Note 6. Loans

The Bank reports its loan portfolio based on the primary collateral of the loan. It further classifies these loans by the primary purpose, either consumer or commercial. The Bank’s residential real estate loans include long-term loans to individuals and businesses secured by mortgages on the borrower’s real property and include home equity loans. Construction loans are made to finance the purchase of land and the construction of residential and commercial buildings thereon, and are secured by mortgages on real estate. Commercial real estate loans include construction, owner and non-owner occupied properties and farm real estate. Commercial loans are made to businesses of various sizes for a variety of purposes including property, plant and equipment, working capital and loans to government municipalities. Commercial lending is concentrated in the Bank’s primary market, but also includes purchased loan participations. Consumer loans are comprised of installment loans and unsecured personal lines of credit.

A summary of loans outstanding, by primary collateral, at the end of the reporting periods is as follows:


						Change
(Dollars in thousands)	March 31, 2016		December 31, 2015			Amount	%
Residential Real Estate 1-4 Family
Consumer first liens	$	101,412	$	103,698	$	(2,286)	(2.2)
Commercial first lien		60,394		57,780		2,614	4.5
Total first liens		161,806		161,478		328	0.2

Consumer junior liens and lines of credit		46,479		44,996		1,483	3.3
Commercial junior liens and lines of credit		5,936		5,917		19	0.3
Total junior liens and lines of credit		52,415		50,913		1,502	3.0
Total residential real estate 1-4 family		214,221		212,391		1,830	0.9

Residential real estate - construction
Consumer		514		545		(31)	(5.7)
Commercial		7,593		7,343		250	3.4
Total residential real estate construction		8,107		7,888		219	2.8

Commercial real estate		359,642		340,695		18,947	5.6
Commercial		215,671		215,942		(271)	(0.1)
Total commercial		575,313		556,637		18,676	3.4

Consumer		4,927		5,100		(173)	(3.4)
		802,568		782,016		20,552	2.6
Less: Allowance for loan losses		(10,342)		(10,086)		(256)	2.5
Net Loans	$	792,226	$	771,930	$	20,296	2.6

Included in the loan balances are the following:
Net unamortized deferred loan fees (costs)	$	547	$	436

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	665,635	$	643,449
Federal Reserve Bank		42,932		45,111
	$	708,567	$	688,560