Note 5. 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 class, at the end of the reporting periods is as follows:



(Dollars in thousands)	March 31, 2017		December 31, 2016
Residential Real Estate 1-4 Family
Consumer first liens	$	101,534	$	103,125
Commercial first lien		65,030		65,445
Total first liens		166,564		168,570

Consumer junior liens and lines of credit		44,023		44,817
Commercial junior liens and lines of credit		5,370		5,396
Total junior liens and lines of credit		49,393		50,213
Total residential real estate 1-4 family		215,957		218,783

Residential real estate - construction
Consumer		1,034		1,350
Commercial		9,904		7,625
Total residential real estate construction		10,938		8,975

Commercial real estate		397,321		390,584
Commercial		274,722		270,826
Total commercial		672,043		661,410

Consumer		4,591		4,705
		903,529		893,873
Less: Allowance for loan losses		(11,278)		(11,075)
Net Loans	$	892,251	$	882,798

Included in the loan balances are the following:
Net unamortized deferred loan costs	$	363	$	242

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	717,790	$	711,682
Federal Reserve Bank		37,618		41,152
	$	755,408	$	752,834