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:



	September 30,		December 31,
(Dollars in thousands)	2018		2017
Residential Real Estate 1-4 Family
Consumer first liens	$	90,029	$	97,159
Commercial first lien		60,142		61,275
Total first liens		150,171		158,434

Consumer junior liens and lines of credit		43,044		45,043
Commercial junior liens and lines of credit		5,040		5,328
Total junior liens and lines of credit		48,084		50,371
Total residential real estate 1-4 family		198,255		208,805

Residential real estate - construction
Consumer		2,779		1,813
Commercial		9,510		8,088
Total residential real estate construction		12,289		9,901

Commercial real estate		475,838		428,428
Commercial		279,835		291,519
Total commercial		755,673		719,947

Consumer		4,766		5,047
		970,983		943,700
Less: Allowance for loan losses		(12,526)		(11,792)
Net Loans	$	958,457	$	931,908

Included in the loan balances are the following:
Net unamortized deferred loan costs	$	73	$	98

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	762,292	$	737,313
Federal Reserve Bank		34,685		35,740
	$	796,977	$	773,053