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 mortgage loans include long-term loans to individuals and businesses secured by mortgages on the borrower’s real property. Consumer real estate loans also include home equity loans and lines of credit. 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 loans are made to businesses of various sizes for a variety of purposes including construction, property, plant and equipment, and working capital. Commercial loans also include 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)	September 30, 2013			December 31, 2012		Amount	%
Residential Real Estate 1-4 Family
Consumer first liens	$	103,388	$	93,790	$	9,598	10.2
Consumer junior liens and lines of credit		33,750		35,494		(1,744)	(4.9)
Total consumer		137,138		129,284		7,854	6.1

Commercial first lien		57,882		60,809		(2,927)	(4.8)
Commercial junior liens and lines of credit		6,176		6,794		(618)	(9.1)
Total		64,058		67,603		(3,545)	(5.2)
Total residential real estate 1-4 family		201,196		196,887		4,309	2.2

Residential real estate - construction
Consumer purpose		2,795		3,255		(460)	(14.1)
Commercial purpose		7,986		12,177		(4,191)	(34.4)
Total residential real estate construction		10,781		15,432		(4,651)	(30.1)

Commercial, industrial and agricultural real estate		348,721		363,874		(15,153)	(4.2)
Commercial, industrial and agricultural		150,323		166,734		(16,411)	(9.8)
Total commercial, industrial and agricultural		499,044		530,608		(31,564)	(5.9)

Consumer		9,130		10,652		(1,522)	(14.3)
		720,151		753,579		(33,428)	(4.4)
Less: Allowance for loan losses		(11,376)		(10,379)		(997)	9.6
Net Loans	$	708,775	$	743,200	$	(34,425)	(4.6)

Included in the loan balances are the following:
Net unamortized deferred loan costs	$	367	$	456
Unamortized discount on purchased loans	$	(106)	$	(129)

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	592,392	$	657,684
Federal Reserve Bank		71,128		112,613
	$	663,520	$	770,297