4. LOANS

The following table details our loan portfolio by category:


December 31,	2013		2012
(In Thousands)
Commercial	$	810,882	$	704,491
Owner occupied commercial		786,360		770,581
Commercial Mortgages		725,193		631,365
Construction		106,074		133,375
Residential		221,520		243,627
Consumer		302,234		289,001

		2,952,263		2,772,440

Less:
Deferred fees, net		6,043		4,602
Allowance for loan losses		41,244		43,922

Net loans	$	2,904,976	$	2,723,916

Nonaccruing loans aggregated $31.0 million, $47.8 million and $71.1 million at December 31, 2013, 2012 and 2011, respectively. If interest on all such loans had been recorded in accordance with contractual terms, net interest income would have increased by $1.0 million in 2013, $1.6 million in 2012, and $3.1 million in 2011.

The total amounts of loans serviced for others were $229.8 million, $263.4 million and $308.1 million at December 31, 2013, 2012 and 2011, respectively, which consisted of residential first mortgage loans and reverse mortgage loans. We received fees from the servicing of loans of $342,000, $359,000 and $445,000 during 2013, 2012 and 2011, respectively.

We record mortgage-servicing rights on our mortgage loan-servicing portfolio. Mortgage servicing rights represent the present value of the future net servicing fees from servicing mortgage loans we acquire or originate. The value of these servicing rights was $419,000 and $240,000 at December 31, 2013 and 2012, respectively. Mortgage loans serviced for others are not included in loans in the accompanying Consolidated Statements of Condition. Changes in the valuation of these servicing rights resulted in net income of $178,000 during 2013 and net income of $24,000 during 2012. Revenues from originating, marketing and servicing mortgage loans as well as valuation adjustments related to capitalized mortgage servicing rights are included in mortgage banking activities, net in the Consolidated Statements of Operations.

Accrued interest receivable on loans outstanding was $7.8 million and $7.6 million at December 31, 2013 and 2012, respectively.