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 mortgage loans include long-term loans to individuals and businesses secured by mortgages on the borrower’s real property. 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, home equity and unsecured personal lines of credit.

A summary of loans outstanding, by primary collateral, at December 31 is as follows:




(Dollars in thousands)	2018		2017
Residential Real Estate 1-4 Family
Consumer first liens	$	89,673	$	97,159
Commercial first lien		59,227		61,275
Total first liens		148,900		158,434

Consumer junior liens and lines of credit		42,504		45,043
Commercial junior liens and lines of credit		4,716		5,328
Total junior liens and lines of credit		47,220		50,371
Total residential real estate 1-4 family		196,120		208,805

Residential real estate - construction
Consumer		1,667		1,813
Commercial		8,558		8,088
Total residential real estate construction		10,225		9,901

Commercial real estate		487,980		428,428
Commercial		274,054		291,519
Total commercial		762,034		719,947

Consumer		4,996		5,047
		973,375		943,700
Less: Allowance for loan losses		(12,415)		(11,792)
Net Loans	$	960,960	$	931,908

Included in the loan balances are the following:
Net unamortized deferred loan costs	$	123	$	98

Loans pledged as collateral for borrowings and commitments from:
FHLB	$	772,564	$	737,313
Federal Reserve Bank		34,160		35,740
Total	$	806,724	$	773,053

Loans to directors and executive officers and related interests and affiliated enterprises were as follows:


(Dollars in thousands)	2018		2017
Balance at beginning of year	$	22,123	$	23,243
New loans made		1,461		1,513
Repayments		(3,095)		(2,633)
Balance at end of year	$	20,489	$	22,123