NOTE 7 – Bank Loans

The following table presents the balance and associated percentage of each major loan category in our loan portfolio at March 31, 2012 and December 31, 2011 (in thousands, except percentages):


	March 31, 2012						December 31, 2011
	Balance			Percent			Balance			Percent

Consumer ⁽¹⁾	$	385,231			58.1	%	$	371,399			58.2	%
Commercial and industrial		203,559			30.7			186,996			29.3
Residential real estate		47,200			7.1			51,755			8.1
Home equity lines of credit		24,100			3.6			24,086			3.8
Commercial real estate		2,996			0.4			3,107			0.5
Construction and land		514			0.1			514			0.1
		663,600			100.0	%		637,857			100.0	%
Unamortized loan fees, net of origination costs		(537	)					(421	)
Loans in process		(89	)					4
Allowance for loan losses		(5,781	)					(5,300	)
	$	657,193					$	632,140

⁽¹⁾Includes securities-based loans of $384.9 million and $371.1 million at March 31, 2012 and December 31, 2011, respectively.

Changes in the allowance for loan losses for the periods presented were as follows (in thousands):


	Three Months Ended March 31,
	2012			2011

Allowance for loan losses, beginning of period	$	5,300		$	2,331
Provision for loan losses		543			185
Charge-offs:
Residential real estate		(109	)		—
Recoveries		47			5
Allowance for loan losses, end of period	$	5,781		$	2,521

A loan is determined to be impaired, usually when principal or interest becomes 90 days past due or when collection becomes uncertain. At the time a loan is determined to be impaired, the accrual of interest and amortization of deferred loan origination fees is discontinued (“non-accrual status”), and any accrued and unpaid interest income is reversed. At March 31, 2012, we had $1.9 million of non-accrual loans, for which there was a specific allowance of $0.6 million. Further, we had $0.3 million in troubled debt restructurings at March 31, 2012. At December 31, 2011, we had $2.3 million of non-accrual loans, for which there was a specific allowance of $0.6 million. Further, we had $0.3 million in troubled debt restructurings at December 31, 2011. The gross interest income related to impaired loans, which would have been recorded had these loans been current in accordance with their original terms, and the interest income recognized on these loans during the three months ended March 31, 2012, were insignificant to the consolidated financial statements.

Credit Quality

We closely monitor economic conditions and loan performance trends to manage and evaluate our exposure to credit risk. Trends in delinquency ratios are an indicator, among other considerations, of credit risk within our loan portfolios. The level of nonperforming assets represents another indicator of the potential for future credit losses. Accordingly, key metrics we track and use in evaluating the credit quality of our loan portfolio include delinquency and nonperforming asset rates, as well as charge-off rates and our internal risk ratings of the loan portfolio. In general, we are a secured lender. At March 31, 2012 and December 31, 2011, approximately 95% and 95% of our loan portfolio was collateralized, respectively. Collateral is required in accordance with the normal credit evaluation process based upon the creditworthiness of the customer and the credit risk associated with the particular transaction.

The following is a breakdown of the allowance for loan losses by type for as of March 31, 2012 and December 31, 2011 (in thousands, except rates):


	March 31, 2012					December 31, 2011
	Balance		Percent⁽¹⁾			Balance		Percent⁽¹⁾

Commercial and industrial	$	2,908		30.7	%	$	2,595		29.3	%
Residential real estate		667		7.1			679		8.1
Commercial real estate		565		0.4			633		0.5
Consumer		785		58.1			510		58.2
Unallocated		856		3.7			883		3.9
	$	5,781		100.0	%	$	5,300		100.0	%

⁽¹⁾ Loan category as a percentage of total loan portfolio.

At March 31, 2012 and December 31, 2011, Stifel Bank had loans outstanding to its executive officers, directors, and their affiliates in the amount of $0.8 million and $0.8 million, respectively, and loans outstanding to other Stifel Financial Corp. executive officers, directors, and their affiliates in the amount of $5.2 million and $4.3 million, respectively. Such loans and other extensions of credit were made in the ordinary course of business and were made on substantially the same terms (including interest rates and collateral requirements) as those prevailing at the time for comparable transactions with other persons.

At March 31, 2012 and December 31, 2011, we had mortgage loans held for sale of $141.1 million and $131.8 million, respectively. For the three months ended March 31, 2012 and 2011, we recognized gains of $2.8 million and $2.0 million, respectively, from the sale of originated loans, net of fees and costs.