NOTE 9 – Bank Loans

The following table presents the balance and associated percentage of each major loan category in our loan portfolio at December 31, 2014 and 2013 (in thousands, except percentages):


	December 31, 2014					December 31, 2013
	Balance		Percent			Balance		Percent

Commercial and industrial	$	896,853		42.4	%	$	509,484		34.8	%
Consumer (1)		758,288		35.8			552,333		37.7
Residential real estate		432,646		20.4			372,789		25.5
Commercial real estate		15,902		0.8			12,284		0.8
Home equity lines of credit		12,945		0.6			16,327		1.1
Construction and land		-		-			490		0.1
		2,116,634		100.0	%		1,463,707		100.0	%
Unamortized loan discount		(30,533)					(45,100)
Unamortized loan fees, net of origination costs		(1,631)					(1,920)
Loans in process		1,681					334
Allowance for loan losses		(20,731)					(12,668)
	$	2,065,420				$	1,404,353

⁽¹⁾

Includes securities-based loans of $732.8 million and $508.9 million at December 31, 2014 and 2013, respectively.

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


	Year Ended December 31,
	2014		2013		2012

Allowance for loan losses, beginning of period	$	12,668	$	8,145	$	5,300
Provision for loan losses		8,531		8,842		3,004
Charge-offs:
Residential real estate		-		(501)		(254)
Commercial and industrial		(510)		(3,864)		-
Consumer		(16)		-		-
Other		(5)		(7)		-
Total charge-offs		(531)		(4,372)		(254)
Recoveries		63		53		95
Allowance for loan losses, end of period	$	20,731	$	12,668	$	8,145

A loan is determined to be impaired, 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 December 31, 2014, we had $4.9 million of non-accrual loans, net of discounts, which included $1.0 million in troubled debt restructurings, for which there was a specific allowance of $0.3 million. At December 31, 2013, we had $1.5 million of non-accrual loans, net of discounts, which included $0.4 million in troubled debt restructurings, for which there was a specific allowance of $0.2 million. 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 years ended December 31, 2014, 2013, and 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 December 31, 2014 and 2013, 95.8% and 96.8% 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 as of December 31, 2014 and 2013 (in thousands, except rates):


	December 31, 2014					December 31, 2013
	Balance		Percent (1)			Balance		Percent (1)

Commercial and industrial	$	16,609		42.4	%	$	9,538		37.7	%
Consumer		1,255		35.8			892		34.8
Residential real estate		787		20.4			408		25.5
Home equity lines of credit		267		0.6			174		1.1
Commercial real estate		232		0.8			198		0.8
Construction and land		-		0.0			12		0.1
Qualitative		1,581		-			1,446		-
	$	20,731		100.0	%	$	12,668		100.0	%

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

At December 31, 2014 and 2013, Stifel Bank had loans outstanding to its executive officers, directors, and their affiliates in the amount of $0.6 million and $0.6 million, respectively, and loans outstanding to other Stifel Financial Corp. executive officers, directors, and their affiliates in the amount of $5.3 million and $5.9 million, respectively.

At December 31, 2014 and 2013, we had mortgage loans held for sale of $121.9 million and $109.1 million, respectively. For the years ended December 31, 2014, 2013, and 2012, we recognized gains of $7.4 million, $11.3 million, and $13.8 million, respectively, from the sale of originated loans, net of fees and costs.