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, 2015 and December 31, 2014 (in thousands, except percentages):


	March 31, 2015					December 31, 2014
	Balance		Percent			Balance		Percent

Commercial and industrial	$	958,556		41.5	%	$	896,853		42.4	%
Consumer (1)		875,317		37.9			758,288		35.8
Residential real estate		442,305		19.1			432,646		20.4
Commercial real estate		21,515		0.9			15,902		0.8
Home equity lines of credit		12,862		0.6			12,945		0.6
Construction and land		-		-			-		-
		2,310,555		100.0	%		2,116,634		100.0	%
Unamortized loan discount		(31,368)					(30,533)
Unamortized loan fees, net of origination costs		(1,998)					(1,631)
Loans in process		(693)					1,681
Allowance for loan losses		(22,567)					(20,731)
	$	2,253,929				$	2,065,420

⁽¹⁾

Includes securities-based loans of $858.7 million and $732.8 million at March 31, 2015 and December 31, 2014, respectively.

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


	Three Months Ended March 31,
	2015		2014

Allowance for loan losses, beginning of period	$	20,731	$	12,668
Provision for loan losses		1,846		1,910
Charge-offs:
Residential real estate		-		-
Commercial and industrial		(47)		(468)
Consumer		-		-
Other		-		(4)
Total charge-offs		(47)		(472)
Recoveries		37		25
Allowance for loan losses, end of period	$	22,567	$	14,131

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 March 31, 2015, we had $5.8 million of non-accrual loans, net of discounts, which included $0.9 million in troubled debt restructurings, for which there was a specific allowance of $0.3 million. 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. 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, 2015 and 2014 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, 2015 and December 31, 2014, 97.2% and 95.8% 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 March 31, 2015 and December 31, 2014 (in thousands, except rates):


	March 31, 2015					December 31, 2014
	Balance		Percent (1)			Balance		Percent (1)

Commercial and industrial	$	18,104		41.5	%	$	16,609		42.4	%
Consumer		1,392		37.9			1,255		35.8
Residential real estate		857		19.1			787		20.4
Home equity lines of credit		269		0.6			267		0.8
Commercial real estate		305		0.9			232		0.6
Construction and land		-		0.0			-		0.0
Qualitative		1,640		-			1,581		-
	$	22,567		100.0	%	$	20,731		100.0	%

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

At March 31, 2015 and December 31, 2014, 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 $5.5 million and $5.3 million, respectively.

At March 31, 2015 and December 31, 2014, we had mortgage loans held for sale of $188.8 million and $121.9 million, respectively. For the three months ended March 31, 2015 and 2014, we recognized gains of $2.6 million and $1.2 million, respectively, from the sale of originated loans, net of fees and costs.