The following table presents the balance and associated percentage of each major loan category in our bank loan portfolio at December 31, 2019 and 2018 (in thousands, except percentages):

	December 31, 2019						December 31, 2018
	Balance			Percent			Balance			Percent
Commercial and industrial	$	3,438,953			35.3	%	$	3,304,234			38.5	%
Residential real estate		3,309,548			33.9			2,875,014			33.5
Securities-based loans		2,098,211			21.5			1,786,966			20.8
Commercial real estate		428,549			4.4			318,961			3.7
Construction and land		398,839			4.1			138,245			1.6
Home equity lines of credit		51,205			0.5			38,098			0.4
Other		27,311			0.3			120,129			1.5
Gross bank loans		9,752,616			100.0	%		8,581,647			100.0	%
Unamortized loan discount, net		(6,588	)					(12,155	)
Loans in process		(27,717	)					27,984
Unamortized loan fees, net		1,310						5,972
Allowance for loan losses		(95,579	)					(85,833	)
Loans held for investment, net	$	9,624,042					$	8,517,615

At December 31, 2019 and 2018, Stifel Bancorp had loans outstanding to its executive officers and directors and executive officers and directors of certain affiliated entities in the amount of $24.5 million and $28.8 million, respectively.

At December 31, 2019 and 2018, we had loans held for sale of $389.7 million and $205.6 million, respectively. For the years ended December 31, 2019, 2018, and 2017, we recognized gains, included in other income in the consolidated statements of operations, of $13.1 million, $8.2 million, and $12.3 million, respectively, from the sale of originated loans, net of fees and costs.

At December 31, 2019 and 2018, loans, primarily consisting of residential and commercial real estate loans of $3.1 billion and $2.7 billion, respectively, were pledged at the Federal Home Loan Bank as collateral for borrowings.

The following table details activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2019 and 2018 (in thousands).

	Year Ended December 31, 2019
	Beginning Balance		Provision			Charge- offs			Recoveries		Ending Balance
Commercial and industrial	$	68,367	$	1,821		$	(239	)	$	—	$	69,949
Residential real estate		11,228		2,974			(41	)		92		14,253
Construction and land		1,241		3,372			—			—		4,613
Commercial real estate		1,778		1,786			—			—		3,564
Securities-based loans		1,978		383			—			—		2,361
Home equity lines of credit		310		129			—			3		442
Other		88		152			(106	)		60		194
Qualitative		843		(640	)		—			—		203
	$	85,833	$	9,977		$	(386	)	$	155	$	95,579

	Year Ended December 31, 2018
	Beginning Balance		Provision			Charge- offs			Recoveries		Ending Balance
Commercial and industrial	$	54,474	$	13,896		$	(12	)	$	9	$	68,367
Residential real estate		8,430		2,798			—			—		11,228
Securities-based loans		2,088		(110	)		—			—		1,978
Commercial real estate		1,520		258			—			—		1,778
Construction and land		100		1,141			—			—		1,241
Home equity lines of credit		162		145			—			3		310
Other		16		71			(2	)		3		88
Qualitative		676		167			—			—		843
	$	67,466	$	18,366		$	(14	)	$	15	$	85,833

The following table presents the unpaid principal balances of loans and amount of allowance allocated based upon impairment method by portfolio segment at December 31, 2019 (in thousands):

	Allowance for Loan Losses						Recorded Investment in Loans
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and industrial	$	8,158	$	61,791	$	69,949	$	12,991	$	3,425,962	$	3,438,953
Residential real estate		24		14,229		14,253		1,412		3,308,136		3,309,548
Securities-based loans		—		2,361		2,361		—		2,098,211		2,098,211
Commercial real estate		—		3,564		3,564		—		428,549		428,549
Construction and land		—		4,613		4,613		—		398,839		398,839
Home equity lines of credit		—		442		442		184		51,021		51,205
Other		—		194		194		—		27,311		27,311
Qualitative		—		203		203		—		—		—
	$	8,182	$	87,397	$	95,579	$	14,587	$	9,738,029	$	9,752,616

The following table presents the unpaid principal balances of loans and amount of allowance allocated based upon impairment method by portfolio segment at December 31, 2018 (in thousands):

	Allowance for Loan Losses						Recorded Investment in Loans
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and industrial	$	8,678	$	59,689	$	68,367	$	23,677	$	3,280,557	$	3,304,234
Residential real estate		24		11,204		11,228		519		2,874,495		2,875,014
Securities-based loans		—		1,978		1,978		—		1,786,966		1,786,966
Commercial real estate		—		1,778		1,778		—		318,961		318,961
Construction and land		—		1,241		1,241		—		138,245		138,245
Home equity lines of credit		—		310		310		184		37,914		38,098
Other		1		87		88		21		120,108		120,129
Qualitative		—		843		843		—		—		—
	$	8,703	$	77,130	$	85,833	$	24,401	$	8,557,246	$	8,581,647

In determining the amount of our allowance, we rely on an analysis of our loan portfolio, our experience, and our evaluation of general economic conditions. If our assumptions prove to be incorrect, our current allowance may not be sufficient to cover future loan losses and we may experience significant increases to our provision.

There are two components of the allowance for loan losses: the inherent allowance component and the specific allowance component. The inherent allowance component of the allowance for loan losses is used to estimate the probable losses inherent in the loan portfolio and includes non-homogeneous loans that have not been identified as impaired and portfolios of smaller balance homogeneous loans. Our company maintains methodologies by loan product for calculating an allowance for loan losses that estimates the inherent losses in the loan portfolio. Qualitative and environmental factors, such as economic and business conditions, nature and volume of the portfolio and lending terms, and volume and severity of past due loans may also be considered in the calculations. The allowance for loan losses is maintained at a level reasonable to ensure that it can adequately absorb the estimated probable losses inherent in the portfolio.

The specific allowance component of the allowance for loan losses is used to estimate probable losses for non-homogeneous exposures, including loans modified in a Troubled Debt Restructuring (TDR), which have been specifically identified for impairment analysis by our company and determined to be impaired. At December 31, 2019, we had $14.6 million of impaired loans, net of discounts, which included $0.2 million in troubled debt restructurings. The specific allowance on impaired loans at December 31, 2019 was $8.2 million. At December 31, 2018, we had $24.4 million of impaired loans, net of discounts, which included $9.1 million in troubled debt restructurings. The specific allowance on impaired loans at December 31, 2018 was $8.7 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 year ended December 31, 2019 and 2018, were insignificant to the consolidated financial statements.

The tables below present loans that were individually evaluated for impairment by portfolio segment at December 31, 2019 and 2018, including the average recorded investment balance (in thousands):

	December 31, 2019
	Unpaid Contractual Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
Commercial and industrial	$	12,991	$	51	$	12,940	$	12,991	$	8,158	$	14,172
Residential real estate		1,412		1,412		—		1,412		24		1,231
Home equity lines of credit		184		184		—		184		—		184
Other		150		—		—		—		—		—
Total	$	14,737	$	1,647	$	12,940	$	14,587	$	8,182	$	15,587

	December 31, 2018
	Unpaid Contractual Principal Balance		Recorded Investment with No Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment
Commercial and industrial	$	23,677	$	242	$	23,435	$	23,677	$	8,678	$	23,807
Residential real estate		544		352		167		519		24		275
Home equity lines of credit		184		184		—		184		—		184
Other		694		11		10		21		1		70
Total	$	25,099	$	789	$	23,612	$	24,401	$	8,703	$	24,336

The following tables present the aging of the recorded investment in past due loans at December 31, 2019 and 2018, by portfolio segment (in thousands):

	December 31, 2019
	30-89 Days Past Due		90 or More Days Past Due		Total Past Due		Current Balance		Total
Commercial and industrial	$	—	$	12,940	$	12,940	$	3,426,013		3,438,953
Residential real estate		10,476		1,249		11,725		3,297,823		3,309,548
Securities-based loans		—		—		—		2,098,211		2,098,211
Commercial real estate		—		—		—		428,549		428,549
Construction and land		—		—		—		398,839		398,839
Home equity lines of credit		83		184		267		50,938		51,205
Other		5		—		5		27,306		27,311
Total	$	10,564	$	14,373	$	24,937	$	9,727,679	$	9,752,616

	December 31, 2019 *
	Non-accrual		Restructured		Total
Commercial and industrial	$	12,940	$	—	$	12,940
Residential real estate		1,249		163		1,412
Home equity lines of credit		184		—		184
Total	$	14,373	$	163	$	14,536

* There were no loans past due 90 days and still accruing interest at December 31, 2019.

	December 31, 2018
	30 - 89 Days Past Due		90 or More Days Past Due		Total Past Due		Current Balance		Total
Commercial and industrial	$	—	$	14,656	$	14,656	$	3,289,578		3,304,234
Residential real estate		6,970		377		7,347		2,867,667		2,875,014
Securities-based loans		—		—		—		1,786,966		1,786,966
Commercial real estate		—		—		—		318,961		318,961
Construction and land		—		—		—		138,245		138,245
Home equity lines of credit		33		—		33		38,065		38,098
Other		—		134		134		119,995		120,129
Total	$	7,003	$	15,167	$	22,170	$	8,559,477	$	8,581,647

	December 31, 2018 *
	Non-accrual		Restructured		Total
Commercial and industrial	$	14,741	$	8,936	$	23,677
Residential real estate		352		167		519
Home equity lines of credit		184		—		184
Other		21		—		21
Total	$	15,298	$	9,103	$	24,401

* There were no loans past due 90 days and still accruing interest at December 31, 2018.

As of December 31, 2019, bank loans were primarily extended to non-investment-grade borrowers. Substantially all of these loans align with the U.S. federal bank regulatory agencies’ definition of Pass. Loans meet the definition of Pass when they are performing and/or do not demonstrate adverse characteristics that are likely to result in a credit loss. 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.

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, 2019 and 2018, 98.3% and 98.4% 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. Our company uses the following definitions for risk ratings:

Pass. A credit exposure rated pass has a continued expectation of timely repayment, all obligations of the borrower are current, and the obligor complies with material terms and conditions of the lending agreement.

Special Mention. Extensions of credit that have potential weakness that deserve management’s close attention and, if left uncorrected, may, at some future date, result in the deterioration of the repayment prospects or collateral position.

Substandard. Obligor has a well-defined weakness that jeopardizes the repayment of the debt and has a high probability of payment default with the distinct possibility that we will sustain some loss if noted deficiencies are not corrected.

Doubtful. Inherent weakness in the exposure makes the collection or repayment in full, based on existing facts, conditions, and circumstances, highly improbable, and the amount of loss is uncertain.

Doubtful loans are considered impaired. Substandard loans are regularly reviewed for impairment. When a loan is impaired, the impairment is measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or as a practical expedient, the observable market price of the loan or the fair value of the collateral if the loan is collateral dependent.

Commercial and industrial (“C&I”). C&I loans primarily include commercial and industrial lending used for general corporate purposes, working capital and liquidity, and “event-driven.” “Event-driven” loans support client merger, acquisition, or recapitalization activities. C&I lending is structured as revolving lines of credit, letter of credit facilities, term loans, and bridge loans. Risk factors considered in determining the allowance for corporate loans include the borrower’s financial strength, seniority of the loan, collateral type, leverage, volatility of collateral value, debt cushion, and covenants.

Real Estate. Real estate loans include residential real estate non-conforming loans, residential real estate conforming loans, commercial real estate, and home equity lines of credit. The allowance methodology related to real estate loans considers several factors, including, but not limited to, loan-to-value ratio, FICO score, home price index, delinquency status, credit limits, and utilization rates.

Securities-based loans. Securities-based loans allow clients to borrow money against the value of qualifying securities for any suitable purpose other than purchasing, trading, or carrying securities or refinancing margin debt. The majority of consumer loans are structured as revolving lines of credit and letter of credit facilities and are primarily offered through Stifel’s Pledged Asset (“SPA”) program. The allowance methodology for securities-based lending considers the collateral type underlying the loan, including the liquidity and trading volume of the collateral, position concentration, and other borrower specific factors such as personal guarantees.

Construction and land. Short-term loans used to finance the development of a real estate project.

Based on the most recent analysis performed, the risk category of our loan portfolio was as follows: (in thousands):

	December 31, 2019
	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and industrial	$	3,365,800	$	48,241	$	11,972	$	12,940	$	3,438,953
Residential real estate		3,307,719		417		1,412		—		3,309,548
Securities-based loans		2,098,211		—		—		—		2,098,211
Commercial real estate		427,963		586		—		—		428,549
Construction and land		398,839		—		—		—		398,839
Home equity lines of credit		51,021		—		184		—		51,205
Other		27,311		—		—		—		27,311
Total	$	9,676,864	$	49,244	$	13,568	$	12,940	$	9,752,616

	December 31, 2018
	Pass		Special Mention		Substandard		Doubtful		Total
Commercial and industrial	$	3,254,698	$	34,795	$	14,741	$	—	$	3,304,234
Residential real estate		2,874,495		—		519		—		2,875,014
Securities-based loans		1,786,966		—		—		—		1,786,966
Commercial real estate		318,961		—		—		—		318,961
Construction and land		138,245		—		—		—		138,245
Home equity lines of credit		37,914		—		184		—		38,098
Other		119,912		196		—		21		120,129
Total	$	8,531,191	$	34,991	$	15,444	$	21	$	8,581,647