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, 2011 and 2010 (in thousands, except percentages):


	December 31, 2011					December 31, 2010
	Balance			Percent		Balance			Percent

Consumer (1)	$	371,399		58.2	%	$	266,806		68.2	%
Commercial and industrial		186,996		29.3			41,965		10.7
Residential real estate		51,755		8.1			49,550		12.7
Home equity lines of credit		24,086		3.8			30,966		7.9
Commercial real estate		3,107		0.5			1,637		0.4
Construction and land		514		0.1			524		0.1
		637,857		100.0	%		391,448		100.0	%
Unamortized loan origination costs, net of loan fees		(421	)				392
Loans in process		4					233
Allowance for loan losses		(5,300	)				(2,331	)
	$	632,140				$	389,742

(1) Includes securities-based loans of $371.1 million and $266.1 million at December 31, 2011 and 2010, respectively.

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



	Year Ended December 31,
	2011			2010			2009

Allowance for loan losses, beginning of period	$	2,331		$	1,702		$	2,448
Provision for loan losses		2,925			460			604
Charge-offs:
Residential real estate		(5	)		(216	)		(213	)
Construction and land		—			—			(859	)
Commercial real estate		(5	)		—			(294	)
Other		—			(2	)		(25	)
Total charge-offs		(10	)		(218	)		(1,391	)
Recoveries		54			387			41
Allowance for loan losses, end of period	$	5,300		$	2,331		$	1,702

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 loans 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, 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. At December 31, 2010, we had $1.1 million of non-accrual loans, for which there was a specific allowance of $0.2 million. Further, we had $0.4 million in troubled debt restructurings at December 31, 2010. 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, 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, 2011 and 2010, approximately 95% and 98% 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 December 31, 2011 and 2010 (in thousands, except rates):


	December 31, 2011					December 31, 2010
	Balance		Percent(1)			Balance		Percent(1)

Commercial and industrial	$	2,595		29.3	%	$	696	10.7	%
Residential real estate		679		8.1			681	12.7
Commercial real estate		633		0.5			278	0.4
Consumer		510		58.2			288	68.2
Unallocated		883		3.9			388	8.0
	$	5,300		100.0	%	$	2,331	100.0	%

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

At December 31, 2011 and 2010, Stifel Bank had loans outstanding to its executive officers, directors, and their affiliates in the amount of $0.8 million and $0.9 million, respectively, and loans outstanding to other Stifel Financial Corp. executive officers, directors, and their affiliates in the amount of $4.3 million and $3.5 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 December 31, 2011 and 2010, we had mortgage loans held for sale of $131.8 million and $86.3 million, respectively. For the years ended December 31, 2011, 2010 and 2009, we recognized gains of $9.7 million, $8.3 million and $4.1 million, respectively, from the sale of originated loans, net of fees and costs.