NOTE 7 – Bank Loans

Our loan portfolio consists primarily of the following segments:

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.

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 credit losses on corporate loans include the borrower’s financial strength, seniority of the loan, collateral type, leverage, volatility of collateral value, debt cushion, and covenants.

Fund banking. Fund banking loans primarily include capital call lines of credit, also known as subscription lines of credit. These credit facilities are used by closed-end private investment funds (“Fund”) that have raised capital commitments from limited partners to effectively manage the Fund’s cash and bridge timing between the Fund’s investments and capital calls. The lines of credit are collateralized by a pledge of the limited partner’s contractually callable capital and the general partner’s right to call such capital as permitted in the Fund’s partnership agreement.

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 commercial real estate projects.

Other. Other loans include consumer and credit card lending.

At September 30, 2026 and December 31, 2025, Stifel Bancorp had loans outstanding to its executive officers and directors and executive officers and directors of certain affiliated entities in the amount of $124.3 million and $98.4 million, respectively.

At September 30, 2026 and December 31, 2025, we had loans held for sale of $328.9 million and $502.2 million, respectively. For the three months ended September 30, 2026 and 2025, we recognized losses, included in other income in the accompanying consolidated statements of operations, of $3.2 million and $1.6 million, respectively, from the sale of originated loans, net of fees and costs. For the nine months ended September 30, 2026 and 2025, we recognized losses, included in other income in the accompanying consolidated statements of operations, of $6.3 million and $6.5 million, respectively, from the sale of originated loans, net of fees and costs.

At September 30, 2026 and December 31, 2025, loans, primarily consisting of residential and commercial real estate loans of $9.2 billion and $8.6 billion, respectively, were pledged at the Federal Home Loan Bank as collateral for borrowings. At September 30, 2026 and December 31, 2025, loans of $4.1 billion and $3.1 billion, respectively, were pledged with the Federal Reserve discount window.

Accrued interest receivable for loans and loans held for sale at September 30, 2026 and December 31, 2025 was $103.6 million and $90.7 million, respectively, and is reported in other assets on the consolidated statement of financial condition.

During the three months ended September 30, 2026, we recorded $7.9 million of provision for credit losses, including $7.3 million of the reserve for credit losses for funded loans and $0.6 million of the allowance for credit losses on unfunded lending commitments. During the nine months ended September 30, 2026, we recorded $27.0 million of provision for credit losses, including $26.6 million of the reserve for credit losses for funded loans and $1.4 million of the allowance for credit losses on unfunded lending commitments, partially offset by a release of $1.0 million of the allowance for credit losses on loans and advances to financial advisors and other employees. During the three months ended September 30, 2025, we recorded $8.3 million of provision for credit losses, including $8.8 million of the reserve for credit losses for funded loans, partially offset by a release of $0.5 million of the allowance for credit losses on unfunded lending commitments. During the nine months ended September 30, 2025, we recorded $28.7 million of provision for credit losses, including $29.2 million of the reserve for credit losses for funded loans, partially offset by a release of $0.6 million of the allowance for credit losses on unfunded lending commitments. The provision for credit losses related to the loan portfolio and the provision for unfunded lending commitments are included in the provision for credit losses on the consolidated statement of operations. The expected credit losses for unfunded lending commitments, including standby letters of credit and binding unfunded loan commitments, are reported on the consolidated statement of financial condition in accounts payable and accrued expenses.

In the normal course of business, we may modify the original terms of a loan agreement. In certain circumstances, we may agree to modify the original terms of a loan agreement to a borrower experiencing financial difficulty, which may include a borrower in default, financial distress, bankruptcy or other circumstances. Modifications of loans to borrowers experiencing financial difficulty are designed to reduce our loss exposure while providing borrowers with an opportunity to work through financial difficulties, often to avoid foreclosure or bankruptcy. Loan modifications to borrowers experiencing financial difficulty typically involve principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay (i.e., payment or maturity forbearance greater than six months), or a term extension, or any combination thereof. Modified loans to borrowers experiencing financial difficulty are subject to our nonaccrual policies. Loans to borrowers experiencing financial difficulty which were modified during the three and nine months ended September 30, 2026 and 2025 were not material.

The gross interest income related to individually evaluated 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 and nine months ended September 30, 2026 and 2025, were immaterial to the consolidated financial statements.

Credit quality indicators

As of September 30, 2026, 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 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 (“nonaccrual 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 portfolio. 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 September 30, 2026 and December 31, 2025, 97.4% and 97.1% 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 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 the Company 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.

Loans rated substandard or below are individually evaluated for loss. Loss amounts are calculated 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. If management determines that the loss amount is uncollectible, the amount is charged off. If the loss amount is determined to be collectible, then the amount is reserved as a specific valuation allowance. The determination of whether the loss is collectible or uncollectible is based on current financial information from the borrower, as well as any facts and information of which the Company may have knowledge.