Loans | = 90 days Past due but still accruing Amortized Cost Basis of Non-accrual Loans without Related Allowance Non-owner occupied commercial $ 12,835 $ — $ — $ 11,193 Owner occupied commercial 8,797 — — 6,972 Multifamily 201 — — — Non-owner occupied residential 1,417 — — 852 Commercial, industrial and other 2,252 — — 1,361 Construction 718 — — 515 Equipment finance 300 — — — Residential mortgage 2,328 — — 740 Consumer 2,277 — — — Total $ 31,125 $ — $ — $ 21,633 December 31, 2020 (in thousands) Non-accrual Interest Income Recognized on Non-accrual Loans Amortized Cost Basis of Loans >= 90 days Past due but still accruing Amortized Cost Basis of Non-accrual Loans without Related Allowance Non-owner occupied commercial $ 16,537 $ — $ — $ 14,719 Owner occupied commercial 14,271 — — 12,371 Multifamily 626 — — — Non-owner occupied residential 2,217 — — 1,580 Commercial, industrial and other 2,633 — — 1,418 Construction 1,440 — — 1,234 Equipment finance 327 — — — Residential mortgage 2,469 — — 1,015 Consumer 2,243 — 1 — Total $ 42,763 $ — $ 1 $ 32,337 At March 31, 2021, there were no loans that were past due more than 89 days and still accruing and at December 31, 2020, one loan with a recorded investment of $1,000 was past due more than 89 days and still accruing. The Company had $1.6 million and $1.7 million in residential mortgages and consumer home equity loans included in total non-accrual loans that were in the process of foreclosure at March 31, 2021 and December 31, 2020, respectively. Troubled Debt Restructurings Loans are classified as troubled debt restructured loans ("TDR") in cases where borrowers experience financial difficulties and Lakeland makes certain concessionary modifications to contractual terms. Restructured loans typically involve a modification of terms such as a reduction of the stated interest rate, a moratorium of principal payments and/or an extension of the maturity date at a stated interest rate lower than the current market rate of a new loan with similar risk. At March 31, 2021 and December 31, 2020, TDRs totaled $4.9 million and $5.0 million, respectively. Accruing TDRs totaled $3.8 million and non-accrual TDRs totaled $1.1 million at March 31, 2021. Accruing TDRs and non-accrual TDRs totaled $3.9 million and $1.1 million, respectively, at December 31, 2020. There were no loans that were restructured during the three months ended March 31, 2021 or 2020. There were no restructured loans that subsequently defaulted in the first quarter of 2021 and in the first quarter of 2020, there were two consumer loans with a recorded investment of $83,000 that were restructured in the previous 12 months and subsequently defaulted." id="sjs-B4">Loans When the Company adopted Financial Accounting Standards Board's Accounting Standard Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326) ("ASU 2016-13") for measuring credit losses, the loan portfolio segmentation was expanded to nine portfolio segments, taking into consideration common loan attributes and risk characteristics, as well as historical reporting metrics and data availability. All disclosures as of and for the three months ended March 31, 2021, and December 31, 2020, are presented in accordance with ASU 2016-13. The Company did not reclassify prior comparative financial periods and has presented those disclosures under previously applicable U.S. GAAP. The following sets forth the composition of the Company’s loan portfolio: (in thousands) March 31, 2021 December 31, 2020 Non owner occupied commercial $ 2,375,024 $ 2,398,946 Owner occupied commercial 857,506 827,092 Multifamily 858,168 813,225 Non owner occupied residential 195,534 200,229 Commercial, industrial and other 740,566 718,189 Construction 291,252 266,883 Equipment finance 119,428 116,690 Residential mortgage 385,778 377,380 Home equity and consumer 285,690 302,598 Total $ 6,108,946 $ 6,021,232 Loans are recognized at amortized cost, which includes principal balance and net deferred loan fees and costs. The Company elected to exclude accrued interest receivable from amortized cost. Accrued interest receivable is reported separately in the Consolidated Balance Sheets and totaled $15.5 million at March 31, 2021 and $16.1 million at December 31, 2020. Loan origination fees and certain direct loan origination costs are deferred and the net fee or cost is recognized in interest income as an adjustment of yield. Net deferred loan fees are included in loans by respective segment and total $12.9 million at March 31, 2021 and $10.0 million at December 31, 2020. At March 31, 2021 and December 31, 2020 Small Business Association ("SBA") Paycheck Protection Program ("PPP") loans totaled $346.2 million and $284.6 million, respectively and are included in the balance of commercial, industrial and other loans. Consumer loans included overdraft deposit balances of $220,000 and $650,000, at March 31, 2021 and December 31, 2020, respectively. At March 31, 2021 and December 31, 2020, the Company had $2.22 billion and $2.28 billion of loans pledged for potential borrowings at Federal Home Loan Bank ("FHLB"). Credit Quality Indicators Management closely and continually monitors the quality of its loans and assesses the quantitative and qualitative risks arising from the credit quality of its loans. Lakeland assigns a credit risk rating to all loans and loan commitments. The credit risk rating system has been developed by management to provide a methodology to be used by loan officers, department heads and senior management in identifying various levels of credit risk that exist within the loan portfolios. The risk rating system assists senior management in evaluating the loan portfolio and analyzing trends. In assigning risk ratings, management considers, among other things, the borrower’s ability to service the debt based on relevant information such as current financial information, historical payment experience, credit documentation, public information and current economic conditions. Management categorizes loans and commitments into the following risk ratings: Pass: "Pass" assets are well protected by the current net worth and paying capacity of the obligor or guarantors, if any, or by the fair value of any underlying collateral. Watch: "Watch" assets require more than the usual amount of monitoring due to declining earnings, strained cash flow, increasing leverage and/or weakening market. These borrowers generally have limited additional debt capacity and modest coverage and average or below average asset quality, margins and market share. Any residential or consumer loan currently on deferment in accordance with the Coronavirus Aid, Relief and Economic Security ("CARES") Act or the interagency statement issued by bank regulatory agencies has been classified by management as watch or worse. Special Mention: "Special mention" assets exhibit identifiable credit weakness, which if not checked or corrected could weaken the loan quality or inadequately protect the bank’s credit position at some future date. Substandard: "Substandard" assets are inadequately protected by the current sound worth and paying capacity of the obligors or of the collateral pledged, if any. A substandard loan has a well-defined weakness or weaknesses that may jeopardize the liquidation of the debt. Doubtful: "Doubtful" assets that exhibit all of the weaknesses inherent in substandard loans, but have the added characteristics that the weaknesses make collection or liquidation in full improbable on the basis of existing facts. Loss: “Loss” is a rating for loans or portions of loans that are considered uncollectible and of such little value that their continuance as bankable loans is not warranted. The following table presents the risk category of loans by class of loan and vintage as of March 31, 2021: Term Loans by Origination Year (in thousands) 2021 2020 2019 2018 2017 Pre-2017 Revolving Loans Revolving to Term Total Non owner occupied commercial Pass $ 49,980 $ 555,372 $ 363,885 $ 202,094 $ 248,758 $ 681,691 $ 44,550 2,115 $ 2,148,445 Watch — 200 6,531 11,985 5,880 63,270 247 — 88,113 Special mention — 3,384 3,112 8,343 9,047 22,541 80 — 46,507 Substandard — 901 — 2,658 15,847 72,523 — 30 91,959 Total 49,980 559,857 373,528 225,080 279,532 840,025 44,877 2,145 2,375,024 Owner occupied commercial Pass 61,379 118,138 80,308 78,770 81,400 299,935 8,217 175 728,322 Watch — 1,574 22,907 904 — 22,279 800 — 48,464 Special mention — — 2,211 923 109 41,790 — — 45,033 Substandard — — — 2,995 1,971 30,666 44 11 35,687 Total 61,379 119,712 105,426 83,592 83,480 394,670 9,061 186 857,506 Multifamily Pass 34,418 253,176 59,642 103,577 85,258 260,562 20,931 — 817,564 Watch — — — 600 3,164 8,413 — — 12,177 Special mention — 9,731 — — 2,399 1,113 — — 13,243 Substandard — — 5,483 — — 9,701 — — 15,184 Total 34,418 262,907 65,125 104,177 90,821 279,789 20,931 — 858,168 Non owner occupied residential Pass 7,245 23,958 23,965 24,219 23,282 68,676 8,076 823 180,244 Watch — — 299 — 1,074 5,361 — — 6,734 Special mention — — 496 916 498 941 515 — 3,366 Substandard — 746 512 1,227 1,166 1,539 — — 5,190 Total 7,245 24,704 25,272 26,362 26,020 76,517 8,591 823 195,534 Commercial, industrial and other Pass 130,518 236,340 74,724 14,621 5,978 40,974 193,086 408 696,649 Watch — 285 592 132 1,579 603 11,776 — 14,967 Special mention — — — 788 651 2,534 4,684 — 8,657 Substandard — 7,307 50 2,643 1,533 2,013 4,984 1,763 20,293 Total 130,518 243,932 75,366 18,184 9,741 46,124 214,530 2,171 740,566 Construction Pass 17,527 88,821 82,098 48,338 24,190 5,332 330 — 266,636 Watch — — — 2,179 12,866 — — — 15,045 Special mention — — — — 8,853 — — — 8,853 Substandard — — — — 203 515 — — 718 Total 17,527 88,821 82,098 50,517 46,112 5,847 330 — 291,252 Equipment finance Pass 14,135 38,700 38,555 17,934 7,314 2,491 — — 119,129 Watch — — — — — — — — — Special mention — — — — — — — — — Substandard — — 98 107 94 — — — 299 Total 14,135 38,700 38,653 18,041 7,408 2,491 — — 119,428 Term Loans by Origination Year (in thousands) 2021 2020 2019 2018 2017 Pre-2017 Revolving Loans Revolving to Term Total Residential mortgage Pass 43,620 121,557 35,159 32,159 14,558 136,258 — — 383,311 Watch — — — — — — — — — Special mention — — — — — — — — — Substandard — — 51 230 740 1,446 — — 2,467 Total 43,620 121,557 35,210 32,389 15,298 137,704 — — 385,778 Consumer Pass 3,764 15,063 8,664 6,846 4,803 33,285 210,525 — 282,950 Watch — — — — — — — — — Special mention — — — — — — — — — Substandard — 33 56 130 1 2,038 261 221 2,740 Total 3,764 15,096 8,720 6,976 4,804 35,323 210,786 221 285,690 Total loans $ 362,586 $ 1,475,286 $ 809,398 $ 565,318 $ 563,216 $ 1,818,490 $ 509,106 $ 5,546 $ 6,108,946 The following table presents the risk category of loans by class of loan and vintage as of December 31, 2020: Term Loans by Origination Year (in thousands) 2020 2019 2018 2017 2016 Pre-2016 Revolving Loans Revolving to Term Total Non owner occupied commercial Pass $ 570,665 $ 376,681 $ 217,931 $ 251,751 $ 187,605 $ 509,573 $ 50,071 2,246 $ 2,166,523 Watch 770 638 8,498 5,936 19,579 47,680 315 — 83,416 Special mention 3,400 3,131 8,377 9,115 19,936 7,894 2,895 — 54,748 Substandard — — 2,809 15,903 14,844 60,703 — — 94,259 Total 574,835 380,450 237,615 282,705 241,964 625,850 53,281 2,246 2,398,946 Owner occupied commercial Pass 116,512 76,224 80,244 81,215 62,118 245,330 11,072 179 672,894 Watch 11,347 22,932 411 3,651 8,038 23,612 673 — 70,664 Special mention — 2,218 929 113 4,317 38,638 — — 46,215 Substandard 434 16 3,038 641 5,770 27,376 44 — 37,319 Total 128,293 101,390 84,622 85,620 80,243 334,956 11,789 179 827,092 Multifamily Pass 251,708 59,694 85,748 93,368 117,155 145,786 21,713 — 775,172 Watch — — 600 — — 8,472 — — 9,072 Special mention 9,781 — — 2,399 — 1,124 — — 13,304 Substandard — 5,481 — — 9,512 684 — — 15,677 Total 261,489 65,175 86,348 95,767 126,667 156,066 21,713 — 813,225 Non owner occupied residential Pass 23,506 24,378 27,752 24,344 21,488 53,200 8,180 171 183,019 Watch — 300 — 1,174 — 5,757 — — 7,231 Special mention — 496 1,199 392 293 656 655 — 3,691 Substandard 876 512 1,200 1,295 692 1,713 — — 6,288 Total 24,382 25,686 30,151 27,205 22,473 61,326 8,835 171 200,229 Commercial, industrial and other Pass 299,091 84,917 16,245 7,216 18,358 41,900 208,519 531 676,777 Watch 287 3,701 156 1,643 301 369 2,324 — 8,781 Special mention — — 884 764 2,275 — 4,727 — 8,650 Substandard 7,177 50 3,559 1,547 1,497 729 9,422 — 23,981 Total 306,555 88,668 20,844 11,170 22,431 42,998 224,992 531 718,189 Term Loans by Origination Year (in thousands) 2020 2019 2018 2017 2016 Pre-2016 Revolving Loans Revolving to Term Total Construction Pass 56,734 77,117 69,627 29,303 7,681 328 2,190 — 242,980 Watch — — 2,183 11,959 — — — — 14,142 Special mention — — — 8,321 — — — — 8,321 Substandard — — — 206 719 515 — — 1,440 Total 56,734 77,117 71,810 49,789 8,400 843 2,190 — 266,883 Equipment finance Pass 41,528 41,717 20,697 8,834 3,162 426 — — 116,364 Watch — — — — — — — — — Special mention — — — — — — — — — Substandard — 98 88 74 64 2 — — 326 Total 41,528 41,815 20,785 8,908 3,226 428 — — 116,690 Residential mortgage Pass 127,336 43,910 34,252 17,548 12,108 139,616 — — 374,770 Watch — — — — — — — — — Special mention — — — — — — — — — Substandard — 52 233 1,015 — 1,310 — — 2,610 Total 127,336 43,962 34,485 18,563 12,108 140,926 — — 377,380 Consumer Pass 15,999 9,844 7,490 5,333 4,632 31,861 224,549 166 299,874 Watch — — — — — — — — — Special mention — — — — — — — — — Substandard 33 57 31 2 — 2,208 263 130 2,724 Total 16,032 9,901 7,521 5,335 4,632 34,069 224,812 296 302,598 Total loans $ 1,537,184 $ 834,164 $ 594,181 $ 585,062 $ 522,144 $ 1,397,462 $ 547,612 $ 3,423 $ 6,021,232 Past Due and Non-accrual Loans Loans are considered past due if required principal and interest payments have not been received as of the date such payments were contractually due. A loan is generally considered non-performing when it is placed on non-accrual status. A loan is generally placed on non-accrual status when it becomes 90 days past due if such loan has been identified as presenting uncertainty with respect to the collectability of interest and principal. A loan past due 90 days or more may remain on accruing status if such loan is both well secured and in the process of collection. In the absence of other intervening factors, loans granted payment deferrals related to COVID-19 are not reported as past due or placed on non-accrual status provided the borrowers have met the criteria in the CARES Act or otherwise have met the criteria included in an interagency statement issued by bank regulatory agencies. The following tables present the payment status of the recorded investment in past due loans as of the periods noted, by class of loans. March 31, 2021 Past Due (in thousands) Current 30 - 59 Days 60 - 89 Days Greater than 89 days Total Total Loans Non-owner occupied commercial $ 2,362,259 $ 2,640 $ 396 $ 9,729 $ 12,765 $ 2,375,024 Owner occupied commercial 845,931 2,479 1,454 7,642 11,575 857,506 Multifamily 857,961 207 — — 207 858,168 Non-owner occupied residential 192,199 1,236 1,122 977 3,335 195,534 Commercial, industrial and other 737,642 177 875 1,872 2,924 740,566 Construction 290,737 — — 515 515 291,252 Equipment finance 118,113 1,114 22 179 1,315 119,428 Residential mortgage 382,994 1,357 — 1,427 2,784 385,778 Consumer 282,534 1,640 — 1,516 3,156 285,690 Total $ 6,070,370 $ 10,850 $ 3,869 $ 23,857 $ 38,576 $ 6,108,946 December 31, 2020 Past Due (in thousands) Current 30 - 59 Days 60 - 89 Days Greater than 89 days Total Total Loans Non-owner occupied commercial $ 2,384,233 $ 1,256 $ 306 $ 13,151 $ 14,713 $ 2,398,946 Owner occupied commercial 811,408 2,759 350 12,575 15,684 827,092 Multifamily 812,597 208 — 420 628 813,225 Non-owner occupied residential 197,802 482 294 1,651 2,427 200,229 Commercial, industrial and other 716,337 125 — 1,727 1,852 718,189 Construction 265,649 — — 1,234 1,234 266,883 Equipment finance 115,124 1,338 98 130 1,566 116,690 Residential mortgage 374,370 1,046 156 1,808 3,010 377,380 Consumer 300,127 1,041 73 1,357 2,471 302,598 Total $ 5,977,647 $ 8,255 $ 1,277 $ 34,053 $ 43,585 $ 6,021,232 The following tables present information on non-accrual loans, including PCD loans on non-accrual, at March 31, 2021 and December 31, 2020: March 31, 2021 (in thousands) Non-accrual Interest Income Recognized on Non-accrual Loans Amortized Cost Basis of Loans >= 90 days Past due but still accruing Amortized Cost Basis of Non-accrual Loans without Related Allowance Non-owner occupied commercial $ 12,835 $ — $ — $ 11,193 Owner occupied commercial 8,797 — — 6,972 Multifamily 201 — — — Non-owner occupied residential 1,417 — — 852 Commercial, industrial and other 2,252 — — 1,361 Construction 718 — — 515 Equipment finance 300 — — — Residential mortgage 2,328 — — 740 Consumer 2,277 — — — Total $ 31,125 $ — $ — $ 21,633 December 31, 2020 (in thousands) Non-accrual Interest Income Recognized on Non-accrual Loans Amortized Cost Basis of Loans >= 90 days Past due but still accruing Amortized Cost Basis of Non-accrual Loans without Related Allowance Non-owner occupied commercial $ 16,537 $ — $ — $ 14,719 Owner occupied commercial 14,271 — — 12,371 Multifamily 626 — — — Non-owner occupied residential 2,217 — — 1,580 Commercial, industrial and other 2,633 — — 1,418 Construction 1,440 — — 1,234 Equipment finance 327 — — — Residential mortgage 2,469 — — 1,015 Consumer 2,243 — 1 — Total $ 42,763 $ — $ 1 $ 32,337 At March 31, 2021, there were no loans that were past due more than 89 days and still accruing and at December 31, 2020, one loan with a recorded investment of $1,000 was past due more than 89 days and still accruing. The Company had $1.6 million and $1.7 million in residential mortgages and consumer home equity loans included in total non-accrual loans that were in the process of foreclosure at March 31, 2021 and December 31, 2020, respectively. Troubled Debt Restructurings Loans are classified as troubled debt restructured loans ("TDR") in cases where borrowers experience financial difficulties and Lakeland makes certain concessionary modifications to contractual terms. Restructured loans typically involve a modification of terms such as a reduction of the stated interest rate, a moratorium of principal payments and/or an extension of the maturity date at a stated interest rate lower than the current market rate of a new loan with similar risk. At March 31, 2021 and December 31, 2020, TDRs totaled $4.9 million and $5.0 million, respectively. Accruing TDRs totaled $3.8 million and non-accrual TDRs totaled $1.1 million at March 31, 2021. Accruing TDRs and non-accrual TDRs totaled $3.9 million and $1.1 million, respectively, at December 31, 2020. There were no loans that were restructured during the three months ended March 31, 2021 or 2020. There were no restructured loans that subsequently defaulted in the first quarter of 2021 and in the first quarter of 2020, there were two consumer loans with a recorded investment of $83,000 that were restructured in the previous 12 months and subsequently defaulted. |