Loans | = 90 days Past due but still accruing Amortized Cost Basis of Non-accrual Loans without Related Allowance Non-owner occupied commercial $ 4,748 $ — $ — $ 4,284 Owner occupied commercial 4,656 — — 4,221 Non-owner occupied residential 922 — — 523 Commercial, industrial and other 1,108 — — 477 Equipment finance 238 — — — Residential mortgage 123 — — — Consumer 453 — — — Total $ 12,248 $ — $ — $ 9,505 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 September 30, 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 no loans included in total non-accrual loans that were in the process of foreclosure at September 30, 2021 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 December 31, 2020. 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. The CARES Act provided relief from TDR classification for certain loan modifications related to the COVID-19 pandemic beginning March 1, 2020 through the earlier of 60 days after the end of the pandemic or December 31, 2020. Additionally, banking regulatory agencies issued interagency guidance that COVID-19 related short-term modifications (i.e., six months or less) granted to borrowers that were current as of the loan modification program implementation date do not need to be considered TDRs. The Consolidated Appropriations Act, 2021 (the "CAA"), which was signed into law on December 27, 2020, extended this guidance to modifications made until the earlier of January 1, 2022 or 60 days after the end of the COVID-19 national emergency. The Company elected this provision of the CARES Act and excluded modified loans that met the required guidelines for relief from its TDR classification. At September 30, 2021, no loans were on COVID-related deferrals as the remaining 90-day loan deferments expired and borrowers began paying their pre-deferral loan payments in the first quarter of 2021. For most commercial loans, borrowers are paying their pre-deferral loan payments plus an additional monthly amount to catch up on the payments that were deferred. None of these modifications were considered TDRs. At September 30, 2021 and December 31, 2020, TDRs totaled $3.7 million and $5.0 million, respectively. Accruing TDRs totaled $3.4 million and non-accrual TDRs totaled $241,000 at September 30, 2021. Accruing TDRs and non-accrual TDRs totaled $3.9 million and $1.1 million, respectively, at December 31, 2020. There was one consumer loan totaling $116,000 that was restructured during the three and nine months ended September 30, 2021 and that met the definition of a TDR, while no loans were restructured during the three and nine months ended September 30, 2020. There were no restructured loans that subsequently defaulted in the nine months ended September 30, 2021; however, one construction loan totaling $694,000 that was a TDR within the previous twelve months had subsequently defaulted in the nine months ended September 30, 2020." 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 and nine months ended September 30, 2021, and as of 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) September 30, 2021 December 31, 2020 Non-owner occupied commercial $ 2,300,637 $ 2,398,946 Owner occupied commercial 884,144 827,092 Multifamily 907,903 813,225 Non-owner occupied residential 177,592 200,229 Commercial, industrial and other 473,324 718,189 Construction 332,868 266,883 Equipment finance 119,709 116,690 Residential mortgage 407,021 377,380 Home equity and consumer 277,604 302,598 Total $ 5,880,802 $ 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 $13.5 million at September 30, 2021 and $16.0 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 $7.7 million at September 30, 2021 and $10.0 million at December 31, 2020. At September 30, 2021 and December 31, 2020, Small Business Association ("SBA") Paycheck Protection Program ("PPP") loans totaled $109.3 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 $188,000 and $650,000, at September 30, 2021 and December 31, 2020, respectively. At September 30, 2021 and December 31, 2020, the Company had $2.29 billion and $2.28 billion of loans pledged for potential borrowings at the Federal Home Loan Bank of New York ("FHLB"). The Company transferred approximately $21.7 million of commercial and residential mortgage loans from the loan portfolio to loans held for sale during the nine months ended September 30, 2021 and subsequently sold these loans. Excluding the loan transfers, there were no other sales of loans from the held for investment portfolio during the nine months ended September 30, 2021. 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 September 30, 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 $ 231,072 $ 527,479 $ 307,663 $ 191,755 $ 214,269 $ 612,630 $ 19,746 14 $ 2,104,628 Watch — — 25,434 11,811 4,673 37,995 — — 79,913 Special mention — 3,353 2,731 8,274 14,757 29,028 30 — 58,173 Substandard 98 894 336 2,657 8,112 45,826 — — 57,923 Total 231,170 531,726 336,164 214,497 241,811 725,479 19,776 14 2,300,637 Owner occupied commercial Pass 166,660 130,638 103,320 61,259 50,889 275,250 6,725 52 794,793 Watch — — 2,171 1,220 282 18,708 20 — 22,401 Special mention — — 2,152 13,615 100 24,679 — — 40,546 Substandard 5 — 18 2,647 1,311 22,423 — — 26,404 Total 166,665 130,638 107,661 78,741 52,582 341,060 6,745 52 884,144 Multifamily Pass 141,957 250,242 73,107 87,035 76,472 228,609 10,289 302 868,013 Watch — 970 — — 872 7,174 — — 9,016 Special mention — 12,115 — — 2,391 4,310 — — 18,816 Substandard — — 5,484 1,325 — 5,049 200 — 12,058 Total 141,957 263,327 78,591 88,360 79,735 245,142 10,489 302 907,903 Non-owner occupied residential Pass 20,108 18,924 17,058 17,834 18,647 54,147 7,593 579 154,890 Watch — — — — 916 5,412 — — 6,328 Special mention — — 1,023 841 474 286 515 — 3,139 Substandard — 3,315 512 5,028 1,738 2,642 — — 13,235 Total 20,108 22,239 18,593 23,703 21,775 62,487 8,108 579 177,592 Commercial, industrial and other Pass 121,489 28,903 69,997 12,635 4,645 38,923 166,640 717 443,949 Watch 726 483 495 36 1,432 198 3,545 — 6,915 Special mention — — — 258 1,976 771 3,554 — 6,559 Substandard — 7,184 47 1,678 502 1,307 5,183 — 15,901 Total 122,215 36,570 70,539 14,607 8,555 41,199 178,922 717 473,324 Construction Pass 69,225 101,557 59,474 33,870 30,095 3,753 — — 297,974 Watch — — — 12,664 12,078 — — — 24,742 Special mention — — — — 10,152 — — — 10,152 Total 69,225 101,557 59,474 46,534 52,325 3,753 — — 332,868 Equipment finance Pass 37,254 33,204 31,374 12,228 4,304 1,107 — — 119,471 Substandard 156 — — 57 25 — — — 238 Total 37,410 33,204 31,374 12,285 4,329 1,107 — — 119,709 Term Loans by Origination Year (in thousands) 2021 2020 2019 2018 2017 Pre-2017 Revolving Loans Revolving to Term Total Residential mortgage Pass 118,452 116,567 28,856 26,376 9,946 106,566 — — 406,763 Substandard — — — 123 — 135 — — 258 Total 118,452 116,567 28,856 26,499 9,946 106,701 — — 407,021 Consumer Pass 24,133 12,093 6,199 5,276 3,445 27,531 197,703 220 276,600 Substandard 42 — — — 1 318 266 377 1,004 Total 24,175 12,093 6,199 5,276 3,446 27,849 197,969 597 277,604 Total loans $ 931,377 $ 1,247,921 $ 737,451 $ 510,502 $ 474,504 $ 1,554,777 $ 422,009 $ 2,261 $ 5,880,802 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 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 Term Loans by Origination Year (in thousands) 2020 2019 2018 2017 2016 Pre-2016 Revolving Loans Revolving to Term Total Equipment finance Pass 41,528 41,717 20,697 8,834 3,162 426 — — 116,364 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 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 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. September 30, 2021 Past Due (in thousands) Current 30 - 59 Days 60 - 89 Days Greater than 89 days Total Total Loans Non-owner occupied commercial $ 2,295,310 $ 336 $ 432 $ 4,559 $ 5,327 $ 2,300,637 Owner occupied commercial 878,881 616 263 4,384 5,263 884,144 Multifamily 904,961 2,942 — — 2,942 907,903 Non-owner occupied residential 174,412 102 2,156 922 3,180 177,592 Commercial, industrial and other 471,628 595 — 1,101 1,696 473,324 Construction 332,868 — — — — 332,868 Equipment finance 119,439 44 156 70 270 119,709 Residential mortgage 406,091 807 — 123 930 407,021 Consumer 276,610 563 54 377 994 277,604 Total $ 5,860,200 $ 6,005 $ 3,061 $ 11,536 $ 20,602 $ 5,880,802 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 at September 30, 2021 and December 31, 2020: September 30, 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 $ 4,748 $ — $ — $ 4,284 Owner occupied commercial 4,656 — — 4,221 Non-owner occupied residential 922 — — 523 Commercial, industrial and other 1,108 — — 477 Equipment finance 238 — — — Residential mortgage 123 — — — Consumer 453 — — — Total $ 12,248 $ — $ — $ 9,505 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 September 30, 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 no loans included in total non-accrual loans that were in the process of foreclosure at September 30, 2021 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 December 31, 2020. 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. The CARES Act provided relief from TDR classification for certain loan modifications related to the COVID-19 pandemic beginning March 1, 2020 through the earlier of 60 days after the end of the pandemic or December 31, 2020. Additionally, banking regulatory agencies issued interagency guidance that COVID-19 related short-term modifications (i.e., six months or less) granted to borrowers that were current as of the loan modification program implementation date do not need to be considered TDRs. The Consolidated Appropriations Act, 2021 (the "CAA"), which was signed into law on December 27, 2020, extended this guidance to modifications made until the earlier of January 1, 2022 or 60 days after the end of the COVID-19 national emergency. The Company elected this provision of the CARES Act and excluded modified loans that met the required guidelines for relief from its TDR classification. At September 30, 2021, no loans were on COVID-related deferrals as the remaining 90-day loan deferments expired and borrowers began paying their pre-deferral loan payments in the first quarter of 2021. For most commercial loans, borrowers are paying their pre-deferral loan payments plus an additional monthly amount to catch up on the payments that were deferred. None of these modifications were considered TDRs. At September 30, 2021 and December 31, 2020, TDRs totaled $3.7 million and $5.0 million, respectively. Accruing TDRs totaled $3.4 million and non-accrual TDRs totaled $241,000 at September 30, 2021. Accruing TDRs and non-accrual TDRs totaled $3.9 million and $1.1 million, respectively, at December 31, 2020. There was one consumer loan totaling $116,000 that was restructured during the three and nine months ended September 30, 2021 and that met the definition of a TDR, while no loans were restructured during the three and nine months ended September 30, 2020. There were no restructured loans that subsequently defaulted in the nine months ended September 30, 2021; however, one construction loan totaling $694,000 that was a TDR within the previous twelve months had subsequently defaulted in the nine months ended September 30, 2020. |