Loans and Leases | 9 Months Ended |
Sep. 30, 2013 |
Text Block [Abstract] | ' |
Loans and Leases | ' |
Note 7. Loans and Leases. |
The following sets forth the composition of Lakeland’s loan and lease portfolio as of September 30, 2013 and December 31, 2012: |
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| | September 30, | | | December 31, | | | | | | | | | | | | | | | | | | | | | |
2013 | 2012 | | | | | | | | | | | | | | | | | | | | |
| | (in thousands) | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 1,348,314 | | | $ | 1,125,137 | | | | | | | | | | | | | | | | | | | | | |
Commercial, industrial and other | | | 214,877 | | | | 216,129 | | | | | | | | | | | | | | | | | | | | | |
Leases | | | 37,845 | | | | 26,781 | | | | | | | | | | | | | | | | | | | | | |
Real estate-residential mortgage | | | 437,788 | | | | 423,262 | | | | | | | | | | | | | | | | | | | | | |
Real estate-construction | | | 50,121 | | | | 46,272 | | | | | | | | | | | | | | | | | | | | | |
Home equity and consumer | | | 339,805 | | | | 309,626 | | | | | | | | | | | | | | | | | | | | | |
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Total loans | | | 2,428,750 | | | | 2,147,207 | | | | | | | | | | | | | | | | | | | | | |
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Plus: deferred fees | | | (1,066 | ) | | | (364 | ) | | | | | | | | | | | | | | | | | | | | |
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Loans, net of deferred fees | | $ | 2,427,684 | | | $ | 2,146,843 | | | | | | | | | | | | | | | | | | | | | |
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At September 30, 2013 and December 31, 2012, home equity and consumer loans included overdraft deposit balances of $381,000 and $532,000, respectively. At September 30, 2013 and December 31, 2012, the Company had $273.3 million and $203.1 million in residential loans pledged for potential borrowings at the Federal Home Loan Bank of New York (FHLB). |
The carrying value of loans acquired and accounted for in accordance with ASC Subtopic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality,” was $1.6 million at September 30, 2013, which was substantially the same as the balance at the acquisition date of May 31, 2013. Under ASC Subtopic 310-30, loans may be aggregated and accounted for as pools of loans if the loans being aggregated have common risk characteristics. The Company elected to account for the loans with evidence of credit deterioration individually rather than aggregate them into pools. The difference between the undiscounted cash flows expected at acquisition and the investment in the acquired loans, or the “accretable yield,” is recognized as interest income utilizing the level-yield method over the life of each loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “non-accretable difference,” are not recognized as a yield adjustment, as a loss accrual or as a valuation allowance. |
Increases in expected cash flows subsequent to the acquisition are recognized prospectively through an adjustment of the yield on the loans over the remaining life, while decreases in expected cash flows are recognized as impairment through a loss provision and an increase in the allowance for loan losses. Valuation allowances (recognized in the allowance for loan losses) on these impaired loans reflect only losses incurred after the acquisition (representing all cash flows that were expected at acquisition but currently are not expected to be received). |
There were no material increases or decreases in the expected cash flows between May 31, 2013 (the “acquisition date”) and September 30, 2013. The Company recognized $43,000 of interest income on the loans acquired. |
Non-Performing Assets and Past Due Loans |
The following schedule sets forth certain information regarding the Company’s non-performing assets and its accruing troubled debt restructurings: |
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| | September 30, | | | December 31, | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | 2013 | | | 2012 | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 6,585 | | | $ | 10,511 | | | | | | | | | | | | | | | | | | | | | |
Commercial, industrial and other | | | 184 | | | | 1,476 | | | | | | | | | | | | | | | | | | | | | |
Leases | | | — | | | | 32 | | | | | | | | | | | | | | | | | | | | | |
Real estate—residential mortgage | | | 5,996 | | | | 8,733 | | | | | | | | | | | | | | | | | | | | | |
Real estate—construction | | | 921 | | | | 4,031 | | | | | | | | | | | | | | | | | | | | | |
Home equity and consumer | | | 2,819 | | | | 3,197 | | | | | | | | | | | | | | | | | | | | | |
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Total non-accrual loans and leases | | $ | 16,505 | | | $ | 27,980 | | | | | | | | | | | | | | | | | | | | | |
Other real estate and other repossessed assets | | | 2,154 | | | | 529 | | | | | | | | | | | | | | | | | | | | | |
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TOTAL NON-PERFORMING ASSETS | | $ | 18,659 | | | $ | 28,509 | | | | | | | | | | | | | | | | | | | | | |
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Troubled debt restructurings, still accruing | | $ | 11,006 | | | $ | 7,336 | | | | | | | | | | | | | | | | | | | | | |
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Non-accrual loans included $2.3 million and $3.4 million of troubled debt restructurings as of September 30, 2013 and December 31, 2012, respectively. |
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An age analysis of past due loans, segregated by class of loans as of September 30, 2013 and December 31, 2012, is as follows: |
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| | 30-59 Days | | | 60-89 Days | | | Greater | | | Total Past | | | Current | | | Total | | | Recorded | |
Past Due | Past Due | Than | Due | Loans | Investment greater |
| | 89 Days | | and Leases | than 89 Days and |
| | | | | still accruing |
| | (in thousands) | |
September 30, 2013 | | | | |
Commercial, secured by real estate | | $ | 9,075 | | | $ | 3,783 | | | $ | 7,222 | | | $ | 20,080 | | | $ | 1,328,234 | | | $ | 1,348,314 | | | $ | 637 | |
Commercial, industrial and other | | | 191 | | | | 571 | | | | 192 | | | | 954 | | | | 213,923 | | | | 214,877 | | | | 8 | |
Leases | | | 12 | | | | — | | | | — | | | | 12 | | | | 37,833 | | | | 37,845 | | | | — | |
Real estate—residential mortgage | | | 3,261 | | | | 1,085 | | | | 6,942 | | | | 11,288 | | | | 426,500 | | | | 437,788 | | | | 946 | |
Real estate—construction | | | — | | | | — | | | | 921 | | | | 921 | | | | 49,200 | | | | 50,121 | | | | — | |
Home equity and consumer | | | 2,521 | | | | 694 | | | | 3,711 | | | | 6,926 | | | | 332,879 | | | | 339,805 | | | | 892 | |
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| | $ | 15,060 | | | $ | 6,133 | | | $ | 18,988 | | | $ | 40,181 | | | $ | 2,388,569 | | | $ | 2,428,750 | | | $ | 2,483 | |
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December 31, 2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 3,831 | | | $ | 2,308 | | | $ | 10,511 | | | $ | 16,650 | | | $ | 1,108,487 | | | $ | 1,125,137 | | | $ | — | |
Commercial, industrial and other | | | 400 | | | | 171 | | | | 1,476 | | | | 2,047 | | | | 214,082 | | | | 216,129 | | | | — | |
Leases | | | 367 | | | | 36 | | | | 32 | | | | 435 | | | | 26,346 | | | | 26,781 | | | | — | |
Real estate—residential mortgage | | | 2,370 | | | | 821 | | | | 10,012 | | | | 13,203 | | | | 410,059 | | | | 423,262 | | | | 1,279 | |
Real estate—construction | | | 1,100 | | | | — | | | | 4,031 | | | | 5,131 | | | | 41,141 | | | | 46,272 | | | | — | |
Home equity and consumer | | | 2,479 | | | | 363 | | | | 3,355 | | | | 6,197 | | | | 303,429 | | | | 309,626 | | | | 158 | |
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| | $ | 10,547 | | | $ | 3,699 | | | $ | 29,417 | | | $ | 43,663 | | | $ | 2,103,544 | | | $ | 2,147,207 | | | $ | 1,437 | |
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Impaired Loans |
Impaired loans as of September 30, 2013, September 30, 2012 and December 31, 2012 are as follows: |
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| | Recorded | | | Contractual | | | Specific | | | Interest | | | Average | | | | | | | | | |
Investment in | Unpaid | Allowance | Income | Investment in | | | | | | | | |
Impaired loans | Principal | | Recognized | Impaired loans | | | | | | | | |
| Balance | | | | | | | | | | | |
| | (in thousands) | | | | | | | | | |
September 30, 2013 | | | | | | | | | | | | |
Loans without specific allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 7,098 | | | $ | 7,352 | | | $ | — | | | $ | 137 | | | $ | 7,663 | | | | | | | | | |
Commercial, industrial and other | | | 4,037 | | | | 4,002 | | | | — | | | | 142 | | | | 4,428 | | | | | | | | | |
Real estate-residential mortgage | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Real estate-construction | | | — | | | | — | | | | — | | | | — | | | | 1,328 | | | | | | | | | |
Home equity and consumer | | | 18 | | | | 18 | | | | — | | | | 1 | | | | 18 | | | | | | | | | |
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Loans with specific allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | | 11,769 | | | | 12,890 | | | | 1,044 | | | | 298 | | | | 11,024 | | | | | | | | | |
Commercial, industrial and other | | | 388 | | | | 498 | | | | 78 | | | | 6 | | | | 659 | | | | | | | | | |
Real estate-residential mortgage | | | 479 | | | | 479 | | | | 72 | | | | — | | | | 497 | | | | | | | | | |
Real estate-construction | | | 921 | | | | 3,015 | | | | 41 | | | | — | | | | 1,307 | | | | | | | | | |
Home equity and consumer | | | 1,351 | | | | 1,351 | | | | 203 | | | | 33 | | | | 1,292 | | | | | | | | | |
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Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 18,867 | | | $ | 20,242 | | | $ | 1,044 | | | $ | 435 | | | $ | 18,687 | | | | | | | | | |
Commercial, industrial and other | | | 4,425 | | | | 4,500 | | | | 78 | | | | 148 | | | | 5,087 | | | | | | | | | |
Real estate—residential mortgage | | | 479 | | | | 479 | | | | 72 | | | | — | | | | 497 | | | | | | | | | |
Real estate-construction | | | 921 | | | | 3,015 | | | | 41 | | | | — | | | | 2,635 | | | | | | | | | |
Home equity and consumer | | | 1,369 | | | | 1,369 | | | | 203 | | | | 34 | | | | 1,310 | | | | | | | | | |
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| | $ | 26,061 | | | $ | 29,605 | | | $ | 1,438 | | | $ | 617 | | | $ | 28,216 | | | | | | | | | |
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| | Recorded | | | Contractual | | | Specific | | | Interest | | | Average | | | | | | | | | |
Investment in | Unpaid | Allowance | Income | Investment in | | | | | | | | |
Impaired loans | Principal | | Recognized | Impaired loans | | | | | | | | |
| Balance | | | | | | | | | | | |
| | (in thousands) | | | | | | | | | |
September 30, 2012 | | | | | | | | | | | | |
Loans without specific allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 14,263 | | | $ | 18,253 | | | $ | — | | | $ | 260 | | | $ | 15,605 | | | | | | | | | |
Commercial, industrial and other | | | 4,927 | | | | 4,938 | | | | — | | | | 67 | | | | 3,555 | | | | | | | | | |
Real estate-residential mortgage | | | 366 | | | | 366 | | | | — | | | | 6 | | | | 386 | | | | | | | | | |
Real estate-construction | | | 3,977 | | | | 4,606 | | | | — | | | | — | | | | 7,611 | | | | | | | | | |
Home equity and consumer | | | 350 | | | | 350 | | | | — | | | | — | | | | 337 | | | | | | | | | |
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Loans with specific allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | | 3,127 | | | | 3,895 | | | | 313 | | | | 45 | | | | 4,389 | | | | | | | | | |
Commercial, industrial and other | | | 787 | | | | 902 | | | | 216 | | | | — | | | | 641 | | | | | | | | | |
Real estate-residential mortgage | | | 288 | | | | 288 | | | | 43 | | | | 4 | | | | 384 | | | | | | | | | |
Real estate-construction | | | 120 | | | | 997 | | | | 12 | | | | — | | | | 331 | | | | | | | | | |
Home equity and consumer | | | 946 | | | | 946 | | | | 142 | | | | 36 | | | | 946 | | | | | | | | | |
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Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 17,390 | | | $ | 22,148 | | | $ | 313 | | | $ | 305 | | | $ | 19,994 | | | | | | | | | |
Commercial, industrial and other | | | 5,714 | | | | 5,840 | | | | 216 | | | | 67 | | | | 4,196 | | | | | | | | | |
Real estate—residential mortgage | | | 654 | | | | 654 | | | | 43 | | | | 10 | | | | 770 | | | | | | | | | |
Real estate-construction | | | 4,097 | | | | 5,603 | | | | 12 | | | | — | | | | 7,942 | | | | | | | | | |
Home equity and consumer | | | 1,296 | | | | 1,296 | | | | 142 | | | | 36 | | | | 1,283 | | | | | | | | | |
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| | $ | 29,151 | | | $ | 35,541 | | | $ | 726 | | | $ | 418 | | | $ | 34,185 | | | | | | | | | |
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| | Recorded | | | Contractual | | | Specific | | | Interest | | | Average | | | | | | | | | |
Investment in | Unpaid | Allowance | Income | Investment in | | | | | | | | |
Impaired loans | Principal | | Recognized | Impaired loans | | | | | | | | |
| Balance | | | | | | | | | | | |
| | (in thousands) | | | | | | | | | |
December 31, 2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans without specific allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 16,458 | | | $ | 21,665 | | | $ | — | | | $ | 495 | | | $ | 18,301 | | | | | | | | | |
Commercial, industrial and other | | | 4,896 | | | | 4,932 | | | | — | | | | 116 | | | | 3,838 | | | | | | | | | |
Real estate-residential mortgage | | | 360 | | | | 360 | | | | — | | | | 6 | | | | 385 | | | | | | | | | |
Real estate-construction | | | 3,332 | | | | 4,433 | | | | — | | | | — | | | | 5,533 | | | | | | | | | |
Home equity and consumer | | | 369 | | | | 369 | | | | — | | | | 1 | | | | 360 | | | | | | | | | |
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Loans with specific allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | | 3,346 | | | | 4,088 | | | | 368 | | | | 46 | | | | 3,825 | | | | | | | | | |
Commercial, industrial and other | | | 808 | | | | 871 | | | | 219 | | | | 1 | | | | 769 | | | | | | | | | |
Real estate-residential mortgage | | | 288 | | | | 288 | | | | 43 | | | | 4 | | | | 374 | | | | | | | | | |
Real estate-construction | | | 698 | | | | 1,085 | | | | 97 | | | | — | | | | 1,445 | | | | | | | | | |
Home equity and consumer | | | 976 | | | | 976 | | | | 146 | | | | 55 | | | | 934 | | | | | | | | | |
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Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 19,804 | | | $ | 25,753 | | | $ | 368 | | | $ | 541 | | | $ | 22,126 | | | | | | | | | |
Commercial, industrial and other | | | 5,704 | | | | 5,803 | | | | 219 | | | | 117 | | | | 4,607 | | | | | | | | | |
Real estate—residential mortgage | | | 648 | | | | 648 | | | | 43 | | | | 10 | | | | 759 | | | | | | | | | |
Real estate-construction | | | 4,030 | | | | 5,518 | | | | 97 | | | | — | | | | 6,978 | | | | | | | | | |
Home equity and consumer | | | 1,345 | | | | 1,345 | | | | 146 | | | | 56 | | | | 1,294 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 31,531 | | | $ | 39,067 | | | $ | 873 | | | $ | 724 | | | $ | 35,764 | | | | | | | | | |
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Interest that would have been accrued on impaired loans during the first nine months of 2013 and 2012 had the loans been performing under original terms would have been $1.7 million and $2.1 million, respectively. Interest that would have accrued for the year ended December 31, 2012 was $2.8 million. |
Credit Quality Indicators |
The primary credit quality indicator is an internal risk rating whereby management closely and continually monitors the quality of its loans and leases and assesses the quantitative and qualitative risks arising from the credit quality of its loans and leases. It is the policy of Lakeland to require that a Credit Risk Rating be assigned to all commercial 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 Lakeland’s loan portfolios. The risk rating system assists Senior Management in evaluating Lakeland’s commercial loan portfolio, analyzing trends, and determining the proper level of required reserves to be recommended to the Board. In assigning risk ratings, management considers, among other things, a borrower’s debt service coverage, earnings strength, loan to value ratios, industry conditions and economic conditions. Management categorizes loans and commitments into a one (1) to nine (9) numerical structure with rating 1 being the strongest rating and rating 9 being the weakest. Ratings 1 through 5W are considered ‘Pass’ ratings. |
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The following table shows the Company’s commercial loan portfolio as of September 30, 2013 and December 31, 2012, by the risk ratings discussed above (in thousands): |
September 30, 2013 |
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Risk Rating | | Commercial, | | | Commercial, | | | Real estate- | | | | | | | | | | | | | | | | | |
secured by | industrial | construction | | | | | | | | | | | | | | | | |
real estate | and other | | | | | | | | | | | | | | | | | |
1 | | $ | — | | | $ | 774 | | | $ | — | | | | | | | | | | | | | | | | | |
2 | | | — | | | | 16,089 | | | | — | | | | | | | | | | | | | | | | | |
3 | | | 71,453 | | | | 9,822 | | | | — | | | | | | | | | | | | | | | | | |
4 | | | 420,190 | | | | 57,793 | | | | — | | | | | | | | | | | | | | | | | |
5 | | | 733,677 | | | | 87,859 | | | | 46,515 | | | | | | | | | | | | | | | | | |
5W—Watch | | | 38,488 | | | | 11,150 | | | | — | | | | | | | | | | | | | | | | | |
6—Other Assets Especially Mentioned | | | 28,003 | | | | 8,730 | | | | 2,639 | | | | | | | | | | | | | | | | | |
7—Substandard | | | 56,418 | | | | 22,660 | | | | 967 | | | | | | | | | | | | | | | | | |
8—Doubtful | | | 85 | | | | — | | | | — | | | | | | | | | | | | | | | | | |
9—Loss | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,348,314 | | | $ | 214,877 | | | $ | 50,121 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
December 31, 2012 |
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Risk Rating | | Commercial, | | | Commercial, | | | Real estate- | | | | | | | | | | | | | | | | | |
secured by | industrial | construction | | | | | | | | | | | | | | | | |
real estate | and other | | | | | | | | | | | | | | | | | |
1 | | $ | — | | | $ | 996 | | | $ | — | | | | | | | | | | | | | | | | | |
2 | | | — | | | | 12,899 | | | | — | | | | | | | | | | | | | | | | | |
3 | | | 44,448 | | | | 15,676 | | | | — | | | | | | | | | | | | | | | | | |
4 | | | 350,145 | | | | 62,676 | | | | 795 | | | | | | | | | | | | | | | | | |
5 | | | 623,912 | | | | 88,033 | | | | 34,682 | | | | | | | | | | | | | | | | | |
5W—Watch | | | 43,515 | | | | 13,261 | | | | — | | | | | | | | | | | | | | | | | |
6—Other Assets Especially Mentioned | | | 21,132 | | | | 2,845 | | | | 6,535 | | | | | | | | | | | | | | | | | |
7—Substandard | | | 41,817 | | | | 19,743 | | | | 4,260 | | | | | | | | | | | | | | | | | |
8—Doubtful | | | 168 | | | | — | | | | — | | | | | | | | | | | | | | | | | |
9—Loss | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,125,137 | | | $ | 216,129 | | | $ | 46,272 | | | | | | | | | | | | | | | | | |
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The risk rating tables above do not include consumer or residential loans or leases because the evaluation of their primary credit quality indicator is based on the loans’ payment performance status. |
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Allowance for Loan and Lease Losses |
The following table details activity in the allowance for loan and lease losses by portfolio segment and the related recorded investment in loans and leases for the nine months ended September 30, 2013 and the year ended December 31, 2012: |
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Nine Months Ended September 30, 2013 | | Commercial, | | | Commercial, | | | Leases | | | Real estate- | | | Real estate- | | | Home | | | Total | |
Allowance for Loan and Lease Losses: | secured by | industrial | residential | construction | equity and |
| real estate | and other | mortgage | | consumer |
| | (in thousands) | |
Beginning Balance | | $ | 16,258 | | | $ | 5,103 | | | $ | 578 | | | $ | 3,568 | | | $ | 587 | | | $ | 2,837 | | | $ | 28,931 | |
Charge-offs | | | (1,192 | ) | | | (1,103 | ) | | | (206 | ) | | | (903 | ) | | | (3,652 | ) | | | (1,252 | ) | | ($ | 8,308 | ) |
Recoveries | | | 955 | | | | 139 | | | | 119 | | | | 97 | | | | 12 | | | | 156 | | | $ | 1,478 | |
Provision | | | 1,684 | | | | 971 | | | | 17 | | | | 423 | | | | 3,431 | | | | 1,130 | | | $ | 7,656 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 17,705 | | | $ | 5,110 | | | $ | 508 | | | $ | 3,185 | | | $ | 378 | | | $ | 2,871 | | | $ | 29,757 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance: Individually evaluated for impairment | | $ | 1,044 | | | $ | 78 | | | $ | — | | | $ | 72 | | | $ | 41 | | | $ | 203 | | | $ | 1,438 | |
Ending Balance: Collectively evaluated for impairment | | | 16,661 | | | | 5,032 | | | | 508 | | | | 3,113 | | | | 337 | | | | 2,668 | | | $ | 28,319 | |
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Ending Balance: Loans acquired with deteriorated credit quality | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 17,705 | | | $ | 5,110 | | | $ | 508 | | | $ | 3,185 | | | $ | 378 | | | $ | 2,871 | | | $ | 29,757 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans and Leases: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance: Individually evaluated for impairment | | $ | 18,867 | | | $ | 4,425 | | | $ | — | | | $ | 479 | | | $ | 921 | | | $ | 1,369 | | | $ | 26,061 | |
Ending Balance: Collectively evaluated for impairment | | | 1,328,185 | | | | 210,452 | | | | 37,845 | | | | 437,309 | | | | 49,200 | | | | 338,066 | | | $ | 2,401,057 | |
Ending Balance: Loans acquired with deteriorated credit quality | | | 1,262 | | | | — | | | | — | | | | — | | | | — | | | | 370 | | | $ | 1,632 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance (1) | | $ | 1,348,314 | | | $ | 214,877 | | | $ | 37,845 | | | $ | 437,788 | | | $ | 50,121 | | | $ | 339,805 | | | $ | 2,428,750 | |
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-1 | Excludes deferred fees | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Year Ended December 31, 2012 | | Commercial, | | | Commercial, | | | Leases | | | Real estate- | | | Real estate- | | | Home | | | Total | |
Allowance for Loan and Lease Losses: | secured by | industrial | residential | construction | equity and |
| real estate | and other | mortgage | | consumer |
| | (in thousands) | |
Beginning Balance | | $ | 16,618 | | | $ | 3,477 | | | $ | 688 | | | $ | 3,077 | | | $ | 1,424 | | | $ | 3,132 | | | $ | 28,416 | |
Charge-offs | | | (7,287 | ) | | | (949 | ) | | | (999 | ) | | | (1,822 | ) | | | (2,888 | ) | | | (2,074 | ) | | ($ | 16,019 | ) |
Recoveries | | | 280 | | | | 428 | | | | 504 | | | | 66 | | | | 43 | | | | 306 | | | $ | 1,627 | |
Provision | | | 6,647 | | | | 2,147 | | | | 385 | | | | 2,247 | | | | 2,008 | | | | 1,473 | | | $ | 14,907 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 16,258 | | | $ | 5,103 | | | $ | 578 | | | $ | 3,568 | | | $ | 587 | | | $ | 2,837 | | | $ | 28,931 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance: Individually evaluated for impairment | | $ | 368 | | | $ | 219 | | | $ | — | | | $ | 43 | | | $ | 97 | | | $ | 146 | | | $ | 873 | |
Ending Balance: Collectively evaluated for impairment | | | 15,890 | | | | 4,884 | | | | 578 | | | | 3,525 | | | | 490 | | | | 2,691 | | | $ | 28,058 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 16,258 | | | $ | 5,103 | | | $ | 578 | | | $ | 3,568 | | | $ | 587 | | | $ | 2,837 | | | $ | 28,931 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans and Leases: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance: Individually evaluated for impairment | | $ | 19,804 | | | $ | 5,704 | | | $ | — | | | $ | 648 | | | $ | 4,030 | | | $ | 1,345 | | | $ | 31,531 | |
Ending Balance: Collectively evaluated for impairment | | | 1,105,333 | | | | 210,425 | | | | 26,781 | | | | 422,614 | | | | 42,242 | | | | 308,281 | | | $ | 2,115,676 | |
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Ending Balance(1) | | $ | 1,125,137 | | | $ | 216,129 | | | $ | 26,781 | | | $ | 423,262 | | | $ | 46,272 | | | $ | 309,626 | | | $ | 2,147,207 | |
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-1 | Excludes deferred fees | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Lakeland also maintains a reserve for unfunded lending commitments which are included in other liabilities. This reserve was $1.1 million both at September 30, 2013 and December 31, 2012. The Company analyzes the adequacy of the reserve for unfunded lending commitments in conjunction with its analysis of the adequacy of the allowance for loan and lease losses. For more information on this analysis, see “Risk Elements” in Management’s Discussion and Analysis. |
Troubled Debt Restructurings |
Troubled debt restructurings are those loans where concessions have been made due to borrowers’ financial difficulties. 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 Company considers the potential losses on these loans as well as the remainder of its impaired loans while considering the adequacy of the allowance for loan and lease losses. |
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The following tables summarize loans that have been restructured during the three and nine months ended September 30, 2013 and 2012: |
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| | For the Three Months Ended | | | For the Three Months Ended | | | | | |
| | September 30, 2013 | | | September 30, 2012 | | | | | |
| | Number of | | | Pre- | | | Post- | | | Number of | | | Pre- | | | Post- | | | | | |
Contracts | Modification | Modification | Contracts | Modification | Modification | | | | |
| Outstanding | Outstanding | | Outstanding | Outstanding | | | | |
| Recorded | Recorded | | Recorded | Recorded | | | | |
| Investment | Investment | | Investment | Investment | | | | |
| | (Dollars in thousands) | | | (Dollars in thousands) | | | | | |
Troubled Debt Restructurings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | | — | | | $ | — | | | $ | — | | | | 3 | | | $ | 521 | | | $ | 432 | | | | | |
Commercial, industrial and other | | | — | | | | — | | | | — | | | | 2 | | | | 56 | | | | 52 | | | | | |
Leases | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Real estate—residential mortgage | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Real estate—construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Home equity and consumer | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | — | | | $ | — | | | $ | — | | | | 5 | | | $ | 577 | | | $ | 484 | | | | | |
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| | For the Nine Months Ended | | | For the Nine Months Ended | | | | | |
| | September 30, 2013 | | | September 30, 2012 | | | | | |
| | Number of | | | Pre- | | | Post- | | | Number of | | | Pre- | | | Post- | | | | | |
Contracts | Modification | Modification | Contracts | Modification | Modification | | | | |
| Outstanding | Outstanding | | Outstanding | Outstanding | | | | |
| Recorded | Recorded | | Recorded | Recorded | | | | |
| Investment | Investment | | Investment | Investment | | | | |
| | (Dollars in thousands) | | | (Dollars in thousands) | | | | | |
Troubled Debt Restructurings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | | 11 | | | $ | 5,472 | | | $ | 5,468 | | | | 8 | | | $ | 1,524 | | | $ | 1,407 | | | | | |
Commercial, industrial and other | | | 1 | | | | 127 | | | | 125 | | | | 4 | | | | 4,231 | | | | 4,218 | | | | | |
Leases | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Real estate—residential mortgage | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Real estate—construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Home equity and consumer | | | 1 | | | | 11 | | | | 11 | | | | — | | | | — | | | | — | | | | | |
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| | | 13 | | | $ | 5,610 | | | $ | 5,604 | | | | 12 | | | $ | 5,755 | | | $ | 5,625 | | | | | |
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The following table summarizes as of September 30, 2013 and 2012, loans that were restructured within the last 12 months that have subsequently defaulted: |
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| | For the Nine Months Ended | | | | | | | | | | | | | |
| | September 30, 2013 | | | September 30, 2012 | | | | | | | | | | | | | |
| | Number of | | | Recorded | | | Number of | | | Recorded | | | | | | | | | | | | | |
Contracts | Investment | Contracts | Investment | | | | | | | | | | | | |
| | (Dollars in thousands) | | | (Dollars in thousands) | | | | | | | | | | | | | |
Defaulted Troubled Debt Restructurings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | | 5 | | | $ | 3,084 | | | | 2 | | | $ | 267 | | | | | | | | | | | | | |
Commercial, industrial and other | | | — | | | | — | | | | 1 | | | | 62 | | | | | | | | | | | | | |
Leases | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Real estate—residential mortgage | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Real estate—construction | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Home equity and consumer | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
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| | | 5 | | | $ | 3,084 | | | | 3 | | | $ | 329 | | | | | | | | | | | | | |
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Mortgages Held for Sale |
Residential mortgages originated by the bank and held for sale in the secondary market are carried at the lower of cost or fair market value. Fair value is generally determined by the value of purchase commitments. Losses are recorded as a valuation allowance and charged to earnings. As of September 30, 2013, the Company had $901,000 in mortgages held for sale. |
Leases |
Lakeland had no leases held for sale as of September 30, 2013 and December 31, 2012. The following table shows the components of gains on leasing related assets for the periods presented: |
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| | For the Three Months Ended | | | For the Nine Months Ended | | | | | | | | | | | | | |
| | September 30, | | | September 30, | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | | | | | | | | | | | | | |
| | (in thousands) | | | (in thousands) | | | | | | | | | | | | | |
Gains (losses) on sales of leases | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | | | | | | | | | | | |
Realized gains on paid off leases | | | 20 | | | | 92 | | | | 51 | | | | 365 | | | | | | | | | | | | | |
Gains on other repossessed assets | | | — | | | | 8 | | | | 12 | | | | 38 | | | | | | | | | | | | | |
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Total gains on leasing related assets | | $ | 20 | | | $ | 100 | | | $ | 63 | | | $ | 403 | | | | | | | | | | | | | |
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Other Real Estate and Other Repossessed Assets |
At September 30, 2013, the Company had other repossessed assets and other real estate owned of $44,000 and $2.1 million, respectively. At December 31, 2012, the Company had other repossessed assets and other real estate owned of $77,000 and $452,000, respectively. |