Loans, Leases and Other Real Estate | 9 Months Ended |
Sep. 30, 2014 |
Debt Disclosure [Abstract] | ' |
Loans, Leases and Other Real Estate | ' |
Note 8. Loans, Leases and Other Real Estate. |
The following sets forth the composition of Lakeland’s loan and lease portfolio as of September 30, 2014 and December 31, 2013: |
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| | September 30, | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | |
2014 | 2013 | | | | | | | | | | | | | | | | | | | | | | | | |
| | (in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 1,489,219 | | | $ | 1,389,861 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, industrial and other | | | 231,961 | | | | 213,808 | | | | | | | | | | | | | | | | | | | | | | | | | |
Leases | | | 52,285 | | | | 41,332 | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate-residential mortgage | | | 431,477 | | | | 432,831 | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate-construction | | | 67,949 | | | | 53,119 | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity and consumer | | | 340,513 | | | | 339,338 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total loans | | | 2,613,404 | | | | 2,470,289 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Less: deferred fees | | | (1,639 | ) | | | (1,273 | ) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans, net of deferred fees | | $ | 2,611,765 | | | $ | 2,469,016 | | | | | | | | | | | | | | | | | | | | | | | | | |
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At September 30, 2014 and December 31, 2013, home equity and consumer loans included overdraft deposit balances of $652,000 and $590,000, respectively. At September 30, 2014 and December 31, 2013, the Company had $348.6 million and $263.1 million in residential loans pledged for potential borrowings at the Federal Home Loan Bank of New York (FHLB). |
Purchased Credit-Impaired (“PCI”) loans, are loans acquired at a discount that is due, in part, to credit quality. In conjunction with the Somerset Hills acquisition, three loans totaling $1.6 million were deemed to be PCI loans at May 31, 2013 (the “acquisition date”). PCI loans are accounted for in accordance with ASC Subtopic 310-30 and are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance (i.e., allowance for loan losses). For more information, see Note 2 – Acquisitions. |
Subsequent to the acquisition date, one PCI loan for $149,000 was paid in full in the first quarter of 2014. There was credit deterioration in the remaining two loans. One loan totaling $250,000 was charged off in the third quarter of 2014. The remaining loan at a balance $1.3 million is being evaluated for impairment with the remainder of the Company’s impaired loans. |
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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(in thousands) | | September 30, | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | |
2014 | 2013 | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 8,361 | | | $ | 7,697 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, industrial and other | | | 599 | | | | 88 | | | | | | | | | | | | | | | | | | | | | | | | | |
Leases | | | 141 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate—residential mortgage | | | 7,221 | | | | 6,141 | | | | | | | | | | | | | | | | | | | | | | | | | |
Real estate—construction | | | 188 | | | | 831 | | | | | | | | | | | | | | | | | | | | | | | | | |
Home equity and consumer | | | 2,114 | | | | 2,175 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total non-accrual loans and leases | | $ | 18,624 | | | $ | 16,932 | | | | | | | | | | | | | | | | | | | | | | | | | |
Other real estate and other repossessed assets | | | 982 | | | | 520 | | | | | | | | | | | | | | | | | | | | | | | | | |
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TOTAL NON-PERFORMING ASSETS | | $ | 19,606 | | | $ | 17,452 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Troubled debt restructurings, still accruing | | $ | 7,957 | | | $ | 10,289 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Non-accrual loans included $1.3 million and $2.3 million of troubled debt restructurings as of September 30, 2014 and December 31, 2013, respectively. |
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An age analysis of past due loans, segregated by class of loans as of September 30, 2014 and December 31, 2013, is as follows: |
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| | | | | | | | | | | | | | | | | | | | Recorded | | | | | |
| | | | | | | | Greater | | | | | | | | | Total | | | Investment greater | | | | | |
| | 30-59 Days | | | 60-89 Days | | | Than | | | Total | | | | | | Loans | | | than 89 Days and | | | | | |
September 30, 2014 | | Past Due | | | Past Due | | | 89 Days | | | Past Due | | | Current | | | and Leases | | | still accruing | | | | | |
| | (in thousands) | | | | | |
Commercial, secured by real estate | | $ | 2,759 | | | $ | 3,698 | | | $ | 7,227 | | | $ | 13,684 | | | $ | 1,475,535 | | | $ | 1,489,219 | | | $ | — | | | | | |
Commercial, industrial and other | | | 808 | | | | 601 | | | | 523 | | | | 1,932 | | | | 230,029 | | | | 231,961 | | | | — | | | | | |
Leases | | | 133 | | | | 92 | | | | 141 | | | | 366 | | | | 51,919 | | | | 52,285 | | | | — | | | | | |
Real estate—residential mortgage | | | 3,184 | | | | 2,192 | | | | 6,787 | | | | 12,163 | | | | 419,314 | | | | 431,477 | | | | 27 | | | | | |
Real estate—construction | | | — | | | | — | | | | 189 | | | | 189 | | | | 67,760 | | | | 67,949 | | | | — | | | | | |
Home equity and consumer | | | 3,191 | | | | 216 | | | | 2,375 | | | | 5,782 | | | | 334,731 | | | | 340,513 | | | | 402 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 10,075 | | | $ | 6,799 | | | $ | 17,242 | | | $ | 34,116 | | | $ | 2,579,288 | | | $ | 2,613,404 | | | $ | 429 | | | | | |
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December 31, 2013 | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 7,355 | | | $ | 5,438 | | | $ | 6,059 | | | $ | 18,852 | | | $ | 1,371,009 | | | $ | 1,389,861 | | | $ | 697 | | | | | |
Commercial, industrial and other | | | 482 | | | | 159 | | | | 20 | | | | 661 | | | | 213,147 | | | | 213,808 | | | | — | | | | | |
Leases | | | 77 | | | | 179 | | | | — | | | | 256 | | | | 41,076 | | | | 41,332 | | | | — | | | | | |
Real estate—residential mortgage | | | 5,792 | | | | 1,306 | | | | 5,365 | | | | 12,463 | | | | 420,368 | | | | 432,831 | | | | 414 | | | | | |
Real estate—construction | | | — | | | | — | | | | 831 | | | | 831 | | | | 52,288 | | | | 53,119 | | | | — | | | | | |
Home equity and consumer | | | 1,776 | | | | 533 | | | | 2,884 | | | | 5,193 | | | | 334,145 | | | | 339,338 | | | | 886 | | | | | |
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| | $ | 15,482 | | | $ | 7,615 | | | $ | 15,159 | | | $ | 38,256 | | | $ | 2,432,033 | | | $ | 2,470,289 | | | $ | 1,997 | | | | | |
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Impaired Loans |
The Company defines impaired loans as all non-accrual commercial real estate, commercial, industrial and other, and commercial real estate construction loans with recorded investments of $500,000 or greater. Impaired loans also includes all loans modified in troubled debt restructurings. Impaired loans as of September 30, 2014, September 30, 2013 and December 31, 2013 are as follows: |
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| | | | | Contractual | | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Unpaid | | | | | | Interest | | | Average | | | | | | | | | | | | | |
| | Investment in | | | Principal | | | Specific | | | Income | | | Investment in | | | | | | | | | | | | | |
September 30, 2014 | | Impaired loans | | | Balance | | | Allowance | | | Recognized | | | Impaired loans | | | | | | | | | | | | | |
| | (in thousands) | | | | | | | | | | | | | |
Loans without specific allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 15,393 | | | $ | 16,047 | | | $ | — | | | $ | 318 | | | $ | 15,899 | | | | | | | | | | | | | |
Commercial, industrial and other | | | 416 | | | | 920 | | | | — | | | | 43 | | | | 1,446 | | | | | | | | | | | | | |
Real estate-residential mortgage | | | 252 | | | | 252 | | | | — | | | | — | | | | 275 | | | | | | | | | | | | | |
Real estate-construction | | | 189 | | | | 189 | | | | — | | | | — | | | | 411 | | | | | | | | | | | | | |
Home equity and consumer | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Loans with specific allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | | 3,301 | | | | 3,771 | | | | 219 | | | | 119 | | | | 3,875 | | | | | | | | | | | | | |
Commercial, industrial and other | | | 149 | | | | 149 | | | | 12 | | | | 5 | | | | 170 | | | | | | | | | | | | | |
Real estate-residential mortgage | | | 1,211 | | | | 1,013 | | | | 171 | | | | 6 | | | | 170 | | | | | | | | | | | | | |
Real estate-construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Home equity and consumer | | | 1,326 | | | | 1,326 | | | | 686 | | | | 36 | | | | 1,044 | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 18,694 | | | $ | 19,818 | | | $ | 219 | | | $ | 437 | | | $ | 19,774 | | | | | | | | | | | | | |
Commercial, industrial and other | | | 565 | | | | 1,069 | | | | 12 | | | | 48 | | | | 1,616 | | | | | | | | | | | | | |
Real estate—residential mortgage | | | 1,463 | | | | 1,265 | | | | 171 | | | | 6 | | | | 445 | | | | | | | | | | | | | |
Real estate-construction | | | 189 | | | | 189 | | | | — | | | | — | | | | 411 | | | | | | | | | | | | | |
Home equity and consumer | | | 1,326 | | | | 1,326 | | | | 686 | | | | 36 | | | | 1,044 | | | | | | | | | | | | | |
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| | $ | 22,237 | | | $ | 23,667 | | | $ | 1,088 | | | $ | 527 | | | $ | 23,290 | | | | | | | | | | | | | |
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| | | | | Contractual | | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Unpaid | | | | | | Interest | | | Average | | | | | | | | | | | | | |
| | Investment in | | | Principal | | | Specific | | | Income | | | Investment in | | | | | | | | | | | | | |
September 30, 2013 | | Impaired loans | | | Balance | | | Allowance | | | Recognized | | | Impaired loans | | | | | | | | | | | | | |
| | (in thousands) | | | | | | | | | | | | | |
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 | | | | | | | | | | | | | |
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 | | | | | | | | | | | | | |
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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| | | | | Contractual | | | | | | | | | | | | | | | | | | | | | | |
| | Recorded | | | Unpaid | | | | | | Interest | | | Average | | | | | | | | | | | | | |
| | Investment in | | | Principal | | | Specific | | | Income | | | Investment in | | | | | | | | | | | | | |
December 31, 2013 | | Impaired loans | | | Balance | | | Allowance | | | Recognized | | | Impaired loans | | | | | | | | | | | | | |
| | (in thousands) | | | | | | | | | | | | | |
Loans without specific allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 8,223 | | | $ | 9,656 | | | $ | — | | | $ | 198 | | | $ | 8,853 | | | | | | | | | | | | | |
Commercial, industrial and other | | | 4,020 | | | | 4,118 | | | | — | | | | 189 | | | | 4,333 | | | | | | | | | | | | | |
Real estate-residential mortgage | | | 617 | | | | 672 | | | | — | | | | — | | | | 622 | | | | | | | | | | | | | |
Real estate-construction | | | 501 | | | | 2,411 | | | | — | | | | — | | | | 2,111 | | | | | | | | | | | | | |
Home equity and consumer | | | 17 | | | | 17 | | | | — | | | | 1 | | | | 17 | | | | | | | | | | | | | |
Loans with specific allowance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | | 10,152 | | | | 10,217 | | | | 739 | | | | 442 | | | | 9,727 | | | | | | | | | | | | | |
Commercial, industrial and other | | | 155 | | | | 155 | | | | 31 | | | | 5 | | | | 396 | | | | | | | | | | | | | |
Real estate-residential mortgage | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Real estate-construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Home equity and consumer | | | 934 | | | | 936 | | | | 140 | | | | 42 | | | | 907 | | | | | | | | | | | | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | $ | 18,375 | | | $ | 19,873 | | | $ | 739 | | | $ | 640 | | | $ | 18,580 | | | | | | | | | | | | | |
Commercial, industrial and other | | | 4,175 | | | | 4,273 | | | | 31 | | | | 194 | | | | 4,729 | | | | | | | | | | | | | |
Real estate—residential mortgage | | | 617 | | | | 672 | | | | — | | | | — | | | | 622 | | | | | | | | | | | | | |
Real estate-construction | | | 501 | | | | 2,411 | | | | — | | | | — | | | | 2,111 | | | | | | | | | | | | | |
Home equity and consumer | | | 951 | | | | 953 | | | | 140 | | | | 43 | | | | 924 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 24,619 | | | $ | 28,182 | | | $ | 910 | | | $ | 877 | | | $ | 26,966 | | | | | | | | | | | | | |
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Interest that would have been accrued on impaired loans during the first nine months of 2014 and 2013 had the loans been performing under original terms would have been $1.3 million and $1.7 million, respectively. Interest that would have accrued for the year ended December 31, 2013 was $2.2 million. |
Credit Quality Indicators |
The class of loans are determined by internal risk rating. 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 commercial 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, 2014 and December 31, 2013, by the risk ratings discussed above (in thousands): |
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September 30, 2014 | | Commercial, | | | Commercial, | | | Real estate- | | | | | | | | | | | | | | | | | | | | | |
| secured by | industrial | construction | | | | | | | | | | | | | | | | | | | | |
Risk Rating | real estate | and other | | | | | | | | | | | | | | | | | | | | | |
1 | | $ | — | | | $ | 913 | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
2 | | | — | | | | 10,126 | | | | — | | | | | | | | | | | | | | | | | | | | | |
3 | | | 69,582 | | | | 27,773 | | | | — | | | | | | | | | | | | | | | | | | | | | |
4 | | | 479,080 | | | | 83,989 | | | | 4,600 | | | | | | | | | | | | | | | | | | | | | |
5 | | | 824,573 | | | | 71,342 | | | | 60,383 | | | | | | | | | | | | | | | | | | | | | |
5W - Watch | | | 40,681 | | | | 15,224 | | | | — | | | | | | | | | | | | | | | | | | | | | |
6 - Other Assets Especially Mentioned | | | 29,563 | | | | 11,225 | | | | 1,239 | | | | | | | | | | | | | | | | | | | | | |
7 - Substandard | | | 45,740 | | | | 11,369 | | | | 1,727 | | | | | | | | | | | | | | | | | | | | | |
8 - Doubtful | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
9 - Loss | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,489,219 | | | $ | 231,961 | | | $ | 67,949 | | | | | | | | | | | | | | | | | | | | | |
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December 31, 2013 | | Commercial, | | | Commercial, | | | Real estate- | | | | | | | | | | | | | | | | | | | | | |
| secured by | industrial | construction | | | | | | | | | | | | | | | | | | | | |
Risk Rating | real estate | and other | | | | | | | | | | | | | | | | | | | | | |
1 | | $ | — | | | $ | 952 | | | $ | — | | | | | | | | | | | | | | | | | | | | | |
2 | | | — | | | | 12,964 | | | | — | | | | | | | | | | | | | | | | | | | | | |
3 | | | 70,811 | | | | 9,263 | | | | — | | | | | | | | | | | | | | | | | | | | | |
4 | | | 442,933 | | | | 60,002 | | | | 1,178 | | | | | | | | | | | | | | | | | | | | | |
5 | | | 754,275 | | | | 85,939 | | | | 48,243 | | | | | | | | | | | | | | | | | | | | | |
5W - Watch | | | 38,893 | | | | 12,278 | | | | — | | | | | | | | | | | | | | | | | | | | | |
6 - Other Assets Especially Mentioned | | | 27,640 | | | | 9,596 | | | | 1,245 | | | | | | | | | | | | | | | | | | | | | |
7 - Substandard | | | 55,309 | | | | 22,814 | | | | 2,453 | | | | | | | | | | | | | | | | | | | | | |
8 - Doubtful | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
9 - Loss | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 1,389,861 | | | $ | 213,808 | | | $ | 53,119 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The risk rating tables above do not include consumer or residential loans or leases because they are evaluated on their payment status. |
|
Allowance for Loan and Lease Losses |
The following table details activity in the allowance for loan and lease losses by portfolio segment for the three months ended September 30, 2014 and 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended September 30, 2014 | | Commercial, | | | Commercial, | | | Leases | | | Real estate- | | | Real estate- | | | Home | | | Unallocated | | | Total | |
secured by | industrial | residential | construction | equity and |
real estate | and other | mortgage | | consumer |
| | (in thousands) | | | | | | | | | | | | | | | | | | | | | | |
Beginning Balance | | $ | 14,042 | | | $ | 3,601 | | | $ | 654 | | | $ | 4,231 | | | $ | 536 | | | $ | 4,111 | | | $ | 2,691 | | | $ | 29,866 | |
Charge-offs | | | (134 | ) | | | (143 | ) | | | (229 | ) | | | (192 | ) | | | — | | | | (675 | ) | | | — | | | | (1,373 | ) |
Recoveries | | | 97 | | | | 215 | | | | — | | | | 3 | | | | 8 | | | | 37 | | | | — | | | | 360 | |
Provision | | | (714 | ) | | | (678 | ) | | | 403 | | | | 97 | | | | (36 | ) | | | 1,465 | | | | 657 | | | | 1,194 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 13,291 | | | $ | 2,995 | | | $ | 828 | | | $ | 4,139 | | | $ | 508 | | | $ | 4,938 | | | $ | 3,348 | | | $ | 30,047 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three 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 | | $ | 18,439 | | | $ | 5,120 | | | $ | 399 | | | $ | 3,121 | | | $ | 371 | | | $ | 2,176 | | | | 29,626 | | | | | |
Charge-offs | | | (378 | ) | | | (444 | ) | | | (34 | ) | | | (152 | ) | | | (1,250 | ) | | | (561 | ) | | | (2,819 | ) | | | | |
Recoveries | | | 875 | | | | 77 | | | | 12 | | | | 34 | | | | 5 | | | | 68 | | | | 1,071 | | | | | |
Provision | | | (1,231 | ) | | | 357 | | | | 131 | | | | 182 | | | | 1,252 | | | | 1,188 | | | | 1,879 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 17,705 | | | $ | 5,110 | | | $ | 508 | | | $ | 3,185 | | | $ | 378 | | | $ | 2,871 | | | $ | 29,757 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following table details activity in the allowance for loan and lease losses by portfolio segment for the nine months ended September 30, 2014 and 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2014 | | Commercial, | | | Commercial, | | | Leases | | | Real estate- | | | Real estate- | | | Home | | | Unallocated | | | Total | |
Allowance for Loan and Lease Losses: | secured by | industrial | residential | construction | equity and |
| real estate | and other | mortgage | | consumer |
| | (in thousands) | | | | | | | | | | | | | | | | | | | | | | |
Beginning Balance | | $ | 14,463 | | | $ | 5,331 | | | $ | 504 | | | $ | 3,214 | | | $ | 542 | | | $ | 2,737 | | | $ | 3,030 | | | $ | 29,821 | |
Charge-offs | | | (1,925 | ) | | | (755 | ) | | | (394 | ) | | | (701 | ) | | | (25 | ) | | | (1,759 | ) | | | — | | | | (5,559 | ) |
Recoveries | | | 451 | | | | 894 | | | | — | | | | 12 | | | | 9 | | | | 143 | | | | — | | | | 1,509 | |
Provision | | | 302 | | | | (2,475 | ) | | | 718 | | | | 1,614 | | | | (18 | ) | | | 3,817 | | | | 318 | | | | 4,276 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 13,291 | | | $ | 2,995 | | | $ | 828 | | | $ | 4,139 | | | $ | 508 | | | $ | 4,938 | | | $ | 3,348 | | | $ | 30,047 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable summarized by portfolio segment and impairment method are as follows: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At September 30, 2014 | | Commercial, | | | Commercial, | | | Leases | | | Real estate- | | | Real estate- | | | Home | | | Total | | | | | |
secured by | industrial | residential | construction | equity and | | | | |
real estate | and other | mortgage | | consumer | | | | |
| | (in thousands) | | | | | |
Ending Balance: Individually evaluated for impairment | | $ | 18,694 | | | $ | 565 | | | $ | — | | | $ | 1,463 | | | $ | 189 | | | $ | 1,326 | | | $ | 22,237 | | | | | |
Ending Balance: Collectively evaluated for impairment | | | 1,470,525 | | | | 231,396 | | | | 52,285 | | | | 430,014 | | | | 67,760 | | | | 339,187 | | | $ | 2,591,167 | | | | | |
Ending Balance: Loans acquired with deteriorated credit quality | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | $ | 0 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance (1) | | $ | 1,489,219 | | | $ | 231,961 | | | $ | 52,285 | | | $ | 431,477 | | | $ | 67,949 | | | $ | 340,513 | | | $ | 2,613,404 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
-1 | Excludes deferred fees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At December 31, 2013 | | Commercial, | | | Commercial, | | | Leases | | | Real estate- | | | Real estate- | | | Home | | | Total | | | | | |
secured by | industrial | residential | construction | equity and | | | | |
real estate | and other | mortgage | | consumer | | | | |
| | (in thousands) | | | | | |
Ending Balance: Individually evaluated for impairment | | $ | 18,375 | | | $ | 4,175 | | | $ | — | | | $ | 617 | | | $ | 501 | | | $ | 951 | | | $ | 24,619 | | | | | |
Ending Balance: Collectively evaluated for impairment | | | 1,371,486 | | | | 209,633 | | | | 41,332 | | | | 432,214 | | | | 52,618 | | | | 337,976 | | | $ | 2,445,259 | | | | | |
Ending Balance: Loans acquired with deteriorated credit quality | | | — | | | | — | | | | — | | | | — | | | | — | | | | 411 | | | $ | 411 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance(1) | | $ | 1,389,861 | | | $ | 213,808 | | | $ | 41,332 | | | $ | 432,831 | | | $ | 53,119 | | | $ | 339,338 | | | $ | 2,470,289 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
-1 | Excludes deferred fees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The allowance for loan losses is summarized by portfolio segment and impairment classification as follows: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
At September 30, 2014 | | Commercial, | | | Commercial, | | | Leases | | | Real estate- | | | Real estate- | | | Home | | | Unallocated | | | Total | |
secured by | industrial | residential | construction | equity and |
real estate | and other | mortgage | | consumer |
| | (in thousands) | |
Ending Balance: Individually evaluated for impairment | | $ | 219 | | | $ | 12 | | | $ | — | | | $ | 171 | | | $ | — | | | $ | 686 | | | $ | — | | | $ | 1,088 | |
Ending Balance: Collectively evaluated for impairment | | | 13,072 | | | | 2,983 | | | | 828 | | | | 3,968 | | | | 508 | | | | 4,252 | | | | 3,348 | | | $ | 28,959 | |
Ending Balance: Loans acquired with deteriorated credit quality | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 13,291 | | | $ | 2,995 | | | $ | 828 | | | $ | 4,139 | | | $ | 508 | | | $ | 4,938 | | | $ | 3,348 | | | $ | 30,047 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
At December 31, 2013 | | Commercial, | | | Commercial, | | | Leases | | | Real estate- | | | Real estate- | | | Home | | | Unallocated | | | Total | |
secured by | industrial | residential | construction | equity and |
real estate | and other | mortgage | | consumer |
| | (in thousands) | |
Ending Balance: Individually evaluated for impairment | | $ | 739 | | | $ | 31 | | | $ | — | | | $ | — | | | $ | — | | | $ | 140 | | | $ | — | | | $ | 910 | |
Ending Balance: Collectively evaluated for impairment | | | 13,724 | | | | 5,300 | | | | 504 | | | | 3,214 | | | | 542 | | | | 2,597 | | | | 3,030 | | | $ | 28,911 | |
Ending Balance: Loans acquired with deteriorated credit quality | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending Balance | | $ | 14,463 | | | $ | 5,331 | | | $ | 504 | | | $ | 3,214 | | | $ | 542 | | | $ | 2,737 | | | $ | 3,030 | | | $ | 29,821 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Lakeland also maintains a reserve for unfunded lending commitments which are included in other liabilities. This reserve was $1.2 million for each of the periods ended September 30, 2014 and December 31, 2013. 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. |
|
The following table summarizes loans that have been restructured during the three and nine months ended September 30, 2014 and 2013: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | | For the Three Months Ended | | | | | | | | | |
| | September 30, 2014 | | | September 30, 2013 | | | | | | | | | |
| | | | | Pre- | | | Post- | | | | | | Pre- | | | Post- | | | | | | | | | |
| | | | | Modification | | | Modification | | | | | | Modification | | | Modification | | | | | | | | | |
| | | | | Outstanding | | | Outstanding | | | | | | Outstanding | | | Outstanding | | | | | | | | | |
| | Number of | | | Recorded | | | Recorded | | | Number of | | | Recorded | | | Recorded | | | | | | | | | |
| | Contracts | | | Investment | | | Investment | | | Contracts | | | Investment | | | Investment | | | | | | | | | |
| | (Dollars in thousands) | | | (Dollars in thousands) | | | | | | | | | |
Troubled Debt Restructurings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | | — | | | $ | — | | | $ | — | | | | — | | | $ | — | | | $ | — | | | | | | | | | |
Commercial, industrial and other | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Leases | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Real estate—residential mortgage | | | 4 | | | | 1,211 | | | | 1,211 | | | | — | | | | — | | | | — | | | | | | | | | |
Real estate—construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Home equity and consumer | | | 3 | | | | 317 | | | | 317 | | | | — | | | | — | | | | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 7 | | | $ | 1,528 | | | $ | 1,528 | | | | — | | | $ | — | | | $ | — | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | For the Nine Months Ended | | | For the Nine Months Ended | | | | | | | | | |
| | 30-Sep-14 | | | 30-Sep-13 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Pre- | | | Post- | | | | | | Pre- | | | Post- | | | | | | | | | |
| | | | | Modification | | | Modification | | | | | | Modification | | | Modification | | | | | | | | | |
| | | | | Outstanding | | | Outstanding | | | | | | Outstanding | | | Outstanding | | | | | | | | | |
| | Number of | | | Recorded | | | Recorded | | | Number of | | | Recorded | | | Recorded | | | | | | | | | |
| | Contracts | | | Investment | | | Investment | | | Contracts | | | Investment | | | Investment | | | | | | | | | |
| | (Dollars in thousands) | | | (Dollars in thousands) | | | | | | | | | |
Troubled Debt Restructurings: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Commercial, secured by real estate | | | 2 | | | $ | 1,697 | | | $ | 1,697 | | | | 11 | | | $ | 5,472 | | | $ | 5,468 | | | | | | | | | |
Commercial, industrial and other | | | — | | | | — | | | | — | | | | 1 | | | | 127 | | | | 125 | | | | | | | | | |
Leases | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Real estate—residential mortgage | | | 4 | | | | 1,211 | | | | 1,211 | | | | — | | | | — | | | | — | | | | | | | | | |
Real estate—construction | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | |
Home equity and consumer | | | 6 | | | | 652 | | | | 652 | | | | 1 | | | | 11 | | | | 11 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 12 | | | $ | 3,560 | | | $ | 3,560 | | | | 13 | | | $ | 5,610 | | | $ | 5,604 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
The following table summarizes as of September 30, 2014 and 2013, loans that were restructured within the last 12 months that have subsequently defaulted: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended | | | | | | | | | | | | | | | | | |
| | September 30, 2014 | | | September 30, 2013 | | | | | | | | | | | | | | | | | |
| | 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 | | | 1 | | | $ | 32 | | | | 5 | | | $ | 3,084 | | | | | | | | | | | | | | | | | |
Commercial, industrial and other | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Leases | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Real estate—residential mortgage | | | 1 | | | | 179 | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Real estate—construction | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
Home equity and consumer | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2 | | | $ | 211 | | | | 5 | | | $ | 3,084 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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 on individual loans. Losses are recorded as a valuation allowance and charged to earnings. As of September 30, 2014, the Company had $1.5 million in mortgages held for sale compared to $1.2 million as of December 31, 2013. |
Other Real Estate and Other Repossessed Assets |
At September 30, 2014, the Company had other repossessed assets and other real estate owned of $43,000 and $939,000, respectively. At December 31, 2013, the Company had other repossessed assets and other real estate owned of $54,000 and $466,000, respectively. |