Regulatory Matters

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Regulatory Matters

REGULATORY MATTERS

The Bank Holding Company Act of 1956 restricts the amount of dividends the Company can pay. Accordingly, dividends should generally only be paid out of current earnings, as defined.

The New Jersey Banking Act of 1948 restricts the amount of dividends paid on the capital stock of New Jersey chartered banks. Accordingly, no dividends shall be paid by such banks on their capital stock unless, following the payment of such dividends, the capital stock of Lakeland will be unimpaired, and: (1) Lakeland will have a surplus, as defined, of not less than 50% of its capital stock, or, if not, (2) the payment of such dividend will not reduce the surplus, as defined, of Lakeland. Under these limitations, approximately $507.9 million was available for payment of dividends from Lakeland to the Company as of December 31, 2017.

The Company and Lakeland are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory – and possible additional discretionary – actions by regulators that, if undertaken, could have a direct material effect on the Company’s and Lakeland’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s and Lakeland’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and Lakeland’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulations to ensure capital adequacy require the Company and Lakeland to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets, and of Tier 1 capital to average assets. Management believes, as of December 31, 2017, that the Company and Lakeland met all capital adequacy requirements to which they are subject.

As of December 31, 2017, the most recent notification from the FDIC categorized Lakeland as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, Lakeland must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 capital and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the institution’s category.

As of December 31, 2017 and 2016, the Company and Lakeland have the following capital ratios based on the then current regulations:

	Actual				For Capital Adequacy Purposes with Capital Conservation Buffer				To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2017	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(dollars in thousands)
Total capital (to risk-weighted assets)
Company	$	589,047	13.40	%	> $	406,477	> 9.25%			N/A	N/A
Lakeland	563,910		12.86	%		405,552	9.25	%	> $	438,435	> 10.00%
Tier 1 capital (to risk-weighted assets)
Company	$	477,453	10.87	%	> $	318,590	> 7.25%			N/A	N/A
Lakeland	525,979		12.00	%		317,865	7.25	%	> $	350,748	> 8.00%
Common equity Tier 1 capital (to risk-weighted assets)
Company	$	447,453	10.18	%	> $	252,675	> 5.75%			N/A	N/A
Lakeland	525,979		12.00	%		252,100	5.75	%	> $	284,983	> 6.50%
Tier 1 capital (to average assets)
Company	$	477,453	9.12	%	> $	209,431	> 4.00%			N/A	N/A
Lakeland	525,979		10.06	%		209,239	4.00	%	> $	261,548	> 5.00%

	Actual				For Capital Adequacy Purposes with Capital Conservation Buffer				To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2016	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(dollars in thousands)
Total capital (to risk-weighted assets)
Company	$	549,391	13.48	%	> $	351,431	> 8.625%			N/A	N/A
Lakeland	530,458		13.03	%		350,996	8.625	%	> $	406,952	> 10.00
Tier 1 capital (to risk-weighted assets)
Company	$	442,124	10.85	%	> $	269,940	> 6.625%			N/A	N/A
Lakeland	496,737		12.21	%		269,605	6.625	%	> $	325,561	> 8.00
Common equity Tier 1 capital (to risk-weighted assets)
Company	$	412,124	10.11	%	> $	208,821	> 5.125%			N/A	N/A
Lakeland	496,737		12.21	%		208,563	5.125	%	> $	264,519	> 6.50
Tier 1 capital (to average assets)
Company	$	442,124	9.07	%	> $	194,927	> 4.00%			N/A	N/A
Lakeland	496,737		10.21	%		194,691	4.00	%	> $	243,364	> 5.00

The final rules implementing the Basel Committee on Banking Supervisions capital guidelines for U.S. Banks became effective for the Company on January 1, 2015, with full compliance with all the final rule’s requirements phased in over a multi-year schedule, to be fully phased in by January 1, 2019. The Basel Rules require a “capital conservation buffer.” The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and increases by 0.625% every January 1 until it reaches 2.5% on January 1, 2019.