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Loans and Other Real Estate
 12 Months Ended
Dec. 31, 2019
Receivables [Abstract]  
Loans and Other Real Estate LOANS AND OTHER REAL ESTATE
The following sets forth the composition of Lakeland’s loan portfolio:
 
 
December 31,
(in thousands)
 
2019
 
2018
Commercial, secured by real estate
 
$
3,589,593

 
$
3,057,779

Commercial, industrial and other
 
431,934

 
336,735

Equipment finance
 
111,076

 
87,925

Real estate - residential mortgage
 
335,191

 
329,854

Real estate - construction
 
335,169

 
319,545

Home equity and consumer
 
337,977

 
328,609

Total loans
 
5,140,940

 
4,460,447

Less deferred fees
 
(3,117
)
 
(3,714
)
Loans, net of deferred fees
 
$
5,137,823

 
$
4,456,733


At December 31, 2019 and December 31, 2018, Lakeland had $1.3 billion and $1.2 billion in loans pledged for potential borrowings at the Federal Home Loan Bank of New York (“FHLB”). As of December 31, 2019 and 2018, home equity and consumer loans included overdraft deposit balances of $789,000 and $452,000, respectively.
Purchased Credit Impaired Loans
The following sets forth the carrying value of the purchased credit impaired loans ("PCI") loans acquired in mergers:
 
December 31,
(in thousands)
2019
 
2018
Acquisition
 
 
 
  Highlands
$
8,194

 
$
—

  Pascack Community Bank
113

 
157

  Harmony Bank
441

 
495

     Total
$
8,748

 
$
652


The following table presents changes in the accretable yield for PCI loans:
 
 
Years Ended December 31,
(in thousands)
 
2019
 
2018
Balance, beginning of period
 
$
81

 
$
129

Acquisitions
 
1,431

 
—

Accretion
 
(1,236
)
 
(182
)
Net reclassification non-accretable difference
 
87

 
134

Balance, end of period
 
$
363

 
$
81


Portfolio Segments
Lakeland currently manages its credit products and the respective exposure to credit losses (credit risk) by the following specific portfolio segments which are levels at which Lakeland develops and documents its systematic methodology to determine the allowance for loan losses attributable to each respective portfolio segment. These segments are:
•
Commercial, secured by real estate - consists of commercial mortgage loans secured by owner occupied properties and non-owner occupied properties. The loans secured by owner occupied properties involve a variety of property types to conduct the borrower’s operations. The primary source of repayment for this type of loan is the cash flow from the business and is based upon the borrower’s financial health and the ability of the borrower and the business to repay. The loans secured by non-owner occupied properties involve investment properties for warehouse, retail, office space, etc., with a history of occupancy and cash flow. This commercial real estate category contains mortgage loans to the developers and owners of commercial real estate where the borrower intends to operate or sell the property at a profit and use the income stream or proceeds from the sale to repay the loan.
•
Commercial, industrial and other - are loans made to provide funds for equipment and general corporate needs. Repayment of a loan primarily uses the funds obtained from the operation of the borrower’s business. Commercial loans also include lines of credit that are utilized to finance a borrower’s short-term credit needs and/or to finance a percentage of eligible receivables and inventory.
•
Equipment finance - includes a small portfolio of equipment leases, which consists of leases primarily for essential equipment used by small to medium sized businesses.
•
Real estate - residential mortgage - contains permanent mortgage loans principally to consumers secured by residential real estate. Residential real estate loans are evaluated for the adequacy of repayment sources at the time of approval, based upon measures including credit scores, debt-to-income ratios, and collateral values. Loans may be either conforming or non-conforming.
•
Real estate - construction - construction loans, as defined, are intended to finance the construction of commercial properties and include loans for the acquisition and development of land. Construction loans represent a higher degree of risk than permanent real estate loans and may be affected by a variety of factors such as the borrower’s ability to control costs and adhere to time schedules and the risk that constructed units may not be absorbed by the market within the anticipated time frame or at the anticipated price. The loan commitment on these loans often includes an interest reserve to pay interest charges on the outstanding balance of the loan.
•
Home equity and consumer - includes primarily home equity loans and lines, installment loans, personal lines of credit and automobile loans. The home equity category consists mainly of loans and revolving lines of credit to consumers which are secured by residential real estate. These loans are typically secured with second mortgages on the homes, although many are secured with first mortgages. Other consumer loans include installment loans used by customers to purchase automobiles, boats and recreational vehicles.
Non-accrual and Past Due Loans
The following schedule sets forth certain information regarding Lakeland’s non-accrual loans, its other real estate owned and other repossessed assets, and accruing troubled debt restructurings (“TDRs”):
 
 
At December 31,
(in thousands)
 
2019
 
2018
Commercial, secured by real estate
 
$
12,314

 
$
7,192

Commercial, industrial and other
 
1,539

 
1,019

Equipment finance
 
284

 
501

Real estate - residential mortgage
 
3,428

 
1,986

Real estate - construction
 
967

 
—

Home equity and consumer
 
2,606

 
1,432

Total non-accrual loans
 
21,138

 
12,130

Other real estate and other repossessed assets
 
563

 
830

Total non-performing assets
 
$
21,701

 
$
12,960

Troubled debt restructurings, still accruing
 
$
5,650

 
$
9,293


Non-accrual loans included $1.6 million and $3.6 million of TDRs for the years ended December 31, 2019 and 2018, respectively. As of December 31, 2019 and 2018, the Company had $2.0 million and $1.5 million, respectively, in residential mortgages and consumer home equity loans included in total non-accrual loans that were in the process of foreclosure.
An age analysis of past due loans, excluding PCI loans which are accounted for on a pool basis, segregated by class of loans as of December 31, 2019 and 2018, is as follows:
December 31, 2019
 
30-59 Days
Past Due
 
60-89 Days
Past Due
 
Greater
Than
89 Days
 
Total
Past Due
 
Current
 
Total Loans

 
Recorded
Investment  Greater
than 89 Days and
Still  Accruing
(in thousands)
 
 
Commercial, secured by real estate
 
$
3,578

 
$
1,200

 
$
9,702

 
$
14,480

 
$
3,569,008

 
$
3,583,488

 
$
—

Commercial, industrial and other
 
353

 
71

 
1,064

 
1,488

 
429,502

 
430,990

 
—

Equipment finance
 
166

 
80

 
284

 
530

 
110,546

 
111,076

 
—

Real estate - residential mortgage
 
1,138

 
251

 
2,075

 
3,464

 
331,337

 
334,801

 
—

Real estate - construction
 
—

 
—

 
967

 
967

 
333,418

 
334,385

 
—

Home equity and consumer
 
1,573

 
287

 
1,533

 
3,393

 
334,059

 
337,452

 
—

 
 
$
6,808

 
$
1,889

 
$
15,625

 
$
24,322

 
$
5,107,870

 
$
5,132,192

 
$
—

December 31, 2018
 
30-59 Days
Past Due
 
60-89 Days
Past Due
 
Greater
Than
89 Days
 
Total
Past Due
 
Current
 
Total Loans
 
Recorded
Investment  Greater
than 89 Days and
Still  Accruing
(in thousands)
 
 
Commercial, secured by real estate
 
$
1,477

 
$
639

 
$
2,080

 
$
4,196

 
$
3,052,931

 
$
3,057,127

 
$
—

Commercial, industrial and other
 
173

 
243

 
750

 
1,166

 
335,569

 
336,735

 
—

Equipment finance
 
533

 
13

 
501

 
1,047

 
86,878

 
87,925

 
—

Real estate - residential mortgage
 
743

 
111

 
1,776

 
2,630

 
327,224

 
329,854

 
—

Real estate - construction
 
—

 
—

 
—

 
—

 
319,545

 
319,545

 
—

Home equity and consumer
 
1,917

 
216

 
850

 
2,983

 
325,626

 
328,609

 
—

 
 
$
4,843

 
$
1,222

 
$
5,957

 
$
12,022

 
$
4,447,773

 
$
4,459,795

 
$
—



Impaired Loans
Lakeland’s policy regarding impaired loans is discussed in Note 1 – Summary of Accounting Policies – Loans and Allowance for Loan Losses. The Company defines impaired loans as all non-accrual loans with recorded investments of $500,000 or greater. Impaired loans also includes all loans modified in troubled debt restructurings, but excludes PCI loans. The following tables represent the Company's impaired loans at December 31, 2019, 2018 and 2017.
December 31, 2019
 
Recorded
Investment in
Impaired Loans
 
Contractual
Unpaid
Principal
Balance
 
Related
Allowance
 
Interest
Income
Recognized
 
Average
Investment in
Impaired Loans
(in thousands)
 
 
Loans without related allowance:
 
 
 
 
 
 
 
 
 
 
Commercial, secured by real estate
 
$
12,478

 
$
12,630

 
$
—

 
$
164

 
$
10,386

Commercial, industrial and other
 
1,391

 
1,381

 
—

 
16

 
1,334

Equipment finance
 
—

 
—

 
—

 
—

 
—

Real estate - residential mortgage
 
803

 
815

 
—

 
—

 
233

Real estate - construction
 
1,663

 
1,661

 
—

 
2

 
82

Home equity and consumer
 
—

 
—

 
—

 
—

 
—

Loans with related allowance:
 
 
 
 
 
 
 
 
 
 
Commercial, secured by real estate
 
3,470

 
3,706

 
228

 
190

 
4,554

Commercial, industrial and other
 
113

 
113

 
5

 
6

 
113

Equipment finance
 
23

 
23

 
10

 
—

 
21

Real estate - residential mortgage
 
1,512

 
1,682

 
104

 
19

 
926

Real estate - construction
 
—

 
—

 
—

 
—

 
—

Home equity and consumer
 
671

 
765

 
5

 
29

 
693

Total:
 
 
 
 
 
 
 
 
 
 
Commercial, secured by real estate
 
$
15,948

 
$
16,336

 
$
228

 
$
354

 
$
14,940

Commercial, industrial and other
 
1,504

 
1,494

 
5

 
22

 
1,447

Equipment finance
 
23

 
23

 
10

 
—

 
21

Real estate - residential mortgage
 
2,315

 
2,497

 
104

 
19

 
1,159

Real estate - construction
 
1,663

 
1,661

 
—

 
2

 
82

Home equity and consumer
 
671

 
765

 
5

 
29

 
693

 
 
$
22,124

 
$
22,776

 
$
352

 
$
426

 
$
18,342

December 31, 2018
 
Recorded
Investment in
Impaired Loans
 
Contractual
Unpaid
Principal
Balance
 
Related
Allowance
 
Interest
Income
Recognized
 
Average
Investment in
Impaired Loans
(in thousands)
 
 
Loans without related allowance:
 
 
 
 
 
 
 
 
 
 
Commercial, secured by real estate
 
$
9,284

 
$
9,829

 
$
—

 
$
188

 
$
7,369

Commercial, industrial and other
 
1,151

 
1,449

 
—

 
19

 
1,834

Equipment finance
 
301

 
597

 
—

 
—

 
376

Real estate - residential mortgage
 
—

 
—

 
—

 
4

 
242

Real estate - construction
 
—

 
—

 
—

 
—

 
726

Home equity and consumer
 
—

 
—

 
—

 
—

 
—

Loans with related allowance:
 
 
 
 
 
 
 
 
 
 
Commercial, secured by real estate
 
7,270

 
7,597

 
307

 
317

 
7,594

Commercial, industrial and other
 
209

 
209

 
7

 
12

 
209

Equipment finance
 
30

 
30

 
14

 
—

 
19

Real estate - residential mortgage
 
730

 
884

 
4

 
20

 
745

Real estate - construction
 
—

 
—

 
—

 
—

 
—

Home equity and consumer
 
727

 
765

 
6

 
32

 
898

Total:
 
 
 
 
 
 
 
 
 
 
Commercial, secured by real estate
 
$
16,554

 
$
17,426

 
$
307

 
$
505

 
$
14,963

Commercial, industrial and other
 
1,360

 
1,658

 
7

 
31

 
2,043

Equipment finance
 
331

 
627

 
14

 
—

 
395

Real estate - residential mortgage
 
730

 
884

 
4

 
24

 
987

Real estate - construction
 
—

 
—

 
—

 
—

 
726

Home equity and consumer
 
727

 
765

 
6

 
32

 
898

 
 
$
19,702

 
$
21,360

 
$
338

 
$
592

 
$
20,012

December 31, 2017
 
Recorded
Investment in
Impaired Loans
 
Contractual
Unpaid
Principal
Balance
 
Related
Allowance
 
Interest
Income
Recognized
 
Average
Investment in
Impaired Loans
(in thousands)
 
 
Loans without related allowance:
 
 
 
 
 
 
 
 
 
 
Commercial, secured by real estate
 
$
12,155

 
$
12,497

 
$
—

 
$
366

 
$
12,774

Commercial, industrial and other
 
618

 
618

 
—

 
25

 
618

Equipment finance
 
—

 
—

 
—

 
—

 
—

Real estate - residential mortgage
 
963

 
980

 
—

 
15

 
996

Real estate - construction
 
1,471

 
1,471

 
—

 
—

 
1,471

Home equity and consumer
 
—

 
—

 
—

 
—

 
6

Loans with related allowance:
 
 
 
 
 
 
 
 
 
 
Commercial, secured by real estate
 
5,381

 
5,721

 
454

 
206

 
5,029

Commercial, industrial and other
 
164

 
164

 
9

 
14

 
283

Equipment finance
 
65

 
65

 
30

 
—

 
29

Real estate - residential mortgage
 
781

 
919

 
4

 
27

 
940

Real estate - construction
 
—

 
—

 
—

 
—

 
—

Home equity and consumer
 
993

 
1,026

 
8

 
52

 
1,090

Total:
 
 
 
 
 
 
 
 
 
 
Commercial, secured by real estate
 
$
17,536

 
$
18,218

 
$
454

 
$
572

 
$
17,803

Commercial, industrial and other
 
782

 
782

 
9

 
39

 
901

Equipment finance
 
65

 
65

 
30

 
—

 
29

Real estate - residential mortgage
 
1,744

 
1,899

 
4

 
42

 
1,936

Real estate - construction
 
1,471

 
1,471

 
—

 
—

 
1,471

Home equity and consumer
 
993

 
1,026

 
8

 
52

 
1,096

 
 
$
22,591

 
$
23,461

 
$
505

 
$
705

 
$
23,236


Interest which would have been accrued on impaired loans during 2019, 2018 and 2017 was $1.0 million, $1.1 million and $1.5 million, respectively.
Credit Quality Indicators
The class of loans are determined by internal risk rating. 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. 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 loan portfolio, analyzing trends and determining the proper level of required reserves to be recommended to the Company's Board of Directors. 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. “Pass” ratings on loans are given to loans that management considers to be of acceptable or better quality. A rating of 5W, or “Watch” is a loan that requires 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. Rating 6, “Other Assets Especially Mentioned” is used for loans exhibiting 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. Rating 7, “Substandard,” is used on loans that 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. Rating 8, “Doubtful,” are loans 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. Rating 9, “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 shows Lakeland’s commercial loan portfolio as of December 31, 2019 and 2018, by the risk ratings discussed above:
December 31, 2019
 
Commercial,
Secured by
Real Estate
 
Commercial,
Industrial
and  Other
 
 
 
 
(in thousands)
 
Real Estate -
Construction
 
Total Commercial Loans
RISK RATING
 
 
 
 
 
 
 
 
1
 
$
—

 
$
898

 
$
—

 
$
898

2
 
—

 
17,988

 
—

 
17,988

3
 
74,072

 
39,112

 
—

 
113,184

4
 
965,825

 
107,376

 
17,941

 
1,091,142

5
 
2,332,863

 
215,975

 
307,824

 
2,856,662

5W - Watch
 
100,347

 
30,192

 
6,959

 
137,498

6 - Other assets especially mentioned
 
55,438

 
11,328

 
—

 
66,766

7 - Substandard
 
61,048

 
9,065

 
2,445

 
72,558

8 - Doubtful
 
—

 
—

 
—

 
—

9 - Loss
 
—

 
—

 
—

 
—

Total
 
$
3,589,593

 
$
431,934

 
$
335,169

 
$
4,356,696


December 31, 2018
 
Commercial,
Secured by
Real Estate
 
Commercial,
Industrial
and  Other
 
 
 
Total Commercial Loans
(in thousands)
 
Real Estate -
Construction
 
RISK RATING
 
 
 
 
 
 
 
 
1
 
$
—

 
$
1,119

 
$
—

 
$
1,119

2
 
—

 
18,462

 
—

 
18,462

3
 
69,995

 
36,367

 
—

 
106,362

4
 
933,577

 
91,145

 
17,375

 
1,042,097

5
 
1,910,423

 
168,474

 
297,625

 
2,376,522

5W - Watch
 
61,626

 
7,798

 
3,493

 
72,917

6 - Other assets especially mentioned
 
38,844

 
2,033

 
—

 
40,877

7 - Substandard
 
43,314

 
11,337

 
1,052

 
55,703

8 - Doubtful
 
—

 
—

 
—

 
—

9 - Loss
 
—

 
—

 
—

 
—

Total
 
$
3,057,779

 
$
336,735

 
$
319,545

 
$
3,714,059


This table does not include residential mortgage loans, consumer loans, or equipment finance loans because they are evaluated on their payment status as pass or substandard, which is defined as non-accrual or past due 90 days or more.
Allowance for Loan Losses
The following table details activity in the allowance for loan losses by portfolio segment and the related recorded investment in loans for the years ended December 31, 2019 and 2018:
December 31, 2019
 
Commercial,
Secured by
Real Estate
 
Commercial,
Industrial
and  Other
 
Equipment Finance
 
Real Estate -
Residential
Mortgage
 
Real Estate -
Construction
 
Home
Equity and
Consumer
 
Total
(in thousands)
 
 
Beginning balance
 
$
27,881

 
$
1,742

 
$
987

 
$
1,566

 
$
3,015

 
$
2,497

 
$
37,688

Charge-offs
 
(544
)
 
(645
)
 
(414
)
 
(50
)
 
—

 
(283
)
 
(1,936
)
Recoveries
 
251

 
1,100

 
332

 
66

 
126

 
246

 
2,121

Provision
 
1,362

 
1,092

 
52

 
143

 
(469
)
 
(50
)
 
2,130

Ending balance
 
$
28,950

 
$
3,289

 
$
957

 
$
1,725

 
$
2,672

 
$
2,410

 
$
40,003

Allowance for Loan Losses
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: Individually evaluated for impairment
 
$
228

 
$
5

 
$
10

 
$
104

 
$
—

 
$
5

 
$
352

Ending balance: Collectively evaluated for impairment
 
28,722

 
3,284

 
947

 
1,621

 
2,672

 
2,405

 
39,651

Ending balance
 
$
28,950

 
$
3,289

 
$
957

 
$
1,725

 
$
2,672

 
$
2,410

 
$
40,003

Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: Individually evaluated for impairment
 
$
15,948

 
$
1,504

 
$
23

 
$
2,315

 
$
1,663

 
$
671

 
$
22,124

Ending balance: Collectively evaluated for impairment
 
3,567,540

 
429,486

 
111,053

 
332,486

 
332,722

 
336,781

 
5,110,068

Ending balance: Loans acquired with deteriorated credit quality
 
6,105

 
944

 
—

 
390

 
784

 
525

 
8,748

Ending balance (1)
 
$
3,589,593

 
$
431,934

 
$
111,076

 
$
335,191

 
$
335,169

 
$
337,977

 
$
5,140,940

(1)
Excludes deferred fees
December 31, 2018
 
Commercial,
Secured by
Real Estate
 
Commercial,
Industrial
and Other
 
Equipment Finance
 
Real Estate -
Residential
Mortgage
 
Real Estate -
Construction
 
Home
Equity and
Consumer
 
Total
(in thousands)
 
 
Beginning balance
 
$
25,704

 
$
2,313

 
$
630

 
$
1,557

 
$
2,731

 
$
2,520

 
$
35,455

Charge-offs
 
(421
)
 
(1,452
)
 
(507
)
 
(131
)
 
(248
)
 
(588
)
 
(3,347
)
Recoveries
 
468

 
317

 
23

 
10

 
17

 
332

 
1,167

Provision
 
2,130

 
564

 
841

 
130

 
515

 
233

 
4,413

Ending balance
 
$
27,881

 
$
1,742

 
$
987

 
$
1,566

 
$
3,015

 
$
2,497

 
$
37,688

Allowance for Loan Losses
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: Individually evaluated for impairment
 
$
307

 
$
7

 
$
14

 
$
4

 
$
—

 
$
6

 
$
338

Ending balance: Collectively evaluated for impairment
 
27,574

 
1,735

 
973

 
1,562

 
3,015

 
2,491

 
37,350

Ending balance
 
$
27,881

 
$
1,742

 
$
987

 
$
1,566

 
$
3,015

 
$
2,497

 
$
37,688

Loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance: Individually evaluated for impairment
 
$
16,554

 
$
1,360

 
$
331

 
$
730

 
$
—

 
$
727

 
$
19,702

Ending balance: Collectively evaluated for impairment
 
3,040,573

 
335,375

 
87,594

 
329,124

 
319,545

 
327,882

 
4,440,093

Ending balance: Loans acquired with deteriorated credit quality
 
652

 
—

 
—

 
—

 
—

 
—

 
652

Ending balance (1)
 
$
3,057,779

 
$
336,735

 
$
87,925

 
$
329,854

 
$
319,545

 
$
328,609

 
$
4,460,447

(1)
Excludes deferred fees
Lakeland also maintains a reserve for unfunded lending commitments which is included in other liabilities. This reserve was $1.8 million and $2.3 million as of December 31, 2019 and December 31, 2018, respectively. Lakeland analyzes the adequacy of the reserve for unfunded lending commitments in conjunction with its analysis of the adequacy of the allowance for loan losses. For more information on this analysis, see “Risk Elements” in Management’s Discussion and Analysis.
Troubled Debt Restructurings
Troubled Debt Restructurings ("TDRs") are those loans where significant concessions have been made to borrowers experiencing financial difficulties. Restructured loans typically involve a modification of terms such as a reduction of the stated interest rate lower than the current market rate of a new loan with similar risk, an extended moratorium of principal payments and/or an extension of the maturity date. Lakeland considers the potential losses on these loans as well as the remainder of its impaired loans when considering the adequacy of the allowance for loan losses.
The following table summarizes loans that have been restructured during the periods presented:
  
 
For the Year Ended December 31, 2019
 
For the Year Ended December 31, 2018
(dollars in thousands)
 
Number of
Contracts
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
 
Number of
Contracts
 
Pre-
Modification
Outstanding
Recorded
Investment
 
Post-
Modification
Outstanding
Recorded
Investment
 
 
 
Commercial, secured by real estate
 
—

 
$
—

 
$
—

 
5

 
$
3,348

 
$
3,348

Commercial, industrial and other
 
—

 
—

 
—

 
1

 
950

 
950

Equipment finance
 
—

 
—

 
—

 
1

 
15

 
15

Real estate - construction
 
1

 
694

 
694

 
—

 
—

 
—

Home equity and consumer
 
2

 
83

 
83

 
—

 
—

 
—

 
 
3

 
$
777

 
$
777

 
7

 
$
4,313

 
$
4,313


The following table presents loans modified as TDRs within the previous twelve months from December 31, 2019 and 2018 that have defaulted during the subsequent twelve months:
  
 
For the Year Ended December 31, 2019
 
For the Year Ended December 31, 2018
(dollars in thousands)
 
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
 
 
 
Commercial, secured by real estate
 
—

 
$
—

 
1

 
$
171

Home equity and consumer
 
2

 
83

 
—

 
—

 
 
2

 
$
83

 
1

 
$
171


Related Party Loans
Lakeland has entered into lending transactions in the ordinary course of business with directors, executive officers, principal stockholders and affiliates of such persons on similar terms, including interest rates and collateral, as those prevailing for comparable transactions with other borrowers not related to Lakeland. At December 31, 2019 and 2018, loans to these related parties amounted to $55.4 million and $53.1 million, respectively. There were new loans of $21.4 million to related parties and repayments of $19.1 million from related parties in 2019.
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 December 31, 2019, Lakeland had $1.7 million in mortgages held for sale compared to $1.1 million as of December 31, 2018.
Equipment Finance Receivables
Future minimum payments of equipment finance receivables at December 31, 2019 are expected as follows:
(in thousands)
 
2020
$
36,290

2021
30,448

2022
23,029

2023
14,767

2024
5,616

Thereafter
926

 
$
111,076


Other Real Estate and Other Repossessed Assets
At December 31, 2019, Lakeland had other real estate of $563,000, consisting of residential property acquired as a result of foreclosure proceedings or through a deed in lieu of foreclosure. Lakeland held no other repossessed assets at December 31, 2019. At December 31, 2018, Lakeland had other real estate of $830,000 and no other repossessed assets. The other real estate that Lakeland held at December 31, 2018 consisted of $702,000 in residential property acquired as a result of foreclosure proceedings or through a deed in lieu of foreclosure. For the years ended December 31, 2019, 2018 and 2017, Lakeland had writedowns of $153,000, $70,000 and $98,000, respectively, on other real estate and other repossessed assets which are included in other real estate and repossessed asset expense in the Consolidated Statement of Income.