XML 26 R13.htm IDEA: XBRL DOCUMENT v3.22.0.1
Loans
 12 Months Ended
Dec. 31, 2021
Receivables [Abstract]  
Loans Loans
The following table summarizes the composition of the Company’s loan portfolio.
(in thousands)December 31, 2021December 31, 2020
Non-owner occupied commercial$2,316,284 $2,398,946 
Owner occupied commercial908,449 827,092 
Multifamily972,233 813,225 
Non-owner occupied residential177,097 200,229 
Commercial, industrial and other462,406 718,189 
Construction302,228 266,883 
Equipment finance123,212 116,690 
Residential mortgage438,710 377,380 
Consumer275,529 302,598 
Total$5,976,148 $6,021,232 
Loans are recognized at amortized cost, which includes principal balance and net deferred loan fees and costs. The Company elected to exclude accrued interest receivable from amortized cost. Accrued interest receivable is reported separately in the Consolidated Balance Sheets and totaled $13.9 million at December 31, 2021 and $16.1 million at December 31, 2020. Loan origination fees and certain direct loan origination costs are deferred and the net fee or cost is recognized in interest income as an adjustment of yield. Net deferred loan fees are included in loans by respective segment and total $5.8 million and $10.0 million at December 31, 2021 and December 31, 2020, respectively.
At December 31, 2021 and December 31, 2020, Small Business Association ("SBA") Paycheck Protection Program ("PPP") loans totaled $56.6 million and $284.6 million, respectively, and are included in the balance of commercial, industrial and other loans. Consumer loans included overdraft deposit balances of $184,000 and $650,000 at December 31, 2021 and December 31, 2020, respectively. Loans pledged for potential borrowings at the Federal Home Loan Bank of New York ("FHLB") totaled $2.30 billion and $2.28 billion at December 31, 2021 and December 31, 2020, respectively.
Credit Quality Indicators
Management closely and continually monitors the quality of its loans and assesses the quantitative and qualitative risks arising from the credit quality of its loans. Lakeland assigns a credit risk rating to all loans and loan commitments. The credit risk rating system has been developed by management to provide a methodology to be used by loan officers, department heads and senior management in identifying various levels of credit risk that exist within the loan portfolios. The risk rating system assists senior management in evaluating the loan portfolio and analyzing trends. In assigning risk ratings, management considers, among other things, the borrower’s ability to service the debt based on relevant information such as current financial information, historical payment experience, credit documentation, public information and current economic conditions.
Management categorizes loans and commitments into the following risk ratings:
Pass: "Pass" assets are well protected by the current net worth and paying capacity of the obligor or guarantors, if any, or by the fair value of any underlying collateral.
Watch: "Watch" assets require more than the usual amount of monitoring due to declining earnings, strained cash flow, increasing leverage and/or weakening market. These borrowers generally have limited additional debt capacity and modest coverage and average or below average asset quality, margins and market share.
Special Mention: "Special mention" assets exhibit identifiable credit weakness, which if not checked or corrected could weaken the loan quality or inadequately protect the bank’s credit position at some future date.
Substandard: "Substandard" assets are inadequately protected by the current sound worth and paying capacity of the obligors or of the collateral pledged, if any. A substandard loan has a well-defined weakness or weaknesses that may jeopardize the liquidation of the debt.
Doubtful: "Doubtful" assets that exhibit all of the weaknesses inherent in substandard loans, but have the added characteristics that the weaknesses make collection or liquidation in full improbable on the basis of existing facts.
Loss: “Loss” is a rating for loans or portions of loans that are considered uncollectible and of such little value that their continuance as bankable loans is not warranted.
The following table presents the risk category of loans by class of loan and vintage as of December 31, 2021.
Term Loans by Origination Year
(in thousands)20212020201920182017
Pre-2017
Revolving LoansRevolving to TermTotal
Non-owner occupied commercial
  Pass$363,459 $516,131 $295,944 $189,592 $195,733 $562,338 $18,795 $— $2,141,992 
  Watch— — 25,292 14,660 4,641 47,011 130 — 91,734 
  Special mention— 458 — 5,749 14,639 6,602 — — 27,448 
  Substandard119 431 332 2,656 8,000 43,572 — — 55,110 
    Total363,578 517,020 321,568 212,657 223,013 659,523 18,925 — 2,316,284 
Owner occupied commercial
  Pass209,515 133,292 83,395 54,019 48,850 252,001 8,343 108 789,523 
  Watch— 5,757 2,134 900 280 24,873 — — 33,944 
  Special mention— 9,694 21,837 12,632 95 17,851 — — 62,109 
  Substandard5 — — 2,597 1,299 18,972 — — 22,873 
    Total209,520 148,743 107,366 70,148 50,524 313,697 8,343 108 908,449 
Multifamily
  Pass225,060 255,016 72,438 71,366 73,122 207,509 18,161 1,281 923,953 
  Watch— 966 — 13,709 854 6,497 — — 22,026 
  Special mention— 2,470 — — 8,944 2,948 — — 14,362 
  Substandard— — 5,485 1,321 — 4,987 99 — 11,892 
    Total225,060 258,452 77,923 86,396 82,920 221,941 18,260 1,281 972,233 
Non-owner occupied residential
  Pass28,476 18,527 16,928 15,695 18,048 51,194 7,288 — 156,156 
  Watch— — — — 651 5,057 — — 5,708 
  Special mention— — 523 837 1,205 284 515 — 3,364 
  Substandard— 3,062 510 4,797 988 2,512 — — 11,869 
    Total28,476 21,589 17,961 21,329 20,892 59,047 7,803 — 177,097 
Commercial, industrial and other
  Pass100,921 23,940 65,225 11,636 3,808 37,479 191,293 872 435,174 
  Watch939 461 446 — 1,378 173 5,056 — 8,453 
  Special mention— — — — 1,896 443 1,365 — 3,704 
  Substandard101 7,352 — 1,276 496 422 5,428 — 15,075 
    Total101,961 31,753 65,671 12,912 7,578 38,517 203,142 872 462,406 
Construction
  Pass108,585 84,993 40,847 30,125 23,578 3,654 — — 291,782 
  Special mention— — — — 10,446 — — — 10,446 
    Total108,585 84,993 40,847 30,125 34,024 3,654 — — 302,228 
Equipment finance
  Pass50,482 30,486 27,626 10,238 3,128 803 — — 122,763 
  Substandard— — 216 177 56 — — — 449 
    Total50,482 30,486 27,842 10,415 3,184 803 — — 123,212 
Residential mortgage
  Pass171,442 112,680 27,228 20,784 9,103 96,510 — — 437,747 
  Substandard12 — — 123 694 134 — — 963 
    Total171,454 112,680 27,228 20,907 9,797 96,644 — — 438,710 
Consumer
  Pass35,283 10,476 5,358 4,561 3,260 24,888 190,481 34 274,341 
  Substandard32 — — — — 630 526 — 1,188 
    Total35,315 10,476 5,358 4,561 3,260 25,518 191,007 34 275,529 
Total loans$1,294,431 $1,216,192 $691,764 $469,450 $435,192 $1,419,344 $447,480 $2,295 $5,976,148 
The following table presents the risk category of loans by class of loan and vintage as of December 31, 2020.
Term Loans by Origination Year
(in thousands)20202019201820172016
Pre-2016
Revolving LoansRevolving to TermTotal
Non-owner occupied commercial
  Pass$570,665 $376,681 $217,931 $251,751 $187,605 $509,573 $50,071 2,246 $2,166,523 
  Watch770 638 8,498 5,936 19,579 47,680 315 — 83,416 
  Special mention3,400 3,131 8,377 9,115 19,936 7,894 2,895 — 54,748 
  Substandard— — 2,809 15,903 14,844 60,703 — — 94,259 
    Total574,835 380,450 237,615 282,705 241,964 625,850 53,281 2,246 2,398,946 
Owner occupied commercial
  Pass116,512 76,224 80,244 81,215 62,118 245,330 11,072 179 672,894 
  Watch11,347 22,932 411 3,651 8,038 23,612 673 — 70,664 
  Special mention— 2,218 929 113 4,317 38,638 — — 46,215 
  Substandard434 16 3,038 641 5,770 27,376 44 — 37,319 
    Total128,293 101,390 84,622 85,620 80,243 334,956 11,789 179 827,092 
Multifamily
  Pass251,708 59,694 85,748 93,368 117,155 145,786 21,713 — 775,172 
  Watch— — 600 — — 8,472 — — 9,072 
  Special mention9,781 — — 2,399 — 1,124 — — 13,304 
  Substandard— 5,481 — — 9,512 684 — — 15,677 
    Total261,489 65,175 86,348 95,767 126,667 156,066 21,713 — 813,225 
Non-owner occupied residential
  Pass23,506 24,378 27,752 24,344 21,488 53,200 8,180 171 183,019 
  Watch— 300 — 1,174 — 5,757 — — 7,231 
  Special mention— 496 1,199 392 293 656 655 — 3,691 
  Substandard876 512 1,200 1,295 692 1,713 — — 6,288 
    Total24,382 25,686 30,151 27,205 22,473 61,326 8,835 171 200,229 
Commercial, industrial and other
  Pass299,091 84,917 16,245 7,216 18,358 41,900 208,519 531 676,777 
  Watch287 3,701 156 1,643 301 369 2,324 — 8,781 
  Special mention— — 884 764 2,275 — 4,727 — 8,650 
  Substandard7,177 50 3,559 1,547 1,497 729 9,422 — 23,981 
    Total306,555 88,668 20,844 11,170 22,431 42,998 224,992 531 718,189 
Construction
  Pass56,734 77,117 69,627 29,303 7,681 328 2,190 — 242,980 
  Watch— — 2,183 11,959 — — — — 14,142 
  Special mention— — — 8,321 — — — — 8,321 
  Substandard— — — 206 719 515 — — 1,440 
    Total56,734 77,117 71,810 49,789 8,400 843 2,190 — 266,883 
Equipment finance
  Pass41,528 41,717 20,697 8,834 3,162 426 — — 116,364 
  Substandard— 98 88 74 64 2 — — 326 
    Total41,528 41,815 20,785 8,908 3,226 428 — — 116,690 
Residential mortgage
  Pass127,336 43,910 34,252 17,548 12,108 139,616 — — 374,770 
  Substandard— 52 233 1,015 — 1,310 — — 2,610 
    Total127,336 43,962 34,485 18,563 12,108 140,926 — — 377,380 
Consumer
  Pass15,999 9,844 7,490 5,333 4,632 31,861 224,549 166 299,874 
  Substandard33 57 31 2 — 2,208 263 130 2,724 
    Total16,032 9,901 7,521 5,335 4,632 34,069 224,812 296 302,598 
Total loans$1,537,184 $834,164 $594,181 $585,062 $522,144 $1,397,462 $547,612 $3,423 $6,021,232 
Past Due and Non-accrual Loans
Loans are considered past due if required principal and interest payments have not been received as of the date such payments were contractually due. A loan is generally considered non-performing when it is placed on non-accrual status. A loan is generally placed on non-accrual status when it becomes 90 days past due if such loan has been identified as presenting uncertainty with respect to the collectability of interest and principal. A loan past due 90 days or more may remain on accruing status if such loan is both well secured and in the process of collection.
In the absence of other intervening factors, loans granted payment deferrals related to COVID-19 are not reported as past due or placed on non-accrual status provided the borrowers have met the criteria in the CARES Act or otherwise have met the criteria included in an interagency statement issued by bank regulatory agencies.
The following tables present the payment status of the recorded investment in past due loans as of the periods noted, by class of loans.
December 31, 2021Past Due
(in thousands)Current30 - 59 Days60 - 89 DaysGreater than 89 daysTotalTotal Loans
Non-owner occupied commercial$2,312,557 $— $718 $3,009 $3,727 $2,316,284 
Owner occupied commercial905,751 20 — 2,678 2,698 908,449 
Multifamily972,233 — — — — 972,233 
Non-owner occupied residential174,245 — 136 2,716 2,852 177,097 
Commercial, industrial and other461,659 154 — 593 747 462,406 
Construction302,228 — — — — 302,228 
Equipment finance122,923 211 41 37 289 123,212 
Residential mortgage437,574 255 64 817 1,136 438,710 
Consumer274,426 705 135 263 1,103 275,529 
Total$5,963,596 $1,345 $1,094 $10,113 $12,552 $5,976,148 
December 31, 2020Past Due
(in thousands)Current30-59 Days60-89 DaysGreater than 89 daysTotalTotal Loans
Non-owner occupied commercial$2,384,233 $1,256 $306 $13,151 $14,713 $2,398,946 
Owner occupied commercial811,408 2,759 350 12,575 15,684 827,092 
Multifamily812,597 208 — 420 628 813,225 
Non-owner occupied residential197,802 482 294 1,651 2,427 200,229 
Commercial, industrial and other716,337 125 — 1,727 1,852 718,189 
Construction265,649 — — 1,234 1,234 266,883 
Equipment finance115,124 1,338 98 130 1,566 116,690 
Residential mortgage374,370 1,046 156 1,808 3,010 377,380 
Consumer300,127 1,041 73 1,357 2,471 302,598 
Total$5,977,647 $8,255 $1,277 $34,053 $43,585 $6,021,232 
The following tables present information on non-accrual loans at December 31, 2021 and December 31, 2020.
December 31, 2021
(in thousands)Non-accrualInterest Income Recognized on Non-accrual LoansAmortized Cost Basis of Loans >= 90 days Past due but still accruingAmortized Cost Basis of Non-accrual Loans without Related Allowance
Non-owner occupied commercial$3,009 $— $— $2,624 
Owner occupied commercial2,810 — — 2,398 
Non-owner occupied residential2,852 — — 2,567 
Commercial, industrial and other6,763 — — 1,122 
Equipment finance43 — — — 
Residential mortgage817 — — 694 
Consumer687 — 1 — 
Total$16,981 $— $1 $9,405 
December 31, 2020
(in thousands)Non-accrualInterest Income Recognized on Non-accrual LoansAmortized Cost Basis of Loans >= 90 days Past due but still accruingAmortized Cost Basis of Non-accrual Loans without Related Allowance
Non-owner occupied commercial$16,537 $— $— $14,719 
Owner occupied commercial14,271 — — 12,371 
Multifamily626 — — — 
Non-owner occupied residential2,217 — — 1,580 
Commercial, industrial and other2,633 — — 1,418 
Construction1,440 — — 1,234 
Equipment finance327 — — — 
Residential mortgage2,469 — — 1,015 
Consumer2,243 — 1 — 
Total$42,763 $— $1 $32,337 
At December 31, 2021 and December 31, 2020, there was one loan with a recorded investment of $1,000 that was past due more than 89 days and still accruing. The Company had $930,000 and $1.7 million in residential mortgages and consumer home equity loans included in total non-accrual loans that were in the process of foreclosure at December 31, 2021 and December 31, 2020, respectively.
Impaired Loans
The following table presents, under previously applicable GAAP, loans individually evaluated for impairment by the portfolio segments existing at 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 other1,391 1,381 — 16 1,334 
Construction1,663 1,661 — 2 82 
Equipment finance— — — — — 
Residential mortgage803 815 — — 233 
Consumer— — — — — 
Loans with related allowance:
Commercial, secured by real estate3,470 3,706 228 190 4,554 
Commercial, industrial and other113 113 5 6 113 
Construction— — — — — 
Equipment finance23 23 10 — 21 
Residential mortgage1,512 1,682 104 19 926 
Consumer671 765 5 29 693 
Total:
Commercial, secured by real estate$15,948 $16,336 $228 $354 $14,940 
Commercial, industrial and other1,504 1,494 5 22 1,447 
Construction1,663 1,661 — 2 82 
Equipment finance23 23 10 — 21 
Residential mortgage2,315 2,497 104 19 1,159 
Consumer671 765 5 29 693 
$22,124 $22,776 $352 $426 $18,342 
Troubled Debt Restructurings
Loans are classified as troubled debt restructured loans ("TDR") in cases where borrowers experience financial difficulties and Lakeland makes certain concessionary modifications to contractual terms. Restructured loans typically involve a modification of terms such as a reduction of the stated interest rate, a moratorium of principal payments and/or an extension of the maturity date at a stated interest rate lower than the current market rate of a new loan with similar risk.
The CARES Act provided relief from TDR classification for certain loan modifications related to the COVID-19 pandemic beginning March 1, 2020 through the earlier of 60 days after the end of the pandemic or December 31, 2020. Additionally, banking regulatory agencies issued interagency guidance that COVID-19 related short-term modifications (i.e., six months or less) granted to borrowers that were current as of the loan modification program implementation date do not need to be considered TDRs. The Consolidated Appropriations Act, 2021 (the "CAA"), which was signed into law on December 27, 2020, extended this guidance to modifications made until the earlier of January 1, 2022 or 60 days after the end of the COVID-19 national emergency. The Company elected this provision of the CARES Act and excluded modified loans that met the required guidelines for relief from its TDR classification. At December 31, 2021, no loans were on COVID-related deferrals as the remaining 90-day loan deferments expired and borrowers began paying their pre-deferral loan payments in the first quarter of 2021. For most commercial loans, borrowers are paying their pre-deferral loan payments plus an additional monthly amount to catch up on the payments that were deferred. None of these modifications were considered TDRs.
At December 31, 2021 and 2020, TDRs totaled $3.5 million and $5.0 million, respectively. Accruing TDRs totaled $3.3 million and non-accrual TDRs totaled $127,000 at December 31, 2021. Accruing TDRs and non-accrual TDRs totaled $3.9 million and $1.1 million, respectively, at December 31, 2020. There was one consumer loan totaling $115,000 that was restructured during 2021 that met the definition of a TDR, while no loans were restructured during 2020 that met the definition of a TDR. There were no restructured loans that subsequently defaulted in 2021; however, two consumer loans totaling $83,000 that were TDRs within the previous twelve months had subsequently defaulted in 2020.
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, 2021 and 2020, loans to these related parties amounted to $64.0 million and $75.7 million, respectively. There were new loans of $5.0 million to related parties and repayments of $16.7 million from related parties in 2021.
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, 2021, Lakeland had $1.9 million in mortgages held for sale compared to $1.3 million as of December 31, 2020.
Equipment Finance Receivables
Future minimum payments of equipment finance receivables at December 31, 2021 are expected as follows:
(in thousands)
2022$40,997 
202334,476 
202425,736 
202515,388 
20265,885 
Thereafter730 
$123,212 
Other Real Estate and Other Repossessed Assets
At December 31, 2021 and December 31, 2020, Lakeland had no other real estate owned and held no other repossessed assets. For the year ended December 31, 2021, Lakeland had no writedowns of other real estate owned and for the years ended December 31, 2020 and 2019 had writedowns of $39,000 and $153,000, respectively, recorded in other expense in the Consolidated Statement of Income.