Lakeland Bancorp Inc. has reached a settlement agreement with one of three insurance companies over a pool of nonperforming commercial leases.
The agreement was announced Monday. Royal Indemnity Co. would pay the $2 billion-asset Oak Ridge, N.J., banking company $1.85 million to settle its claims.
Lakeland would also be able to reduce its nonperforming loans and leases by $4 million. It reported nonperforming assets of $18.1 million as of Sept. 30.
Commercial Money Center Inc., which sold the leases to Lakeland in the summer of 2001, was supposed to service them and forward the payments to Lakeland. However, the Escondido, Calif., company stopped making the payments within months after the sale. It filed for bankruptcy protection in 2002.
Lakeland reached a $2.2 million settlement with the American Motorists Insurance Co. in October 2003.
The third insurer, RLI Insurance Co. of Peoria, Ill., filed suit against Lakeland in 2002 and said it should not have to pay Lakeland's claims, because Commercial Money Center fraudulently inflated the revenue the leases could generate. That case remains in litigation.
