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Loans | 9 Months Ended
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Sep. 30, 2020
Loans and Leases Receivable, Net Amount [Abstract] |
Loans | Loans The Company’s loan portfolio includes originated and purchased loans. The following is an analysis of the loan portfolio by segment and class (net of unearned income):
|  | September 30, 2020 |  | December 31, 2019
|  | (dollars in thousands)
Commercial loans: |  |  |  |
Commercial real estate |  | $ | 4,027,035 |  |  | $ | 3,945,853 |
Commercial business |  | 3,836,009 |  |  | 2,989,613 |
Agriculture |  | 850,290 |  |  | 765,371 |
Construction |  | 273,176 |  |  | 361,533 |
Consumer loans: |  |  |  |
One-to-four family residential real estate |  | 665,432 |  |  | 637,325 |
Other consumer |  | 37,005 |  |  | 43,770 |
Total loans |  | 9,688,947 |  |  | 8,743,465 |
Less: Allowance for credit losses |  | (156,968) |  |  | (83,968) |
Total loans, net |  | $ | 9,531,979 |  |  | $ | 8,659,497 |
Loans held for sale |  | $ | 24,407 |  |  | $ | 17,718 |
At September 30, 2020 and December 31, 2019, the Company had no material foreign activities. Substantially all of the Company’s loans and unfunded commitments are geographically concentrated in its service areas within the states of Washington, Oregon and Idaho. At September 30, 2020 and December 31, 2019, $3.49 billion and $3.24 billion of commercial and residential real estate loans were pledged as collateral on FHLB borrowings and additional borrowing capacity. The Company has also pledged $200.6 million and $151.3 million of commercial loans to the FRB for additional borrowing capacity at September 30, 2020 and December 31, 2019, respectively. Accrued interest receivable for loans is included in “Interest receivable” on the Company’s Consolidated Balance Sheet and is not reflected in the balances in the table above. At September 30, 2020 and December 31, 2019, accrued interest receivable for loans was $43.4 million and $33.0 million, respectively. The Company does not measure an allowance for credit losses for accrued interest receivable. The following is an aging of the recorded investment of the loan portfolio as of September 30, 2020 and December 31, 2019:
|  | Current Loans |  | 30 - 59 Days Past Due |  | 60 - 89 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Nonaccrual Loans |  | Total Loans
September 30, 2020 |  | (in thousands)
Commercial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | $ | 4,015,038 |  |  | $ | 547 |  |  | $ | 1,088 |  |  | $ | — |  |  | $ | 1,635 |  |  | $ | 10,362 |  |  | $ | 4,027,035 |
Commercial business |  | 3,808,794 |  |  | 6,987 |  |  | 915 |  |  | — |  |  | 7,902 |  |  | 19,313 |  |  | 3,836,009 |
Agriculture |  | 833,408 |  |  | 1,710 |  |  | 259 |  |  | — |  |  | 1,969 |  |  | 14,913 |  |  | 850,290 |
Construction |  | 272,959 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 217 |  |  | 273,176 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential real estate |  | 658,468 |  |  | 4,559 |  |  | — |  |  | — |  |  | 4,559 |  |  | 2,405 |  |  | 665,432 |
Other consumer |  | 36,744 |  |  | 215 |  |  | 25 |  |  | — |  |  | 240 |  |  | 21 |  |  | 37,005 |
Total |  | $ | 9,625,411 |  |  | $ | 14,018 |  |  | $ | 2,287 |  |  | $ | — |  |  | $ | 16,305 |  |  | $ | 47,231 |  |  | $ | 9,688,947 |
|  | Current Loans |  | 30 - 59 Days Past Due |  | 60 - 89 Days Past Due |  | Greater than 90 Days Past Due |  | Total Past Due |  | Nonaccrual Loans |  | Total Loans
December 31, 2019 |  | (in thousands)
Commercial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  | $ | 3,935,633 |  |  | $ | 6,421 |  |  | $ | — |  |  | — |  |  | $ | 6,421 |  |  | $ | 3,799 |  |  | $ | 3,945,853 |
Commercial business |  | 2,959,826 |  |  | 6,081 |  |  | 2,769 |  |  | — |  |  | 8,850 |  |  | 20,937 |  |  | 2,989,613 |
Agriculture |  | 755,719 |  |  | 2,283 |  |  | 2,346 |  |  | — |  |  | 4,629 |  |  | 5,023 |  |  | 765,371 |
Construction |  | 360,582 |  |  | 951 |  |  | — |  |  | — |  |  | 951 |  |  | — |  |  | 361,533 |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential real estate |  | 631,109 |  |  | 2,516 |  |  | 408 |  |  | — |  |  | 2,924 |  |  | 3,292 |  |  | 637,325 |
Other consumer |  | 43,654 |  |  | 80 |  |  | 27 |  |  | — |  |  | 107 |  |  | 9 |  |  | 43,770 |
Total |  | $ | 8,686,523 |  |  | $ | 18,332 |  |  | $ | 5,550 |  |  | $ | — |  |  | $ | 23,882 |  |  | $ | 33,060 |  |  | $ | 8,743,465 |
Loan payments are considered timely when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof is received on the due date of the scheduled payment. In addition, the risk rating on COVID-19 modified loans did not change. These loans are not considered past due until after the deferral period is over and scheduled payments resume. Accrued interest on these COVID-19 modified loans is due, in full, when the deferral period ends. The credit quality of these loans will be reevaluated after the deferral period ends. Nonaccrual loans are generally loans placed on a nonaccrual basis when they become 90 days past due or when there are otherwise serious doubts about the collectability of principal or interest within the existing terms of the loan. The Company’s policy is to write-off all accrued interest on loans when they are placed on nonaccrual status. The following table summarizes written-off interest on nonaccrual loans for the three and nine months ended September 30, 2020 and 2019:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2020 |  | 2019 |  | 2020 |  | 2019
|  | (in thousands)
Commercial loans |  | $ | 387 |  |  | $ | 149 |  |  | $ | 1,835 |  |  | $ | 1,316 |
Consumer loans |  | 6 |  |  | 26 |  |  | 19 |  |  | 146 |
Total |  | $ | 393 |  |  | $ | 175 |  |  | $ | 1,854 |  |  | $ | 1,462 |
The following summarizes the amortized cost of nonaccrual loans for which there was no related ACL as of September 30, 2020 and December 31, 2019:
|  | September 30, 2020 |  | December 31, 2019
|  | (in thousands)
Commercial loans: |  |  |  |
Commercial real estate |  | $ | 9,092 |  |  | $ | 1,715 |
Commercial business |  | 11,713 |  |  | 15,762 |
Agriculture |  | 11,074 |  |  | 1,798 |
Total |  | $ | 31,879 |  |  | $ | 19,275 |
The following is an analysis of loans classified as TDR during the three and nine months ended September 30, 2020 and 2019:
|  | Three Months Ended September 30, 2020 |  | Three Months Ended September 30, 2019
|  | Number of TDR Modifications |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number of TDR Modifications |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment
|  | (dollars in thousands)
Commercial loans: |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 4 |  |  | $ | 795 |  |  | 795 |  |  | 5 |  |  | 5,026 |  |  | 5,026 |
Agriculture |  | 1 |  |  | 2,600 |  |  | 2,600 |  |  | — |  |  | — |  |  | — |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential real estate |  | 4 |  |  | 618 |  |  | 618 |  |  | 5 |  |  | 357 |  |  | 357 |
Other consumer |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 1 |  |  | 1 |
Total |  | 9 |  |  | $ | 4,013 |  |  | $ | 4,013 |  |  | 11 |  |  | $ | 5,384 |  |  | $ | 5,384 |
|  | Nine Months Ended September 30, 2020 |  | Nine Months Ended September 30, 2019
|  | Number of TDR Modifications |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Number of TDR Modifications |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment
|  | (dollars in thousands)
Commercial loans: |  |  |  |  |  |  |  |  |  |  |  |
Commercial business |  | 10 |  |  | $ | 2,757 |  |  | $ | 2,757 |  |  | 10 |  |  | $ | 6,560 |  |  | $ | 6,560 |
Agriculture |  | 2 |  |  | 3,495 |  |  | 3,495 |  |  | — |  |  | — |  |  | — |
Consumer loans: |  |  |  |  |  |  |  |  |  |  |  |
One-to-four family residential real estate |  | 6 |  |  | 814 |  |  | 814 |  |  | 10 |  |  | 692 |  |  | 692 |
Other consumer |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 1 |  |  | 1 |
Total |  | 18 |  |  | $ | 7,066 |  |  | $ | 7,066 |  |  | 21 |  |  | $ | 7,253 |  |  | $ | 7,253 |
The Company’s loans classified as TDR are loans that have been modified or with respect to which the borrower has been granted special concessions due to financial difficulties that, if not for the challenges of the borrower, the Company would not otherwise consider. The TDR modifications or concessions are made to increase the likelihood that these borrowers with financial difficulties will be able to satisfy their debt obligations as amended. The concessions granted in the restructurings, summarized in the table above, largely consisted of maturity extensions, interest rate modifications or a combination of both. In limited circumstances, a reduction in the principal balance of the loan could also be made as a concession. Loans classified as TDR are included with the loans collectively measured for credit losses. The Company had commitments to lend $641 thousand of additional funds on loans classified as TDR as of September 30, 2020. The Company had $1.1 million of such commitments at December 31, 2019. The Company had no loans modified as TDR that defaulted within 12 months of being modified as TDR during the three and nine months ended September 30, 2020. During three months ended September 30, 2019, the Company had no loans that defaulted within 12 months of being modified as a TDR. During the nine months ended September 30, 2019, the Company had one $26 thousand consumer loan that defaulted within 12 months of being modified as a TDR. The defaulted TDR loan was collateralized and included with the loans individually measured for credit loss. Loan modifications and PPP loans in response to COVID-19 Financial institutions are required to maintain records of the volume of loans involved in modifications to which troubled debt restructuring relief is applicable. At September 30, 2020, the Company had 103 short–term deferments on $114.4 million of loans, gross of unearned income. These short–term deferments are not classified as TDR’s and will not be reported as past due provided that they are performing in accordance with the modified terms. The Company offered PPP loans to provide financial support to small and medium-size businesses to cover payroll and certain other expenses during the COVID-19 pandemic. The PPP was established by the CARES Act and is implemented by the U.S. SBA with support from the U.S. Department of Treasury. The program, which was amended by the Paycheck Protection Flexibility Act of 2020, provides small businesses with funds to pay up to 24 weeks of payroll costs including benefits, as well as interest on mortgages, rent and utilities. Funds are provided to small businesses in the form of loans that will be fully forgiven when used for permitted purposes and when at least 60% of the funds are used for payroll costs in accordance with the requirements of the amended PPP. At September 30, 2020, we had $953.2 million of PPP loans outstanding, which are included in commercial business loans.

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