Loans

12 Months Ended

Dec. 31, 2020

Loans and Leases Receivable, Net Amount [Abstract]

Loans

The Company’s loan portfolio includes originated and purchased loans. The following is an analysis of the loan portfolio by segment (net of unearned income):


	December 31,
	2020		2019
	(in thousands)
Commercial loans:
Commercial real estate	$	4,062,313	$	3,945,853
Commercial business	3,597,968		2,989,613
Agriculture	779,627		765,371
Construction	268,663		361,533
Consumer loans:
One-to-four family residential real estate	683,570		637,325
Other consumer	35,519		43,770
Total loans	9,427,660		8,743,465
Less: Allowance for credit losses	(149,140)		(83,968)
Total loans, net	$	9,278,520	$	8,659,497

At December 31, 2020 and 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 December 31, 2020 and 2019, $3.46 billion and $3.24 billion, respectively, of commercial and residential real estate loans were pledged as collateral on FHLB advances. The Company has also pledged $200.4 million and $151.3 million of commercial loans to the FRB for additional borrowing capacity at December 31, 2020 and 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 December 31, 2020 and 2019, accrued interest receivable for loans was $37.8 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 amortized cost of the loan portfolio as of December 31, 2020 and 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
December 31, 2020	(in thousands)
Commercial loans:
Commercial real estate	$	4,037,309	$	17,292	$	—	$	—	$	17,292	$	7,712	$	4,062,313
Commercial business	3,578,905		1,282		4,559		—		5,841		13,222		3,597,968
Agriculture	767,102		911		—		—		911		11,614		779,627
Construction	268,304		—		142		—		142		217		268,663
Consumer loans:
One-to-four family residential real estate	677,627		2,283		1,659		—		3,942		2,001		683,570
Other consumer	35,450		24		5		—		29		40		35,519
Total	$	9,364,697	$	21,792	$	6,365	$	—	$	28,157	$	34,806	$	9,427,660

	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 are due. 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.

The following table summarizes written-off interest on nonaccrual loans for the years ended December 31, 2020, 2019 and 2018:


	Years Ended December 31,
	2020		2019		2018
	(in thousands)
Commercial loans	$	1,972	$	1,475	$	1,296
Consumer loans	28		196		268
Total	$	2,000	$	1,671	$	1,564

The following summarizes the amortized cost of nonaccrual loans for which there was no related ACL as of December 31, 2020 and 2019:


	December 31, 2020		December 31, 2019
	(in thousands)
Commercial loans:
Commercial real estate	$	6,393	$	1,715
Commercial business	6,382		15,762
Agriculture	8,136		1,798




Total	$	20,911	$	19,275

The following is an analysis of loans classified as TDR for the years ended December 31, 2020, 2019 and 2018:


	Years Ended December 31,
	2020					2019					2018
	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		Number of TDR Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(dollars in thousands)
Commercial loans:
Commercial real estate	—	$	—	$	—	—	$	—	$	—	1	$	891	$	891
Commercial business	11	3,257		3,257		10	6,560		6,560		10	18,352		18,352
Agriculture	2	3,495		3,495		—	—		—		2	27		27

Consumer loans:
One-to-four family residential real estate	6	814		814		13	787		787		21	2,777		2,777
Other consumer	—	—		—		1	1		1		—	—		—
Total	19	$	7,566	$	7,566	24	$	7,348	$	7,348	34	$	22,047	$	22,047

The Company’s loans classified as TDR are loans that have been modified or 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 Company had $651 thousand of commitments to lend additional funds on loans classified as TDR as of December 31, 2020 as compared to $1.1 million of similar commitments at December 31, 2019. 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. The Company had no loans classified as TDR that defaulted within 12 months of being classified as TDR during the year ended December 31, 2020. During the year ended December 31, 2019, the Company had one $26 thousand consumer loan that defaulted within 12 months of being classified as a TDR. The defaulted TDR loan was collateralized and included with the loans individually measured for credit loss. The Company also had no loans modified as TDR that defaulted within 12 months of being modified as TDR during the year ended December 31, 2018.

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 TDR relief is applicable. At December 31, 2020, the Company had 70 deferments on $146.7 million of loans, gross of unearned income. These 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 December 31, 2020, we had $651.6 million of PPP loans outstanding, which are included in commercial business loans.