Loans and Leases

12 Months Ended

Dec. 31, 2020

The following table presents the major types of loans and leases, net of deferred fees and costs, as of December 31, 2020 and 2019:


(in thousands)	December 31, 2020		December 31, 2019
Commercial real estate
Non-owner occupied term, net	$	3,505,802	$	3,545,566
Owner occupied term, net	2,333,945		2,496,088
Multifamily, net	3,349,196		3,514,774
Construction & development, net	828,478		678,740
Residential development, net	192,761		189,010
Commercial
Term, net	4,024,467		2,232,817
Lines of credit & other, net	862,760		1,212,393
Leases & equipment finance, net	1,456,630		1,465,489
Residential
Mortgage, net	3,871,906		4,215,424
Home equity loans & lines, net	1,136,064		1,237,512
Consumer & other, net	217,358		407,871
Total loans and leases, net of deferred fees and costs	$	21,779,367	$	21,195,684

The loan balances are net of deferred fees and costs. As of December 31, 2020 and 2019, the balances of the net deferred costs were $38.6 million and $71.9 million, respectively. In response to the COVID-19 crisis, the federal government created the PPP, sponsored by the SBA, under the CARES Act. The Bank participated in the PPP to originate SBA loans designated to help businesses maintain their workforce and cover other working capital needs during the COVID-19 pandemic. As of December 31, 2020, the Bank has approximately 14,800 PPP loans, totaling $1.8 billion in net loans, which are classified as commercial term loans. Net deferred costs include $26.9 million net deferred fees for the PPP loan related origination fees net of costs to originate these loans. The PPP net deferred fees are a yield adjustment over the remaining term of these loans. The loans are fully guaranteed by the SBA and the maximum term of the loans is either two or five years; however, the majority of the loan balances are expected to be forgiven by the SBA, which will accelerate the recognition of these net deferred fees at the forgiveness date.

Net loans also include net discounts on acquired loans of $17.9 million and $30.2 million as of December 31, 2020 and 2019, respectively. As of December 31, 2020, loans totaling $12.1 billion were pledged to secure borrowings and available lines of credit. The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this footnote. Interest accrued on loans totaled $74.8 million and $58.5 million as of December 31, 2020 and December 31, 2019, respectively, and is included in Other Assets.

The Bank, through its commercial equipment leasing subsidiary, FinPac, is a provider of commercial equipment leasing and financing throughout the United States, originating business through three distinct channels: small and mid-ticket third party originators, vendor finance, and Umpqua Bank Equipment Leasing & Finance. Direct finance leases are included within the lease and equipment finance segment within the loans and leases, net line item. These leases typically have terms of three to five years and are considered to be direct financing leases. Interest income recognized on these leases was $26.5 million and $32.8 million at December 31, 2020 and 2019, respectively.

Residual values on leases are established at the time equipment is leased based on an estimate of the value of the leased equipment when the Company expects to dispose of the equipment, typically at the termination of the lease. An annual evaluation is also performed each fiscal year by an independent valuation specialist and equipment residuals are confirmed or adjusted in conjunction with such evaluation.

The following table presents the net investment in direct financing leases as of December 31, 2020 and 2019:


(in thousands)	December 31, 2020		December 31, 2019
Minimum lease payments receivable	$	349,979	$	435,574
Estimated guaranteed and unguaranteed residual values	79,792		86,633
Initial direct costs - net of accumulated amortization	7,228		9,400
Unearned income	(51,185)		(68,177)
Net investment in direct financing leases	$	385,814	$	463,430

The following table presents the scheduled minimum lease payments receivable as of December 31, 2020:


(in thousands)
Year	Amount
2021	$	131,133
2022	95,102
2023	57,028
2024	33,444
2025	17,052
Thereafter	16,220
Total minimum lease payments receivable	$	349,979

In the course of managing the loan and lease portfolio, at certain times, management may decide to sell loans and leases. The following table summarizes the carrying value of loans and leases sold by major loan type during the years ended December 31, 2020 and 2019:


(in thousands)	2020		2019
Commercial real estate
Non-owner occupied term, net	$	26,209	$	40,496
Owner occupied term, net	30,945		25,454
Multifamily, net	—		13,849


Commercial
Term, net	47,427		38,227
Lines of credit & other, net	159		1,619
Leases & equipment finance, net	43		54,499
Residential
Mortgage, net	365		1,849

Consumer & other, net	—		65,322
Total loans and leases sold, net	$	105,148	$	241,315