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Loans
 9 Months Ended
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, 2020December 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 loans9,688,947 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,
2020201920202019
(in thousands)
Commercial loans$387 $149 $1,835 $1,316 
Consumer loans6 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, 2020December 31, 2019
(in thousands)
Commercial loans:
Commercial real estate$9,092 $1,715 
Commercial business11,713 15,762 
Agriculture11,074 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, 2020Three Months Ended September 30, 2019
Number of TDR ModificationsPre-Modification
Outstanding
Recorded
Investment 		Post-Modification
Outstanding
Recorded
Investment 		Number of TDR ModificationsPre-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 
Total9 $4,013 $4,013 11 $5,384 $5,384 
Nine Months Ended September 30, 2020Nine Months Ended September 30, 2019
Number of TDR ModificationsPre-Modification
Outstanding
Recorded
Investment 		Post-Modification
Outstanding
Recorded
Investment 		Number of TDR ModificationsPre-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 
Total18 $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.