Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2021

Loans in the accompanying consolidated balance sheets consisted of the following:


	September 30,			December 31,
	2021			2020
Real estate loans:
Non-farm non-residential owner occupied	$	361,467,237		$	353,273,098
Non-farm non-residential non-owner occupied		345,359,923			277,804,173
Residential		179,971,204			140,621,495
Construction, development & other		124,548,118			98,207,147
Farmland		8,308,914			4,653,344
Commercial & industrial		538,550,714			645,927,775
Consumer		4,417,542			4,157,339
Other		49,770,699			31,447,517
		1,612,394,351			1,556,091,888
Allowance for loan losses		(15,571,366	)		(11,979,492	)
Loans, net	$	1,596,822,985		$	1,544,112,396

Total loans are presented net of unaccreted discounts and deferred fees totaling $7,897,196 and $10,424,219 at September 30, 2021 and December 31, 2020, respectively.

The Company had $171,262,592 and $390,803,748 in outstanding loan balances related to the guaranteed SBA Paycheck Protection Program (“PPP”) as of September 30, 2021 and December 31, 2020, respectively. These loans are included within the commercial and industrial loan balances throughout the footnotes.

Non-accrual and Past Due Loans

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. As mentioned in Note 1, the accrual of interest on loans is discontinued when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due. Non-accrual loans and accruing loans past due more than 90 days segregated by class of loans were as follows:


	September 30,				December 31,
	2021				2020
	Non-accrual		Accruing loans past due more than 90 days		Non-accrual		Accruing loans past due more than 90 days
Real estate loans:
Non-farm non-residential owner occupied	$	1,031,558	$	—	$	1,943,744	$	568,591
Non-farm non-residential non-owner occupied		352,991		—		384,581		—
Residential		133,011		—		85,538		183,535
Construction, development & other		251,246		—		264,038		—
Farmland		—		—		—		—
Commercial & industrial		9,162,115		560,559		4,155,064		—
Consumer		—		—		—		—
Other		—		—		—		—
Purchased credit impaired		146,552		—		423,680		—
	$	11,077,473	$	560,559	$	7,256,645	$	752,126

An age analysis of past due loans, segregated by class of loans, were as follows:


	September 30, 2021
	30-59 days		60-89 days		Over 90 days		Total past due		Total current		Total loans
Real estate loans:
Non-farm non-residential owner occupied	$	108,122	$	157,768	$	1,031,558	$	1,297,448	$	360,169,789	$	361,467,237
Non-farm non-residential non-owner occupied		728,653		—		352,991		1,081,644		340,855,253		341,936,897
Residential		—		2,100,000		133,011		2,233,011		177,655,554		179,888,565
Construction, development & other		—		51,619		251,246		302,865		120,117,461		120,420,326
Farmland		—		—		—		—		8,308,914		8,308,914
Commercial & industrial		6,419,082		335,406		9,722,674		16,477,162		521,866,545		538,343,707
Consumer		12,305		—		—		12,305		4,405,237		4,417,542
Other		23,994		—		—		23,994		49,746,705		49,770,699
Purchased credit impaired		—		—		146,552		146,552		7,693,912		7,840,464
	$	7,292,156	$	2,644,793	$	11,638,032	$	21,574,981	$	1,590,819,370	$	1,612,394,351


	December 31, 2020
	30-59 days		60-89 days		Over 90 days		Total past due		Total current		Total loans
Real estate loans:
Non-farm non-residential owner occupied	$	286,624	$	—	$	2,512,335	$	2,798,959	$	350,474,139	$	353,273,098
Non-farm non-residential non-owner occupied		1,733,940		—		384,581		2,118,521		271,785,063		273,903,584
Residential		286,977		—		269,073		556,050		140,047,638		140,603,688
Construction, development & other		—		—		264,038		264,038		93,819,610		94,083,648
Farmland		—		—		—		—		4,653,344		4,653,344
Commercial & industrial		842,059		255,907		4,155,064		5,253,030		640,404,991		645,658,021
Consumer		49,645		—		—		49,645		4,107,694		4,157,339
Other		21,991				—		21,991		31,425,526		31,447,517
Purchased credit impaired		—		—		423,680		423,680		7,887,969		8,311,649
	$	3,221,236	$	255,907	$	8,008,771	$	11,485,914	$	1,544,605,974	$	1,556,091,888

Impaired Loans

The following tables present impaired loans by class of loans:


	September 30, 2021
	Unpaid contractual principal balance		Recorded investment with no allowance		Recorded investment with allowance		Total recorded investment		Related allowance		Average recorded investment during year
Real estate loans:
Non-farm non-residential owner occupied	$	1,031,558	$	1,031,558	$	—	$	1,031,558	$	—	$	1,062,661
Non-farm non-residential non-owner occupied		5,671,819		5,658,937		—		5,658,937		—		5,694,624
Residential		135,851		133,011		—		133,011		—		141,148
Construction, development & other		248,576		251,245		—		251,245		—		258,976
Farmland		—		—		—		—		—		—
Commercial & industrial		12,199,640		8,913,207		3,286,433		12,199,640		1,062,227		12,812,262
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Purchased credit impaired		68,356		—		68,356		68,356		17,656		72,548
	$	19,355,800	$	15,987,958	$	3,354,789	$	19,342,747	$	1,079,883	$	20,042,219


	December 31, 2020
	Unpaid contractual principal balance		Recorded investment with no allowance		Recorded investment with allowance		Total recorded investment		Related allowance		Average recorded investment during year
Real estate loans:
Non-farm non-residential owner occupied	$	1,943,744	$	1,943,744	$	—	$	1,943,744	$	—	$	1,754,100
Non-farm non-residential non-owner occupied		384,581		384,581		—		384,581		—		406,069
Residential		85,539		82,699		—		82,699		—		70,163
Construction, development & other		264,038		266,708		—		266,708		—		187,446
Farmland		—		—		—		—		—		—
Commercial & industrial		4,737,100		3,706,167		1,030,933		4,737,100		136,309		4,904,295
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Purchased credit impaired		—		—		—		—		—		—
	$	7,415,002	$	6,383,899	$	1,030,933	$	7,414,832	$	136,309	$	7,322,073

Interest payments received on impaired loans are recorded as interest income unless collections of the remaining recorded investment are doubtful, at which time payments received are recorded as reductions of principal. Interest income collected on impaired loans was approximately $398,400 for the nine months ended September 30, 2021 and approximately $299,600 for the three months ended September 30, 2021. No interest income was collected on impaired loans for the nine months or three months ended September 30, 2020.

Troubled Debt Restructuring

During the nine months ended September 30, 2021, the terms of one loan were modified as a troubled debt restructuring (“TDR”). The following table presents modifications of loans the Company considers to be TDR loans:


	September 30, 2021
	Loan modifications
	Number of loans		Pre- restructuring recorded investment		Post- restructuring recorded investment		Adjusted interest rate		Payment deferral		Combined rate and payment deferral
Real estate loans:
Non-farm non-residential owner occupied		—	$	—	$	—	$	—	$	—	$	—
Non-farm non-residential non-owner occupied		1		5,305,945		5,305,945		—		5,305,945		—
Residential		—		—		—		—		—		—
Construction, development & other		—		—		—		—		—		—
Farmland		—		—		—		—		—		—
Commercial & industrial		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
		1	$	5,305,945	$	5,305,945	$	—	$	5,305,945	$	—

	December 31, 2020
	Loan modifications
	Number of loans		Pre- restructuring recorded investment		Post- restructuring recorded investment		Adjusted interest rate		Payment deferral		Combined rate and payment deferral
Real estate loans:
Non-farm non-residential owner occupied		3	$	927,205	$	927,205	$	—	$	927,205	$	—
Non-farm non-residential non-owner occupied		—		—		—		—		—		—
Residential		—		—		—		—		—		—
Construction, development & other		—		—		—		—		—		—
Farmland		—		—		—		—		—		—
Commercial & industrial		2		757,786		757,786		—		757,786		—
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
		5	$	1,684,991	$	1,684,991	$	—	$	1,684,991	$	—

No loans modified under a troubled debt restructuring during the previous twelve-month period were in default. A default for purposes of this disclosure is a troubled debt restructured loan in which the borrower is 90 days past due or results in the foreclosure and repossession of the applicable collateral. At September 30, 2021 and December 31, 2020, the Company had no commitments to lend additional funds to borrowers with loans whose terms had been modified under troubled debt restructurings.

COVID-19 Loan Deferments

Certain borrowers were unable to meet their contractual payment obligations because of the adverse effects of COVID-19. During March of 2020 and to help mitigate these effects, the Company began offering deferral modifications of principal and/or interest payments for varying periods, but typically no more than 90 days. After 90 days, customers could apply for an additional deferral, and a small portion of our customers requested such an additional deferral. At September 30, 2021, the Company had approximately 576 loans totaling $247.9 million in outstanding loan balances subject to deferral and modification agreements due to COVID whereby principal and/or interest payments were deferred to the end of each loan term. Subsequent to the approved deferral period, customers resumed their regular payments. The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provides banks an option to elect to not account for certain loan modifications related to COVID as troubled debt restructurings if the borrowers were not

more than 30 days past due at December 31, 2019. In the absence of other intervening factors, such short-term modifications made on a good faith basis are not categorized as troubled debt restructurings, nor are loans granted payment deferrals related to COVID-19 reported as past due or placed on non-accrual status. At September 30, 2021, $4.9 million in accrued interest receivables related to these loans remained outstanding and will be collected at the end of each loan term.

Credit Quality Indicators

Credit Quality Indicators. From a credit risk standpoint, the Company classifies its loans in one of six categories: (i) pass, (ii) special mention, (iii) substandard, (iv) purchased credit impaired, (v) doubtful, or (vi) loss.

The classifications of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on credits monthly. Ratings are adjusted to reflect the degree of risk and loss that is felt to be inherent in each credit as of each monthly reporting period. The Company’s methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

(i) The Company has several pass credit grades that are assigned to loans based on varying levels of credits, ranging from credits that are secured by cash or marketable securities, to watch credits that have all the characteristics of an acceptable credit risk but warrant more than the normal level of supervision.

(ii) Special mention loans are loans that still show sufficient cash flow to service their debt but show a declining financial trend with potential cash flow shortages if trends continue. This category should be treated as a temporary grade. If cash flow deteriorates further to become negative, then a substandard grade should be given. If cash flow trends begin to improve then an upgrade back to pass would be justified. Nonfinancial reasons for rating a credit special mention include management problems, pending litigation, an ineffective loan agreement or other material structure weakness.

(iii) A substandard loan has material weakness in the primary repayment source such as insufficient cash flow from operations to service the debt. However, other weaknesses such as limited paying capacity of the obligor or the collateral pledged could justify a substandard grade. Substandard loans must have a well-defined weakness, or weaknesses that jeopardize the liquidation of the debt.

(iv) Credits purchased from third parties are recorded at their estimated fair value at the acquisition date and are classified as PCI loans if the loans reflect credit deterioration since origination and it is probable at acquisition that the Company will be unable to collect all contractually required payments (see Note 1 - Nature of Operations and Summary of Significant Accounting Policies - Certain Acquired Loans).

(v) A loan classified as doubtful has all the weaknesses of a substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. A doubtful loan has a high probability of total or substantial loss, but because of specific pending events that may strengthen the asset, its classification as loss is deferred. Doubtful borrowers are usually in default, lack adequate liquidity or capital, and lack the resources necessary to remain an operating entity. Because of high probability of loss, non-accrual status is required on doubtful loans.

(vi) Loans classified as loss are considered uncollectible and of such little value that their continuance as banking assets are not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. With loans classified as loss, the underlying borrowers are often in bankruptcy, have formally suspended debt repayments, or have otherwise ceased normal business operations. Once an asset is classified as loss, there is little prospect of collecting either its principal or interest. When access to collateral, rather than the value of the collateral, is a problem, a less severe classification may be appropriate. However, the Company does not maintain an asset on the balance sheet if realizing its value would require long-term litigation or other lengthy recovery efforts. Losses are to be recorded in the period an obligation becomes uncollectible.

The following tables summarize the Company’s internal ratings of its loans:


	September 30, 2021
	Pass		Special Mention		Substandard		Purchased Credit Impaired		Doubtful		Total
Real estate loans:
Non-farm non-residential owner occupied	$	350,054,949	$	6,987,549	$	4,424,739	$	—	$	—	$	361,467,237
Non-farm non-residential non-owner occupied		326,199,331		8,391,737		7,345,829		3,423,026		—		345,359,923
Residential		179,359,279		—		529,286		82,639		—		179,971,204
Construction, development & other		120,169,081		—		251,245		4,127,792		—		124,548,118
Farmland		8,308,914		—		—		—		—		8,308,914
Commercial & industrial		525,099,678		4,760,400		8,483,629		207,007		—		538,550,714
Consumer		4,394,433		23,109		—		—		—		4,417,542
Other		49,770,699		—		—		—		—		49,770,699
	$	1,563,356,364	$	20,162,795	$	21,034,728	$	7,840,464	$	—	$	1,612,394,351


	December 31, 2020
	Pass		Special Mention		Substandard		Purchased Credit Impaired		Doubtful		Total
Real estate loans:
Non-farm non-residential owner occupied	$	335,441,780	$	12,189,268	$	5,642,050	$	—	$	—	$	353,273,098
Non-farm non-residential non-owner occupied		255,467,635		12,705,637		5,730,312		3,900,589		—		277,804,173
Residential		139,742,887		—		860,801		17,807		—		140,621,495
Construction, development & other		93,816,941		—		266,707		4,123,499		—		98,207,147
Farmland		4,653,344		—		—		—		—		4,653,344
Commercial & industrial		629,093,318		6,143,686		9,847,172		269,754		573,845		645,927,775
Consumer		4,157,339		—		—		—		—		4,157,339
Other		31,447,517		—		—		—		—		31,447,517
	$	1,493,820,761	$	31,038,591	$	22,347,042	$	8,311,649	$	573,845	$	1,556,091,888

Allowance for Loan Losses

The majority of the loan portfolio is comprised of loans to businesses and individuals in the Greater Houston, Dallas-Fort Worth, and Austin-San Antonio markets. This geographic concentration subjects the loan portfolio to the general economic conditions within this area. The risks created by this concentration has been considered by management in the determination of the adequacy of the allowance for loan losses. Management believes the allowance for loan losses is adequate to cover estimated losses on loans at September 30, 2021 and December 31, 2020.

The following tables detail the activity in the allowance for loan losses by portfolio segment:


	For the Nine Months Ended September 30, 2021
	Beginning balance		Provision for loan losses			Charge-offs			Recoveries		Ending balance
Real estate loans:
Non-farm non-residential owner occupied	$	2,607,494	$	969,665		$	—		$	—	$	3,577,159
Non-farm non-residential non-owner occupied		3,107,186		1,773,874			—			—		4,881,060
Residential		1,218,132		(223,994	)		—			—		994,138
Construction, development & other		931,830		(77,038	)		—			—		854,792
Farmland		31,800		7,864			—			—		39,664
Commercial & industrial		3,858,284		1,367,686			(315,399	)		100,054		5,010,625
Consumer		35,354		(31,008	)		—			1,650		5,996
Other		189,412		35,951			(19,876	)		2,445		207,932
	$	11,979,492	$	3,823,000		$	(335,275	)	$	104,149	$	15,571,366


	For the Nine Months Ended September 30, 2020
	Beginning balance		Provision for loan losses			Charge-offs			Recoveries		Ending balance
Real estate loans:
Non-farm non-residential owner occupied	$	2,158,228	$	1,706,890		$	—		$	—	$	3,865,118
Non-farm non-residential non-owner occupied		1,626,882		1,071,398			—			—		2,698,280
Residential		373,226		310,843			—			—		684,069
Construction, development & other		330,326		273,323			—			—		603,649
Farmland		28,817		(11,946	)		—			—		16,871
Commercial & industrial		3,503,848		(835,106	)		(616,020	)		32,966		2,085,688
Consumer		15,761		6,965			(7,042	)		2,989		18,673
Other		86,274		27,633			—			—		113,907
	$	8,123,362	$	2,550,000		$	(623,062	)	$	35,955	$	10,086,255


	For the Three Months Ended September 30, 2021
	Beginning balance		Provision for loan losses			Charge-offs			Recoveries		Ending balance
Real estate loans:
Non-farm non-residential owner occupied	$	3,935,447	$	(358,288	)	$	—		$	—	$	3,577,159
Non-farm non-residential non-owner occupied		4,330,250		550,810			—			—		4,881,060
Residential		1,050,327		(56,189	)		—			—		994,138
Construction, development & other		681,472		173,320			—			—		854,792
Farmland		34,202		5,462			—			—		39,664
Commercial & industrial		3,192,366		1,962,453			(145,750	)		1,556		5,010,625
Consumer		9,961		(3,965	)		—			—		5,996
Other		159,846		49,397			(1,311	)		—		207,932
	$	13,393,871	$	2,323,000		$	(147,061	)	$	1,556	$	15,571,366


	For the Three Months Ended September 30, 2020
	Beginning balance		Provision for loan losses			Charge-offs		Recoveries			Ending balance
Real estate loans:
Non-farm non-residential owner occupied	$	3,795,183		73,957		$	—	$	(4,022	)	$	3,865,118
Non-farm non-residential non-owner occupied		2,470,107		228,173			—		—			2,698,280
Residential		611,456		72,613			—		—			684,069
Construction, development & other		831,169		(227,520	)		—		—			603,649
Farmland		20,067		(3,196	)		—		—			16,871
Commercial & industrial		2,241,754		(158,409	)		—		2,343			2,085,688
Consumer		18,200		473			—		—			18,673
Other		99,998		13,909			—		—			113,907
	$	10,087,934	$	—		$	—	$	(1,679	)	$	10,086,255

The following tables summarize the allocation of the allowance for loan losses, by portfolio segment, for loans evaluated for impairment individually and collectively:


	September 30, 2021
	Period end amounts of ALLL allocated to loans evaluated for impairment:
	Individually		Collectively		PCI		Total
Real estate loans:
Non-farm non-residential owner occupied	$	—	$	3,577,159	$	—	$	3,577,159
Non-farm non-residential non-owner occupied		—		4,881,060		—		4,881,060
Residential		—		994,138		—		994,138
Construction, development & other		—		854,792		—		854,792
Farmland		—		39,664		—		39,664
Commercial & industrial		1,062,227		3,930,742		17,656		5,010,625
Consumer		—		5,996		—		5,996
Other		—		207,932		—		207,932
	$	1,062,227	$	14,491,483	$	17,656	$	15,571,366


	December 31, 2020
	Period end amounts of ALLL allocated to loans evaluated for impairment:
	Individually		Collectively		PCI		Total
Real estate loans:
Non-farm non-residential owner occupied	$	—	$	2,607,494	$	—	$	2,607,494
Non-farm non-residential non-owner occupied		—		3,107,186		—		3,107,186
Residential		—		1,218,132		—		1,218,132
Construction, development & other		—		931,830		—		931,830
Farmland		—		31,800		—		31,800
Commercial & industrial		136,309		3,721,975		—		3,858,284
Consumer		—		35,354		—		35,354
Other		—		189,412		—		189,412
	$	136,309	$	11,843,183	$	—	$	11,979,492

The Company’s recorded investment in loans related to the balance in the allowance for loan losses on the basis of the Company’s impairment methodology is as follows:


	September 30, 2021
	Loans evaluated for impairment:
	Individually		Collectively		PCI		Total
Real estate loans:
Non-farm non-residential owner occupied	$	1,031,558	$	360,435,679	$	—	$	361,467,237
Non-farm non-residential non-owner occupied		5,658,937		339,700,986		—		345,359,923
Residential		133,011		179,838,193		—		179,971,204
Construction, development & other		251,245		124,296,873		—		124,548,118
Farmland		—		8,308,914		—		8,308,914
Commercial & industrial		12,267,996		526,214,362		68,356		538,550,714
Consumer		—		4,417,542		—		4,417,542
Other		—		49,770,699		—		49,770,699
	$	19,342,747	$	1,592,983,248	$	68,356	$	1,612,394,351


	December 31, 2020
	Loans evaluated for impairment:
	Individually		Collectively		PCI		Total
Real estate loans:
Non-farm non-residential owner occupied	$	1,943,744	$	351,329,354		—	$	353,273,098
Non-farm non-residential non-owner occupied		384,581		273,519,003		3,900,589		277,804,173
Residential		82,699		140,520,989		17,807		140,621,495
Construction, development & other		266,708		93,816,940		4,123,499		98,207,147
Farmland		—		4,653,344		—		4,653,344
Commercial & industrial		4,737,100		640,920,921		269,754		645,927,775
Consumer		—		4,157,339		—		4,157,339
Other		—		31,447,517		—		31,447,517
	$	7,414,832	$	1,540,365,407	$	8,311,649	$	1,556,091,888

Certain Acquired Loans

During 2013, the Company purchased certain loans from a third party with gross contractual balances of $8,207,194 for a purchase price of $6,303,095, resulting in a discount of $1,904,099. Upon acquisition, the acquired loans were initially segregated and classified in one of two categories: 1) PCI loans and 2) acquired performing loans. At acquisition date, estimated fair values of PCI loans and acquired performing loans were $3,215,504 and $3,087,591, respectively. The gross contractual amounts receivable for PCI loans and acquired performing loans were $4,502,097 and $3,705,097, respectively, as of the acquisition date.

As discussed in Note 19, the Company acquired loans with fair values of $259,605,933 as part of the acquisition of Heritage Bancorp, Inc. and its subsidiary, Heritage Bank. Of the total $263,314,602 of loans acquired, $250,659,720 were determined to have no evidence of deteriorated credit quality and are accounted for under ASC Topics 310-10 and 310-20. The remaining $12,654,882 were determined to exhibit deteriorated credit quality since origination under ASC 310-30.

In connection with the acquisition of loans from Heritage Bancorp, Inc. and its subsidiary, Heritage Bank on January 1, 2020, the PCI loan portfolio was accounted for at fair value as follows:


Contractual required payments	$	26,626,779
Non-accretable difference (expected loss)		15,026,950
Cash flows expected to be collected at acquisition		11,599,829
Accretable yield		1,850,260
Basis in acquired Heritage PCI loans	$	9,749,569

The following table presents the gross contractual amounts receivable balances, by portfolio segment, and the carrying amount of PCI loans:


	September 30,		December 31,
	2021		2020
Real estate loans:
Non-farm non-residential owner occupied	$	—	$	—
Non-farm non-residential non-owner occupied		4,609,670		5,426,265
Residential		183,610		200,144
Construction, development & other		5,194,735		5,104,868
Farmland		—		—
Commercial & industrial		320,463		383,146
Consumer		—		—
Other		—		—
Total outstanding balances	$	10,308,478	$	11,114,423
Carrying amount	$	7,840,464	$	8,311,649

The accretable discount is accreted into income using the interest method over the life of the loans. At September 30, 2021 and December 31, 2020, unaccreted discounts on PCI loans totaled $2,068,154 and $2,379,944, respectively, and were included in net loans in the accompanying consolidated balance sheets.

At September 30, 2021 and December 31,2020, the allowance for loan losses related to the PCI loans disclosed above was $17,656 and $0, respectively.

Determining the fair value of PCI loans at acquisition required the Company to estimate cash flows expected to result from those loans and to discount those cash flows at appropriate rates of interest. For such loans, the excess of cash flows expected to be collected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans and is called the accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and is called the nonaccretable difference. In accordance with GAAP, there was no carry-over of previously established allowance for credit losses from the acquired loans.

Accretable yield, or income expected to be collected on PCI loans was as follows:


	September 30,			December 31,
	2021			2020
Balance at beginning of year	$	2,260,759		$	82,566
New loans acquired from Heritage acquisition		—			2,725,993
Accretion of income		(192,605	)		(807,552	)
Reclassifications from non-accretable difference		—			259,752
Disposals		—			—
Balance at end of period	$	2,068,154		$	2,260,759