Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 624

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1C
Chunk 624
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667 shares of common stock at a price of $14.00. The approximate
fair value of the warrants at the date of grant was not considered significant. The warrants are exercisable at any time after their
grant date, and from time to time, in whole or in part, for seven years from their grant dates, between December 2029 and January 2030.
The exercise of such warrants remains subject to certain contractual provisions and a “cashless exercise” may be executed.

For more information
about these private placements, see Note 19—Private Placement of Common and Preferred Stock, in our financial statements included
in this Annual Report on Form 10-K.

Liquidity

Liquidity
refers to our ability to maintain cash flow that is adequate to fund operations, support asset funding, meet present and future obligations
of deposit withdrawals, lending obligations, and other contractual obligations.

Bancorp
34 (Parent Company)

Bancorp 34 has routine
cash outlays consisting primarily of operating expenses and debt service. Bancorp 34 can obtain funding to meet its obligations from
dividends collected from its subsidiary, Southwest Heritage Bank, and through the issuance of varying forms of debt and equity. At December
31, 2024, Bancorp 34 had cash and equivalents of $4.4 million, a $1.5 million note receivable from the Southwest Heritage Bank ESOP,
and net debt outstanding of $27.4 million, which includes $4.2 million related to trust preferred debt assumed in connection with the
CBOA Merger. Management believes Bancorp 34 has the ability to generate and obtain adequate amounts of liquidity to meet its requirements
in the short-term and the long-term.

Federal banking laws
regulate dividends that may be paid by banking subsidiaries without prior approval. Southwest Heritage Bank may declare dividends without
prior regulatory approval that do not exceed the total of retained net income for the current year combined with its retained net income
for the preceding two years, subject to maintenance of minimum capital requirements. Prior regulatory approval to pay dividends was not
required in 2022 or 2023. During 2024, Southwest Heritage Bank did not pay a dividend to Bancorp 34.

72

Southwest
Heritage Bank

Southwest Heritage
Bank’s liquidity management policy and our asset and liability management policy, or ALM policy, provides the framework that we
use to seek to maintain adequate liquidity and sources of available liquidity at levels that will enable