Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 39

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 39
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 than long-term rates—is
relatively common. It is not clear when long term rates are likely to catch up, or when short term rates will decrease, if at all.

Many external factors
may interfere with the effects of Federal Reserve strategies or cause them to be changed, sometimes quickly. Such factors include significant
economic trends or events as well as significant international monetary policies and events. As exemplified by the March 2023 bank failures
in the U.S., such strategies also can affect the U.S. and world-wide financial systems in ways that may be difficult to predict. Risks
associated with interest rates and the yield curve and their potential effects on financial institutions are discussed in these Risk
Factors under the Caption Lending and Interest Rate Risks.

Lending
and Interest Rate Risks

If
we fail to effectively manage credit risk, our business and financial condition will suffer.

We must effectively
manage credit risk. There are risks inherent in making any loan, including risks with respect to the period of time over which the loan
may be repaid, risks relating to proper loan underwriting and guidelines, risks resulting from changes in economic and industry conditions,
risks inherent in dealing with individual borrowers and risks resulting from uncertainties as to the future value of collateral. There
is no assurance that our credit risk monitoring and loan approval procedures are or will be adequate or will reduce the inherent risks
associated with lending.

Our risk management
practices, such as monitoring the concentration of our loans within specific industries and our credit approval, review and administrative
practices, may not adequately reduce credit risk, and our credit administration personnel, policies and procedures may not adequately
adapt to changes in economic or any other conditions affecting customers and the quality of the loan portfolio. Many of our loans are
made to small and medium-sized businesses that are less able to withstand competitive, economic and financial pressures than larger borrowers.
Consequently, we may have significant exposure if any of these borrowers become unable to pay their loan obligations as a result of economic
or market conditions, or personal circumstances. A failure to effectively measure and limit the credit risk associated with our loan
portfolio may result in loan defaults, foreclosures and additional charge-offs, and may necessitate that we significantly increase our
allowance for credit losses, each of which could adversely affect our net income. As a result, our inability to successfully manage credit
risk could have a material adverse effect on our business, financial condition and results of operations.

31

Our
estimated allowance for