Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 438

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1B
Chunk 438
---
 Arizona, was merged with and into Bancorp 34’s wholly-owned subsidiary, Bank 34, a federally chartered stock covered savings
association (“the CBOA Merger”). Bank 34 was subsequently rebranded as Southwest Heritage Bank. Southwest Heritage Bank provides
a variety of banking services to individuals and businesses through its seven full-service community bank branches, two in Maricopa County,
Arizona, in the cities of Scottsdale and Gilbert; three in Pima County, Arizona, in the cities of Tucson and Green Valley; one branch
in Otero County, New Mexico in the city of Alamogordo; and one branch in Dona Ana County New Mexico, in the city of Las Cruces. Following
the CBOA merger, our retail services offered at the two Scottsdale locations were combined into one branch, reducing the number of branches
from eight to its current seven.

We offer a full range
of relationship-focused services to meet our clients’ business and personal financial objectives. Our product lines include commercial
loans, commercial real estate loans, and a variety of commercial and consumer deposit products, including noninterest bearing accounts,
interest-bearing demand products, savings accounts, money market accounts and certificates of deposit. We also offer online banking and
bill payment services, online cash management, safe deposit box rentals, debit card and ATM card services and the availability of a network
of ATMs for our customers.

We generate
most of our income from interest income on loans, investment securities and deposits in other financial institutions, and service charges
on customer accounts. We incur interest expenses on deposits and other borrowed funds and non-interest expenses such as salaries and
employee benefits, occupancy expenses, and technology expenses. Net interest income is the largest source of revenue. Net interest spread
is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin
is calculated as net interest income divided by average interest-earning assets. Because noninterest-bearing sources of funds, such as
noninterest-bearing deposits and shareholders’ equity, also fund interest-earning assets, net interest margin includes the benefit
of these noninterest-bearing sources.

Changes in the
market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume
and types of interest-earning assets, interest-bearing and noninterest-bearing liabilities, and shareholders’ equity, are usually
the largest drivers of periodic changes in net interest spread, net interest margin, and net interest