Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 281

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1A
Chunk 281
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 well as developments affecting the real estate, technology, financial
services, insurance, transportation, manufacturing and homebuilding sectors within Southwest Heritage Bank’s target market.

Bancorp
34 manages its operations as one unit and thus does not have separate operating segments.

57

Critical
Accounting Estimates

Our consolidated financial
statements are prepared based on the application of accounting policies in accordance with generally accepted accounting principles,
or “GAAP,” and follow general practices within the banking industry. These policies require reliance on estimates, assumptions
and judgments, which may prove inaccurate and are subject to variations. Changes in underlying factors, estimates, assumptions or judgements
could have a material impact on our future financial condition and results of operations.

Certain policies inherently
have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results
that could be materially different than originally reported. We have identified the following as critical accounting estimates: (i) determination
of the allowance for credit losses for collectively evaluated loans and individually evaluated loans; (ii) determining the fair
values of the assets acquired and liabilities assumed and the fair value of the common stock consideration issued in connection
with the CBOA Merger; and, (iii) other fair value measurements to be the accounting areas that require the most subjective
or complex judgments and, as such, could be most subject to revision as new or additional information becomes available or circumstances
change, including overall changes in the economic climate and/or market interest rates. Therefore, we consider these policies, discussed
below, to be critical accounting estimates and discuss them directly with the Audit Committee of our board of directors.

Our significant accounting
policies are presented in Note 1—Nature of Operations and Significant Accounting Policies of our audited consolidated financial
statements included in this Annual Report on Form 10-K. These policies, along with the disclosures presented in the other financial statement
notes, and in this discussion, provide information on how significant assets and liabilities are valued in the financial statements and
how those values are determined. Recent accounting pronouncements and standards that have impacted or could potentially affect us are
also discussed in Note 1 of our audited consolidated financial statements. 

Allowance
for credit losses 

One significant
accounting policy is our accounting policy related to the allowance for credit losses (“ACL”). Effective January 1, 2023,
we adopted ASU 2016-13, Financial Instruments – Measurement of Current Expected Credit Losses on Financial Instruments