Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 338

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1A
Chunk 338
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 life insurance income.

Other
real estate owned – Other real estate owned is comprised of properties acquired through
a foreclosure proceeding or acceptance of a deed in lieu of foreclosure. Generally, these properties are initially recorded at fair value,
less estimated cost to sell at the date of foreclosure, establishing a new cost basis. After foreclosure, valuations are periodically
performed by management; other real estate owned is carried at the lower of the carrying amount or fair value, less the estimated cost
to sell. Expenses, gains and losses on disposition, and reductions in carrying value are reported as non-interest expenses. There was
no other real estate owned as of December 31, 2024, and $3,000,000 of other real estate owned at December 31, 2023.

Fair
value measurements – Fair value is defined as the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize
the use of observable inputs and minimize the use of unobservable inputs. A three-level fair value hierarchy prioritizes the inputs used
to measure fair value:

Level
1 – Quoted prices in active markets for identical assets or liabilities; includes certain
U.S. Treasury and other U.S. Government agency debt that is highly-liquid and is actively traded in over-the-counter markets.

Level
2 – Inputs that are observable, either directly or indirectly, such as quoted prices for
similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the assets or liabilities.

Level
3 – Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value
is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination
of fair value requires significant management judgment or estimation.

The asset or liability’s fair
value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value
measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

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Escrow
accounts – Funds collected from loan customers for insurance