Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 492

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1B
Chunk 492
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 as an adjustment of the related loan yield
using the interest method. See Note 2 - Business Combination, for our accounting methodology for the loans acquired in the Merger.

Allowance
for credit losses - loans: The ACL is a valuation account that is deducted from the loans’
amortized cost basis to present the net amount expected to be collected on the loans. The ACL excludes loans held-for-sale and loans
accounted for under the fair value option. The Company elected to not measure an ACL for accrued interest receivable, as we write
off applicable accrued interest receivable balances in a timely manner when a loan is placed on non-accrual status, in which any accrued
but uncollected interest is reversed from current income. Loans are charged off against the allowance when management confirms all or
part of the loan balance is uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected
to be charged-off. Management estimates the allowance balance using relevant available information, from internal and external sources,
related to past events, current conditions, and reasonable and supportable forecasts. An industry index is used in the model to provide
historical credit loss experience and provides the basis for the estimation of expected credit losses. The Company identified and grouped
portfolio segments based on risk characteristics and underlying collateral.

The principal segments of our loan portfolio
are discussed below:

Commercial
loans. We provide a mix of variable and fixed rate commercial loans. The loans are typically
made to small- and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs and business expansion.
Commercial loans generally include lines of credit and loans with maturities of five years or less. The loans are generally made with
business operations as the primary source of repayment, but may also include collateralization by inventory, accounts receivable, and
equipment. Personal guarantees are typically obtained on commercial loans as well.

    89

Commercial
real estate loans. Our commercial real estate loans consist of both real estate occupied
by the borrower for ongoing operations and non-owner occupied real estate properties. The real estate securing our existing commercial
real estate loans includes a wide variety of property types, such as owner and non-owner-occupied offices, warehouses and production
facilities, office buildings, hotels, mobile home parks, retail centers, and assisted living facilities.

Multifamily.
Our multifamily portfolio includes properties with 5 or more dwellings where the use is primarily residential.

Construction
and land development