Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 446

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1B
Chunk 446
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,
consisting primarily of deposits and borrowings. Our results of operations are also dependent on our generation of non-interest income,
consisting primarily of income from service charges on deposit accounts, interchange and ATM fees, and gains on sales of SBA loans. Other
factors contributing to our results of operations include our provisions for credit losses, income taxes, and non-interest expenses,
such as salaries and employee benefits, occupancy, amortization of intangible assets and other operating costs.

We had net income of
$1.7 million for the year ended December 31, 2024, compared to a net loss of $3.4 million for the year ended December 31, 2023. Our 2024
net income is comprised of pre-tax income of $0.6 million and an income tax benefit of $1.1 million. Non-recurring merger-related items
also are reflected in our 2024 results, which include: (i) a one-time preliminary bargain purchase gain on the CBOA Merger of $5.0 million
(none of which is taxable); (ii) $3.8 million of merger expenses (a portion of which is not deductible for income taxes); and (iii) a
Day-2 $4.1 million non-PCD loan provision for credit losses in connection with the CBOA Merger. Our 2023 net loss includes provision for
credit loss of $4.2 million and $3.0 million of merger expenses.

Net
Interest Income

Net interest income,
representing interest income less interest expense, is a significant contributor to our revenues and earnings. We generate interest income
from interest and dividends on interest-earning assets, which are principally comprised of loans, investment securities, and interest-bearing
bank balances. We incur interest expense from interest owed or paid on interest-bearing liabilities, including interest-bearing deposits,
FHLB and FRB advances, as well as other borrowings. Net interest income and margin are shaped by the characteristics of the underlying
products, including volume, term, and structure of each product. We measure and monitor yields on our loans and other interest-earning
assets, the costs of our deposits and other funding sources, our net interest spread and our net interest margin. 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 the annualized net interest income divided by average interest-earning assets.

Our net interest income