Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 237

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1A
Chunk 237
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 accompanied by a substantial and broad stock market decline. In 2019, the Federal Reserve began to lower
rates. In 2020, in response to economic disruption associated with the COVID-19 pandemic, the Federal Reserve quickly reduced short-term
rates to extremely low levels and acted to influence the markets to reduce long-term rates as well. During 2021, the Federal Reserve
significantly reduced its “easing” actions that held down long-term rates. During 2022, the Federal Reserve switched to a
tightening policy. It raised short term rates significantly and rapidly over most of the year. Those actions triggered a significant
decline in the values of most categories of U.S. stocks and bonds; impacted bank asset values, funding costs, and liquidity resources;
significantly raised recessionary expectations for the U.S.; and inverted the yield curve through the second quarter of 2023. The Federal
Reserve slowed the rate of increases in 2023 and began lower rates in late 2024.

30

Despite the recent cuts
in interest rates, rates remain higher than they have been in the recent past and these increases in interest rates accordingly may have
significant and adverse effects upon our business as well as the business of many of our customers. For example, the raising of short-term
interest rates: (i) increases our cost of funds due largely to overall increases in the cost of our deposits which may decrease our net
interest margin; (ii) increases the cost of our other funding sources such as borrowings from the Federal Home Loan Bank, which we utilize
for liquidity, may further decrease our net interest margins; (iii) may cause a further decline in the value of our investment portfolio
which could result in unrealized or realized losses if the investments are sold; (iv) may cause a decline in the demand for our products
if borrowers are no longer able to afford our loans or if our competitors offer more attractive rates for loans or deposits; and (v)
may cause an increase in the number of customers who default on their loans or obligations to us as they may not be able to fund higher
loan payments on floating interest rate loans or have the ability to refinance maturing loans at higher interest rates. Risks associated
with interest rates and the yield curve and their potential effects on financial institutions are further discussed in these Risk Factors
under the Caption Lending and Interest Rate Risks.

Federal
Reserve strategies can, and often are intended to, affect the domestic money supply,