Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 246

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1A
Chunk 246
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 we have a base of lower cost transaction deposits. Generally, we believe local deposits
are less expensive and more stable source of funds than other borrowings because interest rates paid for local deposits are typically
lower than interest rates charged for borrowings from the Federal Reserve or from other institutional lenders and reflect a mix of transaction
and time deposits, whereas brokered deposits typically are higher cost time deposits. Further, economic conditions and rising interest
rates could result in a decrease in our transaction deposit account balances as customers seek to obtain maximum federal deposit insurance
coverage or to seek higher interest rates. Additionally, our costs of funds, operating results and liquidity are likely to be adversely
affected if, and to the extent, we have to rely upon higher cost borrowings from the Federal Reserve or other institutional lenders,
such as the Federal Home Loan Bank (“FHLB”), or upon brokers to fund liquidity needs, and changes in our deposit mix, pricing,
and growth could adversely affect our profitability and the ability to expand our
loan portfolio. 

Rapidly
rising interest rates will impact the value of our investment securities and the cost of our funding sources, including deposits.

Our operating results
are highly dependent on our net interest income, which is the difference between the interest income paid to us on our loans and investments
and the interest we pay to third parties such as our depositors, lenders and debt holders. Changes in interest rates can impact our profits
and the fair values of certain of our assets and liabilities. Higher market interest rates and increased competition for deposits may
result in higher interest expense, as we may offer higher rates to attract or retain customer deposits. Increases in interest rates also
may increase the amount of interest expense we pay to creditors on short and long-term debt. Interest rate risk can also result from
mismatches between the dollar amounts of re-pricing or maturing assets and liabilities and from mismatches in the timing and rates at
which our assets and liabilities re-price. Changes in market values of investment securities classified as available for sale are impacted
by higher rates and can negatively impact our other comprehensive income and equity levels through accumulated other comprehensive income,
which includes net unrealized gains and losses on those securities. Further, such losses could be realized into earnings should liquidity
and/or business strategy necessitate the sales of securities in a loss position. We actively monitor and manage the balances of our maturing
and re-pricing assets and liabilities to reduce the adverse impact of changes in interest rates, but there can be no assurance that