Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 781

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 2
Chunk 781
---
0% of total assets, at December 31, 2023. The increase in Southwest Heritage Bank’s liquid
assets during 2024 reflects cash acquired in the CBOA Merger, proceeds from the sale of the marked investment portfolio acquired in the
CBOA Merger, and loan payoffs. These cash increases were partially offset by the decline in deposit balances and the payoff of borrowings
since the CBOA Merger.

The liability portion
of our balance sheet serves as a primary source of liquidity. We plan to meet our future cash needs primarily through the generation
of deposits. Customer deposits have historically provided a sizeable source of relatively stable and low-cost funds. At December 31,
2024, net loans as a percentage of the Bank’s deposits were 83.6%, compared to 98.1% at December 31, 2023. For additional
information related to our deposits, see the “Deposits” section above.

As of December 31, 2024,
we also had borrowing capacity at the Federal Reserve Bank (“FRB”) of San Francisco and the FHLB of San Francisco, from which
we can borrow for leverage or liquidity purposes. Both the FRB and FHLB require that securities and/or qualifying loans be pledged to
secure any advances. At December 31, 2024, the Bank had: (i) $233.8 million in borrowing capacity at the FHLB of San Francisco; (ii)
$49.3 million in availability through the FRB’s Discount Window; and (iii) fully available unsecured Federal funds lines-of-credit
with certain other financial institutions totaling $49.8 million.

Management believes
Southwest Heritage Bank has the ability to generate and obtain adequate amounts of liquidity to meet its requirements in the short-term
and long-term.

Capital
Resources

Our consolidated stockholders’
equity at December 31, 2024, and December 31, 2023, was $86.5 million and $60.7 million, respectively. This increase primarily reflects
the $23.3 million estimated fair value of our 2.7 million common shares issued as consideration in connection with the CBOA Merger in
March 2024.

We are subject to various
regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct