Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 494

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1B
Chunk 494
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 Loans that have experienced more than
insignificant credit deterioration since origination are referred to as purchase credit deteriorated (PCD) loans. In its evaluation of
whether a loan has experienced more than insignificant deterioration in credit quality since origination, the Company takes into consideration
loan grades, payment performance, past due status, and nonaccrual status. The Company also considered the results of an independent external
credit review completed during the due diligence phase to identify other loans that have experienced deterioration. At the purchase or
acquisition date, the amortized cost basis of PCD loans is equal to the purchase price and an initial estimate of credit losses. The
initial recognition of expected credit losses on PCD loans is reflected as a “Day 2” on-balance sheet gross-up to the allowance
for credit losses and as an increase to PCD loans. When the initial measurement of expected credit losses on PCD loans is calculated
on a pooled loan basis, the expected credit losses are allocated to each loan within the pool. Any difference between the initial amortized
cost basis and the unpaid principal balance of the loan represents a noncredit discount or premium, which is accreted (or amortized)
into interest income over the life of the loan. Subsequent changes to the ACL on PCD loans are recorded through the provision for credits
losses. For purchased loans that are not deemed to have experienced more than insignificant credit deterioration since origination and
are therefore not deemed PCD, any discounts or premiums included in the purchase price are accreted (or amortized) over the contractual
life of the individual loan. See Note 2 - Business Combination for further information related to PCD and Non-PCD loans acquired in connection
with the Merger.

Premises
and equipment – Land is carried at cost. Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method in amounts sufficient
to relate the cost of depreciable assets to operations over the estimated useful lives of the assets which range from three to seven
years for equipment and 15 to 40 years for leasehold improvements and buildings. Maintenance and repairs that do not extend the useful
lives of premises and equipment are charged to expense as incurred.

    90

Leases
– Leases are classified as operating or finance leases at the lease commencement date.
Lease expense for operating leases and short-term leases is recognized on a straight-line