Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 16

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 16
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 of financial strength to its subsidiary depository institutions and to commit
resources to support such institutions in circumstances where it might not do so absent such policy. Under the Federal Deposit Insurance
Corporation Improvement Act of 1991, to avoid receivership of its insured depository institution subsidiary, a bank holding company is
required to guarantee the compliance of any insured depository institution subsidiary that may become “undercapitalized”
within the terms of any capital restoration plan filed by such subsidiary with its appropriate federal banking agency up to the lesser
of (a) an amount equal to 5% of the institution’s total assets at the time the institution became undercapitalized, or (b) the
amount which is necessary (or would have been necessary) to bring the institution into compliance with all applicable capital standards
as of the time the institution fails to comply with such capital restoration plan.

The Federal Reserve
also has the authority under the BHC Act to require a bank holding company to terminate any activity or relinquish control of a nonbank
subsidiary (other than a nonbank subsidiary of a bank) upon the Federal Reserve’s determination that such activity or control constitutes
a serious risk to the financial soundness or stability of any subsidiary depository institution of the bank holding company. Further,
federal law grants federal bank regulatory authorities’ additional discretion to require a bank holding company to divest itself
of any bank or nonbank subsidiary if the agency determines that divestiture may aid the depository institution’s financial condition.

16

The Federal Deposit
Insurance Act also provides that amounts received from the liquidation or other resolution of any insured depository institution by any
receiver must be distributed (after payment of secured claims) to pay the deposit liabilities of the institution prior to payment of
any other general or unsecured senior liability, subordinated liability, general creditor or stockholder.

Any capital loans by
a bank holding company to any of its subsidiary banks are subordinate in right of payment to deposits and to certain other indebtedness
of such subsidiary bank. In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a priority
of payment.

Capital
Requirements

The Federal Reserve
imposes certain capital requirements on bank holding companies under the BHC Act, including a minimum leverage ratio and a minimum ratio
of “qualifying” capital to risk-weighted assets. These requirements are