Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 632

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1C
Chunk 632
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 interest sensitive activities such as mortgage origination
and servicing income and loan and deposit demand.

We are subject to interest
rate risk due to:

    ·
    the
    maturity or repricing of assets and liabilities at different times or for different amounts;

    ·
    differences
    in short-term and long-term market interest rate changes; and

    ·
    the
    remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change.

Our Asset Liability
Committee, or ALCO, which is composed of our full board and supported by executive management, monitors interest rate risk on an ongoing
basis in accordance with policies approved by the board. The ALCO reviews interest rate positions and considers the impact projected
interest rate scenarios have on earnings, liquidity, business strategies and other factors.

The ALCO’s objective
is to operate in compliance with the board of directors’ approved policies and procedures. Limits are established by policy around
point in time liquidity metrics which include, but are not limited to, on-hand liquidity, non-core funding dependency, and loan-to-deposit
ratios. Limits are also established around various funding sources which include, but are not limited to, brokered deposits, deposits
gathered through on-line resources, and borrowings. Regarding interest rate risk, limits have been instituted around 12- and 24-month
earnings simulation modeling as well as economic value of equity modeling. No material changes to policy limits have been made in response
to current market conditions or developments.

Due to the possibility
of rapid changes within the credit and interest rate markets, the ALCO must have the flexibility to make prudent decisions which may
temporarily deviate from the approved policy and risk limits to enhance profitability or minimize risk. Our policy thus permits ALCO
management to implement exceptions to policy; however, any exception to policy must have the prior approval of the Chief Executive Officer
and one other ALCO member. All exceptions must be documented in the ALCO minutes and reported to the board of directors at the next scheduled
meeting. In 2024, no policy exception strategies have been implemented that deviate from the risk limits outlined in the ALCO related
policies and procedures.

To assess and manage
interest rate risk, sensitivity analysis is used to determine the impact on earnings and the net market value of the balance sheet across
various interest rate scenarios, balance sheet trends, and strategies.

Management uses a simulation
model to analyze the sensitivity of net interest income to changes in