Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 249

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1A
Chunk 249
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 borrowers, fail to detect or respond to deterioration in asset quality in a timely manner, or rely on financial statements that
do not comply with GAAP or are materially misleading.

37

We
are exposed to the possibility of technology failure and a disruption in our operations may adversely affect our business.

We rely on our computer
systems and the technology of outside service providers. Our daily operations depend on the operational effectiveness of their technology.
We rely on our systems to accurately track and record our assets and liabilities. If our computer systems or outside technology sources
become unreliable, fail, or experience a breach of security, our ability to maintain accurate financial records may be impaired, which
could materially affect our business operations and financial condition. In addition, a disruption in our operations resulting from failure
of transportation and telecommunication systems, loss of power, interruption of other utilities, natural disaster, fire, global climate
changes, computer hacking or viruses, failure of technology, terrorist activity or the domestic and foreign response to such activity
or other events outside of our control could have an adverse impact on the financial services industry as a whole and/or on our business.
Our business recovery plan may not be adequate and may not prevent significant interruptions of our operations or substantial losses.
The increased number of cyberattacks during the past few years has further heightened our attention to this risk.

Fraud
is a major, and increasing operational risk for us and all banks.

Two traditional areas,
deposit fraud (check kiting, wire fraud, etc.) and loan fraud, continue to be major sources of fraud attempts and loss, and we incurred
a $0.7 million expense related to a check kiting incident in the fourth quarter of 2024. The sophistication and methods used to perpetrate
fraud continue to evolve as technology changes. In addition to cybersecurity risk (discussed below), new technologies have made it easier
for bad actors to obtain and use client personal information, mimic signatures and otherwise create false documents that look genuine.
The industry fraud threat continues to evolve, including but not limited to card fraud, check fraud, social engineering and phishing
attacks for identity theft and account takeover. Our anti-fraud measures are both preventive and, when necessary, responsive; however,
some level of fraud loss is unavoidable, and the risk of a major loss cannot be eliminated.

Our
ability to conduct and grow our businesses profitability is dependent in part upon our ability to create, maintain, expand, and evolve
an appropriate operational and organizational infrastructure, manage expenses, and recruit and