Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 81

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 81
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 demand products, savings accounts, money market accounts and certificates of deposit. We also offer online banking and
bill payment services, online cash management, safe deposit box rentals, debit card and ATM card services and the availability of a network
of ATMs for our customers.

We generate
most of our income from interest income on loans, investment securities and deposits in other financial institutions, and service charges
on customer accounts. We incur interest expenses on deposits and other borrowed funds and non-interest expenses such as salaries and
employee benefits, occupancy expenses, and technology expenses. Net interest income is the largest source of revenue. Net interest spread
is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin
is calculated as net interest income divided by average interest-earning assets. Because noninterest-bearing sources of funds, such as
noninterest-bearing deposits and shareholders’ equity, also fund interest-earning assets, net interest margin includes the benefit
of these noninterest-bearing sources.

Changes in the
market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume
and types of interest-earning assets, interest-bearing and noninterest-bearing liabilities, and shareholders’ equity, are usually
the largest drivers of periodic changes in net interest spread, net interest margin, and net interest income. Fluctuations in market
interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments,
changes in unemployment, the money supply, political and international conditions, and conditions in domestic and foreign financial markets.
Periodic changes in the volume and types of loans in Southwest Heritage Bank’s loan portfolio are affected by, among other factors,
economic and competitive conditions in Arizona and New Mexico, as well as developments affecting the real estate, technology, financial
services, insurance, transportation, manufacturing and homebuilding sectors within Southwest Heritage Bank’s target market.

Bancorp
34 manages its operations as one unit and thus does not have separate operating segments.

57

Critical
Accounting Estimates

Our consolidated financial
statements are prepared based on the application of accounting policies in accordance with generally accepted accounting principles,
or “GAAP,” and follow general practices within the banking industry. These policies require reliance on estimates, assumptions
and judgments, which may prove inaccurate and are subject to variations. Changes in underlying factors, estimates, assumptions or judgements
could have a material impact on our future financial condition and results of operations.

Certain policies inherently