Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 244

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1A
Chunk 244
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 historical experience, current conditions, and reasonable and supportable
forecasts that affect the estimated collectability of loans held-for-investment, unfunded commitments, and held-to-maturity debt securities.
This measurement takes place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs
significantly from the “incurred loss” model previously required under GAAP, which delayed recognition until it is probable
a loss was incurred. Accordingly, the CECL model may create more volatility in the level of our allowance for credit losses. If we are
required to materially increase our level of allowance for credit losses for any reason, such increase could adversely affect our business,
financial condition and results of operations.

34

We
are subject to interest rate risk, which could adversely affect our financial condition and profitability.

The majority of our
banking assets are subject to changes in interest rates. For example, as of December 31, 2024, 42.3% of our loan portfolio, including
loan level derivative instruments, consisted of floating or adjustable interest rate loans. Like most financial institutions, our earnings
significantly depend on our net interest income, the principal component of our operating results, which is the difference between interest
earned by us from our interest-earning assets, such as loans and investment securities, and interest paid by us on our interest-bearing
liabilities, such as deposits and borrowings. We expect that we will periodically experience “gaps” in the interest rate
sensitivities of our assets and liabilities, meaning that either our interest-bearing liabilities will be more sensitive to changes in
market interest rates than our interest-earning assets, or vice versa. In either event, if market interest rates should move contrary
to our position, this “gap” will negatively impact our earnings. Many factors beyond our control impact interest rates, including
economic conditions, governmental monetary policies, inflation, recession, changes in unemployment, the money supply, and disorder and
instability in domestic and foreign financial markets. Changes in monetary policies of the various government agencies could influence
not only the interest we receive on loans and securities and the interest we pay on deposits and borrowings, but such changes could also
affect our ability to originate loans and obtain deposits, the fair value of our financial assets and liabilities, and the average duration
of our assets and liabilities.

In addition, changes
in monetary policy, including changes in interest rates, will influence the origination of loans, the prepayment