Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 6

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 6
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verticals such as public finance offerings to our charter school and municipal based customers, asset based lending and structured finance
products. Commercial and industrial loans also includes our healthcare, SBA and other small business lending products. Commercial and
industrial loans generally include lines of credit and loans with maturities of five years or less. Because we are a bank with long standing
ties to the businesses and professionals operating in our geographic footprint, we are able to tailor our commercial and industrial loan
programs to meet the needs of our clients. Growing our commercial and industrial loan portfolio is an important area of emphasis for
us and we intend to continue to grow this portfolio.

Commercial and industrial
loans are generally made with operating cash flows as the primary source of repayment, but may also include collateralization by inventory,
accounts receivable, equipment and personal guarantees. As a result, the repayment risk is subject to the ongoing business operations
of the borrower. Any interruption or discontinuance of operating cash flows from the borrower’s business, which may be influenced
by events not under the control of the borrower such as economic events and changes in governmental regulations, could materially affect
the ability of the borrower to repay the loan. Further, commercial and industrial loans may be secured by the collateral described above,
which if the business is unsuccessful, typically have values insufficient to satisfy the loan without a loss.

SBA
loans. We participate in the SBA 7(a) program in order to meet the needs of our small business.
SBA guarantees are conditional and cover a portion of the risk of payment default by the borrower, but not the risk of improper closing
and servicing by the lender. As such, prudent underwriting and closing processes are essential to effective utilization of the SBA 7(a)
program.

Commercial
and Residential Real Estate Loans

Real estate loans are
subject to the same general risks as other loans and are particularly sensitive to fluctuations in the value of real estate. Fluctuations
in the value of real estate, as well as other factors arising after a loan has been made, could negatively affect a borrower’s
cash flow, creditworthiness and ability to repay the loan. When we make new real estate loans, we obtain a security interest in real
estate whenever possible, in addition to any other available collateral, to increase the likelihood of the ultimate repayment of the
loan. To assess concentration risk, we monitor collateral type and industry concentrations within this portfolio.

Commercial
Real Estate Loans. Our commercial real estate loans consist