Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 40

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 40
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 credit losses and fair value adjustments with respect to acquired loans may prove to be insufficient to absorb
actual losses in our loan portfolio, which may adversely affect our business, financial condition and results of operations.

We are exposed to the
risk that our customers will be unable to repay their loans according to their terms and that any collateral securing the payment of
their loans will not be sufficient to ensure full repayment. Credit losses are inherent in the lending business and could have a material
adverse effect on our operating results and ability to meet our obligations. We evaluate the collectability of our loan portfolio and
we maintain an allowance for credit losses that represents management’s judgment of expected credit losses in our loan portfolio
that we believe to be adequate based on a variety of factors including but not limited to: the risk characteristics of various classifications
of loans, previous loan loss experience, specific loans that have loss potential, delinquency trends, estimated fair market value of
the collateral, current economic conditions, the views of our regulators, and geographic and industry loan concentrations. If our evaluation
is incorrect and defaults by borrowers lead to credit losses that exceed our allowance for credit losses, our operating results could
be significantly and adversely affected. No assurance can be given that the allowance for credit losses will be adequate to cover credit
losses incurred in our portfolio. We may experience credit losses in our loan portfolio or perceive adverse conditions and trends that
may require us to significantly increase our allowance for credit losses in the future, a decision that would unfavorably impact our
operating results.

The application of the
acquisition method of accounting in any future acquisitions will impact our allowance for credit losses. Under the acquisition method
of accounting, all acquired loans will be recorded in our consolidated financial statements at their estimated fair value at the time
of acquisition. To the extent that our estimates of fair value are too high, we will incur losses associated with the acquired loans.

In addition, our regulators,
as an integral part of their periodic examination, review our methodology for calculating, and the adequacy of, our allowance and provision
for credit losses. Although we believe that the methodology used by us to determine the amount of both the allowance and provision for
credit losses is effective, the regulators may conclude that changes are necessary based on information available to them at the time
of their review, which could impact our overall credit portfolio. Such changes could result in, among other things, modifications to
our methodology for determining our allowance or provision for credit losses or models, reclassification