Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 995

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 3
Chunk 995
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 and interest payments on the note are made every December 31 and the interest rate on the loan adjusts annually on January
1st to the prime rate of interest as published in the Wall Street Journal. The Bank makes at least annual discretionary contributions
to the ESOP and the ESOP uses all funds it receives to repay the loan. When loan payments are made, ESOP shares are allocated to participants
based on relative compensation for that plan year. At the discretion of the employer, participants may receive the shares, cash, or a
combination of stock and cash at the end of employment.

Since the Bank is the primary source of
repayment on ESOP loans, the Bank records the note payable and an equal contra-equity account on its balance sheet and interest expense
and ESOP benefit plan expense on its statement of comprehensive income equal to the annual loan payments. As inter-company borrowings,
all bank-recorded balance sheet items, Bancorp 34 interest income and Southwest Heritage Bank interest expense on the ESOP loan are eliminated
in consolidation. Bancorp 34 consolidated financial statements include a contra-equity account with a balance equal to the purchase price
of all unallocated shares in the ESOP.

Shares held by the ESOP on December 31,
2024, and 2023, were as follows:

Schedule of Shares held
by ESOP

    2024  
    2023 

    Allocated shares 
     56,780  
     50,717 
  
    Unallocated shares 
     133,271  
     139,334 

    Total ESOP shares 
     190,051  
     190,051 

The fair value of unallocated shares held
by the ESOP is $1,399,000
and $1,379,000
at December 31, 2024, and 2023, respectively. ESOP expense was $161,000
and $67,000
for the years ended December 31, 2024, and 2023, respectively.

Deferred
Compensation and Director’s Fee Plans: A deferred compensation plan covers all senior
officers and a deferred director’s fee plan covers all directors. Under these plans, the company pays each participant that elects
to defer, or their beneficiary, the amount deferred plus interest over a pre-selected period up to 10 years, beginning with the participant’s
termination of service. A liability is accrued monthly for the deferred amount plus