Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 138

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 138
---
 real estate owned at December 31, 2023.

Fair
value measurements – Fair value is defined as the exchange price that would be received
for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize
the use of observable inputs and minimize the use of unobservable inputs. A three-level fair value hierarchy prioritizes the inputs used
to measure fair value:

Level
1 – Quoted prices in active markets for identical assets or liabilities; includes certain
U.S. Treasury and other U.S. Government agency debt that is highly-liquid and is actively traded in over-the-counter markets.

Level
2 – Inputs that are observable, either directly or indirectly, such as quoted prices for
similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the assets or liabilities.

Level
3 – Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value
is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination
of fair value requires significant management judgment or estimation.

The asset or liability’s fair
value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value
measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

    91

Escrow
accounts – Funds collected from loan customers for insurance, real estate taxes and other
purposes are maintained in escrow accounts and carried as a liability in the Consolidated Balance Sheets. These funds are periodically
remitted to the appropriate entities to satisfy those claims.

Financial
instruments with off-balance-sheet risk – In the ordinary course of business, the
Bank enters into off-balance-sheet financial instruments consisting of commitments to extend credit and letters of credit. Such financial
instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received.
The credit risk associated with these instruments is generally evaluated using the same methodology as for loans held for investment. 

Allowance
for credit losses - off-balance sheet credit exposures: The Company estimates