Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 936

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 3
Chunk 936
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 sizeable source of relatively stable and low-cost funds. At December 31,
2024, net loans as a percentage of the Bank’s deposits were 83.6%, compared to 98.1% at December 31, 2023. For additional
information related to our deposits, see the “Deposits” section above.

As of December 31, 2024,
we also had borrowing capacity at the Federal Reserve Bank (“FRB”) of San Francisco and the FHLB of San Francisco, from which
we can borrow for leverage or liquidity purposes. Both the FRB and FHLB require that securities and/or qualifying loans be pledged to
secure any advances. At December 31, 2024, the Bank had: (i) $233.8 million in borrowing capacity at the FHLB of San Francisco; (ii)
$49.3 million in availability through the FRB’s Discount Window; and (iii) fully available unsecured Federal funds lines-of-credit
with certain other financial institutions totaling $49.8 million.

Management believes
Southwest Heritage Bank has the ability to generate and obtain adequate amounts of liquidity to meet its requirements in the short-term
and long-term.

Capital
Resources

Our consolidated stockholders’
equity at December 31, 2024, and December 31, 2023, was $86.5 million and $60.7 million, respectively. This increase primarily reflects
the $23.3 million estimated fair value of our 2.7 million common shares issued as consideration in connection with the CBOA Merger in
March 2024.

We are subject to various
regulatory capital requirements administered by federal banking regulators. Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary actions by federal banking regulators that, if undertaken, could have a direct
material effect on our financial statements.

73

Regulatory capital
rules adopted in July 2013 and fully phased in as of January 1, 2019, which we refer to as the Basel III rules, impose minimum capital
requirements for bank holding companies and banks. The Basel III rules apply to all national and state banks and savings associations
regardless of size and bank holding companies and savings and loan holding companies with consolidated assets of more than $3 billion.
While Bancorp 34 is not subject to the regulation, the ratios are monitored by management should compliance be required.

To avoid restrictions
on capital distributions or discretionary bonus