Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 21

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 21
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 (b)
a Tier 1 risk-based capital ratio of 8.5%, and (c) a total risk-based capital ratio of 10.5%.

The
capital rules require that goodwill and other intangible assets (other than mortgage servicing assets), net of associated deferred tax
liabilities (“DTLs”), be deducted from CET1 capital. Additionally, deferred tax assets (“DTAs”) that arise from
net operating loss and tax credit carryforwards, net of associated DTLs and valuation allowances, are fully deducted from CET1 capital.
However, DTAs arising from temporary differences that could not be realized through net operating loss carrybacks, along with mortgage
servicing assets and “significant” (defined as greater than 10% of the issued and outstanding common stock of the unconsolidated
financial institution) investments in the common stock of unconsolidated “financial institutions” are partially includible
in CET1 capital, subject to deductions defined in the rules.

19

The
OCC also considers interest rate risk (arising when the interest rate sensitivity of the Bank’s assets does not match the sensitivity
of its liabilities or its off-balance sheet position) in the evaluation of the bank’s capital adequacy. Banks with excessive interest
rate risk exposure are required to hold additional amounts of capital against their exposure to losses resulting from that risk. Through
the risk-weighting of assets, the regulators also require banks to incorporate market risk components into their risk-based capital.
Under these market risk requirements, capital is allocated to support the amount of market risk related to a bank’s lending and
trading activities.

 The
Bank’s capital categories are determined solely for the purpose of applying the “prompt corrective action” rules described
below and they are not necessarily an accurate representation of its overall financial condition or prospects for other purposes. Failure
to meet capital guidelines could subject a bank or bank holding company to a variety of enforcement remedies, including issuance of a
capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting brokered deposits, and certain other
restrictions on its business. See “Prompt Corrective Action” below.

Banks and holding companies
that have less than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio of greater
than 9%, off-balance-sheet exposures of 25% or less of total consolidated assets and trading assets plus trading liabilities of 5% or
less of total consolidated assets, are deemed “