Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 497

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1B
Chunk 497
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 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.

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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 expected credit
losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit unless
that obligation is unconditionally cancelable by the Company. The allowance for credit losses on off-balance sheet credit exposures is
adjusted through the Provision for Credit Losses and is recorded in other liabilities. The estimate includes consideration of
the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated
life. The probability of funding is based on historical utilization statistics for unfunded loan commitments that are not unconditionally
cancelable by the Company. The loss rates used are calculated using the same assumptions as the associated funded balance.

Advertising
cost – The Bank conducts direct and non-direct response advertising and purchases prospective
customer lists from various sources. These costs are expensed as incurred. Advertising costs from continuing operations are not material.

Merger expenses –
Merger expenses were those related to the acquisition of CBOA. These costs primarily relate to information technology and professional
service firms that were directly related to the merger and are not expected to reoccur. 

Employee
Stock Ownership Plan (ESOP) – The Bank sponsors an internally leveraged ESOP. The cost
of shares issued to the ESOP but not yet released is shown as unearned ESOP shares, an element of stock