Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 1395

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 6
Chunk 1395
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 obligations, and other contractual obligations.

Bancorp
34 (Parent Company)

Bancorp 34 has routine
cash outlays consisting primarily of operating expenses and debt service. Bancorp 34 can obtain funding to meet its obligations from
dividends collected from its subsidiary, Southwest Heritage Bank, and through the issuance of varying forms of debt and equity. At December
31, 2024, Bancorp 34 had cash and equivalents of $4.4 million, a $1.5 million note receivable from the Southwest Heritage Bank ESOP,
and net debt outstanding of $27.4 million, which includes $4.2 million related to trust preferred debt assumed in connection with the
CBOA Merger. Management believes Bancorp 34 has the ability to generate and obtain adequate amounts of liquidity to meet its requirements
in the short-term and the long-term.

Federal banking laws
regulate dividends that may be paid by banking subsidiaries without prior approval. Southwest Heritage Bank may declare dividends without
prior regulatory approval that do not exceed the total of retained net income for the current year combined with its retained net income
for the preceding two years, subject to maintenance of minimum capital requirements. Prior regulatory approval to pay dividends was not
required in 2022 or 2023. During 2024, Southwest Heritage Bank did not pay a dividend to Bancorp 34.

72

Southwest
Heritage Bank

Southwest Heritage
Bank’s liquidity management policy and our asset and liability management policy, or ALM policy, provides the framework that we
use to seek to maintain adequate liquidity and sources of available liquidity at levels that will enable us to meet all reasonably foreseeable
short-term, long-term, and strategic liquidity demands. Our Asset and Liability Management Committee, or ALCO, is responsible for oversight
of our liquidity risk management activities in accordance with the provisions of our ALM Policy and applicable bank regulatory capital
and liquidity laws and regulations. Our liquidity risk management process includes (i) ongoing analysis and monitoring of our funding
requirements under various economic and interest rate scenarios, (ii) review and monitoring of lenders, depositors, brokers and other
liability holders to ensure appropriate diversification of funding sources, and (iii) liquidity contingency planning to address liquidity
needs in the event of unforeseen market disruption, including appropriate allocation of funds to a liquid portfolio of marketable securities
and investments. We continuously monitor our liquidity position in order for our assets and liabilities to be managed in a manner that
we