Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 603

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1C
Chunk 603
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 restricted stock unit vested and was cancelled and converted automatically into the right to receive
0.2628 shares of Bancorp 34 common stock with respect to each share of CBOA common stock underlying such restricted stock unit. In connection
with the CBOA Merger, Bancorp 34 issued approximately 2.7 million shares of Bancorp 34 common stock, which had a fair value of approximately
$23.3 million based on a common share valuation completed by an independent third party as of the CBOA Merger date. Each outstanding
share of Bancorp 34 common stock remained outstanding and was unaffected by the CBOA Merger.

Commerce Bank of Arizona
operated five full-service offices serving customers in Gilbert, Green Valley, Oro Valley, Scottsdale and Tucson, Arizona. The combined
banks operate as Southwest Heritage Bank and serve customers from seven full-service offices in Arizona and southern New Mexico. The
core system conversion was executed in March 2024.

We accounted for the
CBOA Merger using the acquisition method of accounting in accordance the Financial Accounting Standards Board’s Accounting Standards
Code 805 (“ASC 805”), Business Combinations, and accordingly, the assets and liabilities of CBOA were recorded at their respective
merger date fair values. The fair values of assets and liabilities are preliminary and subject to refinement for up to one year after
the merger date as additional information related to the merger date fair values becomes available. Effective in March 2024, we recognized
a preliminary bargain purchase gain of $5.0 million in connection with the CBOA Merger (not taxable for income tax purposes), which was
recognized in our first quarter 2024 operating results. The core deposit intangible asset of $8.9 million represents the estimated value
of Commerce Bank of Arizona’s long-term deposit relationships with its customers and will be amortized over an estimated weighted
average life of ten years using an accelerated method, which approximates the estimated run-off of the acquired deposits.

For further information
regarding the CBOA Merger, see Note 2 in our consolidated financial statements included in Annual Report on Form 10-K.

61

Results
of Operations

General

Our results of operations
depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily
of interest income on loans, investment securities and other short-term investments and interest expense on interest-bearing liabilities,
consisting primarily of deposits and borrowings.