Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 142

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 142
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 undistributed earnings as if all such earnings had been distributed during the period.

Derivatives
– At the inception of derivative contracts, the Company designates derivatives as one of
two types based on our intention and belief as to the likely effectiveness of the hedge. These two types are: (i) a hedge of changes
in fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”); and (ii) a hedge
of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash
flow hedge”).

For a fair value hedge, the gain
or loss on the derivative as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values
change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into
earnings in the same period during which the hedged transaction affects the earnings. The changes in fair value of derivatives that do
not qualify for hedge accounting are reported in current earnings.

Net cash settlements on derivatives that
qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Cash flows on hedges
are classified in the cash flow statement in the same line item as the cash flows of the item being hedged.

The initial fair value of hedge components
excluded from the assessment of effectiveness are recognized in the consolidated balance sheet under a systematic and rational method
over the life of the hedging relationship and are presented in the same income statement line item as the earnings effect of the hedged
item. Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the
amounts recognized in earnings are recorded as a component of other comprehensive income.

The Company discontinues hedge accounting
when it is determined that the derivative is no longer effective in offsetting changes in fair values or cash flows of the hedged item,
the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer
firm, or the treatment of the derivative as a hedge is no longer appropriate or intended. When hedge accounting is discontinued, subsequent
changes in fair value of the derivative are recorded as noninterest income. When a fair value hedge is discontinued, the hedged asset
or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized