Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 238

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1A
Chunk 238
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 inflation, interest rates, and the shape of the
yield curve.

Effects on the yield
curve often are most pronounced at the short end of the curve, which is of particular importance to us and other banks. Among other things,
easing strategies are intended to lower interest rates, expand the money supply, and stimulate economic activity, while tightening strategies
are intended to increase interest rates, discourage borrowing, tighten the money supply, and restrain economic activity. However, as
noted above, in 2022 short term rates rose faster than long term rates to the point that the yield curve inverted for much of the final
two quarters of the year. This sort of phenomenon—where short term rates are raised more strongly and rapidly than long-term rates—is
relatively common. It is not clear when long term rates are likely to catch up, or when short term rates will decrease, if at all.

Many external factors
may interfere with the effects of Federal Reserve strategies or cause them to be changed, sometimes quickly. Such factors include significant
economic trends or events as well as significant international monetary policies and events. As exemplified by the March 2023 bank failures
in the U.S., such strategies also can affect the U.S. and world-wide financial systems in ways that may be difficult to predict. Risks
associated with interest rates and the yield curve and their potential effects on financial institutions are discussed in these Risk
Factors under the Caption Lending and Interest Rate Risks.

Lending
and Interest Rate Risks

If
we fail to effectively manage credit risk, our business and financial condition will suffer.

We must effectively
manage credit risk. There are risks inherent in making any loan, including risks with respect to the period of time over which the loan
may be repaid, risks relating to proper loan underwriting and guidelines, risks resulting from changes in economic and industry conditions,
risks inherent in dealing with individual borrowers and risks resulting from uncertainties as to the future value of collateral. There
is no assurance that our credit risk monitoring and loan approval procedures are or will be adequate or will reduce the inherent risks
associated with lending.

Our risk management
practices, such as monitoring the concentration of our loans within specific industries and our credit approval, review and administrative
practices, may not adequately reduce credit risk, and our credit administration personnel, policies and procedures may not adequately
adapt to changes in economic or any other conditions affecting customers and the quality of the loan portfolio. Many of our loans are
made to