Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 145

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 145
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 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 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 shares valuation as of the Merger date. Each outstanding share of Bancorp 34 common stock remained outstanding and
was unaffected by the Merger. 

Commerce Bank of Arizona operated
five full-service offices serving customers in Gilbert, Green Valley, Oro Valley, Scottsdale and Tucson, Arizona. Completing the Merger
further enhanced the Bank’s Arizona footprint, allowed for greater efficiencies based on size and scale, and strengthened the depth
of the management team. The combined banks operate as Southwest Heritage Bank and serve customers from eight full-service offices in
Arizona and southern New Mexico. The core system conversion was executed in March 2024. 

We accounted for the Merger using the acquisition
method of accounting in accordance the FASB’s Accounting Standards Code 805 (“ASC 805”), Business Combinations,
and accordingly, the assets and liabilities of CBOA were recorded at their respective Merger date estimated fair values. The estimated
fair values of assets and liabilities are preliminary and subject to refinement during the measurement period (which cannot exceed one
year from the Merger date), as additional information relative to the Merger date fair values becomes available. Effective in March 2024,
we recognized a preliminary bargain purchase gain of $5.1 million in connection with the Merger (not taxable for income tax purposes),
which is 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. During
2023 and through December 31, 2024, Bancorp 34 incurred, on a cumulative basis, approximately $6.8 million of Merger-related expenses.

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The primary cause of the $5.1 million
preliminary bargain purchase gain was a decrease in Bancorp 34, Inc.’s common share valuation from April 2023 to March 2024. In
April