Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 20

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 20
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 companies other than “small
bank holding companies,” generally holding companies with consolidated assets of less than $3 billion. More stringent requirements
are imposed on “advanced approaches” banking organizations—those organizations with $250 billion or more in total
consolidated assets, $10 billion or more in total foreign exposures, or that have opted into the Basel II capital regime.

The rules include certain
higher risk-based capital and leverage requirements than those previously in place. Specifically, we are required to maintain the following
minimum capital requirements:

    ·
    a common equity Tier 1 (“CET1”) risk-based
    capital ratio of 4.5%;

    ·
    a Tier 1 risk-based capital ratio of 6%;

    ·
    a total risk-based capital ratio of 8%; and

    ·
    a leverage ratio of 4%.

Under Basel III, Tier
1 capital includes two components: CET1 capital and additional Tier 1 capital. The highest form of capital, CET1 capital, consists solely
of common stock (plus related surplus), retained earnings, accumulated other comprehensive income, otherwise referred to as AOCI, and
limited amounts of minority interests that are in the form of common stock. Additional Tier 1 capital is primarily comprised of noncumulative
perpetual preferred stock, Tier 1 minority interests and grandfathered trust preferred securities. Tier 2 capital generally includes
the allowance for credit losses up to 1.25% of risk-weighted assets, qualifying preferred stock, subordinated debt and qualifying tier
2 minority interests, less any deductions in Tier 2 instruments of an unconsolidated financial institution. AOCI is presumptively included
in CET1 capital and often would operate to reduce this category of capital. When implemented, Basel III provided a one-time opportunity
for covered banking organizations to opt out of much of this treatment of AOCI. We made this opt-out election.

In addition, in order
to avoid restrictions on capital distributions or discretionary bonus payments to executives, under Basel III, a banking organization
must maintain a “capital conservation buffer” on top of its minimum risk-based capital requirements. This buffer must consist
solely of Tier 1 Common Equity, but the buffer applies to all three risk-based measurements (CET1, Tier 1 capital and total capital).
The following effective minimum capital plus capital conservation buffer ratios are applicable: (a) a CET1 capital ratio of 7.0%,