Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 842

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 2
Chunk 842
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 of forfeitures
from employees who have terminated employment.

In October 2016, the ESOP borrowed $1.5
million from the Company to purchase 150,358 shares of common stock from the Company at $10 per share. Bancorp 34 accepted a $1.8 million
note from the ESOP secured by all unallocated shares in the plan with a 30-year repayment term. The principal balance includes $1.5 million
used to purchase stock in 2016 and $266,000 used to pay off already outstanding ESOP loans used to purchase shares in 2012 and 2014.
Principal and interest payments on the note are made every December 31 and the interest rate on the loan adjusts annually on January
1st to the prime rate of interest as published in the Wall Street Journal. The Bank makes at least annual discretionary contributions
to the ESOP and the ESOP uses all funds it receives to repay the loan. When loan payments are made, ESOP shares are allocated to participants
based on relative compensation for that plan year. At the discretion of the employer, participants may receive the shares, cash, or a
combination of stock and cash at the end of employment.

Since the Bank is the primary source of
repayment on ESOP loans, the Bank records the note payable and an equal contra-equity account on its balance sheet and interest expense
and ESOP benefit plan expense on its statement of comprehensive income equal to the annual loan payments. As inter-company borrowings,
all bank-recorded balance sheet items, Bancorp 34 interest income and Southwest Heritage Bank interest expense on the ESOP loan are eliminated
in consolidation. Bancorp 34 consolidated financial statements include a contra-equity account with a balance equal to the purchase price
of all unallocated shares in the ESOP.

Shares held by the ESOP on December 31,
2024, and 2023, were as follows:

Schedule of Shares held
by ESOP

    2024  
    2023 

    Allocated shares 
     56,780  
     50,717 
  
    Unallocated shares 
     133,271  
     139,334 

    Total ESOP shares 
     190,051  
     190,051 

The fair value of unallocated shares held
by the ESOP is $1,399,000
and $1,379,000
at December 31, 2024