Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 56

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 56
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 with technological change could adversely affect our business.

The financial services
industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services.
The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.
Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products
and services that will satisfy customer demands, as well as to create additional efficiencies in our operations. Many of our competitors
have substantially greater resources to invest in technological improvements. We may not be able to effectively implement new technology-driven
products and services or be successful in marketing these products and services to our customers. Failure to successfully keep pace with
technological change affecting the financial services industry could have a material adverse impact on our business, financial condition
and results of operations.

Industry-Related
Risks

We
are exposed to the possibility that more prepayments may be made by customers to pay down loan balances, which could reduce our interest
income and negatively impact our operating results.

Prepayment rates stem
from consumer behavior, conditions in the housing and financial markets, general U.S. economic conditions, and the relative interest
rates on fixed-rate and adjustable-rate loans. Therefore, changes in prepayment rates are difficult to predict. Recognition of deferred
loan origination costs and premiums paid in originating these loans are normally recognized over the contractual life of each loan. As
prepayments occur, the rate at which net deferred loan origination costs and premiums are expensed will accelerate. The effect of the
acceleration of deferred costs and premium amortization may be mitigated by prepayment penalties paid by the borrower when the loan is
paid in full within a certain period of time, which varies between loans. If prepayment occurs after the period of time when the loan
is subject to a prepayment penalty, the effect of the acceleration of premium and deferred cost amortization is no longer mitigated.
We recognize premiums paid on mortgage-backed securities as an adjustment from interest income over the expected life of the security
based on the rate of repayment of the securities. Acceleration of prepayments on the loans underlying a mortgage-backed security shortens
the life of the investment security, increases the rate at which premiums are expensed and further reduces interest income. We may not
be able to reinvest loan and security prepayments at rates comparable to the prepaid instrument particularly in a period of declining
interest rates.

41

We
could experience a decline in operating