Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 1112

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 4
Chunk 1112
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 segments of our loan portfolio
are discussed below:

Commercial
loans. We provide a mix of variable and fixed rate commercial loans. The loans are typically
made to small- and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs and business expansion.
Commercial loans generally include lines of credit and loans with maturities of five years or less. The loans are generally made with
business operations as the primary source of repayment, but may also include collateralization by inventory, accounts receivable, and
equipment. Personal guarantees are typically obtained on commercial loans as well.

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Commercial
real estate loans. Our commercial real estate loans consist of both real estate occupied
by the borrower for ongoing operations and non-owner occupied real estate properties. The real estate securing our existing commercial
real estate loans includes a wide variety of property types, such as owner and non-owner-occupied offices, warehouses and production
facilities, office buildings, hotels, mobile home parks, retail centers, and assisted living facilities.

Multifamily.
Our multifamily portfolio includes properties with 5 or more dwellings where the use is primarily residential.

Construction
and land development loans. Our construction and land development loans are comprised of
residential construction, commercial construction, and land acquisition and development loans.

Residential
real estate loans. Our residential real estate loans consist of residential properties
that generally do not qualify for secondary market sale.

Consumer
loans. Our consumer loans include direct personal loans and automobile loans. Personal
loans are generally unsecured or secured by cash held at the bank.

The ACL for pooled loans is estimated
using a non-discounted cash flow methodology. The bank then applies probability of default and loss given default to the cash flow methodology
to calculate expected losses within the model. This allows the bank to identify the timing of default as compared to when the actual
loss event may occur. The results are then aggregated to produce segment level results and reserve requirements for each segment. The
Company uses a 12-month forecast that is reasonable and supportable within the ACL calculation and then reverts to historical credit
loss experience on a straight-line basis over a one-year timeline. Historical loss experience is then used for the remaining life of
the assets. The Company uses several economic variables in the calculation of the ACL, the most significant of which is the economic
forecast for the national unemployment rate. Changes in the economic forecast for unemployment rates could significantly affect the estimated
credit losses which could potentially