Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 297

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1A
Chunk 297
---
 There were no trading securities in
our investment portfolio as of December 31, 2024, and December 31, 2023. All available-for-sale securities are carried at fair value
and may be used for liquidity purposes.

Our securities available-for-sale
were $78.7 million and $56.7 million at December 31, 2024, and December 31, 2023, respectively. Following the CBOA Merger, management
liquidated the entire acquired CBOA available-for-sale investment portfolio in late March and early April, and management determined
that these sales prices were the best indicator of the fair value of the CBOA available-for-sale-investment portfolio effective as of
the CBOA Merger date. For further information regarding the CBOA Merger, see Note 2 in our consolidated financial statements included
in this Annual Report on Form 10-K. To use excess liquidity on hand, management purchased $28.6 million in available-for-sale securities,
primarily during the fourth quarter. Purchases included $15.8 million in agency mortgage-backed securities, $10.8 million in asset-backed
securities, and $2.0 million in AAA rated private label mortgage-backed securities.

Our held-to-maturity
securities which are carried on our balance sheet at amortized costs and net of an allowance for credit losses, were $5.7 million and
$5.7 million as of December 31, 2024, and December 31, 2023, respectively.

Derivatives
and Hedging activities

Southwest Heritage
Bank is exposed to certain risks relating to its ongoing business operations. As such, from time to time, we enter into interest rate
derivatives as part of our asset liability management strategy to help manage the Bank’s interest rate risk position. Derivative
instruments represent contracts between parties that result in one party delivering cash to the other party based on a notional amount
and an underlying term (such as a rate, security price or price index) as specified in the derivative contract. The amount of cash delivered
from one party to the other is determined based on the interaction of the notional amount of the contract with the underlying term. Derivatives
may also be implicit in certain contracts and commitments.

We recognize derivative
financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument.
We record derivative assets and derivative liabilities on the balance sheet within other assets