Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 821

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 2
Chunk 821
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 on a collective basis and was allocated to individual PCD loans. This allowance for credit losses is reflected as
a “Day Two” on-balance sheet gross-up to the allowance for credit losses and as an increase to PCD loans. The PCD
loans’ purchase price of $26.2 million plus the allowance for credit losses of $1.1 million, becomes the initial amortized cost
basis of $27.3 million for the PCD loans. The difference between the initial amortized cost basis and the unpaid principal balance of
the PCD loans of $30.4 million, results in a non-credit discount for the PCD loans of $3.1 million, which is accreted as interest income
over the life of the PCD loans. Thereafter, the PCD loans are subject to the same interest rate recognition and credit model as non-PCD
loans, with changes to the allowance for credit losses recorded through provision expense.

    96

As of the Merger date and as described
above, the PCD Loans included the following components (in thousands):

Schedule
of  Purchased Credit Deteriorated Loans

    Unpaid principal balance 
    $30,425 
  
    Allowance for credit losses at acquisition 
     (1,164)
  
    Non-credit discount 
     (3,098)
  
    Purchase price 
    $ 26,163 

Pro
Forma Information

The pro forma revenues and pro forma earnings
in the following table, for each of the periods presented, combine CBOA’s consolidated operating results and Bancorp 34’s
consolidated operating results as if the Merger occurred on January 1, 2023.

Pro forma amounts for the twelve months
ended December 31, 2024, primarily reflect the following pro forma adjustments: (i) CBOA’s net income of $200,000 for the first
two and a half months of 2024 (ii) interest and fee income decrease related to lower loan discount accretion income of $616,000 and related
taxes of $154,000; (iii) interest and fee income decrease due to the removal of CBOA’s pre-Merger deferred loan fee income of $175,000
and related taxes of $44,000; (iv) interest expense decrease related to deposit liability and long-term debt discount expense of $131,000
and related taxes of $