Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 342

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1A
Chunk 342
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 and outstanding immediately
and would not be considered outstanding. All outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends
are considered participating securities for this calculation. Diluted earnings per common share include the dilutive effect of additional
potential common shares issuable under stock options. Performance awards cannot be dilutive until the performance conditions have been
met and all necessary conditions have been satisfied. Earnings per share are restated for all stock splits and stock dividends through
the date of issuance of the consolidated financial statements. The two-class method is an earnings allocation method under which earnings
per share is calculated for each class of common stock and participating security considering both dividends declared (or accumulated)
and participation rights in undistributed earnings as if all such earnings had been distributed during the period.

Derivatives
– At the inception of derivative contracts, the Company designates derivatives as one of
two types based on our intention and belief as to the likely effectiveness of the hedge. These two types are: (i) a hedge of changes
in fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”); and (ii) a hedge
of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash
flow hedge”).

For a fair value hedge, the gain
or loss on the derivative as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values
change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into
earnings in the same period during which the hedged transaction affects the earnings. The changes in fair value of derivatives that do
not qualify for hedge accounting are reported in current earnings.

Net cash settlements on derivatives that
qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Cash flows on hedges
are classified in the cash flow statement in the same line item as the cash flows of the item being hedged.

The initial fair value of hedge components
excluded from the assessment of effectiveness are recognized in the consolidated balance sheet under a systematic and rational method
over the life of the hedging relationship and are presented in the same income statement line item as the earnings effect of the hedged
item. Any difference between the change in the fair value of the hedge components excluded from the assessment of effectiveness and the
amount