Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 987

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 3
Chunk 987
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409  
    $—  
    $589  
    $998  
    $456,029  
    $457,027 

Credit
quality indicators – The following tables represent the credit exposure by internally
assigned grades. This grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements
in accordance with the loan terms. The Bank’s internal credit risk grading system is based on management’s experiences with
similarly graded loans. Credit risk grades are reassessed each quarter based on any recent developments potentially impacting the creditworthiness
of the borrower, as well as other external statistics and factors, which may affect the risk characteristics of the respective loan.
The Company uses the following definitions for risk ratings:

Pass:
Strong credit with no existing or known potential weaknesses deserving of management’s close attention.

Special
Mention: Potential weaknesses that deserve management’s close attention. Borrower and
guarantor’s capacity to meet all financial obligations is marginally adequate or deteriorating.

Substandard:
Inadequately protected by the paying capacity of the borrower and/or collateral pledged. The borrower or guarantor is unwilling or unable
to meet loan terms or loan covenants for the foreseeable future.

Doubtful:
All the weakness inherent in one classified as substandard with the added characteristic that those weaknesses in place make the collection
or liquidation in full, on the basis of current conditions, highly questionable and improbable.

Loss
– Considered uncollectible or no longer a bankable asset. This classification does not
mean that the asset has no recoverable value. In fact, a certain salvage value is inherent in these loans. Nevertheless, it is not practical
or desirable to defer writing off a portion or whole of a perceived asset even though partial recovery may be collected in the future.

The following tables present the
amortized cost basis of loans by credit quality indicator, by class of financing receivable, and year of origination for term loans as
of December 31, 2024, and December 31, 2023. For revolving lines of credit that are converted to term loans, if the conversion involved
a credit decision, such loans are included in the origination year in which the credit decision was made. If revolving lines of credit
converted to term loans without a credit decision, such lines of credit are included in the “Revolving lines of credit converted
to term” column in the following tables (dollars in thousands).