Company: BCTF
Filing Date: 2025-03-06
Form Type: 10-K
Source: 0001552781-25-000058
Chunk: 82

Company: Bancorp 34, Inc.
Filing Date: 2025-03-06
Form: 10-K
Item: Item 1
Chunk 82
---

have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater possibility of producing results
that could be materially different than originally reported. We have identified the following as critical accounting estimates: (i) determination
of the allowance for credit losses for collectively evaluated loans and individually evaluated loans; (ii) determining the fair
values of the assets acquired and liabilities assumed and the fair value of the common stock consideration issued in connection
with the CBOA Merger; and, (iii) other fair value measurements to be the accounting areas that require the most subjective
or complex judgments and, as such, could be most subject to revision as new or additional information becomes available or circumstances
change, including overall changes in the economic climate and/or market interest rates. Therefore, we consider these policies, discussed
below, to be critical accounting estimates and discuss them directly with the Audit Committee of our board of directors.

Our significant accounting
policies are presented in Note 1—Nature of Operations and Significant Accounting Policies of our audited consolidated financial
statements included in this Annual Report on Form 10-K. These policies, along with the disclosures presented in the other financial statement
notes, and in this discussion, provide information on how significant assets and liabilities are valued in the financial statements and
how those values are determined. Recent accounting pronouncements and standards that have impacted or could potentially affect us are
also discussed in Note 1 of our audited consolidated financial statements. 

Allowance
for credit losses 

One significant
accounting policy is our accounting policy related to the allowance for credit losses (“ACL”). Effective January 1, 2023,
we adopted ASU 2016-13, Financial Instruments – Measurement of Current Expected Credit Losses on Financial Instruments (“CECL”), using
the modified retrospective method for our financial assets measured at amortized cost. CECL changed our method of accounting for credit
losses from an incurred loss model to an expected credit loss model. Under the prior incurred loss model, credit losses on financial
instruments were recognized when a probable loss was incurred, while CECL is an “expected credit loss” model. The expected
credit loss model represents management’s estimate of expected credit losses to the full contractual maturity of the financial
asset and is based on historical experience, current conditions, and reasonable and supportable forecasts. We believe the determination
of the ACL involves a greater amount of judgment and complexity when compared with our other significant accounting policies.

Qual