BORROWINGS

12 Months Ended

Dec. 31, 2024

BORROWINGS

NOTE 7 – BORROWINGS

The Bank has established a borrowing line at the Federal Home Loan Bank of San Francisco. As of December 31, 2024, borrowing capacity totaled $233.8 million and collateral consists of a blanket lien on the loan portfolio. There were no outstanding borrowings on the borrowing line as of December 31, 2024, or December 31, 2023.

On March 12, 2023, the Federal Reserve Board announced it would make additional funding available to eligible depository institutions to help ensure banks could meet the needs of depositors made available through the creation of a new Bank Term Funding Program (“BTFP”). The BTFP is a liquidity resource with capacity based on the pledging of high-quality securities. The intention of the program was to eliminate an institution’s need to quickly sell those securities in times of stress. Effective March 11, 2024, the Federal Reserve ceased lending under the program’s terms. Outstanding borrowings were not impacted. As of December 31, 2024, the Bank had no borrowings under the BTFP and removed assets that were previously pledged to secure borrowings. As of December 31, 2023, the Bank had $29 million in outstanding BTFP advances.

As of December 31, 2024, the Bank pledged securities with a carrying value of $50.2 million and had borrowing availability of $49.3 million at the Federal Reserve Bank of San Francisco’s Discount Window. No borrowings were outstanding through the Discount Window as of December 31, 2024.

As of December 31, 2024, and 2023, the Bank had available unsecured Federal Funds lines of credit at correspondent banks totaling $49.8 million and $39.8 million, respectively. The terms of the borrowings are overnight at the applicable fed funds borrowing rate. As of December 31, 2024, the Bank had no borrowings under these lines of credit.

On June 29, 2021, the Company completed a private placement of $25.0 million of 10 year, fixed-to-floating rate subordinated notes. The subordinated notes initially bear interest at 4.00% per annum for five years, floating at Three-Month SOFR plus 328 basis points quarterly thereafter. The ten-year notes mature on July 15, 2031, and are callable at the Company’s option after five years. The subordinated notes have unamortized origination fees of $351,000 at December 31, 2024. As part of the Merger with CBOA, $1.5 million of the subordinated debt was acquired in the transaction and subsequently retired.

As part of the Merger with CBOA, the Company acquired CBOA Financial Statutory Trust #1, a trust formed by CBOA in November 2005. The trust closed a pooled private offering of 5,000 trust preferred securities with a liquidation amount of $1,000 per security. CBOA made a required equity contribution of $155,000 to form the trust and issued $5 million of subordinated debentures to the trust in exchange for ownership of all of the common securities of the trust and the proceeds of the preferred securities sold by the trust. The Company is able to redeem the subordinated debentures, in whole or in part, in a principal amount with integral multiples of $1,000, at 100% of the principal amount, plus accrued and unpaid interest until maturity in 2036. The subordinated debentures are also redeemable in whole or in part from time to time, upon the occurrence of specific events defined within the trust indenture. Bancorp 34 has the option to defer interest payments on the subordinated debentures from time to time, for a period not to exceed five consecutive years. Bancorp 34 has elected not to defer interest payments on the subordinated debentures. The trust preferred securities have a variable rate of interest, reset quarterly on the 23rd of each February, May, August, and November, equal to the sum of 3-month CME term SOFR plus 1.70%. As of December 31, 2024, the rate was 6.48%. Bancorp 34’s investment in the common stock of the trust is $155,000, which is included in other investments and is accounted for as an unconsolidated cost-method investment. Bancorp 34 is not considered the primary beneficiary of this trust, and therefore the trust is not consolidated in the financial statements. Rather the subordinated debentures are shown as a liability. The remaining Merger-related fair value mark on the CBOA Financial Statutory Trust #1 subordinated debt was $952,000 as of December 31, 2024.

Maturities of outstanding borrowings as of December 31, 2024, were (dollars in thousands):

One year or less	$	0
Over one through three years		0
Over three through five years		0
Over five through ten years		23,500
Over ten years		5,000
Totals	$	28,500