Finance

Bancorp 34, Inc. Announces Quarterly Performance Amidst Merger Proceedings

SCOTTSDALE, Ariz., March 8, 2024 /PRNewswire/ — Bancorp 34, Inc. (OTCQB: BCTF), the esteemed parent company of Bank 34, has just released its consolidated performance metrics for the fourth and final quarter of 2023. Despite enduring financial challenges, the institution managed to close the year with an uptick in total assets, although they also reported a net loss for the most recent quarter.

Financial Highlights and Challenges

Throughout the quarter that concluded on December 31, 2023, Bancorp 34 acknowledged a net loss of $1.7 million, translating to a diluted net loss per share of $0.40. In comparison, the same period in the previous year incurred a net loss of $1.9 million and a diluted net loss per share of $0.81. Despite these figures, the company's total assets showcased modest growth, escalating from $574.3 million at the end of 2022 to $581.3 million at the end of 2023.

The persevering enterprise dealt with additional expenses attributed to the merger with CBOA Financial, Inc. ("CBOA"), proclaimed in April 2023, and has experienced inflated funding costs due to heightened market rates and intensified competition for deposits throughout the year. As 2023 concluded, merger-related expenses totaled $1.7 million for the fourth quarter alone, aggregating to $3 million for the year. Moreover, part of these merger expenses were not eligible for tax deductions, which, in turn, negatively influenced the bank's income tax benefit parallel to the pre-tax loss.

A problematic credit issue synonymous with elevated provision expenses in the 3rd quarter was resolved by shifting the related assets to other real estate owned, valuing $3 million at the year's end. The incurred loss on this credit reached $3.4 million during the 4th quarter. Moving forward, the note regarding the affected parcel was later sold in February 2024 for $2.5 million. The additional loss recognized at $0.5 million is due to a reduction in collected rents, an effect that is noted and will be reflected in the financial results of the 1st quarter of 2024.

In 2023, Bancorp 34 observed a total asset increase of $6.9 million. Aligning with industry trends, deposit balances experienced a decline of $27.6 million during the year. However, increases in capital and borrowings have balanced out this decline. Consequently, the tangible book value per share ended the year at $12.94.

Anticipated Merger and Brand Evolution

Both Bancorp 34 and CBOA share optimism regarding the merger, targeting closure in March of 2024. In preparation for this significant corporate change, both entities announced that the unified bank will reintroduce itself as Southwest Heritage Bank upon completion of the merger.

Executive Outlook

Jim Crotty, the President and Chief Executive Officer, commented on the past fiscal year and the trajectory for the future. He noted, "While 2023 presented a challenging market, rate, and deposit environment that limited any material balance sheet growth, we saw our bank improve process, procedures, and efficiencies to prepare for the future. Our team has started the preparations for life as a bank approaching and ultimately growing beyond $1 billion in assets. We are looking forward to completing the merger with Commerce Bank of Arizona. Our commitment to create shareholder value has never been stronger. We are excited to showcase the merits of the combined bank as we rebrand as Southwest Heritage Bank."

Bancorp 34, Inc. at a Glance

Bank 34 operates with three comprehensive community bank branches, including a location in Maricopa County's city of Scottsdale, Arizona, and branches in Otero and Dona Ana Counties, situated in the New Mexico cities of Alamogordo and Las Cruces, respectively.

Forward-Looking Statements

This release contains forward-looking statements that are not rooted in historical facts, falling within the Private Securities Litigation Reform Act of 1995's definition. These potentially predictive statements may often be recognized by descriptive terms such as "believes," "will," "expects," and other similar expressions. The discourse here includes the company's hopeful prognosis for obtaining shareholder approval and fulfilling the merger with CBOA. These forward-looking statements rest on the company's administration's current conviction and expectations but are inherently subject to significant risks and uncertainties. The actual outcomes may substantially diverge from the expressed forward-looking statements due to multiple influential factors. Factors potentially driving these differences encompass, yet are not limited to, scenarios where the company's or CBOA's shareholders do not approve the merger or other contingencies to the merger are not met, in addition to prevailing economic conditions. The readers are admonished not to place excessive reliance on these forward-looking statements, as they are only relevant as of this release's date. It must be noted that forward-looking statements hold validity exclusively at the time of utterance, and barring any legal obligations under federal securities laws, we assume no pledge to update any such statements considering new information or future occurrences.

Important Merger Information and Where to Find It

In terms of the proposed merger between Bancorp 34 and CBOA, a registration statement on Form S-4 has been filed with the SEC to register the shares that Bancorp 34 will issue to CBOA shareholders as part of the transaction. Included in this registration statement is a composite proxy statement of Bancorp 34 and CBOA, along with a prospectus of Bancorp 34. These documents spell out essential aspects of the proposed transaction and are vital for investors and shareholders to read and grasp thoroughly. The SEC filings are accessible to the public and contain pertinent documents concerning the proposed merger. It is highly recommended for investors and shareholders of both entities to review these materials meticulously.

For prospective readers and pertinent individuals, a free copy of the proxy statement/prospectus can be obtained via the SEC's website. This proxy statement/prospectus is an essential document and has also been disseminated to shareholders of Bancorp 34 and CBOA.

Participants in the Merger

Directors and executive officers of Bancorp 34 and CBOA may be deemed to be participants in the solicitation of proxies for the approval of the merger agreement. Information concerning the aforementioned individuals, as well as their shareholding in Bancorp 34 and CBOA, is detailed in the registration statement and proxy statement/prospectus concerning the transaction. Copies of these pertinent documents can be obtained without charge as described in the prior section.

For further details, interested parties may reach out to Kevin Vaughn, Chief Financial Officer at Bancorp 34, via email at [email protected]

In conclusion, while Bancorp 34, Inc. faced fiscal challenges in 2023, the impending merger and consequent rebranding as Southwest Heritage Bank signal a new chapter of growth and opportunity for the company. Through strategic maneuvers and anticipation of future growth, Bancorp 34 aims to successfully navigate through the demanding financial terrain of the industry. Stay tuned for more updates as the company approaches an exciting merger and rebranding in the near future.

SOURCE Bancorp 34, Inc. The information provided in this news article is intended to present readers with a comprehensive insight into Bancorp 34, Inc.'s financial standing, merger progress, and outlook as conveyed in the original PRNewswire release.