UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities
Exchange Act of 1934 (Amendment No.
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Filed by the Registrant
x
Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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Bancorp 34,
Inc.
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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N/A
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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N/A
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Proposed maximum aggregate value of transaction:
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N/A
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Total fee paid:
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N/A
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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[letterhead of Bancorp 34, Inc.]
April 22, 2019
Dear Fellow Stockholder:
We cordially invite
you to attend the 2019 Annual Meeting of Stockholders of Bancorp 34, Inc. The Annual Meeting will be held at the main office of
Bank 34 located at 500 East 10th Street, Alamogordo, New Mexico 88310 on May 22, 2019, at 11:00 a.m., local time.
The enclosed Notice
of Annual Meeting and Proxy Statement describe the formal business to be transacted. During the annual meeting we will also report
on the operations of Bancorp 34, Inc. Also enclosed for your review is our Annual Report for the year ended December 31, 2018,
which contains information concerning our activities and operating performance. Our directors and officers, as well as a representative
of our independent registered public accounting firm, will be present to respond to any questions that stockholders may have.
The business to be
conducted at the annual meeting consists of the election of directors and the ratification of the appointment of Moss Adams LLP
as independent registered public accounting firm for the year ending December 31, 2019. The Board of Directors has determined that
the matters to be considered at the annual meeting are in the best interest of Bancorp 34, Inc. and its stockholders, and the Board
of Directors unanimously recommends a vote “FOR” each matter to be considered.
On behalf of the Board
of Directors, we urge you to sign, date and return the enclosed proxy card as soon as possible, even if you currently plan to attend
the annual meeting. This will not prevent you from voting in person, but will assure that your vote is counted if you are unable
to attend the annual meeting. Your vote is important, regardless of the number of shares that you own.
Our Proxy Statement
and the Annual Report to Stockholders are available at
www.cstproxy.com/bancorp34/2019.
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Sincerely,
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/s/ Jill Gutierrez
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Jill Gutierrez
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President and Chief Executive Officer
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Bancorp
34, Inc.
500 East 10th Street
Alamogordo, New Mexico 88310
(575) 437-9334
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 22, 2019
Notice is hereby given
that the 2019 Annual Meeting of Stockholders of Bancorp 34, Inc. will be held at the main office of Bank 34 located at 500 East
10th Street, Alamogordo, New Mexico 88310 on May 22, 2019 at 11:00 a.m., local time.
A Proxy Card and Proxy
Statement for the annual meeting are enclosed. The annual meeting is for the purpose of considering and acting upon:
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1.
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the election of two directors;
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2.
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the ratification of the appointment of Moss Adams LLP as independent registered public accounting
firm for the year ending December 31, 2019; and
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such other matters as may
properly
come before the annual meeting, or any adjournments thereof. The Board of Directors is not aware of any other business to come
before the annual meeting.
Any action may be taken
on the foregoing proposals at the annual meeting on the date specified above, or on the date or dates to which the annual meeting
may be adjourned. Stockholders of record at the close of business on March 29, 2019 are the stockholders entitled to vote at the
annual meeting, and any adjournments thereof.
EACH STOCKHOLDER, WHETHER
HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED. A PROXY MAY BE
REVOKED BY FILING WITH THE CORPORATE SECRETARY OF BANCORP 34, INC. A WRITTEN REVOCATION OR A DULY EXECUTED PROXY CARD BEARING A
LATER DATE. ANY STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT
BEFORE THE ANNUAL MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL
DOCUMENTATION FROM THE RECORD HOLDER IN ORDER TO VOTE IN PERSON AT THE ANNUAL MEETING. ATTENDANCE AT THE ANNUAL MEETING WILL NOT
IN ITSELF CONSTITUTE REVOCATION OF YOUR PROXY.
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By Order of the Board of Directors
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/s/ Dorothy Valdez
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Dorothy Valdez
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Corporate Secretary
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Alamogordo, New Mexico
April 22, 2019
IMPORTANT: THE PROMPT RETURN OF PROXIES
WILL SAVE THE EXPENSE OF FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES.
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS: THE PROXY STATEMENT, INCLUDING THE NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS, AND BANCORP 34, INC.’S
ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 ARE EACH AVAILABLE ON THE INTERNET AT
WWW.CSTPROXY.COM/BANCORP34/2019.
PROXY STATEMENT
Bancorp
34, Inc.
500 East 10th Street
Alamogordo, New Mexico 88310
(575) 437-9334
ANNUAL MEETING OF STOCKHOLDERS
May 22, 2019
This Proxy Statement
is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Bancorp 34, Inc. to be used
at the Annual Meeting of Stockholders, which will be held at the main office of Bank 34 located at 500 East 10th Street, Alamogordo,
New Mexico 88310 on May 22, 2019, at 11:00 a.m., local time, and all adjournments of the annual meeting. The accompanying Notice
of Annual Meeting of Stockholders and this Proxy Statement are first being mailed to stockholders on or about April 22, 2019.
REVOCATION OF PROXIES
Stockholders who execute
proxies in the form solicited hereby retain the right to revoke them in the manner described below. Unless so revoked, the shares
represented by such proxies will be voted at the annual meeting and all adjournments thereof. Proxies solicited on behalf of the
Board of Directors of Bancorp 34, Inc. will be voted in accordance with the directions given thereon.
Please sign and return
your proxy card in the postage paid envelope provided. Where no instructions are indicated on the proxy card, signed proxies will
be voted “FOR” the election of the nominees for director named herein and “FOR” the ratification of the
appointment of Moss Adams LLP as our independent registered public accounting firm for the year ending December 31, 2019.
Proxies may be revoked
by sending written notice of revocation to the Corporate Secretary of Bancorp 34, Inc. at the address shown above, by filing a
duly executed proxy bearing a later date, by following the internet or telephone instructions on the enclosed proxy card or by
voting in person at the annual meeting. The presence at the annual meeting of any stockholder who had given a proxy shall not revoke
such proxy unless the stockholder delivers his or her ballot in person at the annual meeting or delivers a written revocation to
our Corporate Secretary prior to the voting of such proxy.
If you have any questions
about giving your proxy or require assistance, please call Dorothy Valdez, Corporate Secretary, at (575) 437-9334.
If you are a stockholder
whose shares are not registered in your name, you will need appropriate documentation from the record holder to vote in person
at the annual meeting.
SOLICITATION OF PROXIES; EXPENSES
We will pay the cost
of this proxy solicitation. Our directors, executive officers and other employees may solicit proxies by mail, personally, by telephone,
by press release, by facsimile transmission or by other electronic means. No additional compensation will be paid to our directors,
executive officers or employees for such services. We will reimburse brokerage firms and other custodians, nominees, and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of our common stock.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Except as otherwise
noted below, holders of record of Bancorp 34, Inc.’s shares of common stock, par value $0.01 per share, as of the close of
business on March 29, 2019 are entitled to one vote for each share then held. As of March 29, 2019, there were 3,356,155 shares
of common stock issued and outstanding.
Bancorp 34, Inc.’s
Articles of Incorporation provide that, subject to certain exceptions, record owners of Bancorp 34, Inc.’s common stock that
is beneficially owned by a person who beneficially owns in excess of 10% of Bancorp 34, Inc.’s outstanding shares are not
entitled to any vote in respect of the shares held in excess of the 10% limit.
Principal Holders
Persons and groups
who beneficially own in excess of 5% of the shares of common stock are required to file certain reports with the Securities and
Exchange Commission regarding such ownership. The following table sets forth, as of March 29, 2019, the shares of common stock
beneficially owned by our directors and executive officers, individually and as a group, and by each person who was known to us
as the beneficial owner of more than 5% of the outstanding shares of common stock. The mailing address for each of our directors
and executive officers is 500 East 10th Street, Alamogordo, New Mexico 88310.
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Shares of Common
Stock Beneficially
Owned as of the
Record Date (1)
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Percent of Shares of
Common Stock
Outstanding (2)
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Persons Owning Greater than 5%
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Bank 34 Employee Stock Ownership Plan
500 East 10th Street
Alamogordo, New Mexico 88310
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203,634
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6.03
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%
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Directors
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William F. Burt
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18,813
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(3)
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*
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Wortham A. (Pete) Cook
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14,026
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(4)
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*
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Jill Gutierrez
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61,491
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(5)
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1.82
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%
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James D. Harris
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23,198
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(6)
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*
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Randal L. Rabon
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46,183
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(6)
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1.37
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%
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Elaine E. Ralls
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16,789
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(7)
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*
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Don P. Van Winkle
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9,790
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(8)
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*
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Executive Officer Who is Not a Director
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Jan R. Thiry
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28,033
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(9)
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*
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All directors and executive officers as a group (8 persons)
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218,323
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6.42
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%
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(1)
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In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, a person is
deemed to be the beneficial owner, for purposes of this table, of any shares of Bancorp 34, Inc. common stock if he has or shares
voting or investment power with respect to such common stock or has a right to acquire beneficial ownership at any time within
60 days from March 29, 2019. As used herein, “voting power” is the power to vote or direct the voting of shares and
“investment power” is the power to dispose or direct the disposition of shares. Except as otherwise noted, ownership
is direct and the named individuals and group exercise sole voting and investment power over the shares of Bancorp 34, Inc. common
stock. In accordance with applicable Securities and Exchange Commission rules, outstanding options held by an individual that are
vested or that will vest within 60 days of March 29, 2019 are included for purposes of calculating that individual’s percentage
ownership, but not for purposes of calculating any other individual’s percentage ownership.
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(2)
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Based on a total of 3,356,155 shares of common stock outstanding as of March 29, 2019.
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Includes 3,000 shares of unvested restricted stock and 1,880 presently exercisable stock options.
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Includes 6,495 shares are held in an individual retirement account, 3,000 shares of unvested restricted
stock and 1,880 presently exercisable stock options.
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(5)
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Includes 25,000 shares held in an individual retirement account, 12,260 presently exercisable stock
options, 3,081 shares held by the Bank 34 Employee Stock Ownership Plan and 11,200 shares of unvested restricted stock.
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Includes 1,880 presently exercisable stock options and 3,000 shares of unvested restricted stock.
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(7)
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Includes 3,920 shares of common stock held by a trust, 2,000 shares held in an individual retirement
account, 3,000 shares of unvested restricted stock and 1,880 presently exercisable stock options.
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(8)
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Includes 1,480 shares held in an individual retirement account, 3,000 shares of unvested restricted
stock and 1,880 presently exercisable stock options.
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(9)
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Includes 3,900 shares held in an individual retirement account, 2,866 shares held by Mr. Thiry’s
spouse, 867 shares held by the Bank 34 Employee Stock Ownership Plan, 9,600 shares of unvested restricted stock and 4,400 presently
exercisable stock options.
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Quorum
The presence in person
or by proxy of holders of a majority of the total number of outstanding shares of common stock entitled to vote is necessary to
constitute a quorum at the annual meeting. Abstentions and broker non-votes will be counted for purposes of determining that a
quorum is present. In the event there are not sufficient votes for a quorum, or to approve or ratify any matter being presented
at the time of the annual meeting, the annual meeting may be adjourned in order to permit the further solicitation of proxies.
Method of Counting Votes
As to the election
of directors, the proxy card being provided by the Board of Directors enables a stockholder to vote FOR ALL nominees proposed by
the Board, to WITHHOLD for ALL nominees or to vote FOR ALL EXCEPT one or more of the nominees being proposed. Directors are elected
by a plurality of votes cast, without regard to either broker non-votes or proxies as to which the authority to vote for the nominees
being proposed is withheld. Plurality means that individuals who receive the highest number of votes cast are elected, up to the
maximum number of directors to be elected at the annual meeting.
As to the ratification
of the appointment of Moss Adams LLP as our independent registered public accounting firm, by checking the appropriate box, a stockholder
may: (i) vote FOR the ratification; (ii) vote AGAINST the ratification; or (iii) ABSTAIN from voting on such ratification. The
ratification of this matter shall be determined by a majority of the votes cast at the annual meeting, without regard to broker
non-votes or proxies marked ABSTAIN.
Participants in the Bank 34 Employee
Stock Ownership Plan
If you participate
in the Bank 34 Employee Stock Ownership Plan (the “ESOP”), you will receive a Vote Authorization Form for the ESOP
that reflects all of the shares you may direct the trustees to vote on your behalf under the ESOP. Under the terms of the ESOP,
the ESOP trustee votes all shares held by the ESOP, but each ESOP participant may direct the trustee how to vote the proportionate
interest of shares of our common stock allocated to his or her account. The ESOP trustee, subject to the exercise of its fiduciary
responsibilities, will vote all unallocated shares of our common stock held by the ESOP and allocated shares for which no voting
instructions are received in the same proportion as shares for which it has received timely voting instructions, subject to a determination
that such vote is in the best interest of ESOP participants. The deadline for returning your ESOP Vote Authorization Form is May
15, 2019 at 11:59 p.m. Eastern time. The telephone and internet voting deadline for ESOP participants is also 11:59 p.m. Eastern
time on May 15, 2019.
PROPOSAL I—ELECTION OF DIRECTORS
Our Board of Directors
is comprised of seven members. Our Bylaws provide that directors are divided into three classes as nearly equal in number as possible,
with one class of directors elected annually. Our directors are generally elected to serve for a three-year period and until their
respective successors are elected and qualified. Two directors will be elected at the annual meeting to serve for a three-year
period and until their respective successors shall have been elected and qualified. The Nominating and Corporate Governance Committee
of the Board of Directors has nominated William F. Burt and Don P. Van Winkle to serve as directors for three-year terms. Each
nominee is currently a director of Bancorp 34, Inc.
The following sets
forth certain information regarding the nominees, the other current members of our Board of Directors, and executive officers who
are not directors, including the terms of office of board members. It is intended that the proxies solicited on behalf of the Board
of Directors (other than proxies in which the vote is withheld as to any nominee) will be voted at the annual meeting for the election
of the proposed nominees. If a nominee is unable to serve, the shares represented by all such proxies will be voted for the election
of such substitute as the Board of Directors may determine. At this time, the Board of Directors knows of no reason why any of
the nominees might be unable to serve, if elected. Except as indicated herein, there are no arrangements or understandings between
any nominee or continuing director and any other person pursuant to which such nominee or continuing director was selected. Age
information is as of December 31, 2018, and term as a director includes service with Bank 34.
With respect to directors
and nominees, the biographies contain information regarding the person’s business experience and the experiences, qualifications,
attributes or skills that caused the Nominating and Corporate Governance Committee to determine that the person should serve as
a director. Each director of Bancorp 34, Inc. is also a director of Bank 34.
Directors
The nominees for director are:
William F. Burt.
Mr. Burt, age 68, has served as director since 2007. He is currently Vice Chairman of Bancorp 34, Inc. and is Chairman of the Bank
34 Compliance Committee. Mr. Burt has served in several different capacities in the broadcast industry since receiving his degree
in mass communications from New Mexico State University in 1974. He has been the owner and general manager of Burt Broadcasting,
Inc. since 1988. Mr. Burt is a current State Senator representing District #33. He has spent many years actively supporting the
U.S. Air Force and Army. Mr. Burt was a charter member of the Governor Appointed New Mexico Military Base Planning Commission and
is a member of the Military and Veterans Affairs Committee. He also serves as a Holloman Wingman and a member of the Air Force
Air Combat Command Commanders Group. In the New Mexico State Senate, Mr. Burt serves on the Senate Finance Committee, as well as
the Revenue Stabilization and Tax Committee and Science and Technology Committee. Mr. Burt has been awarded the New Mexico Broadcaster
of the Year Award, Owner of the Radio Station of the Year Award and was named Alamogordo Citizen of the Year. He has also served
as Chairman of the Alamogordo Chamber of Commerce, the Committee of 50 (military support committee), Flickinger Center for Performing
Arts and the New Mexico Broadcasters Association. Mr. Burt’s media background, senatorial experience and experience in our
local markets provides the franchise with substantial insights and discipline for enhancing our public perception and corporate
citizenship initiatives.
Don P. Van Winkle.
Mr. Van Winkle, age 62, joined the Board of Directors in 2013. He works with mid-market companies in an out-sourced corporate
development and Board role to include managing acquisitions and divestitures, bank-relations and other capital access options.
Previous experience includes: Vistage Chair for Vistage International from 2011 through 2014 (a CEO peer advisory organization);
Managing Director for SDR Ventures, a Denver-based investment banking company and mezzanine debt fund; Three years as both President
and Corporate Banking Manager for two Denver-based middle-market banking groups; Seven years as Chairman & Chief Executive
Officer of Van Winkle’s Farmers Market, Inc. (a 500 employee IGA retail grocery store group based in New Mexico), which he
successfully sold in 2002; Chief Financial Officer and Chief Operating Officer of Fresh Produce Sportswear, Inc., a sportswear
design and distribution firm based in Boulder, Colorado where he additionally served on the Board of Directors for 10 years.
Mr. Van Winkle began his career as a corporate banker in Denver (1980 to 1991) after spending two years as a bank examiner with
the Comptroller of the Currency. Mr. Van Winkle’s experience is instrumental in high level evaluation of our credit
management processes and practices and his experience as a chief financial officer and chief executive officer qualify him to serve
as our audit committee financial expert.
The following directors of Bancorp 34, Inc. have terms
ending in 2020:
James D. Harris.
Mr. Harris, age 73, has served as a director since 2008. Previously, he served as a director of Pioneer Bank in New Mexico for
seven years. Mr. Harris was the owner of Charles, Garland & Harris Agency, Alamogordo, New Mexico, until the sale of the firm
and his retirement in 2008. He served for 38 years as a director of Gerald Champion Regional Medical Center in Alamogordo and is
a former member of the Committee of 50 (military support committee). Mr. Harris is a Paul Harris Fellow of Rotary International.
He also served as President of the New Mexico Amigos, a statewide organization of business and professional people and the Official
Goodwill Ambassadors of the State of New Mexico. Mr. Harris’ experience in risk management provides valuable insights into
the types and levels of insurance we should maintain for the complexity of our operating environment.
Elaine E. Ralls.
Ms. Ralls, age 69, has served as a director since 2014 upon the completion of the acquisition of Bank 1440. Ms. Ralls has
owned and operated several businesses in Arizona, each of which was successfully acquired or merged with larger entities. Currently,
Ms. Ralls is the President of Commit Agency (formerly AIR Marketing), an advertising agency based in Phoenix, Arizona that she
formed in 1998 and which she owns with her son. Commit Agency has received the Ethics Award from the Better Business Bureau and
is ranked by the Phoenix Business Journal in the Top Places to Work, Top Advertising Agencies, and Top Women Owned Businesses.
She is actively involved on the Board of Directors for the Better Business Bureau and the Arizona Foundation for Women, as well
as the Lennox Tech Enterprise Center (an organization for CEOs) and the Women President’s Organization. Ms. Ralls served
as a director of Bank 1440 beginning in 2007. Ms. Ralls currently serves as Chairwoman of the Audit Committee for Bancorp 34, Inc.,
and her experience in company mergers and associated integration of companies and cultures provides us with a strong resource for
guidance pertaining to our business expansion via strategic alliances and acquisitions.
The following directors of Bancorp 34, Inc. have terms
ending in 2021:
Jill Gutierrez.
Ms. Gutierrez, age 68, has been employed by Bank 34 since 2007. She began her career at Bank 34 as the Las Cruces Division President
and was originally named President and Chief Executive Officer in 2011. She was named Chief Executive Officer in 2015, and re-appointed
as President in 2018. Ms. Gutierrez was appointed as a director in 2011. Prior to joining Bank 34, Ms. Gutierrez held the position
of Senior Vice President and Senior Lending Officer at Western Bank in Alamogordo, New Mexico, and at First National Bank in Alamogordo,
New Mexico. From 2001 to 2007 she was Senior Vice President and Market President at First Federal Bank in Las Cruces, New
Mexico. Ms. Gutierrez has been employed in the banking industry since 1972. Ms. Gutierrez’s direct experience in managing
operations and employees provides the Board of Directors with insight into operations, and her position on the Board of Directors
provides a clear and direct channel of communication from senior management to the full board and alignment on corporate strategy.
Randal L. Rabon.
Mr. Rabon, age 62, has served as a director since 2007. He is currently Chairman of Bancorp 34, Inc. He is a lifelong resident
of Alamogordo where he co-owns and operates several businesses. His primary interests include: C&R Ventures; Mesa Verde Enterprises
(which is Otero County’s largest civil contractor); Aggregate Technologies; The Heritage Group (developer of Mesa Village
and Cielo Vista Ranch subdivisions); and the Mesa Verde Ranch. Mr. Rabon has served as Chairman of the Boards of Directors of Bank
34 and Bancorp 34, Inc. for the past six years. In addition, Mr. Rabon serves on the following boards: Chairman of the New Mexico
State Land Trust Advisory Board, the Advisory Board, Otero County Building Contractors Association, Chairman-elect, Alamogordo
Chamber of Commerce, Member of the Otero County Economic Development Council and Main Gate United, all of which promote and support
the expansion, development, and missions of Holloman Air Force Base and White Sands Missile Range. Mr. Rabon’s deep economic
roots in the community and experience dealing with regulatory matters associated with banking and government contracts is highly
beneficial in bringing perspective to corporate governance matters.
Wortham A. (Pete)
Cook.
Mr. Cook, age 70, has served as a director since March 2015. Prior to his appointment to the Board of Directors,
Mr. Cook served as a financial consultant to Bank 34 from January 2014 to March 2015. From 1989 until his retirement in 2013 he
served as President, Chief Executive Officer and Director at First National Bank in Alamogordo, New Mexico. Mr. Cook also served
as Executive Vice President and Vice President at First National Bank from 1987 to 1989. He held the position of Executive Vice
President and managed commercial lending, corporate strategy and administration at United Bank of Lea County, Hobbs, New Mexico,
from 1982 through 1987. He served as an executive branch manager overseeing consumer finance and administration from 1971 through
1982 in Hobbs, New Mexico and Farmington, New Mexico. Mr. Cook is past chairman of the Economic Development Council of Otero County
and a former member of the Committee of 50 (military support committee). His director experience spanned other organizations including:
Federal Reserve Bank, El Paso, Texas; Federal Reserve Bank, Dallas, Texas; and the New Mexico Bankers Association. Mr. Cook’s
banking background and leadership experience brings valuable insight in the areas of leadership, bank operations, credit evaluation
and corporate governance.
Executive Officer Who is Not a Director
Jan R. Thiry.
Mr. Thiry, age 66, joined Bank 34 as Senior Vice President, Chief Financial Officer and Treasurer in February 2014, and
was named Executive Vice President, Chief Financial Officer and Treasurer in January 2015. Mr. Thiry has over 35 years of experience
with Wisconsin and Illinois financial institutions and multi-bank holding companies ranging in assets from $1 billion to $22 billion,
including Security Capital Corp./Security Bank SSB, Marshall & Ilsley Corporation/M&I Bank, CIB Marine Bancshares and Midwest
Banc Holdings, with responsibilities including audit manager, controller and chief accounting officer. He began his career
as an auditor with KPMG LLP and, immediately prior to joining Bank 34, spent three years as a consultant with RGP, formerly Resources
Global Professionals, specializing in Securities and Exchange Commission reporting, investor relations, GAAP interpretation, merger
and acquisition accounting and financial analysis with multi-national corporations in the Chicago area. He is a Certified
Public Accountant and has 20 years experience as an adjunct professor for the Keller Graduate School of Management, teaching courses
in accounting, auditing, fraud investigation and business communications.
Board and Committee Independence
The Board of Directors
has determined that each of our directors, with the exception of President and Chief Executive Officer Jill Gutierrez, is “independent”
as defined in the listing standards of the Nasdaq Stock Market. Ms. Gutierrez is not independent because she is one of our executive
officers. Each director who serves on the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee
is “independent” as defined in the listing standards of the Nasdaq Stock Market and applicable Securities and Exchange
Commission regulations for purposes of service on each of such committees.
In determining the
independence of the other directors, the Board of Directors considered the following transactions, which are not required to be
reported under “Transactions with Certain Related Persons.” During the year ended December 31, 2018, Bank 34 paid $15,595
for advertising on radio stations that are owned by director William Burt.
Board Leadership Structure and Risk Oversight
Our Board of Directors
is chaired by Randal L. Rabon, who is an independent director.
This ensures a greater role for the independent directors
in the oversight of Bancorp 34, Inc. and Bank 34 and active participation of the independent directors in setting agendas and establishing
priorities and procedures for the work of the Board.
To further assure effective
independent oversight, the Board of Directors has adopted a number of governance practices, including:
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a majority independent Board of Directors;
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periodic meetings of the independent directors; and
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annual performance evaluations of the Chief Executive Officer by the independent directors.
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The Board of Directors
recognizes that, depending on the circumstances, other leadership models might be appropriate. Accordingly, the Board of Directors
periodically reviews its leadership structure.
The Board of Directors
is actively involved in oversight of risks that could affect Bancorp 34, Inc. This oversight is conducted primarily through committees
of the Board of Directors, but the full Board of Directors has retained responsibility for general oversight of risks. The Board
of Directors also satisfies this responsibility through reports by the committee chair of all board committees regarding the committees’
considerations and actions, through review of minutes of committee meetings and through regular reports directly from officers
responsible for oversight of particular risks within Bancorp 34, Inc. Risks relating to the direct operations of Bank 34
are further overseen by the Board of Directors of Bank 34, which currently consists of the same individuals who serve on the Board
of Directors of Bancorp 34, Inc. The Board of Directors of Bank 34 also has additional committees that conduct risk oversight.
All committees are responsible for the establishment of policies that guide management and staff in the day-to-day operation of
Bancorp 34, Inc. and Bank 34 such as lending, risk management, asset/liability management, investment management and others.
References to our Website Address
References to our website
address throughout this proxy statement and the accompanying materials are for informational purposes only, or to fulfill specific
disclosure requirements of the Securities and Exchange Commission’s rules. These references are not intended to, and
do not, incorporate the contents of our website by reference into this proxy statement or the accompanying materials.
Section 16(a) Beneficial Ownership Reporting Compliance
Our executive officers
and directors and beneficial owners of greater than 10% of the outstanding shares of common stock are required to file reports
with the Securities and Exchange Commission disclosing beneficial ownership and changes in beneficial ownership of our common stock.
Securities and Exchange Commission rules require disclosure if an executive officer, director or 10% beneficial owner fails to
file these reports on a timely basis. Based on our review of ownership reports required to be filed for the year ended December
31, 2018, Director Randal L. Rabon filed one late Form 4 to report four purchases of shares of common stock that were executed
on the same day, and we believe that no other executive officer, director or 10% beneficial owner of our shares of common stock
failed to file ownership reports on a timely basis.
Code of Ethics for Senior Officers
Bancorp 34, Inc. has
adopted a Code of Ethics for Senior Officers that applies to Bancorp 34, Inc.’s principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing similar functions. The Code of Ethics for Senior Officers
is available on our website at
www.bank34.com
. Amendments to and waivers from the Code of Ethics for Senior Officers will
also be disclosed on our website.
Attendance at Annual Meetings of Stockholders
Bancorp 34, Inc. does
not have a written policy regarding director attendance at annual meetings of stockholders, although directors are expected to
attend these meetings absent unavoidable scheduling conflicts. Each of our then-current directors attended the 2018 Annual Meeting
of Stockholders.
Communications with the Board of Directors
Any stockholder who
wishes to contact our Board of Directors or an individual director may do so by writing to: Bancorp 34, Inc., 500 East 10th Street,
Alamogordo, New Mexico 88310, Attention: Board of Directors. The letter should indicate that the sender is a stockholder and if
shares are not held of record, should include appropriate evidence of stock ownership. Communications are reviewed by the Corporate
Secretary and are then distributed to the Board of Directors or the individual director, as appropriate, depending on the facts
and circumstances outlined in the communications received. The Corporate Secretary may attempt to handle an inquiry directly (for
example, where it is a request for information about Bancorp 34, Inc. or it is a stock-related matter). The Corporate Secretary
has the authority not to forward a communication if it is primarily commercial in nature, relates to an improper or irrelevant
topic, or is unduly hostile, threatening, illegal or otherwise inappropriate. At each Board of Directors meeting, the Corporate
Secretary shall present a summary of all communications received since the last meeting that were not forwarded and make those
communications available to the Directors on request.
Meetings and Committees of the Board of Directors
The business of Bancorp
34, Inc. is conducted at regular and special meetings of the Board of Directors and its committees. In addition, the “independent”
members of the Board of Directors (as defined in the listing standards of the Nasdaq Stock Market) meet in executive sessions.
The standing committees of the Board of Directors of Bancorp 34, Inc. are the Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee.
The Board of Directors
of Bancorp 34, Inc. held 12 regular meetings and one special meeting during the year ended December 31, 2018. No member of the
Board of Directors or any committee thereof attended fewer than 75% of the aggregate of: (i) the total number of meetings
of the Board of Directors (held during the period for which he or she has been a director); and (ii) the total number of meetings
held by all committees on which he or she served (during the periods that he or she served).
Audit Committee.
The Audit Committee is comprised of Directors Cook, Harris, Rabon, Ralls and Van Winkle, each of whom is “independent”
in accordance with applicable Securities and Exchange Commission rules and Nasdaq listing standards. Ms. Ralls serves as chair
of the Audit Committee. The Board of Directors has determined that Mr. Van Winkle qualifies as an “audit committee financial
expert” as defined under applicable Securities and Exchange Commission rules. In addition, each Audit Committee member has
the ability to analyze and evaluate our financial statements and has an understanding of the Audit Committee’s functions.
In addition, each Audit Committee member has overseen and assessed the finances and financial reporting of various businesses that
they own or with which they have been employed.
Our Board of Directors
has adopted a written charter for the Audit Committee, which is available on our website at
www.bank34.com
. As more fully
described in the Audit Committee Charter, the Audit Committee reviews the financial records and affairs of Bancorp 34, Inc. and
monitors adherence in accounting and financial reporting to accounting principles generally accepted in the United States of America.
The Audit Committee of Bancorp 34, Inc. met six times during the year ended December 31, 2018.
Nominating and
Corporate Governance Committee.
The Nominating and Corporate Governance Committee is currently comprised of Directors
Burt, Ralls and Van Winkle, each of whom is independent in accordance with applicable Securities and Exchange Commission rules
and Nasdaq listing standards. Mr. Burt serves as chair of the Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee operates under a written charter which is available on our website at
www.bank34.com
. The
Nominating and Corporate Governance Committee of Bancorp 34, Inc. met once during the year ended December 31, 2018.
The Nominating and
Corporate Governance Committee does not have a formal policy or specific guidelines regarding diversity among board members. However,
the Nominating and Corporate Governance Committee seeks members who represent a mix of backgrounds that will reflect the diversity
of our stockholders, employees, and customers, and experiences that will enhance the quality of the Board of Directors’ deliberations
and decisions. As the holding company for a community bank, the Nominating and Corporate Governance Committee also seeks directors
who can continue to strengthen Bank 34’s position in its community and can assist Bank 34 with business development through
business and other community contacts.
The Nominating and
Corporate Governance Committee considers the following criteria in evaluating and selecting candidates for nomination:
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Contribution to Board
– Bancorp 34, Inc. endeavors to maintain a Board of Directors
that possesses a wide range of abilities. Thus, the Nominating and Corporate Governance Committee will assess the extent to which
the candidate would contribute to the range of talent, skill and expertise appropriate for the Board of Directors. The Nominating
and Corporate Governance Committee will also take into consideration the number of public company boards of directors, other than
Bancorp 34, Inc.’s, and committees thereof, on which the candidate serves. The Nominating and Corporate Governance Committee
will consider carefully the time commitments of any candidate who would concurrently serve on the boards of directors of more than
two public companies other than Bancorp 34, Inc., it being the policy of Bancorp 34, Inc. to limit public company directorships
to two companies other than Bancorp 34, Inc.
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Experience
– Bancorp 34, Inc. is the holding company for an insured depository
institution. Because of the complex and heavily regulated nature of Bancorp 34, Inc.’s business, the Nominating and Corporate
Governance Committee will consider a candidate’s relevant financial, regulatory and business experience and skills, including
the candidate’s knowledge of the banking and financial services industries, familiarity with the operations of public companies
and ability to read and understand fundamental financial statements, as well as real estate and legal experience.
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Familiarity with and Participation in Local Community
– Bancorp 34, Inc. is
a community-orientated organization that serves the needs of local consumers and businesses. In connection with the local character
of Bancorp 34, Inc.’s business, the Nominating and Corporate Governance Committee will consider a candidate’s familiarity
with Bancorp 34, Inc.’s market area (or a portion thereof), including without limitation the candidate’s contacts with
and knowledge of local businesses operating in Bancorp 34, Inc.’s market area, knowledge of the local real estate markets
and real estate professionals, experience with local governments and agencies and political activities, and participation in local
business, civic, charitable or religious organizations.
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Integrity
– Due to the nature of the financial services provided by Bancorp
34, Inc. and its subsidiaries, Bancorp 34, Inc. is in a special position of trust with respect to its customers. Accordingly, the
integrity of the Board of Directors is of utmost importance to developing and maintaining customer relationships. In connection
with upholding that trust, the Nominating and Corporate Governance Committee will consider a candidate’s personal and professional
integrity, honesty and reputation, including, without limitation, whether a candidate or any entity controlled by the candidate
is or has in the past been subject to any regulatory orders, involved in any regulatory or legal action, or been accused or convicted
of a violation of law, even if such issue would not result in disqualification for service under Bancorp 34, Inc.’s Bylaws.
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Stockholder Interests and Dedication
– A basic responsibility of directors
is the exercise of their business judgment to act in what they reasonably believe to be in the best long-term interests of Bancorp
34, Inc. and its stockholders. In connection with such obligation, the Nominating and Corporate Governance Committee will consider
a candidate’s ability to represent the best long-term interests of Bancorp 34, Inc. and its stockholders, including past
service with Bancorp 34, Inc. or Bank 34 and contributions to their operations, the candidate’s experience or involvement
with other local financial services companies, the potential for conflicts of interests with the candidate’s other pursuits,
and the candidate’s ability to devote sufficient time and energy to diligently perform his or her duties, including the candidate’s
ability to personally attend board and committee meetings.
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Independence
– The Nominating and Corporate Governance Committee will consider
the absence or presence of material relationships between a candidate and Bancorp 34, Inc. (including those set forth in applicable
listing standards) that might impact objectivity and independence of thought and judgment. In addition, the Nominating and Corporate
Governance Committee will consider the candidate’s ability to serve on any Board committees that are subject to additional
regulatory requirements (e.g. Securities and Exchange Commission regulations and applicable listing standards). If Bancorp 34,
Inc. should adopt independence standards other than those set forth in the Nasdaq Stock Market listing standards, the Nominating
and Corporate Governance Committee will consider the candidate’s potential independence under such other standards.
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Gender and Ethnic Diversity
– Bancorp 34, Inc. understands the importance and
value of gender and ethnic diversity on a Board of Directors and will consider highly qualified women and individuals from minority
groups to include in the pool from which candidates are chosen.
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Additional Factors
– The Nominating and Corporate Governance Committee will
also consider any other factors it deems relevant to a candidate’s nomination, including the extent to which the candidate
helps the Board of Directors reflect the diversity of Bancorp 34, Inc.’s stockholders, employees, customers and communities.
The Nominating and Corporate Governance Committee also may consider the current composition and size of the Board of Directors,
the balance of management and independent directors, and the need for audit committee expertise.
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The Nominating and
Corporate Governance Committee identifies nominees by first evaluating the current members of the Board of Directors willing to
continue in service, including the current members’ board and committee meeting attendance and performance, length of board
service, experience, contributions, and independence. Current members of the Board of Directors with skills and experience that
are relevant to Bancorp 34, Inc.’s business and who are willing to continue in service are considered for re-nomination,
balancing the value of continuity of service by existing members of the Board of Directors with that of obtaining a new perspective.
If there is a vacancy on the Board of Directors because any member of the Board of Directors does not wish to continue in service
or if the Nominating and Corporate Governance Committee decides not to re-nominate a member for re-election, the Nominating and
Corporate Governance Committee would determine the desired skills and experience of a new nominee (including a review of the skills
set forth above), may solicit suggestions for director candidates from all board members and may engage in other search activities.
During the year ended
December 31, 2018 we did not pay a fee to any third party to identify, evaluate or assist in identifying or evaluating potential
nominees for director.
The Board of Directors
has adopted a procedure by which stockholders may recommend nominees to the Nominating and Corporate Governance Committee. Stockholders
who wish to suggest qualified candidates for director may do so by writing to our Corporate Secretary at 500 East 10th Street,
Alamogordo, New Mexico 88310. Any such communication must include:
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A statement that the writer is a stockholder and is proposing a candidate for consideration by
the Nominating and Corporate Governance Committee;
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The name and address of the stockholder as they appear on Bancorp 34, Inc.’s books, and of
the beneficial owner, if any, on whose behalf the nomination is made;
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The class or series and number of shares of Bancorp 34, Inc.’s capital stock that are owned
beneficially or of record by such stockholder and such beneficial owner;
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A description of all arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder;
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A representation that such stockholder intends to appear in person or by proxy at the meeting to
nominate the nominee named in the stockholder’s notice;
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The name, age, personal and business address of the candidate and the principal occupation or employment
of the candidate;
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The candidate’s written consent to serve as a director;
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A statement of the candidate’s business and educational experience and all other information
relating to such person that would indicate such person’s qualification to serve on Bancorp 34, Inc.’s Board of Directors;
and
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Such other information regarding the candidate or the stockholder as would be required to be included
in Bancorp 34, Inc.’s proxy statement pursuant to Securities and Exchange Commission Regulation 14A.
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To be timely, the submission
of a candidate for director by a stockholder must be received by the Corporate Secretary at least 120 days prior to the anniversary
date of the proxy statement relating to the preceding year’s annual meeting of stockholders. If (i) less than 90 days’
prior public disclosure of the date of the meeting is given to stockholders and (ii) the date of the annual meeting is advanced
more than 30 days prior to or delayed more than 30 days after the anniversary of the preceding year’s annual meeting, a stockholder’s
submission of a candidate shall be timely if delivered or mailed to and received by the Corporate Secretary of Bancorp 34, Inc.
no later than the 10
th
day following the day on which public disclosure (by press release issued through a nationally
recognized news service, a document filed with the Securities and Exchange Commission, or on a website maintained by Bancorp 34,
Inc.) of the date of the annual meeting is first made.
Submissions that are
received and that satisfy the above requirements are forwarded to the Nominating and Corporate Governance Committee for further
review and consideration, using the same criteria to evaluate the candidate as it uses for evaluating other candidates that it
considers.
There is a difference
between the recommendations of nominees by stockholders pursuant to this policy and a formal nomination (whether by proxy solicitation
or in person at a meeting) by a stockholder. Stockholders have certain rights under applicable law with respect to nominations,
and any such nominations must comply with applicable law and provisions of the Bylaws of Bancorp 34, Inc. See “Stockholder
Proposals and Nominations.”
Compensation
Committee.
The Compensation Committee is comprised of Directors Rabon, Burt, Cook, Harris, Ralls and Van Winkle. Mr. Rabon
serves as chair of the Compensation Committee. No member of the Compensation Committee is a current or former officer or employee
of Bancorp 34, Inc. or Bank 34. The Compensation Committee of Bancorp 34, Inc. met five times during the year ended December 31,
2018.
The Compensation Committee
is responsible for establishing the compensation philosophy, developing compensation guidelines, establishing (or recommending
to the entire Board of Directors) the compensation of the Chief Executive Officer and the other executive officers. No executive
officer who is also a director participates with respect to decisions on his or her compensation. The Compensation Committee will
also administer any stock-based incentive or compensation plan that Bancorp 34, Inc. may adopt in the future. During the year ended
December 31, 2018, the Compensation Committee did not utilize the services of a compensation consultant.
The Compensation Committee
operates under a written charter which is available on our website at
www.bank34.com
. This charter sets forth the responsibilities
of the Compensation Committee and reflects the Compensation Committee’s commitment to create a compensation structure that
not only compensates senior management but also aligns the interests of senior management with those of our stockholders.
Our goal is to determine
appropriate compensation levels that will enable us to meet the following objectives:
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to attract, retain and motivate an experienced, competent executive management team;
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to reward the executive management team for the enhancement of stockholder value based on our annual
earnings performance and the market price of our stock;
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to provide compensation rewards that are adequately balanced between short-term and long-term performance
goals;
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to encourage ownership of our common stock through stock-based compensation to all levels of management;
and
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to maintain compensation levels that are competitive with other financial institutions, particularly
those in our peer group based on asset size and market area.
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The Compensation Committee
considers a number of factors in their decisions regarding executive compensation, including, but not limited to, the level of
responsibility and performance of the individual executive officers, the overall performance of Bancorp 34, Inc. and a peer group
analysis of compensation paid at institutions of comparable size and complexity. The Compensation Committee also considers the
recommendations of the Chief Executive Officer with respect to the compensation of executive officers other than the Chief Executive
Officer.
The base salary levels
for our executive officers are set to reflect the duties and levels of responsibilities inherent in the position and to reflect
competitive conditions in the banking business in Bancorp 34, Inc.’s market area. Comparative salaries paid by other financial
institutions are considered in establishing the salary for our executive officers. The Compensation Committee has utilized bank
compensation surveys compiled by the Harlon Group as well as other surveys prepared by trade groups and independent benefit consultants.
In setting the base salaries, the Compensation Committee also considers a number of factors relating to the executive officers,
including individual performance, job responsibilities, experience level, ability and knowledge of the position. These factors
are considered subjectively and none of the factors are accorded a specific weight.
Audit Committee Report
The Audit Committee
has issued a report that states as follows:
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We have reviewed and discussed with management our audited consolidated financial statements for
the year ended December 31, 2018;
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We have discussed with the independent registered public accounting firm the matters required to
be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16.
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We have received the written disclosures and the letter from the independent registered public
accounting firm required by PCAOB Rule 3526, “Communication with Audit Committees Concerning Independence,” and
have discussed with the independent registered public accounting firm their independence.
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Based on the review
and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial
statements be included in our Annual Report on Form 10-K for the year ended December 31, 2018 for filing with the Securities
and Exchange Commission.
This report shall not
be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Bancorp 34,
Inc. specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
This report has been provided by the Audit
Committee:
Elaine E. Ralls (Chairman)
Wortham A. Cook
James D. Harris
Randal L. Rabon
Don P. Van Winkle
Transactions With Certain Related Persons
The Sarbanes-Oxley
Act of 2002 generally prohibits us from making loans to our executive officers and directors, but it contains a specific exemption
from such prohibition for loans made by Bank 34 to our executive officers and directors in compliance with federal banking regulations.
During the year ended December 31, 2018, we made no loans to, or had outstanding loans with, our directors and executive officers,
other than loans made in the ordinary course of business, on substantially the same terms, including collateral, as those prevailing
at the time for comparable loans with persons not related to Bank 34, and which do not involve more than the normal risk of collectibility
or present other unfavorable features.
Pursuant to our Policy
and Procedures for Approval of Related Person Transactions, the Audit Committee periodically reviews, no less frequently than twice
a year, a summary of transactions in excess of $25,000 with our directors, executive officers, and their family members, for the
purpose of determining whether the transactions are within our policies and should be ratified and approved. Additionally, pursuant
to our Code of Business Conduct and Ethics, all of our executive officers and directors must disclose any personal or financial
interest in any matter that comes before Bancorp 34, Inc.
Executive Officer Compensation
The following table
sets forth for the years ended December 31, 2018 and 2017, certain information as to the total remuneration paid by Bank 34 to
Ms. Gutierrez, who served as Chief Executive Officer during that time period, and the two most highly compensated executive officers
of Bank 34 other than Ms. Gutierrez (“Named Executive Officers”). The “Non-equity Incentive Plan Compensation”
column has been omitted because no listed individual earned any compensation during the fiscal year of a type required to be disclosed
in that column.
SUMMARY COMPENSATION TABLE
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Name and principal position
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Year
Ended
December
31,
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Salary ($)
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Bonus
($) (1)
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Stock
Awards
($) (2)
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Option
Awards
($) (3)
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Nonqualified
deferred
compensation
earnings
($) (4)
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All other
compensation
($) (5)
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Total ($)
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Jill Gutierrez
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2018
|
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247,176
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22,756
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|
—
|
|
|
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—
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10,085
|
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32,622
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312,639
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President and Chief Executive Officer
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2017
|
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238,703
|
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112,446
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208,600
|
|
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|
91,500
|
|
|
|
8,970
|
|
|
|
15,476
|
|
|
|
675,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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William P. Kauper
|
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2018
|
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133,388
|
|
|
|
—
|
|
|
|
104,000
|
|
|
|
—
|
|
|
|
—
|
|
|
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266,383
|
|
|
|
503,771
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|
Former President/ Director of Corporate Development (6)
|
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|
2017
|
|
|
|
164,967
|
|
|
|
77,806
|
|
|
|
193,700
|
|
|
|
86,010
|
|
|
|
—
|
|
|
|
4,833
|
|
|
|
527,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Jan R. Thiry
|
|
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2018
|
|
|
|
166,250
|
|
|
|
15,556
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,178
|
|
|
|
29,093
|
|
|
|
212,077
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
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2017
|
|
|
|
155,000
|
|
|
|
73,104
|
|
|
|
178,800
|
|
|
|
80,520
|
|
|
|
1,048
|
|
|
|
11,937
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|
|
|
500,409
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|
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(1)
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See “—Bonuses,” below, for a description of the amounts in this column.
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(2)
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For 2018, reflects the aggregate grant date fair value of restricted stock vested for Mr. Kauper,
described below. For 2017, reflects the aggregate grant date fair value of restricted stock grated during the applicable year.
The assumptions used in the valuation of these awards are included in Note 18 to our audited financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission.
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(3)
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Reflects the aggregate grant date fair value of option awards granted during the applicable year.
The value is the amount recognized for financial statement reporting purposes in accordance with Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. The assumptions used in the valuation
of these awards are included in Note 18 to our audited financial statements included in our Annual Report on Form 10-K for the
year ended December 31, 2018, as filed with the Securities and Exchange Commission.
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(4)
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Reflects the above-market interest rate paid on the accounts of the Named Executive Officers under
deferred compensation agreements, described below.
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(5)
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For the year ended December 31, 2018, none of the Named Executive Officers had perquisites the
aggregate value of which exceeded $10,000. For the year ended December 31, 2018, the amounts in this column represent, in the case
of Ms. Gutierrez, $999 representing the value of term life insurance protection received under her Split Dollar Life Insurance
Agreement, $11,000 in employer matching contributions under the 401(k) Plan, $17,500 in dividends paid on unvested restricted stock
and $3,123 allocated under the Employee Stock Ownership Plan, in the case of Mr. Kauper, $1,490 representing the value of term
life insurance protection received under his Split Dollar Life Insurance Agreement, $3,107 allocated under the Employee Stock Ownership
Plan, $16,250 in dividends paid on unvested restricted stock, $18,661 in payments for excess paid time off and $226,875 in severance
payments, described below, and for Mr. Thiry $11,000 in employer matching contributions under the 401(k) Plan, $15,000 in dividends
paid on unvested restricted stock and $3,093 allocated under the Employee Stock Ownership Plan.
|
|
(6)
|
Effective October 2, 2018, Mr. Kauper resigned from Bancorp 34, Inc. and Bank 34. In connection
with this resignation, Bancorp 34, Inc., Bank 34 and Mr. Kauper entered into a separation and settlement agreement, which includes
non-competition, non-solicitation and confidentiality provisions and a full and final release of claims, under which Bank 34 has
paid Mr. Kauper 15 months of base salary (totaling $226,875) and Mr. Kauper vested in 6,500 shares of restricted common stock previously
granted in 2017 (and previously reported as compensation paid) under the 2017 Equity Incentive Plan. In addition, in connection
with his resignation, Mr. Kauper forfeited all of the stock options he had been granted in 2017 under the 2017 Equity Incentive
Plan.
|
Amounts included in
the “Stock awards” and “Option Awards” columns for the year ended December 31, 2017 represent grants under
our 2017 Equity Incentive Plan. Amounts related to stock awards and option awards are reported in the table above pursuant to applicable
Securities and Exchange Commission regulations that require that we report the full grant-date fair value of grants in the year
in which such grants are made. Because grants vest (are earned) at a rate of 20% per year over a five year period, the amounts
actually vested and recognized as income on Form W-2 for the Named Executive Officers in 2017 was $0. Amounts included in the “Option
awards” column for the year ended December 31, 2017 represent grants under our 2017 Equity Incentive Plan. Stock option grants
are not treated as taxable income in the year of grant, so for the year ended December 31, 2017, the economic value of compensation
related to the award of stock options as reported to the Internal Revenue Service on Form W-2 for income tax purposes was $0.
Bonuses.
For
the year ended December 31, 2018, Bank 34 paid discretionary bonuses to Ms. Gutierrez and Mr. Thiry based on the Compensation Committee’s
recommendation after a review of quantitative and qualitative performance-based metrics. The Committee considered three levels
of corporate performance targets, with the lowest level (threshold) resulting in cash incentive payments to the Named Executive
Officers of approximately 15% of base salary, and the highest level (out-perform) resulting in cash incentive payments of approximately
50% of base salary. The performance targets and weightings were as follows:
|
|
Bonus Level
|
|
|
|
|
|
|
Level 1 - Threshold
(15% of
Base Salary)
|
|
|
Level 2 -
Commendable
(30% of
Base Salary)
|
|
|
Level 3 - Out-Perform
(50% of
Base Salary)
|
|
|
Weightings
|
|
Performance Measure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net after-tax earnings
|
|
$
|
2,197,454
|
|
|
$
|
2,441,615
|
|
|
$
|
2,685,777
|
|
|
|
50
|
%
|
Increase in non-interest bearing deposits
|
|
$
|
9,893,584
|
|
|
$
|
10,992,871
|
|
|
$
|
12,092,158
|
|
|
|
10
|
%
|
Mortgage banking profitability
|
|
$
|
648,743
|
|
|
$
|
720,825
|
|
|
$
|
792,908
|
|
|
|
20
|
%
|
Non-accrual loans plus other real estate owned to loans plus other real estate owned
|
|
|
2.17
|
%
|
|
|
1.98
|
%
|
|
|
1.78
|
%
|
|
|
10
|
%
|
Charge-offs to average loans held for investment
|
|
|
0.30
|
%
|
|
|
0.27
|
%
|
|
|
0.24
|
%
|
|
|
10
|
%
|
For 2018, actual operating results, and
operating results adjusted to exclude the effects of the $1.25 per share special dividend paid by Bancorp 34, Inc. and the $4.8
million dividend Bank 34 paid to Bancorp 34, Inc. in December 2018, which Bancorp 34, Inc. had deposited in Bank 34 as of December
31, 2018, were as follows.
|
|
Actual Result
|
|
|
Level
|
|
|
Adjusted Result
|
|
|
Level
|
|
Performance Measure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net after-tax earnings
|
|
$
|
1,100,091
|
|
|
|
0
|
|
|
$
|
1,174,091
|
|
|
|
0
|
|
Increase in non-interest bearing deposits
|
|
$
|
8,808,481
|
|
|
|
0
|
|
|
$
|
4,008,481
|
|
|
|
0
|
|
Mortgage banking profitability
|
|
$
|
(1,002,897
|
)
|
|
|
0
|
|
|
$
|
(1,002,897
|
)
|
|
|
0
|
|
Non-accrual loans plus other real estate owned to loans plus other real estate owned
|
|
|
1.27
|
%
|
|
|
3
|
|
|
|
1.27
|
%
|
|
|
3
|
|
Charge-offs to average loans held for investment
|
|
|
0.20
|
%
|
|
|
3
|
|
|
|
0.20
|
%
|
|
|
3
|
|
Based on the performance
measurements reviewed, the Compensation Committee recommended and the Board of Directors approved, on a discretionary basis, that
the management bonus should be paid at a weighted level of 0.60 for all Named Executive Officers, resulting in bonuses to Ms. Gutierrez
and Mr. Thiry in the amounts of $22,500 and $15,300, respectively, or approximately 9% of each individual’s base salary.
These amounts were paid in the first quarter of 2019.
For the year ended
December 31, 2017, Bank 34 paid discretionary bonuses to Ms. Gutierrez, Mr. Kauper and Mr. Thiry based on the Compensation Committee’s
recommendation after a review of quantitative and qualitative performance-based metrics. The Committee considered three levels
of corporate performance targets, with the lowest level (threshold) resulting in cash incentive payments to the Named Executive
Officers of approximately 15% of base salary, and the highest level (out-perform) resulting in cash incentive payments of approximately
50% of base salary. The performance targets and weightings were as follows:
|
|
Bonus Level
|
|
|
|
|
|
|
Level 1 - Threshold
(15% of
Base Salary)
|
|
|
Level 2 -
Commendable
(30% of
Base Salary)
|
|
|
Level 3 - Out-Perform
(50% of
Base Salary)
|
|
|
Weightings
|
|
Performance Measure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank 34 net after-tax earnings
|
|
$
|
1,315,394
|
|
|
$
|
1,461,549
|
|
|
$
|
1,607,704
|
|
|
|
60
|
%
|
Maintain composite CAMELS rating
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Meets Expectations
|
|
|
|
20
|
%
|
Non-performing loans plus other real estate owned to loans plus other real estate owned
|
|
|
2.30
|
%
|
|
|
2.15
|
%
|
|
|
2.00
|
%
|
|
|
10
|
%
|
Charge-offs to average loans held for investment
|
|
|
0.33
|
%
|
|
|
0.28
|
%
|
|
|
0.23
|
%
|
|
|
10
|
%
|
For 2017, actual operating results, and
operating results adjusted to exclude the effects of the $1.0 million additional, bank-level, income tax expense taken in the fourth
quarter of 2017 as a result of the enactment of the Tax Cuts and Jobs Act, were as follows.
|
|
Actual Result
|
|
|
Level
|
|
|
Adjusted Result
|
|
|
Level
|
|
Performance Measure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank 34 net after-tax earnings
|
|
$
|
643,113
|
|
|
|
0
|
|
|
$
|
1,630,218
|
|
|
|
3
|
|
Maintain composite CAMELS rating
|
|
|
Met Expectations
|
|
|
|
3
|
|
|
|
Met Expectations
|
|
|
|
3
|
|
Non-performing loans plus other real estate owned to loans plus other real estate owned
|
|
|
2.08
|
%
|
|
|
2.4
|
|
|
|
2.08
|
%
|
|
|
2.4
|
|
Charge-offs to average loans held for investment
|
|
|
(0.01
|
)%
|
|
|
3
|
|
|
|
(0.01
|
)%
|
|
|
3
|
|
Based on the performance
measurements reviewed, the Compensation Committee recommended and the Board of Directors approved, on a discretionary basis, that
the management bonus should be paid at a weighted level of 2.94 for all Named Executive Officers, resulting in bonuses to Ms. Gutierrez,
Mr. Kauper and Mr. Thiry in the amounts of $112,190, $77,550 and $72,850, respectively, or approximately 47% of each individual’s
base salary. These amounts were paid in the first quarter of 2018.
Remaining amounts represent
holiday bonuses Bank 34 paid to its Named Executive Officers for the years ended December 31, 2018 and 2017.
Employment Agreements.
Bancorp 34, Inc. and Bank 34 have each entered into employment agreements with each of Ms. Gutierrez and Mr. Thiry. The
employment agreements each have an initial term of two years. At least 60 days prior to the anniversary date of the agreements,
the disinterested members of the board of directors must conduct a comprehensive performance evaluation of the executive and affirmatively
approve any extension of the agreements for an additional year or determine not to extend the term of the agreements. If the board
of directors determines not to extend the term, it shall provide the executive with a written notice of non-renewal at least 30
days, but not more than 60 days, prior to such date. If the board fails to conduct the comprehensive performance evaluation prior
to the anniversary date, the employment agreements will not renew.
The employment agreements
provide for base salaries for Ms. Gutierrez and Mr. Thiry, which are currently $250,000 and $170,000, respectively. The base salaries
may be increased, but not decreased (other than a decrease which is applicable to all senior officers). In addition to base salary,
the executives are entitled to participate in any bonus programs and benefit plans that are made available to management employees,
and will be reimbursed for all reasonable business expenses incurred.
In the event of an
executive’s involuntary termination of employment for reasons other than cause, disability or death, or in the event of the
executive’s resignation for “good reason,” the executive will receive a severance payment equal to the base salary
(in effect at the date of termination) that the executive would have earned during the remaining term of the employment agreement.
Such payment will be payable in a lump sum within 10 days following the executive’s date of termination. For purposes of
the employment agreements, “good reason” is defined as: (i) the failure of Bancorp 34, Inc. or Bank 34 to appoint or
re-elect the executive to his or her executive position; (ii) a material reduction in base salary or benefits (other than reduction
by Bancorp 34, Inc. or Bank 34 that is part of a good faith, overall reduction of such benefits applicable to all employees); (iii)
a material change in the executive’s position to one of lesser authority or a reduction in the executive’s duties or
responsibilities; (iv) a relocation of the executive’s principal place of employment by more than 25 miles from the executive’s
principal place of employment as of the initial effective date of the employment agreement; or (v) a material breach of the employment
agreement by Bancorp 34, Inc. or Bank 34. In order to be entitled to the benefit set forth above, the executive will be required
to enter into a release of claims against Bancorp 34, Inc. and Bank 34.
If the executive’s
involuntary termination of employment other than for cause, disability or death or voluntary resignation for “good reason”
occurs on or after the effective date of a change in control of Bancorp 34, Inc. or Bank 34, the executive will be entitled to
(in lieu of the payments and benefits described in the previous paragraph) a severance payment equal to two times the executive’s
highest annual rate of base salary and highest annual bonus paid to or earned by the executive during the calendar year in which
the date of termination occurs or either of the two calendar years immediately preceding the date of termination. Such payment
will be payable in a lump sum within 10 days following the executive’s date of termination. If an executive has an involuntary
termination or terminates for good reason within six months prior to the change in control, the executive will be entitled to an
additional payment within ten days following the change in control equal to the difference, if any, between what he or she would
have been entitled to under the change in control provisions of the contract and the severance benefit paid to the executive on
the involuntary or good reason termination occurring prior to a change in control. In the event the payments and benefits payable
to an executive on a change in control resulted in an excess parachute payment, then under the Bank 34 employment agreement, the
severance benefit would be reduced to an amount that would avoid the occurrence of an excess parachute payment. The Bancorp 34,
Inc. employment agreement would not include such a reduction.
In addition, should
an executive become disabled, she or he will be entitled to disability benefits, if any, provided under a long-term disability
plan sponsored by Bank 34 and will receive continued non-taxable medical and dental benefit coverage substantially comparable to
that maintained for the executive and their dependents prior to becoming disabled. In the event of an executive’s death while
employed, the executive’s estate or beneficiary will be paid her or his base salary for one year following death, and her
or his family will continue to receive non-taxable medical and dental coverage for one year after the executive’s death.
Upon any termination
of employment that would entitle an executive to a severance payment (other than a termination in connection with a change in control),
the executive will be required to adhere to one-year non-competition and non-solicitation covenants. Each executive also agrees
that she or he will not disparage Bancorp 34, Inc. or Bank 34 at any time during the term of the employment agreement or thereafter.
Deferred Compensation
Agreements.
Bank 34 has entered into deferred compensation agreements with Ms. Gutierrez and Mr. Thiry in order to provide
them with retirement benefits. Under each of the agreements, the executive may annually defer the payment of a portion of his or
her base salary, bonus and/or performance-based compensation by filing a deferral election form with the plan administrator, setting
forth the amount of the deferral and its duration. Bank 34 may, in its discretion, annually contribute an incentive award amount
to the executive’s deferral account if certain return on assets (ROA) and return on equity (ROE) criteria are met. The discretionary
amount that may be contributed ranges, in the case of Ms. Gutierrez, between 10% and 20% of base salary if ROA is between 0.75%
and 1.5% and ROE is between 2.0% and 7.0%, and in the case of Mr. Thiry, between 5% and 15% of base salary if ROA is between 0.16%
and 0.46% and ROE is between 1.3% and 3.5%. The executives will be at all times 100% vested in any of his or her elective deferrals.
The executives will vest in Bank 34 contributions and any interest incrementally, over a period of five years, in the case of Mr.
Thiry, or seven years, in the case of Ms. Gutierrez. The agreements provide that interest will be credited monthly on the executive’s
deferral account at an annual rate equal to the greater of
The Wall Street Journal
prime rate on the first business day
of the plan year or 5%, compounded monthly. Benefits under the agreements will be paid to the executive upon attainment of his
or her normal retirement date, as defined in each agreement, or in the event of early retirement (as defined in the agreement),
following separation from service. Benefits will be distributed in either a lump sum or in a number of monthly installments, as
selected by each executive and set forth in her or his agreement. Payment of benefits will commence on the first day of the month
following an executive’s normal retirement date, separation from service or disability. In the event a change in control
occurs prior to the executive’s normal retirement age, death or disability, followed by an executive’s separation from
service, the benefit under the agreement will be equal to the executive’s deferral account balance, determined as of the
date of the separation from service, and payable in a lump sum within 30 days following separation from service. In the event the
change in control occurs during the period of installment payments, Bank 34 will pay the remaining deferral account balance in
a lump sum within 30 days after the change in control. If the executive dies during active service, the executive’s deferral
account balance will be paid to the executive’s beneficiary on the first day of the fourth month following the executive’s
death.
Split Dollar
Life Insurance Agreement
.
Bank 34 has entered into a split dollar life insurance agreement with Jill Gutierrez to retain
and reward Ms. Gutierrez, by dividing the death proceeds of certain life insurance policies owned by Bank 34 on her life with her
designated beneficiary. Bank 34 will pay the life insurance premiums from its general assets. Under the agreement, Ms. Gutierrez
or her assignee has the right to designate the beneficiary of an amount of death proceeds. In the event Ms. Gutierrez dies prior
to separation from service, her beneficiary will be entitled to a benefit equal to 100% of net death proceeds, defined as the total
death proceeds of all policies minus the greater of the cash surrender value or the aggregate premiums paid by Bank 34. In the
event of Ms. Gutierrez’s death after separation from service, there will be no benefit under the agreement. In the event
Bank 34 discontinues a policy, Bank 34 will give Ms. Gutierrez at least 30 days to purchase such policy at a purchase price equal
to the fair market value of the policy.
Outstanding Equity
Awards at Fiscal Year End
. The following table sets forth information with respect to outstanding equity awards as of December
31, 2018 for the Named Executive Officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
|
|
|
Option awards
|
|
Stock awards
|
|
Name
|
|
Number of
securities
underlying
unexercised
options (#)
exercisable
|
|
|
Number of
securities
underlying
unexercised
options (#)
unexercisable
|
|
|
Option
exercise
price ($)
|
|
|
Option
expiration date
|
|
Number of
Shares or Units
of Stock That
Have Not
Vested
(#)
|
|
|
Market Value of
Shares or Units
of Stock That
Have Not
Vested
($) (1)
|
|
Jill Gutierrez
|
|
|
7,260
|
|
|
|
—
|
|
|
|
9.65
|
|
|
7/1/19
|
|
|
11,200
|
|
|
|
165,648
|
|
|
|
|
5,000
|
|
|
|
20,000
|
|
|
|
14.90
|
|
|
12/6/24
|
|
|
|
|
|
|
|
|
Jan R. Thiry
|
|
|
4,400
|
|
|
|
17,600
|
|
|
|
14.90
|
|
|
12/6/24
|
|
|
9,600
|
|
|
|
141,984
|
|
|
(1)
|
Based on a closing price of Bancorp 34, Inc.’s common
stock of $14.79 as of December 31, 2018.
|
Management Stock
Plans
. In connection with its 2001 Annual Meeting of Stockholders, Alamogordo Financial Corp. (the predecessor company
to Bancorp 34, Inc.) adopted the 2001 Stock Option Plan and the 2001 Recognition and Retention Plan. Under these plans, Alamogordo
Financial Corp. had the authority to grant a total of 130,513 stock options (split adjusted) and a total of 65,255 restricted stock
awards (split adjusted), respectively. The right of Alamogordo Financial Corp. to grant further awards under these plans expired
on each plan’s tenth anniversary in 2011; however, outstanding stock options that were awarded prior to the expiration of
the 2001 Stock Option Plan may be exercised during such stock options’ remaining term. There are no unvested restricted stock
awards under the 2001 Recognition and Retention Plan.
Bancorp 34, Inc. has
also adopted the Bancorp 34, Inc. 2017 Equity Incentive Plan (the “Incentive Plan”), which was approved by stockholders
on November 17, 2017. Subject to permitted adjustments for certain corporate transactions, the Incentive Plan authorizes the issuance
or delivery to participants of up to 263,127 shares of common stock pursuant to grants of incentive and non-statutory stock options,
restricted stock awards and restricted stock units. Of this number, the maximum number of shares of common stock that may be issued
under the Incentive Plan pursuant to the exercise of stock options is 187,948 shares, and the maximum number of shares of Company
common stock that may be issued as restricted stock awards or restricted stock units is 75,179 shares. As of December 31, 2018,
there were 6,500 restricted stock awards or units and 31,798 stock options that remain available for future grants under the Incentive
Plan.
Employee Stock
Ownership Plan and Trust
. Bank 34 implemented an employee stock ownership plan in connection with Alamogordo Financial
Corp.’s initial public offering of shares of Alamogordo Financial Corp., and the employee stock ownership plan borrowed funds
from Bancorp 34, Inc. to buy additional shares of common stock in Bancorp 34, Inc.’s 2016 stock offering. Employees with
at least one year of employment with Bank 34 are eligible to participate. As of December 31, 2018, the employee stock ownership
plan held 203,634 shares of common stock. Shares purchased by the employee stock ownership plan are held in a suspense account
for allocation among participants as the loan utilized to purchase the shares is repaid. The loan is repaid principally from Bank
34 discretionary contributions to the employee stock ownership plan.
Contributions to the
employee stock ownership plan and shares released from the suspense account in an amount proportional to the repayment of the employee
stock ownership plan loan are allocated among employee stock ownership plan participants on the basis of compensation in the year
of allocation. Benefits under the plan become fully vested upon completion of six years of credited service. A participant’s
interest in his account under the plan also fully vests in the event of termination of service due to a participant’s early
or normal retirement, death, disability, or upon a change in control (as defined in the plan). Vested benefits are payable in the
form of shares of common stock and/or cash. Bank 34’s contributions to the employee stock ownership plan are discretionary,
subject to the loan terms and tax law limits. Therefore, benefits payable under the employee stock ownership plan cannot be estimated.
Pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic 718-40, we are required to record compensation
expense each year in an amount equal to the fair market value of the shares released from the suspense account. The employee stock
ownership plan will terminate in the event of a change in control.
Directors’ Compensation
The following table
sets forth, for the year ended December 31, 2018, certain information as to the total remuneration paid to directors other than
Ms. Gutierrez, our President and Chief Executive Officer. Ms. Gutierrez’s compensation is set forth in the Summary Compensation
Table. The “Stock Awards,” “Option Awards” and “Non-equity Incentive Plan Compensation” columns
have been omitted because no listed individual earned any compensation during the fiscal year of a type required to be disclosed
in these columns
.
DIRECTOR COMPENSATION FOR THE YEAR ENDED DECEMBER 31, 2018
|
Name
|
|
Fees earned or
paid in cash
($)
|
|
|
Non-qualified
deferred
compensation
earnings
($) (1)
|
|
|
All other
compensation
($) (2)
|
|
|
Total
($)
|
|
Randal Rabon
|
|
|
36,000
|
|
|
|
2,601
|
|
|
|
5,301
|
|
|
|
43,902
|
|
William Burt
|
|
|
36,000
|
|
|
|
—
|
|
|
|
6,008
|
|
|
|
42,008
|
|
Wortham A. Cook
|
|
|
36,000
|
|
|
|
1,034
|
|
|
|
4,688
|
|
|
|
41,722
|
|
James Harris
|
|
|
36,000
|
|
|
|
—
|
|
|
|
6,076
|
|
|
|
42,076
|
|
Elaine E. Ralls
|
|
|
36,000
|
|
|
|
2,853
|
|
|
|
4,688
|
|
|
|
43,541
|
|
Don P. Van Winkle
|
|
|
36,000
|
|
|
|
—
|
|
|
|
4,688
|
|
|
|
40,688
|
|
|
(1)
|
Reflects above-market interest under the Director’s Deferred Fee Plan.
|
|
(2)
|
For each director, includes $4,688 in dividends paid on unvested shares of restricted stock. Includes
$613, $1,320 and $1,388 for the value of term life insurance protection under the director’s Split Dollar Life Insurance
Agreement for the fiscal year for directors Rabon, Burt and Harris, respectively. For the year ended December 31, 2018, none of
the directors received perquisites the aggregate value of which exceeded $10,000.
|
At December 31, 2018,
each of our non-employee directors had 3,000 unvested shares of restricted stock, 1,880 vested stock options and 7,520 unvested
stock options.
Each of the individuals
who serves as a director of Bancorp 34, Inc. also serves as a director of Bank 34. Each director, other than our Chief Executive
Officer, receives $3,000 per month. No fees are currently paid to directors of Bancorp 34, Inc.
Director Retirement
Agreements
. Bank 34 has entered into director retirement agreements with William Burt, James Harris and Randal Rabon, which
agreements were amended in 2013. Each agreement provides for a normal retirement benefit equal to each director’s accrual
balance of $74,238, amortized with interest and payable upon the later of the director’s normal retirement date (age 70)
or his separation from service, in monthly installments over a 15-year period. In the event of the director’s separation
from service prior to normal retirement age or in the event the director experiences a disability prior to normal retirement age,
the director will be entitled to his accrual balance, payable as set forth in the director’s individual agreement. In the
event a change in control occurs prior to the director’s normal retirement age, followed by separation from service within
24 months, the director will be entitled to the accrual balance of his account, payable in a lump sum within 30 days following
separation from service. If the director dies during active service, the accrual balance of the director’s account at the
time of death will be payable to the director’s beneficiary.
Director Deferred
Fee Plan.
Bank 34 has entered into a director deferred fee plan for the benefit of its directors. Under the plan, a director
must be notified of eligibility to participate and then must elect to participate by entering into a participation agreement, a
deferral election form and a distribution election form within 30 days of becoming eligible. A participant may modify his or her
deferral election annually by entering into a subsequent deferral election and such modification shall become effective in the
calendar year following the year in the subsequent deferral election is received by Bank 34. In addition to the directors’
deferrals, Bank 34 may, but is not required, to make contributions to the plan. The plan provides that interest will be credited
monthly on the directors’ account at an annual rate equal to 5%, compounded monthly. The board may prospectively increase
or decrease the crediting rate by providing notice to the directors. Benefits under the plan will be paid to the director following
separation from service, whether due to early termination, normal retirement (i.e., on or after age 70), death, disability or following
a change in control. Benefits will be distributed to the director in either a lump sum or in a number of monthly installments,
as selected by each director and set forth in her or his distribution election form. Payment of benefits will commence in the month
following the occurrence of the event which entitles the director to the distribution. If the director dies during active service,
the director’s deferral account balance will be paid to the director’s beneficiary commencing in the month following
the director’s death. The benefit under the plan will be equal to the director’s deferral account balance, determined
as of the date of the separation from service. In the event a director has a termination of service for cause, the director will
forego the interest earned on the account, as well as the contributions made by Bank 34, if any, and will receive only the director’s
own deferrals. Directors Cook, Rabon and Ralls have elected to participate in the plan by deferring a portion of their director
fees into the plan.
Split Dollar
Life Insurance Agreements for Directors
. Bank 34 has entered into split dollar life insurance agreements with directors
William Burt, James Harris and Randal Rabon to retain and reward the directors, by dividing the death proceeds of certain life
insurance policies owned by Bank 34 on the life of each director with the designated beneficiary of the director. Bank 34 pays
the life insurance premiums from its general assets. Under the agreements, the director or the director’s assignee has the
right to designate the beneficiary of an amount of death proceeds. In the event the director dies prior to separation from service,
the director’s beneficiary will be entitled to a benefit equal to 100% of net death proceeds, defined as the total death
proceeds of all policies minus the greater of the cash surrender value or the aggregate premiums paid by Bank 34. In the event
of the director’s death after separation from service, there will be no benefit paid to the director’s beneficiary
under the agreement. In the event Bank 34 discontinues a policy, Bank 34 will give the director at least 30 days to purchase such
policy at a purchase price equal to the fair market value of the policy.
PROPOSAL II—RATIFICATION OF APPOINTMENT
OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee
of Bancorp 34, Inc. has approved the engagement of Moss Adams LLP to be our independent registered public accounting firm for the
year ending December 31, 2019, subject to the ratification of the engagement by our stockholders. At the annual meeting, stockholders
will consider and vote on the ratification of the Audit Committee’s engagement of Moss Adams LLP for the year ending December
31, 2019. A representative of Moss Adams LLP is expected to attend the annual meeting and may respond to appropriate questions
and make a statement if he or she so desires.
Even if the engagement
of Moss Adams LLP is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered
public accounting firm at any time during the year if it determines that such change would be in the best interests of Bancorp
34, Inc. and its stockholders.
Briggs & Veselka
Co. was previously the independent registered public accounting firm for Bancorp 34, Inc. On September 26, 2017, the firm was dismissed
as Bancorp 34, Inc.’s independent registered public accounting firm. The decision to dismiss Briggs & Veselka Co. was
approved by the Audit Committee of Bancorp 34, Inc. The dismissal was effective upon the filing of Bancorp 34, Inc.’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2017.
During the fiscal years
ended December 31, 2016 and 2015 and the subsequent interim period through September 26, 2017, there were no: (1) disagreements
with Briggs & Veselka Co. on any matter of accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreements, if not resolved to their satisfaction, would have caused them to make reference in connection
with their opinion to the subject matter of the disagreement, or (2) reportable events under Item 304(a)(1)(v) of Regulation S-K.
The audit reports of
Briggs & Veselka Co. on the consolidated financial statements of the Registrant as of and for the fiscal years ended December
31, 2016 and 2015 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles.
A letter from Briggs
& Veselka Co. was previously filed as an exhibit to Bancorp 34, Inc.’s Current Report on Form 8-K, filed with the SEC
on October 2, 2017.
On October 4, 2017,
Bancorp 34, Inc. engaged Moss Adams LLP as Bancorp 34, Inc.’s new independent registered public accounting firm for the fiscal
year ended December 31, 2017. The engagement was approved by the Audit Committee of the Board of Directors of Bancorp 34, Inc.
During the fiscal years ended December 31, 2016 and 2015, and the subsequent interim period prior to the engagement of Moss Adams
LLP, Bancorp 34, Inc. did not consult with Moss Adams LLP regarding any of the matters or events set forth in Item 304(a)(2)(i)
and (ii) of Regulation S-K.
Set forth below is
certain information concerning aggregate fees billed for professional services rendered by Moss Adams LLP for the years ended December
31, 2018 and 2017.
|
|
Year Ended
December 31, 2018
|
|
|
Year Ended
December 31, 2017
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
78,000
|
|
|
$
|
73,000
|
|
Audit-Related Fees
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
Tax Fees
|
|
$
|
—
|
|
|
$
|
—
|
|
All Other Fees
|
|
$
|
45,000
|
|
|
$
|
—
|
|
Audit Fees.
Audit Fees consist
of professional services and related expenses for the audit of our annual financial statements and review of our annual report
on SEC Form 10-K.
Audit Related
Fees.
Audit Related Fees include expenses directly related to the performance of the audit.
All Other Fees.
All other fees relate to reviews of our quarterly financial statements.
Set forth below is
certain information concerning aggregate fees billed for professional services rendered by Briggs & Veselka Co. during the
years ended December 31, 2018 and 2017.
|
|
Year Ended
December 31, 2018
|
|
|
Year Ended
December 31, 2017
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
—
|
|
|
$
|
133,285
|
|
Audit-Related Fees
|
|
$
|
4,200
|
|
|
$
|
9,022
|
|
Tax Fees
|
|
$
|
—
|
|
|
$
|
—
|
|
All Other Fees
|
|
$
|
—
|
|
|
$
|
—
|
|
Audit Fees.
Audit Fees consist
of professional services and related expenses for the audit of our annual financial statements and reviews of our quarterly financial
statements.
Audit Related
Fees.
Audit Related Fees consist of consulting related to the implementation of accounting standards, the issuance of a
consent letter and assistance with transition to a new accounting firm.
The Audit Committee’s
current policy is to pre-approve all audit and non-audit services provided by the independent registered public accounting firm,
either by approving an engagement prior to the engagement or pursuant to a pre-approval policy with respect to particular services,
subject to the
de minimus
exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange
Act of 1934, as amended. These services may include audit services, audit-related services, tax services and other services. The
Audit Committee may delegate pre-approval authority to one or more members of the Audit Committee when expedition of services is
necessary. The independent registered public accounting firm and management are required to periodically report to the full Audit
Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this
pre-approval, and the fees for the services performed to date. The Audit Committee pre-approved 100% of audit-related fees and
all other fees billed and paid during the years ended December 31, 2018 and 2017, as indicated in the tables above.
The Board of Directors
recommends a vote “FOR” the ratification of Moss Adams LLP as independent registered public accounting firm for the
year ending December 31, 2019.
STOCKHOLDER PROPOSALS AND NOMINATIONS
In order to be eligible
for inclusion in the proxy materials for our 2020 Annual Meeting of Stockholders, any stockholder proposal to take action at such
meeting must be received at Bancorp 34, Inc.’s executive office, 500 East 10th Street, Alamogordo, New Mexico 88310, no later
than December 24, 2018, which is 120 days prior to the first anniversary of the date we expect to mail these proxy materials. If
the date of the 2019 Annual Meeting of Stockholders is changed by more than 30 days from May 22, 2020, any stockholder proposal
must be received at a reasonable time before we print or mail proxy materials for such meeting. Any such proposals shall be subject
to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934.
Our Bylaws provide
an advance notice procedure for certain business, or nominations to the Board of Directors, to be brought before an annual meeting
of stockholders. In order for a stockholder to properly bring business before an annual meeting, or to propose a nominee to the
board of directors, our Corporate Secretary must receive written notice not earlier than the 120th day nor later than the 110th
day prior to date of the annual meeting; provided, however, that in the event the date of the annual meeting is advanced more than
30 days prior to the anniversary of the preceding year’s annual meeting, then, to be timely, notice by the stockholder must
be so received not later than the tenth day following the day on which public announcement of the date of such meeting is first
made.
The notice with respect
to stockholder proposals that are not nominations for director must set forth as to each matter such stockholder proposes to bring
before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the
reasons for conducting such business at the annual meeting; (ii) the name and address of such stockholder as they appear on
the our books and of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class or series and number
of shares of our capital stock which are owned beneficially or of record by such stockholder and such beneficial owner; (iv) a
description of all arrangements or understandings between such stockholder and any other person or persons (including their names)
in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business;
and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting.
The notice with respect
to director nominations must include: (a) as to each person whom the stockholder proposes to nominate for election as a director,
(i) all information relating to such person that would indicate such person’s qualification to serve on our Board of Directors;
(ii) an affidavit that such person would not be disqualified under the provisions of Article II, Section 12 of our Bylaws; (iii)
such information relating to such person that is required to be disclosed in connection with solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or any successor rule or regulation; and (iv) a written consent of each proposed nominee to be
named as a nominee and to serve as a director if elected; and (b) as to the stockholder giving the notice: (i) the name
and address of such stockholder as they appear on our books and of the beneficial owner, if any, on whose behalf the nomination
is made; (ii) the class or series and number of shares of our capital stock which are owned beneficially or of record by such
stockholder and such beneficial owner; (iii) a description of all arrangements or understandings between such stockholder
and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be
made by such stockholder; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting
to nominate the persons named in its notice; and (v) any other information relating to such stockholder that would be required
to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election
of directors pursuant to Regulation 14A under the Exchange Act or any successor rule or regulation.
The 2020 annual meeting
of stockholders is expected to be held May 27, 2020. Advance written notice for certain business, or nominations to the Board of
Directors, to be brought before the next annual meeting must be given to us no earlier than January 28, 2020 and no later than
February 7, 2020. If notice is received before January 28, 2020 or after February 7, 2020, it will be considered untimely, and
we will not be required to present the matter at the stockholders meeting.
Nothing in this proxy
statement shall be deemed to require us to include in our proxy statement and proxy relating to an annual meeting any stockholder
proposal that does not meet all of the requirements for inclusion established by the Securities and Exchange Commission in effect
at the time such proposal is received.
OTHER MATTERS
The Board of Directors
is not aware of any business to come before the annual meeting other than the matters described above in the Proxy Statement. However,
if any matters should properly come before the annual meeting, it is intended that the Board of Directors, as holders of the proxies,
will act as determined by a majority vote.
MISCELLANEOUS
A COPY OF BANCORP
34, INC.’S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2018 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY,
500
East 10th Street, Alamogordo, New Mexico 88310
OR BY CALLING (575) 437-9334.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
Bancorp 34, Inc.’s
Proxy Statement, including the Notice of the Annual Meeting of Stockholders, and the 2018 Annual Report are each available on
the Internet at.
www.cstproxy.com/bancorp34/2019.
|
By Order of the Board of Directors
|
|
|
|
/s/ Dorothy Valdez
|
|
Dorothy Valdez
|
|
Corporate Secretary
|
Alamogordo, New Mexico
April 22, 2019
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. Vote by Internet
or Telephone – QUICK *** EASY IMMEDIATE – 24 Hours a Day, 7 Days a Week or by Mail Your phone or Internet vote authorizes
the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. Votes submitted
electronically over the Internet or by telephone must be received by 11:59 p.m., Eastern Time, on May 21, 2019. INTERNET/MOBILE
— www.cstproxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow
the instructions to obtain your records and to create an electronic voting instruction form. PHONE — 1 (866) 894-0536 Use
any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date.
Have your proxy card in hand when you call and then follow the instructions. MAIL — Mark, sign and date your proxy card and
return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Continental Stock Transfer & Trust
Co., 1 State Street, New York, NY 10004 PLEASE DO NOT RETURN THE PROXY CARD IF YOU ARE VOTING ELECTRONICALLY OR BY PHONE. FOLD
HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED PROXY The Board of Directors recommends you vote FOR the following:
1. Election of Directors FOR WITHHOLD FOR ALL ALL ALL EXCEPT NOMINEES (01) William F. Burt (02) Don P. Van Winkle (INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s)
on the line below.) 2. The ratification of the appointment of Moss FOR AGAINST ABSTAIN Adams LLP as independent registered public
accounting firm of Bancorp 34, Inc. for the year ending December 31, 2019. Please mark your votes X like this NOTE: This proxy
is revocable and will be voted as directed, but if no instructions are specified, this proxy, properly signed and dated, will be
voted FOR each of the listed proposals. If any other business is presented at the Annual Meeting, including whether or not to adjourn
the meeting, this proxy will be voted by the proxies in their judgment. At the present time, the Board of Directors knows of no
other business to be presented at the Annual Meeting. This proxy also confers discretionary authority on the proxy committee of
the Board of Directors to vote (1) with respect to the election of any person as director, where the nominees are unable to serve
or for good cause will not serve, and (2) matters incident to the conduct of the meeting. CONTROL NUMBER Signature Date , 2019.
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please
give full title as such. Joint owners should each sign personally, but only one holder is required to sign. If a corporation or
partnership, please sign in full corporate or partnership name by authorized officer.
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting: The Annual Report and Notice of Annual Meeting and Proxy Statement are available at http://www.cstproxy.com/bancorp34/2019
FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Bancorp 34, Inc. Annual Meeting of Stockholders May 22, 2019, 11.00 A.M. The stockholder(s) signing this proxy hereby appoint(s)
the members of the official proxy committee of Bancorp 34, Inc. (the “Company”), or any of them, with full power of
substitution in each, to act as proxy for the stockholder(s), and to vote all shares of common stock of the Company which the
stockholder(s) is entitled to vote only at the Annual Meeting of Stockholders to be held on May 22, 2019 at 11:00 a.m., local
time, at the main office of Bank 34 located at 500 East 10th Street, Alamogordo, New Mexico 88310, and at any and all adjournments
thereof with all of the powers the stockholder(s) would possess if personally present at such meeting. PLEASE COMPLETE, DATE,
SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ALTERNATIVELY, PLEASE VOTE BY INTERNET OR PHONE AS INDICATED
ON THE REVERSE SIDE. (Continued, and to be marked, dated and signed, on the other side)
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