Item 1A. Risk Factors
Not applicable.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 1C. Cybersecurity
The Bank, as part of its risk management process, has implemented an information security program that encompasses the Bank’s cybersecurity efforts. The Bank’s goals of confidentiality, availability and integrity of its information are key to this process and program. The Bank’s goals of protecting confidential information and safeguarding our digital assets are foundational objectives of the program.
The Boards of Directors of the Company and Bank and the Audit Committee of the Company are responsible for ultimate oversight of cybersecurity risks managed daily by management pursuant to the Bank’s information security program. The Boards of Directors annually approve this information security program and regularly receive a report from the Bank’s Information Security Officer that outlines the steps undertaken to protect the information and data assets of the Bank and Company. Additionally, the Information Security Officer updates the Boards of Directors through supplementary reports on issues related to Cybersecurity readiness. Our Information Security Officer has over 20 years of relevant experience in the areas of information security and cyber security risk management.
The Bank’s information security program is developed and implemented by the Bank’s Information Security Officer. Together with the Bank’s Information Technology Committee, comprised of relevant information technology and business unit stakeholders within Bank management, the Information Security Officer of the Bank works to manage, control and mitigate cybersecurity risks. The Bank’s employees are regularly trained on cybersecurity awareness, and testing is performed to monitor the success of the training. The Board of Directors receives training annually.
The Bank engages third parties to audit and examine its processes, review the security of its network infrastructure, and assist the Bank in designing and implementing robust cybersecurity systems. These third parties help the Bank improve and test its cybersecurity readiness. The Bank engages third-party vendors to monitor and test its network infrastructure. These third-party vendors take an active role in ensuring that the Bank’s systems are protected by testing, reviewing and advising the Bank to strengthen cybersecurity controls when necessary.
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The Bank has a vendor oversight risk management process that helps to validate the security and integrity of information collected and maintained by third-party vendors that the Bank uses to provide banking services. A key goal of the Bank’s vendor management program includes assessing risks, which include but are not limited to operational, strategic, reputational, cyber, and credit risks. These processes are supported by specialized vendors that assist the Bank’s management and Board of Directors with properly assessing these risks. Finally, the Bank also has an incident response and business continuity program that is intended to address operational concerns, including cybersecurity risks, during contingency scenarios that may create unknown circumstances. This program is tested annually.
Although the Company and Bank have not, as of the date of this Annual Report on Form 10-K, experienced a cybersecurity threat or incident that materially affected their business strategy, results of operations or financial condition, there can be no guarantee that the Company or Bank will not experience such an incident in the future.
As regulated financial institutions, the Company and Bank are also subject to financial privacy laws and their cybersecurity practices are subject to oversight by the federal banking agencies. For additional information, see “Supervision and Regulation –Cybersecurity” included in Part I. Item 1 – Business of this report.
Item 2. Properties
We currently conduct business from our main office and five full-service banking offices. The aggregate net book value of the land, building and leasehold improvements with respect to our offices at December 31, 2025 was $5.1 million. We owned all of such offices at December 31, 2025. No offices were leased. We believe that our current facilities are adequate to meet our present and foreseeable needs, other than routine and customary repair and maintenance needs.
Item 3. Legal Proceedings
Catalyst Bancorp and Catalyst Bank are not involved in any pending legal proceedings other than nonmaterial legal proceedings occurring in the ordinary course of business.
Item 4. Mine Safety Disclosures
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
(a)Catalyst Bancorp’s common stock is traded on the Nasdaq Capital Market under the symbol “CLST.” The common stock was issued at a price of $10.00 per share in connection with the Bank’s mutual to stock Conversion and the initial public offering of the Company’s common stock. The common stock commenced trading on the Nasdaq Capital Market on October 13, 2021. As of the close of business on December 31, 2025, there were 4,074,911 shares of common stock outstanding, held by approximately 210 shareholders of record, not including the number of persons or entities whose stock is held in nominee or “street” name through various brokerage firms and banks.
(b) Not applicable.
(c)On November 25, 2024, the Company’s Board of Directors approved the Company’s fifth share repurchase program (the “November 2024 Repurchase Plan”). Under the November 2024 Repurchase Plan, the Company purchased 215,000 shares, or approximately 5%, of the Company's outstanding common stock. The Company completed the November 2024 Repurchase Plan in December 2025. On November 20, 2025, the Company announced its sixth share repurchase plan (the “November 2025 Repurchase Plan”). Under the November 2025 Repurchase Plan, the Company may purchase up to 205,000 shares, or approximately 5%, of the Company's outstanding common stock.
Item 6. [Reserved.]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This discussion and analysis reflects our financial statements and other relevant statistical data, and is intended to enhance your understanding of the financial condition and results of operations of Catalyst Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, Catalyst Bank (the “Bank”). The information in this section has been derived from the audited financial statements, which appear in Item 8 of this Annual Report on Form 10-K. The information in this section should be read in conjunction with the Consolidated Financial Statements and related notes included herein in “Item 8. Financial Statements and Supplementary Data” and the description of our business included herein in “Item 1. Business”.
Overview
Catalyst Bancorp, Inc. (“Catalyst Bancorp” or the “Company”) is the holding company for Catalyst Bank (the “Bank”), formerly known as St. Landry Homestead Federal Savings Bank. The Company was incorporated by the Bank in February 2021 as part of the conversion of the Bank from the mutual to the stock form of organization (the “Conversion”). The Conversion was completed on October 12, 2021, at which time the Company acquired all of the issued and outstanding shares of common stock of the Bank, which became the wholly-owned subsidiary of Catalyst Bancorp. The Bank officially changed its name to Catalyst Bank in June 2022.
Founded in 1922, the Bank is a community-oriented savings bank serving the banking needs of customers in the Acadiana region of south-central Louisiana. We are headquartered in Opelousas, Louisiana and serve our customers through six full-service branches located in Carencro, Eunice, Lafayette, Opelousas, and Port Barre. Our primary business consists of attracting deposits from the general public and using those funds together with funds we borrow from the Federal Home Loan Bank (“FHLB”) of Dallas, Federal Reserve Bank of Atlanta, and other sources to originate loans to our customers and invest in securities.
Historically, we operated as a traditional thrift relying on long-term, single-family residential mortgage loans secured by properties located primarily in St. Landry Parish and adjoining areas to generate interest income. In 2021, we re-focused our business strategy to a relationship-based community bank model targeting small- to mid-sized businesses and business professionals in our market areas while continuing to serve our traditional customer base. The Conversion and offering were important factors in our efforts to become a more dynamic, profitable and growing institution.
The following is an overview of financial results for the year ended December 31, 2025, compared to December 31, 2024:
● Total assets of $282.9 million at December 31, 2025, up $6.2 million or 2.3%
● Borrowings of $14.7 million at December 31, 2025, up $5.2 million or 54.1%
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Our results of operations depend, to a large extent, on net interest income, which is the difference between the income earned on our loan and investment portfolios and interest expense on deposits and borrowings. Our net interest income is largely determined by our net interest spread, which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities, and the relative amounts of interest-earning assets and interest-bearing liabilities. Results of operations are also affected by our provisions for credit losses, fee income and other non-interest income and non-interest expense. Non-interest expense principally consists of compensation, office occupancy and equipment expense, data processing, and other expense. Our results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially impact our financial condition and results of operations.
Business Strategy
Our business strategy is focused on embracing a relationship-oriented community bank model targeting small- to mid-sized businesses and business professionals in our market areas while continuing to serve our traditional customer base. Highlights of our business strategy, which is designed to facilitate our ability to operate and grow as a profitable community-based banking institution, include the following:
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Critical Accounting Estimates
In reviewing and understanding financial information for the Company, you are encouraged to read and understand the significant accounting policies used in preparing our financial statements. These policies are described in Note 1 of the notes to our consolidated financial statements included in Item 8 of this Form 10-K. Our accounting and financial reporting policies conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Accordingly, the financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods presented. The JOBS Act of 2012 contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an emerging growth company, we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We are taking advantage of the benefits of this extended transition period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards.
SEC guidance requires disclosure of “critical accounting estimates.” The SEC defines “critical accounting estimates” as those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant. Not all significant accounting policies require management to make difficult, subjective or complex judgments. However, management believes the policy noted below meet the SEC’s definition of critical accounting policies. This policy requires numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods.
Allowance for Credit Losses. We have identified the evaluation of the allowance for credit losses as a critical accounting policy where amounts are sensitive to material variation. The Company’s allowance for credit losses reflects management’s current estimate of expected credit losses over the remaining life of its loans as of the end of the reporting period.
The allowance for credit losses includes the allowance for credit losses on loans and the allowance for credit losses on unfunded lending commitments, which is recorded in other liabilities on the statement of financial condition. The allowance for credit losses is established through a provision for credit losses charged to earnings. Loans, or portions of loans, are charged off against the allowance in the period that such loans, or portions thereof, are deemed uncollectible. Subsequent recoveries are added to the allowance. The allowance for credit losses on loans totaled $2.4 million, or 1.39% of total loans, at December 31, 2025 and $2.5 million, or 1.51% of total loans, at December 31, 2024. The decline in the allowance for credit losses on loans from December 31, 2024 largely reflects the impact of net charge-offs and a decline in the estimated allowance for credit losses on individually evaluated loans.
Management’s estimate of the allowance for credit losses considers factors such as changes in the types and amount of loans in the loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, estimated losses relating to specifically identified loans, current and future economic conditions, and forecasted information. This evaluation is inherently subjective as it requires material estimates including, among others, average historical loss experience, expected future loss rates, the amount and timing of expected future pay-downs on existing loans and fundings on unfunded commitments, and the value of underlying collateral. All of these estimates may be susceptible to significant changes as more information becomes available.
While management uses the best information available to make loan loss allowance evaluations, adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance. In addition, the Office of the Comptroller of the Currency as an integral part of their examination processes periodically reviews our allowance for credit losses. While management is responsible for the establishment of the allowance for credit losses and for adjusting such allowance through provisions for credit losses, management may determine, as a result of such regulatory reviews, that an increase or decrease in the allowance or provision for credit losses may be necessary or that loan charge-offs are needed. To the extent that actual outcomes differ from management’s estimates, additional provisions to the allowance for credit losses may be required that would adversely impact earnings in future periods.
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Selected Financial and Other Data
Set forth below is selected financial and other data of the Company at and for the dates indicated. The following is only a summary and should be read in conjunction with the business and financial information regarding the Company included elsewhere herein, including the financial statements included in Item 8 of this Annual Report on Form 10-K. The information at and for the years ended December 31, 2025 and 2024 is derived from the audited financial statements that appear elsewhere in this Annual Report on Form 10-K.
At December 31,
Selected Financial Condition Data:
Investment securities:
Available for sale, at fair value 50,467 28,712
Allowance for credit losses 2,367 2,522
Year Ended December 31,
Selected Operating Data:
Provision for credit losses 60 531
Net interest income after provision for credit losses 9,730 9,014
Total non-interest income (loss) 1,358 (3,840)
Total non-interest expense 8,584 9,157
Income (loss) before income tax expense (benefit) 2,504 (3,983)
Income tax expense (benefit) 452 (894)
Net income (loss) $ 2,052 $ (3,089)
Selected Performance Ratios:(1)
Average yield on interest-earning assets 5.55 % 5.30 %
Average rate on interest-bearing liabilities 2.55 2.54
Average interest rate spread(2) 3.00 2.76
Net interest margin(2) 3.92 3.65
Total non-interest expense to average assets 3.15 3.25
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At or For the
Year Ended December 31,
Asset Quality Ratios:(4)
Non-accrual loans as a percent of total loans outstanding 1.32 % 0.94 %
Non-performing assets as a percent of total assets(5) 0.95 0.66
Net charge-offs to average loans receivable (0.07) (0.17)
Capital Ratios:(6)
Common equity Tier 1 capital 42.45 % 45.81 %
Total risk-based capital 43.71 47.06
Average equity to average assets 29.73 28.91
Other Data:
Banking offices 6 6
Full-time equivalent employees 49 49
(6) Capital ratios are end of period ratios for the Bank only.
Non-GAAP Measures. The efficiency ratio is a non-GAAP financial measure used by the Company that the Company believes is useful to investors in understanding the Company's performance and trends and facilitates comparison with the performance of its peers. The efficiency ratio represents non-interest expense as a percentage of total revenues. Total revenues is the sum of net interest income and non-interest income.
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Comparison of Financial Condition at December 31, 2025 and December 31, 2024
Total Assets. Total assets increased $6.2 million, or 2.3%, to $282.9 million at December 31, 2025 from $276.7 million at December 31, 2024. The increase was largely driven by an increase in borrowings, which were used to partially fund growth in investment securities and loans.
Loans. The following table summarizes the changes in the composition of our loan portfolio by type of loan as of the dates indicated.
(Dollars in thousands) Amount % Amount % Change
Real estate loans
Other loans
During 2025, a multi-family construction loan with an outstanding balance of $4.4 million at December 31, 2024 paid-off and $16.5 million of outstanding construction loans at December 31, 2024 were converted to amortizing real estate loans following the completion of their respective construction projects. At December 31, 2025, the outstanding balance of the converted construction loans totaled $19.0 million. Of the $19.0 million, $4.4 million was classified as one- to four-family residential, $2.9 million was classified as multi-family, and the remaining balance was classified as commercial real estate as of December 31, 2025. The increase in commercial and industrial loans during 2025 was largely driven by growth within the industrial equipment and oilfield services segments of our loan portfolio.
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The following table presents certain major segments of our commercial real estate, construction and land, and commercial and industrial loan balances as of the dates indicated.
December 31,
(Dollars in thousands) 2025 2024 Change
Commercial real estate
Oilfield services 365 402 (37) (9.2)
Construction and land
Commercial and industrial
The following table shows the scheduled contractual maturities of our loans as of December 31, 2025. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. The amounts shown below do not take into account loan prepayments.
Amounts due after December 31, 2025 in
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The following table shows the dollar amount of our loans at December 31, 2025, due after December 31, 2026, as shown in the preceding table, which have fixed interest rates or which have floating or adjustable interest rates.
(Dollars in thousands) Fixed-Rate Floating or Adjustable-Rate Total
Amounts due after December 31, 2026
Allowance for Credit Losses. At December 31, 2025, the allowance for credit losses on loans totaled $2.4 million, or 1.39% of total loans, compared to $2.5 million, or 1.51% of total loans, at December 31, 2024. The decline in the ratio of the allowance to total loans largely reflects the impact of net charge-offs and a decline in the estimated allowance for credit losses on individually evaluated loans during 2025. The allowance for credit losses on unfunded commitments totaled $211,000, up $90,000 from December 31, 2024. The total provision for credit losses on loans and unfunded commitments was $60,000 for 2025 and was largely attributable to increases in construction loan commitments and outstanding loan balances during 2025.
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The following table shows changes in our allowance for credit losses and other related data for the periods indicated.
Year Ended December 31,
(Dollars in thousands) 2025 2024
Allowance for credit losses:
Loans:
Balance, beginning of period $ 2,522 $ 2,124
Provision for (reversal of) credit losses (30) 667
Net loan (charge-offs) recoveries:
One- to four-family residential (112) (92)
Commercial real estate - (14)
Construction and land - -
Multi-family residential - -
Commercial and industrial 17 (128)
Consumer (30) (35)
Total net charge-offs (125) (269)
Balance, end of period $ 2,367 $ 2,522
Unfunded lending commitments:
Balance, beginning of period $ 121 $ 257
Balance, end of period $ 211 $ 121
Total provision for credit losses $ 60 $ 531
Total non-accrual loans at end of period 2,248 1,567
Total non-performing loans at end of period 2,643 1,631
Allowance for credit losses on loans as a percent of:
Total loans 1.39 % 1.51 %
One- to four-family residential (0.14) % (0.11) %
Commercial real estate - (0.06)
Construction and land - -
Multi-family residential - -
Commercial and industrial 0.07 (0.56)
Consumer (1.38) (1.51)
Total loans (0.07) (0.17)
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Substandard Loans and Non-performing Assets. The following table shows the amounts of our substandard loans and non-performing assets, which include non-accruing loans, accruing loans 90 days or more past due and foreclosed assets at the dates indicated. During 2025, the Company downgraded a $3.3 million non-real estate, commercial loan relationship to substandard due to declines in debt service coverage. All loans within the relationship have paid as agreed and, at December 31, 2025, were current and performing.
At December 31,
Substandard loans
One- to four-family residential $ 2,699 $ 2,417
Commercial real estate 254 227
Construction and land 128 158
Multi-family residential - -
Commercial and industrial 1,949 -
Consumer - -
Total substandard loans $ 5,030 $ 2,802
Non-accruing loans
One- to four-family residential $ 2,228 $ 1,530
Commercial real estate - -
Construction and land 20 37
Multi-family residential - -
Commercial and industrial - -
Consumer - -
Total non-accruing loans 2,248 1,567
Accruing loans 90 days or more past due
One- to four-family residential 272 64
Commercial real estate 32 -
Construction and land - -
Multi-family residential - -
Commercial and industrial 91 -
Consumer - -
Total accruing loans 90 days or more past due 395 64
Total non-performing loans 2,643 1,631
Foreclosed assets 34 194
Total non-performing assets $ 2,677 $ 1,825
Total non-accruing loans as a percentage of total loans 1.32 % 0.94 %
Total non-performing loans as a percentage of total loans 1.55 0.98
Total non-performing loans as a percentage of total assets 0.93 0.59
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The following table shows how our allowance for credit losses is allocated by type of loan at each of the dates indicated.
December 31,
Unallocated - - - 205 8.1 -
Investment Securities. Total investment securities, available-for-sale and held-to-maturity, amounted to $65.4 million at December 31, 2025, up $23.2 million, or 55.1%, compared to $42.2 million in investment securities at December 31, 2024. During 2025, the Company purchased $20.2 million of variable-rate and $6.3 million of fixed-rate securities. The weighted average yield of the securities purchased during 2025 was 4.72% at December 31, 2025.
During the three months ended March 31, 2024, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million. Proceeds from the sales totaled $42.6 million, inclusive of accrued interest. During the nine-month period ending December 31, 2024, the Company re-deployed a portion of the sales proceeds by purchasing $7.9 million of fixed-rate government-sponsored mortgage-backed securities.
Net unrealized losses on securities available-for-sale totaled $3.1 million at December 31, 2025, compared to $4.5 million at December 31, 2024. Unrealized losses on available-for-sale securities relate principally to higher market interest rates for similar securities. Our investment securities portfolio consists primarily of debt obligations issued by the U.S. government and government agencies and government-sponsored mortgage-backed securities.
The following table sets forth the composition of our investment securities portfolio as of the dates indicated.
December 31,
Securities available-for-sale
U.S. Government and agency obligations - - - - - -
Securities held-to-maturity
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The following table presents the amortized cost of our total investment securities portfolio that matures during each of the periods indicated and the weighted average yields for each range of maturities at December 31, 2025.
Contractual Maturity as of December 31, 2025
Total investment securities
Municipal obligations - 1,070 2,544 - 3,614
Weighted average yield
Mortgage-backed securities - % 4.45 % 4.70 % 3.46 % 3.57 %
U.S. Government and agency obligations - 1.24 2.46 - 1.61
Municipal obligations - 3.36 3.39 - 3.38
Total weighted average yield - 2.50 2.91 3.46 3.19
Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments, or call options. The expected maturities may differ from contractual maturities because of the exercise of call options and potential paydowns. Accordingly, actual maturities may differ from contractual maturities. Weighted average yields are calculated by dividing the estimated annual income by the average amortized cost of the applicable securities.
The following table sets forth the dollar value of our investment securities which have fixed interest rates or which have floating or adjustable interest rates at each of the dates indicated.
December 31,
Fixed-rate
Available-for-sale, at fair value $ 31,659 $ 28,679
Adjustable-rate
Available-for-sale, at fair value 18,808 33
Held-to-maturity - -
Total adjustable-rate 18,808 33
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Deposits. The following table presents total deposits by account type as of the dates indicated.
(Dollars in thousands) Amount % Amount % Change
The ratio of the Company’s total loans to deposits was 91.9% and 90.0% as of December 31, 2025 and 2024, respectively.
The decline in interest-bearing demand deposits was largely due to fluctuations in public fund balances. Total public fund deposits were $26.4 million, or 14.3% of total deposits, at December 31, 2025, compared to $35.6 million, or 19.2% of total deposits, at December 31, 2024. At December 31, 2025, approximately 59% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits from municipalities within our market, compared to 83% at December 31, 2024. At December 31, 2025, a larger portion of public funds were held in savings accounts and certificates of deposit.
The increase in savings deposits was primarily attributable to our high-yield savings special. The competitive offering has been successful at attracting new deposits and deepening relationships with existing customers. Certificates of deposit declined primarily due to the scheduled maturity of $5.0 million of brokered deposits, which was partially offset by growth driven by in-market rate specials.
The estimated amount of our total uninsured deposits (that is deposits in excess of the FDIC’s insurance limit), inclusive of public funds, was approximately $50.1 million at December 31, 2025 and $53.7 million at December 31, 2024. Total uninsured non-public funds deposits were approximately $28.8 million and $22.5 million at December 31, 2025 and 2024, respectively. At December 31, 2025, the full amount of our public fund deposits in excess of the FDIC’s insurance limit were secured by either pledged investment securities of $25.3 million or $20.0 million of a custodial letter of credit granted by the Federal Home Loan Bank of Dallas.
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The following table shows the average balance of each type of deposit and the average rate paid on each type of interest-bearing deposit for the periods indicated.
Year Ended December 31,
The following table shows the maturities and weighted average contractual interest rates of our total certificates of deposit at December 31, 2025 by time remaining to maturity.
(Dollars in thousands) Amount Weighted Average Rate
Balance at December 31, 2025 maturing in:
Over three months through six months 18,671 3.31
Total certificates of deposit $ 58,366 3.14
The following table shows the maturities and weighted average contractual interest rates of our certificates of deposit in excess of the FDIC insurance limit (generally, $250,000) at December 31, 2025 by time remaining to maturity.
(Dollars in thousands) Amount Weighted Average Rate
Balance at December 31, 2025 maturing in:
Three months or less $ 9,354 4.00 %
Over three months through six months 5,329 3.39
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Borrowings.Total borrowings at December 31, 2025 were $14.7 million, up $5.2 million, or 54.1%, from December 31, 2024. The Company increased borrowings to partially fund the growth in investment securities during 2025.
Borrowings outstanding at December 31, 2025 consisted of FHLB advances. The carrying value of our FHLB advances reflects deferred prepayment penalties on advances restructured in December of 2020. Deferred prepayment penalties on our FHLB advances totaled $268,000 and $442,000 at December 31, 2025 and 2024, respectively.
The following table shows certain information regarding our borrowings at or for the dates indicated:
At or For the Year Ended
December 31,
Advance from Federal Reserve Bank of Atlanta
Average balance $ - $ 16,918
Maximum balance at any month-end during the period - 21,000
Balance at end of period - -
Average interest rate during the period - % 4.81 %
Weighted average interest rate at end of period(1) - -
Advances from FHLB
Maximum balance at any month-end during the period 19,723 10,261
Average interest rate during the period 2.94 % 2.89 %
Weighted average interest rate at end of period(1) 2.49 0.93
(1) Reflects the weighted average contractual rate of advances.
Shareholders’ Equity. Shareholders’ equity totaled $81.7 million, or 28.9% of total assets, at December 31, 2025, up $1.5 million, or 1.9%, from $80.2 million, or 29.0% of total assets, at December 31, 2024. During 2025, the impacts of net income and the decline in unrealized losses on available-for-sale securities were partially offset by the Company’s repurchases of its common stock.
During the year ended December 31, 2025, the Company repurchased 203,239 shares of its common stock at an average cost of $12.72 per share. Of those shares, 187,150 shares were repurchased under the Company’s November 2024 Repurchase Plan and 16,089 shares were repurchased under the November 2025 Repurchase Plan. Under the November 2025 Repurchase Plan, 188,911 shares of the Company’s common stock were available for repurchase at December 31, 2025.
Since the announcement of our first share repurchase plan on January 26, 2023 and through December 31, 2025, the Company has repurchased a total of 1,215,089 shares of its common stock, or approximately 23% of the common shares originally issued, at an average cost per share of $12.06. At December 31, 2025, the Company had common shares outstanding of 4,074,911.
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Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. Taxable equivalent (“TE”) yields have been calculated using a marginal tax rate of 21%. All average balances are based on daily balances.
Year Ended December 31,
Interest-earning assets:
Non-interest-earning assets 21,869 20,163
Interest-bearing liabilities:
Non-interest-bearing liabilities 30,250 30,694
Total liabilities 191,433 200,337
Shareholders' equity 80,982 81,480
Net interest-earning assets $ 89,363 $ 92,011
Net interest margin(3) 3.92 3.65
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Rate/Volume Analysis. The following table shows the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities affected our interest income and interest expense during the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in rate, which is the change in rate multiplied by prior year volume, and (2) changes in volume, which is the change in volume multiplied by prior year rate. The combined effect of changes in both rate and volume has been allocated proportionately to the change due to rate and the change due to volume.
Year Ended
Increase (Decrease) Due to Total
(Dollars in thousands) Rate Volume Increase (Decrease)
Interest income:
Other interest-earning assets (395) (966) (1,361)
Interest expense:
Demand deposits, money market and savings accounts 392 119 511
Certificates of deposit 38 13 51
Total interest expense 36 (247) (211)
Increase (decrease) in net interest income $ 250 $ (5) $ 245
Comparison of Results of Operation for the Years Ended December 31, 2025 and 2024
General.For the year ended December 31, 2025, the Company reported net income of $2.1 million, or $0.56 diluted EPS, compared to a net loss of $3.1 million for the year ended December 31, 2024. The following table summarizes the changes in net income (loss) for the periods indicated.
Year Ended December 31,
(Dollars in thousands) 2025 2024 Change
Selected Operating Data
Provision for credit losses 60 531 (471) (88.7)
Total non-interest expense 8,584 9,157 (573) (6.3)
During the three months ended March 31, 2024, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million. Non-interest expense for 2025 was down compared to 2024 primarily due to expenses incurred during 2024 related to the Company’s upgrade to a new core processing system.
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Interest Income.The following table summarizes the changes in interest income for the periods indicated.
Year Ended December 31,
(Dollars in thousands) 2025 2024 Change
Interest Income
Other earning assets 56 86 (30) (34.9)
The average yield on loans was 6.68% for 2025, up 18 basis points (“bps”) from 6.50% for 2024. Average loans were $167.0 million in 2025, up $11.2 million, or 7.2%, compared to 2024.
The increase in interest income on investment securities was primarily due to an increase in the average rate earned on our investment securities portfolio for 2025 compared to 2024. The average rate earned on our investment securities portfolio was 2.72% for 2025, up 75 bps compared to 2024, primarily due to the impact of higher-yielding investment securities purchased during 2024 and 2025.
Interest income on interest-earning cash and due from banks, included in other interest-earning assets in certain preceding tables, decreased mainly due to the decline in the average balance of interest-earning cash, as well as a decline in the average rate earned. The average rate earned on other interest-earning assets was 4.31% for 2025, down 87 bps compared to 2024.
Interest Expense. The following table summarizes the changes in interest expense for the periods indicated.
Year Ended December 31,
(Dollars in thousands) 2025 2024 Change
Interest Expense
The average rate paid on interest-bearing deposits was 2.52% during 2025, up 27 bps from 2.25% during 2024 largely driven by growth in high-yield savings account balances and an increase in the average rate paid on interest-bearing demand deposits. Interest expense on borrowings decreased in 2025 compared to 2024 mainly due to the payoff of a BTFP advance during the fourth quarter of 2024.
Net Interest Income. The increase in net interest margin and net interest income in 2025 compared to 2024, presented in the preceding tables, was primarily the result of loan growth during the last nine months of 2024 and the payoff of our BTFP advance.
Provision for Credit Losses. The total provision for credit losses on loans and unfunded commitments was $60,000 for 2025 and was largely attributable to increases in construction loan commitments and outstanding loan balances during 2025. In 2024, the provision for credit losses totaled $531,000 and was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated residential loans.
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Non-interest Income (Loss). The following table summarizes the changes in non-interest income (loss) for the periods indicated.
Year Ended December 31,
(Dollars in thousands) 2025 2024 Change
Non-interest Income (Loss)
Service charges on deposit accounts $ 781 $ 798 $ (17) (2.1) %
Bank-owned life insurance 494 463 31 6.7
Loss on sale of investment securities - (5,507) 5,507 100.0
Federal community development grant - 280 (280) (100.0)
During 2024, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million and recognized as income a $280,000 Bank Enterprise Award (“BEA”) Program grant from the Community Development Financial Institution (“CDFI”) Fund. The Company did not qualify for a similar award during 2025 and does not expect to qualify for future similar awards primarily due to the increase in our commercial lending activities.
Non-interest Expense. The following table summarizes the changes in non-interest expense for the periods indicated.
Year Ended December 31,
(Dollars in thousands) 2025 2024 Change
Non-interest Expense
Salaries and employee benefits $ 5,153 $ 4,830 $ 323 6.7 %
Occupancy and equipment 823 765 58 7.6
Data processing and communication 718 1,349 (631) (46.8)
Foreclosed assets, net (85) 74 (159) (214.9)
Total non-interest expense $ 8,584 $ 9,157 $ (573) (6.3)
Total non-interest expense for 2024 included $531,000 of data conversion and other associated expenses related to the Company’s upgrade to a new core processing system, which occurred during the first quarter of 2024.
Salaries and employee benefits expense increased in 2025 compared to 2024 primarily due to higher salaries and wages, increased bonus expense, and new grants of share-based compensation issued in June 2025.
Occupancy and equipment expense increased in 2025 compared to 2024 mainly due to new ATMs, computers, and other technology upgrades.
Data processing and communication expense for 2024 included $509,000 of data conversion and other associated expenses due to the Company’s upgrade to a new core processing system. In addition to the expense savings related to our new core processing system, data processing and communication expense in 2025 also benefited from our transition to a new internet provider and a new contract for our loan document management solution.
In 2024, professional fees associated with obtaining the BEA Program grant totaled $42,000 and were expensed during the three months ended September 30, 2024. Lower legal and audit expenses also contributed to lower professional fees during 2025 compared to 2024.
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Foreclosed assets expenses and losses for 2025 were offset by $216,000 of insurance proceeds received for fire and flood damages related to foreclosed properties.
Income Tax Expense (Benefit). The Company reported income tax expense of $452,000 for 2025, compared to an income tax benefit of $894,000 for 2024. The change in income taxes over the comparable periods was largely due to the loss on sales of investment securities in 2024.
Exposure to Changes in Interest Rates
Our ability to maintain net interest income depends upon our ability to earn a higher yield on interest-earning assets than the rates we pay on deposits and borrowings. Consequently, our ability to maintain a positive spread between the interest earned on assets and the interest paid on deposits and borrowings can be adversely affected when market rates of interest change. Interest rate sensitivity is monitored by management through the use of models which generate estimates of changes in net interest income and the economic value of our assets and liabilities over a range of interest rate scenarios.
Net Interest Income Analysis. We model and analyze potential changes to net interest income over a twelve-month period under rising and falling interest rate scenarios. Our primary model used to analyze the impact of changes in interest rates on net interest income assumes a static balance sheet, applies immediate and sustained rate shocks and assumes no management intervention over the forecast period. The following table summarizes the results of our net interest income model as of December 31, 2025, which estimates the impact of immediate and sustained changes in interest rates on net interest income over the following twelve months.
(Dollars in thousands) Net Interest Income $ Change % Change
Change in Interest Rates in Basis Points (Rate Shock):
The above table indicates that as of December 31, 2025, in the event of an immediate and sustained 100 basis point decrease in interest rates, our net interest income for the 12 months ending December 31, 2026 would be expected to decrease by $163,000 or 1.6%.
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Economic Value of Equity. Economic value of equity (“EVE”) represents the market value of portfolio equity, which is different from book value, and is equal to the market value of assets minus the market value of liabilities (that is, the difference between incoming and outgoing discounted cash flows of assets and liabilities) with adjustments made for off-balance sheet items. The EVE ratio, under any interest rate scenario, is defined as the EVE in that scenario divided by the market value of assets in the same scenario. The following table sets forth our EVE as of December 31, 2025 and reflects the changes to EVE as a result of immediate and sustained changes in interest rates as indicated.
Economic Value of Equity EVE as % of Fair Value of Assets
Liquidity and Capital Resources
The Company maintains levels of liquid assets deemed adequate by management. We adjust our liquidity levels to fund deposit outflows, repay our borrowings, and to fund loan commitments. We also adjust liquidity, as appropriate, to meet asset and liability management objectives.
Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities or sales of securities. We also have the ability to borrow from the FHLB, Federal Reserve Bank of Atlanta, and our primary correspondent bank.
At December 31, 2025, our borrowed funds consisted of FHLB advances with a net carrying value of $14.7 million. The table below summarizes our unused and available liquidity sources as of December 31, 2025.
(Dollars in thousands) December 31, 2025
Advances from the Federal Home Loan Bank of Dallas $ 49,664
Line of credit with primary correspondent bank 17,800
Unpledged available-for-sale investment securities, at fair value 32,761
Total unused and available liquidity $ 100,225
The Bank’s available borrowing capacity with the FHLB is secured through a blanket floating lien on real estate loans. The Company also has a $20.0 million custodial letter of credit outstanding from the FHLB as of December 31, 2025, which is included in the calculation of our available capacity with the FHLB indicated above. The Company can allocate portions of this letter of credit to collateralize certain deposit balances in excess of the FDIC’s insurance limit as an alternative to pledging investment securities for the same purpose. At December 31, 2025, the Company used $20.0 million of the FHLB custodial letter of credit to collateralize public fund deposits.
While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.
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Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. The details of these cash flow classifications are presented on the statement of cash flows included in Item 8 of this Form 10-K. The most significant uses and sources of cash flows during the year ended December 31, 2025 included:
● $26.5 million in outflows due to purchases of investment securities
● $5.0 million in net advances from the FHLB
● $3.3 million in net cash provided by operations
● $4.6 million in proceeds from maturities and paydowns of investment securities
● $3.3 million in outflows due to a net increase in total loans
● $2.6 million in outflows for the repurchase of the Company’s common stock
We are committed to maintaining a strong liquidity position. We monitor our liquidity position daily and anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that the majority of maturing time deposits will be retained. We also anticipate continued use of our secondary funding sources.
The following table summarizes our outstanding off-balance sheet commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans at December 31, 2025.
Amount of Commitment Expiration — Per Period
Commitments to originate loans $ 1,740 $ 1,740 $ - $ - $ -
Unused overdraft privilege amounts 1,238 - - - 1,238
Letters of credit - - - - -
The following table summarizes our contractual cash obligations at December 31, 2025.
Payments Due By Period
Management expects that a majority of the maturing certificates of deposit will be retained. However, if a substantial portion of these deposits is not retained, we may utilize borrowings from our secondary funding sources or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.
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The Bank exceeded all regulatory capital requirements and was categorized as well-capitalized at December 31, 2025 and December 31, 2024. Management is not aware of any conditions or events since the most recent notification that would change our category. Refer to Note 9 of the financial statements included in Item 8 of this Form 10-K for more detail on the Bank’s capital.
Recent Accounting Pronouncements
For a discussion of the impact of recent accounting pronouncements, see Note 1 of the notes to our financial statements included in Item 8 of this Form 10-K.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The Company is a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, therefore it is not required to provide the information under this item.
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Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Catalyst Bancorp, Inc.
Opelousas, Louisiana
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of financial condition of Catalyst Bancorp, Inc. (the “Company”) as of December 31, 2025, and the related consolidated statements of income (loss), comprehensive income, changes in shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ BDO USA, P.C.
We have served as the Company’s auditor since 2024.
Baton Rouge, Louisiana
March 31, 2026
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Catalyst Bancorp, Inc.
Opelousas, LA
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of financial condition of Catalyst Bancorp, Inc. (the Company) as of December 31, 2024, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.