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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission file number: 001-40893

CATALYST BANCORP, INC.

(Exact name of registrant as specified in its charter)

Louisiana		86-2411762
(State or other jurisdiction of incorporation of organization)		(I.R.S. Employer Identification No.)

235 N. Court Street, Opelousas, Louisiana 70570

(Address of principal executive offices; Zip Code)

(337) 948-3033

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		CLST		Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 4,113,660 shares of Registrant’s common stock, par value of $0.01 per share, issued and outstanding as of November 7, 2025.

Table of Contents

CATALYST BANCORP, INC.

FORM 10-Q

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Financial Condition	2

	Consolidated Statements of Income (Loss)	3

	Consolidated Statements of Comprehensive Income	4

	Consolidated Statements of Changes in Shareholders' Equity	5

	Consolidated Statements of Cash Flows	6

	Notes to Unaudited Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	45

Item 4.	Controls and Procedures	45

PART II	OTHER INFORMATION	46

Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3.	Defaults Upon Senior Securities	46

Item 4.	Mine Safety Disclosures	46

Item 5	Other Information	47

Item 6.	Exhibits	48

SIGNATURES		49

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


	(Unaudited)
	September 30,		December 31,
(Dollars in thousands)	2025		2024
ASSETS
Non-interest-bearing cash	$	4,515	$	4,076
Interest-bearing cash and due from banks		32,756		40,219
Total cash and cash equivalents		37,271		44,295
Investment securities:
Securities available-for-sale, at fair value (amortized cost of $48,206 and $33,215, respectively)		44,853		28,712
Securities held-to-maturity (fair value of $13,464 and $11,284, respectively)		14,945		13,447
Loans receivable, net of unearned income		164,767		167,076
Allowance for credit losses		(2,397)		(2,522)
Loans receivable, net		162,370		164,554
Accrued interest receivable		861		851
Foreclosed assets		76		194
Premises and equipment, net		5,954		6,085
Stock in correspondent banks, at cost		939		1,961
Bank-owned life insurance		14,849		14,489
Other assets		1,716		2,109
TOTAL ASSETS	$	283,834	$	276,697

LIABILITIES
Deposits
Non-interest-bearing	$	27,617	$	28,281
Interest-bearing		158,755		157,393
Total deposits		186,372		185,674
Borrowings		14,693		9,558
Other liabilities		1,184		1,261
TOTAL LIABILITIES		202,249		196,493

SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value - 5,000,000 shares authorized; none issued or outstanding		-		-
Common stock, $0.01 par value; 30,000,000 shares authorized; 4,129,604 and 4,278,150 issued and outstanding at September 30, 2025 and December 31, 2024, respectively		41		43
Additional paid-in capital		37,997		39,561
Unallocated common stock held by benefit plans		(5,260)		(5,702)
Retained earnings		51,456		49,860
Accumulated other comprehensive loss		(2,649)		(3,558)
TOTAL SHAREHOLDERS' EQUITY		81,585		80,204
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	283,834	$	276,697

The accompanying Notes are an integral part of these consolidated financial statements.

Table of Contents

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands, except per share data)	2025		2024		2025		2024
INTEREST INCOME
Loans receivable, including fees	$	2,816	$	2,717	$	8,346	$	7,314
Investment securities		345		255		914		790
Cash and due from banks		345		678		1,039		2,184
Other earning assets		7		21		49		63
Total interest income		3,513		3,671		10,348		10,351
INTEREST EXPENSE
Deposits		983		830		2,849		2,370
Borrowings		80		309		216		908
Total interest expense		1,063		1,139		3,065		3,278
Net interest income		2,450		2,532		7,283		7,073
Provision for (reversal of) credit losses		(36)		337		(36)		531
Net interest income after provision for (reversal of) credit losses		2,486		2,195		7,319		6,542
NON-INTEREST INCOME (LOSS)
Service charges on deposit accounts		172		200		571		597
Bank-owned life insurance		123		118		360		344
Loss on sale of investment securities		-		-		-		(5,507)
Other income on foreclosed assets		-		-		216		-
Gain (loss) on sale of fixed assets		(1)		-		(1)		6
Federal community development grant		-		280		-		280
Other		21		22		66		103
Total non-interest income (loss)		315		620		1,212		(4,177)
NON-INTEREST EXPENSE
Salaries and employee benefits		1,312		1,200		3,819		3,603
Occupancy and equipment		220		193		627		572
Data processing and communication		179		238		537		1,170
Professional fees		91		151		306		375
Directors’ fees		123		116		354		345
ATM and debit card		24		24		75		124
Foreclosed assets, net		7		33		114		67
Advertising and marketing		35		31		94		112
Regulatory fees and assessments		34		42		102		111
Franchise and shares tax		14		15		41		46
Other		163		217		509		594
Total non-interest expense		2,202		2,260		6,578		7,119
Income (loss) before income tax expense (benefit)		599		555		1,953		(4,754)
Income tax expense (benefit)		110		108		357		(1,039)
NET INCOME (LOSS)	$	489	$	447	$	1,596	$	(3,715)

Earnings (loss) per share - basic	$	0.13	$	0.11	$	0.43	$	(0.93)
Earnings (loss) per share - diluted		0.13		0.11		0.43		(0.93)

The accompanying Notes are an integral part of these consolidated financial statements.

Table of Contents

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2025		2024		2025		2024
Net income (loss)	$	489	$	447	$	1,596	$	(3,715)
Net unrealized gains on available-for-sale securities		282		1,185		1,150		261
Reclassification adjustment for losses included in net income (loss)		-		-		-		5,507
Income tax effect		(59)		(249)		(241)		(1,212)
Total other comprehensive income		223		936		909		4,556
Total comprehensive income	$	712	$	1,383	$	2,505	$	841

The accompanying Notes are an integral part of these consolidated financial statements.

Table of Contents

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


	Three Months Ended September 30, 2025 and 2024
(Dollars in thousands)	Common Stock		Additional Paid-in Capital		Unallocated Common Stock Held by Benefit Plans		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
BALANCE, JUNE 30, 2025	$	41	$	38,259	$	(5,596)	$	50,967	$	(2,872)	$	80,799
Net income		-		-		-		489		-		489
Other comprehensive income		-		-		-		-		223		223
ESOP shares released for allocation		-		14		53		-		-		67
2022 Recognition and Retention Plan shares released for allocation, including excise tax benefit		-		(277)		283		-		-		6
Stock compensation expense		-		172		-		-		-		172
Repurchase of common stock		-		(171)		-		-		-		(171)
BALANCE, SEPTEMBER 30, 2025	$	41	$	37,997	$	(5,260)	$	51,456	$	(2,649)	$	81,585

BALANCE, JUNE 30, 2024	$	45	$	41,914	$	(6,116)	$	48,787	$	(3,617)	$	81,013
Net income		-		-		-		447		-		447
Other comprehensive income		-		-		-		-		936		936
ESOP shares released for allocation		-		8		53		-		-		61
2022 Recognition and Retention Plan shares released for allocation		-		(286)		286		-		-		-
Stock compensation expense		-		143		-		-		-		143
Repurchase of common stock		(1)		(932)		-		-		-		(933)
BALANCE, SEPTEMBER 30, 2024	$	44	$	40,847	$	(5,777)	$	49,234	$	(2,681)	$	81,667

	Nine Months Ended September 30, 2025 and 2024
(Dollars in thousands)	Common Stock		Additional Paid-in Capital		Unallocated Common Stock Held by Benefit Plans		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
BALANCE, DECEMBER 31, 2024	$	43	$	39,561	$	(5,702)	$	49,860	$	(3,558)	$	80,204
Net income		-		-		-		1,596		-		1,596
Other comprehensive income		-		-		-		-		909		909
ESOP shares released for allocation		-		32		159		-		-		191
2022 Recognition and Retention Plan shares released for allocation, including excise tax benefit		-		(277)		283		-		-		6
Stock compensation expense		-		458		-		-		-		458
Repurchase of common stock		(2)		(1,777)		-		-		-		(1,779)
BALANCE, SEPTEMBER 30, 2025	$	41	$	37,997	$	(5,260)	$	51,456	$	(2,649)	$	81,585

BALANCE, DECEMBER 31, 2023	$	48	$	45,020	$	(6,221)	$	52,949	$	(7,237)	$	84,559
Net loss		-		-		-		(3,715)		-		(3,715)
Other comprehensive income		-		-		-		-		4,556		4,556
ESOP shares released for allocation		-		27		158		-		-		185
2022 Recognition and Retention Plan shares released for allocation		-		(286)		286		-		-		-
Stock compensation expense		-		423		-		-		-		423
Repurchase of common stock		(4)		(4,337)		-		-		-		(4,341)
BALANCE, SEPTEMBER 30, 2024	$	44	$	40,847	$	(5,777)	$	49,234	$	(2,681)	$	81,667

The accompanying Notes are an integral part of these consolidated financial statements.

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CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
(Dollars in thousands)	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,596	$	(3,715)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Investment securities amortization, net		60		119
Stock dividends from correspondent banks		(41)		(62)
Amortization of prepayment penalties on debt restructuring		135		135
Provision for (reversal of) credit losses		(36)		531
Increase in cash surrender value of bank-owned life insurance		(360)		(344)
Loss on sales of investment securities		-		5,507
Loss (gain) on disposals and sales of premises and equipment		1		(6)
Stock-based compensation		649		608
Depreciation of premises and equipment		315		306
Net write-downs and losses on the sale of foreclosed assets		106		57
Deferred income tax expense (benefit)		248		(1,039)
Increase in other assets		(107)		(215)
Increase (decrease) in other liabilities		(76)		654
Net cash provided by operating activities		2,490		2,536
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in available-for-sale securities:
Proceeds from maturities, calls, and paydowns		2,485		3,845
Proceeds from sales		-		42,525
Purchases		(17,528)		(7,873)
Activity in held-to-maturity securities:
Purchases		(1,506)		-
Net decrease (increase) in loans		2,209		(21,515)
Proceeds from sale of foreclosed assets		29		114
Purchases of premises and equipment		(185)		(375)
Purchase of Federal Home Loan Bank Stock		(108)		-
Proceeds from redemption of Federal Home Loan Bank Stock		1,171		-
Proceeds from sale of premises and equipment		-		12
Net cash (used in) provided by investing activities		(13,433)		16,733
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		698		1,814
Borrowings from the Federal Home Loan Bank of Dallas		5,001		793
Repayments of borrowings from Federal Home Loan Bank of Dallas		(1)		(793)
Borrowings from the Federal Reserve Bank of Atlanta		-		43,000
Repayments of borrowings from the Federal Reserve Bank of Atlanta		-		(33,000)
Repurchase of common stock		(1,779)		(4,341)
Net cash provided by financing activities		3,919		7,473
NET CHANGE IN CASH AND CASH EQUIVALENTS		(7,024)		26,742
CASH AND CASH EQUIVALENTS, beginning of period		44,295		19,011
CASH AND CASH EQUIVALENTS, end of period	$	37,271	$	45,753

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
Acquisition of real estate in settlement of loans	$	17	$	284

SUPPLEMENTAL SCHEDULE OF INTEREST AND TAXES PAID
Cash paid for interest	$	2,950	$	2,547
Cash paid for income taxes		66		200

The accompanying Notes are an integral part of these consolidated financial statements.

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CATALYST BANCORP, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

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 Bank has been in operation in the Acadiana region of south-central Louisiana since 1922 and offers commercial and retail banking products through six full-service locations. 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. The Company was not engaged in operations and had not issued any shares of stock prior to the completion of the Conversion.

As used in this report, unless the context otherwise requires, the terms “we,” “our,” “us,” or the “Company” refer to Catalyst Bancorp, and the term the “Bank” refers to Catalyst Bank, the wholly owned subsidiary of the Company. In addition, unless the context otherwise requires, references to the operations of the Company include the operations of the Bank.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the results for the interim periods presented have been included. The results of operations for the interim periods presented are not necessarily indicative of the results which may be expected for the entire fiscal year. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K.

Certain amounts reported in prior periods may have been reclassified to conform to the current period presentation. Such reclassifications had no effect on previously reported equity or net income.

Segment Reporting

The Company determined that all of its banking operations serve a similar customer base, offer similar products and services, and are managed through similar processes. Therefore, the Company’s banking operations are aggregated into one reported operating segment, which generates income principally from interest on loans and investment securities, as well as from fees charged in connection with various loan and deposit services. The chief operating decision maker (“CODM”) is the Chief Executive Officer, who for the purposes of assessing performance, making operating decisions, and allocating Company resources, regularly reviews net income as reported in the accompanying consolidated statements of income. The level of disaggregation and amounts of significant segment income and expenses, such as interest income, interest expense, provision for credit losses, salaries and employee benefits expense and other items, that are regularly provided to the CODM are the same as those presented in the accompanying consolidated statements of income. Likewise, the measure of segment assets is reported on the accompanying consolidated statements of financial condition as total assets.

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Critical Accounting Policies and Estimates

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could reflect materially different results under different assumptions and conditions. Methodologies the Company uses when applying critical accounting policies and developing critical estimates are included in its Annual Report on Form 10-K for the year ended December 31, 2024. Our accounting policies for allowance for credit losses, investment securities, and income taxes comprise those that management believes involve the most critical estimates and aid in fully understanding and evaluating our reported financial results.

There were no material changes from the significant accounting policies or critical accounting estimates previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In preparing the financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s financial condition, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.

Out-of-period Adjustment

During the three months ended September 30, 2025, the Company corrected a technical error related to fees charged for the use of foreign ATMs and refunded $30,000 of fees that were applied in error. The Company evaluated the error’s impact on prior periods and determined it was immaterial. The Company also evaluated the impact of recognizing the full correction during the three months ended September 30, 2025, and determined that it was immaterial as well. Therefore, the correction resulted in a corresponding decrease in income from service charges on deposit accounts during the three months ended September 30, 2025.

Recently Adopted Accounting Standards

ASU No. 2023-09. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU require further granularity on the disclosure of income taxes. The guidance in ASU 2023-09 requires that public business entities disclose specific categories in the income tax rate reconciliation and provide additional qualitative information for reconciling items that meet a quantitative threshold. In addition, the amendments in ASU 2023-09 require that all entities disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by individual jurisdictions. The ASU also includes other disclosure amendments related to the disaggregation of income tax expense between federal, state and foreign taxes. The Company has adopted the amendments in ASU 2023-09 as of January 1, 2025 and the required annual-only disclosures will be provided in its Annual Report on Form 10-K for the year ended December 31, 2025. There was no impact on the Company’s financial condition or results of operations upon adoption.

Accounting Standards Updates Issued, but Not Adopted

ASU No. 2024-03. In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU require disclosure, in the notes to the financial statements, of specified qualitative and quantitative information about certain costs and expenses, such as employee compensation, depreciation, and intangible asset amortization. Disclosure requirements also include a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, among other items. The Company expects to adopt the amendments in ASU 2024-03 for periods beginning after December 31, 2026. As the update contains only amendments to disclosure requirements, adoption will have no impact to the Company’s consolidated results of operations or financial condition.

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NOTE 2. EARNINGS (LOSS) PER SHARE

Earnings (loss) per common share was computed based on the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2025		2024		2025		2024
Numerator
Net income (loss) available to common shareholders	$	489	$	447	$	1,596	$	(3,715)

Denominator
Weighted average common shares outstanding		4,138		4,439		4,183		4,537
Weighted average unallocated common stock held by benefit plans		(501)		(546)		(510)		(555)
Weighted average shares - basic		3,637		3,893		3,673		3,982
Effect of dilutive stock-based awards⁽¹⁾:
Stock options		-		-		-		-
Restricted stock		21		12		11		-
Weighted average shares - assuming dilution		3,658		3,905		3,684		3,982

Basic earnings (loss) per common share	$	0.13	$	0.11	$	0.43	$	(0.93)
Diluted earnings (loss) per common share		0.13		0.11		0.43		(0.93)

(1)	The computation of diluted earnings (loss) per common share for the nine months ended September 30, 2024 does not include the impact of dilutive stock-based awards because to do so would be antidilutive for a period with a net loss.

Diluted earnings per share was computed using the treasury stock method. The weighted average of potentially dilutive common shares attributable to outstanding stock options that were anti-dilutive totaled 353,250 and 294,573 for the three months ended September 30, 2025 and 2024, respectively, and were excluded from the calculation of diluted earnings per share. The weighted average of potentially dilutive common shares attributable to restricted stock that were anti-dilutive totaled 326 for the three months ended September 30, 2025 and 2024, respectively, and were excluded from the calculation of diluted earnings per share.

The weighted average of potentially dilutive common shares attributable to outstanding stock options that were anti-dilutive totaled 319,150 and 294,647 for the nine months ended September 30, 2025 and 2024, respectively, and were excluded from the calculation of diluted earnings per share. The weighted average of potentially dilutive common shares attributable to restricted stock that were anti-dilutive totaled 2,120 and 537 for the nine months ended September 30, 2025 and 2024, respectively, and were excluded from the calculation of diluted earnings per share.

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NOTE 3. INVESTMENT SECURITIES

Investment securities have been classified according to management’s intent. The amortized cost of securities and their fair values are as follows:


	September 30, 2025
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale
Mortgage-backed securities	$	46,507	$	116	$	(3,321)	$	43,302
Municipal obligations		1,699		18		(166)		1,551
Total available-for-sale	$	48,206	$	134	$	(3,487)	$	44,853
Securities held-to-maturity
U.S. Government and agency obligations	$	13,000	$	-	$	(1,547)	$	11,453
Municipal obligations		1,945		77		(11)		2,011
Total held-to-maturity	$	14,945	$	77	$	(1,558)	$	13,464


	December 31, 2024
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale
Mortgage-backed securities	$	31,511	$	18	$	(4,327)	$	27,202
Municipal obligations		1,704		4		(198)		1,510
Total available-for-sale	$	33,215	$	22	$	(4,525)	$	28,712
Securities held-to-maturity
U.S. Government and agency obligations	$	13,000	$	-	$	(2,140)	$	10,860
Municipal obligations		447		-		(23)		424
Total held-to-maturity	$	13,447	$	-	$	(2,163)	$	11,284

There were no securities transferred between classifications during the nine months ended September 30, 2025 or 2024. There were no sales of investment securities during the nine months ended September 30, 2025. During the nine months ended September 30, 2024, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million.

Accrued interest receivable on the Company’s investment securities totaled $169,000 and $142,000 at September 30, 2025 and December 31, 2024, respectively.

Investment securities with a carrying amount of $25.5 million and $15.1 million were pledged to secure public deposits as required or permitted by law at September 30, 2025 and December 31, 2024, respectively. The Company also uses a custodial letter of credit granted by the Federal Home Loan Bank of Dallas to collateralize public fund deposits. At September 30, 2025 and December 31, 2024, $20.0 million and $25.0 million, respectively, of the custodial letter of credit was pledged as collateral for public deposits.

At September 30, 2025 and December 31, 2024, other than securities issued by U.S. Government agencies or government-sponsored enterprises, we had no investments in a single issuer which had an aggregate book value in excess of 10% of the Company’s shareholders’ equity.

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The following is a summary of maturities of securities available-for-sale and held-to-maturity at September 30, 2025:


	September 30, 2025
	Available-for-Sale				Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	-	$	-	$	-	$	-
After one through five years		632		650		9,439		8,512
After five through ten years		-		-		5,506		4,952
After ten years		1,067		901		-		-
Subtotal		1,699		1,551		14,945		13,464
Mortgage-backed securities		46,507		43,302		-		-
Total	$	48,206	$	44,853	$	14,945	$	13,464

Securities, other than mortgage-backed 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.

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Information pertaining to securities with gross unrealized losses at September 30, 2025 and December 31, 2024 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


	September 30, 2025
	Less than 12 Months				12 Months or Greater				Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Securities available-for-sale
Mortgage-backed securities	$	15,706	$	(63)	$	20,158	$	(3,258)	$	35,864	$	(3,321)
Municipal obligations		-		-		901		(166)		901		(166)
Total available-for-sale	$	15,706	$	(63)	$	21,059	$	(3,424)	$	36,765	$	(3,487)
Securities held-to-maturity
U.S. Government and agency obligations	$	-	$	-	$	11,452	$	(1,547)	$	11,452	$	(1,547)
Municipal obligations		-		-		428		(11)		428		(11)
Total held-to-maturity	$	-	$	-	$	11,880	$	(1,558)	$	11,880	$	(1,558)
Total	$	15,706	$	(63)	$	32,939	$	(4,982)	$	48,645	$	(5,045)


	December 31, 2024
	Less than 12 Months				12 Months or Greater				Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Securities available-for-sale
Mortgage-backed securities	$	3,274	$	(90)	$	18,135	$	(4,237)	$	21,409	$	(4,327)
Municipal obligations		-		-		878		(198)		878		(198)
Total available-for-sale	$	3,274	$	(90)	$	19,013	$	(4,435)	$	22,287	$	(4,525)
Securities held-to-maturity
U.S. Government and agency obligations	$	-	$	-	$	10,860	$	(2,140)	$	10,860	$	(2,140)
Municipal obligations		-		-		424		(23)		424		(23)
Total held-to-maturity	$	-	$	-	$	11,284	$	(2,163)	$	11,284	$	(2,163)
Total	$	3,274	$	(90)	$	30,297	$	(6,598)	$	33,571	$	(6,688)

At September 30, 2025 and December 31, 2024, the Company held 48 and 41 securities, respectively, with an unrealized loss. The securities with unrealized losses consisted of mortgage-backed securities guaranteed by the government-sponsored enterprises that have a credit rating consistent with the U.S. Government, and debt obligations guaranteed by federal, state and local government entities. These unrealized losses relate principally to noncredit related factors, including changes in current interest rates for similar types of securities. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell the securities before recovery of their amortized cost basis. Based on management’s evaluation of the securities portfolio, the Company did not establish an allowance for credit losses for its available-for-sale or held-to-maturity securities at September 30, 2025 or December 31, 2024.

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NOTE 4. LOANS RECEIVABLE

Loans receivable at September 30, 2025 and December 31, 2024 are summarized as follows:



	September 30,		December 31,
(Dollars in thousands)	2025		2024
Real estate loans
One- to four-family residential	$	78,373	$	81,097
Commercial real estate		33,679		22,108
Construction and land		18,850		32,941
Multi-family residential		5,367		2,570
Total real estate loans		136,269		138,716
Other loans
Commercial and industrial		25,665		26,439
Consumer		2,833		1,921
Total other loans		28,498		28,360
Total loans		164,767		167,076
Less: Allowance for credit losses		(2,397)		(2,522)
Net loans	$	162,370	$	164,554

At September 30, 2025 and December 31, 2024, real estate loans totaling $84.7 million and $80.6 million, respectively, were pledged as collateral to the Federal Home Loan Bank of Dallas for borrowings under a blanket lien agreement.

Accrued interest receivable on the Company’s loans totaled $687,000 and $704,000 at September 30, 2025 and December 31, 2024, respectively. Accrued interest receivable is excluded from the Company’s estimate of the allowance for credit losses.

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The following describes the general risk characteristics of each segment of the loan portfolio disclosed in this note:

One- to four-family residential – This category primarily consists of loans secured by residential real estate located in our market. The performance of these loans may be adversely affected by, among other factors, unemployment rates, local residential real estate market conditions and the interest rate environment. Generally, these loans are for longer terms than commercial and construction loans.

Commercial real estate – This category generally consists of loans secured by retail and industrial use buildings, hotels, strip shopping centers and other properties used for commercial purposes. The performance of these loans may be adversely affected by, among other factors, conditions specific to the relevant industry, the real estate market for the property type and geographic region where the property or borrower is located.

Construction and land – This category consists of loans to finance the ground-up construction and/or improvement of residential and commercial properties and loans secured by land. The performance of these loans is generally dependent upon the successful completion of improvements and/or land development for the end user, the sale of the property to a third party, or a secondary source of cash flow from the owners. The successful completion of planned improvements and development may be adversely affected by changes in the estimated property value upon completion of construction, projected costs and other conditions leading to project delays.

Multi-family residential – This category consists of loans secured by apartment or residential buildings with five or more units used to accommodate households on a temporary or permanent basis. The performance of multi-family loans is generally dependent on the receipt of rental income from the tenants who occupy the subject property. The occupancy rate of the subject property and the ability of the tenants to pay rent may be adversely affected by the location of the subject property and local economic conditions.

Commercial and industrial – This category primarily consists of secured and unsecured loans to small and mid-sized businesses to fund operations or purchase non-real estate assets. Secured loans are primarily secured by accounts receivable, inventory, equipment and certain other business assets. The performance of these loans may be adversely affected by, among other factors, conditions specific to the relevant industry, fluctuations in the value of the collateral and individual performance factors related to the borrower.

Consumer – This category consists of loans to individuals for household, family and other personal use. The performance of these loans may be adversely affected by national and local economic conditions, unemployment rates and other factors affecting the borrower’s income available to service the debt.

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The following tables outline the changes in the allowance for credit losses for the nine months ended September 30, 2025 and 2024.


	For the Nine Months Ended September 30, 2025
(Dollars in thousands)	Beginning Balance		Provision (Reversal)		Charge-offs		Recoveries		Ending Balance
Allowance for credit losses
One- to four-family residential	$	1,164	$	81	$	(113)	$	34	$	1,166
Commercial real estate		192		110		-		-		302
Construction and land		528		(246)		-		-		282
Multi-family residential		35		37		-		-		72
Commercial and industrial		372		(57)		-		17		332
Consumer		26		33		(40)		19		38
Unallocated		205		-		-		-		205
Total for loans	$	2,522	$	(42)	$	(153)	$	70	$	2,397
Unfunded lending commitments⁽¹⁾		121		6		-		-		127
Total	$	2,643	$	(36)	$	(153)	$	70	$	2,524

(1)

The allowance for credit losses on unfunded lending commitments is recorded within “other liabilities” on the statement of financial condition. The related provision for credit losses for unfunded lending commitments is recorded with the provision for credit losses on loans and reported in aggregate as the provision for credit losses on the income statement.


	For the Nine Months Ended September 30, 2024
(Dollars in thousands)	Beginning Balance		Provision (Reversal)		Charge-offs		Recoveries		Ending Balance
Allowance for credit losses
One- to four-family residential	$	1,240	$	62	$	(160)	$	68	$	1,210
Commercial real estate		213		17		(28)		14		216
Construction and land		283		258		-		-		541
Multi-family residential		50		(13)		-		-		37
Commercial and industrial		302		206		(133)		4		379
Consumer		36		27		(43)		11		31
Total for loans	$	2,124	$	557	$	(364)	$	97	$	2,414
Unfunded lending commitments		257		(26)		-		-		231
Total	$	2,381	$	531	$	(364)	$	97	$	2,645

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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, if any, are credited to the allowance. The Company groups loans and unfunded lending commitments with similar risk characteristics into pools or segments and collectively evaluates each pool to estimate the allowance for credit losses. For each loan pool, the Company uses the remaining life method to calculate its credit loss estimate. Loans are individually evaluated for credit losses when they do not share similar risk characteristics with our identified loan pools. The allowance for credit losses reflects the Company’s estimate of current expected credit losses (“CECL”) over the full life of the financial assets.

The following tables outline the allowance for credit losses and the balance of loans by method of loss evaluation at September 30, 2025 and December 31, 2024.


	September 30, 2025						December 31, 2024
(Dollars in thousands)	Individually Evaluated		Collectively Evaluated		Total		Individually Evaluated		Collectively Evaluated		Total
Allowance for credit losses
One- to four-family residential	$	54	$	1,112	$	1,166	$	104	$	1,060	$	1,164
Commercial real estate		-		302		302		-		192		192
Construction and land		-		282		282		35		493		528
Multi-family residential		-		72		72		-		35		35
Commercial and industrial		-		332		332		-		372		372
Consumer		-		38		38		-		26		26
Unallocated		-		205		205		-		205		205
Total	$	54	$	2,343	$	2,397	$	139	$	2,383	$	2,522
Loans
One- to four-family residential	$	508	$	77,865	$	78,373	$	589	$	80,508	$	81,097
Commercial real estate		-		33,679		33,679		-		22,108		22,108
Construction and land		-		18,850		18,850		120		32,821		32,941
Multi-family residential		-		5,367		5,367		-		2,570		2,570
Commercial and industrial		2,055		23,610		25,665		-		26,439		26,439
Consumer		-		2,833		2,833		-		1,921		1,921
Total	$	2,563	$	162,204	$	164,767	$	709	$	166,367	$	167,076

At September 30, 2025 and December 31, 2024, all loans individually evaluated for credit losses were considered collateral-dependent financial assets under ASC 326. Loans are considered collateral-dependent and individually evaluated when, based on management’s assessment as of the reporting date, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following describes the types of collateral that secure collateral dependent loans:

●

One- to four-family first mortgages are primarily secured by first liens on residential real estate.

●

Construction and land loans are primarily secured by residential and commercial properties, which are under construction and/or redevelopment, and by raw land.

●

Commercial and industrial loans considered collateral dependent are primarily secured by accounts receivable, inventory and equipment.

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A summary of current, past due and non-accrual loans as of September 30, 2025 and December 31, 2024 follows:


	As of September 30, 2025
(Dollars in thousands)	Past Due 30-89 Days and Accruing		Past Due Over 90 Days and Accruing		Past Due Over 30 Days and Non-accruing		Total Past Due		Current and Accruing		Current and Non-accruing		Total Loans
One- to four-family residential	$	2,664	$	364	$	654	$	3,682	$	73,907	$	784	$	78,373
Commercial real estate		342		-		-		342		33,337		-		33,679
Construction and land		-		-		-		-		18,829		21		18,850
Multi-family residential		-		-		-		-		5,367		-		5,367
Commercial and industrial		68		-		-		68		25,597		-		25,665
Consumer		6		-		-		6		2,827		-		2,833
Total	$	3,080	$	364	$	654	$	4,098	$	159,864	$	805	$	164,767


	As of December 31, 2024
(Dollars in thousands)	Past Due 30-89 Days and Accruing		Past Due Over 90 Days and Accruing		Past Due Over 30 Days and Non-accruing		Total Past Due		Current and Accruing		Current and Non-accruing		Total Loans
One- to four-family residential	$	2,926	$	64	$	767	$	3,757	$	76,577	$	763	$	81,097
Commercial real estate		-		-		-		-		22,108		-		22,108
Construction and land		81		-		13		94		32,823		24		32,941
Multi-family residential		-		-		-		-		2,570		-		2,570
Commercial and industrial		1		-		-		1		26,438		-		26,439
Consumer		8		-		-		8		1,913		-		1,921
Total	$	3,016	$	64	$	780	$	3,860	$	162,429	$	787	$	167,076

A summary of total non-accrual loans as of September 30, 2025 and December 31, 2024 follows:



	September 30, 2025						December 31, 2024
(Dollars in thousands)	With Allowance for Credit Loss		Without Allowance for Credit Loss		Total		With Allowance for Credit Loss		Without Allowance for Credit Loss		Total
Non-accrual loans
One- to four-family residential	$	1,392	$	46	$	1,438	$	1,518	$	12	$	1,530
Commercial real estate		-		-		-		-		-		-
Construction and land		21		-		21		37		-		37
Multi-family residential		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	1,413	$	46	$	1,459	$	1,555	$	12	$	1,567

The Company was not committed to lend any additional funds on non-accrual loans at September 30, 2025 or December 31, 2024. The Company does not recognize interest income while loans are on non-accrual status. All payments received while on non-accrual status are applied against the principal balance of non-accrual loans.

At September 30, 2025, the Company had no outstanding loans for which formal foreclosure proceedings were in process. At December 31, 2024, loans secured by residential real estate for which formal foreclosure proceedings were in process totaled $37,000.

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Occasionally loans are modified to assist borrowers experiencing financial difficulty. We consider modifications such as term extensions, principal forgiveness, payment delays or alternate payment schedules, and alternate interest rate terms. At September 30, 2025 and December 31, 2024, loans with modifications for borrowers experiencing financial difficulty totaled $658,000 and $583,000, respectively. At September 30, 2025 and December 31, 2024, all loans with modifications for borrowers experiencing financial difficulty were one- to four-family residential loans and totaled less than 1.0% of total one- to four-family residential loans at such dates.

During the nine months ended September 30, 2025, the Company granted one loan modification to borrowers experiencing financial difficulty that resulted in a more than minor change in the timing or amount of contractual cash flows. The Company consolidated the debt of two related borrowers into a new residential mortgage loan totaling $131,000 to extend the maturity date and lower the monthly payment. During the year ended December 31, 2024, the Company granted one loan modification to a borrower experiencing financial difficulty that resulted in a more than minor change in the timing or amount of contractual cash flows. The maturity date was extended by three years for a residential mortgage loan with a balance of $20,000. The loans modified in 2025 and 2024 for borrowers experiencing financial difficulty have performed in accordance with their terms after modification. The Company was not committed to lend any additional funds to borrowers with modified terms and experiencing financial difficulty at September 30, 2025 or December 31, 2024.

Loans are categorized by credit quality indicators based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Credit quality classifications follow regulatory guidelines and can generally be described as follows:

Pass – Loans in this category have strong asset quality and liquidity along with a multi-year track record of profitability.

Special Mention – Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss – Loans classified as loss have been identified as uncollectible and are generally charged-off in the period identified.

The information for each of the credit quality indicators is updated at least quarterly in conjunction with the determination of the adequacy of the allowance for credit losses.

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The following table presents the Company’s loan portfolio by credit quality classification and origination year as of September 30, 2025. The Company uses the latter of origination or renewal date to classify term loans into vintages.


															Line-of-credit
															Arrangements
	Term Loans by Origination Year												Line-of-credit		Converted to
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Arrangements		Term Loans		Total
One- to four-family residential
Pass	$	2,375	$	3,695	$	3,762	$	11,826	$	2,491	$	47,219	$	2,011	$	2,410	$	75,789
Special Mention		-		-		-		-		54		-		244		-		298
Substandard		-		21		10		-		-		2,255		-		-		2,286
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	2,375	$	3,716	$	3,772	$	11,826	$	2,545	$	49,474	$	2,255	$	2,410	$	78,373
Commercial real estate
Pass	$	1,749	$	4,187	$	4,922	$	1,439	$	810	$	8,041	$	82	$	11,783	$	33,013
Special Mention		-		-		-		98		312		-		-		-		410
Substandard		-		222		-		-		-		34		-		-		256
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	1,749	$	4,409	$	4,922	$	1,537	$	1,122	$	8,075	$	82	$	11,783	$	33,679
Construction and land
Pass	$	368	$	196	$	-	$	99	$	48	$	282	$	17,725	$	-	$	18,718
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		111		-		-		-		-		21		-		-		132
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	479	$	196	$	-	$	99	$	48	$	303

Catalyst Bancorp, Inc. 10-Q