Catalyst Bancorp, Inc.

Previous wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations at June 30, 2025 and for the three and six months ended June 30, 2025 and 2024 is intended to assist in understanding our financial condition and results of operations. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements of the Company and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q as well as the business and financial information included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2024.

Current wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations at September 30, 2025 and for the three and nine months ended September 30, 2025 and 2024 is intended to assist in understanding our financial condition and results of operations. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements of the Company and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q as well as the business and financial information included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2024.

Previous wording

The following is an overview of financial results for the three and six months ended June 30, 2025:

Current wording

The following is an overview of financial results for the three and nine months ended September 30, 2025:

Previous wording

During the six months ended June 30, 2025, $15.8 million of outstanding construction loans at December 31, 2024 were converted to amortizing real estate loans following the completion of their respective construction projects. Of the total, $2.8 million was classified as multi-family, $2.2 million was classified as one- to four-family residential, and the remaining balance was designated as commercial real estate.

Current wording

During the nine months ended September 30, 2025, a $4.6 million multi-family construction loan paid-off and $15.8 million of outstanding construction loans at December 31, 2024 were converted to amortizing real estate loans following the completion of their respective construction projects. Of the total converted construction loans, $2.8 million was classified as multi-family, $2.2 million was classified as one- to four-family residential, and the remaining balance was classified as commercial real estate.

Previous wording

Allowance for Credit Losses. At June 30, 2025, the allowance for credit losses on loans totaled $2.4 million, or 1.45% of total loans, compared to $2.5 million, or 1.51% of total loans at December 31, 2024. The allowance for credit losses on unfunded commitments totaled $131,000, up $10,000 from December 31, 2024. The provision for credit losses was zero and net loan charge-offs were $81,000 for the six months ended June 30, 2025. Net loan charge-offs were primarily related to residential mortgages and overdrawn deposit accounts.

Current wording

Allowance for Credit Losses. At September 30, 2025, the allowance for credit losses on loans totaled $2.4 million, or 1.45% of total loans, compared to $2.5 million, or 1.51% of total loans at December 31, 2024. The allowance for credit losses on unfunded commitments totaled $127,000, up $6,000 from December 31, 2024. The Company recorded a reversal of provision for credit losses of $36,000 and net loan charge-offs were $83,000 for the nine months ended September 30, 2025. The reversal of provision for credit losses was largely due to a reduction in expected credit losses on individually evaluated loans and a decline in total loans. Net loan charge-offs were primarily related to residential mortgages and overdrawn deposit accounts.

Previous wording

**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 the six months ended June 30, 2025, the Company downgraded a $3.3 million non-real estate, commercial loan relationship to substandard due to declines in debt service coverage. At June 30, 2025, all loans within the downgraded relationship were current and performing.

Current wording

**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 the nine months ended September 30, 2025, the Company downgraded a $3.3 million non-real estate, commercial loan relationship to substandard due to declines in debt service coverage. At September 30, 2025, all loans within the downgraded relationship were current and performing.

Previous wording

Investment Securities*.* Total investment securities were $44.2 million at June 30, 2025, up $2.1 million, or 4.9%, compared to $42.2 million at December 31, 2024. Net unrealized losses on securities available-for-sale totaled $3.6 million at June 30, 2025, compared to $4.5 million at December 31, 2024. Unrealized losses on available-for-sale securities relate principally to increases in 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.

Current wording

Net unrealized losses on securities available-for-sale totaled $3.4 million at September 30, 2025, compared to $4.5 million at December 31, 2024. Unrealized losses on available-for-sale securities relate principally to increases in 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.

Previous wording

The ratio of the Company’s total loans to total deposits was 92.0% and 90.0% as of June 30, 2025 and December 31, 2024, respectively.

Current wording

The ratio of the Company’s total loans to total deposits was 88.4% and 90.0% as of September 30, 2025 and December 31, 2024, respectively.

Previous wording

The decline in interest-bearing demand deposits was largely due to fluctuations in public fund balances. Total public fund deposits amounted to $29.0 million, or 16% of total deposits, at June 30, 2025, compared to $35.6 million, or 19% of total deposits, at December 31, 2024. At June 30, 2025, approximately 64% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits, compared to 83% at December 31, 2024.

Current wording

The decline in interest-bearing demand deposits was largely due to fluctuations in public fund balances. Total public fund deposits amounted to $30.5 million, or 16% of total deposits, at September 30, 2025, compared to $35.6 million, or 19% of total deposits, at December 31, 2024. At September 30, 2025, approximately 64% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits, compared to 83% at December 31, 2024. At September 30, 2025, a larger portion of public funds were held in savings accounts and certificates of deposit.

Previous wording

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 brokered deposits.

Current wording

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 has been partially offset by growth driven by rate specials.

Previous wording

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 $49.6 million at June 30, 2025 and $53.7 million at December 31, 2024. Total uninsured non-public fund deposits were approximately $25.7 million and $22.5 million at June 30, 2025 and December 31, 2024, respectively. At June 30, 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 $25.8 million or $25.0 million of a custodial letter of credit granted by the Federal Home Loan Bank of Dallas.

Current wording

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 $50.7 million at September 30, 2025 and $53.7 million at December 31, 2024. Total uninsured non-public fund deposits were approximately $25.2 million and $22.5 million at September 30, 2025 and December 31, 2024, respectively. At September 30, 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 $25.5 million or $20.0 million of a custodial letter of credit granted by the Federal Home Loan Bank of Dallas.

Previous wording

Shareholders’ Equity. Shareholders’ equity totaled $80.8 million, or 29.5% of total assets, at June 30, 2025, up $595,000, or 0.7%, from $80.2 million, or 29.0% of total assets, at December 31, 2024. During the six months ended June 30, 2025, shareholders’ equity increased by the Company’s net income of $1.1 million and other comprehensive income of $686,000, which was the result of the change in unrealized losses on available-for-sale investment securities. These increases were partially offset by the Company’s repurchases of its common stock.

Current wording

Shareholders’ Equity. Shareholders’ equity totaled $81.6 million, or 28.7% of total assets, at September 30, 2025, up $1.4 million, or 1.7%, from $80.2 million, or 29.0% of total assets, at December 31, 2024. During the nine months ended September 30, 2025, shareholders’ equity increased by the Company’s net income of $1.6 million and other comprehensive income of $909,000, which was the result of the change in unrealized losses on available-for-sale investment securities. These increases were partially offset by the Company’s repurchases of its common stock.

Previous wording

The Company repurchased 135,334 shares of its common stock at an average cost per share of $11.88 during the six months ended June 30, 2025. Under the November 2024 Repurchase Plan, 51,816 shares of the Company’s common stock were available for repurchase at June 30, 2025. Since the announcement of our first share repurchase plan on January 26, 2023 and through June 30, 2025, the Company has repurchased a total of 1,147,184 shares of its common stock, or approximately 22% of the common shares originally issued, at an average cost per share of $11.92.

Current wording

The Company repurchased 148,546 shares of its common stock at an average cost per share of $11.98 during the nine months ended September 30, 2025. Under the November 2024 Repurchase Plan, 38,604 shares of the Company’s common stock were available for repurchase at September 30, 2025. Since the announcement of our first share repurchase plan on January 26, 2023 and through September 30, 2025, the Company has repurchased a total of 1,160,396 shares of its common stock, or approximately 22% of the common shares originally issued, at an average cost per share of $11.94.

Previous wording

Interest Income. Total interest income decreased $64,000, or 1.8%, to $3.5 million for the three months ended June 30, 2025, compared to the same period in 2024. Interest income on loans was up $409,000, or 17.2%, for the three months ended June 30, 2025, compared to the same period in 2024. Interest income on investment securities increased $84,000, or 40.0%, for the three months ended June 30, 2025, compared to the same period in 2024. These increases were offset by a decrease in interest income on cash and due from banks of $559,000, or 61.3%, for the three months ended June 30, 2025, compared to the same period in 2024.

Current wording

Interest Income. Total interest income decreased $158,000, or 4.3%, to $3.5 million for the three months ended September 30, 2025, compared to the same period in 2024. Interest income on loans and investment securities were up $99,000, or 3.6%, and $90,000, or 35.3%, respectively, for the three months ended September 30, 2025, compared to the same period in 2024. These increases were offset by a decrease in interest income on cash and due from banks of $333,000, or 49.1%, for the three months ended September 30, 2025, compared to the same period in 2024.

Previous wording

The average loan yield was 6.68% for the three months ended June 30, 2025, up from 6.38% for the same period in 2024. Average loans were $167.6 million for the three months ended June 30, 2025, up $17.4 million, or 11.6%, compared to the same period in 2024. At June 30, 2025, approximately 51% of our total loans have adjustable rates and approximately 45% of total loans are scheduled to re-price or mature during the next 12 months.

Current wording

The average loan yield was 6.69% for the three months ended September 30, 2025, down from 6.70% for the same period in 2024. Average loans were $167.0 million for the three months ended September 30, 2025, up $5.6 million, or 3.5%, compared to the same period in 2024. At September 30, 2025, approximately 47% of our total loans have adjustable rates and approximately 45% of total loans are scheduled to re-price or mature during the next 12 months.

Previous wording

The increase in interest income on investment securities was primarily due to an increase in the average rate earned on investment securities as a result of security purchases during 2024 and 2025. The average rate earned on our investment securities portfolio was 2.49% for the three months ended June 30, 2025, up 58 bps compared to the same period in 2024.

Current wording

The increase in interest income on investment securities was primarily due to an increase in the average rate earned on investment securities as a result of security purchases during 2024 and 2025. The average rate earned on our investment securities portfolio was 2.71% for the three months ended September 30, 2025, up 60 bps compared to the same period in 2024.

Previous wording

Interest income on interest-earning cash and due from banks, included in other interest-earning assets in the 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 4.44% for the six months ended June 30, 2025, down 79 bps compared to the same period in 2024.

Current wording

Interest income on interest-earning cash and due from banks, included in other interest-earning assets in the 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

Previous wording

Interest Expense. Total interest expense decreased $84,000, or 7.8%, to $993,000 for the three months ended June 30, 2025, compared to $1.1 million for the same period in 2024. Interest expense on deposits was $925,000 during the three months ended June 30, 2025, up $154,000, or 20.0%, compared to the same period in 2024. The average rate paid on interest-bearing deposits was 2.49% during the three months ended June 30, 2025, up 33 bps compared to the same period in 2024. Interest expense on borrowings decreased by $238,000, or 77.8%, during the three months ended June 30, 2025 compared to the same period in 2024 mainly due to the payoff of an advance under the Bank Term Funding Program (“BTFP”) during the fourth quarter of 2024.

Current wording

Interest Expense. Total interest expense decreased $76,000, or 6.7%, to $1.1 million for the three months ended September 30, 2025, compared to the same period in 2024. Interest expense on deposits was $983,000 during the three months ended September 30, 2025, up $153,000, or 18.4%, compared to the same period in 2024. The average rate paid on interest-bearing deposits was 2.59% during the three months ended September 30, 2025, up 25 bps compared to the same period in 2024 largely driven by growth in high-yield savings account balances. Interest expense on borrowings decreased by $229,000, or 74.1%, during the three months ended September 30, 2025 compared to the same period in 2024 mainly due to the payoff of an advance under the Bank Term Funding Program (“BTFP”) during the fourth quarter of 2024.

Previous wording

Net Interest Income. Net interest income was $2.5 million for the three months ended June 30, 2025, up $20,000, or 0.8%, compared to the same period in 2024. Our interest rate spread was 3.07% and 2.85% for the three months ended June 30, 2025 and 2024, respectively. Our net interest margin was 3.98% and 3.72% for the three months ended June 30, 2025 and 2024, respectively. The increase in net interest margin over the comparable periods was largely the result of loan growth during the last nine months of 2024 and the payoff of our BTFP advance.

Current wording

Net Interest Income. Net interest income was $2.5 million for the three months ended September 30, 2025, down $82,000, or 3.2%, compared to the same period in 2024. Our interest rate spread was 2.94% for the three months ended September 30, 2025 and 2024. Our net interest margin was 3.88% and 3.86% for the three months ended September 30, 2025 and 2024, respectively. The increase in net interest margin over the comparable periods was largely the result of growth in loans and investment securities and the payoff of our BTFP advance.

Previous wording

Provision for Credit Losses. The total provision for credit losses on loans and unfunded commitments was zero for the three months ended June 30, 2025, compared to $99,000 for the same period in 2024. In 2024, the provision for credit losses was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated residential loans.

Current wording

Provision for Credit Losses. The Company recorded a reversal of provision for credit losses of $36,000 for the three months ended September 30, 2025, compared to provision for credit losses expense of $337,000 for the same period in 2024. The reversal was largely due to a reduction in expected credit losses on individually evaluated loans and a decline in total loans. In 2024, the provision for credit losses was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated residential loans.

Previous wording

Non-interest Expense. Non-interest expense totaled $2.2 million for the three months ended June 30, 2025, up $110,000, or 5.3%, compared to the three months ended June 30, 2024.

Current wording

Non-interest Expense. Non-interest expense totaled $2.2 million for the three months ended September 30, 2025, down $58,000, or 2.6%, compared to the three months ended September 30, 2024.

Previous wording

Salaries and employee benefits expense totaled $1.3 million for the three months ended June 30, 2025, up $119,000, or 10.4%, compared to the same period in 2024 primarily due to raises issued during the third quarter of 2024 and an increase in bonus expense.

Current wording

Salaries and employee benefits expense totaled $1.3 million for the three months ended September 30, 2025, up $112,000, or 9.3%, compared to the same period in 2024 primarily due to raises issued during the third quarter of 2024, an increase in bonus expense, and new grants of share-based compensation issued in June 2025.

Previous wording

Occupancy and equipment expense totaled $208,000 for the three months ended June 30, 2025, up $25,000 or 13.7%, compared to the same period in 2024 mainly due to new ATMs, computers, and other technology upgrades acquired and placed in service after June 30, 2024.

Current wording

Occupancy and equipment expense totaled $220,000 for the three months ended September 30, 2025, up $27,000 or 14.0%, compared to the same period in 2024 mainly due to new ATMs, computers, and other technology upgrades.

Previous wording

Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024.

Current wording

Comparison of Results of Operations for the Nine Months Ended September 30, 2025 and 2024.

Previous wording

General. For the six months ended June 30, 2025, the Company reported net income of $1.1 million, compared to a net loss of $4.2 million for the six months ended June 30, 2024. Net interest income increased $292,000, or 6.4%, for the six months ended June 30, 2025, compared to the same period in 2024. The provision for credit losses was zero for the six months ended June 30, 2025, compared to $194,000 for the same period in 2024. Non-interest income was $897,000 for the six months ended June 30, 2025, compared to a net loss of $4.8 million for the same period in 2024. 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 the six months ended June 30, 2025 was down $483,000, or 9.9%, compared to the same period in 2024, primarily due to expenses incurred during the 2024 period related to the Company’s upgrade to a new core processing system.

Current wording

General. For the nine months ended September 30, 2025, the Company reported net income of $1.6 million, compared to a net loss of $3.7 million for the nine months ended September 30, 2024. Net interest income increased $210,000, or 3.0%, for the nine months ended September 30, 2025, compared to the same period in 2024. The Company recorded a reversal of provision for credit losses of $36,000 for the nine months ended September 30, 2025, compared to provision for credit losses expense of $531,000 for the same period in 2024. Non-interest income was $1.2 million for the nine months ended September 30, 2025, compared to a net loss of $4.2 million for the same period in 2024. 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 the nine months ended September 30, 2025 was down $541,000, or 7.6%, compared to the same period in 2024, primarily due to expenses incurred during the 2024 period related to the Company’s upgrade to a new core processing system.

Previous wording

Interest Income. Total interest income increased $155,000, or 2.3%, to $6.8 million for the six months ended June 30, 2025, compared to the same period in 2024. Interest income on loans and investment securities was up $933,000, or 20.3%, and $34,000, or 6.4%, respectively. These increases were partially offset by a decrease in interest income on cash and due from banks of $812,000, or 53.9%.

Current wording

Interest Income. Total interest income was $10.3 million and $10.4 million for the nine months ended September 30, 2025 and 2024, respectively. Interest income on loans and investment securities were up $1.0 million, or 14.1%, and $124,000, or 15.7%, respectively. These increases were partially offset by a decrease in interest income on cash and due from banks of $1.1 million, or 52.4%.

Previous wording

The average yield on loans was 6.68% for the six months ended June 30, 2025, up from 6.27% for the same period in 2024. Average loans were $166.9 million for the six months ended June 30, 2025, up $19.5 million, or 13.3%, compared to the same period in 2024.

Current wording

The average yield on loans was 6.68% for the nine months ended September 30, 2025, up from 6.42% for the same period in 2024. Average loans were $166.9 million for the nine months ended September 30, 2025, up $14.9 million, or 9.8%, compared to the same period in 2024.

Previous wording

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 the six months ended June 30, 2025, compared to the same period in 2024. The average rate earned on our investment securities portfolio was 2.42% for the six months ended June 30, 2025, up 63 bps compared to the same period in 2024 primarily due to higher-yielding investment securities purchased during 2024 and 2025.

Current wording

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 the nine months ended September 30, 2025, compared to the same period in 2024. The average rate earned on our investment securities portfolio was 2.52% for the nine months ended September 30, 2025, up 64 bps compared to the same period in 2024 primarily due to higher-yielding investment securities purchased during 2024 and 2025.

Previous wording

Interest income on interest-earning cash and due from banks, included in other interest-earning assets in the 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 4.53% for the three months ended June 30, 2025, down 80 bps compared to the same period in 2024.

Current wording

Interest income on interest-earning cash and due from banks, included in other interest-earning assets in the 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 4.41% for the nine months ended September 30, 2025, down 88 bps compared to the same period in 2024.

Previous wording

Interest Expense. Total interest expense decreased $137,000, or 6.4%, to $2.0 million for the six months ended June 30, 2025, compared to $2.1 million for the same period in 2024. Interest expense on deposits was $1.9 million during the six months ended June 30, 2025, up $326,000, or 21.2%, compared to the same period in 2024. The average rate paid on interest-bearing deposits was 2.52% during the six months ended June 30, 2025, up 38 bps compared to the same period in 2024. Interest expense on borrowings decreased by $463,000, or 77.3%, during the six months ended June 30, 2025, compared to the same period in 2024, mainly due to the payoff of a BTFP advance during the fourth quarter of 2024.

Current wording

Interest Expense. Total interest expense decreased $213,000, or 6.5%, to $3.1 million for the nine months ended September 30, 2025, compared to $3.3 million for the same period in 2024. Interest expense on deposits was $2.8 million during the nine months ended September 30, 2025, up $479,000, or 20.2%, compared to the same period in 2024. The average rate paid on interest-bearing deposits was 2.54% during the nine months ended September 30, 2025, up 34 bps compared to the same period in 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 by $692,000, or 76.2%, during the nine months ended September 30, 2025, compared to the same period in 2024, mainly due to the payoff of a BTFP advance during the fourth quarter of 2024.

Previous wording

Net Interest Income. Net interest income was $4.8 million for the six months ended June 30, 2025, up $292,000, or 6.4%, compared to the same period in 2024. Our interest rate spread was 3.02% and 2.55% for the six months ended June 30, 2025 and 2024, respectively. Our net interest margin was 3.93% and 3.42% for the six months ended June 30, 2025 and 2024, respectively. The increase in net interest margin and net interest income over the comparable periods was primarily the result of loan growth during the last nine months of 2024 and the payoff of our BTFP advance.

Current wording

Net Interest Income. Net interest income was $7.3 million for the nine months ended September 30, 2025, up $210,000, or 3.0%, compared to the same period in 2024. Our interest rate spread was 3.00% and 2.68% for the nine months ended September 30, 2025 and 2024, respectively. Our net interest margin was 3.92% and 3.56% for the nine months ended September 30, 2025 and 2024, respectively. The increase in net interest margin and net interest income over the comparable periods was primarily the result of loan growth during the last nine months of 2024 and the payoff of our BTFP advance.

Previous wording

Provision for Credit Losses. The total provision for credit losses on loans and unfunded commitments was zero for the six months ended June 30, 2025, compared to $194,000 for the same period in 2024. In 2024, the provision for credit losses was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated residential loans.

Current wording

Provision for Credit Losses. The Company recorded a reversal of provision for credit losses of $36,000 for the nine months ended September 30, 2025, compared to provision for credit losses expense of $531,000 for the same period in 2024. The reversal was largely due to a reduction in expected credit losses on individually evaluated loans and a decline in total loans. In 2024, the provision for credit losses was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated residential loans.

Previous wording

Non-interest Income*.*Non-interest income for the six months ended June 30, 2025 totaled $897,000, up $5.7 million compared to the same period in 2024. Non-interest income for the six months ended June 30, 2025 included insurance proceeds of $216,000 for fire and flood damages related to foreclosed properties. During the 2024 period, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million.

Current wording

Non-interest Income*.*Non-interest income for the nine months ended September 30, 2025 totaled $1.2 million, up $5.4 million compared to the same period in 2024. Non-interest income for the nine months ended September 30, 2025 included insurance proceeds of $216,000 for fire and flood damages related to foreclosed properties. During the 2024 period, 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 CDFI Fund.

Previous wording

Non-interest Expense. Non-interest expense totaled $4.4 million for the six months ended June 30, 2025, down $483,000, or 9.9%, compared to the same period in 2024. Non-interest expense for the six months ended June 30, 2024 includes $539,000 of data conversion and other associated expenses related to the Company’s upgrade to a new core processing system, which occurred during the first three months of 2024.

Current wording

Non-interest Expense. Non-interest expense totaled $6.6 million for the nine months ended September 30, 2025, down $541,000, or 7.6%, compared to the same period in 2024. Non-interest expense for the nine months ended September 30, 2024 includes $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 three months of 2024.

Previous wording

Data processing and communication expense totaled $358,000 for the six months ended June 30, 2025, down $574,000, or 61.6%, compared to the same period in 2024. Data processing and communication expense for the 2024 period included $517,000 of data conversion and other associated expenses due to the Company’s upgrade to a new core processing system.

Current wording

Data processing and communication expense totaled $537,000 for the nine months ended September 30, 2025, down $633,000, or 54.1%, compared to the same period in 2024. Data processing and communication expense for the 2024 period 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.

Previous wording

ATM and debit card expense totaled $51,000 for the six months ended June 30, 2025, down $49,000, or 49.0%, compared to the same period in 2024 largely due to reductions in processing costs following the Company’s upgrade to a new core processing system.

Current wording

ATM and debit card expense totaled $75,000 for the nine months ended September 30, 2025, down $49,000, or 39.5%, compared to the same period in 2024 largely due to reductions in processing costs following the Company’s upgrade to a new core processing system.

Previous wording

Foreclosed assets expense totaled $107,000 for the six months ended June 30, 2025, up $73,000 compared to the same period in 2024. Net write-downs and losses on the sale of foreclosed assets totaled $102,000 for the six months ended June 30, 2025, compared to $18,000 for the same period in 2024.

Current wording

Foreclosed assets expense totaled $114,000 for the nine months ended September 30, 2025, up $47,000, or 70.1%, compared to the same period in 2024. Net write-downs and losses on the sale of foreclosed assets totaled $106,000 for the nine months ended September 30, 2025, compared to $57,000 for the same period in 2024.

Previous wording

Income Tax Expense. The Company reported income tax expense of $247,000 for the six months ended June 30, 2025, compared to an income tax benefit of $1.1 million for the six months ended June 30, 2024. The change in income taxes over the comparable prior period was largely due to the loss on sales of investment securities in 2024.

Current wording

Income Tax Expense. The Company reported income tax expense of $357,000 for the nine months ended September 30, 2025, compared to an income tax benefit of $1.0 million for the nine months ended September 30, 2024. The change in income taxes over the comparable prior period was largely due to the loss on sales of investment securities in 2024.

Previous wording

At June 30, 2025, our borrowed funds consisted of FHLB advances with a total net carrying value of $9.6 million. The table below summarizes our unused and available liquidity sources as of June 30, 2025.

Current wording

At September 30, 2025, our borrowed funds consisted of FHLB advances with a total net carrying value of $14.7 million. The table below summarizes our unused and available liquidity sources as of September 30, 2025.

Previous wording

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 $25.0 million custodial letter of credit outstanding from the FHLB as of June 30, 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 June 30, 2025, the Company used $25.0 million of the FHLB custodial letter of credit to collateralize public fund deposits.

Current wording

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 September 30, 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 September 30, 2025, the Company used $20.0 million of the FHLB custodial letter of credit to collateralize public fund deposits.

Previous wording

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. The most significant uses and sources of cash flows during the six months ended June 30, 2025 included:

Current wording

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. The most significant uses and sources of cash flows during the nine months ended September 30, 2025 included: