Catalyst Bancorp, Inc.
For the period ended Dec 31, 2025. Filed Mar 31, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 31, 2026
CLST$17.50-2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-28.
0001558370-25-003964
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-31.
0001104659-26-037676
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 94 previous paragraphs and 93 current paragraphs.
46 unchanged; 27 reworded; 20 added; 21 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 59 previous and 65 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
Interest Income. The following table summarizes the changes in interest income for the periods indicated.
Current report
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.
Current report
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.
Current report
Interest Expense. The following table summarizes the changes in interest expense for the periods indicated.
Current report
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.
Current report
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.
Current report
Non-interest Income (Loss). The following table summarizes the changes in non-interest income (loss) for the periods indicated.
Current report
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.
Current report
Non-interest Expense. The following table summarizes the changes in non-interest expense for the periods indicated.
Current report
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.
Current report
Occupancy and equipment expense increased in 2025 compared to 2024 mainly due to new ATMs, computers, and other technology upgrades.
Current report
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.
Current report
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.
Removed paragraphs (21)
Previous report
**Investment Securities.**Available-for-sale securities consist of investment securities not classified as trading securities or held-to-maturity securities. Available-for-sale securities are reported at fair value and unrealized holding gains and losses, net of tax, on available-for-sale securities are included in other comprehensive income. The fair market values of investment securities are obtained from a third-party service provider, whose prices are based on a combination of observed market prices for identical or similar instruments and various matrix pricing programs. The fair market values of investment securities are classified within Level 2 of the fair value hierarchy. At December 31, 2024 and 2023, net unrealized losses on available-for-sale securities totaled $4.5 million and $9.2 million, respectively. Unrealized losses on our available-for-sale securities relate principally to the increases in market rates of similar types of securities. During the year ended December 31, 2024, the Company sold 50 available- for-sale investment securities for a total loss of $5.5 million, which is reported in the consolidated statements of income. Proceeds from the investment sales totaled $42.6 million, inclusive of accrued interest.
Previous report
The adoption of ASC 326 amended the guidance applicable to measuring and recognizing losses on available-for-sale securities. Under ASC 326, expected credit related losses for available-for-sale debt securities are recorded through an allowance for credit losses, while non-credit related losses will continue to be recognized through other comprehensive income as unrealized holding gains and losses, net of tax.
Previous report
For reporting periods on or after January 1, 2023 and the adoption of ASC 326, management evaluates available-for-sale securities in unrealized loss positions to determine if the decline in the fair value of each security below its amortized cost basis is due to credit-related factors or noncredit-related factors. Consideration is given to the extent to which that fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period sufficient to allow for any anticipated recovery in fair value. Similarly, ASC 326 requires held-to-maturity debt securities to be presented at an amount net of a current estimate of expected credit losses, though the held-to-maturity debt securities are still reported at amortized cost under the new guidance.
Previous report
**Income Taxes.Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. **During the three months ended March 31, 2024, the measurement of the Company’s deferred income tax assets and liabilities was identified as a critical accounting estimate. Deferred income tax assets and liabilities are determined based on the tax effects of the temporary differences between the book and tax bases of the various assets and liabilities and gives current recognition to changes in tax rates and laws. At December 31, 2024, the Company’s net deferred tax asset totaled $1.5 million and is included in other assets on the statement of financial condition. The most significant portions of the net deferred tax asset are the deferred tax benefits related to the Company’s net operating loss for 2024 and unrealized losses on available-for-sale securities.
Previous report
According to Subtopic 740-10 of the Accounting Standards Codification (“ASC 740-10”), the measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized. At December 31, 2024, the Company has not recorded a valuation allowance for its deferred tax assets. Realizing our deferred tax assets principally depends upon our achieving projected future taxable income. We may change our judgments regarding future profitability due to future market conditions and other factors. We may adjust our deferred tax asset balances if our judgments change, which may impact total income tax expense in future periods.
Previous report
Revision of Prior Period Financial Statements
Previous report
As discussed in detail in Note 1 of the notes to our consolidated financial statements included in Item 8 of this Form 10-K, during June of 2024, the Bank became aware of interest owed by it to a deposit customer that was not properly accrued or paid by the Bank during the period beginning August 1, 2022 and ending March 31, 2024. Accordingly, management revised the prior period financial statements, related disclosures and supplemental information presented in this filing to correct the misstatement. The Company will also revise previously reported financial information for these immaterial errors in its future filings, as applicable. The information in this Item 7 and throughout this Annual Report on Form 10-K has been adjusted to reflect these revisions as described in Note 1 to the Company’s financial statements of this Annual Report on Form 10-K.
Previous report
During 2024, loan growth was primarily driven by commercial construction and non-real estate commercial loan growth. This was largely the result of our focused business strategy. Since 2021, we have increased our commercial lending activities to grow the loan portfolio with greater diversification.
Previous report
Borrowings.* *Total borrowings at December 31, 2024 were $9.6 million, down $9.8 million, or 50.7%, from December 31, 2023. During the fourth quarter of 2023, the Bank began borrowing from the Federal Reserve Bank of Atlanta through its Bank Term Funding Program (“BTFP”), and at December 31, 2023, the Bank had one $10.0 million BTFP loan outstanding. The BTFP debt was repaid during 2024 and the Bank had no outstanding borrowings under the program at December 31, 2024.
Previous report
General. For the year ended December 31, 2024, the Company reported a net loss of $3.1 million, compared to net income of $526,000 for the year ended December 31, 2023. Net interest income for 2024 was up $1.8 million, or 23.9%, compared to 2023. The provision for credit losses totaled $531,000 in 2024, compared to $128,000 in 2023. Non-interest income for 2024 was down $5.4 million compared to 2023, primarily due to losses on the sales of investment securities. Non-interest expense for 2024 was up $578,000, or 6.7%, compared to 2023, primarily due to expenses associated with the Company’s upgrade to a new core processing system.
Previous report
Interest Income. Total interest income increased $4.2 million, or 43.5%, to $13.9 million for the year ended December 31, 2024, compared to 2023. Interest income on loans and other interest-earning assets were up by $2.9 million and $1.9 million, respectively, for the year ended December 31, 2024, compared to 2023. These increases were partially offset by a decrease in interest income on investment securities of $580,000 over the same comparable periods.
Previous report
The average loan yield was 6.50% for the year ended December 31, 2024, up from 5.33% for 2023. Average loans were $155.9 million for the year ended December 31, 2024, up $20.2 million, or 14.9%, compared to 2023. At December 31, 2024, approximately 50% of our total loans have adjustable rates and approximately 50% of total loans are scheduled to re-price or mature during the next 12 months.
Previous report
The increase in interest income on other interest-earning assets, consisting primarily of interest-earning cash and deposits at other financial institutions, was mainly due to the re-investment of proceeds from investment securities sales discussed previously, as well as the impact of higher average short-term interest rates during 2024 compared to 2023.
Previous report
Interest Expense. Total interest expense increased $2.4 million, or 120.7%, to $4.3 million for the year ended December 31, 2024, compared to $2.0 million for 2023. Interest expense on deposits was $3.2 million during 2024, up $1.6 million, or 97.3%, from $1.6 million for 2023. The average rate paid on interest-bearing deposits was 2.25% during 2024, up 105 basis points from 1.20% during 2023. Interest expense on borrowings increased by $769,000 during the year ended December 31, 2024, compared to 2023 largely due to interest expense on BTFP advances.
Previous report
Net Interest Income. Net interest income was $9.5 million for the year ended December 31, 2024, up $1.8 million, or 23.9%, compared to 2023. Our interest rate spread was 2.76% and 2.50% for the years ended December 31, 2024 and 2023, respectively. Our net interest margin was 3.65% and 3.06% for the years ended December 31, 2024 and 2023, respectively. The increase in net interest margin and net interest income over the comparable periods was primarily the result of an increase in the yield and a change in the mix of our interest-earning assets, partially offset by the impact of an increase in the average volume and average rate paid on interest-bearing liabilities.
Previous report
Non-interest Income*.* Non-interest income for the year ended December 31, 2024 was down $5.4 million from $1.6 million for 2023. Non-interest income for 2024 includes the $5.5 million loss on the sales of investment securities discussed previously. During 2023, the Company reported a loss on the sale of investment securities of $92,000.
Previous report
During 2024 and 2023, the Company recognized income of $280,000 and $437,000, respectively, due to the Bank Enterprise Award (“BEA”) Program grants received from the Community Financial Institution (“CDFI”) Fund. The BEA Program grants awards to depository institutions that have successfully increased their investments in economically distressed communities through certain qualified activities, including investments in CDFIs and providing loans, investments and financial services to businesses and residents located in distressed communities.
Previous report
Salaries and employee benefits expense totaled $4.8 million for the year ended December 31, 2024, up $159,000, or 3.4%, compared to 2023. The increase was primarily due to an increase in bonus expense and annual raises during 2024. Stock compensation expense also contributed to the increase in salaries and employee benefits expense due to additional grants under the 2022 stock compensation plans.
Previous report
Professional fees totaled $469,00 for the year ended December 31, 2024, down $17,000, or 3.5%, from 2023. Professional fees associated with obtaining our 2024 and 2023 BEA grants totaled $42,000 and $66,000, respectively.
Previous report
ATM and debit card expense totaled $141,000 for the year ended December 31, 2024, down $109,000, or 43.6%, compared to 2023. The decline is largely the result of reductions in debit card processing costs after the Company’s upgrade to a new core processing system during 2024.
Previous report
Other non-interest expense totaled $533,000 for the year ended December 31, 2024, up $172,000, or 47.6%, compared to 2023 primarily due to increased loan collection expenses, service charges from correspondent banks and fraud losses during the 2024 period.
Reworded paragraphs (27)
Previous wording
The following accounting policies comprise those that management believes are the most critical to aid in fully understanding and evaluating our reported financial results. These policies require 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.
Current wording
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.
Previous wording
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. On January 1, 2023, the Company adopted the guidance under ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. The main provisions of the ASU have been codified by the FASB under ASC 326. The amendments introduced an impairment model that is based on current expected credit losses, rather than incurred losses, to estimate credit losses on loans. For reporting periods beginning on or after January 1, 2023, the 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.
Current wording
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.
Previous wording
The allowance for credit losses includes the allowance for loan losses 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 loan losses totaled $2.5 million, or 1.51% of total loans, at December 31, 2024 and $2.1 million, or 1.47% of total loans, at December 31, 2023. The increase in the allowance for loan losses from December 31, 2023 largely reflects the impact of loan growth in 2024.
Current wording
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.
Previous wording
Total Assets. Total assets increased $5.8 million, or 2.1%, to $276.7 million at December 31, 2024 from $270.9 million at December 31, 2023. The increase was largely due to an increase in cash from deposit growth, which was partially offset by the repayment of outstanding borrowings under the BTFP and repurchases of common stock.
Current wording
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.
Previous wording
Allowance for Credit Losses. At December 31, 2024, the allowance for loan losses totaled $2.5 million, or 1.51% of total loans, compared to 1.47% of total loans at December 31, 2023. The allowance for credit losses on unfunded commitments totaled $121,000, down $136,000 from December 31, 2023. The total provision for credit losses on loans and unfunded commitments was $531,000 for 2024 and was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated loans.
Current wording
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.
Previous wording
The following table shows changes in our allowance for loan losses and other related data for the periods indicated.
Current wording
The following table shows changes in our allowance for credit losses and other related data for the periods indicated.
Previous wording
Non-performing Assets. The following table shows the amounts of our non-performing assets, which include non-accruing loans, accruing loans 90 days or more past due and foreclosed assets at the dates indicated.
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 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.
Previous wording
The following table shows how our allowance for loan losses is allocated by type of loan at each of the dates indicated.
Current wording
The following table shows how our allowance for credit losses is allocated by type of loan at each of the dates indicated.
Previous wording
Investment Securities*.*Total investment securities, available-for-sale and held-to-maturity, amounted to $42.2 million at December 31, 2024, down $41.8 million, or 49.8%, compared to $84.0 million in investment securities at December 31, 2023. Net unrealized losses on securities available-for-sale totaled $4.5 million at December 31, 2024, compared to $9.2 million at December 31, 2023. 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 $3.1 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.
Previous wording
The following table sets forth the composition of our securities portfolio as of the dates indicated.
Current wording
The following table sets forth the composition of our investment securities portfolio as of the dates indicated.
Previous wording
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 divided by the average amortized cost of the applicable securities.
Current wording
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.
Previous wording
The ratio of the Company’s total loans to deposits was 90.0% and 87.5% as of December 31, 2024 and 2023, respectively.
Current wording
The ratio of the Company’s total loans to deposits was 91.9% and 90.0% as of December 31, 2025 and 2024, respectively.
Previous wording
The increase in interest-bearing demand deposits was largely due to a seasonal increase in public funds. Total public fund deposits totaled $35.6 million, or 19.2% of total deposits, at December 31, 2024, compared to $23.3 million, or 14.1% of total deposits, at December 31, 2023. At December 31, 2024, approximately 83% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits from municipalities within our market, compared to 78% at December 31, 2023. The increase in savings deposits was largely driven by rate specials offered to depositors during 2024, while the increase in certificates of deposit was primarily due to the acquisition of brokered funding during the fourth quarter of 2024.
Current wording
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.
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 $53.7 million at December 31, 2024 and $44.6 million at December 31, 2023. Total uninsured non-public funds deposits were approximately $22.5 million and $26.3 million at December 31, 2024 and 2023, respectively. At December 31, 2024, the full amount of our public fund deposits in excess of the FDIC’s insurance limit were secured by either pledged investment securities of $15.1 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 $50.1 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.
Previous wording
Borrowings outstanding at December 31, 2024 consisted of FHLB advances totaling $9.6 million, compared to $9.4 million at December 31, 2023. The change in the carrying value of our FHLB advances reflects the amortization of deferred prepayment penalties on $10.0 million in advances restructured in December of 2020. Deferred prepayment penalties on our FHLB advances totaled $442,000 and $622,000 at December 31, 2024 and 2023, respectively.
Current wording
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.
Previous wording
Shareholders’ Equity. Shareholders’ equity totaled $80.2 million, or 29.0% of total assets, at December 31, 2024, down $4.4 million, or 5.2%, from $84.6 million, or 31.2% of total assets, at December 31, 2023. During 2024, shareholders’ equity decreased by $5.8 million due to the Company’s repurchases of its common stock. The Company’s net loss of $3.1 million for 2024 was offset by other comprehensive income of $3.7 million, which was largely the result of the reclassification adjustment for realized losses on available-for-sale securities sold during the first quarter of 2024.
Current wording
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.
Previous wording
During the year ended December 31, 2024, the Company repurchased 483,176 shares of its common stock at an average cost of $11.91 per share. Of those shares, 228,326 shares were repurchased under the Company’s November 2023 Repurchase Plan and 227,000 shares were repurchased under the May 2024 Repurchase Plan. The remaining 27,850 shares were repurchased pursuant to the Company’s fifth repurchase plan announced in November 2024 (the “November 2024 Repurchase Plan”). Under the November 2024 Repurchase Plan, 187,150 shares of the Company’s common stock were available for repurchase at December 31, 2024.
Current wording
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.
Previous wording
Since the announcement of our first share repurchase plan on January 26, 2023 and through December 31, 2024, the Company has repurchased a total of 1,011,850 shares of its common stock, or approximately 19% of the common shares originally issued, at an average cost per share of $11.93. At December 31, 2024, the Company had common shares outstanding of 4,278,150.
Current wording
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.
Previous wording
The decrease in interest income on investment securities was primarily due to the decrease in the average balance of total investment securities due to the sales executed during the three months ended March 31, 2024. The average balance of total investment securities for 2024 was down $46.1 million, or 45.9%, compared to 2023. The average rate earned on our investment securities portfolio was 1.97% for the year ended December 31, 2024, up 31 basis points compared to 1.66% for 2023 primarily due to investment securities purchased during 2024.
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 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.
Previous wording
Provision for Credit Losses. The total provision for credit losses on loans and unfunded commitments was $531,000 for the year ended December 31, 2024, compared to $128,000 in 2023. 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 loans.
Current wording
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.
Previous wording
Non-interest Expense. Non-interest expense totaled $9.2 million for the year ended December 31, 2024, up $578,000, or 6.7%, compared to 2023. 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 three months of 2024.
Current wording
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.
Previous wording
Data processing and communication expense totaled $1.3 million for the year ended December 31, 2024, up $438,000, or 48.1%, compared to 2023. Data processing and communication expense for 2024 included $509,000 of data conversion and other associated expenses associated with the Company’s upgrade to a new core processing system.
Current wording
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.
Previous wording
Income Tax Expense. The Company reported an income tax benefit of $894,000 for the year ended December 31, 2024, compared to income tax expense of $61,000 for the year ended December 31, 2023. The change in income taxes over the comparable periods was largely due to the loss on sales of investment securities in 2024.
Current wording
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.
Previous wording
The above table indicates that as of December 31, 2024, 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, 2025 would be expected to decrease by $200,000 or 1.9%. During the first quarter of 2024, the Company executed a strategy involving the sale of a substantial portion of its available-for-sale investment securities. The Company sold 50 available-for-sale investment securities for a pre-tax loss of $5.5 million and collected proceeds from the sales of $42.6 million. The Company deployed the net sales proceeds into a mix of cash and higher-yielding earning assets to improve net interest income and our exposure to interest rate risk.
Current wording
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%.
Previous wording
At December 31, 2024, our borrowed funds consisted of FHLB advances with a net carrying value of $9.6 million. The table below summarizes our unused and available liquidity sources as of December 31, 2024.
Current wording
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.
Previous wording
The Bank’s available borrowing capacity with the FHLB is secured though a blanket floating lien on real estate loans. For more detail on loans pledged to the FHLB, refer to Note 4 of the financial statements included in Item 8 of this Form 10-K. The Company also has a $25.0 million custodial letter of credit outstanding from the FHLB as of December 31, 2024, which is included in the calculation of our available capacity with the FHLB. 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, 2024, 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 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.
Previous wording
The following table summarizes our outstanding 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, 2024.
Current wording
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.