Catalyst Bancorp, Inc.

Previous wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations at March 31, 2026 and for the three months ended March 31, 2026 and 2025 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, 2025.

Current wording

Management’s Discussion and Analysis of Financial Condition and Results of Operations at June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 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, 2025.

Previous wording

Founded in 1922, the Bank is a community-oriented savings bank serving the banking needs of customers in the Acadiana region of south-central Louisiana. We are headquartered in Opelousas, Louisiana and serve our customers through six full-service branches located in Carencro, Eunice, Lafayette, Opelousas, and Port Barre. Our primary business consists of attracting deposits from the general public and using those funds together with funds we borrow from the Federal Home Loan Bank (“FHLB”) of Dallas, Federal Reserve Bank of Atlanta, and other sources to originate loans to our customers and invest in securities.

Current wording

Founded in 1922, the Bank is a community-oriented savings bank serving the banking needs of customers in south Louisiana. Our primary business consists of attracting deposits from the general public and using those funds together with funds we borrow from other sources to originate loans to our customers and invest in securities.

Previous wording

The following is an overview of financial results for the three months ended March 31, 2026:

Current wording

The following tables present an overview of financial results for the three and six months ended June 30, 2026. It is only a summary and should be read in conjunction with the business and financial information regarding the Company included elsewhere herein, including the financial statements included in Item 8 of the Company’s Annual Report on Form 10-K.

Previous wording

Total Assets. Total assets increased by $5.6 million, or 2.0%, to $288.5 million at March 31, 2026 from $282.9 million at December 31, 2025. Over the same time period, total cash and cash equivalents were up $13.3 million, or 52.9%, primarily due to deposit growth, partially offset by a decline in borrowings.

Current wording

Total Assets. Total assets increased by $7.1 million, or 2.5%, to $290.0 million at June 30, 2026 from $282.9 million at December 31, 2025. Over the same period, total cash and cash equivalents were up $11.8 million, or 46.7%, primarily due to deposit growth, partially offset by a decline in borrowings.

Previous wording

During the three months ended March 31, 2026, a $5.9 million commercial and industrial loan relationship paid off after the sale of the borrower’s business.

Current wording

During the six months ended June 30, 2026, a $5.9 million commercial and industrial loan relationship paid off after the sale of the borrower’s business and $6.6 million of construction loans were converted to amortizing commercial real estate loans. The loans are included in the health service facilities category presented in the following table.

Previous wording

A $1.6 million construction loan, included in the health service facilities category in the table above, converted to a commercial real estate loan during the three months ended March 31, 2026. Multi-family residential construction loan growth was largely driven by new apartment homes in Lafayette Parish.

Current wording

Multi-family residential construction loan growth was largely driven by new apartment homes in Lafayette Parish.

Previous wording

Allowance for Credit Losses. At March 31, 2026, the allowance for credit losses on loans totaled $2.3 million, or 1.40% of total loans, compared to $2.4 million, or 1.39% of total loans at December 31, 2025. The allowance for credit losses on unfunded commitments totaled $176,000, down $35,000 from December 31, 2025. The Company recorded a $70,000 reversal of provision for credit losses and net loan charge-offs were $37,000 for the three months ended March 31, 2026. The reversal of provision for credit losses was primarily driven by declines in commercial and industrial and residential loan balances and commitments. Net loan charge-offs in 2026 included a $28,000 charge-off of a commercial line of credit.

Current wording

Allowance for Credit Losses. At June 30, 2026, the allowance for credit losses on loans totaled $2.2 million, or 1.34% of total loans, compared to $2.4 million, or 1.39% of total loans at December 31, 2025. The allowance for credit losses on unfunded commitments totaled $181,000, down $30,000 from December 31, 2025. The Company recorded a $174,000 reversal of provision for credit losses and net loan charge-offs were $38,000 for the six months ended June 30, 2026. The reversal of provision for credit losses was primarily driven by declines in outstanding loan balances and loan commitments, conversions of construction loans to amortizing real estate loans, and a decline in the amount of classified commercial real estate loans. Net loan charge-offs in 2026 included a $28,000 charge-off of a commercial line of credit.

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 three months ended March 31, 2026, a $304,000 commercial real estate loan was placed on non-accrual status and classified as substandard.

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 June 30, 2026, were current and performing.

Previous wording

Investment Securities*.* Total investment securities, available-for-sale and held-to-maturity, amounted to $63.1 million at March 31, 2026, down $2.3 million, or 3.4%, compared to $65.4 million at December 31, 2025. The Company did not purchase investment securities during the three months ended March 31, 2026. 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 4.45% at March 31, 2026.

Current wording

Investment Securities*.* Total investment securities, available-for-sale and held-to-maturity, amounted to $67.1 million at June 30, 2026, up $1.7 million, or 2.6%, compared to $65.4 million at December 31, 2025. The Company purchased $6.0 million of subordinated debt issued by bank holding companies during the six months ended June 30, 2026. The issuers are financially strong, publicly traded companies based in the southern United States. The weighted average yield of the securities purchased during 2026 was 6.3%. 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 4.41% at June 30, 2026.

Previous wording

Net unrealized losses on securities available-for-sale totaled $3.1 million at March 31, 2026 and December 31, 2025. 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.

Current wording

Net unrealized losses on securities available-for-sale totaled $3.2 million and $3.1 million at June 30, 2026 and December 31, 2025, respectively. 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

Total deposits averaged $198.2 million during the three months ended March 31, 2026, $177.1 million during the three months ended March 31, 2025, and $179.5 million during the year ended December 31, 2025. The ratio of the Company’s total loans to total deposits was 83.8% and 91.9% at March 31, 2026 and December 31, 2025, respectively.

Current wording

Total deposits averaged $198.5 million during the six months ended June 30, 2026, $178.3 million during the six months ended June 30, 2025, and $179.5 million during the year ended December 31, 2025. The ratio of the Company’s total loans to total deposits was 82.9% and 91.9% at June 30, 2026 and December 31, 2025, respectively. Growth in high-yield savings accounts has been a primary driver of deposit growth during 2026.

Previous wording

The increase in total deposits was driven by a mix of public and non-public deposits. Total public fund deposits were $29.8 million, or 15.3% of total deposits, at March 31, 2026, compared to $26.4 million, or 14.3% of total deposits, at December 31, 2025. Total public fund deposits averaged $35.6 million during the three months ended March 31, 2026, $30.7 million during the three months ended March 31, 2025, and $27.6 million during the year ended December 31, 2025. At March 31, 2026 and December 31, 2025, approximately 59% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits.

Current wording

Total public fund deposits were $27.4 million, or 14.0% of total deposits, at June 30, 2026, compared to $26.4 million, or 14.3% of total deposits, at December 31, 2025. Total public fund deposits averaged $32.9 million during the six months ended June 30, 2026, $29.0 million during the six months ended June 30, 2025, and $27.6 million during the year ended December 31, 2025. At June 30, 2026 and December 31, 2025, approximately 55% and 59%, respectively, of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits.

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 $55.3 million at March 31, 2026 and $50.1 million at December 31, 2025. Total uninsured non-public fund deposits were approximately $30.8 million and $28.8 million at March 31, 2026 and December 31, 2025, respectively. At March 31, 2026, the full amount of our public fund deposits in excess of the FDIC’s insurance limit were secured by either pledged investment securities of $48.8 million or $5.0 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 $55.1 million at June 30, 2026 and $50.1 million at December 31, 2025. Total uninsured non-public fund deposits were approximately $32.8 million and $28.8 million at June 30, 2026 and December 31, 2025, respectively. At June 30, 2026, the full amount of our public fund deposits in excess of the FDIC’s insurance limit were secured by either pledged investment securities of $41.5 million or $5.0 million of a custodial letter of credit granted by the Federal Home Loan Bank of Dallas.

Previous wording

Borrowings. Total borrowings at March 31, 2026 were $9.8 million, down $5.0 million, or 33.8%, from $14.7 million at December 31, 2025 due to pay-offs of short-term advances.

Current wording

Borrowings. Total borrowings at June 30, 2026 were $9.8 million, down $4.9 million, or 33.6%, from $14.7 million at December 31, 2025 due to pay-offs of short-term advances.

Previous wording

Shareholders’ Equity. Shareholders’ equity totaled $82.2 million, or 28.5% of total assets, at March 31, 2026, up $484,000, or 0.6%, from $81.7 million, or 28.9% of total assets, at December 31, 2025. During the three months ended March 31, 2026, shareholders’ equity increased by the Company’s net income of $558,000, which was partially offset by the Company’s repurchases of its common stock.

Current wording

Shareholders’ Equity. Shareholders’ equity totaled $82.5 million, or 28.5% of total assets, at June 30, 2026, up $805,000, or 1.0%, from $81.7 million, or 28.9% of total assets, at December 31, 2025. During the six months ended June 30, 2026, shareholders’ equity increased by the Company’s net income of $1.1 million, which was partially offset by the Company’s repurchases of its common stock.

Previous wording

During the fourth quarter of 2025, the Company announced our sixth share repurchase plan (the “November 2025 Repurchase Plan”). Under the November 2025 Repurchase Plan, the Company may purchase up to 205,000 shares, or approximately 5%, of the Company’s outstanding common stock. At March 31, 2026, 172,297 shares of the Company’s common stock were available for repurchase under the November 2025 Repurchase Plan. As of the date of this filing, we have resumed repurchases under the November 2025 Repurchase Plan.

Current wording

The Company repurchased 40,820 shares of its common stock at an average cost per share of $16.00 during the six months ended June 30, 2026. During the fourth quarter of 2025, the Company announced our sixth share repurchase plan (the “November 2025 Repurchase Plan”). Under the November 2025 Repurchase Plan, the Company may purchase up to 205,000 shares, or approximately 5%, of the Company’s outstanding common stock. At June 30, 2026, 148,091 shares of the Company’s common stock were available for repurchase under the November 2025 Repurchase Plan.

Previous wording

Since the announcement of our first share repurchase plan on January 26, 2023 and through May 12, 2026, the Company has repurchased a total of 1,238,104 shares of its common stock, or approximately 23% of the common shares originally issued, at an average cost per share of $12.13.

Current wording

Since the announcement of our first share repurchase plan on January 26, 2023 and through June 30, 2026, the Company has repurchased a total of 1,255,909 shares of its common stock, or approximately 24% of the common shares originally issued, at an average cost per share of $12.19.

Previous wording

Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. Taxable equivalent (“TE”) yields have been calculated using a marginal tax rate of 21%. All average balances are based on daily balances.

Current wording

Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following tables show for the periods indicated the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. Taxable equivalent (“TE”) yields have been calculated using a marginal tax rate of 21%. All average balances are based on daily balances.

Previous wording

General. For the three months ended March 31, 2026, the Company reported net income of $558,000, or $0.15 diluted EPS, compared to net income of $586,000, or $0.16 diluted EPS, for the three months ended March 31, 2025. The following table summarizes the changes in net income for the periods indicated.

Current wording

General. For the three months ended June 30, 2026, the Company reported net income of $524,000, or $0.14 diluted EPS, compared to net income of $521,000, or $0.14 diluted EPS, for the three months ended June 30, 2025. The following table summarizes the changes in net income for the periods indicated. Non-interest expense for the three months ended June 30, 2026 included Lakeside merger-related expenses of $87,000 (pre-tax).

Previous wording

The average yield on loans was 6.61% for the three months ended March 31, 2026, down seven basis points (“bps”) from 6.68% for the same period in 2025. Average loans were $168.5 million for the three months ended March 31, 2026, up $2.4 million, or 1.4%, compared to the same period in 2025.

Current wording

The average yield on loans was 6.58% for the three months ended June 30, 2026, down ten basis points (“bps”) from 6.68% for the same period in 2025. Average loans were $163.7 million for the three months ended June 30, 2026, down $4.0 million, or 2.4%, compared to the same period in 2025.

Previous wording

The increase in interest income on investment securities was due to increases in both the average balance and the average rate earned on our investment securities portfolio for the three months ended March 31, 2026 compared to the same period in 2025. The average balance of our investment securities portfolio, measured at amortized cost, was $67.5 million, up $20.6 million, or 43.8%, compared to the same period in 2025. The average rate earned on our investment securities portfolio also increased to 3.13% for the three months ended March 31, 2026, compared to 2.35% for the same period in 2025. These increases were primarily due to the impact of higher-yielding investment securities purchased during 2025.

Current wording

The increase in interest income on investment securities was due to increases in both the average balance and the average rate earned on our investment securities portfolio for the three months ended June 30, 2026 compared to the same period in 2025. The average balance of our investment securities portfolio, measured at amortized cost, was $69.7 million, up $21.4 million, or 44.4%, compared to the same period in 2025. The average rate earned on our investment securities portfolio also increased to 3.28% for the three months ended June 30, 2026, compared to 2.49% for the same period in 2025. These increases were primarily due to the impact of higher-yielding investment securities purchased during 2025.

Previous wording

Interest income on interest-earning cash and due from banks, included in other interest-earning assets in certain preceding tables, decreased mainly due to a decline in the average rate earned on interest-earning cash and other earning assets. The average rate earned on other interest-earning assets was 3.60% for the three months ended March 31, 2026, down 76 bps, compared to 4.36% for the same period in 2025.

Current wording

Interest income on interest-earning cash and due from banks, included in other interest-earning assets in certain preceding tables, decreased mainly due to a decline in the average rate earned on interest-earning cash and other earning assets. The average rate earned on other interest-earning assets was 3.67% for the three months ended June 30, 2026, down 86 bps, compared to 4.53% for the same period in 2025.

Previous wording

The average rate paid on interest-bearing deposits was 2.30% during the three months ended March 31, 2026, down 24 bps compared to 2.54% for the same period in 2025. The average balance of interest-bearing deposits was $165.2 million for the three months ended March 31, 2026, up $15.3 million, or 10.2%, compared to the same period in 2025, largely due to growth in high-yield savings account balances.

Current wording

The average rate paid on interest-bearing deposits was 2.26% during the three months ended June 30, 2026, down 23 bps compared to 2.49% for the same period in 2025. The average balance of interest-bearing deposits was $162.9 million for the three months ended June 30, 2026, up $13.7 million, or 9.2%, compared to the same period in 2025, largely due to growth in high-yield savings account balances.

Previous wording

Net Interest Income. The increase in net interest income and decline in net interest margin for the three months ended March 31, 2026 compared to the same period in 2025, as presented in the preceding tables, was largely the result of growth in investment securities and a decline in the average rate earned on loans and other interest-earning assets.

Current wording

Net Interest Income. The increase in net interest income and decline in net interest margin for the three months ended June 30, 2026 compared to the same period in 2025 was largely the result of growth in investment securities and a decline in the average rate earned on loans and other interest-earning assets.

Previous wording

Income Tax Expense*.*The effective tax rates for the three months ended March 31, 2026 and 2025 were 18.4% and 18.6%, respectively.

Current wording

Income Tax Expense*.*The effective tax rates for the three months ended June 30, 2026 and 2025 were 22.5% and 17.8%, respectively. The increase in income tax expense and the effective tax rate for the three months ended June 30, 2026 was mainly due to the tax impact of non-deductible merger-related expenses.

Previous wording

Provision for Credit Losses. The Company recorded a reversal of provision for credit losses of $70,000 for the three months ended March 31, 2026, compared to zero provision for the same period in 2025. The reversal of provision for credit losses was primarily driven by declines in commercial and industrial and residential loan balances and related commitments.

Current wording

Provision for Credit Losses. The Company recorded a reversal of provision for credit losses of $174,000 for the six months ended June 30, 2026, compared to zero provision for the same period in 2025. The reversal of expected credit losses was largely driven by declines in outstanding loan balances and loan commitments, conversions of construction loans to amortizing real estate loans, and a decline in the amount of classified commercial real estate loans.

Previous wording

Foreclosed assets expenses and losses during the three months ended March 31, 2025 were offset by $216,000 of insurance proceeds received for fire and flood damages related to foreclosed properties.

Current wording

Foreclosed assets expenses and losses during the six months ended June 30, 2025 were offset by $216,000 of insurance proceeds received for fire and flood damages related to foreclosed properties.

Previous wording

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. The details of these cash flow classifications are presented on the statement of cash flows included in Item 1 of this Form 10-Q. The most significant uses and sources of cash flows during the three months ended March 31, 2026 included:

Current wording

Our cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities, and financing activities. The details of these cash flow classifications are presented on the statement of cash flows included in Item 1 of this Form 10-Q. The most significant uses and sources of cash flows during the six months ended June 30, 2026 included: