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Catalyst Bancorp, Inc.

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Business Summary

Catalyst Bancorp, Inc. (the "Company") operates as a federally-chartered community-oriented savings bank, Catalyst Bank, headquartered in Opelousas, Louisiana, serving the Acadiana region of south-central Louisiana . The Bank, originally organized in 1922, converted from a mutual to a stock form of organization on October 12, 2021, at which time Catalyst Bancorp became its holding company . The Company's business strategy shifted in 2021 from a traditional thrift model focused on single-family residential mortgages to a full-service community bank model, emphasizing small- to mid-sized businesses and business professionals . This strategy aims to enhance profitability and growth prospects through increased commercial lending, organic growth via improved products and services, talent acquisition, and potential acquisitions .

The core business model involves attracting deposits from the general public and utilizing these funds, along with borrowings from sources like the Federal Home Loan Bank (FHLB) of Dallas or the Federal Reserve Bank of Atlanta, to originate loans and invest in securities . Revenue is primarily generated from interest earned on loans and investment securities, supplemented by loan origination fees and service charges on deposit accounts . Primary expenses include compensation and benefits, interest expense on deposits and borrowings, and other general operating expenses . The Company offers online banking services to its customers .

The loan portfolio, totaling $170.2 million or 60.2% of total assets at December 31, 2025, is diversified across several categories. Single-family residential mortgage loans constituted $80.1 million or 47.1% of the total loan portfolio, with an average outstanding balance of $75,000 per loan. Commercial real estate and multi-family residential loans amounted to $38.2 million or 22.4% of the portfolio, with commercial real estate loans specifically at $32.9 million (19.3% of the total loan portfolio) and multi-family residential loans at $5.3 million (3.1% of the total loan portfolio). Construction and land loans totaled $18.8 million or 11.0% of total loans, while commercial and industrial loans were $31.2 million or 18.3% of the total loan portfolio. Consumer loans represented $1.9 million or 1.2% of the total loan portfolio . The investment securities portfolio, comprising available-for-sale and held-to-maturity securities, totaled $65.4 million or 23.1% of total assets at December 31, 2025 .

For the year ended December 31, 2025, Catalyst Bancorp reported total assets of $282.9 million , an increase of $6.2 million or 2.3% from December 31, 2024 . Cash and cash equivalents were $25.2 million . Loans receivable, net of unearned income, stood at $170.2 million . The allowance for credit losses was $2.4 million . Total deposits were $185.3 million , and borrowings amounted to $14.7 million . Shareholders' equity totaled $81.7 million , representing 28.9% of total assets . The Company generated net interest income of $9.8 million , with a net interest margin of 3.92% . The provision for credit losses was $60,000 . Non-interest income was $1.4 million , while non-interest expense was $8.6 million . Net income for the period was $2.1 million , resulting in diluted EPS of $0.56 .

Year-over-year, total assets increased by $6.2 million or 2.3% . Loans increased by $3.1 million or 1.9% . Investment securities saw a significant increase of $23.2 million or 55.1% . Deposits decreased by $400,000 or 0.2% , while average deposits for 2025 increased by $7.4 million or 4.3% over 2024 . Borrowings increased by $5.2 million or 54.1% . Net interest income increased by $245,000 or 2.6% , and net interest margin expanded by 27 basis points to 3.92% . The provision for credit losses decreased significantly from $531,000 in 2024 to $60,000 in 2025 . Non-interest expense decreased by $573,000 or 6.3% , primarily due to reduced expenses related to a core processing system upgrade in 2024 . The Company reported a net income of $2.1 million in 2025, a substantial improvement from a net loss of $3.1 million in 2024 .

During 2025, the Company purchased $20.2 million of variable-rate and $6.3 million of fixed-rate securities . A multi-family construction loan with an outstanding balance of $4.4 million at December 31, 2024, was paid off, and $16.5 million of outstanding construction loans from December 31, 2024, were converted to amortizing real estate loans . The Company repurchased 203,239 shares of its common stock at an average cost of $12.72 per share during 2025 . The Company also downgraded a $3.3 million non-real estate, commercial relationship to substandard and a $2.5 million commercial real estate relationship to special mention due to declines in debt service coverage .

Business Outlook

The Company's business strategy is focused on prudent growth, specifically by growing the loan portfolio with greater diversification, enhancing banking products and services, recruiting and retaining top talent, expanding through possible acquisitions, rebranding the franchise, and managing credit risk to limit non-performing assets . The Company aims to increase its commercial loan portfolio to enhance profitability and growth prospects .

A key growth area is the organic expansion of the franchise through enhanced banking products and services. The Company converted to a new core processing system during the first quarter of 2024, which provides new and enhanced technology tools and online services . This is expected to attract new deposits and deepen relationships with existing customers. The Company also plans to continue enhancing its staff capacity through training and hiring new employees to facilitate growth .

Another growth vector involves expanding the franchise through potential acquisitions of other financial institutions. The Company intends to leverage its strong capital position for expansion by acquiring other financial institutions in its current market area and adjoining markets in south Louisiana .

Operationally, the Company expects to manage its cost structure. Non-interest expense for 2025 was lower than 2024, primarily due to expenses incurred in 2024 related to the core processing system upgrade . The transition to a new internet provider and a new contract for loan document management solution also contributed to data processing and communication expense savings in 2025 . The Company's management believes that strong asset quality is crucial for long-term financial success, and their strategy for credit risk management focuses on an experienced team, well-defined credit policies, appropriate loan underwriting, and active credit monitoring .

Regarding capital allocation, the Company has been actively repurchasing its common stock. Since January 26, 2023, through December 31, 2025, the Company repurchased a total of 1,215,089 shares of its common stock at an average cost per share of $12.06 . Under the November 2025 Repurchase Plan, 188,911 shares of common stock were available for repurchase at December 31, 2025 . The Company also made matching percentage contributions up to 4% of participants' plan salary to its 401(k) plan during 2025 and 2024 . Compensation expense related to the ESOP totaled $267,000 for 2025 .

The Company's net interest income model as of December 31, 2025, estimates that an immediate and sustained 100 basis point decrease in interest rates would result in a decrease of $163,000 or 1.6% in net interest income for the 12 months ending December 31, 2026 . Conversely, a 100 basis point increase in interest rates would lead to an increase of $75,000 or 0.7% in net interest income .

Risk Factors

The Company faces several material risks. General economic and competitive conditions, both nationally and in its market area, could negatively affect loan originations, deposit flows, asset quality, and real estate values . Changes in inflation and the interest rate environment could reduce interest margins or lower the fair values of financial instruments . Reliance on third-party vendors for key services, political and social unrest including acts of war or terrorism, and cyber threats, attacks, or events also pose risks . Legislation or changes in regulatory requirements or accounting policies and practices could adversely affect the business . The Company also faces risks related to the failure to fully realize anticipated benefits from any future acquisitions or inaccurate assumptions made in connection with them . The effectiveness of adjustable-rate one- to four-family residential real estate loans in compensating for changes in market interest rates may be limited during periods of rapidly rising interest rates due to rate caps . Commercial real estate and multi-family residential lending involve a greater degree of risk due to larger loans to individual borrowers and payments dependent on project or business operations, which can be affected by supply and demand conditions . Construction financing is generally considered to involve a higher degree of credit risk than long-term financing on improved, owner-occupied real estate . Consumer loans carry additional credit risk due to the type or absence of collateral . The Company's determination of its allowance for credit losses is subject to review by Federal bank regulators, who may require an increase or decrease in the allowance or provision for credit losses . The estimated amount of total uninsured deposits was approximately $50.1 million at December 31, 2025 . If a substantial portion of maturing time deposits is not retained, the Company may need to utilize secondary funding sources or raise interest rates on deposits, potentially increasing interest expense .

Management Priorities

Management's overall tone to shareholders emphasizes a strategic shift towards a relationship-oriented community bank model, targeting small- to mid-sized businesses and business professionals, while maintaining service to its traditional customer base. They highlight the importance of the mutual-to-stock conversion and initial public offering as key factors in becoming a more dynamic, profitable, and growing institution . Management's strategic priorities for the period ahead include growing the loan portfolio with greater diversification, expanding the franchise organically through enhanced banking products and services, recruiting and retaining top talent, expanding through possible acquisitions of other financial institutions, rebranding the franchise, and managing credit risk to limit non-performing assets . They explicitly state that in the event of an immediate and sustained 100 basis point decrease in interest rates, net interest income for the 12 months ending December 31, 2026, would be expected to decrease by $163,000 or 1.6% . Conversely, an immediate and sustained 100 basis point increase in interest rates would be expected to increase net interest income by $75,000 or 0.7% .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — BUSINESS OF CATALYST BANK General
  2. [2] Item 1, Business — BUSINESS OF CATALYST BANCORP, INC.
  3. [3] Item 7, MD&A — Overview
  4. [4] Item 7, MD&A — Business Strategy
  5. [5] Item 1, Business — BUSINESS OF CATALYST BANK General
  6. [6] Item 1, Business — BUSINESS OF CATALYST BANK General
  7. [7] Item 1, Business — BUSINESS OF CATALYST BANK General
  8. [8] Item 1, Business — BUSINESS OF CATALYST BANCORP, INC.
  9. [9] Item 1, Business — Lending Activities General
  10. [10] Item 1, Business — Lending Activities General
  11. [11] Item 1, Business — One- to Four-Family Residential Mortgage Lending
  12. [12] Item 1, Business — One- to Four-Family Residential Mortgage Lending
  13. [13] Item 1, Business — One- to Four-Family Residential Mortgage Lending
  14. [14] Item 1, Business — Commercial Real Estate Loans and Multi-Family Residential Loans
  15. [15] Item 1, Business — Commercial Real Estate Loans and Multi-Family Residential Loans
  16. [16] Item 1, Business — Commercial Real Estate Loans and Multi-Family Residential Loans
  17. [17] Item 1, Business — Commercial Real Estate Loans and Multi-Family Residential Loans
  18. [18] Item 1, Business — Commercial Real Estate Loans and Multi-Family Residential Loans
  19. [19] Item 1, Business — Commercial Real Estate Loans and Multi-Family Residential Loans
  20. [20] Item 1, Business — Construction and Land Loans
  21. [21] Item 1, Business — Construction and Land Loans
  22. [22] Item 1, Business — Commercial and Industrial Loans
  23. [23] Item 1, Business — Commercial and Industrial Loans
  24. [24] Item 1, Business — Consumer Lending Activities
  25. [25] Item 1, Business — Consumer Lending Activities
  26. [26] Item 1, Business — Consumer Lending Activities
  27. [27] Item 1, Business — Investment Securities
  28. [28] Item 1, Business — Investment Securities
  29. [29] Item 1, Business — Investment Securities
  30. [30] Item 7, MD&A — Overview
  31. [31] Item 7, MD&A — Overview
  32. [32] Item 7, MD&A — Overview
  33. [33] Item 7, MD&A — Overview
  34. [34] Item 7, MD&A — Selected Financial and Other Data
  35. [35] Item 7, MD&A — Selected Financial and Other Data
  36. [36] Item 7, MD&A — Selected Financial and Other Data
  37. [37] Item 7, MD&A — Selected Financial and Other Data
  38. [38] Item 7, MD&A — Selected Financial and Other Data
  39. [39] Item 7, MD&A — Selected Financial and Other Data
  40. [40] Item 7, MD&A — Selected Financial and Other Data
  41. [41] Item 7, MD&A — Selected Financial and Other Data
  42. [42] Item 7, MD&A — Overview
  43. [43] Item 7, MD&A — Overview
  44. [44] Item 7, MD&A — Overview
  45. [45] Item 7, MD&A — Selected Operating Data
  46. [46] Item 7, MD&A — Overview
  47. [47] Item 7, MD&A — Overview
  48. [48] Item 7, MD&A — Overview
  49. [49] Item 7, MD&A — Overview
  50. [50] Item 7, MD&A — Overview
  51. [51] Item 7, MD&A — Overview
  52. [52] Item 7, MD&A — Overview
  53. [53] Item 7, MD&A — Overview
  54. [54] Item 7, MD&A — Overview
  55. [55] Item 7, MD&A — Overview
  56. [56] Item 7, MD&A — Overview
  57. [57] Item 7, MD&A — Overview
  58. [58] Item 7, MD&A — Overview
  59. [59] Item 7, MD&A — Overview
  60. [60] Item 7, MD&A — Overview
  61. [61] Item 7, MD&A — Overview
  62. [62] Item 7, MD&A — Overview
  63. [63] Item 7, MD&A — Overview
  64. [64] Item 7, MD&A — Overview
  65. [65] Item 7, MD&A — Overview
  66. [66] Item 7, MD&A — Overview
  67. [67] Item 7, MD&A — Overview
  68. [68] Item 7, MD&A — Overview
  69. [69] Item 7, MD&A — Overview
  70. [70] Item 7, MD&A — Overview
  71. [71] Item 7, MD&A — Overview
  72. [72] Item 7, MD&A — Overview
  73. [73] Item 7, MD&A — Overview
  74. [74] Item 7, MD&A — Investment Securities
  75. [75] Item 7, MD&A — Investment Securities
  76. [76] Item 7, MD&A — Investment Securities
  77. [77] Item 7, MD&A — Loans
  78. [78] Item 7, MD&A — Loans
  79. [79] Item 7, MD&A — Loans
  80. [80] Item 7, MD&A — Shareholders’ Equity
  81. [81] Item 7, MD&A — Shareholders’ Equity
  82. [82] Item 7, MD&A — Shareholders’ Equity
  83. [83] Item 7, MD&A — Substandard Loans and Non-performing Assets
  84. [84] Item 7, MD&A — Substandard Loans and Non-performing Assets
  85. [85] Item 7, MD&A — Substandard Loans and Non-performing Assets
  86. [86] Item 7, MD&A — Business Strategy
  87. [87] Item 7, MD&A — Business Strategy
  88. [88] Item 7, MD&A — Business Strategy
  89. [89] Item 7, MD&A — Business Strategy
  90. [90] Item 7, MD&A — Business Strategy
  91. [91] Item 7, MD&A — Non-interest Expense
  92. [92] Item 7, MD&A — Non-interest Expense
  93. [93] Item 7, MD&A — Business Strategy
  94. [94] Item 7, MD&A — Shareholders’ Equity
  95. [95] Item 7, MD&A — Shareholders’ Equity
  96. [96] Item 7, MD&A — Shareholders’ Equity
  97. [97] Item 7, MD&A — Shareholders’ Equity
  98. [98] Item 12, Benefit Plans — 401(k) Plan
  99. [99] Item 12, Benefit Plans — 401(k) Plan
  100. [100] Item 12, Benefit Plans — Employee Stock Ownership Plan
  101. [101] Item 12, Benefit Plans — Employee Stock Ownership Plan
  102. [102] Item 7, MD&A — Net Interest Income Analysis
  103. [103] Item 7, MD&A — Net Interest Income Analysis
  104. [104] Item 7, MD&A — Net Interest Income Analysis
  105. [105] Item 7, MD&A — Net Interest Income Analysis
  106. [106] Item 7, MD&A — Net Interest Income Analysis
  107. [107] Item 7, MD&A — Net Interest Income Analysis
  108. [108] Part I, Forward-Looking Statements
  109. [109] Part I, Forward-Looking Statements
  110. [110] Part I, Forward-Looking Statements
  111. [111] Part I, Forward-Looking Statements
  112. [112] Part I, Forward-Looking Statements
  113. [113] Item 1, Business — One- to Four-Family Residential Mortgage Lending
  114. [114] Item 1, Business — Commercial Real Estate Loans and Multi-Family Residential Loans
  115. [115] Item 1, Business — Construction and Land Loans
  116. [116] Item 1, Business — Commercial and Industrial Loans
  117. [117] Item 1, Business — Asset Quality General
  118. [118] Item 7, MD&A — Deposits
  119. [119] Item 7, MD&A — Deposits
  120. [120] Item 7, MD&A — Liquidity and Capital Resources
  121. [121] Item 7, MD&A — Overview
  122. [122] Item 7, MD&A — Business Strategy
  123. [123] Item 7, MD&A — Net Interest Income Analysis
  124. [124] Item 7, MD&A — Net Interest Income Analysis
  125. [125] Item 7, MD&A — Net Interest Income Analysis
  126. [126] Item 7, MD&A — Net Interest Income Analysis

Analysis on 5/22/2026