10-Q - CLST - Equibles

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ** March 31, 2024**

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

Commission file number: 001-40893

CATALYST BANCORP, INC.

(Exact name of registrant as specified in its charter)

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

235 N. Court Street , Opelousas , Louisiana **** 70570

(Address of principal executive offices; Zip Code)

( 337 ) 948-3033

(Registrant’s telephone number, including area code)

None

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

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

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

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

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

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


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

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

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

There were 4,533,000 shares of Registrant’s common stock, par value of $0.01 per share, issued and outstanding as of May 8, 2024.

Table of Contents CATALYST BANCORP, INC.

FORM 10-Q

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Financial Condition	2

	Consolidated Statements of Income	3

	Consolidated Statements of Comprehensive Income	4

	Consolidated Statements of Changes in Shareholders' Equity	5

	Consolidated Statements of Cash Flows	6

	Notes to Unaudited Consolidated Financial Statements	7

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

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43

Item 4.	Controls and Procedures	43

PART II	OTHER INFORMATION	44

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3.	Defaults Upon Senior Securities	44

Item 4.	Mine Safety Disclosures	44

Item 5	Other Information	44

Item 6.	Exhibits	45

SIGNATURES		46

Table of Contents PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


	****	(Unaudited)
		March 31,		December 31,
(Dollars in thousands)		2024		2023
ASSETS
Non-interest-bearing cash		$	3,118	$	3,654
Interest-bearing cash and due from banks			72,893		15,357
Total cash and cash equivalents			76,011		19,011
Investment securities:
Securities available-for-sale, at fair value			25,534		70,540
Securities held-to-maturity (fair values of $11,127 and $11,227, respectively)			13,457		13,461
Loans receivable, net of unearned income			143,491		144,920
Allowance for loan losses			(2,068)		(2,124)
Loans receivable, net			141,423		142,796
Accrued interest receivable			733		906
Foreclosed assets			237		60
Premises and equipment, net			5,995		6,072
Stock in correspondent banks, at cost			1,898		1,878
Bank-owned life insurance			14,139		14,026
Other assets			2,622		2,182
TOTAL ASSETS		$	282,049	$	270,932

LIABILITIES
Deposits
Non-interest-bearing		$	28,836	$	28,183
Interest-bearing			140,801		137,439
Total deposits			169,637		165,622
Borrowings			29,423		19,378
Other liabilities			1,628		1,277
TOTAL LIABILITIES			200,688		186,277

SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value - 5,000,000 shares authorized; none issued			-		-
Common stock, $0.01 par value; 30,000,000 shares authorized; 4,558,329 and 4,761,326 issued and outstanding at March 31, 2024 and December 31, 2023, respectively			46		48
Additional paid-in capital			42,711		45,020
Unallocated common stock held by benefit plans			(6,169)		(6,221)
Retained earnings			48,368		53,045
Accumulated other comprehensive income (loss)			(3,595)		(7,237)
TOTAL SHAREHOLDERS' EQUITY			81,361		84,655
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	282,049	$	270,932

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

Table of Contents CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended March 31,
(Dollars in thousands)	2024		2023
INTEREST INCOME
Loans receivable, including fees	$	2,214	$	1,629
Investment securities		325		427
Other		616		211
Total interest income		3,155		2,267
INTEREST EXPENSE
Deposits		754		233
Borrowings		293		68
Total interest expense		1,047		301
Net interest income		2,108		1,966
Provision for credit losses		95		-
Net interest income after provision for credit losses		2,013		1,966
NON-INTEREST INCOME
Service charges on deposit accounts		197		183
Bank-owned life insurance		113		97
Gain (loss) on sales of investment securities		(5,507)		-
Gain (loss) on disposals and sales of fixed assets		11		-
Other		23		14
Total non-interest income (loss)		(5,163)		294
NON-INTEREST EXPENSE
Salaries and employee benefits		1,260		1,203
Occupancy and equipment		196		213
Data processing and communication		794		227
Professional fees		107		129
Directors’ fees		115		115
ATM and debit card		69		58
Foreclosed assets, net		8		2
Advertising and marketing		38		30
Franchise and shares tax		16		27
Regulatory fees and assessments		23		24
Insurance		26		29
Printing, supplies and postage		33		31
Other		106		97
Total non-interest expense		2,791		2,185
Income (loss) before income tax expense (benefit)		(5,941)		75
Income tax expense (benefit)		(1,264)		2
NET INCOME (LOSS)	$	(4,677)	$	73

Earnings (loss) per share - basic	$	(1.14)	$	0.02
Earnings (loss) per share - diluted		(1.14)		0.02

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

Table of Contents CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(Dollars in thousands)	2024		****	2023
Net income (loss)	$	(4,677)		$	73
Net change in unrealized gains (losses) on available-for-sale securities		(897)			1,362
Reclassification adjustment for losses included in net income		5,507			-
Income tax effect		(968)			(286)
Total other comprehensive income		3,642			1,076
Total comprehensive income (loss)	$	(1,035)		$	1,149

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

Table of Contents CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(Dollars in thousands)	Common Stock		Additional Paid-in Capital		Unallocated Common Stock Held by Benefit Plans		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
BALANCE, DECEMBER 31, 2022	$	53	$	51,062	$	(6,307)	$	52,778	$	(9,074)	$	88,512
Impact of adoption of ASC 326		-		-		-		(335)		-		(335)
Net income		-		-		-		73		-		73
Other comprehensive income		-		-		-		-		1,076		1,076
Stock purchased to fund the 2022 Recognition and Retention Plan		-		-		(410)		-		-		(410)
ESOP shares released for allocation		-		14		53		-		-		67
Stock compensation expense		-		141		-		-		-		141
Repurchase of common stock		(2)		(2,958)		-		-		-		(2,960)
BALANCE, MARCH 31, 2023	$	51	$	48,259	$	(6,664)	$	52,516	$	(7,998)	$	86,164

BALANCE, DECEMBER 31, 2023	$	48	$	45,020	$	(6,221)	$	53,045	$	(7,237)	$	84,655
Net income (loss)		-		-		-		(4,677)		-		(4,677)
Other comprehensive income		-		-		-		-		3,642		3,642
ESOP shares released for allocation		-		10		52		-		-		62
Stock compensation expense		-		139		-		-		-		139
Repurchase of common stock		(2)		(2,458)		-		-		-		(2,460)
BALANCE, MARCH 31, 2024	$	46	$	42,711	$	(6,169)	$	48,368	$	(3,595)	$	81,361

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

Table of Contents CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(Dollars in thousands)	2024		****	2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(4,677)		$	73
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Investment securities amortization, net		56			77
Federal Home Loan Bank stock dividends		(21)			(14)
Amortization of prepayment penalties on debt restructuring		45			45
Provision for credit losses		95			-
Increase in cash surrender value of bank-owned life insurance		(113)			(97)
Loss on sales of investment securities		5,507			-
Gain on disposals and sales of premises and equipment		(11)			-
Stock-based compensation		201			208
Depreciation of premises and equipment		101			101
Deferred income tax expense (benefit)		(1,264)			(58)
(Increase) decrease in other assets		29			(424)
Increase (decrease) in other liabilities		299			(27)
Net cash provided by (used in) operating activities		247			(116)
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in available-for-sale securities:
Proceeds from maturities, calls, and paydowns		1,533			1,953
Proceeds from sales		42,525			-
Net decrease in loans		1,153			970
Purchases of premises and equipment		(24)			-
Proceeds from sale of premises and equipment		11			-
Net cash provided by investing activities		45,198			2,923
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		4,015			14,618
Net advances from the Federal Reserve Bank of Atlanta		10,000			-
Purchase of stock to fund the 2022 Recognition and Retention Plan		-			(410)
Repurchase of common stock		(2,460)			(2,960)
Net cash provided by financing activities		11,555			11,248
NET CHANGE IN CASH AND CASH EQUIVALENTS		57,000			14,055
CASH AND CASH EQUIVALENTS, beginning of period		19,011			13,472
CASH AND CASH EQUIVALENTS, end of period	$	76,011		$	27,527

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
Acquisition of real estate in settlement of loans	$	177		$	-

SUPPLEMENTAL SCHEDULE OF INTEREST AND TAXES PAID
Cash paid for interest	$	660		$	221
Cash paid for income taxes		90			-

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

Table of Contents

CATALYST BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. BASIS OF PRESENTATION

Catalyst Bancorp, Inc. (“Catalyst Bancorp” or the “Company”) is the holding company for Catalyst Bank (the “Bank”), formerly known as St. Landry Homestead Federal Savings Bank. The Bank has been in operation in the Acadiana region of south-central Louisiana since 1922 and offers commercial and retail banking products through six full-service locations.

The Company was incorporated by the Bank in February 2021 as part of the conversion of the Bank from the mutual to the stock form of organization (the “Conversion”). The Conversion was completed on October 12, 2021, at which time the Company acquired all of the issued and outstanding shares of common stock of the Bank and became the holding company for the Bank. Shares of the Company’s common stock were issued and sold in an offering to certain depositors of the Bank and others. The Company was not engaged in operations and had not issued any shares of stock prior to the completion of the Conversion.

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

The accompanying unaudited consolidated financial statements of the Company were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three months ended March 31, 2024 and 2023 are not necessarily indicative of the results which may be expected for the entire fiscal year. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2023.

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

Table of Contents Critical Accounting Policies and Estimates

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could reflect materially different results under different assumptions and conditions. Methodologies the Company uses when applying critical accounting policies and developing critical estimates are included in its Annual Report on Form 10-K for the year ended December 31, 2023. Our accounting policies for allowance for credit losses, investment securities, and income taxes comprise those that management believes involve the most critical estimates and aid in fully understanding and evaluating our reported financial results.

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 March 31, 2024, the Company’s net deferred tax asset totaled $1.8 million and is included in other assets on the statement of financial condition. 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 March 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.

There were no other material changes from the significant accounting policies or critical accounting estimates previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. In preparing the financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s financial condition, results of operations, comprehensive income, changes in equity and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Updates Issued, but Not Adopted

ASU No. 2023-09. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU add specific requirements for income tax disclosures to improve transparency and decision usefulness. The guidance in ASU 2023-09 requires that public business entities disclose specific categories in the income tax rate reconciliation and provide additional qualitative information for reconciling items that meet a quantitative threshold. In addition, the amendments in ASU 2023-09 require that all entities disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by individual jurisdictions. The ASU also includes other disclosure amendments related to the disaggregation of income tax expense between federal, state and foreign taxes. The Company expects to adopt the amendments in ASU 2023-09 for periods beginning after December 31, 2024.

Table of Contents

NOTE 3. EARNINGS (LOSS) PER SHARE

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


	Three Months Ended March 31,
(In thousands, except per share data)	2024		****	2023
Numerator
Net income (loss) available to common shareholders	$	(4,677)		$	73

Denominator
Weighted average common shares outstanding		4,651			5,214
Weighted average unallocated common stock held by benefit plans		(562)			(601)
Weighted average shares - basic		4,089			4,613
Effect of dilutive stock-based awards:
Stock options		-			-
Restricted stock		-			5
Weighted average shares - assuming dilution		4,089			4,618

Basic earnings (loss) per common share	$	(1.14)		$	0.02
Diluted earnings (loss) per common share		(1.14)			0.02

The weighted average of potentially dilutive common shares attributable to outstanding stock options that were anti-dilutive totaled 294,830 and 295,000 for the three months ended March 31, 2024 and 2023, respectively, and were excluded from the calculation of diluted earnings per share. The weighted average of potentially dilutive common shares attributable to restricted stock that were anti-dilutive totaled 1,286 for the three months ended March 31, 2024. There were no potentially dilutive common shares attributable to restricted stock that were anti-dilutive for the three months ended March 31, 2023.

Table of Contents NOTE 4. INVESTMENT SECURITIES

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


	****	March 31, 2024
(Dollars in thousands)		Amortized Cost		****	Gross Unrealized Gains		****	Gross Unrealized Losses		****	Fair Value
Securities available-for-sale
Mortgage-backed securities		$	26,676		$	4		$	(4,343)		$	22,337
U.S. Government and agency obligations			1,000			-			(27)			973
Municipal obligations			2,409			6			(191)			2,224
Total available-for-sale		$	30,085		$	10		$	(4,561)		$	25,534
Securities held-to-maturity
U.S. Government and agency obligations		$	13,002		$	-		$	(2,303)		$	10,699
Municipal obligations			455			-			(27)			428
Total held-to-maturity		$	13,457		$	-		$	(2,330)		$	11,127


	****	December 31, 2023
(Dollars in thousands)		Amortized Cost		****	Gross Unrealized Gains		****	Gross Unrealized Losses		****	Fair Value
Securities available-for-sale
Mortgage-backed securities		$	65,704		$	14		$	(8,206)		$	57,512
U.S. Government and agency obligations			7,999			-			(611)			7,388
Municipal obligations			5,998			7			(365)			5,640
Total available-for-sale		$	79,701		$	21		$	(9,182)		$	70,540
Securities held-to-maturity
U.S. Government and agency obligations		$	13,003		$	-		$	(2,210)		$	10,793
Municipal obligations			458			-			(24)			434
Total held-to-maturity		$	13,461		$	-		$	(2,234)		$	11,227

There were no securities transferred between classifications during the three months ended March 31, 2024 or 2023. During the three months ended March 31, 2024, the Company sold 50 available-for-sale investment securities for a total loss of $5.5 million. Proceeds from the sales totaled $42.6 million, inclusive of accrued interest.

Accrued interest receivable on the Company’s investment securities totaled $131,000 and $241,000 at March 31, 2024 and December 31, 2023, respectively.

At March 31, 2024 and December 31, 2023, investment securities totaling $3.9 million and $44.6 million, respectively, were pledged to secure public deposits as required or permitted by law. During the three months ended March 31, 2024, the Company used a custodial letter of credit granted by the Federal Home Loan Bank of Dallas to collateralize public fund deposits as we executed the investment securities sales. At March 31, 2024, $34.0 million of the custodial letter of credit was pledged as collateral for pubic deposits.

Investment securities totaling $19.1 million and $11.1 million were pledged to the Federal Reserve Bank as collateral for borrowings at March 31, 2024 and December 31, 2023, respectively. 10

Table of Contents The following is a summary of maturities of securities available-for-sale and held-to-maturity at March 31, 2024 and December 31, 2023:


	March 31, 2024
	Available-for-Sale					Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Fair Value		****	Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	1,700	$	1,656		$	-	$	-
After one through five years		2,041		2,012			2,455		2,206
After five through ten years		1,161		1,160			7,000		5,724
After ten years		25,183		20,706			4,002		3,197
Total	$	30,085	$	25,534		$	13,457	$	11,127


	December 31, 2023
	Available-for-Sale					Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Fair Value		****	Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	1,700	$	1,643		$	-	$	-
After one through five years		10,676		10,226			2,334		2,095
After five through ten years		14,909		13,673			7,124		5,899
After ten years		52,416		44,998			4,003		3,233
Total	$	79,701	$	70,540		$	13,461	$	11,227

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.

Table of Contents Information pertaining to securities with gross unrealized losses at March 31, 2024 and December 31, 2023 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


		March 31, 2024
		Less than 12 Months				12 Months or Greater				Total
(Dollars in thousands)	****	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Securities available-for-sale
Mortgage-backed securities		$	530	$	(6)	$	20,820	$	(4,337)	$	21,350	$	(4,343)
U.S. Government and agency obligations			-		-		973		(27)		973		(27)
Municipal obligations			-		-		1,594		(191)		1,594		(191)
Total available-for-sale		$	530	$	(6)	$	23,387	$	(4,555)	$	23,917	$	(4,561)
Securities held-to-maturity
U.S. Government and agency obligations		$	-	$	-	$	10,699	$	(2,303)	$	10,699	$	(2,303)
Municipal obligations			-		-		428		(27)		428		(27)
Total held-to-maturity		$	-	$	-	$	11,127	$	(2,330)	$	11,127	$	(2,330)
Total		$	530	$	(6)	$	34,514	$	(6,885)	$	35,044	$	(6,891)


	****	December 31, 2023
		Less than 12 Months				12 Months or Greater				Total
(Dollars in thousands)	****	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Securities available-for-sale
Mortgage-backed securities		$	554	$	(1)	$	55,959	$	(8,205)	$	56,513	$	(8,206)
U.S. Government and agency obligations			-		-		7,388		(611)		7,388		(611)
Municipal obligations			-		-		3,992		(365)		3,992		(365)
Total available-for-sale		$	554	$	(1)	$	67,339	$	(9,181)	$	67,893	$	(9,182)
Securities held-to-maturity
U.S. Government and agency obligations		$	-	$	-	$	10,793	$	(2,210)	$	10,793	$	(2,210)
Municipal obligations			-		-		434		(24)		434		(24)
Total held-to-maturity		$	-	$	-	$	11,227	$	(2,234)	$	11,227	$	(2,234)
Total		$	554	$	(1)	$	78,566	$	(11,415)	$	79,120	$	(11,416)

At March 31, 2024 and December 31, 2023, the Company held 43 and 92 securities, respectively, with an unrealized loss. The securities with unrealized losses consisted of government-sponsored mortgage-backed securities and debt obligations guaranteed by federal, state and local government entities. These unrealized losses relate principally to noncredit related factors, including changes in current interest rates for similar types of securities. Based on management’s evaluation of the securities portfolio, the Company did not establish an allowance for credit losses for its available-for-sale or held-to-maturity securities at March 31, 2024 or December 31, 2023.

Table of Contents NOTE 5. LOANS RECEIVABLE

Loans receivable at March 31, 2024 and December 31, 2023 are summarized as follows:


	March 31,
(Dollars in thousands)	2024		2023
Real estate loans
One- to four-family residential	$	81,686	$	83,623
Commercial real estate		21,130		21,478
Construction and land		19,369		13,857
Multi-family residential		3,061		3,373
Total real estate loans		125,246		122,331
Other loans
Commercial and industrial		15,711		19,984
Consumer		2,534		2,605
Total other loans		18,245		22,589
Total loans		143,491		144,920
Less: Allowance for loan losses		(2,068)		(2,124)
Net loans	$	141,423	$	142,796

At March 31, 2024 and December 31, 2023, real estate loans totaling $79.9 million and $81.2 million, respectively, were pledged as collateral to the Federal Home Loan Bank of Dallas for borrowings under a blanket lien agreement. Refer to Note 7 for more information on borrowed funds.

Accrued interest receivable on the Company’s loans totaled $595,000 and $659,000 at March 31, 2024 and December 31, 2023, respectively. Accrued interest receivable is excluded from the Company’s estimate of the allowance for credit losses.

The following tables outline the changes in the allowance for credit losses for the three months ended March 31, 2024 and 2023.


		For the Three Months Ended March 31, 2024
(Dollars in thousands)	****	****	Beginning Balance		Provision (Reversal)		****	Charge-offs		****	Recoveries		****	Ending Balance
Allowance for credit losses
One- to four-family residential			$	1,240	$	8		$	(101)		$	21		$	1,168
Commercial real estate				213		10			(14)			-			209
Construction and land				283		91			-			-			374
Multi-family residential				50		(6)			-			-			44
Commercial and industrial				302		(65)			-			-			237
Consumer				36		4			(8)			4			36
Total for loans			$	2,124	$	42		$	(123)		$	25		$	2,068
Unfunded lending commitments^(1)^				257		53			-			-			310
Total			$	2,381	$	95		$	(123)		$	25		$	2,378
(1)	The allowance for credit losses on unfunded lending commitments is recorded within “other liabilities” on the statement of financial condition. The related provision for credit losses for unfunded lending commitments is recorded with the provision for loan losses and reported in aggregate as the provision for credit losses on the income statement.
---	---

Table of Contents


	****	For the Three Months Ended March 31, 2023
(Dollars in thousands)	****	Beginning Balance		****		ASC 326 Adoption Impact	Provision (Reversal)		****	Charge-offs		****	Recoveries		****	Ending Balance
Allowance for credit losses
One- to four-family residential		$	1,224		$	158	$	5		$	-		$	56		$	1,443
Commercial real estate			248			(53)		5			-			-			200
Construction and land			74			40		3			-			-			117
Multi-family residential			40			5		(4)			-			-			41
Commercial and industrial			175			51		(4)			-			-			222
Consumer			46			8		(5)			(7)			5			47
Total for loans		$	1,807		$	209	$	-		$	(7)		$	61		$	2,070
Unfunded lending commitments			-			216		-			-			-			216
Total		$	1,807		$	425	$	-		$	(7)		$	61		$	2,286

The following tables outline the allowance for loan losses and the balance of loans by method of loss evaluation at March 31, 2024 and December 31, 2023.


	March 31, 2024						December 31, 2023
(Dollars in thousands)	Individually Evaluated		Collectively Evaluated		Total		Individually Evaluated		Collectively Evaluated		Total
Allowance for loan losses
One- to four-family residential	$	77	$	1,091	$	1,168	$	127	$	1,113	$	1,240
Commercial real estate		-		209		209		-		213		213
Construction and land		43		331		374		46		237		283
Multi-family residential		-		44		44		-		50		50
Commercial and industrial		-		237		237		-		302		302
Consumer		-		36		36		-		36		36
Total	$	120	$	1,948	$	2,068	$	173	$	1,951	$	2,124
Loans
One- to four-family residential	$	582	$	81,104	$	81,686	$	989	$	82,634	$	83,623
Commercial real estate		-		21,130		21,130		50		21,428		21,478
Construction and land		129		19,240		19,369		132		13,725		13,857
Multi-family residential		-		3,061		3,061		-		3,373		3,373
Commercial and industrial		-		15,711		15,711		-		19,984		19,984
Consumer		-		2,534		2,534		-		2,605		2,605
Total	$	711	$	142,780	$	143,491	$	1,171	$	143,749	$	144,920

At March 31, 2024 and December 31, 2023, all loans individually evaluated for credit losses were considered collateral-dependent financial assets under ASC 326. Loans are considered collateral-dependent and individually evaluated when, based on management’s assessment as of the reporting date, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. Collateral-dependent loans primarily consist of residential real estate loans secured by one- to four-family residential properties located in our market.

Table of Contents A summary of current, past due and nonaccrual loans as of March 31, 2024 and December 31, 2023 follows:


	****	As of March 31, 2024
(Dollars in thousands)		Past Due 30-89 Days and Accruing		****	Past Due Over 90 Days and Accruing		****	Past Due Over 30 Days and Non-accruing		****	Total Past Due		****	Current and Accruing		****	Current and Non-accruing		****	Total Loans
One- to four-family residential		$	2,146		$	29		$	816		$	2,991		$	78,085		$	610		$	81,686
Commercial real estate			333			-			-			333			20,797			-			21,130
Construction and land			-			-			-			-			19,342			27			19,369
Multi-family residential			-			-			-			-			3,061			-			3,061
Commercial and industrial			104			-			-			104			15,607			-			15,711
Consumer			10			-			-			10			2,524			-			2,534
Total		$	2,593		$	29		$	816		$	3,438		$	139,416		$	637		$	143,491


		As of December 31, 2023
(Dollars in thousands)	****	Past Due 30-89 Days and Accruing		****	Past Due Over 90 Days and Accruing		****	Past Due Over 30 Days and Non-accruing		****	Total Past Due		****	Current and Accruing		****	Current and Non-accruing		****	Total Loans
One- to four-family residential		$	2,391		$	24		$	1,103		$	3,518		$	79,333		$	772		$	83,623
Commercial real estate			126			-			50			176			21,302			-			21,478
Construction and land			-			-			-			-			13,815			42			13,857
Multi-family residential			-			-			-			-			3,373			-			3,373
Commercial and industrial			46			-			-			46			19,938			-			19,984
Consumer			12			-			-			12			2,593			-			2,605
Total		$	2,575		$	24		$	1,153		$	3,752		$	140,354		$	814		$	144,920

A summary of total nonaccrual loans as of March 31, 2024 and December 31, 2023 follows:



	March 31, 2024						December 31, 2023
(Dollars in thousands)	With Allowance for Credit Loss		Without Allowance for Credit Loss		Total		With Allowance for Credit Loss		Without Allowance for Credit Loss		Total
Nonaccrual loans
One- to four-family residential	$	1,375	$	51	$	1,426	$	1,564	$	311	$	1,875
Commercial real estate		-		-		-		-		50		50
Construction and land		27		-		27		42		-		42
Multi-family residential		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	1,402	$	51	$	1,453	$	1,606	$	361	$	1,967

The Company was not committed to lend any additional funds on nonaccrual loans at March 31, 2024 or December 31, 2023. The Company does not recognize interest income while loans are on nonaccrual status. All payments received while on nonaccrual status are applied against the principal balance of nonaccrual loans.

At March 31, 2024, one loan secured by residential real estate for which formal foreclosure proceedings were in process totaled $37,000. At December 31, 2023, loans secured by residential and commercial real estate for which formal foreclosure proceedings were in process totaled $345,000 and $50,000, respectively. 15

Table of Contents Occasionally loans are modified to assist borrowers experiencing financial difficulty. We consider modifications such as term extensions, principal forgiveness, payment delays or alternate payment schedules, and alternate interest rate terms. At March 31, 2024 and December 31, 2023, loans with modifications for borrowers experiencing financial difficulty totaled $696,000 and $683,000, respectively.

During the three months ended March 31, 2024, the Company granted one loan modification to a borrower experiencing financial difficulty that resulted in a more than minor change in the timing or amount of contractual cash flows. The maturity date was extended by three years for a residential mortgage loan with a balance of $20,000. During the three months ended March 31, 2023, the Company did not grant any loan modifications to borrowers experiencing financial difficulty that resulted in a more than minor change in the timing or amount of contractual cash flows. The Company was not committed to lend any additional funds to borrowers with modified terms and experiencing financial difficulty at March 31, 2024 or December 31, 2023.

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

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

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

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

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

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

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

Table of Contents The following table presents the Company’s loan portfolio by credit quality classification and origination year as of March 31, 2024. The Company uses the latter of origination or renewal date to classify term loans into vintages.


															Line-of-credit
															Arrangements
	Term Loans by Origination Year												Line-of-credit		Converted to
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Arrangements		Term Loans		Total
One- to four-family residential
Pass	$	67	$	2,944	$	12,866	$	3,244	$	2,889	$	55,309	$	1,592	$	219	$	79,130
Special Mention		-		-		-		-		61		137		-		-		198
Substandard		-		21		-		10		40		2,287		-		-		2,358
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	67	$	2,965	$	12,866	$	3,254	$	2,990	$	57,733	$	1,592	$	219	$	81,686
Commercial real estate
Pass	$	298	$	4,631	$	2,216	$	2,072	$	3,708	$	7,802	$	60	$	-	$	20,787
Special Mention		-		-		107		-		-		-		-		-		107
Substandard		236		-		-		-		-		-		-		-		236
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	534	$	4,631	$	2,323	$	2,072	$	3,708	$	7,802	$	60	$	-	$	21,130
Construction and land
Pass	$	-	$	54	$	106	$	54	$	78	$	419	$	18,502	$	-	$	19,213
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		129		-		27		-		-		156
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	-	$	54	$	106	$	183	$	78	$	446	$	18,502	$	-	$	19,369
Multi-family residential
Pass	$	-	$	378	$	-	$	470	$	-	$	2,213	$	-	$	-	$	3,061
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	-	$	378	$	-	$	470	$	-	$	2,213	$	-	$	-	$	3,061
Commercial and industrial
Pass	$	552	$	5,444	$	1,849	$	689	$	292	$	343	$	6,542	$	-	$	15,711
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	552	$	5,444	$	1,849	$	689	$	292	$	343	$	6,542	$	-	$	15,711
Consumer
Pass	$	373	$	874	$	391	$	458	$	125	$	313	$	-	$	-	$	2,534
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	373	$	874	$	391	$	458	$	125	$	313	$	-	$	-	$	2,534
Total
Pass	$	1,290	$	14,325	$	17,428	$	6,987	$	7,092	$	66,399	$	26,696	$	219	$	140,436
Special Mention		-		-		107		-		61		137		-		-		305
Substandard		236		21		-		139		40		2,314		-		-		2,750
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	1,526	$	14,346	$	17,535	$	7,126	$	7,193	$	68,850	$	26,696	$	219	$	143,491

Table of Contents The following table presents the Company’s loan portfolio by credit quality classification and origination year as of December 31, 2023. The Company uses the latter of origination or renewal date to classify term loans into vintages.


															Line-of-credit
															Arrangements
	Term Loans by Origination Year												Line-of-credit		Converted to
(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Arrangements		Term Loans		Total
One- to four-family residential
Pass	$	2,733	$	10,979	$	3,271	$	2,949	$	3,048	$	53,462	$	1,449	$	2,904	$	80,795
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		24		-		11		122		131		2,540		-		-		2,828
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	2,757	$	10,979	$	3,282	$	3,071	$	3,179	$	56,002	$	1,449	$	2,904	$	83,623
Commercial real estate
Pass	$	4,476	$	1,974	$	2,008	$	4,308	$	3,423	$	4,168	$	90	$	527	$	20,974
Special Mention		-		108		104		-		-		-		-		-		212
Substandard		242		-		-		-		-		50		-		-		292
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	4,718	$	2,082	$	2,112	$	4,308	$	3,423	$	4,218	$	90	$	527	$	21,478
Construction and land
Pass	$	56	$	182	$	56	$	67	$	24	$	426	$	12,872	$	-	$	13,683
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		132		-		13		-		29		-		-		174
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	56	$	314	$	56	$	80	$	24	$	455	$	12,872	$	-	$	13,857
Multi-family residential
Pass	$	380	$	-	$	470	$	-	$	271	$	2,252	$	-	$	-	$	3,373
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	380	$	-	$	470	$	-	$	271	$	2,252	$	-	$	-	$	3,373
Commercial and industrial
Pass	$	5,717	$	2,097	$	767	$	300	$	292	$	50	$	10,761	$	-	$	19,984
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	5,717	$	2,097	$	767	$	300	$	292	$	50	$	10,761	$	-	$	19,984
Consumer
Pass	$	1,004	$	451	$	527	$	270	$	171	$	182	$	-	$	-	$	2,605
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	1,004	$	451	$	527	$	270	$	171	$	182	$	-	$	-	$	2,605
Total
Pass	$	14,366	$	15,683	$	7,099	$	7,894	$	7,229	$	60,540	$	25,172	$	3,431	$	141,414
Special Mention		-		108		104		-		-		-		-		-		212
Substandard		266		132		11		135		131		2,619		-		-		3,294
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	14,632	$	15,923	$	7,214	$	8,029	$	7,360	$	63,159	$	25,172	$	3,431	$	144,920

Table of Contents The following table presents gross charge-offs and recoveries for the three months ended March 31, 2024 by origination year of the related loans. The Company uses the latter of origination or renewal date to classify loans into vintages.


	Loan Origination Year
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Total
Charge-offs
One- to four-family residential	$	-	$	-	$	-	$	-	$	-	$	101	$	101
Commercial real estate		-		-		-		-		-		14		14
Consumer		3		1		1		1		-		2		8
Total	$	3	$	1	$	1	$	1	$	-	$	117	$	123
Recoveries
One- to four-family residential	$	-	$	-	$	-	$	-	$	-	$	21	$	21
Consumer		-		1		-		1		-		2		4
Total	$	-	$	1	$	-	$	1	$	-	$	23	$	25

The following table presents gross charge-offs and recoveries for the three months ended March 31, 2023 by origination year of the related loans. The Company uses the latter of origination or renewal date to classify loans into vintages.


	Loan Origination Year
(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Total
Charge-offs
Consumer		-		2		3		-		-		2		7
Total	$	-	$	2	$	3	$	-	$	-	$	2	$	7
Recoveries
One- to four-family residential	$	-	$	-	$	-	$	-	$	-	$	56	$	56
Consumer		-		-		1		1		-		3		5
Total	$	-	$	-	$	1	$	1	$	-	$	59	$	61

Table of Contents NOTE 6. DEPOSITS

Deposits at March 31, 2024 and December 31, 2023 are summarized as follows:


	March 31, 2024					December 31, 2023
(Dollars in thousands)	Amount		****	Percent		Amount		****	Percent
Non-interest-bearing demand deposits	$	28,836		17.0	%	$	28,183		17.0	%
Interest-bearing demand deposits		35,374		20.9			36,867		22.3
Money market		14,712		8.7			15,126		9.1
Savings		33,675		19.9			31,518		19.0
Certificates of deposit		57,040		33.5			53,928		32.6
Total deposits	$	169,637		100.0	%	$	165,622		100.0	%

The estimated amount of our total uninsured deposits (that is, deposits in excess of the FDIC’s insurance limit) was $41.7 million and $44.6 million, respectively, at March 31, 2024 and December 31, 2023.

At March 31, 2024 scheduled maturities of certificates of deposits were as follows:


(Dollars in thousands)	Amount
2024	$	37,692
2025		17,544
2026		959
2027		510
2028		286
2029		49
Total	$	57,040

Table of Contents NOTE 7. BORROWED FUNDS

Borrowed funds at March 31, 2024 and December 31, 2023 are summarized as follows:


		March 31, 2024						December 31, 2023
(Dollars in thousands)	****	Rate		****	Amount		****	Rate		****	Amount
Advance from Federal Reserve Bank of Atlanta		4.76	%		$	20,000		4.83	%		$	10,000

Advances from Federal Home Loan Bank of Dallas		0.65	%		$	3,000		0.65	%		$	3,000
		0.96				3,000		0.96				3,000
		1.12				4,000		1.12				4,000
						10,000						10,000
Debt modification discount on FHLB Advances						(577)						(622)
						9,423						9,378

Total borrowings					$	29,423					$	19,378

During the fourth quarter of 2023, the Bank began borrowing from the Federal Reserve Bank of Atlanta through its Bank Term Funding Program (“BTFP”). In December of 2020, the Bank restructured $10.0 million of its long-term borrowings from the FHLB. The debt was restructured to longer maturities at current interest rates. A prepayment penalty for the restructuring of $1.2 million was treated as a discount on the debt. The deferred prepayment penalty is amortized into interest expense using the interest method over the life of the restructured borrowings.

Interest payments are due at maturity for the advance from the Federal Reserve Bank of Atlanta and are due monthly for FHLB advances. A schedule of maturities for borrowings outstanding at March 31, 2024 are as follows:


(Dollars in thousands)	****	Amount
Amounts maturing in:
2025		$	23,000
2026			-
2027			3,000
2028			4,000
2029			-
Total		$	30,000

At March 31, 2024 and December 31, 2023, the Company had $31.8 million and $48.5 million, respectively, in available borrowing capacity with the Federal Home Loan Bank (“FHLB”). Borrowings from the FHLB are secured though a blanket floating lien on real estate loans. Refer to Note 5 for more detail on loans pledged to the FHLB. The Company has a $40.0 million custodial letter of credit outstanding from the FHLB as of March 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 March 31, 2024, the Company used $34.0 million of the FHLB custodial letter of credit to collateralize public fund deposits.

At March 31, 2024, the Company had no available borrowing capacity with the Federal Reserve Bank of Atlanta. At December 31, 2023, the Company’s available borrowing capacity with the Federal Reserve Bank of Atlanta was $2.2 million. Borrowings from the Federal Reserve are secured by pledging investment securities. Refer to Note 4 for more detail on pledged investment securities.

Other available funding includes an Unsecured Federal Funds Master Purchase Agreement with First National Bankers Bank for $17.8 million. At March 31, 2024 and December 31, 2023, this credit facility was unused.

Table of Contents NOTE 8. CAPITAL AND REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the Office of the Comptroller of the Currency (“OCC”). Failure to meet minimum regulatory capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements of the Company and the Bank. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification under the prompt corrective action guidelines are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total risk-based capital, Tier 1 Capital to risk-weighted assets, and Tier 1 Capital to adjusted total assets. As of March 31, 2024 and December 31, 2023, the Bank met all of the capital adequacy requirements to which it is subject.

At March 31, 2024 and December 31, 2023, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since the most recent notification that management believes have changed the Bank’s prompt corrective action category. The following table presents actual and required capital ratios for the Bank.


		Actual					To be Well Capitalized under the Prompt Corrective Action Provision
(Dollars in thousands)	****	Amount		****	Ratio		Amount		****	Ratio
As of March 31, 2024
Common Equity Tier 1 Capital		$	75,218		52.09	%	$	9,386		>6.5	%
Tier 1 Risk-Based Capital			75,218		52.09			11,552		>8.0
Total Risk-Based Capital			77,030		53.34			14,441		>10.0
Tier 1 Leverage Capital			75,218		26.84			14,013		>5.0

As of December 31, 2023
Common Equity Tier 1 Capital		$	79,468		52.34	%	$	9,870		>6.5	%
Tier 1 Risk-Based Capital			79,468		52.34			12,147		>8.0
Total Risk-Based Capital			81,371		53.59			15,184		>10.0
Tier 1 Leverage Capital			79,468		31.67			12,546		>5.0

Share Repurchase Plans

The Company repurchased 202,997 shares of its common stock at an average cost per share of $12.12 during the three months ended March 31, 2024 under its November 2023 Repurchase Plan. At March 31, 2024, the Company had common shares outstanding of 4,558,329 and 25,329 of those shares were available for repurchase under the November 2023 Repurchase Plan. The Company completed the November 2023 Repurchase Plan in April 2024.

On May 2, 2024, the Company announced that its Board of Directors approved the Company’s fourth share repurchase plan (the “May 2024 Repurchase Plan”). Under the May 2024 Repurchase Plan, the Company may purchase up to 227,000 shares, or approximately 5%, of the Company’s outstanding shares of common stock.

Table of Contents NOTE 9. FAIR VALUE MEASUREMENTS

In accordance with fair value guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 — Valuation is based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 — Valuation is based on inputs other than quoted prices included with Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the asset or liability.

Level 3 — Valuation is based on unobservable income inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.

Table of Contents Fair values of assets and liabilities measured on a recurring basis at March 31, 2024 and December 31, 2023 follows:


		Fair Value Measurements at Reporting Date Using
(Dollars in thousands)	****	Fair Value		****	Level 1		****	Level 2		****	Level 3
March 31, 2024
Available-for-sale securities		$	25,534		$	-		$	25,534		$	-

December 31, 2023
Available-for-sale securities		$	70,540		$	-		$	70,540		$	-

Fair values of assets and liabilities measured on a nonrecurring basis at March 31, 2024 and December 31, 2023 follows:


		Fair Value Measurements at Reporting Date Using
(Dollars in thousands)	****	Fair Value		****	Level 1		****	Level 2		****	Level 3
March 31, 2024
Loans individually evaluated for credit losses		$	273		$	-		$	-		$	273
Foreclosed assets			237			-			-			237
Total		$	510		$	-		$	-		$	510
December 31, 2023
Loans individually evaluated for credit losses		$	374		$	-		$	-		$	374
Foreclosed assets			60			-			-			60
Total		$	434		$	-		$	-		$	434

At March 31, 2024 and December 31, 2023, individually evaluated loans with a recorded investment of $394,000 and $547,000, respectively, have been written down to their fair value by a charge to the allowance for loan losses. Foreclosed assets are written down to fair value by a charge to earnings through foreclosed asset expense. During the three months ended March 31, 2024 and 2023, no impairment losses on foreclosed assets were recognized.

The fair value of loans individually evaluated and foreclosed assets is estimated using third-party appraisals of the collateral or asset held less estimated costs to sell and discounts to reflect current conditions.

Table of Contents NOTE 10. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows the guidance of ASC 825, Financial Instruments, and ASC 820, Fair Value Measurements. This guidance permits entities to measure many financial instruments and certain other items at fair value. No assets have been elected to be reported at fair value. The objective is to improve financial reporting by providing the Company with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or to transfer a liability in an orderly transaction between market participants. Under this guidance, fair value measurements are not adjusted for transaction costs. This guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quotes priced in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Accounting Standards Codification 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities, requires that the Company disclose estimated fair values for its financial instruments, whether or not recognized in the statement of financial condition. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments and all nonfinancial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments of which it is practicable to estimate that value:

Cash and cash equivalents - The carrying amounts reported in the statements of financial condition for cash and cash equivalents approximate those assets’ fair values and are classified within Level 1 of the fair value hierarchy.

Investment securities - The fair market values of investments 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.

Loans receivable, net – The fair value of loans are generally determined by discounting scheduled cash flows using discount rates determined with reference to current market rates at which similar loans would be made. Loans receivable are classified within Level 3 of the fair value hierarchy.

Loans individually evaluated for credit losses - The fair value of loans individually evaluated for credit losses is measured by the fair value of the collateral if the loan is collateral dependent. Fair value of the collateral is determined by appraisals or by independent valuation. Loans individually evaluated for credit losses are classified within Level 3 of the fair value hierarchy.

Bank-owned life insurance - The cash surrender value of bank-owned life insurance approximates its fair value and is classified within Level 2 of the fair value hierarchy.

Non-maturity deposit liabilities - Under ASC 825-10, the fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, NOW, money market and checking accounts, is equal to the amount payable on demand at the reporting date. These non-maturity deposit liabilities are classified within Level 2 of the fair value hierarchy.

Certificates of deposit – Fair values are estimated by discounting scheduled cash flows using the rates currently offered for deposits of similar remaining maturities. Certificates of deposit are classified within Level 2 of the fair value hierarchy.

Borrowings – The fair value is estimated by discounting the future contractual cash flows using current market rates at which debt with similar terms could be obtained. Borrowings are classified within Level 2 of the fair value hierarchy. 25

Table of Contents Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business or the value of assets and liabilities that are not considered financial instruments.

The estimated fair values of the Company’s financial instruments as of March 31, 2024 and December 31, 2023 are as follows:


		March 31, 2024
(Dollars in thousands)	****	Carrying Amount		****	Fair Value		****	Level 1		****	Level 2		****	Level 3
Financial Assets:
Cash and cash equivalents		$	76,011		$	76,011		$	76,011		$	-		$	-
Investment securities:
Available-for-sale			25,534			25,534			-			25,534			-
Held-to-maturity			13,457			11,127			-			11,127			-
Loans receivable, net			141,423			135,986			-			-			135,986
Bank-owned life insurance			14,139			14,139			-			14,139			-
Financial Liabilities:
Deposits			169,637			168,812			-			168,812			-
Borrowed funds			29,423			28,778			-			28,778			-


		December 31, 2023
(Dollars in thousands)	****	Carrying Amount		****	Fair Value		****	Level 1		****	Level 2		****	Level 3
Financial Assets:
Cash and cash equivalents		$	19,011		$	19,011		$	19,011		$	-		$	-
Investment securities:
Available-for-sale			70,540			70,540			-			70,540			-
Held-to-maturity			13,461			11,227			-			11,227			-
Loans receivable, net			142,796			132,742			-			-			132,742
Bank-owned life insurance			14,026			14,026			-			14,026			-
Financial Liabilities:
Deposits			165,622			164,710			-			164,710			-
Borrowed funds			19,378			18,807			-			18,807			-

The carrying amounts in the preceding table are included in the statement of financial condition under the applicable captions. It is not practical to estimate the fair value of stock in correspondent banks because the equity securities are not marketable. The carrying amount of investments without readily determinable fair value are reported in the statements of financial condition at historical cost.

Table of Contents NOTE 11. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the Company has various outstanding commitments and contingent liabilities that are not reflected in the accompanying financial statements. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on our financial statements.

The Company is not involved in any pending legal proceedings as a plaintiff or defendant other than routine legal proceedings occurring in the ordinary course of business, and at March 31, 2024, we were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations.

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments consist of unfunded commitments to extend credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the statement of financial position. The contract or notional amounts of these instruments reflect the extent of the Company’s involvement in particular classes of instruments.

Table of Contents ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

Management’s Discussion and Analysis of Financial Condition and Results of Operations at March 31, 2024 and for the three months ended March 31, 2024 and 2023 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, 2023.

Cautionary Note Regarding Forward-Looking Statements

Certain matters in this Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of words such as “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would,” and “could.” These forward-looking statements include, but are not limited to:

●	statements of our goals, intentions and expectations;
●	statements regarding our business plans, prospects, growth and operating strategies;
---	---
●	statements regarding the quality of our loan and investment portfolios; and
---	---
●	estimates of our risks and future costs and benefits.
---	---

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These forward-looking statements are based on our current beliefs and expectations and, by their nature, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

Important factors that could cause our actual results to differ materially from the results anticipated or projected, include, but are not limited to, the following:

●	general economic conditions, either nationally or in our market areas, that are different than expected;
●	conditions relating to infectious disease outbreaks, including the severity and duration of the associated economic slowdown, either nationally or in our market areas, that are worse than expected;
---	---
●	changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance for credit losses;
---	---
●	our ability to access cost-effective funding;
---	---
●	major catastrophes such as hurricanes, floods or other natural disasters, the related disruption to local, regional and global economic activity and financial markets, and the impact that any of the foregoing may have on us and our customers and other constituencies;
---	---
●	technological changes that may be more difficult or expensive than expected;
---	---
●	success or consummation of new business initiatives may be more difficult or expensive than expected;
---	---
●	the inability of third-party service providers to perform;
---	---
●	fluctuations in real estate values and both residential and commercial real estate market conditions;
---	---
●	demand for loans and deposits in our market area;
---	---
●	our ability to continue to implement our business strategies;
---	---
●	competition among depository and other financial institutions;
---	---
●	inflation and changes in the interest rate environment that reduce our margins and yields, reduce the fair value of financial instruments or reduce the origination levels in our lending business, or increase the level of defaults, losses and prepayments on loans;
---	---
●	adverse changes in the securities markets;
---	---
●	changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;
---	---
●	our ability to manage market risk, credit risk and operational risk in the current economic conditions;
---	---

Table of Contents

●	our ability to enter new markets successfully and capitalize on growth opportunities;
●	our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;
---	---
●	changes in consumer spending, borrowing and savings habits;
---	---
●	changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the U. S. Securities and Exchange Commission or the Public Company Accounting Oversight Board;
---	---
●	our ability to retain key employees; and our compensation expense associated with equity allocated or awarded to our employees.
---	---

We undertake no obligation to publicly update or revise any forward-looking statements included in this report or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur and you should not put undue reliance on any forward-looking statements.

Table of Contents Overview

Catalyst Bancorp, Inc. (“Catalyst Bancorp” or the “Company”) is the holding company for Catalyst Bank (the “Bank”), formerly known as St. Landry Homestead Federal Savings Bank. The Company was incorporated by the Bank in February 2021 as part of the conversion of the Bank from the mutual to the stock form of organization (the “Conversion”). The Conversion was completed on October 12, 2021, at which time the Company acquired all of the issued and outstanding shares of common stock of the Bank, which became the wholly-owned subsidiary of Catalyst Bancorp. The Bank officially changed its name to Catalyst Bank in June 2022.

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.

Historically, we operated as a traditional thrift relying on long-term, single-family residential mortgage loans secured by properties located primarily in St. Landry Parish and adjoining areas to generate interest income. In 2021, we re-focused our business strategy to a relationship-based community bank model targeting small- to mid-sized businesses and business professionals in our market areas while continuing to serve our traditional customer base. The Conversion and offering were important factors in our efforts to become a more dynamic, profitable and growing institution.

The following is an overview of financial results for the three months ended March 31, 2024:

●	Total assets of $282.0 million at March 31, 2024, up $11.1 million or 4.1% from December 31, 2023
●	Loans of $143.5 million, or 50.9% of total assets, at March 31, 2024, down $1.4 million or 1.0% from December 31, 2023
---	---
●	Non-performing assets of $1.7 million at March 31, 2024, down $332,000 or 16.2% from December 31, 2023
---	---
●	Investment securities of $39.0 million, or 13.8% of total assets, at March 31, 2024, down $45.0 million or 53.6% from December 31, 2023
---	---
●	Deposits of $169.6 million at March 31, 2024, up $4.0 million or 2.4% from December 31, 2023
---	---
●	Borrowings of $29.4 million at March 31, 2024, up $10.0 million or 51.8% from December 31, 2023
---	---
●	Total shareholders’ equity of $81.4 million, or 28.8% of total assets, at March 31, 2024, down $3.3 million or 3.9% from December 31, 2023
---	---
●	Net interest income of $2.1 million, up $142,000 or 7.2%, and net interest margin of 3.15%, up 5 basis points (“bps”) compared to the first three months of 2023
---	---
●	Loss on the sales of investment securities of $5.5 million
---	---
●	Non-interest expense of $2.8 million, up $606,000 or 27.7% compared to the first three months of 2023, primarily due to expenses related to the Company’s upgrade to a new core processing system.
---	---
●	Net loss of $4.7 million
---	---

Our results of operations depend, to a large extent, on net interest income, which is the difference between the income earned on our loan and investment portfolios and interest expense on deposits and borrowings. Our net interest income is largely determined by our net interest spread, which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities, and the relative amounts of interest-earning assets and interest-bearing liabilities. Results of operations are also affected by our provisions for credit losses, fee income and other non-interest income and non-interest expense. Non-interest expense principally consists of compensation, office occupancy and equipment expense, data processing, and other expense. Our results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially impact our financial condition and results of operations. 30

Table of Contents Critical Accounting Policies and Estimates

Table of Contents Comparison of Financial Condition at March 31, 2024 and December 31, 2023

Total Assets. Total assets increased $11.1 million, or 4.1%, to $282.0 million at March 31, 2024 from $270.9 million at December 31, 2023. The increase was primarily due to additional borrowings under the Bank Term Funding Program (“BTFP”).

Loans. The following table summarizes the changes in the composition of our loan portfolio by type of loan as of the dates indicated.



	March 31, 2024						December 31, 2023
(Dollars in thousands)	Amount		****	%		****	Amount		****	%		Change
Real estate loans
One- to four-family residential	$	81,686		56.9	%		$	83,623		57.7	%	$	(1,937)	(2.3)	%
Commercial real estate		21,130		14.7				21,478		14.8			(348)	(1.6)
Construction and land		19,369		13.5				13,857		9.6			5,512	39.8
Multi-family residential		3,061		2.1				3,373		2.3			(312)	(9.2)
Total real estate loans		125,246		87.2				122,331		84.4			2,915	2.4
Other loans
Commercial and industrial		15,711		10.9				19,984		13.8			(4,273)	(21.4)
Consumer		2,534		1.9				2,605		1.8			(71)	(2.7)
Total other loans		18,245		12.8				22,589		15.6			(4,344)	(19.2)
Total loans	$	143,491		100.0	%		$	144,920		100.0	%	$	(1,429)	(1.0)

During the three months ended March 31, 2024, strong construction loan growth was offset primarily by net declines in our commercial and industrial and residential loan portfolios. Construction loan growth was largely driven by multi-family residential development and additional fundings on several existing construction loans.

The following table summarizes the composition of our construction and land loan balances and commitments, including the related undisbursed amounts for construction projects in process as of March 31, 2024.


(Dollars in thousands)	Loan Balance		Undisbursed		Total Commitment
Commercial construction and land loans
Multi-family residential	$	4,782	$	3,218	$	8,000
Retail		711		4,769		5,480
Health service facilities		2,749		2,663		5,412
Hospitality		2,716		700		3,416
Residential subdivision development		813		9		822
Commercial land		297		-		297
Other commercial construction and development		3,790		289		4,079
Total commercial construction and land	$	15,858	$	11,648	$	27,506
Consumer construction and land loans
Residential construction		2,851		1,241		4,092
Consumer land		660		-		660
Total consumer construction and land		3,511		1,241		4,752
Total construction and land	$	19,369	$	12,889	$	32,258

Based on total commitment and contractual maturity date, the weighted average term to maturity of our construction and land loan portfolio is approximately 11 months as of March 31, 2024.

Allowance for Credit Losses. At March 31, 2024, the allowance for loan losses totaled $2.1 million, or 1.44% of total loans, compared to 1.47% of total loans at December 31, 2023. The allowance for credit losses on unfunded commitments totaled $310,000, up $53,000 from December 31, 2023. The provision for credit losses, inclusive of the provision for unfunded commitments, for the first quarter of 2024 totaled $95,000 and was largely attributable to growth in total construction loan commitments.

Table of Contents The following table presents the changes in the allowance for loan losses and other related data for the periods indicated.


	Three Months Ended March 31,							Year Ended December 31,
(Dollars in thousands)	2024			2023			2023
Allowance for loan losses:
Balance, beginning of period	$	2,124		$	1,807		$	1,807
Impact of adoption of ASC 326		-			209			209
Provision for loan losses		42			-			87
Net loan recoveries (charge-offs):
One- to four-family residential		(80)			56			42
Commercial real estate		(14)			-			-
Construction and land		-			-			-
Multi-family residential		-			-			-
Commercial and industrial		-			-			1
Consumer		(4)			(2)			(22)
Total net recoveries (charge-offs)		(98)			54			21
Balance, end of period	$	2,068		$	2,070		$	2,124

Allowance for credit losses on unfunded lending commitments:
Balance, beginning of period	$	257		$	-		$	-
Impact of adoption of ASC 326		-			216			216
Provision for credit losses on unfunded lending commitments		53			-			41
Balance, end of period	$	310		$	216		$	257

Total allowance for credit losses, end of period	$	2,378		$	2,286		$	2,381
Total provision for (reversal of) credit losses		95			-			128

Total loans at end of period	$	143,491		$	132,690		$	144,920
Total non-accrual loans at end of period		1,453			1,618			1,967
Total non-performing loans at end of period		1,482			1,687			1,991
Total average loans		144,428			133,781			135,713

Allowance for loan losses as a percent of:
Total loans		1.44	%		1.56	%		1.47	%
Non-accrual loans		142.33			127.94			107.98
Non-performing loans		139.54			122.70			106.68

Net annualized recoveries (charge-offs) as a percent of average loans by portfolio:
One- to four-family residential		(0.39)	%		0.26	%		0.05	%
Commercial real estate		(0.27)			-			-
Construction and land		-			-			-
Multi-family residential		-			-			-
Commercial and industrial		-			-			0.01
Consumer		(0.63)			(0.24)			(0.71)
Total loans		(0.27)			0.16			0.02

Table of Contents 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.


	****	March 31,			December 31,
(Dollars in thousands)		2024			2023
Non-accruing loans
One- to four-family residential		$	1,426		$	1,875
Commercial real estate			-			50
Construction and land			27			42
Multi-family residential			-			-
Commercial and industrial			-			-
Consumer			-			-
Total non-accruing loans			1,453			1,967
Accruing loans 90 days or more past due
One- to four-family residential			29			24
Commercial real estate			-			-
Construction and land			-			-
Multi-family residential			-			-
Commercial and industrial			-			-
Consumer			-			-
Total accruing loans 90 days or more past due			29			24
Total non-performing loans			1,482			1,991
Foreclosed assets			237			60
Total non-performing assets		$	1,719		$	2,051

Total loans		$	143,491		$	144,920
Total assets			282,049			270,932

Total non-accruing loans as a percentage of total loans			1.01	%		1.36	%
Total non-performing loans as a percentage of total loans			1.03			1.37
Total non-performing loans as a percentage of total assets			0.53			0.73
Total non-performing assets as a percentage of total assets			0.61			0.76

Non-performing loans totaling $275,000 as of December 31, 2023 were paid-off or returned to accrual status during the three months ended March 31, 2024.

Table of Contents

Investment Securities. Total investment securities were $39.0 million at March 31, 2024, down $45.0 million, or 53.6%, compared to $84.0 million at December 31, 2023. Net unrealized losses on securities available-for-sale totaled $4.6 million at March 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.

The Company has not purchased investment securities since the fourth quarter of 2022. 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. Proceeds from the sales totaled $42.6 million, inclusive of accrued interest.

The following table presents the amortized cost of our total investment securities portfolio that mature during each of the periods indicated and the weighted average yields for each range of maturities at March 31, 2024.


	Contractual Maturity as of March 31, 2024
(Dollars in thousands)	One Year or Less			After One Through Five Years			After Five Through Ten Years			Over Ten Years			Total
Total investment securities
Mortgage-backed securities	$	-		$	2,041		$	537		$	24,098		$	26,676
U.S. Government and agency obligations		1,000			2,000			7,000			4,002			14,002
Municipal obligations		700			455			624			1,085			2,864
Total	$	1,700		$	4,496		$	8,161		$	29,185		$	43,542

Weighted average yield
Mortgage-backed securities		-	%		4.18	%		4.52	%		1.83	%		2.06	%
U.S. Government and agency obligations		0.92			1.00			1.31			2.37			1.54
Municipal obligations		0.80			1.12			4.90			1.41			1.97
Total weighted average yield		0.87			2.45			1.79			1.88			1.89

Table of Contents

Deposits. The following table presents total deposits by account type for the dates indicated.


	March 31, 2024						December 31, 2023
(Dollars in thousands)	Amount		****	%		****	Amount		****	%		Change
Non-interest-bearing demand deposits	$	28,836		17.0	%		$	28,183		17.0	%	$	653	2.3	%
Interest-bearing demand deposits		35,374		20.9				36,867		22.3			(1,493)	(4.0)
Money market		14,712		8.7				15,126		9.1			(414)	(2.7)
Savings		33,675		19.9				31,518		19.0			2,157	6.8
Certificates of deposit		57,040		33.5				53,928		32.6			3,112	5.8
Total deposits	$	169,637		100.0	%		$	165,622		100.0	%	$	4,015	2.4

The ratio of the Company’s total loans to total deposits was 84.6% and 87.5% as of March 31, 2024 and December 31, 2023, respectively.

Total public fund deposits amounted to $22.7 million, or 13% of total deposits, at March 31, 2024, compared to $23.3 million, or 14% of total deposits, at December 31, 2023. At March 31, 2024, approximately 78% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits from municipalities within our market.

Our total uninsured deposits (that is deposits in excess of the FDIC’s insurance limit), inclusive of public funds, were approximately $41.7 million at March 31, 2024 and $44.6 million at December 31, 2023. Total uninsured non-public funds deposits were approximately $23.9 million and $26.3 million at March 31, 2024 and December 31, 2023, respectively. At March 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 $23.0 million or $34.0 million of a custodial letter of credit granted by the Federal Home Loan Bank of Dallas.

Borrowings. Total borrowings at March 31, 2024 were $29.4 million, up $10.0 million from December 31, 2023. During the three months ended March 31, 2024, the Bank increased its borrowings from the Federal Reserve Bank of Atlanta through the BTFP. At March 31, 2024, the Bank had one $20.0 million BTFP advance outstanding with a contractual interest rate of 4.76% and a maturity date of January 15, 2025.

Other borrowings outstanding consisted of FHLB advances totaling $9.4 million at March 31, 2024 and December 31, 2023. Deferred prepayment penalties on our FHLB advances totaled $577,000 and $622,000 at March 31, 2024 and December 31, 2023, respectively.

Shareholders’ Equity. Shareholders’ equity totaled $81.4 million, or 28.8% of total assets, at March 31, 2024, down $3.3 million, or 3.9%, from $84.7 million, or 31.2% of total assets, at December 31, 2023. During the first three months of 2024, shareholders’ equity decreased by $2.5 million due to the Company’s repurchases of its common stock.

On May 2, 2024, The Company announced that its Board of Directors approved the Company’s fourth share repurchase plan (the “May 2024 Repurchase Plan”). Under the May 2024 Repurchase Plan, the Company may purchase up to 227,000 shares, or approximately 5%, of the Company’s outstanding shares of common stock.

Table of Contents 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.


		Three Months Ended March 31,
		2024						2023
(Dollars in thousands)	****	Average Balance		Interest		Average Yield/Rate		Average Balance		Interest		Average Yield/Rate
Interest-earning assets:
Loans receivable^(1)^		$	144,428	$	2,214	6.17	%	$	133,781	$	1,629	4.94	%
Investment securities^(TE)(2)^			76,432		325	1.72			103,739		427	1.66
Other interest-earning assets			48,779		616	5.08			19,820		211	4.33
Total interest-earning assets^(TE)^			269,639		3,155	4.71			257,340		2,267	3.57
Non-interest-earning assets			16,792						14,636
Total assets		$	286,431					$	271,976
Interest-bearing liabilities:
Demand deposits, money market and savings accounts			89,109		317	1.43			90,972		81	0.36
Certificates of deposit			57,092		437	3.08			51,528		152	1.20
Total interest-bearing deposits			146,201		754	2.07			142,500		233	0.66
Borrowings			27,991		293	4.21			9,216		68	2.96
Total interest-bearing liabilities			174,192		1,047	2.42			151,716		301	0.80
Non-interest-bearing liabilities			29,844						32,872
Total liabilities			204,036						184,588
Shareholders' equity			82,395						87,388
Total liabilities and shareholders' equity		$	286,431					$	271,976
Net interest-earning assets		$	95,447					$	105,624
Net interest income; average interest rate spread^(TE)^				$	2,108	2.29	%			$	1,966	2.77	%
Net interest margin^(TE)(3)^						3.15						3.10
Average interest-earning assets to average interest-bearing liabilities						154.79						169.62
(1)	Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts and loans in process.
---	---
(2)	Average investment securities does not include unrealized holding gains/ losses on available-for-sale securities.
---	---
(3)	Equals net interest income divided by average interest-earning assets. Taxable equivalent yields are calculated using a marginal tax rate of 21%.
---	---

Table of Contents Rate/Volume Analysis. The following tables show the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities affected our interest income and expense during the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in rate, which is the change in rate multiplied by prior year volume, and (2) changes in volume, which is the change in volume multiplied by prior year rate. The combined effect of changes in both rate and volume has been allocated proportionately to the change due to rate and the change due to volume.


	****	Three Months Ended
		March 31, 2024 vs 2023
		Increase (Decrease) Due to				Total
(Dollars in thousands)		Rate		Volume		Increase (Decrease)
Interest income:
Loans receivable		$	448	$	137	$	585
Investment securities			36		(138)		(102)
Other interest-earning assets			43		362		405
Total interest income			527		361		888
Interest expense:
Demand deposits, money market and savings accounts			237		(1)		236
Certificates of deposit			267		18		285
Total deposits			504		17		521
Borrowings			110		115		225
Total interest expense			614		132		746
Increase (decrease) in net interest income		$	(87)	$	229	$	142

Table of Contents Comparison of Results of Operations for the Three Months Ended March 31, 2024 and 2023.

General. For the three months ended March 31, 2024, the Company reported a net loss of $4.7 million, compared to net income of $73,000 for the three months ended March 31, 2023. Net interest income was up $142,000, or 7.2%, for the three months ended March 31, 2024, compared to the same period in 2023. The provision for credit losses totaled $95,000 for the three months ended March 31, 2024, compared to no provision for the same period in 2023. Non-interest income was down $5.5 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to losses on the sales of investment securities. Total non-interest expense for the three months ended March 31, 2024 was up $606,000, or 27.7%, from the same period in 2023 primarily due to expenses related to the Company’s upgrade to a new core processing system.

Interest Income. Total interest income increased $888,000, or 39.2%, to $3.2 million for the three months ended March 31, 2024, compared to the same period in 2023. Interest income on loans and other interest-earning assets were up $585,000 and $405,000, respectively. These increases were partially offset by a decrease in interest income on investment securities of $102,000.

The average loan yield was 6.17% for the three months ended March 31, 2024, up from 4.94% for the same period in 2023. Average loans were $144.4 million for the three months ended March 31, 2024, up $10.6 million, or 8.0%, compared to the same period in 2023. At March 31, 2024, approximately 52% of our total loans have adjustable rates and approximately 49% of total loans are scheduled to re-price or mature during the next 12 months.

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 rate earned on our investment securities portfolio was 1.72% for the three months ended March 31, 2024, up six basis points compared to the same period 2023.

Interest income on other interest-earning assets, consisting primarily of interest-earning cash and deposits at other financial institutions, increased mainly due to the re-investment of proceeds from investment securities sales.

Interest Expense. Total interest expense increased $746,000, or 247.8%, to $1.0 million for the three months ended March 31, 2024, compared to $301,000 for the same period in 2023. Interest expense on deposits was $754,000 during the three months ended March 31, 2024, up $521,000, or 223.6%, compared to the same period in 2023. The average rate paid on interest-bearing deposits was 2.07% during the three months ended March 31, 2024, up 141 basis points compared to the same period in 2023. Interest expense on borrowings increased by $225,000 during the three months ended March 31, 2024 compared to the same period in 2023 due to interest expense on BTFP advances.

Net Interest Income. Net interest income was $2.1 million for the three months ended March 31, 2024, up $142,000, or 7.2%, compared to 2023. Our interest rate spread was 2.29% and 2.77% for the three months ended March 31, 2024 and 2023, respectively. Our net interest margin was 3.15% and 3.10% for the three months ended March 31, 2024 and 2023, respectively. The increase in net interest margin and net interest income over the comparable periods was primarily the result of increased yields on our interest-earning assets, partially offset by the rising cost of interest-bearing liabilities.

Provision for Credit Losses. The total provision for credit losses on loans and unfunded commitments was $95,000 for the three months ended March 31, 2024, compared to no provision for the same period in 2023. In 2024, the provision for credit losses was largely attributable to growth in total construction loan commitments.

Table of Contents

Non-interest Income. Non-interest income for the three months ended March 31, 2024 was down $5.5 million compared to $294,000 for the same period in 2023. Non-interest income for 2024 includes the $5.5 million loss on the sales of investment securities discussed previously.

Non-interest Expense. Non-interest expense totaled $2.8 million for the three months ended March 31, 2024, up $606,000, or 27.7%, compared to the three months ended March 31, 2023. During the three months ended March 31, 2024, the Company upgraded to a new core processing system and incurred $560,000 of data conversion and other associated expenses. Most of these costs are included in data processing and communication expense, which was up $567,000 for the three months ended March 31, 2024 compared to the same period in 2023. The Company estimates annual savings of greater than $200,000 due to the upgrade to our new core processing system.

Income Tax Expense. The Company reported an income tax benefit of $1.3 million for the three months ended March 31, 2024 compared to income tax expense of $2,000 for the three months ended March 31, 2023. The change in income taxes over the comparable prior period was largely due the loss on sales of investment securities in 2024.

Table of Contents Liquidity and Capital Resources

The Company maintains levels of liquid assets deemed adequate by management. We adjust our liquidity levels to fund deposit outflows, repay our borrowings, and to fund loan commitments. We also adjust liquidity, as appropriate, to meet asset and liability management objectives.

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We also have the ability to borrow from the FHLB, Federal Reserve Bank of Atlanta, and our primary correspondent bank.

At March 31, 2024, our borrowed funds consisted of a $20 million BTFP advance and FHLB advances with a carrying value of $9.4 million. The table below summarizes our unused and available liquidity sources as of March 31, 2024.


(Dollars in thousands)	3/31/2024
Advances from the Federal Home Loan Bank of Dallas	$	31,786
Line of credit with primary correspondent bank		17,800
Unpledged available-for-sale investment securities, at fair value		11,663
Total unused and available liquidity	$	61,249

The Company also has a $40.0 million custodial letter of credit outstanding from the FHLB as of March 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. During the three months ended March 31, 2024, the Company used $34.0 million of this letter of credit to collateralize public fund deposits as we executed the investment securities sales discussed previously.

While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. Our most liquid assets are cash and short-term investments. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.

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 three months ended March 31, 2024 included: $44.1 million in proceeds from maturities, paydowns, and sales of investment securities, $10.0 million in proceeds from BTFP advances, $4.0 million of inflows from growth in total deposits and $2.5 million in outflows for the repurchase of the Company’s common stock.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position daily and anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that the majority of maturing time deposits will be retained. We also anticipate continued use of our secondary funding sources.

Table of Contents 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 March 31, 2024.


			Amount of Commitment Expiration — Per Period
(Dollars in thousands)	Total Amounts Committed at March 31, 2024		To 1 Year		1 - 3 Years		3 - 5 Years		After 5 Years
Commitments to originate loans	$	3,711	$	3,711	$	-	$	-	$	-
Undisbursed portion of construction loans in process		12,072		9,527		2,545		-		-
Unused lines of credit		22,884		19,008		2,657		-		1,219
Unused overdraft privilege amounts		1,126		-		-		-		1,126
Letters of credit		2		2		-		-		-
Total commitments	$	39,795	$	32,248	$	5,202	$	-	$	2,345

The following table summarizes our contractual cash obligations at March 31, 2024.


			Payments Due By Period
(Dollars in thousands)	Total at March 31, 2024		To 1 Year		1 - 3 Years		3 - 5 Years		After 5 Years
Certificates of deposit	$	57,040	$	50,225	$	6,145	$	670	$	-
Borrowings		30,000		20,000		3,000		7,000		-
Total term debt	$	87,040	$	70,225	$	9,145	$	7,670	$	-

Management expects that a majority of the maturing certificates of deposit will be retained. However, if a substantial portion of these deposits is not retained, we may utilize borrowings from our secondary funding sources or raise interest rates on deposits to attract new accounts, which may result in higher levels of interest expense.

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 2 of the notes to our financial statements.

Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Act”)) as of March 31, 2024, was carried out under the supervision and with the participation of our Chief Executive Officer, Chief Financial Officer and several other members of our senior management. Our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures in effect as of March 31, 2024, were effective. In addition, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We do not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all errors and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls may be circumvented by the individual acts of some persons, by collusion of two or more people, or by override of the control. The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

Table of Contents PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not involved in any pending legal proceedings as a plaintiff or defendant other than routine legal proceedings occurring in the ordinary course of business, and at March 31, 2024, we were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company’s purchases of its common stock made during the three months ended March 31, 2024 consisted of share repurchases under the Company’s approved plans and are set forth in the following table.


For the Month Ended	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under Plans or Programs
January 31, 2024		111,282	$	11.96		111,282		117,044
February 29, 2024		67,055		11.98		67,055		49,989
March 31, 2024		24,660		11.81		24,660		25,329
Total		202,997	$	11.95		202,997

The November 2023 Repurchase Plan was announced on November 21, 2023, and authorized the Company to repurchase up to 240,000 shares, or approximately 5% of the Company’s common stock. At March 31, 2024, 25,329 shares were available for repurchase under the November 2023 Repurchase Plan. The Company completed the November 2023 Repurchase Plan in April 2024.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Nothing to report.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Nothing to report.

Table of Contents ITEM 6. EXHIBITS ****


31.1	Rule 13a-14(a) Certifications (Chief Executive Officer)

31.2	Rule 13a-14(a) Certifications (Chief Financial Officer)

32.0	Section 1350 Certifications

101.INS	XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB	XBRL Taxonomy Extension Label Linkbase Document

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document

104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

Table of Contents SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	CATALYST BANCORP, INC.


Date: May 15, 2024	By:	/s/ Joseph B. Zanco
		Joseph B. Zanco
		President and Chief Executive Officer
		(Duly Authorized Officer)

Date: May 15, 2024	By:	/s/ Jacques L. J. Bourque
		Jacques L. J. Bourque
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EXHIBIT 31.1

RULE 13A-14(A) CERTIFICATION

I, Joseph B. Zanco, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Catalyst Bancorp, Inc. (the “Company”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
---	---
4.	The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:
---	---
a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c)	Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
d)	Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
---	---
5.	The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the Company’s auditors and the audit committee of the Company’s Board of Directors (or persons performing the equivalent functions):
---	---
a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
---	---
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
---	---


Date: May 15, 2024	By:	/s/ Joseph B. Zanco
		Joseph B. Zanco
		President and Chief Executive Officer

EXHIBIT 31.2

RULE 13A-14(A) CERTIFICATION

I, Jacques L. J. Bourque, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Catalyst Bancorp, Inc. (the “Company”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
---	---
4.	The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:
---	---
a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c)	Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)	Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
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5.	The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the Company’s auditors and the audit committee of the Company’s Board of Directors (or persons performing the equivalent functions):
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a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
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b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
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Date: May 15, 2024	By:	/s/ Jacques L. J. Bourque
		Jacques L. J. Bourque
		Chief Financial Officer

EXHIBIT 32.0

SECTION 1350 CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 each of the undersigned hereby certifies in his or her capacity as an officer of Catalyst Bancorp, Inc. (the “Company”) that the Quarterly Report of the Company on Form 10-Q for the period ended March 31, 2024, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, and that the information contained in such report fairly represents, in all material respects, the financial statements included in such report.

Date: May 15, 2024		/s/ Joseph B. Zanco
		Joseph B. Zanco
		President and Chief Executive Officer
Date: May 15, 2024		/s/ Jacques L. J. Bourque
		Jacques L. J. Bourque
		Chief Financial Officer