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 ~~September~~March 3031, ~~2024~~2025

☐	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 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,~~342~~180,~~427~~598 shares of Registrant’s common stock, par value of $0.01 per share, issued and outstanding as of ~~November~~May 89, ~~2024~~2025.

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 (Loss)	3

	Consolidated Statements of Comprehensive Income (Loss)	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	2927

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4541

Item 4.	Controls and Procedures	4541

PART II	OTHER INFORMATION	4642

Item 1.	Legal Proceedings	4642

Item 1A.	Risk Factors	4642

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4642

Item 3.	Defaults Upon Senior Securities	4642

Item 4.	Mine Safety Disclosures	4642

Item 5	Other Information	4643

Item 6.	Exhibits	4744

SIGNATURES		4845

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


	(Unaudited)
	~~September~~March 3031,		December 31,
(Dollars in thousands)	~~2024~~2025		~~2023~~2024
ASSETS
Non-interest-bearing cash	$	34,~~625~~128	$	34,~~654~~076
Interest-bearing cash and due from banks		4236,~~128~~190		1540,~~357~~219
Total cash and cash equivalents		4540,~~753~~318		1944,~~011~~295
Investment securities:
Securities available-for-sale, at fair value (amortized cost of $35,589 and $79,701, respectively)		32,196		70,540
Securities available-for-sale, at fair value (amortized cost of $33,754 and $33,215, respectively)		29,840		28,712
Securities held-to-maturity (fair values of $11,699 and $11,227, respectively)		13,450		13,461
Securities held-to-maturity (fair value of $11,611 and $11,284, respectively)		13,445		13,447
Loans receivable, net of unearned income		~~165~~166,~~882~~077		~~144~~167,~~920~~076
Allowance for loan losses		(2,414)		(2,124)
Allowance for credit losses		(2,500)		(2,522)
Loans receivable, net		163,~~468~~577		~~142~~164,~~796~~554
Accrued interest receivable		~~815~~866		~~906~~851
Foreclosed assets		~~173~~77		60194
Premises and equipment, net		6,~~135~~049		6,~~072~~085
Stock in correspondent banks, at cost		~~1,939~~809		1,~~878~~961
Bank-owned life insurance		14,~~370~~607		14,~~026~~489
Other assets		2,~~318~~060		2,~~182~~109
TOTAL ASSETS	$	~~280~~271,~~617~~648	$	~~270~~276,~~932~~697

LIABILITIES
Deposits
Non-interest-bearing	$	2726,~~904~~093	$	28,~~183~~281
Interest-bearing		~~139~~154,~~532~~505		~~137~~157,~~439~~393
Total deposits		~~167~~180,~~436~~598		~~165~~185,~~622~~674
Borrowings		299,~~513~~603		199,~~378~~558
Other liabilities		~~2,001~~856		1,~~373~~261
TOTAL LIABILITIES		~~198~~191,~~950~~057		~~186~~196,~~373~~493

SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value - 5,000,000 shares authorized; none issued		-		-
Preferred stock, $0.01 par value - 5,000,000 shares authorized; none issued or outstanding		-		-
Common stock, $0.01 par value; 30,000,000 shares authorized; 4,399,127 and 4,761,326 issued and outstanding at September 30, 2024 and December 31, 2023, respectively		44		48
Common stock, $0.01 par value; 30,000,000 shares authorized; 4,205,201 and 4,278,150 issued and outstanding at March 31, 2025 and December 31, 2024, respectively		42		43
Additional paid-in capital		4038,~~847~~844		4539,~~020~~561
Unallocated common stock held by benefit plans		(5,~~777~~649)		(65,~~221~~702)
Retained earnings		4950,~~234~~446		5249,~~949~~860
Accumulated other comprehensive income (loss)		(2,681)		(7,237)
Accumulated other comprehensive loss		(3,092)		(3,558)
TOTAL SHAREHOLDERS' EQUITY		8180,~~667~~591		8480,~~559~~204
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	~~280~~271,~~617~~648	$	~~270~~276,~~932~~697

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

Table of Contents

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)


	Three Months Ended ~~September~~March 3031,				~~Nine Months Ended September 30,~~
(Dollars in thousands)	~~2024~~2025		~~2023~~2024		~~2024~~		~~2023~~
INTEREST INCOME
Loans receivable, including fees	$	2,~~717~~738	$	12,~~852~~214	$	~~7,314~~	$	~~5,172~~
Investment securities		~~255~~275		~~403~~325		~~790~~		~~1,243~~
Other earning assets		699		214		2,247		643
Cash and due from banks		341		594
Total interest income		3,671		2,469		10,351		7,058
Other earning assets		20		22
INTEREST EXPENSE
Total interest income		3,374		3,155
Deposits		830		452		2,370		1,092
INTEREST EXPENSE
Borrowings		309		69		908		205
Deposits		941		769
Total interest expense		1,139		521		3,278		1,297
Borrowings		68		293
Net interest income		2,532		1,948		7,073		5,761
Total interest expense		1,009		1,062
Provision for credit losses		337		-		531		-
Net interest income		2,365		2,093
Net interest income after provision for credit losses		2,195		1,948		6,542		5,761
Provision for credit losses		-		95
NON-INTEREST INCOME
Net interest income after provision for credit losses		2,365		1,998
Service charges on deposit accounts		200		190		597		573
NON-INTEREST INCOME (LOSS)
Bank-owned life insurance		118		104		344		300
Service charges on deposit accounts		197		203
Gain (loss) on sales of investment securities		-		-		(5,507)		-
Bank-owned life insurance		118		113
Gain (loss) on disposals and sales of fixed assets		-		-		6		-
Loss on sale of investment securities		-		(5,507)
Federal community development grant		280		-		280		-
Other income on foreclosed assets		216		-
Other		22		12		103		44
Gain on sale of fixed assets		-		11
Total non-interest income (loss)		620		306		(4,177)		917
Other		22		17
NON-INTEREST EXPENSE
Total non-interest income (loss)		553		(5,163)
Salaries and employee benefits		1,200		1,141		3,603		3,522
NON-INTEREST EXPENSE
Occupancy and equipment		193		198		572		609
Salaries and employee benefits		1,245		1,260
Data processing and communication		238		228		1,170		675
Occupancy and equipment		199		196
Professional fees		151		100		375		346
Data processing and communication		182		794
Directors’ fees		116		116		345		345
Professional fees		101		107
ATM and debit card		24		68		124		187
Directors’ fees		114		115
Foreclosed assets, net		33		2		67		67
ATM and debit card		22		69
Advertising and marketing		31		25		112		77
Foreclosed assets, net		89		8
Franchise and shares tax		15		19		46		71
Advertising and marketing		39		38
Regulatory fees and assessments		4236		3323		~~111~~		99
Insurance		26		26		77		80
Franchise and shares tax		13		16
Printing, supplies and postage		7		28		70		102
Other		158		165
Other		184		97		447		277
Total non-interest expense		2,198		2,791
Total non-interest expense		2,260		2,081		7,119		6,457
Income (loss) before income tax expense (benefit)		720		(5,956)
Income (loss) before income tax expense (benefit)		555		173		(4,754)		221
Income tax expense (benefit)		134		(1,267)
Income tax expense (benefit)		108		22		(1,039)		2
NET INCOME (LOSS)	$	586	$	(4,689)
NET INCOME (LOSS)	$	447	$	151	$	(3,715)	$	219


Earnings (loss) per share - basic	$	0.16	$	(1.15)
Earnings (loss) per share - basic	$	0.11	$	0.03	$	(0.93)	$	0.05
Earnings (loss) per share - diluted		0.16		(1.15)
Earnings (loss) per share - diluted		0.11		0.03		(0.93)		0.05

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

Table of Contents

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three Months Ended ~~September~~March 3031,

~~Nine Months Ended September 30,~~

(Dollars in thousands)

~~2024~~2025

~~2023~~2024

~~2024~~

~~2023~~

Net income (loss)

~~447~~586

~~151~~(4,689)

~~(3,715)~~

~~219~~

Net change in unrealized gains (losses) on available-for-sale securities

~~1,185~~589

(~~1,852~~897)

~~261~~

~~(1,309)~~

Reclassification adjustment for losses included in net income

5,507

Reclassification adjustment for losses included in net income (loss)

5,507

Income tax effect

(~~249~~123)

~~389~~(968)

~~(1,212)~~

~~275~~

Total other comprehensive income (loss)

936

(1,463)

4,556

(1,034)

Total other comprehensive income

466

3,642

Total comprehensive income (loss)

1,~~383~~052

(1,~~312~~047)

~~841~~

~~(815)~~

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)


	Three Months Ended March 31, 2025 and 2024
(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, JUNE 30, 2023	$	49	$	47,032	$	(6,616)	$	52,491	$	(8,645)	$	84,311
Net income		-		-		-		151		-		151
Other comprehensive income (loss)		-		-		-		-		(1,463)		(1,463)
ESOP shares released for allocation		-		10		53		-		-		63
2022 Recognition and Retention Plan shares released for allocation		-		(289)		289		-		-		-
Stock compensation expense		-		102		-		-		-		102
Repurchase of common stock		(1)		(1,000)		-		-		-		(1,001)
BALANCE, SEPTEMBER 30, 2023	$	48	$	45,855	$	(6,274)	$	52,642	$	(10,108)	$	82,163

BALANCE, JUNE 30, 2024	$	45	$	41,914	$	(6,116)	$	48,787	$	(3,617)	$	81,013
Net income		-		-		-		447		-		447
Other comprehensive income (loss)		-		-		-		-		936		936
ESOP shares released for allocation		-		8		53		-		-		61
2022 Recognition and Retention Plan shares released for allocation		-		(286)		286		-		-		-
Stock compensation expense		-		143		-		-		-		143
Repurchase of common stock		(1)		(932)		-		-		-		(933)
BALANCE, SEPTEMBER 30, 2024	$	44	$	40,847	$	(5,777)	$	49,234	$	(2,681)	$	81,667

BALANCE, DECEMBER 31, 2022	$	53	$	51,062	$	(6,307)	$	52,758	$	(9,074)	$	88,492
Impact of adoption of ASC 326		-		-		-		(335)		-		(335)
Net income		-		-		-		219		-		219
Other comprehensive income		-		-		-		-		(1,034)		(1,034)
Stock purchased to fund the 2022 Recognition and Retention Plan		-		-		(415)		-		-		(415)
ESOP shares released for allocation		-		27		159		-		-		186
2022 Recognition and Retention Plan shares released for allocation		-		(289)		289		-		-		-
Stock compensation expense		-		386		-		-		-		386
Repurchase of common stock		(5)		(5,331)		-		-		-		(5,336)
BALANCE, SEPTEMBER 30, 2023	$	48	$	45,855	$	(6,274)	$	52,642	$	(10,108)	$	82,163

BALANCE, DECEMBER 31, 2023	$	48	$	45,020	$	(6,221)	$	52,949	$	(7,237)	$	84,559
Net income (loss)		-		-		-		(34,~~715~~689)		-		(34,~~715~~689)
Other comprehensive income		-		-		-		-		43,~~556~~642		43,~~556~~642
ESOP shares released for allocation		-		2710		~~158~~52		-		-		~~185~~62
2022 Recognition and Retention Plan shares released for allocation		-		(286)		286		-		-		-
Stock compensation expense		-		139		-		-		-		139
Stock compensation expense		-		423		-		-		-		423
Repurchase of common stock		(2)		(2,458)		-		-		-		(2,460)
Repurchase of common stock		(4)		(4,337)		-		-		-		(4,341)
BALANCE, MARCH 31, 2024	$	46	$	42,711	$	(6,169)	$	48,260	$	(3,595)	$	81,253
BALANCE, SEPTEMBER 30, 2024	$	44	$	40,847	$	(5,777)	$	49,234	$	(2,681)	$	81,667

BALANCE, DECEMBER 31, 2024	$	43	$	39,561	$	(5,702)	$	49,860	$	(3,558)	$	80,204
Net income		-		-		-		586		-		586
Other comprehensive income		-		-		-		-		466		466
ESOP shares released for allocation		-		9		53		-		-		62
Stock compensation expense		-		139		-		-		-		139
Repurchase of common stock		(1)		(865)		-		-		-		(866)
BALANCE, MARCH 31, 2025	$	42	$	38,844	$	(5,649)	$	50,446	$	(3,092)	$	80,591

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)


	~~Nine~~Three Months Ended ~~September~~March 3031,
(Dollars in thousands)	~~2024~~2025		~~2023~~2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	~~(3,715)~~586	$	~~219~~(4,689)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Investment securities amortization, net		~~119~~19		~~236~~56
Federal Home Loan Bank stock dividends		(62)		(49)
Stock dividends from correspondent banks		(19)		(21)
Amortization of prepayment penalties on debt restructuring		~~135~~45		~~135~~45
Provision for credit losses		~~531~~-		-95
Increase in cash surrender value of bank-owned life insurance		(~~344~~118)		(~~300~~113)
Loss on sales of investment securities		~~5,507~~-		-5,507
Gain on disposals and sales of premises and equipment		(6)		-
Gain on sales of premises and equipment		-		(11)
Stock-based compensation		~~608~~201		~~572~~201
Depreciation of premises and equipment		~~306~~103		~~301~~101
Net write-downs and losses on the sale of foreclosed assets		5788		62-
Deferred income tax expense (benefit)		~~(1,039)~~71		(741,264)
(Increase) decrease in other assets		(~~215~~161)		~~(395)~~29
Increase (decrease) in other liabilities		654		371
(Decrease) increase in other liabilities		(388)		311
Net cash provided by operating activities		~~2,536~~427		~~1,078~~247
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in available-for-sale securities:
Proceeds from maturities, calls, and paydowns		~~3,845~~710		61,~~259~~533
Proceeds from sales		~~42,525~~-		-42,525
Purchases		(71,~~873~~266)		-
Net (increase) decrease in loans		(21,515)		(2,019)
Net decrease in loans		960		1,153
Proceeds from sale of foreclosed assets		~~114~~29		~~259~~-
Purchases of premises and equipment		(~~375~~66)		(~~158~~24)
Proceeds from sale of premises and equipment		12		-
Proceeds from redemption of Federal Home Loan Bank Stock		1,171		-
Net cash provided by investing activities		16,733		4,341
Proceeds from sale of premises and equipment		-		11
Net cash provided by investing activities		1,538		45,198
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		1,814		126
Net (decrease) increase in deposits		(5,076)		4,015
Net advances from the Federal Reserve Bank of Atlanta		10,000		-
Net advances from borrowings		-		10,000
Purchase of stock to fund the 2022 Recognition and Retention Plan		-		(415)
Repurchase of common stock		(866)		(2,460)
Repurchase of common stock		(4,341)		(5,336)
Net cash (used in) provided by financing activities		(5,942)		11,555
Net cash provided by (used in) financing activities		7,473		(5,625)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(3,977)		57,000
NET CHANGE IN CASH AND CASH EQUIVALENTS		26,742		(206)
CASH AND CASH EQUIVALENTS, beginning of period		44,295		19,011
CASH AND CASH EQUIVALENTS, beginning of period		19,011		13,472
CASH AND CASH EQUIVALENTS, end of period	$	40,318	$	76,011
CASH AND CASH EQUIVALENTS, end of period	$	45,753	$	13,266

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
Acquisition of real estate in settlement of loans	$	~~284~~-	$	37177

SUPPLEMENTAL SCHEDULE OF INTEREST AND TAXES PAID
Cash paid for interest	$	21,~~547~~013	$	~~916~~660
Cash paid for income taxes		~~200~~-		-90

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

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CATALYST BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ~~BASIS~~SIGNIFICANT OFACCOUNTING ~~PRESENTATION~~POLICIES

Nature of Operations

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~~Basis ~~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 and nine months ended September 30, 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.Presentation

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, 2025 and 2024 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, 2024.

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.

~~Revision~~Segment ~~of Prior Period Financial Statements~~Reporting

~~During~~The ~~the~~Company ~~three~~determined ~~months ended June 30, 2024, it was discovered~~ that ~~the~~all ~~rate~~ of ~~interest~~its ~~paid~~banking onoperations ~~one~~serve ~~interest-bearing~~a ~~checking~~similar ~~account did not reconcile with the contract with the~~ customer. ~~The~~base, ~~checking~~offer ~~account~~similar isproducts aand ~~public~~services, ~~fund~~and ~~deposit~~are ~~with a negotiated arrangement~~ managed bythrough asimilar ~~lead financial institution that billed the Bank periodically for interest then owed to the municipality~~processes. ~~The~~Therefore, ~~Bank is a party to~~ the ~~agreement~~Company’s ~~with~~banking ~~the~~operations ~~municipality~~are ~~but~~aggregated ~~participated~~into inone ~~only~~reported aoperating ~~portion~~segment, ofwhich ~~the~~generates ~~total~~income ~~funds~~principally ~~deposited~~from byinterest ~~the~~on ~~municipality~~loans and ~~did~~investment ~~not~~securities, ~~deal~~as ~~directly~~well ~~with~~as ~~the~~from ~~municipality~~fees ~~with~~charged ~~respect~~in toconnection ~~the~~with ~~funds~~various ~~deposited~~loan orand ~~the~~deposit ~~interest paid~~services. ~~These~~The ~~responsibilities~~chief ~~are~~operating ~~handled~~decision ~~indirectly~~maker ~~through~~(“CODM”) is the ~~lead~~Chief ~~institution.~~Executive ~~During June of 2024~~Officer, ~~the~~who ~~Bank~~for ~~became aware of~~ the ~~additional~~purposes ~~interest owed by it pursuant to the agreement. As a result~~ of ~~the~~assessing ~~error~~performance, ~~$137,000~~making ofoperating ~~total interest expense was not properly accrued or paid by the Bank during the period beginning August 1~~decisions, ~~2022~~ and ~~ending~~allocating ~~March~~Company 31resources, ~~2024.~~regularly Inreviews ~~accordance~~net ~~with~~income ~~the~~as ~~guidance~~reported ~~set forth~~ in ~~SEC~~the ~~Staff~~accompanying ~~Bulletin~~consolidated ~~99,~~statements ~~Materiality,~~of ~~and~~income. ~~SEC~~The ~~Staff~~level ~~Accounting~~of ~~Bulletin~~disaggregation ~~108,~~and ~~Considering~~amounts ~~Effects~~ of ~~Prior~~significant ~~Year~~segment ~~Misstatements~~income ~~when~~and ~~Quantifying~~expenses ~~Misstatements in Current Year Financials, the Bank concluded~~ that ~~the~~are ~~error~~regularly ~~was~~provided ~~not material~~ to ~~any~~the ~~prior~~CODM ~~periods,~~are the ~~current~~same ~~period~~as orthose ~~the~~presented ~~trend~~ in ~~earnings~~the ~~from~~accompanying ~~a quantitative~~consolidated ~~and~~statements ~~qualitative~~of ~~perspective~~income. ~~However~~Likewise, ~~correcting~~ the ~~cumulative~~measure ~~effect~~ of ~~the~~segment ~~error~~assets inis ~~the~~reported ~~current~~on ~~period would have resulted in a material misstatement in~~ the ~~current~~accompanying ~~period.~~consolidated ~~Accordingly, management revised the prior period financial~~ statements, ~~related~~of ~~disclosures, and supplemental information presented in this filing to correct the misstatement. We will also revise previously reported~~ financial ~~information~~condition ~~for these immaterial errors in our future filings,~~ as ~~applicable.~~total ~~The Company’s previously issued financial statements and related disclosures were not amended and can still be relied upon~~assets.

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The following highlights the primary changes to prior period financial statements presented in this Form 10-Q caused by the correction of the misstated interest expense:


(Dollars in thousands)	As Reported		Adjustment		As Revised
Revised Consolidated Statements of Condition as of December 31, 2023
Other liabilities	$	1,277	$	96	$	1,373
Retained earnings		53,045		(96)		52,949
Total shareholders' equity		84,655		(96)		84,559

Revised Consolidated Statements of Income for the Three Months Ended September 30, 2023
Interest expense - Deposits	$	428	$	24	$	452
Total interest expense		497		24		521
Net interest income		1,972		(24)		1,948
Income tax expense (benefit)		27		(5)		22
Net income (loss)		170		(19)		151

Revised Consolidated Statements of Income for the Nine Months Ended September 30, 2023
Interest expense - Deposits	$	1,012	$	80	$	1,092
Total interest expense		1,217		80		1,297
Net interest income		5,841		(80)		5,761
Income tax expense (benefit)		19		(17)		2
Net income (loss)		282		(63)		219

Revised Consolidated Statements of Changes in Shareholders' Equity
Retained earnings, as of December 31, 2022	$	52,778	$	(20)	$	52,758
Retained earnings, as of June 30, 2023		52,517		(26)		52,491
Retained earnings, as of September 30, 2023		52,687		(45)		52,642

Revised Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023
Increase (decrease) in other liabilities	$	308	$	63	$	371

Management performed a review of all similar contracts with deposit customers and verified that the error was isolated to this unique deposit account. Management and the Audit Committee also assessed the error’s impact on internal controls over financial reporting and did not identify any material weaknesses. For further information on Management’s evaluation of the Company’s internal controls, see Item 4 of this Quarterly Report on Form 10-Q.

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~~2024. 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~~There ~~the~~were ~~three~~no ~~months~~material ~~ended~~changes ~~March~~from ~~31, 2024,~~ the ~~measurement~~significant ofaccounting ~~the~~policies ~~Company’s~~or ~~deferred income tax assets and liabilities was identified as a~~ critical accounting ~~estimate.~~estimates ~~Deferred~~previously ~~income~~disclosed ~~tax~~in ~~assets~~the ~~and~~Company’s ~~liabilities~~Annual ~~are~~Report ~~determined~~on ~~based~~Form on10-K for the ~~tax~~year ~~effects~~ended ofDecember ~~the~~31, ~~temporary~~2024. ~~differences~~In ~~between~~preparing the ~~book~~financial ~~and~~statements, ~~tax~~the ~~bases~~Company ofis ~~the~~required ~~various~~to ~~assets~~make ~~and~~estimates ~~liabilities~~ and ~~gives~~assumptions ~~current~~that ~~recognition~~affect tothe ~~changes~~amounts reported in ~~tax~~the ~~rates~~financial statements and ~~laws~~accompanying notes. AtActual ~~September~~results ~~30,~~could ~~2024,~~differ ~~the~~from ~~Company’s~~those ~~net~~estimates. ~~deferred~~The ~~tax~~consolidated ~~asset~~financial ~~totaled~~statements ~~$1.4~~reflect ~~million~~all ~~and~~adjustments isthat ~~included~~are, in ~~other assets on~~ the ~~statement~~opinion of ~~financial~~management, ~~condition.~~necessary ~~According~~for toa ~~Subtopic~~fair ~~740-10~~statement of the ~~Accounting~~Company’s ~~Standards~~financial ~~Codification~~condition, ~~(“ASC~~results ~~740-10”)~~of operations, ~~the~~comprehensive ~~measurement~~income, ofchanges ~~deferred~~in ~~tax~~equity ~~assets~~and iscash ~~reduced,~~flows iffor ~~necessary,~~the byinterim ~~the~~periods ~~amount~~presented. ofThese ~~any~~adjustments ~~tax~~are ~~benefits~~of ~~that,~~a ~~based~~normal onrecurring ~~available~~nature ~~evidence,~~and ~~are~~include ~~not~~appropriate estimated provisions.

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 its annual financial statements for the year ended December 31, 2025. As the update contains only amendments to disclosure requirements, adoption will have no impact to the Company’s consolidated results of operations or financial condition.

ASU No. 2024-03. In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU require disclosure, in the notes to the financial statements, of specified qualitative and quantitative information about certain costs and expenses, such as employee compensation, depreciation, and intangible asset amortization. Disclosure requirements also include a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, among other items. The Company expects to adopt the amendments in ASU 2024-03 for periods beginning after December 31, 2026. As the update contains only amendments to disclosure requirements, adoption will have no impact to the Company’s consolidated results of operations or financial condition.

Revision of Prior Period Financial Statements

During the three months ended June 30, 2024, it was discovered that the rate of interest paid on one interest-bearing checking account did not reconcile with the contract with the customer. The checking account was a public fund deposit with a negotiated arrangement managed by a lead financial institution that billed the Bank periodically for interest then owed to the municipality. The Bank is a party to the agreement with the municipality but participated in only a portion of the total funds deposited by the municipality and did not deal directly with the municipality with respect to the funds deposited or the interest paid. These responsibilities are handled indirectly through the lead institution. During June 2024, the Bank became aware of the additional interest owed by it pursuant to the agreement. As a result of the error, $137,000 of total interest expense was not properly accrued or paid by the Bank during the period beginning August 1, 2022 and ending March 31, 2024. In accordance with the guidance set forth in SEC Staff Bulletin 99, Materiality, and SEC Staff Accounting Bulletin 108, Considering Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financials, the Bank concluded that the error was not material to any prior periods, the current period or the trend in earnings from a quantitative and qualitative perspective. However, correcting the cumulative effect of the error in the current period would have resulted in a material misstatement in the current period. Accordingly, management revised the prior period financial statements, related disclosures, and supplemental information presented in this filing to correct the misstatement. We will also revise previously reported financial information for these immaterial errors in our future filings, as applicable. The Company’s previously issued financial statements and related disclosures were not amended and can still be relied upon.

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~~expected~~The tofollowing betable ~~realized.~~highlights ~~At September 30, 2024,~~ the ~~Company~~primary ~~has~~changes 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~~prior ~~market~~period ~~conditions~~financial ~~and~~statements ~~other~~presented ~~factors.~~in Wethis ~~may~~Form ~~adjust~~10-Q ~~our~~caused ~~deferred~~by ~~tax~~the ~~asset~~correction ~~balances~~of ifthe ~~our~~misstated ~~judgments~~interest ~~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


(Dollars in thousands, except per share data)	As Reported		Adjustment		As Revised
Revised Consolidated Statements of Income (Loss) for the Three Months Ended March 31, 2024
Interest expense - Deposits	$	754	$	15	$	769
Total interest expense		1,047		15		1,062
Net interest income		2,108		(15)		2,093
Income tax expense (benefit)		(1,264)		(3)		(1,267)
Net income (loss)		(4,677)		(12)		(4,689)

Revised Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024
Increase in other liabilities	$	299	$	12	$	311

Accounting Standards Updates Issued, but Not Adopted

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NOTE 32. EARNINGS (LOSS) PER SHARE

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

Three Months Ended ~~September~~March 3031,

~~Nine Months Ended September 30,~~

(In thousands, except per share data)

~~2024~~2025

~~2023~~2024

~~2024~~

~~2023~~

Numerator

Net income (loss) available to common shareholders

~~447~~586

~~151~~(4,689)

~~(3,715)~~

~~219~~

Denominator

Weighted average common shares outstanding

4,~~439~~241

4,~~901~~651

~~4,537~~

~~5,033~~

Weighted average unallocated common stock held by benefit plans

(~~546~~518)

(~~588~~562)

~~(555)~~

~~(597)~~

Weighted average shares - basic

3,~~893~~723

4,~~313~~089

~~3,982~~

~~4,436~~

Effect of dilutive stock-based awards(1):

Stock options

Restricted stock

123

11-

Weighted average shares - assuming dilution

3,~~905~~726

4,~~324~~089

~~3,982~~

~~4,442~~

Basic earnings (loss) per common share

0.1116

0(1.0315)

~~(0.93)~~

~~0.05~~

Diluted earnings (loss) per common share

0.1116

0(1.0315)

~~(0.93)~~

~~0.05~~

(1) The computation of diluted earnings (loss) per common share for the ~~nine~~three months ended ~~September~~March 3031, 2024 does not include the impact of dilutive stock-based awards because to do so would be antidilutive for a period with a net loss.

Diluted earnings per share was computed using the treasury stock method. The weighted average of potentially dilutive common shares attributable to outstanding stock options that were anti-dilutive totaled ~~294~~295,~~573~~822 and ~~280~~294,~~620~~830 for the three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, 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 326 for the three months ended September 30, 2024.~~ There were no potentially dilutive common shares attributable to restricted stock that were anti-dilutive for the three months ended ~~September~~March 3031, ~~2023.~~2025 and 2024.

The weighted average of potentially dilutive common shares attributable to outstanding stock options that were anti-dilutive totaled 294,647 and 290,379 for the nine months ended September 30, 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 537 and 39,779 for the nine months ended September 30, 2024 and 2023, respectively, and were excluded from the calculation of diluted earnings per share.

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NOTE 43. 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:


	~~September~~March 3031, ~~2024~~2025
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale
Mortgage-backed securities	$	32,~~182~~051	$	~~136~~76	$	(3,~~402~~796)	$	28,~~916~~331
U.S. Government and agency obligations		1,000		-		(5)		995
Municipal obligations		1,703		13		(207)		1,509
Municipal obligations		2,407		26		(148)		2,285
Total available-for-sale	$	33,754	$	89	$	(4,003)	$	29,840
Total available-for-sale	$	35,589	$	162	$	(3,555)	$	32,196
Securities held-to-maturity
U.S. Government and agency obligations	$	13,000	$	-	$	(1,~~733~~814)	$	11,~~267~~186
Municipal obligations		~~450~~445		-		(1820)		~~432~~425
Total held-to-maturity	$	13,~~450~~445	$	-	$	(1,~~751~~834)	$	11,~~699~~611


	December 31, ~~2023~~2024
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Securities available-for-sale
Mortgage-backed securities	$	6531,~~704~~511	$	1418	$	(84,~~206~~327)	$	5727,~~512~~202
U.S. Government and agency obligations		7,999		-		(611)		7,388
Municipal obligations		1,704		4		(198)		1,510
Municipal obligations		5,998		7		(365)		5,640
Total available-for-sale	$	33,215	$	22	$	(4,525)	$	28,712
Total available-for-sale	$	79,701	$	21	$	(9,182)	$	70,540
Securities held-to-maturity
U.S. Government and agency obligations	$	13,~~003~~000	$	-	$	(2,~~210~~140)	$	10,~~793~~860
Municipal obligations		~~458~~447		-		(2423)		~~434~~424
Total held-to-maturity	$	13,~~461~~447	$	-	$	(2,~~234~~163)	$	11,~~227~~284

There were no securities transferred between classifications during the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 or ~~2023~~2024. There were no sales of investment securities during the three months ended March 31, 2025. During the ~~nine~~three months ended ~~September~~March 3031, 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.~~

Accrued interest receivable on the Company’s investment securities totaled $~~153~~150,000 and $~~241~~142,000 at ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, respectively.

AtInvestment ~~September~~securities ~~30,~~with ~~2024~~a ~~and~~carrying ~~December~~amount ~~31,~~of ~~2023, investment securities totaling~~ $1419.41 million and $4415.6 1 million, ~~respectively,~~ were pledged to secure public deposits as required or permitted by law. ~~During~~at ~~the~~March ~~nine~~31, ~~months~~2025 ~~ended~~and ~~September~~December 3031, 2024, ~~the~~respectively. The Company ~~used~~also uses a custodial letter of credit granted by the Federal Home Loan Bank of Dallas to collateralize public fund deposits. asAt weMarch ~~executed~~31, ~~the~~2025 ~~investment~~and ~~securities~~December ~~sales.~~31 ~~At September 30,~~ 2024, $1925.0 million of the custodial letter of credit was pledged as collateral for pubic deposits.

~~Investment~~At March 31, 2025 and December 31, 2024, other than securities ~~totaling~~issued ~~$18~~by U.9S. ~~million~~Government ~~and~~agencies ~~$11~~or U.1S. ~~million~~Government ~~were~~sponsored ~~pledged~~enterprises, towe ~~the~~had no investments ~~Federal~~in ~~Reserve~~a ~~Bank~~single asissuer ~~collateral~~which ~~for~~had ~~borrowings~~an ataggregate ~~September~~book ~~30,~~value ~~2024~~in ~~and~~excess ~~December~~of 10% ~~31,~~of ~~2023,~~the ~~respectively~~Company’s shareholders’ equity.

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The following is a summary of maturities of securities available-for-sale and held-to-maturity at ~~September~~March ~~30, 2024 and December~~ 31, ~~2023~~2025:


	~~September~~March 3031, ~~2024~~2025
	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~~-	$	~~1,693~~-	$	-	$	-
After one through five years		~~3,870~~630		~~3,965~~643		2,~~450~~445		2,~~277~~281
After five through ten years		~~2,583~~-		~~2,606~~-		710,000		68,~~051~~568
After ten years		271,~~436~~073		~~23,932~~866		41,000		~~3,371~~762
Total	$	35,589	$	32,196	$	13,450	$	11,699
Subtotal		1,703		1,509		13,445		11,611
Mortgage-backed securities		32,051		28,331		-		-
Total	$	33,754	$	29,840	$	13,445	$	11,611


	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, other than mortgage-backed 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.

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Information pertaining to securities with gross unrealized losses at ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


	~~September~~March 3031, ~~2024~~2025
	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	$	2,~~973~~791	$	(1347)	$	1918,~~523~~103	$	(3,~~389~~749)	$	2220,~~496~~894	$	(3,~~402~~796)
U.S. Government and agency obligations		-		-		995		(5)		995		(5)
Municipal obligations		-		-		866		(207)		866		(207)
Municipal obligations		-		-		1,282		(148)		1,282		(148)
Total available-for-sale	$	2,791	$	(47)	$	18,969	$	(3,956)	$	21,760	$	(4,003)
Total available-for-sale	$	2,973	$	(13)	$	21,800	$	(3,542)	$	24,773	$	(3,555)
Securities held-to-maturity
U.S. Government and agency obligations	$	-	$	-	$	11,~~267~~186	$	(1,~~733~~814)	$	11,~~267~~186	$	(1,~~733~~814)
Municipal obligations		-		-		~~432~~425		(1820)		~~432~~425		(1820)
Total held-to-maturity	$	-	$	-	$	11,~~699~~611	$	(1,~~751~~834)	$	11,~~699~~611	$	(1,~~751~~834)
Total	$	2,~~973~~791	$	(1347)	$	3330,~~499~~580	$	(5,~~293~~790)	$	3633,~~472~~371	$	(5,~~306~~837)


	December 31, ~~2023~~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	$	~~554~~3,274	$	(190)	$	5518,~~959~~135	$	(84,~~205~~237)	$	5621,~~513~~409	$	(84,~~206~~327)
U.S. Government and agency obligations		-		-		7,388		(611)		7,388		(611)
Municipal obligations		-		-		878		(198)		878		(198)
Municipal obligations		-		-		3,992		(365)		3,992		(365)
Total available-for-sale	$	3,274	$	(90)	$	19,013	$	(4,435)	$	22,287	$	(4,525)
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~~860	$	(2,~~210~~140)	$	10,~~793~~860	$	(2,~~210~~140)
Municipal obligations		-		-		~~434~~424		(2423)		~~434~~424		(2423)
Total held-to-maturity	$	-	$	-	$	11,~~227~~284	$	(2,~~234~~163)	$	11,~~227~~284	$	(2,~~234~~163)
Total	$	~~554~~3,274	$	(190)	$	7830,~~566~~297	$	(116,~~415~~598)	$	7933,~~120~~571	$	(116,~~416~~688)

At ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, the Company held 4240 and 9241 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 ~~September~~March 3031, ~~2024~~2025 or December 31, ~~2023~~2024.

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NOTE 54. LOANS RECEIVABLE

Loans receivable at ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024 are summarized as follows:


	~~September 30,~~		~~December 31,~~
(Dollars in thousands)	2024		2023
	March 31,		December 31,
(Dollars in thousands)	2025		2024
Real estate loans
One- to four-family residential	$	8182,~~433~~025	$	8381,~~623~~097
Commercial real estate		22,~~704~~103		2122,~~478~~108
Construction and land		3032,~~310~~038		1332,~~857~~941
Multi-family residential		2,~~622~~530		32,~~373~~570
Total real estate loans		~~137~~138,~~069~~696		~~122~~138,~~331~~716
Other loans
Commercial and industrial		2625,~~507~~447		1926,~~984~~439
Consumer		21,~~306~~934		21,~~605~~921
Total other loans		2827,~~813~~381		2228,~~589~~360
Total loans		~~165~~166,~~882~~077		~~144~~167,~~920~~076
Less: Allowance for loan losses		(2,414)		(2,124)
Less: Allowance for credit losses		(2,500)		(2,522)
Net loans	$	163,~~468~~577	$	~~142~~164,~~796~~554

At ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, real estate loans totaling $8180.35 million and $8180.26 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 $~~656~~710,000 and $~~659~~704,000 at ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, 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 nine months ended September 30, 2024 and 2023.


	For the Nine Months Ended September 30, 2024
(Dollars in thousands)	Beginning Balance		Provision (Reversal)		Charge-offs		Recoveries		Ending Balance
Allowance for credit losses
One- to four-family residential	$	1,240	$	62	$	(160)	$	68	$	1,210
Commercial real estate		213		17		(28)		14		216
Construction and land		283		258		-		-		541
Multi-family residential		50		(13)		-		-		37
Commercial and industrial		302		206		(133)		4		379
Consumer		36		27		(43)		11		31
Total for loans	$	2,124	$	557	$	(364)	$	97	$	2,414
Unfunded lending commitments(1)		257		(26)		-		-		231
Total	$	2,381	$	531	$	(364)	$	97	$	2,645

(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

The following describes the general risk characteristics of each segment of the loan portfolio disclosed in this note:

One- to four-family residential – This category primarily consists of loans secured by residential real estate located in our market. The performance of these loans may be adversely affected by, among other factors, unemployment rates, local residential real estate market conditions and the interest rate environment. Generally, these loans are for longer terms than commercial and construction loans.

Commercial real estate – This category generally consists of loans secured by retail and industrial use buildings, hotels, strip shopping centers and other properties used for commercial purposes. The performance of these loans may be adversely affected by, among other factors, conditions specific to the relevant industry, the real estate market for the property type and geographic region where the property or borrower is located.


	For the Nine Months Ended September 30, 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	$	(299)	$	-	$	98	$	1,181
Commercial real estate		248		(53)		(5)		-		-		190
Construction and land		74		40		48		-		-		162
Multi-family residential		40		5		(2)		-		-		43
Commercial and industrial		175		51		73		-		1		300
Consumer		46		8		2		(26)		11		41
Unallocated		-		-		119		-		-		119
Total for loans	$	1,807	$	209	$	(64)	$	(26)	$	110	$	2,036
Unfunded lending commitments		-		216		64		-		-		280
Total	$	1,807	$	425	$	-	$	(26)	$	110	$	2,316

Construction and land – This category consists of loans to finance the ground-up construction and/or improvement of residential and commercial properties and loans secured by land. The performance of these loans is generally dependent upon the successful completion of improvements and/or land development for the end user, the sale of the property to a third party, or a secondary source of cash flow from the owners. The successful completion of planned improvements and development may be adversely affected by changes in the estimated property value upon completion of construction, projected costs and other conditions leading to project delays.

Multi-family residential – This category consists of loans secured by apartment or residential buildings with five or more units used to accommodate households on a temporary or permanent basis. The performance of multi-family loans is generally dependent on the receipt of rental income from the tenants who occupy the subject property. The occupancy rate of the subject property and the ability of the tenants to pay rent may be adversely affected by the location of the subject property and local economic conditions.

~~The~~Commercial ~~following~~and ~~tables~~industrial ~~outline~~– ~~the~~This ~~allowance~~category ~~for~~primarily ~~loan~~consists ~~losses~~of secured and ~~the~~unsecured ~~balance~~loans ofto small and mid-sized businesses to fund operations or purchase non-real estate assets. Secured loans are primarily secured by ~~method~~accounts receivable, inventory, equipment and certain other business assets. The performance of ~~loss~~these ~~evaluation~~loans atmay ~~September~~be 30adversely affected by, ~~2024~~among ~~and~~other ~~December~~factors, 31conditions specific to the relevant industry, ~~2023~~fluctuations in the value of the collateral and individual performance factors related to the borrower.


	September 30, 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	$	124	$	1,086	$	1,210	$	127	$	1,113	$	1,240
Commercial real estate		-		216		216		-		213		213
Construction and land		38		503		541		46		237		283
Multi-family residential		-		37		37		-		50		50
Commercial and industrial		-		379		379		-		302		302
Consumer		-		31		31		-		36		36
Total	$	162	$	2,252	$	2,414	$	173	$	1,951	$	2,124
Loans
One- to four-family residential	$	633	$	80,800	$	81,433	$	989	$	82,634	$	83,623
Commercial real estate		-		22,704		22,704		50		21,428		21,478
Construction and land		124		30,186		30,310		132		13,725		13,857
Multi-family residential		-		2,622		2,622		-		3,373		3,373
Commercial and industrial		-		26,507		26,507		-		19,984		19,984
Consumer		-		2,306		2,306		-		2,605		2,605
Total	$	757	$	165,125	$	165,882	$	1,171	$	143,749	$	144,920

Consumer – This category consists of loans to individuals for household, family and other personal use. The performance of these loans may be adversely affected by national and local economic conditions, unemployment rates and other factors affecting the borrower’s income available to service the debt.

At September 30, 2024 and December 31, 2023, all one- to four family residential and construction and land 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 loans secured by one- to four-family residential properties and land located in our market.

Table of Contents

AThe ~~summary~~following oftables ~~current,~~outline ~~past~~the ~~due~~changes ~~and~~in ~~non-accrual~~the ~~loans~~allowance asfor ofcredit ~~September~~losses ~~30,~~for ~~2024~~the ~~and~~three ~~December~~ months ended March 31, ~~2023~~2025 ~~follows:~~and 2024.


	~~As of September 30, 2024~~	For the Three Months Ended March 31, 2025
(Dollars in thousands)	~~Past Due 30-89 Days and Accruing~~	Beginning Balance		~~Past Due Over 90 Days and Accruing~~	Provision (Reversal)		~~Past Due Over 30 Days and Non-accruing~~	Charge-offs		~~Total Past Due~~	Recoveries		~~Current and Accruing~~	Ending Balance		~~Current and Non-accruing~~		~~Total Loans~~
One- to four-family residential	$	2,409		$	15		$	724		$	3,148		$	77,611		$	674	$	81,433
Allowance for credit losses
Commercial real estate		267			-			-			267			22,437			-		22,704
One- to four-family residential		$	1,164		$	60		$	(31)		$	8		$	1,201
Construction and land		14			-			-			14			30,271			25		30,310
Commercial real estate			192			(2)			-			-			190
Multi-family residential		-			-			-			-			2,622			-		2,622
Construction and land			528			(16)			-			-			512
Commercial and industrial		3			-			-			3			26,504			-		26,507
Multi-family residential			35			-			-			-			35
Consumer		14			-			-			14			2,292			-		2,306
Commercial and industrial			372			(64)			-			5			313
Total	$	2,707		$	15		$	724		$	3,446		$	161,737		$	699	$	165,882
Consumer			26			21			(22)			1			26
Unallocated			205			18			-			-			223
Total for loans		$	2,522		$	17		$	(53)		$	14		$	2,500
Unfunded lending commitments(1)			121			(17)			-			-			104
Total		$	2,643		$	-		$	(53)		$	14		$	2,604

(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 credit losses on loans and reported in aggregate as the provision for credit losses on the income statement.


	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 non-accrual loans as of September 30, 2024 and December 31, 2023 follows:


	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		257		53		-		-		310
Total	$	2,381	$	95	$	(123)	$	25	$	2,378



	September 30, 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
Non-accrual loans
One- to four-family residential	$	1,381	$	17	$	1,398	$	1,564	$	311	$	1,875
Commercial real estate		-		-		-		-		50		50
Construction and land		25		-		25		42		-		42
Multi-family residential		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	1,406	$	17	$	1,423	$	1,606	$	361	$	1,967

The Company was not committed to lend any additional funds on non-accrual loans at September 30, 2024 or December 31, 2023. The Company does not recognize interest income while loans are on non-accrual status. All payments received while on non-accrual status are applied against the principal balance of non-accrual loans.

At September 30, 2024, loans secured by residential real estate for which formal foreclosure proceedings were in process totaled $80,000. 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.

Table of Contents

~~Occasionally~~The ~~loans~~allowance ~~are~~for ~~modified~~credit tolosses ~~assist~~is ~~borrowers~~established ~~experiencing~~through ~~financial~~a ~~difficulty.~~provision Wefor ~~consider~~credit ~~modifications~~losses ~~such~~charged asto ~~term~~earnings. ~~extensions~~Loans, ~~principal~~or ~~forgiveness~~portions of loans, ~~payment~~are ~~delays~~charged oroff ~~alternate~~against ~~payment~~the ~~schedules~~allowance in the period that such loans, ~~and~~or ~~alternate~~portions ~~interest~~thereof, ~~rate~~are ~~terms~~deemed uncollectible. AtSubsequent ~~September~~recoveries, 30if any, ~~2024~~are ~~and~~credited ~~December~~to ~~31,~~the ~~2023~~allowance. Under the guidance of Topic 326 of the Accounting Standards Codification (“ASC 326”), the Company groups loans and unfunded lending commitments with ~~modifications~~similar risk characteristics into pools or segments and collectively evaluates each pool to estimate the allowance for ~~borrowers~~credit ~~experiencing~~losses. ~~financial~~For ~~difficulty~~each ~~totaled~~loan ~~$615~~pool,~~000~~ ~~and~~the ~~$683,000,~~Company ~~respectively~~uses the remaining life method to calculate its credit loss estimate. Loans are individually evaluated for credit losses when they do not share similar risk characteristics with our identified loan pools under ASC 326. The allowance for credit losses reflects the Company’s estimate of current expected credit losses (“CECL”) over the full life of the financial assets.

~~During~~The ~~the~~following ~~nine~~tables ~~months~~outline ~~ended September 30, 2024,~~ the ~~Company~~allowance ~~granted~~for ~~one~~credit ~~loan~~losses ~~modification~~and ~~to a borrower experiencing financial difficulty that resulted in a more than minor change in~~ the ~~timing~~balance ~~or amount~~ of ~~contractual~~loans ~~cash flows. The maturity date was extended~~ by ~~three~~method ~~years for a residential mortgage loan with a balance~~ of ~~$20,000.~~loss ~~During~~evaluation ~~the~~at ~~nine~~March ~~months ended September 30~~31, ~~2023,~~2025 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 September 30, 2024 or~~ December 31, ~~2023~~2024.

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:


	March 31, 2025						December 31, 2024
(Dollars in thousands)	Individually Evaluated		Collectively Evaluated		Total		Individually Evaluated		Collectively Evaluated		Total
Allowance for credit losses
One- to four-family residential	$	68	$	1,133	$	1,201	$	104	$	1,060	$	1,164
Commercial real estate		-		190		190		-		192		192
Construction and land		33		479		512		35		493		528
Multi-family residential		-		35		35		-		35		35
Commercial and industrial		-		313		313		-		372		372
Consumer		-		26		26		-		26		26
Unallocated		-		223		223		-		205		205
Total	$	101	$	2,399	$	2,500	$	139	$	2,383	$	2,522
Loans
One- to four-family residential	$	530	$	81,495	$	82,025	$	589	$	80,508	$	81,097
Commercial real estate		-		22,103		22,103		-		22,108		22,108
Construction and land		118		31,920		32,038		120		32,821		32,941
Multi-family residential		-		2,530		2,530		-		2,570		2,570
Commercial and industrial		3,289		22,158		25,447		-		26,439		26,439
Consumer		-		1,934		1,934		-		1,921		1,921
Total	$	3,937	$	162,140	$	166,077	$	709	$	166,367	$	167,076

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.

At March 31, 2025 and December 31, 2024, 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. The following describes the types of collateral that secure collateral dependent loans:

●

One- to four-family first mortgages are primarily secured by first liens on residential real estate.

●

Construction and land loans are primarily secured by residential and commercial properties, which are under construction and/or redevelopment, and by raw land.

●

Commercial and industrial loans considered collateral dependent are primarily secured by accounts receivable, inventory and equipment.

Table of Contents

~~The~~A ~~following~~summary ~~table~~of ~~presents~~current, ~~the~~past ~~Company’s~~due ~~loan portfolio by credit quality classification~~ and ~~origination~~non-accrual ~~year~~loans as of ~~September~~March 3031, ~~2024.~~2025 ~~The~~and ~~Company~~December 31, ~~uses~~2024 ~~the latter of origination or renewal date to classify term loans into vintages.~~follows:


	As of March 31, 2025														~~Line-of-credit~~
															Arrangements
(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
	Term Loans by Origination Year												Line-of-credit		Converted to
One- to four-family residential	$	3,094	$	91	$	811	$	3,996	$	77,322	$	707	$	82,025
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Arrangements		Term Loans		Total
Commercial real estate		37		-		-		37		22,066		-		22,103
One- to four-family residential
Construction and land		-		-		13		13		32,002		23		32,038
Pass	$	2,143	$	2,723	$	12,318	$	3,099	$	2,721	$	51,691	$	2,400	$	1,774	$	78,869
Multi-family residential		-		-		-		-		2,530		-		2,530
Special Mention		-		-		-		57		59		132		-		-		248
Commercial and industrial		23		-		-		23		25,424		-		25,447
Substandard		-		25		-		-		26		2,265		-		-		2,316
Consumer		7		-		-		7		1,927		-		1,934
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	3,161	$	91	$	824	$	4,076	$	161,271	$	730	$	166,077
Total	$	2,143	$	2,748	$	12,318	$	3,156	$	2,806	$	54,088	$	2,400	$	1,774	$	81,433
Commercial real estate
Pass	$	2,852	$	4,730	$	1,799	$	1,104	$	3,314	$	6,035	$	-	$	1,399	$	21,233
Special Mention		-		-		371		871		-		-		-		-		1,242
Substandard		229		-		-		-		-		-		-		-		229
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	3,081	$	4,730	$	2,170	$	1,975	$	3,314	$	6,035	$	-	$	1,399	$	22,704
Construction and land
Pass	$	1,886	$	50	$	103	$	53	$	71	$	344	$	27,654	$	-	$	30,161
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		124		-		25		-		-		149
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	1,886	$	50	$	103	$	177	$	71	$	369	$	27,654	$	-	$	30,310
Multi-family residential
Pass	$	-	$	-	$	-	$	470	$	-	$	2,152	$	-	$	-	$	2,622
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	470	$	-	$	2,152	$	-	$	-	$	2,622
Commercial and industrial
Pass	$	11,452	$	4,072	$	1,430	$	515	$	247	$	292	$	8,499	$	-	$	26,507
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	11,452	$	4,072	$	1,430	$	515	$	247	$	292	$	8,499	$	-	$	26,507
Consumer
Pass	$	699	$	605	$	264	$	377	$	87	$	274	$	-	$	-	$	2,306
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	699	$	605	$	264	$	377	$	87	$	274	$	-	$	-	$	2,306
Total
Pass	$	19,032	$	12,180	$	15,914	$	5,618	$	6,440	$	60,788	$	38,553	$	3,173	$	161,698
Special Mention		-		-		371		928		59		132		-		-		1,490
Substandard		229		25		-		124		26		2,290		-		-		2,694
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	19,261	$	12,205	$	16,285	$	6,670	$	6,525	$	63,210	$	38,553	$	3,173	$	165,882


	As of December 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	$	2,926	$	64	$	767	$	3,757	$	76,577	$	763	$	81,097
Commercial real estate		-		-		-		-		22,108		-		22,108
Construction and land		81		-		13		94		32,823		24		32,941
Multi-family residential		-		-		-		-		2,570		-		2,570
Commercial and industrial		1		-		-		1		26,438		-		26,439
Consumer		8		-		-		8		1,913		-		1,921
Total	$	3,016	$	64	$	780	$	3,860	$	162,429	$	787	$	167,076

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

A summary of total non-accrual loans as of March 31, 2025 and December 31, 2024 follows:



	March 31, 2025						December 31, 2024
(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
Non-accrual loans
One- to four-family residential	$	1,518	$	-	$	1,518	$	1,518	$	12	$	1,530
Commercial real estate		-		-		-		-		-		-
Construction and land		36		-		36		37		-		37
Multi-family residential		-		-		-		-		-		-
Commercial and industrial		-		-		-		-		-		-
Consumer		-		-		-		-		-		-
Total	$	1,554	$	-	$	1,554	$	1,555	$	12	$	1,567

19The Company was not committed to lend any additional funds on non-accrual loans at March 31, 2025 or December 31, 2024. The Company does not recognize interest income while loans are on non-accrual status. All payments received while on non-accrual status are applied against the principal balance of non-accrual loans.

At March 31, 2025, loans secured by residential real estate and vacant land for which formal foreclosure proceedings were in process totaled $45,000 and $13,000, respectively. At December 31, 2024, loans secured by residential real estate for which formal foreclosure proceedings were in process totaled $37,000.

Table of Contents

~~The~~Occasionally ~~following~~loans ~~table~~are ~~presents~~modified ~~gross~~to ~~charge-offs~~assist ~~and~~borrowers ~~recoveries~~experiencing ~~for~~financial ~~the~~difficulty. ~~nine~~We ~~months~~consider ~~ended~~modifications ~~September~~such 30as term extensions, ~~2024~~principal byforgiveness, ~~origination~~payment ~~year~~delays ofor ~~the~~alternate ~~related~~payment ~~loans.~~schedules, ~~The~~and ~~Company~~alternate ~~uses~~interest ~~the~~rate ~~latter~~terms. ofAt ~~origination~~March or31, ~~renewal~~2025 ~~date~~and toDecember ~~classify~~31, 2024, loans ~~into~~with ~~vintages~~modifications for borrowers experiencing financial difficulty totaled $563,000 and $583,000, respectively.


	Loan Origination Year
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Total
Charge-offs
One- to four-family residential	$	-	$	-	$	-	$	-	$	-	$	160	$	160
Commercial real estate		-		-		-		-		-		28		28
Commercial and industrial		43		45		45		-		-		-		133
Consumer		37		2		1		1		-		2		43
Total	$	80	$	47	$	46	$	1	$	-	$	190	$	364
Recoveries
One- to four-family residential	$	-	$	-	$	-	$	-	$	1	$	67	$	68
Commercial real estate		-		-		-		-		-		14		14
Commercial and industrial		-		4		-		-		-		-		4
Consumer		2		-		-		1		-		8		11
Total	$	2	$	4	$	-	$	1	$	1	$	89	$	97

During the three months ended March 31, 2025, 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. During the year ended December 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. The Company was not committed to lend any additional funds to borrowers with modified terms and experiencing financial difficulty at March 31, 2025 or December 31, 2024.

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

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.

The following table presents gross charge-offs and recoveries for the nine months ended September 30, 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		4		5		9		1		2		5		26
Total	$	4	$	5	$	9	$	1	$	2	$	5	$	26
Recoveries
One- to four-family residential	$	-	$	-	$	-	$	-	$	-	$	98	$	98
Commercial and industrial		-		-		-		-		-		1		1
Consumer		-		-		2		1		-		8		11
Total	$	-	$	-	$	2	$	1	$	-	$	107	$	110

Table of Contents

The following table presents the Company’s loan portfolio by credit quality classification and origination year as of March 31, 2025. 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)	2025		2024		2023		2022		2021		Prior		Arrangements		Term Loans		Total
One- to four-family residential
Pass	$	729	$	3,882	$	4,018	$	12,091	$	2,921	$	51,392	$	2,135	$	2,422	$	79,590
Special Mention		-		-		-		-		55		-		-		-		55
Substandard		-		21		13		-		-		2,346		-		-		2,380
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	729	$	3,903	$	4,031	$	12,091	$	2,976	$	53,738	$	2,135	$	2,422	$	82,025
Commercial real estate
Pass	$	574	$	4,397	$	5,047	$	1,550	$	1,020	$	8,622	$	50	$	199	$	21,459
Special Mention		-		-		-		100		318		-		-		-		418
Substandard		-		226		-		-		-		-		-		-		226
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	574	$	4,623	$	5,047	$	1,650	$	1,338	$	8,622	$	50	$	199	$	22,103
Construction and land
Pass	$	191	$	198	$	-	$	101	$	50	$	327	$	31,016	$	-	$	31,883
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		119		36		-		-		155
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	191	$	198	$	-	$	101	$	169	$	363	$	31,016	$	-	$	32,038
Multi-family residential
Pass	$	-	$	-	$	-	$	-	$	470	$	2,060	$	-	$	-	$	2,530
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	470	$	2,060	$	-	$	-	$	2,530
Commercial and industrial
Pass	$	313	$	11,564	$	2,749	$	208	$	342	$	513	$	6,469	$	-	$	22,158
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		438		-		869		-		-		1,982		-		3,289
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	313	$	12,002	$	2,749	$	1,077	$	342	$	513	$	8,451	$	-	$	25,447
Consumer
Pass	$	452	$	389	$	359	$	206	$	263	$	265	$	-	$	-	$	1,934
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	452	$	389	$	359	$	206	$	263	$	265	$	-	$	-	$	1,934
Total
Pass	$	2,259	$	20,430	$	12,173	$	14,156	$	5,066	$	63,179	$	39,670	$	2,621	$	159,554
Special Mention		-		-		-		100		373		-		-		-		473
Substandard		-		685		13		869		119		2,382		1,982		-		6,050
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	2,259	$	21,115	$	12,186	$	15,125	$	5,558	$	65,561	$	41,652	$	2,621	$	166,077

Table of Contents

~~NOTE~~The 6following table presents the Company’s loan portfolio by credit quality classification and origination year as of December 31, 2024. ~~DEPOSITS~~The Company uses the latter of origination or renewal date to classify term loans into vintages.

Deposits at September 30, 2024 and December 31, 2023 are summarized as follows:


	~~September 30, 2024~~				~~December 31, 2023~~										Line-of-credit
(Dollars in thousands)	Amount		Percent		Amount		Percent
															Arrangements
Non-interest-bearing demand deposits	$	27,904	16.7	%	$	28,183	17.0	%
	Term Loans by Origination Year												Line-of-credit		Converted to
Interest-bearing demand deposits		33,751	20.2			36,867	22.3
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Arrangements		Term Loans		Total
Money market		13,372	8.0			15,126	9.1
One- to four-family residential
Savings		36,798	22.0			31,518	19.0
Pass	$	2,255	$	2,702	$	12,205	$	3,054	$	2,731	$	50,193	$	2,488	$	2,996	$	78,624
Certificates of deposit		55,611	33.1			53,928	32.6
Special Mention		-		-		-		56		-		-		-		-		56
Total deposits	$	167,436	100.0	%	$	165,622	100.0	%
Substandard		22		21		-		-		24		2,350		-		-		2,417
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	2,277	$	2,723	$	12,205	$	3,110	$	2,755	$	52,543	$	2,488	$	2,996	$	81,097
Commercial real estate
Pass	$	3,176	$	4,691	$	1,729	$	1,070	$	3,236	$	5,673	$	-	$	1,884	$	21,459
Special Mention		-		-		102		320		-		-		-		-		422
Substandard		227		-		-		-		-		-		-		-		227
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	3,403	$	4,691	$	1,831	$	1,390	$	3,236	$	5,673	$	-	$	1,884	$	22,108
Construction and land
Pass	$	1,731	$	48	$	102	$	51	$	53	$	347	$	30,451	$	-	$	32,783
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		121		13		24		-		-		158
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	1,731	$	48	$	102	$	172	$	66	$	371	$	30,451	$	-	$	32,941
Multi-family residential
Pass	$	-	$	-	$	-	$	470	$	-	$	2,100	$	-	$	-	$	2,570
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	470	$	-	$	2,100	$	-	$	-	$	2,570
Commercial and industrial
Pass	$	11,095	$	3,640	$	1,142	$	429	$	243	$	281	$	7,944	$	1,665	$	26,439
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	11,095	$	3,640	$	1,142	$	429	$	243	$	281	$	7,944	$	1,665	$	26,439
Consumer
Pass	$	519	$	551	$	239	$	304	$	74	$	234	$	-	$	-	$	1,921
Special Mention		-		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	519	$	551	$	239	$	304	$	74	$	234	$	-	$	-	$	1,921
Total
Pass	$	18,776	$	11,632	$	15,417	$	5,378	$	6,337	$	58,828	$	40,883	$	6,545	$	163,796
Special Mention		-		-		102		376		-		-		-		-		478
Substandard		249		21		-		121		37		2,374		-		-		2,802
Doubtful		-		-		-		-		-		-		-		-		-
Total	$	19,025	$	11,653	$	15,519	$	5,875	$	6,374	$	61,202	$	40,883	$	6,545	$	167,076

The estimated amount of our total uninsured deposits (that is, deposits in excess of the FDIC’s insurance limit) was $40.2 million and $44.6 million, respectively, at September 30, 2024 and December 31, 2023.

At September 30, 2024 scheduled maturities of certificates of deposits were as follows:


(Dollars in thousands)	Amount
2024	$	15,720
2025		36,691
2026		2,203
2027		466
2028		494
2029		37
Total	$	55,611

Table of Contents

~~NOTE~~The 7following table presents gross charge-offs and recoveries for the three months ended March 31, 2025 by origination year of the related loans. ~~BORROWED~~The ~~FUNDS~~Company uses the latter of origination or renewal date to classify loans into vintages.

Borrowed funds and the weighted-average contractual interest rate on borrowings at September 30, 2024 and December 31, 2023 are summarized as follows:


	~~September~~Loan ~~30,~~Origination ~~2024~~Year				~~December 31, 2023~~
(Dollars in thousands)	~~Rate~~2025		~~Amount~~2024		~~Rate~~2023		~~Amount~~2022		2021		Prior		Total
Advance from Federal Reserve Bank of Atlanta	4.76	%	$	20,000	4.83	%	$	10,000
Charge-offs

One- to four-family residential	$	-	$	-	$	-	$	-	$	-	$	31	$	31
Advances from Federal Home Loan Bank of Dallas	0.93	%	$	10,000	0.93	%	$	10,000
Consumer		1		21		-		-		-		-		22
Debt modification discount on FHLB Advances				(487)				(622)
Total	$	1	$	21	$	-	$	-	$	-	$	31	$	53
				9,513				9,378
Recoveries

One- to four-family residential	$	-	$	-	$	-	$	-	$	-	$	8	$	8
Total borrowings			$	29,513			$	19,378
Commercial and industrial		-		-		5		-		-		-		5
Consumer		-		1		-		-		-		-		1
Total	$	-	$	1	$	5	$	-	$	-	$	8	$	14

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~~The ~~payments~~following ~~are~~table ~~due~~presents atgross ~~maturity~~charge-offs and recoveries for the ~~advance~~three ~~from~~months ~~the~~ended ~~Federal~~March ~~Reserve~~31, ~~Bank~~2024 ofby ~~Atlanta~~origination ~~and~~year ~~are~~of ~~due~~the ~~monthly~~related ~~for~~loans. ~~FHLB~~The ~~advances.~~Company Auses ~~schedule~~the latter of ~~maturities~~origination ~~for~~or ~~borrowings~~renewal ~~outstanding~~date atto ~~September~~classify ~~30,~~loans ~~2024~~into ~~are~~vintages. ~~as follows:~~


(Dollars in thousands)	Amount
	Loan Origination Year
Amounts maturing in:
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Total
2024	$	-
Charge-offs
2025		23,000
One- to four-family residential	$	-	$	-	$	-	$	-	$	-	$	101	$	101
2026		-
Commercial real estate		-		-		-		-		-		14		14
2027		3,000
Consumer		3		1		1		1		-		2		8
2028		4,000
Total	$	3	$	1	$	1	$	1	$	-	$	117	$	123
Total	$	30,000
Recoveries
One- to four-family residential	$	-	$	-	$	-	$	-	$	-	$	21	$	21
Consumer		-		1		-		1		-		2		4
Total	$	-	$	1	$	-	$	1	$	-	$	23	$	25

At September 30, 2024 and December 31, 2023, the Company had $43.2 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 $25.0 million custodial letter of credit outstanding from the FHLB as of September 30, 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 September 30, 2024, the Company used $19.0 million of the FHLB custodial letter of credit to collateralize public fund deposits.

At September 30, 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 September 30, 2024 and December 31, 2023, this credit facility was unused.

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NOTE 85. ~~CAPITAL~~FAIR ~~AND~~VALUE ~~REGULATORY MATTERS~~MEASUREMENTS

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 September 30, 2024 and December 31, 2023, the Bank met all of the capital adequacy requirements to which it is subject.

At September 30, 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 September 30, 2024
Common Equity Tier 1 Capital	$	76,435	45.71	%	$	10,868	>6.5	%
Tier 1 Risk-Based Capital		76,435	45.71			13,376	>8.0
Total Risk-Based Capital		78,531	46.97			16,720	>10.0
Tier 1 Leverage Capital		76,435	27.43			13,933	>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 362,199 shares of its common stock at an average cost per share of $11.98 during the nine months ended September 30, 2024. Of those shares, 228,326 were repurchased under the Company’s third repurchase plan announced in November 2023 (“November 2023 Repurchase Plan”), and the remainder were repurchased under the Company’s fourth share repurchase plan announced in May 2024 (“May 2024 Repurchase Plan”). Under the May 2024 Repurchase Plan, 93,127 shares of the Company’s common stock were available for repurchase at September 30, 2024.

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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.

Fair values of assets and liabilities measured on a recurring basis at March 31, 2025 and December 31, 2024 follows:


	Fair Value Measurements at Reporting Date Using
(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
March 31, 2025
Available-for-sale securities	$	29,840	$	-	$	29,840	$	-

December 31, 2024
Available-for-sale securities	$	28,712	$	-	$	28,712	$	-

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Fair values of assets and liabilities measured on a recurring basis at September 30, 2024 and December 31, 2023 follows:


	Fair Value Measurements at Reporting Date Using
(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
September 30, 2024
Available-for-sale securities	$	32,196	$	-	$	32,196	$	-

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, 2025 and December 31, 2024 follows:


	Fair Value Measurements at Reporting Date Using
(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
March 31, 2025
Loans individually evaluated for credit losses	$	293	$	-	$	-	$	293
Foreclosed assets		77		-		-		77
Total	$	370	$	-	$	-	$	370
December 31, 2024
Loans individually evaluated for credit losses	$	314	$	-	$	-	$	314
Foreclosed assets		194		-		-		194
Total	$	508	$	-	$	-	$	508

~~Fair~~At ~~values~~March 31, 2025 and December 31, 2024, individually evaluated loans with a recorded investment of ~~assets~~$393,000 and ~~liabilities~~$452,000, ~~measured~~respectively, onhave been written down to their fair value by a ~~nonrecurring~~charge ~~basis~~to atthe ~~September~~allowance 30for credit losses. Foreclosed assets are adjusted to fair value by recording a related gain or loss through foreclosed asset expense. Foreclosed asset expense for the three months ended March 31, ~~2024~~2025 ~~and~~included ~~December~~net losses of $88,000 on the sales of foreclosed assets. During the three months ended March 31, ~~2023~~2024, ~~follows:~~no impairment losses on foreclosed assets were recognized.


	Fair Value Measurements at Reporting Date Using
(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
September 30, 2024
Loans individually evaluated for credit losses	$	317	$	-	$	-	$	317
Foreclosed assets		173		-		-		173
Total	$	490	$	-	$	-	$	490
December 31, 2023
Loans individually evaluated for credit losses	$	374	$	-	$	-	$	374
Foreclosed assets		60		-		-		60
Total	$	434	$	-	$	-	$	434

At September 30, 2024 and December 31, 2023, individually evaluated loans with a recorded investment of $479,000 and $547,000, respectively, have been written down to their fair value by a charge to the allowance for loan losses. Foreclosed assets are adjusted to fair value by recording a related gain or loss through foreclosed asset expense. Foreclosed asset expense for the three and nine months ended September 30, 2024 included net losses of $39,000 and $37,000, respectively, to adjust foreclosed assets to fair value. For the three and nine months ended September 30, 2023, the Company recorded a loss of $62,000 to adjust foreclosed assets to fair value.

The fair value of foreclosed assets is estimated using third-party appraisals of the asset held less estimated costs to sell and discounts to reflect current conditions. The fair value of collateral-dependent loans individually evaluated for credit losses is estimated using third-party appraisals of the collateral less estimated costs to sell and discounts to reflect current conditions. The fair value of other loans individually evaluated for credit losses is estimated by discounting expected cash flows using discount rates determined with reference to current market rates at which similar loans would be made.

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~~NOTE~~evaluated ~~10.~~for ~~FAIR~~credit ~~VALUE~~losses OFthat ~~FINANCIAL~~are ~~INSTRUMENTS~~not collateral-dependent is estimated by discounting expected cash flows using discount rates determined with reference to current market rates at which similar loans would be made.

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.

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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 ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024 are as follows:

~~September~~March 3031, ~~2024~~2025

(Dollars in thousands)

Carrying Amount

Fair Value

Level 1

Level 2

Level 3

Financial Assets:

Cash and cash equivalents

4540,~~753~~318

Investment securities:

Available-for-sale

3229,~~196~~840

Held-to-maturity

13,~~450~~445

11,~~699~~611

Loans receivable, net

163,~~468~~577

~~162~~160,~~500~~673

Bank-owned life insurance

14,~~370~~607

Financial Liabilities:

Deposits

~~167~~180,~~436~~598

~~166~~180,~~979~~124

Borrowed funds

299,~~513~~603

299,~~209~~261


	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		-


	December 31, 2024
(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Cash and cash equivalents	$	44,295	$	44,295	$	44,295	$	-	$	-
Investment securities:
Available-for-sale		28,712		28,712		-		28,712		-
Held-to-maturity		13,447		11,284		-		11,284		-
Loans receivable, net		164,554		161,412		-		-		161,412
Bank-owned life insurance		14,489		14,489		-		14,489		-
Financial Liabilities:
Deposits		185,674		185,087		-		185,087		-
Borrowed funds		9,558		9,069		-		9,069		-

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.

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NOTE 116. 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 ~~September~~March 3031, ~~2024~~2025, 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.

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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 ~~September~~March 3031, ~~2024~~2025 and for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024 is intended to assist in understanding our financial condition and results of operations. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements of the Company and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q as well as the business and financial information included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, ~~2023~~2024.

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.

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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;

●

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.

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.

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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 ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025:

● Total assets of $~~280~~271.6 million at ~~September~~March 3031, ~~2024~~2025, updown $95.70 million, or 31.68%, from December 31, ~~2023~~2024

● Loans of $~~165~~166.91 million at ~~September~~March 3031, ~~2024~~2025, updown $~~21.0 million~~999,000, or 140.56%, from December 31, ~~2023~~2024

● Non-performing assets of $1.67 million at ~~September~~March 3031, ~~2024~~2025, down $~~440~~103,000, or ~~21.~~5.6%, from December 31, ~~2023~~2024

● Investment securities of $4543.63 million at ~~September~~March 3031, ~~2024~~2025, ~~down~~up $381.41 million, or 452.7%, from December 31, ~~2023~~2024

● Deposits of $~~167~~180.46 million at ~~September~~March 3031, ~~2024~~2025, updown $15.81 million, or 12.17%, from December 31, ~~2023~~2024

● Borrowings of $299.56 million at ~~September~~March 3031, ~~2024~~2025, up $~~10.1 million~~45,000, or 520.35%, from December 31, ~~2023~~2024

● Total shareholders’ equity of $8180.76 million at ~~September~~March 3031, ~~2024~~2025, ~~down~~up $~~2.9 million~~387,000, or 30.45%, from December 31, ~~2023~~2024

● Net interest income of $2.54 million ~~and net interest margin of 3.86% for the three months ended September 30~~, ~~2024,~~ up $~~584~~272,000, or 3013.0%, and net interest margin of 3.89%, up 77 basis points (“bps”), ~~respectively,~~ compared to the ~~same~~three ~~period~~months inended ~~2023~~March 31, 2024

● ~~Net~~No ~~interest~~loss ~~income~~on sales of ~~$7.1~~investment ~~million~~securities, ~~and~~compared ~~net~~to ~~interest~~a ~~margin~~loss of 3$5.~~56%~~5 million for the ~~nine~~three months ended ~~September~~March 3031, 2024~~, up $1.3 million, or 22.8%, and up 52 bps, respectively, compared to the same period in 2023~~

● ~~Loss~~Non-interest onexpense ~~the sales~~ of ~~investment~~$2.2 ~~securities~~million, ofdown $5593,000, or 21.52%, ~~million~~compared ~~for~~to the ~~nine~~three months ended ~~September~~March 3031, 2024, which included expenses related to the Company’s upgrade to a new core processing system

● ~~Non-interest~~Net ~~expense~~income of $2586,000, compared to a net loss of $4.37 million for the three months ended ~~September~~March 3031, 2024~~, up $179,000, or 8.6%, compared to the same period in 2023~~

● Non-interest expense of $7.1 million for the nine months ended September 30, 2024, up $662,000, or 10.3%, compared to the same period in 2023, primarily due to expenses related to the Company’s upgrade to a new core processing system

● Net income of $447,000 for the three months ended September 30, 2024, up $296,000, or 196.0%, compared to the same period in 2023

● A net loss of $3.7 million for the nine months ended September 30, 2024, compared to net income of $219,000 for the same period in 2023

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.

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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~~2024. Our accounting policies for allowance for credit losses, investment securities, and income taxes comprise those that management believes involve the most critical estimates ~~and~~to aid in fully understanding and evaluating our reported financial results. These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods.

~~During~~There ~~the~~were ~~three~~no ~~months~~changes ~~ended~~from ~~March 31, 2024,~~ the ~~measurement~~significant ofaccounting ~~the~~policies ~~Company’s~~or ~~deferred income tax assets and liabilities was identified as a~~ critical accounting ~~estimate.~~estimates ~~Deferred~~previously ~~income~~disclosed ~~tax~~in ~~assets~~the ~~and~~Company’s ~~liabilities~~Annual ~~are~~Report ~~determined based~~ on ~~the~~Form ~~tax~~10-K ~~effects~~for of the ~~temporary~~year ~~differences~~ended ~~between~~December ~~the~~31, ~~book~~2024. ~~and~~In ~~tax~~preparing ~~bases of~~ the ~~various~~financial ~~assets~~statements, ~~and~~the ~~liabilities~~Company ~~and~~is ~~gives~~required ~~current recognition~~ to ~~changes~~make inestimates ~~tax rates~~ and ~~laws.~~assumptions Atthat ~~September~~affect ~~30, 2024,~~ the ~~Company’s~~amounts ~~net~~reported ~~deferred~~in ~~tax~~the ~~asset~~financial ~~totaled~~statements ~~$1.4 million~~ and isaccompanying ~~included~~notes. inActual ~~other~~results ~~assets~~could ondiffer ~~the~~from ~~statement~~those ~~of financial condition~~estimates. ~~According~~The toconsolidated ~~Subtopic~~financial ~~740-10~~statements ofreflect ~~the~~all ~~Accounting~~adjustments ~~Standards~~that ~~Codification (“ASC 740-10”)~~are, in the ~~measurement~~opinion of ~~deferred tax assets is reduced~~management, if necessary, byfor ~~the~~a ~~amount~~fair statement of ~~any~~the ~~tax~~Company’s ~~benefits~~financial ~~that~~condition, ~~based~~results onof ~~available evidence~~operations, ~~are~~comprehensive ~~not expected to be realized. At September 30~~income, ~~2024,~~changes ~~the~~in ~~Company~~equity ~~has~~and ~~not~~cash ~~recorded~~flows ~~a valuation allowance~~ for ~~its~~the ~~deferred~~interim ~~tax~~periods ~~assets~~presented. ~~Realizing~~These ~~our~~adjustments ~~deferred~~are ~~tax~~of ~~assets~~a ~~principally~~normal ~~depends~~recurring ~~upon~~nature ~~our achieving projected future taxable income. We may change our judgments regarding future profitability due to future market conditions~~ and ~~other~~include ~~factors.~~appropriate Weestimated ~~may adjust our deferred tax asset balances if our judgments change, which may impact total income tax expense in future periods~~provisions.

~~Additionally,~~Revision ~~as discussed in detail in Note 1 to the Company’s financial statements reported in this Quarterly Report on Form 10-Q, during June~~ of ~~2024,~~Prior ~~the~~Period ~~Bank~~Financial ~~became~~Statements aware of interest owed by it to a deposit customer that was not properly accrued or paid by the Bank during the period beginning August 1, 2022 and ending March 31, 2024. Accordingly, management revised the prior period financial statements, related disclosures and supplemental information presented in this filing to correct the misstatement. The Company will also revise previously reported financial information for these immaterial errors in its future filings, as applicable. The information in this Item 2 and throughout this Quarterly Report on Form 10-Q has been adjusted to reflect these revisions as described in Note 1 to the Company’s financial statements of this Quarterly Report on Form 10-Q.

~~There~~As ~~were~~discussed noin ~~other~~detail ~~material~~in ~~changes~~Note ~~from~~1 to the ~~significant~~Company’s ~~accounting~~financial ~~policies~~statements orreported ~~critical accounting estimates previously disclosed~~ in ~~the~~this ~~Company’s~~Quarterly ~~Annual~~ Report on Form 10-KQ, ~~for~~during June of 2024, the ~~year~~Bank ~~ended~~became ~~December~~aware ~~31,~~of ~~2023.~~interest Inowed ~~preparing~~by ~~the~~it ~~financial~~to ~~statements,~~a deposit customer that was not properly accrued or paid by the ~~Company~~Bank isduring ~~required~~the toperiod ~~make~~beginning ~~estimates~~August 1, 2022 and ~~assumptions~~ending ~~that~~March ~~affect~~31, ~~the~~2024. ~~amounts~~Accordingly, ~~reported~~management inrevised the prior period financial statements, related disclosures and ~~accompanying~~supplemental ~~notes.~~information ~~Actual~~presented ~~results~~in ~~could~~this ~~differ~~filing ~~from~~to ~~those~~correct ~~estimates~~the misstatement. The ~~consolidated~~Company ~~financial~~will ~~statements~~also ~~reflect~~revise ~~all~~previously ~~adjustments~~reported ~~that~~financial ~~are,~~information infor ~~the~~these ~~opinion~~immaterial oferrors ~~management~~in its future filings, ~~necessary~~as ~~for~~applicable. aThe ~~fair~~information ~~statement~~in ofthis ~~the~~Item ~~Company’s~~2 ~~financial~~and ~~condition,~~throughout ~~results~~this ofQuarterly ~~operations,~~Report ~~comprehensive~~on ~~income,~~Form ~~changes~~10-Q inhas ~~equity~~been ~~and~~adjusted ~~cash~~to ~~flows~~reflect ~~for~~these ~~the~~revisions ~~interim~~as ~~periods~~described ~~presented.~~in ~~These~~Note ~~adjustments~~1 ~~are~~to ofthe aCompany’s ~~normal~~financial ~~recurring~~statements ~~nature~~of ~~and~~this ~~include~~Quarterly ~~appropriate~~Report ~~estimated~~on ~~provisions~~Form 10-Q.

Table of Contents

Comparison of Financial Condition at ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024

Total Assets. Total assets ~~increased~~decreased $95.70 million, or 31.68%, to $~~280~~271.6 million at ~~September~~March 3031, ~~2024~~2025 from $~~270~~276.97 million at December 31, ~~2023~~2024. The ~~increase~~decrease was primarily due to ana ~~increase~~decrease in cash as a result of ~~additional~~a ~~borrowings~~decline ~~under~~in ~~the~~total ~~Bank~~public ~~Term~~fund ~~Funding Program (“BTFP”)~~deposits.

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, 2025				December 31, 2024
	September 30, 2024				December 31, 2023
(Dollars in thousands)	Amount		%		Amount		%		Change
Real estate loans
One- to four-family residential	$	8182,~~433~~025	49.14	%	$	8381,~~623~~097	5748.75	%	$	~~(2,190)~~928	(21.6)1	%
Commercial real estate		22,~~704~~103	13.73			2122,~~478~~108	1413.82			~~1,226~~(5)	~~5.7~~-
Construction and land		3032,~~310~~038	1819.3			1332,~~857~~941	919.67			~~16,453~~(903)	~~118~~(2.7)
Multi-family residential		2,~~622~~530	1.65			32,~~373~~570	21.35			(~~751~~40)	(221.36)
Total real estate loans		~~137~~138,~~069~~696	8283.75			~~122~~138,~~331~~716	8482.49			~~14,738~~(20)	~~12.0~~-
Other loans
Commercial and industrial		2625,~~507~~447	1615.03			1926,~~984~~439	1315.8			~~6,523~~(992)	32(3.68)
Consumer		21,~~306~~934	1.32			21,~~605~~921	1.83			~~(299)~~13	~~(11~~0.5)7
Total other loans		2827,~~813~~381	1716.35			2228,~~589~~360	1517.61			~~6,224~~(979)	27(3.65)
Total loans	$	~~165~~166,~~882~~077	100.0	%	$	~~144~~167,~~920~~076	100.0	%	$	~~20,962~~(999)	14(0.56)	%

Our loan growth has largely been the result of our re-focused business strategy. Since 2021, we have been targeting small- to mid-sized businesses and business professionals in our market areas while continuing to serve our traditional customer base. The following table presents certain major segments of our commercial real estate, construction and land, and commercial and industrial loan balances as of the dates indicated.


(Dollars in thousands)	~~September~~March 3031, ~~2024~~2025		December 31, ~~2023~~2024		Change
Commercial real estate
Retail	$	43,~~154~~723	$	4,~~825~~005	$	(~~671~~282)	(137.90)	%
Hospitality		3,~~594~~342		43,~~003~~460		(~~409~~118)	(103.24)
Restaurants		1,~~112~~070		1,~~037~~091		75(21)	7(1.29)
Oilfield services		~~411~~393		~~437~~402		(269)	(52.92)
Other non-owner occupied		2,~~780~~479		2,~~908~~658		(~~128~~179)	(46.47)
Other owner occupied		1011,~~653~~096		810,~~268~~492		~~2,385~~604	285.8
Total commercial real estate	$	22,~~704~~103	$	2122,~~478~~108	$	~~1,226~~(5)	~~5.7~~-
Construction and land
Multi-family residential	$	811,~~353~~297	$	110,~~406~~031	$	61,~~947~~266	~~494~~12.16	%
Health service facilities		78,~~073~~626		27,~~469~~139		41,~~604~~487	~~186~~20.58
Hospitality		2,716		2,716		-	-
Retail		36,~~339~~077		-5,106		~~3,339~~971	-19.0
Other commercial construction and land		41,~~846~~791		4,~~312~~364		~~534~~(2,573)	12(59.40)
Consumer residential construction and land		31,~~983~~531		23,~~954~~585		1(2,~~029~~054)	34(57.83)
Total construction and land	$	3032,~~310~~038	$	1332,~~857~~941	$	~~16,453~~(903)	~~118~~(2.7)
Commercial and industrial
Oilfield services	$	148,~~010~~474	$	614,~~254~~823	$	7(6,~~756~~349)	~~124~~(42.08)	%
Industrial equipment		38,~~882~~285		32,~~453~~831		~~429~~5,454	12192.47
Professional services		23,~~910~~119		23,~~792~~127		~~118~~(8)	4(0.23)
Communications		-		2,823		(2,823)	(100.0)
Other commercial and industrial		5,569		5,658		(89)	(1.6)
Other commercial and industrial		5,705		4,662		1,043	22.4
Total commercial and industrial loans	$	25,447	$	26,439	$	(992)	(3.8)
Total commercial and industrial loans	$	26,507	$	19,984	$	6,523	32.6

Table of Contents

Allowance for Credit Losses. At September 30, 2024, the allowance for loan losses totaled $2.4 million, or 1.46% of total loans, compared to 1.47% of total loans at December 31, 2023. The allowance for credit losses on unfunded commitments totaled $231,000, down $26,000 from December 31, 2023. The provision for credit losses, inclusive of the provision for unfunded commitments, for the nine months ended September 30, 2024 totaled $531,000 and was largely attributable to commercial loan growth.

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


	Nine Months Ended September 30,							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 (reversal of) loan losses		557			(64)			87
Net loan (charge-offs) recoveries:
One- to four-family residential		(92)			98			42
Commercial real estate		(14)			-			-
Construction and land		-			-			-
Multi-family residential		-			-			-
Commercial and industrial		(129)			1			1
Consumer		(32)			(15)			(22)
Total net (charge-offs) recoveries		(267)			84			21
Balance, end of period	$	2,414		$	2,036		$	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 (reversal of) credit losses on unfunded lending commitments		(26)			64			41
Balance, end of period	$	231		$	280		$	257

Total allowance for credit losses, end of period	$	2,645		$	2,316		$	2,381
Total provision for (reversal of) credit losses		531			-			128

Total loans at end of period	$	165,882		$	135,672		$	144,920
Total non-accrual loans at end of period		1,423			1,961			1,967
Total non-performing loans at end of period		1,438			2,088			1,991
Total average loans		152,066			134,013			135,713

Allowance for loan losses as a percent of:
Total loans		1.46	%		1.50	%		1.47	%
Non-accrual loans		169.64			103.82			107.98
Non-performing loans		167.87			97.51			106.68

Net annualized (charge-offs) recoveries as a percent of average loans by portfolio:
One- to four-family residential		(0.15)	%		0.15	%		0.05	%
Commercial real estate		(0.08)			-			-

Filing Compare · Catalyst Bancorp, Inc.