Breaking Down Catalyst Bancorp, Inc. (CLST) Financial Health: Key Insights for Investors

You're looking at Catalyst Bancorp, Inc. (CLST) and wondering if their recent stability is a floor or a ceiling for your capital, and honestly, that's the right question to ask a community bank in this rate environment. The headline numbers from the Q3 2025 filing tell a story of careful maneuvering: they posted a net income of $489,000, which is modest but steady, translating to a basic earnings per share (EPS) of $0.13. While their total assets climbed to $283.8 million, driven by a strategic 41.8% increase in investment securities to $59.8 million, loan growth is still the sticky wicket-total loans actually decreased 2% to $164.8 million in the quarter. Plus, while the net interest margin (NIM) held at 3.88%, you have to keep an eye on credit quality, especially with non-performing assets ticking up slightly to $1.9 million. We need to break down how they plan to turn those signs of increased economic activity the CEO mentioned into actual loan volume, because that's defintely what will drive the stock from here.

Revenue Analysis

You're looking for a clear map of where Catalyst Bancorp, Inc. (CLST) is actually making its money, and the answer is simple: it's a bank, so its core revenue is almost entirely driven by interest. For the third quarter of 2025, the company generated approximately $3.83 million in total operating revenue, but the mix shows a slight contraction in its primary engine.

The vast majority of this comes from Net Interest Income (NII), which is the difference between the interest earned on assets (like loans and securities) and the interest paid on liabilities (like deposits). This is the heartbeat of any community bank. In Q3 2025, NII was $2.45 million, which is a decrease of about 3.2% compared to the same period in 2024. This dip isn't a surprise, but it is a signal.

Here's the quick math on the revenue streams for the third quarter of 2025, showing just how dependent the bank is on its core lending and investment activities. It's a classic bank model-very little fee income to cushion the interest rate environment.

The primary revenue source, Total Interest Income, stood at $3.513 million for Q3 2025. This figure was actually down about 5.1% year-over-year from $3.7 million in Q3 2024. The main reason for this decline? Lower interest earnings from cash and due from banks. This suggests the bank is holding less high-yielding cash or that short-term rates are less favorable for their liquidity holdings.

Still, the pressure on the NII figure is coming from both sides. Total interest expense jumped, mainly due to the full quarter impact of growth in their high-yield savings account balances. They've been successful in attracting new deposits-total deposits hit $186.4 million by September 30, 2025-but that stability comes at a higher cost of funds, squeezing the profit margin. This is the defintely the near-term risk to watch: rising deposit costs eating into the core spread.

The Non-Interest Income segment, which includes things like service charges on deposit accounts, is small but saw a sequential decline of 8% ($29,000) from the second quarter of 2025. This was largely due to a one-off event: a refund to customers for an immaterial technical error related to foreign ATM fees. This isn't a structural problem, but it shows how a small bank's non-interest revenue can be volatile. The strategic shift is clear, though, as they move from a traditional thrift model to a relationship-based community bank, focusing on small- to mid-sized businesses in the Acadiana region of south-central Louisiana.

• Total Assets reached $283.8 million as of September 30, 2025.
• Loans totaled $164.8 million, down 2% from the prior quarter.
• Investment securities grew 35% to $59.8 million.

The significant change is the strategic diversification: Investment Securities grew by $15.6 million, or 35%, to $59.8 million in Q3 2025. This is a clear action to diversify income sources away from just loan origination, a move that provides a higher-quality yield on interest-earning assets, with a weighted average yield of 5.17% on the new purchases. You can see the full context of this analysis in Breaking Down Catalyst Bancorp, Inc. (CLST) Financial Health: Key Insights for Investors.

Profitability Metrics

You need to know if Catalyst Bancorp, Inc. (CLST) is making money efficiently, especially in a tough rate environment. The direct takeaway is that while their quarterly net income is trending slightly down, their core profitability-measured by the Net Interest Margin (NIM)-is strong and outperforming the community bank average in 2025. This shows a solid foundation, but the sequential decline in net income is a near-term risk to watch.

For a bank, the closest equivalent to a gross profit margin is the Net Interest Margin (NIM), which measures the difference between interest earned on loans and interest paid on deposits. In the first quarter of 2025, CLST's NIM was 3.89%, and it settled at 3.88% in the third quarter.

Here's the quick math on their Q3 2025 margins, using their reported total revenue of $2.765 million (Net Interest Income of $2.45 million plus Non-Interest Income of $0.315 million):

• Gross Profit Margin (NIM Proxy): 3.88%
• Net Profit Margin: 17.68% (Net Income of $0.489 million / Total Revenue of $2.765 million)

The net profit margin of 17.68% is impressive for a regional bank, but it's crucial to look at the trend, which is a bit mixed. Net income for the nine months ended September 30, 2025, was $1.6 million, a significant turnaround from a net loss of $3.72 million in the prior year period. Still, quarterly net income has been slowly falling: $586,000 in Q1, $521,000 in Q2, and $489,000 in Q3 2025. That's a clear deceleration. The pressure is real.

Industry Comparison and Operational Efficiency

When you stack CLST against its peers, the picture is clearer. Their NIM of 3.88% is firmly within the top tier for community banks, which generally see margins between 3.5% and 4.5%, and it's higher than the overall community bank average of 3.62% in Q2 2025. This suggests good core lending profitability and effective asset-liability management (ALM).

However, their Return on Assets (ROA) and Return on Equity (ROE) tell a different story. These ratios are the final word on how well a bank uses its assets and shareholder capital to generate profit. The TTM (Trailing Twelve Months) figures as of November 2025 show:

Operational efficiency is where they need to defintely focus. For Q3 2025, their Non-Interest Expense-the cost of running the bank outside of interest payments-declined to $2.20 million, which is a good sign of cost management. But, when you calculate the Efficiency Ratio (Non-Interest Expense as a percentage of Total Revenue), it comes in high at about 79.57%. This means nearly 80 cents of every dollar of revenue goes toward operating expenses before provisions and taxes. That's too high; a healthy, efficient bank typically aims for an Efficiency Ratio below 60%.

The core issue is that while the bank is making good money on its loans (high NIM), too much of that profit is being eaten up by operating costs. The Q3 2025 report noted that non-interest expense was partially offset by lower professional fees, but the overall ratio is still a drag on the bottom line, keeping their ROA and ROE below the industry average. You can find a more detailed breakdown of these metrics and their impact on the stock's valuation in Breaking Down Catalyst Bancorp, Inc. (CLST) Financial Health: Key Insights for Investors.

Next Step: Review CLST's Q4 2025 guidance for non-interest expense to see if management is projecting further cost cuts to drive the Efficiency Ratio closer to the peer average.

Debt vs. Equity Structure

You need to know how Catalyst Bancorp, Inc. (CLST) funds its operations, because that tells you about its risk profile and growth capacity. The direct takeaway is that Catalyst Bancorp, Inc. operates with an extremely conservative capital structure, relying heavily on shareholder equity and deposits rather than wholesale debt.

As of the third quarter of 2025, the company's financial leverage is remarkably low, which is a sign of stability in a volatile banking environment. Their Debt-to-Equity (D/E) ratio is approximately 0.18. This is a crucial number. Here's the quick math: for every dollar of shareholder equity, the company has only 18 cents of debt. To be fair, this is significantly lower than the average for US Regional Banks, which sits closer to 0.49 as of November 2025, indicating a much lower risk tolerance than peers. It's a clean balance sheet.

• Low D/E ratio signals a strong capital cushion against potential loan losses.
• The company prioritizes an 'incredibly strong capital base' for sustained growth.

The company's debt levels are modest. Total borrowings-which is their primary debt component-rose to approximately $14.7 million in Q3 2025. The most significant piece of this debt is a $15.0 million Federal Home Loan Bank (FHLB) advance, which is essentially a collateralized loan from a government-sponsored enterprise. This debt carries a relatively low rate of 2.05%, which is smart, cost-effective funding. This is a strategic use of debt to supplement deposits for lending, not a sign of financial distress.

Their financing strategy clearly favors equity funding and retained earnings, backed by a strong deposit base, over aggressive debt-fueled growth. When you look at their shareholder equity, it increased to $81.6 million as of Q3 2025, which gives them a substantial buffer. The low-cost FHLB advances are a tactical tool, not a foundational reliance. This balance allows them to maintain a strong regulatory capital position while still funding loan growth, a defintely prudent approach in a rising interest rate cycle.

For a deeper dive into who is investing in this capital structure, you can check out Exploring Catalyst Bancorp, Inc. (CLST) Investor Profile: Who's Buying and Why?

Here is a snapshot of their capitalization structure for context:

The next step is for you to map this low-leverage position against their return on equity (ROE) to see if they are generating efficient profits from that strong capital base. Finance: Compare CLST's Q3 2025 ROE to its peer group average by next week.

Liquidity and Solvency

You need to know if Catalyst Bancorp, Inc. (CLST) can cover its short-term obligations, and for a bank, that means looking beyond the typical corporate liquidity ratios. The short answer is that while the traditional current ratio looks concerningly low, the core banking liquidity metrics show a stabilizing funding profile and a deliberate increase in liquid assets as of the third quarter of 2025.

Current Ratios and Core Liquidity Positions

For a non-financial company, a current ratio (current assets / current liabilities) of less than 1.0 is a red flag. Catalyst Bancorp, Inc.'s current ratio was around 0.24 as of December 2024, which reflects the nature of a bank's balance sheet where customer deposits are current liabilities and loans are current assets, but are inherently less liquid than inventory or accounts receivable. A more telling metric is the Loan-to-Deposit Ratio (LDR), which fell to a strong 88% at September 30, 2025, down from 92% at June 30, 2025. This drop shows the company is holding more deposits than loans, which is a sign of improved funding stability and liquidity.

The quick ratio (acid-test ratio) is also less relevant here for the same reason, but the strategic shift to bolster liquid assets is the key takeaway. They are defintely prioritizing a stable funding base.

Analysis of Working Capital Trends

The working capital dynamics for Catalyst Bancorp, Inc. are centered on deposits and loans. The company successfully grew total deposits to $186.4 million at September 30, 2025, an increase of 2% from the prior quarter, driven largely by high-yield account specials. This deposit growth is a critical source of low-cost funding. Conversely, total loans decreased to $164.8 million at September 30, 2025, a 2% drop from the previous quarter, mainly due to a $4.6 million construction loan payoff. This combination of deposit growth and loan reduction is a powerful, intentional move to improve their liquidity buffer in a high-interest-rate environment.

Here's the quick math on core funding: they added $4.2 million in deposits while loans decreased by $2.8 million in Q3 2025, which directly improves their cash position.

Cash Flow Statements Overview: Operating, Investing, and Financing

While the full cash flow statement is complex for a bank, we can map the near-term trends based on the Q3 2025 results. The company's cash flow activities show a deliberate pivot toward liquidity and capital management:

• Operating Cash Flow: Driven by net income of $489,000 in Q3 2025. The significant deposit growth also acts as a primary source of operating cash, funding the balance sheet.
• Investing Cash Flow: This saw a substantial outflow, which is a good thing for liquidity. The company purchased $16.2 million in variable-rate and fixed-rate government-sponsored mortgage-backed securities during Q3 2025, boosting their total investment securities by 41.8% to $59.8 million. These securities are highly liquid and a key part of their reserve.
• Financing Cash Flow: This activity reflects an inflow from increased borrowings, which rose by 53.7% to $14.7 million at September 30, 2025, including $15.0 million in Federal Home Loan Bank (FHLB) advances. They also continued their share repurchase program, which is an outflow, though the Q3 amount is not specified.

Potential Liquidity Concerns and Strengths

The company's liquidity position is a story of managed transition. The primary strength is the improved LDR and the strategic build-up of the investment securities portfolio, which provides a significant, high-quality, and liquid reserve. The total assets of Catalyst Bancorp, Inc. were $283.8 million at September 30, 2025.

The main area to watch is the reliance on wholesale funding, as borrowings increased to $14.7 million. While FHLB advances are a standard, reliable funding source for banks, they are more expensive than core deposits. Also, non-performing assets (NPAs) ticked up slightly to $1.9 million in Q3 2025, or 0.67% of total assets, which bears monitoring, though it is not yet a major concern.

To dive deeper into the credit quality and profitability that supports this liquidity, you should read the full analysis in Breaking Down Catalyst Bancorp, Inc. (CLST) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Catalyst Bancorp, Inc. (CLST) and wondering if the market has it right. Honestly, the valuation signals are mixed, which is common for smaller banks navigating a tough interest rate environment. The quick takeaway is that while the stock looks expensive on earnings, its price-to-book ratio suggests a deep discount on the bank's core assets.

As of November 2025, the stock trades around $14.60, a nice jump of 26.58% over the last 12 months. That price action is defintely a positive sign, but you need to look closer at the core valuation multiples to see the full picture. The stock's 52-week range, from a low of $10.67 to a high of $15.30, shows a decent volatility band.

Here's the quick math on the key valuation ratios:

• Price-to-Earnings (P/E): The trailing P/E ratio is high at about 25.30x (as of November 10, 2025). This looks expensive, especially compared to the US Banks industry average of around 11.2x. This multiple suggests investors are pricing in a significant earnings recovery or growth that hasn't fully materialized yet.
• Price-to-Book (P/B): The P/B ratio sits at approximately 0.67x. We get this by dividing the current stock price of $14.60 by the Book Value Per Share of $21.69. This is a massive discount, indicating the stock trades well below the value of its net assets.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio is less useful here because the trailing 12-month EBITDA is negative, resulting in a negative EV/EBITDA of -3.26. The Enterprise Value is approximately $38.83 million, reflecting the market cap plus debt minus cash.

The core tension is clear: you're paying a premium for earnings but getting a discount on the book value. This often happens when a bank is struggling with profitability (high P/E) but has a strong balance sheet (low P/B). For a deeper dive into the bank's strategy, check out the Mission Statement, Vision, & Core Values of Catalyst Bancorp, Inc. (CLST).

What this estimate hides is that Catalyst Bancorp is currently not paying a dividend, so you won't get a dividend yield or have a payout ratio to analyze. This is a key factor for income-focused investors. The good news is that the bank's Q3 2025 net income was $489 thousand, with diluted earnings per share (EPS) of $0.13, showing modest profitability.

The analyst community is playing it safe. Based on the single Wall Street analyst who has issued a rating in the last 12 months, the consensus is a Hold. The consensus rating score is 2.00, which firmly lands in the 'Hold' territory. This means they believe you should maintain your existing position but not buy or sell. For a value investor, the P/B discount is the most compelling argument for potential undervaluation, but the high P/E is a clear near-term risk.

Your action here: Track the P/E ratio's movement against the P/B. If the P/E starts to drop closer to the industry average while the P/B stays low, you have a stronger case for a buy. Finance: Monitor Q4 2025 EPS guidance for a P/E re-rating signal.

Risk Factors

You're looking at Catalyst Bancorp, Inc. (CLST) and seeing steady, albeit modest, profitability in 2025. That's good, but as a seasoned analyst, I always map the near-term risks that could derail a bank's core business. For CLST, the risks fall into three buckets: financial pressure, strategic headwinds, and the constant threat of credit quality erosion.

Honestly, the biggest financial headwind is the pressure on their Net Interest Margin (NIM), which is the bank's profit engine. While the Q3 2025 Net Interest Income was $2.45 million, it was slightly lower than the prior year, and the NIM narrowed slightly to 3.89% in Q1 2025. This tells you the cost of deposits is rising faster than the yield on their assets, a classic squeeze in a high-rate environment.

Here's the quick math on their funding risk, too. Total deposits grew only modestly to $186.4 million in Q3 2025, but their borrowings-specifically Federal Home Loan Bank (FHLB) advances-surged by 53.7% to $14.7 million. That reliance on wholesale funding, like the $15.0 million in FHLB advances at a 2.05% rate, is more expensive and less stable than core customer deposits. You need to watch that funding mix defintely.

• Financial Risk: NIM compression and rising cost of funds.
• Strategic Risk: Muted loan growth due to market turbulence.
• Credit Risk: Concentration of non-performing loans in residential mortgages.

Operational and Credit Quality Risks

On the operational and credit front, the numbers are contained, but the exposure is clear. Non-performing assets (NPAs) were $1.9 million as of September 30, 2025, keeping the NPA-to-total-assets ratio at a manageable 0.64% in Q2 2025. What this estimate hides, however, is the composition of their non-performing loans (NPLs): 99% of NPLs in Q2 2025 were concentrated in one- to four-family residential mortgage loans. That's a specific, localized risk, especially in their Louisiana market.

From a strategic standpoint, the firm is navigating a tough market while trying to transition from a traditional thrift model to a relationship-based community bank. The CEO noted that loan growth was 'muted to start the year as market turbulence caused some of our customers to delay projects'. This external market turbulence is a direct strategic headwind, causing total loans to dip to $164.8 million in Q3 2025, a 2% year-over-year decline.

Mitigation Strategies and Clear Actions

Catalyst Bancorp, Inc. is not sitting still, though. Their mitigation strategies are focused on capital management and expense control to offset the revenue pressures.

For one, they are actively managing their capital structure through a share repurchase plan, buying back 72,949 shares in Q1 2025 at an average cost of $11.86 per share. This is a clean way to bolster their Earnings Per Share (EPS) and signal confidence to the market. They are also diversifying their asset base, with investment securities increasing 41.8% to $59.8 million in Q3 2025, which helps balance the slower loan growth.

They are also keeping a tight leash on costs, with non-interest expense declining to $2.20 million in Q3 2025. You can see the impact of this expense control in their Q3 net income of $489 thousand, which was up from the prior year despite the lower net interest income.

To dive deeper into the people behind these decisions and their long-term vision, you should read Exploring Catalyst Bancorp, Inc. (CLST) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking for a clear path forward for Catalyst Bancorp, Inc. (CLST), and the picture is one of deliberate, internal transformation rather than explosive market expansion. The near-term growth story isn't about massive acquisitions-they've noted the right opportunities haven't materialized-but about maximizing efficiency and deepening their local, relationship-based banking model.

The company is fundamentally shifting from a traditional thrift model to a community bank focused on small- to mid-sized businesses and business professionals in the Acadiana region of south-central Louisiana. This strategic pivot is the core growth driver, aiming for higher-margin commercial relationships over volume. That's a smart, realistic move in a tight credit market.

Revenue Trajectory and Earnings Snapshot for 2025

While full-year analyst forecasts are scarce, we can map the current financial trajectory using the latest 2025 actuals. The last twelve months (LTM) of revenue ending September 30, 2025, hit $11.34 million, which is a significant year-over-year increase of 133.67%. Here's the quick math on profitability for the first nine months of the year:

Net income for the first nine months of 2025 totaled $1.6 million, a solid base that shows steady, albeit slightly declining quarter-over-quarter, profitability. The focus is on quality of earnings, not just the top line. For more context on these numbers, you can read the full analysis at Breaking Down Catalyst Bancorp, Inc. (CLST) Financial Health: Key Insights for Investors.

Strategic Initiatives Driving Future Returns

The company's strategy is built on operational efficiency and a targeted market presence. They are using technology to defintely improve the bottom line, which is a key lever for smaller banks.

• Market Expansion: The branch network has expanded by 50%, adding locations in Carencro and Lafayette, Louisiana. This positions the bank directly in the region's key business centers.
• Technology Upgrades: System upgrades are projected to reduce non-interest expense by over $200,000 annually, facilitating efficiency gains that flow directly to net income. That's a clean, permanent cost saving.
• Shareholder Value: The November 2024 Repurchase Plan authorized buying back up to 215,000 shares, or about 5% of common stock, signaling management's belief the stock is undervalued and providing a clear return to shareholders.

Competitive Advantages and Positioning

Catalyst Bancorp, Inc.'s primary competitive advantage is its deep local roots and new relationship-based model. Operating in the Acadiana region for over a century gives them an embedded trust factor that national banks can't easily replicate. Their shift to focusing on small- to mid-sized businesses leverages this local knowledge, allowing for more informed, high-touch lending and deposit gathering.

The transition from a thrift to a commercial-focused bank is the right long-term move, even if it causes some short-term volatility in metrics like net interest income, which was $2.45 million in Q3 2025, slightly lower than the prior year. The goal is to build a more durable, higher-margin loan portfolio. The fact they've increased investment securities by 41.8% to $59.8 million as of Q3 2025 also shows a strategic focus on diversifying income sources beyond traditional lending. You should monitor loan growth and the cost of deposits closely. Next step: Check the Q4 2025 earnings release in January 2026 for the full-year picture.