Catalyst Bancorp, Inc.: Form 10-Q for the period ended Mar 31, 2026

General

Management’s Discussion and Analysis of Financial Condition and Results of Operations at March 31, 2026 and for the three months ended March 31, 2026 and 2025 is intended to assist in understanding our financial condition and results of operations. The information contained in this section should be read in conjunction with the unaudited consolidated financial statements of the Company and the notes thereto appearing in Part I, Item 1, of this Quarterly Report on Form 10-Q as well as the business and financial information included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2025.

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. This act provides a safe harbor for such disclosure which protects the companies from unwarranted litigation if actual results are different from management expectations. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of words such as “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would,” and “could.” These forward-looking statements include, but are not limited to:

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

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

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

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

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.

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

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

• Total assets of $288.5 million at March 31, 2026, up $5.6 million, or 2.0%, from December 31, 2025
• Loans of $163.7 million at March 31, 2026, down $6.5 million, or 3.8%, from December 31, 2025
• Non-performing assets of $2.7 million at March 31, 2026, up $35,000, or 1.3%, from December 31, 2025
• Investment securities of $63.1 million at March 31, 2026, down $2.3 million, or 3.4%, from December 31, 2025
• Deposits of $195.4 million at March 31, 2026, up $10.1 million, or 5.5%, from December 31, 2025
• Borrowings of $9.8 million at March 31, 2026, down $5.0 million, or 33.8%, from December 31, 2025
• Total shareholders’ equity of $82.2 million at March 31, 2026, up $484,000, or 0.6%, from December 31, 2025
• Net interest income increased $180,000, or 7.6%, to $2.5 million and net interest margin decreased six basis points (“bps”) to 3.83% for the three months ended March 31, 2026, compared to the same period in 2025
• A reversal of provision for credit losses of $70,000 for the three months ended March 31, 2026, compared to zero provision for the same period in 2025
• Non-interest expense of $2.3 million for the three months ended March 31, 2026, up $301,000, or 15.2%, compared to the same period in 2025, largely due to $216,000 in insurance proceeds for damaged foreclosed properties which partially offset non-interest expense in 2025
• Non-interest expense for the three months ended March 31, 2026 included professional fees of $95,000 (pre-tax) related to our agreement to acquire Lakeside Bancshares, Inc. and its subsidiary, Lakeside Bank (collectively referred to as “Lakeside”).
• Net income of $558,00, or $0.15 per diluted common share (“diluted EPS”), for the three months ended March 31, 2026, down $28,000, or 4.8%, compared to net income of $586,000, or $0.16 diluted EPS, for the same period in 2025

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.

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, 2025. Our accounting policy for the allowance for credit losses is the policy that management believes involves the most critical estimate to aid in fully understanding and evaluating our reported financial results. This policy requires 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.

There were no changes from the significant accounting policies or the critical accounting estimate previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. 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.

Comparison of Financial Condition at March 31, 2026 and December 31, 2025

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

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

(Dollars in thousands)

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

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)

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

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

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

(Dollars in thousands)

Substandard Loans and Non-performing Assets. The following table shows the amounts of our substandard loans and non-performing assets, which include non-accruing loans, accruing loans 90 days or more past due and foreclosed assets at the dates indicated. During the three months ended March 31, 2026, a $304,000 commercial real estate loan was placed on non-accrual status and classified as substandard.

(Dollars in thousands)

Investment Securities. Total investment securities, available-for-sale and held-to-maturity, amounted to $63.1 million at March 31, 2026, down $2.3 million, or 3.4%, compared to $65.4 million at December 31, 2025. The Company did not purchase investment securities during the three months ended March 31, 2026. During 2025, the Company purchased $20.2 million of variable-rate and $6.3 million of fixed-rate securities. The weighted average yield of the securities purchased during 2025 was 4.45% at March 31, 2026.

Net unrealized losses on securities available-for-sale totaled $3.1 million at March 31, 2026 and December 31, 2025. Unrealized losses on available-for-sale securities relate principally to higher market interest rates for similar securities. Our investment securities portfolio consists primarily of debt obligations issued by the U.S. government and government agencies and government-sponsored mortgage-backed securities.

The following table presents the amortized cost of our total investment securities portfolio that matures during each of the periods indicated and the weighted average yields for each range of maturities at March 31, 2026.

(Dollars in thousands)

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. Weighted average yields are calculated by dividing the estimated annual income by the average amortized cost of the applicable securities.

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

(Dollars in thousands)

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

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

The estimated amount of our total uninsured deposits (that is deposits in excess of the FDIC’s insurance limit), inclusive of public funds, was approximately $55.3 million at March 31, 2026 and $50.1 million at December 31, 2025. Total uninsured non-public fund deposits were approximately $30.8 million and $28.8 million at March 31, 2026 and December 31, 2025, respectively. At March 31, 2026, the full amount of our public fund deposits in excess of the FDIC’s insurance limit were secured by either pledged investment securities of $48.8 million or $5.0 million of a custodial letter of credit granted by the Federal Home Loan Bank of Dallas.

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

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

The Company repurchased 16,614 shares of its common stock at an average cost per share of $15.71 during the three months ended March 31, 2026. The Company paused share repurchases temporarily during the three months ended March 31, 2026 while conducting due diligence and negotiations related to our agreement to acquire Lakeside.

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

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

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

(Dollars in thousands)

(1) Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts and loans in process.

(2) Average investment securities does not include unrealized holding gains/losses on available-for-sale securities.

(3) Equals net interest income divided by average interest-earning assets. Taxable equivalent yields are calculated using a marginal tax rate of 21%.

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

(Dollars in thousands)

Comparison of Results of Operations for the Three Months Ended March 31, 2026 and 2025.

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

(Dollars in thousands)

Non-interest expense for the three months ended March 31, 2026 included professional fees of $95,000 (pre-tax) related to our agreement to acquire Lakeside. During the three months ended March 31, 2025, insurance proceeds of $216,000 for damaged foreclosed properties partially offset non-interest expense.

Interest Income. The following table summarizes the changes in interest income for the periods indicated.

(Dollars in thousands)

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

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

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

Interest Expense. The following table summarizes the change in interest expense for the periods indicated.

(Dollars in thousands)

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

During the three months ended March 31, 2026, borrowings averaged $11.1 million, up $1.5 million, or 16.1%, and the average rate paid on borrowing was 3.11%, up 26 bps compared to the same period in 2025.

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

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

Non-interest Income. The following table summarizes the changes in non-interest income for the periods indicated.

(Dollars in thousands)

Income from bank-owned life insurance increased largely due to an internal exchange of certain existing policies that became effective during the fourth quarter of 2025.

Non-interest Expense. The following table summarizes the changes in non-interest expense for the periods indicated.

(Dollars in thousands)

Salaries and employee benefits expense increased primarily due to annual raises that were made effective during the fourth quarter of 2025, an increase in compensation expense related to the Employee Stock Ownership Plan due to a rise in the Company’s average stock price, and new grants of share-based compensation issued in June 2025.

Professional fees increased mainly due to $95,000 (pre-tax) of expense incurred during the three months ended March 31, 2026 related to our agreement to acquire Lakeside Bancshares, Inc. and its subsidiary, Lakeside Bank, which was entered into on April 7, 2026 and is expected to close in the third quarter of 2026.

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

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

Liquidity and Capital Resources

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

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

At March 31, 2026, our borrowings consisted of FHLB advances with a total net carrying value of $9.8 million. The table below summarizes our unused and available liquidity sources as of March 31, 2026.

(Dollars in thousands)

The Bank’s available borrowing capacity with the FHLB is secured through a blanket floating lien on real estate loans. The Company also has a $20.0 million custodial letter of credit outstanding from the FHLB as of March 31, 2026, which is included in the calculation of our available capacity with the FHLB indicated above. The Company can allocate portions of this letter of credit to collateralize certain deposit balances in excess of the FDIC’s insurance limit as an alternative to pledging investment securities for the same purpose. At March 31, 2026, the Company used $5.0 million of the FHLB custodial letter of credit to collateralize public fund deposits.

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

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

• $10.1 million in proceeds from the net increase in deposits
• $6.5 million in proceeds from the net decrease in loans
• $5.0 million due to net repayments of advances from the FHLB
• $2.2 million in proceeds from maturities and paydowns of investment securities

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

The following table summarizes our outstanding off-balance sheet commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans at March 31, 2026.

(Dollars in thousands)

The following table summarizes our contractual cash obligations at March 31, 2026.

(Dollars in thousands)

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

The Bank exceeded all regulatory capital requirements and was categorized as well-capitalized at March 31, 2026 and December 31, 2025. Management is not aware of any conditions or events since the most recent notification that would change our category.

Recent Accounting Pronouncements

For a discussion of the impact of recent accounting pronouncements, see Note 1 of the notes to our consolidated financial statements.

An evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Act”)) as of March 31, 2026, was carried out under the supervision and with the participation of our Chief Executive Officer, Chief Financial Officer and several other members of our senior management. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Company in the reports it files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms. There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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