# Catalyst Bancorp, Inc.: Form 10-Q for the period ended Jun 30, 2025

- Company: [Catalyst Bancorp, Inc.](/companies/clst.md) (CIK 1849867)
- Form: 10-Q
- Filed: 2025-08-13
- Accepted by EDGAR: Aug 13, 2025, 16:01 ET
- Period: 2025-06-30
- Accession: 0001558370-25-011368
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1849867/000155837025011368/clst-20250630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1849867/000155837025011368/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $113.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $247.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | $521.0k | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | $1.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.14 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | $0.30 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | $0.14 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | $0.30 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 3,671,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 3,698,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | $1.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $100.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2025-01-01 to 2025-06-30 | $1.6m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-06-30 | $40.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2025-06-30 | $273.8m | us-gaap:Assets |
| Total liabilities | at 2025-06-30 | $193.0m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-06-30 | $80.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 56,702 characters.

### General

Management’s Discussion and Analysis of Financial Condition and Results of Operations at June 30, 2025 and for the three and six months ended June 30, 2025 and 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, 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.

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.

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 six months ended June 30, 2025:

- Total assets of $273.8 million at June 30, 2025, down $2.9 million, or 1.1%, from December 31, 2024
- Loans of $167.6 million at June 30, 2025, up $493,000, or 0.3%, from December 31, 2024
- Non-performing assets of $1.8 million at June 30, 2025, down $75,000, or 4.1%, from December 31, 2024
- Investment securities of $44.2 million at June 30, 2025, up $2.1 million, or 4.9%, from December 31, 2024
- Deposits of $182.2 million at June 30, 2025, down $3.5 million, or 1.9%, from December 31, 2024
- Borrowings of $9.6 million at June 30, 2025, up $89,000, or 0.9%, from December 31, 2024
- Total shareholders’ equity of $80.8 million at June 30, 2025, up $595,000, or 0.7%, from December 31, 2024
- For the three months ended June 30, 2025, net interest income of $2.5 million, up $20,000, or 0.8%, and net interest margin of 3.98%, up 26 basis points (“bps”) compared to the same period in 2024
- For the six months ended June 30, 2025, net interest income of $4.8 million, up $292,000, or 6.4%, and net interest margin of 3.93%, up 51 bps compared to the same period in 2024
- No loss on sales of investment securities in 2025, compared to a loss of $5.5 million for the six months ended June 30, 2024
- For the three months ended June 30, 2025, non-interest expense of $2.2 million, up $110,000, or 5.3%, compared to the same period in 2024
- For the six months ended June 30, 2025, non-interest expense of $4.4 million, down $483,000, or 9.9%, compared to the same period in 2024, which included expenses related to the Company’s upgrade to a new core processing system
- For the three months ended June 30, 2025, net income of $521,000, down $6,000, or 1.1%, compared to the same period in 2024
- For the six months ended June 30, 2025, net income of $1.1 million, compared to a net loss of $4.2 million for the same period in 2024

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, 2024. Our accounting policies for allowance for credit losses, investment securities, and income taxes comprise those that management believes involve the most critical estimates 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.

There were no 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, 2024. 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 June 30, 2025 and December 31, 2024

**Total Assets.** Total assets decreased $2.9 million, or 1.1%, to $273.8 million at June 30, 2025 from $276.7 million at December 31, 2024. The decrease was primarily due to a decrease in cash as a result of repurchases of the Company’s common stock and a decline in total deposits.

**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)*

| ​ ​ Real estate loans | ​ ​ ​ | ​ ​ June 30, 2025 Amount% ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ | ​ ​ December 31, 2024 Amount% ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ Change ​ ​ | ​ ​ ​ | ​ ​ ​ ​ ​ ​ |
| --- | --- | ---: | ---: | --- | ---: | ---: | --- | ---: | --- | ---: |
| One- to four-family residential | ​ | $80,195 | 47.9% | ​ | $81,097 | 48.5% | ​ | $(902) | ​ | (1.1)% |
| Commercial real estate | ​ | 33,976 | 20.3 ​ | ​ | 22,108 | 13.2 ​ | ​ | 11,868 | ​ | 53.7 ​ |
| Construction and land | ​ | 20,650 | 12.3 ​ | ​ | 32,941 | 19.7 ​ | ​ | (12,291) | ​ | (37.3) ​ |
| Multi-family residential | ​ | 5,432 | 3.2 ​ | ​ | 2,570 | 1.5 ​ | ​ | 2,862 | ​ | 111.4 ​ |
| Total real estate loans | ​ | ​ 140,253 | 83.7 ​ | ​ | ​ 138,716 | 82.9 ​ | ​ | ​ 1,537 | ​ | 1.1 ​ |
| **Other loans** | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Commercial and industrial | ​ | ​ 25,035 | 14.9 ​ | ​ | ​ 26,439 | 15.8 ​ | ​ | ​ (1,404) | ​ | (5.3) ​ |
| Consumer | ​ | ​ 2,281 | 1.4 ​ | ​ | ​ 1,921 | 1.3 ​ | ​ | ​ 360 | ​ | 18.7 ​ |
| Total other loans | ​ | ​ 27,316 | 16.3 ​ | ​ | ​ 28,360 | 17.1 ​ | ​ | ​ (1,044) | ​ | (3.7) ​ |
| Total loans | ​ | $167,569 | 100.0% | ​ | $167,076 | 100.0% | ​ | $493 | ​ | 0.3% |

During the six months ended June 30, 2025, $15.8 million of outstanding construction loans at December 31, 2024 were converted to amortizing real estate loans following the completion of their respective construction projects. Of the total, $2.8 million was classified as multi-family, $2.2 million was classified as one- to four-family residential, and the remaining balance was designated as commercial real estate.

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)*

| ​ Commercial real estate | ​ ​ ​ | ​ ​ June 30, 2025 ​ ​ | ​ ​ ​ | ​ ​ December 31, 2024 ​ ​ | ​ ​ ​ | ​ ​ Change ​ ​ | ​ ​ | ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | ---: |
| Retail | ​ | $9,739 | ​ | $4,005 | ​ | $5,734 | ​ | 143% |
| Hospitality | ​ | ​ 5,849 | ​ | ​ 3,460 | ​ | ​ 2,389 | ​ | 69 ​ |
| Health service facilities | ​ | ​ 3,345 | ​ | ​ 393 | ​ | ​ 2,952 | ​ | 751 ​ |
| Restaurants | ​ | ​ 1,049 | ​ | ​ 1,091 | ​ | ​ (42) | ​ | (4) ​ |
| Oilfield services | ​ | ​ 384 | ​ | ​ 402 | ​ | ​ (18) | ​ | (5) ​ |
| Other non-owner occupied | ​ | ​ 2,648 | ​ | ​ 2,658 | ​ | ​ (10) | ​ | (0) ​ |
| Other owner occupied | ​ | ​ 10,962 | ​ | ​ 10,099 | ​ | ​ 863 | ​ | 9 ​ |
| Total commercial real estate | ​ | $33,976 | ​ | $22,108 | ​ | $11,868 | ​ | 54 ​ |
| **Construction and land** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Multi-family residential | ​ | $8,997 | ​ | $10,031 | ​ | $(1,034) | ​ | (10)% |
| Health service facilities | ​ | ​ 7,649 | ​ | ​ 7,139 | ​ | ​ 510 | ​ | 7 ​ |
| Hospitality | ​ | ​ - | ​ | ​ 2,716 | ​ | ​ (2,716) | ​ | (100) ​ |
| Retail | ​ | ​ - | ​ | ​ 5,106 | ​ | ​ (5,106) | ​ | (100) ​ |
| Other commercial construction and land | ​ | ​ 1,782 | ​ | ​ 4,364 | ​ | ​ (2,582) | ​ | (59) ​ |
| Consumer residential construction and land | ​ | ​ 2,222 | ​ | ​ 3,585 | ​ | ​ (1,363) | ​ | (38) ​ |
| Total construction and land | ​ | $20,650 | ​ | $32,941 | ​ | $(12,291) | ​ | (37) ​ |
| **Commercial and industrial** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Oilfield services | ​ | $8,081 | ​ | $14,823 | ​ | $(6,742) | ​ | (46)% |
| Industrial equipment | ​ | ​ 8,453 | ​ | ​ 2,831 | ​ | ​ 5,622 | ​ | 199 ​ |
| Professional services | ​ | ​ 3,146 | ​ | ​ 3,127 | ​ | ​ 19 | ​ | 1 ​ |
| Other commercial and industrial | ​ | ​ 5,355 | ​ | ​ 5,658 | ​ | ​ (303) | ​ | (5) ​ |
| Total commercial and industrial loans | ​ | $25,035 | ​ | $26,439 | ​ | $(1,404) | ​ | (5) ​ |

30

**Allowance for Credit Losses.** At June 30, 2025, the allowance for credit losses on loans totaled $2.4 million, or 1.45% of total loans, compared to $2.5 million, or 1.51% of total loans at December 31, 2024. The allowance for credit losses on unfunded commitments totaled $131,000, up $10,000 from December 31, 2024. The provision for credit losses was zero and net loan charge-offs were $81,000 for the six months ended June 30, 2025. Net loan charge-offs were primarily related to residential mortgages and overdrawn deposit accounts.

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

*(Dollars in thousands)*

| ​ ​ Allowance for credit losses: Loans: | ​ ​ ​ ​ | ​ ​ ​ Six Months Ended June 30, 2025 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ ​ 2024 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Year Ended December 31, ​ 2024 ​ ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | --- | --- | --- |
| Balance, beginning of period | ​ | $2,522 | ​ | $2,124 ​ | ​ | $2,124 ​ |
| Provision for (reversal of) credit losses | ​ | (10) | ​ | ​ 227 ​ | ​ | ​ 667 ​ |
| Net loan (charge-offs) recoveries: | ​ | ​ | ​ | ​ ​ | ​ | ​ ​ |
| One- to four-family residential | ​ | (64) | ​ | ​ (92) ​ | ​ | ​ (92) ​ |
| Commercial real estate | ​ | - | ​ | ​ (28) ​ | ​ | ​ (14) ​ |
| Construction and land | ​ | - | ​ | ​ - ​ | ​ | ​ - ​ |
| Multi-family residential | ​ | - | ​ | ​ - ​ | ​ | ​ - ​ |
| Commercial and industrial | ​ | 6 | ​ | ​ - ​ | ​ | ​ (128) ​ |
| Consumer | ​ | (23) | ​ | ​ (16) ​ | ​ | ​ (35) ​ |
| Total net charge-offs | ​ | (81) | ​ | ​ (136) ​ | ​ | ​ (269) ​ |
| Balance, end of period | ​ | $2,431 | ​ | $2,215 ​ | ​ | $2,522 ​ |
| **​** | ​ | ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| **Unfunded lending commitments:** | ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| Balance, beginning of period | ​ | $121 | ​ | $257 ​ | ​ | $257 ​ |
| Provision for (reversal of) credit losses on unfunded lending commitments | ​ | ​ 10 | ​ | ​ (33) ​ | ​ | ​ (136) ​ |
| Balance, end of period | ​ | $131 | ​ | $224 ​ | ​ | $121 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| Total provision for credit losses | ​ | $- ​ | ​ | $194 ​ | ​ | $531 ​ |
| ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| Total loans at end of period | ​ | $167,569 | ​ | $153,266 ​ | ​ | $167,076 ​ |
| Total non-accrual loans at end of period | ​ | 1,455 | ​ | ​ 1,560 ​ | ​ | ​ 1,567 ​ |
| Total non-performing loans at end of period | ​ | 1,670 | ​ | ​ 1,600 ​ | ​ | ​ 1,631 ​ |
| Total average loans | ​ | ​ 166,891 ​ | ​ | ​ 147,342 ​ | ​ | ​ 155,867 ​ |
| ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| **Allowance for credit losses on loans as a percent of:** | ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| Total loans | ​ | 1.45% | ​ | ​ 1.45% | ​ | ​ 1.51% |
| Non-accrual loans | ​ | 167.08 ​ | ​ | ​ 141.99 ​ | ​ | ​ 160.94 ​ |
| Non-performing loans | ​ | 145.57 ​ | ​ | ​ 138.44 ​ | ​ | ​ 154.63 ​ |
| ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| **Net annualized (charge-offs) recoveries as a percent of average loans by portfolio:** | ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| One- to four-family residential | ​ | ​ (0.16)% | ​ | ​ (0.23)% | ​ | ​ (0.11)% |
| Commercial real estate | ​ | ​ - ​ | ​ | ​ (0.26) ​ | ​ | ​ (0.06) ​ |
| Construction and land | ​ | ​ - ​ | ​ | ​ - ​ | ​ | ​ - ​ |
| Multi-family residential | ​ | ​ - ​ | ​ | ​ - ​ | ​ | ​ - ​ |
| Commercial and industrial | ​ | ​ 0.05 ​ | ​ | ​ - ​ | ​ | ​ (0.56) ​ |
| Consumer | ​ | ​ (2.47) ​ | ​ | ​ (1.31) ​ | ​ | ​ (1.51) ​ |
| Total loans | ​ | ​ (0.10) ​ | ​ | ​ (0.19) ​ | ​ | ​ (0.17) ​ |

**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 six months ended June 30, 2025, the Company downgraded a $3.3 million non-real estate, commercial loan relationship to substandard due to declines in debt service coverage. At June 30, 2025, all loans within the downgraded relationship were current and performing.

*(Dollars in thousands)*

| ​ ​ Substandard loans | ​ ​ | ​ ​ ​ June 30, 2025 ​ | ​ ​ ​ ​ | ​ ​ ​ December 31, 2024 ​ ​ |
| --- | --- | ---: | --- | ---: |
| One- to four-family residential | ​ | $2,346 ​ | ​ | $2,417 ​ |
| Commercial real estate | ​ | 256 ​ | ​ | 227 ​ |
| Construction and land | ​ | 136 ​ | ​ | 158 ​ |
| Multi-family residential | ​ | - ​ | ​ | - ​ |
| Commercial and industrial | ​ | 3,096 ​ | ​ | - ​ |
| Consumer | ​ | - ​ | ​ | - ​ |
| Total substandard loans | ​ | $5,834 ​ | ​ | $2,802 ​ |
| ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| **Non-accruing loans** |  | ​ | ​ | ​ ​ |
| One- to four-family residential | ​ | $1,433 ​ | ​ | $1,530 ​ |
| Commercial real estate | ​ | - ​ | ​ | - ​ |
| Construction and land | ​ | 22 ​ | ​ | 37 ​ |
| Multi-family residential | ​ | - ​ | ​ | - ​ |
| Commercial and industrial | ​ | - ​ | ​ | - ​ |
| Consumer | ​ | - ​ | ​ | - ​ |
| Total non-accruing loans | ​ | 1,455 ​ | ​ | ​ 1,567 ​ |
| **Accruing loans 90 days or more past due** | ​ | ​ | ​ | ​ |
| One- to four-family residential | ​ | 215 ​ | ​ | 64 ​ |
| Commercial real estate | ​ | - ​ | ​ | - ​ |
| Construction and land | ​ | - ​ | ​ | - ​ |
| Multi-family residential | ​ | - ​ | ​ | - ​ |
| Commercial and industrial | ​ | - ​ | ​ | - ​ |
| Consumer | ​ | - ​ | ​ | - ​ |
| Total accruing loans 90 days or more past due | ​ | ​ 215 ​ | ​ | ​ 64 ​ |
| Total non-performing loans | ​ | ​ 1,670 ​ | ​ | ​ 1,631 ​ |
| Foreclosed assets | ​ | ​ 80 ​ | ​ | ​ 194 ​ |
| Total non-performing assets | ​ | $1,750 ​ | ​ | $1,825 ​ |
| ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| Total loans | ​ | $167,569 ​ | ​ | $167,076 ​ |
| Total assets | ​ | ​ 273,785 ​ | ​ | ​ 276,697 ​ |
| ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| Total non-accruing loans as a percentage of total loans | ​ | ​ 0.87% | ​ | 0.94% |
| Total non-performing loans as a percentage of total loans | ​ | ​ 1.00 ​ | ​ | 0.98 ​ |
| Total non-performing loans as a percentage of total assets | ​ | ​ 0.61 ​ | ​ | 0.59 ​ |
| Total non-performing assets as a percentage of total assets | ​ | ​ 0.64 ​ | ​ | 0.66 ​ |

**Investment Securities.** Total investment securities were $44.2 million at June 30, 2025, up $2.1 million, or 4.9%, compared to $42.2 million at December 31, 2024. Net unrealized losses on securities available-for-sale totaled $3.6 million at June 30, 2025, compared to $4.5 million at December 31, 2024. Unrealized losses on available-for-sale securities relate principally to increases in market interest rates for similar securities. Our investment securities portfolio consists primarily of debt obligations issued by the U.S. government and government agencies and government-sponsored mortgage-backed securities.

The following table presents the amortized cost of our total investment securities portfolio that mature during each of the periods indicated and the weighted average yields for each range of maturities at June 30, 2025.

*(Dollars in thousands)*

| ​ ​ Total investment securities | ​ ​ ​ ​ | ​ ​ ​ Contractual Maturity as of June 30, 2025 One Year or Less ​ ​ ​ | ​ ​ ​ | ​ ​ ​ After One Through Five Years ​ ​ ​ | ​ ​ ​ | ​ ​ ​ After Five Through Ten Years ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Over Ten Years ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Total ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Mortgage-backed securities | ​ | $- ​ | ​ | $5,331 ​ | ​ | $403 ​ | ​ | $25,494 ​ | ​ | $31,228 ​ |
| U.S. Government and agency obligations | ​ | - ​ | ​ | 5,000 ​ | ​ | 8,000 ​ | ​ | - ​ | ​ | 13,000 ​ |
| Municipal obligations | ​ | ​ - ​ | ​ | ​ 1,073 ​ | ​ | ​ 1,506 ​ | ​ | ​ 1,070 ​ | ​ | ​ 3,649 ​ |
| Total | ​ | $- ​ | ​ | $11,404 ​ | ​ | $9,909 ​ | ​ | $26,564 ​ | ​ | $47,877 ​ |
| ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ | ​ | ​ ​ ​ |
| **Weighted average yield** | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Mortgage-backed securities | ​ | -% | ​ | 4.47% | ​ | 4.55% | ​ | 2.28% | ​ | 2.69% |
| U.S. Government and agency obligations | ​ | - ​ | ​ | 1.24 ​ | ​ | 1.85 ​ | ​ | - ​ | ​ | 1.61 ​ |
| Municipal obligations | ​ | - ​ | ​ | 3.35 ​ | ​ | 4.81 ​ | ​ | 1.41 ​ | ​ | 3.38 ​ |
| Total weighted average yield | ​ | - ​ | ​ | 2.95 ​ | ​ | 2.41 ​ | ​ | 2.25 ​ | ​ | 2.45 ​ |

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 divided 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)*

| ​ ​ | ​ ​ | ​ ​ June 30, 2025 Amount% | ​ ​ ​ | ​ ​ | ​ ​ December 31, 2024 Amount% | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Change | ​ ​ | ​ ​ ​ ​ |
| --- | --- | ---: | ---: | --- | ---: | ---: | --- | ---: | --- | ---: |
| Non-interest-bearing demand deposits | ​ | $31,155 | 17.1% | ​ | $28,281 | 15.2% | ​ | $2,874 | ​ | 10.2% |
| Interest-bearing demand deposits | ​ | 35,307 | 19.4 ​ | ​ | 48,334 | 26.0 ​ | ​ | (13,027) | ​ | (27.0) ​ |
| Money market | ​ | 9,437 | 5.2 ​ | ​ | 10,729 | 5.8 ​ | ​ | (1,292) | ​ | (12.0) ​ |
| Savings | ​ | 51,001 | 28.0 ​ | ​ | 37,639 | 20.3 ​ | ​ | 13,362 | ​ | 35.5 ​ |
| Certificates of deposit | ​ | ​ 55,311 | 30.3 ​ | ​ | ​ 60,691 | 32.7 ​ | ​ | ​ (5,380) | ​ | (8.9) ​ |
| Total deposits | ​ | $182,211 | 100.0% | ​ | $185,674 | 100.0% | ​ | $(3,463) | ​ | (1.9) ​ |

The ratio of the Company’s total loans to total deposits was 92.0% and 90.0% as of June 30, 2025 and December 31, 2024, respectively.

The decline in interest-bearing demand deposits was largely due to fluctuations in public fund balances. Total public fund deposits amounted to $29.0 million, or 16% of total deposits, at June 30, 2025, compared to $35.6 million, or 19% of total deposits, at December 31, 2024. At June 30, 2025, approximately 64% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits, compared to 83% at December 31, 2024.

The increase in savings deposits was primarily attributable to our high-yield savings special. The competitive offering has been successful at attracting new deposits and deepening relationships with existing customers. Certificates of deposit declined primarily due to the scheduled maturity of brokered 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 $49.6 million at June 30, 2025 and $53.7 million at December 31, 2024. Total uninsured non-public fund deposits were approximately $25.7 million and $22.5 million at June 30, 2025 and December 31, 2024, respectively. At June 30, 2025, the full amount of our public fund deposits in excess of the FDIC’s insurance limit were secured by either pledged investment securities of $25.8 million or $25.0 million of a custodial letter of credit granted by the Federal Home Loan Bank of Dallas.

**Borrowings**. Borrowings outstanding at June 30, 2025 and December 31, 2024 consisted of FHLB advances totaling $9.6 million. The small change in the carrying value of our FHLB advances reflects the amortization of deferred prepayment penalties on $10.0 million in advances restructured in December of 2020. Deferred prepayment penalties on our FHLB advances totaled $353,000 and $442,000 at June 30, 2025 and December 31, 2024, respectively.

**Shareholders’ Equity.** Shareholders’ equity totaled $80.8 million, or 29.5% of total assets, at June 30, 2025, up $595,000, or 0.7%, from $80.2 million, or 29.0% of total assets, at December 31, 2024. During the six months ended June 30, 2025, shareholders’ equity increased by the Company’s net income of $1.1 million and other comprehensive income of $686,000, which was the result of the change in unrealized losses on available-for-sale investment securities. These increases were partially offset by the Company’s repurchases of its common stock.

The Company repurchased 135,334 shares of its common stock at an average cost per share of $11.88 during the six months ended June 30, 2025. Under the November 2024 Repurchase Plan, 51,816 shares of the Company’s common stock were available for repurchase at June 30, 2025. Since the announcement of our first share repurchase plan on January 26, 2023 and through June 30, 2025, the Company has repurchased a total of 1,147,184 shares of its common stock, or approximately 22% of the common shares originally issued, at an average cost per share of $11.92.

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

*(Dollars in thousands)*

| ​ ​ ​ Interest-earning assets: | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2025 Average Balance ​ ​ | ​ ​ | ​ ​ Interest ​ ​ | ​ ​ | ​ ​ Average Yield/Rate(TE) ​ ​ | ​ ​ ​ ​ | ​ ​ 2024 Average Balance ​ ​ | ​ ​ | ​ ​ Interest ​ ​ | ​ ​ | ​ ​ Average Yield/Rate(TE) ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Loans receivable(1) |  | $167,627 | ​ | $2,792 |  | 6.68% | ​ | $150,257 | ​ | $2,383 |  | 6.38% |
| Investment securities(2) |  | 48,285 | ​ | 294 |  | 2.49 ​ | ​ | 44,165 | ​ | 210 |  | 1.91 ​ |
| Other interest-earning assets |  | 33,225 | ​ | 375 |  | 4.53 ​ | ​ | 70,354 | ​ | 932 |  | 5.33 ​ |
| Total interest-earning assets | ​ | 249,137 | ​ | 3,461 |  | 5.58 ​ | ​ | 264,776 | ​ | 3,525 |  | 5.35 ​ |
| Non-interest-earning assets | ​ | 21,651 | ​ | ​ ​ | ​ | ​ ​ | ​ | 20,997 | ​ | ​ ​ | ​ | ​ ​ |
| Total assets | ​ | $270,788 | ​ | ​ ​ | ​ | ​ ​ | ​ | $285,773 | ​ | ​ ​ | ​ | ​ ​ |
| **Interest-bearing liabilities:** |  | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Demand deposits, money market and savings accounts |  | 92,088 | ​ | 466 |  | 2.03 ​ | ​ | 87,651 | ​ | 327 |  | 1.50 ​ |
| Certificates of deposit |  | 57,018 | ​ | 459 |  | 3.23 ​ | ​ | 55,960 | ​ | 444 |  | 3.19 ​ |
| Total interest-bearing deposits |  | 149,106 | ​ | 925 |  | 2.49 ​ | ​ | 143,611 | ​ | 771 |  | 2.16 ​ |
| Borrowings |  | 9,619 | ​ | 68 |  | 2.84 ​ | ​ | 29,468 | ​ | 306 |  | 4.17 ​ |
| Total interest-bearing liabilities | ​ | 158,725 | ​ | 993 |  | 2.51 ​ | ​ | 173,079 | ​ | 1,077 |  | 2.50 ​ |
| Non-interest-bearing liabilities | ​ | 31,452 | ​ | ​ ​ | ​ | ​ ​ | ​ | 31,729 | ​ | ​ ​ | ​ | ​ ​ |
| Total liabilities | ​ | 190,177 | ​ | ​ ​ | ​ | ​ ​ | ​ | 204,808 | ​ | ​ ​ | ​ | ​ ​ |
| **Shareholders' equity** | ​ | 80,611 | ​ | ​ ​ | ​ | ​ ​ | ​ | 80,965 | ​ | ​ ​ | ​ | ​ ​ |
| Total liabilities and shareholders' equity | ​ | $270,788 | ​ | ​ ​ | ​ | ​ ​ | ​ | $285,773 | ​ | ​ ​ | ​ | ​ ​ |
| Net interest-earning assets | ​ | $90,412 | ​ | ​ ​ | ​ | ​ ​ | ​ | $91,697 | ​ | ​ ​ | ​ | ​ ​ |
| Net interest income; average interest rate spread | ​ | ​ ​ | ​ | $2,468 |  | 3.07% | ​ | ​ ​ | ​ | $2,448 |  | 2.85% |
| Net interest margin(3) | ​ | ​ ​ | ​ | ​ ​ |  | 3.98 ​ | ​ | ​ ​ | ​ | ​ ​ |  | 3.72 ​ |
| Average interest-earning assets to average interest-bearing liabilities | ​ | ​ ​ | ​ | ​ ​ |  | 156.96 ​ | ​ | ​ ​ | ​ | ​ ​ |  | 152.98 ​ |

(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%.

*(Dollars in thousands)*

| ​ ​ ​ Interest-earning assets: | ​ ​ ​ ​ | ​ ​ Six Months Ended June 30, 2025 Average Balance ​ ​ | ​ ​ ​ | ​ ​ Interest ​ ​ | ​ ​ ​ | ​ ​ Average Yield/Rate(TE) ​ ​ | ​ ​ ​ ​ | ​ ​ 2024 Average Balance ​ ​ | ​ ​ ​ | ​ ​ Interest ​ ​ | ​ ​ ​ | ​ ​ Average Yield/Rate(TE) ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Loans receivable(1) | ​ | $166,891 | ​ | $5,530 |  | 6.68% | ​ | $147,342 | ​ | $4,597 |  | 6.27% |
| Investment securities(2) | ​ | 47,626 | ​ | 569 |  | 2.42 ​ | ​ | 60,397 | ​ | 535 |  | 1.79 ​ |
| Other interest-earning assets | ​ | 33,403 | ​ | 736 |  | 4.44 ​ | ​ | 59,567 | ​ | 1,548 |  | 5.23 ​ |
| Total interest-earning assets | ​ | 247,920 | ​ | 6,835 |  | 5.56 ​ | ​ | 267,306 | ​ | 6,680 |  | 5.03 ​ |
| Non-interest-earning assets | ​ | 21,597 | ​ | ​ ​ | ​ | ​ ​ | ​ | 18,934 | ​ | ​ ​ | ​ | ​ ​ |
| Total assets | ​ | $269,517 | ​ | ​ ​ | ​ | ​ ​ | ​ | $286,240 | ​ | ​ ​ | ​ | ​ ​ |
| **Interest-bearing liabilities:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Demand deposits, money market and savings accounts | ​ | 93,105 | ​ | 949 |  | 2.06% | ​ | 88,380 | ​ | 659 |  | 1.50% |
| Certificates of deposit | ​ | 56,435 | ​ | 917 |  | 3.28 ​ | ​ | 56,526 | ​ | 881 |  | 3.13 ​ |
| Total interest-bearing deposits | ​ | 149,540 | ​ | 1,866 |  | 2.52 ​ | ​ | 144,906 | ​ | 1,540 |  | 2.14 ​ |
| Borrowings | ​ | 9,596 | ​ | 136 |  | 2.84 ​ | ​ | 28,730 | ​ | 599 |  | 4.19 ​ |
| Total interest-bearing liabilities | ​ | 159,136 | ​ | 2,002 |  | 2.54 ​ | ​ | 173,636 | ​ | 2,139 |  | 2.48 ​ |
| Non-interest-bearing liabilities | ​ | 29,862 | ​ | ​ ​ | ​ | ​ ​ | ​ | 30,788 | ​ | ​ ​ | ​ | ​ ​ |
| Total liabilities | ​ | 188,998 | ​ | ​ ​ | ​ | ​ ​ | ​ | 204,424 | ​ | ​ ​ | ​ | ​ ​ |
| **Shareholders' equity** | ​ | 80,519 | ​ | ​ ​ | ​ | ​ ​ | ​ | 81,816 | ​ | ​ ​ | ​ | ​ ​ |
| Total liabilities and shareholders' equity | ​ | $269,517 | ​ | ​ ​ | ​ | ​ ​ | ​ | $286,240 | ​ | ​ ​ | ​ | ​ ​ |
| Net interest-earning assets | ​ | $88,784 | ​ | ​ ​ | ​ | ​ ​ | ​ | $93,670 | ​ | ​ ​ | ​ | ​ ​ |
| Net interest income; average interest rate spread | ​ | ​ ​ | ​ | $4,833 |  | 3.02% | ​ | ​ ​ | ​ | $4,541 |  | 2.55% |
| Net interest margin(3) | ​ | ​ ​ | ​ | ​ ​ |  | 3.93 ​ | ​ | ​ ​ | ​ | ​ ​ |  | 3.42 ​ |
| Average interest-earning assets to average interest-bearing liabilities | ​ | ​ ​ | ​ | ​ ​ |  | 155.79 ​ | ​ | ​ ​ | ​ | ​ ​ |  | 153.95 ​ |

|  |  |
| --- | --- |
| (1) Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts and loans in process. ​ 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%. ​ ​ ​ |  |
| ​ ​ (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%. | Equals net interest income divided by average interest-earning assets. Taxable equivalent yields are calculated using a marginal tax rate of 21%. |

36

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

*(Dollars in thousands)*

| ​ ​ ​ ​ Interest income: | ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2025 vs 2024 Increase (Decrease) Due to Rate ​ | ​ ​ | ​ ​ Volume ​ | ​ ​ ​ | ​ ​ Total Increase (Decrease) ​ | ​ ​ ​ ​ | ​ ​ Six Months Ended June 30, 2025 vs 2024 Increase (Decrease) Due to Rate ​ | ​ ​ | ​ ​ Volume ​ | ​ ​ ​ | ​ ​ Total Increase (Decrease) ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Loans receivable | ​ | $124 | ​ | $285 | ​ | $409 | ​ | $298 | ​ | $635 | ​ | $933 |
| Investment securities | ​ | 64 | ​ | 20 | ​ | 84 | ​ | 162 | ​ | (128) | ​ | 34 |
| Other interest-earning assets | ​ | ​ (120) | ​ | (437) | ​ | (557) | ​ | (212) | ​ | (600) | ​ | (812) |
| Total interest income | ​ | 68 | ​ | (132) | ​ | (64) | ​ | 248 | ​ | (93) | ​ | 155 |
| **Interest expense:** | ​ | ​ | ​ |  | ​ |  | ​ |  | ​ |  | ​ |  |
| Demand deposits, money market and savings accounts | ​ | 122 | ​ | 17 | ​ | 139 | ​ | 254 | ​ | 36 | ​ | 290 |
| Certificates of deposit | ​ | 7 | ​ | 8 | ​ | 15 | ​ | 37 | ​ | (1) | ​ | 36 |
| Total deposits | ​ | 129 | ​ | 25 | ​ | 154 | ​ | 291 | ​ | 35 | ​ | 326 |
| Borrowings | ​ | (120) | ​ | (118) | ​ | (238) | ​ | (233) | ​ | (230) | ​ | (463) |
| Total interest expense | ​ | 9 | ​ | (93) | ​ | (84) | ​ | 58 | ​ | (195) | ​ | (137) |
| Increase in net interest income | ​ | $59 | ​ | $(39) | ​ | $20 | ​ | $190 | ​ | $102 | ​ | $292 |

**Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024.**

**General.** For the three months ended June 30, 2025, the Company reported net income of $521,000, compared to net income of $527,000 for the three months ended June 30, 2024. Net interest income was up $20,000, or 0.8%, for the three months ended June 30, 2025, compared to the same period in 2024. The provision for credit losses was zero for the three months ended June 30, 2025, compared to $99,000 for the same period in 2024. Non-interest income was $344,000 for the three months ended June 30, 2025, compared to $366,000 for the same period in 2024. Non-interest expense for the three months ended June 30, 2025 was up $110,000, or 5.3%, compared to the same period in 2024, largely due to increased salaries and employee benefits expense.

**Interest Income.** Total interest income decreased $64,000, or 1.8%, to $3.5 million for the three months ended June 30, 2025, compared to the same period in 2024. Interest income on loans was up $409,000, or 17.2%, for the three months ended June 30, 2025, compared to the same period in 2024. Interest income on investment securities increased $84,000, or 40.0%, for the three months ended June 30, 2025, compared to the same period in 2024. These increases were offset by a decrease in interest income on cash and due from banks of $559,000, or 61.3%, for the three months ended June 30, 2025, compared to the same period in 2024.

The average loan yield was 6.68% for the three months ended June 30, 2025, up from 6.38% for the same period in 2024. Average loans were $167.6 million for the three months ended June 30, 2025, up $17.4 million, or 11.6%, compared to the same period in 2024. At June 30, 2025, approximately 51% of our total loans have adjustable rates and approximately 45% of total loans are scheduled to re-price or mature during the next 12 months.

The increase in interest income on investment securities was primarily due to an increase in the average rate earned on investment securities as a result of security purchases during 2024 and 2025. The average rate earned on our investment securities portfolio was 2.49% for the three months ended June 30, 2025, up 58 bps compared to the same period in 2024.

Interest income on interest-earning cash and due from banks, included in other interest-earning assets in the preceding tables, decreased mainly due to the decline in the average balance of interest-earning cash, as well as a decline in the average rate earned. The average rate earned on other interest-earning assets was 4.53% for the three months ended June 30, 2025, down 80 bps compared to the same period in 2024.

**Interest Expense.** Total interest expense decreased $84,000, or 7.8%, to $993,000 for the three months ended June 30, 2025, compared to $1.1 million for the same period in 2024. Interest expense on deposits was $925,000 during the three months ended June 30, 2025, up $154,000, or 20.0%, compared to the same period in 2024. The average rate paid on interest-bearing deposits was 2.49% during the three months ended June 30, 2025, up 33 bps compared to the same period in 2024. Interest expense on borrowings decreased by $238,000, or 77.8%, during the three months ended June 30, 2025 compared to the same period in 2024 mainly due to the payoff of an advance under the Bank Term Funding Program (“BTFP”) during the fourth quarter of 2024.

**Net Interest Income.** Net interest income was $2.5 million for the three months ended June 30, 2025, up $20,000, or 0.8%, compared to the same period in 2024. Our interest rate spread was 3.07% and 2.85% for the three months ended June 30, 2025 and 2024, respectively. Our net interest margin was 3.98% and 3.72% for the three months ended June 30, 2025 and 2024, respectively. The increase in net interest margin over the comparable periods was largely the result of loan growth during the last nine months of 2024 and the payoff of our BTFP advance.

**Provision for Credit Losses.** The total provision for credit losses on loans and unfunded commitments was zero for the three months ended June 30, 2025, compared to $99,000 for the same period in 2024. In 2024, the provision for credit losses was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated residential loans.

**Non-interest Income.** Non-interest income for the three months ended June 30, 2025 totaled $344,000, down $22,000 compared to the same period in 2024. Non-interest income for the three months ended June 30, 2024 includes $46,000 related to insurance proceeds received due to storm damage.

**Non-interest Expense.** Non-interest expense totaled $2.2 million for the three months ended June 30, 2025, up $110,000, or 5.3%, compared to the three months ended June 30, 2024.

Salaries and employee benefits expense totaled $1.3 million for the three months ended June 30, 2025, up $119,000, or 10.4%, compared to the same period in 2024 primarily due to raises issued during the third quarter of 2024 and an increase in bonus expense.

Occupancy and equipment expense totaled $208,000 for the three months ended June 30, 2025, up $25,000 or 13.7%, compared to the same period in 2024 mainly due to new ATMs, computers, and other technology upgrades acquired and placed in service after June 30, 2024.

Data processing and communication expense totaled $176,000 for the three months ended June 30, 2025, up $38,000, or 27.5%, compared to the same period in 2024. Data processing and communication expense for the 2024 period benefited from the reversal of accrued data conversion expenses related to the Company’s upgrade to a new core processing system.

**Income Tax Expense.** The Company reported income tax expense of $113,000 for the three months ended June 30, 2025, compared to $120,000 for the three months ended June 30, 2024. The change in income taxes over the comparable prior period was mainly due to the change in taxable earnings over the comparable periods.

**Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024.**

**General.** For the six months ended June 30, 2025, the Company reported net income of $1.1 million, compared to a net loss of $4.2 million for the six months ended June 30, 2024. Net interest income increased $292,000, or 6.4%, for the six months ended June 30, 2025, compared to the same period in 2024. The provision for credit losses was zero for the six months ended June 30, 2025, compared to $194,000 for the same period in 2024. Non-interest income was $897,000 for the six months ended June 30, 2025, compared to a net loss of $4.8 million for the same period in 2024. During the three months ended March 31, 2024, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million. Non-interest expense for the six months ended June 30, 2025 was down $483,000, or 9.9%, compared to the same period in 2024, primarily due to expenses incurred during the 2024 period related to the Company’s upgrade to a new core processing system.

**Interest Income.** Total interest income increased $155,000, or 2.3%, to $6.8 million for the six months ended June 30, 2025, compared to the same period in 2024. Interest income on loans and investment securities was up $933,000, or 20.3%, and $34,000, or 6.4%, respectively. These increases were partially offset by a decrease in interest income on cash and due from banks of $812,000, or 53.9%.

The average yield on loans was 6.68% for the six months ended June 30, 2025, up from 6.27% for the same period in 2024. Average loans were $166.9 million for the six months ended June 30, 2025, up $19.5 million, or 13.3%, compared to the same period in 2024.

The increase in interest income on investment securities was primarily due to an increase in the average rate earned on our investment securities portfolio for the six months ended June 30, 2025, compared to the same period in 2024. The average rate earned on our investment securities portfolio was 2.42% for the six months ended June 30, 2025, up 63 bps compared to the same period in 2024 primarily due to higher-yielding investment securities purchased during 2024 and 2025.

Interest income on interest-earning cash and due from banks, included in other interest-earning assets in the preceding tables, decreased mainly due to the decline in the average balance of interest-earning cash, as well as a decline in the average rate earned. The average rate earned on other interest-earning assets was 4.44% for the six months ended June 30, 2025, down 79 bps compared to the same period in 2024.

**Interest Expense.** Total interest expense decreased $137,000, or 6.4%, to $2.0 million for the six months ended June 30, 2025, compared to $2.1 million for the same period in 2024. Interest expense on deposits was $1.9 million during the six months ended June 30, 2025, up $326,000, or 21.2%, compared to the same period in 2024. The average rate paid on interest-bearing deposits was 2.52% during the six months ended June 30, 2025, up 38 bps compared to the same period in 2024. Interest expense on borrowings decreased by $463,000, or 77.3%, during the six months ended June 30, 2025, compared to the same period in 2024, mainly due to the payoff of a BTFP advance during the fourth quarter of 2024.

**Net Interest Income.** Net interest income was $4.8 million for the six months ended June 30, 2025, up $292,000, or 6.4%, compared to the same period in 2024. Our interest rate spread was 3.02% and 2.55% for the six months ended June 30, 2025 and 2024, respectively. Our net interest margin was 3.93% and 3.42% for the six months ended June 30, 2025 and 2024, respectively. The increase in net interest margin and net interest income over the comparable periods was primarily the result of loan growth during the last nine months of 2024 and the payoff of our BTFP advance.

**Provision for Credit Losses.** The total provision for credit losses on loans and unfunded commitments was zero for the six months ended June 30, 2025, compared to $194,000 for the same period in 2024. In 2024, the provision for credit losses was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated residential loans.

**Non-interest Income.** Non-interest income for the six months ended June 30, 2025 totaled $897,000, up $5.7 million compared to the same period in 2024. Non-interest income for the six months ended June 30, 2025 included insurance proceeds of $216,000 for fire and flood damages related to foreclosed properties. During the 2024 period, the Company sold 50 available-for-sale investment securities for a total pre-tax loss of $5.5 million.

**Non-interest Expense.** Non-interest expense totaled $4.4 million for the six months ended June 30, 2025, down $483,000, or 9.9%, compared to the same period in 2024. Non-interest expense for the six months ended June 30, 2024 includes $539,000 of data conversion and other associated expenses related to the Company’s upgrade to a new core processing system, which occurred during the first three months of 2024.

Salaries and employee benefits expense totaled $2.5 million for the six months ended June 30, 2025, up $104,000, or 4.3%, compared to the same period in 2024 primarily due to raises issued during the third quarter of 2024.

Data processing and communication expense totaled $358,000 for the six months ended June 30, 2025, down $574,000, or 61.6%, compared to the same period in 2024. Data processing and communication expense for the 2024 period included $517,000 of data conversion and other associated expenses due to the Company’s upgrade to a new core processing system.

ATM and debit card expense totaled $51,000 for the six months ended June 30, 2025, down $49,000, or 49.0%, compared to the same period in 2024 largely due to reductions in processing costs following the Company’s upgrade to a new core processing system.

Foreclosed assets expense totaled $107,000 for the six months ended June 30, 2025, up $73,000 compared to the same period in 2024. Net write-downs and losses on the sale of foreclosed assets totaled $102,000 for the six months ended June 30, 2025, compared to $18,000 for the same period in 2024.

**Income Tax Expense.** The Company reported income tax expense of $247,000 for the six months ended June 30, 2025, compared to an income tax benefit of $1.1 million for the six months ended June 30, 2024. The change in income taxes over the comparable prior period was largely due to the loss on sales of investment securities in 2024.

### 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 June 30, 2025, our borrowed funds consisted of FHLB advances with a total net carrying value of $9.6 million. The table below summarizes our unused and available liquidity sources as of June 30, 2025.

*(Dollars in thousands)*

| ​ | ​ ​ | ​ ​ June 30, 2025 |
| --- | --- | ---: |
| Advances from the FHLB of Dallas | ​ | $46,176 |
| Line of credit with primary correspondent bank | ​ | ​ 17,800 |
| Unpledged available-for-sale investment securities, at fair value | ​ | ​ 11,120 |
| Total unused and available liquidity | ​ | $75,096 |

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 $25.0 million custodial letter of credit outstanding from the FHLB as of June 30, 2025, 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 June 30, 2025, the Company used $25.0 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 most significant uses and sources of cash flows during the six months ended June 30, 2025 included:

- $3.5 million net outflow due to a decrease in deposits
- $2.8 million in outflows due to purchases of investment securities
- $1.6 million in outflows for the repurchase of the Company’s common stock
- $1.6 million in net cash provided by operations
- $1.5 million in proceeds from maturities and paydowns of investment securities
- $1.2 million in proceeds from the redemption of Federal Home Loan Bank Stock

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

The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans at June 30, 2025.

*(Dollars in thousands)*

| ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total Amounts Committed at June 30, 2025 | ​ ​ ​ | ​ ​ Amount of Commitment Expiration — Per Period To 1 Year | ​ ​ | ​ ​ 1 - 3 Years | ​ ​ | ​ ​ 3 - 5 Years | ​ ​ | ​ ​ After 5 Years |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Commitments to originate loans | ​ | $8,770 | ​ | $8,770 | ​ | $- | ​ | $- | ​ | $- |
| Undisbursed portion of construction loans in process | ​ | 8,780 | ​ | 4,953 | ​ | 3,827 | ​ | - | ​ | - |
| Unused lines of credit | ​ | 13,370 | ​ | 10,012 | ​ | 2,174 | ​ | 6 | ​ | 1,178 |
| Unused overdraft privilege amounts | ​ | 1,204 | ​ | - | ​ | - | ​ | - | ​ | 1,204 |
| Letters of credit | ​ | ​ - | ​ | ​ - | ​ | ​ - | ​ | ​ - | ​ | ​ - |
| Total commitments | ​ | $32,124 | ​ | $23,735 | ​ | $6,001 | ​ | $6 | ​ | $2,382 |

The following table summarizes our contractual cash obligations at June 30, 2025.

*(Dollars in thousands)*

| ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Total at June 30, 2025 | ​ ​ ​ | ​ ​ Payments Due By Period To 1 Year | ​ ​ | ​ ​ 1 - 3 Years | ​ ​ | ​ ​ 3 - 5 Years | ​ ​ | ​ ​ After 5 Years |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Certificates of deposit | ​ | $55,311 | ​ | $49,078 | ​ | $5,703 | ​ | $530 | ​ | $- |
| Borrowings | ​ | 10,000 | ​ | 3,000 | ​ | 3,000 | ​ | 4,000 | ​ | - |
| Total term debt | ​ | $65,311 | ​ | $52,078 | ​ | $8,703 | ​ | $4,530 | ​ | $- |

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

### Recent Accounting Pronouncements

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

## Controls and procedures

As filed, 2,458 characters.

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 June 30, 2025, 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 are 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 June 30, 2025, 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.

Filed Aug 13, 2025.
Source: SEC EDGAR, the filing index for accession 0001558370-25-011368. Last ingested by Listed: Nov 6, 2026, 13:14 ET. No prices; not investment advice.