Catalyst Bancorp, Inc. Income Taxes Disclosure
NOTE 8. INCOME TAXES
Income tax expense (benefit) for the years ended December 31, 2025 and 2024 are summarized as follows:
Year Ended December 31, | ||||||
(Dollars in thousands) | | 2025 | | 2024 | ||
Federal: |
| |
| | ||
Current | $ | 140 | $ | - | ||
Deferred |
| 312 |
| (894) | ||
Total income tax expense (benefit) | $ | 452 | $ | (894) | ||
Total income tax expense differed from the amounts computed by applying the U.S. federal income tax rate of 21 percent in 2025 and 2024 to income before income taxes as a result of the following:
Year Ended December 31, | ||||||||||||
| 2025 | | 2024 | |||||||||
(Dollars in thousands) | | Amount | % | | Amount | % | ||||||
Expected income tax expense at federal tax rate | $ | 526 | 21.0 | % | $ | (836) | 21.0 | % | ||||
Nontaxable or nondeductible items: | ||||||||||||
Bank-owned life insurance income |
| (104) | (4.2) |
| (97) | 2.4 | ||||||
Tax free investment securities income |
| (15) | (0.6) |
| (6) | 0.2 | ||||||
Nondeductible stock-based compensation expense | 43 | 1.7 | 42 | (1.1) | ||||||||
Other |
| 2 | 0.2 |
| 3 | (0.1) | ||||||
$ | 452 | 18.1 | % | $ | (894) | 22.4 | % | |||||
Catalyst Bancorp, Inc. (holding company only) is subject to Louisiana income tax but has not incurred state income tax expense because of the absence of taxable income. Catalyst Bancorp, Inc. is also subject to the Louisiana Corporation Franchise Tax based on the Company’s capital not attributable to the Bank. The Bank is subject to the Louisiana Shares Tax which is imposed on the assessed value of the Bank’s capital stock. Louisiana franchise and shares tax expense are reported in aggregate within non-interest expense on the consolidated statements of income.
Income tax payments reported on the consolidated statements of cash flows reflect federal income taxes paid. No state income taxes were paid or incurred during the years ended December 31, 2025 or 2024.
Deferred taxes are recorded based upon differences between the financial statement and tax basis of assets and liabilities. The net deferred tax assets and liabilities in the accompanying statements of financial condition include the following components:
December 31, | ||||||
(Dollars in thousands) | | 2025 | | 2024 | ||
Deferred tax assets: |
| |
| | ||
Allowance for credit losses | $ | 138 | $ | 152 | ||
Net unrealized losses on available-for-sale securities |
| 640 |
| 946 | ||
Net operating loss | 194 | 753 | ||||
Foreclosed assets |
| 1 |
| 8 | ||
Stock-based compensation | 162 | 117 | ||||
Other |
| 58 |
| 36 | ||
Deferred tax assets |
| 1,193 |
| 2,012 | ||
Deferred tax liabilities: |
| |
| | ||
FHLB stock |
| (10) |
| (154) | ||
FHLB debt modification discount |
| (56) |
| (93) | ||
Premises and equipment, net |
| (293) |
| (313) | ||
Deferred tax liabilities |
| (359) |
| (560) | ||
Net deferred tax asset (liability) | $ | 834 | $ | 1,452 | ||
The net operating loss carryforward for income tax purposes totaled $924,000 and $3.6 million as of December 31, 2025 and 2024, respectively. The carryforward does not expire and is available to offset 80% of taxable income annually.
Retained earnings at December 31, 2025 and 2024 include approximately $1.9 million accumulated prior to January 1, 1987, for which no deferred federal income tax liability has been recognized. This amount represents an allocation of income to bad-debt deductions for tax purposes only. Reduction of amounts so allocated for purposes
other than tax bad-debt losses or adjustments arising from carryback of net operating losses would create income for tax purposes only, which would be subject to the then-current corporate income tax rate.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Mar 30, 2023 | |
| 2021 | Mar 29, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.