Catalyst Bancorp, Inc. (CLST): 5 FORCES Analysis [Nov-2025 Updated]

You're trying to get a clear-eyed view of Catalyst Bancorp, Inc.'s competitive spot as we head into late 2025, and honestly, the community bank model is under structural strain. The data we have-like the $\text{2\%}$ drop in net loans to $\text{164.8 million}$ and an efficiency ratio of $\text{77.46\%}$ in Q2-defintely signals that the local Acadiana rivalry is intense, putting pressure on their $\text{283.8 million}$ asset base. Suppliers, mainly depositors, hold real power, forcing the bank to compete hard for its $\text{186.4 million}$ in capital, even as they boast a rock-solid $\text{43.7\%}$ CET1 ratio. Below, we map out exactly where the leverage lies across all five of Porter's forces so you can see the near-term risks and opportunities for Catalyst Bancorp, Inc. clearly.

Catalyst Bancorp, Inc. (CLST) - Porter's Five Forces: Bargaining power of suppliers

When you look at Catalyst Bancorp, Inc. (CLST)'s funding structure, the suppliers-primarily depositors and wholesale lenders-hold considerable sway over the bank's cost of capital. This dynamic is critical because, for a community bank like Catalyst Bancorp, Inc., the cost of funding directly impacts the Net Interest Margin (NIM). We saw the NIM compress by 10 bps quarter-over-quarter to 3.88% in Q3 2025, largely due to these rising supplier costs.

Depositors, your main source of core capital, definitely have high power right now. You are seeing this play out as Catalyst Bancorp, Inc. has to push competitive high-yield specials just to keep the funding base growing. The success of these specials is evident: total deposits reached $186.4 million at September 30, 2025, which was an increase of 2% (or $4.2 million) from the end of Q2 2025. Honestly, without those specials, deposit growth would likely have stalled or reversed.

The pressure from depositors is quantifiable in the liability costs. For instance, the average rate on interest-bearing liabilities climbed 11 bps sequentially to reach 2.62% for the third quarter of 2025. That's the market telling Catalyst Bancorp, Inc. what it costs to keep their money in the bank.

Here's a quick look at the key supplier metrics as of the end of Q3 2025:

Beyond retail deposits, the reliance on more expensive, non-core funding is increasing, which signals a rising power dynamic from wholesale sources. Catalyst Bancorp, Inc. increased its borrowings by 53.7% to $14.7 million in 2025. That sharp jump means a larger portion of the balance sheet is now subject to market rates and counterparty terms, not just local deposit competition.

We also see concentrated power among specific segments of the depositor base. Public fund depositors are a significant bloc, wielding substantial influence because their balances are large and concentrated. As of September 30, 2025, these funds represented 16% of total deposits, totaling $30.5 million. When a segment holds that much capital, Catalyst Bancorp, Inc. must manage that relationship carefully.

Finally, consider the technology providers. For a smaller institution like Catalyst Bancorp, Inc., the power held by core banking technology providers is generally moderate but sticky. Switching costs for legacy systems are high, meaning these vendors can often command steady, perhaps increasing, service fees without immediate threat of being replaced. You don't see this in the deposit numbers, but it's a real operational cost factor.

• Depositors forced high-yield specials to achieve $186.4 million in total deposits.
• Public fund concentration equals $30.5 million, or 16% of funding.
• Wholesale funding grew by 53.7% to $14.7 million.
• Interest-bearing liability costs hit 2.62% in Q3 2025.

Finance: draft 13-week cash view by Friday.

Catalyst Bancorp, Inc. (CLST) - Porter's Five Forces: Bargaining power of customers

Borrowers have moderate-to-high power, as evidenced by slow loan growth and a 2% Q3 2025 decline in net loans to $164.8 million, suggesting competitive pricing pressure. This decline of $2.8 million from June 30, 2025, was partly due to a $4.6 million construction loan payoff and $1.0 million in pay-downs on a commercial and industrial relationship that was previously downgraded. The loan portfolio composition as of September 30, 2025, shows the areas where borrowers exert this pressure:

Retail customers face low switching costs for basic deposit products, keeping interest rates competitive in the Acadiana region. The need to actively compete for customer funds is confirmed by the bank's strategy, which shows clear pressure on funding costs. Here's the quick math on deposit cost impact:

• Total deposits grew 2% QoQ to $186.4 million as of September 30, 2025.
• Total interest expense increased 7% in Q3 2025 compared to the prior quarter.
• This interest expense rise was mainly due to the full quarter impact of growth in high-yield savings account balances.
• The Net Interest Margin (NIM) compressed 10 basis points QoQ to 3.88%.

Commercial customers have options from larger regional banks, giving them leverage in negotiating commercial real estate and C&I loan terms. The fact that a $1.0 million pay-down occurred on a C&I relationship, coupled with the overall increase in Substandard Loans to $4.7 million (up from $2.8 million at year-end 2024, largely in C&I), suggests borrowers are actively managing their credit lines or seeking better terms elsewhere. Still, management noted that new deposit customer acquisition remained strong in 2025. The bank's use of high-yield account specials confirms the need to actively compete for customer funds, as evidenced by the 2% quarter-over-quarter deposit growth to $186.4 million.

Catalyst Bancorp, Inc. (CLST) - Porter's Five Forces: Competitive rivalry

You're looking at a market where Catalyst Bancorp, Inc. (CLST) is fighting for every dollar against established players. The competitive rivalry in the local Louisiana Acadiana region is definitely intense, pitting Catalyst Bancorp, Inc. against larger regional banks and local credit unions all vying for the same customer base.

The pressure from this competition shows up directly in the cost structure. The efficiency ratio, which tells you how much it costs to generate a dollar of income, was 77.46% in Q2 2025. By Q3 2025, that ratio ticked up to 79.67%, signaling that cost-to-income pressure from market competition is not easing; it's actually increasing.

To counter the slow growth environment, especially in single-family mortgages, Catalyst Bancorp, Inc. has adjusted its focus within the loan book. This is a direct competitive response seen in the Q3 2025 portfolio composition. The bank's loan portfolio remains heavily concentrated in real estate, which accounted for 82.7% of total loans at September 30, 2025.

Here is the breakdown of the total net loans of $164.767 million as of September 30, 2025:

The bank's small asset base of $283.8 million as of Q3 2025 inherently limits its ability to compete on scale when stacked against larger regional rivals. This size constraint means Catalyst Bancorp, Inc. must compete on service and local knowledge rather than balance sheet dominance.

Evidence of the competitive nature of the market is clear in local market share data, even if it is not the absolute latest. As of June 30, 2021, Catalyst's deposit market share in Lafayette Parish was 0.03 percent, tying it for last place out of 28 banks/thrifts operating in that specific parish.

The competitive dynamics are further illustrated by the following Q3 2025 loan movements:

• One- to four-family residential loans declined by $1.822 million (or 2%) from Q2 2025.
• Commercial real estate loans saw a minor decrease of $297 thousand (or 1%).
• Construction and land loans dropped by $1.800 million (or 9%).
• Commercial and industrial loans increased by $630 thousand (or 3%).
• Consumer loans grew by $552 thousand (or 24%).

Finance: draft a competitive positioning memo comparing CLST's Q3 2025 loan growth rates against the top 3 listed competitors by Friday.

Catalyst Bancorp, Inc. (CLST) - Porter's Five Forces: Threat of substitutes

You're looking at the competitive landscape for Catalyst Bancorp, Inc. (CLST), and the threat of substitutes is definitely something to watch closely. When customers have alternatives that are cheaper, more convenient, or offer better yields, they will move their money or their business. For a community bank like Catalyst Bancorp, Inc., these substitutes aren't just other local banks; they are massive, tech-driven entities.

National and regional banks offer greater branch networks and a wider range of services, acting as a strong substitute for all customers. While Catalyst Bancorp, Inc. operates from a focused footprint of six branch offices across Louisiana's Acadiana region, larger players present a significant contrast. For instance, one major regional bank, U.S. Bank, serves 3 million clients through 600 branches in California alone, showcasing the scale of physical access available elsewhere. This scale is being rationalized, though; the U.S. is projected to see between 900 to 1,400 branch closures in 2025, with regional banks like Huntington and Fifth Third reducing their physical footprint by an average of 12%. Still, the sheer breadth of services-from complex wealth management to extensive payment processing, where some regional banks posted 7% annual growth in volume-means they are a ready-made substitute for any customer needing more than basic community banking services.

Credit unions provide tax-advantaged, often lower-cost deposit and loan products, posing a constant, local threat. Because credit unions are not-for-profit, they often pass savings to members. For example, in a representative comparison for a $25,000 car loan over five years, a credit union might offer 4.5% compared to a bank's 6.5%, resulting in a total savings of $1,560. While Catalyst Bancorp, Inc. is actively attracting new deposit customers, credit unions generally offer slightly higher interest rates on deposits than traditional brick-and-mortar banks. The competitive pressure on lending is real, even if credit union loan growth was only at a 1.8% seasonally-adjusted annual rate recently, with expectations that it could rise to 6% as rates potentially ease in 2025.

FinTech companies and online lenders are substitutes for consumer and small business lending, bypassing the bank's branch-based model. The digital lending space is massive; the global fintech lending market was valued at $590 billion in 2025. This technology-first approach is capturing significant market share: digital lending accounted for about 63% of U.S. personal loan originations in 2025, and an estimated 55% of small businesses in developed regions accessed loans via fintech platforms that same year. Furthermore, customer experience is a differentiator, with mobile-first lending platforms reporting 95% customer satisfaction in 2025, which is a tough benchmark for any physical institution to meet across all service lines.

Investment products like Treasury bills and money market funds are highly competitive alternatives to the bank's deposit products, especially in a higher rate environment. When safe, government-backed alternatives offer attractive yields, they pull core deposits. For Catalyst Bancorp, Inc., the average rate on its interest-bearing liabilities rose 11 basis points quarter-over-quarter in Q3 2025 to reach 2.62%. Contrast that with the market for risk-free assets: as of late November 2025, the secondary market yield for a 3-Month Treasury Bill was hovering around 3.74% to 3.85%. This means that liquid, government securities were offering yields significantly higher than what Catalyst Bancorp, Inc. was paying on its interest-bearing liabilities, putting direct pressure on the bank's Net Interest Margin, which compressed 10 basis points quarter-over-quarter to 3.88% in Q3 2025. To compete on the asset side, Catalyst Bancorp, Inc. itself was purchasing investment securities at a 5.17% average yield, showing where the market pricing power truly lies.

Here's a quick look at how some of these substitute rates compare to Catalyst Bancorp, Inc.'s funding costs as of late 2025:

The threat here is clear: if Catalyst Bancorp, Inc. cannot raise its deposit rates to compete with T-Bills without compressing its margin further, it risks deposit migration, especially from its $30.5 million in public fund deposits, 64% of which are demand deposits.

Catalyst Bancorp, Inc. (CLST) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for a new bank trying to set up shop against Catalyst Bancorp, Inc. in Louisiana's Acadiana region. Honestly, the deck is stacked against newcomers right out of the gate.

Regulatory barriers are definitely high, requiring significant capital and charter approval for a federally-chartered savings bank. New entrants must navigate a complicated U.S. regulatory structure involving multiple federal agencies, which carries substantial compliance costs that disproportionately burden smaller firms and startups. The very nature of banking stability means policymakers often view 'excessive competition' as deleterious to the sector's overall efficiency, creating a regulatory environment that favors incumbents.

To give you a sense of the scale Catalyst Bancorp, Inc. is operating from, look at these key figures as of mid-to-late 2025. This data shows the established foundation a new entrant would need to match or overcome.

Catalyst Bancorp's Common Equity Tier 1 capital ratio of 43.7% (Q2 2025) is well above minimums, setting a high bar for new entrants. This level of capital strength signals a high equity cushion, which regulators look for and which new, smaller entities would struggle to match immediately without massive initial capitalization.

Establishing a local brand and trust in the Acadiana region, where the bank has operated since 1922, is a significant non-financial barrier. That's over a century of community presence. Building that level of institutional memory and local relationship capital doesn't happen overnight; it's a slow accumulation of trust that fintechs or out-of-market banks can't easily replicate.

New entrants must also contend with the physical and digital presence required to serve a market effectively. They must overcome the need for a physical branch network or invest heavily in digital infrastructure to compete with the existing six-branch footprint of Catalyst Bank. Here's the quick math on what that physical presence entails:

• Headquarters and main office in Opelousas.
• Full-service branches in Carencro and Lafayette.
• Additional branches in Eunice, Port Barre, and one other location (Harry Guilbeau Branch).
• Total physical touchpoints: six locations across St. Landry and Lafayette Parishes.

If you try to go purely digital, you're competing against established digital offerings plus a physical network. If you try to build a physical network, the real estate, staffing, and regulatory hurdles for each new location add immense fixed and sunk costs. It's a tough spot for anyone starting from zero.