SCHEDULE: Activist Investor Stilwell Boosts Stake in Catalyst Bancorp

Stilwell Activist Fund and affiliates have increased their stake in Catalyst Bancorp to 6.3%, signaling intent to maximize shareholder value.

Summary

• Stilwell Activist Fund and its affiliates (the "Group") have filed an amendment to their Schedule 13D, reporting an increased beneficial ownership in Catalyst Bancorp, Inc.
• The Group now beneficially owns 260,009 shares of Common Stock, representing approximately 6.3% of the 4,113,660 shares outstanding as of November 7, 2025.
• The Group's stated purpose is to profit from the appreciation in the market price of the shares by asserting shareholder rights.
• They believe the value of Catalyst Bancorp's assets is not adequately reflected in the current market price.
• Since their last report, Stilwell Activist Fund purchased 4,710 shares for $70,220.57, and Stilwell Activist Investments purchased 39,316 shares for $592,999.82.
• Funds for these purchases were provided from working capital and may, from time to time, be provided in part by margin account loans.
• The Group has a history of taking activist positions in 78 other publicly-traded companies since 2000, consistently aiming to maximize shareholder value through similar strategies.

Sentiment

Score: 7

Explanation: The filing indicates a significant activist investor has increased its stake and intends to push for shareholder value maximization, which is generally positive for shareholders seeking catalysts. However, the implied undervaluation and potential for conflict with management introduce some uncertainty.

Positives

• An experienced activist investor group, Stilwell, has increased its stake, indicating a belief in undervalued assets and potential for value creation.
• The Group explicitly states its intention to work with management and the board to maximize shareholder value.
• The Group has a long history of successful activist campaigns, often leading to sales, mergers, or significant share repurchases in other companies.

Negatives

• The activist position implies a belief that current management or the board is not adequately maximizing shareholder value.
• The Group's history suggests potential for proxy contests or demands for board representation if their objectives are not met, which could create friction.
• Stilwell Value LLC, a member of the Group, previously faced an SEC cease and desist order and a $75,000 penalty for untimely beneficial ownership filings.

Risks

• Potential for a contentious relationship between the activist investor and current management/board, which could distract from core business operations.
• The activist's strategies, while aimed at value maximization, may not align with all shareholders' long-term interests or could lead to short-term focused decisions.
• The use of margin loans for share purchases introduces financial leverage risk for the activist group.

Future Outlook

The Group intends to work with Catalyst Bancorp's management and board to maximize shareholder value, potentially through additional purchases or sales of Common Stock. Their long-term goal is to profit from share price appreciation by asserting shareholder rights, based on their belief that the Issuer's asset value is currently undervalued.

Management Comments

• We hope to work with management and the board to maximize shareholder value.
• Our purpose in acquiring shares of Common Stock of the Issuer is to profit from the appreciation in the market price of the shares of Common Stock through asserting shareholder rights.
• We do not believe the value of the Issuer's assets is adequately reflected in the current market price of the Issuer's Common Stock.

Industry Context

This filing indicates an activist investor's increased stake in a financial institution (Bancorp). Such actions are common in the banking sector, particularly for smaller or regional banks, where activists often push for strategic alternatives like mergers, sales, or improved capital allocation (e.g., share repurchases, special dividends) to unlock perceived undervalued assets. The Stilwell Group's extensive history in the financial sector confirms this focus, suggesting a potential for similar outcomes for Catalyst Bancorp.

Comparison to Industry Standards

• The Stilwell Group's history of taking activist positions in 78 other publicly-traded companies since 2000, with a consistent goal of profiting from share price appreciation by asserting shareholder rights, demonstrates a specialized and active approach within the financial industry.
• Their past successes, such as the sales or mergers of Security of Pennsylvania Financial Corp., Cameron Financial Corporation, and Community Financial Corp. after their intervention, provide a benchmark for their potential impact on Catalyst Bancorp, aligning with common activist outcomes in the sector.
• The Group's strategy often involves demanding board representation, pushing for share repurchases, or advocating for a sale, which are standard tactics employed by activist investors in the banking sector when they perceive underperformance or undervaluation compared to peers.

Legal Proceedings

• Stilwell Value LLC consented to an SEC administrative cease and desist order on September 25, 2024, for failing to timely file certain beneficial ownership reports on Schedule 13D and Schedule 13G.
• A $75,000 civil monetary penalty was imposed on Stilwell Value LLC, which has since been satisfied.

Stakeholder Impact

• Shareholders: Potential for increased share price appreciation if the activist's strategies are successful, but also potential for volatility during a proxy contest or strategic review.
• Management/Board: Increased scrutiny and pressure to perform or consider strategic alternatives. Potential for changes in leadership or board composition if the activist's demands are not met.
• Employees: Potential for uncertainty if strategic alternatives like a sale or merger are pursued, which could impact job security or company culture.

Next Steps

• The Group hopes to work collaboratively with Catalyst Bancorp's management and board to achieve their objectives.
• The Group may seek to make additional purchases or sales of Common Stock, depending on market conditions and strategic developments.
• The Group may, at any time, review or reconsider their positions and formulate new plans or proposals regarding Catalyst Bancorp.

Key Dates

Recommendation

The increased stake by an experienced activist investor like Stilwell suggests potential for future value creation through strategic actions such as a sale, merger, or improved capital allocation. This could lead to share price appreciation. However, the outcome of activist campaigns is not guaranteed, and there could be periods of uncertainty or conflict. For existing shareholders, holding the stock to observe the activist engagement unfold seems prudent. While the activist's involvement could be a catalyst, the filing itself does not provide new financial performance data for Catalyst Bancorp to warrant an immediate 'buy' or 'sell' recommendation.

Keywords

Catalyst Bancorp, Stilwell Activist Fund, Shareholder Activism, Schedule 13D, Bank Stock, Financial Services, Corporate Governance, Value Investing, Proxy Contest, Merger & Acquisition