In his exegesis of Psalm 16:1-4, Lutheran theologian Nikolaus Selnecker (1530-1592) gives a clear statement defining the nature of the catholic church. He argues that it is the congregation of those who, despite being sinners deserving death, are saved by Christ, and through his suffering and death are united to their savior and made children of God.
I Believe in the Holy Catholic Church
But who the saints are we should learn to understand correctly. For Christ does not talk about such saints, who before God through their own works are pious and righteous and who have no sins, because no person is righteous before God—otherwise Christ should not have had to suffer for the human race. Rather, he speaks about real sinners and children of death, whom the Lord Christ has saved from God’s wrath and eternal damnation through his suffering and death. And he has made them all, as many as believe in him, children of God, righteous and blessed. On account of this he calls them saints. Not because they are holy and pious by nature— just as little as the thief on the cross—but because he has reconciled these poor, miserable, great sinners and enemies of God with his heavenly Father through his sacrifice given on the cross, and through his suffering, death and resurrection he has redeemed them from sin, God’s wrath and eternal damnation. He has made them righteous, holy and blessed, as the Lord himself intercedes for them to his Father in John 17: “Sanctify them in your truth; your word is the truth.” And shortly afterwards: “I sanctify myself for them, so that they also might be sanctified in the truth.” . . . From this we now understand what the holy Christian church is, namely, a congregation or assembly who are gathered by the Holy Spirit through the gospel of Christ. In this assembly . . . they still have much weakness and sin in them and must endure much crossbearing and misery; nevertheless they have the forgiveness of sin, righteousness, the Holy Spirit and eternal life on account of the Mediator Christ Jesus. They are his holy and living members.
The Whole Psalter.
Psalms 1-72, ed. Herman Selderhuis, Reformation Commentary on Scripture, OT vol.7, p. 121.