Catalyst Bancorp, Inc. Announces 2023 Second Quarter Results

OPELOUSAS, La., July 27, 2023 /PRNewswire/ -- Catalyst Bancorp, Inc. (Nasdaq: "CLST") (the "Company"), the parent company for Catalyst Bank (the "Bank") (www.catalystbank.com), reported financial results for the second quarter of 2023. For the quarter, the Company reported net income of $39,000, compared to $73,000 for the first quarter of 2023.

(PRNewsfoto/St. Landry Homestead Federal Savings Bank)

"One by one, we're adding new customers and expanding existing relationships as our bankers deliver responsive and customized service across Acadiana," said Joe Zanco, President and Chief Executive Officer of the Company and the Bank. "We're building a dedicated, fully engaged, high character company where people want to bank and maximize the impact of their work."

Capital and Share Repurchases

The Bank continues to maintain an exceptional capital position with a total risk-based capital ratio of 57.27% and 57.69% at June 30, 2023 and March 31, 2023, respectively. At June 30, 2023 and March 31, 2023, consolidated shareholders' equity totaled $84.3 million, or 31.7% of total assets, and $86.1 million, or 31.2% of total assets, respectively.

On April 27, 2023, the Company announced its second share repurchase plan (the "April 2023 Repurchase Plan"). Under the April 2023 Repurchase Plan, the Company may purchase up to 252,000 shares, or approximately 5% of the Company's outstanding shares of common stock. During the second quarter of 2023, the Company repurchased 129,070 shares of its common stock at an average cost per share of $10.65. At June 30, 2023, 156,542 shares were available for repurchase under the April 2023 Repurchase Plan.

Loans

Loans totaled $133.5 million at June 30, 2023, up $803,000, or less than 1%, from March 31, 2023. During the second quarter of 2023, commercial and industrial loan growth was partially offset by net declines in our real estate loan portfolio. The decline in construction and land loans was primarily driven by the conversion of construction loans to permanent financing.

The following table sets forth the composition of the Company's loan portfolio as of the dates indicated.

(Dollars in thousands)		6/30/2023			3/31/2023			Increase (Decrease)
Real estate loans
One- to four-family residential		$	85,655		$	86,464		$	(809)		(1)	%
Commercial real estate			19,175			19,303			(128)		(1)
Construction and land			4,620			6,536			(1,916)		(29)
Multi-family residential			3,094			3,146			(52)		(2)
Total real estate loans			112,544			115,449			(2,905)		(3)
Other loans
Commercial and industrial			17,609			14,109			3,500		25
Consumer			3,340			3,132			208		7
Total other loans			20,949			17,241			3,708		22
Total loans		$	133,493		$	132,690		$	803		1	%

The majority of the Company's loan portfolio consists of real estate loans secured by properties in our local market area, the Acadiana region of south Louisiana. Loans secured by one- to four-family residential properties accounted for 64% of total loans and commercial real estate loans accounted for 14% of total loans at June 30, 2023. Our commercial real estate loans are generally secured by retail and industrial use buildings, hotels, strip shopping centers and other properties used for commercial purposes. Approximately 66% of our real estate loans have adjustable rates and, of our total real estate loans, approximately $55.1 million, or 49%, are scheduled to re-price or mature during the next 12 months.

Our non-real estate loans primarily consist of commercial and industrial loans, which amounted to 13% of total loans, at June 30, 2023. This segment of the portfolio largely consists of loans to local businesses involved in industrial manufacturing and equipment, communications, and professional services. Approximately 37% of our commercial and industrial loans have adjustable rates and, of total commercial and industrial loans, approximately $8.8 million, or 50% are scheduled to re-price or mature during the next 12 months.

Credit Quality and Allowance for Loan Losses

At June 30 and March 31, 2023, non-performing assets ("NPAs") totaled $2.2 million and $2.0 million, respectively, and the ratio of NPAs to total assets was 0.82% and 0.73%, respectively, at such dates. Non-performing loans ("NPLs") totaled $1.9 million, or 1.42% of total loans, at June 30, 2023 and $1.7 million, or 1.27% of total loans, at March 31, 2023. At June 30, 2023 and March 31, 2023, greater than 94% of total NPLs were one- to four-family residential mortgage loans.

Net loan recoveries totaled $13,000 during the second quarter of 2023, compared to net recoveries of $54,000 for the first quarter of 2023. During the first quarter of 2023, the Company recovered $41,000 of principal from a previously charged-off residential mortgage loan.

At June 30 and March 31, 2023, the allowance for loan losses totaled $2.1 million, or 1.56% of total loans. The total provision for credit losses on loans and unfunded commitments was zero for the first six months of 2023.

Investment Securities

Total investment securities were $89.3 million, or 34% of total assets, at June 30, 2023. 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 Company has not purchased investment securities since the fourth quarter of 2022. We have also not sold or reclassified securities during this current period of interest rate hikes by the Federal Reserve, which began in March 2022.

At June 30, 2023, 87% of total investment securities, based on amortized cost, were classified as available-for-sale. Net unrealized losses on securities available-for-sale totaled $10.9 million at June 30, 2023, compared to $10.1 million at March 31, 2023. For the second quarter of 2023, the average yield on the total investment securities portfolio was 1.65%, down one basis point from the first quarter of 2023.

The following table summarizes the amortized cost and fair value of our investment securities portfolio as of June 30, 2023.

		June 30, 2023
(Dollars in thousands)		Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale
Mortgage-backed securities		$	69,804		$	1		$	(9,477)		$	60,328
U.S. Government and agency obligations			10,984			-			(976)			10,008
Municipal obligations			6,031			1			(492)			5,540
Total available-for-sale		$	86,819		$	2		$	(10,945)		$	75,876
Securities held-to-maturity
U.S. Government and agency obligations		$	13,005		$	-		$	(2,487)		$	10,518
Municipal obligations			463			-			(31)			432
Total held-to-maturity		$	13,468		$	-		$	(2,518)		$	10,950

Deposits and Liquidity

Total deposits were $171.4 million at June 30, 2023, down $8.3 million, or 5%, from March 31, 2023. Compared to December 31, 2022, total deposits were up $6.3 million, or 4%, at June 30, 2023. During the first and second quarters of 2023, the average balance of total deposits was $174.6 million and $172.5 million, respectively. The decrease during the second quarter of 2023 was primarily due to decreases in public fund deposits.

Our public funds consist primarily of non-interest bearing and NOW account deposits from municipalities within our market. At June 30, 2023, total public fund deposits amounted to $24.7 million, or 14% of total deposits, compared to $40.1 million, or 22% of total deposits, at March 31, 2023.

Our total uninsured deposits (that is deposits in excess of the FDIC's insurance limit), inclusive of public funds, were approximately $50.2 million at June 30, 2023 and $59.7 million at March 31, 2023. Total uninsured non-public funds deposits were approximately $30.5 million and $24.6 million at June 30 and March 31, 2023, respectively. The full amount of our public fund deposits in excess of the FDIC's insurance limit are secured by pledging investment securities or by allocating available portions of a letter of credit from the FHLB to collateralize the balances. At June 30, 2023, the amortized cost and fair value of investment securities pledged to secure public fund deposits totaled $48.3 million and $41.8 million, respectively.

The following table sets forth the composition of the Bank's deposits as of the dates indicated.

(Dollars in thousands)		6/30/2023			3/31/2023			Increase (Decrease)
Non-interest-bearing demand deposits		$	41,482		$	35,483		$	5,999		17	%
NOW			34,159			49,252			(15,093)		(31)
Money market			18,798			16,153			2,645		16
Savings			26,927			28,200			(1,273)		(5)
Certificates of deposit			50,007			50,624			(617)		(1)
Total deposits		$	171,373		$	179,712		$	(8,339)		(5)	%

The ratio of the Company's total loans to total deposits was 78% and 74% as of June 30 and March 31, 2023, respectively. In addition to our deposit base, our secondary sources of liquidity include borrowings from the FHLB and a line of credit from our primary correspondent bank. At June 30, 2023, we had available capacity to borrow $47.9 million from the FHLB and an additional $17.8 million on a line of credit with our primary correspondent bank.

Net Interest Income

The net interest margin for the second quarter of 2023 was 3.02%, down eight basis points compared to the prior quarter. The average yield on interest-earning assets increased by 11 basis points to 3.68% for the second quarter of 2023, while the average rate on interest-bearing liabilities increased by 37 basis points to 1.17%, compared to the first quarter of 2023.

Net interest income for the second quarter of 2023 was $1.9 million, down $63,000, or 3%, from the first quarter of 2023 primarily due to an increase in interest expense on deposits (up $118,000, or 51%) partially offset by an increase in interest income on loans (up $62,000, or 4%). Demand for higher rates on deposit accounts remained persistent during the second quarter of 2023 largely driven by competitor offerings.

The following table sets forth, for the periods indicated, the Company's 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.

		Three Months Ended
		6/30/2023									3/31/2023
(Dollars in thousands)		Average Balance			Interest			Average Yield/ Rate			Average Balance			Interest			Average Yield/ Rate
INTEREST-EARNING ASSETS
Loans receivable(1)		$	133,394		$	1,691		5.09	%		$	133,781		$	1,629		4.94	%
Investment securities(TE)(2)			101,630			413		1.65				103,739			427		1.66
Other interest earning assets			18,403			218		4.73				19,820			211		4.33
Total interest-earning assets(TE)		$	253,427		$	2,322		3.68	%		$	257,340		$	2,267		3.57	%
INTEREST-BEARING LIABILITIES
NOW, money market and savings      accounts		$	83,962		$	142		0.68	%		$	90,972		$	81		0.36	%
Certificates of deposit			51,185			209		1.64				51,528			152		1.20
Total interest-bearing deposits			135,147			351		1.04				142,500			233		0.66
FHLB advances			9,264			68		2.94				9,216			68		2.96
Total interest-bearing liabilities		$	144,411		$	419		1.17	%		$	151,716		$	301		0.80	%
Net interest-earning assets		$	109,016								$	105,624
Net interest income; average interest rate      spread(TE)					$	1,903		2.51	%					$	1,966		2.77	%
Net interest margin(TE)(3)								3.02	%								3.10	%

(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%.

Non-interest Income

Non-interest income for the second quarter of 2023 was $317,000, up $23,000, or 8%, from the first quarter of 2023 primarily due to higher debit card income.

Non-interest Expense

Non-interest expense for the second quarter of 2023 totaled $2.2 million, up $6,000 compared to the first quarter of 2023.

Salaries and employee benefits expense totaled $1.2 million for the second quarter of 2023, down $25,000, or 2%, from the prior quarter. Compensation expense related to our ESOP was down from the prior quarter due to a decline in the average market price of the Company's common stock.

Occupancy and equipment expense totaled $198,000 for the second quarter of 2023, down $15,000, or 7%, from the prior quarter primarily due to a decline in repairs and maintenance expense.

Professional fees totaled $117,000 for the second quarter of 2023, down $12,000, or 9%, from the prior quarter primarily due to lower audit and consulting expenses.

Foreclosed assets expense totaled $63,000 for the second quarter of 2023, up $61,000 from the prior quarter. During the second quarter of 2023, the Company recorded a write-down of $62,000 on real estate held as foreclosed assets. The real estate had a carrying value of $320,000 at March 31, 2023 and the sale of the property closed in July 2023.

About Catalyst Bancorp, Inc.

Catalyst Bancorp, Inc. (Nasdaq: CLST) is a Louisiana corporation and registered bank holding company for Catalyst Bank, its wholly-owned subsidiary, with $266.0 million in assets at June 30, 2023. Catalyst Bank, formerly St. Landry Homestead Federal Savings Bank, has been in operation in the Acadiana region of south-central Louisiana for over 100 years. With a focus on fueling business and improving lives throughout the region, Catalyst Bank offers commercial and retail banking products through our six full-service branches located in Carencro, Eunice, Lafayette, Opelousas, and Port Barre. To learn more about Catalyst Bank, visit www.catalystbank.com.

Forward-looking Statements

This press release contains certain forward-looking statements.  Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.  They often include words like "believe," "expect," "anticipate," "estimate" and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may."  Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the business of Catalyst Bancorp, Inc. and Catalyst Bank, and changes in the securities markets.  Except as required by law, the Company does not undertake any obligation to update any forward-looking statements to reflect changes in belief, expectations or events.

 

CATALYST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
		(Unaudited)			(Unaudited)						(Unaudited)
(Dollars in thousands)		6/30/2023			3/31/2023			12/31/2022			6/30/2022
ASSETS
Non-interest-bearing cash		$	4,769		$	3,531		$	5,092		$	4,553
Interest-bearing cash and due from banks			15,022			23,996			8,380			24,582
Total cash and cash equivalents			19,791			27,527			13,472			29,135
Investment securities:
Securities available-for-sale, at fair value			75,876			78,937			79,602			82,276
Securities held-to-maturity			13,468			13,471			13,475			13,486
Loans receivable, net of unearned income			133,493			132,690			133,607			133,869
Allowance for loan losses			(2,081)			(2,070)			(1,807)			(1,980)
Loans receivable, net			131,412			130,620			131,800			131,889
Accrued interest receivable			707			675			673			556
Foreclosed assets			296			320			320			320
Premises and equipment, net			6,111			6,202			6,303			6,494
Stock in correspondent banks, at cost			1,839			1,823			1,808			1,795
Bank-owned life insurance			13,813			13,714			13,617			13,422
Other assets			2,662			2,539			2,254			1,804
TOTAL ASSETS		$	265,975		$	275,828		$	263,324		$	281,177
LIABILITIES
Deposits:
Non-interest-bearing		$	41,482		$	35,483		$	33,657		$	30,400
Interest-bearing			129,891			144,229			131,437			148,335
Total deposits			171,373			179,712			165,094			178,735
Federal Home Loan Bank advances			9,288			9,243			9,198			9,108
Other liabilities			977			747			558			727
TOTAL LIABILITIES			181,638			189,702			174,850			188,570
SHAREHOLDERS' EQUITY
Common stock			49			51			53			53
Additional paid-in capital			47,032			48,259			51,062			50,838
Unallocated common stock held by benefit plans			(6,616)			(6,664)			(6,307)			(4,073)
Retained earnings			52,517			52,478			52,740			52,434
Accumulated other comprehensive income (loss)			(8,645)			(7,998)			(9,074)			(6,645)
TOTAL SHAREHOLDERS' EQUITY			84,337			86,126			88,474			92,607
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	265,975		$	275,828		$	263,324		$	281,177

 

CATALYST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
		Three Months Ended									Six Months Ended
(Dollars in thousands)		6/30/2023			3/31/2023			6/30/2022			6/30/2023			6/30/2022
INTEREST INCOME
Loans receivable, including fees		$	1,691		$	1,629		$	1,555		$	3,320		$	3,118
Investment securities			413			427			352			840			681
Other			218			211			58			429			77
Total interest income			2,322			2,267			1,965			4,589			3,876
INTEREST EXPENSE
Deposits			351			233			87			584			179
Advances from Federal Home Loan      Bank			68			68			68			136			136
Total interest expense			419			301			155			720			315
Net interest income			1,903			1,966			1,810			3,869			3,561
Provision for (reversal of) credit losses			-			-			(189)			-			(260)
Net interest income after provision for      (reversal of) loan losses			1,903			1,966			1,999			3,869			3,821
NON-INTEREST INCOME
Service charges on deposit accounts			200			183			182			383			350
... Gain (loss) on disposals and sales of       fixed assets			-			-			(77)			-			(77)
Bank-owned life insurance			99			97			98			196			119
Federal community development grant			-			-			171			-			171
Other			18			14			5			32			13
Total non-interest income			317			294			379			611			576
NON-INTEREST EXPENSE
Salaries and employee benefits			1,178			1,203			1,218			2,381			2,479
Occupancy and equipment			198			213			227			411			437
Data processing and communication			220			227			242			447			450
Professional fees			117			129			175			246			315
Directors' fees			114			115			55			229			110
ATM and debit card			61			58			59			119			108
Foreclosed assets, net			63			2			1			65			(3)
Advertising and marketing			22			30			109			52			151
Franchise and shares tax			25			27			58			52			116
Other			193			181			240			374			422
Total non-interest expense			2,191			2,185			2,384			4,376			4,585
Income (loss) before income tax expense			29			75			(6)			104			(188)
Income tax expense (benefit)			(10)			2			(21)			(8)			(62)
NET INCOME (LOSS)		$	39		$	73		$	15		$	112		$	(126)
Earnings (loss) per share:
Basic		$	0.01		$	0.02		$	0.01		$	0.03		$	(0.02)
Diluted			0.01			0.02			N/A			0.03			N/A

 

CATALYST BANCORP, INC. AND SUBSIDIARY
SELECTED FINANCIAL DATA
		Three Months Ended												Six Months Ended
(Dollars in thousands)		6/30/2023				3/31/2023				6/30/2022				6/30/2023				6/30/2022
EARNINGS DATA
Total interest income		$	2,322			$	2,267			$	1,965			$	4,589			$	3,876
Total interest expense			419				301				155				720				315
Net interest income			1,903				1,966				1,810				3,869				3,561
Provision for (reversal of) credit losses			-				-				(189)				-				(260)
Total non-interest income			317				294				379				611				576
Total non-interest expense			2,191				2,185				2,384				4,376				4,585
Income tax expense (benefit)			(10)				2				(21)				(8)				(62)
Net income (loss)		$	39			$	73			$	15			$	112			$	(126)
AVERAGE BALANCE SHEET DATA
Total assets		$	268,095			$	271,940			$	286,529			$	270,007			$	286,741
Total interest-earning assets			253,427				257,340				268,303				255,373				271,259
Total loans			133,394				133,781				134,058				133,586				132,542
Total interest-bearing deposits			135,147				142,500				150,582				138,803				149,210
Total interest-bearing liabilities			144,411				151,716				159,661				148,043				158,267
Total deposits			172,526				174,597				183,316				173,555				181,476
Total shareholders' equity			85,421				87,350				93,514				86,380				95,429
SELECTED RATIOS
Return on average assets			0.06	%			0.11	%			0.02	%			0.08	%			(0.09)	%
Return on average equity			0.18				0.34				0.06				0.26				(0.27)
Efficiency ratio			98.73				96.68				108.93				97.69				110.84
Net interest margin(TE)			3.02				3.10				2.71				3.06				2.65
Average equity to average assets			31.86				32.12				32.64				31.99				33.28
Common equity Tier 1 capital ratio(1)			56.02				56.43				58.51
Tier 1 leverage capital ratio(1)			30.64				30.11				28.43
Total risk-based capital ratio(1)			57.27				57.69				59.76

(1)	Capital ratios are preliminary end-of-period ratios for the Bank only and are subject to change.

 

CATALYST BANCORP, INC. AND SUBSIDIARY
SELECTED FINANCIAL DATA
(continued)
		Three Months Ended												Six Months Ended
(Dollars in thousands)		6/30/2023				3/31/2023				6/30/2022				6/30/2023				6/30/2022
ALLOWANCE FOR CREDIT LOSSES
Allowance for loan losses:
Beginning balance		$	2,070			$	1,807			$	2,173			$	1,807			$	2,276
CECL adoption impact			-				209				-				209				-
Provision for (reversal of) loan losses			(2)				-				(189)				(2)				(260)
Charge-offs			(10)				(7)				(38)				(17)				(101)
Recoveries			23				61				34				84				65
Net (charge-offs) recoveries			13				54				(4)				67				(36)
Ending balance		$	2,081			$	2,070			$	1,980			$	2,081			$	1,980
Allowance for unfunded commitments:
Beginning balance			216				-				-				-				-
CECL adoption impact			-				216				-				216				-
Provision for losses on unfunded commitments			2				-				-				2				-
Ending balance		$	218			$	216			$	-			$	218			$	-
Total allowance for credit losses, end of      period		$	2,299			$	2,286			$	1,980			$	2,299			$	1,980
Total provision for (reversal of) credit       losses			-				-				(189)				-				(260)
CREDIT QUALITY
Non-accruing loans		$	1,629			$	1,618			$	1,246
Accruing loans 90 days or more past due			260				69				41
Total non-performing loans			1,889				1,687				1,287
Foreclosed assets			296				320				320
Total non-performing assets		$	2,185			$	2,007			$	1,607
Total non-performing loans to total loans			1.42	%			1.27	%			0.96	%
Total non-performing assets to total assets			0.82				0.73				0.57

 

For more information:
Joe Zanco, President and CEO
(337) 948-3033

Cision

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