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Catalyst Bancorp, Inc. Announces 2023 First Quarter Results and Approval of New Share Repurchase Plan

OPELOUSAS, La., April 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 first quarter of 2023. For the quarter, the Company reported net income of $73,000 compared to $171,000 for the fourth quarter of 2022.

(PRNewsfoto/St. Landry Homestead Federal Savings Bank)
(PRNewsfoto/St. Landry Homestead Federal Savings Bank)

"As our nation's economic angst rises, our capital strength positions us to grow and thrive through whatever challenges the economy offers," said Joe Zanco, President and Chief Executive Officer of the Company and the Bank. "Our focus remains on helping locally-owned businesses grow so that, together, we can increase employment across our communities."

Capital and Share Repurchases

The Bank continues to maintain an exceptional capital position with a total risk-based capital ratio of 57.69% and 57.42% at March 31, 2023 and December 31, 2022, respectively. At March 31, 2023 and December 31, 2022, consolidated shareholders' equity totaled $86.1 million, or 31.2% of total assets, and $88.5 million, or 33.6% of total assets, respectively.

The Company announced that its Board of Directors approved the Company's 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. Share repurchases under the April 2023 Repurchase Plan are expected to commence during the second quarter of 2023.

The Company announced its first share repurchase plan (the "January 2023 Repurchase Plan") on January 26, 2023, and completed repurchases under the January 2023 Repurchase Plan in April 2023. Under the January 2023 Repurchase Plan, the Company repurchased 265,000 shares of its common stock at an average cost per share of $12.62.

Loans and Credit Quality

Loans totaled $132.7 million at March 31, 2023, down $917,000, or less than 1%, from December 31, 2022. During the first quarter of 2023, fundings on existing construction loans and new originations of commercial and industrial loans were offset by paydowns across other segments of the portfolio.

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 totaled $86.5 million, or 65% of total loans, and commercial real estate loans totaled $19.3 million, or 15% of total loans, at March 31, 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 in our market area. Approximately 66% of our real estate loans have adjustable rates and, of these adjustable-rate real estate loans, approximately $47.0 million are scheduled to re-price during the next 12 months.

Our non-real estate loans primarily consist of commercial and industrial loans of $14.1 million, or 11% of total loans, at March 31, 2023. The commercial and industrial portfolio mainly consists of direct loans to small and mid-sized businesses located in our market area. Since March 31, 2022, the Company has grown this segment of the portfolio by $4.0 million, which was largely driven by loans to local businesses involved in industrial manufacturing and equipment, communications, and professional services. Approximately 39% of our commercial and industrial loans have adjustable rates and, of these adjustable-rate commercial and industrial loans, approximately $5.5 million are scheduled to re-price during the next 12 months.

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














(Dollars in thousands)


3/31/2023


12/31/2022


Increase (Decrease)

Real estate loans













One- to four-family residential


$

86,464


$

87,508


$

(1,044)


(1)

%

Commercial real estate



19,303



19,437



(134)


(1)


Construction and land



6,536



6,172



364


6


Multi-family residential



3,146



3,200



(54)


(2)


Total real estate loans



115,449



116,317



(868)


(1)


Other loans













Commercial and industrial



14,109



13,843



266


2


Consumer



3,132



3,447



(315)


(9)


Total other loans



17,241



17,290



(49)


-


Total loans


$

132,690


$

133,607


$

(917)


(1)

%

At both March 31, 2023 and December 31, 2022, non-performing assets ("NPAs") totaled $2.0 million and the ratio of NPAs to total assets was 0.73% and 0.76%, respectively. Non-performing loans ("NPLs") totaled $1.7 million, or 1.27% of total loans, at March 31, 2023 and $1.7 million, or 1.26% of total loans, at December 31, 2022. At March 31, 2023 and December 31, 2022, approximately 94% of total NPLs were one- to four-family residential mortgage loans.

Net loan recoveries totaled $54,000 during the first quarter of 2023, compared to net loan recoveries of $3,000 for the fourth quarter of 2022. During the first quarter of 2023, the Company recovered $41,000 of principal from a previously charged-off residential mortgage loan. In addition to the recovery of principal, the Company recovered $29,000 of interest income related to the same loan during the first quarter of 2023.

CECL Adoption and Allowance for Credit Losses

As of January 1, 2023, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced a new framework known as CECL. The adoption of CECL resulted in a $209,000, or 12%, increase in the allowance for loan losses, and a $216,000 increase in other liabilities due to the allowance for credit losses on unfunded commitments. At adoption, we also recorded a corresponding $335,000 after-tax decrease in retained earnings. The increase in the total allowance for credit losses, which is inclusive of the reserve for unfunded commitments, was primarily due to the addition of forecasted credit losses.

At January 1, 2023, the allowance for loan losses totaled $2.0 million, or 1.51% of total loans, compared to $1.8 million, or 1.35% of total loans, at December 31, 2022. At March 31, 2023, the allowance for loan losses totaled $2.1 million, or 1.56% of total loans, and the allowance for credit losses on unfunded commitments totaled $216,000, unchanged from the date of adoption. The Company did not record a provision for or a reversal of loan losses during the first quarter of 2023.

Investment Securities

Total investment securities were $92.4 million at March 31, 2023, down $669,000, or 1%, from December 31, 2022. At March 31, 2023 and December 31, 2022, 87% of total investment securities, based on amortized cost, were classified as available-for-sale. Net unrealized losses on securities available-for-sale totaled $10.1 million at March 31, 2023, compared to $11.5 million at December 31, 2022. For the first quarter of 2023, the average yield on the investment securities portfolio was 1.66%, up five basis points from the fourth quarter of 2022.

The following table summarizes the amortized cost and fair value of our investment securities portfolio as of March 31, 2023.
















March 31, 2023

(Dollars in thousands)


 Amortized
Cost


Gross
Unrealized
Gains


Gross
Unrealized
Losses


Fair Value

Securities available-for-sale













Mortgage-backed securities


$

72,032


$

24


$

(8,818)


$

63,238

U.S. Government and agency obligations



10,981






(905)



10,076

Municipal obligations



6,048



12



(437)



5,623

Total available-for-sale


$

89,061


$

36


$

(10,160)


$

78,937

Securities held-to-maturity













U.S. Government and agency obligations


$

13,005


$

-


$

(2,327)


$

10,678

Municipal obligations



466



-



(25)



441

Total held-to-maturity


$

13,471


$

-


$

(2,352)


$

11,119

Deposits and Liquidity

Total deposits were $179.7 million at March 31, 2023, up $14.6 million, or 9%, from December 31, 2022. The increase in deposits was primarily due to an increase in the balance of public funds. Our public funds consist primarily of non-interest bearing and NOW account deposits from municipalities within our market. At March 31, 2023, total public fund deposits amounted to $40.1 million, or 22% of total deposits.

Our total uninsured deposits (that is deposits in excess of the FDIC's insurance limit), inclusive of public funds, were approximately $59.7 million at March 31, 2023. Total uninsured non-public funds deposits were approximately $24.6 million at March 31, 2023. The full amount of our public funds 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 March 31, 2023, the amortized cost and fair value of investment securities pledged to secure public fund deposits totaled $36.9 million and $31.6 million, respectively.

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














(Dollars in thousands)


3/31/2023


12/31/2022


Increase (Decrease)

Non-interest-bearing demand deposits


$

35,483


$

33,657


$

1,826


5

%

NOW



49,252



36,991



12,261


33


Money market



16,153



15,734



419


3


Savings



28,200



26,209



1,991


8


Certificates of deposit



50,624



52,503



(1,879)


(4)


Total deposits


$

179,712


$

165,094


$

14,618


9

%

The ratio of the Company's total loans to total deposits was 73% and 80% as of March 31, 2023 and December 31, 2022, 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 March 31, 2023, we had available capacity to borrow $34.3 million from the FHLB and an additional $17.8 million on a line of credit with our primary correspondent bank.

Net Interest Income

Net interest margin for the first quarter of 2023 was 3.10%, up 14 basis points compared to the prior quarter. The average yield on interest-earning assets increased by 29 basis points to 3.57% for the first quarter of 2023, while the average rate on interest-bearing liabilities increased by 25 basis points to 0.80%, compared to the fourth quarter of 2022.

Net interest income for the first quarter of 2023 was $2.0 million, up $66,000, or 3%, from the fourth quarter of 2022 primarily due to an increase in interest income from loans (up $86,000, or 6%) and other interest income (up $66,000, or 46%). These increases were partially offset by an increase in interest expense on deposits (up $103,000, or 79%). The Company's interest-earning asset yield continues to benefit from rising interest rates due to increasing yields on our adjustable-rate loan portfolio and our interest-earning cash, which is included in other interest-earning assets. However, rising interest rates have also increased competition for deposits and have led us to offer higher rates on our deposit accounts.

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



3/31/2023


12/31/2022

(Dollars in thousands)


Average
Balance


Interest


Average
Yield/ Rate


Average
Balance


Interest


Average
Yield/ Rate

INTEREST-EARNING ASSETS



















Loans receivable(1)


$

133,781


$

1,629


4.94

%


$

133,102


$

1,543


4.60

%

Investment securities(TE)(2)



103,739



427


1.66




105,488



418


1.61


Other interest earning assets



19,820



211


4.33




17,443



145


3.29


Total interest-earning assets(TE)


$

257,340


$

2,267


3.57

%


$

256,033


$

2,106


3.28

%

INTEREST-BEARING LIABILITIES



















NOW, money market and savings accounts


$

90,972


$

81


0.36

%


$

84,157


$

37


0.18

%

Certificates of deposit



51,528



152


1.20




54,977



93


0.67


Total interest-bearing deposits



142,500



233


0.66




139,134



130


0.37


FHLB advances



9,216



68


2.96




9,930



76


3.07


Total interest-bearing liabilities


$

151,716


$

301


0.80

%


$

149,064


$

206


0.55

%

Net interest-earning assets


$

105,624








$

106,969







Net interest income; average interest rate spread(TE)





$

1,966


2.77

%





$

1,900


2.73

%

Net interest margin(TE)(3)








3.10

%








2.96

%



(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 first quarter of 2023 was $294,000, down $7,000, or 2%, from the fourth quarter of 2022 primarily due to a decrease in debit card and ATM transaction fees included in service charges on deposit accounts.

Non-interest Expense

Non-interest expense for the first quarter of 2023 totaled $2.2 million, up $183,000, or 9%, compared to the fourth quarter of 2022.

Data processing and communication expense totaled $227,000 for the first quarter of 2023, up $52,000, or 30%, from the prior quarter. During the fourth quarter of 2022, the Company received a credit from our core system provider, which lowered data processing and communication expense by $26,000 for the fourth quarter. The remaining increase in data processing and communication expense was primarily due to annual rate increases by our core system provider.

Professional fees totaled $129,000 for the first quarter of 2023, up $63,000, or 95%, from the prior quarter primarily due to increases in expenses related to audit and consulting services and 2022 annual reporting.

Franchise and shares tax expense increased $43,000, compared to the fourth quarter of 2022. During the fourth quarter of 2022, the Company recorded a reversal of franchise and shares tax expense of $16,000. Shares tax due for 2022 was received during the fourth quarter of 2022 and the actual expense was less than our initial estimate.

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 $275.8 million in assets at March 31, 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)

(Dollars in thousands)


3/31/2023


12/31/2022



3/31/2022

ASSETS











Non-interest-bearing cash


$

3,531


$

5,092



$

511

Interest-bearing cash and due from banks



23,996



8,380




39,585

Total cash and cash equivalents



27,527



13,472




40,096

Investment securities:











Securities available-for-sale, at fair value



78,937



79,602




84,649

Securities held-to-maturity



13,471



13,475




13,492

Loans receivable, net of unearned income



132,690



133,607




132,252

Allowance for loan losses



(2,070)



(1,807)




(2,173)

Loans receivable, net



130,620



131,800




130,079

Accrued interest receivable



675



673




536

Foreclosed assets



320



320




320

Premises and equipment, net



6,202



6,303




6,475

Stock in correspondent banks, at cost



1,823



1,808




1,794

Bank-owned life insurance



13,714



13,617




8,824

Other assets



2,539



2,254




1,204

TOTAL ASSETS


$

275,828


$

263,324



$

287,469












LIABILITIES











Deposits:











Non-interest-bearing


$

35,483


$

33,657



$

33,056

Interest-bearing



144,229



131,437




150,028

Total deposits



179,712



165,094




183,084

Federal Home Loan Bank advances



9,243



9,198




9,063

Other liabilities



747



558




663

TOTAL LIABILITIES



189,702



174,850




192,810












SHAREHOLDERS' EQUITY











Common stock



51



53




53

Additional paid-in capital



48,259



51,062




50,821

Unallocated common stock held by benefit plans



(6,664)



(6,307)




(4,126)

Retained earnings



52,478



52,740




52,419

Accumulated other comprehensive income (loss)



(7,998)



(9,074)




(4,508)

TOTAL SHAREHOLDERS' EQUITY



86,126



88,474




94,659

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$

275,828


$

263,324



$

287,469

 











CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)













Three Months Ended

(Dollars in thousands)


3/31/2023


12/31/2022


3/31/2022

INTEREST INCOME










Loans receivable, including fees


$

1,629


$

1,543


$

1,563

Investment securities



427



418



329

Other



211



145



19

Total interest income



2,267



2,106



1,911

INTEREST EXPENSE










Deposits



233



130



92

Advances from Federal Home Loan Bank



68



76



68

Total interest expense



301



206



160

Net interest income



1,966



1,900



1,751

Provision for (reversal of) credit losses



-



-



(71)

Net interest income after provision for (reversal of) loan losses



1,966



1,900



1,822

NON-INTEREST INCOME










Service charges on deposit accounts



183



189



168

Bank-owned life insurance



97



98



21

Other



14



14



8

Total non-interest income



294



301



197

NON-INTEREST EXPENSE










Salaries and employee benefits



1,203



1,175



1,261

Occupancy and equipment



213



193



210

Data processing and communication



227



175



208

Professional fees



129



66



140

Directors' fees



115



117



55

ATM and debit card



58



61



49

Foreclosed assets, net



2



5



(4)

Advertising and marketing



30



53



42

Franchise and shares tax



27



(16)



58

Other



181



173



182

Total non-interest expense



2,185



2,002



2,201

Income (loss) before income tax expense



75



199



(182)

Income tax expense (benefit)



2



28



(41)

NET INCOME (LOSS)


$

73


$

171


$

(141)











Earnings (loss) per share:










Basic


$

0.02


$

0.04


$

(0.03)

Diluted



0.02



0.04



N/A

 














CATALYST BANCORP, INC. AND SUBSIDIARY

SELECTED FINANCIAL DATA
















Three Months Ended

(Dollars in thousands)


3/31/2023


12/31/2022


3/31/2022

EARNINGS DATA













Total interest income


$

2,267



$

2,106



$

1,911


Total interest expense



301




206




160


Net interest income



1,966




1,900




1,751


Provision for (reversal of) credit losses



-




-




(71)


Total non-interest income



294




301




197


Total non-interest expense



2,185




2,002




2,201


Income tax expense (benefit)



2




28




(41)


Net income (loss)


$

73



$

171



$

(141)















AVERAGE BALANCE SHEET DATA













Total assets


$

271,910



$

270,121



$

286,955


Total interest-earning assets



257,340




256,033




274,249


Total loans



133,781




133,102




131,009


Total interest-bearing deposits



142,500




139,134




147,824


Total interest-bearing liabilities



151,716




149,064




156,858


Total deposits



174,597




170,952




179,615


Total shareholders' equity



87,350




88,558




97,366















SELECTED RATIOS













Return on average assets



0.11

%



0.25

%



(0.20)

%

Return on average equity



0.34




0.76




(0.59)


Efficiency ratio



96.68




90.99




112.98


Net interest margin(TE)



3.10




2.96




2.59


Average equity to average assets



32.12




32.78




33.93


Common equity Tier 1 capital ratio(1)



56.43




56.17




57.98


Tier 1 leverage capital ratio(1)



30.11




30.37




28.39


Total risk-based capital ratio(1)



57.69




57.42




59.24















ALLOWANCE FOR LOANS LOSSES













Beginning balance


$

1,807



$

1,804



$

2,276


CECL adoption impact



209




-




-


Provision for (reversal of) credit losses



-




-




(71)


Charge-offs



(7)




(19)




(63)


Recoveries



61




22




31


Net (charge-offs) recoveries



54




3




(32)


Ending balance


$

2,070



$

1,807



$

2,173















CREDIT QUALITY













Non-accruing loans


$

1,618



$

1,494



$

1,269


Accruing loans 90 days or more past due



69




191




-


Total non-performing loans



1,687




1,685




1,269


Foreclosed assets



320




320




320


Total non-performing assets


$

2,007



$

2,005



$

1,589















Total non-performing loans to total loans



1.27

%



1.26

%



0.96

%

Total non-performing assets to total assets



0.73




0.76




0.55




(1)

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

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

 

Cision
Cision

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SOURCE Catalyst Bancorp, Inc.

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