Catalyst Bancorp, Inc. Announces 2022 Fourth Quarter Results and Approval of Share Repurchase Plan

OPELOUSAS, La., Jan. 26, 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 fourth quarter of 2022. For the quarter, the Company reported net income of $171,000, up $36,000, or 27%, from the third quarter of 2022.

"2022 was transformational for our company embodied by the new Catalyst Bank name," said Joe Zanco, President and Chief Executive Officer of the Company and the Bank. "Our mission is to serve as catalysts for economic growth in our communities by helping locally-owned businesses grow. Our team is fully committed to fueling local business and improving the lives of our neighbors."

Share Repurchase Plan

The Company announced that its Board of Directors approved the Company's first share repurchase plan (the "2023 Repurchase Plan"). Under the 2023 Repurchase Plan, the Company may purchase up to 265,000 shares, or approximately 5% of the Company's outstanding common stock. Share repurchases under the 2023 Repurchase Plan are expected to commence during the first quarter of 2023 upon the completion of share repurchases to fund the 2022 Recognition and Retention Plan and Trust Agreement.

Loans and Credit Quality

Loans totaled $133.6 million at December 31, 2022, up $1.7 million, or 1%, from September 30, 2022. During the fourth quarter of 2022, loan growth was primarily driven by new originations of commercial and industrial loans and fundings on existing construction loans, which were partially offset by paydowns across other segments of the portfolio.

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


*(Dollars in thousands)*	12/31/2022		9/30/2022		Increase (Decrease)
Real estate loans
One- to four-family residential	$	87,508	$	88,568	$	(1,060)	(1)	%
Commercial real estate		19,437		21,073		(1,636)	(8)
Construction and land		6,172		4,450		1,722	39
Multi-family residential		3,200		3,252		(52)	(2)
Total real estate loans		116,317		117,343		(1,026)	(1)
Other loans
Commercial and industrial		13,843		11,087		2,756	25
Consumer		3,447		3,512		(65)	(2)
Total other loans		17,290		14,599		2,691	18
Total loans	$	133,607	$	131,942	$	1,665	1	%

Non-performing assets ("NPAs") totaled $2.0 million at December 31, 2022, up $85,000, or 4%, compared to September 30, 2022. The ratio of NPAs to total assets was 0.76% at December 31, 2022, compared to 0.68% at September 30, 2022. Non-performing loans ("NPLs") totaled $1.7 million, or 1.26% of total loans, at December 31, 2022 and $1.6 million, or 1.21% of total loans, at September 30, 2022. At December 31, 2022, approximately 94% of total NPLs were one- to four-family residential mortgage loans, compared to 88% at September 30, 2022.

The allowance for loan losses totaled $1.8 million, or 1.35% of total loans, at December 31, 2022 and $1.8 million, or 1.37% of total loans, at September 30, 2022. The Company did not record a provision for or a reversal of loan losses during the fourth quarter of 2022.

Net loan recoveries totaled $3,000 during the fourth quarter of 2022, compared to net loan charge-offs of $61,000 for the third quarter of 2022. The third quarter charge-offs were primarily related to two residential mortgage loans.

Investment Securities

Total investment securities were $93.1 million at December 31, 2022, up $1.0 million, or 1%, from September 30, 2022. At December 31 and September 30, 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 $11.5 million at December 31, 2022, compared to $12.6 million at September 30, 2022. For the fourth quarter of 2022, the average yield on the investment securities portfolio was 1.61%, up 13 basis points from the third quarter of 2022.

Deposits

Total deposits were $165.1 million at December 31, 2022, down $19.1 million, or 10%, from September 30, 2022. The decrease in deposits was primarily due to net outflows from NOW accounts and a decrease in certificates of deposit.

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


*(Dollars in thousands)*	12/31/2022		9/30/2022		Increase (Decrease)
Non-interest-bearing demand deposits	$	33,657	$	31,988	$	1,669	5	%
NOW		36,991		50,547		(13,556)	(27)
Money market		15,734		17,129		(1,395)	(8)
Savings		26,209		26,874		(665)	(2)
Certificates of deposit		52,503		57,689		(5,186)	(9)
Total deposits	$	165,094	$	184,227	$	(19,133)	(10)	%

Net Interest Income

Net interest margin for the fourth quarter of 2022 was 2.96%, up 21 basis points compared to the prior quarter. The average yield on interest-earning assets increased by 29 basis points to 3.28% for the fourth quarter of 2022, while the average rate on interest-bearing liabilities increased by 15 basis points to 0.55%, compared to the third quarter of 2022.

Net interest income for the fourth quarter of 2022 was $1.9 million, up $30,000, or 2%, from the third quarter of 2022 primarily due to an increase in interest income from loans (up $77,000, or 5%) and investment securities (up $37,000, or 10%). These increases were partially offset by a decline in other interest income and an increase in interest expense on deposits. Lower average balances of cash and cash equivalents led to the decline in other interest income and the increase in interest expense on deposits was primarily the result of accounts re-pricing to higher rates during the fourth quarter of 2022.

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
	12/31/2022						9/30/2022
*(Dollars in thousands)*	Average Balance		Interest		Average Yield/ Rate		Average Balance		Interest		Average Yield/ Rate
INTEREST-EARNING ASSETS
Loans receivable⁽¹⁾	$	133,102	$	1,543	4.60	%	$	131,827	$	1,466	4.41	%
Investment securities^(TE)(2)		105,488		418	1.61			104,403		381	1.48
Other interest earning assets		17,443		145	3.28			34,547		185	2.12
Total interest-earning assets^(TE)	$	256,033	$	2,106	3.28	%	$	270,777	$	2,032	2.99	%
INTEREST-BEARING LIABILITIES
NOW, money market and savings accounts	$	84,157	$	37	0.18	%	$	91,738	$	29	0.13	%
Certificates of deposit		54,977		93	0.67			59,833		64	0.43
Total interest-bearing deposits		139,134		130	0.37			151,571		93	0.24
FHLB advances		9,930		76	3.07			9,126		69	2.99
Total interest-bearing liabilities	$	149,064	$	206	0.55	%	$	160,697	$	162	0.40	%
Net interest-earning assets	$	106,969					$	110,080
Net interest income; average interest rate spread^(TE)			$	1,900	2.73	%			$	1,870	2.59	%
Net interest margin^(TE)(3)					2.96	%					2.75	%


(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 fourth quarter of 2022 was $301,000, up $5,000, or 2%, from the third quarter of 2022 primarily due to an increase in fee income recorded in other non-interest income.

Non-interest Expense

Non-interest expense for the fourth quarter of 2022 totaled $2.0 million, down $131,000, or 6%, compared to the third quarter of 2022.

Data processing and communication expense totaled $175,000 for the fourth quarter of 2022, down $41,000, or 19%, from the prior quarter primarily due to a credit received from our core system provider during the fourth quarter of 2022.

Professional fees totaled $66,000 for the fourth quarter of 2022, down $91,000, or 58%, from the prior quarter mainly due to continued improvement in the cost of legal and auditing services during the second half of 2022.

The Company recorded a reversal of franchise and shares tax expense of $16,000 during the fourth quarter of 2022, compared to $15,000 in expense for the prior quarter. 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 $263.3 million in assets at December 31, 2022. 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)

*(Dollars in thousands)*	12/31/2022		9/30/2022		12/31/2021
ASSETS
Non-interest-bearing cash	$	5,092	$	4,558	$	4,933
Interest-bearing cash and due from banks		8,380		31,639		35,951
Total cash and cash equivalents		13,472		36,197		40,884
Investment securities:
Securities available-for-sale, at fair value		79,602		78,563		88,339
Securities held-to-maturity		13,475		13,480		13,498
Loans receivable, net of unearned income		133,607		131,942		132,103
Allowance for loan losses		(1,807)		(1,804)		(2,276)
Loans receivable, net		131,800		130,138		129,827
Accrued interest receivable		673		566		579
Foreclosed assets		320		320		340
Premises and equipment, net		6,303		6,392		6,577
Stock in correspondent banks, at cost		1,808		1,799		1,793
Bank-owned life insurance		13,617		13,519		3,303
Other assets		2,254		2,630		470
TOTAL ASSETS	$	263,324	$	283,604	$	285,610

LIABILITIES
Deposits:
Non-interest-bearing	$	33,657	$	31,988	$	30,299
Interest-bearing		131,437		152,239		146,496
Total deposits		165,094		184,227		176,795
Federal Home Loan Bank advances		9,198		9,153		9,018
Other liabilities		558		706		1,245
TOTAL LIABILITIES		174,850		194,086		187,058

SHAREHOLDERS' EQUITY
Common stock		53		53		53
Additional paid-in capital		51,062		50,902		50,802
Unallocated common stock held by benefit plans		(6,307)		(4,020)		(4,179)
Retained earnings		52,740		52,569		52,559
Accumulated other comprehensive income (loss)		(9,074)		(9,986)		(683)
TOTAL SHAREHOLDERS' EQUITY		88,474		89,518		98,552
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	263,324	$	283,604	$	285,610


CATALYST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended						Year Ended
*(Dollars in thousands)*	12/31/2022		9/30/2022		12/31/2021		12/31/2022		12/31/2021
INTEREST INCOME
Loans receivable, including fees	$	1,543	$	1,466	$	1,621	$	6,127	$	6,965
Investment securities		418		381		240		1,480		674
Other		145		185		23		407		60
Total interest income		2,106		2,032		1,884		8,014		7,699
INTEREST EXPENSE
Deposits		130		93		109		402		523
Advances from Federal Home Loan Bank		76		69		68		281		272
Total interest expense		206		162		177		683		795
Net interest income		1,900		1,870		1,707		7,331		6,904
Provision for (reversal of) loan losses		-		(115)		(374)		(375)		(660)
Net interest income after provision for (reversal of) loan losses		1,900		1,985		2,081		7,706		7,564
NON-INTEREST INCOME
Service charges on deposit accounts		189		192		193		731		641
Gain (loss) on disposals and sales of fixed assets		-		-		-		(77)		25
Bank-owned life insurance		98		97		23		314		90
Federal community development grant		-		-		-		171		1,826
Other		14		7		8		34		44
Total non-interest income		301		296		224		1,173		2,626
NON-INTEREST EXPENSE
Salaries and employee benefits		1,175		1,168		1,300		4,822		4,631
Occupancy and equipment		193		203		220		833		774
Data processing and communication		175		216		221		841		777
Professional fees		66		157		133		538		388
Directors' fees		117		75		68		302		279
ATM and debit card		61		76		64		245		201
Foreclosed assets, net		5		3		8		5		90
Advertising and marketing		53		36		8		240		43
Franchise and shares tax		(16)		15		-		115		-
Other		173		184		185		779		608
Total non-interest expense		2,002		2,133		2,207		8,720		7,791
Income (loss) before income tax expense		199		148		98		159		2,399
Income tax expense (benefit)		28		13		20		(21)		484
NET INCOME	$	171	$	135	$	78	$	180	$	1,915

Earnings per share:
Basic	$	0.04	$	0.03	$	0.02	$	0.04	$	0.39
Diluted		0.04		0.03		N/A		0.04		N/A


CATALYST BANCORP, INC. AND SUBSIDIARY
SELECTED FINANCIAL DATA

	Three Months Ended									Year Ended
*(Dollars in thousands)*	12/31/2022			9/30/2022			12/31/2021			12/31/2022			12/31/2021
EARNINGS DATA
Total interest income	$	2,106		$	2,032		$	1,884		$	8,014		$	7,699
Total interest expense		206			162			177			683			795
Net interest income		1,900			1,870			1,707			7,331			6,904
Provision for (reversal of) loan losses		-			(115)			(374)			(375)			(660)
Total non-interest income		301			296			224			1,173			2,626
Total non-interest expense		2,002			2,133			2,207			8,720			7,791
Income tax expense (benefit)		28			13			20			(21)			484
Net income	$	171		$	135		$	78		$	180		$	1,915

AVERAGE BALANCE SHEET DATA
Total assets	$	270,121		$	288,244		$	289,118		$	282,931		$	252,840
Total interest-earning assets		256,033			270,777			275,117			267,300			237,739
Total loans		133,102			131,827			137,456			132,503			141,860
Total interest-bearing deposits		139,134			151,571			146,620			147,266			146,968
Total interest-bearing liabilities		149,064			160,697			155,609			156,560			155,895
Total deposits		170,952			185,453			185,660			179,826			181,024
Total shareholders' equity		88,558			92,956			93,151			93,074			61,542

SELECTED RATIOS
Return on average assets		0.25	%		0.19	%		0.11	%		0.06	%		0.76	%
Return on average equity		0.76			0.58			0.33			0.19			3.11
Efficiency ratio		90.99			98.44			114.34			102.55			81.76
Net interest margin^(TE)		2.96			2.75			2.47			2.75			2.91
Average equity to average assets		32.78			32.25			32.22			32.90			24.34
Common equity Tier 1 capital ratio⁽¹⁾		56.25			57.84			63.51
Tier 1 leverage capital ratio⁽¹⁾		30.37			28.29			27.38
Total risk-based capital ratio⁽¹⁾		57.50			59.09			64.77

ALLOWANCE FOR LOANS LOSSES
Beginning balance	$	1,804		$	1,980		$	2,646		$	2,276		$	3,022
Provision for (reversal of) loan losses		-			(115)			(374)			(375)			(660)
Charge-offs		(19)			(90)			-			(210)			(150)
Recoveries		22			29			4			116			64
Net (charge-offs) recoveries		3			(61)			4			(94)			(86)
Ending balance	$	1,807		$	1,804		$	2,276		$	1,807		$	2,276

CREDIT QUALITY
Non-accruing loans	$	1,494		$	1,221		$	890
Accruing loans 90 days or more past due		191			379			1
Total non-performing loans		1,685			1,600			891
Foreclosed assets		320			320			340
Total non-performing assets	$	2,005		$	1,920		$	1,231

Total non-performing loans to total loans		1.26	%		1.21	%		0.67	%
Total non-performing assets to total assets		0.76			0.68			0.43

(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

SOURCE Catalyst Bancorp, Inc.