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.
"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 | Gross | Gross | 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 | Interest | Average | Average | Interest | Average | ||||||||||||
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
SOURCE Catalyst Bancorp, Inc.