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.

"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

SOURCE Catalyst Bancorp, Inc.