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Catalyst Bancorp, Inc. Announces 2023 Third Quarter Results

OPELOUSAS, La., Oct. 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 third quarter of 2023. For the quarter, the Company reported net income of $170,000, up $131,000, compared to net income of $39,000 for the second quarter of 2023.

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

"We grew our loan portfolio during the quarter by helping local businesses grow," said Joe Zanco, President and Chief Executive Officer of the Company and the Bank. "Although deposit competition remains tough, more and more people in our community are coming to understand how keeping their deposits in local banks helps our economy expand."

Capital and Share Repurchases

The Bank maintains an exceptional capital position with a total risk-based capital ratio of 56.23% and 57.27% at September 30, 2023 and June 30, 2023, respectively. At September 30, 2023 and June 30, 2023, consolidated shareholders' equity totaled $82.2 million, or 31.9% of total assets, and $84.3 million, or 31.7% 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 third quarter of 2023, the Company repurchased 81,252 shares of its common stock at an average cost per share of $12.33. At September 30, 2023, 75,290 shares were available for repurchase under the April 2023 Repurchase Plan.

Loans

Loans totaled $135.7 million at September 30, 2023, up $2.2 million, or 2%, from June 30, 2023. The increase in total loans during the third quarter of 2023 was primarily due to growth in commercial and industrial and construction loans, which was partially offset by net declines in one- to four-family residential real estate loans. The increase in commercial and industrial loans was largely driven by equipment loans. Construction and land loan growth was mainly due to residential construction loans.

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

 

(Dollars in thousands)


9/30/2023


6/30/2023


Increase (Decrease)

Real estate loans













One- to four-family residential


$

83,973


$

85,655


$

(1,682)


(2)

%

Commercial real estate



19,113



19,175



(62)


-


Construction and land



6,622



4,620



2,002


43


Multi-family residential



3,424



3,094



330


11


Total real estate loans



113,132



112,544



588


1


Other loans













Commercial and industrial



19,634



17,609



2,025


11


Consumer



2,906



3,340



(434)


(13)


Total other loans



22,540



20,949



1,591


8


Total loans


$

135,672


$

133,493


$

2,179


2

%

 

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 62% of total loans and commercial real estate loans accounted for 14% of total loans at September 30, 2023. Approximately 64% of our real estate loans have adjustable rates and, of our total real estate loans, approximately $54.7 million, or 48%, 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 14% of total loans, at September 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 34% of our commercial and industrial loans have adjustable rates and, of total commercial and industrial loans, approximately $9.1 million, or 47% are scheduled to re-price or mature during the next 12 months.

Credit Quality and Allowance for Credit Losses

At September 30 and June 30, 2023, non-performing assets ("NPAs") totaled $2.1 million and $2.2 million, respectively, and the ratio of NPAs to total assets was 0.82% at such dates. Non-performing loans ("NPLs") totaled $2.1 million, or 1.54% of total loans, at September 30, 2023 and $1.9 million, or 1.42% of total loans, at June 30, 2023. At September 30, 2023 and June 30, 2023, over 94% of total NPLs were one- to four-family residential mortgage loans.

At September 30, 2023 the allowance for loan losses totaled $2.0 million, or 1.50% of total loans, compared to $2.1 million at June 30, 2023, or 1.56% of total loans. During the third quarter of 2023, $62,000 of the allowance for loan losses was reallocated to the allowance for credit losses on unfunded commitments due to an increase in unfunded commercial lending commitments.

Net loan recoveries totaled $17,000 during the third quarter of 2023, compared to net recoveries of $13,000 for the second quarter of 2023. The total provision for credit losses on loans and unfunded commitments was zero for the third quarter and the first nine months of 2023.

Investment Securities

Total investment securities were $85.3 million, or 33% of total assets, at September 30, 2023. Our investment securities portfolio consists primarily of government-sponsored mortgage-backed securities and debt obligations issued by the U.S. government and government agencies. The Company has not purchased investment securities since the fourth quarter of 2022. We have also not sold or reclassified securities since the Federal Reserve Board began raising interest rates in March 2022.

At September 30, 2023, 86% of total investment securities, based on amortized cost, were classified as available-for-sale. Net unrealized losses on securities available-for-sale totaled $12.8 million at September 30, 2023, compared to $10.9 million at June 30, 2023. The increase in unrealized losses principally relates to further increases in market interest rates for similar securities during the third quarter of 2023.

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

 



September 30, 2023

(Dollars in thousands)


 Amortized
Cost


Gross
Unrealized
Gains


Gross
Unrealized
Losses


Fair Value

Securities available-for-sale













Mortgage-backed securities


$

67,604


$

-


$

(11,181)


$

56,423

U.S. Government and agency obligations



10,985



-



(949)



10,036

Municipal obligations



6,014



-



(665)



5,349

Total available-for-sale


$

84,603


$

-


$

(12,795)


$

71,808

Securities held-to-maturity













U.S. Government and agency obligations


$

13,004


$

-


$

(2,846)


$

10,158

Municipal obligations



460



-



(45)



415

Total held-to-maturity


$

13,464


$

-


$

(2,891)


$

10,573

 

Deposits and Liquidity

Total deposits were $165.2 million at September 30, 2023, down $6.2 million, or 4%, from June 30, 2023. Average deposits totaled $170.6 million during the third quarter of 2023, down $1.9 million, or 1%, compared to the second quarter of 2023. The decrease in total deposits during the third quarter of 2023 was largely due to declines in non-interest-bearing public funds and large commercial deposits.

During the first quarter of 2023, the Company gained $6.9 million in non-interest-bearing public funds, which were granted to an existing customer for a designated project. During the third quarter 2023, the project commenced and $4.1 million of the designated funds were disbursed. Overall, our public funds consist primarily of non-interest-bearing and interest-bearing demand deposits from municipalities within our market. At September 30, 2023, total public fund deposits amounted to $26.4 million, or 16% of total deposits, compared to $24.7 million, or 14% of total deposits, at June 30, 2023.

Our total uninsured deposits (that is deposits in excess of the FDIC's insurance limit), inclusive of public funds, were approximately $45.2 million at September 30, 2023 and $50.2 million at June 30, 2023. Total uninsured non-public funds deposits were approximately $23.9 million and $30.5 million at September 30 and June 30, 2023, respectively. The full amount of our public fund deposits in excess of the FDIC's insurance limit are secured by pledging investment securities. At September 30, 2023, the amortized cost and fair value of investment securities pledged to secure public fund deposits totaled $49.7 million and $41.7 million, respectively.

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

 

(Dollars in thousands)


9/30/2023


6/30/2023


Increase (Decrease)

Non-interest-bearing demand deposits


$

33,222


$

41,482


$

(8,260)


(20)

%

Interest-bearing demand deposits



38,881



34,159



4,722


14


Money market



15,473



18,798



(3,325)


(18)


Savings



27,237



26,927



310


1


Certificates of deposit



50,407



50,007



400


1


Total deposits


$

165,220


$

171,373


$

(6,153)


(4)

%

 

The ratio of the Company's total loans to total deposits was 82% and 78% as of September 30 and June 30, 2023, respectively. In addition to our primary sources of liquidity, our secondary sources of liquidity include FHLB advances, borrowings from the Federal Reserve and a line of credit from our primary correspondent bank. At September 30, 2023, we had available capacity to borrow $48.0 million from the FHLB and $17.8 million from our primary correspondent bank. In addition, securities held by the Bank with a total par value of $35.7 million were available to pledge as collateral for borrowings from the Federal Reserve at September 30, 2023.

Net Interest Income

The net interest margin for the third quarter of 2023 was 3.13%, up 11 basis points compared to the prior quarter. The average yield on interest-earning assets increased by 23 basis points to 3.91% for the third quarter of 2023, while the average rate on interest-bearing liabilities increased by 21 basis points to 1.38%, compared to the second quarter of 2023.

Net interest income for the third quarter of 2023 was $2.0 million, up $69,000, or 4%, from the second quarter of 2023 primarily due to an increase in interest income on loans (up $161,000, or 10%) partially offset by an increase in interest expense on deposits (up $77,000, or 22%). Though demand for higher rates and competition for deposit accounts remained persistent, the rise in yield on our adjustable rate loans helped the increase in interest income outpace the increase in interest expense.

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



9/30/2023


6/30/2023

(Dollars in thousands)


Average
Balance


Interest


Average
Yield/ Rate


Average
Balance


Interest


Average
Yield/ Rate

INTEREST-EARNING ASSETS



















Loans receivable(1)


$

134,851


$

1,852


5.45

%


$

133,394


$

1,691


5.09

%

Investment securities(TE)(2)



99,373



403


1.64




101,630



413


1.65


Other interest earning assets



16,915



214


5.02




18,403



218


4.73


Total interest-earning assets(TE)


$

251,139


$

2,469


3.91

%


$

253,427


$

2,322


3.68

%

INTEREST-BEARING LIABILITIES



















NOW, money market and savings accounts


$

83,051


$

154


0.73

%


$

83,962


$

142


0.68

%

Certificates of deposit



50,526



274


2.15




51,185



209


1.64


Total interest-bearing deposits



133,577



428


1.27




135,147



351


1.04


FHLB advances



9,306



69


2.93




9,264



68


2.94


Total interest-bearing liabilities


$

142,883


$

497


1.38

%


$

144,411


$

419


1.17

%

Net interest-earning assets


$

108,256








$

109,016







Net interest income; average interest rate spread(TE)





$

1,972


2.53

%





$

1,903


2.51

%

Net interest margin(TE)(3)








3.13

%








3.02

%

(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 third quarter of 2023 was $306,000, down $11,000, or 3%, from the second quarter of 2023 primarily due to lower debit card income.

Non-interest Expense

Non-interest expense for the third quarter of 2023 totaled $2.1 million, down $110,000, or 5%, compared to the second quarter of 2023.

Salaries and employee benefits expense totaled $1.1 million for the third quarter of 2023, down $37,000, or 3%, from the prior quarter primarily due to a decrease in employee count.

Professional fees totaled $100,000 for the third quarter of 2023, down $17,000, or 15%, from the prior quarter primarily due to a decline in legal fees and expenses.

Foreclosed assets expense totaled $2,000 for the third quarter of 2023, down $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 $259,000 at June 30, 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 $257.9 million in assets at September 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 Bancorp and 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)


9/30/2023


6/30/2023


12/31/2022


9/30/2022

ASSETS













Non-interest-bearing cash


$

3,497


$

4,769


$

5,092


$

4,558

Interest-bearing cash and due from banks



9,769



15,022



8,380



31,639

Total cash and cash equivalents



13,266



19,791



13,472



36,197

Investment securities:













Securities available-for-sale, at fair value



71,808



75,876



79,602



78,563

Securities held-to-maturity



13,464



13,468



13,475



13,480

Loans receivable, net of unearned income



135,672



133,493



133,607



131,942

Allowance for loan losses



(2,036)



(2,081)



(1,807)



(1,804)

Loans receivable, net



133,636



131,412



131,800



130,138

Accrued interest receivable



806



707



673



566

Foreclosed assets



37



296



320



320

Premises and equipment, net



6,160



6,111



6,303



6,392

Stock in correspondent banks, at cost



1,858



1,839



1,808



1,799

Bank-owned life insurance



13,917



13,813



13,617



13,519

Other assets



2,956



2,662



2,254



2,630

TOTAL ASSETS


$

257,908


$

265,975


$

263,324


$

283,604














LIABILITIES













Deposits:













Non-interest-bearing


$

33,222


$

41,482


$

33,657


$

31,988

Interest-bearing



131,998



129,891



131,437



152,239

Total deposits



165,220



171,373



165,094



184,227

Federal Home Loan Bank advances



9,333



9,288



9,198



9,153

Other liabilities



1,147



977



558



706

TOTAL LIABILITIES



175,700



181,638



174,850



194,086














SHAREHOLDERS' EQUITY













Common stock



48



49



53



53

Additional paid-in capital



45,855



47,032



51,062



50,902

Unallocated common stock held by benefit plans



(6,274)



(6,616)



(6,307)



(4,020)

Retained earnings



52,687



52,517



52,740



52,569

Accumulated other comprehensive income (loss)



(10,108)



(8,645)



(9,074)



(9,986)

TOTAL SHAREHOLDERS' EQUITY



82,208



84,337



88,474



89,518

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$

257,908


$

265,975


$

263,324


$

283,604

 

CATALYST BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



















Three Months Ended


Nine Months Ended

(Dollars in thousands)


9/30/2023


6/30/2023


9/30/2022


9/30/2023


9/30/2022

INTEREST INCOME
















Loans receivable, including fees


$

1,852


$

1,691


$

1,466


$

5,172


$

4,584

Investment securities



403



413



381



1,243



1,062

Other



214



218



185



643



262

Total interest income



2,469



2,322



2,032



7,058



5,908

INTEREST EXPENSE
















Deposits



428



351



93



1,012



272

Advances from Federal Home Loan Bank



69



68



69



205



205

Total interest expense



497



419



162



1,217



477

Net interest income



1,972



1,903



1,870



5,841



5,431

Provision for (reversal of) credit losses



-



-



(115)



-



(375)

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



1,972



1,903



1,985



5,841



5,806

NON-INTEREST INCOME
















Service charges on deposit accounts



190



200



192



573



542

Gain (loss) on disposals and sales of fixed assets



...-



-



-



-



(77)

Bank-owned life insurance



104



99



97



300



216

Federal community development grant



-



-



-



-



171

Other



12



18



7



44



20

Total non-interest income



306



317



296



917



872

NON-INTEREST EXPENSE
















Salaries and employee benefits



1,141



1,178



1,168



3,522



3,647

Occupancy and equipment



198



198



203



609



640

Data processing and communication



228



220



216



675



666

Professional fees



100



117



157



346



472

Directors' fees



116



114



75



345



185

ATM and debit card



68



61



76



187



184

Foreclosed assets, net



2



63



3



67



-

Advertising and marketing



25



22



36



77



187

Franchise and shares tax



19



25



15



71



131

Other



184



193



184



558



606

Total non-interest expense



2,081



2,191



2,133



6,457



6,718

Income (loss) before income tax expense (benefit)



197



29



148



301



(40)

Income tax expense (benefit)



27



(10)



13



19



(49)

NET INCOME


$

170


$

39


$

135


$

282


$

9

















Earnings per share:
















Basic


$

0.03


$

0.01


$

0.03


$

0.06


$

0.01

Diluted



0.03



0.01



0.03



0.06



0.01

 

CATALYST BANCORP, INC. AND SUBSIDIARY

SELECTED FINANCIAL DATA
























Three Months Ended


Nine Months Ended

(Dollars in thousands)


9/30/2023


6/30/2023


9/30/2022


9/30/2023


9/30/2022

EARNINGS DATA





















Total interest income


$

2,469



$

2,322



$

2,032



$

7,058



$

5,908


Total interest expense



497




419




162




1,217




477


Net interest income



1,972




1,903




1,870




5,841




5,431


Provision for (reversal of) credit losses



-




-




(115)




-




(375)


Total non-interest income



306




317




296




917




872


Total non-interest expense



2,081




2,191




2,133




6,457




6,718


Income tax expense (benefit)



27




(10)




13




19




(49)


Net income


$

170



$

39



$

135



$

282



$

9























AVERAGE BALANCE SHEET DATA





















Total assets


$

265,057



$

268,095



$

288,244



$

268,339



$

287,247


Total interest-earning assets



251,139




253,427




270,777




253,946




271,097


Total loans



134,851




133,394




131,827




134,013




132,301


Total interest-bearing deposits



133,577




135,147




151,571




137,042




150,006


Total interest-bearing liabilities



142,883




144,411




160,697




146,304




159,086


Total deposits



170,589




172,526




185,453




172,556




182,816


Total shareholders' equity



84,021




85,421




92,956




85,585




94,596























SELECTED RATIOS





















Return on average assets



0.25

%



0.06

%



0.19

%



0.14

%



0.00

%

Return on average equity



0.80




0.18




0.58




0.44




0.01


Efficiency ratio



91.34




98.73




98.44




95.55




106.58


Net interest margin(TE)



3.13




3.02




2.75




3.08




2.68


Average equity to average assets



31.70




31.86




32.25




31.89




32.93


Common equity Tier 1 capital ratio(1)



54.97




56.02




57.84










Tier 1 leverage capital ratio(1)



31.08




30.64




28.29










Total risk-based capital ratio(1)



56.23




57.27




59.09










(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


Nine Months Ended

(Dollars in thousands)


9/30/2023


6/30/2023


9/30/2022


9/30/2023


9/30/2022

ALLOWANCE FOR CREDIT LOSSES





















Allowance for loan losses:





















Beginning balance


$

2,081



$

2,070



$

1,980



$

1,807



$

2,276


CECL adoption impact



-




-




-




209




-


Provision for (reversal of) loan losses



(62)




(2)




(115)




(64)




(375)


Charge-offs



(9)




(10)




(90)




(26)




(191)


Recoveries



26




23




29




110




94


Net (charge-offs) recoveries



17




13




(61)




84




(97)


Ending balance


$

2,036



$

2,081



$

1,804



$

2,036



$

1,804























Allowance for unfunded commitments:





















Beginning balance



218




216




-




-




-


CECL adoption impact



-




-




-




216




-


Provision for losses on unfunded commitments



62




2




-




64




-


Ending balance


$

280



$

218



$

-



$

280



$

-























Total allowance for credit losses, end of period


$

2,316



$

2,299



$

1,804



$

2,316



$

1,804


Total provision for (reversal of) credit losses



-




-




(115)




-




(375)























CREDIT QUALITY(1)





















Non-accruing loans


$

1,961



$

1,629



$

1,221










Accruing loans 90 days or more past due



127




260




379










Total non-performing loans



2,088




1,889




1,600










Foreclosed assets



37




296




320










Total non-performing assets


$

2,125



$

2,185



$

1,920































Total non-performing loans to total loans



1.54

%



1.42

%



1.21

%









Total non-performing assets to total assets



0.82




0.82




0.68










(1)

Credit quality data and ratios are as of the end of each period presented.

 

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

Cision
Cision

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SOURCE Catalyst Bancorp, Inc.