Catalyst Bancorp, Inc. Announces 2021 Fourth Quarter Results

Rhea-AI Summary

Catalyst Bancorp, Inc. (Nasdaq: CLST) reported a net income of $83,000 for Q4 2021, a sharp decline from $1.4 million in Q3 2021. For the full year, net income was $1.9 million, an improvement from a net loss in 2020. Total loans decreased by 4% to $131.8 million, primarily due to a drop in commercial real estate loans. Deposits fell by 29% to $176.8 million, impacted by IPO-related transactions. Non-interest income dropped significantly, reflecting the absence of prior grants. Total investment securities rose 61% to $101.8 million, attributed to IPO proceeds.

Positive

• Net income for the year totaled $1.9 million, an increase from a net loss in 2020.
• Total investment securities increased by 61% to $101.8 million due to IPO proceeds.
• Net interest income for Q4 2021 rose 3% to $1.7 million, driven by higher income from investment securities.

Negative

• Q4 net income dropped to $83,000 from $1.4 million in Q3 2021.
• Loans receivable decreased 4% to $131.8 million, largely due to a decline in commercial real estate loans.
• Deposits fell 29% to $176.8 million, primarily due to returns of IPO subscription deposits.
• Non-interest income plummeted 89% to $224,000, missing significant prior grants.

OPELOUSAS, La., Jan. 27, 2022 /PRNewswire/ -- Catalyst Bancorp, Inc. (Nasdaq: "CLST") (the "Company"), the parent company for St Landry Homestead Federal Savings Bank (the "Bank") (www.stlandryhomestead.com), reported financial results for the fourth quarter of 2021. For the quarter, the Company reported net income of $83,000, compared to $1.4 million for the third quarter of 2021. For the year ended December 31, 2021, net income totaled $1.9 million, up $2.6 million, compared to the net loss reported for 2020. During the third quarter of 2021, the Company received and recognized into income a Community Development Financial Institution ("CDFI") Rapid Response Program grant totaling $1.8 million.

"We had tremendous success in 2021, from completing our IPO to the addition of several outstanding bankers who have joined our team," said Joe Zanco, President and Chief Executive Officer of the Company and the Bank.  "As we continue to position our company for growth, our investments in 2022 will be focused on our team, advancing our technology and re-branding the bank."

Completion of Stock Offering

The Company completed its initial public offering ("IPO") of stock in connection with the Bank's conversion from the mutual to the stock form of organization on October 12, 2021. The Company issued a total of 5,290,000 shares of its common stock for an aggregate of $52,900,000 in total offering proceeds, including shares sold to the Company's employee stock ownership plan ("ESOP"). The Company made a loan to the ESOP in the amount of $4.2 million, which the ESOP used to purchase 423,200 shares. The net proceeds of the IPO of $50.9 million are reflected in the Company's shareholder's equity at December 31, 2021. The Company's common stock trades on the Nasdaq Capital Market under the symbol "CLST".

Loans and Credit Quality

Loans receivable totaled $131.8 million at December 31, 2021, down $4.9 million, or 4%, from September 30, 2021. The decrease was primarily due to declines in commercial real estate loans (down $5.0 million, or 18%) and one- to four-family residential mortgage loans (down 1.3 million, or 1%), partially offset by an increase in commercial and industrial loans (up $2.4 million, or 40%).

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

(Dollars in thousands)		12/31/2021			9/30/2021			Increase (Decrease)
Real estate loans
One- to four-family residential		$	87,303		$	88,595		$	(1,292)		(1)	%
Commercial real estate			23,112			28,135			(5,023)		(18)
Construction and land			4,079			4,443			(364)		(8)
Multi-family residential			4,589			4,648			(59)		(1)
Total real estate loans			119,083			125,821			(6,738)		(5)
Other loans
Commercial and industrial			8,374			5,987			2,387		40
Consumer			4,385			4,912			(527)		(11)
Total other loans			12,759			10,899			1,860		17
Total loans		$	131,842		$	136,720		$	(4,878)		(4)	%

Commercial real estate loans were down primarily due to the pay-off of a $4.3 million hotel relationship. Small Business Administration Paycheck Protection Program ("PPP") loans, included in commercial and industrial loans, decreased $605,000, or 19%, from September 30, 2021.  At December 31, 2021, PPP loans totaled $2.6 million, net of deferred fees of $186,000.

Non-performing assets ("NPAs") totaled $1.2 million at December 31, 2021, down $86,000, or 7%, compared to $1.3 million at September 30, 2021. The ratio of NPAs to total assets was 0.43% at December 31, 2021, compared to 0.42% at September 30, 2021. Nonperforming loans ("NPLs") totaled $890,000 at December 31, 2021, down $27,000 or 3%, compared to September 30, 2021. The ratio of NPLs to total loans was 0.68% at December 31, 2021, compared to 0.67% at September 30, 2021.

The following table summarizes the Company's non-performing assets as of the dates indicated.

(Dollars in thousands)		12/31/2021			9/30/2021			Increase (Decrease)
Non-accruing loans		$	890		$	752		$	138		18	%
Accruing loans 90 days or more past due			1			165			(164)		(99)
Total non-performing loans			891			917			(26)		(3)
Real estate owned			340			399			(59)		(15)
Total non-performing assets		$	1,231		$	1,316		$	(85)		(6)	%

The Bank recorded net loan recoveries of $4,000 during the fourth quarter of 2021, compared to net loan charge-offs of $3,000 for the third quarter of 2021.

The ratio of the allowance for loan losses to total loans was 1.73% at December 31, 2021, compared to 1.94% at September 30, 2021.The Company recorded a reversal to the allowance for loan losses of $374,000 during the fourth quarter of 2021 as our assessment of the impact of the COVID-19 pandemic on our borrowers continued to improve. For the year ended December 31, 2021, the reversal to the allowance totaled $660,000.

Investment Securities

Total investment securities were $101.8 million at December 31, 2021, up $38.7 million, or 61%, from September 30, 2021. During the fourth quarter of 2021, the Company deployed $41.9 million of the proceeds from our IPO into the investment securities portfolio. For the fourth quarter of 2021, the average yield on the investment securities portfolio was 1.21%, up 11 basis points from the third quarter of 2021.

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

(Dollars in thousands)		12/31/2021			9/30/2021			Increase (Decrease)
Available-for-sale, at fair value
Mortgage-backed securities		$	74,663		$	45,204		$	29,459		65	%
U. S. government and agency obligations			9,237			1,929			7,308		379
Municipal obligations			4,439			2,549			1,890		74
Total available-for-sale, at fair value			88,339			49,682			38,657		78
Held-to-maturity
U. S. government and agency obligations			13,019			13,023			(4)		-
Municipal obligations			479			481			(2)		-
Total held-to-maturity			13,498			13,504			(6)		-
Total investment securities		$	101,837		$	63,186		$	38,651		61	%

Deposits

Total deposits were $176.8 million at December 31, 2021, down $72.7 million, or 29%, from September 30, 2021. During the third quarter of 2021, the Company received $72.9 million in deposits for subscriptions to purchase shares of the Company's common stock in its IPO. On October 12, 2021, the Company completed its IPO and issued a total of 5,290,000 shares for net proceeds of $50.9 million. The net proceeds of the offering are reflected in the Company's shareholder's equity at December 31, 2021. The amount of deposits received for subscriptions to purchase shares in excess of the gross IPO proceeds were returned to the original subscribers.

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

(Dollars in thousands)		12/31/2021			9/30/2021			Increase (Decrease)
Demand deposits		$	30,299		$	102,091		$	(71,792)		(70)	%
Savings			26,698			25,147			1,551		6
Money market			18,878			18,578			300		2
NOW			34,357			34,796			(439)		(1)
Certificates of deposit			66,563			68,848			(2,285)		(3)
Total deposits		$	176,795		$	249,460		$	(72,665)		(29)	%

Net Interest Income

Net interest income for the fourth quarter of 2021 was $1.7 million, up $43,000, or 3%, from the third quarter of 2021 primarily due to an increase in interest income from investment securities (up $68,000, or 40%) and a decrease in interest expense on deposits (down $15,000, or 12%). The impact of the change in income from investment securities and interest expense on deposits was partially offset by a decrease in interest income on loans (down $50,000, or 3%).

The following table sets forth, for the periods indicated, the Bank'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. All average balances are based on daily balances.

		Three Months Ended
		12/31/2021									9/30/2021
(Dollars in thousands)		Average Balance			Interest			Average Yield/ Rate			Average Balance			Interest			Average Yield/ Rate
INTEREST-EARNING ASSETS
Loans receivable(1)		$	137,190		$	1,621		4.69	%		$	137,001		$	1,671		4.84	%
Investment securities			78,455			240		1.21				61,910			172		1.10
Other interest earning assets			58,706			23		0.15				36,505			13		0.14
Total interest-earning assets		$	274,351		$	1,884		2.72	%		$	235,416		$	1,856		3.13	%
INTEREST-BEARING LIABILITIES
Savings, NOW and money market accounts		$	78,822		$	24		0.12	%		$	81,650		$	26		0.12	%
Certificates of deposit			67,798			85		0.49				69,076			98		0.56
Total interest-bearing deposits			146,620			109		0.29				150,726			124		0.33
FHLB advances			8,989			68		3.03				8,966			68		3.04
Total interest-bearing liabilities		$	155,609		$	177		0.45	%		$	159,692		$	192		0.48	%
Net interest-earning assets		$	118,742								$	75,724
Net interest income; average interest rate spread					$	1,707		2.27	%					$	1,664		2.65	%
Net interest margin(2)								2.47	%								2.80	%

(1)	Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts and loans in-process.
(2)	Equals net interest income divided by average interest-earning assets.

Non-interest Income

Non-interest income for the fourth quarter of 2021 was $224,000, down $1.8 million, or 89%, from the third quarter of 2021. During the third quarter of 2021, the Company received and recognized into non-interest income a CDFI Rapid Response Program grant totaling $1.8 million.

Non-interest Expense

Non-interest expense for the fourth quarter of 2021 totaled $2.2 million, up $317,000, or 17%, compared to the third quarter of 2021.

Salaries and employee benefits expense totaled $1.3 million for the fourth quarter of 2021, up $216,000, or 20%, from the third quarter of 2021. The increase was primarily due to the addition of bankers to our team, severance costs and the commencement of the ESOP.

Data processing and communication expense totaled $234,000 for the fourth quarter of 2021, up $33,000, or 16%, from the third quarter of 2021 primarily due to the cost of additional technology resources for public company reporting and a new Lafayette branch location.

Professional service fees totaled $133,000 for the fourth quarter of 2021, up $45,000, or 51%, from the third quarter of 2021 mainly due to public company audit and legal services.

Other non-interest expense totaled $172,000 for the fourth quarter of 2021, up $48,000, or 39%, from the third quarter of 2021 primarily due to cost increases driven by our IPO, such as Nasdaq listing fees and increased insurance costs.

About St. Landry Homestead Federal Savings Bank

Founded in 1922, St. Landry Homestead Federal Savings Bank, is a federally chartered savings bank that serves the banking needs of customers in the Acadiana region of south-central Louisiana. We serve our customers through six full-service branches located in Carencro, Eunice, Lafayette, Opelousas, and Port Barre. Our team is focused on fueling business and improving lives across our region. By working together, we can grow our economy and provide our children with the opportunity to raise their families in Acadiana.

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 St. Landry Homestead Federal Savings 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
STATEMENTS OF FINANCIAL CONDITION
		(Unaudited)			(Unaudited)
(Dollars in thousands)		12/31/2021			9/30/2021(1)				12/31/2020(1)
ASSETS
Non-interest-bearing cash		$	4,933		$	5,117			$	5,507
Interest-bearing cash and due from banks			35,951			95,287				19,738
Total cash and cash equivalents			40,884			100,404				25,245
Investment securities:
Securities available-for-sale, at fair value			88,339			49,682				20,730
Securities held-to-maturity			13,498			13,504				17,523
Loans receivable, net of unearned income			131,842			136,720				151,800
Allowance for loan losses			(2,276)			(2,646)				(3,022)
Loans receivable, net			129,566			134,074				148,778
Accrued interest receivable			579			511				564
Foreclosed real estate			340			399				415
Premises and equipment, net			6,577			6,658				5,489
Stock in Federal Home Loan Bank, at cost			1,399			1,398				1,394
Bank-owned life insurance			3,303			3,280				3,213
Other assets			864			1,653				1,337
TOTAL ASSETS		$	285,349		$	311,563			$	224,688
LIABILITIES
Deposits:
Non-interest-bearing		$	30,299		$	102,091			$	26,169
Interest-bearing			146,496			147,369				138,429
Total deposits			176,795			249,460				164,598
Federal Home Loan Bank advances			9,018			8,973				8,838
Other liabilities			1,190			1,130				719
TOTAL LIABILITIES			187,003			259,563				174,155
SHAREHOLDERS' EQUITY
Common stock			53			-				-
Additional paid-in capital			50,801			-				-
Unallocated common stock held by Employee Stock Ownership Plan			(4,179)			-				-
Retained earnings			52,354			52,270				50,426
Accumulated other comprehensive (loss) income			(683)			(270)				107
TOTAL SHAREHOLDERS' EQUITY			98,346			52,000				50,533
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	285,349		$	311,563			$	224,688

(1)	Data at September 30, 2021 and December 31, 2020 are Bank-only.

 

CATALYST BANCORP, INC. AND SUBSIDIARY
STATEMENTS OF INCOME
(Unaudited)
		Three Months Ended									Year Ended
(Dollars in thousands)		12/31/2021			9/30/2021(1)			12/31/2020(1)			12/31/2021			12/31/2020(1)
INTEREST INCOME
Loans receivable, including fees		$	1,621		$	1,671		$	1,889		$	6,965		$	7,827
Investment securities			240			172			93			674			568
Other			23			13			10			60			95
Total interest income			1,884			1,856			1,992			7,699			8,490
INTEREST EXPENSE
Deposits			109			124			182			523			920
Advances from Federal Home Loan Bank			68			68			189			272			785
Total interest expense			177			192			371			795			1,705
Net interest income			1,707			1,664			1,621			6,904			6,785
(Reversal of) provision for loan losses			(374)			-			320			(660)			985
Net interest income after (reversal of) provision for loan losses			2,081			1,664			1,301			7,564			5,800
NON-INTEREST INCOME
Service charges on deposit accounts			193			165			147			641			575
Gain on sale of fixed assets			-			-			-			24			16
Bank-owned life insurance			23			23			20			90			70
Federal community development grant			-			1,826			203			1,826			203
Other			8			11			51			45			102
Total non-interest income			224			2,025			421			2,626			966
NON-INTEREST EXPENSE
Salaries and employee benefits			1,300			1,084			812			4,631			3,644
Occupancy and equipment			220			215			188			818			678
Data processing and communication			234			201			171			790			612
Professional fees			133			88			108			388			273
Directors' fees			68			70			(21)			279			219
ATM and debit card			64			48			40			201			151
Foreclosed assets, net			1			39			16			75			287
Advertising and marketing			8			14			11			43			86
Prepayment penalties on FHLB advances			-			-			1,510			-			1,510
Other			172			124			108			551			483
Total non-interest expense			2,200			1,883			2,943			7,776			7,943
Income (loss) before income tax expense			105			1,806			(1,221)			2,414			(1,177)
Income tax expense (benefit)			22			373			(507)			487			(474)
NET INCOME (LOSS)		$	83		$	1,433		$	(714)		$	1,927		$	(703)
Earnings per share - basic		$	0.02		$	N/A		$	N/A		$	0.40		$	N/A

(1)	Data for the periods ended September 30, 2021 and December 31, 2020 are Bank-only.

 

CATALYST BANCORP, INC. AND SUBSIDIARY
SELECTED FINANCIAL DATA
		Three Months Ended												Year Ended
(Dollars in thousands)		12/31/2021				9/30/2021(1)				12/31/2020(1)				12/31/2021				12/31/2020(1)
EARNINGS DATA
Total interest income		$	1,884			$	1,856			$	1,992			$	7,699			$	8,490
Total interest expense			177				192				371				795				1,705
Net interest income			1,707				1,664				1,621				6,904				6,785
(Reversal of) provision for loan losses			(374)				-				320				(660)				985
Total non-interest income			224				2,025				421				2,626				966
Total non-interest expense			2,200				1,883				2,943				7,776				7,943
Income tax expense (benefit)			22				373				(507)				487				(474)
Net income (loss)		$	83			$	1,433			$	(714)			$	1,927			$	(703)
ALLOWANCE FOR LOANS LOSSES
Beginning balance		$	2,646			$	2,649			$	2,742			$	3,022			$	2,071
(Reversal of) provision for loan losses			(374)				-				320				(660)				985
Charge-offs			-				(18)				(58)				(150)				(140)
Recoveries			4				15				18				64				106
Net recoveries (charge-offs)			4				(3)				(40)				(86)				(34)
Ending balance		$	2,276			$	2,646			$	3,022			$	2,276			$	3,022
AVERAGE BALANCE SHEET DATA
Total assets		$	288,852			$	253,146			$	239,326			$	252,571			$	232,694
Total interest-earning assets			274,351				235,416				227,099				237,331				219,910
Total loans			137,190				137,001				157,132				141,592				161,208
Total interest-bearing deposits			146,620				150,726				137,372				146,968				132,336
Total interest-bearing liabilities			155,609				159,692				159,910				155,895				156,718
Total deposits			185,660				191,060				164,388				181,032				155,697
Total equity			92,942				50,920				51,235				61,323				51,600
SELECTED RATIOS
Return on average assets			0.11	%			2.25	%			(1.19)	%			0.76	%			(0.30)	%
Return on average equity			0.35				11.17				(5.54)				3.14				(1.36)
Efficiency ratio			113.93				51.04				144.12				81.59				102.48
Average equity to average assets			32.18				20.11				21.41				24.28				22.18
Common equity Tier 1 capital ratio(2)			63.51				38.94				40.92				63.51				40.92
Tier 1 leverage capital ratio(2)			27.38				20.65				21.06				27.38				21.06
Total risk-based capital ratio(2)			64.77				40.20				42.29				64.77				42.29
Net interest margin			2.47				2.80				2.84				2.91				3.09

(1)	Data at and for the periods ended September 30, 2021 and December 31, 2020 are Bank-only.
(2)	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

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SOURCE Catalyst Bancorp, Inc.

FAQ

What were Catalyst Bancorp's earnings for Q4 2021?

Catalyst Bancorp reported net income of $83,000 for Q4 2021.

How did Catalyst Bancorp perform financially in 2021?

For the year ended December 31, 2021, Catalyst Bancorp's net income totaled $1.9 million.

What is Catalyst Bancorp's stock symbol?

Catalyst Bancorp trades on the Nasdaq under the symbol CLST.

What caused the decrease in loans for Catalyst Bancorp?

Loans receivable decreased by 4% primarily due to declines in commercial real estate loans.

How much did Catalyst Bancorp's total deposits decline?

Total deposits fell by 29% to $176.8 million as of December 31, 2021.