Catalyst Bancorp, Inc. Announces 2022 Third Quarter Results

Rhea-AI Summary

Catalyst Bancorp (Nasdaq: CLST) reported a net income of $139,000 for Q3 2022, an increase of $121,000 from Q2 2022. Loans receivable decreased by 1% to $131.7 million, with non-performing assets rising 19% to $1.9 million. Deposits increased 3% to $184.2 million, driven by higher NOW account balances. Net interest income rose by 3% to $1.9 million, while non-interest income fell 22% to $296,000. The allowance for loan losses decreased to $1.8 million. Total investment securities declined by 4% to $92.0 million, with net unrealized losses increasing due to rising interest rates.

Positive

• Net income increased to $139,000, up from $18,000 in Q2 2022.
• Deposits grew by 3% to $184.2 million.
• Net interest income rose by 3% to $1.9 million.
• Net interest margin improved to 2.75%, up four basis points from Q2.

Negative

• Loans receivable decreased by 1% from the previous quarter.
• Non-performing assets increased by 19% to $1.9 million.
• Non-interest income decreased by 22% to $296,000.

OPELOUSAS, La., Oct. 27, 2022 /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 2022. For the quarter, the Company reported net income of $139,000, up $121,000 from the second quarter of 2022. During the second quarter of 2022, the Bank rebranded from St. Landry Homestead Federal Savings Bank to Catalyst Bank.  Pre-tax costs associated with the rebranding of the Bank totaled $208,000 during the second quarter of 2022, compared to $28,000 during the third quarter of 2022. The second quarter of 2022 also included $171,000 of non-interest income attributable to a Bank Enterprise Award ("BEA") Program grant from the Community Development Financial Institution ("CDFI") Fund.

"We just celebrated our first anniversary as a public company and will celebrate the Bank's centennial in November," said Joe Zanco, President and Chief Executive Officer of the Company and the Bank. "Our team is tremendously excited with the response we've received from our rebranding to Catalyst Bank."

Loans and Credit Quality

Loans receivable totaled $131.7 million at September 30, 2022, down $1.9 million, or 1%, from June 30, 2022. During the third quarter of 2022, additional fundings on existing construction and land loans were largely offset by paydowns across other segments of the portfolio. PPP loans, which totaled $22,000 at June 30, 2022, were fully paid-off during the third quarter of 2022.

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

(Dollars in thousands)		9/30/2022			6/30/2022			Increase (Decrease)
Real estate loans
One- to four-family residential		$	88,327		$	89,531		$	(1,204)		(1)	%
Commercial real estate			21,073			21,521			(448)		(2)
Construction and land			4,450			3,843			607		16
Multi-family residential			3,252			3,315			(63)		(2)
Total real estate loans			117,102			118,210			(1,108)		(1)
Other loans
Commercial and industrial			11,087			11,410			(323)		(3)
Consumer			3,512			4,004			(492)		(12)
Total other loans			14,599			15,414			(815)		(5)
Total loans		$	131,701		$	133,624		$	(1,923)		(1)	%

 

Non-performing assets ("NPAs") totaled $1.9 million at September 30, 2022, up $313,000, or 19%, compared to June 30, 2022, primarily due to an increase in past due loans. The ratio of NPAs to total assets was 0.68% at September 30, 2022, compared to 0.57% at June 30, 2022. Non-performing loans ("NPLs") totaled $1.6 million, or 1.21% of total loans, at September 30, 2022 and $1.3 million, or 0.96% of total loans, at June 30, 2022. At September 30, 2022, approximately 88% of total NPLs were one- to four-family residential mortgage loans, compared to 91% at June 30, 2022.

The allowance for loan losses totaled $1.8 million, or 1.37% of total loans, at September 30, 2022, down $176,000 from $2.0 million, or 1.48% of total loans, at June 30, 2022. The reduction in the allowance for loan losses largely reflects the reversal of certain provisions made for estimated loan losses during 2020 associated with our initial assessment of COVID-19's impact on credit risk.  The Company recorded a reversal to the allowance for loan losses of $115,000 during the third quarter of 2022, compared to a reversal of $189,000 for the second quarter of 2022. Net loan charge-offs totaled $61,000 during the third quarter of 2022, compared to net loan charge-offs of $4,000 for the second quarter of 2022. The third quarter charge-offs were primarily related to two residential mortgage loans.

Investment Securities

Total investment securities were $92.0 million at September 30, 2022, down $3.7 million, or 4%, from June 30, 2022. At September 30 and June 30, 2022, 87% of total investment securities, based on amortized cost, were classified as available-for-sale. Net unrealized losses on securities available-for-sale totaled $12.6 million at September 30, 2022, compared to $8.4 million at June 30, 2022. The increase in unrealized losses on available-for-sale securities related principally to increases in market interest rates for similar securities. For the third quarter of 2022, the average yield on the investment securities portfolio was 1.48%, up 11 basis points from the second quarter of 2022.

Deposits

Total deposits were $184.2 million at September 30, 2022, up $5.5 million, or 3%, from June 30, 2022. The increase in deposits was primarily due to an increase in NOW account balances, partially offset by declines in certificates of deposit and money market accounts. Total average deposits were $185.5 million for the third quarter of 2022, up $2.1 million, or 1%, from the prior quarter.

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

(Dollars in thousands)		9/30/2022			6/30/2022			Increase (Decrease)
Demand deposits		$	31,988		$	30,400		$	1,588		5	%
NOW			50,547			39,454			11,093		28
Money market			17,129			19,525			(2,396)		(12)
Savings			26,874			27,388			(514)		(2)
Certificates of deposit			57,689			61,968			(4,279)		(7)
Total deposits		$	184,227		$	178,735		$	5,492		3	%

 

Net Interest Income

Our net interest margin for the third quarter of 2022 was 2.75%, up four basis points compared to the prior quarter. The average yield on interest-earning assets increased by five basis points to 2.99% for the third quarter of 2022, while the average rate on interest-bearing liabilities increased by one basis point to 0.40%, compared to the second quarter of 2022.

Net interest income for the third quarter of 2022 was $1.9 million, up $60,000, or 3%, from the second quarter of 2022 primarily due to an increase in interest income from interest-bearing cash included in other interest income (up $127,000, or 219%), partially offset by a decline in interest income from loans. Rising market interest rates have increased the yields on our interest-bearing cash accounts and securities portfolio.

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
		9/30/2022									6/30/2022
(Dollars in thousands)		Average Balance			Interest			Average Yield/ Rate			Average Balance			Interest			Average Yield/ Rate
INTEREST-EARNING ASSETS
Loans receivable(1)		$	131,583		$	1,466		4.42	%		$	133,810		$	1,555		4.66	%
Investment securities(TE)(2)			104,403			381		1.48				104,137			352		1.37
Other interest earning assets			34,548			185		2.12				30,108			58		0.78
Total interest-earning assets(TE)		$	270,534		$	2,032		2.99	%		$	268,055		$	1,965		2.94	%
INTEREST-BEARING LIABILITIES
NOW, money market and savings accounts		$	91,738		$	29		0.13	%		$	85,646		$	24		0.11	%
Certificates of deposit			59,833			64		0.43				64,936			63		0.39
Total interest-bearing deposits			151,571			93		0.24				150,582			87		0.23
FHLB advances			9,126			69		2.99				9,079			68		3.00
Total interest-bearing liabilities		$	160,697		$	162		0.40	%		$	159,661		$	155		0.39	%
Net interest-earning assets		$	109,837								$	108,394
Net interest income; average interest rate spread(TE)					$	1,870		2.59	%					$	1,810		2.55	%
Net interest margin(TE)(3)								2.75	%								2.71	%

(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 2022 was $296,000, down $83,000, or 22%, from the second quarter of 2022. During the second quarter of 2022, the Company received and recognized into income a $171,000 BEA Program grant from the CDFI Fund. In addition, the Company disposed of fixed assets totaling $77,000, net of accumulated depreciation, during the second quarter of 2022. Of the assets disposed, $55,000 was attributable to branch signage that was replaced due to our rebranding.

Non-interest Expense

Non-interest expense for the third quarter of 2022 totaled $2.1 million, down $253,000, or 11%, compared to the second quarter of 2022. Total non-interest expense for the third quarter of 2022 included $28,000 of rebranding-related expenses, compared to $153,000 for the second quarter of 2022.

Salaries and employee benefits expense totaled $1.2 million for the third quarter of 2022, down $50,000, or 4%, from the second quarter of 2022 primarily due to a decrease in our employee count.

Directors' fees totaled $75,000 for the third quarter of 2022, up $20,000, or 36%, from the second quarter of 2022 mainly due to stock compensation expense related to awards granted under the Company's 2022 Stock Option Plan and 2022 Recognition and Retention Plan and Trust Agreement in September 2022. Total stock compensation expense, allocated between salaries and employee benefits expense and directors' fees, during the fourth quarter of 2022 is expected to be approximately $141,000, compared to $47,000 for the third quarter of 2022.

Data processing and communication expense totaled $216,000, down $26,000, or 11%, from the previous quarter primarily due to the absence of rebranding expenses during the third quarter of 2022.

Advertising and marketing expense totaled $36,000 for the third quarter of 2022, down $73,000, or 67%, from the second quarter of 2022. Advertising and marketing expense included rebranding costs of $3,000 in the third quarter of 2022, compared to $87,000 in the second quarter of 2022.

Other non-interest expense totaled $184,000 for the third quarter of 2022, down $56,000, or 23%, from the second quarter of 2022. Other non-interest expense included rebranding costs of $7,000 and $18,000 during the third and second quarters of 2022, respectively. In addition, the Company benefited from recoveries on charged-off deposit accounts and certain cost saving initiatives during the third quarter of 2022.

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 $283.4 million in assets at September 30, 2022. Catalyst Bank, formerly St. Landry Homestead Federal Savings Bank, has been in operation in the Acadiana region of south-central Louisiana for 100 years. With a focus on fueling business and improving lives throughout the region, Catalyst Bank offers commercial and retail banking products through our six full-service branches located in Carencro, Eunice, Lafayette, Opelousas, and Port Barre. To learn more about Catalyst Bank, visit www.catalystbank.com.

Forward-looking Statements

This press release contains certain forward-looking statements.  Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.  They often include words like "believe," "expect," "anticipate," "estimate" and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may."  Certain factors that could cause actual results to differ materially from expected results include changes in the interest rate environment, changes in general economic conditions, legislative and regulatory changes that adversely affect the business of Catalyst Bancorp, Inc. and Catalyst Bank, and changes in the securities markets.  Except as required by law, the Company does not undertake any obligation to update any forward-looking statements to reflect changes in belief, expectations or events.

 

CATALYST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands)		9/30/2022			6/30/2022				9/30/2021(1)
ASSETS
Non-interest-bearing cash		$	4,558		$	4,553			$	5,117
Interest-bearing cash and due from banks			31,639			24,582				95,287
Total cash and cash equivalents			36,197			29,135				100,404
Investment securities:
Securities available-for-sale, at fair value			78,563			82,276				49,682
Securities held-to-maturity			13,480			13,486				13,504
Loans receivable, net of unearned income			131,701			133,624				136,720
Allowance for loan losses			(1,804)			(1,980)				(2,646)
Loans receivable, net			129,897			131,644				134,074
Accrued interest receivable			566			556				511
Foreclosed assets			320			320				399
Premises and equipment, net			6,392			6,494				6,658
Stock in correspondent banks, at cost			1,799			1,795				1,792
Bank-owned life insurance			13,519			13,422				3,280
Other assets			2,681			1,855				1,259
TOTAL ASSETS		$	283,414		$	280,983			$	311,563
LIABILITIES
Deposits:
Non-interest-bearing		$	31,988		$	30,400			$	102,091
Interest-bearing			152,239			148,335				147,369
Total deposits			184,227			178,735				249,460
Federal Home Loan Bank advances			9,153			9,108				8,973
Other liabilities			706			727				1,130
TOTAL LIABILITIES			194,086			188,570				259,563
SHAREHOLDERS' EQUITY
Common stock			53			53				-
Additional paid-in capital			50,902			50,838				-
Unallocated common stock held by Employee Stock Ownership Plan			(4,020)			(4,073)				-
Retained earnings			52,379			52,240				52,270
Accumulated other comprehensive income (loss)			(9,986)			(6,645)				(270)
TOTAL SHAREHOLDERS' EQUITY			89,328			92,413				52,000
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	283,414		$	280,983			$	311,563

(1)	Data at September 30, 2021 is Bank-only.

 

CATALYST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
		Three Months Ended									Nine Months Ended
(Dollars in thousands)		9/30/2022			6/30/2022			9/30/2021(1)			9/30/2022			9/30/2021(1)
INTEREST INCOME
Loans receivable, including fees		$	1,466		$	1,555		$	1,671		$	4,584		$	5,344
Investment securities			381			352			172			1,062			434
Other			185			58			13			262			37
Total interest income			2,032			1,965			1,856			5,908			5,815
INTEREST EXPENSE
Deposits			93			87			124			272			414
Advances from Federal Home Loan Bank			69			68			68			205			204
Total interest expense			162			155			192			477			618
Net interest income			1,870			1,810			1,664			5,431			5,197
Provision for (reversal of) loan losses			(115)			(189)			-			(375)			(286)
Net interest income after provision for (reversal of) loan losses			1,985			1,999			1,664			5,806			5,483
NON-INTEREST INCOME
Service charges on deposit accounts			192			182			165			542			448
Gain (loss) on disposals and sales of fixed assets			-			(77)			-			(77)			25
Bank-owned life insurance			97			98			22			216			67
Federal community development grant			-			171			1,826			171			1,826
Other			7			5			12			20			36
Total non-interest income			296			379			2,025			872			2,402
NON-INTEREST EXPENSE
Salaries and employee benefits			1,168			1,218			1,084			3,647			3,331
Occupancy and equipment			203			227			200			640			554
Data processing and communication			216			242			201			666			556
Professional fees			157			175			88			472			255
Directors' fees			75			55			70			185			211
ATM and debit card			76			59			48			184			137
Foreclosed assets, net			(2)			(2)			39			(21)			74
Advertising and marketing			36			109			14			187			35
Franchise and shares tax			15			58			-			131			-
Other			184			240			140			606			423
Total non-interest expense			2,128			2,381			1,884			6,697			5,576
Income (loss) before income tax expense			153			(3)			1,805			(19)			2,309
Income tax expense (benefit)			14			(21)			372			(45)			465
NET INCOME		$	139		$	18		$	1,433		$	26		$	1,844
Earnings per share:
Basic		$	0.03		$	0.01		$	N/A		$	0.01		$	N/A
Diluted			0.03			N/A			N/A			0.01			N/A

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

 

CATALYST BANCORP, INC. AND SUBSIDIARY
SELECTED FINANCIAL DATA
		Three Months Ended												Nine Months Ended
(Dollars in thousands)		9/30/2022				6/30/2022				9/30/2021(1)				9/30/2022				9/30/2021(1)
EARNINGS DATA
Total interest income		$	2,032			$	1,965			$	1,856			$	5,908			$	5,815
Total interest expense			162				155				192				477				618
Net interest income			1,870				1,810				1,664				5,431				5,197
Provision for (reversal of) loan losses			(115)				(189)				-				(375)				(286)
Total non-interest income			296				379				2,025				872				2,402
Total non-interest expense			2,128				2,381				1,884				6,697				5,576
Income tax expense (benefit)			14				(21)				372				(45)				465
Net income		$	139			$	18			$	1,433			$	26			$	1,844
AVERAGE BALANCE SHEET DATA
Total assets		$	288,052			$	286,288			$	253,176			$	287,000			$	240,345
Total interest-earning assets			270,534				268,055				235,447				270,848				224,873
Total loans			131,583				133,810				137,031				132,052				143,075
Total interest-bearing deposits			151,571				150,582				150,726				150,006				147,085
Total interest-bearing liabilities			160,697				159,661				159,692				159,086				155,992
Total deposits			185,453				183,316				191,060				182,816				179,462
Total shareholders' equity			92,764				93,318				50,950				94,400				50,678
SELECTED RATIOS
Return on average assets			0.19	%			0.02	%			2.25	%			0.01	%			1.03	%
Return on average equity			0.60				0.08				11.16				0.04				4.86
Efficiency ratio			98.24				108.78				51.06				106.25				73.38
Net interest margin(TE)			2.75				2.71				2.81				2.69				3.09
Average equity to average assets			32.20				32.60				20.12				32.89				21.09
Common equity Tier 1 capital ratio(2)			57.84				58.51				38.94
Tier 1 leverage capital ratio(2)			28.29				28.43				20.65
Total risk-based capital ratio(2)			59.09				59.76				40.20
ALLOWANCE FOR LOANS LOSSES
Beginning balance		$	1,980			$	2,173			$	2,649			$	2,276			$	3,022
Provision for (reversal of) loan losses			(115)				(189)				-				(375)				(286)
Charge-offs			(90)				(38)				(18)				(191)				(150)
Recoveries			29				34				15				94				60
Net (charge-offs) recoveries			(61)				(4)				(3)				(97)				(90)
Ending balance		$	1,804			$	1,980			$	2,646			$	1,804			$	2,646
CREDIT QUALITY
Non-accruing loans		$	1,221			$	1,246			$	752
Accruing loans 90 days or more past due			379				41				165
Total non-performing loans			1,600				1,287				917
Foreclosed assets			320				320				399
Total non-performing assets		$	1,920			$	1,607			$	1,316
Total non-performing loans to total loans			1.21	%			0.96	%			0.67	%
Total non-performing assets to total assets			0.68				0.57				0.42

(1)	Data at and for the periods ended September 30, 2021 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 was Catalyst Bancorp's net income for Q3 2022?

Catalyst Bancorp reported a net income of $139,000 for Q3 2022.

How much did deposits increase in Q3 2022 for CLST?

Deposits increased by 3% to $184.2 million in Q3 2022.

What is the net interest margin for Catalyst Bancorp in Q3 2022?

The net interest margin for Q3 2022 was 2.75%.

What were the non-performing assets for CLST in Q3 2022?

Non-performing assets totaled $1.9 million, up 19% from the previous quarter.

How much did non-interest income decline in Q3 2022 for CLST?

Non-interest income decreased by 22% to $296,000 in Q3 2022.