Catalyst Bancorp, Inc. Announces 2023 Third Quarter Results

Rhea-AI Summary

Catalyst Bancorp reports net income of $170,000 for Q3 2023, up from $39,000 in Q2 2023. Loan portfolio grows, while deposit competition remains tough.

Positive

• Net income increases by $131,000, or 336%, from Q2 2023 to Q3 2023.
• Loan portfolio grows by $2.2 million, or 2%, in Q3 2023.
• Capital position remains strong with a total risk-based capital ratio of 56.23% at September 30, 2023.
• Company repurchases 81,252 shares of common stock at an average cost per share of $12.33 in Q3 2023.

Negative

• Deposit competition remains tough.
• Unrealized losses on securities available-for-sale increase by $1.9 million from Q2 2023 to Q3 2023.
• Total deposits decrease by $6.2 million, or 4%, in Q3 2023.

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.

"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

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SOURCE Catalyst Bancorp, Inc.

FAQ

What is the net income for Q3 2023?

The net income for Q3 2023 is $170,000, up from $39,000 in Q2 2023.

How much did the loan portfolio grow in Q3 2023?

The loan portfolio grew by $2.2 million, or 2%, in Q3 2023.

What is the total risk-based capital ratio at September 30, 2023?

The total risk-based capital ratio is 56.23% at September 30, 2023.

How many shares of common stock did the company repurchase in Q3 2023?

The company repurchased 81,252 shares of common stock in Q3 2023 at an average cost per share of $12.33.

What is the percentage decrease in total deposits in Q3 2023?

Total deposits decreased by 4% in Q3 2023.