Catalyst Bancorp, Inc. Announces 2024 First Quarter Results and Approval of New Share Repurchase Plan
Catalyst Bancorp, Inc. (CLST) reported a net loss of $4.7 million for Q1 2024, due to strategic moves like upgrading banking systems and selling lower-yielding securities to enhance growth prospects. The company plans to invest in new loans, higher-yielding securities, share repurchases, and debt repayments with $42.6 million in cash generated from sales.
Despite a slight decrease in loans and non-performing assets, the company's credit quality remains stable. The approval of a new share repurchase plan and increased net interest income are positive indicators for investors.
Catalyst Bancorp, Inc. approved a new share repurchase plan, allowing for the repurchase of up to 227,000 shares, which can enhance shareholder value.
The net interest margin for Q1 2024 increased by one basis point, showcasing improved interest income and effective management of interest-bearing liabilities.
Non-performing assets decreased by 16.1% in Q1 2024, indicating the company's focus on maintaining a healthy credit quality and minimizing risks.
The company reported a net loss of $4.7 million for Q1 2024, primarily due to a $5.5 million loss on the sale of investment securities, highlighting a short-term financial setback.
Non-interest income for Q1 2024 decreased significantly, mainly attributed to the $5.5 million loss on the sale of investment securities, impacting overall revenue.
Non-interest expenses increased by 32% in Q1 2024, primarily due to costs associated with upgrading to a new core processing system, potentially impacting short-term profitability.
Insights
The financial health of Catalyst Bancorp, Inc. is under scrutiny after a reported net loss of
The quarterly results also indicate a reshuffling of the loan portfolio, with a noticeable
The slight uptick in net interest margin to
Lastly, the new share repurchase plan suggests a confidence from the board in the intrinsic value of the company's stock which might be taken as a positive signal by the market, even as it must be assessed against the backdrop of the company's overall performance and capital requirements.
The banking sector's resilience is often tested through its response to market changes and internal operational shifts. Catalyst Bancorp's strategic moves, including system upgrades and balance sheet repositioning, reflect an effort to remain competitive in a technology-driven industry. As demand for fintech solutions grows, the upgrade to a new core processing system could provide enhanced customer experiences and operational efficiencies—a long-term investment that may resonate positively with customer retention and future profit margins.
Concerning deposit growth, a
Investors would be keen to monitor the deployment of the
An integral aspect for investors to consider is the bank's credit risk profile. The reduction in non-performing assets by
The bank's capital strength, with shareholders' equity representing
From a risk perspective, the blend of offensive strategies (such as technology upgrades and share repurchases) and defensive maneuvers (like managing credit quality and maintaining capital) could suggest a balanced approach to risk-taking and mitigation. Investors should consider these dynamics when evaluating the bank's risk profile in anticipation of future performance.
"Our net loss resulted from two strategic moves that significantly enhance our growth prospects," said Joe Zanco. "First, we completed a full upgrade of our banking systems and now offer among the very best technology in banking. We're incredibly proud of our team for executing such a successful systems upgrade."
"Second, we repositioned our balance sheet by selling lower-yielding investment securities. The sales generated
Loans
Loans totaled
(Dollars in thousands) | 3/31/2024 | 12/31/2023 | Increase (Decrease) | |||||||||
Real estate loans | ||||||||||||
One- to four-family residential | $ | 81,686 | $ | 83,623 | $ | (1,937) | (2) | % | ||||
Commercial real estate | 21,130 | 21,478 | (348) | (2) | ||||||||
Construction and land | 19,369 | 13,857 | 5,512 | 40 | ||||||||
Multi-family residential | 3,061 | 3,373 | (312) | (9) | ||||||||
Total real estate loans | 125,246 | 122,331 | 2,915 | 2 | ||||||||
Other loans | ||||||||||||
Commercial and industrial | 15,711 | 19,984 | (4,273) | (21) | ||||||||
Consumer | 2,534 | 2,605 | (71) | (3) | ||||||||
Total other loans | 18,245 | 22,589 | (4,344) | (19) | ||||||||
Total loans | $ | 143,491 | $ | 144,920 | $ | (1,429) | (1) | % | ||||
In the first quarter of 2024, strong construction loan growth was offset primarily by net declines in our commercial and industrial and residential loan portfolios. Construction loan growth was largely driven by multi-family residential development and additional fundings on several existing construction loans.
The following table summarizes the composition of our construction and land loan balances and commitments, including the related undisbursed amounts for construction projects in process as of March 31, 2024.
(Dollars in thousands) | Loan Balance | Undisbursed | Total | ||||||
Commercial construction and land loans | |||||||||
Multi-family residential | $ | 4,782 | $ | 3,218 | $ | 8,000 | |||
Retail | 711 | 4,769 | 5,480 | ||||||
Health service facilities | 2,749 | 2,663 | 5,412 | ||||||
Hospitality | 2,716 | 700 | 3,416 | ||||||
Residential subdivision development | 813 | 9 | 822 | ||||||
Commercial land | 297 | - | 297 | ||||||
Other commercial construction and development | 3,790 | 289 | 4,079 | ||||||
Total commercial construction and land | $ | 15,858 | $ | 11,648 | $ | 27,506 | |||
Consumer construction and land loans | |||||||||
Residential construction | 2,851 | 1,241 | 4,092 | ||||||
Consumer land | 660 | - | 660 | ||||||
Total consumer construction and land | 3,511 | 1,241 | 4,752 | ||||||
Total construction and land | $ | 19,369 | $ | 12,889 | $ | 32,258 | |||
Based on total commitment and contractual maturity date, the weighted average term to maturity of our construction and land loan portfolio is approximately 11 months as of March 31, 2024.
Credit Quality and Allowance for Credit Losses
At March 31, 2024, non-performing assets ("NPAs") totaled
At March 31, 2024, the allowance for loan losses totaled
Net loan charge-offs totaled
Investment Securities
Total investment securities were
At March 31, 2024 the amortized cost and fair value of pledged investment securities totaled
Deposits
Total deposits were
(Dollars in thousands) | 3/31/2024 | 12/31/2023 | Increase (Decrease) | |||||||||
Non-interest-bearing demand deposits | $ | 28,836 | $ | 28,183 | $ | 653 | 2 | % | ||||
Interest-bearing demand deposits | 35,374 | 36,867 | (1,493) | (4) | ||||||||
Money market | 14,712 | 15,126 | (414) | (3) | ||||||||
Savings | 33,675 | 31,518 | 2,157 | 7 | ||||||||
Certificates of deposit | 57,040 | 53,928 | 3,112 | 6 | ||||||||
Total deposits | $ | 169,637 | $ | 165,622 | $ | 4,015 | 2 | % | ||||
Total public fund deposits amounted to
Our total uninsured deposits (that is deposits in excess of the FDIC's insurance limit), inclusive of public funds, were approximately
Borrowings
Total borrowings at March 31, 2024 were
Capital and Share Repurchases
The Company announced that its Board of Directors approved the Company's fourth share repurchase plan (the "May 2024 Repurchase Plan"). Under the May 2024 Repurchase Plan, the Company may purchase up to 227,000 shares, or approximately
The Company repurchased 202,997 shares of its common stock at an average cost per share of
At March 31, 2024 and December 31, 2023, consolidated shareholders' equity totaled
Net Interest Income
The net interest margin for the first quarter of 2024 was
Net interest income for the first quarter of 2024 was
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
Three Months Ended | ||||||||||||||||||
3/31/2024 | 12/31/2023 | |||||||||||||||||
(Dollars in thousands) | Average | Interest | Average | Average | Interest | Average | ||||||||||||
INTEREST-EARNING ASSETS | ||||||||||||||||||
Loans receivable(1) | $ | 144,428 | $ | 2,214 | 6.17 | % | $ | 140,757 | $ | 2,066 | 5.82 | % | ||||||
Investment securities(TE)(2) | 76,432 | 325 | 1.72 | 96,640 | 400 | 1.67 | ||||||||||||
Other interest earning assets | 48,779 | 616 | 5.08 | 11,276 | 137 | 4.83 | ||||||||||||
Total interest-earning assets(TE) | $ | 269,639 | $ | 3,155 | 4.71 | % | $ | 248,673 | $ | 2,603 | 4.17 | % | ||||||
INTEREST-BEARING LIABILITIES | ||||||||||||||||||
Demand deposits, money market, and savings accounts | $ | 89,109 | $ | 317 | 1.43 | % | $ | 82,474 | $ | 185 | 0.89 | % | ||||||
Certificates of deposit | 57,092 | 437 | 3.08 | 51,707 | 344 | 2.64 | ||||||||||||
Total interest-bearing deposits | 146,201 | 754 | 2.07 | 134,181 | 529 | 1.56 | ||||||||||||
Borrowings | 27,991 | 293 | 4.21 | 13,016 | 114 | 3.50 | ||||||||||||
Total interest-bearing liabilities | $ | 174,192 | $ | 1,047 | 2.42 | % | $ | 147,197 | $ | 643 | 1.73 | % | ||||||
Net interest-earning assets | $ | 95,447 | $ | 101,476 | ||||||||||||||
Net interest income; average interest rate spread(TE) | $ | 2,108 | 2.29 | % | $ | 1,960 | 2.44 | % | ||||||||||
Net interest margin(TE)(3) | 3.15 | % | 3.14 | % | ||||||||||||||
(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 |
Non-interest Income
For the first quarter of 2024, non-interest income was down
Non-interest Expense
Non-interest expense for the first quarter of 2024 totaled
About Catalyst Bancorp, Inc.
Catalyst Bancorp, Inc. (Nasdaq: CLST) is a
Forward-looking Statements
This news release reflects industry conditions, Company performance and financial results and contains "forward-looking statements,' which may include forecasts of our financial results and condition, expectations for our operations and businesses, and our assumptions for those forecasts and expectations. Do not place undue reliance on forward-looking statements. These forward-looking statements are subject to a number of risk factors and uncertainties which could cause the Company's actual results and experience to differ materially from the anticipated results and expectation expressed in such forward-looking statements.
Factors that could cause our actual results to differ materially from our forward-looking statements are described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Supervision and Regulation" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and in other documents subsequently filed by the Company with the Securities and Exchange Commission, available at the SEC's website and the Company's website, each of which are referenced above. To the extent that statements in this news release relate to future plans, objectives, financial results or performance by the Company, these statements are deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are generally identified by use of words such as "may," "believe," "expect," "anticipate," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology.
Forward-looking statements represent management's beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements. All information is as of the date of this news release. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.
CATALYST BANCORP, INC. AND SUBSIDIARY | |||||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||||
(Unaudited) | (Unaudited) | ||||||||
(Dollars in thousands) | 3/31/2024 | 12/31/2023 | 3/31/2023 | ||||||
ASSETS | |||||||||
Non-interest-bearing cash | $ | 3,118 | $ | 3,654 | $ | 3,531 | |||
Interest-bearing cash and due from banks | 72,893 | 15,357 | 23,996 | ||||||
Total cash and cash equivalents | 76,011 | 19,011 | 27,527 | ||||||
Investment securities: | |||||||||
Securities available-for-sale, at fair value | 25,534 | 70,540 | 78,937 | ||||||
Securities held-to-maturity | 13,457 | 13,461 | 13,471 | ||||||
Loans receivable, net of unearned income | 143,491 | 144,920 | 132,690 | ||||||
Allowance for loan losses | (2,068) | (2,124) | (2,070) | ||||||
Loans receivable, net | 141,423 | 142,796 | 130,620 | ||||||
Accrued interest receivable | 733 | 906 | 675 | ||||||
Foreclosed assets | 237 | 60 | 320 | ||||||
Premises and equipment, net | 5,995 | 6,072 | 6,202 | ||||||
Stock in correspondent banks, at cost | 1,898 | 1,878 | 1,823 | ||||||
Bank-owned life insurance | 14,139 | 14,026 | 13,714 | ||||||
Other assets | 2,622 | 2,182 | 2,577 | ||||||
TOTAL ASSETS | $ | 282,049 | $ | 270,932 | $ | 275,866 | |||
LIABILITIES | |||||||||
Deposits: | |||||||||
Non-interest-bearing | $ | 28,836 | $ | 28,183 | $ | 35,483 | |||
Interest-bearing | 140,801 | 137,439 | 144,229 | ||||||
Total deposits | 169,637 | 165,622 | 179,712 | ||||||
Borrowings | 29,423 | 19,378 | 9,243 | ||||||
Other liabilities | 1,628 | 1,277 | 747 | ||||||
TOTAL LIABILITIES | 200,688 | 186,277 | 189,702 | ||||||
SHAREHOLDERS' EQUITY | |||||||||
Common stock | 46 | 48 | 51 | ||||||
Additional paid-in capital | 42,711 | 45,020 | 48,259 | ||||||
Unallocated common stock held by benefit plans | (6,169) | (6,221) | (6,664) | ||||||
Retained earnings | 48,368 | 53,045 | 52,516 | ||||||
Accumulated other comprehensive income (loss) | (3,595) | (7,237) | (7,998) | ||||||
TOTAL SHAREHOLDERS' EQUITY | 81,361 | 84,655 | 86,164 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 282,049 | $ | 270,932 | $ | 275,866 | |||
CATALYST BANCORP, INC. AND SUBSIDIARY | |||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||
(Unaudited) | |||||||||
Three Months Ended | |||||||||
(Dollars in thousands) | 3/31/2024 | 12/31/2023 | 3/31/2023 | ||||||
INTEREST INCOME | |||||||||
Loans receivable, including fees | $ | 2,214 | $ | 2,066 | $ | 1,629 | |||
Investment securities | 325 | 400 | 427 | ||||||
Other | 616 | 137 | 211 | ||||||
Total interest income | 3,155 | 2,603 | 2,267 | ||||||
INTEREST EXPENSE | |||||||||
Deposits | 754 | 529 | 233 | ||||||
Borrowings | 293 | 114 | 68 | ||||||
Total interest expense | 1,047 | 643 | 301 | ||||||
Net interest income | 2,108 | 1,960 | 1,966 | ||||||
Provision for credit losses | 95 | 128 | - | ||||||
Net interest income after provision for credit losses | 2,013 | 1,832 | 1,966 | ||||||
NON-INTEREST INCOME | |||||||||
Service charges on deposit accounts | 197 | 201 | 183 | ||||||
Bank-owned life insurance | 113 | 109 | 97 | ||||||
Loss on sales of investment securities | (5,507) | (92) | - | ||||||
Gain (loss) on disposals and sales of fixed assets | 11 | - | - | ||||||
Federal community development grant | - | 437 | - | ||||||
Other | 23 | 17 | 14 | ||||||
Total non-interest income (loss) | (5,163) | 672 | 294 | ||||||
NON-INTEREST EXPENSE | |||||||||
Salaries and employee benefits | 1,260 | 1,149 | 1,203 | ||||||
Occupancy and equipment | 196 | 193 | 213 | ||||||
Data processing and communication | 794 | 236 | 227 | ||||||
Professional fees | 107 | 140 | 129 | ||||||
Directors' fees | 115 | 118 | 115 | ||||||
ATM and debit card | 69 | 63 | 58 | ||||||
Foreclosed assets, net | 8 | 5 | 2 | ||||||
Advertising and marketing | 38 | 23 | 30 | ||||||
Franchise and shares tax | 16 | 10 | 27 | ||||||
Other | 188 | 185 | 181 | ||||||
Total non-interest expense | 2,791 | 2,122 | 2,185 | ||||||
Income before income tax expense (benefit) | (5,941) | 382 | 75 | ||||||
Income tax expense (benefit) | (1,264) | 62 | 2 | ||||||
NET INCOME (LOSS) | $ | (4,677) | $ | 320 | $ | 73 | |||
Earnings (loss) per share: | |||||||||
Basic | $ | (1.14) | $ | 0.08 | $ | 0.02 | |||
Diluted | (1.14) | 0.08 | 0.02 | ||||||
CATALYST BANCORP, INC. AND SUBSIDIARY | ||||||||||||
SELECTED FINANCIAL DATA | ||||||||||||
Three Months Ended | ||||||||||||
(Dollars in thousands) | 3/31/2024 | 12/31/2023 | 3/31/2023 | |||||||||
EARNINGS DATA | ||||||||||||
Total interest income | $ | 3,155 | $ | 2,603 | $ | 2,267 | ||||||
Total interest expense | 1,047 | 643 | 301 | |||||||||
Net interest income | 2,108 | 1,960 | 1,966 | |||||||||
Provision for credit losses | 95 | 128 | - | |||||||||
Total non-interest income (loss) | (5,163) | 672 | 294 | |||||||||
Total non-interest expense | 2,791 | 2,122 | 2,185 | |||||||||
Income tax expense (benefit) | (1,264) | 62 | 2 | |||||||||
Net income (loss) | $ | (4,677) | $ | 320 | $ | 73 | ||||||
AVERAGE BALANCE SHEET DATA | ||||||||||||
Total loans | $ | 144,428 | $ | 140,757 | $ | 133,781 | ||||||
Total interest-earning assets | 269,639 | 248,673 | 257,340 | |||||||||
Total assets | 286,431 | 261,657 | 271,976 | |||||||||
Total interest-bearing deposits | 146,201 | 134,181 | 142,500 | |||||||||
Total interest-bearing liabilities | 174,192 | 147,197 | 151,716 | |||||||||
Total deposits | 174,656 | 165,102 | 174,597 | |||||||||
Total shareholders' equity | 82,395 | 82,227 | 87,388 | |||||||||
SELECTED RATIOS | ||||||||||||
Return on average assets | (6.57) | % | 0.49 | % | 0.11 | % | ||||||
Return on average equity | (22.83) | 1.54 | 0.34 | |||||||||
Efficiency ratio | (91.37) | 80.61 | 96.68 | |||||||||
Net interest margin(TE) | 3.15 | 3.14 | 3.10 | |||||||||
Average equity to average assets | 28.77 | 31.43 | 32.13 | |||||||||
Common equity Tier 1 capital ratio | 52.09 | 52.34 | 56.43 | |||||||||
Tier 1 leverage capital ratio | 26.84 | 31.67 | 30.11 | |||||||||
Total risk-based capital ratio | 53.34 | 53.60 | 57.69 | |||||||||
NON-FINANCIAL DATA | ||||||||||||
Total employees (full-time equivalent) | 47 | 48 | 51 | |||||||||
Common shares issued and outstanding, end of period | 4,558,329 | 4,761,326 | 5,058,612 | |||||||||
CATALYST BANCORP, INC. AND SUBSIDIARY | ||||||||||||
SELECTED FINANCIAL DATA | ||||||||||||
(continued) | ||||||||||||
Three Months Ended | ||||||||||||
(Dollars in thousands) | 3/31/2024 | 12/31/2023 | 3/31/2023 | |||||||||
ALLOWANCE FOR CREDIT LOSSES | ||||||||||||
Allowance for loan losses: | ||||||||||||
Beginning balance | $ | 2,124 | $ | 2,036 | $ | 1,807 | ||||||
CECL adoption impact | - | - | 209 | |||||||||
Provision for loan losses | 42 | 151 | - | |||||||||
Charge-offs | (123) | (76) | (7) | |||||||||
Recoveries | 25 | 13 | 61 | |||||||||
Net (charge-offs) recoveries | (98) | (63) | 54 | |||||||||
Ending balance | $ | 2,068 | $ | 2,124 | $ | 2,070 | ||||||
Allowance for unfunded commitments: | ||||||||||||
Beginning balance | 257 | 280 | - | |||||||||
CECL adoption impact | - | - | 216 | |||||||||
Provision for (reversal of) losses on unfunded commitments | 53 | (23) | - | |||||||||
Ending balance | $ | 310 | $ | 257 | $ | 216 | ||||||
Total allowance for credit losses, end of period | $ | 2,378 | $ | 2,381 | $ | 2,286 | ||||||
Total provision for credit losses | 95 | 128 | - | |||||||||
CREDIT QUALITY(1) | ||||||||||||
Non-accruing loans | $ | 1,453 | $ | 1,967 | $ | 1,618 | ||||||
Accruing loans 90 days or more past due | 29 | 24 | 69 | |||||||||
Total non-performing loans | 1,482 | 1,991 | 1,687 | |||||||||
Foreclosed assets | 237 | 60 | 320 | |||||||||
Total non-performing assets | $ | 1,719 | $ | 2,051 | $ | 2,007 | ||||||
Total non-performing loans to total loans | 1.03 | % | 1.37 | % | 1.27 | % | ||||||
Total non-performing assets to total assets | 0.61 | 0.76 | 0.73 | |||||||||
(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 was Catalyst Bancorp, Inc.'s net loss for the first quarter of 2024?
What strategic moves led to Catalyst Bancorp, Inc.'s net loss in Q1 2024?
What did Catalyst Bancorp, Inc. plan to do with the $42.6 million cash generated from sales of securities in Q1 2024?
What is the total number of shares the company may repurchase under the May 2024 Repurchase Plan?
How did the net interest margin change in Q1 2024 compared to the previous quarter?
