Catalyst Bancorp, Inc. Announces 2024 Second Quarter Results

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Jul 31, 2024, 07:00 ET

OPELOUSAS, La., July 31, 2024 /PRNewswire/ -- Catalyst Bancorp, Inc. (Nasdaq: "CLST") (the "Company"), the parent company for Catalyst Bank (the "Bank") (www.catalystbank.com), reported net income of $527,000 for the second quarter of 2024, compared to a net loss of $4.7 million for the first quarter of 2024. The first quarter of 2024 included a $5.5 million loss on the sale of investment securities and $560,000 of data conversion and other expenses associated with the Bank's upgrade to a new core processing system.

"We posted our strongest quarter of loan growth since becoming a public company," said Joe Zanco, President and Chief Executive Officer of the Company and Bank. "That growth was focused on living our mission – serving as catalysts for economic growth in our communities. We do that most effectively by helping local businesses expand and add jobs."

Loans

Loans totaled $153.3 million at June 30, 2024, up $9.8 million, or 7%, from March 31, 2024. The following table sets forth the composition of the Company's loan portfolio as of the dates indicated.


*(Dollars in thousands)*	6/30/2024		3/31/2024		Increase (Decrease)
Real estate loans
One- to four-family residential	$	80,572	$	81,686	$	(1,114)	(1)	%
Commercial real estate		23,071		21,130		1,941	9
Construction and land		20,427		19,369		1,058	5
Multi-family residential		3,025		3,061		(36)	(1)
Total real estate loans		127,095		125,246		1,849	1
Other loans
Commercial and industrial		23,915		15,711		8,204	52
Consumer		2,256		2,534		(278)	(11)
Total other loans		26,171		18,245		7,926	43
Total loans	$	153,266	$	143,491	$	9,775	7	%

The following table presents certain major segments of our commercial real estate, construction and land, and commercial and industrial loan balances as of the dates indicated.


*(Dollars in thousands)*	6/30/2024		3/31/2024		Increase (Decrease)
Commercial real estate
Retail	$	3,891	$	4,071	$	(180)	(4)	%
Hospitality		3,736		3,873		(137)	(4)
Office buildings		2,263		2,285		(22)	(1)
Restaurants		623		632		(9)	(1)
Oilfield services		419		428		(9)	(2)
Other commercial real estate		12,139		9,841		2,298	23
Total commercial real estate	$	23,071	$	21,130	$	1,941	9	%
Construction and land
Multi-family residential	$	5,688	$	4,782	$	906	19	%
Health service facilities		2,749		2,749		-	-
Hospitality		2,716		2,716		-	-
Retail		2,033		711		1,322	186
Other commercial construction and land		2,830		4,900		(2,070)	(42)
Consumer residential construction and land		4,411		3,511		900	26
Total construction and land	$	20,427	$	19,369	$	1,058	5	%
Commercial and industrial
Oilfield services		10,382		4,821		5,561	115
Industrial equipment		4,540		3,626		914	25
Professional services		2,839		2,713		126	5
Other commercial and industrial		6,154		4,551		1,603	35
Total commercial and industrial loans	$	23,915	$	15,711	$	8,204	52	%

Credit Quality and Allowance for Credit Losses

At both June 30, 2024 and March 31, 2024, non-performing assets ("NPAs") totaled $1.7 million. The ratio of NPAs to total assets was 0.58% and 0.61% at June 30, 2024 and March 31, 2024, respectively. Non-performing loans ("NPLs") comprised 1.04% and 1.03% of total loans at June 30 and March 31, 2024, respectively. At June 30 and March 31, 2024, 98% of total NPLs, were one- to four-family residential mortgage loans.

At June 30, 2024, the allowance for loan losses totaled $2.2 million, or 1.45% of total loans, compared to 1.44% of total loans at March 31, 2024. The allowance for credit losses on unfunded lending commitments totaled $224,000 and $310,000 at June 30 and March 31, 2024, respectively. The provision for credit losses, inclusive of the provision for unfunded commitments, for the second quarter of 2024 totaled $99,000 and was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated residential loans. Net loan charge-offs totaled $38,000 during the second quarter of 2024, compared to net charge-offs of $98,000 for the first quarter of 2024.

Investment Securities

Total investment securities were $43.2 million, or 14.6% of total assets, at June 30, 2024, up $4.2 million, or 10.8%, compared to March 31, 2024. During the first quarter of 2024, the Company sold $48.0 million of available-for-sale securities (quoted at book value) for a pre-tax loss of $5.5 million. Cash proceeds from the sales totaled $42.6 million. The Company re-deployed $4.9 million of the first quarter sales proceeds into investment securities during the second quarter of 2024.

At June 30, 2024 the amortized cost and fair value of pledged investment securities totaled $25.1 million and $21.0 million, respectively. The amortized cost and fair value of investment securities pledged as collateral for borrowings through the Bank Term Funding Program ("BTFP") totaled $21.3 million and $17.7 million, respectively, at June 30, 2024. The remainder of the pledged investment securities at June 30, 2024 served as collateral for public fund deposits.

Deposits

Total deposits were $180.1 million at June 30, 2024, up $10.4 million, or 6%, from March 31, 2024. The following table sets forth the composition of the Company's deposits as of the dates indicated. The ratio of the Company's total loans to total deposits was 85% as of June 30 and March 31, 2024, respectively.


*(Dollars in thousands)*	6/30/2024		3/31/2024		Increase (Decrease)
Non-interest-bearing demand deposits	$	30,177	$	28,836	$	1,341	5	%
Interest-bearing demand deposits		44,038		35,374		8,664	24
Money market		13,685		14,712		(1,027)	(7)
Savings		36,746		33,675		3,071	9
Certificates of deposit		55,419		57,040		(1,621)	(3)
Total deposits	$	180,065	$	169,637	$	10,428	6	%

Total public fund deposits amounted to $31.2 million, or 17% of total deposits, at June 30, 2024, compared to $22.7 million, or 13% of total deposits, at March 31, 2024. At June 30, 2024, approximately 84% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits from municipalities within our market. The full amount of our public fund deposits in excess of the FDIC's insurance limit are secured by pledging investment securities and portions of a custodial letter of credit from the Federal Home Loan Bank of Dallas.

Capital and Share Repurchases

At June 30 and March 31, 2024, consolidated shareholders' equity totaled $81.0 million, or 27.4% of total assets, and $81.3 million, or 28.8% of total assets, respectively.

The Company repurchased 79,802 shares of its common stock at an average cost per share of $11.88 during the second quarter of 2024, compared to 202,997 shares at an average cost per share of $12.12 during the first quarter of 2023. At June 30, 2024, the Company had common shares outstanding of 4,478,527. Under our current repurchase plan, 172,527 shares of the Company's common stock were available for repurchase at June 30, 2024. Since the announcement of our first share repurchase plan on January 26, 2023 and through June 30, 2024, the Company has repurchased a total of 811,473 shares of its common stock, or approximately 15% of the common shares originally issued, at an average cost per share of $11.98.

Net Interest Income

The net interest margin for the second quarter of 2024 was 3.72%, up 60 basis points compared to the prior quarter. For the second quarter of 2024, the average yield on interest-earning assets was 5.35%, up 65 basis points from the prior quarter, while the average rate paid on interest-bearing liabilities was 2.50%, up five basis points from the first quarter of 2024.

Net interest income for the second quarter of 2024 was $2.4 million, up $355,000, or 17%, compared to the first quarter of 2024. Total interest income was up $370,000, or 12%, while total interest expense increased $15,000, or 1%, in the second quarter of 2024 compared to the prior quarter. Interest income increased during the second quarter of 2024 mainly due to the re-investment of the investment securities sales proceeds from the previous quarter.

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
	6/30/2024						3/31/2024
*(Dollars in thousands)*	Average Balance		Interest		Average Yield/ Rate^(TE)		Average Balance		Interest		Average Yield/ Rate^(TE)
INTEREST-EARNING ASSETS
Loans receivable⁽¹⁾	$	150,257	$	2,383	6.38	%	$	144,428	$	2,214	6.17	%
Investment securities⁽²⁾		44,165		210	1.91			76,628		325	1.71
Other interest earning assets		70,354		932	5.33			48,779		616	5.08
Total interest-earning assets	$	264,776	$	3,525	5.35	%	$	269,835	$	3,155	4.70	%
INTEREST-BEARING LIABILITIES
Demand deposits, money market, and savings accounts	$	87,651	$	327	1.50	%	$	89,109	$	332	1.50	%
Certificates of deposit		55,960		444	3.19			57,092		437	3.08
Total interest-bearing deposits		143,611		771	2.16			146,201		769	2.12
Borrowings		29,468		306	4.17			27,991		293	4.21
Total interest-bearing liabilities	$	173,079	$	1,077	2.50	%	$	174,192	$	1,062	2.45	%
Net interest-earning assets	$	91,697					$	95,643
Net interest income; average interest rate spread			$	2,448	2.85	%			$	2,093	2.25	%
Net interest margin⁽³⁾					3.72	%					3.12	%


(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

For the second quarter of 2024, non-interest income totaled $366,000, up $5.5 million compared to the first quarter of 2024. Non-interest income for the first quarter of 2024 includes the $5.5 million loss on the sale of investment securities discussed previously.

Non-interest Expense

Non-interest expense for the second quarter of 2024 totaled $2.1 million, down $723,000, or 26%, compared to the first quarter of 2024. During the first quarter of 2024, the Company upgraded to a new core processing system and incurred $560,000 of data conversion and other associated expenses related to that change. Most of these costs are included in data processing and communication expense for the first quarter of 2024. Data processing and communication expense totaled $133,000 for the second quarter of 2024, down $87,000, or 40%, compared to the second quarter of 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 $295.3 million in assets at June 30, 2024. 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, or the website of the Securities and Exchange Commission, www.sec.gov.

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)				(Unaudited)
*(Dollars in thousands)*	6/30/2024		3/31/2024		12/31/2023		6/30/2023
ASSETS
Non-interest-bearing cash	$	4,952	$	3,118	$	3,654	$	4,769
Interest-bearing cash and due from banks		70,503		72,893		15,357		15,022
Total cash and cash equivalents		75,455		76,011		19,011		19,791
Investment securities:
Securities available-for-sale, at fair value		29,748		25,534		70,540		75,876
Securities held-to-maturity		13,454		13,457		13,461		13,468
Loans receivable, net of unearned income		153,266		143,491		144,920		133,493
Allowance for loan losses		(2,215)		(2,068)		(2,124)		(2,081)
Loans receivable, net		151,051		141,423		142,796		131,412
Accrued interest receivable		737		733		906		707
Foreclosed assets		104		237		60		296
Premises and equipment, net		6,114		5,995		6,072		6,111
Stock in correspondent banks, at cost		1,919		1,898		1,878		1,839
Bank-owned life insurance		14,252		14,139		14,026		13,813
Other assets		2,499		2,622		2,182		2,701
TOTAL ASSETS	$	295,333	$	282,049	$	270,932	$	266,014

LIABILITIES
Deposits:
Non-interest-bearing	$	30,177	$	28,836	$	28,183	$	41,482
Interest-bearing		149,888		140,801		137,439		129,891
Total deposits		180,065		169,637		165,622		171,373
Borrowings		30,261		29,423		19,378		9,288
Other liabilities		3,994		1,736		1,373		1,042
TOTAL LIABILITIES		214,320		200,796		186,373		181,703

SHAREHOLDERS' EQUITY
Common stock		45		46		48		49
Additional paid-in capital		41,914		42,711		45,020		47,032
Unallocated common stock held by benefit plans		(6,116)		(6,169)		(6,221)		(6,616)
Retained earnings		48,787		48,260		52,949		52,491
Accumulated other comprehensive income (loss)		(3,617)		(3,595)		(7,237)		(8,645)
TOTAL SHAREHOLDERS' EQUITY		81,013		81,253		84,559		84,311
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	295,333	$	282,049	$	270,932	$	266,014


CATALYST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

	Three Months Ended						Six Months Ended
*(Dollars in thousands)*	6/30/2024		3/31/2024		6/30/2023		6/30/2024		6/30/2023
INTEREST INCOME
Loans receivable, including fees	$	2,383	$	2,214	$	1,691	$	4,597	$	3,320
Investment securities		210		325		413		535		840
Other		932		616		218		1,548		429
Total interest income		3,525		3,155		2,322		6,680		4,589
INTEREST EXPENSE
Deposits		771		769		380		1,540		640
Borrowings		306		293		68		599		136
Total interest expense		1,077		1,062		448		2,139		776
Net interest income		2,448		2,093		1,874		4,541		3,813
Provision for credit losses		99		95		-		194		-
Net interest income after provision for credit losses		2,349		1,998		1,874		4,347		3,813
NON-INTEREST INCOME
Service charges on deposit accounts		194		203		200		397		383
Bank-owned life insurance		113		113		99		226		196
Loss on sales of investment securities		-		(5,507)		-		(5,507)		-
Gain (loss) on disposals and sales of fixed assets		(5)		11		-		6		-
Other		64		17		18		81		32
Total non-interest income (loss)		366		(5,163)		317		(4,797)		611
NON-INTEREST EXPENSE
Salaries and employee benefits		1,143		1,260		1,178		2,403		2,381
Occupancy and equipment		183		196		198		379		411
Data processing and communication		133		794		220		927		447
Professional fees		117		107		117		224		246
Directors' fees		114		115		114		229		229
ATM and debit card		36		69		61		105		119
Foreclosed assets, net		26		8		63		34		65
Advertising and marketing		43		38		22		81		52
Franchise and shares tax		15		16		25		31		52
Other		258		188		193		446		374
Total non-interest expense		2,068		2,791		2,191		4,859		4,376
Income (loss) before income tax expense (benefit)		647		(5,956)		-		(5,309)		48
Income tax expense (benefit)		120		(1,267)		(16)		(1,147)		(20)
NET INCOME (LOSS)	$	527	$	(4,689)	$	16	$	(4,162)	$	68

Earnings (loss) per share:
Basic	$	0.13	$	(1.15)	$	-	$	(1.03)	$	0.02
Diluted		0.13		(1.15)		-		(1.03)		0.02


CATALYST BANCORP, INC. AND SUBSIDIARY
SELECTED FINANCIAL DATA

	Three Months Ended									Six Months Ended
*(Dollars in thousands)*	6/30/2024			3/31/2024			6/30/2023			6/30/2024			6/30/2023
EARNINGS DATA
Total interest income	$	3,525		$	3,155		$	2,322		$	6,680		$	4,589
Total interest expense		1,077			1,062			448			2,139			776
Net interest income		2,448			2,093			1,874			4,541			3,813
Provision for credit losses		99			95			-			194			-
Total non-interest income (loss)		366			(5,163)			317			(4,797)			611
Total non-interest expense		2,068			2,791			2,191			4,859			4,376
Income tax expense (benefit)		120			(1,267)			(16)			(1,147)			(20)
Net income (loss)	$	527		$	(4,689)		$	16		$	(4,162)		$	68

AVERAGE BALANCE SHEET DATA
Total loans	$	150,257		$	144,428		$	133,394		$	147,342		$	133,586
Total interest-earning assets		264,776			269,835			253,427			267,306			255,373
Total assets		285,773			286,708			268,133			286,240			270,045
Total interest-bearing deposits		143,611			146,201			135,147			144,906			138,803
Total interest-bearing liabilities		173,079			174,192			144,411			173,636			148,043
Total deposits		173,326			174,656			172,526			173,990			173,555
Total shareholders' equity		80,965			82,667			85,459			81,816			86,418

SELECTED RATIOS
Return on average assets		0.74	%		(6.58)	%		0.02	%		(2.92)	%		0.05	%
Return on average equity		2.62			(22.81)			0.08			(10.23)			0.16
Efficiency ratio		73.47			(90.93)			100.00			(1,901.18)			98.91
Net interest margin^(TE)		3.72			3.12			2.97			3.42			3.01
Average equity to average assets		28.33			28.83			31.87			28.58			32.00
Common equity Tier 1 capital ratio		49.09			52.09			56.02
Tier 1 leverage capital ratio		26.88			26.84			30.64
Total risk-based capital ratio		50.34			53.34			57.27

NON-FINANCIAL DATA
Total employees (full-time equivalent)		47			47			50
Common shares issued and outstanding, end of period		4,478,527			4,558,329			4,929,542


CATALYST BANCORP, INC. AND SUBSIDIARY
SELECTED FINANCIAL DATA
(continued)

	Three Months Ended									Six Months Ended
*(Dollars in thousands)*	6/30/2024			3/31/2024			6/30/2023			6/30/2024		6/30/2023
ALLOWANCE FOR CREDIT LOSSES
Allowance for loan losses:
Beginning balance	$	2,068		$	2,124		$	2,070		$	2,124	$	1,807
CECL adoption impact		-			-			-			-		209
Provision for loan losses		185			42			(2)			227		(2)
Charge-offs		(57)			(123)			(10)			(180)		(17)
Recoveries		19			25			23			44		84
Net (charge-offs) recoveries		(38)			(98)			13			(136)		67
Ending balance	$	2,215		$	2,068		$	2,081		$	2,215	$	2,081

Allowance for unfunded commitments:
Beginning balance		310			257			216			257		-
CECL adoption impact		-			-			-			-		216
Provision for (reversal of) losses on unfunded commitments		(86)			53			2			(33)		2
Ending balance	$	224		$	310		$	218		$	224	$	218

Total allowance for credit losses, end of period	$	2,439		$	2,378		$	2,299		$	2,439	$	2,299
Total provision for credit losses		99			95			-			194		-

CREDIT QUALITY⁽¹⁾
Non-accruing loans	$	1,560		$	1,453		$	1,629
Accruing loans 90 days or more past due		40			29			260
Total non-performing loans		1,600			1,482			1,889
Foreclosed assets		104			237			296
Total non-performing assets	$	1,704		$	1,719		$	2,185

Total non-performing loans to total loans		1.04	%		1.03	%		1.42	%
Total non-performing assets to total assets		0.58			0.61			0.82