Catalyst Bancorp, Inc. Announces 2024 Third Quarter Results

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Oct 24, 2024, 07:00 ET

OPELOUSAS, La., Oct. 24, 2024 /PRNewswire/ -- Catalyst Bancorp, Inc. (Nasdaq: "CLST") (the "Company"), the parent company for Catalyst Bank (the "Bank") (www.catalystbank.com), reported net income of $447,000 for the third quarter of 2024, down $80,000 compared to net income of $527,000 for the second quarter of 2024. Net income for the third quarter of 2024 included a net pre-tax benefit of $238,000 due to a Bank Enterprise Award ("BEA") Program grant from the Community Development Financial Institution ("CDFI") Fund.

"Our loan portfolio grew a record $12.6 million during the quarter," said Joe Zanco, President and Chief Executive Officer of the Company and Bank. "This marks our second consecutive quarter of outstanding loan growth."

Loans

Loans totaled $165.9 million at September 30, 2024, up $12.6 million, or 8%, from June 30, 2024. The following table sets forth the composition of the Company's loan portfolio as of the dates indicated.

*(Dollars in thousands)*	9/30/2024		6/30/2024		Change
Real estate loans
One- to four-family residential	$	81,433	$	80,572	$	861	1	%
Commercial real estate		22,704		23,071		(367)	(2)
Construction and land		30,310		20,427		9,883	48
Multi-family residential		2,622		3,025		(403)	(13)
Total real estate loans		137,069		127,095		9,974	8
Other loans
Commercial and industrial		26,507		23,915		2,592	11	%
Consumer		2,306		2,256		50	2
Total other loans		28,813		26,171		2,642	10
Total loans	$	165,882	$	153,266	$	12,616	8

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)*	9/30/2024		6/30/2024		Change
Commercial real estate
Retail	$	4,154	$	4,481	$	(327)	(7)	%
Hospitality		3,594		3,736		(142)	(4)
Restaurants		1,112		973		139	14
Oilfield services		411		419		(8)	(2)
Other non-owner occupied		2,780		2,820		(40)	(1)
Other owner occupied		10,653		10,642		11	0
Total commercial real estate	$	22,704	$	23,071	$	(367)	(2)
Construction and land
Multi-family residential	$	8,353	$	5,688	$	2,665	47	%
Health service facilities		7,073		2,749		4,324	157
Hospitality		2,716		2,716		-	-
Retail		3,339		2,033		1,306	64
Other commercial construction and land		4,846		2,830		2,016	71
Consumer residential construction and land		3,983		4,411		(428)	(10)
Total construction and land	$	30,310	$	20,427	$	9,883	48
Commercial and industrial
Oilfield services	$	14,010	$	10,382	$	3,628	35	%
Industrial equipment		3,882		4,540		(658)	(15)
Professional services		2,910		2,839		71	3
Other commercial and industrial		5,705		6,154		(449)	(7)
Total commercial and industrial loans	$	26,507	$	23,915	$	2,592	11

Credit Quality and Allowance for Credit Losses

At September 30, 2024, non-performing assets ("NPAs") totaled $1.6 million, down from $1.7 million at June 30, 2024. The ratio of NPAs to total assets was 0.57% and 0.58% at September 30 and June 30, 2024, respectively. Non-performing loans ("NPLs") comprised 0.87% and 1.04% of total loans at September 30 and June 30, 2024, respectively. At September 30 and June 30, 2024, 98% of total NPLs, were one- to four-family residential mortgage loans.

At September 30, 2024, the allowance for loan losses totaled $2.4 million, or 1.46% of total loans, compared to 1.45% of total loans at June 30, 2024. The allowance for credit losses on unfunded lending commitments totaled $231,000 and $224,000 at September 30 and June 30, 2024, respectively. The provision for credit losses, inclusive of the provision for unfunded commitments, for the third quarter of 2024 totaled $337,000 and was mainly attributable to commercial loan growth. Net loan charge-offs totaled $131,000 during the third quarter of 2024, compared to net charge-offs of $38,000 for the second quarter of 2024. Net loan charge-offs during the third quarter of 2024 were primarily related to three commercial lines of credit.

Investment Securities

Total investment securities were $45.6 million, or 16% of total assets, at September 30, 2024, up $2.4 million, or 6%, compared to June 30, 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. During the second and third quarters of 2024, the Company re-deployed a portion of those sales proceeds into fixed-rate mortgage back securities. Investment securities purchases totaled $3.0 million for the third quarter of 2024 and $4.9 million for the second quarter of 2024.

At September 30, 2024 the amortized cost and fair value of pledged investment securities totaled $35.3 million and $31.7 million, respectively. The amortized cost and fair value of investment securities pledged as collateral for borrowings through the Bank Term Funding Program ("BTFP") totaled $21.0 million and $18.0 million, respectively, at September 30, 2024. The remainder of the pledged investment securities at September 30, 2024 served as collateral for public fund deposits.

Deposits

Total deposits were $167.4 million at September 30, 2024, down $12.6 million, or 7%, from June 30, 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 99% at September 30, 2024, compared to 85% at June 30, 2024.

*(Dollars in thousands)*	9/30/2024		6/30/2024		Change
Non-interest-bearing demand deposits	$	27,904	$	30,177	$	(2,273)	(8)	%
Interest-bearing demand deposits		33,751		44,038		(10,287)	(23)
Money market		13,372		13,685		(313)	(2)
Savings		36,798		36,746		52	-
Certificates of deposit		55,611		55,419		192	-
Total deposits	$	167,436	$	180,065	$	(12,629)	(7)

Total public fund deposits amounted to $21.0 million, or 13% of total deposits, at September 30, 2024, compared to $31.2 million, or 17% of total deposits, at June 30, 2024. The decline in public fund deposits was primarily due to seasonal fluctuations. At September 30, 2024, approximately 74% 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 September 30 and June 30, 2024, consolidated shareholders' equity totaled $81.7 million, or 29.1% of total assets, and $81.0 million, or 27.4% of total assets, respectively.

The Company repurchased 79,400 shares of its common stock at an average cost per share of $11.75 during the third quarter of 2024, compared to 79,802 shares at an average cost per share of $11.88 during the second quarter of 2024. The shares repurchased during the third quarter were acquired under the Company's fourth share repurchase program announced in May of this year ("May 2024 Repurchase Plan"). At September 30, 2024, the Company had common shares outstanding of 4,399,127. Under the May 2024 Repurchase Plan, 93,127 shares of the Company's common stock were available for repurchase at September 30, 2024. Since the announcement of our first share repurchase plan on January 26, 2023 and through September 30, 2024, the Company has repurchased a total of 890,873 shares of its common stock, or approximately 17% of the common shares originally issued, at an average cost per share of $11.96.

Net Interest Income

The net interest margin for the third quarter of 2024 was 3.86%, up 14 basis points compared to the prior quarter. For the third quarter of 2024, the average yield on interest-earning assets was 5.60%, up 25 basis points from the prior quarter, while the average rate paid on interest-bearing liabilities was 2.66%, up 16 basis points from the second quarter of 2024.

Net interest income for the third quarter of 2024 was $2.5 million, up $84,000, or 3%, compared to the second quarter of 2024. Total interest income was up $146,000, or 4%, while total interest expense increased $62,000, or 6%, in the third quarter of 2024 compared to the prior quarter. The increase in interest income during the third quarter of 2024 was largely due to loan growth.

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
	9/30/2024						6/30/2024
*(Dollars in thousands)*	Average Balance		Interest		Average Yield/ Rate^(TE)		Average Balance		Interest		Average Yield/ Rate^(TE)
INTEREST-EARNING ASSETS
Loans receivable⁽¹⁾	$	161,410	$	2,717	6.70	%	$	150,257	$	2,383	6.38	%
Investment securities⁽²⁾		48,517		255	2.11			44,165		210	1.91
Other interest earning assets		51,142		699	5.45			70,354		932	5.33
Total interest-earning assets	$	261,069	$	3,671	5.60		$	264,776	$	3,525	5.35
INTEREST-BEARING LIABILITIES
Demand deposits, money market, and savings accounts	$	85,164	$	382	1.78	%	$	87,651	$	327	1.50	%
Certificates of deposit		55,910		448	3.19			55,960		444	3.19
Total interest-bearing deposits		141,074		830	2.34			143,611		771	2.16
Borrowings		29,502		309	4.17			29,468		306	4.17
Total interest-bearing liabilities	$	170,576	$	1,139	2.66		$	173,079	$	1,077	2.50
Net interest-earning assets	$	90,493					$	91,697
Net interest income; average interest rate spread			$	2,532	2.94	%			$	2,448	2.85	%
Net interest margin⁽³⁾					3.86						3.72


(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 third quarter of 2024, non-interest income totaled $620,000, up $254,000 from $366,000 for the second quarter of 2024. The Company recognized as income a $280,000 Bank Enterprise Award ("BEA") Program grant from the CDFI Fund during the third quarter of 2024.

Non-interest Expense

Non-interest expense for the third quarter of 2024 totaled $2.3 million, up $192,000, or 9%, compared to the second quarter of 2024.

Salaries and employee benefits expense totaled $1.2 million for the third quarter of 2024, up $57,000, or 5%, compared to the previous quarter primarily due to raises that became effective at the start of the third quarter.

Data processing and communication expense totaled $238,000 for the third quarter of 2024, up $100,000, or 72%, compared to the second quarter of 2024. The Company upgraded to a new core processing system in the first quarter of 2024, and we settled our initial billings from the new service provider during the third quarter of 2024.

Professional fees totaled $151,000 for the third quarter of 2024, up $34,000, or 29%, from the prior quarter. Professional fees associated with obtaining the BEA Program grant totaled $42,000 and were expensed in the third quarter of 2024.

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 $280.6 million in assets at September 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)*	9/30/2024		6/30/2024		12/31/2023		9/30/2023
ASSETS
Non-interest-bearing cash	$	3,625	$	4,952	$	3,654	$	3,497
Interest-bearing cash and due from banks		42,128		70,503		15,357		9,769
Total cash and cash equivalents		45,753		75,455		19,011		13,266
Investment securities:
Securities available-for-sale, at fair value		32,196		29,748		70,540		71,808
Securities held-to-maturity		13,450		13,454		13,461		13,464
Loans receivable, net of unearned income		165,882		153,266		144,920		135,672
Allowance for loan losses		(2,414)		(2,215)		(2,124)		(2,036)
Loans receivable, net		163,468		151,051		142,796		133,636
Accrued interest receivable		815		737		906		806
Foreclosed assets		173		104		60		37
Premises and equipment, net		6,135		6,114		6,072		6,160
Stock in correspondent banks, at cost		1,939		1,919		1,878		1,858
Bank-owned life insurance		14,370		14,252		14,026		13,917
Other assets		2,318		2,499		2,182		2,995
TOTAL ASSETS	$	280,617	$	295,333	$	270,932	$	257,947

LIABILITIES
Deposits:
Non-interest-bearing	$	27,904	$	30,177	$	28,183	$	33,222
Interest-bearing		139,532		149,888		137,439		131,998
Total deposits		167,436		180,065		165,622		165,220
Borrowings		29,513		30,261		19,378		9,333
Other liabilities		2,001		3,994		1,373		1,231
TOTAL LIABILITIES		198,950		214,320		186,373		175,784

SHAREHOLDERS' EQUITY
Common stock		44		45		48		48
Additional paid-in capital		40,847		41,914		45,020		45,855
Unallocated common stock held by benefit plans		(5,777)		(6,116)		(6,221)		(6,274)
Retained earnings		49,234		48,787		52,949		52,642
Accumulated other comprehensive income (loss)		(2,681)		(3,617)		(7,237)		(10,108)
TOTAL SHAREHOLDERS' EQUITY		81,667		81,013		84,559		82,163
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	280,617	$	295,333	$	270,932	$	257,947

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

	Three Months Ended						Nine Months Ended
*(Dollars in thousands)*	9/30/2024		6/30/2024		9/30/2023		9/30/2024		9/30/2023
INTEREST INCOME
Loans receivable, including fees	$	2,717	$	2,383	$	1,852	$	7,314	$	5,172
Investment securities		255		210		403		790		1,243
Other		699		932		214		2,247		643
Total interest income		3,671		3,525		2,469		10,351		7,058
INTEREST EXPENSE
Deposits		830		771		452		2,370		1,092
Borrowings		309		306		69		908		205
Total interest expense		1,139		1,077		521		3,278		1,297
Net interest income		2,532		2,448		1,948		7,073		5,761
Provision for credit losses		337		99		-		531		-
Net interest income after provision for credit losses		2,195		2,349		1,948		6,542		5,761
NON-INTEREST INCOME
Service charges on deposit accounts		200		194		190		597		573
Bank-owned life insurance		118		113		104		344		300
Loss on sales of investment securities		-		-		-		(5,507)		-
Gain (loss) on disposals and sales of fixed assets		-		(5)		-		6		-
Federal community development grant		280		-		-		280		-
Other		22		64		12		103		44
Total non-interest income (loss)		620		366		306		(4,177)		917
NON-INTEREST EXPENSE
Salaries and employee benefits		1,200		1,143		1,141		3,603		3,522
Occupancy and equipment		193		183		198		572		609
Data processing and communication		238		138		228		1,170		675
Professional fees		151		117		100		375		346
Directors' fees		116		114		116		345		345
ATM and debit card		24		31		68		124		187
Foreclosed assets, net		33		26		2		67		67
Advertising and marketing		31		43		25		112		77
Franchise and shares tax		15		15		19		46		71
Other		259		258		184		705		558
Total non-interest expense		2,260		2,068		2,081		7,119		6,457
Income (loss) before income tax expense (benefit)		555		647		173		(4,754)		221
Income tax expense (benefit)		108		120		22		(1,039)		2
NET INCOME (LOSS)	$	447	$	527	$	151	$	(3,715)	$	219

Earnings (loss) per share:
Basic	$	0.11	$	0.13	$	0.03	$	(0.93)	$	0.05
Diluted		0.11		0.13		0.03		(0.93)		0.05

CATALYST BANCORP, INC. AND SUBSIDIARY
SELECTED FINANCIAL DATA

	Three Months Ended									Nine Months Ended
*(Dollars in thousands)*	9/30/2024			6/30/2024			9/30/2023			9/30/2024			9/30/2023
EARNINGS DATA
Total interest income	$	3,671		$	3,525		$	2,469		$	10,351		$	7,058
Total interest expense		1,139			1,077			521			3,278			1,297
Net interest income		2,532			2,448			1,948			7,073			5,761
Provision for credit losses		337			99			-			531			-
Total non-interest income (loss)		620			366			306			(4,177)			917
Total non-interest expense		2,260			2,068			2,081			7,119			6,457
Income tax expense (benefit)		108			120			22			(1,039)			2
Net income (loss)	$	447		$	527		$	151		$	(3,715)		$	219

AVERAGE BALANCE SHEET DATA
Total loans	$	161,410		$	150,257		$	134,851		$	152,066		$	134,013
Total interest-earning assets		261,069			264,776			251,139			265,212			253,946
Total assets		282,440			285,773			265,095			284,964			268,377
Total interest-bearing deposits		141,074			143,611			133,577			143,619			137,042
Total interest-bearing liabilities		170,576			173,079			142,883			172,608			146,304
Total deposits		169,437			173,326			170,589			172,461			172,556
Total shareholders' equity		81,307			80,965			84,059			81,645			85,623

SELECTED RATIOS
Return on average assets		0.63	%		0.74	%		0.23	%		(1.74)	%		0.11	%
Return on average equity		2.18			2.62			0.71			(6.08)			0.34
Efficiency ratio		71.72			73.47			92.32			245.83			96.69
Net interest margin^(TE)		3.86			3.72			3.13			3.56			3.08
Average equity to average assets		28.79			28.33			31.71			28.65			31.90
Common equity Tier 1 capital ratio		45.74			49.09			54.97
Tier 1 leverage capital ratio		27.43			26.88			31.08
Total risk-based capital ratio		46.99			50.34			56.23

NON-FINANCIAL DATA
Total employees (full-time equivalent)		48			47			47
Common shares issued and outstanding, end of period		4,399,127			4,478,527			4,848,290

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

	Three Months Ended									Nine Months Ended
*(Dollars in thousands)*	9/30/2024			6/30/2024			9/30/2023			9/30/2024		9/30/2023
ALLOWANCE FOR CREDIT LOSSES
Allowance for loan losses:
Beginning balance	$	2,215		$	2,068		$	2,081		$	2,124	$	1,807
CECL adoption impact		-			-			-			-		209
Provision for (reversal of) loan losses		330			185			(62)			557		(64)
Charge-offs		(184)			(57)			(9)			(364)		(26)
Recoveries		53			19			26			97		110
Net (charge-offs) recoveries		(131)			(38)			17			(267)		84
Ending balance	$	2,414		$	2,215		$	2,036		$	2,414	$	2,036

Allowance for unfunded commitments:
Beginning balance		224			310			218			257		-
CECL adoption impact		-			-			-			-		216
Provision for (reversal of) losses on unfunded commitments		7			(86)			62			(26)		64
Ending balance	$	231		$	224		$	280		$	231	$	280

Total allowance for credit losses, end of period	$	2,645		$	2,439		$	2,316		$	2,645	$	2,316
Total provision for credit losses		337			99			-			531		-

CREDIT QUALITY⁽¹⁾
Non-accruing loans	$	1,423		$	1,560		$	1,961
Accruing loans 90 days or more past due		15			40			127
Total non-performing loans		1,438			1,600			2,088
Foreclosed assets		173			104			37
Total non-performing assets	$	1,611		$	1,704		$	2,125

Total non-performing loans to total loans		0.87	%		1.04	%		1.54	%
Total non-performing assets to total assets		0.57			0.58			0.82