PR Newswire
OPELOUSAS, La., July 27, 2023
OPELOUSAS, La., July 27, 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 second quarter of 2023. For the quarter, the Company reported net income of $39,000, compared to $73,000 for the first quarter of 2023.
"One by one, we're adding new customers and expanding existing relationships as our bankers deliver responsive and customized service across Acadiana," said Joe Zanco, President and Chief Executive Officer of the Company and the Bank. "We're building a dedicated, fully engaged, high character company where people want to bank and maximize the impact of their work."
Capital and Share Repurchases
The Bank continues to maintain an exceptional capital position with a total risk-based capital ratio of 57.27% and 57.69% at June 30, 2023 and March 31, 2023, respectively. At June 30, 2023 and March 31, 2023, consolidated shareholders' equity totaled $84.3 million, or 31.7% of total assets, and $86.1 million, or 31.2% 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 second quarter of 2023, the Company repurchased 129,070 shares of its common stock at an average cost per share of $10.65. At June 30, 2023, 156,542 shares were available for repurchase under the April 2023 Repurchase Plan.
Loans
Loans totaled $133.5 million at June 30, 2023, up $803,000, or less than 1%, from March 31, 2023. During the second quarter of 2023, commercial and industrial loan growth was partially offset by net declines in our real estate loan portfolio. The decline in construction and land loans was primarily driven by the conversion of construction loans to permanent financing.
The following table sets forth the composition of the Company's loan portfolio as of the dates indicated.
(Dollars in thousands) | 6/30/2023 | 3/31/2023 | Increase (Decrease) | |||||||||
Real estate loans | ||||||||||||
One- to four-family residential | $ | 85,655 | $ | 86,464 | $ | (809) | (1) | % | ||||
Commercial real estate | 19,175 | 19,303 | (128) | (1) | ||||||||
Construction and land | 4,620 | 6,536 | (1,916) | (29) | ||||||||
Multi-family residential | 3,094 | 3,146 | (52) | (2) | ||||||||
Total real estate loans | 112,544 | 115,449 | (2,905) | (3) | ||||||||
Other loans | ||||||||||||
Commercial and industrial | 17,609 | 14,109 | 3,500 | 25 | ||||||||
Consumer | 3,340 | 3,132 | 208 | 7 | ||||||||
Total other loans | 20,949 | 17,241 | 3,708 | 22 | ||||||||
Total loans | $ | 133,493 | $ | 132,690 | $ | 803 | 1 | % | ||||
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 64% of total loans and commercial real estate loans accounted for 14% of total loans at June 30, 2023. Our commercial real estate loans are generally secured by retail and industrial use buildings, hotels, strip shopping centers and other properties used for commercial purposes. Approximately 66% of our real estate loans have adjustable rates and, of our total real estate loans, approximately $55.1 million, or 49%, 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 13% of total loans, at June 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 37% of our commercial and industrial loans have adjustable rates and, of total commercial and industrial loans, approximately $8.8 million, or 50% are scheduled to re-price or mature during the next 12 months.
Credit Quality and Allowance for Loan Losses
At June 30 and March 31, 2023, non-performing assets ("NPAs") totaled $2.2 million and $2.0 million, respectively, and the ratio of NPAs to total assets was 0.82% and 0.73%, respectively, at such dates. Non-performing loans ("NPLs") totaled $1.9 million, or 1.42% of total loans, at June 30, 2023 and $1.7 million, or 1.27% of total loans, at March 31, 2023. At June 30, 2023 and March 31, 2023, greater than 94% of total NPLs were one- to four-family residential mortgage loans.
Net loan recoveries totaled $13,000 during the second quarter of 2023, compared to net recoveries of $54,000 for the first quarter of 2023. During the first quarter of 2023, the Company recovered $41,000 of principal from a previously charged-off residential mortgage loan.
At June 30 and March 31, 2023, the allowance for loan losses totaled $2.1 million, or 1.56% of total loans. The total provision for credit losses on loans and unfunded commitments was zero for the first six months of 2023.
Investment Securities
Total investment securities were $89.3 million, or 34% of total assets, at June 30, 2023. Our investment securities portfolio consists primarily of debt obligations issued by the U.S. government and government agencies and government-sponsored mortgage-backed securities. The Company has not purchased investment securities since the fourth quarter of 2022. We have also not sold or reclassified securities during this current period of interest rate hikes by the Federal Reserve, which began in March 2022.
At June 30, 2023, 87% of total investment securities, based on amortized cost, were classified as available-for-sale. Net unrealized losses on securities available-for-sale totaled $10.9 million at June 30, 2023, compared to $10.1 million at March 31, 2023. For the second quarter of 2023, the average yield on the total investment securities portfolio was 1.65%, down one basis point from the first quarter of 2023.
The following table summarizes the amortized cost and fair value of our investment securities portfolio as of June 30, 2023.
June 30, 2023 | ||||||||||||
(Dollars in thousands) | Amortized | Gross | Gross | Fair Value | ||||||||
Securities available-for-sale | ||||||||||||
Mortgage-backed securities | $ | 69,804 | $ | 1 | $ | (9,477) | $ | 60,328 | ||||
U.S. Government and agency obligations | 10,984 | - | (976) | 10,008 | ||||||||
Municipal obligations | 6,031 | 1 | (492) | 5,540 | ||||||||
Total available-for-sale | $ | 86,819 | $ | 2 | $ | (10,945) | $ | 75,876 | ||||
Securities held-to-maturity | ||||||||||||
U.S. Government and agency obligations | $ | 13,005 | $ | - | $ | (2,487) | $ | 10,518 | ||||
Municipal obligations | 463 | - | (31) | 432 | ||||||||
Total held-to-maturity | $ | 13,468 | $ | - | $ | (2,518) | $ | 10,950 | ||||
Deposits and Liquidity
Total deposits were $171.4 million at June 30, 2023, down $8.3 million, or 5%, from March 31, 2023. Compared to December 31, 2022, total deposits were up $6.3 million, or 4%, at June 30, 2023. During the first and second quarters of 2023, the average balance of total deposits was $174.6 million and $172.5 million, respectively. The decrease during the second quarter of 2023 was primarily due to decreases in public fund deposits.
Our public funds consist primarily of non-interest bearing and NOW account deposits from municipalities within our market. At June 30, 2023, total public fund deposits amounted to $24.7 million, or 14% of total deposits, compared to $40.1 million, or 22% of total deposits, at March 31, 2023.
Our total uninsured deposits (that is deposits in excess of the FDIC's insurance limit), inclusive of public funds, were approximately $50.2 million at June 30, 2023 and $59.7 million at March 31, 2023. Total uninsured non-public funds deposits were approximately $30.5 million and $24.6 million at June 30 and March 31, 2023, respectively. The full amount of our public fund deposits in excess of the FDIC's insurance limit are secured by pledging investment securities or by allocating available portions of a letter of credit from the FHLB to collateralize the balances. At June 30, 2023, the amortized cost and fair value of investment securities pledged to secure public fund deposits totaled $48.3 million and $41.8 million, respectively.
The following table sets forth the composition of the Bank's deposits as of the dates indicated.
(Dollars in thousands) | 6/30/2023 | 3/31/2023 | Increase (Decrease) | |||||||||
Non-interest-bearing demand deposits | $ | 41,482 | $ | 35,483 | $ | 5,999 | 17 | % | ||||
NOW | 34,159 | 49,252 | (15,093) | (31) | ||||||||
Money market | 18,798 | 16,153 | 2,645 | 16 | ||||||||
Savings | 26,927 | 28,200 | (1,273) | (5) | ||||||||
Certificates of deposit | 50,007 | 50,624 | (617) | (1) | ||||||||
Total deposits | $ | 171,373 | $ | 179,712 | $ | (8,339) | (5) | % | ||||
The ratio of the Company's total loans to total deposits was 78% and 74% as of June 30 and March 31, 2023, respectively. In addition to our deposit base, our secondary sources of liquidity include borrowings from the FHLB and a line of credit from our primary correspondent bank. At June 30, 2023, we had available capacity to borrow $47.9 million from the FHLB and an additional $17.8 million on a line of credit with our primary correspondent bank.
Net Interest Income
The net interest margin for the second quarter of 2023 was 3.02%, down eight basis points compared to the prior quarter. The average yield on interest-earning assets increased by 11 basis points to 3.68% for the second quarter of 2023, while the average rate on interest-bearing liabilities increased by 37 basis points to 1.17%, compared to the first quarter of 2023.
Net interest income for the second quarter of 2023 was $1.9 million, down $63,000, or 3%, from the first quarter of 2023 primarily due to an increase in interest expense on deposits (up $118,000, or 51%) partially offset by an increase in interest income on loans (up $62,000, or 4%). Demand for higher rates on deposit accounts remained persistent during the second quarter of 2023 largely driven by competitor offerings.
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 | ||||||||||||||||||
6/30/2023 | 3/31/2023 | |||||||||||||||||
(Dollars in thousands) | Average | Interest | Average | Average | Interest | Average | ||||||||||||
INTEREST-EARNING ASSETS | ||||||||||||||||||
Loans receivable(1) | $ | 133,394 | $ | 1,691 | 5.09 | % | $ | 133,781 | $ | 1,629 | 4.94 | % | ||||||
Investment securities(TE)(2) | 101,630 | 413 | 1.65 | 103,739 | 427 | 1.66 | ||||||||||||
Other interest earning assets | 18,403 | 218 | 4.73 | 19,820 | 211 | 4.33 | ||||||||||||
Total interest-earning assets(TE) | $ | 253,427 | $ | 2,322 | 3.68 | % | $ | 257,340 | $ | 2,267 | 3.57 | % | ||||||
INTEREST-BEARING LIABILITIES | ||||||||||||||||||
NOW, money market and savings | $ | 83,962 | $ | 142 | 0.68 | % | $ | 90,972 | $ | 81 | 0.36 | % | ||||||
Certificates of deposit | 51,185 | 209 | 1.64 | 51,528 | 152 | 1.20 | ||||||||||||
Total interest-bearing deposits | 135,147 | 351 | 1.04 | 142,500 | 233 | 0.66 | ||||||||||||
FHLB advances | 9,264 | 68 | 2.94 | 9,216 | 68 | 2.96 | ||||||||||||
Total interest-bearing liabilities | $ | 144,411 | $ | 419 | 1.17 | % | $ | 151,716 | $ | 301 | 0.80 | % | ||||||
Net interest-earning assets | $ | 109,016 | $ | 105,624 | ||||||||||||||
Net interest income; average interest rate | $ | 1,903 | 2.51 | % | $ | 1,966 | 2.77 | % | ||||||||||
Net interest margin(TE)(3) | 3.02 | % | 3.10 | % | ||||||||||||||
(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 second quarter of 2023 was $317,000, up $23,000, or 8%, from the first quarter of 2023 primarily due to higher debit card income.
Non-interest Expense
Non-interest expense for the second quarter of 2023 totaled $2.2 million, up $6,000 compared to the first quarter of 2023.
Salaries and employee benefits expense totaled $1.2 million for the second quarter of 2023, down $25,000, or 2%, from the prior quarter. Compensation expense related to our ESOP was down from the prior quarter due to a decline in the average market price of the Company's common stock.
Occupancy and equipment expense totaled $198,000 for the second quarter of 2023, down $15,000, or 7%, from the prior quarter primarily due to a decline in repairs and maintenance expense.
Professional fees totaled $117,000 for the second quarter of 2023, down $12,000, or 9%, from the prior quarter primarily due to lower audit and consulting expenses.
Foreclosed assets expense totaled $63,000 for the second quarter of 2023, up $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 $320,000 at March 31, 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 $266.0 million in assets at June 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 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) | 6/30/2023 | 3/31/2023 | 12/31/2022 | 6/30/2022 | ||||||||
ASSETS | ||||||||||||
Non-interest-bearing cash | $ | 4,769 | $ | 3,531 | ||||||||
