Catalyst Bancorp, Inc. Announces 2022 Third Quarter Results

OPELOUSAS, La., Oct. 27, 2022 /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 2022. For the quarter, the Company reported net income of $139,000, up $121,000 from the second quarter of 2022. During the second quarter of 2022, the Bank rebranded from St. Landry Homestead Federal Savings Bank to Catalyst Bank.  Pre-tax costs associated with the rebranding of the Bank totaled $208,000 during the second quarter of 2022, compared to $28,000 during the third quarter of 2022. The second quarter of 2022 also included $171,000 of non-interest income attributable to a Bank Enterprise Award ("BEA") Program grant from the Community Development Financial Institution ("CDFI") Fund.

"We just celebrated our first anniversary as a public company and will celebrate the Bank's centennial in November," said Joe Zanco, President and Chief Executive Officer of the Company and the Bank. "Our team is tremendously excited with the response we've received from our rebranding to Catalyst Bank."

Loans receivable totaled $131.7 million at September 30, 2022, down $1.9 million, or 1%, from June 30, 2022. During the third quarter of 2022, additional fundings on existing construction and land loans were largely offset by paydowns across other segments of the portfolio. PPP loans, which totaled $22,000 at June 30, 2022, were fully paid-off during the third quarter of 2022.

The following table sets forth the composition of the Company's loan portfolio as of the dates indicated.

Non-performing assets ("NPAs") totaled $1.9 million at September 30, 2022, up $313,000, or 19%, compared to June 30, 2022, primarily due to an increase in past due loans. The ratio of NPAs to total assets was 0.68% at September 30, 2022, compared to 0.57% at June 30, 2022. Non-performing loans ("NPLs") totaled $1.6 million, or 1.21% of total loans, at September 30, 2022 and $1.3 million, or 0.96% of total loans, at June 30, 2022. At September 30, 2022, approximately 88% of total NPLs were one- to four-family residential mortgage loans, compared to 91% at June 30, 2022.

The allowance for loan losses totaled $1.8 million, or 1.37% of total loans, at September 30, 2022, down $176,000 from $2.0 million, or 1.48% of total loans, at June 30, 2022. The reduction in the allowance for loan losses largely reflects the reversal of certain provisions made for estimated loan losses during 2020 associated with our initial assessment of COVID-19's impact on credit risk.  The Company recorded a reversal to the allowance for loan losses of $115,000 during the third quarter of 2022, compared to a reversal of $189,000 for the second quarter of 2022. Net loan charge-offs totaled $61,000 during the third quarter of 2022, compared to net loan charge-offs of $4,000 for the second quarter of 2022. The third quarter charge-offs were primarily related to two residential mortgage loans.

Total investment securities were $92.0 million at September 30, 2022, down $3.7 million, or 4%, from June 30, 2022. At September 30 and June 30, 2022, 87% of total investment securities, based on amortized cost, were classified as available-for-sale. Net unrealized losses on securities available-for-sale totaled $12.6 million at September 30, 2022, compared to $8.4 million at June 30, 2022. The increase in unrealized losses on available-for-sale securities related principally to increases in market interest rates for similar securities. For the third quarter of 2022, the average yield on the investment securities portfolio was 1.48%, up 11 basis points from the second quarter of 2022.

Total deposits were $184.2 million at September 30, 2022, up $5.5 million, or 3%, from June 30, 2022. The increase in deposits was primarily due to an increase in NOW account balances, partially offset by declines in certificates of deposit and money market accounts. Total average deposits were $185.5 million for the third quarter of 2022, up $2.1 million, or 1%, from the prior quarter.

The following table sets forth the composition of the Bank's deposits as of the dates indicated.

Our net interest margin for the third quarter of 2022 was 2.75%, up four basis points compared to the prior quarter. The average yield on interest-earning assets increased by five basis points to 2.99% for the third quarter of 2022, while the average rate on interest-bearing liabilities increased by one basis point to 0.40%, compared to the second quarter of 2022.

Net interest income for the third quarter of 2022 was $1.9 million, up $60,000, or 3%, from the second quarter of 2022 primarily due to an increase in interest income from interest-bearing cash included in other interest income (up $127,000, or 219%), partially offset by a decline in interest income from loans. Rising market interest rates have increased the yields on our interest-bearing cash accounts and securities portfolio.

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.

Non-interest income for the third quarter of 2022 was $296,000, down $83,000, or 22%, from the second quarter of 2022. During the second quarter of 2022, the Company received and recognized into income a $171,000 BEA Program grant from the CDFI Fund. In addition, the Company disposed of fixed assets totaling $77,000, net of accumulated depreciation, during the second quarter of 2022. Of the assets disposed, $55,000 was attributable to branch signage that was replaced due to our rebranding.

Non-interest expense for the third quarter of 2022 totaled $2.1 million, down $253,000, or 11%, compared to the second quarter of 2022. Total non-interest expense for the third quarter of 2022 included $28,000 of rebranding-related expenses, compared to $153,000 for the second quarter of 2022.

Salaries and employee benefits expense totaled $1.2 million for the third quarter of 2022, down $50,000, or 4%, from the second quarter of 2022 primarily due to a decrease in our employee count.

Directors' fees totaled $75,000 for the third quarter of 2022, up $20,000, or 36%, from the second quarter of 2022 mainly due to stock compensation expense related to awards granted under the Company's 2022 Stock Option Plan and 2022 Recognition and Retention Plan and Trust Agreement in September 2022. Total stock compensation expense, allocated between salaries and employee benefits expense and directors' fees, during the fourth quarter of 2022 is expected to be approximately $141,000, compared to $47,000 for the third quarter of 2022.

Data processing and communication expense totaled $216,000, down $26,000, or 11%, from the previous quarter primarily due to the absence of rebranding expenses during the third quarter of 2022.

Advertising and marketing expense totaled $36,000 for the third quarter of 2022, down $73,000, or 67%, from the second quarter of 2022. Advertising and marketing expense included rebranding costs of $3,000 in the third quarter of 2022, compared to $87,000 in the second quarter of 2022.

Other non-interest expense totaled $184,000 for the third quarter of 2022, down $56,000, or 23%, from the second quarter of 2022. Other non-interest expense included rebranding costs of $7,000 and $18,000 during the third and second quarters of 2022, respectively. In addition, the Company benefited from recoveries on charged-off deposit accounts and certain cost saving initiatives during the third quarter of 2022.

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 $283.4 million in assets at September 30, 2022. Catalyst Bank, formerly St. Landry Homestead Federal Savings Bank, has been in operation in the Acadiana region of south-central Louisiana for 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.

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.

For more information:
Joe Zanco, President and CEO
(337) 948-3033

SOURCE Catalyst Bancorp, Inc.