Catalyst Bancorp, Inc. Announces 2024 Third Quarter Results
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
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