Catalyst Bancorp(CLST) - 2024 Q4 - Annual Report

Loan Portfolio - As of December 31, 2024, Catalyst Bancorp's loan portfolio totaled $167.1 million, representing 60.4% of total assets[24] - Single-family residential mortgage loans accounted for$ 81.1 million, or 48.5% of the total loan portfolio, with an average outstanding balance of $71,000 per loan[30] - Commercial real estate and multi-family residential loans totaled$ 24.7 million, or 14.7% of the total loan portfolio[36] - The commercial real estate loan portfolio was $22.1 million, or 13.2% of the total loan portfolio, with an average loan size of$ 243,000[37] - As of December 31, 2024, the outstanding balance of construction and land loans totaled $32.9 million, representing 19.7% of total loans outstanding, more than doubling since December 31, 2023[42] - Commercial and industrial loans totaled$ 26.4 million, or 15.8% of the total loan portfolio, at December 31, 2024, with net charge-offs of $128,000 during the year, primarily from unsecured loans[47][48] - The company’s consumer loans amounted to$ 1.9 million, or 1.3% of the total loan portfolio, with net charge-offs of $35,000 in 2024, up from$ 22,000 in 2023[50][51] - The outstanding balance of non-residential commercial construction loans was $27.3 million as of December 31, 2024, with all loans performing in accordance with their terms[43] - Single-family residential construction loans totaled$ 3.1 million, with the largest loan in this segment being $2.2 million[45] - Loans classified as "substandard" totaled$ 2.8 million at December 31, 2024, down from $3.3 million in 2023, while "special mention" loans increased to$ 478,000 from $212,000[59] Financial Performance - The company reported a net loss of$ 3.1 million for 2024, compared to net income of $526,000 for 2023[176] - Net interest income increased by$ 1.8 million, or 23.9%, to $9.5 million, with net interest margin rising 59 basis points to 3.65%[176] - Total interest income for the year ended December 31, 2024, was$ 13.9 million, an increase from $9.7 million in 2023[195] - Total non-interest income for 2024 was a loss of$ 3.8 million, compared to a gain of $1.6 million in 2023[195] - The efficiency ratio increased to 160.51% in 2024 from 92.29% in 2023, indicating a decline in operational efficiency[195] - Non-accrual loans as a percent of total loans outstanding decreased to 0.94% in 2024 from 1.36% in 2023[196] Asset Management - Total assets increased to$ 276.7 million at December 31, 2024, up $5.8 million or 2.1% from the previous year[176] - The investment securities portfolio amounted to$ 42.2 million, representing 15.2% of total assets as of December 31, 2024[70] - Total investment securities decreased by $41.8 million, or 49.8%, to$ 42.2 million as of December 31, 2024, compared to $84.0 million in 2023[212] - The largest component of the investment securities portfolio was pass-through mortgage-backed securities totaling$ 27.2 million[70] - The company sold 50 available-for-sale investment securities during 2024, resulting in a total loss of $5.5 million[70] Capital and Regulatory Compliance - Catalyst Bank's capital exceeded all applicable regulatory requirements as of December 31, 2024[97] - Catalyst Bank is considered "well capitalized" as of December 31, 2024, meeting the criteria with a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, and a common equity Tier 1 ratio of 6.5% or greater[116] - Catalyst Bancorp is subject to the FRB's capital adequacy guidelines, with a threshold for the "small bank holding company" exception increased to$ 3.0 billion, meaning it is not subject to capital requirements until consolidated assets exceed this amount[136] - The company requires a minimum debt service coverage ratio of 125% for commercial and industrial loans[47] - Catalyst Bank is in compliance with the loans-to-one borrower limitations, which restrict loans to a single borrower to 15% of unimpaired capital and surplus[102] Strategic Initiatives - Catalyst Bancorp's strategy has shifted to focus on attracting small- to mid-sized businesses and increasing holdings of commercial and multi-family residential real estate loans[20] - The company aims to grow its loan portfolio with greater diversification, focusing on commercial lending[179] - A new core processing system was implemented in the first quarter of 2024 to enhance technology tools and online services[179] - Catalyst Bancorp may consider future acquisitions of banking and financial services companies, although no agreements are currently in place[13] - The company plans to expand through potential acquisitions of other financial institutions in its market area[179] Taxation and Legal Compliance - Catalyst Bancorp is subject to federal income taxation in the same manner as other corporations, with specific exceptions noted[145] - The Louisiana Corporation Income Tax for 2024 applies at graduated rates from 3.5% on the first $50,000 of taxable income to 7.5% on income exceeding$ 150,000, with a flat rate of 5.5% starting in 2025[151] - The Sarbanes-Oxley Act of 2002 aims to improve corporate responsibility and enhance penalties for accounting improprieties at publicly traded companies[142] - The Gramm-Leach-Bliley Act of 1999 allows qualifying bank holding companies to engage in a broader array of financial activities, including insurance underwriting and investment banking[135]