Catalyst Bancorp(US:CLST)2025-07-24 21:29markdown [Executive Summary](index=1&type=section&id=Executive%20Summary) Overview of the company's Q2 2025 financial performance and management's strategic perspective [Second Quarter 2025 Financial Highlights](index=1&type=section&id=1.1%20Second%20Quarter%202025%20Financial%20Highlights) Net income for Q2 2025 decreased slightly to $521,000, while loan and deposit portfolios experienced growth Financial Performance Summary | Metric | Q2 2025 | Q1 2025 | | :---------------- | :------ | :------ | | Net Income | $521,000 | $586,000 | [Management Commentary](index=1&type=section&id=1.2%20Management%20Commentary) Management expressed satisfaction with strong loan and deposit growth, noting success in new business and market momentum - Management is pleased with both loan and deposit growth, noting a strong success rate in new business and building momentum[2](index=2&type=chunk) [Loan Portfolio Analysis](index=2&type=section&id=Loan%20Portfolio%20Analysis) Analysis of the company's loan portfolio composition, growth, and changes across various categories [Loan Composition and Growth](index=2&type=section&id=2.1%20Loan%20Composition%20and%20Growth) Total loans increased by $1.5 million to $167.6 million, primarily due to commercial real estate and multi-family growth, offsetting other declines Loan Portfolio Details | Loan Category | 6/30/2025 ($ thousands) | 3/31/2025 ($ thousands) | Change ($ thousands) | Change (%) | | :------------------------ | :---------------------- | :---------------------- | :------------------- | :--------- | | One- to four-family residential | 80,195 | 82,025 | (1,830) | (2)% | | Commercial real estate | 33,976 | 22,103 | 11,873 | 54% | | Construction and land | 20,650 | 32,038 | (11,388) | (36)% | | Multi-family residential | 5,432 | 2,530 | 2,902 | 115% | | Total real estate loans | 140,253 | 138,696 | 1,557 | 1% | | Commercial and industrial | 25,035 | 25,447 | (412) | (2)% | | Consumer | 2,281 | 1,934 | 347 | 18% | | Total other loans | 27,316 | 27,381 | (65) | -% | | **Total loans** | **167,569** | **166,077** | **1,492** | **1%** | - **Four construction loans** totaling **$14.5 million** were converted to amortizing real estate loans, with **$2.9 million** classified as multi-family and the remainder as commercial real estate[4](index=4&type=chunk) [Major Loan Segments](index=2&type=section&id=2.2%20Major%20Loan%20Segments) Commercial real estate saw substantial growth in retail, hospitality, and health services, while construction and land loans declined due to conversions Segment Details | Segment | 6/30/2025 ($ thousands) | 3/31/2025 ($ thousands) | Change ($ thousands) | Change (%) | | :---------------------------- | :---------------------- | :---------------------- | :------------------- | :--------- | | **Commercial Real Estate** | | | | | | Retail | 9,739 | 3,723 | 6,016 | 162% | | Hospitality | 5,849 | 3,342 | 2,507 | 75% | | Health service facilities | 3,345 | 389 | 2,956 | 760% | | **Construction and Land** | | | | | | Multi-family residential | 8,997 | 11,297 | (2,300) | (20)% | | Hospitality | - | 2,716 | (2,716) | (100)% | | Retail | - | 6,077 | (6,077) | (100)% | | Consumer residential | 2,222 | 1,531 | 691 | 45% | | **Commercial and Industrial** | | | | | | Oilfield services | 8,081 | 8,474 | (393) | (5)% | | Industrial equipment | 8,453 | 8,285 | 168 | 2% | [Credit Quality and Allowance for Credit Losses](index=3&type=section&id=Credit%20Quality%20and%20Allowance%20for%20Credit%20Losses) Details on the company's credit quality, including non-performing assets and allowance for credit losses [Non-Performing Assets and Loans](index=3&type=section&id=3.1%20Non-Performing%20Assets%20and%20Loans) Non-performing assets and loans slightly increased in Q2 2025, with residential mortgage loans forming the majority of NPLs Non-Performing Assets and Loans Summary | Metric | 6/30/2025 ($ thousands) | 3/31/2025 ($ thousands) | Change ($ thousands) | Change (%) | | :----------------------------------- | :---------------------- | :---------------------- | :------------------- | :--------- | | Non-performing assets (NPAs) | 1,800 | 1,700 | 100 | 5.88% | | NPAs to total assets | 0.64% | 0.63% | 0.01% | | | Non-performing loans (NPLs) | 1,670 | 1,645 | 25 | 1.52% | | NPLs to total loans | 1.00% | 0.99% | 0.01% | | | NPLs as 1-4 family residential loans | 99% | 98% | 1% | | [Allowance for Credit Losses and Net Charge-offs](index=3&type=section&id=3.2%20Allowance%20for%20Credit%20Losses%20and%20Net%20Charge-offs) Allowance for credit losses on loans slightly decreased, with zero provision, while net charge-offs marginally rose from residential mortgages and overdrawn accounts Allowance for Credit Losses Details | Metric | 6/30/2025 ($ thousands) | 3/31/2025 ($ thousands) | Change ($ thousands) | Change (%) | | :----------------------------------- | :---------------------- | :---------------------- | :------------------- | :--------- | | Allowance for credit losses on loans | 2,400 | 2,500 | (100) | (4)% | | ACL to total loans | 1.45% | 1.51% | (0.06)% | | | Provision for credit losses | 0 | 0 | 0 | 0% | | Net loan charge-offs | 42 | 39 | 3 | 7.69% | - Net loan charge-offs in Q1 and Q2 2025 were mainly due to residential mortgage loans and overdrawn deposit accounts[8](index=8&type=chunk) [Deposit Analysis](index=4&type=section&id=Deposit%20Analysis) Examines the composition and growth of the company's deposit base, including public fund deposits [Deposit Composition and Growth](index=4&type=section&id=4.1%20Deposit%20Composition%20and%20Growth) Total deposits grew by $1.6 million to $182.2 million, driven by non-interest-bearing demand and savings accounts, partially offset by other deposit decreases Deposit Category Details | Deposit Category | 6/30/2025 ($ thousands) | 3/31/2025 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------------------- | :---------------------- | :---------------------- | :------------------- | :--------- | | Non-interest-bearing demand deposits | 31,155 | 26,093 | 5,062 | 19% | | Interest-bearing demand deposits | 35,307 | 42,737 | (7,430) | (17)% | | Money market | 9,437 | 9,737 | (300) | (3)% | | Savings | 51,001 | 42,542 | 8,459 | 20% | | Certificates of deposit | 55,311 | 59,489 | (4,178) | (7)% | | **Total deposits** | **182,211** | **180,598** | **1,613** | **1%** | - The change in deposits was mainly due to fluctuations in public funds and inflows from commercial customers[10](index=10&type=chunk) - The ratio of total loans to total deposits remained stable at **92%** for both June 30 and March 31, 2025[11](index=11&type=chunk) [Public Fund Deposits](index=4&type=section&id=4.2%20Public%20Fund%20Deposits) Public fund deposits slightly decreased to 16% of total deposits, with a larger portion shifting into savings accounts Public Fund Deposit Breakdown | Metric | 6/30/2025 ($ thousands) | 3/31/2025 ($ thousands) | Change ($ thousands) | Change (%) | | :----------------------------------- | :---------------------- | :---------------------- | :------------------- | :--------- | | Total public fund deposits | 29,000 | 29,800 | (800) | (2.68)% | | Public funds as % of total deposits | 16% | 17% | (1)% | | | Public funds in non-interest/interest-bearing demand deposits | 64% | 80% | (16)% | | - At June 30, 2025, a larger portion of public funds were held in savings accounts compared to March 31, 2025[12](index=12&type=chunk) [Capital and Shareholder Activity](index=4&type=section&id=Capital%20and%20Shareholder%20Activity) Reviews the company's shareholders' equity and activities related to its share repurchase program [Shareholders' Equity](index=4&type=section&id=5.1%20Shareholders'%20Equity) Consolidated shareholders' equity remained stable at $80.8 million, representing 29.5% of total assets Shareholders' Equity Summary | Metric | 6/30/2025 ($ thousands) | 3/31/2025 ($ thousands) | Change ($ thousands) | Change (%) | | :--------------------------- | :---------------------- | :---------------------- | :------------------- | :--------- | | Consolidated shareholders' equity | 80,800 | 80,600 | 200 | 0.25% | | Equity as % of total assets | 29.5% | 29.7% | (0.2)% | | [Share Repurchases](index=4&type=section&id=5.2%20Share%20Repurchases) The company continued its share repurchase program, buying back 62,385 shares in Q2 2025, significantly reducing originally issued common shares since January 2023 Share Repurchase Activity | Metric | Q2 2025 | Q1 2025 | | :----------------------------------- | :----------- | :----------- | | Shares repurchased | 62,385 | 72,949 | | Average cost per share | $11.91 | $11.86 | | Shares available for repurchase (6/30/2025) | 51,816 | N/A | | Total shares repurchased since 1/26/2023 | 1,147,184 | N/A | | % of common shares originally issued repurchased | ~22% | N/A | | Common shares outstanding (6/30/2025) | 4,142,816 | N/A | [Net Interest Income and Margin](index=5&type=section&id=Net%20Interest%20Income%20and%20Margin) Analyzes the company's net interest income, margin, and performance of interest-earning assets and liabilities [Net Interest Income Performance](index=5&type=section&id=6.1%20Net%20Interest%20Income%20Performance) Net interest income increased by 4% in Q2 2025 due to higher loan income and lower deposit costs, improving net interest margin by nine basis points Net Interest Income and Margin Metrics | Metric | Q2 2025 ($ thousands) | Q1 2025 ($ thousands) | Change ($ thousands) | Change (%) | | :---------------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Net interest income | 2,500 | 2,365 | 103 | 4% | | Net interest margin | 3.98% | 3.89% | 0.09% | | | Average yield on interest-earning assets | 5.58% | 5.54% | 0.04% | | | Average rate paid on interest-bearing liabilities | 2.51% | 2.56% | (0.05)% | | - Total interest income increased by **$87,000** (**3%**) due to higher income on loans, while total interest expense decreased by **$16,000** (**2%**) due to a decline in the cost of deposits[16](index=16&type=chunk) [Interest-Earning Assets and Interest-Bearing Liabilities](index=5&type=section&id=6.2%20Interest-Earning%20Assets%20and%20Interest-Bearing%20Liabilities) Average interest-earning assets slightly increased, driven by loans, while average interest-bearing liabilities decreased, mainly in demand, money market, and savings accounts Category Details | Category | Average Balance (Q2 2025, $ thousands) | Interest (Q2 2025, $ thousands) | Yield/Rate (Q2 2025) | Average Balance (Q1 2025, $ thousands) | Interest (Q1 2025, $ thousands) | Yield/Rate (Q1 2025) | | :---------------------------- | :----------------------------------- | :------------------------------ | :------------------- | :----------------------------------- | :------------------------------ | :------------------- | | **Interest-Earning Assets** | | | | | | | | Loans receivable | 167,627 | 2,792 | 6.68% | 166,145 | 2,738 | 6.68% | | Investment securities | 48,285 | 294 | 2.49% | 46,960 | 275 | 2.35% | | Other interest earning assets | 33,225 | 375 | 4.53% | 33,585 | 361 | 4.36% | | **Total interest-earning assets** | **249,137** | **3,461** | **5.58%** | **246,690** | **3,374** | **5.54%** | | **Interest-Bearing Liabilities** | | | | | | | | Demand, money market, savings | 92,088 | 466 | 2.03% | 94,133 | 483 | 2.08% | | Certificates of deposit | 57,018 | 459 | 3.23% | 55,846 | 458 | 3.32% | | **Total interest-bearing deposits** | **149,106** | **925** | **2.49%** | **149,979** | **941** | **2.54%** | | Borrowings | 9,619 | 68 | 2.84% | 9,573 | 68 | 2.85% | | **Total interest-bearing liabilities** | **158,725** | **993** | **2.51%** | **159,552** | **1,009** | **2.56%** | [Non-Interest Income and Expense](index=6&type=section&id=Non-Interest%20Income%20and%20Expense) Details the company's non-interest income and expenses, highlighting key drivers of changes [Non-Interest Income](index=6&type=section&id=7.1%20Non-Interest%20Income) Non-interest income significantly decreased in Q2 2025, primarily due to the absence of Q1 2025 insurance proceeds from foreclosed properties Total non-interest income Summary | Metric | Q2 2025 ($ thousands) | Q1 2025 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Total non-interest income | 344 | 553 | (209) | (38)% | - Non-interest income for Q1 2025 included **$216,000** in insurance proceeds for fire and flood damages related to foreclosed properties, which was not present in Q2 2025[21](index=21&type=chunk) [Non-Interest Expense](index=6&type=section&id=7.2%20Non-Interest%20Expense) Total non-interest expense slightly decreased in Q2 2025, with a foreclosed assets write-down and increased loan collection related costs Total non-interest expense Summary | Metric | Q2 2025 ($ thousands) | Q1 2025 ($ thousands) | Change ($ thousands) | Change (%) | | :-------------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Total non-interest expense | 2,200 | 2,200 | (20) | (1)% | | Foreclosed assets expense | 14 | 88 | (74) | (84)% | | Other non-interest expense | 234 | 207 | 27 | 13% | - Foreclosed assets expense in Q2 2025 included a **$14,000** write-down, compared to net losses of **$88,000** on the sale of foreclosed assets in Q1 2025[22](index=22&type=chunk) - The increase in other non-interest expense was primarily due to higher loan collection related expenses[23](index=23&type=chunk) [Company Overview](index=6&type=section&id=Company%20Overview) Provides background information on Catalyst Bancorp, Inc. and its banking operations [About Catalyst Bancorp, Inc.](index=6&type=section&id=8.1%20About%20Catalyst%20Bancorp,%20Inc.) Catalyst Bancorp, Inc. is a Louisiana-based bank holding company for Catalyst Bank, operating for over 100 years in Acadiana with $273.8 million in assets and six branches - Catalyst Bancorp, Inc. (Nasdaq: CLST) is the parent company of Catalyst Bank, with **$273.8 million** in assets at June 30, 2025[24](index=24&type=chunk) - Catalyst Bank, formerly St. Landry Homestead Federal Savings Bank, has operated for **over 100 years** in south-central Louisiana's Acadiana region[24](index=24&type=chunk) - The bank offers commercial and retail banking products through **six full-service branches** located in Carencro, Eunice, Lafayette, Opelousas, and Port Barre[24](index=24&type=chunk) [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) This disclaimer notes forward-looking statements reflect management's beliefs but are subject to risks and uncertainties, with no obligation for the company to update them - The news release contains forward-looking statements, which are forecasts of financial results and operations, subject to risk factors and uncertainties[26](index=26&type=chunk) - Factors that could cause actual results to differ are described in the Company's Annual Report on Form 10-K and other SEC filings[27](index=27&type=chunk) - Forward-looking statements are management's beliefs, not guarantees of future performance, and the Company undertakes no obligation to update them[28](index=28&type=chunk) [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) Presents the company's unaudited consolidated balance sheets and income statements for reported periods [Consolidated Statements of Financial Condition (Balance Sheet)](index=8&type=section&id=10.1%20Consolidated%20Statements%20of%20Financial%20Condition) This section presents the unaudited consolidated balance sheet for Catalyst Bancorp, Inc., detailing assets, liabilities, and equity across recent quarters Consolidated Balance Sheet | Metric ($ thousands) | 6/30/2025 | 3/31/2025 | 12/31/2024 | 6/30/2024 | | :--------------------------- | :-------- | :-------- | :--------- | :-------- | | Total Assets | 273,785 | 271,648 | 276,697 | 295,333 | | Total Liabilities | 192,986 | 191,057 | 196,493 | 214,320 | | Total Shareholders' Equity | 80,799 | 80,591 | 80,204 | 81,013 | | Loans receivable, net | 165,138 | 163,577 | 164,554 | 151,051 | | Total deposits | 182,211 | 180,598 | 185,674 | 180,065 | [Consolidated Statements of Income (Income Statement)](index=9&type=section&id=10.2%20Consolidated%20Statements%20of%20Income) This section provides the unaudited consolidated income statements for Catalyst Bancorp, Inc., detailing revenues, expenses, and net income for recent periods Consolidated Income Statement | Metric ($ thousands) | 3 Months Ended 6/30/2025 | 3 Months Ended 3/31/2025 | 3 Months Ended 6/30/2024 | 6 Months Ended 6/30/2025 | 6 Months Ended 6/30/2024 | | :--------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Total interest income | 3,461 | 3,374 | 3,525 | 6,835 | 6,680 | | Total interest expense | 993 | 1,009 | 1,077 | 2,002 | 2,139 | | Net interest income | 2,468 | 2,365 | 2,448 | 4,833 | 4,541 | | Provision for credit losses | - | - | 99 | - | 194 | | Total non-interest income (loss) | 344 | 553 | 366 | 897 | (4,797) | | Total non-interest expense | 2,178 | 2,198 | 2,068 | 4,376 | 4,859 | | Income tax expense (benefit) | 113 | 134 | 120 | 247 | (1,147) | | Net Income (Loss) | 521 | 586 | 527 | 1,107 | (4,162) | | Basic EPS | $0.14 | $0.16 | $0.13 | $0.30 | ($1.03) | | Diluted EPS | $0.14 | $0.16 | $0.13 | $0.30 | ($1.03) | [Selected Financial Data and Ratios](index=10&type=section&id=Selected%20Financial%20Data%20and%20Ratios) Provides key financial data, average balance sheet figures, and performance ratios for analysis [Earnings Data](index=10&type=section&id=11.1%20Earnings%20Data) This section summarizes key earnings data, including trends in interest income, expense, net interest income, and net income over recent periods Earnings Performance Data | Metric ($ thousands) | 3 Months Ended 6/30/2025 | 3 Months Ended 3/31/2025 | 3 Months Ended 6/30/2024 | 6 Months Ended 6/30/2025 | 6 Months Ended 6/30/2024 | | :--------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Total interest income | 3,461 | 3,374 | 3,525 | 6,835 | 6,680 | | Total interest expense | 993 | 1,009 | 1,077 | 2,002 | 2,139 | | Net interest income | 2,468 | 2,365 | 2,448 | 4,833 | 4,541 | | Provision for credit losses | - | - | 99 | - | 194 | | Total non-interest income (loss) | 344 | 553 | 366 | 897 | (4,797) | | Total non-interest expense | 2,178 | 2,198 | 2,068 | 4,376 | 4,859 | | Income tax expense (benefit) | 113 | 134 | 120 | 247 | (1,147) | | Net income (loss) | 521 | 586 | 527 | 1,107 | (4,162) | [Average Balance Sheet Data](index=10&type=section&id=11.2%20Average%20Balance%20Sheet%20Data) This section provides average balance sheet figures, offering insights into the average levels of key assets and liabilities over reported periods Average Balance Sheet Figures | Metric ($ thousands) | 3 Months Ended 6/30/2025 | 3 Months Ended 3/31/2025 | 3 Months Ended 6/30/2024 | 6 Months Ended 6/30/2025 | 6 Months Ended 6/30/2024 | | :--------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Total loans | 167,627 | 166,145 | 150,257 | 166,891 | 147,342 |\ | Total interest-earning assets | 249,137 | 246,690 | 264,776 | 247,920 | 267,306 |\ | Total assets | 270,788 | 268,232 | 285,773 | 269,517 | 286,240 |\ | Total interest-bearing deposits | 149,106 | 149,979 | 143,611 | 149,540 | 144,906 |\ | Total interest-bearing liabilities | 158,725 | 159,552 | 173,079 | 159,136 | 173,636 |\ | Total deposits | 179,426 | 177,106 | 173,326 | 178,272 | 173,990 |\ | Total shareholders' equity | 80,611 | 80,426 | 80,965 | 80,519 | 81,816 | [Key Financial Ratios](index=10&type=section&id=11.3%20Key%20Financial%20Ratios) This section presents key financial performance and capital adequacy ratios, including profitability, efficiency, and capital levels for reported periods Key Financial Performance Ratios | Metric | 3 Months Ended 6/30/2025 | 3 Months Ended 3/31/2025 | 3 Months Ended 6/30/2024 | 6 Months Ended 6/30/2025 | 6 Months Ended 6/30/2024 | | :--------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Return on average assets | 0.77% | 0.89% | 0.74% | 0.83% | (2.92)% |\ | Return on average equity | 2.59% | 2.96% | 2.62% | 2.77% | (10.23)% |\ | Efficiency ratio | 77.46% | 75.31% | 73.47% | 76.37% | (1,901.18)% |\ | Net interest margin (TE) | 3.98% | 3.89% | 3.72% | 3.93% | 3.42% |\ | Average equity to average assets | 29.77% | 29.98% | 28.33% | 29.88% | 28.58% |\ | Common equity Tier 1 capital ratio | 43.72% | 46.95% | 49.09% | N/A | N/A |\ | Tier 1 leverage capital ratio | 27.56% | 29.45% | 26.88% | N/A | N/A |\ | Total risk-based capital ratio | 44.98% | 48.20% | 50.34% | N/A | N/A | - Capital ratios are preliminary end-of-period ratios for the Bank only and are subject to change[34](index=34&type=chunk) [Allowance for Credit Losses Details](index=11&type=section&id=11.4%20Allowance%20for%20Credit%20Losses%20Details) This section details movements in the allowance for credit losses (ACL) for loans and unfunded commitments, including balances, provisions, charge-offs, and recoveries Loans: Details | Metric ($ thousands) | 3 Months Ended 6/30/2025 | 3 Months Ended 3/31/2025 | 3 Months Ended 6/30/2024 | 6 Months Ended 6/30/2025 | 6 Months Ended 6/30/2024 | | :--------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | **Loans:** | | | | | | | Beginning balance | 2,500 | 2,522 | 2,068 | 2,522 | 2,124 | | Provision for credit losses | (27) | 17 | 185 | (10) | 227 | | Charge-offs | (63) | (53) | (57) | (116) | (180) | | Recoveries | 21 | 14 | 19 | 35 | 44 | | Net (charge-offs) recoveries | (42) | (39) | (38) | (81) | (136) | | Ending balance | 2,431 | 2,500 | 2,215 | 2,431 | 2,215 | | **Unfunded commitments:** | | | | | | | Beginning balance | 104 | 121 | 310 | 121 | 257 | | Provision for (reversal of) credit losses on unfunded commitments | 27 | (17) | (86) | 10 | (33) | | Ending balance | 131 | 104 | 224 | 131 | 224 | | Total provision for credit losses | - | - | 99 | - | 194 | [Credit Quality Metrics](index=11&type=section&id=11.5%20Credit%20Quality%20Metrics) This section provides detailed credit quality metrics, including non-accruing, past due, and non-performing loans, foreclosed assets, and their ratios to total loans and assets Non-accruing loans Summary | Metric ($ thousands) | 6/30/2025 | 3/31/2025 | 6/30/2024 | | :----------------------------------- | :-------- | :-------- | :-------- | | Non-accruing loans | 1,455 | 1,554 | 1,560 | | Accruing loans 90 days or more past due | 215 | 91 | 40 | | Total non-performing loans | 1,670 | 1,645 | 1,600 | | Foreclosed assets | 80 | 77 | 104 | | Total non-performing assets | 1,750 | 1,722 | 1,704 | | Total non-performing loans to total loans | 1.00% | 0.99% | 1.04% | | Total non-performing assets to total assets | 0.64% | 0.63% | 0.58% | - Credit quality data and ratios are as of the end of each period presented[36](index=36&type=chunk)