Financial Performance - Net income for the year ended December 31, 2022, was $180,000, a decrease from $1.9 million for the year ended December 31, 2021[171]. - Net income fell significantly from $1.92 million in 2021 to $0.18 million in 2022, representing a decrease of about 90.6%[218]. - Basic earnings per share dropped to $0.04 in 2022 from $0.39 in 2021, a decline of 89.7%[236]. - Non-interest income dropped from $2.63 million in 2021 to $1.17 million in 2022, a decline of about 55.5%[218]. - Non-interest income decreased significantly to $1,173,000 in 2022 from $2,626,000 in 2021, a decline of 55.3%[236]. - The efficiency ratio worsened to 102.55% in 2022 from 81.76% in 2021, indicating increased operational inefficiency[218]. - Net cash provided by operating activities decreased to $772,000 in 2022 from $3,428,000 in 2021, a reduction of 77.5%[240]. - Net income available to common shareholders decreased to $180,000 in 2022 from $1,915,000 in 2021[263]. Asset and Loan Composition - Total assets decreased by $22.3 million, or 7.8%, to $263.3 million as of December 31, 2022, compared to $285.6 million at the end of 2021[78]. - Total loans increased by $1.5 million, or 1.1%, to $133.6 million as of December 31, 2022, compared to $132.1 million in 2021[87]. - The loan portfolio composition shows that single-family residential loans accounted for $87.5 million, or 65.5% of total loans, while commercial and industrial loans increased by 65.3% to $13.8 million[87]. - The Bank's primary income sources are interest from loans and investment securities, with total real estate loans at $116.3 million, representing 87.0% of total loans[87]. - As of December 31, 2022, the total amount of loans due after December 31, 2023 is $125.166 million, with $43.805 million in fixed-rate loans and $81.361 million in floating or adjustable-rate loans[91]. - The allowance for loan losses totaled $1.8 million, or 1.35% of total loans, at December 31, 2022, down from $2.3 million, or 1.72% of total loans, at December 31, 2021[191]. - Non-accrual loans as a percentage of total loans outstanding rose to 1.12% in 2022 from 0.67% in 2021, reflecting a deterioration in asset quality[227]. Investment and Capital Management - The total investment securities portfolio at December 31, 2022, amounted to $93.1 million, representing 35.3% of total assets, with $64.2 million in pass-through mortgage-backed securities[103]. - The company had $79.6 million of investment securities classified as available for sale and $13.5 million classified as held to maturity as of December 31, 2022[115]. - The investment policy aims to manage interest rate sensitivity and maintain liquidity while generating favorable returns[102]. - The company has authority to invest in various securities, including mortgage-backed securities and U.S. Treasury obligations[101]. - Federal regulations require a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, and a total capital to risk-based assets ratio of 8.0%[205]. - Catalyst Bank met the criteria for being considered "well capitalized" as of December 31, 2022[214]. - Common equity Tier 1 capital ratio decreased from 63.51% in 2021 to 56.17% in 2022, indicating a decline in capital strength[227]. Operational Changes and Strategy - Catalyst Bancorp completed its initial public offering, issuing 5,290,000 shares for an aggregate of $52.9 million, with net proceeds of $50.8 million[65]. - The Bank's strategy includes increasing focus on small- to mid-sized businesses and enhancing commercial and multi-family residential real estate loans[72]. - The company aims to grow its loan portfolio with greater diversification, focusing on increasing commercial lending activities to enhance profitability and growth prospects[180]. - Catalyst Bank's business strategy includes expanding its franchise through potential acquisitions of other financial institutions in south Louisiana[180]. - The company has made several key hires, including a new Chief Financial Officer and a Chief Credit Officer, to support its business strategy[137]. - The company plans to repurchase up to 265,000 shares, approximately 5% of its outstanding common stock, under the 2023 Repurchase Plan[159]. Regulatory Compliance and Risk Management - At December 31, 2022, Catalyst Bank's capital exceeded all applicable regulatory requirements, ensuring compliance with capital adequacy guidelines[108]. - The bank received an "outstanding" Community Reinvestment Act rating in its most recent federal examination, reflecting its compliance with community credit needs[183]. - As of December 31, 2022, Catalyst Bank was in compliance with loans-to-one borrower limitations, which restrict loans to a single borrower to 15% of unimpaired capital and surplus[167]. - The bank's strategy for credit risk management emphasizes strong asset quality, experienced credit professionals, and active credit monitoring to reduce non-performing assets[180]. - The evaluation of the allowance for loan losses is sensitive to material variation and is based on estimates that may change as more information becomes available[191]. Market and Economic Conditions - Non-performing assets increased from December 31, 2021, to December 31, 2022, primarily due to a rise in non-accruing one- to four-family residential loans, influenced by reduced government stimulus and persistent inflation[100]. - The FDIC has increased deposit insurance assessment rates effective January 1, 2023, which may adversely affect operating expenses[221]. - The increase in unrealized losses on available-for-sale securities relates principally to increases in market rates of similar types of securities[207]. - The company expects a 10% to 20% increase in the allowance for loan losses due to the adoption of ASU 2016-13[259].
Catalyst Bancorp(CLST) - 2022 Q4 - Annual Report