Catalyst Bancorp Reports Decrease in Net Income and Total Assets for Q3 2022

Catalyst Bancorp, Inc. reported a net income of $139,000 for the three months ended September 30, 2022, a significant decrease from $1.4 million in the same period of the previous year. For the nine months ended September 30, 2022, the company recorded a net income of $26,000, down from $1.8 million in the prior year. The decline in profitability was largely attributed to the absence of a $1.8 million grant received in 2021 from the Community Development Financial Institution (CDFI) Rapid Response Program, which was recognized as non-interest income. Total interest income for the third quarter increased by 9.5% to $2.0 million, driven by higher income from investment securities, while interest income from loans decreased.

Total assets for Catalyst Bancorp decreased by $1.9 million, or 0.7%, to $283.4 million as of September 30, 2022, compared to $285.3 million at the end of 2021. This decline was primarily due to a $9.8 million drop in available-for-sale investment securities and a $4.7 million decrease in cash and cash equivalents. However, bank-owned life insurance increased by $10.2 million during the same period. Total loans receivable remained relatively stable, decreasing slightly by $141,000 to $131.7 million, with growth in commercial and industrial loans offset by declines in other segments.

In terms of operational developments, Catalyst Bancorp has focused on enhancing its community banking model, targeting small- to mid-sized businesses while continuing to serve its traditional customer base. The company also underwent a rebranding, officially changing its name to Catalyst Bank, which incurred pre-tax costs of $270,000. The bank's total deposits increased by $7.4 million, or 4.2%, to $184.2 million, primarily due to growth in negotiable order of withdrawal (NOW) accounts, despite a decline in certificates of deposit.

The allowance for loan losses decreased to $1.8 million, or 1.37% of total loans, from $2.3 million, or 1.73%, at the end of 2021. This reduction reflects a reversal of provisions made during the pandemic's initial impact on credit risk. Non-performing loans increased to $1.6 million, representing 1.21% of total loans, compared to 0.68% at the end of 2021. The company continues to monitor its loan portfolio closely, particularly in light of ongoing economic uncertainties.

Looking ahead, Catalyst Bancorp anticipates continued growth in its operations, although it expects non-interest expenses to rise as it expands its business and integrates new stock benefit plans. The company remains committed to maintaining a strong liquidity position and meeting regulatory capital requirements, having been categorized as well-capitalized as of September 30, 2022. The management is focused on navigating the challenges posed by market conditions and the ongoing effects of the COVID-19 pandemic while pursuing strategic growth opportunities.