Catalyst Bancorp (CLST) Q1 2024 earnings summary

Executive summary

• Q1 net loss was $4.7 million vs. $73,000 net income YoY, driven mainly by a $5.5 million securities-sale loss and higher expenses; results included $560,000 in core-system conversion costs.

• Net interest income was $2.1 million, up 7.2% YoY and $148,000, or 8%, QoQ; net interest margin was 3.15%.

• Loans ended at $143.5 million, down 1% QoQ; deposits were $169.6 million, up 2%.

Financial highlights

• Interest income increased 39.2% to $3.2 million; interest expense rose 247.8% to $1.0 million YoY.

• Non-interest income was a $5.2 million loss, including a $5.5 million securities-sale loss; non-interest expense rose 27.7% YoY and 32% QoQ to $2.8 million.

• Income tax benefit was $1.3 million vs. $2,000 expense YoY; basic and diluted EPS were $(1.14), vs. $0.02. Q4 2023 net income was $320,000, with diluted EPS of $0.08.

• Cash and cash equivalents ended at $76.0 million, up from $19.0 million at year-end; total assets rose 4.1% to $282.0 million.

Outlook and guidance

• Core-system upgrade is expected to generate annual savings greater than $200,000; $560,000 of data conversion and related expenses were incurred in Q1.

• $42.6 million in securities-sale proceeds are planned for redeployment into loans, higher-yielding securities, share repurchases and debt repayments.

• Management expects sufficient funds for current commitments and most maturing time deposits to be retained; lower retention could prompt secondary borrowings or higher deposit rates, increasing interest expense.

• Construction and land loan portfolio weighted-average contractual term to maturity was ~11 months at March 31, 2024.