OPELOUSAS, La., May 2, 2024 /PRNewswire/ -- Catalyst Bancorp, Inc. (Nasdaq: "CLST") (the "Company"), the parent company for Catalyst Bank (the "Bank") (www.catalystbank.com), reported a net loss of $4.7 million for the first quarter of 2024, which includes a $5.5 million loss on the sale of investment securities and $560,000 of data conversion and other expenses associated with the Bank's upgrade to a new core processing system.  "Our net loss resulted from two strategic moves that significantly enhance our growth prospects," said Joe Zanco. "First, we completed a full upgrade of our banking systems and now offer among the very best technology in banking.  We're incredibly proud of our team for executing such a successful systems upgrade." "Second, we repositioned our balance sheet by selling lower-yielding investment securities. The sales generated $42.6 million in cash which we plan to invest in new loans, higher-yielding investment securities, share repurchases and debt repayments," continued Zanco.  Loans Loans totaled $143.5 million at March 31, 2024, down $1.4 million, or less than 1%, from December 31, 2023. The following table sets forth the composition of the Company's loan portfolio as of the dates indicated. (Dollars in thousands) 3/31/2024 12/31/2023 Increase (Decrease) Real estate loans One- to four-family residential $ 81,686 $ 83,623 $ (1,937) (2) % Commercial real estate 21,130 21,478 (348) (2) Construction and land 19,369 13,857 5,512 40 Multi-family residential 3,061 3,373 (312) (9) Total real estate loans 125,246 122,331 2,915 2 Other loans Commercial and industrial 15,711 19,984 (4,273) (21) Consumer 2,534 2,605 (71) (3) Total other loans 18,245 22,589 (4,344) (19) Total loans $ 143,491 $ 144,920 $ (1,429) (1) % In the first quarter of 2024, strong construction loan growth was offset primarily by net declines in our commercial and industrial and residential loan portfolios. Construction loan growth was largely driven by multi-family residential development and additional fundings on several existing construction loans. The following table summarizes the composition of our construction and land loan balances and commitments, including the related undisbursed amounts for construction projects in process as of March 31, 2024. (Dollars in thousands) Loan Balance Undisbursed Total Commitment Commercial construction and land loans Multi-family residential $ 4,782 $ 3,218 $ 8,000 Retail 711 4,769 5,480 Health service facilities 2,749 2,663 5,412 Hospitality 2,716 700 3,416 Residential subdivision development 813 9 822 Commercial land 297 - 297 Other commercial construction and development 3,790 289 4,079 Total commercial construction and land $ 15,858 $ 11,648 $ 27,506 Consumer construction and land loans Residential construction 2,851 1,241 4,092 Consumer land 660 - 660 Total consumer construction and land 3,511 1,241 4,752 Total construction and land $ 19,369 $ 12,889 $ 32,258 Based on total commitment and contractual maturity date, the weighted average term to maturity of our construction and land loan portfolio is approximately 11 months as of March 31, 2024. Credit Quality and Allowance for Credit Losses At March 31, 2024, non-performing assets ("NPAs") totaled $1.7 million, down $331,000, or 16.1%, compared to $2.1 million at December 31, 2023. Non-performing loans totaling $275,000 as of December 31, 2023 were paid-off or returned to accrual status during the first quarter of 2024. The ratio of NPAs to total assets was 0.61% and 0.76% at March 31, 2024 and December 31, 2023, respectively. Non-performing loans ("NPLs") comprised 1.03% of total loans at March 31, 2024, and 1.37% of total loans at December 31, 2023. At March 31, 2024 and December 31, 2023, 98% and 95% of total NPLs, respectively, were one- to four-family residential mortgage loans. At March 31, 2024, the allowance for loan losses totaled $2.1 million, or 1.44% of total loans, compared to 1.47% of total loans at December 31, 2023. The allowance for credit losses on unfunded lending commitments totaled $310,000 and $257,000 at March 31, 2024 and December 31, 2023, respectively. The provision for credit losses, inclusive of the provision for unfunded commitments, for the first quarter of 2024 totaled $95,000 and was largely attributable to growth in total construction loan commitments. Net loan charge-offs totaled $98,000 during the first quarter of 2024, compared to net charge-offs of $63,000 for the fourth quarter of 2023. Net loan charge-offs in both periods were primarily attributable to one- to four-family residential loans. Investment Securities Total investment securities were $39.0 million, or 13.8% of total assets, at March 31, 2024, down $45.0 million, or 53.6%, compared to December 31, 2023. During the first quarter of 2024, the Company sold $48.0 million of available-for-sale securities (quoted at book value) for a pre-tax loss of $5.5 million. Cash proceeds from the sale totaled $42.6 million. The Company expects to re-deploy the sales proceeds into a mix of loans, higher-yielding investment securities, share repurchases, and debt repayments. At March 31, 2024 the amortized cost and fair value of pledged investment securities totaled $25.4 million and $21.3 million, respectively. The amortized cost and fair value of investment securities pledged as collateral for borrowings through the Bank Term Funding Program ("BTFP") totaled $21.6 million and $18.0 million, respectively at March 31, 2024. The remainder of the pledged investment securities at March 31, 2024 served as collateral for public fund deposits. Deposits Total deposits were $169.6 million at March 31, 2024, up $4.0 million, or 2%, from December 31, 2023. The following table sets forth the composition of the Bank's deposits as of the dates indicated. The ratio of the Company's total loans to total deposits was 85% and 88% as of March 31, 2024, and December 31, 2023, respectively. (Dollars in thousands) 3/31/2024 12/31/2023 Increase (Decrease) Non-interest-bearing demand deposits $ 28,836 $ 28,183 $ 653 2 % Interest-bearing demand deposits 35,374 36,867 (1,493) (4) Money market 14,712 15,126 (414) (3) Savings 33,675 31,518 2,157 7 Certificates of deposit 57,040 53,928 3,112 6 Total deposits $ 169,637 $ 165,622 $ 4,015 2 % Total public fund deposits amounted to $22.7 million, or 13% of total deposits, at March 31, 2024, compared to $23.3 million, or 14% of total deposits, at December 31, 2023. At March 31, 2024, approximately 78% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits from municipalities within our market. Our total uninsured deposits (that is deposits in excess of the FDIC's insurance limit), inclusive of public funds, were approximately $41.7 million at March 31, 2024 and $44.6 million at December 31, 2023. Total uninsured non-public funds deposits were approximately $23.9 million and $26.3 million at March 31, 2024 and December 31, 2023, respectively. The full amount of our public fund deposits in excess of the FDIC's insurance limit are secured by pledging investment securities and portions of a custodial letter of credit from the Federal Home Loan Bank of Dallas. Borrowings Total borrowings at March 31, 2024 were $29.4 million, up $10.0 million from December 31, 2023. During the first quarter of 2024, the Bank increased its borrowings from the Federal Reserve Bank of Atlanta through the BTFP. At March 31, 2024, the Bank had one $20.0 million BTFP advance outstanding with a contractual interest rate of 4.76% and a maturity date of January 15, 2025. Capital and Share Repurchases The Company announced that its Board of Directors approved the Company's fourth share repurchase plan (the "May 2024 Repurchase Plan"). Under the May 2024 Repurchase Plan, the Company may purchase up to 227,000 shares, or approximately 5%, of the Company's outstanding shares of common stock. The Company repurchased 202,997 shares of its common stock at an average cost per share of $12.12 during the first quarter of 2024 under its November 2023 Repurchase Plan. At March 31, 2024, the Company had common shares outstanding of 4,558,329 and 25,329 of those shares were available for repurchase under the November 2023 Repurchase Plan. The Company completed the November 2023 Repurchase Plan in April 2024.   At March 31, 2024 and December 31, 2023, consolidated shareholders' equity totaled $81.4 million, or 28.8% of total assets, and $84.7 million, or 31.2% of total assets, respectively. Net Interest Income The net interest margin for the first quarter of 2024 was 3.15%, up one basis point compared to the prior quarter. For the first quarter of 2024, the average yield on interest-earning assets was 4.71%, up 54 basis points from the prior quarter, while the average rate paid on interest-bearing liabilities was 2.42%, up 69 basis points from the fourth quarter of 2023. Net interest income for the first quarter of 2024 was $2.1 million, up $148,000, or 8%, compared to the fourth quarter of 2023. Total interest income was up $552,000, or 21%, while total interest expense increased $404,000, or 63%, in the first quarter of 2024 compared to the prior quarter. Interest expense increased largely due to an increase in the average rate paid for deposits and an increase in the volume of BTFP borrowings during the first quarter of 2024. The following table sets forth, for the periods indicated, the Company's total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. Taxable equivalent ("TE") yields have been calculated using a marginal tax rate of 21%. All average balances are based on daily balances. Three Months Ended 3/31/2024 12/31/2023 (Dollars in thousands) AverageBalance Interest AverageYield/ Rate AverageBalance Interest AverageYield/ Rate INTEREST-EARNING ASSETS Loans receivable(1) $ 144,428 $ 2,214 6.17 % $ 140,757 $ 2,066 5.82 % Investment securities(TE)(2) 76,432 325 1.72 96,640 400 1.67 Other interest earning assets 48,779 616 5.08 11,276 137 4.83 Total interest-earning assets(TE) $ 269,639 $ 3,155 4.71 % $ 248,673 $ 2,603 4.17 % INTEREST-BEARING LIABILITIES Demand deposits, money market, and savings accounts $ 89,109 $ 317 1.43 % $ 82,474 $ 185 0.89 %