Catalyst Bancorp, Inc. reported a net income of $73,000 for the first quarter of 2023, a significant turnaround from a net loss of $141,000 during the same period in 2022. The company’s total interest income increased by 18.6% to $2.3 million, driven by higher yields on loans and investment securities. Net interest income rose by 12.3% to $2.0 million, reflecting an improved interest rate spread of 2.77% compared to 2.41% in the prior year. The increase in interest income was attributed to a rise in average loan yields, which reached 4.94%, up from 4.84% a year earlier.
Total assets for Catalyst Bancorp increased by 4.7% to $275.8 million as of March 31, 2023, compared to $263.3 million at the end of 2022. This growth was primarily fueled by a $14.1 million increase in cash and cash equivalents, which was linked to a corresponding rise in total deposits, which reached $179.7 million, up 8.9% from $165.1 million. The increase in deposits was largely due to a rise in public funds, which accounted for 22.3% of total deposits at the end of the quarter.
In terms of operational metrics, the company’s total loans decreased slightly by 0.7% to $132.7 million, with real estate loans making up the majority of the portfolio. The allowance for loan losses increased to $2.1 million, or 1.56% of total loans, reflecting the adoption of the Current Expected Credit Loss (CECL) model under ASC 326. The company did not record any provision for credit losses during the quarter, contrasting with a reversal of $71,000 in the same period last year.
Catalyst Bancorp also initiated a share repurchase plan in January 2023, allowing for the buyback of up to 265,000 shares, of which 231,388 shares were repurchased at an average cost of $12.79 per share. The company announced a second repurchase plan in April 2023, permitting the purchase of an additional 252,000 shares. As of March 31, 2023, total shareholders' equity stood at $86.1 million, down from $88.5 million at the end of 2022, primarily due to the stock repurchases.
Looking ahead, Catalyst Bancorp aims to continue its strategic focus on community banking, targeting small to mid-sized businesses while maintaining its traditional customer base. The company remains well-capitalized, exceeding all regulatory capital requirements, and anticipates sufficient liquidity to meet its operational needs and growth objectives.