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At June 30, 2024, the allowance for loan losses totaled $2.2 million, or 1.45% of total loans, compared to 1.44% of total loans at March 31, 2024. The allowance for credit losses on unfunded lending commitments totaled $224,000 and $310,000 at June 30 and March 31, 2024, respectively. The provision for credit losses, inclusive of the provision for unfunded commitments, for the second quarter of 2024 totaled $99,000 and was largely attributable to commercial loan growth and an increase in the allowance for credit losses on individually evaluated residential loans. Net loan charge-offs totaled $38,000 during the second quarter of 2024, compared to net charge-offs of $98,000 for the first quarter of 2024.

Investment Securities

Total investment securities were $43.2 million, or 14.6% of total assets, at June 30, 2024, up $4.2 million, or 10.8%, compared to March 31, 2024. 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 sales totaled $42.6 million. The Company re-deployed $4.9 million of the first quarter sales proceeds into investment securities during the second quarter of 2024.

At June 30, 2024 the amortized cost and fair value of pledged investment securities totaled $25.1 million and $21.0 million, respectively. The amortized cost and fair value of investment securities pledged as collateral for borrowings through the Bank Term Funding Program ("BTFP") totaled $21.3 million and $17.7 million, respectively, at June 30, 2024. The remainder of the pledged investment securities at June 30, 2024 served as collateral for public fund deposits.

Deposits

Total deposits were $180.1 million at June 30, 2024, up $10.4 million, or 6%, from March 31, 2024. The following table sets forth the composition of the Company's deposits as of the dates indicated. The ratio of the Company's total loans to total deposits was 85% as of June 30 and March 31, 2024, respectively.

Total public fund deposits amounted to $31.2 million, or 17% of total deposits, at June 30, 2024, compared to $22.7 million, or 13% of total deposits, at March 31, 2024. At June 30, 2024, approximately 84% of our total public fund deposits consisted of non-interest-bearing and interest-bearing demand deposits from municipalities within our market. 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.

Capital and Share Repurchases

At June 30 and March 31, 2024, consolidated shareholders' equity totaled $81.0 million, or 27.4% of total assets, and $81.3 million, or 28.8% of total assets, respectively.

The Company repurchased 79,802 shares of its common stock at an average cost per share of $11.88 during the second quarter of 2024, compared to 202,997 shares at an average cost per share of $12.12 during the first quarter of 2023. At June 30, 2024, the Company had common shares outstanding of 4,478,527. Under our current repurchase plan, 172,527 shares of the Company's common stock were available for repurchase at June 30, 2024. Since the announcement of our first share repurchase plan on January 26, 2023 and through June 30, 2024, the Company has repurchased a total of 811,473 shares of its common stock, or approximately 15% of the common shares originally issued, at an average cost per share of $11.98.

Net Interest Income

The net interest margin for the second quarter of 2024 was 3.72%, up 60 basis points compared to the prior quarter. For the second quarter of 2024, the average yield on interest-earning assets was 5.35%, up 65 basis points from the prior quarter, while the average rate paid on interest-bearing liabilities was 2.50%, up five basis points from the first quarter of 2024.

Net interest income for the second quarter of 2024 was $2.4 million, up $355,000, or 17%, compared to the first quarter of 2024. Total interest income was up $370,000, or 12%, while total interest expense increased $15,000, or 1%, in the second quarter of 2024 compared to the prior quarter. Interest income increased during the second quarter of 2024 mainly due to the re-investment of the investment securities sales proceeds from the previous quarter.

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.

Non-interest Income

For the second quarter of 2024, non-interest income totaled $366,000, up $5.5 million compared to the first quarter of 2024. Non-interest income for the first quarter of 2024 includes the $5.5 million loss on the sale of investment securities discussed previously.

Non-interest Expense

Non-interest expense for the second quarter of 2024 totaled $2.1 million, down $723,000, or 26%, compared to the first quarter of 2024. During the first quarter of 2024, the Company upgraded to a new core processing system and incurred $560,000 of data conversion and other associated expenses related to that change. Most of these costs are included in data processing and communication expense for the first quarter of 2024. Data processing and communication expense totaled $133,000 for the second quarter of 2024, down $87,000, or 40%, compared to the second quarter of 2023.

About Catalyst Bancorp, Inc.

Catalyst Bancorp, Inc. (Nasdaq: CLST) is a Louisiana corporation and registered bank holding company for Catalyst Bank, its wholly-owned subsidiary, with $295.3 million in assets at June 30, 2024. Catalyst Bank, formerly St. Landry Homestead Federal Savings Bank, has been in operation in the Acadiana region of south-central Louisiana for over 100 years. With a focus on fueling business and improving lives throughout the region, Catalyst Bank offers commercial and retail banking products through our six full-service branches located in Carencro, Eunice, Lafayette, Opelousas, and Port Barre. To learn more about Catalyst Bancorp and Catalyst Bank, visit www.catalystbank.com, or the website of the Securities and Exchange Commission, www.sec.gov.

Forward-looking Statements

This news release reflects industry conditions, Company performance and financial results and contains "forward-looking statements,' which may include forecasts of our financial results and condition, expectations for our operations and businesses, and our assumptions for those forecasts and expectations. Do not place undue reliance on forward-looking statements. These forward-looking statements are subject to a number of risk factors and uncertainties which could cause the Company's actual results and experience to differ materially from the anticipated results and expectation expressed in such forward-looking statements.

Factors that could cause our actual results to differ materially from our forward-looking statements are described under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Supervision and Regulation" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and in other documents subsequently filed by the Company with the Securities and Exchange Commission, available at the SEC's website and the Company's website, each of which are referenced above. To the extent that statements in this news release relate to future plans, objectives, financial results or performance by the Company, these statements are deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are generally identified by use of words such as "may," "believe," "expect," "anticipate," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology. 

Forward-looking statements represent management's beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements. All information is as of the date of this news release. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.