• BayFirst Financial Corp. Reports Third Quarter 2023 Results; Highlighted by Third Consecutive Quarter of Earnings Growth and Continued Core Loan and Deposit Growth

    Source: Nasdaq GlobeNewswire / 26 Oct 2023 15:00:01   America/Chicago

    ST. PETERSBURG, Fla., Oct. 26, 2023 (GLOBE NEWSWIRE) -- BayFirst Financial Corp. (NASDAQ: BAFN) (“BayFirst” or the “Company”), parent company of BayFirst National Bank (the “Bank”) today reported net income of $1.9 million, or $0.41 per diluted common share, for the third quarter of 2023 compared to $1.4 million, or $0.29 per diluted common share, in the second quarter of 2023. Net income from continuing operations was $2.0 million for the third quarter of 2023, compared to net income from continuing operations of $1.4 million in the second quarter of 2023 and $3.1 million in the third quarter of 2022.

    The increase in earnings from continuing operations during the third quarter of 2023, as compared to the second quarter of 2023, was primarily the result of higher noninterest income of $3.7 million, or 34.2%, substantially attributable to an increase in gain on sale of government guaranteed loans of $1.1 million and an increase in the fair value gain on government guaranteed loans of $1.6 million. The increase was partially offset by increases in deposit interest expense of $2.0 million and noninterest expense of $1.0 million.

    “BayFirst’s third quarter results reflect the continued progress in our efforts to fine tune our operations with third quarter net income increasing 39% over the prior quarter, highlighted by the strength of our community banking operations and record quarterly production by our CreditBench government guaranteed lending division," stated Anthony N. Leo, Chief Executive Officer. "Although net interest margin compressed in the third quarter as compared to the prior quarter, the number of checking accounts in our bank has expanded by 22% year-to-date, while transaction account balances have grown by 23% over the same period. We cater to individuals, families, and small businesses, with a focus on checking and savings accounts which are not only less rate sensitive, but also far less volatile in times of economic disruptions.”

    “The third quarter progress is the result of our continued focus on becoming the premier community bank in the Tampa Bay market,” stated Thomas G. Zernick, President. “During the third quarter, we opened our tenth banking center in Sarasota, representing our third banking center in the Sarasota Bradenton portion of the Tampa Bay region. In addition, construction is progressing on our Sarasota South Tamiami Trail Banking Center, which will be our marquee office in the Sarasota area and is expected to open later this year. CreditBench produced $155.9 million in new loans during the quarter, with $84.9 million of that production coming from the SBA small loan program, particularly loans of $150 thousand or less which carry an 85% government guaranty as well as a higher yield than other SBA loans. In addition, loans originated through our community bank also had solid growth during the quarter, increasing $21.6 million from the prior quarter end."

    Third Quarter 2023 Performance Review

    • The Company’s government guaranteed loan origination platform, CreditBench, originated $155.9 million in new government guaranteed loans during the third quarter of 2023, an increase of 25.2% over $124.5 million of loans produced in the previous quarter, and an 11.8% increase over $139.5 million of loans produced during the third quarter of 2022. Demand remains strong for the Company's BOLT loan program, an SBA 7(a) loan product designed to expeditiously provide working capital loans of $150 thousand or less to businesses throughout the country. Since the launch in late second quarter of 2022, the Company has originated 2,629 BOLT loans totaling $339.5 million, of which 652 BOLT loans totaling $84.9 million were originated during the quarter.
    • Loans held for investment, excluding PPP loans of $15.2 million, increased by $42.2 million, or 5.1%, during the third quarter of 2023 to $863.2 million and $204.5 million, or 31.1%, over the past year. During the quarter, the Company originated $197.1 million of loans, purchased $6.9 million of government guaranteed loans, and sold $131.9 million of government guaranteed loan balances.
    • Deposits increased $73.0 million, or 7.7%, during the third quarter of 2023 and increased $232.1 million, or 29.5%, over the past year to $1.02 billion. During the third quarter of 2023, interest-bearing transaction account balances increased $14.3 million and time deposit balances increased $113.6 million. These increases were partially offset by decreases in savings and money market deposit account balances of $51.8 million and noninterest-bearing deposit account balances of $3.1 million. The time deposit balance increase included a $6.4 million decrease in short-term Certificate of Deposit Account Registry Service ("CDARS") and listing service balances.
    • Balance sheet liquidity remains strong, with $117.2 million in cash balances and time deposits with other banks as of September 30, 2023. Additionally, the Company maintains significant borrowing capacity through the FHLB and Federal Reserve discount window, furthermore approximately 85% of the Company's deposits are insured.
    • Book value and tangible book value at September 30, 2023 were $20.12 per common share, up from $19.85 at June 30, 2023.
    • Net interest margin including discontinued operations decreased by 82 bps to 3.36% in the third quarter of 2023, from 4.18% in the second quarter of 2023 primarily due to increases in deposit costs. Furthermore, the second quarter margin was inflated by 30 basis points related to the accelerated recognition of unamortized deferred premiums on the sale of $10.9 million of unguaranteed loan balances. Management does not anticipate further need to raise above market priced deposits which should support the improvement in our net interest margin in the fourth quarter.

    Results of Operations

    Net Income (Loss)

    Net income was $1.9 million for the third quarter of 2023, compared to $1.4 million in the second quarter of 2023 and a net loss of $1.4 million in the third quarter of 2022. The increase in net income for the third quarter of 2023 from the preceding quarter was primarily due to an increase of $1.1 million in gain on sale of government guaranteed loans and an increase in the fair value gains on government guaranteed loans of $1.6 million, partially offset by higher interest expense on deposits of $2.0 million and higher noninterest expense of $1.0 million. The increase in net income from the third quarter of 2022 was due to an increase in gain on sale of government guaranteed loans of $3.5 million, an increase in other noninterest income of $1.4 million, and a decrease of $4.4 million in the net loss on discontinued operations. This was partially offset by an increase of $2.3 million in provision for credit losses and an increase in noninterest expense of $3.3 million. In the third quarter of 2022, the Company made the strategic decision to discontinue the Bank’s nationwide residential mortgage operations which resulted in the net loss from discontinued operations.

    In the first nine months of 2023, net income was $4.0 million, an increase of $5.7 million from the net loss of $1.7 million for the first nine months of 2022. The increase was primarily the result of higher interest income from continuing operations of $23.6 million, an increase of $7.5 million in government guaranteed loan fair value gains, an increase in other noninterest income of $1.9 million, an increase of $1.7 million in gain on sale of government guaranteed loans, and a decrease of $4.8 million in net loss from discontinued operations. This was partially offset by an increase of $16.9 million in interest expense on deposits, an increase of $9.1 million in provision for credit losses, and an increase of $7.5 million in noninterest expense.

    Net Interest Income and Net Interest Margin

    Net interest income from continuing operations was $8.4 million in the third quarter of 2023, a decrease of $1.7 million, or 17.0%, from the second quarter of 2023, and a decrease of $0.8 million, or 8.5%, from the third quarter of 2022. The net interest margin rate compressed by 82 basis points, of which 30 basis points was related to the recognition of unamortized deferred premiums related to the sale of the $10.9 million of high yielding, but also higher risk, unguaranteed SBA loans in the second quarter of 2023. The remaining compression was primarily from higher deposit interest expense during the quarter, specifically the Company's 6%, 13-month time deposit special, which ended on August 31, 2023. The additional time deposits, which replaced other non-core funding, will fund current and future small dollar SBA loans currently earning Prime plus 4.75%. Although time deposit balances increased in the third quarter, $71 million of time deposits are maturing in the fourth quarter of 2023, the majority of which are not expected to renew.

    The decrease during the third quarter of 2023 as compared to the year ago quarter was mainly due to higher interest expense on deposits of $7.2 million, partially offset by an increase in loan interest income, including fees, of $5.4 million.

    Net interest income from continuing operations was $27.6 million in the first nine months of 2023, an increase of $6.2 million, or 28.6%, from $21.4 million in the first nine months of 2022. The increase was mainly due to an increase in loan interest income, including fees, of $20.7 million, partially offset by an increase in deposit interest expense of $16.9 million.

    Noninterest Income

    Noninterest income from continuing operations was $14.7 million for the third quarter of 2023, an increase of $3.8 million, or 34.2%, from $10.9 million in the second quarter of 2023, and an increase of $4.9 million, or 49.7%, from $9.8 million in the third quarter of 2022. The increase in the third quarter of 2023, as compared to the prior quarter, was primarily due to an increase of $1.1 million in gain on sale of government guaranteed loans, net, and an increase of $1.6 million in fair value gains related to held for investment government guaranteed loans. The increase in the third quarter of 2023, as compared to the third quarter of 2022, was the result of increases in fair value gains related to held for investment government guaranteed loans of $3.5 million and other noninterest income of $1.4 million. The increase in other noninterest income was primarily attributable to higher government guaranteed loan packaging fees of $1.0 million.

    Noninterest income from continuing operations was $35.1 million for the first nine months of 2023, an increase of $12.0 million, or 51.5%, from $23.1 million in the first nine months of 2022. The increase was primarily due to higher gains on the sale of government guaranteed loans of $1.7 million, a $7.5 million increase in fair value gains related to held for investment government guaranteed loans, and an increase in other noninterest income of $1.9 million. The increase in other noninterest income was primarily due to higher government guaranteed loan packaging fees of $1.6 million.

    Noninterest Expense

    Noninterest expense from continuing operations was $17.4 million in the third quarter of 2023, which was a $1.0 million, or 6.2%, increase from $16.4 million in the second quarter of 2023 and a $3.2 million, or 23.1%, increase compared to $14.2 million in the third quarter of 2022. The increase in the third quarter of 2023, as compared to the prior quarter, was primarily due to increases in compensation and incentive costs related to higher loan production, data processing expense, and nondeferrable origination expenses on fair value loans. The increase in the third quarter of 2023, as compared to the third quarter of 2022 was primarily due to higher compensation costs of $1.7 million and higher loan origination expense of $0.9 million.

    Noninterest expense from continuing operations was $49.2 million in the first nine months of 2023, which was a $7.5 million, or 18.0%, increase from $41.7 million in the first nine months of 2022. The increase was primarily the result of higher compensation costs and loan origination and collection expense.

    Discontinued Operations

    Net loss on discontinued operations was $47 thousand in the third quarter of 2023, which was $15 thousand higher than the net loss of $32 thousand in the second quarter of 2023. The company recorded net loss on discontinued operations of $4.5 million in the third quarter of 2022. The loss in the second and third quarters of 2023 were partially due to lagging facilities costs as we seek to sublease vacant space. The $4.4 million decrease in the net loss from the year-ago quarter was primarily due to a decrease in noninterest expense of $13.9 million, partially offset by decreases in residential loan fee income of $7.1 million, interest income of $0.9 million, and income tax benefit of $1.5 million. In the third quarter of 2022, the Company recognized $3.7 million of restructuring charges from the discontinuation of the residential mortgage operations which was recorded to noninterest expense.

    Net loss from discontinued operations was $207 thousand in the first nine months of 2023, which was a $4.8 million reduction from a net loss of $5.0 million in the first nine months of 2022. The majority of the discontinued loss in 2022 was recorded in the third quarter of 2022. As such, the net loss from discontinued operations for the first nine months of 2022 included restructuring charges of $4.3 million and the discontinued loss in the first nine months of 2023 represented a modest amount of trailing expenses from the discontinuation.

    Balance Sheet

    Assets

    Total assets increased $46.6 million, or 4.3%, during the third quarter of 2023 to $1.13 billion, mainly due to new loan production, partially offset by the sale of $131.9 million in government guaranteed loans and an increase of $8.8 million in cash and cash equivalents.

    Loans

    Loans held for investment, excluding PPP loans, increased $42.2 million, or 5.1%, during the third quarter of 2023 and $204.5 million, or 31.1%, over the past year to $863.2 million, due to increases in both conventional community bank loans and government guaranteed loans, partially offset by government guaranteed loan sales. PPP loans, net of deferred origination fees, decreased $0.4 million in the third quarter of 2023 to $15.2 million.

    Deposits

    Deposits increased $73.0 million, or 7.7%, during the third quarter of 2023 and $232.1 million, or 29.5%, from September 30, 2022, ending the third quarter of 2023 at $1.02 billion. During the third quarter, there was growth in interest-bearing transaction account balances of $14.3 million and time deposit balances of $113.6 million, partially offset by decreases in savings and money market deposit account balances of $51.8 million and noninterest-bearing deposit account balances of $3.1 million. The time deposit balance increase included a decrease of $6.4 million in short-term CDARS and listing service balances.

    Asset Quality

    In accordance with changes in generally accepted accounting principles, the Company adopted the new credit loss accounting standard known as CECL on January 1, 2023. At the time of adoption, the allowance for credit losses ("ACL") for loans increased by $3.1 million to 1.73% of loans, the reserve on unfunded commitments increased $213 thousand, and an $18 thousand reserve was established for held to maturity investment securities. These one-time increases resulted in an after tax decrease to capital of $2.5 million, with no impact to earnings. Under CECL, the ACL is based on projected credit losses rather than on incurred losses.

    The Company recorded a provision for credit losses in the third quarter of $3.0 million, which compared to a $2.8 million provision for the second quarter of 2023. The Company recorded a $0.8 million provision for loan losses under the incurred loss methodology during the third quarter of 2022. The Company recorded a provision for credit losses in the first nine months of 2023 of $7.7 million, which compared to a $1.4 million negative provision under the incurred loss methodology for the first nine months of 2022.

    The ratio of ACL to total loans held for investment at amortized cost, excluding government guaranteed loans, was 2.03% at September 30, 2023, 2.03% as of June 30, 2023, and 1.90% as of September 30, 2022.

    Net charge-offs for the third quarter of 2023 were $2.2 million, a $0.1 million decrease from $2.3 million for the second quarter of 2023 and a $1.6 million increase compared to $0.6 million in the third quarter of 2022. Annualized net charge-offs as a percentage of average loans held for investment at amortized cost, excluding PPP loans, were 1.27% for the third quarter of 2023, down from 1.18% in the second quarter of 2023 and up from 0.37% in the third quarter of 2022. Net charge-offs for the first three quarters of 2023 were elevated by $1.9 million due to the performance from a purchased portfolio of unsecured consumer loans. The Company stopped purchasing these loans at the end of 2022 and the portfolio balances have decreased from $29.4 million to $19.6 million since the beginning of 2023. Nonperforming assets, excluding government guaranteed loans, to total assets was 0.77% as of September 30, 2023, compared to 0.61% as of June 30, 2023, and 0.44% as of September 30, 2022.

    Capital

    The Bank’s Tier 1 leverage ratio was 9.16% as of September 30, 2023, compared to 9.36% as of June 30, 2023, and 10.48% at September 30, 2022. The CET 1 and Tier 1 capital ratio to risk-weighted assets were 12.21% as of September 30, 2023, compared to 12.34% as of June 30, 2023, and 13.77% as of September 30, 2022. The total capital to risk-weighted assets ratio was 13.46% as of September 30, 2023, compared to 13.60% as of June 30, 2023, and 15.02% as of September 30, 2022.

    Recent Events

    Preferred Stock Offering. On September 30, 2023, the Company issued 1,835 shares of 11.0% Series C Cumulative Convertible Preferred Stock. These shares have no par value and a liquidation preference of $1,000 per share plus an amount equal to all accumulated dividends thereon (whether or not earned or declared but without interest) to the date payment of such distribution is made in full. An additional 1,995 shares were issued on October 18, 2023. Total gross proceeds from the preferred stock offering currently total $3.83 million, which will be used for operating expenses or to contribute capital to BayFirst National Bank to support its growth and operations.

    Fourth Quarter Common Stock Dividend. On October 24, 2023, BayFirst’s Board of Directors declared a fourth quarter 2023 cash dividend of $0.08 per common share. The dividend will be payable December 15, 2023 to common shareholders of record as of December 1, 2023. This dividend marks the 30th consecutive quarterly cash dividend paid since BayFirst initiated cash dividends in 2016.

    Conference Call

    BayFirst’s management team will host a conference call on Friday, October 27, 2023 at 9:00 a.m. ET to discuss its third quarter results. Interested investors may listen to the call live under the Investor Relations tab at www.bayfirstfinancial.com. Investment professionals are invited to dial (888) 259-6580 to participate in the call. A replay will be available for one week at (877) 674-7070 using access code 913503# or at www.bayfirstfinancial.com.

    About BayFirst Financial Corp.

    BayFirst Financial Corp. is a registered bank holding company based in St. Petersburg, Florida which commenced operations on September 1, 2000. Its primary source of income is derived from its wholly owned subsidiary, BayFirst National Bank, a national banking association which commenced business operations on February 12, 1999. The Bank currently operates ten full-service banking offices throughout the Tampa Bay region and offers a broad range of commercial and consumer banking services to businesses and individuals. The Bank was the 7th largest SBA 7(a) lender by dollar volume and 3rd by number of units originated nationwide through the SBA's 2023 fiscal year ended September 30, 2023. Additionally, it was the number one SBA 7(a) lender in dollar volume in the 5 county Tampa Bay market for the SBA's 2023 fiscal year. As of September 30, 2023, BayFirst Financial Corp. had $1.13 billion in total assets.

    Forward-Looking Statements

    In addition to the historical information contained herein, this presentation includes "forward-looking statements" within the meaning of such term in the Private Securities Litigation Reform Act of 1995. These statements are subject to many risks and uncertainties, including, but not limited to, the effects of health crises, global military hostilities, or climate change, including their effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with them; the ability of the Company to implement its strategy and expand its banking operations; changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; risks related to mergers and acquisitions; changes in benchmark interest rates used to price loans and deposits, changes in tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the SEC, including, but not limited to those “Risk Factors” described in our most recent Form 10-K and Form 10-Q. Readers should note that the forward-looking statements included herein are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements.

    Contacts: 
    Anthony N. LeoScott J. McKim
    Chief Executive OfficerChief Financial Officer
    727.399.5678727.521.7085


    BAYFIRST FINANCIAL CORP.
    SELECTED FINANCIAL DATA (Unaudited)

     At or for the three months ended
    (Dollars in thousands, except for share data)9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022
    Balance sheet data:         
    Average loans held for investment at amortized cost, excluding PPP loans$705,577  $763,854  $625,129  $688,759  $525,922 
    Average total assets 1,088,517   1,064,068   969,489   925,194   939,847 
    Average common shareholders’ equity 81,067   80,310   78,835   80,158   83,014 
    Total loans held for investment 878,447   836,704   792,777   728,652   680,805 
    Total loans held for investment, excluding PPP loans 863,203   821,016   774,467   709,479   658,669 
    Total loans held for investment, excl gov’t gtd loan balances 687,141   638,148   596,505   569,892   520,408 
    Allowance for credit losses(1) 13,365   12,598   12,208   9,046   9,739 
    Total assets 1,133,979   1,087,399   1,069,839   938,895   930,275 
    Common shareholders’ equity 82,725   81,460   80,734   82,279   81,032 
    Share data:         
    Basic earnings (loss) per common share$0.42  $0.29  $0.13  $0.28  $(0.40)
    Diluted earnings (loss) per common share 0.41   0.29   0.13   0.28   (0.35)
    Dividends per common share 0.08   0.08   0.08   0.08   0.08 
    Book value per common share 20.12   19.85   19.70   20.35   20.10 
    Tangible book value per common share(2) 20.12   19.85   19.70   20.35   20.10 
    Performance and capital ratios:         
    Return on average assets(3) 0.71%  0.52%  0.30%  0.57% (0.60)%
    Return on average common equity(3) 8.46%  5.86%  2.69%  5.56% (7.76)%
    Net interest margin 3.36%  4.18%  4.17%  4.19%  4.63%
    Dividend payout ratio 19.15%  27.89%  61.48%  28.99% (20.02)%
    Asset quality ratios:         
    Net charge-offs(3)$2,234  $2,253  $1,887  $1,393  $575 
    Net charge-offs/avg loans held for investment at amortized cost, excl PPP(3) 1.27%  1.18%  1.08%  0.82%  0.37%
    Nonperforming loans$10,393  $8,606  $5,890  $10,468  $10,267 
    Nonperforming loans (excluding gov't gtd balance)$8,776  $6,590  $2,095  $3,671  $4,015 
    Nonperforming loans/total loans held for investment 1.18%  1.03%  0.74%  1.44%  1.51%
    Nonperforming loans (excl gov’t gtd balance)/total loans held for investment 1.00%  0.79%  0.26%  0.50%  0.59%
    ACL/Total loans held for investment at amortized cost(1) 1.68%  1.61%  1.69%  1.29%  1.48%
    ACL/Total loans held for investment at amortized cost, excl PPP loans(1) 1.72%  1.64%  1.73%  1.33%  1.54%
    ACL/Total loans held for investment at amortized cost, excl government guaranteed loans(1) 2.03%  2.03%  2.10%  1.62%  1.90%
    Other Data:         
    Full-time equivalent employees 307   302   300   291   524 
    Banking center offices 10   9   9   8   8 
    (1)Prior to January 1, 2023, the incurred loss methodology was used to estimate credit losses. Beginning with that date, credit losses are estimated using the CECL methodology.
    (2)See section entitled "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below for a reconciliation to most comparable GAAP equivalent.
    (3)Annualized


    GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

    Some of the financial measures included in this report are not measures of financial condition or performance recognized by GAAP. These non-GAAP financial measures include tangible common shareholders' equity and tangible book value per common share. Our management uses these non-GAAP financial measures in its analysis of our performance, and we believe that providing this information to financial analysts and investors allows them to evaluate capital adequacy.

    The following presents these non-GAAP financial measures along with their most directly comparable financial measures calculated in accordance with GAAP:

    Tangible Common Shareholders' Equity and Tangible Book Value Per Common Share (Unaudited)
      As of
    (Dollars in thousands, except for share data) September 30,
    2023
     June 30,
    2023
     March 31,
    2023
     December 31,
    2022
     September 30,
    2022
    Total shareholders’ equity $94,165  $91,065  $90,339  $91,884  $90,637 
    Less: Preferred stock liquidation preference  (11,440)  (9,605)  (9,605)  (9,605)  (9,605)
    Total equity available to common shareholders  82,725   81,460   80,734   82,279   81,032 
    Less: Goodwill               
    Tangible common shareholders' equity $82,725  $81,460  $80,734  $82,279  $81,032 
               
    Common shares outstanding  4,110,650   4,103,834   4,098,805   4,042,474   4,031,937 
    Tangible book value per common share $20.12  $19.85  $19.70  $20.35  $20.10 



    BAYFIRST FINANCIAL CORP.
    CONSOLIDATED BALANCE SHEETS
    (Dollars in thousands)9/30/20236/30/20239/30/2022
    AssetsUnauditedUnauditedUnaudited
    Cash and due from banks$4,501 $4,593 $3,131 
    Interest-bearing deposits in banks 108,052  99,114  33,365 
    Cash and cash equivalents 112,553  103,707  36,496 
    Time deposits in banks 4,631  4,881  4,881 
    Investment securities available for sale, at fair value (amortized cost $44,569, $45,713, and $48,016 at September 30, 2023, June 30, 2023, and September 30, 2022, respectively) 39,683  41,343  42,915 
    Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $19, $19, and $0 (fair value: $2,282, $2,222, and $4,995 at September 30, 2023, June 30, 2023, and September 30, 2022, respectively) 2,482  2,483  5,008 
    Nonmarketable equity securities 4,250  5,332  2,531 
    Government guaranteed loans held for sale 1,855  1,247  573 
    Government guaranteed loans held for investment, at fair value 84,178  52,165  24,965 
    Loans held for investment, at amortized cost net of allowance for credit losses of $13,365, $12,598, and $9,739 at September 30, 2023, June 30, 2023, and September 30, 2022, respectively) 780,904  771,941  646,101 
    Accrued interest receivable 6,907  5,929  3,789 
    Premises and equipment, net 37,992  40,052  32,779 
    Loan servicing rights 14,216  12,820  9,932 
    Deferred income tax assets 414  925  1,937 
    Right-of-use operating lease assets 2,594  2,804  2,985 
    Bank owned life insurance 25,630  25,469  25,004 
    Other assets 15,292  15,850  13,632 
    Assets from discontinued operations 398  451  76,747 
    Total assets$1,133,979 $1,087,399 $930,275 
    Liabilities:   
    Noninterest-bearing deposits$98,008 $101,081 $104,215 
    Interest-bearing transaction accounts 267,404  253,112  190,985 
    Savings and money market deposits 350,110  401,941  380,576 
    Time deposits 302,274  188,648  109,960 
    Total deposits 1,017,796  944,782  785,736 
    FHLB and FRB borrowings 0  30,000  28,000 
    Subordinated debentures 5,947  5,945  5,990 
    Notes payable 2,503  2,617  2,958 
    Accrued interest payable 632  572  236 
    Operating lease liabilities 2,812  3,018  3,355 
    Accrued expenses and other liabilities 9,409  8,461  9,374 
    Liabilities from discontinued operations 715  939  3,989 
    Total liabilities 1,039,814  996,334  839,638 
    Shareholders’ equity:UnauditedUnauditedUnaudited
    Preferred stock, Series A; no par value, 10,000 shares authorized, 6,395 shares issued and outstanding at September 30, 2023, June 30, 2023, and September 30, 2022, respectively; aggregate liquidation preference of $6,395 each period 6,161  6,161  6,161 
    Preferred stock, Series B; no par value, 20,000 shares authorized, 3,210 shares issued and outstanding at September 30, 2023, June 30, 2023, and September 30, 2022; aggregate liquidation preference of $3,210 each period 3,123  3,123  3,123 
    Preferred stock, Series C; no par value, 10,000 shares authorized, 1,835 shares issued and outstanding at September 30, 2023 and no shares issued and outstanding as of June 30, 2023 and September 30, 2022; aggregate liquidation preference of $1,835 at September 30, 2023 1,835     
    Common stock and additional paid-in capital; no par value, 15,000,000 shares authorized, 4,110,650, 4,103,834, and 4,031,937 shares issued and outstanding at September 30, 2023, June 30, 2023, and September 30, 2022, respectively 54,500  54,384  52,770 
    Accumulated other comprehensive loss, net (3,621) (3,239) (3,780)
    Unearned compensation (1,242) (1,386) (323)
    Retained earnings 33,409  32,022  32,686 
    Total shareholders’ equity 94,165  91,065  90,637 
    Total liabilities and shareholders’ equity$1,133,979 $1,087,399 $930,275 


    BAYFIRST FINANCIAL CORP.
    CONSOLIDATED STATEMENTS OF INCOME
     For the Quarter Ended Year-to-Date
    (Dollars in thousands, except per share data)9/30/2023 6/30/2023 9/30/2022 9/30/2023 9/30/2022
    Interest income:Unaudited Unaudited Unaudited Unaudited Unaudited
    Loans, including fees$16,032  $16,372  $10,650  $45,475  $24,812 
    Interest-bearing deposits in banks and other 1,588   1,420   634   4,188   1,234 
    Total interest income 17,620   17,792   11,284   49,663   26,046 
    Interest expense:         
    Deposits 9,055   7,098   1,856   21,076   4,133 
    Other 172   586   258   1,033   487 
    Total interest expense 9,227   7,684   2,114   22,109   4,620 
    Net interest income 8,393   10,108   9,170   27,554   21,426 
    Provision for credit losses 3,001   2,765   750   7,708   (1,400)
    Net interest income after provision for credit losses 5,392   7,343   8,420   19,846   22,826 
    Noninterest income:         
    Loan servicing income, net 760   649   620   2,149   1,508 
    Gain on sale of government guaranteed loans, net 7,139   6,028   7,446   17,576   15,915 
    Service charges and fees 408   379   347   1,166   951 
    Government guaranteed loans fair value gain, net 4,543   2,904   999   11,021   3,510 
    Other noninterest income 1,829   977   392   3,152   1,262 
    Total noninterest income 14,679   10,937   9,804   35,064   23,146 
    Noninterest Expense:         
    Salaries and benefits 7,912   7,780   6,758   23,527   21,177 
    Bonus, commissions, and incentives 1,406   1,305   883   3,515   1,833 
    Occupancy and equipment 1,262   1,183   1,070   3,608   3,010 
    Data processing 1,526   1,316   1,247   4,189   3,486 
    Marketing and business development 929   1,102   662   2,696   2,100 
    Professional services 816   874   956   2,587   3,089 
    Loan origination and collection 1,981   1,221   1,068   4,697   2,486 
    Employee recruiting and development 543   556   518   1,667   1,653 
    Regulatory assessments 284   232   110   615   299 
    Other noninterest expense 768   833   886   2,140   2,586 
    Total noninterest expense 17,427   16,402   14,158   49,241   41,719 
    Income before taxes from continuing operations 2,644   1,878   4,066   5,669   4,253 
    Income tax expense from continuing operations 674   461   983   1,415   888 
    Net income from continuing operations 1,970   1,417   3,083   4,254   3,365 
    Loss from discontinued operations before income taxes (62)  (43)  (5,973)  (275)  (6,706)
    Income tax benefit from discontinued operations (15)  (11)  (1,488)  (68)  (1,670)
    Net loss from discontinued operations (47)  (32)  (4,485)  (207)  (5,036)
              
    Net income (loss) 1,923   1,385   (1,402)  4,047   (1,671)
    Preferred dividends 208   208   208   624   624 
    Net income available to (loss attributable to) common shareholders$1,715  $1,177  $(1,610) $3,423  $(2,295)
    Basic earnings (loss) per common share:Unaudited Unaudited Unaudited Unaudited Unaudited
    Continuing operations$0.43  $0.30  $0.71  $0.89  $0.68 
    Discontinued operations (0.01)  (0.01)  (1.11)  (0.05)  (1.25)
    Basic earnings (loss) per common share$0.42  $0.29  $(0.40) $0.84  $(0.57)
              
    Diluted earnings (loss) per common share:         
    Continuing operations$0.42  $0.30  $0.68  $0.88  $0.67 
    Discontinued operations (0.01)  (0.01)  (1.03)  (0.05)  (1.15)
    Diluted earnings (loss) per common share$0.41  $0.29  $(0.35) $0.83  $(0.48)


    Loan Composition

    (Dollars in thousands)9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022
    Real estate:(Unaudited) (Unaudited) (Unaudited)   (Unaudited)
    Residential$248,973  $235,339  $214,638  $202,329  $176,574 
    Commercial 280,620   272,200   239,720   231,281   220,210 
    Construction and land 25,339   15,575   11,069   9,320   9,259 
    Commercial and industrial 174,238   198,639   199,721   194,643   183,631 
    Commercial and industrial - PPP 15,364   15,808   18,430   19,293   22,286 
    Consumer and other 39,024   38,103   32,697   37,288   37,595 
    Loans held for investment, at amortized cost, gross 783,558   775,664   716,275   694,154   649,555 
    Deferred loan costs, net 12,928   11,506   10,678   10,740   9,047 
    Discount on government guaranteed loans sold (6,623)  (5,937)  (6,046)  (5,621)  (5,068)
    Premium on loans purchased, net 4,406   3,306   2,823   2,301   2,306 
    Allowance for credit losses(1) (13,365)  (12,598)  (12,208)  (9,046)  (9,739)
    Loans held for investment, at amortized cost$780,904  $771,941  $711,522  $692,528  $646,101 


    Nonperforming Assets (Unaudited)

    (Dollars in thousands)9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022
    Nonperforming loans (government guaranteed balances)$1,617  $2,016  $3,795  $6,797  $6,252 
    Nonperforming loans (unguaranteed balances) 8,776   6,590   2,095   3,671   4,015 
    Total nonperforming loans 10,393   8,606   5,890   10,468   10,267 
    OREO    3   3   56   56 
    Total nonperforming assets$10,393  $8,609  $5,893  $10,524  $10,323 
    Nonperforming loans as a percentage of total loans held for investment 1.18%  1.03%  0.74%  1.44%  1.51%
    Nonperforming loans (excluding government guaranteed balances) to total loans held for investment 1.00%  0.79%  0.26%  0.50%  0.59%
    Nonperforming assets as a percentage of total assets 0.92%  0.79%  0.55%  1.12%  1.11%
    Nonperforming assets (excluding government guaranteed balances) to total assets 0.77%  0.61%  0.20%  0.40%  0.44%
    ACL to nonperforming loans(1) 128.60%  146.39%  207.27%  86.42%  94.86%
    ACL to nonperforming loans (excluding government guaranteed balances)(1) 152.29%  191.17%  582.72%  246.42%  242.57%

    (1) Prior to January 1, 2023, the incurred loss methodology was used to estimate credit losses. Beginning with that date, credit losses are estimated using the CECL methodology. 


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