BayFirst Financial Corp. Reports Third Quarter 2022 Results; Highlighted by Strong SBA 7(a) and Conventional Loan Production and Net Interest Margin Expansion

BayFirst Financial Corp.

ST. PETERSBURG, Fla., Oct. 28, 2022 (GLOBE NEWSWIRE) — BayFirst Financial Corp. (NASDAQ: BAFN) (“BayFirst” or the “Company”), parent company of BayFirst National Bank (the “Bank”) today reported net income from continuing operations of $3.1 million for the third quarter of 2022 compared to $391 thousand in the second quarter of 2022. Following the strategic decision to discontinue the Bank’s nationwide residential mortgage operations, BayFirst recognized a one-time charge of $3.7 million in the third quarter of 2022. Net loss inclusive of discontinued operations was $1.4 million, or $0.35 per diluted share, for the third quarter of 2022, compared to a net loss of $282 thousand, or $0.10 per diluted share, in the second quarter of 2022. In the third quarter of 2021, net income inclusive of discontinued operations was $1.3 million, or $0.26 per diluted share. Quarterly financial results were highlighted by robust loan production in community banking, up 172% year over year, as well as the best quarter of SBA 7(a) loan production in the Company’s history.

The increase in earnings from continuing operations during the third quarter of 2022, compared to the second quarter of 2022, included an increase in interest income of $3.5 million driven primarily from rising interest rates on variable rate loans and a $39.1 million increase in loans held for investment. Results for the third quarter of 2022 included a $750 thousand provision for loan losses, compared to a $250 thousand provision for loan losses in the preceding quarter and a negative provision for loan losses of $3.0 million in the third quarter of 2021.

“The third quarter represented a significant transition for BayFirst as we exited our national mortgage lending business to focus our efforts on building the premier bank of Tampa Bay,” stated Anthony N. Leo, Chief Executive Officer. “Supported by our top 10 SBA lending division CreditBench, and the investments we’ve made in an advanced technology platform, BayFirst is now poised to enter a new era of growth and profitability. Notwithstanding the significant charges associated with discontinuation of the mortgage lending division, we are extremely pleased with third quarter results, as net income from continuing operations was $3.1 million.”

“In addition to improved core operating results from continuing operations, we benefited from strong loan production from community banking and SBA lending. Loans held for investment excluding PPP loans were up 7.9% during the quarter, and 31.6% compared to a year ago, with the growth well diversified across all of our loan categories. SBA lending through our CreditBench division has grown substantially, surpassing last quarter’s record levels, with SBA loan production of $139.2 million. Additionally, our net interest margin improved 90 basis points on a linked quarter basis, as we benefited from recent interest rate increases. With the one-time expenses for exiting the national residential mortgage business behind us, we remain well positioned for growth throughout the rest of the year and into 2023.”

“While other financial institutions in our markets are closing banking centers, we continue to grow our community bank, opening our eighth banking center in West Bradenton last month. We plan to open a second Tampa banking center in early 2023 with two additional branches in Sarasota currently under construction and expected to be open late 2023 or early 2024, expanding our network of bank offices throughout the Tampa Bay region. We were fortunate that Hurricane Ian had minimal impact on our branch locations and overall organization. Our bankers are working to help all businesses and residents that were impacted throughout the broader region,” concluded Leo.

Third Quarter 2022 Performance Review

  • The Company’s SBA loan origination platform, CreditBench, originated $139.2 million in new SBA loans during the third quarter of 2022, a 54.7% increase compared to $90.0 million originated in the second quarter of 2022, and a 194.6% increase over $47.3 million of loans produced during the third quarter of 2021. Late in the second quarter, the Company launched BOLT, an SBA 7(a) loan product designed to expeditiously provide working capital loans of $150 thousand or less to businesses throughout the country. During the third quarter, the Company originated 425 BOLT loans totaling $55.9 million.

  • Loans held for investment, excluding PPP loans, increased by $48.1 million or 7.9% to $658.7 million during the third quarter of 2022 and $158.0 million, or 31.6% over the past year. Production during the quarter was partially offset by $124.4 million in sales of principal balances of SBA loans.

  • The Residential Mortgage Division originated $245.4 million in loans during the third quarter of 2022, a reduction of 19.7% compared to $305.6 million originated during the second quarter of 2022, and a 49.2% reduction compared to $506.7 million of loans produced during the third quarter of 2021.

  • Deposits increased by $20.3 million, or 2.7% during the third quarter of 2022 and increased by $110.7 million, or 16.4% over the past year to $785.7 million at September 30, 2022. During the third quarter of 2022, there were increases in time deposit balances of $75.9 million partially offset by decreases in money market and savings account balances of $51.8 million.

  • Tangible book value at September 30, 2022 was $20.10 per common share, down from $20.80 at June 30, 2022, primarily due to the net loss and the increase in accumulated other comprehensive loss. Over the course of the past year, tangible book value decreased $1.20 per common share, or 5.6%, from $21.30 at September 30, 2021.

  • Net interest margin including discontinued operations expanded 90 bps to 4.63% in the third quarter of 2022, from 3.73% in the second quarter of 2022.

Results of Operations

Net Income (Loss)

Net loss was $1.4 million for the third quarter of 2022 compared to a net loss of $282 thousand in the second quarter of 2022, and net income of $1.3 million in the third quarter of 2021. The increase in net loss for the third quarter of 2022 from the preceding quarter was primarily due to an increase of $3.1 million in charges to discontinue residential operations and a $1.7 million decrease in SBA loan fair value gains, which resulted primarily from election of the fair value option on significantly less principal balance in the third quarter of 2022, compared to second quarter of 2022. This was partially offset by an increase of $2.6 million in net interest income and an increase of $3.6 million in gain on sale of SBA loans. The decrease in net income from the third quarter of 2021 was partially due to a $7.1 million unfavorable change from discontinued operations. Additionally, loan loss provision changed unfavorably by $3.8 million from the third quarter of 2021. This was partially offset by an increase of $1.9 million in net interest income and an increase of $7.8 million in gain on sale of SBA loans.

In the first nine months of 2022, the net loss was $1.7 million, a decrease of $23.5 million from the net income of $21.8 million in the first nine months of 2021. The decrease in net income was the result of an increase in the net loss from discontinued operations of $18.7 million, a $13.8 million gain on sale of PPP loans in 2021 which did not recur in 2022, an increase in non-interest expense on continuing operations of $4.7 million, and lower PPP income. These items were partially offset by a $3.4 million increase related to held for investment SBA loan fair value gains and higher gains on non-PPP SBA guaranteed loan sales of $16.3 million. The increase in the net loss from discontinued operations was primarily the result of a decrease in gain on sale of residential mortgage loans of $46.4 million and the recognition of restructuring charges of $4.3 million for the discontinuation of the nationwide residential mortgage division, partially offset by lower non-interest expense of $26.1 million.

Net Interest Income and Net Interest Margin

Net interest income from continuing operations was $9.2 million in the third quarter of 2022, an increase of $2.6 million or 39.2% from $6.6 million in the second quarter of 2022, and an increase of $1.9 million or 26.0% from $7.3 million in the third quarter of 2021. The increase during the third quarter of 2022 as compared to the prior quarter was mainly due to the increase in non-PPP loan interest income partially offset by an increase in deposit interest expense. The increase during the third quarter of 2022 as compared to the year ago quarter was mainly due to the increase in loan interest income, including fees, of $2.0 million.

Net interest income from continuing operations was $21.4 million in the first nine months of 2022, a decrease of $9.4 million or 30.4% from $30.8 million in the first nine months of 2021. The decrease was mainly due to a decline in net PPP income of $17.8 million.

Net interest margin including discontinued operations improved to 4.63% for the third quarter of 2022, which represented increases of 90 basis points, compared to 3.73% from the preceding quarter and 159 basis points compared to 3.04% from the same quarter last year. Net interest margin including discontinued operations improved to 3.90% for the first nine months of 2022, compared to 3.26% for the first nine months of 2021. With recent rate increases, the Company anticipates further improvement in its net interest margin as its SBA loan portfolio rates are tied to the prime lending rate with the vast majority resetting at the beginning of each calendar quarter.

Noninterest Income

Noninterest income from continuing operations was $9.8 million for the third quarter of 2022, an increase of $2.1 million or 27.7% from $7.7 million in the second quarter of 2022, and an increase of $9.2 million from $610 thousand in the third quarter of 2021. The increase in the third quarter of 2022, as compared to the prior quarter, was primarily due to $3.6 million of additional gain on sale of SBA loans, partially offset by a $1.7 million decrease related to held for investment SBA loan fair value gains. The increase from a year ago quarter was primarily the result of an increase of $7.8 million in gains on SBA loan sales.

Noninterest income from continuing operations was $23.1 million for the first nine months of 2022, an increase of $6.8 million or 41.3% from $16.4 million in the first nine months of 2021. The increase was primarily due to higher gains on the sale of non-PPP SBA loans of $16.3 million and an increase related to held for investment SBA loan fair value gains of $3.4 million, partially offset by the $13.8 million gain on sale of PPP loans in 2021 which did not recur in 2022.

Noninterest Expense

Noninterest expense from continuing operations was $14.2 million in the third quarter of 2022, which was a $466 thousand or 3.4% increase from $13.7 million in the second quarter of 2022 and a $1.6 million or 12.7% increase compared to $12.6 million in the third quarter of 2021. The increase from a year ago quarter was primarily due to higher compensation expense, occupancy expense, data processing expense and loan origination expense, partially offset by lower professional services expense.

Noninterest expense from continuing operations was $41.7 million in the first nine months of 2022, which was a $4.7 million or 12.7% increase from $37.0 million in the first nine months of 2021. The increase was primarily the result of higher salaries and benefits and occupancy expense.

Discontinued Operations

Net loss on discontinued operations was $4.5 million in the third quarter of 2022, which was a $3.8 million increase from a loss of $673 thousand in the second quarter of 2022. The company recorded net income on discontinued operations of $2.6 million in the third quarter of 2021. The increase in the net loss from the previous quarter was the result of a decrease in gains on sale of residential mortgage loans of $3.1 million and an increase in restructuring charges of $3.1 million for the discontinuation of the nationwide residential mortgage division, partially offset by a decrease in noninterest expense, excluding restructuring charges, of $1.2 million and a decrease in income tax benefit of $1.3 million. The $7.1 million decrease in income from the year ago quarter was primarily due to a decrease in residential loan fee income of $14.3 million and the restructuring charges for the discontinuation of residential mortgage division of $3.7 million recorded in the third quarter of 2022. This was partially offset by a decrease in noninterest expense, excluding the restructuring charges, of $8.4 million and a decrease in income tax expense of $2.3 million.

Net loss from discontinued operations was $5.0 million in the first nine months of 2022, which was an $18.6 million reduction from net income of $13.6 million in the first nine months of 2021. The reduction in net income was primarily the result of a decrease in residential loan fee income of $46.4 million and the restructuring charges for the discontinuation of residential mortgage division of $4.3 million recorded in the second and third quarters of 2022. This was partially offset by a $26.1 million decrease in noninterest expense excluding the restructuring charge and a decrease in income tax expense of $6.2 million.

Balance Sheet

Assets

Total assets increased $8.9 million or 1.0% during the third quarter of 2022 to $930.3 million, mainly due to new loan production, partially offset by a decrease in cash and cash equivalents and the sale of $124.4 million in SBA loans.

Loans

Loans held for investment, excluding PPP loans, increased $48.1 million or 7.9% during the third quarter of 2022 and $158.0 million or 31.6%, over the past year to $658.7 million, due to increases in both conventional community bank loans and SBA loans, partially offset by SBA loan sales. PPP loans, net of deferred origination fees, decreased $9.1 million in the third quarter of 2022 to $22.1 million, due primarily to PPP forgiveness payments.

Deposits

Deposits increased $20.3 million or 2.7% during the third quarter of 2022 and increased $110.7 million or 16.4% compared to September 30, 2021, ending the third quarter of 2022 at $785.7 million. During the third quarter, time deposit balances increased, partially offset by a decrease in interest-bearing transaction, savings, and money market account balances. Over the past year, all types of deposit account balances increased.

Asset Quality

Asset quality remained stable in the third quarter of 2022. As the financial impact of the COVID-19 pandemic became more predictable throughout 2021 and 2022, the Company began adjusting downward its allowance for loan losses from the historic high levels reached in 2020 at the onset of the pandemic. The Company recorded a provision for loan losses in the third quarter of $750 thousand, which compared to a $250 thousand provision for the second quarter of 2022, and a $3.0 million negative provision for loan losses during the third quarter of 2021.

The ratio of the allowance for loan losses to total loans held for investment at amortized cost, excluding government guaranteed loans, was 1.90% at September 30, 2022, 2.14% as of June 30, 2022, and 5.29% as of September 30, 2021.

Over the past five years, the Company’s loan losses have been incurred primarily in its SBA unguaranteed loan portfolio, particularly loans originated under the SBA 7(a) Small Loan Program. The Small Loan Program represents loans of $350 thousand or less and carry an SBA guaranty of 75% to 85% of the loan, depending on the original principal balance. The default rate on loans originated in the SBA 7(a) Small Loan Program has been higher than the Bank’s other loans.

Net charge-offs for the third quarter of 2022 were $575 thousand, a $281 thousand decrease from $856 thousand for the second quarter of 2022 and a $606 thousand decrease compared to $1.2 million in the third quarter of 2021. Annualized net charge-offs as a percentage of average loans, excluding PPP loans, were 0.35% for the third quarter of 2022, down from 0.61% in the second quarter of 2022 and 1.01% in the third quarter of 2021. Nonperforming assets, excluding government guaranteed loans, to total assets was 0.44% as of September 30, 2022, compared to 0.47% as of June 30, 2022, and 0.40% as of September 30, 2021.

Capital

The Bank’s Tier 1 leverage ratio was 10.48% as of September 30, 2022, a decrease from 11.37% as of June 30, 2022, and from 12.64% at September 30, 2021. The CET 1 and Tier 1 capital ratio to risk-weighted assets were 13.77% as of September 30, 2022, a decrease from 15.12% as of June 30, 2022, and from 21.21% as of September 30, 2021. The total capital to risk-weighted assets ratio was 15.02% as of September 30, 2022, a decrease from 16.37% as of June 30, 2022, and from 22.50% as of September 30, 2021.

Recent Events

Fourth Quarter Common Stock Dividend. On October 25, 2022, BayFirst’s Board of Directors declared a fourth quarter 2022 cash dividend of $0.08 per common share. The dividend will be payable December 15, 2022 to common shareholders of record as of December 1, 2022. This dividend marks the 26th consecutive quarterly cash dividend paid since BayFirst initiated cash dividends in 2016.

About BayFirst Financial Corp.

BayFirst Financial Corp. is a registered bank holding company which commenced operations on September 1, 2000. Its primary source of income is from its wholly owned subsidiary, BayFirst National Bank (f/k/a First Home Bank), which commenced business operations on February 12, 1999. BayFirst National Bank is a national banking association. The Bank currently operates eight full-service office locations and was in the top 8 by dollar volume and number of units originated nationwide through the fourth quarter ended September 30, 2022, of SBA’s 2022 fiscal year. In the 5 county Tampa Bay market, BayFirst was proud to rank number one by both dollar volume and number of units originated during the same period.

BayFirst Financial Corp., through the Bank, offers a broad range of commercial and consumer banking services including various types of deposit accounts and loans for businesses and individuals. As of September 30, 2022, BayFirst Financial Corp. had $930.3 million 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 the COVID-19 pandemic, 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.

BAYFIRST FINANCIAL CORP.
SELECTED FINANCIAL DATA (Unaudited)

 

At or for the three months ended

(Dollars in thousands, except for share data)

9/30/2022

 

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

Balance sheet data:

 

 

 

 

 

 

 

 

 

Average loans held for investment, excluding PPP loans

$

663,716

 

 

$

561,455

 

 

$

520,559

 

 

$

518,697

 

 

$

467,283

 

Average total assets

 

939,847

 

 

 

879,868

 

 

 

872,311

 

 

 

923,485

 

 

 

1,086,377

 

Average common shareholders’ equity

 

83,014

 

 

 

83,235

 

 

 

83,990

 

 

 

83,056

 

 

 

81,989

 

Total loans held for investment

 

680,805

 

 

 

641,737

 

 

 

561,797

 

 

 

583,948

 

 

 

656,294

 

Total loans held for investment, excluding PPP loans

 

658,669

 

 

 

610,527

 

 

 

517,434

 

 

 

504,525

 

 

 

500,647

 

Total loans held for investment, excl gov’t gtd loan balances

 

520,408

 

 

 

458,624

 

 

 

374,353

 

 

 

332,977

 

 

 

316,528

 

Allowance for loan losses

 

9,739

 

 

 

9,564

 

 

 

10,170

 

 

 

13,452

 

 

 

16,616

 

Total assets

 

930,275

 

 

 

921,377

 

 

 

888,541

 

 

 

917,095

 

 

 

943,743

 

Common shareholders’ equity

 

81,032

 

 

 

83,690

 

 

 

85,274

 

 

 

86,685

 

 

 

83,593

 

Share data:

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

(0.40

)

 

$

(0.12

)

 

$

(0.05

)

 

$

0.66

 

 

$

0.26

 

Diluted earnings per common share

 

(0.35

)

 

 

(0.10

)

 

 

(0.05

)

 

 

0.61

 

 

 

0.26

 

Dividends per common share

 

0.08

 

 

 

0.08

 

 

 

0.08

 

 

 

0.07

 

 

 

0.07

 

Book value per common share

 

20.10

 

 

 

20.82

 

 

 

21.25

 

 

 

21.77

 

 

 

21.32

 

Tangible book value per common share (1)

 

20.10

 

 

 

20.80

 

 

 

21.22

 

 

 

21.75

 

 

 

21.30

 

Performance and capital ratios:

 

 

 

 

 

 

 

 

 

Return on average assets

 

(0.60

 

 

 

(0.13

 

 

 

0.01

%

 

 

1.22

%

 

 

0.47

%

Return on average common equity

 

(7.76

)%

 

 

(2.35

)%

 

 

(0.93

)%

 

 

12.54

%

 

 

5.12

%

Net interest margin

 

4.63

%

 

 

3.73

%

 

 

3.25

%

 

 

3.07

%

 

 

3.04

%

Dividend payout ratio

 

(20.02

)%

 

 

(65.54

)%

 

 

(164.25

)%

 

 

10.65

%

 

 

26.09

%

Asset quality ratios:

 

 

 

 

 

 

 

 

 

Net charge-offs

$

575

 

 

$

856

 

 

$

882

 

 

$

664

 

 

$

1,181

 

Net charge-offs/avg loans held for investment excl PPP

 

0.35

%

 

 

0.61

%

 

 

0.68

%

 

 

0.51

%

 

 

1.01

%

Nonperforming loans

$

10,267

 

 

$

10,437

 

 

$

8,834

 

 

$

11,909

 

 

$

10,495

 

Nonperforming loans (excluding gov’t gtd balance)

$

4,015

 

 

$

4,245

 

 

$

2,660

 

 

$

3,967

 

 

$

3,756

 

Nonperforming loans/total loans held for investment

 

1.51

%

 

 

1.63

%

 

 

1.57

%

 

 

2.04

%

 

 

1.60

%

Nonperforming loans (excl gov’t gtd balance)/total loans held for investment

 

0.59

%

 

 

0.66

%

 

 

0.47

%

 

 

0.68

%

 

 

0.57

%

ALLL/Total loans held for investment at amortized cost

 

1.48

%

 

 

1.62

%

 

 

1.84

%

 

 

2.34

%

 

 

2.57

%

ALLL/Total loans held for investment at amortized cost, excl PPP loans

 

1.54

%

 

 

1.71

%

 

 

2.00

%

 

 

2.72

%

 

 

3.39

%

Other Data:

 

 

 

 

 

 

 

 

 

Full-time equivalent employees(2)

 

524

 

 

 

485

 

 

 

575

 

 

 

637

 

 

 

651

 

Banking center offices

 

8

 

 

 

7

 

 

 

7

 

 

 

7

 

 

 

6

 

Loan production offices(3)

 

20

 

 

 

19

 

 

 

20

 

 

 

17

 

 

 

22

 

(1) See section entitled “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” below for a reconciliation to most comparable GAAP equivalent.

(2) Included 254 FTE from discontinued operations as of September 30, 2022.

(3) As of October 2, 2022, three loan production offices remained open.

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

 

 

As of

(Dollars in thousands, except per share data)

 

September 30,
2022

 

June 30,
2022

 

March 31,
2022

 

December 31,
2021

 

September 30,
2021

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Total shareholders’ equity

 

$

90,637

 

 

$

93,295

 

 

$

94,879

 

 

$

96,290

 

 

$

94,298

 

Less: Preferred stock liquidation preference

 

 

(9,605

)

 

 

(9,605

)

 

 

(9,605

)

 

 

(9,605

)

 

 

(10,705

)

Total equity available to common shareholders

 

 

81,032

 

 

 

83,690

 

 

 

85,274

 

 

 

86,685

 

 

 

83,593

 

Less: Goodwill

 

 

 

 

 

(100

)

 

 

(100

)

 

 

(100

)

 

 

(100

)

Tangible common shareholders’ equity

 

$

81,032

 

 

$

83,590

 

 

$

85,174

 

 

$

86,585

 

 

$

83,493

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

4,031,937

 

 

 

4,019,023

 

 

 

4,013,173

 

 

 

3,981,117

 

 

 

3,919,977

 

Tangible book value per common share

 

$

20.10

 

 

$

20.80

 

 

$

21.22

 

 

$

21.75

 

 

$

21.30

 

BAYFIRST FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

9/30/2022

6/30/2022

9/30/2021

Assets

Unaudited

Unaudited

Unaudited

Cash and due from banks

$

3,131

 

$

2,944

 

$

2,715

 

Interest-bearing deposits in banks

 

33,365

 

 

64,992

 

 

104,382

 

Cash and cash equivalents

 

36,496

 

 

67,936

 

 

107,097

 

Time deposits in banks

 

4,881

 

 

4,881

 

 

2,381

 

Investment securities available for sale

 

42,915

 

 

45,283

 

 

32,535

 

Investment securities held to maturity

 

5,008

 

 

5,016

 

 

3

 

Restricted equity securities, at cost

 

2,531

 

 

3,274

 

 

2,827

 

SBA loans held for sale

 

573

 

 

 

 

 

SBA loans held for investment, at fair value

 

24,965

 

 

52,209

 

 

9,805

 

Loans held for investment, at amortized cost net of allowance for loan losses of $9,739, $9,564, and $16,616

 

646,101

 

 

579,964

 

 

629,873

 

Accrued interest receivable

 

3,789

 

 

3,172

 

 

4,275

 

Premises and equipment, net

 

32,779

 

 

31,058

 

 

23,988

 

Loan servicing rights

 

9,932

 

 

7,760

 

 

5,933

 

Deferred income tax assets

 

1,937

 

 

1,345

 

 

1,263

 

Right-of-use operating lease assets

 

2,985

 

 

2,975

 

 

3,387

 

Bank owned life insurance

 

25,004

 

 

24,850

 

 

12,434

 

Other assets

 

13,632

 

 

13,472

 

 

11,774

 

Assets from discontinued operations

 

76,747

 

 

78,182

 

 

96,168

 

Total assets

$

930,275

 

$

921,377

 

$

943,743

 

Liabilities:

 

 

 

Noninterest-bearing deposits

$

104,215

 

$

103,613

 

$

87,625

 

Interest-bearing transaction accounts

 

190,985

 

 

195,386

 

 

157,304

 

Savings and money market deposits

 

380,576

 

 

432,369

 

 

377,452

 

Time deposits

 

109,960

 

 

34,038

 

 

52,653

 

Total deposits

 

785,736

 

 

765,406

 

 

675,034

 

FHLB and FRB borrowings

 

28,000

 

 

40,000

 

 

 

Subordinated debentures

 

5,990

 

 

5,989

 

 

5,983

 

Notes payable

 

2,958

 

 

3,072

 

 

3,413

 

PPP Liquidity Facility

 

 

 

 

 

144,601

 

Accrued interest payable

 

236

 

 

31

 

 

562

 

Operating lease liabilities

 

3,355

 

 

3,116

 

 

3,551

 

Accrued expenses and other liabilities

 

9,374

 

 

7,290

 

 

9,643

 

Liabilities from discontinued operations

 

3,989

 

 

3,178

 

 

6,658

 

Total liabilities

 

839,638

 

 

828,082

 

 

849,445

 

Shareholders’ equity:

 

 

 

Preferred stock, Series A; no par value, 10,000 shares authorized, 6,395 shares issued and outstanding at September 30, 2022, June 30, 2022, and September 30, 2021, 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, 3,210, and 4,310 shares issued and outstanding at September 30, 2022, June 30, 2022, and September 30, 2021; aggregate liquidation preference of $3,210, $3,210, and $4,580, respectively

 

3,123

 

 

3,123

 

 

4,193

 

Common stock and additional paid-in capital; no par value, 15,000,000 shares authorized, 4,031,937, 4,019,023, and 3,919,977 shares issued and outstanding at September 30, 2022, June 30, 2022, and September 30, 2021, respectively

 

52,770

 

 

52,432

 

 

50,546

 

Accumulated other comprehensive (loss), net

 

(3,780

)

 

(2,574

)

 

(201

)

Unearned compensation

 

(323

)

 

(467

)

 

(23

)

Retained earnings

 

32,686

 

 

34,620

 

 

33,622

 

Total shareholders’ equity

 

90,637

 

 

93,295

 

 

94,298

 

Total liabilities and shareholders’ equity

$

930,275

 

$

921,377

 

$

943,743

 

BAYFIRST FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

For the Quarter Ended

 

Year-to-Date

(Dollars in thousands, except per share data)

9/30/2022

 

6/30/2022

 

9/30/2021

 

9/30/2022

 

9/30/2021

Interest income:

 

 

 

 

 

 

 

 

 

Loans, other than PPP

$

10,510

 

 

$

7,057

 

 

$

6,263

 

 

$

23,945

 

 

$

17,584

 

PPP loan interest income

 

70

 

 

 

87

 

 

 

692

 

 

 

297

 

 

 

4,751

 

PPP origination fee income

 

70

 

 

 

200

 

 

 

1,662

 

 

 

570

 

 

 

13,909

 

Interest-bearing deposits in banks and other

 

634

 

 

 

415

 

 

 

188

 

 

 

1,234

 

 

 

420

 

Total interest income

 

11,284

 

 

 

7,759

 

 

 

8,805

 

 

 

26,046

 

 

 

36,664

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

1,856

 

 

 

1,060

 

 

 

1,152

 

 

 

4,133

 

 

 

3,666

 

PPPLF borrowings

 

 

 

 

 

 

 

278

 

 

 

20

 

 

 

1,699

 

Other

 

258

 

 

 

112

 

 

 

99

 

 

 

467

 

 

 

519

 

Total interest expense

 

2,114

 

 

 

1,172

 

 

 

1,529

 

 

 

4,620

 

 

 

5,884

 

Net interest income

 

9,170

 

 

 

6,587

 

 

 

7,276

 

 

 

21,426

 

 

 

30,780

 

Provision for loan losses

 

750

 

 

 

250

 

 

 

(3,000

)

 

 

(1,400

)

 

 

(1,000

)

Net interest income after provision for loan losses

 

8,420

 

 

 

6,337

 

 

 

10,276

 

 

 

22,826

 

 

 

31,780

 

Noninterest income:

 

 

 

 

 

 

 

 

 

Loan servicing income, net

 

620

 

 

 

433

 

 

 

412

 

 

 

1,508

 

 

 

1,441

 

Gain (loss) on sale of SBA loans, net

 

7,446

 

 

 

3,848

 

 

 

(338

)

 

 

15,915

 

 

 

13,460

 

Service charges and fees

 

347

 

 

 

322

 

 

 

261

 

 

 

951

 

 

 

730

 

SBA loan fair value (loss) gain

 

999

 

 

 

2,708

 

 

 

72

 

 

 

3,510

 

 

 

151

 

Other noninterest income

 

392

 

 

 

367

 

 

 

203

 

 

 

1,262

 

 

 

595

 

Total noninterest income

 

9,804

 

 

 

7,678

 

 

 

610

 

 

 

23,146

 

 

 

16,377

 

Noninterest Expense:

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

6,758

 

 

 

6,870

 

 

 

6,481

 

 

 

21,177

 

 

 

18,047

 

Bonus, commissions, and incentives

 

883

 

 

 

573

 

 

 

414

 

 

 

1,833

 

 

 

2,376

 

Occupancy and equipment

 

1,070

 

 

 

973

 

 

 

790

 

 

 

3,010

 

 

 

2,362

 

Data processing

 

1,247

 

 

 

1,083

 

 

 

1,047

 

 

 

3,486

 

 

 

4,266

 

Marketing and business development

 

662

 

 

 

750

 

 

 

693

 

 

 

2,100

 

 

 

1,727

 

Professional services

 

956

 

 

 

979

 

 

 

1,267

 

 

 

3,089

 

 

 

2,554

 

Loan origination and collection

 

1,068

 

 

 

748

 

 

 

683

 

 

 

2,486

 

 

 

2,284

 

Employee recruiting and development

 

518

 

 

 

532

 

 

 

441

 

 

 

1,653

 

 

 

1,213

 

Regulatory assessments

 

110

 

 

 

121

 

 

 

138

 

 

 

299

 

 

 

340

 

Other noninterest expense

 

886

 

 

 

1,063

 

 

 

612

 

 

 

2,586

 

 

 

1,847

 

Total noninterest expense

 

14,158

 

 

 

13,692

 

 

 

12,566

 

 

 

41,719

 

 

 

37,016

 

Income/(loss) before taxes from continuing operations

 

4,066

 

 

 

323

 

 

 

(1,680

)

 

 

4,253

 

 

 

11,141

 

Income tax expense/(benefit) from continuing operations

 

983

 

 

 

(68

)

 

 

(362

)

 

 

888

 

 

 

2,968

 

Net income/(loss) from continuing operations

 

3,083

 

 

 

391

 

 

 

(1,318

)

 

 

3,365

 

 

 

8,173

 

(Loss)/income from discontinued operations before income taxes

 

(5,973

)

 

 

(896

)

 

 

3,459

 

 

 

(6,706

)

 

 

18,154

 

Income tax (benefit)/expense from discontinued operations

 

(1,488

)

 

 

(223

)

 

 

861

 

 

 

(1,670

)

 

 

4,520

 

Net (loss)/income from discontinued operations

 

(4,485

)

 

 

(673

)

 

 

2,598

 

 

 

(5,036

)

 

 

13,634

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

(1,402

)

 

 

(282

)

 

 

1,280

 

 

 

(1,671

)

 

 

21,807

 

Preferred dividends

 

208

 

 

 

208

 

 

 

230

 

 

 

624

 

 

 

797

 

Net income available to/(loss attributable to) common shareholders

$

(1,610

)

 

$

(490

)

 

$

1,050

 

 

$

(2,295

)

 

$

21,010

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.71

 

 

$

0.05

 

 

$

(0.40

)

 

$

0.68

 

 

$

1.97

 

Discontinued operations

 

(1.11

)

 

 

(0.17

)

 

 

0.66

 

 

 

(1.25

)

 

 

3.63

 

Basic earnings per common share

$

(0.40

)

 

$

(0.12

)

 

$

0.26

 

 

$

(0.57

)

 

$

5.60

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share:

 

 

 

 

 

 

 

 

 

Continuing operations

$

0.68

 

 

$

0.06

 

 

$

(0.40

)

 

$

0.67

 

 

$

1.86

 

Discontinued operations

 

(1.03

)

 

 

(0.16

)

 

 

0.66

 

 

 

(1.15

)

 

 

3.27

 

Diluted earnings per common share

$

(0.35

)

 

$

(0.10

)

 

$

0.26

 

 

$

(0.48

)

 

$

5.13

 


Loan Composition

(Dollars in thousands)

9/30/2022

 

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

Real estate:

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

(Unaudited)

Residential

$

176,574

 

 

$

122,403

 

 

$

102,897

 

 

$

87,235

 

 

$

79,889

 

Commercial

 

220,210

 

 

 

216,067

 

 

 

189,684

 

 

 

163,477

 

 

 

151,122

 

Construction and land

 

9,259

 

 

 

9,686

 

 

 

18,038

 

 

 

18,632

 

 

 

17,848

 

Commercial and industrial

 

183,631

 

 

 

168,990

 

 

 

180,163

 

 

 

217,155

 

 

 

232,416

 

Commercial and industrial – PPP

 

22,286

 

 

 

31,430

 

 

 

44,792

 

 

 

80,158

 

 

 

156,783

 

Consumer and other

 

37,595

 

 

 

35,845

 

 

 

13,502

 

 

 

3,581

 

 

 

4,910

 

Loans held for investment, at amortized cost, gross

 

649,555

 

 

 

584,421

 

 

 

549,076

 

 

 

570,238

 

 

 

642,968

 

Deferred loan costs (fees), net

 

9,047

 

 

 

7,629

 

 

 

7,297

 

 

 

7,975

 

 

 

7,298

 

Discount on SBA 7(a) loans sold

 

(5,068

)

 

 

(4,743

)

 

 

(4,624

)

 

 

(3,866

)

 

 

(3,753

)

Premium/(discount) on loans purchased

 

2,306

 

 

 

2,221

 

 

 

1,279

 

 

 

(13

)

 

 

(24

)

Allowance for loan losses

 

(9,739

)

 

 

(9,564

)

 

 

(10,170

)

 

 

(13,452

)

 

 

(16,616

)

Loans held for investment, at amortized cost

$

646,101

 

 

$

579,964

 

 

$

542,858

 

 

$

560,882

 

 

$

629,873

 


Nonperforming Assets (Unaudited)

(Dollars in thousands)

9/30/2022

 

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

Nonperforming loans (government guaranteed balances)

$

6,252

 

 

$

6,192

 

 

$

6,174

 

 

$

7,942

 

 

$

6,739

 

Nonperforming loans (unguaranteed balances)

 

4,015

 

 

 

4,245

 

 

 

2,660

 

 

 

3,967

 

 

 

3,756

 

Total nonperforming loans

 

10,267

 

 

 

10,437

 

 

 

8,834

 

 

 

11,909

 

 

 

10,495

 

OREO

 

56

 

 

 

56

 

 

 

3

 

 

 

3

 

 

 

3

 

Total nonperforming assets

$

10,323

 

 

$

10,493

 

 

$

8,837

 

 

$

11,912

 

 

$

10,498

 

Nonperforming loans as a percentage of total loans held for investment

 

1.51

%

 

 

1.63

%

 

 

1.57

%

 

 

2.04

%

 

 

1.60

%

Nonperforming loans (excluding government guaranteed balances) to total loans held for investment

 

0.59

%

 

 

0.66

%

 

 

0.47

%

 

 

0.68

%

 

 

0.57

%

Nonperforming assets as a percentage of total assets

 

1.11

%

 

 

1.14

%

 

 

0.99

%

 

 

1.30

%

 

 

1.11

%

Nonperforming assets (excluding government guaranteed balances) to total assets

 

0.44

%

 

 

0.47

%

 

 

0.30

%

 

 

0.43

%

 

 

0.40

%

ALLL to nonperforming loans

 

94.86

%

 

 

91.64

%

 

 

115.12

%

 

 

112.96

%

 

 

158.32

%

ALLL to nonperforming loans (excluding government guaranteed balances)

 

242.57

%

 

 

225.30

%

 

 

382.33

%

 

 

339.10

%

 

 

442.39

%

Contacts:
Anthony N. Leo
Chief Executive Officer 
727.399.5678 

Robin L. Oliver
Chief Financial Officer
727.685.2082

Source