8-K
BayFirst Financial Corp. (BAFN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 27, 2023
BAYFIRST FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
| Florida | 001-41068 | 59-3665079 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>file number) | (IRS employer<br><br>identification no.) |
| 700 Central Avenue | 33701 | |
| St. Petersburg, Florida | (Zip Code) | |
| (Address of principal executive offices) | ||
| (727) 440-6848 | ||
| (Registrant’s telephone number, including area code) |
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
|---|---|---|
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
| Securities Registered pursuant to Section 12(b) of the Act: | ||
| --- | --- | --- |
| Title of each class registered | Trading Symbol(s) | Name of exchange on which registered |
| Common Stock | BAFN | The Nasdaq Stock Market LLC |
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1933 (§240.12b-2 of this chapter) | ||
| --- | ||
| Emerging growth company ☑ | ||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Item 2.02. Results of Operations and Financial Condition
On April 27, 2023, BayFirst Financial Corp. issued a press release announcing its financial results for the first quarter of 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure
The Company has prepared presentation materials (the “Conference Call & Webcast Presentation”) that management intends to use during its previously announced First Quarter 2023 conference call on Friday, April 28, 2023 at 9:00 am Eastern Time, and from time to time thereafter in presentations about the Company’s operations and performance. The Company may use the Conference Call & Webcast Presentation, possibly with modifications, in presentations to current and potential investors, analysts, lenders, business partners, acquisition candidates, customers, employees and others with an interest in the Company and its business.
A copy of the Conference Call & Webcast Presentation is furnished as Exhibit 99.2 to this report and incorporated here by reference. The Conference Call & Webcast Presentation is also available on the Company's website at www.bayfirstfinancial.com. Materials on the Company’s website are not part of, or incorporated by reference into, this report.
Item 8.01. Other Events
On April 25, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.08 per common share. The dividend will be payable June 15, 2023 to common shareholders of record as of June 1, 2023. This dividend marks the 28th consecutive quarterly cash dividend paid since BayFirst initiated cash dividends in 2016.
Item 9.01 Financial Statements and Exhibits.
| (d) Exhibits | ||
|---|---|---|
| Exhibit Number | Exhibit Name | Filed Herewith |
| 99.1 | BayFirst Financial Corp. Press Release dated April 27, 2023 | * |
| 99.2 | BayFirst Financial Corp. First Quarter 2023 Investor Presentation | * |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | * |
The information in this report (including the exhibits) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BAYFIRST FINANCIAL CORP. | |
|---|---|
| Date: | 4/27/2023 |
| By: | /s/ Robin L. Oliver |
| Robin L. Oliver | |
| Chief Financial Officer and<br>Chief Operating Officer |
Document
| Contacts: | |
|---|---|
| Anthony N. Leo | Robin L. Oliver |
| Chief Executive Officer | Chief Operating Officer and Chief Financial Officer |
| 727.399.5678 | 727.685.2082 |
BayFirst Financial Corp. Reports First Quarter 2023 Results;
Highlighted by Exceptional Core Deposit Growth and Strong Balance Sheet Liquidity
ST. PETERSBURG, FL. — April 27, 2023 — BayFirst Financial Corp. (NASDAQ: BAFN) (“BayFirst” or the “Company”), parent company of BayFirst National Bank (the “Bank”) today reported net income of $739 thousand, or $0.13 per diluted share, for the first quarter of 2023 compared to $1.3 million, or $0.28 per diluted share, in the fourth quarter of 2022. In the first quarter of 2022, net income was $13 thousand, or $(0.05) per diluted share. Net income from continuing operations was $867 thousand for the first quarter of 2023 compared to net income from continuing operations of $2.1 million in the fourth quarter of 2022 and a net loss from continuing operations of $110 thousand in the first quarter of 2022. The Company's balance sheet displayed ample liquidity and strong balance sheet and core deposit growth.
The decrease in earnings from continuing operations during the first quarter of 2023, compared to the fourth quarter of 2022, was the result of lower gain on sale of government guaranteed loans (SBA/USDA) of $1.4 million. This decrease was attributable to the cancellation of approximately $60 million of loan sales originally contracted to Signature Bank which were then rebid to another investor during less favorable market conditions once Signature Bank was placed into receivership by the FDIC. In addition, there was higher interest expense on deposits of $1.2 million, higher provision for credit losses of $1.2 million, and higher compensation costs of $1.8 million, partially offset by higher loan interest income, including fees, of $1.4 million and an increase in the government guaranteed loans fair value of $2.3 million.
BayFirst’s management team will host a conference call on Friday, April 28, 2023 at 9:00 a.m. EDT to discuss its first 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) 396-8049 to participate in the call. A replay will be available for one week at (877) 674-7070 using access code 559600# or at www.bayfirstfinancial.com.
“BayFirst’s first quarter of 2023 was highlighted by strong core deposit growth,” stated Anthony N. Leo, Chief Executive Officer. “We benefited from exceptional growth in all core deposit categories, with noninterest bearing balances growing by 14% in the first quarter alone, while total transaction account balances grew by 26%. Additionally, we benefited from approximately 82% of our deposits being fully FDIC insured, which is the direct result of our community focused business model. Our goal is to fund continued balance sheet growth primarily through core deposits.”
“Our operating performance during the first quarter of 2023 was negatively impacted by a sale of approximately $60 million in SBA guaranteed loans which was cancelled with Signature Bank after the FDIC placed the bank into receivership,” Leo continued. “Signature Bank was one of the largest aggregators of SBA loans, and our counterparty on the sale of the bulk of our SBA loans during the first quarter of 2023. We moved quickly to identify another buyer to mitigate our damages, all at a time of limited liquidity in the secondary market. The re-trade of these loans resulted in $1.6 million in reduced income on the sale. The FDIC has taken the position that all contracts of Signature Bank would be honored, and we are in the process of submitting a claim for breach of contract to the FDIC as receiver for the gain differential.”
“The disruption caused by the Signature Bank failure highlights a central theme of our strategic plan to grow recurring revenue through net interest income, thereby resulting in less reliance on the gain on sale from SBA loans,” said
BayFirst Financial Corp. Reports First Quarter 2023 Results
April 27, 2023
Page 2
Thomas G. Zernick, President. “A critical element of this strategy focuses on growing our lower cost transaction account base to fund a rapidly expanding commercial and consumer loan portfolio. As such, we are in a position to continue to expand our lending services and take advantage of opportunities that arise as our competitors pull back in the current environment. We serve individuals, families and small businesses, with a focus on checking and savings accounts which are not only less rate sensitive, but also are far less volatile in times of economic disruptions. Moreover, our focus on providing checking and savings accounts to a broad segment of the communities we serve expands our overall franchise in the attractive Tampa Bay region and increases opportunities for offering consumer loans, residential mortgages, and small business loans throughout the region.”
First Quarter 2023 Performance Review
•Deposits increased $137.8 million, or 17.3%, during the first quarter of 2023 and increased $162.8 million, or 21.1%, over the past year to $932.9 million. During the first quarter of 2023, there were increases in interest-bearing transaction account balances of $63.8 million, time deposit balances of $59.4 million, non-interest bearing deposit account balances of $13.4 million, and money market and savings account balances of $1.2 million. Transaction accounts increased $77.2 million or 26.1% during the quarter. The time deposit balance increase was partially due to a $35.0 million increase in short-term Certificate of Deposit Account Registry Service ("CDARS") and listing service balances. Approximately 82% of our deposits are insured.
•Balance sheet liquidity remains strong, with over $136.5 million in cash balances and time deposits with other banks as of March 31, 2023. Additionally, the Company maintains a significant borrowing capability through the FHLB and Federal Reserve discount window.
•The Company’s government guaranteed loan origination platform, CreditBench, originated $121.1 million in new government guaranteed loans during the first quarter of 2023, a 10.6% increase compared to $109.4 million originated in the fourth quarter of 2022, and a 155.8% increase over $47.3 million of loans produced during the first quarter of 2022. The Company has increased the origination of smaller SBA loans since the launch of BOLT, 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 originated 1,387 BOLT loans totaling $179.8 million of which 464 BOLT loans totaling $58.6 million were originated during the quarter.
•Loans held for investment, excluding PPP loans of $18.3 million, increased by $65.0 million or 9.2% to $774.5 million during the first quarter of 2023 and $257.0 million, or 49.7% over the past year. Production during the quarter was partially offset by the sale of $71.6 million of government guaranteed loans.
•Tangible book value at March 31, 2023 was $19.70 per common share, down from $20.35 at December 31, 2022. The decline in book value was primarily due to the implementation of the new credit loss accounting standard known as Current Expected Credit Loss (“CECL”). As a result of the accounting change, equity was reduced by $2.5 million or a $0.61 reduction in tangible book value.
•Net interest margin including discontinued operations contracted slightly by 2 bps to 4.17% in the first quarter of 2023, from 4.19% in the fourth quarter of 2022, primarily due to an increase in deposit costs, partially offset by increase in loan yields.
Results of Operations
Net Income (Loss)
Net income was $739 thousand for the first quarter of 2023 compared to $1.3 million in the fourth quarter of 2022, and $13 thousand in the first quarter of 2022. The decrease in net income for the first quarter of 2023 from the preceding quarter was primarily due to a decrease of $1.4 million in gain on sale of government guaranteed loans, higher interest expense on deposits of $1.2 million, higher provision for credit losses of $1.2 million, and higher compensation costs of $1.8 million, partially offset by higher loan interest income, including fees, of $1.4 million and an increase in fair value gains related to held for investment government guaranteed loans of $2.3 million. The increase in net income from the first quarter of 2022 was due to increases of $3.4 million in net interest income and $3.8 million of fair value gains related to held for investment government guaranteed loans. This was partially offset
BayFirst Financial Corp. Reports First Quarter 2023 Results
April 27, 2023
Page 3
by the credit loss provision, which changed unfavorably by $4.3 million from the first quarter of 2022, and higher noninterest expense of $1.5 million.
Net Interest Income and Net Interest Margin
Net interest income from continuing operations was $9.1 million in the first quarter of 2023, an increase of $479 thousand or 5.6% from $8.6 million in the fourth quarter of 2022, and an increase of $3.4 million or 59.7% from $5.7 million in the first quarter of 2022. The increase during the first quarter of 2023 as compared to the prior quarter was mainly due to an increase in loan interest income, including fees of $1.4 million, partially offset by an increase in deposit interest expense of $1.2 million. The increase during the first quarter of 2023 as compared to the year ago quarter was mainly due to the increase in loan interest income, including fees, of $6.3 million, partially offset by higher interest expense on deposits of $3.7 million.
Net interest margin including discontinued operations decreased to 4.17% for the first quarter of 2023, which represented a slight contraction of 2 basis points, compared to 4.19% from the preceding quarter and an expansion of 92 basis points compared to 3.25% from the same quarter last year.
Noninterest Income
Noninterest income from continuing operations was $9.4 million for the first quarter of 2023, an increase of $1.0 million or 12.4% from $8.4 million in the fourth quarter of 2022, and an increase of $3.8 million or 66.8% from $5.7 million in the first quarter of 2022. The increase in the first quarter of 2023, as compared to the prior quarter, was primarily due to an increase of $2.3 million of fair value gains related to held for investment government guaranteed loans, partially offset by a $1.4 million reduction in gain on sale of government guaranteed loans. The gain on sale was impacted by a $1.6 million reduction in expected premium income from the cancellation of the sale to a bank placed in receivership, which resulted in the Bank having to rebid the loans to a different investor at a time when the SBA secondary market pricing was significantly less favorable. The increase in the first quarter of 2023, as compared to the first quarter of 2022 was the result of $3.8 million of fair value gain improvement related to held for investment government guaranteed loans.
Noninterest Expense
Noninterest expense from continuing operations was $15.4 million in the first quarter of 2023, which was a $1.9 million or 14.2% increase from $13.5 million in the fourth quarter of 2022 and a $1.5 million or 11.1% increase compared to $13.9 million in the first quarter of 2022. The increase in the first quarter of 2023, as compared to the prior quarter, was primarily due to an increase of $1.8 million in compensation costs. The increase in compensation costs was the result of the recognition of the one-time employee retention credit last quarter, annual merit increases, higher payroll taxes in the first quarter since limits are reset, and lower deferral of loan origination compensation costs. The increase in the first quarter of 2023, as compared to the first quarter of 2022 was primarily due to higher loan origination expense of $0.8 million and higher compensation costs of $0.7 million.
Discontinued Operations
Net loss on discontinued operations was $128 thousand in the first quarter of 2023, which was a $663 thousand improvement from a net loss of $791 thousand in the fourth quarter of 2022. The company recorded net income on discontinued operations of $123 thousand in the first quarter of 2022. The loss in the first quarter of 2023 was partially due to lagging facilities costs as we seek to sublease the vacant space. The decrease in the net loss from the previous quarter was the result of a decrease of $2.1 million in noninterest expense, partially offset by a decrease in gains on sale of residential mortgage loans of $883 thousand and a decrease in income tax benefit of $220 thousand. The $251 thousand decrease in income from the year ago quarter was primarily due to a decrease in residential loan fee income of $13.2 million, partially offset by a decrease in noninterest expense of $13.6 million.
BayFirst Financial Corp. Reports First Quarter 2023 Results
April 27, 2023
Page 4
Balance Sheet
Assets
Total assets increased $130.9 million or 13.9% during the first quarter of 2023 to $1.07 billion, mainly due to new loan production and an increase of $65.6 million in cash and cash equivalents, partially offset by the sale of $71.6 million in government guaranteed loans.
Loans
Loans held for investment, excluding PPP loans, increased $65.0 million or 9.2% during the first quarter of 2023 and $257.0 million or 49.7%, over the past year to $774.5 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 $0.9 million in the first quarter of 2023 to $18.3 million.
Deposits
Deposits increased $137.8 million or 17.3% during the first quarter of 2023 and increased $162.8 million or 21.1% compared to March 31, 2022, ending the first quarter of 2023 at $932.9 million. During the first quarter, there was growth in all categories of deposits. There were increases in interest-bearing transaction account balances of $63.8 million, time deposit balances of $59.4 million, non-interest bearing deposit account balances of $13.4 million, and money market and savings account balances of $1.2 million. The time deposit balance increase was partially due to a $35.0 million increase 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. With the adoption, the allowance for credit losses ("ACL") for loans increased by $3.1 million to 1.73% of loans on this effective date combined with a $213 thousand increase in reserve on unfunded commitments and an $18 thousand reserve on held to maturity investment securities. Under CECL, the ACL is based on projected credit losses rather than on incurred losses. The increase in ACL had an after tax adjustment to capital of $2.5 million, with no impact to earnings.
Asset quality remained strong in the first quarter of 2023. Although net charge-offs and delinquencies increased, nonperforming assets decreased. As a result of loan growth and increased consumer charge-offs, the Company recorded a provision for credit losses in the first quarter of $1.9 million, which compared to a $0.7 million provision under the incurred loss method for the fourth 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 $2.4 million negative provision for loan losses under the incurred loss method during the first quarter of 2022.
The ratio of the allowance for credit losses to total loans held for investment at amortized cost, excluding government guaranteed loans, was 2.09% at March 31, 2023, 1.62% as of December 31, 2022, and 2.73% as of March 31, 2022.
Net charge-offs for the first quarter of 2023 were $1.9 million, a $0.5 million increase from $1.4 million for the fourth quarter of 2022 and a $1.0 million increase compared to $0.9 million in the first quarter of 2022. Annualized net charge-offs as a percentage of average loans, excluding PPP loans, were 1.01% for the first quarter of 2023, up from 0.79% in the fourth quarter of 2022 and 0.68% in the first quarter of 2022. Nonperforming assets, excluding government guaranteed loans, to total assets was 0.20% as of March 31, 2023, compared to 0.40% as of December 31, 2022, and 0.30% as of March 31, 2022.
Capital
The Bank’s Tier 1 leverage ratio was 10.18% as of March 31, 2023, a decrease from 10.79% as of December 31, 2022, and a decrease from 11.75% at March 31, 2022. The CET 1 and Tier 1 capital ratio to risk-weighted assets were 12.87% as of March 31, 2023, a decrease from 13.75% as of December 31, 2022, and a decrease from 18.19% as of March 31, 2022. The total capital to risk-weighted assets ratio was 14.12% as of March 31, 2023, a decrease from 15.00% as of December 31, 2022, and a decrease from 19.45% as of March 31, 2022.
BayFirst Financial Corp. Reports First Quarter 2023 Results
April 27, 2023
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Recent Events
Second Quarter Common Stock Dividend. On April 25, 2023, BayFirst’s Board of Directors declared a second quarter 2023 cash dividend of $0.08 per common share. The dividend will be payable June 15, 2023 to common shareholders of record as of June 1, 2023. This dividend marks the 28th consecutive quarterly cash dividend paid since BayFirst initiated cash dividends in 2016.
Management Succession. On February 6, 2023, BayFirst Financial Corp. issued a press release announcing that Anthony N. Leo will retire as Chief Executive Officer at the end of 2023. Mr. Leo will remain a Director of the Company and will also serve as Special Counsel for strategic matters. The Board of Directors has appointed Thomas G. Zernick to succeed Mr. Leo as Chief Executive Officer on January 1, 2024. He was also appointed to serve as a Director of the Company. Mr. Zernick has served as President of the Company since February 2022, and previously served as President of its CreditBench Division, which provides government guaranteed lending to businesses throughout the nation. He joined the Company in 2016.
Stock Repurchase Program. On February 28, 2023, the Board of Directors approved the Company’s 2023 Stock Repurchase Program (“Program”). The Program permits the Company to repurchase up to $1,000,000 of the Company’s issued and outstanding common stock. The Program will continue until the earlier of: (i) the date an aggregate of $1,000,000 of common stock has been repurchased; (ii) December 31, 2023; or (iii) the termination of the plan by the Board of Directors. There has been no purchases made under this program as of the report date.
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 nine full-service banking offices throughout the Tampa Bay region and offers a broad range of commercial and consumer banking services to businesses and individuals. It was the 6th largest SBA 7(a) lender by dollar volume and 3rd by number of units originated nationwide through the second quarter ended March 31, 2023, of SBA's 2023 fiscal year. Additionally, it is the number one SBA 7(a) lender in the 5 county Tampa Bay market for the SBA's 2022 fiscal year end. As of March 31, 2023, BayFirst Financial Corp. had $1.07 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 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. Reports First Quarter 2023 Results
April 27, 2023
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BAYFIRST FINANCIAL CORP.
SELECTED FINANCIAL DATA (Unaudited)
| At or for the three months ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands, except for share data) | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | ||||||||||
| Balance sheet data: | |||||||||||||||
| Average loans held for investment, excluding PPP loans | $ | 747,417 | $ | 703,193 | $ | 663,716 | $ | 561,455 | $ | 520,559 | |||||
| Average total assets | 969,489 | 925,194 | 939,847 | 879,868 | 872,311 | ||||||||||
| Average common shareholders’ equity | 78,835 | 80,158 | 83,014 | 83,235 | 83,990 | ||||||||||
| Total loans held for investment | 792,777 | 728,652 | 680,805 | 641,737 | 561,797 | ||||||||||
| Total loans held for investment, excluding PPP loans | 774,467 | 709,479 | 658,669 | 610,527 | 517,434 | ||||||||||
| Total loans held for investment, excl gov’t gtd loan balances | 596,505 | 569,892 | 520,408 | 458,624 | 374,353 | ||||||||||
| Allowance for credit losses (1) | 12,208 | 9,046 | 9,739 | 9,564 | 10,170 | ||||||||||
| Total assets | 1,069,839 | 938,895 | 930,275 | 921,377 | 888,541 | ||||||||||
| Common shareholders’ equity | 80,734 | 82,279 | 81,032 | 83,690 | 85,274 | ||||||||||
| Share data: | |||||||||||||||
| Basic earnings (loss) per common share | $ | 0.13 | $ | 0.28 | $ | (0.40) | $ | (0.12) | $ | (0.05) | |||||
| Diluted earnings (loss) per common share | 0.13 | 0.28 | (0.35) | (0.10) | (0.05) | ||||||||||
| Dividends per common share | 0.08 | 0.08 | 0.08 | 0.08 | 0.08 | ||||||||||
| Book value per common share | 19.70 | 20.35 | 20.10 | 20.82 | 21.25 | ||||||||||
| Tangible book value per common share (2) | 19.70 | 20.35 | 20.10 | 20.80 | 21.22 | ||||||||||
| Performance and capital ratios: | |||||||||||||||
| Return on average assets | 0.30 | % | 0.57 | % | (0.60) | % | (0.13) | % | 0.01 | % | |||||
| Return on average common equity | 2.69 | % | 5.56 | % | (7.76) | % | (2.35) | % | (0.93) | % | |||||
| Net interest margin | 4.17 | % | 4.19 | % | 4.63 | % | 3.73 | % | 3.25 | % | |||||
| Dividend payout ratio | 61.48 | % | 28.99 | % | (20.02) | % | (65.54) | % | (164.25) | % | |||||
| Asset quality ratios: | |||||||||||||||
| Net charge-offs | $ | 1,887 | $ | 1,393 | $ | 575 | $ | 856 | $ | 882 | |||||
| Net charge-offs/avg loans held for investment excl PPP | 1.01 | % | 0.79 | % | 0.35 | % | 0.61 | % | 0.68 | % | |||||
| Nonperforming loans | $ | 5,890 | $ | 10,468 | $ | 10,267 | $ | 10,437 | $ | 8,834 | |||||
| Nonperforming loans (excluding gov't gtd balance) | $ | 2,095 | $ | 3,671 | $ | 4,015 | $ | 4,245 | $ | 2,660 | |||||
| Nonperforming loans/total loans held for investment | 0.74 | % | 1.44 | % | 1.51 | % | 1.63 | % | 1.57 | % | |||||
| Nonperforming loans (excl gov’t gtd balance)/total loans held for investment | 0.26 | % | 0.50 | % | 0.59 | % | 0.66 | % | 0.47 | % | |||||
| ACL/Total loans held for investment at amortized cost (1) | 1.69 | % | 1.29 | % | 1.48 | % | 1.62 | % | 1.84 | % | |||||
| ACL/Total loans held for investment at amortized cost, excl PPP loans (1) | 1.73 | % | 1.33 | % | 1.54 | % | 1.71 | % | 2.00 | % | |||||
| ACL/Total loans held for investment at amortized cost, excl government guaranteed loans (1) | 2.09 | % | 1.62 | % | 1.90 | % | 2.14 | % | 2.73 | % | |||||
| Other Data: | |||||||||||||||
| Full-time equivalent employees | 300 | 291 | 524 | 485 | 575 | ||||||||||
| Banking center offices | 9 | 8 | 8 | 7 | 7 | ||||||||||
| Loan production offices(3) | 1 | 1 | 20 | 19 | 20 | ||||||||||
| (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) All out of market nationwide residential loan production offices have been closed. |
BayFirst Financial Corp. Reports First Quarter 2023 Results
April 27, 2023
Page 7
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) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | |||||
| Total shareholders’ equity | $ | 90,339 | $ | 91,884 | $ | 90,637 | $ | 93,295 | $ | 94,879 |
| Less: Preferred stock liquidation preference | (9,605) | (9,605) | (9,605) | (9,605) | (9,605) | |||||
| Total equity available to common shareholders | 80,734 | 82,279 | 81,032 | 83,690 | 85,274 | |||||
| Less: Goodwill | — | — | — | (100) | (100) | |||||
| Tangible common shareholders' equity | $ | 80,734 | $ | 82,279 | $ | 81,032 | $ | 83,590 | $ | 85,174 |
| Common shares outstanding | 4,098,805 | 4,042,474 | 4,031,937 | 4,019,023 | 4,013,173 | |||||
| Tangible book value per common share | $ | 19.70 | $ | 20.35 | $ | 20.10 | $ | 20.80 | $ | 21.22 |
BayFirst Financial Corp. Reports First Quarter 2023 Results
April 27, 2023
Page 8
BAYFIRST FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
| (Dollars in thousands) | 3/31/2023 | 12/31/2022 | 3/31/2022 | |||
|---|---|---|---|---|---|---|
| Assets | Unaudited | Unaudited | ||||
| Cash and due from banks | $ | 3,766 | $ | 3,649 | $ | 3,141 |
| Interest-bearing deposits in banks | 127,901 | 62,397 | 118,960 | |||
| Cash and cash equivalents | 131,667 | 66,046 | 122,101 | |||
| Time deposits in banks | 4,881 | 4,881 | 3,881 | |||
| Investment securities available for sale | 42,435 | 42,349 | 41,656 | |||
| Investment securities held to maturity, net of allowance for credit losses of $18, $0, and $0 | 2,484 | 5,002 | 2 | |||
| Nonmarketable equity securities | 5,115 | 4,037 | 2,520 | |||
| Government guaranteed loans held for sale | 1,174 | — | 1,445 | |||
| Government guaranteed loans held for investment, at fair value | 69,047 | 27,078 | 8,769 | |||
| Loans held for investment, at amortized cost net of allowance for credit losses of $12,208, $9,046, and $10,170 | 711,522 | 692,528 | 542,858 | |||
| Accrued interest receivable | 5,547 | 4,452 | 3,077 | |||
| Premises and equipment, net | 37,780 | 35,440 | 30,517 | |||
| Loan servicing rights | 11,625 | 10,906 | 7,399 | |||
| Deferred income tax assets | 1,338 | 980 | 490 | |||
| Right-of-use operating lease assets | 2,985 | 3,177 | 3,111 | |||
| Bank owned life insurance | 25,313 | 25,159 | 24,698 | |||
| Other assets | 16,421 | 15,649 | 13,372 | |||
| Assets from discontinued operations | 505 | 1,211 | 82,645 | |||
| Total assets | $ | 1,069,839 | $ | 938,895 | $ | 888,541 |
| Liabilities: | ||||||
| Noninterest-bearing deposits | $ | 106,622 | $ | 93,235 | $ | 92,680 |
| Interest-bearing transaction accounts | 266,445 | 202,656 | 180,815 | |||
| Savings and money market deposits | 364,269 | 363,053 | 464,847 | |||
| Time deposits | 195,565 | 136,126 | 31,787 | |||
| Total deposits | 932,901 | 795,070 | 770,129 | |||
| FHLB and FRB borrowings | 25,000 | 25,000 | — | |||
| Subordinated debentures | 5,994 | 5,992 | 5,987 | |||
| Notes payable | 2,731 | 2,844 | 3,186 | |||
| Accrued interest payable | 860 | 704 | 86 | |||
| Operating lease liabilities | 3,209 | 3,538 | 3,285 | |||
| Accrued expenses and other liabilities | 7,738 | 12,205 | 5,484 | |||
| Liabilities from discontinued operations | 1,067 | 1,658 | 5,505 | |||
| Total liabilities | 979,500 | 847,011 | 793,662 |
BayFirst Financial Corp. Reports First Quarter 2023 Results
April 27, 2023
Page 9
| (Dollars in thousands) | 3/31/2023 | 12/31/2022 | 3/31/2022 | |||
|---|---|---|---|---|---|---|
| Shareholders’ equity: | Unaudited | Unaudited | ||||
| Preferred stock, Series A; no par value, 10,000 shares authorized, 6,395 shares issued and outstanding at March 31, 2023, December 31, 2022, and March 31, 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 March 31, 2023, December 31, 2022, and March 31, 2022; aggregate liquidation preference of $3,210 each period | 3,123 | 3,123 | 3,123 | |||
| Common stock and additional paid-in capital; no par value, 15,000,000 shares authorized, 4,098,805, 4,042,474, and 4,013,173 shares issued and outstanding at March 31, 2023, December 31, 2022, and March 31, 2022, respectively | 54,003 | 53,023 | 52,252 | |||
| Accumulated other comprehensive loss, net | (3,182) | (3,724) | (1,458) | |||
| Unearned compensation | (940) | (178) | (630) | |||
| Retained earnings | 31,174 | 33,479 | 35,431 | |||
| Total shareholders’ equity | 90,339 | 91,884 | 94,879 | |||
| Total liabilities and shareholders’ equity | $ | 1,069,839 | $ | 938,895 | $ | 888,541 |
BayFirst Financial Corp. Reports First Quarter 2023 Results
April 27, 2023
Page 10
BAYFIRST FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
| For the Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| (Dollars in thousands, except per share data) | 3/31/2023 | 12/31/2022 | 3/31/2022 | |||
| Interest income: | Unaudited | Unaudited | Unaudited | |||
| Loans, including fees | $ | 13,071 | $ | 11,680 | $ | 6,818 |
| Interest-bearing deposits in banks and other | 1,180 | 840 | 185 | |||
| Total interest income | 14,251 | 12,520 | 7,003 | |||
| Interest expense: | ||||||
| Deposits | 4,923 | 3,711 | 1,217 | |||
| Other | 275 | 235 | 117 | |||
| Total interest expense | 5,198 | 3,946 | 1,334 | |||
| Net interest income | 9,053 | 8,574 | 5,669 | |||
| Provision for credit losses | 1,942 | 700 | (2,400) | |||
| Net interest income after provision for credit losses | 7,111 | 7,874 | 8,069 | |||
| Noninterest income: | ||||||
| Loan servicing income, net | 740 | 532 | 455 | |||
| Gain on sale of government guaranteed loans, net | 4,409 | 5,805 | 4,621 | |||
| Service charges and fees | 379 | 355 | 282 | |||
| Government guaranteed loans fair value (loss) gain | 3,574 | 1,246 | (197) | |||
| Other noninterest income | 346 | 466 | 504 | |||
| Total noninterest income | 9,448 | 8,404 | 5,665 | |||
| Noninterest Expense: | ||||||
| Salaries and benefits | 7,835 | 6,245 | 7,549 | |||
| Bonus, commissions, and incentives | 804 | 561 | 377 | |||
| Occupancy and equipment | 1,163 | 985 | 967 | |||
| Data processing | 1,347 | 1,342 | 1,155 | |||
| Marketing and business development | 665 | 560 | 689 | |||
| Professional services | 897 | 994 | 1,154 | |||
| Loan origination and collection | 1,495 | 1,225 | 670 | |||
| Employee recruiting and development | 568 | 577 | 603 | |||
| Regulatory assessments | 99 | 158 | 69 | |||
| Other noninterest expense | 539 | 846 | 638 | |||
| Total noninterest expense | 15,412 | 13,493 | 13,871 | |||
| Income/(loss) before taxes from continuing operations | 1,147 | 2,785 | (137) | |||
| Income tax expense/(benefit) from continuing operations | 280 | 672 | (27) | |||
| Net income/(loss) from continuing operations | 867 | 2,113 | (110) | |||
| (Loss)/income from discontinued operations before income taxes | (170) | (1,053) | 164 | |||
| Income tax (benefit)/expense from discontinued operations | (42) | (262) | 41 | |||
| Net (loss)/income from discontinued operations | (128) | (791) | 123 | |||
| Net income | 739 | 1,322 | 13 | |||
| Preferred dividends | 208 | 208 | 208 | |||
| Net income available to/(loss attributable to) common shareholders | $ | 531 | $ | 1,114 | $ | (195) |
BayFirst Financial Corp. Reports First Quarter 2023 Results
April 27, 2023
Page 11
| For the Quarter Ended | ||||||
|---|---|---|---|---|---|---|
| (Dollars in thousands, except per share data) | 3/31/2023 | 12/31/2022 | 3/31/2022 | |||
| Basic earnings (loss) per common share: | Unaudited | Unaudited | Unaudited | |||
| Continuing operations | $ | 0.16 | $ | 0.47 | $ | (0.08) |
| Discontinued operations | (0.03) | (0.19) | 0.03 | |||
| Basic earnings (loss) per common share | $ | 0.13 | $ | 0.28 | $ | (0.05) |
| Diluted earnings (loss) per common share: | ||||||
| Continuing operations | $ | 0.16 | $ | 0.47 | $ | (0.08) |
| Discontinued operations | (0.03) | (0.19) | 0.03 | |||
| Diluted earnings (loss) per common share | $ | 0.13 | $ | 0.28 | $ | (0.05) |
BayFirst Financial Corp. Reports First Quarter 2023 Results
April 27, 2023
Page 12
Loan Composition
| (Dollars in thousands) | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Real estate: | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
| Residential | $ | 214,638 | $ | 202,329 | $ | 176,574 | $ | 122,403 | $ | 102,897 |
| Commercial | 239,720 | 231,281 | 220,210 | 216,067 | 189,684 | |||||
| Construction and land | 11,069 | 9,320 | 9,259 | 9,686 | 18,038 | |||||
| Commercial and industrial | 199,721 | 194,643 | 183,631 | 168,990 | 180,163 | |||||
| Commercial and industrial - PPP | 18,430 | 19,293 | 22,286 | 31,430 | 44,792 | |||||
| Consumer and other | 32,697 | 37,288 | 37,595 | 35,845 | 13,502 | |||||
| Loans held for investment, at amortized cost, gross | 716,275 | 694,154 | 649,555 | 584,421 | 549,076 | |||||
| Deferred loan costs, net | 10,678 | 10,740 | 9,047 | 7,629 | 7,297 | |||||
| Discount on government guaranteed loans sold | (6,046) | (5,621) | (5,068) | (4,743) | (3,335) | |||||
| Premium/(discount) on loans purchased | 2,823 | 2,301 | 2,306 | 2,221 | (10) | |||||
| Allowance for credit losses (1) | (12,208) | (9,046) | (9,739) | (9,564) | (10,170) | |||||
| Loans held for investment, at amortized cost | $ | 711,522 | $ | 692,528 | $ | 646,101 | $ | 579,964 | $ | 542,858 |
Nonperforming Assets (Unaudited)
| (Dollars in thousands) | 3/31/2023 | 12/31/2022 | 9/30/2022 | 6/30/2022 | 3/31/2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Nonperforming loans (government guaranteed balances) | $ | 3,795 | $ | 6,797 | $ | 6,252 | $ | 6,192 | $ | 6,174 | |||||
| Nonperforming loans (unguaranteed balances) | 2,095 | 3,671 | 4,015 | 4,245 | 2,660 | ||||||||||
| Total nonperforming loans | 5,890 | 10,468 | 10,267 | 10,437 | 8,834 | ||||||||||
| OREO | 3 | 56 | 56 | 56 | 3 | ||||||||||
| Total nonperforming assets | $ | 5,893 | $ | 10,524 | $ | 10,323 | $ | 10,493 | $ | 8,837 | |||||
| Nonperforming loans as a percentage of total loans held for investment | 0.74 | % | 1.44 | % | 1.51 | % | 1.63 | % | 1.57 | % | |||||
| Nonperforming loans (excluding government guaranteed balances) to total loans held for investment | 0.26 | % | 0.50 | % | 0.59 | % | 0.66 | % | 0.47 | % | |||||
| Nonperforming assets as a percentage of total assets | 0.55 | % | 1.12 | % | 1.11 | % | 1.14 | % | 0.99 | % | |||||
| Nonperforming assets (excluding government guaranteed balances) to total assets | 0.20 | % | 0.40 | % | 0.44 | % | 0.47 | % | 0.30 | % | |||||
| ACL to nonperforming loans (1) | 207.27 | % | 86.42 | % | 94.86 | % | 91.64 | % | 115.12 | % | |||||
| ACL to nonperforming loans (excluding government guaranteed balances) (1) | 582.72 | % | 246.42 | % | 242.57 | % | 225.30 | % | 382.33 | % |
(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.
Note: Transmitted on Globe Newswire on April 27 2023, at 4:00 p.m. EDT.
bayfirstinvestorpresenta
BayFirst Financial Corp. (NASDAQ:BAFN) 2023 – First Quarter Results (Unaudited)
22 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. Cautionary Statement Concerning Forward-Looking Information Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this document, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
3 ABOUT BAYFIRST FINANCIAL CORP. TAMPA BAY’S PREMIER BANKING FRANCHISE in the Tampa Bay – St. Petersburg MSA(1) HOW WE RANK 2 ASSET SIZE Billion total assets (2)$1.07 SBA ORIGINATION SBA 7(a) ORIGINATOR IN THE NATION (3) #6 GROWTH ASSET GROWTH OVER 5 YEARS193% 1. Deposit market share ranking of banks with assets less than $10B headquartered in the MSA as of June 30, 2022 2. Financial data as of March 31, 2023 3. As of SBA’s quarter ended March 31, 2023 INITIATIVES ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FOCUSED ESG DEPOSITS 26% TRANSACTION ACCOUNTS GROWTH DURING THE QUARTER
44 ABOUT BAYFIRST FINANCIAL CORP. CURRENT BANKING CENTER LOCATION FUTURE BANKING CENTER LOCATION EXPANDING BANKING CENTER FRANCHISE
5 • Advanced technology platform to support innovative products and services while improving efficiencies • PowerLOS for government guaranteed and commercial lending platform • Working with FinTechs to offer new and innovative services through Mulesoft API platform • 9 banking centers in Tampa Bay, expected to grow to 12 banking centers over the next two years to three years ▪ 10 commercial and 4 consumer loan production officers • Full suite of commercial and consumer loan and deposit products to meet the needs of Tampa Bay individuals, families and small businesses • BayFirst’s in-house government guaranteed lending platform • #6 SBA lender in dollars and #3 in units as of SBA's quarter ended 3/31/2023 • #1 SBA lender in the five county Tampa Bay area at SBA’s FY ended 9/30/22 • FlashCap program: ▪ SBA 7(a) loans of $350K or less ▪ Includes BOLT SBA 7(a) loans for $150K or less, with 85% government guarantee • Core program: ▪ Focuses on $350K and above, and is anchored by 10 experienced core lenders ▪ Loan generation from organic sales and FinTech partners COMMUNITY BANKING TECHNOLOGY DRIVEN INNOVATIVE COMMUNITY BANK Technology driven community bank with diversified revenue streams CREDITBENCH
6 ATTRACTIVE LOAN COMPOSITION Composition of Loans Held for Investment as of March 31, 2023 33.9% 18.4%8.9% 1.4% 33.3% 4.1% C&I Residential HELOC C&D Secured by Other Real Estate Consumer & Other Loan Highlights • Total loan production of $168 million during the quarter • Loans held for investment grew $65 million during the quarter (1) • Purchased $36 million of government guaranteed loans • Sold $72 million of government guaranteed loans for a net gain on sale of $4 million during the quarter (1) Excludes PPP loans
7 SOLID DEPOSIT COMPOSITION Deposit Portfolio Composition as of March 31, 2023 • Transaction account balances increased $77 million or 26% during the quarter • Approximately 82% of deposits are insured • Minimal use of short-term brokered deposits ($30 million as of March 31, 2023) 11.4% 28.6% 39.0% 21.0% Noninterest Bearing Transaction Interest Bearing Transaction Savings & Money Market Time Deposits Deposit Highlights
Divider + Image Click image icon to insert rectangular image. No content below the lineNo content below the line Only use S&P Global Red for key text high- lights, not shapes or charts. It’s available in the custom color palette. Footer : Never change the footer text on individual slides. Change, turn on or off footer by using Insert Header & Footer Enter / change text Click Apply All. Data color order: Used with accent colors: Complimentary colors: Font: Follow the link below to download Akkurat, the S&P Global Font: https:// mediaportal.spglobal.c om/ selection/044f0784c26 0101db38e31ccde3bbe ff/detail/28188 8 KEY STRATEGIC INITIATIVES FOR 2023 AND BEYOND • Grow community banking franchise through new banking centers and expansion of commercial and consumer lending teams • Strive to be a top 5 SBA lender • Promote innovation through the Company while enhancing omnichannel and digital delivery • Optimize efficiency through technology and workflow improvements • Differentiate the Company through a commitment to social responsibility
9 Q1 2023 For the Three Months Ended ($000s) 3/31/2023 12/31/2022 Increase/ (Decrease) 3/31/2022 Increase/ (Decrease) Interest income $ 14,251 $ 12,520 $ 1,731 $ 7,003 $ 7,248 Interest expense 5,198 3,946 1,252 1,334 3,864 Net interest income 9,053 8,574 479 5,669 3,384 Provision for credit losses 1,942 700 1,242 (2,400) 4,342 Noninterest income 9,448 8,404 1,044 5,665 3,783 Noninterest expense 15,412 13,493 1,919 13,871 1,541 Income tax expense (benefit) 280 672 (392) (27) 307 Net income (loss) from continuing operations 867 2,113 (1,246) (110) 977 Net income (loss) from discontinued operations (128) (791) 663 123 (251) Net income 739 1,322 (583) 13 726 Preferred dividends 208 208 — 208 — Net income available to/(loss attributable to) common shareholders $ 531 $ 1,114 $ (583) $ (195) $ 726
10 Q1 2023 As of and For the Three Months Ended 3/31/2023 12/31/2022 3/31/2022 Return on average assets 0.30 % 0.57 % 0.01 % Return on average common equity 2.69 % 5.56 % (0.93) % Basic earnings (loss) from continuing operations per common share $ 0.16 $ 0.47 $ (0.08) Diluted earnings (loss) from continuing operations per common share $ 0.16 $ 0.47 $ (0.08) Dividend payout ratio 61.48 % 28.99 % (164.25) % Total Capital (to risk-weighted assets) 14.12 % 15.00 % 19.45 % Tier 1 Capital (to risk-weighted assets) 12.87 % 13.75 % 18.19 % Common Equity Tier 1 Capital (to risk-weighted assets) 12.87 % 13.75 % 18.19 % Tier 1 Capital (to total assets) 10.18 % 10.79 % 11.75 % Nonperforming loans (excl gov’t gtd balance)/total loans held for investment 0.26 % 0.50 % 0.47 % ACL/Total loans held for investment at amortized cost, excl PPP loans (1) 1.73 % 1.33 % 2.00 % (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.
11 $56 $85 $82 $81 2020Y 2021Y 2022Y 2023Q1 $20 $40 $60 $80 $100 $120 Strong balance sheet on track for continued organic growth ORGANIC GROWTH Total Assets excluding PPP Loans ($M) Total Net Loans HFI excluding PPP loans ($M) Total Deposits ($M) Tangible Common Equity ($M) Capitalizing on $15.0M after-ta x gain on sale of PPP loans in ’20 & ‘21 $706 $844 $920 $1,052 2020Y 2021Y 2022Y 2023Q1 $0 $200 $400 $600 $800 $1,000 $1,200 $471 $491 $700 $762 2020Y 2021Y 2022Y 2023Q1 $0 $200 $400 $600 $800 $1,000 $559 $722 $795 $933 2020Y 2021Y 2022Y 2023Q1 $0 $200 $400 $600 $800 $1,000 $1,200 CECL adoption decreased capital by $2.5M in ‘23
Divider + Image Click image icon to insert rectangular image. No content below the lineNo content below the line Only use S&P Global Red for key text high- lights, not shapes or charts. It’s available in the custom color palette. Footer : Never change the footer text on individual slides. Change, turn on or off footer by using Insert Header & Footer Enter / change text Click Apply All. Data color order: Used with accent colors: Complimentary colors: Font: Follow the link below to download Akkurat, the S&P Global Font: https:// mediaportal.spglobal.c om/ selection/044f0784c26 0101db38e31ccde3bbe ff/detail/28188 12 LIQUIDITY SOURCES • Available Liquidity ◦ $137 million in cash and due from other banks ◦ $42 million in AFS investment securities • Off Balance Sheet Sources of Liquidity ◦ $131 million of unused, available borrowing capacity at the FHLB based on pledged loans ◦ $41 million available at the Federal Reserve Bank based on pledged loans ◦ $40 million in available Fed Funds borrowing lines from other banks • Contingent Sources ◦ Up to $130 million in brokered deposits (1) ◦ Up to $309 million in listing service deposits (1) (1) Based on Bank’s policy limits Data as of March 31, 2023 (unaudited)
13 POSITIONED TO RETURN TO STRONG PROFITABILITY ROAA (%) ROATCE (%) Net Interest Margin (%) Noninterest Income / Total Revenue from Continuing Operations Volatility in 2022 due to discontinued mortgage operations; 2023 was impacted by the cancellation of the sale of government guaranteed loans to Signature Bank (1) The NIM was depressed due to impact of low yield PPP loan portfolio 1.06% 1.90% (0.04)% 0.30% 2020Y 2021Y 2022Y 2023Q1 (0.50)% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 25.60% 32.40% (1.43)% 2.69% 2020Y 2021Y 2022Y 2023Q1 0.00% 7.50% 15.00% 22.50% 30.00% 2.88% 3.23% 3.97% 4.17% 2020Y 2021Y 2022Y 2023Q1 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% (1)(1) 7.63% 37.56% 51.26% 51.07% 2020Y 2021Y 2022Y 2023Q1 0% 10% 20% 30% 40% 50% 60%
14 ASSET QUALITY Strong reserve well-positioned to withstand volatility in economic conditions 1.44% 1.00% 0.61% 1.01% 2020Y 2021Y 2022Y 2023Q1 0.0% 0.5% 1.0% 1.5% 2.0% Net charge-offs/average loans held for investment excluding PPP ACL/Total loans held for investment at amortized cost, excluding PPP loans(1) 5.49% 2.72% 1.33% 1.73% 2020Y 2021Y 2022Y 2023Q1 0.0% 2.0% 4.0% 6.0% ACL to nonperforming loans(1)(2) Past due and Nonaccrual loans to Total loans HFI at amortized cost(2) 636.07% 339.10% 246.42% 582.72% 2020Y 2021Y 2022Y 2023Q1 0.0% 250.0% 500.0% 750.0% 0.45% 1.12% 1.08% 1.05% 2020Y 2021Y 2022Y 2023Q1 0.0% 0.5% 1.0% 1.5% (2) Excludes government guaranteed balances (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.
15 SHAREHOLDER VALUE CREATION $11.49 $12.77 $16.02 $21.75 $20.35 $19.70 Tangible Book Value 2018Y 2019Y 2020Y 2021Y 2022Y 2023Q1 $0 $5 $10 $15 $20 $25 CECL adoption decreased equity by $2.5M in ‘23 Record earnings fro m residential m ortgage and PPP lending in ‘20 and ‘21 Discontinuation of nationwide residential lending platform in ‘22
16 COMMUNITY BANKING PERFORMANCE Q1 2023 Loan Production Summary: ▪ Loan production during the quarter was $47.4 million(1) ▪ Loans held for investment, including government guaranteed loans, increased by a net $65.0 million QoQ Q1 2023 Deposit Summary: ▪ Deposit balances grew $137.8 million QoQ ▪ Deposit portfolio increased by 7.3% in number of accounts (to 15,739 accounts totaling $932.9 million) QoQ New Banking Center: • New banking center opened in North Tampa (Carrollwood) in January 2023 Q1 2023 Highlights Banking Center & Deposits ($ in 000s) Total Deposits # Branch Year Opened 3/31/2023 3/31/2022 3/31/2021 1 Saint Petersburg(2) 2017 $ 312,052 $ 247,204 $ 207,650 2 Sarasota 2018 188,418 169,613 128,340 3 Seminole 1999 137,298 159,093 138,104 4 Pinellas Park 2005 69,223 71,235 57,768 5 Countryside 2018 66,896 60,060 48,970 6 West Tampa 2020 88,286 54,985 26,432 7 Belleair Bluffs 2021 31,529 7,939 — 8 West Bradenton 2022 32,944 — — 9 Carrollwood 2023 6,255 — — Total Branches (9) $ 932,901 $ 770,129 $ 607,264 (1) Excludes government guaranteed loan production (2) Saint Petersburg branch deposits include other deposits generated by CreditBench, Cash Management, Corporate Treasury, and Virtual.
17 $101 $169 $386 $460 320 374 1,364 1,845 2020Y 2021Y 2022Y LTM $0 $100 $200 $300 $400 $500 250 500 750 1,000 1,250 1,500 1,750 2,000 • Ranked #6 in total SBA dollars and #3 in units for the quarter ending March 31, 2023 • Strategic initiative to expand USDA business and industry lending program. The Company recently hired an experienced USDA lender to support this effort. • Total Q1 2023 government guaranteed loan production increased 155.8% from Q1’2022 • Launched BOLT, an SBA 7(a) loan product designed to provide working capital loans of $150 thousand or less to businesses throughout the country ◦ Since the launch in June 2022, the Company originated loans totaling $179.8 million, including $58.6 million in Q1 2023 ◦ New automation program launched through its proprietary loan origination system PowerLOS and Open API, allowing increased volume and speed while limiting additional staff CREDITBENCH (SBA/USDA LENDING) Q1 2023 Highlights Government Guaranteed Loan Amount ($M) and Volume (1) CreditBench concentrated on PPP loan production for years 2020 to 2021 Excludes $877M PPP loans originated in ’20 and $329M during ‘21(1)
Divider + Image Click image icon to insert rectangular image. No content below the lineNo content below the line Only use S&P Global Red for key text high- lights, not shapes or charts. It’s available in the custom color palette. Footer : Never change the footer text on individual slides. Change, turn on or off footer by using Insert Header & Footer Enter / change text Click Apply All. Data color order: Used with accent colors: Complimentary colors: Font: Follow the link below to download Akkurat, the S&P Global Font: https:// mediaportal.spglobal.c om/ selection/044f0784c26 0101db38e31ccde3bbe ff/detail/28188 18 KEY INVESTMENT POINTS Second largest community bank (deposits) based in attractive Tampa Bay market area Total asset growth of 193% since YE2017 Innovative technology driven bank planning for the future of banking Among the nation’s top SBA loan generators Solid deposit growth of 17% for the quarter and 21% since same period last year Experienced management team with strong insider ownership of 14% ✔ ✔ ✔ ✔ ✔ ✔ ✔ Consistent dividend growing 100% over past 5 years
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20 INVESTMENT SECURITIES AFS Investment Securities Portfolio as of March 31, 2023 (fair market value, in thousands) (1)Investment Securities Portfolio Details • Other Comprehensive Loss of $3.2 million reduced Tangible Book Value by $0.78 as of March 31, 2023 ◦ We intend and have the ability to hold the available for sale investment securities to maturity; no plan to sell ◦ Cash flows could be used to fund future loan growth as needed ◦ Retained earnings and investments moving down the curve would earn back capital loss ◦ No impact to regulatory capital ratios • The Company has $2.5 million of HTM investment securities, net of ACL of $18 thousand. (1) HTM Investment Securities make up 10% of total investment securities portfolio $9,466 $3,426 $18,331 $11,212 Asset-backed securities MBS: U.S. Government-sponsored enterprises CMO: U.S. Government-sponsored enterprises Corporate Bonds
21 OWNERSHIP OVERVIEW Total Common Stock Ownership Mix Note: Ownership information based on most recently disclosed common shares outstanding of 4,098,805 Source: S&P Capital IQ Pro Vanguard Group Inc., 3.71% First Manhattan Co., 3.56% Banc Funds Co. LLC, 3.26% All Other Institutions, 10.04% Mark S. Berset, 6.82% All Other Directors/Executive Officers, 7.26% Public/Other, 65.35%
22 ATTRACTIVE FLORIDA MARKETS MEANINGFUL ECONOMIC TAILWINDS #2 state in the U.S.A. for net domestic migration and top 3 growth state* ~$1.4T economy, with 3.8% GDP growth in Q3’22 Attractive tax policy 3.0 million small businesses, more than any other Southeastern state 3rd most populous state Total Deposits in Pinellas, Hillsborough, Manatee and Sarasota Counties of $113bn* …Favorable Population Projections… …and Favorable Expected Household Incomes Tier 1 Markets: • Citrus • Hernando • Pasco • Pinellas • Charlotte • Hillsborough • Polk • Manatee • Sarasota Tier 2 Markets: • Sumter • Lake • Orange • Osceola • Collier • Hardee • DeSoto • Highlands • Lee *Source: S&P Global Market Intelligence as of January 2023, U-haul G ro w th R at e ('2 3 to '2 8) 2.12% 5.00% 5.19% 7.73% USA Florida Tampa MSA Sarasota MSA 0% 3% 5% 8% 10% G ro w th R at e ('2 3 to '2 8) 13.13% 12.55% 13.28% 12.29% USA Florida Tampa MSA Sarasota MSA 0% 5% 10% 15%
Divider + Image Click image icon to insert rectangular image. No content below the lineNo content below the line Only use S&P Global Red for key text high- lights, not shapes or charts. It’s available in the custom color palette. Footer : Never change the footer text on individual slides. Change, turn on or off footer by using Insert Header & Footer Enter / change text Click Apply All. Data color order: Used with accent colors: Complimentary colors: Font: Follow the link below to download Akkurat, the S&P Global Font: https:// mediaportal.spglobal.c om/ selection/044f0784c26 0101db38e31ccde3bbe ff/detail/28188 23 DEPOSIT MARKET SHARE Tampa-St. Petersburg MSA (Total Assets <$10BN and HQ in MSA) Note: Deposit data as of June 30, 2022 Source: S&P Capital IQ Pro Average Deposits Branches Deposits per Branch Market Share Rank Institution ($ millions) (No.) ($ millions) (%) 1 Tampa Bay Banking Co. $2,938 11 $267 65.09 % 2 BayFirst Financial Corp. 618 6 103 13.70 % 3 West Florida Bank Corp. 444 6 73 9.83 % 4 TCM Bank NA 226 1 226 5.00 % 5 Central Financial Holdings Inc. 128 1 128 2.83 % 6 Century Bancshares of Florida Inc. 97 1 97 2.14 % 7 Waterfall Bank 64 1 64 1.41 %
24 EXPERIENCED LEADERSHIP TEAM • Joined BayFirst in Q4 2013; Prior to joining BayFirst, provided management consulting and regulatory advisory services to community banks throughout the state of Florida and served as the interim CEO of three troubled banks between 2009 and 2013 • Managing Director and Executive Vice President of Community Banks, Inc. (Nasdaq: CMTY) in Harrisburg, PA from 1993 until its sale to Susquehanna Bancshares, Inc. (NasdaqGS: SUSQ) in 2007 • B.A. in Political Science from George Washington University and a J.D. from George Washington University Law School • Joined BayFirst in Q2 2018; Prior to joining BayFirst, Controller of Central Bank & Trust Co., a $2.5 billion privately held financial institution in Lexington, Kentucky, from May 2014 to June 2018 • Approximately 16 years with Crowe LLP as an auditor in the financial institution practice; served over 80 financial institution clients with assets ranging from $50 million to $4.5 billion throughout career, including several SEC registrants and FDICIA reporting institutions • B.S. in Accounting from the University of Kentucky • Joined BayFirst in Q1 2016 • Previous experience includes Florida Market President of Stearns Bank, SBA Product Manager of HomeBanc, and Community Bank President and SBA President of Republic Bank (MI) • B.A. in Business Administration from University of Notre Dame Anthony N. Leo Robin Oliver Thomas G. Zernick Chief Executive Officer & Director of BayFirst and the Bank EVP, Chief Financial Officer and Chief Operating Officer of BayFirst and the Bank President of BayFirst and the Bank 24
25 EXPERIENCED LEADERSHIP TEAM • Joined BayFirst in Q4 2017; Prior to joining BayFirst, over fifteen years of Mortgage Banking administration experience as well as Human Resources experience supporting mid-size financial institutions • B.B.S from The University of Florida and M.B.A from The University of Tampa • Joined BayFirst in Q4 2020 • 37 years information technology experience • Served as CTO for Fiserv, Inc. • B.A. from University of South Florida Brandi Jaber John Macaluso EVP, Chief Production Officer EVP, Chief Technology Officer 25 Lewis Benner EVP, Chief Credit Officer • Joined BayFirst in 2018; Prior to joining BayFirst, Mr. Benner served in leadership roles from multiple financial institutions • B.A. in Business Administration from Elizabethtown College • Joined BayFirst in 2018 • Held leadership positions at multiple institutions amassing expertise in many areas of community banking and business development • B.S. in Economics with an emphasis in Mathematics from University of Wisconsin-Madison Thomas Quale EVP, Chief Lending Officer and Market President