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) October 26, 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 October 26, 2023, BayFirst Financial Corp. issued a press release announcing its financial results for the third 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 Third Quarter 2023 conference call on Friday, October 27, 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 October 24, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.08 per common share. The dividend will be payable December 15, 2023 to common shareholders of record as of December 1, 2023. This dividend marks the 30th consecutive quarterly cash dividend paid since BayFirst initiated cash dividends in 2016.
Item 9.01 Financial Statements and Exhibits.
| (d) Exhibits | ||
|---|---|---|
| Exhibit Number | Exhibit Name | Filed Herewith |
| 99.1 | BayFirst Financial Corp. Press Release datedOctober26, 2023 | * |
| 99.2 | BayFirst Financial Corp. Third 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: | 10/26/2023 |
| By: | /s/ Scott J. McKim |
| Scott J. McKim | |
| Chief Financial Officer |
Document
| Contacts: | |
|---|---|
| Anthony N. Leo | Scott J. McKim |
| Chief Executive Officer | Chief Financial Officer |
| 727.399.5678 | 727.521.7085 |
BayFirst Financial Corp. Reports Third Quarter 2023 Results;
Highlighted by Third Consecutive Quarter of Earnings Growth and
Continued Core Loan and Deposit Growth
ST. PETERSBURG, FL. — October 26, 2023 — BayFirst Financial Corp. (NASDAQ: BAFN) (“BayFirst” or the “Company”), parent company of BayFirst National Bank (the “Bank”) today reported net income of $1.9 million, or $0.41 per diluted common share, for the third quarter of 2023 compared to $1.4 million, or $0.29 per diluted common share, in the second quarter of 2023. Net income from continuing operations was $2.0 million for the third quarter of 2023, compared to net income from continuing operations of $1.4 million in the second quarter of 2023 and $3.1 million in the third quarter of 2022.
The increase in earnings from continuing operations during the third quarter of 2023, as compared to the second quarter of 2023, was primarily the result of higher noninterest income of $3.7 million, or 34.2%, substantially attributable to an increase in gain on sale of government guaranteed loans of $1.1 million and an increase in the fair value gain on government guaranteed loans of $1.6 million. The increase was partially offset by increases in deposit interest expense of $2.0 million and noninterest expense of $1.0 million.
“BayFirst’s third quarter results reflect the continued progress in our efforts to fine tune our operations with third quarter net income increasing 39% over the prior quarter, highlighted by the strength of our community banking operations and record quarterly production by our CreditBench government guaranteed lending division," stated Anthony N. Leo, Chief Executive Officer. "Although net interest margin compressed in the third quarter as compared to the prior quarter, the number of checking accounts in our bank has expanded by 22% year-to-date, while transaction account balances have grown by 23% over the same period. We cater to individuals, families, and small businesses, with a focus on checking and savings accounts which are not only less rate sensitive, but also far less volatile in times of economic disruptions.”
“The third quarter progress is the result of our continued focus on becoming the premier community bank in the Tampa Bay market,” stated Thomas G. Zernick, President. “During the third quarter, we opened our tenth banking center in Sarasota, representing our third banking center in the Sarasota Bradenton portion of the Tampa Bay region. In addition, construction is progressing on our Sarasota South Tamiami Trail Banking Center, which will be our marquee office in the Sarasota area and is expected to open later this year. CreditBench produced $155.9 million in new loans during the quarter, with $84.9 million of that production coming from the SBA small loan program, particularly loans of $150 thousand or less which carry an 85% government guaranty as well as a higher yield than other SBA loans. In addition, loans originated through our community bank also had solid growth during the quarter, increasing $21.6 million from the prior quarter end."
Third Quarter 2023 Performance Review
•The Company’s government guaranteed loan origination platform, CreditBench, originated $155.9 million in new government guaranteed loans during the third quarter of 2023, an increase of 25.2% over $124.5 million of loans produced in the previous quarter, and an 11.8% increase over $139.5 million of loans produced during the third quarter of 2022. Demand remains strong for the Company's BOLT loan program, an SBA 7(a) loan product designed to expeditiously provide working capital loans of $150 thousand or less to businesses throughout the country. Since the launch in late second quarter of 2022, the Company has
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 2
originated 2,629 BOLT loans totaling $339.5 million, of which 652 BOLT loans totaling $84.9 million were originated during the quarter.
•Loans held for investment, excluding PPP loans of $15.2 million, increased by $42.2 million, or 5.1%, during the third quarter of 2023 to $863.2 million and $204.5 million, or 31.1%, over the past year. During the quarter, the Company originated $197.1 million of loans, purchased $6.9 million of government guaranteed loans, and sold $131.9 million of government guaranteed loan balances.
•Deposits increased $73.0 million, or 7.7%, during the third quarter of 2023 and increased $232.1 million, or 29.5%, over the past year to $1.02 billion. During the third quarter of 2023, interest-bearing transaction account balances increased $14.3 million and time deposit balances increased $113.6 million. These increases were partially offset by decreases in savings and money market deposit account balances of $51.8 million and noninterest-bearing deposit account balances of $3.1 million. The time deposit balance increase included a $6.4 million decrease in short-term Certificate of Deposit Account Registry Service ("CDARS") and listing service balances.
•Balance sheet liquidity remains strong, with $117.2 million in cash balances and time deposits with other banks as of September 30, 2023. Additionally, the Company maintains significant borrowing capacity through the FHLB and Federal Reserve discount window, furthermore approximately 85% of the Company's deposits are insured.
•Book value and tangible book value at September 30, 2023 were $20.12 per common share, up from $19.85 at June 30, 2023.
•Net interest margin including discontinued operations decreased by 82 bps to 3.36% in the third quarter of 2023, from 4.18% in the second quarter of 2023 primarily due to increases in deposit costs. Furthermore, the second quarter margin was inflated by 30 basis points related to the accelerated recognition of unamortized deferred premiums on the sale of $10.9 million of unguaranteed loan balances. Management does not anticipate further need to raise above market priced deposits which should support the improvement in our net interest margin in the fourth quarter.
Results of Operations
Net Income (Loss)
Net income was $1.9 million for the third quarter of 2023, compared to $1.4 million in the second quarter of 2023 and a net loss of $1.4 million in the third quarter of 2022. The increase in net income for the third quarter of 2023 from the preceding quarter was primarily due to an increase of $1.1 million in gain on sale of government guaranteed loans and an increase in the fair value gains on government guaranteed loans of $1.6 million, partially offset by higher interest expense on deposits of $2.0 million and higher noninterest expense of $1.0 million. The increase in net income from the third quarter of 2022 was due to an increase in gain on sale of government guaranteed loans of $3.5 million, an increase in other noninterest income of $1.4 million, and a decrease of $4.4 million in the net loss on discontinued operations. This was partially offset by an increase of $2.3 million in provision for credit losses and an increase in noninterest expense of $3.3 million. In the third quarter of 2022, the Company made the strategic decision to discontinue the Bank’s nationwide residential mortgage operations which resulted in the net loss from discontinued operations.
In the first nine months of 2023, net income was $4.0 million, an increase of $5.7 million from the net loss of $1.7 million for the first nine months of 2022. The increase was primarily the result of higher interest income from continuing operations of $23.6 million, an increase of $7.5 million in government guaranteed loan fair value gains, an increase in other noninterest income of $1.9 million, an increase of $1.7 million in gain on sale of government guaranteed loans, and a decrease of $4.8 million in net loss from discontinued operations. This was partially offset by
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 3
an increase of $16.9 million in interest expense on deposits, an increase of $9.1 million in provision for credit losses, and an increase of $7.5 million in noninterest expense.
Net Interest Income and Net Interest Margin
Net interest income from continuing operations was $8.4 million in the third quarter of 2023, a decrease of $1.7 million, or 17.0%, from the second quarter of 2023, and a decrease of $0.8 million, or 8.5%, from the third quarter of 2022. The net interest margin rate compressed by 82 basis points, of which 30 basis points was related to the recognition of unamortized deferred premiums related to the sale of the $10.9 million of high yielding, but also higher risk, unguaranteed SBA loans in the second quarter of 2023. The remaining compression was primarily from higher deposit interest expense during the quarter, specifically the Company's 6%, 13-month time deposit special, which ended on August 31, 2023. The additional time deposits, which replaced other non-core funding, will fund current and future small dollar SBA loans currently earning Prime plus 4.75%. Although time deposit balances increased in the third quarter, $71 million of time deposits are maturing in the fourth quarter of 2023, the majority of which are not expected to renew.
The decrease during the third quarter of 2023 as compared to the year ago quarter was mainly due to higher interest expense on deposits of $7.2 million, partially offset by an increase in loan interest income, including fees, of $5.4 million.
Net interest income from continuing operations was $27.6 million in the first nine months of 2023, an increase of $6.2 million, or 28.6%, from $21.4 million in the first nine months of 2022. The increase was mainly due to an increase in loan interest income, including fees, of $20.7 million, partially offset by an increase in deposit interest expense of $16.9 million.
Noninterest Income
Noninterest income from continuing operations was $14.7 million for the third quarter of 2023, an increase of $3.8 million, or 34.2%, from $10.9 million in the second quarter of 2023, and an increase of $4.9 million, or 49.7%, from $9.8 million in the third quarter of 2022. The increase in the third quarter of 2023, as compared to the prior quarter, was primarily due to an increase of $1.1 million in gain on sale of government guaranteed loans, net, and an increase of $1.6 million in fair value gains related to held for investment government guaranteed loans. The increase in the third quarter of 2023, as compared to the third quarter of 2022, was the result of increases in fair value gains related to held for investment government guaranteed loans of $3.5 million and other noninterest income of $1.4 million. The increase in other noninterest income was primarily attributable to higher government guaranteed loan packaging fees of $1.0 million.
Noninterest income from continuing operations was $35.1 million for the first nine months of 2023, an increase of $12.0 million, or 51.5%, from $23.1 million in the first nine months of 2022. The increase was primarily due to higher gains on the sale of government guaranteed loans of $1.7 million, a $7.5 million increase in fair value gains related to held for investment government guaranteed loans, and an increase in other noninterest income of $1.9 million. The increase in other noninterest income was primarily due to higher government guaranteed loan packaging fees of $1.6 million.
Noninterest Expense
Noninterest expense from continuing operations was $17.4 million in the third quarter of 2023, which was a $1.0 million, or 6.2%, increase from $16.4 million in the second quarter of 2023 and a $3.2 million, or 23.1%, increase compared to $14.2 million in the third quarter of 2022. The increase in the third quarter of 2023, as compared to the prior quarter, was primarily due to increases in compensation and incentive costs related to higher loan production, data processing expense, and nondeferrable origination expenses on fair value loans. The increase in the third quarter
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 4
of 2023, as compared to the third quarter of 2022 was primarily due to higher compensation costs of $1.7 million and higher loan origination expense of $0.9 million.
Noninterest expense from continuing operations was $49.2 million in the first nine months of 2023, which was a $7.5 million, or 18.0%, increase from $41.7 million in the first nine months of 2022. The increase was primarily the result of higher compensation costs and loan origination and collection expense.
Discontinued Operations
Net loss on discontinued operations was $47 thousand in the third quarter of 2023, which was $15 thousand higher than the net loss of $32 thousand in the second quarter of 2023. The company recorded net loss on discontinued operations of $4.5 million in the third quarter of 2022. The loss in the second and third quarters of 2023 were partially due to lagging facilities costs as we seek to sublease vacant space. The $4.4 million decrease in the net loss from the year-ago quarter was primarily due to a decrease in noninterest expense of $13.9 million, partially offset by decreases in residential loan fee income of $7.1 million, interest income of $0.9 million, and income tax benefit of $1.5 million. In the third quarter of 2022, the Company recognized $3.7 million of restructuring charges from the discontinuation of the residential mortgage operations which was recorded to noninterest expense.
Net loss from discontinued operations was $207 thousand in the first nine months of 2023, which was a $4.8 million reduction from a net loss of $5.0 million in the first nine months of 2022. The majority of the discontinued loss in 2022 was recorded in the third quarter of 2022. As such, the net loss from discontinued operations for the first nine months of 2022 included restructuring charges of $4.3 million and the discontinued loss in the first nine months of 2023 represented a modest amount of trailing expenses from the discontinuation.
Balance Sheet
Assets
Total assets increased $46.6 million, or 4.3%, during the third quarter of 2023 to $1.13 billion, mainly due to new loan production, partially offset by the sale of $131.9 million in government guaranteed loans and an increase of $8.8 million in cash and cash equivalents.
Loans
Loans held for investment, excluding PPP loans, increased $42.2 million, or 5.1%, during the third quarter of 2023 and $204.5 million, or 31.1%, over the past year to $863.2 million, due to increases in both conventional community bank loans and government guaranteed loans, partially offset by government guaranteed loan sales. PPP loans, net of deferred origination fees, decreased $0.4 million in the third quarter of 2023 to $15.2 million.
Deposits
Deposits increased $73.0 million, or 7.7%, during the third quarter of 2023 and $232.1 million, or 29.5%, from September 30, 2022, ending the third quarter of 2023 at $1.02 billion. During the third quarter, there was growth in interest-bearing transaction account balances of $14.3 million and time deposit balances of $113.6 million, partially offset by decreases in savings and money market deposit account balances of $51.8 million and noninterest-bearing deposit account balances of $3.1 million. The time deposit balance increase included a decrease of $6.4 million in short-term CDARS and listing service balances.
Asset Quality
In accordance with changes in generally accepted accounting principles, the Company adopted the new credit loss accounting standard known as CECL on January 1, 2023. At the time of adoption, the allowance for credit losses ("ACL") for loans increased by $3.1 million to 1.73% of loans, the reserve on unfunded commitments increased $213 thousand, and an $18 thousand reserve was established for held to maturity investment securities. These one-time increases resulted in an after tax decrease to capital of $2.5 million, with no impact to earnings. Under CECL, the ACL is based on projected credit losses rather than on incurred losses.
The Company recorded a provision for credit losses in the third quarter of $3.0 million, which compared to a $2.8 million provision for the second quarter of 2023. The Company recorded a $0.8 million provision for loan losses under the incurred loss methodology during the third quarter of 2022. The Company recorded a provision for credit
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 5
losses in the first nine months of 2023 of $7.7 million, which compared to a $1.4 million negative provision under the incurred loss methodology for the first nine months of 2022.
The ratio of ACL to total loans held for investment at amortized cost, excluding government guaranteed loans, was 2.03% at September 30, 2023, 2.03% as of June 30, 2023, and 1.90% as of September 30, 2022.
Net charge-offs for the third quarter of 2023 were $2.2 million, a $0.1 million decrease from $2.3 million for the second quarter of 2023 and a $1.6 million increase compared to $0.6 million in the third quarter of 2022. Annualized net charge-offs as a percentage of average loans held for investment at amortized cost, excluding PPP loans, were 1.27% for the third quarter of 2023, down from 1.18% in the second quarter of 2023 and up from 0.37% in the third quarter of 2022. Net charge-offs for the first three quarters of 2023 were elevated by $1.9 million due to the performance from a purchased portfolio of unsecured consumer loans. The Company stopped purchasing these loans at the end of 2022 and the portfolio balances have decreased from $29.4 million to $19.6 million since the beginning of 2023. Nonperforming assets, excluding government guaranteed loans, to total assets was 0.77% as of September 30, 2023, compared to 0.61% as of June 30, 2023, and 0.44% as of September 30, 2022.
Capital
The Bank’s Tier 1 leverage ratio was 9.16% as of September 30, 2023, compared to 9.36% as of June 30, 2023, and 10.48% at September 30, 2022. The CET 1 and Tier 1 capital ratio to risk-weighted assets were 12.21% as of September 30, 2023, compared to 12.34% as of June 30, 2023, and 13.77% as of September 30, 2022. The total capital to risk-weighted assets ratio was 13.46% as of September 30, 2023, compared to 13.60% as of June 30, 2023, and 15.02% as of September 30, 2022.
Recent Events
Preferred Stock Offering. On September 30, 2023, the Company issued 1,835 shares of 11.0% Series C Cumulative Convertible Preferred Stock. These shares have no par value and a liquidation preference of $1,000 per share plus an amount equal to all accumulated dividends thereon (whether or not earned or declared but without interest) to the date payment of such distribution is made in full. An additional 1,995 shares were issued on October 18, 2023. Total gross proceeds from the preferred stock offering currently total $3.83 million, which will be used for operating expenses or to contribute capital to BayFirst National Bank to support its growth and operations.
Fourth Quarter Common Stock Dividend. On October 24, 2023, BayFirst’s Board of Directors declared a fourth quarter 2023 cash dividend of $0.08 per common share. The dividend will be payable December 15, 2023 to common shareholders of record as of December 1, 2023. This dividend marks the 30th consecutive quarterly cash dividend paid since BayFirst initiated cash dividends in 2016.
Conference Call
BayFirst’s management team will host a conference call on Friday, October 27, 2023 at 9:00 a.m. ET to discuss its third quarter results. Interested investors may listen to the call live under the Investor Relations tab at www.bayfirstfinancial.com. Investment professionals are invited to dial (888) 259-6580 to participate in the call. A replay will be available for one week at (877) 674-7070 using access code 913503# or at www.bayfirstfinancial.com.
About BayFirst Financial Corp.
BayFirst Financial Corp. is a registered bank holding company based in St. Petersburg, Florida which commenced operations on September 1, 2000. Its primary source of income is derived from its wholly owned subsidiary, BayFirst National Bank, a national banking association which commenced business operations on February 12, 1999. The Bank currently operates ten full-service banking offices throughout the Tampa Bay region and offers a broad range of commercial and consumer banking services to businesses and individuals. The Bank was the 7th largest SBA 7(a) lender by dollar volume and 3rd by number of units originated nationwide through the SBA's 2023 fiscal year ended September 30, 2023. Additionally, it was the number one SBA 7(a) lender in dollar volume in the 5 county Tampa Bay market for the SBA's 2023 fiscal year. As of September 30, 2023, BayFirst Financial Corp. had $1.13 billion in total assets.
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 6
Forward-Looking Statements
In addition to the historical information contained herein, this presentation includes "forward-looking statements" within the meaning of such term in the Private Securities Litigation Reform Act of 1995. These statements are subject to many risks and uncertainties, including, but not limited to, the effects of health crises, global military hostilities, or climate change, including their effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with them; the ability of the Company to implement its strategy and expand its banking operations; changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; risks related to mergers and acquisitions; changes in benchmark interest rates used to price loans and deposits, changes in tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the SEC, including, but not limited to those “Risk Factors” described in our most recent Form 10-K and Form 10-Q. Readers should note that the forward-looking statements included herein are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements.
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 7
BAYFIRST FINANCIAL CORP.
SELECTED FINANCIAL DATA (Unaudited)
| At or for the three months ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands, except for share data) | 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | ||||||||||
| Balance sheet data: | |||||||||||||||
| Average loans held for investment at amortized cost, excluding PPP loans | $ | 705,577 | $ | 763,854 | $ | 625,129 | $ | 688,759 | $ | 525,922 | |||||
| Average total assets | 1,088,517 | 1,064,068 | 969,489 | 925,194 | 939,847 | ||||||||||
| Average common shareholders’ equity | 81,067 | 80,310 | 78,835 | 80,158 | 83,014 | ||||||||||
| Total loans held for investment | 878,447 | 836,704 | 792,777 | 728,652 | 680,805 | ||||||||||
| Total loans held for investment, excluding PPP loans | 863,203 | 821,016 | 774,467 | 709,479 | 658,669 | ||||||||||
| Total loans held for investment, excl gov’t gtd loan balances | 687,141 | 638,148 | 596,505 | 569,892 | 520,408 | ||||||||||
| Allowance for credit losses (1) | 13,365 | 12,598 | 12,208 | 9,046 | 9,739 | ||||||||||
| Total assets | 1,133,979 | 1,087,399 | 1,069,839 | 938,895 | 930,275 | ||||||||||
| Common shareholders’ equity | 82,725 | 81,460 | 80,734 | 82,279 | 81,032 | ||||||||||
| Share data: | |||||||||||||||
| Basic earnings (loss) per common share | $ | 0.42 | $ | 0.29 | $ | 0.13 | $ | 0.28 | $ | (0.40) | |||||
| Diluted earnings (loss) per common share | 0.41 | 0.29 | 0.13 | 0.28 | (0.35) | ||||||||||
| Dividends per common share | 0.08 | 0.08 | 0.08 | 0.08 | 0.08 | ||||||||||
| Book value per common share | 20.12 | 19.85 | 19.70 | 20.35 | 20.10 | ||||||||||
| Tangible book value per common share (2) | 20.12 | 19.85 | 19.70 | 20.35 | 20.10 | ||||||||||
| Performance and capital ratios: | |||||||||||||||
| Return on average assets(3) | 0.71 | % | 0.52 | % | 0.30 | % | 0.57 | % | (0.60) | % | |||||
| Return on average common equity(3) | 8.46 | % | 5.86 | % | 2.69 | % | 5.56 | % | (7.76) | % | |||||
| Net interest margin | 3.36 | % | 4.18 | % | 4.17 | % | 4.19 | % | 4.63 | % | |||||
| Dividend payout ratio | 19.15 | % | 27.89 | % | 61.48 | % | 28.99 | % | (20.02) | % | |||||
| Asset quality ratios: | |||||||||||||||
| Net charge-offs(3) | $ | 2,234 | $ | 2,253 | $ | 1,887 | $ | 1,393 | $ | 575 | |||||
| Net charge-offs/avg loans held for investment at amortized cost, excl PPP(3) | 1.27 | % | 1.18 | % | 1.08 | % | 0.82 | % | 0.37 | % | |||||
| Nonperforming loans | $ | 10,393 | $ | 8,606 | $ | 5,890 | $ | 10,468 | $ | 10,267 | |||||
| Nonperforming loans (excluding gov't gtd balance) | $ | 8,776 | $ | 6,590 | $ | 2,095 | $ | 3,671 | $ | 4,015 | |||||
| Nonperforming loans/total loans held for investment | 1.18 | % | 1.03 | % | 0.74 | % | 1.44 | % | 1.51 | % | |||||
| Nonperforming loans (excl gov’t gtd balance)/total loans held for investment | 1.00 | % | 0.79 | % | 0.26 | % | 0.50 | % | 0.59 | % | |||||
| ACL/Total loans held for investment at amortized cost (1) | 1.68 | % | 1.61 | % | 1.69 | % | 1.29 | % | 1.48 | % | |||||
| ACL/Total loans held for investment at amortized cost, excl PPP loans (1) | 1.72 | % | 1.64 | % | 1.73 | % | 1.33 | % | 1.54 | % | |||||
| ACL/Total loans held for investment at amortized cost, excl government guaranteed loans (1) | 2.03 | % | 2.03 | % | 2.10 | % | 1.62 | % | 1.90 | % | |||||
| Other Data: | |||||||||||||||
| Full-time equivalent employees | 307 | 302 | 300 | 291 | 524 | ||||||||||
| Banking center offices | 10 | 9 | 9 | 8 | 8 | ||||||||||
| (1) Prior to January 1, 2023, the incurred loss methodology was used to estimate credit losses. Beginning with that date, credit losses are estimated using the CECL methodology. | |||||||||||||||
| (2) See section entitled "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below for a reconciliation to most comparable GAAP equivalent. | |||||||||||||||
| (3) Annualized |
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 8
GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
Some of the financial measures included in this report are not measures of financial condition or performance recognized by GAAP. These non-GAAP financial measures include tangible common shareholders' equity and tangible book value per common share. Our management uses these non-GAAP financial measures in its analysis of our performance, and we believe that providing this information to financial analysts and investors allows them to evaluate capital adequacy.
The following presents these non-GAAP financial measures along with their most directly comparable financial measures calculated in accordance with GAAP:
| Tangible Common Shareholders' Equity and Tangible Book Value Per Common Share (Unaudited) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| As of | ||||||||||
| (Dollars in thousands, except for share data) | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | |||||
| Total shareholders’ equity | $ | 94,165 | $ | 91,065 | $ | 90,339 | $ | 91,884 | $ | 90,637 |
| Less: Preferred stock liquidation preference | (11,440) | (9,605) | (9,605) | (9,605) | (9,605) | |||||
| Total equity available to common shareholders | 82,725 | 81,460 | 80,734 | 82,279 | 81,032 | |||||
| Less: Goodwill | — | — | — | — | — | |||||
| Tangible common shareholders' equity | $ | 82,725 | $ | 81,460 | $ | 80,734 | $ | 82,279 | $ | 81,032 |
| Common shares outstanding | 4,110,650 | 4,103,834 | 4,098,805 | 4,042,474 | 4,031,937 | |||||
| Tangible book value per common share | $ | 20.12 | $ | 19.85 | $ | 19.70 | $ | 20.35 | $ | 20.10 |
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 9
| BAYFIRST FINANCIAL CORP. | ||||||
|---|---|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||||||
| (Dollars in thousands) | 9/30/2023 | 6/30/2023 | 9/30/2022 | |||
| Assets | Unaudited | Unaudited | Unaudited | |||
| Cash and due from banks | $ | 4,501 | $ | 4,593 | $ | 3,131 |
| Interest-bearing deposits in banks | 108,052 | 99,114 | 33,365 | |||
| Cash and cash equivalents | 112,553 | 103,707 | 36,496 | |||
| Time deposits in banks | 4,631 | 4,881 | 4,881 | |||
| Investment securities available for sale, at fair value (amortized cost $44,569, $45,713, and $48,016 at September 30, 2023, June 30, 2023, and September 30, 2022, respectively) | 39,683 | 41,343 | 42,915 | |||
| Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $19, $19, and $0 (fair value: $2,282, $2,222, and $4,995 at September 30, 2023, June 30, 2023, and September 30, 2022, respectively) | 2,482 | 2,483 | 5,008 | |||
| Nonmarketable equity securities | 4,250 | 5,332 | 2,531 | |||
| Government guaranteed loans held for sale | 1,855 | 1,247 | 573 | |||
| Government guaranteed loans held for investment, at fair value | 84,178 | 52,165 | 24,965 | |||
| Loans held for investment, at amortized cost net of allowance for credit losses of $13,365, $12,598, and $9,739 at September 30, 2023, June 30, 2023, and September 30, 2022, respectively) | 780,904 | 771,941 | 646,101 | |||
| Accrued interest receivable | 6,907 | 5,929 | 3,789 | |||
| Premises and equipment, net | 37,992 | 40,052 | 32,779 | |||
| Loan servicing rights | 14,216 | 12,820 | 9,932 | |||
| Deferred income tax assets | 414 | 925 | 1,937 | |||
| Right-of-use operating lease assets | 2,594 | 2,804 | 2,985 | |||
| Bank owned life insurance | 25,630 | 25,469 | 25,004 | |||
| Other assets | 15,292 | 15,850 | 13,632 | |||
| Assets from discontinued operations | 398 | 451 | 76,747 | |||
| Total assets | $ | 1,133,979 | $ | 1,087,399 | $ | 930,275 |
| Liabilities: | ||||||
| Noninterest-bearing deposits | $ | 98,008 | $ | 101,081 | $ | 104,215 |
| Interest-bearing transaction accounts | 267,404 | 253,112 | 190,985 | |||
| Savings and money market deposits | 350,110 | 401,941 | 380,576 | |||
| Time deposits | 302,274 | 188,648 | 109,960 | |||
| Total deposits | 1,017,796 | 944,782 | 785,736 | |||
| FHLB and FRB borrowings | 0 | 30,000 | 28,000 | |||
| Subordinated debentures | 5,947 | 5,945 | 5,990 | |||
| Notes payable | 2,503 | 2,617 | 2,958 | |||
| Accrued interest payable | 632 | 572 | 236 | |||
| Operating lease liabilities | 2,812 | 3,018 | 3,355 | |||
| Accrued expenses and other liabilities | 9,409 | 8,461 | 9,374 | |||
| Liabilities from discontinued operations | 715 | 939 | 3,989 | |||
| Total liabilities | 1,039,814 | 996,334 | 839,638 |
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 10
| BAYFIRST FINANCIAL CORP. | ||||||
|---|---|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||||||
| (Dollars in thousands) | 9/30/2023 | 6/30/2023 | 9/30/2022 | |||
| Shareholders’ equity: | Unaudited | Unaudited | Unaudited | |||
| Preferred stock, Series A; no par value, 10,000 shares authorized, 6,395 shares issued and outstanding at September 30, 2023, June 30, 2023, and September 30, 2022, respectively; aggregate liquidation preference of $6,395 each period | 6,161 | 6,161 | 6,161 | |||
| Preferred stock, Series B; no par value, 20,000 shares authorized, 3,210 shares issued and outstanding at September 30, 2023, June 30, 2023, and September 30, 2022; aggregate liquidation preference of $3,210 each period | 3,123 | 3,123 | 3,123 | |||
| Preferred stock, Series C; no par value, 10,000 shares authorized, 1,835 shares issued and outstanding at September 30, 2023 and no shares issued and outstanding as of June 30, 2023 and September 30, 2022; aggregate liquidation preference of $1,835 at September 30, 2023 | 1,835 | — | — | |||
| Common stock and additional paid-in capital; no par value, 15,000,000 shares authorized, 4,110,650, 4,103,834, and 4,031,937 shares issued and outstanding at September 30, 2023, June 30, 2023, and September 30, 2022, respectively | 54,500 | 54,384 | 52,770 | |||
| Accumulated other comprehensive loss, net | (3,621) | (3,239) | (3,780) | |||
| Unearned compensation | (1,242) | (1,386) | (323) | |||
| Retained earnings | 33,409 | 32,022 | 32,686 | |||
| Total shareholders’ equity | 94,165 | 91,065 | 90,637 | |||
| Total liabilities and shareholders’ equity | $ | 1,133,979 | $ | 1,087,399 | $ | 930,275 |
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 11
| BAYFIRST FINANCIAL CORP. | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
| For the Quarter Ended | Year-to-Date | |||||||||
| (Dollars in thousands, except per share data) | 9/30/2023 | 6/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | |||||
| Interest income: | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | |||||
| Loans, including fees | $ | 16,032 | $ | 16,372 | $ | 10,650 | $ | 45,475 | $ | 24,812 |
| Interest-bearing deposits in banks and other | 1,588 | 1,420 | 634 | 4,188 | 1,234 | |||||
| Total interest income | 17,620 | 17,792 | 11,284 | 49,663 | 26,046 | |||||
| Interest expense: | ||||||||||
| Deposits | 9,055 | 7,098 | 1,856 | 21,076 | 4,133 | |||||
| Other | 172 | 586 | 258 | 1,033 | 487 | |||||
| Total interest expense | 9,227 | 7,684 | 2,114 | 22,109 | 4,620 | |||||
| Net interest income | 8,393 | 10,108 | 9,170 | 27,554 | 21,426 | |||||
| Provision for credit losses | 3,001 | 2,765 | 750 | 7,708 | (1,400) | |||||
| Net interest income after provision for credit losses | 5,392 | 7,343 | 8,420 | 19,846 | 22,826 | |||||
| Noninterest income: | ||||||||||
| Loan servicing income, net | 760 | 649 | 620 | 2,149 | 1,508 | |||||
| Gain on sale of government guaranteed loans, net | 7,139 | 6,028 | 7,446 | 17,576 | 15,915 | |||||
| Service charges and fees | 408 | 379 | 347 | 1,166 | 951 | |||||
| Government guaranteed loans fair value gain, net | 4,543 | 2,904 | 999 | 11,021 | 3,510 | |||||
| Other noninterest income | 1,829 | 977 | 392 | 3,152 | 1,262 | |||||
| Total noninterest income | 14,679 | 10,937 | 9,804 | 35,064 | 23,146 | |||||
| Noninterest Expense: | ||||||||||
| Salaries and benefits | 7,912 | 7,780 | 6,758 | 23,527 | 21,177 | |||||
| Bonus, commissions, and incentives | 1,406 | 1,305 | 883 | 3,515 | 1,833 | |||||
| Occupancy and equipment | 1,262 | 1,183 | 1,070 | 3,608 | 3,010 | |||||
| Data processing | 1,526 | 1,316 | 1,247 | 4,189 | 3,486 | |||||
| Marketing and business development | 929 | 1,102 | 662 | 2,696 | 2,100 | |||||
| Professional services | 816 | 874 | 956 | 2,587 | 3,089 | |||||
| Loan origination and collection | 1,981 | 1,221 | 1,068 | 4,697 | 2,486 | |||||
| Employee recruiting and development | 543 | 556 | 518 | 1,667 | 1,653 | |||||
| Regulatory assessments | 284 | 232 | 110 | 615 | 299 | |||||
| Other noninterest expense | 768 | 833 | 886 | 2,140 | 2,586 | |||||
| Total noninterest expense | 17,427 | 16,402 | 14,158 | 49,241 | 41,719 | |||||
| Income before taxes from continuing operations | 2,644 | 1,878 | 4,066 | 5,669 | 4,253 | |||||
| Income tax expense from continuing operations | 674 | 461 | 983 | 1,415 | 888 | |||||
| Net income from continuing operations | 1,970 | 1,417 | 3,083 | 4,254 | 3,365 | |||||
| Loss from discontinued operations before income taxes | (62) | (43) | (5,973) | (275) | (6,706) | |||||
| Income tax benefit from discontinued operations | (15) | (11) | (1,488) | (68) | (1,670) | |||||
| Net loss from discontinued operations | (47) | (32) | (4,485) | (207) | (5,036) | |||||
| Net income (loss) | 1,923 | 1,385 | (1,402) | 4,047 | (1,671) | |||||
| Preferred dividends | 208 | 208 | 208 | 624 | 624 | |||||
| Net income available to (loss attributable to) common shareholders | $ | 1,715 | $ | 1,177 | $ | (1,610) | $ | 3,423 | $ | (2,295) |
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 12
| BAYFIRST FINANCIAL CORP. | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
| For the Quarter Ended | Year-to-Date | |||||||||
| (Dollars in thousands, except per share data) | 9/30/2023 | 6/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | |||||
| Basic earnings (loss) per common share: | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | |||||
| Continuing operations | $ | 0.43 | $ | 0.30 | $ | 0.71 | $ | 0.89 | $ | 0.68 |
| Discontinued operations | (0.01) | (0.01) | (1.11) | (0.05) | (1.25) | |||||
| Basic earnings (loss) per common share | $ | 0.42 | $ | 0.29 | $ | (0.40) | $ | 0.84 | $ | (0.57) |
| Diluted earnings (loss) per common share: | ||||||||||
| Continuing operations | $ | 0.42 | $ | 0.30 | $ | 0.68 | $ | 0.88 | $ | 0.67 |
| Discontinued operations | (0.01) | (0.01) | (1.03) | (0.05) | (1.15) | |||||
| Diluted earnings (loss) per common share | $ | 0.41 | $ | 0.29 | $ | (0.35) | $ | 0.83 | $ | (0.48) |
BayFirst Financial Corp. Reports Third Quarter 2023 Results
October 26, 2023
Page 13
Loan Composition
| (Dollars in thousands) | 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Real estate: | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||
| Residential | $ | 248,973 | $ | 235,339 | $ | 214,638 | $ | 202,329 | $ | 176,574 |
| Commercial | 280,620 | 272,200 | 239,720 | 231,281 | 220,210 | |||||
| Construction and land | 25,339 | 15,575 | 11,069 | 9,320 | 9,259 | |||||
| Commercial and industrial | 174,238 | 198,639 | 199,721 | 194,643 | 183,631 | |||||
| Commercial and industrial - PPP | 15,364 | 15,808 | 18,430 | 19,293 | 22,286 | |||||
| Consumer and other | 39,024 | 38,103 | 32,697 | 37,288 | 37,595 | |||||
| Loans held for investment, at amortized cost, gross | 783,558 | 775,664 | 716,275 | 694,154 | 649,555 | |||||
| Deferred loan costs, net | 12,928 | 11,506 | 10,678 | 10,740 | 9,047 | |||||
| Discount on government guaranteed loans sold | (6,623) | (5,937) | (6,046) | (5,621) | (5,068) | |||||
| Premium on loans purchased, net | 4,406 | 3,306 | 2,823 | 2,301 | 2,306 | |||||
| Allowance for credit losses (1) | (13,365) | (12,598) | (12,208) | (9,046) | (9,739) | |||||
| Loans held for investment, at amortized cost | $ | 780,904 | $ | 771,941 | $ | 711,522 | $ | 692,528 | $ | 646,101 |
Nonperforming Assets (Unaudited)
| (Dollars in thousands) | 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Nonperforming loans (government guaranteed balances) | $ | 1,617 | $ | 2,016 | $ | 3,795 | $ | 6,797 | $ | 6,252 | |||||
| Nonperforming loans (unguaranteed balances) | 8,776 | 6,590 | 2,095 | 3,671 | 4,015 | ||||||||||
| Total nonperforming loans | 10,393 | 8,606 | 5,890 | 10,468 | 10,267 | ||||||||||
| OREO | — | 3 | 3 | 56 | 56 | ||||||||||
| Total nonperforming assets | $ | 10,393 | $ | 8,609 | $ | 5,893 | $ | 10,524 | $ | 10,323 | |||||
| Nonperforming loans as a percentage of total loans held for investment | 1.18 | % | 1.03 | % | 0.74 | % | 1.44 | % | 1.51 | % | |||||
| Nonperforming loans (excluding government guaranteed balances) to total loans held for investment | 1.00 | % | 0.79 | % | 0.26 | % | 0.50 | % | 0.59 | % | |||||
| Nonperforming assets as a percentage of total assets | 0.92 | % | 0.79 | % | 0.55 | % | 1.12 | % | 1.11 | % | |||||
| Nonperforming assets (excluding government guaranteed balances) to total assets | 0.77 | % | 0.61 | % | 0.20 | % | 0.40 | % | 0.44 | % | |||||
| ACL to nonperforming loans (1) | 128.60 | % | 146.39 | % | 207.27 | % | 86.42 | % | 94.86 | % | |||||
| ACL to nonperforming loans (excluding government guaranteed balances) (1) | 152.29 | % | 191.17 | % | 582.72 | % | 246.42 | % | 242.57 | % |
(1) Prior to January 1, 2023, the incurred loss methodology was used to estimate credit losses. Beginning with that date, credit losses are estimated using the CECL methodology.
Note: Transmitted on Globe Newswire on October 26, 2023, at 4:00 p.m. ET.
bayfirstinvestorpresenta
BayFirst Financial Corp. (NASDAQ:BAFN) 2023 – Second 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 health crises, global military hostilities, or climate change, including their effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with them; the ability of the Company to implement its strategy and expand its banking operations; changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; risks related to mergers and acquisitions; changes in benchmark interest rates used to price loans and deposits, changes in tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the SEC, including, but not limited to those “Risk Factors” described in our most recent Form 10-K and Form 10-Q. Readers should note that the forward-looking statements included herein are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward- looking statements. 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/ Sarasota Region(1) HOW WE RANK 2 ASSET SIZE Billion total assets (2)$1.09 SBA ORIGINATION SBA 7(a) ORIGINATOR IN THE NATION (3) #6 GROWTH ASSET GROWTH OVER 5 YEARS198% 1. Deposit ranking of banks with assets less than $10B headquartered in the Tampa/Sarasota region as of March 3, 2023 from Uniform Bank Performance Report 2. Financial data as of June 30, 2023 3. As of SBA’s quarter ended June 30, 2023 INITIATIVES ENVIRONMENTAL, SOCIAL, AND GOVERNANCE FOCUSED ESG DEPOSITS 20% TRANSACTION ACCOUNTS GROWTH DURING THE FIRST HALF OF THE YEAR NET INTEREST MARGIN 45 BPS EXPANSION OF NIM SINCE SAME QUARTER OF LAST YEAR
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 • 10 banking centers in Tampa Bay, expected to grow to 12 banking centers over the next year ▪ 7 commercial and 5 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 6/30/23 • #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 8 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 June 30, 2023 30.8% 18.6% 9.8% 1.9% 28.1% 5.8% 0.5% 4.5% C&I Residential HELOC C&D Owner-occupied nonfarm/nonresidential Other nonfarm/nonresidential Secured by Other Real Estate Consumer & Other Loan Highlights • Low concentration of non owner- occupied commercial real estate loans • Total loan production of $196 million during the quarter • Loans held for investment grew $47 million during the quarter (1) (1) Excludes PPP loans
7 SOLID DEPOSIT COMPOSITION Deposit Portfolio Composition as of June 30, 2023 • Transaction account balances increased $58 million or 20% during the first half of the year • Approximately 82% of deposits are insured • Minimal use of short-term brokered deposits (4% of total deposits as of June 30, 2023) 10.7% 26.8% 42.5% 20.0% Noninterest Bearing Transaction Interest Bearing Transaction Savings & Money Market Time Deposits Deposit Highlights
8 INVESTMENT SECURITIES AFS Investment Securities Portfolio as of June 30, 2023 (fair market value, in thousands) (1)Investment Securities Portfolio Details • Minimal exposure to market value losses due to modest investment securities portfolio (4% of total assets) • Other Comprehensive Loss of $3.2 million reduced Tangible Book Value by $0.79 as of June 30, 2023 ◦ We intend and have the ability to hold the available for sale investment securities to maturity; no plan to sell ◦ No impact to regulatory capital ratios • The Company has $2.5 million of HTM investment securities, net of ACL of $19 thousand. (1) HTM Investment Securities make up 10% of total investment securities portfolio $8,900 $3,314 $17,790 $11,339 Asset-backed securities MBS: U.S. Government-sponsored enterprises CMO: U.S. Government-sponsored enterprises Corporate bonds
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 9 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 in the nation • 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
10 Q2 2023 For the Three Months Ended ($000s) 6/30/2023 3/31/2023 Increase/ (Decrease) 6/30/2022 Increase/ (Decrease) Interest income $ 17,792 $ 14,251 $ 3,541 $ 7,759 $ 10,033 Interest expense 7,684 5,198 2,486 1,172 6,512 Net interest income 10,108 9,053 1,055 6,587 3,521 Provision for credit losses 2,765 1,942 823 250 2,515 Noninterest income 10,937 9,448 1,489 7,678 3,259 Noninterest expense 16,402 15,412 990 13,692 2,710 Income tax expense (benefit) 461 280 181 (68) 529 Net income from continuing operations 1,417 867 550 391 1,026 Net loss from discontinued operations (32) (128) 96 (673) 641 Net income (loss) 1,385 739 646 (282) 1,667 Preferred dividends 208 208 — 208 — Net income available to/(loss attributable to) common shareholders $ 1,177 $ 531 $ 646 $ (490) $ 1,667
11 Q2 2023 Six Months Ended June 30, ($000s) 2023 2022 Increase/ (Decrease) Interest income $ 32,043 $ 14,762 $ 17,281 Interest expense 12,882 2,506 10,376 Net interest income 19,161 12,256 6,905 Provision for credit losses 4,707 (2,150) 6,857 Noninterest income 20,385 13,342 7,043 Noninterest expense 31,814 27,561 4,253 Income tax expense (benefit) 741 (95) 836 Net income from continuing operations 2,284 282 2,002 Net loss from discontinued operations (160) (551) 391 Net income (loss) 2,124 (269) 2,393 Preferred dividends 416 416 — Net income available to/(loss attributable to) common shareholders $ 1,708 $ (685) $ 2,393
12 Q2 2023 As of and For the Three Months Ended As of and For the Six Months Ended 6/30/2023 3/31/2023 6/30/2022 6/30/2023 6/30/2022 Return on average assets(1) 0.52 % 0.30 % (0.13) % 0.42 % (0.06) % Return on average common equity(1) 5.86 % 2.69 % (2.35) % 4.29 % (1.64) % Tangible book value per common share $ 19.85 $ 19.70 $ 20.80 $ 19.85 $ 20.80 Diluted earnings from continuing operations per common share $ 0.30 $ 0.16 $ 0.05 $ 0.46 $ (0.03) Dividend payout ratio 27.89 % 61.48 % (65.54) % 38.34 % (93.64) % Total Capital (to risk-weighted assets) 13.60 % 14.12 % 16.37 % 13.60 % 15.00 % Common Equity Tier 1 Capital (to risk-weighted assets) 12.34 % 12.87 % 15.12 % 12.34 % 13.75 % Tier 1 Capital (to total assets) 9.36 % 10.18 % 11.37 % 9.36 % 10.79 % Nonperforming loans (excl gov’t gtd balance)/ total loans held for investment 0.79 % 0.26 % 0.66 % 0.79 % 0.66 % ACL/Total loans held for investment at amortized cost, excl PPP loans (2) 1.64 % 1.73 % 1.71 % 1.64 % 1.71 % (1) Annualized (2) 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.
13 $56 $85 $82 $81 2020Y 2021Y 2022Y Q2 2023 $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 $1,072 2020Y 2021Y 2022Y Q2 2023 $0 $200 $400 $600 $800 $1,000 $1,200 $471 $491 $700 $808 2020Y 2021Y 2022Y Q2 2023 $0 $200 $400 $600 $800 $1,000 $559 $722 $795 $945 2020Y 2021Y 2022Y Q2 2023 $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 14 LIQUIDITY SOURCES • Available Liquidity ◦ $109 million in cash and due from other banks ◦ $41 million in AFS investment securities • Off Balance Sheet Sources of Liquidity ◦ $140 million of unused, available borrowing capacity at the FHLB based on pledged loans ◦ $34 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 $123 million in brokered deposits (1) ◦ Up to $317 million in listing service deposits (1) (1) Based on Bank’s policy limits Data as of June 30, 2023 (unaudited)
15 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) Annualized (2) The NIM was depressed due to impact of low yield PPP loan portfolio 1.06% 1.90% (0.04)% 0.42% 2020Y 2021Y 2022Y YTD Q2 2023 (0.50)% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 25.60% 32.40% (1.43)% 4.29% 2020Y 2021Y 2022Y YTD Q2 2023 0.00% 7.50% 15.00% 22.50% 30.00% 2.88% 3.23% 3.97% 4.18% 2020Y 2021Y 2022Y YTD Q2 2023 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% (2)(2) 7.63% 37.56% 51.26% 51.55% 2020Y 2021Y 2022Y YTD Q2 2023 0% 10% 20% 30% 40% 50% 60% (1) (1)
16 ASSET QUALITY Strong reserve well-positioned to withstand volatility in economic conditions 1.44% 1.00% 0.61% 1.05% 2020Y 2021Y 2022Y YTD Q2 2023 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% 1.64% 2020Y 2021Y 2022Y Q2 2023 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% 191.17% 2020Y 2021Y 2022Y Q2 2023 0.0% 250.0% 500.0% 750.0% 0.45% 1.12% 1.08% 1.67% 2020Y 2021Y 2022Y Q2 2023 0.0% 0.5% 1.0% 1.5% 2.0% (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.
17 SHAREHOLDER VALUE CREATION $11.49 $12.77 $16.02 $21.75 $20.35 $19.70 $19.85 Tangible Book Value 2018Y 2019Y 2020Y 2021Y 2022Y Q1 2023 Q2 2023 $0 $5 $10 $15 $20 $25 CECL adoption decreased equity by $2.5M in Q1 ‘23 Record earnings fro m residential m ortgage and PPP lending in ‘20 and ‘21 Discontinuation of nationwide residential lending platform in ‘22
18 COMMUNITY BANKING PERFORMANCE Q2 2023 Loan Production Summary: ▪ Loan production during the quarter was $71.1 million(1) ▪ Loans held for investment, including government guaranteed loans, increased by a net $46.5 million QoQ Q2 2023 Deposit Summary: ▪ Deposit balances grew $11.9 million QoQ ▪ Deposit portfolio increased by 4.3% in number of accounts (to 16,419 accounts totaling $944.8 million) QoQ New Banking Center: • Opened third banking center in Sarasota-Bradenton area in July 2023 bringing the total to 10 banking centers in the Tampa Bay region Q2 2023 Highlights Banking Center & Deposits ($ in 000s) Total Deposits # Branch Year Opened 6/30/2023 6/30/2022 6/30/2021 1 St. Petersburg(2) 2017 $ 277,276 $ 247,003 $ 198,056 2 Downtown Sarasota 2018 173,695 169,463 144,103 3 Seminole 1999 136,807 150,861 143,921 4 Pinellas Park 2005 90,211 69,395 63,985 5 Countryside 2018 64,209 62,342 53,959 6 West Tampa 2020 110,112 53,352 28,298 7 Belleair Bluffs 2021 34,891 12,990 — 8 West Bradenton 2022 41,359 — — 9 Carrollwood 2023 16,222 — — Total Branches (9) $ 944,782 $ 765,406 $ 632,322 (1) Excludes government guaranteed loan production (2) St. Petersburg branch deposits include other deposits generated by CreditBench, Cash Management, Corporate Treasury, and Virtual.
19 $101 $169 $386 $496 320 374 1,364 2,309 2020Y 2021Y 2022Y LTM $0 $100 $200 $300 $400 $500 500 1,000 1,500 2,000 2,500• Nationally ranked #6 in total SBA dollars and #3 in units for the quarter ending June 30, 2023 • Strategic initiative to expand USDA business and industry lending program. The Company recently hired an experienced USDA lender to support this effort. • Total Q2 2023 government guaranteed loan production increased 38.3% from Q2 2022 • The demand remains strong for the Company’s specialty BOLT program, 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 $254.6 million, including $74.8 million in Q2 2023 ◦ New automation program launched through its proprietary loan origination system PowerLOS and Open API, allowing increased volume and speed while limiting additional staff CREDITBENCH (SBA/USDA LENDING) Q2 2023 Highlights Government Guaranteed Loan Amount ($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)
20 GOVERNMENT GUARANTEED LOANS • Government guaranteed loan portfolio of $364 million of which $183 million are guaranteed by the SBA or USDA • Sold $113 million of guaranteed loan balances and $11 million of unguaranteed loan balances for a net gain on sale of $6 million during the quarter • The sale of unguaranteed loan balances reduces credit risk in the loan portfolio and even, when sold at a discount, often results in a positive impact to the income statement in the quarter sold with reductions in provision for credit losses and acceleration of the recognition of discount on loans sold income offsetting any loss on sale • Purchased $64 million of government guaranteed loans during the quarter, $32 million of which was already sold or paid off during the quarter
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 21 KEY INVESTMENT POINTS Second largest community bank (deposits) based in attractive Tampa Bay region Total asset growth of 198% since YE2017 Innovative technology driven bank planning for the future of banking Among the nation’s top SBA loan generators Solid deposit growth of 19% since year end and 23% since same period last year Experienced management team with strong insider ownership of 14% ✔ ✔ ✔ ✔ ✔ ✔ ✔ Consistent dividend growing 100% over past 5 years
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 22 APPENDIX
23 OWNERSHIP OVERVIEW Total Common Stock Ownership Mix Note: Ownership information based on most recently disclosed common shares outstanding of 4,104,669 as of 7/20/2023 Source: S&P Capital IQ Pro Vanguard Group Inc., 3.85% First Manhattan Co., 3.38% Banc Funds Co. LLC, 3.25% All Other Institutions, 7.42% Mark S. Berset, 6.84% All Other Directors/ Executive Officers, 7.30% Public/Other, 67.96%
24 ATTRACTIVE FLORIDA MARKETS MEANINGFUL ECONOMIC TAILWINDS #2 state in the U.S.A. for net domestic migration and top 3 growth state* ~$1.5T economy, with 3.5% GDP growth in Q1’23 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 25 DEPOSITS IN TAMPA BAY/SARASOTA REGION Total Deposits (Total Assets <$10BN and HQ in Tampa/St. Petersburg/Sarasota Region) Note: Deposit data as of March 31, 2023 Source: Uniform Bank Performance Report Average Deposits Branches Deposits per Branch Rank Institution ($ millions) (No.) ($ millions) 1 Bank of Tampa $2,843 13 $219 2 BayFirst National Bank 934 9 104 3 Flagship Bank 510 6 85 4 Climate First 270 3 90 5 Gulfside Bank 261 1 261 6 TCM Bank NA 235 1 235 7 Central Bank 223 4 56 8 Century Bank of Florida 99 1 99 9 Waterfall Bank 72 1 72
26 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 Operating Officer of BayFirst and the Bank President & Director of BayFirst and the Bank 26 Scott J. McKim EVP, Chief Financial Officer of BayFirst and the Bank • Joined BayFirst in July 2023 • Previous experience includes Chief Strategy Officer of 121 Financial Credit Union, Chief Financial Officer and Chief Lending Officer of Publix Employees Federal Credit Union, and Director of Corporate Finance and Divisional CFO for Huntington Bancshares • B.S. in Accounting from Bowling Green State University and a M.B.A from Max M. Fisher College of Business, The Ohio State University
27 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 Brandi Jaber John Macaluso EVP, Chief Production Officer EVP, Chief Technology Officer 27 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 • Joined BayFirst in Q4 2020 • 37 years information technology experience • Served as CTO for Fiserv, Inc. • B.A. from University of South Florida