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

BayFirst Financial Corp.

ST. PETERSBURG, Fla., July 27, 2022 (GLOBE NEWSWIRE) — BayFirst Financial Corp. (NASDAQ: BAFN) (“BayFirst” or the “Company”), parent company of BayFirst National Bank (f/k/a First Home Bank) (the “Bank”) reported earnings for the second quarter of 2022 of $328 thousand, or $0.03 per diluted common share compared to $13 thousand, or $(0.05) per diluted common share in the first quarter of 2022, and $13.0 million, or $2.98 per diluted common share, in the second quarter of 2021. Financial results for the second quarter of 2022 were highlighted by robust loan production in community banking, up 200% year to date over last year, as well as one of the best quarters of SBA 7(a) loan production in the Company’s history.

The increase in earnings during the second quarter of 2022, compared to the first quarter of 2022, included a $2.5 million decrease in salaries and benefits, $2.9 million increase in SBA loan fair value gains, resulting primarily from election of the fair value option on $41.7 million of loans originated in the quarter, and a $1.0 million increase in net interest income. These were partially offset by a restructuring charge of $630 thousand related to the discontinuation of the direct-to-consumer mortgage business, a reduction in residential loan fee income of $3.0 million, and a $2.7 million increase in loan loss provision, as the Company made a modest provision of $250 thousand in the second quarter compared to a $2.4 million negative provision in the prior quarter.

Compared to the year ago quarter, the decrease in net income for the second quarter of 2022 included the $13.8 million one-time gain on sale of PPP loans in 2021, a $6.0 million decrease in PPP origination fee income and a decrease of $13.1 million in residential loan fee income. These items were partially offset by a decrease in noninterest expense of $8.8 million.

“The second quarter represented a dramatic turnaround quarter for the Company,” stated Anthony N. Leo, Chief Executive Officer. “We produced excellent core loan growth, improved operating expenses, and expanded our net interest margin by 48 basis points compared to the prior quarter. The investments we made to expand our nationwide SBA production team earlier in the year are paying off, with SBA 7(a) loan production of $90 million during the quarter. This production represents one of the highest performing quarters of SBA loan production in our Company’s history, with record monthly SBA loan production in June. Our SBA business acceleration was in part due to a new lending product, BOLT, that we launched during the quarter to originate SBA loans of $150 thousand or less, which is in high demand and carries an 85% government guaranty. Conventional community bank loan production was also strong, with production up more than 200% year to date over last year, as our lending teams have done an excellent job of bringing in new customer relationships. Our net interest margin benefited from the recent interest rate increases enacted by the Federal Reserve, and we are well positioned to benefit even further in future periods as our SBA loan portfolio rates are tied to prime, with the majority of them resetting quarterly.”

“Our organization is focused on building our community banking franchise in Tampa Bay, supported by national business lines to provide the revenue engine to build out and support our community bank,” Leo continued. “During the quarter and simultaneous with converting to a national banking charter, we rebranded our community bank to the name BayFirst National Bank, which reinforces our commitment to our Tampa Bay communities. We are also continuing our expansion efforts, with plans to open two additional branches in our current markets later this year. While we will continue to support small business owners and homebuyers across the country through our SBA and residential mortgage divisions, we remain a St. Petersburg-based, independent bank focused on making a difference in our own community and in the lives of those we serve.”

Recent Significant Initiatives

  • Late in the second quarter, the Company launched BOLT, an SBA 7(a) loan product designed to expeditiously provide working capital loans of $150 thousand or less to businesses throughout the country. In its first month since inception, the Company originated 57 BOLT loans totaling $7.5 million, with an additional 296 loans, representing $39 million, closed or in process through July 21, 2022. Over the balance of the third quarter, the Company plans to deploy new automation to the BOLT loan program through its proprietary loan origination system, PowerLOS and open API integration with marketplace lending partners to increase volume and speed of delivery while limiting additional staffing.

  • During the second quarter, the Company completed a restructuring of its Residential Mortgage Division, and discontinued its primary consumer direct residential mortgage business line. The restructuring was undertaken in response to reduced volume due to a lack of refinance demand in the current rising rate environment which directly impacted the consumer direct business line. As a result of this restructuring the Bank will focus resources on its traditional retail mortgage business supported by loan production offices across the nation.

  • A large residential loan production team located in Las Vegas was onboarded after the end of the second quarter during July and, as previously reported, two large residential loan production teams were added in April, one in Branfield, CT and the other in Miami, FL. The addition of these offices is expected to increase residential loan production volume once the teams are fully integrated.

  • On May 16th, the Bank converted its charter from a Florida state chartered banking institution to that of a national association and simultaneously changed its name to BayFirst National Bank.

Second Quarter 2022 Performance Review

  • The Company’s SBA loan origination platform, CreditBench, had one of the best quarters of SBA 7(a) loan production in the Company’s history. CreditBench originated $90.0 million in new SBA loans during the second quarter of 2022, a 90.2% increase compared to $47.3 million originated in the first quarter of 2022, and an 89.9% increase over the $47.4 million of loans produced during the second quarter of 2021. Additionally, the pipeline continues to remain strong at $179.4 million at June 30, 2022.

  • Loans held for investment, excluding PPP loans, increased by $93.8 million or 18.1% to $611.2 million during the second quarter of 2022 and $145.7 million, or 31.3% over the past year. Production during the quarter was partially offset by $46.8 million in sales of the guaranteed balances of SBA loans.

  • The Residential Mortgage Division originated $305.6 million in loans during the second quarter of 2022, a reduction of 8.9% compared to $335.6 million originated during the first quarter of 2022, and a 48.2% reduction compared to $522.1 million of loans produced during the second quarter of 2021.

  • Deposits decreased by $4.7 million, or 0.6% during the second quarter of 2022 and increased by $133.1 million, or 21.0% over the past year to $765.4 million at June 30, 2022. During the second quarter of 2022, there were increases in transaction accounts and time deposit balances partially offset by decreases in money market and savings account balances.Although the balances decreased slightly as customers utilized more of their existing cash, the number of transaction, savings, and money market accounts increased by 5.5% over the prior quarter

  • Tangible book value at June 30, 2022 was $20.95 per common share, down from $21.22 at March 31, 2022, primarily due to a reduction in equity as accumulated other comprehensive loss increased in the rising rate environment. Over the course of the past year, tangible book value decreased $0.18 per common share, or 0.9%, from $21.14 at June 30, 2021.

  • Net interest margin expanded 48 bps quarter-over-quarter to 3.73% in the second quarter of 2022, from 3.25% in the first quarter of 2022.

Results of Operations

Net Income

Net income was $328 thousand for the second quarter of 2022 compared to $13 thousand in the first quarter of 2022, and $13.0 million in the second quarter of 2021. The increase in net income for the second quarter of 2022 from the preceding quarter was primarily due to a $2.9 million increase related to held for investment SBA loan fair value gains, resulting primarily from election of the fair value option on $41.7 million of loans originated in the quarter, and a $2.8 million, or 10.0%, reduction in noninterest expense, partially offset by $3.0 million lower residential loan fee income, and a $2.7 million increase in loan loss provision, as the Company recorded a modest $250 thousand provision for loan loss in the second quarter compared to the $2.4 million negative provision in the prior quarter. The decrease in net income from the second quarter of 2021 was the result of the $13.8 million one-time gain on sale of PPP loans in 2021, lower PPP origination fee and interest income, and lower residential loan fee income, partially offset by higher income from the sale of non-PPP SBA guaranteed loans, and lower noninterest expense.

In the first six months of 2022, net income was $341 thousand, a decrease of $20.2 million from $20.5 million in the first six months of 2021, reflecting $32.0 million in lower residential loan fee income, a $13.8 million gain on sale of PPP loan in 2021, and lower PPP income origination fee and interest. These items were partially offset by a $2.4 million increase related to held for investment SBA loan fair value gains, higher gains on non-PPP SBA guaranteed loan sales, a $14.9 million reduction, or 22.1%, in noninterest expense and a $4.2 million lower provision for loan losses.

Net Interest Income and Net Interest Margin

Net interest income was $7.5 million in the second quarter of 2022, an increase of $1.1 million or 16.4% from $6.4 million in the first quarter of 2022, and a decrease of $5.4 million or 42.2% from $12.9 million in the second quarter of 2021. The increase during the second quarter of 2022 as compared to the prior quarter was mainly due to the increase in non-PPP loan interest income and a reduction in deposit interest expense. The decrease during the second quarter of 2022 as compared to the year ago quarter was mainly due to the decrease in net PPP loan interest and origination fee income.

Net interest income was $13.9 million in the first six months of 2022, a decrease of $11.6 million or 45.7% from $25.5 million in the first six months of 2021. The decrease during the first six months of 2022 as compared to the prior year was mainly due to the decrease in net PPP loan interest and origination fee income.

Net interest margin improved to 3.73% for the second quarter of 2022, an expansion of 48 bps, compared to 3.25% for the first quarter of 2022 and an expansion of 27 bps over 3.46% for the second quarter of 2021. Net interest margin improved to 3.49% for the first six months of 2022, compared to 3.34% for the first six months of 2021. With the recent rate increase enacted by the Federal Reserve, the Company anticipates further improvement in its net interest margin as its SBA loan portfolio rates are tied to prime with the vast majority resetting at the beginning of each quarter.

Noninterest Income

Noninterest income was $17.9 million for the second quarter of 2022, a decrease of $1.0 million or 5.1% from $18.9 million in the first quarter of 2022, and a decrease of $20.3 million or 53.2% from $38.2 million in the second quarter of 2021. The decrease in the second quarter of 2022, as compared to the prior quarter was primarily the result of lower residential loan fee income and gain on sale of SBA loans, partially offset by an increase related to held for investment SBA loan fair value gains, resulting primarily from election of the fair value option on $41.7 million of loans originated in the quarter. The decrease from a year ago quarter was primarily the result of the one-time $13.8 million gain on sale of PPP loans in 2021 and a decrease in residential loan fee income, partially offset by an increase in gains on SBA loan sales and the resulting gain in SBA loan servicing income.

Noninterest income was $36.8 million for the first six months of 2022, a decrease of $34.6 million or 48.5% from $71.4 million in the first six months of 2021. The decrease was primarily due to a $32.0 million reduction in residential loan income and the $13.8 million gain on sale of PPP loans in 2021. These items were partially offset by higher gains on the sale of non-PPP SBA loans and a $2.4 million increase related to held for investment SBA loan fair value gains.

Noninterest Expense

Noninterest expense was $24.9 million in the second quarter of 2022, which was a $2.7 million or 10.0% decrease from $27.6 million in the first quarter of 2022 and an $8.8 million or 26.1% decrease compared to $33.7 million in the second quarter of 2021. The decrease from the prior quarter was primarily the result of $2.5 million lower salaries and benefits, partially offset by the $630 thousand residential mortgage division restructuring expense. The decrease from a year ago quarter was primarily due to lower residential mortgage commissions, salaries and benefits, and data processing expense, partially offset by residential mortgage division restructuring expense.

Noninterest expense was $52.5 million in the first six months of 2022, which was a $14.9 million or 22.1% decrease from $67.4 million in the first six months of 2021. The decrease was primarily the result of lower residential mortgage commissions.

Balance Sheet

Assets

Total assets increased by $33.3 million or 3.7% during the second quarter of 2022 to $921.9 million, mainly due to new loan production and an increase in in both held to maturity and available for sale securities, partially offset by a decrease in cash and cash equivalents and the sale of SBA guaranteed loans.

Loans

Loans held for investment, excluding PPP loans, increased by $93.8 million or 18.1% during the second quarter of 2022 and by $145.7 million or 31.3%, over the past year to $611.2 million due to increases in both conventional community bank loans and SBA loans, partially offset by SBA loan sales. PPP loans, net of deferred origination fees, decreased $13.2 million in the second quarter of 2022 to $31.2 million, due primarily to PPP forgiveness payments.

Deposits

Deposits decreased by $4.7 million or 0.6% during the second quarter of 2022 and increased $133.1 million or 21.0% compared to June 30, 2021, ending the second quarter of 2022 at $765.4 million. During the quarter, transaction account and time deposit balances increased, partially offset by a decrease in savings and money market account balances. Over the year, savings and money market accounts and transaction account balances increased and time deposit balances decreased.

Asset Quality

Asset quality remained stable in the second quarter of 2022. As the financial impact of the COVID-19 pandemic became more predictable throughout 2021, the Company began adjusting downward its allowance for loan losses from the historic high levels reached in 2020 at the onset of the pandemic. The Company recorded a provision for loan losses in the second quarter of $250 thousand. This compared to a $2.4 million negative provision for the first quarter of 2022, and no provision for loan losses during the second quarter of 2021.

The ratio of the allowance for loan losses to total loans held for investment at amortized cost, excluding government guaranteed loans, was 2.13% at June 30, 2022, 2.73% as of March 31, 2022, and 6.67% as of June 30, 2021.

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

Net charge-offs for the second quarter of 2022 were $856 thousand, a $26 thousand decrease from $882 thousand for the first quarter of 2022 and a $364 thousand decrease compared to $1.2 million in the second quarter of 2021. Annualized net charge-offs as a percentage of average loans, excluding PPP loans, were 0.61% for the second quarter of 2022, down from 0.7% in the first quarter of 2022 and 1.1% in the second quarter of 2021. Nonperforming assets, excluding government guaranteed loans, to total assets was 0.46% as of June 30, 2022, compared to 0.30% as of March 31, 2022, and 0.30% as of June 30, 2021.

Capital

The Bank’s Tier 1 leverage ratio was 11.44% as of June 30, 2022, a decrease from 11.75% as of March 31, 2022, and from 12.06% at June 30, 2021. The CET 1 and Tier 1 capital ratio to risk-weighted assets were 15.21% as of June 30, 2022, a decrease from 18.19% as of March 31, 2022, and from 21.27% as of June 30, 2021. The total capital to risk-weighted assets ratio was 16.46% as of June 30, 2022, a decrease from 19.45% as of March 31, 2022, and from 22.57% as of June 30, 2021.

Recent Events

Conversion to a National Bank: On May 16, 2022, BayFirst Financial Corp.’s wholly-owned subsidiary completed its conversion to a national bank. As part of this process, the Bank, formerly known as First Home Bank, changed its name to BayFirst National Bank.

About BayFirst Financial Corp.

BayFirst Financial Corp. is a registered bank holding company which commenced operations on September 1, 2000. Its primary source of income is from its wholly owned subsidiary, BayFirst National Bank (f/k/a First Home Bank), which commenced business operations on February 12, 1999. BayFirst National Bank is a national banking association. The Bank currently operates seven full-service office locations, 21 mortgage loan production offices, and was the top 15 by dollar volume and by number of units originated nationwide through the third quarter ended June 30, 2022, of SBA’s 2022 fiscal year.

BayFirst Financial Corp., through the Bank, offers a broad range of commercial and consumer banking services including various types of deposit accounts and loans for businesses and individuals. As of June 30, 2022, BayFirst Financial Corp. had $921.9 million in total assets.

Forward Looking Statements

In addition to the historical information contained herein, this presentation includes “forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995. These statements are subject to many risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic, global military hostilities, or climate change, including their effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with them; the ability of the Company to implement its strategy and expand its banking operations; changes in interest rates and other general economic, business and political conditions, including changes in the financial markets; changes in business plans as circumstances warrant; risks related to mergers and acquisitions; changes in benchmark interest rates used to price loans and deposits, changes in tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the SEC, including, but not limited to those “Risk Factors” described in our most recent Form 10-K and Form 10-Q. Readers should note that the forward-looking statements included herein are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements.

BAYFIRST FINANCIAL CORP.
SELECTED FINANCIAL DATA (Unaudited)

 

At or for the three months ended

(Dollars in thousands, except for share data)

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

6/30/2021

Balance sheet data:

 

 

 

 

 

 

 

 

 

Average loans held for investment, excluding PPP loans

$

562,120

 

 

$

520,559

 

 

$

518,697

 

 

$

467,283

 

 

$

445,893

 

Average total assets

 

879,868

 

 

 

872,311

 

 

 

923,485

 

 

 

1,086,377

 

 

 

1,541,230

 

Average common shareholders’ equity

 

83,235

 

 

 

83,990

 

 

 

83,056

 

 

 

81,989

 

 

 

68,525

 

Total loans held for investment

 

642,407

 

 

 

561,797

 

 

 

583,948

 

 

 

656,294

 

 

 

895,194

 

Total loans held for investment, excluding PPP loans

 

611,197

 

 

 

517,434

 

 

 

504,525

 

 

 

500,647

 

 

 

465,470

 

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

 

459,294

 

 

 

374,353

 

 

 

332,977

 

 

 

316,528

 

 

 

314,438

 

Allowance for loan losses

 

9,564

 

 

 

10,170

 

 

 

13,452

 

 

 

16,616

 

 

 

20,797

 

Total assets

 

921,852

 

 

 

888,541

 

 

 

917,095

 

 

 

943,743

 

 

 

1,198,229

 

Common shareholders’ equity

 

84,300

 

 

 

85,274

 

 

 

86,685

 

 

 

83,593

 

 

 

81,838

 

Share data:

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.03

 

 

$

(0.05

)

 

$

0.66

 

 

$

0.27

 

 

$

3.34

 

Diluted earnings per common share

 

0.03

 

 

 

(0.05

)

 

 

0.61

 

 

 

0.26

 

 

 

2.98

 

Dividends per common share

 

0.080

 

 

 

0.080

 

 

 

0.070

 

 

 

0.070

 

 

 

0.070

 

Book value per common share

 

20.98

 

 

 

21.25

 

 

 

21.77

 

 

 

21.32

 

 

 

21.16

 

Tangible book value per common share(1)

 

20.95

 

 

 

21.22

 

 

 

21.75

 

 

 

21.30

 

 

 

21.14

 

Performance and capital ratios:

 

 

 

 

 

 

 

 

 

Return on average assets

 

0.15

%

 

 

0.01

%

 

 

1.22

%

 

 

0.47

%

 

 

3.38

%

Return on average common equity

 

0.58

%

 

(0.93)

%

 

 

12.54

%

 

 

5.12

%

 

 

74.61

%

Net interest margin

 

3.73

%

 

 

3.25

%

 

 

3.07

%

 

 

3.04

%

 

 

3.46

%

Dividend payout ratio

 

267.63

%

 

(164.25)

%

 

 

10.65

%

 

 

26.09

%

 

 

2.09

%

Asset quality ratios:

 

 

 

 

 

 

 

 

 

Net charge-offs

$

856

 

 

$

882

 

 

$

664

 

 

$

1,181

 

 

$

1,220

 

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

 

0.61

%

 

 

0.68

%

 

 

0.51

%

 

 

1.01

%

 

 

1.09

%

Nonperforming loans

$

10,437

 

 

$

8,834

 

 

$

11,909

 

 

$

10,495

 

 

$

9,884

 

Nonperforming loans (excluding gov’t gtd balance)

$

4,245

 

 

$

2,660

 

 

$

3,967

 

 

$

3,756

 

 

$

3,577

 

Nonperforming loans/total loans held for investment

 

1.62

%

 

 

1.57

%

 

 

2.04

%

 

 

1.60

%

 

 

1.10

%

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

 

0.66

%

 

 

0.47

%

 

 

0.68

%

 

 

0.57

%

 

 

0.40

%

ALLL/Total loans held for investment at amortized cost

 

1.62

%

 

 

1.84

%

 

 

2.34

%

 

 

2.57

%

 

 

2.35

%

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

 

1.71

%

 

 

2.00

%

 

 

2.72

%

 

 

3.39

%

 

 

4.57

%

Other Data:

 

 

 

 

 

 

 

 

 

Full-time equivalent employees

 

485

 

 

 

575

 

 

 

637

 

 

 

651

 

 

 

671

 

Banking center offices

 

7

 

 

 

7

 

 

 

7

 

 

 

6

 

 

 

6

 

Loan production offices

 

19

 

 

 

20

 

 

 

17

 

 

 

22

 

 

 

26

 

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

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

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

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

Tangible Common Shareholders’ Equity and Tangible Book Value Per Common Share

 

 

As of

(Dollars in thousands, except per share data)

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Total shareholders’ equity

 

$

93,905

 

 

$

94,879

 

 

$

96,290

 

 

$

94,298

 

 

$

92,813

 

Less: Preferred stock liquidation preference

 

 

(9,605

)

 

 

(9,605

)

 

 

(9,605

)

 

 

(10,705

)

 

 

(10,975

)

Total equity available to common shareholders

 

 

84,300

 

 

 

85,274

 

 

 

86,685

 

 

 

83,593

 

 

 

81,838

 

Less: Goodwill

 

 

(100

)

 

 

(100

)

 

 

(100

)

 

 

(100

)

 

 

(100

)

Tangible common shareholders’ equity

 

$

84,200

 

 

$

85,174

 

 

$

86,585

 

 

$

83,493

 

 

$

81,738

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

4,019,023

 

 

 

4,013,173

 

 

 

3,981,117

 

 

 

3,919,977

 

 

 

3,867,414

 

Tangible book value per common share

 

$

20.95

 

 

$

21.22

 

 

$

21.75

 

 

$

21.30

 

 

$

21.14

 

BAYFIRST FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

6/30/2022

3/31/2022

6/30/2021

Assets

Unaudited

Unaudited

Unaudited

Cash and due from banks

$

2,944

 

$

3,141

 

$

2,896

 

Interest-bearing deposits in banks

 

64,992

 

 

118,960

 

 

102,441

 

Cash and cash equivalents

 

67,936

 

 

122,101

 

 

105,337

 

Time deposits in banks

 

4,881

 

 

3,881

 

 

2,381

 

Investment securities available for sale

 

45,283

 

 

41,656

 

 

22,674

 

Investment securities held to maturity

 

5,016

 

 

2

 

 

6

 

Restricted equity securities, at cost

 

3,274

 

 

2,520

 

 

2,820

 

Residential loans held for sale

 

74,708

 

 

75,022

 

 

126,479

 

SBA loans held for sale

 

 

 

1,445

 

 

 

SBA loans held for investment, at fair value

 

52,209

 

 

8,769

 

 

10,070

 

Loans held for investment, at amortized cost net of allowance for loan losses of $9,564, $10,170, and $20,797

 

580,634

 

 

542,858

 

 

864,327

 

Accrued interest receivable

 

3,190

 

 

3,150

 

 

7,039

 

Premises and equipment, net

 

31,368

 

 

31,037

 

 

21,076

 

Loan servicing rights

 

7,952

 

 

7,601

 

 

6,614

 

Deferred income tax assets

 

1,145

 

 

490

 

 

2,594

 

Right-of-use operating lease assets

 

3,547

 

 

4,166

 

 

3,722

 

Bank owned life insurance

 

24,850

 

 

24,698

 

 

12,351

 

Other assets

 

15,859

 

 

19,145

 

 

10,739

 

Total assets

$

921,852

 

$

888,541

 

$

1,198,229

 

Liabilities:

 

 

 

Noninterest-bearing deposits

$

103,613

 

$

92,680

 

$

81,150

 

Interest-bearing transaction accounts

 

195,386

 

 

180,815

 

 

143,046

 

Savings and money market deposits

 

432,369

 

 

464,847

 

 

355,045

 

Time deposits

 

34,038

 

 

31,787

 

 

53,081

 

Total deposits

 

765,406

 

 

770,129

 

 

632,322

 

FHLB and FRB borrowings

 

40,000

 

 

 

 

 

Subordinated debentures

 

5,989

 

 

5,987

 

 

5,982

 

Notes payable

 

3,072

 

 

3,186

 

 

3,527

 

PPP Liquidity Facility

 

 

 

 

 

443,906

 

Accrued interest payable

 

31

 

 

86

 

 

928

 

Operating lease liabilities

 

4,014

 

 

4,377

 

 

3,923

 

Accrued expenses and other liabilities

 

9,435

 

 

9,897

 

 

14,828

 

Total liabilities

 

827,947

 

 

793,662

 

 

1,105,416

 

Shareholders’ equity:

 

 

 

Preferred stock, Series A; no par value, 10,000 shares authorized, 6,395 shares issued and outstanding at June 30, 2022, March 31, 2022, and June 30, 2021, respectively; aggregate liquidation preference of $6,395 each period

 

6,161

 

 

6,161

 

 

6,161

 

Preferred stock, Series B; no par value, 20,000 shares authorized, 3,210, 3,210, and 4,580 shares issued and outstanding at June 30, 2022, March 31, 2022, and June 30, 2021; aggregate liquidation preference of $3,210, $3,210, and $4,580, respectively

 

3,123

 

 

3,123

 

 

4,456

 

Common stock and additional paid-in capital; no par value, 15,000,000 shares authorized, 4,019,023, 4,013,173, and 3,867,414 shares issued and outstanding at June 30, 2022, March 31, 2022, and June 30, 2021, respectively

 

52,432

 

 

52,252

 

 

49,501

 

Accumulated other comprehensive (loss), net

 

(2,574

)

 

(1,458

)

 

(122

)

Unearned compensation

 

(467

)

 

(630

)

 

(29

)

Retained earnings

 

35,230

 

 

35,431

 

 

32,846

 

Total shareholders’ equity

 

93,905

 

 

94,879

 

 

92,813

 

Total liabilities and shareholders’ equity

$

921,852

 

$

888,541

 

$

1,198,229

 

BAYFIRST FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

For the Quarter Ended

 

Year-to-Date

(Dollars in thousands, except per share data)

6/30/2022

 

3/31/2022

 

6/30/2021

 

6/30/2022

 

6/30/2021

Interest income:

 

 

 

 

 

 

 

 

 

Loans, other than PPP

$

7,924

 

 

$

7,115

 

 

$

5,282

 

$

15,039

 

 

$

11,881

PPP loan interest income

 

87

 

 

 

140

 

 

 

3,330

 

 

227

 

 

 

5,529

PPP origination fee income

 

200

 

 

 

300

 

 

 

6,234

 

 

500

 

 

 

12,247

Interest-bearing deposits in banks and other

 

415

 

 

 

185

 

 

 

151

 

 

600

 

 

 

232

Total interest income

 

8,626

 

 

 

7,740

 

 

 

14,997

 

 

16,366

 

 

 

29,889

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

1,060

 

 

 

1,217

 

 

 

1,194

 

 

2,277

 

 

 

2,514

PPPLF borrowings

 

 

 

 

20

 

 

 

655

 

 

20

 

 

 

1,421

Other

 

112

 

 

 

97

 

 

 

244

 

 

209

 

 

 

420

Total interest expense

 

1,172

 

 

 

1,334

 

 

 

2,093

 

 

2,506

 

 

 

4,355

Net interest income

 

7,454

 

 

 

6,406

 

 

 

12,904

 

 

13,860

 

 

 

25,534

Provision for loan losses

 

250

 

 

 

(2,400

)

 

 

 

 

(2,150

)

 

 

2,000

Net interest income after provision for loan losses

 

7,204

 

 

 

8,806

 

 

 

12,904

 

 

16,010

 

 

 

23,534

Noninterest income:

 

 

 

 

 

 

 

 

 

Residential loan fee income

 

10,212

 

 

 

13,191

 

 

 

23,352

 

 

23,403

 

 

 

55,381

Loan servicing income, net

 

438

 

 

 

461

 

 

 

325

 

 

899

 

 

 

1,029

Gain (loss) on sale of SBA loans, net

 

3,848

 

 

 

4,621

 

 

 

13,798

 

 

8,469

 

 

 

13,798

Service charges and fees

 

322

 

 

 

282

 

 

 

364

 

 

604

 

 

 

586

SBA loan fair value (loss) gain

 

2,708

 

 

 

(197

)

 

 

7

 

 

2,511

 

 

 

79

Other noninterest income

 

371

 

 

 

510

 

 

 

366

 

 

881

 

 

 

498

Total noninterest income

 

17,899

 

 

 

18,868

 

 

 

38,212

 

 

36,767

 

 

 

71,371

Noninterest Expense:

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

11,215

 

 

 

13,697

 

 

 

12,948

 

 

24,912

 

 

 

26,115

Bonus, commissions, and incentives

 

4,807

 

 

 

4,606

 

 

 

9,218

 

 

9,413

 

 

 

21,091

Mortgage banking

 

677

 

 

 

1,002

 

 

 

1,572

 

 

1,679

 

 

 

3,267

Occupancy and equipment

 

1,382

 

 

 

1,421

 

 

 

1,297

 

 

2,803

 

 

 

2,629

Data processing

 

1,367

 

 

 

1,467

 

 

 

2,593

 

 

2,834

 

 

 

3,862

Marketing and business development

 

1,659

 

 

 

1,742

 

 

 

1,878

 

 

3,401

 

 

 

3,520

Professional services

 

1,075

 

 

 

1,307

 

 

 

843

 

 

2,382

 

 

 

1,767

Loan origination and collection

 

331

 

 

 

670

 

 

 

1,105

 

 

1,001

 

 

 

1,601

Employee recruiting and development

 

474

 

 

 

871

 

 

 

1,008

 

 

1,345

 

 

 

1,622

Regulatory assessments

 

120

 

 

 

69

 

 

 

100

 

 

189

 

 

 

202

Residential mortgage division restructuring expense

 

630

 

 

 

 

 

 

 

 

630

 

 

 

Other noninterest expense

 

1,133

 

 

 

795

 

 

 

1,106

 

 

1,928

 

 

 

1,713

Total noninterest expense

 

24,870

 

 

 

27,647

 

 

 

33,668

 

 

52,517

 

 

 

67,389

Income before taxes

 

233

 

 

 

27

 

 

 

17,448

 

 

260

 

 

 

27,516

Income tax expense

 

(95

)

 

 

14

 

 

 

4,432

 

 

(81

)

 

 

6,989

Net income

 

328

 

 

 

13

 

 

 

13,016

 

 

341

 

 

 

20,527

Preferred dividends

 

208

 

 

 

208

 

 

 

235

 

 

416

 

 

 

567

Net income available to common shareholders

$

120

 

 

$

(195

)

 

$

12,781

 

$

(75

)

 

$

19,960

Basic earnings per common share

$

0.03

 

 

$

(0.05

)

 

$

3.34

 

$

(0.02

)

 

$

5.44

Diluted earnings per common share

$

0.03

 

 

$

(0.05

)

 

$

2.98

 

$

(0.02

)

 

$

4.87

Loan Composition

(Dollars in thousands)

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

6/30/2021

Real estate:

(Unaudited)

 

(Unaudited)

 

 

 

(Unaudited)

 

(Unaudited)

Residential

$

122,403

 

 

$

102,897

 

 

$

87,235

 

 

$

79,889

 

 

$

75,618

 

Commercial

 

216,067

 

 

 

189,684

 

 

 

163,477

 

 

 

151,122

 

 

 

143,388

 

Construction and land

 

9,686

 

 

 

18,038

 

 

 

18,632

 

 

 

17,848

 

 

 

14,293

 

Commercial and industrial

 

168,990

 

 

 

180,163

 

 

 

217,155

 

 

 

232,416

 

 

 

215,359

 

Commercial and industrial – PPP

 

31,430

 

 

 

44,792

 

 

 

80,158

 

 

 

156,783

 

 

 

432,469

 

Consumer and other

 

35,845

 

 

 

13,502

 

 

 

3,581

 

 

 

4,910

 

 

 

3,489

 

Loans held for investment, at amortized cost, gross

 

584,421

 

 

 

549,076

 

 

 

570,238

 

 

 

642,968

 

 

 

884,616

 

Deferred loan costs (fees), net

 

8,299

 

 

 

7,297

 

 

 

7,975

 

 

 

7,298

 

 

 

4,968

 

Discount on SBA 7(a) loans sold

 

(2,521

)

 

 

(3,335

)

 

 

(3,866

)

 

 

(3,753

)

 

 

(4,420

)

Discount on PPP loans purchased

 

(1

)

 

 

(10

)

 

 

(13

)

 

 

(24

)

 

 

(40

)

Allowance for loan losses

 

(9,564

)

 

 

(10,170

)

 

 

(13,452

)

 

 

(16,616

)

 

 

(20,797

)

Loans held for investment, at amortized cost

$

580,634

 

 

$

542,858

 

 

$

560,882

 

 

$

629,873

 

 

$

864,327

 

Nonperforming Assets (Unaudited)

(Dollars in thousands)

6/30/2022

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

6/30/2021

Nonperforming loans (government guaranteed balances)

$

6,192

 

 

$

6,174

 

 

$

7,942

 

 

$

6,739

 

 

$

6,307

 

Nonperforming loans (unguaranteed balances)

 

4,245

 

 

 

2,660

 

 

 

3,967

 

 

 

3,756

 

 

 

3,577

 

Total nonperforming loans

 

10,437

 

 

 

8,834

 

 

 

11,909

 

 

 

10,495

 

 

 

9,884

 

OREO

 

56

 

 

 

3

 

 

 

3

 

 

 

3

 

 

 

 

Total nonperforming assets

$

10,493

 

 

$

8,837

 

 

$

11,912

 

 

$

10,498

 

 

$

9,884

 

Nonperforming loans as a percentage of total loans held for investment

 

1.62

%

 

 

1.57

%

 

 

2.04

%

 

 

1.60

%

 

 

1.10

%

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

 

0.66

%

 

 

0.47

%

 

 

0.68

%

 

 

0.57

%

 

 

0.40

%

Nonperforming assets as a percentage of total assets

 

1.14

%

 

 

0.99

%

 

 

1.30

%

 

 

1.11

%

 

 

0.82

%

Nonperforming assets (excluding government guaranteed balances) to total assets

 

0.46

%

 

 

0.30

%

 

 

0.43

%

 

 

0.40

%

 

 

0.30

%

ALLL to nonperforming loans

 

91.64

%

 

 

115.12

%

 

 

112.96

%

 

 

158.32

%

 

 

210.41

%

ALLL to nonperforming loans (excluding government guaranteed balances)

 

225.30

%

 

 

382.33

%

 

 

339.10

%

 

 

442.39

%

 

 

581.41

%

Contacts:

 

Anthony N. Leo

Robin L. Oliver

Chief Executive Officer

Chief Financial Officer

727.399.5678

727.685.2082

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