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BayFirst Financial Corp. Reports Fourth Quarter 2024 Results

Earnings per common share increased to $2.11 for the quarter and $2.64 for the year; Net interest margin expanded by 26bps; Announced share buyback program

ST. PETERSBURG, Fla., Jan. 30, 2025 (GLOBE NEWSWIRE) -- BayFirst Financial Corp. (NASDAQ: BAFN) (鈥淏ayFirst鈥� or the 鈥淐ompany鈥�), parent company of BayFirst National Bank (the 鈥淏ank鈥�) today reported net income of $9.8 million, or $2.27 per common share, or $2.11 per diluted common share, for the fourth quarter of 2024, an increase of 759.8% compared to $1.1 million, or $0.18 per common share and diluted common share, in the third quarter of 2024. Net income for the year ended December听31, 2024 was $12.6 million, or $2.68 per common share, or $2.62 per diluted common share, compared to $5.7 million, or $1.16 per common share, or $1.12 per diluted common share for the year ended December听31, 2023.

鈥淲e reported strong fourth quarter 2024 results, highlighted by quarterly net interest margin expansion and improved operating efficiencies,鈥� stated Thomas G. Zernick, Chief Executive Officer. 鈥淣et income increased substantially compared to the preceding quarter, led by increases in net interest income, higher gain on sale of government guaranteed loans, and a gain on sale of two branch office properties, which was part of a sale-leaseback transaction. It鈥檚 worth noting that we continue to lease these two branch offices, resulting in no impact to our existing branch network. As a result of this transaction, we recorded an after-tax gain on sale of the properties of $8.7 million during the fourth quarter of 2024.鈥�

鈥淭he strength of our community bank business model, which includes serving individuals, families, and small businesses, coupled with results from our government guaranteed banking division, continues to fuel our operating results,鈥� Zernick continued. 鈥淥ur government guaranteed banking team had a solid quarter, producing $107.8 million in new government guaranteed loans, which was an improvement compared to the third quarter of 2024. Our lenders remain focused on meeting loan origination targets, while also adhering to prudently conservative credit quality metrics.

鈥淥ne of the highlights of the full year 2024 was the $1.1 million reduction in noninterest expenses compared to 2023. When we completed our near-term branch expansion plans in early 2024, we focused on reducing operating expenses by leveraging technology investments to better manage headcount and related incentive compensation, while at the same time growing the franchise. As we look to the new year, we will continue initiatives that are designed to further increase our efficiency, lower costs, and maximize the investments we've already made in technology and in our banking centers. While we are pleased with the progress during the fourth quarter and the year, we are excited to continue our forward momentum and further boost our results in 2025,鈥� said Zernick.

鈥淎dditionally, the Board of Directors authorized a share repurchase program on January 28, 2025. We believe our stock offers an attractive investment and repurchasing stock is a means for building long-term shareholder value,鈥� said Zernick. 鈥淲e are confident about the growth of our Company, and we believe that when our shares are undervalued, repurchases represent a value-enhancing deployment of capital.鈥�

Fourth Quarter 2024 Performance Review

• In December 2024, the Company entered into a sale-leaseback agreement for two branch office properties for an aggregate cash purchase price of $15.0 million. As a result of this transaction, the Company recorded a pre-tax gain on sale of the properties of $11.6 million.
• The Company鈥檚 government guaranteed loan team originated $107.8 million in new loans during the fourth quarter of 2024, an increase from $94.4 million of loans produced in the previous quarter, and a decrease from $144.9 million of loans produced during the fourth quarter of 2023. Since the launch in 2022 of the Company's Bolt loan program, an SBA 7(a) loan product designed to expeditiously provide working capital loans of $150 thousand or less, the Company has originated 5,726 Bolt loans totaling $741.5 million, of which 495 Bolt loans totaling $64.8 million were originated during the fourth quarter. No newly originated government guaranteed loans were measured at fair value during the fourth quarter of 2024 versus $34 million in the third quarter of 2024 and $53 million in the fourth quarter of 2023.
• Loans held for investment increased by $24.1 million, or 2.3%, during the fourth quarter of 2024 to $1.07 billion and increased $150.8 million, or 16.5%, over the past year. During the quarter, the Company originated $158.7 million of loans and sold $94.5 million of government guaranteed loan balances.
• Deposits increased $31.0 million, or 2.8%, during the fourth quarter of 2024 and increased $158.1 million, or 16.0%, over the past year to $1.14 billion.
• Book value and tangible book value at December听31, 2024 were $22.95 per common share, an increase from $20.86 at September听30, 2024.
• Net interest margin increased by 26 basis points to 3.60% in the fourth quarter of 2024, from 3.34% in the third quarter of 2024 and 12 basis points from 3.48%in the fourth quarter of 2023.

Results of Operations

Net Income

Net income was $9.8 million for the fourth quarter of 2024, compared to $1.1 million in the third quarter of 2024 and $1.7 million in the fourth quarter of 2023. The increase in net income for the fourth quarter of 2024 from the preceding quarter was primarily the result of the pre-tax gain on sale of two branch office properties of $11.6 million, which was part of a sale-leaseback transaction. Also contributing to higher earnings was an increase in net interest income of $1.2 million, an increase in gain on sale of government guaranteed loans of $2.3 million, and a decrease in noninterest expense of $1.7 million, partially offset by an increase in provision for credit losses of $1.4 million, a decrease in government guaranteed loan fair value gains of $3.5 million, and an increase in income tax expense on continuing operations of $2.9 million. The decrease in fair value gains on government guaranteed loans was the result of not measuring any newly originated government guaranteed loans at fair value in the fourth quarter. The increase in net income from the fourth quarter of 2023 was due to the pre-tax gain on sale of two branch office properties of $11.6 million, an increase in net interest income of $1.8 million, an increase in gain on sale of government guaranteed loans of $1.4 million, and lower noninterest expense of $3.1 million. This was partially offset by an increase in provision for credit losses of $1.8 million, a decrease in government guaranteed loan fair value gains of $4.8 million, and an increase in income tax expense on continuing operations of $2.6 million.

For the year ended December听31, 2024, net income was $12.6 million, an increase from $5.7 million from the year ended December听31, 2023. The increase was primarily due to the pre-tax gain on sale of two branch office properties of $11.6 million, an increase in net interest income of $1.6 million, higher gain on sale of government guaranteed loans of $3.7 million, and lower noninterest expense of $0.9 million, partially offset by higher provision for credit losses of $4.3 million, a decrease in government guaranteed fair value gains of $5.9 million and higher income tax expense on continuing operations of $2.2 million.

Net Interest Income and Net Interest Margin

Net interest income from continuing operations was $10.7 million in the fourth quarter of 2024, an increase from $9.4 million during the third quarter of 2024, and an increase from $8.9 million during the fourth quarter of 2023. The net interest margin increased by 26 basis points to 3.60% in the fourth quarter of 2024, from 3.34% in the third quarter of 2024 and 12 basis points from 3.48%in the fourth quarter of 2023.

The increase in net interest income from continuing operations during the fourth quarter of 2024, as compared to the third quarter of 2024, was mainly due to a decrease in interest cost on deposits of $1.0 million.

The increase in net interest income from continuing operations during the fourth quarter of 2024, as compared to the year ago quarter, was mainly due to an increase in loan interest income, including fees, of $3.0 million, partially offset by higher interest expense on deposits of $0.9 million.

Net interest income from continuing operations was $38.0 million for the year ended December听31, 2024, an increase from $36.4 million for the year ended December听31, 2023. The increase was mainly due to an increase in loan interest income, including fees, of $15.6 million, partially offset by an increase in interest expense on deposits of $12.1 million.

Noninterest Income

Noninterest income from continuing operations was $22.3 million for the fourth quarter of 2024, which was an increase from $12.3 million in the third quarter of 2024 and an increase from $14.7 million in the fourth quarter of 2023. The increase in the fourth quarter of 2024, as compared to the third quarter of 2024, was primarily the result of the pre-tax gain on sale of two branch office properties of $11.6 million, which was part of a sale-leaseback transaction, and an increase in gain on sale of government guaranteed loans of $2.3 million, partially offset by a decrease in government guaranteed loan fair value gains of $3.5 million. The decrease in fair value gains on government guaranteed loans was the result of not measuring any newly originated government guaranteed loans at fair value in the fourth quarter. The increase in the fourth quarter of 2024, as compared to the fourth quarter of 2023, was the result of the pre-tax gain on sale of two branch office properties of $11.6 million and an increase in gain on sale of government guaranteed loans of $1.4 million, partially offset by a decrease in fair value gains on government guaranteed loans of $4.8 million.

Noninterest income from continuing operations was $60.5 million for the year ended 2024, which was an increase from $49.8 million for the year ended 2023. The increase was primarily the result of the pre-tax gain on sale of two branch office properties of $11.6 million and an increase in gain on sale of government guaranteed loans of $3.7 million, partially offset by a decrease in fair value gains on government guaranteed loans of $5.9 million.

Noninterest Expense

Noninterest expense from continuing operations was $15.3 million in the fourth quarter of 2024 compared to $17.1 million in the third quarter of 2024 and $18.5 million in the fourth quarter of 2023. The decrease in the fourth quarter of 2024, as compared to the prior quarter, was primarily due to a decrease in compensation expense of $0.6 million and a decrease in loan origination and collection expense of $1.2 million. The decrease in the fourth quarter of 2024, as compared to the fourth quarter of 2023, was primarily due to lower compensation expense of $1.2 million and lower loan origination and collection expenses of $2.0 million.

Noninterest expense from continuing operations was $66.8 million for the year ended 2024 compared to $67.7 million for the year ended 2023. The decrease was the result of decreases in compensation expenses of $1.2 million, loan origination and collection expense of $1.0 million, and marketing and business development expenses of $1.3 million. The decreases were partially offset by increases in data processing expenses of $1.1 million, regulatory assessments of $0.4 million, and other noninterest expenses of $0.8 million.

Balance Sheet

Assets

Total assets increased $43.2 million, or 3.5%, during the fourth quarter of 2024 to $1.29 billion, mainly due to increases in loans held for investment of $24.1 million, cash and cash equivalents of $13.4 million, and right-of-use operating lease assets of $13.8 million, partially offset by a decrease in premises and equipment of $5.5 million. The increase in the right-of-use operating lease asset and decrease in premises and equipment was primarily the result of the fourth quarter 2024 sale-leaseback transaction. Compared to the end of the fourth quarter last year, total assets increased $170.5 million, or 15.3%, driven by growth of loans held for investment of $150.8 million, higher cash and cash equivalents of $19.4 million, and an increase in right-of-use operating lease asset of $13.4 million, partially offset by a decrease in premises and equipment of $5.6 million.

Loans

Loans held for investment increased $24.1 million, or 2.3%, during the fourth quarter of 2024 and $150.8 million, or 16.5%, over the past year to $1.07 billion, due to originations in both conventional community bank loans and government guaranteed loans, partially offset by government guaranteed loan sales.

Deposits

Deposits increased $31.0 million, or 2.8%, during the fourth quarter of 2024 and increased $158.1 million, or 16.0%, from the fourth quarter of 2023, ending December听31, 2024 at $1.14 billion. During the fourth quarter, there were increases in noninterest-bearing deposit account balances of $5.7 million, interest-bearing transaction account balances of $8.9 million, and savings and money market deposit account balances of $19.1 million, partially offset by a decrease in time deposit balances of $2.7 million. The majority of the deposits are generated through the community bank in the Tampa Bay/Sarasota area. At December听31, 2024, approximately 74% of total deposits were insured by the FDIC. At times, the Bank has brokered time deposit and non-maturity deposit relationships available to diversify its funding sources. At December听31, 2024, September听30, 2024, and December听31, 2023, the Company had $112.1 million, $76.7 million, and $0.2 million, respectively, of brokered deposits.

Asset Quality

The Company recorded a provision for credit losses in the fourth quarter of $4.5 million, compared to provisions of $3.1 million for the third quarter of 2024 and $2.7 million during the fourth quarter of 2023.

The ratio of ACL to total loans held for investment at amortized cost was 1.54% at December听31, 2024, 1.48% as of September听30, 2024, and 1.64% as of December听31, 2023. The ratio of ACL to total loans held for investment at amortized cost, excluding government guaranteed loan balances, was 1.79% at December听31, 2024, 1.70% as of September听30, 2024, and 2.03% as of December听31, 2023. To date, we have not learned of a material loss to the Company as a result of the recent hurricanes. Therefore, additional loss reserves have not been deemed necessary.

Net charge-offs for the fourth quarter of 2024 were $3.4 million, which was an increase from $2.8 million for the third quarter of 2024 and $2.6 million in the fourth quarter of 2023. Annualized net charge-offs as a percentage of average loans held for investment at amortized cost were 1.34% for the fourth quarter of 2024, compared to 1.16% in the third quarter of 2024 and 1.27% in the fourth quarter of 2023. Nonperforming assets to total assets were 1.50% as of December听31, 2024, compared to 1.38% as of September听30, 2024, and 0.92% as of December听31, 2023. Nonperforming assets, excluding government guaranteed loan balances, to total assets were 1.06% as of December听31, 2024, compared to 0.88% as of September听30, 2024, and 0.74% as of December听31, 2023. As we discussed in previous quarters, the Bank developed an express modification program for SBA 7(a) borrowers to help those borrowers who are challenged with larger payments in the higher interest rate environment compared to interest rates at the time the loans were originated. To date, 496 SBA 7(a) borrowers have been offered loan modification options. These efforts have helped and are expected to continue to help reduce the risk of loss.

Capital

The Bank鈥檚 Tier 1 leverage ratio was 8.82% as of December听31, 2024, compared to 8.41% as of September听30, 2024, and 9.38% as of December听31, 2023. The CET 1 and Tier 1 capital ratio to risk-weighted assets were 10.89% as of December听31, 2024, compared to 10.14% as of September听30, 2024, and 11.77% as of December听31, 2023. The total capital to risk-weighted assets ratio was 12.14% as of December听31, 2024, compared to 11.39% as of September听30, 2024, and 13.03% as of December听31, 2023.

Liquidity

The Bank's overall liquidity position remains strong and stable with liquidity in excess of internal minimums as stated by policy and monitored by management and the Board. The on-balance sheet liquidity ratio at December听31, 2024 was 9.17%, as compared to 9.33% at December听31, 2023. The Bank has robust liquidity resources which include secured borrowings available from the Federal Home Loan Bank, the Federal Reserve, and lines of credit with other financial institutions. As of December听31, 2024, the Bank had no borrowings from the FHLB, the FRB or other financial institutions. This compares to $10.0 million of borrowings from the FHLB and no borrowings from the FRB or other financial institutions at September听30, 2024 and December听31, 2023.

Recent Events

Share Repurchase Program

The Company announced that its Board of Directors has adopted a share repurchase program. Under the repurchase program, the Company may repurchase up to $2.0 million of the Company鈥檚 outstanding shares, over a period beginning on January 28, 2025, and continuing until the earlier of the completion of the repurchase, or December 31, 2025, or termination of the program by the Board of Directors.

First Quarter Common Stock Dividend. On January 28, 2025, BayFirst鈥檚 Board of Directors declared a first quarter 2025 cash dividend of $0.08 per common share. The dividend will be payable March 15, 2025 to common shareholders of record as of March 1, 2025. The Company has continuously paid quarterly common stock cash dividends since 2016.

Conference Call

BayFirst鈥檚 management team will host a conference call on Friday, January 31, 2025, at 9:00 a.m. ET to discuss its fourth quarter results. Interested investors may listen to the call live under the Investor Relations tab at . Investment professionals are invited to dial (800) 549-8228 to participate in the call using Conference ID 71006. A replay of the call will be available for one year at .听

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 twelve full-service banking offices throughout the Tampa Bay-Sarasota region and offers a broad range of commercial and consumer banking services to businesses and individuals. It was named the best bank in Florida in 2024, according to Forbes and was the 9th largest SBA 7(a) lender by number of units originated and 16th largest by dollar volume nationwide through the SBA's quarter ended December听31, 2024. As of December听31, 2024, BayFirst Financial Corp. had $1.29 billion in total assets.

Forward-Looking Statements

In addition to the historical information contained herein, this presentation includes "forward-looking statements" within the meaning of such term in the Private Securities Litigation Reform Act of 1995. These statements are subject to many risks and uncertainties, including, but not limited to, the effects of health crises, global military hostilities, weather events, 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 鈥淩isk Factors鈥� 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)

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:

Loan Composition

Nonperforming Assets (Unaudited)

⁽¹⁾ Excludes loans measured at fair value

Note: Transmitted on Globe Newswire on January 30, 2025, at 4:00 p.m. ET.