Company Overview - BayFirst Financial Corp. is a registered bank holding company based in St. Petersburg, Florida, which commenced operations on September 1, 2000 [3] - The primary source of income is derived from its wholly owned subsidiary, BayFirst National Bank, which began operations on February 12, 1999 [3] - The Bank operates twelve full-service banking offices throughout the Tampa Bay-Sarasota region, offering a broad range of commercial and consumer banking services [3] - As of June 30, 2025, BayFirst Financial Corp. had total assets of $1.34 billion [3] Recent Developments - BayFirst Financial Corp. will report its third quarter results after the market close on Thursday, October 30, 2025 [1] - Management will host a conference call on Friday, October 31, 2025, at 9:00 a.m. ET to discuss the results, which will also be broadcast live via the internet [1][2] - The Bank was the 8th largest SBA 7(a) lender by number of units originated and 18th largest by dollar volume nationwide as of the SBA's quarter ended June 30, 2025 [3]

Core Viewpoint - BayFirst Financial Corp. plans to exit the SBA 7(a) lending business and sell $103 million of SBA 7(a) loan balances to Banesco USA, marking a strategic move to derisk its balance sheet and enhance long-term growth and shareholder value [1][2]. Company Overview - BayFirst Financial Corp. is a registered bank holding company based in St. Petersburg, Florida, with total assets of $1.34 billion as of June 30, 2025. It operates twelve full-service banking offices in the Tampa Bay-Sarasota region, offering a range of commercial and consumer banking services [5]. - Banesco USA, an independent Florida state-chartered bank founded in 2006, has $5.2 billion in assets as of June 30, 2025, and operates six branches across South Florida and Puerto Rico. The bank focuses on serving small and middle-market businesses, as well as professionals, with personalized financial services [6]. Transaction Details - BayFirst has signed a definitive agreement to sell $103 million in SBA 7(a) loans to Banesco USA at 97% of retained balances. Banesco USA will assume servicing of these loans and purchase servicing rights for book value [2][3]. - The transaction is expected to close in the fourth quarter of 2025, with the majority of BayFirst's current SBA lending staff being offered positions with Banesco USA [2][3]. Strategic Implications - The exit from the SBA 7(a) lending business allows BayFirst to focus on its community bank mission, enhancing its portfolio of stable checking and savings products, and creating opportunities for deposit growth and fee income [3]. - Banesco USA aims to leverage the acquisition of BayFirst's SBA lending team and loan portfolio to establish a nationwide SBA lending platform, enhancing its capabilities to serve small and mid-size companies across Florida and nationally [4].

Core Viewpoint - BayFirst Financial Corp. has been downgraded from Outperform to Neutral due to near-term profitability concerns and elevated risks, despite showing resilience and strategic progress in various areas [1] Group 1: Positive Takeaways - Total assets reached $1.3 billion as of Q2 2025, marking a 47% increase since December 2020 [2] - Deposits increased by $121.4 million year over year, with 80% of the deposit base being insured, indicating strong customer trust [2] - The bank has a diversified loan portfolio with Q2 loan production at $157 million and loans held for investment growing by $41 million [3] - BayFirst ranks 8 nationally in SBA 7(a) loan originations, enhancing its competitive position [3] - The bank has implemented advanced technology platforms, improving operational efficiency and creating new revenue streams [4] Group 2: Challenges Persist - BayFirst reported a net loss of $1.2 million in Q2 2025, a decline from a net income of $0.9 million in the same quarter last year [5] - Credit loss provisions increased to $7.3 million, more than double from the previous year, impacting earnings [5] - Nonperforming loans rose to 1.37% of total loans, up from 0.87% a year earlier, indicating rising credit risk [6] - The net interest margin improved to 4.06%, but the cost of funds remains high at 3.75% due to deposit pricing pressures [7] - The Tier 1 capital ratio decreased to 8.11% from 8.73% a year ago, suggesting tighter cushions against potential credit shocks [7] Group 3: Outlook - The downgrade to Neutral reflects cautious earnings visibility, with solid growth in deposits and lending but persistent net losses and rising credit costs [8] - Long-term investors may find the community banking franchise and focus on innovation compelling, but current profitability challenges may lead to sideways trading until earnings recovery is demonstrated [9]

Core Viewpoint - BayFirst Financial Corp. has discontinued its Bolt loan program as part of a strategic review aimed at long-term growth and enhancing shareholder value [1][2] Group 1: Strategic Changes - The Bolt loan program, an SBA 7(a) loan product for small businesses, has been terminated to reduce risk associated with unguaranteed loans [2] - A reduction in force has been announced, affecting 51 positions, which represents 17% of the workforce, resulting in annual cost savings of $6 million [2] - The company plans to record restructuring charges in the third quarter related to the exit from the Bolt loan program and is seeking to sell the associated loan balances and origination platform [2] Group 2: Financial Position - As of June 30, 2025, BayFirst Financial Corp. reported total assets of $1.34 billion [4] - The company was the 8th largest SBA 7(a) lender by number of units originated and the 18th largest by dollar volume nationwide as of the same date [4] Group 3: Future Focus - The leadership team is committed to innovation and resilience, aiming to build a premier community banking franchise and capitalize on strengths in the Florida markets [3] - The company operates twelve banking centers in the Tampa Bay area, positioning itself to efficiently grow and gain market share [3]

Core Insights - BayFirst Financial Corp. has faced a significant stock decline of 14.9% since its earnings report for Q2 2025, contrasting with a 2.4% decline in the S&P 500 index during the same period [1] - The company reported a net loss of $1.2 million in Q2 2025, a downturn from a net income of $0.9 million in the same quarter of the previous year, with a loss of 39 cents per share compared to earnings of 12 cents per share a year ago [2] Financial Performance - Total interest income increased by 10.2% to $22.5 million, primarily due to higher loan interest income rising to $21.5 million from $19.4 million, while total interest expense decreased by 9.7% to $10.2 million [3] - Noninterest income rose to $10.8 million from $8.8 million in the previous quarter, driven by gains on the sale of government-guaranteed loans, but non-interest expenses increased to $17.5 million from $16.6 million [5] Loan Portfolio and Asset Quality - The loan portfolio grew to $1.13 billion from $1 billion a year ago, with the allowance for credit losses increasing to $17 million, indicating a cautious approach to potential defaults [4] - Nonperforming loans, excluding government-guaranteed balances, improved slightly to 1.37% of total loans from 1.47% in the previous quarter, although overall nonperforming loans remained elevated at 2.09% [4] Management Insights - Management highlighted challenges from rising interest rates and competitive pressures, with provisions for credit losses increasing to $7.3 million from $3 million a year ago, reflecting a cautious stance amid economic uncertainties [6] - The company aims to expand its loan portfolio while maintaining stringent credit standards to mitigate risks [6] Capital Position - BayFirst Financial's total shareholders' equity increased to $108.2 million from $101 million a year ago, with a tangible book value per common share of $22.30, down from $22.95 at the end of 2024 [7] - The return on average common equity was negative at 6.8%, compared to a positive 42.7% at the end of 2024, indicating the impact of the challenging environment on profitability [7] Operational Developments - The company continues to operate with 12 banking center offices and a workforce of 300 full-time equivalent employees, focusing on strategic growth initiatives [8]

Financial Performance - The company reported a net loss of $1,200,000 in Q2 2025, driven by higher provision expenses and write-downs on loans measured at fair value, compared to a net loss of $335,000 in Q1 2025 [3][7] - Loans held for investment increased by $41,000,000 (3.8%) during Q2 2025, totaling $1,130,000,000, and increased by $117,500,000 (11.7%) year-over-year [7][8] - Deposits increased by $35,500,000 (3.1%) in Q2 2025, totaling $1,160,000,000, with a year-over-year increase of $121,400,000 (11.6%) [8] - Net interest income rose to $12,300,000 in Q2 2025, an increase of $1,300,000 from Q1 2025 and $3,200,000 from the same quarter last year [9] - The net interest margin improved by 29 basis points to 4.06% in Q2 2025 [4][9] Business Line Performance - The company originated $157,000,000 in loans during the quarter and sold $66,800,000 of government guaranteed loan balances [8][10] - The government guaranteed loan origination platform originated $106,400,000 in new loans, with $67,900,000 being BOLT loans, showing stability from the previous quarter [6] - The trendsetter deposit portfolio has over 2,100 accounts, representing more than $200,000,000 in balances, with a growth of 60 households year-to-date [5] Market Performance - Nonperforming assets were 1.79% of total assets as of June 30, 2025, down from 2.08% as of March 31, 2025 [14] - The ratio of allowance for credit losses to total loans held for investment was 1.65% as of June 30, 2025, slightly up from 1.61% in Q1 2025 [15] Company Strategy and Industry Competition - The company is undergoing a comprehensive strategic review aimed at derisking unguaranteed SBA seven balances and positioning for long-term growth [3] - Management has increased collections and portfolio management staff to proactively manage credit quality amid economic challenges [16] - The company is evaluating its small loan program and related underwriting processes, with further announcements expected [17] Management Commentary on Operating Environment and Future Outlook - Management noted that asset quality trends in the SBA seven small loan program continue to decline due to rising interest rates and inflation [16] - The company remains committed to building household relationships and enhancing its community banking presence in Tampa Bay and Sarasota [18] - Future growth is expected to be supported by a strong community bank model in a desirable market [18] Other Important Information - The board has suspended common and preferred stock dividend payments and board of director fees to offset the impact of charge-offs [4] - The company is well-capitalized but is exploring strategic alternatives to enhance shareholder value [28] Q&A Session Summary Question: How would a 25 basis point cut in Fed funds affect NIM? - Management indicated that the company is asset sensitive and expects a slight temporary compression in NIM, but stability should return by the end of the next quarter [26][27] Question: Is there a probability of raising additional capital? - Management stated that the bank is currently well-capitalized and exploring options, but no imminent actions have been decided [28][29] Question: Is the company still making small SBA loans? - Management confirmed that they are focusing on core loans and evaluating the credit losses and profitability of the small loan program [76] Question: What is the current status of the BOLT loans? - Management noted that BOLT loan volume has been steady, but additional credit underwriting has been instituted to manage risks [52] Question: Are there geographic concentrations in credit issues? - Management clarified that credit issues are broad and not concentrated in specific geographic areas, although certain NAICS codes have been identified as problematic [55]

Financial Performance - BayFirst's net interest income for the three months ended June 30, 2025, was $12348 thousand, compared to $9182 thousand for the same period in 2024[27] - The company reported a net loss of $1237 thousand for the three months ended June 30, 2025, compared to a net income of $866 thousand for the same period in 2024[27] - For the six months ended June 30, 2025, BayFirst's net interest income was $23347 thousand, compared to $17924 thousand for the same period in 2024[28] - The company experienced a net loss of $1572 thousand for the six months ended June 30, 2025, compared to a net income of $1690 thousand for the same period in 2024[28] Balance Sheet and Loan Portfolio - Total assets reached $134 billion as of June 30, 2025, representing a 47% growth since December 31, 2020[6] - Total loan production for the quarter was $157 million, with loans held for investment growing by $41 million during the quarter[18] - Total deposits increased by $36 million for the quarter and $121 million over the last twelve months[22] - The investment securities portfolio has minimal exposure to market value losses, representing 02% of total assets[25] Community Banking - Total deposits across 12 branches reached $1163796 thousand as of June 30, 2025, compared to $1042388 thousand on June 30, 2024[53] - Loan production in community banking for the quarter was $507 million[54] Government Guaranteed Banking - The company is ranked 8 nationally in total SBA units and 18 in dollars for the SBA's quarter ended June 30, 2025[67] - Since its launch in June 2022, the Bolt program has originated loans totaling $8699 million, including $679 million in Q2 2025[67]

Core Points - BayFirst Financial Corp. reported a net loss of $1.2 million, or $(0.39) per share, for Q2 2025, compared to a net loss of $0.3 million, or $(0.17) per share, in Q1 2025 [1][8][32] - The company is undergoing a strategic review to derisk unguaranteed SBA 7(a) balances and enhance long-term growth and shareholder value [2][4] - The net interest margin increased to 4.06% in Q2 2025, up 29 basis points from Q1 2025 and 63 basis points from Q2 2024 [6][10] Financial Performance - Net interest income for Q2 2025 was $12.3 million, an increase from $11.0 million in Q1 2025 and $9.2 million in Q2 2024 [10][11] - Noninterest income was $10.8 million in Q2 2025, up from $8.8 million in Q1 2025 but down from $11.7 million in Q2 2024 [14][17] - The company recorded a provision for credit losses of $7.3 million in Q2 2025, compared to $4.4 million in Q1 2025 and $3.0 million in Q2 2024 [23][24] Loan and Deposit Growth - Loans held for investment increased by $41.0 million, or 3.8%, during Q2 2025, totaling $1.13 billion [15][21] - Deposits rose by $35.5 million, or 3.1%, during Q2 2025, reaching $1.16 billion [22][39] - The company originated $106.4 million in new government guaranteed loans in Q2 2025, slightly up from $106.3 million in Q1 2025 [6][7] Asset Quality - Net charge-offs for Q2 2025 were $6.8 million, an increase from $3.3 million in Q1 2025 [25][32] - The ratio of allowance for credit losses (ACL) to total loans held for investment was 1.65% as of June 30, 2025, up from 1.61% as of March 31, 2025 [24][26] Capital and Liquidity - The company's total assets increased by $51.9 million, or 4.0%, during Q2 2025, totaling $1.34 billion [20][39] - The Tier 1 leverage ratio was 8.11% as of June 30, 2025, down from 8.56% as of March 31, 2025 [26][27] - The bank's liquidity position remains strong, with an on-balance sheet liquidity ratio of 8.28% as of June 30, 2025 [27]

Core Viewpoint - BayFirst Financial Corp. will report its second quarter results on July 29, 2025, with a conference call scheduled for July 30, 2025, to discuss the results [1][2]. Company Overview - BayFirst Financial Corp. is a registered bank holding company based in St. Petersburg, Florida, operational since September 1, 2000 [3]. - The primary income source is its wholly owned subsidiary, BayFirst National Bank, which began operations on February 12, 1999 [3]. - The Bank operates twelve full-service banking offices in the Tampa Bay-Sarasota region, offering a wide range of commercial and consumer banking services [3]. - In 2024, BayFirst was named the best bank in Florida by Forbes [3]. - As of March 31, 2025, BayFirst Financial Corp. had total assets of $1.29 billion [3]. - The company ranked as the 10th largest SBA 7(a) lender by number of units originated and 19th largest by dollar volume nationwide as of March 31, 2025 [3].

Core Viewpoint - BayFirst Financial Corp. reported a net loss in Q1 2025, leading to a significant decline in its stock performance compared to the S&P 500 index, primarily due to asset quality deterioration and weaker financial results [1][2]. Financial Performance - The company incurred a net loss of $0.17 per share in Q1 2025, a reversal from a net income of $0.11 per share in Q1 2024, attributed to weaker noninterest income and elevated credit costs [2][3]. - Net interest income improved to $11 million, a 26.4% increase from $8.7 million a year earlier, while noninterest income fell by 38.5% year over year to $8.8 million [2]. - Overall deposits declined by 1.3% sequentially to $1.1 billion, despite a 1.7% increase in loans held for investment, reaching $1.1 billion, driven by commercial real estate and consumer loan origination [4]. Credit Quality Metrics - Net charge-offs decreased to $3.3 million from $3.7 million a year ago, but nonperforming assets rose to 2.08% of total assets, compared to 0.97% in the prior-year quarter [5]. - The provision for credit losses was $4.4 million, flat sequentially but slightly up from $4.1 million in Q1 2024 [5]. Management Insights - CEO Thomas G. Zernick highlighted economic challenges such as high interest rates and inflation affecting borrowers, leading to increased net charge-offs [6]. - The company is focusing on enhancing recurring revenues through core net interest income and reducing reliance on government-guaranteed loan sales [6][7]. Revenue Influences - The decline in earnings was significantly influenced by reduced revenues from government-guaranteed loans, with a $0.8 million drop in gains on sale and a $4.1 million decline in fair value gains [8]. - The absence of an $11.6 million one-time gain from a sale-leaseback transaction in the previous quarter also impacted noninterest income [8]. Expense Management - Noninterest expenses increased modestly by $0.5 million from the prior quarter, but year-over-year expenses declined by $2 million due to lower compensation and professional services costs [9]. Corporate Developments - The board authorized a share repurchase program of up to $2 million, with $0.3 million already repurchased as of March 31, 2025 [10]. - A second-quarter dividend of 8 cents per common share was declared, maintaining consistent payouts since 2016 [10]. SBA Lending Position - BayFirst ranks as the 10th largest SBA 7(a) lender by loan units and 19th by dollar volume nationwide for the SBA's quarter ended March 31, 2025 [11].