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BayFirst Incurs Loss in Q1 as Loan Sales Decline, Stock Down 6%
BAFNBayFirst Financial (BAFN) ZACKS·2025-04-30 18:50

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 0.17pershareinQ12025,areversalfromanetincomeof0.17 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 11million,a26.411 million, a 26.4% increase from 8.7 million a year earlier, while noninterest income fell by 38.5% year over year to 8.8million[2].−Overalldepositsdeclinedby1.38.8 million [2]. - Overall deposits declined by 1.3% sequentially to 1.1 billion, despite a 1.7% increase in loans held for investment, reaching 1.1billion,drivenbycommercialrealestateandconsumerloanorigination[4].CreditQualityMetrics−Netcharge−offsdecreasedto1.1 billion, driven by commercial real estate and consumer loan origination [4]. Credit Quality Metrics - Net charge-offs decreased to 3.3 million from 3.7millionayearago,butnonperformingassetsroseto2.083.7 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 4.1millioninQ12024[5].ManagementInsights−CEOThomasG.Zernickhighlightedeconomicchallengessuchashighinterestratesandinflationaffectingborrowers,leadingtoincreasednetcharge−offs[6].−Thecompanyisfocusingonenhancingrecurringrevenuesthroughcorenetinterestincomeandreducingrelianceongovernment−guaranteedloansales[6][7].RevenueInfluences−Thedeclineinearningswassignificantlyinfluencedbyreducedrevenuesfromgovernment−guaranteedloans,witha4.1 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 4.1milliondeclineinfairvaluegains[8].−Theabsenceofan4.1 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 0.5millionfromthepriorquarter,butyear−over−yearexpensesdeclinedby0.5 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 2million,with2 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].