BAFN Stock Slides 15% on Q2 Loss, Interest Income Up Y/Y

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]