BayFirst Financial (NasdaqCM:BAFN) Q4 2025 Earnings call January 30, 2026 09:00 AM ET Company ParticipantsJulienne Cassarino - FounderRobin Oliver - President and COORoss Haberman - Money ManagerScott McKim - EVP and CFOThomas Zernick - CEOOperatorGood morning, ladies and gentlemen, and welcome to the BayFirst Financial Corp Q4 2025 conference call and webcast. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during ...

Forward-Looking Information Fourth Quarter 2025 Results January 30, 2026 Cautionary Statement This earnings presentation and the associated conference call may include forward‐looking statements by us and our authorized officers pertaining to such matters as our goals, beliefs, intentions, and expectations regarding, among other things: (a) revenues, earnings, loan production, asset quality, liquidity position, capital levels, risk analysis, divestitures, acquisitions, and other material transactions, among ...

Core Viewpoint - Endeavor Bancorp reported strong earnings for the fourth quarter of 2025, achieving a net income of $1.70 million, which reflects a solid performance despite challenges from recent Federal Reserve rate cuts. The company experienced growth in both loans and deposits, contributing to an overall record-breaking year [1][2]. Financial Performance - Net income for Q4 2025 was $1.70 million, or $0.45 per diluted share, compared to $1.73 million, or $0.46 per diluted share in Q3 2025, and $1.08 million, or $0.29 per diluted share in Q4 2024 [1]. - Core pre-tax earnings for Q4 2025 were $3.06 million, a 7.1% increase from $2.86 million in Q3 2025, and a 58.9% increase from $1.93 million in Q4 2024 [2]. - Total interest income remained stable at $12.2 million in Q4 2025, while total interest expenses decreased by $403,000, leading to a net interest income of $8.1 million, which is a 5.2% increase from the previous quarter and a 23.9% increase year-over-year [3]. Interest Margin and Asset Management - The net interest margin expanded by 13 basis points to 4.22% in Q4 2025 compared to 4.09% in Q3 2025, and increased by 25 basis points from 3.97% in Q4 2024 [4]. - The yield on total earning assets was 6.35% in Q4 2025, down from 6.48% in Q3 2025, primarily due to Federal Reserve rate cuts [4]. Non-Interest Income and Expenses - Non-interest income rose to $532,000 in Q4 2025, a 32.8% increase from Q3 2025 and a 232.7% increase from $160,000 in Q4 2024, largely driven by SBA loan sales income [5]. - Non-interest expenses increased to $5.6 million in Q4 2025, up $326,000 from Q3 2025 and $799,000 from Q4 2024, attributed to strategic investments in staff [6]. Asset Quality and Balance Sheet - Total loans outstanding increased by $10.8 million, or 1.7%, to $643.4 million in Q4 2025, and increased by $71.6 million, or 12.5%, year-over-year [11]. - Total deposits rose by $4.4 million, or 0.7%, to $682.7 million in Q4 2025, and increased by $81.5 million, or 13.6%, compared to the previous year [12]. - The loan-to-deposit ratio was 94.2% at the end of Q4 2025, compared to 93.3% in Q3 2025 and 95.1% in Q4 2024 [13]. Capital and Equity - Shareholders' equity increased to $53.1 million at the end of Q4 2025, compared to $51.0 million in Q3 2025 and $46.0 million in Q4 2024 [15]. - The Tier 1 leverage ratio was 10.24% as of December 31, 2025, remaining well above regulatory minimums [16].

Fourth Quarter & Fiscal Year 2025 Financial Results January 27, 2026 Forward–Looking Statements Certain statements contained in this document constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as "may," "hope," "will," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "project," "potential," "seek," "continue," "could," "would," "future" or the negative ...

Financial Data and Key Metrics Changes - The company reported net income of $7.6 million, or $0.25 per diluted share, compared to a loss of $67.5 million, or $2.22 per share, in the previous quarter [6] - Non-performing loans decreased to $106.8 million, down $12 million from the prior quarter, representing 1.47% of total loans [7] - Total non-performing assets declined by $24 million to $108.9 million, representing 1.04% of total assets, down from 1.23% in the prior quarter [7] - The allowance for credit losses ended the quarter at $159.6 million, or 2.19% of total loans [8] - Tangible common equity to tangible assets is 10.87%, with a Tier 1 leverage ratio of 10.17% and CET1 at 13.83% [10] Business Line Data and Key Metrics Changes - Net interest income grew by $144,000 to $68.3 million, with a net interest margin (NIM) decline of five basis points to 2.38% [9] - Non-interest income increased to $12.2 million compared to $2.5 million in the previous quarter, primarily due to non-reoccurring losses and gains from SBIC investments [10] - Non-interest expense rose by $17.9 million to $59.8 million, driven by costs associated with the disposition of held-for-sale loans and valuation adjustments [10] Market Data and Key Metrics Changes - The company experienced a reduction in brokered deposits by $602 million while increasing core deposits by $692 million during 2025 [11] - The concentration ratio for commercial real estate (CRE) loans to total risk-based capital and reserves declined to 322% [9] - The acquisition, development, and construction (ADC) concentration ratio decreased to 88% as of year-end [9] Company Strategy and Development Direction - The company is transitioning from remediation to execution, focusing on consistent performance and reducing risk concentration [4] - The strategic plan includes improving asset quality and enhancing the balance sheet to support sustainable earnings [4][14] - The company aims to expand pre-provision net revenue in 2026, despite a smaller average balance sheet, prioritizing shareholder returns and profitability [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's direction, highlighting improved asset quality and a stronger foundation [14] - The expectation is for average deposits, loans, and earning assets to decline year-over-year due to deliberate balance sheet repositioning [11] - Management anticipates a meaningful expansion in net interest margin, forecasting NIM to range between 2.6% and 2.8% for the year [12] Other Important Information - The company has $4.7 billion in available liquidity, maintaining two-times coverage of uninsured deposits [11] - The company is actively reducing brokered deposits and expects to continue this trend into 2026 [11] Q&A Session Summary Question: Can you provide more details on the asset dispositions and the expected timing? - The company has $90.7 million of loans held for sale, with two-thirds scheduled for resolution in the first quarter, though it may extend into the second quarter [19] Question: What is the outlook for further moves into held-for-sale loans? - There may be situations where selling loans is the best strategy, but the pace will not match that of 2025 [20] Question: What trends are being observed in the multifamily sector? - There is stabilization and improvement in multifamily loans, with strong valuations compared to the office market [22] Question: How does the company view the provisioning for loan losses moving forward? - The company expects provision expenses to be higher than in 2024 but not at the levels seen in 2025, with a focus on the criticized classified portfolio [36] Question: What is the current status of brokered deposits and cash levels? - The company holds $1.56 billion in brokered deposits, with plans to reduce this significantly throughout 2026 [56]

Core Insights - S&P Global has launched WSO Compliance Insights, a compliance management solution aimed at enhancing credit risk management for private credit and CLO managers [1][5] - The private credit market is projected to exceed $3 trillion in assets under management by 2028, leading to increased compliance challenges [2] Product Features - WSO Compliance Insights offers real-time data streaming to streamline compliance processes and improve decision-making [1][7] - Key features include real-time test visualization, advanced hypothetical trade analysis, cross-deal comparison, interactive dashboards, and historical reporting [8] Market Context - The solution addresses the complexities of loan terms and legal documentation in the private credit market, enhancing transparency and risk management [2][5] - S&P Global's recent collaborations, including those with Cambridge Associates and Mercer, aim to deliver comprehensive private markets performance analytics [5]

Core Insights - The SEC ETF rule in 2019 has expanded the operational flexibility of ETFs, allowing them to encompass a wider range of strategies beyond traditional passive approaches [1] - Active bond ETFs have emerged as significant competitors to traditional bond strategies, offering lower fees and greater accessibility to active fixed income managers [2] Group 1: Active Bond ETFs - The ASHare total return active ETF, ticker BRT, is leveraging BlackRock's Active Fixed Income Organization and has shown strong performance [3][5] - The management team for BRT, led by Rick Reer and Chan, has extensive experience and utilizes top-down sector allocation and interest rate calls [4] - BRT outperformed its category average and index by 45 and 49 basis points respectively from January to August 2025 [6] Group 2: Dimensional Core Fixed Income ETF (DFC) - DFC aims to outperform the market by strategically positioning its duration and credit risk profile, focusing on bonds with the best return potential [6][7] - The fund has a systematic approach to credit risk, adjusting bond credit ratings based on market conditions, and has outperformed its index by 71 basis points from January to November 2024 [9] - DFC maintains a close composition to the US aggregate bond index and employs a flexible trading philosophy, contributing to its competitive edge [10][11] Group 3: DoubleLine Opportunistic Core Bond ETF (DBND) - DBND is managed by experienced professionals Jeffrey Gunlock and Jeffrey Sherman, focusing on securitized and emerging market debts [12][14] - The ETF's process includes a monthly asset allocation committee that guides sector allocation and risk, leading to strong performance [12][15] - DBND outperformed its category index by 57 basis points annually from March 2022 to August 2025, benefiting from shorter duration and effective credit risk selection [15]

Core Insights - Pathfinder Bancorp reported a net income of $626,000, or $0.10 per diluted share for Q3 2025, a significant increase from $31,000 in Q2 2025 and a recovery from a net loss of $4.6 million in Q3 2024 [2][20]. Financial Performance - Net interest income for Q3 2025 was $11.6 million, reflecting a 7.3% increase from Q2 2025 and a 1.1% decrease from Q3 2024 [6][8]. - The net interest margin (NIM) improved to 3.34% in Q3 2025, up from 3.11% in Q2 2025, driven by lower average interest-bearing deposit costs [7][9]. - Noninterest income totaled $1.5 million in Q3 2025, recovering from a negative $1.5 million in Q2 2025 [10][11]. Asset Quality - Nonperforming loans increased to $23.3 million, or 2.59% of total loans, as of September 30, 2025, compared to $11.7 million or 1.28% in Q2 2025 [27]. - The provision for credit losses was $3.5 million in Q3 2025, up from $1.2 million in Q2 2025, reflecting proactive measures to enhance asset quality [29][30]. Deposits and Loans - Total deposits grew to $1.23 billion as of September 30, 2025, a slight increase from $1.22 billion in Q2 2025 [23][32]. - Loans totaled $898.5 million, a decrease from $909.7 million in Q2 2025, with commercial loans making up 60.5% of total loans [22][21]. Noninterest Expense - Noninterest expense for Q3 2025 was $8.9 million, an increase from $8.1 million in Q2 2025 but a decrease from $10.3 million in Q3 2024 [14][19]. - Salaries and benefits increased to $5.0 million, driven by additional workdays and increased medical claims [15]. Shareholder Value - The Board of Directors declared a cash dividend of $0.10 per share, scheduled for disbursement on November 7, 2025 [34][35]. - The closing stock price as of September 30, 2025, was $15.68, resulting in an annualized dividend yield of 2.55% [36].

Financial Data and Key Metrics Changes - The company reported a net loss of $67.5 million, or $2.22 per share, compared to a loss of $69.8 million, or $2.30 per share in the previous quarter [13] - Tangible common equity to tangible assets is at 10.39%, with Tier 1 leverage ratio slightly declining to 10.4% and CET1 at 13.58% [13] - Tangible book value per share decreased by $2.03 to $37, reflecting credit cleanup rather than core earnings erosion [13] Business Line Data and Key Metrics Changes - C&I loans increased by $105 million, representing the majority of loan originations for the quarter [6] - Average C&I deposits grew by 8.6%, or $134.2 million, indicating relationship growth and new account activity [6] - Non-interest income totaled $2.5 million, down from $6.4 million in the previous quarter, primarily due to loan loss sales [15] Market Data and Key Metrics Changes - Total criticized and classified office loans declined from $302 million at the end of March to $113.1 million at September 30 [9] - Non-performing loans decreased from $226.4 million to $118.6 million, reflecting transfers to held-for-sale status and charge-offs [10] - Total criticized and classified loans rose to $958 million from $875 million, with office loans declining while multifamily loans increased [11] Company Strategy and Development Direction - The company is focused on completing credit cleanup, deepening core relationships, and improving earnings performance to drive shareholder value [8] - The strategic plan includes diversifying the balance sheet, improving margins, and reducing reliance on wholesale funding [7] - The company anticipates loan growth in 2026 to be concentrated in C&I, with a disciplined approach to credit standards [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that they are nearing the end of elevated losses from decreased asset values and are addressing valuation stress in the office market [4] - The independent loan review confirmed the adequacy of current provisioning, supporting management's view of the portfolio [16] - Provisions are expected to be manageable moving forward, with improved earnings anticipated in 2026 [21] Other Important Information - The company announced the voluntary resignation of Chief Credit Officer Kevin Geoghegan, with interim replacements appointed [21][22] - The independent loan review covered over 400 loans, representing 84.9% of the commercial loan book, assessing potential losses over a 30-month horizon [16] Q&A Session Summary Question: Concerns about further losses on loan sales - Management indicated that they are implementing better valuation tools and placing carrying values at the lower end of ranges to avoid previous issues [25][26] Question: Timing for asset disposals - Management expects material actions to occur during the fourth quarter of 2025, with ongoing discussions about individual assets [28] Question: Future charge-offs and impact on provisions - Management does not anticipate significant charge-off activity impacting provision expenses in the upcoming quarter [29][30] Question: Clarification on multifamily loan performance - Management noted that while debt service coverage is stressed, the actual performance of many properties is at or above underwritten expectations [32] Question: Impact of government shutdown on government contracts - Management has not seen significant concerns in the government contracting space due to the shutdown, with ongoing communication with clients [38] Question: Future inflow of criticized and classified loans - Management expects a dramatic slowdown in the inflow of criticized and classified loans moving into 2026 [44][45] Question: Comments on Kevin Geoghegan's departure - Management expressed gratitude for Geoghegan's contributions and emphasized the continuity of credit risk management processes with interim appointments [52][53] Question: Potential for M&A activity and franchise value - Management is focused on strategic plans to build shareholder value through diversification and improving pre-provision net revenue [70][71]

Financial Data and Key Metrics Changes - The company reported a net loss of $67.5 million, or $2.22 per share, compared to a loss of $69.8 million, or $2.30 per share in the previous quarter [13][14] - Tangible common equity to tangible assets is at 10.39%, with a slight decline in Tier 1 leverage ratio to 10.4% and CET1 to 13.58% [13][14] - Tangible book value per share decreased by $2.03 to $37, reflecting credit cleanup rather than core earnings erosion [13][14] Business Line Data and Key Metrics Changes - C&I loans increased by $105 million, representing the majority of loan originations for the quarter [6] - Average C&I deposits grew by 8.6%, or $134.2 million, indicating relationship growth and new account activity [6] - Non-interest income totaled $2.5 million, down from $6.4 million last quarter, primarily due to loan loss sales [15] Market Data and Key Metrics Changes - Total criticized and classified office loans declined from $302 million at the end of March to $113.1 million at September 30 [10] - Non-performing loans decreased from $226.4 million to $118.6 million, reflecting transfers to held-for-sale status and charge-offs [11] - Total criticized and classified loans rose to $958 million from $875 million last quarter, with multifamily loans increasing by $204 million [12] Company Strategy and Development Direction - The company is focused on completing credit cleanup, deepening core relationships, and improving earnings performance to drive shareholder value [9] - The strategic plan includes diversifying the balance sheet, improving margins, and reducing reliance on wholesale funding [7][8] - The company anticipates loan growth in 2026 to be concentrated in C&I, with a strong focus on disciplined credit standards [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that they are nearing the end of elevated losses from decreased asset values and that provisions will be manageable moving forward [5][22] - The independent loan review confirmed the adequacy of current reserves, with potential losses identified being largely in line with internal assessments [18][19] - The company expects net interest income to grow despite a smaller balance sheet, driven by lower funding costs [20] Other Important Information - The Chief Credit Officer, Kevin Geoghegan, announced his voluntary resignation, with interim replacements appointed [22][23] - The company engaged a nationally recognized loan review firm to conduct an independent credit evaluation of its portfolios [16][17] Q&A Session Summary Question: Can you talk about the comfort level regarding potential further losses on closed transactions? - Management indicated that they have implemented a process to determine carrying values based on brokers' opinions, which are considered more reliable than appraisals [27][28] Question: What is the timeline for getting assets off the balance sheet? - Management expects material action to occur during the fourth quarter of 2025, with ongoing discussions with potential buyers [30] Question: What are the expectations for charge-offs in the next quarter? - Management does not anticipate significant charge-off activity impacting book value in the upcoming quarter [31][32] Question: Can you elaborate on the multifamily loans and the increase in criticized balances? - Management noted that while there are challenges in debt service coverage due to interest rates, the underlying property performance remains stable [34][35] Question: How does the company view the government contract business amid the shutdown? - Management has not seen significant concerns in the government contracting space, with ongoing communication with relationship managers [40][41] Question: What are the expectations for criticized classified loans moving into 2026? - Management expects a decline in criticized classified loans into 2026 based on recent reviews and assessments [45][46] Question: How does the company view the potential for M&A activity? - The board is open to any options that add value to shareholders, focusing on strategic plans and diversification efforts [68][70]