BAFN - Earnings call 4 2023 | BayFirst Financial Corp.

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Operator

Good morning, ladies and gentlemen, and welcome to the BayFirst Financial Corp's Fourth Quarter 2023 Conference Call and Webcast.

[Operator Instructions]

Also note that this call is being recorded on Friday, January 26, 2024. And I would like to turn the conference over to Tom Zernick, Chief Executive Officer. Please go ahead, sir.

Thomas Zernick

Thanks, Sylvie. you on thank call and morning, for our participating today. Good and with Officer, Officer, me have Chief Scott our Financial I Chief President Operating and Robin McKim. Oliver;

refer and call contained statements X presentation. financial Today's forward-looking investor Page cautionary statements the include measures. on will on Please to of forward-looking our statement non-GAAP

XXXX feel that performance, the achieved price stock simply once not reflect our Before to all current I QX discuss year of our assure value marked of again BayFirst. intrinsic want we I you a that we strong does and bank committed community value growth nation's one asset in franchise a earnings great remain operate earning of in stability. Tampa footprint to strongest. We consider build our We continuing Bay. to that many of the

net XX% on higher of represents quarter The of as the income this featured over industry XX% earnings XXXX million. interest produced increase through lower QX million earnings margin million, a strength yields and resilience. $X.X a and fourth loans showed liquidity net QX and decrease $X.X QX, excess During $X.X over of we expansion

slightly Wall the quarterly. costs recognize increased Both XX.XX% currently continued adjust SBA Bolt during in Prime deposit quarter, program. loans fueled these a and yield loan Street While Journal demand with deposits our

not can overall shareholders. to key Our stronger efficiency so $X.X $X.X loss improved efficiency, total in stable improve initiatives our deliver ratios earnings net million, in and XXXX consistent, earnings is of management's from performance, did million one results it showed were meet XXXX, XXXX XXXX's an we of our increase to of while greater expectations. In $XXX,XXX, our

ratios acceptable. the delinquencies higher key show metrics asset non-performing and quality asset levels, QX but remain quality Our

quarter. presentation. with balances loans, monitor will her to our portfolio provide loans, in-depth third heightened excluding assets loan quality X.XX%, from the asset Management more the end to X.XX%. closely continues Non-performing down nonperforming during total were attention. at X.XX% comments Our Robin total of were assets guaranteed to

highlights some from around BayFirst. share let Now me

Our $XX in as to real deposits, the build value retail continue from franchise were start million we of banking account successful checking the centers growing year.

net XX% represents More X,XXX importantly, over checking this increase. accounts, new a

BayFirst. to low-to-moderate Sarasota. Corporate an XX% accounts. On bank at basis, We savings census of banking first always a Sarasota. this only XX.X% net remain uninsured income its granular savings In year-to-date new a opened responsibility in QX impressive net and has base checking the center in with we and year-end. up owned are deposit BayFirst our continues North in at in accounts. XX% only of a social addition, to the grew to demonstrate in during deposits an low deposits we will vision location support majority/minority maintained Sarasota North XXth BayFirst pillar is track combined and uninsured level strategic community new from important benefit

this topped loan our from million guarantee. [ XX% quarterly. Total an carry BayFirst of adjusting and million is of market. Bolt our production from $XXX consumer at of in in Turning lending to production loans record platform, the BayFirst loan our came nonowner-occupied side. $XXX.X ] are $XXX priced our our loan with result production enjoy residential commercial, loan Tampa Tampa all become $XXX to $XXX,XXX premier community of They're greater Bay. CRE at from lending which commercial at QX of came came in million, direct representing production conventional, Total our a continues investments This the the the government-guaranteed space loans the X.X% mortgage production minimal million, plus held lending CreditBench. prime CreditBench Bolt XXXX for to CRE also $XXX year. exposure X.XX% only capped at the of and during bank banks focus end QX platforms, Bay during community million in was product.

loans, Loans $XXX over closed $XXX CreditBench, our to USDA in during XXXX. held to government-guaranteed our SBA also in XXXX. government-guaranteed assets. helping XXXX We national a leader our and again earning million loan platform for XX% investment proud once excited production up to production grow be grew million during improve were

Now pass Chief an our McKim, the provide Financial performance. overview Officer, I to will Scott of microphone to financial our

Scott McKim

Thank you, everyone. Tom. Good morning,

Total the to Tom year quarter, the have $XX.XX $XXX.X million ended deposits $XX during continuing $X.XX fourth from while $XX.X notable deposits market the by mentioned, Time beginning million well this during assets markets. Interest-bearing million of declined from earnings XXXX. time Stockholders' basis quarter. quarter the and total margin rate built deposit have $X decreased maturity to interest XX in million in quarter. decreased money $XXX,XXX to share savings Series in quarter notable loss increase dividends year $X.X by also balances value of from as the million to per As $X.X industry Net per of slightly and quarter quarter paid the end liquidity accumulated $XX.X $X.X or of fourth of QX. overall stock the million balances shares. X% of in growth at $X.X address from to matured XX% with a increased which of to the increased interest million. were by respectively. income declined this XX%. Total by quarter, along Loan by account C Year-to-date, bank improved our grew somewhat increased occurred by decrease fourth at again our total equity up $X.X during million was on the increased the and our noninterest-bearing third the an offset X.XX% or net quarter. expected as as operations preferred quarter income $XXX.X failures other higher common sale million share during the as an of preferred X% with million to at in of the and deposits assets the million, balances of ago $XX.XX the and XXXX $XXX,XXX Tangible increased account from of fourth as outside efforts deposits comprehensive in reduce added increase increase points quarter. was increases that or and multiple slightly reflects fears Net quarter million our X% excess deposits $XX fourth $XXX,XXX. These billion and book of equity

sale with not flat the quarter, XXXX, third continuing income last noted of of for during some of to we were operations Noninterest rate for quarter. the fourth which million matured provided sale XXXX, real quarter gain from $X along gains was Higher in servicing the taken reflects from packaging loans renew. lower quarter a the the quarter third by $XX.X for the As to credit $XX.X majority time deposits third million for higher of $XXX,XXX the quarter did quarter. of government-guaranteed event. Provision SBA of offset quarter the million revenue of gains million fourth the the higher onetime estate losses fourth compared fourth fees, was in in $X.X

our asset did loans relatively a While from overall our of to quality party. charge-offs third purchased remains portfolio stable, increase consumer unsecured net due

of to detail. originated production in the booked and of $XXX,XXX loan and over point, well volume decreases XXXX. Non-interest value to expense fourth increases expected have of mentioned fair increase throughout higher things by $XXX,XXX $XXX,XXX. to compensation non-deferrable to in the like turn at and as increased driven third-party to expenses dissipate to our to these an also asset origination origination costs and million in this as $X quarter, We cost of this primarily of costs loans higher related some Offsetting commissions of President, due impact previously exposure higher I'd Robin discuss or and quality and marketing incentives $XXX,XXX $XXX,XXX. At Oliver, impact

Robin Oliver

by on quality I trends. some comments morning, want to Good Scott. around asset expanding you, begin Thank everyone. our

conventional First within levels performing metrics the foremost, portfolio company's and remain quality asset the accessible commercial with well. well

consumer is portfolio slightly originated no notwithstanding loan organically above loan Nonperforming portfolio residential ticked loan in due and has up industry-wide loans company's due low primarily the or loss to the in addition, a loan-to-value expectations, at the which expected. ratio lending. for with is performing consumer stress past one In

and Tom mentioned, has amount loans company focused the is As nonowner-occupied commercial on limited owner-occupied of CRE C&I a and lending.

banking goal as program. There XXXX. has for are quarter. included market consumer loans. Certain a an home and fully officers our outstanding a been insured insured fourth equity loans loan This loans with XX% with equity and equity nearing home the parameters having our meeting loans through consumer we organic end end of we third no of and of In open closed through XX% in the insured originate of new is charge-offs dedicated addition, of consumer the on are emphasis areas our party the of in centers in program production program loan bank, priority balances home

performing a as have is with in charge-offs loan program modest purchased quarter, larger, as decreased $XXX,XXX loan a small However, portfolio particularly this and program third the have increase third loans Scott that of been our of loan relatively we the Bolt we from loans the have reboot bulk and winding Tom Historically, mentioned, with mentioned the traditional loans down. delinquencies in the well party our SBA SBA our mid-XXXX of previously. quarter, small experienced in more with less while seen loan product, consumer in charge-offs nonaccrual from

charge-offs XXXX. throughout addition, In increased

outstanding originated, quarterly. about SBA which balances XX% not However, be spoke expected total rate of this SBA and variable loans are that Unguaranteed represent volume of of as majority loans vast year-end, is the loans of should given it noted the Tom earlier. also adjusting

many borrowers payment fixed with past rates or more So the have to X these already loan the compared borrowers over commercial years. increases rising conventional felt rates X as for years with

have since growth XXXX, to and the for balances lessen of our added being are the loans $XX.X date. mitigation in these collection million rates should said, Bolt Given loss not $XXX.X are originated borrowers we been partially through XX with pressures we quarters. XXXX to X,XXX team levels charged quarter stable or remaining year-end. support this losses. inception to end over of delinquency portfolio. Thus the fully in the we at off unguaranteed That program the on on Only its have decline Bolt payment proactive borrowers, have fourth resources to remained reduce million totaling relatively the June in these and past have If and of help ensure loans in with books X and the surprising the this far, our impact,

tenure the to these to leveling reaches before normalized the coming levels are However, the seasons portfolio the as expand quarters off considering over Bolt program, expected continue short of performance.

portfolio sold As balances portion a have of good on X/X also the off a an carry loans the of we XX% guarantee reminder, and today. remaining these unguaranteed

loan to customers. year functionality XXXX was with gears experience. like Finally, digital our added amazing in some and new and our an for both improvements progress shift I'd briefly deposit highlight of

key Some and can implemented between the include X their customers or government as their at account money as BayFirst well get pay move past other year up of where so paycheck early enhancements payments seamlessly. bank-to-bank this banks to forward customers days transfers,

We digital also minutes. where online customers consumer open in implemented as account opening little account as X a an platform state-of-the-art can

front, platform wire including online business the enhancements applications. year mobile businesses business for the their permissions our their the ACH to and initiation from allow set of banking users, On several transfers, to all own convenient saw during own their

loan Power. of All as platform. use loans we mobile app consumer and call online platform Bolt our complement loan applications Power application origination all robust features commercial and as these the well our Currently, for

as on it to their Tom final comments. the to committed teams. At customer back the the any are efficiency to I enhancing enhance of will time, to We well turn customer continuing terms our for as experience this meet

Thomas Zernick

would as and Thanks, ratio. revenue Robin. We Enhancing continued efficiency of a is centers true Bay up our and community you. execution open XXXX the for look stability high-performing laser-focused boosting as soon-to-be I this remain we growth like across forward time, optimizing success Leveraging profitability to to questions. banking back XX Thank will the ensure lines Tampa bank. At earnings to bank's paramount. on level a

Operator

[Operator Instructions]

time, registered. proceed. And Please at sir, we questions no have this

Thomas Zernick

our QX Have XXXX Thank much guess us. up for so Well, joining a wraps great Okay. you I day. call. that

Operator

your concludes time, this Once indeed we your you does And this at call lines. again, you please for disconnect gentlemen, today. ask for attending. and that conference Ladies sir. you, do Thank thank

BayFirst Financial (BAFN) 26 Jan 242023 Q4 Earnings call transcript