BayFirst Financial Corp.
For the period ended Dec 31, 2024. Filed Mar 25, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 25, 2025
BAFN$5.72-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-28.
0001649739-24-000122
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-25.
0001649739-25-000106
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 130 previous paragraphs and 124 current paragraphs.
67 unchanged; 47 reworded; 9 added; 14 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 26 previous and 26 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Share Repurchase Program. The Company announced that its Board of Directors adopted a share repurchase program. Under the repurchase program, the Company may repurchase up to $2.0 million of the Company’s outstanding shares, over a period beginning on January 28, 2025, and continuing until the earlier of the completion of the repurchase, or December 31, 2025, or termination of the program by the Board of Directors.
Current report
For the year ended December 31, 2024, net income was $12.6 million, or$2.68 per common share, or$2.62 per diluted common share, an increase from net income of $5.7 million, or$1.16 per common share, or $1.12 per diluted common share, for the year ended December 31, 2023. The change was primarily due tothe pre-tax gain on sale of two branch office properties of $11.6 million, which was part of a sale-leaseback transaction, an increase in net interest income of $1.6 million, higher gain on sale of government guaranteed loans of $3.7 million, and lower noninterest expense of $0.9 million. This was partially offset by higher provision for credit losses of $4.3 million, a decrease in government guaranteed fair value gains of $5.9 million and higher income tax expense on continuing operations of $2.2 million. The decrease in fair value gains on government guaranteed loans was partially due to not electing the fair value option on newly originated government guaranteed loans in the fourth quarter of 2024..
Current report
The Company recorded a provision for credit losses for the year ended December 31, 2024 of $14.7 million compared to a $10.4 million provision for the year ended December 31, 2023. The increase of $4.3 million in the provision for credit losses expense was primarily due to higher than expected charge-offs resulting in higher provision expense based on ACL model output. For the year ended December 31, 2024, net loan charge offs totaled $13.0 million compared to $9.0 million for the year ended December 31, 2023.
Current report
The Bank developed an express modification program for SBA 7(a) borrowers to help those borrowers who are challenged with larger payments in the higher interest rate environment compared to interest rates at the time the loans were originated. Through December 31, 2024, approximately 400 SBA 7(a) borrowers have been offered loan modification options. These efforts have helped and are expected to continue to help reduce risk of loss.
Current report
Noninterest income from continuing operations was $60.5 million for the year ended December 31, 2024, anincrease from $49.8 million for the year ended December 31, 2023. The increase was primarily the result of the pre-tax gain on sale of two branch office properties of $11.6 million, which was a result of a sale-leaseback transaction, and an increase in gain on sale of government guaranteed loans of $3.7 million, partially offset by a decrease in fair value gains on government guaranteed loans of $5.9 million. The decrease in fair value gains on government guaranteed loans was partially due to not electing the fair value option on newly originated government guaranteed loans in the fourth quarter of 2024.
Current report
Noninterest expense was $66.8 million for the year ended December 31, 2024, a decrease from $67.7 million for the year ended December 31, 2023. The decrease was the result of decreases in compensation expenses of $1.2 million, loan origination and collection expense of $1.0 million, and marketing and business development expenses of $1.3 million. The decreases were partially offset by increases in data processing expenses of $1.1 million, regulatory assessments of $0.4 million, and other noninterest expense of $0.6 million.
Current report
The increase in commercial and industrial loan net charge-offs was the result of macro economic conditions including rapidly rising interest and inflation rates, as well as natural disasters including wildfires and hurricanes.
Current report
Deposits increased $158.1 million or 16.05% for the year ended December 31, 2024, with growth in noninterest-bearing deposit accounts, money market accounts, savings accounts, and time deposits, partially offset by a slight decrease in interest-bearing transaction accounts.
Current report
Shareholders' equitywas $110.9 million at December 31, 2024 as compared to $100.7 million at December 31, 2023. Theincrease was primarily due tonet income of $12.6 million, partially offset by common stock dividends of$1.3 million andpreferred stock dividends of$1.5 million.
Removed paragraphs (14)
Previous report
Preferred Stock Offering. On September 30, 2023, the Company issued 1,835 shares of 11.0% Series C Cumulative Convertible Preferred Stock. These shares have no par value and a liquidation preference of $1,000 per share plus an amount equal to all accumulated dividends thereon (whether or not earned or declared but without interest) to the date payment of such distribution is made in full. An additional 4,611 shares were issued during the fourth quarter of 2023. Total gross proceeds from the preferred stock offering currently totals $6.45 million, which will be used for operating expenses or to contribute capital to BayFirst National Bank to support its growth and operations.
Previous report
For the year ended 2023, net income was $5.7 million, or $1.12 per diluted common share, an increase of $6.0 million from the net loss of$0.3 million, or $0.22 per diluted common share, for the year ended 2022. The increase was primarily the result of a $5.8 million net loss from discontinued operations in 2022, as well as an increase in net income from continuing operations of $0.4 million primarily as a result of increased loan origination volume.
Previous report
The Company recorded a provision for credit losses for the year ended December 31, 2023 of $10.4 million compared to a $0.7 million negative provision under the incurred loss methodology for the year ended December 31, 2022. The increase of $11.1 million in the provision for credit losses expense was primarily due to loan growth, higher charge-offs, and the Company having reduced its ALLL under the incurred loss methodology in 2022 from the historic high levels reached in 2020 at the onset of the COVID-19 pandemic. During the year ended December 31, 2023, net loan charge offs totaled $9.0 million compared to $3.7 million during the year ended December 31, 2022. Net charge-offs for theyear ended December 31, 2023 were elevated by$2.8 million due to the performance from a purchased portfolio of unsecured consumer loans. As of December 31, 2023, this portfolio had$1.0 million of loans 30-89 days past due and$0.3 million of loans 90+ days past due. The Company stopped purchasing these loans at the end of 2022 and the portfolio balances decreased from $30.9 million to$17.0 million during 2023.
Previous report
Noninterest income from continuing operations was $49.8 million for the year ended December 31, 2023, anincrease of $18.2 million or 57.7% from $31.6 million for the year ended December 31, 2022. The increase was primarily due to higher gains on the sale of government guaranteed loans of $2.8 million, an $11.0 million increase in fair value gains related to HFI government guaranteed loans, and an increase in other noninterest income of $3.2 million. The increase in other noninterest income was primarily due to higher government guaranteed loan packaging fees of $2.9 million. The increase in fair value gains related to HFI government guaranteed loans was primarily related to an increase in the volume of loans held at fair value. As of December 31, 2023, the Company had $91.5 million of loans held at fair value compared to $27.1 million at December 31, 2022.
Previous report
Noninterest expense was $67.7 million during the year ended December 31, 2023, an increase of $12.5 million or 22.6% from $55.2 million for the year ended December 31, 2022. The increasewas primarily the result of higher compensation costs and loan origination and collection expense.
Previous report
Discontinued Operations
Previous report
Net loss from discontinued operations was $213 thousand for the year ended December 31, 2023, which was a $5.6 million reduction from a net loss of $5.8 million for the year ended December 31, 2022. The majority of the discontinued loss in 2022 was recorded in the third quarter of 2022. As such, the net loss from discontinued operations for the year ended 2022 included restructuring charges of $4.3 million and the discontinued loss in the year ended of 2023 represented a modest amount of trailing expenses from the discontinuation.
Previous report
During the year ended December 31, 2022, the Bank originated approximately $254.9 million in loans through conventional lending channels, $386.0 million through CreditBench, and $946.1 million through the Residential Mortgage Lending Division, which is a discontinued operation. Additionally, the Bank sold guaranteed loan balances of $311.8 million and unguaranteed loan balances of $13.8 million of government guaranteed loans. The Bank purchased $16.6 million of government guaranteed loans and $37.2 million of unsecured consumer loans.
Previous report
Prior to January 1, 2023, the incurred loss methodology was used to estimate credit losses. Beginning with that date, the credit losses are estimated using the CECL methodology.
Previous report
(1)Excludes loans accounted for at fair value
Previous report
Nonperforming assets to total assets, excluding government guaranteed loan balances, were 0.74% as of December 31, 2023, as compared to 0.40% as of December 31, 2022.
Previous report
Deposits increased $190.1 million or 23.91% during the year ended 2023, with growth in all deposit types. There was growth in transaction accounts (noninterest bearing and interest bearing transaction accounts) of $57.2 million or 19.3%, savings and money market account balances of $9.9 million or 2.7%, and time deposit balances of $122.9 million, or 90.3%.
Previous report
Shareholders' equity increased $8.8 million to $100.7 million at December 31, 2023 as compared to $91.9 million at December 31, 2022. Theincrease was primarily due tonet income of $5.7 million and the issuance of preferred stock of $6.4 million. This was partially offset bythe implementation of the new credit loss accounting standard. As a result of the accounting change, equity was reduced by $2.5 million.
Previous report
In 2020, the Federal banking regulatory agencies adopted a rule to simplify the methodology for measuring capital adequacy for smaller, uncomplicated banks. This CBLR is calculated as the ratio of tangible equity capital divided by average total consolidated assets. CBLR tangible equity is defined as total equity capital, prior to including minority interests, and excluding accumulated other comprehensive income, deferred tax assets arising from net operating loss and tax credit carryforwards, goodwill, and other intangible assets (other than mortgage servicing assets). Under the proposal, a qualifying organization may elect to use the CBLR framework if its CBLR is greater than 9%. The Bank elected not to use the CBLR framework.
Reworded paragraphs (47)
Previous wording
The following discussion is an analysis of the results of operations for the fiscal years ended December 31, 2023 and December 31, 2022 and financial condition as of December 31, 2023 and December 31, 2022. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes.
Current wording
The following discussion is an analysis of the results of operations for the year ended December 31, 2024 and December 31, 2023 and financial condition as of December 31, 2024 and December 31, 2023. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes.
Previous wording
In addition to the historical information contained herein, this Form 10-K includes "forward-looking statements" within the meaning of such term in the Private Securities Litigation Reform Act of 1995. These statements are subject to many risks and uncertainties, including, but not limited to, the effects of health crises, global military hostilities, or climate changes, including its effects on the economic environment, its customers and its operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with them; the ability of the Company to implement its strategy and expand its banking operations; changes in interest rates and other general economic, business and political conditions, including changes in the financial markets or global military hostilities; changes in business plans as circumstances warrant; risks related to mergers and acquisitions; changes in benchmark interest rates used to price loans and deposits, changes in tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the SEC. Readers should note that the forward-looking statements included herein are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements.
Current wording
In addition to the historical information contained herein, this Form 10-K includes "forward-looking statements" within the meaning of such term in the Private Securities Litigation Reform Act of 1995. These statements are subject to many risks and uncertainties, including, but not limited to, the effects of health crises, global military hostilities, weather events, or climate changes, including its effects on the economic environment, its customers and its operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with them; the ability of the Company to implement its strategy and expand its banking operations; changes in interest rates and other general economic, business and political conditions, including changes in the financial markets or global military hostilities; changes in business plans as circumstances warrant; risks related to mergers and acquisitions; changes in benchmark interest rates used to price loans and deposits, changes in tax laws, regulations and guidance; and other risks detailed from time to time in filings made by the Company with the SEC. Readers should note that the forward-looking statements included herein are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements.
Previous wording
The following presents these non-GAAP financial measures along with their most directly comparable financial measures calculated in accordance with GAAP:
Current wording
The following presents these non-GAAP financial measures calculated in accordance with GAAP:
Previous wording
The ACL is calculated with the objective of maintaining a reserve sufficient to absorb estimated losses. Management's determination of the appropriateness of the allowance is based on periodic evaluations of the loan portfolio, lending-related commitments, and other relevant factors. This evaluation is inherently subjective as it requires numerous estimates, including the loss for internal risk ratings, collateral values, and the amounts and timing of expected future cash flows. The Company’s ACL on loans is estimated using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In addition, management may include qualitative adjustments intended to capture the impact of other uncertainties in the lending environment such as underwriting standards, current economic and political conditions, and other factors affecting the credit quality. Changes to one or more of the estimates used could result in a different estimated ACL.
Current wording
The ACL is calculated with the objective of maintaining a reserve sufficient to absorb estimated losses. Management's determination of the appropriateness of the allowance is based on periodic evaluations of the loan portfolio, lending-related commitments, and other relevant factors. This evaluation is inherently subjective as it requires numerous estimates, including collateral values, and the amounts and timing of expected future cash flows. The Company’s ACL on loans is estimated using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In addition, management may include qualitative adjustments intended to capture the impact of other uncertainties in the lending environment such as underwriting standards, current economic and political conditions, and other factors affecting the credit quality. Changes to one or more of the estimates used could result in a different estimated ACL.
Previous wording
As a one-bank holding company, the Company generates most of its revenue from interest on loans and gain-on-sale income derived from the sale of government guaranteed loans into the secondary market. The primary source of funding for its loans is deposits. The Company is dependent on noninterest income, which is derived primarily from net gain on the sales of the guaranteed portion of government guaranteed loans. The largest expenses are interest on those deposits and borrowings, professional fees, and salaries and commissions plus related employee benefits. The Company measures its performance through its net interest income after provision for credit losses, return on average assets, and return on average common equity, while maintaining appropriate regulatory leverage and risk-based capital ratios.
Current wording
As a one-bank holding company, the Company generates most of its revenue from interest on loans and gain on sale income derived from the sale of government guaranteed loans into the secondary market. The primary sources of funding for its loans are loan sales, loan payments, deposits, and borrowings. The Company is dependent on noninterest income, which is derived primarily from net gain on the sales of the guaranteed portion of government guaranteed loans. The largest expenses are interest on those deposits and borrowings, professional fees, loan origination expenses, and salaries and commissions plus related employee benefits. The Company measures its performance through its net interest income after provision for credit losses, return on average assets, and return on average common equity, while maintaining appropriate regulatory leverage and risk-based capital ratios.
Previous wording
First Quarter Common Stock Dividend. On January 23, 2024, BayFirst’s Board of Directors declared a first quarter 2024 cash dividend of $0.08 per common share, payable March 15, 2024 to common shareholders of record as of March 1, 2024. This dividend marks the 31 st consecutive quarterly cash dividend paid since BayFirst initiated cash dividends in 2016.
Current wording
First Quarter Common Stock Dividend. On January 28, 2025, BayFirst’s Board of Directors declared a first quarter 2025 cash dividend of $0.08 per common share, payable March 15, 2025 to common shareholders of record as of March 1, 2025. The Company has continuously paid quarterly common stock cash dividends since 2016.
Previous wording
First Quarter Preferred Series A Stock Dividend. BayFirst’s Board of Directors declared a quarterly cash dividend of $22.50 on the Series A Preferred Stock. The dividend was payable March 1, 2024 to shareholders of record as of January 15, 2024. The amount and timing of the dividend is in accordance with the terms of the Series A Preferred Stock.
Current wording
First Quarter Preferred Series A Stock Dividend. BayFirst’s Board of Directors declared a quarterly cash dividend of $22.50 on the Series A Preferred Stock. The dividend will be payable April 1, 2025 to shareholders of record as of January 15, 2025. The amount and timing of the dividend is in accordance with the terms of the Series A Preferred Stock.
Previous wording
First Quarter Preferred Series B Stock Dividend. BayFirst’s Board of Directors declared a quarterly cash dividend of $20.00 on the Series B Convertible Preferred Stock. The dividend was payable March 1, 2024 to shareholders of record as of January 15, 2024. The amount and timing of the dividend is in accordance with the terms of the Series B Convertible Preferred Stock.
Current wording
First Quarter Preferred Series B Stock Dividend. BayFirst’s Board of Directors declared a quarterly cash dividend of $20.00 on the Series B Convertible Preferred Stock. The dividend will be payable April 1, 2025 to shareholders of record as of January 15, 2025. The amount and timing of the dividend is in accordance with the terms of the Series B Convertible Preferred Stock.
Previous wording
First Quarter Preferred Series C Stock Dividend. BayFirst’s Board of Directors declared a quarterly cash dividend of $27.50 on the Series C Cumulative Convertible Preferred Stock. The dividend was payable March 1, 2024 to shareholders of record as of January 15, 2024. The amount and timing of the dividend is in accordance with the terms of the Series C Cumulative Convertible Preferred Stock.
Current wording
First Quarter Preferred Series C Stock Dividend. BayFirst’s Board of Directors declared a quarterly cash dividend of $27.50 on the Series C Cumulative Convertible Preferred Stock. The dividend will be payable April 1, 2025 to shareholders of record as of January 15, 2025. The amount and timing of the dividend is in accordance with the terms of the Series C Cumulative Convertible Preferred Stock.
Previous wording
BayFirst’s operating results depend on its net interest income, which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities, consisting primarily of deposits. Net interest income is determined by the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities (“interest rate spread”) and the relative amounts of interest-earning assets and interest-bearing liabilities. The interest rate spread is affected by regulatory, economic, and competitive factors which influence interest rates, loan demand, and deposit flows. In addition, the Company’s operating results can be affected by the level of nonperforming assets, as well as the level of the noninterest income and the noninterest expenses, such as salaries and employee benefits, and occupancy and equipment costs, as well as income taxes.
Current wording
BayFirst’s operating results depend on its net interest income, which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities, consisting primarily of deposits. Net interest income is determined by the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities (“interest rate spread”) and the relative amounts of interest-earning assets and interest-bearing liabilities. The interest rate spread is affected by regulatory, economic, and competitive factors which influence interest rates, loan demand, and deposit flows. In addition, the Company’s operating results can be affected by the level of nonperforming assets, as well as the level of the noninterest income and the noninterest expenses, such as salaries and employee benefits, occupancy and equipment costs, and loan origination expenses as well as income taxes.
Previous wording
The Company is dependent on noninterest income, which is derived primarily from net gain on the sales of the guaranteed portion of government guaranteed loans, as well as fair value adjustments for certain loans which management has elected the fair value option. While the Company retains some of its government guaranteed loans on the balance sheet, the
Current wording
The Company is dependent on noninterest income, which is derived primarily from net gain on the sales of the guaranteed portion of government guaranteed loans, as well as fair value adjustments for certain loans which management has elected the fair value option. While the Company retains some of its government guaranteed loans on the balance sheet, the Company may sell both the guaranteed balance of its government guaranteed loans, as well as a percentage of the unguaranteed portions of such loans.
Previous wording
In the second quarter of 2022, the Bank discontinued its primary consumer direct residential mortgage business line. In the third quarter of 2022, management decided to discontinue the nationwide residential lending business. As a result of the discontinuance, the nationwide residential line of business was reclassified as a discontinued operation and reported in the financial statements as such.
Current wording
In the second quarter of 2022, the Bank discontinued its primary consumer direct residential mortgage business line. In the third quarter of 2022, management decided to discontinue the nationwide residential lending business. As a result of the discontinuance, the nationwide residential mortgage line of business was reclassified as a discontinued operation and reported in the financial statements as such.
Previous wording
Net interest income from continuing operations was $36.4 million for the year ended December 31, 2023, an increase of $6.4 million or 21.4% from $30.0 million for the year ended December 31, 2022. The increase was mainly due to an increase in loan interest income, including fees, of $26.7 million, partially offset by an increase in deposit interest expense of $23.0 million.
Current wording
Net interest income from continuing operations was $38.0 million for the year ended December 31, 2024, an increase from $36.4 million for the year ended December 31, 2023. The increase was mainly due to an increase in loan interest income, including fees, of $15.6 million, partially offset by an increase in interest expense on deposits of $12.1 million and a decrease in interest income on interest-bearing deposit from banks of $1.3 million.
Previous wording
Net interest margin including discontinued operations decreased to 3.78% for the year ended December 31, 2023, compared to 3.97% for the year ended December 31, 2022.
Current wording
Net interest margin decreased to 3.45% for the year ended December 31, 2024, compared to 3.78% for the year ended December 31, 2023.
Previous wording
The ACL was $13.5 million at December 31, 2023 and $9.0 million using the incurred losses methodology at December 31, 2022.
Current wording
The ACL was $15.5 million at December 31, 2024 and $13.5 million at December 31, 2023.
Previous wording
Income tax expense from continuing operations was$2.1 million for the year ended December 31, 2023, an increase of$0.6 million from income tax expense of$1.6 million for the year ended December 31, 2022. The increase was primarily due to the increase in pre-tax earnings from continuing operations. Income tax benefit from discontinued operations was $70 thousand for the year ended December 31, 2023, a change of$1.9 million from income tax benefit of$1.9 million for the year ended December 31, 2022. The change was primarily due to the decrease in pre-tax loss from discontinued operations.
Current wording
Income tax expense from continuing operations was$4.3 million for the year ended December 31, 2024, an increase from income tax expense of$2.1 million for the year ended December 31, 2023. The increase was primarily due to the increase in pre-tax earnings from continuing operations. Income tax benefit from discontinued operations was $23 thousand for the year ended December 31, 2024, from income tax benefit of $70 thousand for the year ended December 31, 2023.
Previous wording
At December 31, 2023, the Company had $1.8 million of federal net operating loss carryforward and $0.4 million of state net operating loss carryforward. The net operating loss carryforwards do not expire. At December 31, 2022, the Company had $2.2 million of federal net operating loss carryforward and $0.4 million of state net operating loss carryforward.
Current wording
At December 31, 2024, the Company had no federal net operating loss carryforward and $16 thousand of state net operating loss carryforward. At December 31, 2023, the Company had $1.8 million of federal net operating loss carryforward and $0.4 million of state net operating loss carryforward. The net operating loss carryforwards do not expire.
Previous wording
The effective income tax rate was 26.44% for the year ended December 31, 2023 and 51.60% for the year ended December 31, 2022.
Current wording
The effective income tax rate was 25.40% for the year ended December 31, 2024 and 26.44% for the year ended December 31, 2023.
Previous wording
The net unrealized loss on the investment securities AFS at December 31, 2023, was $4.0 million compared with a net unrealized loss on investment securities AFS of $5.0 million at December 31, 2022. The change in unrealized loss on investment securities AFS from December 31, 2022 to December 31, 2023 was primarily due to the change in the interest rate environment.
Current wording
The net unrealized loss on the investment securities AFS at December 31, 2024 and December 31, 2023, was $4.0 million.
Previous wording
There was a $17 thousand ACL on the corporate bonds HTM as of December 31, 2023 and no ACL as of December 31, 2022. The net unrealized loss on the investment securities HTM at December 31, 2023, was $238 thousand compared with a net unrealized loss on investment securities HTM of $247 thousand at December 31, 2022.
Current wording
There was a $12 thousand ACL on the corporate bonds HTM as of December 31, 2024 and a $17 thousand ACL on the corporate bonds HTM as of December 31, 2023. The net unrealized loss on the investment securities HTM at December 31, 2024, was $154 thousand compared with a net unrealized loss on investment securities HTM of $238 thousand at December 31, 2023.
Previous wording
No investment securities were pledged as of December 31, 2023 or December 31, 2022, and there were no sales of investment securities during the year ended December 31, 2023 or year ended December 31, 2022.
Current wording
No investment securities were pledged as of December 31, 2024 or December 31, 2023, and there were no sales of investment securities for the year ended December 31, 2024 or year ended December 31, 2023.
Previous wording
The Company offers a variety of products designed to meet the credit needs of our borrowers. Our lending activities primarily consist of government guaranteed loans, real estate loans, commercial business loans, residential mortgage, and consumer loans. Senior management and loan officers have continued to develop new sources of loan referrals, particularly among centers of local influence and real estate professionals, and have also enjoyed repeat business from loyal customers in the markets the Bank serves. The Bank has no concentration of credit in any industry that represents 10% or more of its loan portfolio. Additionally, the loan portfolio is well-diversified across major loan types with a low concentration of non owner-occupied commercial real estate loans which makes up 8% of the total portfolio. The following table sets forth the composition of its loan portfolio, including LHFS as of the dates indicated.
Current wording
The Company offers a variety of products designed to meet the credit needs of our borrowers. Our lending activities primarily consist of government guaranteed, commercial real estate, commercial business, residential mortgage, and consumer loans. Senior management and loan officers have continued to develop new sources of loan referrals, particularly among centers of local influence and real estate professionals, and have also enjoyed repeat business from loyal customers in the markets the Bank serves. The Bank has no concentration of credit in any industry that represents 10% or more of its loan portfolio. Additionally, the loan portfolio is well-diversified across major loan types with a low concentration of non owner-occupied commercial real estate loans which makes up 7% of the total portfolio. The following table sets forth the composition of its loan portfolio.
Previous wording
During the year ended December 31, 2023, the Bank originated approximately $216.9 million in loans through conventional lending channels and $547.5 million in loans through CreditBench (its government guaranteed lending function). In addition, the Bank sold guaranteed loan balances of $437.9 million and unguaranteed loan balances of $13.7 million of government guaranteed loans. The Bank purchased $111.8 million of government guaranteed loans. Of the loans purchased during the year, $75.8 million were sold or paid off as of December 31, 2023.
Current wording
For the year ended December 31, 2024, the Bank originated $269.8 million in loans through conventional lending channels and $431.4 million in loans through its government guaranteed lending function. In addition, the Bank sold guaranteed loan balances of $385.3 million.
Previous wording
Allowance for Credit Losses. In accordance with changes in generally accepted accounting principles, the Company adopted the new credit loss accounting standard known as CECL on January 1, 2023. At the time of adoption, the ACL for loans increased by $3.1 million to 1.73% of loans, thereserve on unfunded commitments increased $213 thousand, and an $18 thousand reserve was established for held to maturity investment securities.These one-time increases resulted in an after tax decrease to capital of $2.5 million, with no impact to earnings. Under CECL, the ACL is based on expected credit losses rather than on incurred losses.
Current wording
Allowance for Credit Losses. In accordance with changes in generally accepted accounting principles, the Company adopted the new credit loss accounting standard known as CECL on January 1, 2023. At the time of adoption, the reserves for loans increased by $3.1 million to 1.73% of loans, thereserve on unfunded commitments increased $213 thousand, and an $18 thousand reserve was established for held to maturity investment securities. These one-time increases resulted in an after tax decrease to capital of $2.5 million, with no impact to earnings. Under CECL, the ACL is based on expected credit losses rather than on incurred losses.
Previous wording
The Bank must maintain an adequate ACL based on a comprehensive methodology that assesses the probable losses inherent in its loan portfolio. The Bank maintains an ACL based on a number of quantitative and qualitative factors, including levels and trends of past due and nonaccrual loans, asset classifications, change in volume and mix of loans, collateral value, historical loss experience, size and complexity of individual credits, and economic conditions. In addition to this, the Company uses reasonable and supportable forecasts utilizing data from the FOMC’s median forecasts of change in national GDP and of national unemployment. Provisions for credit losses are provided on both a specific and general basis. Specific allowances are provided for individual loans that do not share similar risk characteristics with instruments evaluated using a collective (pooled) basis. General valuation allowances are determined by loan pools with a further evaluation of various quantitative and qualitative factors noted above.
Current wording
The Bank must maintain an adequate ACL based on a comprehensive methodology that assesses the probable losses inherent in its loan portfolio. The Bank maintains an ACL based on a number of quantitative and qualitative factors, including levels and trends of past due and nonaccrual loans, asset classifications, change in volume and mix of loans, collateral value, historical loss experience, size and complexity of individual credits, and economic conditions. In addition to this, the Company uses reasonable and supportable forecasts that are developed with internal and external data. These are updated quarterly by management and utilize data from the FOMC’s median forecasts of change in national GDP and of national unemployment. Provisions for credit losses are provided on both a specific and general basis. Specific allowances are provided for individual loans that do not share similar risk characteristics with instruments evaluated using a collective (pooled) basis. General valuation allowances are determined by loan pools with a further evaluation of various quantitative and qualitative factors noted above.
Previous wording
All nonaccrual loans and modifications to loans for borrowers experiencing financial difficulty are reviewed to determine if the loans share the same risk characteristics as the pooled loans. If the loan does not share the same risk characteristics, the loan is evaluated individually for credit losses. Specific allocation of reserves for individually evaluated loans considers the value of the collateral, the financial condition of the borrower, and industry and current economic trends. The Bank reviews the collateral value, cash flow, and tertiary support on each individually evaluated credit. Any deficiency outlined by a real estate collateral evaluation analysis, or cash flow shortfall, is accounted for through a specific allocation for the loan.
Current wording
All nonaccrual loans and modifications to loans for borrowers experiencing financial difficulty are reviewed to determine if the loans share the same risk characteristics as the pooled loans. If the loan does not share the same risk characteristics, the loan is evaluated individually for credit losses. Specific allocation of reserves for individually evaluated loans considers the value of the collateral, the financial condition of the borrower, and industry and current economic trends. The Bank reviews the collateral value, cash flow, and other support on each individually evaluated credit. Any deficiency outlined by a real estate collateral evaluation analysis, or cash flow shortfall, is accounted for through a specific allocation for the loan.
Previous wording
December 31, 2022, the Company had $3.7 million in nonperforming assets, excluding government guaranteed loan balances, and their ALLL represented 1.29% of total loans HFI at amortized cost. Total loans HFI at December 31, 2023 and December 31, 2022 included government guaranteed loans and loans measured at fair value, which had no reserves allocated to them. ACL as a percentage of loans HFI at amortized cost, not including government guaranteed loan balances, was 2.03% under CECL at December 31, 2023, compared to 1.62% under the incurred loss method at December 31, 2022.
Current wording
Nonperforming Assets. At December 31, 2024, the Company had $15.2 million in nonperforming assets, excluding government guaranteed loan balances, and the ACL represented 1.54% of total loans HFI at amortized cost. At December 31, 2023, the Company had $8.9 million in nonperforming assets, excluding government guaranteed loan balances, and the ACL represented 1.64% of total loans HFI at amortized cost. The increase in nonperforming assets was partially the result of a nonaccrual loan for $2.7 million that is fully secured and there was no ACL allocated. Total loans HFI at December 31, 2024 and December 31, 2023 included government guaranteed loans and loans measured at fair value, which had no reserves allocated to them. ACL as a percentage of loans HFI at amortized cost, not including government guaranteed loan balances, was 1.79% at December 31, 2024, compared to 2.03% at December 31, 2023.
Previous wording
The following table sets forth certain information on nonaccrual loans and foreclosed assets, the ratio of such loans and foreclosed assets to total assets as of the dates indicated, and certain other related information.
Current wording
The following table sets forth certain information on nonaccrual loans, loans 90 days or more past due, and foreclosed assets, the ratio of such loans and foreclosed assets to total assets as of the dates indicated, and certain other related information.
Previous wording
The following table details net charge-offs to average loans outstanding by loan category for theyears ended December 31, 2023 and December 31, 2022.
Current wording
The following table details net charge-offs to average loans outstanding by loan category for theyear ended December 31, 2024 and December 31, 2023.
Previous wording
Deposits. Deposits are sourced principally from within its primary service area of Pinellas, Hillsborough, Manatee, Pasco, and Sarasota Counties, Florida. The Bank offers a wide selection of deposit instruments including demand deposit accounts, NOW accounts, money-market accounts, regular savings accounts, certificate of deposit accounts, and retirement savings plans (such as IRA accounts).
Current wording
Deposits. Deposits are sourced principally from within its primary service area of Pinellas, Hillsborough, Manatee, Pasco, and Sarasota Counties, Florida. The Bank offers a wide selection of deposit instruments including demand deposit accounts, NOW accounts, money market accounts, regular savings accounts, time deposit accounts, and retirement savings plans (such as IRA accounts).
Previous wording
Certificate of deposit rates are set to encourage longer maturities as cost and market conditions will allow. Deposit account terms vary, with the primary differences being the minimum balance required, the time period the funds must remain on deposit, and the interest rate.
Current wording
Time deposit rates are set to encourage longer maturities as cost and market conditions will allow. Deposit account terms vary, with the primary differences being the minimum balance required, the time period the funds must remain on deposit, and the interest rate.
Previous wording
Brokered deposits. At times, the Bank has brokered time deposit and non-maturity deposit relationships available to diversify its funding sources. Brokered deposits offer several benefits relative to other funding sources, such as: maturity structures which cannot be duplicated in the current retail market, deposit gathering outside the market of the existing deposit base, the unsecured nature of these liabilities, and the ability to quickly generate funds. The Bank’s internal policy limits the use of brokered deposits as a funding source to no more than 15% of total assets. The Company's ability to accept or renew brokered deposits is contingent upon the Bank maintaining a capital level of "well capitalized." At December 31, 2023 and December 31, 2022, the Company had $30.0 million and $746 thousand, respectively, of brokered deposits.
Current wording
Brokered deposits. At times, the Bank has brokered time deposit and non-maturity deposit relationships available to diversify its funding sources. Brokered deposits offer several benefits relative to other funding sources, such as: maturity structures which cannot be duplicated in the current retail market, deposit gathering outside the market of the existing deposit base, the unsecured nature of these liabilities, and the ability to quickly generate funds. The Bank’s internal policy limits the use of brokered deposits as a funding source to no more than 15% of total assets. The Company's ability to accept or renew brokered deposits is contingent upon the Bank maintaining a capital level of "well capitalized." At December 31, 2024 and December 31, 2023, the Company had $112.1 million and $30.0 million, respectively, of brokered deposits.
Previous wording
At December 31, 2023, the Company held approximately $162.3 million of deposits that exceeded the FDIC insurance limit which was 16% of total deposits.
Current wording
At December 31, 2024, the Company held approximately $213.4 million of deposits that exceeded the FDIC insurance limit which was 19% of total deposits.
Previous wording
At December 31, 2023, the Company had $10.0 million of borrowings at 5.57% from the FHLB and no borrowings from the FRB. There was$25.0 million of borrowings at 4.50% from the FRB and no borrowings from the FHLB at December 31, 2022.
Current wording
At December 31, 2024, the Company had no borrowings from the FHLB or FRB. There was $10.0 million of borrowings at 5.57% from the FHLB and no borrowings from the FRB at December 31, 2023.
Previous wording
The Bank is a member of the FHLB of Atlanta, which provides short- and long-term funding collateralized by mortgage-related assets to its members. FHLB short-term borrowings bear interest at variable rates set by the FHLB. Any advances that the bank were to obtain would be secured by a blanket lien on$285.9 million of real estate-related loans as of December 31, 2023. Based on this collateral and the Company's holdings of FHLB stock, the Company was eligible to borrow up to$153.5 million from the FHLB at December 31, 2023.
Current wording
The Bank is a member of the FHLB of Atlanta, which provides short- and long-term funding collateralized by mortgage-related assets to its members. FHLB short-term borrowings bear interest at variable rates set by the FHLB. Any advances that the Bank were to obtain would be secured by a blanket lien on$350.3 million of real estate-related loans as of December 31, 2024. Based on this collateral and the Bank's holdings of FHLB stock, the Bank was eligible to borrow up to$184.7 million from the FHLB at December 31, 2024.
Previous wording
In addition, the Bank has a line of credit with the Federal Reserve Bank of Atlanta which was secured by$57.7 million of commercial loans as of December 31, 2023. FRB short-term borrowings bear interest at variable rates based on the FOMC's target range for the federal funds rate. Based on this collateral, the Company was eligible to borrow up to$40.4 million from the FRB at December 31, 2023.
Current wording
In addition, the Bank has a line of credit with the Federal Reserve Bank of Atlanta which was secured by$69.8 million of commercial loans as of December 31, 2024. FRB short-term borrowings bear interest at variable rates based on the FOMC's target range for the federal funds rate. Based on this collateral, the Bank was eligible to borrow up to$49.5 million from the FRB at December 31, 2024.
Previous wording
In June 2021, the Company issued$6.0 million of Subordinated Debentures (the “Debentures”) that mature June 30, 2031 and are redeemable after 5 years. The Debentures carry interest at a fixed rate of 4.50% per annum for the initial 5 years of term and carry interest at a floating rate for the final 5 years of term. Under the debt agreements, the floating rates are based on a SOFR benchmark plus 3.78% per annum. The balance of Subordinated Debentures outstanding at the Company, net of offering costs, amounted to$5.9 million and$6.0 million at December 31, 2023 and December 31, 2022, respectively.
Current wording
The Company has$6.0 million of Subordinated Debentures (the “Debentures”) that mature June 30, 2031 and are redeemable after 5 years which is June 30, 2026. The Debentures carry interest at a fixed rate of 4.50% per annum for the initial 5 years of term and carry interest at a floating rate for the final 5 years of term after June 30, 2026. Under the debt agreements, the floating rates are based on a SOFR benchmark plus 3.78% per annum. The balance of Subordinated Debentures outstanding at the Company, net of offering costs, amounted to$6.0 million and$5.9 million at December 31, 2024 and December 31, 2023, respectively.
Previous wording
The Company has a term note with quarterly principal and interest payments with interest at Prime (8.50% at December 31, 2023). The note matures on March 10, 2029 and the balance of the note was$2.4 million and $2.8 million at December 31, 2023 and December 31, 2022, respectively. The note is secured by 100% of the stock of the Company and requires the Company to comply with certain loan covenants during the term of the note. As of December 31, 2023, the Company was in compliance with all financial debt covenants.
Current wording
The Company has a term note with quarterly principal and interest payments with interest at Prime (7.50% at December 31, 2024). The note matures on March 10, 2029 and the balance of the note was$1.9 million and $2.4 million at December 31, 2024 and December 31, 2023, respectively. The note is secured by 100% of the stock of the Company and requires the Company to comply with certain loan covenants during the term of the note. As of December 31, 2024, the Company was in compliance with all financial debt covenants.
Previous wording
The Company strives to maintain an adequate capital base to support its activities in a safe and sound manner while at the same time attempting to maximize shareholder value. Management assesses capital adequacy against the risk inherent in the balance sheet, recognizing that unexpected loss is the common denominator of risk and that common equity has the greatest capacity to absorb unexpected loss.
Current wording
The Company strives to maintain an adequate capital base to support its activities in a safe and sound manner while at the same time maximizing shareholder value. Management assesses capital adequacy against the risk inherent in the balance sheet, recognizing that unexpected loss is the common denominator of risk and that common equity has the greatest capacity to absorb unexpected loss.
Previous wording
The Bank is subject to regulatory capital requirements imposed by various regulatory banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by banking regulators that, if undertaken, could have a direct material effect on BayFirst’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.
Current wording
The Bank is subject to regulatory capital requirements imposed by various regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by banking regulators that, if undertaken, could have a direct material effect on BayFirst’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.
Showing the first 40 of 47 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
(1)Excludes loans measured at fair value
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Company may sell both the guaranteed balance of its government guaranteed loans, as well as a percentage of the unguaranteed portions of such loans.
Previous report — wording carried elsewhere
Nonperforming Assets. At December 31, 2023, the Company had $8.3 million in nonperforming assets, excluding government guaranteed loan balances, and their ACL represented 1.64% of total loans HFI at amortized cost. At