On October 24, 2024, BayFirst Financial Corp (BAFN, Financial) released its 8-K filing detailing its financial performance for the third quarter of 2024. The company, a one-bank holding entity, primarily generates revenue through interest on loans and gain-on-sale income from loan sales in the secondary market. BayFirst serves a diverse clientele, including individuals, families, and small businesses, with a focus on residential and SBA lending.
Performance Overview
BayFirst Financial Corp reported a net income of $1.1 million, or $0.18 per diluted common share, marking a 31.3% increase from the previous quarter's $0.9 million, or $0.12 per share. This growth was driven by an increase in net interest income and higher gains from the sale of government-guaranteed loans. However, the company faced challenges with a decrease in government-guaranteed loan origination compared to both the previous quarter and the same quarter last year.
The highlight of the third quarter of 2024 was the 31% increase in net income compared to the preceding quarter, led by increases in net interest income and higher gain on sale of government guaranteed loans," stated Thomas G. Zernick, Chief Executive Officer.
Financial Achievements and Challenges
BayFirst's government-guaranteed loan origination team produced $94.4 million in new loans, a decrease from $98.7 million in the previous quarter and $155.9 million in the third quarter of 2023. Despite this, the company managed to increase its loans held for investment by $34.1 million, or 3.4%, to $1.04 billion. Deposits also saw a significant increase of $69.8 million, or 6.7%, reaching $1.11 billion.
The company's net interest margin decreased by 9 basis points to 3.34%, primarily due to a one-time unamortized premium recognition related to a prepaid USDA loan. Excluding this item, the net interest margin would have decreased by only 1 basis point.
Income Statement and Balance Sheet Highlights
Net interest income from continuing operations rose to $9.4 million, up from $9.2 million in the previous quarter and $8.4 million in the same quarter last year. Noninterest income increased to $12.3 million from $11.7 million in the second quarter but decreased from $14.7 million in the third quarter of 2023. Noninterest expenses rose to $17.1 million, primarily due to increased compensation expenses.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Income | $1.1 million | $0.9 million | $1.9 million |
| Net Interest Margin | 3.34% | 3.43% | 3.36% |
| Deposits | $1.11 billion | $1.04 billion | $1.02 billion |
Analysis and Outlook
BayFirst Financial Corp's performance in the third quarter of 2024 reflects a strategic focus on enhancing profitability through increased net interest income and gains from loan sales. However, the decline in government-guaranteed loan origination poses a challenge that the company must address to sustain growth. The increase in deposits and loans held for investment indicates a strong market presence and potential for future expansion.
Overall, BayFirst's financial results demonstrate resilience and adaptability in a competitive banking environment, with a focus on maintaining credit quality and optimizing operational efficiency. The company's recognition as the best bank in Florida by Forbes Magazine underscores its commitment to excellence and customer satisfaction.
Explore the complete 8-K earnings release (here) from BayFirst Financial Corp for further details.
