BayFirst Financial reported a third-quarter loss of $700,000, a sharp improvement from its $32.7 million loss in the second quarter. The Florida-based bank said lending in its community banking business strengthened, its net interest margin widened and credit quality improved as it continued actions to resolve problem assets.
The results show progress from the prior quarter, but BayFirst remained unprofitable. The company said it is focused on achieving sustained profitability.
Key details
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Loss narrowed: BayFirst lost $0.04 per share in the third quarter, compared with a loss of $8.05 per share in the second quarter.
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Net interest margin expanded: The margin rose to 4.07%, up 59 basis points from 3.48% in the second quarter and 43 basis points from 3.64% a year earlier.
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Community-bank lending grew: Loans in that business, excluding the government-guaranteed portfolio, increased $41.9 million from the prior quarter—an annualized growth rate of 25%.
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Total loans held for investment also increased: They rose $20.1 million, or 2.3%, during the quarter to $903 million. That balance was down $90.1 million, or 9.1%, from a year earlier.
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Deposits outpaced loan growth: BayFirst said this was the first time in nearly three years that deposit growth had exceeded loan growth. Management described the shift as a sign of a strengthening funding base.
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Credit indicators improved: Nonperforming assets declined as a percentage of total assets, and net charge-offs were lower than in the second quarter. The company attributed the improvement to its asset-resolution efforts but did not provide the specific measures in the supplied results excerpt.
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Investor presentation and call: Management planned to discuss the quarter on a conference call on October 30 at 9 a.m. Eastern. The company also prepared an investor presentation for the call and future presentations.
Plain-English implications
BayFirst’s margin expansion, stronger community-bank lending and improved credit measures point to better operating conditions than in the second quarter. However, the bank still posted a loss, and its total loans held for investment remained below the year-earlier level.