On April 24, 2025, BayFirst Financial Corp (BAFN, Financial) released its 8-K filing, reporting a net loss of $0.3 million, or $0.17 per common share, for the first quarter of 2025. This marks a significant decline from the net income of $9.8 million, or $2.27 per common share, recorded in the fourth quarter of 2024.
Company Overview
BayFirst Financial Corp is a bank holding company that generates revenue primarily through interest on loans and gain-on-sale income from loan sales in the secondary market. The company serves a diverse clientele, including individuals, families, and small businesses, with a focus on residential and SBA lending. Deposits are the primary funding source for its loans. Performance metrics include net interest income after provision for loan losses, return on average assets, and return on average common equity, while maintaining regulatory leverage and risk-based capital ratios.
Performance and Challenges
The first quarter of 2025 presented challenges for BayFirst Financial Corp, with a net loss attributed to deteriorating economic conditions. CEO Thomas G. Zernick noted, "While we were encouraged by net interest margin expansion and steady operating expenses during the quarter, our operating results were impacted by deteriorating economic conditions, resulting in net charge-offs and provision expense continuing to be elevated and lower valuations on our portfolio of loans measured at fair value." The economic environment, characterized by inflationary pressures and high interest rates, has affected business customers, leading to uncertainty and impacting the company's financial performance.
Financial Achievements
Despite the challenges, BayFirst Financial Corp achieved a net interest margin of 3.77% in the first quarter of 2025, up from 3.60% in the previous quarter and 3.42% in the same quarter last year. This improvement is crucial for banks as it indicates the company's ability to manage interest income and expenses effectively. Additionally, the company reported strong loan growth, with total loans held for investment increasing by 1.7% during the quarter and 16% over the past year.
Key Financial Metrics
BayFirst Financial Corp's net interest income from continuing operations was $11.0 million, an increase from $10.7 million in the fourth quarter of 2024 and $8.7 million in the first quarter of 2024. Noninterest income, however, decreased to $8.8 million from $22.3 million in the previous quarter, primarily due to lower borrower demand and tighter credit guidelines. Noninterest expense increased slightly to $15.8 million, driven by higher occupancy and data processing costs.
| Metric | Q1 2025 | Q4 2024 | Q1 2024 |
|---|---|---|---|
| Net Income (Loss) | $(0.3) million | $9.8 million | $0.8 million |
| Net Interest Margin | 3.77% | 3.60% | 3.42% |
| Total Loans Held for Investment | $1.08 billion | $1.07 billion | $0.93 billion |
| Total Deposits | $1.13 billion | $1.14 billion | $1.01 billion |
Analysis and Outlook
BayFirst Financial Corp's performance in the first quarter of 2025 reflects the broader economic challenges impacting the banking sector. The company's strategic focus on growing recurring revenue through net interest income and expanding its low-cost deposit base is crucial for long-term stability. However, the elevated net charge-offs and provision expenses highlight the need for continued robust loan oversight and risk management. As the company navigates these challenges, its commitment to supporting local communities and maintaining strong customer relationships remains a key driver of future success.
Explore the complete 8-K earnings release (here) from BayFirst Financial Corp for further details.
