BayFirst Financial Corp. Q4 FY2025 earnings call

• Completed strategic initiatives like exiting SBA 7(a) lending, selling loan balances, reducing headcount, and focusing on community bank. - Organic deposit growth of $12.5 million in Q4, 85% insured. - Net interest margin stable at 3.58%; treasury management revenues up 69% YOY. - Acknowledged risk in legacy SBA 7(a) portfolio but working on managing future risk. - Liquidity ratio over 18% at year-end; plans to reduce high-cost deposits and improve cost of funds. - Credit risk focus: nonperforming loans excluding gov't guarantees flat, 64% of classified loans current performing; goal to reduce nonperforming and classified credits. - Retail and commercial teams focusing on community, treasury/merchant services growth, and kids/trendsetter club programs.

Loans held for investment decreased by $34.8 million or 3.5% in 2025, ending at $963.9 million; total loans held for investment down $102.7 million or 9.6% over the past year. Deposits increased $12.5 million or 1.1% in 2025 to $1.18 billion, with 85% insured. Net interest margin was 3.58%, stable but down 3 basis points from Q3. Non-interest income was negative $104,000 in 2025, $900,000 better than 2024. Non-interest expense in Q4 was $11.9 million, down $13.3 million from Q3; full-year non-interest expense $3.6 million higher but excluding Q3 restructuring charge, down $3.7 million YOY. Provision for credit losses was $2 million in Q4, vs $10.9 million in Q3 and $4.5 million in 2024. Net charge-offs were $4.6 million in Q4, up $1.3 million from Q3, with unguaranteed SBA 7(a) loans accounting for $1 million of Q4 net charge-offs.

• 2026 strategic plan focuses on fortifying balance sheet and disciplined risk management. - Expect asset quality improvement in coming quarters without significant additional provision for credit losses. - Goal to reduce nonperforming and classified credits to align with peers.

• Legacy SBA 7(a) portfolio: additional charge-offs likely in 2026 but expected to lessen over time. - Credit risk in unguaranteed SBA 7(a) loans.

Q: Focus on $171 million of unguaranteed government loans, specific allowance and default experience.

A: Scott McKim mentioned the portfolio is shrinking.

Q: Deposits growth, cost of funds, breakdown between commercial and retail.

A: Scott and Robin discussed deposit growth from customer relationships, treasury team collaboration, granular deposit portfolio.