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BayFirst Financial Corp. Reports Second Quarter 2024 Results; Highlighted by Improved Operating Efficiencies and Lower Net Charge-Offs
ソース: Nasdaq GlobeNewswire / 25 7 2024 15:00:01 America/Chicago
ST. PETERSBURG, Fla., July 25, 2024 (GLOBE NEWSWIRE) -- BayFirst Financial Corp. (NASDAQ: BAFN) (“BayFirst” or the “Company”), parent company of BayFirst National Bank (the “Bank”) today reported net income of $0.9 million, or $0.12 per diluted common share, for the second quarter of 2024, an increase of 5.1% compared to $0.8 million, or $0.11 per diluted common share, in the first quarter of 2024. Net income increased due to higher net interest income and lower provision for credit losses and compensation expense, partially offset by lower gain on sale of government guaranteed loans resulting from a decrease in balance of loans sold.
“We are pleased with the improvement in credit administration during the second quarter which resulted in a $1.1 million decrease in our provision for credit losses from the previous quarter,” stated Thomas G. Zernick, Chief Executive Officer. "As we stated in the past, the SBA 7(a) working capital loans we offer often provide resources to small businesses struggling with economic factors like high inflation. Similar to other SBA lenders, we expanded our portfolio management efforts in the second quarter to help borrowers who continue to make timely payments by offering loan modification options. These efforts helped reduce net charge-offs during the quarter."
“Our CreditBench team worked hard to produce almost $100 million in new government guaranteed loans during the second quarter. However, this volume was below both the first quarter of 2024 and the second quarter of 2023. With less loan balances sold in the market, our gains from the sale of government guaranteed loans were below the prior quarter and our expectations. Our team is focused on meeting loan origination targets in line with past performance, while also promoting acceptable credit and profitability metrics.”
“Furthermore, earlier in the year we opened our twelfth banking center, completing our near-term branch expansion plans. At the same time, we have been successful at reducing operating expenses by leveraging technology investments to reduce headcount and related incentive compensation, renegotiating key vendor contracts, and reducing other expenses while successfully growing the franchise. These reductions helped reduce noninterest expense in the second quarter by $1.2 million, and we expect those savings to increase in future quarters. We believe we have both the infrastructure and banking teams in place to efficiently grow and gain market share in our attractive Tampa Bay market.”
“Finally, a highlight of the second quarter was the launch of a strategic focus around Healthcare Banking for BayFirst, under the leadership of Phil Russo. Phil is an industry veteran and native to the Tampa Bay region and will lead a team to develop the Bank’s efforts to meet the lending and deposit needs of healthcare businesses across our Tampa Bay footprint,” concluded Zernick.
Second Quarter 2024 Performance Review
- The Company’s government guaranteed loan origination platform, CreditBench, originated $98.7 million in new government guaranteed loans during the second quarter of 2024, a decrease of 24.4% from $130.6 million of loans produced in the previous quarter, and a 21.4% decrease from $125.6 million of loans produced during the second quarter of 2023. Demand was down in the second quarter for the Company's Bolt loan program, an SBA 7(a) loan product designed to expeditiously provide working capital loans of $150 thousand or less to businesses throughout the country. Since the launch in 2022, the Company has originated 4,729 Bolt loans totaling $611.4 million, of which 561 Bolt loans totaling $71.5 million were originated during the quarter.
- Loans held for investment increased by $73.4 million, or 7.9%, during the second quarter of 2024 to $1.01 billion and increased $171.6 million, or 20.5%, over the past year. During the quarter, the Company originated $178.5 million of loans and sold $79.0 million of government guaranteed loan balances. The majority of the loan growth was to individuals and businesses across the Tampa Bay and Sarasota region.
- Deposits increased $35.1 million, or 3.5%, during the second quarter of 2024 and increased $97.6 million, or 10.3%, over the past year to $1.04 billion.
- Balance sheet liquidity remains strong, with $63.0 million in cash balances and time deposits with other banks as of June 30, 2024. Additionally, the Company maintains significant borrowing capacity through the FHLB, Federal Reserve discount window, and lines of credit with other financial institutions. Approximately 81% of the Company's deposits were insured at June 30, 2024.
- Book value and tangible book value at June 30, 2024 were $20.54 per common share, an increase from $20.45 at March 31, 2024.
- Net interest margin increased by 1 basis point to 3.43% in the second quarter of 2024, from 3.42% in the first quarter of 2024.
Results of Operations
Net Income
Net income was $0.9 million for the second quarter of 2024, compared to $0.8 million in the first quarter of 2024 and $1.4 million in the second quarter of 2023. The increase in net income for the second quarter of 2024 from the preceding quarter was primarily the result of an increase in net interest income of $0.4 million, a decrease in provision for credit losses of $1.1 million and a decrease in noninterest expense of $1.2 million partially offset by a decrease in noninterest income of $2.6 million. The decrease in net income from the second quarter of 2023 was due to decreases in net interest income of $0.9 million and gain on sale of government guaranteed loans of $0.4 million, partially offset by an increase in other noninterest income of $0.4 million and lower compensation expense of $0.6 million.
In the first six months of 2024, net income was $1.7 million, a decrease from $2.1 million for the first six months of 2023. The decrease was primarily due to lower net interest income of $1.2 million, higher provision for credit losses of $2.4 million and higher noninterest expense of $2.6 million, partially offset by higher gain on sale of government guaranteed loans of $3.2 million and higher government guaranteed loan packaging fees of $1.5 million.
Net Interest Income and Net Interest Margin
Net interest income from continuing operations was $9.2 million in the second quarter of 2024, an increase from $8.7 million during the first quarter of 2024, and a decrease from $10.1 million during the second quarter of 2023. The net interest margin increased by 1 basis point to 3.43% in the second quarter of 2024, from 3.42% in the first quarter of 2024.
The increase during the second quarter of 2024, as compared to the first quarter of 2024, was mainly due to an increase in loan interest income, including fees, of $1.2 million partially offset by higher interest costs on deposits of $0.2 million and borrowings of $0.6 million.
The decrease during the second quarter of 2024, as compared to the year ago quarter, was mainly due to higher interest expense on deposits of $3.4 million, partially offset by an increase in interest income of $2.6 million.
Net interest income from continuing operations was $17.9 million in the first six months of 2024, a decrease from $19.2 million in the first six months of 2023. The decrease was mainly due to an increase in interest expense on deposits of $8.6 million, partially offset by an increase in loan interest income, including fees, of $8.2 million.
Noninterest Income
Noninterest income from continuing operations was $11.7 million for the second quarter of 2024, which was a decrease from $14.3 million in the first quarter of 2024 and an increase from $10.9 million in the second quarter of 2023. The decrease in the second quarter of 2024, as compared to the first quarter of 2024, was primarily the result of a decrease in gain on sale of government guaranteed loans of $2.5 million as a result of selling $48.8 million less in loan balances during the quarter. The increase in the second quarter of 2024, as compared to the second quarter of 2023, was the result of increases in fair value gains on government guaranteed loans of $0.3 million, government guaranteed loan packaging fees of $0.2 million, and other noninterest income of $0.4 million, partially offset by a decrease in gain on sale of government guaranteed loans of $0.4 million.
Noninterest income from continuing operations was $25.9 million for the first six months of 2024, which was an increase from $20.4 million for the first six months of 2023. The increase was primarily the result of increases in gain on sale of government guaranteed loans of $3.2 million and government guaranteed loan packaging fees of $1.5 million.
Noninterest Expense
Noninterest expense from continuing operations was $16.6 million in the second quarter of 2024 compared to $17.8 million in the first quarter of 2024 and $16.4 million in the second quarter of 2023. The decrease in the second quarter of 2024, as compared to the prior quarter, was primarily due to decreases in compensation expense of $1.1 million and professional services expense of $0.5 million. The increase in the second quarter of 2024, as compared to the second quarter of 2023, was primarily due to higher loan production expenses of $0.7 million, data processing expenses of $0.3 million, and other noninterest expense of $0.2 million, partially offset by lower compensation costs of $0.6 million and marketing and business development expenses of $0.6 million. The overall reduction of noninterest expense compared to the first quarter is attributed to the lower headcount on the Bolt lending team where we are leveraging technology in place of staff, combined with restructured incentive plans, and savings from renegotiated vendor contracts. These changes will provide ongoing expense savings.
Noninterest expense from continuing operations was $34.4 million for the first six months of 2024 compared to $31.8 million for the first six months of 2023. The increase was the result of increases in data processing expense of $0.5 million, loan origination and collection expense of $1.0 million, professional services expenses of $0.5 million, and other noninterest expenses of $0.6 million. The increases were partially offset by a decrease in marketing and business development expenses of $0.6 million.
Balance Sheet
Assets
Total assets increased $73.7 million, or 6.4%, during the second quarter of 2024 to $1.22 billion, mainly due to an increase of $73.4 million in loans held for investment.
Loans
Loans held for investment increased $73.4 million, or 7.9%, during the second quarter of 2024 and $171.6 million, or 20.5%, over the past year to $1.01 billion, due to originations in both conventional community bank loans and government guaranteed loans, partially offset by government guaranteed loan sales.
Deposits
Deposits increased $35.1 million, or 3.5%, during the second quarter of 2024 and increased $97.6 million, or 10.3%, from the second quarter of 2023, ending the second quarter of 2024 at $1.04 billion. During the second quarter, there were increases in savings and money market deposit account balances of $28.4 million and time deposit balances of $23.7 million, partially offset by decreases in noninterest-bearing deposit account balances of $2.9 million and interest-bearing transaction account balances of $14.0 million. The majority of the deposits are generated through the community bank. At times, the Bank has brokered time deposit and non-maturity deposit relationships available to diversify its funding sources. At June 30, 2024, March 31, 2024, and June 30, 2023, the Company had $60.1 million , $30.5 million,and $40.1 million, respectively, of brokered deposits.
Asset Quality
The Company recorded a provision for credit losses in the second quarter of $3.0 million, compared to a $4.1 million provision for the first quarter of 2024 and $2.8 million during the second quarter of 2023.
The ratio of ACL to total loans held for investment at amortized cost was 1.50% at June 30, 2024, 1.62% as of March 31, 2024, and 1.61% as of June 30, 2023. The ratio of ACL to total loans held for investment at amortized cost, excluding government guaranteed loans, was 1.73% at June 30, 2024, 1.88% as of March 31, 2024, and 2.03% as of June 30, 2023.
Net charge-offs for the second quarter of 2024 were $3.3 million, which was a decrease from $3.7 million for the first quarter of 2024 and an increase from $2.3 million in the second quarter of 2023. Annualized net charge-offs as a percentage of average loans held for investment at amortized cost were 1.45% for the second quarter of 2024, compared to 1.71% in the first quarter of 2023 and 1.15% in the second quarter of 2023. Nonperforming assets to total assets was 1.28% as of June 30, 2024, compared to 0.97% as of March 31, 2024, and 0.79% as of June 30, 2023. Nonperforming assets, excluding government guaranteed loans, to total assets was 0.82% as of June 30, 2024, compared to 0.70% as of March 31, 2024, and 0.61% as of June 30, 2023.
Capital
The Bank’s Tier 1 leverage ratio was 8.73% as of June 30, 2024, compared to 9.12% as of March 31, 2024, and 9.36% at June 30, 2023. The CET 1 and Tier 1 capital ratio to risk-weighted assets were 10.54% as of June 30, 2024, compared to 11.04% as of March 31, 2024, and 12.34% as of June 30, 2023. The total capital to risk-weighted assets ratio was 11.79% as of June 30, 2024, compared to 12.29% as of March 31, 2024, and 13.60% as of June 30, 2023.
Liquidity
The Bank has liquidity in excess of internal minimums and the expectations of our bank regulators. The Bank’s overall liquidity position remains strong and stable. The on-balance sheet liquidity ratio at June 30, 2024 was 8.55%, as compared to 9.33% at December 31, 2023. The Bank has robust liquidity resources which include secured borrowings available from the Federal Home Loan Bank, the Federal Reserve, and lines of credit with other financial institutions. As of June 30, 2024, the Bank had $55.0 million of borrowings from the FHLB and no borrowings from the FRB or other financial institutions. This compares to $15.0 million and $10.0 million of borrowings from the FHLB and no borrowings from the FRB or other financial institutions at March 31, 2024 and December 31, 2023, respectively.
Recent Events
Third Quarter Common Stock Dividend. On July 23, 2024, BayFirst’s Board of Directors declared a third quarter 2024 cash dividend of $0.08 per common share. The dividend will be payable September 15, 2024 to common shareholders of record as of September 1, 2024. The Company has continuously paid quarterly common stock cash dividends since 2016.
Conference Call
BayFirst’s management team will host a conference call on Friday, July 26, 2024, at 9:00 a.m. ET to discuss its second quarter results. Interested investors may listen to the call live under the Investor Relations tab at www.bayfirstfinancial.com. Investment professionals are invited to dial (800) 549-8228 to participate in the call using Conference ID 63886. A replay of the call will be available for one year at www.bayfirstfinancial.com.
About BayFirst Financial Corp.
BayFirst Financial Corp. is a registered bank holding company based in St. Petersburg, Florida which commenced operations on September 1, 2000. Its primary source of income is derived from its wholly owned subsidiary, BayFirst National Bank, a national banking association which commenced business operations on February 12, 1999. The Bank currently operates twelve full-service banking offices throughout the Tampa Bay-Sarasota region and offers a broad range of commercial and consumer banking services to businesses and individuals. The Bank was the 3rd largest SBA 7(a) lender by number of units originated and 9th largest by dollar volume nationwide through the third quarter ended June 30, 2024, of SBA's 2024 fiscal year. Additionally, it was the number one SBA 7(a) lender in dollar volume in the 5 county Tampa Bay market for the SBA's 2023 fiscal year. As of June 30, 2024, BayFirst Financial Corp. had $1.22 billion in total assets.
Forward-Looking Statements
In addition to the historical information contained herein, this presentation 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 change, including their effects on the economic environment, our customers and our 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; 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, including, but not limited to those “Risk Factors” described in our most recent Form 10-K and Form 10-Q. 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.
BAYFIRST FINANCIAL CORP. SELECTED FINANCIAL DATA (Unaudited) At or for the three months ended (Dollars in thousands, except for share data) 6/30/2024 3/31/2024 12/31/2023 9/30/2023 6/30/2023 Balance sheet data: Average loans held for investment at amortized cost $ 902,417 $ 855,040 $ 825,196 $ 789,167 $ 781,744 Average total assets 1,178,501 1,126,315 1,108,550 1,088,517 1,064,068 Average common shareholders’ equity 84,948 85,385 82,574 81,067 80,310 Total loans held for investment 1,008,314 934,868 915,726 878,447 836,704 Total loans held for investment, excl gov’t gtd loan balances 844,659 776,302 698,106 687,141 638,148 Allowance for credit losses 13,843 13,906 13,497 13,365 12,598 Total assets 1,217,869 1,144,194 1,117,766 1,133,979 1,087,399 Common shareholders’ equity 84,911 84,578 84,656 82,725 81,460 Share data: Basic earnings per common share $ 0.12 $ 0.11 $ 0.32 $ 0.42 $ 0.29 Diluted earnings per common share 0.12 0.11 0.32 0.41 0.29 Dividends per common share 0.08 0.08 0.08 0.08 0.08 Book value per common share 20.54 20.45 20.60 20.12 19.85 Tangible book value per common share (1) 20.54 20.45 20.60 20.12 19.85 Performance and capital ratios: Return on average assets(2) 0.29 % 0.29 % 0.60 % 0.71 % 0.52 % Return on average common equity(2) 2.26 % 2.06 % 6.37 % 8.46 % 5.86 % Net interest margin(2) 3.43 % 3.42 % 3.48 % 3.36 % 4.18 % Dividend payout ratio 68.91 % 75.27 % 25.03 % 19.15 % 27.89 % Asset quality ratios: Net charge-offs $ 3,261 $ 3,652 $ 2,612 $ 2,234 $ 2,253 Net charge-offs/avg loans held for investment at amortized cost(2) 1.45 % 1.71 % 1.27 % 1.13 % 1.15 % Nonperforming loans(3) $ 12,312 $ 9,877 $ 9,688 $ 9,518 $ 8,478 Nonperforming loans (excluding gov't gtd balance)(3) $ 8,054 $ 7,568 $ 8,264 $ 7,997 $ 6,590 Nonperforming loans/total loans held for investment(3) 1.34 % 1.15 % 1.18 % 1.20 % 1.08 % Nonperforming loans (excl gov’t gtd balance)/total loans held for investment(3) 0.87 % 0.88 % 1.00 % 1.01 % 0.84 % ACL/Total loans held for investment at amortized cost 1.50 % 1.62 % 1.64 % 1.68 % 1.61 % ACL/Total loans held for investment at amortized cost, excl government guaranteed loans 1.73 % 1.88 % 2.03 % 2.03 % 2.03 % Other Data: Full-time equivalent employees 302 313 305 307 302 Banking center offices 12 12 11 10 9 (1) See section entitled "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below for a reconciliation to most comparable GAAP equivalent. (2) Annualized (3) Excludes loans measured at fair value
GAAP Reconciliation and Management Explanation of Non-GAAP Financial MeasuresSome of the financial measures included in this report are not measures of financial condition or performance recognized by GAAP. These non-GAAP financial measures include tangible common shareholders' equity and tangible book value per common share. Our management uses these non-GAAP financial measures in its analysis of our performance, and we believe that providing this information to financial analysts and investors allows them to evaluate capital adequacy.
The following presents these non-GAAP financial measures along with their most directly comparable financial measures calculated in accordance with GAAP:
Tangible Common Shareholders' Equity and Tangible Book Value Per Common Share (Unaudited) As of (Dollars in thousands, except for share data) June 30, 2024 March 31,
2024December 31,
2023September 30,
2023June 30, 2023 Total shareholders’ equity $ 100,962 $ 100,629 $ 100,707 $ 94,165 $ 91,065 Less: Preferred stock liquidation preference (16,051 ) (16,051 ) (16,051 ) (11,440 ) (9,605 ) Total equity available to common shareholders 84,911 84,578 84,656 82,725 81,460 Less: Goodwill — — — — — Tangible common shareholders' equity $ 84,911 $ 84,578 $ 84,656 $ 82,725 $ 81,460 Common shares outstanding 4,134,219 4,134,914 4,110,470 4,110,650 4,103,834 Tangible book value per common share $ 20.54 $ 20.45 $ 20.60 $ 20.12 $ 19.85 BAYFIRST FINANCIAL CORP. CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands) 6/30/2024 3/31/2024 6/30/2023 Assets Cash and due from banks $ 4,226 $ 4,425 $ 4,593 Interest-bearing deposits in banks 56,546 53,080 99,114 Cash and cash equivalents 60,772 57,505 103,707 Time deposits in banks 2,261 3,000 4,881 Investment securities available for sale, at fair value (amortized cost $42,885, $46,816, and $45,713 at June 30, 2024, March 31, 2024, and June 30, 2023, respectively) 38,685 42,514 41,343 Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $14, $14, and $19 (fair value: $2,273, $2,352, and $2,222 at June 30, 2024, March 31, 2024, and June 30, 2023, respectively) 2,486 2,487 2,483 Nonmarketable equity securities 7,132 5,228 5,332 Government guaranteed loans held for sale — 2,226 1,247 Government guaranteed loans held for investment, at fair value 86,142 77,769 52,165 Loans held for investment, at amortized cost net of allowance for credit losses of $13,843, $13,906, and $12,598 at June 30, 2024, March 31, 2024, and June 30, 2023, respectively) 908,329 843,193 771,941 Accrued interest receivable 8,000 7,625 5,929 Premises and equipment, net 39,088 39,327 40,052 Loan servicing rights 15,770 15,742 12,820 Deferred income tax assets — — 925 Right-of-use operating lease assets 2,305 2,499 2,804 Bank owned life insurance 26,150 25,974 25,469 Other assets 20,713 18,805 15,850 Assets from discontinued operations 36 300 451 Total assets $ 1,217,869 $ 1,144,194 $ 1,087,399 Liabilities: Noninterest-bearing deposits $ 94,040 $ 96,977 $ 101,081 Interest-bearing transaction accounts 236,447 250,478 253,112 Savings and money market deposits 420,271 391,915 401,941 Time deposits 291,630 267,945 188,648 Total deposits 1,042,388 1,007,315 944,782 FHLB borrowings 55,000 15,000 30,000 Subordinated debentures 5,952 5,950 5,945 Notes payable 2,162 2,276 2,617 Accrued interest payable 1,172 1,598 572 Operating lease liabilities 2,497 2,673 3,018 Deferred income tax liabilities 1,000 728 — Accrued expenses and other liabilities 6,565 7,496 8,461 Liabilities from discontinued operations 171 529 939 Total liabilities 1,116,907 1,043,565 996,334 Shareholders’ equity: Preferred stock, Series A; no par value, 10,000 shares authorized, 6,395 shares issued and outstanding at June 30, 2024, March 31, 2024, and June 30, 2023; aggregate liquidation preference of $6,395 each period 6,161 6,161 6,161 Preferred stock, Series B; no par value, 20,000 shares authorized, 3,210 shares issued and outstanding at June 30, 2024, March 31, 2024, and June 30, 2023; aggregate liquidation preference of $3,210 each period 3,123 3,123 3,123 Preferred stock, Series C; no par value, 10,000 shares authorized, 6,446 shares issued and outstanding at June 30, 2024 and March 31, 2024, and no shares issued and outstanding as of June 30, 2023; aggregate liquidation preference of $6,446 at June 30, 2024 and March 31, 2024 6,446 6,446 — Common stock and additional paid-in capital; no par value, 15,000,000 shares authorized, 4,134,219, 4,134,914, and 4,103,834 shares issued and outstanding at June 30, 2024, March 31, 2024, and June 30, 2023, respectively 54,773 54,776 54,384 Accumulated other comprehensive loss, net (3,113 ) (3,188 ) (3,239 ) Unearned compensation (1,081 ) (1,192 ) (1,386 ) Retained earnings 34,653 34,503 32,022 Total shareholders’ equity 100,962 100,629 91,065 Total liabilities and shareholders’ equity $ 1,217,869 $ 1,144,194 $ 1,087,399 BAYFIRST FINANCIAL CORP. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the Quarter Ended Year-to-Date (Dollars in thousands, except per share data) 6/30/2024 3/31/2024 6/30/2023 6/30/2024 6/30/2023 Interest income: Loans, including fees $ 19,414 $ 18,228 $ 16,372 $ 37,642 $ 29,443 Interest-bearing deposits in banks and other 1,013 959 1,420 1,972 2,600 Total interest income 20,427 19,187 17,792 39,614 32,043 Interest expense: Deposits 10,448 10,215 7,098 20,663 12,021 Other 797 230 586 1,027 861 Total interest expense 11,245 10,445 7,684 21,690 12,882 Net interest income 9,182 8,742 10,108 17,924 19,161 Provision for credit losses 3,000 4,058 2,765 7,058 4,707 Net interest income after provision for credit losses 6,182 4,684 7,343 10,866 14,454 Noninterest income: Loan servicing income, net 805 795 649 1,600 1,389 Gain on sale of government guaranteed loans, net 5,595 8,089 6,028 13,684 10,437 Service charges and fees 452 444 379 896 758 Government guaranteed loans fair value gain, net 3,202 3,305 2,904 6,507 6,478 Government guaranteed loan packaging fees 1,022 1,407 797 2,429 918 Other noninterest income 577 228 180 805 405 Total noninterest income 11,653 14,268 10,937 25,921 20,385 Noninterest Expense: Salaries and benefits 7,829 8,005 7,780 15,834 15,615 Bonus, commissions, and incentives 659 1,571 1,305 2,230 2,109 Occupancy and equipment 1,273 1,110 1,183 2,383 2,346 Data processing 1,647 1,560 1,316 3,207 2,663 Marketing and business development 540 588 1,102 1,128 1,767 Professional services 877 1,349 874 2,226 1,771 Loan origination and collection 1,958 1,719 1,221 3,677 2,716 Employee recruiting and development 549 597 556 1,146 1,124 Regulatory assessments 279 282 232 561 331 Other noninterest expense 999 992 833 1,991 1,372 Total noninterest expense 16,610 17,773 16,402 34,383 31,814 Income before taxes from continuing operations 1,225 1,179 1,878 2,404 3,025 Income tax expense from continuing operations 349 296 461 645 741 Net income from continuing operations 876 883 1,417 1,759 2,284 Loss from discontinued operations before income taxes (14 ) (78 ) (43 ) (92 ) (213 ) Income tax benefit from discontinued operations (4 ) (19 ) (11 ) (23 ) (53 ) Net loss from discontinued operations (10 ) (59 ) (32 ) (69 ) (160 ) Net income 866 824 1,385 1,690 2,124 Preferred dividends 386 385 208 771 416 Net income available to common shareholders $ 480 $ 439 $ 1,177 $ 919 $ 1,708 Basic earnings (loss) per common share: Continuing operations $ 0.12 $ 0.12 $ 0.30 $ 0.24 $ 0.46 Discontinued operations — (0.01 ) (0.01 ) (0.02 ) (0.04 ) Basic earnings per common share $ 0.12 $ 0.11 $ 0.29 $ 0.22 $ 0.42 Diluted earnings (loss) per common share: Continuing operations $ 0.12 $ 0.12 $ 0.30 $ 0.24 $ 0.46 Discontinued operations — (0.01 ) (0.01 ) (0.02 ) (0.04 ) Diluted earnings per common share $ 0.12 $ 0.11 $ 0.29 $ 0.22 $ 0.42
Loan Composition(Dollars in thousands) 6/30/2024 3/31/2024 12/31/2023 9/30/2023 6/30/2023 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Real estate: Residential $ 304,234 $ 285,214 $ 264,126 $ 248,973 $ 235,339 Commercial 288,185 273,227 293,595 280,620 272,200 Construction and land 35,759 36,764 26,272 25,339 15,575 Commercial and industrial 192,140 182,264 177,566 174,238 198,639 Commercial and industrial - PPP 2,324 2,965 3,202 15,364 15,808 Consumer and other 85,789 63,854 47,287 39,024 38,103 Loans held for investment, at amortized cost, gross 908,431 844,288 812,048 783,558 775,664 Deferred loan costs, net 17,299 16,233 14,707 12,928 11,506 Discount on government guaranteed loans sold (7,731 ) (7,674 ) (7,040 ) (6,623 ) (5,937 ) Premium on loans purchased, net 4,173 4,252 4,503 4,406 3,306 Loans held for investment, at amortized cost, net 922,172 857,099 824,218 794,269 784,539 Government guaranteed loans held for investment, at fair value 86,142 77,769 91,508 84,178 52,165 Total loans held for investment, net $ 1,008,314 $ 934,868 $ 915,726 $ 878,447 $ 836,704
Nonperforming Assets (Unaudited)(Dollars in thousands) 6/30/2024 3/31/2024 12/31/2023 9/30/2023 6/30/2023 Nonperforming loans (government guaranteed balances), at amortized cost, gross $ 4,258 $ 2,309 $ 1,424 $ 1,521 $ 1,888 Nonperforming loans (unguaranteed balances), at amortized cost, gross 8,054 7,568 8,264 7,997 6,590 Total nonperforming loans, at amortized cost, gross 12,312 9,877 9,688 9,518 8,478 Nonperforming loans (government guaranteed balances), at fair value 341 94 — 96 128 Nonperforming loans (unguaranteed balances), at fair value 1,284 729 648 363 — Total nonperforming loans, at fair value 1,625 823 648 459 128 OREO 1,633 404 — — 3 Total nonperforming assets, gross $ 15,570 $ 11,104 $ 10,336 $ 9,977 $ 8,609 Nonperforming loans as a percentage of total loans held for investment(1) 1.34 % 1.15 % 1.18 % 1.20 % 1.08 % Nonperforming loans (excluding government guaranteed balances) to total loans held for investment(1) 0.87 % 0.88 % 1.00 % 1.01 % 0.84 % Nonperforming assets as a percentage of total assets 1.28 % 0.97 % 0.92 % 0.88 % 0.79 % Nonperforming assets (excluding government guaranteed balances) to total assets 0.82 % 0.70 % 0.74 % 0.71 % 0.61 % ACL to nonperforming loans(1) 112.44 % 140.79 % 139.32 % 128.60 % 146.39 % ACL to nonperforming loans (excluding government guaranteed balances)(1) 171.88 % 183.75 % 163.32 % 152.29 % 191.17 % (1) Excludes loans measured at fair value
Contacts: Thomas G. Zernick Scott J. McKim Chief Executive Officer Chief Financial Officer 727.399.5680 727.521.7085 
