BayFirst Financial Corp.

Good morning, ladies and gentlemen, and welcome to the Bay First Financial Corp's fourth quarter 2023 conference call and webcast. Note that at this time, all lines are in a listen-only mode. But following the presentation, we will conduct a question and answer session. And if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on Friday, January 26, 2024. And I would like to turn the conference over to Tom Zernick, Chief Executive Officer. Please go ahead, sir.

Hey, thanks, Sylvie. Good morning, and thank you for participating on our call today. I have with me our President and Chief Operating Officer, Robin Oliver, and Chief Financial Officer, Scott McKim. Today's call will include forward-looking statements and non-GAAP financial measures. Please refer to our cautionary statement on forward-looking statements contained on page two of the investor presentation. Before I discuss our Q4 performance, I want to assure all of you that we feel our current stock price simply does not reflect the intrinsic value of Bay First. 2023 marked a year that we once again achieved strong earning asset growth and earning stability. We operate in a footprint that many consider one of the nation's strongest. We remain committed to continuing to build the franchise value of our great community bank in Tampa Bay. During Q4, we produced net income of $1.7 million. This represents a 25% increase over Q4 2022 earnings of $1.3 million and a 14% decrease over Q3 earnings of $1.9 million. The fourth quarter featured net interest margin expansion through higher yields on loans and lower excess liquidity as the industry showed strength and resilience. While deposit costs increased slightly during the quarter, these deposits fueled continued loan demand in our SBA BOLT program. BOLT loans currently recognize a 13.25% yield and adjust with Wall Street Journal Prime quarterly. Our total earnings in 2023 were 5.7 million, an increase of 6.1 million from 2022's net loss of 349,000. While results in 2023 showed improved overall performance, stronger ratios, and greater efficiency, it did not meet management's expectations. In 2024, one of our key initiatives is to improve our efficiency so we can deliver consistent stable earnings to our shareholders. Our Q4 asset quality metrics show higher delinquencies and non-performing levels, but the key asset quality ratios remain acceptable. Our non-performing asset to total assets were 0.94%. Non-performing loans excluding guaranteed balances to total loans were 1.14% down from 1.18% at the end of the third quarter. Robin will provide more in-depth asset quality comments during her presentation. Management continues to closely monitor our loan portfolio with heightened attention. Now let me share some highlights from around Bay First. Our retail banking centers continue to build real franchise value as we were successful in growing checking account deposits $57 million from the start of the year. More importantly, this represents over 2,200 net new checking accounts, a 27% increase. In addition, we grew an impressive 36% in net new savings accounts. On a combined basis, we are up 29.2% year to date in net new checking and savings accounts. We opened our 11th banking center location during Q4 in North Sarasota, and the only majority minority owned census tract in Sarasota. Bay First is the first bank to demonstrate its vision to support this low to moderate income community in North Sarasota. Corporate social responsibility will always remain an important strategic pillar at Bay First. Bay First has maintained a granular deposit base and continues to benefit from a low level of uninsured deposits. with only 16% of uninsured deposits at year end. Turning to the lending side, BayFirst continues to enjoy minimal commercial exposure in the CRE space with non-owner occupied CRE representing only 5.5% of our loans held for investments at the end of the year. Total loan production in Q4 was 202 million, of which $145 million came from our government-guaranteed lending platform, CreditBench. $102.3 million of our record CreditBench production during Q4 came from our Bolt product. Bolt loans are capped at $150,000 and carry an 85% guarantee. They're also priced at prime plus 475%, adjusting quarterly. Total loan production at Bay First during 2023 topped $767 million. $220 million of this loan production came from our community bank's conventional commercial, consumer, and residential mortgage lending platforms, all in the greater Tampa Bay market. This loan production is a direct result of our focus to become the premier community bank in Tampa Bay. Loans held for investment grew $187 million during 2023, helping to improve our earning assets. Credit Bench, our government guaranteed loan platform, closed $547 million in government guaranteed loans, up 42% over 2022. We were proud to once again be a national leader in SBA production and also excited to grow our USDA production during 2023. Now I will pass the microphone to Scott McKim, our Chief Financial Officer, to provide an overview of our financial performance.

Scott McKim Thank you, Tom. Good morning, everyone. As Tom mentioned, our net income from continuing operations was $1.7 million in the fourth quarter. Loan balances grew 37 million or 4% during the quarter, while overall total assets decreased slightly to 1.12 billion or 1% during the quarter. Year to date, total assets have increased 19% and deposits have increased by 24%. Total deposits decreased 33 million or 3% during the fourth quarter of this year and increased by $190.1 million from the fourth quarter of 2022. Total deposits ended the quarter at $985.1 million, with notable growth in savings and money market account balances of $22.9 million. Time deposits declined $43.3 million as expected maturity of higher rate time deposits matured, which reflects our efforts to reduce excess liquidity that was built up at the beginning of 2023 to address fears in the industry as multiple bank failures occurred outside of our market. Interest-bearing and non-interest-bearing deposit account balances also declined slightly by $4.3 million and $8 million respectively. Stockholders' equity increased by $6.5 million during the quarter, as earnings as well as the sale of $4.6 million of Series C preferred stock added to equity, along with a notable decrease in accumulated other comprehensive loss of $640,000. These increases were offset somewhat by dividends paid on our common and preferred shares. Tangible book value increased again this quarter to $20.60 per share from $20.12 per share at the end of Q3. Net interest income improved to $8.9 million in the fourth quarter, an increase of $486,000 from the third quarter, and an increase of $303,000 from the year-ago quarter. Net interest margin increased by 12 basis points to 3.48% in the fourth quarter. As we noted last quarter, $70.1 million of time deposits matured during the fourth quarter of 2023, the majority of which did not renew. Non-interest income from continuing operations was $14.7 million for the fourth quarter of 2023, flat to the third quarter. Higher packaging fees, along with higher gains from the sale of SBA government-guaranteed loans, were offset by lower servicing rate gains, provided higher revenue for the fourth quarter, while $346,000 gains taken in the third quarter for the sale of some real estate reflects a one-time event. Provision for credit losses was $2.7 million in the fourth quarter, compared to $3 million in the third quarter. While our overall asset quality remains relatively stable, net charge-offs did increase, due to our portfolio of unsecured consumer loans purchased from a third party. We have previously mentioned this exposure and expect its impact to dissipate throughout 2024. Non-interest expense also increased $1 million in the fourth quarter, primarily due to an increase of $270,000 in third-party non-deferrable origination expenses related to the impact of loans originated and booked at fair value, as well as higher loan origination costs driven by higher production volume of $479,000 and higher commissions and incentives of $554,000. Offsetting these increases were decreases in marketing costs of $289,000 and compensation costs of $465,000. At this point, I'd like to turn things over to Rob and Oliver, our presidents, to discuss asset quality in some detail.