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BayFirst Financial To End Lending Nationwide, Focus On Florida

David Krechevsky
Sep 23, 2022
BayFirst Financial Corp.

Pending regulatory approvals, lender expects to complete pullback by Nov. 24.

With mortgage lending on the decline, a Florida-based bank has decided to focus its loan origination efforts in its home state, pulling back from the national market.

St. Petersburg, Fla.-based BayFirst Financial Corp., parent company of BayFirst National Bank, this week announced that its board of directors has initiated the process to discontinue the bank’s nationwide network of residential mortgage loan production offices. The decision to reduce its national mortgage-lending footprint is subject to any necessary regulatory approvals, but is expected to be completed by Nov. 24, the company said.

“Given the impact of declining mortgage volume on the company’s operating performance in recent quarters, together with the uncertain outlook for mortgage lending in the near to mid-term, we made the difficult decision to discontinue our nationwide network of residential mortgage loan production offices,” said Anthony N. Leo, BayFirst CEO. “This decision allows the bank to focus our resources on building a premier community banking franchise and capitalizing on our expertise in SBA lending.”

Leo noted that the bank opened its eighth banking center in West Bradenton, Fla., this week, “as we continue to expand our network of bank offices throughout the Tampa Bay region. At the same time, SBA lending through our CreditBench division has grown to record levels and we continue to add new team members to that division.”

BayFirst Financial reported a $282,000 loss, or 12 cents per diluted common share, for the second quarter of 2022. That compares to net income of $13,000, or 5 cents per diluted common share, in the first quarter of 2022, and $13 million, or $2.98 per diluted common share, in the second quarter of 2021.

The company attributed the decrease in earnings in the second quarter to a restructuring charge of $630,000 related to "the discontinuation of the direct-to-consumer mortgage business, a reduction in residential loan fee income of $3 million, and a $2.7 million increase in loan loss provision."

During the second quarter, BayFirst said, it completed a restructuring of its residential mortgage division and discontinued its primary consumer direct residential mortgage business line.

"The restructuring was undertaken in response to reduced volume due to a lack of refinance demand in the current rising rate environment, which directly impacted the consumer direct business line," the company said in its second quarter earnings report. The company added that, "As a result of this restructuring the bank will focus resources on its traditional retail mortgage business supported by loan production offices across the nation."

That has now changed. The bank and the company estimate the after-tax expense associated with discontinuing its national loan-production offices will range between $3 million and $4 million, depending on various factors that include its ability to "renegotiate certain contracts and close loans in its locked pipeline," among other issues. BayFirst did not disclose the number or total value of loans in its pipeline.

In addition to Florida, BayFirst maintains mortgage offices in Colorado, Connecticut, Delaware, Georgia, Maryland, Nevada, New Jersey, New York, South Carolina, Texas, and Washington.

The company did not say how many employees would be affected by the decision, but according to its website, the company has “a nationwide team of more than 200 residential mortgage originators.”

The company also did not say what would happen with the affected employees, including whether they will all be laid off and if it would offer them severance packages or job-placement assistance.

BayFirst Financial Corp. is a registered bank holding company that began operations on Sept. 1, 2000. Its primary source of income is from its wholly owned subsidiary, BayFirst National Bank, which commenced business operations on Feb. 12, 1999. BayFirst National Bank currently operates eight full-service office locations.

Company officials did not respond to a request for comment.

Sep 23, 2022
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