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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-41068
BAYFIRST FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Florida
59-3665079
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
700 Central Avenue
St. Petersburg, Florida
33701
(Address of Principal Executive Offices)
(Zip Code)
(727) 440-6848
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockBAFNThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x   No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated fileroAccelerated filero
Non-accelerated filer  xSmaller reporting companyx
Emerging growth companyx
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes   o     No  x
The registrant had outstanding 4,013,036 shares of common stock as of May 11, 2022.



Page
Item 1A.



Glossary of Acronyms and Abbreviations
The acronyms and abbreviations identified below may be used throughout this Quarterly Report on Form 10-Q or in our other SEC filings. You may find it helpful to refer back to this page while reading this report.
AFS: Available for SaleFDIC: Federal Deposit Insurance Corporation
ALCO: Asset-Liability CommitteeFHLB: Federal Home Loan Bank
ALLL: Allowance for Loan LossesFNBB: First National Bankers Bank
AOCI: Accumulated Other Comprehensive Income
FRB: Federal Reserve Bank
ASC: FASB Accounting Standards CodificationFVO: Fair Value Option
ASU: FASB Accounting Standards UpdateGAAP: Generally Accepted Accounting Principles
BHCA: Bank Holding Company Act of 1956, as amended
IRA: Individual Retirement Account
BOLI: Bank Owned Life InsuranceJOBS Act: Jumpstart Our Business Startups Act of 2012
BSA: Bank Secrecy Act of 1970LHFS: Loans Held for Sale
CAA: Consolidated Appropriations ActMMDA: Money Market Deposit Account
CARES Act: Coronavirus Aid, Relief, and Economic Security ActNOW: Negotiable Order of Withdrawal
CBLR: Community Bank Leverage RatioNSPP: Non-Qualified Stock Purchase Plan
CECL: Current Expected Credit LossesOFR: Florida Office of Financial Regulation
CET1: Common Equity Tier 1 Capital
OLC: Officer Loan Commitee
C&I: Commercial and IndustrialOREO: Other Real Estate Owned
CIK: Central Index Key
OTTI: Other-Than-Temporary Impairment
COVID-19: Coronavirus Disease 2019PCAOB: Public Company Accounting Oversight Board
DCLC: Directors’ Credit and Loan CommitteePPP: Paycheck Protection Program
DODD-Frank Act: Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010PPPLF: Paycheck Protection Program Liquidity Facility
DRIP: Dividend Reinvestment PlanQIB: Qualified Institutional Buyer
EGC: Emerging Growth CompanySBA: Small Business Administration
Equity Plan: The Amended and Restated 2017 Equity Inventive PlanSEC: U.S. Securities and Exchange Commission
ESG: Environmental, Social, and GovernanceSOFR: Secured Overnight Financing Rate
ESOP: Employee Stock Ownership PlanU.S.: United States
ESPP: Employee Stock Purchase PlanUSDA: United States Department of Agriculture
Exchange Act: Securities Exchange Act of 1934USDA B&I: United States Department of Agriculture Buiness and Industry
FASB: Financial Accounting Standards BoardTDR: Troubled Debt Restructure
FBCA: Florida Business Corporation ActiXBRL: Inline eXtensible Business Reporting Language

2

Table of Contents
BAYFIRST FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
Part I - Financial Information
Item 1. Financial Statements
ASSETS
March 31, 2022December 31, 2021
(Unaudited)
Cash and due from banks
$3,141 $2,869 
Interest-bearing deposits in banks
118,960 106,858 
Cash and cash equivalents
122,101 109,727 
Time deposits in banks
3,881 2,381 
Investment securities available for sale
41,656 30,893 
Investment securities held to maturity
2 2 
Restricted equity securities, at cost
2,520 2,827 
Residential loans held for sale
75,022 114,131 
Government guaranteed loans held for sale1,445 1,460 
SBA loans held for investment, at fair value
8,769 9,614 
Loans held for investment, at amortized cost net of allowance for loan losses of $10,170 and $13,452
542,858 560,882 
Accrued interest receivable
3,150 3,564 
Premises and equipment, net
31,037 29,671 
Loan servicing rights
7,601 6,619 
Deferred income taxes
490 454 
Right-of-use operating lease assets
4,166 4,543 
Bank owned life insurance
24,698 24,547 
Other assets
19,145 15,780 
Total assets
$888,541 $917,095 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Noninterest-bearing deposits
$92,680 $83,638 
Interest-bearing transaction accounts
180,815 163,495 
Savings and money market deposits
464,847 423,864 
Time deposits
31,787 50,688 
Total deposits
770,129 721,685 
Subordinated debentures
5,987 5,985 
Notes payable
3,186 3,299 
PPP Liquidity Facility
 69,654 
Accrued interest payable
86 326 
Operating lease liabilities
4,377 4,747 
Accrued expenses and other liabilities
9,897 15,109 
Total liabilities
793,662 820,805 
Shareholders’ equity:
Preferred stock, Series A; no par value, 10,000 shares authorized, 6,395 shares issued and outstanding at March 31, 2022 and December 31, 2021; aggregate liquidation preference of $6,395
6,161 6,161 
Preferred stock, Series B; no par value, 20,000 shares authorized, 3,210 shares issued and outstanding at March 31, 2022 and December 31, 2021; aggregate liquidation preference of $3,210
3,123 3,123 
Common stock and additional paid-in capital; no par value, 15,000,000 shares authorized, 4,013,173 and 3,981,117 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
52,252 51,496 
Accumulated other comprehensive loss, net
(1,458)(420)
Unearned compensation
(630)(17)
Retained earnings
35,431 35,947 
Total shareholders’ equity
94,879 96,290 
Total liabilities and shareholders’ equity
$888,541 $917,095 
See accompanying notes.
3

Table of Contents
BAYFIRST FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands, except per share data)
Three Months Ended March 31,
20222021
Interest income:
Loans, including fees
$7,555 $14,811 
Interest-bearing deposits in banks and other
185 81 
Total interest income
7,740 14,892 
Interest expense:
Deposits
1,217 1,320 
Borrowings
117 942 
Total interest expense
1,334 2,262 
Net interest income
6,406 12,630 
Provision for loan losses
(2,400)2,000 
Net interest income after provision for loan losses
8,806 10,630 
Noninterest income:
Residential loan fee income
13,191 32,029 
Loan servicing income, net
461 704 
Gain on sale of government guaranteed loans, net4,621  
Service charges and fees
282 222 
SBA loan fair value gain (loss)
(197)72 
Other noninterest income
510 132 
Total noninterest income
18,868 33,159 
Noninterest expense:
Salaries and benefits
13,697 13,167 
Bonus, commissions, and incentives
4,606 11,873 
Mortgage banking
1,002 1,695 
Occupancy and equipment
1,421 1,332 
Data processing
1,467 1,269 
Marketing and business development
1,742 1,642 
Professional services
1,307 924 
Loan origination and collection
670 496 
Employee recruiting and development
871 614 
Regulatory assessments
69 102 
Other noninterest expense
795 607 
Total noninterest expense
27,647 33,721 
Income before income taxes
27 10,068 
Income tax expense
14 2,557 
Net income
13 7,511 
Preferred stock dividends
208 332 
Net income (loss attributable to) available to common shareholders
$(195)$7,179 
Basic earnings (loss) per common share
$(0.05)$2.05 
Diluted earnings (loss) per common share
$(0.05)$1.82 
See accompanying notes.
4

Table of Contents
BAYFIRST FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Dollars in thousands)
Three Months Ended March 31,
20222021
Net income
$13 $7,511 
Net unrealized (losses) on investment securities available for sale
(1,377) 
Deferred income tax benefit
339  
Other comprehensive (loss), net
(1,038) 
Comprehensive income (loss)
$(1,025)$7,511 
See accompanying notes.
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BAYFIRST FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
(Dollars in thousands, except per share data)
Preferred
Shares, Series A
Preferred
Shares, Series B
Common
Shares(1)
Preferred
Stock, Series A
Preferred
Stock, Series B
Common Stock
and Additional
Paid-in Capital
Accumulated
Other
Comprehensive
Income (Loss)
Unearned
Compensation
Retained
Earnings
Total
Balance at January  1, 2021
6,395 8,760 3,485,018 $6,161 $8,516 $43,043 $ $(41)$13,390 $71,069 
Net income
— — — — — — — — 7,511 7,511 
Issuance of common stock under:
Non-qualified stock purchase plan
— — 13,142 — — 207 — — — 207 
Dividend reinvestment plan
— — 6,339 — — 107 — — — 107 
Issuance of common stock, net— — 14,471 — — 224 — — — 224 
Issuance of preferred stock, net
— 740 — — 727 — — — — 727 
Stock-based awards - common stock:
Restricted stock expense, net of tax impact
— — 2,227 — — 29 — 6 — 35 
Stock option expense
— — — — — 106 — — — 106 
Conversion of Series B preferred stock to common stock— (2,520)157,369 — (2,452)2,452 — — — — 
Dividends declared on:
Preferred stock
— — — — — — — — (331)(331)
Common stock ($0.067 per share)
— — — — — — — — (234)(234)
Balance at March 31, 2021
6,395 6,980 3,678,566 $6,161 $6,791 $46,168 $ $(35)$20,336 $79,421 
Balance at January  1, 2022
6,395 3,210 3,981,117 $6,161 $3,123 $51,496 $(420)$(17)$35,947 $96,290 
Net income
— — — — — — — — 13 13 
Exercise of stock warrants
— — 750 — — 13 — — — 13 
Repurchase of common stock— — (2,212)— — (49)— — — (49)
Exercise of stock options, net— — 401 — — — — — — — 
Stock-based awards - common stock:
Restricted stock expense, net of tax impact
— — 33,117 — — 713 — (613)— 100 
Stock option expense
— — — — — 79 — — — 79 
Other comprehensive income (loss), net
— — — — — — (1,038)— — (1,038)
Dividends declared on:
Preferred stock
— — — — — — — — (208)(208)
Common stock ($0.08 per share)
— — — — — — — — (321)(321)
Balance at March 31, 2022
6,395 3,210 4,013,173 $6,161 $3,123 $52,252 $(1,458)$(630)$35,431 $94,879 
(1) Common shares for all periods shown herein reflect the three-for-two stock split, effective on May 10, 2021.
See accompanying notes.
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BAYFIRST FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Three Months Ended March 31,
20222021
Cash flows from operating activities:
Net income
$13 $7,511 
Adjustments to reconcile net income to net cash from operating activities:
Depreciation of fixed assets495 414 
Net securities premium amortization40  
Amortization of debt issuance costs 3 
Amortization of discount on PPP loans purchased(2)(14)
Provision for loan losses(2,400)2,000 
Accretion of discount on unguaranteed loans
(411)(457)
Deferred tax expense (benefit)303 (1,904)
Origination of SBA loans held for sale
(1,445) 
Proceeds from sales of SBA loans held for sale
81,880  
Net gains on sales of SBA loans
(4,621) 
Origination of residential loans held for sale
(335,560)(715,856)
Proceeds from sales of residential loans held for sale
380,999 739,409 
Net gains on sales of residential loans held for sale
(9,070)(28,944)
Change in fair value of residential loans held for sale
2,999 5,333 
Change in fair value of SBA loans held for investment, at fair value
197 (72)
Amortization of loan servicing rights
707 716 
Non-qualified stock purchase plan expense
25 19 
Stock based compensation expense
154 141 
Income from bank owned life insurance
(151)(85)
Changes in:
Accrued interest receivable
414 (1,284)
Other assets
(2,988)(4,016)
Accrued interest payable
(240)(1,105)
Other liabilities
(5,582)372 
Net cash from operating activities105,756 2,181 
Cash flows from investing activities:
Purchase of investment securities available for sale
(12,820) 
Principal payments on investment securities available for sale
640  
Principal payments on investment securities held to maturity
 10 
Purchase (sale) of restricted equity securities
307 (357)
Purchase of time deposits from banks(1,500) 
Loan (originations) and payments, net
(56,260)(160,813)
Purchase of premises and equipment
(1,861)(602)
Net cash (used in) investing activities(71,494)(161,762)
Cash flows from financing activities:
Net change in deposits
48,444 48,480 
Net increase of short-term fed funds purchased 40,000 
Payments on notes payable
(113)(113)
Net proceeds (repayments) of PPP Liquidity Facility borrowings
(69,654)76,151 
Proceeds from issuance of preferred stock, net
 727 
Proceeds from sale of common stock, net
13 519 
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BAYFIRST FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
Three Months Ended March 31,
20222021
Share buyback - redeemed stock(49) 
Dividends paid on common stock
(321)(234)
Dividends paid on preferred stock
(208)(331)
Net cash from (used in) financing activities
(21,888)165,199 
Net change in cash and cash equivalents
12,374 5,618 
Cash and cash equivalents, beginning of period
109,727 55,379 
Cash and cash equivalents, end of period
$122,101 $60,997 
Supplemental cash flow information
Interest paid
$1,574 $3,367 
Income taxes paid
$22 $2 
Supplemental noncash disclosures
Net change in unrealized holding gain on investment securities available for sale$(1,038)$ 
Transfer of loans and leases held for investment to loans held for sale$77,747 $ 
Recognition of right of use asset and operating lease liability
$ $136 
Conversion of Series B preferred stock to common stock
$ $2,452 
See accompanying notes.
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BAYFIRST FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data) (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include BayFirst Financial Corp. and its wholly owned subsidiary, First Home Bank d/b/a BayFirst Bank, together referred to as “the Company”.
These unaudited consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles followed within the financial services industry for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information or notes required for complete financial statements. The condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited consolidated financial statements of BayFirst Financial Corp. for that period.
The Company principally operates in two business segments, Banking and Residential Mortgage Lending.
In the opinion of management, all adjustments, consisting of normal and recurring items, considered necessary for a fair presentation of the consolidated financial statements for the interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts reported in prior periods have been reclassified to conform to current year presentation. These reclassifications did not have a material effect on previously reported net income, shareholders’ equity or cash flows.
Operating results for the three month period ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2021.
The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2021 in the Company’s Annual Report filed on Form 10-K. There were no new accounting policies or changes to existing policies adopted during the first three months of 2022 which had a significant effect on the Company’s results of operations or statement of financial condition. For interim reporting purposes, the Company follows the same basic accounting policies and considers each interim period as an integral part of an annual period.
Effective May 10, 2021, the Company effected a three-for-two stock split. All share amounts and per share financial data contained in these financial statements related to periods prior and subsequent to this stock split have been adjusted to reflect the split.
Use of Estimates: To prepare financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The most significant estimates relate to the allowance for loan losses, SBA loan servicing rights, and fair value of residential loans held for sale and residential mortgage derivatives.
Emerging Growth Company Status: The Company is expected to remain an "emerging growth company," as defined in the JOBS Act, through December 31, 2026. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period when complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period, which means these financial statements, as well as financial statements we file in the future for as long as we remain an emerging growth company, will be subject to all new or revised accounting standards generally applicable to private companies.
Contingencies:  Due to the nature of their activities, the Company and its subsidiary are at times engaged in various legal proceedings that arise in the course of normal business, some of which were outstanding as of March 31, 2022. Although the ultimate outcome of all claims and lawsuits outstanding as of March 31, 2022 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on the Company’s results of operations or financial condition.
New Accounting Standards Not Yet Adopted:
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This new guidance was issued to replace the incurred loss model for loans and other financial assets with an expected loss model, which is referred to as the CECL model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables and debt securities held to maturity. It also applies to off-balance sheet credit exposures not accounted for as insurance (i.e., loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net
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BAYFIRST FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data) (Unaudited)
investments in certain leases recognized by a lessor. In addition, the amendments in ASU 2016-13 require credit losses on securities available for sale to be presented as a valuation allowance rather than as a direct write-down thereon. The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted; however, the Company has elected to adopt new or revised accounting standards using the delayed effective dates applicable to Emerging Growth Companies. Management is in the process of evaluating the impact of adoption of this ASU on its Consolidated Financial Statements, processes, and controls and is not currently able to reasonably estimate the impact of adoption on the Company’s consolidated financial position, results of operations; however, adoption is likely to lead to significant changes in accounting policies related to, and the methods employed in estimating, the allowance for credit losses. It is possible that the impact will be material to the Company’s consolidated financial position and results of operations. To date, the Company has established a CECL steering committee and has an implementation plan. The Company is reviewing potential methodologies for estimating expected credit losses using reasonable and supportable forecast information to use in the CECL model.
ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326)” (“ASU 2022-02”) eliminates the guidance on troubled debt restructurings and requires entities to evaluate all loan modifications to determine if they result in a new loan or a continuation of the existing loan. ASU 2022-02 also requires that entities disclose current-period gross charge-offs by year of origination for loans and leases. ASU 2022-02 is effective January 1, 2023 and is not expected to have a significant impact on our financial statement disclosures.
NOTE 2 – INVESTMENT SECURITIES
The amortized costs, gross unrealized gains and losses, and estimated fair values of securities available for sale at March 31, 2022 and December 31, 2021 are summarized as follows:
March 31, 2022Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Investment securities available for sale:
Asset-backed securities
$7,621 $ $(50)$7,571 
Mortgage-backed securities:
U.S. Government-sponsored enterprises
4,388  (323)4,065 
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises
23,721  (1,575)22,146 
Corporate bonds7,874   7,874 
Total investment securities available for sale
$43,604 $ $(1,948)$41,656 
December 31, 2021Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Investment securities available for sale:
Asset-backed securities
$7,624 $ $(89)$7,535 
Mortgage-backed securities:
U.S. Government-sponsored enterprises
4,470  (76)4,394 
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises
19,370  (406)18,964 
Total investment securities available for sale
$31,464 $ $(571)$30,893 
The amortized cost and fair value of securities are shown in the table below by contractual maturity. Actual timing may
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BAYFIRST FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data) (Unaudited)
differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
March 31, 2022
Amortized
Cost
Fair
Value
One to five years5,018 5,018
Five to ten years2,856 2,856
Beyond ten years35,730 33,782
Total$43,604 $41,656
As of March 31, 2022, the Company's investment portfolio consisted of 14 securities, 9 of which were in an unrealized loss position. The investment securities available for sale were purchased after March 31, 2021 and, therefore, had been in an unrealized loss position for less than 12 months at March 31, 2022. The Company expects full recovery of the carrying amount of these securities and does not intend to sell the securities in an unrealized loss position nor does it believe it will be required to sell securities in an unrealized loss position before the value is recovered. The Company does not consider these securities to be other-than-temporarily impaired at March 31, 2022.
The following table summarizes securities with unrealized losses at March 31, 2022 and December 31, 2021 aggregated by security type and length of time in a continuous unrealized loss position:
Less than 12 Months12 Months or LongerTotal
March 31, 2022Far ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Asset-backed securities$7,571 $(50)$ $ $7,571 $(50)
Mortgage-backed securities:
U.S. Government-sponsored enterprises4,065 (323)4,065 (323)
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises17,215 (1,575)  17,215 (1,575)
Total securities available for sale$28,851 $(1,948)$ $ $28,851 $(1,948)
December 31, 2021
Asset-backed securities$7,535 $(89)$ $ $7,535 $(89)
Mortgage-backed securities:
U.S. Government-sponsored enterprises4,394 (76)  4,394 (76)
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises18,964 (406)  18,964 (406)
Total securities available for sale$30,893 $(571)$ $ $30,893 $(571)
The Company held one security classified as held to maturity at March 31, 2022 and December 31, 2021, which matures in August 2039. The security is a debt security to a government-sponsored enterprise and its amortized cost was $2 and the fair value was $2 at March 31, 2022 and December 31, 2021.
No securities were pledged as of March 31, 2022 or December 31, 2021, and there were no sales of investment securities during the three months ended March 31, 2022 or December 31, 2021.

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BAYFIRST FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data) (Unaudited)
NOTE 3 – LOANS
Loans held for investment, at amortized cost, at March 31, 2022 and December 31, 2021 were as follows:
March 31,
2022
December 31,
2021
Real estate:
Residential
$102,897 $87,235 
Commercial
189,684 163,477 
Construction and land
18,038 18,632 
Commercial and industrial
180,163 217,155 
Commercial and industrial - PPP
44,792 80,158 
Consumer and other
13,502 3,581 
Loans held for investment, at amortized cost, gross
549,076 570,238 
Deferred loan costs, net
7,297 7,975 
Discount on SBA 7(a) loans sold(1)
(3,335)(3,866)
Discount on PPP loans purchased
(10)(13)
Allowance for loan losses
(10,170)(13,452)
Loans held for investment, at amortized cost
$542,858 $560,882 
(1) The Company allocates the retained portion of loans sold based on relative fair value of the retained portion and the sold portion, which results in a discount on the retained portion.
NOTE 4 - ALLOWANCE FOR LOAN LOSSES
The following schedule presents the activity in the allowance for loan losses by loan segment for the three months ended March 31, 2022 and March 31, 2021:
Three Months Ended
March 31,
20222021
Balance, beginning of period
$13,452 $21,162 
Charge-offs:
Commercial and industrial
(1,031)(1,137)
Consumer and other
(15)(16)
Total charge-offs
(1,046)(1,153)
Recoveries:
Real estate - commercial8  
Commercial and industrial
153 5 
Consumer and other
3 3 
Total recoveries
164 8 
Net (charge-offs)
(882)(1,145)