BayFirst Financial Corp. (BAFN) Q1 2026 Earnings Call Transcript – Image for illustrative purposes only (Image credits: Unsplash)
St. Petersburg, Fla. – BayFirst Financial Corp. disclosed a net loss of $5.7 million for the first quarter of 2026, marking a deterioration from prior periods as the company wound down its SBA 7(a) lending operations.[1][2] The firm simultaneously announced an $80 million private investment in public equity and named a new chief executive for its bank subsidiary, moves designed to fortify capital and refocus on community banking in the Tampa Bay region. Shares fell more than 37% in after-hours trading following the April 30 release, underscoring investor scrutiny of persistent credit issues.[3]
Financial Performance Pressured by Loan Sales and Servicing Costs
The quarter produced a net loss of $5.7 million, or $1.48 per common share, compared with losses of $2.5 million in the fourth quarter of 2025 and $0.3 million in the first quarter of 2025. Net interest income declined to $9.4 million from $11.2 million and $11.0 million in those prior periods, respectively. The net interest margin compressed to 3.42%, down 16 basis points from the prior quarter and 35 basis points year over year.
Noninterest income fell sharply year over year to $0.9 million, reflecting the absence of gains from government-guaranteed loan sales after the SBA exit. Noninterest expenses rose to $14.9 million quarter over quarter, driven largely by $2.3 million in servicing costs on legacy SBA loans. Loans held for investment dropped 3.5% quarter over quarter to $930.4 million, including a $97.4 million sale to Banesco USA, while deposits decreased 8.3% to $1.09 billion amid runoff of high-rate promotional accounts.[5]
| Key Metric | Q1 2026 | Q4 2025 | Q1 2025 |
|---|---|---|---|
| Net Loss ($ millions) | 5.7 | 2.5 | 0.3 |
| Net Interest Income ($ millions) | 9.4 | 11.2 | 11.0 |
| Net Interest Margin (%) | 3.42 | 3.58 | 3.77 |
| Provision for Credit Losses ($ millions) | 3.1 | 2.0 | 4.4 |
Capital Raise Addresses Regulatory Shortfalls
BayFirst completed an $80 million PIPE offering of convertible preferred stock, potentially exchangeable for about 22.9 million common shares at an effective price of $3.50 per share, pending shareholder and regulatory approvals. A planned $42 million contribution to the bank subsidiary would lift pro forma capital ratios above well-capitalized levels: Tier 1 leverage to 10.02%, Common Equity Tier 1 to 13.13%, and total capital to risk-weighted assets to 14.40%.[1] Pre-raise ratios stood at 6.54%, 8.58%, and 9.84%, respectively, falling short of thresholds.
The infusion supports an asset resolution plan for criticized loans and enables growth in core operations. BayFirst also filed to offer up to 4.1 million common shares in a rights offering to shareholders of record on May 12, with a special meeting set for July 14 to increase authorized shares. The board resumed preferred dividends and plans to redeem Series A preferred stock.[2]
Alfred Rogers Steps In as Bank CEO
Alfred Rogers assumed the role of chief executive and president at BayFirst National Bank following regulatory approval, replacing the retiring Tom Zernick. His appointment to the holding company board and CEO position awaits further clearances. Kenneth R. Lehman joined both boards, also contingent on approvals.
Chairman Anthony Saravanos described the changes as pivotal. “This successful capital raise reflects the trust our investors place in our institution and our long-term strategic direction,” he said. “The Board believes that Al’s experience and leadership, combined with this capital raise, will lead BayFirst back to profitability and growth as the premier financial institution of Tampa Bay.” Rogers echoed the optimism: “I am excited to begin my next chapter… Our terrific network of branches and dedicated people are the ideal foundation for BayFirst to become the community bank of choice in our market.”[1][6]
Credit Metrics Deteriorate Amid SBA Legacy Issues
Provision expense climbed to $3.1 million, while net charge-offs reached $4.4 million, or 1.98% annualized of average loans, concentrated in unguaranteed SBA 7(a) loans totaling $159.3 million. A $100 million subset known as Bolt/FlashCap, largely unsecured, carried reserves around 13% and behaved like high-default small business credit amid rate hikes and economic strains.[2] The allowance for credit losses stood at 2.35% of loans, down slightly quarter over quarter but up from 1.61% a year earlier.
Nonperforming assets equaled 2.00% of total assets, with nonperformers excluding government guarantees at 1.81% of loans. Chief Financial Officer Scott McKim noted the portfolio’s unique risks: “The future is not as clear as we would like it to be… we have not found anything that is similar to it that we could use as a basis.” Management committed to proactive resolutions, with 68% of classified loans remaining current.
What Matters Now
The capital raise provides breathing room for BayFirst to tackle legacy loans and invest in Tampa Bay relationships. Stakeholders, including depositors and shareholders, gain from improved capital buffers and a localized strategy, though charge-off trends warrant close monitoring.
BayFirst now prioritizes its 21-branch network for deposit and loan expansion in Tampa Bay and Sarasota, growing treasury management fees and checking accounts despite broader declines. With liquidity at 13.85% and no wholesale borrowings, the firm positions itself for stability as it navigates economic uncertainty and implements its turnaround under new leadership.