BAFN

This article first appeared on GuruFocus. Release Date: October 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Community bank loans grew 25% ($41 million) during the quarter, signaling a successful strategic shift. - Net interest margin improved to 4.07%, up 59 basis points from the prior quarter. - Deposit growth of $25.3 million (2.6%) outpaced net loan growth, strengthening the funding base. - Credit quality improved significantly: provision expense was negative $69,000, net charge-offs declined, and non-performing loans decreased. - Capital position strengthened with a $14 million rights offering, redemption of preferred shares, and Tier 1 leverage ratio rising to 8.79%. - BayFirst Financial Corp (NASDAQ:BAFN) reported a net loss of $677,000 for the third quarter, indicating ongoing profitability challenges. - Total deposits decreased $157.3 million (13%) year-over-year, reflecting a decline in the deposit base. - Tangible book value per share fell to $3.64 from $4.82 in the prior quarter, primarily due to preferred stock redemptions. - Net charge-offs remained elevated at $3.2 million, with $2.9 million tied to the unguaranteed SBA 7 loan portfolio. - Total loans held for investment declined 9.1% year-over-year, partly due to the exit from SBA 7 lending, which may impact future revenue. - Warning! GuruFocus has detected 2 Warning Signs with BAFN. - Is BAFN fairly valued? Test your thesis with our free DCF calculator. Q: Could you address how much in the quarter was non-recurring, either income or expenses? A: Scott McKim, CFO, stated that in the third quarter, there was nothing that was non-recurring. This signals a cleaner earnings base compared with prior quarters that were distorted by one-time items tied to the asset resolution plan. Q: In terms of the unguaranteed portion of the loans, you said it was $132 million. Did I understand that $10 million was paid down in the quarter, and do you expect that trend to continue? A: Scott McKim, CFO, confirmed the unguaranteed SBA 7 loan balance declined about $10 million in the quarter, to $132.4 million from $142 million at June 30. He said the runoff has stabilized over the past six months and expects the trend to continue, implying roughly $40 million of annual runoff. Q: You talked about $2.9 million of charge-offs. Was that strictly related to the unguaranteed portion, and do you see that rate continuing quarterly? A: Scott McKim, CFO, said the $2.9 million of net charge-offs related only to unguaranteed SBA 7A loans. He hopes the trend moderates as the portfolio rolls down and as borrowers, now more seasoned after weathering high rates, inflation and fuel costs, continue to perform better. Q: Against the $132 million of unguaranteed loans, what was your total allowance or reserve today? A: Scott McKim, CFO, said total allowance for credit losses was just over $41.5 million at quarter end, with more than $30 million of that against the unguaranteed portfolio. That implies a reserve of roughly 22% to 23% against the $132 million of unguaranteed SBA 7 loans. Q: What drove the sharp improvement in credit quality and the near-zero provision this quarter? A: Robin Oliver, COO, said the $3.2 million of net charge-offs were absorbed within the asset resolution plan, while the change in loan portfolio mix accounted for the remaining negative provision expense. She noted improvement across all loan types, with non-performing loans excluding government-guaranteed balances down to $13.4 million from $14.4 million. Q: How is the shift to a pure community banking model progressing? A: Al Rogers, CEO, said community bank loans grew 25%, or $41 million, during the quarter, and deposits rose $25.3 million, outpacing net loan growth. He emphasized relationship banking sourced by bankers inside the footprint rather than brokers, and said the new South Tampa branch exceeded its first-year deposit expectations in its first month. Q: What is the outlook for net interest income given the quarter-end loan growth? A: Scott McKim, CFO, noted that many new loans were booked in September, so average loan balances were actually down $17 million in the quarter even as period-end balances rose $20.1 million. He said higher period-end balances combined with the 4.07% net interest margin should produce higher net interest income in future periods. Q: How did the capital actions affect shareholders' equity and book value? A: Scott McKim, CFO, said shareholders' equity fell $11.4 million to $104.5 million, primarily from redemption of the Series A and B preferred shares. Tangible book value per share declined to $3.64 from $4.82, while the rights offering completed September 30 raised over $14 million of incremental capital and the Tier 1 leverage ratio improved to 8.79%. Q: What is happening with the Series C preferred shares? A: Scott McKim, CFO, said the no-call period on the Series C preferred shares expires in the fourth quarter of 2026, the Board has voted to redeem the class, and holders have been notified. Because the conversion option is priced at the last reported tangible book value per share, he expects many holders to convert rather than seek redemption. Q: What are the priorities for expense control and staffing as the bank grows? A: Robin Oliver, COO, said the bank is adding retail and commercial banking talent, with additional commercial bankers critical given strong loan demand. Al Rogers, CEO, added that the bank is evaluating technology investments and process improvements and looking at other areas to reduce expenses and improve profitability, noting six of 12 banking centers have been open five years or less. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Management is transforming BayFirst into a pure-play community bank, evidenced by a 25% growth in community bank loans and a strategic exit from the SBA 7(a) lending business completed in late 2025. - The company executed a significant capital restructuring, increasing authorized common stock to 100 million shares and exchanging Series D and E preferred stock for 22.8 million common shares to simplify the balance sheet. - Net interest margin (NIM) improved to 4.07%, a 59 basis point increase driven by the stabilization of the balance sheet following the implementation of the asset resolution plan. - Deposit growth outpaced net loan growth for the quarter, reflecting a strategic shift toward deepening local relationship banking rather than relying on broker-sourced funding. - The asset resolution plan contributed to improved credit metrics, including lower charge-offs and a reduction in non-performing loans, allowing for a negative provision expense during the period. - Operational efficiency is being targeted through the replacement and addition of talent in commercial banking to capture strong loan demand while aggressively scaling newer banking centers. - Management expects the current earnings loss to be temporary, with higher quarter-end loan balances and a strong NIM projected to drive higher net interest income in future periods. - The unguaranteed SBA 7(a) portfolio is expected to continue its runoff at a rate of approximately $10 million per quarter, or roughly $40 million annually, as the portfolio seasons. - The company plans to redeem Series C preferred shares in Q4 2026, though management anticipates many holders will choose to convert to common stock at the current tangible book value. - Strategic focus remains on expanding the bank's presence in the Tampa Bay, Sarasota, and Bradenton markets through disciplined execution and relationship-based commercial lending. - Management is evaluating technology investments and process improvements to enhance efficiency, improve customer experience, and position the bank to scale responsibly as it grows. - Net charge-offs of $3.2 million were primarily concentrated in the unguaranteed SBA 7(a) portfolio but were fully absorbed within the previously established asset resolution plan. - Tangible book value per share decreased to $3.64 from $4.82, primarily due to the redemption of Series A and B preferred shares during the quarter. - The bank maintains a high allowance for credit losses (ACL) of 4.85% of total loans, with over $30 million specifically reserved against the $132.4 million unguaranteed SBA portfolio. - A successful rights offering completed in September raised over $14 million in incremental capital to support the bank's community-focused growth strategy. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management confirmed there were no non-recurring income or expense items in the third quarter, contrasting with the one-time charges seen in Q2 related to the asset resolution plan. - The $10 million quarterly runoff in the unguaranteed portfolio is expected to continue, though management noted the runoff rate has stabilized over the past six months. - Management expressed hope that charge-off rates will moderate as the remaining borrowers have already weathered significant macro headwinds like high interest rates and inflation. - The bank has allocated over $30 million of its $41.5 million total allowance for credit losses specifically to the $132.4 million unguaranteed portfolio. - This represents a coverage ratio of approximately 22% to 23% for the highest-risk portion of the legacy lending business.

Image source: The Motley Fool. Friday, Oct. 30, 2026 - President and Chief Executive Officer - Alfred Rogers - Chief Financial Officer - Scott McKim - Chief Operating Officer - Robin Oliver Operator: Hello, everyone. Thank you for joining us, and welcome to the BayFirst Financial Corp. Q3 2026 Conference Call and Webcast. [Operator Instructions] I will now hand the conference over to Al Rogers, President and CEO. Al, please go ahead. Alfred Rogers: Thank you. Good morning, and thank you for joining our call today. With me is Scott McKim, our Chief Financial Officer; and Robin Oliver, our Chief Operating Officer. Remember, 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 2 of the investor presentation. I'm excited to share the progress we've made over the past 3 months. BayFirst is being transformed into the strong community bank that I've spoken about. Here are some key accomplishments. Community Bank loans grew 25% during the quarter. That's an increase of $41 million. Total loans for investment increased by $20 million or 2.3%. Total deposits increased by $25.3 million or 2.6%. I want to point out that deposit growth outpaced net loan growth for the quarter. Our net interest margin for the quarter improved to 4.07%. We held a special meeting of shareholders on July 14, where the company obtained shareholder approval to amend the BayFirst Financial Corporation Articles of Incorporation. This meeting increased the number of authorized common stock from 50 million shares to 100 million shares and exchanged all 4,000 outstanding mandatorily convertible cumulative perpetual preferred stock Series D and all 4,000 outstanding shares of mandatorily convertible cumulative perpetual preferred stock Series E for a total of 22,856,000 shares of common stock. Upon conversion, all Series D and E preferred stock were retired. The company's Series A and Series B preferred shares were fully redeemed during the quarter as well. The rights offering was completed on September 30, and raised over $14 million of incremental capital as well. Scott will be discussing all of these accomplishments here in a few minutes. Our asset resolution plan contributed to significant improvements in the credit quality during the quarter. We've had meaningful improvements in all credit metrics, including an immaterial provision expense, lower charge-offs, a reduction in non-performing loans. Robin is going to provide additional details later in the call as it relates to our asset quality. During the quarter, we opened a new temporary branch in South Tampa on Dale Mabry Highway and purchased what will be a permanent branch less than a mile away. This branch opened on September 9, 2026, and has exceeded the 2026 expectations for deposit growth in the first month. I am pleased with our operational performance to-date. While we still have work to do to deliver positive earnings in the short-term, these accomplishments set the stage for that success. The earnings loss we report for the quarter is not indicative of what we will do going forward. Now I want to turn the call over to Scott, to provide some comments on our financial performance for the quarter. Scott? Scott McKim: Thank you, Al. Good morning, everyone. We are reporting a net loss of $677,000 for the third quarter. This compares to the net loss of $32.7 million that we reported in the second quarter. Other key results include loans held for investment increased by $20.1 million or 2.3% during the third quarter of 2026 to $903 million in total. This is also a decrease of $90.1 million or 9.1% over the past 12 months. Most of this decrease year-over-year reflects the sale of loans and the exit from SBA 7(a) lending, which we completed in the fourth quarter of 2025. Total deposits increased $25.3 million or 2.6% during the third quarter of 2026 and also decreased $157.3 million or 13% over the past year to $1.01 billion. 79% of the bank's deposits were insured by FDIC on September 30, 2026, and the bank's on-balance sheet liquidity ratio as of September 30, 2026, was 13.5%. The bank did not have any wholesale borrowings. Shareholders' equity at quarter-end was $104.5 million, which is $11.4 million lower than it was at the end of Q2. The decrease is primarily from the redemption of the company's Series A and B preferred shares, which Al already mentioned. Net accumulated other comprehensive loss increased by $600,000 during the quarter, ending at $2.7 million in total. Tangible book value per share decreased to $3.64 per share, down from $4.82 per share at the end of the second quarter. Our net interest margin, as Al stated, is 4.07%. That's a 59 basis point increase from the reported number in the second quarter. Net interest income was $10.6 million in the third quarter, an increase of $1.2 million from the quarter prior and down $700,000 from the year-ago quarter. Also, please recall, as I mentioned last quarter, the normalized net interest margin for Q2, excluding one-time impacts related to the asset resolution plan was also 4.70%. As I noted, net loan growth for the quarter was up $20.1 million. Many of the new loans that we originated during the quarter were booked in September and our average loan balances in the third quarter were actually down $17 million from the second quarter. I mentioned this as the higher loan balances at the end of the quarter, combined with our strong net interest margin, will provide higher net interest income in future periods, also contributing to better earnings as we go forward. Non-interest income was $1.1 million in the third quarter of 2026, which is $7.9 million better than what we reported in the second quarter and an increase of $2.2 million from the third quarter of 2025. Please recall that the second quarter non-interest income included $8 million of one-time negative impacts related to the Board-approved asset resolution plan. Additionally, the year-over-year decrease was heavily impacted by our exit from the SBA 7(a) lending business and no additional gains on sale of government-guaranteed loans is being booked. Non-interest expense was $12.8 million, a decrease of $4.8 million compared to the second quarter. $2.8 million of this decrease is related to, once again, one-time charges driven by the asset resolution plan. The remaining decrease is from lower salaries and benefits, data processing, and loan servicing expenses as well. Provision for credit losses was negative $69,000 in the third quarter compared to $29 million in the second quarter and $11.2 million in the third quarter of 2025. Both of the prior periods had elevated provision expense to address risk in the unguaranteed 7(a) portfolio, including the amount quantified for the asset resolution plan that we announced last quarter. Net charge-offs in the quarter were $3.2 million, down $1.3 million compared to last quarter. Total unguaranteed SBA 7(a) loan balances ended the quarter at $132.4 million as of the end of September. In comparison, the bank had $142 million of unguaranteed SBA 7(a) loan balances on June 30 and $171.6 million on December 31, 2025. Total annualized net charge-offs as a percentage of average loans held for investment at amortized cost were 1.52% in the third quarter. That was down from 2.08% in the second quarter and 2.14% in the first quarter of this year. The ratio of allowance to credit losses on loans to total loans held for investment at amortized cost was 4.85% at September 30, 5.37% as of the end of the second quarter, and 2.36% as of the third quarter of last year. The ratio of allowance to credit losses to total loans held for investment at amortized cost, excluding government-guaranteed loan balances, was 5.2% as of September 30, 2026, 5.82% at June 30, 2026, and 2.55% as of September 30, 2025. The bank's Tier 1 leverage ratio was 8.79% at the end of the third quarter compared to 8.30% at the end of the second quarter and 6.14% as of the end of the third quarter of last year. Total capital to risk-weighted assets ratio was 12.44% as of the end of the third quarter. That compares to 12.77% at the end of the second quarter and 9.08% at the end of the third quarter last year. Finally, I want to note that the no call period on the company's Series C preferred shares will expire in the fourth quarter of this year. The Board has voted to redeem the class and notification has been sent to those holders. These preferred shares have a conversion option priced at the company's last reported tangible book value per share, and we do expect many of those holders to select the conversion option versus seeking redemption. Now I will turn the call over to Robin, to talk about some other impacts on credit as well as the business. Robin? Robin Oliver: Thank you, Scott. Good morning, everyone. I want to start with some further follow-up on the asset resolution plan, which I spoke about last quarter. And I want to highlight that the $3.2 million of net charge-offs during this quarter were absorbed within the plan. The change in the loan portfolio mix accounted for the remaining negative provision expense during the quarter. Furthermore, $2.9 million of the $3.2 million of net charge-offs were related to the unguaranteed SBA 7(a) portfolio, a decrease of nearly $1 million in net charge-offs from both the first and second quarter of this year. Net charge-offs in non-SBA 7(a) categories were also lower in the third quarter at $286,000 compared to $580,000 last quarter and $977,000 in the first quarter. While the plan is working to address the risk we discussed previously, we are seeing improvement across all loan types as we remain diligent in collecting and resolving problem assets. Other progress is being made as well. And at the end of the third quarter, total non-performing loans, excluding government guaranteed balances were $13.4 million, down from $14.4 million at the end of the second quarter. The percentage of non-performing loans, excluding government guaranteed balances compared to total loans held for investment, was 1.56%, down 16 basis points from June 30, '26, and down 14 basis points from a year ago. Of the $13.4 million in non-performing loans, I want to note that $2.9 million of these balances were current and paying as agreed. In addition, as I noted last quarter, 68% of the bank's classified loans remain current and performing loans, whereby we are working with the borrowers towards resolution. Switching gears to credit for a moment. As we continue our efforts to transition the bank to focus solely on community banking, we are working to ensure we have the right talent in the right positions to effectively grow our bank while still improving efficiency and providing the best overall customer experience. As such, we have added a great deal of talent throughout the bank in both retail and commercial banking, some of which are replacements and other positions have been added to support our growth, particularly in commercial lending. Additional commercial bankers will be critical as loan demand is currently very strong and commercial loan demand also helps grow deposits. With 6 of our 12 banking center locations having been open for 5 years or less, we will aggressively work to grow the deposits in those banking centers to ensure every location we have is providing appropriate profitability to the organization. At this time, I will turn the call over to Al, to make some final comments. Alfred Rogers: Thank you, Robin. These improvements reinforce my belief that we have a significant opportunity ahead. The focus remains: we are building a high-performing community bank centered on relationship banking, disciplined execution, sound credit practices and exceptional service. We believe local businesses and consumers are best served when decisions are made close to home by bankers who know the market, understand their customers and are invested in the success of the communities in which they serve. That community banking model starts with strong local customer relationships. Our deposit mix and cost of funds remains the top priority. We're working to deepen existing relationships and improve our deposit mix from higher cost transactional accounts to relationships that value service, responsiveness, and long-term partnerships. Our lending philosophy is similar. We're hyper-focused on building and deepening relationships with borrowers in our markets. These relationships are sourced by our bankers inside our footprint, not from brokers. We are adding talented, experienced bankers and are evaluating technology investments and process improvements that will enhance efficiency, improve customer experience and position us to scale responsibly as we grow. We are also looking at other areas where we can reduce expenses and improve profitability. There's still work to do, however, and this quarter's momentum is measurable and supports our priorities. Grow core relationships, strengthen performance, expand our presence in the Tampa Bay, Sarasota, and Bradenton markets, which will deliver consistent long-term value for our shareholders. I want to thank our employees for their dedication, our customers for their trust, and our shareholders for their continued support. I'm optimistic about the future and excited about what lies ahead. Operator, I'll turn the call over to you, and we'll take some questions. Thank you so much. Operator: [Operator Instructions] Your first question comes from the line of Ross Haberman with RLH Investments. Ross Haberman: Nice news and it's nice to see that things are slowly begin to turn around here. Can I ask just two quick questions about the income statement. Could you address how much in the quarter were non-recurring, either income or expenses in the quarter, please? Alfred Rogers: In the third quarter, there was nothing that was non-recurring. Ross Haberman: Okay. And just one follow-up question. In terms of the unguaranteed portion of the loans, you said it was $132 million. Did I understand it that $10 million was paid down in the quarter. Is that correct? Alfred Rogers: Yes, that's just on the unguaranteed side of it. So that is why we're actually paying either. Yes, are we expecting that trend to continue? And the short answer is yes. Ross Haberman: Correct. Yes, a quarter. So you're talking close to $40 million a year? Alfred Rogers: I would say yes. Let me put a little bit more context around it for you, Ross, because all things being equal, what we are seeing is some degree of stability in that portfolio and what I will characterize as some better predicting components and the runoff is one of the things that we are seeing kind of stabilize. Earlier in the year, it was running off a little bit quicker than that, but we did notice in the second quarter that it had slowed down and it's kind of stabilized at this level over the past 6 months, give or take. Ross Haberman: And just related to that, you talked about $2.9 million of charge-offs. Was that strictly related to the unguaranteed portion? And do you see that rate continuing quarterly? Alfred Rogers: Yes, it's only related to the unguaranteed 7(a) loans, the [ $2 point million ] it is. My -- okay, as far as the outlook on that, again, this is the area that really has challenged the bank over the past few years. My hope is that trend moderates, especially as the portfolio rolls down, but also at this point, these borrowers within the portfolio has become quite seasoned and they've weathered the storm of high interest rates, inflation, expensive fuel costs, so on and so forth. And my hope would be that they continue to perform at better levels going forward. So that's about the best way I can characterize it for you. Operator: [Operator Instructions] Your next question comes from the line of Ross Haberman with RLH Investments. Ross Haberman: I don't mean to monopolize this, guys. I apologize. But just one last question. Against the $132 million of unguaranteed loans, what was your total allowance or reserve today? Alfred Rogers: The total ACL on the books at the end of the quarter was just over $41.5 million, and over $30 million of that is against the unguaranteed portfolio, Ross. Ross Haberman: So you're saying about 22%, 23%? Alfred Rogers: Yes. Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in BayFirst Financial, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and BayFirst Financial wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $334,631!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,312,844!* Now, it's worth noting Stock Advisor's total average return is 893% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 30, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. BayFirst (BAFN) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

- Interested in BayFirst Financial Corp.? Here are five stocks we like better. - BayFirst's third-quarter net loss narrowed sharply to $677,000 from $32.7 million in the second quarter, supported by improved net interest margin, lower expenses and the absence of major one-time Asset Resolution Plan charges. - Credit quality improved as the unguaranteed SBA 7(a) portfolio declined to $132.4 million, nonperforming loans fell to $13.4 million, and provisions shifted to a $69,000 benefit from $29 million of expense in the prior quarter. - The bank strengthened capital through a $14 million rights offering and preferred-share actions, while expanding its community banking strategy with loan and deposit growth and a new South Tampa branch. BayFirst Financial (NASDAQ:BAFN) reported a third-quarter net loss of $677,000, a substantial improvement from its $32.7 million loss in the second quarter, as the company continued its transition toward a community banking-focused model and saw improvements in credit metrics tied to its Asset Resolution Plan. President and CEO Al Rogers said the company made progress during the quarter in loan and deposit growth, asset quality and capital actions. Community bank loans increased 25%, or $41 million, during the period, while total loans held for investment rose $20 million, or 2.3%. Deposits grew $25.3 million, or 2.6%, exceeding net loan growth for the quarter. → Heavy Metal: Why Nucor Could Be an Overlooked AI Infrastructure Winner "BayFirst is being transformed into the strong community bank that I've spoken about," Rogers said. He added that the reported quarterly loss "is not indicative of what we will do going forward," while acknowledging that the company still has work to do to return to positive earnings. Chief Financial Officer Scott McKim said net interest margin improved to 4.07% in the third quarter, up 59 basis points from the reported second-quarter level. Net interest income totaled $10.6 million, increasing $1.2 million sequentially but declining $700,000 from the year-earlier quarter. → Boeing Got Its MAX 10 Approval, But Q3 Delivered a Reality Check Loans held for investment ended the quarter at $903 million. While balances increased during the third quarter, they were down $90.1 million, or 9.1%, from a year earlier. McKim said much of the year-over-year decline reflected loan sales and the company's exit from SBA 7(a) lending, which was completed in the fourth quarter of 2025. Total deposits were $1.01 billion at Sept. 30, down $157.3 million, or 13%, from the prior year. The bank reported that 79% of deposits were FDIC-insured, its on-balance-sheet liquidity ratio was 13.5%, and it had no wholesale borrowings. → Johnson Controls Beats the Heat in AI Data Centers Noninterest income was $1.1 million, improving by $7.9 million from the second quarter. The prior quarter included $8 million of one-time negative impacts from the board-approved Asset Resolution Plan. Noninterest expense declined $4.8 million sequentially to $12.8 million, including a $2.8 million reduction related to prior one-time Asset Resolution Plan charges, as well as lower salaries and benefits, data processing and loan servicing expenses. During the question-and-answer session, McKim said there were no non-recurring income or expense items in the third-quarter results. BayFirst recorded a negative provision for credit losses of $69,000 in the third quarter, compared with provision expenses of $29 million in the second quarter and $11.2 million in the third quarter of 2025. McKim said the earlier periods included elevated provisions associated with risks in the unguaranteed SBA 7(a) portfolio and the Asset Resolution Plan. Net charge-offs totaled $3.2 million, down $1.3 million from the second quarter. Chief Operating Officer Robin Oliver said $2.9 million of those charge-offs related to unguaranteed SBA 7(a) loans, while net charge-offs in non-SBA 7(a) categories declined to $286,000 from $580,000 in the prior quarter. "While the plan is working to address the risks we discussed previously, we are seeing improvement across all loan types as we remain diligent in collecting and resolving problem assets," Oliver said. The unguaranteed SBA 7(a) portfolio declined to $132.4 million at quarter-end, from $142 million on June 30 and $171.6 million at the end of 2025. McKim told investors that roughly $10 million of the unguaranteed portfolio paid down during the quarter and said he expected the runoff trend to continue, describing the recent pace as approximately $40 million annually. McKim said the company held more than $41.5 million in total allowance for credit losses at quarter-end, with more than $30 million allocated against the unguaranteed SBA 7(a) portfolio. That represented roughly 22% to 23% of the unguaranteed balance, according to the discussion. Total nonperforming loans, excluding government-guaranteed balances, fell to $13.4 million from $14.4 million in the second quarter. The ratio of nonperforming loans excluding government-guaranteed balances to total loans held for investment was 1.56%, down 16 basis points from June 30. Oliver noted that $2.9 million of nonperforming balances were current and paying as agreed, while 68% of classified loans remained current and performing. During the quarter, shareholders approved an increase in authorized common shares to 100 million from 15 million. The company also converted and retired all Series D and Series E mandatorily convertible preferred shares in exchange for 22.856 million common shares. BayFirst fully redeemed its Series A and Series B preferred shares during the quarter. The company completed a rights offering on Sept. 30 that raised more than $14 million in incremental capital. Shareholders' equity was $104.5 million at quarter-end, down $11.4 million from the prior quarter primarily because of the Series A and Series B preferred-share redemptions. BayFirst's Tier 1 leverage ratio improved to 8.79% from 8.30% at the end of the second quarter and 6.14% a year earlier. Its total capital-to-risk-weighted-assets ratio was 12.44%. McKim also said the board voted to redeem the company's Series C preferred shares after their no-call period expires in the fourth quarter. He said holders have a conversion option based on the company's last reported tangible book value per share and that management expects many holders to choose conversion rather than redemption. Rogers said BayFirst opened a temporary South Tampa branch on Dale Mabry Highway and purchased a permanent location less than a mile away. The temporary branch opened Sept. 9 and exceeded the company's 2026 deposit-growth expectations in its first month, he said. The company is adding retail and commercial banking personnel, with particular emphasis on commercial lending. Oliver said six of BayFirst's 12 banking centers have been open for five years or less, and the company plans to pursue deposit growth at those locations to support profitability. Rogers said BayFirst remains focused on relationship banking, deposit mix and cost of funds, disciplined credit practices, operating efficiency and expansion across the Tampa Bay, Sarasota and Bradenton markets. BayFirst Financial Corp. is a bank holding company headquartered in St. Petersburg, Florida. Its primary subsidiary, BayFirst National Bank, provides banking and financial services to individuals, families, small businesses and commercial customers. The bank offers deposit accounts, commercial and consumer lending, residential mortgage loans, business banking services and other related financial products. Its lending activities also include Small Business Administration financing and mortgage lending through specialized banking and lending teams. BayFirst National Bank primarily serves communities in the Tampa Bay region and other areas of Florida, while its mortgage and specialty lending operations may serve customers in additional markets. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What BayFirst Financial (BAFN) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Net Interest Margin Expansion, 25% Growth in Community Bank Lending, and Significant Credit Improvement ST. PETERSBURG, Fla., Oct. 29, 2026 (GLOBE NEWSWIRE) -- BayFirst Financial Corp. (NASDAQ: BAFN) ("BayFirst" or "Company"), parent company of BayFirst National Bank ("Bank") reported a net loss of $0.7 million, or $0.04 per common share and diluted common share, for the third quarter of 2026, compared to a net loss of $32.7 million, or $8.05 per common share and diluted common share, in the second quarter of 2026. "In the second quarter we took deliberate steps under our asset resolution plan to strengthen our balance sheet, and this quarter's results show those actions are beginning to pay off," stated Al Rogers, Chief Executive Officer. "Total community bank loans, excluding the government guaranteed portfolio, grew $41.9 million over the prior quarter, or 25% annualized, a key highlight that reflects strong demand and the trust our customers place in us. Net interest margin improved 59 basis points from the prior quarter, and for the first time in nearly three years, deposit growth outpaced loan growth, a clear sign that our relationship-focused approach is strengthening our funding base. While we did report a loss for the third quarter, it was a significant improvement over prior periods. Our strengthened foundation positions us for continued improvement in the coming quarters as we remain focused on achieving sustained profitability. "We are also encouraged by the continued improvement in asset quality," Rogers continued. "Nonperforming assets declined as percentage of total assets, and net charge-offs were lower than in the prior quarter, further evidence that our asset resolution efforts are working. Through it all, our focus on the communities we serve remains unwavering, and I am confident we will continue to build on our standing as the community bank of choice in our Tampa Bay and Sarasota markets." Third Quarter 2026 Performance Review - Net interest margin was 4.07% in the third quarter of 2026, an increase of 59 basis points from 3.48% in the second quarter of 2026 and an increase of 43 basis points from 3.64% in the third quarter of 2025. - Total loans held for investment increased by $20.1 million, or 2.3%, during the third quarter of 2026 to $903.0 million and decreased $90.1 million, or 9.1%, over the past year. The decrease from the prior year was partially the result of no new SBA 7(a) loan originations and the sale of $97.4 million of government guaranteed loans to a third party as part of the Bank's discontinuance of SBA 7(a) lending. - Deposits increased $25.3 million, or 2.6%, during the third quarter of 2026 and decreased $157.3 million, or 13.4%, over the past year to $1.01 billion. The increase in deposits during the quarter was primarily due to increases in noninterest-bearing account balances, interest-bearing transaction account balances, savings and money market account balances, partially offset by a decrease in time deposit balances. The decrease in deposits over the past year was primarily due to decreases in high-rate promotional deposits held with non-relationship customers and brokered deposits. - On July 14, 2026, the Company obtained shareholder approval to amend the BayFirst Financial Corp. Articles of Incorporation to increase the number of authorized shares of the common stock from 15,000,000 to 100,000,000 and exchanged all 4,000 outstanding shares of Mandatorily Convertible Cumulative Perpetual Preferred Stock, Series D, and exchanged all 4,000 outstanding shares of Mandatorily Convertible Cumulative Perpetual Preferred Stock, Series E for a total of 22,856,000 shares of common stock. Upon conversion, all shares of Series D and Series E Preferred Stock were retired. - On August 13, 2026, the Company redeemed all outstanding Series A and Series B Preferred Shares in the amount of $6,464 for Preferred Series A, including accrued dividends of $303, and $3,241 for Preferred Series B, including accrued dividends of $118. - At September 30, 2026, book value and tangible book value was $3.64 per common share, a decrease from $4.82 at June 30, 2026. Results of Operations Net Loss The Company had a net loss of $0.7 million for the third quarter of 2026, compared to a net loss of $32.7 million in the second quarter of 2026 and a net loss of $19.1 million in the third quarter of 2025. The change in the third quarter of 2026 from the preceding quarter was primarily the result of $41.5 million of expense in the second quarter of 2026 related to the asset resolution plan. The change from the third quarter of 2025 was the due to decreases in provision for credit losses of $11.2 million and noninterest expense of $12.4 million, and an increase in noninterest income of $2.2 million, partially offset with a decrease in income tax benefit of $6.7 million. For the nine months ended September 30, 2026, the Company had a net loss of $39.3 million, compared to a net loss of $21.9 million for the nine months ended September 30, 2025. The change was primarily due to decreases in net interest income of $4.6 million and noninterest income of $22.8 million and increases in provision for credit losses of $13.5 million and noninterest expense of $13.2 million, partially offset by income tax benefit of $5.7 million. Net Interest Income and Net Interest Margin Net interest income was $10.6 million in the third quarter of 2026, which was an increase of $1.2 million from $9.4 million for the second quarter of 2026, and a decrease of $0.7 million from $11.3 million during the third quarter of 2025. The net interest margin was 4.07% in the third quarter of 2026, an increase of 59 basis points from 3.48% in the second quarter of 2026 and an increase of 43 basis points from 3.64% in the third quarter of 2025. The increase in net interest income during the third quarter of 2026, as compared to the second quarter of 2026, was mainly due to an increase in loan interest income, including fees, of $1.1 million. The decrease in net interest income during the third quarter of 2026, as compared to the year ago quarter, was mainly due to a decrease in loan interest income, including fees, of $4.8 million, partially offset by a decrease in interest expense on deposits of $3.1 million. Net interest income was $29.5 million for the nine months ended September 30, 2026, a decrease from $34.1 million for the nine months ended September 30, 2025. The decrease was mainly due to a decrease in loan interest income, including fees, of $14.7 million, partially offset by a decrease in interest expense of $8.7 million. Noninterest Income Noninterest income was $1.1 million for the third quarter of 2026, compared to negative income of $6.8 million in the second quarter of 2026 and negative income of $1.1 million in the third quarter of 2025. The change from the third quarter of 2026, as compared to the second quarter of 2026, was primarily the result of a 99.41% decrease in government guaranteed loan fair value losses of $6.4 million and second quarter 2026 loss on nonmarketable equity securities of $1.5 million which was related to the impairment of an investment in a firm who was a partner with the Company's former SBA 7(a) lending business. The increase in the third quarter of 2026, as compared to the third quarter of 2025, was the result of a third quarter 2025 fair value adjustment on loans held for sale of $5.1 million, partially offset by a decrease in gain on sale of government guaranteed loans of $3.0 million. Noninterest income was a negative $4.8 million for the nine months ended September 30, 2026, which was a decrease from income of $17.9 million for the nine months ended September 30, 2025. The decrease was primarily the result of a decrease in gain on sale of government guaranteed loans of $16.1 million, a decrease in government guaranteed loan fair value gains of $7.8 million, a decrease in government guaranteed loan packaging fees of $1.7 million and second quarter 2026 loss on nonmarketable equity securities of $1.5 million, partially offset by a 2025 fair value adjustment on loans held for sale of $5.1 million. Noninterest Expense Noninterest expense was $12.8 million in the third quarter of 2026 compared to $17.7 million in the second quarter of 2026 and $25.2 million in the third quarter of 2025. The decrease in the third quarter of 2026, as compared to the prior quarter, was primarily due to $1.7 million of expenses in the second quarter of 2026 related to the asset resolution plan and $2.3 million of one-time expenses to record a change in control payment and write-off vendor contracts related to national lending and digital account opening businesses which are not part of our community banking focus. The decrease in the third quarter of 2026, as compared to the third quarter of 2025, was primarily due to the third quarter 2025 restructuring expense of $7.3 million, and a decrease in compensation expense of $3.1 million. Noninterest expense was $45.4 million for the nine months ended September 30, 2026 compared to $58.6 million for the nine months ended September 30, 2025. The decrease was primarily the result of the third quarter 2025 restructuring expense of $7.3 million, a decrease in compensation expense of $8.1 million, partially offset by an increase in loan servicing and origination expense of $3.1 million. Balance Sheet Assets Total assets increased $13.0 million, or 1.1%, during the third quarter of 2026 to $1.15 billion, primarily the result of an increase in loans held for investment of $20.1 million, and a decrease in allowance for credit losses on loans of $3.3 million, partially offset by a decrease in cash and cash equivalents of $10.8 million. Compared to the end of the third quarter last year, total assets decreased $192.3 million, or 14.3%, driven primarily by a decrease in loans held for investment and held for sale of $184.2 million, and an increase in allowance for credit losses on loans of $17.3 million, partially offset by an increase in cash and cash equivalents of $9.8 million and an increase in deferred tax asset of $14.8 million. Loans Loans held for investment increased $20.1 million, or 2.3%, during the third quarter of 2026 and decreased $90.1 million, or 9.1%, over the past year to $903.0 million. The decrease from prior year was primarily due to loan payoffs and government guaranteed loan sales, which included the sale of the SBA 7(a) loans to a third party in the fourth quarter as part of the Bank's discontinuance of SBA 7(a) lending. This was partially offset by originations in both conventional community bank loans and USDA government guaranteed loans. Deposits Deposits increased $25.3 million, or 2.6%, during the third quarter of 2026 and decreased $157.3 million, or 13.4%, from the third quarter of 2025, ending September 30, 2026, at $1.01 billion. During the third quarter, there was a decrease in time deposit balances of $8.7 million, partially offset by increases in noninterest-bearing account balances of $4.4 million, interest-bearing transaction account balances of $6.9 million, and savings and money market account balances of $22.6 million. At September 30, 2026, June 30, 2026, and September 30, 2025, the Company had $165.7 million, $163.8 million, and $235.9 million, respectively, of brokered deposits. Asset Quality The Company recorded a provision for credit losses in the third quarter of negative $0.1 million, compared to provisions of $29.0 million for the second quarter of 2026 and $11.2 million during the third quarter of 2025. The decrease in the provision expense was primarily the result of $30.5 million of expense related to the asset resolution plan recorded in the second quarter of 2026. The ratio of allowance for credit losses (ACL) on loans to total loans held for investment at amortized cost was 4.85% at September 30, 2026, 5.37% as of June 30, 2026, and 2.63% as of September 30, 2025. The ratio of ACL on loans to total loans held for investment at amortized cost, excluding government guaranteed loan balances, was 5.20% at September 30, 2026, 5.82% as of June 30, 2026, and 2.80% as of September 30, 2025. Net charge-offs for the third quarter of 2026 were $3.2 million, which was a decrease from $4.5 million for the second quarter of 2026 and a decrease from $3.5 million for the third quarter of 2025. Annualized net charge-offs as a percentage of average loans held for investment at amortized cost were 1.52% for the third quarter of 2026, compared to 2.08% in the second quarter of 2026 and 1.34% in the third quarter of 2025. Nonperforming assets were 1.29% of total assets as of September 30, 2026, compared to 1.75% as of June 30, 2026, and 1.98% as of September 30, 2025. Nonperforming assets, excluding government guaranteed loan balances, were 1.21% of total assets as of September 30, 2026, compared to 1.32% as of June 30, 2026, and 1.21% as of September 30, 2025. Capital The Bank's Tier 1 leverage ratio was 8.79% as of September 30, 2026, compared to 8.30% as of June 30, 2026, and 6.14% as of September 30, 2025. The CET 1 and Tier 1 capital ratios to risk-weighted assets were 11.15% as of September 30, 2026, compared to 11.47% as of June 30, 2026, and 7.82% as of September 30, 2025. The total capital to risk-weighted assets ratio was 12.44% as of September 30, 2026, compared to 12.77% as of June 30, 2026, and 9.08% as of September 30, 2025. At September 30, 2026, the Bank met all of its regulatory capital requirements to be well-capitalized. Liquidity The Bank's overall liquidity position remains strong and stable with liquidity in excess of internal minimums as stated by policy and monitored by management and the Board. The on-balance sheet liquidity ratio at September 30, 2026 was 13.49%, as compared to 18.44% at December 31, 2025. The Bank has 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 September 30, 2026 and June 30, 2026, the Bank had no borrowings from the FHLB, the FRB or other financial institutions. Recent Events On October 8, 2026, the Company sold and issued 4,107,908 common shares at $3.50 per common share in or as part of the Company's rights offering. The offering resulted in gross proceeds of $14.4 million which will be used to improve capital levels of the Company and the Bank, and support the continued growth of the Bank. Conference Call BayFirst will host a conference call on Friday, October 30, 2026, at 9:00 a.m. ET to discuss its third quarter results. Interested parties may listen to the call live under the Investor Relations tab at www.bayfirstfinancial.com or are invited to dial (833) 461-5787 to participate in the call using Conference ID 438809173. 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. As of September 30, 2026, BayFirst Financial Corp. had $1.15 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, weather events, 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 and credit quality; 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; enforcement actions initiated by our regulators and their impact on our operations; 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. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this document, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise. BAYFIRST FINANCIAL CORP. SELECTED FINANCIAL DATA (Unaudited) | At or for the three months ended (Dollars in thousands, except for share data) | 9/30/2026 | | 6/30/2026 | | 3/31/2026 | | 12/31/2025 | | 9/30/2025 | | | | | As restated | | As restated | | As restated Net loss | $ | (677 | ) | | $ | (32,665 | ) | | $ | (5,930 | ) | | $ | (2,696 | ) | | $ | (19,077 | ) Balance sheet data: | | | | | | | | | Average loans held for investment at amortized cost | | 848,578 | | | | 858,931 | | | | 881,938 | | | | 933,401 | | | | 1,054,946 | Average total assets | | 1,121,140 | | | | 1,185,392 | | | | 1,213,823 | | | | 1,328,923 | | | | 1,339,795 | Average common shareholders' equity | | 59,761 | | | | 67,624 | | | | 64,448 | | | | 67,481 | | | | 86,976 | Government guaranteed loans held for sale | | — | | | | — | | | | — | | | | — | | | | 94,052 | Total loans held for investment | | 902,966 | | | | 882,840 | | | | 924,220 | | | | 958,014 | | | | 993,109 | Total loans held for investment, excl gov't gtd loan balances | | 832,904 | | | | 805,684 | | | | 849,157 | | | | 887,885 | | | | 917,816 | Allowance for credit losses | | 41,762 | | | | 45,081 | | | | 20,632 | | | | 21,996 | | | | 24,485 | Total assets | | 1,147,929 | | | | 1,134,925 | | | | 1,189,671 | | | | 1,294,269 | | | | 1,340,222 | Total deposits | | 1,014,154 | | | | 988,874 | | | | 1,085,869 | | | | 1,183,938 | | | | 1,171,457 | Common shareholders' equity | | 98,095 | | | | 19,850 | | | | 58,421 | | | | 64,758 | | | | 67,921 | Share data: | | | | | | | | | Basic loss per common share | $ | (0.04 | ) | | $ | (8.05 | ) | | $ | (1.54 | ) | | $ | (0.75 | ) | | $ | (4.71 | ) Diluted loss per common share | | (0.04 | ) | | | (8.05 | ) | | | (1.54 | ) | | | (0.75 | ) | | | (4.71 | ) Book value per common share | | 3.64 | | | | 4.83 | | | | 14.22 | | | | 15.76 | | | | 16.50 | Tangible book value per common share (1) | | 3.64 | | | | 4.82 | | | | 14.22 | | | | 15.76 | | | | 16.50 | Performance ratios: | | | | | | | | | Return on average assets(2) | (0.24) | % | | (11.02) | % | | (1.95) | % | | (0.81) | % | | (5.70) | % Return on average common equity(2) | (6.39) | % | | (195.50) | % | | (39.19) | % | | (18.26) | % | | (89.51) | % Net interest margin(2) | | 4.07 | % | | | 3.48 | % | | | 3.44 | % | | | 3.60 | % | | | 3.64 | % Asset quality ratios: | | | | | | | | | Net charge-offs | $ | 3,228 | | | $ | 4,460 | | | $ | 4,719 | | | $ | 4,865 | | | $ | 3,544 | Net charge-offs/avg loans held for investment at amortized cost(2) | | 1.52 | % | | | 2.08 | % | | | 2.14 | % | | | 2.08 | % | | | 1.34 | % Nonperforming loans(3) | $ | 14,013 | | | $ | 18,457 | | | $ | 21,453 | | | $ | 24,343 | | | $ | 24,687 | Nonperforming loans (excluding gov't gtd balance)(3) | $ | 13,445 | | | $ | 14,434 | | | $ | 15,873 | | | $ | 16,271 | | | $ | 15,822 | Nonperforming loans/total loans held for investment(3) | | 1.63 | % | | | 2.20 | % | | | 2.46 | % | | | 2.69 | % | | | 2.65 | % Nonperforming loans (excl gov't gtd balance)/total loans held for investment(3) | | 1.56 | % | | | 1.72 | % | | | 1.82 | % | | | 1.80 | % | | | 1.70 | % ACL/Total loans held for investment at amortized cost | | 4.85 | % | | | 5.37 | % | | | 2.36 | % | | | 2.43 | % | | | 2.63 | % ACL/Total loans held for investment at amortized cost, excl government guaranteed loans | | 5.20 | % | | | 5.82 | % | | | 2.55 | % | | | 2.60 | % | | | 2.80 | % Other Data: | | | | | | | | | Full-time equivalent employees | | 146 | | | | 148 | | | | 143 | | | | 144 | | | | 237 | Banking center offices | | 12 | | | | 11 | | | | 12 | | | | 12 | | | | 12 | (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 Reconciliation and Management Explanation of Non-GAAP Financial Measures Some 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 the calculation of the non-GAAP financial measures. Tangible Common Shareholders' Equity and Tangible Book Value Per Common Share (Unaudited) | As of (Dollars in thousands, except for share data) | September 30, 2026 | | June 30, 2026 | | March 31, 2026 | | December 31, 2025 | | September 30, 2025 | | | | | As restated | | As restated | | As restated Total shareholders' equity | $ | 104,541 | | | $ | 115,901 | | | $ | 75,628 | | | $ | 81,580 | | | $ | 83,972 | Less: Preferred stock liquidation preference | | (6,446 | ) | | | (96,051 | ) | | | (17,207 | ) | | | (16,822 | ) | | | (16,051 | ) Total equity available to common shareholders | | 98,095 | | | | 19,850 | | | | 58,421 | | | | 64,758 | | | | 67,921 | Less: Intangible assets | | (62 | ) | | | (62 | ) | | | — | | | | — | | | | — | Tangible common shareholders' equity | $ | 98,033 | | | $ | 19,788 | | | $ | 58,421 | | | $ | 64,758 | | | $ | 67,921 | | | | | | | | | | Common shares outstanding | | 26,962,725 | | | | 4,106,905 | | | | 4,108,072 | | | | 4,108,069 | | | | 4,116,913 | Tangible book value per common share | $ | 3.64 | | | $ | 4.82 | | | $ | 14.22 | | | $ | 15.76 | | | $ | 16.50 | BAYFIRST FINANCIAL CORP. CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands) | 9/30/2026 | 6/30/2026 | 9/30/2025 Assets | | | As restated Cash and due from banks | $ | 5,230 | | $ | 5,641 | | $ | 5,193 | Interest-bearing deposits in banks | | 123,097 | | | 133,524 | | | 113,357 | Cash and cash equivalents | | 128,327 | | | 139,165 | | | 118,550 | Time deposits in banks | | — | | | — | | | 1,284 | Investment securities available for sale, at fair value (amortized cost $27,454, $30,591, and $32,614 at September 30, 2026, June 30, 2026, and September 30, 2025, respectively) | | 23,856 | | | 27,778 | | | 29,857 | Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $7, $7, and $9 (fair value: $2,347, $2,371, and $2,375 at September 30, 2026, June 30, 2026, and September 30, 2025, respectively) | | 2,493 | | | 2,493 | | | 2,491 | Nonmarketable equity securities | | 4,509 | | | 3,164 | | | 7,028 | Government guaranteed loans held for sale | | — | | | — | | | 94,052 | Government guaranteed loans held for investment, at fair value | | 42,204 | | | 43,847 | | | 61,780 | Loans held for investment, at amortized cost | | 860,762 | | | 838,993 | | | 931,329 | Allowance for credit losses on loans | | (41,762 | ) | | (45,081 | ) | | (24,485 | ) Net Loans held for investment, at amortized cost | | 819,000 | | | 793,912 | | | 906,844 | Accrued interest receivable | | 5,429 | | | 5,127 | | | 6,800 | Premises and equipment, net | | 34,681 | | | 30,245 | | | 31,695 | Loan servicing rights | | 8,827 | | | 9,942 | | | 15,663 | Deferred income tax assets | | 21,836 | | | 21,253 | | | 7,040 | Right-of-use operating lease assets | | 13,402 | | | 13,720 | | | 14,833 | Bank owned life insurance | | 27,854 | | | 27,654 | | | 27,071 | Other real estate owned | | 410 | | | 532 | | | 400 | Other assets | | 15,101 | | | 16,093 | | | 14,834 | Total assets | $ | 1,147,929 | | $ | 1,134,925 | | $ | 1,340,222 | Liabilities: | | | Noninterest-bearing deposit accounts | $ | 121,193 | | $ | 116,788 | | $ | 105,937 | Interest-bearing transaction accounts | | 142,555 | | | 135,628 | | | 210,336 | Savings and money market deposit accounts | | 445,578 | | | 422,933 | | | 479,262 | Time deposits | | 304,828 | | | 313,525 | | | 375,922 | Total deposits | | 1,014,154 | | | 988,874 | | | 1,171,457 | FHLB borrowings | | — | | | — | | | 50,000 | Subordinated debentures | | 5,968 | | | 5,966 | | | 5,961 | Notes payable | | 1,138 | | | 1,252 | | | 1,593 | Accrued interest payable | | 735 | | | 597 | | | 1,082 | Operating lease liabilities | | 12,408 | | | 12,694 | | | 13,554 | Accrued expenses and other liabilities | | 8,985 | | | 9,641 | | | 12,603 | Total liabilities | | 1,043,388 | | | 1,019,024 | | | 1,256,250 | Shareholders' equity: | | | As restated Preferred stock, Series A; no par value, no shares authorized, issued, and outstanding at September 30, 2026, and 10,000 shares authorized, 6,395 shares issued and outstanding at June 30, 2026 and September 30, 2025; aggregate liquidation preference of $6,395 at June 30, 2026 and September 30, 2025 | | — | | | 6,161 | | | 6,161 | Preferred stock, Series B; no par value, no shares authorized, issued, and outstanding at September 30, 2026, 20,000 shares authorized, 3,210 shares issued and outstanding at June 30, 2026 and September 30, 2025; aggregate liquidation preference of $3,210 at June 30, 2026 and September 30, 2025 | | — | | | 3,123 | | | 3,123 | Preferred stock, Series C; no par value, 10,000 shares authorized, 6,446 shares issued and outstanding at September 30, 2026, June 30, 2026, and September 30, 2025; aggregate liquidation preference of $6,446 at September 30, 2026, June 30, 2026 and September 30, 2025 | | 6,446 | | | 6,446 | | | 6,446 | Preferred stock, Series D; no par value, no shares authorized, issued and outstanding at September 30, 2026 and September 30, 2025 and 4,000 shares authorized, issued and outstanding at June 30, 2026; aggregate liquidation preference of $40,000 at June 30, 2026 | | — | | | 37,254 | | | — | Preferred stock, Series E; no par value, no shares authorized, issued and outstanding at September 30, 2026 and September 30, 2025, and 4,000 shares authorized, issued and outstanding at June 30, 2026; aggregate liquidation preference of $40,000 at June 30, 2026 | | — | | | 37,254 | | | — | Common stock and additional paid-in capital; no par value, 100,000,000, 15,000,000, and 15,000,000 shares authorized, 26,962,725, 4,106,905, and 4,116,913 shares issued and outstanding at September 30, 2026, June 30, 2026, and September 30, 2025, respectively | | 128,646 | | | 54,382 | | | 54,764 | Accumulated other comprehensive loss, net | | (2,701 | ) | | (2,111 | ) | | (2,069 | ) Unearned compensation | | (213 | ) | | (245 | ) | | (538 | ) Retained earnings | | (27,637 | ) | | (26,363 | ) | | 16,085 | Total shareholders' equity | | 104,541 | | | 115,901 | | | 83,972 | Total liabilities and shareholders' equity | $ | 1,147,929 | | $ | 1,134,925 | | $ | 1,340,222 | BAYFIRST FINANCIAL CORP. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | For the Quarter Ended | | Year-to-Date (Dollars in thousands, except per share data) | 9/30/2026 | | 6/30/2026 | | 9/30/2025 | | 9/30/2026 | | 9/30/2025 Interest income: | | | | | As restated | | | | As restated Loans, including fees | $ | 15,951 | | | $ | 14,803 | | | $ | 20,746 | | | $ | 46,675 | | | $ | 61,346 | Interest-bearing deposits in banks and other | | 1,296 | | | | 1,562 | | | | 946 | | | | 4,367 | | | | 2,926 | Total interest income | | 17,247 | | | | 16,365 | | | | 21,692 | | | | 51,042 | | | | 64,272 | Interest expense: | | | | | | | | | Deposits | | 6,483 | | | | 6,850 | | | | 9,576 | | | | 21,226 | | | | 28,289 | Other | | 137 | | | | 93 | | | | 798 | | | | 327 | | | | 1,928 | Total interest expense | | 6,620 | | | | 6,943 | | | | 10,374 | | | | 21,553 | | | | 30,217 | Net interest income | | 10,627 | | | | 9,422 | | | | 11,318 | | | | 29,489 | | | | 34,055 | Provision for credit losses | | (69 | ) | | | 28,977 | | | | 11,165 | | | | 32,312 | | | | 23,332 | Net interest income after provision for credit losses | | 10,696 | | | | (19,555 | ) | | | 153 | | | | (2,823 | ) | | | 10,723 | Noninterest income: | | | | | | | | | Loan servicing income, net | | 655 | | | | 588 | | | | 761 | | | | 2,013 | | | | 1,981 | Gain (loss) on sale of government guaranteed loans, net | | — | | | | — | | | | 3,039 | | | | (97 | ) | | | 15,975 | Service charges and fees | | 507 | | | | 497 | | | | 474 | | | | 1,494 | | | | 1,396 | Government guaranteed loans fair value gain (loss), net | | (38 | ) | | | (6,468 | ) | | | (882 | ) | | | (7,039 | ) | | | 805 | Fair value adjustment on loans held for sale | | — | | | | — | | | | (5,096 | ) | | | — | | | | (5,096 | ) Government guaranteed loan packaging fees | | — | | | | — | | | | 380 | | | | — | | | | 1,673 | Loss on nonmarketable securities | | — | | | | (1,500 | ) | | | — | | | | (1,500 | ) | | | — | Loss on sale of premises and equipment | | — | | | | (34 | ) | | | — | | | | (21 | ) | | | — | Other noninterest income (loss) | | (23 | ) | | | 108 | | | | 254 | | | | 326 | | | | 1,215 | Total noninterest income | | 1,101 | | | | (6,809 | ) | | | (1,070 | ) | | | (4,824 | ) | | | 17,949 | Noninterest Expense: | | | | | | | | | Salaries and benefits | | 4,466 | | | | 5,332 | | | | 7,637 | | | | 14,867 | | | | 23,748 | Bonus, commissions, and incentives | | 576 | | | | 741 | | | | 530 | | | | 1,607 | | | | 863 | Occupancy and equipment | | 1,307 | | | | 1,352 | | | | 1,525 | | | | 4,027 | | | | 4,738 | Data processing | | 1,406 | | | | 2,649 | | | | 2,049 | | | | 5,544 | | | | 6,172 | Marketing and business development | | 76 | | | | 157 | | | | 262 | | | | 356 | | | | 1,152 | Professional services | | 571 | | | | 1,172 | | | | 859 | | | | 2,907 | | | | 2,373 | Loan servicing and origination expense | | 3,004 | | | | 3,122 | | | | 3,273 | | | | 9,962 | | | | 6,866 | Employee recruiting and development | | 213 | | | | 248 | | | | 364 | | | | 663 | | | | 1,443 | Regulatory assessments | | 515 | | | | 611 | | | | 484 | | | | 1,704 | | | | 1,175 | Restructure charges | | — | | | | — | | | | 7,262 | | | | — | | | | 7,262 | Other noninterest expense | | 682 | | | | 2,292 | | | | 970 | | | | 3,741 | | | | 2,764 | Total noninterest expense | | 12,816 | | | | 17,676 | | | | 25,215 | | | | 45,378 | | | | 58,556 | Loss before taxes | | (1,019 | ) | | | (44,040 | ) | | | (26,132 | ) | | | (53,025 | ) | | | (29,884 | ) Income tax benefit | | (342 | ) | | | (11,375 | ) | | | (7,055 | ) | | | (13,753 | ) | | | (8,015 | ) Net loss | | (677 | ) | | | (32,665 | ) | | | (19,077 | ) | | | (39,272 | ) | | | (21,869 | ) Preferred dividends | | 277 | | | | 386 | | | | 385 | | | | 1,048 | | | | 1,156 | Net loss attributable to common shareholders | $ | (954 | ) | | $ | (33,051 | ) | | $ | (19,462 | ) | | $ | (40,320 | ) | | $ | (23,025 | ) Basic loss per common share | $ | (0.04 | ) | | $ | (8.05 | ) | | $ | (4.71 | ) | | $ | (3.76 | ) | | $ | (5.57 | ) Diluted loss per common share | $ | (0.04 | ) | | $ | (8.05 | ) | | $ | (4.71 | ) | | $ | (3.76 | ) | | $ | (5.57 | ) Loan Composition (Dollars in thousands) | 9/30/2026 | | 6/30/2026 | | 3/31/2026 | | 12/31/2025 | | 9/30/2025 | (Unaudited) | | (Unaudited) | | Unaudited/As restated | | As restated | | Unaudited/As restated Real estate: | | | | | | | | | Residential | $ | 348,865 | | | $ | 353,716 | | | $ | 359,305 | | | $ | 365,427 | | | $ | 364,020 | Commercial | | 228,589 | | | | 211,518 | | | | 216,643 | | | | 215,771 | | | | 231,039 | Construction and land | | 35,976 | | | | 38,095 | | | | 36,732 | | | | 48,397 | | | | 43,700 | Commercial and industrial | | 177,062 | | | | 158,077 | | | | 171,666 | | | | 181,566 | | | | 194,654 | Commercial and industrial - PPP | | — | | | | — | | | | 6 | | | | 6 | | | | 13 | Consumer and other | | 66,903 | | | | 73,567 | | | | 82,269 | | | | 86,441 | | | | 90,946 | Loans held for investment, at amortized cost, gross | | 857,395 | | | | 834,973 | | | | 866,621 | | | | 897,608 | | | | 924,372 | Deferred loan costs, net | | 7,151 | | | | 8,338 | | | | 9,353 | | | | 10,491 | | | | 11,522 | Discount on government guaranteed loans | | (4,472 | ) | | | (5,107 | ) | | | (6,007 | ) | | | (6,811 | ) | | | (7,506 | ) Premium on loans purchased, net | | 688 | | | | 789 | | | | 2,446 | | | | 2,650 | | | | 2,941 | Loans held for investment, at amortized cost, net | | 860,762 | | | | 838,993 | | | | 872,413 | | | | 903,938 | | | | 931,329 | Government guaranteed loans held for investment, at fair value | | 42,204 | | | | 43,847 | | | | 51,807 | | | | 54,076 | | | | 61,780 | Total loans held for investment, net | $ | 902,966 | | | $ | 882,840 | | | $ | 924,220 | | | $ | 958,014 | | | $ | 993,109 | Nonperforming Assets (Unaudited) (Dollars in thousands) | 9/30/2026 | | 6/30/2026 | | 3/31/2026 | | 12/31/2025 | | 9/30/2025 | | | | | As Restated | | As Restated | | As Restated Nonperforming loans (government guaranteed balances), at amortized cost, gross | $ | 568 | | | $ | 4,023 | | | $ | 5,580 | | | $ | 8,072 | | | $ | 8,865 | Nonperforming loans (unguaranteed balances), at amortized cost, gross | | 13,445 | | | | 14,434 | | | | 15,873 | | | | 16,271 | | | | 15,822 | Total nonperforming loans, at amortized cost, gross | | 14,013 | | | | 18,457 | | | | 21,453 | | | | 24,343 | | | | 24,687 | Nonperforming loans (government guaranteed balances), at fair value | | — | | | | — | | | | 208 | | | | 83 | | | | — | Nonperforming loans (unguaranteed balances), at fair value | | 114 | | | | 443 | | | | 1,230 | | | | 1,453 | | | | 1,385 | Total nonperforming loans, at fair value | | 114 | | | | 443 | | | | 1,438 | | | | 1,536 | | | | 1,385 | OREO | | 410 | | | | 532 | | | | 400 | | | | 400 | | | | 400 | Repossessed assets | | 253 | | | | 466 | | | | 583 | | | | 263 | | | | 32 | Total nonperforming assets, gross | $ | 14,790 | | | $ | 19,898 | | | $ | 23,874 | | | $ | 26,542 | | | $ | 26,504 | Nonperforming loans as a percentage of total loans held for investment(1) | | 1.63 | % | | | 2.20 | % | | | 2.46 | % | | | 2.69 | % | | | 2.65 | % Nonperforming loans (excluding government guaranteed balances) to total loans held for investment(1) | | 1.56 | % | | | 1.72 | % | | | 1.82 | % | | | 1.80 | % | | | 1.70 | % Nonperforming assets as a percentage of total assets | | 1.29 | % | | | 1.75 | % | | | 2.01 | % | | | 2.05 | % | | | 1.98 | % Nonperforming assets (excluding government guaranteed balances) to total assets | | 1.21 | % | | | 1.32 | % | | | 1.39 | % | | | 1.29 | % | | | 1.21 | % ACL to nonperforming loans(1) | | 298.02 | % | | | 244.24 | % | | | 96.17 | % | | | 90.35 | % | | | 99.18 | % ACL to nonperforming loans (excluding government guaranteed balances)(1) | | 310.61 | % | | | 312.32 | % | | | 129.98 | % | | | 135.18 | % | | | 154.75 | % (1) Excludes loans measured at fair value Contacts: | Alfred T. Rogers, Jr. | Scott J. McKim Chief Executive Officer and President | Chief Financial Officer 727.685.2097 | 727.521.7085

ST. PETERSBURG, Fla., Sept. 30, 2026 (GLOBE NEWSWIRE) -- BayFirst Financial Corp. (NASDAQ: BAFN) ("BayFirst" or "Company"), parent company of BayFirst National Bank ("Bank") today announced that it will report its third quarter results after the market close on Thursday, October 29, 2026. Management will host a conference call on Friday, October 30, 2026, at 9:00 a.m. ET to discuss the results. The call will also be broadcast live via the internet. Interested investors may listen to the call live under the Investor Relations tab at www.bayfirstfinancial.com. Investment professionals are invited to dial (833) 461-5787 to participate in the call using Conference ID 438809173. 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 eleven 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. As of June 30, 2026, BayFirst Financial Corp. had $1.13 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, weather events, 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; enforcement actions initiated by our regulators and their impact on our operations; 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. Contacts: | Alfred T. Rogers, Jr. | Scott J. McKim Chief Executive Officer | Chief Financial Officer 727.685.2097 | 727.521.7085

Image source: The Motley Fool. Friday, Aug. 14, 2026 at 9:00 a.m. ET President and Chief Executive Officer - Alfred Rogers Chief Financial Officer - Scott McKim Chief Operating Officer - Robin Oliver Operator: Hello, everyone. Thank you for joining us, and welcome to the BayFirst Financial Corp. Q2 2026 Conference Call and Webcast. [Operator Instructions] I will now hand the conference over to Al Rogers, President and CEO. Al, please go ahead. Alfred Rogers: Thank you, Marina. Good morning, and thank you for joining our call today. With me is Scott McKim, our CFO; and Robin Oliver, our COO. Please remember, 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 2 of the investor presentation. My first full quarter as CEO at BayFirst has been very busy. We set to work on a number of initiatives, both short and longer term. The substantial $80 million capital raise at the end of April was the first and was certainly biggest step for the future of our bank. We completed and deployed our asset resolution plan to address the bank's legacy credit issues, predominantly related to unguaranteed balances of the SBA 7(a) loans. During the process of completing the asset resolution plan, our team also identified some material misstatements from prior periods. We have restated financial statements for the years ended December 31, 2024, December 31, 2025, and the quarter ended March 31, 2026. The amended 10-K and 10-Q have been filed this week. Scott will elaborate on both in a few minutes. We held a special meeting of shareholders on July 14, where the company obtained shareholder approval to amend BayFirst Financial Corporation's articles of incorporation to increase the number of authorized shares of common stock from 15 million to 100 million and exchange all 4,000 outstanding shares of mandatorily convertible cumulative perpetual preferred stock Series D and all 4,000 outstanding shares of mandatorily convertible cumulative perpetual preferred stock Series E for a total of 22,856,000 shares of common stock. Upon conversion, all shares of Series D and Series E preferred stock were retired. The company's Series A and Series B preferred shares were redeemed in July as well. Management also noted a mid-August launch as the date for the rights offering we announced back in April. Beyond these shareholder actions, we've also moved decisively to strengthen our operating structure and leadership team. Most notably, Trey Korhn has joined as BayFirst Chief Banking Officer. Trey has been a career banker in Tampa for over 22 years and will lead our retail and commercial banking teams. As a lifelong Tampa resident with deep roots and involvement in several real estate, industry and community organizations, Trey brings the local market insight, relationship orientation and proven leadership needed to help us sharpen execution and accelerate growth across our franchise. Adam Curtis will continue to lead commercial lending with the organization as Chief Lending Officer. He will report to Trey. The commercial relationship managers and portfolio managers will report to Adam as that team focuses on growing and serving our commercial business customers across our footprint. Adam's steady leadership, strong customer relationships and strong lending expertise remain critical to our ability to serve commercial clients and grow this important line of business with quality and consistency. Samantha Hill has transitioned to Director of Retail Banking with responsibility for production, growth and execution across our retail banking centers. She will also report to Trey. All banking center managers now report to Sam, giving us clear accountability and a more focused retail strategy. Sam brings a strong record of team development, customer experience and branch execution, and her leadership will be important as we expand core relationships across our banking center network. Additionally, we have submitted an application to open a new retail location in South Tampa. This office will bring our total retail branch network back to 12, having closed an office in Sarasota last quarter. With that operational foundation in place, I will now turn the call over to Scott, who will discuss the quarter's earnings, including the impact of the asset resolution plan and restatement. Scott? Scott McKim: Thank you, Al. Good morning, everyone. We are reporting a net loss of $32.7 million in the second quarter. This compares to the restated net loss of $5.9 million we reported for the first quarter. As Al mentioned, the asset resolution plan was deployed during the second quarter and therefore, has dominated the results that we will talk about today. The plan was a thorough review of the bank's legacy unguaranteed SBA 7(a) portfolio as well as our other portfolios. We conducted an analysis, which provided adjustments to the net amount expected to be collected on over 7,000 individual SBA loans, which resulted in the full or partial charge-off on several of those loans. We established a specific allowance for credit losses on 6 loans, increased the overall allowance on unguaranteed SBA 7(a) loan categories and also adjustments to the fair market values on our portfolio of loans that we have measured at fair value. In total, the adjustment amounted to $38.4 million. Provision expense for the quarter was $29.7 million, and the company's total allowance for credit losses on June 30, 2026, was $45.1 million. Additionally, the company booked an impairment of $1.5 million on a nonmarketable equity investment in a firm who was a partner of the company's former SBA 7(a) lending business. Finally, the company wrote down the unamortized premiums on the bank's portfolio of purchased, only guaranteed USDA loans, which are at risk of default or early prepayment. I want to be clear, this adjustment is not credit specific. In total, the asset resolution plan impact was $41.5 million. As our new management team has assessed the existing business and started to make updates to the strategic plan, we identified some additional onetime charges during the quarter, which amount to $2.2 million and reflect the write-off of vendor contracts, which will no longer be used and also the accrual of a change in control payment to prior management. All of these adjustments together equal $43.8 million of the company's pretax $44 million loss for the quarter. We announced on July 15 that we identified $2.8 million of deferred origination costs and $2.1 million of accrued interest as of March 31, 2026, relate to loans which had defaulted or was placed into nonaccrual status in prior periods, which resulted in a material understatement of provision expense and overstatement of net interest income during the affected quarterly periods in which the errors were accumulated in 2024, 2025 and the first quarter of 2026. Subsequent to that announcement, we further identified another $3.4 million of deferred origination costs, which should have been netted against net gain on sale of government-guaranteed loans and resulted in a material overstatement of those net gain on sale of government guaranteed loans during the affected quarterly period in which the error accumulated specifically in the years of 2024 and 2025. These errors occurred in periods prior to 2024 as well, but were not material during those periods. Our restatement efforts have correctly restated the company's earnings to date, and we have amended our 2025 10-K and our first quarter 10-Q. Management and the Board of Directors take our obligation to provide accurate and transparent financial reporting seriously. We moved quickly to investigate what happens and to correct it and to notify our shareholders. We continue to work through internal operational remediation activities and we will report in future SEC filings on our progress towards resolution and strengthening our internal controls over financial reporting. It is important to note that by exiting the SBA 7(a) lending business, these errors will not repeat. Nonetheless, we will ensure that our internal operations are compliant. Please note, as I continue, our prior period metrics, which I will mention are the restated metrics. Other financial results include loans held for investment decreased by $41.4 million or 4% during the second quarter of 2026 to $882.8 million and decreased $237.7 million or 21% over the past year. Most of this decrease year-over-year reflects the sale of loans and the exit of the SBA 7(a) lending in the fourth quarter of 2025. Deposits decreased $97 million or 9% during the second quarter of 2026 and decreased $175 million or 15% over the past year to $989 million. The decrease in deposits during the quarter was primarily due to reductions in high-rate promotional deposits held with non-relationship customers and also a decrease in broker deposits. 80% of the bank's deposits were insured by FDIC on June 30, 2026. And the bank's on-balance sheet liquidity ratio as of June 30, 2026, was 14.95%, and the bank did not have any wholesale borrowings. Shareholders' equity at the end of the quarter was $115.9 million, which is $40.3 million higher than it was at the end of the first quarter. The increase is from the capital raise net of the asset resolution plan. Net accumulated other comprehensive loss increased slightly by $57,000 during the quarter, ending at $2.1 million. Tangible book value per share decreased this quarter to $4.82 per share from $14.22 per share at the end of the first quarter. Our net interest margin was 3.48%, up 4 basis points from first quarter. Net interest income was $9.4 million in the second quarter, virtually unchanged from the first quarter and down $2.7 million from the year ago quarter. On a normalized basis, the net interest margin for the second quarter, excluding the onetime impact that I mentioned as part of the asset resolution plan was 4.07%, which was driven by positive trends in cost of funds, which decreased 24 basis points from the prior quarter to 2.66%. The bank's cost of funds is now down 49 basis points year-to-date, reflecting our efforts to exit promotional rate balances and brokered deposit balances. Noninterest income was negative $6.8 million in the second quarter of 2026, which is $7.7 million worse than the first quarter and a decrease of $17.3 million from the second quarter of 2025. Current quarter net interest income includes an $8 million in onetime impacts related to the Board-approved asset resolution plan. Additionally, the year-over-year decrease is exacerbated by exiting the SBA 7(a) lending business as no additional gains on sales of government-guaranteed loans will be booked. Noninterest expense was $17.7 million, an increase of $2 million compared to the first quarter. Essentially, all of this increase is related to onetime charges that were driven by our actions under the asset resolution plan and the onetime items that I have mentioned, in total, approximately $2.5 million. Compensation costs were about $600,000 higher, driven largely by accrued change in control payment that I mentioned. Also, as I mentioned, our provision for credit losses was $29 million in the second quarter compared to $3.4 million in the first quarter and $7.6 million in the second quarter of 2025. Net charge-offs were $4.5 million, down $200,000 compared to the first quarter, which was $4.7 million. Total unguaranteed SBA 7(a) loan balances were $142 million on June 30. In comparison, the bank had $159.3 million of unguaranteed SBA 7(a) loan balances at the end of the first quarter. Total annualized charge-offs as a percentage of average loans held for investment at amortized cost were 2.08% for the second quarter, a decrease from 2.14% in the first quarter of the year. The ratio of allowance for credit losses on loans to total loans held for investment at amortized cost was 5.37% on June 30, compared to 2.36% on March 31, 2026, and 2.43% as of the end of 2025. The ratio of allowance for credit losses to total loans held for investment at amortized cost and excluding government-guaranteed loan balances was 5.82% on June 30, 2026, 2.55% at the end of the first quarter and 2.60% at the end of 2025. The bank's Tier 1 leverage ratio was 8.3% as of June 30, 2026, compared to 5.89% at March 31, 2026, and 7.73% as of June 30, 2025. The total capital to risk-weighted assets ratio was 12.77% as of June 30, 2026, compared to 9% on March 31, 2026, and 10.77% as of June 30, 2025. I will now turn the call over to Robin to make some operational and credit comments. Robin? Robin Oliver: Thank you, Scott. Good morning, everyone. First, I want to provide some further details around the asset resolution plan and the related impact. As Scott mentioned, the asset resolution plan identified and provided resolution for troubled balances, but it also provides protection from future charge-offs. Also, as Scott mentioned, our allowance for credit losses divided by total loans held for investment at amortized cost, excluding government-guaranteed loans, increased to 5.82% at the end of June. That is up from 1.86% a year ago. Further, the SBA BOLT loan portfolio now has 32.8% reserved against unguaranteed balances and the SBA FlashCap portfolio now has a 25% reserve. These 2 small loan portfolios represent $83 million of unguaranteed SBA balances. As these loans season, we continue to learn how they perform, but we believe the actions taken under the asset resolution plan have adequately positioned the bank to manage future charge-offs. That being said, we know we must remain diligent in collecting and resolving problem assets. And to that end, progress is being made. And at the end of the second quarter, total nonperforming loans, excluding government guaranteed balances were $14.4 million, down from $15.9 million at the end of the first quarter and the percentage of nonperforming loans, excluding government guaranteed balances compared to total loans held for investment was also down to 1.72%, which was a 10 basis point drop from March 31, 2026. Although that's up from a year ago, we are still making clear progress. I should also note that of the $14.4 million in nonperforming loans, $3.1 million of these balances were current and paying as agreed. And we will be evaluating those for potential return to accrual status as time continues. And in addition, as I noted last quarter, although our classified loans are elevated at the moment, 68% of our classified loans were current and performing loans, whereby we are working with the borrowers towards resolution. Switching gears from credit. As we look towards the future growth of the bank and work towards a return to profitability, we are also focused on becoming as efficient as possible in our processes while ensuring we provide an excellent experience for our customers to make banking easy with a high level of personal touch. Our focus over the last 2 years has been on growing business deposits and treasury services, but the infusion of capital this past quarter really allows us to get back to lending, which will help the bank grow both loans and deposits to add stable net interest income and fee income instead of transactional earnings. Without adding significant headcount, we've also added leadership and talent in various areas of the bank, which we believe will position us for growth, including Trey, the Chief Banking Officer that Al mentioned, a Chief Data Officer and retail personnel, including the retail individuals to support our new South Tampa location that is scheduled to open in September. We are excited about further expanding in Hillsborough County as we seek to round out our presence in the Tampa Bay market. At this time, I will turn the call over to Al to make some final comments. Alfred Rogers: Thank you, Rob. As I complete my first few months at BayFirst, what I've seen only reinforces my belief that we have a significant opportunity ahead. I've spent time with our employees, customers, shareholders and community leaders. And one thing is clear, BayFirst has the people, relationships and market position to become the leading community bank in the Tampa Bay region. Our focus is simple. We're building a high-performing community bank centered on relationship banking, disciplined execution, sound credit practices and exceptional service. We believe local businesses and consumers are best served when decisions are made close to home by bankers who know the market, understand their customers and are invested in the success of the communities in which they serve. That community banking model starts with strong customer relationships. Our deposit mix and cost of funds remain a top priority. We are working to deepen existing relationships and improve the mix from higher cost transactional accounts to relationships that value service, responsiveness and long-term partnerships. On the lending side, loan growth has already begun. While we continue to manage payoffs and charge-offs associated with the legacy SBA portfolio, our focus has shifted toward growing traditional commercial and consumer lending with borrowers located in the markets we serve. Our loan pipeline is strong, and we are seeing encouraging opportunities across our footprint. We're also investing in technology and process improvements that enhance efficiency, improve customer experience and position us to scale responsibly as we grow. The capital we raised earlier this year provides us with strength and flexibility as we execute this strategy. We intend to deploy that capital thoughtfully, focusing on opportunities that strengthen the franchise, improve profitability and support sustainable growth. While there is still work to do, I'm encouraged by the progress we've made and the momentum we are building. Our priorities are clear: Grow core relationships, strengthen performance, expand our presence in Tampa Bay and deliver consistent long-term value for our shareholders. I want to thank our employees for their dedication, our customers for their trust and our shareholders for their continued support. I am optimistic about our future and excited about what lies ahead. Marina, I'll turn the call back over to you for some questions. Thank you. Operator: [Operator Instructions] Your first question comes from the line of Ross Haberman with Rlh Investments. Ross Haberman: Just 2 or 3 quick questions. Al, could you talk about this new branch you're going to open? How big could it be? And how quickly do you think you will hit a breakeven on it? How long will that take? Alfred Rogers: Location is in South Tampa, a very prosperous area in the market that we do not have a significant location. We do have an office 4 miles away, but in a significantly different demographic and market. We've already started opening accounts in this area, and we expect that would come quickly as this is initially a leased location in that market. Ross Haberman: Will it be a 2-year breakeven or hopefully something less than that? Or what's your guess? Alfred Rogers: I would say, given our investment, it would be sooner than that. Ross Haberman: And just a question or 2 for Scott. Scott, the $142 million of unguaranteed SBA loans, I think you broke that out into a piece of $82 million and then another $60 million. Could you go over the reserves on each of those parts? And how quickly are -- do you think they'll be paying down? I think you said in the last quarter, they paid down a total of $17 million. Is that correct? Scott McKim: Ross, yes, so we went from $159 million down to $142 million. That's a pretty quick drop, but also keep in mind, some part of that was also related to the asset resolution plan. So it was a little bit higher than what I would consider to be a true run rate for it. I will tell you that the -- I'll start to break the pieces down as far as what's in the portfolio for you. The BOLT portfolio is the largest part -- Ross, I'm getting a little feedback. Ross Haberman: Sorry, is that better? Scott McKim: That's right. Okay. Here we go. So the BOLT portfolio, and this is all the loans that are booked at amortized cost. This excludes the fair value portfolio. We ended the quarter with $60 million in the BOLT, and that has a 33% reserve against that. So that's a little over almost $9.1 million. The Flash portfolio, and this is the one that really is amortizing a little bit quicker, that had $29 million in balances and has a 25% reserve against it, which is $3.2 million. And then the core -- what we call the core C&I, so this is some of the larger loans that have collateral other than real estate have $45 million in balances in it, and that has a 23% reserve against it or $1.5 million. Now there's another component of the SBA portfolio that has -- that is all real estate backed. It has $53 million in balances, and there's a relatively small reserve of about 1% against that. That part of the portfolio performs as expected. It is not a big loss driver for us. So you roll all those bits and pieces together and on the riskier parts of the portfolio, we're reserved in the high 20%. Ross Haberman: And just one final question. Could you be a little more specific on the timing of the rights offering? You said mid-August. We're basically here. Is it going to be this week or next week? What's your timing on the execution of the rights offering for the shareholders? Scott McKim: Yes, Ross, thanks for asking that question. I was kind of expecting that one this morning. Just for you and everybody else that's listening that the rights offering is coming, there was -- because of the restatement, we wanted to make sure that we had updated reliable financials in all prior periods and current periods available to all investors so that you have a complete package of information for consideration before we launched the rights offering. The -- obviously, that's pushed the timing out on that a little bit. But now that we have everything filed or we'll have the second quarter 10-Q will be filed later today, that kind of frees us up to move on to the rights offering component. So what we'll end up doing is preparing the communication that goes out to all of the shareholders of record as of May 12. And those communications we should have in hand or be ready to mail those next week. Coincidentally, we also have the full proxy, which will be going out. Our Annual Shareholder Meeting is scheduled for September 22. So really, we're going to have a full population of all important documents in hand for investors to look at before they make a decision around the rights offer. So it is coming. I know it's taken a little bit longer than what we had initially wanted to do, but we wanted to make sure that we were checking all the boxes for everyone. Ross Haberman: So you're saying it's going to be pushed off to September. Is that what you're implying? Scott McKim: No, the rights offering, we'll launch that in August. I just wanted to mention when the shareholder meeting was, and that's in September. Operator: Your next question comes from the line of Julienne Cassarino with Sycamore Analytics. Julienne Cassarino: Just trying to cut through a lot of the noise in the quarter. On the call, you just said that of the $44 million pretax loss, $43.8 million came from the restructuring and nonrecurring. So that implies still a loss for the quarter, excluding all onetime? Or what was the core earnings power in the quarter? Scott McKim: I think if I understand your question, the onetime items in the asset resolution component was $43.8 million. The total was $44 million. So the remaining operating loss to think about was about $200,000 for the quarter. Julienne Cassarino: And that was just a regular recurring operating loss, right? Is that correct? Scott McKim: Yes. I think you can refer to that as being core, Julienne. Julienne Cassarino: Okay. So there's -- so we're really -- the core earnings power that we're starting with is kind of 0 right now, right? Or is there anything masking that? Is there any core earnings power on the nonresolution piece? Scott McKim: I will tell you this. The -- as we look forward, essentially, the things that we talked about, if you recall, I mentioned on the net interest margin really on a core basis was 4.07%. So there's a lot more in terms of overall earnings revenue that we are expecting going forward, plus all of the components that Al talked about in terms of growth in the balance sheet, combined with continued efforts to reduce the bank's overall cost of funds. So I'd like to think about it from the standpoint that core earnings in the second quarter was just below breakeven. But now that we have a clear path ahead, a lot of strength, a lot of good focus as far as what's coming, the bank is positioned for profitable earnings going forward. Julienne Cassarino: Okay. With operating leverage. What about the tax rate? So is there a deferred tax -- is there a DTA valuation allowance that's been set up or no? Scott McKim: No, there's no valuation allowance against the deferred tax asset. Truthfully, and these are conversations that obviously we've had internally, the bank is positioned for profitable growth going forward. And the new leadership team, a lot of strength that's coming in. We believe that we will have no issues whatsoever in terms of reacquiring that asset in the future. So there is no valuation allowance at this time. Like I said, we continue to look at it, but at this time, it is 0. Julienne Cassarino: Okay. So does that mean what tax rate to use going forward? Scott McKim: Tax rate for the quarter is about 25%. Julienne Cassarino: Okay. Okay. And so the quarter -- and did that include the redemption payments of, I think, almost $10 million, right, the $9.7 million payments to redeem the -- forgive me if I get the names wrong, but basically the preferred holders. Did that -- is that $9.7 million included that payment? And is that pretax or after tax? Like should we be adjusting the TCE for that or... Scott McKim: The payout for the Series A and Series B, which I think you're referring to, actually concluded this week. So that will actually be a Q3 event. Julienne Cassarino: That's the Q3. So is that totaled $9.7 million, right? Is that pretax or after? Scott McKim: It's a redemption. It's not really an income statement component. So it's not an earnings. Julienne Cassarino: But is it a TC -- does it come out of tangible common equity or no because it's sitting on one bucket to another? Scott McKim: Yes. Julienne Cassarino: So no impact on TC from that. No impact on shares either, right, share count. Scott McKim: Correct. Julienne Cassarino: So the redemption payment is kind of going from one bucket to another, don't need to adjust for that. What about the exchange too, nothing to adjust for that. You mentioned 22.9 million shares from an exchange, but that's already -- like we don't have to adjust for that? Or is that a third quarter adjustment that we should make? Scott McKim: Yes. It's a third quarter event, but that is preferred to common. And obviously, the share count is going to go up. So that -- if you're asking the tangible book value, you already have that dilution component baked into it. Julienne Cassarino: That's what I was asking. Okay. Now so the only thing to adjust in the third quarter for tangible book per share is the rights offering. Is that correct? Scott McKim: That is correct. And obviously, it's -- we would like to maximize that for shareholders, but we're not sure how much we will get. We'll report that when it's done. Julienne Cassarino: So let's just assume everyone exercised, that everyone who could exercise at $3.50, I believe it is. So what would be that impact on TCE and share count if everyone were to exercise? Is that something I can calculate or... Scott McKim: Yes, $3.50 at 4.1 million shares. Julienne Cassarino: 4.1 million? Scott McKim: Yes. Julienne Cassarino: Okay. Okay. All right. All right. Very good. It was the 4.1 million, I think I needed to have. Okay. And then just to ask about the deposit franchise. So you mentioned that you've gone through the loan book pretty completely but now the deposit franchise. Is there -- have you finished the review of depositor -- you mentioned in the press release, I think the earnings release, non-relationship customers. Are there -- about what percent of the deposit franchise right now would you estimate as non-relationship customers approximately? Scott McKim: Julienne, it's very small. We have -- we are strictly focused on relationship-based, I guess, depositors. And when I say relationship, it's not just the deposit side. In a lot of cases, we also have lending relationships that's something that we have really been focused on, and I think Al did a really nice job of explaining how we will go about that in the future. The key thing is in the past, we had some relatively large, what I'll call -- well, I'll just say, I mean, they were more of a place for entities to park money, we're paying them a very attractive rate to do it because it was funding business funding loan growth around the SBA business. That's not what we're doing any longer. So we had conversations with those people. We said, look, we're not going to pay these rates anymore. They're out of market. Most of that money has left and that was by design as well as the runoff of the broker deposits that we have, and that was also part of our strategy. Julienne Cassarino: Right. So you'd say this quarter's -- or this quarter end deposit franchise is there's no more transition to be done looking at the interest-free and the brokered, this is a good base to go forward. Like there's no more... Scott McKim: Yes. There's still some brokered in there that's going to run off, but really what's there, I'm going to call core deposits, I suppose. Julienne Cassarino: Right. And is it all local? Is the 100% local? Or about how much would you say is out of market, just excluding the brokered? So excluding brokered, is it all predominantly local customers? Scott McKim: It's local. It's local. Yes. These are people we know that we can drive for about an hour to go visit them. Julienne Cassarino: Okay. Great. Great. And is there -- is any one customer more than -- or any one customer 5% to 10% or more of total deposits? Scott McKim: No. Operator: Your next question comes from the line of Ian Green with Pendragon Capital Management. Ian Green: Lots of great questions here. I just wanted to kind of come back a little bit to some of the new initiatives like your treasury business and some other incentives to -- or initiatives to grow fee income. Do you have the systems in place to do that? Is this going to require any significant capital expenditures in technology and so forth? And I guess it's a very crowded space, a lot of those businesses. Where do you think you have the edge to compete? Robin Oliver: Yes, this is Robin. I'll take that one. We do already have the systems in place that we need. I think we have all the tools to be successful here. And if you look at our growth in '25 over '24, our treasury fee revenue grew about 75% year-over-year, and we continue to be on track to continue that increase this year. I think really what it is, as we move upmarket a bit, we are now really targeting our commercial business customers, and we are going to be banking some larger businesses than we have in the past, and those customers have more sophisticated needs. And we're going to do their loan, we're going to get their operating account and those operating accounts are just by the nature of the business going to come with treasury. So I really think there's a strong opportunity there. And we have 2 different treasury platforms, one for very small businesses and another that is more sophisticated. So I think we're well positioned. Alfred Rogers: I'll add -- this is Al. Talk about the edge. Our bankers know their customers. They're accessible and at 5:00, they don't turn their cell phones off. So it's true relationships, solving problems, being accessible, being local, not outsourcing or offshoring customer support. And generally speaking, banking professional executives and small businesses and investors and companies, they generally have larger average balances and their cost of funds is generally lower. So that comes with our initiative to act as a commercial bank serving commercial customers in our community. So it comes all together. Ian Green: So we shouldn't -- so in the end, we shouldn't see a significant... Robin Oliver: There will be a significant investment. I mean we will need to continue to expand the treasury team. It's a small team today. They're a small but mighty team. But certainly, the opportunities that this will provide will have need some additions to the team. But we don't have investments in software or other things. And certainly, the revenue that we get from it should balance off the additional costs that we may have. Operator: There are no more questions at this time. This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in BayFirst Financial, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and BayFirst Financial wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. BayFirst Financial (BAFN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Net Loss: Reported a net loss of $32.7 million in the second quarter, compared to a restated net loss of $5.9 million in the first quarter. Asset Resolution Plan Impact: Total impact of $41.5 million, including a $38.4 million adjustment to the SBA 7A portfolio and other credit items. Provision for Credit Losses: $29.7 million in the second quarter, compared to $3.4 million in the first quarter and $7.6 million in the second quarter of 2025. Net Interest Income: $9.4 million in the second quarter, virtually unchanged from the first quarter and down $2.7 million from the year-ago quarter. Net Interest Margin: 3.48%, up 4 basis points from the first quarter; normalized margin was 4.07% excluding one-time impacts. Non-Interest Income: Negative $6.8 million in the second quarter, $7.7 million worse than the first quarter and a decrease of $17.3 million from the second quarter of 2025. Non-Interest Expense: $17.7 million, an increase of $2 million compared to the first quarter, driven by one-time charges. Net Charge-Offs: $4.5 million, down $200,000 compared to the first quarter's $4.7 million. Loans Held for Investment: Decreased by $41.4 million or 4% during the second quarter to $882.8 million, and decreased $237.7 million or 21% year over year. Deposits: Decreased $97 million or 9% during the second quarter and decreased $175 million or 15% year over year to $989 million. Allowance for Credit Losses: Total allowance was $45.1 million on June 30, 2026; ratio to total loans held for investment was 5.37%, up from 2.36% on March 31, 2026. Tangible Book Value Per Share: Decreased to $4.82 per share from $14.22 per share at the end of the first quarter. Cost of Funds: Decreased 24 basis points from the prior quarter to 2.66%, down 49 basis points year to date. Capital Ratios: Tier 1 leverage ratio was 8.3% as of June 30, 2026, compared to 5.89% at March 31, 2026; total capital to risk-weighted assets ratio was 12.77%, compared to 9% on March 31, 2026. Non-Performing Loans: Excluding government guaranteed balances, were $14.4 million, down from $15.9 million at the end of the first quarter. Branch Network: Submitted an application to open a new retail location in South Tampa, bringing the total retail branch network back to 12 after closing an office in Sarasota last quarter. Warning! GuruFocus has detected 2 Warning Sign with BAFN. Is BAFN fairly valued? Test your thesis with our free DCF calculator. Release Date: August 14, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. BayFirst Financial Corp (NASDAQ:BAFN) successfully completed an $80 million capital raise, significantly strengthening its balance sheet and providing flexibility for future growth. The company's asset resolution plan has adequately positioned it to manage future charge-offs, with increased reserves on riskier SBA loan portfolios (e.g., 32.8% on SBA BOLT and 25% on SBA FlashCap). Net interest margin improved to 4.07% on a normalized basis, driven by a 24 basis point reduction in cost of funds to 2.66%. The bank's capital ratios improved substantially, with Tier 1 leverage ratio rising to 8.3% and total capital to risk-weighted assets ratio to 12.77%. Management has strengthened the leadership team with key hires, including a new Chief Banking Officer, and is expanding its retail presence with a new South Tampa branch, positioning for growth in core markets. BayFirst Financial Corp (NASDAQ:BAFN) reported a significant net loss of $32.7 million for Q2 2026, primarily due to the $41.5 million impact of the asset resolution plan. The company identified material misstatements in prior financial statements, leading to restatements for 2024, 2025, and Q1 2026, which raises concerns about internal controls. Tangible book value per share plummeted to $4.82 from $14.22 in the prior quarter, reflecting the substantial charge-offs and capital actions. The bank's core earnings power is currently near break-even, with a core operating loss of approximately $200,000 for the quarter, indicating a lack of profitability. The rights offering has been delayed due to the restatement process, creating uncertainty for shareholders and potentially diluting existing investors. Q: Can you break down the reserves on the $142 million of unguaranteed SBA loans and how quickly they will pay down?A: Scott McKim (CFO) detailed the portfolio breakdown: the BOLT portfolio has $60 million in balances with a 33% reserve ($9.1 million), the FlashCap portfolio has $29 million with a 25% reserve ($3.2 million), and core C&I loans have $45 million with a 23% reserve ($1.5 million). Additionally, there is $53 million in real estate-backed SBA loans with a relatively small 1% reserve, as that portion performs as expected. The riskier parts of the portfolio are reserved in the high 20% range. The decline from $159 million to $142 million was partly accelerated by the asset resolution plan, so the true run rate is somewhat lower. Q: What was the core earnings power in the quarter, excluding the one-time restructuring and asset resolution plan impacts?A: Scott McKim (CFO) clarified that of the $44 million pre-tax loss, $43.8 million came from one-time items and the asset resolution plan, leaving a core operating loss of approximately $200,000 for the quarter. He noted that on a normalized basis, the net interest margin was 4.07%, and with the clear path ahead, growth in the balance sheet, and continued efforts to reduce the bank's cost of funds, the bank is positioned for profitable earnings going forward. Q: What is the timing for the rights offering launch?A: Scott McKim (CFO) explained that the rights offering was delayed due to the restatement, as the company wanted to ensure updated, reliable financials were available to all investors before launching. Now that the amended 10-K and 10-Q have been filed, the company will prepare communications to shareholders of record as of May 12, with documents ready to mail next week. The rights offering will launch in August, coinciding with the annual shareholder meeting scheduled for September 22. Q: Is there a deferred tax asset valuation allowance that has been set up?A: Scott McKim (CFO) confirmed there is no valuation allowance against the deferred tax asset. The bank is positioned for profitable growth going forward with a new leadership team, and management believes there will be no issues in realizing that asset in the future. The tax rate for the quarter was approximately 25%. Q: What is the impact of the preferred stock redemptions and exchanges on tangible common equity and share count?A: Scott McKim (CFO) clarified that the $9.7 million payout for the Series A and Series B preferred redemptions concluded this week and will be a Q3 event. However, it is a redemption, not an income statement component, so it does not impact tangible common equityit's simply moving from one bucket to another. The exchange of Series D and E preferred stock into 22.9 million common shares is also a Q3 event, and the dilution is already baked into the tangible book value. The only adjustment for Q3 tangible book value per share will be the rights offering. Q: What percentage of the deposit franchise is non-relationship customers, and is the transition complete?A: Scott McKim (CFO) stated that the non-relationship customer base is now very small. The bank is strictly focused on relationship-based depositors, often with lending relationships. Previously, the bank paid attractive rates to entities parking money to fund SBA loan growth, but that strategy has ended. Most of that money has left by design, along with broker deposit runoff. While some brokered deposits remain to run off, the current base is essentially core deposits, all local customers within about an hour's drive, with no single customer representing 5% to 10% or more of total deposits. Q: Do you have the systems in place for the treasury business and fee income growth initiatives, and will this require significant capital expenditures?A: Robin Oliver (COO) confirmed the systems are already in place. Treasury fee revenue grew about 75% year-over-year in 2025, and the bank is on track to continue that increase. As the bank moves upmarket to target larger commercial business customers, operating accounts will naturally come with treasury services. The bank has two treasury platformsone for very small businesses and another for more sophisticated needs. Al Rogers (CEO) added that the bank's edge is its local, accessible bankers who provide true relationships and don't outsource customer support. While the treasury team may need additions, there are no significant software or technology investments required, and the revenue should offset any additional costs. Q: Can you provide details on the new South Tampa branch and how quickly it will reach breakeven?A: Al Rogers (CEO) explained that the new location is in South Tampa, a prosperous area where the bank currently lacks a significant presence. The bank has already started opening accounts in the area, and since it's a leased location, the investment is relatively low. He estimated breakeven would be achieved sooner than the typical two-year timeframe given the modest investment. Q: What is the status of the restatement and the material misstatements identified?A: Scott McKim (CFO) detailed that the company identified $2.8 million of deferred origination costs and $2.1 million of accrued interest as of March 31, 2026, related to loans that had defaulted or were placed on non-accrual status in prior periods. This resulted in a material understatement of provision expense and overstatement of net interest income. Additionally, another $3.4 million of deferred origination costs should have been netted against net gain on sale of government guaranteed loans. The restatement efforts have correctly restated earnings, and the amended 10-K and 10-Q have been filed. Management continues to work through internal operational remediation and will report on strengthening internal controls in future SEC filings. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Completed a comprehensive asset resolution plan to address legacy credit issues, primarily within the unguaranteed SBA 7(a) loan portfolio, resulting in a $38.4 million adjustment. Identified and corrected material financial misstatements from 2024 through Q1 2026 related to deferred origination costs and accrued interest on defaulted loans. Successfully raised $80 million in capital in April, providing the necessary strength to pivot from transactional SBA lending to traditional commercial and consumer banking. Restructured the leadership team with the appointment of a new Chief Banking Officer to lead retail and commercial teams, emphasizing local market expertise and relationship-driven growth. Deliberately reduced high-rate promotional and brokered deposits to improve the cost of funds, which decreased by 24 basis points during the quarter. Shifted the lending strategy toward traditional commercial and consumer loans within the Tampa Bay footprint to build stable net interest and fee income. Expanded the retail presence with a new South Tampa location, aiming to capture higher-demographic customers and deepen core deposit relationships. Management expects a return to profitability following the one-time $43.8 million impact of the asset resolution plan and restructuring charges. The bank intends to deploy recently raised capital into traditional lending opportunities, leveraging a strong current loan pipeline across its footprint. Future earnings are expected to be driven by a normalized net interest margin of 4.07% and continued reductions in the overall cost of funds. Strategic focus remains on scaling treasury services and business deposits to generate sustainable fee income without requiring significant new technology investment. Internal operational remediation is ongoing to strengthen internal controls over financial reporting and prevent the recurrence of past accounting errors. Recognized a $44 million pretax loss, of which $43.8 million was attributed to non-recurring items including the asset resolution plan and prior management change-in-control payments. Recorded a $1.5 million impairment on a nonmarketable equity investment linked to the former SBA 7(a) lending partner. Wrote down unamortized premiums on purchased USDA loans due to risks of default or early prepayment, noted as a non-credit specific adjustment. Restated prior periods to reflect $2.8 million in deferred origination costs, $2.1 million in accrued interest, and an additional $3.4 million in deferred origination costs related to net gain on sale that were previously misstated. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management confirmed that the riskier BOLT and Flash SBA portfolios are now heavily reserved at 33% and 25% respectively. The unguaranteed SBA balance dropped from $159 million to $142 million in the quarter, though this was accelerated by the resolution plan rather than just organic run-off. The rights offering was delayed to ensure investors had access to restated and reliable financial statements, with a launch now targeted for August. The offering involves 4.1 million shares at a price of $3.50 per share, which is the only remaining dilution component for tangible book value per share. Excluding one-time items, the bank operated at a near-breakeven level (approximately $200,000 loss) during the quarter. Management opted not to set up a valuation allowance against the deferred tax asset, citing confidence in the bank's ability to return to profitable growth. BayFirst intends to compete by offering high-touch, local accessibility that larger banks lack, specifically targeting larger commercial operating accounts. The bank already possesses the necessary technology platforms for treasury growth, meaning future investment will focus on personnel rather than capital-intensive software.

ST. PETERSBURG, Fla., Aug. 13, 2026 (GLOBE NEWSWIRE) -- BayFirst Financial Corp. (NASDAQ: BAFN) (“BayFirst” or “Company”), parent company of BayFirst National Bank (“Bank”) reported a net loss of $32.7 million, or $8.05 per common share and diluted common share, for the second quarter of 2026, compared to a restated net loss of $5.9 million, or $1.54 per common share and diluted common share, in the first quarter of 2026. The current quarter’s net loss was driven by expenses related to the Company's asset resolution plan of $41.5 million. “This quarter’s results reflect the financial impact of actions taken under our asset resolution plan, a deliberate step we believe strengthens our balance sheet and will position us well for the future,” stated Alfred Rogers, Chief Executive Officer. “Even as we absorbed this impact, we continued to invest in our Community Banking initiatives, including the upcoming opening of our newest branch in South Tampa, reflecting our long-term commitment to the markets we serve regardless of near-term conditions. We are taking a disciplined approach as we work through the issues affecting our performance, with a clear focus on the fundamentals of profitability and serving our local markets. “We take our obligation to provide accurate and transparent financial reporting seriously. When we identified an understatement of provision expense and an overstatement of gain of sale on government guaranteed loans through our internal review process, we moved quickly to investigate, correct it, and inform our shareholders and regulators. The Bank remains well capitalized and well positioned to continue serving our customers and communities as we work toward improved performance. “BayFirst’s commitment to the communities we serve has not changed, and I am confident we will keep strengthening our position as the community bank of choice within our Tampa Bay and Sarasota markets.” Second Quarter 2026 Performance Review The capital raise reported on April 28, 2026 was $80 million before transaction fees. Of this total investment, $60 million was invested in the Bank during the second quarter. The Company completed and quantified the impact of the asset resolution plan adopted in accordance with the transactions contemplated by the Stock Purchase Agreement dated April 28, 2026. The asset resolution plan includes the identification of specific loans within the Company’s government guaranteed loan portfolio, as well as adjustments to the net amount expected to be collected on over 7,000 unguaranteed SBA 7(a) small balance loans. As a result, the Company recorded $41.5 million of provision expense, write-downs on loans measured at fair value, amortization of premiums paid on purchased government guaranteed loans, and impairment on nonmarketable securities during the quarter. Net interest margin was 3.48% in the second quarter of 2026, an increase of 4 basis points from 3.44% in the first quarter of 2026 and a decrease of 53 basis points from 4.01% in the second quarter of 2025. Loans held for investment decreased by $41.4 million, or 4.5%, during the second quarter of 2026 to $882.8 million and decreased $237.7 million, or 21.2%, over the past year. The decrease from the prior year was partially the result of no new SBA 7(a) loan originations and the sale of $97.4 million of government guaranteed loans to a third party as part of the Bank’s discontinuance of SBA 7(a) lending. Deposits decreased $97.0 million, or 8.9%, during the second quarter of 2026 and decreased $174.9 million, or 15.0%, over the past year to $988.9 million. The decrease in deposits during the quarter was primarily due to decreases in high-rate promotional interest-bearing transaction account balances, savings and money market account balances, brokered deposits, and time deposit balances, partially offset by an increase in noninterest-bearing account balances. At June 30, 2026, book value per common share was $4.83 and tangible book value was $4.82 per common share, a decrease from $14.22 at March 31, 2026. The decrease was primarily the result of the net loss in the second quarter 2026. Results of Operations Net Loss The Company had a net loss of $32.7 million for the second quarter of 2026, compared to a net loss of $5.9 million in the first quarter of 2026 and a net loss of $1.9 million in the second quarter of 2025. The change in the second quarter of 2026 from the preceding quarter and from the second quarter of 2025 was primarily the result of $41.5 million of expense related to the asset resolution plan. For the six months ended June 30, 2026, the Company had a net loss of $38.6 million, compared to a net loss of $2.8 million for the six months ended June 30, 2025. The decrease was primarily the result of $41.5 million expense related to the asset resolution plan. Net Interest Income and Net Interest MarginNet interest income was $9.4 million in the second quarter of 2026 was relatively unchanged compared to the first quarter of 2026, which is a decrease of $2.7 million from $12.1 million during the second quarter of 2025. The decrease in loan interest income, including fees, was primarily related to the write down of $1.6 million of unamortized premiums on the Company’s portfolio of purchased fully guaranteed USDA loans which are at risk of default or early prepayment. The net interest margin was 3.48% in the second quarter of 2026, an increase of 4 basis points from 3.44% in the first quarter of 2026 and a decrease of 53 basis points from 4.01% in the second quarter of 2025. Excluding the write-downs, the net interest margin for the second quarter was 4.07%. The decrease in net interest income during the second quarter of 2026, as compared to the year ago quarter, was mainly due to a decrease in loan interest income, including fees, of $6.4 million, partially offset by a decrease in interest expense on deposits of $2.4 million. Net interest income was $18.9 million for the six months ended June 30, 2026, a decrease from $22.7 million for the year ended June 30, 2025. The decrease was mainly due to a decrease in loan interest income, including fees, of $9.9 million, partially offset by a decrease in interest expense of $4.9 million. Noninterest Income Noninterest income was a negative $6.8 million for the second quarter of 2026, compared to income of $0.9 million in the first quarter of 2026 and income of $10.5 million in the second quarter of 2025. The change from the second quarter of 2026, as compared to the first quarter of 2026, was primarily the result of a decrease in government guaranteed loan fair value gains of $5.9 million of which $6.2 million was related to the asset resolution plan. The decrease was also due to a loss on nonmarketable equity securities of $1.5 million which was related to the impairment of an investment in a firm who was a partner with the Company’s former SBA 7(a) lending business. The decrease in the second quarter of 2026, as compared to the second quarter of 2025, was the result of a decrease in gain on sale of government guaranteed loans of $5.9 million and the loss on nonmarketable equity securities of $1.5 million. Noninterest income was a negative $5.9 million for the six months ended June 30, 2026, which was a decrease from income of $19.0 million for the six months ended June 30, 2025. The decrease was primarily the result of a decrease in gain on sale of government guaranteed loans of $13.0 million, a decrease in government guaranteed loan fair value gains of $8.7 million, a decrease in government guaranteed loan packaging fees of $1.3 million, and the loss on nonmarketable equity securities of $1.5 million. Noninterest Expense Noninterest expense was $17.7 million in the second quarter of 2026 compared to $14.9 million in the first quarter of 2026 and $17.5 million in the second quarter of 2025. The increase in the second quarter of 2026, as compared to the prior quarter, was primarily due to $1.7 million of expenses related to the asset resolution plan and $2.3 million of one-time expenses to record a change in control payment and write-off vendor contracts related to national lending and digital account opening businesses which are not part of our community banking focus. The increase in the second quarter of 2026, as compared to the second quarter of 2025, was primarily due to an increase in loan servicing and origination expense of $0.6 million, an increase in data processing expenses of $0.6 million of which $1.4 million was related to the asset resolution plan, and an increase in other expense of $1.4 million of which $1.7 million was related to the asset resolution plan. These increases were partially offset by a decrease in compensation expense of $2.3 million which included $0.8 million of expense related to the asset resolution plan. Noninterest expense was $32.6 million for the six months ended June 30, 2026 compared to $33.3 million for the six months ended June 30, 2025. The decrease was primarily the result of a decrease in compensation expense of $5.0 million, partially offset by an increase in loan servicing and origination expense of $3.4 million and an increase in other expense of $1.3 million. Balance Sheet Assets Total assets decreased $54.7 million, or 4.6%, during the second quarter of 2026 to $1.13 billion, primarily the result of a decrease in loans held for investment of $41.4 million, an increase in allowance for credit losses on loans of $24.4 million, and an increase in the deferred tax asset of $11.4 million. Compared to the end of the second quarter last year, total assets decreased $202.5 million, or 15.1%, driven primarily by a decrease in loans held for investment of $237.7 million, and an increase in allowance for credit losses on loans of $28.0 million, partially offset by an increase in cash and cash equivalents of $61.9 million. Loans Loans held for investment decreased $41.4 million, or 4.5%, during the second quarter of 2026 and $237.7 million, or 21.2%, over the past year to $882.8 million. The decrease from prior year was primarily due to loan payoffs and government guaranteed loan sales, which included the sale of the SBA 7(a) loans to a third party in the fourth quarter as part of the Bank’s discontinuance of SBA 7(a) lending. This was partially offset by originations in both conventional community bank loans and USDA government guaranteed loans. Deposits Deposits decreased $97.0 million, or 8.9%, during the second quarter of 2026 and decreased $174.9 million, or 15.0%, from the second quarter of 2025, ending June 30, 2026, at $988.9 million. During the second quarter, there were decreases in interest-bearing transaction account balances of $18.2 million, savings and money market account balances of $9.8 million, and time deposit balances of $74.2 million, partially offset by an increase in noninterest-bearing account balances of $5.3 million. The decrease in deposits during the quarter was primarily due to reductions in high-rate promotional deposits held with non-relationship customers and also a decrease in brokered deposits. During the second quarter, the Bank reduced cost of funds by 20 basis points. At June 30, 2026, March 31, 2026, and June 30, 2025, the Company had $163.8 million, $183.9 million, and $186.7 million, respectively, of brokered deposits. Asset Quality The Company recorded a provision for credit losses in the second quarter of $29.0 million, compared to provisions of $3.4 million for the first quarter of 2025 and $7.6 million during the second quarter of 2025. The increase in the provision expense was primarily the result of $30.5 million of expense related to the asset resolution plan. The ratio of allowance for credit losses (ACL) on loans to total loans held for investment at amortized cost was 5.37% at June 30, 2026, 2.36% as of March 31, 2026, and 1.65% as of June 30, 2025. The ratio of ACL on loans to total loans held for investment at amortized cost, excluding government guaranteed loan balances, was 5.82% at June 30, 2026, 2.55% as of March 31, 2026, and 1.86% as of June 30, 2025. The increase in ACL percentage was the result of provision expense booked during the quarter as determined by the asset resolution plan. Net charge-offs for the second quarter of 2026 were $4.5 million, which was a decrease from $4.7 million for the first quarter of 2025 and a decrease from $7.1 million for the second quarter of 2025. Annualized net charge-offs as a percentage of average loans held for investment at amortized cost were 2.08% for the second quarter of 2026, compared to 2.14% in the first quarter of 2025 and 2.74% in the second quarter of 2025. Nonperforming assets were 1.75% of total assets as of June 30, 2026, compared to 2.01% as of March 31, 2026, and 1.79% as of June 30, 2025. Nonperforming assets, excluding government guaranteed loan balances, were 1.32% of total assets as of June 30, 2026, compared to 1.39% as of March 31, 2026, and 1.13% as of June 30, 2025. Capital The Bank’s Tier 1 leverage ratio was 8.30% as of June 30, 2026, compared to 5.89% as of March 31, 2026, and 7.73% as of June 30, 2025. The CET 1 and Tier 1 capital ratios to risk-weighted assets were 11.47% as of June 30, 2026, compared to 7.74% as of March 31, 2026, and 9.51% as of June 30, 2025. The total capital to risk-weighted assets ratio was 12.77% as of June 30, 2026, compared to 9.00% as of March 31, 2026, and 10.77% as of June 30, 2025. At June 30, 2026, the Bank met all of its regulatory capital requirements to be well-capitalized. Liquidity The Bank's overall liquidity position remains strong and stable with liquidity in excess of internal minimums as stated by policy and monitored by management and the Board. The on-balance sheet liquidity ratio at June 30, 2026 was 14.95%, as compared to 18.44% at December 31, 2025. The Bank has 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, 2026 and March 31, 2026, the Bank had no borrowings from the FHLB, the FRB or other financial institutions. Recent Events Restatement of Previously Issued Financial Statements As previously disclosed in the Current Report on Form 8-K filed with the SEC on July 15, 2026, the Company is restating its previously issued financial statements as and for the years ended December 31, 2024, and December 31, 2025, and the quarter ended March 31, 2026. Management identified $2.8 million, pretax, of deferred origination costs and $2.1 million, pretax, of accrued interest as of March 31, 2026, related to unguaranteed portions of SBA 7(a) loans which had defaulted or were placed into nonaccrual status in prior periods, which resulted in a material understatement of provision for credit losses expense and overstatement of net interest income during the effected quarterly periods in which the errors accumulated in 2024, 2025, and the first quarter of 2026. Furthermore, management identified $3.4 million, pretax, of deferred origination costs which should have been netted against gain on sale of guaranteed SBA 7a loans which resulted in a material over statement of gain on sale of government guaranteed loans, during the affected quarterly periods in which the error accumulated in 2024 and 2025. Stock Purchase and Exchange Agreements and Rights Offering On July 14, 2026, the Company obtained shareholder approval to amend the BayFirst Financial Corp. Articles of Incorporation to increase the number of authorized shares of the common stock from 15,000,000 to 100,000,000 and exchanged all 4,000 outstanding shares of Mandatorily Convertible Cumulative Perpetual Preferred Stock, Series D, and all 4,000 outstanding shares of Mandatorily Convertible Cumulative Perpetual Preferred Stock, Series E for a total of 22,856,000 shares of common stock. Upon conversion, all shares of Series D and Series E Preferred Stock were retired. Management also noted a Mid-August launch date for the rights offering, discussed in the Stock Purchase Agreement included with the Company’s Form 8-K and the exhibits dated April 28, 2026, and filed with the Securities and Exchange Commission on April 30, 2026. Redemption of Series A and Series B Preferred Shares On July 20, 2026, the Company sent notifications to holders of Series A and Series B Preferred Shares formally redeeming all shares outstanding. On August 10, 2026, the Company made a payment in the amount of $6,463,746.25 for Preferred Series A, including accrued dividends of $302,746.25, and payment in the amount of $3,240,687.60 for Preferred Series B, including accrued dividends of $117,687.60. Conference Call BayFirst will host a conference call on Friday, August 14, 2026, at 9:00 a.m. ET to discuss its second quarter results. Interested parties may listen to the call live under the Investor Relations tab at www.bayfirstfinancial.com or are invited to dial (833) 461-5787 to participate in the call using Conference ID 560643219. 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 eleven 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. As of June 30, 2026, BayFirst Financial Corp. had $1.13 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, weather events, 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 and credit quality; 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; enforcement actions initiated by our regulators and their impact on our operations; 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. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this document, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise. BAYFIRST FINANCIAL CORP. SELECTED FINANCIAL DATA (Unaudited) Reconciliation and Management Explanation of Non-GAAP Financial Measures Some 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 adjusted income before income taxes, 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 the calculation of the non-GAAP financial measures. Loan Composition Nonperforming Assets (Unaudited) (1) Excludes loans measured at fair value