BayFirst Financial Q3 2025 Earnings Report

BayFirst Financial EPS Results

• Actual EPS: -$4.66
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

BayFirst Financial Revenue Results

• Actual Revenue: $10.23 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

BayFirst Financial Announcement Details

• Quarter: Q3 2025
• Date: 10/30/2025
• Time: After Market Closes
• Conference Call Date: Friday, October 31, 2025
• Conference Call Time: 9:00AM ET

BayFirst Financial (NASDAQ:BAFN) is a bank holding company headquartered in St. Petersburg, Florida. Through its subsidiary, BayFirst National Bank, the company provides banking and financial services to individuals, families, businesses and nonprofit organizations.

BayFirst National Bank offers deposit products, consumer and commercial lending, business banking, treasury management and other traditional community-banking services. Its lending activities include commercial real estate, commercial and industrial loans, residential mortgage lending and Small Business Administration (SBA) loans. The bank also operates mortgage banking and SBA lending platforms in addition to its community banking business.

The company primarily serves customers in the Tampa Bay region and other areas of Florida through banking offices and specialized lending operations. The bank previously operated under the name First Home Bank before adopting the BayFirst National Bank name as part of its broader expansion beyond residential mortgage banking. BayFirst Financial is led by President and Chief Executive Officer Anthony Leo.

BayFirst Financial Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Management announced a full exit from SBA 7(a) lending, signing a definitive agreement to sell a large portion of the portfolio to Banesco USA (closing delayed by the federal shutdown) and offering most SBA staff roles with Banesco to preserve servicing continuity.
• Negative Sentiment: The company reported a Q3 net loss of $18.9 million, driven by a $7.3 million restructuring charge, a $5.1 million portfolio discount/fair-value adjustment, $1.9 million of disallowed SBA interest, and higher provisions for credit losses.
• Negative Sentiment: Asset quality weakened this quarter: non-performing assets rose to 1.97% of total assets and the allowance for credit losses increased to 2.61%, with a $10.9 million provision reflecting targeted third‑party and internal portfolio reviews.
• Neutral Sentiment: Liquidity/funding is stable with deposits up to $1.17 billion (up 5.3% YoY) and >84% FDIC‑insured, while loans held for investment fell 11.3% to $998.7 million after transferring $97 million to held‑for‑sale.
• Positive Sentiment: Leadership and restructuring steps (including ESOP termination, staff reductions, and internal promotions) are intended to lower legacy costs, reduce reliance on gain‑on‑sale revenue, and return the bank to profitability with a target ROA of 40–70 bps in 2026 and a NIM closer to ~4% over time.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to the BayFirst Financial Corp Q3 2025 conference call and webcast. At this time, our lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Friday, October 31st, 2025. I will now turn the conference over to CEO Thomas Zernick. Please go ahead.

[Thomas Zernick, CEO at BayFirst Financial Corp]

Thank you, Joanna. Good morning, and thank you for joining our call today. Once again, with me is Robin Oliver, our President and Chief Operating Officer, and Scott McKim, our Chief Financial Officer. Today's call will include forward-looking statements and non-GAAP financial measures. Please refer to our cautionary clause on forward-looking statements contained on page two of the investor presentation. At the start of the year, management and the board initiated a comprehensive strategic review of the bank's business model to chart a new path forward that holds true to our mission as a community bank. Today, we are reporting on the culmination of our work to de-risk the balance sheet and position our community bank for long-term sustainable growth and enhanced shareholder value. For over a decade, the bank's SBA 7(a) business has provided revenue to help build our 12-branch network, which drives tremendous franchise value.

[Thomas Zernick, CEO at BayFirst Financial Corp]

At the same time, this line of business outgrew our community bank model, and as reflected in this year's results, brought material risk that led to operating losses. In September, we reported BayFirst would exit SBA 7(a) lending and that we had signed a definitive agreement to sell a large portion of our SBA 7(a) portfolio to Banesco USA. Furthermore, the majority of our SBA 7(a) staff would be offered positions with Banesco USA's SBA lending team. I should note that we expect to close this transaction later in the quarter, however, the current federal government shutdown has generated some delays. While managing this transition, the BayFirst team continues to prioritize our community banking mission by delivering excellent service to our customers across the Tampa Bay and Sarasota markets. Our focus remains firmly on what matters most.

[Thomas Zernick, CEO at BayFirst Financial Corp]

Being the premier community bank in Tampa Bay means building real relationships with local individuals, families, and small businesses through reliable checking and savings accounts. These connections give us a solid, stable funding foundation while strengthening our footprint throughout Tampa Bay's dynamic market. Today, more than 84% of our deposits are insured. This relationship-driven strategy helps us to deliver sustainable growth while maintaining the disciplined risk management and operational efficiency central to our long-term value creation. Scott will elaborate on the restructuring charge and the accounting impacts related to the portfolio sale to Banesco USA, and Robin will discuss changes to our senior leadership, which align with the focus I have previously shared. First, I want to emphasize that though profitability has not met expectations, we are building a stronger, more resilient organization.

[Thomas Zernick, CEO at BayFirst Financial Corp]

Once restructuring is complete, we expect to return to profitability with a goal of positive return on assets of 40-70 bps in 2026, with continued improvement in later years. Additionally, we will continue resolving non-performing loans and improving credit quality. With strong market opportunities and operational capabilities, we remain focused on executing our strategy and delivering long-term shareholder value. To that end, we have made some important but difficult decisions regarding staff levels, span of control, and legacy costs related to our SBA 7(a) lending business and technology platform. I am confident our actions will allow us to create a stronger, more stable BayFirst. I also want to share some encouraging metrics, all of which will be sustainable as we move away from relying on gain-on-sale revenue, which has historically contributed to most of our earnings.

[Thomas Zernick, CEO at BayFirst Financial Corp]

We expect lower net charge-offs following the reduction of unguaranteed SBA 7(a) loans on the balance sheet. While our net interest margin dipped this quarter, the decrease was related to one-time items. We will be closer to the 4% target, which we mentioned previously, which is achieved through lower deposit costs and appropriately priced consumer and commercial loans originated across the Tampa Bay market. Now I will pass the microphone to Scott McKim, our CFO, to provide an overview of our financial performance.

[Scott McKim, CFO at BayFirst Financial Corp]

Thank you, Tom. Good morning, everyone. We are reporting a net loss of $18.9 million in the third quarter. This compares to the net loss of $1.2 million reported in the second quarter.

[Scott McKim, CFO at BayFirst Financial Corp]

During the third quarter, we recorded a restructuring charge of $7.3 million, plus the lower of cost or market adjustment on the loan portfolio being sold to Banesco USA, an increase to our allowance for credit losses, and a handful of other extraordinary items. The restructuring charge includes $2.9 million to write off assets and prepaid expenses related to the SBA 7(a) lending business. Also, $3.9 million in personnel-specific costs, including the termination of the company's ESOP plan, and about half a million dollars of conversion and deal costs. We previously reported that the portfolio sale was priced at 97%. The discount on the final portfolio is $5.1 million, including fair value adjustments, recognition of deferred costs and premium discounts, and, of course, the 3% stated discount. This impact is seen in non-interest income for this quarter.

[Scott McKim, CFO at BayFirst Financial Corp]

I will also note that our allowance for credit losses was reduced by $800,000 in recognizing that these loans are being moved to held for sale. While it is not part of the restructuring charge, we also recorded and approved $1.9 million of disallowed interest overpayments from the SBA during the quarter. Loans held for investment, therefore, did decrease by $127.1 million, or 11.3%, during the third quarter of 2025 to end at $998.7 million. They decreased $43.8 million, or 4.2%, over the past year. During the quarter, $97 million of loans were transferred to held for sale and subsequently marked to the lower of cost or market, as I noted a moment ago. Total deposit balances increased $7.7 million, or 0.7%, during the third quarter of 2025 and increased by $59.3 million, or 5.3%, over the past year to $1.17 billion.

[Scott McKim, CFO at BayFirst Financial Corp]

The increase in deposits during the quarter was primarily due to an increase in time deposits of $53 million and is partially offset by decreases in non-interest-bearing accounts of $3.8 million, interest-bearing transaction account balances of $27.9 million, and savings and money market account balances of $13.7 million. Furthermore, as Tom mentioned, more than 84% of the bank's deposits were insured by the FDIC on September 30th, 2025. Shareholders' equity at quarter end was $89.7 million and is $12.6 million lower than the end of the second quarter, or the third quarter of 2024. Net accumulated other comprehensive loss decreased by $300,000 during the quarter, ending at $2.1 million. Tangible book value decreased this quarter to $17.90 per share from $22.30 per share at the end of the second quarter. As Tom mentioned, our net interest margin was down 45 basis points to 3.61% in the third quarter.

[Scott McKim, CFO at BayFirst Financial Corp]

Net interest income was $11.3 million in the third quarter, down $1 million compared to the second quarter, and up $9.4 million from the year-ago quarter. During this quarter, the bank wrote off $400,000 of unamortized premiums related to one USDA guaranteed loan, which was liquidated during the quarter. Furthermore, $600,000 of interest was reversed for loans moved to non-accrual status during the quarter. Outside of these one-time adjustments, net interest income would have been flat to the second quarter number. Non-interest income was a -$1 million for the third quarter of 2025, which is a decrease from $10.8 million in the second quarter and a decrease from $11.7 million in the third quarter of 2024. The third quarter decrease is primarily from the decrease of gains on the sale of SBA 7(a) government-guaranteed loans.

[Scott McKim, CFO at BayFirst Financial Corp]

Notably, with the exit of the SBA 7(a) lending business, revenue from the gains on sale of government-guaranteed loans will no longer impact non-interest income as it has in prior periods. Tom alluded to this earlier. Non-interest expense was $25.2 million, an increase of $7.7 million compared to the second quarter. Nearly all of this increase is related to the $7.3 million, which is the restructuring charge that I spoke about a moment ago. Loan origination and collection expense was also $700,000 higher in the third quarter, and that was offset by lower salaries and benefits, including commissions and incentives. Provision for credit losses was $10.9 million in the third quarter compared to $7.3 million in the second quarter and $3.1 million in the year-ago quarter. Net charge-offs, primarily from unguaranteed SBA 7(a) balances, were $3.3 million, which was down $3.5 million compared to the second quarter.

[Scott McKim, CFO at BayFirst Financial Corp]

Excluding the $800,000 reduction in the allowance for credit losses for the loans that were transferred to held for sale, the remaining increase in provision is primarily for retained unguaranteed SBA 7(a) balances. Annualized net charge-offs, as a percentage of average loans held for investment at amortized cost, were 1.24% in the third quarter. That was down from 2.6% in the second quarter and up just slightly from 1.16% in the third quarter of 2024. Non-performing assets were 1.97% of total assets on September 30th compared to 1.79% at June 30th, 2025, and 1.38% at September 30th last year. Non-performing assets, excluding government-guaranteed loan balances, were 1.21% of total assets as of September 30th, 2025, compared to 1.12% as of June 30th, 2025, and 0.88% on September 30th of 2024.

[Scott McKim, CFO at BayFirst Financial Corp]

The ratio of allowance for credit losses to total loans held for investment at amortized cost was 2.61% at September 30th, 2025. That compares to 1.65% as of June 30th, 2025, and 1.7% on September 30th of last year. The ratio of ACL to total loans held for investment at amortized cost, excluding government-guaranteed loan balances, was 2.78% at September 30th of this year, 1.85% in June of this year, and 1.70% at September 30th of last year. At this time, I'll turn the call over to Robin to make some additional comments about staffing changes.

[Robin Oliver, President and COO at BayFirst Financial Corp]

Thank you, Scott. First, I'd like to comment a bit more on our efforts around asset quality. Throughout this year, we have worked to strengthen credit administration practices to ensure the timely identification of problem credits, as well as ensuring those same problem credits are resolved as quickly as possible. Management has worked to tighten credit underwriting in all areas of the loan portfolio, and in an effort to ensure all loans are properly risk-rated and accounted for, management hired consultants and other third parties in the third quarter to assist in reviewing the portfolio to take an aggressive stance on recognizing all potential problem loans. This effort did increase our non-performing and classified loans, as well as our allowance for credit losses, as Scott reported.

[Robin Oliver, President and COO at BayFirst Financial Corp]

As we move forward into 2026, the goal will be the continual reduction of non-performing and classified credits to bring these balances closer in line to peer. The overall wind down of the SBA 7(a) loan portfolio, the potential sales of additional SBA unguaranteed balances, and the continued aggressive workout of problem loans is expected to improve asset quality in the coming quarters without significant additional provision for credit losses being necessary. As Tom mentioned, I also want to touch on some leadership changes. First, Tom Qualley has served as the bank's Sarasota market leader for the past several years. Tom is a veteran banker with over 40 years of experience, and he will be retiring in December. Succeeding Tom is Samantha Hill. Sam, as she likes to be called, joined BayFirst over a year ago and brings a wealth of knowledge in the commercial and community banking space.

[Robin Oliver, President and COO at BayFirst Financial Corp]

Tom and Sam have been working together and will complete their transition plan over the coming weeks. I also want to announce that Adam Curtis, who has been serving as our Pinellas County market leader, has assumed the leadership role in Tampa as well. Adam has added the two Tampa branches to his team and will also take over as Chief Lending Officer upon Tom Qualley's retirement. Adam is well known throughout both markets and has a great team of branch managers and business bankers. Finally, I want to note that Brandi Javers' title is now Chief Administrative Officer. Previously, Brandi was focused on loan production operations, and with our restructuring efforts, she will now manage a few operational areas and, importantly, the Banesco USA transition project. Brandi's historical knowledge of our SBA 7(a) lending business makes her the perfect leader for this important project.

[Robin Oliver, President and COO at BayFirst Financial Corp]

That concludes the comments I have, and I will turn it back to Tom for his final thoughts.

[Thomas Zernick, CEO at BayFirst Financial Corp]

Thank you, Robin. Our board of directors and leadership team are committed to driving resilience and innovation as we position the company for long-term success and enhance shareholder value. We are confident that these efforts will better align the company and our bank with the demands of a dynamic banking landscape. We remain optimistic about the road ahead. Thank you.

[Robin Oliver, President and COO at BayFirst Financial Corp]

At this time, we'd like to turn it over for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys.

[Operator]

The first question comes from Ross Haberman at RLH Investments. Please go ahead.

[Ross Haberman, Money Manager at RLH Investments]

Good morning. Thank you for taking my call. I have two quick questions. You said you did not sell all of the SBA. How much did you hold back? How are you servicing them, and why didn't you sell the whole thing?

[Scott McKim, CFO at BayFirst Financial Corp]

Hey, Ross. Good morning. I can answer that quickly for you. Our anticipation is, and I stress this is a forecast, that at the end of December, post-closing the transaction, the bank would still have about $167 million of unguaranteed SBA 7(a) loan balances. We are still working on selling the remainder of that portfolio. The transaction that we announced previously was the amount of balances that Banesco USA wished to buy. We continue to look for other parties to try to market and sell that portfolio down. As far as servicing it, ultimately, Banesco will be operating as the servicer for all of the loans that are in our SBA portfolio for us.

[Scott McKim, CFO at BayFirst Financial Corp]

At that point, the best part of that is that a good chunk of our people who have been servicing that portfolio on our behalf will move over, so there really should be a good level of continuity between the two.

[Ross Haberman, Money Manager at RLH Investments]

Refresh my memory. What kind of reserve or allowance did you sell the bulk of, or cents on the dollar did you sell the bulk of the SBA 7(a) loans for? Do we have to take a bigger reserve or allowance for this last $167?

[Scott McKim, CFO at BayFirst Financial Corp]

The portfolio sale that we previously announced was at a 3% discount, so 97%. The increase in our allowance for credit losses that we are talking about today reflects an increase really primarily related to the unguaranteed balances going forward. We're not anticipating adding additional to the ACL for those remaining balances at the end of this year or in the future.

[Ross Haberman, Money Manager at RLH Investments]

Okay, thank you very much.

[Scott McKim, CFO at BayFirst Financial Corp]

Thanks, Ross.

[Operator]

Thank you. Ladies and gentlemen, as a reminder, if you have any questions, please press star one. The next question comes from Julianne Casarino at Sycamore Analytics. Please go ahead.

[Julianne Cassarino, Founder at Sycamore Analytics]

Hi, good morning.

[Scott McKim, CFO at BayFirst Financial Corp]

Hi, Julianne.

[Robin Oliver, President and COO at BayFirst Financial Corp]

Good morning.

[Julianne Cassarino, Founder at Sycamore Analytics]

Good morning. Yes, eventful quarter. You do what has to be done. I applaud you on the definitive actions in the quarter. I was just wondering, are you still—Tom, your background is in SBA loans. Are you still originating SBA loans, even though they're not this kind of 7(a), or is SBA still going to be a big part of the business model moving forward?

[Thomas Zernick, CEO at BayFirst Financial Corp]

Yeah. First of all, I'm certainly a commercial banker. I do have a lot of expertise in SBA, but we are actually exiting SBA. We will continue to originate up until our close with Banesco USA. Beyond the closing date, we will be a true community bank, and we will make Tampa Bay-based commercial C&I loans. We will continue to focus on some consumer lending, residential mortgage lending, all in Tampa Bay. We will continue to offer a great deposit suite. We've enhanced our treasury management services significantly and will continue to do all the right things as a real community bank now.

[Julianne Cassarino, Founder at Sycamore Analytics]

Okay. SBA really is the complete exit. Can you talk about the treasury management product? You mentioned it started in February, I believe, of this year. It really seems to have gained traction. Can you just describe the products, and if you have any off-balance sheet deposits?

[Robin Oliver, President and COO at BayFirst Financial Corp]

Hi, this is Robin, Julianne. Thanks for your question. We have always had treasury in our portfolio, but what we've tried to really do is beef up the software and the services that we have to make sure we are competitive in the marketplace. For example, towards the end of last year, we added lockbox services, which we did not have before, which, if we're going to serve the healthcare industry or the homeowners associations that we've talked about, that was something that they demand. In addition, earlier, I think what you're speaking about in February, we did roll out a new software product from Jack Henry, Jack Henry Treasury. We've always had Banno Business for our business customers, but the new Jack Henry Treasury is really designed for more mid-market-type businesses that want more complex permissions and functionality in order to serve that market.

[Robin Oliver, President and COO at BayFirst Financial Corp]

It's not something that all of our customers would be on, but we've worked to transition some of our larger business clients to that platform. Now we can offer that as we work to enhance and improve our business services. A little over two years ago, we had one treasury officer, to give you an idea. We have now beefed our team up to really four folks serving treasury, and we will likely continue to increase that in 2026 because we have onboarded a lot of new treasury customers this year and are seeing a lot of success in that space. Hopefully, that gives you a little flavor of what we're doing there.

[Julianne Cassarino, Founder at Sycamore Analytics]

Yeah, sounds great. There's no off-balance? You don't do sweep deposits?

[Robin Oliver, President and COO at BayFirst Financial Corp]

No, we do not have any off-balance sheet deposit activity. Sorry, I forgot to answer that part of your question.

[Julianne Cassarino, Founder at Sycamore Analytics]

Okay. No, I just wanted to make sure. Yeah, sounds really good. I was just wondering about the loan portfolio review that was done in the third quarter that you were describing. What percent of total loans were reviewed in that?

[Robin Oliver, President and COO at BayFirst Financial Corp]

We reviewed around $70 million of the portfolio, but it was from a third party. We also had another individual that we hired as a consultant that was reviewing a large number of units but smaller dollars because that has been where some of our credit concerns have been. It was a targeted review focused on specific criteria that might indicate that there was a credit weakness in that particular credit. We looked at different components of our data tape, our watchlist loans, things of that nature, to try to pinpoint those that could be problems that weren't recognized yet as needing a downgrade, and to just make sure that we had our arms around the entire portfolio and that any problem loan possible was identified clearly here by the end of Q3. A bit of a targeted review there.

[Julianne Cassarino, Founder at Sycamore Analytics]

Is it fair to say $70 million loans were reviewed by a third party, external third party, and the rest of all the loans were internally reviewed by a new hire, it sounds like? Is that?

[Robin Oliver, President and COO at BayFirst Financial Corp]

Yeah, a contractor.

[Julianne Cassarino, Founder at Sycamore Analytics]

Contractor.

[Robin Oliver, President and COO at BayFirst Financial Corp]

Not all other loans, right? We focused on our SBA watchlist loans, our conventional commercial watchlist loans, our smaller bolt and flashcap loans that have had prior express modifications and might still be having some struggle, things of that nature. We probably hit about 8%-10% of the total portfolio, but focused in a targeted way.

[Julianne Cassarino, Founder at Sycamore Analytics]

Okay, 8%-10%. Okay. Is the board getting paid now? I remember last quarter you said the board had halted their compensation. Has that changed?

[Robin Oliver, President and COO at BayFirst Financial Corp]

No, that has not changed.

[Julianne Cassarino, Founder at Sycamore Analytics]

Okay. The board is still not being paid. The repurchases have been halted. Now all of this news is out. I'm guessing insiders are not restricted, right, from buying if they want.

[Scott McKim, CFO at BayFirst Financial Corp]

Yeah, I'll take that one, Julianne. I'll answer it this way. These were some pretty substantial changes, and this is something that really has kept insiders out of the market. As far as when that window opens back up for us, that's to be determined. I wouldn't expect to see anybody jumping in today by any measure, but we'll take that one day at a time going forward.

[Julianne Cassarino, Founder at Sycamore Analytics]

Currently, insiders continue to be under a lockup.

[Scott McKim, CFO at BayFirst Financial Corp]

Typically, we wait until two full trading days after we release earnings before we open that window.

[Julianne Cassarino, Founder at Sycamore Analytics]

Right. There's no reason to not be under lockup, right? Because it's all out, right? There's nothing else really pending, right?

[Scott McKim, CFO at BayFirst Financial Corp]

Yeah, I appreciate the question, Julianne. I'm not going to go into additional details.

[Julianne Cassarino, Founder at Sycamore Analytics]

Sure. Okay. Great. Again, thank you. Thank you so much. Appreciate it.

[Robin Oliver, President and COO at BayFirst Financial Corp]

Thank you.

[Operator]

Thank you. The next question comes from Fred Earl at DTF Capital Management. Please go ahead.

[Fred Earl, Analyst at DTF Capital Management]

Good morning, and happy Halloween. That earning really was.

[Robin Oliver, President and COO at BayFirst Financial Corp]

Thank you.

[Fred Earl, Analyst at DTF Capital Management]

My question is, why is the best decision anything other than to go to the Home Depot and get one of those signs that goes in the windshield for sale? Call now.

[Scott McKim, CFO at BayFirst Financial Corp]

We're not exactly following your question. Okay. Looks like you hung up, Joanne. Was there anyone else in the queue?

[Operator]

Thank you. There are no further questions in the queue. That does indeed conclude today's conference call. We do thank everyone for participating. At this time, you may disconnect your lines. Thank you.

[Scott McKim, CFO at BayFirst Financial Corp]

Thank you. Thank you.

Participants

Executives

• Thomas Zernick, CEO
• Scott McKim, CFO
• Robin Oliver, President and COO

Analysts

• Ross Haberman, Money Manager at RLH Investments
• Julianne Cassarino, Founder at Sycamore Analytics
• Fred Earl, Analyst at DTF Capital Management