BayFirst Financial Corp.

Other Borrowings

At September 30, 2025, the Company had $50,000 of borrowings at 4.33% from the FHLB and no borrowings from the FRB. There were no borrowings from the FHLB or FRB at December 31, 2024.

The Bank is a member of the FHLB of Atlanta, which provides short- and long-term funding collateralized by mortgage-related assets to its members. FHLB short-term borrowings bear interest at variable rates set by the FHLB. Any advances that the Bank were to obtain would be secured by a blanket lien on$375.2 million of real estate-related loans as of September 30, 2025. Based on this collateral and the Bank's holdings of FHLB stock, the Bank was eligible to borrow up to$145.6 million from the FHLB at September 30, 2025.

In addition, the Bank has a line of credit with the Federal Reserve Bank of Atlanta which was secured by$79.2 million of commercial loans as of September 30, 2025. FRB short-term borrowings bear interest at variable rates based on the

FOMC's target range for the federal funds rate. Based on this collateral, the Bank was eligible to borrow up to$55.7 million from the FRB at September 30, 2025.

The Company has$6.0 million of Subordinated Notes (the “Notes”) that mature June 30, 2031 and are redeemable after 5 years which is June 30, 2026. The Notes carry interest at a fixed rate of 4.50% per annum for the initial 5 years of term and carry interest at a floating rate for the final 5 years of term after June 30, 2026. Under the note agreements, the floating rates are based on a SOFR benchmark plus 3.78% per annum. The balance of Subordinated Notes outstanding at the Company, net of offering costs, amounted to$6.0 million at September 30, 2025 and December 31, 2024. As of September 30, 2025, the Company was not in compliance with certain debt covenants. A waiver of these covenants has been requested, and approval has not yet been received.

The Company has a term note with quarterly principal and interest payments with interest at Prime (7.25% at September 30, 2025). The note matures on March 10, 2029 and the balance of the note was$1.6 million and $1.9 million at September 30, 2025 and December 31, 2024, respectively. The note is secured by 100% of the stock of the Company and requires the Company to comply with certain loan covenants during the term of the note. As of September 30, 2025, the Company was not in compliance with certain debt covenants. A waiver of these covenants has been requested, and approval has not yet been received.

Capital Resources

Shareholders' equity is influenced primarily by earnings, dividends, the Company's sales and repurchases of its common and preferred stock, and changes in accumulated other comprehensive income caused primarily by fluctuations in unrealized gains or losses, net of taxes, on available for sale investment securities.

Shareholders' equitywas $89.7 million at September 30, 2025 as compared to $110.9 million at December 31, 2024. Thedecrease was primarily due tonet loss of $20.5 million, common stock dividends of$0.7 million, andpreferred stock dividends of$1.2 million.

The Company strives to maintain an adequate capital base to support its activities in a safe and sound manner while at the same time maximizing shareholder value. Management assesses capital adequacy against the risk inherent in the balance sheet, recognizing that unexpected loss is the common denominator of risk and that common equity has the greatest capacity to absorb unexpected loss.

The Bank is subject to regulatory capital requirements imposed by various regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by banking regulators that, if undertaken, could have a direct material effect on BayFirst’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.

At September 30, 2025, the Bank did not meet all of its regulatory capital requirements and is taking steps toward meeting the capital requirements established by the regulators.The Bank requested a waiver from the FDIC in order to continue to access brokered deposits, approval has not yet been received.

The Bank’s actual capital amounts and percentages were as shown in the table below:

(1) Minimum to be considered “adequately capitalized” under Basel III Capital Adequacy.

(2) Minimum to be considered “well capitalized” under Prompt Corrective Actions Provisions.