BayFirst Financial Corp.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 14, 2026
BAFN$5.72-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-12.
0001649739-26-000028
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001649739-26-000061
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 120 previous paragraphs and 135 current paragraphs.
80 unchanged; 31 reworded; 23 added; 8 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 26 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Restatement of Previously Issued Financial Statements
Current report
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.
Current report
During this process, 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.
Current report
The discussion of financial results presented are reflective of the restatement adjustments. Refer to Note 1 of the consolidated financial statements included in the 2025 Annual Report for more information on the restatement.
Current report
Stock Purchase and Exchange Agreements and Rights Offering
Current report
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. 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.
Current report
Asset Resolution Plan
Current report
The Company has 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 nature, scope, and potential impact of the asset resolution plan were discussed in the Company’s Form 8-K and the exhibits incorporated therein, filed with the Securities and Exchange Commission on April 30, 2026.
Current report
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. These adjustments impact loans measured at amortized cost in accordance with ASC 326 and loans measured at fair value in accordance with ASC 825. These adjustments amount to $38.4 million.
Current report
Furthermore, the Company will book an impairment of $1.5 million on a non-marketable equity investment in a firm who was a partner with the Company’s former SBA 7(a) lending business and will also write down by $1.6 million the unamortized premiums on the Company’s portfolio of purchased fully guaranteed USDA loans which are at risk of default or early prepayment.
Current report
Redemption of Series A and Series B Preferred Shares
Current report
On July 20, 2026, the Company sent notifications to holders of Series A and Series B Preferred Shares formally redeeming all outstanding. On August 10, 2026, payment in the amount of $6.5 million for Preferred Series A, including accrued dividends of $0.3 million, and payment in the amount of $3.2 million for Preferred Series B, including accrued dividends of $0.1 million.
Current report
For the six months ended June 30, 2026, the Company had a net loss of $38.6 million, or$9.58 per common share and diluted common share, a decrease from net loss of $2.8 million, or$0.86 per common share anddiluted common share, for the six months ended June 30, 2025. The decrease was primarily was primarily the result of $41.5 million expense related to the asset resolution plan.
Current report
Net interest income was $18.9 million for the six months ended June 30, 2026, a decrease from $22.7 million for the six months ended June 30, 2025. The decrease was mainly due to a decrease in loan interest income, including fees, of $9.9 million and a decrease in interest expense of $4.9 million.
Current report
Net interest margin increased to 3.46% for the six months ended June 30, 2026, compared to 3.83% for the six months ended June 30, 2025.
Current report
The Company recorded a provision for credit losses for the six months ended June 30, 2026 of $32.4 million compared to a $12.2 million provision for the six months ended June 30, 2025. For the six months ended June 30, 2026, net loan charge offs totaled $9.2 million compared to $10.6 million for the six months ended June 30, 2025. The increase in provision was the result of provision expense booked during the second quarter as determined by the asset resolution plan.
Current report
The ACL was $45.1 million at June 30, 2026 and $17.0 million at June 30, 2025.
Current report
Noninterest income was $5.9 million for thesix months ended June 30, 2026, a decrease from $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.
Current report
Noninterest expense was $17.7 million during the three months ended June 30, 2026, an increase from $17.5 million during the three months ended June 30, 2025. 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.
Current report
Income tax benefit was$13.4 million for the six months ended June 30, 2026, a decrease from income tax expense of$1.0 million for the six ended June 30, 2025. The change was attributed to a higher net loss for the current year.
Current report
The Company completed and quantified the impact of the asset resolution. The asset resolution plan included 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.
Current report
Shareholders' equitywas $115.9 million at June 30, 2026 as compared to $81.6 million at December 31, 2025. Theincrease was primarily due to the$74.5 million preferred stock capital raise partially offset by thenet loss of $38.6 million.
Current report
Management believes that the Bank met capital adequacy requirements to which it was subject at June 30, 2026 and December 31, 2025.
Removed paragraphs (8)
Previous report
On April 28, 2026, the Company raised $80 million of capital from investors in a private investment in public equity (“PIPE”) offering. The Company issued shares of Series D and Series E Preferred stock in the PIPE, which subject to shareholder and regulatory approvals, will convert to, or be exchanged for, approximately 22.9 million shares of common stock at an effective purchase price of $3.50 per share.The Company has also agreed to register the shares of common stock with the SEC following the conversion or exchange.
Previous report
On April 28, 2026, the Company filed Articles of Amendment to its Articles of Incorporation with the Florida Division of Corporations creating and authorizing 4,000 shares of Series D Preferred Stock and 4,000 shares of Series E Preferred Stock.
Previous report
On April 28, 2026, the Board elected Alfred Rogers as Chief Executive Officer and President of the Bank, in place of Tom Zernick who retired on May 1, 2026. Additionally, the Board appointed Kenneth R. Lehman as a member of the Boards of Directors. Mr. Rogers' appointment to the Board of Directors of the Bank and as Chief Executive Officer have received all necessary regulatory approvals and became effective upon the completion of the capital raise. The appointments of Mr. Rogers as CEO and President of the Company, as well as a director, is contingent upon receipt of regulatory non-objections. Mr. Lehman's appointment to the Boards of Directors of the Company and the Bank are contingent upon receipt of regulatory non-objections.
Previous report
On April 30, 2026, the Company filed a registration statement on Form S-1 regarding the public offering of up to 4,108,072 shares of Common Stock at an offering price of $3.50 per share. The Company intends to exclusively market this offering to its shareholders of record on May 12, 2026.
Previous report
In 2025, in response to continued elevated charge-offs, increases in nonperforming loans and continued economic uncertainty, Management assessed and strengthened the Bank’s problem loan administration processes to ensure they were sufficiently identifying and timely risk-rating problem loans. The scope and frequency of the Bank’s independent, external loan review program were also expanded. Management believes that the updated processes around problem loan administration are adequate and that loan risk ratings are accurate.
Previous report
As part of the amendment to the subordinated note and term note, the Company obtained a waiver related to financial debt covenants.
Previous report
Shareholders' equitywas $81.9 million at March 31, 2026 as compared to $87.6 million at December 31, 2025. Thedecrease was primarily due tonet loss of $5.7 million.
Previous report
At March 31, 2026, the Bank did not meet all of its regulatory capital requirements to be well-capitalized but the consummation of the capital raise is expected to meet these capital requirements going forward.
Reworded paragraphs (31)
Previous wording
The following discussion is an analysis of the results of operations for the three months ended March 31, 2026 and March 31, 2025 and financial condition as of March 31, 2026 and December 31, 2025. This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes.
Current wording
The following discussion is an analysis of the results of operations for the three and six months ended June 30, 2026 and June 30, 2025 and financial condition as of June 30, 2026 and December 31, 2025. This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes.
Previous wording
In the fourth quarter of 2025, the Company sold a portion of its SBA 7(a) loan portfolio. In conjunction with the sale and as a result of the comprehensive strategic review aimed at reducing expenses and derisking the Bank's balance sheet, BayFirst exited the SBA 7(a) lending business. Banesco USA assumed servicing of loans included in the sale and has been engaged as subservicer on the remaining SBA 7(a) loans retained by BayFirst.
Current wording
In the fourth quarter of 2025, the Company sold a portion of its SBA 7(a) loan portfolio. In conjunction with the sale and as a result of the comprehensive strategic review aimed at reducing expenses and derisking the Bank's balance sheet, BayFirst exited the SBA 7(a) lending business. A third party assumed servicing of loans included in the sale and has been engaged as subservicer on the remaining SBA 7(a) loans retained by BayFirst.
Previous wording
The Company had a net loss for the three months ended March 31, 2026 of $5.7 million, or $1.48 per common share and diluted common share, compared to net income for the three months ended March 31, 2025 of $0.3 million, or $0.17 per common and diluted common share. The change from the first quarter of 2025 was due to a decrease in net interest income of $1.6 million, a decrease in noninterest income of $7.9 million, partially offset by a decrease in provision for credit losses of $1.3 million, a decrease in noninterest expense of $0.9 million, and a decrease in income tax expenses of $1.8 million.
Current wording
The Company had a net loss for the three months ended June 30, 2026 of $32.7 million, or $8.05 per common share and diluted common share, compared to net income for the three months ended June 30, 2025 of $1.9 million, or $0.54 per common and diluted common share. The change from the second quarter of 2025 was primarily the result of $41.5 million of expense related to the asset resolution plan.
Previous wording
Net interest income was $9.4 million for the three months ended March 31, 2026, an decrease from $11.0 million during the three months ended March 31, 2025. The decrease in net interest income during the first quarter of 2026, as compared to the year ago quarter, was mainly due to a decrease in loan interest income, including fees, of $3.8 million, partially offset by an increase in interest income on interest bearing deposits in banks and other of $0.6 million and a decrease in interest expense on deposits of $1.5 million.
Current wording
Net interest income was $9.4 million for the three months ended June 30, 2026, a decrease from $12.1 million during the three months ended June 30, 2025. 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. 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.
Previous wording
Net interest margin was 3.42% for the first quarter of 2026, which represented a decrease from 3.77% for the first quarter of 2025.
Current wording
Net interest margin was 3.48% for the second quarter of 2026, which represented a decrease from 4.01% for the second quarter of 2025. Excluding the write-downs, the net interest margin for the second quarter was 4.07%.
Previous wording
The Company recorded a provision for credit losses on loans for the three months ended March 31, 2026 of $3.1 million compared to a provision of $4.4 million for the three months ended March 31, 2025. During the three months ended March 31, 2026, $4.4 million of net charge offs were recorded compared to $3.3 million during the three months ended March 31, 2025.
Current wording
The Company recorded a provision for credit losses on loans for the three months ended June 30, 2026 of $29.0 million compared to a provision of $7.6 million for the three months ended June 30, 2025. The increase in provision was the result of provision expense booked during the quarter as determined by the asset resolution plan. During the three months ended June 30, 2026, $4.5 million of net charge offs were recorded compared to $7.1 million during the three months ended June 30, 2025.
Previous wording
The following table presents noninterest income for the three months ended March 31, 2026 and March 31, 2025.
Current wording
The following table presents noninterest income for the six months ended June 30, 2026 and June 30, 2025.
Previous wording
Noninterest income was $0.9 million during the three months ended March 31, 2026, a decrease from$8.8 million during the three months ended March 31, 2025. The decrease in the first quarter of 2026, as compared to the first quarter of 2025, was the result a decrease in gain on sale of government guaranteed loans of $7.4 million and a decrease in government guaranteed loan packaging fees of $0.7 million.
Current wording
Noninterest income was $6.8 million during the three months ended June 30, 2026, a decrease from$10.5 million during the three months ended June 30, 2025. 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.
Previous wording
The following table presents noninterest expense for the three months ended March 31, 2026 and March 31, 2025.
Current wording
The following table presents noninterest expense for the six months ended June 30, 2026 and June 30, 2025.
Previous wording
Noninterest expense was $14.9 million during the three months ended March 31, 2026, an decrease from $15.8 million during the three months ended March 31, 2025. The decrease in the first quarter of 2026, as compared to the first quarter of 2025, was primarily due to a decrease in compensation expense of $2.7 million and a decrease in data processing expenses of $0.6 million, partially offset by an increase in loan servicing and origination expense of $2.8 million.
Current wording
Noninterest expense was $32.6 million for the six months ended June 30, 2026, a decrease from $33.3 million for the six months ended June 30, 2025. The decrease was 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.
Previous wording
Income tax benefit was $2.0 million for the three months ended March 31, 2026, a decrease from income tax benefit of $0.1 million for the three months ended March 31, 2025. The change was attributed to an increase in net loss.
Current wording
Income tax benefit was $11.4 million for the three months ended June 30, 2026, a decrease from income tax benefit of $0.6 million for the three months ended June 30, 2025. The change was attributed to an increase in net loss.
Previous wording
At March 31, 2026, the Company had $19.6 million federal net operating loss carryforward and $18.1 million of state net operating loss carryforward. At March 31, 2025, the Company had no federal net operating loss carryforward and $16 thousand of state net operating loss carryforward. The Company expects to fully utilize the net operating losses.
Current wording
At June 30, 2026, the Company had $31.0 million federal net operating loss carryforward and $34.6 million of state net operating loss carryforward. At June 30, 2025, the Company had no of federal net operating loss carryforward and $21 thousand of state net operating loss carryforward. The Company expects to fully utilize the net operating losses.
Previous wording
The effective income tax rate was 25.57% for the three months ended March 31, 2026 and 27.65% for the three months ended March 31, 2025.
Current wording
The effective income tax rate was 25.79% for the six months ended June 30, 2026 and 25.59% for the six months ended June 30, 2025.
Previous wording
The net unrealized loss on the investment securities AFS at March 31, 2026 and December 31, 2025, was $2.7 million and $2.6 million, respectively.
Current wording
The net unrealized loss on the investment securities AFS at June 30, 2026 and December 31, 2025, was $2.8 million and $2.6 million, respectively.
Previous wording
There was a $9 thousand ACL on the corporate bonds HTM as of March 31, 2026 and $7 thousand at December 31, 2025. The net unrealized loss on the investment securities HTM at March 31, 2026, was $122 thousand compared with a net unrealized loss on investment securities HTM of $116 thousand at December 31, 2025.
Current wording
There was a $7 thousand ACL on the corporate bonds HTM as of June 30, 2026 and $7 thousand at December 31, 2025. The net unrealized loss on the investment securities HTM at June 30, 2026, was $129 thousand compared with a net unrealized loss on investment securities HTM of $116 thousand at December 31, 2025.
Previous wording
No investment securities were pledged as of March 31, 2026 or December 31, 2025, and there were no sales of investment securities for the three months ended March 31, 2026 or the three months ended March 31, 2025.
Current wording
No investment securities were pledged as of June 30, 2026 or December 31, 2025, and there were no sales of investment securities for the six months ended June 30, 2026 or the six months ended June 30, 2025.
Previous wording
For the three months ended March 31, 2026, the Bank originated $2.4 million in loans through conventional lending channels and $0.8 million in government guaranteed loans. In addition, the Bank sold $0.8 million of government guaranteed loans to Banesco USA as part of the Bank’s discontinuance of SBA 7(a) lending.
Current wording
For the six months ended June 30, 2026, the Bank originated $7.5 million in loans through conventional lending channels and $0.8 million in government guaranteed loans. In addition, the Bank sold $0.8 million of government guaranteed loans to a third party as part of the Bank’s discontinuance of SBA 7(a) lending.
Previous wording
Nonperforming Assets. At March 31, 2026, the Company had $17.5 million in nonperforming assets, excluding government guaranteed loan balances. The ACL represented 2.35% of total loans HFI at amortized cost. At March 31, 2025, the Company had $16.6 million in nonperforming assets, excluding government guaranteed loan balances. The ACL represented 1.61% of total loans HFI at amortized cost. The increase in nonperforming assets was partially the result of a nonaccrual loan for $2.6 million that is fully secured and has no ACL allocated. Total loans HFI at March 31, 2026 and March 31, 2025 included government guaranteed balances and loans measured at fair value, which had no reserves allocated to them. ACL as a percentage of loans HFI at amortized cost, not including government guaranteed loan balances, was 2.53% at March 31, 2026, compared to 1.84% at March 31, 2025.
Current wording
Nonperforming Assets. At June 30, 2026, the Company had $15.4 million in nonperforming assets, excluding government guaranteed loan balances. The ACL represented 5.37% of total loans HFI at amortized cost. At June 30, 2025, the Company had $16.0 million in nonperforming assets, excluding government guaranteed loan balances. The ACL represented 1.65% of total loans HFI at amortized cost. The increase in nonperforming assets was partially the result of a nonaccrual loan for $8.8 million that is fully secured and has no ACL allocated. Total loans HFI at June 30, 2026 and June 30, 2025 included government guaranteed balances and loans measured at fair value, which had no reserves allocated to them. ACL as a percentage of loans HFI at amortized cost, not including government guaranteed loan balances, was 5.82% at June 30, 2026, compared to 1.86% at 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.
Previous wording
The following table sets forth, for the periods indicated, information regarding the SBA and other government guaranteed lending activity, excluding PPP loans. In addition to the Bank’s routine loan sale activity, the Bank sold $97.4 million of government guaranteed loans to Banesco USA as part of the Bank’s discontinuance of SBA 7(a) lending in the fourth quarter 2025 and first quarter of 2026..
Current wording
The following table sets forth, for the periods indicated, information regarding the SBA and other government guaranteed lending activity, excluding PPP loans. In addition to the Bank’s routine loan sale activity, the Bank sold $97.4 million of government guaranteed loans to a third party as part of the Bank’s discontinuance of SBA 7(a) lending in the fourth quarter 2025 and first quarter of 2026.
Previous wording
Brokered deposits. At times, the Bank has brokered time deposit and non-maturity deposit relationships available to diversify its funding sources. Brokered deposits offer several benefits relative to other funding sources, such as: maturity structures which cannot be duplicated in the current retail market, deposit gathering outside the market of the existing deposit base, the unsecured nature of these liabilities, and the ability to quickly generate funds. The Bank’s internal policy limits the use of brokered deposits as a funding source to no more than 20% of total assets. The Company's ability to accept or renew brokered deposits is contingent upon the Bank maintaining a capital level of "well capitalized." At March 31, 2026 and December 31, 2025, the Company had $183.9 million and $195.5 million, respectively, of brokered deposits.
Current wording
Brokered deposits. At times, the Bank has brokered time deposit and non-maturity deposit relationships available to diversify its funding sources. Brokered deposits offer several benefits relative to other funding sources, such as: maturity structures which cannot be duplicated in the current retail market, deposit gathering outside the market of the existing deposit base, the unsecured nature of these liabilities, and the ability to quickly generate funds. The Bank’s internal policy limits the use of brokered deposits as a funding source to no more than 20% of total assets. The Company's ability to accept or renew brokered deposits is contingent upon the Bank maintaining a capital level of "well capitalized." At June 30, 2026 and December 31, 2025, the Company had $163.8 million and $195.5 million, respectively, of brokered deposits.
Previous wording
At March 31, 2026, the Company held approximately $188.9 million of deposits that exceeded the FDIC insurance limit which was 17% of total deposits.
Current wording
At June 30, 2026, the Company held approximately $195.5 million of deposits that exceeded the FDIC insurance limit which was 20% of total deposits.
Previous wording
Deposits decreased $98.1 million or 8.28% for the three months ended March 31, 2026, with increases in noninterest-bearing deposit account balances, money market deposit account balances, and time deposit balances, partially offset by decreases in interest-bearing transaction account balances and savings account balances.
Current wording
Deposits decreased $195.1 million or 16.48% for the six months ended June 30, 2026, with increases in noninterest-bearing deposit account balances, money market deposit account balances, and time deposit balances, partially offset by decreases in interest-bearing transaction account balances and savings account balances.
Previous wording
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$387.6 million of real estate-related loans as of March 31, 2026. Based on this collateral and the Bank's holdings of FHLB stock, the Bank was eligible to borrow up to$187.8 million from the FHLB at March 31, 2026.
Current wording
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$378.1 million of real estate-related loans as of June 30, 2026. Based on this collateral and the Bank's holdings of FHLB stock, the Bank was eligible to borrow up to$183.5 million from the FHLB at June 30, 2026.
Previous wording
In addition, the Bank has a line of credit with the Federal Reserve Bank of Atlanta which was secured by$49.8 million of commercial loans as of March 31, 2026. 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$28.8 million from the FRB at March 31, 2026.
Current wording
In addition, the Bank has a line of credit with the Federal Reserve Bank of Atlanta which was secured by$46.3 million of commercial loans as of June 30, 2026. 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$34.0 million from the FRB at June 30, 2026.
Previous wording
On December 29, 2025, the Company and the holders of the Company’s Notes entered into an Amendment to the Notes (the “Amendment”), effective as of December 26, 2025. Pursuant to the Amendment, instead of the Company paying interest on the Notes, the outstanding principal of the Notes shall be increased by the amount of interest due as of the date of the Amendment and that becomes due through and including June 30, 2026. In addition, if the Company does not pay all amounts due on the Notes by June 30, 2026, at the Company’s option, (i) it shall pay the holders 3.00% of the outstanding principal of the Notes, or (ii) the principal of the Notes shall be increased by 3.00%.
Current wording
On December 29, 2025, the Company and the holders of the Company’s Notes entered into an Amendment to the Notes (the “Amendment”), effective as of December 26, 2025. Pursuant to the Amendment, instead of the Company paying interest on the Notes, the outstanding principal of the Notes shall be increased by the amount of interest due as of the date of the Amendment and that becomes due through and including June 30, 2026. The Company paid the deferred interest as agreed. As of June 30, 2026, the Company was in compliance with all financial debt covenants.
Previous wording
The balance of Subordinated Notes outstanding at the Company, net of offering costs, amounted to$6.1 million and$6.0 millionat March 31, 2026 and December 31, 2025, respectively.The increase was primarily the result of the deferred interest payment that were due in January 2026.
Current wording
The balance of Subordinated Notes outstanding at the Company, net of offering costs, amounted to$6.0 millionat June 30, 2026 and December 31, 2025.
Previous wording
The Company has a term note with quarterly principal and interest payments with interest at Prime (6.75% at March 31, 2026). The note matures on March 10, 2029 and the balance of the note was$1.5 million and $1.6 million at March 31, 2026 and December 31, 2025, 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. On December 30, 2025, the lender agreed that the Bank may defer the quarterly interest payment due December 10, 2025 on its term loan until March 10, 2026. The deferred interest was paid as agreed.
Current wording
The Company has a term note with quarterly principal and interest payments with interest at Prime (6.75% at June 30, 2026). The note matures on March 10, 2029 and the balance of the note was$1.3 million and $1.6 million at June 30, 2026 and December 31, 2025, 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. On December 30, 2025, the lender agreed that the Bank may defer the quarterly interest payment due December 10, 2025 on its term loan until March 10, 2026. The deferred interest was paid as agreed. As of June 30, 2026, the Company was in compliance with all financial debt covenants.
Previous wording
The Company maintains an ACL for its off-balance sheet loan commitments which is calculated by loan type using estimated line utilization rates based on historical usage. Loss rates for outstanding loans is applied to the estimated utilization rates to calculate the ACL for off-balance sheet loan commitments. At March 31, 2026 and December 31, 2025, ACL for off-balance sheet loan commitments totaled $718 thousand and $671 thousand, respectively.
Current wording
The Company maintains an ACL for its off-balance sheet loan commitments which is calculated by loan type using estimated line utilization rates based on historical usage. Loss rates for outstanding loans is applied to the estimated utilization rates to calculate the ACL for off-balance sheet loan commitments. At June 30, 2026 and December 31, 2025, ACL for off-balance sheet loan commitments totaled $788 thousand and $671 thousand, respectively.
Previous wording
In the ordinary course of its operations, the Company enters into certain contractual obligations. Total contractual obligations at March 31, 2026 were $416.3 million, an decrease from $431.4 million at December 31, 2025. The decrease was primarily due to a decrease in time deposits of $14.6 million.
Current wording
In the ordinary course of its operations, the Company enters into certain contractual obligations. Total contractual obligations at June 30, 2026 were $341.2 million, a decrease from $431.4 million at December 31, 2025. The decrease was primarily due to a decrease in time deposits of $88.8 million.
Previous wording
Liquidity management is the process by which the Bank manages the flow of funds necessary to meet its financial commitments on a timely basis and at a reasonable cost to take advantage of earnings enhancement opportunities. These financial commitments include withdrawals by depositors, credit commitments to borrowers, expenses of the operations, and capital expenditures. The Bank generally maintains a minimum liquidity ratio of liquid assets to total assets of at least 7.0%. Liquid assets include cash and due from banks, federal funds sold, interest-bearing deposits with banks and unencumbered investment securities available for sale. The on-balance sheet liquidity ratio at March 31, 2026 was 13.85%, ascompared to 18.35% at December 31, 2025.
Current wording
Liquidity management is the process by which the Bank manages the flow of funds necessary to meet its financial commitments on a timely basis and at a reasonable cost to take advantage of earnings enhancement opportunities. These financial commitments include withdrawals by depositors, credit commitments to borrowers, expenses of the operations, and capital expenditures. The Bank generally maintains a minimum liquidity ratio of liquid assets to total assets of at least 7.0%. Liquid assets include cash and due from banks, federal funds sold, interest-bearing deposits with banks and unencumbered investment securities available for sale. The on-balance sheet liquidity ratio at June 30, 2026 was 14.95%, ascompared to 18.44% at December 31, 2025.
Previous wording
For the three months ended March 31, 2026, the Bank there were no dividends needed to its parent company in order to meet liquidity needs to make interest payments on its debt obligations, dividends on shares of its preferred stock and common stock, and payment of operating expenses. The Company suspended the payment of dividends in 2025. As of March 31, 2026, BayFirst Financial Corp. held $401 thousand in cash and cash equivalents.
Current wording
For the six months ended June 30, 2026, the Bank did not pay any dividends needed to its parent company in order to meet liquidity needs to make interest payments on its debt obligations, dividends on shares of its preferred stock and common stock, and payment of operating expenses. The Company suspended the payment of dividends in 2025. As of June 30, 2026, BayFirst Financial Corp. held $12.6 million in cash and cash equivalents.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The following table details net charge-offs to average loans outstanding by loan category for thesix months ended June 30, 2026 and June 30, 2025.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
In the fourth quarter 2025, The Company sold a portion of its SBA 7(a) loan portfolio. In conjunction with the sale and as a result of the comprehensive strategic review aimed at reducing expenses and derisking the Bank's balance sheet, BayFirst exited the SBA 7(a) lending business. Banesco USA assumed servicing of loans included in the sale and has been engaged as subservicer on the remaining SBA 7(a) loans retained by BayFirst. In addition, the Company reduced staff.