BayFirst Financial Corp. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This report covers the fiscal quarter ended March 31, 2026. BayFirst Financial Corp. is a one-bank holding company operating BayFirst National Bank, primarily serving Florida. The Company is classified as a smaller reporting company and an emerging growth company. During the quarter, the Company continued its strategic shift following the exit from the SBA 7(a) lending business in late 2025.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Interest Income | $9.45 million | $11.00 million |
| Provision for Credit Losses | $3.08 million | $4.40 million |
| Noninterest Income | $0.88 million | $8.75 million |
| Noninterest Expense | $14.89 million | $15.81 million |
| Net Loss | $(5.68) million | $(0.34) million |
| Loss Per Common Share (Diluted) | $(1.48) | $(0.17) |
| Total Assets | $1.20 billion | $1.29 billion |
| Total Deposits | $1.09 billion | $1.13 billion |
| Cash and Cash Equivalents | $134.5 million | $63.2 million |
| Allowance for Credit Losses (ACL) | $20.63 million | $16.51 million |
| Net Charge-offs | $4.39 million | $3.30 million |
| Nonperforming Loans (NPL) | $21.45 million (2.44% of loans) | $24.81 million (2.42% of loans) |
Material Changes vs. Prior Period
- Revenue Decline: Net interest income decreased by $1.55 million year-over-year, driven by a $3.8 million drop in loan interest income due to a shrinking loan portfolio. Noninterest income plummeted $7.87 million, primarily due to the absence of a $7.33 million gain on the sale of government-guaranteed loans recorded in Q1 2025.
- Expense Reduction: Total noninterest expenses decreased by $0.93 million. Salaries and benefits dropped significantly by $2.93 million following the exit from SBA lending and staff reductions. However, loan servicing and origination expenses increased by $2.80 million.
- Asset Quality: Net charge-offs increased to $4.39 million from $3.30 million. The ACL increased to $20.63 million (2.35% of loans) from $16.51 million (1.61% of loans) to cover elevated credit losses, particularly in the Commercial and Industrial segment.
- Liquidity: Cash and cash equivalents increased to $134.5 million from $63.2 million in the prior year, despite a $98.1 million decrease in total deposits during the quarter.
Outlook, Risks, and Subsequent Events
- Capital Raise (Subsequent Event): On April 28, 2026, the Company raised $80 million in a Private Investment in Public Equity (PIPE) offering. This involved issuing Series D and Series E Preferred Stock, convertible to approximately 22.9 million common shares at $3.50 per share.
- Leadership Change: Alfred Rogers was elected CEO and President, replacing Tom Zernick who retired on May 1, 2026. Kenneth R. Lehman was appointed to the Board of Directors.
- Regulatory Capital: As of March 31, 2026, the Bank did not meet all requirements to be "well-capitalized" under Prompt Corrective Action regulations. Management expects the consummation of the $80 million capital raise to restore these ratios.
- Dividend Suspension: The Company has temporarily suspended common and preferred stock dividends. As of the filing date, $1.16 million in preferred dividends had accrued.
- Risks: Key risks include continued elevated credit losses in the C&I portfolio, interest rate sensitivity, and the successful integration of the new capital structure.
Investor Verification Checklist
- Verify the closing of the $80 million PIPE transaction and the conversion terms of the new preferred stock.
- Monitor the trend in Commercial and Industrial net charge-offs and the adequacy of the ACL given the 7.57% net charge-off ratio in that segment.
- Confirm the Bank's regulatory capital ratios post-capital raise to ensure "well-capitalized" status is achieved.
- Review the impact of the leadership transition on strategic execution and expense management.
- Assess the sustainability of the deposit base, which declined 8.3% in the quarter.