BayFirst Financial Corp. — Second Quarter 2026 Earnings Summary

Financial Performance

• Reported a net loss of $32.7 million ($8.05 per share) for the second quarter of 2026, compared to a restated net loss of $5.9 million ($1.54 per share) in the first quarter of 2026 and a net loss of $1.9 million in the second quarter of 2025.
• Net loss for the six months ended June 30, 2026, was $38.6 million, compared to a net loss of $2.8 million for the same period in 2025.
• The Q2 2026 loss was driven by $41.5 million in expenses related to the asset resolution plan, including provision expense, loan write-downs, premium amortization, and security impairment.
• Net interest income was $9.4 million in Q2 2026, down from $12.1 million in Q2 2025 and relatively unchanged from Q1 2026.
• Net interest margin was 3.48% in Q2 2026, an increase of 4 basis points from Q1 2026 (3.44%) but a decrease of 53 basis points from Q2 2025 (4.01%); excluding write-downs, the margin was 4.07%.
• Noninterest income was negative $6.8 million in Q2 2026, compared to $0.9 million in Q1 2026 and $10.5 million in Q2 2025, primarily due to a $5.9 million decrease in government guaranteed loan fair value gains.
• Noninterest expense was $17.7 million in Q2 2026, up from $14.9 million in Q1 2026 and $17.5 million in Q2 2025.
• Provision for credit losses was $29.0 million in Q2 2026, compared to $3.4 million in Q1 2026 and $7.6 million in Q2 2025.
• Total assets decreased 4.6% to $1.13 billion in Q2 2026 and decreased 15.1% year-over-year.
• Loans held for investment decreased 4.5% to $882.8 million in Q2 2026 and decreased 21.2% year-over-year.
• Total deposits decreased 8.9% to $988.9 million in Q2 2026 and decreased 15.0% year-over-year.
• Book value per common share was $4.83 at June 30, 2026, down from $14.22 at March 31, 2026.
• Tangible book value per common share was $4.82 at June 30, 2026, down from $14.22 at March 31, 2026.
• Return on average assets was (11.02)% for the quarter ended June 30, 2026, compared to (1.95)% in Q1 2026 and (0.56)% in Q2 2025.
• Return on average common equity was (195.50)% for the quarter ended June 30, 2026, compared to (39.19)% in Q1 2026 and (10.02)% in Q2 2025.
• Net charge-offs were $4.5 million in Q2 2026, down from $7.1 million in Q2 2025.
• Annualized net charge-offs as a percentage of average loans were 2.08% in Q2 2026, compared to 2.74% in Q2 2025.
• Allowance for credit losses (ACL) to total loans held for investment at amortized cost was 5.37% at June 30, 2026, compared to 1.65% at June 30, 2025.

Guidance and Future Outlook

• Management stated the asset resolution plan is a deliberate step to strengthen the balance sheet and position the company for the future.
• The company continues to invest in Community Banking initiatives, including the upcoming opening of a new branch in South Tampa.
• Management expressed confidence in strengthening their position as the community bank of choice within the Tampa Bay and Sarasota markets.
• The company is working through issues affecting performance with a focus on the fundamentals of profitability and serving local markets.

Business Segments and Product Lines

• The Bank discontinued SBA 7(a) lending, resulting in the sale of $97.4 million of government guaranteed loans to a third party and no new SBA 7(a) loan originations.
• The asset resolution plan involved identifying specific loans in the government guaranteed loan portfolio and adjusting net collection expectations on over 7,000 unguaranteed SBA 7(a) small balance loans.
• The company recorded a loss on nonmarketable equity securities of $1.5 million related to the impairment of an investment in a partner of the former SBA 7(a) lending business.
• The company recorded $1.7 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.
• The company reduced the cost of funds by 20 basis points during the second quarter.

Market and Competitive Landscape

• The company operates eleven full-service banking offices throughout the Tampa Bay-Sarasota region.
• Deposits decreased primarily due to reductions in high-rate promotional interest-bearing transaction account balances, savings and money market account balances, brokered deposits, and time deposit balances.
• Brokered deposits decreased from $186.7 million at June 30, 2025, to $163.8 million at June 30, 2026.

Risks and Challenges

• The company identified an understatement of provision expense and an overstatement of gain on sale of government guaranteed loans through an internal review process, leading to a restatement of previously issued financial statements.
• The restatement involved correcting $2.8 million in deferred origination costs and $2.1 million in accrued interest related to defaulted or nonaccrual SBA 7(a) loans, and $3.4 million in deferred origination costs netted against gain on sale of guaranteed loans.
• Forward-looking statements note risks including health crises, global military hostilities, weather events, climate change, changes in interest rates, economic conditions, regulatory enforcement actions, and changes in business plans.

Management Commentary and Tone

• CEO Alfred Rogers stated, "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."
• Management emphasized taking a disciplined approach and maintaining a commitment to accurate and transparent financial reporting.
• CEO Rogers noted, "We take our obligation to provide accurate and transparent financial reporting seriously... The Bank remains well capitalized and well positioned to continue serving our customers and communities as we work toward improved performance."

Other Key Points

• A capital raise reported on April 28, 2026, totaled $80 million before transaction fees, with $60 million invested in the Bank during the second quarter.
• On July 14, 2026, shareholder approval was obtained to increase authorized common stock from 15,000,000 to 100,000,000 shares.
• All 4,000 outstanding shares of Mandatorily Convertible Cumulative Perpetual Preferred Stock, Series D, and Series E were exchanged for a total of 22,856,000 shares of common stock and retired.
• On July 20, 2026, the Company notified holders of Series A and Series B Preferred Shares of redemption, with payments totaling $6,463,746.25 for Series A and $3,240,687.60 for Series B made on August 10, 2026.
• A rights offering was announced with a mid-August launch date.
• The Bank's Tier 1 leverage ratio was 8.30% at June 30, 2026, up from 5.89% at March 31, 2026.
• The CET 1 and Tier 1 capital ratios to risk-weighted assets were 11.47% at June 30, 2026, compared to 7.74% at March 31, 2026.
• The Bank met all regulatory capital requirements to be well-capitalized as of June 30, 2026.
• The Bank had no borrowings from the FHLB, FRB, or other financial institutions as of June 30, 2026.
• The on-balance sheet liquidity ratio was 14.95% at June 30, 2026.
• Full-time equivalent employees were 148 as of June 30, 2026, down from 300 in June 2025.