BAFN — BayFirst Financial Corp.

BayFirst Financial Corp. Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Net Loss: Reported a net loss of $2.5 million for Q4 2025, an improvement from a net loss of $18.9 million in Q3 2025.
• Loans: Loans held for investment decreased by $34.8 million (3.5%) in 2025, totaling $963.9 million. Total loans decreased by $102.7 million (9.6%) year-over-year.
• Deposits: Increased by $12.5 million (1.1%) in Q4 and $40.7 million (3.6%) year-over-year, ending at $1.18 billion. 85% of deposits are FDIC insured.
• Net Interest Margin: Stable at 3.58%, down three basis points from Q3 2025.
• Provision for Credit Losses: $2 million in Q4, significantly lower than $10.9 million in Q3 2025.
• Net Charge-offs: Increased to $4.6 million in Q4, up from $3.3 million in Q3, with unguaranteed SBA 7(a) loans accounting for $1 million of this amount.

2. Strategic Updates and Business Highlights:

• Exit from SBA 7(a) Lending: Completed exit from the SBA 7(a) lending business, which has been a significant focus for the company.
• Community Banking Focus: Emphasized commitment to becoming the premier community bank in Tampa Bay, with organic deposit growth and enhanced treasury management revenues (up 69% from 2024).
• Cost Management: Significant reductions in non-interest expenses, down $13.3 million compared to Q3, largely due to restructuring efforts.
• Credit Risk Management: Increased focus on credit administration, with efforts to manage and resolve problem loans.

3. Forward Guidance and Outlook:

• 2026 Strategic Plan: Focus on fortifying the balance sheet and maintaining disciplined risk management. Management is optimistic about improving asset quality and profitability as the SBA portfolio winds down.
• Expectations for Charge-offs: Additional charge-offs are anticipated in the near term but are expected to lessen over time as the legacy portfolio is managed down.

4. Bad News, Challenges, or Points of Concern:

• Legacy SBA Portfolio Risks: Continued elevated charge-offs and net charge-offs from unguaranteed SBA loans pose ongoing risks.
• Declining Metrics: Total loans and shareholders' equity decreased year-over-year, with tangible book value dropping to $17.22 per share from $17.90.
• Nonperforming Loans: Nonperforming loans increased to $16.9 million, up from $16.5 million in Q3, indicating potential asset quality concerns.

5. Notable Q&A Insights:

• Deposit Growth: Management attributed deposit growth to strong local customer relationships and effective treasury management strategies, with a focus on small businesses.
• Cost of Funds: The bank is actively working to reduce the cost of funds while maintaining customer relationships, balancing deposit rates to avoid runoff.
• SBA Loan Portfolio: Clarification on the $171.6 million of unguaranteed SBA loans, with management noting that this portfolio will continue to shrink as the bank exits this business.

Overall, BayFirst Financial Corp. is navigating significant challenges related to its legacy SBA loan portfolio while focusing on community banking and improving operational efficiency. The management remains committed to enhancing shareholder value through strategic initiatives and disciplined risk management.