BAFN — BayFirst Financial Corp.

Summary of BayFirst Financial Corp. Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Net Loss: Reported a net loss of $5.7 million in Q1 2026, compared to a loss of $2.5 million in Q4 2025.
• Loans Held for Investment: Decreased by $33.5 million (3%) quarter-over-quarter and by $154.4 million (14%) year-over-year, totaling $930.4 million.
• Deposits: Decreased by $98 million (8%) in Q1 2026, totaling $1.09 billion, with a year-over-year decline of $42.4 million (4%).
• Net Interest Margin: Decreased to 3.42%, down 16 basis points from the previous quarter.
• Net Interest Income: Declined to $9.4 million, down $1.7 million from Q4 2025.
• Noninterest Income: Increased by $1 million from Q4 2025 to $884,000, but decreased by $7.9 million year-over-year.
• Nonperforming Loans: Totaled $15.9 million, slightly down from $16.3 million in Q4 2025, with a nonperforming loans ratio of 1.81%.
• Provision for Credit Losses: Increased to $3.1 million from $2 million in the previous quarter.
• Tangible Book Value: Decreased to $15.74 per share from $17.22 at the end of Q4 2025.

2. Strategic Updates and Business Highlights:

• Capital Raise: Successfully raised $80 million through a private investment in public equity offering, which will convert to approximately 22.9 million shares of common stock at $3.50 per share, pending approvals.
• Leadership Changes: Al Rogers appointed as the new CEO, with a focus on returning to profitability and expanding community banking efforts in the Tampa Bay area.
• Dividend Resumption: The Board announced the resumption of dividend payments to preferred shareholders and plans to redeem Series A shares.

3. Forward Guidance and Outlook:

• The additional capital is expected to support growth and expansion, particularly in relationship-based lending within the Tampa Bay market.
• The bank aims to stabilize and grow its operations while managing credit risk and problem assets effectively.
• Plans to expand branch presence beyond the current two locations in the Tampa Metropolitan Area.

4. Challenges and Points of Concern:

• Continued Losses: The bank reported a significant net loss and declining loan and deposit metrics, indicating ongoing financial challenges.
• High Charge-Offs: Elevated net charge-offs, particularly from unguaranteed SBA 7(a) loans, remain a concern, with a total of $4.4 million in charge-offs reported.
• Credit Quality: The bank's allowance for credit losses remains a point of focus, with concerns about the performance of the unguaranteed loan portfolio, which is primarily unsecured and has high default characteristics.
• Liquidity Position: While the liquidity ratio is at 13.6%, it does not include the recent capital raise, which could enhance the bank's cash position.

5. Notable Q&A Insights:

• CEO Priorities: Al Rogers emphasized understanding the loan portfolio, returning to profitability, and deepening customer relationships as his top three initiatives.
• Reserve Adequacy: Scott McKim confirmed that the reserves for the unguaranteed loan portfolio are considered adequate under CECL guidelines, although they reflect high-risk characteristics similar to unsecured credit card loans.
• Future Outlook on Defaults: There is uncertainty regarding when defaults will subside, with management committed to addressing the challenges proactively.

Overall, BayFirst Financial Corp. is navigating significant challenges while attempting to stabilize its operations and return to profitability through strategic initiatives and leadership changes.