BayFirst Financial BAFN

NASDAQ BAFN

$7.48 -0.07 (-0.93%)

At close: Sep 9, 2026 · 4:00 PM EDT

Key Stats

Market Cap30.60 Mn

P/E-0.48

P/S0.92

Div. Yield0.00

Total Debt (Qtr)5.97 Mn

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About

BayFirst Financial Corp. operates as a bank holding company that owns BayFirst National Bank, delivering community banking services to consumers and small businesses in the Tampa Bay/Sarasota region. As of December 31, 2025, the company reported consolidated total assets of $1.30 billion, total loans held for investment of $963.9 million, total deposits of $1.18 billion, and total shareholders’ equity of $87.6 million. The Bank’s main office is located at the BayFirst…

The company generates revenue primarily from interest income on its loan portfolio, which includes commercial real estate, construction, working capital, healthcare, minority, USDA, and SBA 504 loans, as well as consumer loans such as auto, boat, and home equity lines. Additionally, fee income arises from deposit services, online banking, online bill payment, lock box services, remote capture and deposit, cash management, wire transfers, safety deposit boxes, courier services, retail investment services, and ACH originations. The Bank also earns income from specialized checking programs such as Essential checking, TrendSetters Club for seniors, and Cash Kids’ Club savings accounts, which attract specific customer segments and generate ancillary fees.

BayFirst Financial Corp. operates through the following segments:.

Community Banking: This segment provides traditional deposit products including checking, savings, money market accounts, and certificates of deposit, alongside lending services such as commercial mortgages, construction loans, working capital loans, business expansion loans, healthcare financing, minority lending programs, and consumer loans for autos, boats, and recreational vehicles. The Bank structures its community banking services to attract consumers, small and medium sized businesses, and professionals seeking flexible, personalized relationships and offers specialized programs like the Essential checking account for customers rebuilding access to banking, the TrendSetters Club for customers age fifty and over, and the Cash Kids’ Club savings account for children twelve years old and under to teach basic financial skills through interactive tools.
Government Guaranteed Lending: This segment originates loans backed by federal programs, specifically USDA Business and Industry loans and SBA 504 loans, offering businesses in rural areas and qualified enterprises access to financing with partial government guarantees. The Bank also continues to service USDA loans and SBA 404 loans through its community banking centers after discontinuing its nationwide SBA 7(a) lending division in the third quarter of 2025. These government guaranteed loans are underwritten according to SBA or USDA guidelines and include thorough analysis of guarantor credit quality and projected debt service coverage.
Residential Mortgage Division: Although the nationwide residential lending business was discontinued in the 3rd quarter of 2022, the division continues to offer fixed and variable rate home mortgages for purchase and refinance through the local community banking centers in the Tampa Bay/Sarasota area. The division focuses on residential mortgage loans that are underwritten to secondary market standards for those held for sale, while portfolio loans are primarily underwritten on borrower financial strength and cash flow with conservative loan to value requirements.

Within the competitive banking landscape of Florida’s Tampa Bay market, BayFirst Financial Corp. positions itself as a nimble community bank that competes against larger national and super regional banks, finance companies, credit unions, and emerging fintech providers by emphasizing local decision making, personalized relationships, and a deep understanding of regional commerce. The Bank’s competitive advantages include its ability to make quick lending decisions, its flexibility in responding to interest rate changes, and its reputation for understanding local market needs, which larger competitors often lack. Additionally, the Bank leverages its independent status to solicit business through the personal efforts of its directors and officers, reinforcing its image as a community focused institution.

The company serves a diverse customer base that includes individual consumers, small and medium sized businesses, healthcare professionals, and women owned and minority owned enterprises, as well as customers seeking specialized products such as the Essential checking account, TrendSetters Club for seniors, and Cash Kids’ Club for youth. Specific customer groups targeted by the Bank include healthcare practitioners who benefit from tailored lending options, women or minority business owners looking to expand their operations, and seniors who value the benefits of the TrendSetters Club. The Bank also serves customers who require basic banking services such as checking and savings accounts, as well as those seeking loans for automobiles, boats, recreational vehicles, and residential properties.

Investment Thesis

▲ Bull case

BayFirst National Bank (BAFN) has a significant opportunity to capitalize on its newly raised $80 million in capital from the PIPE offering to drive organic growth in its core Tampa Bay and Sarasota markets, which remains underappreciated by the market. The bank has explicitly stated it has no plans to deploy lending programs outside these regions, allowing for concentrated efforts to deepen relationships with local businesses and retail customers—a strategy aligned with the CEO’s background and network in the area. This geographic focus reduces execution risk compared to broader expansion plays and leverages the bank’s existing branch footprint and community trust. With tangible book value per share currently depressed due to recent losses, the infusion of capital provides a strong foundation to grow loans and deposits without dilution concerns in the near term, especially as the rights offering allows existing shareholders to participate. The market is likely underestimating how quickly this capital can be translated into earning assets, particularly as the bank exits the drag of legacy SBA 7a servicing costs and shifts focus to higher-margin relationship banking.
The bank’s legacy SBA 7a portfolio, while currently a drag on earnings, contains an underlying performing component that management has hinted at but not fully emphasized—specifically, Scott McKim’s comment that the Bolt and FlashCap segments (approximately $100 million of the $159 million unguaranteed SBA 7a balance) include loans that “have performed well” despite being overshadowed by defaults. This suggests a potential for credit improvement as economic conditions stabilize or as the bank intensifies its workout efforts, which could lead to fewer charge-offs and even upgrades to accrual status over time. The fact that 68% of classified loans are current and performing, and that $3.8 million of the $15.9 million in nonperforming loans are current and paying as agreed, indicates that a meaningful portion of the problem assets may be resolvable without significant loss. If the bank successfully resolves even a portion of this portfolio through modifications or repayments, the allowance for credit losses (currently 2.35% of total loans) could be released, directly boosting earnings and tangible book value—a catalyst not yet priced into the stock.
BAFN’s liquidity position is stronger than it appears, with a bank liquidity ratio of 13.85% as of March 31, 2026, equating to roughly $130 million in liquid assets on a near-$1 billion balance sheet, excluding the recently raised $80 million in capital. This provides ample flexibility to support loan growth, absorb unexpected losses, or even accelerate debt reduction without needing to rely on volatile wholesale funding markets—a notable advantage given the regional bank sector’s sensitivity to liquidity concerns. Furthermore, the bank reported no wholesale borrowings and maintains a high percentage of insured deposits (83% FDIC-insured), which enhances stability. The pro forma improvement in capital ratios to 10.02% Tier 1 leverage and 14.4% total capital to risk-weighted assets (post-capital contribution) places BAFN well above regulatory minimums and in a stronger position than many peers to withstand economic headwinds while pursuing growth—a structural advantage the market may be overlooking amid near-term losses.

BayFirst National Bank (BAFN) has a significant opportunity to capitalize on its newly raised $80 million in capital from the PIPE offering to drive organic growth in its core Tampa Bay and Sarasota markets, which remains underappreciated by the market. The bank has explicitly stated it has no plans to deploy lending programs outside these regions, allowing for concentrated efforts to deepen relationships with local businesses and retail customers—a strategy aligned with the CEO’s background and network in the area. This geographic focus reduces execution risk compared to broader expansion plays and leverages the bank’s existing branch footprint and community trust. With tangible book value per share currently depressed due to recent losses, the infusion of capital provides a strong foundation to grow loans and deposits without dilution concerns in the near term, especially as the rights offering allows existing shareholders to participate. The market is likely underestimating how quickly this capital can be translated into earning assets, particularly as the bank exits the drag of legacy SBA 7a servicing costs and shifts focus to higher-margin relationship banking.
The bank’s legacy SBA 7a portfolio, while currently a drag on earnings, contains an underlying performing component that management has hinted at but not fully emphasized—specifically, Scott McKim’s comment that the Bolt and FlashCap segments (approximately $100 million of the $159 million unguaranteed SBA 7a balance) include loans that “have performed well” despite being overshadowed by defaults. This suggests a potential for credit improvement as economic conditions stabilize or as the bank intensifies its workout efforts, which could lead to fewer charge-offs and even upgrades to accrual status over time. The fact that 68% of classified loans are current and performing, and that $3.8 million of the $15.9 million in nonperforming loans are current and paying as agreed, indicates that a meaningful portion of the problem assets may be resolvable without significant loss. If the bank successfully resolves even a portion of this portfolio through modifications or repayments, the allowance for credit losses (currently 2.35% of total loans) could be released, directly boosting earnings and tangible book value—a catalyst not yet priced into the stock.
BAFN’s liquidity position is stronger than it appears, with a bank liquidity ratio of 13.85% as of March 31, 2026, equating to roughly $130 million in liquid assets on a near-$1 billion balance sheet, excluding the recently raised $80 million in capital. This provides ample flexibility to support loan growth, absorb unexpected losses, or even accelerate debt reduction without needing to rely on volatile wholesale funding markets—a notable advantage given the regional bank sector’s sensitivity to liquidity concerns. Furthermore, the bank reported no wholesale borrowings and maintains a high percentage of insured deposits (83% FDIC-insured), which enhances stability. The pro forma improvement in capital ratios to 10.02% Tier 1 leverage and 14.4% total capital to risk-weighted assets (post-capital contribution) places BAFN well above regulatory minimums and in a stronger position than many peers to withstand economic headwinds while pursuing growth—a structural advantage the market may be overlooking amid near-term losses.

▼ Bear case

BayFirst National Bank (BAFN) faces a material and persistent risk from its legacy unguaranteed SBA 7a loan portfolio, which continues to dominate credit quality metrics and remains a significant drag on profitability despite management’s assurances. As of March 31, 2026, the bank held $159.3 million in unguaranteed SBA 7a loans, with net charge-offs from this segment alone reaching $3.4 million in Q1 FY26—accounting for over 77% of total net charge-offs—and the allowance for credit losses on these loans is concentrated in the higher-risk Bolt and FlashCap components, reserved at approximately 13% on roughly $100 million of exposure. Management’s comparison of this portfolio to small business credit cards highlights its unsecured nature and vulnerability to interest rate shocks and inflation, yet they provided no clear timeline for when defaults might subside, acknowledging they “do not have a clear answer” and that the portfolio’s performance lacks comparable benchmarks for modeling. This uncertainty, combined with the portfolio’s continued runoff at approximately $12 million per quarter (with a significant portion likely charging off), suggests that earnings pressure from credit costs could persist longer than anticipated, delaying the path to sustainable profitability.
Despite the recent $80 million capital raise, BAFN’s core earnings power remains severely impaired, as evidenced by a widening net loss of $5.7 million in Q1 FY26 compared to $2.8 million in Q4 FY25, driven by declining net interest income and persistently high noninterest expenses. Net interest income fell $1.7 million sequentially and $1.5 million year-over-year, largely due to the $97 million loan portfolio sale completed in December 2025, which removed a meaningful base of earning assets. Simultaneously, noninterest expense increased $3 million quarter-over-quarter, with $2.3 million attributed to a full quarter of servicing costs on the legacy SBA 7a portfolio—a cost that will persist as long as the bank retains servicing rights on sold guarantees. The bank’s net interest margin compressed to 3.42%, down 16 basis points from the prior quarter, reflecting both lower-yielding assets and the drag of excess liquidity from the capital raise not yet deployed. Without a clear, near-term plan to grow the loan book at attractive margins or significantly reduce the legacy servicing cost burden, the bank risks burning through its newly raised capital before achieving meaningful earnings improvement—a scenario the market may be underestimating given the lack of specific loan growth targets or timelines provided by management.
BAFN’s deposit base shows signs of fragility that could undermine its funding stability and growth prospects, particularly as the bank has relied on non-relationship and brokered deposits to sustain levels, which are inherently less sticky. Deposits decreased $98 million (8%) in Q1 FY26 and $42.4 million (4%) year-over-year, with the quarterly decline driven by reductions in high-rate promotional deposits and brokered balances—indicating that the bank may be losing its ability to attract or retain cost-effective funding without offering unsustainable incentives. While 83% of deposits are FDIC-insured, the reliance on promotional and brokered funds suggests the bank’s core deposit franchise is weak, potentially forcing it to pay higher rates to maintain liquidity as it attempts to grow loans. This dynamic could compress net interest margin further if the bank must compete on rate for deposits while simultaneously trying to lend at disciplined spreads, creating a self-defeating cycle that hinders profitability—a structural challenge not adequately addressed in management’s commentary, which focused more on product offerings than on deposit cost resilience or core deposit growth strategies.

BayFirst National Bank (BAFN) faces a material and persistent risk from its legacy unguaranteed SBA 7a loan portfolio, which continues to dominate credit quality metrics and remains a significant drag on profitability despite management’s assurances. As of March 31, 2026, the bank held $159.3 million in unguaranteed SBA 7a loans, with net charge-offs from this segment alone reaching $3.4 million in Q1 FY26—accounting for over 77% of total net charge-offs—and the allowance for credit losses on these loans is concentrated in the higher-risk Bolt and FlashCap components, reserved at approximately 13% on roughly $100 million of exposure. Management’s comparison of this portfolio to small business credit cards highlights its unsecured nature and vulnerability to interest rate shocks and inflation, yet they provided no clear timeline for when defaults might subside, acknowledging they “do not have a clear answer” and that the portfolio’s performance lacks comparable benchmarks for modeling. This uncertainty, combined with the portfolio’s continued runoff at approximately $12 million per quarter (with a significant portion likely charging off), suggests that earnings pressure from credit costs could persist longer than anticipated, delaying the path to sustainable profitability.
Despite the recent $80 million capital raise, BAFN’s core earnings power remains severely impaired, as evidenced by a widening net loss of $5.7 million in Q1 FY26 compared to $2.8 million in Q4 FY25, driven by declining net interest income and persistently high noninterest expenses. Net interest income fell $1.7 million sequentially and $1.5 million year-over-year, largely due to the $97 million loan portfolio sale completed in December 2025, which removed a meaningful base of earning assets. Simultaneously, noninterest expense increased $3 million quarter-over-quarter, with $2.3 million attributed to a full quarter of servicing costs on the legacy SBA 7a portfolio—a cost that will persist as long as the bank retains servicing rights on sold guarantees. The bank’s net interest margin compressed to 3.42%, down 16 basis points from the prior quarter, reflecting both lower-yielding assets and the drag of excess liquidity from the capital raise not yet deployed. Without a clear, near-term plan to grow the loan book at attractive margins or significantly reduce the legacy servicing cost burden, the bank risks burning through its newly raised capital before achieving meaningful earnings improvement—a scenario the market may be underestimating given the lack of specific loan growth targets or timelines provided by management.
BAFN’s deposit base shows signs of fragility that could undermine its funding stability and growth prospects, particularly as the bank has relied on non-relationship and brokered deposits to sustain levels, which are inherently less sticky. Deposits decreased $98 million (8%) in Q1 FY26 and $42.4 million (4%) year-over-year, with the quarterly decline driven by reductions in high-rate promotional deposits and brokered balances—indicating that the bank may be losing its ability to attract or retain cost-effective funding without offering unsustainable incentives. While 83% of deposits are FDIC-insured, the reliance on promotional and brokered funds suggests the bank’s core deposit franchise is weak, potentially forcing it to pay higher rates to maintain liquidity as it attempts to grow loans. This dynamic could compress net interest margin further if the bank must compete on rate for deposits while simultaneously trying to lend at disciplined spreads, creating a self-defeating cycle that hinders profitability—a structural challenge not adequately addressed in management’s commentary, which focused more on product offerings than on deposit cost resilience or core deposit growth strategies.

Peer group

Peer Comparison

Companies in the Regional Banks

S.No.	Ticker	Company	match	Market Cap	P/E	P/S	Total Debt (Qtr)
1	BSAC	Banco Santander Chile	primary	950.85 Bn	-0.68	-	652.30 Bn
2	FITB	Fifth Third Bancorp	primary	49.43 Bn	18.58	4.87	26.90 Bn
3	MTB	M&T Bank Corp	primary	34.72 Bn	12.08	3.49	22.80 Bn
4	HBAN	Huntington Bancshares Inc /Md/	primary	33.60 Bn	14.96	3.46	24.96 Bn
5	CFG	Citizens Financial Group Inc/Ri	primary	29.31 Bn	14.77	3.36	17.51 Bn
6	RF	Regions Financial Corp	primary	25.53 Bn	11.88	3.35	10.63 Bn
7	FCNCA	First Citizens Bancshares Inc /De/	primary	24.60 Bn	10.85	89.45	32.34 Bn
8	KEY	Keycorp /New/	primary	23.26 Bn	12.33	2.99	14.65 Bn

BayFirst Financial BAFN

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