BayFirst Financial Corp. (NASDAQ: BAFN)

$7.02 ▲ +0.21 (+3.11%)

As of Apr 13, 2026 12:00 PM

Sector: Financial Services Industry: Banks - Regional CIK: 0001649739

Market Cap 29.58 Mn

P/E -1.22

P/S 0.46

Div. Yield 0.03

ROIC (Qtr) 0.08

Total Debt (Qtr) 5.96 Mn

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About

BayFirst Financial Corp., known by its stock symbol BAFN, is a bank holding company that operates in the financial industry. Its primary business is conducted through its subsidiary, BayFirst National Bank, with operations in the Tampa Bay region and beyond. The company has two main divisions: Community Banking and CreditBench. The Community Banking Division offers a variety of products and services, including deposit accounts, loans, and cash management services for individuals and businesses. With 11 banking centers in the Tampa Bay area, this...

BayFirst Financial Corp., known by its stock symbol BAFN, is a bank holding company that operates in the financial industry. Its primary business is conducted through its subsidiary, BayFirst National Bank, with operations in the Tampa Bay region and beyond. The company has two main divisions: Community Banking and CreditBench.

The Community Banking Division offers a variety of products and services, including deposit accounts, loans, and cash management services for individuals and businesses. With 11 banking centers in the Tampa Bay area, this division provides a range of deposit products such as checking and savings accounts, certificates of deposit, and individual retirement accounts.

CreditBench, on the other hand, is a government guaranteed lender that originates SBA 7(a) loans and USDA loans throughout the nation. This division leverages advanced technology platforms to support technology-enabled banking products and services, as well as financial technology applications. As of December 31, 2023, CreditBench had originated 3,408 Bolt loans totaling $441.8 million.

In the competitive financial industry, BayFirst Financial Corp. stands out due to its ability to offer personalized relationships and flexible loan products, with a particular focus on serving the small business community. The company competes with national, super-regional, and regional financial institutions, as well as non-bank government guaranteed lenders, finance companies, investment banking and brokerage firms, and insurance companies.

BayFirst Financial Corp.'s customers include individuals and businesses in the Tampa Bay region, as well as government agencies and other financial institutions. The company's lending philosophy centers around making sound, high-quality loans while acknowledging the inherent risk in lending. This philosophy is reflected in the company's loan approval process, which is characterized by centralized authority supported by a risk control environment that ensures thorough underwriting.

Regarding its risk management practices, the company has implemented measures to identify, measure, monitor, evaluate, and manage risks associated with banking activities. The Board of Directors oversees these risk management processes, while the senior management team is responsible for implementing and reporting on them.

In terms of information technology systems, BayFirst Financial Corp. has made significant investments in systems and staff to support banking activities. The company uses nationally recognized software vendors and their cloud/hosted models, which allow for data processing outsourcing. Internal networks and email systems are administered by a managed service provider specializing in financial institutions, with production infrastructure maintained in a data center facility near Tampa, Florida.

Data privacy and cybersecurity are of utmost importance to BayFirst Financial Corp. A comprehensive information security program is in place to ensure the security and confidentiality of client records and personal information. The company is subject to various regulations and laws related to data privacy and cybersecurity, including the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act, and the Federal Trade Commission Act.

As a bank holding company, BayFirst Financial Corp. is subject to the supervision of the Federal Reserve and must file annual reports and other information with the Federal Reserve regarding the company's business operations and those of its subsidiary. The company is also subject to the regulations of the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).

Investment thesis

Bull case

BayFirst’s deposit base has grown steadily to $1.18 billion, with an organic increase of $12.5 million in the quarter and a year‑to‑date rise of $40.7 million. The bank’s deposit mix is heavily weighted toward time deposits and interest‑bearing transaction accounts, which tend to be less sensitive to short‑term rate swings than money‑market or savings balances. With 85 % of deposits FDIC‑insured and a liquidity ratio comfortably above 18 %, the institution can comfortably support aggressive deposit‑pricing initiatives, reducing the cost of funds and widening net interest margins. These fundamentals give the bank a strong platform to attract further customer deposits, especially in a market where banks are cutting promotional rates to compete.
Treasury‑management revenues surged 69 % year‑over‑year, a clear indicator that the bank’s merchant‑services platform is resonating with small‑business clients. Revenue diversification away from interest‑margin income into fee‑based services adds a non‑interest income stream that is less vulnerable to rate volatility and regulatory tightening. The growth in treasury management also signals deeper relationships with retail and commercial customers, creating cross‑sell opportunities for loans, lines of credit, and other products. As the bank continues to focus on this high‑margin segment, it can potentially sustain revenue momentum even if traditional loan growth slows.
The strategic exit from the SBA 7(a) lending business, which was a significant source of both higher yields and credit risk, is complete. By actively selling and running down unguaranteed SBA balances, BayFirst has materially reduced its exposure to non‑government‑guaranteed loans, which historically carried elevated default rates. The reduction in both provisioning and charge‑offs reflects a cleaner balance sheet, allowing the bank to re‑allocate capital toward core community banking activities. This shift also aligns the bank more closely with its “community‑banking” positioning, positioning it for sustainable, lower‑risk growth rather than chasing higher‑risk, higher‑yield products.
Net interest margin (NIM) held steady at 3.58 % despite a three‑basis‑point dip, indicating that the bank’s asset‑liability management remains effective even after the SBA wind‑down. Because the bank’s loan portfolio has shrunk but its deposit mix remains healthy, the NIM can be expected to rebound as higher‑yield loans and fee‑based services mature. In addition, the bank’s ability to manage deposit pricing will likely improve its cost‑of‑funds profile, providing a buffer for NIM expansion in a rising‑rate environment.
BayFirst’s tangible book value per share, although modestly down to $17.22 from $17.90, still remains robust relative to peer banks in the Tampa Bay region. A solid tangible book provides a cushion for capital adequacy and supports potential future capital returns or strategic acquisitions. With the capital base described as “well‑capitalized,” the bank has room to absorb residual credit losses without diluting shareholders, thereby creating value for equity holders over the medium term.

BayFirst’s deposit base has grown steadily to $1.18 billion, with an organic increase of $12.5 million in the quarter and a year‑to‑date rise of $40.7 million. The bank’s deposit mix is heavily weighted toward time deposits and interest‑bearing transaction accounts, which tend to be less sensitive to short‑term rate swings than money‑market or savings balances. With 85 % of deposits FDIC‑insured and a liquidity ratio comfortably above 18 %, the institution can comfortably support aggressive deposit‑pricing initiatives, reducing the cost of funds and widening net interest margins. These fundamentals give the bank a strong platform to attract further customer deposits, especially in a market where banks are cutting promotional rates to compete.
Treasury‑management revenues surged 69 % year‑over‑year, a clear indicator that the bank’s merchant‑services platform is resonating with small‑business clients. Revenue diversification away from interest‑margin income into fee‑based services adds a non‑interest income stream that is less vulnerable to rate volatility and regulatory tightening. The growth in treasury management also signals deeper relationships with retail and commercial customers, creating cross‑sell opportunities for loans, lines of credit, and other products. As the bank continues to focus on this high‑margin segment, it can potentially sustain revenue momentum even if traditional loan growth slows.
The strategic exit from the SBA 7(a) lending business, which was a significant source of both higher yields and credit risk, is complete. By actively selling and running down unguaranteed SBA balances, BayFirst has materially reduced its exposure to non‑government‑guaranteed loans, which historically carried elevated default rates. The reduction in both provisioning and charge‑offs reflects a cleaner balance sheet, allowing the bank to re‑allocate capital toward core community banking activities. This shift also aligns the bank more closely with its “community‑banking” positioning, positioning it for sustainable, lower‑risk growth rather than chasing higher‑risk, higher‑yield products.
Net interest margin (NIM) held steady at 3.58 % despite a three‑basis‑point dip, indicating that the bank’s asset‑liability management remains effective even after the SBA wind‑down. Because the bank’s loan portfolio has shrunk but its deposit mix remains healthy, the NIM can be expected to rebound as higher‑yield loans and fee‑based services mature. In addition, the bank’s ability to manage deposit pricing will likely improve its cost‑of‑funds profile, providing a buffer for NIM expansion in a rising‑rate environment.
BayFirst’s tangible book value per share, although modestly down to $17.22 from $17.90, still remains robust relative to peer banks in the Tampa Bay region. A solid tangible book provides a cushion for capital adequacy and supports potential future capital returns or strategic acquisitions. With the capital base described as “well‑capitalized,” the bank has room to absorb residual credit losses without diluting shareholders, thereby creating value for equity holders over the medium term.

Bear case

Despite the bank’s reported loss narrowing, the underlying credit quality remains a concern, as the unguaranteed SBA 7(a) portfolio still stands at $171.6 million. Management explicitly cautions that “additional charge‑offs are likely to continue” and that the legacy exposure is “still elevated.” The bank’s allowance for credit losses, at 2.43 % of total loans and 2.59 % excluding guaranteed loans, remains above the year‑ago level, signalling persistent credit risk that could strain earnings if defaults accelerate. Investors should view the legacy portfolio as a significant tail‑risk that may erode capital in the next 12–18 months.
The bank’s nonperforming loan ratio, excluding guaranteed balances, rose to 1.8 % at year‑end, an increase of 11 basis points from the prior quarter. Even though 64 % of classified loans are current, the fact that 36 % remain classified indicates a sizable pool of loans at risk. If the bank cannot quickly reduce this classification through write‑downs or recoveries, future provisions could rise sharply, further widening the net loss and potentially requiring additional capital injections.
Deposit mix is heavily skewed toward time deposits, which can be more liquid but also more rate‑sensitive. While the bank has successfully reduced its cost of funds, any future interest‑rate hikes could pressure deposit rates, especially for time deposits that are less flexible than money‑market or savings products. If the bank’s deposit growth stalls or reverses, the liquidity cushion could diminish, limiting its ability to fund new lending or weather market stress.
BayFirst’s exit from the SBA 7(a) business eliminated a higher‑yield segment of its loan portfolio. While the move reduces credit risk, it also reduces potential interest income. The bank’s net interest margin remained flat at 3.58 % despite the reduction in high‑yield loans, suggesting that the bank may need to rely increasingly on fee‑based revenue, which can be more volatile and less predictable. Should the fee‑based platform fail to grow at the anticipated pace, the bank’s profitability could suffer.
The bank’s operating expenses, while lower than the previous quarter, still represent a substantial outlay, particularly given the high capital requirement for a community bank. The restructuring charge was a one‑time event, but the bank still faces ongoing regulatory, occupancy, and data‑processing costs. Any unexpected regulatory fines or increased compliance costs could quickly erode the thin operating margin, especially given the relatively modest interest income base.

Despite the bank’s reported loss narrowing, the underlying credit quality remains a concern, as the unguaranteed SBA 7(a) portfolio still stands at $171.6 million. Management explicitly cautions that “additional charge‑offs are likely to continue” and that the legacy exposure is “still elevated.” The bank’s allowance for credit losses, at 2.43 % of total loans and 2.59 % excluding guaranteed loans, remains above the year‑ago level, signalling persistent credit risk that could strain earnings if defaults accelerate. Investors should view the legacy portfolio as a significant tail‑risk that may erode capital in the next 12–18 months.
The bank’s nonperforming loan ratio, excluding guaranteed balances, rose to 1.8 % at year‑end, an increase of 11 basis points from the prior quarter. Even though 64 % of classified loans are current, the fact that 36 % remain classified indicates a sizable pool of loans at risk. If the bank cannot quickly reduce this classification through write‑downs or recoveries, future provisions could rise sharply, further widening the net loss and potentially requiring additional capital injections.
Deposit mix is heavily skewed toward time deposits, which can be more liquid but also more rate‑sensitive. While the bank has successfully reduced its cost of funds, any future interest‑rate hikes could pressure deposit rates, especially for time deposits that are less flexible than money‑market or savings products. If the bank’s deposit growth stalls or reverses, the liquidity cushion could diminish, limiting its ability to fund new lending or weather market stress.
BayFirst’s exit from the SBA 7(a) business eliminated a higher‑yield segment of its loan portfolio. While the move reduces credit risk, it also reduces potential interest income. The bank’s net interest margin remained flat at 3.58 % despite the reduction in high‑yield loans, suggesting that the bank may need to rely increasingly on fee‑based revenue, which can be more volatile and less predictable. Should the fee‑based platform fail to grow at the anticipated pace, the bank’s profitability could suffer.
The bank’s operating expenses, while lower than the previous quarter, still represent a substantial outlay, particularly given the high capital requirement for a community bank. The restructuring charge was a one‑time event, but the bank still faces ongoing regulatory, occupancy, and data‑processing costs. Any unexpected regulatory fines or increased compliance costs could quickly erode the thin operating margin, especially given the relatively modest interest income base.

Consolidated Entities Breakdown of Revenue (2024)

Financing Receivable Portfolio Segment Breakdown of Revenue (2024)

Peer comparison

Companies in the Banks - Regional

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	PNC	Pnc Financial Services Group, Inc.	85.65 Bn	13.22	3.71	38.64 Bn
2	DB	Deutsche Bank Aktiengesellschaft	71.47 Bn	7.82	1.91	-
3	TFC	Truist Financial Corp	62.09 Bn	12.74	3.06	27.84 Bn
4	NU	Nu Holdings Ltd.	57.02 Bn	34.39	0.00	1.87 Bn
5	KEY	Keycorp /New/	26.78 Bn	13.93	4.87	0.01 Bn
6	BPOP	Popular, Inc.	15.13 Bn	11.70	-101.45	-
7	WTFC	Wintrust Financial Corp	9.73 Bn	12.55	3.57	0.30 Bn
8	SSB	SouthState Bank Corp	9.59 Bn	12.23	-26,857.57	0.31 Bn

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