0001649739-26-000014
SEC filingBayFirst Financial Corp. reported a net loss of $22.9 million for FY 2025, a significant decline from net income of $12.6 million in FY 2024. The loss was driven by a substantial $24.6 million provision for credit losses, a $42.1 million decrease in noninterest income, and $7.3 million in restructure charges from discontinuing its SBA 7(a) lending business. This was partially offset by a $7.8 million increase in net interest income to $45.8 million and a $12.2 million decrease in income tax expense. The company's total assets were $1.30 billion, with total deposits of $1.18 billion and shareholders' equity of $87.6 million. The strategic exit from nationwide SBA lending and a 52% reduction in staff mark a significant operational shift.
BayFirst Financial Corp. reported a net loss of $22.9 million for FY 2025, a severe deterioration from net income of $12.6 million in FY 2024. The loss per common share was $5.93, compared to earnings of $2.68 per share in the prior year. The primary drivers were a $24.6 million provision for credit losses (up $9.9 million YoY), a $42.1 million decline in noninterest income to $18.4 million, and $7.3 million in restructure charges from discontinuing the SBA 7(a) lending business. These were partially offset by a $7.8 million increase in net interest income to $45.8 million and a $12.2 million swing to an income tax benefit of $7.9 million. The company's strategic review led to exiting nationwide SBA lending and reducing staff by 52%.
The company's total interest income was $85.8 million, with interest expense of $40.0 million, resulting in net interest income of $45.8 million, an increase of 20.4% from $38.0 million in FY 2024. The increase was mainly due to a $2.4 million rise in loan interest income and a $4.8 million decrease in interest expense. Noninterest income collapsed by 69.6% to $18.4 million from $60.5 million. This was primarily due to a $16.5 million decrease in gain on sale of government guaranteed loans, the absence of an $11.6 million gain on sale of branch properties recorded in Q4 2024, a $10.9 million decrease in government guaranteed loan fair value gains, and a $2.3 million decrease in packaging fees. In Q4 2025, the bank sold $96.6 million of government guaranteed loans at a 3% discount as part of the SBA lending discontinuance.
The net interest margin increased to 3.75% for FY 2025 from 3.45% in FY 2024. Despite this improvement, profitability was severely impacted by credit costs and lower noninterest income. Noninterest expense increased by 5.5% to $70.4 million, driven by the $7.3 million restructure charge, a $1.1 million increase in data processing expense, and a $1.6 million increase in loan servicing and origination expense. This was partially offset by a $6.2 million decrease in compensation expense. The efficiency ratio deteriorated significantly due to the decline in noninterest income. The effective income tax rate was 25.60% for FY 2025 compared to 25.40% for FY 2024.
Net cash provided by operating activities was strong at $285.3 million, primarily driven by proceeds from sales of government guaranteed loans held for sale ($298.2M) and a $24.6 million provision for credit losses (a non-cash add-back), offset by a net loss. Net cash used in investing activities was $194.9 million, mainly for net loan originations of $205.3 million. Net cash provided by financing activities was $38.8 million, primarily from a net change in deposits of $40.7 million. The consolidated balance sheet shows total assets of $1.30 billion. Cash and cash equivalents were $207.0 million. Net loans held for investment were $887.8 million, with an allowance for credit losses of $22.0 million (2.42% of loans HFI at amortized cost). Total deposits were $1.18 billion. Shareholders' equity decreased to $87.6 million from $110.9 million, primarily due to the net loss. The bank's regulatory capital ratios exceeded 'well capitalized' requirements.
The company has undergone a significant strategic shift, discontinuing its nationwide SBA 7(a) lending business in Q4 2025 to reduce expenses and derisk the balance sheet. It continues to offer SBA 504 and USDA loans through community banking centers. Management suspended common and preferred stock dividend payments in July 2025. Key risk factors include credit risk from the loan portfolio, particularly following elevated charge-offs, economic uncertainty, and competitive pressures. The company had $11.1 million in federal net operating loss carryforwards at year-end, which it expects to fully utilize. Future performance will depend on the execution of its streamlined community banking strategy, credit quality trends, and interest rate environment.