BayFirst reported a $32.7 million Q2 loss and restated three years of earnings as the Florida bank works through its failed small-dollar SBA lending strategy.
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BayFirst Financial reported its sixth consecutive quarterly loss on Friday, a $32.7 million shortfall driven almost entirely by the small-dollar SBA lending program it shut down last year.
The St. Petersburg, Florida-based bank also revised its earnings for 2024, 2025 and the first quarter of 2026 after a loan portfolio review uncovered understated provision expenses and overstated net interest income and gain-on-sale income. Full-year 2024 profit was cut from $12.6 million to $11.4 million. The 2025 operating loss grew by $1.5 million to $24.2 million, and the first-quarter 2026 loss of $5.7 million rose to $5.9 million.
"We moved quickly to investigate what happened, correct it and notify our shareholders," Chief Financial Officer Scott McKim said on a conference call with analysts and investors.
The $1.13 billion-asset company launched the small-dollar SBA 7(a) program in 2022, halted originations in August 2025 after a spike in problem credits, and exited SBA lending entirely a month later. It sold $103 million of government-guaranteed loans to Miami-based Banesco USA in December. This year, BayFirst parted ways with CEO Thomas Zernick and raised $80 million in a stock offering.
The second-quarter loss reflected a $29 million provision for credit losses, an impairment charge on an investment in a third-party SBA services firm, and a writedown on USDA-guaranteed loan sale premiums. Together those items totaled $41.5 million.
"We completed and deployed our asset resolution plan to address the bank's legacy credit issues, predominantly related to unguaranteed balances of the SBA 7(a) loans," CEO Al Rogers said.
Rogers, who joined BayFirst in May, said the bank plans to pivot toward larger commercial customers. "We're going to be banking some larger businesses than we have in the past," Chief Operating Officer Robin Oliver said. The shift has already produced higher treasury management fee income and noninterest deposits, she added.
McKim said the charges represent most of the cleanup needed for a return to profitability. "Now that we have a clear path ahead, a lot of strength, a lot of good focus as far as what's coming, the bank is positioned for profitable earnings going forward," he said.
The restatements follow a similar move by Richmond, Virginia-based Blue Ridge Bancshares. On Monday, Blue Ridge revised its second-quarter earnings after a commercial client ceased operations, widening its loss from $200,000 to $1.3 million.
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