- Key takeaway: BayFirst believes it's poised for a return to profitability after announcing a major plan aimed at resolving Small Business Administration-related credit problems.
- Supporting data: The bank's second-quarter earnings report on Friday showed its sixth consecutive quarterly operating loss.
- Forward look: Chief Financial Officer Scott McKim said the company is poised to put its asset-quality woes in the rearview mirror.
Executives at a struggling Florida-based community bank said they plan to target larger commercial customers as the bank seeks to unwind a disastrous strategy that focused on small-dollar Small Business Administration lending.
"We're going to be banking some larger businesses than we have in the past," BayFirst Financial Chief Operating Officer Robin Oliver said Friday on a conference call with analysts and investors.
Along those same lines, CEO Al Rogers, who
Though the shift has already begun to produce results — with both treasury management fee income and noninterest deposits trending upward — the St. Petersburg-based bank's second-quarter earnings report was dominated by legacy SBA challenges.
BayFirst reported a second-quarter loss totaling $32.7 million on Friday, driven almost entirely by items tied to the small-dollar SBA program it shut down last year. The company reported a soaring $29 million provision for credit losses.
"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," Rogers said.
BayFirst also made downward adjustments to its earnings for 2024, 2025 and the first quarter of 2026 after a review of its loan portfolio uncovered material understatements of provision expenses and an overstatement of net interest income and gain-on-sale income.
BayFirst's full-year 2024 profit was adjusted from $12.6 million to $11.4 million. Meanwhile, its 2025 operating loss increased by $1.5 million to $24.2 million. Its 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 the conference call.
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BayFirst's restatements follow a similar move by Richmond, Virginia-based Blue Ridge Bancshares. On Monday, Blue Ridge revised its second-quarter earnings after learning that a commercial client had ceased operations. The $2.3 billion-asset company amended its results to reflect a loss of $1.3 million, up from a previously stated $200,000 loss.
While BayFirst hasn't released a postmortem detailing exactly where the small-dollar SBA effort went off the rails, it's clear the strategy's failure has had far-reaching effects on the 27-year-old company.
After launching the small-dollar loan program in 2022, BayFirst halted originations in August 2025, following a spike in the level of problem credits. It
This year, following continued deterioration in the portfolio of SBA loans that remained on its books, BayFirst parted ways with CEO Thomas Zernick and raised $80 million of capital in a stock offering. Friday's $32.7 million shortfall represented its sixth consecutive quarterly loss.
According to Oliver, BayFirst's big provision, the restatements and the other adjustments BayFirst reported in its second-quarter earnings report were meant to close the books on the SBA-related loan losses.
"The asset resolution plan identified and provided for the resolution of troubled loans," Oliver said. "It also provided protection from future chargeoffs."
In full, the negative impact of the second-quarter asset resolution plan — including the provision for credit losses, an impairment charge on a nonmarketable investment in a third-party firm that provided SBA-lending-related services, and a write-down on the sales premiums of a portfolio of USDA-guaranteed loans — was $41.5 million.
But those charges represent most, if not all, of the heavy lifting necessary to position BayFirst to return to profitability, according to McKim. Indeed, the new focus on commercial loans has produced an influx of lower-cost demand deposits from corporate customers, Rogers said.
"The loan pipeline is strong, and we're seeing encouraging opportunities across our footprint," he added.
"There's a lot more in terms of overall earnings revenue that we expect going forward," McKim said. "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."
