Breaking Down BayFirst Financial Corp. (BAFN) Financial Health: Key Insights for Investors

If you are looking at BayFirst Financial Corp. (BAFN) right now, you need to look past the headline numbers, because the third quarter of 2025 was a period of painful but decisive strategic clean-up, not business-as-usual operations.

The company reported a substantial net loss of $18.9 million, or $4.66 per common share, for Q3 2025, a sharp reversal from the prior year, but this was largely driven by a single, future-focused action: the exit from the volatile SBA 7(a) lending business, which triggered $12.4 million in one-time charges, including a $7.3 million restructuring charge. Honsetly, that loss is a cost of derisking the balance sheet, which still holds $1.35 billion in total assets. The real question for investors is whether the remaining core community bank operation, with a tangible book value of $17.90 per share as of September 30, 2025, can now deliver consistent returns after shedding its riskiest portfolio segment.

Revenue Analysis

You need to look past the top-line numbers for BayFirst Financial Corp. (BAFN) because the company is undergoing a major strategic pivot. The direct takeaway is this: while Net Interest Income (NII) is growing, the significant drop in Noninterest Income due to the exit from SBA lending is the dominant near-term financial reality you must account for.

For the first nine months of the 2025 fiscal year, BayFirst Financial Corp.'s revenue structure shows a clear reliance on traditional banking activities, but with a sharp contraction in non-core areas. Total revenue for this period was approximately $53.1 million, a figure heavily influenced by the strategic restructuring. Here's the quick math: Net Interest Income was $34.6 million, and Total Noninterest Income was $18.5 million.

Primary Revenue Sources and Segment Contribution

BayFirst Financial Corp., like any bank, generates revenue from two main buckets: Net Interest Income (NII) and Noninterest Income. NII is the money made from loans and investments minus the interest paid on deposits. Noninterest Income is everything else-fees, service charges, and gains on loan sales.

The first nine months of 2025 show that NII is now the defintely dominant segment, contributing about 65.2% of the total revenue. This is a clear signal of the shift toward a core community banking model. The primary sources break down like this:

• Interest Income: Driven by interest on the loan portfolio and deposits, totaling $64.8 million in the first nine months of 2025.
• Noninterest Income: Derived from loan servicing, service charges, and gains from government guaranteed loans. This segment contributed $18.5 million.

The Impact of the Strategic Pivot on Growth

The year-over-year growth picture is a tale of two segments, which is why looking at the aggregate revenue growth rate alone can be misleading. You have to separate the core lending business from the one-time events of the restructuring.

Net Interest Income from continuing operations actually saw a healthy increase, rising from $27.4 million in the first nine months of 2024 to $34.6 million in the same period of 2025, representing a growth of approximately 26.3%. That's a strong sign of core lending profitability improving, even with rising deposit costs being a constant pressure.

But here's the rub: Total Noninterest Income plummeted by about 51.6%, falling from $38.2 million to $18.5 million over the same nine-month period. This massive drop is the direct result of the company's decision to exit the Small Business Administration (SBA) 7(a) lending business, which historically provided significant gains on loan sales. The third quarter of 2025 alone saw non-interest income turn negative at -$1.0 million.

What this estimate hides is the one-time restructuring charge of $7.3 million and the $5.1 million net loss from the definitive agreement to sell a portion of the SBA 7(a) loan portfolio, both hitting the third quarter of 2025. The revenue stream is intentionally being reshaped, so the near-term volatility is a feature, not a bug. For a deeper dive into the risks and opportunities surrounding this shift, you should read our full post: Breaking Down BayFirst Financial Corp. (BAFN) Financial Health: Key Insights for Investors. Your next step is to model the financial impact of a fully-realized community bank structure, stripping out the defunct SBA revenue entirely.

Profitability Metrics

You're looking at BayFirst Financial Corp. (BAFN) and seeing a lot of turbulence, and honestly, the 2025 profitability numbers reflect a major strategic shift and some real credit quality issues. The direct takeaway is that BayFirst Financial Corp. is currently operating at a significant loss, driven by one-time charges and a sharp increase in credit provisions.

For the first nine months of 2025, BayFirst Financial Corp. reported a net loss of $20.5 million, a stark reversal from the prior year's net income. This loss translates to a Net Profit Margin of -38.61% when measured against the total revenue of $53.1 million (Net Interest Income plus Noninterest Income). That's a deep hole, and it's defintely not a sustainable rate.

Here's the quick math on the key profitability components for the first nine months of 2025:

• Total Revenue (Gross Profit Equivalent): $53.1 million ($34.6 million Net Interest Income + $18.5 million Noninterest Income).
• Operating Profit (Pre-Provision Net Revenue, or PPNR): $(5.5) million ($53.1M Total Revenue - $58.6M Noninterest Expense).
• Operating Profit Margin: -10.36%.

Trends in Profitability and Operational Efficiency

The trend in profitability is clearly negative in 2025. The core issue isn't just a revenue problem, but a cost and credit problem. Net Interest Income (NII) actually improved to $34.6 million in the first nine months of 2025, up from $27.4 million in the same period a year ago, reflecting better management of interest expense on deposits.

But, the total noninterest income plummeted, decreasing by $19.7 million year-over-year, largely due to lower gains on the sale of government-guaranteed loans. This reliance on less predictable fee income was a major vulnerability. Plus, the operational efficiency metrics were hit hard:

• Restructuring Charge: A $7.3 million charge was incurred to exit the SBA 7(a) lending business, a major one-time hit to noninterest expense.
• Credit Provision Surge: The provision for credit losses increased by $12.4 million in the first nine months of 2025 compared to 2024, showing a significant deterioration in loan portfolio quality.

What this estimate hides is the one-time nature of the restructuring charges. If you strip out the $7.3 million charge, the underlying operating expense picture improves slightly, but the negative PPNR still points to a fundamental challenge in covering operating costs with revenue before factoring in credit losses.

Industry Comparison: BAFN vs. Regional Banks

When you compare BayFirst Financial Corp.'s performance to the broader banking industry, the divergence is clear. The industry as a whole reported an aggregate Return on Assets (ROA) of 1.16% in the first quarter of 2025, and a healthy efficiency ratio (noninterest expense as a share of net operating revenue) of 56.2%. BayFirst Financial Corp.'s net loss means its ROA is deeply negative, and its calculated PPNR of $(5.5) million indicates its efficiency ratio is over 100% (meaning noninterest expense exceeds total revenue), which is a major red flag.

The company is focused on improving its Net Interest Margin (NIM), which was 3.61% in the third quarter of 2025, an increase from the prior year's quarter. This is a positive sign for core lending profitability, but it's completely overshadowed by the asset quality and restructuring costs. The management is aiming for a positive return on assets of 40-70 basis points in 2026 once the restructuring is complete, but that's a goal, not a current reality.

To be fair, the restructuring is a necessary step to stabilize the business long-term. You can find more on the company's long-term strategy here: Mission Statement, Vision, & Core Values of BayFirst Financial Corp. (BAFN).

Debt vs. Equity Structure

You need to know how BayFirst Financial Corp. (BAFN) is funding its operations, especially with the recent strategic shifts. The quick takeaway is that BayFirst Financial Corp.'s leverage is in line with its peers, but the composition of its funding is changing, with a greater reliance on secured borrowings and a pause on equity payouts.

The company's debt-to-equity (D/E) ratio currently sits at about 0.57 as of the end of the 2025 fiscal third quarter, which is right in the ballpark for a US regional bank, where the average is around 0.50. This indicates that for every dollar of shareholder equity, the company has about 57 cents in debt. It's a healthy ratio for a bank, but it's defintely something to watch as the company restructures.

Overview of Debt and Equity Levels

BayFirst Financial Corp.'s primary debt is secured borrowing, specifically advances from the Federal Home Loan Bank (FHLB). This is a common, stable source of wholesale funding for community banks. Here's the quick math: with total equity at $89.72 million as of September 30, 2025, the 0.57 D/E ratio implies total debt is roughly $51.14 million.

A significant portion of this debt is the FHLB borrowings, which have been increasing in 2025 to bolster liquidity and fund the loan portfolio. As of September 30, 2025, the Bank reported $50.0 million in FHLB borrowings. This is a noticeable jump, considering they had only $20.0 million in FHLB borrowings at the end of the first quarter of 2025. This signals a deliberate use of debt financing to manage their balance sheet during a transition.

• Total Equity (Q3 2025): $89.72 million
• FHLB Borrowings (Q3 2025): $50.0 million
• Debt-to-Equity Ratio: 0.57 (Oct 2025)

Balancing Debt and Equity Funding

The company is actively rebalancing its funding mix, shifting away from a reliance on non-interest income from government-guaranteed loans and towards a more traditional community banking model. This strategic pivot has immediate consequences for equity funding. To provide for a stronger balance sheet and conserve capital, BayFirst Financial Corp. suspended its common and preferred stock dividend payments in 2025. This action prioritizes retaining earnings (a form of equity) over distributing capital, which is a clear signal of risk management during a period of uncertainty and restructuring.

The strategic exit from the SBA 7(a) lending business, announced in September 2025 with the sale of $103 million in loans, further de-risks the balance sheet, which is a positive for equity holders in the long run, even if it caused a short-term loss.

Here is a snapshot of the leverage comparison:

Your action item is to track the FHLB borrowing trend in the next quarter's report; if it continues to climb significantly, it suggests a growing need for wholesale funding, which increases interest expense risk. For a deeper dive into the company's financial health, you can check out Breaking Down BayFirst Financial Corp. (BAFN) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You are looking at BayFirst Financial Corp. (BAFN) during a period of significant strategic change, so simply looking at standard liquidity ratios for a non-financial company won't tell the whole story. The firm's liquidity position remains stable, but it is heavily supported by wholesale funding and is managing a sharp decline in profitability from its restructuring. The on-balance sheet liquidity ratio actually improved, hitting 11.31% as of September 30, 2025, up from 8.04% in the first quarter of 2025. This is a defintely positive trend, showing more liquid assets relative to total assets.

For a bank, the current ratio and quick ratio are less relevant than the regulatory capital and deposit-to-loan ratios, but the general liquidity picture is clear: BAFN is actively managing its cash. Cash and cash equivalents stood at approximately $77.299 million at the end of the second quarter of 2025. The true strength lies in its access to external funds, which provides a robust safety net.

• On-balance sheet liquidity ratio: 11.31% in Q3 2025.
• FHLB borrowings: Increased to $50.0 million by Q3 2025.
• Cash and cash equivalents: $77.299 million at Q2 2025.

Working Capital and Funding Trends

The concept of working capital (Current Assets minus Current Liabilities) is distorted for a bank, but we can look at the underlying asset and liability trends. The key takeaway is the shift in funding strategy. Total assets grew slightly to $1.35 billion by the third quarter of 2025, but the composition is changing. Loans held for investment decreased to approximately $998.7 million in Q3 2025 as the company began exiting its SBA 7(a) lending business. This strategic pivot is reducing risky assets but requires careful management of the capital base, which saw total equity decrease to $89.72 million by Q3 2025.

To support its operations and manage the transition, BayFirst Financial Corp. has increased its secured borrowings from the Federal Home Loan Bank (FHLB), which are a key source of wholesale funding. These borrowings climbed from $20.0 million in Q1 2025 to $50.0 million by the end of Q3 2025. This reliance on FHLB funds is a sign of stability in access to capital, but it also increases the cost of funds compared to core deposits. You can read more about the strategic shift in the loan portfolio here: Exploring BayFirst Financial Corp. (BAFN) Investor Profile: Who's Buying and Why?

Cash Flow Statement Overview

The cash flow statement for 2025 reflects the turbulence of the strategic restructuring. The net cash generated from operating activities (CFO) showed a net change in cash of $41.25 million in the third quarter of 2025, a strong number that suggests core banking operations are still generating cash, even as the income statement shows a loss. Here's the quick math on the major components:

The cash flow from investing activities (CFI) is a significant outflow, estimated at -$324.8 million for the trailing twelve months ending November 2025, which is typical for a growing bank or one adjusting its investment portfolio. The financing activities (CFF) are the most telling: the company reported a net loss of $18.9 million in Q3 2025, driven by a $7.3 million restructuring charge. The Board's decision to suspend common and preferred stock dividend payments in Q2 2025 is a clear financing action aimed at preserving capital and cash flow, directly addressing the pressure from the net loss. This is a necessary, albeit painful, step to stabilize the balance sheet during a major transition.

Valuation Analysis

You're looking at BayFirst Financial Corp. (BAFN) and trying to figure out if the stock price reflects its true value, especially after the recent strategic shifts. The direct takeaway is that, based on traditional banking metrics like Price-to-Book (P/B), the stock appears significantly undervalued, but the negative earnings in 2025 complicate the picture and signal high risk.

The company's stock has been on a rough ride, reflecting the turbulence of its strategic restructuring and exit from the Small Business Administration (SBA) 7(a) lending business. As of November 14, 2025, the stock closed at $8.35 per share. Over the last 52 weeks, the price has fluctuated wildly, hitting a high of $19.75 and a low of $6.40. That range shows the market's uncertainty. Honestly, a 36.41% drop in the stock price during 2025 tells you all you need to know about investor sentiment right now.

Key Valuation Multiples

When assessing a bank, the Price-to-Book (P/B) ratio is often the most critical metric because it compares the stock price to the company's book value (assets minus liabilities). Here's the quick math on the key ratios using 2025 fiscal year data:

• Price-to-Book (P/B): The ratio stands at approximately 0.50. This is a classic sign of potential undervaluation, as it means the stock is trading for half of its net asset value per share. For a bank, a P/B below 1.0 is defintely a red flag for market confidence, but it also presents an opportunity if the restructuring succeeds.
• Price-to-Earnings (P/E): This ratio is currently not meaningful for comparison. BayFirst Financial Corp. reported a net loss of $18.9 million for the third quarter of 2025, resulting in a negative Trailing Twelve Months (TTM) Earnings Per Share (EPS) of -$4.66. A negative P/E simply tells you the company is losing money, which is a major risk.
• Enterprise Value-to-EBITDA (EV/EBITDA): The ratio is reported at -16.76. This metric is less common for bank analysis, but the negative value again confirms the earnings challenge. The negative EBITDA is a direct result of the large losses, including $12.4 million in one-time charges related to the strategic exit from SBA 7(a) lending.

Dividend and Analyst Sentiment

The dividend situation is a clear action point for investors. BayFirst Financial Corp. had been paying a quarterly dividend of $0.08 per share, which equated to an annual dividend of $0.32 and a yield of about 3.86% at certain price points. However, the Board voted to suspend all common and preferred stock dividend payments in the second quarter of 2025 to conserve capital amid the restructuring and credit challenges. Don't count on that income stream for now.

Analyst consensus has shifted, moving from a more bearish stance to a more neutral one. As of mid-November 2025, the stock is generally considered a Hold candidate. The market is waiting to see the results of the strategic transformation, which includes focusing resources on core community banking operations and derisking the balance sheet. The Q3 2025 net loss of $18.9 million was substantial, but a lot of that was due to one-time charges, so the market is looking past the current pain for future stability.

Risk Factors

You're looking at BayFirst Financial Corp. (BAFN) and seeing a bank in the middle of a major, and frankly, painful, strategic pivot. The direct takeaway is this: the company is accepting a massive short-term financial hit to shed a high-risk business line, but the execution risk on the new community banking model is now the primary concern for your investment thesis.

The company's Q3 2025 earnings report, released in October 2025, clearly outlines the immediate financial fallout from this shift. BayFirst Financial Corp. reported a substantial net loss of $18.9 million, or $4.66 per common share, which is a stark reversal from prior periods. This loss is directly tied to the decision to exit the Small Business Administration (SBA) 7(a) lending business, which, while historically a source of income, had become a material risk.

Operational and Strategic Transition Risk

The biggest risk right now is not external competition-though that's defintely there-it's the internal execution of their strategic shift. They are moving from a national-level SBA lender to a focused Tampa Bay community bank. This is a complete business model overhaul.

• Exit Cost and Volatility: The Q3 2025 results included $12.4 million in one-time charges, with a $7.3 million restructuring charge for exiting the SBA 7(a) business. This financial volatility will continue until the sale of the remaining SBA portfolio is finalized.
• Execution of New Model: Management is refocusing on traditional community banking products like business loans, owner-occupied commercial lending, and treasury management services. The risk is whether they can successfully ramp up these new, lower-risk revenue streams quickly enough to offset the lost income from the SBA portfolio. It's hard to change a company's DNA overnight.
• Market Competition: Even in their core Tampa Bay-Sarasota market, competition is intense. They need to win market share in a crowded space, which is a significant challenge for a bank in a restructuring phase.

Credit Quality and Financial Risks

The financial statements show clear signs of credit stress, which is one of the main reasons for the strategic exit. The bank had to significantly increase its safety net for bad loans.

Here's the quick math on credit risk:

The jump in the provision for credit losses to $10.9 million in Q3 2025, compared to $3.1 million a year earlier, is the clearest signal of deteriorating credit quality. Plus, nonperforming assets climbed to 1.97% of total assets. You need to see this number reverse course fast, as it directly impacts future earnings.

External and Mitigation Strategies

External risks are the typical macroeconomic headwinds-changes in interest rates, general economic conditions, and regulatory shifts. However, the bank has taken decisive, albeit costly, action to mitigate its most significant internal risk.

• SBA Exit as De-risking: The decision to sell $103 million of SBA 7(a) loan balances to Banesco USA is the core mitigation strategy. It immediately de-risks the balance sheet by removing a volatile asset class.
• Liquidity Buffer: The bank maintains a stable liquidity position, with an on-balance sheet liquidity ratio of 11.31% as of September 30, 2025. This provides a buffer to manage the current transition.
• Return to Profitability Goal: Management is targeting a positive Return on Assets (ROA) of 40-70 basis points in 2026, which hinges on successfully executing the community bank strategy and improving credit administration.

The goal is a stronger, more resilient organization, but you're investing in the hope of a 2026 turnaround, not the current reality. If you want to dive deeper into who is currently holding the stock during this transition, you should be Exploring BayFirst Financial Corp. (BAFN) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking at BayFirst Financial Corp. (BAFN) right now, and the first thing you need to understand is that the company is in a massive, painful pivot. They are shedding a risky, non-core business-the Small Business Administration (SBA) 7(a) lending-to double down on their profitable, relationship-driven community bank model in the Tampa Bay-Sarasota region. This strategic shift is the single biggest driver of their future growth, but it comes with near-term costs.

The headline number is tough: BayFirst Financial Corp. reported a net loss of $18.9 million, or $4.66 per share, for the third quarter of 2025. Here's the quick math: that loss was primarily driven by $12.4 million in one-time charges, including a $7.3 million restructuring charge, tied directly to exiting the SBA 7(a) business and selling a loan portfolio to Banesco USA. This is a one-time clean-up, but it defintely impacts the 2025 numbers.

Still, the core community bank is showing a clear path forward. Net interest income (NII) from continuing operations-meaning the community bank-was $34.6 million for the first nine months of 2025, which is a solid increase from $27.4 million in the same period a year prior. That's the engine you should be watching.

• Regional Focus: They operate 12 banking centers across the high-growth Tampa Bay-Sarasota region.
• Deposit Strength: BayFirst Financial Corp. holds the second-highest deposit market share in their region among banks with under $10 billion in assets.
• Loan Production: Community banking generated $27.9 million in new loans during Q3 2025 alone.

The future revenue growth will be fueled by this regional focus, not the national lending platform they are exiting. They are also expanding their Treasury Management services, which is a great, sticky source of non-interest income. Treasury management fee income has grown from $20,000 in 2022 to $69,000 year-to-date in 2025. It's a small number now, but it's a high-margin business that helps service small and medium-sized businesses, locking in those core deposits.

Their competitive advantage is now purely local: a relationship-driven strategy that saw total deposits increase to $1.17 billion in the third quarter of 2025, a 5.3% increase over the past year. That's a stable, low-cost funding base. What this estimate hides, however, is the full impact of the loan portfolio cleanup; nonperforming loans to total loans held for investment rose to 1.69% in Q3 2025, so the credit quality issue isn't fully resolved yet.

For a clearer view of the transition, here is a breakdown of the key financial metrics from the third quarter of 2025:

The future hinges on their ability to execute this community bank strategy flawlessly. If you want to dive deeper into the nuts and bolts of the balance sheet, you can check out the full analysis: Breaking Down BayFirst Financial Corp. (BAFN) Financial Health: Key Insights for Investors. Finance: track the NII growth from continuing operations and the nonperforming loan ratio quarterly to confirm the pivot is working.