BayFirst Financial Corp. (BAFN): History, Ownership, Mission, How It Works & Makes Money

BayFirst Financial Corp. (BAFN) just reported a Q3 2025 net loss of $18.9 million, but does this massive strategic pivot away from government-guaranteed lending signal a value trap or a defintely deep-value opportunity for investors?

You're looking at a bank with $1.35 billion in total assets that is fundamentally changing its business model by exiting the high-risk Small Business Administration (SBA) 7(a) lending unit, a move that triggered $12.4 million in one-time restructuring charges alone.

This is a clear, painful de-risking strategy, and while the company is betting on its core community banking operations across its twelve Tampa Bay-Sarasota offices, we need to understand how they plan to replace the revenue and drive profitability in 2026.

BayFirst Financial Corp. (BAFN) History

BayFirst Financial Corp. is a community bank holding company that has evolved from a local Florida institution into a Nasdaq-listed entity with a national presence in government-guaranteed lending, though it is now pivoting back to a community-focused model. Its history is a story of strategic shifts, the most recent of which is a decisive exit from the Small Business Administration (SBA) 7(a) lending business in late 2025 to derisk the balance sheet and focus on core banking in the Tampa Bay-Sarasota region. This is a big move.

Given Company's Founding Timeline

Year established

The bank subsidiary, BayFirst National Bank (originally First Home Bank), commenced business operations on February 12, 1999. The parent holding company, BayFirst Financial Corp. (originally First Home Bancorp, Inc.), was incorporated in June 2000 and commenced operations on September 1, 2000.

Original location

The company has always been headquartered in St. Petersburg, Florida, a location that underscores its commitment to the Tampa Bay-Sarasota market.

Founding team members

While the original founding team members from the 1999 launch are not explicitly named in public filings, the company's early growth was steered by a local group dedicated to community banking. A key figure in the mid-to-late evolution was Anthony N. Leo, who served as CEO during the significant 2021 rebrand and Nasdaq listing. As of late 2025, the company is led by CEO Thomas G. Zernick.

Initial capital/funding

Specific initial capital from the 1999 launch is not publicly detailed, but the company has since relied on strategic capital raises to fuel its growth. A notable milestone was a private placement completed in 2017, which raised gross proceeds of approximately $9.426 million through the issuance of common stock to institutional and high net worth investors.

Given Company's Evolution Milestones

Given Company's Transformative Moments

The company's most significant transformation is the strategic pivot announced in late 2025, which fundamentally changes its business model. This move was a direct response to credit challenges, particularly within the government-guaranteed lending portfolio.

• Exiting National SBA Lending: The decision to entirely exit the SBA 7(a) lending business, which was a top-tier national originator, marks an end to a high-growth, but high-risk, chapter.
• Q3 2025 Restructuring Costs: The third quarter of 2025 reflected the immediate financial impact of this shift, reporting a net loss of $18.9 million. This loss included a substantial $7.3 million restructuring charge and a $5.1 million fair value loss on the loans held for sale.
• Balance Sheet De-risking: The sale of $103 million in SBA 7(a) loan balances to Banesco USA for 97% of the retained balances is a clear action to strengthen the balance sheet and reduce future credit volatility.

Here's the quick math: The Q3 2025 net loss of $18.9 million was a sharp reversal from the net income of $1.1 million reported in the same quarter of the prior year, defintely showing the cost of this strategic realignment. The company's total assets were $1.35 billion as of September 30, 2025, providing a solid base for the renewed focus on its community bank operations. You can see a deeper dive into the ownership structure and market sentiment in Exploring BayFirst Financial Corp. (BAFN) Investor Profile: Who's Buying and Why?

BayFirst Financial Corp. (BAFN) Ownership Structure

BayFirst Financial Corp. (BAFN) is a publicly traded company, meaning its ownership is distributed among a mix of institutional funds, company insiders, and everyday retail investors. This structure, with a significant public float, means strategic decisions are often a balance between management's vision and the interests of a diverse shareholder base.

BayFirst Financial Corp.'s Current Status

BayFirst Financial Corp. is a public company traded on the NASDAQ Stock Exchange under the ticker symbol BAFN. As of November 2025, the company has a market capitalization of approximately $33.96 million, reflecting its size as a community-focused financial institution undergoing a strategic shift.

The company is currently executing a major restructuring, including the exit from its SBA 7(a) lending business, which resulted in a Q3 2025 net loss of $18.9 million. This move is defintely a pivot toward strengthening its core community banking model in the Tampa Bay and Sarasota markets. You can dive deeper into the implications of this shift by reading Breaking Down BayFirst Financial Corp. (BAFN) Financial Health: Key Insights for Investors.

BayFirst Financial Corp.'s Ownership Breakdown

The company's ownership structure is critical for understanding who holds the power to influence its direction, especially during a restructuring. Insider ownership is quite high for a public company, which means management and directors have a substantial vested interest in the long-term success of the business.

Here's the quick math: with insiders controlling nearly one-fifth of the company, their decisions carry significant weight. For instance, Banc Funds Company, L.L.C. and First Manhattan Co. LLC are each top institutional holders with about 3.04% of the stock, a sizeable stake in a smaller bank.

BayFirst Financial Corp.'s Leadership

The executive team is steering the company through its major strategic repositioning in 2025, focusing resources back on community banking. The average tenure of the Board of Directors is long, at 5.8 years, suggesting experienced oversight.

• Thomas G. Zernick: Chief Executive Officer (CEO) and Director. He has been instrumental in the current strategic review and exit from the SBA 7(a) business.
• Robin L. Oliver: President and Chief Operating Officer (COO) and Director. A Certified Public Accountant, she manages the day-to-day operations and strategic execution.
• Scott J. McKim: Executive Vice President (EVP) and Chief Financial Officer (CFO). He oversees the financial strategy and capital management.
• Susan P. Khayat: EVP, Chief Credit Officer. She joined in 2025 and brings a strong background as a former bank regulator, which is crucial for managing the balance sheet risk during this transition.
• Anthony Saravanos: Board Chair. He leads the Board of Directors, which provides governance and oversight to the executive team.

The leadership is a mix of long-tenured executives and new, specialized talent brought in to navigate the current financial environment.

BayFirst Financial Corp. (BAFN) Mission and Values

BayFirst Financial Corp.'s core purpose centers on community-first banking, defining success by local well-being and growth, not just balance sheets. This focus is defintely critical now, as the company executes a major strategic pivot away from national lending to strengthen its Tampa Bay community bank operations. Mission Statement, Vision, & Core Values of BayFirst Financial Corp. (BAFN).

Given Company's Core Purpose

The company's cultural DNA is built around a commitment to community, culture, and sustainability, which informs every decision, even during a challenging transition. For instance, while the company reported a net loss of $18.9 million in the third quarter of 2025 due to restructuring charges, management stressed that the shift is meant to better focus resources on their core community bank priorities, which is where the mission lives.

Official mission statement

BayFirst Financial Corp. strives to be the first choice for individuals, families, and small businesses to enhance their financial well-being and foster growth. They aim to redefine the banking experience by seamlessly integrating technology with an amazing human touch. This is a clear, relationship-driven mandate.

Their mission is supported by four core values, which they summarize using the acronym C.A.R.E. These values guide how they operate internally and how they show up for their customers:

• Curiosity: Fuels the solutions they offer.
• Adaptability: Shapes how they respond to market change.
• Resilience: Keeps the institution steady through challenges.
• Excellence: Drives them to always deliver their best.

Vision statement

The company's vision is to be the premier community bank in Tampa Bay, a goal that requires a stable funding base and disciplined risk management. They measure overall success not just by profit, but by the lasting impact made through community involvement, financial education, and economic inclusivity. This is a long-term play.

Here's the quick math on their focus: BayFirst grew deposits by $59.3 million over the past year to reach $1.17 billion as of Q3 2025, showing their community-focused deposit strategy is working to build a stable foundation.

Given Company slogan/tagline

BayFirst Financial Corp.'s official tagline speaks directly to their commitment to long-term community presence and support, especially as other local institutions consolidate.

• Being Here For What's Next.®

That slogan is a promise to stay put and support customers through every phase of their financial journey, from a child's first savings account to small business financing. They're all-in on the Tampa Bay area.

BayFirst Financial Corp. (BAFN) How It Works

BayFirst Financial Corp. operates as a traditional, relationship-driven community bank, primarily generating revenue by taking in local deposits and lending that capital back out to individuals and businesses in the Tampa Bay-Sarasota region.

The company is undergoing a major strategic pivot as of late 2025, exiting the high-volume, but volatile, Small Business Administration (SBA) 7(a) lending business to focus entirely on its core community banking model, which is centered on commercial, consumer, and real estate lending funded by a stable, lower-cost deposit base.

BayFirst Financial Corp.'s Product/Service Portfolio

Following the Q3 2025 restructuring, BayFirst Financial Corp.'s value proposition is now squarely focused on traditional banking services, moving away from national government-guaranteed lending. This shift aims to create more predictable, recurring net interest income.

BayFirst Financial Corp.'s Operational Framework

The operational framework is shifting to prioritize net interest margin (NIM) expansion and local market penetration over fee income from loan sales. Honestly, this is a necessary move after the Q3 2025 net loss of $18.9 million, driven by the restructuring and high provision for credit losses.

The core value creation process now relies on a classic bank model, but executed with a regional focus:

• Fund the Balance Sheet: The bank aggressively seeks low-cost, core deposits from the local community to serve as its primary funding source. Total deposit balances hit $1.17 billion as of September 30, 2025, with over 84% of deposits insured by the FDIC.
• Lend Locally: Capital is deployed into conventional commercial and consumer loan portfolios, with a heavy emphasis on commercial real estate and C&I lending within its twelve full-service branch network in the Tampa Bay-Sarasota area.
• Generate Net Interest Income: The difference between the interest earned on the loan portfolio and the interest paid on deposits (the NIM) is the main profit engine. Net interest income from continuing operations was $34.6 million for the first nine months of 2025.
• Grow Fee Income: Non-interest income, like treasury management fees, is being expanded to provide a secondary, stable revenue stream to offset the loss of the SBA loan sale gains.

Here's the quick math: Loans held for investment were approximately $999 million in Q3 2025, and the bank is focused on growing that number with conventional loans while shedding the riskier SBA assets.

BayFirst Financial Corp.'s Strategic Advantages

BayFirst's strategic advantages are now rooted in its deep community ties and a cleaner, less-risky balance sheet following the strategic exit from national lending. The goal is to build long-term shareholder value through stability, not just high-growth loan origination. You can read more about their priorities in their Mission Statement, Vision, & Core Values of BayFirst Financial Corp. (BAFN).

• Local Market Dominance: The bank holds the second largest deposit market share among banks with less than $10 billion in assets in the vibrant Tampa Bay-Sarasota region. This local knowledge is defintely a key competitive edge for underwriting and relationship banking.
• Capital and Liquidity Strength: Despite the recent losses, the bank maintains a strong capital base, with a Total Capital to Risk-Weighted Assets ratio of 11.73% as of March 31, 2025, providing a buffer for future growth.
• De-risked Model: The September 2025 decision to exit the SBA 7(a) business and sell $103 million in loans to Banesco USA reduces balance sheet volatility and risk exposure, allowing management to focus resources on the more predictable community bank portfolio.
• Stable Funding Base: A strong focus on growing core deposits has led to deposit balances increasing by 5.3% over the past year to $1.17 billion, which helps keep the cost of funds lower than competitors who rely on more expensive wholesale funding.

BayFirst Financial Corp. (BAFN) How It Makes Money

BayFirst Financial Corp. primarily makes money the way most banks do: by borrowing money (taking deposits) and lending it out at a higher rate, which is called net interest income. However, a significant, and recently volatile, portion of its revenue has historically come from noninterest income, specifically the gain on the sale of government-guaranteed loans.

BayFirst Financial Corp.'s Revenue Breakdown

For the first nine months of 2025, the company's total revenue was approximately $53.1 million, with a clear majority coming from traditional lending activities. This breakdown reflects the underlying, and now shifting, business model.

Business Economics

The core economic engine of BayFirst Financial Corp. is its Net Interest Margin (NIM), which measures the profitability of its lending versus its cost of funds. In the third quarter of 2025, the NIM stood at 3.61%. This is the spread the bank earns, and honestly, it's the most defintely sustainable revenue source.

The biggest recent shift is the company's announced exit from its high-volume Small Business Administration (SBA) 7(a) lending business. This strategic move is designed to de-risk the balance sheet and reduce reliance on volatile noninterest income, which is essentially the gain-on-sale revenue from selling the guaranteed portion of SBA loans into the secondary market. That gain-on-sale income is unpredictable, so moving away from it is a clear path to stability.

• Strategic Focus: Shifting to a traditional, relationship-based community banking model.
• Gain-on-Sale Volatility: The dramatic drop in Noninterest Income, including a negative $1.0 million in Q3 2025, highlights the risk of relying on the loan sale market.
• Future Target: Management aims for a Net Interest Margin closer to 4.0% over time, coupled with a Return on Average Assets (ROAA) target of 40-70 basis points in 2026, signaling a focus on efficiency and stable profitability.

If you want to understand the foundational principles driving this strategic pivot, you can review the Mission Statement, Vision, & Core Values of BayFirst Financial Corp. (BAFN).

BayFirst Financial Corp.'s Financial Performance

The third quarter of 2025 was a challenging one, primarily due to the strategic restructuring costs. The company reported a significant net loss of $18.9 million for the quarter, compared to a net income of $1.1 million in the same period last year. This loss was heavily impacted by one-time charges.

• Restructuring Charge: A $7.3 million charge was recorded related to the exit from the SBA 7(a) lending business, including the sale of a portion of that loan portfolio.
• Credit Risk Provision: The provision for credit losses surged to $10.9 million in Q3 2025, a necessary but painful acknowledgment of rising credit risk in the loan portfolio.
• Balance Sheet Health: Total assets remain solid at approximately $1.35 billion as of September 30, 2025, but total equity decreased to $89.72 million, down from $102.2 million a year earlier, reflecting the net loss.
• Loan Portfolio: Total loans held for investment decreased to $998.7 million in Q3 2025, an 11.3% drop from the previous quarter, as the company reduced its exposure to the SBA portfolio.

Here's the quick math on the loss: the $18.9 million net loss is a direct result of the $10.9 million credit loss provision plus the $7.3 million restructuring charge, which together nearly account for the entire deficit. What this estimate hides is the long-term benefit of a less volatile revenue stream, even if the near-term numbers are ugly.

BayFirst Financial Corp. (BAFN) Market Position & Future Outlook

BayFirst Financial Corp. is in the middle of a major strategic pivot, moving from a national Small Business Administration (SBA) lender to a pure, hyper-local community bank focused on the high-growth Tampa Bay-Sarasota market. This shift, while painful-evidenced by the Q3 2025 net loss of $18.9 million-is designed to derisk the balance sheet and stabilize future earnings by focusing on core deposits and conventional lending. The company is betting its future on its strong local franchise value, aiming for a positive return on assets (ROA) of 40-70 basis points (bps) in 2026. Exploring BayFirst Financial Corp. (BAFN) Investor Profile: Who's Buying and Why?

Competitive Landscape

In the Tampa Bay-Sarasota region, BayFirst Financial Corp. holds a strong position as the second-largest bank in deposit market share among institutions with less than $10 billion in assets. This local deposit base is its primary competitive moat. To be fair, the overall market is fragmented, pitting them against both large national players and nimble regional banks.

Here's the quick math: Market share percentages are estimated based on BAFN's reported ranking and total assets of $1.34 billion, as precise local percentages for the sub-$10B segment are proprietary. Regional Bank Leader market share reflects the broader Tampa-St. Petersburg-Clearwater MSA deposit market share, where large banks dominate overall.

Opportunities & Challenges

The strategic pivot opens up clear opportunities, but it also crystallizes near-term risks, especially around asset quality and execution.

Industry Position

BayFirst Financial Corp.'s industry standing is currently defined by a painful, necessary transition. The company is shedding its identity as a top-tier national SBA 7(a) lender-a business that became too risky and capital-intensive-to double down on its roots as a community bank.

• The bank operates 12 full-service banking centers across the Tampa Bay-Sarasota region.
• Total assets stood at $1.34 billion as of September 30, 2025.
• Liquidity remains solid with $120 million in cash and due from other banks as of Q3 2025.
• The goal is to move from volatile, fee-based SBA income to more stable net interest income from conventional loans and core deposits.
• What this estimate hides is the potential for further credit loss provisions as they work to resolve the remaining unguaranteed SBA loans.

The market is defintely watching to see if management can successfully execute this pivot and deliver the targeted 2026 profitability.