BayFirst Financial Corp. reported a net loss of $18.9 million, or $4.66 per share, for the third quarter of 2025, compared with a net income of $1.1 million in the same quarter a year earlier.
Net interest income rose to $11.3 million, but the net interest margin fell to 3.61% from 4.06% in the prior quarter, driven by higher cost of funds and lower loan yields.
Noninterest income declined by $11.8 million, largely due to reduced gains on government‑guaranteed loan sales and lower fair‑value gains on held‑for‑sale loans.
Provision for credit losses increased to $10.9 million, up from $7.3 million in Q2, reflecting higher nonperforming assets at 1.97% of total assets versus 1.79% in Q2.
Noninterest expense rose to $25.2 million, with a $7.3 million restructuring charge accounting for the majority of the increase.
BayFirst entered into a definitive agreement to sell 97% of its SBA 7(a) loan portfolio to Banesco USA, resulting in a net loss of $5.1 million on the transaction. The sale is expected to close in the fourth quarter of 2025, subject to regulatory approval.
The company will exit the SBA 7(a) lending business entirely, offering positions to the majority of SBA staff at Banesco. The move is part of a broader strategy to de‑risk the balance sheet and focus on core community banking in the Tampa Bay region.
Management emphasized strengthening the deposit base and conventional loan portfolio to improve recurring net interest income and stabilize earnings. The restructuring plan is intended to strengthen the balance sheet and support long‑term shareholder value.
Capital ratios declined between Q2 and Q3, with Tier 1 leverage falling from 8.11% to 6.64% and CET1 from 9.98% to 8.44%, underscoring the financial pressures that prompted the restructuring.
The company did not provide new forward guidance beyond the strategic focus on core operations, but management noted that the restructuring and exit from SBA lending are expected to improve earnings stability.
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