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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the fiscal period ended March 31, 2026
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission file number 001-41068

BAYFIRST FINANCIAL CORP.

(Exact name of registrant as specified in its charter)


Florida			59-3665079
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

700 Central Avenue St. Petersburg, Florida			33701
(Address of Principal Executive Offices)			(Zip Code)

(727) 440-6848

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	BAFN	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None




Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ☒

The registrant had outstanding 4,108,072 shares of common stock as of May 5, 2026.

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BayFirst Financial Corp.

Table of Contents


		Page
Part I - Financial Information		3
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets at March 31, 2026 (Unaudited) and December 31, 2025	3
	Condensed Consolidated Statements of Income (Loss) (Unaudited) for the three months ended March 31, 2026 and 2025	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the three months ended March 31, 2026 and 2025	6
	Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) for the three months ended March 31, 2026 and 2025	7
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2026 and 2025	8
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	54
Item 4.	Controls and Procedures	55

Part II - Other Information		56
Item 1.	Legal Proceedings	56
Item 1A.	Risk Factors	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	57
Signatures		58

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Glossary of Acronyms and Abbreviations

The acronyms and abbreviations identified below may be used throughout this Quarterly Report on Form 10-Q or in our other SEC filings. You may find it helpful to refer back to this page while reading this report.


ACL: Allowance for Credit Losses			FFIEC: Federal Financial Institutions Examination Council
AFS: Available for Sale			FHLB: Federal Home Loan Bank
AIO: Architecture, Infrastructure, and Operations			FNBB: First National Bankers Bank
ALCO: Asset-Liability Committee			FOMC: Federal Open Market Committee
AOCI: Accumulated Other Comprehensive Income			FRB: Federal Reserve Bank
ASC: FASB Accounting Standards Codification			FVO: Fair Value Option
ASU: FASB Accounting Standards Update			GAAP: Generally Accepted Accounting Principles
BHCA: Bank Holding Company Act of 1956, as amended			HFI: Held for Investment
BOLI: Bank Owned Life Insurance			HFS: Held for Sale
BSA: Bank Secrecy Act of 1970			HTM: Held to Maturity
CARES Act: Coronavirus Aid, Relief, and Economic Security Act			IRA: Individual Retirement Account
CBLR: Community Bank Leverage Ratio			ISO: Information Security Officer
CDARS: Certificate of Deposit Account Registry Services			IT: Information Technology
CECL: Current Expected Credit Losses			JOBS Act: Jumpstart Our Business Startups Act of 2012
CEO: Chief Executive Officer			LGD: Loss Given Default
CET1: Common Equity Tier 1 Capital			LHFS: Loans Held for Sale
CFPB: Consumer Financial Protection Bureau			MMDA: Money Market Deposit Account
C&I: Commercial and Industrial			NOW: Negotiable Order of Withdrawal
CRO: Chief Risk Officer			NSPP: Non-Qualified Stock Purchase Plan
CTO: Chief Technology Officer			OCC: Office of the Comptroller of the Currency
Dodd-Frank Act: Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010			OREO: Other Real Estate Owned
DRIP: Dividend Reinvestment Plan			OTTI: Other-Than-Temporary Impairment
EGC: Emerging Growth Company			PCAOB: Public Company Accounting Oversight Board
EPS: Earnings per Share			PD: Probability of Default
Equity Plan: The Amended and Restated 2017 Equity Incentive Plan			PPP: Paycheck Protection Program
ESG: Environmental, Social, and Governance			ROU: Right of Use
ESOP: Employee Stock Ownership Plan			SBA: Small Business Administration
Exchange Act: Securities Exchange Act of 1934			SEC: U.S. Securities and Exchange Commission
FASB: Financial Accounting Standards Board			SOFR: Secured Overnight Financing Rate
FBCA: Florida Business Corporation Act			U.S.: United States
FDIA: Federal Deposit Insurance Act			USDA: United States Department of Agriculture
FDIC: Federal Deposit Insurance Corporation			USDA B&I: United States Department of Agriculture Business and Industry
FDICIA: Federal Deposit Insurance Corporation Improvement Act			WARM: Weighted Average Remaining Life

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BAYFIRST FINANCIAL CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

Part I - Financial Information

Item 1. Financial Statements


	March 31, 2026		December 31, 2025		(1)

ASSETS
Cash and due from banks	$	6,848	$	5,123
Interest-bearing deposits in banks	127,617		201,859
Cash and cash equivalents	134,465		206,982

Investment securities available for sale, at fair value (amortized cost: $31,268 and $31,974 at March 31, 2026 and December 31, 2025, respectively)	28,531		29,363
Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $9 and $7 (fair value: $2,378 and $2,384 at March 31, 2026 and December 31, 2025, respectively)	2,491		2,493
Nonmarketable equity securities	4,662		4,656


Government guaranteed loans HFI, at fair value	51,807		54,076
Loans HFI, at amortized cost	878,619		909,818
Allowance for credit losses on loans	(20,632)		(21,996)
Net loans HFI, at amortized cost	857,987		887,822
Accrued interest receivable	7,683		8,421
Premises and equipment, net	30,690		31,188
Loan servicing rights	11,334		12,580
Deferred income tax asset	8,489		6,538
Right-of-use operating lease assets	14,171		14,504
Bank owned life insurance	27,457		27,264
Other real estate owned	400		400
Other assets	15,743		13,971

Total assets	$	1,195,910	$	1,300,258
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Noninterest-bearing deposit accounts	$	111,476	$	95,731
Interest-bearing transaction accounts	153,860		231,227
Savings and money market deposit accounts	432,781		454,639
Time deposits	387,752		402,341
Total deposits	1,085,869		1,183,938

Subordinated notes	6,099		5,962
Notes payable	1,479		1,593

Accrued interest payable	958		1,133
Operating lease liabilities	13,003		13,264

Accrued expenses and other liabilities	6,635		6,799

Total liabilities	1,114,043		1,212,689

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BAYFIRST FINANCIAL CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS CONTINUED

(Dollars in thousands, except per share data)


	March 31, 2026		December 31, 2025		(1)

Shareholders’ equity:
Preferred stock, Series A; no par value, 10,000 shares authorized, 6,395 shares issued and outstanding at March 31, 2026 and December 31, 2025; aggregate liquidation preference of $6,827 at March 31, 2026 and $6,683 at December 31, 2025	6,161		6,161
Preferred stock, Series B; no par value, 20,000 shares authorized, 3,210 shares issued and outstanding at March 31, 2026 and December 31, 2025; aggregate liquidation preference of $3,402 at March 31, 2026 and $3,338 at December 31, 2025	3,123		3,123
Preferred stock, Series C; no par value, 10,000 shares authorized, 6,446 shares issued and outstanding at March 31, 2026 and December 31, 2025; aggregate liquidation preference of $6,978 at March 31, 2026 and $6,801 at December 31, 2025	6,446		6,446
Common stock and additional paid-in capital; no par value, 15,000,000 shares authorized, 4,108,072 and 4,108,609 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively	54,390		54,371
Accumulated other comprehensive loss, net	(2,054)		(1,960)
Unearned compensation	(282)		(335)
Retained earnings	14,083		19,763
Total shareholders’ equity	81,867		87,569
Total liabilities and shareholders’ equity	$	1,195,910	$	1,300,258

(1) Derived from audited consolidated financial statements

See accompanying notes.

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BAYFIRST FINANCIAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Dollars in thousands, except per share data)


	Three Months Ended March 31,
	2026		2025
Interest income:
Loans, including fees	$	15,930	$	19,751
Interest-bearing deposits in banks and other	1,509		934
Total interest income	17,439		20,685
Interest expense:
Deposits	7,893		9,431
Borrowings	97		255
Total interest expense	7,990		9,686
Net interest income	9,449		10,999
Provision for credit losses	3,078		4,400
Net interest income after provision for credit losses	6,371		6,599
Noninterest income:
Loan servicing income, net	770		736
Gain (loss) on sale of government guaranteed loans, net	(97)		7,327
Service charges and fees	490		449
Government guaranteed loans fair value loss, net	(533)		(755)

Government guaranteed loan packaging fees	—		716
Gain on sale of premises and equipment	13		—
Other noninterest income	241		278
Total noninterest income	884		8,751
Noninterest expense:
Salaries and benefits	5,069		7,998
Bonus, commissions, and incentives	290		71

Occupancy and equipment	1,368		1,634
Data processing	1,489		2,045
Marketing and business development	123		487
Professional services	1,164		732
Loan servicing and origination expense	3,836		1,035
Employee recruiting and development	202		617
Regulatory assessments	578		339

Other noninterest expense	767		855
Total noninterest expense	14,886		15,813
Loss before income taxes	(7,631)		(463)
Income tax benefit	(1,951)		(128)
Net loss	(5,680)		(335)






Preferred stock dividends	385		385
Net loss attributable to common shareholders	$	(6,065)	$	(720)



Basic loss per common share	$	(1.48)	$	(0.17)




Diluted loss per common share	$	(1.48)	$	(0.17)

See accompanying notes.

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BAYFIRST FINANCIAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Dollars in thousands)


	Three Months Ended March 31,
	2026		2025
Net loss	$	(5,680)	$	(335)
Net unrealized gains (losses) on investment securities available for sale	(126)		799
Deferred income tax expense (benefit)	32		(221)
Other comprehensive income (loss), net	(94)		578
Comprehensive income (loss)	$	(5,774)	$	243

See accompanying notes.

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BAYFIRST FINANCIAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Dollars in thousands, except per share data)


	Preferred Stock, Series A		Preferred Stock, Series B		Preferred Stock, Series C		Common Stock, Additional Paid-in Capital, and Unearned Compensation		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
Balance at January 1, 2025	$	6,161	$	3,123	$	6,446	$	54,012	$	(2,956)	$	44,134	$	110,920
Net income	—		—		—		—		—		(335)		(335)






Repurchase of common stock	—		—		—		(335)		—		—		(335)




Stock-based awards - common stock:
Restricted stock expense, net of tax impact	—		—		—		(31)		—		—		(31)
Stock option expense	—		—		—		5		—		—		5

Other comprehensive income, net	—		—		—		—		578		—		578
Dividends declared on:
Preferred stock	—		—		—		—		—		(385)		(385)
Common stock ($0.08 per share)	—		—		—		—		—		(332)		(332)
Balance at March 31, 2025	$	6,161	$	3,123	$	6,446	$	53,651	$	(2,378)	$	43,082	$	110,085

Balance at January 1, 2026	$	6,161	$	3,123	$	6,446	$	54,036	$	(1,960)	$	19,763	$	87,569
Net loss	—		—		—		—		—		(5,680)		(5,680)

Issuance of common stock under:
Non-qualified stock purchase plan	—		—		—		18		—		—		18









Restricted stock expense, net of tax impact	—		—		—		53		—		—		53
Stock option expense	—		—		—		1		—		—		1

Other comprehensive loss, net	—		—		—		—		(94)		—		(94)



Balance at March 31, 2026	$	6,161	$	3,123	$	6,446	$	54,108	$	(2,054)	$	14,083	$	81,867

See accompanying notes.

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BAYFIRST FINANCIAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)


	Three Months Ended March 31,
	2026		2025
Cash flows from operating activities:
Net loss	$	(5,680)	$	(335)


Adjustments to reconcile net loss to net cash from operating activities:
Depreciation of fixed assets	518		553
Net securities premium amortization	2		19
Amortization of debt issuance costs	2		1
Amortization of premium on loans purchased, net	161		322
Provision for credit losses	3,078		4,400
Accretion of discount on unguaranteed loans	(804)		(882)
Deferred tax benefit	(7,221)		(189)

Proceeds from sales of government guaranteed loans held for sale	665		76,557
Net (gains) losses on sales of government guaranteed loans	97		(7,327)




Change in fair value of government guaranteed loans HFI, at fair value	533		755
Amortization of loan servicing rights	1,246		1,726
Gain on sale of premises and equipment	(13)		—


Non-qualified stock purchase plan expense	—		5
Stock based compensation expense	54		(26)

Income from bank owned life insurance	(193)		(183)
Impairment of equipment and software	1,249		—
Capitalization of subordinated debt interest	135		—
Changes in:
Accrued interest receivable	738		2
Other assets	2,874		(359)
Accrued interest payable	(175)		17
Other liabilities	(472)		(892)


Net cash provided by (used in) operating activities	(3,206)		74,164
Cash flows from investing activities:
Purchase of investment securities available for sale	—		(2,480)
Principal payments on investment securities available for sale	704		733


Call of investment securities held to maturity	—		2,500
Net purchase of nonmarketable equity securities	(6)		(954)
Purchase of time deposits in banks	—		(5)
Maturity of time deposits in banks	—		250


Loan originations/(payments), net	28,104		(92,636)

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BAYFIRST FINANCIAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED (Dollars in thousands)


	Three Months Ended March 31,
	2026		2025
Purchase of premises and equipment	(7)		(73)

Loss on repossessed assets	59		—

Net cash provided by (used in) investing activities	28,854		(92,665)
Cash flows from financing activities:
Net change in deposits	(98,069)		(14,962)
Net decrease in short-term borrowings	—		20,000

Payments on notes payable	(114)		(114)



Proceeds from issuance of common stock for benefit plans, net	18		(5)
Common share buyback - redeemed stock	—		(335)



Dividends paid on common stock	—		(332)
Dividends paid on preferred stock	—		(385)
Net cash provided by (used in) financing activities	(98,165)		3,867
Net change in cash and cash equivalents	(72,517)		(14,634)
Cash and cash equivalents, beginning of period	206,982		77,788
Cash and cash equivalents, end of period	$	134,465	$	63,154
Supplemental cash flow information
Interest paid	$	8,165	$	9,669
Income taxes paid	3		—
Supplemental noncash disclosures

Net change in unrealized holding gains (losses) on investment securities available for sale, net of tax effect	(94)		578

Transfer of government guaranteed loans HFI to loans HFS	762		70,882


Transfer of loans HFI to repossessed assets	319		—

See accompanying notes.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include BayFirst Financial Corp. and its wholly owned subsidiary, BayFirst National Bank (“the Bank”), together referred to as “the Company”.

These unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles followed within the financial services industry for interim financial information and Article 8 of Regulation S-X. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to these rules and regulations. The consolidated balance sheet as of December 31, 2025 has been derived from the audited consolidated financial statements of BayFirst Financial Corp. for that date.

In the opinion of management, all adjustments, consisting of normal and recurring items, considered necessary for a fair presentation of the condensed consolidated financial statements for the interim periods have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain amounts reported in prior periods have been reclassified to conform to current year presentation. These reclassifications did not have a material effect on previously reported net income, shareholders’ equity, or cash flows.

Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2025.

The Company’s significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2025 in the Company’s Annual Report filed on Form 10-K. For interim reporting purposes, the Company follows the same basic accounting policies and considers each interim period as an integral part of an annual period.

Use of Estimates: To prepare financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The most significant estimates relate to the ACL, government guaranteed loan servicing rights, and fair value of government guaranteed loans HFI.

Emerging Growth Company Status: The Company is expected to remain an "emerging growth company," as defined in the JOBS Act, through December 31, 2026. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period when complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of this extended transition period, which means these financial statements, as well as financial statements they file in the future for as long as the Company remains an emerging growth company, will be subject to all new or revised accounting standards generally applicable to private companies.

Contingencies: Due to the nature of their activities, the Company is at times engaged in various legal proceedings that arise in the course of normal business, some of which were outstanding as of March 31, 2026. Although the ultimate outcome of all claims and lawsuits outstanding as of March 31, 2026 cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material adverse effect on the Company’s results of operations or financial condition.

New Accounting Standards Not Yet Adopted:

In October 2023, the FASB issued ASU No. 2023-06 “Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative” (“ASU 2023-06”). ASU 2023-06 amends the ASC to incorporate certain disclosure requirements from SEC Release No. 33-10532 - Disclosure Update and Simplification that was issued in 2018. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company does not believe this standard will have a material impact on its Consolidated Financial Statements.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share data)

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Disaggregation of Income Statement Expenses Disclosure (“ASU 2024-03”). This ASU was issued to improve the disclosures about public business entity’s expenses and address investor’s requests for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions. The amendments in this standard will be effective for the Company for the fiscal year ended December 31, 2027 and subsequent interim periods. The amendments should be applied either prospectively to the financial statements issued for reporting periods after the effective date of this update or retrospectively to any and all prior periods presented in the financial statements. We are currently evaluating the impact these changes may have on the Company’s consolidated financial statements.

In November, 2025, the FASB issued ASU 2025‑11, “Interim Reporting (Topic 270): Narrow‑Scope Improvements.” This ASU was issued to clarify and enhance guidance under ASC 270 on interim financial reporting by (i) clarifying the scope of ASC 270 such that it now explicitly applies only to entities that issue complete interim financial statements and related notes under U.S. GAAP, (ii) establishing clear guidance on the form of interim statements and notes, incorporating a comprehensive list of required interim disclosures drawn from across the ASC, and (iii) introducing a requirement to disclose material events and changes occurring after the end of the last annual period that could impact interim results. ASU 2025-11 will be effective for interim periods beginning in 2029. The Company does not believe this standard will have a material impact on its Consolidated Financial Statements.

NOTE 2 – INVESTMENT SECURITIES

The amortized costs, gross unrealized gains and losses, and estimated fair values of investment securities available for sale and investment securities held to maturity at March 31, 2026 and December 31, 2025 as well as the ACL for investment securities held to maturity at March 31, 2026 and December 31, 2025 are summarized as follows:


March 31, 2026	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Investment securities available for sale:
Asset-backed securities	$	2,720	$	5	$	(1)	$	2,724
Mortgage-backed securities:
U.S. Government-sponsored enterprises	5,149		38		(427)		4,760
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises	19,554		6		(2,378)		17,182
Corporate bonds	3,845		20		—		3,865
Total investment securities available for sale	$	31,268	$	69	$	(2,806)	$	28,531


March 31, 2026	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		ACL
Investment securities held to maturity:





Corporate bonds	$	2,500	$	—	$	(122)	$	2,378	$	9
Total investment securities held to maturity	$	2,500	$	—	$	(122)	$	2,378	$	9

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share data)


December 31, 2025	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Investment securities available for sale:
Asset-backed securities	$	2,827	$	4	$	(9)	$	2,822
Mortgage-backed securities:
U.S. Government-sponsored enterprises	5,264		55		(420)		4,899
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises	20,040		27		(2,299)		17,768
Corporate bonds	3,843		31		—		3,874
Total investment securities available for sale	$	31,974	$	117	$	(2,728)	$	29,363


December 31, 2025	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		ACL
Investment securities held to maturity:





Corporate bonds	$	2,500	$	—	$	(116)	$	2,384	$	7
Total investment securities held to maturity	$	2,500	$	—	$	(116)	$	2,384	$	7

The amortized cost and fair value of investment securities as of March 31, 2026 are shown in the table below by contractual maturity. Actual timing may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.


	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value

One to five years	$	3,846	$	3,866	$	1,500	$	1,493
Five to ten years	—		—		1,000		885
Beyond ten years	27,422		24,665		—		—
Total	$	31,268	$	28,531	$	2,500	$	2,378

No ACL for investment securities AFS was needed at March 31, 2026 or December 31, 2025. Declines in the fair value of the AFS investment portfolio are believed by management to be unrelated to credit losses. When evaluating an investment for credit loss, management considers, among other things, the financial condition of the issuer through the review of credit ratings and, if necessary, corporate financial statements; adverse conditions specifically related to the security such as past due principal or interest; underlying assets that collateralize the debt security; other economic conditions and demographics; and the intent and ability of the Company to hold the investment until the loss position is recovered. Any unrealized losses were largely due to increases in market interest rates over the yields available at the time of purchase. The fair value is expected to recover as the bonds approach their maturity date or market yields for similar investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. At March 31, 2026, the Company did not intend to sell and believed it was not likely to be required to sell the available for sale securities that were in a loss position prior to full recovery.

As of March 31, 2026, there were no past due principal and interest payments associated with the HTM securities. The Company monitors the credit quality of debt securities held to maturity quarterly through the use of credit ratings. However, the corporate bonds that are held to maturity have no credit rating and the corporate bonds in an unrealized loss position at March 31, 2026 are not material to the financial statements. There was an ACL of $9 on corporate bonds HTM at March 31, 2026 and $7 at December 31, 2025, which was calculated based on applying the long-term historical credit loss rate for similarly rated securities.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share data)

The following table presents the activity in the ACL for investment securities HTM by major security type for the three months ended March 31, 2026 and March 31, 2025:


	For the Three Months Ended			For the Three Months Ended
Corporate Bonds	March 31, 2026		March 31, 2025
Balance at beginning of period	$	7		$	12

Provision for credit losses on HTM investment securities	2			—
Investment securities charge-offs	—			—
Investment securities recoveries	—			—
Balance at end of period	$	9		$	12

The following table summarizes investment securities with unrealized losses at March 31, 2026 aggregated by security type and length of time in a continuous unrealized loss position:


	Less than 12 Months				12 Months or Longer				Total
March 31, 2026	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities
Investment securities available for sale:
Asset-backed securities	$	—	$	—	$	1,344	$	(1)	$	1,344	$	(1)	1
Mortgage-backed securities:
U.S. Government-sponsored enterprises	—		—		2,456		(427)		2,456		(427)		2
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises	—		—		13,976		(2,378)		13,976		(2,378)		7

Total investment securities available for sale	$	—	$	—	$	17,776	$	(2,806)	$	17,776	$	(2,806)	10

Investment securities held to maturity:





Corporate bonds	$	—	$	—	$	2,378	$	(122)	$	2,378	$	(122)	3
Total investment securities held to maturity	$	—	$	—	$	2,378	$	(122)	$	2,378	$	(122)	3

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share data)

The following table summarizes investment securities with unrealized losses at December 31, 2025 aggregated by security type and length of time in a continuous unrealized loss position:


	Less than 12 Months				12 Months or Longer				Total
December 31, 2025	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities
Investment securities available for sale:
Asset-backed securities	$	—	$	—	$	1,402	$	(9)	$	1,402	$	(9)	1
Mortgage-backed securities:
U.S. Government-sponsored enterprises	—		—		2,528		(420)		2,528		(420)		2
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises	—		—		14,531		(2,299)		14,531		(2,299)		7

Total investment securities available for sale	$	—	$	—	$	18,461	$	(2,728)	$	18,461	$	(2,728)	10

Investment securities held to maturity:





Corporate bonds	$	—	$	—	$	2,384	$	(116)	$	2,384	$	(116)	3
Total investment securities held to maturity	$	—	$	—	$	2,384	$	(116)	$	2,384	$	(116)	3

No investment securities were pledged as of March 31, 2026 or December 31, 2025, and there were no sales of investment securities for the three months ended March 31, 2026 or March 31, 2025.

NOTE 3 – LOANS

Loans HFI, excluding loans measured at fair value, at March 31, 2026 and December 31, 2025 were as follows:


	March 31, 2026		December 31, 2025
Real estate:
Residential	$	359,305	$	365,427
Commercial	216,643		215,771
Construction and land	36,732		48,397
Commercial and industrial	171,666		181,566
Commercial and industrial - PPP	6		6
Consumer and other	82,269		86,441
Loans HFI, excluding loans measured at fair value, gross	866,621		897,608
Deferred loan costs, net	15,559		16,371
Discount on government guaranteed loans(1)	(6,007)		(6,811)
Premium on loans purchased, net	2,446		2,650
Allowance for credit losses	(20,632)		(21,996)
Net loans HFI, excluding loans measured at fair value	$	857,987	$	887,822

(1) The Company allocates the retained portion of loans sold based on relative fair value of the retained portion and the sold portion, which results in a discount on the retained portion.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share data)

NOTE 4 - ALLOWANCE FOR CREDIT LOSSES

The following schedules present the activity in the ACL by loan segment for the three months ended March 31, 2026 and March 31, 2025:


Three Months Ended	Real Estate - Residential		Real Estate - Commercial		Real Estate - Construction and Land		Commercial and Industrial		Consumer and Other		Total
March 31, 2026
Beginning Balance	$	2,269	$	1,822	$	630	$	15,435	$	1,840	$	21,996

Charge-offs	(519)		(201)		—		(3,515)		(532)		(4,767)
Recoveries	—		22		—		286		66		374
Provision	407		182		(167)		2,326		281		3,029
Ending Balance	$	2,157	$	1,825	$	463	$	14,532	$	1,655	$	20,632
March 31, 2025
Beginning Balance	$	1,181	$	2,096	$	507	$	9,607	$	2,121	$	15,512

Charge-offs	(7)		(130)		—		(2,966)		(493)		(3,596)
Recoveries	20		—		—		193		82		295
Provision	(46)		195		302		3,544		307		4,302
Ending Balance	$	1,148	$	2,161	$	809	$	10,378	$	2,017	$	16,513

The ACL represents management’s best estimate of future lifetime expected losses on its HFI loan portfolio. The Company calculates its ACL by estimating expected credit losses on a collective basis for loans that share similar risk characteristics. Loans that do not share similar risk characteristics with other loans are evaluated for credit losses on an individual basis. The Company uses a combination of modeled and non-modeled approaches that incorporates current and future economic conditions to estimate lifetime expected losses on a collective basis. Individually evaluated loans are evaluated for impairment and a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the rate implicit in the original loan agreement or at the fair value of collateral adjusted for selling costs as appropriate if repayment is expected solely from the collateral.

The Company uses reasonable and supportable forecasts that are developed with internal and external data. These are updated quarterly by management and utilize data from the FOMC’s median forecasts of change in national GDP and of national unemployment. The FOMC’s forecast of GDP and unemployment for the next calendar year is used in conjunction with the most recent 4 quarters of historical data from FRED (Federal Reserve Economic Data) to determine changes in certain qualitative factors used in calculating loss rates.

See Note 1 and Note 5 of the Notes to Consolidated Financial Statements for further discussion of the Company’s ACL methodology in the December 31, 2025 Form 10-K.

The Company maintains a separate ACL for its off-balance sheet unfunded loan commitments. The ACL on unfunded loan commitments is based on estimates of probability that these commitments will be drawn upon according to historical utilization experience, expected loss severity and loss rates as determined for pooled funded loans. As of March 31, 2026 and December 31, 2025, the ACL for unfunded commitments recorded in other liabilities was $718 and $671, respectively.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share data)

The following table presents the activity in the ACL for unfunded commitments for the three months ended March 31, 2026 and March 31, 2025:


	For the Three Months Ended
	March 31, 2026		March 31, 2025
Balance at beginning of period	$	671	$	516

Provision for credit losses on unfunded commitments	47		98
Unfunded commitments charge-offs	—		—
Unfunded commitments recoveries	—		—
Balance at end of period	$	718	$	614

The following tables present the principal balance of nonaccrual loans and loans past due over 89 days on accrual by loan segment at March 31, 2026 and December 31, 2025. In the following tables, the principal balance does not include the government guaranteed balance or loans measured at fair value.


March 31, 2026	Nonaccrual with no ACL(1)		Nonaccrual with ACL(1)		Loans Past Due Over 89 Days and Accruing(1)
Real estate - residential	$	—	$	7,654	$	—
Real estate - commercial	2,628		2,601		—

Commercial and industrial	—		2,498		—
Consumer and other	—		475		16
Total	$	2,628	$	13,228	$	16


December 31, 2025	Nonaccrual with no ACL(1)		Nonaccrual with ACL(1)		Loans Past Due Over 89 Days and Accruing(1)
Real estate - residential	$	—	$	6,164	$	—
Real estate - commercial	2,628		3,888		—
Real estate - construction and land	—		815		—
Commercial and industrial	—		2,467		—
Consumer and other	—		268		41
Total	$	2,628	$	13,602	$	41

(1) Excludes loans measured at fair value. See Note 5 . Fair Value for additional information.

A financial asset is considered collateral dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. Expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. Significant quarter over quarter changes are reflective of changes in nonaccrual status and not necessarily associated with credit quality indicators like appraised value. The following tables present the principal balance, including government

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Dollars in thousands, except per share data)

guaranteed balances, of individually analyzed collateral dependent loans by loan portfolio segment as of March 31, 2026 and December 31, 2025:


March 31, 2026	Type of Collateral		ACL
	Real Estate

Real estate - commercial	$	2,628	$	—


December 31, 2025	Type of Collateral			ACL
		Real Estate



Real estate - commercial		$	2,628	$	—

The following table presents the aging of the principal balance of past due loans HFI at amortized cost at March 31, 2026 by loan segment:


	30-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due (1)		Total Loans
Real estate - residential	$	3,945	$	6,519	$	10,464	$	348,841	$	359,305
Real estate - commercial	6,427		4,016		10,443		206,200		216,643
Real estate - construction and land	—		—		—		36,732		36,732
Commercial and industrial	4,847		914		5,761		165,905		171,666
Commercial and industrial - PPP	—		—		—		6		6
Consumer and other	665		312		977		81,292		82,269
Total	$	15,884	$	11,761	$	27,645	$	838,976	$	866,621
(1) $6,976 of balances 30-89 days past due and $5,208 of balances greater than 89 days past due are reported as Loans Not Past Due as a result of the government guarantee. Of those loans, $6 of commercial and industrial PPP loans were delinquent as of March 31, 2026.

The following table presents the aging of the principal balance of past due loans HFI at amortized cost at December 31, 2025 by loan segment:


	30-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due (1)		Total Loans
Real estate - residential	$	4,698	$	5,635	$	10,333	$	355,094	$	365,427
Real estate - commercial	4,100		4,262		8,362		207,409		215,771
Real estate - construction and land	—		814		814		47,583		48,397
Commercial and industrial	4,473		919		5,392		176,174		181,566
Commercial and industrial - PPP	—		—		—		6		6
Consumer and other	1,622		69		1,691		84,750		86,441
Total	$	14,893	$	11,699	$	26,592	$	871,016	$	897,608
(1) $1,537 of balances 30-89 days past due and $7,592 of balances greater than 89 days past due are reported as Loans Not Past Due as a result of the government guarantee. Of those loans, $6 of commercial and industrial PPP loans were delinquent as of December 31, 2025.

Modifications to Borrowers Experiencing Financial Difficulty

For the three months ended March 31, 2026 and the year ended December 31, 2025, there were no loan modifications to borrowers experiencing financial difficulty and no loan modifications that subsequently defaulted during the period.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

Credit Quality Indicators

Internal risk-rating grades are assigned to loans by lending, credit administration or loan review personnel, based on an analysis of the financial and collateral strength and other credit attributes underlying each loan. Management analyzes the resulting ratings, as well as other statistics and factors such as delinquency, to track the migration performance of the portfolio balances. This analysis is performed at least annually. The Bank uses the following definitions for its risk ratings:

Pass – Loans properly approved, documented, collateralized, and performing which do not reflect an abnormal credit risk.

Special Mention – These credits have potential weaknesses that may, if not checked or corrected, weaken the asset, or inadequately protect the Company’s position at some future date. These assets pose elevated risk, but their weakness does not yet justify a “Substandard” classification.

Substandard – These loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – These loans have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

The table below sets forth principal balance for the commercial loan portfolio disaggregated by loan segment based on internally assigned risk ratings at March 31, 2026 and gross write offs for the three months ended March 31, 2026:


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
	2026		2025		2024		2023		2022		Prior		Cost Basis		to Term		Total
Real estate - commercial
Risk Rating
Pass	$	1,575	$	21,153	$	36,117	$	37,944	$	39,538	$	57,665	$	2,632	$	—	$	196,624
Special mention	—		—		3,545		394		1,418		363		15		—		5,735
Substandard	—		—		5,101		3,178		3,046		2,959		—		—		14,284
Doubtful	—		—		—		—		—		—		—		—		—
Total real estate - commercial loans, at amortized cost, gross	1,575		21,153		44,763		41,516		44,002		60,987		2,647		—		216,643
Gross write offs	—		—		—		—		201		—		—		—		201

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)


							Revolving	Revolving
							Loans	Loans
	Term Loans Amortized Cost Basis by Origination Year						Amortized	Converted
	2026	2025	2024	2023	2022	Prior	Cost Basis	to Term	Total
Real estate - construction and land
Risk Rating
Pass	—	11,294	6,007	5,332	63	—	—	—	22,696
Special mention	—	—	1,196	—	—	—	—	—	1,196
Substandard	—	—	—	12,840	—	—	—	—	12,840
Doubtful	—	—	—	—	—	—	—	—	—
Total real estate - construction and land loans, at amortized cost, gross	—	11,294	7,203	18,172	63	—	—	—	36,732
Gross write offs	—	—	—	—	—	—	—	—	—

Commercial and industrial
Risk Rating
Pass	98	43,458	37,642	20,702	21,308	20,203	13,881	—	157,292
Special mention	—	549	1,306	989	385	1,240	79	—	4,548
Substandard	—	104	1,282	3,463	1,851	2,866	40	—	9,606
Doubtful	—	13	—	22	92	93	—	—	220
Total commercial and industrial loans, at amortized cost, gross	98	44,124	40,230	25,176	23,636	24,402	14,000	—	171,666
Gross write offs	—	352	1,585	323	516	253	486	—	3,515

Commercial and industrial - PPP
Risk Rating
Pass	—	—	—	—	—	6	—	—	6
Special mention	—	—	—	—	—	—	—	—	—
Substandard	—	—	—	—	—	—	—	—	—
Doubtful	—	—	—	—	—	—	—	—	—
Total commercial and industrial - PPP loans, at amortized cost, gross	—	—	—	—	—	6	—	—	6
Gross write offs	—	—	—	—	—	—	—	—	—

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

The table below sets forth principal balance for the commercial loan portfolio disaggregated by loan segment based on internally assigned risk ratings at December 31, 2025 and gross write offs for the year ended December 31, 2025:


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
	2025		2024		2023		2022		2021		Prior		Cost Basis		to Term		Total
Real estate - commercial
Risk Rating
Pass	$	21,998	$	39,871	$	39,799	$	33,762	$	24,573	$	35,268	$	2,480	$	—	$	197,751
Special mention	—		79		394		1,436		111		297		15		—		2,332
Substandard	—		5,111		3,183		4,426		759		2,209		—		—		15,688
Doubtful	—		—		—		—		—		—		—		—		—
Total real estate - commercial loans, at amortized cost, gross	21,998		45,061		43,376		39,624		25,443		37,774		2,495		—		215,771
Gross write offs	—		—		130		235		—		85		—		—		450

Real estate - construction and land
Risk Rating
Pass	7,977		5,266		8,849		10,487		1,049		—		—		—		33,628
Special mention	—		1,069		—		—		—		—		—		—		1,069
Substandard	—		—		13,700		—		—		—		—		—		13,700
Doubtful	—		—		—		—		—		—		—		—		—
Total real estate - construction and land loans, at amortized cost, gross	7,977		6,335		22,549		10,487		1,049		—		—		—		48,397
Gross write offs	—		—		—		—		—		—		—		—		—

Commercial and industrial
Risk Rating
Pass	44,674		40,705		24,250		22,538		3,418		19,740		11,362		—		166,687
Special mention	386		702		1,330		950		98		1,150		79		—		4,695
Substandard	41		1,155		3,369		2,114		353		2,939		40		—		10,011
Doubtful	13		—		22		45		8		85		—		—		173
Total commercial and industrial loans, at amortized cost, gross	45,114		42,562		28,971		25,647		3,877		23,914		11,481		—		181,566
Gross write offs	350		3,441		5,185		2,722		404		3,289		33		—		15,424

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)


							Revolving	Revolving
							Loans	Loans
	Term Loans Amortized Cost Basis by Origination Year						Amortized	Converted
	2025	2024	2023	2022	2021	Prior	Cost Basis	to Term	Total

Commercial and industrial - PPP
Risk Rating
Pass	—	—	—	—	—	6	—	—	6
Special mention	—	—	—	—	—	—	—	—	—
Substandard	—	—	—	—	—	—	—	—	—
Doubtful	—	—	—	—	—	—	—	—	—
Total commercial and industrial - PPP loans, at amortized cost, gross	—	—	—	—	—	6	—	—	6
Gross write offs	—	—	—	—	—	1	—	—	1

The Company considers the performance of the loan portfolio to determine its impact on the ACL. For residential and consumer loan classes, the Company evaluates credit quality based on the aging status of the loan by payment activity. The following table presents the principal balance at March 31, 2026 of residential and consumer loans based on payment activity as well as gross write offs for the three months ended March 31, 2026.


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
	2026		2025		2024		2023		2022		Prior		Cost Basis		to Term		Total
Real estate - residential
Payment Performance
Performing	$	550	$	8,967	$	29,951	$	23,665	$	66,398	$	33,879	$	188,241	$	—	$	351,651
Nonperforming	—		—		149		807		1,472		3,489		1,737		—		7,654
Total real estate - residential loans, at amortized cost, gross	550		8,967		30,100		24,472		67,870		37,368		189,978		—		359,305
Gross write offs	—		—		181		92		169		—		77		—		519

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)


							Revolving	Revolving
							Loans	Loans
	Term Loans Amortized Cost Basis by Origination Year						Amortized	Converted
	2026	2025	2024	2023	2022	Prior	Cost Basis	to Term	Total
Consumer and other
Payment Performance
Performing	141	11,206	48,567	16,888	3,386	188	1,402	—	81,778
Nonperforming	—	29	205	241	16	—	—	—	491
Total consumer and other loans, at amortized cost, gross	141	11,235	48,772	17,129	3,402	188	1,402	—	82,269
Gross write offs	2	19	189	126	63	68	65	—	532

The following table presents the principal balance at December 31, 2025 of residential and consumer loans based on payment activity as well as gross write offs for the year ended December 31, 2025.


													Revolving		Revolving
													Loans		Loans
	Term Loans Amortized Cost Basis by Origination Year												Amortized		Converted
	2025		2024		2023		2022		2021		Prior		Cost Basis		to Term		Total
Real estate - residential
Payment Performance
Performing	$	9,162	$	31,950	$	24,494	$	67,942	$	21,372	$	15,775	$	188,568	$	—	$	359,263
Nonperforming	—		150		550		716		867		2,512		1,369		—		6,164
Total real estate - residential loans, at amortized cost, gross	9,162		32,100		25,044		68,658		22,239		18,287		189,937		—		365,427
Gross write offs	—		—		—		141		—		—		842		—		983

Consumer and other
Payment Performance
Performing	12,047		50,220		17,921		4,220		171		49		1,504		—		86,132
Nonperforming	—		240		20		49		—		—		—		—		309
Total consumer and other loans, at amortized cost, gross	12,047		50,460		17,941		4,269		171		49		1,504		—		86,441
Gross write offs	233		680		251		1,088		23		9		74		—		2,358

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

NOTE 5 – FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access at the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Investment Securities Available for Sale: The fair values of investment securities available for sale are determined by matrix pricing, which is a mathematical technique used to value debt securities without relying exclusively on quoted prices for the specific investment securities, but rather by relying on the investment securities’ relationship to other benchmark quoted investment securities (Level 2). Management obtains the fair values of investment securities available for sale on a monthly basis from a third party pricing service.

Government Guaranteed Loans HFI, at Fair Value: The Company has elected to account for certain government guaranteed loans HFI at fair value. Fair value is calculated based on the present value of estimated future payments (Level 3). The valuation model uses interest rate, prepayment speed, and default rate assumptions that market participants would use in estimating future payments. Whenever available, the present value is validated against available market data.

Individually Evaluated Loans: Periodically, the Company records nonrecurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Nonrecurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the ACL. Loans are considered collateral dependent when the Company has determined that foreclosure of the collateral is probable or when a borrower is experiencing financial difficulty and the loan is expected to be repaid substantially through the operation or sale of collateral. A collateral dependent loan’s ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. Fair value of the loan’s collateral is determined by appraisals, independent valuation, or management’s estimation of fair value which is then adjusted for the cost related to liquidation of the collateral. Collateral dependent loans are generally classified as Level 3 based on management’s judgment and estimation.

Other Real Estate Owned: Other real estate owned assets are recorded at fair value less estimated costs to sell upon the transfer of a loan to other real estate owned and, subsequently, continue to be measured and carried at fair value. The fair value of other real estate owned is based on recent real estate appraisals which are generally updated annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales, cost, and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by either the Company or the Company's appraisal services vendor. Once received, management reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Management compares the best-efforts price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraised value to arrive at fair value.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

Repossessed Assets: Repossessed assets are recorded at fair value less estimated costs to sell upon the transfer of a loan to repossessed assets. The fair value of a repossessed asset, upon initial recognition, is estimated using a market approach or based on observable market data, such as a current appraisal, recent sale price of similar assets, or assumptions specific to the individual property or equipment, such as management applied discounts used to further reduce values to a net realizable value when observable inputs become stale.

Assets measured at fair value on a recurring basis at March 31, 2026 are summarized below. There were no liabilities carried at fair value on a recurring basis at March 31, 2026.


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets
Investment securities available for sale	$	—	$	28,531	$	—	$	28,531

Government guaranteed loans HFI, at fair value	—		—		51,807		51,807

Assets measured at fair value on a recurring basis at December 31, 2025 are summarized below. There were no liabilities carried at fair value on a recurring basis at December 31, 2025.


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Financial assets
Investment securities available for sale	$	—	$	29,363	$	—	$	29,363

Government guaranteed loans HFI, at fair value	—		—		54,076		54,076

There were no transfers between levels for assets and liabilities recorded at fair value on a recurring basis during the reported periods.

Financial Instruments Recorded Using Fair Value Option

The Company elected the fair value option for certain of its government guaranteed loans HFI as the Company believed that fair value was the best indicator of the resolution of those loans at that time. Depending on market conditions and liquidity needs of the Company, management determined whether it was advantageous to hold or sell government guaranteed loans on a loan-by-loan basis. The portion of these loans guaranteed by the government are generally readily marketable in the secondary market and the portion of the loans that are not guaranteed may be sold periodically to other third party financial institutions. Interest income on these loans is recorded based on the contractual term of the loan and in accordance with the Company’s policy on other loans HFI.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

The following tables provide more information about the fair value carrying amount and the unpaid principal outstanding of HFI government guaranteed loans measured at fair value at March 31, 2026 and December 31, 2025.


	March 31, 2026
	Total Loans						Nonaccrual(1)						90 Days or More Past Due(1)
	Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)		Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)		Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)
Real estate - commercial	$	10,279	$	10,160	$	119	$	418	$	439	$	(21)	$	—	$	—	$	—
Commercial and industrial	41,528		48,690		(7,162)		1,020		8,409		(7,389)		—		—		—
Total loans HFI, at fair value	$	51,807	$	58,850	$	(7,043)	$	1,438	$	8,848	$	(7,410)	$	—	$	—	$	—


	December 31, 2025
	Total Loans						Nonaccrual(1)						90 Days or More Past Due(1)
	Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)		Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)		Fair Value Carrying Amount		Unpaid Principal Balance		Fair Value Gain (Loss)
Real estate - commercial	$	10,348	$	10,420	$	(72)	$	—	$	—	$	—	$	—	$	—	$	—
Commercial and industrial	43,728		50,165		(6,437)		1,491		2,630		(1,139)		—		—		—
Total loans HFI, at fair value	$	54,076	$	60,585	$	(6,509)	$	1,491	$	2,630	$	(1,139)	$	—	$	—	$	—

(1) The nonaccrual and 90 days or more past due loan balances do not include the portion of government guaranteed loan balances.

The total amount of net gains and losses from changes in fair value and interest income included in earnings for the three months ended March 31, 2026 and March 31, 2025 for government guaranteed loans HFI, at fair value, were as follows:


	Three Months Ended March 31,
	2026		2025
Interest income	$	1,147	$	1,777
Change in fair value	(533)		(755)
Total gain, net	$	614	$	1,022

Changes in fair value for government guaranteed loans HFI, at fair value, were included in Government guaranteed loans fair value loss, net on the Condensed Consolidated Statements of Income.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

The table below presents a reconciliation of government guaranteed loans HFI, at fair value, which were valued on a recurring basis and used significant unobservable inputs (Level 3) for the three months ended March 31, 2026 and March 31, 2025:


	Three Months Ended March 31,
	2026		2025
Balance of government guaranteed loans HFI at fair value, beginning of period	$	54,076	$	60,833
New government guaranteed originations at fair value	—		4,760
Loans sold	—		(5,606)
Principal payments	(1,736)		(1,331)


Total fair value gains (losses) during the period	(533)		(755)
Balance of government guaranteed loans HFI at fair value, end of period	$	51,807	$	57,901

The Company’s valuation of government guaranteed loans HFI, at fair value, was supported by an analysis prepared by an independent third party and approved by management. The approach to determine fair value involved several steps: 1) identifying each loan’s unique characteristics, including balance, payment type, term, coupon, age, and principal and interest payment; 2) projecting these loan level characteristics for the life of each loan; and 3) performing discounted cash flow modeling.

The following table provides information about the valuation techniques and unobservable inputs used in the valuation of government guaranteed loans HFI that fall within Level 3 of the fair value hierarchy at March 31, 2026 and December 31, 2025:


	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
March 31, 2026
Government guaranteed loans HFI, at fair value	$	51,807	Discounted	Discount rate	4.93%-8.43% (7.38%)
			cash flow	Conditional prepayment rate	6.82%-18.62% (11.31%)


December 31, 2025
Government guaranteed loans HFI, at fair value	$	54,076	Discounted	Discount rate	5.27%-8.77% (7.75%)
			cash flow	Conditional prepayment rate	8.61%-18.58% (11.16%)

The significant unobservable inputs impacting the fair value measurement of government guaranteed loans HFI, at fair value, include discount rates and conditional prepayment rates. Increases in discount rates or prepayment rates would result in a lower fair value measurement. Although the prepayment rate and discount rate are not directly interrelated, they generally move in opposite directions. The discount rates and conditional prepayment rates were weighted by the relative principal balance outstanding of these loans.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

Assets measured at fair value on a nonrecurring basis at March 31, 2026 are summarized below:


	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Discount % Amount	Valuation Level

Individually evaluated loans	$	2,628	Discounted appraisals, estimated net realizable value of collateral	Collateral discounts	10%	3
Other real estate owned	$	400	Discounted appraisals, estimated net realizable value of collateral	Collateral discounts	10%	3
Repossessed assets	$	583	Discounted appraisals, estimated net realizable value of collateral	Collateral discounts	10%	3

Assets measured at fair value on a nonrecurring basis at December 31, 2025 are summarized below:


	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Discount % Amount	Valuation level
Individually evaluated loans	$	2,628	Discounted appraisals, estimated net realizable value of collateral	Collateral discounts	10%	3
Other real estate owned	$	400	Discounted appraisals, estimated net realizable value of collateral	Collateral discounts	10%	3
Repossessed assets	$	263	Discounted appraisals, estimated net realizable value of collateral	Collateral discounts	10%	3

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

Fair Value of Financial Instruments

The carrying values and estimated fair values of financial instruments not carried at fair value, at March 31, 2026 and December 31, 2025 are as follows:


		March 31, 2026				December 31, 2025
	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Cash and cash equivalents	1	$	134,465	$	134,465	$	206,982	$	206,982

Investment securities held to maturity	2	2,491		2,378		2,493		2,384
Nonmarketable equity securities, at cost	2	4,662		4,662		4,656		4,656

Loans HFI, at amortized cost	3	857,987		875,190		887,822		900,200
Accrued interest receivable	2	7,683		7,683		8,421		8,421
Government guaranteed loan servicing rights	3	11,334		14,653		12,580		16,041

Liabilities:
Noninterest-bearing deposit accounts	2	$	111,476	$	111,476	$	95,731	$	95,731
Interest-bearing transaction accounts	2	153,860		153,860		231,227		231,227
Savings and money market deposit accounts	2	432,781		432,781		454,639		454,639
Time deposits	2	387,752		388,050		402,341		403,394

Subordinated notes	2	6,099		5,725		5,962		5,877
Notes payable	2	1,479		1,476		1,593		1,590
Accrued interest payable	2	958		958		1,133		1,133

NOTE 6 – GOVERNMENT GUARANTEED LOAN SERVICING ACTIVITIES

At March 31, 2026 and December 31, 2025, the balance of government guaranteed loans HFI, excluding PPP loans, retained by the Company was $287,282 and $302,986, respectively, of which $75,057 and $70,123 represented the guaranteed portion of the loans. Loans serviced for others are not included in the accompanying Condensed Consolidated Balance Sheets. The unpaid principal balances of government guaranteed loans serviced for others requiring recognition of a servicing asset were $832,047 and $885,505 at March 31, 2026 and December 31, 2025, respectively.

In December 2025, the Company sold SBA 7(a) loans with principal balance of $96,602 to Banesco USA as part of the Company’s restructure related to the discontinuance of SBA 7(a) lending. Of those loans, there were $26,749 of loans with a servicing asset of $1,691.

Activity for government guaranteed loan servicing rights for the three months ended March 31, 2026 and March 31, 2025 follows:


	Three Months Ended
	March 31, 2026		March 31, 2025
Beginning of period	$	12,580	$	16,534
Additions	—		1,652

Amortization	(1,246)		(1,726)
End of period	$	11,334	$	16,460

The fair value of government guaranteed loan servicing rights was $14,653 and $16,041 at March 31, 2026 and December 31, 2025, respectively. Fair value was determined using a weighted average discount rate of 14.13% and a weighted average prepayment speed of 11.25% at March 31, 2026. Fair value was determined using a weighted average

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

discount rate of 13.88% and a weighted average prepayment speed of 11.16% at December 31, 2025. The government guaranteed loan servicing rights are amortized over the life of a loan on a loan-by-loan basis.

The following table presents the components of net gain on sale of government guaranteed loans for the three months ended March 31, 2026 and March 31, 2025:


	Three Months Ended
	March 31, 2026		March 31, 2025
Gain on sale of guaranteed portion of government guaranteed loans	$	(97)	$	5,675


Fair value of loan servicing rights created	—		1,652
Gain on sale of government guaranteed loans, net	$	(97)	$	7,327

NOTE 7 – LEASES

For the three months ended March 31, 2026 and March 31, 2025, the components of total lease cost and supplemental information related to operating leases were as follows:


	Three Months Ended March 31,
	2026		2025
Operating lease cost	$	501	$	605
Short-term lease cost	23		31
Total lease cost, net (1)	$	524	$	636


	Three Months Ended March 31,
	2026		2025

Cash flows related to operating lease liabilities	$	219	$	276

At March 31, 2026, the weighted average discount rate of operating leases was 7.14% and the weighted average remaining life of operating leases was 12.73 years.

The future minimum lease payments for operating leases, subsequent to March 31, 2026, as recorded on the balance sheet, are summarized as follows:


2026	$	1,590
2027	1,751
2028	1,313
2029	1,340
2030	1,366
Thereafter	13,594
Total undiscounted lease payments	$	20,954
Less: imputed interest	(7,951)
Net lease liabilities	$	13,003

NOTE 8 – OTHER BORROWINGS

At March 31, 2026 and December 31, 2025, the Company had no borrowings outstanding from the FHLB or FRB.

The Bank is a member of the FHLB of Atlanta, which provides short- and long-term funding collateralized by mortgage-related assets to its members. FHLB short-term borrowings bear interest at variable rates set by the FHLB. Any advances that the Bank were to obtain would be secured by a blanket lien on $387,578 of real estate-related loans as of March 31, 2026. Based on this collateral and the Bank's holdings of FHLB stock, the Bank was eligible to borrow up to $187,805 from the FHLB at March 31, 2026.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

In addition, the Bank has a secured line of credit with the Federal Reserve Bank of Atlanta which was secured by $49,755 of commercial loans as of March 31, 2026. FRB short-term borrowings bear interest at variable rates based on the FOMC's target range for the federal funds rate. Based on this collateral, the Bank was eligible to borrow up to $28,787 from the FRB at March 31, 2026.

The Company has $6,000 of Subordinated Notes (the “Notes”) that mature June 30, 2031 and are redeemable after 5 years which is June 30, 2026. The Notes carry interest at a fixed rate of 4.50% per annum for the initial 5 years of term and carry interest at a floating rate for the final 5 years of term after June 30, 2026. Under the note agreements, the floating rates are based on a SOFR benchmark plus 3.78% per annum.

On December 29, 2025, the Company and the holders of the Company’s Notes entered into an Amendment to the Notes (the “Amendment”), effective as of December 26, 2025. Pursuant to the Amendment, instead of the Company paying interest on the Notes, the outstanding principal of the Notes shall be increased by the amount of interest due as of the date of the Amendment and that becomes due through and including June 30, 2026. In addition, if the Company does not pay all amounts due on the Notes by June 30, 2026, at the Company’s option, (i) it shall pay the holders 3.00% of the outstanding principal of the Notes, or (ii) the principal of the Notes shall be increased by 3.00%.

The balance of Notes outstanding at the Company, net of offering costs, amounted to $6,099 and $5,962 at March 31, 2026 and December 31, 2025, respectively. The increase was primarily the result of the deferred interest payment that were due in January 2026.

The Company has a term note with quarterly principal and interest payments with interest at Prime (6.75% at March 31, 2026). The note matures on March 10, 2029 and the balance of the note was $1,479 and $1,593 at March 31, 2026 and December 31, 2025, respectively. The note is secured by 100% of the stock of the Bank and requires the Company to comply with certain loan covenants during the term of the note. On December 30, 2025, lender agreed that the Company may defer the quarterly interest payment due December 10, 2025 on its term loan until March 10, 2026. The deferred interest was paid as agreed.

As part of the amendment to the subordinated note and term note, the Company obtained a waiver related to financial debt covenants.

NOTE 9 – STOCK-BASED COMPENSATION

The Equity Plan governs the Company’s restricted stock grants and stock options. Total compensation cost charged against income related to the Equity Plan was $53 and $69 for the three months ended March 31, 2026 and March 31, 2025, respectively.

Restricted Stock

The Company awarded shares of restricted common stock to certain employees and directors for which compensation expense is recognized ratably over the vesting period of the awards based on the fair value of the stock at issue date.

A summary of changes in the Company’s nonvested restricted shares for the three months ended March 31, 2026 and March 31, 2025 follows:


	Shares	Weighted-Average Grant-Date Fair Value, per share
Nonvested at January 1, 2026	33,750	$	15.87

Vested	(10,065)	(16.35)

Nonvested at March 31, 2026	23,685	$	15.67

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)


	Shares	Weighted-Average Grant-Date Fair Value, per share
Nonvested at January 1, 2025	47,485	$	14.54
Granted	20,500	15.93
Vested	(24,225)	(13.23)
Forfeited	(340)	(14.50)
Nonvested at March 31, 2025	43,420	$	15.93

At March 31, 2026, there was $281 of total unrecognized compensation cost related to nonvested restricted shares granted under the Equity Plan that is expected to be recognized over a weighted average period of 1.5 years. The total fair value of shares vested during the three months ended March 31, 2026 and March 31, 2025 on the vesting date was $165 and $370, respectively.

Stock Options

The Equity Plan permits the grant of stock options to the Company’s employees and directors for up to 15% of the total number of shares of Company common stock issued and outstanding, up to 1,500,000 shares. Option awards are

granted with an exercise price equal to the market price of the Company’s common stock at the date of grant. The market price of the Company’s common stock is the closing sales price of the Common Stock on Nasdaq on the date of the grant. Those option awards generally have a vesting period of 5 years for employees and 3 years for directors and have 10-year contractual terms.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatility is based on an average of historical volatility of peer financial institutions. The expected term of options granted represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

A summary of the activity in the Equity Plan for the three months ended March 31, 2026 and March 31, 2025 follows:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2026	359,233	$	15.68


Forfeited	(24,570)	(15.34)

Outstanding at March 31, 2026	334,663	$	15.71	3.38	$	—
Vested and exercisable at March 31, 2026	334,663	$	15.71	3.38	$	—


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at January 1, 2025	364,063	$	15.68

Exercised	(1,050)	(14.67)


Outstanding at March 31, 2025	363,013	$	15.68	4.40	$	34
Vested and exercisable at March 31, 2025	357,688	$	15.69	4.40	$	34

There were no options granted during the three months ended March 31, 2026 or March 31, 2025. All stock options granted are vested and there is no unrecognized compensation cost under the Equity Plan at March 31, 2026.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

NOTE 10 – OTHER BENEFIT PLANS

The Company has established a stock dividend reinvestment and stock purchase plan. Under the DRIP, eligible shareholders can voluntarily purchase stock with their dividend or can make additional stock purchases. For the three months ended March 31, 2026 and March 31, 2025, there were no shares issued.

All employees and Directors are eligible to participate in the NSPP. Expense recognized in relation to the NSPP for the three months ended March 31, 2026 and March 31, 2025 was $0 and $5, respectively. During the three months ended March 31, 2026, 3,028 shares were purchased at an average price of $6.02. For the three months ended March 31, 2025, there were no shares issued.

The Company has a Salary Continuation Agreement (the “Agreement”) with the Company’s retired CEO. In accordance with the Agreement, the executive will receive an annual benefit of $25 for twenty years following separation of service. The liability recorded for the Agreement was $294 and $316 at March 31, 2026 and December 31, 2025, respectively, and the related expense for the three months ended March 31, 2026 was $3 and the related expense for the three months ended March 31, 2025 was $3. Payments began in July 2024 as a result of the retirement of the CEO on December 31, 2023.

The Company has a 401(k) plan that covers all employees subject to certain age and service requirements. Previous to January 2026, the Company contributed 3% of each employee’s salary each pay period as a safe harbor contribution. In January 2026, the Company updated the plan to change the contribution from the non-elective contribution to a matching contribution equal to 100% of the first 4% and 50% of the next 2% of employee contributions. Expense recognized in relation to the 401(k) plan was $134 and $264 for the three months ended March 31, 2026 and March 31, 2025, respectively.

The Company had an ESOP for eligible employees with outstanding loans as a result of the acquisition of shares in 2021 and the termination of the nationwide residential lending division in 2022. On September 30, 2025, the Plan was terminated and the remaining 19,691 shares in the ESOP unallocated account with a fair value of $175 were returned to the Company in partial satisfaction of the outstanding balances on the ESOP loans. The ESOP accounts of the participants were 100% vested as of the date of the termination. As part of the termination of the plan, the Company forgave the indebtedness of the outstanding loans which totaled $365. There was $30 expense for the three months ended March 31, 2025. The Company’s ESOP, which was internally leveraged, did not report the loan receivable extended to the ESOP as an asset and did not report the ESOP debt due to the Company.

NOTE 11 – REGULATORY MATTERS

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believes that the Bank met capital adequacy requirements to which it was subject at March 31, 2026 and December 31, 2025.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. The Bank must maintain a “well capitalized” rating to access brokered deposits without FDIC waiver. An “adequately capitalized” rating requires an FDIC waiver to access brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At March 31, 2026, the Bank did not meet all of its regulatory capital requirements to be well-capitalized but the consummation of the capital raise is expected to meet these capital requirements going forward.

In February 2019, the federal bank regulatory agencies issued a final rule that revised certain capital regulations under ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and included a transition option that allows banking organizations to phase in, over a three year period, the day one adverse effects of adoption on their regulatory capital ratios (three year transition option). In connection with the adoption of ASC 326 on January 1, 2023, the Company recognized an after-tax cumulative effect reduction to retained earnings. The Company elected to adopt the three year transition option and the deferral has been applied in capital ratios presented below. Actual and required capital amounts and ratios for the Bank are presented below at March 31, 2026:

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)


	Actual				Required for Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Regulations
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital
(to Risk Weighted Assets)	$	90,664	9.84	%	$	73,713	8.00	%	$	92,141	10.00	%
Tier 1 Capital
(to Risk Weighted Assets)	$	79,025	8.58	%	$	55,285	6.00	%	$	73,713	8.00	%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)	$	79,025	8.58	%	$	41,464	4.50	%	$	59,892	6.50	%
Tier 1 Capital
(to Average Assets)	$	79,025	6.54	%	$	48,304	4.00	%	$	60,380	5.00	%

Actual and required capital amounts and ratios for the Bank are presented below at December 31, 2025:


	Actual				Required for Capital Adequacy Purposes				To be Well Capitalized Under Prompt Corrective Action Regulations
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital
(to Risk Weighted Assets)	$	98,560	10.18	%	$	77,441	8.00	%	$	96,802	10.00	%
Tier 1 Capital
(to Risk Weighted Assets)	$	86,337	8.92	%	$	58,081	6.00	%	$	77,441	8.00	%
Common Equity Tier 1 Capital
(to Risk Weighted Assets)	$	86,337	8.92	%	$	43,561	4.50	%	$	62,921	6.50	%
Tier 1 Capital
(to Average Assets)	$	86,337	6.52	%	$	52,983	4.00	%	$	66,229	5.00	%

Dividend Restrictions

Banking regulations limit the amount of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. Approval is also required if dividends declared exceed the net profits of the Bank for that year combined with the retained net profits for the preceding two years. The Company has temporarily suspended common and preferred stock dividends, see Part II Item 3 of the 10K for additional information.

NOTE 12 – LOAN COMMITMENTS AND OTHER RELATED ACTIVITIES

Some financial instruments, such as loan commitments, credit lines, and letters of credit, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies that are used for loans are used to make such commitments, including obtaining collateral at exercise of the commitment.

The contractual amounts of financial instruments with off-balance sheet risk at March 31, 2026 and December 31, 2025 were as follows:


	March 31, 2026		December 31, 2025
Unfunded loan commitments	$	17,674	$	1,257
Unused lines of credit	191,307		207,665
Standby letters of credit	1,161		1,161

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

All unused lines of credit at March 31, 2026 and December 31, 2025 were variable rate lines of credit and the majority of unfunded loan commitments at March 31, 2026 and December 31, 2025 were commitments to fund variable rate loans. Unfunded loan commitments are generally entered into for periods of 90 days or less.

The Company maintains an ACL for its off-balance sheet loan commitments which is calculated by loan type using estimated line utilization rates based on peer historical usage. Loss rates for outstanding loans are applied to the estimated utilization rates to calculate the ACL for off-balance sheet loan commitments. At March 31, 2026 and December 31, 2025, ACL for off-balance sheet loan commitments totaled $718 and $671, respectively.

NOTE 13 – EARNINGS PER COMMON SHARE

The following table sets forth the computation of basic and diluted earnings per common share for the three months ended March 31, 2026 and March 31, 2025:


	Three Months Ended March 31,
	2026		2025
Basic:
Net loss	$	(5,680)	$	(335)


Less: Preferred stock dividend earned	385		385
Net loss attributable to common shareholders	$	(6,065)	$	(720)
Weighted average common shares outstanding	4,108,071		4,141,070




Basic loss per common share:	$	(1.48)	$	(0.17)

Diluted:
Net loss	$	(5,680)	$	(335)


Less: Preferred stock dividend earned	385		385
Add: Series B preferred stock and preferred C stock dividends	—		—
Net loss attributable to common shareholders	$	(6,065)	$	(720)
Weighted average common shares outstanding for basic loss per common share	4,108,071		4,141,070
Add: Dilutive effects of conversion of Series B preferred stock and Preferred C to common stock	—		—
Add: Dilutive effects of assumed exercises of stock options and warrants	—		—
Average shares and dilutive potential common shares	4,108,071		4,141,070




Diluted loss per common share:	$	(1.48)	$	(0.17)

The following securities outstanding at March 31, 2026 and March 31, 2025 have been excluded from the calculation of weighted average shares outstanding as their effect on the calculation of loss per share are antidilutive:


	Three Months Ended March 31,
	2026	2025
Common stock options	334,663	363,013
Convertible Series B preferred stock	3,210	3,210
Convertible Series C preferred stock	6,446	6,446

NOTE 14 - SEGMENT INFORMATION

The Company’s revenue is primarily derived from the business of banking. The Company’s financial performance is monitored on a consolidated basis by senior management, who are considered to be the Bank’s Chief Operating Decision Maker (“CODM”). Senior management includes the following officers of the Company: Chief Executive Officer; President, Chief Operating Officer; and Executive Vice President, Chief Financial Officer.

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BAYFIRST FINANCIAL CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data)

All of the Company’s financial results are similar and considered by management to be aggregated into one reportable operating segment. While the Company has assigned certain management responsibilities by branch location or department, the Company’s CODM evaluates financial performance on a Company-wide basis. The majority of the Company’s revenue is from the business of banking, and the Company’s branch locations have similar economic characteristics, products, services and customers. Accordingly, all of the Company’s operations are considered by the CODM to be aggregated in one reportable operating segment.

Financial performance is measured monthly and the primary measures of performance are net interest income after provision for credit losses, return on average assets, and return on average common equity, and significant operating expenses detailed below, as compared to the budget when assessing the Company’s segment. The allocation of resources throughout the Company is based on consolidated profitability. The presentation of financial performance is consistent with amounts and financial statement line items shown in the Company’s condensed consolidated balance sheets and condensed consolidated statements of income. Additionally, the Company’s significant expenses are adequately segmented by category and amount in the condensed consolidated statements of income to include all significant items when considering both qualitative and quantitative factors. Significant expenses of the Company include interest on deposits and borrowings, professional fees, loan servicing and origination expenses, and compensation.

NOTE 15 – RESTRUCTURE CHARGES

On September 29, 2025, the Company signed a definitive agreement to sell a portion of the Company’s SBA 7(a) loan portfolio. In conjunction with the agreement, the Company planned to exit the SBA 7(a) lending business. The loan sale and exit of SBA 7(a) lending business was completed in the fourth quarter of 2025. The transaction resulted in restructure charges totaling $7,283, including $3,719 for employee compensation and benefits costs, $2,864 for recognition of asset impairment, $435 for the transaction deal cost, and $265 for miscellaneous charges. All of these expenses were recorded in 2025. As of March 31, 2026, there were $371 of unpaid charges outstanding.

NOTE 16 – SUBSEQUENT EVENTS

On April 28, 2026, the Company raised $80 million of capital from investors in a private investment in public equity (“PIPE”) offering. The Company issued shares of Series D and Series E Preferred Stock in the PIPE, which subject to shareholder and regulatory approvals, will convert to, or be exchanged for, approximately 22.9 million shares of common stock at an effective purchase price of $3.50 per share.

On April 28, 2026, the Company filed Articles of Amendment to its Articles of Incorporation with the Florida Division of Corporations creating and authorizing 4,000 shares of Series D Preferred Stock and 4,000 shares of Series E Preferred Stock. The Company has also agreed to register the shares of common stock with the SEC following the conversion or exchange.

On April 28, 2026, the Board elected Alfred Rogers as Chief Executive Officer and President of the Bank, in place of Tom Zernick who retired on May 1, 2026. Additionally, the Board appointed Kenneth R. Lehman as a member of the Boards of Directors. Mr. Rogers' appointment to the Board of Directors of the Bank and as Chief Executive Officer have received all necessary regulatory approvals and became effective upon the completion of the capital raise. The appointments of Mr. Rogers as CEO and President of the Company, as well as a director, is contingent upon receipt of regulatory non-objections. Mr. Lehman's appointment to the Boards of Directors of the Company and the Bank are contingent upon receipt of regulatory non-objections.

On April 30, 2026, the Company filed a registration statement on Form S-1 regarding the public offering of up to 4,108,072 shares of Common Stock at an offering price of $3.50 per share. The Company intends to exclusively market this offering to its shareholders of record on May 12, 2026.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is an analysis of the results of operations for the three months ended March 31, 2026 and March 31, 2025 and financial condition as of March 31, 2026 and December 31, 2025. This discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes.

In addition to the historical information contained herein, this Form 10-Q includes "forward-looking statements" within the meaning of such term in the Private Securities Litigation Reform Act of 1995. These statements are subject to many risks and uncertainties, including, but not limited to, the effects of health crises, global military hostilities, weather events, or climate changes, including its effects on the economic environment, its customers and its operations, as well as any

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changes to federal, state or local government laws, regulations or orders in connection with them; the ability of the Company to implement its strategy and expand its banking operations; changes in interest rates and other general economic, business and political conditions, including changes in the financial markets, credit quality or global military hostilities; changes in business plans as circumstances warrant; risks related to mergers and acquisitions; changes in benchmark interest rates used to price loans and deposits, changes in tax laws, regulations and guidance; enforcement actions initiated by our regulators and their impact on our operations; the impact of data breaches or other cybersecurity incidents; enforcement actions initiated by our regulators and their impact on our operations; and other risks detailed from time to time in filings made by the Company with the SEC. Readers should note that the forward-looking statements included herein are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements.

Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this document, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Overview

The following discussion and analysis presents the financial condition and results of operations on a consolidated basis. However, because the Company conducts all of its material business operations through the Bank, the discussion and analysis relates to activities primarily conducted at the subsidiary level. The following discussion should be read in conjunction with the condensed consolidated financial statements.

As a one-bank holding company, the Company generates most of its revenue from interest on loans and noninterest income. The primary sources of funding for its loans are loan payments, deposits, and borrowings. The Company is dependent on noninterest income, which is derived from service fee income. The largest expenses are interest on those deposits and borrowings, professional fees, loan servicing and origination expenses, and salaries and commissions plus related employee benefits. The Company measures its performance through its net interest income after provision for credit losses, return on average assets, and return on average common equity, while maintaining appropriate regulatory leverage and risk-based capital ratios.

In the fourth quarter 2025, The Company sold a portion of its SBA 7(a) loan portfolio. In conjunction with the sale and as a result of the comprehensive strategic review aimed at reducing expenses and derisking the Bank's balance sheet, BayFirst exited the SBA 7(a) lending business. Banesco USA assumed servicing of loans included in the sale and has been engaged as subservicer on the remaining SBA 7(a) loans retained by BayFirst. In addition, the Company reduced staff.

Application of Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements in accordance with GAAP requires the Company to make estimates and judgments that affect reported amounts of assets, liabilities, income and expenses and related disclosure of contingent assets and liabilities. The Company bases those estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, results of which form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. Estimates are evaluated on an ongoing basis. Actual results may differ from these estimates.

Accounting policies, as described in detail in the notes to the Company’s condensed consolidated financial statements, are an integral part of the Company’s condensed consolidated financial statements. A thorough understanding of these accounting policies is essential when reviewing the Company’s reported results of operations and financial position. Management believes that the critical accounting policies and estimates listed below require the Company to make difficult, subjective or complex judgments about matters that are inherently uncertain. At March 31, 2026, the most critical of these significant accounting policies in understanding the estimates and assumptions involved in preparing the condensed consolidated financial statements were the policies related to the ACL, fair value measurement of government

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guaranteed loan servicing rights and government guaranteed loans HFI at fair value, which are discussed more fully in the December 31, 2025 Form 10-K.

Changes in these estimates that are likely to occur from period to period, or the use of different estimates that the Company could have reasonably used in the current period, could have a material impact on the Company’s financial position or results of operation.

Further, the Company is an emerging growth company. The JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected to take advantage of this extended transition period. This means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies do so. This may make the Company’s financial statements not comparable with those of public companies which are neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period because of the potential differences in accounting standards used.

Recent Developments

On April 28, 2026, the Company raised $80 million of capital from investors in a private investment in public equity (“PIPE”) offering. The Company issued shares of Series D and Series E Preferred stock in the PIPE, which subject to shareholder and regulatory approvals, will convert to, or be exchanged for, approximately 22.9 million shares of common stock at an effective purchase price of $3.50 per share.The Company has also agreed to register the shares of common stock with the SEC following the conversion or exchange.

Selected Financial Data - Unaudited


	As of and for the Three Months Ended
(Dollars in thousands, except for share data)	3/31/2026		12/31/2025		3/31/2025
Income Statement Data:
Net interest income	$	9,449	$	11,158	$	10,999
Provision for credit losses	3,078		2,007		4,400
Noninterest income	884		(104)		8,751
Noninterest expense	14,886		11,869		15,813
Income tax benefit	(1,951)		(359)		(128)
Net loss	(5,680)		(2,463)		(335)


Preferred stock dividends	385		385		385
Net loss attributable to common shareholders	$	(6,065)	$	(2,848)	$	(720)

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	As of and for the Three Months Ended
(Dollars in thousands, except for share data)	3/31/2026			12/31/2025			3/31/2025
Balance Sheet Data:
Average loans HFI	$	945,532		$	997,710		$	1,087,015
Average loans HFI at amortized cost	887,756			939,281			1,027,648
Average total assets	1,219,748			1,334,912			1,287,618
Average common shareholders’ equity	70,373			73,470			96,053

Total loans HFI	930,426			963,894			1,084,817

Total loans HFI, excluding government guaranteed loan balances	855,363			893,765			943,979
Allowance for credit losses on loans	20,632			21,996			16,513
Total assets	1,195,910			1,300,258			1,291,957
Total deposits	1,085,869			1,183,938			1,128,267
Common shareholders’ equity	64,660			70,747			94,034
Per Share Data:
Basic loss per common share	$	(1.48)		$	(0.69)		$	(0.17)
Diluted loss per common share	$	(1.48)		$	(0.69)		$	(0.17)
Dividends per common share	$	—		$	—		$	0.08
Book value per common share	$	15.74		$	17.22		$	22.77
Tangible book value per common share(1)	$	15.74		$	17.22		$	22.77
Performance Ratios:
Return on average assets(2)	(1.86)		%	(0.74)		%	(0.10)		%
Return on average common equity(2)	(34.47)		%	(15.51)		%	(3.00)		%
Net interest margin(2)	3.42		%	3.58		%	3.77		%

Asset Quality Data:
Net charge-offs	$	4,393		$	4,558		$	3,301
Net charge-offs/average loans HFI at amortized cost(2)	1.98		%	1.94		%	1.28		%
Nonperforming loans(3)	$	21,453		$	24,343		$	24,806
Nonperforming loans (excluding government guaranteed balance)(3)	$	15,873		$	16,271		$	15,078
Nonperforming loans/total loans HFI(3)	2.44		%	2.68		%	2.42		%
Nonperforming loans (excluding gov’t guaranteed balance)/total loans HFI(3)	1.81		%	1.79		%	1.47		%
ACL/Total loans HFI at amortized cost	2.35		%	2.42		%	1.61		%
Other Data:
Full-time equivalent employees	143			144			305
Banking centers	12			12			12
(1) See section entitled "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below for a reconciliation to most comparable GAAP equivalent.
(2) Annualized
(3) Excludes loans measured at fair value

Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial measures included in this report are not measures of financial condition or performance recognized by GAAP. These non-GAAP financial measures include tangible common shareholders' equity and tangible book value per

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common share. The management team uses these non-GAAP financial measures in its analysis of its performance, and they believe that providing this information to financial analysts and investors allows them to evaluate capital adequacy.

The following presents the calculation of the non-GAAP financial measures:


Tangible Common Shareholders' Equity and Tangible Book Value Per Common Share (Unaudited)
	As of
(Dollars in thousands, except for share data)	March 31, 2026		December 31, 2025		March 31, 2025
Total shareholders’ equity	$	81,867	$	87,569	$	110,085
Less: Preferred stock liquidation preference	(17,207)		(16,822)		(16,051)
Total equity available to common shareholders	64,660		70,747		94,034
Less: Goodwill	—		—		—
Tangible common shareholders' equity	$	64,660	$	70,747	$	94,034

Common shares outstanding	4,108,072		4,108,069		4,129,027
Tangible book value per common share	$	15.74	$	17.22	$	22.77

Results of Operations

BayFirst’s operating results depend on its net interest income, which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities, consisting primarily of deposits. Net interest income is determined by the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities (“interest rate spread”) and the relative amounts of interest-earning assets and interest-bearing liabilities. The interest rate spread is affected by regulatory, economic, and competitive factors which influence interest rates, loan demand, and deposit flows. In addition, the Company’s operating results can be affected by the level of nonperforming assets, as well as the level of the noninterest income and the noninterest expenses, such as compensation , loan servicing and origination expenses, and income taxes.

Historically, the Company has been dependent on noninterest income, derived primarily from service fee income and net gain on the sales of the guaranteed portion of government guaranteed loans, as well as fair value adjustments for certain loans which management has elected the fair value option. While the Company retains some of its government guaranteed loans on the balance sheet, the Company sold both the guaranteed balance of its government guaranteed loans, as well as a percentage of the unguaranteed portions of such loans.

In the fourth quarter of 2025, the Company sold a portion of its SBA 7(a) loan portfolio. In conjunction with the sale and as a result of the comprehensive strategic review aimed at reducing expenses and derisking the Bank's balance sheet, BayFirst exited the SBA 7(a) lending business. Banesco USA assumed servicing of loans included in the sale and has been engaged as subservicer on the remaining SBA 7(a) loans retained by BayFirst.

Net Loss

The Company had a net loss for the three months ended March 31, 2026 of $5.7 million, or $1.48 per common share and diluted common share, compared to net income for the three months ended March 31, 2025 of $0.3 million, or $0.17 per common and diluted common share. The change from the first quarter of 2025 was due to a decrease in net interest income of $1.6 million, a decrease in noninterest income of $7.9 million, partially offset by a decrease in provision for credit losses of $1.3 million, a decrease in noninterest expense of $0.9 million, and a decrease in income tax expenses of $1.8 million.

Net Interest Income

Net interest income was $9.4 million for the three months ended March 31, 2026, an decrease from $11.0 million during the three months ended March 31, 2025. The decrease in net interest income during the first quarter of 2026, as compared to the year ago quarter, was mainly due to a decrease in loan interest income, including fees, of $3.8 million, partially offset by an increase in interest income on interest bearing deposits in banks and other of $0.6 million and a decrease in interest expense on deposits of $1.5 million.

Net interest margin was 3.42% for the first quarter of 2026, which represented a decrease from 3.77% for the first quarter of 2025.

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Average Balance Sheet and Analysis of Net Interest Income

The following table sets forth, for the periods indicated, information regarding: (i) the total dollar amount of interest and dividend income of BayFirst from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest income; (iv) interest rate spread; (v) net interest margin; and (vi) ratio of average interest-earning assets to average interest-bearing liabilities. Loans in nonaccrual status, for the purposes of the following computations, are included in the average loan balances. FRB,

FHLB, and FNBB restricted equity holdings are included in other interest-earning assets. The Company did not have a significant amount of tax-exempt assets.


	Three Months Ended March 31,
	2026							2025
(Dollars in thousands)	Average Balance			Interest		Yield		Average Balance			Interest		Yield
Interest-earning assets:
Investment securities	$	31,722		$	259	3.31	%	$	38,344		$	368	3.89	%
Loans(1)	945,532			15,930		6.83		1,087,015			19,751		7.37

Other	141,968			1,250		3.57		58,111			566		3.95
Total interest-earning assets	1,119,222			17,439		6.32		1,183,470			20,685		7.09
Noninterest-earning assets	100,526							104,148
Total assets	$	1,219,748						$	1,287,618
Interest-bearing liabilities:
NOW, MMDA and savings	$	608,801		$	4,016	2.68		$	719,600		$	6,097	3.44
Time deposits	393,810			3,877		3.99		304,790			3,334		4.44

Other borrowings	7,556			97		5.21		21,364			255		4.84
Total interest-bearing liabilities	1,010,167			7,990		3.21		1,045,754			9,686		3.76
Demand deposits	101,537							103,875
Noninterest-bearing liabilities	20,657							25,885
Shareholders’ equity	87,387							112,104
Total liabilities and shareholders’ equity	$	1,219,748						$	1,287,618
Net interest income				$	9,449						$	10,999
Interest rate spread						3.11							3.33
Net interest margin (2)						3.42							3.77
Ratio of average interest-earning assets to average interest-bearing liabilities	110.80		%					113.17		%

(1) Includes nonaccrual loans.
(2) Net interest margin represents annualized net interest income divided by average total interest-earning assets.

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Rate/Volume Analysis

The table below presents the effects of volume and rate changes on interest income and expense for the periods indicated. Changes in volume are changes in the average balance multiplied by the previous period’s average rate. Changes in rate are changes in the average rate multiplied by the average balance from the previous period. The net changes attributable to the combined impact of both rate and volume have been allocated proportionately to the changes due to volume and the changes due to rate. Loans in nonaccrual status, for the purpose of the following computations, are included in the average loan balances. FRB, FHLB, and FNBB restricted equity holdings are included in other interest-earning assets. The Company did not have a significant amount of tax-exempt assets.


(Dollars in thousands)	Rate		Volume		Total
Three Months Ended March 31, 2026 vs. March 31, 2025:
Interest-earning assets:
Investment securities	$	(51)	$	(58)	$	(109)
Loans	(1,370)		(2,451)		(3,821)

Other interest-earning assets	(59)		743		684
Total interest-earning assets	(1,480)		(1,766)		(3,246)
Interest-bearing liabilities:
NOW, MMDA and savings	(1,227)		(854)		(2,081)
Time deposits	(358)		901		543

Other borrowings	18		(176)		(158)
Total interest-bearing liabilities	(1,567)		(129)		(1,696)
Net change in net interest income	$	87	$	(1,637)	$	(1,550)

Provision for Credit Losses

The provision for credit losses is charged to operations to adjust the ACL to a level deemed appropriate by management and is based upon the volume and type of lending the Bank conducts, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they relate to its market area, economic forecasts, and other factors that may affect the ability to collect on the loans in its portfolio.

The Company recorded a provision for credit losses on loans for the three months ended March 31, 2026 of $3.1 million compared to a provision of $4.4 million for the three months ended March 31, 2025. During the three months ended March 31, 2026, $4.4 million of net charge offs were recorded compared to $3.3 million during the three months ended March 31, 2025.

Noninterest Income

The following table presents noninterest income for the three months ended March 31, 2026 and March 31, 2025.


	For the Three Months Ended March 31,
(Dollars in thousands)	2026		2025
Noninterest income:
Loan servicing income, net	$	770	$	736
Gain on sale of SBA and PPP loans, net	(97)		7,327
Service charges and fees	490		449

SBA loan fair value loss	(533)		(755)
Government guaranteed loan packaging fees	—		716
Gain on sale of premises and equipment	13		—
Other non-interest income	241		278
Total noninterest income	$	884	$	8,751

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Noninterest income was $0.9 million during the three months ended March 31, 2026, a decrease from $8.8 million during the three months ended March 31, 2025. The decrease in the first quarter of 2026, as compared to the first quarter of 2025, was the result a decrease in gain on sale of government guaranteed loans of $7.4 million and a decrease in government guaranteed loan packaging fees of $0.7 million.

Noninterest Expense

The following table presents noninterest expense for the three months ended March 31, 2026 and March 31, 2025.


	For the Three Months Ended March 31,
(Dollars in thousands)	2026		2025
Noninterest expense:
Salaries and benefits	$	5,069	$	7,998
Bonus, commissions, and incentives	290		71

Occupancy and equipment	1,368		1,634
Data processing	1,489		2,045
Marketing and business development	123		487
Professional services	1,164		732
Loan servicing and origination expense	3,836		1,035
Employee recruiting and development	202		617
Regulatory assessments	578		339
Restructure charges	—		—
Director compensation	137		176
Liability and fidelity bond insurance	162		143
ATM and interchange	131		109
Telecommunication	68		115
Other noninterest expense	269		312
Total noninterest expense	$	14,886	$	15,813

Noninterest expense was $14.9 million during the three months ended March 31, 2026, an decrease from $15.8 million during the three months ended March 31, 2025. The decrease in the first quarter of 2026, as compared to the first quarter of 2025, was primarily due to a decrease in compensation expense of $2.7 million and a decrease in data processing expenses of $0.6 million, partially offset by an increase in loan servicing and origination expense of $2.8 million.

Income Taxes

Income tax benefit was $2.0 million for the three months ended March 31, 2026, a decrease from income tax benefit of $0.1 million for the three months ended March 31, 2025. The change was attributed to an increase in net loss.

At March 31, 2026, the Company had $19.6 million federal net operating loss carryforward and $18.1 million of state net operating loss carryforward. At March 31, 2025, the Company had no federal net operating loss carryforward and $16 thousand of state net operating loss carryforward. The Company expects to fully utilize the net operating losses.

The effective income tax rate was 25.57% for the three months ended March 31, 2026 and 27.65% for the three months ended March 31, 2025.

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Financial Condition

Investment Securities

The following table presents the fair value of the Company's investment securities portfolio classified as available for sale as of March 31, 2026 and December 31, 2025.


(Dollars in thousands)	March 31, 2026		December 31, 2025
Investment securities available for sale:
Asset-backed securities	$	2,724	$	2,822
Mortgage-backed securities:
U.S. Government-sponsored enterprises	4,760		4,899
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises	17,182		17,768
Corporate bonds	3,865		3,874
Total investment securities available for sale	$	28,531	$	29,363

The net unrealized loss on the investment securities AFS at March 31, 2026 and December 31, 2025, was $2.7 million and $2.6 million, respectively.

The following table presents the amortized cost of the Company's investment securities portfolio classified as held to maturity as of March 31, 2026 and December 31, 2025.


(Dollars in thousands)	March 31, 2026		December 31, 2025
Investment securities held to maturity:





Corporate bonds	$	2,500	$	2,500
Total investment securities held to maturity	$	2,500	$	2,500

There was a $9 thousand ACL on the corporate bonds HTM as of March 31, 2026 and $7 thousand at December 31, 2025. The net unrealized loss on the investment securities HTM at March 31, 2026, was $122 thousand compared with a net unrealized loss on investment securities HTM of $116 thousand at December 31, 2025.

No investment securities were pledged as of March 31, 2026 or December 31, 2025, and there were no sales of investment securities for the three months ended March 31, 2026 or the three months ended March 31, 2025.

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The investment securities available for sale presented in the following tables are reported at amortized cost and by contractual maturity as of March 31, 2026 and December 31, 2025. Actual timing may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Additionally, residential mortgage-backed securities and collateralized mortgage obligations receive monthly principal payments, which are not reflected below.


	March 31, 2026
	One year or less				One to five years				Five to ten years				After ten years
(Dollars in thousands)	Amortized Cost		Average Yield		Amortized Cost		Average Yield		Amortized Cost		Average Yield		Amortized Cost		Average Yield
Asset-backed securities	$	—	—	%	$	—	—	%	$	—	—	%	$	2,720	4.85	%
Mortgage-backed securities:
U.S. Government-sponsored enterprises	—		—		—		—		—		—		5,149		2.92
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises	—		—		—		—		—		—		19,554		2.34
Corporate bonds	—		—		3,845		4.88		—		—		—		—
Total investment securities available for sale	$	—	—	%	$	3,845	4.88	%	$	—	—	%	$	27,423	2.70	%


	December 31, 2025
	One year or less				One to five years				Five to ten years				After ten years
(Dollars in thousands)	Amortized Cost		Average Yield		Amortized Cost		Average Yield		Amortized Cost		Average Yield		Amortized Cost		Average Yield
Asset-backed securities	$	—	—	%	$	—	—	%	$	—	—	%	$	2,827	2.96	%
Mortgage-backed securities:
U.S. Government-sponsored enterprises	—		—		—		—		—		—		5,264		2.99
Collateralized mortgage obligations:
U.S. Government-sponsored enterprises	—		—		—		—		—		—		20,040		2.32
Corporate bonds	—		—		3,843		5.04		—		—		—		—
Total investment securities available for sale	$	—	—	%	$	3,843	5.04	%	$	—	—	%	$	28,131	2.51	%

The investment securities held to maturity presented in the following tables are reported at amortized cost and by contractual maturity as of March 31, 2026 and December 31, 2025. Actual timing may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Additionally, residential mortgage-backed securities receive monthly principal payments, which are not reflected below.


	March 31, 2026
	One year or less				One to five years				Five to ten years				After ten years
(Dollars in thousands)	Amortized Cost		Average Yield		Amortized Cost		Average Yield		Amortized Cost		Average Yield		Amortized Cost		Average Yield





Corporate bonds	$	—	—	%	$	1,500	4.38	%	$	1,000	4.38	%	$	—	—	%
Total investment securities held to maturity	$	—	—	%	$	1,500	4.38	%	$	1,000	4.38	%	$	—	—	%

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	December 31, 2025
	One year or less				One to five years				Five to ten years				After ten years
(Dollars in thousands)	Amortized Cost		Average Yield		Amortized Cost		Average Yield		Amortized Cost		Average Yield		Amortized Cost		Average Yield





Corporate bonds	$	—	—	%	$	1,500	4.38	%	$	1,000	4.38	%	$	—	—	%
Total investment securities held to maturity	$	—	—	%	$	1,500	4.38	%	$	1,000	4.38	%	$	—	—	%

Loan Portfolio Composition

The Company offers a variety of products designed to meet the credit needs of our borrowers. Our lending activities primarily consist of government guaranteed, commercial real estate, commercial business, residential mortgage, and consumer loans. Senior management and loan officers have continued to develop new sources of loan referrals, particularly among centers of local influence and real estate professionals, and have also enjoyed repeat business from loyal customers in the markets the Bank serves. The Bank has no concentration of credit in any industry that represents 10% or more of its loan portfolio. Additionally, the loan portfolio is well-diversified across major loan types with a low concentration of non owner-occupied commercial real estate loans which makes up 10% of the total portfolio. The following table sets forth the composition of its HFI loan portfolio.


	March 31, 2026				December 31, 2025
(Dollars in thousands)	Amount		% of Total		Amount		% of Total

Loans HFI:
Government guaranteed loans HFI, at fair value	$	51,807			$	54,076
Loans HFI, at amortized cost:
Residential real estate	359,305		41.5	%	365,427		40.7	%
Commercial real estate	216,643		25.0		215,771		24.0
Construction and land	36,732		4.2		48,397		5.4
Commercial and industrial	171,666		19.8		181,566		20.2
Commercial and industrial – PPP	6		—		6		—
Consumer and other	82,269		9.5		86,441		9.7
Loans HFI, at amortized cost, gross	866,621		100.0	%	897,608		100.0	%
Discount on government guaranteed loans	(6,007)				(6,811)
Premium on loans purchased, net	2,446				2,650
Deferred loan costs, net	15,559				16,371
Allowance for credit losses	(20,632)				(21,996)
Loans HFI, at amortized cost, net	857,987				887,822
Total loans HFI, net	$	909,794			$	941,898

For the three months ended March 31, 2026, the Bank originated $2.4 million in loans through conventional lending channels and $0.8 million in government guaranteed loans. In addition, the Bank sold $0.8 million of government guaranteed loans to Banesco USA as part of the Bank’s discontinuance of SBA 7(a) lending.

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Loan Maturity/Rate Sensitivity

The following table shows the contractual maturities of our loans at March 31, 2026. Loan balances in this table include loans HFI at fair value, loans HFI at amortized cost, discount on retained balances of loans sold, premium and discount on loans purchased, and deferred loan costs, net.


(Dollars in thousands)	Due in One Year or Less		Due After One Year to Five Years		Due After Five Years to 15 Years		Due After 15 Years		Total
Real estate:
Residential	$	1,482	$	597	$	14,815	$	342,691	$	359,585
Commercial	2,347		5,488		55,609		166,093		229,537
Construction and land	3,694		—		3,648		29,390		36,732
Commercial and industrial	10,453		22,891		177,172		8,557		219,073
Commercial and industrial - PPP	6		—		—		—		6
Consumer and other	2,355		19,113		18,589		45,436		85,493
Total loans HFI	$	20,337	$	48,089	$	269,833	$	592,167	$	930,426

The following table shows the loans with contractual maturities of greater than one year that have fixed or adjustable interest rates at March 31, 2026.


(Dollars in thousands)	Fixed Interest Rate		Adjustable Interest Rate
Real estate:
Residential	$	68,677	$	289,426
Commercial	4,299		222,891
Construction and land	494		32,544
Commercial and industrial	15,902		192,718

Consumer and other	77,597		5,541
Total loans HFI	$	166,969	$	743,120

Credit Risk

The Bank’s primary business is making commercial, consumer, and real estate loans. This activity inevitably has risks for potential credit losses, the magnitude of which depends on a variety of economic factors affecting borrowers, which are beyond its control. The Bank has developed policies and procedures for evaluating the overall quality of its credit portfolio and the timely identification of potential problem loans. Management’s judgment as to the adequacy of the allowance is based upon a number of assumptions about the economic environment that it believes impacts credit quality as of the balance sheet date that it believes to be reasonable, but which may or may not prove accurate. Thus, there can be no assurance that charge-offs in future periods will not exceed the ACL, or that additional increases in the ACL will not be required.

Allowance for Credit Losses. The Bank must maintain an adequate ACL based on a comprehensive methodology that assesses the probable losses inherent in its loan portfolio. The Bank maintains an ACL based on a number of quantitative and qualitative factors, including levels and trends of past due and nonaccrual loans, asset classifications, change in volume and mix of loans, collateral value, historical loss experience, size and complexity of individual credits, and economic conditions. In addition to this, the Company uses reasonable and supportable forecasts that are developed with internal and external data. These are updated quarterly by management and utilize data from the FOMC’s median forecasts of change in national GDP and of national unemployment. Provisions for credit losses are provided on both a specific and general basis. Specific allowances are provided for individual loans that do not share similar risk characteristics with instruments evaluated using a collective (pooled) basis. General valuation allowances are determined by loan pools with a further evaluation of various quantitative and qualitative factors noted above.

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The Bank periodically reviews the assumptions and formulates methodologies by which changes are made to the specific and general valuation ACL in an effort to refine such allowances in light of the current status of the factors described above.

All nonaccrual loans and modifications to loans for borrowers experiencing financial difficulty are reviewed to determine if the loans share the same risk characteristics as the pooled loans. If the loan does not share the same risk characteristics, the loan is evaluated individually for credit losses. Specific allocation of reserves for individually evaluated loans considers the value of the collateral, the financial condition of the borrower, and industry and current economic trends. The Bank reviews the collateral value, cash flow, and other support on each individually evaluated credit. Any deficiency outlined by a real estate collateral evaluation analysis, or cash flow shortfall, is accounted for through a specific allocation for the loan.

In 2025, in response to continued elevated charge-offs, increases in nonperforming loans and continued economic uncertainty, Management assessed and strengthened the Bank’s problem loan administration processes to ensure they were sufficiently identifying and timely risk-rating problem loans. The scope and frequency of the Bank’s independent, external loan review program were also expanded. Management believes that the updated processes around problem loan administration are adequate and that loan risk ratings are accurate.

Nonperforming Assets. At March 31, 2026, the Company had $17.5 million in nonperforming assets, excluding government guaranteed loan balances. The ACL represented 2.35% of total loans HFI at amortized cost. At March 31, 2025, the Company had $16.6 million in nonperforming assets, excluding government guaranteed loan balances. The ACL represented 1.61% of total loans HFI at amortized cost. The increase in nonperforming assets was partially the result of a nonaccrual loan for $2.6 million that is fully secured and has no ACL allocated. Total loans HFI at March 31, 2026 and March 31, 2025 included government guaranteed balances and loans measured at fair value, which had no reserves allocated to them. ACL as a percentage of loans HFI at amortized cost, not including government guaranteed loan balances, was 2.53% at March 31, 2026, compared to 1.84% at March 31, 2025.

The following table sets forth certain information on nonaccrual loans, loans 90 days or more past due, and foreclosed assets, the ratio of such loans and foreclosed assets to total assets as of the dates indicated, and certain other related information.


(Dollars in thousands)	March 31, 2026			March 31, 2025
Nonperforming loans (government guaranteed balances), at amortized cost, gross	$	5,580		$	9,728
Nonperforming loans (unguaranteed balances), at amortized cost, gross	15,873			15,078
Total nonperforming loans, at amortized cost, gross	21,453			24,806
Nonperforming loans (government guaranteed balances), at fair value	208			507
Nonperforming loans (unguaranteed balances), at fair value	1,230			1,419
Total nonperforming loans, at fair value	1,438			1,926
OREO	400			132
Repossessed assets	583			36
Total nonperforming assets, gross	$	23,874		$	26,900
Nonperforming loans as a percentage of total loans HFI(1)	2.44		%	2.42		%
Nonperforming loans (excluding government guaranteed balances) to total loans HFI(1)	1.81		%	1.47		%
Nonperforming assets as a percentage of total assets	2.00		%	2.08		%
Nonperforming assets (excluding government guaranteed balances) to total assets	1.38		%	1.22		%
ACL to nonperforming loans(1)	96.17		%	66.57		%
ACL to nonperforming loans (excluding government guaranteed balances)(1)	129.98		%	109.52		%

(1) Excludes loans measured at fair value

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The following table sets forth information with respect to activity in the ACL for loans for the periods shown:


(Dollars in thousands)	At and for the Three Months Ended March 31,
	2026			2025
Allowance at beginning of period	$	21,996		$	15,512

Charge-offs:
Residential real estate	(519)			(7)
Commercial real estate	(201)			(130)
Commercial and industrial	(3,515)			(2,966)

Consumer and other	(532)			(493)
Total charge-offs	(4,767)			(3,596)
Recoveries:
Residential real estate	—			20
Commercial real estate	22			—
Commercial and industrial	286			193

Consumer and other	66			82
Total recoveries	374			295
Net charge-offs	(4,393)			(3,301)
Provision for credit losses on loans	3,029			4,302
Allowance at end of period	$	20,632		$	16,513
Net charge-offs to average loans HFI at amortized cost	1.98		%	1.28		%
Allowance as a percent of total loans HFI at amortized cost	2.35		%	1.61		%
Allowance as a percent of loans HFI at amortized cost, not including government guaranteed loans	2.53		%	1.84		%
Allowance as a percent of nonperforming loans at amortized cost, gross	96.17		%	66.57		%
Total loans HFI	$	930,426		$	1,084,817
Average loans HFI at amortized cost	$	887,756		$	1,027,648
Nonperforming loans (including government guaranteed balances) at amortized cost, gross	$	21,453		$	24,806
Nonperforming loans (excluding government guaranteed balances) at amortized cost, gross	$	15,873		$	15,078
Guaranteed balance of government guaranteed loans	$	75,063		$	140,838

The following table details net charge-offs to average loans outstanding by loan category for the three months ended March 31, 2026 and March 31, 2025.


	Three Months Ended March 31, 2026						Three Months Ended March 31, 2025
(Dollars in thousands)	Net (Charge-off) Recovery		Average Loans HFI at amortized cost		Net (Charge-off) Recovery Ratio		Net (Charge-off) Recovery		Average Loans HFI at amortized cost		Net (Charge-off) Recovery Ratio
Residential real estate	$	(519)	$	357,766	(0.58)	%	$	13	$	325,911	0.02	%
Commercial real estate	(179)		274,121		(0.26)		(130)		361,012		(0.14)
Commercial and industrial	(3,229)		170,571		(7.57)		(2,773)		245,893		(4.51)
Commercial and industrial - PPP	—		6		—		—		633		—
Consumer and other	(466)		85,292		(2.19)		(411)		94,199		(1.75)
Total loans HFI at amortized cost	$	(4,393)	$	887,756	(1.98)	%	$	(3,301)	$	1,027,648	(1.28)	%

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SBA and Other Government Guaranteed Loans

The following table sets forth, for the periods indicated, information regarding the SBA and other government guaranteed lending activity, excluding PPP loans. In addition to the Bank’s routine loan sale activity, the Bank sold $97.4 million of government guaranteed loans to Banesco USA as part of the Bank’s discontinuance of SBA 7(a) lending in the fourth quarter 2025 and first quarter of 2026..


(Dollars in thousands)	At and for the Three Months Ended March 31,				At and for the Year Ended December 31,
Government Guaranteed, Excluding PPP	2026		2025		2025
Number of loans originated	1		525		1,388
Amount of loans originated	$	762	$	106,323	$	278,334
Average loan size originated	$	762	$	203	$	201
Government guaranteed loan balances sold	$	—	$	72,523	$	198,996

Total government guaranteed loan balances:
Guaranteed portion of government guaranteed loan balances HFI	$	75,057	$	140,381	$	70,123
Unguaranteed portion of government guaranteed loan balances HFI	212,225		281,814		232,863
Total government guaranteed loans HFI	287,282		422,195		302,986




Government guaranteed loans serviced for others	$	832,047	$	1,065,754	$	885,505
Government guaranteed loans sold to Banesco USA	$	762	$	—	$	96,602

The following table sets forth, at the dates indicated, the geographic disbursement of gross principal balances of its government guaranteed loan portfolio. The “All Other” category includes states with less than 5% in any period presented.


	March 31,
	2026				2025
(Dollars in thousands)	Amount		% of Total		Amount		% of Total
Florida	$	93,619	33	%	$	144,636	34	%
California	24,983		9		46,918		11
Tennessee	20,001		7		27,067		6
Texas	24,128		8		29,468		7
All Other	124,551		43		174,106		42
Total government guaranteed loans, excluding PPP loans	$	287,282	100	%	$	422,195	100	%

Deposits

General. In addition to deposits, sources of funds available for lending and for other purposes include loan repayments and historically proceeds from the sales of loans. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are influenced significantly by general interest rates and market conditions. Borrowings, as well as available lines of credit, may be used on a short-term basis to compensate for reductions in other sources, such as deposits at less than projected levels.

Deposits. Deposits are sourced principally from within its primary service area of Pinellas, Hillsborough, Manatee, Pasco, and Sarasota Counties, Florida. The Bank offers a wide selection of deposit instruments including demand deposit accounts, NOW accounts, money market accounts, regular savings accounts, time deposit accounts, and retirement savings plans (such as IRA accounts).

Time deposit rates are set to encourage longer maturities as cost and market conditions will allow. Deposit account terms vary, with the primary differences being the minimum balance required, the time period the funds must remain on deposit, and the interest rate.

The Bank emphasizes commercial banking relationships in an effort to increase demand deposits as a percentage of total deposits. Deposit interest rates are set by management at least monthly or more often if conditions require, based on a review of loan demand, projected cash flows and a survey of rates among competitors.

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Brokered deposits. At times, the Bank has brokered time deposit and non-maturity deposit relationships available to diversify its funding sources. Brokered deposits offer several benefits relative to other funding sources, such as: maturity structures which cannot be duplicated in the current retail market, deposit gathering outside the market of the existing deposit base, the unsecured nature of these liabilities, and the ability to quickly generate funds. The Bank’s internal policy limits the use of brokered deposits as a funding source to no more than 20% of total assets. The Company's ability to accept or renew brokered deposits is contingent upon the Bank maintaining a capital level of "well capitalized." At March 31, 2026 and December 31, 2025, the Company had $183.9 million and $195.5 million, respectively, of brokered deposits.

The amount of each of the following categories of deposits, at the dates indicated, are as follows:


(Dollars in thousands)	March 31, 2026				December 31, 2025
Noninterest-bearing deposit accounts	$	111,476	10.3	%	$	95,731	8.1	%
Interest-bearing transaction accounts	153,860		14.2		231,227		19.5
Money market accounts	411,226		37.9		434,930		36.7
Savings accounts	21,555		2.0		19,709		1.7
Subtotal	698,117		64.4		781,597		66.0
Total time deposits	387,752		35.6		402,341		34.0
Total deposits	$	1,085,869	100.0	%	$	1,183,938	100.0	%

At March 31, 2026, the Company held approximately $188.9 million of deposits that exceeded the FDIC insurance limit which was 17% of total deposits.

The following table provides information on the maturity distribution of the time deposits exceeding the FDIC insurance limit of $250 thousand as of March 31, 2026.


(Dollars in thousands)
Three months or less	$	32,342
Over three months through six months	17,511
Over six months through 12 months	25,160
Over 12 months	38,634
Total time deposits over $250	$	113,647

Deposits decreased $98.1 million or 8.28% for the three months ended March 31, 2026, with increases in noninterest-bearing deposit account balances, money market deposit account balances, and time deposit balances, partially offset by decreases in interest-bearing transaction account balances and savings account balances.

Other Borrowings

At March 31, 2026 and December 31, 2025, the Company had no borrowings outstanding from the FHLB or FRB.

The Bank is a member of the FHLB of Atlanta, which provides short- and long-term funding collateralized by mortgage-related assets to its members. FHLB short-term borrowings bear interest at variable rates set by the FHLB. Any advances that the Bank were to obtain would be secured by a blanket lien on $387.6 million of real estate-related loans as of March 31, 2026. Based on this collateral and the Bank's holdings of FHLB stock, the Bank was eligible to borrow up to $187.8 million from the FHLB at March 31, 2026.

In addition, the Bank has a line of credit with the Federal Reserve Bank of Atlanta which was secured by $49.8 million of commercial loans as of March 31, 2026. FRB short-term borrowings bear interest at variable rates based on the FOMC's target range for the federal funds rate. Based on this collateral, the Bank was eligible to borrow up to $28.8 million from the FRB at March 31, 2026.

The Company has $6.0 million of Subordinated Notes (the “Notes”) that mature June 30, 2031 and are redeemable after 5 years which is June 30, 2026. The Notes carry interest at a fixed rate of 4.50% per annum for the initial 5 years of term and carry interest at a floating rate for the final 5 years of term after June 30, 2026. Under the note agreements, the floating rates are based on a SOFR benchmark plus 3.78% per annum.

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The balance of Subordinated Notes outstanding at the Company, net of offering costs, amounted to $6.1 million and $6.0 million at March 31, 2026 and December 31, 2025, respectively.The increase was primarily the result of the deferred interest payment that were due in January 2026.

The Company has a term note with quarterly principal and interest payments with interest at Prime (6.75% at March 31, 2026). The note matures on March 10, 2029 and the balance of the note was $1.5 million and $1.6 million at March 31, 2026 and December 31, 2025, respectively. The note is secured by 100% of the stock of the Company and requires the Company to comply with certain loan covenants during the term of the note. On December 30, 2025, the lender agreed that the Bank may defer the quarterly interest payment due December 10, 2025 on its term loan until March 10, 2026. The deferred interest was paid as agreed.

As part of the amendment to the subordinated note and term note, the Company obtained a waiver related to financial debt covenants.

Capital Resources

Shareholders' equity is influenced primarily by earnings, dividends, the Company's sales and repurchases of its common and preferred stock, and changes in accumulated other comprehensive income caused primarily by fluctuations in unrealized gains or losses, net of taxes, on available for sale investment securities.

Shareholders' equity was $81.9 million at March 31, 2026 as compared to $87.6 million at December 31, 2025. The decrease was primarily due to net loss of $5.7 million.

The Company strives to maintain an adequate capital base to support its activities in a safe and sound manner while at the same time maximizing shareholder value. Management assesses capital adequacy against the risk inherent in the balance sheet, recognizing that unexpected loss is the common denominator of risk and that common equity has the greatest capacity to absorb unexpected loss.

The Bank is subject to regulatory capital requirements imposed by various regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and discretionary actions by banking regulators that, if undertaken, could have a direct material effect on BayFirst’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.

At March 31, 2026, the Bank did not meet all of its regulatory capital requirements to be well-capitalized but the consummation of the capital raise is expected to meet these capital requirements going forward.

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The Bank’s actual capital amounts and percentages were as shown in the table below:


	Actual				Minimum(1)				Well Capitalized(2)
(Dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
As of March 31, 2026
Total Capital (to risk-weighted assets)	$	90,664	9.84	%	$	73,713	8.00	%	$	92,141	10.00	%
Tier 1 Capital (to risk-weighted assets)	79,025		8.58		55,285		6.00		73,713		8.00
Common Equity Tier 1 Capital (to risk-weighted assets)	79,025		8.58		41,464		4.50		59,892		6.50
Tier 1 Capital (to total assets)	79,025		6.54		48,304		4.00		60,380		5.00
As of December 31, 2025
Total Capital (to risk-weighted assets)	98,560		10.18		77,441		8.00		96,802		10.00
Tier 1 Capital (to risk-weighted assets)	86,337		8.92		58,081		6.00		77,441		8.00
Common Equity Tier 1 Capital (to risk-weighted assets)	86,337		8.92		43,561		4.50		62,921		6.50
Tier 1 Capital (to total assets)	86,337		6.52		52,983		4.00		66,229		5.00

(1) Minimum to be considered “adequately capitalized” under Basel III Capital Adequacy.

(2) Minimum to be considered “well capitalized” under Prompt Corrective Actions Provisions.

Off-Balance Sheet Arrangements

The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business. These financial instruments primarily include unfunded loan commitments, unfunded lines of credit, and standby letters of credit. The Bank uses these financial instruments to meet the financing needs of its customers. These financial instruments involve, to varying degrees, elements of credit, interest rate, and liquidity risk. These do not present unusual risks and management does not anticipate any accounting losses that would have a material effect on the Bank.

A summary of the amounts of the Bank’s financial instruments, with off-balance sheet risk as of the dates indicated, was as follows:


(Dollars in thousands)	March 31, 2026		December 31, 2025
Unfunded loan commitments	$	17,674	$	1,257
Unused lines of credit	191,307		207,665
Standby letters of credit	1,161		1,161
Total	$	210,142	$	210,083

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Management evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Bank upon extension of credit is based on management’s credit evaluation of the customer.

Standby letters-of-credit are conditional lending commitments that the Bank issues to guarantee the performance of a customer to a third party and to support private borrowing arrangements. Essentially, letters of credit have expiration dates within one year of the issue date. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending credit.

In general, loan commitments and letters of credit are made on the same terms, including with respect to collateral, as outstanding loans. Each customer’s creditworthiness and the collateral required are evaluated on a case-by-case basis.

The Company maintains an ACL for its off-balance sheet loan commitments which is calculated by loan type using estimated line utilization rates based on historical usage. Loss rates for outstanding loans is applied to the estimated

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utilization rates to calculate the ACL for off-balance sheet loan commitments. At March 31, 2026 and December 31, 2025, ACL for off-balance sheet loan commitments totaled $718 thousand and $671 thousand, respectively.

Contractual Obligations

In the ordinary course of its operations, the Company enters into certain contractual obligations. Total contractual obligations at March 31, 2026 were $416.3 million, an decrease from $431.4 million at December 31, 2025. The decrease was primarily due to a decrease in time deposits of $14.6 million.

The following tables present our contractual obligations as of March 31, 2026 and December 31, 2025.


	Contractual Obligations as of March 31, 2026
(Dollars in thousands)	Less than One Year		One to Three Years		Three to Five Years		Over Five Years		Total
Operating lease obligations	$	2,128	$	2,861	$	2,719	$	13,246	$	20,954

Long-term borrowings	456		912		111		—		1,479
Subordinated notes	—		—		—		6,099		6,099
Time deposits	322,707		62,681		2,364		—		387,752
Total	$	325,291	$	66,454	$	5,194	$	19,345	$	416,284

	Contractual Obligations as of December 31, 2025
(Dollars in thousands)	Less than One Year		One to Three Years		Three to Five Years		Over Five Years		Total
Operating lease obligations	$	2,119	$	3,064	$	2,706	$	13,594	$	21,483

Long-term borrowings	456		912		225		—		1,593
Subordinated notes	—		—		—		5,962		5,962
Time deposits	318,112		81,873		2,356		—		402,341
Total	$	320,687	$	85,849	$	5,287	$	19,556	$	431,379

Liquidity

Liquidity management is the process by which the Bank manages the flow of funds necessary to meet its financial commitments on a timely basis and at a reasonable cost to take advantage of earnings enhancement opportunities. These financial commitments include withdrawals by depositors, credit commitments to borrowers, expenses of the operations, and capital expenditures. The Bank generally maintains a minimum liquidity ratio of liquid assets to total assets of at least 7.0%. Liquid assets include cash and due from banks, federal funds sold, interest-bearing deposits with banks and unencumbered investment securities available for sale. The on-balance sheet liquidity ratio at March 31, 2026 was 13.85%, as compared to 18.35% at December 31, 2025.

For the three months ended March 31, 2026, the Bank there were no dividends needed to its parent company in order to meet liquidity needs to make interest payments on its debt obligations, dividends on shares of its preferred stock and common stock, and payment of operating expenses. The Company suspended the payment of dividends in 2025. As of March 31, 2026, BayFirst Financial Corp. held $401 thousand in cash and cash equivalents.

The Company expects that all the liquidity needs, including the contractual commitments, can be met by currently available liquid assets and cash flows. In the event any unforeseen demand or commitments were to occur, the Company could access the borrowing capacity with the FHLB or FRB, or lines of credit with other financial institutions. The Company does not rely on investment securities as the main source of liquidity and does not foresee the need to sell investment securities for cash flow purposes. In addition, the Company has the ability to obtain non-brokered wholesale deposits as another source of liquidity. The Company expects that the currently available liquid assets and the ability to borrow from the FHLB, FRB, and other financial institutions would be sufficient to satisfy the liquidity needs without any material adverse effect on the Company’s liquidity.

A description of BayFirst’s debt obligations is set forth above under the heading “Other Borrowings.”

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk and Interest Rate Sensitivity

Market risk is the risk of loss from adverse changes in market prices and rates. Market risk arises primarily from interest-rate risk inherent in lending and deposit taking activities. To that end, the Company actively monitors and manages its interest-rate risk exposure. The measurement of market risk associated with financial instruments is meaningful only when all related and offsetting on- and off-balance sheet transactions are aggregated, and the resulting net positions are identified. Disclosures about the fair value of financial instruments, which reflect changes in market prices and rates, should also be considered.

The objective in managing interest-rate risk is to minimize the adverse impact of changes in interest rates on net interest income and capital, while adjusting the asset-liability structure to obtain the maximum yield-cost spread on that structure. The Company relies primarily on its asset-liability structure to control interest rate risk. A sudden or substantial change in interest rates may impact its earnings, to the extent that the interest rates borne by assets and liabilities do not change at the same rate, to the same extent, or on the same basis.

The Company established a comprehensive interest rate risk management policy which is administered by management. The policy establishes risk limits, which are quantitative measures of the percentage change in net interest income (net interest income at risk) and the fair value of equity capital (economic value of equity at risk) resulting from a hypothetical change in interest rates for maturities from one day to 30 years. Management measures the potential adverse impacts that changing interest rates may have on its short-term earnings, long-term value, and liquidity with computer-generated simulation analysis. The simulation model is designed to capture call features and interest rate caps and floors embedded in investment and loan contracts. As with any method of analyzing interest rate risk, there are certain shortcomings inherent in the interest rate modeling methodology used. When interest rates change, actual movements in different categories of interest-earning assets and interest-bearing liabilities, loan prepayments, and withdrawals of time and other deposits, may deviate significantly from the assumptions used in modeling. The methodology does not measure the impact that higher rates may have on borrowers’ ability to service their debts, or the impact of rate changes on demand for loan and deposit products.

To minimize the potential for adverse effects of changes in interest rates on the results of the operations, the Company monitors assets and liabilities to better match the maturities and repricing terms of the interest-earning assets and interest-bearing liabilities. To do this, the Company (i) emphasizes the origination of adjustable-rate and variable-rate loans to be HFI; (ii) maintains a stable core deposit base; and (iii) maintains a significant portion of liquid assets (cash, interest-bearing deposits with other banks, and available for sale investment securities).

Management regularly reviews its exposure to changes in interest rates. Among the factors they consider are changes in the mix of interest-earning assets and interest-bearing liabilities, interest rate spreads and repricing periods. ALCO reviews, on at least a quarterly basis, its interest rate risk position.

The interest rate risk position is measured and monitored at the Bank using net interest income simulation models and economic value of equity sensitivity analysis that captures both short-term and long-term interest-rate risk exposure.

Modeling the sensitivity of net interest income and the economic value of equity to changes in market interest rates is highly dependent on numerous assumptions incorporated into the modeling process. The models used for these measurements rely on estimates of the potential impact that changes in interest rates may have on the value and prepayment speeds on all components of its loan and investment portfolios, as well as embedded options and cash flows of other assets and liabilities. Balance sheet growth assumptions are also included in the simulation modeling process. The analysis provides a framework as to what the overall sensitivity position is as of the most recent reported position and the impact that potential changes in interest rates may have on net interest income and the economic value of its equity.

Net interest income simulation involves forecasting net interest income under a variety of interest rate scenarios including instantaneous shocks.

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The estimated impact on the net interest income as of March 31, 2026 and December 31, 2025, assuming immediate parallel moves in interest rates, is presented in the table below.


	March 31, 2026				December 31, 2025
Change in rates	Following 12 months		Following 24 months		Following 12 months		Following 24 months
+400 basis points	1.3	%	(3.2)	%	5.2	%	(3.2)	%
+300 basis points	1.9		(1.3)		5.2		(0.9)
+200 basis points	1.8		(0.3)		4.1		0.2
+100 basis points	1.2		0.3		2.5		0.6
-100 basis points	(0.1)		(0.2)		(1.1)		(0.5)
-200 basis points	(2.4)		(2.7)		(3.9)		(2.8)

Management strategies may impact future reporting periods, as the actual results may differ from simulated results due to the timing, magnitude, and frequency of interest rate changes, the difference between actual experience and the characteristics assumed, as well as changes in market conditions. Market-based prepayment speeds are factored into the analysis for loan and investment securities portfolios. Rate sensitivity for transactional deposit accounts is modeled based on both historical experience and external industry studies.

The Company uses economic value of equity sensitivity analysis to understand the impact of interest rate changes on long-term cash flows, income, and capital. Economic value of equity is based on discounting the cash flows for all balance sheet instruments under different interest rate scenarios.

The table below presents the change in the economic value of equity as of March 31, 2026 and December 31, 2025, assuming immediate parallel shifts in interest rates.


Change in rates	March 31, 2026		December 31, 2025
+400 basis points	(17.2)	%	(15.6)	%
+300 basis points	(12.4)		(10.9)
+200 basis points	(8.0)		(6.9)
+100 basis points	(3.7)		(3.1)
-100 basis points	4.4		4.1
-200 basis points	7.0		7.6

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) of the Exchange Act), was carried out under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer as of March 31, 2026, the last day of the period covered by this Quarterly Report. The Company’s Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of March 31, 2026, in ensuring that the information required to be disclosed in the reports the Company files or submits under the Exchange Act is (i) accumulated and communicated to management (including the Company’s Chief Executive Officer and Chief Financial Officer) as appropriate to allow timely decisions regarding required disclosures, and (ii) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the fiscal period to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II

Item 1. Legal Proceedings

In the normal course of business, the Company is named or threatened to be named as a defendant in various lawsuits, none of which is expected to have a material effect on the Company. However, given the nature, scope and complexity of the extensive legal and regulatory landscape applicable to its business (including laws and regulations governing consumer protection, fair lending, fair labor, privacy, information security, anti-money laundering and anti-terrorism), the Company, like all banking organizations, is subject to heightened legal and regulatory compliance and litigation risk. There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company is a party or to which its property is the subject.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed under "Part I--Item 1A--Risk Factors" in the Company's Form 10-K for the year ended December 31, 2025. There have been no material changes from those risk factors previously disclosed. These factors could materially and adversely affect the Company's business, financial condition, liquidity, results of operations and capital position, and could cause its actual results to differ materially from its historical results or the results contemplated by the forward-looking statements contained in this report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

On July 28, 2025, the Company’s Board of Directors approved the temporary suspension of the Company’s quarterly cash dividends on its 9% Series A Cumulative Nonconvertible Preferred Stock, 8% Series B Cumulative Convertible Preferred Stock, and 11% Series C Cumulative Convertible Preferred Stock commencing with the October 2025 dividend. As of the date of this March 31, 2026 Quarterly Report on Form 10-Q, an aggregate of $1,156,058 in dividends had accrued.

Item 4. Mine Safety Disclosures

Not applicable.

Item 9B. Other Information

None.

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ITEM 6. EXHIBITS

(a)Exhibits.


Exhibit Number						Exhibit Name
*3.1						Amended and Restated Articles of Incorporation
*3.2						Bylaws
*3.3						Amendment to Bylaws, dated August 22, 2019
*3.4						Amendment to Articles of Incorporation, dated September 7, 2023
*3.5						Articles of Amendment to the Amended and Restated Articles of Incorporation - Mandatorily Convertible Cumulative Perpetual Preferred Stock, Series D (Exhibit I-1 to Exhibit 10.1 )
*3.6						Articles of Amendment to the Amended and Restated Articles of Incorporation - Mandatorily Convertible Cumulative Perpetual Preferred Stock, Series E (Exhibit I-2 to Exhibit 10.1 1 )
*4.1						Form of common stock certificate
*4.2						Form of Series A Preferred Stock certificate
*4.3						Form of Series B Convertible Preferred Stock certificate
*4.4						Form of Series C Cumulative Convertible Preferred Stock certificate
*10.1						Securities Purchase Agreement, dated April 28, 2026
*10.2						Form of Registration Rights Agreement (Exhibit A to Exhibit 10.1)
*10.3						Exchange Agreement (Exhibit J to Exhibit 10.1)
*10.4						Employment Agreement with Alfred T. Rogers, Jr.
31.1						Principal Executive Officer’s Certification required by Rule 13(a)-14(a) - filed herewith
31.2						Principal Financial Officer’s Certification required by Rule 13(a)-14(a) - filed herewith
32.1						Principal Executive Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - filed herewith
32.2						Principal Financial Officer’s Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - filed herewith
101						Financial information from the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, formatted in iXBRL interactive data files pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Income; (iii) Condensed Consolidated Statements of Comprehensive Income; (iv) Condensed Consolidated Statements of Shareholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to the Condensed Consolidated Financial Statements – filed herewith.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

•Incorporated by reference

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SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



BAYFIRST FINANCIAL CORP.

Date:			May 12, 2026

By:			/s/ Robin L. Oliver
			Robin L. Oliver
			President and Chief Operating Officer (Principal Executive Officer)

Date:			May 12, 2026

By:			/s/ Scott J. McKim
			Scott J. McKim
			Chief Financial Officer (Principal Financial Officer\Principal Accounting Officer)