BAYFIRST FINANCIAL CORP.

The company restated 2024, 2025, and Q1 2026 results after identifying $2.8 million of deferred origination costs and $2.1 million of accrued interest that had understated provision expense and overstated net interest income, plus another $3.4 million of deferred-cost accounting errors. Management acknowledged ongoing remediation of material weaknesses in internal controls.

The $43.8 million of purportedly nonrecurring charges nearly equaled the entire $44 million pretax loss, leaving no demonstrated recurring earnings cushion. The analyst explicitly pressed whether core earnings power was effectively zero; the CFO confirmed Q2 core earnings were just below breakeven and relied on future growth assumptions for the recovery case.

Tangible book value declined approximately 66% sequentially to $4.82 per share, while the company will issue 22.9 million common shares through preferred conversion and potentially 4.1 million additional shares through the rights offering. The dilution and post-offering tangible book value were not quantified on the call.

Management described the asset-resolution adjustments as providing protection from future charge-offs, but did not provide a quantified remaining loss range, expected resolution timetable, or evidence that reserves are sufficient across the full $142 million unguaranteed SBA exposure.

Deposit runoff is partly intentional, but the bank still has brokered balances to shed and lost 15% of deposits year over year. The call did not establish that new relationship deposits will replace those funds at acceptable cost.

The $9.7 million redemption of Series A and Series B preferred stock is a Q3 cash event, and management also expects incremental treasury staffing and branch investment. These uses of capital could delay profitability if loan and fee-income growth does not materialize.