BayFirst Financial Corp. disclosed on July 15 that it will restate previously issued financial statements for the years ended December 31, 2024 and 2025, as well as the quarter ended March 31, 2026. The decision follows an internal review that identified accounting errors related to its loan portfolio, and the company is simultaneously quantifying the impact of a broader asset resolution plan tied to a stock purchase agreement announced in April.
The Restatement
Management found that $2.8 million of deferred origination costs and $2.1 million of accrued interest as of March 31, 2026, were tied to loans that had defaulted or been placed on non-accrual status in prior periods. These items were not properly written off at the time, which resulted in an understatement of provision expense and an overstatement of net interest income during the affected quarterly periods in 2024, 2025, and early 2026.
The cumulative effect of the corrections will reduce 2024 net income from the previously reported $12.6 million to $11.4 million. The 2025 net loss will widen from $22.9 million to $24.2 million, and the first quarter 2026 net loss will deepen from $5.7 million to $5.9 million.
On July 14, management recommended, and the audit committee agreed, that the prior financial statements and related audit reports should no longer be relied upon. The company also cautioned investors against relying on earlier earnings releases and investor presentations covering those periods. BayFirst expects to file amended reports by August 12, 2026.
Asset Resolution Plan
Separately, the company completed its quantification of an asset resolution plan adopted under the April 28, 2026 stock purchase agreement. The plan identifies specific loans in the government guaranteed portfolio and revises expected collections on more than 7,000 unguaranteed SBA 7(a) small balance loans. These adjustments total $37.0 million, affecting loans measured under both amortized cost and fair value accounting.
The company will also record a $1.5 million impairment on a non-marketable equity investment in a former SBA lending partner and a $1.6 million write-down of unamortized premiums on purchased fully guaranteed USDA loans at risk of default or early prepayment. All of these items will be reflected in second quarter 2026 results, which the company plans to release after markets close on July 30.
Additional Steps
BayFirst is conducting a recovery analysis of incentive-based compensation paid to executive officers during the relevant period, as required under SEC clawback rules. The company is also evaluating whether the accounting issues will lead to the identification of material weaknesses in internal control over financial reporting, which would be disclosed in the amended filings. Management and the audit committee have discussed the matters with the company’s independent auditor, Forvis Mazars, LLP.