Bayfirst Financial Corp. Reports Third Quarter 2026 Results

(MENAFN- GlobeNewsWire - Nasdaq) Net Interest Margin Expansion, 25% Growth in Community Bank Lending, and Significant Credit Improvement

ST. PETERSBURG, Fla., Oct. 29, 2026 (GLOBE NEWSWIRE) -- BayFirst Financial Corp. (NASDAQ: BAFN) (“BayFirst” or“Company”), parent company of BayFirst National Bank (“Bank”) reported a net loss of $0.7 million, or $0.04 per common share and diluted common share, for the third quarter of 2026, compared to a net loss of $32.7 million, or $8.05 per common share and diluted common share, in the second quarter of 2026.

“In the second quarter we took deliberate steps under our asset resolution plan to strengthen our balance sheet, and this quarter's results show those actions are beginning to pay off,” stated Al Rogers, Chief Executive Officer.“Total community bank loans, excluding the government guaranteed portfolio, grew $41.9 million over the prior quarter, or 25% annualized, a key highlight that reflects strong demand and the trust our customers place in us. Net interest margin improved 59 basis points from the prior quarter, and for the first time in nearly three years, deposit growth outpaced loan growth, a clear sign that our relationship-focused approach is strengthening our funding base. While we did report a loss for the third quarter, it was a significant improvement over prior periods. Our strengthened foundation positions us for continued improvement in the coming quarters as we remain focused on achieving sustained profitability.

“We are also encouraged by the continued improvement in asset quality,” Rogers continued.“Nonperforming assets declined as percentage of total assets, and net charge-offs were lower than in the prior quarter, further evidence that our asset resolution efforts are working. Through it all, our focus on the communities we serve remains unwavering, and I am confident we will continue to build on our standing as the community bank of choice in our Tampa Bay and Sarasota markets.”

Third Quarter 2026 Performance Review

• Net interest margin was 4.07% in the third quarter of 2026, an increase of 59 basis points from 3.48% in the second quarter of 2026 and an increase of 43 basis points from 3.64% in the third quarter of 2025.
• Total loans held for investment increased by $20.1 million, or 2.3%, during the third quarter of 2026 to $903.0 million and decreased $90.1 million, or 9.1%, over the past year. The decrease from the prior year was partially the result of no new SBA 7(a) loan originations and the sale of $97.4 million of government guaranteed loans to a third party as part of the Bank's discontinuance of SBA 7(a) lending.
• Deposits increased $25.3 million, or 2.6%, during the third quarter of 2026 and decreased $157.3 million, or 13.4%, over the past year to $1.01 billion. The increase in deposits during the quarter was primarily due to increases in noninterest-bearing account balances, interest-bearing transaction account balances, savings and money market account balances, partially offset by a decrease in time deposit balances. The decrease in deposits over the past year was primarily due to decreases in high-rate promotional deposits held with non-relationship customers and brokered deposits.
• On July 14, 2026, the Company obtained shareholder approval to amend the BayFirst Financial Corp. Articles of Incorporation to increase the number of authorized shares of the common stock from 15,000,000 to 100,000,000 and exchanged all 4,000 outstanding shares of Mandatorily Convertible Cumulative Perpetual Preferred Stock, Series D, and exchanged all 4,000 outstanding shares of Mandatorily Convertible Cumulative Perpetual Preferred Stock, Series E for a total of 22,856,000 shares of common stock. Upon conversion, all shares of Series D and Series E Preferred Stock were retired.
• On August 13, 2026, the Company redeemed all outstanding Series A and Series B Preferred Shares in the amount of $6,464 for Preferred Series A, including accrued dividends of $303, and $3,241 for Preferred Series B, including accrued dividends of $118.
• At September 30, 2026, book value and tangible book value was $3.64 per common share, a decrease from $4.82 at June 30, 2026.
  

Results of Operations

Net Loss

The Company had a net loss of $0.7 million for the third quarter of 2026, compared to a net loss of $32.7 million in the second quarter of 2026 and a net loss of $19.1 million in the third quarter of 2025. The change in the third quarter of 2026 from the preceding quarter was primarily the result of $41.5 million of expense in the second quarter of 2026 related to the asset resolution plan. The change from the third quarter of 2025 was the due to decreases in provision for credit losses of $11.2 million and noninterest expense of $12.4 million, and an increase in noninterest income of $2.2 million, partially offset with a decrease in income tax benefit of $6.7 million.

For the nine months ended September 30, 2026, the Company had a net loss of $39.3 million, compared to a net loss of $21.9 million for the nine months ended September 30, 2025. The change was primarily due to decreases in net interest income of $4.6 million and noninterest income of $22.8 million and increases in provision for credit losses of $13.5 million and noninterest expense of $13.2 million, partially offset by income tax benefit of $5.7 million.

Net Interest Income and Net Interest Margin

Net interest income was $10.6 million in the third quarter of 2026, which was an increase of $1.2 million from $9.4 million for the second quarter of 2026, and a decrease of $0.7 million from $11.3 million during the third quarter of 2025. The net interest margin was 4.07% in the third quarter of 2026, an increase of 59 basis points from 3.48% in the second quarter of 2026 and an increase of 43 basis points from 3.64% in the third quarter of 2025.

The increase in net interest income during the third quarter of 2026, as compared to the second quarter of 2026, was mainly due to an increase in loan interest income, including fees, of $1.1 million.

The decrease in net interest income during the third quarter of 2026, as compared to the year ago quarter, was mainly due to a decrease in loan interest income, including fees, of $4.8 million, partially offset by a decrease in interest expense on deposits of $3.1 million.

Net interest income was $29.5 million for the nine months ended September 30, 2026, a decrease from $34.1 million for the nine months ended September 30, 2025. The decrease was mainly due to a decrease in loan interest income, including fees, of $14.7 million, partially offset by a decrease in interest expense of $8.7 million.

Noninterest Income

Noninterest income was $1.1 million for the third quarter of 2026, compared to negative income of $6.8 million in the second quarter of 2026 and negative income of $1.1 million in the third quarter of 2025. The change from the third quarter of 2026, as compared to the second quarter of 2026, was primarily the result of a 99.41% decrease in government guaranteed loan fair value losses of $6.4 million and second quarter 2026 loss on nonmarketable equity securities of $1.5 million which was related to the impairment of an investment in a firm who was a partner with the Company's former SBA 7(a) lending business. The increase in the third quarter of 2026, as compared to the third quarter of 2025, was the result of a third quarter 2025 fair value adjustment on loans held for sale of $5.1 million, partially offset by a decrease in gain on sale of government guaranteed loans of $3.0 million.

Noninterest income was a negative $4.8 million for the nine months ended September 30, 2026, which was a decrease from income of $17.9 million for the nine months ended September 30, 2025. The decrease was primarily the result of a decrease in gain on sale of government guaranteed loans of $16.1 million, a decrease in government guaranteed loan fair value gains of $7.8 million, a decrease in government guaranteed loan packaging fees of $1.7 million and second quarter 2026 loss on nonmarketable equity securities of $1.5 million, partially offset by a 2025 fair value adjustment on loans held for sale of $5.1 million.

Noninterest Expense

Noninterest expense was $12.8 million in the third quarter of 2026 compared to $17.7 million in the second quarter of 2026 and $25.2 million in the third quarter of 2025. The decrease in the third quarter of 2026, as compared to the prior quarter, was primarily due to $1.7 million of expenses in the second quarter of 2026 related to the asset resolution plan and $2.3 million of one-time expenses to record a change in control payment and write-off vendor contracts related to national lending and digital account opening businesses which are not part of our community banking focus. The decrease in the third quarter of 2026, as compared to the third quarter of 2025, was primarily due to the third quarter 2025 restructuring expense of $7.3 million, and a decrease in compensation expense of $3.1 million.

Noninterest expense was $45.4 million for the nine months ended September 30, 2026 compared to $58.6 million for the nine months ended September 30, 2025. The decrease was primarily the result of the third quarter 2025 restructuring expense of $7.3 million, a decrease in compensation expense of $8.1 million, partially offset by an increase in loan servicing and origination expense of $3.1 million.

Balance Sheet

Assets

Total assets increased $13.0 million, or 1.1%, during the third quarter of 2026 to $1.15 billion, primarily the result of an increase in loans held for investment of $20.1 million, and a decrease in allowance for credit losses on loans of $3.3 million, partially offset by a decrease in cash and cash equivalents of $10.8 million. Compared to the end of the third quarter last year, total assets decreased $192.3 million, or 14.3%, driven primarily by a decrease in loans held for investment and held for sale of $184.2 million, and an increase in allowance for credit losses on loans of $17.3 million, partially offset by an increase in cash and cash equivalents of $9.8 million and an increase in deferred tax asset of $14.8 million.

Loans

Loans held for investment increased $20.1 million, or 2.3%, during the third quarter of 2026 and decreased $90.1 million, or 9.1%, over the past year to $903.0 million. The decrease from prior year was primarily due to loan payoffs and government guaranteed loan sales, which included the sale of the SBA 7(a) loans to a third party in the fourth quarter as part of the Bank's discontinuance of SBA 7(a) lending. This was partially offset by originations in both conventional community bank loans and USDA government guaranteed loans.

Deposits

Deposits increased $25.3 million, or 2.6%, during the third quarter of 2026 and decreased $157.3 million, or 13.4%, from the third quarter of 2025, ending September 30, 2026, at $1.01 billion. During the third quarter, there was a decrease in time deposit balances of $8.7 million, partially offset by increases in noninterest-bearing account balances of $4.4 million, interest-bearing transaction account balances of $6.9 million, and savings and money market account balances of $22.6 million. At September 30, 2026, June 30, 2026, and September 30, 2025, the Company had $165.7 million, $163.8 million, and $235.9 million, respectively, of brokered deposits.

Asset Quality

The Company recorded a provision for credit losses in the third quarter of negative $0.1 million, compared to provisions of $29.0 million for the second quarter of 2026 and $11.2 million during the third quarter of 2025. The decrease in the provision expense was primarily the result of $30.5 million of expense related to the asset resolution plan recorded in the second quarter of 2026.

The ratio of allowance for credit losses (ACL) on loans to total loans held for investment at amortized cost was 4.85% at September 30, 2026, 5.37% as of June 30, 2026, and 2.63% as of September 30, 2025. The ratio of ACL on loans to total loans held for investment at amortized cost, excluding government guaranteed loan balances, was 5.20% at September 30, 2026, 5.82% as of June 30, 2026, and 2.80% as of September 30, 2025.

Net charge-offs for the third quarter of 2026 were $3.2 million, which was a decrease from $4.5 million for the second quarter of 2026 and a decrease from $3.5 million for the third quarter of 2025. Annualized net charge-offs as a percentage of average loans held for investment at amortized cost were 1.52% for the third quarter of 2026, compared to 2.08% in the second quarter of 2026 and 1.34% in the third quarter of 2025. Nonperforming assets were 1.29% of total assets as of September 30, 2026, compared to 1.75% as of June 30, 2026, and 1.98% as of September 30, 2025. Nonperforming assets, excluding government guaranteed loan balances, were 1.21% of total assets as of September 30, 2026, compared to 1.32% as of June 30, 2026, and 1.21% as of September 30, 2025.

Capital

The Bank's Tier 1 leverage ratio was 8.79% as of September 30, 2026, compared to 8.30% as of June 30, 2026, and 6.14% as of September 30, 2025. The CET 1 and Tier 1 capital ratios to risk-weighted assets were 11.15% as of September 30, 2026, compared to 11.47% as of June 30, 2026, and 7.82% as of September 30, 2025. The total capital to risk-weighted assets ratio was 12.44% as of September 30, 2026, compared to 12.77% as of June 30, 2026, and 9.08% as of September 30, 2025. At September 30, 2026, the Bank met all of its regulatory capital requirements to be well-capitalized.

Liquidity

The Bank's overall liquidity position remains strong and stable with liquidity in excess of internal minimums as stated by policy and monitored by management and the Board. The on-balance sheet liquidity ratio at September 30, 2026 was 13.49%, as compared to 18.44% at December 31, 2025. The Bank has liquidity resources which include secured borrowings available from the Federal Home Loan Bank, the Federal Reserve, and lines of credit with other financial institutions. As of September 30, 2026 and June 30, 2026, the Bank had no borrowings from the FHLB, the FRB or other financial institutions.

Recent Events

On October 8, 2026, the Company sold and issued 4,107,908 common shares at $3.50 per common share in or as part of the Company's rights offering. The offering resulted in gross proceeds of $14.4 million which will be used to improve capital levels of the Company and the Bank, and support the continued growth of the Bank.

Conference Call

BayFirst will host a conference call on Friday, October 30, 2026, at 9:00 a.m. ET to discuss its third quarter results. Interested parties may listen to the call live under the Investor Relations tab at or are invited to dial (833) 461-5787 to participate in the call using Conference ID 438809173. A replay of the call will be available for one year at.

About BayFirst Financial Corp.

BayFirst Financial Corp. is a registered bank holding company based in St. Petersburg, Florida which commenced operations on September 1, 2000. Its primary source of income is derived from its wholly owned subsidiary, BayFirst National Bank, a national banking association which commenced business operations on February 12, 1999. The Bank currently operates twelve full-service banking offices throughout the Tampa Bay-Sarasota region and offers a broad range of commercial and consumer banking services to businesses and individuals. As of September 30, 2026, BayFirst Financial Corp. had $1.15 billion in total assets.

Forward-Looking Statements

In addition to the historical information contained herein, this presentation 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 change, including their effects on the economic environment, our customers and our operations, as well as any 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 and credit quality; 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; and other risks detailed from time to time in filings made by the Company with the SEC, including, but not limited to those“Risk Factors” described in our most recent Form 10-K and Form 10-Q. 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.

BAYFIRST FINANCIAL CORP. SELECTED FINANCIAL DATA (Unaudited)
	At or for the three months ended
(Dollars in thousands, except for share data)	9/30/2026		6/30/2026		3/31/2026		12/31/2025		9/30/2025
					As restated		As restated		As restated
Net loss	$	(677	)		$	(32,665	)		$	(5,930	)		$	(2,696	)		$	(19,077	)
Balance sheet data:
Average loans held for investment at amortized cost		848,578				858,931				881,938				933,401				1,054,946
Average total assets		1,121,140				1,185,392				1,213,823				1,328,923				1,339,795
Average common shareholders' equity		59,761				67,624				64,448				67,481				86,976
Government guaranteed loans held for sale		-				-				-				-				94,052
Total loans held for investment		902,966				882,840				924,220				958,014				993,109
Total loans held for investment, excl gov't gtd loan balances		832,904				805,684				849,157				887,885				917,816
Allowance for credit losses		41,762				45,081				20,632				21,996				24,485
Total assets		1,147,929				1,134,925				1,189,671				1,294,269				1,340,222
Total deposits		1,014,154				988,874				1,085,869				1,183,938				1,171,457
Common shareholders' equity		98,095				19,850				58,421				64,758				67,921
Share data:
Basic loss per common share	$	(0.04	)		$	(8.05	)		$	(1.54	)		$	(0.75	)		$	(4.71	)
Diluted loss per common share		(0.04	)			(8.05	)			(1.54	)			(0.75	)			(4.71	)
Book value per common share		3.64				4.83				14.22				15.76				16.50
Tangible book value per common share (1)		3.64				4.82				14.22				15.76				16.50
Performance ratios:
Return on average assets(2)	(0.24)	%		(11.02)	%		(1.95)	%		(0.81)	%		(5.70)	%
Return on average common equity(2)	(6.39)	%		(195.50)	%		(39.19)	%		(18.26)	%		(89.51)	%
Net interest margin(2)		4.07	%			3.48	%			3.44	%			3.60	%			3.64	%
Asset quality ratios:
Net charge-offs	$	3,228			$	4,460			$	4,719			$	4,865			$	3,544
Net charge-offs/avg loans held for investment at amortized cost(2)		1.52	%			2.08	%			2.14	%			2.08	%			1.34	%
Nonperforming loans(3)	$	14,013			$	18,457			$	21,453			$	24,343			$	24,687
Nonperforming loans (excluding gov't gtd balance)(3)	$	13,445			$	14,434			$	15,873			$	16,271			$	15,822
Nonperforming loans/total loans held for investment(3)		1.63	%			2.20	%			2.46	%			2.69	%			2.65	%
Nonperforming loans (excl gov't gtd balance)/total loans held for investment(3)		1.56	%			1.72	%			1.82	%			1.80	%			1.70	%
ACL/Total loans held for investment at amortized cost		4.85	%			5.37	%			2.36	%			2.43	%			2.63	%
ACL/Total loans held for investment at amortized cost, excl government guaranteed loans		5.20	%			5.82	%			2.55	%			2.60	%			2.80	%
Other Data:
Full-time equivalent employees		146				148				143				144				237
Banking center offices		12				11				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 common share. Our management uses these non-GAAP financial measures in its analysis of our performance, and we 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)	September 30, 2026		June 30, 2026		March 31, 2026		December 31, 2025		September 30, 2025
					As restated		As restated		As restated
Total shareholders' equity	$	104,541			$	115,901			$	75,628			$	81,580			$	83,972
Less: Preferred stock liquidation preference		(6,446	)			(96,051	)			(17,207	)			(16,822	)			(16,051	)
Total equity available to common shareholders		98,095				19,850				58,421				64,758				67,921
Less: Intangible assets		(62	)			(62	)			-				-				-
Tangible common shareholders' equity	$	98,033			$	19,788			$	58,421			$	64,758			$	67,921
Common shares outstanding		26,962,725				4,106,905				4,108,072				4,108,069				4,116,913
Tangible book value per common share	$	3.64			$	4.82			$	14.22			$	15.76			$	16.50

BAYFIRST FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)	9/30/2026	6/30/2026	9/30/2025
Assets			As restated
Cash and due from banks	$	5,230		$	5,641		$	5,193
Interest-bearing deposits in banks		123,097			133,524			113,357
Cash and cash equivalents		128,327			139,165			118,550
Time deposits in banks		-			-			1,284
Investment securities available for sale, at fair value (amortized cost $27,454, $30,591, and $32,614 at September 30, 2026, June 30, 2026, and September 30, 2025, respectively)		23,856			27,778			29,857
Investment securities held to maturity, at amortized cost, net of allowance for credit losses of $7, $7, and $9 (fair value: $2,347, $2,371, and $2,375 at September 30, 2026, June 30, 2026, and September 30, 2025, respectively)		2,493			2,493			2,491
Nonmarketable equity securities		4,509			3,164			7,028
Government guaranteed loans held for sale		-			-			94,052
Government guaranteed loans held for investment, at fair value		42,204			43,847			61,780
Loans held for investment, at amortized cost		860,762			838,993			931,329
Allowance for credit losses on loans		(41,762	)		(45,081	)		(24,485	)
Net Loans held for investment, at amortized cost		819,000			793,912			906,844
Accrued interest receivable		5,429			5,127			6,800
Premises and equipment, net		34,681			30,245			31,695
Loan servicing rights		8,827			9,942			15,663
Deferred income tax assets		21,836			21,253			7,040
Right-of-use operating lease assets		13,402			13,720			14,833
Bank owned life insurance		27,854			27,654			27,071
Other real estate owned		410			532			400
Other assets		15,101			16,093			14,834
Total assets	$	1,147,929		$	1,134,925		$	1,340,222
Liabilities:
Noninterest-bearing deposit accounts	$	121,193		$	116,788		$	105,937
Interest-bearing transaction accounts		142,555			135,628			210,336
Savings and money market deposit accounts		445,578			422,933			479,262
Time deposits		304,828			313,525			375,922
Total deposits		1,014,154			988,874			1,171,457
FHLB borrowings		-			-			50,000
Subordinated debentures		5,968			5,966			5,961
Notes payable		1,138			1,252			1,593
Accrued interest payable		735			597			1,082
Operating lease liabilities		12,408			12,694			13,554
Accrued expenses and other liabilities		8,985			9,641			12,603
Total liabilities		1,043,388			1,019,024			1,256,250
Shareholders' equity:			As restated
Preferred stock, Series A; no par value, no shares authorized, issued, and outstanding at September 30, 2026, and 10,000 shares authorized, 6,395 shares issued and outstanding at June 30, 2026 and September 30, 2025; aggregate liquidation preference of $6,395 at June 30, 2026 and September 30, 2025		-			6,161			6,161
Preferred stock, Series B; no par value, no shares authorized, issued, and outstanding at September 30, 2026, 20,000 shares authorized, 3,210 shares issued and outstanding at June 30, 2026 and September 30, 2025; aggregate liquidation preference of $3,210 at June 30, 2026 and September 30, 2025		-			3,123			3,123
Preferred stock, Series C; no par value, 10,000 shares authorized, 6,446 shares issued and outstanding at September 30, 2026, June 30, 2026, and September 30, 2025; aggregate liquidation preference of $6,446 at September 30, 2026, June 30, 2026 and September 30, 2025		6,446			6,446			6,446
Preferred stock, Series D; no par value, no shares authorized, issued and outstanding at September 30, 2026 and September 30, 2025 and 4,000 shares authorized, issued and outstanding at June 30, 2026; aggregate liquidation preference of $40,000 at June 30, 2026		-			37,254			-
Preferred stock, Series E; no par value, no shares authorized, issued and outstanding at September 30, 2026 and September 30, 2025, and 4,000 shares authorized, issued and outstanding at June 30, 2026; aggregate liquidation preference of $40,000 at June 30, 2026		-			37,254			-
Common stock and additional paid-in capital; no par value, 100,000,000, 15,000,000, and 15,000,000 shares authorized, 26,962,725, 4,106,905, and 4,116,913 shares issued and outstanding at September 30, 2026, June 30, 2026, and September 30, 2025, respectively		128,646			54,382			54,764
Accumulated other comprehensive loss, net		(2,701	)		(2,111	)		(2,069	)
Unearned compensation		(213	)		(245	)		(538	)
Retained earnings		(27,637	)		(26,363	)		16,085
Total shareholders' equity		104,541			115,901			83,972
Total liabilities and shareholders' equity	$	1,147,929		$	1,134,925		$	1,340,222

BAYFIRST FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
	For the Quarter Ended		Year-to-Date
(Dollars in thousands, except per share data)	9/30/2026		6/30/2026		9/30/2025		9/30/2026		9/30/2025
Interest income:					As restated				As restated
Loans, including fees	$	15,951			$	14,803			$	20,746			$	46,675			$	61,346
Interest-bearing deposits in banks and other		1,296				1,562				946				4,367				2,926
Total interest income		17,247				16,365				21,692				51,042				64,272
Interest expense:
Deposits		6,483				6,850				9,576				21,226				28,289
Other		137				93				798				327				1,928
Total interest expense		6,620				6,943				10,374				21,553				30,217
Net interest income		10,627				9,422				11,318				29,489				34,055
Provision for credit losses		(69	)			28,977				11,165				32,312				23,332
Net interest income after provision for credit losses		10,696				(19,555	)			153				(2,823	)			10,723
Noninterest income:
Loan servicing income, net		655				588				761				2,013				1,981
Gain (loss) on sale of government guaranteed loans, net		-				-				3,039				(97	)			15,975
Service charges and fees		507				497				474				1,494				1,396
Government guaranteed loans fair value gain (loss), net		(38	)			(6,468	)			(882	)			(7,039	)			805
Fair value adjustment on loans held for sale		-				-				(5,096	)			-				(5,096	)
Government guaranteed loan packaging fees		-				-				380				-				1,673
Loss on nonmarketable securities		-				(1,500	)			-				(1,500	)			-
Loss on sale of premises and equipment		-				(34	)			-				(21	)			-
Other noninterest income (loss)		(23	)			108				254				326				1,215
Total noninterest income		1,101				(6,809	)			(1,070	)			(4,824	)			17,949
Noninterest Expense:
Salaries and benefits		4,466				5,332				7,637				14,867				23,748
Bonus, commissions, and incentives		576				741				530				1,607				863
Occupancy and equipment		1,307				1,352				1,525				4,027				4,738
Data processing		1,406				2,649				2,049				5,544				6,172
Marketing and business development		76				157				262				356				1,152
Professional services		571				1,172				859				2,907				2,373
Loan servicing and origination expense		3,004				3,122				3,273				9,962				6,866
Employee recruiting and development		213				248				364				663				1,443
Regulatory assessments		515				611				484				1,704				1,175
Restructure charges		-				-				7,262				-				7,262
Other noninterest expense		682				2,292				970				3,741				2,764
Total noninterest expense		12,816				17,676				25,215				45,378				58,556
Loss before taxes		(1,019	)			(44,040	)			(26,132	)			(53,025	)			(29,884	)
Income tax benefit		(342	)			(11,375	)			(7,055	)			(13,753	)			(8,015	)
Net loss		(677	)			(32,665	)			(19,077	)			(39,272	)			(21,869	)
Preferred dividends		277				386				385				1,048				1,156
Net loss attributable to common shareholders	$	(954	)		$	(33,051	)		$	(19,462	)		$	(40,320	)		$	(23,025	)
Basic loss per common share	$	(0.04	)		$	(8.05	)		$	(4.71	)		$	(3.76	)		$	(5.57	)
Diluted loss per common share	$	(0.04	)		$	(8.05	)		$	(4.71	)		$	(3.76	)		$	(5.57	)

Loan Composition
(Dollars in thousands)	9/30/2026		6/30/2026		3/31/2026		12/31/2025		9/30/2025
	(Unaudited)		(Unaudited)		Unaudited/As restated		As restated		Unaudited/As restated
Real estate:
Residential	$	348,865			$	353,716			$	359,305			$	365,427			$	364,020
Commercial		228,589				211,518				216,643				215,771				231,039
Construction and land		35,976				38,095				36,732				48,397				43,700
Commercial and industrial		177,062				158,077				171,666				181,566				194,654
Commercial and industrial - PPP		-				-				6				6				13
Consumer and other		66,903				73,567				82,269				86,441				90,946
Loans held for investment, at amortized cost, gross		857,395				834,973				866,621				897,608				924,372
Deferred loan costs, net		7,151				8,338				9,353				10,491				11,522
Discount on government guaranteed loans		(4,472	)			(5,107	)			(6,007	)			(6,811	)			(7,506	)
Premium on loans purchased, net		688				789				2,446				2,650				2,941
Loans held for investment, at amortized cost, net		860,762				838,993				872,413				903,938				931,329
Government guaranteed loans held for investment, at fair value		42,204				43,847				51,807				54,076				61,780
Total loans held for investment, net	$	902,966			$	882,840			$	924,220			$	958,014			$	993,109

Nonperforming Assets (Unaudited)
(Dollars in thousands)	9/30/2026		6/30/2026		3/31/2026		12/31/2025		9/30/2025
					As Restated		As Restated		As Restated
Nonperforming loans (government guaranteed balances), at amortized cost, gross	$	568			$	4,023			$	5,580			$	8,072			$	8,865
Nonperforming loans (unguaranteed balances), at amortized cost, gross		13,445				14,434				15,873				16,271				15,822
Total nonperforming loans, at amortized cost, gross		14,013				18,457				21,453				24,343				24,687
Nonperforming loans (government guaranteed balances), at fair value		-				-				208				83				-
Nonperforming loans (unguaranteed balances), at fair value		114				443				1,230				1,453				1,385
Total nonperforming loans, at fair value		114				443				1,438				1,536				1,385
OREO		410				532				400				400				400
Repossessed assets		253				466				583				263				32
Total nonperforming assets, gross	$	14,790			$	19,898			$	23,874			$	26,542			$	26,504
Nonperforming loans as a percentage of total loans held for investment(1)		1.63	%			2.20	%			2.46	%			2.69	%			2.65	%
Nonperforming loans (excluding government guaranteed balances) to total loans held for investment(1)		1.56	%			1.72	%			1.82	%			1.80	%			1.70	%
Nonperforming assets as a percentage of total assets		1.29	%			1.75	%			2.01	%			2.05	%			1.98	%
Nonperforming assets (excluding government guaranteed balances) to total assets		1.21	%			1.32	%			1.39	%			1.29	%			1.21	%
ACL to nonperforming loans(1)		298.02	%			244.24	%			96.17	%			90.35	%			99.18	%
ACL to nonperforming loans (excluding government guaranteed balances)(1)		310.61	%			312.32	%			129.98	%			135.18	%			154.75	%
(1)Excludes loans measured at fair value

Contacts:
Alfred T. Rogers, Jr.	Scott J. McKim
Chief Executive Officer and President	Chief Financial Officer
727.685.2097	727.521.7085

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