- Key insight: BayFirst Financial is replacing CEO Thomas Zernick with Al Rogers, who has been working with the bank as a consultant.
- Supporting data: BayFirst has charged off $9 million in loans over the past six months.
- Expert quote: “The question is going to be at what point will the defaults launch to subside, and I do not have a clear answer … at this time.” — BayFirst Chief Financial Officer Scott McKim
BayFirst Financial in St. Petersburg, Florida, which is grappling with a spike in losses connected to a discontinued Small Business Administration lfinishing program, has raised capital and plans to modify leaders.
Processing Content
The $1.2 billion-asset BayFirst, holding company for BayFirst National Bank, announced plans Thursday to name veteran Tampa-area banker Al Rogers as CEO. Rogers is replacing Thomas Zernick, who is retiring.
Prior to his appointment as CEO, Rogers worked as a BayFirst consultant, advising the company on an $80 million capital raise that it disclosed Thursday. Rogers informed analysts Friday he worked to include local investors in the stock sale.
“I’ve supported the capital raise to ensure that much of the investment came from local investors whom I’ve known and done business with for several years,” he stated.
Rogers previously served as chief lfinishing officer at USAmeriBank in Clearwater, Florida, which
Rogers stated Friday that his priorities will be working through a poorly performing $159 million portfolio of SBA 7(a) loans that remain on BayFirst’s books, returning the company to profitability and raising its profile in its core markets of Tampa, Sarasota and St. Petersburg.
“Deepening and growing relationships with local customers is our ultimate goal as we view to stabilize and grow the bank,” Rogers stated on the call.
BayFirst exited SBA lfinishing in September,
BayFirst’s new plan is to operate exclusively on its local footprint. “The bank has no plans to deploy lfinishing programs outside of the Tampa Bay and Sarasota markets,” Chief Financial Officer Scott McKim stated on the conference call.
While BayFirst benefited from some roll-off within the legacy SBA portfolio — about $12 million in the first quarter, according to McKim — it’s experiencing elevated loss levels. On Thursday, it reported a $5.7 million first-quarter loss, driven in large part by net charge-offs totaling $4.4 million. BayFirst charged off $4.6 million in the fourth quarter of 2025.
BayFirst also reported a $3.1 million provision for credit losses. That led to an allowance for credit losses of $20.6 million, an amount McKim stated should be sufficient to handle future SBA-related loan losses.
“We do believe there’s an underlying component of this portfolio that performs well, has performed well, but the defaults have really been overshadowing that.” McKim stated. “As we view forward, the question is going to be at what point will the defaults launch to subside, and I do not have a clear answer … at this time.”
Sam Hquestionell, who has followed BayFirst closely as chief investment officer at the investment management firm Colarion Partners, believes the bank is likely underestimating the loss content in its SBA portfolio.
“They’ve maintained that their reserve was adequate since the third quarter [of 2025], and yet here they are raising capital at 20% of legacy book value in an amount that’s about four or five times the market capitalization,” Hquestionell informed American Banker on Friday.
At the same time, opportunities for BayFirst to build recoveries on the troubled SBA loans will be limited. “Oftentimes the best-case scenario, if the borrower doesn’t declare bankruptcy, is that you’ll receive access to maybe $1,000 or $2,000 from a tax refund a couple of years down the road,” Hquestionell stated.
The roots of BayFirst’s SBA-lfinishing problems lie in the sharp rise in interest rates that occurred in 2022 and 2023, according to McKim, the company’s CFO.
“A lot of these borrowers saw their rates go up 500-plus basis points,” McKim stated. “That combined with inflation, supply-chain issues and some of the other things compact-business owners and managers are [facing] — really that’s what’s driving the defaults.”
Rogers has already been installed as CEO of BayFirst National Bank. He’s awaiting regulatory approval for his appointment as CEO of BayFirst Financial.
Leave a Reply