BayFirst Financial Corp.

Hello, everyone. Thank you for joining us and welcome to the Bay First Financial Corp. Q2 2026 conference call and webcast. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Al Rogers, President and CEO. Al, please go ahead.

Thank you, Marina. Good morning, and thank you for joining our call today. With me is Scott McKim, our CFO, and Robin Oliver, our COO. Please remember, today's call will include forward-looking statements and non-GAAP financial measures. Please refer to our cautionary statement on forward-looking statements contained on page two of the investor presentation. My first full quarter as CEO at BayFirst has been very busy. We set to work on a number of initiatives, both short and longer term. The substantial $80 million capital raised at the end of April was the first and was the certainly biggest step for the future of our bank. We completed and deployed our asset resolution plan to address the bank's legacy credit issues predominantly related to unguaranteed balances of the SBA 7A loans. During the process of completing the asset resolution plan, our team also identified some material misstatements from prior periods. We have restated financial statements for the years ended December 31st, 2024, December 31st, 2025, and the quarter ended March 31st, 2026. The amended 10-K and 10-Q have been filed this week. Scott will elaborate on both in a few minutes. We held a special meeting of shareholders on July 14th where the company obtained shareholder approval to amend Bay First Financial Corporation's articles of incorporation to increase the number of authorized shares of common stock from $15 million to $100 million and exchanged all 4,000 outstanding shares of mandatorily convertible cumulative perpetual preferred stock Series D and 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. The company Series A and Series B preferred shares were redeemed in July as well. Management also noted a mid-August launch as the date for the rights offering we announced back in April. Beyond these shareholder actions, we've also moved decisively to strengthen our operating structure and leadership team. Most notably, Trey Porn has joined as Bay First's Chief Banking Officer. Trey has been a career banker in Tampa for over 22 years and will lead our retail and commercial banking teams. as a lifelong Tampa resident with deep roots and involvement in several real estate industry and community organizations, Trey brings the local market insight, relationship orientation, and proven leadership needed to help us sharpen execution and accelerate growth across our franchise. Adam Curtis will continue to lead commercial lending with the organization as chief lending officer. He will report to Trey. The commercial relationship managers and portfolio managers will report to Adam as that team focuses on growing and serving our commercial business customers across our footprint. Adam's steady leadership, strong customer relationships, and strong lending expertise remain critical to our ability to serve commercial clients and grow this important line of business with quality and consistency. Samantha Hill has transitioned to director of retail banking with responsibility for production, growth and execution across our retail banking centers. She will also report to Trey. All banking center managers now report to Sam, giving us clearer accountability and a more focused retail strategy. Sam brings a strong record of team development, customer experience, and branch execution. And her leadership will be important as we expand core relationships across our banking center network. Additionally, we have submitted an application to open a new retail location in South Tampa. This office will bring our total retail branch network back to 12 having closed an office in Sarasota last quarter. With that operational foundation in place, I will now turn the call over to Scott, who will discuss the quarter's earnings, including the impact of the asset resolution plan and restatement.

Scott? Thank you, Al. Good morning, everyone. We are reporting a net loss 32.7 million dollars in the second quarter. This compares to the restated net loss of 5.9 million dollars we reported for the first quarter. As Al mentioned, the asset resolution plan was deployed during the second quarter and therefore has dominated the earnings results that we will talk about today. The plan was a thorough review of the bank's legacy, unguaranteed SBA 7 portfolio as well as our other portfolios. We conducted an analysis which provided adjustments to the net amount expected to be collected on over 7,000 individual SBA loans, which resulted in the full or partial charge-off on several of those loans. We established a specific allowance for credit losses on six loans, increased the overall allowance on unguaranteed SBA 7 loan categories, and also adjustments to the fair market values on our portfolio of loans that we have measured at fair value. In total, the adjustment amounted to $38.4 million. Provision expense for the quarter was $29.7 million and the company's total allowance for credit losses on June 30, 2026 was $45.1 million. Additionally, the company booked an impairment of $1.5 million on a non-marketable equity investment in a firm who was a partner of the company's former SBA 7a lending business. Finally, the company wrote down the unamortized premiums on the bank's portfolio of purchase fully guaranteed USDA loans, which are at risk of default or early prepayment. I want to be clear, this adjustment is not credit specific. In total, the asset resolution plan impact was $41.5 million. As our new management team has assessed the existing business and started to make updates to the strategic plan, we identified some additional one-time charges during the quarter, which amount to $2.2 million and reflect the write-off of vendor contracts, which will no longer be used, and also the approval of a change in control payment to prior management. All of these adjustments together equal $43.8 million of the company's pre-tax $44 million loss for the quarter. We announced on July 15th that we identified $2.8 million of deferred origination costs and $2.1 million of accrued interest as of March 31st, 2026, relates to loans which had defaulted or was placed into non-approval status in prior periods, which resulted in a material understatement of provision expense and overstatement of net interest income during the affected quarterly periods in which the errors were accumulated in 2024, 2025 and the first quarter of 2026. Subsequent to that announcement, we further identified another $3.4 million of deferred origination costs, which should have been netting against net gain on sale of government guaranteed loans and resulted in a material overstatement of those net gain on sale of government guaranteed loans during the affected quarterly period in which the error accumulated specifically in the years of 2024 and 2025. These errors occurred in periods prior to 2024 as well, but were not material during those periods. Our restatement efforts have correctly restated the company's earnings to date, and we have amended our 2025 10K and our first quarter 10Q. Management and the Board of Directors take our obligation to provide accurate and transparent financial reporting seriously. We move quickly to investigate what happened and to correct it and to notify our shareholders. We continue to work through internal operational remediation activities and will report in future SEC filings on our progress towards resolution and strengthening our internal controls over financial reporting. It is important to note that by exiting the SBA 7a lending business, these errors will not recur. Nonetheless, we will ensure that our internal operations are compliant. Please note, as I continue, our prior period metrics, which I will mention, are the restated metrics. Other financial results include loans held for investment decreased by $41.4 million, or 4%, during the second quarter of 2026 to $882.8 million, and decreased 237.7 million, or 21%, over the past year. Most of this decrease year-over-year reflects the sale of loans and the exit of the SBA 7 lending in the fourth quarter of 2025. Deposits decreased $97 million, or 9% during the second quarter of 2026, and decreased $175 million, or 15% over the past year, to $989 million. The decrease in deposits during the quarter was primarily due to reductions in high-rate promotional deposits held with non-relationship customers and also a decrease in broker deposits. 80% of the bank's deposits were insured by FDIC on June 30th, 2026. And the bank's on-balance sheet liquidity ratio as of June 30th, 2026 was 14.95%. And the bank did not have any wholesale borrowings. Shareholders' equity at the end of this quarter was $115.9 million, which is $40.3 million higher than it was at the end of first quarter. The increase is from the capital raise net of the asset resolution plan. Net accumulated other comprehensive loss increased slightly by $57,000 during the quarter, ending at $2.1 million. Tangible book value per share decreased this quarter to 4.8%. Thank you for joining us. The net interest margin for the second quarter, excluding the one-time impact that I mentioned as part of the asset resolution plan, was 4.07%, which is driven by positive trends and cost of funds, which decreased 24 basis points from the prior quarter to 2.66%. The bank's cost of funds is now down 49 basis points year-to-date, reflecting our efforts to exit promotional rate balances and broker deposit balances. Non-interest income was negative $6.8 million in the second quarter of 2026, which is $7.7 million worse than the first quarter and a decrease of $17.3 million from the second quarter of 2025. Current quarter net interest income includes an $8 million in one-time impacts related to the board approved asset resolution plan. Additionally, the year-over-year decrease is exasperated by exiting the SBA 7a lending business, as no additional gains on sales of government-guaranteed loans will be booked. Non-interest expense was $17.7 million, an increase of $2.9 million compared to the first quarter. Essentially, all of this increase is related to one-time charges that were driven by our actions under the asset resolution plan and the one-time items I have mentioned. and so approximately $2.5 million. Compensation costs were about $600,000 higher driven largely by an accrued change in control payment that I mentioned. Also, as I mentioned, our provision for credit losses was $29 million in the second quarter compared to $3.4 million in the first quarter and $7.6 million in the second quarter of 2025. Net charge-offs were $4.5 million down $200,000 compared to the first quarter, which was $4.7 million. Total unguaranteed SBA 7A loan balances were $142 million on June 30th. In comparison, the bank had $159.3 million of unguaranteed SBA 7A loan balances at the end of the first quarter. Total annualized charge-offs as a percentage of average loans held for investment at amortized cost were 2.08% for the second quarter, a decrease from 2.14% in the first quarter of the year. The ratio of allowance for credit losses on loans to total loans held for investment at amortized cost was 5.37% on June 30th, compared to 2.36% on March 31st, 2026, and 2.43% as of the end of 2025. The ratio of allowance for credit losses to build loans held for investment at amortized costs and excluding government guaranteed loan balances was 5.82% on June 30, 2026, 2.55% at the end of the first quarter, and 2.60 at the end of 2025. The bank's Tier 1 leverage ratio was 8.3% as of June 30, 2026, compared to 5.89% at March 31st, 2026 and 7.73% as of June 30th, 2025. The total capital to risk-rated assets ratio was 12.77% as of June 30th, 2026 compared to 9% on March 31st, 2026 and 10.77% as of June 30th, 2025. I will now turn the call over to Robin to make some operational and credit comments. Robin?