BayFirst Financial (BAFN) risk factors, FY2025 10-K

Other

1. 01Liquidity risk could impair our ability to fund operations and jeopardize our financial conditionNew
2. 02Changes in interest rates affect our profitability and assets
3. 03Loss of deposits or a change in deposit mix could increase our funding costs and adversely affect our performance
4. 04Changes in economic and political conditions could adversely affect our earnings through declines in deposits, loan demand, the ability of our customers to repay loans and the value of the collateral securing our loans
5. 05A shutdown of the Federal government would likely result in us being temporarily unable to make USDA government guaranteed loans
6. 06Changes in the laws or regulations governing our USDA government guaranteed lending activities may adversely affect our ability to operate them profitably24% rewritten
7. 07We may not be able to retain or grow our core deposit base, which could adversely impact our funding costs
8. 08Unrealized losses in the Bank’s investment portfolio could affect liquidity
9. 09We are dependent on our management team and any of their departure, or subsequent employment with a competitor could adversely affect our operations
10. 10We have pledged the outstanding shares of the Bank to secure a loan, and if we cannot repay the loan when due, the lender may foreclose on the loan and take ownership of the Bank
11. 11We engage in transactions with our directors and their related interests, which creates the potential for conflicts of interest
12. 12We may not be able to collect on the guarantees of our SBA or other government guaranteed loans if borrowers default
13. 13Our Internet-based systems and online commerce activities are subject to security threats that could adversely affect our business
14. 14A failure or breach, including cyberattacks, of our computer systems or other technologies could disrupt our business, result in the disclosure of confidential information, and create significant financial and legal exposure
15. 15The development and use of artificial intelligence by us or others, or our inability to effectively and timely implement its use, may adversely affect the Company
16. 16The valuation of our SBA and USDA related servicing rights is based on estimates and subject to fluctuation based on market conditions and other factors that are beyond our control
17. 17Changes in business and economic conditions, in particular those of the Florida markets in which we operate, could lead to lower asset quality and decreased earnings
18. 18Most expansion activities require approval of our regulators, which we may not be able to obtain, or that may impose conditions that we find to be unacceptable
19. 19We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to material penalties and have negative effects on our business
20. 20We may be required to make increases in our credit loss reserve and to charge off loans in the future, which could adversely affect our results of operations
21. 21If real estate values in our markets decline, we could experience losses upon foreclosure of the loan or sale of the real estate
22. 22Hurricanes or other adverse weather events, as well as climate change, could negatively affect our local economies or disrupt our operations, which could have an adverse effect on our business and results of operations
23. 23related flooding and wind damage and other similar weather events. Climate change may be increasing the severity and frequency of adverse weather conditions, making the impact from these types of natural disasters on us or customers worse
24. 24The Florida property insurance market is in crisis and the inability of our borrowers to obtain insurance on properties securing our loans may adversely affect the value of the collateral, the performance of our loan portfolio, and our ability to make loans secured by real estate
25. 25Public health emergencies could hurt our business
26. 26Our loan portfolio includes a material amount of commercial real estate and commercial and industrial loans
27. 27Our use of appraisals in deciding whether to make a loan secured by real property or how to value the loan in the future may not accurately describe the net value of the collateral that we can realize
28. 28We operate in a highly competitive industry and market area
29. 29We may face risks with respect to future expansion
30. 30We are subject to government regulation and monetary policy that could constrain our growth and profitability
31. 31Legislation and regulatory proposals enacted in response to market and economic conditions may materially adversely affect our business and results of operations
32. 32Inflation could negatively impact our business and our profitability
33. 33An economic downturn could have a material adverse effect on our capital, financial condition, results of operations, and future growth
34. 34We may incur losses if asset values decline, including due to changes in interest rates and prepayment speeds
35. 35Technological changes, including online and mobile banking, have the potential of disrupting our business model, and we may have fewer resources than many competitors to invest in technological improvements
36. 36Changes in accounting standards may affect our performance
37. 37We face risks related to our operational, technological, and organizational infrastructure

Risks Related to Our Securities

1. 38A vibrant public trading market for our common stock has not and may not develop, which may hinder your ability to sell the common stock and may lower the market price of the stock
2. 39Shareholders may face dilution resulting from the issuance of common stock in the future
3. 40The price of our common stock could be volatile
4. 41An investment in our common stock is not an insured deposit
5. 42Owning our stock will not give you the right to participate in any future offerings of our capital stock and your ownership could be diluted
6. 43Management has broad discretion concerning the use of our capital
7. 44If equity research analysts do not publish research or reports about our business, or if they do publish such reports but issue unfavorable commentary or downgrade our common stock, the price and trading volume of our common stock could decline
8. 45Our Board of Directors owns a significant percentage of our shares and will be able to make decisions to which you may be opposed34% rewritten
9. 46We have outstanding preferred stock and our Board may authorize the issuance of additional series of preferred stock25% rewritten
10. 47BayFirst has outstanding debt and either BayFirst or the Bank may incur additional debt54% rewritten
11. 48We are restricted by law and government policy in our ability to pay dividends to our shareholders22% rewritten
12. 49stock, including the common stock. Since July of 2025, the Board of Directors has not declared dividends for common shareholders and preferred shareholders and has no plans to resume the declaration or payment of dividendsNew
13. 50We are an emerging growth company, and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors
14. 51We are a smaller reporting company and are exempt from certain disclosure requirements, which could make our common stock less attractive to potential investors
15. 52Certain provisions of Florida and federal law may discourage or prevent a takeover of BayFirst and result in a lower market price for our common stock