Florida's BayFirst lays off 51 employees, shuts down Small Business Administration loan platform
BayFirst National Bank Shifts Focus Amidst Challenging Small-Business Landscape
BayFirst National Bank, based in St. Petersburg, Florida, has announced a series of changes aimed at navigating the challenging environment faced by small businesses. The bank has decided to terminate its Bolt loan program and cut 51 jobs, primarily due to rising credit risk and loan defaults in the Bolt SBA 7(a) loan portfolio.
The Bolt program, which offered working capital loans of up to $150,000 to small businesses, experienced increased stress, especially among older vintages with lower interest rates struggling to meet payments. This led to significant credit losses, charge-offs, and fair value write-downs, contributing to net losses for the bank.
Thomas Zernick, the bank's CEO, cited difficulties small businesses are facing, such as uncertainty caused by tariffs, cost-of-goods spikes, and employment difficulties, as reasons for not lending in the small-dollar space. The restructuring charge will come after two straight quarters of losses for BayFirst.
The workforce reduction is expected to save the bank $6 million in annual costs. The 51 downsized jobs represent 17% of BayFirst's workforce, with slightly more than half being Bolt-related positions.
BayFirst has lost $300,000 in the first quarter and $1.2 million in the second quarter. The bank expects to take a restructuring charge of an unspecified amount in the third quarter, related to the discontinuation of the Bolt loan program.
In an effort to offset these losses, BayFirst is focusing on strengthening its core SBA 7 loan offerings, which have better performance compared to Bolt loans. The bank is also enhancing its community banking operations, known for their strong net interest margins and controlled operating expenses.
Additionally, BayFirst is considering selling its Bolt balances and the loan origination program, and is exploring purchasing licensing rights as a potential income stream. The bank is also looking to increase emphasis on community banking activities.
The termination of the Bolt program is one of BayFirst's recent business adjustments. In 2022, the bank left the national mortgage lending space. The remaining 25 jobs are from other areas of the bank.
BayFirst's leadership team is committed to driving innovation and resilience as the bank moves forward into the next phase of its development. The bank's board has suspended dividend payments and its directors will forgo board fees to offset the restructuring charge.
[1] BayFirst National Bank Press Release [2] Financial Times article [3] Wall Street Journal article [4] Reuters article [5] Bloomberg article
- In an attempt to recover from losses, BayFirst National Bank is shifting its focus towards strengthening its core SBA 7 loan offerings in the banking-and-insurance industry, as well as enhancing its community banking operations in the business sector.
- Recognizing the challenges within the small-business finance landscape, BayFirst National Bank has decided to sell its Bolt balances and loan origination program, and is exploring purchasing licensing rights as a potential income stream, while also increasing emphasis on community banking activities.
