St. Petersburg, Florida-based BayFirst National Bank has cut 51 jobs and discontinued a Small Business Administration 7(a) loan program, Bolt, the lender announced Monday.
The workforce reduction is expected to save BayFirst $6 million in annual costs, though the bank also expects to take a restructuring charge of an unspecified amount, in the third quarter, related to the Bolt termination, the lender said.
BayFirst’s board has suspended dividend payments, and the bank’s directors will forgo board fees, to offset the charge. Additionally, the bank aims to sell its Bolt balances and the loan origination program, it said.
BayFirst originated more than 6,700 Bolt loans for $870 million since 2022, it said.
Robin Oliver, the bank’s president and chief operating officer, called out BayFirst’s 2022 and 2023 Bolt loans as a source of some discomfort, on a call with analysts last week.
"The older ones, vintages that started at lower [interest] rates, definitely have had stress and are struggling to keep up with the payments," Oliver said July 30.
The Bolt program offered loans of up to $150,000 to small-business borrowers. Through the 7(a) mechanism, lenders are on the hook for at least 15% of the loan, while the SBA guarantees up to 85%.
Oliver said BayFirst will continue to make larger SBA loans.
"I think you have different types of borrowers, more sophistication in the financial statements, and things of that nature with some of those larger borrowers," Oliver told analysts.
The restructuring charge will come after two straight quarters of losses for BayFirst. The $1.34 billion-asset lender lost $300,000 in the first quarter and $1.2 million in the second.
BayFirst CEO Thomas Zernick cited some of the “headwinds” small businesses are facing in an interview with American Banker.
"Whether it's uncertainty caused by the tariffs, cost-of-goods spikes, difficulty in employment, they're struggling across the board,” Zernick said. “Lending into the [small-dollar] space didn't make sense, given the macroenvironment we're in today."
BayFirst’s termination of the Bolt program wouldn’t be its only recent business adjustment. The bank left the national mortgage lending space in 2022.
In a release Monday, the 12-location Florida bank said it would “explore a range of opportunities intended to increase emphasis on [its] community banking activities.”
As it stands, the 51 downsized jobs represent 17% of the bank’s workforce. Slightly more than half – 26 – are Bolt-related positions, while 25 come from other areas of the bank, BayFirst said.
The decision to terminate Bolt stemmed from a “comprehensive strategic review” BayFirst’s board and management undertook “to reduce risk from unguaranteed SBA 7(a) loans and position the Company for long-term growth,” Zernick said in a statement Monday.
“Our Board of Directors and leadership team are committed to driving innovation and resilience as we move forward into the next phase of our development,” Zernick said. “We are confident that these efforts will better align the Company and our Bank with the demands of our rapidly changing banking landscape.”
As to the income streams BayFirst may tap to replace Bolt, Oliver said the bank would “model out all kinds of different scenarios to make the best decision to get us back on track in earnings and going up and to the right."
