Thomas G. Zernick
About Thomas G. Zernick
Thomas G. “Tom” Zernick, age 62, is Chief Executive Officer of BayFirst Financial Corp. and a member of its Board of Directors. He joined BayFirst in 2016 as President of CreditBench, became President of BayFirst and the Bank in February 2022, and succeeded as CEO on January 1, 2024; he joined the Company’s Board in 2023. He holds a BBA from the University of Notre Dame and previously served as Florida Market President for Stearns Bank, SBA Product Manager for HomeBanc, and Community Bank President/SBA President for Republic Bank (Michigan) . During his tenure, he has emphasized disciplined SBA/government-guaranteed lending and cost control: Q3 2024 net income rose 31% sequentially on higher net interest income and gain-on-sale, while management later discontinued the Bolt SBA 7(a) program in 2025, cutting workforce by 17%, targeting $6 million annual savings, and suspending the dividend as part of a strategic review .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| BayFirst Financial Corp. and BayFirst National Bank | President (Company and Bank) | Feb 2022 – Dec 2023 | Led community bank franchise operations ahead of CEO transition . |
| BayFirst CreditBench (division) | President | 2016 – Feb 2022 | Built a preeminent SBA lending division; integral to succession plan . |
| Stearns Bank | Florida Market President | Not disclosed | Commercial banking leadership in Florida market . |
| HomeBanc (Tampa) | SBA Product Manager | Not disclosed | SBA product/credit expertise . |
| Republic Bank (Michigan) | Community Bank President; SBA President | Not disclosed | Community/SBA banking leadership . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| None disclosed | — | — | No public company directorships or external board roles disclosed in BayFirst proxies . |
Fixed Compensation
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 (current base) |
|---|---|---|---|---|---|
| Base Salary ($) | 291,042 | 300,015 | 320,026 | 345,026 | 322,408 (stated for 2025) |
| All Other Compensation ($) | 39,720 | 30,712 | 30,316 | 29,909 |
Notes:
- Fixed cash pay increased through 2024 then lowered for 2025 per proxy disclosure .
Performance Compensation
Annual Incentive (Cash)
| Year | Target opportunity (% of base) | Actual bonus paid ($) | Notes/Metric design |
|---|---|---|---|
| 2021 | Up to 100% | 210,028 | Objectives set annually by Compensation Committee; mix of objective/subjective criteria; details not disclosed . |
| 2022 | Up to 100% | 25,000 | Objectives set by Committee; details not disclosed . |
| 2023 | Up to 100% | 188,800 | Objectives set by Committee; details not disclosed . |
| 2024 | Up to 100% | 123,338 | Objectives set by Committee; details not disclosed . |
- Compensation Committee (all independent) oversees plan; Pearl Meyer engaged as independent consultant; peer analysis performed (peer names not disclosed) .
Equity Awards – Granted (RSUs) and Outstanding
| Grant date | Instrument | Shares granted | Grant-date fair value ($) | Vesting |
|---|---|---|---|---|
| 01/27/2022 | RSU | 2,000 | 42,900 | Not disclosed in proxy . |
| 01/26/2023 | RSU | 4,000 | 73,200 | Not disclosed in proxy . |
| 01/23/2024 | RSU | 3,000 | 35,100 | Not disclosed in proxy . |
| As of | Unvested RSUs (shares) | Market value of unvested RSUs ($) |
|---|---|---|
| 12/31/2023 | 4,000 | 73,200 |
| 12/31/2024 | 3,000 | 35,100 |
Equity Awards – Stock Options (Exercisable as of 12/31/2024)
| Grant date | Options exercisable | Exercise price ($) | Expiration |
|---|---|---|---|
| 06/12/2018 | 8,100 | 17.33 | 06/12/2028 |
| 03/15/2019 | 6,000 | 14.67 | 03/15/2029 |
| 01/15/2020 | 5,625 | 15.67 | 01/15/2030 |
| 01/14/2021 | 5,625 | 14.67 | 01/14/2031 |
Policy and governance:
- 2017 Equity Incentive Plan authorizes options/RSUs up to 15% of outstanding shares (cap 1,500,000); Board developing an Equity Grant Timing Policy to avoid “spring-loading”; 2024 grants made four days post year-end earnings release .
Equity Ownership & Alignment
| As-of date | Shares owned | Right to acquire (60 days) | Beneficial ownership (%) | Pledged shares | Hedging/shorting |
|---|---|---|---|---|---|
| 03/31/2023 | 13,603.85 | 16,905.00 | 0.74% | Not disclosed | All directors/officers prohibited from trading puts/calls or short selling Company securities . |
| 03/25/2024 | 17,800.92 | 21,975.00 | 0.96% | Not disclosed | Hedging/shorting prohibited . |
| 03/24/2025 | 20,059.89 | 25,350.00 | 1.09% | Not disclosed | Hedging/shorting prohibited . |
- Ownership guidelines/pledging policy: Not disclosed in proxies. No related-party transactions involving Zernick disclosed (related-party items noted pertained to other directors) .
Employment Terms
| Term | Details |
|---|---|
| Agreement | Employment agreement with auto-renewal; initial term ended 12/31/2022 and renews annually unless notice of non-renewal . |
| Minimum salary (agreement) | $295,000; Board may increase annually (actual base set higher by Committee/Board) . |
| Non-compete | 18 months post-termination; no competition within 50-mile radius of any Company office; passive investments under 1% permitted . |
| Non-solicit | 18 months: no solicitation of clients or employees . |
| Severance (no CIC or >12 months after CIC) | If terminated without cause or resigns for good reason: 1/12 of then-current annual compensation paid monthly for 18 months; accrued bonus; immediate vesting of outstanding options/awards . |
| Severance (within 12 months after CIC) | Two-times then-current annual compensation; accrued bonus; immediate vesting of outstanding equity-based incentives . |
| Annual Incentive Plan (AIP) | CEO eligible up to 100% of base salary; objectives set by Compensation Committee . |
| Clawback/tax gross-ups | Not disclosed in proxies . |
Board Governance
- Board service: Director since 2023; current CEO and Executive Committee member; not a member of Audit or Compensation Committees .
- Independence: Not independent due to executive role; Board maintains majority independence; Chair is Anthony Saravanos (separate from CEO) .
- Meeting attendance: All directors met at least 75% attendance in 2024 (and in prior years) .
- Director fees: Director compensation tables exclude Zernick; his pay is captured in executive compensation; cash meeting fees and chair retainers otherwise apply to non-employee directors .
Performance & Track Record
| Period | Highlight |
|---|---|
| Q3 2024 | Net income increased 31% QoQ on higher net interest income and gain on sale of guaranteed loans; CEO emphasized disciplined origination and credit metrics . |
| 2025 strategic actions | Discontinued Bolt SBA 7(a) program; workforce reduction of 51 roles (17% of workforce), targeted $6 million annual cost savings; dividend suspended; Directors to forgo board fees; restructuring charges anticipated; aim to refocus on core community banking/SBA strengths . |
| Rate environment commentary | CEO cited borrower hesitancy and delayed projects as prime rose to 8.5%, affecting both conventional and SBA pipelines (Q2 2023 call) . |
Compensation Structure Analysis
- Mix and trajectory: Cash salary rose from 2021 to 2024 (then reduced for 2025), while bonuses were discretionary and variable (e.g., $25k in 2022 vs. $188.8k in 2023 vs. $123.3k in 2024), and RSU grants occurred annually since 2022, pointing to a balanced cash-equity mix with meaningful at-risk components .
- Incentive design: CEO annual bonus capped at 100% of base; specific performance metrics and weightings not disclosed, limiting transparency into pay-for-performance calibration .
- Equity governance: Board is formalizing an Equity Grant Timing Policy to avoid spring-loading; 2024 grants timed four days post earnings release, showing attention to best practices .
- Change-in-control economics: Double-trigger payout at 2x annual compensation with full vesting; single-trigger vesting on termination without cause/good reason outside CIC window may be shareholder-sensitive depending on market norms for company size .
Risk Indicators & Red Flags
- Dividend suspension and restructuring (2025) indicate profitability and capital allocation rebalancing; while cost actions target $6M annual savings, near-term charges and business mix shifts elevate execution risk .
- No disclosed hedging/shorting permitted; pledging not addressed; no related-party transactions involving Zernick disclosed .
- Section 16 compliance: No delinquent filings reported for Zernick in 2023–2024; Board/management generally compliant (isolated late filings involved other individuals) .
Equity Ownership Trend (alignment and potential selling pressure)
| Year (as of record date) | Shares owned | Options/rights exercisable (60 days) | Ownership % |
|---|---|---|---|
| 2023 (03/31) | 13,603.85 | 16,905.00 | 0.74% |
| 2024 (03/25) | 17,800.92 | 21,975.00 | 0.96% |
| 2025 (03/24) | 20,059.89 | 25,350.00 | 1.09% |
- Options outstanding span 2018–2021 grants, fully exercisable, with strikes of $14.67–$17.33 and expirations 2028–2031, creating potential liquidity windows around expirations; RSUs outstanding at FY-end 2024 totaled 3,000 shares (market value $35,100) .
Director Compensation (for dual role context)
- Director cash fees and chair retainers are disclosed for non-employee directors; Zernick’s director compensation is not separately listed and is covered within the executive Summary Compensation Table, a common practice for sitting CEOs .
Employment Terms Summary (Severance/Restrictive Covenants)
| Provision | Detail |
|---|---|
| Non-compete/solicit | 18 months; 50-mile radius; 1% passive investment carve-out . |
| Severance (no/remote CIC) | 18 months of then-current annual compensation (paid monthly), plus accrued bonus; immediate vesting of equity . |
| Severance (within 12 months post-CIC) | 2x then-current annual compensation, plus accrued bonus; immediate vesting of equity . |
Investment Implications
- Alignment and retention: Zernick’s beneficial ownership has increased over time (0.74% → 1.09%), and he holds fully exercisable options and unvested RSUs; AIP opportunity up to 100% of base ties pay to annual objectives, though lack of disclosed metrics/weightings reduces line-of-sight for investors .
- Governance safeguards: Independent Compensation Committee with an external consultant and evolving grant-timing policy are positives; dual-role risk is mitigated by a separate non-executive Chair and majority-independent Board; Zernick serves on the Executive Committee only .
- Risk/return levers: 2025 restructuring (Bolt exit, dividend suspension) and workforce reductions aim to improve profitability and reduce risk in unguaranteed SBA exposure, but near-term earnings volatility and execution risk remain until cost saves and mix shifts materialize .
- Change-of-control economics: 2x CIC multiple with full vesting is standard for small-cap banks, but single-trigger vesting upon certain non-CIC terminations could draw scrutiny depending on circumstances; investors should monitor board disclosure on any future award modifications .
- Operating backdrop: Management commentary highlights higher-rate headwinds for SBA/conventional borrowers; investors should watch volume/margin trends in government-guaranteed lending and community banking as management rebalances the business .