[10-Q] GBank Financial Holdings Inc. Quarterly Earnings Report
GBank Financial Holdings Inc. (GBFH) reported consolidated assets of $1,232.4 million and total deposits of $1,032.5 million at June 30, 2025, up from $1,122.4 million and $935.1 million at year-end 2024, respectively. Loans, net of allowance, totaled $862.4 million and loans held for sale were $45.2 million. Net income for the three months ended June 30, 2025 was $4.8 million and year-to-date net income was $9.2 million. Net interest income for the quarter was $12.4 million, up from $11.3 million a year earlier, while provision for credit losses increased to $1.09 million for the quarter and $1.81 million for six months. Allowance for credit losses totaled $9.21 million. The bank remains capitalized under the CBLR with a Tier 1 leverage ratio of 13.82%.
GBank Financial Holdings Inc. (GBFH) ha registrato attività consolidate per $1,232.4 milioni e depositi totali per $1,032.5 milioni al 30 giugno 2025, in aumento rispetto a $1,122.4 milioni e $935.1 milioni alla chiusura del 2024. I prestiti, al netto delle rettifiche, ammontavano a $862.4 milioni e i prestiti detenuti per la vendita a $45.2 milioni. Il risultato netto del trimestre chiuso il 30 giugno 2025 è stato di $4.8 milioni, con un utile netto da inizio anno di $9.2 milioni. Il margine di interesse netto per il trimestre è stato di $12.4 milioni, rispetto a $11.3 milioni un anno prima, mentre la provisione per perdite su crediti è salita a $1.09 milioni per il trimestre e a $1.81 milioni nei sei mesi. L'accantonamento per perdite su crediti è pari a $9.21 milioni. La banca resta capitalizzata secondo il CBLR, con un Tier 1 leverage ratio del 13.82%.
GBank Financial Holdings Inc. (GBFH) informó activos consolidados por $1,232.4 millones y depósitos totales por $1,032.5 millones al 30 de junio de 2025, frente a $1,122.4 millones y $935.1 millones al cierre de 2024, respectivamente. Los préstamos, netos de la provisión, sumaron $862.4 millones y los préstamos mantenidos para la venta fueron $45.2 millones. La utilidad neta del trimestre terminado el 30 de junio de 2025 fue de $4.8 millones y la utilidad neta acumulada en el año fue de $9.2 millones. El ingreso neto por intereses del trimestre fue de $12.4 millones, frente a $11.3 millones un año antes, mientras que la provisión para pérdidas crediticias aumentó a $1.09 millones en el trimestre y a $1.81 millones en seis meses. La reserva para pérdidas crediticias totalizó $9.21 millones. El banco continúa capitalizado bajo el CBLR con una ratio de apalancamiento Tier 1 del 13.82%.
GBank Financial Holdings Inc. (GBFH)는 2025년 6월 30일 기준 연결 자산이 $1,232.4백만, 총 예금이 $1,032.5백만이라고 보고했으며, 이는 2024년 말의 $1,122.4백만 및 $935.1백만에서 증가한 수치입니다. 충당금 차감 후 대출 잔액은 $862.4백만, 매각예정대출은 $45.2백만이었습니다. 2025년 6월 30일로 끝난 분기의 순이익은 $4.8백만, 연초 이후 누적 순이익은 $9.2백만이었습니다. 분기 순이자이익은 $12.4백만으로 전년 동기 $11.3백만에서 증가했으며, 대손충당금 전입액은 분기 기준 $1.09백만, 6개월 기준 $1.81백만으로 늘어났습니다. 대손충당금 잔액은 $9.21백만입니다. 은행은 CBLR 기준 하에서 자본을 유지하고 있으며 Tier 1 레버리지 비율은 13.82%입니다.
GBank Financial Holdings Inc. (GBFH) a déclaré des actifs consolidés de $1,232.4 millions et des dépôts totaux de $1,032.5 millions au 30 juin 2025, en hausse par rapport à $1,122.4 millions et $935.1 millions à la fin de 2024. Les prêts, nets de provisions, s'élevaient à $862.4 millions et les prêts détenus en vue de la vente à $45.2 millions. Le résultat net pour le trimestre clos le 30 juin 2025 était de $4.8 millions et le résultat net cumulé pour l'année de $9.2 millions. Le produit net d'intérêts pour le trimestre s'est élevé à $12.4 millions, contre $11.3 millions un an plus tôt, tandis que la dotation aux provisions pour pertes de crédit a augmenté à $1.09 millions pour le trimestre et à $1.81 millions sur six mois. La provision pour pertes sur crédits s'élevait à $9.21 millions. La banque reste capitalisée selon le CBLR, avec un ratio de levier Tier 1 de 13.82%.
GBank Financial Holdings Inc. (GBFH) meldete zum 30. Juni 2025 konsolidierte Vermögenswerte von $1,232.4 Millionen und Gesamteinlagen von $1,032.5 Millionen, gegenüber $1,122.4 Millionen bzw. $935.1 Millionen zum Jahresende 2024. Kredite nach Abzug von Wertberichtigungen beliefen sich auf $862.4 Millionen, und zur Veräußerung gehaltene Kredite betrugen $45.2 Millionen. Der Nettogewinn für das Quartal zum 30. Juni 2025 betrug $4.8 Millionen, das kumulierte Nettoergebnis $9.2 Millionen. Der Nettozinsertrag im Quartal lag bei $12.4 Millionen (vorjahr: $11.3 Millionen), während die Risikovorsorge für Kreditverluste im Quartal auf $1.09 Millionen und für sechs Monate auf $1.81 Millionen anstieg. Die Rückstellung für Kreditverluste belief sich auf $9.21 Millionen. Die Bank bleibt gemäß CBLR kapitalisiert und weist eine Tier‑1‑Leverage‑Ratio von 13.82% auf.
- Total assets increased to $1,232.4 million from $1,122.4 million at December 31, 2024, reflecting balance sheet growth
- Total deposits rose to $1,032.5 million from $935.1 million, supporting funding and loan growth
- Net interest income improved to $12.4 million for the quarter versus $11.3 million a year earlier
- Net income was $4.8 million for the quarter and $9.2 million year-to-date, both higher or roughly in line with prior periods
- Capital position remains strong under the CBLR with a Bank Tier 1 leverage ratio of 13.82%, above the 9.00% threshold
- Provision for credit losses increased to $1.09 million for the quarter and $1.81 million for six months, up materially from prior periods
- Gross loan charge-offs totaled $1.8 million for the six months, with $1.5 million related to commercial real estate - non-owner occupied loans
- Loan portfolio concentration: commercial real estate accounted for approximately 89% of total loans, creating concentration risk
- Unrealized losses on available-for-sale residential mortgage-backed securities totaled $1.669 million at June 30, 2025
Insights
TL;DR Solid asset and deposit growth with modest profit expansion; higher provisions and charge-offs temper the quarter.
GBFH shows sequential and year-over-year balance sheet growth: assets rose to $1.23 billion and deposits topped $1.03 billion, supporting higher loan volumes and loan servicing activity. Net interest income improved to $12.4 million for the quarter, contributing to quarterly net income of $4.8 million and six-month net income of $9.2 million. Capital metrics remain strong under the CBLR framework at a 13.82% Tier 1 leverage ratio. However, provisions for credit losses increased materially versus prior periods, which reduced net interest income after provision and warrants monitoring of asset quality trends.
TL;DR Concentration in commercial real estate and rising provisions/charge-offs are the main risk signals despite adequate capital.
Commercial real estate represents approximately 89% of the loan portfolio, creating concentration risk that requires continued underwriting vigilance. The allowance for credit losses ended at $9.205 million after a $1.79 million year-to-date provision; gross charge-offs totaled $1.8 million for the six months ended June 30, 2025 driven largely by commercial real estate non-owner occupied loans. Nonaccrual and past due balances and the use of collateral-dependent valuation methods indicate areas where credit monitoring and collateral valuation practices will be important. Capital remains above regulatory thresholds, providing a buffer against potential credit deterioration.
GBank Financial Holdings Inc. (GBFH) ha registrato attività consolidate per $1,232.4 milioni e depositi totali per $1,032.5 milioni al 30 giugno 2025, in aumento rispetto a $1,122.4 milioni e $935.1 milioni alla chiusura del 2024. I prestiti, al netto delle rettifiche, ammontavano a $862.4 milioni e i prestiti detenuti per la vendita a $45.2 milioni. Il risultato netto del trimestre chiuso il 30 giugno 2025 è stato di $4.8 milioni, con un utile netto da inizio anno di $9.2 milioni. Il margine di interesse netto per il trimestre è stato di $12.4 milioni, rispetto a $11.3 milioni un anno prima, mentre la provisione per perdite su crediti è salita a $1.09 milioni per il trimestre e a $1.81 milioni nei sei mesi. L'accantonamento per perdite su crediti è pari a $9.21 milioni. La banca resta capitalizzata secondo il CBLR, con un Tier 1 leverage ratio del 13.82%.
GBank Financial Holdings Inc. (GBFH) informó activos consolidados por $1,232.4 millones y depósitos totales por $1,032.5 millones al 30 de junio de 2025, frente a $1,122.4 millones y $935.1 millones al cierre de 2024, respectivamente. Los préstamos, netos de la provisión, sumaron $862.4 millones y los préstamos mantenidos para la venta fueron $45.2 millones. La utilidad neta del trimestre terminado el 30 de junio de 2025 fue de $4.8 millones y la utilidad neta acumulada en el año fue de $9.2 millones. El ingreso neto por intereses del trimestre fue de $12.4 millones, frente a $11.3 millones un año antes, mientras que la provisión para pérdidas crediticias aumentó a $1.09 millones en el trimestre y a $1.81 millones en seis meses. La reserva para pérdidas crediticias totalizó $9.21 millones. El banco continúa capitalizado bajo el CBLR con una ratio de apalancamiento Tier 1 del 13.82%.
GBank Financial Holdings Inc. (GBFH)는 2025년 6월 30일 기준 연결 자산이 $1,232.4백만, 총 예금이 $1,032.5백만이라고 보고했으며, 이는 2024년 말의 $1,122.4백만 및 $935.1백만에서 증가한 수치입니다. 충당금 차감 후 대출 잔액은 $862.4백만, 매각예정대출은 $45.2백만이었습니다. 2025년 6월 30일로 끝난 분기의 순이익은 $4.8백만, 연초 이후 누적 순이익은 $9.2백만이었습니다. 분기 순이자이익은 $12.4백만으로 전년 동기 $11.3백만에서 증가했으며, 대손충당금 전입액은 분기 기준 $1.09백만, 6개월 기준 $1.81백만으로 늘어났습니다. 대손충당금 잔액은 $9.21백만입니다. 은행은 CBLR 기준 하에서 자본을 유지하고 있으며 Tier 1 레버리지 비율은 13.82%입니다.
GBank Financial Holdings Inc. (GBFH) a déclaré des actifs consolidés de $1,232.4 millions et des dépôts totaux de $1,032.5 millions au 30 juin 2025, en hausse par rapport à $1,122.4 millions et $935.1 millions à la fin de 2024. Les prêts, nets de provisions, s'élevaient à $862.4 millions et les prêts détenus en vue de la vente à $45.2 millions. Le résultat net pour le trimestre clos le 30 juin 2025 était de $4.8 millions et le résultat net cumulé pour l'année de $9.2 millions. Le produit net d'intérêts pour le trimestre s'est élevé à $12.4 millions, contre $11.3 millions un an plus tôt, tandis que la dotation aux provisions pour pertes de crédit a augmenté à $1.09 millions pour le trimestre et à $1.81 millions sur six mois. La provision pour pertes sur crédits s'élevait à $9.21 millions. La banque reste capitalisée selon le CBLR, avec un ratio de levier Tier 1 de 13.82%.
GBank Financial Holdings Inc. (GBFH) meldete zum 30. Juni 2025 konsolidierte Vermögenswerte von $1,232.4 Millionen und Gesamteinlagen von $1,032.5 Millionen, gegenüber $1,122.4 Millionen bzw. $935.1 Millionen zum Jahresende 2024. Kredite nach Abzug von Wertberichtigungen beliefen sich auf $862.4 Millionen, und zur Veräußerung gehaltene Kredite betrugen $45.2 Millionen. Der Nettogewinn für das Quartal zum 30. Juni 2025 betrug $4.8 Millionen, das kumulierte Nettoergebnis $9.2 Millionen. Der Nettozinsertrag im Quartal lag bei $12.4 Millionen (vorjahr: $11.3 Millionen), während die Risikovorsorge für Kreditverluste im Quartal auf $1.09 Millionen und für sechs Monate auf $1.81 Millionen anstieg. Die Rückstellung für Kreditverluste belief sich auf $9.21 Millionen. Die Bank bleibt gemäß CBLR kapitalisiert und weist eine Tier‑1‑Leverage‑Ratio von 13.82% auf.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 5, 2025, the registrant had
Table of Contents
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PART I. |
FINANCIAL INFORMATION |
1 |
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Item 1. |
Financial Statements |
1 |
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Consolidated Balance Sheets (Unaudited) |
1 |
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Consolidated Statements of Income (Unaudited) |
2 |
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Consolidated Statements of Comprehensive Income (Unaudited) |
3 |
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Consolidated Statements of Stockholders’ Equity (Unaudited) |
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Consolidated Statements of Cash Flows (Unaudited) |
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Notes to Consolidated Financial Statements (Unaudited) |
6 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
26 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
40 |
Item 4. |
Controls and Procedures |
40 |
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PART II. |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
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Item 1A. |
Risk Factors |
41 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
41 |
Item 3. |
Defaults Upon Senior Securities |
41 |
Item 4. |
Mine Safety Disclosures |
41 |
Item 5. |
Other Information |
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Item 6. |
Exhibits |
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Signatures |
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i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q for the three and six months ended June 30, 2025 (this “Form 10-Q”) may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “consider,” “should,” “plan,” “estimate,” “predict,” “continue,” “probable,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of GBank Financial Holdings Inc. (the “Company”) and its wholly-owned subsidiary GBank (the “Bank”), and the Company’s strategies, plans, objectives, expectations and intentions, and other statements contained in this Form 10-Q that are not historical facts. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that are difficult to predict and are generally beyond our control and that may cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Factors that may cause actual results to differ from those results expressed or implied include those factors listed under the heading “Risk Factors” in the Company’s prospectus dated April 24, 2025, filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on April 25, 2025, pursuant to Rule 424(b) under the Securities Act of 1933, as amended (File No. 333-285750) and in this Form 10-Q. In addition, these factors include but are not limited to:
ii
The Company’s ability to predict results or the actual effects of its plans or strategies is inherently uncertain. As such, forward-looking statements can be affected by inaccurate assumptions made, or by known or unknown risks and uncertainties. Because of these risks and other uncertainties, our actual future results, performance or achievements, or industry results, may be materially different from the results indicated by the forward-looking statements in this Form 10-Q. In addition, our past results of operations are not necessarily indicative of our future results. Consequently, no forward-looking statement can be guaranteed. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect conditions only as of the date of this filing. Forward-looking statements speak only as of the date of this document. The Company undertakes no obligation (and expressly disclaims any obligation) to publicly release the results of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements, except as required by applicable law.
iii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
GBank Financial Holdings Inc. and Subsidiary
Consolidated Balance Sheets (Unaudited)
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ASSETS |
June 30, 2025 |
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December 31, 2024 |
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Total cash and cash equivalents |
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Investment securities: |
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Available for sale, at fair value (amortized cost of $ |
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Held to maturity, at amortized cost (fair value of $ |
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Loans held for sale |
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Loans, net of deferred fees and costs |
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Less: Allowance for credit losses |
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Loans, net |
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Premises and equipment, net |
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Total Assets |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Deposits: |
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Noninterest-bearing demand |
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Savings |
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Time |
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Total deposits |
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Subordinated debt |
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Operating lease liability |
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Other liabilities |
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Total liabilities |
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Commitments and Contingencies (Note 10) |
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Stockholders' Equity: |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total Liabilities and Stockholders' Equity |
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See Notes to Consolidated Financial Statements (Unaudited).
1
GBank Financial Holdings Inc. and Subsidiary
Consolidated Statements of Income (Unaudited)
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Three Months Ended June 30, |
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INTEREST INCOME |
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Total interest income |
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INTEREST EXPENSE |
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Interest on deposits |
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Interest on subordinated debt |
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Total interest expense |
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Net interest income |
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PROVISION FOR CREDIT LOSSES |
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Net interest income after provision for credit losses |
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NONINTEREST INCOME |
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Loan servicing income |
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|
|
|
|
|
|
|
||||
Service charges and fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net interchange fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries and employee benefits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Data processing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Occupancy expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Legal and professional fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loan related costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Audits and exams |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Advertising and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
FDIC insurance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
INCOME BEFORE PROVISION FOR INCOME TAXES |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET INCOME BEFORE EQUITY INVESTMENT LOSS |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss attributable to equity investment |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
NET INCOME |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
PER COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per common share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted earnings per common share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See Notes to Consolidated Financial Statements (Unaudited).
2
GBank Financial Holdings Inc. and Subsidiary
Consolidated Statements of Comprehensive Income (Unaudited)
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
||||||||||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other comprehensive income (loss), before tax: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized gains (losses) on securities available for sale |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Income tax benefit (expense) related to unrealized |
|
|
|
|
|
|
|
|
|
|
|
|
||||
losses on securities available for sale |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Total other comprehensive income (loss), net of tax |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Comprehensive income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
See Notes to Consolidated Financial Statements (Unaudited).
3
GBank Financial Holdings Inc. and Subsidiary
Consolidated Statements of Stockholders’ Equity (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
||||||
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
|
|
||||||
|
Common Stock |
|
|
Paid-In |
|
|
Retained |
|
|
Comprehensive |
|
|
|
|
|||||||||
(Dollars in thousands) |
Shares |
|
|
Amount |
|
|
Capital |
|
|
Earnings |
|
|
Income (Loss) |
|
|
Total |
|
||||||
Balance, December 31, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other comprehensive loss, net of tax |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Exercise of stock options |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Director Compensation Plan |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Other stock-based compensation |
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Balance, March 31, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other comprehensive income, net of tax |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Common stock issued to BCS |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Director Compensation Plan |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Other stock-based compensation |
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Balance, June 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
||||||
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
|
|
||||||
|
Common Stock |
|
|
Paid-In |
|
|
Retained |
|
|
Comprehensive |
|
|
|
|
|||||||||
(Dollars in thousands) |
Shares |
|
|
Amount |
|
|
Capital |
|
|
Earnings |
|
|
Income (Loss) |
|
|
Total |
|
||||||
Balance, December 31, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other comprehensive income, net of tax |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Exercise of stock options |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Director Compensation Plan |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Other stock-based compensation |
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Stock option loan activity |
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Balance, March 31, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||
Other comprehensive loss, net of tax |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Director Compensation Plan |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Other stock-based compensation |
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Balance, June 30, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
See Notes to Consolidated Financial Statements (Unaudited).
4
GBank Financial Holdings Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
|
|
Six Months Ended |
|
|||||
(Dollars in thousands) |
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
||
Provision for credit losses |
|
|
|
|
|
|
||
Depreciation |
|
|
|
|
|
|
||
Amortization and writeoff of loan servicing assets |
|
|
|
|
|
|
||
Amortization of operating lease right of use assets |
|
|
|
|
|
|
||
Amortization of subordinated debt issuance costs |
|
|
|
|
|
|
||
Investment securities amortization and accretion, net |
|
|
( |
) |
|
|
( |
) |
Stock compensation expense |
|
|
|
|
|
|
||
Gain on sale of loans |
|
|
( |
) |
|
|
( |
) |
Gross originations of loans held for sale |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of loans held for sale |
|
|
|
|
|
|
||
Income from bank owned life insurance |
|
|
( |
) |
|
|
( |
) |
Net change in deferred income taxes |
|
|
|
|
|
|
||
Increase in accrued interest receivable |
|
|
( |
) |
|
|
( |
) |
Increase in other assets |
|
|
( |
) |
|
|
( |
) |
Net change in operating lease liability |
|
|
( |
) |
|
|
( |
) |
Increase in accrued interest payable and other liabilities |
|
|
|
|
|
|
||
Net cash (used in) provided by operating activities |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of premises and equipment |
|
|
( |
) |
|
|
( |
) |
Purchase of securities available for sale |
|
|
( |
) |
|
|
|
|
Maturities and repayments of investment securities available for sale |
|
|
|
|
|
|
||
Maturities and repayments of investment securities held to maturity |
|
|
|
|
|
|
||
Purchase of FHLB stock |
|
|
( |
) |
|
|
( |
) |
Purchased loans |
|
|
|
|
|
( |
) |
|
Net change in loans |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Net increase in deposits |
|
|
|
|
|
|
||
Net change in short-term borrowings |
|
|
|
|
|
( |
) |
|
Proceeds from repayment of stock option loans |
|
|
|
|
|
|
||
Net proceeds from issuance of common stock |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Net increase (decrease) in cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Cash and cash equivalents beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
||
Cash payments for interest |
|
$ |
|
|
$ |
|
||
Cash payments for income tax |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Supplemental schedule of noncash investing and financing activities |
|
|
|
|
|
|
||
Right of use asset and lease liabilities |
|
$ |
|
|
$ |
|
||
Capitalized mortgage servicing rights |
|
|
|
|
|
|
||
Loans held for sale transferred to held for investment |
|
|
|
|
|
|
||
Investment in BCS |
|
|
|
|
|
|
||
See Notes to Consolidated Financial Statements (Unaudited).
5
GBank Financial Holdings Inc.
Notes to Unaudited Consolidated Financial Statements
Note 1 - Nature of Business
Basis of Presentation
These unaudited interim financial statements are prepared on a consolidated basis for GBank Financial Holdings Inc. (“GBFH”) and its wholly owned subsidiary, GBank (the “Bank”). References herein to the “Company” refer to the consolidated entity and its financial statements. The Company has prepared these unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, SEC rules that permit reduced disclosure for interim periods, and Rule 8-03 of Regulation S-X. In the opinion of management, all adjustments (all of which are of a normal recurring nature) that are necessary for a fair statement are reflected in the unaudited consolidated financial statements. There have been no material changes to the Company's significant accounting policies for the three and six months ended June 30, 2025. The December 31, 2024 consolidated balance sheet information contained in this Quarterly Report on Form 10-Q was derived from the Company's 2024 audited consolidated financial statements. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2024, including the notes thereto, included in the Company’s Registration Statement on Forms S-1 and S-1/A. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. All significant intercompany transactions and accounts have been eliminated.
The Company has one reportable segment. The Company’s chief operating decision maker (“CODM”) evaluates the operations of the Company using consolidated information for purposes of allocating resources and assessing performance. See Note 12 - Segment Reporting for more information.
In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 855, “Subsequent Events,” the Company’s management has evaluated subsequent events for potential recognition or disclosure through the date of the issuance of these consolidated financial statements. No subsequent events were identified that would have required a change to the consolidated financial statements or disclosure in the notes to the consolidated financial statements.
To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.
Nature of Operations
Recent Accounting Pronouncements Adopted
The following reflect accounting pronouncements adopted by the Company:
ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU 2023-09”), was issued in December 2023 to enhance income tax disclosures primarily through the disaggregation of the rate reconciliation and disclosure of income taxes paid to each federal and state jurisdiction (net of refunds). The amendments in this update are effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, and may be applied on a prospective or retrospective basis. As the amendments in this update relate entirely to enhanced disclosure requirements, adoption of this guidance will not have an impact on the Company's financial position or results of operations. The Company expects to provide these enhanced income tax disclosures beginning with its annual report on Form 10-K filing for the year ending December 31, 2025.
6
Recent Accounting Pronouncements Pending Adoption
The following reflect accounting pronouncements pending adoption by the Company:
ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) – Disaggregation of Income Statement Expenses (“ASU 2024-03”) was issued in November 2024 and requires additional disclosure about specified categories of expenses included in relevant expense captions presented on the face of the consolidated statements of income. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively to consolidated financial statements issued for reporting periods after the effective date of ASU 2024-03, or retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact that ASU 2024-03 will have on its disclosures.
Note 2. Investment Securities
The amortized cost, unrealized gains and losses, allowance for credit losses, and estimated fair values of investment securities are summarized as follows as of the dates indicated:
|
|
June 30, 2025 |
|
|||||||||||||||||
(Dollars in thousands) |
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Allowance for |
|
|
Fair |
|
|||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Credit Losses |
|
|
Value |
|
|||||
Available for sale securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential mortgage-backed securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Held to maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential mortgage-backed securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
December 31, 2024 |
|
|||||||||||||||||
(Dollars in thousands) |
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Allowance for |
|
|
Fair |
|
|||||
|
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Credit Losses |
|
|
Value |
|
|||||
Available for sale securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential mortgage-backed securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Held to maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential mortgage-backed securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Accrued interest receivable is excluded from the estimate of credit losses for available for sale and held to maturity securities. At June 30, 2025, accrued interest receivable totaled $
There were no gross realized gains or losses from the sale of available for sale securities during each of the three- and six-month periods ended June 30, 2025 or 2024.
The fair value of investment securities pledged as collateral for potential borrowing purposes (see Note 7) totaled $
The table below illustrates the maturity distribution of investment securities at amortized cost and fair value as of June 30, 2025:
(Dollars in thousands) |
|
June 30, 2025 |
|
|||||||||||||
|
|
Available for Sale |
|
|
Held to Maturity |
|
||||||||||
|
|
Amortized Cost |
|
|
Fair Value |
|
|
Amortized Cost |
|
|
Fair Value |
|
||||
Due in one year or less |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Due after one but within five years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Due after five years but within ten years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Due after ten years |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgage-backed securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
7
The actual maturities of mortgage-backed securities may differ from their contractual maturities because the loans underlying the securities may be repaid without any penalties. Therefore, maturity schedules are not presented for mortgage-backed securities.
The following tables present gross unrealized losses and fair value of debt security investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of the dates indicated.
|
|
June 30, 2025 |
|
|||||||||||||||||||||||||||
|
|
Less Than 12 Months |
|
|
12 Months or More |
|
|
Total |
|
|||||||||||||||||||||
(Dollars in thousands) |
|
Number of Securities |
|
Fair Value |
|
|
Gross Unrealized Losses |
|
|
Number of Securities |
|
Fair Value |
|
|
Gross Unrealized Losses |
|
|
Number of Securities |
|
Fair Value |
|
|
Gross Unrealized Losses |
|
||||||
Available for sale securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential mortgage-backed securities |
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|||||||||
Total temporarily impaired available for sale securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Held to maturity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential mortgage-backed securities |
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|||||||||
Total temporarily impaired held to maturity securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
December 31, 2024 |
|
|||||||||||||||||||||||||||
|
|
Less Than 12 Months |
|
|
12 Months or More |
|
|
Total |
|
|||||||||||||||||||||
|
|
Number of Securities |
|
Fair Value |
|
|
Gross Unrealized Losses |
|
|
Number of Securities |
|
Fair Value |
|
|
Gross Unrealized Losses |
|
|
Number of Securities |
|
Fair Value |
|
|
Gross Unrealized Losses |
|
||||||
Available for sale securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential mortgage-backed securities |
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|
|
$ |
|
|
$ |
|
|||||||||
Total temporarily impaired available for sale securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Management believes the unrealized losses related to available for sale securities as of June 30, 2025 relate primarily to a continuation of the elevated market interest rate environment. In analyzing an issuer’s financial condition, Management considers whether the securities are issued by the federal government or its agencies and whether downgrades by bond rating agencies have occurred, and various industry analysis reports. There were no Company securities downgraded during each of the three- and six-month periods ended June 30, 2025 or 2024. Management currently has no near-term intentions to sell the available for sale securities in an unrealized loss position, and management believes the unrealized losses are due to non-credit-related factors, including changes in market interest rates and other market factors, and therefore no allowance for credit losses was recorded related to available for sale securities as of June 30, 2025 or December 31, 2024.
Held to maturity Investment Grade CMO securities are evaluated for credit losses using the probability of default/loss model, and as of June 30, 2025 and December 31, 2024, no credit loss allowance was warranted related to these securities.
8
Note 3. Loans and Allowance for Credit Losses - Loans
Loans Held for Sale
Loans held for sale consisted of commercial real estate and commercial and industrial loans as of both June 30, 2025 and December 31, 2024. The balance of unguaranteed held for sale loans to be retained are reported as held for investment.
(Dollars in thousands) |
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Gross loan balances |
|
$ |
|
|
$ |
|
||
Less: Unguaranteed portions to be retained |
|
|
|
|
|
|
||
Amounts held for sale, net |
|
$ |
|
|
$ |
|
||
Loans Held for Investment
(Dollars in thousands) |
|
|
|
|
|
|
||
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Commercial and industrial |
|
$ |
|
|
$ |
|
||
Commercial real estate - non-owner occupied |
|
|
|
|
|
|
||
Commercial real estate - owner occupied |
|
|
|
|
|
|
||
Construction and land development |
|
|
|
|
|
|
||
Multifamily |
|
|
|
|
|
|
||
Single Family Sr. Lien |
|
|
|
|
|
|
||
Single Family Jr. Lien |
|
|
|
|
|
|
||
Single Family HELOC |
|
|
|
|
|
|
||
Consumer |
|
|
|
|
|
|
||
Loans, net |
|
|
|
|
|
|
||
Allowance for credit losses |
|
|
( |
) |
|
|
( |
) |
Loans, net of allowance |
|
$ |
|
|
$ |
|
||
Accrued interest receivable is not included in the amortized cost basis of the Company’s loans. Accrued interest receivable for loans totaled $
Beginning in the third quarter of 2023, and continuing into the first quarter 2024, the Company repurchased previously sold guaranteed SBA loans by initiating a change in loan terms with certain borrowers, at the borrowers’ option, to convert variable loans to
Deferred loan costs of $
As of June 30, 2025 and December 31, 2024, Company loans with a carrying value of $
The portion of loans guaranteed by the U.S. government and held for investment totaled $
9
Past Due and Non-accrual Loans
The performance and credit quality of the loan portfolio is monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. A loan’s past due or delinquent status is based on the contractual term specified in each loan agreement.
|
|
June 30, 2025 |
|
|||||||||||||||||||||||||
(Dollars in thousands) |
|
|
|
|
|
|
|
Past Due 90 |
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|||||||
|
|
30-59 Days |
|
|
60-89 Days |
|
|
Days or More |
|
|
|
|
|
Past Due and |
|
|
|
|
|
|
|
|||||||
|
|
Past Due |
|
|
Past Due |
|
|
and Accruing |
|
|
Nonaccrual |
|
|
Nonaccrual |
|
|
Current |
|
|
Total |
|
|||||||
Commercial and industrial |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Commercial real estate - non-owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial real estate - owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Construction and land development |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||
Multifamily |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
||||||
Single Family Sr. Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Single Family Jr. Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Single Family HELOC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
December 31, 2024 |
|
|||||||||||||||||||||||||
(Dollars in thousands) |
|
|
|
|
|
|
|
Past Due 90 |
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|||||||
|
|
30-59 Days |
|
|
60-89 Days |
|
|
Days or More |
|
|
|
|
|
Past Due and |
|
|
|
|
|
|
|
|||||||
|
|
Past Due |
|
|
Past Due |
|
|
and Accruing |
|
|
Nonaccrual |
|
|
Nonaccrual |
|
|
Current |
|
|
Total |
|
|||||||
Commercial and industrial |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Commercial real estate - non-owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Commercial real estate - owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Construction and land development |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Multifamily |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Single Family Sr. Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Single Family Jr. Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Single Family HELOC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
There were no residential loans for which formal foreclosure proceedings were in place at June 30, 2025 or December 31, 2024.
Loans are placed on nonaccrual status when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely, generally when the loan becomes 90 days or more past due.
Credit Quality Indicators
Management reviews the Company’s loan portfolio at least monthly to determine whether any assets require classification in accordance with the Company’s policy and applicable regulations. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements. The Company’s internal credit risk-grading system is based on experiences with similarly graded loans.
The Company’s internally assigned grades are as follows:
10
The following tables present the amortized cost of loans receivable, by year of origination (for term loans) and by risk grade within each portfolio segment as of June 30, 2025 and December 31, 2024. Current period originations may include modifications, extensions and renewals.
As of and for the six months ended June 30, 2025 |
Term Loans Amortized Cost Basis by Origination Year |
|
|
Revolving Loans |
|
|
|
|
|||||||||||||||||||||||
(Dollars in thousands) |
2025 |
|
|
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
Prior |
|
|
Amortized Cost Basis |
|
|
Total |
|
||||||||
Commercial and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Current period gross charge offs |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Commercial real estate - non-owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Current period gross charge offs |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Commercial real estate - owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Construction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Multifamily |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Single family Sr. Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Single family Jr. Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Single family HELOC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Current period gross charge offs |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
11
As of December 31, 2024 |
Term Loans Amortized Cost Basis by Origination Year |
|
|
Revolving Loans |
|
|
|
|
|||||||||||||||||||||||
(Dollars in thousands) |
2024 |
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
Prior |
|
|
Amortized Cost Basis |
|
|
Total |
|
||||||||
Commercial and industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Commercial real estate - non-owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Commercial real estate - owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Construction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Multifamily |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Single family Sr. Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Single family Jr. Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Single family HELOC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Risk rating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pass |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Special mention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Substandard |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Doubtful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
The Company had gross loan charge offs of $
12
Collateral Dependent Loans
The Company has elected to apply the practical expedient under ASC 326 which permits an entity to estimate credit losses based on the fair value of collateral when either applies: (i) the borrower is experiencing financial difficulty, or (ii) repayment is expected to be provided substantially through the sale or operating of the collateral. Fair value estimates for collateral dependent loans are generally based on the current market value or the “as is” value of the collateral derived from recently received and reviewed appraisals from third-party providers. If repayment is dependent on the sale of the collateral, then the fair value used to measure the allowance for credit losses is adjusted for the costs to sell.
The following tables present the amortized cost basis of collateral-dependent loans by collateral type as of the dates indicated:
|
|
Types of Collateral |
|
|||||||||||||||||
June 30, 2025 |
|
|
|
|
Retail |
|
|
|
|
|
|
|
|
|
|
|||||
(Dollars in thousands) |
|
|
|
|
Shopping |
|
|
Business |
|
|
|
|
|
|
|
|||||
|
|
Hotel / Motel |
|
|
Center |
|
|
Assets |
|
|
Other |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial and industrial |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Commercial real estate - non-owner |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial real estate - owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
Types of Collateral |
|
|||||||||||||||||
December 31, 2024 |
|
|
|
|
Retail |
|
|
|
|
|
|
|
|
|
|
|||||
(Dollars in thousands) |
|
|
|
|
Shopping |
|
|
Business |
|
|
|
|
|
|
|
|||||
|
|
Hotel / Motel |
|
|
Center |
|
|
Assets |
|
|
Other |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial and industrial |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Commercial real estate - non-owner |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
The following tables present the amortized cost basis of collateral-dependent loans by loan portfolio segment and the related allowance assigned as of the dates indicated:
June 30, 2025 |
|
Collateral Dependent Loans |
|
|
|
|
||||||
(Dollars in thousands) |
|
With a Related |
|
|
Without a Related |
|
|
Related |
|
|||
|
|
Allowance |
|
|
Allowance |
|
|
Allowance |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Commercial and industrial |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Commercial real estate - non-owner occupied |
|
|
|
|
|
|
|
|
|
|||
Commercial real estate - owner occupied |
|
|
|
|
|
|
|
|
|
|||
December 31, 2024 |
|
Collateral Dependent Loans |
|
|
|
|
||||||
(Dollars in thousands) |
|
With a Related |
|
|
Without a Related |
|
|
Related |
|
|||
|
|
Allowance |
|
|
Allowance |
|
|
Allowance |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Commercial and industrial |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Commercial real estate - non-owner occupied |
|
|
|
|
|
|
|
|
|
|||
Allowance for Credit Losses
The level of the allowance for credit losses reflects management’s continuing evaluation of product and industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions, and unidentified losses expected in the current loan portfolio. Portions of the allowance for credit losses may be allocated for specific credits; however, the entire allowance for credit losses is available for any credit that, in management’s judgment, should be charged off.
13
The following tables present, by portfolio segment, the changes in the allowance for credit losses for the three- and six-month periods indicated:
|
|
Allowance for Credit Losses |
|
|||||||||||||||||
|
|
Balance, |
|
|
|
|
|
|
|
|
|
|
|
Balance, |
|
|||||
(Dollars in thousands) |
|
April 1 |
|
|
Provision for |
|
|
Amounts |
|
|
Amounts |
|
|
June 30, |
|
|||||
|
|
2025 |
|
|
Credit Losses |
|
|
Charged Off |
|
|
Recovered |
|
|
2025 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial and industrial |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Commercial real estate - non-owner |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Commercial real estate - owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Construction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Multifamily |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Single Family Sr. Lien |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Single Family Jr. Lien |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Single Family HELOC |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Consumer |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
|
|
Allowance for Credit Losses |
|
|||||||||||||||||
|
|
Balance, |
|
|
|
|
|
|
|
|
|
|
|
Balance, |
|
|||||
(Dollars in thousands) |
|
January 1 |
|
|
Provision for |
|
|
Amounts |
|
|
Amounts |
|
|
June 30, |
|
|||||
|
|
2025 |
|
|
Credit Losses |
|
|
Charged Off |
|
|
Recovered |
|
|
2025 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial and industrial |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Commercial real estate - non-owner |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Commercial real estate - owner occupied |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Construction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Multifamily |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Single Family Sr. Lien |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Single Family Jr. Lien |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Single Family HELOC |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Consumer |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
|
|
Allowance for Credit Losses |
|
|||||||||||||||||
|
|
Balance, |
|
|
|
|
|
|
|
|
|
|
|
Balance, |
|
|||||
(Dollars in thousands) |
|
April 1 |
|
|
Provision for |
|
|
Amounts |
|
|
Amounts |
|
|
June 30, |
|
|||||
|
|
2024 |
|
|
Credit Losses |
|
|
Charged Off |
|
|
Recovered |
|
|
2024 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial and industrial |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Commercial real estate - non-owner |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial real estate - owner occupied |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Construction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Multifamily |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Single Family Sr. Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Single Family Jr. Lien |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Single Family HELOC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Consumer |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
14
|
|
Allowance for Credit Losses |
|
|||||||||||||||||
|
|
Balance, |
|
|
|
|
|
|
|
|
|
|
|
Balance, |
|
|||||
(Dollars in thousands) |
|
January 1 |
|
|
Provision for |
|
|
Amounts |
|
|
Amounts |
|
|
June 30, |
|
|||||
|
|
2024 |
|
|
Credit Losses |
|
|
Charged Off |
|
|
Recovered |
|
|
2024 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial and industrial |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial real estate - non-owner |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Commercial real estate - owner occupied |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Construction and land development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Multifamily |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Single Family Sr. Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Single Family Jr. Lien |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Single Family HELOC |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Consumer |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Modifications to Borrowers Experiencing Financial Difficulty
The Company may modify certain loans when a borrower is experiencing financial difficulties and the Company grants concessions to the borrower that it would not otherwise consider. These concessions may include rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses.
The following table presents the amortized cost basis of loans held for investment that were modified during the period for borrowers experiencing financial difficulty by loan portfolio segment:
|
|
Amortized Cost Basis at June 30, 2025 |
|
|||||||||||||||||||
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total Class |
|
||||||
|
|
Term |
|
|
|
Interest Rate |
|
|
Payment |
|
|
|
|
|
of Financing |
|
||||||
|
|
Extension |
|
|
|
Reduction |
|
|
Delay |
|
|
Total |
|
|
Receivable |
|
||||||
Commercial real estate - non-owner occupied |
|
$ |
|
|
- |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
% |
|||||
There were
The performance of these modified loans is monitored for twelve months following the modification. As of June 30, 2025, all modified loans were on nonaccrual status.
15
Note 4. Operating Leases
The Company leases real estate for its main office and two branch offices, as well as office space for operations departments under various operating lease agreements. The lease agreements have maturity dates ranging from September 2030 to October 2032, some of which include options to renew at the Company's discretion. At lease inception, if the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the measurement of the right-of-use asset and lease liability.
The lease liability is equal to the present value of the future lease payments, discounted using the rate implicit in the lease (or if that rate cannot be readily determined, the lessee’s incremental borrowing rate). Given that the rate implicit in the lease is rarely available, lease liability amounts were calculated using the Company’s incremental borrowing rate at lease inception, on a collateralized basis, for a similar term.
Operating lease right-of-use assets, as well as operating lease liabilities, are presented as separate line items on the consolidated balance sheets. The Company has elected not to report short-term leases (i.e., leases with initial terms of twelve months or less) on the consolidated balance sheets.
There were
Below is a summary of the operating lease right-of-use asset and related lease liability, as well as the weighted average lease term (in years), weighted average discount rate and total rent expense as of the dates and periods indicated.
(Dollars in thousands) |
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Right-of-use asset |
|
$ |
|
|
$ |
|
||
Lease liability |
|
$ |
|
|
$ |
|
||
Weighted average remaining lease term (in years) |
|
|
|
|
|
|
||
Weighted average discount rate (annualized) |
|
|
% |
|
|
% |
||
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Rent expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cash paid for operating lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
At June 30, 2025, future minimum payments for operating leases are payable as follows:
(Dollars in thousands) |
|
|
|
|
Years ending December 31: |
|
|
|
|
2025 |
|
$ |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total lease payments |
|
$ |
|
|
Less: imputed interest |
|
|
( |
) |
Present value of lease liability |
|
$ |
|
|
16
Note 5. Loan Servicing Assets
The Company’s servicing assets consist primarily of the right to service the guaranteed portion of government guaranteed loans sold to others. The fair value of the servicing asset is essentially a valuation of the net future income stream, which is based on the rate of the fee, the estimated repayment speed of the loan and the estimated cost to service the loan.
The amount allocated to the loan servicing rights is recorded at fair value at the time of sale, as calculated by a third-party consulting firm specializing in government guaranteed loan matters.
The loan servicing asset is being amortized over the period of estimated servicing income, generally five to seven years, with the amortization recorded against loan servicing fee income.
The balance of loans owned by third parties that are being serviced by the Company was $
The following table presents a reconciliation of loan servicing rights as of the periods indicated:
(Dollars in thousands) |
|
Six Months Ended |
|
|
Year Ended |
|
||
Balance, beginning of period |
|
$ |
|
|
$ |
|
||
Additions - servicing rights related to loans sold |
|
|
|
|
|
|
||
Reductions - write-off of servicing assets |
|
|
|
|
|
( |
) |
|
Reductions - amortization and early payoff |
|
|
( |
) |
|
|
( |
) |
Balance, end of period |
|
$ |
|
|
$ |
|
||
In the event of an early repayment of a serviced loan, the unamortized balance of the loan servicing asset for that loan is charged off against loan servicing fee income.
The loan servicing asset was impacted by the write-off of certain servicing assets totaling $
The aggregate balance of loan servicing rights is evaluated for impairment to ensure that the recorded balance is at the lower of amortized cost or fair value. There was
Note 6. Deposits
At June 30, 2025 and December 31, 2024, time deposits amounted to $
The scheduled maturities of time deposits at June 30, 2025, are as follows:
(Dollars in thousands) |
|
Time Deposit Maturities |
|
|||||
|
|
Less Than |
|
|
$250,000 |
|
||
2025 |
|
$ |
|
|
$ |
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
2028 |
|
|
|
|
|
|
||
2029 |
|
|
|
|
|
|
||
Maturing thereafter |
|
|
|
|
|
|
||
Total time deposits |
|
$ |
|
|
$ |
|
||
GBank had $
The aggregate amount of demand deposit overdrafts that were reclassified as loans was $
17
Note 7. Subordinated Debt, Other Borrowings, and Available Lines of Credit
Subordinated Debt Issued 2021
On December 15, 2021, the Company completed a $
The 2021 Notes have a maturity date of
Interest on the 2021 Notes is payable in arrears semiannually on December 15 and June 15 through December 15, 2026. The 2021 Notes are redeemable by the Company in whole or in part on any interest payment date beginning with the interest payment date of
The 2021 Notes are intended to qualify as Tier 2 capital for the Company for regulatory capital purposes. At the closing of the private placement, the Company invested $
Subordinated Debt Issued 2020
On December 30, 2020, the Company completed a $
The 2020 Notes have a maturity date of
Interest on the 2020 Notes is payable in arrears semiannually on January and July 15 until January 15, 2026, and thereafter is payable in arrears quarterly. The 2020 Notes are redeemable by the Company in whole or in part on any interest payment date beginning with the interest payment date of
The 2020 Notes are intended to qualify as Tier 2 capital for the Company for regulatory capital purposes. At the closing of the private placement, the Company invested $
The Company recorded interest expense on subordinated debt issuances totaling $
Lines of Credit
The Company has a line of credit available from the Federal Home Loan Bank of San Francisco (the “FHLB”). Pursuant to collateral agreements with the FHLB, the arrangement is collateralized by qualifying securities having a fair value of $
The unused borrowing capacity at June 30, 2025 and December 31, 2024 with the FHLB, as collateralized by qualifying securities and pledged loans, was $
The Company also has unsecured lines of credit with other correspondent banks totaling $
18
Other Borrowing Arrangements
GBank is approved to pledge loans as collateral under the Federal Reserve Bank of San Francisco’s Borrower-In-Custody (“BIC”) Program. As of June 30, 2025, the Company had pledged loans and investment securities with an approximate carrying value of $
The Company had
Note 8. Stockholders' Equity and Earnings Per Share
Authorized Shares
The Company is authorized to issue three classes of shares: preferred stock, voting common stock, and nonvoting common stock. The Company had
Stock Option Loans
During the year ended December 31, 2022, the Company approved a stock option loan program (the "Program") under which the Company made secured loans to option holders with proceeds used to pay the exercise price of the stock options. The collateral for the loans was the shares obtained upon exercise of the option using the loan proceeds. All loans under the Program were repaid in full during the first quarter of 2025.
Earnings Per Share
Basic earnings per share are computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during each of the years presented. Diluted earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding plus common shares that would have been outstanding if dilutive potential common shares, consisting of unvested restricted stock and outstanding stock options, had been issued.
The computation of earnings per share is provided in the table below for the three- and six-month periods indicated.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
(Dollars in thousands, except per share data) |
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Net income available to common shareholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted average shares outstanding (basic) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive restricted stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding (diluted) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted earnings per share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Anti-dilutive stock options excluded from |
|
|
|
|
|
|
|
|
|
|
|
|
||||
the computation of earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
19
Note 9. Regulatory Capital Requirements
The Company is subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements.
On September 17, 2019, the federal banking agencies jointly finalized a rule that became effective July 1, 2020 and was intended to provide for an optional, simplified measure of capital adequacy, the community bank leverage ratio (“CBLR”) framework, for qualifying community banking organizations, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. The final rule was effective on January 1, 2020 and allows qualifying community banking organizations to calculate a leverage ratio to measure capital adequacy beginning with their March 31, 2020 Call Reports. . The Company opted into the CBLR framework with its Call Report filed with the federal banking agencies for the quarter ended September 30, 2020.
Under the final rule, if a qualifying community banking organization opts into the CBLR framework and meets all requirements under the framework, it will be considered to have met the well-capitalized ratio requirements under the “prompt corrective action” regulations described above and will not be required to report or calculate risk-based capital.
The main components and requirements of the community bank leverage ratio framework are as follows:
As of June 30, 2025 and December 31, 2024, the Company and GBank were in compliance with the CBLR requirements.
(Dollars in thousands) |
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Bank Tier 1 Capital Leverage Ratio |
|
|
% |
|
|
% |
||
Average Total Consolidated Assets |
|
$ |
|
|
$ |
|
||
Off-Balance-Sheet Exposures |
|
$ |
|
|
$ |
|
||
Ratio of Off-Balance-Sheet Exposures to Total Assets |
|
|
% |
|
|
% |
||
Trading Assets |
|
|
|
|
||||
Advances Approaching Banking Organization |
|
|
|
|
||||
Actual and required capital amounts and ratios for GBank, on a bank-only basis, are presented in the table below as of the dates indicated.
|
|
Actual |
|
|
Required for Capital Adequacy Purposes |
|
||||||||||
(Dollars in thousands) |
|
Amount |
|
|
Ratio |
|
|
Amount |
|
|
Ratio |
|
||||
June 30, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Community Bank Leverage Ratio |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Community Bank Leverage Ratio |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Additionally, State of Nevada banking regulations restrict distribution of the net assets of the Company. These regulations require the sum of the Company’s stockholders’ equity and allowance for credit losses to be at least
20
Note 10. Commitments and Contingencies
Financial Instruments with Off-Balance-Sheet Risk
The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments consist of commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the consolidated balance sheets.
The Company’s exposure to credit loss in the event of nonperformance by the other parties to the financial instruments for these commitments is represented by the contractual amounts of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.
A summary of the contractual amounts of the Company’s exposure to off-balance-sheet risk is as follows as of the dates indicated:
(Dollars in thousands) |
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Commitments to extend credit (1) |
|
$ |
|
|
$ |
|
||
Standby letters of credit (2) |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Commitments to extend credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee since many of the commitments are expected to expire without being drawn upon. The total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based upon management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable; inventory; property, plant and equipment; income-producing commercial properties; and land loans.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Collateral held varies as specified above and is required as the Company deems necessary.
GBank calculates estimated credit losses for off-balance-sheet credit exposures which are not unconditionally cancellable on a collective (pool) basis, with these pools mirroring the segments used for the calculation of the allowance for credit losses for loans, as these unfunded commitments share similar risk characteristics with the loan portfolio segments. The allowance for credit losses related to off-balance-sheet commitments was $
Financial Instruments with Concentrations of Credit Risk
The Company’s loan portfolio is concentrated in commercial real estate loans. Substantially all of these loans are secured by first liens with an initial loan to value ratio of generally not more than
The Company makes commercial, commercial real estate, residential real estate and consumer loans to customers in its local market area of Nevada, California, Utah, and Arizona, and to customers located throughout the United States through the Company’s nationwide government guaranteed loan programs.
The Company’s loans are expected to be repaid from cash flow or from proceeds from the sale of selected assets of the borrowers. Unsecured loans accounted for less than
21
At June 30, 2025, the Company’s loan portfolio included loans and loan commitments in forty states.
(Dollars in thousands) |
|
June 30, 2025 |
|
|||||
|
|
Amounts |
|
|
Percentage |
|
||
Nevada |
|
$ |
|
|
|
% |
||
North Carolina |
|
|
|
|
|
% |
||
Ohio |
|
|
|
|
|
% |
||
California |
|
|
|
|
|
% |
||
Illinois |
|
|
|
|
|
% |
||
Indiana |
|
|
|
|
|
% |
||
Other |
|
|
|
|
|
% |
||
Total Loan Commitments |
|
$ |
|
|
|
% |
||
Legal Contingencies
The Company is a party to various legal actions normally associated with collections of loans and other business activities of financial institutions, the aggregate effect of which, in management’s opinion, would not have a material adverse effect on the Company’s financial statements. In the opinion of management, such proceedings are substantially covered by insurance, and the ultimate disposition of such proceedings are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
Executive Agreements
The Company has entered into agreements with its key employees stating that, in the event the Company terminates the employment of these officers without cause or upon change in control of the Company, the Company may be liable for the employees’ salary for a period of time as outlined in the agreements.
Other Commitments
During the second quarter of 2022, the Company entered into a Limited Partnership Agreement with a venture capital fund under which the Company has committed up to $
Note 11. Fair Value Measurements
The Company uses a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1: Valuations for assets and liabilities traded in active exchange markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.
Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.
Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker-traded transactions. Level 3 valuations incorporate certain unobservable assumptions and projections in determining the fair value assigned to such assets.
There were no transfers between Levels 1, 2, and 3 during the six months ended June 30, 2025 or the year ended December 31, 2024.
22
Assets Measured at Fair Value on a Recurring Basis
Securities Available for Sale - The fair value of investment securities classified as available for sale is measured using information from a third-party pricing service. The pricing service uses quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique, used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.
The table below presents the balance of financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as of the dates indicated:
|
|
|
|
|
Fair Value Measurements at June 30, 2025 Using: |
|
||||||||||
|
|
|
|
|
Quoted Prices In |
|
|
Significant Other |
|
|
Significant |
|
||||
(Dollars in thousands) |
|
Carrying |
|
|
Active |
|
|
Observable |
|
|
Unobservable |
|
||||
|
|
June 30, 2025 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available for sale debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgage-backed securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
Fair Value Measurements at December 31, 2024 Using: |
|
||||||||||
|
|
|
|
|
Quoted Prices In |
|
|
Significant Other |
|
|
Significant |
|
||||
(Dollars in thousands) |
|
Carrying |
|
|
Active |
|
|
Observable |
|
|
Unobservable |
|
||||
|
|
December 31, 2024 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available for sale debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential mortgage-backed securities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Assets Measured at Fair Value on a Nonrecurring Basis
Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on a recurring basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).
Individually Evaluated Loans, Net of Allowance for Credit Losses - Individually evaluated loans, net of allowance for credit losses, are valued based on the fair value of the loan’s collateral, generally determined based upon independent third-party appraisals of the properties. These loans are included as Level 3 fair values, based on the lowest level of input that is significant to the fair value measurements. As of June 30, 2025, the balance of individually evaluated loans, net of allowance for credit losses of $
The table below presents the balance of financial assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of the dates indicated:
|
|
|
|
|
Fair Value Measurements at June 30, 2025 Using: |
|
||||||||||
|
|
|
|
|
Quoted Prices In |
|
|
Significant Other |
|
|
Significant |
|
||||
(Dollars in thousands) |
|
Carrying |
|
|
Active |
|
|
Observable |
|
|
Unobservable |
|
||||
|
|
June 30, 2025 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Individually evaluated loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
Fair Value Measurements at December 31, 2024 Using: |
|
||||||||||
|
|
|
|
|
Quoted Prices In |
|
|
Significant Other |
|
|
Significant |
|
||||
(Dollars in thousands) |
|
Carrying |
|
|
Active |
|
|
Observable |
|
|
Unobservable |
|
||||
|
|
December 31, 2024 |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Individually evaluated loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
23
The following tables present additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine the fair value as of the dates indicated.
(Dollars in thousands) |
|
Quantitative Information About Level 3 Fair Value Measurements |
||||||||||
|
|
Fair Value |
|
|
Valuation |
|
Unobservable |
|
|
|
Weighted |
|
June 30, 2025 |
|
Estimate |
|
|
Technique |
|
Input |
|
Range |
|
Average |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated loans |
|
$ |
|
|
Appraisal (1) |
|
Appraisal adjustments (2) |
|
|
|||
(Dollars in thousands) |
|
Quantitative Information About Level 3 Fair Value Measurements |
||||||||||
|
|
Fair Value |
|
|
Valuation |
|
Unobservable |
|
|
|
Weighted |
|
December 31, 2024 |
|
Estimate |
|
|
Technique |
|
Input |
|
Range |
|
Average |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated loans |
|
$ |
|
|
Appraisal (1) |
|
Appraisal adjustments (2) |
|
|
|||
Carrying amounts and estimated fair values of financial instruments were as follows as of the dates indicated:
|
|
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||
|
|
Fair Value |
|
Carrying |
|
|
Estimated |
|
|
Carrying |
|
|
Estimated |
|
||||
(Dollars in thousands) |
|
Level |
|
Amount |
|
|
Fair Value |
|
|
Amount |
|
|
Fair Value |
|
||||
Financial instruments - assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and due from banks |
|
1 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest-bearing deposits with other financial |
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment securities available for sale |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment securities held to maturity |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans held for sale |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans, net |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loan servicing assets |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Federal Home Loan Bank stock |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued interest receivable |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financial instruments - liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deposits |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Subordinated debt |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued interest payable |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Note 12. Segment Reporting
Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the Company’s CODM in deciding how to allocate resources and assess performance. GBank’s CODM is Edward M. Nigro, Executive Chairman. The Company’s CODM monitors the revenue streams and significant expenses of its various products and services, as well as budget to actual results, in assessing the Company’s segments. The evaluation of significant expenses include salaries and employee benefits, data processing, occupancy, and legal and professional fees. Overall, operations are managed, and financial performance is evaluated, on a Company-wide basis using the Company’s consolidated net income to monitor actual results versus budget, in competitive analyses by benchmarking to the Company’s peers, and in decision making pertaining to executive compensation levels, new product decisions, expansion plans, and capital expenditure spending. Accordingly, all of the Company’s operations are considered by management to be aggregated in
24
The following table presents certain information reviewed by management for the three- and six-month periods presented:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
(Dollars in thousands) |
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Net interest income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Provision for credit losses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss attributable to equity investment |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other Segment Information
Revenue Composition: GBFH generates revenue primarily from net interest income and non-interest income, including gain on sales of loans, net interchange income, and loan servicing income.
Capital Allocation & Performance Metrics: The CODM assesses performance based on key financial metrics, including net interest margin, return on average assets, return on average equity and the Company's efficiency ratio.
25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following presents management’s discussion and analysis of the financial condition and results of operations of GBank Financial Holdings Inc. (individually, “GBFH” and collectively with its subsidiaries including GBank, the “Company”). This discussion should be read in conjunction with the unaudited consolidated financial statements and related notes included elsewhere in this quarterly report on Form 10-Q and with the Company's Registration Statement on Form S-1 and S-1/A. Results of operations for the periods included in this quarterly report on Form 10-Q are not necessarily indicative of results to be obtained during any future period.
General
GBank Financial Holdings Inc. is a bank holding company headquartered in Las Vegas, Nevada and registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). Through our wholly owned bank subsidiary, GBank, we operate two full-service commercial branches in Las Vegas, Nevada to provide a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals in Nevada, California, Utah, and Arizona. Our founding members, including our Executive Chairman of the Board, Edward M. Nigro, recognized a need in the greater Las Vegas area for a solutions-oriented, relationship bank focused on middle market companies and real estate entrepreneurs who generally require loans of $200 thousand to $20 million, a size often overlooked or deprioritized by larger financial institutions. GBank was established in 2007 with the goal of helping these underserved clients build and sustain wealth. By combining the relationship-based focus of a community bank with the extensive suite of financial products and services offered by our largest competitors, we believe that we are well-positioned to continue to capitalize on the significant growth opportunities available not only in the greater Las Vegas and Clark County area, but regionally and nationally through our SBA lending, Gaming Fintech, and credit card initiatives. These activities, together with our two strategically located banking centers, generate a stable source of low-cost core deposits and a diverse loan portfolio with attractive risk-adjusted yields.
Recent Events
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was signed into law by President Trump, which includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain key provisions from the Tax Cuts and Jobs Act of 2017 and expanding certain incentives from the Inflation Reduction Act of 2022 while accelerating the phase-out of others. The Company continues to evaluate the OBBBA but does not anticipate that the OBBBA will have a material impact on the Company’s Consolidated Financial Statements. As the legislation was signed into law after the close of the second quarter of 2025, the impacts are not included in the Company’s operating results for the three and six months ended June 30, 2025.
Available Information
The Company maintains an Internet web site at www.gbankfinancialholdings.com. The Company makes available, free of charge, on its web site (under www.gbankfinancialholdings.com/secfilings) the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Exchange Act as soon as reasonably practicable after the Company files such material with, or furnishes it to, the SEC. The Company also makes available, free of charge, through its web site (under www.gbankfinancialholdings.com/corporate-governance) links to the Company’s Code of Ethics Policy and the charters for its board committees. In addition, the SEC maintains an Internet site (at www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
The Company routinely posts important information for investors on its web site (at www.gbankfinancialholdings.com and, more specifically, under the News & Media tab at www.gbankfinancialholdings.com/press-releases). The Company intends to use its web site as a means of disclosing material non-public information and for complying with its disclosure obligations under SEC Regulation FD (Fair Disclosure). Accordingly, investors should monitor the Company’s web site, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.
The information contained on, or that may be accessed through, the Company’s web site is not incorporated by reference into, and is not a part of, this Form 10-Q.
Nature of Operations
The Company generates the majority of its revenue through net interest income, calculated as the difference between interest earned on loans and investments and interest paid on deposits and borrowings. Growth in net interest income is dependent upon balance sheet growth and maintaining or increasing the net interest margin, which is calculated as net interest income as a percentage of average interest-earning assets. The Company also generates revenue through gains on sales of assets, generally the guaranteed portion of SBA and USDA loans, net interchange fees earned on its credit card product, and fees earned on the various services and products offered to its customers. Offsetting these revenue sources are provisions for credit losses, non-interest expenses and income taxes.
26
The following table presents a summary of the Company's earnings and selected performance ratios for the three- and six-month periods presented:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(Dollars in thousands, except per share data) |
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net Income |
$ |
4,755 |
|
|
$ |
4,676 |
|
|
$ |
9,225 |
|
|
$ |
8,376 |
|
Diluted Earnings Per Share |
$ |
0.33 |
|
|
$ |
0.36 |
|
|
$ |
0.63 |
|
|
$ |
0.65 |
|
Return on Average Assets |
|
1.59 |
% |
|
|
1.90 |
% |
|
|
1.60 |
% |
|
|
1.75 |
% |
Return on Average Equity |
|
12.62 |
% |
|
|
17.59 |
% |
|
|
12.61 |
% |
|
|
16.17 |
% |
Net Interest Margin (annualized) |
|
4.31 |
% |
|
|
4.82 |
% |
|
|
4.39 |
% |
|
|
4.83 |
% |
Non-Performing Assets to Total Assets |
|
1.49 |
% |
|
|
0.75 |
% |
|
|
1.49 |
% |
|
|
0.75 |
% |
Net Charge-Off to Average Loans (annualized) |
|
0.38 |
% |
|
|
0.01 |
% |
|
|
0.39 |
% |
|
|
0.01 |
% |
Financial highlights for the three months ended June 30, 2025 are presented below:
Critical Accounting Policies
In preparing the Company’s Consolidated Financial Statements, accounting policies are applied that require significant judgment and estimates, which can materially impact the Company’s financial position and results of operations. The following are the critical accounting policies that have the most significant impact on the Company’s financial statements because they require significant judgments and assumptions about highly complex and inherently uncertain matters. The use of reasonably different estimates and assumptions could have a material impact on our results of operations or financial condition.
Allowance for Credit Losses
The allowance for credit losses reflects management’s best estimate of credit losses over the remaining life of the loan portfolio and is presented as a valuation account deducted from the loan portfolio’s amortized cost basis to present the net amount expected to be collected on the loans.
The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. GBank has segregated its held-for-investment loan portfolio into segments based on federal call report codes which classify loans based on the primary collateral supporting the loan. The segments are reviewed by management no less than annually to ensure instruments are properly segregated into groups having similar risk characteristics and new segments may be required as the Company offers new loan products.
The Company’s loan portfolio includes certain loans which are partially guaranteed by the U.S. Small Business Administration. The Current Expected Credit Losses (“CECL”) model does not require an entity to measure expected credit losses on an instrument, or pool of instruments, if historical information adjusted for current conditions and reasonable and supportable forecasts result in zero expected credit losses in all scenarios. The guaranteed portion of the loan pools range from 75 percent to 90 percent. For purposes of the assessment of credit losses, Company management ascertains the guaranteed portion of these loans has zero repayment risk due to the full guarantee of the U.S. government.
The Company measures the allowance for credit losses using the average charge-off method and calculates an estimate of expected credit losses based on actual losses incurred during a historic look-back period. The Company has chosen to use the historic losses of similarly insured institutions for each of its loan segments with the exception of commercial real estate loans for which Company management has defined a custom peer group of institutions having a large focus on government guaranteed lending.
27
To account for the model’s quantitative limitations when estimating credit losses, management also considers certain qualitative adjustments, including considerations of:
GBank considers financial assets on an individual basis when the financial asset has unusual risk characteristics not matching an existing segment and may assign a specific reserve to the financial asset having unusual risk characteristics. The specific reserve component is calculated as the Company's evaluation of credit loss on individually evaluated loans based on the fair value of the collateral less estimated selling costs if collateral dependent or based on the present value of expected future cash flows discounted at the loan's initial effective interest rate if not collateral dependent. The majority of the Company's loans subject to individual evaluation are considered collateral dependent. The Company uses the practical expedient as permitted under ASC 326 to measure individually evaluated loans as collateral dependent and/or when repayment is expected to be provided substantially through the operation or sale of the collateral. Expected credit losses are based on the fair value at the reporting date, adjusted for selling costs as appropriate. For collateral dependent loans, credit loss is measured as the difference between the amortized cost basis in the loan and the fair value of the underlying collateral. The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral.
Emerging Growth Company
Pursuant to the JOBS Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by the Financial Accounting Standards Board (“FASB”) or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We have elected to use the extended transition period for complying with new or revised accounting standards affecting public companies, which means that our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards on a non-delayed basis.
We may take advantage of some of the reduced regulatory and reporting requirements that are available to it so long as we qualify as an emerging growth company, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.
Net Interest Income and Net Interest Margin
Net interest income is calculated as the excess of interest earned from the Company’s interest-bearing assets, such as loans and investments, and the interest expense incurred on interest-bearing liabilities, like deposits and borrowed funds. Net interest income represents the core earnings of the Company’s primary activities of lending and investing, less the costs of obtaining funds.
Net interest margin is expressed as net interest income as a percentage of average earning assets and reflects the Company's ability to generate income from its interest-earning assets relative to the costs of funding those assets. Net interest income is affected by changes in interest rates, as well as composition and volume fluctuations in the average balances of interest-earning assets and interest-bearing liabilities.
28
Average balances, interest income or expense, and the interest yield or rate for the Company’s interest-sensitive assets and liabilities are presented in the tables below for the three- and six-month periods presented. Average balances are calculated on a daily basis. The Company had no tax equivalent adjustments for the three and six months ended June 30, 2025 and 2024.
|
|
For the Three Months Ended |
|
|||||||||||||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||||||||||||||||
|
|
Average |
|
|
|
|
|
Yield/ |
|
|
Average |
|
|
|
|
|
Yield/ |
|
||||||
(Dollars in thousands) |
|
Balance |
|
|
Interest |
|
|
Rate(2) |
|
|
Balance |
|
|
Interest |
|
|
Rate(2) |
|
||||||
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest Bearing Deposits With Banks |
|
$ |
115,974 |
|
|
$ |
1,365 |
|
|
|
4.72 |
% |
|
$ |
80,062 |
|
|
$ |
1,165 |
|
|
|
5.85 |
% |
Investment Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Taxable |
|
|
119,880 |
|
|
|
1,414 |
|
|
|
4.73 |
% |
|
|
73,696 |
|
|
|
868 |
|
|
|
4.74 |
% |
Loans, Net (1) |
|
|
911,028 |
|
|
|
17,659 |
|
|
|
7.77 |
% |
|
|
789,516 |
|
|
|
16,360 |
|
|
|
8.33 |
% |
Federal Home Loan Bank Stock |
|
|
5,362 |
|
|
|
117 |
|
|
|
8.75 |
% |
|
|
4,400 |
|
|
|
96 |
|
|
|
8.78 |
% |
Total Earning Assets |
|
|
1,152,244 |
|
|
|
20,555 |
|
|
|
7.16 |
% |
|
|
947,674 |
|
|
|
18,489 |
|
|
|
7.85 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and Due From Banks |
|
|
6,782 |
|
|
|
|
|
|
|
|
|
6,302 |
|
|
|
|
|
|
|
||||
Other Assets |
|
|
41,894 |
|
|
|
|
|
|
|
|
|
33,607 |
|
|
|
|
|
|
|
||||
Total Assets |
|
|
1,200,920 |
|
|
|
|
|
|
|
|
|
987,583 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
LIABILITIES & SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing Demand |
|
$ |
60,320 |
|
|
|
316 |
|
|
|
2.10 |
% |
|
$ |
67,038 |
|
|
|
395 |
|
|
|
2.37 |
% |
Money Market and Savings |
|
|
303,814 |
|
|
|
2,929 |
|
|
|
3.87 |
% |
|
|
217,081 |
|
|
|
2,137 |
|
|
|
3.96 |
% |
Certificates of Deposit |
|
|
413,940 |
|
|
|
4,660 |
|
|
|
4.52 |
% |
|
|
330,271 |
|
|
|
4,316 |
|
|
|
5.26 |
% |
Total Interest-Bearing Deposits |
|
|
778,074 |
|
|
|
7,905 |
|
|
|
4.08 |
% |
|
|
614,390 |
|
|
|
6,848 |
|
|
|
4.48 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Short-Term Borrowings |
|
|
- |
|
|
|
- |
|
|
|
0.00 |
% |
|
|
517 |
|
|
|
7 |
|
|
|
5.45 |
% |
Subordinated Debentures |
|
|
26,113 |
|
|
|
262 |
|
|
|
4.02 |
% |
|
|
26,040 |
|
|
|
286 |
|
|
|
4.42 |
% |
Total Interest-Bearing Liabilities |
|
|
804,187 |
|
|
|
8,167 |
|
|
|
4.07 |
% |
|
|
640,947 |
|
|
|
7,141 |
|
|
|
4.48 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest-bearing Deposits |
|
|
223,201 |
|
|
|
|
|
|
|
|
|
220,842 |
|
|
|
|
|
|
|
||||
Other Liabilities |
|
|
22,404 |
|
|
|
|
|
|
|
|
|
18,849 |
|
|
|
|
|
|
|
||||
Shareholders' Equity |
|
|
151,128 |
|
|
|
|
|
|
|
|
|
106,945 |
|
|
|
|
|
|
|
||||
Total Liabilities & Shareholders' Equity |
|
$ |
1,200,920 |
|
|
|
|
|
|
|
|
$ |
987,583 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Interest Income |
|
|
|
|
$ |
12,388 |
|
|
|
|
|
|
|
|
$ |
11,348 |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Yield on Earning Assets |
|
|
|
|
|
|
|
|
7.16 |
% |
|
|
|
|
|
|
|
|
7.85 |
% |
||||
Cost on Interest-Bearing Liabilities |
|
|
|
|
|
|
|
|
4.07 |
% |
|
|
|
|
|
|
|
|
4.48 |
% |
||||
Average Interest Spread |
|
|
|
|
|
|
|
|
3.08 |
% |
|
|
|
|
|
|
|
|
3.37 |
% |
||||
Net Interest Margin |
|
|
|
|
|
|
|
|
4.31 |
% |
|
|
|
|
|
|
|
|
4.82 |
% |
||||
29
|
|
For the Six Months Ended |
|
|||||||||||||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||||||||||||||||
|
|
Average |
|
|
|
|
|
Yield/ |
|
|
Average |
|
|
|
|
|
Yield/ |
|
||||||
(Dollars in thousands) |
|
Balance |
|
|
Interest |
|
|
Rate(2) |
|
|
Balance |
|
|
Interest |
|
|
Rate(2) |
|
||||||
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest Bearing Deposits With Banks |
|
$ |
109,338 |
|
|
$ |
2,557 |
|
|
|
4.72 |
% |
|
$ |
73,081 |
|
|
$ |
2,137 |
|
|
|
5.88 |
% |
Investment Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Taxable |
|
|
112,591 |
|
|
|
2,695 |
|
|
|
4.83 |
% |
|
|
85,890 |
|
|
|
1,882 |
|
|
|
4.41 |
% |
Loans, Net(1) |
|
|
888,982 |
|
|
|
34,495 |
|
|
|
7.82 |
% |
|
|
758,651 |
|
|
|
31,690 |
|
|
|
8.40 |
% |
Federal Home Loan Bank Stock |
|
|
5,009 |
|
|
|
217 |
|
|
|
8.74 |
% |
|
|
3,811 |
|
|
|
170 |
|
|
|
8.97 |
% |
Total Earning Assets |
|
|
1,115,920 |
|
|
|
39,964 |
|
|
|
7.22 |
% |
|
|
921,433 |
|
|
|
35,879 |
|
|
|
7.83 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and Due From Banks |
|
|
6,501 |
|
|
|
|
|
|
|
|
|
6,119 |
|
|
|
|
|
|
|
||||
Other Assets |
|
|
40,543 |
|
|
|
|
|
|
|
|
|
33,604 |
|
|
|
|
|
|
|
||||
Total Assets |
|
|
1,162,964 |
|
|
|
|
|
|
|
|
|
961,156 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
LIABILITIES & SHAREHOLDERS' EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing Demand |
|
$ |
62,992 |
|
|
|
672 |
|
|
|
2.15 |
% |
|
$ |
66,170 |
|
|
|
788 |
|
|
|
2.39 |
% |
Money Market and Savings |
|
|
284,060 |
|
|
|
5,340 |
|
|
|
3.79 |
% |
|
|
201,727 |
|
|
|
3,897 |
|
|
|
3.88 |
% |
Certificates of Deposit |
|
|
399,899 |
|
|
|
9,123 |
|
|
|
4.60 |
% |
|
|
319,746 |
|
|
|
8,361 |
|
|
|
5.26 |
% |
Total Interest-Bearing Deposits |
|
|
746,951 |
|
|
|
15,135 |
|
|
|
4.09 |
% |
|
|
587,643 |
|
|
|
13,046 |
|
|
|
4.46 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Short-Term Borrowings |
|
|
- |
|
|
|
- |
|
|
|
0.00 |
% |
|
|
4,049 |
|
|
|
111 |
|
|
|
5.51 |
% |
Subordinated Debentures |
|
|
26,104 |
|
|
|
547 |
|
|
|
4.23 |
% |
|
|
26,031 |
|
|
|
571 |
|
|
|
4.41 |
% |
Total Interest-Bearing Liabilities |
|
|
773,055 |
|
|
|
15,682 |
|
|
|
4.09 |
% |
|
|
617,723 |
|
|
|
13,728 |
|
|
|
4.47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noninterest-bearing Deposits |
|
|
221,050 |
|
|
|
|
|
|
|
|
|
220,804 |
|
|
|
|
|
|
|
||||
Other Liabilities |
|
|
21,278 |
|
|
|
|
|
|
|
|
|
18,427 |
|
|
|
|
|
|
|
||||
Shareholders' Equity |
|
|
147,581 |
|
|
|
|
|
|
|
|
|
104,202 |
|
|
|
|
|
|
|
||||
Total Liabilities & Shareholders' Equity |
|
$ |
1,162,964 |
|
|
|
|
|
|
|
|
$ |
961,156 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net Interest Income |
|
|
|
|
$ |
24,282 |
|
|
|
|
|
|
|
|
$ |
22,151 |
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Yield on Earning Assets |
|
|
|
|
|
|
|
|
7.22 |
% |
|
|
|
|
|
|
|
|
7.83 |
% |
||||
Cost on Interest-Bearing Liabilities |
|
|
|
|
|
|
|
|
4.09 |
% |
|
|
|
|
|
|
|
|
4.47 |
% |
||||
Average Interest Spread |
|
|
|
|
|
|
|
|
3.13 |
% |
|
|
|
|
|
|
|
|
3.35 |
% |
||||
Net Interest Margin |
|
|
|
|
|
|
|
|
4.39 |
% |
|
|
|
|
|
|
|
|
4.83 |
% |
||||
30
The following table presents the effects of changing rates and volumes on net interest income for the three- and six-month periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated to volume.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||
|
|
June 30, 2025 vs. June 30, 2024 |
|
|
June 30, 2025 vs. June 30, 2024 |
|
||||||||||||||||||
|
|
Increase (Decrease) |
|
|
Increase (Decrease) |
|
||||||||||||||||||
(Dollars in thousands) |
|
Volume |
|
|
Rate |
|
|
Net |
|
|
Volume |
|
|
Rate |
|
|
Net |
|
||||||
INTEREST INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest Bearing Deposits With Banks |
|
$ |
523 |
|
|
$ |
(323 |
) |
|
$ |
200 |
|
|
$ |
1,060 |
|
|
$ |
(640 |
) |
|
$ |
420 |
|
Investment Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Taxable |
|
|
544 |
|
|
|
2 |
|
|
|
546 |
|
|
|
585 |
|
|
|
228 |
|
|
|
813 |
|
Loans, Net |
|
|
2,518 |
|
|
|
(1,219 |
) |
|
|
1,299 |
|
|
|
5,444 |
|
|
|
(2,639 |
) |
|
|
2,805 |
|
Federal Home Loan Bank Stock |
|
|
21 |
|
|
|
- |
|
|
|
21 |
|
|
|
53 |
|
|
|
(6 |
) |
|
|
47 |
|
Total Interest Income |
|
|
3,606 |
|
|
|
(1,540 |
) |
|
|
2,066 |
|
|
|
7,142 |
|
|
|
(3,057 |
) |
|
|
4,085 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
INTEREST EXPENSE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest Bearing Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest-bearing Demand |
|
|
(40 |
) |
|
|
(39 |
) |
|
|
(79 |
) |
|
|
(38 |
) |
|
|
(78 |
) |
|
|
(116 |
) |
Money Market and Savings |
|
|
854 |
|
|
|
(62 |
) |
|
|
792 |
|
|
|
1,591 |
|
|
|
(148 |
) |
|
|
1,443 |
|
Certificates of Deposit |
|
|
1,093 |
|
|
|
(749 |
) |
|
|
344 |
|
|
|
2,096 |
|
|
|
(1,334 |
) |
|
|
762 |
|
Total Interest-Bearing Deposits |
|
|
1,907 |
|
|
|
(850 |
) |
|
|
1,057 |
|
|
|
3,649 |
|
|
|
(1,560 |
) |
|
|
2,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Short-Term Borrowings |
|
|
(7 |
) |
|
|
- |
|
|
|
(7 |
) |
|
|
(111 |
) |
|
|
- |
|
|
|
(111 |
) |
Subordinated Debentures |
|
|
1 |
|
|
|
(25 |
) |
|
|
(24 |
) |
|
|
2 |
|
|
|
(26 |
) |
|
|
(24 |
) |
Total Interest Expense |
|
|
1,901 |
|
|
|
(875 |
) |
|
|
1,026 |
|
|
|
3,540 |
|
|
|
(1,586 |
) |
|
|
1,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
NET INTEREST INCOME |
|
$ |
1,705 |
|
|
$ |
(665 |
) |
|
$ |
1,040 |
|
|
$ |
3,602 |
|
|
$ |
(1,471 |
) |
|
$ |
2,131 |
|
For the six months ended June 30, 2025, interest income was $40.0 million, an increase of $4.1 million compared to $35.9 million for the six months ended June 30, 2024. For the three months ended June 30, 2025, interest income was $20.6 million, an increase of $2.1 million compared to $18.5 million for the three months ended June 30, 2024. The increases in interest income when comparing the three- and six-month periods ended June 30, 2025 to the same periods in 2024 are primarily due to increases in average interest-earning assets, partially offset by yield reductions on adjustable-rate loans, securities, and other liquid assets as a result of the 100 basis point decrease in the target federal funds rate by the Federal Reserve during the second half of 2024.
Interest expense was $15.7 million for the six months ended June 30, 2025, an increase of $2.0 million compared to $13.7 million for the six months ended June 30, 2024. Interest expense was $8.2 million for the three months ended June 30, 2025, an increase of $1.1 million compared to $7.1 million for the three months ended June 30, 2024. The increase in interest expense when comparing the three and six months ended June 30, 2025 to the same periods in 2024 was driven by increases in average interest-bearing liabilities to fund asset growth.
For the second quarter of 2025, the Company’s net interest margin decreased to 4.31%, compared to 4.82% for the second quarter of 2024. For the six months ended June 30, 2025, the Company's net interest margin decreased to 4.39%, compared to 4.83% for the six months ended June 30, 2024. The decrease in net interest margin for the three and six months ended June 30, 2025 when compared to the same periods in 2024 is reflective of the lower market interest rate environment as explained in the above paragraphs.
31
Provision for Credit Losses
The provision for credit losses in each period is reflected as a reduction in earnings for that period and includes amounts related to funded loans and unfunded loan commitments. The provision is equal to the amount required to maintain the ACL at a level that is adequate to absorb estimated lifetime credit losses inherent in the loan portfolio based on remaining contractual maturity, adjusted for estimated prepayments as of each period end. The Company's CECL models incorporate historical experience, current conditions, and reasonable and supportable forecasts in measuring expected credit losses. For the three and six months ended June 30, 2025, the Company recorded a provision for credit losses of $1.1 million and $1.8 million, respectively, compared to $295 thousand and $315 thousand for the three and six months ended June 30, 2024, respectively. The provision for credit losses for the three and six months ended June 30, 2025 is primarily reflective of net charge-offs of $870 thousand and $1.7 million, respectively, and loan growth.
Noninterest Income
The following table presents the components of total noninterest income.
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
Gain on sale of loans |
|
$ |
2,593 |
|
|
$ |
3,163 |
|
|
$ |
(570 |
) |
|
|
(18.0 |
) |
Loan servicing income |
|
|
750 |
|
|
|
534 |
|
|
|
216 |
|
|
|
40.4 |
|
Service charges and fees |
|
|
54 |
|
|
|
41 |
|
|
|
13 |
|
|
|
31.7 |
|
Net interchange fees |
|
|
1,535 |
|
|
|
146 |
|
|
|
1,389 |
|
|
|
951.4 |
|
Other income |
|
|
452 |
|
|
|
282 |
|
|
|
170 |
|
|
|
60.3 |
|
Total Noninterest Income |
|
$ |
5,384 |
|
|
$ |
4,166 |
|
|
$ |
1,218 |
|
|
|
29.2 |
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
Gain on sale of loans |
|
$ |
5,130 |
|
|
$ |
5,246 |
|
|
$ |
(116 |
) |
|
|
(2.2 |
) |
Loan servicing income |
|
|
1,453 |
|
|
|
594 |
|
|
|
859 |
|
|
|
144.6 |
|
Service charges and fees |
|
|
111 |
|
|
|
82 |
|
|
|
29 |
|
|
|
35.4 |
|
Net interchange fees |
|
|
3,538 |
|
|
|
167 |
|
|
|
3,371 |
|
|
|
2,018.6 |
|
Other income |
|
|
615 |
|
|
|
482 |
|
|
|
133 |
|
|
|
27.6 |
|
Total Noninterest Income |
|
$ |
10,847 |
|
|
$ |
6,571 |
|
|
$ |
4,276 |
|
|
|
65.1 |
|
For the three months ended June 30, 2025, noninterest income totaled $5.4 million compared to noninterest income $4.2 million for the three months ended June 30, 2024. For the six months ended June 30, 2025, noninterest income totaled $10.8 million compared to noninterest income $6.6 million for the six months ended June 30, 2024.
Net interchange fees totaled $1.5 million for the three months ended June 30, 2025 compared to $146 thousand for the three months ended June 30, 2024. Net interchange fees totaled $3.5 million for the six months ended June 30, 2025, compared to $167 thousand for the same period in 2024. The increase in net interchange fees when comparing the three months and six months ended June 30, 2025 to the same periods in 2024 was attributable to transaction volume growth within GBank’s Visa Signature® Card product.
Loan servicing income increased $216 thousand from $534 thousand for the three months ended June 30, 2024 to $750 thousand for the three months ended June 30, 2025. Loan servicing income increased $859 thousand from $594 thousand for the six months ended June 30, 2025 to $1.5 million for the six months ended June 30, 2025. The increase in loan servicing income when comparing the three and six months ended June 30, 2025 to the same periods in 2024 was the result of both (i) higher average balances of loans serviced by GBank during 2025, and (ii) the first quarter of 2024 reflecting loan servicing asset writeoffs of $401 thousand due to the repurchase of the guaranteed portion of previously sold SBA loans.
Gain on sale of loans totaled $2.6 million for the second quarter of 2025 compared to $3.2 million for the second quarter of 2024. Gain on sale of loans totaled $5.1 million for the six months ended June 30, 2025 compared to $5.2 million for the same period in 2024. The decrease in gain on sale of loans for the three- and six-month periods ended June 30, 2025 was due to less favorable secondary market pricing during the six months ended June 30, 2025 compared to the same period of 2024.
32
Noninterest Expense
The following tables present the components of total noninterest expense.
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
Salaries and employee benefits |
|
$ |
6,235 |
|
|
$ |
5,752 |
|
|
$ |
483 |
|
|
|
8.4 |
|
Data processing |
|
|
1,333 |
|
|
|
706 |
|
|
|
627 |
|
|
|
88.8 |
|
Occupancy expense |
|
|
400 |
|
|
|
417 |
|
|
|
(17 |
) |
|
|
(4.1 |
) |
Legal and professional fees |
|
|
571 |
|
|
|
750 |
|
|
|
(179 |
) |
|
|
(23.9 |
) |
Loan related costs |
|
|
330 |
|
|
|
434 |
|
|
|
(104 |
) |
|
|
(24.0 |
) |
Audits and exams |
|
|
397 |
|
|
|
153 |
|
|
|
244 |
|
|
|
159.5 |
|
Advertising and marketing |
|
|
371 |
|
|
|
84 |
|
|
|
287 |
|
|
|
341.7 |
|
FDIC insurance |
|
|
129 |
|
|
|
108 |
|
|
|
21 |
|
|
|
19.4 |
|
Other |
|
|
630 |
|
|
|
728 |
|
|
|
(98 |
) |
|
|
(13.5 |
) |
Total Noninterest Expense |
|
$ |
10,396 |
|
|
$ |
9,132 |
|
|
$ |
1,264 |
|
|
|
13.8 |
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||
(Dollars in thousands) |
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
% Change |
|
||||
Salaries and employee benefits |
|
$ |
12,635 |
|
|
$ |
11,042 |
|
|
$ |
1,593 |
|
|
|
14.4 |
|
Data processing |
|
|
2,738 |
|
|
|
1,540 |
|
|
|
1,198 |
|
|
|
77.8 |
|
Occupancy expense |
|
|
792 |
|
|
|
865 |
|
|
|
(73 |
) |
|
|
(8.4 |
) |
Legal and professional fees |
|
|
1,271 |
|
|
|
1,147 |
|
|
|
124 |
|
|
|
10.8 |
|
Loan related costs |
|
|
714 |
|
|
|
836 |
|
|
|
(122 |
) |
|
|
(14.6 |
) |
Audits and exams |
|
|
894 |
|
|
|
238 |
|
|
|
656 |
|
|
|
275.6 |
|
Advertising and marketing |
|
|
735 |
|
|
|
213 |
|
|
|
522 |
|
|
|
245.1 |
|
FDIC insurance |
|
|
251 |
|
|
|
226 |
|
|
|
25 |
|
|
|
11.1 |
|
Other |
|
|
1,273 |
|
|
|
1,401 |
|
|
|
(128 |
) |
|
|
(9.1 |
) |
Total Noninterest Expense |
|
$ |
21,303 |
|
|
$ |
17,508 |
|
|
$ |
3,795 |
|
|
|
21.7 |
|
For the three months ended June 30, 2025, noninterest expense increased 14% to $10.4 million, compared to $9.1 million for the three months ended June 30, 2024. For the six months ended June 30, 2025, noninterest expense increased 22% to $21.3 million, compared to $17.5 million for the six months ended June 30, 2024.
Salaries and employee benefits expense totaled $6.2 million for the three months ended June 30, 2025, an increase of $483 thousand or 8% when compared to $5.7 million for the second quarter of 2024. Salaries and benefits expense totaled $12.6 million for the six months ended June 30, 2025, an increase of $1.6 million or 14% when compared to $11.0 million for the six months ended June 30, 2024. These increases are attributable to both (i) increases in employee salaries and benefits expenses resulting from an increase in full-time equivalent employees from 155 at June 30, 2024 to 188 at June 30, 2025, and (ii) higher stock-based compensation expense due to increases in grant date fair value of recent stock awards.
Data processing expense increased $627 thousand, or 89%, from $706 thousand for the three months ended June 30, 2024 to $1.3 million for the three months ended June 30, 2025. Data processing expense increased $1.2 million, or 78%, from $1.5 million for the six months ended June 30, 2024 to $2.7 million for the six months ended June 30, 2025. The year over year increases were due to both (i) higher costs from transactional-based charges given the volume increases in loans and deposits over the last twelve months, and (ii) investments to enhance data management and security capabilities responsive to both the larger company profile and the increasing complexity of information technology management.
Audits and exams expense totaled $397 thousand for the three months ended June 30, 2025, an increase of $244 thousand when compared to $153 thousand for the second quarter of 2024. Audits and exams expense totaled $894 thousand for the six months ended June 30, 2025, an increase of $656 thousand when compared to $238 thousand during the same period of 2024. The increases in audits and exams expense reflects certain non-recurring professional, legal and audit fees associated with the preparation of filings made with the U.S. Securities and Exchange Commission for the registration of its shares of common stock and listing on the Nasdaq Capital Market, which totaled $290 thousand and $1.0 million for the three and six months ended June 30, 2025, respectively.
33
Advertising and marketing expense increased $287 thousand to $371 thousand during the second quarter of 2025, compared to $84 thousand during the second quarter of 2025. Advertising and marketing expense increased $522 thousand to $735 thousand during the six months ended June 30, 2025, compared to $213 thousand during the same period in 2024. The increase in advertising and marketing expense was largely attributable to advertising, marketing, and referral campaigns associated with the credit card program.
Income Taxes
Income tax expense was $1.5 million for the three months ended June 30, 2025, an increase of 5% or $75 thousand compared to $1.4 million for the three months ended June 30, 2024. Income tax expense was $2.7 million for the six months ended June 30, 2025, an increase of 7% or $187 thousand compared to $2.5 million for the six months ended June 30, 2024. The increase in income tax expense during the three and six months ended June 30, 2025 was primarily due to higher pre-tax earnings.
The effective tax rate for the three and six months ended June 30, 2025 was 23.6% and 22.6%, respectively compared to 23.2% and 23.1% for the three and six months ended June 30, 2024, respectively. The fluctuations in the effective tax rate are largely driven by the timing and volume of certain stock-based compensation transactions resulting in tax benefits to the Company, as well as the timing and volume of state tax adjustments.
Comparison of Financial Condition – June 30, 2025 and December 31, 2024
Total Assets
Total assets increased 10% to $1.23 billion at June 30, 2025 compared to $1.12 billion at December 31, 2024, primarily due to increases in net loans of $55.7 million as well as cash and equivalents of $19.1 million.
Cash and Cash Equivalents
Cash and cash equivalents increased 15% from $124.1 million at December 31, 2024 to $143.2 million at June 30, 2025 as cash inflows from deposit growth more than offset cash outflows to fund loan growth during the first six months of 2025.
Investments
The Company maintains an investment security portfolio to generate income through interest and potential sales, manage liquidity for funding needs, support interest rate risk management, and meet regulatory requirements for high-quality liquid assets.
The investment security portfolio is comprised of held to maturity securities recorded at amortized cost and available for sale securities recorded at fair value. Held to maturity securities decreased by $1.1 million to $39.5 million as of June 30, 2025, as compared to $40.6 million as of December 31, 2024. Available for sale securities increased $17.3 million from $65.6 million at December 31, 2024 to $82.9 million at June 30, 2025.
The following table presents the maturity composition and the weighted average yields of the investment portfolio as of June 30, 2025. Mortgage-backed security maturities are based on paydown trends in the most recent three-month period. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Weighted-average yield is calculated based on the amortized cost of each security.
|
|
Maturing |
|
|||||||||||||||||||||||||||||
(Dollars in thousands) |
|
One Year |
|
|
After One Year |
|
|
After Five Years |
|
|
After |
|
||||||||||||||||||||
|
|
or Less |
|
|
Through Five Years |
|
|
Through Ten Years |
|
|
Ten Years |
|
||||||||||||||||||||
|
|
|
|
|
Weighted |
|
|
|
|
|
Weighted |
|
|
|
|
|
Weighted |
|
|
|
|
|
Weighted |
|
||||||||
|
|
|
|
|
Average |
|
|
|
|
|
Average |
|
|
|
|
|
Average |
|
|
|
|
|
Average |
|
||||||||
As of June 30, 2025 |
|
Amount |
|
|
Yield |
|
|
Amount |
|
|
Yield |
|
|
Amount |
|
|
Yield |
|
|
Amount |
|
|
Yield |
|
||||||||
Available for sale securities, at fair value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential mortgage-backed securities |
|
$ |
3,737 |
|
|
|
1.78 |
% |
|
$ |
21,626 |
|
|
|
5.25 |
% |
|
$ |
45,574 |
|
|
|
4.42 |
% |
|
$ |
11,949 |
|
|
|
4.07 |
% |
Held to maturity securities, at amortized cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential mortgage-backed securities |
|
$ |
1,045 |
|
|
|
7.69 |
% |
|
$ |
2,377 |
|
|
|
5.14 |
% |
|
$ |
36,093 |
|
|
|
4.81 |
% |
|
$ |
- |
|
|
|
0.00 |
% |
Loans
Total loans, net of deferred loan costs and unamortized discounts, increased 7% to $871.6 million at June 30, 2025, compared to $816.0 million at December 31, 2024. Loan originations, including government guaranteed and non-guaranteed commercial loans, totaled $293.5 million during the first six months of 2025, compared to $263.6 million for the same period in 2024.
34
The following table presents the ending balance of loans outstanding, by type, as of the dates indicated.
|
|
June 30, 2025 |
|
|
December 31, 2024 |
||||||||||||||
(Dollars in thousands) |
|
|
|
|
Percent of |
|
|
|
|
|
Percent of |
||||||||
|
|
Balance |
|
|
Total Loans |
|
|
Balance |
|
|
Total Loans |
||||||||
Commercial and industrial |
|
$ |
59,021 |
|
|
|
6.8 |
|
% |
|
|
$ |
64,000 |
|
|
|
7.8 |
|
% |
Commercial real estate - non-owner occupied |
|
|
682,021 |
|
|
|
78.2 |
|
|
|
|
|
630,551 |
|
|
|
77.3 |
|
|
Commercial real estate - owner occupied |
|
|
96,526 |
|
|
|
11.1 |
|
|
|
|
|
88,802 |
|
|
|
10.9 |
|
|
Construction and land development |
|
|
4,371 |
|
|
|
0.5 |
|
|
|
|
|
2,934 |
|
|
|
0.4 |
|
|
Multifamily |
|
|
18,987 |
|
|
|
2.2 |
|
|
|
|
|
17,374 |
|
|
|
2.1 |
|
|
Single Family Sr. Lien |
|
|
3,023 |
|
|
|
0.3 |
|
|
|
|
|
5,992 |
|
|
|
0.7 |
|
|
Single Family Jr. Lien |
|
|
3,369 |
|
|
|
0.4 |
|
|
|
|
|
3,203 |
|
|
|
0.4 |
|
|
Single Family HELOC |
|
|
418 |
|
|
|
0.0 |
|
|
|
|
|
1,389 |
|
|
|
0.2 |
|
|
Consumer |
|
|
3,894 |
|
|
|
0.5 |
|
|
|
|
|
1,713 |
|
|
|
0.2 |
|
|
Loans, net |
|
|
871,630 |
|
|
|
100.0 |
|
% |
|
|
|
815,958 |
|
|
|
100.0 |
|
% |
Allowance for credit losses |
|
|
(9,205 |
) |
|
|
|
|
|
|
|
(9,114 |
) |
|
|
|
|
||
Loans, net of allowance |
|
$ |
862,425 |
|
|
|
|
|
|
|
$ |
806,844 |
|
|
|
|
|
||
Beginning in the third quarter of 2023, and continuing into the first quarter 2024, the Company repurchased previously sold guaranteed SBA loans by initiating a change in loan terms with certain borrowers, at the borrowers’ option, to convert variable loans to five-year fixed rate loans at lower current interest rates. The repurchase program was initiated in response to a rapid rise in the Wall Street Journal Prime Rate which has the potential to significantly impact our borrowers, the majority of whom are in variable rate loans. The Prime Rate increased from 3.25% to 8.50% between March 2022 and July 2023, an increase of 525 basis points. The Company received requests from borrowers due to the higher payments affecting borrowers’ cash flow and operations. Given the predicted economic outlook and anticipated interest rate reductions likely being delayed until late 2024, the Company decided to evaluate converting the variable rate structure to a fixed-rate based on a current credit evaluation. In response, GBank reached out to request annual tax returns and updated financial information from borrowers. The Company began to repurchase previously sold guaranteed SBA loans by initiating a change in loan terms with certain borrowers, at the borrowers’ option, to convert variable loans to five-year fixed rate loans at the current market terms.
The process for evaluating, approving, and submitting repurchase packages to the SBA was consistent with SOP 50 57 (3) and Section 7.6 of the Secondary Participation Guaranty Agreement. Updated financials from each borrower were reviewed to assess the viability of the business before preparing an interest rate modification document. Once the interest rate modification was approved internally, GBank sought approval for modifications, and submitted requests to the SBA to repurchase these SBA loans. According to the SOP, SBA shall review the repurchase request package, and based on the financial and other information provided determine whether an emergency repurchase of the SBA loan is appropriate for that specific borrower. This activity resulted in the repurchase of $106.1 million of United States government guaranteed loan balances within the commercial and industrial and commercial real estate segments during the year ended December 31, 2023. This program continued through the end of the first quarter of 2024, during which $44.2 million of the guaranteed portion of previously sold loans were repurchased. The balance of guaranteed loans at June 30, 2025 was $237.6 million, representing 22.1% of loans. Comparatively, at December 31, 2024, the Company had $233.9 million of guaranteed loan balances representing 24.7% of loans. Given the stabilization of the interest rate environment the Company is not anticipating any material repurchases in the foreseeable future.
Net deferred loan costs totaled $9.5 million at June 30, 2025 and $8.2 million at December 31, 2024. Net deferred loan costs represent the costs incurred to originate loans, net of fees paid by the borrower, which are measured and recorded at the date the loan is originated. Unamortized discount totaled $9.6 million at June 30, 2025 and $8.9 million at December 31, 2024. The unamortized discount relates to the retained portion of government guaranteed loans and is based on the relative fair value of the retained loan as calculated by an independent consulting firm. Loan costs and discount are amortized over the life of the loan and are recorded as an adjustment to interest income on the loan.
Loans held for sale totaled $45.2 million at June 30, 2025 and consisted of commercial real estate – non-owner occupied, commercial real estate – owner occupied, and commercial and industrial loans. Loans held for sale totaled $32.6 million at December 31, 2024 and consisted of commercial real estate – non-owner occupied, commercial real estate – owner occupied, and commercial and industrial loans. The balance of unguaranteed portions to be retained are reported as held for investment.
35
The following table sets forth the dispersion of loan principal balances with amounts and the percentage of the total balances in the states with five percent of total loans as of June 30, 2025:
(Dollars in thousands) |
|
June 30, 2025 |
|
|||||
|
|
Amounts |
|
|
Percentage |
|
||
Nevada |
|
$ |
193,090 |
|
|
|
22.15 |
% |
North Carolina |
|
|
146,357 |
|
|
|
16.79 |
% |
Ohio |
|
|
61,829 |
|
|
|
7.09 |
% |
Illinois |
|
|
54,372 |
|
|
|
6.24 |
% |
Indiana |
|
|
47,446 |
|
|
|
5.44 |
% |
Other |
|
|
368,536 |
|
|
|
42.28 |
% |
|
|
$ |
871,630 |
|
|
|
100.00 |
% |
Credit Quality, Credit Risk, and Allowance for Credit Losses
In accordance with CECL guidance, the Company has grouped its loan portfolio into segments with similar risk characteristics based on factors such as loan type, credit risk profile, borrower characteristics, and other relevant attributes that influence the risk of default. By dividing loans into these segments, the Company can apply more tailored loss estimation techniques that reflect the specific credit risks associated with each segment.
Evaluations of the Company’s loan portfolio, its segments, and individual credits are inherently subjective and require significant judgments dependent on the circumstances at the time of the evaluation. As such, current period results are not an indication of future performance, and future evaluations may result in substantial changes to the allowance for credit losses and related provision expense as a result of changing economic conditions, asset quality, or loan portfolio composition in future periods.
For more information on the Company’s allowance for credit losses methodology, including the quantitative and qualitative factors used in the calculation, please see "Note 3 – Loans and Allowance for Credit Losses – Loans" within Notes to Consolidated Financial Statements.
The following table presents the allowance for credit loss as a percentage of total loans as of the dates indicated:
(In Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of June 30, 2025 |
|
Total ACL - Loans |
|
|
Total Loans |
|
|
% of Total Loans Outstanding |
|
|
|
Allowance as a % |
|
|
||||
Commercial and industrial |
|
$ |
365 |
|
|
$ |
59,021 |
|
|
|
6.8 |
|
% |
|
|
0.6 |
|
% |
Commercial real estate - non-owner occupied |
|
|
7,701 |
|
|
|
682,021 |
|
|
|
78.2 |
|
|
|
|
1.1 |
|
|
Commercial real estate - owner occupied |
|
|
678 |
|
|
|
96,526 |
|
|
|
11.1 |
|
|
|
|
0.7 |
|
|
Construction and land development |
|
|
100 |
|
|
|
4,371 |
|
|
|
0.5 |
|
|
|
|
2.3 |
|
|
Multifamily |
|
|
60 |
|
|
|
18,987 |
|
|
|
2.2 |
|
|
|
|
0.3 |
|
|
Single Family Sr Lien |
|
|
4 |
|
|
|
3,023 |
|
|
|
0.3 |
|
|
|
|
0.1 |
|
|
Single Family Jr Lien |
|
|
7 |
|
|
|
3,369 |
|
|
|
0.4 |
|
|
|
|
0.2 |
|
|
Single Family HELOC |
|
|
4 |
|
|
|
418 |
|
|
|
0.0 |
|
|
|
|
1.0 |
|
|
Consumer |
|
|
286 |
|
|
|
3,894 |
|
|
|
0.5 |
|
|
|
|
7.3 |
|
|
Total |
|
$ |
9,205 |
|
|
$ |
871,630 |
|
|
|
100.0 |
|
% |
|
|
1.1 |
|
% |
(In Thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of December 31, 2024 |
|
Total ACL - Loans |
|
|
Total Loans |
|
|
% of Total Loans Outstanding |
|
|
|
Allowance as a % |
|
|
||||
Commercial and industrial |
|
$ |
496 |
|
|
$ |
64,000 |
|
|
|
7.8 |
|
% |
|
|
0.8 |
|
% |
Commercial real estate - non-owner occupied |
|
|
7,837 |
|
|
|
630,551 |
|
|
|
77.3 |
|
|
|
|
1.2 |
|
|
Commercial real estate - owner occupied |
|
|
537 |
|
|
|
88,802 |
|
|
|
10.9 |
|
|
|
|
0.6 |
|
|
Construction and land development |
|
|
49 |
|
|
|
2,934 |
|
|
|
0.4 |
|
|
|
|
1.7 |
|
|
Multifamily |
|
|
39 |
|
|
|
17,374 |
|
|
|
2.1 |
|
|
|
|
0.2 |
|
|
Single Family Sr Lien |
|
|
33 |
|
|
|
5,992 |
|
|
|
0.7 |
|
|
|
|
0.6 |
|
|
Single Family Jr Lien |
|
|
14 |
|
|
|
3,203 |
|
|
|
0.4 |
|
|
|
|
0.4 |
|
|
Single Family HELOC |
|
|
11 |
|
|
|
1,389 |
|
|
|
0.2 |
|
|
|
|
0.8 |
|
|
Consumer |
|
|
98 |
|
|
|
1,713 |
|
|
|
0.2 |
|
|
|
|
5.7 |
|
|
Total |
|
$ |
9,114 |
|
|
$ |
815,958 |
|
|
|
100.0 |
|
% |
|
|
1.1 |
|
% |
36
The allowance for credit losses increased from $9.1 million at December 31, 2024 to $9.2 million at June 30, 2025. The allowance as a percentage of loan balances decreased from 1.12% at December 31, 2024 to 1.06% at June 30, 2025. The Company continues to closely monitor credit quality in light of the ongoing economic uncertainty caused by, among other factors, the prolonged elevated interest rate environment, stronger than expected employment data in recent periods, continued uncertainty regarding U.S. trade and tariff policy and the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the United States and our market areas. Accordingly, additional provisions for credit losses may be necessary in future periods.
The following table presents non-performing assets and related ratios as of the periods presented.
(Dollars in thousands) |
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Non-performing assets: |
|
|
|
|
|
|
||
Total nonaccrual loans |
|
$ |
18,227 |
|
|
$ |
14,128 |
|
Loans 90 days past due and accruing |
|
|
146 |
|
|
|
40 |
|
Total non-performing loans |
|
|
18,373 |
|
|
|
14,168 |
|
Other real estate owned |
|
|
- |
|
|
|
- |
|
Total non-performing assets |
|
$ |
18,373 |
|
|
$ |
14,168 |
|
|
|
|
|
|
|
|
||
Non-performing loans to net loans |
|
|
2.11 |
% |
|
|
1.74 |
% |
Nonaccrual loans to net loans |
|
|
2.09 |
% |
|
|
1.73 |
% |
ACL to nonaccrual loans |
|
|
50.50 |
% |
|
|
64.51 |
% |
ACL to gross loans |
|
|
1.06 |
% |
|
|
1.12 |
% |
The Company had $18.4 million of non-performing loans as of June 30, 2025, compared to $14.2 million of non-performing loans as of December 31, 2024. As of June 30, 2025, the balance of non-performing loans was comprised of certain commercial real estate – non-owner occupied, commercial real estate – owner occupied, commercial and industrial loans, and consumer loans, of which $13.8 million is guaranteed by the SBA. Included in the balance of non-performing assets as of June 30, 2025 are $6.8 million of individually evaluated loans with specific credit loss reserves of $784 thousand assigned. As of December 31, 2024, the balance of non-performing loans was comprised of certain commercial real estate – non-owner occupied, commercial real estate – owner occupied, commercial and industrial loans, and consumer loans totaling $14.2 million, of which $9.3 million is guaranteed by the SBA. Included in the balance of non-performing assets as of December 31, 2024 are $12.5 million of individually evaluated loans with specific credit loss reserves of $1.4 million assigned.
The Company had no other real estate owned as of June 30, 2025 or December 31, 2024.
Operating Lease Right of Use Asset
The operating lease right of use asset increased $1.2 million from $4.5 million at December 31, 2024 to $5.7 million at June 30, 2025, due to the modification of two leased locations during the first quarter of 2025 resulting in a five year extensions of the lease terms.
Loan Servicing Assets
Loan servicing assets increased $760 thousand from $9.0 million at December 31, 2024 to $9.7 million at June 30, 2025, primarily due the addition of servicing rights of $3.4 million relating to loans sold during the six months ended June 30, 2025. This increase was partially offset by loan servicing asset amortization of $2.6 million during the quarter.
Federal Home Loan Bank Stock, At Cost
FHLB stock increased $861 thousand from $4.7 million at December 31, 2024 to $5.5 million at June 30, 2025. As a member of the FHLB, GBank is required to hold capital stock with this balance dependent upon GBank’s borrowing capacity with the FHLB.
Other Assets
Other assets totaled $22.9 million at June 30, 2025, an increase of $3.6 million, or 18%, when compared to $19.4 million at December 31, 2024, with this increase largely attributable to growth of the organization driving increases in other miscellaneous receivables.
37
Total Liabilities
The Company’s total liabilities increased $99.0 million, or 10%, to $1.08 billion at June 30, 2025 compared to $981.7 million at December 31, 2024. The increase in total liabilities was primarily attributable to an increase in total deposits of $97.4 million with the largest increases within time deposits and savings accounts.
Deposits and Other Funding Sources
Total deposits increased 10% to $1.03 billion at June 30, 2025, compared to $935.1 million at December 31, 2024. The year-to-date decreases in non-interest bearing and interest bearing demand deposits were offset by increases in time deposits and savings deposits. Contributing to the increase in time deposits was a net increase of $8.0 million of brokered deposits since December 31, 2024.
The following table presents the average balances of deposits by type and the related average interest rates for the three months ended June 30, 2025 and 2024:
|
|
June 30, 2025 |
|
June 30, 2024 |
||||||||||||||
(Dollars in thousands) |
|
Balance |
|
|
Rate |
|
Balance |
|
|
Rate |
||||||||
Noninterest-bearing Deposits |
|
$ |
223,201 |
|
|
|
- |
|
% |
|
$ |
220,842 |
|
|
|
- |
|
% |
Interest-bearing Demand |
|
|
60,320 |
|
|
|
2.10 |
|
|
|
|
67,038 |
|
|
|
2.37 |
|
|
Money Market and Savings |
|
|
303,814 |
|
|
|
3.87 |
|
|
|
|
217,081 |
|
|
|
3.96 |
|
|
Certificates of Deposit |
|
|
413,940 |
|
|
|
4.52 |
|
|
|
|
330,271 |
|
|
|
5.26 |
|
|
|
|
$ |
1,001,275 |
|
|
|
0.79 |
|
% |
|
$ |
835,232 |
|
|
|
0.82 |
|
% |
Federal Deposit Insurance Corporation (“FDIC”) deposit insurance covers $250 thousand per depositor, per FDIC-insured bank, for each account ownership category. As of June 30, 2025, uninsured deposits were approximately $402.3 million, or 38.9% of total deposits, compared to $385.7 million, or 41.2% of total deposits, as of December 31, 2024.
As of June 30, 2025 the maturities of time deposits having balances over $250 thousand were as follows:
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
2025 |
|
$ |
29,410 |
|
2026 |
|
|
15,668 |
|
2027 |
|
|
- |
|
2028 |
|
|
- |
|
2029 |
|
|
3,144 |
|
Maturing thereafter |
|
|
250 |
|
|
|
$ |
48,472 |
|
Short-term Borrowings and Subordinated Debt
The Company had no short-term borrowings as of June 30, 2025 or December 31, 2024.
Subordinated debt totaled $26.1 million as of both June 30, 2025 and December 31, 2024. See "Note 7 - Subordinated Debt, Other Borrowings, and Available Lines of Credit", within Notes to Consolidated Financial Statements.
Operating Lease Liability
Operating lease liability increased $1.3 million, from $4.8 million at December 31, 2024 to $6.1 million at June 30, 2025 reflecting the modification of two leased locations during the first quarter of 2025 resulting in five year extensions of the lease terms.
Other Liabilities
Other liabilities totaled $16.0 million at June 30, 2025, an increase of $307 thousand, or 2%, when compared to $15.7 million at December 31, 2024. This decrease was driven by a reduction in accrued interest payable due to an overall decline in the cost of interest-bearing deposits during the first six months of 2025.
38
Stockholders’ Equity and Capital
Stockholders' equity increased 8% to $151.7 million at June 30, 2025 compared to $140.7 million at December 31, 2024 with this increase driven primarily by the net income generated during the six months of 2025.
The sufficiency of a bank's capital to cover its risk exposures and absorb potential losses, and thus ensuring stability and solvency, is a key element of capital adequacy. Regulatory frameworks set minimum capital requirements that are typically expressed as a percentage of the bank's risk-weighted assets and include common equity tier 1, tier 1, and total capital ratios. These minimum capital requirements have been established so that banks maintain a buffer of capital to protect against financial shocks, sustain operations during economic downturns, and safeguard depositors and the financial system as a whole.
On September 17, 2019, the federal banking agencies jointly finalized a rule that became effective July 1, 2020 and was intended to provide for an optional, simplified measure of capital adequacy, the community bank leverage ratio (“CBLR”) framework, for qualifying community banking organizations, consistent with Section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. The final rule was effective on January 1, 2020 and allows qualifying community banking organizations to calculate a leverage ratio to measure capital adequacy beginning with their March 31, 2020 Call Reports. . The Company opted into the CBLR framework with its Call Report filed with the federal banking agencies for the quarter ended September 30, 2020.
Under the final rule, if a qualifying community banking organization opts into the CBLR framework and meets all requirements under the framework, it will be considered to have met the well-capitalized ratio requirements under the “prompt corrective action” regulations described above and will not be required to report or calculate risk-based capital.
The main components and requirements of the community bank leverage ratio framework are as follows:
As of June 30, 2025 and December 31, 2024, the Company and GBank were in compliance with the CBLR requirements.
The table below presents a summary of the main components and requirements of the CBLR as of the dates indicated:
(Dollars in thousands) |
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
Bank Tier 1 Capital Leverage Ratio |
|
|
13.82 |
% |
|
|
12.90 |
% |
Average Total Consolidated Assets |
|
$ |
1,198,069 |
|
|
$ |
1,076,785 |
|
Off-Balance-Sheet Exposures |
|
$ |
45,517 |
|
|
$ |
38,762 |
|
Ratio of Off-Balance-Sheet Exposures to Total Assets |
|
|
3.71 |
% |
|
|
3.47 |
% |
Trading Assets |
|
None |
|
|
None |
|
||
Advances Approaching Banking Organization |
|
No |
|
|
No |
|
||
The Company's common equity to assets ratio was 12.3% as of June 30, 2025, compared to 12.5% as of December 31, 2024. The Company's book value per share was $10.63 as of June 30, 2025, an increase of 8% from $9.87 as of December 31, 2024.
39
Liquidity
Liquidity management encompasses the Company’s ability to meet its funding obligations at a reasonable cost. Maintaining an adequate level of liquidity depends on the Company’s ability to efficiently meet both expected and unexpected funding events without adversely affecting the daily operations or the financial condition of the Company.
The Company’s primary sources of funding are deposits, proceeds from the sale or maturity of investment securities, payments received on loans and mortgage-backed securities, loan sales, and borrowing capacity available from various correspondent banks.
A summary of the Company's on-balance-sheet primary liquidity sources is presented in the table below as of the dates indicated:
(Dollars in thousands) |
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
|
|
|
|
|
|
|
||
Cash and due from banks |
|
$ |
11,877 |
|
|
$ |
9,262 |
|
Interest-bearing deposits with other financial institutions |
|
|
131,352 |
|
|
|
114,860 |
|
Investment securities, available for sale |
|
|
82,886 |
|
|
|
65,609 |
|
Loans held for sale |
|
|
45,242 |
|
|
|
32,649 |
|
Total primary liquidity sources |
|
$ |
271,357 |
|
|
$ |
222,380 |
|
The Company has a line of credit available from the FHLB. The unused borrowing capacity with the FHLB, as collateralized by qualifying securities and pledged loans, was approximately $100.1 million and $85.0 million, at June 30, 2025 and December 31, 2024, respectively. No draws have been made on the line and no balances were outstanding as of June 30, 2025 and December 31, 2024.
GBank participates in the Federal Reserve Bank of San Francisco’s BIC Program and, as of June 30, 2025 and December 31, 2024, the Company had pledged loans and investment securities with an approximate carrying value of $645.8 million and $590.5 million, respectively, to the BIC Program. Unused borrowing capacity at the Federal Reserve Bank of San Francisco totaled $380.1 million and $362.6 million as of June 30, 2025 and December 31, 2024, respectively.
The Company also has unsecured lines of credit with other correspondent banks totaling $40.0 million at June 30, 2025. No draws have been made on these lines of credit and no balances were outstanding as of June 30, 2025 and December 31, 2024.
The Company’s Consolidated Statement of Cash Flows presents additional information regarding the sources and uses of cash for the six months ended June 30, 2025. Operating activities resulted in a net decrease in cash of $4.8 million, as cash inflows from loan sales were more than offset cash outflows for the origination of loans held for sale. Investing activities resulted in a net decrease in cash of $74.0 million primarily due to loans originated and held for investment, as well as purchases of available for sale securities. Financing activities resulted in a net increase to cash of $98.0 million, primarily due to a net increase in deposits during the six months ended June 30, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), we are not required to provide the information called for by this Item 3.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of its management, including its Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply judgment in evaluating its controls and procedures. Based on this evaluation, the Company’s Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) were effective as of the end of the period covered by this Form 10-Q.
Changes in Internal Controls
There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that occurred during the three months ended June 30, 2025 that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over financial reporting.
40
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
At June 30, 2025, the Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which involve amounts in the aggregate believed to be immaterial to the financial condition and operating results of the Company.
Item 1A. Risk Factors.
In evaluating an investment in any of our securities, investors should consider carefully, among other things, information under the heading “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-Q and the risk factors previously disclosed under the heading “Risk Factors” in our Registration Statement on Form S-1 filed with the SEC on March 12, 2025 pursuant to Rule 424(b) of the Securities Act, in connection with the registration of our common stock. There have been no material changes in the risk factors disclosed by the Company in its Registration Statement on Form S-1.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the quarter ended June 30, 2025, no director or officer of the Company
41
Item 6. Exhibits.
Exhibit Number |
|
Description |
3.1 |
|
Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed with the SEC on March 12, 2025) (File No. 333-285750). |
3.2.1 |
|
Bylaws (incorporated by reference to Exhibit 3.2.1 to the Company’s Registration Statement on Form S-1 filed with the SEC on March 12, 2025) (File No. 333-285750). |
3.2.2 |
|
First Amendment to Bylaws (incorporated by reference to Exhibit 3.2.2 to the Company’s Registration Statement on Form S-1 filed with the SEC on March 12, 2025) (File No. 333-285750). |
3.2.3 |
|
Second Amendment to Bylaws (incorporated by reference to Exhibit 3.2.3 to the Company’s Registration Statement on Form S-1 filed with the SEC on March 12, 2025) (File No. 333-285750). |
31.1* |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32† |
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed with this Quarterly Report on Form 10-Q.
†The certifications attached as Exhibit 32 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
42
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
GBank Financial Holdings Inc. |
|
|
|
|
|
Date: August 12, 2025 |
|
By: |
/s/ Edward M. Nigro |
|
|
|
Edward M. Nigro |
|
|
|
Executive Chairman |
|
|
|
|
Date: August 12, 2025 |
|
By: |
/s/ Jeffery E. Whicker |
|
|
|
Jeffery E. Whicker |
|
|
|
Chief Financial Officer and Treasurer |
43
FAQ
What was GBFH's net income for the quarter and six months ended June 30, 2025?
What were GBFH's total assets and deposits at June 30, 2025?
How did net interest income and provisions change year-over-year for Q2 2025?
What is GBFH's allowance for credit losses and recent charge-offs?
What percentage of GBFH's loan portfolio is commercial real estate?
Is GBFH well capitalized under regulatory guidance?
