UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-42621
GBANK FINANCIAL HOLDINGS INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada
82-3869786
( State or other jurisdiction of
incorporation or organization)
(I.R.S. EmployerIdentification No.)
9115 W. Russell Rd., Ste. 110
Las Vegas, Nevada
89148
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (702) 851-4200
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, $0.0001 par value
GBFH
The Nasdaq Stock Market LLC
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. Yes ☒ No ☐
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). Yes ☒ No ☐
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.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
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 7, 2026 the registrant had 14,516,457 shares of common stock, $0.0001 par value per share, outstanding.
Table of Contents
Page
PART I.
FINANCIAL INFORMATION
1
Item 1.
Financial Statements
Consolidated Balance Sheets (Unaudited)
Consolidated Statements of Income (Unaudited)
2
Consolidated Statements of Comprehensive Income (Unaudited)
3
Consolidated Statements of Stockholders’ Equity (Unaudited)
4
Consolidated Statements of Cash Flows (Unaudited)
5
Notes to Consolidated Financial Statements (Unaudited)
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
28
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
44
Item 4.
Controls and Procedures
PART II.
OTHER INFORMATION
45
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
46
Signatures
47
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q for the three and six months ended June 30, 2026 (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 Annual Report on Form 10-K, filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on March 27, 2026 and in this Form 10-Q. In addition, these factors include but are not limited to:
i
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.
ii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
GBank Financial Holdings Inc. and Subsidiary
(Dollars in thousands, except per share data)
ASSETS
June 30, 2026
December 31, 2025
Cash and due from banks
$
6,726
5,326
Interest-bearing deposits with other financial institutions
134,603
192,538
Total cash and cash equivalents
141,329
197,864
Investment securities:
Available for sale, at fair value (amortized cost of $117,538 at June 30, 2026 and $71,061 at December 31, 2025)
115,018
71,038
Loans held for sale
50,848
46,009
Loans, net of deferred fees and costs
1,047,352
959,269
Less: Allowance for credit losses
(12,418
)
(9,890
Loans, net
1,034,934
949,379
Premises and equipment, net
1,346
1,094
Operating lease right-of-use asset
4,857
5,297
Bank-owned life insurance
30,614
30,004
Loan servicing assets, net
12,270
11,140
Federal Home Loan Bank stock, at cost
5,797
5,513
Other real estate owned
5,663
4,401
Other assets
29,026
37,752
Total Assets
1,431,702
1,359,491
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand
233,444
214,127
Interest-bearing demand
65,995
70,966
Savings
353,065
289,038
Time
553,227
568,564
Total deposits
1,205,731
1,142,695
Short-term borrowings
-
371
Subordinated debt
30,328
26,163
Operating lease liability
5,382
5,757
Other liabilities
17,451
18,750
Total liabilities
1,258,892
1,193,736
Commitments and Contingencies (Note 10)
Stockholders' Equity:
Common stock, par value $0.0001; 80,000,000 shares authorized; 14,470,352 shares issued and outstanding at June 30, 2026 and 14,385,226 shares issued and outstanding at December 31, 2025
Additional paid-in capital
82,606
80,405
Retained earnings
92,143
85,366
Accumulated other comprehensive loss
(1,940
(17
Total Stockholders' Equity
172,810
165,755
Total Liabilities and Stockholders' Equity
See Notes to Consolidated Financial Statements (Unaudited).
Three Months Ended June 30,
Six Months Ended June 30,
INTEREST INCOME
2026
2025
Interest and fees on loans
20,093
17,659
39,051
34,495
Interest on deposits with other financial institutions
1,296
1,365
2,553
2,557
Taxable interest on investment securities
1,326
1,414
2,428
2,695
Other interest bearing balances
14
117
291
217
Total interest income
22,729
20,555
44,323
39,964
INTEREST EXPENSE
Interest on deposits
9,509
7,905
18,402
15,135
Interest on subordinated debt
419
262
929
547
Total interest expense
9,928
8,167
19,331
15,682
Net interest income
12,801
12,388
24,992
24,282
PROVISION FOR CREDIT LOSSES
2,844
1,092
5,137
1,813
Net interest income after provision for credit losses
9,957
11,296
19,855
22,469
NONINTEREST INCOME
Gain on sale of loans
5,544
2,593
9,334
5,130
Loan servicing income
1,248
750
2,246
1,453
Service charges and fees
86
54
144
111
Net interchange fees
1,823
1,535
4,014
3,538
Other income
448
452
865
615
Total noninterest income
9,149
5,384
16,603
10,847
NONINTEREST EXPENSE
Salaries and employee benefits
6,808
6,235
13,558
12,635
Data processing
1,530
1,333
3,419
2,738
Occupancy expense
399
400
809
792
Legal and professional fees
631
571
1,002
1,271
Loan related costs
953
330
1,412
714
Audits and exams
492
397
690
894
Advertising and marketing
1,227
735
FDIC insurance
155
129
312
251
Credit card fraud loss
51
4,265
Other
582
630
1,180
1,273
Total noninterest expense
11,998
10,396
27,874
21,303
INCOME BEFORE PROVISION FOR INCOME TAXES
7,108
6,284
8,584
12,013
Provision for income taxes
1,625
1,486
1,764
2,710
NET INCOME BEFORE EQUITY INVESTMENT LOSS
5,483
4,798
6,820
9,303
Net loss attributable to equity investment
(21
(43
(78
NET INCOME
5,462
4,755
6,777
9,225
PER COMMON SHARE DATA
Basic earnings per common share
0.38
0.33
0.47
0.65
Diluted earnings per common share
0.63
Weighted-average basic shares outstanding
14,470,352
14,273,433
14,442,745
14,264,794
Weighted-average diluted shares outstanding
14,543,745
14,551,123
14,510,939
14,535,891
(Dollars in thousands)
Net income
Other comprehensive (loss) income, before tax:
Unrealized (losses) gains on securities available for sale
(1,145
(255
(2,497
135
Income tax benefit (expense) related to unrealized
(losses) gains on securities available for sale
263
59
574
(31
Total other comprehensive (loss) income, net of tax
(881
(196
(1,923
104
Comprehensive income
4,581
4,559
4,854
9,329
Accumulated
Additional
Common Stock
Paid-In
Retained
Comprehensive
Shares
Amount
Capital
Earnings
Income (Loss)
Total
Balance, December 31, 2024
14,252,435
77,571
64,437
(1,309
140,700
4,470
Other comprehensive income, net of tax
300
Exercise of stock options
16,000
24
Director Compensation Plan
2,477
91
Other stock-based compensation
483
Stock option loan activity
548
Balance, March 31, 2025
14,270,912
78,717
68,907
(1,009
146,616
Other comprehensive loss, net of tax
2,607
84
490
Balance, June 30, 2025
14,273,519
79,291
73,662
(1,205
151,749
Balance, December 31, 2025
14,385,226
1,315
(1,042
82,766
930
2,360
75
589
Balance, March 31, 2026
81,999
86,681
(1,059
167,622
85
522
Balance, June 30, 2026
Six Months Ended
June 30, 2025
Cash flows from operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Provision for credit losses
Depreciation
132
116
Amortization and writeoff of loan servicing assets
3,037
2,640
Amortization of operating lease right of use assets
440
436
Amortization of subordinated debt issuance costs
50
38
Investment securities amortization and accretion, net
(797
(368
Stock compensation expense
1,272
1,148
(9,334
(5,130
Gross originations of loans held for sale
(204,205
(171,804
Proceeds from sale of loans held for sale
203,627
160,941
Income from bank owned life insurance
(610
(210
Net change in deferred income taxes
(200
32
Decrease (increase) in other assets
9,501
(3,635
Net change in operating lease liability
(375
(372
Increase (decrease) in accrued interest payable and other liabilities
(1,300
307
Net cash provided by (used in) operating activities
17,417
(4,823
Cash flows from investing activities:
Purchases of premises and equipment
(385
(51
Purchase of securities available for sale
(51,929
(21,903
Maturities and repayments of investment securities available for sale
6,248
5,152
Maturities and repayments of investment securities held to maturity
1,031
Purchase of FHLB stock
(284
(861
Net change in loans
(95,312
(57,394
Net cash used in investing activities
(141,662
(74,026
Cash flows from financing activities:
Net increase in deposits
63,036
97,384
Net change in short-term borrowings
(371
Subordinated debt advances
10,509
Subordinated debt redemption
(6,394
Proceeds from repayment of stock option loans
Net proceeds from issuance of common stock
Net cash provided by financing activities
67,710
97,956
Net (decrease) increase in cash and cash equivalents
(56,535
19,107
Cash and cash equivalents beginning of period
124,122
Cash and cash equivalents end of period
143,229
Supplemental disclosures of cash flow information:
Cash payments for interest
18,999
15,796
Cash payments for income tax
256
1,543
Supplemental schedule of noncash investing and financing activities
Right of use asset and lease liabilities
1,654
Loans transferred to other real estate owned
1,262
3,400
Loans held for sale transferred to held for investment
10,256
Credit card fraud losses
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, 2026. The December 31, 2025 consolidated balance sheet information contained in this Quarterly Report on Form 10-Q was derived from the Company's 2025 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, 2025, including the notes thereto, included in the Company’s Annual Report on Form 10-K. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. 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 13 - 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
GBFH is a registered bank holding company whose wholly-owned banking subsidiary, GBank, provides banking services to commercial and consumer customers. GBank’s business is concentrated in the Las Vegas, Nevada area and is subject to the general economic conditions of that area. GBank’s primary market for deposit customers is in Las Vegas and Clark County, Nevada, although GBank accepts deposits from deposit listing services as needed to support its funding needs. GBank’s lending operations are carried out in both (i) its local market area, comprised of Nevada, California, Utah, and Arizona, and (ii) across the United States primarily through the origination, sale, and servicing of U.S. Small Business Administration (“SBA”) and U.S. Department of Agriculture (“USDA”) loans.
Accounting Policies
The significant accounting and reporting policies followed by the Company are in accordance with GAAP and are presented in the Company's Annual Report on Form 10-K filed with the SEC on March 27, 2026. The Company reports the following update to its significant accounting policies:
Credit Card Fraud Losses: Credit card fraud losses are recognized in the period in which fraudulent activity is identified and the related loss is considered probable and reasonably estimable. First-party credit card fraud losses (fraudulent transactions initiated by the cardholder) are recognized within the allowance for credit losses. The Company maintains reserves for estimated first-party credit card fraud losses based on recent transaction trends, portfolio risk characteristics, and current economic and fraud environment conditions. Third-party fraud losses (fraudulent transactions initiated by someone other than the cardholder) are recognized within noninterest expense.
Recent Accounting Pronouncements Adopted
No accounting pronouncements were adopted by the Company during the six months of 2026.
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.
ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (“ASU 2025-03”) was issued in May 2025 and amends guidance to improve consistency in identifying the accounting acquirer in transactions involving the acquisition of a variable interest entity that meets the definition of a business. The amendments are effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements and related 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:
Amortized
Unrealized
Allowance for
Fair
Cost
Gains
Losses
Credit Losses
Value
Available for sale securities:
Mortgage-backed U.S. government agencies
113,068
123
110,694
Other mortgage-backed securities
(146
4,324
117,538
(2,643
66,440
624
(646
66,418
4,621
(1
4,620
71,061
(647
Accrued interest receivable is excluded from the estimate of credit losses for available for sale securities. At June 30, 2026, accrued interest receivable totaled $285 thousand for available for sale securities, and was reported in other assets on the Company’s consolidated balance sheets. At December 31, 2025, accrued interest receivable totaled $189 thousand for available for sale securities, and was reported in accrued interest receivable on the Company’s consolidated balance sheets.
There were no gross realized gains or losses from the sale of available for sale securities during the three or six months ended June 30, 2026 or 2025.
The fair value of investment securities pledged as collateral for potential borrowing purposes (see Note 7) totaled $110.7 million at June 30, 2026 and $66.5 million at December 31, 2025.
7
The table below illustrates the maturity distribution of investment securities at amortized cost and fair value as of June 30, 2026:
Available for Sale
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
Mortgage-backed securities
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.
Less Than 12 Months
12 Months or More
Number of Securities
Gross Unrealized Losses
21
87,015
2,028
11
8,326
469
95,341
2,497
88
4,236
145
146
Available for sale securities with gross unrealized losses
22
87,103
2,029
12
12,562
614
34
99,665
2,643
20,493
130
9
13,157
437
16
33,650
567
0
4,515
80
17,672
517
38,165
647
Management believes the unrealized losses related to available for sale securities as of June 30, 2026 relate primarily to a continuation of the elevated market interest rate environment. The principal and interest payments on agency-guaranteed debt is backed by the U.S. government. Government-sponsored enterprises similarly guaranteed principal and interest payments and securities backed by government-sponsored enterprises carry an implicit guarantee from the U.S. Department of Treasury. In analyzing an issuer’s financial condition, Management considers whether downgrades by bond rating agencies have occurred and reviews various industry analysis reports. There were no Company securities downgraded during each of the three or six-month periods ended June 30, 2026 or 2025. 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, 2026 or December 31, 2025.
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, 2026 and December 31, 2025. The balance of unguaranteed held for sale loans to be retained are reported as held for investment. The principal balances of loans held for sale are listed below as of the dates indicated:
Gross loan balances
67,918
61,027
Less: Unguaranteed portions to be retained
17,070
15,018
Amounts held for sale, net
Loans Held for Investment
The amortized cost of loans held for investment are listed below. In accordance with ASC 326, GBank has segregated its held for investment loan portfolio into segments characterized by similar risk characteristics, primarily the collateral supporting the loan, as reflected in the table below as of the dates indicated.
Commercial and industrial
80,766
80,216
Commercial real estate - non-owner occupied
849,634
750,565
Commercial real estate - owner occupied
88,216
94,576
Construction and land development
2,254
2,288
Multifamily
18,836
18,950
Single Family Sr. Lien
720
726
Single Family Jr. Lien
190
131
Single Family HELOC
375
459
Consumer
6,361
11,358
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 $8.5 million and $7.5 million as of June 30, 2026 and December 31, 2025, respectively, and was reported in other assets on the Company’s consolidated balance sheets.
Deferred loan costs of $9.5 million and $10.0 million are included in the balance of net loans as of June 30, 2026 and December 31, 2025, respectively. Loan costs represent the costs incurred to originate the loans, net of fees paid by the borrower, which are measured and recorded at the date the loan is originated. Loan discount of $12.5 million and $10.9 million are included in the balance of net loans as of June 30, 2026 and December 31, 2025, respectively. The discount represents the discount on the retained portion of the government guaranteed loans and is measured at the date the guaranteed portion of the loan is sold, 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.
As of June 30, 2026 and December 31, 2025, Company loans with a carrying value of $652.2 million and $658.9 million, respectively, were pledged as collateral for potential borrowing purposes (see Note 7).
The portion of loans guaranteed by the U.S. government and held for investment totaled $175.0 million and $183.7 million as of June 30, 2026 and December 31, 2025, respectively, and are included in the commercial and industrial, commercial real estate - non-owner occupied, and commercial real estate - owner occupied loan segments.
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. The segments of the loan portfolio summarized by the past due status are summarized as follows as of the dates indicated:
Past Due 90
30-59 Days
60-89 Days
Days or More
Past Due and
Past Due
and Accruing
Nonaccrual
Current
4,713
76,053
4,625
38,996
43,621
806,013
7,939
80,277
7,265
11,571
158
154
868
5,181
12,048
51,648
64,718
982,634
344
372
716
79,500
1,008
3,622
30,789
35,419
715,146
3,148
980
4,128
90,448
908
813
854
2,575
8,783
5,408
4,435
32,141
42,838
916,431
There were no residential loans for which formal foreclosure proceedings were in place at June 30, 2026 or December 31, 2025.
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. No interest income was recognized on nonaccrual loans during the three or six months ended June 30, 2026 or 2025.
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, 2026 and December 31, 2025. Current period originations may include modifications, extensions and renewals. The Company had no loans rated doubtful or loss as of June 30, 2026 and December 31, 2025.
As of and for the six months ended June 30, 2026
Term Loans Amortized Cost Basis by Origination Year
Revolving Loans
2024
2023
2022
Prior
Amortized Cost Basis
Risk rating
Pass
5,129
32,565
8,169
4,971
3,855
1,609
19,177
75,475
Special mention
Substandard
722
1,740
2,462
221
5,145
33,287
9,909
7,579
4,076
Current period gross charge offs
118
Current period gross recoveries
120,186
170,159
173,654
136,628
69,931
135,388
805,946
1,024
1,671
1,442
764
6,219
8,033
25,559
42,017
171,601
174,418
142,847
78,611
161,971
1,014
29
1,043
3,859
29,016
2,126
7,372
11,692
24,017
78,082
1,381
1,770
6,983
10,134
3,507
9,142
31,000
1,865
389
Single family Sr. Lien
162
558
Single family Jr. Lien
Single family HELOC
1,469
Total Loans
129,174
233,605
183,949
148,971
85,867
180,012
26,661
988,239
1,817
2,164
3,885
10,451
8,254
32,542
57,296
235,769
187,834
159,568
94,768
213,578
As of December 31, 2025
2021
2020
34,205
9,660
6,291
4,682
391
1,677
22,137
79,043
311
801
34,577
9,971
6,781
124
241
527
18
169,580
169,501
147,399
76,061
52,361
95,284
710,186
650
238
3,323
3,951
12,489
9,297
11,319
37,056
170,265
151,350
89,200
61,896
108,274
649
741
620
2,010
29,330
3,076
9,416
12,672
18,435
17,540
90,469
3,127
486
494
3,562
13,037
138
174
1,898
390
164
562
10,504
384
235,013
182,237
163,106
93,805
71,187
133,615
33,793
912,756
1,075
3,617
7,251
4,445
39,262
235,385
183,798
171,168
106,944
80,722
146,605
34,647
Collateral Dependent Loans
A loan is considered to be collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. Collateral-dependent loans do not share risk characteristics with other loans and therefore are individually evaluated for purposes of calculating the allowance for credit losses. 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
Retail
Shopping
Business
Residential
Hotel / Motel
Center
Assets
Real Estate
3,337
1,376
470
6,772
697
8,148
27,200
3,589
27,694
3,961
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:
With a Related
Without a Related
Related
Allowance
3,991
1,138
15,808
23,188
1,287
7,241
698
1,099
14,034
16,755
1,161
26
13
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.
The following tables present, by portfolio segment, the changes in the allowance for credit losses for the three- and six-month periods indicated:
Balance,
April 1
Provision for
Amounts
June 30,
Charged Off
Recovered
1,132
466
(118
1,480
8,556
1,642
(1,043
9,157
(50
149
36
20
56
(2
252
771
(9
1,016
10,755
2,829
(1,170
12,418
January 1,
378
1,220
7,214
2,984
628
(54
(32
42
1,457
(1,469
9,890
(2,630
April 1,
343
365
7,806
728
(912
79
7,701
503
175
678
48
52
100
62
60
15
(11
205
119
(38
286
8,997
1,079
(950
9,205
496
(163
7,837
1,320
(1,535
537
141
49
39
33
(29
(7
98
267
(79
9,114
1,789
(1,777
The Company had gross loan charge offs of $1.2 million during the three months ended June 30, 2026 comprised of commercial and industrial and commercial real estate - non-owner occupied loans. Comparatively, the Company had gross loan chargeoffs of $950 thousand during the three months ended June 30, 2025 comprised of commercial real estate - non-owner occupied, and consumer loans. Gross loan charges offs for six months ended June 30, 2026 and 2025 were $2.6 million and $1.8 million, respectively comprised of commercial and industrial, commercial real estate - non-owner occupied, and consumer loans.
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, 2026
Combination:
Interest Rate
% of Total Class
Term
Reduction and
of Financing
Extension
Reduction
Term Extension
Receivable
0.0
%
Amortized Cost Basis at June 30, 2025
3,334
0.5
The financial effects of the term extensions in the table above added a weighted-average of 5.0 years to the life of the loans, which also reduced the monthly payment amounts for the borrowers.
The performance of these modified loans is monitored for twelve months following the modification. As of June 30, 2026 and 2025, all modified loans were on nonaccrual status and performing under their respective modified terms. The Company had no commitments to lend additional funds to borrowers experiencing financial difficulty whose loan terms were modified.
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 no sale and leaseback transactions or leveraged leases as of June 30, 2026 or December 31, 2025. There were no leases that had not commenced as of June 30, 2026.
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.
Right-of-use asset
Lease liability
Weighted average remaining lease term (in years)
5.7
6.1
Weighted average discount rate (annualized)
4.58
Three Months Ended
Rent expense
220
Cash paid for operating lease liabilities
530
520
At June 30, 2026, future minimum payments for operating leases are payable as follows:
Years ending December 31:
505
2027
1,037
2028
1,118
2029
1,129
2030
1,038
Thereafter
1,318
Total lease payments
6,145
Less: imputed interest
(763
Present value of lease liability
17
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 assets 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 fair value of the servicing asset is calculated for each loan using the following valuation variables:
·
Servicing fee: This is the amount of the fee charged to a third-party buyer to service the loan. It is generally one percent (1%) of the loan balance for SBA loans and two percent (2%) for USDA loans on a declining basis as the loan repays principal.
Prepayment assumption: This is an estimate of the repayment speed of the loan using a constant prepayment rate (“CPR”) based on pools of similar government guaranteed loans.
Servicing costs: The internal rates of return (IRR) are the pre-tax yield rates used to discount the expected future cash flow stream from servicing the government guaranteed loan portfolios.
Internal rate of return: The internal rates of return (IRR) are the pre-tax yield rates used to discount the expected future cash flow stream from servicing the government guaranteed loan portfolios.
The loan servicing asset is 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 $1.2 billion and $1.0 billion as of June 30, 2026 and December 31, 2025, respectively.
The following table presents a reconciliation of loan servicing rights as of the periods indicated:
Six Months Ended June 30, 2026
Year Ended December 31, 2025
Balance, beginning of period
8,976
Additions - servicing rights related to loans sold
4,167
7,798
Reductions - write-off of servicing assets
Reductions - amortization and early payoff
(3,037
(5,634
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 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 no allowance for impairment recorded as of June 30, 2026 or December 31, 2025.
Note 6. Deposits
At June 30, 2026 and December 31, 2025, time deposits amounted to $553.2 million and $568.6 million, respectively. Interest expense on time deposits amounted to $5.9 million and $4.7 million for the three months ended June 30, 2026 and 2025, respectively. Interest expense on time deposits amounted to $11.7 million and $9.1 million for the six months ended June 30, 2026 and 2025, respectively.
The scheduled maturities of time deposits at June 30, 2026, are as follows:
Time Deposit Maturities
Less Than$250,000
$250,000or more
263,884
20,695
178,422
14,600
42,140
5,835
21,383
6,017
Maturing thereafter
Total time deposits
511,846
41,381
GBank had $120.1 million and $105.7 million of brokered certificates of deposit as of June 30, 2026 and December 31, 2025, respectively, having terms between six months and five years.
The aggregate amount of demand deposit overdrafts that were reclassified as loans was $211 thousand at June 30, 2026, compared to $62 thousand as of December 31, 2025.
Note 7. Subordinated Debt, Other Borrowings, and Available Lines of Credit
Subordinated Debt Issued 2026
On January 14, 2026, the Company completed a private placement of $11.0 million in aggregate principal amount of 7.25% Fixed-to-Floating Rate Subordinated Notes due 2036 (the “2026 Notes”). The Company intends to utilize the net proceeds for general corporate purposes, including refinancing existing indebtedness. The 2026 Notes were structured to qualify as Tier 2 capital for GBank for regulatory capital purposes. The 2026 Notes initially bear a fixed interest rate of 7.25% until January 15, 2031, after which time and until maturity on January 15, 2036, the interest rate will reset quarterly to an annual floating rate equal to the Three-Month Term Secured Overnight Financing Rate (“SOFR”) plus 382 basis points. The 2026 Notes are redeemable by the Company at its option, in whole or in part, on or after January 15, 2031. Any redemption will be at a redemption price equal to 100% of the principal amount of the 2026 Notes being redeemed, plus accrued and unpaid interest.
On January 15, 2026, utilizing the proceeds from the 2026 Notes, the Company redeemed $6.5 million of fixed-to-floating rate subordinated notes originally issued December 30, 2020 ("the 2020 Notes"). The 2020 Notes had a maturity date of January 15, 2031 and carried a fixed interest rate of 4.50% for the first five years through January 14, 2026. Thereafter, the 2020 Notes would have had a quarterly adjustable rate equal to the then-current three-month term SOFR as published by the Federal Reserve Bank of New York, plus four hundred twenty-three (423) basis points.
The net proceeds of the 2026 Notes were $10.5 million which includes $491 thousand of debt issuance costs that are being amortized over the expected life of the 2026 Notes.
The 2026 Notes are unsecured, subordinated obligations of the Company, are not obligations of, and are not guaranteed by, any subsidiary of the Company, and rank junior in right of payment to the Company’s current and future senior indebtedness. The 2026 Notes are intended to qualify as Tier 2 capital of the Company for regulatory capital purposes.
Subordinated Debt Issued 2021
On December 15, 2021, the Company completed a $20.0 million private placement of 3.875% fixed-to-floating rate subordinated notes due 2031 (the “2021 Notes”). The 2021 Notes are subordinate and junior in right of payment to the prior payment in full of all existing claims of creditors of the Company whether now outstanding or subsequently created, assumed, guaranteed, or incurred (collectively, “Senior Indebtedness”). The 2021 Notes are not secured by any assets of the Company or its sole subsidiary, GBank.
19
The 2021 Notes have a maturity date of December 15, 2031 and carry a fixed interest rate of 3.875% for the first five years through December 15, 2026, and thereafter is payable in arrears quarterly. Thereafter, the 2021 Notes will pay interest at a quarterly adjustable rate equal to the then-current three-month term Secured Overnight Financing Rate (“SOFR”) as published by the Federal Reserve Bank of New York, plus two hundred and eighty-nine (289) basis points.
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 December 15, 2026. The net proceeds of the 2021 Notes were $19.6 million which includes $558 thousand of debt issuance costs that are being amortized over the expected life of the 2021 Notes.
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 $18.0 million into the Company’s wholly owned subsidiary, GBank. The funds invested into GBank are intended to qualify as Tier 1 capital of GBank.
Subordinated Debt Issued 2020
On December 30, 2020, the Company completed a $6.5 million private placement of 4.50% fixed-to-floating rate subordinated notes due 2031 (the “2020 Notes”). The 2020 Notes were subordinate and junior in right of payment to the prior payment in full of all existing claims of creditors of the Company whether now outstanding or subsequently created, assumed, guaranteed, or incurred (collectively, “Senior Indebtedness”). The 2020 Notes were not secured by any assets of the Company or its sole subsidiary, GBank.
On January 15, 2026, the Company redeemed the 2020 Notes through utilization of the proceeds from the issuance of the 2026 Notes.
The Company recorded interest expense on subordinated debt issuances totaling $419 thousand for the three months ended June 30, 2026, compared to $262 thousand for the three months ended June 30, 2025, and $929 thousand for the six months ended June 30, 2026 compared to $547 thousand for the six months ended June 30, 2025. Accrued interest on subordinated debt totaled $406 thousand as of June 30, 2026, compared to $166 thousand accrued as of December 31, 2025.
Lines of Credit
The Company has a line of credit available from the Federal Home Loan Bank of San Francisco (the “FHLB”). The unused borrowing capacity at June 30, 2026 and December 31, 2025 with the FHLB, as collateralized by qualifying securities and pledged loans, was $130.8 million and $88.7 million, respectively. No draws have been made on the line, and the balance was zero at the end of June 30, 2026 compared to $100 thousand December 31, 2025.
The Company also has unsecured lines of credit with other correspondent banks totaling $40.0 million at June 30, 2026 and December 31, 2025. No draws have been made on these lines of credit and no balances were outstanding as of June 30, 2026 or December 31, 2025.
Other Borrowing Arrangements
GBank is approved to pledge loans and investment securities as collateral under the Federal Reserve Bank of San Francisco’s Borrower-In-Custody (“BIC”) Program. As of June 30, 2026, the Company had pledged loans and investment securities with an approximate carrying value of $617.7 million to the BIC Program and had unused borrowing capacity of $326.7 million. Comparatively, the Company had pledged loans and investment securities with an approximate carrying value of $633.1 million to the BIC Program and had unused borrowing capacity of $351.3 million at December 31, 2025. The balance outstanding under the BIC Program was zero as of June 30, 2026, compared to $1 thousand as of December 31, 2025.
The Company had no short-term borrowings outstanding as of June 30, 2026 compared to $371 thousand at December 31, 2025.
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 no preferred shares outstanding as of June 30, 2026 or December 31, 2025. The Company’s non-voting common stock and voting common stock share equally in dividends and residual net assets on a per share basis, and have identical rights and privileges, with the exception of voting rights. As of June 30, 2026 and December 31, 2025, the Company had 231,508 shares of nonvoting common stock issued and outstanding relating to the acquisition of a nonvoting equity interest in BankCard Services LLC ("BCS") during the second quarter of 2024. Earnings per share amounts, as well as the balance of common stock issued and outstanding on the consolidated balance sheets, reflect both voting and nonvoting common shares.
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 periods 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.
Net income available to common stockholders
Weighted average shares outstanding (basic)
Effect of dilutive stock options
25,938
120,483
119,810
Effect of dilutive restricted stock
47,455
157,207
41,533
151,287
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
85,000
40,000
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, 2026 and December 31, 2025, 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:
Bank Tier 1 Capital Leverage Ratio
13.15
13.42
Average Total Consolidated Assets
1,428,511
1,331,466
Off-Balance-Sheet Exposures
90,941
91,804
Ratio of Off-Balance-Sheet Exposures to Total Assets
6.37
6.77
Trading Assets
None
Advanced Approaches Banking Organization
No
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
Ratio
Community Bank Leverage Ratio
187,859
128,566
9.00
178,715
119,832
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 six percent of the average of the Company’s total daily deposit liabilities for the preceding sixty days. As a result of these regulations, $68.5 million and $68.2 million of the Company’s stockholders’ equity was restricted as of June 30, 2026 and December 31, 2025, respectively.
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:
Commitments to extend credit (1)
90,144
91,057
Credit card commitments
135,985
116,585
Standby letters of credit (2)
797
747
226,926
208,389
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 $42 thousand and $57 thousand as of June 30, 2026 and December 31, 2025, respectively, and is recorded in other liabilities on the consolidated balance sheets. The Company reported a provision for credit losses for off-balance-sheet commitments of $15 thousand for the three months ended June 30, 2026 compared to a provision for credit losses related to off-balance-sheet commitments of $13 thousand for the three months ended June 30, 2025. The Company reported a net benefit related to the provision for credit losses for off-balance-sheet commitments of $15 thousand for the six months ended June 30, 2026 compared to a provision for credit losses related to off-balance-sheet commitments of $24 thousand for the six months ended June 30, 2025. The provision for credit losses related to off-balance-sheet commitments is recorded within the provision for credit losses on the consolidated statements of income.
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 80%. Commercial real estate loans accounted for 90% and 88% of total loans at June 30, 2026 and December 31, 2025, respectively. No other loan classification exceeded 10% of the loan portfolio at June 30, 2026 or December 31, 2025.
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.
Loans secured by commercial real estate, residential real estate, or other property 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 1% of total gross loans at June 30, 2026 and December 31, 2025.
At June 30, 2026, the Company’s loan portfolio included loans and loan commitments in over forty states. The following table sets forth the dispersion of loan principal balances and related commitments (undisbursed loan proceeds) for the states having at least five percent of the total loan principal balances and commitments outstanding:
Percentage
242,377
20.44
North Carolina
166,474
14.04
Ohio
77,577
6.54
Illinois
81,239
6.85
Texas
81,277
6.86
Indiana
65,041
5.49
471,574
39.78
Total Loan Commitments
1,185,558
100.00
23
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. There were no accruals under these agreements as of June 30, 2026 and $289 thousand as of December 31, 2025.
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 $2.0 million in capital contributions to the partnership. The Company is a limited partner of the partnership with no controlling financial interests. Capital contributions are expected to be made through 2027. The Company had made capital contributions to the venture capital fund totaling $1.3 million as of June 30, 2026 and $1.1 million as of December 31, 2025, with this balance included in other assets on the consolidated balance sheets.
Note 11. Income Taxes
Income tax expense was $1.6 million for the three months ended June 30, 2026, an increase of $139 thousand compared to $1.5 million for three months ended June 30, 2025. Income tax expense was $1.8 million for the six months ended June 30, 2026, a decrease of $946 thousand compared to $2.7 million for the six months ended June 30, 2025. The effective tax rate for the three and six months ended June 30, 2026 was 22.9% and 20.5%, respectively, compared to 23.6% and 22.6% for the three and six months ended June 30, 2025. Income tax expense and the effective tax rate for the six months ended June 30, 2026 were impacted by certain discrete items related to stock option exercises executed during the first quarter of 2026 totaling $800 thousand, or $192 thousand tax-effected.
Note 12. 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, 2026 or the year ended December 31, 2025.
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, 2026 Using:
Quoted Prices In
Significant Other
Significant
CarryingValue at
ActiveMarkets
ObservableInputs
UnobservableInputs
(Level 1)
(Level 2)
(Level 3)
Assets:
Available for sale debt securities:
Fair Value Measurements at December 31, 2025 Using:
U.S. government agencies
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.
Other real estate owned - The fair value of other real estate owned is determined using independent appraisal values less estimated cost to sell.
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:
Individually evaluated loans:
14,521
6,142
2,853
Other real estate owned:
1,800
2,061
540
25
12,873
468
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.
Quantitative Information About Level 3 Fair Value Measurements
Valuation
Unobservable
Weighted
Estimate
Technique
Input
Range
Average
Appraisal (1)
Appraisal adjustments (2)
5%-36%
21%
4%-32%
15%
10%-45%
13%
10%-10%
10%
15%-29%
24%
39%-39%
39%
Carrying amounts and estimated fair values of financial instruments were as follows as of the dates indicated:
Fair ValueHierarchy
Carrying
Estimated
Level
Financial instruments - assets
Investment securities available for sale
53,810
47,676
1,040,347
957,194
Loan servicing assets
22,215
20,169
Federal Home Loan Bank stock
Accrued interest receivable
7,606
7,840
Financial instruments - liabilities
Deposits
1,172,894
1,122,810
29,421
Accrued interest payable
2,361
3,884
Note 13. 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 and CEO. 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 one reportable segment.
The following table presents certain information reviewed by management for the three- and six-month periods presented:
Noninterest income
Noninterest expense
1,232,424
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.
27
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 Annual Report on Form 10-K for the year ended December 31, 2025. 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 and Gaming Fintech 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.
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.
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.
The following table presents a summary of the Company's earnings and selected performance ratios for the three and six-month periods presented:
Net Income
Diluted Earnings Per Share
Return on Average Assets
1.53
1.59
0.98
1.60
Return on Average Equity
12.64
12.62
7.94
12.61
Net Interest Margin (annualized)
3.78
4.31
3.82
4.39
Non-Performing Assets to Total Assets
4.06
1.49
Net Charge-Off (Recoveries) to Average Loans (annualized)
0.42
0.34
0.39
Financial highlights for the three months ended June 30, 2026 are presented below:
Critical Accounting Policies
The 2025 Annual Report on Form 10-K includes a summary of critical accounting estimates that the Company considers to be most important to the presentation of its financial condition and results of operations. These estimates require management’s most difficult judgments as a result of the need to make estimates about the effects of matters that are inherently uncertain.
Management considers the accounting judgments relating to the allowance for credit losses to be the accounting area that requires the most subjective and complex judgments.
There have been no material changes to the Company's critical accounting estimates as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2025.
Results of Operations
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.
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-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, 2026 and 2025.
For the Three Months Ended
Yield/
Balance
Interest
Rate(2)
ASSETS:
Interest Bearing Deposits With Banks
134,527
3.86
115,974
4.72
Investment Securities:
Taxable
114,526
4.64
119,880
4.73
Loans, Net (1)
1,102,289
7.31
911,028
7.77
Federal Home Loan Bank Stock
5,750
5,362
8.75
Total Earning Assets
1,357,092
6.72
1,152,244
7.16
Cash and Due From Banks
6,804
6,782
Other Assets
67,682
41,894
1,431,578
1,200,920
LIABILITIES & STOCKHOLDERS' EQUITY:
Interest-bearing Demand
69,922
498
2.86
60,320
316
2.10
Money Market and Savings
339,718
3,113
3.68
303,814
2,929
3.87
Certificates of Deposit
579,583
5,898
4.08
413,940
4,660
4.52
Total Interest-Bearing Deposits
989,223
778,074
Short-Term Borrowings
0.00
Subordinated Debt
30,319
5.54
26,113
4.02
Total Interest-Bearing Liabilities
1,019,542
3.91
804,187
4.07
Noninterest-bearing Deposits
212,756
223,201
Other Liabilities
25,914
22,404
Stockholders' Equity
173,366
151,128
Total Liabilities & Shareholders' Equity
Net Interest Income
Total Yield on Earning Assets
Cost on Interest-Bearing Liabilities
Average Interest Spread
2.81
3.08
Net Interest Margin
30
For the Six Months Ended
133,262
109,338
108,161
4.53
112,591
4.83
Loans, Net(1)
1,072,227
7.34
888,982
7.82
5,632
10.42
5,009
8.74
1,319,282
1,115,920
7.22
6,497
6,501
68,328
40,543
1,394,107
1,162,964
71,539
1,019
2.87
62,992
672
2.15
307,974
5,658
3.70
284,060
5,340
3.79
574,556
11,725
4.12
399,899
9,123
4.60
954,069
3.89
746,951
4.09
Subordinated Debentures
29,667
6.32
26,104
4.23
983,743
3.96
773,055
212,720
221,050
25,508
21,278
172,136
147,581
3.13
31
The following table presents the effects of changing rates and volumes on net interest income for the three-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.
June 30, 2026 vs. June 30, 2025
Increase (Decrease)
Volume
Rate
Net
INTEREST INCOME:
218
(287
(69
559
(563
(4
(63
(25
(88
(106
(161
(267
Loans, Net
3,707
(1,273
2,434
7,110
(2,554
4,556
(111
(103
74
Total Interest Income
3,870
(1,696
2,174
7,590
(3,231
4,359
INTEREST EXPENSE:
Interest Bearing Deposits:
182
347
346
(162
184
450
(132
318
(627
1,238
3,984
(1,382
2,602
2,261
(657
1,604
4,525
(1,258
3,267
115
157
309
Total Interest Expense
2,303
(542
1,761
4,600
(949
3,651
NET INTEREST INCOME
1,567
(1,154
413
2,990
(2,282
708
For the six months ended June 30, 2026, interest income was $44.3 million, an increase of $4.4 million compared to $40.0 million for the six months ended June 30, 2025. For the three months ended June 30, 2026, interest income was $22.7 million, an increase of $2.2 million compared to $20.6 million for the three months ended June 30, 2025. The increases in interest income when comparing the three and six-month periods ended June 30, 2026 to the same periods in 2025 is 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 cumulative 75 basis point reduction in the target federal funds rate on the Company’s variable-rate loan portfolio over the preceding twelve months.
Interest expense was $19.3 million for the six months ended June 30, 2026, an increase of $3.6 million compared to $15.7 million for the six months ended June 30, 2025. Interest expense was $9.9 million for the three months ended June 30, 2026, an increase of $1.8 million when compared to $8.2 million for the three months ended June 30, 2025. The increase in interest expense when comparing the three and six months ended June 30, 2026 to the same periods in 2025 was driven by increases in average interest-bearing liabilities to fund asset growth.
For the six months ended June 30, 2026, the Company's net interest margin decreased to 3.82% compared to 4.39% for the same period in 2025. For the second quarter of 2026, the Company's net interest margin decreased to 3.78%, compared to 4.31% for the second quarter of 2025. The decrease in net interest margin for the three and six months ended June 30, 2026 when compared to the same periods in 2025 is reflective of the lower market interest rate environment as explained in the above paragraphs.
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, 2026, the Company recorded a provision for credit losses of $2.8 million and $5.1 million, respectively, compared to $1.1 million and $1.8 million for the three and six months ended June 30, 2025, respectively. Additional information regarding the provision for credit losses can be found under the heading Credit Quality, Credit Risk, and Allowance for Credit Losses later in this document.
Noninterest Income
The following table presents the components of total noninterest income.
$ Change
% Change
2,951
113.8
66.4
59.3
288
18.8
(0.9
3,765
69.9
4,204
81.9
793
54.6
29.7
476
13.5
866
40.8
Total Noninterest Income
16,604
53.1
For the three months ended June 30, 2026, noninterest income totaled $9.1 million compared to noninterest income $5.4 million for the three months ended June 30, 2025. For the six months ended June 30, 2026, noninterest income totaled $16.6 million compared to noninterest income of $10.8 million for the six months ended June 30, 2025.
Gain on sale of loans totaled $5.5 million for the second quarter of 2026 compared to $2.6 million for the second quarter of 2025. Gain on sale of loans totaled $9.3 million for the six months ended June 30, 2026 compared to $5.1 million for the six months ended June 30, 2025. The increases in gain on sale of loans for the three and six months ended June 30, 2026 were due to higher volumes of loans sold and more favorable secondary market pricing in 2026. Loans sold totaled $189.1 million during the six months ended June 30, 2026 compared to $150.9 million during the same period in 2025.
Loan servicing income increased $498 thousand from $750 thousand for the three months ended June 30, 2025 to $1.2 million for the three months ended June 30, 2026. Loan servicing income totaled $2.2 million for the six months ended June 30, 2026 compared to $1.5 million for the six months ended June 30, 2025. The increase in loan servicing income was the result of higher average balances of loans serviced by the Company during 2026.
Service charges and fees totaled $86 thousand and $144 thousand for the three and six months ended June 30, 2026, respectively, compared to $54 thousand and $111 thousand for the three months and six months ended June 30, 2025, respectively. The increases in service charges and fees in 2026 were largely driven by a higher volume of wire transfer fees in 2026.
Net interchange fees totaled $1.8 million for the three months ended June 30, 2026 compared to $1.5 million for the three months ended June 30, 2025. Net interchange fees totaled $4.0 million for the six months ended June 30, 2026, compared to $3.5 million for the same period in 2025. The increase in net interchange fees when comparing the three and six months ended June 30, 2026 to the same periods in 2025 was attributable to transaction volume growth within GBank’s Visa Signature® Card product.
Other income increased $251 thousand from $615 thousand for the six months ended June 30, 2025 to $866 thousand for the six months ended June 30, 2026 due to an increase in bank owned life insurance income resulting from a bank owned life insurance purchase of $15.0 million during the third quarter of 2025.
Noninterest Expense
The following tables present the components of total noninterest expense.
573
9.2
197
14.8
(0.3
10.5
623
188.8
95
23.9
7.0
20.2
n/a
(48
(7.6
Total Noninterest Expense
1,602
15.4
13,559
924
7.3
681
24.9
2.1
(269
(21.2
97.8
(204
(22.8
66.9
61
24.3
(93
(7.3
27,875
6,572
30.9
For the three months ended June 30, 2026, noninterest expense increased 15.4% to $12.0 million, compared to $10.4 million for the three months ended June 30, 2025. For the six months ended June 30, 2026, noninterest expense increased 30.9% to $27.9 million compared to $21.3 million for the six months ended June 30, 2025.
Data processing expense increased $197 thousand, or 14.8%, from $1.3 million for the three months ended June 30, 2025 to $1.5 million for the three months ended June 30, 2026. Data processing expense increased $681 thousand, or 24.9% from $2.7 million for the six months ended June 30, 2025 to $3.4 million for the six months ended June 30, 2026. The year over year increase was due to higher costs from transactional-based charges given the volume increases in loans and deposits over the last twelve months.
Legal and professional fees totaled $1.0 million for the six months ended June 30, 2026, a decrease of $269 thousand, or 21.2% when compared to $1.3 million for the six months ended June 30, 2025. Audit and exams expense totaled $690 thousand for the six months ended June 30, 2026, a decrease of $204 thousand, or 22.8% when compared to $894 thousand for the second quarter of 2025. The decrease in legal and professional fees and audits and exams expense when comparing the six months ended June 30, 2026 to the same period in 2025 reflects extraordinary legal, professional, and audit fees associated with the preparation and filing of the registration statement with the Securities and Exchange Commission on Forms S-1 and S-1/A during the first quarter of 2025.
Loan related costs increased $623 thousand, or 188.8% from $330 thousand for the three months ended June 30, 2025 to $953 thousand for the three months ended June 30, 2026. Loan related costs increased $698 thousand, or 97.8% from $714 thousand for the six months ended June 30, 2025 to $1.4 million for the six months ended June 30, 2026. The increases in loan related costs in 2026 reflect additional expenses incurred as part of the workout process on nonperforming loans, including past due property taxes and legal fees.
Advertising and marketing expense increased $492 thousand to $1.2 million during the six months ended June 30, 2026 compared to $735 thousand during the six months ended June 30, 2025. The increase in advertising and marketing expense was largely attributable marketing and advertising expenses related to the Company's credit card product.
35
During the first quarter of 2026, the Company identified and charged off $4.2 million of third-party fraud credit card losses related to embedded bot fraud resulting from a direct mail retail credit card campaign undertaken during the second half of 2025. Similar losses did not occur during the three and six months ended June 30, 2025.
Income Taxes
Income tax expense was $1.6 million for the three months ended June 30, 2026, an increase of $139 thousand, or 9.4% when compared to $1.5 million for the three months ended June 30, 2025. Income tax expense was $1.8 million for the six months ended June 30, 2026, a decrease of $946 thousand or 34.9% compared to $2.7 million for the six months ended June 30, 2025. The effective tax rate for the three months ended June 30, 2026 was 22.9% compared to 23.6% for the three months ended June 30, 2025. The effective tax rate for the six months ended June 30, 2026 was 20.5% compared to 22.6% for the six months ended June 30, 2025. Fluctuations in income tax expense and the effective tax rate are primarily driven by the timing and magnitude of certain stock-based compensation transactions that generate tax benefits for the Company, as well as changes in pre-tax earnings.
Comparison of Financial Condition – June 30, 2026 and December 31, 2025
Total assets were $1.4 billion for each of the periods ended June 30, 2026 and December 31, 2025.
Cash and Cash Equivalents
Cash and cash equivalents decreased 29% from $197.9 million at December 31, 2025 to $141.3 million at June 30, 2026 as cash outflows to fund loan growth and investment purchases more than offset cash inflows from deposit growth during the first six months of 2026.
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 available for sale securities recorded at fair value which increased $44.0 million from $71.0 million at December 31, 2025 to $115.0 million at June 30, 2026 primarily due to the purchase of $51.9 million of available for sale residential mortgage-backed securities. Unrealized losses on the investment security portfolio increased from $647 thousand at December 31, 2025 to $2.6 million as of June 30, 2026. Management believes the unrealized losses related to the investment security portfolio as of June 30, 2026 relate primarily to a continuation of the elevated market interest rate environment and are not credit related.
The following table presents the maturity composition and the weighted average yields of the investment portfolio as of June 30, 2026. 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
One Year
After One Year
After Five Years
After
or Less
Through Five Years
Through Ten Years
Ten Years
As of June 30, 2026
Yield
Available for sale securities, at fair value:
Residential mortgage-backed securities
196
2.82
24,960
4.35
81,754
4.43
8,108
Loans
Total loans, net of deferred loan costs and unamortized discounts, increased 9% to $1.0 billion at June 30, 2026, compared to $959.3 million at December 31, 2025. Loan originations, including government guaranteed and non-guaranteed commercial loans, totaled $340.3 million during the first six months of 2026, compared to $293.5 million for the same period in 2025.
The following table presents the ending balance of loans outstanding, by type, as of the dates indicated.
Percent of
7.7
8.4
81.1
78.2
9.9
2,255
0.2
1.8
2.0
0.1
374
0.7
1.2
100.0
37
The Company's three largest loan segments are presented by borrower type in the table below for the periods presented.
Commercial and industrial:
General business
43,973
4.2
24,996
2.6
Services
17,726
1.7
16,107
Social assistance
409
14,797
1.5
Manufacturing
7,748
13,426
1.4
Transportation
7,746
6,439
3,164
0.3
4,451
Total commercial and industrial
Commercial real estate - non-owner occupied:
Hotel
769,147
73.4
680,914
71.0
Real Estate Rental
66,681
6.4
67,944
7.1
Food Processing
12,138
1,668
1,707
Total commercial real estate - non-owner occupied:
Commercial real estate - owner occupied:
30,747
2.9
31,932
3.3
22,859
2.2
22,536
2.3
Specialty Trade
6,569
0.6
6,724
Gas Station
6,664
6,751
5,669
4,635
5,093
3,502
0.4
Medical
1,720
3,763
8,895
0.8
14,733
Total commercial real estate - owner occupied
The Company continues to expand its national business lines for government guaranteed lending with a focus on the hospitality industry. For the year ended December 31, 2025, the Bank was a leading provider of SBA hotel financing and ranked among the nation’s top originators of SBA 7(a) loans, placing #11 nationwide. The balance of guaranteed loans at June 30, 2026 was $225.8 million, representing 16.7% of loans. Comparatively, at December 31, 2025, the Company had $229.7 million of guaranteed loan balances representing 19.2% of loans.
Net deferred loan costs totaled $9.5 million at June 30, 2026 and $10.0 million at December 31, 2025. 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 $12.5 million at June 30, 2026 and $10.9 million at December 31, 2025. 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 $50.8 million at June 30, 2026 and consisted of commercial real estate – non-owner occupied, commercial real estate – owner occupied, and commercial and industrial loans. Loans held for sale totaled $46.0 million at December 31, 2025 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.
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 losses as a percentage of total loans as of the dates indicated:
(In Thousands)
Total ACL - Loans
% of Total Loans Outstanding
Allowance as a %of Loan Category
1.1
5.9
Single Family Sr Lien
Single Family Jr Lien
16.0
1.0
7.2
0.9
12.8
The allowance for credit losses increased from $9.9 million at December 31, 2025 to $12.4 million at June 30, 2026. The allowance as a percentage of loan balances increased from 1.03% to 1.19%. The Company continues to closely monitor credit quality in light of the ongoing economic uncertainty caused by, among other factors, 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.
Non-performing assets:
Total nonaccrual loans
Loans 90 days past due and accruing
Total non-performing loans
52,516
32,995
Total non-performing assets
58,179
37,396
Non-performing loans to loans, net of deferred fees and costs
5.01
3.44
Nonaccrual loans to loans, net of deferred fees and costs
4.93
3.35
ACL to nonaccrual loans
24.04
30.77
ACL to gross loans
1.19
1.03
The Company had $52.5 million of non-performing loans as of June 30, 2026, compared to $33.0 of non-performing loans as of December 31, 2025. The increase was driven by $22.9 million of commercial real estate and commercial and industrial loans transferred to nonaccrual status during the first six months of 2026. These loans are primarily collateralized by hotel/motel properties, business assets, and single-family residential properties. As of June 30, 2026, the balance of non-performing loans was comprised of certain commercial real estate – non-owner occupied, commercial real estate – owner occupied, and commercial and industrial loans, and consumer loans, of which $32.5 million is guaranteed by the SBA. Included in the balance of non-performing loans as of June 30, 2026 are $27.0 million of individually evaluated loans with specific credit loss reserves of $3.5 million assigned. As of December 31, 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 totaling $33.0 million, of which $24.8 million is guaranteed by the SBA. Included in the balance of non-performing loans as of December 31, 2025 are $14.5 million of individually evaluated loans with specific credit loss reserves of $1.2 million assigned.
The Company continuously monitors its non-performing asset portfolio and believes the financial risk related to these assets is well contained. In making this assessment, it is important to consider the process undertaken when a collateralized SBA non-performing asset requires collection efforts. Historically, we have repurchased the sold portion of the government guaranteed loan to complete the foreclosure and resale of the property. This process immediately increases the non-performing asset balance on our balance sheet to include the government guaranteed portion, however, the guaranteed balance is excluded from the determination of the allowance for credit losses as it is considered zero risk. During the second quarter of 2026, we began transitioning to a process whereby the USDA or SBA will repurchase the sold portion of the non-performing loan.
The Company held $5.7 million of other real estate owned as of June 30, 2026 and $4.4 million as of December 31, 2025.
Premises and Equipment
Premises and equipment increased $252 thousand from $1.1 million at December 31, 2025 to $1.3 million at June 30, 2026 largely due to purchases of $385 thousand, net of depreciation of $133 thousand, during the six months ended June 30, 2026.
Other assets totaled $29.0 million at June 30, 2026, a decrease of $8.7 million, or 23% when compared to $37.8 million at December 31, 2025, with this decrease largely attributable to the collection of $10.2 million of cash in-transit received during the first quarter of 2026 related to certain investment security sales executed during the fourth quarter of 2025.
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Total Liabilities
The Company’s total liabilities increased $65.2 million, or 5% from December 31, 2025 to June 30, 2026. The increase in total liabilities was primarily attributable to an increase in total deposits of $63.0 million with the largest increases within savings.
Deposits and Other Funding Sources
Total deposits increased 6% to $1.2 billion at June 30, 2026 compared to $1.1 billion at December 31, 2025. The year-to-date increases in non-interest bearing and savings were offset by decreases in interest-bearing demand and time deposits.
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The following table presents the average balances of deposits by type and the related average interest rates for the three months ended June 30, 2026:
Three months ended June 30, 2026
Average Balance
1,201,979
3.17
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, 2026, uninsured deposits were approximately $485.0 million, or 39.8% of total deposits, compared to $417.4 million, or 36.5% of total deposits, as of December 31, 2025.
As of June 30, 2026 the maturities of time deposits having balances over $250 thousand were as follows:
Short-term Borrowings and Subordinated Debt
The Company had no short-term borrowings as of June 30, 2026 compared to $371 thousand for December 31, 2025.
Subordinated debt totaled $30.3 million as of June 30, 2026 compared to $26.2 million as of December 31, 2025. See "Note 7 - Subordinated Debt, Other Borrowings, and Available Lines of Credit", within the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
Stockholders’ Equity and Capital
Stockholders' equity increased 4% to $172.8 million at June 30, 2026 compared to $165.8 million at December 31, 2025 with this increase driven primarily by the net income generated during the first six months of 2026.
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.
As of June 30, 2026 and December 31, 2025, 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:
The Company's common equity to assets ratio was 12.1% as of June 30, 2026 compared to 12.2% as of December 31, 2025. The Company's book value per share was $11.94 as of June 30, 2026, an increase from $11.52 as of December 31, 2025.
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:
Investment securities, available for sale
Total primary liquidity sources
307,195
314,911
The Company has a line of credit available from the FHLB of San Francisco. The unused borrowing capacity with the FHLB, as collateralized by qualifying securities and pledged loans, was approximately $130.8 million and $88.7 million, at June 30, 2026 and December 31, 2025, respectively. No draws were outstanding as of June 30, 2026. The balance on the line of credit with the FHLB was $100 thousand as of December 31, 2025.
GBank participates in the Federal Reserve Bank of San Francisco’s BIC Program and, as of June 30, 2026 and December 31, 2025, the Company had pledged loans and investment securities with an approximate carrying value of $652.2 million and $633.1 million, respectively, to the BIC Program. Unused borrowing capacity at the Federal Reserve Bank of San Francisco totaled $326.7 million and $351.3 million as of June 30, 2026 and December 31, 2025, respectively.
The Company also has unsecured lines of credit with other correspondent banks totaling $40.0 million at June 30, 2026 and December 31, 2025. No draws have been made on these lines of credit and no balances were outstanding as of June 30, 2026 and December 31, 2025.
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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, 2026. Operating activities resulted in a net increase in cash of $17.4 million, as cash inflows from loan sales more than offset cash outflows for the origination of loans held for sale and the receipt of cash in transit of $10.0 million during the first quarter of 2026 related to investment securities sold during the fourth quarter of 2025. Investing activities resulted in a net decrease in cash of $141.7 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 $67.7 million, primarily due to a net increase in deposits during the six months ended June 30, 2026.
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, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
At June 30, 2026, 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 Annual Report on Form 10-K filed with the SEC on March 27, 2026. There have been no material changes in the risk factors disclosed by the Company in our Annual Report on Form 10-K.
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.
Item 5. Other Information.
On April 14, 2026, Nancy DeCou, EVP and Chief SBA Officer of GBank, terminated the Rule 10b5-1 trading arrangement previously disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025. The trading arrangement was adopted on September 16, 2025 and was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The material terms of the trading arrangement were previously disclosed in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 and are incorporated herein by reference. No shares were sold pursuant to the trading arrangement prior to its termination.
Other than as described above, during the fiscal quarter ended June 30, 2026, no other director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" as each term is defined in Item 408(a) of Regulation S-K.
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
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.
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.
Date: August 13, 2026
By:
/s/ Edward M. Nigro
Edward M. Nigro
Executive Chairman and CEO
/s/ Olivia M. Caley
Olivia M. Caley
SVP, Financial Reporting Director