# GBank Financial Holdings Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [GBank Financial Holdings Inc.](/companies/gbfh.md) (CIK 1791145)
- Form: 10-Q
- Filed: 2025-05-28
- Accepted by EDGAR: May 28, 2025, 16:28 ET
- Period: 2025-03-31
- Accession: 0000950170-25-078361
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1791145/000095017025078361/gbfh-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1791145/000095017025078361/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $1.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $4.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.31 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.31 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 14,548,644 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$5.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $32.0k | us-gaap:PaymentsToAcquireProductiveAssets |
| Total assets | at 2025-03-31 | $1.19bn | us-gaap:Assets |
| Total liabilities | at 2025-03-31 | $1.04bn | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $146.6m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 48,025 characters.

The following presents management’s discussion and analysis of the financial condition and results of operations of GBank Financial Holdings Inc. (individually, “GBFH” and collectively with its subsidiaries including GBank, the “Company”). This discussion should be read in conjunction with the unaudited consolidated financial statements and related notes included elsewhere in this quarterly report on Form 10-Q and with the Company's Registration Statement on Form S-1 and S-1/A. Results of operations for the periods included in this quarterly report on Form 10-Q are not necessarily indicative of results to be obtained during any future period.

### Nature of Operations

GBank Financial Holdings Inc. is a bank holding company headquartered in Las Vegas, Nevada and registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). Through our wholly owned bank subsidiary, GBank, we operate two full-service commercial branches in Las Vegas, Nevada to provide a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals in Nevada, California, Utah, and Arizona. Our founding members, including our Executive Chairman of the Board, Edward M. Nigro, recognized a need in the greater Las Vegas area for a solutions-oriented, relationship bank focused on middle market companies and real estate entrepreneurs who generally require loans of $200 thousand to $20 million, a size often overlooked or deprioritized by larger financial institutions. GBank was established in 2007 with the goal of helping these underserved clients build and sustain wealth. By combining the relationship-based focus of a community bank with the extensive suite of financial products and services offered by our largest competitors, we believe that we are well-positioned to continue to capitalize on the significant growth opportunities available not only in the greater Las Vegas and Clark County area, but regionally and nationally through our SBA lending, Gaming Fintech, and credit card initiatives. These activities, together with our two strategically located banking centers, generate a stable source of low-cost core deposits and a diverse loan portfolio with attractive risk-adjusted yields.

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 fees earned on the various services and products offered to its customers and through gains on sales of assets, generally the guaranteed portion of SBA and USDA loans. 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:

*(Dollars in thousands, except per share data)*

|  | Three Months Ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net Income | $4,470 | $3,701 |
| Diluted Earnings Per Share | $0.31 | $0.29 |
| Return on Average Assets | 1.61% | 1.59% |
| Return on Average Equity | 12.59% | 14.67% |
| Net Interest Margin | 4.47% | 4.85% |
| Non-Performing Assets to Total Assets | 1.71% | 0.64% |
| Net Charge-Off to Average Loans (annualized) | 0.39% | 0.00% |

The Company has experienced strong balance sheet growth, primarily driven by increases in commercial real estate loans (due to both organic growth and the repurchase of the guaranteed portion of certain SBA loans previously sold) and interest-bearing deposits. The Company also experienced favorable volume and rate-driven increases in net interest income, which was partially offset by higher funding costs.

Financial highlights for the three months ended March 31, 2025 are presented below:

- Net income of $4.5 million and diluted earnings per share of $0.31
- Net interest margin of 4.47%
- Loan growth of $27.4 million, or 3%
- Principal balances of loans sold of $68.7 million compared to principal balances of loans sold of $68.6 million of during the three months ended March 31, 2024
- Gain on sale of loans of $2.5 million, an increase of $454 thousand or 22% compared to $2.1 million of gain on sale of loans for the three months ended March 31, 2024
- On-balance sheet guaranteed loans totaled $245.6 million as of March 31, 2025 compared to $233.9 million at December 31, 2024
- Non-performing assets of $20.4 million at March 31, 2025 representing 1.71% of total assets compared to $14.2 million of non-performing assets at December 31, 2024

### Critical Accounting Policies

In preparing the Company’s Consolidated Financial Statements, accounting policies are applied that require significant judgment and estimates, which can materially impact the Company’s financial position and results of operations. The following are the critical accounting policies that have the most significant impact on the Company’s financial statements because they require significant judgments and assumptions about highly complex and inherently uncertain matters. The use of reasonably different estimates and assumptions could have a material impact on our results of operations or financial condition.

#### Allowance for Credit Losses

The allowance for credit losses reflects management’s best estimate of credit losses over the remaining life of the loan portfolio and is presented as a valuation account deducted from the loan portfolio’s amortized cost basis to present the net amount expected to be collected on the loans.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. GBank has segregated its held-for-investment loan portfolio into segments based on federal call report codes which classify loans based on the primary collateral supporting the loan. The segments are reviewed by management no less than annually to ensure instruments are properly segregated into groups having similar risk characteristics and new segments may be required as the Company offers new loan products.

The Company’s loan portfolio includes certain loans which are partially guaranteed by the U.S. Small Business Administration. The Current Expected Credit Losses (“CECL”) model does not require an entity to measure expected credit losses on an instrument, or pool of instruments, if historical information adjusted for current conditions and reasonable and supportable forecasts result in zero expected credit losses in all scenarios. The guaranteed portion of the loan pools range from 75 percent to 90 percent. For purposes of the assessment of credit losses, Company management ascertains the guaranteed portion of these loans has zero repayment risk due to the full guarantee of the U.S. government.

The Company measures the allowance for credit losses using the average charge-off method and calculates an estimate of expected credit losses based on actual losses incurred during a historic look-back period. The Company has chosen to use the historic losses of similarly insured institutions for each of its loan segments with the exception of commercial real estate loans for which Company management has defined a custom peer group of institutions having a large focus on government guaranteed lending.

To account for the model’s quantitative limitations when estimating credit losses, management also considers certain qualitative adjustments, including considerations of:

- changes in lending policies, underwriting standards, and collection practices
- changes in economic and business conditions
- changes in volume and severity of past due and adversely classified loans, including nonaccrual volume
- changes in nature, volume, and terms of loans
- changes in the experience, ability, and depth of lending management and staff
- changes in underlying collateral values
- effect of concentrations (loan types) as a percentage of capital
- changes in the quality of the loan review system
- effects of other factors (unemployment, loss of benefits, depreciation, loss of net worth, etc.)

GBank considers financial assets on an individual basis when the financial asset has unusual risk characteristics not matching an existing segment and may assign a specific reserve to the financial asset having unusual risk characteristics. The specific reserve component is calculated as the Company's evaluation of credit loss on individually evaluated loans based on the fair value of the collateral less estimated selling costs if collateral dependent or based on the present value of expected future cash flows discounted at the loan's initial effective interest rate if not collateral dependent. The majority of the Company's loans subject to individual evaluation are considered collateral dependent. The Company uses the practical expedient as permitted under ASC 326 to measure individually evaluated loans as collateral dependent and/or when repayment is expected to be provided substantially through the operation or sale of the collateral. Expected credit losses are based on the fair value at the reporting date, adjusted for selling costs as appropriate. For collateral dependent loans, credit loss is measured as the difference between the amortized cost basis in the loan and the fair value of the underlying collateral. The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral.

#### Emerging Growth Company

Pursuant to the JOBS Act, an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by the Financial Accounting Standards Board (“FASB”) or the SEC either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies. We have elected to use the extended transition period for complying with new or revised accounting standards affecting public companies, which means that our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards on a non-delayed basis.

Although we are still evaluating the JOBS Act, we may take advantage of some of the reduced regulatory and reporting requirements that are available to it so long as we qualify as an emerging growth company, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.

#### Net Interest Income and Net Interest Margin

Net interest income is calculated as the excess of interest earned from the Company’s interest-bearing assets, such as loans and investments, and the interest expense incurred on interest-bearing liabilities, like deposits and borrowed funds. Net interest income represents the core earnings of the Company’s primary activities of lending and investing, less the costs of obtaining funds.

Net interest margin is expressed as net interest income as a percentage of average earning assets and reflects the Company's ability to generate income from its interest-earning assets relative to the costs of funding those assets. Net interest income is affected by changes in interest rates, as well as composition and volume fluctuations in the average balances of interest-earning assets and interest-bearing liabilities.

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 table below. Average balances are calculated on a daily basis. The Company had no tax equivalent adjustments for the three months ended March 31, 2025 and 2024.

*(Dollars in thousands)*

| ASSETS: | For Three Months Ended March 31, 2025 Average Balance | Interest | Yield/ Rate | March 31, 2024 Average Balance | Interest | Yield/ Rate |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest Bearing Deposits With Banks | $102,628 | $1,192 | 4.71% | $66,100 | $972 | 5.91% |
| Investment Securities: |  |  |  |  |  |  |
| Taxable | 105,222 | 1,281 | 4.94% | 98,084 | 1,014 | 4.16% |
| Loans, Net (1) | 866,690 | 16,836 | 7.88% | 727,786 | 15,330 | 8.47% |
| Federal Home Loan Bank Stock | 4,652 | 100 | 8.72% | 3,222 | 74 | 9.24% |
| Total Earning Assets | 1,079,192 | 19,409 | 7.29% | 895,192 | 17,390 | 7.81% |
| Cash and Due From Banks | 6,216 |  |  | 5,935 |  |  |
| Other Assets | 39,177 |  |  | 33,602 |  |  |
| Total Assets | 1,124,585 |  |  | 934,729 |  |  |
| LIABILITIES & SHAREHOLDERS' EQUITY: |  |  |  |  |  |  |
| Deposits: |  |  |  |  |  |  |
| Interest-bearing Demand | $65,693 | $355 | 2.19% | $65,303 | $393 | 2.42% |
| Money Market and Savings | 264,085 | 2,411 | 3.70% | 186,372 | 1,759 | 3.80% |
| Certificates of Deposit | 385,704 | 4,464 | 4.69% | 309,221 | 4,046 | 5.26% |
| Total Interest-Bearing Deposits | 715,482 | 7,230 | 4.10% | 560,896 | 6,198 | 4.44% |
| Short-Term Borrowings | - | - | 0.00% | 7,583 | 104 | 5.52% |
| Subordinated Debentures | 26,095 | 285 | 4.43% | 26,021 | 286 | 4.42% |
| Total Interest-Bearing Liabilities | 741,577 | 7,515 | 4.11% | 594,500 | 6,588 | 4.46% |
| Noninterest-bearing Deposits | 218,874 |  |  | 220,767 |  |  |
| Other Liabilities | 20,139 |  |  | 18,003 |  |  |
| Shareholders' Equity | 143,995 |  |  | 101,459 |  |  |
| Total Liabilities & Shareholders' Equity | $1,124,585 |  |  | $934,729 |  |  |
| Net Interest Income |  | $11,894 |  |  | $10,802 |  |
| Total Yield on Earning Assets |  |  | 7.29% |  |  | 7.81% |
| Cost on Interest-Bearing Liabilities |  |  | 4.11% |  |  | 4.46% |
| Average Interest Spread |  |  | 3.18% |  |  | 3.35% |
| Net Interest Margin |  |  | 4.47% |  |  | 4.85% |

(1) Balances of non-accrual loans of $19.2 million at March 31, 2025 and $6.1 million at March 31, 2024 are included in the average loan balances for each year, respectively.

Net interest income increased $1.1 million or 10% to $11.9 million for the three months ended March 31, 2025, compared to $10.8 million for the three months ended March 31, 2024.

Interest income increased $2.0 million due to a $184.0 million increase in average interest-earning assets over the twelve month period ending March 31, 2025. This increase was partially offset by lower loan yields driven by both (i) yield reductions on adjustable-rate loans, securities, and other liquid assets driven by a 100 basis point decrease in the federal funds rate enacted during the second half of 2024 by the Federal Open Market Committee ("FOMC"), and (ii) certain non-recurring interest income adjustments relating to nonaccrual loans totaling $100 thousand during the three months ended March 31, 2025.

Investment securities yielded 4.94% during the first quarter of 2025, compared to 4.16% for the first quarter of 2024. The increase in investment yield when comparing 2025 to 2024 was the result of the purchase of $72.9 million of investment securities during the previous twelve months to replace certain lower-yielding U.S. Treasury securities that matured during the year ended December 31, 2024.

Net interest income was also impacted by an increase in interest expense from $6.6 million for the three months ended March 31, 2024 to $7.5 million for the three months ended March 31, 2025. The increase in interest expense was driven by both higher funding costs to maintain competitive pricing, and growth in average interest-bearing liabilities to fund interest-earning asset growth.

For the first quarter of 2025, the Company’s net interest margin decreased to 4.47%, compared to 4.85% for the first quarter of 2024. The decrease in net interest margin when compared to the first quarter of 2024 is reflective of the 100 basis point decrease in the federal funds rate on variable rate loans, investment securities, and interest bearing cash balances and interest income reversals relating to loans placed on nonaccrual status during the quarter.

The following table presents the effects of changing rates and volumes on net interest income for the 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.

*(Dollars in thousands)*

| INTEREST INCOME: | Three Months Ended March 31, 2025 vs. March 31, 2024 Increase (Decrease) Volume | Rate | Net |
| --- | ---: | ---: | ---: |
| Interest Bearing Deposits With Banks | $537 | $(317) | $220 |
| Investment Securities: |  |  |  |
| Taxable | 74 | 193 | 267 |
| Loans, Net | 2,926 | (1,420) | 1,506 |
| Federal Home Loan Bank Stock | 33 | (7) | 26 |
| Total Interest Income | 3,570 | (1,551) | 2,019 |
| INTEREST EXPENSE: |  |  |  |
| Interest Bearing Deposits: |  |  |  |
| Interest-bearing Demand | 2 | (40) | (38) |
| Money Market and Savings | 733 | (81) | 652 |
| Certificates of Deposit | 1,001 | (583) | 418 |
| Total Interest-Bearing Deposits | 1,736 | (704) | 1,032 |
| Short-Term Borrowings | (104) | - | (104) |
| Subordinated Debentures | 1 | (2) | (1) |
| Total Interest Expense | 1,633 | (706) | 927 |
| NET INTEREST INCOME | $1,937 | $(845) | $1,092 |

#### Provision Expense and Allowance for Credit Losses - Loans

The provision for credit losses on loans totaled $710 thousand for the first quarter of 2025. No provision for credit losses on loans was recorded during the first quarter of 2024. The allowance for credit losses was $9.0 million at March 31, 2025, compared to $9.1 million at December 31, 2024. The allowance for credit losses to total net loans was 1.07% at March 31, 2025, compared to 1.12% at December 31, 2024.

Net loan charge-offs of $828 thousand were recorded during the three months ended March 31, 2025. No loan charge-offs were recorded during during the first quarter of 2024. The net charge-offs recorded during the first quarter of 2025 were comprised of $624 thousand of charge-offs related to three commercial real estate – non-owner occupied loan relationship, $162 thousand of charge-offs related to two commercial and industrial loans, as well as $41 thousand of credit card charge-offs.

#### Noninterest Income

The following table presents the components of total noninterest income.

*(Dollars in thousands)*

|  | Three months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Gain on sale of loans | $2,537 | $2,083 | $454 | 21.8 |
| Loan servicing income | 703 | 60 | 643 | 1,071.7 |
| Service charges and fees | 56 | 41 | 15 | 36.6 |
| Net interchange fees | 2,003 | 20 | 1,983 | 9,915.0 |
| Other income | 164 | 201 | (37) | (18.4) |
| Total Noninterest Income | $5,463 | $2,405 | $3,058 | 127.2 |

Non-interest income was $5.5 million for the first quarter of 2025, compared to $2.4 million for the first quarter of 2024.

Gain on sale of loans increased 22% to $2.5 million for the three months ended March 31, 2025, compared to $2.1 million during the three months ended March 31, 2024. The increase in gain on sale of loans was driven by improved loan sale pricing, as the average pretax gain on loan sales as a percentage of the loan originated increased to 3.69% for the three months ended March 31, 2025, compared to 3.04% for the same period of 2024.

For the three months ended March 31, 2025, loan servicing income increased to $703 thousand, compared to $60 thousand for the three months ended March 31, 2024 due to both (i) an increase in the principal balance of loans serviced during the twelve months since March 31, 2024, and (ii) the first quarter of 2024 reflecting the write-off of certain loan servicing assets totaling $401 thousand relating to the repurchase of the guaranteed portion of previously sold loans.

Net interchange fees totaled $2.0 million for the three months ended March 31, 2025 compared to $20 thousand for the three months ended March 31, 2024. The increase in net interchange fees is attributable to transaction volume growth within GBank’s Visa Signature® Card product.

#### Noninterest Expense

The following table presents the components of total noninterest expense.

*(Dollars in thousands)*

|  | Three months Ended March 31, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Salaries and employee benefits | $6,400 | $5,290 | $1,110 | 21.0 |
| Data processing | 1,405 | 833 | 572 | 68.7 |
| Occupancy expense | 392 | 447 | (55) | (12.3) |
| Legal and professional fees | 700 | 397 | 303 | 76.3 |
| Loan related costs | 384 | 401 | (17) | (4.2) |
| Audits and exams | 497 | 85 | 412 | 484.7 |
| Advertising and marketing | 127 | 129 | (2) | (1.6) |
| FDIC insurance | 122 | 118 | 4 | 3.4 |
| Other | 880 | 674 | 206 | 30.6 |
| Total Noninterest Expense | $10,907 | $8,374 | $2,533 | 30.2 |

For the three months ended March 31, 2025, noninterest expense increased 30% to $10.9 million, compared to $8.4 million for the three months ended March 31, 2024.

For the three months ended March 31, 2025, salaries and employee benefits increased 21% to $6.4 million, compared to $5.3 million for the three months ended March 31, 2024. The increase was driven by (i) an increase in full-time equivalent employees to 175 at March 31, 2025, compared to 150 for the same period of 2024, and (ii) increased bonuses and commissions commensurate with loan originations and sales volume.

Data processing expense increased $572 thousand, or 69%, from $833 thousand for the three months ended March 31, 2024 to $1.4 million for the three months ended March 31, 2025. This increase reflects higher costs from transactional-based charges given the volume increases in loans and deposits over the last twelve months.

For the three months ended March 31, 2025, legal and professional fees totaled $700 thousand, an increase of 76% or $303 thousand when compared to $397 thousand for the three months ended March 31, 2024. Audits and exam expense totaled $497 thousand, an increase of over 400% or $412 thousand when compared to $85 thousand for the three months ended March 31, 2024. The increases in these categories 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.

Other noninterest expense totaled $880 thousand during the three months ended March 31, 2025, an increase of $206 thousand or 31% compared to $674 thousand during the three months ended March 31, 2024. The year-over-year increase was the result of growth within the organization, with increases reflected across several categories of expense.

### Income Taxes

Income tax expense was $1.2 million for the three months ended March 31, 2025, an increase of 10% or $112 thousand compared to $1.1 million for the three months ended March 31, 2024. The increase in income tax expense was primarily due to higher pre-tax earnings. The effective tax rate for the three months ended March 31, 2025 was 21.4% compared to 23.1% for the three months ended March 31, 2024. The decrease in the effective tax rate is attributable to the timing and volume of certain favorable discrete items related to excess tax benefits from stock-based compensation.

### Comparison of Financial Condition – March 31, 2025 and December 31, 2024

### Total Assets

Total assets increased 6% to $1.190 billion at March 31, 2025 compared to $1.122 million at December 31, 2024 primarily due to increases in net loans of $27.4 million as well as cash and equivalents of $22.8 million.

### Cash and Cash Equivalents

Cash and cash equivalents increased 18% from $124.1 million at December 31, 2024 to $147.0 million at March 31, 2025 as cash inflows from deposit growth more than offset cash outflows to fund loan growth during the first quarter of 2025.

### Investments

The Company maintains an investment security portfolio to generate income through interest and potential sales, manage liquidity for funding needs, support interest rate risk management, and meet regulatory requirements for high-quality liquid assets.

The investment security portfolio is comprised of held-to-maturity securities recorded at amortized cost and available for sale securities recorded at fair value. Held-to-maturity securities decreased $666 thousand to $39.9 million as of March 31, 2025, as compared to $40.6 million as of December 31, 2024. Available-for-sale securities increased $5.9 million from $65.6 million at December 31, 2024 to $71.5 million at March 31, 2025.

The following table presents the maturity composition and the weighted average yields of the investment portfolio as of March 31, 2025. Mortgage-backed security maturities are based on paydown trends in the most recent three-month period. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Weighted-average yield is calculated based on the amortized cost of each security.

*(Dollars in thousands)*

| As of March 31, 2025 Available for sale securities, at fair value: | Maturing One Year or Less Amount | Weighted Average Yield | After One Year Through Five Years Amount | Weighted Average Yield | After Five Years Through Ten Years Amount | Weighted Average Yield | After Ten Years Amount | Weighted Average Yield |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Residential mortgage-backed securities | $- | 0.00% | $12,030 | 4.74% | $23,262 | 4.53% | $36,176 | 4.62% |
| Total available for sale securities | $- | 0.00% | $12,030 | 4.74% | $23,262 | 4.53% | $36,176 | 4.62% |
| Held to maturity securities, at amortized cost: |  |  |  |  |  |  |  |  |
| Residential mortgage-backed securities | $1,220 | 7.74% | $- | 0.00% | $38,683 | 5.01% | $- | 0.00% |
| Total held to maturity securities | $1,220 | 7.74% | $- | 0.00% | $38,683 | 5.01% | $- | 0.00% |

31

#### Loans

Total loans, net of deferred loan costs and unamortized discounts, increased 3% to $843.4 million at March 31, 2025, compared to $816.0 million at December 31, 2024. Loan originations, including government guaranteed and non-guaranteed commercial loans, totaled $133.0 million during the first quarter of 2025, compared to $136.6 million for the same period in 2024.

The following table presents the ending balance of gross loans outstanding, by type.

*(Dollars in thousands)*

|  | March 31, 2025 Balance | Percent of Total Loans | December 31, 2024 Balance | Percent of Total Loans |
| --- | ---: | ---: | ---: | ---: |
| Commercial and industrial | $56,885 | 6.7% | $64,000 | 7.8% |
| Commercial real estate - non-owner occupied | 672,379 | 79.7 | 630,551 | 77.3 |
| Commercial real estate - owner occupied | 81,768 | 9.7 | 88,802 | 10.9 |
| Construction and land development | 3,201 | 0.4 | 2,934 | 0.4 |
| Multifamily | 19,011 | 2.3 | 17,374 | 2.1 |
| Single Family Sr. Lien | 3,859 | 0.5 | 5,992 | 0.7 |
| Single Family Jr. Lien | 3,322 | 0.4 | 3,203 | 0.4 |
| Single Family HELOC | 438 | 0.1 | 1,389 | 0.2 |
| Consumer | 2,502 | 0.2 | 1,713 | 0.2 |
| Loans, net | 843,365 | 100.0% | 815,958 | 100.0% |
| Allowance for credit losses | (8,997) |  | (9,114) |  |
| Loans, net of allowance | $834,368 |  | $806,844 |  |

Beginning in the third quarter of 2023, and continuing into the first quarter 2024, the Company repurchased previously sold guaranteed SBA loans by initiating a change in loan terms with certain borrowers, at the borrowers’ option, to convert variable loans to five-year fixed rate loans at lower current interest rates. The repurchase program was initiated in response to a rapid rise in the Wall Street Journal Prime Rate which has the potential to significantly impact our borrowers, the majority of whom are in variable rate loans. The Prime Rate increased from 3.25% to 8.50% between March 2022 and July 2023, an increase of 525 basis points. The Company received requests from borrowers due to the higher payments affecting borrowers’ cash flow and operations. Given the predicted economic outlook and anticipated interest rate reductions likely being delayed until late 2024, the Company decided to evaluate converting the variable rate structure to a fixed-rate based on a current credit evaluation. In response, the Bank reached out to request annual tax returns and updated financial information from borrowers. The Company began to repurchase previously sold guaranteed SBA loans by initiating a change in loan terms with certain borrowers, at the borrowers’ option, to convert variable loans to five-year fixed rate loans at the current market terms.

The process for evaluating, approving, and submitting repurchase packages to SBA was consistent with SOP 50 57 (3) and Section 7.6 of the Agreement. Updated financials from each borrower were reviewed to assess the viability of the business before preparing an interest rate modification document. Once the interest rate modification was approved internally, GBank sought approval for modifications, and submitted requests to the SBA to repurchase these SBA loans. According to the SOP, SBA shall review the repurchase request package, and based on the financial and other information provided determine whether an emergency repurchase of the SBA loan is appropriate for that specific borrower. This activity resulted in the repurchase of $106.1 million of United States government guaranteed loan balances within the commercial and industrial and commercial real estate segments during the year ended December 31, 2023. This program continued through the end of the first quarter of 2024, during which $44.2 million of the guaranteed portion of previously sold loans was repurchased in the three-month period ending March 31, 2024. The balance of guaranteed loans at March 31, 2025 was $245.6 million, representing 24.2% of loans. Comparatively, at December 31, 2024, the Company had $233.9 million of guaranteed loan balances representing 24.7% of loans. Given the stabilization of the interest rate environment the Company is not anticipating any material repurchases in the foreseeable future.

Net deferred loan costs totaled $9.1 million at March 31, 2025 and $8.2 million at December 31, 2024. Net deferred loan costs represent the costs incurred to originate loans, net of fees paid by the borrower, which are measured and recorded at the date the loan is originated. Unamortized discount totaled $9.2 million at March 31, 2025 and $8.9 million at December 31, 2024. The unamortized discount relates to the retained portion of government guaranteed loans and is based on the relative fair value of the retained loan as calculated by an independent consulting firm. Loan costs and discount are amortized over the life of the loan and are recorded as an adjustment to interest income on the loan.

Loans held for sale totaled $41.3 million at March 31, 2025 and consisted of commercial real estate – non-owner occupied, commercial real estate – owner occupied, and commercial and industrial loans. Loans held for sale totaled $32.6 million at December 31, 2024 and consisted of commercial real estate – non-owner occupied, commercial real estate – owner occupied, and commercial and industrial loans. The balance of unguaranteed portions to be retained are reported as held for investment.

The following table sets forth the dispersion of loan principal balances with amounts and the percentage of the total balances in the states with five percent of total gross loans:

*(Dollars in thousands)*

|  | March 31, 2025 Amounts | Percentage |
| --- | ---: | ---: |
| Nevada | $173,427 | 20.56% |
| North Carolina | 134,856 | 15.99% |
| Ohio | 60,654 | 7.19% |
| Illinois | 53,464 | 6.34% |
| California | 49,653 | 5.89% |
| Indiana | 48,679 | 5.77% |
| Texas | 43,371 | 5.14% |
| Virginia | 42,640 | 5.06% |
| Other | 236,621 | 28.06% |
|  | $843,365 | 100.00% |

### Credit Quality, Credit Risk, and Allowance for Credit Losses

In accordance with CECL guidance, the Company has grouped its loan portfolio into segments with similar risk characteristics based on factors such as loan type, credit risk profile, borrower characteristics, and other relevant attributes that influence the risk of default. By dividing loans into these segments, the Company can apply more tailored loss estimation techniques that reflect the specific credit risks associated with each segment.

Evaluations of the Company’s loan portfolio, its segments, and individual credits are inherently subjective and require significant judgments dependent on the circumstances at the time of the evaluation. As such, current period results are not an indication of future performance, and future evaluations may result in substantial changes to the allowance for credit losses and related provision expense as a result of changing economic conditions, asset quality, or loan portfolio composition in future periods.

For more information on the Company’s allowance for credit losses methodology, including the quantitative and qualitative factors used in the calculation, please see "Note 3 – Loans and Allowance for Credit Losses – Loans" within Notes to Consolidated Financial Statements.

The following table presents the allowance for credit loss as a percentage of total loans:

*(In Thousands)*

| As of March 31, 2025 | Total ACL - Loans | Total Loans | % of Total Loans Outstanding | Allowance as a % of Loan Category |
| --- | ---: | ---: | ---: | ---: |
| Commercial and industrial | $343 | $56,885 | 6.7% | 0.6% |
| Commercial real estate - non-owner occupied | 7,806 | 672,379 | 79.7 | 1.2 |
| Commercial real estate - owner occupied | 503 | 81,768 | 9.7 | 0.6 |
| Construction and land development | 48 | 3,201 | 0.4 | 1.5 |
| Multifamily | 62 | 19,011 | 2.3 | 0.3 |
| Single Family Sr Lien | 15 | 3,859 | 0.5 | 0.4 |
| Single Family Jr Lien | 9 | 3,322 | 0.4 | 0.3 |
| Single Family HELOC | 6 | 438 | 0.1 | 1.4 |
| Consumer | 205 | 2,502 | 0.3 | 8.2 |
| Total | $8,997 | $843,365 | 100.0% | 1.1% |

*(In Thousands)*

| As of December 31, 2024 | Total ACL - Loans | Total Loans | % of Total Loans Outstanding | Allowance as a % of Loan Category |
| --- | ---: | ---: | ---: | ---: |
| Commercial and industrial | $496 | $64,000 | 7.8% | 0.8% |
| Commercial real estate - non-owner occupied | 7,837 | 630,551 | 77.3 | 1.2 |
| Commercial real estate - owner occupied | 537 | 88,802 | 10.9 | 0.6 |
| Construction and land development | 49 | 2,934 | 0.4 | 1.7 |
| Multifamily | 39 | 17,374 | 2.1 | 0.2 |
| Single Family Sr Lien | 33 | 5,992 | 0.7 | 0.6 |
| Single Family Jr Lien | 14 | 3,203 | 0.4 | 0.4 |
| Single Family HELOC | 11 | 1,389 | 0.2 | 0.8 |
| Consumer | 98 | 1,713 | 0.2 | 5.7 |
| Total | $9,114 | $815,958 | 100.0% | 1.1% |

33

The allowance for credit losses decreased from $9.1 million at December 31, 2024 to $9.0 million at March 31, 2025. The allowance as a percentage of loan balances decreased from 1.12% at December 31, 2024 to 1.07% at March 31, 2025.

The following table presents non-performing assets and related ratios as of the periods presented.

*(Dollars in thousands)*

| Non-performing assets: | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Total nonaccrual loans | $19,220 | $14,128 |
| Loans 90 days past due and accruing | 1,153 | 40 |
| Total non-performing loans | 20,373 | 14,168 |
| Other real estate owned | - | - |
| Total non-performing assets | $20,373 | $14,168 |
| Non-performing loans to net loans | 2.42% | 1.74% |
| Nonaccrual loans to net loans | 2.28% | 1.73% |
| ACL to nonaccrual loans | 46.81% | 64.51% |
| ACL to gross loans | 1.07% | 1.12% |

The Company had $20.4 million of non-performing loans as of March 31, 2025, compared to $14.2 million of non-performing loans as of December 31, 2024. As of March 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 $20.4 million, of which $14.7 million is guaranteed by the SBA. Included in the balance of non-performing assets as of March 31, 2025 are $10.2 million of individually evaluated loans with specific credit loss reserves of $927 thousand assigned. As of December 31, 2024, the balance of non-performing loans was comprised of certain commercial real estate – non-owner occupied, commercial real estate – owner occupied, commercial and industrial loans, and consumer loans totaling $14.2 million, of which $9.3 million is guaranteed by the SBA. Included in the balance of non-performing assets as of December 31, 2024 are $12.5 million of individually evaluated loans with specific credit loss reserves of $1.4 million assigned.

The Company had no other real estate owned as of March 31, 2025 or December 31, 2024.

### Operating Lease Right of Use Asset

The operating lease right of use asset increased $1.4 million from $4.5 million at December 31, 2024 to $6.0 million at March 31, 2025 due to the modification of two leased locations resulting in a five year extensions of the lease terms.

### Loan Servicing Assets

Loan servicing assets increased $255 thousand from $9.0 million at December 31, 2024 to $9.2 million at March 31, 2025 primarily due the addition of servicing rights of $1.5 million relating to loans sold during the three months ended March 31, 2025. This increase was partially offset by loan servicing asset amortization of $1.3 million during the quarter.

### Federal Home Loan Bank Stock, At Cost

Federal Home Loan Bank (“FHLB”) stock was $4.7 million as of both March 31, 2025 and December 31, 2024. As a member of the FHLB, GBank is required to hold capital stock with this balance dependent upon GBank’s borrowing capacity with the FHLB.

### Other Assets

Other assets totaled $21.0 million at March 31, 2025, an increase of $1.6 million or 9% when compared to $19.4 million at December 31, 2024, with this increase largely attributable to growth of the organization driving increases in other miscellaneous receivables.

### Total Liabilities

The Company’s total liabilities increased $61.7 million or 6% to $1.043 billion at March 31, 2025 compared to $981.7 million at December 31, 2024. The increase in total liabilities was primarily attributable to an increase in total deposits of $60.9 million with the largest increases within time deposits and savings accounts.

### Deposits and Other Funding Sources

Total deposits increased 7% to $995.9 million at March 31, 2025, compared to $935.1 million at December 31, 2024. The year-to-date decrease in interest bearing demand deposits was offset by increases in time deposits, savings deposits, and non-interest bearing demand deposits. The increase in time deposit was partially offset by a net decrease of approximately $6.1 million of brokered deposits since December 31, 2024.

The following table presents the average balances of deposits by type and the related average interest rates for the periods presented:

*(Dollars in thousands)*

|  | March 31, 2025 Balance | Rate | December 31, 2024 Balance | Rate |
| --- | ---: | ---: | ---: | ---: |
| Noninterest-bearing Deposits | $218,874 | -% | $220,767 | -% |
| Interest-bearing Demand | 65,693 | 2.19 | 65,303 | 2.42 |
| Money Market and Savings | 264,085 | 3.70 | 186,372 | 3.80 |
| Certificates of Deposit | 385,704 | 4.69 | 309,221 | 5.26 |
|  | $934,356 | 0.77% | $781,663 | 0.79% |

Federal Deposit Insurance Corporation (“FDIC”) deposit insurance covers $250 thousand per depositor, per FDIC-insured bank, for each account ownership category. As of March 31, 2025, uninsured deposits were approximately $395.8 million compared to $385.7 million as of December 31, 2024.

The maturities of time deposits over $250 thousand were as follows:

*(Dollars in thousands)*

|  | March 31, 2025 Balance | Rate | December 31, 2024 Balance | Rate |
| --- | ---: | ---: | ---: | ---: |
| Noninterest-bearing Deposits | $218,874 | -% | $220,767 | -% |
| Interest-bearing Demand | 65,693 | 2.19 | 65,303 | 2.42 |
| Money Market and Savings | 264,085 | 3.70 | 186,372 | 3.80 |
| Certificates of Deposit | 385,704 | 4.69 | 309,221 | 5.26 |
|  | $934,356 | 0.77% | $781,663 | 0.79% |

### Short-term Borrowings and Subordinated Debt

The Company had no short-term borrowings as of March 31, 2025 or December 31, 2024.

Subordinated debt totaled $26.1 million as of both March 31, 2025 and December 31, 2024. See "Note 7 - Subordinated Debt, Other Borrowings, and Available Lines of Credit", within Notes to Consolidated Financial Statements.

### Operating Lease Liability

Operating lease liability increased $1.5 million, from $4.8 million at December 31, 2024 to $6.3 million at March 31, 2025 reflecting the modification of two leased locations resulting in five year extensions of the lease terms.

### Other Liabilities

Other liabilities totaled $15.0 million at March 31, 2025, a decrease of $609 thousand or 4% when compared to $15.7 million at December 31, 2024. This decrease was driven by a reduction in accrued interest payable due to an overall decline in the cost of interest-bearing deposits during the first quarter of 2025.

### Stockholders’ Equity and Capital

Stockholders' equity increased 4% to $146.6 million at March 31, 2025 compared to $140.7 million at December 31, 2024 with this increase driven primarily by the net income generated during the first quarter of 2025.

The sufficiency of a bank's capital to cover its risk exposures and absorb potential losses, and thus ensuring stability and solvency, is a key element of capital adequacy. Regulatory frameworks set minimum capital requirements that are typically expressed as a percentage of the bank's risk-weighted assets and include common equity tier 1, tier 1, and total capital ratios. These minimum capital requirements have been established so that banks maintain a buffer of capital to protect against financial shocks, sustain operations during economic downturns, and safeguard depositors and the financial system as a whole.

On November 4, 2019, the federal banking agencies jointly issued a final rule that provides 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. Banks opting into the CBLR framework are not required to calculate or report risk-based capital. The Company adopted the CBLR standards with its Call Report filed with the federal banking agencies for the quarter ended September 30, 2020.

Qualifying community banking organizations that elect to use the community bank leverage ratio framework and that maintain a leverage ratio of greater than 9 percent are considered to have satisfied the risk-based and leverage capital requirements in the agencies’ generally applicable capital rule. Additionally, such insured depository institutions are considered to have met the well-capitalized ratio requirements for purposes of section 38 of the Federal Deposit Insurance Act.

The main components and requirements of the community bank leverage ratio framework are as follows:

- Tier 1 Capital Leverage ratio greater than 9 percent
- Less than $10 billion in average total consolidated assets
- Off-balance-sheet exposures of 25 percent or less of total consolidated assets
- Trading assets plus trading liabilities of 5 percent or less of total consolidated assets
- Not an advanced approaches banking organization

As of March 31, 2025 and December 31, 2024, the Company and GBank were in compliance with the CBLR requirements.

The table below presents a summary of the main components and requirements of the CBLR:

*(Dollars in thousands)*

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Bank Tier 1 Capital Leverage Ratio | 14.23% | 12.90% |
| Average Total Consolidated Assets | $1,122,269 | $1,076,785 |
| Off-Balance-Sheet Exposures | $44,622 | $38,762 |
| Ratio of Off-Balance-Sheet Exposures to Total Assets | 3.76% | 3.47% |
| Trading Assets | None | None |
| Advances Approaching Banking Organization | No | No |

The Company's common equity to assets ratio was 12.3% as of March 31, 2025, compared to 12.5% as of December 31, 2024. The Company's book value per share was $10.27 as of March 31, 2025, an increase of 4% from $9.87 as of December 31, 2024.

### 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:

*(Dollars in thousands)*

|  | March 31, 2025 | December 31, 2024 |
| --- | ---: | ---: |
| Cash and due from banks | $6,701 | $9,262 |
| Interest-bearing deposits with other financial institutions | 140,270 | 114,860 |
| Investment securities, available for sale | 71,468 | 65,609 |
| Loans held for sale | 41,313 | 32,649 |
| Total primary liquidity sources | $259,752 | $222,380 |

The Company has a line of credit available from the FHLB of San Francisco. The unused borrowing capacity with the FHLB of San Francisco, as collateralized by qualifying securities and pledged loans, was approximately $90.0 million and $85.0 million, at March 31, 2025 and December 31, 2024, respectively. No draws have been made on the line and no balances were outstanding as of March 31, 2025 and December 31, 2024.

GBank participates in the Federal Reserve Bank’s Borrower-In-Custody (“BIC”) Program and, as of March 31, 2025 and December 31, 2024, the Company had pledged loans and investment securities with an approximate carrying value of $614.2 million and $590.5 million, respectively, to the BIC Program. Unused borrowing capacity at the Federal Reserve Bank totaled $369.7 million and $362.6 million as of March 31, 2025 and December 31, 2024, respectively.

The Company’s Consolidated Statement of Cash Flows presents additional information regarding the sources and uses of cash for the three months ended March 31, 2025. Operating activities resulted in a net decrease in cash of $5.7 million, as cash inflows from loan sales were more than offset cash outflows for the origination of loans held for sale. Investing activities resulted in a net decrease in cash of $32.9 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 $61.4 million, primarily due to a net increase in deposits during the three months ended March 31, 2025.

## Market risk

As filed, 204 characters.

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.

## Controls and procedures

As filed, 934 characters.

#### Evaluation of Disclosure Controls and Procedures

The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. Based upon their evaluation of those controls and procedures as of March 31, 2025, the Company’s management, with the participation of its Principal Executive Officer and its Principal Financial Officer, concluded that the disclosure controls and procedures were effective as of such date.

#### Changes in Internal Controls

There were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonable likely to materially affect, the Company’s internal control over financial reporting during the three months ended March 31, 2025.

## Risk factors

As filed, 153 characters.

As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A.

Filed May 28, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-078361. Last ingested by Listed: Nov 3, 2026, 18:22 ET. No prices; not investment advice.