GBank Financial Holdings Inc(GBFH) - 2025 Q2 - Quarterly Results

GBank Financial Holdings Inc. Second Quarter 2025 Financial Results Financial Highlights GBank reported net income of $4.8 million, or $0.33 per diluted share, for Q2 2025, achieving a record $160.5 million in SBA and commercial loan originations despite a minor decline in non-interest income Net Income and EPS | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income | $4.8 million | $4.5 million | $4.7 million | | Diluted EPS | $0.33 | $0.31 | $0.36 | | Net Income (YTD) | $9.2 million | - | $8.4 million | | Diluted EPS (YTD) | $0.63 | - | $0.65 | - Executive Chairman Edward M. Nigro noted a 1.5% QoQ decline in non-interest income due to a pause in credit card issuance and a lower gain on SBA loan sale margin of 3.16%, mitigated by the restart of credit card applications with Q3 volume already trending 35% higher and strong SBA loan originations of $132 million[3] Key Metrics (Q2 2025) | Key Metrics (Q2 2025) | Value | Comparison | | :--- | :--- | :--- | | Net Revenue | $17.8 million | +2.4% vs Q1 2025 | | Gain on Loan Sales | $2.6 million | on $82.1 million loans sold | | SBA & Commercial Loan Originations | $160.5 million | All-time record | | Non-performing Assets (excl. guaranteed) | $4.6 million | 0.37% of total assets | Financial Results Analysis The company's Q2 2025 performance featured strong net interest income growth driven by higher earning assets, balance sheet expansion, and improved efficiency, despite net interest margin compression and increased credit loss provisions Income Statement Analysis Net interest income grew significantly due to higher average earning assets, while non-interest expenses decreased, improving the efficiency ratio despite a compressed net interest margin and increased provision for credit losses Net Interest Income | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $12.4 million | $11.9 million | $11.4 million | | Change vs Q1 2025 | +$494 thousand (+4.2%) | - | - | | Change vs Q2 2024 | +$1.0 million (+9.2%) | - | - | - The Net Interest Margin (NIM) decreased to 4.31% in Q2 2025, down from 4.47% in Q1 2025 and 4.82% in Q2 2024, attributed to slightly lower loan yields and a decrease in the yield on investment securities[9] - The provision for credit losses on loans increased to $1.1 million in Q2 2025, up from $710 thousand in Q1 2025, reflecting organic loan growth and replenishment of reserves for charge-offs[10] - Non-interest expense decreased to $10.4 million in Q2 2025 from $10.9 million in Q1 2025, primarily due to lower non-recurring legal and professional fees, leading to an improved efficiency ratio of 58.5%[13] Balance Sheet Analysis The balance sheet expanded significantly year-over-year, with total assets, loans, and deposits showing robust growth, and stockholders' equity increasing substantially Balance Sheet Overview | Balance Sheet Item | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $1.23 billion | $1.19 billion | $1.01 billion | | Total Loans | $871.6 million | $843.4 million | $772.9 million | | Total Deposits | $1.032 billion | $995.9 million | $840.4 million | | Stockholders' Equity | $151.7 million | $146.6 million | $110.9 million | - The allowance for credit losses as a percentage of total loans, excluding guaranteed portions, was 1.36% as of June 30, 2025, compared to 1.41% as of March 31, 2025, and 1.32% as of June 30, 2024[18] - Book value per share increased to $10.63 as of June 30, 2025, representing a 3.5% increase from the prior quarter and a 25.2% increase from the prior year[24] Asset Quality Analysis Net loan charge-offs increased significantly year-over-year, and while total non-performing assets decreased quarter-over-quarter, they remain higher than the prior year, necessitating continued credit quality monitoring Net Loan Charge-offs | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Loan Charge-offs | $870 thousand | $828 thousand | $29 thousand | | Annualized Net Charge-offs to Avg. Loans | 0.38% | 0.39% | 0.01% | - Total non-performing assets (NPAs) decreased by $2.0 million during the quarter to $18.4 million, but increased by $10.8 million from June 30, 2024[30] Non-Performing Asset Ratios | Ratio | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | NPA to Total Assets | 1.49% | 1.71% | 0.75% | | NPA (excl. guaranteed) to Total Assets | 0.37% | 0.48% | 0.22% | - The company continues to closely monitor credit quality due to ongoing economic uncertainty, including the interest rate environment, inflation, and U.S. trade policy, noting that additional provisions for credit losses may be necessary in the future[33] Business Segment Highlights The SBA Lending and Commercial Banking segment achieved record loan originations, while the Gaming FinTech division experienced a temporary dip in transaction volume due to system enhancements, with strong rebound activity and ongoing new platform development - SBA lending and commercial banking loan originations reached a record $160.5 million for Q2 2025, though the average pretax gain on sale of loans margin decreased to 3.16% from 4.36% in Q2 2024[34] - In Gaming FinTech, the company completed system enhancements to internalize control of its credit card operations, which, combined with seasonality, led to a 22% QoQ decline in transaction volume to $82 million[35][36] - Despite the Q2 slowdown, the company began processing new card applications in mid-June and is already seeing significantly higher transaction volume compared to the second quarter[36] - The Prepaid Access/Slot program with BoltBetz has completed technology development and is awaiting final regulatory approvals, with a growing pipeline for new payments agreements[38] Supplementary Information This section provides details for the upcoming earnings call, a corporate profile, and important disclosures regarding non-GAAP financial measures and forward-looking statements - The company will host its Q2 2025 earnings call on Tuesday, July 29, 2025, at 10:00 a.m. PST via a ZOOM conference[40] - The company explains its use of non-GAAP financial measures, stating they provide a more complete understanding of its financial position and performance, with a reconciliation to GAAP measures provided at the end of the release[43][45] - The press release contains forward-looking statements subject to numerous known and unknown risks and uncertainties, including economic conditions, interest rate changes, and regulatory factors, cautioning readers not to place undue reliance on these statements[50] Consolidated Financial Statements (Tables) This section presents the detailed, unaudited consolidated financial statements and supplementary data for GBank Financial Holdings Inc. as of and for the periods ended June 30, 2025, including balance sheets, income statements, and key performance metrics Condensed Consolidated Balance Sheets Condensed Consolidated Income Statements Average Balances, Rates, and Interest Income and Expense Additional Financial Information Reconciliation of Non-GAAP Financial Measures