GBank posts $3.9 million profit as revenue falls 7.3% in third quarter
Key Facts
GBank Financial Holdings reported net income of $3.9 million, or $0.27 per diluted share, for the third quarter ended September 30, 2026, on October 28. Net income fell from $5.5 million and $0.38 per share in the second quarter, and from $4.3 million and $0.30 per share in the same period of 2025. Chief Executive Jeff Niegard said earnings were "below expectations," without the statement specifying the consensus estimate or the size of the shortfall. The company's shares closed at $17.47 on October 27, down 1.77% in the session before the results announcement. Available price data did not include a subsequent close with which to measure the share move after the announcement.
Net revenue was $20.3 million, down $1.6 million, or 7.3%, from $22.0 million in the prior quarter. The company attributed the decline to lower net interchange fees and fewer loan sales. Noninterest income fell by $2.4 million from the second quarter, with net interchange fees down $1.5 million. The company said the decline followed several large sports betting companies stopping acceptance of credit cards to fund accounts. Gains on loan sales also fell $0.8 million as fewer guaranteed loans were sold.
By contrast, net interest income rose to $13.6 million from $12.8 million in the second quarter, an increase of 6.4%, which the company attributed to growth in average loans and investments. Net interest margin rose to 3.95% from 3.78% in the prior quarter, but remained below the 4.35% recorded in the third quarter of 2025. Noninterest expense was $12.8 million, compared with $12.0 million in the second quarter and $12.3 million a year earlier. The company linked the quarterly increase mainly to a $1.1 million rise in salaries and employee benefits, including $0.5 million in severance expense. The efficiency ratio rose to 63.0% from 54.7% in the prior quarter and 61.1% a year earlier, which the company attributed to lower revenue and the presence of noncore expense items.
Adjusted net income, excluding noncore items, was $4.3 million, or $0.30 per adjusted diluted share, in the third quarter. The year-earlier comparison was $6.3 million and $0.44 per share in the third quarter of 2025. The company said noncore items in the current quarter totaled $0.6 million before taxes, including $0.5 million in severance expense and $0.1 million in fraud losses. For the nine months ended September 30, net income was $10.6 million and diluted earnings per share were $0.73. In the same period of 2025, the company recorded $13.5 million and $0.93 per share.
The provision for credit losses rose to $2.6 million in the third quarter from $2.2 million in the same period of 2025, after reaching $2.8 million in the second quarter. Nonperforming assets as a share of total assets were 3.72% on September 30, compared with 4.06% on June 30 and 2.88% a year earlier. Nonperforming assets included $25.5 million in government-guaranteed balances. Niegard said the legacy retail card portfolio's effect on credit provisions is expected to decline as the portfolio continues to contract. He added that the company is targeting the factors weighing on earnings by year-end, while saying its core banking franchise "performed well in the third quarter."
Loans, net of deferred fees and costs, totaled $1.1 billion on September 30, compared with $940.6 million a year earlier. Loans increased $24.5 million during the quarter, driven mainly by a $28 million rise in non-owner-occupied commercial real estate loans. The company recorded $4.7 million in gains on $84.5 million of loan sales in the third quarter, compared with gains of $5.5 million on $110.1 million of sales in the second quarter. In small business administration lending, originations were $171.7 million, up from $131.4 million in the prior quarter. Total assets were $1.5 billion, while total assets under management reached $2.7 billion, including $1.2 billion in loans sold that the company continues to service.
The company announced on October 22 that Jeff Niegard had been appointed president and chief executive, six days before the results announcement. Terrible’s is scheduled to launch its BoltBetz service in early November at 3 locations, with plans for a full expansion during 2027. The company also expected to launch the LuckyLoads prepaid card in the second quarter of 2027. The third-quarter earnings call was scheduled for October 28 at 2:00 p.m. Pacific time, giving management an opportunity to explain the figures. These dates place the company's upcoming operational initiatives within the context of efforts to address the pressures cited by the chief executive.