November 12, 2025 - 10-Q: Quarterly report [Sections 13 or 15(d)]

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 September 30, 2025


☐	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. Employer Identification 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 November 6, 2025, the registrant had 14,376,113 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements	1
	Consolidated Balance Sheets (Unaudited)	1
	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	42
Item 4.	Controls and Procedures	42

PART II.	OTHER INFORMATION	44

Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
Signatures		46

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2025 (this “Form 10-Q”) may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “consider,” “should,” “plan,” “estimate,” “predict,” “continue,” “probable,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of GBank Financial Holdings Inc. (the “Company”) and its wholly-owned subsidiary GBank (the “Bank”), and the Company’s strategies, plans, objectives, expectations and intentions, and other statements contained in this Form 10-Q that are not historical facts. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that are difficult to predict and are generally beyond our control and that may cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Factors that may cause actual results to differ from those results expressed or implied include those factors listed under the heading “Risk Factors” in the Company’s prospectus dated April 24, 2025, filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on April 25, 2025, pursuant to Rule 424(b) under the Securities Act of 1933, as amended (File No. 333-285750) and in this Form 10-Q. In addition, these factors include but are not limited to:

•

a failure to successfully manage our credit risk and the sufficiency of our allowance for credit losses;

•

changes in loan demand and declines in real estate values in the Company’s market area, which may adversely affect our loan production;

•

increased competition for deposits and related changes in deposit customer behavior;

•

borrower and depositor concentrations (e.g., by geographic area and by industry);

•

our ability to navigate the uncertain impacts of the current and future governmental monetary and fiscal policies, including the current and future interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and other regulatory bodies as a result of initiatives of the current U.S. presidential administration;

•

general economic conditions, including changes in unemployment rates, and potential recession, either nationally or locally, including the related effects on our borrowers and other clients, such as adverse changes to credit quality, and on our financial condition and results of operations;

•

the lingering inflationary pressures, and the risk of the resurgence of elevated levels of inflation, in the U.S. and our market areas, and its impact on market interest rates, the economy and credit quality;

•

an unanticipated loss of key personnel or existing clients, or an inability to attract key employees;

•

cybersecurity risk, including the risk of system failures or cybersecurity breaches of our information technology infrastructure and/or confidential information, or those of the Company’s third-party vendors and other service providers or those of our non-bank financial service clients for which we provide global payments infrastructure, including as a result of a cyber-attack, which could impact the Company’s reputation, increase regulatory oversight, and impact the financial results of the Company;

•

failure to maintain current technologies or technological changes and enhancements that may be more difficult or expensive to implement than anticipated, and failure to successfully implement future information technology enhancements;

•

emerging issues related to the development and use of artificial intelligence that could give rise to legal or regulatory action, damage our reputation or otherwise materially harm our business or clients;

•

the timely and efficient development of new products and services offered by the Company, as well as risks (including reputational and litigation) attendant thereto, and the perceived overall value and acceptance of these products and services by clients;

•

the successful implementation or consummation of new business initiatives, which may be more difficult or expensive than anticipated;

•

an unexpected adverse financial, regulatory, legal or bankruptcy event experienced by our financial service clients;

•

unexpected increases in our expenses;

•

changes in liquidity, including funding sources, deposit flows and the size and composition of our deposit portfolio, and the percentage of uninsured deposits in the portfolio;

•

an unexpected deterioration in the performance of our loan or securities portfolios and our inability to absorb the amount of actual losses inherent in the portfolio;

•

increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all;

•

our ability to maintain adequate liquidity and to raise necessary capital to fund our acquisition strategy and operations or to meet increased minimum regulatory capital levels;

•

difficulties associated with achieving or predicting expected future financial results;

•

different than anticipated growth and our ability to manage our growth;

•

increases in competitive pressures among financial institutions or from non-financial institutions which may result in unanticipated changes in our loan or deposit rates;

•

unexpected adverse impact of future acquisitions or divestitures;

•

impacts related to or resulting from regional and community bank failures and stresses to regional banks, or conditions in the securities markets or the banking industry being less favorable than currently anticipated;

•

changes in accounting principles, policies or guidelines may cause the Company’s financial condition or results of operation to be reported or perceived differently;

•

employee error, fraudulent activity by employees or customers and inaccurate or incomplete information about our customers and counterparties;

•

a deterioration of the credit rating for U.S. long-term sovereign debt or uncertainty regarding U.S. fiscal debt, deficit and budget matters;

•

the impacts of tariffs, sanctions and other trade policies of the U.S. and its global trading counterparts and the resulting impact on the Company and its customers;

•

delays in origination and sales of U.S. Small Business Administration loans due to U.S. federal government temporary shutdowns;

•

legislative, tax or regulatory changes or actions, including changes and the potential for changes to regulatory policy and the promulgation of new laws and regulations may adversely affect the Company’s business;

•

unanticipated increases in FDIC insurance premiums or future assessments;

•

the costs, including the possible incurrence of fines, penalties, or other negative effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party, and which may adversely affect our results; and

•

the current or the potential impact on the Company’s operations, financial condition, and clients resulting from natural or man-made disasters, severe weather, acts of god, wars, military conflict, acts of terrorism, geopolitical instability, cyberattacks, public health outbreaks (such as coronavirus), other international or domestic calamities, and other events beyond our control, including as a result of in the policies of the current U.S. presidential administration or Congress.

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.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

GBank Financial Holdings Inc. and Subsidiary

Consolidated Balance Sheets (Unaudited)


(Dollars in thousands, except per share data)
ASSETS	September 30, 2025			December 31, 2024
Cash and due from banks	$	4,988		$	9,262
Interest-bearing deposits with other financial institutions		98,402			114,860
Total cash and cash equivalents		103,390			124,122

Investment securities:
Available for sale, at fair value (amortized cost of $85,506 at September 30, 2025 and $67,308 at December 31, 2024)		85,774			65,609
Held to maturity, at amortized cost (fair value of $38,856 at September 30, 2025 and $40,392 at December 31, 2024)		38,578			40,569
Loans held for sale		66,791			32,649
Loans, net of deferred fees and costs		940,591			815,958
Less: Allowance for credit losses		(10,577	)		(9,114	)
Loans, net		930,014			806,844

Premises and equipment, net		855			835
Operating lease right-of-use asset		5,516			4,518
Bank-owned life insurance		29,700			14,236
Loan servicing assets, net		10,621			8,976
Federal Home Loan Bank stock, at cost		5,513			4,652
Other real estate owned		2,684			-
Other assets		21,942			19,354
Total Assets	$	1,301,378		$	1,122,364

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand	$	227,921		$	239,672
Interest-bearing demand		63,741			68,132
Savings		281,435			256,724
Time		519,080			370,552
Total deposits		1,092,177			935,080

Subordinated debt		26,144			26,088
Operating lease liability		5,942			4,839
Other liabilities		18,922			15,657
Total liabilities		1,143,185			981,664

Commitments and Contingencies (Note 10)

Stockholders' Equity:
Common stock, par value $0.0001; 50,000,000 shares authorized; 14,287,776 shares issued and outstanding at September 30, 2025 and 14,252,435 shares issued and outstanding at December 31, 2024		1			1
Additional paid-in capital		80,016			77,571
Retained earnings		77,970			64,437
Accumulated other comprehensive income (loss)		206			(1,309	)
Total Stockholders' Equity		158,193			140,700
Total Liabilities and Stockholders' Equity	$	1,301,378		$	1,122,364

See Notes to Consolidated Financial Statements (Unaudited).

GBank Financial Holdings Inc. and Subsidiary

Consolidated Statements of Income (Unaudited)


(Dollars in thousands, except per share data)	Three Months Ended September 30,					Nine Months Ended September 30,
INTEREST INCOME	2025			2024		2025			2024
Interest and fees on loans	$	18,919		$	17,347	$	53,413		$	49,036
Interest on deposits with other financial institutions		1,160			1,367		3,718			3,505
Taxable interest on investment securities		1,421			924		4,117			2,806
Other interest bearing balances		122			102		338			272
Total interest income		21,622			19,740		61,586			55,619

INTEREST EXPENSE
Interest on deposits		8,339			7,194		23,473			20,240
Interest on short-term borrowings		-			2		-			112
Interest on subordinated debt		285			285		833			857
Total interest expense		8,624			7,481		24,306			21,209
Net interest income		12,998			12,259		37,280			34,410
PROVISION FOR CREDIT LOSSES		2,219			578		4,032			893
Net interest income after provision for credit losses		10,779			11,681		33,248			33,517

NONINTEREST INCOME
Gain on sale of loans		3,592			2,838		8,722			8,084
Loan servicing income		762			566		2,215			1,160
Service charges and fees		60			48		171			130
Net interchange fees		2,406			284		5,944			451
Other income		357			166		971			649
Total noninterest income		7,177			3,902		18,023			10,474

NONINTEREST EXPENSE
Salaries and employee benefits		6,589			5,495		19,224			16,537
Data processing		1,637			930		4,375			2,470
Occupancy expense		418			404		1,210			1,269
Legal and professional fees		644			424		1,915			1,571
Loan related costs		576			443		1,290			1,278
Audits and exams		262			224		1,157			462
Advertising and marketing		1,141			135		1,876			391
FDIC insurance		134			111		385			336
Other		916			889		2,187			2,251
Total noninterest expense		12,317			9,055		33,619			26,564
INCOME BEFORE PROVISION FOR INCOME TAXES		5,639			6,528		17,652			17,427
Provision for income taxes		1,282			1,513		3,992			4,035
NET INCOME BEFORE EQUITY INVESTMENT LOSS		4,357			5,015		13,660			13,392
Net loss attributable to equity investment		(49	)		-		(127	)		-
NET INCOME	$	4,308		$	5,015	$	13,533		$	13,392

PER COMMON SHARE DATA
Basic earnings per common share	$	0.30		$	0.38	$	0.95		$	1.04
Diluted earnings per common share	$	0.30		$	0.38	$	0.93		$	1.02
Weighted-average basic shares outstanding		14,280,165			13,066,656		14,269,955			12,896,611
Weighted-average diluted shares outstanding		14,525,422			13,235,935		14,509,956			13,074,782

See Notes to Consolidated Financial Statements (Unaudited).

GBank Financial Holdings Inc. and Subsidiary

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(Dollars in thousands)	2025			2024			2025			2024
Net income	$	4,308		$	5,015		$	13,533		$	13,392
Other comprehensive income, before tax:
Unrealized gains on securities available for sale		1,832			132			1,967			201
Income tax expense related to unrealized
gains on securities available for sale		(421	)		(30	)		(452	)		(46	)
Total other comprehensive income, net of tax		1,411			102			1,515			155
Comprehensive income	$	5,719		$	5,117		$	15,048		$	13,547

See Notes to Consolidated Financial Statements (Unaudited).

GBank Financial Holdings Inc. and Subsidiary

Consolidated Statements of Stockholders’ Equity (Unaudited)


									Accumulated
					Additional				Other
	Common Stock				Paid-In		Retained		Comprehensive
(Dollars in thousands)	Shares		Amount		Capital		Earnings		Income (Loss)			Total
Balance, December 31, 2023		12,746,649	$	1	$	52,877	$	45,801	$	(252	)	$	98,427

Net income		-		-		-		3,701		-			3,701
Other comprehensive loss, net of tax		-		-		-		-		(6	)		(6	)
Exercise of stock options		70,375		-		106		-		-			106
Director Compensation Plan		6,526		-		98		-		-			98
Other stock-based compensation		-		-		240		-		-			240
Balance, March 31, 2024		12,823,550	$	1	$	53,321	$	49,502	$	(258	)	$	102,566

Net income		-		-		-		4,676		-			4,676
Other comprehensive income, net of tax		-		-		-		-		59			59
Common stock issued to BCS		231,508		-		3,299		-		-			3,299
Director Compensation Plan		6,185		-		103		-		-			103
Other stock-based compensation		-		-		242		-		-			242
Balance, June 30, 2024		13,061,243	$	1	$	56,965	$	54,178	$	(199	)	$	110,945

Net income		-		-		-		5,015		-			5,015
Other comprehensive income, net of tax		-		-		-		-		102			102
Director Compensation Plan		5,472		-		80		-		-			80
Other stock-based compensation		-		-		241		-		-			241
Balance, September 30, 2024		13,066,715	$	1	$	57,286	$	59,193	$	(97	)	$	116,383


									Accumulated
					Additional				Other
	Common Stock				Paid-In		Retained		Comprehensive
(Dollars in thousands)	Shares		Amount		Capital		Earnings		Income (Loss)			Total
Balance, December 31, 2024		14,252,435	$	1	$	77,571	$	64,437	$	(1,309	)	$	140,700

Net income		-		-		-		4,470		-			4,470
Other comprehensive income, net of tax		-		-		-		-		300			300
Exercise of stock options		16,000		-		24		-		-			24
Director Compensation Plan		2,477		-		91		-		-			91
Other stock-based compensation		-		-		483		-		-			483
Stock option loan activity		-		-		548		-		-			548
Balance, March 31, 2025		14,270,912	$	1	$	78,717	$	68,907	$	(1,009	)	$	146,616

Net income		-		-		-		4,755		-			4,755
Other comprehensive loss, net of tax		-		-		-		-		(196	)		(196	)
Director Compensation Plan		2,607		-		84		-		-			84
Other stock-based compensation		-		-		490		-		-			490
Balance, June 30, 2025		14,273,519	$	1	$	79,291	$	73,662	$	(1,205	)	$	151,749

Net income		-		-		-		4,308		-			4,308
Other comprehensive income, net of tax		-		-		-		-		1,411			1,411
Exercise of stock options		11,234		-		202		-		-			202
Director Compensation Plan		3,023		-		128		-		-			128
Other stock-based compensation		-		-		395		-		-			395
Balance, September 30, 2025		14,287,776	$	1	$	80,016	$	77,970	$	206		$	158,193

See Notes to Consolidated Financial Statements (Unaudited).

GBank Financial Holdings Inc. and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended
(Dollars in thousands)	September 30, 2025			September 30, 2024
Cash flows from operating activities:
Net income	$	13,533		$	13,392
Adjustments to reconcile net income to net cash used in operating activities:
Provision for credit losses		4,032			893
Depreciation		175			188
Amortization and writeoff of loan servicing assets		4,150			3,647
Amortization of operating lease right of use assets		656			600
Amortization of subordinated debt issuance costs		56			57
Investment securities amortization and accretion, net		(573	)		(243	)
Stock compensation expense		1,671			1,005
Gain on sale of loans		(8,722	)		(8,084	)
Gross originations of loans held for sale		(309,916	)		(260,003	)
Proceeds from sale of loans held for sale		278,701			233,414
Income from bank owned life insurance		(464	)		(300	)
Net change in deferred income taxes		(536	)		-
Decrease (increase) in accrued interest receivable		89			(1,510	)
(Decrease) increase in other assets		(2,593	)		60
Net change in operating lease liability		(551	)		(465	)
Increase in accrued interest payable and other liabilities		3,265			4,253
Net cash used in operating activities		(17,027	)		(13,096	)

Cash flows from investing activities:
Purchases of premises and equipment		(195	)		(172	)
Purchase of bank owned life insurance		(15,000	)		-
Purchase of securities available for sale		(28,832	)		(37,227	)
Maturities and repayments of investment securities available for sale		11,252			752
Maturities and repayments of investment securities held to maturity		1,946			51,879
Purchase of FHLB stock		(861	)		(1,429	)
Purchased loans		-			(44,184	)
Net change in loans		(129,886	)		(91,424	)
Net cash used in investing activities		(161,576	)		(121,805	)

Cash flows from financing activities:
Net increase in deposits		157,097			137,820
Net change in short-term borrowings		-			(30,000	)
Proceeds from repayment of stock option loans		548			-
Net proceeds from issuance of common stock		226			106
Net cash provided by financing activities		157,871			107,926

Net decrease in cash and cash equivalents		(20,732	)		(26,975	)
Cash and cash equivalents beginning of period		124,122			97,933
Cash and cash equivalents end of period	$	103,390		$	70,958

Supplemental disclosures of cash flow information:
Cash payments for interest	$	24,268		$	25,859
Cash payments for income tax		3,236			3,895

Supplemental schedule of noncash investing and financing activities
Right of use asset and lease liabilities	$	1,654		$	-
Capitalized mortgage servicing rights		5,795			4,640
Loans transferred to other real estate owned		2,684			-
Loans held for sale transferred to held for investment		-			53,292
Investment in BankCard Services LLC		-			3,299

See Notes to Consolidated Financial Statements (Unaudited).

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 nine months ended September 30, 2025. The December 31, 2024 consolidated balance sheet information contained in this Quarterly Report on Form 10-Q was derived from the Company's 2024 audited consolidated financial statements. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2024, including the notes thereto, included in the Company’s Registration Statement on Forms S-1 and S-1/A. Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. All significant intercompany transactions and accounts have been eliminated.

The Company has one reportable segment. The Company’s chief operating decision maker (“CODM”) evaluates the operations of the Company using consolidated information for purposes of allocating resources and assessing performance. See Note 12 - Segment Reporting for more information.

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 855, “Subsequent Events,” the Company’s management has evaluated subsequent events for potential recognition or disclosure through the date of the issuance of these consolidated financial statements. No subsequent events were identified that would have required a change to the consolidated financial statements or disclosure in the notes to the consolidated financial statements.

To prepare financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

Nature of Operations

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.

Recent Accounting Pronouncements Adopted

The following reflect accounting pronouncements adopted by the Company:

ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU 2023-09”), was issued in December 2023 to enhance income tax disclosures primarily through the disaggregation of the rate reconciliation and disclosure of income taxes paid to each federal and state jurisdiction (net of refunds). The amendments in this update are effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, and may be applied on a prospective or retrospective basis. As the amendments in this update relate entirely to enhanced disclosure requirements, adoption of this guidance will not have an impact on the Company's financial position or results of operations. The Company expects to provide these enhanced income tax disclosures beginning with its annual report on Form 10-K filing for the year ending December 31, 2025.

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.

Other Recent Legislation

On July 4, 2025, new federal tax legislation was signed into law. The legislation includes a range of tax reform measures, including the extension and modification of certain provisions originally enacted under the Tax Cuts and Jobs Act. Key changes include the restoration of 100% bonus depreciation, immediate expensing for domestic research and development expenditures, and modifications to international tax rules. The impact of this legislation is not expected to be material to the Company’s consolidated financial position and results of operations for the year ending December 31, 2025.

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:


	September 30, 2025
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Allowance for		Fair
	Cost		Gains		Losses			Credit Losses		Value
Available for sale securities:
Residential mortgage-backed securities	$	85,506	$	836	$	(568	)	$	-	$	85,774
Held to maturity securities:
Residential mortgage-backed securities	$	38,578	$	281	$	(3	)	$	-	$	38,856


	December 31, 2024
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Allowance for		Fair
	Cost		Gains		Losses			Credit Losses		Value
Available for sale securities:
Residential mortgage-backed securities	$	67,308	$	-	$	(1,699	)	$	-	$	65,609
Held to maturity securities:
Residential mortgage-backed securities	$	40,569	$	46	$	(223	)	$	-	$	40,392

Accrued interest receivable is excluded from the estimate of credit losses for available for sale and held to maturity securities. At September 30, 2025, accrued interest receivable totaled $246 thousand for available for sale securities and $161 thousand for held to maturity securities, and was reported in other assets on the Company’s consolidated balance sheets. At December 31, 2024, accrued interest receivable totaled $194 thousand for available for sale securities and $170 thousand for held to maturity 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 each of the three- and nine-month periods ended September 30, 2025 or 2024.

The fair value of investment securities pledged as collateral for potential borrowing purposes (see Note 7) totaled $112.5 million at September 30, 2025 and $79.7 million at December 31, 2024.

The table below illustrates the maturity distribution of investment securities at amortized cost and fair value as of September 30, 2025:


(Dollars in thousands)	September 30, 2025
	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	-	$	-	$	-	$	-
Due after one but within five years		-		-		-		-
Due after five years but within ten years		-		-		-		-
Due after ten years		-		-		-		-
Residential mortgage-backed securities		85,506		85,774		38,578		38,856
Total	$	85,506	$	85,774	$	38,578	$	38,856

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.


	September 30, 2025
	Less Than 12 Months					12 Months or More					Total
(Dollars in thousands)	Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses
Available for sale securities:
Residential mortgage-backed securities	2	$	2,126	$	6	14	$	30,729	$	562	16	$	32,855	$	568
Available for sale securities with gross unrealized losses	2		2,126		6	14		30,729		562	16		32,855		568

Held to maturity securities:
Residential mortgage-backed securities	1	$	-	$	-	0	$	4,827	$	3	1	$	4,827	$	3
Held to maturity securities with gross unrealized losses	1		-		-	0		4,827		3	1		4,827		3


	December 31, 2024
	Less Than 12 Months					12 Months or More					Total
	Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses
Available for sale securities:
Residential mortgage-backed securities	16	$	63,474	$	1,445	6	$	2,135	$	254	22	$	65,609	$	1,699
Available for sale securities with gross unrealized losses	16		63,474		1,445	6		2,135		254	22		65,609		1,699

Held to maturity securities:
Residential mortgage-backed securities	1	$	4,353	$	15	6	$	32,026	$	208	7	$	36,379	$	223
Held to maturity securities with gross unrealized losses	1		4,353		15	6		32,026		208	7		36,379		223

Management believes the unrealized losses related to available for sale securities as of September 30, 2025 relate primarily to a continuation of the elevated market interest rate environment. In analyzing an issuer’s financial condition, Management considers whether the securities are issued by the federal government or its agencies and whether downgrades by bond rating agencies have occurred, and various industry analysis reports. There were no Company securities downgraded during each of the three- and nine-month periods ended September 30, 2025 or 2024. Management currently has no near-term intentions to sell the available for sale securities in an unrealized loss position, and management believes the unrealized losses are due to non-credit-related factors, including changes in market interest rates and other market factors, and therefore no allowance for credit losses was recorded related to available for sale securities as of September 30, 2025 or December 31, 2024.

Held to maturity Investment Grade CMO securities are evaluated for credit losses using the probability of default/loss model, and as of September 30, 2025 and December 31, 2024, no credit loss allowance was warranted related to these securities.

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 September 30, 2025 and December 31, 2024. 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:


(Dollars in thousands)	September 30, 2025		December 31, 2024
Gross loan balances	$	88,734	$	41,752
Less: Unguaranteed portions to be retained		21,943		9,103
Amounts held for sale, net	$	66,791	$	32,649

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.


(Dollars in thousands)
	September 30, 2025			December 31, 2024
Commercial and industrial	$	66,226		$	64,000
Commercial real estate - non-owner occupied		743,084			630,551
Commercial real estate - owner occupied		97,396			88,802
Construction and land development		2,115			2,934
Multifamily		18,979			17,374
Single Family Sr. Lien		731			5,992
Single Family Jr. Lien		2,664			3,203
Single Family HELOC		433			1,389
Consumer		8,963			1,713
Loans, net		940,591			815,958
Allowance for credit losses		(10,577	)		(9,114	)
Loans, net of allowance	$	930,014		$	806,844

Accrued interest receivable is not included in the amortized cost basis of the Company’s loans. Accrued interest receivable for loans totaled $6.9 million and $6.7 million as of September 30, 2025 and December 31, 2024, respectively, and was reported in other assets on the Company’s consolidated balance sheets.

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 loans at lower then-current interest rates. This activity resulted in the repurchase of $44.2 million of government guaranteed loan balances within the commercial and industrial and commercial real estate segments during the three months ended March 31, 2024.

Deferred loan costs of $10.5 million and $8.2 million are included in the balance of net loans as of September 30, 2025 and December 31, 2024, 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 $10.4 million and $8.9 million are included in the balance of net loans as of September 30, 2025 and December 31, 2024, 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 September 30, 2025 and December 31, 2024, Company loans with a carrying value of $648.7 million and $598.3 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 $193.7 million and $201.3 million as of September 30, 2025 and December 31, 2024, 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:


	September 30, 2025
(Dollars in thousands)					Past Due 90				Total
	30-59 Days		60-89 Days		Days or More				Past Due and
	Past Due		Past Due		and Accruing		Nonaccrual		Nonaccrual		Current		Total
Commercial and industrial	$	-	$	-	$	-	$	373	$	373	$	65,853	$	66,226
Commercial real estate - non-owner occupied		3,372		-		-		32,174		35,546		707,538		743,084
Commercial real estate - owner occupied		-		-		-		2,061		2,061		95,335		97,396
Construction and land development		-		-		-		-		-		2,115		2,115
Multifamily		-		-		-		-		-		18,979		18,979
Single Family Sr. Lien		-		-		-		-		-		731		731
Single Family Jr. Lien		-		-		-		-		-		2,664		2,664
Single Family HELOC		-		-		-		-		-		433		433
Consumer		174		49		184		-		407		8,556		8,963
Total	$	3,546	$	49	$	184	$	34,608	$	38,387	$	902,204	$	940,591


	December 31, 2024
(Dollars in thousands)					Past Due 90				Total
	30-59 Days		60-89 Days		Days or More				Past Due and
	Past Due		Past Due		and Accruing		Nonaccrual		Nonaccrual		Current		Total
Commercial and industrial	$	-	$	-	$	-	$	787	$	787	$	63,213	$	64,000
Commercial real estate - non-owner occupied		11,795		-		-		13,341		25,136		605,415		630,551
Commercial real estate - owner occupied		-		-		-		-		-		88,802		88,802
Construction and land development		-		-		-		-		-		2,934		2,934
Multifamily		-		-		-		-		-		17,374		17,374
Single Family Sr. Lien		-		-		-		-		-		5,992		5,992
Single Family Jr. Lien		-		-		-		-		-		3,203		3,203
Single Family HELOC		-		-		-		-		-		1,389		1,389
Consumer		18		15		40		-		73		1,640		1,713
Total	$	11,813	$	15	$	40	$	14,128	$	25,996	$	789,962	$	815,958

There were no residential loans for which formal foreclosure proceedings were in place at September 30, 2025 or December 31, 2024.

Loans are placed on nonaccrual status when management determines that the full repayment of principal and collection of interest according to contractual terms is no longer likely, generally when the loan becomes 90 days or more past due. No interest income was recognized on nonaccrual loans during the three or nine months ended September 30, 2025 or 2024.

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:

•

Pass: Loans that are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. Loans in this grade are further broken down into sub-grades ranging from A to E in order to provide for additional granularity in the analyses that are performed.

•

Special Mention: Loans where a potential weakness or risk exists that could cause a more serious problem if not corrected.

•

Substandard: Loans that have a well-defined weakness based on objective evidence and can be characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

•

Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make full collection or liquidation highly questionable and improbable, based upon the existing circumstances.

•

Loss: Loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

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 September 30, 2025 and December 31, 2024. Current period originations may include modifications, extensions and renewals.


As of and for the nine months ended September 30, 2025	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Amortized Cost Basis		Total
Commercial and industrial
Risk rating
Pass	$	16,937	$	10,155	$	7,000	$	5,669	$	429	$	2,021	$	23,642	$	65,853
Special mention		-		-		-		-		-		-		-		-
Substandard		-		24		349		-		-		-		-		373
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	16,937	$	10,179	$	7,349	$	5,669	$	429	$	2,021	$	23,642	$	66,226
Current period gross charge offs	$	124	$	241	$	116	$	46	$	-	$	-	$	-	$	527
Commercial real estate - non-owner occupied
Risk rating
Pass	$	137,288	$	171,310	$	148,868	$	82,679	$	57,392	$	102,080	$	-	$	699,617
Special mention		-		766		-		387		238		6,607		-		7,998
Substandard		-		-		3,069		13,985		9,945		8,470		-		35,469
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	137,288	$	172,076	$	151,937	$	97,051	$	67,575	$	117,157	$	-	$	743,084
Current period gross charge offs			$	-	$	-	$	474	$	642	$	619	$	-	$	1,735
Commercial real estate - owner occupied
Risk rating
Pass	$	29,134	$	3,123	$	9,467	$	13,318	$	18,585	$	18,574	$	-	$	92,201
Special mention		-		-		3,134		-		-		-		-		3,134
Substandard		-		1,252		505		-		304		-		-		2,061
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	29,134	$	4,375	$	13,106	$	13,318	$	18,889	$	18,574	$	-	$	97,396
Current period gross charge offs	$	-	$	138	$	-	$	-	$	-	$	-	$	-	$	138
Construction and land development
Risk rating
Pass	$	1,725	$	-	$	-	$	390	$	-	$	-	$	-	$	2,115
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	1,725	$	-	$	-	$	390	$	-	$	-	$	-	$	2,115
Multifamily
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	18,979	$	-	$	18,979
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	-	$	18,979	$	-	$	18,979
Single family Sr. Lien
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	167	$	564	$	731
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	-	$	167	$	564	$	731
Single family Jr. Lien
Risk rating
Pass	$	-	$	-	$	-	$	2,500	$	-	$	-	$	164	$	2,664
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	2,500	$	-	$	-	$	164	$	2,664
Single family HELOC
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	433	$	433
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	-	$	-	$	433	$	433
Consumer
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	8,963	$	8,963
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	-	$	-	$	8,963	$	8,963
Current period gross charge offs	$	-	$	-	$	-	$	-	$	-	$	-	$	216	$	216
Total Loans
Risk rating
Pass	$	185,084	$	184,588	$	165,335	$	104,556	$	76,406	$	141,821	$	33,766	$	891,556
Special mention		-		766		3,134		387		238		6,607		-		11,132
Substandard		-		1,276		3,923		13,985		9,945		8,470		-		37,903
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	185,084	$	186,630	$	172,392	$	118,928	$	86,589	$	156,898	$	33,766	$	940,591


As of December 31, 2024	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Amortized Cost Basis		Total
Commercial and industrial
Risk rating
Pass	$	12,799	$	7,856	$	8,098	$	653	$	2,378	$	297	$	31,132	$	63,213
Special mention		-		-		-		-		-		-		-		-
Substandard		-		465		322		-		-		-		-		787
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	12,799	$	8,321	$	8,420	$	653	$	2,378	$	297	$	31,132	$	64,000
Commercial real estate - non-owner occupied
Risk rating
Pass	$	169,036	$	156,213	$	92,786	$	68,676	$	39,739	$	80,413	$	-	$	606,863
Special mention		-		-		-		4,256		-		3,904		-		8,160
Substandard		-		-		3,220		7,486		-		4,822		-		15,528
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	169,036	$	156,213	$	96,006	$	80,418	$	39,739	$	89,139	$	-	$	630,551
Commercial real estate - owner occupied
Risk rating
Pass	$	5,985	$	13,526	$	20,585	$	27,111	$	3,883	$	17,712	$	-	$	88,802
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	5,985	$	13,526	$	20,585	$	27,111	$	3,883	$	17,712	$	-	$	88,802
Construction and land development
Risk rating
Pass	$	2,545	$	389	$	-	$	-	$	-	$	-	$	-	$	2,934
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	2,545	$	389	$	-	$	-	$	-	$	-	$	-	$	2,934
Multifamily
Risk rating
Pass	$	-	$	-	$	-	$	-	$	7,266	$	10,108	$	-	$	17,374
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	7,266	$	10,108	$	-	$	17,374
Single family Sr. Lien
Risk rating
Pass	$	-	$	828	$	-	$	1,820	$	-	$	2,879	$	465	$	5,992
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	-	$	828	$	-	$	1,820	$	-	$	2,879	$	465	$	5,992
Single family Jr. Lien
Risk rating
Pass	$	-	$	-	$	2,499	$	-	$	-	$	700	$	4	$	3,203
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	2,499	$	-	$	-	$	700	$	4	$	3,203
Single family HELOC
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	1,389	$	1,389
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	-	$	-	$	1,389	$	1,389
Consumer
Risk rating
Pass	$	-	$	-	$	-	$	-	$	-	$	-	$	1,713	$	1,713
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	-	$	-	$	-	$	-	$	-	$	-	$	1,713	$	1,713
Total Loans
Risk rating
Pass	$	190,365	$	178,812	$	123,968	$	98,260	$	53,266	$	112,109	$	34,703	$	791,483
Special mention		-		-		-		4,256		-		3,904		-		8,160
Substandard		-		465		3,542		7,486		-		4,822		-		16,315
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total	$	190,365	$	179,277	$	127,510	$	110,002	$	53,266	$	120,835	$	34,703	$	815,958

Collateral Dependent Loans

The Company has elected to apply the practical expedient under ASC 326 which permits an entity to estimate credit losses based on the fair value of collateral when either applies: (i) the borrower is experiencing financial difficulty, or (ii) repayment is expected to be provided substantially through the sale or operating of the collateral. Fair value estimates for collateral dependent loans are generally based on the current market value or the “as is” value of the collateral derived from recently received and reviewed appraisals from third-party providers. If repayment is dependent on the sale of the collateral, then the fair value used to measure the allowance for credit losses is adjusted for the costs to sell.

The following tables present the amortized cost basis of collateral-dependent loans by collateral type as of the dates indicated:


	Types of Collateral
September 30, 2025			Retail
(Dollars in thousands)			Shopping		Business
	Hotel / Motel		Center		Assets		Other		Total

Commercial and industrial	$	24	$	-	$	-	$	349	$	373
Commercial real estate - non-owner occupied		28,510		75		3,589		-		32,174
Commercial real estate - owner occupied		809		-		-		1,252		2,061
	$	29,343	$	75	$	3,589	$	1,601	$	34,608


	Types of Collateral
December 31, 2024			Retail
(Dollars in thousands)			Shopping		Business
	Hotel / Motel		Center		Assets		Other		Total

Commercial and industrial	$	-	$	-	$	322	$	465	$	787
Commercial real estate - non-owner occupied		12,955		386		-		-		13,341
	$	12,955	$	386	$	322	$	465	$	14,128

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:


September 30, 2025	Collateral Dependent Loans
(Dollars in thousands)	With a Related		Without a Related		Related
	Allowance		Allowance		Allowance

Commercial and industrial	$	-	$	373	$	-
Commercial real estate - non-owner occupied		23,434		8,740		1,504
Commercial real estate - owner occupied		809		1,252		167


December 31, 2024	Collateral Dependent Loans
(Dollars in thousands)	With a Related		Without a Related		Related
	Allowance		Allowance		Allowance

Commercial and industrial	$	787	$	-	$	153
Commercial real estate - non-owner occupied		11,752		1,589		1,283

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:


	Allowance for Credit Losses
	Balance,										Balance,
(Dollars in thousands)	July 1,		Provision for			Amounts			Amounts		September 30,
	2025		Credit Losses			Charged Off			Recovered		2025

Commercial and industrial	$	365	$	381		$	(365	)	$	-	$	381
Commercial real estate - non-owner occupied		7,701		779			(199	)		-		8,281
Commercial real estate - owner occupied		678		80			(137	)		-		621
Construction and land development		100		56			-			-		156
Multifamily		60		(10	)		-			-		50
Single Family Sr. Lien		4		(1	)		-			-		3
Single Family Jr. Lien		7		(4	)		-			-		3
Single Family HELOC		4		-			-			-		4
Consumer		286		926			(137	)		3		1,078
	$	9,205	$	2,207		$	(838	)	$	3	$	10,577


	Allowance for Credit Losses
	Balance,										Balance,
(Dollars in thousands)	January 1,		Provision for			Amounts			Amounts		September 30,
	2025		Credit Losses			Charged Off			Recovered		2025

Commercial and industrial	$	496	$	412		$	(527	)	$	-	$	381
Commercial real estate - non-owner occupied		7,837		2,100			(1,735	)		79		8,281
Commercial real estate - owner occupied		537		222			(138	)		-		621
Construction and land development		49		107			-			-		156
Multifamily		39		11			-			-		50
Single Family Sr. Lien		33		(30	)		-			-		3
Single Family Jr. Lien		14		(11	)		-			-		3
Single Family HELOC		11		(7	)		-			-		4
Consumer		98		1,192			(216	)		4		1,078
	$	9,114	$	3,996		$	(2,616	)	$	83	$	10,577


	Allowance for Credit Losses
	Balance,										Balance,
(Dollars in thousands)	July 1,		Provision for			Amounts			Amounts		September 30,
	2024		Credit Losses			Charged Off			Recovered		2024

Commercial and industrial	$	293	$	166		$	-		$	-	$	459
Commercial real estate - non-owner occupied		6,018		541			-			76		6,635
Commercial real estate - owner occupied		785		(198	)		-			-		587
Construction and land development		49		8			-			-		57
Multifamily		55		(4	)		-			-		51
Single Family Sr. Lien		41		(3	)		-			-		38
Single Family Jr. Lien		21		(3	)		-			-		18
Single Family HELOC		4		8			-			-		12
Consumer		76		55			(54	)		-		77
	$	7,342	$	570		$	(54	)	$	76	$	7,934


	Allowance for Credit Losses
	Balance,										Balance,
(Dollars in thousands)	January 1,		Provision for			Amounts			Amounts		September 30,
	2024		Credit Losses			Charged Off			Recovered		2024

Commercial and industrial	$	295	$	164		$	-		$	-	$	459
Commercial real estate - non-owner occupied		5,681		878			-			76		6,635
Commercial real estate - owner occupied		877		(290	)		-			-		587
Construction and land development		13		44			-			-		57
Multifamily		102		(51	)		-			-		51
Single Family Sr. Lien		41		(3	)		-			-		38
Single Family Jr. Lien		33		(15	)		-			-		18
Single Family HELOC		6		6			-			-		12
Consumer		40		120			(83	)		-		77
	$	7,088	$	853		$	(83	)	$	76	$	7,934

The Company had gross loan charge offs of $2.6 million during the nine months ended September 30, 2025, comprised of (i) $527 thousand of commercial and industrial loans charged off, (ii) $1.7 million of commercial real estate - non-owner occupied loans charged off, (iii) $138 thousand of commercial real estate - owner occupied loans charged off, and (iv) $216 thousand of revolving consumer loans charged off. The Company had gross loan charge offs of $83 thousand attributable to revolving consumer loans during the nine months ended September 30, 2024.

Modifications to Borrowers Experiencing Financial Difficulty

The Company may modify certain loans when a borrower is experiencing financial difficulties and the Company grants concessions to the borrower that it would not otherwise consider. These concessions may include rate reductions, principal forgiveness, extension of maturity date and other actions intended to minimize potential losses.

The following table presents the amortized cost basis of loans held for investment that were modified during the period for borrowers experiencing financial difficulty by loan portfolio segment:


	Amortized Cost Basis at June 30, 2025
(Dollars in thousands)										% of Total Class
	Term			Interest Rate		Payment				of Financing
	Extension			Reduction		Delay		Total		Receivable
Commercial real estate - non-owner occupied	$	3,287	-	$	-	$	-	$	3,287		0.4	%

There were no modifications to borrowers experiencing financial difficulty for each of the three- and nine-month periods ended September 30, 2024.

The performance of these modified loans is monitored for twelve months following the modification. As of September 30, 2025, all modified loans were on nonaccrual status. No modified loans were outstanding as of December 31, 2024.

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 September 30, 2025 or December 31, 2024. There were no leases that had not commenced as of September 30, 2025. The Company entered into amendments for two leased locations during the nine months ended September 30, 2025 to extend the lease terms by five years.

Below is a summary of the operating lease right-of-use asset and related lease liability, as well as the weighted average lease term (in years), weighted average discount rate and total rent expense as of the dates and periods indicated.


(Dollars in thousands)	September 30, 2025			December 31, 2024
Right-of-use asset	$	5,516		$	4,518
Lease liability	$	5,942		$	4,839
Weighted average remaining lease term (in years)		6.4			7.4
Weighted average discount rate (annualized)		6.94	%		4.40	%


	Three Months Ended				Nine Months Ended
	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Rent expense	$	220	$	216	$	656	$	600
Cash paid for operating lease liabilities	$	263	$	260	$	787	$	780

At September 30, 2025, future minimum payments for operating leases are payable as follows:


(Dollars in thousands)
Years ending December 31:
2025	$	251
2026		1,007
2027		1,037
2028		1,118
2029		1,129
2030		1,038
Thereafter		1,318
Total lease payments	$	6,898
Less: imputed interest		(956	)
Present value of lease liability	$	5,942

Note 5. Loan Servicing Assets

The Company’s servicing assets consist primarily of the right to service the guaranteed portion of government guaranteed loans sold to others. The fair value of the servicing asset is essentially a valuation of the net future income stream, which is based on the rate of the fee, the estimated repayment speed of the loan and the estimated cost to service the loan.

The amount allocated to the loan servicing rights is recorded at fair value at the time of sale, as calculated by a third-party consulting firm specializing in government guaranteed loan matters. The loan servicing asset is being amortized over the period of estimated servicing income, generally five to seven years, with the amortization recorded against loan servicing fee income.

The balance of loans owned by third parties that are being serviced by the Company was $969.5 million and $779.1 million as of September 30, 2025 and December 31, 2024, respectively.

The following table presents a reconciliation of loan servicing rights as of the periods indicated:


(Dollars in thousands)	Nine Months Ended September 30, 2025			Year Ended December 31, 2024
Balance, beginning of period	$	8,976		$	7,053
Additions - servicing rights related to loans sold		5,795			6,771
Reductions - write-off of servicing assets		-			(401	)
Reductions - amortization and early payoff		(4,150	)		(4,447	)
Balance, end of period	$	10,621		$	8,976

In the event of an early repayment of a serviced loan, the unamortized balance of the loan servicing asset for that loan is charged off against loan servicing fee income.

The loan servicing asset was impacted by the write-off of certain servicing assets totaling $401 thousand relating to the repurchase of the guaranteed portions of previously sold SBA loans during the nine months ended September 30, 2024.

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 September 30, 2025 or December 31, 2024.

Note 6. Deposits

At September 30, 2025 and December 31, 2024, time deposits amounted to $519.1 million and $370.6 million, respectively. Interest expense on time deposits amounted to $5.1 million and $4.4 million for the three months ended September 30, 2025 and 2024, respectively. Interest expense on time deposit amounted to $14.2 million and $12.7 million for the nine months ended September 30, 2025 and 2024, respectively.

The scheduled maturities of time deposits at September 30, 2025, are as follows:


(Dollars in thousands)	Time Deposit Maturities
	Less Than $250,000		$250,000 or more
2025	$	87,714	$	20,604
2026		276,856		20,261
2027		56,634		3,955
2028		25,405		-
2029		21,383		-
Maturing thereafter		6,017		251
Total time deposits	$	474,009	$

Form: 10-Q

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