GBank Financial NASDAQ: GBFH used its first-quarter 2026 earnings call to address a third-party credit card fraud charge-off that weighed on results, while also highlighting loan growth, SBA performance, and progress in its gaming payments technology initiatives.
Fraud charge-off tied to discontinued retail card program
Management said the quarter included a $0.22 per share charge-off related to third-party credit card fraud within a retail card program that was launched last year and later canceled. The company described the offering as different from its core gaming-focused credit card efforts.
Ed Nigro, Executive Chairman and CEO, said two direct mail campaigns totaling 900,000 pre-qualified recipients increased exposure to what he characterized as “AI-generated bot fraud.” He said the fraud was tied to a legacy system and not to the company’s gaming card customers.
In response, Nigro said the bank implemented a new system that went live November 17 that he described as “state-of-the-art,” adding that the company has “seen no additional substantive fraud issues prospectively.” On the call, he pointed investors to an exhibit filed with the company’s Form 8-K detailing application and monitoring enhancements, including behavioral analytics designed to detect non-human application activity.
Asked whether there would be residual expenses next quarter, management said it did not expect extraordinary costs and that operations were back to “normal.” Nigro said the company had identified and removed bot-related accounts and that, under the new system, attempted bot attacks have been contained.
Loan originations climb; on-balance sheet loans top $1 billion
Nigro said first-quarter loan originations exceeded $208 million, a 56% increase versus the first quarter of 2025 and a 65% increase compared to the fourth quarter of 2025. SBA originations totaled $190 million, which management noted came despite lingering effects from a government shutdown in the prior quarter.
Management said that, for the first time, GBank surpassed $1 billion in on-balance sheet loans. Including off-balance sheet loans, the company reported total assets under management of $2.5 billion as of March 31, 2026.
The company recorded an allowance for credit losses provision expense of $2.3 million for the quarter, which Nigro said included $860,000 related to loan growth and a $1.4 million increase in specific reserves tied to non-performing loans and updated collateral balances.
Management also reported that the balance of at-risk non-performing loans increased to $13.2 million at March 31, 2026, from $12.5 million at December 31, 2025. In response to analyst questions, management said reserve increases reflected both growth in retained loan balances and higher reserves on existing non-performing assets where valuations were adjusted during liquidation efforts.
Net interest margin pressured by rate cuts and investment repositioning
Management said net interest income declined and net interest margin compressed compared with the fourth quarter of 2025. Nigro attributed the pressure to a 50 basis point decrease in market rates enacted in the fourth quarter that affected the loan portfolio beginning January 1, noting that roughly 65% of the loan portfolio reprices quarterly (about $686 million).
Funding costs also remained elevated, with Nigro saying deposit market pricing “lags” Federal Reserve actions. He said the company did not adjust deposit pricing during the first quarter in order to remain competitive, but is implementing measures to lower deposit costs.
Interest income was also affected by the sale of $52 million in investment securities during the fourth quarter of 2025. The company redeployed $44 million during the first quarter, though those purchases were spread across the quarter. Nigro said the full interest impact would be reflected in the second quarter.
Despite the compression, management reported a bank-only net interest margin of 4.02%, which Nigro said remained “amongst the highest” of its peers. He also told analysts he expected net interest margin and net interest income to recover in the second quarter as reinvestment and loan growth flow through results.
SBA gain-on-sale margin exceeds budget; April activity “exceeding expectations”
The company’s SBA business was a key positive discussion point. Nigro said changes made in the fourth quarter to restructure gain-on-sale pricing contributed to a gain-on-sale margin of 4.79% in the first quarter, above the company’s 4% budget expectation.
GBank sold $79 million of government-guaranteed loans during the quarter, generating a net gain on sale of $3.8 million. Loans held for sale were $74 million as of March 31, 2026.
Management said April sales volumes were already running ahead of expectations, citing $39.5 million sold month-to-date at a $2 million gain on sale. Nigro said the company saw gain-on-sale margins above 5% in April, attributing the improvement to wider spreads as interest rates declined. He said the bank expects gain-on-sale results to run above projections by roughly 0.75% to 1%.
Gaming fintech: Bold Bets V2, Bankroll venture, and new prepaid card plans
Management also discussed ongoing development of gaming-related payments products, including its credit card program, the Bold Bets app, and a newly announced Bankroll venture.
- Credit card trends: Nigro said restrictions by several major sportsbooks on credit card acceptance led to lower spending among lower-limit customers, though the company still grew the quarter by 10 million transactions over the prior quarter. He said the bank is focusing on a new gaming credit card program targeting high-limit customers through a secured card account system designed to enable large, frequent transfers with limited credit risk to the bank. He also cited $109 million in credit card transactions in the quarter and said April was tracking at roughly $40 million in transactions early in the month.
- ACH processing: Nigro said GBank is now live with its own ACH processing for its credit card, which he said provides deeper visibility into cash transactions. He added the company plans to expand as an originating depository financial institution (ODFI) and described a pipeline of customers for ACH processing.
- Visa prepaid debit card: Nigro announced plans to launch a new Visa prepaid debit card—its third prepaid card issuance overall—designed for gaming app customers and intended to provide access to wagering platforms that limit credit cards. He said the product includes “unique funding processes” and is expected to provide a new source of non-interest deposits. In Q&A, management said it expects to launch the prepaid card in the third quarter.
Todd A. Nigro, Executive Vice-Chairman, said Bold Bets launched version two of its app this month and that it is now available on both Android and Apple devices. He said V2 was built over the past six months to onboard multiple gaming operators and to maximize payments and rewards functionality while maintaining compliance with gaming and banking regulatory frameworks.
According to Todd Nigro, approval by the Nevada Gaming Control Board’s technology division should help speed licensure in other states. He said Distill Taverns received approval to use the V2 Bold Bets wallet technology provided GBank serves as the sponsor bank.
He also discussed Bankroll, which he described as a product focused on the digital wallet or payments layer of the Bold Bets platform. Todd Nigro said Bankroll is intended to allow other gaming payments providers—including those that may compete with Bold Bets—to access proprietary systems to offer the payment solution to their clients. Both Bold Bets and Bankroll have active pipelines and ongoing negotiations, he said.
In closing remarks, Ed Nigro characterized the fraud episode as “a hiccup, not a heart attack,” and reiterated management’s focus on both the core bank’s lending growth and the expansion of gaming payments and technology initiatives.
About GBank Financial NASDAQ: GBFH
GBank Financial Holdings Inc operates as a bank holding company for GBank which provides banking services to commercial and consumer customers principally in Nevada. The company offers business and personal checking and savings accounts. GBank Financial Holdings Inc is based in Las Vegas, Nevada.
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