GBank Financial NASDAQ: GBFH outlined leadership changes, continued SBA lending growth, pressure on credit quality and gaming-card revenue, and progress in its gaming fintech strategy during its second-quarter 2026 earnings call.
Jeff Newgard, the company’s new President and CEO of GBank, said his initial assessment found “a successful bank with a bright future,” citing a collaborative culture, the strength of the SBA lending team and the bank’s compliance framework. Newgard said the company accepted the retirement of its chief operating officer and promoted its operations manager to director of operations. The COO role will not be filled at this time.
The bank also engaged an IT consultant to review its technology operations and cybersecurity risk profile. Newgard said the assessment had been completed and that management was implementing recommendations intended to improve infrastructure, operational resilience and cybersecurity. He added that the company hired an experienced CFO consultant after its CFO, who had been on medical leave, informed the bank that he would not return. The company is searching for a permanent replacement.
SBA Production Remains Strong as Margin Narrows
Newgard said GBank originated $131.4 million of SBA loans during the second quarter, retaining $61.3 million on its balance sheet at an average yield of 8.01%. The conventional loan portfolio increased by $855,000, with $324,000 retained at an average yield of 8.53%.
The company said its approach to aligning SBA originations with minimum gain-on-sale targets improved spreads to prime and market pricing on sold loans. Gain-on-sale income increased to $9.3 million in the first six months of 2026, from $5.1 million in the corresponding 2025 period.
However, the bank said provision expense rose to $2.8 million in the second quarter from $2.3 million in the first quarter, primarily because of higher reserve requirements associated with non-performing assets. Net interest margin declined to 3.78%, reflecting a seven-basis-point decrease in loan portfolio yields and continued elevated funding costs.
Despite margin pressure, average loan balances rose by about $60 million from the first quarter, contributing to a $1.1 million increase in loan interest income. Newgard said the bank is shifting maturing higher-cost certificates of deposit toward lower-cost funding sources, including money market accounts and, where appropriate, Federal Home Loan Bank advances.
Management has also engaged Darling Consulting Group and the CFO consultant to develop strategies intended to improve net interest margin while maintaining liquidity, capital and interest-rate risk discipline.
Credit Quality and Reserve Discussion
Newgard said GBank operates as a collateral-based SBA 7 lender, a structure that can make reported non-performing asset levels appear higher than the bank’s economic risk. When an SBA loan becomes non-performing, the bank repurchases the guaranteed portion and reports the entire loan balance as a non-performing asset, he said.
Ed Nigro, executive chairman and CEO, said the company had approximately $60 million in non-performing assets and managed roughly $2.3 billion to $2.4 billion in loans, including loans held off balance sheet. He said the bank’s special assets group historically has recovered about 70% through collateral liquidation in his illustrative example, while the SBA generally guarantees 75% of losses on qualifying loans.
Nigro said the bank had $12.7 million in reserves against what he described as roughly $4.5 million to $4.7 million of anticipated loss exposure in the example discussed on the call. He also said the special assets team expected to resolve or move through $20 million to $30 million of the current special-assets portfolio by the end of September.
The company said it is addressing elevated problem assets, particularly in its maturing hotel portfolio. Management has developed proprietary analytics focused on geography, borrower capitalization and management performance, while realigning the special assets group under the chief credit officer and increasing staffing. GBank said it expects allowance levels may remain near current levels in the near term as loan production and the SBA portfolio continue to grow.
Gaming Card Revenue Faces Near-Term Pressure
Nigro said GBank’s gaming credit-card business was hurt during the second quarter after major sports-betting operators eliminated or restricted credit-card use. Gaming credit-card transaction volume declined to $84.2 million in the quarter, and the company expects further contraction until late in the fourth quarter.
Higher delinquencies among retail-only cardholders also added approximately $771,000 to second-quarter loan-loss provisions. Nigro said the company does not market to retail users and is reducing that segment, with the expectation that related delinquencies will decline. He said fraud was not a significant issue.
Management nevertheless said it remains optimistic about the cards’ longer-term role in casino and gaming payments. A Visa prepaid card is in testing, with a commercial launch expected in the fourth quarter. The prepaid product is expected to be directly integrated with GBank’s Pooled Player Account infrastructure.
Nigro said the bank currently averages between $35 million and $50 million in daily gaming-related deposits. He said gaming deposits are not expected to grow significantly this year, though management expects some lift in the fourth quarter. He described 2027 as a more significant year for the strategy as the company gains more experience converting gaming activity from cash to digital payments.
BVNKROLL and BoltBetz Expansion
Todd Nigro, vice chairman, highlighted a July 21 agreement between BVNKROLL and AXES.ai. Under the agreement, BVNKROLL will provide white-labeled payments infrastructure for an AXES-branded enterprise digital wallet across AXES’ operator network. AXES serves 67 gaming operators and distributors in 12 states, according to the company.
Todd Nigro said AXES is working on its first operator integration, while noting that each operator deployment requires separate implementation work despite use of AXES’ casino management system. He said BVNKROLL’s model is intended to allow enterprise partners to own their brands, operator relationships and marketing efforts while GBank provides underlying infrastructure and receives deposits from patron wallet accounts.
Separately, Terrible’s Gaming received Nevada Gaming Control Board approval to deploy the BoltBetz platform. The companies are in technical integration, with an initial rollout at select grocery stores targeted for later this year. Todd Nigro also said the Distill Taverns deployment saw a fourfold increase in sign-ups following improvements in the platform’s second version.
“We continue to operate from a position of strength,” Ed Nigro said in closing, citing the company’s capital base, differentiated business model and focus on execution and innovation.
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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