GBank Financial's Q3 2025: Contradictions Emerge on Credit Card Fraud Detection, Influencer Partnerships, and SBA Loan Pipeline Impact

Date of Call: October 29, 2025

Financials Results

• Revenue: Net revenue $20.2M, up 13.5% quarter-over-quarter
• EPS: $0.30 per diluted share ($4.3M), down $500,000 versus prior quarter ($4.8M); results include ~$2.0M (≈$0.14/share) of unusual operating expenses

Guidance:

• BoltBetz and related gaming programs expected to begin monetizing in the second half of 2026.
• Management expects a solid fourth quarter and to meet current company expectations, though credit-card growth could be delayed.
• SBA originations/sales are delayed by the government shutdown; the bank has ~$48M originated and 19 PLP numbers ready to process when the government reopens.
• Noninterest expenses driven by one-time/unusual items should revert toward normal levels next quarter.
• Bank plans to reprice short-term deposits as rates fall and pursue lower-cost funding (stablecoin, other programs).

Business Commentary:

* Financial Performance and Growth: - GBank Financial Holdings reported quarterly earnings of $4.3 million in Q3 2025, down from $4.8 million in the prior quarter. - The decrease was due to $2 million in unusual operating expenses, including costs related to marketing campaigns and cybersecurity issues.

• SBA Lending and Government Shutdown:
• Loan production reached $242 million in Q3, an increase of $82 million over the prior quarter.

• However, further growth is being delayed due to a government shutdown, as the bank was unable to secure approval for SBA loans and sell them in the secondary market.

• Credit Card and Fraud Prevention Initiatives:

• Credit card transaction volume increased by 57% over the prior quarter, reaching $131 million.

• The increase came despite addressing fraud issues, which involved implementing stronger detection systems like the Experian BustOut Score and new digital identity management platforms.

• Operating Leverage and Revenue Growth:

• The bank delivered 13.5% growth in net revenue to $20.2 million, demonstrating the positive impact of digital banking programs on earnings.

• Digital Transformation and Strategic Focus:

• The company is investing in technology and subject matter experts to enhance its digital bank and payments capabilities.
• This includes embracing AI, improving anti-money laundering measures, and developing mass payment systems to handle significant transaction volumes.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 13.5% QoQ net revenue growth to $20.2M, raised GAAP gain-on-sale to nearly 4% in September, said BoltBetz monetization should begin H2 2026, and stated "we believe the future is really bright" while expecting to meet current expectations; acknowledged challenges (fraud, NPAs) but emphasized remediation and tech hires.

Q&A:

• Question from Timothy Coffey (Janney Montgomery Scott LLC): So I guess my first question has to do with the fraud in the credit card side. How long has that been taking place? And when did you detect it?
  Response: Management said application fraud accelerated in July (fraud had existed earlier), they detected the spike then, shut down the application channel and implemented stronger controls and a new application platform to block bad actors.

• Question from Timothy Coffey (Janney Montgomery Scott LLC): But still had good credit card volume this quarter still.
  Response: Yes — existing gaming customers remained active and transaction volume stayed strong; growth (new-account acquisition) was what's been curtailed.

• Question from Timothy Coffey (Janney Montgomery Scott LLC): If you switch to the new nonaccruals in the quarter, were these relatively recently funded loans or were they older?
  Response: CFO said none were recently funded; all were older loans (nothing less than 18 months).

• Question from Timothy Coffey (Janney Montgomery Scott LLC): That pipeline is essentially shut down right now, correct? (re: SBA)
  Response: Yes — SBA approvals/sales are stalled by the government shutdown; the bank has funded/assembled ~$48M (19 PLP numbers) ready to process once SBA reopens, but cannot sell loans currently.

• Question from Timothy Coffey (Janney Montgomery Scott LLC): On the new incentive structure, are you seeing any turnover in employees?
  Response: Management reported no significant turnover; key producers are committed and only targeted design/leadership changes have been made.

• Question from Timothy Coffey (Janney Montgomery Scott LLC): How is the CEO succession search going?
  Response: There is currently no CEO search underway.

• Question from Matthew Erdner (JonesTrading Institutional Services, LLC): Could you talk a little bit more about the partnerships with the influencers and kind of how that transaction structure works? For example, with Mike Tyson, are we going to need to kind of bake in any more expenses there?
  Response: Influencers are paid from a share of interchange (no large upfront fees); deals may include modest monthly fees for select partners, and management expects influencer marketing costs to be lower than prior direct-mail spend.

• Question from Matthew Erdner (JonesTrading Institutional Services, LLC): Since you reopened, have you seen acceleration in transaction numbers and what can influencers bring in?
  Response: Three influencers currently generate about $25M/month in transactions and management expects material upside and scalability as influencer programs are reactivated and expanded.

• Question from Matthew Erdner (JonesTrading Institutional Services, LLC): Should we expect noninterest expenses to run higher going forward or revert to prior levels?
  Response: CFO expects noninterest expenses to decline from this quarter and move back toward a normal range because most increases were one-time or unusual items.

• Question from Matthew Erdner (JonesTrading Institutional Services, LLC): For gaming deposit expectations and second-quarter next year growth, what backend work is required and what is the partner ramp expectation?
  Response: Management is upgrading technology and adding subject-matter staff/APIs to handle large transaction volumes; they expect a 3–6 month customer adoption ramp post-launch with deposits becoming meaningful in Q2 2026 after GLI testing and operator onboarding.

Contradiction Point 1

Fraud Detection and Credit Card Application Process

It involves changes in the timeline and impact of fraud detection on the credit card application process, which could affect the company's ability to maintain customer trust and manage risk.

How long has the credit card fraud been ongoing, and when was it detected? - Timothy Coffey (Janney Montgomery Scott LLC, Research Division)

2025Q3: This fraudulent activity has been ongoing since the inception of the credit card, with a significant increase beginning in July. The initial fraud detection occurred at that time, leading to temporary shutdowns of the application process. - Edward Nigro(CEO & Executive Chairman)

How should I assess credit card daily transaction volume for Q2? - Timothy Coffey (Janney)

2025Q1: We're in a pause mode, so transaction rates may stay flat. - Edward Nigro(CEO & Executive Chairman)

Contradiction Point 2

Impact of Influencer Partnerships on Transaction Volume

It involves differing statements regarding the immediate impact of influencer partnerships on credit card transaction volumes, which could influence expectations about revenue growth and market engagement.

Have you seen increased transaction volumes since reopening the application process? - Matthew Erdner (JonesTrading Institutional Services, LLC, Research Division)

2025Q3: Three influencers are currently responsible for $25 million in monthly transactions. Once released, the transaction volume is expected to increase significantly due to the expansion of these influencer networks. - Edward Nigro(CEO & Executive Chairman)

How should we think about Q2 credit card daily transaction volume? - Timothy Coffey (Janney)

2025Q1: The second quarter often sees a decline in sports betting. - Edward Nigro(CEO & Executive Chairman)

Contradiction Point 3

Impact of SBA Loan Pipeline on Financial Position

It reflects inconsistencies in the company's financial position and the impact of the SBA loan pipeline, which could affect investor confidence and strategic decision-making.

Can you confirm the current status of the SBA loan pipeline? Is it currently shut down? - Timothy Coffey (Janney Montgomery Scott LLC, Research Division)

2025Q3: The SBA loan pipeline is currently shut down due to the government shutdown, which has halted new loan funding and sales. The bank has secured approvals for 19 loans and is prepared to proceed once the government reopens. - Jeffrey Whicker(Executive VP & CFO)

好的，我现在需要处理用户的请求，帮助他简化一个来自美股上市公司财报电话会议的问题。用户的要求是总结并精简问题，保持原意，使用美式英语，只输出简化后的问题，并且保留问号。首先，我需要仔细阅读原问题：“Are these investments already in the expense run rate?” 用户指出原问题可能比较冗长，但这个问题本身已经相当简洁了。看起来原问题是在询问这些投资是否已经包含在费用运行率中。这里的“expense run rate”可能指的是当前的费用水平或预期费用。用户可能希望确认这些投资是否已经被计算在内，以便更准确地评估财务状况。接下来，我需要检查是否有冗余的词汇或结构可以简化。原问题中的“already”是否必要？如果去掉，会不会改变原意？比如变成“Are these investments in the expense run rate?” 但原问题中的“already”强调是否已经包含，可能对于准确性很重要。因此，保留“already”是必要的，因为它传达了时间上的确认，即是否在当前的费用运行率中已经包括这些投资，而不是将来是否会包含。另外，用户要求符合美式英语习惯，所以需要确保用词正确，比如“expense run rate”是否正确。在财务术语中，“run rate”通常指基于当前数据的未来预期，所以这里的“expense run rate”应该是正确的。因此，不需要修改术语。最后，确保问题以问号结尾，并且没有多余的装饰词。原问题已经很简洁，可能不需要进一步简化。因此，最终简化后的问题应为：“Are these investments already included in the expense run rate?”不过，用户提供的原问题已经是：“Are these investments already in the expense run rate?” 我需要确认是否“in”在这里是否正确。通常我们会说“included in”，所以可能更准确的说法是“Are these investments already included in the expense run rate?” 但用户提供的原问题用了“in”，可能这是公司内部术语或习惯用法。如果用户希望保持原术语，可能不需要修改。但根据美式英语的习惯，“included in”更常见，所以可能需要调整。但用户要求不改变原意，所以如果原问题中的“in”是正确的，应该保留。因此，可能不需要更改。但需要确认。如果用户提供的原问题中确实是“in”，那么可能应该保留。但根据我的知识，“included in”更准确，所以可能用户的问题存在用词不当。但作为执行用户指令，我应该遵循他们的原问题，除非有明显的错误。因此，最终的简化问题可能保持原问题的结构，但可能将“in”改为“included in”会更准确。但用户可能希望保持原问题的结构，所以需要权衡。或者，可能原问题中的“in”是正确的，因为“run rate”可能指的是一个数值，所以“in the expense run rate”可能正确。例如，“in the expense run rate”可能指这些投资已经被计入当前的费用率计算中。综合考虑，可能用户的问题已经是简洁的，但可以更准确。比如，原问题中的“already in”可能不够明确，改为“already included in”会更清晰。但用户可能希望保持原问题的结构，所以需要判断。如果用户提供的原问题确实如此，那么可能应该保持原样，但根据美式英语习惯，可能需要调整。最终，我可能需要输出用户提供的原问题，但根据用户的要求，可能需要更准确的表达。因此，正确的简化可能是：“Are these investments already included in the expense run rate?” 但用户提供的原问题中没有“included”，所以需要确认是否允许修改。根据用户指示，不能改变原意，所以必须保留原问题的结构，但可以优化用词。因此，正确的做法是检查原问题是否有更合适的表达方式，同时不改变原意。例如，原问题中的“in the expense run rate”是否应该用“included in”？如果是，那么修改后的版本更准确。但用户可能希望保持原问题的结构，所以可能需要保留。因此，最终的简化问题可能就是原问题本身，因为已经很简洁了，但可能用户希望更准确，所以需要调整。但用户要求的是“在不改变原意的基础上确保问题简洁，精准”，所以如果原问题中的“in”不够准确，但原意是确认是否已经包含，那么应该改为“included in”。因此，正确的简化问题应为：“Are these investments already included in the expense run rate?” 但需要确认用户是否接受这种修改。根据用户指示，不能改变原意，所以如果原问题中的“in”是正确的，那么保留；否则，调整。经过思考，我认为“already included in”更符合美式英语习惯，因此应该调整，但需要确保不改变原意。因此，最终的简化问题应为：“Are these investments already included in the expense - Timothy Coffey (Janney)

2025Q1: We continue to see robust SBA funding demand, with SBA loan originations in Q1 increasing 24% year-over-year. - Edward Nigro(CEO & Executive Chairman)