GBank Financial Holdings Inc. Q4 FY2024 earnings call

• Net Income: Reported net income of $18.6 million ($1.37 per diluted share) for 2024, a 70.6% increase from 2023. Q4 2024 net income was $5.2 million. - SBA Activity: SBA loan sales increased 38% to $98.5 million in Q4, boosting gain on sale income by $1.2 million. Sale pricing trended up. - Credit Card Growth: Transaction volume for credit card surged 272% in Q4 2024 to $51.7 million, and the program now has a positive contribution margin. - NIM and CDs: Experienced net interest margin compression due to rate decreases. Called $20 million in callable CDs in Q4 and expects to call another $20 million in Q1, with CDs to be repriced lower. - Credit Quality: Low nonperforming assets, with net charge-offs of $157,000 in Q4 and $164,000 in 2024, and very low nonperforming asset levels overall.

SBA Program: In 2024, the SBA program achieved over $500 million in originations, with cumulative originations since 2015 exceeding $2 billion. Q4 2024 saw SBA commercial lending produce $120 million in loans. SBA loan sales increased 38% to $98.5 million during the quarter, boosting gain on sale income. Credit Card: Q4 2024 credit card transactions were $51.7 million, a 272% increase from the prior quarter, and total transactions reached $100 million in January 2025. The credit card program now shows a positive contribution margin. SBA Commercial Lending: Had a banner year in 2024 with a record $500 million in new loans, totaling over $2 billion in cumulative production since the program's inception.

• Margin Pressure: Anticipate margin pressure in Q1 due to Fed rate cuts, but expect repricing of CDs to lower rates. - CD Repricing: Expect to call $20 million in brokered CDs in Q1 and reprice $100 million in maturing CDs. - SBA Pipeline: SBA has a strong pipeline with nearly $0.25 billion in expanded pipeline. - Credit Card Outlook: Credit card growth is key for 2025, with potential significant swing in earnings as the program continues to grow.

• SEC Registration: Restrictions on forward-looking statements due to SEC registration process. - Launch Delays: Challenges in launching new credit card programs during peak periods for payments companies. - State Lottery Delays: Uncertainties with state lottery initiatives due to delays in launching prepaid card programs for lottery payments, with tech company unable to launch first state yet.

Q: What is the time line for being a fully registered SEC company?

A: We submitted an application on January 10 and are in the comment period with the SEC. Generally, it takes within 30 days to hear back from the SEC, but no specific timeline can be given yet.

Q: How much did the credit card product lose in 2024?

A: On a pretax basis, the credit card product had approximately a $1.1 million pretax loss in 2024, but turned breakeven in Q4.

Q: Is there competition in the SBA business?

A: The SBA business is concentrated, but we are strong in hospitality SBA 7(a) lending. There is some competition, but we have a strong broker network, with most top brokers being major shareholders of the bank.

Q: Update on state lottery initiatives?

A: The tech company for state lottery programs has been unable to launch the first state yet due to delays in the launch process. The prepaid card program for lottery payments is lower cost than checks, but the tech company has not been able to proceed with the first state launch so far.