GBank Financial Holdings (GBFH) risk factors, FY2025 10-K

Other

1. 01The disclosures set forth in this Item are qualified by the section captioned “Cautionary Note Regarding Forward-Looking Statements”, and other cautionary statements set forth elsewhere in this Annual Report on Form 10-K
2. 02Lending Risk Management and Government Guaranteed Lending
3. 032 North American Industry Classification System; Note: Concentration limits are net of SBA and/or USDA guaranteed portions, when applicable
4. 04industry specific risk flag monitoring
5. 05The results from these stressed variables are then analyzed to determine the effect on the Bank’s earnings, capital ratios, and asset quality metrics. The complete results and underlying assumptions from real estate stress tests are reviewed in detail and approved by the Bank Board
6. 06Electronic Prepaid Access Programs
7. 07Federal and State Bank Holding Company Regulation
8. 08Federal and State Regulation of GBank

Risks Related to Our Business

1. 09A substantial portion of our loan portfolio consists of multifamily real estate loans and commercial real estate loans, which have a higher degree of risk than other types of loans
2. 10We operate in a highly competitive industry and face significant competition from other financial institutions and financial services providers, which may decrease our growth or profits
3. 12Because we intend to continue to increase our commercial loans, our credit risk may increase
4. 13At December 31, 2025, we had $19.0 million of multifamily real estate loans and $845.1 million of commercial real estate loans. Multifamily real estate loans and commercial real estate loans represented 90% of our total gross loan portfolio at December 31, 2025
5. 14Our use of appraisals as part of the underwriting process in deciding whether to make loans secured by real property does not ensure that the value of the real property collateral will be sufficient to repay our loans
6. 15A large portion of our loan portfolio is unseasoned. Errors in judging the collectability of our unseasoned loans may lead to additional provisions for loan losses or charge-offs, which would reduce our profits
7. 16We must maintain and follow high loan underwriting standards to grow safely
8. 17As a business operating in the financial services industry, our business and operations may be adversely affected in numerous and complex ways by weak economic conditions
9. 18A substantial majority of our loans and operations are in Nevada, and therefore our business is particularly vulnerable to a downturn in the City of Las Vegas and Clark County economy
10. 19Interest rate shifts may reduce net interest income and otherwise negatively impact our results of operations and financial condition
11. 20Increases in interest rates have in the past resulted in, and could in the future result in, unrealized losses on our investment securities portfolio
12. 21If interest rates increase, the average interest rate we pay on our deposits will likely increase, and our cost of funds would rise
13. 22Increases in interest rates could result in a decrease in the market value of our loans
14. 23Our smaller size makes it more difficult for us to compete
15. 24We may not be able to grow, and if we do, we may have difficulty managing that growth
16. 25Changes in card network fees could impact our operations
17. 26Changes in card network rules or standards could adversely affect our business
18. 27Our business could suffer if there is a decline in the use of debit cards as a payment mechanism, or if there are adverse developments with respect to the financial services industry in general
19. 28We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors
20. 29If our allowance for credit losses is not sufficient to cover actual credit losses, our earnings could decrease
21. 30Changes in the valuation of our securities portfolio could hurt our profits and reduce our stockholders’ equity
22. 31We may not be able to adequately measure and limit the credit risk associated with our loan portfolio, which could adversely affect our profitability
23. 32Changes in economic conditions could cause an increase in delinquencies and non-performing assets, including loan charge-offs, which could depress our net income and growth
24. 33industry and general economic trends
25. 34We rely heavily on our Executive Management Team and other key employees, and we could be adversely affected by the unexpected loss of their services
26. 35A lack of liquidity could adversely affect our business, results of operations, and financial condition
27. 36Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance
28. 37We have lower lending limits and different lending risks than certain of our larger, more diversified competitors
29. 38We face risks related to our operational, technological and organizational infrastructure
30. 39A failure in our operational systems or infrastructure, or those of third parties, could disrupt our businesses, impair our liquidity, result in the unauthorized disclosure of confidential information, damage our reputation, and cause financial losses
31. 40The occurrence of fraudulent activity, breaches or failures of our information security controls, or cybersecurity-related incidents could have a material adverse effect on our business, results of operations, and financial condition
32. 41The development and use of artificial intelligence (“AI”) presents risks and challenges that may adversely impact our business
33. 42If our enterprise risk management framework is not effective at mitigating risk and loss to us, we could suffer unexpected losses, and our results of operations could be materially adversely affected
34. 43If we fail to maintain a proper and effective system of internal controls over financial reporting, our operating results, and our ability to operate our business could be harmed
35. 44Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
36. 45Changes in accounting standards could materially impact our financial statements
37. 46We could be subject to environmental risks and associated costs on our foreclosed real estate assets, which could materially and adversely affect us
38. 47Diverse views, increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices and climate change concerns may impose additional costs on us or expose us to new or additional risks
39. 48Any future acquisitions will subject us to a variety of risks, including execution risks, failure to realize anticipated transaction benefits, and failure to overcome integration risks, which could adversely affect our growth and profitability
40. 49As to any acquisition that we complete, we may fail to realize some or all of the anticipated transaction benefits if the integration process takes longer or is more costly than expected or otherwise fails to meet our expectations
41. 50risks of impairment to goodwill or impairment of investment securities

Risks Related to Ownership of Our Common Stock

1. 11There can be no guarantee that the trading market for our Common Stock can be maintained, and investors may not be able to resell their shares at or above the price they paid for such shares

Risks Related to Our Industry and Regulation

1. 51Our business, financial condition, results of operations and future prospects could be adversely affected by the highly regulated environment and laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in any of them
2. 52Federal and state regulators periodically examine our business, and we may be required to remediate adverse examination findings
3. 53SBA lending is an important part of our business. Our SBA lending program is dependent upon the federal government, and we face specific risks associated with originating SBA loans
4. 54Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, results of operations, or financial condition
5. 55Compliance with the Dodd-Frank Act and its implementing regulations has and will continue to result in additional operating and compliance costs that could have an adverse effect on our business, results of operations, financial condition, and growth prospects
6. 56New and future rulemaking from the CFPB may have a material effect on our operations and operating costs
7. 57We are subject to the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to material penalties
8. 58FDIC deposit insurance assessments may continue to materially increase in the future, which would have an adverse effect on our earnings
9. 59Monetary policies and regulations of the FRB could adversely affect our business, results of operations, and financial condition
10. 60We face a risk of noncompliance and enforcement action with respect to the federal Bank Secrecy Act (the “BSA”) and other anti-money laundering and counter terrorist financing laws and regulations
11. 61The FRB may require our Company to commit capital resources to support the Bank
12. 62We could be adversely affected by the soundness of other financial institutions and other third parties we rely on
13. 63We depend on the accuracy and completeness of information about customers and counterparties
14. 64Our accounting estimates and risk management processes and controls rely on analytical and forecasting techniques and models and assumptions, which may not accurately predict future events

Risks Related to Ownership of our Common Stock

1. 65The market price of our Common Stock may be volatile, which could result in substantial losses for purchasers of our Common Stock, and could subject us to litigation
2. 66future sales of our Common Stock by our Company, directors, executives and significant stockholders
3. 67The reduced disclosures, and relief from certain other significant disclosure requirements, that are available to emerging growth companies may make our Common Stock less attractive to investors
4. 68Additionally, even if we comply with the greater obligations of public companies that are not emerging growth companies, we may avail ourselves of the reduced requirements applicable to emerging growth companies from time to time in the future, so long as we are an emerging growth company
5. 69If securities analysts do not publish research or reports about our Company or our business, or if they adversely change their recommendations regarding, or publish negative evaluations of, our Common Stock, the market price of our Common Stock could decline
6. 70We may issue additional securities or engage in other transactions that could dilute the ownership interests of our stockholders or dilute the book value or relative rights of our equity securities, which may adversely affect the market price of our Common Stock
7. 71Sales of a significant number of shares of our Common Stock in the public markets, or the perception that such sales could occur, could depress the market price of our Common Stock
8. 72Because we do not anticipate paying any cash dividends on our Common Stock in the foreseeable future, capital appreciation, if any, will be the sole source of gain for our stockholders
9. 73Anti-takeover effects of certain provisions of Nevada state law hinder a potential takeover of us
10. 74The Nevada Control Share Law may have the effect of discouraging takeovers of our Company
11. 75As a recent reporting issuer with the SEC, we incur increased costs and our management is required to devote substantial time to new compliance initiatives
12. 76We rely on third-party vendors and other service providers, which could expose us to additional risk
13. 77We may be at an increased risk of securities class action litigation