• Capital Bancorp, Inc. Stable Margin and Profitable Growth Drives Strong Profitability

    Источник: Nasdaq GlobeNewswire / 20 апр 2023 20:54:30   America/New_York

    ROCKVILLE, Md., April 20, 2023 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $9.7 million, or $0.68 per diluted share, for the first quarter of 2023, compared to net income of $10.2 million, or $0.71 per diluted share, for the first quarter of 2022. Tangible book value per common share grew 15.7% to $16.65 at March 31, 2023 when compared to the same quarter in 2022. The Company maintains a strong liquidity position and remains well-capitalized as our Risk Based Capital was 16.15% as of March 31, 2023.

    "Capital Bank’s diversified business model and prudent risk management anchored solid earnings in the the first quarter, and should provide us with opportunities to accelerate growth in the coming months as other less well-positioned lenders curtail activity,” said Ed Barry, Chief Executive Officer of the Company and the Bank. “Our capital position remains exceptionally strong and we are pleased that we have ready access to liquidity to fund growth and opportunistic activities. We are also encouraged that we have been able to grow deposits and maintain margin, even as our cost of funds has increased."

    "Despite the failure of certain banks during the quarter, and the resulting challenges that followed, Capital Bank has been able to not only maintain, but continue to grow its deposits,” said Steven J. Schwartz, Chairman of the Company. “Fortunately, Capital Bank has consciously and consistently sought to dampen interest rate risk in its lending and investing activities, and we are fortunate to have a diverse deposit book, circumstances that meaningfully differentiate us from the banks that failed. Our liquidity and capital positions remain well above regulatory policy and our internal thresholds. I am also extremely pleased to see the 15.7% year over year growth in our tangible book value, which includes a mark to market of 100% of our investment portfolio. Notwithstanding current and anticipated economic conditions, we are steadfastly committed to continue to serve our community’s needs by continuing to lend to all qualified businesses and to grow the Bank as smartly as we can."

    First Quarter 2023 Highlights

    Capital Bancorp, Inc.

    • Earnings Summary - Net income decreased to $9.7 million, or $0.68 per diluted share, compared to $10.2 million, or $0.71 per diluted share, for the first quarter of 2022. Interest income increased due to increasing yields on portfolio loans and investment securities. Improved interest income was offset by a decline in card fees and increased deposit costs that were a result of the rising interest rate environment and a shift within the portfolio from noninterest-bearing to interest-bearing deposits and increased CD and FHLB balances.
    • Balance Sheet Growth - Total assets grew by $122.8 million, or 5.8% compared to March 31, 2022. The growth in earning assets consisted of increases in net portfolio loans and investment securities available for sale of $259.9 million and $83.1 million, respectively, compared to March 31, 2022. The investment securities portfolio continues to be classified as available for sale and had a fair market value of $255.8 million, or 11.4% of total assets, as of March 31, 2023. The accumulated other comprehensive income loss ("AOCI Loss") on the investment securities portfolio improved $2.8 million during the quarter to $14.0 million as of March 31, 2023, which represents 6.0% of total shareholders' equity. The Company does not have a held to maturity ("HTM") portfolio.
    • Performance and Efficiency Ratios - Return on average assets ("ROAA") and return on average equity ("ROAE") were 1.84% and 16.98%, respectively, for the three months ended March 31, 2023, compared to 2.01% and 20.30%, respectively, for the three months ended March 31, 2022. Our efficiency ratio decreased to 64.7% for the three months ended March 31, 2023 compared to 65.1% for the same period in the prior year as noninterest expense remained substantially unchanged while interest income increased.
    • Stable Net Interest Margin - Net interest margin was 6.65%, or 3.81% excluding credit card and SBA-PPP loans, for the three months ended March 31, 2023, compared to 6.79%, or 3.82% excluding credit card and SBA-PPP loans, for the same three month period last year. The slightly lower margin is a result of the increased cost of interest-bearing liabilities. Average portfolio loans receivable increased $243.6 million compared to the same quarter in 2022, while yields on interest earning assets increased 136 basis points.
    • Deposits and Cost of Funds - Total deposits at March 31, 2023 increased by $81.7 million, or 4.4%, compared to March 31, 2022. Average noninterest-bearing deposits decreased 16.4% compared to March 31, 2022 and represented 36.3% of total deposits at March 31, 2023. The elevated interest rate environment has driven up the cost of interest-bearing liabilities to 2.93% for the quarter ended March 31, 2023 compared to 0.42% for the same period in 2022.
    • Robust Capital Positions - As of March 31, 2023, the Company reported a common equity tier 1 capital ratio of 14.90%, compared to 13.10% at March 31, 2022, and an allowance for credit losses to total loans ratio of 1.47%, compared to 1.60% in 2022. Tangible book value per common share grew 15.7% to $16.65 at March 31, 2023 when compared to the same quarter in 2022.

    Commercial Bank

    • Strong Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $271.3 million, or 19.3%, to $1.7 billion, gross, at March 31, 2023 compared to March 31, 2022. This growth was mainly due to a 29.9% increase in residential real estate loans of $125.7 million. Also contributing to the growth was a 16.9% increase in commercial real estate loans of $95.5 million, of which $68.1 million was owner occupied, and a 24.6% increase in commercial and industrial loans of $43.8 million, when comparing the quarter ended March 31, 2023 to the quarter ended March 31, 2022. Business loans, comprised of commercial and industrial, SBA, and owner occupied real estate, represent 43% of our total commercial portfolio.
    • Credit Metrics - Non-performing assets ("NPAs") increased 45 basis points to 0.73% of total assets at March 31, 2023 compared to 0.28% at March 31, 2022 as a result of an increase in nonaccrual loans at March 31, 2023 to $16.3 million compared to $6.0 million at March 31, 2022. The increase in NPAs was primarily the result of a March 2023 downgrade of a single $8.2 million, well-collateralized multi-unit residential real estate loan.

    OpenSky®

    • Revenues - Despite a decrease in active customer accounts, rising interest rates led to increased OpenSky® interest income. However, a decline in credit card fees resulted in a $523.4 thousand decrease in OpenSky® revenue from the same period of 2022. Total revenue was $20.3 million for the quarter ended March 31, 2023. Aggressive marketing and product strategies by competitors offering unsecured subprime credit cards has challenged our ability to maintain and grow the number of active OpenSky® accounts and has adversely impacted noninterest income. Management believes it is taking a prudent approach to credit, product and marketing strategies towards subprime customers.
    • Loan Balances - OpenSky® loan balances decreased by 9% or $10.9 million to $112.9 million compared to $123.7 million in the first quarter of 2022. Corresponding deposit balances decreased 16.1% or $35.5 million from $220.4 million at March 31, 2022 to $184.8 million at March 31, 2023. Gross unsecured loan balances stood at $25.8 million and $16.2 million at March 31, 2023 and 2022, respectively.
    • OpenSky® Credit - Card delinquencies and utilization remained stable in the first quarter when compared to the prior year quarter. The Company has tightened credit standards in segments most susceptible to economic pressures. The provision for credit losses increased $707.4 thousand compared to the first quarter of 2022.
    COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited     
          
     Quarter Ended  
     March 31,  
    (in thousands except per share data) 2023   2022  % Change
    Earnings Summary     
    Interest income$43,416  $34,402  26.2%
    Interest expense 8,929   1,071  733.7%
    Net interest income 34,487   33,331  3.5%
    Provision for credit losses 1,660   952  74.4%
    Noninterest income 6,026   8,288  (27.3)%
    Noninterest expense 26,203   27,102  (3.3)%
    Income before income taxes 12,650   13,565  (6.7)%
    Income tax expense 2,915   3,354  (13.1)%
    Net income$9,735  $10,211  (4.7)%
          
    Pre-tax pre-provision net revenue ("PPNR") (2)$14,310  $14,517  (1.4)%
    Weighted average common shares - Basic 14,159   13,989  1.2%
    Weighted average common shares - Diluted 14,272   14,339  (0.5)%
    Earnings per share - Basic 0.69   0.73  (5.8)%
    Earnings per share - Diluted 0.68   0.71  (4.2)%
    Return on average assets (1) 1.84%  2.01% (8.5)%
    Return on average assets, excluding impact of SBA-PPP loans(1) (2) 1.84%  1.67% 10.2%
    Return on average equity 16.98%  20.30% (16.4)%


     Quarter Ended   Quarter Ended
     March 31,  December 31, September 30, June 30,
    (in thousands except per share data) 2023   2022  % Change  2022   2022   2022 
    Balance Sheet Highlights           
    Assets$2,245,286  $2,122,453  5.8% $2,123,655  $2,009,358  $2,154,846 
    Investment securities available for sale 255,762   172,712  48.1%  252,481   269,620   226,509 
    Mortgage loans held for sale 9,620   17,036  (43.5)%  7,416   6,875   11,708 
    SBA-PPP loans, net of fees 2,037   51,085  (96.0)%  2,163   2,662   15,864 
    Portfolio loans receivable (3) 1,786,109   1,526,256  17.0%  1,728,592   1,648,001   1,607,677 
    Allowance for credit losses 26,216   25,252  3.8%  26,385   26,091   26,419 
    Deposits 1,944,374   1,862,722  4.4%  1,758,072   1,737,591   1,888,920 
    FHLB borrowings 32,000   22,000  45.5%  107,000   22,000   22,000 
    Other borrowed funds 12,062   12,062  —%  12,062   12,062   12,062 
    Total stockholders' equity 234,517   201,492  16.4%  224,015   214,005   207,316 
    Tangible common equity(2) 234,517   201,492  16.4%  224,015   214,005   207,316 
                
    Common shares outstanding 14,083   14,001  0.6%  14,139   14,039   14,010 
    Tangible book value per share (2)$16.65  $14.39  15.7% $15.84  $15.24  $14.80 

    ______________
    (1) Annualized for the quarterly periods
    (2) Refer to Appendix for reconciliation of non-GAAP measures.
    (3) Loans are reflected net of deferred fees and costs.


    Operating Results - Comparison of Three Months Ended March 31, 2023 and 2022

    For the three months ended March 31, 2023, net interest income increased $1.2 million, or 3.5%, to $34.5 million from the same period in 2022, primarily due to higher yields on portfolio loans offset by significant increases in the cost of funding. The net interest margin was 6.65% for the three months ended March 31, 2023, a decrease of 14 basis points from the three months ended March 31, 2022 as the increase in the costs of deposits and borrowed funds outpaced the increase in portfolio loan yields, including credit cards. Net interest margin, excluding credit card and SBA-PPP loans, remained flat at 3.81% for the first quarter of 2023 compared to 3.82% for the same period in 2022.

    For the three months ended March 31, 2023, average interest earning assets increased $113.6 million, or 5.7%, to $2.1 billion as compared to the same period in 2022, and the average yield on interest earning assets increased 136 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $189.1 million, or 18.1%, and the average cost of interest-bearing liabilities increased to 2.93%, a 251 basis point increase from 0.42%.

    The provision for credit losses was $1.7 million for the three months ended March 31, 2023, an increase from $1.0 million when compared to the same period in 2022. Contributors to the increase in provision were loan portfolio growth and an increase in credit card losses. Net charge-offs for the first quarter of 2023 were $2.6 million, or 0.61% on an annualized basis of average portfolio loans, compared to $0.9 million, or 0.24% on an annualized basis of average loans for the first quarter of 2022. A majority of the $2.6 million in net charge-offs during the quarter were related to the credit card portfolio with $1.1 million related to partially secured cards and $563 thousand related to unsecured cards.

    For the quarter ended March 31, 2023, noninterest income was $6.0 million, a decrease of $2.3 million, or 27.3%, from $8.3 million in the prior year quarter. Credit card fees declined by $1.7 million as the number of active customer accounts declined year over year, which resulted in lower interchange and other income recognized compared to the prior year quarter. The elevated interest rate environment continues to put pressure on the mortgage market, resulting in declines in home loan sales and home loan refinances, which has resulted in a $0.6 million decrease in mortgage banking revenue compared to the prior year quarter.

    Credit card loan balances, net of reserves, decreased by $10.9 million to $112.9 million as of March 31, 2023 from $123.7 million at March 31, 2022. The related deposit account balances decreased 16.1% to $184.8 million at March 31, 2023 when compared to $220.4 million at March 31, 2022 reflecting the reduction in the number of active customer accounts. During the first quarter of 2023, the number of OpenSky® credit card accounts declined by 7 thousand, net, compared to a 30 thousand net decrease in accounts for the same period in 2022.

    The efficiency ratio for the three months ended March 31, 2023 decreased to 64.7%, compared to 65.1% for the three months ended March 31, 2022 as noninterest expense remained flat while interest income increased.

    Noninterest expense was $26.2 million for the three months ended March 31, 2023, as compared to $27.1 million for the three months ended March 31, 2022, a decrease of $0.9 million, or 3.3%. The decrease was primarily driven by lower data processing expenses and advertising expenses of $1.7 million and $1.1 million, respectively, attributable to data processing contract renegotiations completed in the first quarter 2022 and lower marketing costs for the OpenSky® and Commercial Bank segments, offset by increased salaries and employee benefits of $2.2 million.

    Financial Condition

    Total assets at March 31, 2023 were $2.2 billion, an increase of $122.8 million or 5.8% from the balance at March 31, 2022 and an increase of $121.6 million or 5.7% from December 31, 2022. Net portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.8 billion as of March 31, 2023, an increase of $259.9 million, or 17.0% as compared to $1.5 billion at March 31, 2022, and an increase of $83.9 million, or 4.9% from the balance at December 31, 2022.

    The Company recorded a provision for credit losses of $1.7 million during the three months ended March 31, 2023, which increased the allowance for credit losses to $26.2 million, or 1.5% of total loans at March 31, 2023, representing a decrease of $169 thousand or 0.6% from the balance at December 31, 2022. Nonperforming assets, which were comprised solely of nonperforming loans as of March 31, 2023, were $16.3 million, or 0.73% of total assets, up from $6.0 million, or 0.28% of total assets, at March 31, 2022. Nonperforming assets increased $6.5 million from $9.8 million or 0.46% of total assets as of December 31, 2022. Included in nonperforming loans at March 31, 2023 were troubled debt restructurings of $287.6 thousand.

    Special mention loans at March 31, 2023 decreased by $8.5 million to $29.5 million from $38.0 at December 31, 2022 due to the downward migration to nonaccrual of an $8.2 million, well-collateralized multi unit residential real estate loan.

    Deposits were $1.9 billion for the period ended March 31, 2023, an increase of $81.7 million from the balance at March 31, 2022 and an increase from the balance at December 31, 2022 of $186.3 million. Rising interest rates have resulted in some customers moving balances from noninterest-bearing deposit accounts to interest bearing deposit accounts. This migration has impacted average noninterest-bearing deposit balances which decreased $128.7 million when compared to March 31, 2022 and decreased $127.9 million when compared to December 31, 2022. These deposits represented 36.3% of total deposits at March 31, 2023 compared to 44.3% at March 31, 2022. Uninsured deposits were approximately $888.9 million as of March 31, 2023, representing 45.7% of the Company's deposit portfolio, compared to $915.0 million, or 49.1%, at March 31, 2022, and $784.6 million, or 44.6% at December 31, 2022.

    Stockholders’ equity increased to $234.5 million as of March 31, 2023 compared to $201.5 million at March 31, 2022 and $224.0 million at December 31, 2022. The first quarter of 2023 increase was primarily attributable to earnings during the period of $9.7 million. Shares repurchased and retired in 2023 as part of the Company's stock repurchase program total 146,937 shares at a weighted average price of $18.48, for a total cost of $2.7 million including commissions. As of March 31, 2023, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

    Consolidated Statements of Income (Unaudited)
     Three Months Ended March 31,
    (in thousands) 2023   2022 
    Interest income   
    Loans, including fees$41,275  $33,889 
    Investment securities available for sale 1,377   370 
    Federal funds sold and other 764   143 
    Total interest income 43,416   34,402 
        
    Interest expense   
    Deposits 7,754   884 
    Borrowed funds 1,175   187 
    Total interest expense 8,929   1,071 
        
    Net interest income 34,487   33,331 
    Provision for credit losses 1,660   952 
    Net interest income after provision for credit losses 32,827   32,379 
        
    Noninterest income   
    Service charges on deposits 229   163 
    Credit card fees 4,210   5,924 
    Mortgage banking revenue 1,155   1,790 
    Other income 432   411 
    Total noninterest income 6,026   8,288 
        
    Noninterest expenses   
    Salaries and employee benefits 12,554   10,310 
    Occupancy and equipment 1,213   1,026 
    Professional fees 2,374   2,321 
    Data processing 6,530   8,276 
    Advertising 517   1,639 
    Loan processing 349   392 
    Foreclosed real estate expenses, net 6   — 
    Other operating 2,660   3,138 
    Total noninterest expenses 26,203   27,102 
    Income before income taxes 12,650   13,565 
    Income tax expense 2,915   3,354 
    Net income$9,735  $10,211 


    Consolidated Balance Sheets    
     (Unaudited)  
    (in thousands except share data)March 31, 2023 December 31, 2022
    Assets   
    Cash and due from banks$14,477  $19,963 
    Interest-bearing deposits at other financial institutions 125,448   39,764 
    Federal funds sold 462   20,688 
    Total cash and cash equivalents 140,387   80,415 
    Investment securities available for sale 255,762   252,481 
    Restricted investments 4,215   7,362 
    Loans held for sale 9,620   7,416 
    U.S. Small Business Administration (“SBA”) Payroll Protection Program (“PPP”) loans receivable, net of fees and costs 2,037   2,163 
    Portfolio loans receivable, net of deferred fees and costs 1,786,109   1,728,592 
    Less allowance for credit losses (26,216)  (26,385)
    Total portfolio loans held for investment, net 1,759,893   1,702,207 
    Premises and equipment, net 5,367   3,386 
    Accrued interest receivable 9,985   9,489 
    Deferred tax asset 12,898   13,777 
    Bank owned life insurance 36,781   36,524 
    Other assets 8,341   8,435 
    Total assets$2,245,286  $2,123,655 
        
    Liabilities   
    Deposits   
    Noninterest-bearing$705,801  $674,313 
    Interest-bearing 1,238,573   1,083,759 
    Total deposits 1,944,374   1,758,072 
    Federal Home Loan Bank advances 32,000   107,000 
    Other borrowed funds 12,062   12,062 
    Accrued interest payable 1,977   1,031 
    Other liabilities 20,356   21,475 
    Total liabilities 2,010,769   1,899,640 
        
    Stockholders' equity   
    Common stock, $0.01 par value; 49,000,000 shares authorized; 14,082,657 and 14,138,829 issued and outstanding 141   141 
    Additional paid-in capital 57,277   58,190 
    Retained earnings 191,058   182,435 
    Accumulated other comprehensive loss (13,959)  (16,751)
    Total stockholders' equity 234,517   224,015 
    Total liabilities and stockholders' equity$2,245,286  $2,123,655 


    The following table shows the average outstanding balance of each principal category of our assets, liabilities and stockholders’ equity, together with the average yields on our assets and the average costs of our liabilities for the periods indicated. Such yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.

     Three Months Ended March 31,
     2023 2022
     Average
    Outstanding
    Balance    		 Interest
    Income/
    Expense    		 Average
    Yield/
    Rate(1)    		 Average
    Outstanding
    Balance    		 Interest
    Income/
    Expense    		 Average
    Yield/
    Rate(1)
     (in thousands)
    Assets           
    Interest earning assets:           
    Interest-bearing deposits$62,566  $615  3.99% $197,720  $101  0.21%
    Federal funds sold 2,054   18  3.62   4,658   1  0.09 
    Investment securities available for sale 274,685   1,377  2.03   180,567   370  0.83 
    Restricted investments 7,346   130  7.17   3,766   41  4.42 
    Loans held for sale 4,695   77  6.65   13,500   111  3.33 
    SBA-PPP loans receivable 2,099   8  1.50   83,264   2,066  10.06 
    Portfolio loans receivable(2) 1,750,539   41,191  9.54   1,506,902   31,712  8.53 
    Total interest earning assets 2,103,984   43,416  8.37   1,990,377   34,402  7.01 
    Noninterest earning assets 40,265       66,824     
    Total assets$2,144,249      $2,057,201     
                
    Liabilities and Stockholders’ Equity           
    Interest-bearing liabilities:           
    Interest-bearing demand accounts$186,184   70  0.15  $293,979   37  0.05 
    Savings 6,502   1  0.05   8,274   1  0.05 
    Money market accounts 604,864   4,587  3.08   539,264   301  0.23 
    Time deposits 319,449   3,096  3.93   170,748   545  1.29 
    Borrowed funds 118,379   1,175  4.02   34,062   187  2.23 
    Total interest-bearing liabilities 1,235,378   8,929  2.93   1,046,327   1,071  0.42 
    Noninterest-bearing liabilities:           
    Noninterest-bearing liabilities 22,355       24,156     
    Noninterest-bearing deposits 654,025       782,747     
    Stockholders’ equity 232,491       203,971     
    Total liabilities and stockholders’ equity$2,144,249      $2,057,201     
                
    Net interest spread    5.44%     6.59%
    Net interest income  $34,487      $33,331   
    Net interest margin(3)    6.65%     6.79%

    _______________
    (1)   Annualized.
    (2)   Includes nonaccrual loans.
    (3)   For the three months ended March 31, 2023 and March 31, 2022, collectively, SBA-PPP loans and credit card loans accounted for 283 and 297 basis points of the reported net interest margin, respectively.


    The Company’s reportable segments represent business units with discrete financial information whose results are regularly reviewed by management. The four segments include Commercial Banking, Capital Bank Home Loans (the Company’s mortgage loan division), OpenSky® (the Company’s credit card division) and the Corporate Office. The following schedule presents financial information for each reportable segment for the three and twelve months ended March 31, 2023 and March 31, 2022.

    Segments            
    For the three months ended March 31, 2023            
    (in thousands) Commercial
    Bank    		 CBHL OpenSky® Corporate(2) Eliminations Consolidated
    Interest income $26,300  $77  $16,130  $978  $(69) $43,416 
    Interest expense  8,739   30   —   229   (69)  8,929 
    Net interest income  17,561   47   16,130   749   —   34,487 
    Provision for loan losses  (161)  —   1,821   —   —   1,660 
    Net interest income after provision  17,722   47   14,309   749   —   32,827 
    Noninterest income  489   1,327   4,210   —   —   6,026 
    Noninterest expense(1)  14,980   1,581   9,450   192   —   26,203 
    Net income (loss) before taxes $3,231  $(207) $9,069  $557  $—  $12,650 
                 
    Total assets $2,074,634  $10,193  $106,761  $257,048  $(203,351) $2,245,286 
                 
    For the three months ended March 31, 2022          
    (in thousands) Commercial
    Bank    		 CBHL OpenSky® Corporate(2) Eliminations Consolidated
    Interest income $18,499  $111  $14,940  $889  $(37) $34,402 
    Interest expense  853   81   —   174   (37)  1,071 
    Net interest income  17,646   30   14,940   715   —   33,331 
    Provision for loan losses  —   —   952   —   —   952 
    Net interest income after provision  17,646   30   13,988   715   —   32,379 
    Noninterest income  557   1,807   5,924   —   —   8,288 
    Noninterest expense(1)  12,063   2,099   12,882   58   —   27,102 
    Net income (loss) before taxes $6,140  $(262) $7,030  $657  $—  $13,565 
                 
    Total assets $1,938,326  $17,630  $122,756  $222,167  $(178,426) $2,122,453 

    ________________________
    (1)   Noninterest expense includes $5.9 million and $7.6 million in data processing expense in OpenSky’s® segment for the three months ended March 31, 2023 and 2022, respectively.
    (2)   The Corporate segment invests idle cash in revenue producing assets including interest bearing cash accounts, loan participations and other appropriate investments for the Company.


    HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited  
      Quarter Ended
    (in thousands except per share data) March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
    Earnings:          
    Net income $9,735  $8,991  $11,095  $11,508  $10,211 
    Earnings per common share, diluted  0.68   0.62   0.77   0.80   0.71 
    Net interest margin  6.65%  6.64%  7.24%  7.06%  6.79%
    Net interest margin, excluding credit cards & SBA-PPP loans (1)  3.81%  3.91%  4.16%  3.86%  3.82%
    Return on average assets(2)  1.84%  1.67%  2.15%  2.23%  2.01%
    Return on average assets, excluding impact of SBA-PPP loans (1)(2)  1.84%  1.67%  2.10%  2.04%  1.67%
    Return on average equity(2)  16.98%  16.18%  20.32%  22.16%  20.30%
    Efficiency ratio  64.68%  65.59%  64.16%  62.00%  65.12%
               
    Balance Sheet:          
    Total portfolio loans receivable, net deferred fees $1,786,109  $1,728,592  $1,648,001  $1,607,677  $1,526,256 
    Total deposits  1,944,374   1,758,072   1,737,591   1,888,920   1,862,722 
    Total assets  2,245,286   2,123,655   2,009,358   2,154,846   2,122,453 
    Total shareholders' equity  234,517   224,015   214,005   207,316   201,492 
               
    Asset Quality Ratios:          
    Nonperforming assets to total assets  0.73%  0.46%  0.43%  0.34%  0.28%
    Nonperforming assets to total assets, excluding the SBA-PPP loans (1)  0.73%  0.46%  0.43%  0.34%  0.29%
    Nonperforming loans to total loans  0.91%  0.56%  0.52%  0.45%  0.38%
    Nonperforming loans to portfolio loans (1)  0.91%  0.56%  0.52%  0.46%  0.39%
    Net charge-offs to average portfolio loans (1)(2)  0.61%  0.49%  0.39%  0.23%  0.24%
    Allowance for credit losses to total loans  1.47%  1.52%  1.58%  1.63%  1.60%
    Allowance for credit losses to portfolio loans (1)  1.47%  1.53%  1.58%  1.64%  1.65%
    Allowance for credit losses to non-performing loans  160.91%  270.46%  303.76%  360.06%  422.65%
               
    Bank Capital Ratios:          
    Total risk based capital ratio  14.06%  14.21%  14.65%  14.34%  14.36%
    Tier 1 risk based capital ratio  12.80%  12.95%  13.39%  13.09%  13.10%
    Leverage ratio  9.78%  9.47%  9.60%  9.11%  8.74%
    Common equity Tier 1 capital ratio  12.80%  12.95%  13.39%  13.09%  13.10%
    Tangible common equity  8.79%  8.85%  9.00%  8.17%  8.11%
    Holding Company Capital Ratios:          
    Total risk based capital ratio  16.15%  16.33%  17.41%  17.66%  17.16%
    Tier 1 risk based capital ratio  14.90%  15.13%  15.49%  15.70%  15.19%
    Leverage ratio  11.47%  11.24%  11.31%  10.93%  10.25%
    Common equity Tier 1 capital ratio  14.90%  15.00%  15.36%  15.55%  15.04%
    Tangible common equity  10.44%  10.55%  10.65%  9.62%  9.49%
    Composition of Loans:          
    SBA-PPP loans, net $2,037  $2,163  $2,662  $15,864  $51,085 
    Residential real estate $545,899  $484,735  $466,849  $430,244  $420,242 
    Commercial real estate  660,218   664,551   626,030   608,646   564,725 
    Construction real estate  251,494   238,099   235,045   241,249   245,722 
    Commercial and industrial  221,258   220,221   192,207   193,262   177,504 
    Credit card, net of reserve  112,860   128,434   136,658   142,166   123,750 
    Other consumer loans  1,578   1,179   1,055   856   909 
    Portfolio loans receivable $1,793,307  $1,737,219  $1,657,844  $1,616,423  $1,532,852 
    Deferred origination fees, net  (7,198)  (8,627)  (9,843)  (8,746)  (6,596)
    Portfolio loans receivable, net $1,786,109  $1,728,592  $1,648,001  $1,607,677  $1,526,256 
               
    Composition of Deposits:          
    Noninterest-bearing $705,801  $674,313  $806,033  $842,363  $825,174 
    Interest-bearing demand  219,685   207,836   252,135   305,377   279,591 
    Savings  5,835   7,530   8,861   10,078   9,894 
    Money markets  632,087   574,978   518,184   570,298   585,920 
    Time deposits  380,966   293,415   152,378   160,804   162,143 
    Total deposits $1,944,374  $1,758,072  $1,737,591  $1,888,920  $1,862,722 
               
    Capital Bank Home Loan Metrics:      
    Origination of loans held for sale $44,448  $43,956  $60,516  $84,417  $111,087 
    Mortgage loans sold  40,483   43,415   65,349   89,745   110,039 
    Gain on sale of loans  1,223   912   1,340   1,918   3,042 
    Purchase volume as a % of originations  90.72%  88.94%  81.85%  85.23%  73.16%
    Gain on sale as a % of loans sold(3)  3.02%  2.10%  2.05%  2.14%  2.77%
    Mortgage commissions $378  $451  $587  $772  $1,125 
               
    OpenSky® Portfolio Metrics:      
    Active customer accounts  527,231   533,855   576,844   616,435   630,709 
    Secured credit card loans, gross $89,078  $104,157  $111,842  $118,938  $109,978 
    Unsecured credit card loans, gross  25,782   26,795   27,335   25,641   16,233 
    Noninterest secured credit card deposits  184,809   187,412   201,277   214,110   220,354 

    _______________
    (1)   Refer to Appendix for reconciliation of non-GAAP measures.
    (2)   Annualized.
    (3)   Gain on sale percentage is calculated as gain on sale of loans divided by mortgage loans sold.


    Appendix

    Reconciliation of Non-GAAP Measures

    Return on Average Assets, as AdjustedQuarters Ended
    (in thousands)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
              
    Net Income$9,735  $8,991  $11,095  $11,508  $10,211 
    Less: SBA-PPP loan income 8   28   263   1,120   2,066 
    Net Income, as Adjusted$9,727  $8,963  $10,832  $10,388  $8,145 
    Average Total Assets 2,144,249   2,136,156   2,049,078   2,068,218   2,057,201 
    Less: Average SBA-PPP Loans 2,099   2,435   5,906   28,870   83,264 
    Average Total Assets, as Adjusted$2,142,150  $2,133,721  $2,043,172  $2,039,348  $1,973,937 
    Return on Average Assets, as Adjusted 1.84%  1.67%  2.10%  2.04%  1.67%


    Net Interest Margin, as AdjustedQuarters Ended
    (in thousands)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
              
    Net Interest Income$34,487  $35,199  $36,677  $35,400  $33,331 
    Less Credit card loan income 15,809   15,717   16,768   16,376   14,487 
    Less SBA-PPP loan income 8   28   263   1,120   2,066 
    Net Interest Income, as Adjusted$18,670  $19,454  $19,646  $17,904  $16,778 
    Average Interest Earning Assets 2,103,984   2,101,617   2,010,070   2,011,920   1,990,377 
    Less Average credit card loans 115,850   124,120   132,246   124,548   124,923 
    Less Average SBA-PPP loans 2,099   2,435   5,906   28,870   83,264 
    Total Average Interest Earning Assets, as Adjusted$1,986,035  $1,975,062  $1,871,918  $1,858,502  $1,782,190 
    Net Interest Margin, as Adjusted 3.81%  3.91%  4.16%  3.86%  3.82%


    Pre-tax, Pre-Provision Net Revenue ("PPNR")Quarters Ended
    (in thousands)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
              
    Net income$9,735  $8,991  $11,095  $11,508  $10,211 
    Add: Income Tax Expense 2,915   2,651   3,336   3,089   3,354 
    Add: Provision for Credit Losses 1,660   2,384   1,260   2,035   952 
    Pre-tax, Pre-Provision Net Revenue ("PPNR")$14,310  $14,026  $15,691  $16,632  $14,517 


    Allowance for Credit Losses to Total Portfolio LoansQuarters Ended
    (in thousands)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
              
    Allowance for Credit Losses$26,216  $26,385  $26,091  $26,419  $25,252 
    Total Loans 1,788,146   1,730,755   1,650,663   1,623,541   1,577,341 
    Less: SBA-PPP loans 2,037   2,163   2,662   15,864   51,085 
    Total Portfolio Loans$1,786,109  $1,728,592  $1,648,001  $1,607,677  $1,526,256 
    Allowance for Credit Losses to Total Portfolio Loans 1.47%  1.53%  1.58%  1.64%  1.65%
              
    Nonperforming Assets to Total Assets, net SBA-PPP LoansQuarters Ended
    (in thousands)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
              
    Total Nonperforming Assets$16,293  $9,756  $8,589  $7,338  $5,975 
    Total Assets 2,245,286   2,123,655   2,009,358   2,154,846   2,122,453 
    Less: SBA-PPP loans 2,037   2,163   2,662   15,864   51,085 
    Total Assets, net SBA-PPP Loans$2,243,249  $2,121,492  $2,006,696  $2,138,982  $2,071,368 
    Nonperforming Assets to Total Assets, net SBA-PPP Loans 0.73%  0.46%  0.43%  0.34%  0.29%
              
    Nonperforming Loans to Total Portfolio LoansQuarters Ended
    (in thousands)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
              
    Total Nonperforming Loans$16,293  $9,756  $8,589  $7,338  $5,975 
    Total Loans 1,788,146   1,730,755   1,650,663   1,623,541   1,577,341 
    Less: SBA-PPP loans 2,037   2,163   2,662   15,864   51,085 
    Total Portfolio Loans$1,786,109  $1,728,592  $1,648,001  $1,607,677  $1,526,256 
    Nonperforming Loans to Total Portfolio Loans 0.91%  0.56%  0.52%  0.46%  0.39%
              
    Net Charge-offs to Average Portfolio LoansQuarters Ended
    (in thousands)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
              
    Total Net Charge-offs$2,645  $2,090  $1,588  $868  $881 
    Total Average Loans 1,752,638   1,677,869   1,607,452   1,561,541   1,590,166 
    Less: Average SBA-PPP loans 2,099   2,435   5,906   28,870   83,264 
    Total Average Portfolio Loans$1,750,539  $1,675,434  $1,601,546  $1,532,671  $1,506,902 
    Net Charge-offs to Average Portfolio Loans 0.61%  0.49%  0.39%  0.23%  0.24%
              
    Tangible Book Value per ShareQuarters Ended
    (in thousands, except per share amounts)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
              
    Total Stockholders' Equity$234,517  $224,015  $214,005  $207,316  $201,492 
    Less: Preferred equity —   —   —   —   — 
    Less: Intangible assets —   —   —   —   — 
    Tangible Common Equity$234,517  $224,015  $214,005  $207,316  $201,492 
    Period End Shares Outstanding 14,082,657   14,138,829   14,038,599   14,010,158   14,000,520 
    Tangible Book Value per Share$16.65  $15.84  $15.24  $14.80  $14.39 


    ABOUT CAPITAL BANCORP, INC.
    Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. The Company’s wholly-owned subsidiary, Capital Bank, N.A., is the fourth largest bank headquartered in Maryland at March 31, 2023. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in five locations in the greater Washington, D.C. and Baltimore, Maryland markets. Capital Bancorp had assets of approximately $2.2 billion at March 31, 2023 and its common stock is traded in the NASDAQ Global Market under the symbol “CBNK.” More information can be found at the Company's website www.CapitalBankMD.com under its investor relations page.

    FORWARD-LOOKING STATEMENTS
    This earnings release contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” "optimistic," “intends” and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements.  Accordingly, we caution you that any such forward-looking statements are not a guarantee of future performance and that actual results may prove to be materially different from the results expressed or implied by the forward-looking statements due to a number of factors. For details on some of the factors that could affect these expectations, see risk factors and other cautionary language included in the Company's Annual Report on Form 10-K and other periodic and current reports filed with the Securities and Exchange Commission.

    While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing war in Ukraine; the magnitude and duration of the COVID-19 pandemic and related variants and mutations and their impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; the transition away from USD LIBOR and uncertainty regarding potential alternative reference rates, including SOFR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; and other factors that may affect our future results.

    These forward-looking statements are made as of the date of this communication, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by law.

    FINANCIAL CONTACT: Connie Egan (301) 468-8848 x1225

    MEDIA CONTACT: Ed Barry (240) 283-1912

    WEB SITE: www.CapitalBankMD.com

     


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