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Capital Bancorp, Inc. Reports Fourth Quarter 2023 Net Income of $9.0 million, or $0.65 per share
Источник: Nasdaq GlobeNewswire / 22 янв 2024 15:10:01 America/Chicago
- Diluted EPS of $0.65, ROAA of 1.63%, and ROAE of 14.44% for 4Q 2023
- Tangible Book Value Per Share(1) of $18.31 for 4Q 2023 up 15.6% from 4Q 2022
- Loan Growth of $40.7 million, or 8.7% annualized for 4Q 2023
- Cash dividend of $0.08 per share declared
ROCKVILLE, Md., Jan. 22, 2024 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $9.0 million, or $0.65 per diluted share, for the fourth quarter 2023, compared to net income of $9.8 million, or $0.70 per diluted share, for the third quarter 2023 and $9.0 million, or $0.62 per diluted share, for the fourth quarter 2022.
The Company also declared a cash dividend on its common stock of $0.08 per share. The dividend is payable on February 21, 2024 to shareholders of record on February 5, 2024.
“Over the past two years, our strategy, which emphasizes both growth and profitability, has led to a 29% increase in book value," said Ed Barry, Chief Executive Officer of the Company and the Bank. “Despite persistent market volatility, we continue to identify opportunities to generate attractive loans and core deposits and expand our talented team. We are investing in our people and technology to build on our momentum, diversify our business, and achieve profitable expansion.”
“While acknowledging that net income year-over-year did not advance, there are many performance indicators that are cause for optimism about the Bank’s future,” said Steven J. Schwartz, Chairman of the Company. "Substantial stability of core net interest margin and core deposits year-over-year positions the Bank for continued outperformance of peers, as does our ongoing commitment to maintain a strong credit culture and eschew the assumption of undue interest rate risk. Moreover, our investment in best-in-class C-suite executives should give us competitive advantages as we seek to meaningfully grow both sides of our balance sheet. Also encouraging is the promise that our ongoing investments in technology applications will enable improvements to our already strong customer-facing and back office functions.”
(1) Reconciliations of the non–U.S. generally accepted accounting principles ("GAAP") measures are set forth in the Appendix at the end of this press release.
Fourth Quarter 2023 Highlights
Capital Bancorp, Inc.
Earnings Summary - Net income of $9.0 million, or $0.65 per diluted share, decreased $0.8 million compared to $9.8 million, or $0.70 per diluted share, for the third quarter 2023.
- Net interest income of $34.9 million decreased $1.9 million compared to $36.8 million for the third quarter 2023. Interest income of $47.0 million decreased $0.8 million compared to $47.7 million for the third quarter 2023 as interest income from credit card loans decreased $1.1 million. Interest expense of $12.1 million increased $1.2 million compared to $10.9 million for the third quarter 2023 reflecting the rising cost of interest-bearing deposits.
- The provision for credit losses was $2.8 million, an increase of $0.5 million from the third quarter 2023. The provision for credit losses includes net charge-offs of $2.5 million in the fourth quarter 2023 including $1.9 million from credit card related loans and $0.6 million from commercial loans. Commercial loan net charge-offs include a charge-off of $0.7 million in the fourth quarter 2023 of which $0.4 million was specifically reserved in the third quarter 2023 on a single multi-unit residential real estate loan secured by four properties with a balance of $7.6 million at December 31, 2023. This loan was classified as nonperforming in the first quarter of 2023. As of January 22, 2024, sales of three of the properties totaling $7.1 million are currently pending. The third quarter 2023 provision for credit losses included net charge-offs of $1.8 million primarily related to credit card loans.
- Noninterest income of $5.9 million decreased $0.4 million compared to $6.3 million for the third quarter 2023. Credit card fees decreased $0.4 million primarily due to lower interchange and other fee income.
- Noninterest expense of $26.9 million decreased $1.1 million compared to $28.0 million for the third quarter 2023. Within this category, significant variances included the following:
- Salaries and employee benefits of $11.6 million decreased $0.8 million primarily due to adjustments to annual incentive based compensation.
- Professional fees of $1.6 million decreased $0.4 million related to decreases in third party consulting fees.
- Data processing expense of $6.1 million decreased $0.3 million primarily from processor rebates.
- Loan processing expense of $0.2 million decreased $0.2 million.
- Other operating expenses of $4.0 million increased $0.6 million related to operational losses.
- Income tax expense of $2.2 million, or 19.5% of pre-tax income for the fourth quarter 2023 decreased $0.8 million from $3.0 million, or 23.4% of pre-tax income for the third quarter 2023, reflecting a decrease in pre-tax income of $1.6 million. The lower effective tax rate for the fourth quarter 2023 when compared to the third quarter 2023 is primarily driven by the tax benefit recognized on the exercise of non-qualified stock options during the fourth quarter. The stock option exercises also contributed to the reduction in the total year effective tax rate.
Performance and Efficiency Ratios – Annualized return on average assets ("ROAA") and annualized return on average equity ("ROAE") were 1.63% and 14.44%, respectively, for the three months ended December 31, 2023, compared to 1.75% and 16.00%, respectively, for the three months ended September 30, 2023.
- The efficiency ratio was 65.91% for the three months ended December 31, 2023, compared to 65.02% for the three months ended September 30, 2023.
Balance Sheet – Total assets of $2.2 billion at December 31, 2023 decreased $47.8 million, or 2.1%, from September 30, 2023.
- Cash and cash equivalents of $54.0 million at December 31, 2023 decreased $92.2 million, or 63.1% from September 30, 2023, as total deposits decreased $72.0 million and total portfolio loans increased $40.4 million partially offset by an increase in other borrowed funds of $15.0 million.
- Net portfolio loans of $1.9 billion increased $40.7 million, representing 8.7% annualized growth.
- Total deposits of $1.9 billion at December 31, 2023 decreased $72.0 million, or 3.7%, from September 30, 2023, while total average deposits decreased $33.4 million quarter over quarter. The reduction in deposits is traditionally seasonal in nature, with title companies typically experiencing slower mortgage activity in the fourth quarter and some other commercial operating businesses typically drawing down demand deposits in the fourth quarter. Average portfolio loans-to-deposit ratio of 98.8% for the three months ended December 31, 2023 increased from 96.3% for the three months ended September 30, 2023.
- The investment securities portfolio continues to be classified as available for sale and had a fair market value of $208.3 million, or 9.4% of total assets, at December 31, 2023 up slightly from $206.1 million at September 30, 2023. The amortized cost of the investment securities portfolio was $225.7 million, with an effective duration of 3.22 years. U.S. Treasury securities represented 71.5% of the overall investment portfolio at December 31, 2023. The accumulated other comprehensive loss ("AOCI Loss") on the investment securities portfolio decreased $4.7 million during the quarter to $13.1 million as of December 31, 2023, which represents 5.1% of total stockholders' equity. The Company does not have a held to maturity ("HTM") investment securities portfolio.
Net Interest Margin - Net interest margin decreased to 6.40% for the three months ended December 31, 2023, compared to 6.71% for the three months ended September 30, 2023. Adjusted net interest margin (excluding credit card and SBA-PPP loans), a non-GAAP measure, decreased to 3.92%, compared to 4.05% for the three months ended September 30, 2023.
- The average yield on interest earning assets decreased 8 basis points compared to the third quarter 2023. The decrease in average yield was due to a 13 basis point decline in the yield for portfolio loans to 9.59% as interest income from credit card loans of $14.7 million in the fourth quarter 2023 declined $1.1 million from $15.8 million in the third quarter 2023. The yield on portfolio loans, as adjusted (excluding credit card loans), a non-GAAP measure, of 6.89% for the fourth quarter 2023 increased 13 basis points from 6.76% for the third quarter 2023. New portfolio loans (excluding credit card loans) originated in the fourth quarter 2023 totaled $91.1 million with a weighted average yield of 8.46% as compared to $98.9 million with a weighted average yield of 8.37% in the third quarter 2023.
- The average rate on interest-bearing liabilities increased 31 basis points compared to the third quarter 2023. Increases in average rates include money market accounts increasing 31 basis points to 4.16% and time deposits increasing 21 basis points to 4.72%, while average balances increased $24.7 million and $6.3 million, respectively, compared to the third quarter 2023. Further, the average rate on interest-bearing demand accounts increased 3 basis points to 0.18%, while the average balance decreased $20.0 million compared to the third quarter 2023.
Deposits - Total deposits at December 31, 2023 decreased by $72.0 million, or 3.7%, compared to September 30, 2023.
- Noninterest-bearing deposits of $617.4 million decreased $63.4 million, or 9.3%, compared to September 30, 2023. Interest-bearing deposits of $1.3 billion decreased $8.6 million, or 0.7%, compared to September 30, 2023 with a reduction in interest-bearing demand accounts of $29.7 million, money market accounts of $5.6 million and savings of $0.5 million while other time deposits increased $13.6 million. Brokered time deposits totaled $142.4 million at December 31, 2023, an increase of $13.7 million from September 30, 2023.
Cost of Interest-Bearing Liabilities - The elevated interest rate environment has driven up the average cost of interest-bearing liabilities to 3.68% for the quarter ended December 31, 2023, compared to 3.37% for the third quarter 2023.
- Average noninterest-bearing deposits of $622.9 million decreased $44.0 million, or 6.6%, compared to September 30, 2023, and represented 33.0% of total average deposits at December 31, 2023.
- Average borrowed funds of $41.8 million increased $6.9 million, or 19.7%, compared to September 30, 2023.
Robust Capital Positions - As of December 31, 2023, the Company reported a common equity tier 1 capital ratio of 15.43%, compared to 15.27% at September 30, 2023, and an allowance for credit losses to total loans ratio of 1.50%, compared to an allowance for credit losses to total loans ratio of 1.52% at September 30, 2023. Shares repurchased and retired during the three months ended December 31, 2023, as part of the Company's stock repurchase program, totaled 89,427 shares at an average price of $20.52, for a total cost of $1.8 million including commissions. Tangible book value per common share grew 4.5% to $18.31 at December 31, 2023 when compared to September 30, 2023. The Company did not have goodwill or other intangible assets during any of the periods presented and therefore, tangible book value per share is equal to book value per share.
Liquidity - Total sources of available borrowings at December 31, 2023 totaled $576.9 million, including available collateralized lines of credit of $463.7 million, unsecured lines of credit with other banks of $76.0 million and unpledged investment securities available as collateral for potential additional borrowings of $37.2 million.
Commercial Bank
Continued Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $39.6 million, to $1.8 billion, gross, at December 31, 2023 compared to September 30, 2023.
Net Interest Income - Interest income of $31.0 million increased $0.5 million compared to $30.4 million for the third quarter 2023, driven primarily by loan growth. Interest expense of $11.9 million increased $1.1 million, driven by an increase in the average cost of interest-bearing liabilities in the fourth quarter 2023.
Credit Metrics - Nonperforming assets ("NPAs") increased 5 basis points to 0.72% of total assets at December 31, 2023 compared to 0.67% at September 30, 2023 as a result of an increase in nonaccrual loans at December 31, 2023 to $16.0 million compared to $15.2 million at September 30, 2023. Included in nonperforming assets is a single $7.6 million, multi-unit residential real estate loan as previously mentioned. At December 31, 2023 commercial real estate loans with office space exposure totaled $56.3 million, or 3.0% of total portfolio loans, with a weighted average loan-to-value ("LTV") of 49.5%. Included in the total are owner-occupied commercial real estate loans with office exposure totaling $42.8 million with a weighted average LTV of 48.2% and non owner-occupied commercial real estate loans with office exposure totaling $13.5 million with a weighted average LTV of 54.2%.
OpenSky®
Revenues - Total revenue of $19.0 million decreased $1.5 million from the third quarter 2023. Interest income of $15.0 million decreased $1.1 million from the third quarter 2023. Average OpenSky® loan balances, net of reserves and deferred fees of $114.6 million for the fourth quarter 2023, decreased $2.3 million, or 1.9%, compared to $116.8 million for the third quarter 2023. Noninterest income of $4.0 million decreased $0.4 million due to a decline in credit card fees as compared to the third quarter 2023.
Noninterest Expense - Total noninterest expense of $10.4 million decreased $0.3 million from the third quarter 2023. Noninterest expense declined in the fourth quarter 2023 due primarily to a reduction in data processing expense of $0.4 million primarily from processor rebates. During the fourth quarter 2023, the number of OpenSky® credit card accounts declined by 3,891 to 525,314.
Loan Balances - OpenSky® loan balances, net of reserves, of $123.3 million at December 31, 2023 increased by $0.8 million, or 0.7%, compared to $122.5 million at September 30, 2023. Corresponding deposit balances of $173.9 million at December 31, 2023 decreased $7.3 million, or 4.0%, compared to $181.2 million at September 30, 2023. Gross unsecured loan balances of $30.8 million at December 31, 2023 increased $3.4 million, or 12.4%, compared to $27.4 million at September 30, 2023.
OpenSky® Credit - Card delinquencies remained stable in the fourth quarter 2023 when compared to the third quarter 2023. The provision for credit losses increased $0.3 million compared to the third quarter 2023 as card balances, net of reserves, increased $0.8 million during the fourth quarter 2023 as compared to a decrease of $0.4 million during the third quarter 2023.
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited Quarter Ended 4Q23 vs 3Q23 4Q23 vs 4Q22 (in thousands except per share data) December 31,
2023September 30,
2023December 31,
2022$
Change%
Change$
Change%
ChangeEarnings Summary Interest income $ 46,969 $ 47,741 $ 41,348 $ (772 ) (1.6 )% $ 5,621 13.6 % Interest expense 12,080 10,931 6,149 1,149 10.5 % 5,931 96.5 % Net interest income 34,889 36,810 35,199 (1,921 ) (5.2 )% (310 ) (0.9 )% Provision for credit losses 2,808 2,280 2,384 528 23.2 % 424 17.8 % (Release of) provision for credit losses on unfunded commitments (106 ) 24 — (130 ) (541.7 )% (106 ) — % Noninterest income 5,936 6,326 5,561 (390 ) (6.2 )% 375 6.7 % Noninterest expense 26,907 28,046 26,734 (1,139 ) (4.1 )% 173 0.6 % Income before income taxes 11,216 12,786 11,642 (1,570 ) (12.3 )% (426 ) (3.7 )% Income tax expense 2,186 2,998 2,651 (812 ) (27.1 )% (465 ) (17.5 )% Net income $ 9,030 $ 9,788 $ 8,991 $ (758 ) (7.7 )% $ 39 0.4 % Pre-tax pre-provision net revenue ("PPNR")(1) $ 13,918 $ 15,090 $ 14,026 $ (1,172 ) (7.8 )% $ (108 ) (0.8 )% Common Share Data Earnings per share - Basic $ 0.65 $ 0.70 $ 0.64 $ (0.05 ) (7.1 )% $ 0.01 1.6 % Earnings per share - Diluted $ 0.65 $ 0.70 $ 0.62 $ (0.05 ) (7.1 )% $ 0.03 4.8 % Weighted average common shares - Basic 13,897 13,933 14,071 Weighted average common shares - Diluted 13,989 14,024 14,408 Return Ratios Return on average assets (annualized) 1.63 % 1.75 % 1.67 % Return on average assets, excluding impact of SBA-PPP loans (annualized)(1) 1.63 % 1.75 % 1.67 % Return on average equity (annualized) 14.44 % 16.00 % 16.18 % ______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued) Year Ended December 31, (in thousands except per share data) 2023 2022 $ Change % Change Earnings Summary Interest income $ 183,206 $ 150,646 $ 32,560 21.6 % Interest expense 41,680 10,039 31,641 315.2 % Net interest income 141,526 140,607 919 0.7 % Provision for credit losses 9,610 6,631 2,979 44.9 % (Release of) provision for credit losses on unfunded commitments (101 ) — (101 ) — % Noninterest income 24,975 29,372 (4,397 ) (15.0 )% Noninterest expense 110,767 109,114 1,653 1.5 % Income before income taxes 46,225 54,234 (8,009 ) (14.8 )% Income tax expense 10,354 12,430 (2,076 ) (16.7 )% Net income $ 35,871 $ 41,804 $ (5,933 ) (14.2 )% Pre-tax pre-provision net revenue ("PPNR")(1) $ 55,734 $ 60,865 $ (5,131 ) (8.4 )% Common Share Data Earnings per share - Basic $ 2.56 $ 2.98 $ (0.42 ) (14.1 )% Earnings per share - Diluted $ 2.55 $ 2.91 $ (0.36 ) (12.4 )% Weighted average common shares - Basic 14,003 14,025 Weighted average common shares - Diluted 14,081 14,362 Return Ratios Return on average assets (annualized) 1.64 % 2.01 % Return on average assets, excluding impact of SBA-PPP loans (annualized)(1) 1.64 % 1.87 % Return on average equity (annualized) 14.91 % 19.68 % ______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued) Quarter Ended Quarter Ended December
31,September
30,June
30,March
31,(in thousands except per share data) 2023 2022 % Change 2023 2023 2022 Balance Sheet Highlights Assets $ 2,224,667 $ 2,123,655 4.8 % $ 2,272,484 $ 2,227,866 $ 2,245,286 Investment securities available for sale 208,329 252,481 (17.5 )% 206,055 208,464 255,762 Mortgage loans held for sale 7,481 7,416 0.9 % 4,843 10,146 9,620 SBA-PPP loans, net of fees 645 2,163 (70.2 )% 750 1,090 2,037 Portfolio loans receivable(2) 1,902,643 1,728,592 10.1 % 1,861,929 1,837,041 1,786,109 Allowance for credit losses 28,610 26,385 8.4 % 28,279 27,495 26,216 Deposits 1,895,996 1,758,072 7.8 % 1,967,988 1,934,361 1,944,374 FHLB borrowings 22,000 107,000 (79.4 )% 22,000 22,000 32,000 Other borrowed funds 27,062 12,062 124.4 % 12,062 12,062 12,062 Total stockholders' equity 254,860 224,015 13.8 % 242,878 237,435 234,517 Tangible common equity(1) 254,860 224,015 13.8 % 242,878 237,435 234,517 Common shares outstanding 13,923 14,139 (1.5 )% 13,893 13,981 14,083 Book value per share $ 18.31 $ 15.84 15.6 % $ 17.48 $ 16.98 $ 16.65 Tangible book value per share(1) $ 18.31 $ 15.84 15.6 % $ 17.48 $ 16.98 $ 16.65 Dividends per share $ 0.08 $ 0.06 33.3 % $ 0.08 $ 0.06 $ 0.06 ______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.
(2) Loans are reflected net of deferred fees and costs.Operating Results - Comparison of Three Months Ended December 31, 2023 and 2022
For the three months ended December 31, 2023, net interest income of $34.9 million decreased slightly from $35.2 million in the same period in 2022. The net interest margin decreased 24 basis points to 6.40% for the three months ended December 31, 2023 from the same period in 2022 as interest income on credit card decreased $1.1 million. Net interest margin, excluding credit card and SBA-PPP loans, increased to 3.92% for the three months ended December 31, 2023, compared to 3.91% for the same period in 2022 as yields on interest-bearing deposits and portfolio loans generally kept pace with the rising costs of deposits, including money market accounts and time deposits.
For the three months ended December 31, 2023, average interest earning assets increased $60.8 million, or 2.9%, to $2.2 billion as compared to the same period in 2022, and the average yield on interest earning assets increased 81 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $147.7 million, or 12.8%, and the average cost of interest-bearing liabilities increased to 3.68%, a 157 basis point increase from 2.11%.
For the three months ended December 31, 2023, the provision for credit losses was $2.8 million, an increase of $0.4 million from the same period in 2022. Net charge-offs for the three months ended December 31, 2023 were $2.5 million, or 0.53% on an annualized basis of average portfolio loans, compared to $2.1 million, or 0.49% on an annualized basis of average loans for the same period in 2022. The change in provision was partially due to a charge-off of $0.7 million in the fourth quarter 2023 of which $0.4 million was specifically reserved in the third quarter 2023 on a single multi-unit residential real estate loan secured by four properties with a balance of $7.6 million at December 31, 2023. This loan was classified as nonperforming in the first quarter of 2023. As of January 22, 2024, sales of three of the properties totaling $7.1 million are currently pending. Of the $2.5 million in net charge-offs during the quarter, $1.4 million related to secured and partially secured cards in the credit card portfolio and $0.4 million related to unsecured cards.
For the three months ended December 31, 2023, noninterest income of $5.9 million increased $0.4 million, or 6.7%, from the same period in 2022. Mortgage banking revenue of $1.2 million increased $0.6 million due to an increase in home loan sales. Credit card fees of $4.0 million decreased $0.3 million as the number of open customer accounts declined year over year, which resulted in lower interchange and other fee income.
Credit card loan balances, net of reserves, decreased by $5.1 million to $123.3 million as of December 31, 2023, from $128.4 million at December 31, 2022. The related deposit account balances decreased 7.2% to $173.9 million at December 31, 2023 when compared to $187.4 million at December 31, 2022, reflective of the reduction in the number of open customer accounts year over year.
The efficiency ratio for the three months ended December 31, 2023 was 65.91% compared to 65.59% for the three months ended December 31, 2022.
For the three months ended December 31, 2023, noninterest expense of $26.9 million increased slightly from $26.7 million for the same period in 2022. The change includes increases in advertising expense of $0.7 million and other operating expense of $0.6 million, partially offset by decreases in data processing expense of $0.6 million and professional fees of $0.5 million.
Operating Results - Comparison of Year Ended December 31, 2023 and 2022
For the year ended December 31, 2023, net interest income of $141.5 million increased $0.9 million from the same period in 2022, primarily due to increased average balances of $235.9 million in portfolio loans combined with a 71 basis point increase in yield for portfolio loans, offset by significant increases in the cost of funding. The net interest margin decreased 32 basis points to 6.60% for the year ended December 31, 2023 from the same period in 2022. Net interest margin, excluding credit card and SBA-PPP loans, was 3.96% for the year ended December 31, 2023, compared to 3.93% for the same period in 2022.
For the year ended December 31, 2023, average interest earning assets increased $112.0 million, or 5.5%, to $2.1 billion as compared to the same period in 2022, and the average yield on interest earning assets increased 113 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $209.1 million, or 19.7%, while the average cost of interest-bearing liabilities increased 234 basis points to 3.29% from 0.95%.
For the year ended December 31, 2023, the provision for credit losses was $9.6 million, an increase of $3.0 million from the prior year, attributable primarily to the credit card portfolio. Net charge-offs for the year ended December 31, 2023 were $8.5 million, or 0.47% annualized of average portfolio loans, compared to $5.4 million, or 0.34% annualized of average portfolio loans, for the same period in 2022. The $8.5 million in net charge-offs during the year ended December 31, 2023 was comprised primarily of credit card portfolio net charge-offs, with $5.5 million related to secured and partially secured cards while $1.4 million was related to unsecured cards.
For the year ended December 31, 2023, noninterest income of $25.0 million decreased $4.4 million, or 15.0%, from the same period in 2022. The decrease was primarily driven by the decline in credit card fees of $4.7 million as the number of open customer accounts declined to 525,314 at December 31, 2023 from 533,855 year over year, which resulted in lower interchange and other fee income recognized compared to the prior year.
The efficiency ratio for the year ended December 31, 2023 was 66.53% compared to 64.19% for the year ended December 31, 2022.
For the year ended December 31, 2023, noninterest expense of $110.8 million increased $1.7 million, or 1.5%, from the same period in 2022. The increase was primarily driven by a $5.9 million, or 13.7%, increase in salaries and employee benefits and a $0.8 million, or 16.6%, increase in occupancy and equipment, partially offset by a $3.7 million, or 12.7%, decrease in data processing expense and a $1.7 million, or 15.8%, decrease in professional fees due to a reduction in third party consulting fees. The decrease in data processing expense was the result of a contract renegotiation entered into in the first quarter 2022 in the OpenSky® Division as well as fewer average open cards during the period.
Financial Condition
Total assets at December 31, 2023 were $2.2 billion, a decrease of $47.8 million, or 2.1%, from the balance at September 30, 2023 and an increase of $101.0 million, or 4.8%, from the balance at December 31, 2022. Net portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.9 billion at December 31, 2023, an increase of $40.7 million, up 2.2% or 8.7% annualized, compared to September 30, 2023, and an increase of $174.1 million, or 10.1%, compared to $1.7 billion at December 31, 2022.
The Company recorded a provision for credit losses of $9.6 million during the year ended December 31, 2023, which increased the allowance for credit losses to $28.6 million, or 1.50% of total loans at December 31, 2023, representing an increase of $0.3 million over the balance at September 30, 2023. Nonperforming assets, which were comprised solely of nonperforming loans as of December 31, 2023, were $16.0 million, or 0.72% of total assets, up from $15.2 million, or 0.67% of total assets at September 30, 2023, and up from $9.8 million, or 0.46% of total assets at December 31, 2022. Included in nonperforming assets at December 31, 2023 is a single $7.6 million, multi-unit residential real estate loan, with respect to which $0.7 million was charged off in the fourth quarter 2023.
Deposits were $1.9 billion at December 31, 2023, a decrease of $72.0 million, or 3.7%, from the balance at September 30, 2023 and an increase of $137.9 million, or 7.8%, from the balance at December 31, 2022. Average deposits of $1.9 billion for the three months ended December 31, 2023 decreased $33.4 million, or 1.7%, as compared to the three months ended September 30, 2023. Rising interest rates have resulted in some customers moving balances from noninterest-bearing deposit accounts to interest-bearing deposit accounts. As a result of the migration, average noninterest-bearing deposit balances decreased $112.5 million to $622.9 million as of December 31, 2023, as compared to December 31, 2022. Noninterest-bearing deposits represented 32.6% of total deposits at December 31, 2023 compared to 38.4% at December 31, 2022. Uninsured deposits were approximately $789.4 million as of December 31, 2023, representing 41.6% of the Company's deposit portfolio, compared to $857.7 million, or 43.6%, at September 30, 2023, and $784.6 million, or 44.6%, at December 31, 2022.
Stockholders’ equity increased to $254.9 million as of December 31, 2023, compared to $242.9 million at September 30, 2023 and $224.0 million at December 31, 2022. Shares repurchased and retired for the year ended December 31, 2023 as part of the Company's stock repurchase program totaled 475,346 shares at an average price of $18.12, for a total cost of $8.8 million including commissions. As of December 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 Year Ended (in thousands) December
31,
2023September
30,
2023June
30,
2023March
31,
2023December
31,
2022December
31,
2023December
31,
2022Interest income Loans, including fees $ 45,109 $ 45,385 $ 42,991 $ 41,275 $ 38,763 $ 174,760 $ 144,408 Investment securities available for sale 1,083 1,089 1,266 1,377 1,402 4,815 3,912 Federal funds sold and other 777 1,267 823 764 1,183 3,631 2,326 Total interest income 46,969 47,741 45,080 43,416 41,348 183,206 150,646 Interest expense Deposits 11,759 10,703 9,409 7,754 4,377 39,625 7,611 Borrowed funds 321 228 331 1,175 1,772 2,055 2,428 Total interest expense 12,080 10,931 9,740 8,929 6,149 41,680 10,039 Net interest income 34,889 36,810 35,340 34,487 35,199 141,526 140,607 Provision for credit losses 2,808 2,280 2,862 1,660 2,384 9,610 6,631 (Release of) provision for credit losses on unfunded commitments (106 ) 24 — (19 ) — (101 ) — Net interest income after provision for credit losses 32,187 34,506 32,478 32,846 32,815 132,017 133,976 Noninterest income Service charges on deposits 240 250 245 229 222 964 767 Credit card fees 3,970 4,387 4,706 4,210 4,314 17,273 21,972 Mortgage banking revenue 1,166 1,243 1,332 1,155 554 4,896 4,866 Other income 560 446 404 432 471 1,842 1,767 Total noninterest income 5,936 6,326 6,687 6,026 5,561 24,975 29,372 Noninterest expenses Salaries and employee benefits 11,638 12,419 12,143 12,554 11,769 48,754 42,898 Occupancy and equipment 1,573 1,351 1,536 1,213 1,388 5,673 4,865 Professional fees 1,930 2,358 2,608 2,374 2,426 9,270 11,012 Data processing 6,128 6,469 6,559 6,530 6,697 25,686 29,418 Advertising 1,433 1,565 2,646 517 726 6,161 6,220 Loan processing 198 426 660 349 350 1,633 1,702 Foreclosed real estate expenses, net — 1 — 6 — 7 (183 ) Other operating 4,007 3,457 3,440 2,679 3,378 13,583 13,182 Total noninterest expenses 26,907 28,046 29,592 26,222 26,734 110,767 109,114 Income before income taxes 11,216 12,786 9,573 12,650 11,642 46,225 54,234 Income tax expense 2,186 2,998 2,255 2,915 2,651 10,354 12,430 Net income $ 9,030 $ 9,788 $ 7,318 $ 9,735 $ 8,991 $ 35,871 $ 41,804 Consolidated Balance Sheets (unaudited) (unaudited) (unaudited) (unaudited) (audited) (in thousands except share data) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Assets Cash and due from banks $ 14,513 $ 13,767 $ 18,619 $ 14,477 $ 19,963 Interest-bearing deposits at other financial institutions 39,044 130,428 100,343 125,448 39,764 Federal funds sold 407 1,957 376 462 20,688 Total cash and cash equivalents 53,964 146,152 119,338 140,387 80,415 Investment securities available for sale 208,329 206,055 208,464 255,762 252,481 Restricted investments 4,353 4,340 3,803 4,215 7,362 Loans held for sale 7,481 4,843 10,146 9,620 7,416 U.S. Small Business Administration (“SBA”) Payroll Protection Program (“PPP”) loans receivable, net of fees and costs 645 750 1,090 2,037 2,163 Portfolio loans receivable, net of deferred fees and costs 1,902,643 1,861,929 1,837,041 1,786,109 1,728,592 Less allowance for credit losses (28,610 ) (28,279 ) (27,495 ) (26,216 ) (26,385 ) Total portfolio loans held for investment, net 1,874,033 1,833,650 1,809,546 1,759,893 1,702,207 Premises and equipment, net 5,069 5,297 5,494 5,367 3,386 Accrued interest receivable 11,494 11,231 10,155 9,985 9,489 Deferred tax asset 12,252 13,644 13,616 12,898 13,777 Bank owned life insurance 37,711 37,315 37,041 36,781 36,524 Other assets 9,336 9,207 9,173 8,341 8,435 Total assets $ 2,224,667 $ 2,272,484 $ 2,227,866 $ 2,245,286 $ 2,123,655 Liabilities Deposits Noninterest-bearing $ 617,373 $ 680,803 $ 693,129 $ 705,801 $ 674,313 Interest-bearing 1,278,623 1,287,185 1,241,232 1,238,573 1,083,759 Total deposits 1,895,996 1,967,988 1,934,361 1,944,374 1,758,072 Federal Home Loan Bank advances 22,000 22,000 22,000 32,000 107,000 Other borrowed funds 27,062 12,062 12,062 12,062 12,062 Accrued interest payable 5,583 5,204 3,029 1,977 1,031 Other liabilities 19,166 22,352 18,979 20,356 21,475 Total liabilities 1,969,807 2,029,606 1,990,431 2,010,769 1,899,640 Stockholders' equity Common stock 139 139 140 141 141 Additional paid-in capital 54,473 54,549 55,856 57,277 58,190 Retained earnings 213,345 206,033 197,490 191,058 182,435 Accumulated other comprehensive loss (13,097 ) (17,843 ) (16,051 ) (13,959 ) (16,751 ) Total stockholders' equity 254,860 242,878 237,435 234,517 224,015 Total liabilities and stockholders' equity $ 2,224,667 $ 2,272,484 $ 2,227,866 $ 2,245,286 $ 2,123,655
The following tables show 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
December 31, 2023Three Months Ended
September 30, 2023Three Months Ended
December 31, 2022Average
Outstanding
BalanceInterest Income/
ExpenseAverage
Yield/
Rate(1)Average
Outstanding
BalanceInterest Income/
ExpenseAverage
Yield/
Rate(1)Average
Outstanding
BalanceInterest Income/
ExpenseAverage
Yield/
Rate(1)(in thousands) Assets Interest earning assets: Interest-bearing deposits $ 65,336 $ 680 4.13 % $ 87,112 $ 1,183 5.39 % $ 111,404 $ 1,006 3.58 % Federal funds sold 1,574 21 5.29 1,134 15 5.25 4,054 35 3.41 Investment securities available for sale 223,132 1,083 1.93 229,731 1,089 1.88 292,117 1,402 1.90 Restricted investments 4,518 76 6.67 4,058 69 6.75 10,111 142 5.57 Loans held for sale 4,601 83 7.16 6,670 111 6.60 6,062 88 5.74 SBA-PPP loans receivable 699 4 2.27 906 11 4.82 2,435 28 4.59 Portfolio loans receivable(2)(3) 1,862,599 45,022 9.59 1,846,866 45,263 9.72 1,675,434 38,647 9.15 Total interest earning assets 2,162,459 46,969 8.62 2,176,477 47,741 8.70 2,101,617 41,348 7.81 Noninterest earning assets 40,020 44,640 34,539 Total assets $ 2,202,479 $ 2,221,117 $ 2,136,156 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Interest-bearing demand accounts $ 195,539 90 0.18 $ 215,527 71 0.13 $ 218,518 61 0.11 Savings 5,184 2 0.15 5,582 3 0.21 8,261 1 0.05 Money market accounts 680,697 7,139 4.16 655,990 6,373 3.85 552,185 3,016 2.17 Time deposits 380,731 4,528 4.72 374,429 4,256 4.51 177,346 1,299 2.91 Borrowed funds 41,823 321 3.05 34,932 228 2.59 199,982 1,772 3.52 Total interest-bearing liabilities 1,303,974 12,080 3.68 1,286,460 10,931 3.37 1,156,292 6,149 2.11 Noninterest-bearing liabilities: Noninterest-bearing liabilities 27,529 25,047 23,941 Noninterest-bearing deposits 622,941 666,939 735,416 Stockholders’ equity 248,035 242,671 220,507 Total liabilities and stockholders’ equity $ 2,202,479 $ 2,221,117 $ 2,136,156 Net interest spread 4.94 % 5.33 % 5.70 % Net interest income $ 34,889 $ 36,810 $ 35,199 Net interest margin(4) 6.40 % 6.71 % 6.64 % _______________
(1) Annualized.
(2) Includes nonaccrual loans.
(3) For the three months ended December 31, 2023, September 30, 2023, and December 31, 2022, collectively, portfolio loans yield excluding credit card loans was 6.89%, 6.76% and 5.86%, respectively.
(4) For the three months ended December 31, 2023, September 30, 2023, and December 31, 2022, collectively, SBA-PPP loans and credit card loans accounted for 248, 266 and 273 basis points of the reported net interest margin, respectively.Year Ended December 31, 2023 2022 Average
Outstanding
BalanceInterest Income/
ExpenseAverage
Yield/
Rate(1)Average
Outstanding
BalanceInterest Income/
ExpenseAverage
Yield/
Rate(1)(in thousands) Assets Interest earning assets: Interest-bearing deposits $ 70,407 $ 3,211 4.56 % $ 156,751 $ 2,007 1.28 % Federal funds sold 1,597 74 4.63 2,959 44 1.49 Investment securities available for sale 245,466 4,815 1.96 248,869 3,912 1.57 Restricted investments 5,016 346 6.90 5,475 275 5.02 Loans held for sale 5,755 382 6.64 9,696 435 4.49 SBA-PPP loans receivable 1,373 30 2.18 29,831 3,477 11.66 Portfolio loans receivable(2)(3) 1,815,595 174,348 9.60 1,579,661 140,496 8.89 Total interest earning assets 2,145,209 183,206 8.54 2,033,242 150,646 7.41 Noninterest earning assets 43,090 44,559 Total assets $ 2,188,299 $ 2,077,801 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Interest-bearing demand accounts $ 201,194 298 0.15 $ 253,923 174 0.07 Savings 5,768 8 0.14 8,917 5 0.06 Money market accounts 642,013 23,510 3.66 553,388 4,529 0.82 Time deposits 360,464 15,809 4.39 165,854 2,903 1.75 Borrowed funds 59,302 2,055 3.47 77,556 2,428 3.13 Total interest-bearing liabilities 1,268,741 41,680 3.29 1,059,638 10,039 0.95 Noninterest-bearing liabilities: Noninterest-bearing liabilities 24,026 23,797 Noninterest-bearing deposits 655,013 781,971 Stockholders’ equity 240,519 212,395 Total liabilities and stockholders’ equity $ 2,188,299 $ 2,077,801 Net interest spread 5.25 % 6.46 % Net interest income $ 141,526 $ 140,607 Net interest margin(4) 6.60 % 6.92 % (1) Annualized.
(2) Includes nonaccrual loans.
(3) For the years ended December 31, 2023 and 2022, collectively, portfolio loans yield excluding credit card loans was 6.66% and 5.31%, respectively.
(4) For the years ended December 31, 2023 and 2022, collectively, SBA-PPP loans and credit card loans accounted for 264 and 299 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 year ended December 31, 2023 and December 31, 2022.Segments For the three months ended December 31, 2023 (in thousands) Commercial Bank CBHL OpenSky® Corporate(2) Eliminations Consolidated Interest income $ 30,957 $ 83 $ 15,035 $ 964 $ (70 ) $ 46,969 Interest expense 11,884 31 — 235 (70 ) 12,080 Net interest income 19,073 52 15,035 729 — 34,889 Provision (release of provision) for credit losses 691 — 2,125 (8 ) — 2,808 Release of credit losses on unfunded commitments (106 ) — — — — (106 ) Net interest income after provision 18,488 52 12,910 737 — 32,187 Noninterest income 773 1,166 3,996 1 — 5,936 Noninterest expense(1) 15,135 1,437 10,378 (43 ) — 26,907 Net income (loss) before taxes $ 4,126 $ (219 ) $ 6,528 $ 781 $ — $ 11,216 Total assets $ 2,050,436 $ 8,589 $ 117,477 $ 276,831 $ (228,666 ) $ 2,224,667 For the three months ended September 30, 2023 (in thousands) Commercial Bank CBHL OpenSky® Corporate(2) Eliminations Consolidated Interest income $ 30,409 $ 111 $ 16,143 $ 1,162 $ (84 ) $ 47,741 Interest expense 10,736 32 — 247 (84 ) 10,931 Net interest income 19,673 79 16,143 915 — 36,810 Provision for credit losses 275 — 1,875 130 — 2,280 Provision for credit losses on unfunded commitments 24 — — — — 24 Net interest income after provision 19,374 79 14,268 785 — 34,506 Noninterest income 665 1,255 4,405 1 — 6,326 Noninterest expense(1) 15,784 1,502 10,637 123 — 28,046 Net income (loss) before taxes $ 4,255 $ (168 ) $ 8,036 $ 663 $ — $ 12,786 Total assets $ 2,102,749 $ 5,280 $ 116,318 $ 264,950 $ (216,813 ) $ 2,272,484 For the three months ended December 31, 2022 (in thousands) Commercial Bank CBHL OpenSky® Corporate(2) Eliminations Consolidated Interest income $ 24,389 $ 88 $ 16,035 $ 891 $ (55 ) $ 41,348 Interest expense 5,990 33 — 181 (55 ) 6,149 Net interest income 18,399 55 16,035 710 — 35,199 Provision for loan losses — — 2,384 — — 2,384 Net interest income after provision 18,399 55 13,651 710 — 32,815 Noninterest income 550 696 4,314 1 — 5,561 Noninterest expense(1) 13,811 2,085 10,724 114 — 26,734 Net income (loss) before taxes $ 5,138 $ (1,334 ) $ 7,241 $ 597 $ — $ 11,642 Total assets $ 1,939,601 $ 7,936 $ 122,418 $ 245,399 $ (191,699 ) $ 2,123,655 ________________________
(1) Noninterest expense includes $5.7 million, $6.1 million and $6.1 million in data processing expense in OpenSky’s® segment for the three months ended December 31, 2023 September 30, 2023, and December 31, 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.Segments For the year ended December 31, 2023 (in thousands) Commercial Bank CBHL OpenSky® Corporate(2) Eliminations Consolidated Interest income $ 116,408 $ 382 $ 62,476 $ 4,238 $ (298 ) $ 183,206 Interest expense 40,896 135 — 947 (298 ) 41,680 Net interest income 75,512 247 62,476 3,291 — 141,526 Provision for credit losses 1,540 — 7,948 122 — 9,610 Release of credit losses on unfunded commitments (101 ) — — — — (101 ) Net interest income after provision 74,073 247 54,528 3,169 — 132,017 Noninterest income 2,737 4,909 17,325 4 — 24,975 Noninterest expense(1) 61,836 6,001 42,524 406 — 110,767 Net income (loss) before taxes $ 14,974 $ (845 ) $ 29,329 $ 2,767 $ — $ 46,225 Total assets $ 2,050,436 $ 8,589 $ 117,477 $ 276,831 $ (228,666 ) $ 2,224,667 For the year ended December 31, 2022 (in thousands) Commercial Bank CBHL OpenSky® Corporate(2) Eliminations Consolidated Interest income $ 82,182 $ 435 $ 64,859 $ 3,349 $ (179 ) $ 150,646 Interest expense 9,245 218 — 755 (179 ) 10,039 Net interest income 72,937 217 64,859 2,594 — 140,607 Provision (release of provision) for loan losses (980 ) — 7,611 — — 6,631 Net interest income after provision 73,917 217 57,248 2,594 — 133,976 Noninterest income 2,122 5,276 21,972 2 — 29,372 Noninterest expense(1) 52,552 8,450 47,647 465 — 109,114 Net income (loss) before taxes $ 23,487 $ (2,957 ) $ 31,573 $ 2,131 $ — $ 54,234 Total assets $ 1,939,601 $ 7,936 $ 122,418 $ 245,399 $ (191,699 ) $ 2,123,655 (1) Noninterest expense includes $23.7 million and $27.0 million in data processing expense in OpenSky’s® segment for the years ended December 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) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Earnings: Net income $ 9,030 $ 9,788 $ 7,318 $ 9,735 $ 8,991 Earnings per common share, diluted 0.65 0.70 0.52 0.68 0.62 Net interest margin 6.40 % 6.71 % 6.63 % 6.65 % 6.64 % Net interest margin, excluding credit cards & SBA-PPP loans(1) 3.92 % 4.05 % 4.06 % 3.81 % 3.91 % Return on average assets(2) 1.63 % 1.75 % 1.34 % 1.84 % 1.67 % Return on average assets, excluding impact of SBA-PPP loans(1)(2) 1.63 % 1.75 % 1.34 % 1.84 % 1.67 % Return on average equity(2) 14.44 % 16.00 % 12.30 % 16.98 % 16.18 % Efficiency ratio 65.91 % 65.02 % 70.41 % 64.73 % 65.59 % Balance Sheet: Total portfolio loans receivable, net deferred fees $ 1,902,643 $ 1,861,929 $ 1,837,041 $ 1,786,109 $ 1,728,592 Total deposits 1,895,996 1,967,988 1,934,361 1,944,374 1,758,072 Total assets 2,224,667 2,272,484 2,227,866 2,245,286 2,123,655 Total stockholders' equity 254,860 242,878 237,435 234,517 224,015 Total average portfolio loans receivable, net deferred fees 1,862,599 1,846,866 1,800,800 1,750,539 1,675,434 Total average deposits 1,885,092 1,918,467 1,881,380 1,771,024 1,691,726 Portfolio loans-to-deposit ratio (period-end balances) 100.35 % 94.61 % 94.97 % 91.86 % 98.32 % Portfolio loans-to-deposit ratio (average balances) 98.81 % 96.27 % 95.72 % 98.84 % 99.04 % Asset Quality Ratios: Nonperforming assets to total assets 0.72 % 0.67 % 0.71 % 0.73 % 0.46 % Nonperforming assets to total assets, excluding the SBA-PPP loans(1) 0.72 % 0.67 % 0.71 % 0.73 % 0.46 % Nonperforming loans to total loans 0.84 % 0.82 % 0.85 % 0.91 % 0.56 % Nonperforming loans to portfolio loans(1) 0.84 % 0.82 % 0.86 % 0.91 % 0.56 % Net charge-offs to average portfolio loans(1)(2) 0.53 % 0.38 % 0.35 % 0.61 % 0.49 % Allowance for credit losses to total loans 1.50 % 1.52 % 1.50 % 1.47 % 1.52 % Allowance for credit losses to portfolio loans(1) 1.50 % 1.52 % 1.50 % 1.47 % 1.53 % Allowance for credit losses to non-performing loans 178.34 % 185.61 % 175.03 % 160.91 % 270.46 % Bank Capital Ratios: Total risk based capital ratio 14.81 % 14.51 % 14.08 % 14.09 % 14.21 % Tier 1 risk based capital ratio 13.56 % 13.25 % 12.82 % 12.84 % 12.95 % Leverage ratio 10.51 % 10.04 % 9.77 % 9.78 % 9.47 % Common equity Tier 1 capital ratio 13.56 % 13.25 % 12.82 % 12.84 % 12.95 % Tangible common equity 9.91 % 9.08 % 8.93 % 8.79 % 8.85 % Holding Company Capital Ratios: Total risk based capital ratio 17.38 % 17.11 % 16.81 % 16.75 % 16.33 % Tier 1 risk based capital ratio 15.55 % 15.27 % 14.96 % 14.90 % 15.13 % Leverage ratio 12.14 % 11.62 % 11.50 % 11.47 % 11.24 % Common equity Tier 1 capital ratio 15.43 % 15.27 % 14.96 % 14.90 % 15.00 % Tangible common equity 11.71 % 10.69 % 10.66 % 10.44 % 10.55 % Composition of Loans: SBA-PPP loans, net $ 645 $ 750 $ 1,090 $ 2,037 $ 2,163 Commercial real estate, non owner-occupied $ 351,116 $ 350,637 $ 348,892 $ 348,047 $ 351,423 Commercial real estate, owner-occupied $ 307,911 $ 305,802 $ 311,972 $ 299,966 $ 300,809 Residential real estate 573,104 558,147 555,133 545,899 484,735 Construction real estate 290,108 280,905 258,400 251,494 238,099 Commercial and industrial 238,548 236,782 233,598 221,258 220,221 Lender finance 11,085 — — — — Business equity lines of credit 14,117 14,155 13,277 12,205 12,319 Credit card, net of reserve(3) 123,331 122,533 122,925 112,860 128,434 Other consumer loans 950 948 1,187 1,578 1,179 Portfolio loans receivable $ 1,910,270 $ 1,869,909 $ 1,845,384 $ 1,793,307 $ 1,737,219 Deferred origination fees, net (7,627 ) (7,980 ) (8,343 ) (7,198 ) (8,627 ) Portfolio loans receivable, net $ 1,902,643 $ 1,861,929 $ 1,837,041 $ 1,786,109 $ 1,728,592 Composition of Deposits: Noninterest-bearing $ 617,373 $ 680,803 $ 693,129 $ 705,801 $ 674,313 Interest-bearing demand 199,308 229,035 243,095 219,685 207,836 Savings 5,211 5,686 5,816 5,835 7,530 Money markets 663,129 668,774 631,148 632,087 574,978 Brokered time deposits 142,356 128,665 128,665 181,820 131,819 Other time deposits 268,619 255,025 232,508 199,146 161,596 Total deposits $ 1,895,996 $ 1,967,988 $ 1,934,361 $ 1,944,374 $ 1,758,072 Capital Bank Home Loan Metrics: Origination of loans held for sale $ 45,152 $ 50,023 $ 61,480 $ 44,448 $ 43,956 Mortgage loans sold 34,140 39,364 49,231 40,483 43,415 Gain on sale of loans 1,015 1,011 1,262 1,223 912 Purchase volume as a % of originations 89.99 % 92.29 % 93.12 % 90.72 % 88.94 % Gain on sale as a % of loans sold(4) 2.97 % 2.57 % 2.56 % 3.02 % 2.10 % Mortgage commissions $ 465 $ 528 $ 621 $ 378 $ 451 OpenSky®Portfolio Metrics: Open customer accounts 525,314 529,205 540,058 527,231 533,855 Secured credit card loans, gross $ 95,300 $ 98,138 $ 100,218 $ 89,078 $ 104,157 Unsecured credit card loans, gross 30,817 27,430 25,254 25,782 26,795 Noninterest secured credit card deposits 173,857 181,185 186,566 184,809 187,412 _______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.
(2) Annualized.
(3) Credit card loans are presented net of reserve for interest and fees.
(4) Gain on sale percentage is calculated as gain on sale of loans divided by mortgage loans sold.Appendix
Reconciliation of Non-GAAP Measures
The Company has presented the following non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Company’s results of operations and financial condition. Presentation of these non-GAAP financial measures is consistent with how the Company evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Investors should recognize that the Company’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and the Company strongly encourages a review of its condensed consolidated financial statements in their entirety.
Return on Average Assets, as Adjusted Quarter Ended (in thousands) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Net Income $ 9,030 $ 9,788 $ 7,318 $ 9,735 $ 8,991 Less: SBA-PPP Loan Income 4 11 7 8 28 Net Income, as Adjusted $ 9,026 $ 9,777 $ 7,311 $ 9,727 $ 8,963 Average Total Assets 2,202,479 2,221,117 2,184,351 2,144,249 2,136,156 Less: Average SBA-PPP Loans 699 906 1,808 2,099 2,435 Average Total Assets, as Adjusted $ 2,201,780 $ 2,220,211 $ 2,182,543 $ 2,142,150 $ 2,133,721 Return on Average Assets, as Adjusted 1.63 % 1.75 % 1.34 % 1.84 % 1.67 % Return on Average Assets, as Adjusted Year Ended (in thousands) December 31,
2023December 31,
2022Net Income $ 35,871 $ 41,804 Less: SBA-PPP Loan Income 30 3,477 Net Income, as Adjusted $ 35,841 $ 38,327 Average Total Assets 2,188,299 2,077,801 Less: Average SBA-PPP Loans 1,373 29,831 Average Total Assets, as Adjusted $ 2,186,926 $ 2,047,970 Return on Average Assets, as Adjusted 1.64 % 1.87 % Net Interest Margin, as Adjusted Quarter Ended (in thousands) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Net Interest Income $ 34,889 $ 36,810 $ 35,340 $ 34,487 $ 35,199 Less: Credit Card Loan Income 14,677 15,792 14,818 15,809 15,717 Less: SBA-PPP Loan Income 4 11 7 8 28 Net Interest Income, as Adjusted $ 20,208 $ 21,007 $ 20,515 $ 18,670 $ 19,454 Average Interest Earning Assets 2,162,459 2,176,477 2,136,936 2,103,984 2,101,617 Less: Average Credit Card Loans 114,551 116,814 110,574 115,850 124,120 Less: Average SBA-PPP Loans 699 906 1,808 2,099 2,435 Total Average Interest Earning Assets, as Adjusted $ 2,047,209 $ 2,058,757 $ 2,024,554 $ 1,986,035 $ 1,975,062 Net Interest Margin, as Adjusted 3.92 % 4.05 % 4.06 % 3.81 % 3.91 % Net Interest Margin, as Adjusted Year Ended (in thousands) December 31,
2023December 31,
2022Net Interest Income $ 141,526 $ 140,607 Less: Credit Card Loan Income 61,096 63,348 Less: SBA-PPP Loan Income 30 3,477 Net Interest Income, as Adjusted $ 80,400 $ 73,782 Average Interest Earning Assets 2,145,209 2,033,242 Less: Average Credit Card Loans 114,450 126,473 Less: Average SBA-PPP Loans 1,373 29,831 Total Average Interest Earning Assets, as Adjusted $ 2,029,386 $ 1,876,938 Net Interest Margin, as Adjusted 3.96 % 3.93 % Portfolio Loans Receivable Yield, as Adjusted Quarter Ended (in thousands) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Portfolio Loans Receivable Interest Income $ 45,022 $ 45,263 $ 42,872 $ 41,191 $ 38,647 Less: Credit Card Loan Income 14,677 15,792 14,818 15,809 15,717 Portfolio Loans Receivable Interest Income, as Adjusted $ 30,345 $ 29,471 $ 28,054 $ 25,382 $ 22,930 Average Portfolio Loans Receivable 1,862,599 1,846,866 1,800,800 1,750,539 1,675,434 Less: Average Credit Card Loans 114,551 116,814 110,574 115,850 124,120 Total Average Portfolio Loans Receivable, as Adjusted $ 1,748,048 $ 1,730,052 $ 1,690,226 $ 1,634,689 $ 1,551,314 Portfolio Loans Receivable Yield, as Adjusted 6.89 % 6.76 % 6.66 % 6.30 % 5.86 % Portfolio Loans Receivable Yield, as Adjusted Year Ended (in thousands) December 31,
2023December 31,
2022Portfolio Loans Receivable Interest Income $ 174,348 $ 140,496 Less: Credit Card Loan Income 61,096 63,348 Portfolio Loans Receivable Interest Income, as Adjusted $ 113,252 $ 77,148 Average Portfolio Loans Receivable 1,815,595 1,579,661 Less: Average Credit Card Loans 114,450 126,473 Total Average Portfolio Loans Receivable, as Adjusted $ 1,701,145 $ 1,453,188 Portfolio Loans Receivable Yield, as Adjusted 6.66 % 5.31 % Pre-tax, Pre-Provision Net Revenue ("PPNR") Quarter Ended (in thousands) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Net Income $ 9,030 $ 9,788 $ 7,318 $ 9,735 $ 8,991 Add: Income Tax Expense 2,186 2,998 2,255 2,915 2,651 Add: Provision for Credit Losses 2,808 2,280 2,862 1,660 2,384 Add: (Release of) Provision for Credit Losses on Unfunded Commitments (106 ) 24 — (19 ) — Pre-tax, Pre-Provision Net Revenue ("PPNR") $ 13,918 $ 15,090 $ 12,435 $ 14,291 $ 14,026 Pre-tax, Pre-Provision Net Revenue ("PPNR") Year Ended (in thousands) December 31,
2023December 31,
2022Net Income $ 35,871 $ 41,804 Add: Income Tax Expense 10,354 12,430 Add: Provision for Credit Losses 9,610 6,631 Add: Release of Credit Losses on Unfunded Commitments (101 ) — Pre-tax, Pre-Provision Net Revenue ("PPNR") $ 55,734 $ 60,865 Allowance for Credit Losses to Total Portfolio Loans Quarter Ended (in thousands) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Allowance for Credit Losses $ 28,610 $ 28,279 $ 27,495 $ 26,216 $ 26,385 Total Loans 1,903,288 1,862,679 1,838,131 1,788,146 1,730,755 Less: SBA-PPP Loans 645 750 1,090 2,037 2,163 Total Portfolio Loans $ 1,902,643 $ 1,861,929 $ 1,837,041 $ 1,786,109 $ 1,728,592 Allowance for Credit Losses to Total Portfolio Loans 1.50 % 1.52 % 1.50 % 1.47 % 1.53 % Nonperforming Assets to Total Assets, net SBA-PPP Loans Quarter Ended (in thousands) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Total Nonperforming Assets $ 16,042 $ 15,236 $ 15,709 $ 16,293 $ 9,756 Total Assets 2,224,667 2,272,484 2,227,866 2,245,286 2,123,655 Less: SBA-PPP Loans 645 750 1,090 2,037 2,163 Total Assets, net SBA-PPP Loans $ 2,224,022 $ 2,271,734 $ 2,226,776 $ 2,243,249 $ 2,121,492 Nonperforming Assets to Total Assets, net SBA-PPP Loans 0.72 % 0.67 % 0.71 % 0.73 % 0.46 % Nonperforming Loans to Total Portfolio Loans Quarter Ended (in thousands) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Total Nonperforming Loans $ 16,042 $ 15,236 $ 15,709 $ 16,293 $ 9,756 Total Loans 1,903,288 1,862,679 1,838,131 1,788,146 1,730,755 Less: SBA-PPP Loans 645 750 1,090 2,037 2,163 Total Portfolio Loans $ 1,902,643 $ 1,861,929 $ 1,837,041 $ 1,786,109 $ 1,728,592 Nonperforming Loans to Total Portfolio Loans 0.84 % 0.82 % 0.86 % 0.91 % 0.56 % Net Charge-offs to Average Portfolio Loans Quarter Ended (in thousands) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Total Net Charge-offs $ 2,477 $ 1,780 $ 1,583 $ 2,633 $ 2,090 Total Average Loans 1,863,298 1,847,772 1,802,608 1,752,638 1,677,869 Less: Average SBA-PPP Loans 699 906 1,808 2,099 2,435 Total Average Portfolio Loans $ 1,862,599 $ 1,846,866 $ 1,800,800 $ 1,750,539 $ 1,675,434 Net Charge-offs to Average Portfolio Loans 0.53 % 0.38 % 0.35 % 0.61 % 0.49 % Net Charge-offs to Average Portfolio Loans Year Ended (in thousands) December 31,
2023December 31,
2022Total Net Charge-offs $ 8,473 $ 5,427 Total Average Loans 1,816,968 1,609,492 Less: Average SBA-PPP Loans 1,373 29,831 Total Average Portfolio Loans $ 1,815,595 $ 1,579,661 Net Charge-offs to Average Portfolio Loans 0.47 % 0.34 % Tangible Book Value per Share Quarter Ended (in thousands, except per share amounts) December 31,
2023September 30,
2023June 30,
2023March 31,
2023December 31,
2022Total Stockholders' Equity $ 254,860 $ 242,878 $ 237,435 $ 234,517 $ 224,015 Less: Preferred Equity — — — — — Less: Intangible Assets — — — — — Tangible Common Equity $ 254,860 $ 242,878 $ 237,435 $ 234,517 $ 224,015 Period End Shares Outstanding 13,922,532 13,893,083 13,981,414 14,082,657 14,138,829 Tangible Book Value per Share $ 18.31 $ 17.48 $ 16.98 $ 16.65 $ 15.84
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 December 31, 2023. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in four locations in the greater Washington, D.C. and Baltimore, Maryland markets. Capital Bancorp had assets of approximately $2.2 billion at December 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 wars in Ukraine and in the Middle East; 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; any failure to adequately manage the transition from USD LIBOR as a reference rate; 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; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; 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: Jay Walker (301) 468-8848 x1223 MEDIA CONTACT: Ed Barry (240) 283-1912 WEB SITE: www.CapitalBankMD.com