• CBNK Quarterly Earnings Grow 13.7 Percent Year Over Year

    Source: Nasdaq GlobeNewswire / 20 Apr 2022 16:45:01   America/New_York

    ROCKVILLE, Md., April 20, 2022 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $10.2 million, or $0.71 per diluted share, for the first quarter of 2022. By comparison, net income was $9.0 million, or $0.65 per diluted share, for the first quarter of 2021. Portfolio loans, net, increased $213.9 million when compared to the period ended March 31, 2021.

    “We started the year with another quarter of outstanding profitability at both the Commercial Bank and OpenSky®," said Ed Barry, CEO of the Company and the Bank. "Loan production at the Commercial Bank was strong as new hires and strategic initiatives continue to gain momentum, but growth was negatively impacted by payoffs and selective offboarding of certain lower-quality credit relationships. OpenSky® profitability was stable as updated agreements with service providers delivered savings on data processing costs offsetting anticipated card holder attrition which resulted in a decline in open accounts for the quarter. We are optimistic that our business-wide strategic investments will begin to deliver both increased revenues and lower costs in the coming quarters."

    Steven Schwartz, Chairman of the Board of the Company, said, "Despite the detrimental impact of rising interest rates on our mortgage refinance origination volume, we are pleased with the earnings for the quarter. I believe our commercial loan portfolio is well positioned to benefit from the anticipated interest rate increases and our continued focus on a diversified revenue model should maintain our superior results."

    First Quarter 2022 Highlights

    Capital Bancorp, Inc.

    • Strong Earnings - Continued strong performance by the Commercial Bank and OpenSky® contributed to the first quarter's results. Quarterly net income increased to $10.2 million from $9.0 million in the first quarter of 2021. Earnings were $0.71 per diluted share for the three months ended March 31, 2022 and $0.65 for the three months ended March 31, 2021.
    • Outstanding Performance Ratios - Return on average assets ("ROAA") and return on average equity ("ROAE") were 2.01% and 20.30%, respectively, for the three months ended March 31, 2022 compared to 1.87% and 22.30%, respectively, for the three months ended March 31, 2021.
    • Expanded Net Interest Margin - Net interest margin was 6.79% for the three months ended March 31, 2022, compared to 5.15% for the same three month period last year. The margin expansion was primarily driven by increases in the yield on portfolio loans due to the recognition of deferred fees associated with the credit card portfolio, as well as an acceleration in the deferred fees related to forgiven loans in the Small Business Administration Payroll Protection Program ("SBA-PPP").
    • Robust Capital Positions - As of March 31, 2022, the Company reported a common equity tier 1 capital ratio of 15.04% and an allowance for loan losses to total loans ratio of 1.60%, or 1.65% excluding SBA-PPP loans. Quarter over quarter, tangible book value per common share grew 18.5 percent to $14.39 at March 31, 2022.

    Commercial Bank

    • Strong Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $179.6 million, or 14.6 percent, to $1.4 billion at March 31, 2022 compared to March 31, 2021. The quarter over quarter growth was mainly due to a 30.3 percent increase in commercial real estate loans of $131.4 million, of which $72.8 million was owner occupied. Also contributing to the quarter over quarter growth was a 17.2 percent increase in commercial and industrial loans of $26.1 million and an 11.0 percent increase in construction real estate loans of $24.4 million.
    • Growth in Core Deposits and Reduced Cost of Funds - Noninterest bearing deposits increased 6.9 percent compared to March 31, 2021. The $53.3 million year over year increase was primarily due to an increase in commercial demand deposits reflecting management's ongoing strategic initiative to improve the deposit franchise. At March 31, 2022, noninterest bearing deposits represented 44.3% of total deposits compared to 41.4% at March 31, 2021. Overall, the cost of interest bearing liabilities was reduced 39 basis points, from 0.81% for the quarter ended March 31, 2021 to 0.42% for the quarter ended March 31, 2022.
    • Improving Credit Metrics - Non-performing assets ("NPAs") decreased to 0.28% of total assets at March 31, 2022 compared to 0.58% at March 31, 2021 with the disposition of $3.3 million in other real estate owned and a reduction in nonaccrual loans of $2.8 million as management continues to focus on reducing non-performing assets. The provision for loan losses increased $449 thousand compared to the first quarter of 2021. The current provision for the three months ended March 31, 2022 was $952 thousand and was primarily related to the credit card portfolio and the cycling of accounts, not a deterioration in overall credit quality.
    • SBA-PPP Loans - SBA-PPP loans, net of $1.3 million in unearned fees, totaled $51.1 million at March 31, 2022 which was comprised of $1.7 million in 2020 originations and $49.4 million of 2021 originations. As of March 31, 2022, the Company has obtained forgiveness for $323.3 million of SBA-PPP loans.

    Capital Bank Home Loans

    • Slowing Mortgage Originations - Origination volumes declined 68.8 percent, to $110.4 million, in the first quarter of 2022, when compared to $353.8 million in the first quarter of 2021. The continued steepening of the yield curve in the first quarter of 2022 slowed originations from the year earlier when low interest rates fueled refinance volumes.
    • Purchase Volume - While purchase volumes increased to 73.2 percent of total originations for the first quarter of 2022, up from 24.6 percent during the first quarter of 2021, total purchase originations declined by 8.3% during the same period.

    OpenSky®

    • Strong Revenue Growth - OpenSky® revenue grew by 47.6 percent to $20.9 million for the quarter ended March 31, 2022 from the same period in 2021 due to an increase in average credit card loan balances as well as an increase in the yield on those credit card loans. The surge in new account originations over the past two years has slowed as government stimulus ended and competition increased. New account originations have reverted to a pace reminiscent of 2019, and is not enough to offset the normal customer lifecycle of the 2020 and 2021 vintages.
    • Continued Growth in OpenSky® Loans and Deposits - OpenSky® loan balances, net of reserves, increased by $40.0 million to $123.7 million compared to $83.7 million in the first quarter of 2021. Corresponding deposit balances increased 2.1 percent or $4.5 million from $215.9 million at March 31, 2021 to $220.4 million at March 31, 2022.
    • Expense Management Efforts Demonstrate Scale - Key contracts renegotiated during the first quarter of 2022 will engender cost saves and scale benefits throughout the remainder of the year and into the future.
    COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited
        
     Quarter Ended  
     March 31,  
    (dollars in thousands except per share data) 2022   2021  % Change
    Earnings Summary     
    Interest income$34,402  $26,638  29.1%
    Interest expense 1,071   2,194  (51.2)%
    Net interest income 33,331   24,444  36.4%
    Provision for loan losses 952   503  89.3%
    Noninterest income 8,288   13,951  (40.6)%
    Noninterest expense 27,102   25,767  5.2%
    Income before income taxes 13,565   12,125  11.9%
    Income tax expense 3,354   3,143  6.7%
    Net income$10,211  $8,982  13.7%
          
    Pre-tax pre-provision net revenue ("PPNR") (2)$14,517  $12,628  15.0%
    Weighted average common shares - Basic 13,989   13,757  1.7%
    Weighted average common shares - Diluted 14,339   13,899  3.2%
    Earnings per share - Basic$0.73  $0.65  12.3%
    Earnings per share - Diluted$0.71  $0.65  9.2%
    Return on average assets (1) 2.01%  1.87% 7.5%
    Return on average assets, excluding impact of SBA-PPP loans(1) (2) 1.67%  1.54% 8.4%
    Return on average equity 20.30%  22.30% (9.0)%
              


     Quarter Ended 1Q22 vs. 1Q21 Quarter Ended
     March 31,  December 31, September 30, June 30,
    (in thousands except per share data)2022 2021 % Change 2021 2021 2021
    Balance Sheet Highlights           
    Assets$2,122,453 $2,091,851 1.5% $2,055,300 $2,169,556 $2,151,850
    Investment securities available for sale 172,712  128,023 34.9%  184,455  189,165  160,515
    Mortgage loans held for sale 17,036  60,816 (72.0)%  15,989  36,005  47,935
    SBA-PPP loans, net of fees 51,085  267,871 (80.9)%  108,285  137,178  202,763
    Portfolio loans receivable (3) 1,526,256  1,312,375 16.3%  1,523,982  1,445,126  1,392,471
    Allowance for loan losses 25,252  23,550 7.2%  25,181  24,753  24,079
    Deposits 1,862,722  1,863,069 —%  1,797,137  1,921,238  1,917,419
    FHLB borrowings 22,000  22,000 —%  22,000  22,000  22,000
    Other borrowed funds 12,062  12,062 —%  12,062  12,062  12,062
    Total stockholders' equity 201,492  167,003 20.7%  197,903  189,080  177,204
    Tangible common equity(2) 201,492  167,003 20.7%  197,903  189,080  177,204
                
    Common shares outstanding 14,001  13,759 1.8%  13,962  13,802  13,772
    Tangible book value per share (2)$14.39 $12.14 18.5% $14.17 $13.70 $12.87
                      

    ______________
    (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, 2022 and 2021

    For the three months ended March 31, 2022, net interest income increased $8.9 million, or 36.4 percent, to $33.3 million from the same period in 2021, primarily due to an increase in interest earned on the credit card loan portfolio. The net interest margin increased 164 basis points to 6.79% for the three months ended March 31, 2022 from the same period in 2021 due in large part to the acceleration of the deferred fees associated with the SBA-PPP loan forgiveness as well as the recognition of deferred fees on the credit card loans. Net interest margin, excluding credit card and SBA-PPP loans, was 3.82% for the first quarter of 2022 compared to 3.63% for the same period in 2021. For the three months ended March 31, 2022, average interest earning assets increased $66.9 million, or 3.5 percent, to $2.0 billion as compared to the same period in 2021, and the average yield on interest earning assets increased 139 basis points. Compared to the same period in the prior year, average interest-bearing liabilities decreased $55.4 million, or 5.0 percent, while the average cost of interest-bearing liabilities decreased 39 basis points to 0.42% from 0.81%.

    The provision for loan losses of $952 thousand for the three months ended March 31, 2022 was primarily related to growth in the credit card portfolio and the cycling of credit card accounts. Net charge-offs for the first quarter of 2022 were $881 thousand, or 0.24% on an annualized basis of average portfolio loans, compared to $388 thousand, or 0.12% on an annualized basis of average loans for the first quarter of 2021. All of the $881 thousand in net charge-offs during the quarter were related to the credit card portfolio.

    For the quarter ended March 31, 2022, noninterest income was $8.3 million, a decrease of $5.7 million, or 40.6 percent, from $14.0 million in the prior year quarter. The decrease was primarily the result of reduced mortgage banking revenue.

    Net credit card loan balances increased by $40.0 million to $123.7 million as of March 31, 2022 from $83.7 million at March 31, 2021. The related deposit account balances increased 2.1 percent to $220.4 million at March 31, 2022 when compared to $215.9 million at March 31, 2021. For the three months ended March 31, 2022, OpenSky's® secured credit card accounts decreased by 30 thousand net compared to 74 thousand net new accounts for the same period in 2021 suggesting consumer behaviors may be returning to historical trends after being elevated in response to COVID-19 throughout 2020 and the first half of 2021.

    The efficiency ratio for the three months ended March 31, 2022 decreased to 65.12% compared to 67.11% for the three months ended March 31, 2021.

    Noninterest expense was $27.1 million for the three months ended March 31, 2022, as compared to $25.8 million for the three months ended March 31, 2021, an increase of $1.3 million, or 5.2 percent. The increase was primarily driven by increases in salaries and employee benefits of $1.7 million, advertising expenses of $806 thousand, and professional fees of $697 thousand and were offset by decreases in data processing expenses of $1.0 million, loan processing expenses of $660 thousand, and occupancy and equipment expense of $103 thousand.

    Financial Condition

    Total assets at March 31, 2022 were $2.1 billion, an increase of 1.5% from March 31, 2021. Net portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.5 billion as of March 31, 2022, an increase of 16.3 percent as compared to $1.3 billion at March 31, 2021.

    While total deposits remained steady at $1.9 billion for the periods ended March 31, 2022 and March 31, 2021, the composition of the deposit portfolio shifted, with an increase in noninterest bearing deposits of $53.3 million, or 6.9%, when comparing March 31, 2022 to March 31, 2021. At March 31, 2022, there were no listing service or brokered deposits compared to $86.0 million at March 31, 2021.

    The Company recorded a provision for loan losses of $952 thousand during the three months ended March 31, 2022, which increased the allowance for loan losses to $25.3 million, or 1.60% of total loans (1.65%, excluding SBA-PPP loans, on a non-GAAP basis) at March 31, 2022. Nonperforming assets were $6.0 million, or 0.28% of total assets, as of March 31, 2022, down from $12.1 million, or 0.58% of total assets, at March 31, 2021, and was comprised solely of nonperforming loans. Included in nonperforming loans at March 31, 2022 were troubled debt restructurings of $525 thousand.

    Stockholders’ equity increased to $201.5 million as of March 31, 2022, compared to $167.0 million at March 31, 2021. This increase was primarily attributable to earnings during the period of $41.2 million which were offset by unrealized losses recorded net of tax on the available for sale securities in the rising interest rate environment creating a $7.8 million reduction in accumulated other comprehensive income during the period. As of March 31, 2022, 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)2022 2021
    Interest income   
    Loans, including fees$33,889 $26,068
    Investment securities available for sale 370  478
    Federal funds sold and other 143  92
    Total interest income 34,402  26,638
        
    Interest expense   
    Deposits 884  2,006
    Borrowed funds 187  188
    Total interest expense 1,071  2,194
        
    Net interest income 33,331  24,444
    Provision for loan losses 952  503
    Net interest income after provision for loan losses 32,379  23,941
        
    Noninterest income   
    Service charges on deposits 163  148
    Credit card fees 5,924  5,940
    Mortgage banking revenue 1,790  7,743
    Other fees and charges 411  120
    Total noninterest income 8,288  13,951
        
    Noninterest expenses   
    Salaries and employee benefits 10,310  8,568
    Occupancy and equipment 1,026  1,129
    Professional fees 2,321  1,624
    Data processing 8,276  9,311
    Advertising 1,639  833
    Loan processing 392  1,052
    Other operating 3,138  3,250
    Total noninterest expenses 27,102  25,767
    Income before income taxes 13,565  12,125
    Income tax expense 3,354  3,143
    Net income$10,211 $8,982
          


    Consolidated Balance Sheets    
    (in thousands except share data)(unaudited)
    March 31, 2022    		 December 31, 2021
    Assets   
    Cash and due from banks$14,955  $42,914 
    Interest bearing deposits at other financial institutions 298,501   136,824 
    Federal funds sold 330   3,657 
    Total cash and cash equivalents 313,786   183,395 
    Investment securities available for sale 172,712   184,455 
    Marketable equity securities 245   245 
    Restricted investments 3,602   3,498 
    Loans held for sale 17,036   15,989 
    SBA-PPP loans receivable, net of fees 51,085   108,285 
    Portfolio loans receivable, net of deferred fees and costs 1,526,256   1,523,982 
    Less allowance for loan losses (25,252)  (25,181)
    Total portfolio loans held for investment, net 1,501,004   1,498,801 
    Premises and equipment, net 2,977   3,282 
    Accrued interest receivable 7,512   7,901 
    Deferred income taxes, net 12,366   9,793 
    Other real estate owned —   86 
    Bank owned life insurance 35,758   35,506 
    Other assets 4,370   4,064 
    Total assets$2,122,453  $2,055,300 
        
    Liabilities   
    Deposits   
    Noninterest bearing$825,174  $787,650 
    Interest bearing 1,037,548   1,009,487 
    Total deposits 1,862,722   1,797,137 
    Federal Home Loan Bank advances 22,000   22,000 
    Other borrowed funds 12,062   12,062 
    Accrued interest payable 480   473 
    Other liabilities 23,697   25,725 
    Total liabilities 1,920,961   1,857,397 
        
    Stockholders' equity   
    Common stock, $.01 par value; 49,000,000 shares authorized; 14,000,520 and 13,962,334 issued and outstanding 140   140 
    Additional paid-in capital 55,226   54,306 
    Retained earnings 153,949   144,533 
    Accumulated other comprehensive loss (7,823)  (1,076)
    Total stockholders' equity 201,492   197,903 
    Total liabilities and stockholders' equity$2,122,453  $2,055,300 
            

    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,
      2022   2021 
     Average
    Outstanding
    Balance    		 Interest Income/
    Expense    		 Average
    Yield/
    Rate(1)    		 Average
    Outstanding
    Balance    		 Interest Income/
    Expense    		 Average
    Yield/
    Rate(1)
     (Dollars in thousands)
    Assets           
    Interest earning assets:           
    Interest bearing deposits$197,720 $101 0.21% $205,799 $49 0.10%
    Federal funds sold 4,658  1 0.09   3,871  — — 
    Investment securities available for sale 180,567  370 0.83   106,704  478 1.82 
    Restricted stock and equity securities 3,766  41 4.42   3,906  43 4.43 
    Loans held for sale 13,500  111 3.33   72,460  481 2.69 
    SBA-PPP loans receivable 83,264  2,066 10.06   232,371  2,469 4.31 
    Portfolio loans receivable(2) 1,506,902  31,712 8.53   1,298,352  23,118 7.22 
    Total interest earning assets 1,990,377  34,402 7.01   1,923,463  26,638 5.62 
    Noninterest earning assets 66,824      25,803    
    Total assets$2,057,201     $1,949,266    
                
    Liabilities and Stockholders’ Equity           
    Interest bearing liabilities:           
    Interest bearing demand accounts$293,979  37 0.05  $256,958  68 0.11 
    Savings 8,274  1 0.05   5,631  1 0.05 
    Money market accounts 539,264  301 0.23   471,154  530 0.46 
    Time deposits 170,748  545 1.29   332,660  1,407 1.72 
    Borrowed funds 34,062  187 2.23   35,343  188 2.15 
    Total interest bearing liabilities 1,046,327  1,071 0.42   1,101,746  2,194 0.81 
    Noninterest bearing liabilities:           
    Noninterest bearing liabilities 24,156      24,059    
    Noninterest bearing deposits 782,747      660,086    
    Stockholders’ equity 203,971      163,375    
    Total liabilities and stockholders’ equity$2,057,201     $1,949,266    
                
    Net interest spread    6.59%     4.81%
    Net interest income  $33,331     $24,444  
    Net interest margin(3)    6.79%     5.15%
                  

    _______________
    (1) Annualized.
    (2) Includes nonaccrual loans.
    (3) For the three months ended March 31, 2022 and March 31, 2021, collectively, SBA-PPP loans and credit card loans accounted for 297 and 152 basis points of the reported net interest margin, respectively.

    HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited    
      Quarter Ended
    (dollars in thousands except per share data) March 31,
    2022    		 December 31,
    2021    		 September 30,
    2021    		 June 30,
    2021    		 March 31,
    2021
    Earnings:          
    Net income $10,211  $10,171  $11,177  $9,648  $8,982 
    Earnings per common share, diluted  0.71   0.71   0.79   0.68   0.65 
    Net interest margin  6.79%  6.49%  6.27%  5.47%  5.15%
    Net interest margin, excluding credit cards & SBA-PPP loans (1)  3.82%  3.70%  3.52%  3.55%  3.63%
    Return on average assets(2)  2.01%  1.95%  2.13%  1.90%  1.87%
    Return on average assets, excluding impact of SBA-PPP loans (1)(2)  1.67%  1.80%  1.99%  1.65%  1.54%
    Return on average equity(2)  20.30%  20.66%  23.87%  22.36%  22.30%
    Efficiency ratio  65.12%  65.83%  64.10%  66.37%  67.11%
    Balance Sheet:          
    Total portfolio loans receivable, net $1,526,256  $1,523,982  $1,445,126  $1,392,471  $1,312,375 
    Total deposits  1,862,722   1,797,137   1,921,238   1,917,419   1,863,069 
    Total assets  2,122,453   2,055,300   2,169,556   2,151,850   2,091,851 
    Total shareholders' equity  201,492   197,903   189,080   177,204   167,003 
    Asset Quality Ratios:          
    Nonperforming assets to total assets  0.28%  0.56%  0.77%  0.54%  0.58%
    Nonperforming assets to total assets, excluding the SBA-PPP loans (1)  0.29%  0.59%  0.83%  0.60%  0.66%
    Nonperforming loans to total loans  0.38%  0.70%  0.85%  0.52%  0.56%
    Nonperforming loans to portfolio loans (1)  0.39%  0.75%  0.94%  0.60%  0.67%
    Net charge-offs to average portfolio loans (1)(2)  0.24%  0.18%  0.08%  0.08%  0.12%
    Allowance for loan losses to total loans  1.60%  1.54%  1.56%  1.51%  1.49%
    Allowance for loan losses to portfolio loans (1)  1.65%  1.65%  1.71%  1.73%  1.79%
    Allowance for loan losses to non-performing loans  422.65%  220.40%  182.48%  287.40%  267.07%
    Bank Capital Ratios:          
    Total risk based capital ratio  14.36%  13.79%  13.86%  13.51%  13.55%
    Tier 1 risk based capital ratio  13.10%  12.53%  12.60%  12.25%  12.29%
    Leverage ratio  8.74%  8.36%  7.83%  7.58%  7.54%
    Common equity Tier 1 capital ratio  13.10%  12.53%  12.60%  12.25%  12.29%
    Tangible common equity  8.11%  8.36%  7.57%  7.17%  7.01%
    Holding Company Capital Ratios:          
    Total risk based capital ratio  17.16%  16.41%  15.75%  16.14%  16.07%
    Tier 1 risk based capital ratio  15.19%  14.43%  14.49%  14.10%  13.98%
    Leverage ratio  10.25%  9.73%  9.12%  8.78%  8.84%
    Common equity Tier 1 capital ratio  15.04%  14.28%  14.34%  13.94%  13.81%
    Tangible common equity  9.49%  9.63%  8.72%  8.23%  7.98%
    Composition of Loans:          
    SBA-PPP loans, net $51,085  $108,285  $137,178  $202,763  $267,871 
    Residential real estate $420,242  $401,607  $418,205  $420,015  $420,461 
    Commercial real estate  564,725   556,339   502,523   471,807   433,336 
    Construction real estate  245,722   255,147   251,256   223,832   221,277 
    Commercial and industrial  177,504   175,956   143,244   158,392   151,410 
    Credit card, net of reserve  123,750   141,120   134,979   121,410   83,740 
    Other consumer loans  909   1,033   1,425   1,034   2,991 
    Portfolio loans receivable $1,532,852  $1,531,202  $1,451,632  $1,396,490  $1,313,215 
    Deferred origination fees, net  (6,596)  (7,220)  (6,506)  (4,019)  (840)
    Portfolio loans receivable, net $1,526,256  $1,523,982  $1,445,126  $1,392,471  $1,312,375 
    Composition of Deposits:          
    Noninterest bearing $825,174  $787,650  $833,187  $828,308  $771,924 
    Interest-bearing demand  279,591   330,924   369,812   314,883   300,992 
    Savings  9,894   6,994   6,682   6,965   6,012 
    Money markets  585,920   493,919   493,029   484,567   471,303 
    Time deposits  162,143   177,650   218,528   282,696   312,838 
    Total Deposits $1,862,722  $1,797,137  $1,921,238  $1,917,419  $1,863,069 
    Capital Bank Home Loan Metrics:        
    Origination of loans held for sale $110,446  $158,051  $217,175  $265,517  $353,774 
    Mortgage loans sold  109,953   178,068   229,111   278,384   400,112 
    Gain on sale of loans  3,042   4,423   6,108   7,763   12,008 
    Purchase volume as a % of originations  73.16%  56.44%  50.98%  50.64%  24.59%
    Gain on sale as a % of loans sold(3)  2.77%  2.48%  2.67%  2.79%  3.00%
    Mortgage commissions $1,125  $1,462  $1,884  $2,364  $3,320 
    OpenSky® Portfolio Metrics:        
    Active customer accounts  630,709   660,397   700,383   707,600   642,272 
    Secured credit card loans, gross  113,343   131,245   131,289   120,381   85,897 
    Unsecured credit card loans, gross  12,764   12,135   5,949   3,356   363 
    Noninterest secured credit card deposits  220,354   229,530   242,405   241,724   215,883 
                         

    _______________
    (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
    Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
          
    Net Income$10,211 $10,171 $11,177 $9,648 $8,982 
    Less: SBA-PPP loan income 2,066  1,347  1,525  2,272  2,469 
    Net Income, as Adjusted$8,145 $8,824 $9,652 $7,376 $6,513 
    Average Total Assets 2,057,201  2,066,283  2,084,772  2,041,232  1,949,266 
    Less: Average SBA-PPP Loans 83,264  116,595  162,217  250,040  232,371 
    Average Total Assets, as Adjusted$1,973,937 $1,949,688 $1,922,555 $1,791,192 $1,716,895 
    Return on Average Assets, as Adjusted 1.67% 1.80% 1.99% 1.65% 1.54%
                    


    Net Interest Margin, as AdjustedQuarters Ended
    Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
          
    Net Interest Income$33,331 $32,671 $32,059 $27,520 $24,444 
    Less Credit card loan income 14,487  15,010  15,086  10,497  7,660 
    Less SBA-PPP loan income 2,066  1,347  1,525  2,272  2,469 
    Net Interest Income, as Adjusted$16,778 $16,314 $15,448 $14,751 $14,315 
    Average Interest Earning Assets 1,990,377  1,996,331  2,026,616  2,016,801  1,923,463 
    Less Average credit card loans 124,923  131,306  124,771  100,456  92,150 
    Less Average SBA-PPP loans 83,264  116,595  162,217  250,040  232,371 
    Total Average Interest Earning Assets, as Adjusted$1,782,190 $1,748,430 $1,739,628 $1,666,305 $1,598,941 
    Net Interest Margin, as Adjusted 3.82% 3.70% 3.52% 3.55% 3.63%


    Tangible Book Value per ShareQuarters Ended
    Dollars in thousands, except per share amountsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
          
    Total Stockholders' Equity$201,492 $197,903 $189,080 $177,204 $167,003 
    Less: Preferred equity —  —  —  —  — 
    Less: Intangible assets —  —  —  —  — 
    Tangible Common Equity$201,492 $197,903 $189,080 $177,204 $167,003 
    Period End Shares Outstanding 14,000,520  13,962,334  13,801,936  13,771,615  13,759,218 
    Tangible Book Value per Share$14.39 $14.17 $13.70 $12.87 $12.14 


    Allowance for Loan Losses to Total Portfolio LoansQuarters Ended
    Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
          
    Allowance for Loan Losses$25,252 $25,181 $24,753 $24,079 $23,550 
    Total Loans 1,577,341  1,632,267  1,582,304  1,595,234  1,578,087 
    Less: SBA-PPP loans 51,085  108,285  137,178  202,763  265,712 
    Total Portfolio Loans$1,526,256 $1,523,982 $1,445,126 $1,392,471 $1,312,375 
    Allowance for Loan Losses to Total Portfolio Loans 1.65% 1.65% 1.71% 1.73% 1.79%
          
          
    Nonperforming Assets to Total Assets, net SBA-PPP LoansQuarters Ended
    Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
          
    Total Nonperforming Assets$5,975 $11,512 $16,801 $11,615 $12,112 
    Total Assets 2,122,453  2,055,300  2,169,556  2,151,850  2,091,851 
    Less: SBA-PPP loans 51,085  108,285  137,178  202,763  265,712 
    Total Assets, net SBA-PPP Loans$2,071,368 $1,947,015 $2,032,378 $1,949,087 $1,826,139 
    Nonperforming Assets to Total Assets, net SBA-PPP Loans 0.29% 0.59% 0.83% 0.60% 0.66%
          
          
    Nonperforming Loans to Portfolio LoansQuarters Ended
    Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
          
    Total Nonperforming Loans$5,975 $11,425 $13,565 $8,378 $8,818 
    Total Loans 1,577,341  1,632,267  1,582,304  1,595,234  1,578,087 
    Less: SBA-PPP loans 51,085  108,285  137,178  202,763  265,712 
    Total Portfolio Loans$1,526,256 $1,523,982 $1,445,126 $1,392,471 $1,312,375 
    Nonperforming Loans to Total Portfolio Loans 0.39% 0.75% 0.94% 0.60% 0.67%
          
          
    Net Charge-offs to Average Portfolio LoansQuarters Ended
    Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
          
    Total Net Charge-offs$881 $672 $301 $251 $388 
    Total Average Loans 1,590,166  1,582,473  1,569,198  1,567,973  1,530,723 
    Less: Average SBA-PPP loans 83,264  116,595  162,217  250,040  232,371 
    Total Average Portfolio Loans$1,506,902 $1,465,878 $1,406,981 $1,317,933 $1,298,352 
    Net Charge-offs to Average Portfolio Loans 0.24% 0.18% 0.08% 0.08% 0.12%
          
          
    Pre-tax, Pre-Provision Net Revenue ("PPNR")Quarters Ended
    Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
          
    Net income$10,211 $10,171 $11,177 $9,648 $8,982 
    Add: Income Tax Expense 3,354  3,522  3,877  3,357  3,143 
    Add: Provision for Loan Losses 952  1,100  975  781  503 
    Pre-tax, Pre-Provision Net Revenue ("PPNR")$14,517 $14,793 $16,029 $13,786 $12,628 
          

    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, 2022. 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 $2.1 billion at March 31, 2022 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: Alan Jackson (240) 283-0402

    MEDIA CONTACT: Ed Barry (240) 283-1912

    WEB SITE: www.CapitalBankMD.com


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