Capital Bancorp Reports Fourth Quarter 2019 Net Income of $5.1 million

Thursday, 23. January 2020 23:11

ROCKVILLE, Md., Jan. 23, 2020 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $5.1 million, or $0.36 per diluted share, for the fourth quarter of 2019.  By comparison, net income was $3.5 million, or $0.25 per diluted share, for the fourth quarter of 2018.  Return on average assets was 1.48%, for the fourth quarter of 2019, compared to 1.27% for the same period in 2018, and return on average equity was 15.3% for the fourth quarter of 2019, compared to 12.3% in the same period of 2018.

"Capital Bancorp is executing on the market disruption to post strong balanced growth.  The challenging operating environment presents headwinds, but we have been able to attract new customers and talent while exerting pricing and credit discipline to help offset margin compression.  As we head into 2020, we believe that our differentiated operating model creates compelling value for customers and investors," said Ed Barry CEO of Capital Bancorp.

2019 Fourth Quarter Performance

  • Record Net Income - Net income for the fourth quarter of 2019 increased 13.2% to $5.1 million compared to $4.5 million for the third quarter of 2019.  On a fully diluted basis, earnings per share for the three months ended December 31, 2019 was $0.36, compared to $0.32 per share for the three months ended September 30, 2019.  Return on average assets was 1.48%, an increase of 6 basis points compared to the third quarter of 2019.  Return on average equity for the fourth quarter of 2019 was 15.3%, compared to 14.0% for the previous quarter.

  • Solid Loan Growth - For the quarter ended December 31, 2019, total loans increased $30.8 million, or 2.7%, to $1.17 billion compared to $1.14 billion at September 30, 2019.  Commercial and industrial loans grew $18.2 million, or 13.7% and construction real estate loans increased $16.5 million, or 9.0%.

  • Strong Core Deposit Growth - The Company increased overall deposits quarter over quarter by $113.0 million, or 10.2% to $1.23 billion.  The growth in the portfolio was primarily due to an increase in money market balances of $115.9 million, partially offset by a seasonal decline in certain interest bearing demand accounts.

  • Net Interest Margin - The net interest margin decreased 50 basis points to 5.33% for the fourth quarter of 2019 compared to the prior quarter.  The decrease was primarily attributable to three factors.  The most significant impact was the result of a strategic initiative to increase our liquidity position during the fourth quarter resulting in an increase in low yielding overnight deposits for part of the quarter.  The additional liquidity was utilized to continue re-balancing the deposit portfolio, to fund loan growth, and to bolster our investment portfolio.  The remaining excess liquidity will be deployed in early 2020 for the same purposes.  This excess liquidity had a 23 basis point negative impact on the fourth quarter margin.  In addition, interest rate decreases in late September and October precipitated an 11 basis point reduction in the margin.  Lastly, loan yields in the credit card portfolio were negatively impacted by a seasonal increase in the level of fees and interest charged off, reducing the margin by 11 basis points for the quarter.

  • Continued Growth in OpenSky® Credit Card - New originations for the quarter totaled 24,100 compared to 16,100 in the same quarter of the prior year.  In the fourth quarter of 2019, our credit card loan portfolio increased to $46.4 million, representing an increase from the prior quarter of $2.4 million, or 5.3%, with the related deposit accounts increasing to $78.2 million.

  • Consistent Mortgage Business - Capital Bank Home Loans production experienced a $12.3 million seasonal decrease in mortgage loan originations; however, gain on sale revenue for the fourth quarter of 2019 of $5.0 million remained flat compared to prior quarter revenue of $5.0 million.  Gain on sale as a percent of loans sold showed a slight decrease in the fourth quarter to 2.70% compared to 2.77% in the previous quarter.  The decline in gain-on-sale margin during the fourth quarter is largely attributable to the significant increase in price sensitive refinance activity driven by the lower rate environment.

  • Sound Asset Quality - Non-performing assets as a percentage of total assets remained stable at 0.50% at December 31, 2019, compared to 0.51% at September 30, 2019.  The quarterly decrease is due to a reduction of non-performing loans of approximately $410 thousand.

2019 Highlights

  • Record Net Income - Net income for the year ended December 31, 2019 increased 32.3% to $16.9 million from $12.8 million in 2018.  Diluted earnings per share for the current year increased to $1.21 from $1.02 in 2018 an increase of 18.6%.  Return on average assets was 1.38% compared to 1.22% in 2018.  Return on average equity was 13.7% compared to 13.9% in 2018.

  • Solid Loan Growth - Year over year, loans increased $170.9 million, or 17.1% to $1.17 billion from $1.00 billion at December 31, 2018.  While outstanding balances grew in all loan categories, the strongest growth in 2019 was in commercial real estate, construction real estate and credit cards, with increases of: $69.4 million, or 24.9%; $41.1 million, or 26.1%; and $11.7 million, or 33.9%, respectively.

  • Strong Core Deposit Growth and Improving Deposit Profile - Year over year, deposits increased 28.3% with the largest increase occurring in interest bearing demand accounts.  The Company continues to execute on its strategic initiative to improve the deposit portfolio mix by reducing reliance on wholesale time deposits.  Accordingly, wholesale time deposits decreased by $26.3 million or 13.6% from $193.3 million at December 31, 2018 to $167.0 million at December 31, 2019.  As a percentage of total deposits at December 31, 2019, wholesale time deposits comprised 13.6%, down from 20.2% a year earlier.

  • Stable Net Interest Margin - Despite a falling interest rate environment in the second half of 2019, for the year the Bank was able to maintain a healthy 5.60% net interest margin, a 1 basis point increase over 5.59% for the prior year.  Loan yields, excluding credit cards, increased to 5.91% for the year ended December 31, 2019 from 5.76% for the year earlier.

  • Thriving Mortgage Business - Due primarily to the favorable mortgage refinancing market in 2019, Capital bank Home Loans saw strong growth in mortgage originations year over year.  Originations for 2019 were $591.8 million compared to $337.1 million for 2018, an increase of $254.6 million, or 75.5%.

  • Sound Asset Quality - Non-performing assets as a percentage of total assets remained relatively stable at 0.50% as of December 31, 2019, compared to 0.44% at the prior year end.  Net charge-offs for the year decreased to $797.6 thousand or 0.07% of average loans, as compared to $864.3 thousand or 0.09% of average loans, for the prior year.

  • Credit Card Growth - OpenSky® credit card accounts showed strong year over year growth with an increase of 53,400 accounts, or 31.4%.  Total credit card accounts exceeded 223,000 accounts at December 31, 2019.  Our enhanced customer application and improved mobile servicing functionality contributed to this increase in customer accounts.  Year over year, outstanding credit card balances increased $11.7 million, or 33.9%, and card related deposits increased $18.3 million, or 30.5%.
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited           
 Quarter Ended 4th Quarter Twelve Months Ended YTD
 December 31, 2019 vs. 2018 December 31, 2019 vs. 2018
(in thousands except per share data)2019 2018 % Change 2019 2018 % Change
Earnings Summary           
Interest income$22,393  $18,238  22.8% $83,354  $69,127  20.6%
Interest expense4,339  3,348  29.6% 15,842  11,239  41.0%
Net interest income18,054  14,890  21.2% 67,512  57,888  16.6%
Provision for loan losses921  500  84.2% 2,791  2,140  30.4%
Noninterest income7,278  3,466  110.0% 24,518  16,124  52.1%
Noninterest expense17,757  13,094  35.6% 66,525  54,123  22.9%
Income before income taxes6,654  4,762  39.7% 22,714  17,749  28.0%
Income tax expense1,581  1,276  23.9% 5,819  4,982  16.8%
Net income$5,073  $3,486  45.5% $16,895  $12,767  32.3%
            
Weighted average common shares - Basic13,790  13,554  1.7% 13,733  12,116  13.3%
Weighted average common shares - Diluted14,091  13,866  1.6% 13,969  12,462  12.1%
Earnings - Basic$0.37  $0.26  43.0% $1.23  $1.05  17.1%
Earnings - Diluted$0.36  $0.25  43.2% $1.21  $1.02  18.6%
Return on average assets1.48% 1.27% 16.5% 1.38% 1.22% 13.1%
Return on average equity15.32% 12.26% 25.0% 13.66% 13.94% (2.0)%

 

 Quarter Ended 4th Quarter Quarter Ended
 December 31, 2019 vs. 2018 September 30, June 30, March 31,
(in thousands except per share data)2019 2018 % Change 2019 2019 2019
Balance Sheet Highlights           
Assets$1,428,495  $1,105,058  29.3% $1,311,407  $1,234,157  $1,123,752 
Investment securities available for sale60,828  46,932  29.6% 37,073  39,157  46,080 
Mortgage loans held for sale71,030  18,526  283.4% 68,982  47,744  21,630 
Loans receivable (1)1,171,121  1,000,268  17.1% 1,140,310  1,056,291  1,007,928 
Allowance for loan losses13,301  11,308  17.6% 12,808  11,913  11,347 
Deposits1,225,421  955,240  28.3% 1,112,444  1,037,004  967,722 
Borrowings and repurchase agreements32,222  7,332  339.5% 35,556  38,889  3,010 
Subordinated debentures15,423  15,393  0.2% 15,416  15,409  15,401 
Total stockholders' equity133,331  114,564  16.4% 127,829  123,118  118,551 
Tangible common equity133,331  114,564  16.4% 127,829  123,118  118,551 
            
Common shares outstanding13,895  13,672  1.6% 13,783  13,719  13,713 
Tangible book value per share$9.60  $8.38  14.5% $9.27  $8.97  $8.65 

_______________
(1) Loans are reflected net of deferred fees and costs.

Operating Results - Three Months Ended December 31, 2019 compared to three months ended December 31, 2018

For the three months ended December 31, 2019, net interest income increased $3.2 million, or 21.2% to $18.1 million compared to the same period in 2018.  Reflective of the lower interest rate environment experienced in 2019, net interest margin decreased 13 basis points to 5.33% for the three months ended December 31, 2019 from 5.46% for the year earlier period.  For the three months ended December 31, 2019, average interest-earning assets increased by $262.8 million, or 24.3%, compared to the three months ended December 31, 2018, while the average yield increased by 8 basis points. For the three months ended December 31, 2019, average loans increased, $162.3 million, or 16.6% to $1.14 billion from $977.4 million for the same period of 2018.  Period over period average interest-bearing liabilities increased $190.3 million, or 25.9%, while the average cost increased 5 basis points, to 1.86% from 1.81%.

Loan growth during the three months ended December 31, 2019 resulted in a provision for loan losses of $921 thousand, compared to of $500 thousand for the year earlier period.  Net charge-offs for the fourth quarter of 2019 were $438 thousand or 0.15% of average loans, annualized, compared to $50 thousand, or 0.04% of average loans annualized for the fourth quarter of 2018.

In the most recent quarter, noninterest income was $7.3 million an increase of $3.8 million, or 110.0% from $3.5 million in the prior year quarter.  The increase is largely the result of higher credit card fees and mortgage banking revenues.  Credit card fees and mortgage banking revenues increased $642 thousand and $2.9 million, which represents increases of 44.6% and 136.7%, respectively.

Noninterest expense was $17.8 million and $13.1 million for the three months ended December 31, 2019 and 2018, respectively, an increase of $4.7 million or 35.6%. The increase was driven primarily by a $2.4 million increase in salaries and benefits period over period.  Included in salaries and benefits are commissions paid on mortgage originations which have increased with higher levels of mortgage originations.  In the fourth quarter of 2019, commissions totaled $1.3 million as compared to $682 thousand for the same period of 2018, an increase of 96.7%.  There were smaller increases in data processing, loan processing and other operating expenses during the period.

On higher levels of revenue, the Company saw a seasonal decrease in efficiency ratio for the three months ended December 31, 2019, to 70.1% compared to the three months ended December 31, 2018.

Operating Results - Twelve months ended December 31, 2019 compared to twelve months ended December 31, 2018

Net interest income increased $9.6 million, or 16.6% to $67.5 million for the twelve months ended December 31, 2019 compared to 2018, primarily as a result of the growth in average earning assets of 16.33%.  For the twelve months ended December 31, 2019, our average interest-earning assets increased by $169.1 million, compared to the prior year.  In addition to the average earning asset growth in 2019, year over year net interest income was bolstered by an increase in the average yield on our interest-earning assets of 24 basis points.  Net interest margin increased 1 basis point to 5.60% for the twelve months ended December 31, 2019 from 5.59% for the twelve months ended December 31, 2018.  Year over year, average interest-bearing liabilities increased $90.9 million with the average rate increasing by 39 basis points.

For the twelve months ended December 31, 2019, we recorded a provision for loan losses of $2.8 million, compared to $2.1 million during the previous twelve month period.  Net charge-offs for the twelve months ended December 31, 2019 were $798 thousand, representing 0.07% of average loans, annualized, compared to  $864 thousand, or 0.09% of average loans, annualized, in the prior year.  Included in the net charge-offs for the twelve months ended December 31, 2019, were $331 thousand and $461 thousand for commercial loans and credit cards, respectively.

Noninterest income increased by $8.4 million, or 52%, from $16.1 million for the twelve months ended December 31, 2018 to $24.5 million for the twelve months ended December 31, 2019, largely due to increases in credit card fees and mortgage banking revenue.  Year over year, credit card fees increased from $6.0 million to $7.6 million while mortgage banking revenue increased from $9.5 million to $16.0 million.

Noninterest expense was $66.5 million and $54.1 million for the twelve months ended December 31, 2019 and 2018, respectively.  The increase in noninterest expense was driven primarily by increases in salaries and benefits, which includes commissions paid on mortgage originations.  In 2019, as a result of robust mortgage originations, commissions were $5.4 million versus $2.8 million in 2018, an increase of $2.5 million, or 88.5%.  Additionally, there were smaller increases in data processing, loan processing and other expenses.

The Company's recent investments in technology, sales processes, and sales staff are starting to generate returns as seen in the efficiency ratio for the twelve months ended December 31, 2019, which was 72.3% compared to 73.1% for the same period of 2018, an improvement of 84 basis points.

Financial Condition

Total assets at December 31, 2019 were $1.43 billion, up 29.3% as compared to $1.11 billion at December 31, 2018. Loans, excluding mortgage loans held for sale, were $1.17 billion as of December 31, 2019, compared to $1.00 billion at December 31, 2018, an increase of 17.1%.

Deposits were $1.23 billion at December 31, 2019, an increase of 28.3%, as compared to $955.2 million at December 31, 2018.

Our allowance for loan losses was $13.3 million, or 1.14% of loans at December 31, 2019, which provided approximately 282% coverage of nonperforming loans at such date, compared to $11.3 million, or 1.13% of loans, and approximately 242% coverage of nonperforming loans at December 31, 2018.  Nonperforming assets were $7.1 million, or 0.50% of total assets as of December 31, 2019, up from $4.8 million, or 0.44% of total assets at December 31, 2018.  Of the $7.1 million in total nonperforming assets as of December 31, 2019, nonperforming loans represented $4.7 million and other real estate owned totaled $2.4 million.  Included in nonperforming loans at December 31, 2019 are troubled debt restructurings of $459 thousand.

Stockholders’ equity totaled $133.3 million as of December 31, 2019, compared to $114.6 million at December 31, 2018.  The increase was primarily attributable to 2019 earnings of $16.9 million and proceeds from the exercise of stock options.  Shares repurchased and retired in 2019 as part of the Company's stock repurchase program totaled 41,130 shares at a weighted average price of $13.53, for a total cost of $556 thousand including commissions.  As of December 31, 2019, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

Consolidated Statements of Income (Unaudited)       
 Three Months Ended December 31, Twelve Months Ended December 31,
(in thousands)2019 2018 2019 2018
Interest income       
Loans, including fees$21,758  $17,774  $81,305  $67,229 
Investment securities available for sale217  255  924  1,041 
Federal funds sold and other418  209  1,125  857 
Total interest income22,393  18,238  83,354  69,127 
        
Interest expense       
Deposits3,801  2,916  13,689  9,792 
Borrowed funds538  432  2,153  1,447 
Total interest expense4,339  3,348  15,842  11,239 
        
Net interest income18,054  14,890  67,512  57,888 
Provision for loan losses921  500  2,791  2,140 
Net interest income after provision for loan losses17,133  14,390  64,721  55,748 
        
Noninterest income       
Service charges on deposits159  119  542  484 
Credit card fees2,082  1,439  7,602  6,048 
Mortgage banking revenue4,964  2,097  15,955  9,477 
Gain (loss) on sale of investment securities available for sale    26  (2)
Loss on the sale of foreclosed real estate  (21)   (21)
Loss on the disposal of premises and equipment  (276)   (276)
Other fees and charges73  108  393  414 
Total noninterest income7,278  3,466  24,518  16,124 
        
Noninterest expenses       
Salaries and employee benefits8,450  6,081  32,586  25,164 
Occupancy and equipment1,053  1,078  4,360  4,319 
Professional fees918  759  2,871  2,124 
Data processing4,290  3,326  15,512  14,184 
Advertising509  347  2,066  1,460 
Loan processing615  266  1,894  1,077 
Other real estate expenses, net66  (10) 122  28 
Other operating1,856  1,247  7,114  5,767 
Total noninterest expenses17,757  13,094  66,525  54,123 
Income before income taxes6,654  4,762  22,714  17,749 
Income tax expense1,581  1,276  5,819  4,982 
Net income$5,073  $3,486  $16,895  $12,767 

 

Consolidated Balance Sheets   
(in thousands except share data)(unaudited)
December 31,
2019
 December 31,
2018
Assets   
Cash and due from banks$10,530  $10,431 
Interest bearing deposits at other financial institutions102,447  22,007 
Federal funds sold1,847  2,285 
Total cash and cash equivalents114,824  34,723 
Investment securities available for sale60,828  46,932 
Restricted investments3,966  2,503 
Loans held for sale71,030  18,526 
Loans receivable, net of allowance for loan losses of $13,301 and $11,308 at December 31, 2019 and December 31, 2018, respectively1,157,820  988,960 
Premises and equipment, net6,092  2,975 
Accrued interest receivable4,770  4,462 
Deferred income taxes4,263  3,654 
Foreclosed real estate2,384  142 
Prepaid income taxes9  90 
Other assets2,509  2,091 
Total assets$1,428,495  $1,105,058 
    
Liabilities   
Deposits   
Noninterest bearing$291,777  $242,259 
Interest bearing933,644  712,981 
Total deposits1,225,421  955,240 
Securities sold under agreements to repurchase  3,332 
Federal funds purchased  2,000 
Federal Home Loan Bank advances32,222  2,000 
Other borrowed funds15,423  15,393 
Accrued interest payable1,801  1,565 
Other liabilities20,297  10,964 
Total liabilities1,295,164  990,494 
    
Stockholders' equity   
Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding at December 31, 2019 and December 31, 2018   
Common stock, $.01 par value; 49,000,000 shares authorized; 13,894,842 and 13,672,479 issued and outstanding at December 31, 2019 and December 31, 2018, respectively139  137 
Additional paid-in capital51,561  49,321 
Retained earnings81,618  65,701 
Accumulated other comprehensive income (loss)13  (595)
Total stockholders' equity133,331  114,564 
Total liabilities and stockholders' equity$1,428,495  $1,105,058 

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 December 31,
 2019 2018
 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$85,148  $311  1.45% $35,797  $161  1.78%
Federal funds sold5,841  22  1.49% 1,509  9  2.37%
Investment securities available for sale37,716  216  2.27% 47,365  255  2.14%
Restricted stock4,505  84  7.42% 3,229  39  4.79%
Loans held for sale71,941  972  5.36% 16,729  387  9.18%
Loans(2) (3)1,139,646  20,786  7.24% 977,381  17,387  7.06%
Total interest earning assets1,344,797  22,391  6.61% 1,082,010  18,238  6.69%
Noninterest earning assets15,043      8,557     
Total assets$1,359,840      $1,090,567     
            
Liabilities and Stockholders’ Equity           
Interest bearing liabilities:           
Interest bearing demand accounts$147,521  284  0.77% $70,722  56  0.31%
Savings3,552  3  0.33% 3,744  3  0.32%
Money market accounts386,367  1,620  1.66% 285,986  1,119  1.55%
Time deposits324,272  1,894  2.32% 322,937  1,738  2.14%
Borrowed funds61,963  538  3.44% 49,998  432  3.43%
Total interest bearing liabilities923,675  4,339  1.86% 733,387  3,348  1.81%
Noninterest bearing liabilities:           
Noninterest bearing liabilities19,137      10,022     
Noninterest bearing deposits285,619      234,357     
Stockholders’ equity131,409      112,801     
Total liabilities and stockholders’ equity$1,359,840      $1,090,567     
            
Net interest spread(4)    4.75%     4.88%
Net interest income  $18,052      $14,890   
Net interest margin(5)    5.33%     5.46%
Net interest margin excluding credit cards    4.02%     4.22%

_______________

(1) Annualized.
(2) Includes nonaccrual loans.
(3) Interest income includes amortization of deferred loan fees, net of deferred loan costs.
(4) Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities.
(5) Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period.

 Twelve Months Ended December 31,
 2019 2018
 Average
Outstanding 
Balance
 Interest
Income/
Expense
 Average
Yield/ 
Rate
 Average
Outstanding 
Balance
 Interest
Income/
Expense
 Average
Yield/ 
Rate
            
 (Dollars in thousands)
Assets           
Interest earning assets:           
Interest bearing deposits$47,762  $828  1.73% $41,858  $687  1.64%
Federal funds sold2,733  50  1.83% 1,537  27  1.76%
Investment securities available for sale41,130  924  2.25% 50,074  1,041  2.08%
Restricted stock4,334  243  5.61% 2,724  143  5.25%
Loans held for sale44,483  2,899  6.52% 17,715  1,569  8.86%
Loans(2) (3)1,064,421  78,406  7.37% 921,823  65,660  7.12%
Total interest earning assets1,204,863  83,350  6.92% 1,035,731  69,127  6.67%
Noninterest earning assets15,046      10,001     
Total assets$1,219,909      $1,045,732     
            
Liabilities and Stockholders’ Equity           
Interest bearing liabilities:           
Interest bearing demand accounts$109,977  672  0.61% $72,523  210  0.29%
Savings3,597  12  0.35% 3,704  12  0.32%
Money market accounts344,272  5,822  1.69% 286,257  3,797  1.33%
Time deposits302,149  7,182  2.38% 326,827  5,773  1.77%
Borrowed funds59,387  2,153  3.63% 39,170  1,447  3.69%
Total interest bearing liabilities819,382  15,841  1.93% 728,481  11,239  1.54%
Noninterest bearing liabilities:           
Noninterest bearing liabilities16,144      9,828     
Noninterest bearing deposits260,726      215,833     
Stockholders’ equity123,657      91,590     
Total liabilities and stockholders’ equity$1,219,909      $1,045,732     
            
Net interest spread(3)    4.99%     5.13%
Net interest income  $67,509      $57,888   
Net interest margin(4)    5.60%     5.59%
Net interest margin excluding credit cards    4.26%     4.28%

_______________

(1) Includes nonaccrual loans.
(2) Interest income includes amortization of deferred loan fees, net of deferred loan costs.
(3) Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities.
(4) Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period.

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited    
  Quarter Ended
(Dollars in thousands except per share data) December 31,
 2019
 September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
Earnings:          
Net income $5,073  $4,481  $4,023  $3,319  $3,486 
Earnings per common share, diluted 0.36  0.32  0.29  0.24  0.25 
Net interest margin 5.33% 5.83% 5.79% 5.46% 5.46%
Net interest margin, excluding credit cards 4.02% 4.37% 4.37% 4.30% 4.28%
Return on average assets(1) 1.48% 1.42% 1.39% 1.22% 1.27%
Return on average equity(1) 15.32% 14.04% 13.23% 11.39% 12.26%
Efficiency ratio 70.10% 71.75% 72.18% 76.08% 71.34%
Balance Sheet:          
Loans(2) $1,171,121  $1,140,310  $1,056,291  $1,007,928  $1,000,268 
Deposits 1,225,421  1,112,444  1,037,004  967,722  955,240 
Total assets 1,428,495  1,311,407  1,234,157  1,123,752  1,105,058 
Asset Quality Ratios:          
Nonperforming assets to total assets 0.50% 0.51% 0.57% 0.63% 0.44%
Nonperforming loans to total loans 0.40% 0.57% 0.65% 0.69% 0.47%
Net charge-offs to average loans (YTD annualized) 0.07% 0.05% 0.04% 0.03% 0.09%
Allowance for loan losses to total loans 1.14% 1.12% 1.13% 1.13% 1.13%
Allowance for loan losses to non-performing loans 281.92% 195.76% 174.05% 162.51% 241.72%
Bank Capital Ratios:          
Total risk based capital ratio 11.98% 11.44% 11.91% 12.23% 12.25%
Tier 1 risk based capital ratio 10.73% 10.19% 10.65% 10.98% 11.00%
Leverage ratio 8.65% 8.60% 8.91% 9.05% 9.06%
Common equity Tier 1 ratio 10.73% 10.19% 10.65% 10.98% 11.00%
Tangible common equity 8.21% 8.21% 8.40% 8.93% 8.89%
Composition of Loans:          
Residential real estate $427,925  $443,961  $426,887  $421,346  $407,844 
Commercial real estate 348,091  339,448  297,891  277,905  278,691 
Construction real estate 198,702  182,224  169,225  157,338  157,586 
Commercial and industrial 151,109  132,935  124,436  120,191  122,264 
Credit card 46,412  44,058  40,141  32,359  34,673 
Other 1,285  1,148  1,015  1,195  1,202 
Composition of Deposits:          
Noninterest bearing $291,777  $293,378  $279,484  $262,235  $242,259 
Interest bearing demand 174,166  186,422  129,199  85,969  85,747 
Savings 3,675  3,994  3,572  3,595  2,866 
Money Markets 429,078  313,131  347,701  320,114  288,897 
Time Deposits 326,725  315,520  277,048  295,809  335,471 
Capital Bank Home Loan Metrics:        
Origination of loans held for sale $185,479  $197,754  $134,409  $74,128  $70,826 
Proceeds from loans held for sale, net of gains 178,727  171,880  105,418  71,693  73,883 
Gain on sale of loans 4,964  4,900  3,715  2,375  2,097 
Purchase volume as a % of originations 28.95% 44.02% 79.07% 78.42% 86.72%
Gain on sale as a % of loans sold(3) 2.70% 2.77% 3.40% 3.21% 2.76%
OpenSky Credit Card Portfolio Metrics:        
Total active customer accounts 223,379  221,913  211,408  187,423  169,981 
Total loans $46,412  $44,058  $40,141  $32,359  $34,673 
Total deposits at the Bank $78,223  $77,689  $73,666  $65,808  $59,954 

_______________
(1) Annualized.
(2) Loans are reflected net of deferred fees and costs
2. Gain on sale percentage is calculated as gain on sale of loans divided by the sum of gain on sale of loans and proceeds from loans held for sale, net of gains.

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 eighth largest bank headquartered in Maryland.  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 $1.4 billion at December 31, 2019 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,” “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 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. 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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