October 28, 2024false000141953600014195362024-10-282024-10-28



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 28, 2024

CAPITAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
 
Maryland
001-38671
52-2083046
(State or other jurisdiction of incorporation or organization)
(Commission file number)
(IRS Employer Identification No.)
2275 Research Boulevard, Suite 600, Rockville, Maryland 20850
(Address of principal executive offices) (Zip Code)
(301) 468-8848
Registrant’s telephone number, including area code

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.01 per shareCBNKNASDAQ Stock Market



Item 2.02 Results of Operations and Financial Disclosure
On October 28, 2024, Capital Bancorp, Inc. (the “Company”) issued a press release announcing the Company’s unaudited financial results for the three and nine months ended September 30, 2024. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and hereby incorporated by reference.

The information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including Exhibit 99.1 to this Current Report on Form 8-K, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Company under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.

Item 8.01. Other Events
On October 25, 2024, the Company's Board of Directors declared a $0.10 per share dividend, payable on November 20, 2024 to stockholders of record on November 4, 2024.

Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1
104Cover Page Interactive Data File (embedded within the Inline XBRL document)



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CAPITAL BANCORP, INC.                             
 
 
Date: October 28, 2024
By: /s/ Dominic Canuso
Name: Dominic Canuso
Title: Chief Financial Officer





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capitalbancorplogoa21a.jpg
Capital Bancorp, Inc. Posts Broad Based Growth
Leading to a Sharp Profitability Increase
Third Quarter 2024 Results
•Net Income of $8.7 million, or $0.62 per share
◦Net Income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), of $9.2 million, or $0.66 per share
•Tangible Book Value Per Share(1) of $20.13, increased 4.5%, or $0.87 as compared to $19.26 (2Q 2024).
•Net Interest Income increased $1.3 million, or 3.5% (not annualized), from 2Q 2024
•Net Interest Margin ("NIM") decreased to 6.41% as compared to 6.46% (2Q 2024)
◦Core NIM, as adjusted to exclude the impact of credit card loans (non-GAAP)(1) increased to 4.08% as compared to 4.00% (2Q 2024)
•Loan Growth of $85.9 million, or 16.9% annualized for 3Q 2024
•Deposit Growth of $85.8 million, or 16.2% annualized for 3Q 2024; Noninterest bearing deposits increased $33.5 million, or 19.5% annualized from 2Q 2024
•Cash dividend of $0.10 per share declared
Rockville, Maryland, October 28, 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 $8.7 million, or $0.62 per diluted share, for the third quarter 2024, compared to net income of $8.2 million, or $0.59 per diluted share, for the second quarter 2024, and $9.8 million, or $0.70 per diluted share, for the third quarter 2023. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), was $9.2 million, or $0.66 per diluted share, for the third quarter 2024, compared to $8.3 million, or $0.59 per diluted share, for the second quarter 2024.

The Company also declared a cash dividend on its common stock of $0.10 per share. The dividend is payable on November 20, 2024 to shareholders of record on November 4, 2024.

“We continue to benefit from our diversified business which is driving growth across our platforms," said Ed Barry, Chief Executive Officer of the Company and the Bank. "With the changing interest rate environment, our core margin has inflected. The acquisition of Integrated Financial Holdings, Inc. is now complete and we are now focused on integration and unlocking opportunity out of their complementary lines of business."

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"The Bank continues to execute on its smart growth strategy as reflected by the impressive year-to-date and third quarter growth in commercial bank loan balances and deposits, both interest bearing and non-interest bearing. Our diversified profit centers complement one another and our recent acquisition of IFH adds an additional high potential opportunity for growth,” said Steven J Schwartz, Chairman of the Company. “In addition, our quarter-over-quarter 4.5% increase in tangible book value (with all investment securities fully marked), together with stable asset quality, ROA and ROE metrics, offer clear evidence of our franchise durability.”

(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.
Acquisition of Integrated Financial Holdings, Inc.
On October 1, 2024, the Company completed its previously announced merger with Integrated Financial Holdings, Inc. ("IFHI"). Pursuant to the terms of the Merger Agreement, each share of IFHI’s common stock, par value $1.00 per share (“IFHI Common Stock”) was converted into the right to receive (a) 1.115 shares of common stock of the Company, par value $0.01 per share (“Capital Common Stock”); and (b) $5.36 in cash per share of IFHI Common Stock held immediately prior to the Effective Time, in addition to cash in lieu of fractional shares. In addition, each stock option granted by IFHI to purchase shares of IFHI Common Stock, whether vested or unvested, outstanding immediately prior to the Effective Time, was assumed by the Company and converted into an equivalent option to purchase Capital Common Stock, with the same terms and conditions as applied to the IFHI stock option.
In the first nine months of 2024, the Company incurred pre-tax merger-related expenses of $1.3 million, including expenses totaling $0.5 million for the third quarter 2024, consistent with modeled expectations.
The following table provides a reconciliation of the Company's net income under GAAP to non-GAAP results excluding merger-related expenses.
Third Quarter 2024
Second Quarter 2024
(in thousands, except per share data)Income Before Income TaxesIncome Tax Expense(Benefit)Net IncomeDiluted Earnings per ShareIncome Before Income TaxesIncome Tax ExpenseNet IncomeDiluted Earnings per Share
GAAP Earnings$11,499 $2,827 $8,672 $0.62 $10,933 $2,728 $8,205 $0.59 
Add: Merger-Related Expenses520 (37)557 83 21 62 
Non-GAAP Earnings$12,019 $2,790 $9,229 $0.66 $11,016 $2,749 $8,267 $0.59 
Nine Months Ended September 30, 2024
(in thousands, except per share data)Income Before Income TaxesIncome Tax ExpenseNet IncomeDiluted Earnings per Share
GAAP Earnings$31,056 $7,617 $23,439 $1.69 
Add: Merger-Related Expenses1,315 158 1,157 
Non-GAAP Earnings$32,371 $7,775 $24,596 $1.77 
Note: The tax benefit associated with merger-related expenses has been adjusted to reflect the estimated nondeductible portion of the expenses.
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Third Quarter 2024 Highlights
Earnings Summary
Net income of $8.7 million, or $0.62 per diluted share, increased $0.5 million compared to $8.2 million, or $0.59 per diluted share, for the second quarter 2024. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), increased $0.9 million to $9.2 million, or $0.66 per diluted share, for the third quarter 2024 compared to $8.3 million, or $0.59 per diluted share, for the second quarter 2024.
•Net interest income of $38.4 million increased $1.3 million, or 3.5%, compared to the second quarter 2024.
◦Interest income of $52.6 million increased $2.0 million, or 3.9%, over the second quarter 2024 primarily from $1.7 million in portfolio loan interest income, as growth in average balances increased $61.0 million. Interest income from interest-bearing deposits held at other financial institutions increased $0.2 million, as average balances increased $14.0 million to $91.1 million.
◦Interest expense of $14.3 million increased $0.7 million, or 5.1% over the second quarter 2024 due to increases in customer money market deposits and time deposits of $0.4 million and $0.3 million, respectively. Average balances increased $27.0 million and $14.0 million, respectively.
•The provision for credit losses was $3.7 million, an increase of $0.3 million from the second quarter 2024 primarily driven by unsecured credit card loan growth in the quarter. Net charge-offs totaled $2.7 million in the third quarter including $1.7 million from credit card related loans, $0.6 million from commercial real estate, and $0.4 million from commercial and industrial loans. The $0.8 million net charge-offs increase quarter over quarter includes $0.6 million from a commercial loan charge-off that was fully reserved for, and $0.2 million from higher credit card loans. At September 30, 2024, the allowance for credit losses to total loans ratio was 1.51%, down 2 basis points from the ratio at June 30, 2024.
•Noninterest income of $6.6 million decreased $0.3 million as compared to the second quarter 2024 primarily due to decreased credit card fees of $0.3 million.
•Noninterest expense of $29.7 million increased $0.2 million as compared to the second quarter 2024. Noninterest expense of $29.2 million, excluding merger-related expenses of $0.5 million, decreased $0.2 million as compared to the second quarter 2024. Variances include:
◦Advertising expense of $1.2 million decreased $0.8 million off of seasonally high second quarter levels.
◦Professional fees of $2.0 million increased $0.2 million primarily related to increased non-merger-related legal fees.
◦Other expense categories increased $0.4 million including slight increases from data and loan processing expense and operational losses.
•Income tax expense of $2.8 million, or 24.6% of pre-tax income for the third quarter 2024, increased $0.1 million from $2.7 million, or 25.0% of pre-tax income for the second quarter 2024.
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Balance Sheet
Total assets of $2.6 billion at September 30, 2024 increased $122.2 million, or 5.0% (not annualized), from June 30, 2024.
•Cash and cash equivalents of $156.7 million at September 30, 2024 increased $20.2 million from June 30, 2024, as total deposits increased $85.8 million, and Federal Home Loan Bank advances increased $20.0 million, partially offset by an increase in total portfolio loans of $85.9 million.
•Total portfolio loans of $2.1 billion at September 30, 2024 increased $85.9 million, or 4.3% (not annualized) from June 30, 2024. Total average loans increased $61.0 million quarter over quarter.
◦Owner-occupied commercial real estate loans increased $32.1 million, or 10.0% (not annualized) from June 30, 2024.
◦The average portfolio loans-to-deposit ratio of 98.20% for the three months ended September 30, 2024 remained stable.
•Total deposits of $2.2 billion at September 30, 2024 increased $85.8 million, or 4.1% (not annualized), from June 30, 2024, The increase includes $40.4 million of customer time deposits, $33.5 million of noninterest-bearing deposits primarily related to growth in title company deposit balances and $14.1 million of growth in customer money market deposits.
◦Uninsured and unprotected deposits were approximately $645.6 million as of September 30, 2024, representing 29.5% of the Company's deposit portfolio.
◦Low and no interest bearing deposits of $988.4 million increased $33.5 million, or 3.5% (not annualized) from June 30, 2024. Average noninterest-bearing deposits of $680.7 million increased $27.7 million, or 4.2% (not annualized), and represented 32.6% of total average deposits at September 30, 2024.
•The investment securities portfolio continues to be classified as available-for-sale and had a fair market value of $208.7 million, or 8.1% of total assets, an effective duration of 3.0 years, with U.S. Treasury Securities representing 61.8% of the overall investment portfolio at September 30, 2024. The AOCI on the investment securities portfolio decreased $4.5 million during the quarter to a negative $8.6 million as of September 30, 2024, which represents 3.1% of total stockholders' equity. The Company does not have a held-to-maturity investment securities portfolio.
•Liquidity - The Company maintains stable and reliable sources of available borrowings consistent with prior quarter. Sources of available borrowings at September 30, 2024 totaled $691.8 million, including available collateralized lines of credit of $500.4 million, unsecured lines of credit with other banks of $76.0 million and unpledged investment securities available as collateral for potential additional borrowings of $115.4 million.
•Capital Positions - As of September 30, 2024, the Company reported a robust common equity tier 1 capital ratio of 14.78%, compared to 15.08% at June 30, 2024. At September 30, 2024, the Company and the Bank maintain regulatory capital ratios that exceed all capital adequacy requirements.
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Financial Metrics
Net Interest Margin - Net interest margin decreased 5 basis points to 6.41% for the three months ended September 30, 2024, compared to prior quarter. Core Net Interest Margin, as adjusted to exclude the impact of OpenSky™ credit card loans (non-GAAP)(1), increased 8 basis points to 4.08% as compared to prior quarter.
•The average yield on interest earning assets of 8.79% decreased 3 basis points compared to the prior quarter. The yield on portfolio loans, as adjusted to exclude the impact of OpenSky™ credit card loans (non-GAAP)(1), of 7.15% for the third quarter 2024, increased 11 basis points primarily from portfolio turnover.
•The total cost of deposits increased 3 basis points to 2.64% for the third quarter 2024 as compared to the prior quarter.
•The total cost of interest-bearing deposits increased 5 basis points to 3.92% for the third quarter 2024 as compared to the prior quarter.
Efficiency Ratios – The efficiency ratio was 66.1% for the three months ended September 30, 2024, compared to 67.1% for the three months ended June 30, 2024. The efficiency ratio, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), was 64.9% for the three months ended September 30, 2024 compared to 66.9% for the three months ended June 30, 2024.
Credit Metrics and Asset Quality - Overall credit performance remains stable with the allowance for credit losses to total loans ratio decreasing 2 basis points to 1.51% at September 30, 2024 as compared to June 30, 2024. Nonperforming assets increased 2 basis point to 0.60% of total assets at September 30, 2024 as compared to June 30, 2024. Total nonaccrual loans at September 30, 2024 increased $1.4 million to $15.5 million compared to June 30, 2024. At September 30, 2024, special mention loans totaled $20.3 million, or 1.0% of total portfolio loans, as compared to $23.3 million, or 1.2% of total portfolio loans, at June 30, 2024. At September 30, 2024, substandard loans totaled $23.8 million, or 1.1% of total portfolio loans, as compared to $22.1 million, or 1.2% of total portfolio loans, at June 30, 2024.
Performance Ratios – Annualized return on average assets ("ROAA") and annualized return on average equity ("ROAE") were 1.42% and 12.59%, respectively, for the three months ended September 30, 2024, compared to 1.40% and 12.53%, respectively, for the three months ended June 30, 2024.
•Annualized ROAA and annualized ROAE, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), were 1.51% and 13.40%, respectively, for the three months ended September 30, 2024, compared to 1.41% and 12.62%, respectively, for the three months ended June 30, 2024.
Consistent Tangible Book Value Growth - Tangible book value per common share(1) grew $0.87, or 4.5%, to $20.13 at September 30, 2024 when compared to June 30, 2024. The Company did not have goodwill or other intangible assets during any of the periods presented and therefore, tangible book value per share(1) is equal to book value per share.
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Commercial Bank
Continued Portfolio Loan Growth - Gross portfolio loans, excluding OpenSky™ credit card loans, increased $80.5 million, to $2.0 billion, at September 30, 2024 compared to June 30, 2024.
The $80.5 million gross portfolio loan growth includes commercial real estate loans of $38.5 million, residential real estate loans of $22.4 million and commercial and industrial loans of $16.1 million. Historical gross portfolio loan balances are disclosed in the Composition of Loans table within the Historical Financial Highlights.
Net Interest Income - Interest income of $35.8 million increased $1.9 million from prior quarter, driven by loan growth and higher loan yields. Interest expense of $14.0 million increased $0.7 million, driven by an increase in average balances in the third quarter 2024.
Credit Metrics - Nonperforming assets increased 2 basis point to 0.60% of total assets at September 30, 2024 compared to June 30, 2024. Total nonaccrual loans at September 30, 2024 increased to $15.5 million compared to June 30, 2024.
The following tables present non-owner-occupied and owner-occupied commercial real estate loans and multi-family loans and the weighted average loan-to-value ("LTV").
Non-owner-occupied commercial real estate loans, including multi-family
As of September 30, 2024
(in thousands)AmountAverage Loan Size
Weighted Average LTV(1)
% of Non-Owner-Occupied Commercial Real Estate Loans% of Total Portfolio Loans, Gross
Loan type:
Multi-family$170,513 $1,853 58.1 %Not Applicable8.1 %
Retail$116,324 $1,454 56.6 %28.8 %5.5 %
Mixed use96,337 1,189 52.8 %23.9 %4.6 %
Hotel74,343 4,130 52.4 %18.4 %3.5 %
Industrial63,109 1,127 54.2 %15.6 %3.0 %
Office13,356 557 63.2 %3.3 %0.6 %
Other40,018 1,819 55.4 %10.0 %1.9 %
Total non-owner-occupied commercial real estate loans$403,487 $1,436 54.6 %100.0 %19.1 %
Total portfolio loans, gross$2,113,705 

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Owner-occupied commercial real estate loans
As of September 30, 2024
(in thousands)AmountAverage Loan Size
Weighted Average LTV(1)
% of Owner-Occupied Commercial Real Estate Loans% of Total Portfolio Loans, Gross
Loan type:
Industrial$108,048 $1,522 56.9 %30.7 %5.1 %
Office44,781 640 57.5 %12.7 %2.1 %
Retail41,137 762 59.2 %11.7 %1.9 %
Mixed use17,550 924 65.2 %5.0 %0.8 %
Other(2)
139,946 2,799 61.6 %39.9 %6.6 %
Total owner-occupied commercial real estate loans$351,462 $1,331 59.6 %100.0 %16.6 %
Total portfolio loans, gross$2,113,705 
(1)The weighted average LTV of the loan categories previously mentioned are calculated by reference to the most recent appraisal of the property securing each loan.
(2)Other owner-occupied commercial real estate loans include special purpose loans of $57.9 million, skilled nursing loans of $53.8 million, and other loans of $28.2 million.

Classified and Criticized Loans - At September 30, 2024, special mention loans totaled $20.3 million, or 1.0% of total portfolio loans, as compared to $23.3 million, or 1.2% of total portfolio loans, at June 30, 2024. At September 30, 2024, substandard loans totaled $23.8 million, or 1.1% of total portfolio loans, as compared to $22.1 million, or 1.2% of total portfolio loans, at June 30, 2024.
OpenSky™
Revenues - Total revenue of $19.7 million decreased $0.4 million from the prior quarter. Interest income of $15.6 million decreased $0.2 million from the prior quarter. Average OpenSky™ credit card loan balances, net of reserves and deferred fees of $119.5 million for the third quarter 2024, increased $8.2 million, or 7.3% (not annualized), compared to prior quarter. Noninterest income of $4.1 million decreased $0.3 million as compared to prior quarter primarily related to lower annual fee income.
Noninterest Expense - Total noninterest expense of $13.3 million decreased $0.5 million primarily related to a reduction in seasonally high advertising expense in the second quarter 2024.
Loan and Deposit Balances - Loan balances, net of reserves, of $127.1 million at September 30, 2024 increased by $4.9 million, or 4.0%, compared to $122.2 million at June 30, 2024. Corresponding deposit balances of $170.8 million at September 30, 2024 decreased $2.7 million, or 1.6%, compared to $173.5 million at June 30, 2024. Gross unsecured loan balances of $39.7 million at September 30, 2024 increased $6.2 million, or 18.4%, compared to $33.6 million at June 30, 2024. During the third quarter 2024, the number of credit card accounts increased by 11,218 to 548,952 from June 30, 2024.
OpenSky™ Credit - Portfolio credit metrics continue to be stable and generally consistent with modeled expectations during the third quarter 2024. The provision for credit losses of $2.3 million remained flat when compared to the prior quarter.
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COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited
Quarter Ended3Q24 vs 2Q243Q24 vs 3Q23
(in thousands, except per share data)September 30, 2024June 30, 2024September 30, 2023$ Change% Change$ Change% Change
Earnings Summary
Interest income$52,610 $50,615 $47,741 $1,995 3.9 %$4,869 10.2 %
Interest expense14,256 13,558 10,931 698 5.1 %3,325 30.4 %
Net interest income38,354 37,057 36,810 1,297 3.5 %1,544 4.2 %
Provision for credit losses3,748 3,417 2,280 331 9.7 %1,468 64.4 %
Provision for credit losses on unfunded commitments17 104 24 (87)(83.7)%(7)(29.2)%
Noninterest income6,635 6,890 6,326 (255)(3.7)%309 4.9 %
Noninterest expense29,725 29,493 28,046 232 0.8 %1,679 6.0 %
Income before income taxes11,499 10,933 12,786 566 5.2 %(1,287)(10.1)%
Income tax expense2,827 2,728 2,998 99 3.6 %(171)(5.7)%
Net income$8,672 $8,205 $9,788 $467 5.7 %$(1,116)(11.4)%
Pre-tax pre-provision net revenue ("PPNR") (1)
$15,264 $14,454 $15,090 $810 5.6 %$174 1.2 %
PPNR, as adjusted(1)
$15,784 $14,537 $15,090 $1,247 8.6 %$694 4.6 %
Common Share Data
Earnings per share - Basic$0.62 $0.59 $0.70 $0.03 5.1 %$(0.08)(11.4)%
Earnings per share - Diluted$0.62 $0.59 $0.70 $0.03 5.1 %$(0.08)(11.4)%
Earnings per share - Diluted, as adjusted(1)
$0.66 $0.59 $0.70 $0.07 11.9 %$(0.04)(5.7)%
Weighted average common shares - Basic13,914 13,895 13,933 
Weighted average common shares - Diluted13,951 13,895 14,024 
Return Ratios
Return on average assets (annualized)1.42 %1.40 %1.75 %
Return on average assets, as adjusted (annualized)(1)
1.51 %1.41 %1.75 %
Return on average equity (annualized)12.59 %12.53 %16.00 %
Return on average equity, as adjusted (annualized)(1)
13.40 %12.62 %16.00 %
______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.

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COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)
Nine Months Ended
September 30,
(in thousands, except per share data)20242023$ Change% Change
Earnings Summary
Interest income$151,594 $136,237 $15,357 11.3 %
Interest expense41,175 29,600 11,575 39.1 %
Net interest income110,419 106,637 3,782 3.5 %
Provision for credit losses9,892 6,802 3,090 45.4 %
Provision for credit losses on unfunded commitments263 5 258 5,160.0 %
Noninterest income19,497 19,039 458 2.4 %
Noninterest expense88,705 83,860 4,845 5.8 %
Income before income taxes31,056 35,009 (3,953)(11.3)%
Income tax expense7,617 8,168 (551)(6.7)%
Net income$23,439 $26,841 $(3,402)(12.7)%
Pre-tax pre-provision net revenue ("PPNR") (1)
$41,211 $41,816 $(605)(1.4)%
PPNR, as adjusted(1)
$42,526 $41,816 $710 1.7 %
Common Share Data
Earnings per share - Basic$1.69 $1.91 $(0.22)(11.5)%
Earnings per share - Diluted$1.69 $1.90 $(0.21)(11.1)%
Earnings per share - Diluted, as adjusted(1)
$1.77 $1.90 
Weighted average common shares - Basic13,909 14,038 
Weighted average common shares - Diluted13,909 14,112 
Return Ratios
Return on average assets (annualized)1.32 %1.64 %
Return on average assets, as adjusted (annualized)(1)
1.39 %1.64 %
Return on average equity (annualized)11.79 %15.08 %
Return on average equity, as adjusted (annualized)(1)
12.37 %15.08 %
______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.
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COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)
Quarter EndedQuarter Ended
September 30,June 30,March 31,December 31,
(in thousands, except per share data)20242023% Change202420232023
Balance Sheet Highlights
Assets$2,560,788 $2,272,484 12.7 %$2,438,583 $2,324,238 $2,226,176 
Investment securities available for sale208,700 206,055 1.3 %207,917 202,254 208,329 
Mortgage loans held for sale19,554 4,843 303.8 %19,219 10,303 7,481 
Portfolio loans receivable (2)
2,107,522 1,862,679 13.1 %2,021,588 1,964,525 1,903,288 
Allowance for credit losses31,925 28,279 12.9 %30,832 29,350 28,610 
Deposits2,186,224 1,967,988 11.1 %2,100,428 2,005,695 1,895,996 
FHLB borrowings 52,000 22,000 136.4 %32,000 22,000 22,000 
Other borrowed funds12,062 12,062 — %12,062 12,062 27,062 
Total stockholders' equity280,111 242,878 15.3 %267,854 259,465 254,860 
Tangible common equity (1)
280,111 242,878 15.3 %267,854 259,465 254,860 
Common shares outstanding13,918 13,893 0.2 %13,910 13,890 13,923 
Book value per share$20.13 $17.48 15.2 %$19.26 $18.68 $18.31 
Tangible book value per share (1)
$20.13 $17.48 15.2 %$19.26 $18.68 $18.31 
Dividends per share
$0.10 $0.08 25.0 %$0.08 $0.08 $0.08 
______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.
(2) Loans are reflected net of deferred fees and costs.
10

Consolidated Statements of Income (Unaudited)
Three Months Ended
Nine Months Ended
(in thousands)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023September 30, 2024September 30, 2023
Interest income
Loans, including fees$50,047 $48,275 $45,991 $45,109 $45,385 $144,313 $129,651 
Investment securities available for sale1,343 1,308 1,251 1,083 1,089 3,902 3,732 
Federal funds sold and other1,220 1,032 1,127 777 1,267 3,379 2,854 
Total interest income52,610 50,615 48,369 46,969 47,741 151,594 136,237 
Interest expense
Deposits13,902 13,050 12,833 11,759 10,703 39,785 27,866 
Borrowed funds354 508 528 321 228 1,390 1,734 
Total interest expense14,256 13,558 13,361 12,080 10,931 41,175 29,600 
Net interest income38,354 37,057 35,008 34,889 36,810 110,419 106,637 
Provision for credit losses3,748 3,417 2,727 2,808 2,280 9,892 6,802 
Provision for (release of) credit losses on unfunded commitments17 104 142 (106)24 263 5 
Net interest income after provision for credit losses34,589 33,536 32,139 32,187 34,506 100,264 99,830 
Noninterest income
Service charges on deposits235 200 207 240 250 642 724 
Credit card fees4,055 4,330 3,881 3,970 4,387 12,266 13,303 
Mortgage banking revenue1,882 1,990 1,453 1,166 1,243 5,325 3,730 
Other income463 370 431 560 446 1,264 1,282 
Total noninterest income6,635 6,890 5,972 5,936 6,326 19,497 19,039 
Noninterest expenses
Salaries and employee benefits13,345 13,272 12,907 11,638 12,419 39,524 37,116 
Occupancy and equipment1,791 1,864 1,613 1,573 1,351 5,268 4,100 
Professional fees1,980 1,769 1,947 1,930 2,358 5,696 7,340 
Data processing6,930 6,788 6,761 6,128 6,469 20,479 19,558 
Advertising1,223 2,072 2,032 1,433 1,565 5,327 4,728 
Loan processing615 476 371 198 426 1,462 1,435 
Foreclosed real estate expenses, net1 — 1 — 1 2 7 
Merger-related expenses520 83 712 — — 1,315 — 
Operational losses1,008 782 931 1,490 953 2,721 3,123 
Other operating2,312 2,387 2,212 2,517 2,504 6,911 6,453 
Total noninterest expenses29,725 29,493 29,487 26,907 28,046 88,705 83,860 
Income before income taxes11,499 10,933 8,624 11,216 12,786 31,056 35,009 
Income tax expense2,827 2,728 2,062 2,186 2,998 7,617 8,168 
Net income$8,672 $8,205 $6,562 $9,030 $9,788 $23,439 $26,841 
11


Consolidated Balance Sheets
(unaudited)(unaudited)(unaudited)(audited)(unaudited)
(in thousands, except share data)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Assets
Cash and due from banks$23,462 $19,294 $12,361 $14,513 $13,767 
Interest-bearing deposits at other financial institutions133,180 117,160 72,787 39,044 130,428 
Federal funds sold58 57 56 407 1,957 
Total cash and cash equivalents156,700 136,511 85,204 53,964 146,152 
Investment securities available for sale208,700 207,917 202,254 208,329 206,055 
Restricted investments5,895 4,930 4,441 4,353 4,340 
Loans held for sale19,554 19,219 10,303 7,481 4,843 
Portfolio loans receivable, net of deferred fees and costs2,107,522 2,021,588 1,964,525 1,903,288 1,862,679 
   Less allowance for credit losses(31,925)(30,832)(29,350)(28,610)(28,279)
Total portfolio loans held for investment, net2,075,597 1,990,756 1,935,175 1,874,678 1,834,400 
Premises and equipment, net5,959 5,551 4,500 5,069 5,297 
Accrued interest receivable12,468 12,162 12,258 11,494 11,231 
Deferred tax asset10,748 12,150 12,311 12,252 13,644 
Bank owned life insurance38,779 38,414 38,062 37,711 37,315 
Accounts receivable597 1,336 11,637 1,055 696 
Other assets25,791 9,637 8,093 9,790 8,511 
Total assets$2,560,788 $2,438,583 $2,324,238 $2,226,176 $2,272,484 
Liabilities
Deposits
Noninterest-bearing$718,120 $684,574 $665,812 $617,373 $680,803 
Interest-bearing1,468,104 1,415,854 1,339,883 1,278,623 1,287,185 
Total deposits2,186,224 2,100,428 2,005,695 1,895,996 1,967,988 
Federal Home Loan Bank advances52,000 32,000 22,000 22,000 22,000 
Other borrowed funds12,062 12,062 12,062 27,062 12,062 
Accrued interest payable8,503 6,573 6,009 5,583 5,204 
Other liabilities21,888 19,666 19,007 20,675 22,352 
Total liabilities2,280,677 2,170,729 2,064,773 1,971,316 2,029,606 
Stockholders' equity
Common stock139 139 139 139 139 
Additional paid-in capital55,585 55,005 54,229 54,473 54,549 
Retained earnings232,995 225,824 218,731 213,345 206,033 
Accumulated other comprehensive loss(8,608)(13,114)(13,634)(13,097)(17,843)
Total stockholders' equity280,111 267,854 259,465 254,860 242,878 
Total liabilities and stockholders' equity$2,560,788 $2,438,583 $2,324,238 $2,226,176 $2,272,484 
12

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
September 30, 2024		Three Months Ended
June 30, 2024		Three Months Ended
September 30, 2023
Average
Outstanding
Balance		Interest Income/
Expense
Average
Yield/
Rate(1)
Average
Outstanding
Balance		Interest Income/
Expense
Average
Yield/
Rate(1)
Average
Outstanding
Balance		Interest Income/
Expense
Average
Yield/
Rate(1)
(in thousands)
Assets
Interest earning assets:
Interest-bearing deposits$91,089 $1,137 4.97 %$77,069 $937 4.89 %$87,112 $1,183 5.39 %
Federal funds sold57 1 6.98 56 1 7.18 1,134 15 5.25 
Investment securities available for sale221,303 1,343 2.41 223,973 1,308 2.35 229,731 1,089 1.88 
Restricted investments4,911 82 6.64 5,435 94 6.96 4,058 69 6.75 
Loans held for sale 9,967 161 6.43 7,907 132 6.71 6,670 111 6.60 
Portfolio loans receivable(2)(3)
2,053,619 49,886 9.66 1,992,630 48,143 9.72 1,847,772 45,274 9.72 
Total interest earning assets2,380,946 52,610 8.79 2,307,070 50,615 8.82 2,176,477 47,741 8.70 
Noninterest earning assets56,924 46,798 44,640 
Total assets
$2,437,870 $2,353,868 $2,221,117 
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand accounts$228,365 321 0.56 $216,247 148 0.28 $215,527 71 0.13 
Savings4,135 5 0.48 4,409 1 0.09 5,582 3 0.21 
Money market accounts698,239 7,442 4.24 671,240 7,032 4.21 655,990 6,373 3.85 
Time deposits479,824 6,134 5.09 465,822 5,869 5.07 374,429 4,256 4.51 
Borrowed funds43,655 354 3.23 54,863 508 3.72 34,932 228 2.59 
Total interest-bearing liabilities1,454,218 14,256 3.90 1,412,581 13,558 3.86 1,286,460 10,931 3.37 
Noninterest-bearing liabilities:
Noninterest-bearing liabilities28,834 24,844 25,047 
Noninterest-bearing deposits680,731 653,018 666,939 
Stockholders’ equity
274,087 263,425 242,671 
Total liabilities and stockholders’ equity$2,437,870 $2,353,868 $2,221,117 
Net interest spread4.89 %4.96 %5.33 %
Net interest income$38,354 $37,057 $36,810 
Net interest margin(4)
6.41 %6.46 %6.71 %
_______________
(1)Annualized.
(2)Includes nonaccrual loans.
(3)For the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, collectively, portfolio loans yield excluding credit card loans was 7.15%, 7.04% and 6.76%, respectively.
(4)For the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, collectively, credit card loans accounted for 233, 246 and 266 basis points of the reported net interest margin, respectively.

13

Nine Months Ended September 30,
20242023
Average
Outstanding
Balance		Interest Income/
Expense
Average
Yield/
Rate(1)
Average
Outstanding
Balance		Interest Income/
Expense
Average
Yield/
Rate(1)
(in thousands)
Assets
Interest earning assets:
Interest-bearing deposits$84,254 $3,123 4.95 %$72,116 $2,531 4.69 %
Federal funds sold57 3 7.03 1,605 53 4.42 
Investment securities available for sale226,151 3,902 2.30 252,993 3,732 1.97 
Restricted investments4,982 253 6.78 5,184 270 6.96 
Loans held for sale 7,591 376 6.62 6,145 299 6.51 
Portfolio loans receivable(2)(3)
1,991,435 143,937 9.65 1,801,355 129,352 9.60 
Total interest earning assets2,314,470 151,594 8.75 2,139,398 136,237 8.51 
Noninterest earning assets49,458 44,123 
Total assets
$2,363,928 $2,183,521 
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand accounts$209,346 579 0.37 $203,099 208 0.14 
Savings4,460 7 0.21 5,965 6 0.13 
Money market accounts684,017 21,610 4.22 628,977 16,371 3.48 
Time deposits465,256 17,589 5.05 353,635 11,281 4.27 
Borrowed funds52,461 1,390 3.54 65,192 1,734 3.56 
Total interest-bearing liabilities1,415,540 41,175 3.89 1,256,868 29,600 3.15 
Noninterest-bearing liabilities:
Noninterest-bearing liabilities25,844 22,846 
Noninterest-bearing deposits657,044 665,821 
Stockholders’ equity
265,500 237,986 
Total liabilities and stockholders’ equity$2,363,928 $2,183,521 
Net interest spread4.86 %5.36 %
Net interest income$110,419 $106,637 
Net interest margin(4)
6.37 %6.66 %
(1)Annualized.
(2)Includes nonaccrual loans.
(3)For the nine months ended September 30, 2024 and 2023, collectively, portfolio loans yield excluding credit card loans was 7.05% and 6.57%, respectively.
(4)For the nine months ended September 30, 2024 and 2023, collectively, credit card loans accounted for 239 and 268 basis points of the reported net interest margin, respectively.



14

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.

Effective January 1, 2024, the Company allocated certain expenses previously recorded directly to the Commercial Bank segment to the other segments. These expenses are for shared services also consumed by OpenSky™, CBHL, and Corporate. The Company performs an allocation process based on several metrics the Company believes more accurately ascribe shared service overhead to each segment. The Company believes this reflects the cost of support for each segment that should be considered in assessing segment performance. Historical information has been recast to reflect financial information consistently with the 2024 presentation.

The following schedule presents financial information for the periods indicated. Total assets are presented as of September 30, 2024, June 30, 2024, and September 30, 2023.

15

Segments
For the three months ended September 30, 2024
(in thousands)Commercial BankCBHL
OpenSky™
Corporate(2)
EliminationsConsolidated
Interest income$35,805 $161 $15,625 $1,049 $(30)$52,610 
Interest expense13,984 108 — 194 (30)14,256 
Net interest income21,821 53 15,625 855 — 38,354 
Provision for credit losses1,453 — 2,294 1 — 3,748 
Provision for credit losses on unfunded commitments17 — — — — 17 
Net interest income after provision20,351 53 13,331 854 — 34,589 
Noninterest income726 1,811 4,096 2 — 6,635 
Noninterest expense(1)
12,422 2,395 13,276 1,632 — 29,725 
Net income (loss) before taxes$8,655 $(531)$4,151 $(776)$— $11,499 
Total assets$2,358,555 $19,831 $121,587 $300,325 $(239,510)$2,560,788 
For the three months ended June 30, 2024
(in thousands)Commercial BankCBHL
OpenSky™
Corporate(2)
EliminationsConsolidated
Interest income$33,935 $132 $15,785 $824 $(61)$50,615 
Interest expense13,312 83 — 224 (61)13,558 
Net interest income20,623 49 15,785 600 — 37,057 
Provision for credit losses1,118 — 2,299 — — 3,417 
Provision for credit losses on unfunded commitments104 — — — — 104 
Net interest income after provision19,401 49 13,486 600 — 33,536 
Noninterest income677 1,845 4,368 — — 6,890 
Noninterest expense(1)
12,209 2,500 13,775 1,009 — 29,493 
Net income (loss) before taxes$7,869 $(606)$4,079 $(409)$— $10,933 
Total assets$2,254,198 $19,622 $115,593 $288,872 $(239,702)$2,438,583 
For the three months ended September 30, 2023
(in thousands)Commercial BankCBHL
OpenSky™
Corporate(2)
EliminationsConsolidated
Interest income$30,409 $111 $16,143 $1,162 $(84)$47,741 
Interest expense10,736 32 — 247 (84)10,931 
Net interest income19,673 79 16,143 915 — 36,810 
Provision for credit losses275 — 1,875 130 — 2,280 
Provision for credit losses on unfunded commitments24 — — — — 24 
Net interest income after provision19,374 79 14,268 785 — 34,506 
Noninterest income665 1,255 4,405 1 — 6,326 
Noninterest expense(1)
12,610 1,880 13,227 329 — 28,046 
Net income (loss) before taxes$7,429 $(546)$5,446 $457 $— $12,786 
Total assets$2,102,749 $5,280 $116,318 $264,950 $(216,813)$2,272,484 
________________________
(1)     Noninterest expense includes $6.2 million, $6.3 million, and $6.1 million in data processing expense in OpenSky’s™ segment for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, 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.

16


Segments
For the nine months ended September 30, 2024
(in thousands)Commercial BankCBHL
OpenSky™
Corporate(2)
EliminationsConsolidated
Interest income$102,269 $376 $46,331 $2,772 $(154)$151,594 
Interest expense40,450 232 — 647 (154)41,175 
Net interest income61,819 144 46,331 2,125 — 110,419 
Provision for credit losses3,680 — 6,152 60 — 9,892 
Provision for credit losses on unfunded commitments263 — — — — 263 
Net interest income after provision57,876 144 40,179 2,065 — 100,264 
Noninterest income2,107 5,008 12,379 3 — 19,497 
Noninterest expense(1)
36,890 7,000 40,650 4,165 — 88,705 
Net income (loss) before taxes$23,093 $(1,848)$11,908 $(2,097)$— $31,056 
Total assets$2,358,555 $19,831 $121,587 $300,325 $(239,510)$2,560,788 
For the nine months ended September 30, 2023
(in thousands)Commercial BankCBHLOpenSky™
Corporate(2)
EliminationsConsolidated
Interest income$85,451 $299 $47,441 $3,274 $(228)$136,237 
Interest expense29,012 104 — 712 (228)29,600 
Net interest income56,439 195 47,441 2,562 — 106,637 
Provision for credit losses849 — 5,823 130 — 6,802 
Provision for credit losses on unfunded commitments5 — — — — 5 
Net interest income after provision55,585 195 41,618 2,432 — 99,830 
Noninterest income1,964 3,743 13,329 3 — 19,039 
Noninterest expense(1)
36,043 6,538 40,083 1,196 — 83,860 
Net income (loss) before taxes$21,506 $(2,600)$14,864 $1,239 $— $35,009 
Total assets$2,102,749 $5,280 $116,318 $264,950 $(216,813)$2,272,484 
(1)     Noninterest expense includes $18.7 million and $17.9 million in data processing expense in OpenSky’s™ segment for the nine months ended September 30, 2024 and 2023, 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.








17

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited
Quarter Ended
(in thousands, except per share data)September 30,
2024		June 30, 2024March 31,
2024		December 31,
2023		September 30,
2023
Earnings:
Net income$8,672 $8,205 $6,562 $9,030 $9,788 
Earnings per common share, diluted0.62 0.59 0.47 0.65 0.70 
Net interest margin6.41 %6.46 %6.24 %6.40 %6.71 %
Net interest margin, excluding credit card loans (1)
4.08 %4.00 %3.85 %3.92 %4.05 %
Return on average assets(2)
1.42 %1.40 %1.15 %1.63 %1.75 %
Return on average equity(2)
12.59 %12.53 %10.19 %14.44 %16.00 %
Efficiency ratio66.07 %67.11 %71.95 %65.91 %65.02 %
Balance Sheet:
Total portfolio loans receivable, net deferred fees$2,107,522 $2,021,588 $1,964,525 $1,902,643 $1,861,929 
Total deposits2,186,224 2,100,428 2,005,695 1,895,996 1,967,988 
Total assets2,560,788 2,438,583 2,324,238 2,226,176 2,272,484 
Total stockholders' equity280,111 267,854 259,465 254,860 242,878 
Total average portfolio loans receivable, net deferred fees2,053,619 1,992,630 1,927,372 1,863,298 1,847,772 
Total average deposits2,091,294 2,010,736 1,957,559 1,885,092 1,918,467 
Portfolio loans-to-deposit ratio (period-end balances)96.40 %96.25 %97.95 %100.35 %94.61 %
Portfolio loans-to-deposit ratio (average balances)98.20 %99.10 %98.46 %98.84 %96.32 %
Asset Quality Ratios:
Nonperforming assets to total assets0.60 %0.58 %0.62 %0.72 %0.67 %
Nonperforming loans to total loans0.73 %0.70 %0.73 %0.84 %0.82 %
Net charge-offs to average portfolio loans (2)
0.51 %0.39 %0.41 %0.53 %0.38 %
Allowance for credit losses to total loans1.51 %1.53 %1.49 %1.50 %1.52 %
Allowance for credit losses to non-performing loans206.50 %219.40 %204.37 %178.34 %185.61 %
Bank Capital Ratios:
Total risk based capital ratio13.76 %14.51 %14.36 %14.81 %14.51 %
Tier 1 risk based capital ratio12.50 %13.25 %13.10 %13.56 %13.25 %
Leverage ratio9.84 %10.36 %10.29 %10.51 %10.04 %
Common equity Tier 1 capital ratio12.50 %13.25 %13.10 %13.56 %13.25 %
Tangible common equity9.12 %9.53 %9.66 %9.91 %9.08 %
Holding Company Capital Ratios:
Total risk based capital ratio16.65 %16.98 %16.83 %17.38 %17.11 %
Tier 1 risk based capital ratio14.88 %15.19 %15.03 %15.55 %15.27 %
Leverage ratio11.85 %11.93 %11.87 %12.14 %11.62 %
Common equity Tier 1 capital ratio14.78 %15.08 %14.92 %15.43 %15.27 %
Tangible common equity10.94 %10.98 %11.16 %11.45 %10.69 %
_______________
(1)Refer to Appendix for reconciliation of non-GAAP measures.
(2)Annualized.

18

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited (Continued)
Quarter Ended
(in thousands, except per share data)September 30,
2024		June 30, 2024March 31,
2024		December 31,
2023		September 30,
2023
Composition of Loans:
Commercial real estate, non owner-occupied$403,487 $397,080 $377,224 $351,116 $350,637 
Commercial real estate, owner-occupied351,462 319,370 330,840 307,911 305,802 
Residential real estate623,684 601,312 577,112 573,104 558,147 
Construction real estate301,909 294,489 290,016 290,108 280,905 
Commercial and industrial271,811 255,686 254,577 239,208 237,549 
Lender finance29,546 33,294 13,484 11,085 — 
Business equity lines of credit2,663 2,989 14,768 14,117 14,155 
Credit card, net of reserve(3)
127,098 122,217 111,898 123,331 122,533 
Other consumer loans2,045 1,930 738 950 948 
Portfolio loans receivable$2,113,705 $2,028,367 $1,970,657 $1,910,930 $1,870,676 
Deferred origination fees, net(6,183)(6,779)(6,132)(7,642)(7,997)
Portfolio loans receivable, net$2,107,522 $2,021,588 $1,964,525 $1,903,288 $1,862,679 
Composition of Deposits:
Noninterest-bearing$718,120 $684,574 $665,812 $617,373 $680,803 
Interest-bearing demand266,493 266,070 193,963 199,308 229,035 
Savings3,763 4,270 4,525 5,211 5,686 
Money markets686,526 672,455 678,435 663,129 668,774 
Brokered time deposits153,022 155,148 160,641 142,356 128,665 
Other time deposits358,300 317,911 302,319 268,619 255,025 
Total deposits$2,186,224 $2,100,428 $2,005,695 $1,895,996 $1,967,988 
Capital Bank Home Loan Metrics:
Origination of loans held for sale$74,690 $82,363 $52,080 $45,152 $50,023 
Mortgage loans sold67,296 66,417 40,377 34,140 39,364 
Gain on sale of loans1,644 1,732 1,238 1,015 1,011 
Purchase volume as a % of originations90.98 %96.48 %97.83 %89.99 %92.29 %
Gain on sale as a % of loans sold(4)
2.44 %2.61 %3.07 %2.97 %2.57 %
Mortgage commissions$598 $582 $490 $465 $528 
OpenSky™ Portfolio Metrics:
Open customer accounts548,952 537,734 526,950 525,314 529,205 
Secured credit card loans, gross$89,641 $90,961 $85,663 $95,300 $98,138 
Unsecured credit card loans, gross39,730 33,560 28,508 30,817 27,430 
Noninterest secured credit card deposits170,750 173,499 171,771 173,857 181,185 
_______________
(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.
19

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.
20

Appendix

Reconciliation of Non-GAAP Measures




Earnings Metrics, as AdjustedQuarter Ended
(in thousands, except per share data)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Net Income$8,672 $8,205 $6,562 $9,030 $9,788 
Add: Merger-Related Expenses, net of tax557 62 538 — — 
Net Income, as Adjusted$9,229 $8,267 $7,100 $9,030 $9,788 
Weighted Average Common Shares - Diluted13,951 13,895 13,919 13,989 14,024 
Earnings per Share - Diluted$0.62 $0.59 $0.47 $0.65 $0.70 
Earnings per Share - Diluted, as Adjusted$0.66 $0.59 $0.51 $0.65 $0.70 
Average Assets$2,437,870 $2,353,868 $2,299,234 $2,202,479 $2,221,117 
Return on Average Assets(1)
1.42 %1.40 %1.15 %1.63 %1.75 %
Return on Average Assets, as Adjusted(1)
1.51 %1.41 %1.24 %1.63 %1.75 %
Average Equity$274,087 $263,425 $258,892 $248,035 $242,671 
Return on Average Equity(1)
12.59 %12.53 %10.19 %14.44 %16.00 %
Return on Average Equity, as Adjusted(1)
13.40 %12.62 %11.03 %14.44 %16.00 %
Net Interest Income$38,354 $37,057 $35,008 $34,889 $36,810 
Noninterest Income6,635 6,890 5,972 5,936 6,326 
Total Revenue$44,989 $43,947 $40,980 $40,825 $43,136 
Noninterest Expense$29,725 $29,493 $29,487 $26,907 $28,046 
Efficiency Ratio(2)
66.07 %67.11 %71.95 %65.91 %65.02 %
Noninterest Expense$29,725 $29,493 $29,487 $26,907 $28,046 
Less: Merger-Related Expenses520 83 712 — — 
Noninterest Expense, as Adjusted$29,205 $29,410 $28,775 $26,907 $28,046 
Efficiency Ratio, as Adjusted(2)
64.92 %66.92 %70.22 %65.91 %65.02 %
_______________
(1)Annualized.
(2)The efficiency ratio is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).


21

Appendix

Reconciliation of Non-GAAP Measures



Earnings Metrics, as AdjustedNine Months Ended
(in thousands, except per share data)September 30, 2024September 30, 2023
Net Income$23,439 $26,841 
Add: Merger-Related Expenses, Net of Tax1,157 — 
Net Income, as Adjusted$24,596 $26,841 
Weighted average common shares - Diluted13,909 14,112 
Earnings per share - Diluted$1.69 $1.90 
Earnings per share - Diluted, as Adjusted$1.77 $1.90 
Average Assets$2,363,928 $2,183,521 
Return on Average Assets(1)
1.32 %1.64 %
Return on Average Assets, as Adjusted(1)
1.39 %1.64 %
Average Equity$265,500 $237,986 
Return on Average Equity(1)
11.79 %15.08 %
Return on Average Equity, as Adjusted(1)
12.37 %15.08 %
Net Interest Income$110,419 $106,637 
Noninterest Income19,497 19,039 
Total Revenue$129,916 $125,676 
Noninterest Expense$88,705 $83,860 
Efficiency Ratio(2)
68.28 %66.73 %
Noninterest Expense$88,705 $83,860 
Less: Merger-Related Expenses1,315 — 
Noninterest Expense, as Adjusted$87,390 $83,860 
Efficiency Ratio, as Adjusted(2)
67.27 %66.73 %
_______________
(1)Annualized.
(2)The efficiency ratio is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).
22

Appendix

Reconciliation of Non-GAAP Measures



Net Interest Margin, as AdjustedQuarter Ended
(in thousands)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Net Interest Income$38,354 $37,057 $35,008 $34,889 $36,810 
Less: Credit Card Loan Income
15,137 15,205 14,457 14,677 15,792 
Net Interest Income, as Adjusted$23,217 $21,852 $20,551 $20,212 $21,018 
Average Interest Earning Assets2,380,946 2,307,070 2,254,663 2,162,459 2,176,477 
Less: Average Credit Card Loans
119,458 111,288 110,483 114,551 116,814 
Total Average Interest Earning Assets, as Adjusted$2,261,488 $2,195,782 $2,144,180 $2,047,908 $2,059,663 
Net Interest Margin, as Adjusted4.08%4.00%3.85%3.92%4.05%
Net Interest Margin, as AdjustedNine Months Ended
(in thousands)September 30, 2024September 30, 2023
Net Interest Income$110,419 $106,637 
Less: Credit Card Loan Income
44,798 46,419 
Net Interest Income, as Adjusted$65,621 $60,218 
Average Interest Earning Assets2,314,470 2,139,398 
Less: Average Credit Card Loans
113,764 114,416 
Total Average Interest Earning Assets, as Adjusted$2,200,706 $2,024,982 
Net Interest Margin, as Adjusted3.98%3.98%
Portfolio Loans Receivable Yield, as AdjustedQuarter Ended
(in thousands)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Portfolio Loans Receivable Interest Income$49,886 $48,143 $45,908 $45,026 $45,274 
Less: Credit Card Loan Income15,137 15,205 14,457 14,677 15,792 
Portfolio Loans Receivable Interest Income, as Adjusted$34,749 $32,938 $31,451 $30,349 $29,482 
Average Portfolio Loans Receivable2,053,619 1,992,630 1,927,372 1,863,298 1,847,772 
Less: Average Credit Card Loans119,458 111,288 110,483 114,551 116,814 
Total Average Portfolio Loans Receivable, as Adjusted$1,934,161 $1,881,342 $1,816,889 $1,748,747 $1,730,958 
Portfolio Loans Receivable Yield, as Adjusted7.15%7.04%6.96%6.89%6.76%
Portfolio Loans Receivable Yield, as AdjustedNine Months Ended
(in thousands)September 30, 2024September 30, 2023
Portfolio Loans Receivable Interest Income$143,937 $129,352 
Less: Credit Card Loan Income44,798 46,419 
Portfolio Loans Receivable Interest Income, as Adjusted$99,139 $82,933 
Average Portfolio Loans Receivable1,991,435 1,801,355 
Less: Average Credit Card Loans113,764 114,416 
Total Average Portfolio Loans Receivable, as Adjusted$1,877,671 $1,686,939 
Portfolio Loans Receivable Yield, as Adjusted7.05%6.57%




23

Appendix

Reconciliation of Non-GAAP Measures




Pre-tax, Pre-Provision Net Revenue ("PPNR")Quarter Ended
(in thousands)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Net Income
$8,672 $8,205 $6,562 $9,030 $9,788 
Add: Income Tax Expense2,827 2,728 2,062 2,186 2,998 
Add: Provision for Credit Losses3,748 3,417 2,727 2,808 2,280 
Add: Provision for (Release of) Credit Losses on Unfunded Commitments17 104 142 (106)24 
Pre-tax, Pre-Provision Net Revenue ("PPNR")$15,264 $14,454 $11,493 $13,918 $15,090 
Pre-tax, Pre-Provision Net Revenue ("PPNR")Nine Months Ended
(in thousands)September 30, 2024September 30, 2023
Net Income
$23,439 $26,841 
Add: Income Tax Expense7,617 8,168 
Add: Provision for Credit Losses9,892 6,802 
Add: Provision for Credit Losses on Unfunded Commitments263 5 
Pre-tax, Pre-Provision Net Revenue ("PPNR")$41,211 $41,816 
PPNR, as AdjustedQuarter Ended
(in thousands)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Net Income
$8,672 $8,205 $6,562 $9,030 $9,788 
Add: Income Tax Expense2,827 2,728 2,062 2,186 2,998 
Add: Provision for Credit Losses3,748 3,417 2,727 2,808 2,280 
Add: Provision for (Release of) Credit Losses on Unfunded Commitments17 104 142 (106)24 
Add: Merger-Related Expenses520 83 712 — — 
PPNR, as Adjusted$15,784 $14,537 $12,205 $13,918 $15,090 
PPNR, as AdjustedNine Months Ended
(in thousands)September 30, 2024September 30, 2023
Net Income
$23,439 $26,841 
Add: Income Tax Expense7,617 8,168 
Add: Provision for Credit Losses9,892 6,802 
Add: Provision for Credit Losses on Unfunded Commitments263 5 
Add: Merger-Related Expenses1,315 — 
PPNR, as Adjusted$42,526 $41,816 
24

Appendix

Reconciliation of Non-GAAP Measures




Allowance for Credit Losses to Total Portfolio LoansQuarter Ended
(in thousands)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Allowance for Credit Losses$31,925 $30,832 $29,350 $28,610 $28,279 
Total Portfolio Loans2,107,522 2,021,588 1,964,525 1,903,288 1,862,679 
Allowance for Credit Losses to Total Portfolio Loans1.51%1.53%1.49%1.50%1.52%

Nonperforming Assets to Total AssetsQuarter Ended
(in thousands)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Total Nonperforming Assets$15,460 $14,053 $14,361 $16,042 $15,236 
Total Assets2,560,788 2,438,583 2,324,238 2,226,176 2,272,484 
Nonperforming Assets to Total Assets0.60%0.58%0.62%0.72%0.67%

Nonperforming Loans to Total Portfolio LoansQuarter Ended
(in thousands)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Total Nonperforming Loans$15,460 $14,053 $14,361 $16,042 $15,236 
Total Portfolio Loans2,107,522 2,021,588 1,964,525 1,903,288 1,862,679 
Nonperforming Loans to Total Portfolio Loans0.73%0.70%0.73%0.84%0.82%

Net Charge-Offs to Average Portfolio LoansQuarter Ended
(in thousands)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Total Net Charge-Offs$2,655 $1,935 $1,987 $2,477 $1,780 
Total Average Portfolio Loans2,053,619 1,992,630 1,927,372 1,863,298 1,847,772 
Net Charge-Offs to Average Portfolio Loans, Annualized0.51%0.39%0.41%0.53%0.38%

Net Charge-offs to Average Portfolio LoansNine Months Ended
(in thousands)September 30, 2024September 30, 2023
Total Net Charge-Offs$6,577 $5,996 
Total Average Portfolio Loans1,991,435 1,801,355 
Net Charge-Offs to Average Portfolio Loans, Annualized0.44%0.45%

Tangible Book Value per ShareQuarter Ended
(in thousands, except share and per share data)September 30, 2024June 30, 2024March 31, 2024December 31, 2023September 30, 2023
Total Stockholders' Equity$280,111 $267,854 $259,465 $254,860 $242,878 
Less: Preferred Equity
— — — — — 
Less: Intangible Assets
— — — — — 
Tangible Common Equity$280,111 $267,854 $259,465 $254,860 $242,878 
Period End Shares Outstanding13,917,891 13,910,467 13,889,563 13,922,532 13,893,083 
Tangible Book Value per Share$20.13 $19.26 $18.68 $18.31 $17.48 

25

ABOUT CAPITAL BANCORP, INC.
Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. 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 and one bank branch in Fort Lauderdale, Florida. Capital Bancorp had assets of approximately $2.6 billion at September 30, 2024 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; 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; the expected cost savings, synergies and other financial benefits from the acquisition of IFHI or any other acquisition the Company has made or may make might not be realized within the expected time frames or at all; the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; 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: Dominic Canuso (301) 468-8848 x1403
MEDIA CONTACT: Ed Barry (240) 283-1912
WEB SITE: www.CapitalBankMD.com

26
v3.24.3
Cover Page
Oct. 28, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Oct. 28, 2024
Entity Registrant Name CAPITAL BANCORP, INC
Entity Incorporation, State or Country Code MD
Entity File Number 001-38671
Entity Tax Identification Number 52-2083046
Entity Address, Address Line One 2275 Research Boulevard
Entity Address, Address Line Two Suite 600
Entity Address, City or Town Rockville
Entity Address, State or Province MD
Entity Address, Postal Zip Code 20850
City Area Code 301
Local Phone Number 468-8848
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Title of 12(b) Security Common Stock, par value $0.01 per share
Trading Symbol CBNK
Security Exchange Name NASDAQ
Amendment Flag false
Entity Central Index Key 0001419536
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