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Capital Bancorp Reports First Quarter 2021 Net Income of $9.0 million, or $0.65 per diluted share

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April 22, 2021 6:30 AM EDT

ROCKVILLE, Md., April 22, 2021 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the “Company”) (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the “Bank”), today reported net income of $9.0 million, or $0.65 per diluted share, for the first quarter of 2021. By comparison, net income was $2.9 million, or $0.21 per diluted share, for the first quarter of 2020. Return on average assets was 1.87% for the first quarter of 2021, compared to 0.84% for the same period in 2020. Return on average equity was 22.3% for the first quarter of 2021, compared to 8.6% for the same period in 2020.

“Capital Bancorp started the year with solid first quarter results and is well-positioned to continue our profitable growth in 2021,” said Steven Schwartz, Chairman of the Board of the Company. “Investments in technology and personnel continue to drive results and support the Bank’s differentiated and diversified business model that has demonstrated resiliency in a variety of economic environments.”

“Strong performance by all of our business lines delivered another quarter of exceptional revenue and earnings,” said Ed Barry, CEO of the Company. “We continue to navigate through the COVID-19 pandemic and are building substantial long-term momentum across all of our lines of business. We are optimistic about the potential of our investments in technology and infrastructure to support continued profitable growth in a post COVID-19, fintech-enabled world.”

First Quarter 2021 Highlights

Capital Bancorp, Inc.

  • Solid Earnings - The Commercial Bank, Capital Bank Home Loans and OpenSky® all continued to perform well. In the first quarter of 2021, net income of $9.0 million more than tripled from $2.9 million in the first quarter of 2020 as the economy continued to recover from COVID-19. Earnings were $0.65 per diluted share for the three months ended March 31, 2021 compared to $0.21 per share for the same period last year. Book value per common share grew 23.2 percent to $12.14 at March 31, 2021 compared to $9.85 per share at March 31, 2020.
  • Robust Performance Ratios - Return on average assets (“ROAA”) and return on average equity (“ROAE”) were 1.87% and 22.30%, respectively, for the three months ended March 31, 2021 compared to 0.84% and 8.59%, respectively, for the three months ended March 31, 2020.
  • Stable Net Interest Margin - The net interest margin was 5.15% for the three months ended March 31, 2021, which is in line with the 5.16% net interest margin for the same three month period last year.
  • Strong Balance Sheet - As of March 31, 2021, the Company reported a common equity tier 1 capital ratio of 13.81% and an allowance for loan and lease losses (“ALLL”) to total loans ratio of 1.49%, or 1.79% excluding Small Business Administration Payroll Protection Program (“SBA-PPP”) loans.

Commercial Bank

  • Continued Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $15.4 million, or 5.1 percent annualized, for the quarter ended March 31, 2021 to $1.23 billion compared to $1.21 billion at December 31, 2020. The quarter over quarter growth was mainly due to strong growth in commercial real estate loans which increased by $40.8 million, or 10.4 percent, despite several large loan payoffs.
  • Growth in Core Deposits and Reduced Cost of Funds - Noninterest bearing deposits increased by $163.4 million, or 26.8 percent, during the quarter ended March 31, 2021, due to increases in OpenSky® and SBA-PPP loan-related deposits. At March 31, 2021, noninterest bearing deposits represented 41.4% of total deposits compared to 36.8% at December 31, 2020 and 27.9% at March 31, 2020. Overall, the cost of interest bearing liabilities was reduced 14 bps, from 0.95% for the quarter ended December 31, 2020 to 0.81% for the quarter ended March 31, 2021. This reduction was primarily due to the Bank’s ongoing strategic initiative to improve its funding mix and to reduce overall rates paid.
  • Proactive Management Improves Credit Metrics - We are gaining more clarity into our customers’ ability to rebound from the impact of COVID-19 and as the recovery begins to take hold, our customers are experiencing increased stability in their financial condition. As a result of the improving economic environment, provisions for loan losses declined from $1.9 million for the three months ended March 31, 2020 to $503 thousand in the first quarter of 2021. Non-performing assets (“NPAs”) decreased to 0.58% of total assets in the first quarter of 2021 compared to 0.61% in the same three month period last year.
  • Stable Core Margin - Net interest margin, excluding OpenSky® and SBA-PPP loans was 3.70% for the three months ended March 31, 2021 compared to 3.80% for the three months ended December 31, 2020.
  • SBA-PPP Loans - SBA-PPP loans, net of $6.4 million in fees, totaled $265.7 million at March 31, 2021 which was comprised of $146.1 million from the 2020 vintage and $119.6 million originated thus far this year. Through March 31, 2021, through the SBA, we have obtained forgiveness for $91.6 million of SBA-PPP loans.
  • COVID-19 Related Deferrals - At March 31, 2021, 25 loans with an outstanding balance of $25.4 million remained in deferred status, compared to 43 loans, with an outstanding balance of $30.5 million on December 31, 2020. The majority of deferred loans are in the Accommodation and Food Services sector and are believed to be well-secured by real estate.
Loan Modifications (1)            
(dollars in millions)           
 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020
  Deferred Loans Deferred Loans Deferred Loans Deferred Loans
SectorTotal Loans OutstandingBalance# of
Loans
Deferred		 Balance# of
Loans
Deferred		 Balance# of
Loans
Deferred		 Balance# of
Loans
Deferred
Accommodation & Food Services$112.0 $16.1 15  $14.7 16  $11.2 14  $42.6 36 
Real Estate and Rental Leasing462.7 3.2 4  5.5 10  9.3 16  45.6 67 
Other Services Including Private Households282.7 — —  1.1 3  5.6 11  17.3 36 
Educational Services22.5 — —  — —  — —  9.8 6 
Construction244.6 — —  — —  0.3 1  4.2 6 
Professional, Scientific, and Technical Services80.7 1.1 2  1.4 3  1.1 2  5.0 11 
Arts, Entertainment & Recreation40.5 1.3 1  0.7 2  1.4 2  5.0 9 
Retail Trade25.4 — —  0.3 1  — —  3.0 8 
Healthcare & Social Assistance100.4 — —  0.9 1  0.9 1  4.7 11 
Wholesale Trade16.6 — —  — —  — —  0.9 1 
All other (1)197.2 3.7 3  5.9 7  0.5 2  5.9 13 
Total$1,585.3 $25.4 25  $30.5 43  $30.3 49  $144.0 204 

_______________

(1)  Excludes modifications and deferrals made for OpenSky® secured card customers.

Capital Bank Home Loans

  • Strong Mortgage Performance - Despite a seasonally slower first quarter, Capital Bank Home Loans originated $354 million of mortgage loans and generated mortgage banking revenue of $7.7 million compared to $382 million in originations and $8.7 million in revenue for the previous quarter, and $180 million in originations and $3.0 million in revenue for the same three month period of the previous year.
  • Resilient Gain on Sale Margin - The first quarter 2021 gain on sale margin was 3.00%, up from 2.52% for the same quarter last year, as active product management benefited results.

OpenSky®

  • Growth in OpenSky® Accounts Remains Robust - OpenSky® increased customer accounts 13.0 percent with net growth during the quarter of 74 thousand accounts, driving total accounts to 642 thousand at March 31, 2021.
  • Government Stimulus Impacted Results - Government stimulus programs have improved the credit performance of our customer base which resulted in lower outstanding balances, reduced fees and lower delinquencies. As a result of this improvement, OpenSky® loan balances decreased by $18.4 million or 18.1 percent to $83.7 million and late fees were adversely impacted compared to the fourth quarter of 2020. The increase in accounts opened drove 12.1 percent growth in deposit balances to $215.9 million. This most recent customer behavior appears similar in nature to what was observed with the previous issuance of stimulus payments during 2020.
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited
    
 Quarter Ended  
 March 31,  
(amounts in thousands except per share data)2021 2020 % Change
Earnings Summary     
Interest income$26,638  $21,744  22.5%
Interest expense2,194  4,057  (45.9)%
Net interest income24,444  17,687  38.2%
Provision for loan losses503  2,409  (79.1)%
Noninterest income13,951  5,535  152.1%
Noninterest expense25,767  16,799  53.4%
Income before income taxes12,125  4,014  202.1%
Income tax expense3,143  1,080  191.0%
Net income$8,982  $2,934  206.1%
      
Pre-tax pre-provision net revenue (“PPNR”) (2)$12,628  $6,423  96.6%
Weighted average common shares - Basic13,757  13,876  (0.9)%
Weighted average common shares - Diluted13,899  14,076  (1.3)%
Earnings per share - Basic$0.65  $0.21  208.7%
Earnings per share - Diluted$0.65  $0.21  210.0%
Return on average assets (1)1.87% 0.84% 122.6%
Return on average assets, excluding impact of SBA-PPP loans (1) (2)1.60% 0.84% 90.5%
Return on average equity22.30% 8.59% 159.6%


 Quarter Ended   Quarter Ended
 March 31, 1Q21 vs. 1Q20 December 31, September 30, June 30,
(in thousands except per share data)2021 2020 % Change 2020 2020 2020
Balance Sheet Highlights           
Assets$2,091,851  $1,507,847  38.7% $1,876,593  $1,879,029  $1,822,365 
Investment securities available for sale128,023  59,524  115.1% 99,787  53,992  56,796 
Mortgage loans held for sale60,816  73,955  (17.8)% 107,154  137,717  116,969 
SBA-PPP loans, net of fees (3)265,712  —  100.0% 201,018  233,349  229,646 
Portfolio loans receivable (3)1,312,375  1,187,798  10.5% 1,315,503  1,244,613  1,211,477 
Allowance for loan losses23,550  15,513  51.8% 23,434  22,016  18,680 
Deposits1,863,069  1,302,913  43.0% 1,652,128  1,662,211  1,608,726 
FHLB borrowings22,000  28,889  (23.8)% 22,000  22,222  25,556 
Other borrowed funds12,062  15,430  (21.8)% 14,016  17,516  17,392 
Total stockholders' equity167,003  136,080  22.7% 159,311  149,377  142,108 
Tangible common equity (2)167,003  136,080  22.7% 159,311  149,377  142,108 
            
Common shares outstanding13,759  13,817  (0.4)% 13,754  13,682  13,818 
Tangible book value per share (2)$12.14  $9.85  23.2% $11.58  $10.92  $10.28 

______________

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

Operating Results - Comparison of Three Months Ended March 31, 2021 and 2020

For the three months ended March 31, 2021, net interest income increased $6.8 million, or 38.2 percent, to $24.4 million from the same period in 2020, primarily due to an increase in interest earning assets and a decrease in rates on interest bearing liabilities. The net interest margin decreased 1 basis point to 5.15% for the three months ended March 31, 2021 from the same period in 2020. Net interest margin, excluding credit card and SBA PPP loans, was 3.70% for the first quarter of 2021 compared to 3.96% for the same period in 2020. For the three months ended March 31, 2021, average interest earning assets increased $544.3 million, or 39.5 percent, to $1.9 billion as compared to the same period in 2020, and the average yield on interest earning assets decreased 73 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $156.7 million, or 16.6 percent, while the average cost decreased 92 basis points to 0.81% from 1.73%.

The provision for loan losses of $503 thousand for the three months ended March 31, 2021 was due primarily to a small number of loan charge-offs, which was offset by improving overall credit metrics. Net charge-offs for the first quarter of 2021 were $388 thousand, or 0.12% of average loans on an annualized basis, compared to $197 thousand, or 0.07% of average loans on an annualized basis, for the first quarter of 2020. The $388 thousand in net charge-offs during the quarter, was comprised of $105 thousand in commercial loans and $283 thousand in credit cards.

For the quarter ended March 31, 2021, noninterest income was $14.0 million, an increase of $8.4 million, or 152 percent from $5.5 million in the prior year quarter. The increase was primarily driven by significant growth in mortgage banking revenues of $4.8 million and credit card fees of $3.9 million resulting from the higher number of credit card accounts.

For the three months ended March 31, 2021, OpenSky’s® net growth was 74 thousand secured credit card accounts, increasing the total number of open accounts to 642 thousand. This compares to 43 thousand new originations for the same period last year, which increased total open accounts to 244 thousand. At March 31, 2021 compared to March 31, 2020, credit card loan balances have increased to $83.7 million from $41.9 million, while the related deposit account balances have increased 155 percent to $215.9 million. The growth in open accounts was primarily driven by enhanced marketing and economic conditions that led consumers to recognize the value and convenience of the Bank's secured credit card product.

The efficiency ratio for the three months ended March 31, 2021 improved to 67.1% compared to 73.5% for the three months ended March 31, 2020 on higher levels of revenue and improved operating leverage.

Noninterest expense was $25.8 million for the three months ended March 31, 2021, as compared to $16.8 million for the three months ended March 31, 2020, an increase of $9.0 million, or 53.4 percent. The increase was primarily driven by a $5.2 million, or 126 percent, increase in data processing expenses, a $1.2 million, or 15.6 percent, increase in salaries and benefits, an increase in professional services of $0.9 million or 111 percent, an increase in loan processing fees of $605 thousand, or 135 percent, and an increase in operating expenses of $1.1 million, or 48.0 percent, quarter over quarter. The increase of $5.2 million in data processing expenses was largely attributable to the higher volume of open credit cards, and increased portfolio and mortgage loan processing volumes during the first quarter of 2021. The Company’s organic growth was supported by a 14.7 percent increase in employees to 265 at March 31, 2021, up from 231 at March 31, 2020. Additionally, operating expenses increased $1.1 million due to increases in marketing and advertising, credit expenses, FDIC insurance and miscellaneous expenses.

Financial Condition

Total assets at March 31, 2021 were $2.1 billion, an increase of 38.7 percent from March 31, 2020. Portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.3 billion as of March 31, 2021, an increase of 10.5 percent as compared to $1.2 billion at March 31, 2020.

Total deposits at March 31, 2021 were $1.9 billion, an increase of 43.0 percent as compared to $1.3 billion at March 31, 2020. Noninterest bearing deposits increased by $408.5 million, or 112.4 percent, to $771.9 million at March 31, 2021 compared to the level at March 31, 2020. During the quarter, deposit balances grew in certain fiduciary accounts of title and property management companies, as well as noninterest bearing SBA-PPP loan customers and secured card deposits.

The Company recorded a provision for loan losses of $503 thousand during the three months ended March 31, 2021, which increased the allowance for loan losses to $23.5 million, or 1.49% of total loans (1.79%, excluding SBA-PPP loans, on a non-GAAP basis) at March 31, 2021. This level of reserve provides approximately 267.1% coverage of nonperforming loans at March 31, 2021, compared to the reserve at March 31, 2020 of $15.5 million, or 1.31% of total loans, which represented a coverage ratio of 268%. Nonperforming assets were $12.1 million, or 0.58% of total assets, as of March 31, 2021, up from $9.2 million, or 0.61% of total assets, at March 31, 2020. Of the $12.1 million in total nonperforming assets as of March 31, 2021, nonperforming loans represented $8.8 million and foreclosed real estate totaled $3.3 million. Included in nonperforming loans at March 31, 2021 were troubled debt restructurings of $437 thousand.

Stockholders’ equity increased to $167.0 million as of March 31, 2021, compared to $136.1 million at March 31, 2020. This increase was primarily attributable to earnings during the period. As of March 31, 2021, the Bank’s capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

Consolidated Statements of Income (Unaudited)  
 Three Months Ended March 31,
(in thousands)2021 2020
Interest income   
Loans, including fees$26,068   $21,074 
Investment securities available for sale478   340 
Federal funds sold and other92   330 
Total interest income26,638   21,744 
    
Interest expense   
Deposits2,006   3,613 
Borrowed funds188   444 
Total interest expense2,194   4,057 
    
Net interest income24,444   17,687 
Provision for loan losses503   2,409 
Net interest income after provision for loan losses23,941   15,278 
    
Noninterest income   
Service charges on deposits147   149 
Credit card fees5,940   2,008 
Mortgage banking revenue7,743   2,973 
Other fees and charges120   405 
Total noninterest income13,951   5,535 
    
Noninterest expenses   
Salaries and employee benefits8,568   7,413 
Occupancy and equipment1,129   1,178 
Professional fees1,624   770 
Data processing9,311   4,117 
Advertising833   636 
Loan processing1,052   447 
Other real estate expenses, net4   45 
Other operating3,246   2,193 
Total noninterest expenses25,767   16,799 
Income before income taxes12,125   4,014 
Income tax expense3,143   1,080 
Net income$8,982   $2,934 


Consolidated Balance Sheets    
(in thousands except share data)(unaudited) March 31, 2021 December 31, 2020
Assets   
Cash and due from banks$22,678   $18,456 
Interest bearing deposits at other financial institutions294,777   126,081 
Federal funds sold567   2,373 
Total cash and cash equivalents318,022   146,910 
Investment securities available for sale128,023   99,787 
Restricted investments3,723   3,958 
Loans held for sale60,816   107,154 
U.S. Small Business Administration Payroll Protection Program (“SBA-PPP”) loans receivable, net of fees265,712   201,018 
Portfolio loans receivable, net of deferred fees and costs and net of allowance for loan losses of $23,550 and $23,4341,288,825   1,292,068 
Premises and equipment, net4,004   4,464 
Accrued interest receivable8,104   8,134 
Deferred income taxes, net7,430   6,818 
Other real estate owned3,293   3,326 
Other assets3,899   2,956 
Total assets$2,091,851   $1,876,593 
    
Liabilities   
Deposits   
Noninterest bearing$771,924   $608,559 
Interest bearing1,091,145   1,043,569 
Total deposits1,863,069   1,652,128 
Federal Home Loan Bank advances22,000   22,000 
Other borrowed funds12,062   14,016 
Accrued interest payable1,210   1,134 
Other liabilities26,507   28,004 
Total liabilities1,924,848   1,717,282 
    
Stockholders’ equity   
Common stock, $.01 par value; 49,000,000 shares authorized; 13,759,218 and 13,753,529 issued and outstanding138   138 
Additional paid-in capital51,042   50,602 
Retained earnings115,805   106,854 
Accumulated other comprehensive income18   1,717 
Total stockholders’ equity167,003   159,311 
Total liabilities and stockholders’ equity$2,091,851   $1,876,593 

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

 Three Months Ended March 31,
 2021 2020
 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$205,799   $49   0.10 % $96,622  $259  1.08%
Federal funds sold3,871   —   0.01   1,068  4  1.45 
Investment securities available for sale106,704   478   1.82   60,396  340  2.26 
Restricted stock3,906   43   4.43   3,918  67  6.87 
Loans held for sale72,460   481   2.69   42,105  366  3.49 
SBA-PPP loans receivable232,371   2,205   3.85   —  —  — 
Portfolio loans receivable (2)1,298,352   23,382   7.30   1,175,090  20,708  7.09 
Total interest earning assets1,923,463   26,638   5.62   1,379,199  21,744  6.34 
Noninterest earning assets25,803       18,099     
Total assets$1,949,266       $1,397,298     
            
Liabilities and Stockholders’ Equity           
Interest bearing liabilities:           
Interest bearing demand accounts$256,958   68   0.11   $143,875  228  0.64 
Savings5,631   1   0.05   4,409  3  0.30 
Money market accounts471,154   530   0.46   446,928  1,687  1.52 
Time deposits332,660   1,407   1.72   304,053  1,695  2.24 
Borrowed funds35,343   188   2.15   45,757  444  3.90 
Total interest bearing liabilities1,101,746   2,194   0.81   945,022  4,057  1.73 
Noninterest bearing liabilities:           
Noninterest bearing liabilities24,059       19,835     
Noninterest bearing deposits660,086       295,060     
Stockholders’ equity163,375       137,381     
Total liabilities and stockholders’ equity$1,949,266       $1,397,298     
            
Net interest spread    4.81 %     4.61%
Net interest income  $24,444       $17,687   
Net interest margin (3)    5.15 %     5.16%

_______________

(1)  Annualized.
(2)  Includes nonaccrual loans.
(3)  For the three months ended March 31, 2021 and March 31, 2020, collectively, SBA-PPP loans and credit card loans accounted for 145 and 120 basis points of the reported net interest margin, respectively.

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited    
  Quarter Ended
(Dollars in thousands except per share data) March 31, 2021 December 31,
2020		 September 30,
2020		 June 30,
2020		 March 31,
2020
Earnings:          
Net income $8,982  $9,689  $8,438  $4,761  $2,934 
Earnings per common share, diluted 0.65  0.71  0.61  0.34  0.21 
Net interest margin 5.15% 5.57% 5.01% 4.72% 5.16%
Net interest margin, excluding credit cards & SBA-PPP loans (1) 3.70% 3.80% 3.84% 3.96% 3.96%
Return on average assets (2) 1.87% 2.08% 1.89% 1.19% 0.84%
Return on average assets, excluding impact of SBA-PPP loans (1)(2) 1.60% 1.88% 1.80% 1.04% 0.84%
Return on average equity (2) 22.30% 25.26% 23.28% 13.70% 8.59%
Efficiency ratio 67.11% 66.63% 65.17% 69.74% 73.53%
Balance Sheet:          
Portfolio loans receivable (3) $1,312,375  $1,315,503  $1,244,613  $1,211,477  $1,187,798 
Deposits 1,863,069  1,652,128  1,662,211  1,608,726  1,302,913 
Total assets 2,091,851  1,876,593  1,879,029  1,822,365  1,507,847 
Asset Quality Ratios:          
Nonperforming assets to total assets 0.58% 0.67% 0.79% 0.50% 0.61%
Nonperforming assets to total assets, excluding the SBA-PPP loans (1) 0.66% 0.75% 0.90% 0.58% 0.61%
Nonperforming loans to total loans 0.56% 0.61% 0.78% 0.41% 0.49%
Nonperforming loans to portfolio loans (1) 0.67% 0.70% 0.92% 0.48% 0.49%
Net charge-offs to average portfolio loans (1)(2) 0.12% 0.19% 0.06% 0.05% 0.07%
Allowance for loan losses to total loans 1.49% 1.54% 1.49% 1.30% 1.31%
Allowance for loan losses to portfolio loans (1) 1.79% 1.78% 1.77% 1.54% 1.31%
Allowance for loan losses to non-performing loans 267.07% 253.71% 191.78% 318.25% 268.13%
Bank Capital Ratios:          
Total risk based capital ratio 13.55% 12.60% 12.74% 12.35% 12.18%
Tier 1 risk based capital ratio 12.29% 11.34% 11.48% 11.10% 10.93%
Leverage ratio 7.54% 7.45% 7.44% 7.73% 8.61%
Common equity Tier 1 capital ratio 12.29% 11.34% 11.48% 11.10% 10.93%
Tangible common equity 7.01% 7.43% 7.09% 6.91% 8.03%
Holding Company Capital Ratios:          
Total risk based capital ratio 16.07% 15.19% 15.35% 15.02% 13.63%
Tier 1 risk based capital ratio 13.98% 13.10% 12.93% 12.58% 12.38%
Leverage ratio 8.84% 8.78% 8.63% 8.85% 9.83%
Common equity Tier 1 capital ratio 13.81% 12.94% 12.75% 12.39% 12.19%
Tangible common equity 7.98% 8.48% 7.95% 7.80% 11.08%
Composition of Loans:          
Residential real estate $420,460  $437,860  $422,698  $437,429  $430,870 
Commercial real estate 433,336  392,550  372,972  364,071  360,601 
Construction real estate 221,277  224,904  227,661  212,957  204,047 
Commercial and industrial - Other 149,914  157,127  134,889  142,673  151,551 
SBA-PPP loans 272,090  204,920  238,735  236,325  — 
Credit card 83,740  102,186  84,964  54,732  41,881 
Other consumer loans 4,487  1,649  2,268  947  1,103 
Composition of Deposits:          
Noninterest bearing $771,924  $608,559  $596,239  $563,995  $363,423 
Interest bearing demand 300,992  257,126  247,150  268,150  175,924 
Savings 6,012  4,800  4,941  5,087  4,290 
Money Markets 471,303  447,077  472,447  507,432  473,958 
Time Deposits 312,838  334,566  341,435  264,062  285,318 
Capital Bank Home Loan Metrics:        
Origination of loans held for sale $353,774  $382,267  $431,060  $315,165  $180,421 
Mortgage loans sold 400,112  412,830  410,312  272,151  177,496 
Gain on sale of loans 12,008  12,950  12,837  8,088  4,580 
Purchase volume as a % of originations 24.59% 30.03% 33.76% 31.16% 32.79%
Gain on sale as a % of loans sold (4) 3.00% 3.14% 3.13% 2.97% 2.52%
OpenSky® Portfolio Metrics:        
Active customer accounts 642,272  568,373  529,114  400,530  244,024 
Credit card loans, net $83,740  $102,186  $83,101  $53,150  $40,727 
Noninterest secured credit card deposits 215,883  192,520  176,708  131,854  84,689 

_______________

(1)  Refer to Appendix for reconciliation of non-GAAP measures.
(2)  Annualized.
(3)  Loans are reflected net of deferred fees and costs.
(4)  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.


Appendix

Reconciliation of Non-GAAP Measures

Return on Average Assets, as AdjustedQuarters Ended
Dollars in ThousandsMarch 31, 2021December 31, 2020September 30, 2020June 30, 2020March 31, 2020
      
Net Income$8,982 $9,689 $8,438 $4,761 $2,934 
Less: SBA-PPP loan income2,205 1,998 1,470 1,011 — 
Net Income, as Adjusted$6,777 $7,691 $6,968 $3,750 $2,934 
Average Total Assets1,949,265 1,854,846 1,533,591 1,612,839 1,397,298 
Less: Average SBA-PPP Loans232,371 227,617 238,071 168,490 — 
Average Total Assets, as Adjusted$1,716,894 $1,627,229 $1,295,520 $1,444,349 $1,397,298 
Return on Average Assets, as Adjusted1.60%1.88%2.14%1.04%0.84%


Net Interest Margin, as AdjustedQuarters Ended
Dollars in ThousandsMarch 31, 2021December 31, 2020September 30, 2020June 30, 2020March 31, 2020
      
Net Interest Income$24,444 $25,719 $22,039 $18,624 $17,687 
Less Secured credit card loan income7,660 9,306 6,632 4,066 4,527 
Less SBA-PPP loan income2,205 1,998 1,470 1011 — 
Net Interest Income, as Adjusted$14,580 $14,415 $13,937 $13,547 $13,160 
Average Interest Earning Assets1,923,463 1,836,337 1,748,894 1,588,380 1,379,199 
Less Average secured credit card loans93,520 95,739 68,585 42,538 42,553 
Less Average SBA-PPP loans232,371 227,617 235,160 168,490 — 
Total Average Interest Earning Assets, as Adjusted$1,597,573 $1,512,981 $1,445,149 $1,377,352 $1,336,646 
Net Interest Margin, as Adjusted3.70%3.80%3.84%3.96%3.96%


Tangible Book Value per ShareQuarters Ended
Dollars in ThousandsMarch 31, 2021December 31, 2020September 30, 2020June 30, 2020March 31, 2020
      
Total Stockholders’ Equity$167,003 $159,311 $149,377 $142,108 $136,080 
Less: Preferred equity— — — — — 
Less: Intangible assets— — — — — 
Tangible Common Equity$167,003 $159,311 $149,377 $142,108 $136,080 
Period End Shares Outstanding13,759,218 13,753,529 13,682,198 13,818,223 13,816,723 
Tangible Book Value per Share$12.14 $11.58 $10.92 $10.28 $9.85 


Allowance for Loan Losses to Total Portfolio LoansQuarters Ended
Dollars in ThousandsMarch 31, 2021December 31, 2020September 30, 2020June 30, 2020March 31, 2020
      
Allowance for Loan Losses$23,550 $23,434 $22,016 $18,680 $15,514 
Total Loans1,578,087 1,516,520 1,477,962 1,441,123 1,172,285 
Less: SBA-PPP loans265,712 201,018 233,349 229,646 — 
Total Portfolio Loans$1,312,375 $1,315,503 $1,244,613 $1,211,477 $1,172,285 
Allowance for Loan Losses to Total Portfolio Loans1.79%1.78%1.77%1.54%1.32%
      
      
      
Nonperforming Assets to Total Assets, net SBA-PPP LoansQuarters Ended
Dollars in ThousandsMarch 31, 2021December 31, 2020September 30, 2020June 30, 2020March 31, 2020
      
Total Nonperforming Assets$12,112 $12,563 $14,806 $9,195 $9,187 
Total Assets2,091,851 1,876,593 1,879,029 1,822,365 1,507,847 
Less: SBA-PPP loans265,712 201,018 233,349 229,646 — 
Total Assets, net SBA-PPP Loans$1,826,139 $1,675,575 $1,645,680 $1,592,719 $1,507,847 
Nonperforming Assets to Total Assets, net SBA-PPP Loans0.66%0.75%0.90%0.58%0.61%
      
      
      
Nonperforming Loans to Portfolio LoansQuarters Ended
Dollars in ThousandsMarch 31, 2021December 31, 2020September 30, 2020June 30, 2020March 31, 2020
      
Total Nonperforming Loans$8,818 $9,237 $11,480 $5,869 $5,786 
Total Loans1,578,087 1,516,520 1,477,962 1,441,123 1,172,285 
Less: SBA-PPP loans265,712 201,018 233,349 229,646 — 
Total Portfolio Loans$1,312,375 $1,315,503 $1,244,613 $1,211,477 $1,172,285 
Nonperforming Loans to Total Portfolio Loans0.67%0.70%0.92%0.48%0.49%
      
      
      
Net Charge-offs to Average Portfolio LoansQuarters Ended
Dollars in ThousandsMarch 31, 2021December 31, 2020September 30, 2020June 30, 2020March 31, 2020
      
Total Net Charge-offs$721 $615 $163 $134 $197 
Total Average Loans1,532,093 1,494,278 1,477,962 1,365,371 1,175,090 
Less: Average SBA-PPP loans232,371 227,617 233,349 84,245 — 
Total Average Portfolio Loans$1,299,722 $1,266,661 $1,244,613 $1,281,126 $1,175,090 
Net Charge-offs to Average Portfolio Loans0.22%0.19%0.05%0.05%0.07%
      
      
      
Pre-tax, Pre-provision Net Revenue (“PPNR”)Quarters Ended
Dollars in ThousandsMarch 31, 2021December 31, 2020September 30, 2020June 30, 2020March 31, 2020
      
Net income$8,982 $9,689 $8,438 $4,761 $2,934 
Add: Income Tax Expense3,143 3,347 3,128 1,759 1,080 
Add: Provision for Loan Losses503 2,033 3,500 3,300 2,409 
Pre-tax, Pre-provision Net Revenue (“PPNR”)$12,628 $15,069 $15,066 $9,820 $6,423 
      

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 fifth largest bank headquartered in Maryland at March 31, 2021. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in five locations in the greater Washington, D.C. and Baltimore, Maryland markets. Capital Bancorp had assets of approximately $2.1 billion at March 31, 2021 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.

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be fully reopened. As a result of the COVID-19 pandemic and the related adverse local and national economic consequences, we are exposed to all of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen as planned, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

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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