Press Release

Capital Bancorp, Inc. Announces Broad Based Growth and Expanding Margin Leading to a 25% Net Income Increase from the Prior Quarter

July 22, 2024 at 4:03 PM EDT
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Second Quarter 2024 Results

  • Net Income of $8.2 million, or $0.59 per share
    • Net Income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), of $8.3 million, or $0.59 per share
  • Net Interest Income increased $2.1 million, or 5.9%, from 1Q 2024
  • Net Interest Margin ("NIM") increased to 6.46% as compared to 6.24% (1Q 2024)
    • Core NIM, as adjusted to exclude the impact of credit card loans (non-GAAP)(1) increased to 4.00% as compared to 3.85% (1Q 2024)
  • Loan Growth of $57.1 million, or 11.7% annualized for 2Q 2024
  • Deposit Growth of $94.7 million, or 19.0% annualized for 2Q 2024; Noninterest bearing deposits increased $18.8 million, or 11.3% annualized from 1Q 2024
  • Cash dividend of $0.10 per share declared, or 25% higher than the prior quarter

ROCKVILLE, Md., July 22, 2024 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $8.2 million, or $0.59 per diluted share, for the second quarter 2024, compared to net income of $6.6 million, or $0.47 per diluted share, for the first quarter 2024, and $7.3 million, or $0.52 per diluted share, for the second quarter 2023. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), was $8.3 million, or $0.59 per diluted share, for the second quarter 2024, compared to $7.1 million, or $0.51 per diluted share, for the first quarter 2024.

The Company also declared a cash dividend on its common stock of $0.10 per share. The dividend is payable on August 21, 2024 to shareholders of record on August 5, 2024. The dividend declared of $0.10 is $0.02, or 25.0% higher than the prior quarter dividend reflecting the strength of earnings and capital position. The Company has increased its dividend each year since it first started paying dividends in 2021.

“All of our businesses continued to make progress in the second quarter with sustained loan and deposit growth, increased credit card accounts and revenue growth, mortgage banking income growth, and continued credit stability,” said Ed Barry, Chief Executive Officer of the Company and the Bank. “These positive trends drove stable deposit costs, record net interest income, and increased net interest margin. We were also pleased to receive approval for our pending acquisition of Integrated Financial Holdings, Inc. from the Federal Reserve and we continue to work towards obtaining all approvals and closing requirements. IFHI's expertise in niche C&I lending will further diversify our lending and fee generating capabilities while enhancing shareholder value.”

"The Board is very pleased with the second quarter results and, in particular, with the improvement in our NIM and the growth of our loan and deposit balances. If the economy cooperates, we anticipate these improvements will result in continued steady growth in our EPS and TBV,” said Steven J Schwartz, Chairman of the Company. “We reaffirm our steadfast commitment to smartly grow enterprise value of the Company, while continually expanding and improving the services and products we offer to our customers.”

(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.

Pending Acquisition of Integrated Financial Holdings, Inc.

Regarding the previously announced pending merger with Integrated Financial Holdings, Inc. ("IFHI"), the Company incurred pre-tax merger-related expenses of $0.1 million for the second quarter 2024 compared to $0.7 million for the first quarter 2024, consistent with modeled expectations.

On July 9, 2024, the Company received regulatory approval from the Federal Reserve Bank of Richmond, acting on delegated authority from the Board of Governors of the Federal Reserve System, for the proposed merger of IFHI with and into the Company. Completion of the merger remains subject to the approval of the Office of the Comptroller of the Currency, the approval of the Company's and IFHI’s shareholders and the satisfaction of customary closing conditions. The special meeting of the Company will be held on August 15, 2024 at 3:00 p.m., Eastern Time.

The following table provides a reconciliation of the Company's net income under GAAP to non-GAAP results excluding merger-related expenses.

  Second Quarter 2024   First Quarter 2024
(in thousands except per share data) Income Before Income Taxes   Income Tax Expense   Net Income   Diluted Earnings per Share   Income Before Income Taxes   Income Tax Expense   Net Income   Diluted Earnings per Share
GAAP Earnings $ 10,933   $ 2,728   $ 8,205   $ 0.59   $ 8,624   $ 2,062   $ 6,562   $ 0.47
Add: Merger-Related Expenses   83     21     62         712     174     538    
Non-GAAP Earnings $ 11,016   $ 2,749   $ 8,267   $ 0.59   $ 9,336   $ 2,236   $ 7,100   $ 0.51
                                               


  Six Months Ended June 30, 2024
(in thousands except per share data) Income Before Income Taxes   Income Tax Expense   Net Income   Diluted Earnings per Share
GAAP Earnings $ 19,557   $ 4,790   $ 14,767   $ 1.06
Add: Merger-Related Expenses   795     195     600    
Non-GAAP Earnings $ 20,352   $ 4,985   $ 15,367   $ 1.10
                       

Note: The tax benefit associated with merger-related expenses has been adjusted to reflect the estimated nondeductible portion of the expenses.

Second Quarter 2024 Highlights

Capital Bancorp, Inc.

Earnings Summary - Net income of $8.2 million, or $0.59 per diluted share, increased $1.6 million compared to $6.6 million, or $0.47 per diluted share, for the first quarter 2024. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), was $8.3 million, or $0.59 per diluted share, for the second quarter 2024 compared to $7.1 million, or $0.51 per diluted share, for the first quarter 2024.

  • Net interest income of $37.1 million increased $2.1 million compared to $35.0 million for the first quarter 2024. Interest income of $50.6 million increased $2.2 million compared to $48.4 million for the first quarter 2024, primarily due to interest income from $65.3 million in average portfolio loan growth. Interest expense of $13.6 million increased $0.2 million compared to $13.4 million for the first quarter 2024 as interest expense from time deposits increased $0.3 million as growth in average balances increased $15.9 million.
  • The provision for credit losses was $3.4 million, an increase of $0.7 million from the first quarter 2024 primarily driven by unsecured credit card loan growth in the quarter. Net charge-offs totaled $1.9 million in the second quarter including $1.5 million from credit card related loans and $0.4 million from residential loans. Net charge-offs totaled $2.0 million in the first quarter 2024 including $1.7 million from credit card related loans and $0.3 million from commercial loans. At June 30, 2024, the allowance for credit losses to total loans ratio was 1.53%.
  • Noninterest income of $6.9 million increased $0.9 million compared to $6.0 million for the first quarter 2024. Mortgage banking revenue increased $0.5 million primarily due to increased mortgage loans sold while credit card fees increased $0.4 million primarily related to interchange income.
  • Noninterest expense of $29.5 million remained stable as compared to $29.5 million for the first quarter 2024. Within this category, variances included the following:
    • Salaries and employee benefits of $13.3 million increased $0.4 million due to an increase in base salaries expense of $0.2 million, incentive based compensation expense of $0.1 million and a decrease in deferred salary expense (an increase in expense) of $0.1 million as we continue to invest in talent.
    • Occupancy and equipment expense of $1.9 million increased $0.3 million related to software licensing expense to support business growth.
    • Merger-related expenses totaled $0.1 million in the second quarter 2024 as compared to $0.7 million in the first quarter 2024, consistent with modeled expectations. Primarily all merger-related expenses have been related to professional fees including legal fees, third party consulting fees and other outside service provider expenses.
  • Income tax expense of $2.7 million, or 25.0% of pre-tax income for the second quarter 2024, increased $0.7 million from $2.1 million, or 23.9% of pre-tax income for the first quarter 2024, reflective of an increase in the weighted average state income tax rate.

Performance and Efficiency Ratios – Annualized return on average assets ("ROAA") and annualized return on average equity ("ROAE") were 1.40% and 12.53%, respectively, for the three months ended June 30, 2024, compared to 1.15% and 10.19%, respectively, for the three months ended March 31, 2024.

  • Annualized ROAA and annualized ROAE, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), were 1.41% and 12.62%, respectively, for the three months ended June 30, 2024, compared to 1.24% and 11.03%, respectively, for the three months ended March 31, 2024.
  • The efficiency ratio was 67.11% for the three months ended June 30, 2024, compared to 71.95% for the three months ended March 31, 2024. The efficiency ratio, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), was 66.92% for the three months ended June 30, 2024 compared to 70.22% for the three months ended March 31, 2024.

Balance Sheet – Total assets of $2.4 billion at June 30, 2024 increased $114.3 million, or 4.9%, from March 31, 2024.

  • Cash and cash equivalents of $136.5 million at June 30, 2024 increased $51.3 million from March 31, 2024, as total deposits increased $94.7 million, and Federal Home Loan Bank advances increased $10.0 million, partially offset by an increase in total portfolio loans of $57.1 million.
  • Total portfolio loans of $2.0 billion at June 30, 2024 increased $57.1 million, or 2.9% growth from March 31, 2024. Total average loans increased $65.3 million quarter over quarter.
  • Total deposits of $2.1 billion at June 30, 2024 increased $94.7 million, or 4.7% growth, from March 31, 2024, while total average deposits increased $53.2 million quarter over quarter. The increase in deposits, when comparing June 30, 2024 to March 31, 2024, includes $18.8 million of noninterest-bearing deposits primarily related to growth in title company deposit balances. Average portfolio loans-to-deposit ratio of 99.10% for the three months ended June 30, 2024 increased from 98.46% for the three months ended March 31, 2024.
  • The investment securities portfolio continues to be classified as available for sale and had a fair market value of $207.9 million, or 8.5% of total assets, at June 30, 2024 up from $202.3 million at March 31, 2024. The amortized cost of the investment securities portfolio was $227.1 million, with an effective duration of 2.92 years. U.S. Treasury securities represented 64.3% of the overall investment portfolio at June 30, 2024. The accumulated other comprehensive loss on the investment securities portfolio decreased $0.5 million during the quarter to $13.1 million as of June 30, 2024, which represents 4.9% of total stockholders' equity. The Company does not have a held to maturity investment securities portfolio.

Net Interest Margin - Net interest margin increased to 6.46% for the three months ended June 30, 2024, compared to 6.24% for the three months ended March 31, 2024. Core Net Interest Margin, as adjusted to exclude the impact of credit card loans (non-GAAP)(1) increased to 4.00% and included 4 basis points from interest income recognized from nonaccrual loans as compared to 3.85% for the three months ended March 31, 2024.

  • The average yield on interest earning assets of 8.82% increased 19 basis points compared to the first quarter 2024. The yield on portfolio loans, as adjusted to exclude the impact of credit card loans (non-GAAP)(1), of 7.04% for the second quarter 2024, increased 8 basis points primarily from portfolio turnover. New portfolio loans (excluding credit card loans) originated in the second quarter 2024 totaled $112.3 million with a weighted average yield of 8.25% as compared to $122.7 million with a weighted average yield of 8.24% in the first quarter 2024.
  • The average rate on total deposits of 2.64% for the second quarter 2024 decreased 3 basis points from the first quarter 2024, primarily driven by title company balance growth in low and no interest bearing deposits.

Deposits - Total deposits at June 30, 2024 increased by $94.7 million, or 4.7% unannualized growth, compared to March 31, 2024, primarily driven by growth in low interest-bearing demand and noninterest-bearing deposits from title companies of $86.4 million.

  • Noninterest-bearing deposits of $684.6 million increased $18.8 million, or 2.8%, compared to March 31, 2024. Interest-bearing deposits of $1.4 billion increased $76.0 million, or 5.7%, compared to March 31, 2024 including an increase in interest-bearing demand accounts of $72.1 million. Brokered time deposits totaled $155.1 million at June 30, 2024, a decrease of $5.5 million from March 31, 2024.

Cost of Interest-Bearing Liabilities - Growth in interest-bearing demand accounts resulted in the average cost of interest-bearing liabilities decreasing to 3.86% for the quarter ended June 30, 2024, compared to 3.90% for the first quarter 2024.

  • Average interest-bearing demand accounts of $216.2 million increased $33.0 million, or 18.0%, compared to March 31, 2024.
  • Average time deposits of $465.8 million increased $15.9 million, or 3.5%, compared to March 31, 2024.
  • Average noninterest-bearing deposits of $653.0 million increased $15.9 million, or 2.5%, compared to March 31, 2024, and represented 32.5% of total average deposits at June 30, 2024.

Capital Positions - As of June 30, 2024, the Company reported a robust common equity tier 1 capital ratio of 15.08%, compared to 14.92% at March 31, 2024. At June 30, 2024, the Company maintains regulatory capital ratios that exceed all capital adequacy requirements.

Credit Metrics and Asset Quality - The allowance for credit losses to total loans ratio was 1.53% at June 30, 2024 as compared to an allowance for credit losses to total loans ratio of 1.49% at March 31, 2024. Nonperforming assets decreased 4 basis points to 0.58% of total assets at June 30, 2024 compared to 0.62% at March 31, 2024 as a result of a decrease in nonaccrual loans at June 30, 2024 to $14.1 million compared to $14.4 million at March 31, 2024. At June 30, 2024 special mention loans totaled $23.3 million, or 1.2% of total portfolio loans, as compared to $27.5 million, or 1.4% of total portfolio loans, at March 31, 2024. At June 30, 2024, substandard loans totaled $22.1 million, or 1.2% of total portfolio loans, as compared to $14.1 million, or .7% of total portfolio loans, at March 31, 2024.

Consistent Tangible Book Value Growth - Tangible book value per common share(1) grew 3.1% to $19.26 at June 30, 2024 when compared to March 31, 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.

Liquidity - Total sources of available borrowings at June 30, 2024 totaled $764.2 million, including available collateralized lines of credit of $570.2 million, unsecured lines of credit with other banks of $76.0 million and unpledged investment securities available as collateral for potential additional borrowings of $118.0 million.

Commercial Bank

Continued Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $47.4 million, to $1.9 billion, gross, at June 30, 2024 compared to March 31, 2024. The increase in portfolio loans, as disclosed in the Composition of Loans table within the Historical Financial Highlights includes residential real estate loans of $24.2 million, lender finance loans of $19.8 million and commercial real estate loans of $8.4 million, partially offset by a decrease in business equity lines of credit of $11.8 million. Lender finance loans are loans to companies used to purchase finance receivables or to extend financing to the underlying obligors and are secured primarily by the finance receivables held by our borrowers.

Net Interest Income - Interest income of $33.9 million increased $1.4 million compared to $32.5 million for the first quarter 2024, driven by loan growth and higher loan yields. Interest expense of $13.3 million increased $0.2 million, driven by an increase in average balances in the second quarter 2024.

Credit Metrics - Nonperforming assets decreased 4 basis points to 0.58% of total assets at June 30, 2024 compared to 0.62% at March 31, 2024 as a result of a decrease in nonaccrual loans at June 30, 2024 to $14.1 million compared to $14.4 million at March 31, 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 June 30, 2024
(in thousands) Amount   Average Loan Size   Weighted Average LTV(1)   % of Non-Owner-Occupied Commercial Real Estate Loans   % of Total Portfolio Loans, Gross
Loan type:                  
Multi-family $ 156,744   $ 1,823   56.1 %   Not Applicable     7.7 %
                   
Retail $ 113,697   $ 1,458   54.2 %   28.7 %   5.6 %
Mixed use   94,143     1,177   51.3 %   23.7 %   4.6 %
Industrial   61,992     1,127   54.6 %   15.6 %   3.1 %
Hotel   75,427     4,190   50.8 %   19.0 %   3.7 %
Office   13,699     527   63.1 %   3.4 %   0.7 %
Other   38,122     1,733   48.2 %   9.6 %   1.9 %
Total non-owner-occupied commercial real estate loans $ 397,080   $ 1,423   52.7 %   100.0 %   19.6 %
Total portfolio loans, gross $ 2,028,367                
                     

Owner-occupied commercial real estate loans

  As of June 30, 2024
(in thousands) Amount   Average Loan Size   Weighted Average LTV(1)   % of Owner-Occupied Commercial Real Estate Loans   % of Total Portfolio Loans, Gross
Loan type:                  
Industrial $ 78,596   $ 1,191   53.3 %   24.6 %   3.9 %
Office   42,876     621   57.1 %   13.4 %   2.1 %
Retail   40,596     766   59.1 %   12.7 %   2.0 %
Mixed use   17,657     929   65.6 %   5.5 %   0.9 %
Other(2)   139,644     2,971   61.2 %   43.8 %   6.9 %
Total owner-occupied commercial real estate loans $ 319,369   $ 1,257   58.7 %   100.0 %   15.7 %
Total portfolio loans, gross $ 2,028,367                
                     

(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 $58.3 million, skilled nursing loans of $53.8 million, and other loans of $27.5 million.

Classified and Criticized Loans - At June 30, 2024, special mention loans totaled $23.3 million, or 1.2% of total portfolio loans, as compared to $27.5 million, or 1.4% of total portfolio loans, at March 31, 2024. At June 30, 2024, substandard loans totaled $22.1 million, or 1.2% of total portfolio loans, as compared to $14.1 million, or 0.7% of total portfolio loans, at March 31, 2024.

OpenSky™

Revenues - Total revenue of $20.2 million increased $1.3 million from the first quarter 2024. Interest income of $15.8 million increased $0.9 million from the first quarter 2024. Average OpenSky™ loan balances, net of reserves and deferred fees of $111.3 million for the second quarter 2024, increased $0.8 million, or 0.7%, compared to $110.5 million for the first quarter 2024. Noninterest income of $4.4 million increased $0.5 million from the first quarter 2024 primarily related to interchange income.

Noninterest Expense - Total noninterest expense of $13.8 million increased $0.2 million from the first quarter 2024 primarily related to data processing expense.

Loan and Deposit Balances - OpenSky™ loan balances, net of reserves, of $122.2 million at June 30, 2024 increased by $10.3 million, or 9.2%, compared to $111.9 million at March 31, 2024. Corresponding deposit balances of $173.5 million at June 30, 2024 increased $1.7 million, or 1.0%, compared to $171.8 million at March 31, 2024. Gross unsecured loan balances of $33.6 million at June 30, 2024 increased $5.1 million, or 17.7%, compared to $28.5 million at March 31, 2024. During the second quarter 2024, the number of OpenSky™ credit card accounts increased by 10,784 to 537,734 from March 31, 2024.

OpenSky™ Credit - Card delinquencies remained stable in the second quarter 2024 when compared to the first quarter 2024. The provision for credit losses increased $0.7 million compared to the first quarter 2024 as card balances, net of reserves, increased $10.3 million during the second quarter 2024 as compared to a decrease of $11.4 million during the first quarter 2024.

COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited
                           
  Quarter Ended   2Q24 vs 1Q24   2Q24 vs 2Q23
(in thousands except per share data) June 30, 2024   March 31, 2024   June 30, 2023   $ Change   % Change   $ Change   % Change
Earnings Summary                          
Interest income $ 50,615     $ 48,369     $ 45,080     $ 2,246     4.6 %   $ 5,535     12.3 %
Interest expense   13,558       13,361       9,740       197     1.5 %     3,818     39.2 %
Net interest income   37,057       35,008       35,340       2,049     5.9 %     1,717     4.9 %
Provision for credit losses   3,417       2,727       2,862       690     25.3 %     555     19.4 %
Provision for credit losses on unfunded commitments   104       142       —       (38 )   (26.8 )%     104     — %
Noninterest income   6,890       5,972       6,687       918     15.4 %     203     3.0 %
Noninterest expense   29,493       29,487       29,592       6     — %     (99 )   (0.3 )%
Income before income taxes   10,933       8,624       9,573       2,309     26.8 %     1,360     14.2 %
Income tax expense   2,728       2,062       2,255       666     32.3 %     473     21.0 %
Net income $ 8,205     $ 6,562     $ 7,318     $ 1,643     25.0 %   $ 887     12.1 %
                           
Pre-tax pre-provision net revenue ("PPNR") (1) $ 14,454     $ 11,493     $ 12,435     $ 2,961     25.8 %   $ 2,019     16.2 %
PPNR, as adjusted(1) $ 14,537     $ 12,205     $ 12,435     $ 2,332     19.1 %   $ 2,102     16.9 %
                           
Common Share Data                          
Earnings per share - Basic $ 0.59     $ 0.47     $ 0.52     $ 0.12     25.5 %   $ 0.07     13.5 %
Earnings per share - Diluted $ 0.59     $ 0.47     $ 0.52     $ 0.12     25.5 %   $ 0.07     13.5 %
Earnings per share - Diluted, as adjusted(1) $ 0.59     $ 0.51     $ 0.52     $ 0.08     15.7 %   $ 0.07     13.5 %
Weighted average common shares - Basic   13,895       13,919       14,025                  
Weighted average common shares - Diluted   13,895       13,919       14,059                  
                           
Return Ratios                          
Return on average assets (annualized)   1.40 %     1.15 %     1.34 %                
Return on average assets, as adjusted (annualized)(1)   1.41 %     1.24 %     1.34 %                
Return on average equity (annualized)   12.53 %     10.19 %     12.30 %                
Return on average equity, as adjusted (annualized)(1)   12.62 %     11.03 %     12.30 %                

______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.

COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)  
               
  Six Months Ended        
  June 30,        
(in thousands except per share data)   2024       2023     $ Change   % Change
Earnings Summary              
Interest income $ 98,984     $ 88,496     $ 10,488     11.9 %
Interest expense   26,919       18,669       8,250     44.2 %
Net interest income   72,065       69,827       2,238     3.2 %
Provision for credit losses   6,144       4,522       1,622     35.9 %
Provision for (release of) credit losses on unfunded commitments   246       (19 )     265     (1,394.7)%
Noninterest income   12,862       12,713       149     1.2 %
Noninterest expense   58,980       55,814       3,166     5.7 %
Income before income taxes   19,557       22,223       (2,666 )   (12.0)%
Income tax expense   4,790       5,170       (380 )   (7.4)%
Net income $ 14,767     $ 17,053     $ (2,286 )   (13.4)%
               
Pre-tax pre-provision net revenue ("PPNR") (1) $ 25,947     $ 26,726     $ (779 )   (2.9)%
PPNR, as adjusted(1) $ 26,742     $ 26,726     $ 16     0.1 %
               
Common Share Data              
Earnings per share - Basic $ 1.06     $ 1.21     $ (0.15 )   (12.4)%
Earnings per share - Diluted $ 1.06     $ 1.20     $ (0.14 )   (11.7)%
Earnings per share - Diluted, as adjusted(1) $ 1.10     $ 1.20          
Weighted average common shares - Basic   13,907       14,092          
Weighted average common shares - Diluted   13,907       14,210          
               
Return Ratios              
Return on average assets (annualized)   1.28 %     1.59 %        
Return on average assets, as adjusted (annualized)(1)   1.33 %     1.59 %        
Return on average equity (annualized)   11.37 %     14.60 %        
Return on average equity, as adjusted (annualized)(1)   11.83 %     14.60 %        

______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.

COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)        
                       
  Quarter Ended           Quarter Ended
  June 30,           March 31,   December 31,   September 30,
(in thousands except per share data)   2024       2023     % Change     2024       2023       2023  
Balance Sheet Highlights                      
Assets $ 2,438,583     $ 2,227,866       9.5 %   $ 2,324,238     $ 2,226,176     $ 2,272,484  
Investment securities available for sale   207,917       208,464       (0.3 )%     202,254       208,329       206,055  
Mortgage loans held for sale   19,219       10,146       89.4 %     10,303       7,481       4,843  
Portfolio loans receivable (2)   2,021,588       1,838,131       10.0 %     1,964,525       1,903,288       1,862,679  
Allowance for credit losses   30,832       27,495       12.1 %     29,350       28,610       28,279  
Deposits   2,100,428       1,934,361       8.6 %     2,005,695       1,895,996       1,967,988  
FHLB borrowings   32,000       22,000       45.5 %     22,000       22,000       22,000  
Other borrowed funds   12,062       12,062       — %     12,062       27,062       12,062  
Total stockholders' equity   267,854       237,435       12.8 %     259,465       254,860       242,878  
Tangible common equity (1)   267,854       237,435       12.8 %     259,465       254,860       242,878  
                           
Common shares outstanding   13,910       13,981       (0.5 )%     13,890       13,923       13,893  
Book value per share $ 19.26     $ 16.98       13.4 %   $ 18.68     $ 18.31     $ 17.48  
Tangible book value per share (1) $ 19.26     $ 16.98       13.4 %   $ 18.68     $ 18.31     $ 17.48  
Dividends per share $ 0.08     $ 0.06       33.3 %   $ 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.

Operating Results - Comparison of Three Months Ended June 30, 2024 and 2023

For the three months ended June 30, 2024, net interest income of $37.1 million increased $1.7 million from $35.3 million in the same period in 2023. The net interest margin decreased 17 basis points to 6.46% for the three months ended June 30, 2024 from the same period in 2023 as the increase in cost of deposits, including money market accounts and time deposits, outpaced the increase in portfolio loan yields, including credit card loans. Net interest margin, excluding credit card loans(1), decreased to 4.00% for the three months ended June 30, 2024, compared to 4.06% for the same period in 2023.

For the three months ended June 30, 2024, average interest earning assets increased $170.1 million, or 8.0%, to $2.3 billion as compared to the same period in 2023, and the average yield on interest earning assets increased 36 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $164.4 million, or 13.2%, and the average cost of interest-bearing liabilities increased to 3.86%, a 73 basis point increase from 3.13%.

For the three months ended June 30, 2024, the provision for credit losses was $3.4 million, an increase of $0.6 million from the same period in 2023, primarily driven by unsecured credit card loan growth. Net charge-offs for the three months ended June 30, 2024 were $1.9 million, or 0.39% on an annualized basis of average portfolio loans, compared to $1.6 million, or 0.35% on an annualized basis of average loans for the same period in 2023. Of the $1.9 million in net charge-offs during the second quarter 2024, $0.9 million related to secured and partially secured cards in the credit card portfolio and $0.6 million related to unsecured cards. Of the $1.6 million in net charge-offs during the second quarter 2023, $1.5 million related to secured and partially secured cards in the credit card portfolio and $0.1 million related to unsecured cards.

For the three months ended June 30, 2024, noninterest income of $6.9 million increased $0.2 million, or 3.0%, from the same period in 2023. Mortgage banking revenue of $2.0 million increased $0.7 million due to an increase in salable originations. Credit card fees of $4.3 million decreased $0.4 million primarily related to lower interchange and other fee income.

Credit card loan balances, net of reserves, decreased by $0.7 million to $122.2 million as of June 30, 2024, from $122.9 million at June 30, 2023. The related deposit account balances decreased 7.0% to $173.5 million at June 30, 2024 when compared to $186.6 million at June 30, 2023, reflective of the reduction in the number of open secured card customer accounts year over year.

The efficiency ratio for the three months ended June 30, 2024 was 67.11% compared to 70.41% for the three months ended June 30, 2023.

For the three months ended June 30, 2024, noninterest expense of $29.5 million decreased $0.1 million, or 0.3%, from $29.6 million for the same period in 2023. The change includes decreases in professional fees of $0.8 million, advertising expense of $0.6 million, operational losses of $0.4 million and loan processing expense of $0.2 million. Offsetting increases include salaries and employee benefits expense of $1.1 million, occupancy and equipment expense of $0.3 million, data processing expense of $0.2 million, other operating expense of $0.2 million and merger-related expenses of $0.1 million.

Operating Results - Comparison of Six Months Ended June 30, 2024 and 2023

For the six months ended June 30, 2024, net interest income of $72.1 million increased $2.2 million from the same period in 2023, primarily due to increased average balances of $182.2 million in portfolio loans combined with an 11 basis point increase in the yield on portfolio loans, offset by increases in the cost of funding. The net interest margin decreased 29 basis points to 6.35% for the six months ended June 30, 2024 from the same period in 2023. Net interest margin, excluding credit card loans(1), was 3.93% for the six months ended June 30, 2024, compared to 3.94% for the same period in 2023.

For the six months ended June 30, 2024, average interest earning assets increased $160.3 million, or 7.6%, to $2.3 billion as compared to the same period in 2023, and the average yield on interest earning assets increased 31 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $154.2 million, or 12.4%, while the average cost of interest-bearing liabilities increased 85 basis points to 3.88% from 3.03%.

For the six months ended June 30, 2024, the provision for credit losses was $6.1 million, an increase of $1.6 million from the prior year, attributable primarily to portfolio loan growth and specific reserves of $1.1 million for collateral dependent loans at June 30, 2024 as compared to $0.3 million at June 30, 2024. Net charge-offs for the six months ended June 30, 2024 were $3.9 million, or 0.40% annualized of average portfolio loans, compared to $4.2 million, or 0.48% annualized of average portfolio loans, for the same period in 2023. The $3.9 million in net charge-offs during the six months ended June 30, 2024 was comprised primarily of credit card portfolio net charge-offs, with $2.1 million related to secured and partially secured cards while $1.1 million was related to unsecured cards.

For the six months ended June 30, 2024, noninterest income of $12.9 million increased $0.2 million, or 1.2%, from the same period in 2023. Mortgage banking revenue of $3.4 million increased $1.0 million due to an increase in home loan sales while credit card fees of $8.2 million declined $0.7 million as the number of open customer accounts declined to 537,734 at June 30, 2024 from 540,058 year over year, which resulted in lower interchange and other fee income recognized compared to the prior year.

The efficiency ratio for the six months ended June 30, 2024 was 69.45% compared to 67.62% for the six months ended June 30, 2023.

For the six months ended June 30, 2024, noninterest expense of $59.0 million increased $3.2 million, or 5.7%, from the same period in 2023. The change includes increases in salaries and employee benefits of $1.5 million, or 6.0%, advertising expense of $0.9 million, merger-related expenses of $0.8 million, occupancy and equipment expense of $0.7 million and other operating expenses of $0.7 million partially offset by a decrease in professional fees of $1.3 million.

Financial Condition

Total assets at June 30, 2024 were $2.4 billion, an increase of $114.3 million, or 4.9%, from the balance at March 31, 2024 and an increase of $210.7 million, or 9.5%, from the balance at June 30, 2023.

Net portfolio loans, which exclude mortgage loans held for sale, totaled $2.0 billion at June 30, 2024, an increase of $57.1 million, up 2.9% or 11.6% annualized, compared to March 31, 2024, and an increase of $183.5 million, or 10.0%, compared to $1.8 billion at June 30, 2023.

The Company recorded a provision for credit losses of $6.1 million during the six months ended June 30, 2024, which increased the allowance for credit losses to $30.8 million, or 1.53% of total loans at June 30, 2024, representing an increase of $1.5 million over the balance at March 31, 2024.

Nonperforming assets, which were comprised solely of nonperforming loans as of June 30, 2024, were $14.1 million, or 0.58% of total assets, down from $14.4 million, or 0.62% of total assets at March 31, 2024, and down from $15.7 million, or 0.71% of total assets at June 30, 2023.

Deposits were $2.1 billion at June 30, 2024, an increase of $94.7 million, or 4.7%, from the balance at March 31, 2024 and an increase of $166.1 million, or 8.6%, from the balance at June 30, 2023. Average deposits of $2.0 billion for the three months ended June 30, 2024 increased $53.2 million, or 2.7%, as compared to the three months ended March 31, 2024.

Rising interest rates have resulted in some customers moving balances from noninterest-bearing deposit accounts to interest-bearing deposit accounts. As a result of the migration, average noninterest-bearing deposit balances decreased $23.3 million to $653.0 million as of June 30, 2024, as compared to June 30, 2023.

Noninterest-bearing deposits represented 32.6% of total deposits at June 30, 2024 compared to 35.8% at June 30, 2023. Uninsured deposits were approximately $923.7 million as of June 30, 2024, representing 44.0% of the Company's deposit portfolio, compared to $855.7 million, or 42.7%, at March 31, 2024, and $860.4 million, or 44.5%, at June 30, 2023.

Stockholders’ equity increased to $267.9 million as of June 30, 2024, compared to $259.5 million at March 31, 2024 and $237.4 million at June 30, 2023. As of June 30, 2024, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

Consolidated Statements of Income (Unaudited)        
  Three Months Ended Six Months Ended
(in thousands) June 30,
2024		   March 31,
2024		   December 31,
2023		   September 30,
2023		   June 30,
2023		   June 30,
2024		   June 30,
2023
Interest income                          
Loans, including fees $ 48,275     $ 45,991     $ 45,109     $ 45,385     $ 42,991     $ 94,266     $ 84,266  
Investment securities available for sale   1,308       1,251       1,083       1,089       1,266       2,559       2,643  
Federal funds sold and other   1,032       1,127       777       1,267       823       2,159       1,587  
Total interest income   50,615       48,369       46,969       47,741       45,080       98,984       88,496  
                           
Interest expense                          
Deposits   13,050       12,833       11,759       10,703       9,409       25,883       17,163  
Borrowed funds   508       528       321       228       331       1,036       1,506  
Total interest expense   13,558       13,361       12,080       10,931       9,740       26,919       18,669  
                           
Net interest income   37,057       35,008       34,889       36,810       35,340       72,065       69,827  
Provision for credit losses   3,417       2,727       2,808       2,280       2,862       6,144       4,522  
Provision for (release of) credit losses on unfunded commitments   104       142       (106 )     24       —       246       (19 )
Net interest income after provision for credit losses   33,536       32,139       32,187       34,506       32,478       65,675       65,324  
                           
Noninterest income                          
Service charges on deposits   200       207       240       250       245       407       474  
Credit card fees   4,330       3,881       3,970       4,387       4,706       8,211       8,916  
Mortgage banking revenue   1,990       1,453       1,166       1,243       1,332       3,443       2,487  
Other income   370       431       560       446       404       801       836  
Total noninterest income   6,890       5,972       5,936       6,326       6,687       12,862       12,713  
                           
Noninterest expenses                          
Salaries and employee benefits   13,272       12,907       11,638       12,419       12,143       26,179       24,697  
Occupancy and equipment   1,864       1,613       1,573       1,351       1,536       3,477       2,749  
Professional fees   1,769       1,947       1,930       2,358       2,608       3,716       4,982  
Data processing   6,788       6,761       6,128       6,469       6,559       13,549       13,089  
Advertising   2,072       2,032       1,433       1,565       2,646       4,104       3,163  
Loan processing   476       371       198       426       660       847       1,009  
Foreclosed real estate expenses, net   —       1       —       1       —       1       6  
Merger-related expenses   83       712       —       —       —       795       —  
Operational losses   782       931       1,490       953       1,206       1,713       2,170  
Other operating   2,387       2,212       2,517       2,504       2,234       4,599       3,949  
Total noninterest expenses   29,493       29,487       26,907       28,046       29,592       58,980       55,814  
Income before income taxes   10,933       8,624       11,216       12,786       9,573       19,557       22,223  
Income tax expense   2,728       2,062       2,186       2,998       2,255       4,790       5,170  
Net income $ 8,205     $ 6,562     $ 9,030     $ 9,788     $ 7,318     $ 14,767     $ 17,053  
                                                       


Consolidated Balance Sheets                  
  (unaudited)   (unaudited)   (audited)   (unaudited)   (unaudited)
(in thousands except share data) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
Assets                  
Cash and due from banks $ 19,294     $ 12,361     $ 14,513     $ 13,767     $ 18,619  
Interest-bearing deposits at other financial institutions   117,160       72,787       39,044       130,428       100,343  
Federal funds sold   57       56       407       1,957       376  
Total cash and cash equivalents   136,511       85,204       53,964       146,152       119,338  
Investment securities available for sale   207,917       202,254       208,329       206,055       208,464  
Restricted investments   4,930       4,441       4,353       4,340       3,803  
Loans held for sale   19,219       10,303       7,481       4,843       10,146  
Portfolio loans receivable, net of deferred fees and costs   2,021,588       1,964,525       1,903,288       1,862,679       1,838,131  
Less allowance for credit losses   (30,832 )     (29,350 )     (28,610 )     (28,279 )     (27,495 )
Total portfolio loans held for investment, net   1,990,756       1,935,175       1,874,678       1,834,400       1,810,636  
Premises and equipment, net   5,551       4,500       5,069       5,297       5,494  
Accrued interest receivable   12,162       12,258       11,494       11,231       10,155  
Deferred tax asset   12,150       12,311       12,252       13,644       13,616  
Bank owned life insurance   38,414       38,062       37,711       37,315       37,041  
Accounts receivable   1,336       11,637       1,055       696       450  
Other assets   9,637       8,093       9,790       8,511       8,723  
Total assets $ 2,438,583     $ 2,324,238     $ 2,226,176     $ 2,272,484     $ 2,227,866  
                   
Liabilities                  
Deposits                  
Noninterest-bearing $ 684,574     $ 665,812     $ 617,373     $ 680,803     $ 693,129  
Interest-bearing   1,415,854       1,339,883       1,278,623       1,287,185       1,241,232  
Total deposits   2,100,428       2,005,695       1,895,996       1,967,988       1,934,361  
Federal Home Loan Bank advances   32,000       22,000       22,000       22,000       22,000  
Other borrowed funds   12,062       12,062       27,062       12,062       12,062  
Accrued interest payable   6,573       6,009       5,583       5,204       3,029  
Other liabilities   19,666       19,007       20,675       22,352       18,979  
Total liabilities   2,170,729       2,064,773       1,971,316       2,029,606       1,990,431  
                   
Stockholders' equity                  
Common stock   139       139       139       139       140  
Additional paid-in capital   55,005       54,229       54,473       54,549       55,856  
Retained earnings   225,824       218,731       213,345       206,033       197,490  
Accumulated other comprehensive loss   (13,114 )     (13,634 )     (13,097 )     (17,843 )     (16,051 )
Total stockholders' equity   267,854       259,465       254,860       242,878       237,435  
Total liabilities and stockholders' equity $ 2,438,583     $ 2,324,238     $ 2,226,176     $ 2,272,484     $ 2,227,866  
                                       

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
June 30, 2024		   Three Months Ended
March 31, 2024		   Three Months Ended
June 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 $ 77,069   $ 937   4.89 %   $ 84,531   $ 1,049   4.99 %   $ 66,401   $ 733   4.43 %
Federal funds sold   56     1   7.18       56     1   7.18       1,638     20   4.90  
Investment securities available for sale   223,973     1,308   2.35       233,231     1,251   2.16       255,057     1,266   1.99  
Restricted investments   5,435     94   6.96       4,601     77   6.73       4,185     71   6.80  
Loans held for sale   7,907     132   6.71       4,872     83   6.85       7,047     111   6.32  
Portfolio loans receivable(2)(3)   1,992,630     48,143   9.72       1,927,372     45,908   9.58       1,802,608     42,879   9.54  
Total interest earning assets   2,307,070     50,615   8.82       2,254,663     48,369   8.63       2,136,936     45,080   8.46  
Noninterest earning assets   46,798             44,571             47,415        
Total assets $ 2,353,868           $ 2,299,234           $ 2,184,351        
                                   
Liabilities and Stockholders’ Equity                                  
Interest-bearing liabilities:                                  
Interest-bearing demand accounts $ 216,247     148   0.28     $ 183,217     110   0.24     $ 207,264     67   0.13  
Savings   4,409     1   0.09       4,841     1   0.08       5,822     2   0.14  
Money market accounts   671,240     7,032   4.21       682,414     7,136   4.21       625,515     5,411   3.47  
Time deposits   465,822     5,869   5.07       449,963     5,586   4.99       366,421     3,929   4.30  
Borrowed funds   54,863     508   3.72       58,963     528   3.60       43,183     331   3.07  
Total interest-bearing liabilities   1,412,581     13,558   3.86       1,379,398     13,361   3.90       1,248,205     9,740   3.13  
Noninterest-bearing liabilities:                                  
Noninterest-bearing liabilities   24,844             23,820             21,104        
Noninterest-bearing deposits   653,018             637,124             676,358        
Stockholders’ equity   263,425             258,892             238,684        
Total liabilities and stockholders’ equity $ 2,353,868           $ 2,299,234           $ 2,184,351        
                                   
Net interest spread         4.96 %           4.73 %           5.33 %
Net interest income     $ 37,057           $ 35,008           $ 35,340    
Net interest margin(4)         6.46 %           6.24 %           6.63 %

_______________
(1) Annualized.
(2) Includes nonaccrual loans.
(3) For the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, collectively, portfolio loans yield excluding credit card loans was 7.04%, 6.96% and 6.65%, respectively.
(4) For the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, collectively, credit card loans accounted for 246, 239 and 257 basis points of the reported net interest margin, respectively.

  Six Months Ended June 30,
  2024   2023
  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 $ 80,800     $ 1,986       4.94 %   $ 64,494     $ 1,348       4.21 %
Federal funds sold   56       2       7.18       1,845       38       4.15  
Investment securities available for sale   228,602       2,559       2.25       264,817       2,643       2.01  
Restricted investments   5,018       171       6.85       5,757       201       7.04  
Loans held for sale   6,390       215       6.77       5,878       188       6.45  
Portfolio loans receivable(2)(3)   1,960,001       94,051       9.65       1,777,762       84,078       9.54  
Total interest earning assets   2,280,867       98,984       8.73       2,120,553       88,496       8.42  
Noninterest earning assets   45,684               43,858          
Total assets $ 2,326,551             $ 2,164,411          
                       
Liabilities and Stockholders’ Equity                      
Interest-bearing liabilities:                      
Interest-bearing demand accounts $ 199,732       258       0.26     $ 196,782       137       0.14  
Savings   4,625       2       0.09       6,160       3       0.10  
Money market accounts   676,827       14,168       4.21       615,247       9,998       3.28  
Time deposits   457,892       11,455       5.03       343,065       7,025       4.13  
Borrowed funds   56,913       1,036       3.66       80,573       1,506       3.77  
Total interest-bearing liabilities   1,395,989       26,919       3.88       1,241,827       18,669       3.03  
Noninterest-bearing liabilities:                      
Noninterest-bearing liabilities   24,332               21,726          
Noninterest-bearing deposits   645,071               665,253          
Stockholders’ equity   261,159               235,605          
Total liabilities and stockholders’ equity $ 2,326,551             $ 2,164,411          
                       
Net interest spread           4.85 %             5.39 %
Net interest income     $ 72,065             $ 69,827      
Net interest margin(4)           6.35 %             6.64 %

(1) Annualized.
(2) Includes nonaccrual loans.
(3) For the six months ended June 30, 2024 and 2023, collectively, portfolio loans yield excluding credit card loans was 7.00% and 6.48%, respectively.
(4) For the six months ended June 30, 2024 and 2023, collectively, credit card loans accounted for 242 and 270 basis points of the reported net interest margin, respectively.

The Company’s reportable segments represent business units with discrete financial information whose results are regularly reviewed by management. The four segments include Commercial Banking, Capital Bank Home Loans (the Company’s mortgage loan division), OpenSky™ (the Company’s credit card division) and the Corporate Office.

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 June 30, 2024, March 31, 2024, and June 30, 2023.

Segments                        
For the three months ended June 30, 2024                    
(in thousands)   Commercial Bank   CBHL   OpenSky™   Corporate(2)   Eliminations   Consolidated
Interest income   $ 33,935     $ 132     $ 15,785     $ 824     $ (61 )   $ 50,615  
Interest expense     13,312       83       —       224       (61 )     13,558  
Net interest income     20,623       49       15,785       600       —       37,057  
Provision for credit losses     1,118       —       2,299       —       —       3,417  
Provision for credit losses on unfunded commitments     104       —       —       —       —       104  
Net interest income after provision     19,401       49       13,486       600       —       33,536  
Noninterest income     677       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 March 31, 2024                    
(in thousands)   Commercial Bank   CBHL   OpenSky™   Corporate(2)   Eliminations   Consolidated
Interest income   $ 32,529     $ 83     $ 14,921     $ 899     $ (63 )   $ 48,369  
Interest expense     13,154       41       —       229       (63 )     13,361  
Net interest income     19,375       42       14,921       670       —       35,008  
Provision for credit losses     1,109       —       1,559       59       —       2,727  
Provision for credit losses on unfunded commitments     142       —       —       —       —       142  
Net interest income after provision     18,124       42       13,362       611       —       32,139  
Noninterest income     704       1,352       3,915       1       —       5,972  
Noninterest expense(1)     12,259       2,105       13,599       1,524       —       29,487  
Net income (loss) before taxes   $ 6,569     $ (711 )   $ 3,678     $ (912 )   $ —     $ 8,624  
                         
Total assets   $ 2,160,051     $ 10,785     $ 105,318     $ 281,766     $ (233,682 )   $ 2,324,238  
                         
For the three months ended June 30, 2023                    
(in thousands)   Commercial Bank   CBHL   OpenSky™   Corporate(2)   Eliminations   Consolidated
Interest income   $ 28,742     $ 111     $ 15,168     $ 1,134     $ (75 )   $ 45,080  
Interest expense     9,537       42       —       236       (75 )     9,740  
Net interest income     19,205       69       15,168       898       —       35,340  
Provision for credit losses     735       —       2,127       —       —       2,862  
Net interest income after provision     18,470       69       13,041       898       —       32,478  
Noninterest income     810       1,161       4,714       2       —       6,687  
Noninterest expense(1)     11,675       2,322       15,118       477       —       29,592  
Net income (loss) before taxes   $ 7,605     $ (1,092 )   $ 2,637     $ 423     $ —     $ 9,573  
                         
Total assets   $ 2,047,400     $ 10,605     $ 116,123     $ 260,309     $ (206,571 )   $ 2,227,866  

________________________
(1) Noninterest expense includes $6.3 million, $6.1 million, and $5.9 million in data processing expense in OpenSky’s™ segment for the three months ended June 30, 2024, March 31, 2024, and June 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.

Segments                        
For the six months ended June 30, 2024                    
(in thousands)   Commercial Bank   CBHL   OpenSky™   Corporate(2)   Eliminations   Consolidated
Interest income   $ 66,464     $ 215     $ 30,706     $ 1,723     $ (124 )   $ 98,984  
Interest expense     26,466       124       —       453       (124 )     26,919  
Net interest income     39,998       91       30,706       1,270       —       72,065  
Provision for credit losses     2,227       —       3,858       59       —       6,144  
Provision for credit losses on unfunded commitments     246       —       —       —       —       246  
Net interest income after provision     37,525       91       26,848       1,211       —       65,675  
Noninterest income     1,381       3,197       8,283       1       —       12,862  
Noninterest expense(1)     24,468       4,605       27,374       2,533       —       58,980  
Net income (loss) before taxes   $ 14,438     $ (1,317 )   $ 7,757     $ (1,321 )   $ —     $ 19,557  
                         
Total assets   $ 2,254,198     $ 19,622     $ 115,593     $ 288,872     $ (239,702 )   $ 2,438,583  
                         
For the six months ended June 30, 2023                    
(in thousands)   Commercial Bank   CBHL   OpenSky™   Corporate(2)   Eliminations   Consolidated
Interest income   $ 55,042     $ 188     $ 31,298     $ 2,112     $ (144 )   $ 88,496  
Interest expense     18,276       72       —       465       (144 )     18,669  
Net interest income     36,766       116       31,298       1,647       —       69,827  
Provision for credit losses     574       —       3,948       —       —       4,522  
Release of credit losses on unfunded commitments     (19 )     —       —       —       —       (19 )
Net interest income after provision     36,211       116       27,350       1,647       —       65,324  
Noninterest income     1,299       2,488       8,924       2       —       12,713  
Noninterest expense(1)     23,443       4,658       26,856       857       —       55,814  
Net income (loss) before taxes   $ 14,067     $ (2,054 )   $ 9,418     $ 792     $ —     $ 22,223  
                         
Total assets   $ 2,047,400     $ 10,605     $ 116,123     $ 260,309     $ (206,571 )   $ 2,227,866  

(1) Noninterest expense includes $12.5 million and $11.9 million in data processing expense in OpenSky’s™ segment for the six months ended June 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.

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited
    Quarter Ended
(in thousands except per share data)   June 30,
2024		   March 31,
2024		   December 31,
2023		   September 30,
2023		   June 30,
2023
Earnings:                    
Net income   $ 8,205     $ 6,562     $ 9,030     $ 9,788     $ 7,318  
Earnings per common share, diluted     0.59       0.47       0.65       0.70       0.52  
Net interest margin     6.46 %     6.24 %     6.40 %     6.71 %     6.63 %
Net interest margin, excluding credit card loans (1)     4.00 %     3.85 %     3.92 %     4.05 %     4.06 %
Return on average assets(2)     1.40 %     1.15 %     1.63 %     1.75 %     1.34 %
Return on average equity(2)     12.53 %     10.19 %     14.44 %     16.00 %     12.30 %
Efficiency ratio     67.11 %     71.95 %     65.91 %     65.02 %     70.41 %
                     
Balance Sheet:                    
Total portfolio loans receivable, net deferred fees   $ 2,021,588     $ 1,964,525     $ 1,902,643     $ 1,861,929     $ 1,837,041  
Total deposits     2,100,428       2,005,695       1,895,996       1,967,988       1,934,361  
Total assets     2,438,583       2,324,238       2,226,176       2,272,484       2,227,866  
Total stockholders' equity     267,854       259,465       254,860       242,878       237,435  
Total average portfolio loans receivable, net deferred fees     1,992,630       1,927,372       1,863,298       1,847,772       1,802,608  
Total average deposits     2,010,736       1,957,559       1,885,092       1,918,467       1,881,380  
Portfolio loans-to-deposit ratio (period-end balances)     96.25 %     97.95 %     100.35 %     94.61 %     94.97 %
Portfolio loans-to-deposit ratio (average balances)     99.10 %     98.46 %     98.84 %     96.32 %     95.81 %
                     
Asset Quality Ratios:                    
Nonperforming assets to total assets     0.58 %     0.62 %     0.72 %     0.67 %     0.71 %
Nonperforming loans to total loans     0.70 %     0.73 %     0.84 %     0.82 %     0.85 %
Net charge-offs to average portfolio loans (2)     0.39 %     0.41 %     0.53 %     0.38 %     0.35 %
Allowance for credit losses to total loans     1.53 %     1.49 %     1.50 %     1.52 %     1.50 %
Allowance for credit losses to non-performing loans     219.40 %     204.37 %     178.34 %     185.61 %     175.03 %
                     
Bank Capital Ratios:                    
Total risk based capital ratio     14.51 %     14.36 %     14.81 %     14.51 %     14.08 %
Tier 1 risk based capital ratio     13.25 %     13.10 %     13.56 %     13.25 %     12.82 %
Leverage ratio     10.36 %     10.29 %     10.51 %     10.04 %     9.77 %
Common equity Tier 1 capital ratio     13.25 %     13.10 %     13.56 %     13.25 %     12.82 %
Tangible common equity     9.53 %     9.66 %     9.91 %     9.08 %     8.93 %
Holding Company Capital Ratios:                    
Total risk based capital ratio     16.98 %     16.83 %     17.38 %     17.11 %     16.81 %
Tier 1 risk based capital ratio     15.19 %     15.03 %     15.55 %     15.27 %     14.96 %
Leverage ratio     11.93 %     11.87 %     12.14 %     11.62 %     11.50 %
Common equity Tier 1 capital ratio     15.08 %     14.92 %     15.43 %     15.27 %     14.96 %
Tangible common equity     10.98 %     11.16 %     11.45 %     10.69 %     10.66 %

_______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.
(2) Annualized.

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited (Continued)
    Quarter Ended
(in thousands except per share data)   June 30,
2024		   March 31,
2024		   December 31,
2023		   September 30,
2023		   June 30,
2023
Composition of Loans:                    
Commercial real estate, non owner-occupied   $ 397,080     $ 377,224     $ 351,116     $ 350,637     $ 348,892  
Commercial real estate, owner-occupied     319,370       330,840       307,911       305,802       311,972  
Residential real estate     601,312       577,112       573,104       558,147       555,133  
Construction real estate     294,489       290,016       290,108       280,905       258,400  
Commercial and industrial     255,686       254,577       239,208       237,549       234,714  
Lender finance     33,294       13,484       11,085       —       —  
Business equity lines of credit     2,989       14,768       14,117       14,155       13,277  
Credit card, net of reserve(3)     122,217       111,898       123,331       122,533       122,925  
Other consumer loans     1,930       738       950       948       1,187  
Portfolio loans receivable   $ 2,028,367     $ 1,970,657     $ 1,910,930     $ 1,870,676     $ 1,846,500  
Deferred origination fees, net     (6,779 )     (6,132 )     (7,642 )     (7,997 )     (8,369 )
Portfolio loans receivable, net   $ 2,021,588     $ 1,964,525     $ 1,903,288     $ 1,862,679     $ 1,838,131  
                     
Composition of Deposits:                    
Noninterest-bearing   $ 684,574     $ 665,812     $ 617,373     $ 680,803     $ 693,129  
Interest-bearing demand     266,070       193,963       199,308       229,035       243,095  
Savings     4,270       4,525       5,211       5,686       5,816  
Money markets     672,455       678,435       663,129       668,774       631,148  
Brokered time deposits     155,148       160,641       142,356       128,665       128,665  
Other time deposits     317,911       302,319       268,619       255,025       232,508  
Total deposits   $ 2,100,428     $ 2,005,695     $ 1,895,996     $ 1,967,988     $ 1,934,361  
                     
Capital Bank Home Loan Metrics:                    
Origination of loans held for sale   $ 82,363     $ 52,080     $ 45,152     $ 50,023     $ 61,480  
Mortgage loans sold     66,417       40,377       34,140       39,364       49,231  
Gain on sale of loans     1,732       1,238       1,015       1,011       1,262  
Purchase volume as a % of originations     96.48 %     97.83 %     89.99 %     92.29 %     93.12 %
Gain on sale as a % of loans sold(4)     2.61 %     3.07 %     2.97 %     2.57 %     2.56 %
Mortgage commissions   $ 582     $ 490     $ 465     $ 528     $ 621  
                     
OpenSky™ Portfolio Metrics:                    
Open customer accounts     537,734       526,950       525,314       529,205       540,058  
Secured credit card loans, gross   $ 90,961     $ 85,663     $ 95,300     $ 98,138     $ 100,218  
Unsecured credit card loans, gross     33,560       28,508       30,817       27,430       25,254  
Noninterest secured credit card deposits     173,499       171,771       173,857       181,185       186,566  

_______________
(3) Credit card loans are presented net of reserve for interest and fees.
(4) Gain on sale percentage is calculated as gain on sale of loans divided by mortgage loans sold.

Appendix

Reconciliation of Non-GAAP Measures

The Company has presented the following non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Company’s results of operations and financial condition. Presentation of these non-GAAP financial measures is consistent with how the Company evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Investors should recognize that the Company’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and the Company strongly encourages a review of its condensed consolidated financial statements in their entirety.

Earnings Metrics, as Adjusted Quarter Ended
(in thousands except per share data) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
                   
Net Income $ 8,205     $ 6,562     $ 9,030     $ 9,788     $ 7,318  
Add: Merger-Related Expenses, net of tax   62       538       —       —       —  
Net Income, as Adjusted $ 8,267     $ 7,100     $ 9,030     $ 9,788     $ 7,318  
                   
Weighted Average Common Shares - Diluted   13,895       13,919       13,989       14,024       14,059  
Earnings per Share - Diluted $ 0.59     $ 0.47     $ 0.65     $ 0.70     $ 0.52  
Earnings per Share - Diluted, as Adjusted $ 0.59     $ 0.51     $ 0.65     $ 0.70     $ 0.52  
                   
Average Assets $ 2,353,868     $ 2,299,234     $ 2,202,479     $ 2,221,117     $ 2,184,351  
Return on Average Assets(1)   1.40 %     1.15 %     1.63 %     1.75 %     1.34 %
Return on Average Assets, as Adjusted(1)   1.41 %     1.24 %     1.63 %     1.75 %     1.34 %
                   
Average Equity $ 263,425     $ 258,892     $ 248,035     $ 242,671     $ 238,684  
Return on Average Equity(1)   12.53 %     10.19 %     14.44 %     16.00 %     12.30 %
Return on Average Equity, as Adjusted(1)   12.62 %     11.03 %     14.44 %     16.00 %     12.30 %
                   
Net Interest Income $ 37,057     $ 35,008     $ 34,889     $ 36,810     $ 35,340  
Noninterest Income   6,890       5,972       5,936       6,326       6,687  
Total Revenue $ 43,947     $ 40,980     $ 40,825     $ 43,136     $ 42,027  
Noninterest Expense $ 29,493     $ 29,487     $ 26,907     $ 28,046     $ 29,592  
Efficiency Ratio(2)   67.11 %     71.95 %     65.91 %     65.02 %     70.41 %
                   
Noninterest Expense $ 29,493     $ 29,487     $ 26,907     $ 28,046     $ 29,592  
Less: Merger-Related Expenses   83       712       —       —       —  
Noninterest Expense, as Adjusted $ 29,410     $ 28,775     $ 26,907     $ 28,046     $ 29,592  
Efficiency Ratio, as Adjusted(2)   66.92 %     70.22 %     65.91 %     65.02 %     70.41 %

_______________
(1) Annualized.
(2) The efficiency ratio is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).

Earnings Metrics, as Adjusted Six Months Ended
(in thousands except per share data) June 30, 2024   June 30, 2023
       
Net Income $ 14,767     $ 17,053  
Add: Merger-Related Expenses, Net of Tax   600       —  
Net Income, as Adjusted $ 15,367     $ 17,053  
       
Weighted average common shares - Diluted   13,907       14,210  
Earnings per share - Diluted $ 1.06     $ 1.20  
Earnings per share - Diluted, as Adjusted $ 1.10     $ 1.20  
       
Average Assets $ 2,326,551     $ 2,164,411  
Return on Average Assets(1)   1.28 %     1.59 %
Return on Average Assets, as Adjusted(1)   1.33 %     1.59 %
       
Average Equity $ 261,159     $ 235,605  
Return on Average Equity(1)   11.37 %     14.60 %
Return on Average Equity, as Adjusted(1)   11.83 %     14.60 %
       
Net Interest Income $ 72,065     $ 69,827  
Noninterest Income   12,862       12,713  
Total Revenue $ 84,927     $ 82,540  
Noninterest Expense $ 58,980     $ 55,814  
Efficiency Ratio(2)   69.45 %     67.62 %
       
Noninterest Expense $ 58,980     $ 55,814  
Less: Merger-Related Expenses   795       —  
Noninterest Expense, as Adjusted $ 58,185     $ 55,814  
Efficiency Ratio, as Adjusted(2)   68.51 %     67.62 %

_______________
(1) Annualized.
(2) The efficiency ratio is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).

Net Interest Margin, as Adjusted Quarter Ended
(in thousands) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
                   
Net Interest Income $ 37,057     $ 35,008     $ 34,889     $ 36,810     $ 35,340  
Less: Credit Card Loan Income   15,205       14,457       14,677       15,792       14,818  
Net Interest Income, as Adjusted $ 21,852     $ 20,551     $ 20,212     $ 21,018     $ 20,522  
Average Interest Earning Assets   2,307,070       2,254,663       2,162,459       2,176,477       2,136,936  
Less: Average Credit Card Loans   111,288       110,483       114,551       116,814       110,574  
Total Average Interest Earning Assets, as Adjusted $ 2,195,782     $ 2,144,180     $ 2,047,908     $ 2,059,663     $ 2,026,362  
Net Interest Margin, as Adjusted   4.00 %     3.85 %     3.92 %     4.05 %     4.06 %


       
Net Interest Margin, as Adjusted Six Months Ended
(in thousands) June 30, 2024   June 30, 2023
       
Net Interest Income $ 72,065     $ 69,827  
Less: Credit Card Loan Income   29,662       30,627  
Net Interest Income, as Adjusted $ 42,403     $ 39,200  
Average Interest Earning Assets   2,280,867       2,120,553  
Less: Average Credit Card Loans   110,885       113,197  
Total Average Interest Earning Assets, as Adjusted $ 2,169,982     $ 2,007,356  
Net Interest Margin, as Adjusted   3.93 %     3.94 %
               


Portfolio Loans Receivable Yield, as Adjusted Quarter Ended
(in thousands) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
                   
Portfolio Loans Receivable Interest Income $ 48,143     $ 45,908     $ 45,026     $ 45,274     $ 42,879  
Less: Credit Card Loan Income   15,205       14,457       14,677       15,792       14,818  
Portfolio Loans Receivable Interest Income, as Adjusted $ 32,938     $ 31,451     $ 30,349     $ 29,482     $ 28,061  
Average Portfolio Loans Receivable   1,992,630       1,927,372       1,863,298       1,847,772       1,802,608  
Less: Average Credit Card Loans   111,288       110,483       114,551       116,814       110,574  
Total Average Portfolio Loans Receivable, as Adjusted $ 1,881,342     $ 1,816,889     $ 1,748,747     $ 1,730,958     $ 1,692,034  
Portfolio Loans Receivable Yield, as Adjusted   7.04 %     6.96 %     6.89 %     6.76 %     6.65 %
                                       


Portfolio Loans Receivable Yield, as Adjusted Six Months Ended
(in thousands) June 30, 2024   June 30, 2023
       
Portfolio Loans Receivable Interest Income $ 94,051     $ 84,078  
Less: Credit Card Loan Income   29,662       30,627  
Portfolio Loans Receivable Interest Income, as Adjusted $ 64,389     $ 53,451  
Average Portfolio Loans Receivable   1,960,001       1,777,762  
Less: Average Credit Card Loans   110,885       113,197  
Total Average Portfolio Loans Receivable, as Adjusted $ 1,849,116     $ 1,664,565  
Portfolio Loans Receivable Yield, as Adjusted   7.00 %     6.48 %
               


Pre-tax, Pre-Provision Net Revenue ("PPNR") Quarter Ended
(in thousands) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
                   
Net Income $ 8,205     $ 6,562     $ 9,030     $ 9,788     $ 7,318  
Add: Income Tax Expense   2,728       2,062       2,186       2,998       2,255  
Add: Provision for Credit Losses   3,417       2,727       2,808       2,280       2,862  
Add: Provision for (Release of) Credit Losses on Unfunded Commitments   104       142       (106 )     24       —  
Pre-tax, Pre-Provision Net Revenue ("PPNR") $ 14,454     $ 11,493     $ 13,918     $ 15,090     $ 12,435  
                                       


Pre-tax, Pre-Provision Net Revenue ("PPNR") Six Months Ended
(in thousands) June 30, 2024   June 30, 2023
       
Net Income $ 14,767     $ 17,053  
Add: Income Tax Expense   4,790       5,170  
Add: Provision for Credit Losses   6,144       4,522  
Add: Provision for (Release of) Credit Losses on Unfunded Commitments   246       (19 )
Pre-tax, Pre-Provision Net Revenue ("PPNR") $ 25,947     $ 26,726  
               


PPNR, as Adjusted Quarter Ended
(in thousands) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
                   
Net Income $ 8,205     $ 6,562     $ 9,030     $ 9,788     $ 7,318  
Add: Income Tax Expense   2,728       2,062       2,186       2,998       2,255  
Add: Provision for Credit Losses   3,417       2,727       2,808       2,280       2,862  
Add: Provision for (Release of) Credit Losses on Unfunded Commitments   104       142       (106 )     24       —  
Add: Merger-Related Expenses   83       712       —       —       —  
PPNR, as Adjusted $ 14,537     $ 12,205     $ 13,918     $ 15,090     $ 12,435  
                                       


PPNR, as Adjusted Six Months Ended
(in thousands) June 30, 2024   June 30, 2023
       
Net Income $ 14,767     $ 17,053  
Add: Income Tax Expense   4,790       5,170  
Add: Provision for Credit Losses   6,144       4,522  
Add: Provision for (Release of) Credit Losses on Unfunded Commitments   246       (19 )
Add: Merger-Related Expenses   795       —  
PPNR, as Adjusted $ 26,742     $ 26,726  
               


Allowance for Credit Losses to Total Portfolio Loans Quarter Ended
(in thousands) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
                   
Allowance for Credit Losses $ 30,832     $ 29,350     $ 28,610     $ 28,279     $ 27,495  
Total Portfolio Loans   2,021,588       1,964,525       1,903,288       1,862,679       1,838,131  
Allowance for Credit Losses to Total Portfolio Loans   1.53 %     1.49 %     1.50 %     1.52 %     1.50 %
                                       


Nonperforming Assets to Total Assets Quarter Ended
(in thousands) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
                   
Total Nonperforming Assets $ 14,053     $ 14,361     $ 16,042     $ 15,236     $ 15,709  
Total Assets   2,438,583       2,324,238       2,226,176       2,272,484       2,227,866  
Nonperforming Assets to Total Assets   0.58 %     0.62 %     0.72 %     0.67 %     0.71 %
                                       


Nonperforming Loans to Total Portfolio Loans Quarter Ended
(in thousands) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
                   
Total Nonperforming Loans $ 14,053     $ 14,361     $ 16,042     $ 15,236     $ 15,709  
Total Portfolio Loans   2,021,588       1,964,525       1,903,288       1,862,679       1,838,131  
Nonperforming Loans to Total Portfolio Loans   0.70 %     0.73 %     0.84 %     0.82 %     0.85 %
                                       


Net Charge-Offs to Average Portfolio Loans Quarter Ended
(in thousands) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
                   
Total Net Charge-Offs $ 1,935     $ 1,987     $ 2,477     $ 1,780     $ 1,583  
Total Average Portfolio Loans   1,992,630       1,927,372       1,863,298       1,847,772       1,802,608  
Net Charge-Offs to Average Portfolio Loans, Annualized   0.39 %     0.41 %     0.53 %     0.38 %     0.35 %
                                       


Net Charge-offs to Average Portfolio Loans Six Months Ended
(in thousands) June 30, 2024   June 30, 2023
       
Total Net Charge-Offs $ 3,922     $ 4,216  
Total Average Portfolio Loans   1,960,001       1,777,762  
Net Charge-Offs to Average Portfolio Loans   0.40 %     0.48 %
               


Tangible Book Value per Share Quarter Ended
(in thousands, except per share amounts) June 30, 2024   March 31, 2024   December 31, 2023   September 30, 2023   June 30, 2023
                   
Total Stockholders' Equity $ 267,854     $ 259,465     $ 254,860     $ 242,878     $ 237,435  
Less: Preferred Equity   —       —       —       —       —  
Less: Intangible Assets   —       —       —       —       —  
Tangible Common Equity $ 267,854     $ 259,465     $ 254,860     $ 242,878     $ 237,435  
Period End Shares Outstanding   13,910,467       13,889,563       13,922,532       13,893,083       13,981,414  
Tangible Book Value per Share $ 19.26     $ 18.68     $ 18.31     $ 17.48     $ 16.98  
                                       

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. Capital Bancorp had assets of approximately $2.4 billion at June 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 ability to complete, or any delays in completing, the pending merger between the Company and IFHI; any failure to realize the anticipated benefits of the pending merger transaction when expected or at all; certain restrictions during the pendency of the transaction that may impact the Company's ability to pursue certain business opportunities or strategic transactions; the possibility that the pending merger transaction may be more expensive to complete than anticipated, including as a result of conditions imposed by regulators, unexpected conditions, factors or events, diversion of management's attention from ongoing business operations and opportunities; 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


Capital Bancorp, Inc.