Press Release

Capital Bancorp, Inc. Posts Broad Based Growth Leading to a Sharp Profitability Increase

October 28, 2024 at 4:03 PM EDT

Third Quarter 2024 Results

  • Net Income of $8.7 million, or $0.62 per share

    • Net Income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), of $9.2 million, or $0.66 per share

  • Tangible Book Value Per Share(1) of $20.13, increased 4.5%, or $0.87 as compared to $19.26 (2Q 2024).

  • Net Interest Income increased $1.3 million, or 3.5% (not annualized), from 2Q 2024

  • Net Interest Margin ("NIM") decreased to 6.41% as compared to 6.46% (2Q 2024)

    • Core NIM, as adjusted to exclude the impact of credit card loans (non-GAAP)(1) increased to 4.08% as compared to 4.00% (2Q 2024)

  • Loan Growth of $85.9 million, or 16.9% annualized for 3Q 2024

  • Deposit Growth of $85.8 million, or 16.2% annualized for 3Q 2024; Noninterest bearing deposits increased $33.5 million, or 19.5% annualized from 2Q 2024

  • Cash dividend of $0.10 per share declared
     

ROCKVILLE, Md., Oct. 28, 2024 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $8.7 million, or $0.62 per diluted share, for the third quarter 2024, compared to net income of $8.2 million, or $0.59 per diluted share, for the second quarter 2024, and $9.8 million, or $0.70 per diluted share, for the third quarter 2023. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), was $9.2 million, or $0.66 per diluted share, for the third quarter 2024, compared to $8.3 million, or $0.59 per diluted share, for the second quarter 2024.

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

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

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

(1) Reconciliations of the non–U.S. generally accepted accounting principles ("GAAP") measures are set forth in the Appendix at the end of this press release.

Acquisition of Integrated Financial Holdings, Inc.
On October 1, 2024, the Company completed its previously announced merger with Integrated Financial Holdings, Inc. ("IFHI"). Pursuant to the terms of the Merger Agreement, each share of IFHI’s common stock, par value $1.00 per share (“IFHI Common Stock”) was converted into the right to receive (a) 1.115 shares of common stock of the Company, par value $0.01 per share (“Capital Common Stock”); and (b) $5.36 in cash per share of IFHI Common Stock held immediately prior to the Effective Time, in addition to cash in lieu of fractional shares. In addition, each stock option granted by IFHI to purchase shares of IFHI Common Stock, whether vested or unvested, outstanding immediately prior to the Effective Time, was assumed by the Company and converted into an equivalent option to purchase Capital Common Stock, with the same terms and conditions as applied to the IFHI stock option.

In the first nine months of 2024, the Company incurred pre-tax merger-related expenses of $1.3 million, including expenses totaling $0.5 million for the third quarter 2024, consistent with modeled expectations.

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

 Third Quarter 2024 Second Quarter 2024
(in thousands, except per share data)Income Before Income Taxes Income Tax Expense (Benefit) Net Income Diluted Earnings per Share Income Before Income Taxes Income Tax Expense Net Income Diluted Earnings per Share
GAAP Earnings$11,499  $2,827  $8,672  $0.62  $10,933  $2,728  $8,205  $0.59 
Add: Merger-Related Expenses 520   (37)  557     83   21   62   
Non-GAAP Earnings$12,019  $2,790  $9,229  $0.66  $11,016  $2,749  $8,267  $0.59 

 

 Nine Months Ended September 30, 2024
(in thousands, except per share data)Income Before Income Taxes Income Tax Expense Net Income Diluted Earnings per Share
GAAP Earnings$31,056  $7,617  $23,439  $1.69 
Add: Merger-Related Expenses 1,315   158   1,157   
Non-GAAP Earnings$32,371  $7,775  $24,596  $1.77 
                

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

Third Quarter 2024 Highlights

Earnings Summary

Net income of $8.7 million, or $0.62 per diluted share, increased $0.5 million compared to $8.2 million, or $0.59 per diluted share, for the second quarter 2024. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), increased $0.9 million to $9.2 million, or $0.66 per diluted share, for the third quarter 2024 compared to $8.3 million, or $0.59 per diluted share, for the second quarter 2024.

  • Net interest income of $38.4 million increased $1.3 million, or 3.5%, compared to the second quarter 2024.

    • Interest income of $52.6 million increased $2.0 million, or 3.9%, over the second quarter 2024 primarily from $1.7 million in portfolio loan interest income, as growth in average balances increased $61.0 million. Interest income from interest-bearing deposits held at other financial institutions increased $0.2 million, as average balances increased $14.0 million to $91.1 million.

    • Interest expense of $14.3 million increased $0.7 million, or 5.1% over the second quarter 2024 due to increases in customer money market deposits and time deposits of $0.4 million and $0.3 million, respectively. Average balances increased $27.0 million and $14.0 million, respectively.

  • The provision for credit losses was $3.7 million, an increase of $0.3 million from the second quarter 2024 primarily driven by unsecured credit card loan growth in the quarter. Net charge-offs totaled $2.7 million in the third quarter including $1.7 million from credit card related loans, $0.6 million from commercial real estate, and $0.4 million from commercial and industrial loans. The $0.8 million net charge-offs increase quarter over quarter includes $0.6 million from a commercial loan charge-off that was fully reserved for, and $0.2 million from higher credit card loans. At September 30, 2024, the allowance for credit losses to total loans ratio was 1.51%, down 2 basis points from the ratio at June 30, 2024.

  • Noninterest income of $6.6 million decreased $0.3 million as compared to the second quarter 2024 primarily due to decreased credit card fees of $0.3 million.

  • Noninterest expense of $29.7 million increased $0.2 million as compared to the second quarter 2024. Noninterest expense of $29.2 million, excluding merger-related expenses of $0.5 million, decreased $0.2 million as compared to the second quarter 2024. Variances include:

    • Advertising expense of $1.2 million decreased $0.8 million off of seasonally high second quarter levels.

    • Professional fees of $2.0 million increased $0.2 million primarily related to increased non-merger-related legal fees.

    • Other expense categories increased $0.4 million including slight increases from data and loan processing expense and operational losses.

  • Income tax expense of $2.8 million, or 24.6% of pre-tax income for the third quarter 2024, increased $0.1 million from $2.7 million, or 25.0% of pre-tax income for the second quarter 2024.

Balance Sheet

Total assets of $2.6 billion at September 30, 2024 increased $122.2 million, or 5.0% (not annualized), from June 30, 2024.

  • Cash and cash equivalents of $156.7 million at September 30, 2024 increased $20.2 million from June 30, 2024, as total deposits increased $85.8 million, and Federal Home Loan Bank advances increased $20.0 million, partially offset by an increase in total portfolio loans of $85.9 million.

  • Total portfolio loans of $2.1 billion at September 30, 2024 increased $85.9 million, or 4.3% (not annualized) from June 30, 2024. Total average loans increased $61.0 million quarter over quarter.

    • Owner-occupied commercial real estate loans increased $32.1 million, or 10.0% (not annualized) from June 30, 2024.

    • The average portfolio loans-to-deposit ratio of 98.20% for the three months ended September 30, 2024 remained stable.

  • Total deposits of $2.2 billion at September 30, 2024 increased $85.8 million, or 4.1% (not annualized), from June 30, 2024, The increase includes $40.4 million of customer time deposits, $33.5 million of noninterest-bearing deposits primarily related to growth in title company deposit balances and $14.1 million of growth in customer money market deposits.

    • Uninsured and unprotected deposits were approximately $645.6 million as of September 30, 2024, representing 29.5% of the Company's deposit portfolio.

    • Low and no interest bearing deposits of $988.4 million increased $33.5 million, or 3.5% (not annualized) from June 30, 2024. Average noninterest-bearing deposits of $680.7 million increased $27.7 million, or 4.2% (not annualized), and represented 32.6% of total average deposits at September 30, 2024.

  • The investment securities portfolio continues to be classified as available-for-sale and had a fair market value of $208.7 million, or 8.1% of total assets, an effective duration of 3.0 years, with U.S. Treasury Securities representing 61.8% of the overall investment portfolio at September 30, 2024. The AOCI on the investment securities portfolio decreased $4.5 million during the quarter to a negative $8.6 million as of September 30, 2024, which represents 3.1% of total stockholders' equity. The Company does not have a held-to-maturity investment securities portfolio.

  • Liquidity - The Company maintains stable and reliable sources of available borrowings consistent with prior quarter. Sources of available borrowings at September 30, 2024 totaled $691.8 million, including available collateralized lines of credit of $500.4 million, unsecured lines of credit with other banks of $76.0 million and unpledged investment securities available as collateral for potential additional borrowings of $115.4 million.

  • Capital Positions - As of September 30, 2024, the Company reported a robust common equity tier 1 capital ratio of 14.78%, compared to 15.08% at June 30, 2024. At September 30, 2024, the Company and the Bank maintain regulatory capital ratios that exceed all capital adequacy requirements.

Financial Metrics

Net Interest Margin - Net interest margin decreased 5 basis points to 6.41% for the three months ended September 30, 2024, compared to prior quarter. Core Net Interest Margin, as adjusted to exclude the impact of OpenSky™ credit card loans (non-GAAP)(1), increased 8 basis points to 4.08% as compared to prior quarter.

  • The average yield on interest earning assets of 8.79% decreased 3 basis points compared to the prior quarter. The yield on portfolio loans, as adjusted to exclude the impact of OpenSky™ credit card loans (non-GAAP)(1), of 7.15% for the third quarter 2024, increased 11 basis points primarily from portfolio turnover.

  • The total cost of deposits increased 3 basis points to 2.64% for the third quarter 2024 as compared to the prior quarter.

  • The total cost of interest-bearing deposits increased 5 basis points to 3.92% for the third quarter 2024 as compared to the prior quarter.
     

Efficiency Ratios – The efficiency ratio was 66.1% for the three months ended September 30, 2024, compared to 67.1% for the three months ended June 30, 2024. The efficiency ratio, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), was 64.9% for the three months ended September 30, 2024 compared to 66.9% for the three months ended June 30, 2024.

Credit Metrics and Asset Quality - Overall credit performance remains stable with the allowance for credit losses to total loans ratio decreasing 2 basis points to 1.51% at September 30, 2024 as compared to June 30, 2024. Nonperforming assets increased 2 basis point to 0.60% of total assets at September 30, 2024 as compared to June 30, 2024. Total nonaccrual loans at September 30, 2024 increased $1.4 million to $15.5 million compared to June 30, 2024. At September 30, 2024, special mention loans totaled $20.3 million, or 1.0% of total portfolio loans, as compared to $23.3 million, or 1.2% of total portfolio loans, at June 30, 2024. At September 30, 2024, substandard loans totaled $23.8 million, or 1.1% of total portfolio loans, as compared to $22.1 million, or 1.2% of total portfolio loans, at June 30, 2024.

Performance Ratios – Annualized return on average assets ("ROAA") and annualized return on average equity ("ROAE") were 1.42% and 12.59%, respectively, for the three months ended September 30, 2024, compared to 1.40% and 12.53%, respectively, for the three months ended June 30, 2024.

  • Annualized ROAA and annualized ROAE, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), were 1.51% and 13.40%, respectively, for the three months ended September 30, 2024, compared to 1.41% and 12.62%, respectively, for the three months ended June 30, 2024.
     

Consistent Tangible Book Value Growth - Tangible book value per common share(1) grew $0.87, or 4.5%, to $20.13 at September 30, 2024 when compared to June 30, 2024. The Company did not have goodwill or other intangible assets during any of the periods presented and therefore, tangible book value per share(1) is equal to book value per share.

Commercial Bank

Continued Portfolio Loan Growth - Gross portfolio loans, excluding OpenSky™ credit card loans, increased $80.5 million, to $2.0 billion, at September 30, 2024 compared to June 30, 2024.

The $80.5 million gross portfolio loan growth includes commercial real estate loans of $38.5 million, residential real estate loans of $22.4 million and commercial and industrial loans of $16.1 million. Historical gross portfolio loan balances are disclosed in the Composition of Loans table within the Historical Financial Highlights.

Net Interest Income - Interest income of $35.8 million increased $1.9 million from prior quarter, driven by loan growth and higher loan yields. Interest expense of $14.0 million increased $0.7 million, driven by an increase in average balances in the third quarter 2024.

Credit Metrics - Nonperforming assets increased 2 basis point to 0.60% of total assets at September 30, 2024 compared to June 30, 2024. Total nonaccrual loans at September 30, 2024 increased to $15.5 million compared to June 30, 2024.

The following tables present non-owner-occupied and owner-occupied commercial real estate loans and multi-family loans and the weighted average loan-to-value ("LTV").

Non-owner-occupied commercial real estate loans, including multi-family

 As of September 30, 2024
(in thousands)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$170,513  $1,853  58.1% Not Applicable 8.1%
          
Retail$116,324  $1,454  56.6% 28.8% 5.5%
Mixed use 96,337   1,189  52.8% 23.9% 4.6%
Hotel 74,343   4,130  52.4% 18.4% 3.5%
Industrial 63,109   1,127  54.2% 15.6% 3.0%
Office 13,356   557  63.2% 3.3% 0.6%
Other 40,018   1,819  55.4% 10.0% 1.9%
Total non-owner-occupied commercial real estate loans$403,487  $1,436  54.6% 100.0% 19.1%
Total portfolio loans, gross$2,113,705         
            

Owner-occupied commercial real estate loans

 As of September 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$108,048  $1,522  56.9% 30.7% 5.1%
Office 44,781   640  57.5% 12.7% 2.1%
Retail 41,137   762  59.2% 11.7% 1.9%
Mixed use 17,550   924  65.2% 5.0% 0.8%
Other(2) 139,946   2,799  61.6% 39.9% 6.6%
Total owner-occupied commercial real estate loans$351,462  $1,331  59.6% 100.0% 16.6%
Total portfolio loans, gross$2,113,705         
            

(1) The weighted average LTV of the loan categories previously mentioned are calculated by reference to the most recent appraisal of the property securing each loan.
(2) Other owner-occupied commercial real estate loans include special purpose loans of $57.9 million, skilled nursing loans of $53.8 million, and other loans of $28.2 million.

Classified and Criticized Loans - At September 30, 2024, special mention loans totaled $20.3 million, or 1.0% of total portfolio loans, as compared to $23.3 million, or 1.2% of total portfolio loans, at June 30, 2024. At September 30, 2024, substandard loans totaled $23.8 million, or 1.1% of total portfolio loans, as compared to $22.1 million, or 1.2% of total portfolio loans, at June 30, 2024.

OpenSky™

Revenues - Total revenue of $19.7 million decreased $0.4 million from the prior quarter. Interest income of $15.6 million decreased $0.2 million from the prior quarter. Average OpenSky™ credit card loan balances, net of reserves and deferred fees of $119.5 million for the third quarter 2024, increased $8.2 million, or 7.3% (not annualized), compared to prior quarter. Noninterest income of $4.1 million decreased $0.3 million as compared to prior quarter primarily related to lower annual fee income.

Noninterest Expense - Total noninterest expense of $13.3 million decreased $0.5 million primarily related to a reduction in seasonally high advertising expense in the second quarter 2024.

Loan and Deposit Balances - Loan balances, net of reserves, of $127.1 million at September 30, 2024 increased by $4.9 million, or 4.0%, compared to $122.2 million at June 30, 2024. Corresponding deposit balances of $170.8 million at September 30, 2024 decreased $2.7 million, or 1.6%, compared to $173.5 million at June 30, 2024. Gross unsecured loan balances of $39.7 million at September 30, 2024 increased $6.2 million, or 18.4%, compared to $33.6 million at June 30, 2024. During the third quarter 2024, the number of credit card accounts increased by 11,218 to 548,952 from June 30, 2024.

OpenSky™ Credit - Portfolio credit metrics continue to be stable and generally consistent with modeled expectations during the third quarter 2024. The provision for credit losses of $2.3 million remained flat when compared to the prior quarter.

 
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited
 
              
 Quarter Ended 3Q24 vs 2Q24 3Q24 vs 3Q23
(in thousands, except per share data)September 30, 2024 June 30, 2024 September 30, 2023 $ Change % Change $ Change % Change
Earnings Summary             
Interest income$52,610  $50,615  $47,741  $1,995  3.9% $4,869  10.2%
Interest expense 14,256   13,558   10,931   698  5.1%  3,325  30.4%
Net interest income 38,354   37,057   36,810   1,297  3.5%  1,544  4.2%
Provision for credit losses 3,748   3,417   2,280   331  9.7%  1,468  64.4%
Provision for credit losses on unfunded commitments 17   104   24   (87) (83.7)%  (7) (29.2)%
Noninterest income 6,635   6,890   6,326   (255) (3.7)%  309  4.9%
Noninterest expense 29,725   29,493   28,046   232  0.8%  1,679  6.0%
Income before income taxes 11,499   10,933   12,786   566  5.2%  (1,287) (10.1)%
Income tax expense 2,827   2,728   2,998   99  3.6%  (171) (5.7)%
Net income$8,672  $8,205  $9,788  $467  5.7% $(1,116) (11.4)%
              
Pre-tax pre-provision net revenue ("PPNR")(1)$15,264  $14,454  $15,090  $810  5.6% $174  1.2%
PPNR, as adjusted(1)$15,784  $14,537  $15,090  $1,247  8.6% $694  4.6%
              
Common Share Data             
Earnings per share - Basic$0.62  $0.59  $0.70  $0.03  5.1% $(0.08) (11.4)%
Earnings per share - Diluted$0.62  $0.59  $0.70  $0.03  5.1% $(0.08) (11.4)%
Earnings per share - Diluted, as adjusted(1)$0.66  $0.59  $0.70  $0.07  11.9% $(0.04) (5.7)%
Weighted average common shares - Basic 13,914   13,895   13,933         
Weighted average common shares - Diluted 13,951   13,895   14,024         
              
Return Ratios             
Return on average assets (annualized) 1.42%  1.40%  1.75%        
Return on average assets, as adjusted (annualized)(1) 1.51%  1.41%  1.75%        
Return on average equity (annualized) 12.59%  12.53%  16.00%        
Return on average equity, as adjusted (annualized)(1) 13.40%  12.62%  16.00%        

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

 
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)
 
         
  Nine Months Ended    
  September 30

,

    
(in thousands, except per share data) 2024 2023 $ Change % Change
Earnings Summary        
Interest income $151,594  $136,237  $15,357  11.3%
Interest expense  41,175   29,600   11,575  39.1%
Net interest income  110,419   106,637   3,782  3.5%
Provision for credit losses  9,892   6,802   3,090  45.4%
Provision for credit losses on unfunded commitments  263   5   258  5,160.0%
Noninterest income  19,497   19,039   458  2.4%
Noninterest expense  88,705   83,860   4,845  5.8%
Income before income taxes  31,056   35,009   (3,953) (11.3)%
Income tax expense  7,617   8,168   (551) (6.7)%
Net income $23,439  $26,841  $(3,402) (12.7)%
         
Pre-tax pre-provision net revenue ("PPNR")(1) $41,211  $41,816  $(605) (1.4)%
PPNR, as adjusted(1) $42,526  $41,816  $710  1.7%
         
Common Share Data        
Earnings per share - Basic $1.69  $1.91  $(0.22) (11.5)%
Earnings per share - Diluted $1.69  $1.90  $(0.21) (11.1)%
Earnings per share - Diluted, as adjusted(1) $1.77  $1.90     
Weighted average common shares - Basic  13,909   14,038     
Weighted average common shares - Diluted  13,909   14,112     
         
Return Ratios        
Return on average assets (annualized)  1.32%  1.64%    
Return on average assets, as adjusted (annualized)(1)  1.39%  1.64%    
Return on average equity (annualized)  11.79%  15.08%    
Return on average equity, as adjusted (annualized)(1)  12.37%  15.08%    

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

 
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)
 
            
 Quarter Ended   Quarter Ended
 September 30

,

  June 30

,

 March 31

,

 December 31

,

(in thousands, except per share data)2024
 		 2023
 		 % Change 2024
 		 2023
 		 2023
 
Balance Sheet Highlights           
Assets$2,560,788  $2,272,484  12.7% $2,438,583  $2,324,238  $2,226,176 
Investment securities available for sale 208,700   206,055  1.3%  207,917   202,254   208,329 
Mortgage loans held for sale 19,554   4,843  303.8%  19,219   10,303   7,481 
Portfolio loans receivable(2) 2,107,522   1,862,679  13.1%  2,021,588   1,964,525   1,903,288 
Allowance for credit losses 31,925   28,279  12.9%  30,832   29,350   28,610 
Deposits 2,186,224   1,967,988  11.1%  2,100,428   2,005,695   1,895,996 
FHLB borrowings 52,000   22,000  136.4%  32,000   22,000   22,000 
Other borrowed funds 12,062   12,062  —%  12,062   12,062   27,062 
Total stockholders' equity 280,111   242,878  15.3%  267,854   259,465   254,860 
Tangible common equity(1) 280,111   242,878  15.3%  267,854   259,465   254,860 
            
Common shares outstanding 13,918   13,893  0.2%  13,910   13,890   13,923 
Book value per share$20.13  $17.48  15.2% $19.26  $18.68  $18.31 
Tangible book value per share(1)$20.13  $17.48  15.2% $19.26  $18.68  $18.31 
Dividends per share$0.10  $0.08  25.0% $0.08  $0.08  $0.08 

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

 
Consolidated Statements of Income (Unaudited)
 
 Three Months EndedNine Months Ended
(in thousands)September 30, 2024 

 

June 30, 2024		 

 

March 31, 2024		 

 

December 31, 2023		 

 

September 30, 2023		 September 30, 2024 

 

September 30, 2023
Interest income             
Loans, including fees$50,047  $48,275  $45,991  $45,109  $45,385  $144,313  $129,651 
Investment securities available for sale 1,343   1,308   1,251   1,083   1,089   3,902   3,732 
Federal funds sold and other 1,220   1,032   1,127   777   1,267   3,379   2,854 
Total interest income 52,610   50,615   48,369   46,969   47,741   151,594   136,237 
              
Interest expense             
Deposits 13,902   13,050   12,833   11,759   10,703   39,785   27,866 
Borrowed funds 354   508   528   321   228   1,390   1,734 
Total interest expense 14,256   13,558   13,361   12,080   10,931   41,175   29,600 
              
Net interest income 38,354   37,057   35,008   34,889   36,810   110,419   106,637 
Provision for credit losses 3,748   3,417   2,727   2,808   2,280   9,892   6,802 
Provision for (release of) credit losses on unfunded commitments 17   104   142   (106)  24   263   5 
Net interest income after provision for credit losses 34,589   33,536   32,139   32,187   34,506   100,264   99,830 
              
Noninterest income             
Service charges on deposits 235   200   207   240   250   642   724 
Credit card fees 4,055   4,330   3,881   3,970   4,387   12,266   13,303 
Mortgage banking revenue 1,882   1,990   1,453   1,166   1,243   5,325   3,730 
Other income 463   370   431   560   446   1,264   1,282 
Total noninterest income 6,635   6,890   5,972   5,936   6,326   19,497   19,039 
              
Noninterest expenses             
Salaries and employee benefits 13,345   13,272   12,907   11,638   12,419   39,524   37,116 
Occupancy and equipment 1,791   1,864   1,613   1,573   1,351   5,268   4,100 
Professional fees 1,980   1,769   1,947   1,930   2,358   5,696   7,340 
Data processing 6,930   6,788   6,761   6,128   6,469   20,479   19,558 
Advertising 1,223   2,072   2,032   1,433   1,565   5,327   4,728 
Loan processing 615   476   371   198   426   1,462   1,435 
Foreclosed real estate expenses, net 1   —   1   —   1   2   7 
Merger-related expenses 520   83   712   —   —   1,315   — 
Operational losses 1,008   782   931   1,490   953   2,721   3,123 
Other operating 2,312   2,387   2,212   2,517   2,504   6,911   6,453 
Total noninterest expenses 29,725   29,493   29,487   26,907   28,046   88,705   83,860 
Income before income taxes 11,499   10,933   8,624   11,216   12,786   31,056   35,009 
Income tax expense 2,827   2,728   2,062   2,186   2,998   7,617   8,168 
Net income$8,672  $8,205  $6,562  $9,030  $9,788  $23,439  $26,841 
                            

 

Consolidated Balance Sheets
 (unaudited) (unaudited) (unaudited) (audited) (unaudited)
(in thousands, except share data)September 30, 2024 

 

June 30, 2024		 

 

March 31, 2024		 

 

December 31, 2023		 

 

September 30, 2023
Assets         
Cash and due from banks$23,462  $19,294  $12,361  $14,513  $13,767 
Interest-bearing deposits at other financial institutions 133,180   117,160   72,787   39,044   130,428 
Federal funds sold 58   57   56   407   1,957 
Total cash and cash equivalents 156,700   136,511   85,204   53,964   146,152 
Investment securities available for sale 208,700   207,917   202,254   208,329   206,055 
Restricted investments 5,895   4,930   4,441   4,353   4,340 
Loans held for sale 19,554   19,219   10,303   7,481   4,843 
Portfolio loans receivable, net of deferred fees and costs 2,107,522   2,021,588   1,964,525   1,903,288   1,862,679 
Less allowance for credit losses (31,925)  (30,832)  (29,350)  (28,610)  (28,279)
Total portfolio loans held for investment, net 2,075,597   1,990,756   1,935,175   1,874,678   1,834,400 
Premises and equipment, net 5,959   5,551   4,500   5,069   5,297 
Accrued interest receivable 12,468   12,162   12,258   11,494   11,231 
Deferred tax asset 10,748   12,150   12,311   12,252   13,644 
Bank owned life insurance 38,779   38,414   38,062   37,711   37,315 
Accounts receivable 597   1,336   11,637   1,055   696 
Other assets 25,791   9,637   8,093   9,790   8,511 
Total assets$2,560,788  $2,438,583  $2,324,238  $2,226,176  $2,272,484 
          
Liabilities         
Deposits         
Noninterest-bearing$718,120  $684,574  $665,812  $617,373  $680,803 
Interest-bearing 1,468,104   1,415,854   1,339,883   1,278,623   1,287,185 
Total deposits 2,186,224   2,100,428   2,005,695   1,895,996   1,967,988 
Federal Home Loan Bank

 advances

 52,000   32,000   22,000   22,000   22,000 
Other borrowed funds 12,062   12,062   12,062   27,062   12,062 
Accrued interest payable 8,503   6,573   6,009   5,583   5,204 
Other liabilities 21,888   19,666   19,007   20,675   22,352 
Total liabilities 2,280,677   2,170,729   2,064,773   1,971,316   2,029,606 
          
Stockholders' equity         
Common stock 139   139   139   139   139 
Additional paid-in capital 55,585   55,005   54,229   54,473   54,549 
Retained earnings 232,995   225,824   218,731   213,345   206,033 
Accumulated other comprehensive loss (8,608)  (13,114)  (13,634)  (13,097)  (17,843)
Total stockholders' equity 280,111   267,854   259,465   254,860   242,878 
Total liabilities and stockholders' equity$2,560,788  $2,438,583  $2,324,238  $2,226,176  $2,272,484 
                    

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

      
 Three Months Ended
September 30, 2024		 Three Months Ended
June 30, 2024		 Three Months Ended
September 30, 2023
 Average
Outstanding
Balance		 Interest Income/
Expense		 Average
Yield/
Rate(1)		 Average
Outstanding
Balance		 Interest Income/
Expense		 Average
Yield/
Rate(1)		 Average
Outstanding
Balance		 Interest Income/
Expense		 Average
Yield/
Rate(1)
 (in thousands)
Assets                 
Interest earning assets:                 
Interest-bearing deposits$91,089 $1,137 4.97% $77,069 $937 4.89% $87,112 $1,183 5.39%
Federal funds sold 57  1 6.98   56  1 7.18   1,134  15 5.25 
Investment securities available for sale 221,303  1,343 2.41   223,973  1,308 2.35   229,731  1,089 1.88 
Restricted investments 4,911  82 6.64   5,435  94 6.96   4,058  69 6.75 
Loans held for sale 9,967  161 6.43   7,907  132 6.71   6,670  111 6.60 
Portfolio loans receivable(2)(3) 2,053,619  49,886 9.66   1,992,630  48,143 9.72   1,847,772  45,274 9.72 
Total interest earning assets 2,380,946  52,610 8.79   2,307,070  50,615 8.82   2,176,477  47,741 8.70 
Noninterest earning assets 56,924      46,798      44,640    
Total assets$2,437,870     $2,353,868     $2,221,117    
                  
Liabilities and Stockholders’ Equity                 
Interest-bearing liabilities:                 
Interest-bearing demand accounts$228,365  321 0.56  $216,247  148 0.28  $215,527  71 0.13 
Savings 4,135  5 0.48   4,409  1 0.09   5,582  3 0.21 
Money market accounts 698,239  7,442 4.24   671,240  7,032 4.21   655,990  6,373 3.85 
Time deposits 479,824  6,134 5.09   465,822  5,869 5.07   374,429  4,256 4.51 
Borrowed funds 43,655  354 3.23   54,863  508 3.72   34,932  228 2.59 
Total interest-bearing liabilities 1,454,218  14,256 3.90   1,412,581  13,558 3.86   1,286,460  10,931 3.37 
Noninterest-bearing liabilities:                 
Noninterest-bearing liabilities 28,834      24,844      25,047    
Noninterest-bearing deposits 680,731      653,018      666,939    
Stockholders’ equity 274,087      263,425      242,671    
Total liabilities and stockholders’ equity$2,437,870     $2,353,868     $2,221,117    
                  
Net interest spread    4.89%     4.96%     5.33%
Net interest income  $38,354     $37,057     $36,810  
Net interest margin(4)    6.41%     6.46%     6.71%

_______________
(1) Annualized.
(2) Includes nonaccrual loans.
(3) For the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, collectively, portfolio loans yield excluding credit card loans was 7.15%, 7.04% and 6.76%, respectively.
(4) For the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, collectively, credit card loans accounted for 233, 246 and 266 basis points of the reported net interest margin, respectively.

  
 Nine Months Ended September 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$84,254 $3,123 4.95% $72,116 $2,531 4.69%
Federal funds sold 57  3 7.03   1,605  53 4.42 
Investment securities available for sale 226,151  3,902 2.30   252,993  3,732 1.97 
Restricted investments 4,982  253 6.78   5,184  270 6.96 
Loans held for sale 7,591  376 6.62   6,145  299 6.51 
Portfolio loans receivable(2)(3) 1,991,435  143,937 9.65   1,801,355  129,352 9.60 
Total interest earning assets 2,314,470  151,594 8.75   2,139,398  136,237 8.51 
Noninterest earning assets 49,458      44,123    
Total assets$2,363,928     $2,183,521    
            
Liabilities and Stockholders’ Equity           
Interest-bearing liabilities:           
Interest-bearing demand accounts$209,346  579 0.37  $203,099  208 0.14 
Savings 4,460  7 0.21   5,965  6 0.13 
Money market accounts 684,017  21,610 4.22   628,977  16,371 3.48 
Time deposits 465,256  17,589 5.05   353,635  11,281 4.27 
Borrowed funds 52,461  1,390 3.54   65,192  1,734 3.56 
Total interest-bearing liabilities 1,415,540  41,175 3.89   1,256,868  29,600 3.15 
Noninterest-bearing liabilities:           
Noninterest-bearing liabilities 25,844      22,846    
Noninterest-bearing deposits 657,044      665,821    
Stockholders’ equity 265,500      237,986    
Total liabilities and stockholders’ equity$2,363,928     $2,183,521    
            
Net interest spread    4.86%     5.36%
Net interest income  $110,419     $106,637  
Net interest margin(4)    6.37%     6.66%
              

(1) Annualized.
(2) Includes nonaccrual loans.
(3) For the nine months ended September 30, 2024 and 2023, collectively, portfolio loans yield excluding credit card loans was 7.05% and 6.57%, respectively.
(4) For the nine months ended September 30, 2024 and 2023, collectively, credit card loans accounted for 239 and 268 basis points of the reported net interest margin, respectively.

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

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

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

 
Segments
For the three months ended September 30, 2024
 
(in thousands) Commercial Bank CBHL OpenSky

™

 Corporate(2) Eliminations Consolidated
Interest income $35,805  $161  $15,625  $1,049  $(30) $52,610 
Interest expense  13,984   108   —   194   (30)  14,256 
Net interest income  21,821   53   15,625   855   —   38,354 
Provision for credit losses  1,453   —   2,294   1   —   3,748 
Provision for credit losses on unfunded commitments  17   —   —   —   —   17 
Net interest income after provision  20,351   53   13,331   854   —   34,589 
Noninterest income  726   1,811   4,096   2   —   6,635 
Noninterest expense(1)  12,422   2,395   13,276   1,632   —   29,725 
Net income (loss) before taxes $8,655  $(531) $4,151  $(776) $—  $11,499 
             
Total assets $2,358,555  $19,831  $121,587  $300,325  $(239,510) $2,560,788 
             
For the three months ended June 30, 2024
 
(in thousands) Commercial 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 September 30, 2023
 
(in thousands) Commercial Bank CBHL OpenSky

™

 Corporate(2) Eliminations Consolidated
Interest income $30,409  $111  $16,143  $1,162  $(84) $47,741 
Interest expense  10,736   32   —   247   (84)  10,931 
Net interest income  19,673   79   16,143   915   —   36,810 
Provision for credit losses  275   —   1,875   130   —   2,280 
Provision for credit losses on unfunded commitments  24   —   —   —   —   24 
Net interest income after provision  19,374   79   14,268   785   —   34,506 
Noninterest income  665   1,255   4,405   1   —   6,326 
Noninterest expense(1)  12,610   1,880   13,227   329   —   28,046 
Net income (loss) before taxes $7,429  $(546) $5,446  $457  $—  $12,786 
             
Total assets $2,102,749  $5,280  $116,318  $264,950  $(216,813) $2,272,484 

________________________
(1) Noninterest expense includes $6.2 million, $6.3 million, and $6.1 million in data processing expense in OpenSky’s™ segment for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively.
(2) The Corporate segment invests idle cash in revenue-producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.

 
Segments
For the nine months ended September 30, 2024
 
(in thousands) Commercial Bank CBHL OpenSky

™

 Corporate(2) Eliminations Consolidated
Interest income $102,269  $376  $46,331  $2,772  $(154) $151,594 
Interest expense  40,450   232   —   647   (154)  41,175 
Net interest income  61,819   144   46,331   2,125   —   110,419 
Provision for credit losses  3,680   —   6,152   60   —   9,892 
Provision for credit losses on unfunded commitments  263   —   —   —   —   263 
Net interest income after provision  57,876   144   40,179   2,065   —   100,264 
Noninterest income  2,107   5,008   12,379   3   —   19,497 
Noninterest expense(1)  36,890   7,000   40,650   4,165   —   88,705 
Net income (loss) before taxes $23,093  $(1,848) $11,908  $(2,097) $—  $31,056 
             
Total assets $2,358,555  $19,831  $121,587  $300,325  $(239,510) $2,560,788 
             
For the nine months ended September 30, 2023
 
(in thousands) Commercial Bank CBHL OpenSky™ Corporate(2) Eliminations Consolidated
Interest income $85,451  $299  $47,441  $3,274  $(228) $136,237 
Interest expense  29,012   104   —   712   (228)  29,600 
Net interest income  56,439   195   47,441   2,562   —   106,637 
Provision for credit losses  849   —   5,823   130   —   6,802 
Provision for credit losses on unfunded commitments  5   —   —   —   —   5 
Net interest income after provision  55,585   195   41,618   2,432   —   99,830 
Noninterest income  1,964   3,743   13,329   3   —   19,039 
Noninterest expense(1)  36,043   6,538   40,083   1,196   —   83,860 
Net income (loss) before taxes $21,506  $(2,600) $14,864  $1,239  $—  $35,009 
             
Total assets $2,102,749  $5,280  $116,318  $264,950  $(216,813) $2,272,484 
                         

(1) Noninterest expense includes $18.7 million and $17.9 million in data processing expense in OpenSky’s™ segment for the nine months ended September 30, 2024 and 2023, respectively.
(2) The Corporate segment invests idle cash in revenue-producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.

 
HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited
  Quarter Ended
(in thousands, except per share data) September 30

,
2024

 June 30, 2024 March 31

,
2024

 December 31

,
2023

 September 30

,
2023

Earnings:          
Net income $8,672  $8,205  $6,562  $9,030  $9,788 
Earnings per common share, diluted  0.62   0.59   0.47   0.65   0.70 
Net interest margin  6.41%  6.46%  6.24%  6.40%  6.71%
Net interest margin, excluding credit card loans(1)  4.08%  4.00%  3.85%  3.92%  4.05%
Return on average assets(2)  1.42%  1.40%  1.15%  1.63%  1.75%
Return on average equity(2)  12.59%  12.53%  10.19%  14.44%  16.00%
Efficiency ratio  66.07%  67.11%  71.95%  65.91%  65.02%
           
Balance Sheet:          
Total portfolio loans receivable, net deferred fees $2,107,522  $2,021,588  $1,964,525  $1,902,643  $1,861,929 
Total deposits  2,186,224   2,100,428   2,005,695   1,895,996   1,967,988 
Total assets  2,560,788   2,438,583   2,324,238   2,226,176   2,272,484 
Total stockholders' equity  280,111   267,854   259,465   254,860   242,878 
Total average portfolio loans receivable, net deferred fees  2,053,619   1,992,630   1,927,372   1,863,298   1,847,772 
Total average deposits  2,091,294   2,010,736   1,957,559   1,885,092   1,918,467 
Portfolio loans-to-deposit ratio (period-end balances)  96.40%  96.25%  97.95%  100.35%  94.61%
Portfolio loans-to-deposit ratio (average balances)  98.20%  99.10%  98.46%  98.84%  96.32%
           
Asset Quality Ratios:          
Nonperforming assets to total assets  0.60%  0.58%  0.62%  0.72%  0.67%
Nonperforming loans to total loans  0.73%  0.70%  0.73%  0.84%  0.82%
Net charge-offs to average portfolio loans(2)  0.51%  0.39%  0.41%  0.53%  0.38%
Allowance for credit losses to total loans  1.51%  1.53%  1.49%  1.50%  1.52%
Allowance for credit losses to non-performing loans  206.50%  219.40%  204.37%  178.34%  185.61%
           
Bank Capital Ratios:          
Total risk based capital ratio  13.76%  14.51%  14.36%  14.81%  14.51%
Tier 1 risk based capital ratio  12.50%  13.25%  13.10%  13.56%  13.25%
Leverage ratio  9.84%  10.36%  10.29%  10.51%  10.04%
Common equity Tier 1 capital ratio  12.50%  13.25%  13.10%  13.56%  13.25%
Tangible common equity  9.12%  9.53%  9.66%  9.91%  9.08%
Holding Company Capital Ratios:          
Total risk based capital ratio  16.65%  16.98%  16.83%  17.38%  17.11%
Tier 1 risk based capital ratio  14.88%  15.19%  15.03%  15.55%  15.27%
Leverage ratio  11.85%  11.93%  11.87%  12.14%  11.62%
Common equity Tier 1 capital ratio  14.78%  15.08%  14.92%  15.43%  15.27%
Tangible common equity  10.94%  10.98%  11.16%  11.45%  10.69%

_______________
(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) September 30

,
2024

 June 30, 2024 March 31

,
2024

 December 31

,
2023

 September 30

,
2023

Composition of Loans:          
Commercial real estate, non owner-occupied $403,487  $397,080  $377,224  $351,116  $350,637 
Commercial real estate, owner-occupied  351,462   319,370   330,840   307,911   305,802 
Residential real estate  623,684   601,312   577,112   573,104   558,147 
Construction real estate  301,909   294,489   290,016   290,108   280,905 
Commercial and industrial  271,811   255,686   254,577   239,208   237,549 
Lender finance  29,546   33,294   13,484   11,085   — 
Business equity lines of credit  2,663   2,989   14,768   14,117   14,155 
Credit card, net of reserve(3)  127,098   122,217   111,898   123,331   122,533 
Other consumer loans  2,045   1,930   738   950   948 
Portfolio loans receivable $2,113,705  $2,028,367  $1,970,657  $1,910,930  $1,870,676 
Deferred origination fees, net  (6,183)  (6,779)  (6,132)  (7,642)  (7,997)
Portfolio loans receivable, net $2,107,522  $2,021,588  $1,964,525  $1,903,288  $1,862,679 
           
Composition of Deposits:          
Noninterest-bearing $718,120  $684,574  $665,812  $617,373  $680,803 
Interest-bearing demand  266,493   266,070   193,963   199,308   229,035 
Savings  3,763   4,270   4,525   5,211   5,686 
Money markets  686,526   672,455   678,435   663,129   668,774 
Brokered time deposits  153,022   155,148   160,641   142,356   128,665 
Other time deposits  358,300   317,911   302,319   268,619   255,025 
Total deposits $2,186,224  $2,100,428  $2,005,695  $1,895,996  $1,967,988 
           
Capital Bank Home Loan Metrics:          
Origination of loans held for sale $74,690  $82,363  $52,080  $45,152  $50,023 
Mortgage loans sold  67,296   66,417   40,377   34,140   39,364 
Gain on sale of loans  1,644   1,732   1,238   1,015   1,011 
Purchase volume as a % of originations  90.98%  96.48%  97.83%  89.99%  92.29%
Gain on sale as a % of loans sold(4)  2.44%  2.61%  3.07%  2.97%  2.57%
Mortgage commissions $598  $582  $490  $465  $528 
           
OpenSky™Portfolio Metrics:          
Open customer accounts  548,952   537,734   526,950   525,314   529,205 
Secured credit card loans, gross $89,641  $90,961  $85,663  $95,300  $98,138 
Unsecured credit card loans, gross  39,730   33,560   28,508   30,817   27,430 
Noninterest secured credit card deposits  170,750   173,499   171,771   173,857   181,185 

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

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 AdjustedQuarter Ended
(in thousands, except per share data)September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023
          
Net Income$8,672  $8,205  $6,562  $9,030  $9,788 
Add: Merger-Related Expenses, net of tax 557   62   538   —   — 
Net Income, as Adjusted$9,229  $8,267  $7,100  $9,030  $9,788 
          
Weighted Average Common Shares - Diluted 13,951   13,895   13,919   13,989   14,024 
Earnings per Share - Diluted$0.62  $0.59  $0.47  $0.65  $0.70 
Earnings per Share - Diluted, as Adjusted$0.66  $0.59  $0.51  $0.65  $0.70 
          
Average Assets$2,437,870  $2,353,868  $2,299,234  $2,202,479  $2,221,117 
Return on Average Assets(1) 1.42%  1.40%  1.15%  1.63%  1.75%
Return on Average Assets, as Adjusted(1) 1.51%  1.41%  1.24%  1.63%  1.75%
          
Average Equity$274,087  $263,425  $258,892  $248,035  $242,671 
Return on Average Equity(1) 12.59%  12.53%  10.19%  14.44%  16.00%
Return on Average Equity, as Adjusted(1) 13.40%  12.62%  11.03%  14.44%  16.00%
          
Net Interest Income$38,354  $37,057  $35,008  $34,889  $36,810 
Noninterest Income 6,635   6,890   5,972   5,936   6,326 
Total Revenue$44,989  $43,947  $40,980  $40,825  $43,136 
Noninterest Expense$29,725  $29,493  $29,487  $26,907  $28,046 
Efficiency Ratio(2) 66.07%  67.11%  71.95%  65.91%  65.02%
          
Noninterest Expense$29,725  $29,493  $29,487  $26,907  $28,046 
Less: Merger-Related Expenses 520   83   712   —   — 
Noninterest Expense, as Adjusted$29,205  $29,410  $28,775  $26,907  $28,046 
Efficiency Ratio, as Adjusted(2) 64.92%  66.92%  70.22%  65.91%  65.02%

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

  
Earnings Metrics, as AdjustedNine Months Ended
(in thousands, except per share data)September 30, 2024 September 30, 2023
    
Net Income$23,439  $26,841 
Add: Merger-Related Expenses, Net of Tax 1,157   — 
Net Income, as Adjusted$24,596  $26,841 
    
Weighted average common shares - Diluted 13,909   14,112 
Earnings per share - Diluted$1.69  $1.90 
Earnings per share - Diluted, as Adjusted$1.77  $1.90 
    
Average Assets$2,363,928  $2,183,521 
Return on Average Assets(1) 1.32%  1.64%
Return on Average Assets, as Adjusted(1) 1.39%  1.64%
    
Average Equity$265,500  $237,986 
Return on Average Equity(1) 11.79%  15.08%
Return on Average Equity, as Adjusted(1) 12.37%  15.08%
    
Net Interest Income$110,419  $106,637 
Noninterest Income 19,497   19,039 
Total Revenue$129,916  $125,676 
Noninterest Expense$88,705  $83,860 
Efficiency Ratio(2) 68.28%  66.73%
    
Noninterest Expense$88,705  $83,860 
Less: Merger-Related Expenses 1,315   — 
Noninterest Expense, as Adjusted$87,390  $83,860 
Efficiency Ratio, as Adjusted(2) 67.27%  66.73%

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

  
Net Interest Margin, as AdjustedQuarter Ended
(in thousands)September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023
          
Net Interest Income$38,354  $37,057  $35,008  $34,889  $36,810 
Less: Credit Card Loan Income 15,137   15,205   14,457   14,677   15,792 
Net Interest Income, as Adjusted$23,217  $21,852  $20,551  $20,212  $21,018 
Average Interest Earning Assets 2,380,946   2,307,070   2,254,663   2,162,459   2,176,477 
Less: Average Credit Card Loans 119,458   111,288   110,483   114,551   116,814 
Total Average Interest Earning Assets, as Adjusted$2,261,488  $2,195,782  $2,144,180  $2,047,908  $2,059,663 
Net Interest Margin, as Adjusted 4.08%  4.00%  3.85%  3.92%  4.05%

 

Net Interest Margin, as AdjustedNine Months Ended
(in thousands)September 30, 2024 September 30, 2023
    
Net Interest Income$110,419  $106,637 
Less: Credit Card Loan Income 44,798   46,419 
Net Interest Income, as Adjusted$65,621  $60,218 
Average Interest Earning Assets 2,314,470   2,139,398 
Less: Average Credit Card Loans 113,764   114,416 
Total Average Interest Earning Assets, as Adjusted$2,200,706  $2,024,982 
Net Interest Margin, as Adjusted 3.98%  3.98%

 

Portfolio Loans Receivable Yield, as AdjustedQuarter Ended
(in thousands)September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023
          
Portfolio Loans Receivable Interest Income$49,886  $48,143  $45,908  $45,026  $45,274 
Less: Credit Card Loan Income 15,137   15,205   14,457   14,677   15,792 
Portfolio Loans Receivable Interest Income, as Adjusted$34,749  $32,938  $31,451  $30,349  $29,482 
Average Portfolio Loans Receivable 2,053,619   1,992,630   1,927,372   1,863,298   1,847,772 
Less: Average Credit Card Loans 119,458   111,288   110,483   114,551   116,814 
Total Average Portfolio Loans Receivable, as Adjusted$1,934,161  $1,881,342  $1,816,889  $1,748,747  $1,730,958 
Portfolio Loans Receivable Yield, as Adjusted 7.15%  7.04%  6.96%  6.89%  6.76%

 

Portfolio Loans Receivable Yield, as AdjustedNine Months Ended
(in thousands)September 30, 2024 September 30, 2023
    
Portfolio Loans Receivable Interest Income$143,937  $129,352 
Less: Credit Card Loan Income 44,798   46,419 
Portfolio Loans Receivable Interest Income, as Adjusted$99,139  $82,933 
Average Portfolio Loans Receivable 1,991,435   1,801,355 
Less: Average Credit Card Loans 113,764   114,416 
Total Average Portfolio Loans Receivable, as Adjusted$1,877,671  $1,686,939 
Portfolio Loans Receivable Yield, as Adjusted 7.05%  6.57%

 

Pre-tax, Pre-Provision Net Revenue ("PPNR")Quarter Ended
(in thousands)September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023
          
Net Income$8,672  $8,205  $6,562  $9,030  $9,788 
Add: Income Tax Expense 2,827   2,728   2,062   2,186   2,998 
Add: Provision for Credit Losses 3,748   3,417   2,727   2,808   2,280 
Add: Provision for (Release of) Credit Losses on Unfunded Commitments 17   104   142   (106)  24 
Pre-tax, Pre-Provision Net Revenue ("PPNR")$15,264  $14,454  $11,493  $13,918  $15,090 

 

Pre-tax, Pre-Provision Net Revenue ("PPNR")Nine Months Ended
(in thousands)September 30, 2024 September 30, 2023
    
Net Income$23,439  $26,841 
Add: Income Tax Expense 7,617   8,168 
Add: Provision for Credit Losses 9,892   6,802 
Add: Provision for Credit Losses on Unfunded Commitments 263   5 
Pre-tax, Pre-Provision Net Revenue ("PPNR")$41,211  $41,816 

 

PPNR, as AdjustedQuarter Ended
(in thousands)September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023
          
Net Income$8,672  $8,205  $6,562  $9,030  $9,788 
Add: Income Tax Expense 2,827   2,728   2,062   2,186   2,998 
Add: Provision for Credit Losses 3,748   3,417   2,727   2,808   2,280 
Add: Provision for (Release of) Credit Losses on Unfunded Commitments 17   104   142   (106)  24 
Add: Merger-Related Expenses 520   83   712   —   — 
PPNR, as Adjusted$15,784  $14,537  $12,205  $13,918  $15,090 

 

    
PPNR, as AdjustedNine Months Ended
(in thousands)September 30, 2024 September 30, 2023
    
Net Income$23,439  $26,841 
Add: Income Tax Expense 7,617   8,168 
Add: Provision for Credit Losses 9,892   6,802 
Add: Provision for Credit Losses on Unfunded Commitments 263   5 
Add: Merger-Related Expenses 1,315   — 
PPNR, as Adjusted$42,526  $41,816 

 

Allowance for Credit Losses to Total Portfolio LoansQuarter Ended
(in thousands)September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023
          
Allowance for Credit Losses$31,925  $30,832  $29,350  $28,610  $28,279 
Total Portfolio Loans 2,107,522   2,021,588   1,964,525   1,903,288   1,862,679 
Allowance for Credit Losses to Total Portfolio Loans 1.51%  1.53%  1.49%  1.50%  1.52%

 

Nonperforming Assets to Total AssetsQuarter Ended
(in thousands)September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023
          
Total Nonperforming Assets$15,460  $14,053  $14,361  $16,042  $15,236 
Total Assets 2,560,788   2,438,583   2,324,238   2,226,176   2,272,484 
Nonperforming Assets to Total Assets 0.60%  0.58%  0.62%  0.72%  0.67%

 

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

 

Net Charge-Offs to Average Portfolio LoansQuarter Ended
(in thousands)September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023
          
Total Net Charge-Offs$2,655  $1,935  $1,987  $2,477  $1,780 
Total Average Portfolio Loans 2,053,619   1,992,630   1,927,372   1,863,298   1,847,772 
Net Charge-Offs to Average Portfolio Loans, Annualized 0.51%  0.39%  0.41%  0.53%  0.38%

 

Net Charge-offs to Average Portfolio LoansNine Months Ended
(in thousands)September 30, 2024 September 30, 2023
    
Total Net Charge-Offs$6,577  $5,996 
Total Average Portfolio Loans 1,991,435   1,801,355 
Net Charge-Offs to Average Portfolio Loans, Annualized 0.44%  0.45%

 

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

ABOUT CAPITAL BANCORP, INC.

Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in four locations in the greater Washington, D.C. and Baltimore, Maryland markets and one bank branch in Fort Lauderdale, Florida. Capital Bancorp had assets of approximately $2.6 billion at September 30, 2024 and its common stock is traded in the NASDAQ Global Market under the symbol “CBNK.” More information can be found at the Company's website www.CapitalBankMD.com under its investor relations page.

FORWARD-LOOKING STATEMENTS

This earnings release contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” "optimistic," “intends” and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements.  Accordingly, we caution you that any such forward-looking statements are not a guarantee of future performance and that actual results may prove to be materially different from the results expressed or implied by the forward-looking statements due to a number of factors. For details on some of the factors that could affect these expectations, see risk factors and other cautionary language included in the Company's Annual Report on Form 10-K and other periodic and current reports filed with the Securities and Exchange Commission.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing wars in Ukraine and in the Middle East; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; the expected cost savings, synergies and other financial benefits from the acquisition of IFHI or any other acquisition the Company has made or may make might not be realized within the expected time frames or at all; the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; and other factors that may affect our future results.

These forward-looking statements are made as of the date of this communication, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by law.

FINANCIAL CONTACT: Dominic Canuso (301) 468-8848 x1403

MEDIA CONTACT: Ed Barry (240) 283-1912

WEB SITE: www.CapitalBankMD.com


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Source: Capital Bancorp, Inc.