Third Quarter 2025 Highlights

• GAAP Net Income of $15.1 million, or $0.89 per share, and return on average assets ("ROA") of 1.77%

  • Core net income⁽¹⁾ of $12.2 million, or $0.72 per share, and Core ROA⁽¹⁾ of 1.43%

• Book value per common share of $23.80 at September 30, 2025, increased $0.88 compared to 2Q 2025, and increased $3.67 when compared to 3Q 2024

  • Tangible book value per share⁽¹⁾ of $21.27, increased 3.1% (not annualized), or $0.63 as compared to 2Q 2025, and increased 5.7%, or $1.15 compared to 3Q 2024

• Return on average equity ("ROE") of 15.57%, and return on average tangible common equity ("ROTCE")⁽¹⁾ of 17.49%

  • Core ROE⁽¹⁾ of 12.56%, and Core ROTCE⁽¹⁾ of 14.15%

• Gross Loans⁽²⁾ grew $82.2 million, or 11.9% (annualized), during 3Q 2025, and growth of $714.5 million year-over-year including $341.0 million from organic growth and $373.5 million from the IFH acquisition

• Total deposits decreased $28.7 million, or (3.9)% (annualized), from 2Q 2025. Year-over-year growth of $725.8 million includes $459.0 million from the acquisition of IFH, and $266.8 million from organic growth, or 33.2% from 3Q 2024

  • Customer Deposit³ growth of $3.9 million, or 0.6% (annualized) from 2Q 2025, and $641.3 million year-over-year, or 31.5% from 3Q 2024, including $347.8 million of organic growth, and $293.5 million from the acquisition of IFH

• Net Interest Income increased $4.4 million, or 9.2% (not annualized), from 2Q 2025, mainly due to the $4.6 million acceleration of accretion from refinancing callable brokered time deposits acquired in the IFH transaction, and increased $13.7 million, or 35.6%, year-over-year, primarily driven by strong organic growth and the acquisition of IFH

• Net Interest Margin ("NIM") of 6.36% increased 32 bps compared to 2Q 2025 and decreased 5 bps compared to 3Q 2024 due to the acquisition of commercial loans from IFH, diluting the impact from OpenSky^™

  • Commercial Bank NIM⁽¹⁾ of 4.64% increased by 28 bps (but decreased 43 bps when excluding purchase accounting accretion ("PAA")), when compared to 2Q 2025, and increased 82 bps (or 12 bps excluding PAA), compared to 3Q 2024

    • 3Q 2025 net PAA of $5.5 million, or 67 bps of NIM and 70 bps of Commercial Bank NIM⁽¹⁾, increased $4.7 million, or 59 bps, compared to 2Q 2025

• The allowance for credit losses to total loans ("ACL Coverage Ratio") equaled 1.88% at September 30, 2025, and represented a 15 bps increase from June 30, 2025 and a 37 bps increase from September 30, 2024, primarily due to the acquisition of IFH loans. The Commercial Bank ACL Coverage Ratio⁽¹⁾ equaled 1.70% at September 30, 2025, compared to 1.56% at June 30, 2025

• Fee Revenue (noninterest income) totaled $11.1 million, or 18.9% of total revenue for 3Q 2025, a decrease of $2.0 million, from 2Q 2025 primarily due to decreased government lending revenue (net gain on sale) and an increase of $4.4 million, from 3Q 2024

• Cash Dividend of $0.12 per share declared by the Board of Directors

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⁽¹⁾ As used in this press release, Core net income, Core ROA, Core ROE, ROTCE, Core ROTCE, Commercial Bank NIM, Commercial Bank ACL Coverage Ratio, and Tangible Book Value are non–U.S. generally accepted accounting principles ("GAAP") financial measures. These non-GAAP financial metrics excludes the impact of income from the call of brokered time deposits, merger-related expenses and other certain one-time non-recurring pre-tax adjustments and tax impacts of such adjustments. Reconciliations of these and other non–GAAP measures to their comparable GAAP measures are set forth in the Appendix at the end of this press release.
⁽²⁾ Gross loans represent portfolio loans receivable, net of deferred fees and costs.
⁽³⁾ Customer Deposits represents total deposits excluding brokered deposits.
 

ROCKVILLE, Md., Oct. 27, 2025 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $15.1 million, or $0.89 per diluted share, for 3Q 2025, compared to net income of $13.1 million, or $0.78 per diluted share, for 2Q 2025, and $8.7 million, or $0.62 per diluted share, for 3Q 2024. Core net income⁽⁴⁾ for 3Q 2025 of $12.2 million, or $0.72 per diluted share, compared to $14.2 million, or $0.85 per diluted share in 2Q 2025, and $9.2 million, or $0.66 per diluted share, for 3Q 2024.

The Company also declared a cash dividend on its common stock of $0.12 per share. The dividend is payable on November 26, 2025 to shareholders of record on November 10, 2025.

“We continue to execute on our strategic plan and see progress in driving long term growth and profitability,” said Ed Barry, CEO of the Company and the Bank. “The diversity of our business continues to be a strength as outperformance in our government servicing business offset a decline in USDA gain-on-sales revenues."

“With and without the one-time items this quarter, we continue to grow our tangible book value and report solid returns on equity and tangible book value,” said Steven J Schwartz, Chairman of the Company. “We believe our continued investment in technology and infrastructure, while negatively impacting our current core earnings, will help us provide long-term superior returns to our shareholders. I am also pleased that the uptick in our credit metrics is almost entirely due to loans acquired in the IFH transaction, not to loans originated by Capital Bank. That gives me reason for confidence that our credit discipline, combined with our superior net interest margin, continues to constitute a core competency.”

Reconciliation of GAAP Net Income to Core (Non-GAAP) Net Income

The following table provides a reconciliation of the Company's net income under GAAP to Core net income (non-GAAP) results excluding brokered time deposit call, merger-related expenses and other one-time non-recurring transactions.

^{Note: The income tax expense reflects the non-deductibility of certain merger-related expenses.}

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¹ As used in this press release, Core net income is a non-GAAP financial measure. This non-GAAP financial metric excludes the impact of income from the call of brokered time deposits, merger-related expenses and other certain one-time non-recurring pre-tax adjustments and tax impacts of such adjustments. Reconciliations of this and other non–GAAP measures to their comparable GAAP measures are set forth in the Appendix at the end of this press release.
 

Third Quarter 2025 Results

Earnings Summary

Net income of $15.1 million, or $0.89 per diluted share, compared to net income of $13.1 million, or $0.78 per diluted share, for 2Q 2025, and $8.7 million or $0.62 per diluted share, for 3Q 2024. 3Q 2025 core net income⁽¹⁾ of $12.2 million, or $0.72 per diluted share, compared to 2Q 2025 of $14.2 million, or $0.85 per diluted share.

During the quarter there were two non-recurring events that impacted net income:

• The Bank identified Fee Revenue that was also previously recognized as Interest Income in the first and second quarter. As a result, the Bank recorded a one-time reversal of $1.3 million of interest income (“Interest Income Adjustment”). There was no corresponding adjustment needed to Fee Revenue as the fee income was correctly recognized during those periods.
  
   

• Also, during the quarter, the Bank issued a call of brokered time deposits acquired from the IFH transaction, resulting in the accelerated accretion of $4.6 million (“Call of Brokered Time Deposits”).
  
   

• Net interest income of $52.0 million increased $4.4 million, or 9.2% (not annualized), compared to 2Q 2025, and increased $13.7 million, or 35.6%, year-over-year. 
  
   

  • Interest income of $64.9 million increased $0.3 million, or 0.5% (not annualized), over 2Q 2025, and increased $12.3 million, or 23.3%, year-over-year. When excluding the $1.3 million Interest Income Adjustment, interest income increased $1.6 million from 2Q 2025, primarily driven by $1.3 million of growth from OpenSky^™ and $0.3 million from the investment portfolio, while the increase year-over-year was primarily driven by organic growth and the acquisition of IFH.

    • Interest income included $0.2 million from net purchase accounting accretion in 3Q 2025, compared to $0.4 million in 2Q 2025. There was no impact related to purchase accounting during 3Q 2024.

  • Interest expense of $12.9 million decreased $4.1 million, or 24.0% (not annualized) compared to 2Q 2025, and decreased $1.4 million, or 9.7%, year-over-year. When excluding the $4.6 million one-time impact from the Call of Brokered Time Deposits, interest expense increased $0.5 million, or 3.2%, compared to 2Q 2025, primarily driven by a shift in portfolio mix.

    • Interest expense included a $5.3 million benefit from net purchase accounting accretion in 3Q 2025, which included $4.6 million from the Call of Brokered Time Deposits, compared to a $0.9 million benefit in 2Q 2025. There was no impact related to purchase accounting during 3Q 2024.

• The 3Q 2025 provision for credit losses was $4.7 million, an increase of $0.6 million from 2Q 2025. Excluding the impact of a loan sale during 2Q 2025 from the acquired IFH portfolio, the provision decreased $0.9 million quarter over quarter. Net charge-offs totaled $2.5 million, or 0.35% of portfolio loans (annualized), down from $5.1 million or 0.75% of portfolio loans (annualized), in 2Q 2025. Net charge-offs in the quarter include $0.3 million from the Commercial Bank and $2.1 million from OpenSky^™ loans.

  • At September 30, 2025, the ACL Coverage Ratio was 1.88%, up $5.6 million or 15 bps from June 30, 2025. The increase in the ACL Coverage Ratio over prior quarter was primarily driven by a 12 bps impact resulting from the reassignment of an IFH acquired loan from non-purchase credit deteriorated ("non-PCD") loan to a purchase credit deteriorated ("PCD") loan during the quarter as a measurement period adjustment to the Day-1 purchase accounting, increasing the allowance for credit losses ("ACL") by $3.4 million.
     

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¹ As used in this press release, Core net income is a non-GAAP financial measure. This non-GAAP financial metric excludes the impact of income from the call of brokered time deposits, merger-related expenses and other certain one-time non-recurring pre-tax adjustments and tax impacts of such adjustments. Reconciliations of this and other non–GAAP measures to their comparable GAAP measures are set forth in the Appendix at the end of this press release.
 

Earnings Summary (Continued)

• Fee Revenue of $11.1 million decreased $2.0 million, compared to 2Q 2025 and increased $4.4 million year-over-year primarily due to the contributions made by the businesses IFH brought to the merged entity. During 3Q 2025, core fee revenue⁽¹⁾ of $11.1 million decreased $2.0 million as a result of a $3.1 million decrease in government lending revenue (net gain on sale), $0.8 million lower SBIC investment income, and a $0.1 million decrease in other income, offset by a $1.0 million increase in loan servicing revenue, a $0.6 million increase in government loan servicing revenue (Windsor Advantage^™), a $0.2 million increase in credit card fees from OpenSky^™, and $0.2 million increase in mortgage banking revenue. Core fee revenue mix was 18.9% of total revenue for 3Q 2025, compared to 21.6% during 2Q 2025, and 14.7% during 3Q 2024.

• Noninterest expense of $38.4 million decreased $1.2 million compared to 2Q 2025 and increased $8.6 million compared to 3Q 2024. Core noninterest expense⁽¹⁾ of $37.7 million decreased $0.5 million compared to 2Q 2025 and increased $8.5 million compared to 3Q 2024. Core comparisons include:

  • The decrease of $0.5 million quarter-over-quarter was driven by decreases from personnel expenses and regulatory related expenses, offset by growth in advertising expense mainly from OpenSky^™.

  • Year-over-year expense growth of $8.6 million was primarily due to the acquisition of IFH.

• Income tax expense of $4.8 million, or 24.2% of pre-tax income for 3Q 2025, increased $0.8 million from $4.0 million, or 23.2% of pre-tax income for 2Q 2025. The Core effective income tax rate⁽¹⁾ for 3Q 2025 and 2Q 2025 would have been 23.8% and 23.2%, respectively.
   

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¹ As used in this press release, Core fee revenue, Core noninterest expense, and Core effective income tax rate are non-GAAP financial measures. These non-GAAP financial metrics exclude the impact of income from the call of brokered time deposits, merger-related expenses and other certain one-time non-recurring pre-tax adjustments and tax impacts of such adjustments. Reconciliations of these and other non–GAAP measures to their comparable GAAP measures are set forth in the Appendix at the end of this press release.
 

Balance Sheet

Total assets of $3.4 billion at September 30, 2025 increased $0.8 million from June 30, 2025. Total assets growth year-over-year of $828.7 million, or 32.4%, included $559.4 million acquired with the IFH acquisition, net of purchase accounting, and $269.3 million of organic growth.

• Gross Loans of $2.82 billion at September 30, 2025 increased $82.2 million, or 11.9% (annualized), from June 30, 2025 and increased $714.5 million year-over-year including $373.5 million from the acquisition of IFH and $341.0 million of organic growth.

  • Compared to June 30, 2025, growth was primarily driven by $29.3 million from residential real estate, $25.9 million from commercial and industrial ("C&I"), $20.9 million from commercial real estate ("CRE"), and $5.5 million from OpenSky^™.

  • C&l loans, plus owner-occupied commercial real estate loans totaled 37.6% of total portfolio loans at September 30, 2025, consistent with the prior quarter, and 29.6% at September 30, 2024.

• Total deposits of $2.91 billion at September 30, 2025 decreased $28.7 million, or 3.9% (annualized), from June 30, 2025, and increased $725.8 million, or 33.2% (annualized) from September 30, 2024. When excluding a decrease in brokered time deposits of $32.6 million, customer deposits increased $3.9 million or 0.5% (annualized), including $28.9 million of growth in customer money market deposits, $20.6 million growth of noninterest-bearing deposits, offset by $43.7 million decrease from interest-bearing demand accounts and a $1.9 million decrease in customer time deposits. The increase of $725.8 million year-over-year was driven by $459.0 million from the acquisition of IFH, and $266.8 million from organic growth.

  • Insured and protected¹ deposits were approximately $2.0 billion as of September 30, 2025 representing 67.0% of the Company's deposit portfolio.

  • Low-and-no interest-bearing DDA deposits of $1.1 billion, or 39.4% of deposits, increased $23.1 million, or 7.9% (annualized) from 2Q 2025, and increased $157.8 million, or 16.0% year-over-year, including $91.5 million from the acquisition of IFH, and $66.3 million of organic growth.

    • The average rate on the low-and-no interest-bearing deposits was 0.14% for 3Q 2025, which remained flat compared to 2Q 2025 and year-over-year.

• The average portfolio loans-to-deposit ratio was 95.6% for 3Q 2025, compared to 96.2% for 2Q 2025, and 98.2% for 3Q 2024.

• The investment securities portfolio continues to be classified as available-for-sale and had a fair market value of $232.6 million, or 6.9% of total assets, an effective duration of 2.6 years, with U.S. Treasury Securities representing 59% of the overall investment portfolio at September 30, 2025. The accumulated other comprehensive income (loss) on the investment securities portfolio improved $1.3 million during the quarter to negative $6.8 million after-tax as of September 30, 2025, which represents 1.7% 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, generally consistent with prior quarter. Sources of available borrowings at September 30, 2025 totaled $858.4 million, compared to $834.8 from 2Q 2025. During 3Q 2025, available collateralized lines of credit totaled $767.8 million, unsecured lines of credit with other banks totaled $76.0 million and unpledged investment securities available as collateral for potential additional borrowings totaled $14.5 million.

• Capital Positions – As of September 30, 2025, the Company reported a Common Equity Tier-1 capital ratio of 13.51%, compared to 13.58% at June 30, 2025. At September 30, 2025, the Company and the Bank maintained regulatory capital ratios that exceed all capital adequacy requirements.

  • There were no shares repurchased and retired during the three months ended September 30, 2025, as part of the Company's stock repurchase program. There is $11.9 million remaining to be repurchased under the current $15.0 million authorization repurchase program, which will expire on February 28, 2026.

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¹ Protected deposits includes deposits that are indirectly protected under the product terms
 

Financial Metrics

Net Interest Margin – NIM of 6.36% for 3Q 2025, increased 32 bps compared to the prior quarter, and decreased 5 bps year-over-year. Commercial Bank NIM⁽¹⁾, of 4.64% increased 28 bps compared to the prior quarter, and increased 82 bps year-over-year. Net purchase accounting accretion for 3Q 2025 was 67 bps for NIM and 70 bps for Commercial Bank NIM⁽¹⁾.

• 3Q 2025 includes the previously mentioned $4.6 million (59 bps) Call of Brokered Time Deposits and $1.3 million (17 bps) Interest Income Adjustment. Excluding these items, 3Q 2025 NIM would have been 5.95% and Commercial Bank NIM would have been 4.21%.

• The average yield on interest earning assets of 7.93% decreased 26 bps compared to the prior quarter, mainly due to a 16 bps impact from the Interest Income Adjustment. Excluding this item, the average yield in the quarter would have been 7.77% a decrease of 10 bps compared to 2Q 2025 as a result of the overall rate environment. The average yield decreased 86 bps year-over-year primarily due to the acquisition of commercial loans diluting the positive impact from OpenSky^™ as well as the Interest Income Adjustment.

  • The Commercial Bank Loan Yield⁽¹⁾ of 6.74% for 3Q 2025 decreased 40 bps compared to 2Q 2025, and decreased 41 bps year-over-year. Excluding the Interest Income Adjustment, average yield in the quarter would have been 6.94%, a decrease of 21 bps compared to 2Q 2025 and 22 bps year-over-year as a result of rate environment.

• The total cost of deposits of 1.73% for 3Q 2025 decreased 63 bps compared to the prior quarter and decreased 91 bps year-over-year, both mainly due to the Call of Brokered Time Deposits. Excluding this item, total costs of deposits for the quarter would have been 2.36%, consistent with 2Q 2025, and a decrease of 29 bps year-over-year due to shifts in product mix from the acquisition of IFH.

• The total cost of interest-bearing deposits decreased 88 bps quarter-over-quarter, due to the Call of Brokered Time Deposits. Total cost of interest-bearing deposits decreased 151 bps year-over-year, to 2.41% for 3Q 2025 primarily due to the Call of Brokered Time Deposits as well as shifts in product mix from the acquisition of IFH.

• Net purchase accounting accretion of $5.5 million, or 67 bps of NIM and 70 bps of Commercial Bank NIM, during 3Q 2025, which includes $4.6 million, or 59 bps, from the Call of Brokered Time Deposits, increased $4.4 million from 2Q 2025. There was no impact from purchase accounting during 3Q 2024.

Fee Revenue Mix – The fee revenue mix was 18.9% of total revenue for 3Q 2025, compared to 21.6% during 2Q 2025, and 14.7% during 3Q 2024. The core fee revenue mix⁽¹⁾ was consistent with fee revenue mix for these periods.

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¹ As used in this press release, Commercial Bank NIM, Commercial Bank Loan Yield, Core fee revenue mix and Core efficiency ratio are non-GAAP financial measures. These non-GAAP financial metrics exclude the impact of income from the call of brokered time deposits, merger-related expenses and other certain one-time non-recurring pre-tax adjustments and tax impacts of such adjustments. Reconciliations of these and other non–GAAP measures to their comparable GAAP measures are set forth in the Appendix at the end of this press release.
 

Credit Metrics and Asset Quality – The ACL Coverage Ratio equaled 1.88% at September 30, 2025, an increase of 15 bps from June 30, 2025, and an increase of 37 bps year-over-year driven by a 12 bps impact resulting from the inclusion of an IFH acquired loan discussed below.

Credit metrics in the quarter were impacted by two loan relationships, both of which were acquired as part of the IFH transaction:

• One relationship across three loans accounted for an $8.8 million increase to nonperforming assets. One loan of $5.0 million was previously identified as a PCD loan, which had a specific ACL reserve of $3.8 million established from Day-1 purchase accounting of the IFH acquisition. The other two are USDA loans with an unguaranteed balance of $3.8 million secured by underlying assets, which have no ACL reserve recorded.

• The other relationship accounted for a $7.1 million increase to nonperforming assets. As previously mentioned, the loan was reassigned to a PCD loan as a measurement period adjustment to the Day-1 purchase accounting from the IFH acquisition. The measurement period adjustment for this loan resulted in recording a specific ACL reserve of $3.4 million during the quarter, or a 12 bps impact to the ACL Coverage Ratio.

Nonperforming assets were $52.2 million or 1.54% of total assets at September 30, 2025, an increase of $16.1 million or 47 bps compared to June 30, 2025, due to the $15.9 million or 47 bps of loans described above. Nonperforming assets increased $36.8 million or 94 bps year-over-year, mainly due to the acquisition of IFH. At September 30, 2025, substandard loans totaled $56.8 million, or 2.0% of total portfolio loans, compared to $44.6 million, or 1.7% of total portfolio loans, at June 30, 2025 and $23.8 million, or 1.2% of total portfolio loans, at September 30, 2024. The $12.2 million increase in substandard loans during the quarter was primarily driven by the $15.9 million of loans described above. At September 30, 2025, special mention loans totaled $71.5 million, or 2.5% of total portfolio loans, compared to $54.2 million, or 2.0% of total portfolio loans, at June 30, 2025, and $20.3 million, or 1.0% of total portfolio loans, at September 30, 2024.

Efficiency Ratios – The efficiency ratio was 60.8% for 3Q 2025, compared to 65.1% for 2Q 2025 and 66.1% for 3Q 2024. The core efficiency ratio⁽¹⁾ was 64.4%, for 3Q 2025, which increased from 62.8% compared to the prior quarter, and 64.9% for 3Q 2024.

Financial Metrics (Continued)

Performance Ratios – ROA was 1.77% for 3Q 2025, compared to 1.60% for 2Q 2025, and 1.42% for 3Q 2024. Core ROA⁽¹⁾ for 3Q 2025 was 1.43%, compared to 1.73% for 2Q 2025, and 1.51% for 3Q 2024.

• ROE was 15.57% for 3Q 2025, compared to 14.17% for 2Q 2025, and 12.59% for 3Q 2024. Core ROE⁽¹⁾ was 12.56% for 3Q 2025, compared to 15.33% for 2Q 2025, and 13.40% for 3Q 2024.

• ROTCE⁽¹⁾ was 17.49% for 3Q 2025, compared to 16.10% for 2Q 2025, and 12.59% for 3Q 2024. Core ROTCE⁽¹⁾ for 3Q 2025 was 14.15%, compared to 17.39% for 2Q 2025, and 13.40% for 3Q 2024.

Book Value and Tangible Book Value – Book value per common share of $23.80 at September 30, 2025, increased $0.88 when compared to June 30, 2025, and increased $3.67 when compared to September 30, 2024. Tangible book value per common share⁽¹⁾ increased $0.63, or 3.1%, to $21.27 at September 30, 2025 when compared to June 30, 2025, and increased $1.15, or 5.7%, when compared to September 30, 2024. Tangible book value was impacted by the purchase accounting adjustments required as part of the IFH acquisition. Tangible book value per share⁽¹⁾ was equal to book value per share for periods prior to 4Q 2024.

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¹ As used in this press release, Core ROA, Core ROE, ROTCE, Core ROTCE, and Tangible Book Value are non-GAAP financial measures. These non-GAAP financial metrics exclude the impact of income from the call of brokered time deposits, merger-related expenses and other certain one-time non-recurring pre-tax adjustments and tax impacts of such adjustments. Reconciliations of these and other non–GAAP measures to their comparable GAAP measures are set forth in the Appendix at the end of this press release.
 

Commercial Bank

Loan Growth – Portfolio loans⁽¹⁾ increased $76.0 million at September 30, 2025 compared to June 30, 2025, driven by $29.3 million from residential real estate, $25.9 million from C&I, and $20.9 million from CRE owner and non-owner occupied. Historical gross portfolio loan balances are disclosed in the Composition of Loans table within the Historical Financial Highlights.

Net Interest Income – Interest income of $49.0 million decreased $0.9 million from the prior quarter, primarily due to the Interest Income Adjustment, offset by growth in the Commercial Bank loan portfolio during the quarter. Interest expense of $12.8 million decreased $4.1 million, primarily due to the Call of Brokered Time Deposits offset by growth from money market deposits in 3Q 2025.

Credit Metrics – Nonperforming assets, comprised solely of nonaccrual loans, increased 50 bps to 1.63% of total assets at September 30, 2025 compared to June 30, 2025. Total nonaccrual loans at September 30, 2025 increased to $52.2 million compared to $36.2 million at June 30, 2025 primarily due to the two loan relationships acquired as part of the IFH transaction discussed previously.

Classified and Criticized Loans – At September 30, 2025, special mention loans totaled $71.5 million, or 2.5% of total portfolio loans, compared to $54.2 million, or 2.0% of total portfolio loans, at June 30, 2025. At September 30, 2025, substandard loans totaled $56.8 million, or 2.0% of total portfolio loans, compared to $44.6 million, or 1.7% of total portfolio loans, at June 30, 2025.

OpenSky^™

Accounts – During 3Q 2025, credit card accounts of 587.6 thousand increased by 2.3 thousand, or 0.4% (not annualized) from June 30, 2025, and increased 38.7 thousand, or 7.0% year-over-year.

Loan and Deposit Balances – Secured and unsecured loan balances, net of reserves, of $136.5 million at September 30, 2025 increased by $5.5 million, or 4.2% (not annualized), compared to June 30, 2025 and $9.4 million, or 7.4%, year-over-year. Deposit balances of $166.9 million for 3Q 2025 decreased $2.1 million compared to 2Q 2025 and decreased $3.9 million, or 2.3% year-over-year. Gross unsecured loan balances of $53.6 million at September 30, 2025 increased $7.3 million, or 15.7% (not annualized), compared to $46.4 million at June 30, 2025, and increased $13.9 million year-over-year. Gross secured loan balances of $84.7 million at September 30, 2025 decreased $1.7 million, or 1.9% (not annualized), compared to $86.4 million at June 30, 2025, and decreased $4.9 million, or 5.5% (not annualized) year-over-year.

Net Interest Income – Interest income of $15.6 million increased $1.1 million compared to 2Q 2025. Average OpenSky credit card loan balances, net of reserves and deferred fees of $129.1 million for 3Q 2025, increased $7.7 million, or 6.3% (not annualized), compared to 2Q 2025.

Fee Revenue - Total fee revenue of $4.5 million increased $0.2 million from the prior quarter primarily driven by other credit-card related fees associated with the unsecured product.

Noninterest Expense – Total noninterest expense of $14.0 million increased $0.9 million compared to 2Q 2025, driven by growth from the unsecured product associated with advertising spend, data processing and professional fees.

OpenSky^™ Credit – Portfolio credit metrics continued to be consistent with modeled expectations during 3Q 2025. The provision for credit losses of $2.8 million decreased $0.1 million when compared to the prior quarter. OpenSky's unsecured loan product continues to be offered exclusively to current and former secured card customers to retain customers who have successfully improved their credit profiles. Unsecured loans have been offered by OpenSky since the fourth quarter of 2021 and have generally performed in accordance with management expectations over that time period.

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¹ Portfolio loans represents portfolio loans receivable excluding deferred origination fee
 

Capital Bank Home Loans

Originations of loans held for sale totaled $80.7 million during 3Q 2025, with $66.4 million of mortgage loans sold resulting in a gain on sale of loans of $1.7 million, representing a 2.56% gain on sale as a percentage of total loans sold. Originations of loans held for sale totaled $80.3 million during 2Q 2025, with $59.7 million of mortgage loans sold resulting in a gain on sale of loans of $1.6 million, representing a 2.68% gain on sale as a percentage of total loans sold.

Windsor Advantage^™

Gross government loan servicing revenue totaled $5.3 million, including $1.1 million of Capital Bank related servicing fees, during 3Q 2025. Gross government loan servicing revenue totaled $4.7 million, including $1.1 million of Capital Bank related servicing fees, during 2Q 2025. Windsor's^™ total servicing portfolio was $3.2 billion at September 30, 2025, and $2.9 billion at June 30, 2025.

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

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

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

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.

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⁽¹⁾   Annualized.
⁽²⁾   Includes nonaccrual loans.
⁽³⁾   For the three months ended September 30, 2025, June 30, 2025, and September 30, 2024, collectively, Commercial Bank Loan Yield was 6.74%, 7.14% and 7.15%, respectively.
⁽⁴⁾   For the three months ended September 30, 2025, June 30, 2025, and September 30, 2024, collectively, Commercial Bank Net Interest Margin was 4.64%, 4.38% and 4.01%, respectively.

⁽¹⁾   Annualized.
⁽²⁾   Includes nonaccrual loans.
⁽³⁾   For the nine months ended September 30, 2025 and 2024, collectively. Commercial Bank Loan Yield was 7.01% and 7.05%, respectively.
⁽⁴⁾   For the nine months ended September 30, 2025 and 2024, collectively. Commercial Bank Net Interest Margin was 4.45% and 4.13%, 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, OpenSky^™ (the Company’s credit card division), Windsor Advantage^™ and Capital Bank Home Loans (the Company’s mortgage loan division).

Prior to March 31, 2025, the Company disclosed Corporate as a reportable segment. The Company has determined that what was previously deemed the Corporate reportable segment consists of other business activities that are associated with the Commercial Bank and are reflected in the tabular disclosures that follow. It should be noted that such restructuring of the tabular disclosure did not result in any changes to the Company's revenue and expense allocation methodology. The Company restructured prior period tabular disclosures to achieve appropriate comparability.

The following schedules reported internally for performance assessment by the chief operating decision maker presents financial information for each reportable segment for the periods indicated. Total assets are presented as of September 30, 2025, June 30, 2025, and September 30, 2024.

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⁽¹⁾ Gross government loan servicing revenue totaled $5.3 million, including $1.1 million of servicing fees earned from the Commercial Bank by Windsor, for the three months ended September 30, 2025.
⁽²⁾ Interest income of $49.0 million for the Commercial Bank includes the $1.3 million Interest Income Adjustment.

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⁽¹⁾ Gross government loan servicing revenue totaled $4.7 million, including $1.1 million of servicing fees earned from the Commercial Bank by Windsor, for the three months ended June 30, 2025
⁽²⁾ Loan servicing rights of negative $0.6 million for the Commercial Bank includes a $1.1 million negative fair value adjustment associated with loan servicing portfolio