(1)	The underwriters will also be reimbursed for certain expenses incurred in this offering. See “Underwriting” for additional information.

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•	we are permitted to present only two years of audited financial statements, in addition to any required interim financial statements, and only two years of related discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;

•	we are exempt from the requirement to obtain an attestation from our auditors on management’s assessment of our internal control over financial reporting under the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;

•	we are permitted to provide less extensive disclosure about our executive compensation arrangements; and

•	we are not required to hold non-binding shareholder advisory votes on executive compensation or golden parachute arrangements.

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•	actual or anticipated fluctuations in our operating results, financial condition or asset quality;

•	changes in economic or business conditions;

•	the effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve;

•	publication of research reports about us, our competitors or the financial services industry generally, or changes in, or failure to meet, securities analysts’ estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage;

•	operating and stock price performance of companies that investors deem comparable to us;

•	additional or anticipated sales of our common stock or other securities by us or our existing shareholders;

•	additions or departures of key personnel;

•	perceptions in the marketplace regarding our competitors or us;

•	significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us;

•	other economic, competitive, governmental, regulatory or technological factors affecting our operations, pricing, products and services; and

•	other news, announcements or disclosures (whether by us or others) related to us, our competitors, our core markets or the financial services industry.

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•	empower our board of directors, without shareholder approval, to issue our preferred stock, the terms of which, including voting power, are to be set by our board of directors;

•	divide our board of directors into three classes serving staggered three-year terms;

•	provide that directors may be removed from office (i) without cause but only upon a 66.67% vote of shareholders and (ii) for cause but only upon a majority shareholder vote;

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•	eliminate cumulative voting in elections of directors;

•	permit our board of directors to alter, amend or repeal our Bylaws or to adopt new bylaws;

•	permit our board of directors to increase or decrease the number of authorized shares of our common stock and preferred stock;

•	require the request of holders of at least a majority of the outstanding shares of our capital stock entitled to vote at a meeting to call a special shareholders’ meeting;

•	require shareholders that wish to bring business before annual or special meetings of shareholders, or to nominate candidates for election as directors at our annual meeting of shareholders, to provide timely notice of their intent in writing; and

•	enable our board of directors to increase, between annual meetings, the number of persons serving as directors and to fill the vacancies created as a result of the increase by a majority vote of the directors present at a meeting of directors.

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•	economic conditions (including interest rate environment, government economic and monetary policies, the strength of global financial markets and inflation and deflation) that impact the financial services industry as a whole and/or our business;

•	the concentration of our business in the Washington, D.C. and Baltimore metropolitan areas and the effect of changes in the economic, political and environmental conditions on these markets;

•	our ability to prudently manage our growth and execute our strategy;

•	our plans to grow our commercial real estate and commercial business loan portfolios which may carry greater risks of non-payment or other unfavorable consequences;

•	adequacy of reserves, including our allowance for loan losses;

•	deterioration of our asset quality;

•	risks associated with our residential mortgage banking business;

•	risks associated with our OpenSky credit card division, including compliance with applicable consumer finance and fraud prevention regulations;

•	results of examinations of us by our regulators, including the possibility that our regulators may, among other things, require us to increase our allowance for loan losses or to write-down assets;

•	the effectiveness of our internal control over financial reporting and our ability to remediate any future material weakness in our internal control over financial reporting.

•	changes in the value of collateral securing our loans;

•	our dependence on our management team and board of directors and changes in management and board composition;

•	liquidity risks associated with our business;

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•	interest rate risk associated with our business, including sensitivity of our interest earning assets and interest bearing liabilities to interest rates, and the impact to our earnings from changes in interest rates;

•	our ability to maintain important deposit customer relationships and our reputation;

•	operational risks associated with our business;

•	strategic acquisitions we may undertake to achieve our goals;

•	the sufficiency of our capital, including sources of capital and the extent to which we may be required to raise additional capital to meet our goals;

•	fluctuations to the fair value of our investment securities that are beyond our control;

•	potential exposure to fraud, negligence, computer theft and cyber-crime;

•	the adequacy of our risk management framework;

•	our dependence on our information technology and telecommunications systems and the potential for any systems failures or interruptions;

•	our dependence upon outside third parties for the processing and handling of our records and data;

•	our ability to adapt to technological change;

•	our engagement in derivative transactions;

•	volatility and direction of market interest rates;

•	increased competition in the financial services industry, particularly from regional and national institutions;

•	our involvement from time to time in legal proceedings, examinations and remedial actions by regulators;

•	changes in the laws, rules, regulations, interpretations or policies relating to financial institution, accounting, tax, trade, monetary and fiscal matters;

•	the financial soundness of other financial institutions;

•	further government intervention in the U.S. financial system;

•	natural disasters and adverse weather, acts of terrorism, an outbreak of hostilities or other international or domestic calamities, and other matters beyond our control; and

•	other factors that are discussed in the section entitled “Risk Factors,” beginning on page 22.

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•	on an actual basis; and

•	on an as adjusted basis to give effect to the issuance and sale by us of 1,500,000 shares in this offering and the receipt of the net proceeds therefrom (assuming the underwriters do not exercise their option to purchase additional shares from us) at the initial public offering price of $12.50 per share, after deducting the underwriting discount and estimated offering expenses payable by us.

(1)	As adjusted capital ratios assume all of the net proceeds to us in this offering are contributed to the Bank and are invested by the Bank in 20.0% risk-weighted assets.

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•	1,276,012 shares of our common stock issuable upon the exercise of stock options outstanding at June 30, 2018 at a weighted average exercise price of $8.05 per share; and

•	934,100 shares of our common stock available for issuance under the 2017 Plan.

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(1)	Annualized.

(2)	Includes loans held for sale.

(3)	Includes nonaccrual loans.

(4)	Interest income includes amortization of deferred loan fees, net of deferred loan costs.

(5)	Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities.

(6)	Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period.

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(1)	Includes loans held for sale.

(2)	Includes nonaccrual loans.

(3)	Interest income includes amortization of deferred loan fees, net of deferred loan costs.

(4)	Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities.

(5)	Net interest margin is a ratio calculated as net interest income divided by average interest earning assets for the same period.

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•	Pass/Watch. Borrowers who are considered satisfactory and performing to terms, however exhibit special risk features such as declining earnings, strained cash flow, increasing leverage, and/or weakening fundamentals that indicate above average risk.

•	Special Mention. A special mention loan has potential weaknesses deserving of management’s attention. If uncorrected, such weaknesses may result in deterioration of the repayment prospects for the asset or in our credit position at some future date.

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Substandard. A substandard loan is inadequately protected by the current financial condition and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets that are classified as substandard.

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Doubtful. A doubtful loan has all weaknesses inherent in one classified as substandard, with the added characteristic that weaknesses make collection or liquidation in full, on the basis of existing facts, conditions, and values, highly questionable and improbable. The probability of loss is extremely high, but certain important and reasonably specific factors that may work to the advantage and strengthening of the asset exist. Therefore, its classification as an estimated loss is deferred until a more precise status may be determined by management. Pending factors include proposed merger, acquisition or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans.

•	Loss. Credits rated as loss are charged-off. We have no expectation of the recovery of any payments in respect of credits rated as loss.

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(1)	Category includes loans graded exceptional, very good, good, satisfactory and pass / watch.

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•	for residential mortgage loans, the borrower’s ability to repay the loan, including a consideration of the debt-to-income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral;

•	for commercial mortgage loans, the debt service coverage ratio, operating results of the owner in the case of owner-occupied properties, the loan-to-value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type;

•	for construction loans, the perceived feasibility of the project including the ability to sell improvements constructed for resale, the quality and nature of contracts for presale, if any, experience and ability of the developer, loan-to-cost ratio and loan-to-value ratio;

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for commercial business loans, the debt service coverage ratio (income from the business in excess of operating expenses compared to loan repayment requirements), the operating results of the commercial or professional enterprise, the borrower’s business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral; and

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for credit card-related loans, the borrower’s debt-to-income is estimated from credit rating services, and ability to repay ratios are determined from income and housing payment data provided by the borrower at the time the application for a credit card is submitted. Secured credit line increases are issued upon successful demonstration of the customer’s ability to repay and adherence to our internal policy limits. For unsecured credit line increases, we examine time on book, FICO scores and certain analytics which track a customer’s consumer behaviors, line utilization, payment turnover and delinquency history.

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(1)	Loan category as a percentage of total loans.

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(1)	These ratios are annualized for the six months ended June 30, 2018.

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(1)	Includes loans held for sale.

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(1)	Financial information as of and for the year ended December 31, 2013 excludes the effect of bargain purchase gains.

(2)	Peer group consists of: EGBN, SASR, OLBK, ANCX, SONA, TCFC, JMSB, HBMD and FVCB. Peer data per S&P Global Market Intelligence.

(3)	Net interest margin is a ratio calculated as net interest income divided by average interest earning assets for the same period.

(4)	This financial measure is not recognized under GAAP and is therefore considered to be a non-GAAP measure. See “Prospectus Summary—GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation of this financial measure to its most comparable GAAP financial measure.

(5)

Presentation of this financial measure as of or for the year ended December 31, 2017 excludes the effects of certain non-recurring expenses incurred with the conversion of our credit card processing systems and the revaluation of our deferred tax assets due to the effects of the Tax Act. See “Prospectus Summary—GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for a reconciliation of this financial measure to its most comparable GAAP financial measure.

(6)	June 30, 2018 performance data has been annualized.

(7)	Gives effect to a four-for-one stock split of our common stock completed effective August 15, 2018. The effect of the stock split on outstanding shares and per share figures has been retroactively applied to all periods presented.

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•	Expanded through loan production offices into the Northern Virginia and Columbia-Baltimore, Maryland markets;

•	Expanded our workforce from 118 associates to 195 as of June 30, 2018;

•	Developed Apollo, our customized credit card acquisition platform;

•	Ranked second among local banks by number of SBA loans in Washington, D.C. in 2017;

•	Launched several new business lines: Fiduciary Banking, Church Street Capital, Consumer Direct and Community Lending;

•	Established the Capital Bank Learning Academy and launched an inaugural Management and Leadership Development Program in 2016;

•	Obtained recognition for several of our senior executives. Our CEO, Edward Barry, was named an Ernst & Young Entrepreneur of the Year for the Mid-Atlantic Region. In addition, Kathy Curtis and Eric Suss, were named as outstanding leaders in their specialties (compliance and human resources, respectively) by SmartCEO in the Washington, D.C. market;

•	Opened a new branch in Columbia, Maryland on June 19, 2017; and

•	Opened a new branch in Reston, Virginia on June 20, 2018.

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(1)	Net charge-offs for the year ended December 31, 2016 include $1.8 million charged-off as a result of fraud related to a commercial and industrial credit. Excludes loans held for sale.

(2)	Yield on average loans excludes credit card loans.

(3)	Peer group consists of: EGBN, SASR, OLBK, ANCX, SONA, TCFC, JMSB, HBMD and FVCB. Peer data per S&P Global Market Intelligence.

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•	Serve as financial partners to our customers, helping them to grow their businesses through advice-based financial solutions;

•	Endeavor to provide comprehensive loan and deposit solutions to our customers that are tailored to their needs;

•	Expand expertise in the non-profit, basic industries, fiduciary and community lending groups while building a greater presence in the government contracting sector;

•	Capitalize on market dislocation from recent in-market acquisitions to continue to attract top sales talent, like our Fiduciary Banking Team and the leader of our Business Banking group, and acquire new commercial banking relationships from local competitors; and

•	Selectively add banking centers where sales teams have already proved an ability to capture market share and leverage customer relationships.

•	Use solution structuring and customized technology implementation as differentiators to add value to clients with complex needs and deepen our relationships within our existing customer base;

•	Deploy technologies that better support our lending associates and simplify our processes;

•	Maximize the potential of web-based and mobile banking applications to drive core funding while maintaining our branch-lite business model; and

•	Enhance cross-selling capabilities among our OpenSky, Church Street Mortgage and Commercial Banking division customers.

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•	Utilize our customer acquisition system, Apollo, and leverage our investment in a new core processing system, together with our expertise in data, analytics and marketing, to deliver new products and services and grow our secured credit card business;

•	Retain OpenSky customers that “graduate” from our secured credit product through the limited use of partially unsecured credit products; and

•	Expand our purchase-oriented mortgage loan sales both in-market and in adjacent markets through the hiring of high quality mortgage originators and continuing to improve on our direct to consumer marketing channels.

•	Seek strategic acquisitions in the Washington, D.C., Baltimore, Maryland, and surrounding metropolitan areas;

•	Evaluate specialty finance company opportunities where we can add value through increasing interest and fee income and leveraging our management’s expertise and existing strategic assets; and

•	Use our management’s and Board’s expertise to structure transactions that minimize the integration and execution risk for the Bank.

(1)	Data consists of deposit-weighted average using county-level deposits.

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•	The Washington, D.C. metro area received $70 billion in government contracting awards from October 2015 to September 2016, according to data from USASpending.gov. We expect the region to benefit from anticipated increases in government contract spending under the Trump administration.

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•	According to the Annual Review of Government Contracting of the National Contract Management Association, Virginia, Maryland and the District of Columbia represent three of the top five markets in the United States for annual government contracts awarded in 2015.

•	The Washington, D.C. MSA is home to some of the largest defense contracting companies in the world, including Lockheed Martin (Bethesda, Maryland) and General Dynamics (Falls Church, Virginia).

•	The Washington, D.C. MSA is home to three of the world’s largest hotel and resort chains, Marriott International, Inc. (Bethesda, Maryland), Hilton Worldwide Holdings Inc. (McLean, Virginia) and Host Hotels & Resorts, Inc. (Bethesda, Maryland).

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Worldwide interest in Washington, D.C.’s monuments, museums, diverse neighborhoods drives a strong interest in tourism in the area. According to the Associated Press, the area was visited by more than 22 million domestic and international tourists in 2016. The high volume of tourists contributed to $7.3 billion of spending in the area in 2016, an increase of 2.8% from 2015. The tourism industry supports 74,000 jobs in Washington, D.C., according to Destination DC.

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•	to provide a ready source of balance sheet liquidity, ensuring adequate availability of funds to meet fluctuations in loan demand, deposit balances and other changes in balance sheet volumes and composition;

•	to serve as a means for diversification of our assets with respect to credit quality, maturity and other attributes; and

•	to serve as a tool for modifying our interest rate risk profile pursuant to our established policies.

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(1)	The personnel at the Mortgage Office will be moved to the new Corporate Office location at 2275 Research Boulevard, Suite 600, Rockville, MD 20850 on October 9, 2018.

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(1)	Our board of directors is divided into three classes, the terms for which expire at our annual shareholder meetings in 2018 (Class I), 2019 (Class II), and 2020 (Class III).

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•	The Class I directors are Scot R. Browning, Joshua Bernstein and Michael Burke.

•	The Class II directors are Edward F. Barry, Randall J. Levitt and Deborah Ratner Salzberg.

•	The Class III directors are Stephen N. Ashman, Steven J. Schwartz and James F. Whalen.

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•	selecting and reviewing the performance of our independent auditor and approving, in advance, all engagements and fee arrangements;

•	reviewing reports from the independent auditor regarding its internal quality control procedures and any material issues raised by the most recent internal quality-control or peer review or by governmental or professional authorities, and any steps taken to deal with such issues;

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•	reviewing the independence of our independent auditor and setting policies for hiring employees or former employees of our independent auditor and for audit partner rotation and independent auditor rotation in accordance with applicable laws, rules and regulations;

•	resolving any disagreements regarding financial reporting between management and the independent auditor;

•	overseeing our internal audit function;

•	reviewing operating and control issues identified in internal audit reports, management letters, examination reports of regulatory agencies and monitoring management’s compliance with recommendations contained in those reports;

•	meeting with management and the independent auditor to review the effectiveness of our system of internal controls and internal audit procedures, and to address any deficiencies in such procedures;

•	monitoring management’s compliance with all applicable laws, rules and regulations;

•	reviewing our earnings releases and reports filed with the SEC;

•	preparing the Audit Committee report required to be included in our annual report by SEC rules;

•	reviewing the adequacy and effectiveness of our accounting and financial controls, including guidelines and policies for assessing and managing our risk exposure;

•	establishing and overseeing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and for the confidential anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters;

•	reviewing actions by management on recommendations of the independent auditors and internal auditors;

•	reviewing and approving or ratifying related party transactions; and

•	handling such other matters as are specifically delegated to the Audit Committee by our board of directors from time to time.

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reviewing and determining, and recommending to the board of directors for its confirmation, the annual compensation, annual incentive compensation and any other matter relating to the compensation of our named executive officers; all employment agreements, severance or termination agreements, change in control agreements to be entered into between any executive officer and us; and modifications to our philosophy and compensation practices relating to compensation of our directors and management;

•	reviewing and determining, and recommending to the board of directors for its confirmation, the establishment of performance measures and the applicable performance targets for each performance-based cash and equity incentive award to be made under any benefit plan;

•	taking all actions required or permitted under the terms of our benefit plans, with separate but concurrent authority;

•	reviewing, approving and administering each of our benefit plans, and performing such other duties and responsibilities as may be assigned to the Compensation Committee under the terms of such plans;

•	reviewing with our Chief Executive Officer the compensation payable to employees other than the named executive officers, including equity and non-equity incentive compensation and other benefits and our total incentive compensation program envisioned for each fiscal year;

•	consulting with our Chief Executive Officer regarding a succession plan for our executive officers, including our Chief Executive Officer, and the review of our leadership development process for senior management positions;

•	reviewing the performance of our named executive officers;

•	reviewing and discussing with management any compensation discussion and analysis included in our annual meeting proxy statements and any other reports filed with the SEC and determining whether or not to recommend to our board of directors that such compensation discussion and analysis be so included;

•	preparing the Compensation Committee report required by SEC rules to be included in our annual report;

•	overseeing the administration of our equity plans and other incentive compensation plans and programs and preparing recommendations and periodic reports to our board of directors relating to these matters;

•	overseeing and making recommendations to the board of directors regarding the Company’s compliance with SEC rules and regulations regarding shareholder approval of certain executive compensation matters, including advisory votes on executive compensation and golden parachute compensation and approval of equity compensation plans;

•	conducting an annual evaluation of the performance of the Compensation Committee and the adequacy of its charter and recommending to the board of directors any changes that it deems necessary; and

•	handling such other matters as are specifically delegated to the Compensation Committee by our board of directors from time to time.

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•	reviewing the performance of our boards of directors of the Company and each of our subsidiaries;

•	identifying, assessing and determining the qualification, attributes and skills of, and recommending, persons to be nominated by our board of directors for election as directors and to fill any vacancies on the boards of directors of the Company and each of our subsidiaries;

•	reviewing the background, qualifications and independence of individuals being considered as director candidates, including persons proposed by our shareholders;

•	reviewing and recommending to our board of directors each director’s suitability for continued service as a director upon the expiration of his or her term and upon any material change in his or her status;

•	reviewing the size and composition of the board of directors of the Company and each of our subsidiaries as a whole, and recommend any appropriate changes to reflect the appropriate balance of required independence, knowledge, experience, skills, expertise and diversity;

•	monitoring the function of our standing committees and recommending any changes, including the director assignments, creation or elimination of any committee;

•	developing, reviewing and monitoring compliance with our corporate governance guidelines and the corporate governance provisions of the federal securities laws and the listing rules applicable to us;

•	investigating any alleged violations of such guidelines and the applicable corporate governance provisions of federal securities laws and listing rules, and reporting such violations to our board of directors with recommended corrective actions;

•	reviewing our corporate governance practices in light of best corporate governance practices among our peers and determining whether any changes in our corporate governance practices are necessary;

•	considering any resignation tendered to our board of directors by a director and recommend the acceptance of such resignation if appropriate;

•	considering questions of possible conflicts of interest involving directors, including operations that could be considered competitive with our operations or otherwise present a conflict of interest;

•	overseeing our director orientation and continuing education programs for the board of directors;

•	reviewing its charter and recommending to our board of directors any modifications or changes; and

•	handling such other matters as are specifically delegated to the Nominating and Corporate Governance Committee by our board of directors from time to time.

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•	adherence to high ethical standards and high standards of integrity;

•	sufficient educational background, professional experience, business experience, service on other boards of directors and other experience, qualifications, diversity of viewpoints, attributes and skills that will allow the candidate to serve effectively on the board of directors and the specific committee for which he or she is being considered;

•	evidence of leadership, sound professional judgment and professional acumen;

•	evidence the nominee is well recognized in the community and has a demonstrated record of service to the community;

•	a willingness to abide by any published code of conduct or ethics for the Company and to objectively appraise management performance;

•	the ability and willingness to devote sufficient time to carrying out the duties and responsibilities required of a director;

•	any related party transaction in which the candidate has or may have a material direct or indirect interest and in which we participate; and

•	the fit of the individual’s skills and personality with those of other directors and potential directors in building a board of directors that is effective, collegial and responsive to the needs of the Company and the interests of our shareholders.

•	attendance and performance at meetings of the Company’s board of directors and the committees on which such director serves;

•	length of service on the Company’s board of directors;

•	experience, skills and contributions that the sitting director brings to the Company’s board of directors;

•	independence and any conflicts of interest; and

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•	any significant change in the director’s status, including with respect to the attributes considered for initial membership on the Company’s board of directors.

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•	Edward F. Barry, Chief Executive Officer;

•	Scot R. Browning, President of the Bank; and

•	Nick Bryan, Executive Vice President and Chief Marketing Officer.

(1)

These amounts represent the aggregate grant date fair value of restricted stock granted in 2016 and 2017, calculated in accordance with Financial Accounting Standards Board Account Standards Codification Topic 718, or FASB ASC Topic 718. Assumptions used in the calculation of these amounts are discussed in the Summary of Significant Accounting Policies note and the Stock-Based Compensation note to our consolidated financial statements as of December 31, 2017. The fair market value of shares was determined by the board of directors.

(2)

These amounts represent the aggregate grant date fair value of option awards for the years ended December 31, 2017 and 2016 calculated in accordance with FASB ASC Topic 718. The fair market value of shares was determined by the board of directors. The assumptions used in calculating the option award amounts are set forth in the Stock-Based Compensation note to our consolidated financial statements as of December 31, 2017.

(3)	“All Other Compensation” for the named executive officers is further described below.

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(1)

Represents the grant date fair value of stock awards and option awards calculated in accordance with FASB ASC Topic 718. The average per share price of stock awards was $30.55 for 2017. The grant date fair value of options awarded to directors was $10.71 for 2017. Assumptions used in the calculation of these amounts are discussed in the Summary of Significant Accounting Polices note and the Stock-Based Compensation note to our consolidated financial statements included elsewhere in this prospectus. The fair market value of shares was determined by the board of directors.

(2)	Fees earned or paid in cash represent $88,667 which was paid under a previous consulting services arrangement and $44,000 paid under the retainer arrangement instituted in September 2017.

(3)	Mr. Burke was appointed to our board of directors on August 31, 2017. He did not receive any compensation in 2017 for such service. This compensation includes amounts received as a member of the Bank’s board of directors.

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•	each person known by us to own beneficially more than 5% of our outstanding common stock;

•	each of our directors;

•	each of our named executive officers;

•	all of our directors and executive officers as a group;

•	each of the Bank’s directors; and

•	each selling shareholder.

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*	Denotes less than 1%

(1)

Address: P.O. Box 4004, Merrifield, VA 22116. Includes 4,000 shares held by the Joshua Frank Williams Trust. Includes 4,000 shares held by the Kathleen Elizabeth Williams Trust. Includes 21,052 shares held by Salomon Smith Barney FBO Frank E. Williams Jr. Includes 73,000 shares held by the Williams Family Foundation. Includes 147,052 shares held by The Williams Family Limited Partnership. Includes 7,212 shares held by The Joshua Everett Trust. Includes 7,212 shares held by The Kathleen Williams Trust.

(2)	Includes 469,348 shares held by the Stephen Ashman Revocable Trust. Includes 251,900 of shares held by Mr. Ashman as the co-trustee of the Shari G. Ashman Trust. Includes 12,052 shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 25,748 shares of our common stock underlying options that are subject to vesting.

(3)	Includes 223,004 shares held with Mr. Barry’s spouse. Includes 46,324 shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 48,772 shares of our common stock underlying options that are subject to vesting.

(4)

Includes 303,200 shares held by the Bernstein Fund Limited Partnership, where Mr. Bernstein owns 16.7%. Includes 204,400 shares held by SandBern Ventures, LLC, where Mr. Bernstein owns 66.67%. Includes 324,000 shares held by Mr. Bernstein’s father, Norman Bernstein, through whom he has a general power of attorney. Excludes 22,900 shares of our common stock underlying options that are subject to vesting.

(5)	Includes 40,800 shares held for the benefit of Scot R. Browning, IRA. Includes 23,000 of shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 31,000 shares of our common stock underlying options that are subject to vesting.

(6)

Includes 29,560 shares held by Mr. Burke’s spouse. Includes 4,800 shares held jointly with his spouse. Includes 127,452 shares held by Yorke, Burke & Lee 401(k) Profit Sharing Plan, of which Mr. Burke disclaims 70,572 for the benefit of other employees. Includes 15,500 shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 20,900 shares of our common stock underlying options that are subject to vesting.

(7)	Includes 47,252 shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 36,748 shares of our common stock underlying options that are subject to vesting.

(8)

Includes 139,520 shares held by the Randall James Levitt Revocable Trust (“RJRT”), a trust that benefits Mr. Levitt and for which he acts as sole trustee.  Includes 392,000 shares held by BTC Trust Company of South Dakota (“BTC”), FBO the Richard S. Levitt Fifth Trust whose business affairs are managed by Nellis Corporation (“Nellis”), a company that employs Mr. Levitt and at which he serves as President.  Includes 189,200 shares held by Montrose Lending Group, LLC, a company that is (i) owned by (y) NC Associates Corporation (“NC”), a company 50 percent owned by RJRT, and (z) BTC, FBO the RSL Family 2011 Dynasty Trust and the JSL Family 2011 Dynasty Trust whose business affairs, respectively, are managed by Nellis and (ii) managed by NC.  Includes 154,056 shares held by Maud Associates, LLC, a company that is 50 percent owned by a trust that benefits one of Mr. Levitt’s daughters and for which Mr. Levitt acts as sole trustee.  Excludes 324,000 shares held by Ramar Corporation, a company 25 percent owned by RJRT, as to which Mr. Levitt has disclaimed beneficial ownership, except to the extent of his pecuniary interest therein.  Excludes 16,800 shares owned by Needle Leaf Associates, LLC, a company owned by one of Mr. Levitt’s daughters and her husband, as to which Mr. Levitt has disclaimed beneficial ownership.  Excludes 29,200 shares of our common stock that can, subject to vesting of options, be acquired by Mr. Levitt.

(9)	Includes 14,632 shares held by the Deborah Ratner Salzberg Trust. Includes 7,724 shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 17,576 shares of our common stock underlying options that are subject to vesting.

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(10)	Includes 439,732 shares held by Prudent Investments, LLC where Mr. Schwartz is a Managing Member. Excludes 38,900 shares of our common stock underlying options that are subject to vesting.

(11)

Includes 88,000 shares held by IP Associates, LLC, which is owned by Mr. Whalen. Includes 58,400 shares held by Millennium Trust Company, LLC FBO James Whalen. Includes 620,396 shares held by the James F. Whalen Revocable Trust. Includes 237,248 shares held by the Whalen Family, LLC. Includes 31,200 shares held by The Katherine M Whalen Trust. Excludes 34,976 shares of our common stock underlying options that are subject to vesting.

(12)	Includes 50,896 shares held by the Jerome R. Bailey Revocable Living Trust. Includes 11,800 shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 36,100 shares of our common stock underlying options that are subject to vesting.

(13)

Includes 33,656 shares held by the Rory S. Coakley Revocable Trust. Includes 68,552 shares held by Mr. Coakley as the Trustee of his spouse’s trust, the Nancy K. Coakley Revocable Trust. Includes 8,000 shares held by Pamunkey Holdings, LLC. Includes 27,200 shares held by Raymond James and Associates FBO Rory S. Coakley, IRA. Includes 73,756 shares held by the Rory S. Coakley Revocable Trust. Includes 21,000 shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 27,000 shares of our common stock underlying options that are subject to vesting.

(14)	Includes 4,000 shares held jointly with Mr. Greene’s spouse. Includes 27,100 shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 31,300 shares of our common stock underlying options that are subject to vesting.

(15)	Includes 2,000 shares held by HT Harrison Profit Sharing Trust. Includes 169,532 shares held jointly with Mr. Harrison’s spouse. Includes 23,600 shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 25,600 shares of our common stock underlying options that are subject to vesting.

(16)

Includes 39,000 shares held jointly with Ms. Lee’s spouse. Includes 21,000 shares owned individually by Ms. Lee’s spouse. Includes 40,000 shares held jointly with Ms. Lee’s brother. Includes 25,680 shares held jointly with Ms. Lee’s mother. Excludes 67,320 shares for the benefit of Ms. Lee held by the Yorke, Burke & Lee 401(k) Profit Sharing Plan. Includes 10,300 shares of our common stock underlying options that are currently exercisable or are exercisable within 60 days of June 30, 2018. Excludes 30,900 shares of our common stock underlying options that are subject to vesting.

(17)	Includes 1,200 shares held by RMN Investment Holdings LLC, owned by Mr. Lewis. Excludes 3,000 shares of our common stock underlying options that are subject to vesting.

(18)	Address: 7030 Winterberry Lane, Bethesda, MD 20817.

(19)	Address: 6426 Fairland St., Alexandria, VA 22312.

(20)	Address: 931 Nashua St., Houston, TX 77008.

(21)	Address: 9492 Oak Grove Circle, Davie, FL 33328.

(22)	Address: 19301 New Hampshire Ave., Brinklow, MD 20862.

(23)	Address: 10905 Barn Wood Lane, Potomac, MD 20854.

(24)	Address: 7811 Montrose Road, Suite 420, Potomac, MD 20854.

(25)	Address: 405 Echo Court, Cherry Hill, NJ 08003.

(26)	Address: 14 Founders Mill Ct., Derwood, MD 20855.

(27)	Address: 7013 Wyndale St. NW, Washington, D.C. 20015.

(28)	Address: 9101 Crosby Road, Silver Spring, MD 20910.

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•	general or special voting rights;

•	preferential liquidation or preemptive rights;

•	preferential cumulative or noncumulative dividend rights;

•	redemption or put rights; and

•	conversion or exchange rights.

•	adversely affect voting or other rights evidenced by, or amounts otherwise payable with respect to, the common stock or other series of preferred stock;

•	discourage an unsolicited proposal to acquire us; or

•	facilitate a particular business combination involving us.

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•	empower our board of directors, without shareholder approval, to issue our preferred stock, the terms of which, including voting power, are set by our board of directors;

•	empower our board of directors, without shareholder approval, to amend our Articles to increase or decrease our authorized shares of common stock and any class of capital stock that we have the authority to issue;

•	divide our board of directors into three classes serving staggered three-year terms;

•	provide that directors may be removed from office for cause upon a majority shareholder vote and may only be removed from office without cause only upon a 66.67% shareholder vote;

•	eliminate cumulative voting in elections of directors;

•	permit our board of directors to alter, amend or repeal our Bylaws or to adopt new bylaws;

•	require the request of holders of at least a majority of the outstanding shares of our capital stock entitled to vote at a meeting to call a special shareholders’ meeting;

•	prohibit shareholder action by less than unanimous written consent, thereby requiring virtually all actions to be taken at a meeting of the shareholders;

•	require shareholders that wish to bring business before our annual meeting of shareholders or nominate candidates for election as directors at our annual meeting of shareholders to provide timely notice of their intent in writing; and

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•	enable our board of directors to increase, between annual meetings, the number of persons serving as directors and to fill vacancies created as a result of the increase by a majority vote of the directors present at a meeting of directors.

•	acts or omissions not in good faith;

•	acts or omissions that are the result of active and deliberate dishonesty;

•	any transaction from which the director receives an improper benefit; and

•	acts or omissions that the director has reasonable cause to believe are unlawful.

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•	requires BHCs and banks to be both well capitalized and well managed in order to acquire banks located outside their home state and requires any BHC electing to be treated as a financial holding company to be both well managed and well capitalized;

•	eliminates all remaining restrictions on interstate banking by authorizing national and state banks to establish de novo branches in any state that would permit a bank chartered in that state to open a branch at that location; and

•	repeals Regulation Q, the federal prohibition on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transaction and other accounts.

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Tax Rate. The Tax Act replaces the graduated corporate tax rates applicable under prior law, which imposed a maximum tax rate of 35%, with a reduced 21% flat tax rate. Although the reduced tax rate generally should be favorable to us by resulting in increased earnings and capital, it will decrease the value of our existing deferred tax assets. GAAP requires that the impact of the provisions of the Tax Act be accounted for in the period of enactment. As a result, we recorded net income tax expense of $1.4 million related to this revaluation. Of this amount, $40 thousand of expense was attributable to our net deferred tax asset for unrealized losses on available for sale securities and cash flow hedge. In addition to adjusting the deferred tax asset for this item, we recorded an adjustment to accumulated other comprehensive income with a transfer to retained earnings.

•	Employee Compensation. A “publicly held corporation” is not permitted to deduct compensation in excess of $1 million per year paid to certain employees. The Tax Act eliminates certain exceptions to the $1 million limit applicable under prior to law related to performance-based compensation, such as equity grants and cash bonuses that are paid only on the attainment of performance goals.

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Business Asset Expensing. The Tax Act allows taxpayers immediately to expense the entire cost (instead of only 50%, as under prior law) of certain depreciable tangible property and real property improvements acquired and placed in service after September 27, 2017 and before January 1, 2023 (with an additional year for certain property). This 100% “bonus” depreciation is phased out proportionately for property placed in service on or after January 1, 2023 and before January 1, 2027 (with an additional year for certain property).

•	Interest Expense. The Tax Act limits a taxpayer’s annual deduction of business interest expense to the sum of (i) business interest income and (ii) 30% of “adjusted taxable income,” defined as a business’s taxable income without taking into account business interest income or expense, net operating losses, and, for 2018 through 2021, depreciation, amortization and depletion.

•	Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

•	HMDA, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

•	Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed, or other prohibited factors in extending credit;

•	Fair Credit Reporting Act of 1978, as amended by the Fair and Accurate Credit Transactions Act, governing the use and provision of information to credit reporting agencies, certain identity theft protections, and certain credit and other disclosures;

•	Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected by collection agencies;

•	Real Estate Settlement Procedures Act, requiring certain disclosures concerning loan closing costs and escrows, and governing transfers of loan servicing and the amounts of escrows in connection with loans secured by one-to-four family residential properties;

•	Rules and regulations established by the National Flood Insurance Program; and

•	Rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.

•	Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

•	Truth-In-Savings Act, requiring certain disclosures for consumer deposit accounts;

•	Electronic Funds Transfer Act and Regulation E of the Federal Reserve, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and

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•	Rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.

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•	U.S. expatriates and former citizens or long-term residents of the United States;

•	persons subject to special tax accounting rules as a result of any item of gross income with respect to our common stock being taken into account in an “applicable financial statement” (as defined in the Internal Revenue Code);

•	persons in special situations, such as those that have elected to mark securities to market or that hold our common stock as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;

•	banks, insurance companies, and other financial institutions;

•	investment funds, brokers, dealers or traders in securities;

•	corporations that accumulate earnings to avoid U.S. federal income tax;

•	partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);

•	tax-exempt organizations or governmental organizations;

•	persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code; and

•	tax-qualified retirement plans, “qualified foreign pension funds” as defined in Section 897(l)(2) of the Internal Revenue Code and entities all of the interests of which are held by qualified foreign pension funds.

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•	a non-resident alien individual;

•	a foreign corporation (or other entity taxable as a foreign corporation);

•	a foreign estate, the income of which is not subject to U.S. federal income taxation regardless of its source; or

•	a trust that does not have in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person and either (i) no court within the United States is able to exercise primary supervision over the trust’s administration or (ii) no U.S. persons have the authority to control all substantial decisions of that trust.

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•	the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment or fixed base in the United States to which such gain is attributable);

•	the Non-U.S. Holder is a non-resident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or

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we are or have been a U.S. real property holding corporation, or USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition and the Non-U.S. Holder’s holding period for our common stock (the “relevant period”) and the Non-U.S. Holder (i) disposes of our common stock during a calendar year when our common stock is not regularly traded on an established securities market or (ii) owned (directly, indirectly, and constructively) more than 5% of our common stock at any time during the relevant period.

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offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, hypothecate, establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer any shares of our common stock or any securities convertible into or exchangeable or exercisable for our common stock, whether then owned or thereafter acquired or with respect to which we or such person has or thereafter acquires the power of disposition, or exercise any right with respect to the registration thereof, or file or cause to be filed any registration statement under the Securities Act, with respect to any of the foregoing;

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enter into any swap, hedge or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the shares of our common stock or any securities convertible into or exchangeable or exercisable for our common stock, whether any such swap, hedge or transaction is to be settled by delivery of shares of our common stock or other securities, in cash or otherwise; or

•	publicly disclose the intention to make any such offer, pledge, sale or disposition, or to enter into any such swap, hedge, transaction or other arrangement.

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•	stabilizing transactions;

•	short sales; and

•	purchases to cover positions created by short sales.

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•	to any legal entity which is a “qualified investor” as defined in the Prospectus Directive;

•	to fewer than 150 natural or legal persons (other than qualified investors, as defined in the Prospectus Directive), subject to obtaining the prior consent of the representatives for any such offer; or

•	in any other circumstances falling within Article 3(2) of the Prospectus Directive.

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(1)	Shares of common stock authorized, issued and outstanding and additional paid-in capital totals have been adjusted to reflect the four-for-one stock split completed effective August 15, 2018.

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(1)	Weighted average common shares outstanding used in the computation of basic and diluted net income per common share were adjusted to reflect the four-for-one stock split completed effective August 15, 2018.

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(1)	Shares of common stock outstanding, common stock amount and additional paid-in capital totals have been adjusted to reflect the four-for-one stock split completed effective August 15, 2018.

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(1)	Mortgage-backed securities are due in monthly installments.

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(1)	Shares of common stock outstanding, common stock amount and additional paid-in capital totals have been adjusted to reflect the four-for-one stock split completed effective August 15, 2018.

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