UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 24, 2019
CAPITAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
Maryland | 001-38671 | 52-2083046 |
(State or other jurisdiction of incorporation or organization) | (Commission file number) | (IRS Employer Identification No.) |
2275 Research Boulevard, Suite 600, Rockville, Maryland 20850
(Address of principal executive offices) (Zip Code)
(301) 468-8848
Registrant’s telephone number, including area code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
Common Stock, par value $0.01 per share | CBNK | NASDAQ Stock Market |
ITEM 2.02. Results of Operations and Financial Condition
On July 24, 2019, Capital Bancorp, Inc. (the “Company”) issued a press release setting forth the Company’s second quarter 2019 unaudited financial results. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.
The information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Company under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.
ITEM 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit No. | Description |
99.1 | Press Release, dated July 24, 2019, with respect to the Registrant's unaudited financial results for the second quarter ended June 30, 2019. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CAPITAL BANCORP, INC. | |
By: /s/ Alan W. Jackson | |
Name: Alan W. Jackson | |
Title: Chief Financial Officer | |
July 24, 2019
EXHIBIT INDEX
Exhibit Number | Description | |
99.1 | ||
PRESS RELEASE
FOR IMMEDIATE RELEASE
Capital Bancorp Reports 20% Growth in Earnings for the Second Quarter of 2019
Rockville, Maryland, July 24, 2019 (GLOBE NEWSWIRE) – Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $4.0 million, or $0.29 per diluted share, for the second quarter of 2019. By comparison, net income was $3.3 million, or $0.24 per diluted share, for the first quarter of 2019 and net income was $3.1 million, or $0.26 per diluted share, for the second quarter of 2018. Return on average assets was 1.39% and return on average equity was 13.23% for the second quarter of 2019. For the three months ended March 31, 2019, the return on average assets was 1.22% and return on average equity was 11.39%. For the three months ended June 30, 2018, the return on average assets was 1.22% and the return on average equity was 14.77%. For the six months ended June 30, 2019, net income grew 20% from $6.1 million, or $0.51 per diluted share during 2018 to $7.3 million, or $0.53 per diluted share.
2019 Second Quarter Highlights
• | Strong Quality Earnings - Net income for the second quarter of 2019 increased 21% to $4.0 million compared to $3.3 million for the first quarter of 2019. Diluted earnings per share for the three months ended June 30, 2019 was $0.29, compared to $0.24 per share for the three months ended March 31, 2019. Return on average assets was 1.39%, an increase of 17 basis points compared to the first quarter of 2019. Return on average equity was 13.23% for the second quarter of 2019, compared to 11.39% for the previous quarter. |
• | Robust Asset Growth - Total assets increased $110.4 million, or 10%, to $1.2 billion during the second quarter 2019, and grew 12% for the six months ended June 30, 2019. The increase was fueled by loan growth and funded by deposit growth. For the quarter ending June 30, 2019, total loans increased $48.4 million, or 5% to $1.06 billion compared to $1.01 billion at March 31, 2019. Total deposits increased $69.3 million, or 7%, to $1.0 billion at June 30, 2019, compared to $967.7 million at March 31, 2019. |
• | Continued Loan Growth - Loans improved year over year with growth of $135.5 million, or 15% compared to $920.8 million at June 30, 2018. Average loan balances have increased 13% year over year, with the largest growth from residential real estate and commercial loans. |
• | Strong Core Deposit Growth and Deposit Mix - The Company continues to execute on its strategic initiative to improve the deposit portfolio mix from wholesale time deposits to noninterest bearing deposits. Accordingly, at June 30, 2019, noninterest bearing deposits increased by $37.2 million, or 31% annualized, compared to December 31, 2018. The growth was partially driven by an increase in OpenSky® deposits of $13.7 million, or 23% for the six months ended June 30, 2019. Noninterest bearing deposits increased 18% to $279.5 million for the six months ended June 30, 2019, compared to $237.4 million for the six months ended June 30, 2018. |
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• | Improving Net Interest Margin Excluding Credit Cards - Excluding credit card loans, the net interest margin increased for the three months ended June 30, 2019 to 4.37% from 4.30% in the prior quarter, and also increased from 4.29% in the same quarter in the prior year. Overall, the net interest margin improved 33 basis points to 5.79% for the second quarter of 2019 compared to the prior quarter, and increased 26 basis points from 5.53% in the same quarter of the previous year. The quarter over quarter increase this year was due to the increase in loan volume, yields and late fees on the credit card portfolio. The cost of deposits declined 2 basis points to 1.36% compared to the first quarter of 2019 due to the change in mix from time deposits to noninterest bearing accounts. |
• | Record Credit Card Issuances - OpenSky® credit card issuances exceeded our expectations and set a quarterly high for the second consecutive time this year. During the quarter, new originations totaled 36.7 thousand compared to 35.1 thousand in the prior quarter, and 21.5 thousand in the second quarter of 2018. By taking advantage of our enhanced customer application and improved mobile servicing functionality, total open customer accounts increased by approximately 45,000, or 27%, from June 30, 2018, and exceeded 210,000 at June 30, 2019. |
• | Profitable Mortgage Business - Capital Bank Home Loans ("CBHL"), formerly Church Street Mortgage, the Bank's residential mortgage banking division, increased the number of loans originated by 67% compared to the previous quarter, and continued to contribute to the Company's results of operations for the quarter with higher margins from the previous quarter. |
• | Strong Asset Quality - Asset quality measures remain sound. Non-performing assets as a percentage of total assets decreased to 0.57% at June 30, 2019, compared to 0.63% at March 31, 2019, and increased 22 basis points from 0.35% at June 30, 2018. The increase from the previous year is attributable to a single borrower relationship totaling $2.1 million that is well secured, on which no impairment is expected. As such, there have been no losses related to the increase in non-performing assets. Net charge-offs for the six months ended June 30, 2019 were $192 thousand, a decrease from $731 thousand for the same period last year. |
"During the second quarter, we showed continued progress on our solutions and technology enabled strategy. Strong growth of commercial loans and deposits emerged as our new sales teams began to deliver results. The bank was also able to capitalize on a strong housing market and to utilize our direct marketing efforts to post good mortgage and card volume. We see continued opportunity to capitalize on market disruption and to recruit talent while keeping a close eye on credit risk and risk adjusted returns," said Ed Barry, CEO of Capital Bancorp.
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COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited | |||||||||||||||||||||
Quarter Ended | 2nd Quarter | Six Months Ended | YTD | ||||||||||||||||||
June 30, | 2019 - 2018 | June 30, | 2019 - 2018 | ||||||||||||||||||
(in thousands except per share data) | 2019 | 2018 | % Change | 2019 | 2018 | % Change | |||||||||||||||
Earnings Summary | |||||||||||||||||||||
Interest income | $ | 20,289 | $ | 16,767 | 21.0 | % | $ | 38,607 | $ | 33,431 | 15.5 | % | |||||||||
Interest expense | 3,758 | 2,645 | 42.1 | % | 7,332 | 4,924 | 48.9 | % | |||||||||||||
Net interest income | 16,531 | 14,122 | 17.1 | % | 31,275 | 28,507 | 9.7 | % | |||||||||||||
Provision for loan losses | 677 | 630 | 7.5 | % | 798 | 1,145 | (30.3 | )% | |||||||||||||
Noninterest income | 5,927 | 4,339 | 36.6 | % | 10,019 | 8,417 | 19.0 | % | |||||||||||||
Noninterest expense | 16,210 | 13,528 | 19.8 | % | 30,540 | 27,128 | 12.6 | % | |||||||||||||
Income before income taxes | 5,571 | 4,303 | 29.5 | % | 9,956 | 8,651 | 15.1 | % | |||||||||||||
Income tax expense | 1,548 | 1,158 | 33.7 | % | 2,614 | 2,516 | 3.9 | % | |||||||||||||
Net income | $ | 4,023 | $ | 3,145 | 27.9 | % | $ | 7,342 | $ | 6,135 | 19.7 | % | |||||||||
Weighted average common shares - Basic(1) | 13,719 | 11,611 | 18.2 | % | 13,708 | 11,587 | 18.3 | % | |||||||||||||
Weighted average common shares - Diluted(1) | 13,914 | 11,995 | 16.0 | % | 13,888 | 11,986 | 15.9 | % | |||||||||||||
Earnings - Basic(1) | $ | 0.30 | $ | 0.27 | 11.1 | % | $ | 0.54 | $ | 0.53 | 1.9 | % | |||||||||
Earnings - Diluted(1) | $ | 0.29 | $ | 0.26 | 11.5 | % | $ | 0.53 | $ | 0.51 | 3.9 | % | |||||||||
Return on average assets | 1.39 | % | 1.22 | % | 13.9 | % | 1.30 | % | 1.20 | % | 8.3 | % | |||||||||
Return on average equity | 13.23 | % | 14.77 | % | (10.4 | )% | 12.33 | % | 14.92 | % | (17.4 | )% | |||||||||
_______________
(1) Gives effect to a four-for-one common stock split completed effective August 15, 2018.
Quarter Ended | 2nd Quarter | Quarter Ended | ||||||||||||||||||||
June 30, | 2019 vs. 2018 | March 31, | December 31, | September 30, | ||||||||||||||||||
(in thousands except per share data) | 2019 | 2018 | % Change | 2019 | 2018 | 2018 | ||||||||||||||||
Balance Sheet Highlights | ||||||||||||||||||||||
Assets | $ | 1,234,157 | $ | 1,067,786 | 15.6 | % | $ | 1,123,752 | $ | 1,105,058 | $ | 1,072,905 | ||||||||||
Investment securities | 39,157 | 49,799 | (21.4 | )% | 46,080 | 46,932 | 48,067 | |||||||||||||||
Mortgage loans held for sale | 47,744 | 21,370 | 123.4 | % | 21,630 | 18,526 | 21,373 | |||||||||||||||
Loans(1) | 1,056,290 | 920,783 | 14.7 | % | 1,007,928 | 1,000,268 | 955,412 | |||||||||||||||
Allowance for loan losses | 11,913 | 10,447 | 14.0 | % | 11,347 | 11,308 | 10,892 | |||||||||||||||
Deposits | 1,037,004 | 938,364 | 10.5 | % | 967,722 | 955,240 | 911,116 | |||||||||||||||
Borrowings and repurchase agreements | 38,889 | 14,445 | 169.2 | % | 3,010 | 7,332 | 28,239 | |||||||||||||||
Subordinated debentures | 15,409 | 15,378 | 0.2 | % | 15,401 | 15,393 | 15,386 | |||||||||||||||
Total stockholders' equity | 123,118 | 86,994 | 41.5 | % | 118,550 | 114,564 | 106,657 | |||||||||||||||
Tangible common equity | 123,118 | 86,994 | 41.5 | % | 118,550 | 114,564 | 106,657 | |||||||||||||||
Common shares outstanding | 13,719 | 11,661 | 17.6 | % | 13,713 | 13,672 | 13,191 | |||||||||||||||
Tangible book value per share | $ | 8.97 | $ | 7.46 | 20.2 | % | $ | 8.65 | $ | 8.38 | $ | 8.09 | ||||||||||
_______________
(1) Loans are reflected net of deferred fees and costs.
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Operating Results - three months ended June 30, 2019 compared to three months ended June 30, 2018
Net interest income increased $2.4 million, or 17%, to $16.5 million for the three months ended June 30, 2019 compared to the same period in 2018. Net interest margin increased 26 basis points to 5.79% for the three months ended June 30, 2019 from 5.53% for the three months ended June 30, 2018. For the three months ended June 30, 2019, our average interest-earning assets increased by $121.3 million, or 12%, compared to the three months ended June 30, 2018, and the average yield on our interest-earning assets increased by 54 basis points. In comparison, our average interest-bearing liabilities increased $53.8 million, or 7%, from the second quarter of 2018 to the second quarter of 2019, with the respective average rate increasing by 48 basis points.
During the three months ended June 30, 2019, we recorded a provision for loan losses of $677 thousand, compared to $630 thousand during the three months ended June 30, 2018. Net charge-offs for the second quarter of 2019 were $111 thousand, or 0.04% of average loans, annualized. Net charge-offs for the second quarter of 2018 were $341 thousand, or 0.16% of average loans, annualized.
Noninterest income increased by $1.6 million, or 37% from $4.3 million for the three months ended June 30, 2018 to $5.9 million for the three months ended June 30, 2019, due largely to mortgage banking revenue. Noninterest expense was $16.2 million and $13.5 million for the three months ended June 30, 2019 and 2018, respectively. The increase in noninterest expense was driven primarily by increases in salaries and benefits, which include commissions paid on mortgage originations, data processing expenses, advertising, and other operating expenses.
Operating Results - six months ended June 30, 2019 compared to six months ended June 30, 2018
Net interest income increased $2.8 million, or 10%, to $31.3 million for the six months ended June 30, 2019 compared to the same period in 2018. Net interest margin decreased 3 basis points to 5.63% for the six months ended June 30, 2019 from 5.66% for the six months ended June 30, 2018. For the six months ended June 30, 2019, our average interest-earning assets had increased by $104.6 million, compared to the six months ended June 30, 2018, and the average yield on our interest-earning assets increased by 31 basis points. In comparison, our average interest-bearing liabilities increased $35.3 million from the second quarter of 2018 to the second quarter of 2019, with the respective average rate increasing by 58 basis points.
During the six months ended June 30, 2019, we recorded a provision for loan losses of $798 thousand, compared to $1.1 million during the six months ended June 30, 2018. Net charge-offs for the six months ended June 30, 2019 were $192 thousand, or 0.04% of average loans, annualized. Net charge-offs for the same period in 2018 were $731 thousand, or 0.16% of average loans, annualized.
Noninterest income increased by $1.6 million, or 19% from $8.4 million for the six months ended June 30, 2018 to $10.0 million for the six months ended June 30, 2019, due largely to mortgage banking revenue. Noninterest expense was $30.5 million and $27.1 million for the six months ended June 30, 2019 and 2018, respectively. The increase in noninterest expense was driven primarily by increases in salaries and benefits, which include commissions paid on mortgage originations, advertising and other expenses.
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Financial Condition
Total assets at June 30, 2019 were $1.2 billion, up 15.6% as compared to $1.1 billion at June 30, 2018. Gross loans, excluding mortgage loans held for sale, were $1.1 billion as of June 30, 2019, compared to $920.8 million at June 30, 2018, an increase of 15%. Deposits were $1.0 billion at June 30, 2019, an increase of 11%, as compared to $938.4 million at June 30, 2018.
Our allowance for loan losses was $11.9 million, or 1.13% of loans, at June 30, 2019, which provided approximately 174% coverage of nonperforming loans at such date, compared to $10.4 million, or 1.13% of loans, and approximately 321% coverage of nonperforming loans at June 30, 2018. Nonperforming assets were $7.0 million, or 0.57% of total assets, as of June 30, 2019. Comparatively, nonperforming assets were $3.7 million, or 0.35% of total assets, at June 30, 2018. Of the $7.0 million in total nonperforming assets as of June 30, 2019, nonperforming loans represented $6.8 million and other real estate owned totaled $149 thousand. Included in nonperforming loans are troubled debt restructurings of $473 thousand, and one borrower relationship totaling $2.1 million that is well secured, on which no impairment is expected.
Stockholders’ equity totaled $123.1 million as of June 30, 2019, compared to $87.0 million at June 30, 2018. The increase was due to increased earnings and net proceeds from the Company's initial public offering on September 28, 2018 of approximately $19.8 million. As of June 30, 2019, the Bank's capital ratios continue to exceed the regulatory requirements for a “well-capitalized” institution.
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Consolidated Statements of Income (Unaudited) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(in thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||||
Interest income | |||||||||||||||
Loans, including fees | $ | 19,804 | $ | 16,232 | $ | 37,648 | $ | 32,500 | |||||||
Investment securities available for sale | 234 | 276 | 492 | 515 | |||||||||||
Federal funds sold and other | 251 | 259 | 467 | 416 | |||||||||||
Total interest income | 20,289 | 16,767 | 38,607 | 33,431 | |||||||||||
Interest expense | |||||||||||||||
Deposits | 3,195 | 2,309 | 6,438 | 4,259 | |||||||||||
Borrowed funds | 563 | 336 | 894 | 665 | |||||||||||
Total interest expense | 3,758 | 2,645 | 7,332 | 4,924 | |||||||||||
Net interest income | 16,531 | 14,122 | 31,275 | 28,507 | |||||||||||
Provision for loan losses | 677 | 630 | 798 | 1,145 | |||||||||||
Net interest income after provision for loan losses | 15,854 | 13,492 | 30,477 | 27,362 | |||||||||||
Noninterest income | |||||||||||||||
Service charges on deposits | 138 | 117 | 236 | 242 | |||||||||||
Credit card fees | 1,970 | 1,562 | 3,462 | 3,017 | |||||||||||
Mortgage banking revenue | 3,715 | 2,499 | 6,091 | 4,928 | |||||||||||
Gain(loss) on sale of investment securities available for sale | 26 | 1 | 26 | (2 | ) | ||||||||||
Other fees and charges | 78 | 160 | 204 | 232 | |||||||||||
Total noninterest income | 5,927 | 4,339 | 10,019 | 8,417 | |||||||||||
Noninterest expenses | |||||||||||||||
Salaries and employee benefits | 8,111 | 6,211 | 14,898 | 12,512 | |||||||||||
Occupancy and equipment | 1,102 | 1,088 | 2,196 | 2,171 | |||||||||||
Professional fees | 609 | 471 | 1,228 | 845 | |||||||||||
Data processing | 3,716 | 3,540 | 7,029 | 7,222 | |||||||||||
Advertising | 531 | 331 | 973 | 755 | |||||||||||
Loan processing | 340 | 348 | 645 | 609 | |||||||||||
Other real estate expenses, net | 28 | 7 | 50 | 31 | |||||||||||
Other operating | 1,773 | 1,532 | 3,521 | 2,983 | |||||||||||
Total noninterest expenses | 16,210 | 13,528 | 30,540 | 27,128 | |||||||||||
Income before income taxes | 5,571 | 4,303 | 9,956 | 8,651 | |||||||||||
Income tax expense | 1,548 | 1,158 | 2,614 | 2,516 | |||||||||||
Net income | $ | 4,023 | $ | 3,145 | $ | 7,342 | $ | 6,135 | |||||||
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Consolidated Balance Sheets | (unaudited) | ||||||
(in thousands) | June 30, 2019 | December 31, 2018 | |||||
Assets | |||||||
Cash and due from banks | $ | 12,253 | $ | 10,431 | |||
Interest bearing deposits at other financial institutions | 65,284 | 22,007 | |||||
Federal funds sold | 1,991 | 2,285 | |||||
Total cash and cash equivalents | 79,528 | 34,723 | |||||
Investment securities available for sale | 39,157 | 46,932 | |||||
Restricted investments | 4,137 | 2,503 | |||||
Loans held for sale | 47,744 | 18,526 | |||||
Loans receivable, net of allowance for loan losses of $11,913 and $11,308 at June 30, 2019 and December 31, 2018, respectively | 1,044,377 | 988,960 | |||||
Premises and equipment, net | 7,202 | 2,975 | |||||
Accrued interest receivable | 4,649 | 4,462 | |||||
Deferred income taxes | 3,504 | 3,654 | |||||
Foreclosed real estate | 149 | 142 | |||||
Prepaid income taxes | 268 | 90 | |||||
Other assets | 3,442 | 2,091 | |||||
Total assets | $ | 1,234,157 | $ | 1,105,058 | |||
Liabilities | |||||||
Deposits | |||||||
Noninterest bearing | $ | 279,484 | $ | 242,259 | |||
Interest bearing | 757,520 | 712,981 | |||||
Total deposits | 1,037,004 | 955,240 | |||||
Securities sold under agreements to repurchase | — | 3,332 | |||||
Federal funds purchased | — | 2,000 | |||||
Federal Home Loan Bank advances | 38,889 | 2,000 | |||||
Other borrowed funds | 15,409 | 15,393 | |||||
Accrued interest payable | 2,039 | 1,565 | |||||
Other liabilities | 17,698 | 10,964 | |||||
Total liabilities | 1,111,039 | 990,494 | |||||
Stockholders' equity | |||||||
Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding at June 30, 2019 and December 31, 2018 | — | — | |||||
Common stock, $.01 par value; 49,000,000 shares authorized: 13,718,665 and 13,672,479 issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 137 | 137 | |||||
Additional paid-in capital | 50,071 | 49,321 | |||||
Retained earnings | 72,940 | 65,701 | |||||
Accumulated other comprehensive loss | (30 | ) | (595 | ) | |||
Total stockholders' equity | 123,118 | 114,564 | |||||
Total liabilities and stockholders' equity | $ | 1,234,157 | $ | 1,105,058 | |||
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The following table shows the average outstanding balance of each principal category of our assets, liabilities and stockholders’ equity, together with the average yields on our assets and the average costs of our liabilities for the periods indicated. Such yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.
Three Months Ended June 30, | |||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||
Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate(1) | Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate(1) | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Interest earning assets: | |||||||||||||||||||||
Interest bearing deposits | $ | 38,573 | $ | 210 | 2.19 | % | $ | 48,682 | $ | 219 | 1.80 | % | |||||||||
Federal funds sold | 2,111 | — | 0.00 | % | 1,483 | 6 | 1.62 | % | |||||||||||||
Investment securities | 42,031 | 234 | 2.23 | % | 50,739 | 276 | 2.18 | % | |||||||||||||
Restricted stock | 4,428 | 41 | 3.75 | % | 2,553 | 35 | 5.50 | % | |||||||||||||
Loans held for sale | 34,635 | 681 | 7.88 | % | 17,217 | 397 | 9.25 | % | |||||||||||||
Loans(2)(3) | 1,024,306 | 19,123 | 7.49 | % | 904,149 | 15,835 | 7.02 | % | |||||||||||||
Total interest earning assets | 1,146,084 | 20,289 | 7.10 | % | 1,024,823 | 16,768 | 6.56 | % | |||||||||||||
Noninterest earning assets | 17,233 | 11,179 | |||||||||||||||||||
Total assets | $ | 1,163,317 | $ | 1,036,002 | |||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||
Now accounts | $ | 96,702 | 89 | 0.37 | % | $ | 76,770 | 53 | 0.28 | % | |||||||||||
Savings | 3,577 | 3 | 0.35 | % | 3,602 | 3 | 0.33 | % | |||||||||||||
Money market accounts | 333,248 | 1,434 | 1.73 | % | 286,836 | 931 | 1.30 | % | |||||||||||||
Time deposits | 277,402 | 1,669 | 2.41 | % | 323,840 | 1,323 | 1.64 | % | |||||||||||||
Borrowed funds | 63,083 | 563 | 3.58 | % | 29,129 | 336 | 4.63 | % | |||||||||||||
Total interest bearing liabilities | 774,012 | 3,758 | 1.95 | % | 720,177 | 2,646 | 1.47 | % | |||||||||||||
Noninterest bearing liabilities: | |||||||||||||||||||||
Noninterest bearing liabilities | 15,963 | 8,499 | |||||||||||||||||||
Noninterest bearing deposits | 251,408 | 221,896 | |||||||||||||||||||
Stockholders’ equity | 121,934 | 85,430 | |||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,163,317 | $ | 1,036,002 | |||||||||||||||||
Net interest spread(4) | 5.15 | % | 5.09 | % | |||||||||||||||||
Net interest income | $ | 16,531 | $ | 14,122 | |||||||||||||||||
Net interest margin(5) | 5.79 | % | 5.53 | % | |||||||||||||||||
Net interest margin excluding credit cards | 4.37 | % | 4.29 | % | |||||||||||||||||
_______________
(1) | Annualized. |
(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 annualized net interest income divided by average interest earning assets for the same period. |
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Six Months Ended June 30, 2019 | |||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||
Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate(1) | Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate(1) | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Interest earning assets: | |||||||||||||||||||||
Interest bearing deposits | $ | 34,879 | $ | 374 | 2.16 | % | $ | 45,435 | $ | 338 | 1.50 | % | |||||||||
Federal funds sold | 1,869 | 1 | 0.06 | % | 1,644 | 12 | 1.50 | % | |||||||||||||
Investment securities | 44,259 | 492 | 2.24 | % | 51,917 | 514 | 2.00 | % | |||||||||||||
Restricted stock | 3,588 | 92 | 5.17 | % | 2,528 | 67 | 5.35 | % | |||||||||||||
Loans held for sale | 24,519 | 1,032 | 8.49 | % | 17,729 | 771 | 8.77 | % | |||||||||||||
Loans(2)(3) | 1,011,971 | 36,616 | 7.30 | % | 897,193 | 31,729 | 7.13 | % | |||||||||||||
Total interest earning assets | 1,121,085 | 38,607 | 6.94 | % | 1,016,446 | 33,431 | 6.63 | % | |||||||||||||
Noninterest earning assets | 14,712 | 10,324 | |||||||||||||||||||
Total assets | $ | 1,135,797 | $ | 1,026,770 | |||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||
Now accounts | $ | 87,416 | 167 | 0.38 | % | $ | 72,252 | 99 | 0.28 | % | |||||||||||
Savings | 3,460 | 6 | 0.35 | % | 3,501 | 4 | 0.26 | % | |||||||||||||
Money market accounts | 325,173 | 2,748 | 1.70 | % | 294,305 | 1,706 | 1.17 | % | |||||||||||||
Time deposits | 298,805 | 3,517 | 2.37 | % | 323,124 | 2,450 | 1.53 | % | |||||||||||||
Borrowed funds | 44,603 | 894 | 4.04 | % | 31,005 | 665 | 4.32 | % | |||||||||||||
Total interest bearing liabilities | 759,457 | 7,332 | 1.95 | % | 724,187 | 4,924 | 1.37 | % | |||||||||||||
Noninterest bearing liabilities: | |||||||||||||||||||||
Noninterest bearing liabilities | 13,856 | 9,558 | |||||||||||||||||||
Noninterest bearing deposits | 242,443 | 210,081 | |||||||||||||||||||
Stockholders’ equity | 120,041 | 82,944 | |||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,135,797 | $ | 1,026,770 | |||||||||||||||||
Net interest spread(4) | 4.99 | % | 5.26 | % | |||||||||||||||||
Net interest income | $ | 31,275 | $ | 28,507 | |||||||||||||||||
Net interest margin(5) | 5.63 | % | 5.66 | % | |||||||||||||||||
Net interest margin excluding credit cards | 4.34 | % | 4.27 | % | |||||||||||||||||
_______________
(1) | Annualized. |
(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 annualized net interest income divided by average interest earning assets for the same period. |
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HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited | ||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||
(Dollars in thousands except per share data) | June 30, 2019 | March 31, 2019 | December 31, 2018 | September 30, 2018 | June 30, 2018 | |||||||||||||||
Earnings: | ||||||||||||||||||||
Net income | $ | 4,023 | $ | 3,319 | $ | 3,486 | $ | 3,147 | $ | 3,145 | ||||||||||
Earnings per common share, diluted(1)(2) | 0.29 | 0.24 | 0.25 | 0.26 | 0.26 | |||||||||||||||
Net interest margin | 5.79 | % | 5.46 | % | 5.46 | % | 5.56 | % | 5.53 | % | ||||||||||
Net interest margin, excluding credit cards | 4.37 | % | 4.30 | % | 4.28 | % | 4.26 | % | 4.29 | % | ||||||||||
Return on average assets(1) | 1.39 | % | 1.22 | % | 1.27 | % | 1.19 | % | 1.22 | % | ||||||||||
Return on average equity(1) | 13.23 | % | 11.39 | % | 12.26 | % | 13.69 | % | 14.77 | % | ||||||||||
Efficiency ratio | 72.18 | % | 76.08 | % | 71.34 | % | 74.20 | % | 73.64 | % | ||||||||||
Balance Sheet: | ||||||||||||||||||||
Loans(3) | $ | 1,056,290 | $ | 1,007,928 | $ | 1,000,268 | $ | 955,412 | $ | 920,783 | ||||||||||
Deposits | 1,037,004 | 967,722 | 955,240 | 911,116 | 938,364 | |||||||||||||||
Total assets | 1,234,157 | 1,123,752 | 1,105,058 | 1,072,905 | 1,067,786 | |||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Nonperforming assets to total assets | 0.57 | % | 0.63 | % | 0.44 | % | 0.42 | % | 0.35 | % | ||||||||||
Nonperforming loans to total loans | 0.65 | % | 0.69 | % | 0.47 | % | 0.44 | % | 0.35 | % | ||||||||||
Net charge-offs to average loans (YTD annualized) | 0.04 | % | 0.03 | % | 0.09 | % | 0.11 | % | 0.16 | % | ||||||||||
Allowance for loan losses to total loans | 1.13 | % | 1.13 | % | 1.13 | % | 1.14 | % | 1.13 | % | ||||||||||
Allowance for loan losses to non-performing loans | 174.05 | % | 162.52 | % | 241.72 | % | 257.83 | % | 320.78 | % | ||||||||||
Bank Capital Ratios: | ||||||||||||||||||||
Total risk based capital ratio | 11.91 | % | 12.23 | % | 12.25 | % | 12.36 | % | 12.34 | % | ||||||||||
Tier 1 risk based capital ratio | 10.65 | % | 10.98 | % | 11.00 | % | 11.11 | % | 11.09 | % | ||||||||||
Leverage ratio | 8.91 | % | 9.05 | % | 9.06 | % | 9.01 | % | 8.91 | % | ||||||||||
Common equity Tier 1 ratio | 10.65 | % | 10.98 | % | 11.00 | % | 11.11 | % | 11.09 | % | ||||||||||
Tangible common equity | 8.40 | % | 8.93 | % | 8.89 | % | 8.72 | % | 8.58 | % | ||||||||||
Composition of Loans: | ||||||||||||||||||||
Residential real estate | $ | 426,887 | $ | 421,346 | $ | 407,844 | $ | 388,141 | $ | 366,465 | ||||||||||
Commercial real estate | 297,891 | 277,905 | 278,691 | 276,726 | 271,800 | |||||||||||||||
Construction real estate | 169,225 | 157,338 | 157,586 | 144,012 | 149,192 | |||||||||||||||
Commercial and industrial | 124,436 | 120,191 | 122,264 | 113,473 | 101,752 | |||||||||||||||
Credit card | 40,141 | 32,359 | 34,673 | 33,821 | 32,522 | |||||||||||||||
Other | 1,015 | 1,195 | 1,202 | 1,270 | 1,244 | |||||||||||||||
Composition of Deposits: | ||||||||||||||||||||
Non interest bearing | $ | 279,484 | $ | 262,235 | $ | 242,259 | $ | 234,094 | $ | 237,361 | ||||||||||
Interest bearing demand | 129,199 | 85,969 | 85,747 | 66,170 | 88,077 | |||||||||||||||
Savings | 3,572 | 3,595 | 2,866 | 4,597 | 3,902 | |||||||||||||||
Time Deposits | 277,048 | 295,809 | 335,471 | 330,423 | 333,083 | |||||||||||||||
Money Markets | 347,701 | 320,114 | 288,897 | 275,832 | 275,941 | |||||||||||||||
Capital Bank Home Loan Metrics: | ||||||||||||||||||||
Origination of loans held for sale | $ | 134,409 | $ | 74,128 | $ | 70,826 | $ | 81,665 | $ | 95,570 | ||||||||||
Proceeds from loans held for sale, net of gains | 105,418 | 71,693 | 73,883 | 81,029 | 92,195 | |||||||||||||||
Gain on sale of loans | 3,715 | 2,375 | 2,097 | 2,451 | 2,500 | |||||||||||||||
Purchase volume as a % of originations | 79.07 | % | 78.42 | % | 86.72 | % | 92.72 | % | 85.09 | % | ||||||||||
Gain on sale as a % of loans sold(4) | 3.40 | % | 3.21 | % | 2.76 | % | 2.94 | % | 2.64 | % | ||||||||||
OpenSky Credit Card Portfolio Metrics: | ||||||||||||||||||||
Total active customer accounts | 211,408 | 187,423 | 169,981 | 170,160 | 166,661 | |||||||||||||||
Total loans | $ | 40,141 | $ | 32,359 | $ | 34,673 | $ | 33,821 | $ | 32,522 | ||||||||||
Total deposits at the Bank | $ | 73,666 | $ | 65,808 | $ | 59,954 | $ | 59,978 | $ | 58,951 | ||||||||||
(1) | Annualized. |
(2) | Gives effect to a four-for-one common stock split completed effective August 15, 2018. |
(3) | Loans are reflected net of deferred fees and costs. |
(4) | Gain on sale percentage is calculated as gain on sale of loans divided by the sum of gain on sale of loans and proceeds from loans held for sale, net of gains. |
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ABOUT CAPITAL BANCORP, INC.
Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. The Company’s wholly-owned subsidiary, Capital Bank, N.A., is the eighth largest bank headquartered in Maryland. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in five locations in the greater Washington, D.C. and Baltimore, Maryland markets. Capital Bancorp had assets of approximately $1.2 billion at June 30, 2019 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,” “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. Such factors include, without limitation, those listed from time to time in reports that the Company files with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this communication, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by law.
FINANCIAL CONTACT: Alan Jackson (240) 283-0402
MEDIA CONTACT: Ed Barry (240) 283-1912
WEB SITE: www.CapitalBankMD.com
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