(State or other jurisdiction of incorporation or organization) | (Commission file number) | (IRS Employer Identification No.) |
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)) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
Exhibit No. | Description |
99.1 | Press Release, dated October 26, 2020, with respect to the Company's unaudited financial results for the third quarter ended September 30, 2020. |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
CAPITAL BANCORP, INC. | |
October 27, 2020 | By: /s/ Alan W. Jackson |
Name: Alan W. Jackson | |
Title: Chief Financial Officer |
• | Record earnings of $8.4 million, or $0.61 per diluted share for the third quarter of 2020 and $16.1 million, or $1.17 per diluted share for the nine months ended September 30, 2020 |
• | Third quarter earnings supported by all three business lines which provide resilience, diversification and risk mitigation in a range of economic conditions while returning 1.89% on assets, 23.28% on equity and providing pre-tax pre-provision net revenue of $15.1 million |
• | Proactive credit management decreased loans in deferral status to 2.0% of loans outstanding as of September 30, 2020 which is a reduction of 79% from June 30, 2020 |
• | Increased provisions of $3.5 million to respond to economic conditions, increasing the ratio of the allowance for loan losses ("ALLL") to total loans to 1.49%, or 1.77% excluding Small Business Administration Payroll Protection Program ("SBA-PPP") loans |
• | OpenSky® Credit Card account growth of 32% drove a $44.9 million increase in noninterest bearing secured credit card deposits, while cardholder behavior that showed signs of returning to pre-COVID patterns resulted in record credit card revenue of $5.8 million for the third quarter |
• | Record mortgage loan originations of $431.1 million and mortgage banking revenue of $14.4 million during the quarter |
• | Diversified Businesses Drive Record Net Income - In the third quarter of 2020, net income increased 88.2 percent to a record $8.4 million from $4.5 million in the third quarter of 2019. Our continued strong operating results demonstrate the advantages of the Bank's uncorrelated diversified business lines that are complimentary across economic cycles. |
• | Net Interest Margin Improvement - Net interest margin ("NIM") increased by 29 basis points to 5.01% from the last quarter but decreased 82 basis points from 5.83% for the three months ended September 30, 2019. The year over year decline in NIM was driven by an overall decline in the interest rate environment, lower earning SBA-PPP loans and excess liquidity. Excluding credit card and SBA-PPP loans, third quarter 2020 NIM was 3.84%, down 12 basis points from the prior quarter and 53 basis points from 4.37% in the same period last year. |
• | Growth in Core Deposits and Reduced Cost of Interest Bearing Liabilities - Noninterest bearing deposits increased by $32.2 million, or 5.7 percent, during the quarter ended September 30, 2020 and now represent 35.9% of total deposits. The growth in credit card-related deposits was partially offset by anticipated declines in SBA-PPP-related deposit balances. Overall, during the quarter, the cost of interest bearing liabilities was reduced from 1.38% at June 30, 2020 to 1.18% at September 30, 2020 as rates decreased in line with the market. The Bank continues to execute on its ongoing strategic initiative to improve the deposit portfolio mix by decreasing reliance on wholesale, internet and other non-core time deposits. |
• | Cost Management Initiatives Improving Operating Leverage - Focused investments in technology, combined with process improvements and workforce rationalizations, continue to increase the Bank's operating leverage. Higher mortgage originations and credit card volumes increased noninterest expenses by $9.9 million, or 54.3 percent from the same quarter last year. These higher levels of activity drove a $13.9 million, or 192.9 percent increase in related noninterest income. |
• | Balance Sheet Supported By Robust Capital Ratios, Elevated Reserves, and Excess Liquidity - As of September 30, 2020, the Company reported a common equity tier 1 capital ratio of 12.75% and ALLL to total loans of 1.49%, or 1.77% excluding SBA-PPP loans. The Bank is well-capitalized and has taken measures to navigate COVID-19 related disruptions by taking additional loan loss provisions and maintaining higher than normal levels of liquidity on the balance sheet. |
• | Proactive Management Leads to Early Recognition of Problem Assets - Non-performing assets increased to $14.8 million at September 30, 2020 compared to $9.2 million at June 30, 2020. The increase was largely attributable to two past-due construction loans related to a single relationship and totaling $4.7 million. Both loans are well secured and we do not anticipate any losses with these credits. Non-performing assets as a percentage of total assets increased to 0.79%, 0.90% excluding SBA-PPP loans, at September 30, 2020 compared to 0.50% at June 30, 2020. |
• | Continued Portfolio Loan Growth - For the quarter ended September 30, 2020, portfolio loans increased by $33.1 million, or 2.7 percent, to $1.24 billion compared to $1.21 billion at June 30, 2020. Commercial real estate loans increased by $8.9 million, or 2.4 percent, construction real estate loans increased by $14.7 million, or 6.9 percent and secured credit cards balances increased by $30.2 million, or 55.2 percent, while residential real estate decreased by $14.7 million, or 3.4 percent, and commercial and industrial loans decreased by $7.8 million, or 5.5 percent. |
• | COVID-19 Related Deferrals - Outstanding loans deferred due to COVID-19 decreased by 79% from June 30, 2020 to September 30, 2020 as shown in the table below. |
Loan Modifications (1) | |||||||||||||||||
(dollars in thousands) | |||||||||||||||||
September 30, 2020 | June 30, 2020 | ||||||||||||||||
Deferred Loans | Deferred Loans | ||||||||||||||||
Sector | Total Loans Outstanding | Balance | # of Loans Deferred | Total Loans Outstanding | Balance | # of Loans Deferred | |||||||||||
Accommodation & Food Services | $ | 86.4 | $ | 11.2 | 14 | $ | 83.9 | $ | 42.6 | 36 | |||||||
Real Estate and Rental Leasing | 503.1 | 9.3 | 16 | 527.9 | 45.6 | 67 | |||||||||||
Other Services Including Private Households | 273.9 | 5.6 | 11 | 193.8 | 17.3 | 36 | |||||||||||
Educational Services | 20.5 | — | — | 20.4 | 9.8 | 6 | |||||||||||
Construction | 246.0 | 0.3 | 1 | 220.4 | 4.2 | 6 | |||||||||||
Professional, Scientific, and Technical Services | 87.3 | 1.1 | 2 | 88.4 | 5.0 | 11 | |||||||||||
Arts, Entertainment & Recreation | 30.4 | 1.4 | 2 | 14.9 | 5.0 | 9 | |||||||||||
Retail Trade | 24.5 | — | — | 25.5 | 3.0 | 8 | |||||||||||
Healthcare & Social Assistance | 78.0 | 0.9 | 1 | 77.2 | 4.7 | 11 | |||||||||||
Wholesale Trade | 2.6 | — | — | 13.0 | 0.9 | 1 | |||||||||||
All other (1) | 125.3 | 0.5 | 2 | 175.7 | 5.9 | 13 | |||||||||||
Total | $ | 1,478.0 | $ | 30.3 | 49 | $ | 1,441.1 | $ | 144.0 | 204 |
• | Record Mortgage Originations and Revenues - In the third quarter of 2020, the Capital Bank Home Loans originated a record $431.1 million of mortgage loans for sale, compared to $197.8 million in the third quarter of 2019. Capital Bank Home Loans achieved record revenue of $14.4 million for the third quarter of 2020 compared to $4.9 million for the same period in 2019. Efforts to optimize product pricing and mix elevated the average gain on sale to 3.13%. |
• | Continued Strong Growth in OpenSky® Credit Card Accounts - During the quarter, OpenSky® originated 148 thousand new credit cards, increasing the number of open credit card accounts to 529 thousand at September 30, 2020. Quarterly growth resulted in a $44.9 million increase in noninterest bearing secured credit card deposits which totaled $176.7 million at quarter end. Card balances, which typically lag new card production, increased in the third quarter of 2020 to $85.0 million from $54.7 million. Credit card fees were a record $5.8 million as consumer behavior shows signs of returning to pre-COVID patterns, resulting in a 98.2% increase in credit card revenue. |
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited | |||||||||||||||||||||
Quarter Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
(dollars in thousands except per share data) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||
Earnings Summary | |||||||||||||||||||||
Interest income | $ | 25,189 | $ | 22,354 | 12.7 | % | $ | 68,933 | $ | 60,961 | 13.1 | % | |||||||||
Interest expense | 3,150 | 4,170 | (24.5 | )% | 10,583 | 11,502 | (8.0 | )% | |||||||||||||
Net interest income | 22,039 | 18,184 | 21.2 | % | 58,350 | 49,459 | 18.0 | % | |||||||||||||
Provision for loan losses | 3,500 | 1,071 | 226.8 | % | 9,209 | 1,869 | 392.7 | % | |||||||||||||
Noninterest income | 21,146 | 7,221 | 192.8 | % | 41,626 | 17,240 | 141.5 | % | |||||||||||||
Noninterest expense | 28,119 | 18,228 | 54.3 | % | 68,665 | 48,768 | 40.8 | % | |||||||||||||
Income before income taxes | 11,566 | 6,106 | 89.4 | % | 22,102 | 16,062 | 37.6 | % | |||||||||||||
Income tax expense | 3,128 | 1,625 | 92.5 | % | 5,968 | 4,239 | 40.8 | % | |||||||||||||
Net income | $ | 8,438 | $ | 4,481 | 88.3 | % | $ | 16,134 | $ | 11,823 | 36.5 | % | |||||||||
Weighted average common shares - Basic | 13,795 | 13,728 | 0.5 | % | 13,795 | 13,714 | 0.6 | % | |||||||||||||
Weighted average common shares - Diluted | 13,832 | 13,986 | (1.1 | )% | 13,832 | 13,922 | (0.6 | )% | |||||||||||||
Earnings per share - Basic | $ | 0.61 | $ | 0.33 | 87.4 | % | $ | 1.17 | $ | 0.86 | 36.0 | % | |||||||||
Earnings per share - Diluted | $ | 0.61 | $ | 0.32 | 90.4 | % | $ | 1.17 | $ | 0.85 | 37.6 | % | |||||||||
Return on average assets (1) | 1.89 | % | 1.42 | % | 33.1 | % | 1.35 | % | 1.35 | % | — | % | |||||||||
Return on average assets, excluding impact of SBA PPP loans(1) (2) | 1.80 | % | 1.42 | % | 26.8 | % | 1.25 | % | 1.35 | % | (7.4 | )% | |||||||||
Return on average equity | 23.28 | % | 14.04 | % | 65.8 | % | 15.35 | % | 12.93 | % | 18.7 | % |
Quarter Ended | 3Q20 vs. 3Q19 | Quarter Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | |||||||||||||||||||
(in thousands except per share data) | 2020 | 2019 | % Change | 2020 | 2020 | 2019 | ||||||||||||||||
Balance Sheet Highlights | ||||||||||||||||||||||
Assets | $ | 1,879,029 | $ | 1,311,406 | 43.3 | % | $ | 1,822,365 | $ | 1,507,847 | $ | 1,428,495 | ||||||||||
Investment securities available for sale | 53,992 | 37,073 | 45.6 | % | 56,796 | 59,524 | 60,828 | |||||||||||||||
Mortgage loans held for sale | 137,717 | 68,982 | 99.6 | % | 116,969 | 73,955 | 71,030 | |||||||||||||||
SBA-PPP loans, net of fees (3) | 233,349 | — | 100.0 | % | 229,646 | — | — | |||||||||||||||
Portfolio loans receivable (3) | 1,244,613 | 1,140,310 | 9.1 | % | 1,211,477 | 1,187,798 | 1,171,121 | |||||||||||||||
Allowance for loan losses | 22,016 | 12,808 | 71.9 | % | 18,680 | 15,513 | 13,301 | |||||||||||||||
Deposits | 1,662,211 | 1,112,444 | 49.4 | % | 1,608,726 | 1,302,913 | 1,225,421 | |||||||||||||||
Borrowings and repurchase agreements | 22,222 | 35,556 | (37.5 | )% | 25,556 | 28,889 | 32,222 | |||||||||||||||
Other borrowed funds | 17,516 | 15,416 | 13.6 | % | 17,392 | 15,430 | 15,423 | |||||||||||||||
Total stockholders' equity | 149,377 | 127,829 | 16.9 | % | 142,108 | 136,080 | 133,331 | |||||||||||||||
Tangible common equity(2) | 149,377 | 127,829 | 16.9 | % | 142,108 | 136,080 | 133,331 | |||||||||||||||
Common shares outstanding | 13,682 | 13,783 | (0.7 | )% | 13,818 | 13,817 | 13,895 | |||||||||||||||
Tangible book value per share | $ | 10.92 | $ | 9.27 | 17.7 | % | $ | 10.28 | $ | 9.85 | $ | 9.60 |
Consolidated Statements of Income (Unaudited) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Interest income | |||||||||||||||
Loans, including fees | $ | 24,836 | $ | 21,900 | $ | 67,520 | $ | 59,548 | |||||||
Investment securities available for sale | 273 | 215 | 929 | 707 | |||||||||||
Federal funds sold and other | 80 | 239 | 484 | 706 | |||||||||||
Total interest income | 25,189 | 22,354 | 68,933 | 60,961 | |||||||||||
Interest expense | |||||||||||||||
Deposits | 2,634 | 3,449 | 9,201 | 9,887 | |||||||||||
Borrowed funds | 516 | 721 | 1,382 | 1,615 | |||||||||||
Total interest expense | 3,150 | 4,170 | 10,583 | 11,502 | |||||||||||
Net interest income | 22,039 | 18,184 | 58,350 | 49,459 | |||||||||||
Provision for loan losses | 3,500 | 1,071 | 9,209 | 1,869 | |||||||||||
Net interest income after provision for loan losses | 18,539 | 17,113 | 49,141 | 47,590 | |||||||||||
Noninterest income | |||||||||||||||
Service charges on deposits | 119 | 146 | 378 | 382 | |||||||||||
Credit card fees | 5,773 | 2,059 | 10,694 | 5,521 | |||||||||||
Mortgage banking revenue | 14,359 | 4,900 | 28,496 | 10,991 | |||||||||||
Gain on sale of investment securities available for sale | — | — | — | 26 | |||||||||||
Other fees and charges | 895 | 116 | 2,058 | 320 | |||||||||||
Total noninterest income | 21,146 | 7,221 | 41,626 | 17,240 | |||||||||||
Noninterest expenses | |||||||||||||||
Salaries and employee benefits | 12,609 | 9,238 | 32,362 | 24,136 | |||||||||||
Occupancy and equipment | 1,328 | 1,111 | 3,658 | 3,307 | |||||||||||
Professional fees | 1,307 | 724 | 2,971 | 1,952 | |||||||||||
Data processing | 7,880 | 4,192 | 17,664 | 11,222 | |||||||||||
Advertising | 633 | 584 | 1,875 | 1,557 | |||||||||||
Loan processing | 1,264 | 634 | 2,451 | 1,279 | |||||||||||
Other real estate expenses, net | 9 | 7 | 137 | 57 | |||||||||||
Other operating | 3,089 | 1,737 | 7,548 | 5,258 | |||||||||||
Total noninterest expenses | 28,119 | 18,228 | 68,665 | 48,768 | |||||||||||
Income before income taxes | 11,566 | 6,106 | 22,102 | 16,062 | |||||||||||
Income tax expense | 3,128 | 1,625 | 5,968 | 4,239 | |||||||||||
Net income | $ | 8,438 | $ | 4,481 | $ | 16,134 | $ | 11,823 |
Consolidated Balance Sheets | |||||||
(in thousands except share data) | (unaudited) September 30, 2020 | December 31, 2019 | |||||
Assets | |||||||
Cash and due from banks | $ | 20,138 | $ | 10,530 | |||
Interest bearing deposits at other financial institutions | 179,789 | 102,447 | |||||
Federal funds sold | 5,590 | 1,847 | |||||
Total cash and cash equivalents | 205,517 | 114,824 | |||||
Investment securities available for sale | 53,992 | 60,828 | |||||
Restricted investments | 3,958 | 3,966 | |||||
Loans held for sale | 137,717 | 71,030 | |||||
U.S. Small Business Administration Payroll Protection Program ("SBA-PPP") loans receivable, net of fees | 233,349 | — | |||||
Portfolio loans receivable, net of deferred fees and costs and net of allowance for loan losses of $22,016 and $13,301 | 1,222,597 | 1,157,820 | |||||
Premises and equipment, net | 5,021 | 6,092 | |||||
Accrued interest receivable | 7,678 | 4,770 | |||||
Deferred income taxes, net | 3,589 | 4,263 | |||||
Other real estate owned | 3,326 | 2,384 | |||||
Other assets | 2,285 | 2,518 | |||||
Total assets | $ | 1,879,029 | $ | 1,428,495 | |||
Liabilities | |||||||
Deposits | |||||||
Noninterest bearing | $ | 596,239 | $ | 291,777 | |||
Interest bearing | 1,065,972 | 933,644 | |||||
Total deposits | 1,662,211 | 1,225,421 | |||||
Federal Home Loan Bank advances | 22,222 | 32,222 | |||||
Other borrowed funds | 17,516 | 15,423 | |||||
Accrued interest payable | 1,523 | 1,801 | |||||
Other liabilities | 26,179 | 20,297 | |||||
Total liabilities | 1,729,652 | 1,295,164 | |||||
Stockholders' equity | |||||||
Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding | — | — | |||||
Common stock, $.01 par value; 49,000,000 shares authorized; 13,682,198 and 13,894,842 issued and outstanding | 137 | 139 | |||||
Additional paid-in capital | 49,866 | 51,561 | |||||
Retained earnings | 97,580 | 81,618 | |||||
Accumulated other comprehensive income | 1,794 | 13 | |||||
Total stockholders' equity | 149,377 | 133,331 | |||||
Total liabilities and stockholders' equity | $ | 1,879,029 | $ | 1,428,495 |
Three Months Ended September 30, | |||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||
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 | $ | 119,279 | $ | 29 | 0.10 | % | $ | 35,723 | $ | 164 | 1.83 | % | |||||||||
Federal funds sold | 3,980 | — | 0.01 | 1,325 | 7 | 2.12 | |||||||||||||||
Investment securities available for sale | 54,989 | 273 | 1.97 | 38,389 | 215 | 2.22 | |||||||||||||||
Restricted stock | 4,007 | 51 | 5.04 | 5,629 | 68 | 4.77 | |||||||||||||||
Loans held for sale | 112,890 | 856 | 3.02 | 56,301 | 896 | 6.31 | |||||||||||||||
Loans receivable under SBA Payroll Protection Program | 235,160 | 1,470 | 2.49 | — | — | 0.00 | |||||||||||||||
Portfolio loans receivable(2) | 1,218,589 | 22,510 | 7.35 | 1,099,191 | 21,004 | 7.58 | |||||||||||||||
Total interest earning assets | 1,748,894 | 25,189 | 5.73 | 1,236,558 | 22,354 | 7.17 | |||||||||||||||
Noninterest earning assets | 22,768 | 15,908 | |||||||||||||||||||
Total assets | $ | 1,771,662 | $ | 1,252,466 | |||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||
Interest bearing demand accounts | $ | 218,415 | 156 | 0.28 | $ | 116,820 | 191 | 0.65 | |||||||||||||
Savings | 5,126 | 1 | 0.05 | 3,913 | 3 | 0.35 | |||||||||||||||
Money market accounts | 532,973 | 1,186 | 0.89 | 339,751 | 1,484 | 1.73 | |||||||||||||||
Time deposits | 267,970 | 1,291 | 1.92 | 286,605 | 1,771 | 2.45 | |||||||||||||||
Borrowed funds | 41,069 | 516 | 5.00 | 89,746 | 721 | 3.19 | |||||||||||||||
Total interest bearing liabilities | 1,065,553 | 3,150 | 1.18 | 836,835 | 4,170 | 1.98 | |||||||||||||||
Noninterest bearing liabilities: | |||||||||||||||||||||
Noninterest bearing liabilities | 22,702 | 17,163 | |||||||||||||||||||
Noninterest bearing deposits | 539,220 | 271,851 | |||||||||||||||||||
Stockholders’ equity | 144,187 | 126,617 | |||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,771,662 | $ | 1,252,466 | |||||||||||||||||
Net interest spread | 4.55 | % | 5.19 | % | |||||||||||||||||
Net interest income | $ | 22,039 | $ | 18,184 | |||||||||||||||||
Net interest margin(3) | 5.01 | % | 5.83 | % |
(1) | Annualized. |
(2) | Includes nonaccrual loans. |
(3) | For the three months ended September 30, 2020 and 2019, SBA-PPP loans and credit card loans collectively accounted for 117 and 146 basis points of the reported net interest margin, respectively. |
Nine Months Ended September 30, | |||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||
Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate(1) | Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||
Assets | |||||||||||||||||||||
Interest earning assets: | |||||||||||||||||||||
Interest bearing deposits | $ | 98,661 | $ | 306 | 0.41 | % | $ | 35,164 | $ | 518 | 1.97 | % | |||||||||
Federal funds sold | 2,319 | 4 | 0.22 | 1,685 | 28 | 2.23 | |||||||||||||||
Investment securities available for sale | 58,071 | 929 | 2.14 | 42,281 | 707 | 2.24 | |||||||||||||||
Restricted stock | 4,025 | 174 | 5.78 | 4,276 | 160 | 4.99 | |||||||||||||||
Loans held for sale | 77,878 | 1,909 | 3.27 | 35,229 | 1,928 | 7.32 | |||||||||||||||
Loans receivable under SBA Payroll Protection Program | 134,130 | 2,482 | 2.47 | — | — | — | |||||||||||||||
Portfolio loans receivable(2) | 1,197,719 | 63,129 | 7.04 | 1,041,364 | 57,620 | 7.40 | |||||||||||||||
Total interest earning assets | 1,572,803 | 68,933 | 5.85 | 1,159,999 | 60,961 | 7.03 | |||||||||||||||
Noninterest earning assets | 21,779 | 15,115 | |||||||||||||||||||
Total assets | $ | 1,594,582 | $ | 1,175,114 | |||||||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||
Interest bearing liabilities: | |||||||||||||||||||||
Interest bearing demand accounts | $ | 181,597 | 555 | 0.41 | $ | 97,325 | 387 | 0.53 | |||||||||||||
Savings | 4,686 | 4 | 0.13 | 3,613 | 9 | 0.35 | |||||||||||||||
Money market accounts | 484,412 | 4,153 | 1.15 | 330,086 | 4,203 | 1.70 | |||||||||||||||
Time deposits | 284,844 | 4,489 | 2.11 | 294,693 | 5,288 | 2.40 | |||||||||||||||
Borrowed funds | 43,823 | 1,382 | 4.21 | 59,816 | 1,615 | 3.61 | |||||||||||||||
Total interest bearing liabilities | 999,362 | 10,583 | 1.41 | 785,533 | 11,502 | 1.96 | |||||||||||||||
Noninterest bearing liabilities: | |||||||||||||||||||||
Noninterest bearing liabilities | 21,401 | 14,971 | |||||||||||||||||||
Noninterest bearing deposits | 433,381 | 252,353 | |||||||||||||||||||
Stockholders’ equity | 140,438 | 122,257 | |||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,594,582 | $ | 1,175,114 | |||||||||||||||||
Net interest spread | 4.44 | % | 5.07 | % | |||||||||||||||||
Net interest income | $ | 58,350 | $ | 49,459 | |||||||||||||||||
Net interest margin(3) | 4.96 | % | 5.70 | % |
(1) | Annualized. |
(2) | Includes nonaccrual loans. |
(3) | For the nine months ended September 30, 2020 and 2019, SBA-PPP loans and credit card loans collectively accounted for 104 and 135 basis points of the reported net interest margin, respectively. |
HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited | ||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||
(Dollars in thousands except per share data) | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||
Earnings: | ||||||||||||||||||||
Net income | $ | 8,438 | $ | 4,761 | $ | 2,934 | $ | 5,073 | $ | 4,480 | ||||||||||
Earnings per common share, diluted | 0.61 | 0.34 | 0.21 | 0.36 | 0.32 | |||||||||||||||
Net interest margin | 5.01 | % | 4.72 | % | 5.16 | % | 5.33 | % | 5.83 | % | ||||||||||
Net interest margin, excluding credit cards & SBA-PPP loans (1) | 3.84 | % | 3.96 | % | 3.96 | % | 4.02 | % | 4.37 | % | ||||||||||
Return on average assets(2) | 1.89 | % | 1.19 | % | 0.84 | % | 1.48 | % | 1.42 | % | ||||||||||
Return on average assets excluding impact of SBA-PPP loans (1)(2) | 1.80 | % | 1.04 | % | 0.84 | % | 1.48 | % | 1.42 | % | ||||||||||
Return on average equity(2) | 23.28 | % | 13.70 | % | 8.59 | % | 15.32 | % | 14.04 | % | ||||||||||
Efficiency ratio | 65.17 | % | 69.74 | % | 73.53 | % | 70.10 | % | 71.75 | % | ||||||||||
Balance Sheet: | ||||||||||||||||||||
Portfolio loans receivable (3) | $ | 1,244,613 | $ | 1,211,477 | $ | 1,187,798 | $ | 1,171,121 | $ | 1,140,310 | ||||||||||
Deposits | 1,662,211 | 1,608,726 | 1,302,913 | 1,225,421 | 1,112,444 | |||||||||||||||
Total assets | 1,879,029 | 1,822,365 | 1,507,847 | 1,428,495 | 1,311,406 | |||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Nonperforming assets to total assets | 0.79 | % | 0.50 | % | 0.61 | % | 0.50 | % | 0.51 | % | ||||||||||
Nonperforming assets to total assets, excluding SBA-PPP loans (1) | 0.90 | % | 0.58 | % | 0.61 | % | 0.50 | % | 0.51 | % | ||||||||||
Nonperforming loans to total loans | 0.78 | % | 0.41 | % | 0.49 | % | 0.40 | % | 0.57 | % | ||||||||||
Nonperforming loans to portfolio loans (1) | 0.92 | % | 0.48 | % | 0.49 | % | 0.40 | % | 0.57 | % | ||||||||||
Net charge-offs to average portfolio loans (1)(2) | 0.06 | % | 0.05 | % | 0.07 | % | 0.10 | % | 0.04 | % | ||||||||||
Net charge-offs to average loans (1)(2) | 0.06 | % | 0.05 | % | 0.07 | % | 0.10 | % | 0.04 | % | ||||||||||
Allowance for loan losses to total loans | 1.49 | % | 1.30 | % | 1.31 | % | 1.14 | % | 1.12 | % | ||||||||||
Allowance for loan losses to portfolio loans | 1.77 | % | 1.54 | % | 1.31 | % | 1.14 | % | 1.12 | % | ||||||||||
Allowance for loan losses to non-performing loans | 191.78 | % | 318.25 | % | 268.13 | % | 281.80 | % | 195.76 | % | ||||||||||
Bank Capital Ratios: | ||||||||||||||||||||
Total risk based capital ratio | 12.74 | % | 12.35 | % | 12.18 | % | 11.98 | % | 11.44 | % | ||||||||||
Tier 1 risk based capital ratio | 11.48 | % | 11.10 | % | 10.93 | % | 10.73 | % | 10.19 | % | ||||||||||
Leverage ratio | 7.44 | % | 7.73 | % | 8.61 | % | 8.65 | % | 8.60 | % | ||||||||||
Common equity Tier 1 capital ratio | 11.48 | % | 11.10 | % | 10.93 | % | 10.73 | % | 10.19 | % | ||||||||||
Tangible common equity | 7.09 | % | 6.91 | % | 8.03 | % | 8.21 | % | 8.21 | % | ||||||||||
Holding Company Capital Ratios: | ||||||||||||||||||||
Total risk based capital ratio | 15.35 | % | 15.02 | % | 13.63 | % | 13.56 | % | 13.47 | % | ||||||||||
Tier 1 risk based capital ratio | 12.93 | % | 12.58 | % | 12.38 | % | 12.31 | % | 12.21 | % | ||||||||||
Leverage ratio | 8.63 | % | 8.85 | % | 9.83 | % | 9.96 | % | 10.37 | % | ||||||||||
Common equity Tier 1 capital ratio | 12.75 | % | 12.39 | % | 12.19 | % | 12.12 | % | 12.02 | % | ||||||||||
Tangible common equity | 7.95 | % | 7.80 | % | 11.08 | % | 10.71 | % | 10.26 | % | ||||||||||
Composition of Loans: (3) | ||||||||||||||||||||
Residential real estate | $ | 422,698 | $ | 437,429 | $ | 430,870 | $ | 427,926 | $ | 443,961 | ||||||||||
Commercial real estate | 372,972 | 364,071 | 360,601 | 348,091 | 339,448 | |||||||||||||||
Construction real estate | 227,661 | 212,957 | 204,047 | 198,702 | 182,224 | |||||||||||||||
Commercial and industrial - Other | 134,889 | 142,673 | 151,551 | 151,109 | 132,935 | |||||||||||||||
SBA-PPP loans | 238,735 | 229,646 | — | — | — | |||||||||||||||
Credit card | 84,964 | 54,732 | 41,881 | 46,412 | 44,058 | |||||||||||||||
Other | 2,268 | 947 | 1,103 | 1,285 | 1,148 | |||||||||||||||
Composition of Deposits: | ||||||||||||||||||||
Noninterest bearing | $ | 596,239 | $ | 563,995 | $ | 363,423 | $ | 291,777 | $ | 293,378 | ||||||||||
Interest bearing demand | 247,150 | 268,150 | 175,924 | 174,166 | 186,422 | |||||||||||||||
Savings | 4,941 | 5,087 | 4,290 | 3,675 | 3,994 | |||||||||||||||
Money Markets | 472,447 | 507,432 | 473,958 | 429,078 | 313,131 | |||||||||||||||
Time Deposits | 341,435 | 264,062 | 285,318 | 326,725 | 315,519 |
HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited | ||||||||||||||||||||
Quarter Ended | ||||||||||||||||||||
(Dollars in thousands except per share data) | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||
Capital Bank Home Loan Metrics: | ||||||||||||||||||||
Origination of loans held for sale | $ | 431,060 | $ | 315,165 | $ | 180,421 | $ | 185,739 | $ | 197,754 | ||||||||||
Mortgage loans sold | 410,312 | 272,151 | 177,496 | 183,691 | 171,880 | |||||||||||||||
Gain on sale of loans | 12,837 | 8,088 | 4,580 | 4,587 | 5,088 | |||||||||||||||
Purchase volume as a % of originations | 33.76 | % | 31.16 | % | 32.79 | % | 28.95 | % | 44.02 | % | ||||||||||
Gain on sale as a % of loans sold(4) | 3.13 | % | 2.97 | % | 2.52 | % | 2.44 | % | 2.88 | % | ||||||||||
OpenSky Credit Card Portfolio Metrics: | ||||||||||||||||||||
Active customer accounts | 529,114 | 400,530 | 244,024 | 223,379 | 221,913 | |||||||||||||||
Credit card loans | $ | 84,964 | $ | 54,732 | $ | 41,881 | $ | 46,412 | $ | 44,058 | ||||||||||
Noninterest secured credit card deposits | 176,708 | 131,854 | 84,689 | 78,223 | 77,689 |
(1) | Refer to Appendix for reconciliation of non-GAAP measures |
(2) | Annualized. |
(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. |
Dollars in Thousands | Year Ended | Quarter Ended | Year to Date | ||||||
December 31, 2019 | September 30, 2020 | September 30, 2020 | |||||||
Net Income | $ | 16,895 | $ | 8,438 | $ | 16,134 | |||
Less: SBA-PPP loan income | — | (1,470 | ) | (2,482 | ) | ||||
Net Income, as Adjusted | $ | 16,895 | $ | 6,968 | $ | 13,653 | |||
Average Total Assets | $ | 1,219,909 | $ | 1,533,591 | $ | 1,594,582 | |||
Less: Average SBA-PPP Loans | — | (238,071 | ) | (135,894 | ) | ||||
Average Total Assets, as Adjusted | $ | 1,219,909 | $ | 1,533,591 | $ | 1,458,687 | |||
Return on Average Assets, as Adjusted | 1.38 | % | 1.80 | % | 1.25 | % |
Dollars in Thousands | Year Ended | Quarter Ended | Year to Date | ||||||
December 31, 2019 | September 30, 2020 | September 30, 2020 | |||||||
Net Interest Income | $ | 67,509 | $ | 22,039 | $ | 58,350 | |||
Less Secured credit card loan income | — | (6,632 | ) | (15,225 | ) | ||||
Less SBA-PPP loan income | — | (1,470 | ) | (2,482 | ) | ||||
Net Interest Income, as Adjusted | $ | 67,509 | $ | 13,937 | $ | 40,644 | |||
Average Interest Earning Assets | 1,204,863 | 1,748,894 | 1,572,803 | ||||||
Less Average secured credit card loans | — | (68,585 | ) | (51,289 | ) | ||||
Less Average SBA-PPP loans | — | (235,160 | ) | (134,130 | ) | ||||
Total Average Interest Earning Assets, as Adjusted | $ | 1,204,863 | $ | 1,445,148 | $ | 1,387,384 | |||
Net Interest Margin, as Adjusted | 5.60 | % | 3.84 | % | 3.91 | % |
Dollars in Thousands | ||||||
December 31, 2019 | September 30, 2020 | |||||
Total Stockholders' Equity | $ | 133,331 | $ | 149,377 | ||
Tangible Common Equity | $ | 133,331 | $ | 149,377 | ||
Period End Shares Outstanding | 13,894,842 | 13,682,198 | ||||
Tangible Book Value per Share | $ | 9.60 | $ | 10.92 |
Allowance for Loan Losses to Total Portfolio Loans | ||||||
Dollars in Thousands | Year Ended | Quarter Ended | ||||
December 31, 2019 | September 30, 2020 | |||||
Allowance for Loan Losses | $ | 13,301 | $ | 22,016 | ||
Total Loans | 1,171,121 | 1,477,962 | ||||
Less: SBA-PPP loans | — | (233,349 | ) | |||
Total Portfolio Loans | $ | 1,171,121 | $ | 1,244,613 | ||
Allowance for Loan Losses to Total Portfolio Loans | 1.14 | % | 1.77 | % | ||
Nonperforming Assets to Total Assets, net SBA-PPP Loans | ||||||
Dollars in Thousands | Year Ended | Quarter Ended | ||||
December 31, 2019 | September 30, 2020 | |||||
Total Nonperforming Assets | $ | 7,104 | $ | 14,806 | ||
Total Assets | 1,428,495 | 1,879,029 | ||||
Less: SBA-PPP loans | — | (233,349 | ) | |||
Total Assets, net SBA-PPP Loans | $ | 1,428,495 | $ | 1,645,680 | ||
Nonperforming Assets to Total Assets, net SBA-PPP Loans | 0.50 | % | 0.90 | % | ||
Nonperforming Loans to Total Portfolio Loans | ||||||
Dollars in Thousands | Year Ended | Quarter Ended | ||||
December 31, 2019 | September 30, 2020 | |||||
Total Nonperforming Loans | $ | 4,720 | $ | 11,480 | ||
Total Loans | 1,171,121 | 1,477,962 | ||||
Less: SBA-PPP loans | — | (233,349 | ) | |||
Total Portfolio Loans | $ | 1,171,121 | $ | 1,244,613 | ||
Nonperforming Loans to Total Portfolio Loans | 0.40 | % | 0.92 | % | ||
Net Charge-offs to Average Portfolio Loans | ||||||
Dollars in Thousands | Year Ended | Quarter Ended | ||||
December 31, 2019 | September 30, 2020 | |||||
Total Net Charge-offs | $ | 798 | $ | (163 | ) | |
Total Average Loans | 1,064,421 | 1,453,749 | ||||
Less: Average SBA-PPP loans | — | (235,160 | ) | |||
Total Average Loans, Excluding SBA-PPP Loans | $ | 1,064,421 | $ | 1,218,589 | ||
Net Charge-offs (YTD annualized) to Average Portfolio Loans | 0.08 | % | 0.06 | % |