View:
Download DOC
Download PDF
Download XLS
Download XBRL
cbnk-20220420
false000141953600014195362022-04-202022-04-20



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): April 20, 2022

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 ☒
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. ☒
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.01 per shareCBNKNASDAQ Stock Market



Item 2.02 Results of Operations and Financial Disclosure
On April 20, 2022, Capital Bancorp, Inc. (the “Company”) issued a press release announcing the Company’s unaudited financial results for the three months ended March 31, 2022. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K 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 Exhibit 99.1 to this Current Report on Form 8-K, 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
99.1
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)



2

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
April 20, 2022



3
Document


https://cdn.kscope.io/8117b331fd5e47b6a6e60c856d448580-capitalbancorplogoa21.jpg

CBNK Quarterly Earnings Grow 13.7 Percent Year Over Year
Diluted EPS of $0.71, ROAA of 2.01%, and ROAE of 20.30% for 1Q 2022
Rockville, Maryland, April 20, 2022 (GLOBE NEWSWIRE) – Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $10.2 million, or $0.71 per diluted share, for the first quarter of 2022. By comparison, net income was $9.0 million, or $0.65 per diluted share, for the first quarter of 2021. Portfolio loans, net, increased $213.9 million when compared to the period ended March 31, 2021.
“We started the year with another quarter of outstanding profitability at both the Commercial Bank and OpenSky®," said Ed Barry, CEO of the Company and the Bank. "Loan production at the Commercial Bank was strong as new hires and strategic initiatives continue to gain momentum, but growth was negatively impacted by payoffs and selective offboarding of certain lower-quality credit relationships. OpenSky® profitability was stable as updated agreements with service providers delivered savings on data processing costs offsetting anticipated card holder attrition which resulted in a decline in open accounts for the quarter. We are optimistic that our business-wide strategic investments will begin to deliver both increased revenues and lower costs in the coming quarters."

Steven Schwartz, Chairman of the Board of the Company, said, "Despite the detrimental impact of rising interest rates on our mortgage refinance origination volume, we are pleased with the earnings for the quarter. I believe our commercial loan portfolio is well positioned to benefit from the anticipated interest rate increases and our continued focus on a diversified revenue model should maintain our superior results."

First Quarter 2022 Highlights
Capital Bancorp, Inc.
•Strong Earnings - Continued strong performance by the Commercial Bank and OpenSky® contributed to the first quarter's results. Quarterly net income increased to $10.2 million from $9.0 million in the first quarter of 2021. Earnings were $0.71 per diluted share for the three months ended March 31, 2022 and $0.65 for the three months ended March 31, 2021.
•Outstanding Performance Ratios - Return on average assets ("ROAA") and return on average equity ("ROAE") were 2.01% and 20.30%, respectively, for the three months ended March 31, 2022 compared to 1.87% and 22.30%, respectively, for the three months ended March 31, 2021.
•Expanded Net Interest Margin - Net interest margin was 6.79% for the three months ended March 31, 2022, compared to 5.15% for the same three month period last year. The margin expansion was primarily driven by increases in the yield on portfolio loans due to the recognition of deferred fees associated with the credit card portfolio, as well as an acceleration in the deferred fees related to forgiven loans in the Small Business Administration Payroll Protection Program ("SBA-PPP").
1


•Robust Capital Positions - As of March 31, 2022, the Company reported a common equity tier 1 capital ratio of 15.04% and an allowance for loan losses to total loans ratio of 1.60%, or 1.65% excluding SBA-PPP loans. Quarter over quarter, tangible book value per common share grew 18.5 percent to $14.39 at March 31, 2022.
Commercial Bank
•Strong Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $179.6 million, or 14.6 percent, to $1.4 billion at March 31, 2022 compared to March 31, 2021. The quarter over quarter growth was mainly due to a 30.3 percent increase in commercial real estate loans of $131.4 million, of which $72.8 million was owner occupied. Also contributing to the quarter over quarter growth was a 17.2 percent increase in commercial and industrial loans of $26.1 million and an 11.0 percent increase in construction real estate loans of $24.4 million.
•Growth in Core Deposits and Reduced Cost of Funds - Noninterest bearing deposits increased 6.9 percent compared to March 31, 2021. The $53.3 million year over year increase was primarily due to an increase in commercial demand deposits reflecting management's ongoing strategic initiative to improve the deposit franchise. At March 31, 2022, noninterest bearing deposits represented 44.3% of total deposits compared to 41.4% at March 31, 2021. Overall, the cost of interest bearing liabilities was reduced 39 basis points, from 0.81% for the quarter ended March 31, 2021 to 0.42% for the quarter ended March 31, 2022.
•Improving Credit Metrics - Non-performing assets ("NPAs") decreased to 0.28% of total assets at March 31, 2022 compared to 0.58% at March 31, 2021 with the disposition of $3.3 million in other real estate owned and a reduction in nonaccrual loans of $2.8 million as management continues to focus on reducing non-performing assets. The provision for loan losses increased $449 thousand compared to the first quarter of 2021. The current provision for the three months ended March 31, 2022 was $952 thousand and was primarily related to the credit card portfolio and the cycling of accounts, not a deterioration in overall credit quality.
•SBA-PPP Loans - SBA-PPP loans, net of $1.3 million in unearned fees, totaled $51.1 million at March 31, 2022 which was comprised of $1.7 million in 2020 originations and $49.4 million of 2021 originations. As of March 31, 2022, the Company has obtained forgiveness for $323.3 million of SBA-PPP loans.
Capital Bank Home Loans

•Slowing Mortgage Originations - Origination volumes declined 68.8 percent, to $110.4 million, in the first quarter of 2022, when compared to $353.8 million in the first quarter of 2021. The continued steepening of the yield curve in the first quarter of 2022 slowed originations from the year earlier when low interest rates fueled refinance volumes.
•Purchase Volume - While purchase volumes increased to 73.2 percent of total originations for the first quarter of 2022, up from 24.6 percent during the first quarter of 2021, total purchase originations declined by 8.3% during the same period.
OpenSky®
•Strong Revenue Growth - OpenSky® revenue grew by 47.6 percent to $20.9 million for the quarter ended March 31, 2022 from the same period in 2021 due to an increase in average credit card loan balances as well as an increase in the yield on those credit card loans. The surge in new account originations over the past two years has slowed as government stimulus ended and competition increased. New account originations have reverted to a pace reminiscent of 2019, and is not enough to offset the normal customer lifecycle of the 2020 and 2021 vintages.
2


•Continued Growth in OpenSky® Loans and Deposits - OpenSky® loan balances, net of reserves, increased by $40.0 million to $123.7 million compared to $83.7 million in the first quarter of 2021. Corresponding deposit balances increased 2.1 percent or $4.5 million from $215.9 million at March 31, 2021 to $220.4 million at March 31, 2022.
•Expense Management Efforts Demonstrate Scale - Key contracts renegotiated during the first quarter of 2022 will engender cost saves and scale benefits throughout the remainder of the year and into the future.
3


COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited
Quarter Ended
March 31,
(dollars in thousands except per share data)20222021% Change
Earnings Summary
Interest income$34,402 $26,638 29.1 %
Interest expense1,071 2,194 (51.2)%
Net interest income33,331 24,444 36.4 %
Provision for loan losses952 503 89.3 %
Noninterest income8,288 13,951 (40.6)%
Noninterest expense27,102 25,767 5.2 %
Income before income taxes13,565 12,125 11.9 %
Income tax expense3,354 3,143 6.7 %
Net income$10,211 $8,982 13.7 %
Pre-tax pre-provision net revenue ("PPNR") (2)
$14,517 $12,628 15.0 %
Weighted average common shares - Basic13,989 13,757 1.7 %
Weighted average common shares - Diluted14,339 13,899 3.2 %
Earnings per share - Basic$0.73 $0.65 12.3 %
Earnings per share - Diluted$0.71 $0.65 9.2 %
Return on average assets (1)
2.01 %1.87 %7.5 %
Return on average assets, excluding impact of SBA-PPP loans(1) (2)
1.67 %1.54 %8.4 %
Return on average equity20.30 %22.30 %(9.0)%

Quarter Ended1Q22 vs. 1Q21Quarter Ended
March 31,December 31,September 30,June 30,
(in thousands except per share data)20222021% Change202120212021
Balance Sheet Highlights
Assets$2,122,453 $2,091,851 1.5 %$2,055,300 $2,169,556 $2,151,850 
Investment securities available for sale172,712 128,023 34.9 %184,455 189,165 160,515 
Mortgage loans held for sale17,036 60,816 (72.0)%15,989 36,005 47,935 
SBA-PPP loans, net of fees51,085 267,871 (80.9)%108,285 137,178 202,763 
Portfolio loans receivable (3)
1,526,256 1,312,375 16.3 %1,523,982 1,445,126 1,392,471 
Allowance for loan losses25,252 23,550 7.2 %25,181 24,753 24,079 
Deposits1,862,722 1,863,069 — %1,797,137 1,921,238 1,917,419 
FHLB borrowings 22,000 22,000 — %22,000 22,000 22,000 
Other borrowed funds12,062 12,062 — %12,062 12,062 12,062 
Total stockholders' equity201,492 167,003 20.7 %197,903 189,080 177,204 
Tangible common equity(2)
201,492 167,003 20.7 %197,903 189,080 177,204 
Common shares outstanding14,001 13,759 1.8 %13,962 13,802 13,772 
Tangible book value per share (2)
$14.39 $12.14 18.5 %$14.17 $13.70 $12.87 
______________
(1) Annualized for the quarterly periods
(2) Refer to Appendix for reconciliation of non-GAAP measures.
(3) Loans are reflected net of deferred fees and costs.



4


Operating Results - Comparison of Three Months Ended March 31, 2022 and 2021
For the three months ended March 31, 2022, net interest income increased $8.9 million, or 36.4 percent, to $33.3 million from the same period in 2021, primarily due to an increase in interest earned on the credit card loan portfolio. The net interest margin increased 164 basis points to 6.79% for the three months ended March 31, 2022 from the same period in 2021 due in large part to the acceleration of the deferred fees associated with the SBA-PPP loan forgiveness as well as the recognition of deferred fees on the credit card loans. Net interest margin, excluding credit card and SBA-PPP loans, was 3.82% for the first quarter of 2022 compared to 3.63% for the same period in 2021. For the three months ended March 31, 2022, average interest earning assets increased $66.9 million, or 3.5 percent, to $2.0 billion as compared to the same period in 2021, and the average yield on interest earning assets increased 139 basis points. Compared to the same period in the prior year, average interest-bearing liabilities decreased $55.4 million, or 5.0 percent, while the average cost of interest-bearing liabilities decreased 39 basis points to 0.42% from 0.81%.
The provision for loan losses of $952 thousand for the three months ended March 31, 2022 was primarily related to growth in the credit card portfolio and the cycling of credit card accounts. Net charge-offs for the first quarter of 2022 were $881 thousand, or 0.24% on an annualized basis of average portfolio loans, compared to $388 thousand, or 0.12% on an annualized basis of average loans for the first quarter of 2021. All of the $881 thousand in net charge-offs during the quarter were related to the credit card portfolio.
For the quarter ended March 31, 2022, noninterest income was $8.3 million, a decrease of $5.7 million, or 40.6 percent, from $14.0 million in the prior year quarter. The decrease was primarily the result of reduced mortgage banking revenue.
Net credit card loan balances increased by $40.0 million to $123.7 million as of March 31, 2022 from $83.7 million at March 31, 2021. The related deposit account balances increased 2.1 percent to $220.4 million at March 31, 2022 when compared to $215.9 million at March 31, 2021. For the three months ended March 31, 2022, OpenSky's® secured credit card accounts decreased by 30 thousand net compared to 74 thousand net new accounts for the same period in 2021 suggesting consumer behaviors may be returning to historical trends after being elevated in response to COVID-19 throughout 2020 and the first half of 2021.
The efficiency ratio for the three months ended March 31, 2022 decreased to 65.12% compared to 67.11% for the three months ended March 31, 2021.
Noninterest expense was $27.1 million for the three months ended March 31, 2022, as compared to $25.8 million for the three months ended March 31, 2021, an increase of $1.3 million, or 5.2 percent. The increase was primarily driven by increases in salaries and employee benefits of $1.7 million, advertising expenses of $806 thousand, and professional fees of $697 thousand and were offset by decreases in data processing expenses of $1.0 million, loan processing expenses of $660 thousand, and occupancy and equipment expense of $103 thousand.

Financial Condition

Total assets at March 31, 2022 were $2.1 billion, an increase of 1.5% from March 31, 2021. Net portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.5 billion as of March 31, 2022, an increase of 16.3 percent as compared to $1.3 billion at March 31, 2021.
While total deposits remained steady at $1.9 billion for the periods ended March 31, 2022 and March 31, 2021, the composition of the deposit portfolio shifted, with an increase in noninterest bearing deposits of $53.3 million, or 6.9%, when comparing March 31, 2022 to March 31, 2021. At March 31, 2022, there were no listing service or brokered deposits compared to $86.0 million at March 31, 2021.
The Company recorded a provision for loan losses of $952 thousand during the three months ended March 31, 2022, which increased the allowance for loan losses to $25.3 million, or 1.60% of total loans (1.65%, excluding SBA-PPP loans, on a non-GAAP basis) at March 31, 2022. Nonperforming assets were $6.0 million, or 0.28% of total assets, as of March 31, 2022, down from $12.1 million, or 0.58% of total assets, at March 31, 2021, and was
5


comprised solely of nonperforming loans. Included in nonperforming loans at March 31, 2022 were troubled debt restructurings of $525 thousand.
Stockholders’ equity increased to $201.5 million as of March 31, 2022, compared to $167.0 million at March 31, 2021. This increase was primarily attributable to earnings during the period of $41.2 million which were offset by unrealized losses recorded net of tax on the available for sale securities in the rising interest rate environment creating a $7.8 million reduction in accumulated other comprehensive income during the period. As of March 31, 2022, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.


6


Consolidated Statements of Income (Unaudited)
Three Months Ended March 31,
(in thousands)20222021
Interest income
Loans, including fees$33,889 $26,068 
Investment securities available for sale370 478 
Federal funds sold and other143 92 
Total interest income34,402 26,638 
Interest expense
Deposits
884 2,006 
Borrowed funds187 188 
Total interest expense1,071 2,194 
Net interest income33,331 24,444 
Provision for loan losses952 503 
Net interest income after provision for loan losses
32,379 23,941 
Noninterest income
Service charges on deposits163 148 
Credit card fees5,924 5,940 
Mortgage banking revenue1,790 7,743 
Other fees and charges411 120 
Total noninterest income8,288 13,951 
Noninterest expenses
Salaries and employee benefits10,310 8,568 
Occupancy and equipment1,026 1,129 
Professional fees2,321 1,624 
Data processing8,276 9,311 
Advertising1,639 833 
Loan processing392 1,052 
Other operating3,138 3,250 
Total noninterest expenses27,102 25,767 
Income before income taxes13,565 12,125 
Income tax expense3,354 3,143 
Net income$10,211 $8,982 

7


Consolidated Balance Sheets
(in thousands except share data)(unaudited) March 31, 2022December 31, 2021
Assets
Cash and due from banks$14,955 $42,914 
Interest bearing deposits at other financial institutions298,501 136,824 
Federal funds sold330 3,657 
Total cash and cash equivalents
313,786 183,395 
Investment securities available for sale172,712 184,455 
Marketable equity securities245 245 
Restricted investments
3,602 3,498 
Loans held for sale17,036 15,989 
SBA-PPP loans receivable, net of fees51,085 108,285 
Portfolio loans receivable, net of deferred fees and costs1,526,256 1,523,982 
   Less allowance for loan losses(25,252)(25,181)
Total portfolio loans held for investment, net1,501,004 1,498,801 
Premises and equipment, net
2,977 3,282 
Accrued interest receivable7,512 7,901 
Deferred income taxes, net12,366 9,793 
Other real estate owned— 86 
Bank owned life insurance35,758 35,506 
Other assets4,370 4,064 
Total assets
$2,122,453 $2,055,300 
Liabilities
Deposits
Noninterest bearing
$825,174 $787,650 
Interest bearing
1,037,548 1,009,487 
Total deposits
1,862,722 1,797,137 
Federal Home Loan Bank advances22,000 22,000 
Other borrowed funds12,062 12,062 
Accrued interest payable480 473 
Other liabilities23,697 25,725 
Total liabilities
1,920,961 1,857,397 
Stockholders' equity
Common stock, $.01 par value; 49,000,000 shares authorized; 14,000,520 and 13,962,334 issued and outstanding 140 140 
Additional paid-in capital55,226 54,306 
Retained earnings153,949 144,533 
Accumulated other comprehensive loss(7,823)(1,076)
Total stockholders' equity
201,492 197,903 
Total liabilities and stockholders' equity
$2,122,453 $2,055,300 

8



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 March 31,
20222021
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
$197,720 $101 0.21 %$205,799 $49 0.10 %
Federal funds sold
4,658 1 0.09 3,871 — — 
Investment securities available for sale
180,567 370 0.83 106,704 478 1.82 
Restricted stock and equity securities3,766 41 4.42 3,906 43 4.43 
 Loans held for sale 13,500 111 3.33 72,460 481 2.69 
 SBA-PPP loans receivable83,264 2,066 10.06 232,371 2,469 4.31 
Portfolio loans receivable(2)
1,506,902 31,712 8.53 1,298,352 23,118 7.22 
Total interest earning assets
1,990,377 34,402 7.01 1,923,463 26,638 5.62 
Noninterest earning assets66,824 25,803 
Total assets
$2,057,201 $1,949,266 
Liabilities and Stockholders’ Equity
Interest bearing liabilities:
Interest bearing demand accounts
$293,979 37 0.05 $256,958 68 0.11 
Savings
8,274 1 0.05 5,631 1 0.05 
Money market accounts
539,264 301 0.23 471,154 530 0.46 
Time deposits
170,748 545 1.29 332,660 1,407 1.72 
Borrowed funds
34,062 187 2.23 35,343 188 2.15 
Total interest bearing liabilities
1,046,327 1,071 0.42 1,101,746 2,194 0.81 
Noninterest bearing liabilities:
Noninterest bearing liabilities
24,156 24,059 
Noninterest bearing deposits
782,747 660,086 
Stockholders’ equity
203,971 163,375 
Total liabilities and stockholders’ equity
$2,057,201 $1,949,266 
Net interest spread6.59 %4.81 %
Net interest income$33,331 $24,444 
Net interest margin(3)
6.79 %5.15 %
_______________
(1)Annualized.
(2)Includes nonaccrual loans.
(3)For the three months ended March 31, 2022 and March 31, 2021, collectively, SBA-PPP loans and credit card loans accounted for 297 and 152 basis points of the reported net interest margin, respectively.














9

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited
Quarter Ended
(dollars in thousands except per share data)March 31, 2022December 31,
2021		September 30,
2021		June 30,
2021		March 31,
2021
Earnings:
Net income$10,211 $10,171 $11,177 $9,648 $8,982 
Earnings per common share, diluted0.71 0.71 0.79 0.68 0.65 
Net interest margin6.79 %6.49 %6.27 %5.47 %5.15 %
Net interest margin, excluding credit cards & SBA-PPP loans (1)
3.82 %3.70 %3.52 %3.55 %3.63 %
Return on average assets(2)
2.01 %1.95 %2.13 %1.90 %1.87 %
Return on average assets, excluding impact of SBA-PPP loans (1)(2)
1.67 %1.80 %1.99 %1.65 %1.54 %
Return on average equity(2)
20.30 %20.66 %23.87 %22.36 %22.30 %
Efficiency ratio65.12 %65.83 %64.10 %66.37 %67.11 %
Balance Sheet:
Total portfolio loans receivable, net$1,526,256 $1,523,982 $1,445,126 $1,392,471 $1,312,375 
Total deposits1,862,722 1,797,137 1,921,238 1,917,419 1,863,069 
Total assets2,122,453 2,055,300 2,169,556 2,151,850 2,091,851 
Total shareholders' equity201,492 197,903 189,080 177,204 167,003 
Asset Quality Ratios:
Nonperforming assets to total assets0.28 %0.56 %0.77 %0.54 %0.58 %
Nonperforming assets to total assets, excluding the SBA-PPP loans (1)
0.29 %0.59 %0.83 %0.60 %0.66 %
Nonperforming loans to total loans0.38 %0.70 %0.85 %0.52 %0.56 %
Nonperforming loans to portfolio loans (1)
0.39 %0.75 %0.94 %0.60 %0.67 %
Net charge-offs to average portfolio loans (1)(2)
0.24 %0.18 %0.08 %0.08 %0.12 %
Allowance for loan losses to total loans1.60 %1.54 %1.56 %1.51 %1.49 %
Allowance for loan losses to portfolio loans (1)
1.65 %1.65 %1.71 %1.73 %1.79 %
Allowance for loan losses to non-performing loans422.65 %220.40 %182.48 %287.40 %267.07 %
Bank Capital Ratios:
Total risk based capital ratio14.36 %13.79 %13.86 %13.51 %13.55 %
Tier 1 risk based capital ratio13.10 %12.53 %12.60 %12.25 %12.29 %
Leverage ratio8.74 %8.36 %7.83 %7.58 %7.54 %
Common equity Tier 1 capital ratio13.10 %12.53 %12.60 %12.25 %12.29 %
Tangible common equity8.11 %8.36 %7.57 %7.17 %7.01 %
Holding Company Capital Ratios:
Total risk based capital ratio17.16 %16.41 %15.75 %16.14 %16.07 %
Tier 1 risk based capital ratio15.19 %14.43 %14.49 %14.10 %13.98 %
Leverage ratio10.25 %9.73 %9.12 %8.78 %8.84 %
Common equity Tier 1 capital ratio15.04 %14.28 %14.34 %13.94 %13.81 %
Tangible common equity9.49 %9.63 %8.72 %8.23 %7.98 %
10

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited
Quarter Ended
(dollars in thousands except per share data)March 31, 2022December 31,
2021		September 30,
2021		June 30,
2021		March 31,
2021
Composition of Loans:
SBA-PPP loans, net$51,085 $108,285 $137,178 $202,763 $267,871 
Residential real estate$420,242 $401,607 $418,205 $420,015 $420,461 
Commercial real estate564,725 556,339 502,523 471,807 433,336 
Construction real estate245,722 255,147 251,256 223,832 221,277 
Commercial and industrial177,504 175,956 143,244 158,392 151,410 
Credit card, net of reserve123,750 141,120 134,979 121,410 83,740 
Other consumer loans909 1,033 1,425 1,034 2,991 
Portfolio loans receivable$1,532,852 $1,531,202 $1,451,632 $1,396,490 $1,313,215 
Deferred origination fees, net(6,596)(7,220)(6,506)(4,019)(840)
Portfolio loans receivable, net$1,526,256 $1,523,982 $1,445,126 $1,392,471 $1,312,375 
Composition of Deposits:
Noninterest bearing$825,174 $787,650 $833,187 $828,308 $771,924 
Interest-bearing demand279,591 330,924 369,812 314,883 300,992 
Savings9,894 6,994 6,682 6,965 6,012 
Money markets585,920 493,919 493,029 484,567 471,303 
Time deposits162,143 177,650 218,528 282,696 312,838 
Total Deposits$1,862,722 $1,797,137 $1,921,238 $1,917,419 $1,863,069 
Capital Bank Home Loan Metrics:
Origination of loans held for sale$110,446 $158,051 $217,175 $265,517 $353,774 
Mortgage loans sold109,953 178,068 229,111 278,384 400,112 
Gain on sale of loans3,042 4,423 6,108 7,763 12,008 
Purchase volume as a % of originations73.16 %56.44 %50.98 %50.64 %24.59 %
Gain on sale as a % of loans sold(3)
2.77 %2.48 %2.67 %2.79 %3.00 %
Mortgage commissions$1,125 $1,462 $1,884 $2,364 $3,320 
OpenSky® Portfolio Metrics:
Active customer accounts630,709 660,397 700,383 707,600 642,272 
Secured credit card loans, gross113,343 131,245 131,289 120,381 85,897 
Unsecured credit card loans, gross12,764 12,135 5,949 3,356 363 
Noninterest secured credit card deposits220,354 229,530 242,405 241,724 215,883 
_______________
(1)Refer to Appendix for reconciliation of non-GAAP measures.
(2)Annualized.
(3)Gain on sale percentage is calculated as gain on sale of loans divided by mortgage loans sold.
11

Appendix

Reconciliation of Non-GAAP Measures




Return on Average Assets, as AdjustedQuarters Ended
Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
Net Income$10,211 $10,171 $11,177 $9,648 $8,982 
Less: SBA-PPP loan income2,066 1,347 1,525 2,272 2,469 
Net Income, as Adjusted$8,145 $8,824 $9,652 $7,376 $6,513 
Average Total Assets2,057,201 2,066,283 2,084,772 2,041,232 1,949,266 
Less: Average SBA-PPP Loans83,264 116,595 162,217 250,040 232,371 
Average Total Assets, as Adjusted$1,973,937 $1,949,688 $1,922,555 $1,791,192 $1,716,895 
Return on Average Assets, as Adjusted1.67 %1.80 %1.99 %1.65 %1.54 %


Net Interest Margin, as AdjustedQuarters Ended
Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
Net Interest Income$33,331 $32,671 $32,059 $27,520 $24,444 
Less Credit card loan income14,487 15,010 15,086 10,497 7,660 
Less SBA-PPP loan income2,066 1,347 1,525 2,272 2,469 
Net Interest Income, as Adjusted$16,778 $16,314 $15,448 $14,751 $14,315 
Average Interest Earning Assets1,990,377 1,996,331 2,026,616 2,016,801 1,923,463 
Less Average credit card loans124,923 131,306 124,771 100,456 92,150 
Less Average SBA-PPP loans83,264 116,595 162,217 250,040 232,371 
Total Average Interest Earning Assets, as Adjusted$1,782,190 $1,748,430 $1,739,628 $1,666,305 $1,598,941 
Net Interest Margin, as Adjusted3.82 %3.70 %3.52 %3.55 %3.63 %


Tangible Book Value per ShareQuarters Ended
Dollars in thousands, except per share amountsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
Total Stockholders' Equity$201,492 $197,903 $189,080 $177,204 $167,003 
Less: Preferred equity— — — — — 
Less: Intangible assets— — — — — 
Tangible Common Equity$201,492 $197,903 $189,080 $177,204 $167,003 
Period End Shares Outstanding14,000,520 13,962,334 13,801,936 13,771,615 13,759,218 
Tangible Book Value per Share$14.39 $14.17 $13.70 $12.87 $12.14 
12

Appendix

Reconciliation of Non-GAAP Measures



Allowance for Loan Losses to Total Portfolio LoansQuarters Ended
Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
Allowance for Loan Losses$25,252 $25,181 $24,753 $24,079 $23,550 
Total Loans1,577,341 1,632,267 1,582,304 1,595,234 1,578,087 
Less: SBA-PPP loans51,085 108,285 137,178 202,763 265,712 
Total Portfolio Loans$1,526,256 $1,523,982 $1,445,126 $1,392,471 $1,312,375 
Allowance for Loan Losses to Total Portfolio Loans1.65 %1.65 %1.71 %1.73 %1.79 %
Nonperforming Assets to Total Assets, net SBA-PPP LoansQuarters Ended
Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
Total Nonperforming Assets$5,975 $11,512 $16,801 $11,615 $12,112 
Total Assets2,122,453 2,055,300 2,169,556 2,151,850 2,091,851 
Less: SBA-PPP loans51,085 108,285 137,178 202,763 265,712 
Total Assets, net SBA-PPP Loans$2,071,368 $1,947,015 $2,032,378 $1,949,087 $1,826,139 
Nonperforming Assets to Total Assets, net SBA-PPP Loans0.29 %0.59 %0.83 %0.60 %0.66 %
Nonperforming Loans to Portfolio LoansQuarters Ended
Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
Total Nonperforming Loans$5,975 $11,425 $13,565 $8,378 $8,818 
Total Loans1,577,341 1,632,267 1,582,304 1,595,234 1,578,087 
Less: SBA-PPP loans51,085 108,285 137,178 202,763 265,712 
Total Portfolio Loans$1,526,256 $1,523,982 $1,445,126 $1,392,471 $1,312,375 
Nonperforming Loans to Total Portfolio Loans0.39 %0.75 %0.94 %0.60 %0.67 %
Net Charge-offs to Average Portfolio LoansQuarters Ended
Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
Total Net Charge-offs$881 $672 $301 $251 $388 
Total Average Loans1,590,166 1,582,473 1,569,198 1,567,973 1,530,723 
Less: Average SBA-PPP loans83,264 116,595 162,217 250,040 232,371 
Total Average Portfolio Loans$1,506,902 $1,465,878 $1,406,981 $1,317,933 $1,298,352 
Net Charge-offs to Average Portfolio Loans0.24 %0.18 %0.08 %0.08 %0.12 %
Pre-tax, Pre-Provision Net Revenue ("PPNR")Quarters Ended
Dollars in thousandsMarch 31, 2022December 31, 2021September 30, 2021June 30, 2021March 31, 2021
Net income$10,211 $10,171 $11,177 $9,648 $8,982 
Add: Income Tax Expense3,354 3,522 3,877 3,357 3,143 
Add: Provision for Loan Losses952 1,100 975 781 503 
Pre-tax, Pre-Provision Net Revenue ("PPNR")$14,517 $14,793 $16,029 $13,786 $12,628 

13

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 fourth largest bank headquartered in Maryland at March 31, 2022. 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 $2.1 billion at March 31, 2022 and its common stock is traded in the NASDAQ Global Market under the symbol “CBNK.” More information can be found at the Company's website www.CapitalBankMD.com under its investor relations page.
FORWARD-LOOKING STATEMENTS
This earnings release contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” "optimistic," “intends” and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements.  Accordingly, we caution you that any such forward-looking statements are not a guarantee of future performance and that actual results may prove to be materially different from the results expressed or implied by the forward-looking statements due to a number of factors. For details on some of the factors that could affect these expectations, see risk factors and other cautionary language included in the Company's Annual Report on Form 10-K and other periodic and current reports filed with the Securities and Exchange Commission.

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing war in Ukraine; the magnitude and duration of the COVID-19 pandemic and related variants and mutations and their impact on the global economy and financial market conditions and our business, results of operations, and financial condition; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; the transition away from USD LIBOR and uncertainty regarding potential alternative reference rates, including SOFR; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; and other factors that may affect our future results.

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

FINANCIAL CONTACT: Alan Jackson (240) 283-0402
MEDIA CONTACT: Ed Barry (240) 283-1912
WEB SITE: www.CapitalBankMD.com

14