0001419536-23-000054 | 10-K | XBRL Viewer

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense were as follows:



	For the Years Ended December 31,
(in thousands)	2022		2021
Current:
Federal	$	9,906	$	12,990
State	1,284		2,835
Total current expense	11,190		15,825
Deferred tax expense (benefit)	1,240		(1,927)
Total income tax expense	$	12,430	$	13,898

Schedule of Deferred Tax Assets and Liabilities

The components of the net deferred tax asset at December 31, 2022 and 2021 were:



(in thousands)	2022		2021
Deferred tax assets:
Allowance for loan and credit losses	$	7,073	$	6,674
Reserve for recourse on mortgage loans sold	297		364
Deferred loan fees - PPP	8		1,076


Stock-based compensation	257		320
Long-term incentive program	428		507


Unrealized loss on investment securities available for sale	5,665		428
Net operating loss carryforward	—		67
Other	85		532
	13,813		9,968
Deferred tax liabilities:



Accumulated depreciation	34		107
Other	2		1

	36		108
Net deferred tax asset before valuation allowance	13,777		9,860
Less: Valuation allowance	—		67
Net deferred tax asset	$	13,777	$	9,793

Schedule of Effective Income Tax Rate Reconciliation

The differences between the federal income tax rate and the effective tax rate for the Company are reconciled as follows:



	2022		2021
Statutory federal income tax rate	21.00	%	21.00	%
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit	2.58		3.97
Nondeductible expenses	0.56		0.44
Tax exempt income	(0.41)		(0.20)
Other	(0.78)		0.59
Effective Tax Rate	22.95	%	25.80	%

Nature of Business and Basis of Presentation

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Nature of Business and Basis of Presentation

Nature of operations:

Capital Bancorp, Inc. is a Maryland corporation and bank holding company (the “Company”) for Capital Bank, N.A. (the “Bank”). The Company's primary operations are conducted by the Bank, which operates branches in Rockville and Columbia, Maryland; Reston, Virginia; and the District of Columbia. The Bank is principally engaged in the business of investing in commercial, real estate, and credit card loans and attracting deposits. The Company originates residential mortgages for sale in the secondary market through Capital Bank Home Loans, the Bank’s residential mortgage banking arm, and issues credit cards through OpenSky®, a secured, digitally-driven, nationwide credit card platform.

The Company formed Church Street Capital, LLC (“Church Street Capital”) in 2014 to provide short-term secured real estate financing to Washington, D.C. area investors and developers that may not meet all Bank credit criteria.

In addition, the Company owns all of the stock of Capital Bancorp (MD) Statutory Trust I (the “Trust”). The Trust is a special purpose non-consolidated entity organized for the sole purpose of issuing trust preferred securities.

Basis of presentation:

The accompanying consolidated financial statements include the activity of the Company and its wholly-owned subsidiaries, the Bank and Church Street Capital. All intercompany transactions have been eliminated in consolidation. The Company reports its activities as four business segments: commercial banking; mortgage lending; credit cards; and corporate activities. In determining the appropriateness of segment definition, the Company considers components of the business about which financial information is available and regularly evaluated relative to resource allocation and performance assessment. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and conform to general practices within the banking industry.

Significant accounting policies:

The preparation of consolidated financial statements in accordance with GAAP requires estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. The primary reference point for the estimates is on historical experience and assumptions believed to be reasonable regarding the value of certain assets and liabilities that are not readily available from other sources. Estimates are evaluated on an ongoing basis. Actual results may materially differ from these estimates under different assumptions or conditions.

Cash and cash equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from financial institutions, interest-bearing deposits with financial institutions and federal funds sold. Generally, federal funds are sold for one-day periods.

Note 1 - Nature of Business and Basis of Presentation (continued)

Investment securities

Investment securities are classified as available for sale and carried at fair value with unrealized gains and losses included in stockholders’ equity on an after-tax basis. Premiums and discounts on investment securities are amortized or accreted using the interest method. Changes in the fair value of debt securities available for sale are included in stockholder’s equity as unrealized gains and losses, net of the related tax effect. Unrealized losses are periodically reviewed to determine whether the loss represents an other than temporary impairment. Any unrealized losses judged to be other than a temporary impairment will be charged to income.

Marketable equity securities

Marketable equity securities are carried at fair value with realized gains and losses included in earnings. Premiums and discounts on investment securities are amortized or accreted using the interest method. Changes in the fair value of equity securities are also included in earnings as gain or loss on marketable equity securities.

Loans held for sale

Mortgage loans originated and intended for sale are recorded at fair value, determined individually, as of the balance sheet date. Fair value is determined based on outstanding investor commitments, or in the absence of such commitments, based on current investor yield requirements. Gains and losses on loan sales are determined by the specific-identification method. The Company’s current practice is to sell residential mortgage loans on a servicing released basis, and, therefore, it has no intangible asset recorded for the value of such servicing. Interest on loans held for sale is credited to income based on the principal amounts outstanding.

Upon sale and delivery, loans are legally isolated from the Company and the Company has no ability to restrict or constrain the ability of third‑party investors to pledge or exchange the mortgage loans. The Company does not have the entitlement or ability to repurchase the mortgage loans or unilaterally cause third‑party investors to put the mortgage loans back to the Company. Unrealized and realized gains on loan sales are determined using the specific-identification method and are recognized through mortgage banking activity in the Consolidated Statements of Income.

The Company elects to measure loans held for sale at fair value to better align reported results with the underlying economic changes in value of the loans on the Company’s balance sheet.

Portfolio loans and the allowance for loan losses

Loans are stated at the principal amount outstanding, adjusted for deferred origination fees and costs, discounts on loans acquired, and the allowance for loan losses. Interest is accrued based on the loan principal balances and stated interest rates. Origination fees and costs are recognized as an adjustment to the related loan yield using approximate interest methods. For credit card loans, loan origination fees and direct loan origination costs are amortized on a straight-line basis over a 12-month period.

Note 1 - Nature of Business and Basis of Presentation (continued)

The Company discontinues the accrual of interest at the earlier of when any portion of the principal and/or interest is 90 days past due, or when it is probable that not all principal and interest payments will be collected, and collateral is insufficient to discharge the debt in full. Generally, interest payments on nonaccrual loans are recorded as a reduction of the principal balance.

Loans are considered impaired when, based on current information, management believes the Company will not collect all principal and interest payments according to contractual terms. Generally, loans are reviewed for impairment when the risk grade for a loan is downgraded to a classified asset category. The loans are evaluated for appropriate classification, accrual, impairment, and troubled debt restructure status. If collection of principal is evaluated as doubtful, all payments are applied to principal. A modification of a loan is considered a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Company may consider interest rate reductions, changes to payment terms, extensions of maturities and/or principal reductions.

Loans are generally charged-off in part or in full when management determines the loan to be uncollectible. Factors for charge-off that may be considered include: repayments deemed to be extended out beyond reasonable time frames, client bankruptcy and lack of assets, and/or collateral deficiencies. For credit card loans, accrued interest and assessed late fees are charged off simultaneously with the charge off of other components of amortized costs as other operating expense.

The allowance for loan losses is estimated to adequately provide for probable future losses on existing loans. The allowance consists of specific and general components. For loans that are classified as impaired, an allowance is established when the collateral value, if the loan is collateral dependent, or the discounted cash flows of the impaired loan is lower than the carrying value of that loan. The general component covers pools of nonclassified loans and is based on historical loss experience adjusted with qualitative factors such as: trends in volume and terms of loans; levels of, and trends in, delinquencies and non-accruals; effects of any changes in lending policies, experience, ability and depth of management; national and local economic trends and conditions; commitments and concentrations of credit; changes in the quality of the Company’s loan review system; and the volume of loans with identified incomplete financial documentation. Actual loan performance may differ materially from those estimates. A loss is recognized as a charge to the allowance when management believes that collection of the loan is unlikely. Collections of loans previously charged off are added to the allowance at the time of recovery.

The components of the allowance for loan losses represent an estimation done pursuant to Accounting Standards Codification (“ASC”) Topic 450, “Contingencies,” or ASC Topic 310,“Receivables.” Specific allowances are established in cases where management has identified significant conditions or circumstances related to a specific credit that management believes indicate the probability that a loss may be incurred. The process for determining an appropriate allowance for loan losses is based on a comprehensive, well-documented, and consistently applied analysis of the loan portfolio. The analysis considers significant factors that affect the collectability of the portfolio and supports the loan losses estimated by this process. It is important to recognize that the related process, methodology, and underlying assumptions require a substantial degree of judgment.

Note 1 - Nature of Business and Basis of Presentation (continued)

Management believes that the allowance for loan losses is adequate; however, determination of the allowance is inherently subjective and requires significant estimates. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. Evaluation of the potential effects of these factors on estimated losses involves a high degree of uncertainty, including the strength and timing of economic cycles and concerns over the effects of a prolonged economic downturn in the current cycle. In addition, various banking agencies, as an integral part of their examination process, and independent consultants engaged by the Bank, periodically review the Bank’s loan portfolio and allowance for loan losses. Such review may result in recognition of additions to the allowance based on their evaluation of information available to them at the time of their examination. The review of the adequacy of the allowance for loan losses includes an assessment of the fair value adjustment for acquired loans in accordance with generally accepted accounting principles.

Premises and equipment

Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related property, generally over two to seven years. Leasehold improvements are amortized over the estimated term of the respective leases, which may include renewal options where management has the positive intent to exercise such options, or the estimated useful lives of the improvements, whichever is less. The costs of major renewals and improvements are capitalized with the corresponding costs associated with amortization or depreciation included as a component of occupancy and equipment expenses. Expenditures for maintenance, repairs, and minor replacements are charged to noninterest expenses as incurred.

Leases

The Company accounts for leases according to ASU 2016-02, Leases (Topic 842), and applies a right-of-use (“ROU”) model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset and a liability to make lease payments. The Company elected to apply the package of practical expedients permitting entities to not reassess: 1) whether any expired or existing contracts are or contain leases; 2) the lease classification for any expired or existing leases; and 3) initial direct costs for any existing leases. Additionally, as provided by ASU 2016-02, the Company elected not to apply the recognition requirements of ASC 842 to short-term leases, defined as leases with a term of 12 months or less, and to recognize the lease payments in net income on short-term leases on a straight-line basis over the lease term.

Derivative financial instruments

The Company enters into commitments to fund residential mortgage loans (interest rate locks) with the intention of selling them in the secondary market. The Company also enters into forward sales agreements for certain funded loans and loan commitments. The Company records unfunded commitments intended for loans held for sale and forward sales agreements at fair value with changes in fair value recorded as a component of mortgage banking revenue. Loans originated and intended for sale in the secondary market are carried at fair value. For pipeline loans which are not pre-sold to an investor, the Company endeavors to manage the interest rate risk on rate lock commitments by entering into forward sale contracts, whereby the Company obtains the right to deliver securities to investors in the future at a specified price. Such contracts are accounted for as derivatives and are recorded at fair value as derivative assets or liabilities, with changes in fair value recorded in mortgage banking revenue.

Note 1 - Nature of Business and Basis of Presentation (continued)

The Company accounts for derivative instruments and hedging activities according to guidelines established in ASC 815-10, Accounting for Derivative Instruments and Hedging Activities, as amended. The Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. Changes in fair value of derivatives designated and accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in other comprehensive income, net of deferred taxes. Any hedge ineffectiveness would be recognized in the income statement line item pertaining to the hedged item.

Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are traded actively and have quoted market prices or observable market inputs, there is minimal subjectivity involved in measuring fair value. However, when quoted market prices or observable market inputs are not fully available, significant management judgment may be necessary to estimate fair value. In developing our fair value estimates, we strive to maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy defines Level 1 valuations as those based on quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 valuations include inputs based on quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 valuations are based on at least one significant assumption not observable in the market, or significant management judgment or estimation, some of which may be internally developed.

Financial assets that are recorded at fair value on a recurring basis include investment securities available for sale, loans held for sale, and derivative financial instruments. Financial liabilities that are recorded at fair value on a recurring basis are comprised of derivative financial instruments. See Note 17 - Fair Value.

Bank-owned life insurance

The Company had $36.5 million of bank-owned life insurance at December 31, 2022 and $35.5 million at December 31, 2021. The Company recognized income, which is included in other noninterest income, of $1.0 million and $506 thousand for the years ended December 31, 2022 and December 31, 2021, respectively.

Income taxes

The Company employs the asset and liability method of accounting for income taxes as required by ASC Topic 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities (i.e., temporary timing differences) and are measured at the enacted rates that will be in effect when these differences reverse. The Company utilizes statutory requirements for its income tax accounting, and limits risks associated with potentially problematic tax positions that may incur challenge upon audit, where an adverse outcome is more likely than not. Therefore, no provisions are necessary for either uncertain tax positions nor accompanying potential tax penalties and interest for underpayments of income taxes in the Company’s tax reserves. In accordance with ASC Topic 740, the Company may establish a valuation allowance against deferred tax assets in those cases where realization is less than certain.

Note 1 - Nature of Business and Basis of Presentation (continued)

Earnings per share

Earnings per share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding, adjusted for the dilutive effect of stock options and restricted stock using the treasury stock method. At December 31, 2022 and 2021, there were 139,921 and 1,129 stock options, respectively, that were not included in the calculation as their effect would have been anti-dilutive.

The following is a reconciliation of the numerators and denominators used in computing basic and diluted earnings per common share:


	For the Years Ended December 31,
	2022					2021
(dollars in thousands)	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
Basic EPS
Net income available to common stockholders	$	41,804	14,024,598	$	2.98	$	39,978	13,798,620	$	2.90
Effect of dilutive securities	—		337,605			—		282,783
Dilutive EPS per common share	$	41,804	14,362,203	$	2.91	$	39,978	14,081,403	$	2.84

Comprehensive income

The Company reports as comprehensive income all changes in stockholders' equity during the year from sources other than stockholders. Other comprehensive income refers to all components (income, expenses, gains, and losses) of comprehensive income that are excluded from net income.

The Company's only component of other comprehensive income is unrealized losses on investment securities available for sale, net of income taxes. Information concerning the Company's accumulated other comprehensive loss as of December 31, 2022 and 2021 are as follows:


	For the Years Ended December 31,
(in thousands)	2022		2021
Unrealized losses on securities available for sale	$	(22,416)	$	(1,504)
Deferred tax benefit	5,665		428




Total accumulated comprehensive loss	$	(16,751)	$	(1,076)

Note 1 - Nature of Business and Basis of Presentation (continued)

Recently issued accounting pronouncements:

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. ASU 2016-13 introduces guidance to change the accounting for loan losses and modifies the impairment model for certain debt securities. This ASU introduced a new model known as CECL. CECL changes the impairment model for most financial assets, and will require the use of an “expected credit loss” model for financial instruments measured at amortized cost and certain other instruments, such as off-balance sheet credit exposures, loan commitments, standby letters of credit, net investments in leases recognized by a lessor and HTM debt securities. This model requires entities to estimate the lifetime expected credit loss on such instruments and record an allowance that represents the portion of the amortized cost basis that the entity does not expect to be collected, considering relevant information about historical experience, current conditions and reasonable supportable forecast. ASU 2016-13 offers a simplified accounting model for purchased financial assets with more than insignificant credit deterioration since their origination. Additionally, ASU 2016-13 also modifies certain provisions of the current other-than-temporary impairment model for AFS debt securities. Credit losses on AFS debt securities will be restricted to the difference between the security’s amortized cost basis and its fair value. In April 2019, the FASB issued ASU 2019-04 which elaborates on the treatment of accrued interest when measuring credit losses. To meet disclosure requirements, we elected a practical expedient to disclose separately the total amount of accrued interest included in the amortized cost basis as a single balance. ASU 2019-04 explains that expected recoveries of amounts previously written off and expected to be written off should be included in the valuation account and should not exceed the aggregate of amounts previously written off and expected to be written off by the entity. In addition, for collateral dependent financial assets, the amendments clarify that an allowance for credit losses that is added to the amortized cost basis of the financial asset(s) should not exceed amounts previously written off. In November 2019, the FASB issued ASU 2019-10, which delayed the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for smaller reporting companies. While early adoption was permitted, the Company did not elect that option.

The Company adopted this guidance on January 1, 2023 using the modified retrospective approach. Upon adoption of this standard, the Company expects the adoption to result in a change to the Allowance for Loan Losses of less than $1.0 million which will be reflected in the Company’s first quarter 2023 Form 10-Q when the Company will also be subject to the amended disclosure requirements of the standard.

The Company expects the adoption of the CECL framework to also impact its off-balance sheet exposures, such as its unfunded commitments. Upon adoption of ASU 2016-13, the company expects to make an adjustment to its reserve for unfunded commitments in an amount less than $1.0 million.

In addition to its allowance for loan losses and its reserve for unfunded commitments, the Company is required to record an allowance for losses on held-to-maturity debt securities with the CECL adoption. The Company did not hold any held to maturity securities that would be impacted by ASU 2016-13 as of the adoption date.

In March 2020, the FASB released ASU 2020-04 - Reference Rate Reform, Topic 848, which provides temporary guidance to ease the potential accounting burden in accounting for, or recognizing the effects from, reference rate reform on financial reporting. The new standard is a result of London Interbank Offered Rate (“LIBOR”) likely being discontinued as an available benchmark rate. The standard is elective and provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, or other transactions that reference LIBOR, or another reference rate expected to be discontinued. The amendments in the update are effective for all entities between March 12, 2020 and an extended sunset date of December 31, 2024 which was extended by ASU 2022-06 issued by FASB in December 2022. The Company is currently evaluating products and preparing to offer new rates. The

adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

In February 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The ASU eliminates the accounting guidance for troubled debt restructurings by creditors and enhances disclosure requirements for certain loan re-financings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendments also add requirements to disclose current-period gross write-offs by year of origination for financing receivables. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is in the process of reviewing the enhanced modification disclosure requirements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company's financial position, results of operations or cash flows.

Reclassifications:

Certain reclassifications have been made to amounts reported in prior periods to conform to the current period presentation. The reclassifications had no material effect on net income or total stockholders' equity.

Portfolio Loans Receivable - Activity in Allowance for Loan Losses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	$ 25,181	$ 23,434
Provision for (reversal of) off balance sheet credit commitments	6,631	3,359
Add: Recoveries	51	42
Less: Charge-offs	(5,478)	(1,654)
Ending Balance	26,385	25,181
Unfunded Lines of Credit
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	1,736	1,776
Provision for (reversal of) off balance sheet credit commitments	(54)	(40)
Add: Recoveries	0	0
Less: Charge-offs	0	0
Ending Balance	1,682	1,736
Mortgage Loans Sold
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	1,164	1,160
Provision for (reversal of) off balance sheet credit commitments	9	4
Add: Recoveries	0	0
Less: Charge-offs	0	0
Ending Balance	$ 1,173	$ 1,164

Borrowed Funds - Schedule of Borrowings (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Nov. 30, 2020
Debt Instrument [Line Items]
Total - FHLB advances	$ 107,000	$ 22,000
Interest	3.75%	0.93%
Total - Other borrowed funds	$ 12,062	$ 12,062
FHLB fixed rate advance due October 16, 2025
Debt Instrument [Line Items]
Total - FHLB advances	$ 22,000	$ 22,000
Interest	0.93%	0.93%
FHLB fixed rate advance due March 20, 2023
Debt Instrument [Line Items]
Total - FHLB advances	$ 50,000	$ 0
Interest	4.42%	0.00%
FHLB daily rate advance due September 13, 2023
Debt Instrument [Line Items]
Total - FHLB advances	$ 35,000	$ 0
Interest	4.57%	0.00%
Junior subordinated debentures due June 15, 2036 \| Junior Subordinated Debt
Debt Instrument [Line Items]
Interest	6.64%	2.07%
Long-term debt, gross	$ 2,062	$ 2,062
Other subordinated notes due November 30, 2030 \| Senior Subordinated Notes
Debt Instrument [Line Items]
Interest	5.00%	5.00%	5.00%
Long-term debt, gross	$ 10,000	$ 10,000
Other Borrowed Funds
Debt Instrument [Line Items]
Interest	5.28%	4.50%

Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Current:
Federal	$ 9,906	$ 12,990
State	1,284	2,835
Total current expense	11,190	15,825
Deferred tax expense (benefit)	1,240	(1,927)
Total income tax expense	$ 12,430	$ 13,898

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Cover Page - USD ($) $ in Millions	12 Months Ended
Cover Page - USD ($) $ in Millions	Dec. 31, 2022	Mar. 14, 2023	Jun. 30, 2022
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-38671
Entity Registrant Name	CAPITAL BANCORP, INC
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	52-2083046
Entity Address, Address Line One	2275 Research Boulevard
Entity Address, Address Line Two	Suite 600
Entity Address, City or Town	Rockville
Entity Address, State or Province	MD
Entity Address, Postal Zip Code	20850
City Area Code	301
Local Phone Number	468-8848
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	CBNK
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 186.7
Entity Common Stock, Shares Outstanding		14,152,418
Documents Incorporated by Reference	DOCUMENTS INCORPORATED BY REFERENCE The information required by Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K will be found in the Company’s definitive proxy statement for its 2022 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, and such information is incorporated herein by this reference.
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Entity Central Index Key	0001419536

SBA-PPP Loans

12 Months Ended

Dec. 31, 2022

Loans and Leases Receivable Disclosure [Line Items]

SBA-PPP Loans

Portfolio Loans Receivable

Major classifications of portfolio loans are as follows:


	December 31,
	2022				2021
(in thousands)	Amount		Percent		Amount		Percent
Real estate:
Residential	$	484,735	28	%	$	401,607	26	%
Commercial	664,551		38		556,339		36
Construction	238,099		14		255,147		17
Commercial and Industrial	220,221		13		175,956		11
Credit card, net of reserve	128,434		7		141,120		9
Other consumer	1,179		—		1,033		—
Portfolio loans receivable, gross	1,737,219		100	%	1,531,202		100	%
Deferred origination fees, net	(8,627)				(7,220)
Allowance for loan losses	(26,385)				(25,181)
Portfolio loans receivable, net	$	1,702,207			$	1,498,801

The Company makes loans to customers located primarily in the Washington, D.C. and Baltimore, Maryland metropolitan areas. Although the loan portfolio is diversified, its performance is influenced by the regional economy. The Company’s loan categories, excluding SBA-PPP loans, previously discussed in Note 4, are described below.

Residential Real Estate Loans. One-to-four family mortgage loans are primarily secured by owner-occupied primary residences and, to a lesser extent, investor-owned residences. Residential loans are originated through the commercial sales teams and Capital Bank Home Loans division. Residential loans also include home equity lines of credit. Owner-occupied residential real estate loans usually have fixed rates for five or seven years and adjust on an annual basis after the initial term based on a typical maturity of 30 years. Investor residential real estate loans are generally based on 25-year terms with a balloon payment due after five years. Generally, the required minimum debt service coverage ratio is 1.15.

Commercial Real Estate Loans. Commercial real estate loans are originated on owner-occupied and non-owner-occupied properties. These loans may be more adversely affected by conditions in the real estate markets or in the general economy. Commercial loans that are secured by owner-occupied commercial real estate and primarily collateralized by operating cash flows are also included in this category of loans. As of December 31, 2022, there were approximately $378.7 million of owner-occupied commercial real estate loans, representing approximately 21.8% of the commercial real estate portfolio. Commercial real estate loan terms are generally extended for 10 years or less and amortize generally over 25 years or less. The interest rates on commercial real estate loans generally have initial fixed rate terms that adjust typically at five years. Origination fees are routinely charged for services. Personal guarantees from the principal owners of the business are generally required, supported by a review of the principal owners’ personal financial statements and global debt service obligations. The properties securing the portfolio are diverse in type. This diversity may help reduce the exposure to adverse economic events that affect any single industry.

Note 5 - Portfolio Loans Receivable (continued)

Construction Loans. Construction loans are offered within the Company’s Washington, D.C. and Baltimore, Maryland metropolitan operating areas to builders primarily for the construction of single-family homes and condominium and townhouse conversions or renovations and, to a lesser extent, to individuals. Construction loans typically have terms of 12 to 18 months. The Company frequently transitions the end purchaser to permanent financing or re-underwriting and sale into the secondary market through Capital Bank Home Loans. According to underwriting standards, the ratio of loan principal to collateral value, as established by an independent appraisal, cannot exceed 75% for investor-owned and 80% for owner-occupied properties, although exceptions are sometimes made. Semi-annual stress testing of the construction loan portfolio is conducted, and underlying real estate conditions are monitored as well as trends in sales outcomes versus underwriting valuations as part of ongoing risk management efforts. The borrowers’ progress in construction buildout is monitored to enforce the original underwriting guidelines for construction milestones and completion timelines.

Commercial and Industrial. In addition to other loan products, general commercial loans, including commercial lines of credit, working capital loans, term loans, equipment financing, letters of credit and other loan products are offered, primarily in target markets, and underwritten based on each borrower’s ability to service debt from income. These loans are primarily made based on the identified cash flows of the borrower and secondarily, on the underlying collateral provided by the borrower. Most commercial business loans are secured by a lien on general business assets including, among other things, available real estate, accounts receivable, promissory notes, inventory and equipment. Personal guaranties from the borrower or other principal are generally obtained.

Credit Cards. Through the OpenSky® credit card division, the Company offers secured, partially secured, and unsecured credit cards on a nationwide basis to under-banked populations and those looking to rebuild their credit scores through a fully digital and mobile platform. The secured lines of credit are secured by a noninterest-bearing demand account at the Bank in an amount equal to the full credit limit of the credit card. For the partially secured lines of credit, the Bank offers certain customers an unsecured line in excess of their secured line of credit by using a proprietary scoring model, which considers credit score and repayment history (typically a minimum of six months of on-time repayments, but ultimately determined on a case-by-case basis). Partially secured and unsecured credit cards are only extended to existing secured card customers who have demonstrated sound credit behaviors. Approximately $109.4 million and $126.8 million of the $123.1 million and $140.2 million in secured and partially secured credit card balances were protected by savings deposits held by the Company as of December 31, 2022 and December 31, 2021, respectively. Unsecured balances were $26.8 million and $17.7 million, respectively, as of December 31, 2022 and December 31, 2021, respectively.

Other Consumer Loans. To a limited extent and typically as an accommodation to existing customers, personal consumer loans, such as term loans, car loans or boat loans are offered.

Loans acquired through acquisitions are recorded at estimated fair value on their purchase date with no carryover of the related allowance for loan losses. In estimating the fair value of loans acquired, certain factors were considered, including the remaining lives of the acquired loans, payment history, estimated prepayments, estimated loss ratios, estimated value of the underlying collateral and the net present value of cash flows expected. Discounts on loans that were not considered impaired at acquisition were recorded as an accretable discount, which will be recognized in interest income over the terms of the related loans. For loans considered to be impaired at acquisition, the difference between the contractually required payments and expected cash flows are recorded as a non-accretable discount. The remaining non-accretable discounts on loans acquired was $285 thousand as of December 31, 2022 and December 31, 2021. Loans with non-accretable discounts had carrying values of $781 thousand and $818 thousand as of December 31, 2022 and December 31, 2021, respectively.

Note 5 - Portfolio Loans Receivable (continued)

The allowance for loan losses consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for current economic factors. The following tables present, by class and reserving methodology, the allocation of the allowance for loan losses and the gross investment in loans as of December 31, 2022 and 2021.



(in thousands)			Provision for Loan Losses								Allowance for Loan Losses Ending Balance Evaluated for Impairment:				Outstanding Loan Balances Evaluated for Impairment:
December 31, 2022	Beginning Balance				Charge-Offs		Recoveries		Ending Balance		Individually		Collectively		Individually		Collectively
Real estate:
Residential	$	5,612	$	(131)	$	—	$	—	$	5,481	$	—	$	5,481	$	4,288	$	480,447
Commercial	8,566		(468)		—		—		8,098		—		8,098		1,563		662,988
Construction	4,699		(900)		(17)		—		3,782		—		3,782		2,837		235,262
Commercial and Industrial	2,637		298		—		—		2,935		372		2,563		705		219,516
Credit card (1)	3,655		7,833		(5,461)		51		6,078		—		6,078		—		128,434
Other consumer	12		(1)		—		—		11		—		11		—		1,179
Total	$	25,181	$	6,631	$	(5,478)	$	51	$	26,385	$	372	$	26,013	$	9,393	$	1,727,826

December 31, 2021
Real estate:
Residential	$	7,153	$	(1,541)	$	—	$	—	$	5,612	$	—	$	5,612	$	2,835	$	398,772
Commercial	6,786		1,941		(161)		—		8,566		—		8,566		25		556,314
Construction	4,595		103		—		1		4,699		—		4,699		7,803		247,344
Commercial and Industrial	2,417		253		(39)		6		2,637		218		2,419		676		175,280
Credit card (1)	2,462		2,612		(1,454)		35		3,655		—		3,655		—		141,120
Other consumer	21		(9)		—		—		12		—		12		—		1,033
Total	$	23,434	$	3,359	$	(1,654)	$	42	$	25,181	$	218	$	24,963	$	11,339	$	1,519,863

_______________

(1) Credit cards loans are collectively evaluated by past due status and as such are not individually risk rated.

Note 5 - Portfolio Loans Receivable (continued)

Past due portfolio loans, segregated by delinquency and class of loans, as of December 31, 2022 and 2021 were as follows:



	Loans 30-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More days Past Due		Nonaccrual Loans
(in thousands)
December 31, 2022
Real estate:
Residential	$	146	$	4,284	$	4,430	$	480,305	$	484,735	$	—	$	4,288
Commercial	—		1,563		1,563		662,988		664,551		—		1,563
Construction	1,804		2,837		4,641		233,458		238,099		—		2,837
Commercial and Industrial	503		569		1,072		219,149		220,221		—		705
Credit card	15,928		363		16,291		112,143		128,434		363		—
Other consumer	—		—		—		1,179		1,179		—		—
Total	$	18,381	$	9,616	$	27,997	$	1,709,222	$	1,737,219	$	363	$	9,393



December 31, 2021
Real estate:
Residential	$	469	$	2,494	$	2,963	$	398,644	$	401,607	$	72	$	2,835
Commercial	367		25		392		555,947		556,339		—		25
Construction	—		7,803		7,803		247,344		255,147		—		7,803
Commercial and Industrial	183		593		776		175,180		175,956		—		676
Credit card	19,022		10		19,032		122,088		141,120		10		—
Other consumer	—		—		—		1,033		1,033		—		—
Total	$	20,041	$	10,925	$	30,966	$	1,500,236	$	1,531,202	$	82	$	11,339

Impaired loans also include acquired loans for which management has recorded a non-accretable discount. Impaired loans as of December 31, 2022 and 2021 were as follows:



	Unpaid Contractual Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Recognized
(in thousands)
December 31, 2022
Real estate:
Residential	$	4,476	$	4,288	$	—	$	4,288	$	—	$	4,629	$	149
Commercial	1,647		1,563		—		1,563		—		1,656		52
Construction	2,939		2,837		—		2,837		—		2,938		75
Commercial and Industrial	899		247		458		705		372		1,199		77


Total	$	9,961	$	8,935	$	458	$	9,393	$	372	$	10,422	$	353



December 31, 2021
Real estate:
Residential	$	3,022	$	2,835	$	—	$	2,835	$	—	$	4,578	$	345
Commercial	90		25		—		25		—		90		82
Construction	7,885		7,803		—		7,803		—		9,746		209
Commercial and Industrial	832		340		336		676		218		1,056		282


Total	$	11,829	$	11,003	$	336	$	11,339	$	218	$	15,470	$	918

Note 5 - Portfolio Loans Receivable (continued)

There were $1.3 million and $6 thousand, respectively, of loans secured by one to four family residential properties in the process of foreclosure as of December 31, 2022 and 2021.

Credit quality indicators

As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to the risk grade of loans, the level of classified loans, net charge-offs, nonperforming loans, and general economic conditions in the Company’s market.

The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. A description of the general characteristics of loans characterized as classified is as follows:

Special Mention

A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Borrowers may exhibit poor liquidity and leverage positions resulting from generally negative cash flow or negative trends in earnings. Access to alternative financing may be limited to finance companies for business borrowers and may be unavailable for commercial real estate borrowers.

Substandard

A substandard loan is inadequately protected by the current financial condition and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Borrowers may exhibit recent or unexpected unprofitable operations, an inadequate debt service coverage ratio, or marginal liquidity and capitalization. These loans require more intense supervision by Company management.

Doubtful

A doubtful loan has all the weaknesses associated with a substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Note 5 - Portfolio Loans Receivable (continued)

The following table presents the balances of classified loans based on the risk grade. Classified loans include Special Mention, Substandard, and Doubtful loans:



(in thousands)	Pass(1)		Special Mention		Substandard		Doubtful		Ungraded(2)		Total
December 31, 2022
Real estate:
Residential	$	469,304	$	9,966	$	5,465	$	—	$	—	$	484,735
Commercial	657,411		5,577		1,563		—		—		664,551
Construction	235,262		—		2,837		—		—		238,099
Commercial and Industrial	196,381		22,469		1,371		—		—		220,221
Credit card	—		—		—		—		128,434		128,434
Other consumer	1,179		—		—		—		—		1,179
Portfolio loans receivable, gross	$	1,559,537	$	38,012	$	11,236	$	—	$	128,434	$	1,737,219

December 31, 2021
Real estate:
Residential	$	394,488	$	2,540	$	4,579	$	—	$	—	$	401,607
Commercial	548,244		8,070		25		—		—		556,339
Construction	243,848		3,496		7,803		—		—		255,147
Commercial and Industrial	164,066		10,417		1,473		—		—		175,956
Credit card	—		—		—		—		141,120		141,120
Other consumer	1,033		—		—		—		—		1,033
Portfolio loans receivable, gross	$	1,351,679	$	24,523	$	13,880	$	—	$	141,120	$	1,531,202

________________________

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

(2)Credit card loans are not individually graded.

Note 5 - Portfolio Loans Receivable (continued)

Impaired loans also include certain loans that have been modified in troubled debt restructurings (“TDRs”) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after confirmation of the borrower’s sustained repayment performance for a reasonable period, generally six months. The status of TDRs is as follows:


	Number of Contracts	Recorded Investment
(dollars in thousands)		Performing		Nonperforming		Total
December 31, 2022
Real estate:
Residential	1	$	—	$	288	$	288





Total	1	$	—	$	288	$	288



December 31, 2021
Real estate:
Residential	4	$	—	$	450	$	450
Commercial and Industrial	1	—		83		83

Total	5	$	—	$	533	$	533

At December 31, 2022 the Company had one defaulted TDR for $288 thousand. In the 12 months ending December 31, 2022, four TDRs, totaling $215 thousand paid off. There were no new TDRs added in 2022. During the year ended December 31, 2021, the Company restructured one residential portfolio loan for $319 thousand in which the borrower was granted a rate reduction and payment recast. There were no material financial effects as a direct result of this modification. There was one commercial TDR that was paid off during the twelve months ended December 31, 2021 for $200 thousand.

Note 5 - Portfolio Loans Receivable (continued)

Outstanding loan commitments were as follows:



	December 31,
(in thousands)	2022		2021
Unused lines of credit
Real Estate:
Residential	$	14,336	$	15,747
Residential - Home Equity	43,128		37,640
Commercial	36,609		17,225
Construction	93,913		118,518
Commercial and Industrial	45,747		45,135
Credit card(1)	111,227		123,874
Other consumer	102		2,247



	$	345,062	$	360,386

Commitments to originate residential loans held for sale	$	—	$	1,385

Letters of credit	$	5,105	$	5,105

_______________

(1) Outstanding loan commitments in the credit card portfolio include $106.9 million and $121.7 million in secured balances as of December 31, 2022 and 2021, respectively.

Lines of credit are agreements to lend to a customer as long as there is no violation of any condition of the contract. Lines of credit generally have variable interest rates. Such lines do not represent future cash requirements because it is unlikely that all customers will, at any given time, draw upon their lines in full. Loan commitments generally have variable interest rates, fixed expiration dates, and may require payment of a fee. Letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. In the event of nonperformance by the customer in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment.

The Company's maximum exposure to credit loss in the event of nonperformance by the customer is the contractual amount of the credit commitment. Loan commitments and lines of credit are generally made on the same terms, including with regard to collateral, as outstanding loans. Management is not aware of any accounting loss to be incurred by funding these loan commitments.

Note 5 - Portfolio Loans Receivable (continued)

The Company maintains an estimated reserve for off balance sheet items such as unfunded lines of credit, which is reflected in other liabilities, with increases or decreases in the reserve being charged to or released from operating expense. Activity for this account is as follows for the periods presented:




(in thousands)	2022		2021
Balance at beginning of period	$	1,736	$	1,776
Provision for (reversal of) off balance sheet credit commitments	(54)		(40)
Add: Recoveries	—		—
Less: Charge-offs	—		—
Balance at end of period	$	1,682	$	1,736

The Company makes representations and warranties that loans sold to investors meet the investors’ program guidelines and that the information provided by the borrowers is accurate and complete. In the event of a default on a loan sold, the investor may have the right to make a claim for losses due to document deficiencies, program non-compliance, early payment default, and fraud or borrower misrepresentations.

The Company maintains a reserve for potential losses on mortgage loans sold, which is reflected in other liabilities, with changes being charged to or released from operating expense. Activity in this reserve is as follows for the periods presented:



(in thousands)	2022		2021
Balance at beginning of period	$	1,164	$	1,160
Provision for mortgage loan put backs	9		4
Add: Recoveries	—		—
Less: Charge-offs	—		—
Balance at end of period	$	1,173	$	1,164

Paycheck Protection Program

Loans and Leases Receivable Disclosure [Line Items]

SBA-PPP Loans

During the global COVID-19 pandemic, pursuant to the CARES Act and the Consolidated Appropriations Act, 2021, the SBA-PPP provided forgivable loans to small businesses to enable them to maintain payroll, hire back employees who have been laid off, and cover applicable overhead. SBA-PPP loans have an interest rate of 1%, have 2- and 5-year terms, and carry a 100% guarantee of the SBA. The program ended on May 31, 2031.

The allowance for loan losses for SBA-PPP loans was separately evaluated given the explicit government guarantee. This analysis, which incorporated historical experience with similar SBA guarantees and underwriting, concluded that the likelihood of loss was remote and therefore no allowance for loan losses was assigned to these loans.

SBA-PPP loans receivable, which totaled $2.2 million, and $111.5 million at December 31, 2022 and 2021, respectively all of which rated as pass credits, not past due, nonaccrual, TDR, or otherwise impaired. Earned fees for the years ended December 31, 2022 and 2021 are $3.2 million and $5.7 million, respectively. Unearned net fees associated with the SBA-PPP loans amounted to $31 thousand and $3.2 million at December 31, 2022 and 2021, respectively. There were no outstanding commitments to extend additional SBA-PPP loans at December 31, 2022.

Nature of Business and Basis of Presentation - Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Basic EPS
Income	$ 41,804	$ 39,978
Weighted Average Shares, Basic (in shares)	14,024,598	13,798,620
Basic earnings per share (in dollars per share)	$ 2.98	$ 2.90
Effect of dilutive securities (in shares)	337,605	282,783
Weighted Average Shares, Diluted (in shares)	14,362,203	14,081,403
Diluted earnings per share (in dollars per share)	$ 2.91	$ 2.84
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	139,921	1,129

Premises and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Premises and Equipment

Premises and equipment and the related depreciation and amortization consist of the following:



(in thousands)	2022		2021
Leasehold improvements	$	1,683	$	1,718
Furniture and equipment	4,775		4,657
Vehicle	54		54
Software	2,517		2,518
Construction in progress	694		—
	9,723		8,947
Less: Accumulated depreciation and amortization	(8,434)		(8,131)
Premises and equipment	1,289		816
Net lease asset	2,097		2,466
Premises and equipment, net	$	3,386	$	3,282

Depreciation and amortization expense	$	364	$	561

Parent Company Financial Information - Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Assets
Total portfolio loans held for investment, net	$ 1,702,207	$ 1,498,801
Allowance for loan losses	26,385	25,181	$ 23,434
Accrued interest receivable	9,489	7,901
Deferred income taxes	13,777	9,793
Other assets	8,435	4,064
Total assets	2,123,655	2,055,300
Liabilities
Borrowed funds	12,062	12,062
Accrued interest payable	1,031	473
Other liabilities	21,475	25,725
Total liabilities	1,899,640	1,857,397
Stockholders' equity
Common stock	141	140
Additional paid-in capital	58,190	54,306
Retained earnings	182,435	144,533
Accumulated other comprehensive loss	(16,751)	(1,076)
Total stockholders' equity	224,015	197,903	$ 159,311
Total liabilities and stockholders' equity	2,123,655	2,055,300
Parent Company
Assets
Cash and cash equivalents	272	630
Total portfolio loans held for investment, net	47,517	36,198
Allowance for loan losses	328	328
Accrued interest receivable	288	217
Deferred income taxes	100	100
Other assets	45	14
Total assets	236,781	210,136
Liabilities
Borrowed funds	12,062	12,062
Accrued interest payable	48	44
Other liabilities	656	127
Total liabilities	12,766	12,233
Stockholders' equity
Common stock	141	140
Additional paid-in capital	58,190	54,306
Retained earnings	182,435	144,533
Accumulated other comprehensive loss	(16,751)	(1,076)
Total stockholders' equity	224,015	197,903
Total liabilities and stockholders' equity	236,781	210,136
Parent Company \| Investment in Bank
Assets
Investment	183,095	168,308
Parent Company \| Investment in Church Street Capital
Assets
Investment	5,402	4,607
Parent Company \| Investment in Trust
Assets
Investment	$ 62	$ 62

Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following table reports the commitment and fair value amounts on the outstanding derivatives:



(in thousands)	December 31, 2022		December 31, 2021
Notional amount of open forward sales agreements	$	1,750	$	22,500
Fair value of open forward delivery sales agreements	9		(16)


Notional amount of interest rate lock commitments	626		18,053
Fair value of interest rate lock commitments	1		34

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4B
-URI https://asc.fasb.org/extlink&oid=125515794&loc=SL5624163-113959

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1B
-URI https://asc.fasb.org/extlink&oid=125515794&loc=SL5580258-113959

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 2
-URI https://asc.fasb.org/extlink&oid=125515794&loc=d3e41620-113959

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1A
-URI https://asc.fasb.org/extlink&oid=125515794&loc=SL5579245-113959

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4
-URI https://asc.fasb.org/extlink&oid=125515794&loc=d3e41638-113959

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 8
-URI https://asc.fasb.org/extlink&oid=125515794&loc=d3e41678-113959

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 5
-URI https://asc.fasb.org/extlink&oid=125515794&loc=d3e41641-113959

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-URI https://asc.fasb.org/extlink&oid=125515794&loc=SL5624171-113959

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=125515794&loc=SL5579240-113959

+ Details

Stock-Based Compensation - Restricted Stock Vesting Schedule (Details) - Restricted Stock - shares	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
2023 (in shares)	22,206
2024 (in shares)	13,632
2025 (in shares)	3,831
Nonvested restricted stock (in shares)	39,669	49,047	30,713

Income Taxes - Reconciliation of Federal Tax Rate to the Effective Rate (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Statutory federal income tax rate	21.00%	21.00%
State income taxes, net of federal income tax benefit	2.58%	3.97%
Nondeductible expenses	0.56%	0.44%
Tax exempt income	(0.41%)	(0.20%)
Other	(0.78%)	0.59%
Effective Tax Rate	22.95%	25.80%
Valuation allowance	$ 0	$ 67

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Statement of Stockholders' Equity [Abstract]
Cash dividends to stockholders (in dollar per share)	$ 0.22	$ 0.10

Retirement Plans	12 Months Ended
Retirement Plans	Dec. 31, 2022
Retirement Benefits [Abstract]
Retirement Plans	Retirement PlansThe Company provides a defined contribution plan qualifying under Section 401(k) of the Internal Revenue Code to eligible employees. The Company contributes 3% of eligible compensation on behalf of all full‑time employees up to limits prescribed by the Internal Revenue Code. The Company’s contribution to the plan was $850 thousand in 2022 and $398 thousand in 2021.The Bank adopted a Long-Term Incentive Plan (“LTIP”) for executive management members in 2021. The LTIP is in the form of a nonqualified deferred compensation plan and complies with IRC Section 409A as well as related guidance and regulations. The LTIP was introduced in order to align long-term interests of the Bank with the Bank’s key executive management members. Under the LTIP, the CEO is eligible to earn an annual contribution of 20 percent of salary for achieving targeted performance levels while other executive management members are eligible to earn an annual contribution of 15 percent of salary for achieving targeted performance levels. The Compensation Committee may award more for overachievement of the targets, and all targets are set for participants at the beginning of a fiscal year. All participants are subject to the following vesting schedule for any earnings (or losses) on the investment of the contribution: 100 percent vesting following completion of either (i) ten years of service by the applicable executive from the later of the effective date of the LTIP or the executive’s hire date or (ii) ten years of continuous, full-time employment with the Bank by the applicable executive (to include continuous employment prior to the effective date of the LTIP) and retirement, which is defined in the LTIP as the later of a participant’s separation from service or the executive attaining 67 years of age. In the event of a change in control, the LTIP will accelerate vesting. Any executive not fulfilling either vesting requirement will forfeit any employer contributions.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-SubTopic 20
-Section 55
-Paragraph 17
-URI https://asc.fasb.org/extlink&oid=123450688&loc=d3e4179-114921

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=21916913&loc=d3e273930-122802

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920

+ Details

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Assets
Cash and due from banks	$ 19,963	$ 42,914
Interest-bearing deposits at other financial institutions	39,764	136,824
Federal funds sold	20,688	3,657
Total cash and cash equivalents	80,415	183,395
Investment securities available for sale	252,481	184,455
Marketable equity securities	0	245
Restricted investments	7,362	3,498
Loans held for sale	7,416	15,989
U.S. Small Business Administration ("SBA") Payroll Protection Program ("PPP") loans receivable, net of deferred fees and costs	2,163	108,285
Portfolio loans receivable, net of deferred fees and costs	1,728,592	1,523,982
Less allowance for loan losses	(26,385)	(25,181)
Total portfolio loans held for investment, net	1,702,207	1,498,801
Premises and equipment, net	3,386	3,282
Accrued interest receivable	9,489	7,901
Deferred tax asset	13,777	9,793
Foreclosed real estate	0	86
Bank owned life insurance	36,524	35,506
Other assets	8,435	4,064
Total assets	2,123,655	2,055,300
Deposits
Noninterest-bearing	674,313	787,650
Interest-bearing	1,083,759	1,009,487
Total deposits	1,758,072	1,797,137
Federal Home Loan Bank advances	107,000	22,000
Other borrowed funds	12,062	12,062
Accrued interest payable	1,031	473
Other liabilities	21,475	25,725
Total liabilities	1,899,640	1,857,397
Stockholders' equity
Common stock, $.01 par value; 49,000,000 shares authorized; 14,138,829 and 13,962,334 issued and outstanding	141	140
Additional paid-in capital	58,190	54,306
Retained earnings	182,435	144,533
Accumulated other comprehensive loss	(16,751)	(1,076)
Total stockholders' equity	224,015	197,903
Total liabilities and stockholders' equity	$ 2,123,655	$ 2,055,300

Fair Value - Financial Instruments Carrying Amount, FV and Placement (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Financial assets
Cash and due from banks	$ 19,963	$ 42,914
Interest-bearing deposits at other financial institutions	39,764	136,824
Federal funds sold	20,688	3,657
Carrying Amount \| Level 1 Inputs
Financial assets
Cash and due from banks	19,963	42,914
Interest-bearing deposits at other financial institutions	39,764	136,824
Marketable equity securities	0	245
Federal funds sold	20,688	3,657
Financial liabilities
Noninterest-bearing deposits	674,313	787,650
Carrying Amount \| Level 3 Inputs
Financial assets
Loans receivable, net	1,704,370	1,607,086
Restricted investments	7,362	3,498
Financial liabilities
Interest-bearing deposits	1,083,759	1,009,487
FHLB advances and other borrowed funds	119,062	34,062
Fair Value \| Level 1 Inputs
Financial assets
Cash and due from banks	19,963	42,914
Interest-bearing deposits at other financial institutions	39,764	136,824
Marketable equity securities	0	245
Federal funds sold	20,688	3,657
Financial liabilities
Noninterest-bearing deposits	674,313	787,650
Fair Value \| Level 3 Inputs
Financial assets
Loans receivable, net	1,659,283	1,598,228
Restricted investments	7,362	3,498
Financial liabilities
Interest-bearing deposits	1,090,553	1,011,121
FHLB advances and other borrowed funds	$ 116,544	$ 34,263

Investment Securities - Amortized cost to Estimated Fair Value (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) security	Dec. 31, 2021 USD ($)
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 274,897	$ 185,959
Unrealized Gains	0	661
Unrealized Losses	(22,416)	(2,165)
Fair Value	$ 252,481	184,455
Number of securities sold \| security	0
Proceeds from sale of securities available for sale	$ 0	66,534
Gain on sale of investment securities available for sale		694
Loss on sale of investment securities available for sale		541
U.S. Treasuries
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	215,486	132,452
Unrealized Gains	0	45
Unrealized Losses	(16,037)	(1,496)
Fair Value	199,449	131,001
Municipal
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	10,815	10,825
Unrealized Gains	0	43
Unrealized Losses	(2,803)	(394)
Fair Value	8,012	10,474
Corporate
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	5,000	5,000
Unrealized Gains	0	0
Unrealized Losses	(400)	(66)
Fair Value	4,600	4,934
Asset-backed securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	7,970	10,093
Unrealized Gains	0	59
Unrealized Losses	(259)	(12)
Fair Value	7,711	10,140
Mortgage-backed securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	35,626	27,589
Unrealized Gains	0	514
Unrealized Losses	(2,917)	(197)
Fair Value	$ 32,709	$ 27,906

Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Schedule of Assets and Liabilities, Lessee

The Company’s lease information is summarized as follows:



(in thousands)	2022		2021
Lease Right-of-Use Asset
Lease asset	$	5,171	$	5,364
Less: Accumulated amortization	(3,074)		(2,898)
Net lease asset	$	2,097	$	2,466

Lease Liability
Lease liability	$	5,327	$	5,535
Less: Accumulated amortization	(2,968)		(2,800)
Net lease liability	$	2,359	$	2,735

Schedule of Lessee, Operating Lease, Liability, Maturity

Future minimum payments for operating leases with initial or remaining terms of one year or more are as follows at December 31, 2022:



(in thousands)	2022
Amounts due in:
2023	$	1,056
2024	715
2025	259
2026	255
2027 and thereafter	137
Total future lease payments	2,422
Discount of cash flows	(63)
Present value of net future lease payments	$	2,359

Segments

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segments

The Company’s reportable segments represent business units with discrete financial information whose results are regularly reviewed by management. The four segments include Commercial Banking, Capital Bank Home Loans (the Company’s mortgage loan division), and OpenSky® (the Company’s credit card division) and the Corporate Office. The following schedule presents financial information for each reportable segment at December 31, 2022 and 2021.


Segments
(in thousands)
December 31, 2022	Commercial Bank		CBHL		OpenSky®		Corporate(2)		Eliminations		Consolidated
Interest income	$	82,182	$	435	$	64,859	$	3,349	$	(179)	$	150,646
Interest expense	9,245		218		—		755		(179)		10,039
Net interest income	72,937		217		64,859		2,594		—		140,607
Provision for (reversal of) loan losses	(980)		—		7,611		—		—		6,631
Noninterest income	2,122		5,276		21,972		2		—		29,372
Noninterest expense(1)	52,552		8,450		47,647		465		—		109,114
Net income (loss) before taxes	$	23,487	$	(2,957)	$	31,573	$	2,131	$	—	$	54,234

Total assets	$	1,939,601	$	7,936	$	122,418	$	245,399	$	(191,699)	$	2,123,655

December 31, 2021
Interest income	$	69,433	$	1,217	$	50,422	$	2,307	$	(136)	$	123,243
Interest expense	5,142		874		—		670		(136)		6,550
Net interest income	64,291		343		50,422		1,637		—		116,693
Provision for loan losses	433		—		2,856		70		—		3,359
Noninterest income	1,759		20,911		27,884		82		—		50,636
Noninterest expense(1)	44,729		12,713		52,231		421		—		110,094
Net income before taxes	$	20,888	$	8,541	$	23,219	$	1,228	$	—	$	53,876

Total assets	$	1,859,201	$	16,698	$	138,232	$	217,993	$	(176,824)	$	2,055,300

_______________

(1)Noninterest expense includes $27.0 million and $36.1 million in data processing expenses in OpenSky’s® segment for the years ended December 31, 2022 and 2021, respectively.

(2)The Corporate segment invests idle cash in revenue producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Interest-Bearing Deposits - Major Categories (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Deposit Liability [Line Items]
Interest-bearing demand accounts	$ 207,836,000	$ 330,924,000
Money market accounts	574,978,000	493,919,000
Savings	7,530,000	6,994,000
Certificates of deposit of $250,000 or more	96,291,000	108,827,000
Other time deposits	197,124,000	68,823,000
Total Interest-bearing deposits	1,083,759,000	1,009,487,000
Certificates of deposits, brokered	$ 131,100,000	$ 0
Liabilities, Total \| Customer Concentration Risk \| Lines of Credit
Deposit Liability [Line Items]
Concentration Risk, Percentage	11.00%	13.00%
Liabilities, Total \| Customer Concentration Risk \| Deposits From Title Companies
Deposit Liability [Line Items]
Concentration Risk, Percentage	13.00%	18.00%

Portfolio Loans Receivable - Outstanding Loan Commitments (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 1,737,219	$ 1,531,202
Residential \| Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	484,735	401,607
Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	220,221	175,956
Commercial and Industrial \| Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	664,551	556,339
Construction \| Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	238,099	255,147
Consumer \| Credit card
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	128,434	141,120
Consumer \| Credit card \| Savings Deposits
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	106,900	121,700
Consumer \| Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	1,179	1,033
Commitments to Extend Credit
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to originate residential loans held for sale	345,062	360,386
Letters of credit	5,105	5,105
Commitments to Extend Credit \| Residential \| Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to originate residential loans held for sale	14,336	15,747
Commitments to Extend Credit \| Residential \| Residential - Home Equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to originate residential loans held for sale	43,128	37,640
Commitments to Extend Credit \| Residential \| Commitments to originate residential loans held for sale
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to originate residential loans held for sale	0	1,385
Commitments to Extend Credit \| Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to originate residential loans held for sale	45,747	45,135
Commitments to Extend Credit \| Commercial and Industrial \| Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to originate residential loans held for sale	36,609	17,225
Commitments to Extend Credit \| Construction \| Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to originate residential loans held for sale	93,913	118,518
Commitments to Extend Credit \| Consumer \| Credit card
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to originate residential loans held for sale	111,227	123,874
Commitments to Extend Credit \| Consumer \| Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commitments to originate residential loans held for sale	$ 102	$ 2,247

Portfolio Loans Receivable - Trouble Debt Restructuring (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) contract	Dec. 31, 2021 USD ($) contract
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts \| contract	1	5
Recorded Investment	$ 288	$ 533
Defaulted TDR
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts \| contract	1
Recorded Investment	$ 288
Paid Off T D R
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts \| contract	4
Recorded Investment	$ 215
Residential \| Real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts \| contract	1	4
Recorded Investment	$ 288	$ 450
Residential \| Real estate \| New T D R
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts \| contract		1
Recorded Investment		$ 319
Commercial and Industrial
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts \| contract		1
Recorded Investment		$ 83
Commercial and Industrial \| Paid Off T D R
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts \| contract		1
Recorded Investment		$ 200
Performing
Financing Receivable, Troubled Debt Restructuring [Line Items]
Recorded Investment	0	0
Performing \| Residential \| Real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Recorded Investment	0	0
Performing \| Commercial and Industrial
Financing Receivable, Troubled Debt Restructuring [Line Items]
Recorded Investment		0
Nonperforming
Financing Receivable, Troubled Debt Restructuring [Line Items]
Recorded Investment	288	533
Nonperforming \| Residential \| Real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Recorded Investment	$ 288	450
Nonperforming \| Commercial and Industrial
Financing Receivable, Troubled Debt Restructuring [Line Items]
Recorded Investment		$ 83

Fair Value - Loans Held For Sale (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held for sale	$ 7,416	$ 15,989
Aggregate fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held for sale	7,416	15,989
Contractual principal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held for sale	6,808	14,504
Difference
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans held for sale	$ 608	$ 1,485

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Statement of Comprehensive Income [Abstract]
Net income	$ 41,804	$ 39,978
Other comprehensive (loss):
Unrealized loss on investment securities available for sale	(20,912)	(3,688)
Reclassification of realized gain on sales of investment securities available for sale	0	(153)
Other comprehensive income (loss)	(20,912)	(3,841)
Income tax benefit relating to the items above	5,237	1,048
Other comprehensive loss	(15,675)	(2,793)
Comprehensive income	$ 26,129	$ 37,185

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

Portfolio Loans Receivable - Allowance for Loan Losses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	$ 25,181	$ 23,434
Provision for Loan Losses	6,631	3,359
Charge-Offs	(5,478)	(1,654)
Recoveries	51	42
Ending Balance	26,385	25,181
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Individually	372	218
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Collectively	26,013	24,963
Outstanding Loan Balances Evaluated for Impairment - Individually	9,393	11,339
Outstanding Loan Balances Evaluated for Impairment - Collectively	1,727,826	1,519,863
Residential \| Real estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	5,612	7,153
Provision for Loan Losses	(131)	(1,541)
Charge-Offs	0	0
Recoveries	0	0
Ending Balance	5,481	5,612
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Individually	0	0
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Collectively	5,481	5,612
Outstanding Loan Balances Evaluated for Impairment - Individually	4,288	2,835
Outstanding Loan Balances Evaluated for Impairment - Collectively	480,447	398,772
Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	2,637	2,417
Provision for Loan Losses	298	253
Charge-Offs	0	(39)
Recoveries	0	6
Ending Balance	2,935	2,637
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Individually	372	218
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Collectively	2,563	2,419
Outstanding Loan Balances Evaluated for Impairment - Individually	705	676
Outstanding Loan Balances Evaluated for Impairment - Collectively	219,516	175,280
Commercial \| Real estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	8,566	6,786
Provision for Loan Losses	(468)	1,941
Charge-Offs	0	(161)
Recoveries	0	0
Ending Balance	8,098	8,566
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Individually	0	0
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Collectively	8,098	8,566
Outstanding Loan Balances Evaluated for Impairment - Individually	1,563	25
Outstanding Loan Balances Evaluated for Impairment - Collectively	662,988	556,314
Construction \| Real estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	4,699	4,595
Provision for Loan Losses	(900)	103
Charge-Offs	(17)	0
Recoveries	0	1
Ending Balance	3,782	4,699
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Individually	0	0
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Collectively	3,782	4,699
Outstanding Loan Balances Evaluated for Impairment - Individually	2,837	7,803
Outstanding Loan Balances Evaluated for Impairment - Collectively	235,262	247,344
Consumer \| Credit card
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	3,655	2,462
Provision for Loan Losses	7,833	2,612
Charge-Offs	(5,461)	(1,454)
Recoveries	51	35
Ending Balance	6,078	3,655
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Individually	0	0
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Collectively	6,078	3,655
Outstanding Loan Balances Evaluated for Impairment - Individually	0	0
Outstanding Loan Balances Evaluated for Impairment - Collectively	128,434	141,120
Consumer \| Other consumer
Allowance for Loan and Lease Losses [Roll Forward]
Beginning Balance	12	21
Provision for Loan Losses	(1)	(9)
Charge-Offs	0	0
Recoveries	0	0
Ending Balance	11	12
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Individually	0	0
Allowance for Loan Losses Ending Balance Evaluated for Impairment - Collectively	11	12
Outstanding Loan Balances Evaluated for Impairment - Individually	0	0
Outstanding Loan Balances Evaluated for Impairment - Collectively	$ 1,179	$ 1,033

Segments (Tables)

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following schedule presents financial information for each reportable segment at December 31, 2022 and 2021.


Segments
(in thousands)
December 31, 2022	Commercial Bank		CBHL		OpenSky®		Corporate(2)		Eliminations		Consolidated
Interest income	$	82,182	$	435	$	64,859	$	3,349	$	(179)	$	150,646
Interest expense	9,245		218		—		755		(179)		10,039
Net interest income	72,937		217		64,859		2,594		—		140,607
Provision for (reversal of) loan losses	(980)		—		7,611		—		—		6,631
Noninterest income	2,122		5,276		21,972		2		—		29,372
Noninterest expense(1)	52,552		8,450		47,647		465		—		109,114
Net income (loss) before taxes	$	23,487	$	(2,957)	$	31,573	$	2,131	$	—	$	54,234

Total assets	$	1,939,601	$	7,936	$	122,418	$	245,399	$	(191,699)	$	2,123,655

December 31, 2021
Interest income	$	69,433	$	1,217	$	50,422	$	2,307	$	(136)	$	123,243
Interest expense	5,142		874		—		670		(136)		6,550
Net interest income	64,291		343		50,422		1,637		—		116,693
Provision for loan losses	433		—		2,856		70		—		3,359
Noninterest income	1,759		20,911		27,884		82		—		50,636
Noninterest expense(1)	44,729		12,713		52,231		421		—		110,094
Net income before taxes	$	20,888	$	8,541	$	23,219	$	1,228	$	—	$	53,876

Total assets	$	1,859,201	$	16,698	$	138,232	$	217,993	$	(176,824)	$	2,055,300

_______________

(1)Noninterest expense includes $27.0 million and $36.1 million in data processing expenses in OpenSky’s® segment for the years ended December 31, 2022 and 2021, respectively.

(2)The Corporate segment invests idle cash in revenue producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.

Borrowed Funds

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Borrowed Funds

As of December 31, 2022 and 2021, the Company was indebted as follows:



	2022				2021
(dollars in thousands)	Balance		Interest		Balance		Interest
FHLB fixed rate advance due October 16, 2025	$	22,000	0.93	%	$	22,000	0.93	%
FHLB fixed rate advance due March 20, 2023	50,000		4.42		—		—
FHLB daily rate advance due September 13, 2023	35,000		4.57		—		—
Total - FHLB advances	$	107,000	3.75	%	$	22,000	0.93	%


Junior subordinated debentures due June 15, 2036	$	2,062	6.64	%	$	2,062	2.07	%
Other subordinated notes due November 30, 2030	10,000		5.00		10,000		5.00



Total - Other borrowed funds	$	12,062	5.28	%	$	12,062	4.50	%

The FHLB fixed rate advances accrue interest on a daily basis and are paid semi-annually.

Junior subordinated debentures

In June 2006, the Company formed Capital Bancorp (MD) Statutory Trust I (the “Trust”) and on

June 15, 2006, the Trust issued 2,000 floating rate capital securities (the “Capital Securities”) with an aggregate liquidation value of $2,000,000 to a third party in a private placement. Concurrent with the issuance of the Capital Securities, the Trust issued trust common securities to the Company in the aggregate liquidation value of $62,000.

Note 10 - Borrowed Funds (continued)

The proceeds of the issuance of the Capital Securities and trust common securities were invested in the Company’s Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Floating Rate Debentures”). The Floating Rate Debentures for the Trust will mature on June 15, 2036, which may be shortened if certain conditions are met (including the Company having received prior approval of the Board of Governors of the Federal Reserve System and any other required regulatory approvals). These Floating Rate Debentures, which are the only assets of the Trust, are subordinate and junior in right of payment to all present and future senior indebtedness (as defined in the Indenture dated June 15, 2006) of the Company. The Floating Rate Debentures for the Trust accrue interest at a floating rate equal to the three-month LIBOR plus 1.89%, payable quarterly. As of December 31, 2022 and 2021, the rate for the Trust was 6.64% and 2.07%, respectively. The quarterly distributions on the Capital Securities will be paid at the same rate that interest is paid on the Floating Rate Debentures.

The Company has fully and unconditionally guaranteed the Trust’s obligation under the Capital Securities. The Trust must redeem the Capital Securities when the Floating Rate Debentures are paid at maturity or upon any earlier prepayment of the Floating Rate Debentures. The Floating Rate Debentures may be prepaid if certain events occur, including a change in the tax status or regulatory capital treatment of the Capital Securities, or a change in existing laws that requires the Trust to register as an investment company.

The junior subordinated debentures are treated as Tier 1 capital by the Company, to a limited extent, by the Federal Reserve.

Other subordinated notes

On November 30, 2020, the Company issued $10.0 million of subordinated notes. The notes mature on November 30, 2030 and are redeemable in whole or part on November 30, 2025. The notes bear interest at a fixed annual rate of 5.00% for the first five years, then adjust quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be the three-month SOFR, plus 490 basis points. There were related debt issuance costs incurred totaling $50,000 which were fully expensed at the time of issuance. The Company used the proceeds from the offering to redeem the outstanding $13.5 million, 6.95% fixed-to-floating rate subordinated notes issued in November 2015 and called on December 1, 2020.

Available lines of credit

The Company has available lines of credit of $76.0 million with other correspondent banks. There were no outstanding line of credit balances at December 31, 2022 and December 31, 2021.

The Company may borrow up to 25% of its assets from the FHLB, based on collateral available to pledge to secure the borrowings. Borrowings from the FHLB are secured by a portion of the Company’s loan and/or investment portfolio. As of December 31, 2022 and 2021, the Company had pledged loans providing borrowing capacity of $330.8 million and $205.3 million, respectively. The Company did not have any pledged investment securities to the FHLB at December 31, 2022 or December 31, 2021. As of December 31, 2022 and 2021, the Company had available borrowing capacity, net of advances and amounts pledged for letters of credit, from the FHLB of $223.8 million and $183.3 million, respectively.

Note 10 - Borrowed Funds (continued)

As of December 31, 2022 and 2021, the Company had pledged commercial loans to the Federal Reserve Bank of Richmond to secure a borrowing capacity totaling $21.4 million and $15.9 million, respectively, under its discount window program. In addition, the Company had the ability to borrow from the SBA-PPP Liquidity Facility by pledging SBA-PPP loans during 2020 and up through July 30, 2021 after which no new extensions of credit were made under the facility.

The Company limits its certificate of deposit funding through financial networks to 15% of the Bank’s assets, or approximately $310.5 million and $302.1 million as of December 31, 2022 and 2021, respectively. The Company had $131.8 million outstanding as of December 31, 2022 and zero outstanding as of December 31, 2021.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Interest-Bearing Deposits (Tables)

12 Months Ended

Dec. 31, 2022

Deposits [Abstract]

Schedule of Deposit Liabilities, Type

Major categories of interest-bearing deposits are as follows:




(in thousands)	2022		2021
Interest-bearing demand accounts	$	207,836	$	330,924
Money market accounts	574,978		493,919
Savings	7,530		6,994
Certificates of deposit of $250,000 or more	96,291		108,827
Other time deposits	197,124		68,823
Total Interest-bearing deposits	$	1,083,759	$	1,009,487

Schedule of Time Deposit Maturities

Certificates of deposit, as of December 31, 2022, mature as follows:



(in thousands)
2023	$	181,455
2024	59,140
2025	51,339
2026	677
2027, and thereafter	804
Total	$	293,415

- Definition

Tabular disclosure of type of deposit liability.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (e)

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(ii)

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (1)

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (1)

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (d)

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(iv)

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (5)

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(iii)

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (4)

Reference 11: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (c)

Reference 13: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (2)

Reference 14: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (3)

Reference 15: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)

+ Details

Portfolio Loans Receivable - Accretable Discount (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Receivables [Abstract]
Remaining nonaccretable discount	$ 285	$ 285
Loans receivable, net	$ 781	$ 818

Parent Company Financial Information - Statements of Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Condensed Income Statements, Captions [Line Items]
Total interest income	$ 150,646	$ 123,243
Interest expense	10,039	6,550
Net interest income	140,607	116,693
Provision for loan losses	6,631	3,359
Net interest income after provision for loan losses	133,976	113,334
Noninterest income	29,372	50,636
Noninterest expenses	109,114	110,094
Income tax expense	12,430	13,898
Net income	41,804	39,978
Parent Company
Condensed Income Statements, Captions [Line Items]
Interest and dividend income	2,146	1,663
Total interest income	13,546	8,163
Interest expense	576	542
Net interest income	12,970	7,621
Provision for loan losses	0	70
Net interest income after provision for loan losses	12,970	7,551
Noninterest income	2	2
Noninterest expenses	447	393
Income before income taxes	12,525	7,160
Income tax expense	315	138
Income before undistributed net income of subsidiaries	12,210	7,022
Undistributed net income of subsidiaries	29,594	32,956
Net income	41,804	39,978
Parent Company \| Investment in Bank
Condensed Income Statements, Captions [Line Items]
Dividend from Bank	$ 11,400	$ 6,500

Stock-Based Compensation - Stock Option Pricing Assumptions (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-Based Payment Arrangement [Abstract]
Dividend yield	0.99%	0.80%
Risk free interest rate	3.25%	0.25%
Expected volatility	55.91%	60.97%
Expected life in years	5 years	5 years

Consolidated Statements of Changes in Stockholders' Equity - USD ($)	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2020		13,753,529
Beginning balance at Dec. 31, 2020	$ 159,311,000	$ 138,000	$ 50,602,000	$ 106,854,000	$ 1,717,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	39,978,000			39,978,000
Unrealized loss on investment securities available for sale, net of income taxes	$ (2,793,000)				(2,793,000)
Stock options exercised, net of shares withheld for purchase price (in shares)	186,461	186,461
Stock options exercised, net of shares withheld for purchase price	$ 967,000	$ 2,000	1,838,000	(873,000)
Shares issued as compensation (in shares)		22,344
Shares issued as compensation	475,000		519,000	(44,000)
Stock-based compensation	1,347,000		1,347,000
Cash dividends to stockholders	$ (1,382,000)			(1,382,000)
Ending balance (in shares) at Dec. 31, 2021	13,962,334	13,962,334
Ending balance at Dec. 31, 2021	$ 197,903,000	$ 140,000	54,306,000	144,533,000	(1,076,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	41,804,000			41,804,000
Unrealized loss on investment securities available for sale, net of income taxes	$ (15,675,000)				(15,675,000)
Stock options exercised, net of shares withheld for purchase price (in shares)	160,590	160,590
Stock options exercised, net of shares withheld for purchase price	$ 1,235,000	$ 1,000	1,999,000	(765,000)
Shares issued as compensation (in shares)		15,905
Shares issued as compensation	171,000		223,000	(52,000)
Stock-based compensation	1,662,000		1,662,000
Cash dividends to stockholders	$ (3,085,000)			(3,085,000)
Ending balance (in shares) at Dec. 31, 2022	14,138,829	14,138,829
Ending balance at Dec. 31, 2022	$ 224,015,000	$ 141,000	$ 58,190,000	$ 182,435,000	$ (16,751,000)

Segments (Details) $ in Thousands	12 Months Ended
Segments (Details) $ in Thousands	Dec. 31, 2022 USD ($) segment	Dec. 31, 2021 USD ($)
Segment Reporting Information [Line Items]
Number of reportable business segments \| segment	4
Interest income	$ 150,646	$ 123,243
Interest expense	10,039	6,550
Net interest income	140,607	116,693
Provision for loan losses	6,631	3,359
Noninterest income	29,372	50,636
Noninterest expenses	109,114	110,094
Income before income taxes	54,234	53,876
Total assets	2,123,655	2,055,300
OpenSky®
Segment Reporting Information [Line Items]
Noninterest expenses	27,000	36,100
Operating Segments \| Commercial Bank
Segment Reporting Information [Line Items]
Interest income	82,182	69,433
Interest expense	9,245	5,142
Net interest income	72,937	64,291
Provision for loan losses	(980)	433
Noninterest income	2,122	1,759
Noninterest expenses	52,552	44,729
Income before income taxes	23,487	20,888
Total assets	1,939,601	1,859,201
Operating Segments \| CBHL
Segment Reporting Information [Line Items]
Interest income	435	1,217
Interest expense	218	874
Net interest income	217	343
Provision for loan losses	0	0
Noninterest income	5,276	20,911
Noninterest expenses	8,450	12,713
Income before income taxes	(2,957)	8,541
Total assets	7,936	16,698
Operating Segments \| OpenSky®
Segment Reporting Information [Line Items]
Interest income	64,859	50,422
Interest expense	0	0
Net interest income	64,859	50,422
Provision for loan losses	7,611	2,856
Noninterest income	21,972	27,884
Noninterest expenses	47,647	52,231
Income before income taxes	31,573	23,219
Total assets	122,418	138,232
Corporate
Segment Reporting Information [Line Items]
Interest income	3,349	2,307
Interest expense	755	670
Net interest income	2,594	1,637
Provision for loan losses	0	70
Noninterest income	2	82
Noninterest expenses	465	421
Income before income taxes	2,131	1,228
Total assets	245,399	217,993
Eliminations
Segment Reporting Information [Line Items]
Interest income	(179)	(136)
Interest expense	(179)	(136)
Net interest income	0	0
Provision for loan losses	0	0
Noninterest income	0	0
Noninterest expenses	0	0
Income before income taxes	0	0
Total assets	$ (191,699)	$ (176,824)

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	49,000,000	49,000,000
Common stock, shares issued (in shares)	14,138,829	13,962,334
Common stock, shares outstanding (in shares)	14,138,829	13,962,334

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities
Net income	$ 41,804	$ 39,978
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	6,631	3,359
Provision for mortgage put-back reserve, net	9	4
Release of off balance sheet credit risk	(54)	(40)
Net amortization on investments	540	642
Premises and equipment depreciation	364	561
Lease asset amortization	1,068	645
Increase in cash surrender value of BOLI	(1,018)	(506)
Executive long term incentive plan expense	582	1,344
Stock-based compensation expense	1,662	1,347
Director and employee compensation paid in Company stock	171	519
Deferred income tax expense (benefit)	1,240	(1,927)
Valuation allowance on derivatives	9	(49)
Gain on sale of securities available for sale	0	(153)
(Gain) loss on sales of foreclosed real estate, net	(20)	47
Loss on disposal of premises and equipment	14	0
(Increase) decrease in valuation of loans held for sale carried at fair value	0	246
Proceeds from sales of loans held for sale	308,549	1,091,746
Originations of loans held for sale	(299,976)	(1,000,827)
Changes in assets and liabilities:
Accrued interest receivable	(1,588)	233
Other assets	(4,382)	(1,222)
Accrued interest payable	558	(661)
Other liabilities	(4,773)	(3,210)
Net cash provided by operating activities	51,390	132,076
Cash flows from investing activities
Purchases of securities available for sale	(113,078)	(169,672)
Proceeds from maturities, calls and principal paydowns of securities available for sale	23,846	13,882
Proceeds from sale of securities available for sale	0	66,534
Net (purchases) sales of restricted investments	(3,864)	215
Net decrease in SBA-PPP loans receivable	106,122	92,733
Net increase in loans receivable	(210,037)	(210,092)
Net purchases of premises and equipment	(1,550)	(24)
Proceeds from sales of foreclosed real estate	106	3,193
Purchase of Bank owned life insurance	0	(35,000)
Net cash used in investing activities	(198,455)	(238,231)
Net increase (decrease) in:
Noninterest-bearing deposits	(113,337)	179,091
Interest-bearing deposits	74,272	(34,082)
Federal Home Loan Bank advances, net	85,000	0
Other borrowed funds	0	(1,954)
Dividends paid	(3,085)	(1,382)
Proceeds from exercise of stock options	1,235	967
Net cash provided by financing activities	44,085	142,640
Net increase (decrease) in cash and cash equivalents	(102,980)	36,485
Cash and cash equivalents, beginning of year	183,395	146,910
Cash and cash equivalents, end of year	80,415	183,395
Noncash investing and financing activities:
Change in unrealized losses on investments	(20,912)	(3,841)
Value of restricted shares withheld for payment of taxes	(52)	(44)
Cash paid during the period for:
Taxes	11,730	15,920
Interest	$ 9,481	$ 7,211

Audit Information	12 Months Ended
Audit Information	Dec. 31, 2022
Audit Information [Abstract]
Auditor Name	Elliott Davis, PLLC
Auditor Location	Raleigh, North Carolina
Auditor Firm ID	149

Capital Standards

12 Months Ended

Dec. 31, 2022

Mortgage Banking [Abstract]

Capital Standards

The Company and Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can precipitate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting, and other factors.

Quantitative measures established and defined by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of Total, Tier 1 and Common Equity Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. As of December 31, 2022 and 2021, the capital levels of the Company and the Bank exceeded all applicable capital adequacy requirements.

As of December 31, 2022 the most recent notification from the OCC has categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain ratios as set forth in the table. There have been no conditions or events since that notification that management believes have changed the Bank’s category.

The following table presents actual and required capital ratios as of December 31, 2022 and 2021 for the Bank under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of December 31, 2022 and 2021 based on the phase-in provisions of the Basel III Capital Rules. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules.

Based on recent changes to the Federal Reserve’s definition of a “Small Bank Holding Company” that increased the threshold to $3 billion in assets, the Company is not currently subject to separate minimum capital measurements. At such time as the Company reaches the $3 billion asset level, it will again be subject to capital measurements independent of the Bank. For comparison purposes, the Company’s ratios are presented in the following table as well, all of which would have exceeded the “well-capitalized” level had the Company been subject to separate capital minimums.

Note 14 - Capital Standards (continued)


Regulatory Capital
	Actual				Minimum Capital Adequacy				To Be Well Capitalized				Full Phase In of Basel III
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount	Ratio
December 31, 2022
The Company
Tier 1 leverage ratio (to average assets)	$	242,829	11.24	%	$	86,442	4.00	%	N/A		N/A		N/A	N/A
Tier 1 capital (to risk-weighted assets)	242,829		15.13	%	96,315		6.00	%	N/A		N/A		136,447	8.50	%
Common equity tier 1 capital ratio (to risk-weighted assets)	240,767		15.00	%	$	72,237	4.50	%	N/A		N/A		112,368	7.00	%
Total capital ratio (to risk-weighted assets)	262,217		16.33	%	$	128,421	8.00	%	N/A		N/A		168,552	10.50	%

The Bank
Tier 1 leverage ratio (to average assets)	$	199,846	9.47	%	$	84,416	4.00	%	$	105,521	5.00	%	N/A	N/A
Tier 1 capital (to risk-weighted assets)	199,846		12.95	%	92,574		6.00	%	123,432		8.00	%	131,147	8.50	%
Common equity tier 1 capital ratio (to risk-weighted assets)	199,846		12.95	%	69,431		4.50	%	100,289		6.50	%	108,003	7.00	%
Total capital ratio (to risk-weighted assets)	219,234		14.21	%	123,432		8.00	%	154,290		10.00	%	162,005	10.50	%

December 31, 2021
The Company
Tier 1 leverage ratio (to average assets)	$	201,040	9.73	%	$	82,683	4.00	%	N/A		N/A		N/A	N/A
Tier 1 capital (to risk-weighted assets)	201,040		14.43	%	83,596		6.00	%	N/A		N/A		118,428	8.50	%
Common equity tier 1 capital ratio (to risk-weighted assets)	198,978		14.28	%	62,697		4.50	%	N/A		N/A		97,529	7.00	%
Total capital ratio (to risk-weighted assets)	228,574		16.41	%	111,462		8.00	%	N/A		N/A		146,294	10.50	%

The Bank
Tier 1 leverage ratio (to average assets)	$	169,384	8.36	%	$	81,070	4.00	%	$	101,338	5.00	%	N/A	N/A
Tier 1 capital (to risk-weighted assets)	169,384		12.53	%	81,097		6.00	%	108,130		8.00	%	114,888	8.50	%
Common equity tier 1 capital ratio (to risk-weighted assets)	169,384		12.53	%	60,823		4.50	%	87,856		6.50	%	94,614	7.00	%
Total capital ratio (to risk-weighted assets)	186,397		13.79	%	108,130		8.00	%	135,162		10.00	%	141,921	10.50	%

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References + Details

Derivative Financial Instruments (Details) - Designated as Hedging Instrument - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Open Forward Delivery Sales Agreements
Derivatives, Fair Value [Line Items]
Notional amount	$ 1,750	$ 22,500
Fair value of open forward delivery sales agreements	9	(16)
Interest Rate Lock Commitments
Derivatives, Fair Value [Line Items]
Notional amount	626	18,053
Fair value of interest rate lock commitments	$ 1	$ 34

Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Compensation cost is recognized for stock options and restricted stock awards issued to employees. Compensation cost is measured as the fair value of these awards on their date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used as the fair value of restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period for stock option awards and as the restriction period for restricted stock awards. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

The expense recognition of employee stock option and restricted stock awards resulted in net expense of approximately $1.8 million and $1.4 million during the years ended December 31, 2022 and 2021, respectively.

Stock options:

The Company currently has two incentive compensation plans with outstanding stock options, the 2002 Stock Option Plan and the 2017 Stock and Incentive Compensation Plan (“the Plan”). Only the Plan, which authorizes the use of stock options, stock appreciation rights, restricted stock and/or restricted stock, is available to grant options and shares to employees and directors. At inception the Plan allowed for up to 1,120,000 shares of common stock to be issued. In 2021, an additional 900,000 shares were authorized for a total of 2,020,000. As of December 31, 2022, there are 896,462 shares available for future grant. Shares of common stock related to any unexercised or unvested award granted under the Plan that terminate or expire, or are subsequently forfeited or cancelled for any reason, become available for re-grant under the Plan. Option prices are equal to or greater than the estimated fair value of the common stock at the date of grant. Options outstanding vest over a four-year period, whereby 25% of the options become exercisable on each anniversary of the grant date.

Information with respect to options outstanding during the years ended December 31, 2022 and 2021 is as follows:



	2022			2021
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
Outstanding at beginning of year	1,060,023	$	14.77	1,169,413	$	12.21
Add: Granted	2,000	24.25		170,244	24.51
Less: Exercised	(160,590)	12.46		(186,461)	9.61
Less: Retired on exercise	(63,697)	12.52		(54,192)	9.41
Less: Expired/cancelled/forfeited	(26,576)	12.82		(38,981)	7.43
Outstanding at end of year	811,160	$	15.37	1,060,023	$	14.77
Exercisable at end of year	538,066	$	13.63	551,804	$	12.55

The weighted average fair value of options granted during the years ended December 31, 2022 and 2021, was $11.49 and $12.56, respectively.

Note 15 - Stock-Based Compensation (continued)

A summary of information about stock options outstanding is as follows:



	Exercise Price Range	Weighted Average Exercise Price		Average Remaining Life (years)	Outstanding Shares		Exercisable Shares
December 31, 2022

	$10.70 - 14.63	$	13.02	1.73	648,651		492,909
	14.64 - 18.56	14.96		2.14	22,750		10,688
	18.57 - 22.49	21.86		3.07	2,500		625
	22.50 - 26.41	26.38		3.86	137,259		33,844











Total outstanding options		$	15.37	2.11	811,160		538,066
Intrinsic value on December 31, 2022					$	7,020,560	$	5,428,713

December 31, 2021
	$10.70 - 14.63	$	12.89	2.45	892,529		546,804
	14.64 - 18.56	14.96		3.14	22,750		5,000
	18.57 - 22.49	21.86		4.71	2,500		—
	22.50 - 26.41	26.41		5.00	142,244		—







Total outstanding options		$	14.77	2.80	1,060,023		551,804
Intrinsic value on December 31, 2021					$	12,143,007	$	7,529,711

The aggregate intrinsic value as presented in the preceding tables is the difference between the estimated fair value of the stock as of December 31, 2022 and 2021, and the exercise price of the option multiplied by the number of options outstanding. Stock options with exercise prices greater than the estimated fair value of the stock are not included in this calculation.

Total unrecognized compensation expense related to stock options to be recognized over the next five years was $1.2 million and $2.9 million at December 31, 2022 and 2021, respectively.

The intrinsic value of stock options exercised was $1.9 million and $4.0 million during the years ended December 31, 2022 and 2021, respectively.

The weighted average fair value of options granted during 2022 and 2021 were estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:



	2022	2021
Dividend yield	0.99%	0.80%
Risk free interest rate	3.25%	0.25%
Expected volatility	55.91%	60.97%
Expected life in years	5	5

Note 15 - Stock-Based Compensation (continued)

Restricted stock:

The Company from time-to-time also grants shares of restricted stock to key employees. These awards help align the interests of these employees with the interests of the stockholders of the Company by providing economic value directly related to increases in the value of the Company’s stock. These awards typically hold service requirements over various vesting periods. The value of the stock awarded is established as the fair market value of the stock at the time of the grant. The Company recognizes expense, equal to the total value of such awards, ratably over the vesting period of the stock grants.

All restricted stock agreements are conditioned upon continued employment. Termination of employment prior to a vesting date, as described below, would terminate any interest in non-vested shares. All restricted shares will fully vest in the event of change in control of the Company.

Nonvested restricted stock for the years ended December 31, 2022 and 2021 is summarized in the following table.



	2022			2021
	Shares	Weighted Average Grant-Date Fair Value		Shares	Weighted Average Grant-Date Fair Value
Nonvested at beginning of year	49,047	$	14.33	30,713	$	13.46
Add: Granted	11,495	24.66		29,405	14.88
Less: Vested	(15,905)	14.01		(11,071)	13.38
Less: Retired on vesting	(4,968)	14.44		—	—
Less: Forfeited	—	—		—	—
Nonvested at end of year	39,669	$	17.45	49,047	$	14.33

The vesting schedule of restricted shares as of December 31, 2022 is as follows:



Year						Shares
2023						22,206
2024						13,632
2025						3,831

						39,669

There was $429 thousand and $189 thousand of total unrecognized compensation expense related to nonvested restricted stock at December 31, 2022 and 2021, respectively.

Leases - Assets and Liabilities and Lease Payment Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
Lease asset	$ 5,171	$ 5,364
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Premises and equipment, net	Premises and equipment, net
Less: Accumulated amortization	$ (3,074)	$ (2,898)
Net lease asset	2,097	2,466
Lease liability	$ 5,327	$ 5,535
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration]	Other liabilities	Other liabilities
Less: Accumulated amortization	$ (2,968)	$ (2,800)
Net lease liability	2,359	2,735
Amounts due in:
2023	1,056
2024	715
2025	259
2026	255
2027 and thereafter	137
Total future lease payments	2,422
Discount of cash flows	(63)
Present value of net future lease payments	$ 2,359	$ 2,735

Derivative Financial Instruments

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

As part of its mortgage banking activities, the Company enters into interest rate lock commitments, which are commitments to originate loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. The Company then either locks the loan and rate in with an investor and commits to deliver the loan if settlement occurs (Best Efforts). Certain loans under rate lock commitments are covered under forward sales contracts. Forward sales contracts are recorded at fair value with changes in fair value recorded in mortgage banking revenue. Interest rate lock commitments and commitments to deliver loans to investors are considered derivatives. The market value of interest rate lock commitments and best-efforts contracts are not readily ascertainable with precision because they are not actively traded in stand-alone markets. The Company determines the fair value of rate lock commitments and delivery contracts by measuring the fair value of the underlying asset, which is impacted by current interest rates and takes into consideration the probability that the rate lock commitments will close or will be funded.

The following table reports the commitment and fair value amounts on the outstanding derivatives:



(in thousands)	December 31, 2022		December 31, 2021
Notional amount of open forward sales agreements	$	1,750	$	22,500
Fair value of open forward delivery sales agreements	9		(16)


Notional amount of interest rate lock commitments	626		18,053
Fair value of interest rate lock commitments	1		34

Fair Value (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The Company has categorized its financial instruments measured at fair value on a recurring basis as of December 31, 2022 and December 31, 2021 as follows:



(in thousands)	Total		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
December 31, 2022
Investment securities available for sale

U.S. Treasuries	$	199,449	$	199,449	$	—	$	—
Asset-backed securities	7,711		—		7,711		—
Municipal	8,012		—		8,012		—
Corporate	4,600		—		4,600		—
Mortgage-backed securities	32,709		—		32,709		—
Total	$	252,481	$	199,449	$	53,032	$	—
Loans held for sale	$	7,416	$	—	$	7,416	$	—
Derivative assets	$	10	$	—	$	10	$	—
Derivative liabilities	$	—	$	—	$	—	$	—

December 31, 2021
Investment securities available for sale
U.S. Treasuries	$	131,001	$	131,001	$	—	$	—
Asset-backed securities	10,140		—		10,140		—
Municipal	10,474		—		10,474		—
Corporate	4,934		—		4,934		—
Mortgage-backed securities	27,906		—		27,906		—
Total	$	184,455	$	131,001	$	53,454	$	—
Marketable equity securities	$	245	$	245	$	—	$	—
Loans held for sale	$	15,989	$	—	$	15,989	$	—
Derivative assets	$	34	$	—	$	34	$	—
Derivative liabilities	$	16	$	—	$	16	$	—

Schedule Of Fair Value Of Loans Held For Sale

The following table reflects the difference between the fair value carrying amount of loans held for sale, measured at fair value under FASB ASC 825-10, and the aggregate unpaid principal amount the Company is contractually entitled to receive at maturity:


Fair Value of Loans Held for Sale

(in thousands)	December 31, 2022		December 31, 2021

Aggregate fair value	$	7,416	$	15,989
Contractual principal	6,808		14,504
Difference	$	608	$	1,485

Schedule of Fair Value Measurements, Nonrecurring


Fair Value of Impaired Loans and Foreclosed Real Estate

(in thousands)	2022		2021
Impaired loans


Level 3 Inputs	9,021		11,121
Total	$	9,021	$	11,121

Foreclosed real estate


Level 3 Inputs	—		86
Total	$	—	$	86

Schedule of Fair Value Measurement Inputs and Valuation Techniques

The following table provides information describing the unobservable inputs used in Level 3 fair value measurements at December 31, 2022 and 2021:

Inputs

Valuation Technique

Unobservable Inputs

General Range of Inputs

Impaired Loans

Appraised Value/Discounted Cash Flows

Discounts to appraisals or cash flows for estimated holding and/or selling costs

0 - 25%

Foreclosed Real Estate

Appraised Value/Comparable Sales

Discounts to appraisals for estimated holding and/or selling costs

0 - 25%

Schedule of Fair Value Measurements, Recurring and Nonrecurring

The table below presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments (in thousands).


Fair Value of Financial Assets and Liabilities
	December 31, 2022				December 31, 2021
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Level 1
Cash and due from banks	$	19,963	$	19,963	$	42,914	$	42,914
Interest-bearing deposits at other financial institutions	39,764		39,764		136,824		136,824
Marketable equity securities	—		—		245		245
Federal funds sold	20,688		20,688		3,657		3,657
Level 3
Loans receivable, net	$	1,704,370	$	1,659,283	$	1,607,086	$	1,598,228
Restricted investments	7,362		7,362		3,498		3,498

Financial liabilities
Level 1
Noninterest-bearing deposits	$	674,313	$	674,313	$	787,650	$	787,650

Level 3
Interest-bearing deposits	$	1,083,759	$	1,090,553	$	1,009,487	$	1,011,121
FHLB advances and other borrowed funds	119,062		116,544		34,062		34,263

Investment Securities - By Maturity Dates (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Amortized Cost
Within one year	$ 53,739	$ 0
Over one to five years	88,165	58,602
Over five to ten years	79,090	78,850
Over ten years	10,307	10,825
Asset/Mortgage-backed securities	274,897	185,959
Fair Value
Within one year	53,204	0
Over one to five years	82,538	57,650
Over five to ten years	68,805	78,285
Over ten years	7,514	10,474
Fair Value	252,481	184,455
Asset-backed securities
Amortized Cost
Asset/Mortgage-backed securities	7,970	10,093
Fair Value
Fair Value	7,711	10,140
Mortgage-backed securities
Amortized Cost
Asset/Mortgage-backed securities	35,626	27,589
Fair Value
Fair Value	$ 32,709	$ 27,906

Capital Standards (Details) $ in Thousands	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Tier 1 leverage ratio (to average assets)
Tier One Leverage Capital	$ 242,829	$ 201,040
Tier One Leverage Capital to Average Assets	0.1124	0.0973
Tier One Leverage Capital Required for Capital Adequacy	$ 86,442	$ 82,683
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	0.0400	0.0400
Tier 1 capital (to risk-weighted assets)
Tier One Risk Based Capital	$ 242,829	$ 201,040
Tier One Risk Based Capital to Risk Weighted Assets	0.1513	0.1443
Tier One Risk Based Capital Required for Capital Adequacy	$ 96,315	$ 83,596
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	0.0600	0.0600
Tier One Risk Based Capital Full Phase In Of Base III	$ 136,447	$ 118,428
Tier One Risk Based Capital Full Phase In Of Base III To Risk Weighted Assets	8.50%	8.50%
Common equity tier 1 capital ratio (to risk-weighted assets)
Common Equity Tier One Capital	$ 240,767	$ 198,978
Common Equity Tier One Capital Ratio	0.1500	0.1428
Common Equity Tier One Capital Required for Capital Adequacy	$ 72,237	$ 62,697
Common Equity Tier One Capital Required For Capital Adequacy To Risk Weighted Assets	4.50%	4.50%
Common Equity Tier One Capital Full Phase In Of Base III	$ 112,368	$ 97,529
Common Equity Tier One Capital Full PHase In Of Base III To Risk Weighted Assets	7.00%	7.00%
Total capital ratio (to risk-weighted assets)
Capital	$ 262,217	$ 228,574
Capital to Risk Weighted Assets	0.1633	0.1641
Capital Required for Capital Adequacy	$ 128,421	$ 111,462
Capital Required for Capital Adequacy to Risk Weighted Assets	0.0800	0.0800
Capital Full Phase In Of Base III	$ 168,552	$ 146,294
Capital Full Phase In Of Base III To Risk Weighted Assets	10.50%	10.50%
The Bank
Tier 1 leverage ratio (to average assets)
Tier One Leverage Capital	$ 199,846	$ 169,384
Tier One Leverage Capital to Average Assets	0.0947	0.0836
Tier One Leverage Capital Required for Capital Adequacy	$ 84,416	$ 81,070
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	0.0400	0.0400
Tier One Leverage Capital Required to be Well Capitalized	$ 105,521	$ 101,338
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	0.0500	0.0500
Tier 1 capital (to risk-weighted assets)
Tier One Risk Based Capital	$ 199,846	$ 169,384
Tier One Risk Based Capital to Risk Weighted Assets	0.1295	0.1253
Tier One Risk Based Capital Required for Capital Adequacy	$ 92,574	$ 81,097
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	0.0600	0.0600
Tier One Risk Based Capital Required to be Well Capitalized	$ 123,432	$ 108,130
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	0.0800	0.0800
Tier One Risk Based Capital Full Phase In Of Base III	$ 131,147	$ 114,888
Tier One Risk Based Capital Full Phase In Of Base III To Risk Weighted Assets	8.50%	8.50%
Common equity tier 1 capital ratio (to risk-weighted assets)
Common Equity Tier One Capital	$ 199,846	$ 169,384
Common Equity Tier One Capital Ratio	0.1295	0.1253
Common Equity Tier One Capital Required for Capital Adequacy	$ 69,431	$ 60,823
Common Equity Tier One Capital Required For Capital Adequacy To Risk Weighted Assets	4.50%	4.50%
Common Equity Tier One Capital Required to be Well-Capitalized	$ 100,289	$ 87,856
Common Equity Tier One Capital To Be Well Capitalized To Risk Weighted Assets	6.50%	6.50%
Common Equity Tier One Capital Full Phase In Of Base III	$ 108,003	$ 94,614
Common Equity Tier One Capital Full PHase In Of Base III To Risk Weighted Assets	7.00%	7.00%
Total capital ratio (to risk-weighted assets)
Capital	$ 219,234	$ 186,397
Capital to Risk Weighted Assets	0.1421	0.1379
Capital Required for Capital Adequacy	$ 123,432	$ 108,130
Capital Required for Capital Adequacy to Risk Weighted Assets	0.0800	0.0800
Capital Required to be Well Capitalized	$ 154,290	$ 135,162
Capital Required to be Well Capitalized to Risk Weighted Assets	0.1000	0.1000
Capital Full Phase In Of Base III	$ 162,005	$ 141,921
Capital Full Phase In Of Base III To Risk Weighted Assets	10.50%	10.50%

Portfolio Loans Receivable - Classification of Loans (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 1,737,219	$ 1,531,202
Loans receivable, gross percent	100.00%	100.00%
Deferred origination fees, net	$ (8,627)	$ (7,220)
Allowance for loan losses	(26,385)	(25,181)	$ (23,434)
Total portfolio loans held for investment, net	1,702,207	1,498,801
Residential \| Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 484,735	$ 401,607
Loans receivable, gross percent	28.00%	26.00%
Allowance for loan losses	$ (5,481)	$ (5,612)	(7,153)
Residential \| Real estate \| Owner Occupied Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Initial commitment term	30 years
Residential \| Real estate \| Owner Occupied Real Estate \| Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed interest rate term	5 years
Residential \| Real estate \| Owner Occupied Real Estate \| Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fixed interest rate term	7 years
Residential \| Real estate \| Investor Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Initial commitment term	25 years
Balloon payment period	5 years
Covenant compliance, debt service coverage ratio	1.15
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 220,221	$ 175,956
Loans receivable, gross percent	13.00%	11.00%
Allowance for loan losses	$ (2,935)	$ (2,637)	(2,417)
Commercial \| Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 664,551	$ 556,339
Loans receivable, gross percent	38.00%	36.00%
Allowance for loan losses	$ (8,098)	$ (8,566)	(6,786)
Fixed interest rate term	5 years
Initial commitment term	10 years
Amortization period	25 years
Commercial \| Real estate \| Owner Occupied Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 378,700
Percent of real estate portfolio	21.80%
Construction \| Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 238,099	$ 255,147
Loans receivable, gross percent	14.00%	17.00%
Allowance for loan losses	$ (3,782)	$ (4,699)	(4,595)
Construction \| Real estate \| Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Initial commitment term	12 months
Construction \| Real estate \| Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Initial commitment term	18 months
Construction \| Real estate \| Owner Occupied Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal to collateral value ratio, percent	80.00%
Construction \| Real estate \| Investor Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal to collateral value ratio, percent	75.00%
Consumer \| Credit card, net of reserve
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 128,434	$ 141,120
Loans receivable, gross percent	7.00%	9.00%
Allowance for loan losses	$ (6,078)	$ (3,655)	(2,462)
Consumer \| Credit card, net of reserve \| Savings Deposits
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 106,900	121,700
Repayment history used for scoring model	6 months
Consumer \| Credit card, net of reserve \| Savings Deposit Held By Company
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 109,400	126,800
Consumer \| Credit card, net of reserve \| Secured And Partially Secured Credit Cards
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	123,100	140,200
Consumer \| Credit card, net of reserve \| Unsecured Credit Cards
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	26,800	17,700
Consumer \| Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 1,179	$ 1,033
Loans receivable, gross percent	0.00%	0.00%
Allowance for loan losses	$ (11)	$ (12)	$ (21)

Related-Party Transactions

12 Months Ended

Dec. 31, 2022

Related-Party Transactions

Certain executive officers and directors of the Company and Bank, and companies with which they are affiliated, are clients of and have banking transactions with the Company in the ordinary course of business. These transactions are conducted on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the Company.

Activity in related-party loans during 2022 and 2021 is shown below:



(in thousands)	2022		2021
Balance at beginning of year	$	32,524	$	19,275
Add: New loans	18,326		15,717
Less: Amounts collected	(14,545)		(2,468)

Balance at end of year	$	36,305	$	32,524

Note 12 - Related-Party Transactions (continued)

Deposits from officers and directors and their related interests were $92.0 million at December 31, 2022, and $113.8 million at December 31, 2021.

A director of the Company owns an interest in an entity from which the Company leases space for one of its Rockville, Maryland locations. Payments made in accordance with the lease were $82 thousand and $79 thousand in 2022 and 2021, respectively.

Company directors, or their related interests, held $2.5 million of the subordinated notes outstanding as of December 31, 2022. These notes hold a fixed rate of interest until November 30, 2025, after which it converts to variable rate.

Interest-Bearing Deposits - Maturities (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Deposits [Abstract]
2023	$ 181,455
2024	59,140
2025	51,339
2026	677
2027, and thereafter	804
Total	$ 293,415

Borrowed Funds (Tables)

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Schedule of Debt

As of December 31, 2022 and 2021, the Company was indebted as follows:



	2022				2021
(dollars in thousands)	Balance		Interest		Balance		Interest
FHLB fixed rate advance due October 16, 2025	$	22,000	0.93	%	$	22,000	0.93	%
FHLB fixed rate advance due March 20, 2023	50,000		4.42		—		—
FHLB daily rate advance due September 13, 2023	35,000		4.57		—		—
Total - FHLB advances	$	107,000	3.75	%	$	22,000	0.93	%


Junior subordinated debentures due June 15, 2036	$	2,062	6.64	%	$	2,062	2.07	%
Other subordinated notes due November 30, 2030	10,000		5.00		10,000		5.00



Total - Other borrowed funds	$	12,062	5.28	%	$	12,062	4.50	%

Investment Securities - Unrealized Losses (Details) $ in Thousands	Dec. 31, 2022 USD ($) security	Dec. 31, 2021 USD ($)
Debt Securities, Available-for-sale [Line Items]
AFS, Less than 12 Months, Fair Value	$ 111,777	$ 134,503
AFS, Less than 12 months, Unrealized Losses	(3,724)	(1,985)
AFS,12 Months or Longer, Fair Value	140,704	7,744
AFS, 12 months or longer, Unrealized Losses	(18,692)	(180)
AFS,Total, Fair Value	252,481	142,247
AFS, Total, Unrealized Losses	(22,416)	(2,165)
U.S. Treasuries
Debt Securities, Available-for-sale [Line Items]
AFS, Less than 12 Months, Fair Value	82,102	110,191
AFS, Less than 12 months, Unrealized Losses	(1,396)	(1,496)
AFS,12 Months or Longer, Fair Value	117,347	0
AFS, 12 months or longer, Unrealized Losses	(14,641)	0
AFS,Total, Fair Value	199,449	110,191
AFS, Total, Unrealized Losses	$ (16,037)	(1,496)
Number of securities in a loss position for greater than twelve months \| security	16
Municipal
Debt Securities, Available-for-sale [Line Items]
AFS, Less than 12 Months, Fair Value	$ 1,452	5,750
AFS, Less than 12 months, Unrealized Losses	(207)	(248)
AFS,12 Months or Longer, Fair Value	6,560	3,019
AFS, 12 months or longer, Unrealized Losses	(2,596)	(146)
AFS,Total, Fair Value	8,012	8,769
AFS, Total, Unrealized Losses	$ (2,803)	(394)
Number of securities in a loss position for greater than twelve months \| security	7
Corporate
Debt Securities, Available-for-sale [Line Items]
AFS, Less than 12 Months, Fair Value	$ 0	4,448
AFS, Less than 12 months, Unrealized Losses	0	(52)
AFS,12 Months or Longer, Fair Value	4,600	486
AFS, 12 months or longer, Unrealized Losses	(400)	(14)
AFS,Total, Fair Value	4,600	4,934
AFS, Total, Unrealized Losses	$ (400)	(66)
Number of securities in a loss position for greater than twelve months \| security	5
Asset-backed securities
Debt Securities, Available-for-sale [Line Items]
AFS, Less than 12 Months, Fair Value	$ 6,156	0
AFS, Less than 12 months, Unrealized Losses	(237)	0
AFS,12 Months or Longer, Fair Value	1,555	2,115
AFS, 12 months or longer, Unrealized Losses	(22)	(12)
AFS,Total, Fair Value	7,711	2,115
AFS, Total, Unrealized Losses	$ (259)	(12)
Number of securities in a loss position for greater than twelve months \| security	1
Mortgage-backed securities
Debt Securities, Available-for-sale [Line Items]
AFS, Less than 12 Months, Fair Value	$ 22,067	14,114
AFS, Less than 12 months, Unrealized Losses	(1,884)	(189)
AFS,12 Months or Longer, Fair Value	10,642	2,124
AFS, 12 months or longer, Unrealized Losses	(1,033)	(8)
AFS,Total, Fair Value	32,709	16,238
AFS, Total, Unrealized Losses	$ (2,917)	$ (197)
Number of securities in a loss position for greater than twelve months \| security	3

Stock-Based Compensation - Restricted Stock Summary (Details) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Less: Retired on vesting (in shares)	(4,968)	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Less: Retired on vesting (in dollars per share)	$ 14.44	$ 0
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested at beginning of year (in shares)	49,047	30,713
Add: Granted (in shares)	11,495	29,405
Less: Vested (in shares)	(15,905)	(11,071)
Less: Forfeited (in shares)	0	0
Nonvested at end of year (in shares)	39,669	49,047
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Nonvested at beginning of year (in dollars per share)	$ 14.33	$ 13.46
Add: Granted (in dollars per share)	24.66	14.88
Less: Vested (in dollars per share)	14.01	13.38
Less: Forfeited (in dollars per share)	0	0
Nonvested at end of year (in dollars per share)	$ 17.45	$ 14.33

Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

The Company’s primary leasing activities relate to certain real estate leases entered into in support of the Company’s branch operations and back-office operations. The Company leases its four full-service branches and three other locations for corporate/administration activities, operations, and loan production. All property leases under lease agreements have been designated as operating leases. The Company does not have leases designated as finance leases.

The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in premises and equipment, and operating lease liabilities are included as other liabilities in the consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The historical weighted average discount rate used was 1.94% at December 31, 2022 and 2.23% at December 31, 2021. The operating lease ROU asset also includes any lease pre-payments. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which the Company has elected to account for separately as the non-lease component amounts are readily determinable under most leases.

As of December 31, 2022, the Company’s net lease ROU assets and related lease liabilities were $2.1 million and $2.4 million, respectively, and have remaining terms ranging from 1 - 6 years, including extension options that the Company is reasonably certain will be exercised. As of December 31, 2022, the Company had not entered into any material leases that have not yet commenced. The Company’s lease information is summarized as follows:



(in thousands)	2022		2021
Lease Right-of-Use Asset
Lease asset	$	5,171	$	5,364
Less: Accumulated amortization	(3,074)		(2,898)
Net lease asset	$	2,097	$	2,466

Lease Liability
Lease liability	$	5,327	$	5,535
Less: Accumulated amortization	(2,968)		(2,800)
Net lease liability	$	2,359	$	2,735

Note 7 - Leases (continued)

Future minimum payments for operating leases with initial or remaining terms of one year or more are as follows at December 31, 2022:



(in thousands)	2022
Amounts due in:
2023	$	1,056
2024	715
2025	259
2026	255
2027 and thereafter	137
Total future lease payments	2,422
Discount of cash flows	(63)
Present value of net future lease payments	$	2,359

Operating lease and rent expense were $1.3 million and $1.2 million for the years ended December 31, 2022 and 2021, respectively.

Parent Company Financial Information - Statements of Cash Flows (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities
Net income	$ 41,804	$ 39,978
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	6,631	3,359
Stock-based compensation expense	1,662	1,347
Deferred income tax benefit	1,240	(1,927)
Changes in assets and liabilities:
Accrued interest receivable	(1,588)	233
Other assets	(4,382)	(1,222)
Accrued interest payable	558	(661)
Other liabilities	(4,773)	(3,210)
Net cash provided by operating activities	51,390	132,076
Cash flows from investing activities
Net cash used in investing activities	(198,455)	(238,231)
Cash flows from financing activities
Dividends paid	(3,085)	(1,382)
Proceeds from exercise of stock options	1,235	967
Net cash provided by financing activities	44,085	142,640
Net increase (decrease) in cash and cash equivalents	(102,980)	36,485
Cash and cash equivalents, beginning of year	183,395	146,910
Cash and cash equivalents, end of year	80,415	183,395
Parent Company
Cash flows from operating activities
Net income	41,804	39,978
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	0	70
Undistributed net income of subsidiaries	(29,594)	(32,956)
Stock-based compensation expense	1,662	1,347
Director and employee compensation paid in Company stock	171	519
Deferred income tax benefit	0	(14)
Changes in assets and liabilities:
Accrued interest receivable	(71)	83
Other assets	(31)	(14)
Accrued interest payable	4	1
Other liabilities	528	(130)
Net cash provided by operating activities	14,473	8,884
Cash flows from investing activities
Net increase in loans receivable	(11,319)	(9,269)
Capital contributions to subsidiaries	(1,662)	(1,347)
Net cash used in investing activities	(12,981)	(10,616)
Cash flows from financing activities
Dividends paid	(3,085)	(1,382)
Proceeds from exercise of stock options	1,235	967
Net cash provided by financing activities	(1,850)	(415)
Net increase (decrease) in cash and cash equivalents	(358)	(2,147)
Cash and cash equivalents, beginning of year	630	2,777
Cash and cash equivalents, end of year	$ 272	$ 630

Portfolio Loans Receivable

12 Months Ended

Dec. 31, 2022

Receivables [Abstract]

Portfolio Loans Receivable

Major classifications of portfolio loans are as follows:


	December 31,
	2022				2021
(in thousands)	Amount		Percent		Amount		Percent
Real estate:
Residential	$	484,735	28	%	$	401,607	26	%
Commercial	664,551		38		556,339		36
Construction	238,099		14		255,147		17
Commercial and Industrial	220,221		13		175,956		11
Credit card, net of reserve	128,434		7		141,120		9
Other consumer	1,179		—		1,033		—
Portfolio loans receivable, gross	1,737,219		100	%	1,531,202		100	%
Deferred origination fees, net	(8,627)				(7,220)
Allowance for loan losses	(26,385)				(25,181)
Portfolio loans receivable, net	$	1,702,207			$	1,498,801

Note 5 - Portfolio Loans Receivable (continued)

Other Consumer Loans. To a limited extent and typically as an accommodation to existing customers, personal consumer loans, such as term loans, car loans or boat loans are offered.

Note 5 - Portfolio Loans Receivable (continued)



(in thousands)			Provision for Loan Losses								Allowance for Loan Losses Ending Balance Evaluated for Impairment:				Outstanding Loan Balances Evaluated for Impairment:
December 31, 2022	Beginning Balance				Charge-Offs		Recoveries		Ending Balance		Individually		Collectively		Individually		Collectively
Real estate:
Residential	$	5,612	$	(131)	$	—	$	—	$	5,481	$	—	$	5,481	$	4,288	$	480,447
Commercial	8,566		(468)		—		—		8,098		—		8,098		1,563		662,988
Construction	4,699		(900)		(17)		—		3,782		—		3,782		2,837		235,262
Commercial and Industrial	2,637		298		—		—		2,935		372		2,563		705		219,516
Credit card (1)	3,655		7,833		(5,461)		51		6,078		—		6,078		—		128,434
Other consumer	12		(1)		—		—		11		—		11		—		1,179
Total	$	25,181	$	6,631	$	(5,478)	$	51	$	26,385	$	372	$	26,013	$	9,393	$	1,727,826

December 31, 2021
Real estate:
Residential	$	7,153	$	(1,541)	$	—	$	—	$	5,612	$	—	$	5,612	$	2,835	$	398,772
Commercial	6,786		1,941		(161)		—		8,566		—		8,566		25		556,314
Construction	4,595		103		—		1		4,699		—		4,699		7,803		247,344
Commercial and Industrial	2,417		253		(39)		6		2,637		218		2,419		676		175,280
Credit card (1)	2,462		2,612		(1,454)		35		3,655		—		3,655		—		141,120
Other consumer	21		(9)		—		—		12		—		12		—		1,033
Total	$	23,434	$	3,359	$	(1,654)	$	42	$	25,181	$	218	$	24,963	$	11,339	$	1,519,863

_______________

(1) Credit cards loans are collectively evaluated by past due status and as such are not individually risk rated.

Note 5 - Portfolio Loans Receivable (continued)

Past due portfolio loans, segregated by delinquency and class of loans, as of December 31, 2022 and 2021 were as follows:



	Loans 30-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More days Past Due		Nonaccrual Loans
(in thousands)
December 31, 2022
Real estate:
Residential	$	146	$	4,284	$	4,430	$	480,305	$	484,735	$	—	$	4,288
Commercial	—		1,563		1,563		662,988		664,551		—		1,563
Construction	1,804		2,837		4,641		233,458		238,099		—		2,837
Commercial and Industrial	503		569		1,072		219,149		220,221		—		705
Credit card	15,928		363		16,291		112,143		128,434		363		—
Other consumer	—		—		—		1,179		1,179		—		—
Total	$	18,381	$	9,616	$	27,997	$	1,709,222	$	1,737,219	$	363	$	9,393



December 31, 2021
Real estate:
Residential	$	469	$	2,494	$	2,963	$	398,644	$	401,607	$	72	$	2,835
Commercial	367		25		392		555,947		556,339		—		25
Construction	—		7,803		7,803		247,344		255,147		—		7,803
Commercial and Industrial	183		593		776		175,180		175,956		—		676
Credit card	19,022		10		19,032		122,088		141,120		10		—
Other consumer	—		—		—		1,033		1,033		—		—
Total	$	20,041	$	10,925	$	30,966	$	1,500,236	$	1,531,202	$	82	$	11,339

Impaired loans also include acquired loans for which management has recorded a non-accretable discount. Impaired loans as of December 31, 2022 and 2021 were as follows:



	Unpaid Contractual Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Recognized
(in thousands)
December 31, 2022
Real estate:
Residential	$	4,476	$	4,288	$	—	$	4,288	$	—	$	4,629	$	149
Commercial	1,647		1,563		—		1,563		—		1,656		52
Construction	2,939		2,837		—		2,837		—		2,938		75
Commercial and Industrial	899		247		458		705		372		1,199		77


Total	$	9,961	$	8,935	$	458	$	9,393	$	372	$	10,422	$	353



December 31, 2021
Real estate:
Residential	$	3,022	$	2,835	$	—	$	2,835	$	—	$	4,578	$	345
Commercial	90		25		—		25		—		90		82
Construction	7,885		7,803		—		7,803		—		9,746		209
Commercial and Industrial	832		340		336		676		218		1,056		282


Total	$	11,829	$	11,003	$	336	$	11,339	$	218	$	15,470	$	918

Note 5 - Portfolio Loans Receivable (continued)

There were $1.3 million and $6 thousand, respectively, of loans secured by one to four family residential properties in the process of foreclosure as of December 31, 2022 and 2021.

Credit quality indicators

The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. A description of the general characteristics of loans characterized as classified is as follows:

Special Mention

Substandard

Doubtful

Note 5 - Portfolio Loans Receivable (continued)

The following table presents the balances of classified loans based on the risk grade. Classified loans include Special Mention, Substandard, and Doubtful loans:



(in thousands)	Pass(1)		Special Mention		Substandard		Doubtful		Ungraded(2)		Total
December 31, 2022
Real estate:
Residential	$	469,304	$	9,966	$	5,465	$	—	$	—	$	484,735
Commercial	657,411		5,577		1,563		—		—		664,551
Construction	235,262		—		2,837		—		—		238,099
Commercial and Industrial	196,381		22,469		1,371		—		—		220,221
Credit card	—		—		—		—		128,434		128,434
Other consumer	1,179		—		—		—		—		1,179
Portfolio loans receivable, gross	$	1,559,537	$	38,012	$	11,236	$	—	$	128,434	$	1,737,219

December 31, 2021
Real estate:
Residential	$	394,488	$	2,540	$	4,579	$	—	$	—	$	401,607
Commercial	548,244		8,070		25		—		—		556,339
Construction	243,848		3,496		7,803		—		—		255,147
Commercial and Industrial	164,066		10,417		1,473		—		—		175,956
Credit card	—		—		—		—		141,120		141,120
Other consumer	1,033		—		—		—		—		1,033
Portfolio loans receivable, gross	$	1,351,679	$	24,523	$	13,880	$	—	$	141,120	$	1,531,202

________________________

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

(2)Credit card loans are not individually graded.

Note 5 - Portfolio Loans Receivable (continued)


	Number of Contracts	Recorded Investment
(dollars in thousands)		Performing		Nonperforming		Total
December 31, 2022
Real estate:
Residential	1	$	—	$	288	$	288





Total	1	$	—	$	288	$	288



December 31, 2021
Real estate:
Residential	4	$	—	$	450	$	450
Commercial and Industrial	1	—		83		83

Total	5	$	—	$	533	$	533

Note 5 - Portfolio Loans Receivable (continued)

Outstanding loan commitments were as follows:



	December 31,
(in thousands)	2022		2021
Unused lines of credit
Real Estate:
Residential	$	14,336	$	15,747
Residential - Home Equity	43,128		37,640
Commercial	36,609		17,225
Construction	93,913		118,518
Commercial and Industrial	45,747		45,135
Credit card(1)	111,227		123,874
Other consumer	102		2,247



	$	345,062	$	360,386

Commitments to originate residential loans held for sale	$	—	$	1,385

Letters of credit	$	5,105	$	5,105

_______________

(1) Outstanding loan commitments in the credit card portfolio include $106.9 million and $121.7 million in secured balances as of December 31, 2022 and 2021, respectively.

Note 5 - Portfolio Loans Receivable (continued)




(in thousands)	2022		2021
Balance at beginning of period	$	1,736	$	1,776
Provision for (reversal of) off balance sheet credit commitments	(54)		(40)
Add: Recoveries	—		—
Less: Charge-offs	—		—
Balance at end of period	$	1,682	$	1,736



(in thousands)	2022		2021
Balance at beginning of period	$	1,164	$	1,160
Provision for mortgage loan put backs	9		4
Add: Recoveries	—		—
Less: Charge-offs	—		—
Balance at end of period	$	1,173	$	1,164

Fair Value

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value

Generally accepted accounting principles define fair value, establish a framework for measuring fair value, recommend disclosures about fair value, and establish a hierarchy for determining fair value measurement. The hierarchy includes three levels and is based upon the valuation techniques used to measure assets and liabilities. The three levels are as follows:

Level 1 - Inputs to the valuation method are quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2 - Inputs to the valuation method include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument; and

Level 3 - Inputs to the valuation method are unobservable and significant to the fair value measurement.

Fair value measurements on a recurring basis

Investment securities available for sale - The fair values of the Company's investment securities available for sale are provided by an independent pricing service. The fair values of the Company's securities are determined based on quoted prices for similar securities under Level 1 or Level 2 inputs.

Loans held for sale - The fair value of loans held for sale is determined using Level 2 inputs of quoted prices for a similar asset, adjusted for specific attributes of that loan.

Derivative financial instruments - Derivative instruments used to hedge residential mortgage loans held for sale and the related interest rate lock commitments include forward commitments to sell mortgage loans and are reported at fair value utilizing Level 2 inputs. The fair values of derivative financial instruments are based on derivative market data inputs as of the valuation date and the underlying value of mortgage loans for rate lock commitments.

Note 17 - Fair Value (continued)

The Company has categorized its financial instruments measured at fair value on a recurring basis as of December 31, 2022 and December 31, 2021 as follows:



(in thousands)	Total		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
December 31, 2022
Investment securities available for sale

U.S. Treasuries	$	199,449	$	199,449	$	—	$	—
Asset-backed securities	7,711		—		7,711		—
Municipal	8,012		—		8,012		—
Corporate	4,600		—		4,600		—
Mortgage-backed securities	32,709		—		32,709		—
Total	$	252,481	$	199,449	$	53,032	$	—
Loans held for sale	$	7,416	$	—	$	7,416	$	—
Derivative assets	$	10	$	—	$	10	$	—
Derivative liabilities	$	—	$	—	$	—	$	—

December 31, 2021
Investment securities available for sale
U.S. Treasuries	$	131,001	$	131,001	$	—	$	—
Asset-backed securities	10,140		—		10,140		—
Municipal	10,474		—		10,474		—
Corporate	4,934		—		4,934		—
Mortgage-backed securities	27,906		—		27,906		—
Total	$	184,455	$	131,001	$	53,454	$	—
Marketable equity securities	$	245	$	245	$	—	$	—
Loans held for sale	$	15,989	$	—	$	15,989	$	—
Derivative assets	$	34	$	—	$	34	$	—
Derivative liabilities	$	16	$	—	$	16	$	—

Financial instruments recorded using FASB ASC 825-10

Under FASB ASC 825-10, the Company may elect to report most financial instruments and certain other items at fair value on an instrument-by-instrument basis with changes in fair value reported in net income. After the initial adoption, the election is made at the acquisition of an eligible financial asset, financial liability or firm commitment or when certain specified reconsideration events occur. The fair value election, with respect to an item, may not be revoked once an election is made.


Fair Value of Loans Held for Sale

(in thousands)	December 31, 2022		December 31, 2021

Aggregate fair value	$	7,416	$	15,989
Contractual principal	6,808		14,504
Difference	$	608	$	1,485

Note 17 - Fair Value (continued)

The Company elects to account for loans held for sale at fair value to eliminate the mismatch that would occur by recording changes in market value on derivative instruments used to hedge loans held for sale while carrying the loans at the lower of cost or market.

Fair value measurements on a nonrecurring basis

Impaired loans - The Company has measured impairment generally based on the fair value of the loan's collateral and discounted cash flow analysis. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values. As of December 31, 2022 and December 31, 2021, the fair values consist of loan balances of $9.4 million and $11.3 million, with valuation allowances of $372 thousand and $218 thousand, respectively.

Foreclosed real estate - The Company's foreclosed real estate is measured at fair value less cost to sell. Fair value was determined based on offers and/or appraisals. Cost to sell the real estate was based on standard market factors. The Company has categorized its foreclosed real estate as Level 3.


Fair Value of Impaired Loans and Foreclosed Real Estate

(in thousands)	2022		2021
Impaired loans


Level 3 Inputs	9,021		11,121
Total	$	9,021	$	11,121

Foreclosed real estate


Level 3 Inputs	—		86
Total	$	—	$	86

The following table provides information describing the unobservable inputs used in Level 3 fair value measurements at December 31, 2022 and 2021:

Inputs

Valuation Technique

Unobservable Inputs

General Range of Inputs

Impaired Loans

Appraised Value/Discounted Cash Flows

Discounts to appraisals or cash flows for estimated holding and/or selling costs

0 - 25%

Foreclosed Real Estate

Appraised Value/Comparable Sales

Discounts to appraisals for estimated holding and/or selling costs

0 - 25%

Fair value of financial instruments

Fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practical to estimate the value is based upon the characteristics of the instruments and relevant market information. Financial instruments include cash, evidence of ownership in an entity, or contracts that convey or impose on an entity the contractual right or obligation to either receive or deliver cash for another financial instrument.

Note 17 - Fair Value (continued)

The information used to determine fair value is highly subjective and judgmental in nature and, therefore, the results may not be precise. Subjective factors include, among other things, estimates of cash flows, risk characteristics, credit quality, and interest rates, all of which are subject to change. Since the fair value is estimated as of the balance sheet date, the amounts that will actually be realized or paid upon settlement or maturity on these various instruments could be significantly different.

As of December 31, 2022, the technique used by the Company to estimate the exit price of the loan portfolio consists of similar procedures to those used as of December 31, 2021, but with added emphasis on both illiquidity risk and credit risk not captured by the previously applied entry price notion. The fair value of the Company’s loan portfolio has always included a credit risk assumption in the determination of the fair value of its loans. This credit risk assumption is intended to approximate the fair value that a market participant would realize in a hypothetical orderly transaction. The Company’s loan portfolio is initially fair valued using a segmented approach. The Company divides its loan portfolio into the following categories: variable rate loans, impaired loans, and all other loans. The results are then adjusted to account for credit risk as described above. However, under the new guidance, the Company believes a further credit risk discount must be applied through the use of a discounted cash flow model to compensate for illiquidity risk, based on certain assumptions included within the discounted cash flow model, primarily the use of discount rates that better capture inherent credit risk over the lifetime of a loan. This consideration of enhanced credit risk provides an estimated exit price for the Company’s loan portfolio.

For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values approximate carrying values. Fair values for impaired loans are estimated using discounted cash flow models or based on the fair value of the underlying collateral.

The fair value of cash and cash equivalents, interest-bearing deposits at other financial institutions, federal funds sold and restricted investments is the carrying amount. Restricted stock includes equity of the Federal Reserve and other banker’s banks.

The fair value of noninterest-bearing deposits and securities sold under agreements to repurchase is the carrying amount.

The fair value of checking and savings deposits, and money market accounts, is the amount payable on demand at the reporting date. Fair value of fixed maturity term accounts and individual retirement accounts is estimated using rates currently offered for accounts of similar remaining maturities.

The fair value of certificates of deposit in other financial institutions is estimated based on interest rates currently offered for deposits of similar remaining maturities.

The fair value of borrowings is estimated by discounting the value of contractual cash flows using current market rates for borrowings with similar terms and remaining maturities.

The fair value of outstanding loan commitments, unused lines of credit, and letters of credit are not included in the table since the carrying value generally approximates fair value. These instruments generate fees that approximate those currently charged to originate similar commitments.

Note 17 - Fair Value (continued)

The table below presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments (in thousands).


Fair Value of Financial Assets and Liabilities
	December 31, 2022				December 31, 2021
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets
Level 1
Cash and due from banks	$	19,963	$	19,963	$	42,914	$	42,914
Interest-bearing deposits at other financial institutions	39,764		39,764		136,824		136,824
Marketable equity securities	—		—		245		245
Federal funds sold	20,688		20,688		3,657		3,657
Level 3
Loans receivable, net	$	1,704,370	$	1,659,283	$	1,607,086	$	1,598,228
Restricted investments	7,362		7,362		3,498		3,498

Financial liabilities
Level 1
Noninterest-bearing deposits	$	674,313	$	674,313	$	787,650	$	787,650

Level 3
Interest-bearing deposits	$	1,083,759	$	1,090,553	$	1,009,487	$	1,011,121
FHLB advances and other borrowed funds	119,062		116,544		34,062		34,263

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Nature of Business and Basis of Presentation (Tables)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Schedule of Computing Basic and Diluted Earnings Per Common Share

The following is a reconciliation of the numerators and denominators used in computing basic and diluted earnings per common share:


	For the Years Ended December 31,
	2022					2021
(dollars in thousands)	Income		Weighted Average Shares	Per Share Amount		Income		Weighted Average Shares	Per Share Amount
Basic EPS
Net income available to common stockholders	$	41,804	14,024,598	$	2.98	$	39,978	13,798,620	$	2.90
Effect of dilutive securities	—		337,605			—		282,783
Dilutive EPS per common share	$	41,804	14,362,203	$	2.91	$	39,978	14,081,403	$	2.84

Schedule of Accumulated Other Comprehensive Income Unrealized Gains and Losses


	For the Years Ended December 31,
(in thousands)	2022		2021
Unrealized losses on securities available for sale	$	(22,416)	$	(1,504)
Deferred tax benefit	5,665		428




Total accumulated comprehensive loss	$	(16,751)	$	(1,076)

Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Premises and equipment and the related depreciation and amortization consist of the following:



(in thousands)	2022		2021
Leasehold improvements	$	1,683	$	1,718
Furniture and equipment	4,775		4,657
Vehicle	54		54
Software	2,517		2,518
Construction in progress	694		—
	9,723		8,947
Less: Accumulated depreciation and amortization	(8,434)		(8,131)
Premises and equipment	1,289		816
Net lease asset	2,097		2,466
Premises and equipment, net	$	3,386	$	3,282

Depreciation and amortization expense	$	364	$	561

Investment Securities

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment SecuritiesThe investment securities portfolio consists primarily of U.S. government sponsored entity securities, asset-backed securities, securities issued by states, counties and municipalities, corporate bonds and mortgage-backed securities (“MBS”). The asset-backed securities are comprised of student loan collateral issued by the Federal Family Education Loan Program (“FFELP”) which includes a minimum of a 97% government repayment guarantee, as well as additional support in excess of the government guaranteed portion.

The amortized cost and estimated fair value of investment securities available for sale at December 31, 2022 and 2021 are summarized as follows:


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
(in thousands)
December 31, 2022
U.S. Treasuries	$	215,486	$	—	$	(16,037)	$	199,449
Municipal	10,815		—		(2,803)		8,012
Corporate	5,000		—		(400)		4,600
Asset-backed securities	7,970		—		(259)		7,711
Mortgage-backed securities	35,626		—		(2,917)		32,709
Total	$	274,897	$	—	$	(22,416)	$	252,481

December 31, 2021
U.S. Treasuries	$	132,452	$	45	$	(1,496)	$	131,001
Municipal	10,825		43		(394)		10,474
Corporate	5,000		—		(66)		4,934
Asset-backed securities	10,093		59		(12)		10,140
Mortgage-backed securities	27,589		514		(197)		27,906
Total	$	185,959	$	661	$	(2,165)	$	184,455

There were no securities sold during the year ended December 31, 2022. Proceeds from the sale of securities during the year ended December 31, 2021 were $66.5 million and resulted in gains of $694 thousand and losses of $541 thousand.

Information related to unrealized losses in the investment portfolio as of December 31, 2022 and 2021 is summarized as follows:


	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(in thousands)
December 31, 2022
U.S. Treasuries	$	82,102	$	(1,396)	$	117,347	$	(14,641)	$	199,449	$	(16,037)
Municipal	1,452		(207)		6,560		(2,596)		8,012		(2,803)
Corporate	—		—		4,600		(400)		4,600		(400)
Asset-backed securities	6,156		(237)		1,555		(22)		7,711		(259)
Mortgage-backed securities	22,067		(1,884)		10,642		(1,033)		32,709		(2,917)
Total	$	111,777	$	(3,724)	$	140,704	$	(18,692)	$	252,481	$	(22,416)

December 31, 2021
U.S. Treasuries	$	110,191	$	(1,496)	$	—	$	—	$	110,191	$	(1,496)
Municipal	5,750		(248)		3,019		(146)		8,769		(394)
Corporate	4,448		(52)		486		(14)		4,934		(66)
Asset-backed securities	—		—		2,115		(12)		2,115		(12)
Mortgage-backed securities	14,114		(189)		2,124		(8)		16,238		(197)
Total	$	134,503	$	(1,985)	$	7,744	$	(180)	$	142,247	$	(2,165)

At December 31, 2022, there were sixteen treasury securities, one asset-backed security, seven municipal securities, five corporate securities, and three mortgage-backed securities that have been in a loss position for greater than twelve months. Management believes that all unrealized losses have resulted from temporary changes in interest rates and current market conditions and not as a result of credit deterioration. Management has the ability and the intent to hold these investment securities until maturity or until they recover in value.

Note 3 - Investment Securities (continued)

There were no pledged securities at December 31, 2022 or December 31, 2021.

Contractual maturities of U.S. government-sponsored agencies, asset-backed, municipal, corporate and mortgage-backed securities at December 31, 2022 and 2021 are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	For the Years Ended December 31,
	2022				2021
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	53,739	$	53,204	$	—	$	—
Over one to five years	88,165		82,538		58,602		57,650
Over five to ten years	79,090		68,805		78,850		78,285
Over ten years	10,307		7,514		10,825		10,474
Asset-backed securities(1)	7,970		7,711		10,093		10,140
Mortgage-backed securities(1)	35,626		32,709		27,589		27,906
	$	274,897	$	252,481	$	185,959	$	184,455

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

Related-Party Transactions (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Related Party Transactions

Activity in related-party loans during 2022 and 2021 is shown below:



(in thousands)	2022		2021
Balance at beginning of year	$	32,524	$	19,275
Add: New loans	18,326		15,717
Less: Amounts collected	(14,545)		(2,468)

Balance at end of year	$	36,305	$	32,524

Portfolio Loans Receivable - Impaired Loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unpaid Contractual Principal Balance	$ 9,961	$ 11,829
Recorded Investment with no Allowance	8,935	11,003
Recorded Investment with Allowance	458	336
Total Recorded Investment	9,393	11,339
Related Allowance	372	218
Average Recorded Investment	10,422	15,470
Interest Recognized	353	918
Loans receivable, gross	1,737,219	1,531,202
Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	1,300	6
Residential \| Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unpaid Contractual Principal Balance	4,476	3,022
Recorded Investment with no Allowance	4,288	2,835
Recorded Investment with Allowance	0	0
Total Recorded Investment	4,288	2,835
Related Allowance	0	0
Average Recorded Investment	4,629	4,578
Interest Recognized		345
Loans receivable, gross	484,735	401,607
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unpaid Contractual Principal Balance	899	832
Recorded Investment with no Allowance	247	340
Recorded Investment with Allowance	458	336
Total Recorded Investment	705	676
Related Allowance	372	218
Average Recorded Investment	1,199	1,056
Interest Recognized		282
Loans receivable, gross	220,221	175,956
Commercial \| Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unpaid Contractual Principal Balance	1,647	90
Recorded Investment with no Allowance	1,563	25
Recorded Investment with Allowance	0	0
Total Recorded Investment	1,563	25
Related Allowance	0	0
Average Recorded Investment	1,656	90
Interest Recognized		82
Loans receivable, gross	664,551	556,339
Construction \| Real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unpaid Contractual Principal Balance	2,939	7,885
Recorded Investment with no Allowance	2,837	7,803
Recorded Investment with Allowance	0	0
Total Recorded Investment	2,837	7,803
Related Allowance	0	0
Average Recorded Investment	2,938	9,746
Interest Recognized		209
Loans receivable, gross	$ 238,099	$ 255,147

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

The components of income tax expense were as follows:



	For the Years Ended December 31,
(in thousands)	2022		2021
Current:
Federal	$	9,906	$	12,990
State	1,284		2,835
Total current expense	11,190		15,825
Deferred tax expense (benefit)	1,240		(1,927)
Total income tax expense	$	12,430	$	13,898

The components of the net deferred tax asset at December 31, 2022 and 2021 were:



(in thousands)	2022		2021
Deferred tax assets:
Allowance for loan and credit losses	$	7,073	$	6,674
Reserve for recourse on mortgage loans sold	297		364
Deferred loan fees - PPP	8		1,076


Stock-based compensation	257		320
Long-term incentive program	428		507


Unrealized loss on investment securities available for sale	5,665		428
Net operating loss carryforward	—		67
Other	85		532
	13,813		9,968
Deferred tax liabilities:



Accumulated depreciation	34		107
Other	2		1

	36		108
Net deferred tax asset before valuation allowance	13,777		9,860
Less: Valuation allowance	—		67
Net deferred tax asset	$	13,777	$	9,793

Note 13 - Income Taxes (continued)

The differences between the federal income tax rate and the effective tax rate for the Company are reconciled as follows:



	2022		2021
Statutory federal income tax rate	21.00	%	21.00	%
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit	2.58		3.97
Nondeductible expenses	0.56		0.44
Tax exempt income	(0.41)		(0.20)
Other	(0.78)		0.59
Effective Tax Rate	22.95	%	25.80	%

Deferred tax assets represent the future tax benefit of deductible differences and, if it is more likely than not that a tax asset will not be realized, a valuation allowance is required to reduce the net deferred tax assets to net realizable value. As of December 31, 2022, management has determined that it is more likely than not that the majority of the deferred tax asset from continuing operations will be realized. At December 31, 2021, a valuation allowance of $67 thousand was recognized for a State of Maryland net operating loss carryforward that may not be realizable. No such valuation allowance was recognized at December 31, 2022.

The Company does not have material uncertain tax positions and did not recognize any adjustments for unrecognized tax benefits. The Company remains subject to examination of income tax returns for the years ending after December 31, 2018.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Nature of Business and Basis of Presentation - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) segment	Dec. 31, 2021 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of reportable business segments \| segment	4
Derivative Asset Statement Of Financial Position, Extensible Enumeration, Not Disclosed Flag	balance sheet
Bank owned life insurance	$ 36,524	$ 35,506
Other non interest income	$ 1,018	$ 506
Minimum \| Premises And Equipment
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Useful lives	2 years
Maximum \| Premises And Equipment
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Useful lives	7 years

Leases - Additional Information (Details) $ in Thousands	12 Months Ended
Leases - Additional Information (Details) $ in Thousands	Dec. 31, 2022 USD ($) branch	Dec. 31, 2021 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of full service branches \| branch	4
Number of locations \| branch	3
Weighted average discount rate	1.94%	2.23%
ROU assets	$ 2,097	$ 2,466
Present value of net future lease payments	2,359	2,735
Rent expense	$ 1,300	$ 1,200
Minimum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Remaining term of contract	1 year
Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Remaining term of contract	6 years

Investment Securities (Tables)

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of Amortized Cost and Estimated Fair Value of Investment

The amortized cost and estimated fair value of investment securities available for sale at December 31, 2022 and 2021 are summarized as follows:


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
(in thousands)
December 31, 2022
U.S. Treasuries	$	215,486	$	—	$	(16,037)	$	199,449
Municipal	10,815		—		(2,803)		8,012
Corporate	5,000		—		(400)		4,600
Asset-backed securities	7,970		—		(259)		7,711
Mortgage-backed securities	35,626		—		(2,917)		32,709
Total	$	274,897	$	—	$	(22,416)	$	252,481

December 31, 2021
U.S. Treasuries	$	132,452	$	45	$	(1,496)	$	131,001
Municipal	10,825		43		(394)		10,474
Corporate	5,000		—		(66)		4,934
Asset-backed securities	10,093		59		(12)		10,140
Mortgage-backed securities	27,589		514		(197)		27,906
Total	$	185,959	$	661	$	(2,165)	$	184,455

Schedule of Investment Portfolio in Continuous Unrealized Loss Position, Fair Value

Information related to unrealized losses in the investment portfolio as of December 31, 2022 and 2021 is summarized as follows:


	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(in thousands)
December 31, 2022
U.S. Treasuries	$	82,102	$	(1,396)	$	117,347	$	(14,641)	$	199,449	$	(16,037)
Municipal	1,452		(207)		6,560		(2,596)		8,012		(2,803)
Corporate	—		—		4,600		(400)		4,600		(400)
Asset-backed securities	6,156		(237)		1,555		(22)		7,711		(259)
Mortgage-backed securities	22,067		(1,884)		10,642		(1,033)		32,709		(2,917)
Total	$	111,777	$	(3,724)	$	140,704	$	(18,692)	$	252,481	$	(22,416)

December 31, 2021
U.S. Treasuries	$	110,191	$	(1,496)	$	—	$	—	$	110,191	$	(1,496)
Municipal	5,750		(248)		3,019		(146)		8,769		(394)
Corporate	4,448		(52)		486		(14)		4,934		(66)
Asset-backed securities	—		—		2,115		(12)		2,115		(12)
Mortgage-backed securities	14,114		(189)		2,124		(8)		16,238		(197)
Total	$	134,503	$	(1,985)	$	7,744	$	(180)	$	142,247	$	(2,165)

Schedule of Investments Classified by Contractual Maturity Date


	For the Years Ended December 31,
	2022				2021
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	53,739	$	53,204	$	—	$	—
Over one to five years	88,165		82,538		58,602		57,650
Over five to ten years	79,090		68,805		78,850		78,285
Over ten years	10,307		7,514		10,825		10,474
Asset-backed securities(1)	7,970		7,711		10,093		10,140
Mortgage-backed securities(1)	35,626		32,709		27,589		27,906
	$	274,897	$	252,481	$	185,959	$	184,455

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

Cash and Cash Equivalents	12 Months Ended
Cash and Cash Equivalents	Dec. 31, 2022
Cash and Cash Equivalents [Abstract]
Cash and Cash Equivalents	Cash and Cash EquivalentsCash and cash equivalents include cash and amounts due from banks, interest-bearing deposits and federal funds sold. The Bank is required by regulations to maintain an average cash reserve balance based on a percentage of deposits; however, on March 15, 2020, the Federal Reserve announced that reserve requirement ratios would be reduced to zero percent effective March 26, 2020, due to economic conditions, which eliminated the reserve requirement for all depository institutions. The reserve requirement is still at zero percent as of December 31, 2022.

Borrowed Funds - Additional Information (Details) - USD ($)		12 Months Ended
	Nov. 30, 2020	Dec. 31, 2022	Dec. 31, 2021	Nov. 30, 2015	Jun. 15, 2006
Debt Instrument [Line Items]
Interest rate		3.75%	0.93%
Maximum borrowing capacity		$ 76,000,000
Line of credit, outstanding amount		0	$ 0
Certificates of deposits, brokered, outstanding		131,800,000
Line of Credit \| Federal Home Loan Bank
Debt Instrument [Line Items]
FHLB available borrowing capacity		$ 223,800,000	183,300,000
Line of Credit \| Pledged Loans \| Federal Home Loan Bank
Debt Instrument [Line Items]
FHLB maximum borrowing capacity, percent of assets		25.00%
Current borrowing capacity		$ 330,800,000	205,300,000
Line of Credit \| Pledged Loans \| Federal Reserve Bank Of Richmond
Debt Instrument [Line Items]
Current borrowing capacity		21,400,000	15,900,000
Line of Credit \| Collateral Pledged \| Federal Home Loan Bank
Debt Instrument [Line Items]
Investments at fair value		0	0
Certificates of Deposit \| Financial Network
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 310,500,000	$ 302,100,000
Maximum borrowing capacity, percent of assets		15.00%
Junior subordinated debentures due June 15, 2036 \| Junior Subordinated Debt
Debt Instrument [Line Items]
Interest rate		6.64%	2.07%
Junior subordinated debentures due June 15, 2036 \| Junior Subordinated Debt \| London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate		1.89%
Junior subordinated debentures due June 15, 2036 \| Junior Subordinated Debt \| Capital Securities
Debt Instrument [Line Items]
Securities issued (in shares)					2,000
Face amount					$ 2,000,000
Junior subordinated debentures due June 15, 2036 \| Junior Subordinated Debt \| Common Securities
Debt Instrument [Line Items]
Face amount					$ 62,000
Other subordinated notes due November 30, 2030 \| Senior Subordinated Notes
Debt Instrument [Line Items]
Face amount	$ 10,000,000
Interest rate	5.00%	5.00%	5.00%
Initial fixed rate term	5 years
Debt issuance costs	$ 50,000
Other subordinated notes due November 30, 2030 \| Senior Subordinated Notes \| Three Month SOFR
Debt Instrument [Line Items]
Basis spread on variable rate	4.90%
Other subordinated notes due December 1, 2025 \| Senior Subordinated Notes
Debt Instrument [Line Items]
Face amount				$ 13,500,000
Interest rate				6.95%

Income Taxes - Components of Net Deferred Tax Asset (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets:
Allowance for loan and credit losses	$ 7,073	$ 6,674
Reserve for recourse on mortgage loans sold	297	364
Deferred loan fees - PPP	8	1,076
Stock-based compensation	257	320
Long-term incentive program	428	507
Unrealized loss on investment securities available for sale	5,665	428
Net operating loss carryforward	0	67
Other	85	532
Deferred tax assets, gross	13,813	9,968
Deferred tax liabilities:
Accumulated depreciation	34	107
Other	2	1
Deferred tax liabilities, gross	36	108
Net deferred tax asset before valuation allowance	13,777	9,860
Less: Valuation allowance	0	67
Net deferred tax asset	$ 13,777	$ 9,793

Fair Value - Financial Instruments Measured at FV on Recurring Basis (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 252,481,000	$ 184,455,000
Loans held for sale	7,416,000	15,989,000
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	252,481,000	184,455,000
Marketable equity securities		245,000
Loans held for sale	7,416,000	15,989,000
Derivative assets	10,000	34,000
Derivative liabilities	0	16,000
Fair Value, Measurements, Recurring \| Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	199,449,000	131,001,000
Marketable equity securities		245,000
Loans held for sale	0	0
Derivative assets	0	0
Derivative liabilities	0	0
Fair Value, Measurements, Recurring \| Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	53,032,000	53,454,000
Marketable equity securities		0
Loans held for sale	7,416,000	15,989,000
Derivative assets	10,000	34,000
Derivative liabilities	0	16,000
Fair Value, Measurements, Recurring \| Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Marketable equity securities		0
Loans held for sale	0	0
Derivative assets	0	0
Derivative liabilities	0	0
U.S. Treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	199,449,000	131,001,000
U.S. Treasuries \| Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	199,449,000	131,001,000
U.S. Treasuries \| Fair Value, Measurements, Recurring \| Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	199,449,000	131,001,000
U.S. Treasuries \| Fair Value, Measurements, Recurring \| Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
U.S. Treasuries \| Fair Value, Measurements, Recurring \| Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	7,711,000	10,140,000
Asset-backed securities \| Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	7,711,000	10,140,000
Asset-backed securities \| Fair Value, Measurements, Recurring \| Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Asset-backed securities \| Fair Value, Measurements, Recurring \| Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	7,711,000	10,140,000
Asset-backed securities \| Fair Value, Measurements, Recurring \| Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	8,012,000	10,474,000
Municipal \| Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	8,012,000	10,474,000
Municipal \| Fair Value, Measurements, Recurring \| Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Municipal \| Fair Value, Measurements, Recurring \| Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	8,012,000	10,474,000
Municipal \| Fair Value, Measurements, Recurring \| Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Corporate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,600,000	4,934,000
Corporate \| Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,600,000	4,934,000
Corporate \| Fair Value, Measurements, Recurring \| Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Corporate \| Fair Value, Measurements, Recurring \| Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	4,600,000	4,934,000
Corporate \| Fair Value, Measurements, Recurring \| Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	32,709,000	27,906,000
Mortgage-backed securities \| Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	32,709,000	27,906,000
Mortgage-backed securities \| Fair Value, Measurements, Recurring \| Level 1 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	0	0
Mortgage-backed securities \| Fair Value, Measurements, Recurring \| Level 2 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	32,709,000	27,906,000
Mortgage-backed securities \| Fair Value, Measurements, Recurring \| Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 0	$ 0

Litigation	12 Months Ended
Litigation	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Litigation	LitigationThe Company is involved in legal proceedings occurring in the ordinary course of business. The aggregate effect of these, in management’s opinion, would not be material to the results of operations or financial condition of the Company.

Nature of Business and Basis of Presentation (Policies)	12 Months Ended
Nature of Business and Basis of Presentation (Policies)	Dec. 31, 2022
Accounting Policies [Abstract]
Nature of operations	Nature of operations: Capital Bancorp, Inc. is a Maryland corporation and bank holding company (the “Company”) for Capital Bank, N.A. (the “Bank”). The Company's primary operations are conducted by the Bank, which operates branches in Rockville and Columbia, Maryland; Reston, Virginia; and the District of Columbia. The Bank is principally engaged in the business of investing in commercial, real estate, and credit card loans and attracting deposits. The Company originates residential mortgages for sale in the secondary market through Capital Bank Home Loans, the Bank’s residential mortgage banking arm, and issues credit cards through OpenSky®, a secured, digitally-driven, nationwide credit card platform. The Company formed Church Street Capital, LLC (“Church Street Capital”) in 2014 to provide short-term secured real estate financing to Washington, D.C. area investors and developers that may not meet all Bank credit criteria. In addition, the Company owns all of the stock of Capital Bancorp (MD) Statutory Trust I (the “Trust”). The Trust is a special purpose non-consolidated entity organized for the sole purpose of issuing trust preferred securities.
Basis of presentation	Basis of presentation:The accompanying consolidated financial statements include the activity of the Company and its wholly-owned subsidiaries, the Bank and Church Street Capital. All intercompany transactions have been eliminated in consolidation. The Company reports its activities as four business segments: commercial banking; mortgage lending; credit cards; and corporate activities. In determining the appropriateness of segment definition, the Company considers components of the business about which financial information is available and regularly evaluated relative to resource allocation and performance assessment. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and conform to general practices within the banking industry.
Cash and cash equivalents	Cash and cash equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from financial institutions, interest-bearing deposits with financial institutions and federal funds sold. Generally, federal funds are sold for one-day periods.
Investment securities	Investment securities Investment securities are classified as available for sale and carried at fair value with unrealized gains and losses included in stockholders’ equity on an after-tax basis. Premiums and discounts on investment securities are amortized or accreted using the interest method. Changes in the fair value of debt securities available for sale are included in stockholder’s equity as unrealized gains and losses, net of the related tax effect. Unrealized losses are periodically reviewed to determine whether the loss represents an other than temporary impairment. Any unrealized losses judged to be other than a temporary impairment will be charged to income.
Marketable equity securities	Marketable equity securitiesMarketable equity securities are carried at fair value with realized gains and losses included in earnings. Premiums and discounts on investment securities are amortized or accreted using the interest method. Changes in the fair value of equity securities are also included in earnings as gain or loss on marketable equity securities.
Loans held for sale	Loans held for sale Mortgage loans originated and intended for sale are recorded at fair value, determined individually, as of the balance sheet date. Fair value is determined based on outstanding investor commitments, or in the absence of such commitments, based on current investor yield requirements. Gains and losses on loan sales are determined by the specific-identification method. The Company’s current practice is to sell residential mortgage loans on a servicing released basis, and, therefore, it has no intangible asset recorded for the value of such servicing. Interest on loans held for sale is credited to income based on the principal amounts outstanding. Upon sale and delivery, loans are legally isolated from the Company and the Company has no ability to restrict or constrain the ability of third‑party investors to pledge or exchange the mortgage loans. The Company does not have the entitlement or ability to repurchase the mortgage loans or unilaterally cause third‑party investors to put the mortgage loans back to the Company. Unrealized and realized gains on loan sales are determined using the specific-identification method and are recognized through mortgage banking activity in the Consolidated Statements of Income. The Company elects to measure loans held for sale at fair value to better align reported results with the underlying economic changes in value of the loans on the Company’s balance sheet.
Portfolio loans and the allowance for loan losses	Portfolio loans and the allowance for loan losses Loans are stated at the principal amount outstanding, adjusted for deferred origination fees and costs, discounts on loans acquired, and the allowance for loan losses. Interest is accrued based on the loan principal balances and stated interest rates. Origination fees and costs are recognized as an adjustment to the related loan yield using approximate interest methods. For credit card loans, loan origination fees and direct loan origination costs are amortized on a straight-line basis over a 12-month period. Note 1 - Nature of Business and Basis of Presentation (continued) The Company discontinues the accrual of interest at the earlier of when any portion of the principal and/or interest is 90 days past due, or when it is probable that not all principal and interest payments will be collected, and collateral is insufficient to discharge the debt in full. Generally, interest payments on nonaccrual loans are recorded as a reduction of the principal balance. Loans are considered impaired when, based on current information, management believes the Company will not collect all principal and interest payments according to contractual terms. Generally, loans are reviewed for impairment when the risk grade for a loan is downgraded to a classified asset category. The loans are evaluated for appropriate classification, accrual, impairment, and troubled debt restructure status. If collection of principal is evaluated as doubtful, all payments are applied to principal. A modification of a loan is considered a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession. The Company may consider interest rate reductions, changes to payment terms, extensions of maturities and/or principal reductions. Loans are generally charged-off in part or in full when management determines the loan to be uncollectible. Factors for charge-off that may be considered include: repayments deemed to be extended out beyond reasonable time frames, client bankruptcy and lack of assets, and/or collateral deficiencies. For credit card loans, accrued interest and assessed late fees are charged off simultaneously with the charge off of other components of amortized costs as other operating expense. The allowance for loan losses is estimated to adequately provide for probable future losses on existing loans. The allowance consists of specific and general components. For loans that are classified as impaired, an allowance is established when the collateral value, if the loan is collateral dependent, or the discounted cash flows of the impaired loan is lower than the carrying value of that loan. The general component covers pools of nonclassified loans and is based on historical loss experience adjusted with qualitative factors such as: trends in volume and terms of loans; levels of, and trends in, delinquencies and non-accruals; effects of any changes in lending policies, experience, ability and depth of management; national and local economic trends and conditions; commitments and concentrations of credit; changes in the quality of the Company’s loan review system; and the volume of loans with identified incomplete financial documentation. Actual loan performance may differ materially from those estimates. A loss is recognized as a charge to the allowance when management believes that collection of the loan is unlikely. Collections of loans previously charged off are added to the allowance at the time of recovery. The components of the allowance for loan losses represent an estimation done pursuant to Accounting Standards Codification (“ASC”) Topic 450, “Contingencies,” or ASC Topic 310,“Receivables.” Specific allowances are established in cases where management has identified significant conditions or circumstances related to a specific credit that management believes indicate the probability that a loss may be incurred. The process for determining an appropriate allowance for loan losses is based on a comprehensive, well-documented, and consistently applied analysis of the loan portfolio. The analysis considers significant factors that affect the collectability of the portfolio and supports the loan losses estimated by this process. It is important to recognize that the related process, methodology, and underlying assumptions require a substantial degree of judgment. Note 1 - Nature of Business and Basis of Presentation (continued) Management believes that the allowance for loan losses is adequate; however, determination of the allowance is inherently subjective and requires significant estimates. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. Evaluation of the potential effects of these factors on estimated losses involves a high degree of uncertainty, including the strength and timing of economic cycles and concerns over the effects of a prolonged economic downturn in the current cycle. In addition, various banking agencies, as an integral part of their examination process, and independent consultants engaged by the Bank, periodically review the Bank’s loan portfolio and allowance for loan losses. Such review may result in recognition of additions to the allowance based on their evaluation of information available to them at the time of their examination. The review of the adequacy of the allowance for loan losses includes an assessment of the fair value adjustment for acquired loans in accordance with generally accepted accounting principles.
Premises and equipment	Premises and equipmentPremises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related property, generally over two to seven years. Leasehold improvements are amortized over the estimated term of the respective leases, which may include renewal options where management has the positive intent to exercise such options, or the estimated useful lives of the improvements, whichever is less. The costs of major renewals and improvements are capitalized with the corresponding costs associated with amortization or depreciation included as a component of occupancy and equipment expenses. Expenditures for maintenance, repairs, and minor replacements are charged to noninterest expenses as incurred.
Leases	Leases The Company accounts for leases according to ASU 2016-02, Leases (Topic 842), and applies a right-of-use (“ROU”) model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset and a liability to make lease payments. The Company elected to apply the package of practical expedients permitting entities to not reassess: 1) whether any expired or existing contracts are or contain leases; 2) the lease classification for any expired or existing leases; and 3) initial direct costs for any existing leases. Additionally, as provided by ASU 2016-02, the Company elected not to apply the recognition requirements of ASC 842 to short-term leases, defined as leases with a term of 12 months or less, and to recognize the lease payments in net income on short-term leases on a straight-line basis over the lease term.
Derivative financial instruments	Derivative financial instruments The Company enters into commitments to fund residential mortgage loans (interest rate locks) with the intention of selling them in the secondary market. The Company also enters into forward sales agreements for certain funded loans and loan commitments. The Company records unfunded commitments intended for loans held for sale and forward sales agreements at fair value with changes in fair value recorded as a component of mortgage banking revenue. Loans originated and intended for sale in the secondary market are carried at fair value. For pipeline loans which are not pre-sold to an investor, the Company endeavors to manage the interest rate risk on rate lock commitments by entering into forward sale contracts, whereby the Company obtains the right to deliver securities to investors in the future at a specified price. Such contracts are accounted for as derivatives and are recorded at fair value as derivative assets or liabilities, with changes in fair value recorded in mortgage banking revenue. Note 1 - Nature of Business and Basis of Presentation (continued) The Company accounts for derivative instruments and hedging activities according to guidelines established in ASC 815-10, Accounting for Derivative Instruments and Hedging Activities, as amended. The Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. Changes in fair value of derivatives designated and accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in other comprehensive income, net of deferred taxes. Any hedge ineffectiveness would be recognized in the income statement line item pertaining to the hedged item.
Fair value measurements	Fair value measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are traded actively and have quoted market prices or observable market inputs, there is minimal subjectivity involved in measuring fair value. However, when quoted market prices or observable market inputs are not fully available, significant management judgment may be necessary to estimate fair value. In developing our fair value estimates, we strive to maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines Level 1 valuations as those based on quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 valuations include inputs based on quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 valuations are based on at least one significant assumption not observable in the market, or significant management judgment or estimation, some of which may be internally developed. Financial assets that are recorded at fair value on a recurring basis include investment securities available for sale, loans held for sale, and derivative financial instruments. Financial liabilities that are recorded at fair value on a recurring basis are comprised of derivative financial instruments. See Note 17 - Fair Value.
Income taxes	Income taxesThe Company employs the asset and liability method of accounting for income taxes as required by ASC Topic 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities (i.e., temporary timing differences) and are measured at the enacted rates that will be in effect when these differences reverse. The Company utilizes statutory requirements for its income tax accounting, and limits risks associated with potentially problematic tax positions that may incur challenge upon audit, where an adverse outcome is more likely than not. Therefore, no provisions are necessary for either uncertain tax positions nor accompanying potential tax penalties and interest for underpayments of income taxes in the Company’s tax reserves. In accordance with ASC Topic 740, the Company may establish a valuation allowance against deferred tax assets in those cases where realization is less than certain.
Earnings per share	Earnings per shareEarnings per share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding, adjusted for the dilutive effect of stock options and restricted stock using the treasury stock method.
Comprehensive income	Comprehensive income The Company reports as comprehensive income all changes in stockholders' equity during the year from sources other than stockholders. Other comprehensive income refers to all components (income, expenses, gains, and losses) of comprehensive income that are excluded from net income.
Recently issued accounting pronouncements	Recently issued accounting pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. ASU 2016-13 introduces guidance to change the accounting for loan losses and modifies the impairment model for certain debt securities. This ASU introduced a new model known as CECL. CECL changes the impairment model for most financial assets, and will require the use of an “expected credit loss” model for financial instruments measured at amortized cost and certain other instruments, such as off-balance sheet credit exposures, loan commitments, standby letters of credit, net investments in leases recognized by a lessor and HTM debt securities. This model requires entities to estimate the lifetime expected credit loss on such instruments and record an allowance that represents the portion of the amortized cost basis that the entity does not expect to be collected, considering relevant information about historical experience, current conditions and reasonable supportable forecast. ASU 2016-13 offers a simplified accounting model for purchased financial assets with more than insignificant credit deterioration since their origination. Additionally, ASU 2016-13 also modifies certain provisions of the current other-than-temporary impairment model for AFS debt securities. Credit losses on AFS debt securities will be restricted to the difference between the security’s amortized cost basis and its fair value. In April 2019, the FASB issued ASU 2019-04 which elaborates on the treatment of accrued interest when measuring credit losses. To meet disclosure requirements, we elected a practical expedient to disclose separately the total amount of accrued interest included in the amortized cost basis as a single balance. ASU 2019-04 explains that expected recoveries of amounts previously written off and expected to be written off should be included in the valuation account and should not exceed the aggregate of amounts previously written off and expected to be written off by the entity. In addition, for collateral dependent financial assets, the amendments clarify that an allowance for credit losses that is added to the amortized cost basis of the financial asset(s) should not exceed amounts previously written off. In November 2019, the FASB issued ASU 2019-10, which delayed the effective date of ASU 2016-13 to fiscal years beginning after December 15, 2022 for smaller reporting companies. While early adoption was permitted, the Company did not elect that option. The Company adopted this guidance on January 1, 2023 using the modified retrospective approach. Upon adoption of this standard, the Company expects the adoption to result in a change to the Allowance for Loan Losses of less than $1.0 million which will be reflected in the Company’s first quarter 2023 Form 10-Q when the Company will also be subject to the amended disclosure requirements of the standard. The Company expects the adoption of the CECL framework to also impact its off-balance sheet exposures, such as its unfunded commitments. Upon adoption of ASU 2016-13, the company expects to make an adjustment to its reserve for unfunded commitments in an amount less than $1.0 million. In addition to its allowance for loan losses and its reserve for unfunded commitments, the Company is required to record an allowance for losses on held-to-maturity debt securities with the CECL adoption. The Company did not hold any held to maturity securities that would be impacted by ASU 2016-13 as of the adoption date. In March 2020, the FASB released ASU 2020-04 - Reference Rate Reform, Topic 848, which provides temporary guidance to ease the potential accounting burden in accounting for, or recognizing the effects from, reference rate reform on financial reporting. The new standard is a result of London Interbank Offered Rate (“LIBOR”) likely being discontinued as an available benchmark rate. The standard is elective and provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, or other transactions that reference LIBOR, or another reference rate expected to be discontinued. The amendments in the update are effective for all entities between March 12, 2020 and an extended sunset date of December 31, 2024 which was extended by ASU 2022-06 issued by FASB in December 2022. The Company is currently evaluating products and preparing to offer new rates. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements. In February 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The ASU eliminates the accounting guidance for troubled debt restructurings by creditors and enhances disclosure requirements for certain loan re-financings and restructurings by creditors when a borrower is experiencing financial difficulty. The amendments also add requirements to disclose current-period gross write-offs by year of origination for financing receivables. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is in the process of reviewing the enhanced modification disclosure requirements. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company's financial position, results of operations or cash flows.
Reclassifications	Reclassifications: Certain reclassifications have been made to amounts reported in prior periods to conform to the current period presentation. The reclassifications had no material effect on net income or total stockholders' equity.

Interest-Bearing Deposits

12 Months Ended

Dec. 31, 2022

Deposits [Abstract]

Interest-Bearing Deposits

Major categories of interest-bearing deposits are as follows:




(in thousands)	2022		2021
Interest-bearing demand accounts	$	207,836	$	330,924
Money market accounts	574,978		493,919
Savings	7,530		6,994
Certificates of deposit of $250,000 or more	96,291		108,827
Other time deposits	197,124		68,823
Total Interest-bearing deposits	$	1,083,759	$	1,009,487

The Company had $131.1 million in brokered deposits at December 31, 2022 compared to none at December 31, 2021.

Deposits securing our OpenSky® card lines of credit and deposits from title companies represent the largest concentrations in the deposit portfolio. As of December 31, 2022, these concentrations represent 11% and 13% of deposits, respectively. As of December 31, 2021, these deposits represented 13% and 18% of deposits, respectively.

Certificates of deposit, as of December 31, 2022, mature as follows:



(in thousands)
2023	$	181,455
2024	59,140
2025	51,339
2026	677
2027, and thereafter	804
Total	$	293,415

Stock-Based Compensation - Stock Option Summary (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range (in dollars per share)	$ 13.63	$ 12.55
Weighted Average Exercise Price (in dollars per share)	$ 15.37	$ 14.77	$ 12.21
Average Remaining Life (years)	2 years 1 month 9 days	2 years 9 months 18 days
Outstanding Shares (in shares)	811,160	1,060,023	1,169,413
Exercisable Shares (in shares)	538,066	551,804
Outstanding Shares, intrinsic value	$ 7,020,560	$ 12,143,007
Exercisable shares, intrinsic value	$ 5,428,713	$ 7,529,711
Exercise Price Range 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price (in dollars per share)	$ 13.02	$ 12.89
Average Remaining Life (years)	1 year 8 months 23 days	2 years 5 months 12 days
Outstanding Shares (in shares)	648,651	892,529
Exercisable Shares (in shares)	492,909	546,804
Exercise Price Range 1 \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range (in dollars per share)	$ 10.70	$ 10.70
Exercise Price Range 1 \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range (in dollars per share)	14.63	14.63
Exercise Price Range 2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price (in dollars per share)	$ 14.96	$ 14.96
Average Remaining Life (years)	2 years 1 month 20 days	3 years 1 month 20 days
Outstanding Shares (in shares)	22,750	22,750
Exercisable Shares (in shares)	10,688	5,000
Exercise Price Range 2 \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range (in dollars per share)	$ 14.64	$ 14.64
Exercise Price Range 2 \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range (in dollars per share)	18.56	18.56
Exercise Price Range 3
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price (in dollars per share)	$ 21.86	$ 21.86
Average Remaining Life (years)	3 years 25 days	4 years 8 months 15 days
Outstanding Shares (in shares)	2,500	2,500
Exercisable Shares (in shares)	625	0
Exercise Price Range 3 \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range (in dollars per share)	$ 18.57	$ 18.57
Exercise Price Range 3 \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range (in dollars per share)	22.49	22.49
Exercise Price Range 4
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Exercise Price (in dollars per share)	$ 26.38	$ 26.41
Average Remaining Life (years)	3 years 10 months 9 days	5 years
Outstanding Shares (in shares)	137,259	142,244
Exercisable Shares (in shares)	33,844	0
Exercise Price Range 4 \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range (in dollars per share)	$ 22.50	$ 22.50
Exercise Price Range 4 \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise Price Range (in dollars per share)	$ 26.41	$ 26.41

Fair Value - Impaired Loans and Foreclosed Real Estate (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans, net	$ 458	$ 336
Impaired loans, valuation allowance	372	218
Impaired loans	9,393	11,339
Foreclosed real estate	0	86
Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Foreclosed real estate	0
Fair Value, Measurements, Nonrecurring \| Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans, net	9,400	11,300
Impaired loans, valuation allowance	372	218
Impaired loans	9,021	11,121
Foreclosed real estate	$ 0	$ 86
Minimum \| Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans, discounts to appraisals or cash flows for estimated holding and/or selling costs, percent	0.00%
Foreclosed real estate, discounts to appraisals for estimated holding and/or selling costs, percent	0.00%
Maximum \| Level 3 Inputs
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans, discounts to appraisals or cash flows for estimated holding and/or selling costs, percent	25.00%
Foreclosed real estate, discounts to appraisals for estimated holding and/or selling costs, percent	25.00%

Stock-Based Compensation - Stock Options Outstanding (Details) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning of year (in shares)	1,060,023	1,169,413
Add: Granted (in shares)	2,000	170,244
Less: Exercised (in shares)	(160,590)	(186,461)
Less: Retired on exercise (in shares)	(63,697)	(54,192)
Less: Expired/cancelled/forfeited (in shares)	(26,576)	(38,981)
Outstanding at end of year (in shares)	811,160	1,060,023
Exercisable at end of year (in shares)	538,066	551,804
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Outstanding at beginning of year (in dollars per share)	$ 14.77	$ 12.21
Add: Granted (in dollars per share)	24.25	24.51
Less: Exercised (in dollars per share)	12.46	9.61
Less: Retired on exercise (in dollars per share)	12.52	9.41
Less: Expired/cancelled/forfeited (in dollars per share)	12.82	7.43
Outstanding at end of year (in dollars per share)	15.37	14.77
Exercise Price Range (in dollars per share)	$ 13.63	$ 12.55

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2022
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events The Company has disclosed information about deposit concentrations in Note 9. In relation to the current economic conditions, management has monitored deposit concentrations through the date the financial statements were issued, noting no significant changes to concentrations. In addition, there has been no significant changes in the characteristics of the deposit book through the date the financial statements were issued. The company has disclosed its investment portfolio position in Note 3. There has been no significant changes in the composition of the investment portfolio through the date the consolidated financial statements were issued.

Consolidated Statements of Income - USD ($) $ in Thousands	12 Months Ended
Consolidated Statements of Income - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Interest income
Loans, including fees	$ 144,408	$ 120,784
Investment securities available for sale	3,912	2,010
Federal funds sold and other	2,326	449
Total interest income	150,646	123,243
Interest expense
Deposits	7,611	5,808
Borrowed funds	2,428	742
Total interest expense	10,039	6,550
Net interest income	140,607	116,693
Provision for loan losses	6,631	3,359
Net interest income after provision for loan losses	133,976	113,334
Noninterest income
Gain on sale of investment securities available for sale, net	0	153
Other income	1,767	1,147
Total noninterest income	29,372	50,636
Noninterest expenses
Salaries and employee benefits	42,898	37,843
Occupancy and equipment	4,865	4,327
Professional fees	11,012	6,996
Data processing	29,418	39,237
Advertising	6,220	4,803
Loan processing	1,702	3,527
Other real estate expenses (income), net	(183)	368
Other operating	13,182	12,993
Total noninterest expenses	109,114	110,094
Income before income taxes	54,234	53,876
Income tax expense	12,430	13,898
Net income	$ 41,804	$ 39,978
Basic earnings per share (in dollars per share)	$ 2.98	$ 2.90
Diluted earnings per share (in dollars per share)	$ 2.91	$ 2.84
Weighted average common shares outstanding:
Basic (in shares)	14,024,598	13,798,620
Diluted (in shares)	14,362,203	14,081,403
Service charges on deposits
Noninterest income
Noninterest income	$ 767	$ 609
Credit card fees
Noninterest income
Noninterest income	21,972	27,884
Mortgage banking revenue
Noninterest income
Noninterest income	$ 4,866	$ 20,843

Retirement Plans (Details) - USD ($) $ in Thousands	12 Months Ended
Retirement Plans (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Defined Benefit Plan, Plan Assets, Allocation [Line Items]
Company's contribution, percent of eligible compensation	3.00%
Company's contribution to the plan	$ 850	$ 398
Total vesting percentage	100.00%
Service period	10 years
Continuous employment period	10 years
Age of participant attaining separation under the LTIP	67 years
Chief Executive Officer
Defined Benefit Plan, Plan Assets, Allocation [Line Items]
Defined contribution plan earn an annual contribution percent	20.00%
Executive Management
Defined Benefit Plan, Plan Assets, Allocation [Line Items]
Defined contribution plan earn an annual contribution percent	15.00%

Premises and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Premises and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	$ 9,723	$ 8,947
Less: Accumulated depreciation and amortization	(8,434)	(8,131)
Premises and equipment	1,289	816
Net lease asset	2,097	2,466
Premises and equipment, net	3,386	3,282
Depreciation and amortization expense	364	561
Leasehold improvements
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	1,683	1,718
Furniture and equipment
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	4,775	4,657
Vehicle
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	54	54
Software
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	2,517	2,518
Construction in progress
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	$ 694	$ 0

Nature of Business and Basis of Presentation - Recently Issued Accounting Pronouncements (Details) - Accounting Standards Update 2016-13 - Cumulative Effect, Period of Adoption, Adjustment - USD ($) $ in Millions	Jan. 01, 2023	Mar. 31, 2023
Subsequent Event
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Change to allowance for loan losses	$ 1.0
Unfunded Lines of Credit \| Forecast
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Portfolio loans receivable, net		$ 1.0

Capital Standards (Tables)

12 Months Ended

Dec. 31, 2022

Mortgage Banking [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations


Regulatory Capital
	Actual				Minimum Capital Adequacy				To Be Well Capitalized				Full Phase In of Basel III
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount	Ratio
December 31, 2022
The Company
Tier 1 leverage ratio (to average assets)	$	242,829	11.24	%	$	86,442	4.00	%	N/A		N/A		N/A	N/A
Tier 1 capital (to risk-weighted assets)	242,829		15.13	%	96,315		6.00	%	N/A		N/A		136,447	8.50	%
Common equity tier 1 capital ratio (to risk-weighted assets)	240,767		15.00	%	$	72,237	4.50	%	N/A		N/A		112,368	7.00	%
Total capital ratio (to risk-weighted assets)	262,217		16.33	%	$	128,421	8.00	%	N/A		N/A		168,552	10.50	%

The Bank
Tier 1 leverage ratio (to average assets)	$	199,846	9.47	%	$	84,416	4.00	%	$	105,521	5.00	%	N/A	N/A
Tier 1 capital (to risk-weighted assets)	199,846		12.95	%	92,574		6.00	%	123,432		8.00	%	131,147	8.50	%
Common equity tier 1 capital ratio (to risk-weighted assets)	199,846		12.95	%	69,431		4.50	%	100,289		6.50	%	108,003	7.00	%
Total capital ratio (to risk-weighted assets)	219,234		14.21	%	123,432		8.00	%	154,290		10.00	%	162,005	10.50	%

December 31, 2021
The Company
Tier 1 leverage ratio (to average assets)	$	201,040	9.73	%	$	82,683	4.00	%	N/A		N/A		N/A	N/A
Tier 1 capital (to risk-weighted assets)	201,040		14.43	%	83,596		6.00	%	N/A		N/A		118,428	8.50	%
Common equity tier 1 capital ratio (to risk-weighted assets)	198,978		14.28	%	62,697		4.50	%	N/A		N/A		97,529	7.00	%
Total capital ratio (to risk-weighted assets)	228,574		16.41	%	111,462		8.00	%	N/A		N/A		146,294	10.50	%

The Bank
Tier 1 leverage ratio (to average assets)	$	169,384	8.36	%	$	81,070	4.00	%	$	101,338	5.00	%	N/A	N/A
Tier 1 capital (to risk-weighted assets)	169,384		12.53	%	81,097		6.00	%	108,130		8.00	%	114,888	8.50	%
Common equity tier 1 capital ratio (to risk-weighted assets)	169,384		12.53	%	60,823		4.50	%	87,856		6.50	%	94,614	7.00	%
Total capital ratio (to risk-weighted assets)	186,397		13.79	%	108,130		8.00	%	135,162		10.00	%	141,921	10.50	%

Stock-Based Compensation - Additional Information (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) plan $ / shares shares	Dec. 31, 2021 USD ($) $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense \| $	$ 1,800	$ 1,400
Number of shares authorized (in shares) \| shares	2,020,000
Weighted average grant date fair value (in dollars per share) \| $ / shares	$ 11.49	$ 12.56
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of incentive compensation plans \| plan	2
Number of shares authorized (in shares) \| shares	1,120,000
Number of shares additional authorized (in shares) \| shares	900,000
Number of shares available for grant (in shares) \| shares	896,462
Award vesting period	4 years
Awards exercisable each anniversary of grant date, percent	25.00%
Unrecognized compensation expense period for recognition	5 years	5 years
Unrecognized compensation expense \| $	$ 1,200	$ 2,900
Exercises in period, intrinsic value \| $	1,900	4,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense (awards other than options) \| $	$ 429	$ 189

Portfolio Loans Receivable (Tables)

12 Months Ended

Dec. 31, 2022

Receivables [Abstract]

Schedule of Loans Receivable

Major classifications of portfolio loans are as follows:


	December 31,
	2022				2021
(in thousands)	Amount		Percent		Amount		Percent
Real estate:
Residential	$	484,735	28	%	$	401,607	26	%
Commercial	664,551		38		556,339		36
Construction	238,099		14		255,147		17
Commercial and Industrial	220,221		13		175,956		11
Credit card, net of reserve	128,434		7		141,120		9
Other consumer	1,179		—		1,033		—
Portfolio loans receivable, gross	1,737,219		100	%	1,531,202		100	%
Deferred origination fees, net	(8,627)				(7,220)
Allowance for loan losses	(26,385)				(25,181)
Portfolio loans receivable, net	$	1,702,207			$	1,498,801

Schedule of Allowance for Credit Losses on Loans Receivables

The following tables present, by class and reserving methodology, the allocation of the allowance for loan losses and the gross investment in loans as of December 31, 2022 and 2021.



(in thousands)			Provision for Loan Losses								Allowance for Loan Losses Ending Balance Evaluated for Impairment:				Outstanding Loan Balances Evaluated for Impairment:
December 31, 2022	Beginning Balance				Charge-Offs		Recoveries		Ending Balance		Individually		Collectively		Individually		Collectively
Real estate:
Residential	$	5,612	$	(131)	$	—	$	—	$	5,481	$	—	$	5,481	$	4,288	$	480,447
Commercial	8,566		(468)		—		—		8,098		—		8,098		1,563		662,988
Construction	4,699		(900)		(17)		—		3,782		—		3,782		2,837		235,262
Commercial and Industrial	2,637		298		—		—		2,935		372		2,563		705		219,516
Credit card (1)	3,655		7,833		(5,461)		51		6,078		—		6,078		—		128,434
Other consumer	12		(1)		—		—		11		—		11		—		1,179
Total	$	25,181	$	6,631	$	(5,478)	$	51	$	26,385	$	372	$	26,013	$	9,393	$	1,727,826

December 31, 2021
Real estate:
Residential	$	7,153	$	(1,541)	$	—	$	—	$	5,612	$	—	$	5,612	$	2,835	$	398,772
Commercial	6,786		1,941		(161)		—		8,566		—		8,566		25		556,314
Construction	4,595		103		—		1		4,699		—		4,699		7,803		247,344
Commercial and Industrial	2,417		253		(39)		6		2,637		218		2,419		676		175,280
Credit card (1)	2,462		2,612		(1,454)		35		3,655		—		3,655		—		141,120
Other consumer	21		(9)		—		—		12		—		12		—		1,033
Total	$	23,434	$	3,359	$	(1,654)	$	42	$	25,181	$	218	$	24,963	$	11,339	$	1,519,863

_______________

(1) Credit cards loans are collectively evaluated by past due status and as such are not individually risk rated.

Schedule of Past Due Loans Receivables

Past due portfolio loans, segregated by delinquency and class of loans, as of December 31, 2022 and 2021 were as follows:



	Loans 30-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total Loans		Accruing Loans 90 or More days Past Due		Nonaccrual Loans
(in thousands)
December 31, 2022
Real estate:
Residential	$	146	$	4,284	$	4,430	$	480,305	$	484,735	$	—	$	4,288
Commercial	—		1,563		1,563		662,988		664,551		—		1,563
Construction	1,804		2,837		4,641		233,458		238,099		—		2,837
Commercial and Industrial	503		569		1,072		219,149		220,221		—		705
Credit card	15,928		363		16,291		112,143		128,434		363		—
Other consumer	—		—		—		1,179		1,179		—		—
Total	$	18,381	$	9,616	$	27,997	$	1,709,222	$	1,737,219	$	363	$	9,393



December 31, 2021
Real estate:
Residential	$	469	$	2,494	$	2,963	$	398,644	$	401,607	$	72	$	2,835
Commercial	367		25		392		555,947		556,339		—		25
Construction	—		7,803		7,803		247,344		255,147		—		7,803
Commercial and Industrial	183		593		776		175,180		175,956		—		676
Credit card	19,022		10		19,032		122,088		141,120		10		—
Other consumer	—		—		—		1,033		1,033		—		—
Total	$	20,041	$	10,925	$	30,966	$	1,500,236	$	1,531,202	$	82	$	11,339

Schedule of Impaired Loans Receivables

Impaired loans also include acquired loans for which management has recorded a non-accretable discount. Impaired loans as of December 31, 2022 and 2021 were as follows:



	Unpaid Contractual Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment		Interest Recognized
(in thousands)
December 31, 2022
Real estate:
Residential	$	4,476	$	4,288	$	—	$	4,288	$	—	$	4,629	$	149
Commercial	1,647		1,563		—		1,563		—		1,656		52
Construction	2,939		2,837		—		2,837		—		2,938		75
Commercial and Industrial	899		247		458		705		372		1,199		77


Total	$	9,961	$	8,935	$	458	$	9,393	$	372	$	10,422	$	353



December 31, 2021
Real estate:
Residential	$	3,022	$	2,835	$	—	$	2,835	$	—	$	4,578	$	345
Commercial	90		25		—		25		—		90		82
Construction	7,885		7,803		—		7,803		—		9,746		209
Commercial and Industrial	832		340		336		676		218		1,056		282


Total	$	11,829	$	11,003	$	336	$	11,339	$	218	$	15,470	$	918

Schedule of Loans Receivables Credit Quality Indicators

The following table presents the balances of classified loans based on the risk grade. Classified loans include Special Mention, Substandard, and Doubtful loans:



(in thousands)	Pass(1)		Special Mention		Substandard		Doubtful		Ungraded(2)		Total
December 31, 2022
Real estate:
Residential	$	469,304	$	9,966	$	5,465	$	—	$	—	$	484,735
Commercial	657,411		5,577		1,563		—		—		664,551
Construction	235,262		—		2,837		—		—		238,099
Commercial and Industrial	196,381		22,469		1,371		—		—		220,221
Credit card	—		—		—		—		128,434		128,434
Other consumer	1,179		—		—		—		—		1,179
Portfolio loans receivable, gross	$	1,559,537	$	38,012	$	11,236	$	—	$	128,434	$	1,737,219

December 31, 2021
Real estate:
Residential	$	394,488	$	2,540	$	4,579	$	—	$	—	$	401,607
Commercial	548,244		8,070		25		—		—		556,339
Construction	243,848		3,496		7,803		—		—		255,147
Commercial and Industrial	164,066		10,417		1,473		—		—		175,956
Credit card	—		—		—		—		141,120		141,120
Other consumer	1,033		—		—		—		—		1,033
Portfolio loans receivable, gross	$	1,351,679	$	24,523	$	13,880	$	—	$	141,120	$	1,531,202

________________________

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

(2)Credit card loans are not individually graded.

Schedule of Troubled Debt Restructurings on Loans Receivables

The status of TDRs is as follows:


	Number of Contracts	Recorded Investment
(dollars in thousands)		Performing		Nonperforming		Total
December 31, 2022
Real estate:
Residential	1	$	—	$	288	$	288





Total	1	$	—	$	288	$	288



December 31, 2021
Real estate:
Residential	4	$	—	$	450	$	450
Commercial and Industrial	1	—		83		83

Total	5	$	—	$	533	$	533

Schedule Of Outstanding Loan Commitments

Outstanding loan commitments were as follows:



	December 31,
(in thousands)	2022		2021
Unused lines of credit
Real Estate:
Residential	$	14,336	$	15,747
Residential - Home Equity	43,128		37,640
Commercial	36,609		17,225
Construction	93,913		118,518
Commercial and Industrial	45,747		45,135
Credit card(1)	111,227		123,874
Other consumer	102		2,247



	$	345,062	$	360,386

Commitments to originate residential loans held for sale	$	—	$	1,385

Letters of credit	$	5,105	$	5,105

_______________

(1) Outstanding loan commitments in the credit card portfolio include $106.9 million and $121.7 million in secured balances as of December 31, 2022 and 2021, respectively.

Schedule of Credit Losses for Financing Receivables

Activity for this account is as follows for the periods presented:




(in thousands)	2022		2021
Balance at beginning of period	$	1,736	$	1,776
Provision for (reversal of) off balance sheet credit commitments	(54)		(40)
Add: Recoveries	—		—
Less: Charge-offs	—		—
Balance at end of period	$	1,682	$	1,736

Activity in this reserve is as follows for the periods presented:



(in thousands)	2022		2021
Balance at beginning of period	$	1,164	$	1,160
Provision for mortgage loan put backs	9		4
Add: Recoveries	—		—
Less: Charge-offs	—		—
Balance at end of period	$	1,173	$	1,164

Parent Company Financial Information

12 Months Ended

Dec. 31, 2022

Condensed Financial Information Disclosure [Abstract]

Parent Company Financial Information

The balance sheets as of December 31, 2022 and 2021 and statements of income and cash flows for the years then ended, for Capital Bancorp, Inc. (Parent only) are presented below.


Parent Company Only Balance Sheets

(in thousands)	2022		2021
Assets
Cash and cash equivalents	$	272	$	630
Investment in Bank	183,095		168,308
Investment in Church Street Capital	5,402		4,607
Investment in Trust	62		62
Loans receivable, net of allowance for loan losses of $328 and $328 at December 31, 2022 and 2021, respectively	47,517		36,198
Accrued interest receivable	288		217


Deferred income taxes	100		100
Other assets	45		14
Total assets	$	236,781	$	210,136

Liabilities and Stockholders’ Equity
Borrowed funds	$	12,062	$	12,062
Accrued interest payable	48		44
Other liabilities	656		127
Total liabilities	12,766		12,233
Stockholders’ equity
Common stock	141		140
Additional paid-in capital	58,190		54,306
Retained earnings	182,435		144,533
Accumulated other comprehensive loss	(16,751)		(1,076)
Total stockholders’ equity	224,015		197,903
Total liabilities and stockholders’ equity	$	236,781	$	210,136


Parent Company Only Statements of Income

(in thousands)	2022		2021
Interest and dividend income	$	2,146	$	1,663
Dividend from Bank	11,400		6,500
Total interest and dividend revenue	13,546		8,163
Interest expense	576		542
Net interest income	12,970		7,621
Provision for loan losses	—		70
Net interest income after provision for loan losses	12,970		7,551
Noninterest income	2		2
Noninterest expenses	447		393
Income before income taxes	12,525		7,160
Income tax expense	315		138
Income before undistributed net income of subsidiaries	12,210		7,022
Undistributed net income of subsidiaries	29,594		32,956
Net income	$	41,804	$	39,978

Note 16 - Parent Company Financial Information (continued)


Parent Company Only Statements of Cash Flows
(in thousands)	2022		2021
Cash flows from operating activities
Net Income	$	41,804	$	39,978
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	—		70
Undistributed net income of subsidiaries	(29,594)		(32,956)

Stock-based compensation expense	1,662		1,347
Director and employee compensation paid in Company stock	171		519
Deferred income tax benefit	—		(14)

Changes in assets and liabilities:
Accrued interest receivable	(71)		83

Other assets	(31)		(14)
Accrued interest payable	4		1
Other liabilities	528		(130)
Net cash provided by operating activities	14,473		8,884

Cash flows from investing activities
Net increase in loans receivable	(11,319)		(9,269)
Capital contributions to subsidiaries	(1,662)		(1,347)
Net cash used by investing activities	(12,981)		(10,616)

Cash flows from financing activities

Dividends paid	(3,085)		(1,382)

Proceeds from exercise of stock options	1,235		967


Net cash used by financing activities	(1,850)		(415)

Net decrease in cash and cash equivalents	(358)		(2,147)

Cash and cash equivalents, beginning of year	630		2,777

Cash and cash equivalents, end of year	$	272	$	630

Nature of Business and Basis of Presentation - Comprehensive Income (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accumulated Other Comprehensive Income (Loss) [Line Items]
Total accumulated comprehensive loss	$ (16,751)	$ (1,076)
Accumulated Net Investment Gain (Loss) Attributable to Parent
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized losses on securities available for sale	(22,416)	(1,504)
Deferred tax benefit	5,665	428
Total accumulated comprehensive loss	$ (16,751)	$ (1,076)

- Definition

Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.

+ References + Details

Related-Party Transactions - Activity in Related Party Loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Loans and Leases Receivable, Related Parties [Roll Forward]
Balance at beginning of year	$ 32,524	$ 19,275
Add: New loans	18,326	15,717
Less: Amounts collected	(14,545)	(2,468)
Balance at end of year	$ 36,305	$ 32,524

Portfolio Loans Receivable - Past Due Financing Receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	$ 1,737,219	$ 1,531,202
Accruing Loans 90 or More days Past Due	363	82
Nonaccrual Loans	9,393	11,339
Loans 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	18,381	20,041
Loans 90 or More Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	9,616	10,925
Total Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	27,997	30,966
Current Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	1,709,222	1,500,236
Residential \| Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	484,735	401,607
Accruing Loans 90 or More days Past Due	0	72
Nonaccrual Loans	4,288	2,835
Residential \| Real estate \| Loans 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	146	469
Residential \| Real estate \| Loans 90 or More Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	4,284	2,494
Residential \| Real estate \| Total Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	4,430	2,963
Residential \| Real estate \| Current Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	480,305	398,644
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	220,221	175,956
Accruing Loans 90 or More days Past Due	0	0
Nonaccrual Loans	705	676
Commercial \| Loans 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	503	183
Commercial \| Loans 90 or More Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	569	593
Commercial \| Total Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	1,072	776
Commercial \| Current Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	219,149	175,180
Commercial \| Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	664,551	556,339
Accruing Loans 90 or More days Past Due	0	0
Nonaccrual Loans	1,563	25
Commercial \| Real estate \| Loans 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	0	367
Commercial \| Real estate \| Loans 90 or More Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	1,563	25
Commercial \| Real estate \| Total Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	1,563	392
Commercial \| Real estate \| Current Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	662,988	555,947
Construction \| Real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	238,099	255,147
Accruing Loans 90 or More days Past Due	0	0
Nonaccrual Loans	2,837	7,803
Construction \| Real estate \| Loans 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	1,804	0
Construction \| Real estate \| Loans 90 or More Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	2,837	7,803
Construction \| Real estate \| Total Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	4,641	7,803
Construction \| Real estate \| Current Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	233,458	247,344
Consumer \| Credit card
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	128,434	141,120
Accruing Loans 90 or More days Past Due	363	10
Nonaccrual Loans	0	0
Consumer \| Credit card \| Loans 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	15,928	19,022
Consumer \| Credit card \| Loans 90 or More Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	363	10
Consumer \| Credit card \| Total Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	16,291	19,032
Consumer \| Credit card \| Current Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	112,143	122,088
Consumer \| Other consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	1,179	1,033
Accruing Loans 90 or More days Past Due	0	0
Nonaccrual Loans	0	0
Consumer \| Other consumer \| Loans 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	0	0
Consumer \| Other consumer \| Loans 90 or More Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	0	0
Consumer \| Other consumer \| Total Past Due Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	0	0
Consumer \| Other consumer \| Current Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable, gross	$ 1,179	$ 1,033

SBA-PPP Loans (Details) - USD ($) $ in Thousands	12 Months Ended
SBA-PPP Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 1,737,219	$ 1,531,202
Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	220,221	175,956
Commercial and Industrial \| Paycheck Protection Program
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	2,200	111,500
Earned fees	3,200	5,700
Unearned net fees	$ 31	$ 3,200

Related-Party Transactions - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Officers and Directors
Related Party Transaction [Line Items]
Related party deposits	$ 92,000	$ 113,800
Director \| Lease Payments
Related Party Transaction [Line Items]
Expenses from transactions with related party	82	$ 79
Director \| Convertible Subordinated Notes
Related Party Transaction [Line Items]
Notes payable, related parties	$ 2,500

Parent Company Financial Information (Tables)

12 Months Ended

Dec. 31, 2022

Condensed Financial Information Disclosure [Abstract]

Schedule of Condensed Financial Statements

The balance sheets as of December 31, 2022 and 2021 and statements of income and cash flows for the years then ended, for Capital Bancorp, Inc. (Parent only) are presented below.


Parent Company Only Balance Sheets

(in thousands)	2022		2021
Assets
Cash and cash equivalents	$	272	$	630
Investment in Bank	183,095		168,308
Investment in Church Street Capital	5,402		4,607
Investment in Trust	62		62
Loans receivable, net of allowance for loan losses of $328 and $328 at December 31, 2022 and 2021, respectively	47,517		36,198
Accrued interest receivable	288		217


Deferred income taxes	100		100
Other assets	45		14
Total assets	$	236,781	$	210,136

Liabilities and Stockholders’ Equity
Borrowed funds	$	12,062	$	12,062
Accrued interest payable	48		44
Other liabilities	656		127
Total liabilities	12,766		12,233
Stockholders’ equity
Common stock	141		140
Additional paid-in capital	58,190		54,306
Retained earnings	182,435		144,533
Accumulated other comprehensive loss	(16,751)		(1,076)
Total stockholders’ equity	224,015		197,903
Total liabilities and stockholders’ equity	$	236,781	$	210,136


Parent Company Only Statements of Income

(in thousands)	2022		2021
Interest and dividend income	$	2,146	$	1,663
Dividend from Bank	11,400		6,500
Total interest and dividend revenue	13,546		8,163
Interest expense	576		542
Net interest income	12,970		7,621
Provision for loan losses	—		70
Net interest income after provision for loan losses	12,970		7,551
Noninterest income	2		2
Noninterest expenses	447		393
Income before income taxes	12,525		7,160
Income tax expense	315		138
Income before undistributed net income of subsidiaries	12,210		7,022
Undistributed net income of subsidiaries	29,594		32,956
Net income	$	41,804	$	39,978

Note 16 - Parent Company Financial Information (continued)


Parent Company Only Statements of Cash Flows
(in thousands)	2022		2021
Cash flows from operating activities
Net Income	$	41,804	$	39,978
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	—		70
Undistributed net income of subsidiaries	(29,594)		(32,956)

Stock-based compensation expense	1,662		1,347
Director and employee compensation paid in Company stock	171		519
Deferred income tax benefit	—		(14)

Changes in assets and liabilities:
Accrued interest receivable	(71)		83

Other assets	(31)		(14)
Accrued interest payable	4		1
Other liabilities	528		(130)
Net cash provided by operating activities	14,473		8,884

Cash flows from investing activities
Net increase in loans receivable	(11,319)		(9,269)
Capital contributions to subsidiaries	(1,662)		(1,347)
Net cash used by investing activities	(12,981)		(10,616)

Cash flows from financing activities

Dividends paid	(3,085)		(1,382)

Proceeds from exercise of stock options	1,235		967


Net cash used by financing activities	(1,850)		(415)

Net decrease in cash and cash equivalents	(358)		(2,147)

Cash and cash equivalents, beginning of year	630		2,777

Cash and cash equivalents, end of year	$	272	$	630

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity

Information with respect to options outstanding during the years ended December 31, 2022 and 2021 is as follows:



	2022			2021
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
Outstanding at beginning of year	1,060,023	$	14.77	1,169,413	$	12.21
Add: Granted	2,000	24.25		170,244	24.51
Less: Exercised	(160,590)	12.46		(186,461)	9.61
Less: Retired on exercise	(63,697)	12.52		(54,192)	9.41
Less: Expired/cancelled/forfeited	(26,576)	12.82		(38,981)	7.43
Outstanding at end of year	811,160	$	15.37	1,060,023	$	14.77
Exercisable at end of year	538,066	$	13.63	551,804	$	12.55

Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable

A summary of information about stock options outstanding is as follows:



	Exercise Price Range	Weighted Average Exercise Price		Average Remaining Life (years)	Outstanding Shares		Exercisable Shares
December 31, 2022

	$10.70 - 14.63	$	13.02	1.73	648,651		492,909
	14.64 - 18.56	14.96		2.14	22,750		10,688
	18.57 - 22.49	21.86		3.07	2,500		625
	22.50 - 26.41	26.38		3.86	137,259		33,844











Total outstanding options		$	15.37	2.11	811,160		538,066
Intrinsic value on December 31, 2022					$	7,020,560	$	5,428,713

December 31, 2021
	$10.70 - 14.63	$	12.89	2.45	892,529		546,804
	14.64 - 18.56	14.96		3.14	22,750		5,000
	18.57 - 22.49	21.86		4.71	2,500		—
	22.50 - 26.41	26.41		5.00	142,244		—







Total outstanding options		$	14.77	2.80	1,060,023		551,804
Intrinsic value on December 31, 2021					$	12,143,007	$	7,529,711

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The weighted average fair value of options granted during 2022 and 2021 were estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:



	2022	2021
Dividend yield	0.99%	0.80%
Risk free interest rate	3.25%	0.25%
Expected volatility	55.91%	60.97%
Expected life in years	5	5

Schedule of Share-based Compensation, Restricted Stock Units Award Activity

Nonvested restricted stock for the years ended December 31, 2022 and 2021 is summarized in the following table.



	2022			2021
	Shares	Weighted Average Grant-Date Fair Value		Shares	Weighted Average Grant-Date Fair Value
Nonvested at beginning of year	49,047	$	14.33	30,713	$	13.46
Add: Granted	11,495	24.66		29,405	14.88
Less: Vested	(15,905)	14.01		(11,071)	13.38
Less: Retired on vesting	(4,968)	14.44		—	—
Less: Forfeited	—	—		—	—
Nonvested at end of year	39,669	$	17.45	49,047	$	14.33

Share Based Compensation, Restricted Stock, Vesting Schedule

The vesting schedule of restricted shares as of December 31, 2022 is as follows:



Year						Shares
2023						22,206
2024						13,632
2025						3,831

						39,669

Portfolio Loans Receivable - Credit Quality Indicators (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	$ 1,737,219	$ 1,531,202
Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	1,559,537	1,351,679
Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	38,012	24,523
Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	11,236	13,880
Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Ungraded
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	128,434	141,120
Residential \| Real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	484,735	401,607
Residential \| Real estate \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	469,304	394,488
Residential \| Real estate \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	9,966	2,540
Residential \| Real estate \| Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	5,465	4,579
Residential \| Real estate \| Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Residential \| Real estate \| Ungraded
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Commercial
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	220,221	175,956
Commercial \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	196,381	164,066
Commercial \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	22,469	10,417
Commercial \| Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	1,371	1,473
Commercial \| Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Commercial \| Ungraded
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Commercial \| Real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	664,551	556,339
Commercial \| Real estate \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	657,411	548,244
Commercial \| Real estate \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	5,577	8,070
Commercial \| Real estate \| Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	1,563	25
Commercial \| Real estate \| Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Commercial \| Real estate \| Ungraded
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Construction \| Real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	238,099	255,147
Construction \| Real estate \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	235,262	243,848
Construction \| Real estate \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	3,496
Construction \| Real estate \| Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	2,837	7,803
Construction \| Real estate \| Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Construction \| Real estate \| Ungraded
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Consumer \| Credit card
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	128,434	141,120
Consumer \| Credit card \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Consumer \| Credit card \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Consumer \| Credit card \| Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Consumer \| Credit card \| Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Consumer \| Credit card \| Ungraded
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	128,434	141,120
Consumer \| Other consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	1,179	1,033
Consumer \| Other consumer \| Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	1,179	1,033
Consumer \| Other consumer \| Special Mention
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Consumer \| Other consumer \| Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Consumer \| Other consumer \| Doubtful
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	0	0
Consumer \| Other consumer \| Ungraded
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable, gross	$ 0	$ 0