Capital Bancorp, Inc. Posts Broad Based Growth Leading to a

Third Quarter 2024 Results

Net Income of $8.7 million, or $0.62 per share
- Net Income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)⁽¹⁾, of $9.2 million, or $0.66 per share
Tangible Book Value Per Share⁽¹⁾ of $20.13, increased 4.5%, or $0.87 as compared to $19.26 (2Q 2024).
Net Interest Income increased $1.3 million, or 3.5% (not annualized), from 2Q 2024
Net Interest Margin ("NIM") decreased to 6.41% as compared to 6.46% (2Q 2024)
- Core NIM, as adjusted to exclude the impact of credit card loans (non-GAAP)⁽¹⁾ increased to 4.08% as compared to 4.00% (2Q 2024)
Loan Growth of $85.9 million, or 16.9% annualized for 3Q 2024
Deposit Growth of $85.8 million, or 16.2% annualized for 3Q 2024; Noninterest bearing deposits increased $33.5 million, or 19.5% annualized from 2Q 2024
Cash dividend of $0.10 per share declared

ROCKVILLE, Md., Oct. 28, 2024 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $8.7 million, or $0.62 per diluted share, for the third quarter 2024, compared to net income of $8.2 million, or $0.59 per diluted share, for the second quarter 2024, and $9.8 million, or $0.70 per diluted share, for the third quarter 2023. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)⁽¹⁾, was $9.2 million, or $0.66 per diluted share, for the third quarter 2024, compared to $8.3 million, or $0.59 per diluted share, for the second quarter 2024.

The Company also declared a cash dividend on its common stock of $0.10 per share. The dividend is payable on November 20, 2024 to shareholders of record on November 4, 2024.

“We continue to benefit from our diversified business which is driving growth across our platforms," said Ed Barry, Chief Executive Officer of the Company and the Bank. "With the changing interest rate environment, our core margin has inflected. The acquisition of Integrated Financial Holdings, Inc. is now complete and we are now focused on integration and unlocking opportunity out of their complementary lines of business."

"The Bank continues to execute on its smart growth strategy as reflected by the impressive year-to-date and third quarter growth in commercial bank loan balances and deposits, both interest bearing and non-interest bearing. Our diversified profit centers complement one another and our recent acquisition of IFH adds an additional high potential opportunity for growth,” said Steven J Schwartz, Chairman of the Company. “In addition, our quarter-over-quarter 4.5% increase in tangible book value (with all investment securities fully marked), together with stable asset quality, ROA and ROE metrics, offer clear evidence of our franchise durability.”

⁽¹⁾Reconciliations of the non–U.S. generally accepted accounting principles ("GAAP") measures are set forth in the Appendix at the end of this press release.

Acquisition of Integrated Financial Holdings, Inc.
On October 1, 2024, the Company completed its previously announced merger with Integrated Financial Holdings, Inc. ("IFHI"). Pursuant to the terms of the Merger Agreement, each share of IFHI’s common stock, par value $1.00 per share (“IFHI Common Stock”) was converted into the right to receive (a) 1.115 shares of common stock of the Company, par value $0.01 per share (“Capital Common Stock”); and (b) $5.36 in cash per share of IFHI Common Stock held immediately prior to the Effective Time, in addition to cash in lieu of fractional shares. In addition, each stock option granted by IFHI to purchase shares of IFHI Common Stock, whether vested or unvested, outstanding immediately prior to the Effective Time, was assumed by the Company and converted into an equivalent option to purchase Capital Common Stock, with the same terms and conditions as applied to the IFHI stock option.

In the first nine months of 2024, the Company incurred pre-tax merger-related expenses of $1.3 million, including expenses totaling $0.5 million for the third quarter 2024, consistent with modeled expectations.

The following table provides a reconciliation of the Company's net income under GAAP to non-GAAP results excluding merger-related expenses.

	Third Quarter 2024									Second Quarter 2024
(in thousands, except per share data)	Income Before Income Taxes		Income Tax Expense (Benefit)			Net Income		Diluted Earnings per Share		Income Before Income Taxes		Income Tax Expense		Net Income		Diluted Earnings per Share
GAAP Earnings	$	11,499	$	2,827		$	8,672	$	0.62	$	10,933	$	2,728	$	8,205	$	0.59
Add: Merger-Related Expenses		520		(37	)		557				83		21		62
Non-GAAP Earnings	$	12,019	$	2,790		$	9,229	$	0.66	$	11,016	$	2,749	$	8,267	$	0.59

	Nine Months Ended September 30, 2024
(in thousands, except per share data)	Income Before Income Taxes		Income Tax Expense		Net Income		Diluted Earnings per Share
GAAP Earnings	$	31,056	$	7,617	$	23,439	$	1.69
Add: Merger-Related Expenses		1,315		158		1,157
Non-GAAP Earnings	$	32,371	$	7,775	$	24,596	$	1.77

^{Note: The tax benefit associated with merger-related expenses has been adjusted to reflect the estimated nondeductible portion of the expenses.}

Third Quarter 2024 Highlights

Earnings Summary

Net income of $8.7 million, or $0.62 per diluted share, increased $0.5 million compared to $8.2 million, or $0.59 per diluted share, for the second quarter 2024. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)⁽¹⁾, increased $0.9 million to $9.2 million, or $0.66 per diluted share, for the third quarter 2024 compared to $8.3 million, or $0.59 per diluted share, for the second quarter 2024.

Net interest income of $38.4 million increased $1.3 million, or 3.5%, compared to the second quarter 2024.
- Interest income of $52.6 million increased $2.0 million, or 3.9%, over the second quarter 2024 primarily from $1.7 million in portfolio loan interest income, as growth in average balances increased $61.0 million. Interest income from interest-bearing deposits held at other financial institutions increased $0.2 million, as average balances increased $14.0 million to $91.1 million.
- Interest expense of $14.3 million increased $0.7 million, or 5.1% over the second quarter 2024 due to increases in customer money market deposits and time deposits of $0.4 million and $0.3 million, respectively. Average balances increased $27.0 million and $14.0 million, respectively.
The provision for credit losses was $3.7 million, an increase of $0.3 million from the second quarter 2024 primarily driven by unsecured credit card loan growth in the quarter. Net charge-offs totaled $2.7 million in the third quarter including $1.7 million from credit card related loans, $0.6 million from commercial real estate, and $0.4 million from commercial and industrial loans. The $0.8 million net charge-offs increase quarter over quarter includes $0.6 million from a commercial loan charge-off that was fully reserved for, and $0.2 million from higher credit card loans. At September 30, 2024, the allowance for credit losses to total loans ratio was 1.51%, down 2 basis points from the ratio at June 30, 2024.
Noninterest income of $6.6 million decreased $0.3 million as compared to the second quarter 2024 primarily due to decreased credit card fees of $0.3 million.
Noninterest expense of $29.7 million increased $0.2 million as compared to the second quarter 2024. Noninterest expense of $29.2 million, excluding merger-related expenses of $0.5 million, decreased $0.2 million as compared to the second quarter 2024. Variances include:
- Advertising expense of $1.2 million decreased $0.8 million off of seasonally high second quarter levels.
- Professional fees of $2.0 million increased $0.2 million primarily related to increased non-merger-related legal fees.
- Other expense categories increased $0.4 million including slight increases from data and loan processing expense and operational losses.
Income tax expense of $2.8 million, or 24.6% of pre-tax income for the third quarter 2024, increased $0.1 million from $2.7 million, or 25.0% of pre-tax income for the second quarter 2024.

Balance Sheet

Total assets of $2.6 billion at September 30, 2024 increased $122.2 million, or 5.0% (not annualized), from June 30, 2024.

Cash and cash equivalents of $156.7 million at September 30, 2024 increased $20.2 million from June 30, 2024, as total deposits increased $85.8 million, and Federal Home Loan Bank advances increased $20.0 million, partially offset by an increase in total portfolio loans of $85.9 million.
Total portfolio loans of $2.1 billion at September 30, 2024 increased $85.9 million, or 4.3% (not annualized) from June 30, 2024. Total average loans increased $61.0 million quarter over quarter.
- Owner-occupied commercial real estate loans increased $32.1 million, or 10.0% (not annualized) from June 30, 2024.
- The average portfolio loans-to-deposit ratio of 98.20% for the three months ended September 30, 2024 remained stable.
Total deposits of $2.2 billion at September 30, 2024 increased $85.8 million, or 4.1% (not annualized), from June 30, 2024, The increase includes $40.4 million of customer time deposits, $33.5 million of noninterest-bearing deposits primarily related to growth in title company deposit balances and $14.1 million of growth in customer money market deposits.
- Uninsured and unprotected deposits were approximately $645.6 million as of September 30, 2024, representing 29.5% of the Company's deposit portfolio.
- Low and no interest bearing deposits of $988.4 million increased $33.5 million, or 3.5% (not annualized) from June 30, 2024. Average noninterest-bearing deposits of $680.7 million increased $27.7 million, or 4.2% (not annualized), and represented 32.6% of total average deposits at September 30, 2024.
The investment securities portfolio continues to be classified as available-for-sale and had a fair market value of $208.7 million, or 8.1% of total assets, an effective duration of 3.0 years, with U.S. Treasury Securities representing 61.8% of the overall investment portfolio at September 30, 2024. The AOCI on the investment securities portfolio decreased $4.5 million during the quarter to a negative $8.6 million as of September 30, 2024, which represents 3.1% of total stockholders' equity. The Company does not have a held-to-maturity investment securities portfolio.
Liquidity - The Company maintains stable and reliable sources of available borrowings consistent with prior quarter. Sources of available borrowings at September 30, 2024 totaled $691.8 million, including available collateralized lines of credit of $500.4 million, unsecured lines of credit with other banks of $76.0 million and unpledged investment securities available as collateral for potential additional borrowings of $115.4 million.
Capital Positions - As of September 30, 2024, the Company reported a robust common equity tier 1 capital ratio of 14.78%, compared to 15.08% at June 30, 2024. At September 30, 2024, the Company and the Bank maintain regulatory capital ratios that exceed all capital adequacy requirements.

Financial Metrics

Net Interest Margin - Net interest margin decreased 5 basis points to 6.41% for the three months ended September 30, 2024, compared to prior quarter. Core Net Interest Margin, as adjusted to exclude the impact of OpenSky^™ credit card loans (non-GAAP)⁽¹⁾, increased 8 basis points to 4.08% as compared to prior quarter.

The average yield on interest earning assets of 8.79% decreased 3 basis points compared to the prior quarter. The yield on portfolio loans, as adjusted to exclude the impact of OpenSky^™credit card loans (non-GAAP)⁽¹⁾, of 7.15% for the third quarter 2024, increased 11 basis points primarily from portfolio turnover.
The total cost of deposits increased 3 basis points to 2.64% for the third quarter 2024 as compared to the prior quarter.
The total cost of interest-bearing deposits increased 5 basis points to 3.92% for the third quarter 2024 as compared to the prior quarter.

Efficiency Ratios – The efficiency ratio was 66.1% for the three months ended September 30, 2024, compared to 67.1% for the three months ended June 30, 2024. The efficiency ratio, as adjusted to exclude the impact of merger-related expenses (non-GAAP)⁽¹⁾, was 64.9% for the three months ended September 30, 2024 compared to 66.9% for the three months ended June 30, 2024.

Credit Metrics and Asset Quality - Overall credit performance remains stable with the allowance for credit losses to total loans ratio decreasing 2 basis points to 1.51% at September 30, 2024 as compared to June 30, 2024. Nonperforming assets increased 2 basis point to 0.60% of total assets at September 30, 2024 as compared to June 30, 2024. Total nonaccrual loans at September 30, 2024 increased $1.4 million to $15.5 million compared to June 30, 2024. At September 30, 2024, special mention loans totaled $20.3 million, or 1.0% of total portfolio loans, as compared to $23.3 million, or 1.2% of total portfolio loans, at June 30, 2024. At September 30, 2024, substandard loans totaled $23.8 million, or 1.1% of total portfolio loans, as compared to $22.1 million, or 1.2% of total portfolio loans, at June 30, 2024.

Performance Ratios – Annualized return on average assets ("ROAA") and annualized return on average equity ("ROAE") were 1.42% and 12.59%, respectively, for the three months ended September 30, 2024, compared to 1.40% and 12.53%, respectively, for the three months ended June 30, 2024.

Annualized ROAA and annualized ROAE, as adjusted to exclude the impact of merger-related expenses (non-GAAP)⁽¹⁾, were 1.51% and 13.40%, respectively, for the three months ended September 30, 2024, compared to 1.41% and 12.62%, respectively, for the three months ended June 30, 2024.

Consistent Tangible Book Value Growth - Tangible book value per common share⁽¹⁾ grew $0.87, or 4.5%, to $20.13 at September 30, 2024 when compared to June 30, 2024. The Company did not have goodwill or other intangible assets during any of the periods presented and therefore, tangible book value per share⁽¹⁾ is equal to book value per share.

Commercial Bank

Continued Portfolio Loan Growth - Gross portfolio loans, excluding OpenSky^™credit card loans, increased $80.5 million, to $2.0 billion, at September 30, 2024 compared to June 30, 2024.

The $80.5 million gross portfolio loan growth includes commercial real estate loans of $38.5 million, residential real estate loans of $22.4 million and commercial and industrial loans of $16.1 million. Historical gross portfolio loan balances are disclosed in the Composition of Loans table within the Historical Financial Highlights.

Net Interest Income - Interest income of $35.8 million increased $1.9 million from prior quarter, driven by loan growth and higher loan yields. Interest expense of $14.0 million increased $0.7 million, driven by an increase in average balances in the third quarter 2024.

Credit Metrics - Nonperforming assets increased 2 basis point to 0.60% of total assets at September 30, 2024 compared to June 30, 2024. Total nonaccrual loans at September 30, 2024 increased to $15.5 million compared to June 30, 2024.

The following tables present non-owner-occupied and owner-occupied commercial real estate loans and multi-family loans and the weighted average loan-to-value ("LTV").

Non-owner-occupied commercial real estate loans, including multi-family

	As of September 30, 2024
(in thousands)	Amount		Average Loan Size		Weighted Average LTV⁽¹⁾		% of Non-Owner-Occupied Commercial Real Estate Loans		% of Total Portfolio Loans, Gross
Loan type:
Multi-family	$	170,513	$	1,853	58.1	%	Not Applicable		8.1	%

Retail	$	116,324	$	1,454	56.6	%	28.8	%	5.5	%
Mixed use		96,337		1,189	52.8	%	23.9	%	4.6	%
Hotel		74,343		4,130	52.4	%	18.4	%	3.5	%
Industrial		63,109		1,127	54.2	%	15.6	%	3.0	%
Office		13,356		557	63.2	%	3.3	%	0.6	%
Other		40,018		1,819	55.4	%	10.0	%	1.9	%
Total non-owner-occupied commercial real estate loans	$	403,487	$	1,436	54.6	%	100.0	%	19.1	%
Total portfolio loans, gross	$	2,113,705

Owner-occupied commercial real estate loans

	As of September 30, 2024
(in thousands)	Amount		Average Loan Size		Weighted Average LTV⁽¹⁾		% of Owner-Occupied Commercial Real Estate Loans		% of Total Portfolio Loans, Gross
Loan type:
Industrial	$	108,048	$	1,522	56.9	%	30.7	%	5.1	%
Office		44,781		640	57.5	%	12.7	%	2.1	%
Retail		41,137		762	59.2	%	11.7	%	1.9	%
Mixed use		17,550		924	65.2	%	5.0	%	0.8	%
Other⁽²⁾		139,946		2,799	61.6	%	39.9	%	6.6	%
Total owner-occupied commercial real estate loans	$	351,462	$	1,331	59.6	%	100.0	%	16.6	%
Total portfolio loans, gross	$	2,113,705

⁽¹⁾The weighted average LTV of the loan categories previously mentioned are calculated by reference to the most recent appraisal of the property securing each loan.
⁽²⁾Other owner-occupied commercial real estate loans include special purpose loans of $57.9 million, skilled nursing loans of $53.8 million, and other loans of $28.2 million.

Classified and Criticized Loans - At September 30, 2024, special mention loans totaled $20.3 million, or 1.0% of total portfolio loans, as compared to $23.3 million, or 1.2% of total portfolio loans, at June 30, 2024. At September 30, 2024, substandard loans totaled $23.8 million, or 1.1% of total portfolio loans, as compared to $22.1 million, or 1.2% of total portfolio loans, at June 30, 2024.

OpenSky^™

Revenues - Total revenue of $19.7 million decreased $0.4 million from the prior quarter. Interest income of $15.6 million decreased $0.2 million from the prior quarter. Average OpenSky^™ credit card loan balances, net of reserves and deferred fees of $119.5 million for the third quarter 2024, increased $8.2 million, or 7.3% (not annualized), compared to prior quarter. Noninterest income of $4.1 million decreased $0.3 million as compared to prior quarter primarily related to lower annual fee income.

Noninterest Expense - Total noninterest expense of $13.3 million decreased $0.5 million primarily related to a reduction in seasonally high advertising expense in the second quarter 2024.

Loan and Deposit Balances - Loan balances, net of reserves, of $127.1 million at September 30, 2024 increased by $4.9 million, or 4.0%, compared to $122.2 million at June 30, 2024. Corresponding deposit balances of $170.8 million at September 30, 2024 decreased $2.7 million, or 1.6%, compared to $173.5 million at June 30, 2024. Gross unsecured loan balances of $39.7 million at September 30, 2024 increased $6.2 million, or 18.4%, compared to $33.6 million at June 30, 2024. During the third quarter 2024, the number of credit card accounts increased by 11,218 to 548,952 from June 30, 2024.

OpenSky^™Credit - Portfolio credit metrics continue to be stable and generally consistent with modeled expectations during the third quarter 2024. The provision for credit losses of $2.3 million remained flat when compared to the prior quarter.


COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited

	Quarter Ended									3Q24 vs 2Q24					3Q24 vs 3Q23
(in thousands, except per share data)	September 30, 2024			June 30, 2024			September 30, 2023			$ Change			% Change		$ Change			% Change
Earnings Summary
Interest income	$	52,610		$	50,615		$	47,741		$	1,995		3.9	%	$	4,869		10.2	%
Interest expense		14,256			13,558			10,931			698		5.1	%		3,325		30.4	%
Net interest income		38,354			37,057			36,810			1,297		3.5	%		1,544		4.2	%
Provision for credit losses		3,748			3,417			2,280			331		9.7	%		1,468		64.4	%
Provision for credit losses on unfunded commitments		17			104			24			(87	)	(83.7	)%		(7	)	(29.2	)%
Noninterest income		6,635			6,890			6,326			(255	)	(3.7	)%		309		4.9	%
Noninterest expense		29,725			29,493			28,046			232		0.8	%		1,679		6.0	%
Income before income taxes		11,499			10,933			12,786			566		5.2	%		(1,287	)	(10.1	)%
Income tax expense		2,827			2,728			2,998			99		3.6	%		(171	)	(5.7	)%
Net income	$	8,672		$	8,205		$	9,788		$	467		5.7	%	$	(1,116	)	(11.4	)%

Pre-tax pre-provision net revenue ("PPNR")⁽¹⁾	$	15,264		$	14,454		$	15,090		$	810		5.6	%	$	174		1.2	%
PPNR, as adjusted⁽¹⁾	$	15,784		$	14,537		$	15,090		$	1,247		8.6	%	$	694		4.6	%

Common Share Data
Earnings per share - Basic	$	0.62		$	0.59		$	0.70		$	0.03		5.1	%	$	(0.08	)	(11.4	)%
Earnings per share - Diluted	$	0.62		$	0.59		$	0.70		$	0.03		5.1	%	$	(0.08	)	(11.4	)%
Earnings per share - Diluted, as adjusted⁽¹⁾	$	0.66		$	0.59		$	0.70		$	0.07		11.9	%	$	(0.04	)	(5.7	)%
Weighted average common shares - Basic		13,914			13,895			13,933
Weighted average common shares - Diluted		13,951			13,895			14,024

Return Ratios
Return on average assets (annualized)		1.42	%		1.40	%		1.75	%
Return on average assets, as adjusted (annualized)⁽¹⁾		1.51	%		1.41	%		1.75	%
Return on average equity (annualized)		12.59	%		12.53	%		16.00	%
Return on average equity, as adjusted (annualized)⁽¹⁾		13.40	%		12.62	%		16.00	%

______________
⁽¹⁾Refer to Appendix for reconciliation of non-GAAP measures.


COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)

	Nine Months Ended
	September 30,
(in thousands, except per share data)	2024			2023			$ Change			% Change
Earnings Summary
Interest income	$	151,594		$	136,237		$	15,357		11.3	%
Interest expense		41,175			29,600			11,575		39.1	%
Net interest income		110,419			106,637			3,782		3.5	%
Provision for credit losses		9,892			6,802			3,090		45.4	%
Provision for credit losses on unfunded commitments		263			5			258		5,160.0	%
Noninterest income		19,497			19,039			458		2.4	%
Noninterest expense		88,705			83,860			4,845		5.8	%
Income before income taxes		31,056			35,009			(3,953	)	(11.3	)%
Income tax expense		7,617			8,168			(551	)	(6.7	)%
Net income	$	23,439		$	26,841		$	(3,402	)	(12.7	)%

Pre-tax pre-provision net revenue ("PPNR")⁽¹⁾	$	41,211		$	41,816		$	(605	)	(1.4	)%
PPNR, as adjusted⁽¹⁾	$	42,526		$	41,816		$	710		1.7	%

Common Share Data
Earnings per share - Basic	$	1.69		$	1.91		$	(0.22	)	(11.5	)%
Earnings per share - Diluted	$	1.69		$	1.90		$	(0.21	)	(11.1	)%
Earnings per share - Diluted, as adjusted⁽¹⁾	$	1.77		$	1.90
Weighted average common shares - Basic		13,909			14,038
Weighted average common shares - Diluted		13,909			14,112

Return Ratios
Return on average assets (annualized)		1.32	%		1.64	%
Return on average assets, as adjusted (annualized)⁽¹⁾		1.39	%		1.64	%
Return on average equity (annualized)		11.79	%		15.08	%
Return on average equity, as adjusted (annualized)⁽¹⁾		12.37	%		15.08	%

______________
⁽¹⁾Refer to Appendix for reconciliation of non-GAAP measures.


COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)

	Quarter Ended						Quarter Ended
	September 30,						June 30,		March 31,		December 31,
(in thousands, except per share data)	2024		2023		% Change		2024		2023		2023
Balance Sheet Highlights
Assets	$	2,560,788	$	2,272,484	12.7	%	$	2,438,583	$	2,324,238	$	2,226,176
Investment securities available for sale		208,700		206,055	1.3	%		207,917		202,254		208,329
Mortgage loans held for sale		19,554		4,843	303.8	%		19,219		10,303		7,481
Portfolio loans receivable⁽²⁾		2,107,522		1,862,679	13.1	%		2,021,588		1,964,525		1,903,288
Allowance for credit losses		31,925		28,279	12.9	%		30,832		29,350		28,610
Deposits		2,186,224		1,967,988	11.1	%		2,100,428		2,005,695		1,895,996
FHLB borrowings		52,000		22,000	136.4	%		32,000		22,000		22,000
Other borrowed funds		12,062		12,062	—	%		12,062		12,062		27,062
Total stockholders' equity		280,111		242,878	15.3	%		267,854		259,465		254,860
Tangible common equity⁽¹⁾		280,111		242,878	15.3	%		267,854		259,465		254,860

Common shares outstanding		13,918		13,893	0.2	%		13,910		13,890		13,923
Book value per share	$	20.13	$	17.48	15.2	%	$	19.26	$	18.68	$	18.31
Tangible book value per share⁽¹⁾	$	20.13	$	17.48	15.2	%	$	19.26	$	18.68	$	18.31
Dividends per share	$	0.10	$	0.08	25.0	%	$	0.08	$	0.08	$	0.08

______________
⁽¹⁾Refer to Appendix for reconciliation of non-GAAP measures.
⁽²⁾Loans are reflected net of deferred fees and costs.


Consolidated Statements of Income (Unaudited)
	Three Months Ended											Nine Months Ended
(in thousands)	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023			September 30, 2023		September 30, 2024		September 30, 2023
Interest income
Loans, including fees	$	50,047	$	48,275	$	45,991	$	45,109		$	45,385	$	144,313	$	129,651
Investment securities available for sale		1,343		1,308		1,251		1,083			1,089		3,902		3,732
Federal funds sold and other		1,220		1,032		1,127		777			1,267		3,379		2,854
Total interest income		52,610		50,615		48,369		46,969			47,741		151,594		136,237

Interest expense
Deposits		13,902		13,050		12,833		11,759			10,703		39,785		27,866
Borrowed funds		354		508		528		321			228		1,390		1,734
Total interest expense		14,256		13,558		13,361		12,080			10,931		41,175		29,600

Net interest income		38,354		37,057		35,008		34,889			36,810		110,419		106,637
Provision for credit losses		3,748		3,417		2,727		2,808			2,280		9,892		6,802
Provision for (release of) credit losses on unfunded commitments		17		104		142		(106	)		24		263		5
Net interest income after provision for credit losses		34,589		33,536		32,139		32,187			34,506		100,264		99,830

Noninterest income
Service charges on deposits		235		200		207		240			250		642		724
Credit card fees		4,055		4,330		3,881		3,970			4,387		12,266		13,303
Mortgage banking revenue		1,882		1,990		1,453		1,166			1,243		5,325		3,730
Other income		463		370		431		560			446		1,264		1,282
Total noninterest income		6,635		6,890		5,972		5,936			6,326		19,497		19,039

Noninterest expenses
Salaries and employee benefits		13,345		13,272		12,907		11,638			12,419		39,524		37,116
Occupancy and equipment		1,791		1,864		1,613		1,573			1,351		5,268		4,100
Professional fees		1,980		1,769		1,947		1,930			2,358		5,696		7,340
Data processing		6,930		6,788		6,761		6,128			6,469		20,479		19,558
Advertising		1,223		2,072		2,032		1,433			1,565		5,327		4,728
Loan processing		615		476		371		198			426		1,462		1,435
Foreclosed real estate expenses, net		1		—		1		—			1		2		7
Merger-related expenses		520		83		712		—			—		1,315		—
Operational losses		1,008		782		931		1,490			953		2,721		3,123
Other operating		2,312		2,387		2,212		2,517			2,504		6,911		6,453
Total noninterest expenses		29,725		29,493		29,487		26,907			28,046		88,705		83,860
Income before income taxes		11,499		10,933		8,624		11,216			12,786		31,056		35,009
Income tax expense		2,827		2,728		2,062		2,186			2,998		7,617		8,168
Net income	$	8,672	$	8,205	$	6,562	$	9,030		$	9,788	$	23,439	$	26,841

Consolidated Balance Sheets
	(unaudited)			(unaudited)			(unaudited)			(audited)			(unaudited)
(in thousands, except share data)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Assets
Cash and due from banks	$	23,462		$	19,294		$	12,361		$	14,513		$	13,767
Interest-bearing deposits at other financial institutions		133,180			117,160			72,787			39,044			130,428
Federal funds sold		58			57			56			407			1,957
Total cash and cash equivalents		156,700			136,511			85,204			53,964			146,152
Investment securities available for sale		208,700			207,917			202,254			208,329			206,055
Restricted investments		5,895			4,930			4,441			4,353			4,340
Loans held for sale		19,554			19,219			10,303			7,481			4,843
Portfolio loans receivable, net of deferred fees and costs		2,107,522			2,021,588			1,964,525			1,903,288			1,862,679
Less allowance for credit losses		(31,925	)		(30,832	)		(29,350	)		(28,610	)		(28,279	)
Total portfolio loans held for investment, net		2,075,597			1,990,756			1,935,175			1,874,678			1,834,400
Premises and equipment, net		5,959			5,551			4,500			5,069			5,297
Accrued interest receivable		12,468			12,162			12,258			11,494			11,231
Deferred tax asset		10,748			12,150			12,311			12,252			13,644
Bank owned life insurance		38,779			38,414			38,062			37,711			37,315
Accounts receivable		597			1,336			11,637			1,055			696
Other assets		25,791			9,637			8,093			9,790			8,511
Total assets	$	2,560,788		$	2,438,583		$	2,324,238		$	2,226,176		$	2,272,484

Liabilities
Deposits
Noninterest-bearing	$	718,120		$	684,574		$	665,812		$	617,373		$	680,803
Interest-bearing		1,468,104			1,415,854			1,339,883			1,278,623			1,287,185
Total deposits		2,186,224			2,100,428			2,005,695			1,895,996			1,967,988
Federal Home Loan Bank advances		52,000			32,000			22,000			22,000			22,000
Other borrowed funds		12,062			12,062			12,062			27,062			12,062
Accrued interest payable		8,503			6,573			6,009			5,583			5,204
Other liabilities		21,888			19,666			19,007			20,675			22,352
Total liabilities		2,280,677			2,170,729			2,064,773			1,971,316			2,029,606

Stockholders' equity
Common stock		139			139			139			139			139
Additional paid-in capital		55,585			55,005			54,229			54,473			54,549
Retained earnings		232,995			225,824			218,731			213,345			206,033
Accumulated other comprehensive loss		(8,608	)		(13,114	)		(13,634	)		(13,097	)		(17,843	)
Total stockholders' equity		280,111			267,854			259,465			254,860			242,878
Total liabilities and stockholders' equity	$	2,560,788		$	2,438,583		$	2,324,238		$	2,226,176		$	2,272,484

The following tables show the average outstanding balance of each principal category of our assets, liabilities and stockholders’ equity, together with the average yields on our assets and the average costs of our liabilities for the periods indicated. Such yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.


	Three Months Ended September 30, 2024						Three Months Ended June 30, 2024						Three Months Ended September 30, 2023
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽¹⁾		Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽¹⁾		Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽¹⁾
	(in thousands)
Assets
Interest earning assets:
Interest-bearing deposits	$	91,089	$	1,137	4.97	%	$	77,069	$	937	4.89	%	$	87,112	$	1,183	5.39	%
Federal funds sold		57		1	6.98			56		1	7.18			1,134		15	5.25
Investment securities available for sale		221,303		1,343	2.41			223,973		1,308	2.35			229,731		1,089	1.88
Restricted investments		4,911		82	6.64			5,435		94	6.96			4,058		69	6.75
Loans held for sale		9,967		161	6.43			7,907		132	6.71			6,670		111	6.60
Portfolio loans receivable⁽²⁾⁽³⁾		2,053,619		49,886	9.66			1,992,630		48,143	9.72			1,847,772		45,274	9.72
Total interest earning assets		2,380,946		52,610	8.79			2,307,070		50,615	8.82			2,176,477		47,741	8.70
Noninterest earning assets		56,924						46,798						44,640
Total assets	$	2,437,870					$	2,353,868					$	2,221,117

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand accounts	$	228,365		321	0.56		$	216,247		148	0.28		$	215,527		71	0.13
Savings		4,135		5	0.48			4,409		1	0.09			5,582		3	0.21
Money market accounts		698,239		7,442	4.24			671,240		7,032	4.21			655,990		6,373	3.85
Time deposits		479,824		6,134	5.09			465,822		5,869	5.07			374,429		4,256	4.51
Borrowed funds		43,655		354	3.23			54,863		508	3.72			34,932		228	2.59
Total interest-bearing liabilities		1,454,218		14,256	3.90			1,412,581		13,558	3.86			1,286,460		10,931	3.37
Noninterest-bearing liabilities:
Noninterest-bearing liabilities		28,834						24,844						25,047
Noninterest-bearing deposits		680,731						653,018						666,939
Stockholders’ equity		274,087						263,425						242,671
Total liabilities and stockholders’ equity	$	2,437,870					$	2,353,868					$	2,221,117

Net interest spread					4.89	%					4.96	%					5.33	%
Net interest income			$	38,354					$	37,057					$	36,810
Net interest margin⁽⁴⁾					6.41	%					6.46	%					6.71	%

_______________
⁽¹⁾Annualized.
⁽²⁾Includes nonaccrual loans.
⁽³⁾For the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, collectively, portfolio loans yield excluding credit card loans was 7.15%, 7.04% and 6.76%, respectively.
⁽⁴⁾For the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, collectively, credit card loans accounted for 233, 246 and 266 basis points of the reported net interest margin, respectively.


	Nine Months Ended September 30,
	2024						2023
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽¹⁾		Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate⁽¹⁾
	(in thousands)
Assets
Interest earning assets:
Interest-bearing deposits	$	84,254	$	3,123	4.95	%	$	72,116	$	2,531	4.69	%
Federal funds sold		57		3	7.03			1,605		53	4.42
Investment securities available for sale		226,151		3,902	2.30			252,993		3,732	1.97
Restricted investments		4,982		253	6.78			5,184		270	6.96
Loans held for sale		7,591		376	6.62			6,145		299	6.51
Portfolio loans receivable⁽²⁾⁽³⁾		1,991,435		143,937	9.65			1,801,355		129,352	9.60
Total interest earning assets		2,314,470		151,594	8.75			2,139,398		136,237	8.51
Noninterest earning assets		49,458						44,123
Total assets	$	2,363,928					$	2,183,521

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand accounts	$	209,346		579	0.37		$	203,099		208	0.14
Savings		4,460		7	0.21			5,965		6	0.13
Money market accounts		684,017		21,610	4.22			628,977		16,371	3.48
Time deposits		465,256		17,589	5.05			353,635		11,281	4.27
Borrowed funds		52,461		1,390	3.54			65,192		1,734	3.56
Total interest-bearing liabilities		1,415,540		41,175	3.89			1,256,868		29,600	3.15
Noninterest-bearing liabilities:
Noninterest-bearing liabilities		25,844						22,846
Noninterest-bearing deposits		657,044						665,821
Stockholders’ equity		265,500						237,986
Total liabilities and stockholders’ equity	$	2,363,928					$	2,183,521

Net interest spread					4.86	%					5.36	%
Net interest income			$	110,419					$	106,637
Net interest margin⁽⁴⁾					6.37	%					6.66	%

⁽¹⁾Annualized.
⁽²⁾Includes nonaccrual loans.
⁽³⁾For the nine months ended September 30, 2024 and 2023, collectively, portfolio loans yield excluding credit card loans was 7.05% and 6.57%, respectively.
⁽⁴⁾For the nine months ended September 30, 2024 and 2023, collectively, credit card loans accounted for 239 and 268 basis points of the reported net interest margin, respectively.

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), OpenSky^™ (the Company’s credit card division) and the Corporate Office.

Effective January 1, 2024, the Company allocated certain expenses previously recorded directly to the Commercial Bank segment to the other segments. These expenses are for shared services also consumed by OpenSky^™, CBHL, and Corporate. The Company performs an allocation process based on several metrics the Company believes more accurately ascribe shared service overhead to each segment. The Company believes this reflects the cost of support for each segment that should be considered in assessing segment performance. Historical information has been recast to reflect financial information consistently with the 2024 presentation.

The following schedule presents financial information for the periods indicated. Total assets are presented as of September 30, 2024, June 30, 2024, and September 30, 2023.

Segments

For the three months ended September 30, 2024

(in thousands)

Commercial Bank

CBHL

OpenSky^™

Corporate⁽²⁾

Eliminations

Consolidated

Interest income

35,805

161

15,625

1,049

(30

)

52,610

Interest expense

13,984

108

—

194

(30

)

14,256

Net interest income

21,821

15,625

855

—

38,354

Provision for credit losses

1,453

—

2,294

—

3,748

Provision for credit losses on unfunded commitments

—

Net interest income after provision

20,351

13,331

854

—

34,589

Noninterest income

726

1,811

4,096

—

6,635

Noninterest expense⁽¹⁾

12,422

2,395

13,276

1,632

—

29,725

Net income (loss) before taxes

8,655

(531

)

4,151

(776

)

—

11,499

Total assets

2,358,555

19,831

121,587

300,325

(239,510

)

2,560,788

For the three months ended June 30, 2024

(in thousands)

Commercial Bank

CBHL

OpenSky^™

Corporate⁽²⁾

Eliminations

Consolidated

Interest income

33,935

132

15,785

824

(61

)

50,615

Interest expense

13,312

—

224

(61

)

13,558

Net interest income

20,623

15,785

600

—

37,057

Provision for credit losses

1,118

—

2,299

—

3,417

Provision for credit losses on unfunded commitments

104

—

104

Net interest income after provision

19,401

13,486

600

—

33,536

Noninterest income

677

1,845

4,368

—

6,890

Noninterest expense⁽¹⁾

12,209

2,500

13,775

1,009

—

29,493

Net income (loss) before taxes

7,869

(606

)

4,079

(409

)

—

10,933

Total assets

2,254,198

19,622

115,593

288,872

(239,702

)

2,438,583

For the three months ended September 30, 2023

(in thousands)

Commercial Bank

CBHL

OpenSky^™

Corporate⁽²⁾

Eliminations

Consolidated

Interest income

30,409

111

16,143

1,162

(84

)

47,741

Interest expense

10,736

—

247

(84

)

10,931

Net interest income

19,673

16,143

915

—

36,810

Provision for credit losses

275

—

1,875

130

—

2,280

Provision for credit losses on unfunded commitments

—

Net interest income after provision

19,374

14,268

785

—

34,506

Noninterest income

665

1,255

4,405

—

6,326

Noninterest expense⁽¹⁾

12,610

1,880

13,227

329

—

28,046

Net income (loss) before taxes

7,429

(546

)

5,446

457

—

12,786

Total assets

2,102,749

5,280

116,318

264,950

(216,813

)

2,272,484

________________________
⁽¹⁾Noninterest expense includes $6.2 million, $6.3 million, and $6.1 million in data processing expense in OpenSky’s^™ segment for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, 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.

Segments

For the nine months ended September 30, 2024

(in thousands)

Commercial Bank

CBHL

OpenSky^™

Corporate⁽²⁾

Eliminations

Consolidated

Interest income

102,269

376

46,331

2,772

(154

)

151,594

Interest expense

40,450

232

—

647

(154

)

41,175

Net interest income

61,819

144

46,331

2,125

—

110,419

Provision for credit losses

3,680

—

6,152

—

9,892

Provision for credit losses on unfunded commitments

263

—

263

Net interest income after provision

57,876

144

40,179

2,065

—

100,264

Noninterest income

2,107

5,008

12,379

—

19,497

Noninterest expense⁽¹⁾

36,890

7,000

40,650

4,165

—

88,705

Net income (loss) before taxes

23,093

(1,848

)

11,908

(2,097

)

—

31,056

Total assets

2,358,555

19,831

121,587

300,325

(239,510

)

2,560,788

For the nine months ended September 30, 2023

(in thousands)

Commercial Bank

CBHL

OpenSky™

Corporate⁽²⁾

Eliminations

Consolidated

Interest income

85,451

299

47,441

3,274

(228

)

136,237

Interest expense

29,012

104

—

712

(228

)

29,600

Net interest income

56,439

195

47,441

2,562

—

106,637

Provision for credit losses

849

—

5,823

130

—

6,802

Provision for credit losses on unfunded commitments

—

Net interest income after provision

55,585

195

41,618

2,432

—

99,830

Noninterest income

1,964

3,743

13,329

—

19,039

Noninterest expense⁽¹⁾

36,043

6,538

40,083

1,196

—

83,860

Net income (loss) before taxes

21,506

(2,600

)

14,864

1,239

—

35,009

Total assets

2,102,749

5,280

116,318

264,950

(216,813

)

2,272,484

⁽¹⁾Noninterest expense includes $18.7 million and $17.9 million in data processing expense in OpenSky’s^™ segment for the nine months ended September 30, 2024 and 2023, 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.


HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited
	Quarter Ended
(in thousands, except per share data)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Earnings:
Net income	$	8,672		$	8,205		$	6,562		$	9,030		$	9,788
Earnings per common share, diluted		0.62			0.59			0.47			0.65			0.70
Net interest margin		6.41	%		6.46	%		6.24	%		6.40	%		6.71	%
Net interest margin, excluding credit card loans⁽¹⁾		4.08	%		4.00	%		3.85	%		3.92	%		4.05	%
Return on average assets⁽²⁾		1.42	%		1.40	%		1.15	%		1.63	%		1.75	%
Return on average equity⁽²⁾		12.59	%		12.53	%		10.19	%		14.44	%		16.00	%
Efficiency ratio		66.07	%		67.11	%		71.95	%		65.91	%		65.02	%

Balance Sheet:
Total portfolio loans receivable, net deferred fees	$	2,107,522		$	2,021,588		$	1,964,525		$	1,902,643		$	1,861,929
Total deposits		2,186,224			2,100,428			2,005,695			1,895,996			1,967,988
Total assets		2,560,788			2,438,583			2,324,238			2,226,176			2,272,484
Total stockholders' equity		280,111			267,854			259,465			254,860			242,878
Total average portfolio loans receivable, net deferred fees		2,053,619			1,992,630			1,927,372			1,863,298			1,847,772
Total average deposits		2,091,294			2,010,736			1,957,559			1,885,092			1,918,467
Portfolio loans-to-deposit ratio (period-end balances)		96.40	%		96.25	%		97.95	%		100.35	%		94.61	%
Portfolio loans-to-deposit ratio (average balances)		98.20	%		99.10	%		98.46	%		98.84	%		96.32	%

Asset Quality Ratios:
Nonperforming assets to total assets		0.60	%		0.58	%		0.62	%		0.72	%		0.67	%
Nonperforming loans to total loans		0.73	%		0.70	%		0.73	%		0.84	%		0.82	%
Net charge-offs to average portfolio loans⁽²⁾		0.51	%		0.39	%		0.41	%		0.53	%		0.38	%
Allowance for credit losses to total loans		1.51	%		1.53	%		1.49	%		1.50	%		1.52	%
Allowance for credit losses to non-performing loans		206.50	%		219.40	%		204.37	%		178.34	%		185.61	%

Bank Capital Ratios:
Total risk based capital ratio		13.76	%		14.51	%		14.36	%		14.81	%		14.51	%
Tier 1 risk based capital ratio		12.50	%		13.25	%		13.10	%		13.56	%		13.25	%
Leverage ratio		9.84	%		10.36	%		10.29	%		10.51	%		10.04	%
Common equity Tier 1 capital ratio		12.50	%		13.25	%		13.10	%		13.56	%		13.25	%
Tangible common equity		9.12	%		9.53	%		9.66	%		9.91	%		9.08	%
Holding Company Capital Ratios:
Total risk based capital ratio		16.65	%		16.98	%		16.83	%		17.38	%		17.11	%
Tier 1 risk based capital ratio		14.88	%		15.19	%		15.03	%		15.55	%		15.27	%
Leverage ratio		11.85	%		11.93	%		11.87	%		12.14	%		11.62	%
Common equity Tier 1 capital ratio		14.78	%		15.08	%		14.92	%		15.43	%		15.27	%
Tangible common equity		10.94	%		10.98	%		11.16	%		11.45	%		10.69	%

_______________
⁽¹⁾Refer to Appendix for reconciliation of non-GAAP measures.
⁽²⁾Annualized.


HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited (Continued)
	Quarter Ended
(in thousands, except per share data)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023
Composition of Loans:
Commercial real estate, non owner-occupied	$	403,487		$	397,080		$	377,224		$	351,116		$	350,637
Commercial real estate, owner-occupied		351,462			319,370			330,840			307,911			305,802
Residential real estate		623,684			601,312			577,112			573,104			558,147
Construction real estate		301,909			294,489			290,016			290,108			280,905
Commercial and industrial		271,811			255,686			254,577			239,208			237,549
Lender finance		29,546			33,294			13,484			11,085			—
Business equity lines of credit		2,663			2,989			14,768			14,117			14,155
Credit card, net of reserve⁽³⁾		127,098			122,217			111,898			123,331			122,533
Other consumer loans		2,045			1,930			738			950			948
Portfolio loans receivable	$	2,113,705		$	2,028,367		$	1,970,657		$	1,910,930		$	1,870,676
Deferred origination fees, net		(6,183	)		(6,779	)		(6,132	)		(7,642	)		(7,997	)
Portfolio loans receivable, net	$	2,107,522		$	2,021,588		$	1,964,525		$	1,903,288		$	1,862,679

Composition of Deposits:
Noninterest-bearing	$	718,120		$	684,574		$	665,812		$	617,373		$	680,803
Interest-bearing demand		266,493			266,070			193,963			199,308			229,035
Savings		3,763			4,270			4,525			5,211			5,686
Money markets		686,526			672,455			678,435			663,129			668,774
Brokered time deposits		153,022			155,148			160,641			142,356			128,665
Other time deposits		358,300			317,911			302,319			268,619			255,025
Total deposits	$	2,186,224		$	2,100,428		$	2,005,695		$	1,895,996		$	1,967,988

Capital Bank Home Loan Metrics:
Origination of loans held for sale	$	74,690		$	82,363		$	52,080		$	45,152		$	50,023
Mortgage loans sold		67,296			66,417			40,377			34,140			39,364
Gain on sale of loans		1,644			1,732			1,238			1,015			1,011
Purchase volume as a % of originations		90.98	%		96.48	%		97.83	%		89.99	%		92.29	%
Gain on sale as a % of loans sold⁽⁴⁾		2.44	%		2.61	%		3.07	%		2.97	%		2.57	%
Mortgage commissions	$	598		$	582		$	490		$	465		$	528

OpenSky^™Portfolio Metrics:
Open customer accounts		548,952			537,734			526,950			525,314			529,205
Secured credit card loans, gross	$	89,641		$	90,961		$	85,663		$	95,300		$	98,138
Unsecured credit card loans, gross		39,730			33,560			28,508			30,817			27,430
Noninterest secured credit card deposits		170,750			173,499			171,771			173,857			181,185

_______________
⁽³⁾Credit card loans are presented net of reserve for interest and fees.
⁽⁴⁾Gain on sale percentage is calculated as gain on sale of loans divided by mortgage loans sold.

Appendix

Reconciliation of Non-GAAP Measures

The Company has presented the following non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Company’s results of operations and financial condition. Presentation of these non-GAAP financial measures is consistent with how the Company evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Investors should recognize that the Company’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and the Company strongly encourages a review of its condensed consolidated financial statements in their entirety.

Earnings Metrics, as Adjusted	Quarter Ended
(in thousands, except per share data)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023

Net Income	$	8,672		$	8,205		$	6,562		$	9,030		$	9,788
Add: Merger-Related Expenses, net of tax		557			62			538			—			—
Net Income, as Adjusted	$	9,229		$	8,267		$	7,100		$	9,030		$	9,788

Weighted Average Common Shares - Diluted		13,951			13,895			13,919			13,989			14,024
Earnings per Share - Diluted	$	0.62		$	0.59		$	0.47		$	0.65		$	0.70
Earnings per Share - Diluted, as Adjusted	$	0.66		$	0.59		$	0.51		$	0.65		$	0.70

Average Assets	$	2,437,870		$	2,353,868		$	2,299,234		$	2,202,479		$	2,221,117
Return on Average Assets⁽¹⁾		1.42	%		1.40	%		1.15	%		1.63	%		1.75	%
Return on Average Assets, as Adjusted⁽¹⁾		1.51	%		1.41	%		1.24	%		1.63	%		1.75	%

Average Equity	$	274,087		$	263,425		$	258,892		$	248,035		$	242,671
Return on Average Equity⁽¹⁾		12.59	%		12.53	%		10.19	%		14.44	%		16.00	%
Return on Average Equity, as Adjusted⁽¹⁾		13.40	%		12.62	%		11.03	%		14.44	%		16.00	%

Net Interest Income	$	38,354		$	37,057		$	35,008		$	34,889		$	36,810
Noninterest Income		6,635			6,890			5,972			5,936			6,326
Total Revenue	$	44,989		$	43,947		$	40,980		$	40,825		$	43,136
Noninterest Expense	$	29,725		$	29,493		$	29,487		$	26,907		$	28,046
Efficiency Ratio⁽²⁾		66.07	%		67.11	%		71.95	%		65.91	%		65.02	%

Noninterest Expense	$	29,725		$	29,493		$	29,487		$	26,907		$	28,046
Less: Merger-Related Expenses		520			83			712			—			—
Noninterest Expense, as Adjusted	$	29,205		$	29,410		$	28,775		$	26,907		$	28,046
Efficiency Ratio, as Adjusted⁽²⁾		64.92	%		66.92	%		70.22	%		65.91	%		65.02	%

_______________
⁽¹⁾Annualized.
⁽²⁾The efficiency ratio is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).


Earnings Metrics, as Adjusted	Nine Months Ended
(in thousands, except per share data)	September 30, 2024			September 30, 2023

Net Income	$	23,439		$	26,841
Add: Merger-Related Expenses, Net of Tax		1,157			—
Net Income, as Adjusted	$	24,596		$	26,841

Weighted average common shares - Diluted		13,909			14,112
Earnings per share - Diluted	$	1.69		$	1.90
Earnings per share - Diluted, as Adjusted	$	1.77		$	1.90

Average Assets	$	2,363,928		$	2,183,521
Return on Average Assets⁽¹⁾		1.32	%		1.64	%
Return on Average Assets, as Adjusted⁽¹⁾		1.39	%		1.64	%

Average Equity	$	265,500		$	237,986
Return on Average Equity⁽¹⁾		11.79	%		15.08	%
Return on Average Equity, as Adjusted⁽¹⁾		12.37	%		15.08	%

Net Interest Income	$	110,419		$	106,637
Noninterest Income		19,497			19,039
Total Revenue	$	129,916		$	125,676
Noninterest Expense	$	88,705		$	83,860
Efficiency Ratio⁽²⁾		68.28	%		66.73	%

Noninterest Expense	$	88,705		$	83,860
Less: Merger-Related Expenses		1,315			—
Noninterest Expense, as Adjusted	$	87,390		$	83,860
Efficiency Ratio, as Adjusted⁽²⁾		67.27	%		66.73	%

_______________
⁽¹⁾Annualized.
⁽²⁾The efficiency ratio is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).


Net Interest Margin, as Adjusted	Quarter Ended
(in thousands)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023

Net Interest Income	$	38,354		$	37,057		$	35,008		$	34,889		$	36,810
Less: Credit Card Loan Income		15,137			15,205			14,457			14,677			15,792
Net Interest Income, as Adjusted	$	23,217		$	21,852		$	20,551		$	20,212		$	21,018
Average Interest Earning Assets		2,380,946			2,307,070			2,254,663			2,162,459			2,176,477
Less: Average Credit Card Loans		119,458			111,288			110,483			114,551			116,814
Total Average Interest Earning Assets, as Adjusted	$	2,261,488		$	2,195,782		$	2,144,180		$	2,047,908		$	2,059,663
Net Interest Margin, as Adjusted		4.08	%		4.00	%		3.85	%		3.92	%		4.05	%

Net Interest Margin, as Adjusted	Nine Months Ended
(in thousands)	September 30, 2024			September 30, 2023

Net Interest Income	$	110,419		$	106,637
Less: Credit Card Loan Income		44,798			46,419
Net Interest Income, as Adjusted	$	65,621		$	60,218
Average Interest Earning Assets		2,314,470			2,139,398
Less: Average Credit Card Loans		113,764			114,416
Total Average Interest Earning Assets, as Adjusted	$	2,200,706		$	2,024,982
Net Interest Margin, as Adjusted		3.98	%		3.98	%

Portfolio Loans Receivable Yield, as Adjusted	Quarter Ended
(in thousands)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023

Portfolio Loans Receivable Interest Income	$	49,886		$	48,143		$	45,908		$	45,026		$	45,274
Less: Credit Card Loan Income		15,137			15,205			14,457			14,677			15,792
Portfolio Loans Receivable Interest Income, as Adjusted	$	34,749		$	32,938		$	31,451		$	30,349		$	29,482
Average Portfolio Loans Receivable		2,053,619			1,992,630			1,927,372			1,863,298			1,847,772
Less: Average Credit Card Loans		119,458			111,288			110,483			114,551			116,814
Total Average Portfolio Loans Receivable, as Adjusted	$	1,934,161		$	1,881,342		$	1,816,889		$	1,748,747		$	1,730,958
Portfolio Loans Receivable Yield, as Adjusted		7.15	%		7.04	%		6.96	%		6.89	%		6.76	%

Portfolio Loans Receivable Yield, as Adjusted	Nine Months Ended
(in thousands)	September 30, 2024			September 30, 2023

Portfolio Loans Receivable Interest Income	$	143,937		$	129,352
Less: Credit Card Loan Income		44,798			46,419
Portfolio Loans Receivable Interest Income, as Adjusted	$	99,139		$	82,933
Average Portfolio Loans Receivable		1,991,435			1,801,355
Less: Average Credit Card Loans		113,764			114,416
Total Average Portfolio Loans Receivable, as Adjusted	$	1,877,671		$	1,686,939
Portfolio Loans Receivable Yield, as Adjusted		7.05	%		6.57	%

Pre-tax, Pre-Provision Net Revenue ("PPNR")	Quarter Ended
(in thousands)	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023			September 30, 2023

Net Income	$	8,672	$	8,205	$	6,562	$	9,030		$	9,788
Add: Income Tax Expense		2,827		2,728		2,062		2,186			2,998
Add: Provision for Credit Losses		3,748		3,417		2,727		2,808			2,280
Add: Provision for (Release of) Credit Losses on Unfunded Commitments		17		104		142		(106	)		24
Pre-tax, Pre-Provision Net Revenue ("PPNR")	$	15,264	$	14,454	$	11,493	$	13,918		$	15,090

Pre-tax, Pre-Provision Net Revenue ("PPNR")	Nine Months Ended
(in thousands)	September 30, 2024		September 30, 2023

Net Income	$	23,439	$	26,841
Add: Income Tax Expense		7,617		8,168
Add: Provision for Credit Losses		9,892		6,802
Add: Provision for Credit Losses on Unfunded Commitments		263		5
Pre-tax, Pre-Provision Net Revenue ("PPNR")	$	41,211	$	41,816

PPNR, as Adjusted	Quarter Ended
(in thousands)	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023			September 30, 2023

Net Income	$	8,672	$	8,205	$	6,562	$	9,030		$	9,788
Add: Income Tax Expense		2,827		2,728		2,062		2,186			2,998
Add: Provision for Credit Losses		3,748		3,417		2,727		2,808			2,280
Add: Provision for (Release of) Credit Losses on Unfunded Commitments		17		104		142		(106	)		24
Add: Merger-Related Expenses		520		83		712		—			—
PPNR, as Adjusted	$	15,784	$	14,537	$	12,205	$	13,918		$	15,090


PPNR, as Adjusted	Nine Months Ended
(in thousands)	September 30, 2024		September 30, 2023

Net Income	$	23,439	$	26,841
Add: Income Tax Expense		7,617		8,168
Add: Provision for Credit Losses		9,892		6,802
Add: Provision for Credit Losses on Unfunded Commitments		263		5
Add: Merger-Related Expenses		1,315		—
PPNR, as Adjusted	$	42,526	$	41,816

Allowance for Credit Losses to Total Portfolio Loans	Quarter Ended
(in thousands)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023

Allowance for Credit Losses	$	31,925		$	30,832		$	29,350		$	28,610		$	28,279
Total Portfolio Loans		2,107,522			2,021,588			1,964,525			1,903,288			1,862,679
Allowance for Credit Losses to Total Portfolio Loans		1.51	%		1.53	%		1.49	%		1.50	%		1.52	%

Nonperforming Assets to Total Assets	Quarter Ended
(in thousands)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023

Total Nonperforming Assets	$	15,460		$	14,053		$	14,361		$	16,042		$	15,236
Total Assets		2,560,788			2,438,583			2,324,238			2,226,176			2,272,484
Nonperforming Assets to Total Assets		0.60	%		0.58	%		0.62	%		0.72	%		0.67	%

Nonperforming Loans to Total Portfolio Loans	Quarter Ended
(in thousands)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023

Total Nonperforming Loans	$	15,460		$	14,053		$	14,361		$	16,042		$	15,236
Total Portfolio Loans		2,107,522			2,021,588			1,964,525			1,903,288			1,862,679
Nonperforming Loans to Total Portfolio Loans		0.73	%		0.70	%		0.73	%		0.84	%		0.82	%

Net Charge-Offs to Average Portfolio Loans	Quarter Ended
(in thousands)	September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023

Total Net Charge-Offs	$	2,655		$	1,935		$	1,987		$	2,477		$	1,780
Total Average Portfolio Loans		2,053,619			1,992,630			1,927,372			1,863,298			1,847,772
Net Charge-Offs to Average Portfolio Loans, Annualized		0.51	%		0.39	%		0.41	%		0.53	%		0.38	%

Net Charge-offs to Average Portfolio Loans	Nine Months Ended
(in thousands)	September 30, 2024			September 30, 2023

Total Net Charge-Offs	$	6,577		$	5,996
Total Average Portfolio Loans		1,991,435			1,801,355
Net Charge-Offs to Average Portfolio Loans, Annualized		0.44	%		0.45	%

Tangible Book Value per Share	Quarter Ended
(in thousands, except share and per share data)	September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023		September 30, 2023

Total Stockholders' Equity	$	280,111	$	267,854	$	259,465	$	254,860	$	242,878
Less: Preferred Equity		—		—		—		—		—
Less: Intangible Assets		—		—		—		—		—
Tangible Common Equity	$	280,111	$	267,854	$	259,465	$	254,860	$	242,878
Period End Shares Outstanding		13,917,891		13,910,467		13,889,563		13,922,532		13,893,083
Tangible Book Value per Share	$	20.13	$	19.26	$	18.68	$	18.31	$	17.48

ABOUT CAPITAL BANCORP, INC.

Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in four locations in the greater Washington, D.C. and Baltimore, Maryland markets and one bank branch in Fort Lauderdale, Florida. Capital Bancorp had assets of approximately $2.6 billion at September 30, 2024 and its common stock is traded in the NASDAQ Global Market under the symbol “CBNK.” More information can be found at the Company's website www.CapitalBankMD.com under its investor relations page.

FORWARD-LOOKING STATEMENTS

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

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing wars in Ukraine and in the Middle East; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; the expected cost savings, synergies and other financial benefits from the acquisition of IFHI or any other acquisition the Company has made or may make might not be realized within the expected time frames or at all; the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; and other factors that may affect our future results.

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

FINANCIAL CONTACT: Dominic Canuso (301) 468-8848 x1403

MEDIA CONTACT: Ed Barry (240) 283-1912

WEB SITE: www.CapitalBankMD.com

Capital Bancorp, Inc. Posts Broad Based Growth Leading to a Sharp Profitability Increase

Mot-clé