CBNK Quarterly Earnings Grow 13.7 Percent Year Over Year

Diluted EPS of $0.71, ROAA of 2.01%, and ROAE of 20.30% for 1Q 2022

ROCKVILLE, Md., April 20, 2022 (GLOBE NEWSWIRE) — Capital Bancorp, Inc. (the “Company”) (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the “Bank”), today reported net income of $10.2 million, or $0.71 per diluted share, for the first quarter of 2022. By comparison, net income was $9.0 million, or $0.65 per diluted share, for the first quarter of 2021. Portfolio loans, net, increased $213.9 million when compared to the period ended March 31, 2021.

“We started the year with another quarter of outstanding profitability at both the Commercial Bank and OpenSky®,” said Ed Barry, CEO of the Company and the Bank. “Loan production at the Commercial Bank was strong as new hires and strategic initiatives continue to gain momentum, but growth was negatively impacted by payoffs and selective offboarding of certain lower-quality credit relationships. OpenSky® profitability was stable as updated agreements with service providers delivered savings on data processing costs offsetting anticipated card holder attrition which resulted in a decline in open accounts for the quarter. We are optimistic that our business-wide strategic investments will begin to deliver both increased revenues and lower costs in the coming quarters.”

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

First Quarter 2022 Highlights

Capital Bancorp, Inc.

  • Strong Earnings – Continued strong performance by the Commercial Bank and OpenSky® contributed to the first quarter’s results. Quarterly net income increased to $10.2 million from $9.0 million in the first quarter of 2021. Earnings were $0.71 per diluted share for the three months ended March 31, 2022 and $0.65 for the three months ended March 31, 2021.
  • Outstanding Performance Ratios – Return on average assets (“ROAA”) and return on average equity (“ROAE”) were 2.01% and 20.30%, respectively, for the three months ended March 31, 2022 compared to 1.87% and 22.30%, respectively, for the three months ended March 31, 2021.
  • Expanded Net Interest Margin – Net interest margin was 6.79% for the three months ended March 31, 2022, compared to 5.15% for the same three month period last year. The margin expansion was primarily driven by increases in the yield on portfolio loans due to the recognition of deferred fees associated with the credit card portfolio, as well as an acceleration in the deferred fees related to forgiven loans in the Small Business Administration Payroll Protection Program (“SBA-PPP”).
  • Robust Capital Positions – As of March 31, 2022, the Company reported a common equity tier 1 capital ratio of 15.04% and an allowance for loan losses to total loans ratio of 1.60%, or 1.65% excluding SBA-PPP loans. Quarter over quarter, tangible book value per common share grew 18.5 percent to $14.39 at March 31, 2022.

Commercial Bank

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

Capital Bank Home Loans

  • Slowing Mortgage Originations – Origination volumes declined 68.8 percent, to $110.4 million, in the first quarter of 2022, when compared to $353.8 million in the first quarter of 2021. The continued steepening of the yield curve in the first quarter of 2022 slowed originations from the year earlier when low interest rates fueled refinance volumes.
  • Purchase Volume – While purchase volumes increased to 73.2 percent of total originations for the first quarter of 2022, up from 24.6 percent during the first quarter of 2021, total purchase originations declined by 8.3% during the same period.

OpenSky®

  • Strong Revenue Growth – OpenSky® revenue grew by 47.6 percent to $20.9 million for the quarter ended March 31, 2022 from the same period in 2021 due to an increase in average credit card loan balances as well as an increase in the yield on those credit card loans. The surge in new account originations over the past two years has slowed as government stimulus ended and competition increased. New account originations have reverted to a pace reminiscent of 2019, and is not enough to offset the normal customer lifecycle of the 2020 and 2021 vintages.
  • Continued Growth in OpenSky® Loans and Deposits – OpenSky® loan balances, net of reserves, increased by $40.0 million to $123.7 million compared to $83.7 million in the first quarter of 2021. Corresponding deposit balances increased 2.1 percent or $4.5 million from $215.9 million at March 31, 2021 to $220.4 million at March 31, 2022.
  • Expense Management Efforts Demonstrate Scale – Key contracts renegotiated during the first quarter of 2022 will engender cost saves and scale benefits throughout the remainder of the year and into the future.
COMPARATIVE FINANCIAL HIGHLIGHTS – Unaudited
       
  Quarter Ended    
  March 31,    
(dollars in thousands except per share data)   2022       2021     % Change
Earnings Summary          
Interest income $ 34,402     $ 26,638     29.1 %
Interest expense   1,071       2,194     (51.2 )%
Net interest income   33,331       24,444     36.4 %
Provision for loan losses   952       503     89.3 %
Noninterest income   8,288       13,951     (40.6 )%
Noninterest expense   27,102       25,767     5.2 %
Income before income taxes   13,565       12,125     11.9 %
Income tax expense   3,354       3,143     6.7 %
Net income $ 10,211     $ 8,982     13.7 %
           
Pre-tax pre-provision net revenue (“PPNR”) (2) $ 14,517     $ 12,628     15.0 %
Weighted average common shares – Basic   13,989       13,757     1.7 %
Weighted average common shares – Diluted   14,339       13,899     3.2 %
Earnings per share – Basic $ 0.73     $ 0.65     12.3 %
Earnings per share – Diluted $ 0.71     $ 0.65     9.2 %
Return on average assets (1)   2.01 %     1.87 %   7.5 %
Return on average assets, excluding impact of SBA-PPP loans(1) (2)   1.67 %     1.54 %   8.4 %
Return on average equity   20.30 %     22.30 %   (9.0 )%
                   

  Quarter Ended   1Q22 vs. 1Q21   Quarter Ended
  March 31,     December 31,   September 30,   June 30,
(in thousands except per share data) 2022   2021   % Change   2021   2021   2021
Balance Sheet Highlights                      
Assets $ 2,122,453   $ 2,091,851   1.5 %   $ 2,055,300   $ 2,169,556   $ 2,151,850
Investment securities available for sale   172,712     128,023   34.9 %     184,455     189,165     160,515
Mortgage loans held for sale   17,036     60,816   (72.0 )%     15,989     36,005     47,935
SBA-PPP loans, net of fees   51,085     267,871   (80.9 )%     108,285     137,178     202,763
Portfolio loans receivable (3)   1,526,256     1,312,375   16.3 %     1,523,982     1,445,126     1,392,471
Allowance for loan losses   25,252     23,550   7.2 %     25,181     24,753     24,079
Deposits   1,862,722     1,863,069   %     1,797,137     1,921,238     1,917,419
FHLB borrowings   22,000     22,000   %     22,000     22,000     22,000
Other borrowed funds   12,062     12,062   %     12,062     12,062     12,062
Total stockholders’ equity   201,492     167,003   20.7 %     197,903     189,080     177,204
Tangible common equity(2)   201,492     167,003   20.7 %     197,903     189,080     177,204
                       
Common shares outstanding   14,001     13,759   1.8 %     13,962     13,802     13,772
Tangible book value per share (2) $ 14.39   $ 12.14   18.5 %   $ 14.17   $ 13.70   $ 12.87
                                   

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

Operating Results – Comparison of Three Months Ended March 31, 2022 and 2021

For the three months ended March 31, 2022, net interest income increased $8.9 million, or 36.4 percent, to $33.3 million from the same period in 2021, primarily due to an increase in interest earned on the credit card loan portfolio. The net interest margin increased 164 basis points to 6.79% for the three months ended March 31, 2022 from the same period in 2021 due in large part to the acceleration of the deferred fees associated with the SBA-PPP loan forgiveness as well as the recognition of deferred fees on the credit card loans. Net interest margin, excluding credit card and SBA-PPP loans, was 3.82% for the first quarter of 2022 compared to 3.63% for the same period in 2021. For the three months ended March 31, 2022, average interest earning assets increased $66.9 million, or 3.5 percent, to $2.0 billion as compared to the same period in 2021, and the average yield on interest earning assets increased 139 basis points. Compared to the same period in the prior year, average interest-bearing liabilities decreased $55.4 million, or 5.0 percent, while the average cost of interest-bearing liabilities decreased 39 basis points to 0.42% from 0.81%.

The provision for loan losses of $952 thousand for the three months ended March 31, 2022 was primarily related to growth in the credit card portfolio and the cycling of credit card accounts. Net charge-offs for the first quarter of 2022 were $881 thousand, or 0.24% on an annualized basis of average portfolio loans, compared to $388 thousand, or 0.12% on an annualized basis of average loans for the first quarter of 2021. All of the $881 thousand in net charge-offs during the quarter were related to the credit card portfolio.

For the quarter ended March 31, 2022, noninterest income was $8.3 million, a decrease of $5.7 million, or 40.6 percent, from $14.0 million in the prior year quarter. The decrease was primarily the result of reduced mortgage banking revenue.

Net credit card loan balances increased by $40.0 million to $123.7 million as of March 31, 2022 from $83.7 million at March 31, 2021. The related deposit account balances increased 2.1 percent to $220.4 million at March 31, 2022 when compared to $215.9 million at March 31, 2021. For the three months ended March 31, 2022, OpenSky’s® secured credit card accounts decreased by 30 thousand net compared to 74 thousand net new accounts for the same period in 2021 suggesting consumer behaviors may be returning to historical trends after being elevated in response to COVID-19 throughout 2020 and the first half of 2021.

The efficiency ratio for the three months ended March 31, 2022 decreased to 65.12% compared to 67.11% for the three months ended March 31, 2021.

Noninterest expense was $27.1 million for the three months ended March 31, 2022, as compared to $25.8 million for the three months ended March 31, 2021, an increase of $1.3 million, or 5.2 percent. The increase was primarily driven by increases in salaries and employee benefits of $1.7 million, advertising expenses of $806 thousand, and professional fees of $697 thousand and were offset by decreases in data processing expenses of $1.0 million, loan processing expenses of $660 thousand, and occupancy and equipment expense of $103 thousand.

Financial Condition

Total assets at March 31, 2022 were $2.1 billion, an increase of 1.5% from March 31, 2021. Net portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.5 billion as of March 31, 2022, an increase of 16.3 percent as compared to $1.3 billion at March 31, 2021.

While total deposits remained steady at $1.9 billion for the periods ended March 31, 2022 and March 31, 2021, the composition of the deposit portfolio shifted, with an increase in noninterest bearing deposits of $53.3 million, or 6.9%, when comparing March 31, 2022 to March 31, 2021. At March 31, 2022, there were no listing service or brokered deposits compared to $86.0 million at March 31, 2021.

The Company recorded a provision for loan losses of $952 thousand during the three months ended March 31, 2022, which increased the allowance for loan losses to $25.3 million, or 1.60% of total loans (1.65%, excluding SBA-PPP loans, on a non-GAAP basis) at March 31, 2022. Nonperforming assets were $6.0 million, or 0.28% of total assets, as of March 31, 2022, down from $12.1 million, or 0.58% of total assets, at March 31, 2021, and was comprised solely of nonperforming loans. Included in nonperforming loans at March 31, 2022 were troubled debt restructurings of $525 thousand.

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

Consolidated Statements of Income (Unaudited)    
  Three Months Ended March 31,
(in thousands) 2022   2021
Interest income      
Loans, including fees $ 33,889   $ 26,068
Investment securities available for sale   370     478
Federal funds sold and other   143     92
Total interest income   34,402     26,638
       
Interest expense      
Deposits   884     2,006
Borrowed funds   187     188
Total interest expense   1,071     2,194
       
Net interest income   33,331     24,444
Provision for loan losses   952     503
Net interest income after provision for loan losses   32,379     23,941
       
Noninterest income      
Service charges on deposits   163     148
Credit card fees   5,924     5,940
Mortgage banking revenue   1,790     7,743
Other fees and charges   411     120
Total noninterest income   8,288     13,951
       
Noninterest expenses      
Salaries and employee benefits   10,310     8,568
Occupancy and equipment   1,026     1,129
Professional fees   2,321     1,624
Data processing   8,276     9,311
Advertising   1,639     833
Loan processing   392     1,052
Other operating   3,138     3,250
Total noninterest expenses   27,102     25,767
Income before income taxes   13,565     12,125
Income tax expense   3,354     3,143
Net income $ 10,211   $ 8,982
           

Consolidated Balance Sheets      
(in thousands except share data) (unaudited)
March 31, 2022
  December 31, 2021
Assets      
Cash and due from banks $ 14,955     $ 42,914  
Interest bearing deposits at other financial institutions   298,501       136,824  
Federal funds sold   330       3,657  
Total cash and cash equivalents   313,786       183,395  
Investment securities available for sale   172,712       184,455  
Marketable equity securities   245       245  
Restricted investments   3,602       3,498  
Loans held for sale   17,036       15,989  
SBA-PPP loans receivable, net of fees   51,085       108,285  
Portfolio loans receivable, net of deferred fees and costs   1,526,256       1,523,982  
Less allowance for loan losses   (25,252 )     (25,181 )
Total portfolio loans held for investment, net   1,501,004       1,498,801  
Premises and equipment, net   2,977       3,282  
Accrued interest receivable   7,512       7,901  
Deferred income taxes, net   12,366       9,793  
Other real estate owned         86  
Bank owned life insurance   35,758       35,506  
Other assets   4,370       4,064  
Total assets $ 2,122,453     $ 2,055,300  
       
Liabilities      
Deposits      
Noninterest bearing $ 825,174     $ 787,650  
Interest bearing   1,037,548       1,009,487  
Total deposits   1,862,722       1,797,137  
Federal Home Loan Bank advances   22,000       22,000  
Other borrowed funds   12,062       12,062  
Accrued interest payable   480       473  
Other liabilities   23,697       25,725  
Total liabilities   1,920,961       1,857,397  
       
Stockholders’ equity      
Common stock, $.01 par value; 49,000,000 shares authorized; 14,000,520 and 13,962,334 issued and outstanding   140       140  
Additional paid-in capital   55,226       54,306  
Retained earnings   153,949       144,533  
Accumulated other comprehensive loss   (7,823 )     (1,076 )
Total stockholders’ equity   201,492       197,903  
Total liabilities and stockholders’ equity $ 2,122,453     $ 2,055,300  
               

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

  Three Months Ended March 31,
    2022       2021  
  Average
Outstanding
Balance
  Interest Income/
Expense
  Average
Yield/
Rate(1)
  Average
Outstanding
Balance
  Interest Income/
Expense
  Average
Yield/
Rate(1)
  (Dollars in thousands)
Assets                      
Interest earning assets:                      
Interest bearing deposits $ 197,720   $ 101   0.21 %   $ 205,799   $ 49   0.10 %
Federal funds sold   4,658     1   0.09       3,871        
Investment securities available for sale   180,567     370   0.83       106,704     478   1.82  
Restricted stock and equity securities   3,766     41   4.42       3,906     43   4.43  
Loans held for sale   13,500     111   3.33       72,460     481   2.69  
SBA-PPP loans receivable   83,264     2,066   10.06       232,371     2,469   4.31  
Portfolio loans receivable(2)   1,506,902     31,712   8.53       1,298,352     23,118   7.22  
Total interest earning assets   1,990,377     34,402   7.01       1,923,463     26,638   5.62  
Noninterest earning assets   66,824             25,803        
Total assets $ 2,057,201           $ 1,949,266        
                       
Liabilities and Stockholders’ Equity                      
Interest bearing liabilities:                      
Interest bearing demand accounts $ 293,979     37   0.05     $ 256,958     68   0.11  
Savings   8,274     1   0.05       5,631     1   0.05  
Money market accounts   539,264     301   0.23       471,154     530   0.46  
Time deposits   170,748     545   1.29       332,660     1,407   1.72  
Borrowed funds   34,062     187   2.23       35,343     188   2.15  
Total interest bearing liabilities   1,046,327     1,071   0.42       1,101,746     2,194   0.81  
Noninterest bearing liabilities:                      
Noninterest bearing liabilities   24,156             24,059        
Noninterest bearing deposits   782,747             660,086        
Stockholders’ equity   203,971             163,375        
Total liabilities and stockholders’ equity $ 2,057,201           $ 1,949,266        
                       
Net interest spread         6.59 %           4.81 %
Net interest income     $ 33,331           $ 24,444    
Net interest margin(3)         6.79 %           5.15 %
                           

_______________
(1) Annualized.
(2) Includes nonaccrual loans.
(3) For the three months ended March 31, 2022 and March 31, 2021, collectively, SBA-PPP loans and credit card loans accounted for 297 and 152 basis points of the reported net interest margin, respectively.

HISTORICAL FINANCIAL HIGHLIGHTS – Unaudited        
    Quarter Ended
(dollars in thousands except per share data)   March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
Earnings:                    
Net income   $ 10,211     $ 10,171     $ 11,177     $ 9,648     $ 8,982  
Earnings per common share, diluted     0.71       0.71       0.79       0.68       0.65  
Net interest margin     6.79 %     6.49 %     6.27 %     5.47 %     5.15 %
Net interest margin, excluding credit cards & SBA-PPP loans (1)     3.82 %     3.70 %     3.52 %     3.55 %     3.63 %
Return on average assets(2)     2.01 %     1.95 %     2.13 %     1.90 %     1.87 %
Return on average assets, excluding impact of SBA-PPP loans (1)(2)     1.67 %     1.80 %     1.99 %     1.65 %     1.54 %
Return on average equity(2)     20.30 %     20.66 %     23.87 %     22.36 %     22.30 %
Efficiency ratio     65.12 %     65.83 %     64.10 %     66.37 %     67.11 %
Balance Sheet:                    
Total portfolio loans receivable, net   $ 1,526,256     $ 1,523,982     $ 1,445,126     $ 1,392,471     $ 1,312,375  
Total deposits     1,862,722       1,797,137       1,921,238       1,917,419       1,863,069  
Total assets     2,122,453       2,055,300       2,169,556       2,151,850       2,091,851  
Total shareholders’ equity     201,492       197,903       189,080       177,204       167,003  
Asset Quality Ratios:                    
Nonperforming assets to total assets     0.28 %     0.56 %     0.77 %     0.54 %     0.58 %
Nonperforming assets to total assets, excluding the SBA-PPP loans (1)     0.29 %     0.59 %     0.83 %     0.60 %     0.66 %
Nonperforming loans to total loans     0.38 %     0.70 %     0.85 %     0.52 %     0.56 %
Nonperforming loans to portfolio loans (1)     0.39 %     0.75 %     0.94 %     0.60 %     0.67 %
Net charge-offs to average portfolio loans (1)(2)     0.24 %     0.18 %     0.08 %     0.08 %     0.12 %
Allowance for loan losses to total loans     1.60 %     1.54 %     1.56 %     1.51 %     1.49 %
Allowance for loan losses to portfolio loans (1)     1.65 %     1.65 %     1.71 %     1.73 %     1.79 %
Allowance for loan losses to non-performing loans     422.65 %     220.40 %     182.48 %     287.40 %     267.07 %
Bank Capital Ratios:                    
Total risk based capital ratio     14.36 %     13.79 %     13.86 %     13.51 %     13.55 %
Tier 1 risk based capital ratio     13.10 %     12.53 %     12.60 %     12.25 %     12.29 %
Leverage ratio     8.74 %     8.36 %     7.83 %     7.58 %     7.54 %
Common equity Tier 1 capital ratio     13.10 %     12.53 %     12.60 %     12.25 %     12.29 %
Tangible common equity     8.11 %     8.36 %     7.57 %     7.17 %     7.01 %
Holding Company Capital Ratios:                    
Total risk based capital ratio     17.16 %     16.41 %     15.75 %     16.14 %     16.07 %
Tier 1 risk based capital ratio     15.19 %     14.43 %     14.49 %     14.10 %     13.98 %
Leverage ratio     10.25 %     9.73 %     9.12 %     8.78 %     8.84 %
Common equity Tier 1 capital ratio     15.04 %     14.28 %     14.34 %     13.94 %     13.81 %
Tangible common equity     9.49 %     9.63 %     8.72 %     8.23 %     7.98 %
Composition of Loans:                    
SBA-PPP loans, net   $ 51,085     $ 108,285     $ 137,178     $ 202,763     $ 267,871  
Residential real estate   $ 420,242     $ 401,607     $ 418,205     $ 420,015     $ 420,461  
Commercial real estate     564,725       556,339       502,523       471,807       433,336  
Construction real estate     245,722       255,147       251,256       223,832       221,277  
Commercial and industrial     177,504       175,956       143,244       158,392       151,410  
Credit card, net of reserve     123,750       141,120       134,979       121,410       83,740  
Other consumer loans     909       1,033       1,425       1,034       2,991  
Portfolio loans receivable   $ 1,532,852     $ 1,531,202     $ 1,451,632     $ 1,396,490     $ 1,313,215  
Deferred origination fees, net     (6,596 )     (7,220 )     (6,506 )     (4,019 )     (840 )
Portfolio loans receivable, net   $ 1,526,256     $ 1,523,982     $ 1,445,126     $ 1,392,471     $ 1,312,375  
Composition of Deposits:                    
Noninterest bearing   $ 825,174     $ 787,650     $ 833,187     $ 828,308     $ 771,924  
Interest-bearing demand     279,591       330,924       369,812       314,883       300,992  
Savings     9,894       6,994       6,682       6,965       6,012  
Money markets     585,920       493,919       493,029       484,567       471,303  
Time deposits     162,143       177,650       218,528       282,696       312,838  
Total Deposits   $ 1,862,722     $ 1,797,137     $ 1,921,238     $ 1,917,419     $ 1,863,069  
Capital Bank Home Loan Metrics:                
Origination of loans held for sale   $ 110,446     $ 158,051     $ 217,175     $ 265,517     $ 353,774  
Mortgage loans sold     109,953       178,068       229,111       278,384       400,112  
Gain on sale of loans     3,042       4,423       6,108       7,763       12,008  
Purchase volume as a % of originations     73.16 %     56.44 %     50.98 %     50.64 %     24.59 %
Gain on sale as a % of loans sold(3)     2.77 %     2.48 %     2.67 %     2.79 %     3.00 %
Mortgage commissions   $ 1,125     $ 1,462     $ 1,884     $ 2,364     $ 3,320  
OpenSky® Portfolio Metrics:                
Active customer accounts     630,709       660,397       700,383       707,600       642,272  
Secured credit card loans, gross     113,343       131,245       131,289       120,381       85,897  
Unsecured credit card loans, gross     12,764       12,135       5,949       3,356       363  
Noninterest secured credit card deposits     220,354       229,530       242,405       241,724       215,883  
                                         

_______________
(1)   Refer to Appendix for reconciliation of non-GAAP measures.
(2)   Annualized.
(3)   Gain on sale percentage is calculated as gain on sale of loans divided by mortgage loans sold.

Appendix

Reconciliation of Non-GAAP Measures

Return on Average Assets, as Adjusted Quarters Ended
Dollars in thousands March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
           
Net Income $ 10,211   $ 10,171   $ 11,177   $ 9,648   $ 8,982  
Less: SBA-PPP loan income   2,066     1,347     1,525     2,272     2,469  
Net Income, as Adjusted $ 8,145   $ 8,824   $ 9,652   $ 7,376   $ 6,513  
Average Total Assets   2,057,201     2,066,283     2,084,772     2,041,232     1,949,266  
Less: Average SBA-PPP Loans   83,264     116,595     162,217     250,040     232,371  
Average Total Assets, as Adjusted $ 1,973,937   $ 1,949,688   $ 1,922,555   $ 1,791,192   $ 1,716,895  
Return on Average Assets, as Adjusted   1.67 %   1.80 %   1.99 %   1.65 %   1.54 %
                               

Net Interest Margin, as Adjusted Quarters Ended
Dollars in thousands March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
           
Net Interest Income $ 33,331   $ 32,671   $ 32,059   $ 27,520   $ 24,444  
Less Credit card loan income   14,487     15,010     15,086     10,497     7,660  
Less SBA-PPP loan income   2,066     1,347     1,525     2,272     2,469  
Net Interest Income, as Adjusted $ 16,778   $ 16,314   $ 15,448   $ 14,751   $ 14,315  
Average Interest Earning Assets   1,990,377     1,996,331     2,026,616     2,016,801     1,923,463  
Less Average credit card loans   124,923     131,306     124,771     100,456     92,150  
Less Average SBA-PPP loans   83,264     116,595     162,217     250,040     232,371  
Total Average Interest Earning Assets, as Adjusted $ 1,782,190   $ 1,748,430   $ 1,739,628   $ 1,666,305   $ 1,598,941  
Net Interest Margin, as Adjusted   3.82 %   3.70 %   3.52 %   3.55 %   3.63 %

Tangible Book Value per Share Quarters Ended
Dollars in thousands, except per share amounts March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
           
Total Stockholders’ Equity $ 201,492   $ 197,903   $ 189,080   $ 177,204   $ 167,003  
Less: Preferred equity                    
Less: Intangible assets                    
Tangible Common Equity $ 201,492   $ 197,903   $ 189,080   $ 177,204   $ 167,003  
Period End Shares Outstanding   14,000,520     13,962,334     13,801,936     13,771,615     13,759,218  
Tangible Book Value per Share $ 14.39   $ 14.17   $ 13.70   $ 12.87   $ 12.14  

Allowance for Loan Losses to Total Portfolio Loans Quarters Ended
Dollars in thousands March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
           
Allowance for Loan Losses $ 25,252   $ 25,181   $ 24,753   $ 24,079   $ 23,550  
Total Loans   1,577,341     1,632,267     1,582,304     1,595,234     1,578,087  
Less: SBA-PPP loans   51,085     108,285     137,178     202,763     265,712  
Total Portfolio Loans $ 1,526,256   $ 1,523,982   $ 1,445,126   $ 1,392,471   $ 1,312,375  
Allowance for Loan Losses to Total Portfolio Loans   1.65 %   1.65 %   1.71 %   1.73 %   1.79 %
           
           
Nonperforming Assets to Total Assets, net SBA-PPP Loans Quarters Ended
Dollars in thousands March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
           
Total Nonperforming Assets $ 5,975   $ 11,512   $ 16,801   $ 11,615   $ 12,112  
Total Assets   2,122,453     2,055,300     2,169,556     2,151,850     2,091,851  
Less: SBA-PPP loans   51,085     108,285     137,178     202,763     265,712  
Total Assets, net SBA-PPP Loans $ 2,071,368   $ 1,947,015   $ 2,032,378   $ 1,949,087   $ 1,826,139  
Nonperforming Assets to Total Assets, net SBA-PPP Loans   0.29 %   0.59 %   0.83 %   0.60 %   0.66 %
           
           
Nonperforming Loans to Portfolio Loans Quarters Ended
Dollars in thousands March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
           
Total Nonperforming Loans $ 5,975   $ 11,425   $ 13,565   $ 8,378   $ 8,818  
Total Loans   1,577,341     1,632,267     1,582,304     1,595,234     1,578,087  
Less: SBA-PPP loans   51,085     108,285     137,178     202,763     265,712  
Total Portfolio Loans $ 1,526,256   $ 1,523,982   $ 1,445,126   $ 1,392,471   $ 1,312,375  
Nonperforming Loans to Total Portfolio Loans   0.39 %   0.75 %   0.94 %   0.60 %   0.67 %
           
           
Net Charge-offs to Average Portfolio Loans Quarters Ended
Dollars in thousands March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
           
Total Net Charge-offs $ 881   $ 672   $ 301   $ 251   $ 388  
Total Average Loans   1,590,166     1,582,473     1,569,198     1,567,973     1,530,723  
Less: Average SBA-PPP loans   83,264     116,595     162,217     250,040     232,371  
Total Average Portfolio Loans $ 1,506,902   $ 1,465,878   $ 1,406,981   $ 1,317,933   $ 1,298,352  
Net Charge-offs to Average Portfolio Loans   0.24 %   0.18 %   0.08 %   0.08 %   0.12 %
           
           
Pre-tax, Pre-Provision Net Revenue (“PPNR”) Quarters Ended
Dollars in thousands March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021
           
Net income $ 10,211   $ 10,171   $ 11,177   $ 9,648   $ 8,982  
Add: Income Tax Expense   3,354     3,522     3,877     3,357     3,143  
Add: Provision for Loan Losses   952     1,100     975     781     503  
Pre-tax, Pre-Provision Net Revenue (“PPNR”) $ 14,517   $ 14,793   $ 16,029   $ 13,786   $ 12,628  
           

ABOUT CAPITAL BANCORP, INC.

Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. The Company’s wholly-owned subsidiary, Capital Bank, N.A., is the fourth largest bank headquartered in Maryland at March 31, 2022. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in five locations in the greater Washington, D.C. and Baltimore, Maryland markets. Capital Bancorp had assets of approximately $2.1 billion at March 31, 2022 and its common stock is traded in the NASDAQ Global Market under the symbol “CBNK.” More information can be found at the Company’s website www.CapitalBankMD.com under its investor relations page.

FORWARD-LOOKING STATEMENTS

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

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

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

FINANCIAL CONTACT: Alan Jackson (240) 283-0402

MEDIA CONTACT: Ed Barry (240) 283-1912

WEB SITE: www.CapitalBankMD.com

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