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October 28, 2024false000141953600014195362024-10-282024-10-28



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 28, 2024

CAPITAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
 
Maryland
001-38671
52-2083046
(State or other jurisdiction of incorporation or organization)
(Commission file number)
(IRS Employer Identification No.)
2275 Research Boulevard, Suite 600, Rockville, Maryland 20850
(Address of principal executive offices) (Zip Code)
(301) 468-8848
Registrant’s telephone number, including area code

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share CBNK NASDAQ Stock Market




Item 2.02 Results of Operations and Financial Disclosure
On October 28, 2024, Capital Bancorp, Inc. (the “Company”) issued a press release announcing the Company’s unaudited financial results for the three and nine months ended September 30, 2024. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and hereby incorporated by reference.

The information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including Exhibit 99.1 to this Current Report on Form 8-K, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Company under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.

Item 8.01. Other Events
On October 25, 2024, the Company's Board of Directors declared a $0.10 per share dividend, payable on November 20, 2024 to stockholders of record on November 4, 2024.

Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)



2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CAPITAL BANCORP, INC.                             
 
 
Date: October 28, 2024
By: /s/ Dominic Canuso
Name: Dominic Canuso
Title: Chief Financial Officer





3
EX-99.1 2 earningsrelease9302024.htm EX-99.1 Document


capitalbancorplogoa21a.jpg
Capital Bancorp, Inc. Posts Broad Based Growth
Leading to a Sharp Profitability Increase
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, Maryland, October 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.

1


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.
2


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.
3


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.
4


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.
5


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 

6


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.
7


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.

8


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  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.
9


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.
10


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 
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 —  — 
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 
11



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 
12


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  6.98  56  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  0.48  4,409  0.09  5,582  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.

13


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  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  0.21  5,965  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.



14


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.

15


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  53  15,625  855  —  38,354 
Provision for credit losses 1,453  —  2,294  —  3,748 
Provision for credit losses on unfunded commitments 17  —  —  —  —  17 
Net interest income after provision 20,351  53  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  83  —  224  (61) 13,558 
Net interest income 20,623  49  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  49  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  32  —  247  (84) 10,931 
Net interest income 19,673  79  16,143  915  —  36,810 
Provision for credit losses 275  —  1,875  130  —  2,280 
Provision for credit losses on unfunded commitments 24  —  —  —  —  24 
Net interest income after provision 19,374  79  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.

16



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  60  —  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.








17


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.

18


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.
19


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.
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Appendix

Reconciliation of Non-GAAP Measures




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).


21


Appendix

Reconciliation of Non-GAAP Measures



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).
22


Appendix

Reconciliation of Non-GAAP Measures



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%




23


Appendix

Reconciliation of Non-GAAP Measures




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 
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 
Add: Merger-Related Expenses 1,315  — 
PPNR, as Adjusted $ 42,526  $ 41,816 
24


Appendix

Reconciliation of Non-GAAP Measures




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 

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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

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