• CBNK Reports Diluted EPS of $0.68, ROAA of 1.90%, and ROAE of 22.36% for 2Q2021

    ソース: Nasdaq GlobeNewswire / 22 7 2021 07:45:01   America/New_York

    ROCKVILLE, Md., July 22, 2021 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $9.6 million, or $0.68 per diluted share, for the second quarter of 2021. By comparison, net income was $4.8 million, or $0.34 per diluted share, for the second quarter of 2020. Return on average assets ("ROAA") was 1.90% for the second quarter of 2021, compared to 1.19% for the same period in 2020. Return on average equity ("ROAE") was 22.36% for the second quarter of 2021, compared to 13.70% for the same period in 2020.

    “Capital Bancorp’s second quarter results once again demonstrated the strength of our diversified business model that performs well in a variety of economic environments,” said Steven Schwartz, Chairman of the Board of the Company. “The strength of our earnings has made it possible to continue to invest in the business while delivering attractive returns to our shareholders.”

    "Growth has accelerated, leading to another strong and balanced quarter. The continued strong performance by all of our business lines emphasizes the momentum we have built through investment and strategic decisions at Capital Bank," said Ed Barry, CEO of the Company. "OpenSky's® performance remains above expectations as consumers increasingly recognize the value of our product offerings. The Commercial Bank continues to grow and take advantage of dislocations in the market. Capital Bank Home Loans delivered another solid quarter despite a rapidly cooling origination environment. We believe we have laid the foundation for continued profitable growth and look forward to leading the market with our technology-led capabilities."

    Second Quarter 2021 Highlights

    Capital Bancorp, Inc.

    • Strong Earnings - Continued strong performance by the Commercial Bank, Capital Bank Home Loans and OpenSky® contributed to another quarter of solid results. In the second quarter of 2021, net income doubled to $9.6 million from $4.8 million in the second quarter of 2020. Earnings were $0.68 per diluted share for the three months ended June 30, 2021 compared to $0.34 per share for the same period last year.
    • Industry-Leading Performance Ratios - Return on average assets ("ROAA") and return on average equity ("ROAE") were 1.90% and 22.36%, respectively, for the three months ended June 30, 2021 compared to 1.19% and 13.70%, respectively, for the three months ended June 30, 2020.
    • Expanded Net Interest Margin - The net interest margin was 5.47% for the three months ended June 30, 2021, which is an increase of 75 basis points compared to 4.72% for the same three month period last year.
    • Robust Capital Levels - As of June 30, 2021, the Company reported a common equity tier 1 capital ratio of 13.94% and an allowance for loan and lease losses ("ALLL") to total loans ratio of 1.51%, or 1.73% excluding Small Business Administration Payroll Protection Program ("SBA-PPP") loans. During the preceding twelve months, book value per common share grew 25.1 percent to $12.87 at June 30, 2021 compared to $10.28 per share at June 30, 2020.

    Commercial Bank

    • Continued Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $148.0 million to $1.3 billion at June 30, 2021 compared to June 30, 2020, and by $45.6 million, or 14.8 percent annualized, compared to March 31, 2021. The year over year growth was mainly due to a 29.6 percent increase in commercial real estate loans of $107.7 million, an 11.0 percent increase in commercial and industrial loans of $15.7 million, and a 5.1 percent increase in construction real estate loans of $10.9 million.
    • Further Growth in Core Deposits and Reduced Cost of Funds - Noninterest bearing deposits increased 46.9 percent compared to June 30, 2020, and by 29.2 percent annualized, compared to March 31, 2021. The $264.3 million year over year increase, and the $56.4 million increase over the prior quarter was primarily due to increases in OpenSky® and SBA-PPP loan-related deposits. At June 30, 2021, noninterest bearing deposits represented 43.2% of total deposits compared to 41.4% at March 31, 2021 and 35.1% at June 30, 2020. Overall, the cost of interest bearing liabilities was reduced 73 basis points, from 1.38% for the quarter ended June 30, 2020 to 0.65% for the quarter ended June 30, 2021. This reduction was primarily due to the Bank's ongoing strategic initiative to improve the deposit franchise.
    • Stable Credit Metrics - Non-performing assets ("NPAs") remained steady at 0.54% of total assets at June 30, 2021 compared to 0.50% at June 30, 2020. The provision for loan losses declined from $2.5 million for the three months ended June 30, 2020 to $781 thousand in the second quarter of 2021.
    • SBA-PPP Loans - SBA-PPP loans, net of $5.3 million in unearned fees, totaled $202.8 million at June 30, 2021 which was comprised of $74.1 million in 2020 originations and $128.7 million originated thus far in 2021. As of June 30, 2021, the Company has obtained forgiveness for $169.0 million of SBA-PPP loans, through the SBA.

    Capital Bank Home Loans

    • Strong Mortgage Performance - New home purchase volume increased to 50.6% of total originations for the second quarter, up from 31.2% during the second quarter of 2020 as a result of a strategic shift to emphasize the financing of home purchases over the refinancing of existing mortgages. Mortgage loan originations were $266 million and mortgage banking revenue was $5.3 million for the three months ended June 30, 2021 compared to $315 million in originations and $7.3 million in revenue for the same three month period of the previous year.
    • Steady Gain on Sale Margin - The second quarter 2021 gain on sale margin was 2.79%, compared to 2.97% for the same quarter last year.

    OpenSky®

    • Continued Growth in OpenSky® Accounts - OpenSky® increased customer accounts by 10.2 percent with net growth during the quarter of 65 thousand accounts, driving total accounts to 708 thousand at June 30, 2021.
    • Robust Growth in OpenSky® Loans and Deposits - OpenSky® loan balances increased by $68.3 million to $121.4 million compared to $53.1 million in the second quarter of 2020. Corresponding deposit balances increased 83.3 percent or $109.9 million from $131.9 million at June 30, 2021 to $241.7 million at June 30, 2021. This strong growth in loans and deposits appears to indicate that consumer behaviors are returning to historical trends.

    Year to Date 2021 Highlights

    Capital Bancorp

    • Diversified Businesses Drive Net Income - Net income for the six months ended June 30, 2021 increased 142.1 percent to $18.6 million, or $1.32 per diluted share, from $7.7 million, or $0.55 per diluted share for the six months ended June 30, 2020. Continued strong operating results demonstrate the advantages of the Bank's diversified business lines that are, in certain respects, uncorrelated across economic cycles.
    • Elevated Performance Ratios - Improved earnings supported ROAA and ROAE of 1.88% and 22.33%, respectively, for the six months ended June 30, 2021 compared to 1.03% and 11.17%, respectively, for the six months ended June 30, 2020.
    • Expanded Net Interest Margin - For the six months ended June 30, 2021, net interest margin ("NIM") increased by 40 basis points to 5.32% compared to 4.92% for the six months ended June 30, 2020. The improvement in NIM was driven by an increase in average loans outstanding, including SBA-PPP and OpenSky®, improving loan yields, and lower funding costs.
    • Efficiency Ratio Continues to Improve - Increased revenue and active expense management improved the efficiency ratio to 66.73% for the six months ended June 30, 2021 compared to 69.32% for the same six month period in the prior year.
    • Balance Sheet Growth - Total assets increased $275.3 million, or 14.7 percent, during the six months ended June 30, 2021. The growth of earning assets on the balance sheet consisted of increases in cash equivalents of $161.8 million, portfolio loans of $76.3 million, OpenSky® loans of $19.2 million, investments available for sale of $60.7 million, and Bank Owned Life Insurance ("BOLI") of $35.0 million. Asset growth was primarily funded by a $265.3 million increase in deposits and a $17.9 million increase in shareholders' equity.

    Commercial Bank

    • Strong Portfolio Loan Growth - Portfolio loans, which exclude SBA-PPP loans, increased by $61.0 million, or 5.0 percent to $1.3 billion for the six months ended June 30, 2021 compared to $1.2 billion at December 31, 2020. The growth was primarily due to a 20.2 percent increase in commercial real estate loans.
    • Improved Deposit Franchise and Lower Cost of Funding - Noninterest bearing deposits increased by $219.7 million, or 36.1 percent, during the six months ended June 30, 2021 and represent 43.2% of total deposits at June 30, 2021. The cost of interest bearing liabilities declined to 0.73% from 1.55% in the prior year.
    • COVID-19 Related Deferrals - At June 30, 2021, outstanding loans deferred due to COVID-19 amounted to $11.9 million, a decrease of 91.7 percent from the high of $144.0 million at June 30, 2020 as shown in the table below.
    Loan Modifications(1)            
    (dollars in millions)           
     June 30, 2021 March 31, 2021 December 31, 2020 June 30, 2020
      Deferred Loans Deferred Loans Deferred Loans Deferred Loans
    SectorTotal Loans OutstandingBalance# of Loans Deferred Balance# of Loans Deferred Balance# of Loans Deferred Balance# of Loans Deferred
    Accommodation & Food Services$114.2 $5.0 7  $16.1 15  $14.7 16  $42.6 36 
    Real Estate and Rental Leasing463.1 0.8 1  3.2 4  5.5 10  45.6 67 
    Other Services Including Private Households171.2 0.3 1  — —  1.1 3  17.3 36 
    Educational Services19.5 — —  — —  — —  9.8 6 
    Construction231.7 — —  — —  — —  4.2 6 
    Professional, Scientific, and Technical Services57.4 — —  1.1 2  1.4 3  5.0 11 
    Arts, Entertainment & Recreation37.2 2.0 3  1.3 1  0.7 2  5.0 9 
    Retail Trade22.2 0.3 1  — —  0.3 1  3.0 8 
    Healthcare & Social Assistance94.3 — —  — —  0.9 1  4.7 11 
    Wholesale Trade16.0 — —  — —  — —  0.9 1 
    All other (1)368.4 3.5 3  3.7 3  5.9 7  5.9 13 
    Total$1,595.2 $11.9 16  $25.4 25  $30.5 43  $144.0 204 

    _______________

    (1) Excludes modifications and deferrals made for OpenSky® secured card customers.

    Capital Bank Home Loans

    • Record Mortgage Originations and Revenues - Capital Bank Home Loans benefited from favorable industry trends, strategic hires and our ability to originate purchase volume (as distinct from refinance volume) equal to 35.7% of our $619.3 million of mortgage originations during the six months ended June 30, 2021, which compares to mortgage originations of $495.6 million for the same six month period last year. Mortgage revenues increased by $2.7 million or 26.4 percent to $13.0 million for the six months ended June 30, 2021 compared to $10.3 million for the six months ended June 30, 2020. Efforts to optimize product pricing and mix improved the average gain on sale to 2.91% compared to 2.82% in the prior year.

    OpenSky®

    • Growth in OpenSky® Credit Card Accounts - Improved marketing and favorable market conditions resulted in the origination of 223 thousand new OpenSky® credit card accounts during the six months ended June 30, 2021 compared to 215 thousand for the same six month period in 2020. At June 30, 2021, total open accounts had increased by 76.7 percent, or 307 thousand to 708 thousand from 401 thousand at June 30, 2020.
    • Growth Contributing to Bank Performance - Account growth in the six months ended June 30, 2021 resulted in a $49.2 million increase in noninterest bearing secured credit card deposits that totaled $241.7 million at the end of the quarter. Corresponding credit card loans increased by $19.2 million, or 18.8 percent, for the six months ended June 30, 2021 and totaled $121.4 million. As a result, credit card fees increased by 177.5 percent, or $8.7 million, to $13.7 million compared to $4.9 million for the same six month period last year.
    COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited      
              
     Quarter Ended   Six Months Ended  
     June 30,   June 30,  
    (amounts in thousands except per share data)2021 2020 % Change 2021 2020 % Change
    Earnings Summary           
    Interest income$29,289  $22,000  33.1% $55,927  $43,744  27.9%
    Interest expense1,769  3,376  (47.6)% 3,964  7,433  (46.7)%
    Net interest income27,520  18,624  47.8% 51,963  36,311  43.1%
    Provision for loan losses781  3,300  (76.3)% 1,284  5,709  (77.5)%
    Noninterest income13,471  11,101  21.3% 27,421  16,636  64.8%
    Noninterest expense27,205  19,905  36.7% 52,972  36,704  44.3%
    Income before income taxes13,005  6,520  99.5% 25,128  10,534  138.5%
    Income tax expense3,357  1,759  90.8% 6,499  2,839  128.9%
    Net income$9,648  $4,761  102.6% $18,629  $7,695  142.1%
                
    Pre-tax pre-provision net revenue ("PPNR") (2)$13,786  $9,820  40.4% $26,412  $16,243  62.6%
    Weighted average common shares - Basic13,766  13,817  (0.4)% 13,762  13,847  (0.6)%
    Weighted average common shares - Diluted14,172  13,817  2.6% 14,070  13,877  1.4%
    Earnings per share - Basic$0.70  $0.34  103.4% $1.35  $0.56  141.1%
    Earnings per share - Diluted$0.68  $0.34  97.6% $1.32  $0.55  140.0%
    Return on average assets (1)1.90% 1.19% 59.7% 1.88% 1.03% 82.5%
    Return on average assets, excluding impact of SBA-PPP loans(1) (2)1.65% 1.04% 58.7% 1.60% 0.95% 68.4%
    Return on average equity22.36% 13.70% 63.2% 22.33% 11.17% 99.9%


     Quarter Ended 2Q21 vs. 2Q20    Quarter Ended
     June 30,   March 31, December 31, September 30,
    (in thousands except per share data)2021 2020 % Change 2021 2020 2020
    Balance Sheet Highlights           
    Assets$2,151,850  $1,822,365  18.1% $2,091,851  $1,876,593  $1,879,029 
    Investment securities available for sale160,515  56,796  182.6% 128,023  99,787  53,992 
    Mortgage loans held for sale47,935  116,969  (59.0)% 60,816  107,154  137,717 
    SBA-PPP loans, net of fees (3)202,763  229,646  (11.7)% 265,712  201,018  233,349 
    Portfolio loans receivable (3)1,392,471  1,209,895  15.1% 1,312,375  1,315,503  1,244,613 
    Allowance for loan losses24,079  18,680  28.9% 23,550  23,434  22,016 
    Deposits1,917,419  1,608,726  19.2% 1,863,069  1,652,128  1,662,211 
    FHLB borrowings22,000  25,556  (13.9)% 22,000  22,000  22,222 
    Other borrowed funds12,062  17,392  (30.6)% 12,062  14,016  17,516 
    Total stockholders' equity177,204  142,108  24.7% 167,003  159,311  149,377 
    Tangible common equity(2)177,204  142,108  24.7% 167,003  159,311  149,377 
                
    Common shares outstanding13,772  13,818  (0.3)% 13,759  13,754  13,682 
    Tangible book value per share (2)$12.87  $10.28  25.1% $12.14  $11.58  $10.92 

    ______________

    (1) Annualized.
    (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 June 30, 2021 and 2020

    For the three months ended June 30, 2021, net interest income increased $8.9 million, or 47.8 percent, to $27.5 million from the same period in 2020, primarily due to an increase in interest earning assets and a decrease in rates on interest bearing liabilities. The net interest margin increased 75 basis point to 5.47% for the three months ended June 30, 2021 from the same period in 2020. Net interest margin, excluding credit card and SBA-PPP loans, was 3.55% for the second quarter of 2021 compared to 3.96% for the same period in 2020. For the three months ended June 30, 2021, average interest earning assets increased $428.4 million, or 27.0 percent, to $2.0 billion as compared to the same period in 2020, and the average yield on interest earning assets increased 25 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $103.0 million, or 10.4 percent, while the average cost decreased 73 basis points to 0.65% from 1.38%.

    The provision for loan losses of $781 thousand for the three months ended June 30, 2021 was due primarily to a small number of loan charge-offs, which was offset by improving overall credit metrics. On an annualized basis, net charge-offs for the second quarter of 2021 were $252 thousand, or 0.08% of average loans, compared to $134 thousand, or 0.05% of average loans on an annualized basis, for the second quarter of 2020. The $252 thousand in net charge-offs during the quarter was comprised of $90 thousand in commercial loans and $162 thousand in credit cards.

    For the quarter ended June 30, 2021, noninterest income was $13.5 million, an increase of $2.4 million, or 21.34 percent, from $11.1 million in the prior year quarter. The increase was primarily driven by significant growth in credit card fees of $4.8 million resulting from the higher number of credit card accounts which was partially offset by a decrease of $2.1 million in mortgage banking revenue.

    For the three months ended June 30, 2021, OpenSky's® net growth was 65 thousand secured credit card accounts, increasing the total number of open accounts to 708 thousand. This compares to 157 thousand net new accounts for the same period last year, which increased total open accounts to 401 thousand. Credit card loan balances increased by $37.7 million to $121.4 million as of June 30, 2021 from $53.1 million at June 30, 2020 and the related deposit account balances have increased 83 percent to $241.7 million. The growth in open accounts was primarily driven by enhanced marketing and economic conditions that led consumers to recognize the value and convenience of the Bank's secured credit card product.

    The efficiency ratio for the three months ended June 30, 2021 improved to 66.37% compared to 69.74% for the three months ended June 30, 2020 on higher levels of revenue and improved operating leverage.

    Noninterest expense was $27.2 million for the three months ended June 30, 2021, as compared to $19.9 million for the three months ended June 30, 2020, an increase of $7.3 million, or 36.7 percent. The increase was primarily driven by a $4.5 million, or 79 percent, increase in data processing expenses, an increase in professional services of $0.5 million, an increase in marketing and advertising of $0.7 million, and an increase in operating expenses of $1.0 million, or 42.8 percent, quarter over quarter. The increase of $4.5 million in data processing expenses was mainly attributed to the higher volume of open credit cards during the second quarter of 2021. In addition, the $1.0 million increase in operating expenses is due to increases in credit expenses, outside service providers, and FDIC insurance.

    Operating Results - Comparison of Six Months Ended June 30, 2021 and 2020

    For the six months ended June 30, 2021, net interest income increased $15.7 million, or 43.1 percent, to $52.0 million from the same period in 2020, primarily due to an increase in interest earning assets and a decrease in rates on interest bearing liabilities. The net interest margin increased 40 basis points to 5.32% for the six months ended June 30, 2021 from the same period in 2020. Net interest margin, excluding credit card and SBA-PPP loans, was 3.59% six months ended June 30, 2020 compared to 3.96% for the same period in 2020. For the six months ended June 30, 2021, average interest earning assets increased $486.6 million, or 32.8 percent, to $2.0 billion as compared to the same period in 2020, and the average yield on interest earning assets decreased 20 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $129.0 million, or 13.4 percent, while the average cost decreased 82 basis points to 0.73% from 1.55%.

    For the six months ended June 30, 2021, the provision for loan losses was $1.3 million, a decrease of $4.4 million from the prior year to date period primarily due to the continued economic recovery from COVID-19. On an annualized basis, net charge-offs for the six months ended June 30, 2021 were $640 thousand, or 0.10% of average portfolio loans, compared to $330 thousand, or 0.05% of average portfolio loans on an annualized basis, for the same period in 2020. The $640 thousand in net charge-offs during the quarter was comprised of commercial loan charge-offs amounting to $195 thousand and $445 thousand in our credit card portfolio.

    For the six months ended June 30, 2021, noninterest income was $27.4 million, an increase of $10.8 million, or 64.8 percent, from the same period in 2020. The increase was primarily driven by significant growth in credit card fees, which increased by $8.7 million, and mortgage banking revenues, which increased $2.7 million.

    For the six months ended June 30, 2021, the Bank originated 223 thousand new OpenSky® secured credit card accounts, increasing the total number of open accounts to 708 thousand. This compares to 215 thousand new originations for the same period last year, which increased total open accounts to 401 thousand.

    The efficiency ratio for the six months ended June 30, 2021 decreased to 66.73% compared to 69.32% for the six months ended June 30, 2020, primarily resulting from increased revenue in addition to management's efforts to control expenses.

    Noninterest expense was $53.0 million for the six months ended June 30, 2021, as compared to $36.7 million for the six months ended June 30, 2020, an increase of $16.3 million, or 44.3%. The increase was primarily driven by an $1.4 million, or 8.8 percent, increase in salaries and benefits, an increase in professional fees of 79.5 percent, or $1.3 million, a $9.6 million, or 98.6 percent, increase in data processing, and a $2.0 million, or 45.4 percent, increase in other operating expenses period over the period. The increase of $6.4 million in data processing expenses was due to the higher volume of open credit cards and increased mortgage originations during the year. Additionally, operating expenses increased $2.0 million due to increases in credit expenses, outside service providers, and FDIC insurance.

    During the six months ended June 30, 2021, results of operations were impacted by the COVID-19 pandemic and the resulting issuance of SBA-PPP loans. At June 30, 2021, SBA-PPP loans had remaining deferred origination fees of $6.5 million, and deferred costs of $1.2 million.

    Financial Condition

    Total assets at June 30, 2021 were $2.2 billion, an increase of 18.1 percent from June 30, 2020. Portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.4 billion as of June 30, 2021, an increase of 15.1 percent as compared to $1.2 billion at June 30, 2020.

    Total deposits at June 30, 2021 were $1.9 billion, an increase of 19.2 percent as compared to $1.6 billion at June 30, 2020. Noninterest bearing deposits increased by $264.3 million, or 46.9 percent, to $828.3 million at June 30, 2021 compared to the level at June 30, 2020. During the quarter, deposit balances grew in certain fiduciary accounts of title and property management companies, as well as noninterest bearing SBA-PPP loan customers and OpenSky® deposits.

    The Company recorded a provision for loan losses of $1.3 million during the six months ended June 30, 2021, which increased the allowance for loan losses to $24.1 million, or 1.51% of total loans (1.73%, excluding SBA-PPP loans, on a non-GAAP basis) at June 30, 2021. Nonperforming assets were $11.6 million, or 0.54% of total assets, as of June 30, 2021, up from $9.2 million, or 0.50% of total assets, at June 30, 2020. Of the $11.6 million in total nonperforming assets as of June 30, 2021, nonperforming loans represented $8.4 million and foreclosed real estate totaled $3.2 million. Included in nonperforming loans at June 30, 2021 were troubled debt restructurings of $558 thousand.

    Stockholders’ equity increased to $177.2 million as of June 30, 2021, compared to $142.1 million at June 30, 2020. This increase was primarily attributable to earnings during the period. As of June 30, 2021, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

    Consolidated Statements of Income (Unaudited)      
     Three Months Ended June 30, Six Months Ended June 30,
    (in thousands)2021 2020 2021 2020
    Interest income       
    Loans, including fees$28,641  $21,609  $54,709  $42,683 
    Investment securities available for sale544  316  1,021  656 
    Federal funds sold and other104  75  197  405 
    Total interest income29,289  22,000  55,927  43,744 
            
    Interest expense       
    Deposits1,582  2,954  3,589  6,567 
    Borrowed funds187  422  375  866 
    Total interest expense1,769  3,376  3,964  7,433 
            
    Net interest income27,520  18,624  51,963  36,311 
    Provision for loan losses781  3,300  1,284  5,709 
    Net interest income after provision for loan losses26,739  15,324  50,679  30,602 
            
    Noninterest income       
    Service charges on deposits165  110  312  259 
    Credit card fees7,715  2,912  13,655  4,921 
    Mortgage banking revenue5,270  7,321  13,013  10,293 
    Gain on sale of investment securities available for sale, net153  —  153  — 
    Other fees and charges168  758  288  1,163 
    Total noninterest income13,471  11,101  27,421  16,636 
            
    Noninterest expenses       
    Salaries and employee benefits8,750  8,498  17,317  15,910 
    Occupancy and equipment1,195  1,152  2,324  2,330 
    Professional fees1,362  894  2,987  1,664 
    Data processing10,122  5,667  19,433  9,784 
    Advertising1,293  606  2,126  1,242 
    Loan processing975  740  2,026  1,187 
    Other real estate expenses, net273  82  277  128 
    Other operating3,235  2,266  6,482  4,459 
    Total noninterest expenses27,205  19,905  52,972  36,704 
    Income before income taxes13,005  6,520  25,128  10,534 
    Income tax expense3,357  1,759  6,499  2,839 
    Net income$9,648  $4,761  $18,629  $7,695 


    Consolidated Balance Sheets    
    (in thousands except share data)(unaudited) June 30, 2021 December 31, 2020
    Assets   
    Cash and due from banks$19,691  $18,456 
    Interest bearing deposits at other financial institutions286,738  126,081 
    Federal funds sold2,237  2,373 
    Total cash and cash equivalents308,666  146,910 
    Investment securities available for sale160,515  99,787 
    Marketable equity securities245  245 
    Restricted investments3,478  3,713 
    Loans held for sale47,935  107,154 
    U.S. Small Business Administration Payroll Protection Program ("SBA-PPP") loans receivable, net of fees202,763  201,018 
    Portfolio loans receivable, net of deferred fees and costs and net of allowance for loan losses of $24,079 and $23,4341,368,392  1,292,068 
    Premises and equipment, net4,134  4,464 
    Accrued interest receivable7,786  8,134 
    Deferred income taxes, net7,381  6,818 
    Other real estate owned3,236  3,326 
    Bank owned life insurance35,004  — 
    Other assets2,315  2,956 
    Total assets$2,151,850  $1,876,593 
        
    Liabilities   
    Deposits   
    Noninterest bearing$828,308  $608,559 
    Interest bearing1,089,111  1,043,569 
    Total deposits1,917,419  1,652,128 
    Federal Home Loan Bank advances22,000  22,000 
    Other borrowed funds12,062  14,016 
    Accrued interest payable959  1,134 
    Other liabilities22,206  28,004 
    Total liabilities1,974,646  1,717,282 
        
    Stockholders' equity   
    Common stock, $.01 par value; 49,000,000 shares authorized; 13,771,615 and 13,753,529 issued and outstanding138  138 
    Additional paid-in capital51,487  50,602 
    Retained earnings125,431  106,854 
    Accumulated other comprehensive income148  1,717 
    Total stockholders' equity177,204  159,311 
    Total liabilities and stockholders' equity$2,151,850  $1,876,593 

    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 June 30,
     2021 2020
     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$259,330  $63  0.10% $79,854  $19  0.09%
    Federal funds sold3,087  —  0.00  1,889  —  0.05 
    Investment securities available for sale139,997  544  1.56  58,860  316  2.16 
    Restricted stock3,478  41  4.70  4,152  56  5.46 
    Loans held for sale44,644  314  2.82  78,254  687  3.53 
    SBA-PPP loans receivable250,040  2,272  3.64  166,033  1,011  2.45 
    Portfolio loans receivable(2)1,316,224  26,055  7.94  1,199,338  19,911  6.68 
    Total interest earning assets2,016,800  29,289  5.82  1,588,380  22,000  5.57 
    Noninterest earning assets24,432      24,459     
    Total assets$2,041,232      $1,612,839     
                
    Liabilities and Stockholders’ Equity           
    Interest bearing liabilities:           
    Interest bearing demand accounts$282,197  50  0.07  $182,095  171  0.38 
    Savings6,634  1  0.05  4,522  1  0.05 
    Money market accounts460,669  352  0.31  472,802  1,279  1.09 
    Time deposits304,519  1,179  1.55  282,695  1,503  2.14 
    Borrowed funds35,770  187  2.10  44,672  422  3.79 
    Total interest bearing liabilities1,089,789  1,769  0.65  986,786  3,376  1.38 
    Noninterest bearing liabilities:           
    Noninterest bearing liabilities20,111      21,647     
    Noninterest bearing deposits758,255      464,702     
    Stockholders’ equity173,077      139,704     
    Total liabilities and stockholders’ equity$2,041,232      $1,612,839     
                
    Net interest spread    5.17%     4.19%
    Net interest income  $27,520      $18,624   
    Net interest margin(3)    5.47%     4.72%

    _______________

    (1) Annualized.
    (2) Includes nonaccrual loans.
    (3) For the three months ended June 30, 2021 and June 30, 2020, collectively, SBA-PPP loans and credit card loans accounted for 192 and 76 basis points of the reported net interest margin, respectively.

     Six Months Ended June 30,
     2021 2020
     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$232,712  $113  0.10% $88,238  $278  0.63%
    Federal funds sold3,477  —  0.00  1,479  4  0.51 
    Investment securities available for sale123,443  1,022  1.67  59,628  656  2.21 
    Restricted stock3,691  83  4.56  4,035  123  6.15 
    Loans held for sale58,475  794  2.74  60,180  1,053  3.52 
    SBA-PPP loans receivable242,619  4,741  3.94  83,060  1,011  2.45 
    Portfolio loans receivable(2)1,305,973  49,174  7.59  1,187,170  40,619  6.88 
    Total interest earning assets1,970,390  55,927  5.72  1,483,790  43,744  5.93 
    Noninterest earning assets25,113      21,279     
    Total assets$1,995,503      $1,505,069     
                
    Liabilities and Stockholders’ Equity           
    Interest bearing liabilities:           
    Interest bearing demand accounts$269,647  118  0.09  $162,985  398  0.49 
    Savings6,127  2  0.05  4,463  4  0.17 
    Money market accounts465,882  881  0.38  459,865  2,967  1.30 
    Time deposits318,512  2,588  1.64  293,374  3,198  2.19 
    Borrowed funds34,699  375  2.18  45,214  866  3.85 
    Total interest bearing liabilities1,094,867  3,964  0.73  965,901  7,433  1.55 
    Noninterest bearing liabilities:           
    Noninterest bearing liabilities22,940      20,744     
    Noninterest bearing deposits709,443      379,881     
    Stockholders’ equity168,253      138,543     
    Total liabilities and stockholders’ equity$1,995,503      $1,505,069     
                
    Net interest spread    4.99%     4.38%
    Net interest income  $51,963      $36,311   
    Net interest margin(3)    5.32%     4.92%

    _______________

    (1) Annualized.
    (2) Includes nonaccrual loans.
    (3) For the six months ended June 30, 2021 and June 30, 2020, collectively, SBA-PPP loans and credit card loans accounted for 173 and 96 basis points of the reported net interest margin, respectively.

    HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited    
      Quarter Ended
    (Dollars in thousands except per share data) June 30, 2021 March 31,
    2021    		 December 31,
    2020    		 September 30,
    2020    		 June 30,
    2020
    Earnings:          
    Net income $9,648  $8,982  $9,689  $8,438  $4,761 
    Earnings per common share, diluted 0.68  0.65  0.71  0.61  0.34 
    Net interest margin 5.47% 5.15% 5.57% 5.01% 4.72%
    Net interest margin, excluding credit cards & SBA-PPP loans (1) 3.55% 3.70% 3.80% 3.84% 3.96%
    Return on average assets(2) 1.90% 1.87% 2.08% 1.89% 1.19%
    Return on average assets, excluding impact of SBA-PPP loans (1)(2) 1.65% 1.60% 1.88% 1.80% 1.04%
    Return on average equity(2) 22.36% 22.30% 25.26% 23.28% 13.70%
    Efficiency ratio 66.37% 67.11% 66.63% 65.17% 69.74%
    Balance Sheet:          
    Portfolio loans receivable (3) $1,392,471  $1,312,375  $1,315,503  $1,244,613  $1,209,895 
    Deposits 1,917,419  1,863,069  1,652,128  1,662,211  1,608,726 
    Total assets 2,151,850  2,091,851  1,876,593  1,879,029  1,822,365 
    Asset Quality Ratios:          
    Nonperforming assets to total assets 0.54% 0.58% 0.67% 0.79% 0.50%
    Nonperforming assets to total assets, excluding the SBA-PPP loans (1) 0.60% 0.66% 0.75% 0.90% 0.58%
    Nonperforming loans to total loans 0.52% 0.56% 0.61% 0.78% 0.41%
    Nonperforming loans to portfolio loans (1) 0.60% 0.67% 0.70% 0.92% 0.48%
    Net charge-offs to average portfolio loans (1)(2) 0.10% 0.12% 0.19% 0.06% 0.05%
    Allowance for loan losses to total loans 1.51% 1.49% 1.54% 1.49% 1.30%
    Allowance for loan losses to portfolio loans (1) 1.73% 1.79% 1.78% 1.77% 1.54%
    Allowance for loan losses to non-performing loans 287.40% 267.07% 253.71% 191.78% 318.25%
    Bank Capital Ratios:          
    Total risk based capital ratio 13.51% 13.55% 12.60% 12.74% 12.35%
    Tier 1 risk based capital ratio 12.25% 12.29% 11.34% 11.48% 11.10%
    Leverage ratio 7.58% 7.54% 7.45% 7.44% 7.73%
    Common equity Tier 1 capital ratio 12.25% 12.29% 11.34% 11.48% 11.10%
    Tangible common equity 7.17% 7.01% 7.43% 7.09% 6.91%
    Holding Company Capital Ratios:          
    Total risk based capital ratio 16.14% 16.07% 15.19% 15.35% 15.02%
    Tier 1 risk based capital ratio 14.10% 13.98% 13.10% 12.93% 12.58%
    Leverage ratio 8.78% 8.84% 8.78% 8.63% 8.85%
    Common equity Tier 1 capital ratio 13.94% 13.81% 12.94% 12.75% 12.39%
    Tangible common equity 8.23% 7.98% 8.48% 7.95% 7.80%
    Composition of Loans:          
    Residential real estate $420,015  $420,460  $437,860  $422,698  $437,429 
    Commercial real estate 471,807  433,336  392,550  372,972  364,071 
    Construction real estate 223,832  221,277  224,904  227,661  212,957 
    Commercial and industrial - Other 158,392  149,914  157,127  134,889  142,673 
    SBA-PPP loans 208,094  272,090  204,920  238,735  236,325 
    Credit card 121,410  83,740  102,186  84,964  53,150 
    Other consumer loans 1,034  4,487  1,649  2,268  947 
    Composition of Deposits:          
    Noninterest bearing $828,308  $771,924  $608,559  $596,239  $563,995 
    Interest bearing demand 314,883  300,992  257,126  247,150  268,150 
    Savings 6,965  6,012  4,800  4,941  5,087 
    Money Markets 484,567  471,303  447,077  472,447  507,432 
    Time Deposits 282,696  312,839  334,566  341,435  264,062 
    Capital Bank Home Loan Metrics:        
    Origination of loans held for sale $265,517  $353,774  $382,267  $431,060  $315,165 
    Mortgage loans sold 278,284  400,112  412,830  410,312  272,151 
    Gain on sale of loans 7,763  12,008  12,950  12,837  8,088 
    Purchase volume as a % of originations 50.64% 24.59% 30.03% 33.76% 31.16%
    Gain on sale as a % of loans sold(4) 2.79% 3.00% 3.14% 3.13% 2.97%
    Mortgage commissions $2,364  $3,320  3,405  $3,669  $2,798 
    OpenSky® Portfolio Metrics:        
    Active customer accounts 707,600  642,272  568,373  529,114  400,530 
    Credit card loans, net $121,410  $83,740  $102,186  $83,101  $53,150 
    Noninterest secured credit card deposits 241,724  215,883  192,520  176,708  131,854 

    _______________

    (1) Refer to Appendix for reconciliation of non-GAAP measures.
    (2) Annualized.
    (3) Loans are reflected net of deferred fees and costs.
    (4) 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 AdjustedQuarters Ended
    Dollars in ThousandsJune 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
          
    Net Income$9,648 $8,982 $9,689 $8,438 $4,761 
    Less: SBA-PPP loan income2,272 2,205 1,998 1,470 1,011 
    Net Income, as Adjusted$7,376 $6,777 $7,691 $6,968 $3,750 
    Average Total Assets2,041,232 1,949,265 1,854,846 1,781,295 1,612,839 
    Less: Average SBA-PPP Loans250,040 232,371 227,617 238,071 168,490 
    Average Total Assets, as Adjusted$1,791,192 $1,716,894 $1,627,229 $1,543,224 $1,444,349 
    Return on Average Assets, as Adjusted1.65%1.60%1.88%1.80%1.04%
          


    Net Interest Margin, as AdjustedQuarters Ended
    Dollars in ThousandsJune 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
          
    Net Interest Income$27,520 $24,444 $25,719 $22,039 $18,624 
    Less Secured credit card loan income10,497 7,660 9,306 6,632 4,066 
    Less SBA-PPP loan income2,272 2,205 1,998 1,470 1,011 
    Net Interest Income, as Adjusted$14,750 $14,580 $14,415 $13,937 $13,547 
    Average Interest Earning Assets2,016,801 1,923,463 1,836,337 1,748,894 1,588,380 
    Less Average secured credit card loans100,456 93,520 95,739 68,585 42,538 
    Less Average SBA-PPP loans250,040 232,371 227,617 235,160 168,490 
    Total Average Interest Earning Assets, as Adjusted$1,666,304 $1,597,573 $1,512,981 $1,445,149 $1,377,352 
    Net Interest Margin, as Adjusted3.55%3.70%3.80%3.84%3.96%


    Tangible Book Value per ShareQuarters Ended
    Dollars in Thousands, Except Per Share AmountJune 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
          
    Total Stockholders' Equity$177,204 $167,003 $159,311 $149,377 $142,108 
    Less: Preferred equity— — — — — 
    Less: Intangible assets— — — — — 
    Tangible Common Equity$177,204 $167,003 $159,311 $149,377 $142,108 
    Period End Shares Outstanding13,771,615 13,759,218 13,753,529 13,682,198 13,818,223 
    Tangible Book Value per Share$12.87 $12.14 $11.58 $10.92 $10.28 


    Allowance for Loan Losses to Total Portfolio LoansQuarters Ended
    Dollars in ThousandsJune 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
          
    Allowance for Loan Losses$24,079  $23,550  $23,434  $22,016  $18,680  
    Total Loans1,595,234  1,578,087  1,516,520  1,477,962  1,441,123  
    Less: SBA-PPP loans202,763  265,712  201,018  233,349  229,646  
    Total Portfolio Loans$1,392,471  $1,312,375  $1,315,503  $1,244,613  $1,211,477  
    Allowance for Loan Losses to Total Portfolio Loans1.73 %1.79 %1.78 %1.77 %1.54 %
          
          
    Nonperforming Assets to Total Assets, net SBA-PPP LoansQuarters Ended
    Dollars in ThousandsJune 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
          
    Total Nonperforming Assets$11,615  $12,112  $12,563  $14,806  $9,195  
    Total Assets2,151,850  2,091,851  1,876,593  1,879,029  1,822,365  
    Less: SBA-PPP loans202,763  265,712  201,018  233,349  229,646  
    Total Assets, net SBA-PPP Loans$1,949,087  $1,826,139  $1,675,575  $1,645,680  $1,592,719  
    Nonperforming Assets to Total Assets, net SBA-PPP Loans0.60 %0.66 %0.75 %0.90 %0.58 %
          
          
    Nonperforming Loans to Portfolio LoansQuarters Ended
    Dollars in ThousandsJune 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
          
    Total Nonperforming Loans$8,378  $8,818  $9,237  $11,480  $5,869  
    Total Loans1,595,234  1,578,087  1,516,520  1,477,962  1,441,123  
    Less: SBA-PPP loans202,763  265,712  201,018  233,349  229,646  
    Total Portfolio Loans$1,392,471  $1,312,375  $1,315,503  $1,244,613  $1,211,477  
    Nonperforming Loans to Total Portfolio Loans0.60 %0.67 %0.70 %0.92 %0.48 %
          
          
    Net Charge-offs to Average Portfolio LoansQuarters Ended
    Dollars in ThousandsJune 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
          
    Total Net Charge-offs$640  $388  $615  $163  $134  
    Total Average Loans1,567,973  1,532,093  1,494,278  1,477,962  1,365,371  
    Less: Average SBA-PPP loans250,040  232,371  227,617  233,349  84,245  
    Total Average Portfolio Loans$1,317,932  $1,299,722  $1,266,661  $1,244,613  $1,281,126  
    Net Charge-offs to Average Portfolio Loans0.19 %0.12 %0.19 %0.05 %0.05 %
          
          
    Pre-tax, Pre-provision Net Revenue ("PPNR")Quarters Ended
    Dollars in ThousandsJune 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
          
    Net income$9,648  $8,982  $9,689  $8,438  $4,761  
    Add: Income Tax Expense3,357  3,143  3,347  3,128  1,759  
    Add: Provision for Loan Losses781  503  2,033  3,500  3,300  
    Pre-tax, Pre-provision Net Revenue ("PPNR")$13,786  $12,628  $15,069  $15,066  $9,820  
          

    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 fifth largest bank headquartered in Maryland at June 30, 2021. 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 $2.2 billion at June 30, 2021 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.

    Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be fully reopened. As a result of the COVID-19 pandemic and the related adverse local and national economic consequences, we are exposed to all of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen as planned, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

    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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