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CBNK Reports Fourth Quarter 2022 Results and Record Annual Earnings

ROCKVILLE, Md., Jan. 25, 2023 (GLOBE NEWSWIRE) — Capital Bancorp, Inc. (the “Company”) CBNK, the holding company for Capital Bank, N.A. (the “Bank”), today reported net income of $9.0 million, or $0.62 per diluted share, for the fourth quarter of 2022, compared to net income of $10.2 million, or $0.71 per diluted share, for the fourth quarter of 2021. Net portfolio loans increased $80.6 million, or 19.4 percent annualized, during the fourth quarter.

“Strong loan growth in the commercial bank was a highlight in the fourth quarter but was tempered by a challenging deposit environment,” said Ed Barry, CEO of the Company and the Bank. “Strategic hires, market disruption and a focus on customized solutions continue to deliver growth in the commercial bank. OpenSky® had a record year of profitability and looks set to remain very profitable but inflation is having an impact on unsecured credit while competition and normal attrition has reduced the number of open accounts. Competition for deposits has increased our costs as we focus on retaining high-quality customers. We continue to invest in the business to build a foundation that will be scalable and allow us to grow and drive value over the long term.”

Steven Schwartz, Chairman of the Board of the Company said, “I am pleased with the record full-year earnings being reported today. Despite the significant headwinds experienced by our mortgage division in 2022, our other diversified sources of revenue — the Commercial Bank and OpenSky® — continued to deliver. We are well positioned for continued strong profitability in 2023. We expect our Commercial Bank loan portfolio to continue to grow, our marketing efforts at OpenSky® to be rewarded with renewed growth in cardholder count and outstandings, and our Mortgage division to be restored to profitability. Notwithstanding potential macroeconomic challenges in 2023, I am confident that our best-in-class credit culture will permit us to adroitly manage any issues that may arise.”

Fourth Quarter 2022 Highlights

Capital Bancorp, Inc.

  • Earnings Summary – Net income decreased to $9.0 million, or $0.62 per diluted share, compared to $10.2 million, or $0.71 per diluted share, for the fourth quarter of 2021. Increasing interest rates led to a sharp increase in deposit costs and a continued slowdown in mortgage revenues in the fourth quarter of 2022. These factors, when combined with an increase in loan loss provisions due to economic uncertainty and a decline in credit card revenue, contributed to the decrease in fourth quarter net income. Net interest income increased by $2.5 million to $35.2 million for the fourth quarter of 2022 when compared to the same period in 2021 but was largely offset by increasing deposit costs.
  • Strong Performance Ratios – Return on average assets (“ROAA”) and return on average equity (“ROAE”) were 1.67% and 16.18%, respectively, for the three months ended December 31, 2022, compared to 1.95% and 20.66%, respectively, for the three months ended December 31, 2021.
  • Elevated Net Interest MarginNet interest margin was 6.64%, or 3.91% excluding PPP and credit card loans, for the three months ended December 31, 2022, compared to 6.49%, or 3.70% excluding PPP and credit card loans, for the same three month period last year. Increases in portfolio loan yields and average loan balances were partially offset by increasing deposit costs.
  • Robust Capital Positions – As of December 31, 2022, the Company reported a common equity tier 1 capital ratio of 15.00% and an allowance for loan losses to total loans ratio of 1.52%. Tangible book value per common share grew 11.8 percent to $15.84 at December 31, 2022 when compared to the same quarter in 2021.

Commercial Bank

  • Strong Portfolio Loan Growth – Portfolio loans, excluding credit cards, increased by $218.7 million, or 15.7 percent, to $1.6 billion at December 31, 2022 compared to December 31, 2021. This growth was mainly due to a 19.5 percent increase in commercial real estate loans of $108.2 million, of which $87.6 million was owner occupied. Also contributing to the growth was a 20.7 percent increase in residential real estate loans of $83.1 million, and a 25.2 percent increase in commercial and industrial loans of $44.3 million when comparing the quarter ended December 31, 2022 to the quarter ended December 31, 2021. Business loans, comprised of commercial and industrial, SBA, and owner occupied real estate, represent 42% of our total commercial portfolio.
  • Stable Credit Metrics – Non-performing assets (“NPAs”) decreased 10 basis points to 0.46% of total assets at December 31, 2022 compared to 0.56% at December 31, 2021 with the disposition of our remaining other real estate owned and a reduction in nonaccrual loans of $1.7 million.

OpenSky®

  • Revenues – OpenSky® revenue declined by 8.2 percent to $20.3 million for the quarter ended December 31, 2022 from the same period in 2021 due to the decrease in active customer accounts which led to decreases in interchange, renewal and other fees. Normal customer attrition and aggressive marketing and product strategies by fintech and credit card companies offering unsecured subprime credit cards has resulted in the continued decline in the total number of OpenSky® accounts.
  • Loan Balances – OpenSky® loan balances, net of reserves, decreased by $12.7 million to $128.4 million compared to $141.1 million in the fourth quarter of 2021. Corresponding deposit balances decreased 18.3 percent or $42.1 million from $229.5 million at December 31, 2021 to $187.4 million at December 31, 2022. Gross unsecured loan balances stood at $26.8 million and $17.7 million at December 31, 2022 and 2021, respectively.
  • OpenSky® Credit Card delinquencies and utilization remained stable in the fourth quarter. Unsecured credit overall has performed in line with expectations while charge offs remained elevated due to higher severity levels among unsecured customers. The Company has tightened credit in the segments that have deteriorated while focusing on lower risk customers. Unsecured balances at quarter end were $26.8 million, flat for the quarter. The provision for loan losses increased $1.3 million compared to the fourth quarter of 2021.

2022 Highlights

Capital Bancorp

  • Diversified Businesses Drive Net Income – Net income for the twelve months ended December 31, 2022 increased 4.6 percent to $41.8 million, or $2.91 per diluted share, from $40.0 million, or $2.84 per diluted share for the twelve months ended December 31, 2021.
  • Above Average Performance Ratios – Strong earnings supported ROAA and ROAE of 2.01% and 19.68%, respectively, for the twelve months ended December 31, 2022 compared to 1.96% and 22.27%, respectively, for the twelve months ended December 31, 2021.
  • Expanded Net Interest Margin – For the twelve months ended December 31, 2022, net interest margin was 6.92%, or 3.93% excluding PPP and credit card loans, compared to 5.86%, or 3.60% excluding PPP and credit card loans for the twelve months ended December 31, 2021. The margin improvement was primarily driven by increases in the yield on portfolio loans. Additionally, average balances and yields on our investment securities available for sale portfolio increased $98.1 million and 24 basis points, respectively, for the twelve months ended December 31, 2022 when compared to the same period last year.
  • Stable Efficiency Ratio – The efficiency ratio decreased to 64.19% for the twelve months ended December 31, 2022 compared to 65.79% for the same twelve month period in the prior year due to higher levels of net interest income.
  • Balance Sheet Growth Total assets increased $68.4 million, or 3.3%, during the twelve months ended December 31, 2022. The growth in earning assets consisted of increases in net portfolio loans and investment securities available for sale of $204.6 million and $68.0 million, respectively. Asset growth was primarily funded by cash received for the payoff of SBA-PPP loans totaling $106.1 million and a $103.0 million redeployment of lower yielding cash and cash equivalents. Total deposits decreased by $39.1 million while Federal Home Loan Bank advances increased $85.0 million during the twelve months ended December 31, 2022.

Commercial Bank

  • Strong Portfolio Loan Growth – In 2022, portfolio loans, excluding credit card loans, increased by $218.7 million, or 15.7 percent to $1.6 billion compared to 2021 when portfolio loans, excluding credit card loans, increased by $176.0 million to $1.4 billion. Growth in 2022 was primarily due to a $108.2 million increase in commercial real estate loans, of which $87.6 million was owner occupied, an $83.1 million increase in residential real estate loans, and a $44.3 million increase in commercial and industrial loans. These increases were partially offset by a $17.0 million decline in construction real estate loans.
  • Deposits – While total deposits at December 31, 2022 decreased during the twelve months, our average noninterest bearing deposit balances increased $31.2 million when compared to December 31, 2021. Noninterest bearing deposits represented 38.4% of total deposits at December 31, 2022. The cost of interest bearing liabilities increased to 0.95% from 0.61% for the same period in the prior year, due to the increase in interest rates. Redeployment of funds by multiple commercial clients out of deposit accounts and into operating businesses impacted overall deposit balances in 2022.

OpenSky®

  • Interest Rate Increases Offset Gross Balance Declines – Credit card balances, net of reserves, decreased by $12.7 million, or 9.0 percent, for the twelve months of 2022 compared to an increase of $38.9 million for the twelve months of 2021 when government stimulus funds contributed to balance growth in the credit card portfolio. For the twelve months of 2022, the increase in average credit card balances as well as an increase in interest rates accounted for the $14.4 million growth in interest income when compared to the same period in 2021. The decrease in overall credit card accounts led to the reduction in credit card fees, which declined by 21.2 percent to $22.0 million compared to $27.9 million for the same twelve month period last year.
COMPARATIVE FINANCIAL HIGHLIGHTS – Unaudited            
                   
  Quarter Ended       Twelve Months Ended    
  December 31,       December 31,    
(in thousands except per share data)   2022       2021     % Change     2022       2021     % Change
Earnings Summary                      
Interest income $ 41,348     $ 33,788     22.4 %   $ 150,646     $ 123,243     22.2 %
Interest expense   6,149       1,117     450.5 %     10,039       6,550     53.3 %
Net interest income   35,199       32,671     7.7 %     140,607       116,693     20.5 %
Provision for loan losses   2,384       1,100     116.7 %     6,631       3,359     97.4 %
Noninterest income   5,561       10,617     (47.6) %     29,372       50,636     (42.0) %
Noninterest expense   26,734       28,495     (6.2) %     109,114       110,094     (0.9) %
Income before income taxes   11,642       13,693     (15.0) %     54,234       53,876     0.7 %
Income tax expense   2,651       3,522     (24.7) %     12,430       13,898     (10.6) %
Net income $ 8,991     $ 10,171     (11.6) %   $ 41,804     $ 39,978     4.6 %
                       
Pre-tax pre-provision net revenue (“PPNR”) (2) $ 14,026     $ 14,793     (5.2) %   $ 60,865     $ 57,235     6.3 %
Weighted average common shares – Basic   14,071       13,877     1.4 %     14,025       13,799     1.6 %
Weighted average common shares – Diluted   14,408       14,290     0.8 %     14,362       14,081     2.0 %
Earnings per share – Basic $ 0.64     $ 0.73     (12.3) %   $ 2.98     $ 2.90     2.8 %
Earnings per share – Diluted $ 0.62     $ 0.71     (12.7) %   $ 2.91     $ 2.84     2.5 %
Return on average assets (1)   1.67 %     1.95 %   (14.4) %     2.01 %     1.96 %   2.6 %
Return on average assets, excluding impact of SBA-PPP loans(1) (2)   1.67 %     1.80 %   (7.2) %     1.87 %     1.75 %   6.9 %
Return on average equity   16.18 %     20.66 %   (21.7) %     19.68 %     22.27 %   (11.6) %
  Quarter Ended   4Q22 vs. 4Q21   Quarter Ended
  December 31,     September 30,   June 30,   March 31,
(in thousands except per share data)   2022     2021   % Change     2022     2022     2022
Balance Sheet Highlights                      
Assets $ 2,123,655   $ 2,055,300   3.3 %   $ 2,009,358   $ 2,154,846   $ 2,122,453
Investment securities available for sale   252,481     184,455   36.9 %     269,620     226,509     172,712
Mortgage loans held for sale   7,416     15,989   (53.6) %     6,875     11,708     17,036
SBA-PPP loans, net of fees   2,163     108,285   (98.0)       2,662     15,864     51,085
Portfolio loans receivable (3)   1,728,592     1,523,982   13.4 %     1,648,001     1,607,677     1,526,256
Allowance for loan losses   26,385     25,181   4.8 %     26,091     26,419     25,252
Deposits   1,758,072     1,797,137   (2.2) %     1,737,591     1,888,920     1,862,722
FHLB borrowings   107,000     22,000   386.4 %     22,000     22,000     22,000
Other borrowed funds   12,062     12,062   %     12,062     12,062     12,062
Total stockholders’ equity   224,015     197,903   13.2 %     214,005     207,316     201,492
Tangible common equity(2)   224,015     197,903   13.2 %     214,005     207,316     201,492
                       
Common shares outstanding   14,139     13,962   1.3 %     14,039     14,010     14,001
Tangible book value per share (2) $ 15.84   $ 14.17   11.8 %   $ 15.24   $ 14.80   $ 14.39

______________

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

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

For the three months ended December 31, 2022, net interest income increased $2.5 million, or 7.7 percent, to $35.2 million from the same period in 2021, primarily due to an increase in interest earned on portfolio loans. The net interest margin increased 15 basis points to 6.64% for the three months ended December 31, 2022 from 6.49% for the same period in 2021 due in large part to the growth in portfolio loan balances and an increase in loan yields, including on credit card loans to customers whose accounts have been open for more than a year as origination costs on these accounts are amortized in the first year and thereafter no longer offset annual renewal fees. Net interest margin, excluding credit card and SBA-PPP loans, was 3.91% for the fourth quarter of 2022 compared to 3.70% for the same period in 2021. For the three months ended December 31, 2022, average interest earning assets increased $104.5 million, or 5.2 percent, to $2.1 billion as compared to the same period in 2021, and the average yield on interest earning assets increased 110 basis points. Compared to the same period in the prior year, average interest bearing liabilities increased $107.9 million, or 10.3 percent, while the average cost of interest-bearing liabilities increased 169 basis points to 2.11% from 0.42%.

The provision for loan losses of $2.4 million for the three months ended December 31, 2022 was related to the credit card portfolio and the cycling of credit card accounts. Net charge-offs for the fourth quarter of 2022 were $2.1 million, or 0.49% on an annualized basis of average portfolio loans, compared to $672 thousand, or 0.18% on an annualized basis of average loans for the fourth quarter of 2021. A majority of the $2.1 million in net charge-offs during the quarter were related to the credit card portfolio with $1.8 million related to secured cards and $229 thousand related to unsecured cards.

For the quarter ended December 31, 2022, noninterest income was $5.6 million, a decrease of $5.1 million, or 47.6 percent, from $10.6 million in the prior year quarter. The decrease was primarily the result of a reduction in mortgage banking revenue of $2.8 million due to the decline in home loan sales and home loan refinances brought on by the rising interest rate environment as well as a decline in credit card fees of $2.4 million associated with the decline in active customer accounts and interchange income.

Credit card loan balances, net of reserves, decreased by $12.7 million to $128.4 million as of December 31, 2022 from $141.1 million at December 31, 2021. The related deposit account balances decreased 18.3 percent to $187.4 million at December 31, 2022 when compared to $229.5 million at December 31, 2021 reflecting the reduction in active customer accounts. For the three months ended December 31, 2022, OpenSky® credit card accounts decreased by 43 thousand net compared to a 40 thousand net decrease in accounts for the same period in 2021. Elevated new account originations related to COVID-19 stimulus payments that were realized during the pandemic did not recur in 2022.

The efficiency ratio for the three months ended December 31, 2022 decreased to 65.59% compared to 65.83% for the three months ended December 31, 2021 due to higher levels of net interest income.

Noninterest expense was $26.7 million for the three months ended December 31, 2022, as compared to $28.5 million for the three months ended December 31, 2021, a decrease of $1.8 million, or 6.2 percent. The decrease was primarily driven by decreases in data processing expenses of $2.9 million due to successful contract negotiations in the first quarter of 2022 for OpenSky® and advertising expenses of $924 thousand, or 56.0 percent due to a strategic refocus and were offset by increases in salaries and employee benefits of $1.2 million, or 11.4 percent and professional fees of $972 thousand, or 66.8 percent.

Operating Results – Comparison of Twelve Months Ended December 31, 2022 and 2021

For the twelve months ended December 31, 2022, net interest income increased $23.9 million, or 20.5 percent, to $140.6 million from the same period in 2021, primarily due to the $208.7 million increase in average balances in portfolio loans combined with the 72 basis point increase in yield for portfolio loans. The net interest margin increased 106 basis points to 6.92% for the twelve months ended December 31, 2022 from the same period in 2021. Net interest margin, excluding credit card and SBA-PPP loans, was 3.93% for the twelve months ended December 31, 2022 compared to 3.60% for the same period in 2021. For the twelve months ended December 31, 2022, average interest earning assets increased $42.7 million, or 2.1 percent, to $2.0 billion as compared to the same period in 2021, and the average yield on interest earning assets increased 122 basis points. Compared to the same period in the prior year, average interest-bearing liabilities decreased $21.8 million, or 2.0 percent, while the average cost of interest bearing liabilities increased 34 basis points to 0.95% from 0.61%.

For the twelve months ended December 31, 2022, the provision for loan losses was $6.6 million, an increase of $3.3 million from the prior year and was related primarily to the credit card portfolio. Net charge-offs for the twelve months ended December 31, 2022 were $5.4 million, or 0.34% of average portfolio loans, compared to $1.6 million, or 0.12% of average portfolio loans, for the same period in 2021. The $5.4 million in net charge-offs during the twelve months ended December 31, 2022 was comprised of credit card portfolio net charge-offs with $5.1 million related to secured cards while $345 thousand was related to unsecured cards.

For the twelve months ended December 31, 2022, noninterest income was $29.4 million, a decrease of $21.3 million, or 42.0 percent, from the same period in 2021. The decrease was primarily driven by the reduction in mortgage banking revenues of $16.0 million due to the decline in home loan sales and home loan refinances brought on by the rising interest rate environment as well as a decline in credit card fees of $5.9 million. The rising interest rate environment is expected to continue depressing the contribution made by Capital Bank Home Loans into 2023.

For the twelve months ended December 31, 2022, the Bank had a net decrease of 127 thousand OpenSky® active credit card accounts, decreasing the total number of open accounts to 534 thousand. This compares to 92 thousand of net new originations for the same period last year, which increased total open accounts to 660 thousand at December 31, 2021. Elevated new account originations related to COVID-19 stimulus payments that were realized in 2021 which did not recur in 2022 and aggressive marketing by competitors both contributed to the decline.

The efficiency ratio for the twelve months ended December 31, 2022 decreased to 64.19% compared to 65.79% for the twelve months ended December 31, 2021 due to higher levels of net interest income.

Noninterest expense was $109.1 million for the twelve months ended December 31, 2022, as compared to $110.1 million for the twelve months ended December 31, 2021, a decrease of $1.0 million, or 0.9 percent. The decrease was primarily driven by a $9.8 million, or 25.0 percent, decrease in data processing and a $1.8 million, or 51.7 percent, decrease in loan processing. The decrease was partially offset by a $5.1 million, or 13.4 percent, increase in salaries and benefits, an increase in professional fees of 57.4 percent, or $4.0 million, and a $1.4 million, or 29.5 percent, increase in advertising expense. The decrease of $9.8 million in data processing expenses was primarily due to a contract renegotiation entered into in the first quarter of 2022 in the OpenSky® Division.

Financial Condition

Total assets at December 31, 2022 were $2.1 billion, an increase of $68.4 million or 3.3% from the balance at December 31, 2021. Net portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.7 billion as of December 31, 2022, an increase of $204.6 million or 13.4 percent as compared to $1.5 billion at December 31, 2021.

The Company recorded a provision for loan losses of $6.6 million during the twelve months ended December 31, 2022, which increased the allowance for loan losses to $26.4 million, or 1.52% of total loans at December 31, 2022. Nonperforming assets were $9.8 million, or 0.46% of total assets, as of December 31, 2022, down from $11.5 million, or 0.56% of total assets, at December 31, 2021, and was comprised solely of nonperforming loans. Included in nonperforming loans at December 31, 2022 were troubled debt restructurings of $288 thousand.

Special mention loans at December 31, 2022 increased by $13.5 million compared to December 31, 2021.  The increase is attributable, in part, to the reclassification of the Bank’s $18.4 million participation interest in two commercial loans that are secured by the same collateral.  The borrowers, an individual and a related entity, breached a negative covenant and thereafter agreed, in consideration of a forbearance agreement and an extension of the maturity date of each loan, to increase the applicable interest rate and to provide enhanced reporting to the lead bank.  Interest payments are current on both loans.  The lead bank is in discussions with the borrowers regarding a plan for full repayment of the loans.

While total deposits were $1.8 billion for the period ended December 31, 2022, a slight decline from the balance at December 31, 2021, average noninterest bearing deposit balances increased $31.2 million when compared to December 31, 2021. Noninterest bearing deposits represented 38.4% of total deposits at December 31, 2022.

Stockholders’ equity increased to $224.0 million as of December 31, 2022, compared to $197.9 million at December 31, 2021. This increase was primarily attributable to earnings during the period of $41.8 million which were offset by unrealized losses recorded net of tax on available for sale securities in the rising interest rate environment creating a $15.7 million reduction in accumulated other comprehensive income during the period. As of December 31, 2022, the Bank’s capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

Consolidated Statements of Income (Unaudited)            
  Three Months Ended December 31,   Twelve Months Ended December 31,
(Dollars in thousands)   2022     2021     2022     2021
Interest income              
Loans, including fees $ 38,763   $ 33,235   $ 144,408   $ 120,784
Investment securities available for sale   1,402     439     3,912     2,010
Federal funds sold and other   1,183     114     2,326     449
Total interest income   41,348     33,788     150,646     123,243
               
Interest expense              
Deposits   4,377     934     7,611     5,808
Borrowed funds   1,772     183     2,428     742
Total interest expense   6,149     1,117     10,039     6,550
               
Net interest income   35,199     32,671     140,607     116,693
Provision for loan losses   2,384     1,100     6,631     3,359
Net interest income after provision for loan losses   32,815     31,571     133,976     113,334
               
Noninterest income              
Service charges on deposits   222     136     767     609
Credit card fees   4,314     6,676     21,972     27,884
Mortgage banking revenue   554     3,365     4,866     20,843
Gain on sale of investment securities available for sale, net               153
Other fees and charges   471     440     1,767     1,147
Total noninterest income   5,561     10,617     29,372     50,636
               
Noninterest expenses              
Salaries and employee benefits   11,769     10,564     42,898     37,843
Occupancy and equipment   1,388     1,005     4,865     4,327
Professional fees   2,426     1,454     11,012     6,996
Data processing   6,697     9,643     29,418     39,237
Advertising   726     1,650     6,220     4,803
Loan processing   350     857     1,702     3,527
Other operating   3,378     3,322     12,999     13,361
Total noninterest expenses   26,734     28,495     109,114     110,094
Income before income taxes   11,642     13,693     54,234     53,876
Income tax expense   2,651     3,522     12,430     13,898
Net income $ 8,991   $ 10,171   $ 41,804   $ 39,978
Consolidated Balance Sheets      
(in thousands except share data) (unaudited) December 31, 2022   December 31, 2021
Assets      
Cash and due from banks $ 19,963     $ 42,914  
Interest bearing deposits at other financial institutions   39,764       136,824  
Federal funds sold   20,688       3,657  
Total cash and cash equivalents   80,415       183,395  
Investment securities available for sale   252,481       184,455  
Marketable equity securities         245  
Restricted investments   7,362       3,498  
Loans held for sale   7,416       15,989  
SBA-PPP loans receivable, net of fees   2,163       108,285  
Portfolio loans receivable, net of deferred fees and costs   1,728,592       1,523,982  
Less allowance for loan losses   (26,385 )     (25,181 )
Total portfolio loans held for investment, net   1,702,207       1,498,801  
Premises and equipment, net   3,386       3,282  
Accrued interest receivable   9,489       7,901  
Deferred income taxes, net   13,777       9,793  
Other real estate owned         86  
Bank owned life insurance   36,524       35,506  
Other assets   8,435       4,064  
Total assets $ 2,123,655     $ 2,055,300  
       
Liabilities      
Deposits      
Noninterest bearing $ 674,313     $ 787,650  
Interest bearing   1,083,759       1,009,487  
Total deposits   1,758,072       1,797,137  
Federal Home Loan Bank advances   107,000       22,000  
Other borrowed funds   12,062       12,062  
Accrued interest payable   1,031       473  
Other liabilities   21,475       25,725  
Total liabilities   1,899,640       1,857,397  
       
Stockholders’ equity      
Common stock, $.01 par value; 49,000,000 shares authorized; 14,138,829 and 13,962,334 issued and outstanding   141       140  
Additional paid-in capital   58,190       54,306  
Retained earnings   182,435       144,533  
Accumulated other comprehensive loss   (16,751 )     (1,076 )
Total stockholders’ equity   224,015       197,903  
Total liabilities and stockholders’ equity $ 2,123,655     $ 2,055,300  

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 December 31,
    2022       2021  
  Average
Outstanding
Balance
  Interest Income/
Expense
  Average
Yield/
Rate(1)
  Average
Outstanding
Balance
  Interest Income/
Expense
  Average
Yield/
Rate(1)
  (Dollars in thousands)
Assets                      
Interest earning assets:                      
Interest bearing deposits $ 111,404   $ 1,006   3.58 %   $ 198,070   $ 73   0.15 %
Federal funds sold   4,054     35   3.41       2,048        
Investment securities available for sale   292,117     1,402   1.90       187,388     439   0.93  
Restricted stock and equity securities   10,111     142   5.57       3,743     41   4.35  
Loans held for sale   6,062     88   5.74       23,395     179   3.04  
SBA-PPP loans receivable   2,435     28   4.59       116,595     1,347   4.58  
Portfolio loans receivable(2)   1,675,434     38,647   9.15       1,465,878     31,709   8.58  
Total interest earning assets   2,101,617     41,348   7.81       1,997,117     33,788   6.71  
Noninterest earning assets   34,539             69,166        
Total assets $ 2,136,156           $ 2,066,283        
                       
Liabilities and Stockholders’ Equity                      
Interest bearing liabilities:                      
Interest bearing demand accounts $ 218,518     61   0.11     $ 315,933     39   0.05  
Savings   8,261     1   0.05       6,575     1   0.06  
Money market accounts   552,185     3,016   2.17       501,070     267   0.21  
Time deposits   177,346     1,299   2.91       190,795     627   1.30  
Borrowed funds   199,982     1,772   3.52       34,062     183   2.13  
Total interest bearing liabilities   1,156,292     6,149   2.11       1,048,435     1,117   0.42  
Noninterest bearing liabilities:                      
Noninterest bearing liabilities   23,941             26,504        
Noninterest bearing deposits   735,416             796,014        
Stockholders’ equity   220,507             195,330        
Total liabilities and stockholders’ equity $ 2,136,156           $ 2,066,283        
                       
Net interest spread         5.70 %           6.29 %
Net interest income     $ 35,199           $ 32,671    
Net interest margin(3)         6.64 %           6.49 %

_______________

(1) Annualized.
(2) Includes nonaccrual loans.
(3) For the three months ended December 31, 2022 and December 31, 2021, collectively, SBA-PPP loans and credit card loans accounted for 273 and 279 basis points of the reported net interest margin, respectively.

  Twelve Months Ended December 31,
    2022       2021  
  Average
Outstanding
Balance
  Interest Income/
Expense
  Average
Yield/
Rate(1)
  Average
Outstanding
Balance
  Interest Income/
Expense
  Average
Yield/
Rate(1)
  (Dollars in thousands)
Assets                      
Interest earning assets:                      
Interest bearing deposits $ 156,751   $ 2,007   1.28 %   $ 228,420   $ 283   0.12 %
Federal funds sold   2,959     44   1.49       2,850        
Investment securities available for sale   248,869     3,912   1.57       150,750     2,010   1.33  
Restricted stock and equity securities   5,475     275   5.02       3,774     166   4.40  
Loans held for sale   9,696     435   4.49       43,126     1,224   2.84  
SBA-PPP loans receivable   29,831     3,477   11.66       190,588     7,613   3.99  
Portfolio loans receivable(1)   1,579,661     140,496   8.89       1,370,988     111,947   8.17  
Total interest earning assets   2,033,242     150,646   7.41       1,990,496     123,243   6.19  
Noninterest earning assets   44,559             45,348        
Total assets $ 2,077,801           $ 2,035,844        
                       
Liabilities and Stockholders’ Equity                      
Interest bearing liabilities:                      
Interest bearing demand accounts $ 253,923     174   0.07     $ 289,285     202   0.07  
Savings   8,917     5   0.06       6,470     3   0.05  
Money market accounts   553,388     4,529   0.82       482,225     1,484   0.31  
Time deposits   165,854     2,903   1.75       269,262     4,119   1.53  
Borrowed funds   77,556     2,428   3.13       34,214     742   2.17  
Total interest bearing liabilities   1,059,638     10,039   0.95       1,081,456     6,550   0.61  
Noninterest bearing liabilities:                      
Noninterest bearing liabilities   23,797             24,128        
Noninterest bearing deposits   781,971             750,760        
Stockholders’ equity   212,395             179,500        
Total liabilities and stockholders’ equity $ 2,077,801           $ 2,035,844        
                       
Net interest spread         6.46 %           5.58 %
Net interest income     $ 140,607           $ 116,693    
Net interest margin(2)         6.92 %           5.86 %

_______________

(1) Includes nonaccrual loans.
(2) For the twelve months ended December 31, 2022 and December 31, 2021, collectively, SBA-PPP loans and credit card loans accounted for 299 and 226 basis points of the reported net interest margin, respectively.

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

Segments                        
                         
For the three months ended December 31, 2022                    
(in thousands)   Commercial Bank   CBHL   OpenSky®   Corporate(2)   Eliminations   Consolidated
Interest income   $ 24,389   $ 88     $ 16,035   $ 891   $ (55 )   $ 41,348
Interest expense     5,990     33           181     (55 )     6,149
Net interest income     18,399     55       16,035     710           35,199
Provision for loan losses               2,384               2,384
Net interest income after provision     18,399     55       13,651     710           32,815
Noninterest income     550     696       4,314     1           5,561
Noninterest expense(1)     13,811     2,085       10,724     114           26,734
Net income (loss) before taxes   $ 5,138   $ (1,334 )   $ 7,241   $ 597   $     $ 11,642
                         
Total assets   $ 1,939,601   $ 7,936     $ 122,418   $ 245,399   $ (191,699 )   $ 2,123,655
                         
For the three months ended December 31, 2021                    
Interest income   $ 17,464   $ 180     $ 15,479   $ 702   $ (37 )   $ 33,788
Interest expense     857     129           168     (37 )     1,117
Net interest income     16,607     51       15,479     534           32,671
Provision for loan losses               1,100               1,100
Net interest income after provision     16,607     51       14,379     534           31,571
Noninterest income     520     3,382       6,676     39           10,617
Noninterest expense(1)     12,740     2,772       12,852     131           28,495
Net income before taxes   $ 4,387   $ 661     $ 8,203   $ 442   $     $ 13,693
                         
Total assets   $ 1,859,201   $ 16,698     $ 138,232   $ 217,993   $ (176,824 )   $ 2,055,300

________________________
(1) Noninterest expense includes $6.1 million and $8.8 million in data processing expense in OpenSky’s® segment for the three months ended December 31, 2022 and 2021, respectively.
(2) The Corporate segment invests idle cash in revenue producing assets including interest bearing cash accounts, loan participations and other appropriate investments for the Company.

For the twelve months ended December 31, 2022                
(in thousands)   Commercial Bank   CBHL   OpenSky®   Corporate(2)   Eliminations   Consolidated
Interest income   $ 82,182     $ 435     $ 64,859   $ 3,349   $ (179 )   $ 150,646
Interest expense     9,245       218           755     (179 )     10,039
Net interest income     72,937       217       64,859     2,594           140,607
Provision for loan losses     (980 )           7,611               6,631
Net interest income after provision     73,917       217       57,248     2,594           133,976
Noninterest income     2,122       5,276       21,972     2           29,372
Noninterest expense(1)     52,552       8,450       47,647     465           109,114
Net income (loss) before taxes   $ 23,487     $ (2,957 )   $ 31,573   $ 2,131   $     $ 54,234
                         
Total assets   $ 1,939,601     $ 7,936     $ 122,418   $ 245,399   $ (191,699 )   $ 2,123,655
                         
For the twelve months ended December 31, 2021                
Interest income   $ 69,433     $ 1,217     $ 50,422   $ 2,307   $ (136 )   $ 123,243
Interest expense     5,142       874           670     (136 )     6,550
Net interest income     64,291       343       50,422     1,637           116,693
Provision for loan losses     433             2,856     70           3,359
Net interest income after provision     63,858       343       47,566     1,567           113,334
Noninterest income     1,759       20,911       27,884     82           50,636
Noninterest expense(1)     44,729       12,713       52,231     421           110,094
Net income before taxes   $ 20,888     $ 8,541     $ 23,219   $ 1,228   $     $ 53,876
                         
Total assets   $ 1,859,201     $ 16,698     $ 138,232   $ 217,993   $ (176,824 )   $ 2,055,300

________________________
(1) Noninterest expense includes $27.0 million and $36.1 million in data processing expense in OpenSky’s® segment for the twelve months ended December 31, 2022 and 2021, respectively.
(2) The Corporate segment invests idle cash in revenue producing assets including interest bearing cash accounts, loan participations and other appropriate investments for the Company.

HISTORICAL FINANCIAL HIGHLIGHTS – Unaudited        
    Quarter Ended
(dollars in thousands except per share data)   December 31,
2022
  September 30,
2022
  June 30,
2022
  March 31,
2022
  December 31,
2021
Earnings:                    
Net income   $ 8,991     $ 11,095     $ 11,508     $ 10,211     $ 10,171  
Earnings per common share, diluted     0.62       0.77       0.80       0.71       0.71  
Net interest margin     6.64 %     7.24 %     7.06 %     6.79 %     6.49 %
Net interest margin, excluding credit cards & SBA-PPP loans (1)     3.91 %     4.16 %     3.86 %     3.82 %     3.70 %
Return on average assets(2)     1.67 %     2.15 %     2.23 %     2.01 %     1.95 %
Return on average assets, excluding impact of SBA-PPP loans (1)(2)     1.67 %     2.10 %     2.04 %     1.67 %     1.80 %
Return on average equity(2)     16.18 %     20.32 %     22.16 %     20.30 %     20.66 %
Efficiency ratio     65.59 %     64.16 %     62.00 %     65.12 %     65.83 %
Balance Sheet:                    
Total portfolio loans receivable, net deferred fees   $ 1,728,592     $ 1,648,001     $ 1,607,677     $ 1,526,256     $ 1,523,982  
Total deposits     1,758,072       1,737,591       1,888,920       1,862,722       1,797,137  
Total assets     2,123,655       2,009,358       2,154,846       2,122,453       2,055,300  
Total shareholders’ equity     224,015       214,005       207,316       201,492       197,903  
Asset Quality Ratios:                    
Nonperforming assets to total assets     0.46 %     0.43 %     0.34 %     0.28 %     0.56 %
Nonperforming assets to total assets, excluding the SBA-PPP loans (1)     0.46 %     0.43 %     0.34 %     0.29 %     0.59 %
Nonperforming loans to total loans     0.56 %     0.52 %     0.45 %     0.38 %     0.70 %
Nonperforming loans to portfolio loans (1)     0.56 %     0.52 %     0.46 %     0.39 %     0.75 %
Net charge-offs to average portfolio loans (1)(2)     0.49 %     0.39 %     0.23 %     0.24 %     0.18 %
Allowance for loan losses to total loans     1.52 %     1.58 %     1.63 %     1.60 %     1.54 %
Allowance for loan losses to portfolio loans (1)     1.53 %     1.58 %     1.64 %     1.65 %     1.65 %
Allowance for loan losses to non-performing loans     270.46 %     303.76 %     360.06 %     422.65 %     220.40 %
Bank Capital Ratios:                    
Total risk based capital ratio     14.21 %     14.65 %     14.34 %     14.36 %     13.79 %
Tier 1 risk based capital ratio     12.95 %     13.39 %     13.09 %     13.10 %     12.53 %
Leverage ratio     9.47 %     9.60 %     9.11 %     8.74 %     8.36 %
Common equity Tier 1 capital ratio     12.95 %     13.39 %     13.09 %     13.10 %     12.53 %
Tangible common equity     8.85 %     9.00 %     8.17 %     8.11 %     8.36 %
Holding Company Capital Ratios:                    
Total risk based capital ratio     16.33 %     17.41 %     17.66 %     17.16 %     16.41 %
Tier 1 risk based capital ratio     15.13 %     15.49 %     15.70 %     15.19 %     14.43 %
Leverage ratio     11.24 %     11.31 %     10.93 %     10.25 %     9.73 %
Common equity Tier 1 capital ratio     15.00 %     15.36 %     15.55 %     15.04 %     14.28 %
Tangible common equity     10.55 %     10.65 %     9.62 %     9.49 %     9.63 %
Composition of Loans:                    
SBA-PPP loans, net   $ 2,163     $ 2,662     $ 15,864     $ 51,085     $ 108,285  
Residential real estate   $ 484,735     $ 466,849     $ 430,244     $ 420,242     $ 401,607  
Commercial real estate     664,551       626,030       608,646       564,725       556,339  
Construction real estate     238,099       235,045       241,249       245,722       255,147  
Commercial and industrial     220,221       192,207       193,262       177,504       175,956  
Credit card, net of reserve     128,434       136,658       142,166       123,750       141,120  
Other consumer loans     1,179       1,055       856       909       1,033  
Portfolio loans receivable   $ 1,737,219     $ 1,657,844     $ 1,616,423     $ 1,532,852     $ 1,531,202  
Deferred origination fees, net     (8,627 )     (9,843 )     (8,746 )     (6,596 )     (7,220 )
Portfolio loans receivable, net   $ 1,728,592     $ 1,648,001     $ 1,607,677     $ 1,526,256     $ 1,523,982  
Composition of Deposits:                    
Noninterest bearing   $ 674,313     $ 806,033     $ 842,363     $ 825,174     $ 787,650  
Interest-bearing demand     207,836       252,135       305,377       279,591       330,924  
Savings     7,530       8,861       10,078       9,894       6,994  
Money markets     574,978       518,184       570,298       585,920       493,919  
Time deposits     293,415       152,378       160,804       162,143       177,650  
Total Deposits   $ 1,758,072     $ 1,737,591     $ 1,888,920     $ 1,862,722     $ 1,797,137  
Capital Bank Home Loan Metrics:                
Origination of loans held for sale   $ 43,956     $ 60,516     $ 84,417     $ 111,087     $ 158,051  
Mortgage loans sold     43,415       65,349       89,745       110,039       178,068  
Gain on sale of loans     912       1,340       1,918       3,042       4,423  
Purchase volume as a % of originations     88.94 %     81.85 %     85.23 %     73.16 %     56.44 %
Gain on sale as a % of loans sold(3)     2.10 %     2.05 %     2.14 %     2.77 %     2.48 %
Mortgage commissions   $ 451     $ 587     $ 772     $ 1,125     $ 1,462  
OpenSky® Portfolio Metrics:                
Active customer accounts     533,855       576,844       616,435       630,709       660,397  
Secured credit card loans, gross   $ 104,157     $ 111,842     $ 118,938     $ 109,978     $ 125,898  
Unsecured credit card loans, gross     26,795       27,335       25,641       16,233       17,682  
Noninterest secured credit card deposits     187,412       201,277       214,110       220,354       229,530  

_______________

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

Return on Average Assets, as Adjusted Quarters Ended   Years Ended
Dollars in thousands December 31,
2022
September 30,
2022
June 30,
2022
March 31,
2022
December 31,
2021
  December 31,
2022
December 31,
2021
                 
Net Income $ 8,991   $ 11,095   $ 11,508   $ 10,211   $ 10,171     $ 41,804   $ 39,978  
Less: SBA-PPP loan income   28     263     1,120     2,066     1,347       3,477     7,613  
Net Income, as Adjusted $ 8,963   $ 10,832   $ 10,388   $ 8,145   $ 8,824     $ 38,327   $ 32,365  
Average Total Assets   2,136,156     2,049,078     2,068,218     2,057,201     2,066,283       2,077,801     2,035,844  
Less: Average SBA-PPP Loans   2,435     5,906     28,870     83,264     116,595       29,831     190,588  
Average Total Assets, as Adjusted $ 2,133,721   $ 2,043,172   $ 2,039,348   $ 1,973,937   $ 1,949,688     $ 2,047,970   $ 1,845,256  
Return on Average Assets, as Adjusted   1.67 %   2.10 %   2.04 %   1.67 %   1.80 %     1.87 %   1.75 %
Net Interest Margin, as Adjusted Quarters Ended   Years Ended
Dollars in thousands December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021   December 31, 2022 December 31, 2021
                 
Net Interest Income $ 35,199   $ 36,677   $ 35,400   $ 33,331   $ 32,671     $ 140,607   $ 116,693  
Less Credit card loan income   15,717     16,768     16,376     14,487     15,010       63,348     48,253  
Less SBA-PPP loan income   28     263     1,120     2,066     1,347       3,477     7,613  
Net Interest Income, as Adjusted $ 19,454   $ 19,646   $ 17,904   $ 16,778   $ 16,314     $ 73,782   $ 60,827  
Average Interest Earning Assets   2,101,617     2,010,070     2,011,920     1,990,377     1,996,331       2,033,242     1,990,496  
Less Average credit card loans   124,120     132,246     124,548     124,923     131,306       126,473     112,313  
Less Average SBA-PPP loans   2,435     5,906     28,870     83,264     116,595       29,831     190,588  
Total Average Interest Earning Assets, as Adjusted $ 1,975,062   $ 1,871,918   $ 1,858,502   $ 1,782,190   $ 1,748,430     $ 1,876,938   $ 1,687,595  
Net Interest Margin, as Adjusted   3.91 %   4.16 %   3.86 %   3.82 %   3.70 %     3.93 %   3.60 %
Pre-tax, Pre-Provision Net Revenue (“PPNR”) Quarters Ended   Years Ended
Dollars in thousands December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021   December 31, 2022 December 31, 2021
                 
Net income $ 8,991 $ 11,095 $ 11,508 $ 10,211 $ 10,171   $ 41,804 $ 39,978
Add: Income Tax Expense   2,651   3,336   3,089   3,354   3,522     12,430   13,898
Add: Provision for Loan Losses   2,384   1,260   2,035   952   1,100     6,631   3,359
Pre-tax, Pre-Provision Net Revenue (“PPNR”) $ 14,026 $ 15,691 $ 16,632 $ 14,517 $ 14,793   $ 60,865 $ 57,235
Allowance for Loan Losses to Total Portfolio Loans Quarters Ended
Dollars in thousands December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021
           
Allowance for Loan Losses $ 26,385   $ 26,091   $ 26,419   $ 25,252   $ 25,181  
Total Loans   1,730,755     1,650,663     1,623,541     1,577,341     1,632,267  
Less: SBA-PPP loans   2,163     2,662     15,864     51,085     108,285  
Total Portfolio Loans $ 1,728,592   $ 1,648,001   $ 1,607,677   $ 1,526,256   $ 1,523,982  
Allowance for Loan Losses to Total Portfolio Loans   1.53 %   1.58 %   1.64 %   1.65 %   1.65 %
           
Nonperforming Assets to Total Assets, net SBA-PPP Loans Quarters Ended
Dollars in thousands December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021
           
Total Nonperforming Assets $ 9,756   $ 8,589   $ 7,338   $ 5,975   $ 11,512  
Total Assets   2,123,655     2,009,358     2,154,846     2,122,453     2,055,300  
Less: SBA-PPP loans   2,163     2,662     15,864     51,085     108,285  
Total Assets, net SBA-PPP Loans $ 2,121,492   $ 2,006,696   $ 2,138,982   $ 2,071,368   $ 1,947,015  
Nonperforming Assets to Total Assets, net SBA-PPP Loans   0.46 %   0.43 %   0.34 %   0.29 %   0.59 %
           
Nonperforming Loans to Total Portfolio Loans Quarters Ended
Dollars in thousands December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021
           
Total Nonperforming Loans $ 9,756   $ 8,589   $ 7,338   $ 5,975   $ 11,425  
Total Loans   1,730,755     1,650,663     1,623,541     1,577,341     1,632,267  
Less: SBA-PPP loans   2,163     2,662     15,864     51,085     108,285  
Total Portfolio Loans $ 1,728,592   $ 1,648,001   $ 1,607,677   $ 1,526,256   $ 1,523,982  
Nonperforming Loans to Total Portfolio Loans   0.56 %   0.52 %   0.46 %   0.39 %   0.75 %
           
Net Charge-offs to Average Portfolio Loans Quarters Ended
Dollars in thousands December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021
           
Total Net Charge-offs $ 2,090   $ 1,588   $ 868   $ 881   $ 672  
Total Average Loans   1,677,869     1,607,452     1,561,541     1,590,166     1,582,473  
Less: Average SBA-PPP loans   2,435     5,906     28,870     83,264     116,595  
Total Average Portfolio Loans $ 1,675,434   $ 1,601,546   $ 1,532,671   $ 1,506,902   $ 1,465,878  
Net Charge-offs to Average Portfolio Loans   0.49 %   0.39 %   0.23 %   0.24 %   0.18 %
           
Tangible Book Value per Share Quarters Ended
Dollars in thousands, except per share amounts December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021
           
Total Stockholders’ Equity $ 224,015   $ 214,005   $ 207,316   $ 201,492   $ 197,903  
Less: Preferred equity                    
Less: Intangible assets                    
Tangible Common Equity $ 224,015   $ 214,005   $ 207,316   $ 201,492   $ 197,903  
Period End Shares Outstanding   14,138,829     14,038,599     14,010,158     14,000,520     13,962,334  
Tangible Book Value per Share $ 15.84   $ 15.24   $ 14.80   $ 14.39   $ 14.17  

ABOUT CAPITAL BANCORP, INC.

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

FORWARD-LOOKING STATEMENTS

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

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

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

FINANCIAL CONTACT: Alan Jackson (240) 283-0402

MEDIA CONTACT: Ed Barry (240) 283-1912

WEB SITE: www.CapitalBankMD.com 


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