Capital Bancorp, Inc. Reports First Quarter 2024 Results

Source: GlobeNewswire
Capital Bancorp, Inc. Reports First Quarter 2024 Results
  • Net Income of $6.6 million, or $0.47 per share. Net Income, as adjusted(1) of $7.1 million, or $0.51 per share
  • ROAA of 1.15% and ROAE of 10.19% for 1Q 2024
  • Adjusted Metrics(1) excluding Merger-Related Expenses:
    • ROAA of 1.24% and ROAE of 11.03% for 1Q 2024
  • Loan Growth of $61.2 million, or 12.9% annualized for 1Q 2024
  • Deposit Growth of $109.7 million; Noninterest bearing deposits increased $48.4 million, or 7.8% from 4Q 2023
  • Cash dividend of $0.08 per share declared

ROCKVILLE, Md., April 22, 2024 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $6.6 million, or $0.47 per diluted share, for the first quarter 2024, compared to net income of $9.0 million, or $0.65 per diluted share, for the fourth quarter 2023, and $9.7 million, or $0.68 per diluted share, for the first quarter 2023. Net income, as adjusted(1) to exclude the impact of merger-related expenses was $7.1 million, or $0.51 per diluted share for the first quarter 2024.

The Company also declared a cash dividend on its common stock of $0.08 per share. The dividend is payable on May 22, 2024 to shareholders of record on May 6, 2024.

“We had another strong quarter of performance with robust strong loan and deposit growth, increasing credit card accounts and continued credit stability,” said Ed Barry, Chief Executive Officer of the Company and the Bank. “The announced acquisition of Integrated Financial Holdings, Inc. ("IFHI") diversifies our business while prudently deploying capital. IFHI's expertise in niche C&I lending complements our strategy and extends our capabilities. At the same time, CBNK continues to make the investments in people and technology that will enable us to elevate our franchise while maintaining a strong growth and profitability profile.”

"Notwithstanding the significant headwinds currently facing many community and regional banks, we continue to be well positioned for continued value creation,” said Steven J Schwartz, Chairman of the Company. “Our net cardholder growth for the quarter plus strong loan and deposit growth and a resilient core net interest margin are all positive signs for the future. Moreover, we anticipate that the acquisition of Integrated Financial Holdings, Inc., if approved by the regulators, will set us on a path of additional strategic acquisitions that, together with organic growth, will assure we can continue to deliver top tier performance. The Board reiterates its thanks and appreciation to our extremely hard working and dedicated employees.”

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

Pending Acquisition of Integrated Financial Holdings, Inc.

On March 28, 2024, the Company and Integrated Financial Holdings, Inc. (“IFHI”) issued a joint press release announcing the execution of an Agreement and Plan of Merger and Reorganization, dated as of March 27, 2024, by and between the Company and IFHI, pursuant to which, upon the terms and subject to the conditions set forth therein, the Company and IFHI will merge, with the Company continuing as the surviving entity.

The Company incurred pre-tax merger-related expenses related to the IFHI transaction of $0.7 million for the first quarter 2024. The merger is expected to close in the fourth quarter 2024 subject to regulatory approval.

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

 First Quarter 2024
(in thousands except per share data)Income Before
Income Taxes
 Income Tax
Expense
 Net Income Diluted Earnings
per Share
GAAP Earnings$8,624  $2,062  $6,562  $0.47 
Add: Merger-Related Expenses 712   174   538   
Non-GAAP Earnings$9,336  $2,236  $7,100  $0.51 

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

First Quarter 2024 Highlights

Capital Bancorp, Inc.

Earnings Summary - Net income of $6.6 million, or $0.47 per diluted share, decreased $2.5 million compared to $9.0 million, or $0.65 per diluted share, for the fourth quarter 2023. Net income, as adjusted(1), was $7.1 million, or $0.51 per diluted share for the first quarter 2024.

  • Net interest income of $35.0 million increased $0.1 million compared to $34.9 million for the fourth quarter 2023. Interest income of $48.4 million increased $1.4 million compared to $47.0 million for the fourth quarter 2023 as interest income from portfolio loans increased $0.9 million and interest income from interest-bearing deposits held at other financial institutions increased $0.4 million. Interest expense of $13.4 million increased $1.3 million compared to $12.1 million for the fourth quarter 2023 as interest expense from time deposits increased $1.1 million and the average rate of time deposits increased 27 basis points to 4.99% as growth in average time deposits totaled $69.2 million for the first quarter 2024.
  • The provision for credit losses was $2.7 million, a decrease of $0.1 million from the fourth quarter 2023. Net charge-offs totaled $2.0 million in the first quarter first including $1.7 million from credit card related loans and $0.3 million from commercial loans. Net charge-offs totaled $2.5 million in the fourth quarter 2023 including $1.9 million from credit card related loans and $0.6 million from commercial loans. A charge-off of $0.7 million was recorded in the fourth quarter 2023 on a single multi-unit residential real estate loan.
  • Noninterest income of $6.0 million increased $0.1 million compared to $5.9 million for the fourth quarter 2023. Mortgage banking revenue increased $0.3 million primarily due to increased mortgage loans sold while credit card fees decreased $0.1 million and other income decreased $0.1 million.
  • Noninterest expense of $29.5 million increased $2.6 million compared to $26.9 million for the fourth quarter 2023. Within this category, significant variances included the following:
    • Salaries and employee benefits of $12.9 million increased $1.3 million due to an increase in incentive based compensation expense of $1.0 million, annual merit-based increases of $0.3 million and a seasonal increase in payroll taxes of $0.3 million partially offset by an increase in deferred salary expense (a reduction in expense) of $0.3 million. In the fourth quarter 2023 the Company adjusted annual performance based incentive compensation.
    • Merger-related expenses of $0.7 million in the first quarter 2024 were related to professional fees including legal fees, third party consulting fees and other outside service provider expenses, with no comparable expense in the fourth quarter 2023.
    • Data processing expense of $6.8 million increased $0.6 million as the fourth quarter 2023 had lower expense primarily from processor rebates.
    • Advertising expense of $2.0 million increased $0.6 million related primarily to seasonal increases in OpenSkyTM card acquisition strategies.
    • Loan processing expense of $0.4 million increased $0.2 million in line with the growth in the loan portfolio.
    • Other operating expenses of $3.1 million decreased $0.9 million as operational losses were higher in the fourth quarter 2023.
  • Income tax expense of $2.1 million, or 23.9% of pre-tax income for the first quarter 2024, decreased $0.1 million from $2.2 million, or 19.5% of pre-tax income for the fourth quarter 2023, reflective of a decrease in pre-tax income of $2.6 million. The lower effective tax rate for the fourth quarter 2023 was primarily driven by the tax benefit recognized on the exercise of non-qualified stock options. There was no comparable activity in the first quarter 2024.

Performance and Efficiency Ratios – Annualized return on average assets ("ROAA") and annualized return on average equity ("ROAE") were 1.15% and 10.19%, respectively, for the three months ended March 31, 2024, compared to 1.63% and 14.44%, respectively, for the three months ended December 31, 2023.

  • Annualized ROAA and annualized ROAE, as adjusted(1) to exclude the impact of merger-related expenses, were 1.24% and 11.03%, respectively, for the three months ended March 31, 2024.
  • The efficiency ratio was 71.95% for the three months ended March 31, 2024, compared to 65.91% for the three months ended December 31, 2023. The efficiency ratio, as adjusted(1) to exclude the impact of merger-related expenses, was 70.22% for the three months ended March 31, 2024.

Balance Sheet – Total assets of $2.3 billion at March 31, 2024 increased $98.1 million, or 4.4%, from December 31, 2023.

  • Cash and cash equivalents of $85.2 million at March 31, 2024 increased $31.2 million, or 57.9%, from December 31, 2023, as total deposits increased $109.7 million, partially offset by an increase in total portfolio loans of $61.2 million and a decrease in other borrowed funds of $15.0 million.
  • Total portfolio loans of $2.0 billion at March 31, 2024 increased $61.2 million, representing 12.9% annualized growth from December 31, 2023. Growth in the loan portfolio included $46.7 million within the commercial real estate loan category. Total average loans increased $64.1 million quarter over quarter.
  • Total deposits of $2.0 billion at March 31, 2024 increased $109.7 million, or 5.8%, from December 31, 2023, while total average deposits increased $72.5 million quarter over quarter. The increase in deposits, when comparing March 31, 2024 to December 31, 2023, includes $48.4 million of noninterest-bearing deposits. Average portfolio loans-to-deposit ratio of 98.4% for the three months ended March 31, 2024 decreased from 98.8% for the three months ended December 31, 2023.
  • The investment securities portfolio continues to be classified as available for sale and had a fair market value of $202.3 million, or 8.7% of total assets, at March 31, 2024 down from $208.3 million at December 31, 2023. The amortized cost of the investment securities portfolio was $218.4 million, with an effective duration of 3.14 years. U.S. Treasury securities represented 64.2% of the overall investment portfolio at March 31, 2024. The accumulated other comprehensive loss on the investment securities portfolio increased $0.5 million during the quarter to $13.6 million as of March 31, 2024, which represents 5.3% of total stockholders' equity. The Company does not have a held to maturity ("HTM") investment securities portfolio.

Net Interest Margin - Net interest margin decreased to 6.24% for the three months ended March 31, 2024, compared to 6.40% for the three months ended December 31, 2023. Adjusted net interest margin(1) (excluding credit card loans) decreased to 3.85% compared to 3.92% for the three months ended December 31, 2023.

  • The average yield on interest earning assets of 8.63% increased 1 basis point compared to the fourth quarter 2023. The yield on portfolio loans, as adjusted(1) (excluding credit card loans) of 6.96% for the first quarter 2024 increased 7 basis points from 6.89% for the fourth quarter 2023. New portfolio loans (excluding credit card loans) originated in the first quarter 2024 totaled $122.7 million with a weighted average yield of 8.24% as compared to $91.1 million with a weighted average yield of 8.46% in the fourth quarter 2023.
  • The average rate on interest-bearing liabilities increased 22 basis points compared to the fourth quarter 2023. The average rate for time deposits increased 27 basis points to 4.99% and average balances increased $69.2 million, compared to the fourth quarter 2023. Further, the average rate on money market accounts increased 5 basis points to 4.21% and the average rate on interest-bearing demand accounts increased 6 basis points to 0.24%.

Deposits - Total deposits at March 31, 2024 increased by $109.7 million, or 5.8%, compared to December 31, 2023.

  • Noninterest-bearing deposits of $665.8 million increased $48.4 million, or 7.8%, compared to December 31, 2023, primarily due to increases in title account balances. Interest-bearing deposits of $1.3 billion increased $61.3 million, or 4.8%, compared to December 31, 2023 including an increase in money market accounts of $15.3 million and other time deposits of $33.7 million partially offset by a reduction in interest-bearing demand accounts of $5.3 million and savings of $0.7 million. Brokered time deposits totaled $160.6 million at March 31, 2024, an increase of $18.3 million from December 31, 2023.

Cost of Interest-Bearing Liabilities - The elevated interest rate environment, combined with an increase in time deposits, resulted in the average cost of interest-bearing liabilities increasing to 3.90% for the quarter ended March 31, 2024, compared to 3.68% for the fourth quarter 2023.

  • Average time deposits of $450.0 million increased $69.2 million, or 18.2%, compared to December 31, 2023.
  • Average noninterest-bearing deposits of $637.1 million increased $14.2 million, or 2.3%, compared to December 31, 2023, and represented 32.5% of total average deposits at March 31, 2024.
  • Average borrowed funds of $59.0 million increased $17.1 million, or 41.0%, compared to December 31, 2023.

Robust Capital Positions - As of March 31, 2024, the Company reported a common equity tier 1 capital ratio of 14.92%, compared to 15.43% at December 31, 2023, and an allowance for credit losses to total loans ratio of 1.49%, compared to an allowance for credit losses to total loans ratio of 1.50% at December 31, 2023. Shares repurchased and retired during the three months ended March 31, 2024, as part of the Company's stock repurchase program, totaled 67,869 shares at an average price of $20.62, for a total cost of $1.4 million including commissions. Tangible book value per common share(1) grew 2.0% to $18.68 at March 31, 2024 when compared to December 31, 2023. The Company did not have goodwill or other intangible assets during any of the periods presented and therefore, tangible book value per share(1) is equal to book value per share.

Liquidity - Total sources of available borrowings at March 31, 2024 totaled $743.9 million, including available collateralized lines of credit of $465.6 million, unsecured lines of credit with other banks of $76.0 million and unpledged investment securities available as collateral for potential additional borrowings of $202.3 million.

Commercial Bank

Continued Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $71.2 million, to $1.9 billion, gross, at March 31, 2024 compared to December 31, 2023.

Net Interest Income - Interest income of $32.5 million increased $1.5 million compared to $31.0 million for the fourth quarter 2024, driven primarily by loan growth. Interest expense of $13.2 million increased $1.3 million, driven by an increase in average balances and average cost of interest-bearing liabilities in the first quarter 2024.

Credit Metrics - Nonperforming assets decreased 10 basis points to 0.62% of total assets at March 31, 2024 compared to 0.72% at December 31, 2023 as a result of a decrease in nonaccrual loans at March 31, 2024 to $14.4 million compared to $16.0 million at December 31, 2023. The near complete resolution of a single nonperforming asset from $7.6 million to $0.6 million was offset by a $5.4 million increase in nonperforming assets comprised of $2.4 million of residential real estate secured loans and $3.0 million of non owner-occupied commercial real estate loans to various borrowers that the Company is proactively managing toward resolution.

At March 31, 2024 commercial real estate loans with office space exposure totaled $55.0 million, or 2.8% of total portfolio loans, with a weighted average loan-to-value ("LTV") of 48.1%. Included in the total are owner-occupied commercial real estate loans with office exposure totaling $43.2 million with a weighted average LTV of 47.0% and non owner-occupied commercial real estate loans with office exposure totaling $11.8 million with a weighted average LTV of 52.9%. At March 31, 2024 multi-family loans totaled $153.4 million, or 7.8% of total portfolio loans, with a weighted average LTV of 47.3%.

OpenSky

Revenues - Total revenue of $18.8 million decreased $0.2 million from the fourth quarter 2023. Interest income of $14.9 million decreased $0.1 million from the fourth quarter 2023. Average OpenSky loan balances, net of reserves and deferred fees of $110.5 million for the first quarter 2024, decreased $4.1 million, or 3.6%, compared to $114.6 million for the fourth quarter 2023. Noninterest income of $3.9 million decreased $0.1 million from the fourth quarter 2023.

Noninterest Expense - Total noninterest expense of $13.6 million increased $0.9 million from the fourth quarter 2023. Data processing expense was lower in the fourth quarter 2023, attributable primarily to processor rebates. During the first quarter 2024, the number of OpenSky credit card accounts increased by 1,636 to 526,950.

Loan and Deposit Balances - OpenSky loan balances, net of reserves, of $111.9 million at March 31, 2024 decreased by $11.4 million, or 9.3%, compared to $123.3 million at December 31, 2023. Corresponding deposit balances of $171.8 million at March 31, 2024 decreased $2.1 million, or 1.2%, compared to $173.9 million at December 31, 2023. Gross unsecured loan balances of $28.5 million at March 31, 2024 decreased $2.3 million, or 7.5%, compared to $30.8 million at December 31, 2023.

OpenSky Credit - Card delinquencies remained stable in the first quarter 2024 when compared to the fourth quarter 2023. The provision for credit losses decreased $0.6 million compared to the fourth quarter 2023 as card balances, net of reserves, decreased $11.4 million during the first quarter 2024 as compared to an increase of $0.8 million during the fourth quarter 2023.

       
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited      
              
 Quarter Ended 1Q24 vs 4Q23 1Q24 vs 1Q23
(in thousands except per share data)March 31,
2024
 December 31,
2023
 March 31,
2023
 $
Change
 %
Change
 $
Change
 %
Change
Earnings Summary             
Interest income$48,369  $46,969  $43,416  $1,400  3.0% $4,953  11.4%
Interest expense 13,361   12,080   8,929   1,281  10.6%  4,432  49.6%
Net interest income 35,008   34,889   34,487   119  0.3%  521  1.5%
Provision for credit losses 2,727   2,808   1,660   (81) (2.9)%  1,067  64.3%
Provision for (release of) credit losses on unfunded commitments 142   (106)  (19)  248  (234.0)%  161  (847.4)%
Noninterest income 5,972   5,936   6,026   36  0.6%  (54) (0.9)%
Noninterest expense 29,487   26,907   26,222   2,580  9.6%  3,265  12.5%
Income before income taxes 8,624   11,216   12,650   (2,592) (23.1)%  (4,026) (31.8)%
Income tax expense 2,062   2,186   2,915   (124) (5.7)%  (853) (29.3)%
Net income$6,562  $9,030  $9,735  $(2,468) (27.3)% $(3,173) (32.6)%
              
Pre-tax pre-provision net revenue ("PPNR") (1)$11,493  $13,918  $14,291  $(2,425) (17.4)% $(2,798) (19.6)%
PPNR, as adjusted(1)$12,205  $13,918  $14,291  $(1,713) (12.3)% $(2,086) (14.6)%
              
Common Share Data             
Earnings per share - Basic$0.47  $0.65  $0.69  $(0.18) (27.7)% $(0.22) (31.9)%
Earnings per share - Diluted$0.47  $0.65  $0.68  $(0.18) (27.7)% $(0.21) (30.9)%
Earnings per share - Diluted, as adjusted(1)$0.51  $0.65  $0.68  $(0.14) (21.5)% $(0.17) (25.0)%
Weighted average common shares - Basic 13,919   13,897   14,159         
Weighted average common shares - Diluted 13,919   13,989   14,272         
              
Return Ratios             
Return on average assets (annualized) 1.15%  1.63%  1.84%        
Return on average assets, as adjusted (annualized)(1) 1.24%  1.63%  1.84%        
Return on average equity (annualized) 10.19%  14.44%  16.98%        
Return on average equity, as adjusted (annualized)(1) 11.03%  14.44%  16.98%        

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

 

 

COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)    
            
 Quarter Ended   Quarter Ended
 March 31,  December 31, September 30, June 30,
(in thousands except per share data) 2024   2023  % Change  2023   2023   2023 
Balance Sheet Highlights           
Assets$2,324,238  $2,245,286  3.5% $2,226,176  $2,272,484  $2,227,866 
Investment securities available for sale 202,254   255,762  (20.9)%  208,329   206,055   208,464 
Mortgage loans held for sale 10,303   9,620  7.1%  7,481   4,843   10,146 
Portfolio loans receivable (2) 1,964,525   1,788,146  9.9%  1,903,288   1,862,679   1,838,131 
Allowance for credit losses 29,350   26,216  12.0%  28,610   28,279   27,495 
Deposits 2,005,695   1,944,374  3.2%  1,895,996   1,967,988   1,934,361 
FHLB borrowings 22,000   32,000  (31.3)%  22,000   22,000   22,000 
Other borrowed funds 12,062   12,062  %  27,062   12,062   12,062 
Total stockholders' equity 259,465   234,517  10.6%  254,860   242,878   237,435 
Tangible common equity (1) 259,465   234,517  10.6%  254,860   242,878   237,435 
            
Common shares outstanding 13,890   14,083  (1.4)%  13,923   13,893   13,981 
Book value per share$18.68  $16.65  12.2% $18.31  $17.48  $16.98 
Tangible book value per share (1)$18.68  $16.65  12.2% $18.31  $17.48  $16.98 
Dividends per share$0.08  $0.06  33.3% $0.08  $0.08  $0.06 

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

 

Operating Results - Comparison of Three Months Ended March 31, 2024 and 2023

For the three months ended March 31, 2024, net interest income of $35.0 million increased slightly from $34.5 million in the same period in 2023. The net interest margin decreased 41 basis points to 6.24% for the three months ended March 31, 2024 from the same period in 2023 as interest income on credit card decreased $1.4 million. Net interest margin, excluding credit card loans, increased to 3.85% for the three months ended March 31, 2024, compared to 3.81% for the same period in 2023 as yields on interest-bearing deposits and portfolio loans generally kept pace with the rising costs of deposits, including money market accounts and time deposits.

For the three months ended March 31, 2024, average interest earning assets increased $150.7 million, or 7.2%, to $2.3 billion as compared to the same period in 2023, and the average yield on interest earning assets increased 26 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $144.0 million, or 11.7%, and the average cost of interest-bearing liabilities increased to 3.90%, a 97 basis point increase from 2.93%.

For the three months ended March 31, 2024, the provision for credit losses was $2.7 million, an increase of $1.1 million from the same period in 2023, primarily driven by loan growth. Net charge-offs for the three months ended March 31, 2024 were $2.0 million, or 0.41% on an annualized basis of average portfolio loans, compared to $2.6 million, or 0.61% on an annualized basis of average loans for the same period in 2023. Of the $2.0 million in net charge-offs during the first quarter 2024, $1.2 million related to secured and partially secured cards in the credit card portfolio and $0.5 million related to unsecured cards.

For the three months ended March 31, 2024, noninterest income of $6.0 million decreased $0.1 million, or 0.9%, from the same period in 2023. Mortgage banking revenue of $1.5 million increased $0.3 million due to an increase in home loan sales. Credit card fees of $3.9 million decreased $0.3 million primarily related to lower interchange and other fee income.

Credit card loan balances, net of reserves, decreased by $1.0 million to $111.9 million as of March 31, 2024, from $112.9 million at March 31, 2023. The related deposit account balances decreased 7.1% to $171.8 million at March 31, 2024 when compared to $184.8 million at March 31, 2023, reflective of the reduction in the number of open secured card customer accounts year over year.

The efficiency ratio for the three months ended March 31, 2024 was 71.95% compared to 64.72% for the three months ended March 31, 2023.

For the three months ended March 31, 2024, noninterest expense of $29.5 million increased $3.3 million, or 12.5%, from $26.2 million for the same period in 2023. The change includes increases in advertising expense of $1.5 million, merger-related expenses of $0.7 million, other operating expense of $0.5 million, occupancy and equipment expenses of $0.4 million, salaries and employee benefits expenses of $0.4 million and data processing expense of $0.2 million, partially offset by a decrease professional fees of $0.4 million.

Financial Condition

Total assets at March 31, 2024 were $2.3 billion, an increase of $98.1 million, or 4.4%, from the balance at December 31, 2023 and an increase of $79.0 million, or 3.5%, from the balance at March 31, 2023.

Net portfolio loans, which exclude mortgage loans held for sale, totaled $2.0 billion at March 31, 2024, an increase of $61.2 million, up 3.2% or 12.9% annualized, compared to December 31, 2023, and an increase of $176.4 million, or 9.9%, compared to $1.8 billion at March 31, 2023.

The Company recorded a provision for credit losses of $2.7 million during the three months ended March 31, 2024, which increased the allowance for credit losses to $29.4 million, or 1.49% of total loans at March 31, 2024, representing an increase of $0.7 million over the balance at December 31, 2023.

Nonperforming assets, which were comprised solely of nonperforming loans as of March 31, 2024, were $14.4 million, or 0.62% of total assets, down from $16.0 million, or 0.72% of total assets at December 31, 2023, and down from $16.3 million, or 0.73% of total assets at March 31, 2023. The near complete resolution of a single nonperforming asset from $7.6 million to $0.6 million was offset by a $5.8 million increase in nonperforming assets comprised of $2.4 million of residential real estate secured loans and $3.0 million of non owner-occupied commercial real estate loans to various borrowers that the Company is proactively managing toward resolution.

Deposits were $2.0 billion at March 31, 2024, an increase of $109.7 million, or 5.8%, from the balance at December 31, 2023 and an increase of $61.3 million, or 3.2%, from the balance at March 31, 2023. Average deposits of $2.0 billion for the three months ended March 31, 2024 increased $72.5 million, or 3.8%, as compared to the three months ended December 31, 2023.

Rising interest rates have resulted in some customers moving balances from noninterest-bearing deposit accounts to interest-bearing deposit accounts. As a result of the migration, average noninterest-bearing deposit balances decreased $16.9 million to $637.1 million as of March 31, 2024, as compared to March 31, 2023.

Noninterest-bearing deposits represented 33.2% of total deposits at March 31, 2024 compared to 36.3% at March 31, 2023. Uninsured deposits were approximately $855.7 million as of March 31, 2024, representing 42.7% of the Company's deposit portfolio, compared to $789.4 million, or 41.6%, at December 31, 2023, and $888.9 million, or 45.7%, at March 31, 2023.

Stockholders’ equity increased to $259.5 million as of March 31, 2024, compared to $254.9 million at December 31, 2023 and $234.5 million at March 31, 2023. Shares repurchased and retired for the three months ended March 31, 2024 as part of the Company's stock repurchase program totaled 67,869 shares at an average price of $20.62, for a total cost of $1.4 million including commissions. As of March 31, 2024, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

 
Consolidated Statements of Income (Unaudited)
 Three Months Ended
(in thousands)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
Interest income         
Loans, including fees$45,991  $45,109  $45,385  $42,991  $41,275 
Investment securities available for sale 1,251   1,083   1,089   1,266   1,377 
Federal funds sold and other 1,127   777   1,267   823   764 
Total interest income 48,369   46,969   47,741   45,080   43,416 
          
Interest expense         
Deposits 12,833   11,759   10,703   9,409   7,754 
Borrowed funds 528   321   228   331   1,175 
Total interest expense 13,361   12,080   10,931   9,740   8,929 
          
Net interest income 35,008   34,889   36,810   35,340   34,487 
Provision for credit losses 2,727   2,808   2,280   2,862   1,660 
Provision for (release of) credit losses on unfunded commitments 142   (106)  24      (19)
Net interest income after provision for credit losses 32,139   32,187   34,506   32,478   32,846 
          
Noninterest income         
Service charges on deposits 207   240   250   245   229 
Credit card fees 3,881   3,970   4,387   4,706   4,210 
Mortgage banking revenue 1,453   1,166   1,243   1,332   1,155 
Other income 431   560   446   404   432 
Total noninterest income 5,972   5,936   6,326   6,687   6,026 
          
Noninterest expenses         
Salaries and employee benefits 12,907   11,638   12,419   12,143   12,554 
Occupancy and equipment 1,613   1,573   1,351   1,536   1,213 
Professional fees 1,947   1,930   2,358   2,608   2,374 
Data processing 6,761   6,128   6,469   6,559   6,530 
Advertising 2,032   1,433   1,565   2,646   517 
Loan processing 371   198   426   660   349 
Foreclosed real estate expenses, net 1      1      6 
Merger-related expenses 712             
Other operating 3,143   4,007   3,457   3,440   2,679 
Total noninterest expenses 29,487   26,907   28,046   29,592   26,222 
Income before income taxes 8,624   11,216   12,786   9,573   12,650 
Income tax expense 2,062   2,186   2,998   2,255   2,915 
Net income$6,562  $9,030  $9,788  $7,318  $9,735 


 
Consolidated Balance Sheets
 (unaudited) (audited) (unaudited) (unaudited) (unaudited)
(in thousands except share data)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
Assets         
Cash and due from banks$12,361  $14,513  $13,767  $18,619  $14,477 
Interest-bearing deposits at other financial institutions 72,787   39,044   130,428   100,343   125,448 
Federal funds sold 56   407   1,957   376   462 
Total cash and cash equivalents 85,204   53,964   146,152   119,338   140,387 
Investment securities available for sale 202,254   208,329   206,055   208,464   255,762 
Restricted investments 4,441   4,353   4,340   3,803   4,215 
Loans held for sale 10,303   7,481   4,843   10,146   9,620 
Portfolio loans receivable, net of deferred fees and costs 1,964,525   1,903,288   1,862,679   1,838,131   1,788,146 
Less allowance for credit losses (29,350)  (28,610)  (28,279)  (27,495)  (26,216)
Total portfolio loans held for investment, net 1,935,175   1,874,678   1,834,400   1,810,636   1,761,930 
Premises and equipment, net 4,500   5,069   5,297   5,494   5,367 
Accrued interest receivable 12,258   11,494   11,231   10,155   9,985 
Deferred tax asset 12,311   12,252   13,644   13,616   12,898 
Bank owned life insurance 38,062   37,711   37,315   37,041   36,781 
Accounts receivable 11,637   1,055   696   450   551 
Other assets 8,093   9,790   8,511   8,723   7,790 
Total assets$2,324,238  $2,226,176  $2,272,484  $2,227,866  $2,245,286 
          
Liabilities         
Deposits         
Noninterest-bearing$665,812  $617,373  $680,803  $693,129  $705,801 
Interest-bearing 1,339,883   1,278,623   1,287,185   1,241,232   1,238,573 
Total deposits 2,005,695   1,895,996   1,967,988   1,934,361   1,944,374 
Federal Home Loan Bank advances 22,000   22,000   22,000   22,000   32,000 
Other borrowed funds 12,062   27,062   12,062   12,062   12,062 
Accrued interest payable 6,009   5,583   5,204   3,029   1,977 
Other liabilities 19,007   20,675   22,352   18,979   20,356 
Total liabilities 2,064,773   1,971,316   2,029,606   1,990,431   2,010,769 
          
Stockholders' equity         
Common stock 139   139   139   140   141 
Additional paid-in capital 54,229   54,473   54,549   55,856   57,277 
Retained earnings 218,731   213,345   206,033   197,490   191,058 
Accumulated other comprehensive loss (13,634)  (13,097)  (17,843)  (16,051)  (13,959)
Total stockholders' equity 259,465   254,860   242,878   237,435   234,517 
Total liabilities and stockholders' equity$2,324,238  $2,226,176  $2,272,484  $2,227,866  $2,245,286 


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

      
 Three Months Ended
March 31, 2024
 Three Months Ended
December 31, 2023
 Three Months Ended
March 31, 2023
 Average
Outstanding
Balance
 Interest
Income/
Expense
 Average
Yield/
Rate(1)
 Average
Outstanding
Balance
 Interest
Income/
Expense
 Average
Yield/
Rate(1)
 Average
Outstanding
Balance
 Interest
Income/
Expense
 Average
Yield/
Rate(1)
 (in thousands)
Assets                 
Interest earning assets:                 
Interest-bearing deposits$84,531 $1,049 4.99% $65,336 $680 4.13% $62,566 $615 3.99%
Federal funds sold 56  1 7.18   1,574  21 5.29   2,054  18 3.62 
Investment securities available for sale 233,231  1,251 2.16   223,132  1,083 1.93   274,685  1,377 2.03 
Restricted investments 4,601  77 6.73   4,518  76 6.67   7,346  130 7.17 
Loans held for sale 4,872  83 6.85   4,601  83 7.16   4,695  77 6.65 
Portfolio loans receivable(2)(3) 1,927,372  45,908 9.58   1,863,298  45,026 9.59   1,752,638  41,199 9.53 
Total interest earning assets 2,254,663  48,369 8.63   2,162,459  46,969 8.62   2,103,984  43,416 8.37 
Noninterest earning assets 44,571      40,020      40,265    
Total assets$2,299,234     $2,202,479     $2,144,249    
                  
Liabilities and Stockholders’ Equity                 
Interest-bearing liabilities:                 
Interest-bearing demand accounts$183,217  110 0.24  $195,539  90 0.18  $186,184  70 0.15 
Savings 4,841  1 0.08   5,184  2 0.15   6,502  1 0.05 
Money market accounts 682,414  7,136 4.21   680,697  7,139 4.16   604,864  4,587 3.08 
Time deposits 449,963  5,586 4.99   380,731  4,528 4.72   319,449  3,096 3.93 
Borrowed funds 58,963  528 3.60   41,823  321 3.05   118,379  1,175 4.02 
Total interest-bearing liabilities 1,379,398  13,361 3.90   1,303,974  12,080 3.68   1,235,378  8,929 2.93 
Noninterest-bearing liabilities:                 
Noninterest-bearing liabilities 23,820      27,529      22,355    
Noninterest-bearing deposits 637,124      622,941      654,025    
Stockholders’ equity 258,892      248,035      232,491    
Total liabilities and stockholders’ equity$2,299,234     $2,202,479     $2,144,249    
                  
Net interest spread    4.73%     4.94%     5.44%
Net interest income  $35,008     $34,889     $34,487  
Net interest margin(4)    6.24%     6.40%     6.65%

_______________
(1)   Annualized.
(2)   Includes nonaccrual loans.
(3)   For the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, collectively, portfolio loans yield excluding credit card loans was 6.96%, 6.89% and 6.30%, respectively.
(4)   For the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, collectively, credit card loans accounted for 239, 248 and 284 basis points of the reported net interest margin, respectively.

 

The Company’s reportable segments represent business units with discrete financial information whose results are regularly reviewed by management. The four segments include Commercial Banking, Capital Bank Home Loans (the Company’s mortgage loan division), OpenSky (the Company’s credit card division) and the Corporate Office.

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

The following schedule presents financial information for the periods indicated. Total assets are presented as of March 31, 2024, December 31, 2023, and March 31, 2023.

             
Segments            
For the three months ended March 31, 2024
(in thousands) Commercial
Bank
 CBHL OpenSky Corporate(2) Eliminations Consolidated
Interest income $32,529  $83  $14,921 $899  $(63) $48,369 
Interest expense  13,154   41     229   (63)  13,361 
Net interest income  19,375   42   14,921  670      35,008 
Provision for credit losses  1,109      1,559  59      2,727 
Provision for credit losses on unfunded commitments  142              142 
Net interest income after provision  18,124   42   13,362  611      32,139 
Noninterest income  704   1,352   3,915  1      5,972 
Noninterest expense(1)  12,259   2,105   13,599  1,524      29,487 
Net income (loss) before taxes $6,569  $(711) $3,678 $(912) $  $8,624 
             
Total assets $2,160,051  $10,785  $105,318 $281,766  $(233,682) $2,324,238 
             
For the three months ended December 31, 2023
(in thousands) Commercial
Bank
 CBHL OpenSky Corporate(2) Eliminations Consolidated
Interest income $30,957  $83  $15,035 $964  $(70) $46,969 
Interest expense  11,884   31     235   (70)  12,080 
Net interest income  19,073   52   15,035  729      34,889 
Provision for (release of) credit losses  691      2,125  (8)     2,808 
Release of credit losses on unfunded commitments  (106)             (106)
Net interest income after provision  18,488   52   12,910  737      32,187 
Noninterest income  773   1,166   3,996  1      5,936 
Noninterest expense(1)  12,303   1,617   12,669  318      26,907 
Net income (loss) before taxes $6,958  $(399) $4,237 $420  $  $11,216 
             
Total assets $2,051,945  $8,589  $117,477 $277,565  $(229,400) $2,226,176 
             
For the three months ended March 31, 2023
(in thousands) Commercial
Bank
 CBHL OpenSky Corporate(2) Eliminations Consolidated
Interest income $26,300  $77  $16,130 $978  $(69) $43,416 
Interest expense  8,739   30     229   (69)  8,929 
Net interest income  17,561   47   16,130  749      34,487 
(Release of) provision for credit losses  (161)     1,821        1,660 
Release of credit losses on unfunded commitments  (19)             (19)
Net interest income after provision  17,741   47   14,309  749      32,846 
Noninterest income  489   1,327   4,210        6,026 
Noninterest expense(1)  11,759   2,336   11,738  389      26,222 
Net income (loss) before taxes $6,471  $(962) $6,781 $360  $  $12,650 
             
Total assets $2,074,634  $10,193  $106,761 $257,048  $(203,350) $2,245,286 

________________________
(1)  Noninterest expense includes $6.1 million, $5.7 million, and $5.9 million in data processing expense in OpenSky’s segment for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023, respectively.
(2)  The Corporate segment invests idle cash in revenue-producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.

 

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited
  Quarter Ended
(in thousands except per share data) March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
Earnings:          
Net income $6,562  $9,030  $9,788  $7,318  $9,735 
Earnings per common share, diluted  0.47   0.65   0.70   0.52   0.68 
Net interest margin  6.24%  6.40%  6.71%  6.63%  6.65%
Net interest margin, excluding credit card loans (1)  3.85%  3.92%  4.05%  4.06%  3.81%
Return on average assets(2)  1.15%  1.63%  1.75%  1.34%  1.84%
Return on average equity(2)  10.19%  14.44%  16.00%  12.30%  16.98%
Efficiency ratio  71.95%  65.91%  65.02%  70.41%  64.73%
           
Balance Sheet:          
Total portfolio loans receivable, net deferred fees $1,964,525  $1,902,643  $1,861,929  $1,837,041  $1,786,109 
Total deposits  2,005,695   1,895,996   1,967,988   1,934,361   1,944,374 
Total assets  2,324,238   2,226,176   2,272,484   2,227,866   2,245,286 
Total stockholders' equity  259,465   254,860   242,878   237,435   234,517 
Total average portfolio loans receivable, net deferred fees  1,926,778   1,862,599   1,846,866   1,800,800   1,750,539 
Total average deposits  1,957,558   1,885,092   1,918,467   1,881,380   1,771,024 
Portfolio loans-to-deposit ratio (period-end balances)  97.95%  100.35%  94.61%  94.97%  91.86%
Portfolio loans-to-deposit ratio (average balances)  98.43%  98.81%  96.27%  95.72%  98.84%
           
Asset Quality Ratios:          
Nonperforming assets to total assets  0.62%  0.72%  0.67%  0.71%  0.73%
Nonperforming loans to total loans  0.73%  0.84%  0.82%  0.85%  0.91%
Net charge-offs to average portfolio loans (2)  0.41%  0.53%  0.38%  0.35%  0.61%
Allowance for credit losses to total loans  1.49%  1.50%  1.52%  1.50%  1.47%
Allowance for credit losses to non-performing loans  204.37%  178.34%  185.61%  175.03%  160.91%
           
Bank Capital Ratios:          
Total risk based capital ratio  14.36%  14.81%  14.51%  14.08%  14.09%
Tier 1 risk based capital ratio  13.10%  13.56%  13.25%  12.82%  12.84%
Leverage ratio  10.29%  10.51%  10.04%  9.77%  9.78%
Common equity Tier 1 capital ratio  13.10%  13.56%  13.25%  12.82%  12.84%
Tangible common equity  9.66%  9.91%  9.08%  8.93%  8.79%
                     
Holding Company Capital Ratios:          
Total risk based capital ratio  16.83%  17.38%  17.11%  16.81%  16.75%
Tier 1 risk based capital ratio  15.03%  15.55%  15.27%  14.96%  14.90%
Leverage ratio  11.87%  12.14%  11.62%  11.50%  11.47%
Common equity Tier 1 capital ratio  14.92%  15.43%  15.27%  14.96%  14.90%
Tangible common equity  11.16%  11.45%  10.69%  10.66%  10.44%

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

 

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited (Continued)
  Quarter Ended
(in thousands except per share data) March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
Composition of Loans:          
Commercial real estate, non owner-occupied $377,224  $351,116  $350,637  $348,892  $348,047 
Commercial real estate, owner-occupied  328,540   307,911   305,802   311,972   299,966 
Residential real estate  577,112   573,104   558,147   555,133   545,899 
Construction real estate  292,316   290,108   280,905   258,400   251,494 
Commercial and industrial  254,577   239,208   237,549   234,714   223,323 
Lender finance  13,484   11,085          
Business equity lines of credit  14,768   14,117   14,155   13,277   12,205 
Credit card, net of reserve(3)  111,898   123,331   122,533   122,925   112,860 
Other consumer loans  738   950   948   1,187   1,578 
Portfolio loans receivable $1,970,657  $1,910,930  $1,870,676  $1,846,500  $1,795,372 
Deferred origination fees, net  (6,132)  (7,642)  (7,997)  (8,369)  (7,226)
Portfolio loans receivable, net $1,964,525  $1,903,288  $1,862,679  $1,838,131  $1,788,146 
           
Composition of Deposits:          
Noninterest-bearing $665,812  $617,373  $680,803  $693,129  $705,801 
Interest-bearing demand  193,963   199,308   229,035   243,095   219,685 
Savings  4,525   5,211   5,686   5,816   5,835 
Money markets  678,435   663,129   668,774   631,148   632,087 
Brokered time deposits  160,641   142,356   128,665   128,665   181,820 
Other time deposits  302,319   268,619   255,025   232,508   199,146 
Total deposits $2,005,695  $1,895,996  $1,967,988  $1,934,361  $1,944,374 
           
Capital Bank Home Loan Metrics:          
Origination of loans held for sale $52,080  $45,152  $50,023  $61,480  $44,448 
Mortgage loans sold  40,377   34,140   39,364   49,231   40,483 
Gain on sale of loans  1,238   1,015   1,011   1,262   1,223 
Purchase volume as a % of originations  97.83%  89.99%  92.29%  93.12%  90.72%
Gain on sale as a % of loans sold(4)  3.07%  2.97%  2.57%  2.56%  3.02%
Mortgage commissions $490  $465  $528  $621  $378 
           
OpenSky Portfolio Metrics:          
Open customer accounts  526,950   525,314   529,205   540,058   527,231 
Secured credit card loans, gross $85,663  $95,300  $98,138  $100,218  $89,078 
Unsecured credit card loans, gross  28,508   30,817   27,430   25,254   25,782 
Noninterest secured credit card deposits  171,771   173,857   181,185   186,566   184,809 

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


Appendix 

Reconciliation of Non-GAAP Measures

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

  
Earnings Metrics, as AdjustedQuarter Ended
(in thousands except per share data)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
          
Net Income$6,562  $9,030  $9,788  $7,318  $9,735 
Add: Merger-Related Expenses, net of tax 538             
Net Income, as Adjusted$7,100  $9,030  $9,788  $7,318  $9,735 
          
Weighted average common shares - Diluted 13,919   13,989   14,024   14,059   14,272 
Earnings per share - Diluted$0.47  $0.65  $0.70  $0.52  $0.68 
Earnings per share - Diluted, as Adjusted$0.51  $0.65  $0.70  $0.52  $0.68 
          
Average Assets$2,299,234  $2,202,479  $2,221,117  $2,184,351  $2,144,249 
Return on Average Assets(1) 1.15%  1.63%  1.75%  1.34%  1.84%
Return on Average Assets, as Adjusted(1) 1.24%  1.63%  1.75%  1.34%  1.84%
          
Average Equity$258,892  $248,035  $242,671  $238,684  $232,491 
Return on Average Equity(1) 10.19%  14.44%  16.00%  12.30%  16.98%
Return on Average Equity, as Adjusted(1) 11.03%  14.44%  16.00%  12.30%  16.98%
          
Net Interest Income$35,008  $34,889  $36,810  $35,340  $34,487 
Noninterest Income 5,972   5,936   6,326   6,687   6,026 
Total Revenue$40,980  $40,825  $43,136  $42,027  $40,513 
Noninterest Expense$29,487  $26,907  $28,046  $29,592  $26,222 
Efficiency Ratio(2) 71.95%  65.91%  65.02%  70.41%  64.72%
          
Noninterest Expense$29,487  $26,907  $28,046  $29,592  $26,222 
Less: Merger-Related Expenses 712             
Noninterest Expense, as Adjusted$28,775  $26,907  $28,046  $29,592  $26,222 
Efficiency Ratio, as Adjusted(2) 70.22%  65.91%  65.02%  70.41%  64.72%

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

 

Net Interest Margin, as AdjustedQuarter Ended
(in thousands)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
          
Net Interest Income$35,008  $34,889  $36,810  $35,340  $34,487 
Less: Credit Card Loan Income 14,457   14,677   15,792   14,818   15,809 
Net Interest Income, as Adjusted$20,551  $20,212  $21,018  $20,522  $18,678 
Average Interest Earning Assets 2,254,663   2,162,459   2,176,477   2,136,936   2,103,984 
Less: Average Credit Card Loans 110,483   114,551   116,814   110,574   115,850 
Total Average Interest Earning Assets, as Adjusted$2,144,180  $2,047,908  $2,059,663  $2,026,362  $1,988,134 
Net Interest Margin, as Adjusted 3.85%  3.92%  4.05%  4.06%  3.81%


Portfolio Loans Receivable Yield, as AdjustedQuarter Ended
(in thousands)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
          
Portfolio Loans Receivable Interest Income$45,908  $45,026  $45,274  $42,879  $41,199 
Less: Credit Card Loan Income 14,457   14,677   15,792   14,818   15,809 
Portfolio Loans Receivable Interest Income, as Adjusted$31,451  $30,349  $29,482  $28,061  $25,390 
Average Portfolio Loans Receivable 1,927,372   1,863,298   1,847,772   1,802,608   1,752,638 
Less: Average Credit Card Loans 110,483   114,551   116,814   110,574   115,850 
Total Average Portfolio Loans Receivable, as Adjusted$1,816,889  $1,748,747  $1,730,958  $1,692,034  $1,636,788 
Portfolio Loans Receivable Yield, as Adjusted 6.96%  6.89%  6.76%  6.65%  6.29%


Pre-tax, Pre-Provision Net Revenue ("PPNR")Quarter Ended
(in thousands)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
          
Net Income$6,562  $9,030  $9,788  $7,318  $9,735 
Add: Income Tax Expense 2,062   2,186   2,998   2,255   2,915 
Add: Provision for Credit Losses 2,727   2,808   2,280   2,862   1,660 
Add: Provision for (Release of) Credit Losses on Unfunded Commitments 142   (106)  24      (19)
Pre-tax, Pre-Provision Net Revenue ("PPNR")$11,493  $13,918  $15,090  $12,435  $14,291 


PPNR, as AdjustedQuarter Ended
(in thousands)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
          
Net Income$6,562  $9,030  $9,788  $7,318  $9,735 
Add: Income Tax Expense 2,062   2,186   2,998   2,255   2,915 
Add: Provision for Credit Losses 2,727   2,808   2,280   2,862   1,660 
Add: Provision for (Release of) Credit Losses on Unfunded Commitments 142   (106)  24      (19)
Add: Merger-Related Expenses 712             
PPNR, as Adjusted$12,205  $13,918  $15,090  $12,435  $14,291 


Allowance for Credit Losses to Total Portfolio LoansQuarter Ended
(in thousands)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30
2023
 March 31,
2023
          
Allowance for Credit Losses$29,350  $28,610  $28,279  $27,495  $26,216 
Total Loans$1,964,525  $1,903,288  $1,862,679  $1,838,131  $1,788,146 
Allowance for Credit Losses to Total Portfolio Loans 1.49%  1.50%  1.52%  1.50%  1.47%


Nonperforming Assets to Total AssetsQuarter Ended
(in thousands)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
          
Total Nonperforming Assets$14,361  $16,042  $15,236  $15,709  $16,293 
Total Assets 2,324,238   2,226,176   2,272,484   2,227,866   2,245,286 
Nonperforming Assets to Total Assets 0.62%  0.72%  0.67%  0.71%  0.73%


Nonperforming Loans to Total Portfolio LoansQuarter Ended
(in thousands)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
          
Total Nonperforming Loans$14,361  $16,042  $15,236  $15,709  $16,293 
Total Portfolio Loans$1,964,525  $1,903,288  $1,862,679  $1,838,131  $1,788,146 
Nonperforming Loans to Total Portfolio Loans 0.73%  0.84%  0.82%  0.85%  0.91%


Net Charge-offs to Average Portfolio LoansQuarter Ended
(in thousands)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
          
Total Net Charge-offs$1,988  $2,477  $1,780  $1,583  $2,633 
Total Average Portfolio Loans$1,927,372  $1,863,298  $1,847,772  $1,802,608  $1,752,638 
Net Charge-offs to Average Portfolio Loans, annualized 0.41%  0.53%  0.38%  0.35%  0.61%


Tangible Book Value per ShareQuarter Ended
(in thousands, except per share amounts)March 31,
2024
 December 31,
2023
 September 30,
2023
 June 30,
2023
 March 31,
2023
          
Total Stockholders' Equity$259,465  $254,860  $242,878  $237,435  $234,517 
Less: Preferred Equity              
Less: Intangible Assets              
Tangible Common Equity$259,465  $254,860  $242,878  $237,435  $234,517 
Period End Shares Outstanding 13,889,564   13,922,532   13,893,083   13,981,414   14,082,657 
Tangible Book Value per Share$18.68  $18.31  $17.48  $16.98  $16.65 


ABOUT CAPITAL BANCORP, INC.
Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in four locations in the greater Washington, D.C. and Baltimore, Maryland markets. Capital Bancorp had assets of approximately $2.3 billion at March 31, 2024 and its common stock is traded in the NASDAQ Global Market under the symbol “CBNK.” More information can be found at the Company's website www.CapitalBankMD.com under its investor relations page.

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

While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing wars in Ukraine and in the Middle East; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; 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: Jay Walker (301) 468-8848 x1223

MEDIA CONTACT: Ed Barry (240) 283-1912

WEB SITE: www.CapitalBankMD.com