Capital Bancorp 8K Diversified Business Model Drives Strong Performance | CBNK 27 Jan 25

Announces 4Q and Full Year 2024 Results;

Successful Close of the IFH Acquisition;

Robust Organic Loan and Deposit Growth;

Diversified Business Model Drives Strong Performance

Fourth Quarter 2024 Results

•Net Income of $7.5 million, or $0.45 per share, and return on average assets of 0.96%

◦Net Income of $15.5 million, or $0.92 per share, and return on average assets of 1.97% as adjusted to exclude the impact of merger-related expenses, initial Integrated Financial Holdings, Inc. ("IFH") Allowance for Credit Losses ("ACL") provision, and a non-recurring legacy IFH equity and debt investment write-down (non-GAAP)(1)

•Tangible Book Value Per Share(1) of $18.77, decreased 6.8%, or $1.36 as compared to $20.13 (3Q 2024), resulting from the acquisition of IFH and related purchase accounting impacts

•Return on average equity of 8.50%, and return on average tangible common equity(1) of 9.47%

◦Core return on average equity(1) of 17.68%, and core return on average tangible common equity(1) of 19.19%

•Net Interest Income increased $6.0 million, or 15.6% (not annualized), from 3Q 2024

•Net Interest Margin ("NIM") decreased to 5.87% as compared to 6.41% (3Q 2024)

◦Core NIM, as adjusted to exclude the impact of credit card loans (non-GAAP)(1) decreased to 4.05% as compared to 4.08% (3Q 2024)

◦Net purchase accounting accretion of $0.7 million for 4Q 2024 accounted for 9 basis points of the reported 5.87% NIM and 10 basis points of the reported 4.05% core NIM, respectively

•Fee Revenue (noninterest income) totaled $11.9 million, or 21.2% of total revenue for 4Q 2024

◦Core Fee Revenue of $14.5 million, or 24.7% of total core revenue, increased $7.9 million from 3Q 2024, excluding a non-recurring equity and debt investment write-down of $2.6 million (non-GAAP)(1), primarily due to the acquisition of IFH

•Gross Loan Growth in the quarter of $522.6 million includes $373.5 million from the acquisition of IFH, and $149.1 million from organic growth, or 28.2% annualized for 4Q 2024

◦Commercial and industrial loans of $554.6 million, or 21.0% of total gross loans at December 31, 2024 increased $282.7 million from September 30, 2024

•Total Deposit Growth in the quarter of $575.7 million includes $459.0 million from the acquisition of IFH, and $116.7 million from organic growth, or 21.2% annualized for 4Q 2024

◦Noninterest bearing deposits increased $92.8 million, or 51.4% annualized from 3Q 2024

•The ratio of allowance for credit losses to total loans equaled 1.85% at December 31, 2024 including 1.44% for the legacy Capital Bank portfolio, down 7 basis points from 3Q. The additional ACL coverage results from the initial $15.5 million impact from the acquisition of the IFH portfolio.

•Cash Dividend of $0.10 per share declared by the Board of Directors

Rockville, Maryland, January 27, 2025 (GLOBE NEWSWIRE) – Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $7.5 million, or $0.45 per diluted share, for the fourth quarter 2024, compared to net income of $8.7 million, or $0.62 per diluted share, for the third quarter 2024, and $9.0 million, or $0.65 per diluted share, for the fourth quarter 2023. On October 1, 2024, the Company successfully completed its previously announced merger with IFH. Net income for the fourth quarter 2024 would have been $15.5 million, or $0.92 per diluted share if adjusted to exclude the impact of merger-related expenses, the initial IFH ACL provision, and a non-recurring equity and debt investment write down (non-GAAP)(1), compared to $9.2 million, or $0.66 per diluted share, for the third quarter 2024.

The Company also declared a cash dividend on its common stock of $0.10 per share. The dividend is payable on February 26, 2025 to shareholders of record on February 10, 2025.

“We are pleased to have successfully closed our acquisition of Integrated Financial Holdings, and we are now focused on merger integration and executing on the opportunities from our complementary lines of business," said Ed Barry, CEO of the Company and the Bank. "We continue to benefit from our diversified business model which is driving growth across our platforms."

"The really strong performance of the commercial bank during the quarter was highlighted by record loan growth, solid deposit growth, and stable core net interest margin. I am particularly pleased by the growth of our commercial and industrial loans,” said Steven J. Schwartz, Chairman of the Company. "This outstanding organic growth is expected to continue to be a major contributing factor in our overall earnings growth in 2025 and beyond. The acquisition of IFH, while creating a lot of noise in the financial results of the 4th quarter, provides us with a new line of business – loan servicing, processing, and packaging – and a significant expansion of our government-guaranteed lending platform."

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

Acquisition of Integrated Financial Holdings, Inc.

On October 1, 2024, the Company successfully completed its previously announced merger with IFH. Pursuant to the terms of the Merger Agreement, each share of IFH’s common stock, par value $1.00 per share (“IFH Common Stock”) was converted into the right to receive (a) 1.115 shares of common stock of the Company, par value $0.01 per share (“Capital Common Stock”); and (b) $5.36 in cash per share of IFH Common Stock held immediately prior to the Effective Time, in addition to cash in lieu of fractional shares. In addition, each stock option granted by IFH to purchase shares of IFH Common Stock, whether vested or unvested, outstanding immediately prior to the Effective Time, was assumed by the Company and converted into an equivalent option to purchase Capital Common Stock, with the same terms and conditions as applied to the IFH stock option.

Total assets, including purchase accounting adjustments, of $559.4 million acquired in connection with the IFH acquisition included gross loans of $373.5 million, loans held for sale of $41.7 million and total deposits of $459.0 million at October 1, 2024.

During 2024, the Company incurred pre-tax merger-related expenses of $3.9 million, including expenses totaling $2.6 million for the fourth quarter 2024, generally consistent with modeled expectations.

The fourth quarter earnings were also impacted by pre-tax provision credit losses on acquired loans of $4.2 million ("Initial IFH ACL Provision") along with a non-recurring $2.6 million write-down of a legacy IFH equity and debt investment in a start-up. The net remaining value of the equity and debt investment is $0.2 million at December 31, 2024.

The following table provides a reconciliation of the Company's net income under GAAP to non-GAAP results excluding merger-related expenses, Initial IFH ACL Provision, and the non-recurring equity and debt write-down.


	Fourth Quarter 2024								Third Quarter 2024
(in thousands, except per share data)	Income Before Income Taxes		Income Tax Expense		Net Income		Diluted Earnings per Share		Income Before Income Taxes		Income Tax Expense(Benefit)		Net Income		Diluted Earnings per Share
GAAP Earnings	$	10,776	$	3,243	$	7,533	$	0.45	$	11,499	$	2,827	$	8,672	$	0.62
Add: Merger-Related Expenses	2,615		464		2,151				520		(37)		557
Add: Non-recurring Equity and Debt Investment Write-Down	2,620		—		2,620				—		—		—
Add: Initial IFH ACL Provision	4,194		1,025		3,169				—		—		—
Non-GAAP Earnings	$	20,205	$	4,732	$	15,473	$	0.92	$	12,019	$	2,790	$	9,229	$	0.66


	Year Ended December 31, 2024
(in thousands, except per share data)	Income Before Income Taxes		Income Tax Expense		Net Income		Diluted Earnings per Share
GAAP Earnings	$	41,832	$	10,860	$	30,972	$	2.11
Add: Merger-Related Expenses	3,930		622		3,308
Add: Non-recurring Equity and Debt Investment Write-Down	2,620		—		2,620
Add: Initial IFH ACL Provision	4,194		1,025		3,169
Non-GAAP Earnings	$	52,576	$	12,507	$	40,069	$	2.73

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

Fourth Quarter 2024 Highlights

Earnings Summary

Net income of $7.5 million, or $0.45 per diluted share, decreased $1.1 million compared to $8.7 million, or $0.62 per diluted share, for the third quarter 2024. Net income of $15.5 million, or $0.92 per diluted share, as adjusted to exclude the impact of merger-related expenses, Initial IFH ACL Provision and a $2.6 million non-recurring equity and debt investment write-down (non-GAAP)(1) for the fourth quarter 2024 compared to $9.2 million, or $0.66 per diluted share, for the third quarter 2024.

•Net interest income of $44.3 million increased $6.0 million, or 15.6%, compared to the third quarter 2024.

◦Interest income of $61.7 million increased $9.1 million, or 17.3%, over the third quarter 2024, primarily from $7.9 million in portfolio loan interest income, as growth in average balances increased $539.3 million. Interest income from interest-bearing deposits held at other financial institutions increased $0.3 million, as average balances increased $49.1 million to $140.2 million. Interest income included $0.7 million from net purchase accounting amortization.

◦Interest expense of $17.4 million increased $3.1 million, or 21.9% over the third quarter 2024 due to increases in time deposits and borrowed funds of $2.7 million and $0.6 million, respectively, offset by a decrease in customer money market deposits of $0.3 million. Average balances increased $367.8 million, $53.5 million and $65.3 million, respectively. Interest expense included $1.4 million from net purchase accounting accretion.

•The provision for credit losses was $7.8 million, an increase of $4.1 million from the third quarter 2024, which included the Initial IFH ACL Provision of $4.2 million, $2.4 million from organic commercial portfolio loan growth and $1.2 million from OpenSky provision in the quarter. Net charge-offs totaled $2.4 million, a $0.2 million decrease over the third quarter 2024, including $2.1 million from credit card related loans. At December 31, 2024, the allowance for credit losses to total loans ratio was 1.85%, up 34 basis points from the ratio at September 30, 2024 due to the initial purchase credit deteriorated ("PCD") credit mark and initial non-PCD ACL provision. Excluding IFH, legacy Capital Bank ACL coverage ratio was 1.44%, a decrease of 7 basis points from the third quarter 2024.

Earnings Summary (Continued)

•Noninterest income of $11.9 million increased $5.3 million as compared to the third quarter 2024 primarily due to contributions from the IFH acquisition. Government loan servicing revenue (Windsor) totaled $4.0 million, government lending revenue totaled $2.3 million and loan servicing rights totaled $1.0 million, offset by a non-recurring equity and debt write-down of $2.6 million related to an IFH investment. Other income increased $1.0 million including $0.9 million related to an investment in an SBIC, while credit card fees declined $0.3 million.

•Noninterest expense of $37.5 million increased $7.8 million as compared to the third quarter 2024, primarily from the IFH acquisition. Noninterest expense of $34.9 million, excluding merger-related expenses of $2.6 million, increased $5.7 million as compared to the third quarter 2024. Highlights include:

◦The fourth quarter 2024 includes $0.3 million of intangible amortization resulting from the transaction.

◦Salaries and employee benefits expenses of $16.5 million increased $3.2 million, primarily related to the acquisition of IFH.

◦Occupancy and equipment expenses of $3.0 million increased $1.2 million, primarily related to increased contract expense from the IFH acquisition of $0.5 million and software depreciation of $0.4 million.

◦Estimated total cost synergies resulting from the acquisition totaled $1.5 million in the fourth quarter 2024, generally consistent with modeled expectations.

•Income tax expense of $3.2 million, or 30.1% of pre-tax income for the fourth quarter 2024, increased $0.4 million from $2.8 million, or 24.6% of pre-tax income for the third quarter 2024. The elevated tax rate in the quarter resulted from non-deductibility of an equity and debt write-down along with some merger-related expenses. Excluding merger-related expenses and the non-recurring equity and debt write-down, the effective income tax rate for the fourth quarter 2024 would have been 22.6%.

Balance Sheet

Total assets of $3.2 billion at December 31, 2024 increased $646.1 million, or 25.2% (not annualized), from September 30, 2024. Total assets, including $559.4 million acquired with the IFH acquisition, net of purchase accounting, included gross loans of $373.5 million, loans held for sale of $41.7 million and total deposits of $459.0 million at October 1, 2024.

•Cash and cash equivalents of $205.3 million at December 31, 2024 increased $48.6 million from September 30, 2024.

•Total portfolio loans of $2.6 billion at December 31, 2024 increased $522.6 million, or 24.8% (not annualized) from September 30, 2024. Total average loans increased $539.3 million quarter over quarter.

◦Owner-occupied commercial real estate loans increased $88.6 million, or 25.2% (not annualized) from September 30, 2024.

◦The average portfolio loans-to-deposit ratio of 99.27% for the three months ended December 31, 2024 remained stable.

•Total deposits of $2.8 billion at December 31, 2024 increased $575.7 million, or 26.3% (not annualized), from September 30, 2024. The increase includes $190.6 million of customer time deposits, $92.8 million of noninterest-bearing deposits primarily related to growth in title company deposit balances, $130.2 million of growth in customer money market deposits and $180.0 million of growth in brokered time deposits, partially offset by a decrease in interest-bearing demand accounts of $27.6 million.

◦Insured and protected deposits were approximately $1.6 billion as of December 31, 2024, representing 57.1% of the Company's deposit portfolio.

◦Low and no interest bearing deposits of $1.1 billion, 38.5% of deposits, increased $74.9 million, or 7.6% (not annualized) from September 30, 2024. Average noninterest-bearing deposits of $729.9 million increased $49.2 million, or 7.2% (not annualized), and represented 27.9% of total average deposits at December 31, 2024.

•The investment securities portfolio continues to be classified as available-for-sale and had a fair market value of $223.6 million, or 7.0% of total assets, an effective duration of 3.0 years, with U.S. Treasury Securities representing 57% of the overall investment portfolio at December 31, 2024. The accumulated other comprehensive income (loss) on the investment securities portfolio increased $2.9 million during the quarter to ($11.5 million) as of December 31, 2024, which represents 3.2% of total stockholders' equity. The Company does not have a held-to-maturity investment securities portfolio.

•Liquidity – The Company maintains stable and reliable sources of available borrowings, generally consistent with prior quarter. Sources of available borrowings at December 31, 2024 totaled $803.0 million, including available collateralized lines of credit of $595.7 million, unsecured lines of credit with other banks of $76.0 million and unpledged investment securities available as collateral for potential additional borrowings of $131.4 million.

•Capital Positions – As of December 31, 2024, the Company reported a common equity tier 1 capital ratio of 13.74%, compared to 14.78% at September 30, 2024. At December 31, 2024, the Company and the Bank maintain regulatory capital ratios that exceed all capital adequacy requirements.

Financial Metrics

Net Interest Margin – Net interest margin decreased 54 basis points to 5.87% for the three months ended December 31, 2024, compared to prior quarter. Core net interest margin, as adjusted to exclude the impact of OpenSky™ credit card loans (non-GAAP)(1), decreased 3 basis points to 4.05% as compared to prior quarter. Net purchase accounting accretion for the fourth quarter 2024 was 9 basis points and 10 basis points for NIM and core NIM, respectively.

•The average yield on interest earning assets of 8.17% decreased 62 basis points compared to the prior quarter, including 40 basis points from inclusion of IFH commercial assets. The yield on portfolio loans, as adjusted to exclude the impact of OpenSky™ credit card loans (non-GAAP)(1), of 6.98% for the fourth quarter 2024, decreased 17 basis points, primarily as a consequence of reduced market interest rates.

•The total cost of deposits decreased 14 basis points to 2.50% for the fourth quarter 2024 as compared to the prior quarter. The total cost of interest-bearing deposits decreased 46 basis points to 3.46% for the fourth quarter 2024 as compared to the prior quarter.

Efficiency Ratios – The efficiency ratio was 66.7% for the three months ended December 31, 2024, compared to 66.1% for the three months ended September 30, 2024. The efficiency ratio was 59.3%, as adjusted to exclude the impact of merger-related expenses and a non-recurring equity and debt investment write-down (non-GAAP)(1), for the three months ended December 31, 2024 compared to 64.9% for the three months ended September 30, 2024.

Credit Metrics and Asset Quality – The ratio of allowance for credit losses to total loans equaled 1.85% at December 31, 2024, an increase of 34 basis points from September 20, 2024, which includes a 1.44% ACL coverage ratio for the legacy Capital Bank portfolio, down 7 basis points from 3Q. The additional ACL coverage results from the initial $15.5 million reserve on the $373.5 million IFH loan portfolio. Underlying credit performance and metrics were relatively stable and consistent with prior quarter when excluding the impact of the combination with IFH.

Nonperforming assets increased 34 basis points to 0.94% of total assets at December 31, 2024 as compared to September 30, 2024. Total nonaccrual loans at December 31, 2024 increased $14.8 million to $30.2 million compared to September 30, 2024. At December 31, 2024, special mention loans totaled $60.0 million, or 2.3% of total portfolio loans, as compared to $20.3 million, or 1.0% of total portfolio loans, at September 30, 2024. At December 31, 2024, substandard loans totaled $48.4 million, or 1.8% of total portfolio loans, as compared to $23.8 million, or 1.1% of total portfolio loans, at September 30, 2024.

Performance Ratios – Annualized return on average assets ("ROAA") and annualized return on average equity ("ROAE"), and ROATCE were 0.96%, 8.50%, and 9.47% respectively, for the three months ended December 31, 2024, compared to 1.42%, 12.59%, and 12.59% respectively, for the three months ended September 30, 2024.

•Annualized ROAA, annualized ROAE, and annualized ROATCE were 1.97%, 17.46%, and 19.19% respectively, as adjusted to exclude the impact of merger-related expenses, Initial IFH ACL Provision, and a non-recurring equity and debt investment write-down (non-GAAP)(1), for the three months ended December 31, 2024, compared to 1.51%, 13.40%, and 13.40% respectively, for the three months ended September 30, 2024.

Tangible Book Value – Book value per common share of $21.31 at December 31, 2024 increased $1.19 when compared to September 30, 2024. Tangible book value per common share(1) decreased $1.36, or 6.8%, to $18.77 at December 31, 2024 when compared to September 30, 2024. Tangible book value was impacted by the purchase accounting adjustments made in consequence of the IFH acquisition. The Company did not have goodwill or other intangible assets prior to the fourth quarter 2024. Therefore, tangible book value per share(1) was equal to book value per share for periods prior to the fourth quarter 2024.

Commercial Bank

Continued Portfolio Loan Growth – Gross portfolio loans, excluding OpenSky™ credit card loans, increased $522.9 million, to $2.5 billion, at December 31, 2024 compared to September 30, 2024.

The $522.9 million gross portfolio loan growth includes commercial real estate loans of $156.4 million, residential real estate loans of $64.9 million and commercial and industrial loans of $282.7 million. Historical gross portfolio loan balances are disclosed in the Composition of Loans table within the Historical Financial Highlights.

Net Interest Income – Interest income of $45.2 million increased $9.4 million from prior quarter, driven by loan growth and higher loan yields. Interest expense of $17.1 million increased $3.1 million, driven by an increase in average balances in the fourth quarter 2024.

Credit Metrics – Nonperforming assets, comprised solely of nonaccrual loans, increased 34 basis point to 0.94% of total assets at December 31, 2024 compared to September 30, 2024. Total nonaccrual loans at December 31, 2024 increased to $30.2 million compared to $15.5 million at September 30, 2024 due primarily to the acquisition of IFH.

Classified and Criticized Loans – At December 31, 2024, special mention loans totaled $60.0 million, or 2.3% of total portfolio loans, as compared to $20.3 million, or 1.0% of total portfolio loans, at September 30, 2024. At December 31, 2024, substandard loans totaled $48.4 million, or 1.8% of total portfolio loans, as compared to $23.8 million, or 1.1% of total portfolio loans, at September 30, 2024.

OpenSky™

Revenues – Total revenue of $19.2 million decreased $0.5 million from the prior quarter. Interest income of $15.5 million decreased $0.2 million from the prior quarter. Average OpenSky™ credit card loan balances, net of reserves and deferred fees of $121.0 million for the fourth quarter 2024, increased $1.5 million, or 1.3% (not annualized), compared to prior quarter. Noninterest income of $3.7 million decreased $0.4 million as compared to the prior quarter, primarily related to lower annual fee income.

Noninterest Expense – Total noninterest expense of $12.6 million decreased $0.7 million, primarily related to a reduction in quarterly advertising expense.

Loan and Deposit Balances – Loan balances, net of reserves, of $127.8 million at December 31, 2024 increased by $0.7 million, or 0.5%, compared to $127.1 million at September 30, 2024. Corresponding deposit balances of $166.4 million at December 31, 2024 decreased $4.4 million, or 2.6%, compared to $170.8 million at September 30, 2024. Gross unsecured loan balances of $42.4 million at December 31, 2024 increased $2.7 million, or 6.8%, compared to $39.7 million at September 30, 2024. During the fourth quarter 2024, the number of credit card accounts increased by 3,614 to 552,566 from September 30, 2024.

OpenSky™ Credit – Portfolio credit metrics continue to be generally consistent with modeled expectations during the fourth quarter 2024. The provision for credit losses of $1.2 million decreased $1.1 million when compared to the prior quarter.

Capital Bank Home Loans

Originations of loans held for sale totaled $90.0 million during the fourth quarter, with $77.4 million of mortgage loans sold resulting in a gain on sale of loans of $1.9 million, representing a 2.45% of gain on sale as a percentage of total loans sold.

Windsor Advantage

Windsor Advantage is a loan service provider that offers community banks and credit unions with a comprehensive outsourced U.S. Small Business Association (“SBA”) 7(a) and U.S. Department of Agriculture (“USDA”) lending platform. Windsor Advantage generates fee income for the Company in connection with its servicing, processing and packaging of such loans for its financial institution clients.

Fee Income – Gross government loan servicing revenue totaled $4.6 million, including $0.5 million of Capital Bank related servicing fees, during the fourth quarter 2024. Windsor's total servicing portfolio was $2.5 billion at December 31, 2024.


COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited

	Quarter Ended									4Q24 vs 3Q24				4Q24 vs 4Q23
(in thousands, except per share data)	December 31, 2024			September 30, 2024			December 31, 2023			$ Change		% Change		$ Change		% Change
Earnings Summary
Interest income	$	61,707		$	52,610		$	46,969		$	9,097	17.3	%	$	14,738	31.4	%
Interest expense	17,380			14,256			12,080			3,124		21.9	%	5,300		43.9	%
Net interest income	44,327			38,354			34,889			5,973		15.6	%	9,438		27.1	%
Provision for credit losses	7,828			3,748			2,808			4,080		108.9	%	5,020		178.8	%
Provision for (release of) credit losses on unfunded commitments	122			17			(106)			105		617.6	%	228		(215.1)	%
Noninterest income	11,913			6,635			5,936			5,278		79.5	%	5,977		100.7	%
Noninterest expense	37,514			29,725			26,907			7,789		26.2	%	10,607		39.4	%
Income before income taxes	10,776			11,499			11,216			(723)		(6.3)	%	(440)		(3.9)	%
Income tax expense	3,243			2,827			2,186			416		14.7	%	1,057		48.4	%
Net income	$	7,533		$	8,672		$	9,030		$	(1,139)	(13.1)	%	$	(1,497)	(16.6)	%

Pre-tax pre-provision net revenue ("PPNR") (1)	$	18,726		$	15,264		$	13,918		$	3,462	22.7	%	$	4,808	34.5	%
PPNR, as adjusted(1)	$	23,961		$	15,784		$	13,918		$	8,177	51.8	%	$	10,043	72.2	%

Common Share Data
Earnings per share - Basic	$	0.45		$	0.62		$	0.65		$	(0.17)	(27.4)	%	$	(0.20)	(30.8)	%
Earnings per share - Diluted	$	0.45		$	0.62		$	0.65		$	(0.17)	(27.4)	%	$	(0.20)	(30.8)	%
Earnings per share - Diluted, as adjusted(1)	$	0.92		$	0.66		$	0.65		$	0.26	39.4	%	$	0.27	41.5	%
Weighted average common shares - Basic	16,595			13,914			13,897
Weighted average common shares - Diluted	16,729			13,951			13,989

Return Ratios
Return on average assets (annualized)	0.96		%	1.42		%	1.63		%
Return on average assets, as adjusted (annualized)(1)	1.97		%	1.51		%	1.63		%

Return on average equity (annualized)	8.50		%	12.59		%	14.44		%
Return on average equity, as adjusted (annualized)(1)	17.46		%	13.40		%	14.44		%
Return on average tangible common equity (annualized)(1)	9.47		%	12.59		%	14.44		%
Core return on average equity, as adjusted (annualized)(1)	17.68		%	13.40		%	14.44		%
Core return on average tangible common equity, as adjusted (annualized)(1)	19.19		%	13.40		%	14.44		%

______________

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


COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)

	Year Ended
	December 31,
(in thousands, except per share data)	2024			2023			$ Change		% Change
Earnings Summary
Interest income	$	213,301		$	183,206		$	30,095	16.4	%
Interest expense	58,555			41,680			16,875		40.5	%
Net interest income	154,746			141,526			13,220		9.3	%
Provision for credit losses	17,720			9,610			8,110		84.4	%
Provision for (release of) credit losses on unfunded commitments	385			(101)			486		(481.2)	%
Noninterest income	31,410			24,975			6,435		25.8	%
Noninterest expense	126,219			110,767			15,452		14.0	%
Income before income taxes	41,832			46,225			(4,393)		(9.5)	%
Income tax expense	10,860			10,354			506		4.9	%
Net income	$	30,972		$	35,871		$	(4,899)	(13.7)	%

Pre-tax pre-provision net revenue ("PPNR") (1)	$	59,937		$	55,734		$	4,203	7.5	%
PPNR, as adjusted(1)	$	66,487		$	55,734		$	10,753	19.3	%

Common Share Data
Earnings per share - Basic	$	2.12		$	2.56		$	(0.44)	(17.2)	%
Earnings per share - Diluted	$	2.11		$	2.55		$	(0.44)	(17.3)	%
Earnings per share - Diluted, as adjusted(1)	$	2.73		$	2.55
Weighted average common shares - Basic	14,584			14,003
Weighted average common shares - Diluted	14,660			14,081

Return Ratios
Return on average assets (annualized)	1.21		%	1.64		%
Return on average assets, as adjusted (annualized)(1)	1.57		%	1.64		%

Return on average equity (annualized)	10.78		%	14.91		%
Return on average equity, as adjusted (annualized)(1)	13.94		%	14.91		%

______________

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


COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued)

	Quarter Ended						Quarter Ended
	December 31,						September 30,		June 30,		March 31,
(in thousands, except per share data)	2024		2023		% Change		2024		2024		2024
Balance Sheet Highlights
Assets	$	3,206,911	$	2,226,176	44.1	%	$	2,560,788	$	2,438,583	$	2,324,238
Investment securities available-for-sale	223,630		208,329		7.3	%	208,700		207,917		202,254
Mortgage loans held for sale	21,270		7,481		184.3	%	19,554		19,219		10,303
Portfolio loans receivable (2)	2,630,163		1,903,288		38.2	%	2,107,522		2,021,588		1,964,525
Allowance for credit losses	48,652		28,610		70.1	%	31,925		30,832		29,350
Deposits	2,761,939		1,895,996		45.7	%	2,186,224		2,100,428		2,005,695
FHLB borrowings	22,000		22,000		—	%	52,000		32,000		22,000
Other borrowed funds	12,062		27,062		(55.4)	%	12,062		12,062		12,062
Total stockholders' equity	355,139		254,860		39.3	%	280,111		267,854		259,465
Tangible common equity (1)	312,685		254,860		22.7	%	280,111		267,854		259,465

Common shares outstanding	16,662		13,923		19.7	%	13,918		13,910		13,890
Book value per share	$	21.31	$	18.31	16.4	%	$	20.13	$	19.26	$	18.68
Tangible book value per share (1)	$	18.77	$	18.31	2.5	%	$	20.13	$	19.26	$	18.68
Dividends per share	$	0.10	$	0.08	25.0	%	$	0.10	$	0.08	$	0.08

______________

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

(2) Loans are reflected net of deferred fees and costs.


Consolidated Statements of Income (Unaudited)
	Three Months Ended										Year Ended
(in thousands)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023		December 31, 2024		December 31, 2023
Interest income
Loans, including fees	$	58,602	$	50,047	$	48,275	$	45,991	$	45,109	$	202,915	$	174,760
Investment securities available-for-sale	1,539		1,343		1,308		1,251		1,083		5,441		4,815
Federal funds sold and other	1,566		1,220		1,032		1,127		777		4,945		3,631
Total interest income	61,707		52,610		50,615		48,369		46,969		213,301		183,206

Interest expense
Deposits	16,385		13,902		13,050		12,833		11,759		56,170		39,625
Borrowed funds	995		354		508		528		321		2,385		2,055
Total interest expense	17,380		14,256		13,558		13,361		12,080		58,555		41,680

Net interest income	44,327		38,354		37,057		35,008		34,889		154,746		141,526
Provision for credit losses	7,828		3,748		3,417		2,727		2,808		17,720		9,610
Provision for (release of) credit losses on unfunded commitments	122		17		104		142		(106)		385		(101)
Net interest income after provision for credit losses	36,377		34,589		33,536		32,139		32,187		136,641		132,017

Noninterest income
Service charges on deposits	241		235		200		207		240		883		964
Credit card fees	3,733		4,055		4,330		3,881		3,970		15,999		17,273
Mortgage banking revenue	1,821		1,882		1,990		1,453		1,166		7,146		4,896
Government lending revenue	2,301		—		—		—		—		2,301		—
Government loan servicing revenue	3,993		—		—		—		—		3,993		—
Loan servicing rights (government guaranteed)	1,013		—		—		—		—		1,013		—
Non-recurring equity and debt investment write-down	(2,620)		—		—		—		—		(2,620)		—


Other income	1,431		463		370		431		560		2,695		1,842
Total noninterest income	11,913		6,635		6,890		5,972		5,936		31,410		24,975

Noninterest expenses
Salaries and employee benefits	16,513		13,345		13,272		12,907		11,638		56,037		48,754
Occupancy and equipment	2,976		1,791		1,864		1,613		1,573		8,244		5,673
Professional fees	2,150		1,980		1,769		1,947		1,930		7,846		9,270
Data processing	7,210		6,930		6,788		6,761		6,128		27,689		25,686
Advertising	1,032		1,223		2,072		2,032		1,433		6,359		6,161
Loan processing	969		615		476		371		198		2,431		1,633
Foreclosed real estate expenses, net	—		1		—		1		—		2		7
Merger-related expenses	2,615		520		83		712		—		3,930		—
Operational losses	993		1,008		782		931		1,490		3,714		4,613
Other operating	3,056		2,312		2,387		2,212		2,517		9,967		8,970
Total noninterest expenses	37,514		29,725		29,493		29,487		26,907		126,219		110,767
Income before income taxes	10,776		11,499		10,933		8,624		11,216		41,832		46,225
Income tax expense	3,243		2,827		2,728		2,062		2,186		10,860		10,354
Net income	$	7,533	$	8,672	$	8,205	$	6,562	$	9,030	$	30,972	$	35,871


Consolidated Balance Sheets
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(audited)
(in thousands, except share data)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023
Assets
Cash and due from banks	$	25,433	$	23,462	$	19,294	$	12,361	$	14,513
Interest-bearing deposits at other financial institutions	179,841		133,180		117,160		72,787		39,044
Federal funds sold	58		58		57		56		407
Total cash and cash equivalents	205,332		156,700		136,511		85,204		53,964
Investment securities available-for-sale	223,630		208,700		207,917		202,254		208,329

Restricted investments	4,479		5,895		4,930		4,441		4,353
Loans held for sale	21,270		19,554		19,219		10,303		7,481

Portfolio loans receivable, net of deferred fees and costs	2,630,163		2,107,522		2,021,588		1,964,525		1,903,288
Less allowance for credit losses	(48,652)		(31,925)		(30,832)		(29,350)		(28,610)
Total portfolio loans held for investment, net	2,581,511		2,075,597		1,990,756		1,935,175		1,874,678
Premises and equipment, net	15,525		5,959		5,551		4,500		5,069
Accrued interest receivable	16,664		12,468		12,162		12,258		11,494
Goodwill	21,126		—		—		—		—
Intangible assets	14,072		—		—		—		—
Loan servicing assets	5,511		—		—		—		—
Deferred tax asset	16,670		10,748		12,150		12,311		12,252


Bank owned life insurance	43,956		38,779		38,414		38,062		37,711

Other assets	37,165		26,388		10,973		19,730		10,845
Total assets	$	3,206,911	$	2,560,788	$	2,438,583	$	2,324,238	$	2,226,176

Liabilities
Deposits
Noninterest-bearing	$	810,928	$	718,120	$	684,574	$	665,812	$	617,373
Interest-bearing	1,951,011		1,468,104		1,415,854		1,339,883		1,278,623
Total deposits	2,761,939		2,186,224		2,100,428		2,005,695		1,895,996


Federal Home Loan Bank advances	22,000		52,000		32,000		22,000		22,000
Other borrowed funds	12,062		12,062		12,062		12,062		27,062
Accrued interest payable	9,393		8,503		6,573		6,009		5,583
Other liabilities	46,378		21,888		19,666		19,007		20,675
Total liabilities	2,851,772		2,280,677		2,170,729		2,064,773		1,971,316

Stockholders' equity

Common stock	167		139		139		139		139
Additional paid-in capital	128,598		55,585		55,005		54,229		54,473
Retained earnings	237,843		232,995		225,824		218,731		213,345
Accumulated other comprehensive loss	(11,469)		(8,608)		(13,114)		(13,634)		(13,097)
Total stockholders' equity	355,139		280,111		267,854		259,465		254,860
Total liabilities and stockholders' equity	$	3,206,911	$	2,560,788	$	2,438,583	$	2,324,238	$	2,226,176

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 December 31, 2024						Three Months Ended September 30, 2024						Three Months Ended December 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	$	140,206	$	1,446	4.10	%	$	91,089	$	1,137	4.97	%	$	65,336	$	680	4.13	%
Federal funds sold	58		—		—		57		1		6.98		1,574		21		5.29
Investment securities available-for-sale	236,951		1,539		2.58		221,303		1,343		2.41		223,132		1,083		1.93
Restricted investments	7,292		120		6.55		4,911		82		6.64		4,518		76		6.67
Loans held for sale	25,614		193		3.00		9,967		161		6.43		4,601		83		7.16
Portfolio loans receivable(2)(3)	2,592,960		58,409		8.96		2,053,619		49,886		9.66		1,863,298		45,026		9.59
Total interest earning assets	3,003,081		61,707		8.17		2,380,946		52,610		8.79		2,162,459		46,969		8.62
Noninterest earning assets	117,026						56,924						40,020
Total assets	$	3,120,107					$	2,437,870					$	2,202,479

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand accounts	$	257,446	424		0.66		$	228,365	321		0.56		$	195,539	90		0.18
Savings	13,497		20		0.59		4,135		5		0.48		5,184		2		0.15
Money market accounts	763,526		7,131		3.72		698,239		7,442		4.24		680,697		7,139		4.16
Time deposits	847,618		8,810		4.13		479,824		6,134		5.09		380,731		4,528		4.72
Borrowed funds	97,116		995		4.08		43,655		354		3.23		41,823		321		3.05
Total interest-bearing liabilities	1,979,203		17,380		3.49		1,454,218		14,256		3.90		1,303,974		12,080		3.68
Noninterest-bearing liabilities:
Noninterest-bearing liabilities	58,460						28,834						27,529
Noninterest-bearing deposits	729,907						680,731						622,941
Stockholders’ equity	352,537						274,087						248,035
Total liabilities and stockholders’ equity	$	3,120,107					$	2,437,870					$	2,202,479

Net interest spread					4.68	%					4.89	%					4.94	%
Net interest income			$	44,327					$	38,354					$	34,889
Net interest margin(4)					5.87	%					6.41	%					6.40	%

_______________

(1)Annualized.

(2)Includes nonaccrual loans.

(3)For the three months ended December 31, 2024, September 30, 2024, and December 31, 2023, collectively, portfolio loans yield excluding credit card loans was 6.98%, 7.15% and 6.89%, respectively.

(4)For the three months ended December 31, 2024, September 30, 2024, and December 31, 2023, collectively, credit card loans accounted for 182, 233 and 248 basis points of the reported net interest margin, respectively.


	Year Ended December 31,
	2024						2023
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate(1)		Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate(1)
	(in thousands)
Assets
Interest earning assets:
Interest-bearing deposits	$	98,319	$	4,569	4.65	%	$	70,407	$	3,211	4.56	%
Federal funds sold	57		3		5.26		1,597		74		4.63
Investment securities available-for-sale	228,909		5,441		2.38		245,466		4,815		1.96
Restricted investments	5,563		373		6.71		5,016		346		6.90
Loans held for sale	12,121		569		4.69		5,755		382		6.64
Portfolio loans receivable(2)(3)	2,142,638		202,346		9.44		1,816,968		174,378		9.60
Total interest earning assets	2,487,607		213,301		8.57		2,145,209		183,206		8.54
Noninterest earning assets	66,442						43,090
Total assets	$	2,554,049					$	2,188,299

Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand accounts	$	221,437	$	1,003	0.45	%	$	201,194	$	298	0.15	%
Savings	6,732		27		0.40		5,768		8		0.14
Money market accounts	704,002		28,741		4.08		642,013		23,510		3.66
Time deposits	561,369		26,399		4.70		360,464		15,809		4.39
Borrowed funds	63,686		2,385		3.74		59,302		2,055		3.47
Total interest-bearing liabilities	1,557,226		58,555		3.76		1,268,741		41,680		3.29
Noninterest-bearing liabilities:
Noninterest-bearing liabilities	34,043						24,026
Noninterest-bearing deposits	675,360						655,013
Stockholders’ equity	287,420						240,519
Total liabilities and stockholders’ equity	$	2,554,049					$	2,188,299

Net interest spread					4.81	%					5.25	%
Net interest income			$	154,746					$	141,526
Net interest margin(4)					6.22	%					6.60	%

(1)Annualized.

(2)Includes nonaccrual loans.

(3)For the years ended December 31, 2024 and 2023, collectively, portfolio loans yield excluding credit card loans was 7.03% and 6.65%, respectively.

(4)For the years ended December 31, 2024 and 2023, collectively, credit card loans accounted for 222 and 264 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 five segments include Commercial Banking, Capital Bank Home Loans (the Company’s mortgage loan division), OpenSky™ (the Company’s credit card division), Windsor Advantage and the Corporate Office.

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

The following schedule presents financial information for the periods indicated. Total assets are presented as of December 31, 2024, September 30, 2024, and December 31, 2023.


Segments
For the three months ended December 31, 2024
(in thousands)	Commercial Bank		CBHL		OpenSky™		Windsor Advantage		Corporate(2)		Eliminations		Consolidated
Interest income	$	45,195	$	192	$	15,454	$	—	$	874	$	(8)	$	61,707
Interest expense	17,086		131		—		—		171		(8)		17,380
Net interest income	28,109		61		15,454		—		703		—		44,327
Provision for credit losses	6,651		—		1,177		—		—		—		7,828
Provision for credit losses on unfunded commitments	122		—		—		—		—		—		122
Net interest income after provision	21,336		61		14,277		—		703		—		36,377
Noninterest income (loss)	4,547		1,676		3,743		4,566		(2,619)		—		11,913
Noninterest expense(1)	16,539		2,377		12,595		2,670		3,333		—		37,514
Net income (loss) before taxes	$	9,344	$	(640)	$	5,425	$	1,896	$	(5,249)	$	—	$	10,776

Total assets	$	2,994,356	$	21,691	$	125,913	$	7,922	$	376,930	$	(319,901)	$	3,206,911

For the three months ended September 30, 2024
(in thousands)	Commercial Bank		CBHL		OpenSky™		Windsor Advantage		Corporate(2)		Eliminations		Consolidated
Interest income	$	35,805	$	161	$	15,625	$	—	$	1,049	$	(30)	$	52,610
Interest expense	13,984		108		—		—		194		(30)		14,256
Net interest income	21,821		53		15,625		—		855		—		38,354
Provision for credit losses	1,453		—		2,294		—		1		—		3,748
Provision for credit losses on unfunded commitments	17		—		—		—		—		—		17
Net interest income after provision	20,351		53		13,331		—		854		—		34,589
Noninterest income	726		1,811		4,096		—		2		—		6,635
Noninterest expense(1)	12,422		2,395		13,276		—		1,632		—		29,725
Net income (loss) before taxes	$	8,655	$	(531)	$	4,151	$	—	$	(776)	$	—	$	11,499

Total assets	$	2,358,555	$	19,831	$	121,587	$	—	$	300,325	$	(239,510)	$	2,560,788

For the three months ended December 31, 2023
(in thousands)	Commercial Bank		CBHL		OpenSky™		Windsor Advantage		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

________________________

(1) Noninterest expense includes $6.3 million, $6.2 million, and $5.7 million in data processing expense in OpenSky’s™ segment for the three months ended December 31, 2024, September 30, 2024, and December 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.


Segments
For the year ended December 31, 2024
(in thousands)	Commercial Bank		CBHL		OpenSky™		Windsor Advantage		Corporate(2)		Eliminations		Consolidated
Interest income	$	147,464	$	568	$	61,785	$	—	$	3,646	$	(162)	$	213,301
Interest expense	57,536		363		—		—		818		(162)		58,555
Net interest income	89,928		205		61,785		—		2,828		—		154,746
Provision for credit losses	10,331		—		7,329		—		60		—		17,720
Provision for credit losses on unfunded commitments	385		—		—		—		—		—		385
Net interest income after provision	79,212		205		54,456		—		2,768		—		136,641
Noninterest income (loss)	6,654		6,684		16,122		4,566		(2,616)		—		31,410
Noninterest expense(1)	53,429		9,377		53,245		2,670		7,498		—		126,219
Net income (loss) before taxes	$	32,437	$	(2,488)	$	17,333	$	1,896	$	(7,346)	$	—	$	41,832

Total assets	$	2,994,356	$	21,691	$	125,913	$	7,922	$	376,930	$	(319,901)	$	3,206,911

For the year ended December 31, 2023
(in thousands)	Commercial Bank		CBHL		OpenSky™		Windsor Advantage		Corporate(2)		Eliminations		Consolidated
Interest income	$	116,408	$	382	$	62,476	$	—	$	4,238	$	(298)	$	183,206
Interest expense	40,896		135		—		—		947		(298)		41,680
Net interest income	75,512		247		62,476		—		3,291		—		141,526
Provision for credit losses	1,540		—		7,948		—		122		—		9,610
Release of credit losses on unfunded commitments	(101)		—		—		—		—		—		(101)
Net interest income after provision	74,073		247		54,528		—		3,169		—		132,017
Noninterest income	2,737		4,909		17,325		—		4		—		24,975
Noninterest expense(1)	48,347		8,155		52,752		—		1,513		—		110,767
Net income (loss) before taxes	$	28,463	$	(2,999)	$	19,101	$	—	$	1,660	$	—	$	46,225

Total assets	$	2,051,945	$	8,589	$	117,477	$	—	$	277,565	$	(229,400)	$	2,226,176

(1) Noninterest expense includes $24.9 million and $23.7 million in data processing expense in OpenSky’s™ segment for the years ended December 31, 2024 and 2023, respectively.

(2) The Corporate segment invests idle cash in revenue-producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.


HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited
	Quarter Ended
(in thousands, except per share data)	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
Earnings:
Net income	$	7,533		$	8,672		$	8,205		$	6,562		$	9,030
Earnings per common share, diluted	0.45			0.62			0.59			0.47			0.65
Net interest margin	5.87		%	6.41		%	6.46		%	6.24		%	6.40		%
Net interest margin, excluding credit card loans (1)	4.05		%	4.08		%	4.00		%	3.85		%	3.92		%
Return on average assets(2)	0.96		%	1.42		%	1.40		%	1.15		%	1.63		%
Return on average equity(2)	8.50		%	12.59		%	12.53		%	10.19		%	14.44		%
Efficiency ratio	66.70		%	66.07		%	67.11		%	71.95		%	65.91		%

Balance Sheet:
Total portfolio loans receivable, net deferred fees	$	2,630,163		$	2,107,522		$	2,021,588		$	1,964,525		$	1,902,643
Total deposits	2,761,939			2,186,224			2,100,428			2,005,695			1,895,996
Total assets	3,206,911			2,560,788			2,438,583			2,324,238			2,226,176
Total stockholders' equity	355,139			280,111			267,854			259,465			254,860
Total average portfolio loans receivable, net deferred fees	2,592,960			2,053,619			1,992,630			1,927,372			1,863,298
Total average deposits	2,611,994			2,091,294			2,010,736			1,957,559			1,885,092
Portfolio loans-to-deposit ratio (period-end balances)	95.23		%	96.40		%	96.25		%	97.95		%	100.35		%
Portfolio loans-to-deposit ratio (average balances)	99.27		%	98.20		%	99.10		%	98.46		%	98.84		%

Asset Quality Ratios:
Nonperforming assets to total assets	0.94		%	0.60		%	0.58		%	0.62		%	0.72		%
Nonperforming loans to total loans	1.15		%	0.73		%	0.70		%	0.73		%	0.84		%

Net charge-offs to average portfolio loans (2)	0.37		%	0.51		%	0.39		%	0.41		%	0.53		%

Allowance for credit losses to total loans	1.85		%	1.51		%	1.53		%	1.49		%	1.50		%

Allowance for credit losses to non-performing loans	160.88		%	206.50		%	219.40		%	204.37		%	178.34		%

Bank Capital Ratios:
Total risk based capital ratio	12.82		%	13.76		%	14.51		%	14.36		%	14.81		%
Tier 1 risk based capital ratio	11.56		%	12.50		%	13.25		%	13.10		%	13.56		%
Leverage ratio	9.12		%	9.84		%	10.36		%	10.29		%	10.51		%
Common equity Tier 1 capital ratio	11.56		%	12.50		%	13.25		%	13.10		%	13.56		%
Tangible common equity	9.31		%	9.12		%	9.53		%	9.66		%	9.91		%

Holding Company Capital Ratios:
Total risk based capital ratio	15.48		%	16.65		%	16.98		%	16.83		%	17.38		%
Tier 1 risk based capital ratio	13.83		%	14.88		%	15.19		%	15.03		%	15.55		%
Leverage ratio	11.07		%	11.85		%	11.93		%	11.87		%	12.14		%
Common equity Tier 1 capital ratio	13.74		%	14.78		%	15.08		%	14.92		%	15.43		%
Tangible common equity	11.07		%	10.94		%	10.98		%	11.16		%	11.45		%

_______________

(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)	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023
Composition of Loans:

Commercial real estate, non owner-occupied	$	471,329		$	403,487		$	397,080		$	377,224		$	351,116
Commercial real estate, owner-occupied	440,026			351,462			319,370			330,840			307,911
Residential real estate	688,552			623,684			601,312			577,112			573,104
Construction real estate	321,252			301,909			294,489			290,016			290,108
Commercial and industrial	554,550			271,811			255,686			254,577			239,208
Lender finance	28,574			29,546			33,294			13,484			11,085
Business equity lines of credit	3,090			2,663			2,989			14,768			14,117
Credit card, net of reserve(3)	127,766			127,098			122,217			111,898			123,331
Other consumer loans	2,089			2,045			1,930			738			950
Portfolio loans receivable	$	2,637,228		$	2,113,705		$	2,028,367		$	1,970,657		$	1,910,930
Deferred origination fees, net	(7,065)			(6,183)			(6,779)			(6,132)			(7,642)
Portfolio loans receivable, net	$	2,630,163		$	2,107,522		$	2,021,588		$	1,964,525		$	1,903,288

Composition of Deposits:
Noninterest-bearing	$	810,928		$	718,120		$	684,574		$	665,812		$	617,373
Interest-bearing demand	238,881			266,493			266,070			193,963			199,308
Savings	13,488			3,763			4,270			4,525			5,211
Money markets	816,708			686,526			672,455			678,435			663,129
Customer time deposits	548,901			358,300			317,911			302,319			268,619
Brokered time deposits	333,033			153,022			155,148			160,641			142,356
Total deposits	$	2,761,939		$	2,186,224		$	2,100,428		$	2,005,695		$	1,895,996

Capital Bank Home Loan Metrics:
Origination of loans held for sale	$	89,998		$	74,690		$	82,363		$	52,080		$	45,152
Mortgage loans sold	77,399			67,296			66,417			40,377			34,140
Gain on sale of loans	1,897			1,644			1,732			1,238			1,015
Purchase volume as a % of originations	90.42		%	90.98		%	96.48		%	97.83		%	89.99		%
Gain on sale as a % of loans sold(4)	2.45		%	2.44		%	2.61		%	3.07		%	2.97		%
Mortgage commissions	$	620		$	598		$	582		$	490		$	465

OpenSky™ Portfolio Metrics:
Open customer accounts	552,566			548,952			537,734			526,950			525,314
Secured credit card loans, gross	$	87,226		$	89,641		$	90,961		$	85,663		$	95,300
Unsecured credit card loans, gross	42,430			39,730			33,560			28,508			30,817
Noninterest secured credit card deposits	166,355			170,750			173,499			171,771			173,857

_______________

(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.

Appendix

Reconciliation of Non-GAAP Measures


Earnings Metrics, as Adjusted	Quarter Ended
(in thousands, except per share data)	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023

Net Income	$	7,533		$	8,672		$	8,205		$	6,562		$	9,030
Add: Merger-Related Expenses, net of tax	2,151			557			62			538			—
Add: Non-recurring equity and debt investment write-down	2,620			—			—			—			—
Add: IFH ACL Provision, net of tax	3,169			—			—			—			—
Net Income, as Adjusted	$	15,473		$	9,229		$	8,267		$	7,100		$	9,030

Weighted Average Common Shares - Diluted	16,729			13,951			13,895			13,919			13,989
Earnings per Share - Diluted	$	0.45		$	0.62		$	0.59		$	0.47		$	0.65
Earnings per Share - Diluted, as Adjusted	$	0.92		$	0.66		$	0.59		$	0.51		$	0.65

Average Assets	$	3,120,107		$	2,437,870		$	2,353,868		$	2,299,234		$	2,202,479
Return on Average Assets(1)	0.96		%	1.42		%	1.40		%	1.15		%	1.63		%
Return on Average Assets, as Adjusted(1)	1.97		%	1.51		%	1.41		%	1.24		%	1.63		%

Average Equity	$	352,537		$	274,087		$	263,425		$	258,892		$	248,035
Return on Average Equity(1)	8.50		%	12.59		%	12.53		%	10.19		%	14.44		%
Return on Average Equity, as Adjusted(1)	17.46		%	13.40		%	12.62		%	11.03		%	14.44		%

Net Interest Income (a)	$	44,327		$	38,354		$	37,057		$	35,008		$	34,889
Noninterest Income	11,913			6,635			6,890			5,972			5,936
Total Revenue	$	56,240		$	44,989		$	43,947		$	40,980		$	40,825
Noninterest Expense	$	37,514		$	29,725		$	29,493		$	29,487		$	26,907
Efficiency Ratio(2)	66.70		%	66.07		%	67.11		%	71.95		%	65.91		%

Noninterest Income	$	11,913		$	6,635		$	6,890		$	5,972		$	5,936
Add: Non-recurring equity and debt investment write-down	2,620			—			—			—			—
Noninterest Income, as Adjusted (b)	$	14,533		$	6,635		$	6,890		$	5,972		$	5,936
Total Revenue, as Adjusted (a) + (b)	$	58,860		$	44,989		$	43,947		$	40,980		$	40,825

Noninterest Expense	$	37,514		$	29,725		$	29,493		$	29,487		$	26,907
Less: Merger-Related Expenses	2,615			520			83			712			—
Noninterest Expense, as Adjusted	$	34,899		$	29,205		$	29,410		$	28,775		$	26,907
Efficiency Ratio, as Adjusted(2)	59.29		%	64.92		%	66.92		%	70.22		%	65.91		%

_______________

(1)Annualized.

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

Appendix

Reconciliation of Non-GAAP Measures


Earnings Metrics, as Adjusted	Year Ended
(in thousands, except per share data)	December 31, 2024			December 31, 2023

Net Income	$	30,972		$	35,871
Add: Merger-Related Expenses, net of tax	3,308			—
Add: Non-recurring equity and debt investment write-down	2,620			—
Add: IFH ACL Provision, net of tax	3,169			—
Net Income, as Adjusted	$	40,069		$	35,871

Weighted average common shares - Diluted	14,660			14,081
Earnings per share - Diluted	$	2.11		$	2.55
Earnings per share - Diluted, as Adjusted	$	2.73		$	2.55

Average Assets	$	2,554,049		$	2,188,299
Return on Average Assets(1)	1.21		%	1.64		%
Return on Average Assets, as Adjusted(1)	1.57		%	1.64		%

Average Equity	$	287,420		$	240,519
Return on Average Equity(1)	10.78		%	14.91		%
Return on Average Equity, as Adjusted(1)	13.94		%	14.91		%

Net Interest Income (a)	$	154,746		$	141,526
Noninterest Income	31,410			24,975
Total Revenue	$	186,156		$	166,501
Noninterest Expense	$	126,219		$	110,767
Efficiency Ratio(2)	67.80		%	66.53		%

Noninterest Income	$	31,410		$	24,975
Add: Non-recurring equity and debt investment write-down	2,620			—
Noninterest Income, as Adjusted (b)	$	34,030		$	24,975
Total Revenue, as Adjusted (a) + (b)	$	188,776		$	166,501

Noninterest Expense	$	126,219		$	110,767
Less: Merger-Related Expenses	3,930			—
Noninterest Expense, as Adjusted	$	122,289		$	110,767
Efficiency Ratio, as Adjusted(2)	64.78		%	66.53		%

_______________

(1)Annualized.

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

Appendix

Reconciliation of Non-GAAP Measures


Net Interest Margin, as Adjusted	Quarter Ended
(in thousands)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023

Net Interest Income	$	44,327	$	38,354	$	37,057	$	35,008	$	34,889
Less: Credit Card Loan Income	15,022		15,137		15,205		14,457		14,677
Net Interest Income, as Adjusted	$	29,305	$	23,217	$	21,852	$	20,551	$	20,212
Average Interest Earning Assets	3,003,081		2,380,946		2,307,070		2,254,663		2,162,459
Less: Average Credit Card Loans	120,993		119,458		111,288		110,483		114,551
Total Average Interest Earning Assets, as Adjusted	$	2,882,088	$	2,261,488	$	2,195,782	$	2,144,180	$	2,047,908
Net Interest Margin, as Adjusted	4.05%		4.08%		4.00%		3.85%		3.92%



Net Interest Margin, as Adjusted	Year Ended
(in thousands)	December 31, 2024		December 31, 2023

Net Interest Income	$	154,746	$	141,526
Less: Credit Card Loan Income	59,821		61,096
Net Interest Income, as Adjusted	$	94,925	$	80,430
Average Interest Earning Assets	2,487,607		2,145,209
Less: Average Credit Card Loans	115,581		114,450
Total Average Interest Earning Assets, as Adjusted	$	2,372,026	$	2,030,759
Net Interest Margin, as Adjusted	4.00%		3.96%


Portfolio Loans Receivable Yield, as Adjusted	Quarter Ended
(in thousands)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023

Portfolio Loans Receivable Interest Income	$	58,409	$	49,886	$	48,143	$	45,908	$	45,026
Less: Credit Card Loan Income	15,022		15,137		15,205		14,457		14,677
Portfolio Loans Receivable Interest Income, as Adjusted	$	43,387	$	34,749	$	32,938	$	31,451	$	30,349
Average Portfolio Loans Receivable	2,592,960		2,053,619		1,992,630		1,927,372		1,863,298
Less: Average Credit Card Loans	120,993		119,458		111,288		110,483		114,551
Total Average Portfolio Loans Receivable, as Adjusted	$	2,471,967	$	1,934,161	$	1,881,342	$	1,816,889	$	1,748,747
Portfolio Loans Receivable Yield, as Adjusted	6.98%		7.15%		7.04%		6.96%		6.89%



Portfolio Loans Receivable Yield, as Adjusted	Year Ended
(in thousands)	December 31, 2024		December 31, 2023

Portfolio Loans Receivable Interest Income	$	202,346	$	174,378
Less: Credit Card Loan Income	59,821		61,096
Portfolio Loans Receivable Interest Income, as Adjusted	$	142,525	$	113,282
Average Portfolio Loans Receivable	2,142,638		1,816,968
Less: Average Credit Card Loans	115,581		114,450
Total Average Portfolio Loans Receivable, as Adjusted	$	2,027,057	$	1,702,518
Portfolio Loans Receivable Yield, as Adjusted	7.03%		6.65%

Appendix

Reconciliation of Non-GAAP Measures


Pre-tax, Pre-Provision Net Revenue ("PPNR")	Quarter Ended
(in thousands)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023

Net Income	$	7,533	$	8,672	$	8,205	$	6,562	$	9,030
Add: Income Tax Expense	3,243		2,827		2,728		2,062		2,186
Add: Provision for Credit Losses	7,828		3,748		3,417		2,727		2,808
Add: Provision for (Release of) Credit Losses on Unfunded Commitments	122		17		104		142		(106)
Pre-tax, Pre-Provision Net Revenue ("PPNR")	$	18,726	$	15,264	$	14,454	$	11,493	$	13,918



Pre-tax, Pre-Provision Net Revenue ("PPNR")	Year Ended
(in thousands)	December 31, 2024		December 31, 2023

Net Income	$	30,972	$	35,871
Add: Income Tax Expense	10,860		10,354
Add: Provision for Credit Losses	17,720		9,610
Add: Provision for (Release of) Credit Losses on Unfunded Commitments	385		(101)
Pre-tax, Pre-Provision Net Revenue ("PPNR")	$	59,937	$	55,734


PPNR, as Adjusted	Quarter Ended
(in thousands)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023

Net Income	$	7,533	$	8,672	$	8,205	$	6,562	$	9,030
Add: Income Tax Expense	3,243		2,827		2,728		2,062		2,186
Add: Provision for Credit Losses	7,828		3,748		3,417		2,727		2,808
Add: Provision for (Release of) Credit Losses on Unfunded Commitments	122		17		104		142		(106)
Add: Merger-Related Expenses	2,615		520		83		712		—
Add: Non-recurring equity and debt investment write-down	2,620		—		—		—		—
PPNR, as Adjusted	$	23,961	$	15,784	$	14,537	$	12,205	$	13,918



PPNR, as Adjusted	Year Ended
(in thousands)	December 31, 2024		December 31, 2023

Net Income	$	30,972	$	35,871
Add: Income Tax Expense	10,860		10,354
Add: Provision for Credit Losses	17,720		9,610
Add: Provision for (Release of) Credit Losses on Unfunded Commitments	385		(101)
Add: Merger-Related Expenses	3,930		—
Add: Non-recurring equity and debt investment write-down	2,620		—
PPNR, as Adjusted	$	66,487	$	55,734

Appendix

Reconciliation of Non-GAAP Measures


Allowance for Credit Losses to Total Portfolio Loans	Quarter Ended
(in thousands)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023

Allowance for Credit Losses	$	48,652	$	31,925	$	30,832	$	29,350	$	28,610
Total Portfolio Loans	2,630,163		2,107,522		2,021,588		1,964,525		1,903,288
Allowance for Credit Losses to Total Portfolio Loans	1.85%		1.51%		1.53%		1.49%		1.50%


Nonperforming Assets to Total Assets	Quarter Ended
(in thousands)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023

Total Nonperforming Assets	$	30,241	$	15,460	$	14,053	$	14,361	$	16,042
Total Assets	3,206,911		2,560,788		2,438,583		2,324,238		2,226,176
Nonperforming Assets to Total Assets	0.94%		0.60%		0.58%		0.62%		0.72%


Nonperforming Loans to Total Portfolio Loans	Quarter Ended
(in thousands)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023

Total Nonperforming Loans	$	30,241	$	15,460	$	14,053	$	14,361	$	16,042
Total Portfolio Loans	2,630,163		2,107,522		2,021,588		1,964,525		1,903,288
Nonperforming Loans to Total Portfolio Loans	1.15%		0.73%		0.70%		0.73%		0.84%


Net Charge-Offs to Average Portfolio Loans	Quarter Ended
(in thousands)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023

Total Net Charge-Offs	$	2,427	$	2,655	$	1,935	$	1,987	$	2,477
Total Average Portfolio Loans	2,592,960		2,053,619		1,992,630		1,927,372		1,863,298
Net Charge-Offs to Average Portfolio Loans, Annualized	0.37%		0.51%		0.39%		0.41%		0.53%


Net Charge-offs to Average Portfolio Loans	Year Ended
(in thousands)	December 31, 2024		December 31, 2023

Total Net Charge-Offs	$	9,004	$	8,473
Total Average Portfolio Loans	2,142,638		1,816,968
Net Charge-Offs to Average Portfolio Loans, Annualized	0.42%		0.47%


Tangible Book Value per Share	Quarter Ended
(in thousands, except share and per share data)	December 31, 2024		September 30, 2024		June 30, 2024		March 31, 2024		December 31, 2023

Total Stockholders' Equity	$	355,139	$	280,111	$	267,854	$	259,465	$	254,860
Less: Preferred Equity	—		—		—		—		—
Less: Intangible Assets	42,454		—		—		—		—
Tangible Common Equity	$	312,685	$	280,111	$	267,854	$	259,465	$	254,860
Period End Shares Outstanding	16,662,405		13,917,891		13,910,467		13,889,563		13,922,532
Tangible Book Value per Share	$	18.77	$	20.13	$	19.26	$	18.68	$	18.31

Appendix

Reconciliation of Non-GAAP Measures


Return on Average Tangible Common Equity	Quarter Ended
(in thousands)	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023

Net Income	$	7,533		$	8,672		$	8,205		$	6,562		$	9,030
Add: Intangible Amortization, Net of Tax	198			—			—			—			—
Net Tangible Income	$	7,731		$	8,672		$	8,205		$	6,562		$	9,030
Average Equity	352,537			274,087			263,425			258,892			248,035
Less: Average Intangible Assets	27,653			—			—			—			—
Net Average Tangible Common Equity	$	324,884		$	274,087		$	263,425		$	258,892		$	248,035
Return on Average Equity	8.50		%	12.59		%	12.53		%	10.19		%	14.44		%
Return on Average Tangible Common Equity	9.47		%	12.59		%	12.53		%	10.19		%	14.44		%


Core Return on Average Tangible Common Equity	Quarter Ended
(in thousands)	December 31, 2024			September 30, 2024			June 30, 2024			March 31, 2024			December 31, 2023

Net Income, as Adjusted	$	15,473		$	9,229		$	8,267		$	7,100		$	9,030
Add: Intangible Amortization, Net of Tax	198			—			—			—			—
Net Tangible Income, as Adjusted	$	15,671		$	9,229		$	8,267		$	7,100		$	9,030
Core Return on Average Equity, as Adjusted	17.68		%	13.40		%	12.62		%	11.03		%	14.44		%
Core Return on Average Tangible Common Equity, as Adjusted	19.19		%	13.40		%	12.62		%	11.03		%	14.44		%

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 six locations in the greater Washington, D.C. and Baltimore, Maryland markets, one bank branch in Fort Lauderdale, Florida and one bank branch in Chicago, Illinois. Capital Bancorp had assets of approximately $3.2 billion at December 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; the expected cost savings, synergies and other financial benefits from the acquisition of IFH or any other acquisition the Company has made or may make might not be realized within the expected time frames or at all; the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; and other factors that may affect our future results.

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

FINANCIAL CONTACT: Dominic Canuso (301) 468-8848 x1403

MEDIA CONTACT: Ed Barry (240) 283-1912

WEB SITE: www.CapitalBankMD.com

Capital Bancorp (CBNK) 8-KDiversified Business Model Drives Strong Performance