Section 1:8-K (CURRENT REPORT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 25, 2018
CAPITAL BANCORP, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 001-38671 | 52-2083046 |
| (State or other jurisdiction of incorporation or organization) | (Commission file number) | (IRS Employer Identification No.) |
2275 Research Boulevard, Suite 600, Rockville, Maryland 20850
(Address of principal executive offices) (Zip Code)
(301) 468-8848
Registrant’s telephone number, including area code
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
| £ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| £ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| £ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| £ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
ITEM 2.02. Results of Operations and Financial Condition
On October 25, 2018, Capital Bancorp, Inc. (the “Company”) issued a press release setting forth the Company’s third quarter 2018 unaudited financial results. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.
The information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of the Company under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.
ITEM 9.01. Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description |
| 99.1 | Press Release, dated October 25, 2018, with respect to the Registrant's unaudited financial results for the third quarter and year-to-date ended September 30, 2018. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CAPITAL BANCORP, INC. | |
By: /s/ Alan W. Jackson | |
| Name: Alan W. Jackson | |
| Title: Chief Financial Officer | |
October 25, 2018
EXHIBIT INDEX
| Exhibit Number | Description | |
| 99.1 | Earnings Press Release for the period ended September 30, 2018. | |
Section 2: EX-99.1 (EARNINGS PRESS RELEASE FOR THE PERIOD ENDED SEPTEMBER 30, 2018)
Capital Bancorp Reports Results for Third Quarter of 2018
Rockville, Maryland, October 25, 2018 – Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $3.1 million, or $0.26 per diluted share, for the third quarter of 2018. In comparison, net income was $2.9 million, or $0.26 per diluted share, for the third quarter of 2017. For the nine months ended September 30, 2018, net income grew 14.5% year over year to $9.3 million, or $0.77 per diluted share. In comparison, net income for the nine months ended September 30, 2017 was $7.7 million, or $0.67 per diluted share. Return on average assets was 1.19% and return on average equity was 13.69% for the third quarter of 2018. For the comparable period in 2017, the return on average assets was 1.17% and the return on average equity was 14.68%.
2018 Third Quarter Highlights
| • | During the third quarter of 2018, the Company completed a successful initial public offering of common stock raising approximately $17.5 million of primary capital to support growth. |
| • | On August 15, 2018, the Company distributed a four-for-one stock split to stockholders of record as of the close of business on August 1, 2018. |
| • | Net income increased 7.2% to $3.1 million for third quarter of 2018 compared to $2.9 million for the third quarter of 2017. |
| • | Book value per share increased 14.6% to $8.09 at September 30, 2018 from $7.06 at September 30, 2017, driven by earnings growth of the Company and the impact of the initial public offering of common stock. |
| • | Total loans increased 9.8% to $955.4 million at September 30, 2018, compared to $869.9 million at September 30, 2017. |
| • | Total deposits increased 3.9% to $911.1 million at September 30, 2018, compared to $876.5 million at September 30, 2017. |
| • | For the nine months ended September 30, 2018, average noninterest bearing deposits increased 27.7% to $215.1 million, compared to $168.4 million for the nine months ended September 30, 2017. |
| • | Net interest margin improved to 5.56% for the three months ended September 30, 2018, compared to 5.20% for the three months ended September 30, 2017. |
| • | Asset quality remained high, as non-performing assets as a percentage of total assets totaled 0.42% at September 30, 2018. Net chargeoffs to average loans annualized for the quarter were 0.11%. |
| • | OpenSky®, the Bank's secured, digitally driven nationwide credit card platform, launched a mobile servicing application for credit card customers, consistent with the strategy to create lower cost to serve channels. OpenSky® also launched a redesigned customer application process and user experience design. |
| • | Church Street Mortgage, the Bank's residential mortgage banking arm, remained profitable for the quarter even as volumes fell from the previous quarter. The volume decrease was offset by increases in the gain on sale margin due to an increased mix of purchase customers. |
1
“I am incredibly proud of the talent and unique culture of our team as we generated earnings of $3.1 million in the third quarter of 2018,” stated Ed Barry, the Company’s Chief Executive Officer. “We continue to see strong momentum in terms of growth of relationship deposits and loans and in execution on our mortgage and card divisions’ business plans. Our focus on improving the quality of our deposit portfolio continues to bear fruit. The growth of noninterest deposits coupled with the nominal growth of total deposits advances our strategy to reposition the portfolio away from non-relationship and high rate deposits, like promotional CDs and money market accounts, CDARs, listing service CDs and brokered CDs.”
| COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited | |||||||||||||||||||||
| Quarter Ended | 3rd Quarter | Nine Months Ended | YTD | ||||||||||||||||||
| September 30, | 2018 - 2017 | September 30, | 2018 - 2017 | ||||||||||||||||||
| (in thousands except per share data) | 2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||
| Earnings Summary | |||||||||||||||||||||
| Interest income | $ | 17,458 | $ | 15,004 | 16.4 | % | $ | 50,889 | $ | 41,986 | 21.2 | % | |||||||||
| Interest expense | 2,967 | 2,044 | 45.2 | % | 7,891 | 5,635 | 40.0 | % | |||||||||||||
| Net interest income | 14,491 | 12,960 | 11.8 | % | 42,998 | 36,351 | 18.3 | % | |||||||||||||
| Provision for loan losses | 495 | 700 | (29.3 | )% | 1,640 | 1,870 | (12.3 | )% | |||||||||||||
| Noninterest income | 4,240 | 4,958 | (14.5 | )% | 12,657 | 12,180 | 3.9 | % | |||||||||||||
| Noninterest expense | 13,899 | 12,237 | 13.6 | % | 41,028 | 33,979 | 20.7 | % | |||||||||||||
| Income before income taxes | 4,337 | 4,980 | (12.9 | )% | 12,988 | 12,682 | 2.4 | % | |||||||||||||
| Income tax expense | 1,190 | 2,045 | (41.8 | )% | 3,706 | 5,031 | (26.3 | )% | |||||||||||||
| Net income (loss) | $ | 3,146 | $ | 2,936 | 7.2 | % | $ | 9,282 | $ | 7,651 | 21.3 | % | |||||||||
Weighted average common shares - Basic(1) | 11,720 | 11,311 | 3.6 | % | 11,632 | 11,218 | 3.7 | % | |||||||||||||
Weighted average common shares - Diluted(1) | 12,103 | 11,503 | 5.2 | % | 12,033 | 11,358 | 5.9 | % | |||||||||||||
Earnings - Basic(1) | $ | 0.27 | $ | 0.26 | 3.8 | % | $ | 0.80 | $ | 0.68 | 17.6 | % | |||||||||
Earnings - Diluted(1) | $ | 0.26 | $ | 0.26 | — | % | $ | 0.77 | $ | 0.67 | 14.9 | % | |||||||||
| Return on average assets | 1.19 | % | 1.17 | % | 1.7 | % | 1.20 | % | 1.08 | % | 11.1 | % | |||||||||
| Return on average equity | 13.69 | % | 14.68 | % | (6.7 | )% | 14.61 | % | 13.66 | % | 7.0 | % | |||||||||
(1) Gives effect to a four-for-one common stock split completed effective August 15, 2018.
| Quarter Ended | 3rd Quarter | Quarter Ended | ||||||||||||||||||||
| September 30, | 2018 - 2017 | June 30, | March 31, | December 31, | ||||||||||||||||||
| (in thousands except per share data) | 2018 | 2017 | % Change | 2018 | 2018 | 2017 | ||||||||||||||||
| Balance Sheet Highlights | ||||||||||||||||||||||
| Assets | $ | 1,072,904 | $ | 1,002,684 | 7.0 | % | $ | 1,067,786 | $ | 1,017,613 | $ | 1,026,009 | ||||||||||
| Investment securities | 48,067 | 56,252 | (14.6 | )% | 49,799 | 51,706 | 54,029 | |||||||||||||||
| Mortgage loans held for sale | 21,373 | 31,642 | (32.5 | )% | 21,370 | 17,353 | 26,344 | |||||||||||||||
| Loans | 955,411 | 869,898 | 9.8 | % | 920,783 | 900,033 | 887,420 | |||||||||||||||
| Allowance for loan losses | 10,892 | 9,693 | 12.4 | % | 10,447 | 10,157 | 10,033 | |||||||||||||||
| Deposits | 911,116 | 876,500 | 3.9 | % | 938,364 | 897,153 | 904,899 | |||||||||||||||
| Borrowings and repurchase agreements | 28,239 | 19,415 | 45.4 | % | 14,445 | 10,271 | 13,260 | |||||||||||||||
| Subordinated debentures | 15,386 | 15,353 | 0.2 | % | 15,378 | 15,369 | 15,361 | |||||||||||||||
| Total stockholders' equity | 106,657 | 80,085 | 33.2 | % | 86,994 | 83,366 | 80,119 | |||||||||||||||
| Tangible common equity | 106,657 | 80,085 | 33.2 | % | 86,994 | 83,366 | 80,119 | |||||||||||||||
| Common shares outstanding | 13,191 | 11,349 | 16.2 | % | 11,661 | 11,595 | 11,537 | |||||||||||||||
| Tangible book value per share | $ | 8.09 | $ | 7.06 | 14.6 | % | $ | 7.46 | $ | 7.19 | $ | 6.94 | ||||||||||
2
Operating Results
Net interest margin increased 7.0% to 5.56% for the three months ended September 30, 2018 from 5.20% for the three months ended September 30, 2017. For the three months ended September 30, 2018, our average interest-earning assets had increased by $44.7 million, compared to the three months ended September 30, 2017, while the average yield on our interest-earning assets increased by 68 basis points. In comparison, our average interest-bearing liabilities decreased $13.1 million from the third quarter of 2017 to the third quarter of 2018, with the respective average rate increasing by 52 basis points. As a result, net interest income increased $1.5 million, or 11.8%, to $14.5 million for the three months ended September 30, 2018 compared to the same period in 2017.
For the nine months ended September 30, 2018, net interest margin was 5.63%, an increase of 46 basis points over the same period in 2017. This increase included an average interest-earning assets increase of $81.5 million and an average interest-bearing liabilities increase of $27.8 million compared to the same nine month period in 2017. In addition, the average yields on interest-earning assets and interest-bearing liabilities increased 69 and 38 basis points, respectively. Net interest income increased $6.6 million, or 18.3% for the nine months ended September 30, 2018 compared to the same period in 2017.
During the three months ended September 30, 2018, we recorded a provision for loan losses of $495 thousand on net chargeoffs for the third quarter of 2018 of $50 thousand, or 0.01% of average loans, annualized. During the three months ended September 30, 2017, our provision for loan losses was $700 thousand, as net chargeoffs for the third quarter of 2017 were $472 thousand, or 0.21% of average loans, annualized. For the nine months ended September 30, 2018 and 2017, our provision for loan losses were $1.6 million and $1.9 million, respectively. Our allowance for loan losses was $10.9 million, or 1.14% of loans, at September 30, 2018, which provided approximately 258% coverage of nonperforming assets at such date, compared to $9.7 million, or 1.11% of loans, and approximately 160% coverage of nonperforming assets at September 30, 2017.
Noninterest income was $4.2 million and $5.0 million for the three months ended September 30, 2018 and 2017, respectively. For the nine months ended September 30, 2018 and 2017, noninterest income was $12.7 million and $12.2 million, respectively. The decrease in noninterest income during the three months ended September 30, 2018 related primarily to reduced mortgage banking revenue. The increase in noninterest income during the nine month period ended September 30, 2018 was driven by increases in credit card fees partially offset by lower mortgage banking revenue.
Noninterest expense was $13.9 million and $12.2 million for the three months ended September 30, 2018 and 2017, respectively, and $41.0 million and $34.0 million for the nine months ended September 30, 2018 and 2017, respectively. The increase in noninterest expense during the three and nine-month periods ended September 30, 2018 was driven primarily by increases in data processing costs, salaries and benefits, occupancy, and professional fees. During the fourth quarter of 2017, we converted our credit card processing system to a new vendor to further scale the business. Due to projected growth of our credit card, mortgage and commercial banking businesses, data processing costs will continue to be a significant expense.
Income tax expense was $3.7 million for the nine months ended September 30, 2018, as compared to $5.0 million for the same period in 2017, a decrease of 26.3% as a result of the Tax Cuts and Jobs Act of 2017 which reduced the corporate tax rate to 21%.
Financial Condition
Total assets at September 30, 2018 were $1.1 billion, up 7.0% as compared to $1.0 billion at September 30, 2017. Gross loans were $955.4 million, excluding mortgage loans held for sale, as of September 30, 2018, compared to $869.9 million at September 30, 2017, an increase of 9.8%. Deposits were $911.1 million at September 30, 2018, an increase of 3.9%, as compared to $876.5 million at September 30, 2017.
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Nonperforming assets were $4.5 million, or 0.42% of total assets, as of September 30, 2018. Comparatively, nonperforming assets were $6.2 million, or 0.62% of total assets, at September 30, 2017. Of the $4.5 million in total nonperforming assets as of September 30, 2018, nonperforming loans represented $4.2 million, of which troubled debt restructurings amount to $289 thousand. Also included in nonperforming assets at such date was other real estate owned which represents $246 thousand.
Stockholders’ equity totaled $106.7 million as of September 30, 2018, compared to $80.1 million at December 31, 2017. The increase was due to increased earnings and the initial public offering of approximately $17.5 million. As of September 30, 2018, the Bank's capital ratios continue to exceed the regulatory requirements for a “well-capitalized” institution.
| Consolidated Statements of Income (Unaudited) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Interest income | |||||||||||||||
| Loans, including fees | $ | 16,955,183 | $ | 14,551,154 | $ | 49,455,005 | $ | 40,782,284 | |||||||
| Investment securities available for sale | 271,323 | 289,945 | 785,528 | 783,591 | |||||||||||
| Federal funds sold and other | 231,799 | 162,503 | 648,830 | 420,526 | |||||||||||
| Total interest income | 17,458,305 | 15,003,602 | 50,889,363 | 41,986,401 | |||||||||||
| Interest expense | |||||||||||||||
| Deposits | 2,616,627 | 1,707,774 | 6,875,895 | 4,632,486 | |||||||||||
| Borrowed funds | 350,660 | 335,959 | 1,015,106 | 1,002,833 | |||||||||||
| Total interest expense | 2,967,287 | 2,043,733 | 7,891,001 | 5,635,319 | |||||||||||
| Net interest income | 14,491,018 | 12,959,869 | 42,998,362 | 36,351,082 | |||||||||||
| Provision for loan losses | 495,000 | 700,000 | 1,640,000 | 1,870,188 | |||||||||||
| Net interest income after provision for loan losses | 13,996,018 | 12,259,869 | 41,358,362 | 34,480,894 | |||||||||||
| Noninterest income | |||||||||||||||
| Service charges on deposits | 122,490 | 96,882 | 364,673 | 335,246 | |||||||||||
| Credit card fees | 1,591,981 | 1,682,587 | 4,609,321 | 4,028,321 | |||||||||||
| Mortgage banking revenue | 2,451,006 | 3,106,273 | 7,379,076 | 7,577,893 | |||||||||||
| Loss on sale of investment securities available for sale | — | — | (2,083 | ) | — | ||||||||||
| Other fees and charges | 74,558 | 71,769 | 306,124 | 238,609 | |||||||||||
| Total noninterest income | 4,240,035 | 4,957,511 | 12,657,111 | 12,180,069 | |||||||||||
| Noninterest expenses | |||||||||||||||
| Salaries and employee benefits | 6,571,456 | 6,438,537 | 19,083,260 | 18,267,908 | |||||||||||
| Occupancy and equipment | 1,069,240 | 953,007 | 3,240,792 | 2,776,774 | |||||||||||
| Professional fees | 520,056 | 566,677 | 1,364,883 | 1,390,832 | |||||||||||
| Data processing | 3,976,255 | 1,537,761 | 11,820,996 | 5,492,114 | |||||||||||
| Advertising | 358,387 | 532,202 | 1,112,908 | 1,451,925 | |||||||||||
| Loan processing | 201,824 | 405,036 | 810,780 | 1,123,123 | |||||||||||
| Other real estate expenses, net | 6,916 | 63,841 | 37,859 | 82,360 | |||||||||||
| Other operating | 1,195,349 | 1,739,927 | 3,556,072 | 3,393,796 | |||||||||||
| Total noninterest expenses | 13,899,483 | 12,236,988 | 41,027,550 | 33,978,832 | |||||||||||
| Income before income taxes | 4,336,570 | 4,980,392 | 12,987,923 | 12,682,131 | |||||||||||
| Income tax expense | 1,190,159 | 2,044,822 | 3,706,218 | 5,030,640 | |||||||||||
| Net income | $ | 3,146,411 | $ | 2,935,570 | $ | 9,281,705 | $ | 7,651,491 | |||||||
4
| Consolidated Balance Sheets | |||||||
| September 30, 2018 (unaudited) | December 31, 2017 | ||||||
| Assets | |||||||
| Cash and due from banks | $ | 10,982,277 | $ | 8,189,371 | |||
| Interest bearing deposits at other financial institutions | 28,494,169 | 40,355,658 | |||||
| Federal funds sold | 1,248,538 | 3,765,982 | |||||
| Total cash and cash equivalents | 40,724,984 | 52,311,011 | |||||
| Investment securities available for sale | 48,067,052 | 54,028,712 | |||||
| Restricted investments | 3,125,650 | 2,369,250 | |||||
| Loans held for sale | 21,372,702 | 26,344,241 | |||||
| Loans receivable, net of allowance for loan losses | 944,519,534 | 877,387,104 | |||||
| Premises and equipment, net | 2,842,330 | 2,601,293 | |||||
| Accrued interest receivable | 4,160,682 | 3,866,749 | |||||
| Deferred income taxes | 3,709,926 | 3,381,482 | |||||
| Foreclosed real estate | 245,986 | 92,714 | |||||
| Prepaid income taxes | 529,200 | 1,532,468 | |||||
| Other assets | 3,606,292 | 2,093,723 | |||||
| Total assets | $ | 1,072,904,338 | $ | 1,026,008,747 | |||
| Liabilities | |||||||
| Deposits | |||||||
| Noninterest bearing | $ | 234,093,595 | $ | 196,635,473 | |||
| Interest bearing | 677,022,108 | 708,263,509 | |||||
| Total deposits | 911,115,703 | 904,898,982 | |||||
| Securities sold under agreements to repurchase | 11,239,372 | 11,260,363 | |||||
| Federal Home Loan Bank advances | 17,000,000 | 2,000,000 | |||||
| Other borrowed funds | 15,385,505 | 17,361,231 | |||||
| Accrued interest payable | 1,671,884 | 1,083,532 | |||||
| Other liabilities | 9,834,789 | 9,285,564 | |||||
| Total liabilities | 966,247,253 | 945,889,672 | |||||
| Stockholders' equity | |||||||
| Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding at September 30, 2018 and December 31, 2017 | — | — | |||||
Common stock, $.01 par value; 49,000,000 shares authorized; 13,191,024 and 11,537,196 issued and outstanding at September 30, 2018 and December 31, 2017, respectively(1) | 131,910 | 115,372 | |||||
Additional paid-in capital(1) | 44,912,257 | 27,050,741 | |||||
| Retained earnings | 62,481,360 | 53,199,657 | |||||
| Accumulated other comprehensive loss | (868,442 | ) | (246,695 | ) | |||
| Total stockholders' equity | 106,657,085 | 80,119,075 | |||||
| Total liabilities and stockholders' equity | $ | 1,072,904,338 | $ | 1,026,008,747 | |||
(1) Shares of common stock authorized, issued and outstanding and additional paid-in capital totals have been adjusted to reflect the four-for-one stock split completed effective August 15, 2018.
5
The following tables show the average outstanding balance of each principal category of our assets, liabilities and stockholders’ equity, together with the average yields on our assets and the average costs of our liabilities for the periods indicated. Such yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.
| Three Months Ended September 30, | |||||||||||||||||||||
| 2018 | 2017 | ||||||||||||||||||||
| Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate(1) | Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate(1) | ||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| Assets | |||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||
| Interest bearing deposits | $ | 42,734 | $ | 188 | 1.75 | % | $ | 42,079 | $ | 124 | 1.17 | % | |||||||||
| Federal funds sold | 1,354 | 6 | 1.80 | % | 1,095 | 3 | 1.05 | % | |||||||||||||
| Restricted stock | 2,604 | 38 | 5.74 | % | 2,537 | 36 | 5.60 | % | |||||||||||||
| Investment securities | 49,159 | 271 | 2.19 | % | 57,280 | 290 | 2.01 | % | |||||||||||||
Loans(2)(3)(4) | 938,430 | 16,955 | 7.17 | % | 886,639 | 14,551 | 6.51 | % | |||||||||||||
| Total interest earning assets | 1,034,281 | 17,458 | 6.70 | % | 989,630 | 15,004 | 6.01 | % | |||||||||||||
| Noninterest earning assets | 11,924 | 7,760 | |||||||||||||||||||
| Total assets | $ | 1,046,205 | $ | 997,390 | |||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||
| Interest bearing deposits | $ | 687,618 | 2,617 | 1.51 | % | $ | 698,892 | 1,708 | 0.97 | % | |||||||||||
| Borrowed funds | 32,248 | 350 | 4.31 | % | 34,067 | 336 | 3.91 | % | |||||||||||||
| Total interest bearing liabilities | 719,866 | 2,967 | 1.64 | % | 732,959 | 2,044 | 1.11 | % | |||||||||||||
| Noninterest bearing liabilities: | |||||||||||||||||||||
| Noninterest bearing liabilities | 10,250 | 9,358 | |||||||||||||||||||
| Noninterest bearing deposits | 224,877 | 175,725 | |||||||||||||||||||
| Stockholders’ equity | 91,212 | 79,348 | |||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,046,205 | $ | 997,390 | |||||||||||||||||
Net interest spread(5) | 5.06 | % | 4.90 | % | |||||||||||||||||
| Net interest income | $ | 14,491 | $ | 12,960 | |||||||||||||||||
Net interest margin(6) | 5.56 | % | 5.20 | % | |||||||||||||||||
| Net interest margin excluding credit card portfolio | 4.26 | % | 4.30 | % | |||||||||||||||||
_______________
(1) | Annualized. |
(2) | Includes loans held for sale. |
(3) | Includes nonaccrual loans. |
(4) | Interest income includes amortization of deferred loan fees, net of deferred loan costs. |
(5) | Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities. |
(6) | Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period. |
6
| Nine Months Ended September 30, | |||||||||||||||||||||
| 2018 | 2017 | ||||||||||||||||||||
| Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate(1) | Average Outstanding Balance | Interest Income/ Expense | Average Yield/ Rate(1) | ||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| Assets | |||||||||||||||||||||
| Interest earning assets: | |||||||||||||||||||||
| Interest bearing deposits | $ | 44,525 | $ | 525 | 1.58 | % | $ | 44,671 | $ | 314 | 0.94 | % | |||||||||
| Federal funds sold | 1,546 | 18 | 1.59 | % | 1,203 | 8 | 0.87 | % | |||||||||||||
| Restricted stock | 2,554 | 105 | 5.48 | % | 2,475 | 98 | 5.32 | % | |||||||||||||
| Investment securities | 50,987 | 786 | 2.06 | % | 51,451 | 784 | 2.04 | % | |||||||||||||
Loans(2)(3)(4) | 922,326 | 49,455 | 7.17 | % | 840,603 | 40,782 | 6.49 | % | |||||||||||||
| Total interest earning assets | 1,021,938 | 50,889 | 6.66 | % | 940,403 | 41,986 | 5.97 | % | |||||||||||||
| Noninterest earning assets | 10,419 | 6,574 | |||||||||||||||||||
| Total assets | $ | 1,032,357 | $ | 946,977 | |||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||
| Interest bearing liabilities: | |||||||||||||||||||||
| Interest bearing deposits | $ | 691,307 | 6,876 | 1.33 | % | $ | 662,511 | 4,632 | 0.93 | % | |||||||||||
| Borrowed funds | 31,233 | 1,015 | 4.35 | % | 32,250 | 1,003 | 4.16 | % | |||||||||||||
| Total interest bearing liabilities | 722,540 | 7,891 | 1.46 | % | 694,761 | 5,635 | 1.08 | % | |||||||||||||
| Noninterest bearing liabilities: | |||||||||||||||||||||
| Noninterest bearing liabilities | 9,765 | 8,922 | |||||||||||||||||||
| Noninterest bearing deposits | 215,133 | 168,422 | |||||||||||||||||||
| Stockholders’ equity | 84,919 | 74,872 | |||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,032,357 | $ | 946,977 | |||||||||||||||||
Net interest spread(5) | 5.20 | % | 4.89 | % | |||||||||||||||||
| Net interest income | $ | 42,998 | $ | 36,351 | |||||||||||||||||
Net interest margin(6) | 5.63 | % | 5.17 | % | |||||||||||||||||
| Net interest margin excluding credit card portfolio | 4.27 | % | 4.31 | % | |||||||||||||||||
_______________
(1) | Annualized. |
(2) | Includes loans held for sale. |
(3) | Includes nonaccrual loans. |
(4) | Interest income includes amortization of deferred loan fees, net of deferred loan costs. |
(5) | Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities. |
(6) | Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period. |
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| HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited | ||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||
| (Dollars in thousands except per share data) | September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||
| Earnings: | ||||||||||||||||||||
| Net income (loss) | $ | 3,146 | $ | 3,145 | $ | 2,990 | $ | (543 | ) | $ | 2,936 | |||||||||
Earnings per common share, diluted(1) | 0.26 | 0.26 | 0.25 | (0.05 | ) | 0.26 | ||||||||||||||
| Net interest margin | 5.56 | % | 5.49 | % | 5.79 | % | 5.54 | % | 5.20 | % | ||||||||||
| Net interest margin excluding credit card portfolio | 4.26 | % | 4.25 | % | 4.25 | % | 4.35 | % | 4.30 | % | ||||||||||
| Return on average assets | 1.19 | % | 1.22 | % | 1.19 | % | (0.21 | )% | 1.17 | % | ||||||||||
| Return on average equity | 13.69 | % | 14.77 | % | 14.86 | % | (2.63 | )% | 14.68 | % | ||||||||||
| Efficiency ratio | 74.21 | % | 73.64 | % | 73.66 | % | 78.85 | % | 68.30 | % | ||||||||||
| Balance Sheet: | ||||||||||||||||||||
| Loans | $ | 955,411 | $ | 920,783 | $ | 900,033 | $ | 887,420 | $ | 869,898 | ||||||||||
| Deposits | 911,116 | 938,364 | 897,153 | 904,899 | 876,500 | |||||||||||||||
| Total assets | 1,072,904 | 1,067,786 | 1,017,613 | 1,026,009 | 1,002,684 | |||||||||||||||
| Asset Quality Ratios: | ||||||||||||||||||||
| Nonperforming assets to total assets | 0.42 | % | 0.35 | % | 0.39 | % | 0.54 | % | 0.62 | % | ||||||||||
| Nonperforming loans to total loans | 0.44 | % | 0.35 | % | 0.41 | % | 0.61 | % | 0.69 | % | ||||||||||
| Net chargeoffs to average loans (YTD annualized) | 0.11 | % | 0.16 | % | 0.17 | % | 0.15 | % | 0.12 | % | ||||||||||
| Allowance for loan losses to total loans | 1.14 | % | 1.13 | % | 1.13 | % | 1.13 | % | 1.11 | % | ||||||||||
| Allowance for loan losses to non-performing loans | 257.83 | % | 320.78 | % | 273.66 | % | 185.57 | % | 160.24 | % | ||||||||||
| Bank Capital Ratios: | ||||||||||||||||||||
| Total risk based capital ratio | 12.36 | % | 12.34 | % | 12.30 | % | 12.03 | % | 12.25 | % | ||||||||||
| Tier 1 risk based capital ratio | 11.11 | % | 11.09 | % | 11.05 | % | 10.78 | % | 11.00 | % | ||||||||||
| Leverage ratio | 9.03 | % | 8.91 | % | 8.83 | % | 8.55 | % | 8.83 | % | ||||||||||
| Common equity Tier 1 ratio | 11.11 | % | 11.09 | % | 11.05 | % | 10.78 | % | 11.00 | % | ||||||||||
| Tangible common equity | 8.72 | % | 8.58 | % | 8.78 | % | 8.46 | % | 8.78 | % | ||||||||||
| Composition of Loans: | ||||||||||||||||||||
| Residential real estate | $ | 388,141 | $ | 366,465 | $ | 354,818 | $ | 342,684 | $ | 332,347 | ||||||||||
| Commercial real estate | 276,726 | 271,800 | 269,357 | 259,853 | 246,959 | |||||||||||||||
| Construction real estate | 144,012 | 149,192 | 150,820 | 144,932 | 152,734 | |||||||||||||||
| Commercial and industrial | 113,473 | 101,752 | 96,927 | 108,982 | 109,887 | |||||||||||||||
| Credit card | 33,821 | 32,522 | 28,757 | 31,507 | 28,552 | |||||||||||||||
| Other | 1,270 | 1,244 | 1,149 | 1,053 | 1,099 | |||||||||||||||
| Mortgage Metrics (CSM only): | ||||||||||||||||||||
| Origination of loans held for sale | $ | 81,665 | $ | 95,570 | $ | 87,279 | $ | 109,892 | $ | 119,429 | ||||||||||
| Proceeds from loans held for sale, net of gains | 80,603 | 89,936 | 93,955 | 111,851 | 117,965 | |||||||||||||||
| Purchase volume as a % of originations | 92.7 | % | 85.1 | % | 55.4 | % | 48.1 | % | 57.6 | % | ||||||||||
| Gain on sale of loans | 2,227 | 2,239 | 2,092 | 2,569 | 2,673 | |||||||||||||||
| Gain on sale as a % of loans sold | 2.7 | % | 2.4 | % | 2.2 | % | 2.3 | % | 2.2 | % | ||||||||||
| Credit Card Portfolio Metrics: | ||||||||||||||||||||
| Total active customer accounts | 170,160 | 166,661 | 158,362 | 149,226 | 144,222 | |||||||||||||||
| Total loans | $ | 33,821 | $ | 32,522 | $ | 28,757 | $ | 31,506 | $ | 28,552 | ||||||||||
| Total deposits at the Bank | $ | 59,978 | $ | 58,951 | $ | 56,333 | $ | 53,625 | $ | 52,613 | ||||||||||
(1) Gives effect to a four-for-one common stock split completed effective August 15, 2018.
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ABOUT CAPITAL BANCORP, INC.
Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. The Company’s wholly-owned subsidiary, Capital Bank, N.A., is the eighth largest bank headquartered in Maryland. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in five locations in the greater Washington, D.C. and Baltimore, Maryland markets. Capital Bancorp has assets of approximately $1.1 billion at September 30, 2018 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,” “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. Such factors include, without limitation, those listed from time to time in reports that the Company files with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this communication, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by law.
FINANCIAL CONTACT: Alan Jackson (240) 283-0402
MEDIA CONTACT: Ed Barry (240) 283-1912
WEB SITE: www.CapitalBankMD.com
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