UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission file number 001-38671 CAPITAL BANCORP INC. (Exact name of registrant as specified in its charter) Maryland 52-2083046 (State or other jurisdiction of incor ...

Core Viewpoint - Capital Bancorp reported strong revenue growth in Q2 2025, but missed earnings per share estimates, indicating mixed results in profitability and efficiency despite top-line progress [1][2]. Financial Performance - Revenue for Q2 2025 was $60.8 million, a 38.3% increase from $43.9 million in Q2 2024 [1][2]. - Non-GAAP diluted earnings per share (EPS) was $0.85, missing estimates of $0.88 by $0.03, reflecting a 44.1% increase year-over-year from $0.59 [1][2]. - Net interest income rose to $47.6 million, up 28.6% from $37.1 million a year earlier [2][6]. - Fee revenue increased significantly to $13.1 million, a 90.2% rise from $6.9 million in Q2 2024 [2][7]. Business Overview - Capital Bancorp operates in commercial banking, government-guaranteed lending, and credit card services, primarily in the Washington, D.C. and Baltimore metro areas, with additional operations in Florida and Illinois [3]. - The company focuses on commercial and industrial lending, commercial real estate loans, and secured credit cards, aiming to diversify revenue and manage risk [4]. Growth and Expansion - Gross loans increased by $61.4 million quarter-over-quarter, representing a 9.2% annualized growth, with year-over-year growth of $718.2 million [5]. - Total deposits grew by $49.4 million during the quarter and $840.3 million compared to Q2 2024, marking a 40.0% annual increase [5]. - The integration of the IFH acquisition contributed $373.5 million to loan growth, alongside $344.7 million from organic growth [5][9]. Credit Quality and Expenses - Net charge-offs rose to $5.1 million, or 0.75% of portfolio loans, nearly double the previous quarter's ratio [10]. - Nonperforming assets as a percentage of total assets decreased to 1.11%, down from 1.21% in the prior quarter, but remain higher than last year [10]. - Noninterest expenses increased by $10.1 million year-over-year, partly due to investments in digital technologies [9]. Shareholder Returns - The company raised its quarterly dividend by 20% to $0.12 per share [11]. - Tangible book value per share increased by 7.2% year-over-year to $20.64, reflecting ongoing capital strength [9][10]. Future Outlook - Management expressed confidence in ongoing expansion and highlighted multiple growth levers, although no specific earnings or revenue guidance was provided for Q3 or fiscal 2025 [12]. - Key areas to monitor include cost pressures, credit quality normalization, and the integration of acquired operations [12].

Capital Bancorp (CBNK) came out with quarterly earnings of $0.85 per share, missing the Zacks Consensus Estimate of $0.89 per share. This compares to earnings of $0.59 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -4.49%. A quarter ago, it was expected that this company would post earnings of $0.67 per share when it actually produced earnings of $0.88, delivering a surprise of +31.34%.Over the last four quarters, the company ...

CBNK Reports 2Q ROA of 1.60% and EPS of $0.78 Growth across Loans, Deposits, and Cards accompanied by Improving Credit Delivers Strong Profitability Second Quarter 2025 Highlights As used in this press release, core net income, core ROA, core ROE, ROTCE, core ROTCE, Commercial Bank NIM, Commercial Bank ACL Coverage Ratio, and Tangible Book Value are non–U.S. generally accepted accounting principles ("GAAP") financial measures. These non-GAAP financial metrics exclude merger-related expenses and other certai ...

Second Quarter 2025 Highlights GAAP Net Income of $13.1 million, or $0.78 per share, and return on average assets ("ROA") of 1.60% Core net income(1) of $14.2 million, or $0.85 per share, and core ROA(1) of 1.73% Book value per common share of $22.92 at June 30, 2025, increased $0.73 compared to 1Q 2025, and increased $3.66 when compared to 2Q 2024 Tangible book value per share(1) of $20.64, increased 4.2% (not annualized), or $0.83 as compared to 1Q 2025, and increased 7.2%, or $1.38 compared to 2Q 2024 Re ...

Group 1 - Capital Bancorp (NASDAQ: CBNK) is the holding company for Capital Bank, which operates in the Baltimore, Maryland, and Washington DC areas [1] - The bank expanded its operations last year by acquiring Integrated Financial Holdings, a one-branch bank [1] Group 2 - The investment group European Small Cap Ideas focuses on high-quality small-cap investment opportunities in Europe, emphasizing capital gains and dividend income [1] - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]

Core Insights - Capital Bank has launched a new digital banking platform powered by Q2, marking a significant step in its digital evolution [1][2] - The platform enhances efficiency and includes advanced digital treasury management capabilities, allowing for scalability into new markets and customer segments [2][3] - The CEO emphasizes that this upgrade aligns technology with the bank's growth strategy, aiming to meet complex business needs while maintaining a personal touch [3][4] Company Overview - Capital Bank is a subsidiary of Capital Bancorp, Inc., with over $3.3 billion in assets as of March 31, 2025 [4] - The bank is a member of the Federal Reserve Bank System and is FDIC-insured [4] - Since its inception in 1999, Capital Bank has focused on combining innovative technology with customized financial solutions [5]

Core Insights - Capital Bancorp is expanding its Commercial Banking operations in Delaware by adding experienced relationship managers, which is a significant step in its Mid-Atlantic growth strategy [1][5] - The new hires include Ritchie Francia, Sarah Ferguson, and John Hassiepen, who bring extensive experience and strong community ties to the bank [2][3] - The expansion aims to enhance Capital Bank's ability to serve businesses in Delaware and surrounding areas, reflecting a commitment to local market expertise [5] Company Overview - As of March 31, 2025, Capital Bancorp reported $3.3 billion in assets and was ranked 9 in American Banker's Top 20 High Performing Banks in 2024 [6] - The bank has a consultative approach and has been serving commercial customers in the DC Metro Region for over 25 years [6] - Capital Bank is a member of the Federal Reserve Bank system and is committed to helping customers achieve their financial goals while maintaining fiduciary duties to shareholders [6]

PART I - CONSOLIDATED FINANCIAL INFORMATION [Consolidated Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents the unaudited consolidated balance sheets, income statements, and cash flow statements for Q1 2025 [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The company's assets, liabilities, and equity are detailed as of March 31, 2025, compared to year-end 2024 Consolidated Balance Sheet Highlights (Unaudited) | (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$3,349,805** | **$3,206,911** | | Total portfolio loans held for investment, net | $2,629,952 | $2,581,511 | | Total cash and cash equivalents | $293,987 | $205,332 | | Goodwill | $24,085 | $21,126 | | **Total Liabilities** | **$2,980,228** | **$2,851,772** | | Total deposits | $2,891,333 | $2,761,939 | | **Total Stockholders' Equity** | **$369,577** | **$355,139** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Reports the company's revenues, expenses, and net income for the three months ended March 31, 2025 Consolidated Income Statement Highlights (Unaudited) | (in thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Interest Income | $46,047 | $35,008 | | Provision for Credit Losses | $2,246 | $2,727 | | Noninterest Income | $12,549 | $5,972 | | Noninterest Expenses | $38,053 | $29,487 | | **Net Income** | **$13,932** | **$6,562** | | **Diluted Earnings Per Share** | **$0.82** | **$0.47** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities for Q1 2025 Consolidated Cash Flow Summary (Unaudited) | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $22,581 | $(3,412) | | Net cash used in investing activities | $(61,079) | $(57,640) | | Net cash provided by financing activities | $127,153 | $92,292 | | **Net increase in cash and cash equivalents** | **$88,655** | **$31,240** | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Provides supplementary details on accounting policies and specific financial statement items - The Company operates through **four reporting segments**: Commercial Banking, OpenSky™, Windsor Advantage™, and Capital Bank Home Loans[15](index=15&type=chunk)[17](index=17&type=chunk) - Goodwill increased by **$3.0 million** in Q1 2025 due to a measurement period adjustment from the IFH acquisition[28](index=28&type=chunk)[30](index=30&type=chunk) - Total nonperforming loans increased to **$42.9 million** as of March 31, 2025, from $30.2 million at December 31, 2024[47](index=47&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.10 per share** in April 2025[109](index=109&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q1 2025 performance, highlighting significant net income growth driven by the IFH acquisition [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Details the key drivers of the company's operating results, comparing Q1 2025 performance to Q1 2024 Q1 2025 vs. Q1 2024 Performance | (in thousands) | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $46,047 | $35,008 | 31.5% | | Noninterest Income | $12,549 | $5,972 | 110.1% | | Noninterest Expenses | $38,053 | $29,487 | 29.1% | | **Net Income** | **$13,932** | **$6,562** | **112.3%** | - The **110.1% increase in noninterest income** was primarily due to contributions from the businesses acquired from IFH[132](index=132&type=chunk)[149](index=149&type=chunk) - The provision for credit losses decreased to **$2.2 million**, with net charge-offs of $2.4 million primarily from the credit card portfolio[131](index=131&type=chunk)[147](index=147&type=chunk) - Noninterest expense increased by **$8.6 million**, driven by higher salaries and merger-related costs from the IFH acquisition[133](index=133&type=chunk)[153](index=153&type=chunk) [Financial Condition](index=51&type=section&id=Financial%20Condition) Analyzes the changes in the company's balance sheet, including loans, deposits, and liquidity position Balance Sheet Changes | (in thousands) | March 31, 2025 | December 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Assets | $3,349,805 | $3,206,911 | 4.5% | | Portfolio loans receivable, net | $2,678,406 | $2,630,163 | 1.8% | | Deposits | $2,891,333 | $2,761,939 | 4.7% | | Total Stockholders' Equity | $369,577 | $355,139 | 4.1% | - The Allowance for Credit Losses (ACL) as a percentage of total portfolio loans was **1.81%** at March 31, 2025[148](index=148&type=chunk)[192](index=192&type=chunk) - The company had significant available liquidity, including **$509.7 million** from the FHLB and **$115.7 million** from the Federal Reserve[215](index=215&type=chunk) [Capital Resources](index=63&type=section&id=Capital%20Resources) Outlines the company's capital position, regulatory capital ratios, and compliance status - As of March 31, 2025, both the Company and the Bank were in compliance with all regulatory capital requirements and classified as **'well capitalized'**[223](index=223&type=chunk) Regulatory Capital Ratios (The Company) | Ratio | March 31, 2025 | Minimum Adequacy | To Be Well Capitalized | | :--- | :--- | :--- | :--- | | Tier 1 leverage ratio | 10.68% | 4.00% | 5.00% | | Common equity tier 1 capital ratio | 13.24% | 4.50% | 6.50% | | Total capital ratio | 14.97% | 8.00% | 10.00% | [Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details the company's primary market risk from interest rate volatility and its management through ALCO - The company's primary market risk is **interest rate volatility**, which is managed by the Asset/Liability Management Committee (ALCO)[247](index=247&type=chunk)[250](index=250&type=chunk) Earnings at Risk (EAR) - Impact on Net Interest Income | Interest Rate Shock | % Change in NII (12-Month Horizon) | | :--- | :--- | | +300 bps | +10.6% | | +200 bps | +7.1% | | +100 bps | +3.6% | | -100 bps | -3.2% | | -200 bps | -6.1% | Economic Value of Equity (EVE) Analysis | Interest Rate Shock | % Change in EVE | | :--- | :--- | | +300 bps | +4.3% | | +200 bps | +2.9% | | +100 bps | +1.9% | | -100 bps | -3.0% | | -200 bps | -7.3% | [Controls and Procedures](index=74&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and notes enhancements to internal controls - The Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were **effective**[260](index=260&type=chunk) - During Q1 2025, the Company **enhanced internal controls** over business combinations, specifically for Day 1 accounting[261](index=261&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=75&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings expected to have a significant adverse financial impact - The Company is not presently a party to any legal proceedings which are believed to have a **material adverse impact** on its operations or financial condition[262](index=262&type=chunk) [Risk Factors](index=75&type=section&id=Item%201A.%20Risk%20Factors) Confirms no material changes to risk factors disclosed in the 2024 Annual Report on Form 10-K - There are **no material changes** to the risk factors as previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[263](index=263&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the new $15 million stock repurchase program and Q1 2025 repurchase activity - On February 21, 2025, the Company announced a new stock repurchase program authorizing up to **$15 million** of its Common Stock[265](index=265&type=chunk) Share Repurchase Activity (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Maximum Value Remaining ($) | | :--- | :--- | :--- | :--- | | Jan 2025 | 0 | N/A | $15,000,000 | | Feb 2025 | 0 | N/A | $15,000,000 | | Mar 2025 | 22,185 | $27.85 | $14,382,077 | [Other Information](index=77&type=section&id=Item%205.%20Other%20Information) Reports no adoption or termination of Rule 10b5-1 trading plans by officers or directors in Q1 2025 - **No officer or director** adopted or terminated any Rule 10b5-1 trading plan during the quarter ended March 31, 2025[270](index=270&type=chunk)

Core Viewpoint - Capital Bancorp (CBNK) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates for the company [1][3]. Earnings Estimate Revisions - The upward trend in earnings estimate revisions reflects growing analyst optimism, which is expected to positively impact the stock price [2]. - The current-quarter earnings estimate is projected at $0.89 per share, indicating a year-over-year increase of +50.85%, with a 15.58% rise in the Zacks Consensus Estimate over the last 30 days [5]. - For the full year, the earnings estimate stands at $3.41 per share, representing a +24.91% change from the previous year, with no negative revisions noted [6]. Zacks Rank and Performance - Capital Bancorp holds a Zacks Rank 1 (Strong Buy), supported by strong agreement among analysts in revising earnings estimates upward, which historically correlates with stock performance [3][7]. - Stocks with a Zacks Rank 1 and 2 have shown significant outperformance compared to the S&P 500 [7]. Stock Performance - The stock has gained 20.2% over the past four weeks, driven by solid estimate revisions, suggesting potential for further growth in earnings [8].