Core Insights - Capital Bank has been recognized as one of American Banker's 2024 Best Banks to Work For, ranking No. 79 among 90 banks [1][2] - This recognition highlights Capital Bank's commitment to creating a positive workplace for its employees, marking the fifth time the bank has received this award [2] Employee Engagement and Programs - Capital Bank emphasizes employee growth and well-being through various programs, including employee rewards, wellness initiatives, and DEIB (Diversity, Equity, Inclusion, and Belonging) awareness [3] - The bank has launched a signature initiative called Capital Bank Immersion, which helps new employees connect with senior leaders and understand the bank's operations during onboarding [4] Company Overview - Capital Bancorp, Inc. operates with approximately $2.6 billion in assets as of September 30, 2024, and has branches in six locations, including Washington D.C. and Florida [5] - The bank has been providing financial services since 1999 and is traded on the NASDAQ Global Market under the symbol "CBNK" [5] Industry Context - The Best Banks to Work For ranking is based on anonymous employee surveys and a review of benefits, showcasing the importance of employee satisfaction in the banking industry [2][5]

Group 1 - The stock of Capital Bancorp, Inc. (CBNK) is experiencing significant attention due to high implied volatility in the options market, particularly the Apr 17, 2025 $35 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in Capital Bancorp's stock price, possibly due to an upcoming event [2] - Currently, Capital Bancorp holds a Zacks Rank 3 (Hold) in the Banks - Northeast industry, which is in the top 18% of the Zacks Industry Rank, but analysts have not increased earnings estimates for the current quarter, with a slight downward revision affecting the consensus estimate from 67 cents to 66 cents per share [3] Group 2 - The high implied volatility surrounding Capital Bancorp may indicate a developing trading opportunity, as options traders often seek to sell premium on such options, hoping the stock does not move as much as expected by expiration [4]

Capital Position and Regulatory Compliance - As of September 30, 2024, the Bank was classified as "well capitalized" and in compliance with all applicable regulatory capital requirements[131]. - The Company monitors its capital position closely to ensure it remains strong following the recent merger[131]. - The Company reported a Tier 1 capital ratio of 14.88% and a total capital ratio of 16.65% as of September 30, 2024[254]. - The common equity tier 1 capital ratio was 14.78% as of September 30, 2024, compared to 15.43% as of December 31, 2023[254]. - The common equity to total assets ratio was 10.94% at September 30, 2024, down from 11.45% at December 31, 2023[246]. Merger and Business Segments - The Company completed its merger with Integrated Financial Holdings, Inc. on October 1, 2024, with IFHI having over $541 million in assets and $450 million in total deposits[133][135]. - The Company operates through four business segments: commercial banking, mortgage lending, credit cards, and corporate activities[127]. Financial Performance - Net income for the three months ended September 30, 2024 was $8.7 million, an 11.4% decrease from $9.8 million in the same period in 2023[140]. - Net income for the nine months ended September 30, 2024 was $23.4 million, a 12.7% decrease from $26.8 million in the same period in 2023[143]. - Total revenue for the three months ended September 30, 2024, was $44,989,000, compared to $43,136,000 for the same period in 2023, reflecting a growth of 4.3%[269]. - The efficiency ratio for the three months ended September 30, 2024, was 66.07%, slightly higher than 65.02% in the previous year[269]. Income and Expenses - Net interest income increased by $1.5 million, or 4.2%, to $38.4 million, primarily due to increased average balances of $205.8 million in portfolio loans[140]. - Noninterest income for the three months ended September 30, 2024 was $6.6 million, a 4.9% increase from $6.3 million in the prior year[141]. - Noninterest expenses increased to $29.7 million for the three months ended September 30, 2024, compared to $28.0 million in the same period in 2023[142]. - Salaries and employee benefits increased by $0.9 million, or 7.5%, for the three months ended September 30, 2024, compared to the same period in 2023[171]. Loan and Credit Quality - Provision for credit losses for the three months ended September 30, 2024 was $3.7 million, an increase of $1.5 million from the same period in 2023[140]. - The allowance for credit losses (ACL) was $31.9 million as of September 30, 2024, up from $28.6 million at December 31, 2023[220]. - Net charge-offs for the three months ended September 30, 2024, were $2.7 million, or 0.51% on an annualized basis of average portfolio loans, compared to $1.8 million, or 0.38% for the same period in 2023[162]. - Nonperforming assets are monitored closely, with loans placed on nonaccrual status generally when they become 90 days past due[204]. Asset and Deposit Growth - Total assets reached $2,363,928 thousand for the three months ended September 30, 2024, up from $2,183,521 thousand in the same period in 2023[154]. - Total liabilities increased by $309.4 million from December 31, 2023, primarily due to a $290.2 million growth in the deposit portfolio[221]. - Total interest-bearing deposits increased to $1,468.1 million as of September 30, 2024, up from $1,278.6 million at December 31, 2023, representing a growth of 14.8%[223]. - Average total deposits for the nine months ended September 30, 2024, were $2,020.1 million, with an average rate of 2.63%, compared to $1,864.5 million and 2.13% for the year ended December 31, 2023[225]. Interest Rate Sensitivity and Risk Management - The Earnings at Risk (EAR) analysis indicated a potential decrease in net interest income of 4.6% under a -400 bps interest rate shock scenario as of September 30, 2024[293]. - The Economic Value of Equity (EVE) analysis showed a decrease of 20.0% under a -400 bps interest rate shock scenario, indicating significant sensitivity to interest rate changes[294]. - The company utilizes both static and dynamic simulation models to assess interest rate impacts, indicating a comprehensive risk management approach[289]. - Management has the ability to adjust asset and liability durations to manage interest rate sensitivity, showcasing proactive risk management strategies[292].

Financial Performance - Net income for Q3 2024 was $8.7 million, or $0.62 per diluted share, an increase from $8.2 million, or $0.59 per diluted share in Q2 2024[1]. - Net income for Q3 2024 was $8,672, representing a 5.7% increase from Q2 2024 but a decrease of 11.4% compared to Q3 2023[40]. - Net income for the nine months ended September 30, 2024, was $23,439, down 12.7% from $26,841 in the same period of 2023[41]. - Adjusted net income for the nine months ended September 30, 2024, was $24,596,000, down from $26,841,000 for the same period in 2023, reflecting a decrease of approximately 8.4%[72]. - Earnings per share (diluted) for Q3 2024 was $0.62, a 5.1% increase from Q2 2024 but down 11.4% from Q3 2023[40]. Asset and Deposit Growth - Total assets increased by $122.2 million, or 5.0%, to $2.6 billion as of September 30, 2024[15]. - Total assets increased to $2,560,788, a 12.7% increase from $2,272,484[43]. - Total deposits reached $2,186,224 thousand in September 2024, up from $2,100,428 thousand in June 2024, marking an increase of 4.1%[49]. - Deposit growth for Q3 2024 was $85.8 million, or 16.2% annualized, with noninterest-bearing deposits increasing by $33.5 million, or 19.5% annualized[1]. - Deposits grew by 11.1% to $2,186,224 from $1,967,988[43]. Loan Growth - Loan growth for Q3 2024 was $85.9 million, representing a 16.9% annualized increase[1]. - Gross portfolio loans increased by $80.5 million to $2.0 billion at September 30, 2024, with contributions from commercial real estate loans ($38.5 million), residential real estate loans ($22.4 million), and commercial and industrial loans ($16.1 million)[29]. - Average OpenSky credit card loan balances increased by $8.2 million, or 7.3%, to $119.5 million for the third quarter 2024[36]. - Total portfolio loans receivable increased to $2,107,522 thousand from $2,021,588 thousand, reflecting a growth of 4.9% quarter-over-quarter[63]. Interest Income and Margin - Net interest income increased by $1.3 million, or 3.5%, from Q2 2024, totaling $38.4 million[8]. - Interest income for Q3 2024 increased to $52,610, up 3.9% from Q2 2024 and up 10.2% from Q3 2023[40]. - Net interest income for Q3 2024 was $38,354, reflecting a 3.5% increase from Q2 2024 and a 4.2% increase from Q3 2023[40]. - The net interest margin decreased to 6.41%, while the core net interest margin increased to 4.08%[23]. - The adjusted net interest margin for the quarter ended September 30, 2024, was 4.08%, up from 4.00% in the previous quarter, reflecting an improvement in profitability[74]. Credit Losses and Nonperforming Assets - The provision for credit losses was $3.7 million, an increase of $0.3 million from Q2 2024, primarily due to unsecured credit card loan growth[11]. - Nonperforming assets increased by 2 basis points to 0.60% of total assets at September 30, 2024, with total nonaccrual loans rising to $15.5 million[30]. - Provision for credit losses rose to $3,748 in Q3 2024, a 9.7% increase from Q2 2024 and a significant 64.4% increase from Q3 2023[40]. - Total nonperforming assets amounted to $15,460 thousand as of September 30, 2024, representing 0.60% of total assets[82]. Efficiency and Return Metrics - The efficiency ratio was 66.1% for the three months ended September 30, 2024, down from 67.1% for the three months ended June 30, 2024; adjusted efficiency ratio was 64.9% compared to 66.9%[25]. - Annualized return on average assets (ROAA) was 1.42% and annualized return on average equity (ROAE) was 12.59% for the three months ended September 30, 2024, slightly up from 1.40% and 12.53% respectively for the prior quarter[26]. - The return on average equity for the quarter ended September 30, 2024, was 12.59%, compared to 12.53% in the previous quarter, showing stable profitability[62]. - The efficiency ratio for the nine months ended September 30, 2024, was 68.28%, compared to 66.73% for the same period in 2023, indicating a decrease in operational efficiency[72]. Capital and Regulatory Ratios - The common equity tier 1 capital ratio was reported at 14.78%, exceeding all capital adequacy requirements[21]. - The total risk-based capital ratio decreased to 13.76% from 14.51% in the previous quarter[64]. - The allowance for credit losses to total portfolio loans ratio was 1.51% as of September 30, 2024, compared to 1.52% as of September 30, 2023[81]. Company Overview and Risks - Capital Bancorp, Inc. had total assets of approximately $2.6 billion as of September 30, 2024[89]. - The company operates bank branches in four locations in the greater Washington, D.C. and Baltimore markets, and one branch in Fort Lauderdale, Florida[89]. - Key risks include geopolitical concerns, changes in economic conditions, and competitive pressures on product pricing and services[91]. - The company acknowledges that forward-looking statements may not be accurate and actual results could differ materially from expectations due to various factors[90].

Financial Performance - Net income for the three months ended June 30, 2024 was $8.2 million, a 12.1% increase from $7.3 million in the same period of 2023[119] - Net income for the six months ended June 30, 2024 was $14.8 million, a 13.4% decrease from $17.1 million in the same period of 2023[122] - Total revenue for the three months ended June 30, 2024, was $43,947,000, compared to $42,027,000 for the same period in 2023, reflecting an increase of 4.3%[232] - The return on average assets, as adjusted, was 1.41% for the three months ended June 30, 2024, up from 1.34% in the same period of 2023, reflecting improved profitability[232] - The return on average equity, as adjusted, was 12.62% for the three months ended June 30, 2024, compared to 12.30% in the same period of 2023, indicating enhanced shareholder returns[232] Interest Income and Expenses - Net interest income increased by $1.7 million, or 4.9%, to $37.1 million, primarily due to increased average balances of $190.0 million in portfolio loans[119] - Net interest income for the six months ended June 30, 2024 increased by $2.2 million, or 3.2%, to $72.1 million[122] - Average interest-earning assets increased by $170.1 million, or 8.0%, to $2.3 billion for the three months ended June 30, 2024, compared to the same period in 2023[130] - Average yield on interest-earning assets rose to 8.82%, a 36 basis point increase from 8.46%[130] - Net interest margin decreased by 17 basis points to 6.46% for the three months ended June 30, 2024, due to rising deposit costs outpacing loan yield increases[130] Noninterest Income and Expenses - Noninterest income for the three months ended June 30, 2024 was $6.9 million, a 3.0% increase from $6.7 million in the prior year[120] - Noninterest expenses were $29.5 million for the three months ended June 30, 2024, slightly down from $29.6 million in the same period of 2023[121] - Noninterest income for the six months ended June 30, 2024 was $12.9 million, a 1.2% increase from $12.7 million in the prior year[123] - Noninterest expenses for the six months ended June 30, 2024 were $59.0 million, an increase of 5.7% from $55.8 million in the same period of 2023[124] Credit Losses and Asset Quality - Provision for credit losses for the three months ended June 30, 2024 was $3.4 million, an increase of $0.6 million from the same period in 2023[119] - Provision for credit losses for the six months ended June 30, 2024 was $6.1 million, an increase of 35.9% from the prior year[123] - The allowance for credit losses to total portfolio loans increased to 1.53% as of June 30, 2024, compared to 1.50% as of December 31, 2023, indicating a slight increase in risk provisioning[238] - Nonperforming assets to total assets decreased to 0.58% as of June 30, 2024, down from 0.72% as of December 31, 2023, showing improvement in asset quality[239] - Net charge-offs to average portfolio loans increased to 0.39% for the three months ended June 30, 2024, compared to 0.35% in the same period of 2023, indicating a rise in loan losses[241] Balance Sheet and Capital - Total assets increased to $2,353.868 million as of June 30, 2024, from $2,184.351 million in the prior year[130] - Stockholders' equity rose to $263.425 million as of June 30, 2024, compared to $238.684 million in the previous year[130] - Total liabilities increased by $199.4 million from December 31, 2023, primarily due to a growth in the deposit portfolio of $204.4 million[193] - Total interest-bearing deposits reached $1,415.9 million as of June 30, 2024, an increase from $1,278.6 million at December 31, 2023[194] - The Company reported a Tier 1 leverage ratio of 11.93% and a total capital ratio of 16.98%[219] Loan Portfolio and Credit Risk - Net portfolio loans totaled $2.0 billion as of June 30, 2024, an increase of $118.3 million, or 6.2%, from $1.9 billion at the end of 2023[155] - The allowance for credit losses increased by $2.2 million, or 7.8%, to $30.8 million as of June 30, 2024[155] - The total gross loan portfolio amounted to $2,028.4 million, with residential loans at $601.3 million, commercial loans at $752.7 million, and construction loans at $294.5 million[171] - The company maintains a strong credit review function and risk rating process to manage problem loans effectively[182] - The total allowance for credit losses is allocated among various loan categories, ensuring flexibility to absorb losses from any category[190] Regulatory Compliance and Risk Management - The Bank was classified as "well capitalized" and in compliance with all applicable regulatory capital requirements as of June 30, 2024[216] - The Company intends to monitor and control growth relative to earnings to remain compliant with regulatory capital standards[216] - The Company maintains a reserve for unfunded commitments and certain off-balance sheet credit risks, recorded in other liabilities[221] - The company performs annual stress tests on the construction loan portfolio to monitor underlying real estate conditions and borrower progress[166] - The company monitors trends in sales outcomes versus underwriting valuations as part of ongoing risk management efforts[166]

Net Income of $8.2 million, or $0.59 per share Net Income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)(1), of $8.3 million, or $0.59 per share Net Interest Income increased $2.1 million, or 5.9%, from 1Q 2024 Net Interest Margin ("NIM") increased to 6.46% as compared to 6.24% (1Q 2024) Core NIM, as adjusted to exclude the impact of credit card loans (non-GAAP)(1) increased to 4.00% as compared to 3.85% (1Q 2024) Loan Growth of $57.1 million, or 11.7% annualized for 2Q 2024 Deposi ...

Financial Performance - Net income for Q2 2024 was $8.2 million, or $0.59 per diluted share, an increase of 24.2% from $6.6 million, or $0.47 per diluted share in Q1 2024[15]. - For the three months ended June 30, 2024, consolidated net income before taxes was $8,624, an increase from $7,605 for the same period in 2023, representing a year-over-year growth of 13.4%[32]. - Net income for the six months ended June 30, 2024, was $14.77 million, a decrease of 13.4% from $17.05 million in the same period of 2023[64]. - Net income for June 30, 2024, was $8,205,000, an increase of 25% from $6,562,000 in March 31, 2024[133]. - Earnings per diluted share rose to $0.59, up from $0.47 in the previous quarter, reflecting a 25.5% increase[133]. Revenue and Income Growth - Noninterest income rose to $6.9 million, a 15.0% increase from $6.0 million in Q1 2024[10]. - The company’s total revenue for the quarter was $43,947, an increase from $42,027 in the same quarter of 2023, representing a growth of 4.6%[38]. - Total revenue for Q2 2024 was $20.2 million, an increase of $1.3 million from Q1 2024[61]. - Noninterest income for the same period was $6,890, up from $5,972 in 2023, marking a growth of 15.4%[38]. - Total noninterest income for the quarter was $6,890 million, an increase from $5,972 million year-over-year[97]. Asset and Deposit Growth - Total assets as of June 30, 2024, were $2,324,238, up from $2,227,866 as of June 30, 2023, indicating a growth of approximately 4.3%[32]. - Total deposits increased by $94.7 million, or 4.7%, reaching $2.1 billion as of June 30, 2024[26]. - Total deposits at June 30, 2024, were $2.1 billion, an increase of $94.7 million, or 4.7%, from March 31, 2024, and an increase of $166.1 million, or 8.6%, from June 30, 2023[94]. - Average deposits for the three months ended June 30, 2024, increased by $53.2 million, or 2.7%, compared to the three months ended March 31, 2024[94]. Loan Growth and Quality - Loan growth was $57.1 million, representing an annualized growth rate of 11.7% for Q2 2024[1]. - New portfolio loans (excluding credit card loans) originated in the second quarter 2024 totaled $112.3 million with a weighted average yield of 8.25%[49]. - Portfolio loans, excluding credit cards, increased by $47.4 million to $1.9 billion gross at June 30, 2024, compared to March 31, 2024[74]. - Nonperforming Loans to Total Portfolio Loans ratio decreased to 0.70% as of June 30, 2024, from 0.73% in March 31, 2024[46]. - Nonperforming assets decreased to 0.58% of total assets at June 30, 2024, from 0.62% at March 31, 2024[75]. Efficiency and Cost Management - The efficiency ratio improved to 67.11% in Q2 2024, down from 71.95% in Q1 2024[12]. - The efficiency ratio improved to 67.11% for the three months ended June 30, 2024, compared to 71.95% for the same period in 2023, indicating enhanced operational efficiency[38]. - Noninterest expenses totaled $29,493 million, slightly up from $29,487 million, showing a marginal increase of 0.02%[97]. - Noninterest expense for the three months ended June 30, 2024, was $13.8 million, an increase of $0.2 million from the first quarter of 2024[109]. Credit Losses and Provisions - The provision for credit losses was $3.4 million, an increase of $0.7 million from Q1 2024, primarily due to unsecured credit card loan growth[21]. - The provision for credit losses for the six months ended June 30, 2024, was $6.1 million, increasing the allowance for credit losses to $30.8 million, or 1.53% of total loans[93]. - Provision for credit losses increased by 25.3% to $3.4 million in Q2 2024 compared to Q1 2024[63]. - The allowance for credit losses was $30,832 million, compared to $29,350 million in the previous quarter, indicating a rise in provisions[98]. Capital and Equity - The total risk-based capital ratio was 14.51%, slightly up from 14.36% in the previous quarter, indicating strong capital adequacy[133]. - Stockholders' equity increased to $267.9 million as of June 30, 2024, compared to $237.4 million at June 30, 2023[123]. - Retained earnings increased to $225,824 million, up from $218,731 million, reflecting a growth of 2.5%[98]. Mergers and Acquisitions - The pending acquisition of Integrated Financial Holdings, Inc. incurred pre-tax merger-related expenses of $0.1 million in Q2 2024, down from $0.7 million in Q1 2024[4]. - The company is actively pursuing a merger with IFHI, which may impact future business opportunities and strategies[165]. Market Presence - The company operates bank branches in four locations in the greater Washington, D.C. and Baltimore markets, indicating ongoing market expansion efforts[164].

Core Insights - Capital Bank has appointed Dominic C. Canuso, CFA, as the new Chief Financial Officer, effective July 15, 2024, reporting to CEO Ed Barry [1][2] - Canuso brings extensive experience in finance and operations, having previously served as EVP and CFO at WSFS Bank, where he significantly contributed to the bank's growth and operational enhancements [4] - Capital Bank has over $2.3 billion in assets as of March 31, 2024, and emphasizes a human-centric approach to banking [3] Company Overview - Capital Bank has been operational since 1999 and has evolved into a publicly traded company with a strong asset base [3] - The bank is a member of the Federal Reserve Bank system and is committed to its fiduciary duties to shareholders while helping customers achieve their goals [3] Leadership and Strategy - CEO Ed Barry expressed enthusiasm about Canuso's appointment, highlighting his ability to drive both organic and inorganic growth, which aligns with Capital Bank's expansion strategy [2] - Canuso is expected to support the execution of Capital Bank's strategic priorities and leverage opportunities across various business lines [5]

Core Viewpoint - Capital Bank, N.A. has relocated and expanded its Reston branch to enhance customer service and support local business growth [1][2]. Group 1: Branch Details - The new branch is located at 1900 Campus Commons Dr, Suite 130, Reston, VA 20191, replacing the former location at 10700 Parkridge Blvd 180, Reston, VA [2]. - The new facility opened on May 6th, 2024, and features increased space and improved parking facilities [2]. Group 2: Company Commitment - The relocation aligns with Capital Bank's dedication to meeting the evolving needs of its clientele [2]. - The CEO emphasized the bank's commitment to providing the best banking services and enhancing the customer experience [3]. Group 3: Company Background - Capital Bank has been operating for over 25 years in the DC Metro Region and reported assets of nearly $2.3 billion as of September 30, 2023 [3]. - The bank is a member of the Federal Reserve Bank system and an Equal Housing Lender, demonstrating its commitment to customers and shareholders [3].

Core Insights - Capital Bank, N.A. has relocated and expanded its Reston branch to better serve customers and the local business community [1][2] - The new branch is located at 1900 Campus Commons Dr, Suite 130, Reston, VA, and opened on May 6, 2024, replacing the former location [2] - The expansion reflects Capital Bank's commitment to enhancing the banking experience and supporting local business growth [2][3] Company Overview - Capital Bank has been operating for over 25 years in the DC Metro Region, establishing a reliable presence in the financial landscape [3] - As of September 30, 2023, the bank reported assets of nearly $2.3 billion [3] - Capital Bank is a member of the Federal Reserve Bank system and is committed to its customers and shareholders [3]