UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended March 31, 2020 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 | --- | --- | |-------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 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) | --- | --- | --- | --- | --- | --- | |-------|------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended September 30, 2019 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 | --- | --- | |---------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended June 30, 2019 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 | --- | --- | |--------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended March 31, 2019 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 | --- | --- | |-------------------- ...

PART I [Business](index=6&type=section&id=Item%201.%20Business) Capital Bancorp, Inc. operates Capital Bank, N.A., serving the Washington D.C. and Baltimore areas with **$1.1 billion** in assets - **Key Financial Metrics as of December 31, 2018** | Metric | Amount ($ millions) | | :--- | :--- | | Total Assets | $1,100 | | Total Loans Held for Investment | $1,000 | | Total Deposits | $955 | | Total Stockholders' Equity | $115 | - The company operates through three primary divisions: **Commercial Banking**, **Church Street Mortgage (CSM)**, and **OpenSky®**[21](index=21&type=chunk) - The Commercial Banking division, representing approximately **94%** of Capital Bank's total assets, focuses on commercial and industrial (C&I), commercial real estate, and construction lending in the Washington, D.C. and Baltimore metropolitan areas[24](index=24&type=chunk)[25](index=25&type=chunk) - The Church Street Mortgage division originates conventional and government-guaranteed residential mortgage loans nationally, primarily for sale into the secondary market, with purchase volume increasing from **19%** in 2016 to **79%** in 2018[28](index=28&type=chunk)[32](index=32&type=chunk) - The OpenSky® division provides secured credit cards nationwide to under-banked populations, with credit lines fully collateralized by customer deposits held in noninterest-bearing accounts[34](index=34&type=chunk) - The company's business strategy includes driving organic loan and deposit growth, leveraging technology for efficiency, increasing scale in consumer fee-based platforms, and opportunistically pursuing acquisitions[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk) - **Loan Portfolio Composition as of December 31, 2018** | Loan Type | Amount ($ thousands) | Percentage of Total Loans | | :--- | :--- | :--- | | Residential Real Estate | $407,844 | 41% | | Commercial Real Estate | $278,691 | 28% | | Construction | $157,586 | 16% | | Commercial | $122,264 | 12% | | Credit card | $34,673 | 3% | | Other consumer | $1,202 | — | | **Total** | **$1,002,260** | **100.0%** | [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business, regulatory, and ownership risks, including economic sensitivity, geographic concentration, and compliance - **Business Risks:** The company's commercial operations are heavily concentrated in the Washington, D.C. and Baltimore metropolitan areas, making it sensitive to local economic downturns, with approximately **93%** of loans to borrowers in this region[202](index=202&type=chunk)[203](index=203&type=chunk) - **Credit Risks:** The loan portfolio has significant exposure to commercial real estate (**$270.1 million**) and construction loans (**$157.6 million**), which carry greater credit risks, with **85%** of the total loan portfolio secured by real estate as of December 31, 2018[212](index=212&type=chunk)[215](index=215&type=chunk) - **Operational Risks:** The OpenSky® credit card division is exposed to delinquencies and credit losses, particularly from fraud, with approximately **19%** of new secured cards experiencing a charge-off within the first year based on experience[251](index=251&type=chunk)[252](index=252&type=chunk)[255](index=255&type=chunk) - **Regulatory Risks:** The company operates in a highly regulated environment, and compliance with complex laws like the Dodd-Frank Act and Basel III capital standards imposes significant costs and can restrict business activities[283](index=283&type=chunk)[285](index=285&type=chunk)[290](index=290&type=chunk) - **Concentration Risk:** The Bank exceeds regulatory guidelines for commercial real estate (CRE) concentration, with construction loans at **143%** of total capital and non-owner-occupied CRE at **340%** of total capital, potentially leading to increased regulatory scrutiny and capital requirements[149](index=149&type=chunk)[298](index=298&type=chunk) - **Ownership Risks:** As of December 31, 2018, directors and executive officers beneficially owned approximately **42%** of the outstanding common stock, giving them significant influence over corporate matters[309](index=309&type=chunk) [Unresolved Staff Comments](index=55&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - None[324](index=324&type=chunk) [Properties](index=55&type=section&id=Item%202.%20Properties) The company's headquarters are located in Rockville, Maryland, operating a network of leased properties including commercial bank branches, mortgage offices, and an OpenSky® operations office - **Summary of Office Locations** | Type of Office | Location(s) | | :--- | :--- | | Corporate Headquarters | Rockville, MD | | Commercial Branches | Rockville, MD; Washington, D.C.; North Bethesda, MD; Columbia, MD; Reston, VA | | Mortgage Offices | Columbia, MD; Annapolis, MD; Phoenix, MD; Reston, VA | | OpenSky® Operations | Horsham, PA | [Legal Proceedings](index=56&type=section&id=Item%203.%20Legal%20Proceedings) The company is periodically involved in various litigation matters incidental to its business, with specific details referenced in Note 18 of the Financial Statements - The company is a party to various litigation matters in the ordinary course of business, with material legal proceedings described in Note 18 to the Consolidated Financial Statements[327](index=327&type=chunk) [Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[328](index=328&type=chunk) PART II [Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=57&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock began trading on Nasdaq in September 2018, raising **$20.2 million** in its IPO, with no future dividend plans - The company's common stock has been publicly traded on the Nasdaq Global Select Market under the symbol **CBNK** since September 2018[331](index=331&type=chunk) - The company completed its IPO in September/October 2018, selling a total of **1,834,310 shares** and raising approximately **$20.2 million** in net proceeds[332](index=332&type=chunk) - The company has never declared or paid dividends on its common stock and plans to retain earnings for business use rather than paying dividends in the foreseeable future[333](index=333&type=chunk) - **Equity Compensation Plan Information as of December 31, 2018** | Plan Category | Number of Securities to be Issued Upon Exercise | Weighted-Average Exercise Price ($) | Number of Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 1,431,860 | $9.38 | 542,215 | [Selected Financial Data](index=59&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of historical consolidated financial data (2014-2018), including key financial metrics and non-GAAP reconciliations - **Selected Historical Financial Data (2014-2018)** | Metric ($ thousands) | 2018 | 2017 | 2016 | 2015 | 2014 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Income** | $12,767 | $7,109 | $9,441 | $7,492 | $6,793 | | **Total Assets** | $1,105,058 | $1,026,009 | $905,600 | $743,429 | $618,749 | | **Loans, net of unearned income** | $1,000,268 | $887,420 | $763,430 | $639,350 | $506,339 | | **Total Deposits** | $955,241 | $904,899 | $790,924 | $629,817 | $501,974 | | **Total Stockholders' Equity** | $114,564 | $80,119 | $70,748 | $59,657 | $50,216 | - The company provides non-GAAP financial measures for 2017 to exclude the effects of a one-time **$2.3 million** expense for a credit card system conversion, a **$2.4 million** loss of revenue from waived interest and fees during the conversion, and the impact of the 2017 Tax Act on deferred tax assets[348](index=348&type=chunk) - **GAAP to Non-GAAP Reconciliation for 2017 ($ thousands)** | Metric | GAAP Value | Adjustments | Non-GAAP Value | | :--- | :--- | :--- | :--- | | Net Income | $7,109 | $4,184 | $11,293 | | Diluted EPS | $0.62 | $0.37 | $0.99 | | ROAA | 0.74% | 0.43% | 1.17% | | ROAE | 9.29% | 5.46% | 14.75% | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=66&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2018, net income increased **79.6%** to **$12.8 million**, total assets reached **$1.1 billion**, and asset quality improved - **Results of Operations Comparison (2018 vs. 2017)** | Metric ($ thousands) | 2018 | 2017 | % Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $57,888 | $48,911 | 18.4% | | Provision for Loan Losses | $2,140 | $2,655 | (19.4)% | | Noninterest Income | $16,124 | $15,149 | 6.4% | | Noninterest Expense | $54,123 | $47,306 | 14.4% | | **Net Income** | **$12,767** | **$7,109** | **79.6%** | - The significant increase in 2018 net income was primarily due to non-recurring items in 2017, including expenses and waived fees from a system conversion and a one-time tax expense from the revaluation of deferred tax assets[369](index=369&type=chunk) - Total assets grew by **$79.0 million** to **$1.1 billion** at year-end 2018, funded by a **$50.3 million** increase in deposits and a **$34.4 million** increase in stockholders' equity, largely from the IPO[397](index=397&type=chunk) - **Loan Portfolio Growth (Year-End)** | Metric ($ thousands) | 2018 | 2017 | | :--- | :--- | :--- | | Total Gross Loans | $1,002,260 | $889,011 | | Allowance for Loan Losses | $11,308 | $10,033 | | **Total Net Loans** | **$988,960** | **$877,387** | - Asset quality improved, with nonperforming assets decreasing from **$5.5 million** (**0.54%** of total assets) at year-end 2017 to **$4.8 million** (**0.44%** of total assets) at year-end 2018[422](index=422&type=chunk)[424](index=424&type=chunk) - Stockholders' equity increased by **$34.4 million** (**43%**) in 2018, primarily due to **$19.8 million** in net proceeds from the IPO and **$12.5 million** in net income[474](index=474&type=chunk) - The Bank remained 'well capitalized' under regulatory standards, with a Total risk-based capital ratio of **12.25%** as of December 31, 2018[480](index=480&type=chunk)[483](index=483&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=90&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate volatility, managed by ALCO, projecting a **4.3%** increase in net interest income from a **100 bps** rate rise - The primary component of market risk for the company is interest rate volatility, managed by the **Asset/Liability Management Committee (ALCO)**[503](index=503&type=chunk)[506](index=506&type=chunk) - **Interest Rate Shock Simulation as of December 31, 2018** | Rate Shock Scenario | Impact on Net Interest Income (12-month horizon) (%) | Impact on Economic Value of Equity (EVE) (%) | | :--- | :--- | :--- | | +300 bps | +12.8% | (12.0)% | | +200 bps | +8.5% | (7.7)% | | +100 bps | +4.3% | (3.5)% | | -100 bps | (4.2)% | +2.9% | - The company's interest sensitivity gap analysis indicates an asset-sensitive position for maturities under one year, meaning rising interest rates would generally have a positive effect on net interest income[507](index=507&type=chunk) [Financial Statements and Supplementary Data](index=93&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2018 and 2017, with an unqualified opinion from **Elliott Davis, PLLC** - The report of the independent registered public accounting firm, **Elliott Davis, PLLC**, states that the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017[516](index=516&type=chunk) - **Consolidated Balance Sheet Highlights (as of Dec 31)** | Metric ($ thousands) | 2018 | 2017 | | :--- | :--- | :--- | | Total Assets | $1,105,058 | $1,026,009 | | Loans Receivable, net | $988,960 | $877,387 | | Total Deposits | $955,240 | $904,899 | | Total Liabilities | $990,494 | $945,890 | | Total Stockholders' Equity | $114,564 | $80,119 | - **Consolidated Income Statement Highlights (Year Ended Dec 31)** | Metric ($ thousands) | 2018 | 2017 | | :--- | :--- | :--- | | Net Interest Income | $57,888 | $48,911 | | Provision for Loan Losses | $2,140 | $2,655 | | Noninterest Income | $16,124 | $15,149 | | Noninterest Expense | $54,123 | $47,306 | | **Net Income** | **$12,767** | **$7,109** | - The Notes to Consolidated Financial Statements provide detailed information on accounting policies, loan portfolio characteristics, capital standards, fair value measurements, and related-party transactions[534](index=534&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=156&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure - None[751](index=751&type=chunk) [Controls and Procedures](index=156&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of December 31, 2018 - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by the report[752](index=752&type=chunk) - The annual report does not include a management assessment of internal control over financial reporting due to the transition period for newly public companies[753](index=753&type=chunk) - There were no material changes in the company's internal control over financial reporting during the fourth quarter of 2018[754](index=754&type=chunk) [Other Information](index=156&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[755](index=755&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=157&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2019 Annual Meeting of Stockholders proxy statement - Information is incorporated by reference from the Company's 2019 Proxy Statement[758](index=758&type=chunk) [Executive Compensation](index=157&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2019 Annual Meeting of Stockholders proxy statement - Information is incorporated by reference from the Company's 2019 Proxy Statement[759](index=759&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=157&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and related matters is incorporated by reference from the company's 2019 Annual Meeting of Stockholders proxy statement - Information is incorporated by reference from the Company's 2019 Proxy Statement[760](index=760&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=157&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's 2019 Annual Meeting of Stockholders proxy statement - Information is incorporated by reference from the Company's 2019 Proxy Statement[761](index=761&type=chunk) [Principal Accountant Fees and Services](index=157&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2019 Annual Meeting of Stockholders proxy statement - Information is incorporated by reference from the Company's 2019 Proxy Statement[762](index=762&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=158&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides an index of all exhibits filed as part of the Annual Report on **Form 10-K**, including corporate governance documents and certifications - This section lists all exhibits filed with the **Form 10-K**, including Articles of Incorporation, Bylaws, Stock and Incentive Compensation Plans, CEO/CFO certifications, and XBRL data[765](index=765&type=chunk)[766](index=766&type=chunk)