Capital Bancorp(CBNK) - 2024 Q2 - Quarterly Report

Financial Performance - Net income for the three months ended June 30, 2024 was $8.2 million, a 12.1$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$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$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$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]