Capital Bancorp(CBNK) - 2025 Q1 - Quarterly Report

PART I - CONSOLIDATED FINANCIAL INFORMATION Consolidated Financial Statements (Unaudited) Presents the unaudited consolidated balance sheets, income statements, and cash flow statements for Q1 2025 Consolidated Balance Sheets 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 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 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 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][17] - Goodwill increased by $3.0 million in Q1 2025 due to a measurement period adjustment from the IFH acquisition[28][30] - Total nonperforming loans increased to $42.9 million as of March 31, 2025, from $30.2 million at December 31, 2024[47] - The Board of Directors declared a quarterly cash dividend of $0.10 per share in April 2025[109] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Q1 2025 performance, highlighting significant net income growth driven by the IFH acquisition Results of Operations 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][149] - 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][147] - Noninterest expense increased by $8.6 million, driven by higher salaries and merger-related costs from the IFH acquisition[133][153] Financial Condition 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][192] - The company had significant available liquidity, including $509.7 million from the FHLB and $115.7 million from the Federal Reserve[215] Capital Resources 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] 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 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][250] 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 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] - During Q1 2025, the Company enhanced internal controls over business combinations, specifically for Day 1 accounting[261] PART II - OTHER INFORMATION Legal Proceedings 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] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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 $15 million of its Common Stock[265] Share Repurchase Activity (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Maximum Value Remaining ($) | | :--- | :--- | :--- | :--- | | 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 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]