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Capital Bancorp, Inc. Reports Third Quarter 2023 Net Income of $9.8 million, or $0.70 per share
المصدر: Nasdaq GlobeNewswire / 23 أكتوبر 2023 16:15:02 America/New_York
- Net Income Expands 33.8% with Improved Net Interest Margin from 2Q 2023
- Diluted EPS of $0.70, ROAA of 1.75%, and ROAE of 16.00% for 3Q 2023
- Loan and Deposit Growth Generates Positive Operating Leverage
- Tangible Book Value Per Share(1) of $17.48 for 3Q 2023 up 15% from 3Q 2022
- Cash dividend of $0.08 per share declared
ROCKVILLE, Md., Oct. 23, 2023 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $9.8 million, or $0.70 per diluted share, for the third quarter 2023, compared to net income of $7.3 million, or $0.52 per diluted share, for the second quarter 2023 and $11.1 million, or $0.77 per diluted share, for the third quarter 2022. For the quarter, total average deposits increased $37.1 million and the average loan portfolio grew $42.9 million. In addition, the net interest margin of 6.71% for the third quarter 2023 improved when compared to 6.63% for the second quarter 2023. Adjusted net interest margin(1) (excluding credit card and SBA-PPP loans) of 4.05% for the third quarter 2023 remained stable when compared to adjusted net interest margin(1) of 4.06% for the second quarter 2023.
The Company also declared a cash dividend on its common stock of $0.08 per share. The dividend is payable on November 22, 2023 to shareholders of record on November 6, 2023.
"Our business model is proving to be stable and resilient against a challenging backdrop," said Ed Barry, Chief Executive Officer of the Company and the Bank. "Our focus on core deposit relationships and differentiated lending has enabled profitable growth. We continue to make investments in technology, people, and asset generation that should further strengthen our franchise. Credit remains stable and we maintained high capital levels allowing us to be opportunistic moving forward."
“The Board is pleased with our improved quarter over quarter performance,” said Steven J. Schwartz, Chairman of the Company. "Our continued, stable net interest margin, coupled with growth in loans and deposits, enabled our ROAA and ROE to bounce back nicely and positions the Bank for continued best-in-class performance. In addition, we are gratified by our year-over-year growth in tangible book value per share, particularly considering the challenges facing banks today due to a rapidly changing interest rate environment, and falling values of certain real estate asset classes.”
(1) Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth in the Appendix at the end of this press release.
Third Quarter 2023 Highlights
Capital Bancorp, Inc.
Earnings Summary - Net income of $9.8 million, or $0.70 per diluted share, increased $2.5 million compared to $7.3 million, or $0.52 per diluted share, for the second quarter 2023.
- Net interest income of $36.8 million increased $1.5 million compared to $35.3 million for the second quarter 2023. Interest income of $47.7 million increased $2.7 million compared to $45.1 million for the second quarter 2023. Interest expense of $10.9 million increased $1.2 million compared to $9.7 million for the second quarter 2023.
- The provision for credit losses was $2.3 million, a decrease of $0.6 million from the second quarter 2023. The change in provision was partially due to lower loan growth of $24.9 million from June 30, 2023 to September 30, 2023 as compared to loan growth of $50.9 million from March 31, 2023 to June 30, 2023.
- Noninterest income of $6.3 million decreased $0.4 million compared to $6.7 million for the second quarter 2023. Credit card fees decreased $0.3 million partially due to interchange fees from lower customer purchases as the number of open customer accounts decreased quarter over quarter.
- Noninterest expense of $28.0 million decreased $1.5 million compared to $29.6 million for the second quarter 2023 including total advertising expense of $1.6 million decreasing $1.1 million off of seasonally higher second quarter levels.
Performance and Efficiency Ratios – Annualized return on average assets ("ROAA") and annualized return on average equity ("ROAE") were 1.75% and 16.00%, respectively, for the three months ended September 30, 2023, compared to 1.34% and 12.30%, respectively, for the three months ended June 30, 2023.
- The efficiency ratio was 65.0% for the three months ended September 30, 2023, compared to 70.4% for the three months ended June 30, 2023. The change was primarily attributable to a $1.5 million increase in net interest income and a $1.5 million reduction in noninterest expense quarter over quarter.
Balance Sheet – Total assets of $2.3 billion at September 30, 2023 increased $44.6 million, or 2.0%, from June 30, 2023.
- Cash and cash equivalents increased $26.8 million.
- Net portfolio loans of $1.9 billion increased $24.9 million, representing 5.4% annualized growth.
- Total deposits of $2.0 billion at September 30, 2023 increased $33.6 million, or 1.7%, from June 30, 2023, while total average deposits increased $37.1 million, or 7.8% annualized, quarter over quarter.
- The investment securities portfolio continues to be classified as available for sale and had a fair market value of $206.1 million, or 9.1% of total assets, at September 30, 2023 down slightly from $208.5 million at June 30, 2023. The amortized cost of the investment securities portfolio was $229.4 million, with an effective duration of 3.21 years. U.S. Treasury securities represent 74.8% of the overall investment portfolio. The accumulated other comprehensive loss ("AOCI Loss") on the investment securities portfolio increased $1.8 million during the quarter to $17.8 million as of September 30, 2023, which represents 7.3% of total stockholders' equity. The Company does not have a held to maturity ("HTM") investment securities portfolio.
Net Interest Margin - Net interest margin improved to 6.71% for the three months ended September 30, 2023, compared to 6.63% for the three months ended June 30, 2023. Adjusted net interest margin (excluding credit card and SBA-PPP loans), of 4.05%, remained stable compared to 4.06% for the three months ended June 30, 2023.
- The average yield on interest earning assets increased 24 basis points compared to the second quarter 2023. The increase in average yield is due to portfolio loans increasing 17 basis points to 9.72%, and interest-bearing deposits held at other institutions increased 96 basis points to 5.39%. Average portfolio loans increased $46.1 million and average interest-bearing deposits held at other institutions increased $20.7 million, compared to the second quarter 2023.
- The average rate on interest-bearing liabilities increased 24 basis points compared to the second quarter 2023. Increases in average rates include money market accounts increasing 38 basis points to 3.85% and time deposits increasing 21 basis points to 4.51%, while average balances increased $30.5 million and $8.0 million, respectively, compared to the second quarter 2023. The average rate on borrowed funds decreased 48 basis points to 2.59%, as a result of a reduction in average short-term FHLB advances of $8.3 million to $0.9 million in the third quarter 2023 from $9.1 million in the second quarter 2023.
Deposits and Cost of Funds - Total deposits at September 30, 2023 increased by $33.6 million, or 1.7%, compared to June 30, 2023.
- Interest-bearing deposits of $1.3 billion increased $46.0 million, or 3.7%, compared to June 30, 2023 with growth in money market accounts of $37.6 million, other time deposits of $22.5 million and a reduction in interest-bearing demand accounts of $14.1 million. Noninterest-bearing deposits of $680.8 million decreased $12.3 million, or 1.8%, compared to June 30, 2023. Brokered time deposits totaled $128.7 million at September 30, 2023, unchanged from June 30, 2023.
- The elevated interest rate environment has driven up the average cost of interest-bearing liabilities to 3.37% for the quarter ended September 30, 2023, compared to 3.13% for the second quarter 2023.
- Average noninterest-bearing deposits of $666.9 million decreased $9.4 million, or 1.4%, compared to June 30, 2023, and represented 34.8% of total average deposits at September 30, 2023.
- Average borrowed funds of $34.9 million decreased $8.3 million, or 19.1%, compared to June 30, 2023.
Robust Capital Positions - As of September 30, 2023, the Company reported a common equity tier 1 capital ratio of 15.71%, compared to 14.96% at June 30, 2023, and an allowance for credit losses to total loans ratio of 1.52%, compared to an allowance for credit losses to total loans ratio of 1.50% as June 30, 2023. Management expects the Company to remain well-capitalized for the foreseeable future. Shares repurchased and retired during the three months ended September 30, 2023, as part of the Company's stock repurchase program, totaled 100,575 shares at an average price of $19.47, for a total cost of $2.0 million including commissions. Tangible book value per common share grew 2.9% to $17.48 at September 30, 2023 when compared to June 30, 2023. The company did not have goodwill or other intangible assets during any of the periods presented and therefore, tangible book value per share is equal to book value per share.
Liquidity - Total sources of available borrowings at September 30, 2023 totaled $646.6 million, including available collateralized lines of credit of $514.5 million, unsecured lines of credit with other banks of $76.0 million and unpledged investment securities available as collateral for potential additional borrowings of $56.1 million.
Commercial Bank
Continued Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $29.9 million, to $1.7 billion, gross, at September 30, 2023 compared to June 30, 2023.
Net Interest Income - Interest income of $30.4 million increased $1.7 million compared to $28.7 million for the second quarter 2023 driven primarily by loan growth. Interest expense of $10.7 million increased $1.2 million driven by an increase in average interest-bearing deposits with slightly higher rates in the third quarter 2023.
Credit Metrics - Nonperforming assets ("NPAs") decreased 4 basis points to 0.67% of total assets at September 30, 2023 compared to 0.71% at June 30, 2023 as a result of a decrease in nonaccrual loans at September 30, 2023 to $15.2 million compared to $15.7 million at June 30, 2023. Included in nonperforming assets is a single $8.2 million, multi-unit residential real estate loan that was downgraded in the first quarter of 2023. At September 30, 2023 commercial real estate loans with office space exposure totaled $55.4 million, or 3.0% of total portfolio loans, with a weighted average loan-to-value ("LTV") of 48.2%. Owner-occupied commercial real estate loans with office exposure totaled $42.5 million with a weighted average LTV of 47.8% and non owner-occupied commercial real estate loans with office exposure totaled $12.8 million with a weighted average LTV of 49.8%.
OpenSky®
Revenues - Total revenue of $20.5 million increased $0.7 million from the second quarter 2023. Interest income of $16.1 million increased $1.0 million from the second quarter 2023. Average OpenSky® loan balances, net of reserves and deferred fees of $116.8 million for the third quarter 2023, increased $6.2 million, or 5.6%, compared to $110.6 million for the second quarter 2023. Noninterest income of $4.4 million decreased $0.3 million due to a decline in credit card fees as compared to the second quarter 2023.
Noninterest Expense - Total noninterest expense of $10.6 million decreased $1.4 million from the second quarter 2023. Noninterest expense declined in the third quarter off of higher seasonal second quarter levels driven primarily by higher advertising expense. Advertising expense can vary throughout the year based on market opportunities for new account acquisition. During the third quarter 2023, the number of OpenSky® credit card accounts declined by 10,853 to 529,205.
Loan Balances - OpenSky® loan balances, net of reserves, of $122.5 million at September 30, 2023 decreased by $0.4 million, or 0.3%, compared to $122.9 million at June 30, 2023. Corresponding deposit balances of $181.2 million at September 30, 2023 decreased $5.4 million, or 2.9%, compared to $186.6 million at June 30, 2023. Gross unsecured loan balances of $27.4 million at September 30, 2023 increased $2.2 million compared to $25.3 million at June 30, 2023.
OpenSky® Credit - Card delinquencies and utilization remained stable in the third quarter 2023 when compared to the second quarter 2023. The provision for credit losses decreased $0.3 million compared to the second quarter 2023 as card balances, net of reserve decreased $0.4 million during the third quarter 2023 as compared to an increase of $10.1 million during the second quarter 2022.
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited Quarter Ended 3Q23 vs 2Q23 3Q23 vs 3Q22 (in thousands except per share data) September 30, 2023 June 30, 2023 September 30, 2022 $ Change % Change $ Change % Change Earnings Summary Interest income $ 47,741 $ 45,080 $ 38,340 $ 2,661 5.9 % $ 9,401 24.5 % Interest expense 10,931 9,740 1,663 1,191 12.2 % 9,268 557.3 % Net interest income 36,810 35,340 36,677 1,470 4.2 % 133 0.4 % Provision for credit losses 2,280 2,862 1,260 (582 ) (20.3 )% 1,020 81.0 % Provision for credit losses on unfunded commitments 24 — — 24 — % 24 — % Noninterest income 6,326 6,687 7,108 (361 ) (5.4 )% (782 ) (11.0 )% Noninterest expense 28,046 29,592 28,094 (1,546 ) (5.2 )% (48 ) (0.2 )% Income before income taxes 12,786 9,573 14,431 3,213 33.6 % (1,645 ) (11.4 )% Income tax expense 2,998 2,255 3,336 743 32.9 % (338 ) (10.1 )% Net income $ 9,788 $ 7,318 $ 11,095 $ 2,470 33.8 % $ (1,307 ) (11.8 )% Pre-tax pre-provision net revenue ("PPNR")(1) $ 15,090 $ 12,435 $ 15,691 $ 2,655 21.4 % $ (601 ) (3.8 )% Weighted average common shares - Basic 13,933 14,025 14,030 (92 ) (0.7 )% (97 ) (0.7 )% Weighted average common shares - Diluted 14,024 14,059 14,375 (35 ) (0.2 )% (351 ) (2.4 )% Earnings per share - Basic $ 0.70 $ 0.52 $ 0.79 $ 0.18 34.6 % $ (0.09 ) (11.4 )% Earnings per share - Diluted $ 0.70 $ 0.52 $ 0.77 $ 0.18 34.6 % $ (0.07 ) (9.1 )% Return on average assets (annualized) 1.75 % 1.34 % 2.15 % 0.41 % 30.6 % (0.40 )% (18.6 )% Return on average assets, excluding impact of SBA-PPP loans (annualized)(1) 1.75 % 1.34 % 2.10 % 0.41 % 30.6 % (0.35 )% (16.7 )% Return on average equity (annualized) 16.00 % 12.30 % 20.32 % 3.70 % 30.1 % (4.32 )% (21.3 )% ______________
(1) Refer to Appendix for reconciliation of non-GAAP measures
COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited (Continued) Nine Months Ended September 30, (in thousands except per share data) 2023 2022 $ Change % Change Earnings Summary Interest income $ 136,237 $ 109,298 $ 26,939 24.6 % Interest expense 29,600 3,890 25,710 660.9 % Net interest income 106,637 105,408 1,229 1.2 % Provision for credit losses 6,802 4,247 2,555 60.2 % Provision for credit losses on unfunded commitments 5 — 5 — % Noninterest income 19,039 23,811 (4,772 ) (20.0 )% Noninterest expense 83,860 82,379 1,481 1.8 % Income before income taxes 35,009 42,593 (7,584 ) (17.8 )% Income tax expense 8,168 9,779 (1,611 ) (16.5 )% Net income $ 26,841 $ 32,814 $ (5,973 ) (18.2 )% Pre-tax pre-provision net revenue ("PPNR")(1) $ 41,816 $ 46,840 $ (5,024 ) (10.7 )% Weighted average common shares - Basic 14,038 14,009 29 0.2 % Weighted average common shares - Diluted 14,112 14,329 (217 ) (1.5 )% Earnings per share - Basic $ 1.91 $ 2.34 $ (0.43 ) (18.4 )% Earnings per share - Diluted $ 1.90 $ 2.29 $ (0.39 ) (17.0 )% Return on average assets (annualized) 1.64 % 2.13 % (0.49 )% (23.0 )% Return on average assets, excluding impact of SBA-PPP loans (annualized)(1) 1.64 % 1.94 % (0.30 )% (15.5 )% Return on average equity (annualized) 15.08 % 20.93 % (5.85 )% (28.0 )% Quarter Ended Quarter Ended September 30, June 30, March 31, December 31, (in thousands except per share data) 2023 2022 % Change 2023 2023 2022 Balance Sheet Highlights Assets $ 2,272,484 $ 2,009,358 13.1 % $ 2,227,866 $ 2,245,286 $ 2,123,655 Investment securities available for sale 206,055 269,620 (23.6 )% 208,464 255,762 252,481 Mortgage loans held for sale 4,843 6,875 (29.6 )% 10,146 9,620 7,416 SBA-PPP loans, net of fees 750 2,662 (71.8 )% 1,090 2,037 2,163 Portfolio loans receivable(2) 1,861,929 1,648,001 13.0 % 1,837,041 1,786,109 1,728,592 Allowance for credit losses 28,279 26,091 8.4 % 27,495 26,216 26,385 Deposits 1,967,988 1,737,591 13.3 % 1,934,361 1,944,374 1,758,072 FHLB borrowings 22,000 22,000 — % 22,000 32,000 107,000 Other borrowed funds 12,062 12,062 — % 12,062 12,062 12,062 Total stockholders' equity 242,878 214,005 13.5 % 237,435 234,517 224,015 Tangible common equity(1) 242,878 214,005 13.5 % 237,435 234,517 224,015 Common shares outstanding 13,896 14,039 (1.0 )% 13,981 14,083 14,139 Book value per share $ 17.48 $ 15.24 14.7 % $ 16.98 $ 16.65 $ 15.84 Tangible book value per share(1) $ 17.48 $ 15.24 14.7 % $ 16.98 $ 16.65 $ 15.84 Dividends per share $ 0.08 $ 0.06 33.3 % $ 0.06 $ 0.06 $ 0.06 ______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.
(2) Loans are reflected net of deferred fees and costs.Operating Results - Comparison of Three Months Ended September 30, 2023 and 2022
For the three months ended September 30, 2023, net interest income of $36.8 million increased slightly from $36.7 million in the same period in 2022, primarily due to increased average balances of $245.3 million in portfolio loans combined with a 78 basis point increase in yield for portfolio loans partially offset by significant increases in the cost of funding. The net interest margin decreased 53 basis points to 6.71% for the three months ended September 30, 2023, from the same period in 2022 as interest income on credit cards decreased $1.0 million and interest income on SBA-PPP totaled $0.3 million for the three months ended September 30, 2022 with no comparable amount in 2023. Net interest margin, excluding credit card and SBA-PPP loans, decreased to 4.05% for the three months ended September 30, 2023, compared to 4.16% for the same period in 2022 as the costs of deposits, including money market accounts and time deposits, outpaced the increases in yields on interest-bearing deposits and portfolio loans.
For the three months ended September 30, 2023, average interest earning assets increased $166.4 million, or 8.3%, to $2.2 billion as compared to the same period in 2022, and the average yield on interest earning assets increased 113 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $280.9 million, or 27.9%, and the average cost of interest-bearing liabilities increased to 3.37%, a 271 basis point increase from 0.66%.
For the three months ended September 30, 2023, the provision for credit losses was $2.3 million, an increase of $1.0 million from the same period in 2022. Net charge-offs for the three months ended September 30, 2023 were $1.8 million, or 0.38% on an annualized basis of average portfolio loans, compared to $1.6 million, or 0.39% on an annualized basis of average loans for the same period in 2022. Of the $1.8 million in net charge-offs during the quarter, $1.4 million related to secured and partially secured cards in the credit card portfolio and $0.3 million related to unsecured cards.
For the three months ended September 30, 2023, noninterest income of $6.3 million decreased $0.8 million, or 11.0%, from the same period in 2022. Credit card fees declined by $1.1 million as the number of open customer accounts declined year over year, which resulted in lower interchange and other fee income.
Credit card loan balances, net of reserves, decreased by $14.1 million to $122.5 million as of September 30, 2023, from $136.7 million at September 30, 2022. The related deposit account balances decreased 10.0% to $181.2 million at September 30, 2023 when compared to $201.3 million at September 30, 2022 reflecting the reduction in the number of open customer accounts year over year.
The efficiency ratio for the three months ended September 30, 2023 was 65.02% compared to 64.16% for the three months ended September 30, 2022.
For the three months ended September 30, 2023, noninterest expense of $28.0 million decreased slightly from $28.1 million for the same period in 2022. The change includes decreases in professional fees of $1.5 million and data processing expense of $0.8 million partially offset by increases in salaries and employee benefits of $1.7 million and other operating expense of $0.5 million.
Operating Results - Comparison of Nine Months Ended September 30, 2023 and 2022
For the nine months ended September 30, 2023, net interest income of $106.6 million increased $1.2 million from the same period in 2022, primarily due to increased average balances of $252.4 million in portfolio loans combined with the 81 basis point increase in yield for portfolio loans offset by significant increases in the cost of funding. The net interest margin decreased 35 basis points to 6.66% for the nine months ended September 30, 2023 from the same period in 2022. Net interest margin, excluding credit card and SBA-PPP loans, was 3.98% for the nine months ended September 30, 2023, compared to 3.94% for the same period in 2022.
For the nine months ended September 30, 2023, average interest earning assets increased $129.2 million, or 6.4%, to $2.1 billion as compared to the same period in 2022, and the average yield on interest earning assets increased 124 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $229.8 million, or 22.4%, while the average cost of interest-bearing liabilities increased 264 basis points to 3.15% from 0.51%.
For the nine months ended September 30, 2023, the provision for credit losses was $6.8 million, an increase of $2.6 million from the prior year, attributable primarily to the credit card portfolio. Net charge-offs for the nine months ended September 30, 2023 were $6.0 million, or 0.45% annualized of average portfolio loans, compared to $1.7 million, or 0.23% annualized of average portfolio loans, for the same period in 2022. The $6.0 million in net charge-offs during the nine months ended September 30, 2023 was comprised primarily of credit card portfolio net charge-offs with $4.1 million related to secured and partially secured cards while $1.0 million was related to unsecured cards.
For the nine months ended September 30, 2023, noninterest income of $19.0 million decreased $4.8 million, or 20.0%, from the same period in 2022. The decrease was primarily driven by the decline in credit card fees of $4.4 million as the number of open customer accounts declined to 529,205 at September 30, 2023 from 576,844 year over year, which resulted in lower interchange and other fee income recognized compared to the prior year. The elevated interest rate environment continues to put pressure on the mortgage market, resulting in declines in home loan sales and home loan refinances, which has resulted in a $0.6 million decrease in mortgage banking revenue compared to the prior year.
The efficiency ratio for the nine months ended September 30, 2023 was 66.73% compared to 63.75% for the nine months ended September 30, 2022.
For the nine months ended September 30, 2023, noninterest expense of $83.9 million increased $1.5 million, or 1.8%, from the same period in 2022. The increase was primarily driven by a $6.0 million, or 19.2%, increase in salaries and employee benefits, partially offset by a $3.2 million, or 13.9%, decrease in data processing expense and a $1.2 million decrease in professional fees due to a reduction in third party consulting fees. The decrease in data processing expense was the result of a contract renegotiation entered into in the first quarter 2022 in the OpenSky® Division as well as fewer average open cards during the period.
Financial Condition
Total assets at September 30, 2023 were $2.3 billion, an increase of $44.6 million, or 2.0%, from the balance at June 30, 2023 and an increase of $263.1 million, or 13.1%, from the balance at September 30, 2022. Net portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.9 billion at September 30, 2023, an increase of $24.9 million, up 1.4% or 5.4% annualized, compared to June 30, 2023, and an increase of $213.9 million, or 13.0%, compared to $1.6 billion at September 30, 2022.
The Company recorded a provision for credit losses of $6.8 million during the nine months ended September 30, 2023, which increased the allowance for credit losses to $28.3 million, or 1.52% of total loans at September 30, 2023, representing an increase of $0.8 million or 2.9%, from the balance at June 30, 2023. Nonperforming assets, which were comprised solely of nonperforming loans as of September 30, 2023, were $15.2 million, or 0.67% of total assets, down from $15.7 million, or 0.71% of total assets at June 30, 2023 and up from $8.6 million, or 0.43% of total assets at September 30, 2022. Included in nonperforming assets is a single $8.2 million, multi-unit residential real estate loan that was downgraded in the first quarter of 2023.
Deposits were $2.0 billion at September 30, 2023, an increase of $33.6 million, or 1.7%, from the balance at June 30, 2023 and an increase of $230.4 million, or 13.3%, from the balance at September 30, 2022. Average deposits of $1.9 billion for the three months ended September 30, 2023, increased $37.1 million, or 2.0%, as compared to the three months ended June 30, 2023. Rising interest rates have resulted in some customers moving balances from noninterest-bearing deposit accounts to interest-bearing deposit accounts. As a result of the migration, average noninterest-bearing deposit balances decreased $135.5 million to $666.9 million for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. These deposits represented 34.6% of total deposits at September 30, 2023 compared to 46.4% at September 30, 2022. Uninsured deposits were approximately $857.7 million as of September 30, 2023, representing 43.6% of the Company's deposit portfolio, compared to $860.4 million, or 44.5%, at June 30, 2023, and $960.2 million, or 55.3%, at September 30, 2022.
Stockholders’ equity increased to $242.9 million as of September 30, 2023, compared to $237.4 million at June 30, 2023 and $214.0 million at September 30, 2022. Shares repurchased and retired through September 30, 2023 as part of the Company's stock repurchase program totaled 385,919 shares at an average price of $18.12, for a total cost of $7.0 million including commissions. As of September 30, 2023, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.
Consolidated Statements of Income (Unaudited) Three Months Ended Nine Months Ended (in thousands) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 September 30, 2023 September 30, 2022 Interest income Loans, including fees $ 45,385 $ 42,991 $ 41,275 $ 38,763 $ 36,451 $ 129,651 $ 105,645 Investment securities available for sale 1,089 1,266 1,377 1,402 1,362 3,732 2,510 Federal funds sold and other 1,267 823 764 1,183 527 2,854 1,143 Total interest income 47,741 45,080 43,416 41,348 38,340 136,237 109,298 Interest expense Deposits 10,703 9,409 7,754 4,377 1,386 27,866 3,234 Borrowed funds 228 331 1,175 1,772 277 1,734 656 Total interest expense 10,931 9,740 8,929 6,149 1,663 29,600 3,890 Net interest income 36,810 35,340 34,487 35,199 36,677 106,637 105,408 Provision for credit losses 2,280 2,862 1,660 2,384 1,260 6,802 4,247 Provision for (release of) credit losses on unfunded commitments 24 — (19 ) — — 5 — Net interest income after provision for credit losses 34,506 32,478 32,846 32,815 35,417 99,830 101,161 Noninterest income Service charges on deposits 250 245 229 222 199 724 545 Credit card fees 4,387 4,706 4,210 4,314 5,524 13,303 17,658 Mortgage banking revenue 1,243 1,332 1,155 554 969 3,730 4,312 Other income 446 404 432 471 416 1,282 1,296 Total noninterest income 6,326 6,687 6,026 5,561 7,108 19,039 23,811 Noninterest expenses Salaries and employee benefits 12,419 12,143 12,554 11,769 10,747 37,116 31,129 Occupancy and equipment 1,351 1,536 1,213 1,388 1,138 4,100 3,476 Professional fees 2,358 2,608 2,374 2,426 3,848 7,340 8,586 Data processing 6,469 6,559 6,530 6,697 7,178 19,558 22,721 Advertising 1,565 2,646 517 726 1,632 4,728 5,494 Loan processing 426 660 349 350 625 1,435 1,352 Foreclosed real estate expenses, net 1 — 6 — — 7 — Other operating 3,457 3,440 2,679 3,378 2,926 9,576 9,621 Total noninterest expenses 28,046 29,592 26,222 26,734 28,094 83,860 82,379 Income before income taxes 12,786 9,573 12,650 11,642 14,431 35,009 42,593 Income tax expense 2,998 2,255 2,915 2,651 3,336 8,168 9,779 Net income $ 9,788 $ 7,318 $ 9,735 $ 8,991 $ 11,095 $ 26,841 $ 32,814 Consolidated Balance Sheets (unaudited) (unaudited) (unaudited) (audited) (unaudited) (in thousands except share data) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Assets Cash and due from banks $ 13,767 $ 18,619 $ 14,477 $ 19,963 $ 14,774 Interest-bearing deposits at other financial institutions 130,428 100,343 125,448 39,764 20,867 Federal funds sold 1,957 376 462 20,688 1,421 Total cash and cash equivalents 146,152 119,338 140,387 80,415 37,062 Investment securities available for sale 206,055 208,464 255,762 252,481 269,620 Marketable equity securities — — — — 232 Restricted investments 4,340 3,803 4,215 7,362 3,627 Loans held for sale 4,843 10,146 9,620 7,416 6,875 U.S. Small Business Administration (“SBA”) Payroll Protection Program (“PPP”) loans receivable, net of fees and costs 750 1,090 2,037 2,163 2,662 Portfolio loans receivable, net of deferred fees and costs 1,861,929 1,837,041 1,786,109 1,728,592 1,648,001 Less allowance for credit losses (28,279 ) (27,495 ) (26,216 ) (26,385 ) (26,091 ) Total portfolio loans held for investment, net 1,833,650 1,809,546 1,759,893 1,702,207 1,621,910 Premises and equipment, net 5,297 5,494 5,367 3,386 3,212 Accrued interest receivable 11,231 10,155 9,985 9,489 7,890 Deferred tax asset 13,644 13,616 12,898 13,777 14,047 Bank owned life insurance 37,315 37,041 36,781 36,524 36,267 Other assets 9,207 9,173 8,341 8,435 5,954 Total assets $ 2,272,484 $ 2,227,866 $ 2,245,286 $ 2,123,655 $ 2,009,358 Liabilities Deposits Noninterest-bearing $ 680,803 $ 693,129 $ 705,801 $ 674,313 $ 806,033 Interest-bearing 1,287,185 1,241,232 1,238,573 1,083,759 931,558 Total deposits 1,967,988 1,934,361 1,944,374 1,758,072 1,737,591 Federal Home Loan Bank advances 22,000 22,000 32,000 107,000 22,000 Other borrowed funds 12,062 12,062 12,062 12,062 12,062 Accrued interest payable 5,204 3,029 1,977 1,031 481 Other liabilities 22,352 18,979 20,356 21,475 23,219 Total liabilities 2,029,606 1,990,431 2,010,769 1,899,640 1,795,353 Stockholders' equity Common stock 139 140 141 141 140 Additional paid-in capital 54,549 55,856 57,277 58,190 56,532 Retained earnings 206,033 197,490 191,058 182,435 174,916 Accumulated other comprehensive loss (17,843 ) (16,051 ) (13,959 ) (16,751 ) (17,583 ) Total stockholders' equity 242,878 237,435 234,517 224,015 214,005 Total liabilities and stockholders' equity $ 2,272,484 $ 2,227,866 $ 2,245,286 $ 2,123,655 $ 2,009,358 The following tables show the average outstanding balance of each principal category of our assets, liabilities and stockholders’ equity, together with the average yields on our assets and the average costs of our liabilities for the periods indicated. Such yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.
Three Months Ended
September 30, 2023Three Months Ended
June 30, 2023Three Months Ended
September 30, 2022Average
Outstanding
BalanceInterest Income/
ExpenseAverage
Yield/
Rate(1)Average
Outstanding
BalanceInterest Income/
ExpenseAverage
Yield/
Rate(1)Average
Outstanding
BalanceInterest Income/
ExpenseAverage
Yield/
Rate(1)(in thousands) Assets Interest earning assets: Interest-bearing deposits $ 87,112 $ 1,183 5.39 % $ 66,401 $ 733 4.43 % $ 101,187 $ 471 1.85 % Federal funds sold 1,134 15 5.25 1,638 20 4.90 1,492 7 1.87 Investment securities available for sale 229,731 1,089 1.88 255,057 1,266 1.99 287,944 1,362 1.88 Restricted investments 4,058 69 6.75 4,185 71 6.80 4,116 49 4.72 Loans held for sale 6,670 111 6.60 7,047 111 6.32 7,879 102 5.15 SBA-PPP loans receivable 906 11 4.82 1,808 7 1.55 5,906 263 17.66 Portfolio loans receivable(2) 1,846,866 45,263 9.72 1,800,800 42,872 9.55 1,601,546 36,086 8.94 Total interest earning assets 2,176,477 47,741 8.70 2,136,936 45,080 8.46 2,010,070 38,340 7.57 Noninterest earning assets 44,640 47,415 39,008 Total assets $ 2,221,117 $ 2,184,351 $ 2,049,078 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Interest-bearing demand accounts $ 215,527 71 0.13 $ 207,264 67 0.13 $ 244,929 39 0.06 Savings 5,582 3 0.21 5,822 2 0.14 9,216 1 0.04 Money market accounts 655,990 6,373 3.85 625,515 5,411 3.47 555,634 815 0.58 Time deposits 374,429 4,256 4.51 366,421 3,929 4.30 155,091 531 1.36 Borrowed funds 34,932 228 2.59 43,183 331 3.07 40,700 277 2.70 Total interest-bearing liabilities 1,286,460 10,931 3.37 1,248,205 9,740 3.13 1,005,570 1,663 0.66 Noninterest-bearing liabilities: Noninterest-bearing liabilities 25,047 21,104 24,440 Noninterest-bearing deposits 666,939 676,358 802,458 Stockholders’ equity 242,671 238,684 216,610 Total liabilities and stockholders’ equity $ 2,221,117 $ 2,184,351 $ 2,049,078 Net interest spread 5.33 % 5.33 % 6.91 % Net interest income $ 36,810 $ 35,340 $ 36,677 Net interest margin(3) 6.71 % 6.63 % 7.24 % _______________
(1) Annualized.
(2) Includes nonaccrual loans.
(3) For the three months ended September 30, 2023, June 30, 2023, and September 30, 2022, collectively, SBA-PPP loans and credit card loans accounted for 266, 257 and 308 basis points of the reported net interest margin, respectively.Nine Months Ended September 30, 2023 2022 Average
Outstanding
BalanceInterest Income/
ExpenseAverage
Yield/
Rate(1)Average
Outstanding
BalanceInterest Income/
ExpenseAverage
Yield/
Rate(1)(in thousands) Assets Interest earning assets: Interest-bearing deposits $ 72,116 $ 2,531 4.69 % $ 172,033 $ 1,001 0.78 % Federal funds sold 1,605 53 4.42 2,590 9 0.48 Investment securities available for sale 252,993 3,732 1.97 234,294 2,510 1.43 Restricted investments 5,184 270 6.96 3,913 133 4.54 Loans held for sale 6,145 299 6.51 10,921 347 4.25 SBA-PPP loans receivable 1,600 26 2.17 39,063 3,449 11.80 Portfolio loans receivable(2) 1,799,755 129,326 9.61 1,547,386 101,849 8.80 Total interest earning assets 2,139,398 136,237 8.51 2,010,200 109,298 7.27 Noninterest earning assets 44,123 47,936 Total assets $ 2,183,521 $ 2,058,136 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Interest-bearing demand accounts $ 203,099 208 0.14 $ 265,854 114 0.06 Savings 5,965 6 0.13 9,138 4 0.06 Money market accounts 628,977 16,371 3.48 553,794 1,512 0.37 Time deposits 353,635 11,281 4.27 161,982 1,604 1.32 Borrowed funds 65,192 1,734 3.56 36,299 656 2.41 Total interest-bearing liabilities 1,256,868 29,600 3.15 1,027,067 3,890 0.51 Noninterest-bearing liabilities: Noninterest-bearing liabilities 22,846 23,748 Noninterest-bearing deposits 665,821 797,660 Stockholders’ equity 237,986 209,661 Total liabilities and stockholders’ equity $ 2,183,521 $ 2,058,136 Net interest spread 5.36 % 6.76 % Net interest income $ 106,637 $ 105,408 Net interest margin(3) 6.66 % 7.01 % (1) Annualized.
(2) Includes nonaccrual loans.
(3) For the nine months ended September 30, 2023 and 2022, collectively, SBA-PPP loans and credit card loans accounted for 268 and 307 basis points of the reported net interest margin, respectively.The Company’s reportable segments represent business units with discrete financial information whose results are regularly reviewed by management. The four segments include Commercial Banking, Capital Bank Home Loans (the Company’s mortgage loan division), OpenSky® (the Company’s credit card division) and the Corporate Office. The following schedule presents financial information for each reportable segment for the three and nine months ended September 30, 2023 and September 30, 2022.
Segments For the three months ended September 30, 2023 (in thousands) Commercial Bank CBHL OpenSky® Corporate(2) Eliminations Consolidated Interest income $ 30,409 $ 111 $ 16,143 $ 1,162 $ (84 ) $ 47,741 Interest expense 10,736 32 — 247 (84 ) 10,931 Net interest income 19,673 79 16,143 915 — 36,810 Provision for credit losses 275 — 1,875 130 — 2,280 Release of credit losses on unfunded commitments 24 — — — — 24 Net interest income after provision 19,374 79 14,268 785 — 34,506 Noninterest income 665 1,255 4,405 1 — 6,326 Noninterest expense(1) 15,784 1,502 10,637 123 — 28,046 Net income (loss) before taxes $ 4,255 $ (168 ) $ 8,036 $ 663 $ — $ 12,786 Total assets $ 2,102,749 $ 5,280 $ 116,318 $ 264,950 $ (216,813 ) $ 2,272,484 For the three months ended June 30, 2023 (in thousands) Commercial Bank CBHL OpenSky® Corporate(2) Eliminations Consolidated Interest income $ 28,742 $ 111 $ 15,168 $ 1,134 $ (75 ) $ 45,080 Interest expense 9,537 42 — 236 (75 ) 9,740 Net interest income 19,205 69 15,168 898 — 35,340 Provision for credit losses 735 — 2,127 — — 2,862 Net interest income after provision 18,470 69 13,041 898 — 32,478 Noninterest income 810 1,161 4,714 2 — 6,687 Noninterest expense(1) 15,918 1,481 12,059 134 — 29,592 Net income (loss) before taxes $ 3,362 $ (251 ) $ 5,696 $ 766 $ — $ 9,573 Total assets $ 2,047,400 $ 10,605 $ 116,123 $ 260,309 $ (206,571 ) $ 2,227,866 For the three months ended September 30, 2022 (in thousands) Commercial Bank CBHL OpenSky® Corporate(2) Eliminations Consolidated Interest income $ 20,382 $ 102 $ 17,103 $ 812 $ (59 ) $ 38,340 Interest expense 1,449 40 — 233 (59 ) 1,663 Net interest income 18,933 62 17,103 579 — 36,677 Provision (release of provision) for loan losses (980 ) — 2,240 — — 1,260 Net interest income after provision 19,913 62 14,863 579 — 35,417 Noninterest income 468 1,115 5,524 1 — 7,108 Noninterest expense(1) 13,798 2,017 12,101 178 — 28,094 Net income (loss) before taxes $ 6,583 $ (840 ) $ 8,286 $ 402 $ — $ 14,431 Total assets $ 1,823,049 $ 7,664 $ 128,842 $ 234,731 $ (184,928 ) $ 2,009,358 ________________________
(1) Noninterest expense includes $6.1 million, $5.9 million and $6.6 million in data processing expense in OpenSky’s® segment for the three months ended September 30, 2023 June 30, 2023, and September 30, 2022, respectively.
(2) The Corporate segment invests idle cash in revenue-producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.Segments For the nine months ended September 30, 2023 (in thousands) Commercial Bank CBHL OpenSky® Corporate(2) Eliminations Consolidated Interest income $ 85,451 $ 299 $ 47,441 $ 3,274 $ (228 ) $ 136,237 Interest expense 29,012 104 — 712 (228 ) 29,600 Net interest income 56,439 195 47,441 2,562 — 106,637 Provision for credit losses 849 — 5,823 130 — 6,802 Release of credit losses on unfunded commitments 5 — — — — 5 Net interest income after provision 55,585 195 41,618 2,432 — 99,830 Noninterest income 1,964 3,743 13,329 3 — 19,039 Noninterest expense(1) 46,701 4,564 32,146 449 — 83,860 Net income (loss) before taxes $ 10,848 $ (626 ) $ 22,801 $ 1,986 $ — $ 35,009 Total assets $ 2,102,749 $ 5,280 $ 116,318 $ 264,950 $ (216,813 ) $ 2,272,484 For the nine months ended September 30, 2022 (in thousands) Commercial Bank CBHL OpenSky® Corporate(2) Eliminations Consolidated Interest income $ 57,794 $ 347 $ 48,823 $ 2,457 $ (123 ) $ 109,298 Interest expense 3,255 185 — 573 (123 ) 3,890 Net interest income 54,539 162 48,823 1,884 — 105,408 Provision (release of provision) for loan losses (980 ) — 5,227 — — 4,247 Net interest income after provision 55,519 162 43,596 1,884 — 101,161 Noninterest income 1,571 4,580 17,658 2 — 23,811 Noninterest expense(1) 38,741 6,364 36,923 351 — 82,379 Net income (loss) before taxes $ 18,349 $ (1,622 ) $ 24,331 $ 1,535 $ — $ 42,593 Total assets $ 1,823,049 $ 7,664 $ 128,842 $ 234,731 $ (184,928 ) $ 2,009,358 (1) Noninterest expense includes $17.9 million and $20.9 million in data processing expense in OpenSky’s® segment for the nine months ended September 30, 2023 and 2022, respectively.
(2) The Corporate segment invests idle cash in revenue-producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited Quarter Ended (in thousands except per share data) September 30, 2023 June 30, 2023 March 31,
2023December 31,
2022September 30,
2022Earnings: Net income $ 9,788 $ 7,318 $ 9,735 $ 8,991 $ 11,095 Earnings per common share, diluted 0.70 0.52 0.68 0.62 0.77 Net interest margin 6.71 % 6.63 % 6.65 % 6.64 % 7.24 % Net interest margin, excluding credit cards & SBA-PPP loans(1) 4.05 % 4.06 % 3.81 % 3.91 % 4.16 % Return on average assets(2) 1.75 % 1.34 % 1.84 % 1.67 % 2.15 % Return on average assets, excluding impact of SBA-PPP loans(1)(2) 1.75 % 1.34 % 1.84 % 1.67 % 2.10 % Return on average equity(2) 16.00 % 12.30 % 16.98 % 16.18 % 20.32 % Efficiency ratio 65.02 % 70.41 % 64.73 % 65.59 % 64.16 % Balance Sheet: Total portfolio loans receivable, net deferred fees $ 1,861,929 $ 1,837,041 $ 1,786,109 $ 1,728,592 $ 1,648,001 Total deposits 1,967,988 1,934,361 1,944,374 1,758,072 1,737,591 Total assets 2,272,484 2,227,866 2,245,286 2,123,655 2,009,358 Total stockholders' equity 242,878 237,435 234,517 224,015 214,005 Asset Quality Ratios: Nonperforming assets to total assets 0.67 % 0.71 % 0.73 % 0.46 % 0.43 % Nonperforming assets to total assets, excluding the SBA-PPP loans(1) 0.67 % 0.71 % 0.73 % 0.46 % 0.43 % Nonperforming loans to total loans 0.82 % 0.85 % 0.91 % 0.56 % 0.52 % Nonperforming loans to portfolio loans(1) 0.82 % 0.86 % 0.91 % 0.56 % 0.52 % Net charge-offs to average portfolio loans(1)(2) 0.38 % 0.35 % 0.61 % 0.49 % 0.39 % Allowance for credit losses to total loans 1.52 % 1.50 % 1.47 % 1.52 % 1.58 % Allowance for credit losses to portfolio loans(1) 1.52 % 1.50 % 1.47 % 1.53 % 1.58 % Allowance for credit losses to non-performing loans 185.61 % 175.03 % 160.91 % 270.46 % 303.76 % Bank Capital Ratios: Total risk based capital ratio 14.51 % 14.08 % 14.09 % 14.21 % 14.65 % Tier 1 risk based capital ratio 13.25 % 12.82 % 12.84 % 12.95 % 13.39 % Leverage ratio 10.04 % 9.77 % 9.78 % 9.47 % 9.60 % Common equity Tier 1 capital ratio 13.25 % 12.82 % 12.84 % 12.95 % 13.39 % Tangible common equity 9.08 % 8.93 % 8.79 % 8.85 % 9.00 % Holding Company Capital Ratios: Total risk based capital ratio 17.61 % 16.81 % 16.75 % 16.33 % 17.41 % Tier 1 risk based capital ratio 15.71 % 14.96 % 14.90 % 15.13 % 15.49 % Leverage ratio 11.62 % 11.50 % 11.47 % 11.24 % 11.31 % Common equity Tier 1 capital ratio 15.71 % 14.96 % 14.90 % 15.00 % 15.36 % Tangible common equity 10.69 % 10.66 % 10.44 % 10.55 % 10.65 % Composition of Loans: SBA-PPP loans, net $ 750 $ 1,090 $ 2,037 $ 2,163 $ 2,662 Commercial real estate $ 670,594 $ 674,141 $ 660,218 $ 664,551 $ 626,030 Residential real estate 558,147 555,133 545,899 484,735 466,849 Construction real estate 280,905 258,400 251,494 238,099 235,045 Commercial and industrial 236,782 233,598 221,258 220,221 192,207 Credit card, net of reserve(3) 122,533 122,925 112,860 128,434 136,658 Other consumer loans 948 1,187 1,578 1,179 1,055 Portfolio loans receivable $ 1,869,909 $ 1,845,384 $ 1,793,307 $ 1,737,219 $ 1,657,844 Deferred origination fees, net (7,980 ) (8,343 ) (7,198 ) (8,627 ) (9,843 ) Portfolio loans receivable, net $ 1,861,929 $ 1,837,041 $ 1,786,109 $ 1,728,592 $ 1,648,001 Composition of Deposits: Noninterest-bearing $ 680,803 $ 693,129 $ 705,801 $ 674,313 $ 806,033 Interest-bearing demand 229,035 243,095 219,685 207,836 252,135 Savings 5,686 5,816 5,835 7,530 8,861 Money markets 668,774 631,148 632,087 574,978 518,184 Brokered time deposits 128,665 128,665 181,820 131,819 — Other time deposits 255,025 232,508 199,146 161,596 152,378 Total deposits $ 1,967,988 $ 1,934,361 $ 1,944,374 $ 1,758,072 $ 1,737,591 Capital Bank Home Loan Metrics: Origination of loans held for sale $ 50,023 $ 61,480 $ 44,448 $ 43,956 $ 60,516 Mortgage loans sold 39,364 49,231 40,483 43,415 65,349 Gain on sale of loans 1,011 1,262 1,223 912 1,340 Purchase volume as a % of originations 92.29 % 93.12 % 90.72 % 88.94 % 81.85 % Gain on sale as a % of loans sold(4) 2.57 % 2.56 % 3.02 % 2.10 % 2.05 % Mortgage commissions $ 528 $ 621 $ 378 $ 451 $ 587 OpenSky®Portfolio Metrics: Open customer accounts 529,205 540,058 527,231 533,855 576,844 Secured credit card loans, gross $ 98,138 $ 100,218 $ 89,078 $ 104,157 $ 111,842 Unsecured credit card loans, gross 27,430 25,254 25,782 26,795 27,335 Noninterest secured credit card deposits 181,185 186,566 184,809 187,412 201,277 _______________
(1) Refer to Appendix for reconciliation of non-GAAP measures.
(2) Annualized.
(3) Credit card loans are presented net of reserve for interest and fees.
(4) Gain on sale percentage is calculated as gain on sale of loans divided by mortgage loans sold.Appendix
Reconciliation of Non-GAAP Measures
The Company has presented the following non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Company’s results of operations and financial condition. Presentation of these non-GAAP financial measures is consistent with how the Company evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Company’s industry. Investors should recognize that the Company’s presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures and the Company strongly encourages a review of its condensed consolidated financial statements in their entirety.
Return on Average Assets, as Adjusted Quarters Ended (in thousands) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Net Income $ 9,788 $ 7,318 $ 9,735 $ 8,991 $ 11,095 Less: SBA-PPP loan income 11 7 8 28 263 Net Income, as Adjusted $ 9,777 $ 7,311 $ 9,727 $ 8,963 $ 10,832 Average Total Assets 2,221,117 2,184,351 2,144,249 2,136,156 2,049,078 Less: Average SBA-PPP Loans 906 1,808 2,099 2,435 5,906 Average Total Assets, as Adjusted $ 2,220,211 $ 2,182,543 $ 2,142,150 $ 2,133,721 $ 2,043,172 Return on Average Assets, as Adjusted 1.75 % 1.34 % 1.84 % 1.67 % 2.10 % Return on Average Assets, as Adjusted Nine Months Ended (in thousands) September 30, 2023 September 30, 2022 Net Income $ 26,841 $ 32,814 Less: SBA-PPP loan income 26 3,449 Net Income, as Adjusted $ 26,815 $ 29,365 Average Total Assets 2,183,521 2,058,136 Less: Average SBA-PPP Loans 1,600 39,063 Average Total Assets, as Adjusted $ 2,181,921 $ 2,019,073 Return on Average Assets, as Adjusted 1.64 % 1.94 % Net Interest Margin, as Adjusted Quarters Ended (in thousands) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Net Interest Income $ 36,810 $ 35,340 $ 34,487 $ 35,199 $ 36,677 Less Credit card loan income 15,792 14,818 15,809 15,717 16,768 Less SBA-PPP loan income 11 7 8 28 263 Net Interest Income, as Adjusted $ 21,007 $ 20,515 $ 18,670 $ 19,454 $ 19,646 Average Interest Earning Assets 2,176,477 2,136,936 2,103,984 2,101,617 2,010,070 Less Average credit card loans 116,814 110,574 115,850 124,120 132,246 Less Average SBA-PPP loans 906 1,808 2,099 2,435 5,906 Total Average Interest Earning Assets, as Adjusted $ 2,058,757 $ 2,024,554 $ 1,986,035 $ 1,975,062 $ 1,871,918 Net Interest Margin, as Adjusted 4.05 % 4.06 % 3.81 % 3.91 % 4.16 % Net Interest Margin, as Adjusted Nine Months Ended (in thousands) September 30, 2023 September 30, 2022 Net Interest Income $ 106,637 $ 105,408 Less Credit card loan income 46,419 47,631 Less SBA-PPP loan income 26 3,449 Net Interest Income, as Adjusted $ 60,192 $ 54,328 Average Interest Earning Assets 2,139,398 2,010,200 Less Average credit card loans 114,416 127,266 Less Average SBA-PPP loans 1,600 39,063 Total Average Interest Earning Assets, as Adjusted $ 2,023,382 $ 1,843,871 Net Interest Margin, as Adjusted 3.98 % 3.94 % Pre-tax, Pre-Provision Net Revenue ("PPNR") Quarters Ended (in thousands) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Net income $ 9,788 $ 7,318 $ 9,735 $ 8,991 $ 11,095 Add: Income Tax Expense 2,998 2,255 2,915 2,651 3,336 Add: Provision for Credit Losses 2,280 2,862 1,660 2,384 1,260 Add: Provision (release of provision) for Credit Losses on Unfunded Commitments 24 — (19 ) — — Pre-tax, Pre-Provision Net Revenue ("PPNR") $ 15,090 $ 12,435 $ 14,291 $ 14,026 $ 15,691 Pre-tax, Pre-Provision Net Revenue ("PPNR") Nine Months Ended (in thousands) September 30, 2023 September 30, 2022 Net income $ 26,841 $ 32,814 Add: Income Tax Expense 8,168 9,779 Add: Provision for Credit Losses 6,802 4,247 Add: Provision for Credit Losses on Unfunded Commitments 5 — Pre-tax, Pre-Provision Net Revenue ("PPNR") $ 41,816 $ 46,840 Allowance for Credit Losses to Total Portfolio Loans Quarters Ended (in thousands) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Allowance for Credit Losses $ 28,279 $ 27,495 $ 26,216 $ 26,385 $ 26,091 Total Loans 1,862,679 1,838,131 1,788,146 1,730,755 1,650,663 Less: SBA-PPP loans 750 1,090 2,037 2,163 2,662 Total Portfolio Loans $ 1,861,929 $ 1,837,041 $ 1,786,109 $ 1,728,592 $ 1,648,001 Allowance for Credit Losses to Total Portfolio Loans 1.52 % 1.50 % 1.47 % 1.53 % 1.58 % Nonperforming Assets to Total Assets, net SBA-PPP Loans Quarters Ended (in thousands) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Total Nonperforming Assets $ 15,236 $ 15,709 $ 16,293 $ 9,756 $ 8,589 Total Assets 2,272,484 2,227,866 2,245,286 2,123,655 2,009,358 Less: SBA-PPP loans 750 1,090 2,037 2,163 2,662 Total Assets, net SBA-PPP Loans $ 2,271,734 $ 2,226,776 $ 2,243,249 $ 2,121,492 $ 2,006,696 Nonperforming Assets to Total Assets, net SBA-PPP Loans 0.67 % 0.71 % 0.73 % 0.46 % 0.43 % Nonperforming Loans to Total Portfolio Loans Quarters Ended (in thousands) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Total Nonperforming Loans $ 15,236 $ 15,709 $ 16,293 $ 9,756 $ 8,589 Total Loans 1,862,679 1,838,131 1,788,146 1,730,755 1,650,663 Less: SBA-PPP loans 750 1,090 2,037 2,163 2,662 Total Portfolio Loans $ 1,861,929 $ 1,837,041 $ 1,786,109 $ 1,728,592 $ 1,648,001 Nonperforming Loans to Total Portfolio Loans 0.82 % 0.86 % 0.91 % 0.56 % 0.52 % Net Charge-offs to Average Portfolio Loans Quarters Ended (in thousands) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Total Net Charge-offs $ 1,780 $ 1,583 $ 2,633 $ 2,090 $ 1,588 Total Average Loans 1,847,772 1,802,608 1,752,638 1,677,869 1,607,452 Less: Average SBA-PPP loans 906 1,808 2,099 2,435 5,906 Total Average Portfolio Loans $ 1,846,866 $ 1,800,800 $ 1,750,539 $ 1,675,434 $ 1,601,546 Net Charge-offs to Average Portfolio Loans 0.38 % 0.35 % 0.61 % 0.49 % 0.39 % Net Charge-offs to Average Portfolio Loans Nine Months Ended (in thousands) September 30, 2023 September 30, 2022 Total Net Charge-offs $ 5,996 $ 1,749 Total Average Loans 1,801,355 1,586,449 Less: Average SBA-PPP loans 1,600 39,063 Total Average Portfolio Loans $ 1,799,755 $ 1,547,386 Net Charge-offs to Average Portfolio Loans 0.45 % 0.23 % Tangible Book Value per Share Quarters Ended (in thousands, except per share amounts) September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Total Stockholders' Equity $ 242,878 $ 237,435 $ 234,517 $ 224,015 $ 214,005 Less: Preferred equity — — — — — Less: Intangible assets — — — — — Tangible Common Equity $ 242,878 $ 237,435 $ 234,517 $ 224,015 $ 214,005 Period End Shares Outstanding 13,896,062 13,981,414 14,082,657 14,138,829 14,038,599 Tangible Book Value per Share $ 17.48 $ 16.98 $ 16.65 $ 15.84 $ 15.24 ABOUT CAPITAL BANCORP, INC.
Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. The Company’s wholly-owned subsidiary, Capital Bank, N.A., is the fourth largest bank headquartered in Maryland at September 30, 2023. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in four locations in the greater Washington, D.C. and Baltimore, Maryland markets. Capital Bancorp had assets of approximately $2.3 billion at September 30, 2023 and its common stock is traded in the NASDAQ Global Market under the symbol “CBNK.” More information can be found at the Company's website www.CapitalBankMD.com under its investor relations page.
FORWARD-LOOKING STATEMENTS
This earnings release contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” "optimistic," “intends” and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements. Accordingly, we caution you that any such forward-looking statements are not a guarantee of future performance and that actual results may prove to be materially different from the results expressed or implied by the forward-looking statements due to a number of factors. For details on some of the factors that could affect these expectations, see risk factors and other cautionary language included in the Company's Annual Report on Form 10-K and other periodic and current reports filed with the Securities and Exchange Commission.
While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; geopolitical concerns, including the ongoing wars in Ukraine and in the Middle East; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market, and monetary fluctuations; volatility and disruptions in global capital and credit markets; any failure to adequately manage the transition from USD LIBOR as a reference rate; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; climate change, including any enhanced regulatory, compliance, credit and reputational risks and costs; and other factors that may affect our future results.
These forward-looking statements are made as of the date of this communication, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by law.
FINANCIAL CONTACT: Jay Walker (301) 468-8848 x1223
MEDIA CONTACT: Ed Barry (240) 283-1912
WEB SITE: www.CapitalBankMD.com