Capital Bancorp Reports Record Third Quarter 2019 Earnings

Increases in Net Interest Income and Noninterest Income contributed to a 42% year-over-year increase in Net Income


ROCKVILLE, Md., Oct. 22, 2019 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $4.5 million, or $0.32 per diluted share, for the third quarter of 2019. By comparison, net income was $3.1 million, or $0.26 per diluted share, for the third quarter of 2018.  Return on average assets was 1.42% and return on average equity was 14.04% for the third quarter of 2019.

"The third quarter saw continued robust growth in commercial loans and deposits.  Despite fierce competition and a declining rate environment, our margin remained stable, which is a testament to our solutions-driven approach, sales discipline and quality hirings.  The mortgage and credit card businesses continue to experience higher than anticipated growth and profits to complement and enhance the commercial franchise," said Ed Barry, CEO of Capital Bancorp.

2019 Third Quarter Highlights

  • Record Net Income - Net income for the third quarter of 2019 increased 11% to $4.5 million compared to $4.0 million for the second quarter of 2019. Diluted earnings per share for the three months ended September 30, 2019 was $0.32, compared to $0.29 per share for the three months ended June 30, 2019.  Return on average assets was 1.42%, an increase of 3 basis points compared to the second quarter of 2019.  Return on average equity for the third quarter of 2019 was 14.04%, compared to 13.23% for the previous quarter.
  • Robust Loan Growth - For the quarter ended September 30, 2019, total loans increased $84.0 million, or 8%, to $1.14 billion compared to $1.06 billion at June 30, 2019.  Loans increased year over year with growth of $184.9 million, or 19%, from $955.4 million at September 30, 2018.  Average loan balances have increased 15% year over year, with the largest growth from residential real estate and commercial loans.
  • Strong Core Deposit Growth and Improving Deposit Profile - The Company continues to execute on its strategic initiative to improve the deposit portfolio mix away from wholesale time deposits.  Accordingly, at September 30, 2019, noninterest bearing deposits increased by $13.9 million, or 20% annualized, compared to June 30, 2019.  The growth was partially driven by a 5% increase in OpenSky® deposits of $4.0 million for the three months ended September 30, 2019.  Noninterest bearing deposits increased 25% to $293.4 million at September 30, 2019, compared to $234.1 million at September 30, 2018. The cost of interest bearing deposits declined 1 basis point to 1.83% compared to the second quarter of 2019, and the cost of borrowed funds decreased 39 basis points to 3.19% due to in part to two market rate decreases in the third quarter.
  • Stable Net Interest Margin - The net interest margin improved 4 basis points to 5.83% for the third quarter of 2019 compared to the prior quarter, and increased 27 basis points from 5.56% in the same quarter of the previous year. The quarter over quarter increase this year was primarily due to an increase in loan yield.  Excluding credit card loans, the net interest margin remained flat for the three months ended September 30, 2019 at 4.37% compared to the prior quarter, and increased from 4.26% in the same quarter of 2018.
  • Credit Card Issuances Continue at a Record Pace - OpenSky® credit card issuances continue at higher levels with new originations for the quarter totaling 31,400, compared to 36,700 in the prior quarter due to seasonal factors.  New originations increased 11,700, or 59%, from 19,700 in the third quarter of 2018.  Our enhanced customer application and improved mobile servicing functionality contributed to an increase in customer accounts of approximately 52,000, or 30%, from September 30, 2018, and exceeded 220,000 at September 30, 2019.
  • Profitable Mortgage Business - The Bank's residential mortgage banking division increased the number of loans originated by 40% compared to the previous quarter, and continued to contribute to the Company's results of operations for the quarter with higher gains on sales.  The decline in gain-on-sale margin during the third quarter is attributable to the large increase in price sensitive refinance activity driven by the lower rate environment.
  • Sound Asset Quality - Non-performing assets as a percentage of total assets decreased to 0.51% at September 30, 2019, compared to 0.57% at June 30, 2019, and increased 9 basis points from 0.42% at September 30, 2018.  The quarterly decrease is due to a reduction of non-performing loans of approximately $302 thousand. The increase from the previous year is attributable to a single borrower relationship totaling $2.1 million that is well secured, on which no impairment is expected.  As such, there have been no losses related to this increase in non-performing assets.  Net charge-offs for the nine months ended September 30, 2019 were $369 thousand, a decrease from $781 thousand for the same period last year.


COMPARATIVE FINANCIAL
HIGHLIGHTS - Unaudited
           
 Quarter Ended 3rd Quarter Nine Months Ended YTD
 September 30, 2019 - 2018 September 30, 2019 - 2018
(in thousands except per share data)2019 2018 % Change 2019 2018 % Change
Earnings Summary           
Interest income$22,354  $17,447  28.1% $60,961  $50,890  19.8%
Interest expense4,170  2,955  41.1% 11,502  7,891  45.8%
Net interest income18,184  14,492  25.5% 49,459  42,999  15.0%
Provision for loan losses1,071  495  116.4% 1,869  1,640  14.0%
Noninterest income7,221  4,240  70.3% 17,240  12,657  36.2%
Noninterest expense18,228  13,900  31.1% 48,768  41,028  18.9%
Income before income taxes6,106  4,337  40.8% 16,062  12,988  23.7%
Income tax expense1,625  1,190  36.6% 4,239  3,706  14.4%
Net income$4,481  $3,147  42.4% $11,823  $9,282  27.4%
            
Weighted average common shares - Basic13,728  11,720  17.1% 13,714  11,632  17.9%
Weighted average common shares - Diluted13,986  12,103  15.6% 13,922  12,033  15.7%
Earnings - Basic(1)$0.33  $0.27  22.2% $0.86  $0.80  7.5%
Earnings - Diluted(1)$0.32  $0.26  23.1% $0.85  $0.77  10.4%
Return on average assets1.42% 1.19% 19.3% 1.35% 1.20% 12.5%
Return on average equity14.04% 13.69% 2.6% 12.93% 14.61% (11.5)%


   3rd Quarter  
 Quarter Ended September 30, 2019 vs. 2018   Quarter Ended  
(in thousands except per share data)2019 2018 % Change June 30, 2019 March 31, 2019 December 31, 2018
Balance Sheet Highlights           
Assets$1,311,407  $1,072,905  22.2% $1,234,157  $1,123,752  $1,105,058 
Investment securities available for sale37,073  48,067  (22.9)% 39,157  46,080  46,932 
Mortgage loans held for sale68,982  21,373  222.8% 47,744  21,630  18,526 
Loans receivable (1)1,140,310  955,412  19.4% 1,056,290  1,007,928  1,000,268 
Allowance for loan losses12,808  10,892  17.6% 11,913  11,347  11,308 
Deposits1,112,444  911,116  22.1% 1,037,004  967,722  955,240 
Borrowings and repurchase agreements35,556  28,239  25.9% 38,889  3,010  7,332 
Subordinated debentures15,416  15,386  0.2% 15,409  15,401  15,393 
Total stockholders' equity127,829  106,657  19.9% 123,118  118,550  114,564 
Tangible common equity127,829  106,657  19.9% 123,118  118,550  114,564 
            
Common shares outstanding13,783  13,191  4.5% 13,719  13,713  13,672 
Tangible book value per share$9.27  $8.09  14.6% $8.97  $8.65  $8.38 

_______________
(1) Loans are reflected net of deferred fees and costs.

Operating Results - three months ended September 30, 2019 compared to three months ended September 30, 2018

Net interest income increased $3.7 million, or 25%, to $18.2 million for the three months ended September 30, 2019 compared to the same period in 2018.  Net interest margin increased 27 basis points to 5.83% for the three months ended September 30, 2019 from 5.56% for the three months ended September 30, 2018. For the three months ended September 30, 2019, our average interest-earning assets increased by $202.3 million, or 20%, compared to the three months ended September 30, 2018, and the average yield on our interest-earning assets increased by 48 basis points. In comparison, our average interest-bearing liabilities increased $117.0 million, or 16%, from the third quarter of 2018 to the third quarter of 2019, with the respective average rate increasing by 35 basis points.

Strong loan growth during the three months ended September 30, 2019 led to a provision for loan losses of $1.1 million, compared to $495 thousand during the three months ended September 30, 2018.  Net charge-offs for the third quarter of 2019 were $188 thousand, or 0.07% of average loans, annualized.  Net charge-offs for the third quarter of 2018 were $50 thousand, or 0.04% of average loans, annualized.

Noninterest income increased by $3.0 million, or 70% from $4.2 million for the three months ended September 30, 2018 to $7.2 million for the three months ended September 30, 2019, due to increased credit card fees and mortgage banking revenues.

Noninterest expense was $18.2 million and $13.9 million for the three months ended September 30, 2019 and 2018, respectively. The increase in noninterest expense was driven primarily by increases in salaries and benefits, which include commissions paid on mortgage originations, and to a lesser degree by increases in data processing expenses, advertising, and other operating expenses. Other operating expenses were also impacted by a $216 thousand credit to our FDIC assessment expense in the third quarter of 2019 as a result of the FDIC Deposit Insurance Fund exceeding 1.38% of insured deposits at June 30, 2019.

Operating Results - nine months ended September 30, 2019 compared to nine months ended September 30, 2018

Net interest income increased $6.5 million, or 15%, to $49.5 million for the nine months ended September 30, 2019 compared to the same period in 2018.  Net interest margin increased 7 basis points to 5.70% for the nine months ended September 30, 2019 from 5.63% for the nine months ended September 30, 2018. For the nine months ended September 30, 2019, our average interest-earning assets increased by $138.1 million, compared to the nine months ended September 30, 2018, and the average yield on our interest-earning assets increased by 37 basis points. In comparison, our average interest-bearing liabilities increased $63.0 million from the third quarter of 2018 to the third quarter of 2019, with the respective average rate increasing by 50 basis points.

During the nine months ended September 30, 2019, we recorded a provision for loan losses of $1.9 million, compared to $1.6 million during the nine months ended September 30, 2018.  Net charge-offs for the nine months ended September 30, 2019 were $369 thousand, or 0.05% of average loans, annualized.  Net charge-offs for the same period in 2018 were $781 thousand, or 0.11% of average loans, annualized.

Noninterest income increased by $4.6 million, or 36% from $12.7 million for the nine months ended September 30, 2018 to $17.2 million for the nine months ended September 30, 2019, due largely to increased mortgage banking revenue.

Noninterest expense was $48.8 million and $41.0 million for the nine months ended September 30, 2019 and 2018, respectively. The increase in noninterest expense was driven primarily by increases in salaries and benefits, which include commissions paid on mortgage originations, professional fees and other expenses.

Financial Condition

Total assets at September 30, 2019 were $1.3 billion, up 22% as compared to $1.1 billion at September 30, 2018. Gross loans, excluding mortgage loans held for sale, were $1.1 billion as of September 30, 2019, compared to $955.4 million at September 30, 2018, an increase of 19%.  Deposits were $1.1 billion at September 30, 2019, an increase of 22%, as compared to $911.1 million at September 30, 2018.

Our allowance for loan losses was $12.8 million, or 1.12% of loans, at September 30, 2019, which provided approximately 196% coverage of nonperforming loans at such date, compared to $10.9 million, or 1.14% of loans, and approximately 258% coverage of nonperforming loans at September 30, 2018.  Nonperforming assets were $6.7 million, or 0.51% of total assets, as of September 30, 2019. Comparatively, nonperforming assets were $4.5 million, or 0.42% of total assets, at September 30, 2018. Of the $6.7 million in total nonperforming assets as of September 30, 2019, nonperforming loans represented $6.5 million and other real estate owned totaled $149 thousand.  Included in nonperforming loans at September 30, 2019 are troubled debt restructurings of $465 thousand, and one borrower relationship totaling $2.1 million that is well secured, on which no impairment is expected.

Stockholders’ equity totaled $127.8 million as of September 30, 2019, compared to $106.7 million at September 30, 2018. The increase was due to increased earnings and the net underwriter overallotment purchase of $3.4 million in October 2018 following the Company's initial public offering on September 28, 2018.  Shares repurchased and retired for the third quarter of 2019 as part of the Company's stock repurchase program totaled 21,130 shares at a weighted average price of $12.44, for a total cost of $263 thousand including commissions.  As of September 30, 2019, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

Consolidated Statements of Income
(Unaudited)
       
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
(in thousands)2019 2018 2019 2018
Interest income       
Loans, including fees$21,900  $16,955  $59,548  $49,455 
Investment securities available for sale215  272  707  786 
Federal funds sold and other239  220  706  649 
Total interest income22,354  17,447  60,961  50,890 
Interest expense       
Deposits3,449  2,616  9,887  6,876 
Borrowed funds721  339  1,615  1,015 
Total interest expense4,170  2,955  11,502  7,891 
Net interest income18,184  14,492  49,459  42,999 
Provision for loan losses1,071  495  1,869  1,640 
Net interest income after provision for loan losses17,113  13,997  47,590  41,359 
Noninterest income       
Service charges on deposits146  123  382  365 
Credit card fees2,059  1,592  5,521  4,609 
Mortgage banking revenue4,900  2,451  10,991  7,379 
Gain (loss) on sale of investment securities available for sale    26  (2)
Other fees and charges116  74  320  306 
Total noninterest income7,221  4,240  17,240  12,657 
Noninterest expenses       
Salaries and employee benefits9,238  6,571  24,136  19,083 
Occupancy and equipment1,111  1,070  3,307  3,241 
Professional fees724  520  1,952  1,365 
Data processing4,193  3,636  11,222  10,858 
Advertising584  358  1,557  1,113 
Loan processing634  202  1,279  811 
Other real estate expenses, net7  7  57  38 
Other operating1,737  1,536  5,258  4,519 
Total noninterest expenses18,228  13,900  48,768  41,028 
Income before income taxes6,106  4,337  16,062  12,988 
Income tax expense1,625  1,190  4,239  3,706 
Net income$4,481  $3,147  $11,823  $9,282 


Consolidated Balance Sheets(unaudited)  
(in thousands except share data)September 30,
 2019
 December 31,
2018
Assets   
Cash and due from banks$11,093  $10,431 
Interest bearing deposits at other financial institutions40,521  22,007 
Federal funds sold3,464  2,285 
Total cash and cash equivalents55,078  34,723 
Investment securities available for sale37,073  46,932 
Restricted investments4,007  2,503 
Loans held for sale68,982  18,526 
Loans receivable, net of allowance for loan losses of $12,808 and $11,308 at
September 30, 2019 and December 31, 2018, respectively
1,127,502  988,960 
Premises and equipment, net6,667  2,975 
Accrued interest receivable4,636  4,462 
Deferred income taxes3,556  3,654 
Foreclosed real estate149  142 
Prepaid income taxes353  90 
Other assets3,403  2,091 
Total assets$1,311,406  $1,105,058 
    
Liabilities   
Deposits   
Noninterest bearing$293,378  $242,259 
Interest bearing819,066  712,981 
Total deposits1,112,444  955,240 
Securities sold under agreements to repurchase  3,332 
Federal funds purchased  2,000 
Federal Home Loan Bank advances35,556  2,000 
Other borrowed funds15,416  15,393 
Accrued interest payable2,113  1,565 
Other liabilities18,048  10,964 
Total liabilities1,183,577  990,494 
    
Stockholders' equity   
Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares
issued or outstanding at September 30, 2019 and December 31, 2018
   
Common stock, $.01 par value; 49,000,000 shares authorized; 13,782,538
and 13,672,479 issued and outstanding at September 30, 2019 and
December 31, 2018, respectively
138  137 
Additional paid-in capital50,585  49,321 
Retained earnings77,095  65,701 
Accumulated other comprehensive income (loss)11  (595)
Total stockholders' equity127,829  114,564 
Total liabilities and stockholders' equity$1,311,406  $1,105,058 


The following table shows 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,
 2019 2018
 Average
Outstanding 
Balance
 Interest
Income/
Expense
 Average 
Yield/ 
Rate(1)
 Average
Outstanding 
Balance
 Interest
Income/
Expense
 Average 
Yield/ 
Rate(1)
 (Dollars in thousands)
Assets           
Interest earning assets:           
Interest bearing deposits$35,723  $164  1.83% $42,734  $176  1.63%
Federal funds sold1,325  7  2.12% 1,354  6  1.76%
Investment securities available for sale38,389  215  2.22% 49,159  272  2.20%
Restricted stock5,629  68  4.77% 2,604  38  5.79%
 Loans held for sale56,301  896  6.31% 18,671  412  8.75%
Loans(2) (3)1,099,191  21,004  7.58% 919,759  16,543  7.14%
Total interest earning assets1,236,558  22,354  7.17% 1,034,281  17,447  6.69%
Noninterest earning assets15,908      11,924     
Total assets$1,252,466      $1,046,205     
Liabilities and Stockholders’ Equity           
Interest bearing liabilities:           
Interest bearing demand accounts$116,820  191  0.65% $74,854  55  0.29%
Savings3,913  3  0.35% 4,062  4  0.39%
Money market accounts339,751  1,484  1.73% 270,697  972  1.42%
Time deposits286,605  1,771  2.45% 338,005  1,585  1.86%
Borrowed funds89,746  721  3.19% 32,248  339  4.17%
Total interest bearing liabilities836,835  4,170  1.98% 719,866  2,955  1.63%
Noninterest bearing liabilities:           
Noninterest bearing liabilities17,163      10,250     
Noninterest bearing deposits271,851      224,877     
Stockholders’ equity126,617      91,212     
Total liabilities and stockholders’ equity$1,252,466      $1,046,205     
            
Net interest spread(4)    5.19%     5.06%
Net interest income  $18,184      $14,492   
Net interest margin(5)    5.83%     5.56%
Net interest margin excluding credit cards    4.37%     4.26%

_______________
(1)       Annualized.
(2)       Includes nonaccrual loans.
(3)       Interest income includes amortization of deferred loan fees, net of deferred loan costs.
(4)       Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities.
(5)       Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period.


 Nine Months Ended September 30, 2019
 2019 2018
 Average
Outstanding 
Balance
 Interest
Income/
Expense
 Average 
Yield/ 
Rate(1)
 Average
Outstanding 
Balance
 Interest
Income/
Expense
 Average 
Yield/ 
Rate(1)
 (Dollars in thousands)
Assets           
Interest earning assets:           
Interest bearing deposits$35,164  $518  1.97% $44,525  $526  1.58%
Federal funds sold1,685  28  2.23% 1,546  18  1.56%
Investment securities available for sale42,281  707  2.24% 50,987  786  2.06%
Restricted stock4,276  160  4.99% 2,554  105  5.50%
Loans held for sale35,229  1,928  7.32% 18,047  1,182  8.76%
Loans(2) (3)1,041,364  57,620  7.40% 904,279  48,273  7.14%
Total interest earning assets1,159,999  60,961  7.03% 1,021,938  50,890  6.66%
Noninterest earning assets15,115      10,419     
Total assets$1,175,114      $1,032,357     
Liabilities and Stockholders’ Equity           
Interest bearing liabilities:           
Interest bearing demand accounts$97,325  387  0.53% $73,129  154  0.28%
Savings3,613  9  0.35% 3,690  8  0.29%
Money market accounts330,086  4,203  1.70% 286,349  2,678  1.25%
Time deposits294,693  5,288  2.40% 328,139  4,036  1.64%
Borrowed funds59,816  1,615  3.61% 31,233  1,015  4.34%
Total interest bearing liabilities785,533  11,502  1.96% 722,540  7,891  1.46%
Noninterest bearing liabilities:           
Noninterest bearing liabilities14,971      9,765     
Noninterest bearing deposits252,353      215,133     
Stockholders’ equity122,257      84,919     
Total liabilities and stockholders’ equity$1,175,114      $1,032,357     
            
Net interest spread(4)    5.07%     5.20%
Net interest income  $49,459      $42,999   
Net interest margin(5)    5.70%     5.63%
Net interest margin excluding credit cards    4.35%     4.27%

_______________
(1)       Annualized.
(2)       Includes nonaccrual loans.
(3)       Interest income includes amortization of deferred loan fees, net of deferred loan costs.
(4)       Net interest spread is the difference between interest rates earned on interest earning assets and interest rates paid on interest bearing liabilities.
(5)       Net interest margin is a ratio calculated as annualized net interest income divided by average interest earning assets for the same period.


HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited    
  Quarter Ended
(Dollars in thousands except per share data) September 30,
 2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 September 30,
2018
Earnings:          
Net income $4,481  $4,023  $3,319  $3,486  $3,147 
Earnings per common share, diluted(1) (2) 0.32  0.29  0.24  0.25  0.26 
Net interest margin 5.83% 5.79% 5.46% 5.46% 5.56%
Net interest margin, excluding credit cards 4.37% 4.37% 4.30% 4.28% 4.26%
Return on average assets(1) 1.42% 1.39% 1.22% 1.27% 1.19%
Return on average equity(1) 14.04% 13.23% 11.39% 12.26% 13.69%
Efficiency ratio 71.75% 72.18% 76.08% 71.34% 74.20%
Balance Sheet:          
Loans(3) $1,140,310  $1,056,290  $1,007,928  $1,000,268  $955,412 
Deposits 1,112,444  1,037,004  967,722  955,240  911,116 
Total assets 1,311,407  1,234,157  1,123,752  1,105,058  1,072,905 
Asset Quality Ratios:          
Nonperforming assets to total assets 0.51% 0.57% 0.63% 0.44% 0.42%
Nonperforming loans to total loans 0.57% 0.65% 0.69% 0.47% 0.44%
Net charge-offs to average loans (YTD annualized) 0.05% 0.04% 0.03% 0.09% 0.11%
Allowance for loan losses to total loans 1.12% 1.13% 1.13% 1.13% 1.14%
Allowance for loan losses to non-performing loans 195.76% 174.05% 162.52% 241.72% 257.83%
Bank Capital Ratios:          
Total risk based capital ratio 11.44% 11.91% 12.23% 12.25% 12.36%
Tier 1 risk based capital ratio 10.19% 10.65% 10.98% 11.00% 11.11%
Leverage ratio 8.60% 8.91% 9.05% 9.06% 9.01%
Common equity Tier 1 ratio 10.19% 10.65% 10.98% 11.00% 11.11%
Tangible common equity 8.21% 8.40% 8.93% 8.89% 8.72%
Composition of Loans:          
Residential real estate $443,961  $426,887  $421,346  $407,844  $388,141 
Commercial real estate 339,448  297,891  277,905  278,691  276,726 
Construction real estate 182,224  169,225  157,338  157,586  144,012 
Commercial and industrial 132,935  124,436  120,191  122,264  113,473 
Credit card 44,058  40,141  32,359  34,673  33,821 
Other 1,148  1,015  1,195  1,202  1,270 
Composition of Deposits:          
Non interest bearing $293,378  $279,484  $262,235  $242,259  $234,094 
Interest bearing demand 186,422  129,199  85,969  85,747  66,170 
Savings 3,994  3,572  3,595  2,866  4,597 
Money Markets 313,131  347,701  320,114  288,897  275,832 
Time Deposits 315,520  277,048  295,809  335,471  330,423 
Capital Bank Home Loan Metrics:        
Origination of loans held for sale $197,754  $134,409  $74,128  $70,826  $81,665 
Proceeds from loans held for sale, net of gains 171,880  105,418  71,693  73,883  81,029 
Gain on sale of loans 4,900  3,715  2,375  2,097  2,451 
Purchase volume as a % of originations 44.02% 79.07% 78.42% 86.72% 92.72%
Gain on sale as a % of loans sold(4) 2.77% 3.40% 3.21% 2.76% 2.94%
OpenSky Credit Card Portfolio Metrics:        
Total active customer accounts 221,913  211,408  187,423  169,981  170,160 
Total loans $44,058  $40,141  $32,359  $34,673  $33,821 
Total deposits at the Bank $77,689  $73,666  $65,808  $59,954  $59,978 

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(1)         Annualized.
(2)         Gives effect to a four-for-one common stock split completed effective August 15, 2018.
(3)         Loans are reflected net of deferred fees and costs.
(4)         Gain on sale percentage is calculated as gain on sale of loans divided by the sum of gain on sale of loans and proceeds from loans held for sale, net of gains.

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 eighth largest bank headquartered in Maryland. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in five locations in the greater Washington, D.C. and Baltimore, Maryland markets.  Capital Bancorp had assets of approximately $1.3 billion at September 30, 2019 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,” “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. Such factors include, without limitation, those listed from time to time in reports that the Company files with the Securities and Exchange Commission. 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: Alan Jackson (240) 283-0402

MEDIA CONTACT: Ed Barry (240) 283-1912

WEB SITE: www.CapitalBankMD.com