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CLOSED · 03:15 ET
Market ClerkRecap
Sun Oct 25 · markets closed1 signal on Oct 2494 insider buys this week · $48.3MCIRO short report next: Oct 30The week ahead

CBNK

Capital Bancorp Inc
NASDAQ · FINANCIALS · NATIONAL COMMERCIAL BANKS
41.29
+0.10 +0.24%
USD · close Oct 23
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Work order
45
WATCH · shorts 45
Insiders, 90 days
0
no open-market filings in 90 days
Congress, 90 days
0 / 0
no disclosures naming it
Big money
0 / 15
none of the tracked funds disclose it
Calls on record
0
nobody we score has called it yet
MKT CAP $672.6MP/E 12.1DIV YIELD —FCF YIELD —REV TTM —NET INCOME $56.4M +30.3%NET CASH —52W 26.61 – 41.29SEC XBRL · TTM TO Invalid Date

How CBNK rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025
Text kept
36%
of sentences unchanged
Added
419
new sentences
Dropped
334
sentences removed
Length
+3,141
words, now 34,540

New in FY2025

  • As of December 31, 2025, the Company and the Bank were in compliance with all applicable regulatory capital requirements to which it was subject, and the Bank was classified as “well capitalized” for purposes of the prompt corrective action regulations.
  • (in thousands) Actual Minimum Capital Adequacy To Be Well Capitalized December 31, 2025 Amount Ratio Amount Ratio Amount Ratio The Company Tier 1 leverage ratio (to average assets) $ 371,638 10.71 % $ 138,757 4.00 % $ 173,446 5.00 % Tier 1 capital (to risk-weighted assets) 371,638 13.05 170,835 6.00 227,780 8.00 Common equity tier 1 capital ratio (to risk-weighted assets) 369,576 12.98 128,126 4.50 185,071 6.50 Total capital ratio (to risk-weighted assets) 407,481 14.31 227,780 8.00 284,725 10.00 The Bank Tier 1 leverage ratio (to average assets) $ 316,082 9.24 % $ 136,858 4.00 % $ 171,073 5.00 % Tier 1 capital (to risk-weighted assets) 316,082 11.34 167,207 6.00 222,942 8.00 Common equity tier 1 capital ratio (to risk-weighted assets) 316,082 11.34 125,405 4.50 181,141 6.50 Total capital ratio (to risk-weighted assets) 351,170 12.60 222,942 8.00 278,678 10.00 December 31, 2024 The Company Tier 1 leverage ratio (to average assets) $ 346,840 11.07 % $ 125,348 4.00 % $ 156,685 5.00 % Tier 1 capital (to risk-weighted assets) 346,840 13.83 150,512 6.00 200,683 8.00 Common equity tier 1 capital ratio (to risk-weighted assets) 344,778 13.74 112,884 4.50 163,055 6.50 Total capital ratio (to risk-weighted assets) 388,425 15.48 200,683 8.00 250,853 10.00 The Bank Tier 1 leverage ratio (to average assets) $ 283,828 9.17 % $ 123,818 4.00 % $ 154,772 5.00 % Tier 1 capital (to risk-weighted assets) 281,563 11.54 146,451 6.00 195,268 8.00 Common equity tier 1 capital ratio (to risk-weighted assets) 281,563 11.54 109,838 4.50 158,655 6.50 Total capital ratio (to risk-weighted assets) 312,304 12.79 195,268 8.00 244,085 10.00 Contractual Obligations We have contractual obligations to make future payments on debt and lease agreements.
  • The following table of contractual commitments focuses only on future obligations and summarizes our contractual obligations as of December 31, 2025.
  • (in thousands) Due in One Year or Less Due After One Through Three Years Due After Three Through Five Years Due After 5 Years Total FHLB advances $ 50,000 $ — $ — $ — $ 50,000 Certificates of deposit $250,000 or more 173,743 3,563 — — 177,306 Certificates of deposit less than $250,000 570,609 117,785 618 47 689,059 Lease payments 1,969 1,417 997 777 5,160 Subordinated debt — — — 2,062 2,062 Total $ 796,321 $ 122,765 $ 1,615 $ 2,886 $ 923,587 Off-Balance Sheet Items In the normal course of business, we enter into various transactions that, in accordance with GAAP, are not included in our consolidated balance sheets.
  • December 31, (in thousands) 2025 2024 Unfunded lines of credit $ 455,666 $ 403,029 Letters of credit 1,633 3,122 Commitment to fund other investments 2,714 2,714 Total credit extension commitments $ 460,013 $ 408,865 Unfunded lines of credit represent unused credit facilities to our current borrowers.
  • Core Earnings Metrics Year Ended (in thousands, except per share data) December 31, 2025 December 31, 2024 Net Income $ 57,170 $ 30,972 Deduct: Income from the Call of Brokered Time Deposits, Net of Tax (3,489) — Add: Merger-Related Expenses, Net of Tax 2,609 3,308 Add: Non-Recurring Equity and Debt Investment Write-Down — 2,620 Add: IFH Non-PCD ACL Provision, Net of Tax — 3,169 Core Net Income $ 56,290 $ 40,069 Weighted Average Common Shares - Diluted 16,768 14,640 Earnings per Share - Diluted $ 3.41 $ 2.12 Core Earnings per Share - Diluted $ 3.36 $ 2.74 Average Assets $ 3,348,674 $ 2,554,049 Return on Average Assets 1.71 % 1.21 % Core Return on Average Assets 1.68 % 1.57 % Average Equity $ 377,741 $ 287,420 Return on Average Equity 15.13 % 10.78 % Core Return on Average Equity 14.90 % 13.94 % Net Interest Income $ 195,992 $ 154,746 Noninterest Income 49,187 31,410 Total Revenue $ 245,179 $ 186,156 Noninterest Expense $ 155,082 $ 126,219 Efficiency Ratio (1) 63.25 % 67.80 % Net Interest Income $ 195,992 $ 154,746 Less: Call of Brokered Time Deposits 4,618 — Core Net Interest Income (a) $ 191,374 $ 154,746 Noninterest Income 49,187 31,410 Add: Non-Recurring Equity and Debt Investment Write-Down — 2,620 Core Fee Revenue (b) $ 49,187 $ 34,030 Core Revenue (a) + (b) $ 240,561 $ 188,776 Noninterest Expense $ 155,082 $ 126,219 Less: Merger-Related Expenses 3,361 3,930 Core Noninterest Expense $ 151,721 $ 122,289 Core Efficiency Ratio (1) 63.07 % 64.78 % _______________ (1) The efficiency ratio is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).
  • Commercial Bank Net Interest Margin Year Ended (in thousands) December 31, 2025 December 31, 2024 Commercial Bank Net Interest Income $ 134,619 $ 92,756 Average Interest Earning Assets 3,215,483 2,487,607 Less: Average Credit Card Loans 139,344 124,863 Average Commercial Bank Interest Earning Assets $ 3,076,139 $ 2,362,744 Commercial Bank Net Interest Margin 4.38% 3.93% Commercial Bank Portfolio Loans Receivable Yield Year Ended (in thousands) December 31, 2025 December 31, 2024 Portfolio Loans Receivable Interest Income $ 244,380 $ 202,346 Less: Credit Card Loan Income 59,848 59,821 Commercial Bank Portfolio Loans Receivable Interest Income $ 184,532 $ 142,525 Average Portfolio Loans Receivable 2,765,758 2,142,638 Less: Average Credit Card Loans 125,824 115,581 Total Commercial Bank Average Portfolio Loans Receivable $ 2,639,934 $ 2,027,057 Commercial Bank Portfolio Loans Receivable Yield 6.99% 7.03% Pre-tax, Pre-Provision Net Revenue ("PPNR") Year Ended (in thousands) December 31, 2025 December 31, 2024 Net Income $ 57,170 $ 30,972 Add: Income Tax Expense 17,774 10,860 Add: Provision for Credit Losses 14,965 17,720 Add: Provision for Credit Losses on Unfunded Commitments 188 385 PPNR $ 90,097 $ 59,937 Core PPNR Year Ended (in thousands) December 31, 2025 December 31, 2024 Net Income $ 57,170 $ 30,972 Add: Income Tax Expense 17,774 10,860 Add: Provision for Credit Losses 14,965 17,720 Add: Provision for Credit Losses on Unfunded Commitments 188 385 Deduct: Income from the Call of Brokered Time Deposits (4,618) — Add: Merger-Related Expenses 3,361 3,930 Add: Non-Recurring Equity and Debt Investment Write-Down — 2,620 Core PPNR $ 88,840 $ 66,487 Allowance for Credit Losses to Total Portfolio Loans (in thousands) December 31, 2025 December 31, 2024 Allowance for Credit Losses $ 54,660 $ 48,652 Total Portfolio Loans $ 2,959,457 $ 2,630,163 Allowance for Credit Losses to Total Portfolio Loans 1.85% 1.85% Commercial Bank Allowance for Credit Losses to Commercial Bank Portfolio Loans (in thousands) December 31, 2025 December 31, 2024 Allowance for Credit Losses $ 54,660 $ 48,652 Less: Credit Card Allowance for Credit Losses 8,232 6,402 Commercial Bank Allowance for Credit Losses $ 46,428 42,250 Total Portfolio Loans 2,959,457 2,630,163 Less: Gross Credit Card Loans 137,905 122,928 Commercial Bank Portfolio Loans $ 2,821,552 2,507,235 Commercial Bank Allowance for Credit Losses to Total Portfolio Loans 1.65% 1.70% Nonperforming Assets to Total Assets (in thousands) December 31, 2025 December 31, 2024 Total Nonperforming Assets $ 58,276 $ 30,241 Total Assets $ 3,606,207 $ 3,206,911 Nonperforming Assets to Total Assets 1.62% 0.94% Nonperforming Loans to Total Portfolio Loans (in thousands) December 31, 2025 December 31, 2024 Total Nonperforming Loans $ 54,421 $ 30,241 Total Portfolio Loans $ 2,959,457 $ 2,630,163 Nonperforming Loans to Total Portfolio Loans 1.84% 1.15% Net Charge-Offs to Average Portfolio Loans Year Ended (in thousands) December 31, 2025 December 31, 2024 Total Net Charge-Offs $ 12,381 $ 9,003 Total Average Portfolio Loans $ 2,765,758 $ 2,142,638 Net Charge-Offs to Average Portfolio Loans 0.45% 0.42% Tangible Book Value per Share (in thousands, except share and per share data) December 31, 2025 December 31, 2024 Total Stockholders' Equity $ 401,757 $ 355,139 Less: Intangible Assets 40,740 36,943 Tangible Common Equity $ 361,017 $ 318,196 Period End Shares Outstanding 16,373,288 16,662,626 Tangible Book Value per Share $ 22.05 $ 19.10 Return on Average Tangible Common Equity Year Ended (in thousands) December 31, 2025 December 31, 2024 Net Income $ 57,170 $ 30,972 Add: Intangible Amortization, Net of Tax 798 198 Net Tangible Income $ 57,968 $ 31,170 Average Equity 377,741 287,420 Less: Average Intangible Assets 38,763 5,754 Net Average Tangible Common Equity $ 338,978 $ 281,666 Return on Average Equity 15.13 % 10.78 % Return on Average Tangible Common Equity 17.10 % 11.07 % Core Return on Average Tangible Common Equity Year Ended (in thousands) December 31, 2025 December 31, 2024 Core Net Income $ 56,290 $ 40,069 Add: Intangible Amortization, Net of Tax 798 198 Core Net Tangible Income $ 57,088 $ 40,267 Core Return on Average Tangible Common Equity 16.84 % 14.30 % ITEM 7A.
  • The following table summarizes the results of our EAR analysis in simulating the change in net interest income and fair value of equity over a 12-month horizon as of December 31, 2025: IMPACT ON NET INTEREST INCOME UNDER A STATIC BALANCE SHEET, PARALLEL INTEREST RATE SHOCK Earnings at Risk -400 bps -300 bps -200 bps -100 bps Flat +100 bps +200 bps +300 bps +400 bps December 31, 2025 (11.9) % (8.8) % (6.2) % (3.5) % 0.0 % 3.9 % 7.9 % 11.8 % 15.6 % Utilizing an economic value of equity (“EVE”) approach, we analyze the risk to capital from the effects of various interest rate scenarios through a long-term discounted cash flow model.
  • The following table illustrates the results of our EVE analysis as of December 31, 2025.
  • ECONOMIC VALUE OF EQUITY ANALYSIS UNDER A STATIC BALANCE SHEET, PARALLEL INTEREST RATE SHOCK Economic Value of Equity -400 bps -300 bps -200 bps -100 bps Flat +100 bps +200 bps +300 bps +400 bps December 31, 2025 (21.8) % (14.2) % (6.8) % (2.3) % 0.0 % 1.4 % 1.9 % 2.7 % 3.1 % Interest Rate Sensitivity and Market Risk As a financial institution, our primary component of market risk is interest rate volatility.
  • INTEREST SENSITIVITY GAP December 31, 2025 Within One Month After One Month Through Three Months After Three Through Twelve Months Within One Year Greater Than One Year or Non-Sensitive Total (in thousands) Assets Interest earning assets Loans (1) $ 1,067,655 $ 241,775 $ 526,038 $ 1,835,468 $ 1,149,817 $ 2,985,285 Securities 7,975 13,060 68,854 89,889 148,591 238,480 Interest-bearing deposits at other financial institutions 224,611 — — 224,611 — 224,611 Federal funds sold 60 — — 60 — 60 Total earning assets $ 1,300,301 $ 254,835 $ 594,892 $ 2,150,028 $ 1,298,408 $ 3,448,436 Liabilities Interest-bearing liabilities Interest-bearing deposits $ 23,182 $ 46,363 $ 208,635 $ 278,180 $ 1,095,915 $ 1,374,095 Time deposits 110,173 139,657 493,931 743,761 122,603 866,364 Total Interest-bearing deposits 133,355 186,020 702,566 1,021,941 1,218,518 2,240,459 FHLB Advances — — 50,000 50,000 — 50,000 Other borrowed funds — 2,062 — 2,062 — 2,062 Total Interest-bearing liabilities $ 133,355 $ 188,082 $ 752,566 $ 1,074,003 $ 1,218,518 $ 2,292,521 Period gap $ 1,166,946 $ 66,753 $ (157,674) $ 1,076,025 $ 79,890 $ 1,155,915 Cumulative gap $ 1,166,946 $ 1,233,699 $ 1,076,025 $ 1,076,025 $ 1,155,915 Ratio of cumulative gap to total earning assets 33.84 % 35.78 % 31.20 % 31.20 % 33.52 % _______________ (1) Includes loans held for sale.
  • FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Capital Bancorp, Inc. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Capital Bancorp, Inc. and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the “financial statements”).
  • In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
  • We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
  • Our report dated March 16, 2026 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
  • Critical Audit Matters, Continued Allowance for Credit Losses As described in Note 5 to the Company’s financial statements, the Company has a gross loan portfolio of $3.0 billion and related allowance for credit losses (“ACL”) of $54.7 million as of December 31, 2025.
  • For these loans, management uses an adverse “through-the-cycle” (“TTC”) probability of default and loss given default to reflect the “greater-than-insignificant” credit deterioration.
  • The primary procedures we performed to address the critical audit matter include the following: ■ We tested the design and operating effectiveness of controls relating to the Company’s determination of the allowance for credit losses, including controls over management’s review and approval of qualitative factors. ■ We evaluated the relevance and the reasonableness of assumptions related to the evaluation of the loan portfolio, current and forecasted economic conditions, and other risk factors used within the qualitative factors. ■ We tested the completeness and accuracy of significant inputs to the model including the underlying data used to develop the qualitative factors. ■ We validated the mathematical accuracy of the calculation. ■ We evaluated the reasonableness of assumptions and data used by the Company in developing the qualitative factors by comparing these data points to internally developed and third‐party sources, and other audit evidence gathered. /s/ Elliott Davis, PLLC We have served as the Company’s auditor since 2017.
  • Raleigh, North Carolina March 16, 2026 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Capital Bancorp, Inc. and Subsidiaries Opinion on the Internal Control Over Financial Reporting We have audited Capital Bancorp, Inc. and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
  • In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
  • We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2025 of the Company and our report dated March 16, 2026 expressed an unqualified opinion.
  • A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
  • The following material weakness has been identified and included in management’s assessment: Management has identified a material weakness resulting from a combination of (i) lack of a dedicated control designed to clear items on loan clearing accounts dating back to the IFH transaction and (ii) turnover within the operations department that impacted the execution of controls over transactions related to government-guaranteed loan sales and participations.
  • The operational processes and systems used to book, sell and participate these loans were inherited from the IFH transaction.
  • Specifically, the controls relate to two clearing accounts that support transactional activity related to the sale and participation of these loans.
  • This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2025 financial statements, and this report does not affect our report dated March 16, 2026 on those financial statements.
  • Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Elliott Davis, PLLC Raleigh, North Carolina March 16, 2026 Capital Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets As of December 31, 2025 and 2024 (dollars in thousands, except share data) 2025 2024 Assets Cash and due from banks $ 30,894 $ 25,433 Interest-bearing deposits at other financial institutions 224,611 179,841 Federal funds sold 60 58 Total cash and cash equivalents 255,565 205,332 Investment securities available-for-sale 230,083 223,630 Restricted investments 8,397 4,479 Loans held for sale 25,828 17,063 Portfolio loans receivable, net of deferred fees and costs 2,959,457 2,630,163 Less allowance for credit losses ( 54,660 ) ( 48,652 ) Total portfolio loans held for investment, net 2,904,797 2,581,511 Premises and equipment, net 15,072 15,525 Accrued interest receivable 16,695 16,664 Goodwill 25,969 21,126 Intangible assets 14,771 15,817 Loan servicing assets 1,816 5,511 Deferred tax asset 14,992 16,670 Bank owned life insurance 45,488 43,956 Other assets 46,734 39,627 Total assets $ 3,606,207 $ 3,206,911 Liabilities Deposits Noninterest-bearing $ 852,741 $ 810,928 Interest-bearing 2,240,459 1,951,011 Total deposits 3,093,200 2,761,939 Federal Home Loan Bank advances 50,000 22,000 Other borrowed funds 2,062 12,062 Accrued interest payable 8,745 9,393 Other liabilities 50,443 46,378 Total liabilities 3,204,450 2,851,772 Stockholders' equity Common stock, $ .01 par value; 49,000,000 shares authorized; 16,373,288 and 16,662,626 issued and outstanding 164 167 Additional paid-in capital 114,604 123,566 Retained earnings 292,749 242,875 Accumulated other comprehensive loss ( 5,760 ) ( 11,469 ) Total stockholders' equity 401,757 355,139 Total liabilities and stockholders' equity $ 3,606,207 $ 3,206,911 See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Income For the Years Ended December 31, 2025 and 2024 (dollars in thousands, except per share data) 2025 2024 Interest income Loans, including fees $ 245,272 $ 202,915 Investment securities available-for-sale 6,976 5,441 Federal funds sold and other 8,623 4,945 Total interest income 260,871 213,301 Interest expense Deposits 63,771 56,170 Borrowed funds 1,108 2,385 Total interest expense 64,879 58,555 Net interest income 195,992 154,746 Provision for credit losses 14,965 17,720 Provision for credit losses on unfunded commitments 188 385 Net interest income after provision for credit losses 180,839 136,641 Noninterest income Service charges on deposits 1,316 883 Credit card fees 17,366 15,999 Mortgage banking revenue 7,472 7,146 Government lending revenue 4,222 2,301 Government loan servicing revenue 15,513 3,993 Loan servicing rights 545 1,013 Non-recurring equity and debt investment write-down — ( 2,620 ) Other income 2,753 2,695 Total noninterest income 49,187 31,410 Noninterest expenses Salaries and employee benefits 72,169 56,037 Occupancy and equipment 11,392 8,244 Professional fees 10,959 7,846 Data processing 29,788 27,689 Advertising 6,262 6,359 Loan processing 3,988 2,431 Merger-related expenses 3,361 3,930 Operational and other card fraud related losses 3,509 3,714 Regulatory assessment expenses 3,371 1,937 Other operating 10,283 8,032 Total noninterest expenses 155,082 126,219 Income before income taxes 74,944 41,832 Income tax expense 17,774 10,860 Net income $ 57,170 $ 30,972 Basic earnings per share $ 3.45 $ 2.12 Diluted earnings per share $ 3.41 $ 2.12 Weighted average common shares outstanding: Basic 16,581,591 14,584,303 Diluted 16,767,565 14,640,177 See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income For the Years Ended December 31, 2025 and 2024 (in thousands) 2025 2024 Net income $ 57,170 $ 30,972 Other comprehensive income: Unrealized gain on investment securities available-for-sale 7,534 2,194 Income tax expense relating to the items above ( 1,825 ) ( 566 ) Other comprehensive income 5,709 1,628 Comprehensive income $ 62,879 $ 32,600 See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended December 31, 2025 and 2024 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity (dollars in thousands, except per share data) Shares Amount Balance, December 31, 2023 13,922,532 $ 139 $ 50,640 $ 217,178 $ ( 13,097 ) $ 254,860 Net income — — — 30,972 — 30,972 Unrealized gain on investment securities available-for-sale, net of income taxes — — — — 1,628 1,628 Stock options exercised, net of shares withheld for purchase price 150,239 1 1,076 — — 1,077 Shares issued as compensation 25,877 — 517 — — 517 Stock-based compensation — — 1,895 — — 1,895 Cash dividends to stockholders ($ 0.36 per share) — — — ( 5,275 ) — ( 5,275 ) Shares repurchased and retired ( 67,869 ) — ( 1,399 ) — — ( 1,399 ) Issuance of common stock in acquisition of IFH 2,631,847 27 70,837 — — 70,864 Balance, December 31, 2024 16,662,626 167 123,566 242,875 ( 11,469 ) 355,139 Net income — — — 57,170 — 57,170 Unrealized gain on investment securities available-for-sale, net of income taxes — — — — 5,709 5,709 Stock options exercised, net of shares withheld for purchase price 106,450 1 675 — — 676 Shares issued as compensation 23,855 — 482 — — 482 Stock-based compensation — — 1,608 — — 1,608 Cash dividends to stockholders ($ 0.44 per share) — — — ( 7,296 ) — ( 7,296 ) Shares repurchased and retired ( 419,643 ) ( 4 ) ( 11,727 ) — — ( 11,731 ) Balance, December 31, 2025 16,373,288 $ 164 $ 114,604 $ 292,749 $ ( 5,760 ) $ 401,757 See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2025 and 2024 (in thousands) 2025 2024 Cash flows from operating activities Net income $ 57,170 $ 30,972 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 14,965 17,720 Provision for credit losses on unfunded commitments 188 385 Provision for (release of) mortgage put-back reserve, net 79 ( 68 ) Net (accretion) amortization on investment securities available-for-sale ( 150 ) 100 Premises and equipment depreciation 1,424 737 Lease asset amortization 1,402 1,215 Amortization of intangible assets 1,046 262 Extinguishment of leases — ( 2,881 ) Increase in cash surrender value of BOLI ( 1,532 ) ( 1,466 ) Net decrease (increase) in loan servicing assets 1,588 ( 996 ) Executive long-term incentive plan expense 889 516 Stock-based compensation expense 1,608 1,895 Director and employee compensation paid in Company stock 1,225 517 Deferred income tax expense (benefit) 1,097 ( 1,814 ) (Increase) decrease in valuation of loans held for sale carried at fair value ( 62 ) 32 Proceeds from sales of loans held for sale 352,846 281,384 Originations of loans held for sale ( 357,327 ) ( 292,872 ) Government lending revenue ( 4,222 ) ( 2,301 ) Changes in assets and liabilities: Accrued interest receivable ( 31 ) ( 762 ) Taxes payable ( 3,024 ) 3,358 Other assets ( 3,437 ) ( 15,517 ) Accrued interest payable ( 648 ) 2,533 Other liabilities 4,627 11,977 Net cash provided by operating activities 69,721 34,926 Cash flows from investing activities Purchases of securities available-for-sale ( 54,876 ) ( 65,396 ) Proceeds from calls and maturities of securities available-for-sale 56,107 53,208 Net purchases of restricted investments ( 3,918 ) ( 126 ) Net increase in portfolio loans receivable ( 345,819 ) ( 320,651 ) Net purchases of premises and equipment ( 2,374 ) ( 2,157 ) Cash received from acquisitions, net — 65,170 Net cash used in investing activities ( 350,880 ) ( 269,952 ) See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2025 and 2024 (in thousands) 2025 2024 Cash flows from financing activities Net increase (decrease) in: Noninterest-bearing deposits 41,813 107,946 Interest-bearing deposits 289,448 299,045 Federal Home Loan Bank advances 28,000 — Other borrowed funds ( 10,000 ) ( 15,000 ) Dividends paid ( 7,296 ) ( 5,275 ) Repurchase of common stock ( 11,731 ) ( 1,399 ) Net proceeds from exercise of stock 1,158 1,077 Net cash provided by financing activities 331,392 386,394 Net increase in cash and cash equivalents 50,233 151,368 Cash and cash equivalents, beginning of year 205,332 53,964 Cash and cash equivalents, end of year $ 255,565 $ 205,332 Noncash investing and financing activities: Loans transferred to foreclosed real estate $ 3,856 $ — Change in unrealized gains on investments $ 7,534 $ 2,194 Fair value of assets acquired, net of cash received $ — $ 460,455 Goodwill from acquisition $ — $ 21,126 Fair value of liabilities assumed $ — $ 475,886 Common Stock issued related to acquisition $ — $ 27 Goodwill measurement period adjustment $ 4,657 $ — Cash paid during the period for: Taxes $ 18,753 $ 9,098 Interest $ 65,527 $ 54,745 See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 1 - Nature of Business and Basis of Presentation Nature of operations: Capital Bancorp, Inc. is a Maryland corporation and the bank holding company (the “Company”) for Capital Bank, N.A.
  • The Company operates three additional divisions including OpenSky TM , Windsor Advantage, LLC™ (“Windsor Advantage TM ”) and Capital Bank Home Loans (“CBHL”).
  • The Company serves businesses, not-for-profit associations, entrepreneurs and others throughout the Washington D.C., Baltimore, other Maryland markets, Delaware, Florida, Illinois and North Carolina through seven commercial bank branches, one mortgage banking office, three loan production offices, three government loan servicing offices, and one credit card operations office.
  • The Bank is principally engaged in providing commercial, real estate, and credit card loans along with other banking services, and attracting deposits.
  • The Company issues credit cards through OpenSky ™ , a digitally-driven, nationwide credit card platform providing secured, partially secured, and unsecured credit solutions.
  • Windsor Advantage TM , a wholly-owned subsidiary of the Company, is a loan service provider that offers community banks and credit unions a comprehensive U.S.
  • Small Business Administration (“SBA”) 7(a) and U.S.
  • Department of Agriculture (“USDA”) lending platform.
  • The Company originates residential mortgages for sale in the secondary market through Capital Bank Home Loans (“CBHL”), the Bank’s residential mortgage banking arm.
  • The Company reports its activities as four divisions and reporting segments: Commercial Banking; OpenSky ™ ; Windsor Advantage ™ ; and Capital Bank Home Loans.
  • The primary reference point for the estimates is on historical experience and assumptions believed to be reasonable regarding the value of certain assets and liabilities that are not readily available from other sources.
  • Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 1 - Nature of Business and Basis of Presentation (continued) Business Combinations The Company accounts for its acquisitions under the Financial Accounting Standards Board (“FASB”) ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting.
  • Generally, only investments with original maturities of three months or less are reported as cash and cash equivalents.
  • In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance of any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically related to the security.

and 379 more.

Gone since FY2024

  • As of December 31, 2024, the Company and the Bank were in compliance with all applicable regulatory capital requirements to which it was subject, and the Bank was classified as “well capitalized” for purposes of the prompt corrective action regulations.
  • (in thousands) Actual Minimum Capital Adequacy To Be Well Capitalized December 31, 2024 Amount Ratio Amount Ratio Amount Ratio The Company Tier 1 leverage ratio (to average assets) $ 346,840 11.07 % $ 125,348 4.00 % $ 156,685 5.00 % Tier 1 capital (to risk-weighted assets) 346,840 13.83 150,512 6.00 200,683 8.00 Common equity tier 1 capital ratio (to risk-weighted assets) 344,778 13.74 112,884 4.50 163,055 6.50 Total capital ratio (to risk-weighted assets) 388,425 15.48 200,683 8.00 250,853 10.00 The Bank Tier 1 leverage ratio (to average assets) $ 283,828 9.17 % $ 123,818 4.00 % $ 154,772 5.00 % Tier 1 capital (to risk-weighted assets) 281,563 11.54 146,451 6.00 195,268 8.00 Common equity tier 1 capital ratio (to risk-weighted assets) 281,563 11.54 109,838 4.50 158,655 6.50 Total capital ratio (to risk-weighted assets) 312,304 12.79 195,268 8.00 244,085 10.00 December 31, 2023 The Company Tier 1 leverage ratio (to average assets) $ 270,019 12.14 % $ 89,004 4.00 % N/A N/A Tier 1 capital (to risk-weighted assets) 270,019 15.55 104,175 6.00 N/A N/A Common equity tier 1 capital ratio (to risk-weighted assets) 267,957 15.43 78,132 4.50 N/A N/A Total capital ratio (to risk-weighted assets) 301,817 17.38 138,900 8.00 N/A N/A The Bank Tier 1 leverage ratio (to average assets) $ 228,794 10.51 % $ 87,068 4.00 % $ 108,835 5.00 % Tier 1 capital (to risk-weighted assets) 228,794 13.56 101,251 6.00 135,001 8.00 Common equity tier 1 capital ratio (to risk-weighted assets) 228,794 13.56 75,938 4.50 109,688 6.50 Total capital ratio (to risk-weighted assets) 249,984 14.81 135,001 8.00 168,751 10.00 Contractual Obligations We have contractual obligations to make future payments on debt and lease agreements.
  • The following table of contractual commitments focuses only on future obligations and summarizes our contractual obligations as of December 31, 2024.
  • (in thousands) Due in One Year or Less Due After One Through Three Years Due After Three Through Five Years Due After 5 Years Total FHLB advances $ 22,000 $ — $ — $ — $ 22,000 Certificates of deposit $250,000 or more 265,073 9,144 — — 274,217 Certificates of deposit less than $250,000 461,919 116,430 29,348 20 607,717 Lease payments 2,030 2,559 890 1,188 6,667 Subordinated debt — — — 12,062 12,062 Total $ 751,022 $ 128,133 $ 30,238 $ 13,270 $ 922,663 Off-Balance Sheet Items In the normal course of business, we enter into various transactions that, in accordance with GAAP, are not included in our consolidated balance sheets.
  • December 31, (in thousands) 2024 2023 Unfunded lines of credit $ 403,029 $ 336,472 Letters of credit 3,122 4,641 Commitment to fund other investments 2,714 3,874 Total credit extension commitments $ 408,865 $ 344,987 Unfunded lines of credit represent unused credit facilities to our current borrowers.
  • Earnings Metrics, as Adjusted Year Ended (in thousands, except per share data) December 31, 2024 December 31, 2023 Net Income $ 30,972 $ 35,871 Add: Merger-Related Expenses, net of tax 3,308 — Add: Non-Recurring Equity and Debt Investment Write-Down 2,620 — Add: IFH Non-PCD ACL Provision, Net of Tax 3,169 — Net Income, as Adjusted $ 40,069 $ 35,871 Weighted Average Common Shares - Diluted 14,640 14,081 Earnings per Share - Diluted $ 2.12 $ 2.55 Earnings per share - Diluted, as Adjusted $ 2.74 $ 2.55 Average Assets $ 2,554,049 $ 2,188,299 Return on Average Assets 1.21 % 1.64 % Return on Average Assets, as Adjusted 1.57 % 1.64 % Average Equity $ 287,420 $ 240,519 Return on Average Equity 10.78 % 14.91 % Return on Average Equity, as Adjusted 13.94 % 14.91 % Net Interest Income (a) $ 154,746 $ 141,526 Noninterest Income 31,410 24,975 Total Revenue $ 186,156 $ 166,501 Noninterest Expense $ 126,219 $ 110,767 Efficiency Ratio (1) 67.80 % 66.53 % Noninterest Income $ 31,410 $ 24,975 Add: Non-Recurring Equity and Debt Investment Write-Down 2,620 — Noninterest Income, as Adjusted (b) $ 34,030 $ 24,975 Total Revenue, as Adjusted (a) + (b) $ 188,776 $ 166,501 Noninterest Expense $ 126,219 $ 110,767 Less: Merger-Related Expenses 3,930 — Noninterest Expense, as Adjusted $ 122,289 $ 110,767 Efficiency Ratio, as Adjusted (1) 64.78 % 66.53 % _______________ (1) The efficiency ratio is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).
  • Net Interest Margin, as Adjusted Year Ended (in thousands) December 31, 2024 December 31, 2023 Net Interest Income $ 154,746 $ 141,526 Less: Credit Card Loan Income 59,821 61,096 Net Interest Income, as Adjusted $ 94,925 $ 80,430 Average Interest Earning Assets 2,487,607 2,145,209 Less: Average Credit Card Loans 115,581 114,450 Total Average Interest Earning Assets, as Adjusted $ 2,372,026 $ 2,030,759 Net Interest Margin, as Adjusted 4.00% 3.96% Portfolio Loans Receivable Yield, as Adjusted Year Ended (in thousands) December 31, 2024 December 31, 2023 Portfolio Loans Receivable Interest Income $ 202,346 $ 174,378 Less: Credit Card Loan Income 59,821 61,096 Portfolio Loans Receivable Interest Income, as Adjusted $ 142,525 $ 113,282 Average Portfolio Loans Receivable 2,142,638 1,816,968 Less: Average Credit Card Loans 115,581 114,450 Total Average Portfolio Loans Receivable, as Adjusted $ 2,027,057 $ 1,702,518 Portfolio Loans Receivable Yield, as Adjusted 7.03% 6.65% Pre-tax, Pre-Provision Net Revenue ("PPNR") Year Ended (in thousands) December 31, 2024 December 31, 2023 Net Income $ 30,972 $ 35,871 Add: Income Tax Expense 10,860 10,354 Add: Provision for Credit Losses 17,720 9,610 Add: Provision for (Release of) Credit Losses on Unfunded Commitments 385 (101) PPNR $ 59,937 $ 55,734 PPNR, as Adjusted Year Ended (in thousands) December 31, 2024 December 31, 2023 Net Income $ 30,972 $ 35,871 Add: Income Tax Expense 10,860 10,354 Add: Provision for Credit Losses 17,720 9,610 Add: Provision for (Release of) Credit Losses on Unfunded Commitments 385 (101) Add: Merger-Related Expenses 3,930 — Add: Non-Recurring Equity and Debt Investment Write-Down 2,620 — PPNR, as Adjusted $ 66,487 $ 55,734 Allowance for Credit Losses to Total Portfolio Loans Year Ended (in thousands) December 31, 2024 December 31, 2023 Allowance for Credit Losses $ 48,652 $ 28,610 Total Portfolio Loans $ 2,630,163 $ 1,903,288 Allowance for Credit Losses to Total Portfolio Loans 1.85% 1.50% Nonperforming Assets to Total Assets Year Ended (in thousands) December 31, 2024 December 31, 2023 Total Nonperforming Assets $ 30,241 $ 16,042 Total Assets $ 3,206,911 $ 2,226,176 Nonperforming Assets to Total Assets 0.94% 0.72% Nonperforming Loans to Total Portfolio Loans Year Ended (in thousands) December 31, 2024 December 31, 2023 Total Nonperforming Loans $ 30,241 $ 16,042 Total Portfolio Loans $ 2,630,163 $ 1,903,288 Nonperforming Loans to Total Portfolio Loans 1.15% 0.84% Net Charge-Offs to Average Portfolio Loans Year Ended (in thousands) December 31, 2024 December 31, 2023 Total Net Charge-Offs $ 9,003 $ 8,473 Total Average Portfolio Loans $ 2,142,638 $ 1,816,968 Net Charge-Offs to Average Portfolio Loans 0.42% 0.47% Tangible Book Value per Share Year Ended (in thousands, except share and per share data) December 31, 2024 December 31, 2023 Total Stockholders' Equity $ 355,139 $ 254,860 Less: Preferred Equity — — Less: Intangible Assets 42,454 — Tangible Common Equity $ 312,685 $ 254,860 Period End Shares Outstanding 16,662,626 13,922,532 Tangible Book Value per Share $ 18.77 $ 18.31 Return on Average Tangible Common Equity Year Ended (in thousands) December 31, 2024 December 31, 2023 Net Income $ 30,972 $ 35,871 Add: Intangible Amortization, Net of Tax 198 — Net Tangible Income $ 31,170 $ 35,871 Average Equity 287,420 240,519 Less: Average Intangible Assets 6,951 — Net Average Tangible Common Equity $ 280,469 $ 240,519 Return on Average Equity 10.78 % 14.91 % Return on Average Tangible Common Equity 11.11 % 14.91 % Core Return on Average Tangible Common Equity Year Ended (in thousands) December 31, 2024 December 31, 2023 Net Income, as Adjusted $ 40,069 $ 35,871 Add: Intangible Amortization, Net of Tax 198 — Net Tangible Income, as Adjusted $ 40,267 $ 35,871 Core Return on Average Equity, as Adjusted 14.01 % 14.91 % Core Return on Average Tangible Common Equity, as Adjusted 14.36 % 14.91 % ITEM 7A.
  • The following table summarizes the results of our EAR analysis in simulating the change in net interest income and fair value of equity over a 12-month horizon as of December 31, 2024: IMPACT ON NET INTEREST INCOME UNDER A STATIC BALANCE SHEET, PARALLEL INTEREST RATE SHOCK Earnings at Risk -400 bps -300 bps -200 bps -100 bps Flat +100 bps +200 bps +300 bps +400 bps December 31, 2024 (7.8) % (7.1) % (5.4) % (2.8) % 0.0 % 3.0 % 5.9 % 8.7 % 11.5 % Utilizing an economic value of equity (“EVE”) approach, we analyze the risk to capital from the effects of various interest rate scenarios through a long-term discounted cash flow model.
  • The following table illustrates the results of our EVE analysis as of December 31, 2024.
  • ECONOMIC VALUE OF EQUITY ANALYSIS UNDER A STATIC BALANCE SHEET, PARALLEL INTEREST RATE SHOCK Economic Value of Equity -400 bps -300 bps -200 bps -100 bps Flat +100 bps +200 bps +300 bps +400 bps December 31, 2024 (14.8) % (7.7) % (3.1) % (0.9) % 0.0 % (0.2) % (1.3) % (1.8) % (2.5) % Interest Rate Sensitivity and Market Risk As a financial institution, our primary component of market risk is interest rate volatility.
  • INTEREST SENSITIVITY GAP December 31, 2024 Within One Month After One Month Through Three Months After Three Through Twelve Months Within One Year Greater Than One Year or Non-Sensitive Total (in thousands) Assets Interest earning assets Loans (1) $ 497,272 $ 624,734 $ 486,389 $ 1,608,395 $ 1,043,038 $ 2,651,433 Securities 11,183 28,283 49,212 88,678 139,431 228,109 Interest-bearing deposits at other financial institutions 179,841 — — 179,841 — 179,841 Federal funds sold 58 — — 58 — 58 Total earning assets $ 688,354 $ 653,017 $ 535,601 $ 1,876,972 $ 1,182,469 $ 3,059,441 Liabilities Interest-bearing liabilities Interest-bearing deposits $ 16,144 $ 32,288 $ 145,296 $ 193,728 $ 875,349 $ 1,069,077 Time deposits 94,797 85,458 546,751 727,006 154,928 881,934 Total Interest-bearing deposits 110,941 117,746 692,047 920,734 1,030,277 1,951,011 FHLB Advances — — 22,000 22,000 — 22,000 Other borrowed funds — — 10,000 10,000 2,062 12,062 Total Interest-bearing liabilities $ 110,941 $ 117,746 $ 724,047 $ 952,734 $ 1,032,339 $ 1,985,073 Period gap $ 577,413 $ 535,271 $ (188,446) $ 924,238 $ 150,130 $ 1,074,368 Cumulative gap $ 577,413 $ 1,112,684 $ 924,238 $ 924,238 $ 1,074,368 Ratio of cumulative gap to total earning assets 18.87 % 36.37 % 30.21 % 30.21 % 35.12 % _______________ (1) Includes loans held for sale.
  • FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Capital Bancorp, Inc. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Capital Bancorp, Inc. and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the “financial statements”).
  • In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
  • We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 17, 2025, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.
  • Critical Audit Matters, Continued Allowance for Credit Losses As described in Note 5 to the Company’s financial statements, the Company has a gross loan portfolio of $2.6 billion and related allowance for credit losses (“ACL”) of $48.7 million as of December 31, 2024.
  • For these loans, management uses an adverse “through-the-cycle” (“TTC”) probably of default and loss given default to reflect the “greater-than-insignificant” credit deterioration.
  • The primary procedures we performed to address the critical audit matter include the following: ■ We tested the design and operating effectiveness of controls relating to the Company’s determination of the allowance for credit losses, including controls over management’s review and approval of qualitative factors. ■ We evaluated the relevance and the reasonableness of assumptions related to the evaluation of the loan portfolio, current and forecasted economic conditions, and other risk factors used within the qualitative factors. ■ We tested the completeness and accuracy of significant inputs to the model including the underlying data used to develop the qualitative factors. ■ We validated the mathematical accuracy of the calculation. ■ We evaluated the reasonableness of assumptions and data used by the Company in developing the qualitative factors by comparing these data points to internally developed and third‐party sources, and other audit evidence gathered. ■ We performed analytical procedures to evaluate the directional consistency of changes that occurred in the allowance for credit losses for loans.
  • Critical Audit Matters, Continued Business Combination - Valuation of Acquired Loan Portfolio As described in Note 2 to the Company’s financial statements, on October 1, 2024, the Company acquired Integrated Financial Holdings, Inc.
  • The transaction has been accounted for as a business combination and accordingly, the assets acquired and liabilities assumed from IFH were recorded at fair value as of the acquisition date.
  • The fair value of acquired loans held for investments was $362.2 million.
  • Determining the fair value of acquired loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.
  • The market rate adjustment represents the movement in market interest rates, irrespective of credit adjustments, compared to the contractual rates of the acquired loans.
  • The credit adjustment made on pools of homogeneous loans represents the changes in credit quality of the underlying borrowers from loan inception to the merger date.
  • We identified the fair value of acquired loans held for investment as a critical audit matter due to the high degree of complexity and auditor judgment involved and the extent of effort involved, including the use of professionals with specialized skill and knowledge, in testing the Company’s estimates and assumptions, including the discount rates and prepayment rates used in the discounted cash flow methodology.
  • The primary procedures we performed to address the critical audit matter include the following: ■ We tested the design and operating effectiveness of the Company’s process for estimating the acquired loans fair value, including management’s controls over establishing the discount rate used in the discounted cash flow methodology; and evaluating the completeness and accuracy of key inputs and assumptions used in the discounted cash flow methodology, including loan data. ■ We tested the completeness and accuracy of certain underlying loan data provided by management that was significant to the discounted cash flow model. ■ We utilized internal valuation specialists to assist in evaluating management’s valuation methodologies and significant assumptions, including application of discount rates and prepayment rates by comparing management’s selected assumptions to independently developed ranges based on third party market data. /s/ Elliott Davis, PLLC We have served as the Company’s auditor since 2017.
  • Raleigh, North Carolina March 17, 2025 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Capital Bancorp, Inc. and Subsidiaries Opinion on the Internal Control Over Financial Reporting We have audited Capital Bancorp, Inc. and its subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
  • In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
  • We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023 and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024 of the Company and our report dated March 17, 2025 expressed an unqualified opinion.
  • As described in the Report by Management on Internal Control over Financial Reporting, management has excluded Integrated Financial Holdings, Inc.
  • (“IFH”) from its assessment of internal control over financial reporting as of December 31, 2024, because it was acquired by the Company in a business combination in the fourth quarter of 2024.
  • We have also excluded IFH from our audit of internal control over financial reporting.
  • Total assets and net interest income and noninterest income of IFH represent approximately 14.6% and 6.8%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.
  • Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Elliott Davis, PLLC Raleigh, North Carolina March 17, 2025 Capital Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets As of December 31, 2024 and 2023 (dollars in thousands, except share data) 2024 2023 Assets Cash and due from banks $ 25,433 $ 14,513 Interest-bearing deposits at other financial institutions 179,841 39,044 Federal funds sold 58 407 Total cash and cash equivalents 205,332 53,964 Investment securities available-for-sale 223,630 208,329 Restricted investments 4,479 4,353 Loans held for sale 21,270 7,481 Portfolio loans receivable, net of deferred fees and costs 2,630,163 1,903,288 Less allowance for credit losses ( 48,652 ) ( 28,610 ) Total portfolio loans held for investment, net 2,581,511 1,874,678 Premises and equipment, net 15,525 5,069 Accrued interest receivable 16,664 11,494 Goodwill 21,126 — Intangible assets 14,072 — Core deposit intangibles 1,745 — Loan servicing assets 5,511 — Deferred tax asset 16,670 12,252 Bank owned life insurance 43,956 37,711 Other assets 35,420 10,845 Total assets $ 3,206,911 $ 2,226,176 Liabilities Deposits Noninterest-bearing $ 810,928 $ 617,373 Interest-bearing 1,951,011 1,278,623 Total deposits 2,761,939 1,895,996 Federal Home Loan Bank advances 22,000 22,000 Other borrowed funds 12,062 27,062 Accrued interest payable 9,393 5,583 Other liabilities 46,378 20,675 Total liabilities 2,851,772 1,971,316 Stockholders' equity Common stock, $ .01 par value; 49,000,000 shares authorized; 16,662,626 and 13,922,532 issued and outstanding 167 139 Additional paid-in capital 128,598 54,473 Retained earnings 237,843 213,345 Accumulated other comprehensive loss ( 11,469 ) ( 13,097 ) Total stockholders' equity 355,139 254,860 Total liabilities and stockholders' equity $ 3,206,911 $ 2,226,176 See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Income For the Years Ended December 31, 2024 and 2023 (dollars in thousands, except per share data) 2024 2023 Interest income Loans, including fees $ 202,915 $ 174,760 Investment securities available-for-sale 5,441 4,815 Federal funds sold and other 4,945 3,631 Total interest income 213,301 183,206 Interest expense Deposits 56,170 39,625 Borrowed funds 2,385 2,055 Total interest expense 58,555 41,680 Net interest income 154,746 141,526 Provision for credit losses 17,720 9,610 Provision for (release of) credit losses on unfunded commitments 385 ( 101 ) Net interest income after provision for credit losses 136,641 132,017 Noninterest income Service charges on deposits 883 964 Credit card fees 15,999 17,273 Mortgage banking revenue 7,146 4,896 Government lending revenue 2,301 — Government loan servicing revenue 3,993 — Loan servicing rights (government guaranteed) 1,013 — Non-recurring equity and debt investment write-down ( 2,620 ) — Other income 2,695 1,842 Total noninterest income 31,410 24,975 Noninterest expenses Salaries and employee benefits 56,037 48,754 Occupancy and equipment 8,244 5,673 Professional fees 7,846 9,270 Data processing 27,689 25,686 Advertising 6,359 6,161 Loan processing 2,431 1,633 Foreclosed real estate expenses, net 2 7 Merger-related expenses 3,930 — Operational losses 3,714 4,613 Outside service providers 1,878 1,932 Regulatory assessment expenses 1,937 1,649 Other operating 6,152 5,389 Total noninterest expenses 126,219 110,767 Income before income taxes 41,832 46,225 Income tax expense 10,860 10,354 Net income $ 30,972 $ 35,871 Basic earnings per share $ 2.12 $ 2.56 Diluted earnings per share $ 2.12 $ 2.55 Weighted average common shares outstanding: Basic 14,584,303 14,002,556 Diluted 14,640,177 14,080,547 See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income For the Years Ended December 31, 2024 and 2023 (in thousands) 2024 2023 Net income $ 30,972 $ 35,871 Other comprehensive income: Unrealized gain on investment securities available-for-sale 2,194 5,066 Income tax expense relating to the items above ( 566 ) ( 1,412 ) Other comprehensive income 1,628 3,654 Comprehensive income $ 32,600 $ 39,525 See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended December 31, 2024 and 2023 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity (dollars in thousands, except per share data) Shares Amount Balance, December 31, 2022 14,138,829 $ 141 $ 58,190 $ 182,435 $ ( 16,751 ) $ 224,015 Cumulative effect adjustment due to adoption of the CECL standard — — — ( 29 ) — ( 29 ) Net income — — — 35,871 — 35,871 Unrealized gain on investment securities available-for-sale, net of income taxes — — — — 3,654 3,654 Stock options exercised, net of shares withheld for purchase price 228,405 2 2,726 ( 937 ) — 1,791 Shares issued as compensation 30,644 — 622 ( 75 ) — 547 Stock-based compensation — — 1,757 — — 1,757 Cash dividends to stockholders ($ 0.28 per share) — — — ( 3,920 ) — ( 3,920 ) Shares repurchased and retired ( 475,346 ) ( 4 ) ( 8,822 ) — — ( 8,826 ) Balance, December 31, 2023 13,922,532 139 54,473 213,345 ( 13,097 ) 254,860 Net income — — — 30,972 — 30,972 Unrealized gain on investment securities available-for-sale, net of income taxes — — — — 1,628 1,628 Stock options exercised, net of shares withheld for purchase price 150,239 1 2,232 ( 1,156 ) — 1,077 Shares issued as compensation 25,877 — 560 ( 43 ) — 517 Stock-based compensation — — 1,895 — — 1,895 Cash dividends to stockholders ($ 0.36 per share) — — — ( 5,275 ) — ( 5,275 ) Shares repurchased and retired ( 67,869 ) — ( 1,399 ) — — ( 1,399 ) Issuance of common stock in acquisition of IFH 2,631,847 27 70,837 — — 70,864 Balance, December 31, 2024 16,662,626 $ 167 $ 128,598 $ 237,843 $ ( 11,469 ) $ 355,139 See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2024 and 2023 (in thousands) 2024 2023 Cash flows from operating activities Net income $ 30,972 $ 35,871 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 17,720 9,610 Provision for (release of) credit losses on unfunded commitments 385 ( 101 ) Release of mortgage put-back reserve, net ( 68 ) ( 188 ) Net amortization on investment securities available-for-sale 100 188 Premises and equipment depreciation 737 324 Lease asset amortization 1,215 149 Amortization of intangible assets 262 — Extinguishment of leases ( 2,881 ) — Increase in cash surrender value of BOLI ( 1,466 ) ( 1,187 ) Net change in loan servicing assets ( 996 ) — Executive long-term incentive plan expense 516 148 Stock-based compensation expense 1,895 1,757 Director and employee compensation paid in Company stock 517 547 Deferred income tax (benefit) expense ( 1,814 ) 142 Valuation allowance on derivatives — 8 Decrease in valuation of loans held for sale carried at fair value 32 6 Proceeds from sales of loans held for sale 281,384 176,373 Originations of loans held for sale ( 292,872 ) ( 176,444 ) Government lending revenue ( 2,301 ) — Changes in assets and liabilities: Accrued interest receivable ( 762 ) ( 2,005 ) Taxes payable 3,358 179 Other assets ( 15,517 ) ( 2,448 ) Accrued interest payable 2,533 4,552 Other liabilities 11,977 ( 63 ) Net cash provided by operating activities 34,926 47,418 Cash flows from investing activities Purchases of securities available-for-sale ( 65,396 ) ( 6,960 ) Proceeds from calls and maturities of securities available-for-sale 53,208 55,991 Net (purchases) sales of restricted investments ( 126 ) 3,009 Net increase in portfolio loans receivable ( 320,651 ) ( 180,722 ) Net purchases of premises and equipment ( 2,157 ) ( 2,156 ) Cash received from acquisitions, net 65,170 — See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2024 and 2023 (in thousands) 2024 2023 Net cash used in investing activities ( 269,952 ) ( 130,838 ) Cash flows from financing activities Net increase (decrease) in: Noninterest-bearing deposits 107,946 ( 56,940 ) Interest-bearing deposits 299,045 194,864 Federal Home Loan Bank repayments, net — ( 85,000 ) Other borrowed funds ( 15,000 ) 15,000 Dividends paid ( 5,275 ) ( 3,920 ) Repurchase of common stock ( 1,399 ) ( 8,826 ) Net proceeds from exercise of stock options 1,077 1,791 Net cash provided by financing activities 386,394 56,969 Net decrease in cash and cash equivalents 151,368 ( 26,451 ) Cash and cash equivalents, beginning of year 53,964 80,415 Cash and cash equivalents, end of year $ 205,332 $ 53,964 Noncash investing and financing activities: Change in unrealized gains (losses) on investments $ 2,194 $ 5,066 Fair value of assets acquired, net of cash received 460,455 — Goodwill from acquisition 21,126 — Fair value of liabilities assumed 475,886 — Common Stock issued related to acquisition 27 — Cash paid during the period for: Taxes $ 9,098 $ 7,704 Interest $ 54,745 $ 37,128 See Notes to Consolidated Financial Statements Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2024 and 2023 Note 1 - Nature of Business and Basis of Presentation Nature of operations: Capital Bancorp, Inc. is a Maryland corporation and bank holding company (the “Company”) for Capital Bank, N.A.
  • The Company serves businesses, not-for-profit associations, entrepreneurs and others throughout Washington D.C., Baltimore, other Maryland metropolitan areas, Florida, Illinois and North Carolina through six commercial bank branches, one mortgage banking office, two loan production offices, three government loan servicing offices, and one credit card operations office.
  • The Bank is principally engaged in the business of investing in commercial, real estate, and credit card loans and attracting deposits.
  • The Company originates residential mortgages for sale in the secondary market through Capital Bank Home Loans (“CBHL”), the Bank’s residential mortgage banking arm, and issues credit cards through OpenSky ™ , a digitally-driven, nationwide credit card platform providing secured, partially secured, and unsecured credit solutions.
  • As discussed further in Note 2, on October 1, 2024 the Company completed its previously announced merger (the “Merger”) with Integrated Financial Holdings, Inc., a North Carolina corporation (“IFH”).
  • IFH was the holding company of West Town Bank & Trust, an Illinois state-chartered bank which provides banking services through its full-service office located in the greater Chicago area and is a nationwide originator of U.S.
  • Department of Agriculture (“USDA”) and U.S.
  • Small Business Administration (“SBA”) government guaranteed loans.

and 294 more.

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