GlobeNewswire Inc | Apr 22, 2021 06:30AM EDT

April 22, 2021

ROCKVILLE, Md., April 22, 2021 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the Company) (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the Bank), today reported net income of $9.0 million, or $0.65 per diluted share, for the first quarter of 2021. By comparison, net income was $2.9 million, or $0.21 per diluted share, for the first quarter of 2020. Return on average assets was 1.87% for the first quarter of 2021, compared to 0.84% for the same period in 2020. Return on average equity was 22.3% for the first quarter of 2021, compared to 8.6% for the same period in 2020.

Capital Bancorp started the year with solid first quarter results and is well-positioned to continue our profitable growth in 2021, said Steven Schwartz, Chairman of the Board of the Company. Investments in technology and personnel continue to drive results and support the Banks differentiated and diversified business model that has demonstrated resiliency in a variety of economic environments.

Strong performance by all of our business lines delivered another quarter of exceptional revenue and earnings, said Ed Barry, CEO of the Company. We continue to navigate through the COVID-19 pandemic and are building substantial long-term momentum across all of our lines of business. We are optimistic about the potential of our investments in technology and infrastructure to support continued profitable growth in a post COVID-19, fintech-enabled world.

First Quarter 2021 Highlights

Capital Bancorp, Inc.

-- Solid Earnings - The Commercial Bank, Capital Bank Home Loans and OpenSky all continued to perform well. In the first quarter of 2021, net income of $9.0 million more than tripled from $2.9 million in the first quarter of 2020 as the economy continued to recover from COVID-19. Earnings were $0.65 per diluted share for the three months ended March 31, 2021 compared to $0.21 per share for the same period last year. Book value per common share grew 23.2 percent to $12.14 at March 31, 2021 compared to $9.85 per share at March 31, 2020. -- Robust Performance Ratios - Return on average assets (ROAA) and return on average equity (ROAE) were 1.87% and 22.30%, respectively, for the three months ended March 31, 2021 compared to 0.84% and 8.59%, respectively, for the three months ended March 31, 2020. -- Stable Net Interest Margin - The net interest margin was 5.15% for the three months ended March 31, 2021, which is in line with the 5.16% net interest margin for the same three month period last year. -- Strong Balance Sheet - As of March 31, 2021, the Company reported a common equity tier 1 capital ratio of 13.81% and an allowance for loan and lease losses (ALLL) to total loans ratio of 1.49%, or 1.79% excluding Small Business Administration Payroll Protection Program (SBA-PPP) loans.

Commercial Bank

-- Continued Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $15.4 million, or 5.1 percent annualized, for the quarter ended March 31, 2021 to $1.23 billion compared to $1.21 billion at December31, 2020. The quarter over quarter growth was mainly due to strong growth in commercial real estate loans which increased by $40.8 million, or 10.4 percent, despite several large loan payoffs. -- Growth in Core Deposits and Reduced Cost of Funds - Noninterest bearing deposits increased by $163.4 million, or 26.8 percent, during the quarter ended March 31, 2021, due to increases in OpenSky and SBA-PPP loan-related deposits. At March 31, 2021, noninterest bearing deposits represented 41.4% of total deposits compared to 36.8% at December31, 2020 and 27.9% at March 31, 2020. Overall, the cost of interest bearing liabilities was reduced 14 bps, from 0.95% for the quarter ended December31, 2020 to 0.81% for the quarter ended March 31, 2021. This reduction was primarily due to the Banks ongoing strategic initiative to improve its funding mix and to reduce overall rates paid. -- Proactive Management Improves Credit Metrics - We are gaining more clarity into our customers ability to rebound from the impact of COVID-19 and as the recovery begins to take hold, our customers are experiencing increased stability in their financial condition. As a result of the improving economic environment, provisions for loan losses declined from $1.9 million for the three months ended March 31, 2020 to $503 thousand in the first quarter of 2021. Non-performing assets (NPAs) decreased to 0.58% of total assets in the first quarter of 2021 compared to 0.61% in the same three month period last year. -- Stable Core Margin - Net interest margin, excluding OpenSky and SBA-PPP loans was 3.70% for the three months ended March 31, 2021 compared to 3.80% for the three months ended December 31, 2020. -- SBA-PPP Loans- SBA-PPP loans, net of $6.4 million in fees, totaled $265.7 million at March 31, 2021 which was comprised of $146.1 million from the 2020 vintage and $119.6 million originated thus far this year. Through March 31, 2021, through the SBA, we have obtained forgiveness for $91.6 million of SBA-PPP loans. -- COVID-19 Related Deferrals - At March 31, 2021, 25 loans with an outstanding balance of $25.4 million remained in deferred status, compared to 43 loans, with an outstanding balance of $30.5 million on December 31, 2020. The majority of deferred loans are in the Accommodation and Food Services sector and are believed to be well-secured by real estate.

LoanModifications ^(1)(dollars in millions) March 31, 2021 December 31, 2020 September 30, June 30, 2020 2020 Deferred Loans Deferred Loans Deferred Loans Deferred Loans Total Loans # of # of # of # ofSector Outstanding Balance Loans Balance Loans Balance Loans Balance Loans Deferred Deferred Deferred DeferredAccommodation& Food $ 112.0 $ 16.1 15 $ 14.7 16 $ 11.2 14 $ 42.6 36 ServicesReal Estateand Rental 462.7 3.2 4 5.5 10 9.3 16 45.6 67 LeasingOtherServicesIncluding 282.7 ? ? 1.1 3 5.6 11 17.3 36 PrivateHouseholdsEducational 22.5 ? ? ? ? ? ? 9.8 6 ServicesConstruction 244.6 ? ? ? ? 0.3 1 4.2 6 Professional,Scientific, 80.7 1.1 2 1.4 3 1.1 2 5.0 11 and TechnicalServicesArts,Entertainment 40.5 1.3 1 0.7 2 1.4 2 5.0 9 & RecreationRetail Trade 25.4 ? ? 0.3 1 ? ? 3.0 8 Healthcare &Social 100.4 ? ? 0.9 1 0.9 1 4.7 11 AssistanceWholesale 16.6 ? ? ? ? ? ? 0.9 1 TradeAll other^ 197.2 3.7 3 5.9 7 0.5 2 5.9 13 (1)Total $ 1,585.3 $ 25.4 25 $ 30.5 43 $ 30.3 49 $ 144.0 204

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(1)Excludes modifications and deferrals made for OpenSky secured card customers.

Capital Bank Home Loans

-- Strong Mortgage Performance - Despite a seasonally slower first quarter, Capital Bank Home Loans originated $354 million of mortgage loans and generated mortgage banking revenue of $7.7million compared to $382 million in originations and $8.7 million in revenue for the previous quarter, and $180 million in originations and $3.0 million in revenue for the same three month period of the previous year. -- Resilient Gain on Sale Margin - The first quarter 2021 gain on sale margin was 3.00%, up from 2.52% for the same quarter last year, as active product management benefited results.

OpenSky

-- Growth in OpenSky Accounts Remains Robust - OpenSky increased customer accounts 13.0 percent with net growth during the quarter of 74 thousand accounts, driving total accounts to 642 thousand at March 31, 2021. -- Government Stimulus Impacted Results - Government stimulus programs have improved the credit performance of our customer base which resulted in lower outstanding balances, reduced fees and lower delinquencies. As a result of this improvement, OpenSky loan balances decreased by $18.4 million or 18.1 percent to $83.7 million and late fees were adversely impacted compared to the fourth quarter of 2020. The increase in accounts opened drove 12.1 percent growth in deposit balances to $215.9 million. This most recent customer behavior appears similar in nature to what was observed with the previous issuance of stimulus payments during 2020.

COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited Quarter Ended March 31, (amounts in thousands except per share data) 2021 2020 % ChangeEarnings Summary Interest income $ 26,638 $ 21,744 22.5 %Interest expense 2,194 4,057 (45.9 ) %Net interest income 24,444 17,687 38.2 %Provision for loan losses 503 2,409 (79.1 ) %Noninterest income 13,951 5,535 152.1 %Noninterest expense 25,767 16,799 53.4 %Income before income taxes 12,125 4,014 202.1 %Income tax expense 3,143 1,080 191.0 %Net income $ 8,982 $ 2,934 206.1 % Pre-tax pre-provision net revenue (?PPNR?) ^(2) $ 12,628 $ 6,423 96.6 %Weighted average common shares - Basic 13,757 13,876 (0.9 ) %Weighted average common shares - Diluted 13,899 14,076 (1.3 ) %Earnings per share - Basic $ 0.65 $ 0.21 208.7 %Earnings per share - Diluted $ 0.65 $ 0.21 210.0 %Return on average assets ^(1) 1.87 % 0.84 % 122.6 %Return on average assets, excluding impact of 1.60 % 0.84 % 90.5 %SBA-PPP loans^(1) (2)Return on average equity 22.30 % 8.59 % 159.6 %

Quarter Ended Quarter Ended 1Q21 March 31, vs. December 31, September 30, June 30, 1Q20(in thousands %except per 2021 2020 Change 2020 2020 2020share data)Balance Sheet HighlightsAssets $ 2,091,851 $ 1,507,847 38.7 % $ 1,876,593 $ 1,879,029 $ 1,822,365 Investmentsecurities 128,023 59,524 115.1 % 99,787 53,992 56,796 available forsaleMortgage )loans held 60,816 73,955 (17.8 % 107,154 137,717 116,969 for saleSBA-PPPloans, net of 265,712 ? 100.0 % 201,018 233,349 229,646 fees ^(3)Portfolioloans 1,312,375 1,187,798 10.5 % 1,315,503 1,244,613 1,211,477 receivable ^(3)Allowance for 23,550 15,513 51.8 % 23,434 22,016 18,680 loan lossesDeposits 1,863,069 1,302,913 43.0 % 1,652,128 1,662,211 1,608,726 FHLB 22,000 28,889 (23.8 ) 22,000 22,222 25,556 borrowings %Other )borrowed 12,062 15,430 (21.8 % 14,016 17,516 17,392 fundsTotalstockholders' 167,003 136,080 22.7 % 159,311 149,377 142,108 equityTangiblecommon 167,003 136,080 22.7 % 159,311 149,377 142,108 equity^(2) Common shares 13,759 13,817 (0.4 ) 13,754 13,682 13,818 outstanding %Tangible bookvalue per $ 12.14 $ 9.85 23.2 % $ 11.58 $ 10.92 $ 10.28 share^ (2)

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(1)Annualized.(2)Refer to Appendix for reconciliation of non-GAAP measures.(3)Loans are reflected net of deferred fees and costs.

Operating Results - Comparison of Three Months Ended March 31, 2021 and 2020

For the three months ended March 31, 2021, net interest income increased $6.8 million, or 38.2 percent, to $24.4 million from the same period in 2020, primarily due to an increase in interest earning assets and a decrease in rates on interest bearing liabilities. The net interest margin decreased 1 basis point to 5.15% for the three months ended March 31, 2021 from the same period in 2020. Net interest margin, excluding credit card and SBA PPP loans, was 3.70% for the first quarter of 2021 compared to 3.96% for the same period in 2020. For the three months ended March 31, 2021, average interest earning assets increased $544.3 million, or 39.5 percent, to $1.9 billion as compared to the same period in 2020, and the average yield on interest earning assets decreased 73 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $156.7 million, or 16.6 percent, while the average cost decreased 92 basis points to 0.81% from 1.73%.

The provision for loan losses of $503 thousand for the three months ended March 31, 2021 was due primarily to a small number of loan charge-offs, which was offset by improving overall credit metrics. Net charge-offs for the first quarter of 2021 were $388 thousand, or 0.12% of average loans on an annualized basis, compared to $197 thousand, or 0.07% of average loans on an annualized basis, for the first quarter of 2020. The $388 thousand in net charge-offs during the quarter, was comprised of $105 thousand in commercial loans and $283 thousand in credit cards.

For the quarter ended March 31, 2021, noninterest income was $14.0 million, an increase of $8.4 million, or 152 percent from $5.5 million in the prior year quarter. The increase was primarily driven by significant growth in mortgage banking revenues of $4.8 million and credit card fees of $3.9 million resulting from the higher number of credit card accounts.

For the three months ended March 31, 2021, OpenSkys net growth was 74 thousand secured credit card accounts, increasing the total number of open accounts to 642 thousand. This compares to 43 thousand new originations for the same period last year, which increased total open accounts to 244 thousand. At March 31, 2021 compared to March 31, 2020, credit card loan balances have increased to $83.7 million from $41.9 million, while the related deposit account balances have increased 155 percent to $215.9 million. The growth in open accounts was primarily driven by enhanced marketing and economic conditions that led consumers to recognize the value and convenience of the Bank's secured credit card product.

The efficiency ratio for the three months ended March 31, 2021 improved to 67.1% compared to 73.5% for the three months ended March 31, 2020 on higher levels of revenue and improved operating leverage.

Noninterest expense was $25.8 million for the three months ended March 31, 2021, as compared to $16.8 million for the three months ended March 31, 2020, an increase of $9.0 million, or 53.4 percent. The increase was primarily driven by a $5.2 million, or 126 percent, increase in data processing expenses, a $1.2 million, or 15.6 percent, increase in salaries and benefits, an increase in professional services of $0.9million or 111 percent, an increase in loan processing fees of $605 thousand, or 135 percent, and an increase in operating expenses of $1.1 million, or 48.0 percent, quarter over quarter. The increase of $5.2 million in data processing expenses was largely attributable to the higher volume of open credit cards, and increased portfolio and mortgage loan processing volumes during the first quarter of 2021. The Companys organic growth was supported by a 14.7 percent increase in employees to 265 at March 31, 2021, up from 231 at March 31, 2020. Additionally, operating expenses increased $1.1 million due to increases in marketing and advertising, credit expenses, FDIC insurance and miscellaneous expenses.

Financial Condition

Total assets at March 31, 2021 were $2.1 billion, an increase of 38.7 percent from March 31, 2020. Portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.3 billion as of March 31, 2021, an increase of 10.5 percent as compared to $1.2 billion at March 31, 2020.

Total deposits at March 31, 2021 were $1.9 billion, an increase of 43.0 percent as compared to $1.3 billion at March 31, 2020. Noninterest bearing deposits increased by $408.5 million, or 112.4 percent, to $771.9 million at March 31, 2021 compared to the level at March 31, 2020. During the quarter, deposit balances grew in certain fiduciary accounts of title and property management companies, as well as noninterest bearing SBA-PPP loan customers and secured card deposits.

The Company recorded a provision for loan losses of $503 thousand during the three months ended March 31, 2021, which increased the allowance for loan losses to $23.5 million, or 1.49% of total loans (1.79%, excluding SBA-PPP loans, on a non-GAAP basis) at March 31, 2021. This level of reserve provides approximately 267.1% coverage of nonperforming loans at March 31, 2021, compared to the reserve at March 31, 2020 of $15.5 million, or 1.31% of total loans, which represented a coverage ratio of 268%. Nonperforming assets were $12.1 million, or 0.58% of total assets, as of March 31, 2021, up from $9.2 million, or 0.61% of total assets, at March 31, 2020. Of the $12.1 million in total nonperforming assets as of March 31, 2021, nonperforming loans represented $8.8 million and foreclosed real estate totaled $3.3 million. Included in nonperforming loans at March 31, 2021 were troubled debt restructurings of $437 thousand.

Stockholders equity increased to $167.0 million as of March 31, 2021, compared to $136.1 million at March 31, 2020. This increase was primarily attributable to earnings during the period. As of March 31, 2021, the Banks capital ratios continued to exceed the regulatory requirements for a well-capitalized institution.

Consolidated Statements of Income (Unaudited) Three Months Ended March 31,(in thousands) 2021 2020Interest income Loans, including fees $ 26,068 $ 21,074 Investment securities available for sale 478 340 Federal funds sold and other 92 330 Total interest income 26,638 21,744 Interest expense Deposits 2,006 3,613 Borrowed funds 188 444 Total interest expense 2,194 4,057 Net interest income 24,444 17,687 Provision for loan losses 503 2,409 Net interest income after provision for loan 23,941 15,278 losses Noninterest income Service charges on deposits 147 149 Credit card fees 5,940 2,008 Mortgage banking revenue 7,743 2,973 Other fees and charges 120 405 Total noninterest income 13,951 5,535 Noninterest expenses Salaries and employee benefits 8,568 7,413 Occupancy and equipment 1,129 1,178 Professional fees 1,624 770 Data processing 9,311 4,117 Advertising 833 636 Loan processing 1,052 447 Other real estate expenses, net 4 45 Other operating 3,246 2,193 Total noninterest expenses 25,767 16,799 Income before income taxes 12,125 4,014 Income tax expense 3,143 1,080 Net income $ 8,982 $ 2,934

Consolidated Balance Sheets (in thousands except share data) (unaudited) December 31, March 31, 2021 2020Assets Cash and due from banks $ 22,678 $ 18,456 Interest bearing deposits at other financial 294,777 126,081 institutionsFederal funds sold 567 2,373 Total cash and cash equivalents 318,022 146,910 Investment securities available for sale 128,023 99,787 Restricted investments 3,723 3,958 Loans held for sale 60,816 107,154 U.S. Small Business Administration PayrollProtection Program (?SBA-PPP?) loans receivable, 265,712 201,018 net of feesPortfolio loans receivable, net of deferred feesand costs and net of allowance for loan losses 1,288,825 1,292,068 of $23,550 and $23,434Premises and equipment, net 4,004 4,464 Accrued interest receivable 8,104 8,134 Deferred income taxes, net 7,430 6,818 Other real estate owned 3,293 3,326 Other assets 3,899 2,956 Total assets $ 2,091,851 $ 1,876,593 Liabilities Deposits Noninterest bearing $ 771,924 $ 608,559 Interest bearing 1,091,145 1,043,569 Total deposits 1,863,069 1,652,128 Federal Home Loan Bank advances 22,000 22,000 Other borrowed funds 12,062 14,016 Accrued interest payable 1,210 1,134 Other liabilities 26,507 28,004 Total liabilities 1,924,848 1,717,282 Stockholders? equity Common stock, $.01 par value; 49,000,000 sharesauthorized; 13,759,218 and 13,753,529 issued and 138 138 outstandingAdditional paid-in capital 51,042 50,602 Retained earnings 115,805 106,854 Accumulated other comprehensive income 18 1,717 Total stockholders? equity 167,003 159,311 Total liabilities and stockholders? equity $ 2,091,851 $ 1,876,593

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 March 31, 2021 2020 Average Interest Average Average Interest Average Outstanding Income/ Yield/ Outstanding Income/ Yield/ Balance Expense Rate^ Balance Expense Rate^ (1) (1) (Dollars in thousands)Assets Interestearning assets:Interestbearing $ 205,799 $ 49 0.10 % $ 96,622 $ 259 1.08 %depositsFederal funds 3,871 ? 0.01 1,068 4 1.45 soldInvestmentsecurities 106,704 478 1.82 60,396 340 2.26 available forsaleRestricted 3,906 43 4.43 3,918 67 6.87 stockLoans held 72,460 481 2.69 42,105 366 3.49 for saleSBA-PPP loans 232,371 2,205 3.85 ? ? ? receivablePortfolioloans 1,298,352 23,382 7.30 1,175,090 20,708 7.09 receivable^(2)Totalinterest 1,923,463 26,638 5.62 1,379,199 21,744 6.34 earningassetsNoninterestearning 25,803 18,099 assetsTotal assets $ 1,949,266 $ 1,397,298 Liabilitiesand Stockholders?EquityInterestbearing liabilities:Interestbearing $ 256,958 68 0.11 $ 143,875 228 0.64 demandaccountsSavings 5,631 1 0.05 4,409 3 0.30 Money market 471,154 530 0.46 446,928 1,687 1.52 accountsTime deposits 332,660 1,407 1.72 304,053 1,695 2.24 Borrowed 35,343 188 2.15 45,757 444 3.90 fundsTotalinterest 1,101,746 2,194 0.81 945,022 4,057 1.73 bearingliabilitiesNoninterestbearing liabilities:Noninterestbearing 24,059 19,835 liabilitiesNoninterestbearing 660,086 295,060 depositsStockholders? 163,375 137,381 equityTotalliabilitiesand $ 1,949,266 $ 1,397,298 stockholders?equity Net interest 4.81 % 4.61 %spreadNet interest $ 24,444 $ 17,687 incomeNet interest 5.15 % 5.16 %margin^(3)

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(1) Annualized.(2) Includes nonaccrual loans.(3)For the three months ended March 31, 2021 and March 31, 2020, collectively, SBA-PPP loans and credit card loans accounted for 145 and 120 basis points of the reported net interest margin, respectively.

HISTORICAL FINANCIAL HIGHLIGHTS - Unaudited Quarter Ended(Dollars inthousands March 31, December 31, September 30, June 30, March 31,except per 2021 2020 2020 2020 2020share data)Earnings: Net income $ 8,982 $ 9,689 $ 8,438 $ 4,761 $ 2,934 Earnings percommon share, 0.65 0.71 0.61 0.34 0.21 dilutedNet interest 5.15 % 5.57 % 5.01 % 4.72 % 5.16 %marginNet interestmargin,excluding 3.70 % 3.80 % 3.84 % 3.96 % 3.96 %credit cards &SBA-PPP loans^(1)Return onaverage 1.87 % 2.08 % 1.89 % 1.19 % 0.84 %assets^(2)Return onaverageassets,excluding 1.60 % 1.88 % 1.80 % 1.04 % 0.84 %impact ofSBA-PPP loans^(1)(2)Return onaverage 22.30 % 25.26 % 23.28 % 13.70 % 8.59 %equity^(2)Efficiency 67.11 % 66.63 % 65.17 % 69.74 % 73.53 %ratioBalance Sheet: Portfolioloans $ 1,312,375 $ 1,315,503 $ 1,244,613 $ 1,211,477 $ 1,187,798 receivable ^(3)Deposits 1,863,069 1,652,128 1,662,211 1,608,726 1,302,913 Total assets 2,091,851 1,876,593 1,879,029 1,822,365 1,507,847 Asset Quality Ratios:Nonperformingassets to 0.58 % 0.67 % 0.79 % 0.50 % 0.61 %total assetsNonperformingassets tototal assets, 0.66 % 0.75 % 0.90 % 0.58 % 0.61 %excluding theSBA-PPP loans^(1)Nonperformingloans to total 0.56 % 0.61 % 0.78 % 0.41 % 0.49 %loansNonperformingloans to 0.67 % 0.70 % 0.92 % 0.48 % 0.49 %portfolioloans ^(1)Netcharge-offs toaverage 0.12 % 0.19 % 0.06 % 0.05 % 0.07 %portfolioloans ^(1)(2)Allowance forloan losses to 1.49 % 1.54 % 1.49 % 1.30 % 1.31 %total loansAllowance forloan losses to 1.79 % 1.78 % 1.77 % 1.54 % 1.31 %portfolioloans ^(1)Allowance forloan losses to 267.07 % 253.71 % 191.78 % 318.25 % 268.13 %non-performingloansBank Capital Ratios:Total riskbased capital 13.55 % 12.60 % 12.74 % 12.35 % 12.18 %ratioTier 1 riskbased capital 12.29 % 11.34 % 11.48 % 11.10 % 10.93 %ratioLeverage ratio 7.54 % 7.45 % 7.44 % 7.73 % 8.61 %Common equityTier 1 capital 12.29 % 11.34 % 11.48 % 11.10 % 10.93 %ratioTangible 7.01 % 7.43 % 7.09 % 6.91 % 8.03 %common equityHoldingCompany CapitalRatios:Total riskbased capital 16.07 % 15.19 % 15.35 % 15.02 % 13.63 %ratioTier 1 riskbased capital 13.98 % 13.10 % 12.93 % 12.58 % 12.38 %ratioLeverage ratio 8.84 % 8.78 % 8.63 % 8.85 % 9.83 %Common equityTier 1 capital 13.81 % 12.94 % 12.75 % 12.39 % 12.19 %ratioTangible 7.98 % 8.48 % 7.95 % 7.80 % 11.08 %common equityComposition of Loans:Residential $ 420,460 $ 437,860 $ 422,698 $ 437,429 $ 430,870 real estateCommercial 433,336 392,550 372,972 364,071 360,601 real estateConstruction 221,277 224,904 227,661 212,957 204,047 real estateCommercial andindustrial - 149,914 157,127 134,889 142,673 151,551 OtherSBA-PPP loans 272,090 204,920 238,735 236,325 ? Credit card 83,740 102,186 84,964 54,732 41,881 Other consumer 4,487 1,649 2,268 947 1,103 loansComposition of Deposits:Noninterest $ 771,924 $ 608,559 $ 596,239 $ 563,995 $ 363,423 bearingInterest 300,992 257,126 247,150 268,150 175,924 bearing demandSavings 6,012 4,800 4,941 5,087 4,290 Money Markets 471,303 447,077 472,447 507,432 473,958 Time Deposits 312,838 334,566 341,435 264,062 285,318 Capital Bank Home Loan Metrics:Origination ofloans held for $ 353,774 $ 382,267 $ 431,060 $ 315,165 $ 180,421 saleMortgage loans 400,112 412,830 410,312 272,151 177,496 soldGain on sale 12,008 12,950 12,837 8,088 4,580 of loansPurchasevolume as a % 24.59 % 30.03 % 33.76 % 31.16 % 32.79 %oforiginationsGain on saleas a % of 3.00 % 3.14 % 3.13 % 2.97 % 2.52 %loans sold^(4)OpenSky^ Portfolio Metrics: Activecustomer 642,272 568,373 529,114 400,530 244,024 accountsCredit card $ 83,740 $ 102,186 $ 83,101 $ 53,150 $ 40,727 loans, netNoninterestsecured credit 215,883 192,520 176,708 131,854 84,689 card deposits

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(1) Refer to Appendix for reconciliation of non-GAAP measures.(2) Annualized.(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.

Appendix

Reconciliation of Non-GAAP Measures

Return onAverageAssets, Quarters EndedasAdjustedDollars March 31, December 31, September 30, March 31,in 2021 2020 2020 June 30, 2020 2020Thousands Net $ 8,982 $ 9,689 $ 8,438 $ 4,761 $ 2,934 IncomeLess:SBA-PPP 2,205 1,998 1,470 1,011 ? loanincomeNetIncome, $ 6,777 $ 7,691 $ 6,968 $ 3,750 $ 2,934 asAdjustedAverageTotal 1,949,265 1,854,846 1,533,591 1,612,839 1,397,298 AssetsLess:Average 232,371 227,617 238,071 168,490 ? SBA-PPPLoansAverageTotalAssets, $ 1,716,894 $ 1,627,229 $ 1,295,520 $ 1,444,349 $ 1,397,298 asAdjustedReturn onAverageAssets, 1.60 % 1.88 % 2.14 % 1.04 % 0.84 %asAdjusted

NetInterestMargin, Quarters EndedasAdjustedDollars March 31, December 31, September 30, March 31,in 2021 2020 2020 June 30, 2020 2020Thousands NetInterest $ 24,444 $ 25,719 $ 22,039 $ 18,624 $ 17,687 IncomeLessSecuredcredit 7,660 9,306 6,632 4,066 4,527 card loanincomeLessSBA-PPP 2,205 1,998 1,470 1011 ? loanincomeNetInterestIncome, $ 14,580 $ 14,415 $ 13,937 $ 13,547 $ 13,160 asAdjustedAverageInterest 1,923,463 1,836,337 1,748,894 1,588,380 1,379,199 EarningAssetsLessAveragesecured 93,520 95,739 68,585 42,538 42,553 creditcardloansLessAverage 232,371 227,617 235,160 168,490 ? SBA-PPPloansTotalAverageInterestEarning $ 1,597,573 $ 1,512,981 $ 1,445,149 $ 1,377,352 $ 1,336,646 Assets,asAdjustedNetInterestMargin, 3.70 % 3.80 % 3.84 % 3.96 % 3.96 %asAdjusted

Tangible BookValue per Quarters EndedShareDollars in March 31, December 31, September June 30, March 31,Thousands 2021 2020 30, 2020 2020 2020 TotalStockholders? $ 167,003 $ 159,311 $ 149,377 $ 142,108 $ 136,080 EquityLess:Preferred ? ? ? ? ? equityLess:Intangible ? ? ? ? ? assetsTangible $ 167,003 $ 159,311 $ 149,377 $ 142,108 $ 136,080 Common EquityPeriod EndShares 13,759,218 13,753,529 13,682,198 13,818,223 13,816,723 OutstandingTangible BookValue per $ 12.14 $ 11.58 $ 10.92 $ 10.28 $ 9.85 Share

Allowance forLoan Lossesto Total Quarters EndedPortfolioLoansDollars in March 31, December 31, September 30, June 30, 2020 March 31,Thousands 2021 2020 2020 2020 Allowance for $ 23,550 $ 23,434 $ 22,016 $ 18,680 $ 15,514 Loan LossesTotal Loans 1,578,087 1,516,520 1,477,962 1,441,123 1,172,285 Less: SBA-PPP 265,712 201,018 233,349 229,646 ? loansTotalPortfolio $ 1,312,375 $ 1,315,503 $ 1,244,613 $ 1,211,477 $ 1,172,285 LoansAllowance forLoan Lossesto Total 1.79 % 1.78 % 1.77 % 1.54 % 1.32 %PortfolioLoans NonperformingAssets toTotal Assets, Quarters Endednet SBA-PPPLoansDollars in March 31, December 31, September 30, June 30, 2020 March 31,Thousands 2021 2020 2020 2020 TotalNonperforming $ 12,112 $ 12,563 $ 14,806 $ 9,195 $ 9,187 AssetsTotal Assets 2,091,851 1,876,593 1,879,029 1,822,365 1,507,847 Less: SBA-PPP 265,712 201,018 233,349 229,646 ? loansTotal Assets,net SBA-PPP $ 1,826,139 $ 1,675,575 $ 1,645,680 $ 1,592,719 $ 1,507,847 LoansNonperformingAssets toTotal Assets, 0.66 % 0.75 % 0.90 % 0.58 % 0.61 %net SBA-PPPLoans NonperformingLoans to Quarters EndedPortfolioLoansDollars in March 31, December 31, September 30, June 30, 2020 March 31,Thousands 2021 2020 2020 2020 TotalNonperforming $ 8,818 $ 9,237 $ 11,480 $ 5,869 $ 5,786 LoansTotal Loans 1,578,087 1,516,520 1,477,962 1,441,123 1,172,285 Less: SBA-PPP 265,712 201,018 233,349 229,646 ? loansTotalPortfolio $ 1,312,375 $ 1,315,503 $ 1,244,613 $ 1,211,477 $ 1,172,285 LoansNonperformingLoans toTotal 0.67 % 0.70 % 0.92 % 0.48 % 0.49 %PortfolioLoans NetCharge-offsto Average Quarters EndedPortfolioLoansDollars in March 31, December 31, September 30, June 30, 2020 March 31,Thousands 2021 2020 2020 2020 Total Net $ 721 $ 615 $ 163 $ 134 $ 197 Charge-offsTotal Average 1,532,093 1,494,278 1,477,962 1,365,371 1,175,090 LoansLess: Average 232,371 227,617 233,349 84,245 ? SBA-PPP loansTotal AveragePortfolio $ 1,299,722 $ 1,266,661 $ 1,244,613 $ 1,281,126 $ 1,175,090 LoansNetCharge-offsto Average 0.22 % 0.19 % 0.05 % 0.05 % 0.07 %PortfolioLoans Pre-tax,Pre-provision Quarters EndedNet Revenue(?PPNR?)Dollars in March 31, December 31, September 30, June 30, 2020 March 31,Thousands 2021 2020 2020 2020 Net income $ 8,982 $ 9,689 $ 8,438 $ 4,761 $ 2,934 Add: Income 3,143 3,347 3,128 1,759 1,080 Tax ExpenseAdd:Provision for 503 2,033 3,500 3,300 2,409 Loan LossesPre-tax,Pre-provision $ 12,628 $ 15,069 $ 15,066 $ 9,820 $ 6,423 Net Revenue(?PPNR?)

ABOUT CAPITAL BANCORP, INC.

Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. The Companys wholly-owned subsidiary, Capital Bank, N.A., is the fifth largest bank headquartered in Maryland at March 31, 2021. 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 $2.1 billion at March 31, 2021 and its common stock is traded in the NASDAQ Global Market under the symbol CBNK. More information can be found at the Companys 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 managements 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 Companys Annual Report on Form 10-K and other periodic and current reports filed with the Securities and Exchange Commission.

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be fully reopened. As a result of the COVID-19 pandemic and the related adverse local and national economic consequences, we are exposed to all of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen as planned, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Boards target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

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