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CST: 23/07/2019 20:35:44   

Capital Bancorp Reports Results for 2018

165 Days ago

ROCKVILLE, Md., Feb. 08, 2019 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the “Company”) (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the “Bank”), today reported net income of $3.5 million, or $0.25 per diluted share, for the fourth quarter of 2018. In comparison, for the fourth quarter of 2017, we reported a net loss of $0.6 million, or $(0.06) per diluted share, as we incurred one-time expenses and lost revenue related to our credit card system conversion of $4.6 million. For the twelve months ended December 31, 2018, net income grew 79.6% year over year to $12.8 million, or $1.02 per diluted share. In comparison, net income for the twelve months ended December 31, 2017 was $7.1 million, or $0.62 per diluted share after giving effect to the one time items in the fourth quarter of 2017.  Return on average assets was 1.27% and return on average equity was 12.26% for the fourth quarter of 2018.  For the comparable period in 2017, the return on average assets was (0.25)% and the return on average equity was (3.11)%.

2018 Highlights

  • During the fourth quarter of 2018, the underwriters of the Company’s initial public offering that closed on September 28, 2018,  purchased an additional 334,310 shares of the Company’s common stock for approximately $3.9 million in connection with the exercise in full of their option to purchase additional shares. The Company issued and sold an aggregate of 1,834,310 shares of its common stock in the offering, raising approximately $21.4 million of primary capital to support growth.

  • Net income increased to $3.5 million for fourth quarter of 2018 compared to a net loss of $644 thousand for the fourth quarter of 2017.

  • Book value per share increased 20.7% to $8.38 at December 31, 2018 from $6.94 at December 31, 2017, driven by earnings growth of the Company and the impact of the initial public offering of common stock.

  • In the fourth quarter, total loans increased $44.9 million or 4.7% to $1.0 billion at December 31, 2018, compared to $955.4 million at September 30, 2018. Total loans increased $112.8 million or 12.7% from $887.4 million at December 31, 2017.

  • In the fourth quarter, total deposits increased 4.8% to $955.2 million at December 31, 2018, compared to $911.1 million at September 30, 2018, and increased by $50.3 million from $904.9 million at December 31, 2017.

  • For the twelve months ended December 31, 2018, average noninterest bearing deposits increased 22.8% to $215.8 million, compared to $175.7 million for the twelve months ended December 31, 2017.

  • Net interest margin, for the three months ended December 31, 2018, increased 52 basis points to 5.46% compared to 4.94%  for the three months ended December 31, 2017, primarily due to non-recurring foregone interest and fees on our credit card portfolio in the fourth quarter of 2017.  Net interest margin decreased 10 basis points compared to the quarter ended September 30, 2018.

  • Asset quality remained steady during 2018, as non-performing assets as a percentage of total assets totaled 0.44% at December 31, 2018 compared to 0.54% at December 31, 2017. For the quarter, net chargeoffs to average loans were 0.09%, down 2 bps from September 30, 2018.

  • OpenSky®, the Bank's secured, digitally driven nationwide credit card platform, realized benefits of cost initiatives and scale to meaningfully lower its operating costs on a per open accounts basis.

  • Church Street Mortgage, the Bank's residential mortgage banking arm, remained profitable for the quarter even as volumes fell from previous levels. During the quarter, the fintech digital mortgage platform was successfully launched.

“We continued to execute our strategy in the fourth quarter, posting net income of $3.5 million,” stated Ed Barry, the Company’s Chief Executive Officer.  “Our disciplined approach to client selection contributed to the expansion of core net interest margin excluding credit card.  Loan and deposits growth accelerated during the quarter, and we were also able to capitalize on market disruption and hire some great talent on the sales front.”

COMPARATIVE FINANCIAL HIGHLIGHTS (unaudited) 
  Quarter Ended   4th Quarter   Twelve Months Ended    
  December 31,   2018 - 2017   December 31,   2018 - 2017
(in thousands except per share data) 2018   2017   % Change   2018   2017   % Change
Earnings Summary                      
Interest income $ 18,238     $ 14,681     24.2 %   $ 69,127     $ 56,666     22.0 %
Interest expense 3,348     2,120     57.9 %   11,239     7,755     44.9 %
Net interest income 14,890     12,561     18.5 %   57,888     48,911     18.4 %
Provision for loan losses 500     785     (36.3 )%   2,140     2,655     (19.4 )%
Noninterest income 3,466     2,968     16.8 %   16,124     15,149     6.4 %
Noninterest expense 13,094     13,327     (1.7 )%   54,123     47,306     14.4 %
Income before income taxes 4,762     1,417     236.1 %   17,749     14,099     25.9 %
Income tax expense 1,276     2,061     (38.1 )%   4,982     6,990     (28.7 )%
Net income (loss) $ 3,486     $ (644 )   (641.3 )%   $ 12,767     $ 7,109     79.6 %
Weighted average common shares - Basic(1) 13,554     11,270     20.3 %   12,116     11,261     7.6 %
Weighted average common shares - Diluted(1) 13,866     11,626     19.3 %   12,462     11,428     9.0 %
Earnings per common share - Basic(1) $ 0.26     $ (0.06 )   (533.3 )%   $ 1.05     $ 0.63     66.7 %
Earnings per common share - Diluted(1) $ 0.25     $ (0.06 )   (516.7 )%   $ 1.02     $ 0.62     64.5 %
Return on average assets 1.27 %   (0.25 )%   (608.0 )%   1.22 %   1.17 %   4.3 %
Return on average equity 12.26 %   (3.11 )%   (494.2 )%   13.94 %   14.75 %   (5.5 )%
                                   
(1) Gives effect to a four-for-one common stock split completed effective August 15, 2018.


  Quarter Ended   4th Quarter   Quarter Ended
  December 31,   2018 - 2017   September 30,   June 30,   March 31,
(in thousands except per share data) 2018   2017   % Change   2018   2018   2018
Balance Sheet Highlights                      
Assets $ 1,105,058     $ 1,026,009     7.7 %   $ 1,072,905     $ 1,067,786     $ 1,017,613  
Investment securities 46,932     54,029     (13.1 )%   48,067     49,799     51,706  
Mortgage loans held for sale 18,526     26,344     (29.7 )%   21,373     21,370     17,353  
Loans 1,000,268     887,420     12.7 %   955,412     920,783     900,033  
Allowance for loan losses 11,308     10,033     12.7 %   10,892     10,447     10,157  
Deposits 955,240     904,899     5.6 %   911,116     938,364     897,153  
Borrowings and repurchase agreements 7,332     13,260     (44.7 )%   28,239     14,445     12,071  
Senior promissory note     2,000     (100.0 )%            
Subordinated debentures 15,393     15,361     0.2 %   15,386     15,378     15,369  
Total stockholders' equity 114,564     80,119     43.0 %   106,657     86,994     83,453  
Tangible common equity 114,564     80,119     43.0 %   106,657     86,994     83,453  
Common shares outstanding 13,672     11,537     18.5 %   13,191     11,661     11,595  
Tangible book value per share $ 8.38     $ 6.94     20.7 %   $ 8.09     $ 7.46     $ 7.19  
                                             

Operating Results

Net interest margin increased 52 basis points to 5.46% for the three months ended December 31, 2018 as compared to 4.94% for the three months ended December 31, 2017, largely due to non-recurring foregone interest and fees on our credit card portfolio during our system conversion in the fourth quarter of 2017. For the three months ended December 31, 2018, our average interest-earning assets increased by $73.8 million, compared to the three months ended December 31, 2017, while the average yield on our interest-earning assets increased by 91 basis points. In addition, our average interest-bearing liabilities increased by $2.5 million from the fourth quarter of 2017 to the fourth quarter of 2018, with the respective average rate increasing by 66 basis points.  As a result, net interest income increased $2.3 million, or 18.5%, to $14.9 million for the three months ended December 31, 2018 compared to the same period in 2017.

For the twelve months ended December 31, 2018, net interest margin was 5.59%, an increase of 47 basis points over the same period in 2017.  This increase included an average interest-earning assets increase of $80.3 million and an average interest-bearing liabilities increase of $23.9 million compared to the same twelve month period in 2017. In addition, the average yields on interest-earning assets and interest-bearing liabilities increased 74 basis points and 44 basis points , respectively.  Net interest income increased $9.0 million , or 18.4% for the twelve months ended December 31, 2018 compared to the same period in 2017.

During the three months ended December 31, 2018, we recorded a provision for loan losses of $500 thousand on net chargeoffs for the fourth quarter of 2018 of $83 thousand, or 0.01% of average loans, annualized. During the three months ended December 31, 2017, our provision for loan losses was $785 thousand, as net chargeoffs for the fourth quarter of 2017 were $444 thousand, or 0.05% of average loans, annualized. For the twelve months ended December 31, 2018 and 2017, our provision for loan losses was $2.1 million and $2.7 million, respectively. Our allowance for loan losses was $11.3 million, or 1.13% of loans, at December 31, 2018, which provided approximately 242% coverage of nonperforming assets at such date, compared to $10.0 million, or 1.13% of loans, and approximately 186% coverage of nonperforming assets at December 31, 2017.

Noninterest income was $3.5 million and $3.0 million for the three months ended December 31, 2018 and 2017, respectively. For the twelve months ended December 31, 2018 and 2017, noninterest income was $16.1 million and $15.1 million, respectively. The increase in noninterest income during the twelve months ended December 31, 2018 was driven by increases in credit card fees partially offset by lower mortgage banking revenue. Noninterest income decreased $774 thousand during the three months ended December 31, 2018 related primarily to decreases in credit card fees and mortgage banking revenue.

Noninterest expense was $13.1 million and $13.3 million for the three months ended December 31, 2018 and 2017, respectively, and $54.1 million and $47.3 million for the twelve months ended December 31, 2018 and 2017, respectively. The increase in noninterest expense during the twelve-month period ended December 31, 2018 was driven primarily by increases in data processing costs, salaries and benefits, occupancy, and other expenses. During the fourth quarter of 2017, we converted our credit card processing system to a new vendor to further scale the business.  Due to projected growth of our credit card, mortgage and commercial banking businesses, data processing costs will continue to be a significant expense.

Income tax expense was $5.0 million for the twelve months ended December 31, 2018, as compared to $7.0 million for the same period in 2017, a decrease of 28.7% as a result of the Tax Cuts and Jobs Act of 2017 which reduced the corporate tax rate to 21% beginning in 2018.

Financial Condition

Total assets at December 31, 2018 were $1.1 billion, up 7.7% as compared to $1.0 billion at December 31, 2017. Gross loans were $1.0 billion, excluding mortgage loans held for sale, as of December 31, 2018, compared to $887.4 million at December 31, 2017, an increase of 12.7%.  Deposits were $955.2 million at December 31, 2018, an increase of 5.6%, as compared to $904.9 million at December 31, 2017.

Nonperforming assets were $4.8 million, or 0.44% of total assets, as of December 31, 2018. Comparatively, nonperforming assets were $5.5 million, or 0.54% of total assets, at December 31, 2017. Of the $4.8 million in total nonperforming assets as of December 31, 2018, nonperforming loans represented $4.7 million, of which troubled debt restructurings amounted to $284 thousand.  Also included in nonperforming assets at such date was other real estate owned which represented $142 thousand.

Stockholders’ equity totaled $114.6 million as of December 31, 2018, compared to $80.1 million at December 31, 2017. The increase was due to increased earnings and the initial public offering, including the exercise in full by the underwriters of their option to purchase additional shares, of approximately $21.4 million.  As of December 31, 2018, the Bank's capital ratios continue to exceed the regulatory requirements for a “well-capitalized” institution.

Consolidated Statements of Income (unaudited) 
  Three Months Ended December 31,   Twelve Months Ended December 31,
(in thousands except per share data) 2018   2017   2018   2017
Interest income              
Loans, including fees $ 17,774     $ 14,214     $ 67,229     $ 54,996  
Investment securities available for sale 255     284     1,041     1,067  
Federal funds sold and other 209     183     857     602  
Total interest income 18,238     14,681     69,127     56,665  
Interest expense              
Deposits 2,916     1,802     9,792     6,434  
Borrowed funds 432     318     1,447     1,321  
Total interest expense 3,348     2,120     11,239     7,755  
Net interest income 14,890     12,561     57,888     48,910  
Provision for loan losses 500     785     2,140     2,655  
Net interest income after provision for loan losses 14,390     11,776     55,748     46,255  
Noninterest income              
Service charges on deposits 119     125     484     460  
Credit card fees 1,439     (15 )   6,048     4,014  
Mortgage banking revenue 2,097     2,799     9,477     10,377  
Loss on sale of investment securities available for sale         (2 )    
Loss on sale of foreclosed real estate (21 )   (52 )   (21 )   (52 )
Loss on disposal of premises and equipment (276 )   (77 )   (276 )   (77 )
Other fees and charges 108     187     414     427  
Total noninterest income 3,466     2,967     16,124     15,149  
Noninterest expenses              
Salaries and employee benefits 6,081     5,551     25,164     23,819  
Occupancy and equipment 1,078     1,052     4,319     3,829  
Professional fees 759     484     2,124     1,875  
Data processing 3,618     5,127     15,439     10,621  
Advertising 347     470     1,460     1,922  
Loan processing 266     285     1,077     1,409  
Other real estate expenses, net (10 )   (82 )   28     19  
Other operating 955     439     4,512     3,814  
Total noninterest expenses 13,094     13,326     54,123     47,308  
Income before income taxes 4,762     1,417     17,749     14,096  
Income tax expense 1,276     2,061     4,982     6,990  
Net income $ 3,486     $ (644 )   $ 12,767     $ 7,106  
                               


Consolidated Balance Sheets (unaudited) 
(in thousands except per share data) December 31, 2018   December 31, 2017
Assets      
Cash and due from banks $ 10,431     $ 8,189  
Interest bearing deposits at other financial institutions 22,007     40,356  
Federal funds sold 2,285     3,766  
Total cash and cash equivalents 34,723     52,311  
Investment securities available for sale 46,932     54,029  
Restricted investments 2,503     2,369  
Loans held for sale 18,526     26,344  
Loans receivable, net of allowance for loan losses 988,960     877,387  
Premises and equipment, net 2,975     2,601  
Accrued interest receivable 4,462     3,867  
Deferred income taxes 3,654     3,382  
Foreclosed real estate 142     93  
Prepaid income taxes 90     1,532  
Other assets 2,091     2,094  
Total assets $ 1,105,058     $ 1,026,009  
       
Liabilities      
Deposits      
Noninterest bearing $ 242,259     $ 196,635  
Interest bearing 712,981     708,264  
Total deposits 955,240     904,899  
Securities sold under agreements to repurchase 3,332     11,260  
Federal Home Loan Bank advances 2,000     2,000  
Other borrowed funds 17,393     17,361  
Accrued interest payable 1,565     1,084  
Other liabilities 10,964     9,286  
Total liabilities 990,494     945,890  
       
Stockholders' equity      
Preferred stock, $.01 par value; 1,000,000 shares authorized; no shares issued or outstanding at December 31, 2018 and 2017      
Common stock, $.01 par value; 49,000,000 shares authorized; 13,672,479 and 11,537,196 issued and outstanding at December 31, 2018 and 2017, respectively(1) 137     115  
Additional paid-in capital(1) 49,321     27,051  
Retained earnings 65,701     53,200  
Accumulated other comprehensive loss (595 )   (247 )
Total stockholders' equity 114,564     80,119  
Total liabilities and stockholders' equity $ 1,105,058     $ 1,026,009  
               
(1) Shares of common stock authorized, issued and outstanding and additional paid-in capital totals have been adjusted to reflect the four-for-one stock split completed effective August 15, 2018.
 

The following tables show the average outstanding balance of each principal category of our assets, liabilities and stockholders’ equity, together with the average yields on our assets and the average costs of our liabilities for the periods indicated.  Such yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.

  Three Months Ended December 31,
  2018   2017
  Average
Outstanding
Balance
  Interest Income/
Expense
  Average
Yield/
Rate(1)
  Average
Outstanding
Balance
  Interest Income/
Expense
  Average
Yield/
Rate(1)
  (Dollars in thousands)
Assets                      
Interest earning assets:                      
Interest bearing deposits $ 35,797     $ 161     1.78 %   $ 48,263     $ 168     1.38 %
Federal funds sold 1,509     9     2.39 %   2,184     6     1.10 %
Restricted stock 3,229     39     4.75 %   2,411     9     1.50 %
Investment securities 47,365     255     2.14 %   55,290     284     2.04 %
Loans(2)(3)(4) 994,110     17,774     7.09 %   900,095     14,214     6.27 %
Total interest earning assets 1,082,010     18,238     6.69 %   1,008,243     14,681     5.78 %
Noninterest earning assets 8,557             9,844          
Total assets $ 1,090,567             $ 1,018,087          
Liabilities and Stockholders’ Equity                      
Interest bearing liabilities:                      
Interest bearing deposits $ 683,389     2,916     1.69 %   $ 698,866     1,802     1.02 %
Borrowed funds 49,998     432     3.43 %   32,023     318     3.94 %
Total interest bearing liabilities 733,387     3,348     1.81 %   730,889     2,120     1.15 %
Noninterest bearing liabilities:                      
Noninterest bearing liabilities 10,022             9,560          
Noninterest bearing deposits 234,357             195,607          
Stockholders’ equity 112,801             82,031          
Total liabilities and stockholders’ equity $ 1,090,567             $ 1,018,087          
                       
Net interest spread(5)         4.88 %           4.63 %
Net interest income     $ 14,890             $ 12,561      
Net interest margin(6)         5.46 %           4.94 %
Net interest margin excluding credit card portfolio         4.28 %           4.27 %
                           

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

  Twelve Months Ended December 31,
  2018   2017
  Average
Outstanding
Balance
  Interest Income/
Expense
  Average
Yield/
Rate
  Average
Outstanding
Balance
  Interest Income/
Expense
  Average
Yield/
Rate
  (Dollars in thousands)
Assets                      
Interest earning assets:                      
Interest bearing deposits $ 41,858     $ 687     1.64 %   $ 45,385     $ 481     1.06 %
Federal funds sold 1,537     27     1.79 %   1,451     14     0.96 %
Restricted stock 2,724     143     5.26 %   2,521     108     4.27 %
Investment securities 50,074     1,041     2.08 %   52,419     1,067     2.04 %
Loans(1)(2)(3) 939,538     67,229     7.16 %   853,703     54,996     6.44 %
Total interest earning assets 1,035,731     69,127     6.67 %   955,479     56,666     5.93 %
Noninterest earning assets 10,001             9,467          
Total assets $ 1,045,732             $ 964,946          
Liabilities and Stockholders’ Equity                      
Interest bearing liabilities:                      
Interest bearing deposits $ 689,311     9,792     1.42 %   $ 671,639     6,434     0.96 %
Borrowed funds 39,170     1,447     3.70 %   32,893     1,321     4.02 %
Total interest bearing liabilities 728,481     11,239     1.54 %   704,532     7,755     1.10 %
Noninterest bearing liabilities:                      
Noninterest bearing liabilities 9,828             8,164          
Noninterest bearing deposits 215,833             175,707          
Stockholders’ equity 91,590             76,543          
Total liabilities and stockholders’ equity $ 1,045,732             $ 964,946          
                       
Net interest spread(4)         5.13 %           4.83 %
Net interest income     $ 57,888             $ 48,911      
Net interest margin(5)         5.59 %           5.12 %
Net interest margin excluding credit card portfolio         4.28 %           4.31 %
                           

_______________

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

HISTORICAL FINANCIAL HIGHLIGHTS (unaudited) 
    Quarter Ended
(in thousands except per share data)   December 31,
 2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
Earnings:                    
Net income (loss)   $ 3,486     $ 3,146     $ 3,145     $ 2,990     $ (644 )
Earnings per common share, diluted(1)   $ 0.25     $ 0.26     $ 0.26     $ 0.25     $ (0.06 )
Net interest margin   5.46 %   5.56 %   5.49 %   5.79 %   4.94 %
Net interest margin excluding credit card portfolio   4.28 %   4.26 %   4.25 %   4.25 %   4.27 %
Return on average assets   1.27 %   1.19 %   1.22 %   1.19 %   (0.25 )%
Return on average equity   12.26 %   13.69 %   14.77 %   14.86 %   (3.11 )%
Efficiency ratio   71.34 %   74.21 %   73.64 %   73.66 %   85.82 %
Balance Sheet:                    
Loans   $ 1,000,268     $ 955,412     $ 920,783     $ 900,033     $ 887,420  
Deposits   955,240     911,116     938,364     897,153     904,899  
Total assets   1,105,058     1,072,905     1,067,786     1,017,613     1,026,009  
Asset Quality Ratios:                    
Nonperforming assets to total assets   0.44 %   0.42 %   0.35 %   0.39 %   0.54 %
Nonperforming loans to total loans   0.47 %   0.44 %   0.35 %   0.41 %   0.61 %
Net chargeoffs to average loans (YTD annualized)   0.09 %   0.11 %   0.16 %   0.17 %   0.15 %
Allowance for loan losses to total loans   1.13 %   1.14 %   1.13 %   1.13 %   1.13 %
Allowance for loan losses to non-performing loans   241.68 %   257.83 %   320.78 %   273.66 %   185.57 %
Bank Capital Ratios:                    
Total risk based capital ratio   12.25 %   12.36 %   12.34 %   12.30 %   12.03 %
Tier 1 risk based capital ratio   11.00 %   11.11 %   11.09 %   11.05 %   10.78 %
Leverage ratio   9.06 %   9.03 %   8.91 %   8.83 %   8.55 %
Common equity Tier 1 ratio   11.00 %   11.11 %   11.09 %   11.05 %   10.78 %
Tangible common equity   8.89 %   8.72 %   8.58 %   8.78 %   8.46 %
Composition of Loans:                
Residential real estate   $ 407,844     $ 388,141     $ 366,465     $ 354,818     $ 342,684  
Commercial real estate   278,691     276,726     271,800     269,357     259,853  
Construction real estate   157,586     144,012     149,192     150,820     144,932  
Commercial and industrial   122,263     113,473     101,752     96,927     108,982  
Credit card   34,673     33,821     32,522     28,757     31,507  
Other   1,202     1,270     1,244     1,149     1,053  
Mortgage Metrics (CSM only):                    
Origination of loans held for sale   $ 70,826     $ 81,665     $ 95,570     $ 87,279     $ 109,892  
Proceeds from loans held for sale, net of gains   73,883     80,603     89,936     93,955     111,851  
Purchase volume as a % of originations   86.7 %   92.7 %   85.1 %   55.4 %   48.1 %
Gain on sale of loans   $ 1,920     $ 2,227     $ 2,239     $ 2,092     $ 2,569  
Gain on sale as a % of loans sold   2.3 %   2.7 %   2.4 %   2.2 %   2.3 %
Credit Card Portfolio Metrics:                    
Total active customer accounts   169,981     170,160     166,661     158,362     149,226  
Total loans   $ 34,673     $ 33,821     $ 32,522     $ 28,757     $ 31,506  
Total deposits at the Bank   $ 59,954     $ 59,978     $ 58,951     $ 56,333     $ 53,625  
                                         
(1) Gives effect to a four-for-one common stock split completed effective August 15, 2018.


ABOUT CAPITAL BANCORP, INC.

Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. The Company’s wholly-owned subsidiary, Capital Bank, N.A., is the eighth largest bank headquartered in Maryland. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in five locations in the greater Washington, D.C. and Baltimore, Maryland markets.  Capital Bancorp has assets of approximately $1.1 billion at December 31, 2018 and its common stock is traded on the NASDAQ Global Market under the symbol “CBNK.” More information can be found at the Company's website www.CapitalBankMD.com under its investor relations page.

FORWARD-LOOKING STATEMENTS

This earnings release contains forward-looking statements (as defined by the Private Securities Litigation Reform Act of 1995). These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements.  Accordingly, we caution you that any such forward-looking statements are not a guarantee of future performance and that actual results may prove to be materially different from the results expressed or implied by the forward-looking statements due to a number of factors. Such factors include, without limitation, those listed from time to time in reports that the Company files with the Securities and Exchange Commission. These forward-looking statements are made as of the date of this communication, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by law.

FINANCIAL CONTACT: Alan Jackson (240) 283-0402

MEDIA CONTACT: Ed Barry (240) 283-1912

WEB SITE:  www.CapitalBankMD.com

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