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Capital Bancorp Reports Results for 2018

ROCKVILLE, Md., Feb. 08, 2019 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the “Company”) ( 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