Capital Bancorp, Inc. · NASDAQ:CBNK
Capital Bancorp — Investor Presentation (May 2022)
26 slides from Capital Bancorp's investor presentation, May 24, 2022
Slide 1: 1Q 2022 Investor Presentation
1Q 2022 Investor Presentation
Slide 2: Forward Looking Statements
Forward Looking Statements The statements contained in this presentation that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on Capital Bancorp, Inc. (the “Company” or “Capital”
Slide 3: Financial Highlights and Corporate Timeline
Corporate Headquarters - Rockville, MD Balance Sheet ($M, except per share amounts) Unaudited March 31, 2022 Quarterly Result 1 Yearly Result Assets $ 2,122 3.3 % 1.5 % Portfolio Loans 1,526 0.1 % 16.3 % Deposits 1,863 3.6 % — % Quarterly Financial Performance Earnings per Share, Diluted $ 0.71 — %
Slide 4: Digital Challenger Bank with Diversified Lines of Business
Digital Challenger Bank with Diversified Lines of Business • Initial lead product - nationwide, secured credit card to help under-banked customers (re)establish their credit • Building capabilities to cross-sell products and services as card-holders progress on their customer journeys • Proprietary
Slide 5: High Profitability Funds Re-Investment in Businesses
High Profitability Funds Re-Investment in Businesses • Expand digital marketing and partnerships • Optimize application funnel • Increase customer graduation • Cross-sell Digital Bank products / services • Expand entry products beyond secured card OpenSky® Digital Bank Capital Bank Home Loans 5 Capi
Slide 6: 255 255 255 94 94 94 235 235 235 31 73 125 6 •
0 72 122 73 143 207 226 178 9 0 153 153 0 102 116 0 196 187 255 255 255 94 94 94 235 235 235 31 73 125 6 • Organic growth has consistently exceeded community banking peers • OpenSky® drives high non-interest income and provides resiliency during economically stressed periods • Asset growth and diffe
Slide 7: Technology facilitates growth and profitability
0 72 122 73 143 207 226 178 9 0 153 153 0 102 116 0 196 187 255 255 255 94 94 94 235 235 235 31 73 125 • OpenSky® mobile app enabling cost- effective customer acquisition and servicing • Proprietary data, credit scoring (B- Score), and algorithms improving customer retention with unsecured credit in
Slide 8: Growth has Outpaced Peers
0 72 122 73 143 207 226 178 9 0 153 153 0 102 116 0 196 187 255 255 255 94 94 94 235 235 235 31 73 125 $923 $1,126 $1,148 $1,151 $1,155 $1,210 $1,229 $1,275 $1,317 $1,390 $1,409 $32 $45 $40 $53 $85 $102 $84 $121 $135 $141 $124 $236 $239 $205 $272 $208 $141 $111 $52 $955 $1,171 $1,188 $1,440 $1,479 $
Slide 9: Varied Revenue Generation Capabilities
0 72 122 73 143 207 226 178 9 0 153 153 0 102 116 0 196 187 255 255 255 94 94 94 235 235 235 31 73 125 22.6% 21.7% 33.4% 23.8% 42.7% 49.0% 36.3% 24.5% 19.9% 16.0% 15.8% 17.0% 18.0% 18.2% 20.8% 19.2% 19.8% 18.7% CBNK Peer Median 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q
Slide 10: OpenSky Drives Consistently High Margins
0 72 122 73 143 207 226 178 9 0 153 153 0 102 116 0 196 187 255 255 255 94 94 94 235 235 235 31 73 125 38% 173% 150% 204% 174% 174% 5% 28% 30% 49% 38% 38% CBNK Peer 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 —% 50% 100% 150% 200% 5.32% 5.14% 4.71% 4.98% 5.54% 5.15% 5.47% 6.27% 6.49% 6.79% 4.0
Slide 11: Growth and NIM Result in High ROE
0 72 122 73 143 207 226 178 9 0 153 153 0 102 116 0 196 187 255 255 255 94 94 94 235 235 235 31 73 125 19% 22% 27% 35% 43% 50% 59% 69% 75% 78% 17% 20% 24% 27% 31% 33% 38% 40% 44% 36% CBNK TBV Growth Peer Median Growth 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 15.4% 8.5% 13.6% 23.4% 25.4% 22.
Slide 12: Experienced Entrepreneurial Management Team
Experienced Entrepreneurial Management Team Scot R. Browning President Joined 2002 • Mr. Browning oversees the commercial lending department and commercial loan portfolio which has grown from $13.7 million to over $1.5 billion during his tenure • More than 30 years of banking experience primarily in
Slide 13: Experienced Entrepreneurial Management Team
Experienced Entrepreneurial Management Team 13 Eric Suss Chief Human Resources Officer Joined 2012 • More than 20 years of experience in human resources and talent recruitment • Prior to Capital Bank, Mr. Suss spent nearly 10 years in human resources with CPA Global, a leading international provider
Slide 14: Among the Leaders in the DC MSA for Community Banks
0 72 122 73 143 207 226 178 9 0 153 153 0 102 116 0 196 187 255 255 255 94 94 94 235 235 235 31 73 125 $99 $112 $71 $110 $47 $115 $129 $91 $126 $54 16% 15% 29% 14% 17% 2016 Med HHI (000s) 2021 Med HHI (000s) Montgomery, MD Fairfax, VA Washington, DC Howard, MD National Median 14Source: S&P Global Ma
Slide 15: Capital Generation Results in Robust Capital Ratios
0 72 122 73 143 207 226 178 9 0 153 153 0 102 116 0 196 187 255 255 255 94 94 94 235 235 235 31 73 125 Leverage Ratio Tier 1 Ratio Risk Based Capital Ratio CET1 Ratio 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% Nonperforming Assets Consistent with
Slide 16: Distinctive Investment Opportunity
0 72 122 73 143 207 226 178 9 0 153 153 0 102 116 0 196 187 255 255 255 94 94 94 235 235 235 31 73 125 16 Operate in Exceptional Markets Experienced Entrepreneurial Management Team Growth and Diversified Revenue Generation Drive Superior Profitability Track Record of Leveraging Technology to Execute
Slide 17: Appendix
Appendix
Slide 18: OpenSky Digital Bank
OpenSky® Digital Bank 18 Customer demographics • Nationwide customer base - underserved by traditional credit products • Poor or nonexistent credit history Customer Credit Repair / Establishment • Help customers repair or create acceptable credit history • Functions as a traditional VISA credit card
Slide 19: Capital Bank Home Loans
Capital Bank Home Loans 19 $132 $121 $217 $286 $267 $267 $131 $106 $69 $29 $54 $59 $98 $146 $115 $87 $135 $111 $89 $81 $186 $180 $432 $382 $354 $266 $217 $158 $110 2.63% 2.21% 2.97% 3.13% 3.14% 3.00% 2.79% 2.67% 2.48% 2.77% Re-finance Volume Purchase Volume GOS Margin 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2
Slide 20: Commercial Bank
Commercial Bank 20 • Branch-lite model in attractive Maryland, D.C. and Northern Virginia markets • High value-added service generates above- average risk-adjusted loan yields • Improving deposit portfolio mix • Recent hires have bolstered deposit acquisition and loan origination capabilities • Ongo
Slide 21: Balanced Loan Portfolio
21 • Construction lending is a core competency with focus on established builders of single family homes / condos and townhouse conversions • Loan to value limits of 75% for investor and 80% for owner-occupied construction lending • Construction loans provide a short-duration, high-yield asset class
Slide 22: Stable Loan Portfolio Positioned for Higher Rates
Stable Loan Portfolio Positioned for Higher Rates SBA-PPP Loan Originations and Subsequent Forgiveness Portfolio Priced Defensively to Protect Yield • Effective use of rate floors has mitigated impact of declining rate environment • 58% of portfolio loans are variable/adjustable and well positioned
Slide 23: Managing Credit and Identifying Issues Early
9.35% 1.90% 1.91% 1.57% 0.75% 0.46% 0.25% 0.15% 16.46% 5.16% CBNK Peer Median 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 0.00% 8.00% 16.00% 23 Residential Real Estate: $3.05 Commercial Real Estate: $0.02 Commercial and Industrial: $0.85 Construction: $2.04 Credit Card: $0.01 0.50% 0.61% 0.50% 0.79% 0.6
Slide 24: Improving Deposit Franchise
Improving Deposit Franchise • Recruiting deposit sales teams, including fiduciary specialists, from recently acquired competitors driving core deposit growth • Customizing solutions for clients, including fiduciary and non-profit organizations, to generate low-cost business deposit accounts • OpenSk
Slide 25: Delivering Superior Net Interest Margin
Portfolio Loan Yield ex OpenSky Cost of Funds 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 0.00 2.00 4.00 6.00 25 5.33% 4.72% 5.01% 5.57% 5.15% 5.47% 6.27% 6.49% 6.79% 3.60% 3.36% 3.27% 3.40% 3.42% 3.22% 3.33% 3.18% 3.18% Net Interest Margin Peer Median (1) 4Q19 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q
Slide 26: Improving Efficiency Ratio as Businesses Scale
• Renegotiation of data processing contracts will reduce costs and improve efficiency • Expand digital marketing and partnerships • IT and HR infrastructure upgrades • Implement technology to reduce cost in mortgage bank 70% 72% 65% 67% 66% 65% 66% 68% 62% 63% 66% CBNK Peer Median 4Q19 1Q20 2Q20 3Q2