Capital Bancorp, Inc. · NASDAQ:CBNK
Capital Bancorp — Q2 2020 Earnings Presentation
33 slides from Capital Bancorp's earnings presentation, Jul 28, 2020
Slide 1: June 30, 2020 Financial Review
6 CAPITAL BANCORP, INC. CAPITAL BANK @ PARTNERS in YOUR VISION Ed Barry Chief Executive Officer Scot Browning Alan Jackson President Chief Financial Officer Kathleen Yamada Chief Credit Officer June 30, 2020 Financial Review
Slide 2: Forward Looking Statements
Forward Looking Statements Linkin: 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 “
Slide 3: Table of Contents
Table of Contents ns a Page L Introduction to Capital Bancorp (CBNK) 4 Il. COVID-19 Impact and Response 5 I. Investment Opportunity 7 A. Market Dynamics 8 B. Experienced Management Team 9 Cc. Strategy That Delivers Performance 10 D. Innovation Driven, Fee Based Businesses 21 E. Strong Balance Sheet
Slide 4: Capital Bancorp, Inc. (NASDAQ - CBNK)
Capital Bancorp, Inc. (NASDAQ - CBNK) i a Corporate Headquarters - Rockville, MD Unaudited June Balance Sheet (sm, except per share amounts) 30, 2020 Quarter Result Assets $ 1,822 4» 209% Q0Q eet 6 5) Loans 1,441 4p 21.3% QoQ ° 9 ; E Columbia Deposits 1609 4 23.5 % QoQ Gleh Burnie Quarterly Financia
Slide 5: Response to COVID-19
Response to COVID-19 i: a * Transitioned employees to remote work environment supported by investments in systems and infrastructure Protecting * Hosting virtual Town Hall meetings to inform and engage employees Employees + Adopted new operating procedures and adjusted branch hours to keep employees
Slide 6: Monitoring Credit Risk
Monitoring Credit Risk a Enhanced Risk Analysis: Loan Modifications by Industry Sector’ Addressing Impact of Widespread —___Deferred Loans Business Interruption Total Loans Balances. PPP Loans Outstanding —_ with SBA # of Extended to (Sin thousands) "7020" _Guarintees? Balance Deferred _Bonowers Ris
Slide 7: Investment Opportunity
Investment Opportunity oy Operate in Exceptional Markets Entrepreneurial Management Team Consistently High Performing Community Bank Innovation Driven, Fee Based Businesses Strong Balance Sheet and Capital Positions The Washington, D.C. and Baltimore, MD Metropolitan Statistical Areas ("MSA") make u
Slide 8: Exceptional Markets
Exceptional Markets i a Median Household Income by County ($000) + Recent M&A in market has resulted in 18 124 opportunities to acquire talent and 105 customers 83 ea Total population of more than 9.1 million + Includes the four wealthiest counties in the U.S. (as measured by median HH income) US. M
Slide 9: Experienced Management Team
Experienced Management Team Ey Edward F. Barry Chief Executive Officer Joined 2012 Scot R. Browning President Joined 2002 Alan W. Jackson Chief Financial Officer Joined 2017 Karl Dicker Chief Operating Officer Joined 2018 bo pe pe Prior to joining Capital Bank, Mr. Barry held senior positions at Cap
Slide 10: Unique Strategy Consistently Drives Performance
Unique Strategy Consistently Drives Performance ny Disciplined Business Strategy Total Assets ($M) CAGR: 22.4% * Deliver premium, advice-based solutions to our customers $1,822 « Leverage technology to differentiate products and services through customization $1,428 $1,105 $1,026 $906 $743 * Instill
Slide 11: Diversified Lines of Business
Diversified Lines of Business x Commercial OpenSky® Secured Residential Mortgage Banking Credit Card Origination + Approximately $1.6 billion of + $54.7 million loan portfolio * 2.97% QTD GOS margin assets secured by $131.9 million in sharp i , * Provide sophisticated advice deposits e PRNees Verne
Slide 12: Consistently High Performing
Consistently High Performing oy ROAA (%) vs. Peer ROATCE (%) vs. Peer 1.38% 14.41% 14.75% 1.19% 13.66% 2015Y 2016Y 2017Y 2018Y 2019Y 202002 2015Y 2016Y 2017Y 2018Y 2019Y 202002 ROAR ROAR, as Adjusted (1) —-»-=—= Peer Median 2) ROATCE C1 ROATCE, as Adjusted (1) —-»-—~ Peer Median (2) Note - Quarterly
Slide 13: Leveraging the Power of Technology
Leveraging the Power of Technology a + In-house development team Internally + Apollo customer acquisition system developed for OpenSky® provides automated Developed work flows for digital account applications processes Technology + In-house staff participates in business development calls and design
Slide 14: Loan Portfolio
Loan Portfolio ny CAGR: 21.4% Owner Occupied CRE: 12% Non-Owner Occ. CRE: 13% $1,171 $1,000 $887 Construction: 15% $763 $639 $506 $408 J | Residential R.E.: 30% 2013Y — 2014Y = 2015Y = 2016Y = 2017Y = -2018Y = 2019Y 202002 Com! & Ind: 26% Credit Card: 4% * Owner-occupied commercial real estate "CRE"
Slide 15: Balanced Loan Portfolio
Balanced Loan Portfolio ns 7.37% 7.12% 6.16% 5.12% Variable at Floor: 33.9% Variable Not at Floor: 5.5% Adjustable Not at Adjustable at Floor: 9.8% Floor: 4.6% 2015Y 2016Y 2017Y 2018Y 2019Y 202002 HI Loan Yield ex Card ™ Loan Yield 1—-e— Peer Median (2) + Effective use of rate floors has mitigated i
Slide 16: Deposit Portfolio Composition
Deposit Portfolio Composition a Core Deposit Momentum + Recruiting deposit sales teams, including fiduciary salespeople, from recently acquired competitors driving core deposit growth + Customizing solutions for clients, including fiduciary Savings: 0.3% and non-profit organizations, to generate low
Slide 17: Delivering Superior Net Interest Margin
Delivering Superior Net Interest Margin a Deliver real, advice-based solutions to 5.41% 5.59% 5.37% 5:59% 5.60% pill complex credit needs rather than acting as the low-cost provider (largely avoid bid situations) Target customers with complex credit needs : 5.02% 5:18% ; ; 2013Y 2014Y += 2015Y_- 201
Slide 18: Efficiency Ratio
Efficiency Ratio Ey 71.6% 739% 73.1% 72.3% 70.0% 70.0% 69.7% 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 202002 Efficiency Ratio .—-— Peer Median (2) Recent investments driving a positive long-term impact on efficiency: + Credit card data processing conversion has elevated expenses and positioned the
Slide 19: Consistent Quarterly Performance
Consistent Quarterly Performance $1,441 $1,188 $1,140 S174 - LJ O UJ Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 $1,609 $1,303 $1,225 $1,112 $1,037 LL Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 $1,822 $1,508 $1,428 $1,311 $1,234 i] Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 Equity ($M) $142 $13
Slide 20: Consistent Quarterly Performance
Consistent Quarterly Performance oe Net Interest Margin Efficiency Ratio 5.79% 5.83% 5.33% 5.16% 4.72% | 72.18% 71.75% 70.10% 73.53% 69.74% Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Jun 2020 Return on Average Assets ") Return on Average Tangible Common Equity “
Slide 21: Diversified Revenue Model
Diversified Revenue Model oe Net Revenue ($M) CAGR: 10% $92.0 $74.0 $63.2 $66.4 $48.6 $41.2 oH LI i ' 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 202002 Noninterest Income to Net Revenue, as Adjusted” OpenSky & Church Street Mortgage contribute 42.6% to fee income levels in excess of peer median 32.4%
Slide 22: OpenSky Secured Credit Card Division
OpenSky® Secured Credit Card Division i a Customer Demographics Number of Outstanding Accounts (000s) + Underserved by traditional credit products CAGR: 50% ‘ans + Poor or nonexistent credit history + Nationwide customer base * Minimum initial deposit of $200 and maximum initial deposit of $3,000 pe
Slide 23: Capital Bank Home Loan Division
Capital Bank Home Loan Division i a + Elevated volumes continue to outpace expectations $2.98 $0.48 $0.38 $0.68 $0.58 + Increased sales staff to improve productivity while optimizing back-office support * Production hires since the beginning of 2017 focused on niche products and purchase origination
Slide 24: Robust Capital Ratios
Robust Capital Ratios i a 12.95% 10.76% 12.31% 12.58% anal 9.96% 9.87% 11.12% 40.7% 8%, say, 11.00% 10.73% 11.10% 8.86% 06% 8.65% 8.65% 0.02% fo I | 10% Dec 2016 Dec 2017 Dec 2018 Dec 2019 Jun 2020 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Jun 2020 Bank fll Consolidated HE Bank fll Consolidated non Equity
Slide 25: Superior Asset Quality Metrics
Superior Asset Quality Metrics oy Nonperforming Loans ($M) Nonperforming Assets / Assets 1.58% Construction: $0.5, Residential Real Estate: $2.4 0.50% Commercial and Industrial: $1.8 Commercial Real 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 202002 Estalene 12 a NPAs /Assets: n= Peer Median (2) Allow
Slide 26: CRE Concentration Levels
CRE Concentration Levels ns CRE / Total k Based Capital ("RBC") Breakdow: 340% 345% Peer Average Capital Bank, N.A. Capital Bancorp, Inc. HE Construction/RBC fll Non-Owner Occupied CRE / RBC * Construction lending is a historical core competency focused on single family homes and individual condo an
Slide 27: Strong Balance Sheet and Capital Positions
Strong Balance Sheet and Capital Positions oy Earnings per Share (EPS) Growth Tangible Book Value per Share (TBV) Growth Capital CAGR: 10.9%" Capital CAGR: 13.4%? Peer CAGR: 7.9% Peer CAGR: 5.9% $0.84 $0.74 $0.69 $0.65 | 2013Y «2014 2015Y 2016Y -2017Y 2018Y _2019Y 202002 2013Y 2014Y = 2015Y 2016Y 20
Slide 28: Conclusions
Conclusions i Operate in Premier Markets « Entrepreneurial Management Team * Consistently High Performing Community Bank ¢ Innovation Driven, Fee Based Businesses ¢ Building Earnings Momentum CAPITAL BANCORP, INC. 28
Slide 29: Appendix
CAPITAL BANCORP, INC. CAPITAL BANK PARTNERS in YOUR VISION Appendix
Slide 30: ROATCE and ROATCE, as Adjusted Reconciliations
ROATCE and ROATCE, as Adjusted Reconci iations oy “Return on average tangible common equity” is a non-GAAP measure defined as net income, less bargain purchase gain (net of taxes), plus the amortization of intangible assets (net of taxes) divided by average total equity net of average intangible ass
Slide 31: ROAA and NIM, as Adjusted Reconciliations
ROAA and NIM, as Adjusted Reconciliations ny “Return on average assets, as adjusted” is a non-GAAP measure defined as net income, less bargain purchase gain (net of taxes), plus non-recurring foregone interest and fees, plus non-recurring data processing expenses, plus non-recurring deferred tax rev
Slide 32: Adjusted Revenue & Noninterest Income to Adjusted Revenue
Adjusted Revenue & Noninterest Income to Adjusted Revenue = and Efficiency Ratio, as Adjusted Reconciliations “Adjusted Revenue and Noninterest Income to Adjusted Revenue" is considered a non-GAAP measure. Net revenue for 2017 has been adjusted to exclude the impact of non-recurring foregone interes
Slide 33: Diluted Earnings Per Share and Tangible Book Value Reconciliations
Diluted Earnings Per Share, as Adjusted and Tangible Book Value per Share Reconciliations oy “Diluted earnings per share, as adjusted” is a non-GAAP measure defined as net income, less bargain purchase gain (net of taxes), plus non-recurring foregone interest and fees, plus non-recurring data proces