Capital Bancorp, Inc. · NASDAQ:CBNK
Capital Bancorp — Q3 2021 Earnings Presentation
24 slides from Capital Bancorp's earnings presentation, Nov 19, 2021
Slide 1: 3Q 2021 Investor Presentation
3Q 2021 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 September 30, 2021 Quarterly Result 1 Yearly Result Assets $ 2,170 0.8 % 15.5 % Portfolio Loans 1,308 9.9 % 5.1 % Deposits 1,921 0.2 % 15.6 % Quarterly Financial Performance Earnings per Share, Diluted $ 0.
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: Investment highlights
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 5 • Organic growth has consistently exceeded community banking peers • OpenSky® and mortgage drive high non-interest income and provide resiliency during economically stressed periods • Asset growt
Slide 6: 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 7: 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 $1,098 $1,126 $1,155 $1,210 $1,229 $1,274 $1,308 $32 $53 $85 $102 $84 $121 $135 $236 $239 $205 $266 $203 $137 $955 $1,000 $1,008 $1,056 $1,140 $1,171 $1,188 $1,440 $1,479 $1,517 $1,579 $1,598
Slide 8: 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% 33.4% 23.8% 49.0% 36.3% 32.5% 28.2% 16.0% 18.0% 20.8% 19.2% 19.3% CBNK Peer Median 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 10.0% 20.0% 30.0% 40.0% 50.0% $18 $7 $16 $2
Slide 9: 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 73 125 150% 162% 204% 30% 40% CBNK Peer 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 —% 50% 100% 150% 200% 5.32% 5.15% 5.47% 6.27% 4.38% 3.55% 3.52% 3.75% 3.60% 3.36% 3.27% 3.42% 3.22%
Slide 10: 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 0% 4% 7% 11% 15% 19% 22% 27% 35% 43% 50% 59% 69% 17% 20% 24% 27% 31% 33% 38% CBNK TBV Growth Peer Median Growth 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 13.8% 11.2% 15.4% 8.
Slide 11: 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 12: 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 12Source: S&P Global Ma
Slide 13: Nonperforming Assets and 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 Nonperforming Assets Consistent with Peers Capital Generation Results in Robust Capital Ratios 13Source: S&P Global Market Intelligence. (1) Peer Group includes major exchange traded banks with $50
Slide 14: 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 14 Operate in Exceptional Markets Experienced Entrepreneurial Management Team Growth and Diversified Revenue Generation Drive Superior Profitability Track Record of Leveraging Technology to Execute
Slide 15: Appendix
Appendix
Slide 16: OpenSky Digital Bank
OpenSky® Digital Bank 16 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 17: Capital Bank Home Loans
$11.2 $7.6 $52.4 $88.9 $105.8 $84.8 $63.6 $53.6 $7.44 $7.28 $4.42 $5.37 $4.66 $4.68 $4.12 $4.57 $4.91 Tech Driven Orig ($M) Cost per Loan (ex Comm) ($K) 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 Capital Bank Home Loans 17 $112 $132 $120 $215 $284 $269 $272 $132 $107 $78 $63 $6
Slide 18: Commercial Bank
Commercial Bank 18 • 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 19: Balanced Loan Portfolio
19 ∙ 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 20: 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 • 63% of portfolio loans are variable/adjustable and well positioned
Slide 21: Credit Quality: Nonperforming Loans and Assets
9.35% 1.90% 1.91% 1.57% 0.75% 0.46% 16.46% 5.16% 2.17% 1.37% 0.63% CBNK Peer Median 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 0.00% 8.00% 16.00% 21 Residential Real Estate: $5.04 Commercial Real Estate: $0.03 Commercial and Industrial: $0.70 Construction: $7.80 0.42% 0.44% 0.63% 0.57% 0.51% 0.50% 0.61% 0.50% 0.
Slide 22: 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 23: Delivering Superior Net Interest Margin
Portfolio Loan Yield Cost of Funds 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 0.00 2.00 4.00 6.00 23 5.56% 5.46% 5.46% 5.79% 5.83% 5.33% 4.72% 5.01% 5.57% 5.15% 5.47% 6.27% 3.75% 3.74% 3.71% 3.68% 3.64% 3.60% 3.36% 3.27% 3.40% 3.42% 3.22% Net Interest Margin Peer Median (1) 3Q1
Slide 24: Improving Efficiency Ratio as Businesses Scale
• Credit card data processing conversion elevated expenses but positioned the business line for long- term growth • Added a 7-person business development team and a 12-person mortgage origination and processing team in an adjacent market in 2020 • Reston, VA and Columbia, MD branch locations opened