Capital Bancorp, Inc. · NASDAQ:CBNK
Capital Bancorp — KBW Community Bank Investor Conference 2019
35 slides from Capital Bancorp's conference presentation, Jul 30, 2019
Slide 1: KBW Community Bank Investor Conference
Ed Barry Chief Executive Officer Scot Browning Alan Jackson President Chief Financial Officer KBW Community Bank Investor Conference July 30, 2019 1
Slide 2: Forward Looking Statements
Forward Looking Statements The statements contained in this presentation that are not historical facts are forward-looking statement 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: Table of Contents
Table of Contents Page I. Introduction to Capital Bancorp (CBNK) 4 II. Investment Opportunity 5 A. Market Dynamics 6 B. Experienced Management Team 7 C. Delivering Consistent Performance 9 D. Innovation Driven, Fee Based Businesses 20 E. Building Earnings Momentum 25 III. Appendix - Non-GAAP Reconci
Slide 4: Capital Bancorp, Inc. (NASDAQ - CBNK)
Capital Bancorp, Inc. (NASDAQ - CBNK) Franchise Highlights Footprint Corporate Headquarters - Rockville, MD Unaudited Quarter Balance Sheet ($M, except per share amounts) 6/30/2019 Result Assets $ 1,234 10% QoQ Loans 1,056 5% QoQ Deposits 1,037 7% QoQ Quarterly Financial Performance Earnings per Sha
Slide 5: Investment Opportunity
Investment Opportunity • The Washington, D.C. and Baltimore, MD MSAs make up one of the largest Operate in and wealthiest regions in the U.S. Exceptional • Consolidation creates new opportunities for customer and talent acquisition Markets • Market insulated from economic downturns by federal govern
Slide 6: Exceptional Markets
Exceptional Markets Median Household Income by County ($000) Washington, D.C. – Baltimore, MD Market • Recent M&A in market creating disruptions 128 124 and creating opportunities to acquire talent 108 and customers 83 • Total population of more than 9.1 million 63 • Includes the four wealthiest cou
Slide 7: Experienced Management Team
Experienced Management Team Joined Capital Bank as Chief Executive Officer in 2012 Prior to joining Capital Bank, Mr. Barry held senior positions at Capital One Bank, Bank of Edward F. Barry America, and E&Y/Capgemini where he held a variety of roles primarily focusing on Chief Executive Officer mar
Slide 8: Experienced Management Team
Experienced Management Team Joined Capital Bank in 2013 Nick Bryan Mr. Bryan leads the OpenSky® credit card business line for Capital Bank and manages Chief Marketing Officer the Bank’s data analytics platforms GM – OpenSky® Prior to Capital Bank, Mr. Bryan spent eight years with Capital One Bank in
Slide 9: Unique Strategy Consistently Drives Performance
Unique Strategy Consistently Drives Performance Disciplined Business Strategy Total Assets ($M) CAGR: 18% • Deliver premium, advice-based solutions to our customers $1,234 $1,105 $1,026 • Leverage technology to differentiate products and $906 services $743 $619 • Instill a sales-focused, $489 entrep
Slide 10: Diversified Lines of Business
Diversified Lines of Business Commercial OpenSky® Secured Residential Mortgage Banking Credit Card Origination • Approximately $1.2 billion of • $40.1 million loan portfolio • 3.40% QTD GOS margin assets • Credit related consumer • 79.1% purchase volume • Provide sophisticated advice product secured
Slide 11: Leveraging the Power of Technology
Leveraging the Power of Technology • In-house development team Internally • Apollo customer acquisition system developed for OpenSky® provides automated work flows for digital account applications processes Developed Technology • In-house staff participates in business development calls and designs
Slide 12: Consistently High Performing
Consistently High Performing ROAA (%) vs. Peer ROATCE (%) vs. Peer 1.39% 1.22% 1.22% 1.17% 14.41% 14.75% 1.10% 1.13% 13.94% 13.94% 1.02% 13.23% 11.39% 0.50% 0.80% 0.83% 10.97% 8.72% 8.78% 0.65% 7.13% 9.29% 2015Y 2016Y 2017Y 2018Y 20191Q 20192Q 2015Y 2016Y 2017Y 2018Y 20191Q 20192Q ROAA ROAA, as Adju
Slide 13: Loan Portfolio
Loan Portfolio Total Loans HFI ($M) Loan Composition CAGR: 19% $1,056 $1,000 Construction: 16% $887 $763 Residential Non-Owner $639 R.E.: 40% Occupied CRE: 14% $506 $408 Owner Occupied CRE: 14% Credit Card: 4% Commercial & Industrial: 12% 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Q2 • Owner-occupied C
Slide 14: Balanced Loan Portfolio
Balanced Loan Portfolio Fixed vs. Floating Rate Loan Mix Yield on Loans Adjustable: 22.0% 7.49% 7.16% 6.45% 6.44% Fixed: 38.0% 6.18% 5.78% 5.76% 5.76% 5.96% 5.57% 4.79% 4.66% 4.86% 4.62% Variable: 40.0% 2015Y 2016Y 2017Y 2018Y 2019Q2 Adjustable Variable Fixed Loan Yield ex Card Loan Yield Peer Media
Slide 15: Deposit Portfolio Composition
Deposit Portfolio Composition Core Deposit Momentum Deposit Portfolio Composition ($1,037M) • Recruiting deposit sales teams, including fiduciary Time Deposits > salespeople, from recently acquired competitors $100K: 22.2% Noninterest Bearing: 27.0% driving core deposit growth • Customizing solution
Slide 16: Delivering Superior Net Interest Margin
Delivering Superior Net Interest Margin Net Interest Margin(2) 5.59% 5.46% 5.79% • Deliver real, advice-based solutions to 5.37% 5.02% 5.18% customers’ complex credit needs vs. acting as the low-cost provider (largely avoid bid 4.01% 3.73% 3.72% situations) 3.68% • Specifically target customers with
Slide 17: Efficiency Ratio
Efficiency Ratio Efficiency Ratio(1) 73.9% 73.9% 73.2% 72.2% 70.0% 70.0% 71.6% 68.6% 6.1% 66.1% 65.0% 63.6% 62.0% 58.2% 59.3% 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Q2 Efficiency Ratio Peer Median (2) Recent investments should have a positive long-term impact on efficiency: ◦ Credit card data proce
Slide 18: Superior Asset Quality Metrics
Superior Asset Quality Metrics Nonperforming Loans ($M) Nonperforming Assets / Assets 1.58% Construction: $2.1 Residential Real 1.10% Estate: $2.2 0.80% $0 nonaccrual or 0.90% 0.51% 0.54% 0.57% 90+ day past due 0.68% 0.63% 0.44% construction loans 0.59% 0.44% Commercial and 0.29% Industrial: $1.0 Co
Slide 19: Commercial Real Estate ("CRE") Concentration Levels
Commercial Real Estate ("CRE") Concentration Levels CRE / Total Risk Based Capital ("RBC") Breakdown 330% 330% 281% 189% 228% 162% 141% 119% 102% Peer Average Capital Bank, N.A. Capital Bancorp, Inc. Construction / RBC Non-Owner Occupied CRE / RBC • Construction lending is a historical core competen
Slide 20: Diversified Revenue Model
Diversified Revenue Model Net Revenue ($M)(1) CAGR: 17% $83.3 $74.3 $66.4 $63.2 $48.6 $41.2 $35.5 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019 YTD Noninterest Income to Net Revenue(1) OpenSky & Church Street Mortgage contribute to fee income levels in excess of peer median 32.40% 30.70% 28.70% 27.80% 24
Slide 21: OpenSky Secured Credit Card Division
OpenSky® Secured Credit Card Division Customer Demographics Number of Outstanding Accounts (000s) ◦ Underserved by traditional credit CAGR: 44% products 211.4 ◦ Poor or nonexistent credit history 170.0 149.2 ◦ Nationwide customer base ◦ Minimum initial deposit of $200 and 96.4 maximum initial deposi
Slide 22: Capital Bank Home Loan Division
Capital Bank Home Loan Division Purchase vs. Re-finance Volume & GOS Margin • Right-sized mortgage division in conjunction with Federal Reserve rate hikes and in $2.9B $0.4B $0.3B $0.2B anticipation of a reduction in industry-wide re-finance volume 3.4% 77.6% 47.5% 20.6% 20.9% • Production hires sin
Slide 23: Consistent Performance
Consistent Performance Loans ($M) Assets ($M) $1,056 $1,234 $1,008 $1,000 $1,124 $1,105 $955 $1,068 $1,073 $921 Jun 2018 Sep 2018 Dec 2018 Mar 2019 Jun 2019 Jun 2018 Sep 2018 Dec 2018 Mar 2019 Jun 2019 Deposits ($M) Equity ($M) $123 $119 $115 $1,037 $107 $968 $955 $938 $87 $911 Jun 2018 Sep 2018 Dec
Slide 24: Consistent Performance
Consistent Performance Net Interest Margin Efficiency Ratio 5.79% 5.53% 5.56% 5.46% 5.46% 73.64% 74.20% 76.08% 71.34% 72.18% Jun 2018 Sep 2018 Dec 2018 Mar 2019 Jun 2019 Jun 2018 Sep 2018 Dec 2018 Mar 2019 Jun 2019 Return on Average Assets Return on Average Tangible Common Equity 1.39% 1.27% 1.22% 1
Slide 25: Building Earnings Momentum
Building Earnings Momentum Earnings per Share (EPS) Growth Tangible Book Value per Share (TBV) Growth Capital CAGR: 9.4%(1) Capital CAGR: 13.2%(2) Peer CAGR: 5.6% Peer CAGR: 7.2% $8.97 $1.02 $8.38 $0.99 $0.84 $6.94 $0.85 $6.35 $0.74 $0.80 $5.83 $6.35 $0.69 $0.76 $0.65 $0.72 $5.25 $6.02 $0.68 $5.61 $
Slide 26: Conclusions
Conclusions • Operate in Premier Markets • Entrepreneurial Management Team • Consistently High Performing Community Bank • Innovation Driven, Fee Based Businesses • Building Earnings Momentum 26
Slide 27: Appendix
6 CAPITAL BANCORP, INC. CAPITAL ae Thinking PARTNERS in YOUR VISION / \ | 1 e q d Appendix
Slide 28: ROATCE Reconciliation
ROATCE Reconciliation “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 assets. Return on Average Tangi
Slide 29: ROATCE, as Adjusted Reconciliation
ROATCE, as Adjusted Reconciliation “Return on average tangible common equity, 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 t
Slide 30: ROAA, as Adjusted Reconciliation
ROAA, as Adjusted Reconciliation “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 revaluation, l
Slide 31: Net Interest Margin, as Adjusted Reconciliation
Net Interest Margin, as Adjusted Reconciliation “Net interest margin, as adjusted” is a non-GAAP measure defined as net interest income, plus non- recurring foregone interest and fees, divided by average interest earning assets. Net Interest Margin, as Adjusted Dollars in Thousands Year Ended Decemb
Slide 32: Adjusted Revenue & Noninterest Income to Adjusted Revenue Reconciliation
Adjusted Revenue & Noninterest Income to Adjusted Revenue Reconciliation Net revenue for 2017 has been adjusted to exclude the impact of non-recurring foregone interest and fees and as such is considered a non-GAAP measure. Adjusted Revenue and Noninterest Income to Adjusted Revenue Dollars in Thous
Slide 33: Efficiency Ratio, as Adjusted Reconciliation
Efficiency Ratio, as Adjusted Reconciliation “Efficiency ratio, as adjusted” is a non-GAAP measure defined as total noninterest expense less non- recurring data processing expenses, divided by the sum of net interest income, noninterest income and non-recurring foregone interest and fees. Efficiency
Slide 34: Diluted Earnings Per Share, as Adjusted Reconciliation
Diluted Earnings Per Share, as Adjusted Reconciliation “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 processing expenses, plus non-recurring def
Slide 35: Tangible Book Value Per Share Reconciliation
Tangible Book Value Per Share Reconciliation “Tangible book value per share” is a non-GAAP measure defined as total stockholders’ equity, less intangible assets, divided by shares of common stock outstanding. Tangible Book Value per Share Dollars in Thousands except per Share Items Year Ended Decemb
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