Capital Bancorp, Inc. · NASDAQ:CBNK
Capital Bancorp — Q1 2020 Earnings Presentation
32 slides from Capital Bancorp's earnings presentation, Apr 30, 2020
Slide 1: Financial Review March 31, 2020
Ed Barry Chief Executive Officer Scot Browning Alan Jackson President Chief Financial Officer March 31, 2020 Financial Review 1
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: Table of Contents
Table of Contents Page I. Introduction to Capital Bancorp (CBNK) 4 II. COVID-19 Impact and Response 5 III. Investment Opportunity 6 A. Market Dynamics 7 B. Experienced Management Team 8 C. Strategy That Delivers Performance 9 D. Innovation Driven, Fee Based Businesses 20 E. Strong Balance Sheet and
Slide 4: Capital Bancorp, Inc. Franchise Highlights
Capital Bancorp, Inc. (NASDAQ - CBNK) Franchise Highlights Footprint Corporate Headquarters - Rockville, MD Unaudited Balance Sheet ($M, except per share amounts) March 31, 2020 Quarter Result Assets $ 1,508 5.6 % QoQ Loans 1,188 1.4 % QoQ Deposits 1,303 6.3 % QoQ Quarterly Financial Performance Ear
Slide 5: Response to COVID-19
Response to COVID-19 ∙ Transition of 94% of employees to remote work environment supported by investments in systems and infrastructure • Regular virtual Town Hall meetings to inform and engage employees Protecting • Adopted new operating procedures and adjusted branch hours to keep Employees employ
Slide 6: 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 • Opportunities for customer and talent acquisition created by consolidation Markets • Market historically insulated from economic downturns by fe
Slide 7: Exceptional Markets
Exceptional Markets Median Household Income by County ($000) Washington, D.C. – Baltimore, MD Market ∙ Recent M&A in market creating disruptions 128 124 and creating opportunities to acquire talent 108 and customers 83 • Total population of more than 9.1 million 63 ∙ Includes the four wealthiest cou
Slide 8: Experienced Management Team
Experienced Management Team • Prior to joining Capital Bank, Mr. Barry held senior positions at Capital One Bank, Bank Edward F. Barry of America, and E&Y/Capgemini where he held a variety of roles primarily focusing on Chief Executive Officer marketing, data, analytics and strategy Joined 2012 • Re
Slide 9: Unique Strategy Consistently Drives Performance
Unique Strategy Consistently Drives Performance Disciplined Business Strategy Total Assets ($M) CAGR: 19.7% ∙ Deliver premium, advice-based solutions to our customers $1,508 $1,428 Leverage technology to ∙ $1,105 differentiate products and $1,026 services through $906 customization $743 $619 ∙ Insti
Slide 10: Diversified Lines of Business
Diversified Lines of Business Commercial OpenSky® Secured Residential Mortgage Banking Credit Card Origination ∙ Approximately $1.4 billion of ∙ $41.9 million loan portfolio ∙ 2.21% QTD GOS margin assets secured by $84.7 million in deposits ∙ 33% QTD purchase volume ∙ Provide sophisticated advice an
Slide 11: Consistently High Performing
Consistently High Performing ROAA (%) vs. Peer ROATCE (%) vs. Peer 1.38% 14.75% 1.22% 14.41% 13.94% 13.94% 1.17% 13.66% 1.13% 1.10% 1.09% 0.94% 0.95% 5.46% 0.85% 0.50% 0.84% 9.93% 10.50% 8.59% 0.80% 8.94% 8.67% 8.66% 2015Y 2016Y 2017Y 2018Y 2019Y 2020Q1 2015Y 2016Y 2017Y 2018Y 2019Y 2020Q1 ROAA ROAA
Slide 12: Leveraging the Power of Technology
Leveraging the Power of Technology ∙ In-house development team Internally ∙ Apollo customer acquisition system developed for OpenSky® provides automated Developed work flows for digital account applications processes Technology ∙ In-house staff participates in business development calls and designs
Slide 13: Loan Portfolio
Loan Portfolio Total Loans HFI ($M) Loan Composition CAGR: 18.6% $1,171 $1,188 $1,000 Non-Owner Occ. CRE: 16% Owner Occupied CRE: 14% $887 $763 Construction: 17% $639 Com'l & Ind: 13% $506 Credit Card: 4% $408 Other Consumer: 0% Residential R.E.: 36% 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 2020Q1
Slide 14: Balanced Loan Portfolio
Balanced Loan Portfolio Fixed vs. Floating Rate Loan Mix Yield on Loans Adjustable: 5.4% 7.37% Adjustable at Floor: 12.6% 7.12% 7.09% 6.45% 6.44% 6.18% Variable: 7.0% 5.91% 5.78% 5.76% 5.76% 5.75% 5.57% 5.02% Fixed: 35.0% 4.79% 4.86% 4.62% 4.66% Variable at Floor: 40.0% 2015Y 2016Y 2017Y 2018Y 2019Y
Slide 15: Deposit Portfolio Composition
Deposit Portfolio Composition Core Deposit Momentum Deposit Portfolio Composition ($1,225M) • Recruiting deposit sales teams, including fiduciary salespeople, from recently acquired competitors Noninterest driving core deposit growth Bearing: 27.9% Interest Bearing • Customizing solutions for client
Slide 16: Delivering Superior Net Interest Margin
Delivering Superior Net Interest Margin Net Interest Margin(2) 5.60% ∙ Deliver real, advice-based solutions to 5.41% 5.59% 5.37% 5.59% 5.02% 5.18% 5.16% complex credit needs rather than acting as the 3.93% 3.97% 4.01% 3.73% 3.72% 3.68% 3.48% low-cost provider (largely avoid bid situations) ∙ Specifi
Slide 17: Efficiency Ratio
Efficiency Ratio Efficiency Ratio(1) 73.9% 73.9% 73.5% 71.6% 73.1% 72.3% 70.0% 70.0% 68.6% 6.1% 66.1% 65.0% 63.6% 62.0% 58.2% 59.3% 56.0% 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 2020Q1 Efficiency Ratio Peer Median (2) Recent investments driving a positive long-term impact on efficiency: ∙ Credit c
Slide 18: Consistent Quarterly Performance
Consistent Quarterly Performance Loans ($M) Assets ($M) $1,508 $1,188 $1,171 $1,428 $1,140 $1,311 $1,234 $1,056 $1,124 $1,008 Mar 2019 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Mar 2019 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Deposits ($M) Equity ($M) $1,303 $136 $1,225 $133 $128 $1,112 $123 $1,037 $119 $968
Slide 19: Consistent Quarterly Performance
Consistent Quarterly Performance Net Interest Margin Efficiency Ratio 76.08% 5.79% 5.83% 73.53% 5.46% 72.18% 71.75% 5.33% 70.10% 5.16% Mar 2019 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Mar 2019 Jun 2019 Sep 2019 Dec 2019 Mar 2020 Return on Average Assets (1) Return on Average Tangible Common Equity (1) 1
Slide 20: Diversified Revenue Model
Diversified Revenue Model Net Revenue ($M)(1) CAGR: 18% $92.0 $74.0 $66.4 $63.2 $48.6 $41.2 $35.5 $24.3 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 2020Q1 Noninterest Income to Net Revenue(1) OpenSky & Church Street Mortgage contribute to fee income levels in excess of peer median 32.4% 30.7% 28.7% 27
Slide 21: OpenSky Secured Credit Card Division
OpenSky® Secured Credit Card Division Customer Demographics Number of Outstanding Accounts (000s) ∙ Underserved by traditional credit products CAGR: 41% 244.0 223.4 ∙ Poor or nonexistent credit history ∙ Nationwide customer base 170.0 149.2 ∙ Minimum initial deposit of $200 and maximum initial depos
Slide 22: Capital Bank Home Loan Division
Capital Bank Home Loan Division Purchase vs. Re-finance Volume & GOS Margin • Elevated volumes continue to outpace expectations $2.9B $0.4B $0.3B $0.6B $0.2B • Increased sales staff to improve productivity while 77.6% 47.5% 20.6% 48.1% 67.2% optimizing back-office support 2.95% 2.75% ∙ Production hi
Slide 23: Robust Capital Ratios
Robust Capital Ratios Tier 1 Leverage Ratio Tier 1 Capital 12.95% 10.76% 12.31% 12.38% 9.96% 9.83% 10.02% 10.18% 8.01% 8.10% Dec 2016 Dec 2017 Dec 2018 Dec 2019 Mar 2020 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Mar 2020 Common Equity Tier 1 Capital Ratio Total Capital Ratio 14.21% 12.73% 13.55% 13.63% 12
Slide 24: Superior Asset Quality Metrics
Superior Asset Quality Metrics Nonperforming Loans ($M) Nonperforming Assets / Assets 1.58% Construction: $1.50 Residential Real 1.10% Estate: $1.63 0.80% 0.73% 0.90% 0.61% 0.51% 0.54% 0.50% 0.68% 0.44% 0.63% 0.59% 0.44% Commercial and 0.29% Industrial: $0.44 Commercial Real 2013Y 2014Y 2015Y 2016Y
Slide 25: CRE Concentration Levels
CRE Concentration Levels CRE / Total Risk Based Capital ("RBC") Breakdown 340% 342% 286% 197% 241% 162% 145% 124% 99% Peer Average Capital Bank, N.A. Capital Bancorp, Inc. Construction / RBC Non-Owner Occupied CRE / RBC ∙ Construction lending is a historical core competency focused on single family
Slide 26: Strong Balance Sheet and Capital Positions
Strong Balance Sheet and Capital Positions Earnings per Share (EPS) Growth Tangible Book Value per Share (TBV) Growth Capital CAGR: 10.9%(1) Capital CAGR: 13.3%(2) Peer CAGR: 7.9% Peer CAGR: 5.9% $9.85 $9.60 $1.21 $8.38 $0.36 $6.94 $1.02 $6.35 $0.37 $5.83 $5.25 $0.84 $0.32 $4.53 $0.74 $0.69 $0.65 $0
Slide 27: Conclusions
Conclusions ∙ Operate in Premier Markets ∙ Entrepreneurial Management Team ∙ Consistently High Performing Community Bank ∙ Innovation Driven, Fee Based Businesses ∙ Building Earnings Momentum 27
Slide 28: Appendix
6 CAPITAL BANCORP, INC. CAPITAL BANK PARTNERS in YOUR VISION Appendix
Slide 29: ROATCE and ROATCE, as Adjusted Reconciliations
ROATCE and ROATCE, as Adjusted Reconciliations “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
Slide 30: ROAA and NIM, as Adjusted Reconciliations
ROAA and NIM, as Adjusted Reconciliations “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 revalu
Slide 31: Adjusted Revenue and Efficiency Ratio Reconciliations
Adjusted Revenue & Noninterest Income to Adjusted Revenue and Efficiency Ratio, as Adjusted Reconciliations 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 t
Slide 32: Diluted EPS, as Adjusted and Tangible Book Value Reconciliations
Diluted Earnings Per Share, as Adjusted and Tangible Book Value per Share Reconciliations “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 processin