Capital Bancorp, Inc. · NASDAQ:CBNK
Capital Bancorp — IPO Roadshow (September 2018)
34 slides from Capital Bancorp's IPO roadshow presentation, Sep 17, 2018
Slide 1: Investor Presentation September 2018
Free Writing Prospectus Filed Pursuant to Rule 433 Registration Statement No. 333-227172 Dated September 17, 2018 Investor Presentation September 2018 0
Slide 2: Forward Looking Statements
Forward Looking Statements Capital Bancorp, Inc. (“Capital” or the “Company”) has filed a registration statement (including a prospectus), which is preliminary and subject to completion, with the Securities and Exchange Commission for the offering to which this communication relates. Before you inve
Slide 3: Offering Summary
Offering Summary Issuer Capital Bancorp, Inc. Exchange / Ticker Nasdaq / CBNK $30.1 million, comprised of $20.3 million primary and $9.8 million secondary (excluding the Underwriters' Option) Estimated Proceeds Assumes an initial public offering price of $13.50 per share which is the midpoint of the
Slide 4: Exceptional Management Team
Exceptional Management Team • Joined Capital Bank as Chief Executive Officer in 2012 • Prior to joining Capital Bank, Mr. Barry held senior positions at Capital One Bank, Bank of Edward F. Barry America, and E&Y/Capgemini where he held a variety of roles primarily focusing on Chief Executive Officer
Slide 5: Overview of Capital Bancorp, Inc.
Overview of Capital Bancorp, Inc. Franchise Highlights Footprint Corporate Headquarters - Rockville, MD • Branch Balance Sheet - 6/30/18 ($mm) Assets $1,068 • OpenSky Loans (Held for Investment) 921 • LPO Deposits 938 • Mortgage 2018 Year-to-Date Financial Performance ROAA 1.20% ROATCE 14.9% Loan Gr
Slide 6: Diversified Lines of Business
Diversified Lines of Business Commercial OpenSky Secured Residential Mortgage Banking Credit Card Origination . Approximately $1.0 billion of . $32.5 million portfolio . 2.3% YTD GOS margin assets . Credit related consumer . . 71% purchase volume YTD Provide sophisticated advice product secured by d
Slide 7: Investment Highlights
Investment Highlights • The Washington, D.C. and Baltimore, MD MSAs make up one of the largest Operate in and wealthiest regions in the U.S. Premier Markets • Consolidation creates new opportunities for customer and talent acquisition • Market insulated from economic downturns by federal government
Slide 8: Exceptional Markets
Exceptional Markets Median Household Income by County ($000) Washington, D.C. – Baltimore, MD Market . $117 $120 Total population of more than 9.0 million $104 . Includes the four wealthiest counties in $82 the U.S. (as measured by median HH $61 income) . Combined GDP of $696 billion (would rank 3rd
Slide 9: Consistently Superior Profitability
Consistently Superior Profitability ROAA (%) ROATCE (%) 15.76% 1.23% 1.25% 14.90% 14.92% 1.20% 14.75% 1.17% 14.41% 1.13% 13.94% 1.10% 0.92% 0.82% 10.14% 0.79% 8.69% 0.70% 0.73% 8.35% 8.75% 8.68% 0.64% 7.04% 2013Y 2014Y 2015Y 2016Y 2017Y 2018 YTD 2013Y 2014Y 2015Y 2016Y 2017Y 2018 YTD ROAA ROAA, as A
Slide 10: Embracing the Power of Technology
Embracing the Power of Technology . In-house team of 9 individuals . Internally Apollo customer acquisition system developed for OpenSky provides automated work Developed flows for digital account applications processes Technology . In-house staff participates in business development calls and desig
Slide 11: Strategic Approach Drives Track Record of Strong Growth
Strategic Approach Drives Track Record of Strong Growth Disciplined Business Strategy Total Assets ($MM) . Deliver premium, advice-based solutions to our customers $1,068 $1,026 $906 . Leverage technology to differentiate products and $743 services $619 $489 . Instill a sales-focused, entrepreneuria
Slide 12: Loan Portfolio
Loan Portfolio Total Loans HFI ($MM) Loan Composition $921 $887 Residential R.E. $763 39.7% Construction 16.2% $639 $506 Other Consumer Non-Owner $408 0.1% Occupied Credit Card CRE 3.5% 15.8% Commercial & Industrial Owner 11.0% Occupied CRE 13.6% 2013Y 2014Y 2015Y 2016Y 2017Y 6/30/18 . Owner-occupie
Slide 13: Commercial Real Estate Concentration Levels
Commercial Real Estate Concentration Levels CRE / Total Risk Based Capital Breakdown 329.1% 333.0% 190.1% 242.1% 142.9% 87.0% Peer Average Capital Bank Construction / Risk Based Capital Non-Owner Occupied CRE / Risk Based Capital . Construction lending is a historical core competency focused on sing
Slide 14: Superior Asset Quality Metrics
Superior Asset Quality Metrics Nonperforming Loans ($MM) Nonperforming Assets / Assets Credit Card Commercial & nil Industrial $0.8 Residential 1.58% Real Estate $1.4 1.10% 0.80% 0.51% 0.54% 0.90% 0.35% 0.68% 0.63% 0.59% $0 nonaccrual or 0.44% 0.27% Commercial 90+ day past due Real Estate constructi
Slide 15: Asset Sensitive Balance Sheet
Asset Sensitive Balance Sheet Fixed vs. Floating Rate Loan Mix Yield on Loans 7.16% 6.45% 6.44% 6.18% Fixed 5.78% 5.76% 37% 5.57% 5.67% 4.79% 4.57% 4.59% 4.79% Floating 63% 2015Y 2016Y 2017Y 2018 YTD Loan Yield Ex. Card Loan Yield Peer Median (2) . Short duration loan portfolio well positioned for c
Slide 16: Deposit Portfolio Composition
Deposit Portfolio Composition Core deposit momentum: Deposit Portfolio Composition ($938MM) Recruiting deposit sales teams, including fiduciary Time salespeople, from recently acquired competitors Deposits Noninterest >$100,000 Bearing driving core deposit growth 26.4% 25.3% Customizing solution
Slide 17: Delivering Superior Net Interest Margin
Delivering Superior Net Interest Margin Net Interest Margin . 5.66% Deliver real, advice-based solutions to 5.41% 5.59% 5.37% 5.02% 5.18% customers’ complex credit needs vs. acting as the low-cost provider (largely avoid bid situations) 3.93% 3.97% 4.01% 3.73% 3.72% 3.68% . Specifically target custo
Slide 18: Differentiated Revenue Model
Differentiated Revenue Model Net Revenue(1) $66.4 $63.2 Year-over-Year: 21% $48.6 $41.2 $35.5 $36.9 $30.6 2013Y 2014Y 2015Y 2016Y 2017Y 2017 YTD 2018 YTD 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% 2
Slide 19: Efficiency Ratio
Efficiency Ratio Efficiency Ratio(1) 73.9% 73.5% 71.6% 71.0% 70.0% 70.0% 68.6% 67.8% 66.1% 65.0% 63.6% 62.0% 58.2% 59.8% 59.5% 2013Y 2014Y 2015Y 2016Y 2017Y (2) 2017 YTD 2018 YTD Efficiency Ratio 2017Y (Actual) Peer Median (3) . Recent investments should have a positive long-term impact on efficienc
Slide 20: OpenSky Secured Credit Card Division
OpenSky Secured Credit Card Division . Customer Demographics Number of Outstanding Accounts Underserved by traditional credit 166,661 products 149,226 Poor or nonexistent credit history Nationwide customer base 96,404 Minimum initial deposit of $200 and 63,398 maximum initial deposit of $3,0
Slide 21: Church Street Mortgage Division
Church Street Mortgage 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 $0.2B anticipation of a reduction in industry-wide re- finance volume 100.0% 3.00% . Production hires since the beginning of 2
Slide 22: Creating Long-Term Shareholder Value
Creating Long-Term Shareholder Value Earnings per Share (EPS) Growth Tangible Book Value per Share (TBV) Growth Capital CAGR: 11.1%(1) Capital CAGR: 11.7%(2) Peer CAGR: 5.6% Peer CAGR: 7.2% $7.46 $6.94 $0.99 $6.35 $5.83 $0.84 $6.19 $5.25 $5.98 $0.74 $5.58 $0.69 $0.80 $4.53 $5.20 $0.65 $0.76 $0.72 $4
Slide 23: Conclusions
Conclusions . Operate in Premier Markets . Consistently High Performing Community Bank . Innovation Driven, Fee Based Businesses . Entrepreneurial Management Team . Poised with Earnings Momentum 22
Slide 24: Capital Bancorp, Inc.
6 CAPITAL BANCORP, INC. CAPITAL BANK PARTNERS in YOUR VISION Tikine
Slide 25: Exceptional Management Team
Exceptional Management Team • Joined Capital Bank in 2013 Nick Bryan • Mr. Bryan leads the OpenSky credit card business line for Capital Bank and manages the Chief Marketing Officer Bank’s data analytics platforms GM – OpenSky • Prior to Capital Bank, Mr. Bryan spent eight years with Capital One Ban
Slide 26: Board of Directors Overview
Board of Directors Overview . Total insider ownership of 55%(1) Name Title Biography Ownership - Led recapitalization in 2002 and acted as CEO of the Bank from 2007 to 2012 Stephen N. Ashman Chairman of the Board - President & CEO of a community bank in Rockville, MD from 1991 through its sale in 19
Slide 27: 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. Dollars in Thousands Ye
Slide 28: 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 29: 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 30: 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. Dollars in Thousands Year Ended December 31, YTD 2013 2014 2015 2016 20
Slide 31: Net Revenue & Noninterest Income to Net Revenue Reconciliation
Net Revenue & Noninterest Income to Net 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. Dollars in Thousands Year Ended December 31, YTD 2013 2014 2015 2016 2017 June 30, 201
Slide 32: 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. Dollars in
Slide 33: 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 34: 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. Dollars in Thousands (except per share data) Year Ended December 31, 2013 2014 2015 2016 20