CBNK Announces Record Quarterly Earnings

Capital Bancorp, Inc.

Diluted EPS of $0.80, ROAA of 2.23%, and ROAE of 22.16% for 2Q 2022

ROCKVILLE, Md., July 20, 2022 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $11.5 million, or $0.80 per diluted share, for the second quarter of 2022 representing 19.3% growth when compared to net income of $9.6 million, or $0.68 per diluted share, for the second quarter of 2021. Net portfolio loans increased $81.4 million, or 21.4 percent annualized, during the second quarter.

"Loan growth, stable deposit costs, OpenSky^® performance and lower than anticipated expenses drove another quarter of outstanding performance," said Ed Barry, CEO of the Company and the Bank. "Credit quality in our commercial and consumer loan portfolios remains stable with an anticipated increase in loss provisions in our OpenSky^® loan portfolio. Continued aggressive marketing by fintech and credit card companies offering unsecured subprime credit cards has resulted in account growth headwinds in OpenSky^®, but we are confident that our approach to serving this market and our investments to scale our platform will continue to deliver substantial profits in this business. Our multi-year effort to transform our deposit franchise continues to show results and will help drive results in the rising rate environment."

"We are pleased with how well Capital Bank's diversified business model continues to perform despite changes in macroeconomic conditions" said Steven Schwartz, Chairman of the Board of the Company. "Our extremely dedicated management team and fully engaged Board remain focused on increasing shareholder value by improving our unique mix of products with the adoption of state-of-the-art technology to deliver coveted financial solutions to our customers."

Second Quarter 2022 Highlights

Capital Bancorp, Inc.

• Record Earnings - Continued strong performance by the Commercial Bank and OpenSky^® contributed to the second quarter's record results. Quarterly net income increased to $11.5 million from $9.6 million in the second quarter of 2021 due mainly to increased net interest income due to loan growth and an increase in rates. The increase in net interest income was offset by an increase in the loan loss provision and a decrease in noninterest income. Earnings were $0.80 per diluted share for the three months ended June 30, 2022 and $0.68 for the three months ended June 30, 2021.

• Continued Outstanding Performance Ratios - Return on average assets ("ROAA") and return on average equity ("ROAE") were 2.23% and 22.16%, respectively, for the three months ended June 30, 2022, compared to 1.90% and 22.36%, respectively, for the three months ended June 30, 2021.

• Expanded Net Interest Margin - Net interest margin was 7.06% for the three months ended June 30, 2022, compared to 5.47% for the same three month period last year. The margin expansion was primarily driven by increases in the yield on portfolio loans including credit card loans to card holders whose accounts have been open for more than a year as origination costs on these accounts are amortized in the first year and no longer offset annual renewal fees. Rate increases in our adjustable rate portfolios also contributed to the margin expansion.

• Robust Capital Positions - As of June 30, 2022, the Company reported a common equity tier 1 capital ratio of 15.55% and an allowance for loan losses to total portfolio loans ratio of 1.63%, or 1.64% excluding SBA-PPP loans. Tangible book value per common share grew 15.0 percent to $14.80 at June 30, 2022 when compared to the same quarter in 2021.

Commercial Bank

• Strong Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $199.2 million, or 15.6 percent, to $1.5 billion at June 30, 2022 compared to June 30, 2021. This growth was mainly due to a 29.0 percent increase in commercial real estate loans of $136.8 million, of which $92.9 million was owner occupied. Also contributing to the growth was a 22.0 percent increase in commercial and industrial loans of $34.9 million and an 7.8 percent increase in construction real estate loans of $17.4 million when comparing the quarter ended June 30, 2022 to the quarter ended June 30, 2021.

• Improving Credit Metrics - Non-performing assets ("NPAs") decreased to 0.34% of total assets at June 30, 2022 compared to 0.54% at June 30, 2021 with the disposition of $3.2 million in other real estate owned and a reduction in nonaccrual loans of $1.0 million as management continues to focus on reducing non-performing assets. The provision for loan losses increased $1.3 million compared to the second quarter of 2021. The current provision for the three months ended June 30, 2022 was $2.0 million and was related to the growth in the unsecured credit card loans and secured customer attrition which tends to result in an increase in charge offs of certain fees in excess of the secured portion of the loan.

• SBA-PPP Loans - SBA-PPP loans, net of $301 thousand in unearned fees, totaled $15.9 million at June 30, 2022 which was comprised of $1.4 million in 2020 originations and $14.7 million of 2021 originations. As of June 30, 2022, the Company has obtained forgiveness for $359.5 million of SBA-PPP loans.
  

Capital Bank Home Loans

• Slowing Mortgage Originations - Origination volumes declined 68.2 percent, to $84.4 million, in the second quarter of 2022, when compared to $265.5 million in the second quarter of 2021. The continued steepening of the yield curve in the second quarter of 2022 slowed originations from the year earlier when low interest rates fueled refinance volumes.

• Purchase Volume - While purchase volumes increased to 85.2 percent of total originations for the second quarter of 2022, up from 50.6 percent during the second quarter of 2021, total purchase originations declined by 46.7% during the same period.

OpenSky^®

• Strong Revenue Growth - OpenSky^® revenue grew by 22.1 percent to $23.0 million for the quarter ended June 30, 2022 from the same period in 2021 due to an increase in average credit card loan balances as well as an increase in the yield on those credit card loans. Normal customer attrition and aggressive marketing by fintech and credit card companies offering unsecured subprime credit cards has resulted in the continued decline in the total number of OpenSky^® accounts.

• Continued Growth in OpenSky^® Loans - OpenSky^® loan balances, net of reserves, increased by $20.8 million to $142.2 million compared to $121.4 million in the second quarter of 2021. Corresponding deposit balances decreased 11.4 percent or $27.6 million from $241.7 million at June 30, 2021 to $214.1 million at June 30, 2022.

2022 Highlights

Capital Bancorp

• Diversified Businesses Drive Net Income - Net income for the six months ended June 30, 2022 increased 16.6 percent to $21.7 million, or $1.52 per diluted share, from $18.6 million, or $1.32 per diluted share for the six months ended June 30, 2021. Continued strong operating results demonstrate the advantages of the Company's diversified business lines that are, in certain respects, non-correlated across economic cycles.

• Top Tier Performance Ratios - Improved earnings supported ROAA and ROAE of 2.12% and 21.25%, respectively, for the six months ended June 30, 2022 compared to 1.88% and 22.33%, respectively, for the six months ended June 30, 2021.

• Expanded Net Interest Margin - For the six months ended June 30, 2022, net interest margin increased by 161 basis points to 6.93% compared to 5.32% for the six months ended June 30, 2021. The margin improvement was primarily driven by increases in the yield on portfolio loans including credit card loans to card holders whose accounts have been open for more than a year as origination costs on these accounts are amortized in the first year and no longer offset annual renewal fees.. Rate increases in our adjustable rate portfolios also contributed to the margin expansion.

• Stable Efficiency Ratio - The efficiency ratio decreased to 63.52% for the six months ended June 30, 2022 compared to 66.73% for the same six month period in the prior year.

• Strong Balance Sheet Growth - Total assets increased $99.5 million, or 4.8 percent during the six months ended June 30, 2022 and was primarily funded by a $91.8 million increase in deposits.The growth of earning assets on the balance sheet consisted primarily of increases in cash equivalents of $67.5 million, portfolio loans net of deferred fees of $83.7 million which includes OpenSky^® net loan growth of $15.8 million, and investment securities available for sale of $42.1 million. Asset growth was primarily offset by a decrease of $92.4 million in SBA-PPP loans.
  

Commercial Bank

• Strong Portfolio Loan Growth - During the first six months of 2022, portfolio loans, excluding credit card loans, increased by $84.2 million, or 12.2 percent on an annualized basis, to $1.5 billion at June 30, 2022 compared to the first six months of 2021 when portfolio loans, excluding credit card loans, increased by $61.0 million to $1.3 billion at June 30, 2021. The 2022 growth was primarily due to a $52.3 million increase in commercial real estate loans, of which $47.7 million was owner occupied, and a $28.6 million increase in residential real estate.

• Improved Deposit Franchise and Lower Cost of Funding - While total deposits at June 30, 2022 decreased in comparison to total deposits at June 30, 2021, the composition of the deposit portfolio has continued to shift into a more favorable source of funding. Noninterest bearing deposits continue to grow and represented 44.6 percent of total deposits at June 30, 2022. The cost of interest bearing liabilities declined to 0.43% from 0.73% for the same period in the prior year, due mainly to the run-off of higher cost time deposits which have been replaced with lower cost money market accounts.

• COVID-19 Related Deferrals - At June 30, 2022, outstanding loans deferred due to COVID-19 amounted to $2.3 million, a decrease of 86.9 percent from $11.9 million at June 30, 2021.
  

Capital Bank Home Loans

• Gain on Sale - The year-to-date gain on sale of mortgage loans decreased to $5.0 million at June 30, 2022 from $19.8 million at June 30, 2021 due mainly to the $424.4 million, or 68.5 percent, decline in mortgage originations. The steepening yield curve in 2022 has slowed originations from the year earlier period when low interest rates fueled refinance volumes. Gain on sale margins, down slightly from 2.91% for the six months ended June 30, 2021, remained strong at 2.48% for the six months ended June 30, 2022. Historically-low housing inventory, shortages in new home building materials, and fluctuating interest rates are likely to continue suppressing origination volumes into 2022.
  

OpenSky^®

• Balance Growth Offsets Account Attrition - Gross credit card balances increased by $20.7 million, or 16.7 percent, at June 30, 2022 when compared to June 30, 2021. The growth in credit card loan balances coupled with an increase in interest rates accounted for the $12.4 million growth in interest income when comparing the six months ended June 30, 2022 to the same period in 2021. A decrease in overall credit card accounts led to a reduction in credit card fees, which decreased by 11.1 percent to $12.1 million compared to $13.7 million for the same six month period last year.

COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited
	Quarter Ended											Six months ended
	June 30,											June 30,
(dollars in thousands except per share data)		2022				2021			% Change				2022				2021			% Change
Earnings Summary
Interest income	$	36,556			$	29,289			24.8	%		$	70,957			$	55,927			26.9	%
Interest expense		1,156				1,769			(34.7	)%			2,226				3,964			(43.8	)%
Net interest income		35,400				27,520			28.6	%			68,731				51,963			32.3	%
Provision for loan losses		2,035				781			160.6	%			2,987				1,284			132.6	%
Noninterest income		8,362				13,471			(37.9	)%			16,650				27,421			(39.3	)%
Noninterest expense		27,130				27,205			(0.3	)%			54,232				52,972			2.4	%
Income before income taxes		14,597				13,005			12.2	%			28,162				25,128			12.1	%
Income tax expense		3,089				3,357			(8.0	)%			6,443				6,499			(0.9	)%
Net income	$	11,508			$	9,648			19.3	%		$	21,719			$	18,629			16.6	%
Pre-tax pre-provision net revenue ("PPNR") (2)	$	16,632			$	13,786			20.6	%		$	31,149			$	26,412			17.9	%
Weighted average common shares - Basic		14,007				13,766			1.8	%			13,998				13,762			1.7	%
Weighted average common shares - Diluted		14,313				14,172			1.0	%			14,323				14,070			1.8	%
Earnings per share - Basic	$	0.82			$	0.70			17.1	%		$	1.55			$	1.35			14.8	%
Earnings per share - Diluted	$	0.80			$	0.68			17.6	%		$	1.52			$	1.32			15.2	%
Return on average assets (1)		2.23	%			1.90	%		17.4	%			2.12	%			1.88	%		12.8	%
Return on average assets, excluding impact of SBA-PPP loans(1) (2)		2.04	%			1.65	%		23.6	%			1.86	%			1.60	%		16.3	%
Return on average equity		22.16	%			22.36	%		(0.9	)%			21.25	%			22.33	%		(4.8	)%

	Quarter Ended						2Q22 vs. 2Q21			Quarter Ended
	June 30,									March 31,			December 31,			September 30,
(in thousands except per share data)		2022			2021		% Change				2022			2021			2021
Balance Sheet Highlights
Assets	$	2,154,846		$	2,151,850		0.1	%		$	2,122,453		$	2,055,300		$	2,169,556
Investment securities available for sale		226,509			160,515		41.1	%			172,712			184,455			189,165
Mortgage loans held for sale		11,708			47,935		(75.6	)%			17,036			15,989			36,005
SBA-PPP loans, net of fees		15,864			202,763		(92.2	)%			51,085			108,285			137,178
Portfolio loans receivable (3)		1,607,677			1,392,471		15.5	%			1,526,256			1,523,982			1,445,126
Allowance for loan losses		26,419			24,079		9.7	%			25,252			25,181			24,753
Deposits		1,888,920			1,917,419		(1.5	)%			1,862,722			1,797,137			1,921,238
FHLB borrowings		22,000			22,000		—	%			22,000			22,000			22,000
Other borrowed funds		12,062			12,062		—	%			12,062			12,062			12,062
Total stockholders' equity		207,316			177,204		17.0	%			201,492			197,903			189,080
Tangible common equity(2)		207,316			177,204		17.0	%			201,492			197,903			189,080
Common shares outstanding		14,010			13,772		1.7	%			14,001			13,962			13,802
Tangible book value per share (2)	$	14.80		$	12.87		15.0	%		$	14.39		$	14.17		$	13.70

______________
(1)	Annualized for the quarterly periods
(2)	Refer to Appendix for reconciliation of non-GAAP measures.
(3)	Loans are reflected net of deferred fees and costs.

Operating Results - Comparison of Three Months Ended June 30, 2022 and 2021

For the three months ended June 30, 2022, net interest income increased $7.9 million, or 28.6 percent, to $35.4 million from the same period in 2021, primarily due to an increase in interest earned on the credit card loan portfolio. The net interest margin increased 159 basis points to 7.06% for the three months ended June 30, 2022 from the same period in 2021 due in large part to the acceleration of the deferred fees associated with the SBA-PPP loan forgiveness as well as the recognition of deferred fees on the credit card loans. Net interest margin, excluding credit card and SBA-PPP loans, was 3.86% for the second quarter of 2022 compared to 3.55% for the same period in 2021. For the three months ended June 30, 2022, average interest earning assets decreased $4.9 million, or 0.2 percent, to $2.0 billion as compared to the same period in 2021, and the average yield on interest earning assets increased 147 basis points. Compared to the same period in the prior year, average interest bearing liabilities decreased $60.0 million, or 5.5 percent, while the average cost of interest-bearing liabilities decreased 20 basis points to 0.45% from 0.65%.

The provision for loan losses of $2.0 million for the three months ended June 30, 2022 was related to growth in the credit card portfolio and the cycling of credit card accounts. Net charge-offs for the second quarter of 2022 were $868 thousand, or 0.23% on an annualized basis of average portfolio loans, compared to $252 thousand, or 0.08% on an annualized basis of average loans for the second quarter of 2021. All of the $868 thousand in net charge-offs during the quarter were related to the credit card portfolio.

For the quarter ended June 30, 2022, noninterest income was $8.4 million, a decrease of $5.1 million, or 37.9 percent, from $13.5 million in the prior year quarter. The decrease was primarily the result of reduced mortgage banking revenue.

Net credit card loan balances increased by $20.8 million to $142.2 million as of June 30, 2022 from $121.4 million at June 30, 2021. The related deposit account balances decreased 11.4 percent to $214.1 million at June 30, 2022 when compared to $241.7 million at June 30, 2021. For the three months ended June 30, 2022, OpenSky's^® secured credit card accounts decreased by 14 thousand net compared to 65 thousand net new accounts for the same period in 2021 as the elevated new account originations related to Covid stimulus payments subside.

The efficiency ratio for the three months ended June 30, 2022 decreased to 62.00% compared to 66.37% for the three months ended June 30, 2021.

Noninterest expense was $27.1 million for the three months ended June 30, 2022, as compared to $27.2 million for the three months ended June 30, 2021, a decrease of $74 thousand, or 0.3 percent. The decrease was primarily driven by decreases in data processing expenses of $2.9 million and loan processing expenses of $640 thousand, and were offset by increases in salaries and employee benefits of $1.3 million, advertising expenses of $930 thousand, and professional fees of $1.1 million.

Operating Results - Comparison of Six Months Ended June 30, 2022 and 2021

For the six months ended June 30, 2022, net interest income increased $16.8 million, or 32.3 percent, to $68.7 million from the same period in 2021, primarily due to an increase in average balances in the portfolio loans. The net interest margin increased 161 basis points to 6.93% for the six months ended June 30, 2022 from the same period in 2021. Net interest margin, excluding credit card and SBA-PPP loans, was 3.84% for the six months ended June 30, 2022 compared to 3.59% for the same period in 2021. For the six months ended June 30, 2022, average interest earning assets increased $30.8 million, or 1.6 percent, to $2.0 billion as compared to the same period in 2021, and the average yield on interest earning assets increased 143 basis points. Compared to the same period in the prior year, average interest-bearing liabilities decreased $56.9 million, or 5.2 percent, while the average cost of interest bearing liabilities decreased 30 basis points to 0.43% from 0.73%.

For the six months ended June 30, 2022, the provision for loan losses was $3.0 million, an increase of $1.7 million from the prior year. Net charge-offs for the six months ended June 30, 2022 were $1.7 million, or 0.23% annualized of average portfolio loans, compared to $640 thousand, or 0.10% annualized of average portfolio loans, for the same period in 2021. The $1.7 million in net charge-offs during the six months ended June 30, 2022 was comprised of credit card portfolio net charge-offs.

For the six months ended June 30, 2022, noninterest income was $16.7 million, a decrease of $10.8 million, or 39.3 percent, from the same period in 2021. The decrease was primarily driven by the reduction in mortgage banking revenues of $9.7 million.

For the six months ended June 30, 2022, the Bank had a net decrease of 44 thousand OpenSky^® secured credit card accounts, decreasing the total number of open accounts to 616 thousand. This compares to 139 thousand net new originations for the same period last year, which increased total open accounts to 708 thousand.

The efficiency ratio for the six months ended June 30, 2022 decreased to 63.52% compared to 66.73% for the six months ended June 30, 2021 due to increases in interest income.

Noninterest expense was $54.2 million for the six months ended June 30, 2022, as compared to $53.0 million for the six months ended June 30, 2021, an increase of $1.3 million, or 2.4 percent. The increase was primarily driven by a $3.1 million, or 17.7 percent, increase in salaries and benefits, an increase in professional fees of 58.6 percent, or $1.8 million, and an $1.7 million, or 81.7 percent, increase in advertising expense. The increase was partially offset by a $3.9 million, or 20.0 percent, decrease in data processing and a $1.3 million, or 64.1 percent, decrease in loan processing. The decrease of $3.9 million in data processing expenses was primarily due to a contract renegotiation.

Financial Condition

Total assets at June 30, 2022 were $2.2 billion, comparable to the balance at June 30, 2021. Net portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.6 billion as of June 30, 2022, an increase of 15.5 percent as compared to $1.4 billion at June 30, 2021.

While total deposits were $1.9 billion for the period ended June 30, 2022, a slight decline from the balance at June 30, 2021, the composition of the deposit portfolio shifted, with a decrease in higher costing time deposits of $121.9 million, or 43.1 percent, when comparing June 30, 2022 to June 30, 2021 to lower costing money market accounts and noninterest bearing accounts. At June 30, 2022, there were no listing service or brokered deposits compared to $68.2 million at June 30, 2021.

The Company recorded a provision for loan losses of $3.0 million during the six months ended June 30, 2022, which increased the allowance for loan losses to $26.4 million, or 1.63% of total loans (1.64%, excluding SBA-PPP loans, on a non-GAAP basis) at June 30, 2022. Nonperforming assets were $7.3 million, or 0.34% of total assets, as of June 30, 2022, down from $11.6 million, or 0.54% of total assets, at June 30, 2021, and was comprised solely of nonperforming loans. Included in nonperforming loans at June 30, 2022 were troubled debt restructurings of $519 thousand.

Stockholders’ equity increased to $207.3 million as of June 30, 2022, compared to $177.2 million at June 30, 2021. This increase was primarily attributable to earnings during the period of $21.7 million which were offset by unrealized losses recorded net of tax on the available for sale securities in the rising interest rate environment creating a $12.3 million reduction in accumulated other comprehensive income during the period. As of June 30, 2022, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

Consolidated Statements of Income (Unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
Interest income
Loans, including fees	$	35,304		$	28,641		$	69,193		$	54,709
Investment securities available for sale		779			544			1,149			1,021
Federal funds sold and other		473			104			615			197
Total interest income		36,556			29,289			70,957			55,927
Interest expense
Deposits		964			1,582			1,847			3,589
Borrowed funds		192			187			379			375
Total interest expense		1,156			1,769			2,226			3,964
Net interest income		35,400			27,520			68,731			51,963
Provision for loan losses		2,035			781			2,987			1,284
Net interest income after provision for loan losses		33,365			26,739			65,744			50,679
Noninterest income
Service charges on deposits		183			165			346			312
Credit card fees		6,210			7,715			12,134			13,655
Mortgage banking revenue		1,528			5,270			3,318			13,013
Gain on sale of investment securities available for sale, net		—			153			—			153
Other fees and charges		441			168			852			288
Total noninterest income		8,362			13,471			16,650			27,421
Noninterest expenses
Salaries and employee benefits		10,071			8,750			20,381			17,317
Occupancy and equipment		1,313			1,195			2,339			2,324
Professional fees		2,417			1,362			4,738			2,987
Data processing		7,266			10,122			15,542			19,433
Advertising		2,223			1,293			3,862			2,126
Loan processing		335			975			727			2,026
Other operating		3,505			3,508			6,643			6,759
Total noninterest expenses		27,130			27,205			54,232			52,972
Income before income taxes		14,597			13,005			28,162			25,128
Income tax expense		3,089			3,357			6,443			6,499
Net income	$	11,508		$	9,648		$	21,719		$	18,629

Consolidated Balance Sheets
(in thousands except share data)	(unaudited) June 30, 2022				December 31, 2021
Assets
Cash and due from banks	$	14,776			$	42,914
Interest bearing deposits at other financial institutions		234,823				136,824
Federal funds sold		1,285				3,657
Total cash and cash equivalents		250,884				183,395
Investment securities available for sale		226,509				184,455
Marketable equity securities		245				245
Restricted investments		3,615				3,498
Loans held for sale		11,708				15,989
SBA-PPP loans receivable, net of fees		15,864				108,285
Portfolio loans receivable, net of deferred fees and costs		1,607,677				1,523,982
Less allowance for loan losses		(26,419	)			(25,181	)
Total portfolio loans held for investment, net		1,581,258				1,498,801
Premises and equipment, net		3,315				3,282
Accrued interest receivable		7,276				7,901
Deferred income taxes, net		12,929				9,793
Other real estate owned		—				86
Bank owned life insurance		36,011				35,506
Other assets		5,232				4,064
Total assets	$	2,154,846			$	2,055,300
Liabilities
Deposits
Noninterest bearing	$	842,363			$	787,650
Interest bearing		1,046,557				1,009,487
Total deposits		1,888,920				1,797,137
Federal Home Loan Bank advances		22,000				22,000
Other borrowed funds		12,062				12,062
Accrued interest payable		300				473
Other liabilities		24,248				25,725
Total liabilities		1,947,530				1,857,397
Stockholders' equity
Common stock, $.01 par value; 49,000,000 shares authorized; 14,010,158 and 13,962,334 issued and outstanding		140				140
Additional paid-in capital		55,762				54,306
Retained earnings		164,750				144,533
Accumulated other comprehensive loss		(13,336	)			(1,076	)
Total stockholders' equity		207,316				197,903
Total liabilities and stockholders' equity	$	2,154,846			$	2,055,300

The following table shows the average outstanding balance of each principal category of our assets, liabilities and stockholders’ equity, together with the average yields on our assets and the average costs of our liabilities for the periods indicated. Such yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.

	Three Months Ended June 30,
		2022									2021
	Average Outstanding Balance			Interest Income/ Expense			Average Yield/ Rate(1)			Average Outstanding Balance			Interest Income/ Expense			Average Yield/ Rate(1)
	(Dollars in thousands)
Assets
Interest earning assets:
Interest bearing deposits	$	218,251		$	429		0.79	%		$	259,330		$	63		0.10	%
Federal funds sold		1,655			2		0.48				3,087			—		—
Investment securities available for sale		215,172			779		1.45				139,997			544		1.56
Restricted stock and equity securities		3,854			42		4.37				3,478			41		4.70
Loans held for sale		11,447			134		4.70				44,644			314		2.82
SBA-PPP loans receivable		28,870			1,120		15.56				250,040			2,272		3.64
Portfolio loans receivable(2)		1,532,671			34,050		8.91				1,316,224			26,055		7.94
Total interest earning assets		2,011,920			36,556		7.29				2,016,800			29,289		5.82
Noninterest earning assets		56,298									24,432
Total assets	$	2,068,218								$	2,041,232
Liabilities and Stockholders’ Equity
Interest bearing liabilities:
Interest bearing demand accounts	$	259,192			38		0.06			$	282,197			50		0.07
Savings		9,913			1		0.04				6,634			1		0.05
Money market accounts		566,303			396		0.28				460,669			352		0.31
Time deposits		160,279			529		1.32				304,519			1,179		1.55
Borrowed funds		34,062			192		2.27				35,770			187		2.10
Total interest bearing liabilities		1,029,749			1,156		0.45				1,089,789			1,769		0.65
Noninterest bearing liabilities:
Noninterest bearing liabilities		22,647									20,111
Noninterest bearing deposits		807,558									758,255
Stockholders’ equity		208,264									173,077
Total liabilities and stockholders’ equity	$	2,068,218								$	2,041,232
Net interest spread							6.84	%								5.17	%
Net interest income				$	35,400								$	27,520
Net interest margin(3)							7.06	%								5.47	%

_______________
(1)	Annualized.
(2)	Includes nonaccrual loans.
(3)	For the three months ended June 30, 2022 and June 30, 2021, collectively, SBA-PPP loans and credit card loans accounted for 320 and 192 basis points of the reported net interest margin, respectively.

	Six Months Ended June 30,
		2022									2021
	Average Outstanding Balance			Interest Income/ Expense			Average Yield/ Rate(1)			Average Outstanding Balance			Interest Income/ Expense			Average Yield/ Rate(1)
	(Dollars in thousands)
Assets
Interest earning assets:
Interest bearing deposits	$	208,043		$	530		0.51	%		$	232,712		$	113		0.10	%
Federal funds sold		3,148			2		0.13				3,477			—		0.00
Investment securities available for sale		197,965			1,149		1.17				123,443			1,022		1.67
Restricted stock and equity securities		3,810			83		4.39				3,691			83		4.56
Loans held for sale		12,467			245		3.96				58,475			794		2.74
SBA-PPP loans receivable		55,917			3,186		11.49				242,619			4,741		3.94
Portfolio loans receivable(1)		1,519,857			65,762		8.73				1,305,973			49,174		7.59
Total interest earning assets		2,001,207			70,957		7.15				1,970,390			55,927		5.72
Noninterest earning assets		61,533									25,113
Total assets	$	2,062,740								$	1,995,503
Liabilities and Stockholders’ Equity
Interest bearing liabilities:
Interest bearing demand accounts	$	276,490			74		0.05			$	269,647			118		0.09
Savings		9,098			3		0.07				6,127			2		0.05
Money market accounts		552,858			697		0.25				465,882			881		0.38
Time deposits		165,485			1,073		1.31				318,512			2,588		1.64
Borrowed funds		34,062			379		2.24				34,699			375		2.18
Total interest bearing liabilities		1,037,993			2,226		0.43				1,094,867			3,964		0.73
Noninterest bearing liabilities:
Noninterest bearing liabilities		23,397									22,940
Noninterest bearing deposits		795,221									709,443
Stockholders’ equity		206,129									168,253
Total liabilities and stockholders’ equity	$	2,062,740								$	1,995,503
Net interest spread							6.72	%								4.99	%
Net interest income				$	68,731								$	51,963
Net interest margin(2)							6.93	%								5.32	%

_______________
(1)	Includes nonaccrual loans.
(2)	For the six months ended June 30, 2022 and June 30, 2021, collectively, SBA-PPP loans and credit card loans accounted for 309 and 173 basis points of the reported net interest margin, respectively.

The Company’s reportable segments represent business units with discrete financial information whose results are regularly reviewed by management. The four segments include Commercial Banking, Capital Bank Home Loans (the Company’s mortgage loan division), OpenSky® (the Company’s credit card division) and the Corporate Office. The following schedule presents financial information for each reportable segment for the three and six months ended June 30, 2022 and June 30, 2021.

Segments
For the Three Months Ended June 30, 2022
(in thousands)		Commercial Bank			CBHL				OpenSky®			Corporate(2)			Eliminations				Consolidated
Interest income		$	18,912		$	134			$	16,780		$	758		$	(28	)		$	36,556
Interest expense			952			64				—			168			(28	)			1,156
Net interest income			17,960			70				16,780			590			—				35,400
Provision for loan losses			—			—				2,035			—			—				2,035
Net interest income after provision			17,960			70				14,745			590			—				33,365
Noninterest income			526			1,626				6,210			—			—				8,362
Noninterest expense(1)			12,859			2,217				11,940			114			—				27,130
Net income before taxes		$	5,627		$	(521	)		$	9,015		$	476		$	—			$	14,597
Total assets		$	1,958,893		$	12,257			$	137,180		$	226,950		$	(180,434	)		$	2,154,846
For the Three Months Ended June 30, 2021
Interest income		$	17,297		$	313