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National Capital Bancorp, Inc. Reports Second Quarter Earnings

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WASHINGTON, July 27, 2022--(BUSINESS WIRE)--National Capital Bancorp, Inc. (the "Company") (OTC Pink: NACB), the holding company for The National Capital Bank of Washington ("NCB" or the "Bank") reported net income of $1,111,000, or $3.87 per common share, for the three months ended June 30, 2022, compared to net income of $1,164,000 or $4.06 per common share, for the quarter ended June 30, 2021. For the six months ended June 30, 2022, the Company reported net income of $1,948,000, or $6.79 per share, compared to $2,119,000, or $7.40 for the six months ended June 30, 2021. The Company was an active participant in Paycheck Protection Program (PPP) lending during 2020 and the first half of 2021. Average PPP loan balances were $80 million during the second quarter of 2021 compared with $8 million during the second quarter of 2022 resulting in a year-over-year reduction in second quarter PPP-related income of $476,000. This impact was largely offset by a $298,000 recovery of provision for loan losses in the second quarter of 2022 as a result of continued improvement of borrowers in industries most affected by the pandemic.

Total assets increased year-over-year to $676,574,000 on June 30, 2022 compared to $652,729,000 on June 30, 2021. Total loans of $398,680,000 on June 30, 2022 decreased by $7.8 million during the quarter and have decreased from $465,630,000 the year before. Total deposits increased during the quarter by $10.8 million to $602,770,000 on June 30, 2022 and have increased from $571,755,000 the year before. December 31, 2021 deposits included a year-end client deposit of $55 million which was transferred out in January 2022. Organic loan growth in the first half of 2022 was $23 million and was largely offset by PPP loan forgiveness received during the first half of 2022. The remaining combined outstanding balance of PPP loans was $2 million on June 30, 2022, compared with a balance of $23 million and $65 million on December 31, 2021 and June 30, 2021, respectively. The Company’s net interest margin recovered to 3.06% during the second quarter of 2022 compared to 2.83% in the first quarter of 2022 but is down compared to 3.33% in second quarter of 2021. Much like the banking industry as a whole, the Bank is carrying a higher proportion of earning assets in lower yielding securities as loan demand has not kept pace with deposit growth. Additionally, lower PPP fee accretion during the second quarter of 2022 has negatively impacted the net interest margin in comparison to the second quarter of 2021.

Total shareholders’ equity decreased to $48,046,000 on June 30, 2022 from $54,256,000 a year ago due to the change in market valuation of the investment portfolio in a rising rate environment, and partially offset by retained earnings for the past twelve months. In order to partially mitigate the impact of higher interest rates on the valuation of the investment portfolio, the Bank transferred approximately $80 million of securities during the first quarter of 2022 to a held-to-maturity category which is valued at amortized cost rather than at fair market value. For the six months ended June 30, 2022 the return on average assets and return on average equity was 0.57% and 7.65%, respectively.

Richard B. (Randy) Anderson, Jr. President and Chief Executive Officer said, "While challenges remain ahead, we were generally pleased with our ability to minimize the impact of rapidly rising interest rates and the mix of earning assets on our net interest margin and earnings during the second quarter of 2022." Anderson continued "However, the big news during the quarter were the additions to the Bank’s executive management, lending and business process teams positioning the Bank for its next chapter of growth and earnings. In April James (Jimmy) Olevson joined NCB as President bringing significant experience as a senior banking executive in the Metro DC market. He was followed shortly thereafter by Brad Duncan Senior Vice President, Construction Lending Director, Sean Biehl Vice President, Commercial Lending and Matt Santmyer Senior Vice President, Strategic Projects Director. Each of these individuals fills a key role in our strategic plan and brings the needed skills and energy to their positions."

The Company also announced today that its Board of Directors has declared a dividend of $0.60 per share for shareholders of record as of August 16, 2022. The dividend payout of $172,439.40 on 287,399 shares is payable August 30, 2022.

National Capital Bancorp, Inc. is the holding company for The National Capital Bank of Washington which was founded in 1889 and is Washington’s Oldest Bank. NCB is headquartered on Capitol Hill with offices in the Friendship Heights community in Northwest D.C., the Courthouse/Clarendon community in Arlington, Virginia and the Fox Hill senior living community of Bethesda, Maryland. NCB also operates residential mortgage and commercial lending offices and a wealth management services division. NCB product and service offerings include personal and business deposit accounts, robust eBanking, sophisticated treasury management solutions, remote deposit capture and merchant processing – all delivered with top-rated personal service. NCB is well-positioned to serve all the banking needs of those in our communities. For more information about NCB, visit www.nationalcapitalbank.com.

Forward Looking Statements

This news release may contain certain forward-looking statements, such as statements of the Company’s plans, objectives, expectations, estimates and intentions. Forward-looking statements may be identified using words such as "expects," "subject," "will," "intends," "will be" or "would," These statements are subject to change based on various important factors (some of which are beyond the Company’s control) and actual results may differ materially. Accordingly, readers should not place undue reliance on any forward-looking statements (which reflect management’s analysis of factors only as of the date of which they are given). These factors include general economic conditions, trends in interest rates, the ability of the Company to effectively manage its growth and results of regulatory examinations, among other factors. The foregoing list of important factors is not exclusive.

National Capital Bancorp, Inc.

Financial Highlights

(In thousands, except share data)

Three Months Ended

Six Months Ended

(Unaudited)

June 30

June 30

Condensed Statement of Income:

2022

2021

2022

2021

Interest income

$

5,290

$

5,421

$

10,179

$

10,558

Interest expense

362

249

645

450

Net interest income

4,928

5,172

9,534

10,108

Provision for (recovery of) loan losses

(298

)

52

(456

)

197

Net interest income after provision

5,226

5,120

9,990

9,911

Non-interest income

620

626

1,283

1,324

Non-interest expense

4,386

4,203

8,727

8,433

Income before taxes

1,460

1,544

2,546

2,802

Income tax provision

349

380

598

683

Net income

$

1,111

$

1,164

$

1,948

$

2,119

Share Data:

Weighted avg no. of shares outstanding

287,221

286,334

286,860

286,196

Period end shares outstanding

287,399

286,457

287,399

286,457

Per Common Share Data:

Net income

$

3.87

$

4.06

$

6.79

$

7.40

Closing Stock Price

$

186.00

$

189.40

Book Value

$

167.18

$

189.40

Profitability Ratios, Annualized:

Return on average stockholders' equity

9.11

%

8.68

%

7.65

%

7.91

%

Return on average total assets

0.66

%

0.72

%

0.57

%

0.67

%

Average equity to average total assets

7.26

%

8.31

%

7.51

%

8.45

%

Condensed Balance Sheets:

June 30

December 31

June 30

2022

2021

2021

Assets

Cash and equivalents

$

78,099

$

138,607

$

41,823

Securities, available for sale

99,398

179,066

123,389

Securities, held to maturity

76,099

0

0

Loans, held for sale

0

0

2,067

Loans, held in portfolio

398,680

396,453

465,630

Allowance for loan losses

(5,504

)

(5,959

)

(6,251

)

Premises and equipment, net

7,831

8,198

8,375

Bank owned life insurance

12,500

12,396

12,286

Other assets

9,471

5,948

5,410

Total assets

$

676,574

$

734,709

$

652,729

Liabilities and stockholders' equity

Deposits

$

602,770

$

657,116

$

571,755

Securities sold under agreement to repurchase

9,642

6,327

10,423

FHLB advances

0

0

0

Subordinated notes, net of issuance cost

13,652

13,624

13,597

Other liabilities

2,464

2,788

2,698

Stockholders' equity

48,046

54,854

54,256

Total liabilities and stockholders' equity

$

676,574

$

734,709

$

652,729

Other Data:

Non-performing loans to total loans (1)

0.06

%

0.07

%

0.28

%

Allowance to total loans

1.38

%

1.50

%

1.34

%

Net charge-offs (recoveries) to average loans

0.00

%

0.00

%

0.02

%

Loan-to-deposit ratio

66.14

%

60.33

%

81.44

%

Net interest margin for the quarter

3.06

%

3.10

%

3.33

%

Net interest margin for the year

2.94

%

3.22

%

3.33

%

(1) NPL's exclude accruing TDR's

View source version on businesswire.com: https://www.businesswire.com/news/home/20220727005993/en/

Contacts

Richard B. Anderson, Jr., President and CEO
Randal J. Rabe, EVP, Chief Financial Officer
Phone: 202-546-8000
Email: randy.anderson@ncbwash.com or
rrabe@ncbwash.com