 Record 64 growth in OpenSky Credit Cards accounts drove a 47.2 million increase in noninterest bearing secured credit card deposits Record Mortgage Loan Originations of 315.2 million and record Mortgage Banking Revenue of 10.1 million Increase in Net Income Supported by Business Diversification Robust Common Equity Tier 1 capital ratio of 12.39 Credit provisions increased the ratio of the allowance for loan losses ALLL to total loans to 1.30, or 1.54 excluding Small Business Administration Payroll Protection Program PPP loansROCKVILLE, Md., July 23, 2020 GLOBE NEWSWIRE -- Capital Bancorp, Inc. the Company NASDAQ: CBNK, the holding company for Capital Bank, N.A. the Bank, today reported net income of 4.8 million, or 0.34 per diluted share, for the second quarter of 2020. By comparison, net income was 4.0 million, or 0.29 per diluted share, for the second quarter of 2019. Return on average assets was 1.19 for the second quarter of 2020, compared to 1.39 for the same period in 2019, and return on average equity was 13.70 for the second quarter of 2020, compared to 13.23 for the same period in 2019. Included in net income was a provision for loan losses of 3.3 million, attributable to factors related to COVID-19.Our diversified earnings model and entrepreneurial and technology-enabled culture continues to be a source of strength in these difficult times, said Ed Barry, CEO of Capital Bancorp. We moved quickly to take advantage of market opportunities and dramatically increase OpenSky card growth and mortgage originations while supporting our borrowers and the community with loan deferrals and PPP loans. We are carefully monitoring credit quality while assisting borrowers affected by the disruption in the economy. While we are optimistic, we also acknowledge the elevated uncertainty in the market. Our loan loss provision reflects our prudent business practices and is supported by our strong core earnings.Second Quarter 2020 Highlights Record Number of OpenSky Credit Card Accounts Opened - At June 30, 2020, the Bank had 401 thousand OpenSky credit card accounts. Growth was driven by a record 172 thousand new quarterly originations, as we launched several new marketing efforts in response to COVID-19 related changes in the competitive landscape. Card balances, which typically lag new card production, increased to 54.7 million from 41.9 million in the second quarter of 2019, while the related deposit account balances increased 64 percent to 131.9 million. Record Mortgage Originations and Revenues - In the second quarter of 2020, a record 315.2 million of mortgage loans were originated for sale, compared to 134.4 million in the second quarter of 2019. Mortgage banking revenue for the second quarter of 2020 was a record 10.1 million compared to 3.7 million for the same period in 2019. Mortgage banking revenue benefited from higher levels of refinancing and recent strategic hires that enhanced our mortgage banking platform, including our expansion to the Eastern Shore of Maryland. Net Income Supported by Business Diversification - In the second quarter of 2020, net income increased 18.4 percent to 4.8 million from 4.0 million in the second quarter of 2019, despite a 2.6 million increase in the provision for loan losses. Our strong operating results continue to demonstrate the benefits of our diversified business model. COVID-19 Related Deferrals - Through June 30, 2020, the Bank has granted requests for modifications on 204 loans, excluding credit cards, with 144.0 million in principal balances outstanding, which represents 10.0 of total loans. Of the modifications granted, 11.9 were interest-only deferrals based on balances outstanding, 85.7 were 60 to 90 day principal and interest deferrals, and 2.4 were other types of deferrals.Loan Modifications 1 dollars in thousands Deferred Loans SectorTotal Loans Outstanding June 30, 2020 Balances with SBA 7a Guarantees 2 Balance of Loans DeferredPPP Loans Extended to Deferred Borrowers Accommodation Food Services83.9 8.4 42.6 36 6.5 Real Estate and Rental Leasing527.9 0.5 45.6 67 0.2 Other Services Including Private Households193.8 0.6 17.3 36 0.2 Educational Services20.4 0.6 9.8 6 0.6 Construction220.4 3.6 4.2 6 2.4 Professional, Scientific, and Technical Services88.4 1.8 5.0 11 0.3 Arts, Entertainment Recreation14.9 1.1 5.0 9 1.0 Retail Trade25.5 0.8 3.0 8 Healthcare Social Assistance77.2 1.4 4.7 11 0.2 Wholesale Trade13.0 2.5 0.9 1 All other 1175.7 6.0 5.9 13 1.5 Total1,441.1 27.3 144.0 204 12.9 ___1 Excludes modifications and deferrals made for our OpenSky secured card customers. 2 Under the CARES Act, existing loans guaranteed by the SBA qualify for the payments to be made by the SBA for a period of six months. Balance Sheet Supported By Robust Capital Ratios and Prudent Reserves - As of June 30, 2020, the Company reported a common equity tier 1 capital ratio of 12.39 and ALLL to total loans of 1.30, or 1.54 excluding PPP loans. The Bank is well-capitalized and has taken measures to navigate COVID-19 related disruptions, including taking prudent loan loss provisions and maintaining higher-than-normal levels of liquidity on the balance sheet. Stabilizing Core Net Interest Margin - Net interest margin NIM decreased 107 basis points to 4.72 for the three months ended June 30, 2020 from 5.79 for the year earlier period. The decline in NIM was driven by a decline in interest rates and rapid growth of PPP loans. Adjusting for the impact of credit cards and PPP, second quarter 2020 core NIM was 3.96, down 41 basis points from 4.37 in the prior year. Compared to March 30, 2020, the NIM excluding secured credit cards and PPP loans has remained steady at 3.96. The Bank experienced a 77 basis point decline in asset yields, which was partially offset by a 35 basis point decline in the cost of interest bearing deposits combined with the effects of a 170 million increase in average noninterest bearing deposits. SBA Paycheck Protection Program - The Bank originated 1,220 PPP loans 612 to non-customers having outstanding balances totaling 236.3 million at June 30, 2020 to new and existing customers, generating 8.1 million in fees to be recognized over the life of these loans. Existing customers received 113.0 million of these PPP loans, and new customers received 123.3 million of these PPP loans. Each new customer that received a PPP loan opened an account with the Bank. The Bank is currently working with its PPP loan recipients to facilitate various forms of loan-forgiveness in order to ensure compliance with SBA-mandated requirements. Stable Asset Quality - Non-performing assets remained flat at 9.2 million at both June 30, 2020 and March 31, 2020. Non-performing assets as a percentage of total assets decreased to 0.50 at June 30, 2020 compared to 0.61 at March 31, 2020 primarily due to the Banks increase in total assets. Non-performing assets as a percentage of total assets, excluding PPP loans, was 0.58. Loan Growth Supported by PPP Activities - For the quarter ended June 30, 2020, total loans increased by 253.3 million, or 21.3 percent, to 1.44 billion compared to 1.19 billion at March 31, 2020. In addition to the increase of 236.3 million of PPP loans, commercial real estate loans increased by 3.5 million, or 1.0 percent, construction real estate loans increased by 8.9 million, or 4.4 percent, secured credit cards balances increased by 12.9 million, or 30.7 percent, while non-PPP commercial and industrial loans declined by 8.9 million, or 5.9 percent. Growth of Noninterest Bearing Deposits and Reduced Costs of Interest Bearing Liabilities - Noninterest bearing deposits increased by 200.6 million, or 55.2 percent, during the quarter ended June 30, 2020. This growth was primarily driven by PPP loan activity, an increase of 47.2 million in secured credit card deposits, and the Companys ongoing strategic initiative to improve the deposit portfolio mix by decreasing reliance on wholesale, internet and other non-core time deposits. The cost of interest bearing liabilities decreased from 1.73 to 1.38 as we moved to reduce rates in line with the market. Capitalized on Market Disruption to Attract Talent - Hired a team of seven commercial sales associates from a recently-merged competitor. Hired a mortgage banking team in the first quarter to facilitate mortgage production in an adjacent market. COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited Quarter Ended Six Months Ended June 30, June 30, dollars in thousands except per share data2020 2019 Change 2020 2019 Change Earnings Summary Interest income22,000 20,289 8.4 43,744 38,607 13.3 Interest expense3,376 3,758 10.2 7,433 7,332 1.4 Net interest income18,624 16,531 12.7 36,311 31,275 16.1 Provision for loan losses3,300 677 387.4 5,709 798 615.4 Noninterest income13,825 5,927 133.3 20,404 10,019 103.7 Noninterest expense22,630 16,210 39.6 40,472 30,540 32.5 Income before income taxes6,519 5,571 17.0 10,534 9,956 5.8 Income tax expense1,759 1,548 13.6 2,839 2,614 8.6 Net income4,760 4,023 18.3 7,695 7,342 4.8 Weighted average common shares - Basic13,817 13,719 0.7 13,847 13,708 1.0 Weighted average common shares - Diluted13,817 13,914 0.7 13,877 13,888 0.1 Earnings per share - Basic0.34 0.30 13.6 0.56 0.54 3.7 Earnings per share - Diluted0.34 0.29 19.1 0.55 0.53 3.8 Return on average assets 11.19 1.39 14.4 1. 