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CB

Capital Bancorp Inc (CBNK)·Q4 2019 Earnings Summary

Executive Summary

  • Solid quarter with net income of $5.1M and diluted EPS of $0.36, up 13% QoQ and 45% YoY; ROAA 1.48% and ROAE 15.3% .
  • Core franchise momentum: loans +2.7% QoQ to $1.17B and deposits +10.2% QoQ to $1.23B; OpenSky credit card and mortgage businesses drove noninterest income growth (+110% YoY) .
  • Net interest margin compressed 50 bps QoQ to 5.33% on excess liquidity, lower rates, and seasonal card charge-offs; efficiency ratio improved to 70.1% on higher revenues .
  • Management emphasized disciplined pricing/credit, deposit mix improvement, and tech-enabled growth; no explicit numerical guidance provided for 2020 in these materials .
  • Estimates comparison unavailable: S&P Global consensus EPS and revenue for Q4 2019 could not be retrieved due to access limits; note for estimate context below.*

What Went Well and What Went Wrong

What Went Well

  • Record quarterly net income and EPS growth: $5.1M, $0.36 diluted EPS; ROAA 1.48%, ROAE 15.3% .
  • Strong deposit inflows: deposits +$113.0M QoQ (+10.2%), driven by money market balances; improving mix away from wholesale time deposits .
  • Fee businesses outperformed: noninterest income +110% YoY to $7.3M on mortgage banking (+$2.9M YoY) and credit card fees (+44.6% YoY); OpenSky new originations 24,100 in Q4 .
  • CEO tone: “exerting pricing and credit discipline to help offset margin compression,” and “differentiated operating model creates compelling value” .

What Went Wrong

  • Net interest margin fell 50 bps QoQ to 5.33% on excess low-yield liquidity (-23 bps impact), two rate cuts (-11 bps), and seasonal credit card charge-offs (-11 bps) .
  • Operating expenses elevated: noninterest expense +35.6% YoY to $17.8M, driven by salaries/benefits and higher mortgage commissions (Q4 commissions $1.3M vs $0.7M YoY) .
  • Asset quality mixed but manageable: NPAs/Assets 0.50% (vs 0.44% in Q4’18); net charge-offs annualized 0.15% in Q4 from 0.04% YoY; management cited seasonal card charge-offs .

Financial Results

MetricQ4 2018Q2 2019Q3 2019Q4 2019
Net Income ($USD Millions)$3.486 $4.023 $4.481 $5.073
Diluted EPS ($)$0.25 $0.29 $0.32 $0.36
Net Interest Income ($USD Millions)$14.890 $16.531 $18.184 $18.054
Noninterest Income ($USD Millions)$3.466 $5.927 $7.221 $7.278
Provision for Loan Losses ($USD Millions)$0.500 $0.677 $1.071 $0.921
Noninterest Expense ($USD Millions)$13.094 $16.210 $18.228 $17.757
NIM (%)5.46% 5.79% 5.83% 5.33%
Efficiency Ratio (%)71.34% 72.18% 71.75% 70.10%
ROAA (%)1.27% 1.39% 1.42% 1.48%
ROAE (%)12.26% 13.23% 14.04% 15.32%

Segment and KPI breakout:

MetricQ4 2018Q2 2019Q3 2019Q4 2019
Mortgage Banking Revenue ($USD Millions)$2.097 $3.715 $4.900 $4.964
Credit Card Fees ($USD Millions)$1.439 $1.970 $2.059 $2.082
OpenSky Total Active Accounts (000s)170.0 211.4 221.9 223.4
OpenSky Loans ($USD Millions)$34.673 $40.141 $44.058 $46.412
OpenSky Deposits ($USD Millions)$59.954 $73.666 $77.689 $78.223
NPAs / Assets (%)0.44% 0.57% 0.51% 0.50%
Loans ($USD Millions)$1,000.268 $1,056.290 $1,140.310 $1,171.121
Deposits ($USD Millions)$955.240 $1,037.004 $1,112.444 $1,225.421

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
None providedN/AN/AN/AN/A

No explicit quantitative guidance was disclosed in the Q4 2019 earnings materials reviewed .

Earnings Call Themes & Trends

(Transcript not available; themes synthesized from Q2–Q4 press releases)

TopicPrevious Mentions (Q2 2019, Q3 2019)Current Period (Q4 2019)Trend
Deposit mix improvementMove away from wholesale time deposits; noninterest-bearing growth; OpenSky deposits supporting mix Deposits +10.2% QoQ; wholesale time deposits down to 13.6% of total vs 20.2% YoY Improving mix, accelerating inflows
Technology-driven growthEnhanced application and mobile servicing drove record card issuances; tech-enabled mortgage platform Continued strong OpenSky originations (24,100) and mortgage gains on sale; investments in technology yielding efficiency ratio improvements Sustained momentum
NIM dynamicsNIM stable/improving on loan yields (Q2/Q3) despite competition and rates NIM down 50 bps QoQ on excess liquidity, rate cuts, seasonal card charge-offs Near-term compression due to tactical liquidity build
Asset qualityNPAs increased YoY mainly from a well-secured single relationship; charge-offs subdued NPAs/Assets steady at 0.50%; net charge-offs annualized higher vs prior year due to seasonal factors Stable overall, with seasonal card impacts
Fee income diversityMortgage banking and credit card fees rising YoY Noninterest income +110% YoY; mortgage banking +136.7% YoY; credit card fees +44.6% YoY Strengthening fee streams

Management Commentary

  • “Capital Bancorp is executing on the market disruption to post strong balanced growth... attract new customers and talent while exerting pricing and credit discipline to help offset margin compression.” — Ed Barry, CEO (Q4 press release) .
  • “Despite fierce competition and a declining rate environment, our margin remained stable... mortgage and credit card businesses continue to experience higher than anticipated growth and profits.” — Ed Barry (Q3 press release) .
  • “Strong growth of commercial loans and deposits emerged as our new sales teams began to deliver results... good mortgage and card volume.” — Ed Barry (Q2 press release) .

Q&A Highlights

No public Q4 2019 earnings call transcript was available in the document set; therefore Q&A specifics and any guidance clarifications could not be sourced.

Estimates Context

  • Wall Street consensus via S&P Global for Q4 2019 EPS and revenue was unavailable due to access limits at query time. As a result, a direct comparison to consensus cannot be provided here. Values would normally be retrieved from S&P Global Capital IQ.*

Where estimate comparisons are material to your process, consider refreshing SPGI access and re-running consensus queries before investment decisions.

Key Takeaways for Investors

  • Balanced growth quarter: loans +2.7% QoQ and deposits +10.2% QoQ, with fee businesses (mortgage and cards) driving a 110% YoY lift in noninterest income — supportive of diversified earnings .
  • NIM compression appears tactical and transitory: excess liquidity deployment plan into early 2020 alongside deposit rebalancing should help stabilize margins; watch rate trajectory and card portfolio seasonality .
  • Operating leverage improving: efficiency ratio fell to 70.1% on higher revenues; monitor expense growth tied to mortgage commissions and tech investments .
  • Asset quality remains sound with NPAs/Assets at 0.50% and robust ALLL coverage; seasonal card charge-offs impacted Q4 but remain manageable .
  • OpenSky and CBHL are strategic growth engines: rising accounts, balances, and gain-on-sale revenue support fee income resilience in varying rate environments .
  • No formal 2020 guidance disclosed here: focus on deposit mix upgrades, disciplined pricing/credit, and tech-enabled origination to gauge forward earnings power .
  • Near-term trading lens: potential positive read-throughs from deposit inflows and fee strength vs caution on NIM; medium-term thesis centers on scalable, tech-enabled fee franchises and improving core deposits .

Additional references:

  • Q4 2019 investor presentation corroborating quarterly KPIs (ROAA, ROATCE, NIM, efficiency) .
  • Company’s quarterly results page linking Q4 2019 press release and materials .

*Estimates disclaimer: S&P Global consensus values for EPS and revenue were unavailable at time of query due to access limits.