National Capital Bancorp, Inc. Reports Second Quarter Earnings

WASHINGTON, July 26, 2023--(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 $1,190,000, or $4.13 per common share, for the three months ended June 30, 2023, compared to net income of $1,111,000 or $3.87 per common share, for the quarter ended June 30, 2022. For the six months ended June 30, 2023, the Company reported net income of $2,139,000, or $7.44 per share, compared to $1,948,000, or $6.79 for the six months ended June 30, 2022. Improvement in asset mix through continued loan growth along with enhanced expense control during the quarter helped to offset pressure from increased funding costs. Non-interest income for the quarter included a one-time gain of $835,000 from the sale of the Bank’s holdings of class B shares of Visa, Inc. This gain was largely offset by a loss of $789,000 on the sale of $12.5 million of available-for-sale securities which was done to reposition the Company’s balance sheet.

Total assets increased during the quarter to $673,218,000 on June 30, 2023. Total loans of $465,151,000 on June 30, 2023 increased by $26.7 million during the quarter and have increased $40.0 million on a year-to-date basis. Total deposits remained stable during the quarter at $563,827,000 on June 30, 2023 and have decreased $7.9 million (1.4%) on a year-to-date basis. While the Company has begun to utilize borrowings from the FHLB in 2023 to help in meeting loan growth opportunities, it has a relatively low reliance on wholesale funding sources and maintains strong levels of available secured borrowing capacity to meet the financing and cash flow needs of our client base as well as continue to pursue desirable new relationship opportunities.

The Company’s net interest margin of 3.30% during the second quarter of 2023 was down compared with 3.45% in the first quarter of 2023 but did improve from 3.06% in the second quarter of 2022. While the past few quarters have benefited from the favorable impact of interest rate increases on variable-rate loans, interest-bearing cash balances and on newly originated loans, we did see compression of our net interest margin in the most recent quarter due to increased competition for deposits along with some utilization of wholesale funding sources to enhance our liquidity position and satisfy client borrowing needs and new loan opportunities.

Total shareholders’ equity increased to $50,422,000 on June 30, 2023 from $48,046,000 a year ago due to the retained earnings for the past twelve months partially offset by the negative impact of the change in market valuation of the investment portfolio in a rising rate environment. For the six months ended June 30, 2023 the return on average assets and return on average equity was 0.65% and 8.57%, respectively.

"Our loan growth remains strong as we continue to grow new and existing relationships with a large focus on increasing core deposits," said Jimmy Olevson, President and Chief Executive Officer of the Bank. Olevson continued, "We expect pressure on our net interest margin to continue through this year so increasing non-interest income and improving our efficiency will remain high priorities as we move forward."

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, 2023. The dividend payout of $172,650.00 on 287,750 shares is payable August 30, 2023.

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 https://www.nationalcapitalbank.bank/.

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:			2023				2022				2023				2022
Interest income		$	7,095			$	5,290			$	13,608			$	10,179
Interest expense			1,885				362				3,099				645
Net interest income			5,210				4,928				10,509				9,534
Provision for (recovery of) credit losses			0				(298	)			0				(456	)
Net interest income after provision			5,210				5,226				10,509				9,990
Non-interest income			787				620				1,466				1,283
Non-interest expense			4,412				4,386				9,134				8,727
Income before taxes			1,585				1,460				2,841				2,546
Income tax provision			395				349				702				598
Net income		$	1,190			$	1,111			$	2,139			$	1,948
Share Data:
Weighted avg no. of shares outstanding			287,750				287,221				287,531				286,860
Period end shares outstanding			287,750				287,399				287,750				287,399
Per Common Share Data:
Net income		$	4.13			$	3.87			$	7.44			$	6.79
Closing Stock Price										$	175.00			$	186.00
Book Value										$	175.23			$	167.18
Profitability Ratios, Annualized:
Return on average stockholders' equity			9.39	%			9.11	%			8.57	%			7.65	%
Return on average total assets			0.72	%			0.66	%			0.65	%			0.57	%
Average equity to average total assets			7.67	%			7.26	%			7.61	%			7.51	%
Condensed Balance Sheets:		June 30				December 31				June 30
			2023				2022				2022
Assets
Cash and equivalents		$	40,215			$	36,954			$	78,099
Securities, available for sale			68,972				84,714				99,398
Securities, held to maturity			69,843				72,344				76,099
Loans, held for sale			446				0				0
Loans, held in portfolio			465,151				425,149				398,680
Allowance for credit losses			(5,170	)			(5,069	)			(5,504	)
Premises and equipment, net			7,363				7,547				7,831
Bank owned life insurance			14,249				12,610				12,500
Other assets			12,149				9,907				9,471
Total assets		$	673,218			$	644,156			$	676,574
Liabilities and stockholders' equity
Deposits		$	563,827			$	571,751			$	602,770
Securities sold under agreement to repurchase			12,250				7,274				9,642
FHLB advances			30,000				0				0
Subordinated notes, net of issuance cost			13,707				13,679				13,652
Other liabilities			3,012				3,124				2,464
Stockholders' equity			50,422				48,328				48,046
Total liabilities and stockholders' equity		$	673,218			$	644,156			$	676,574
Other Data:
Non-performing loans to total loans			0.00	%			0.05	%			0.06	%
Allowance to total loans			1.11	%			1.19	%			1.38	%
Net charge-offs (recoveries) to average loans			0.00	%			0.00	%			0.00	%
Loan-to-deposit ratio			82.50	%			74.36	%			66.14	%
Net interest margin for the quarter			3.30	%			3.51	%			3.06	%
Net interest margin for the year			3.37	%			3.12	%			2.94	%

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Contacts

Randal J. Rabe, EVP, Chief Financial Officer
Phone: 202-546-8000
Email: rrabe@nationalcapitalbank.bank