Capital Bancorp, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• GAAP Net Income for the quarter ended September 30, 2026, was $13.1 million, a 7.9% decrease from $14.3 million in the second quarter of 2026 and a 12.9% decrease from $15.1 million in the third quarter of 2025.
• Diluted Earnings Per Share (EPS) was $0.80, down 8.0% from $0.87 in Q2 2026 and 10.1% from $0.89 in Q3 2025.
• Core Net Income was $14.7 million, an increase of 3.2% from $14.3 million in Q2 2026 and 21.0% from $12.2 million in Q3 2025.
• Core Diluted EPS was $0.89, up 2.3% from $0.87 in Q2 2026 and 23.6% from $0.72 in Q3 2025.
• Return on Average Assets (ROA) was 1.38% for the quarter, down from 1.52% in Q2 2026 and 1.77% in Q3 2025.
• Core ROA was 1.55% for the quarter, up from 1.52% in Q2 2026 and 1.43% in Q3 2025.
• Return on Average Tangible Common Equity (ROTCE) was 13.62% for the quarter, down from 15.51% in Q2 2026 and 17.49% in Q3 2025.
• Core ROTCE was 15.24% for the quarter, down from 15.51% in Q2 2026 but up from 14.15% in Q3 2025.
• Net Interest Income was $53.1 million, up 4.2% from Q2 2026 and 2.0% from Q3 2025.
• Net Interest Margin (NIM) was 5.81%, an increase of 17 basis points from Q2 2026 but a decrease of 55 basis points from Q3 2025.
• Core NIM was 4.18%, an increase of 14 basis points from Q2 2026 and a decrease of 48 basis points from Q3 2025.
• Fee Revenue was $15.0 million, up 4.7% from Q2 2026 and 35.9% from Q3 2025, representing 22.1% of total revenue.
• Noninterest Expense was $45.7 million, up 5.9% from Q2 2026 and 19.2% from Q3 2025.
• Core Noninterest Expense was $44.1 million, up 8.8% (annualized) from Q2 2026.
• Provision for Credit Losses was $4.9 million, up $1.3 million from Q2 2026.
• Net Charge-offs totaled $3.8 million, or 0.49% of portfolio loans (annualized), consistent with Q2 2026.
• Allowance for Credit Losses (ACL) Coverage Ratio was 1.78% as of September 30, 2026.
• Gross Loans were $3.114 billion, up 3.6% (annualized) from Q2 2026 and 10.4% from Q3 2025.
• Total Deposits were $3.319 billion, down 6.1% (annualized) from Q2 2026 but up 14.0% from Q3 2025.
• Customer Deposits (excluding brokered) were $2.988 billion, down 19.2% (annualized) from Q2 2026 but up 11.7% from Q3 2025.
• Tangible Book Value per share was $23.98, up 9.0% (annualized) from Q2 2026 and 12.4% from Q3 2025.
• Book Value per share was $26.42 as of September 30, 2026.
• Total Assets were $3.8 billion, down 8.9% (annualized) from June 30, 2026, but up 12.2% year-over-year.
• Common Equity Tier-1 capital ratio was 13.25% and Tier 1 leverage ratio was 10.84% as of September 30, 2026.

Guidance and Future Outlook:

• The Company announced a definitive merger agreement on September 29, 2026, under which Peoples Bancorp, Inc. will acquire Capital Bancorp, Inc. in an all-stock transaction.
• Shareholders will receive 1.11 shares of Peoples common stock for each share of Capital Bancorp, representing an implied value of $43.75 per share and an approximate 22.7% premium over the closing stock price on September 29, 2026.
• The transaction is subject to regulatory approvals, shareholder approval, and other customary closing conditions.
• Management expressed excitement about synergistic opportunities from the merger and continued independent organic growth prospects.
• The Company suspended its stock repurchase program in connection with the pending merger and does not expect to repurchase additional shares while the transaction is pending.

Business Segments and Product Lines:

• Commercial Bank: Portfolio loans increased $24.8 million from Q2 2026, driven by $42.7 million growth in C&I loans and $10.0 million in construction real estate. Net interest income was $36.5 million.
• OpenSky™: Loan balances increased $3.9 million to $149.2 million. Gross unsecured loan balances increased 12.4% (not annualized) to $57.6 million. Net charge-offs increased $0.3 million to $3.2 million.
• Capital Bank Home Loans: Originations of loans held for sale totaled $75.3 million. Gain on sale of loans was $1.4 million, representing a 2.93% gain on sale.
• Windsor Advantage™: Gross government loan servicing revenue was $6.7 million. The total servicing portfolio was $3.5 billion. Processed $183.9 million of government guaranteed loans, a 17.8% decrease from Q2 2026.

Market and Competitive Landscape:

• The Company noted strong organic loan growth in the Commercial Bank portfolio and unsecured loan product growth in OpenSky™.
• Fee income growth of 18.7% (annualized) was led by government lending revenue, loan servicing rights income, credit card fees, and USDA fees.
• The Company operates in a volatile operating environment but demonstrated prudent and disciplined financial management.

Risks and Challenges:

• Noninterest expenses increased due to merger-related expenses ($1.577 million in Q3 2026) and planned investments in headcount and shared services.
• Net charge-offs in the OpenSky™ portfolio increased, driven by the secured product, though consistent with management expectations.
• Substandard loans increased $14.6 million year-over-year, primarily driven by a $9.7 million legacy bank loan relationship.
• Total deposits decreased due to seasonality in Title business DDA products and the non-renewal of a single significant customer relationship.
• The merger transaction remains subject to regulatory and shareholder approvals.

Management Commentary and Tone:

• Steven J. Schwartz, Chairman, described the quarter as "very busy" due to the merger announcement and Chicago branch sale but highlighted steady NIM, tangible book value growth, and double-digit loan growth.
• Ed Barry, CEO, stated the company is "excited about our combination with Peoples Bank" and that current results reflect work on the merger and progress on the strategic plan.
• Management emphasized the ability to deliver strong profitability in a volatile operating environment.

Other Key Points:

• The Company announced a purchase and assumption agreement to sell its North Riverside, Illinois (Chicago) branch. Based on September 30, 2026 deposit composition, the Bank would have received a deposit premium of approximately $3.2 million had the transaction closed at that date.
• The Company declared a cash dividend of $0.14 per share, payable on November 25, 2026, to shareholders of record on November 9, 2026.
• There were no shares repurchased and retired during the three months ended September 30, 2026.
• $12.4 million remained to be repurchased under the current $15.0 million authorized repurchase program, which expires on December 31, 2026.
• Total available borrowing capacity was $842.6 million as of September 30, 2026, with total liquidity (including cash) of approximately $1.1 billion.
• Insured and protected deposits were approximately $2.2 billion, representing 66.6% of the deposit portfolio.