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CBNK Reports Fourth Quarter 2022 Results and Record Annual Earnings

Capital Bancorp, Inc.
Updated ·29-min read

Diluted EPS of $0.62, ROAA of 1.67%, and ROAE of 16.18% for 4Q 2022

ROCKVILLE, Md., Jan. 25, 2023 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $9.0 million, or $0.62 per diluted share, for the fourth quarter of 2022, compared to net income of $10.2 million, or $0.71 per diluted share, for the fourth quarter of 2021. Net portfolio loans increased $80.6 million, or 19.4 percent annualized, during the fourth quarter.

"Strong loan growth in the commercial bank was a highlight in the fourth quarter but was tempered by a challenging deposit environment," said Ed Barry, CEO of the Company and the Bank. "Strategic hires, market disruption and a focus on customized solutions continue to deliver growth in the commercial bank. OpenSky® had a record year of profitability and looks set to remain very profitable but inflation is having an impact on unsecured credit while competition and normal attrition has reduced the number of open accounts. Competition for deposits has increased our costs as we focus on retaining high-quality customers. We continue to invest in the business to build a foundation that will be scalable and allow us to grow and drive value over the long term."

Steven Schwartz, Chairman of the Board of the Company said, "I am pleased with the record full-year earnings being reported today. Despite the significant headwinds experienced by our mortgage division in 2022, our other diversified sources of revenue -- the Commercial Bank and OpenSky® -- continued to deliver. We are well positioned for continued strong profitability in 2023. We expect our Commercial Bank loan portfolio to continue to grow, our marketing efforts at OpenSky® to be rewarded with renewed growth in cardholder count and outstandings, and our Mortgage division to be restored to profitability. Notwithstanding potential macroeconomic challenges in 2023, I am confident that our best-in-class credit culture will permit us to adroitly manage any issues that may arise."

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Fourth Quarter 2022 Highlights

Capital Bancorp, Inc.

  • Earnings Summary - Net income decreased to $9.0 million, or $0.62 per diluted share, compared to $10.2 million, or $0.71 per diluted share, for the fourth quarter of 2021. Increasing interest rates led to a sharp increase in deposit costs and a continued slowdown in mortgage revenues in the fourth quarter of 2022. These factors, when combined with an increase in loan loss provisions due to economic uncertainty and a decline in credit card revenue, contributed to the decrease in fourth quarter net income. Net interest income increased by $2.5 million to $35.2 million for the fourth quarter of 2022 when compared to the same period in 2021 but was largely offset by increasing deposit costs.

  • Strong Performance Ratios - Return on average assets ("ROAA") and return on average equity ("ROAE") were 1.67% and 16.18%, respectively, for the three months ended December 31, 2022, compared to 1.95% and 20.66%, respectively, for the three months ended December 31, 2021.

  • Elevated Net Interest Margin - Net interest margin was 6.64%, or 3.91% excluding PPP and credit card loans, for the three months ended December 31, 2022, compared to 6.49%, or 3.70% excluding PPP and credit card loans, for the same three month period last year. Increases in portfolio loan yields and average loan balances were partially offset by increasing deposit costs.

  • Robust Capital Positions - As of December 31, 2022, the Company reported a common equity tier 1 capital ratio of 15.00% and an allowance for loan losses to total loans ratio of 1.52%. Tangible book value per common share grew 11.8 percent to $15.84 at December 31, 2022 when compared to the same quarter in 2021.

Commercial Bank

  • Strong Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $218.7 million, or 15.7 percent, to $1.6 billion at December 31, 2022 compared to December 31, 2021. This growth was mainly due to a 19.5 percent increase in commercial real estate loans of $108.2 million, of which $87.6 million was owner occupied. Also contributing to the growth was a 20.7 percent increase in residential real estate loans of $83.1 million, and a 25.2 percent increase in commercial and industrial loans of $44.3 million when comparing the quarter ended December 31, 2022 to the quarter ended December 31, 2021. Business loans, comprised of commercial and industrial, SBA, and owner occupied real estate, represent 42% of our total commercial portfolio.

  • Stable Credit Metrics - Non-performing assets ("NPAs") decreased 10 basis points to 0.46% of total assets at December 31, 2022 compared to 0.56% at December 31, 2021 with the disposition of our remaining other real estate owned and a reduction in nonaccrual loans of $1.7 million.

OpenSky®

  • Revenues - OpenSky® revenue declined by 8.2 percent to $20.3 million for the quarter ended December 31, 2022 from the same period in 2021 due to the decrease in active customer accounts which led to decreases in interchange, renewal and other fees. Normal customer attrition and aggressive marketing and product strategies by fintech and credit card companies offering unsecured subprime credit cards has resulted in the continued decline in the total number of OpenSky® accounts.

  • Loan Balances - OpenSky® loan balances, net of reserves, decreased by $12.7 million to $128.4 million compared to $141.1 million in the fourth quarter of 2021. Corresponding deposit balances decreased 18.3 percent or $42.1 million from $229.5 million at December 31, 2021 to $187.4 million at December 31, 2022. Gross unsecured loan balances stood at $26.8 million and $17.7 million at December 31, 2022 and 2021, respectively.

  • OpenSky® Credit - Card delinquencies and utilization remained stable in the fourth quarter. Unsecured credit overall has performed in line with expectations while charge offs remained elevated due to higher severity levels among unsecured customers. The Company has tightened credit in the segments that have deteriorated while focusing on lower risk customers. Unsecured balances at quarter end were $26.8 million, flat for the quarter. The provision for loan losses increased $1.3 million compared to the fourth quarter of 2021.

2022 Highlights

Capital Bancorp

  • Diversified Businesses Drive Net Income - Net income for the twelve months ended December 31, 2022 increased 4.6 percent to $41.8 million, or $2.91 per diluted share, from $40.0 million, or $2.84 per diluted share for the twelve months ended December 31, 2021.

  • Above Average Performance Ratios - Strong earnings supported ROAA and ROAE of 2.01% and 19.68%, respectively, for the twelve months ended December 31, 2022 compared to 1.96% and 22.27%, respectively, for the twelve months ended December 31, 2021.

  • Expanded Net Interest Margin - For the twelve months ended December 31, 2022, net interest margin was 6.92%, or 3.93% excluding PPP and credit card loans, compared to 5.86%, or 3.60% excluding PPP and credit card loans for the twelve months ended December 31, 2021. The margin improvement was primarily driven by increases in the yield on portfolio loans. Additionally, average balances and yields on our investment securities available for sale portfolio increased $98.1 million and 24 basis points, respectively, for the twelve months ended December 31, 2022 when compared to the same period last year.

  • Stable Efficiency Ratio - The efficiency ratio decreased to 64.19% for the twelve months ended December 31, 2022 compared to 65.79% for the same twelve month period in the prior year due to higher levels of net interest income.

  • Balance Sheet Growth - Total assets increased $68.4 million, or 3.3%, during the twelve months ended December 31, 2022. The growth in earning assets consisted of increases in net portfolio loans and investment securities available for sale of $204.6 million and $68.0 million, respectively. Asset growth was primarily funded by cash received for the payoff of SBA-PPP loans totaling $106.1 million and a $103.0 million redeployment of lower yielding cash and cash equivalents. Total deposits decreased by $39.1 million while Federal Home Loan Bank advances increased $85.0 million during the twelve months ended December 31, 2022.

Commercial Bank

  • Strong Portfolio Loan Growth - In 2022, portfolio loans, excluding credit card loans, increased by $218.7 million, or 15.7 percent to $1.6 billion compared to 2021 when portfolio loans, excluding credit card loans, increased by $176.0 million to $1.4 billion. Growth in 2022 was primarily due to a $108.2 million increase in commercial real estate loans, of which $87.6 million was owner occupied, an $83.1 million increase in residential real estate loans, and a $44.3 million increase in commercial and industrial loans. These increases were partially offset by a $17.0 million decline in construction real estate loans.

  • Deposits - While total deposits at December 31, 2022 decreased during the twelve months, our average noninterest bearing deposit balances increased $31.2 million when compared to December 31, 2021. Noninterest bearing deposits represented 38.4% of total deposits at December 31, 2022. The cost of interest bearing liabilities increased to 0.95% from 0.61% for the same period in the prior year, due to the increase in interest rates. Redeployment of funds by multiple commercial clients out of deposit accounts and into operating businesses impacted overall deposit balances in 2022.

OpenSky®

  • Interest Rate Increases Offset Gross Balance Declines - Credit card balances, net of reserves, decreased by $12.7 million, or 9.0 percent, for the twelve months of 2022 compared to an increase of $38.9 million for the twelve months of 2021 when government stimulus funds contributed to balance growth in the credit card portfolio. For the twelve months of 2022, the increase in average credit card balances as well as an increase in interest rates accounted for the $14.4 million growth in interest income when compared to the same period in 2021. The decrease in overall credit card accounts led to the reduction in credit card fees, which declined by 21.2 percent to $22.0 million compared to $27.9 million for the same twelve month period last year.

COMPARATIVE FINANCIAL HIGHLIGHTS - Unaudited

Quarter Ended

Twelve Months Ended

December 31,

December 31,

(in thousands except per share data)

2022

2021

% Change

2022

2021

% Change

Earnings Summary

Interest income

$

41,348

$

33,788

22.4

%

$

150,646

$

123,243

22.2

%

Interest expense

6,149

1,117

450.5

%

10,039

6,550

53.3

%

Net interest income

35,199

32,671

7.7

%

140,607

116,693

20.5

%

Provision for loan losses

2,384

1,100

116.7

%

6,631

3,359

97.4

%

Noninterest income

5,561

10,617

(47.6)

%

29,372

50,636

(42.0)

%

Noninterest expense

26,734

28,495

(6.2)

%

109,114

110,094

(0.9)

%

Income before income taxes

11,642

13,693

(15.0)

%

54,234

53,876

0.7

%

Income tax expense

2,651

3,522

(24.7)

%

12,430

13,898

(10.6)

%

Net income

$

8,991

$

10,171

(11.6)

%

$

41,804

$

39,978

4.6

%

Pre-tax pre-provision net revenue ("PPNR") (2)

$

14,026

$

14,793

(5.2)

%

$

60,865

$

57,235

6.3

%

Weighted average common shares - Basic

14,071

13,877

1.4

%

14,025

13,799

1.6

%

Weighted average common shares - Diluted

14,408

14,290

0.8

%

14,362

14,081

2.0

%

Earnings per share - Basic

$

0.64

$

0.73

(12.3)

%

$

2.98

$

2.90

2.8

%

Earnings per share - Diluted

$

0.62

$

0.71

(12.7)

%

$

2.91

$

2.84

2.5

%

Return on average assets (1)

1.67

%

1.95

%

(14.4)

%

2.01

%

1.96

%

2.6

%

Return on average assets, excluding impact of SBA-PPP loans(1) (2)

1.67

%

1.80

%

(7.2)

%

1.87

%

1.75

%

6.9

%

Return on average equity

16.18

%

20.66

%

(21.7)

%

19.68

%

22.27

%

(11.6)

%



Quarter Ended

4Q22 vs. 4Q21

Quarter Ended

December 31,

September 30,

June 30,

March 31,

(in thousands except per share data)

2022

2021

% Change

2022

2022

2022

Balance Sheet Highlights

Assets

$

2,123,655

$

2,055,300

3.3

%

$

2,009,358

$

2,154,846

$

2,122,453

Investment securities available for sale

252,481

184,455

36.9

%

269,620

226,509

172,712

Mortgage loans held for sale

7,416

15,989

(53.6)

%

6,875

11,708

17,036

SBA-PPP loans, net of fees

2,163

108,285

(98.0)

2,662

15,864

51,085

Portfolio loans receivable (3)

1,728,592

1,523,982

13.4

%

1,648,001

1,607,677

1,526,256

Allowance for loan losses

26,385

25,181

4.8

%

26,091

26,419

25,252

Deposits

1,758,072

1,797,137

(2.2)

%

1,737,591

1,888,920

1,862,722

FHLB borrowings

107,000

22,000

386.4

%

22,000

22,000

22,000

Other borrowed funds

12,062

12,062

—

%

12,062

12,062

12,062

Total stockholders' equity

224,015

197,903

13.2

%

214,005

207,316

201,492

Tangible common equity(2)

224,015

197,903

13.2

%

214,005

207,316

201,492

Common shares outstanding

14,139

13,962

1.3

%

14,039

14,010

14,001

Tangible book value per share (2)

$

15.84

$

14.17

11.8

%

$

15.24

$

14.80

$

14.39

______________

(1) Annualized for the quarterly periods
(2) Refer to Appendix for reconciliation of non-GAAP measures.
(3) Loans are reflected net of deferred fees and costs.

Operating Results - Comparison of Three Months Ended December 31, 2022 and 2021

For the three months ended December 31, 2022, net interest income increased $2.5 million, or 7.7 percent, to $35.2 million from the same period in 2021, primarily due to an increase in interest earned on portfolio loans. The net interest margin increased 15 basis points to 6.64% for the three months ended December 31, 2022 from 6.49% for the same period in 2021 due in large part to the growth in portfolio loan balances and an increase in loan yields, including on credit card loans to customers whose accounts have been open for more than a year as origination costs on these accounts are amortized in the first year and thereafter no longer offset annual renewal fees. Net interest margin, excluding credit card and SBA-PPP loans, was 3.91% for the fourth quarter of 2022 compared to 3.70% for the same period in 2021. For the three months ended December 31, 2022, average interest earning assets increased $104.5 million, or 5.2 percent, to $2.1 billion as compared to the same period in 2021, and the average yield on interest earning assets increased 110 basis points. Compared to the same period in the prior year, average interest bearing liabilities increased $107.9 million, or 10.3 percent, while the average cost of interest-bearing liabilities increased 169 basis points to 2.11% from 0.42%.

The provision for loan losses of $2.4 million for the three months ended December 31, 2022 was related to the credit card portfolio and the cycling of credit card accounts. Net charge-offs for the fourth quarter of 2022 were $2.1 million, or 0.49% on an annualized basis of average portfolio loans, compared to $672 thousand, or 0.18% on an annualized basis of average loans for the fourth quarter of 2021. A majority of the $2.1 million in net charge-offs during the quarter were related to the credit card portfolio with $1.8 million related to secured cards and $229 thousand related to unsecured cards.

For the quarter ended December 31, 2022, noninterest income was $5.6 million, a decrease of $5.1 million, or 47.6 percent, from $10.6 million in the prior year quarter. The decrease was primarily the result of a reduction in mortgage banking revenue of $2.8 million due to the decline in home loan sales and home loan refinances brought on by the rising interest rate environment as well as a decline in credit card fees of $2.4 million associated with the decline in active customer accounts and interchange income.

Credit card loan balances, net of reserves, decreased by $12.7 million to $128.4 million as of December 31, 2022 from $141.1 million at December 31, 2021. The related deposit account balances decreased 18.3 percent to $187.4 million at December 31, 2022 when compared to $229.5 million at December 31, 2021 reflecting the reduction in active customer accounts. For the three months ended December 31, 2022, OpenSky® credit card accounts decreased by 43 thousand net compared to a 40 thousand net decrease in accounts for the same period in 2021. Elevated new account originations related to COVID-19 stimulus payments that were realized during the pandemic did not recur in 2022.

The efficiency ratio for the three months ended December 31, 2022 decreased to 65.59% compared to 65.83% for the three months ended December 31, 2021 due to higher levels of net interest income.

Noninterest expense was $26.7 million for the three months ended December 31, 2022, as compared to $28.5 million for the three months ended December 31, 2021, a decrease of $1.8 million, or 6.2 percent. The decrease was primarily driven by decreases in data processing expenses of $2.9 million due to successful contract negotiations in the first quarter of 2022 for OpenSky® and advertising expenses of $924 thousand, or 56.0 percent due to a strategic refocus and were offset by increases in salaries and employee benefits of $1.2 million, or 11.4 percent and professional fees of $972 thousand, or 66.8 percent.

Operating Results - Comparison of Twelve Months Ended December 31, 2022 and 2021

For the twelve months ended December 31, 2022, net interest income increased $23.9 million, or 20.5 percent, to $140.6 million from the same period in 2021, primarily due to the $208.7 million increase in average balances in portfolio loans combined with the 72 basis point increase in yield for portfolio loans. The net interest margin increased 106 basis points to 6.92% for the twelve months ended December 31, 2022 from the same period in 2021. Net interest margin, excluding credit card and SBA-PPP loans, was 3.93% for the twelve months ended December 31, 2022 compared to 3.60% for the same period in 2021. For the twelve months ended December 31, 2022, average interest earning assets increased $42.7 million, or 2.1 percent, to $2.0 billion as compared to the same period in 2021, and the average yield on interest earning assets increased 122 basis points. Compared to the same period in the prior year, average interest-bearing liabilities decreased $21.8 million, or 2.0 percent, while the average cost of interest bearing liabilities increased 34 basis points to 0.95% from 0.61%.

For the twelve months ended December 31, 2022, the provision for loan losses was $6.6 million, an increase of $3.3 million from the prior year and was related primarily to the credit card portfolio. Net charge-offs for the twelve months ended December 31, 2022 were $5.4 million, or 0.34% of average portfolio loans, compared to $1.6 million, or 0.12% of average portfolio loans, for the same period in 2021. The $5.4 million in net charge-offs during the twelve months ended December 31, 2022 was comprised of credit card portfolio net charge-offs with $5.1 million related to secured cards while $345 thousand was related to unsecured cards.

For the twelve months ended December 31, 2022, noninterest income was $29.4 million, a decrease of $21.3 million, or 42.0 percent, from the same period in 2021. The decrease was primarily driven by the reduction in mortgage banking revenues of $16.0 million due to the decline in home loan sales and home loan refinances brought on by the rising interest rate environment as well as a decline in credit card fees of $5.9 million. The rising interest rate environment is expected to continue depressing the contribution made by Capital Bank Home Loans into 2023.

For the twelve months ended December 31, 2022, the Bank had a net decrease of 127 thousand OpenSky® active credit card accounts, decreasing the total number of open accounts to 534 thousand. This compares to 92 thousand of net new originations for the same period last year, which increased total open accounts to 660 thousand at December 31, 2021. Elevated new account originations related to COVID-19 stimulus payments that were realized in 2021 which did not recur in 2022 and aggressive marketing by competitors both contributed to the decline.

The efficiency ratio for the twelve months ended December 31, 2022 decreased to 64.19% compared to 65.79% for the twelve months ended December 31, 2021 due to higher levels of net interest income.

Noninterest expense was $109.1 million for the twelve months ended December 31, 2022, as compared to $110.1 million for the twelve months ended December 31, 2021, a decrease of $1.0 million, or 0.9 percent. The decrease was primarily driven by a $9.8 million, or 25.0 percent, decrease in data processing and a $1.8 million, or 51.7 percent, decrease in loan processing. The decrease was partially offset by a $5.1 million, or 13.4 percent, increase in salaries and benefits, an increase in professional fees of 57.4 percent, or $4.0 million, and a $1.4 million, or 29.5 percent, increase in advertising expense. The decrease of $9.8 million in data processing expenses was primarily due to a contract renegotiation entered into in the first quarter of 2022 in the OpenSky® Division.

Financial Condition

Total assets at December 31, 2022 were $2.1 billion, an increase of $68.4 million or 3.3% from the balance at December 31, 2021. Net portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.7 billion as of December 31, 2022, an increase of $204.6 million or 13.4 percent as compared to $1.5 billion at December 31, 2021.

The Company recorded a provision for loan losses of $6.6 million during the twelve months ended December 31, 2022, which increased the allowance for loan losses to $26.4 million, or 1.52% of total loans at December 31, 2022. Nonperforming assets were $9.8 million, or 0.46% of total assets, as of December 31, 2022, down from $11.5 million, or 0.56% of total assets, at December 31, 2021, and was comprised solely of nonperforming loans. Included in nonperforming loans at December 31, 2022 were troubled debt restructurings of $288 thousand.

Special mention loans at December 31, 2022 increased by $13.5 million compared to December 31, 2021. The increase is attributable, in part, to the reclassification of the Bank’s $18.4 million participation interest in two commercial loans that are secured by the same collateral. The borrowers, an individual and a related entity, breached a negative covenant and thereafter agreed, in consideration of a forbearance agreement and an extension of the maturity date of each loan, to increase the applicable interest rate and to provide enhanced reporting to the lead bank. Interest payments are current on both loans. The lead bank is in discussions with the borrowers regarding a plan for full repayment of the loans.

While total deposits were $1.8 billion for the period ended December 31, 2022, a slight decline from the balance at December 31, 2021, average noninterest bearing deposit balances increased $31.2 million when compared to December 31, 2021. Noninterest bearing deposits represented 38.4% of total deposits at December 31, 2022.

Stockholders’ equity increased to $224.0 million as of December 31, 2022, compared to $197.9 million at December 31, 2021. This increase was primarily attributable to earnings during the period of $41.8 million which were offset by unrealized losses recorded net of tax on available for sale securities in the rising interest rate environment creating a $15.7 million reduction in accumulated other comprehensive income during the period. As of December 31, 2022, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

Consolidated Statements of Income (Unaudited)

Three Months Ended December 31,

Twelve Months Ended December 31,

(Dollars in thousands)

2022

2021

2022

2021

Interest income

Loans, including fees

$

38,763

$

33,235

$

144,408

$

120,784

Investment securities available for sale

1,402

439

3,912

2,010

Federal funds sold and other

1,183

114

2,326

449

Total interest income

41,348

33,788

150,646

123,243

Interest expense

Deposits

4,377

934

7,611

5,808

Borrowed funds

1,772

183

2,428

742

Total interest expense

6,149

1,117

10,039

6,550

Net interest income

35,199

32,671

140,607

116,693

Provision for loan losses

2,384

1,100

6,631

3,359

Net interest income after provision for loan losses

32,815

31,571

133,976

113,334

Noninterest income

Service charges on deposits

222

136

767

609

Credit card fees

4,314

6,676

21,972

27,884

Mortgage banking revenue

554

3,365

4,866

20,843

Gain on sale of investment securities available for sale, net

—

—

—

153

Other fees and charges

471

440

1,767

1,147

Total noninterest income

5,561

10,617

29,372

50,636

Noninterest expenses

Salaries and employee benefits

11,769

10,564

42,898

37,843

Occupancy and equipment

1,388

1,005

4,865

4,327

Professional fees

2,426

1,454

11,012

6,996

Data processing

6,697

9,643

29,418

39,237

Advertising

726

1,650

6,220

4,803

Loan processing

350

857

1,702

3,527

Other operating

3,378

3,322

12,999

13,361

Total noninterest expenses

26,734

28,495

109,114

110,094

Income before income taxes

11,642

13,693

54,234

53,876

Income tax expense

2,651

3,522

12,430

13,898

Net income

$

8,991

$

10,171

$

41,804

$

39,978


Consolidated Balance Sheets

(in thousands except share data)

(unaudited) December 31, 2022

December 31, 2021

Assets

Cash and due from banks

$

19,963

$

42,914

Interest bearing deposits at other financial institutions

39,764

136,824

Federal funds sold

20,688

3,657

Total cash and cash equivalents

80,415

183,395

Investment securities available for sale

252,481

184,455

Marketable equity securities

—

245

Restricted investments

7,362

3,498

Loans held for sale

7,416

15,989

SBA-PPP loans receivable, net of fees

2,163

108,285

Portfolio loans receivable, net of deferred fees and costs

1,728,592

1,523,982

Less allowance for loan losses

(26,385

)

(25,181

)

Total portfolio loans held for investment, net

1,702,207

1,498,801

Premises and equipment, net

3,386

3,282

Accrued interest receivable

9,489

7,901

Deferred income taxes, net

13,777

9,793

Other real estate owned

—

86

Bank owned life insurance

36,524

35,506

Other assets

8,435

4,064

Total assets

$

2,123,655

$

2,055,300

Liabilities

Deposits

Noninterest bearing

$

674,313

$

787,650

Interest bearing

1,083,759

1,009,487

Total deposits

1,758,072

1,797,137

Federal Home Loan Bank advances

107,000

22,000

Other borrowed funds

12,062

12,062

Accrued interest payable

1,031

473

Other liabilities

21,475

25,725

Total liabilities

1,899,640

1,857,397

Stockholders' equity

Common stock, $.01 par value; 49,000,000 shares authorized; 14,138,829 and 13,962,334 issued and outstanding

141

140

Additional paid-in capital

58,190

54,306

Retained earnings

182,435

144,533

Accumulated other comprehensive loss

(16,751

)

(1,076

)

Total stockholders' equity

224,015

197,903

Total liabilities and stockholders' equity

$

2,123,655

$

2,055,300


The following table shows the average outstanding balance of each principal category of our assets, liabilities and stockholders’ equity, together with the average yields on our assets and the average costs of our liabilities for the periods indicated. Such yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.

Three Months Ended December 31,

2022

2021

Average
Outstanding
Balance

Interest Income/
Expense

Average
Yield/
Rate(1)

Average
Outstanding
Balance

Interest Income/
Expense

Average
Yield/
Rate(1)

(Dollars in thousands)

Assets

Interest earning assets:

Interest bearing deposits

$

111,404

$

1,006

3.58

%

$

198,070

$

73

0.15

%

Federal funds sold

4,054

35

3.41

2,048

—

—

Investment securities available for sale

292,117

1,402

1.90

187,388

439

0.93

Restricted stock and equity securities

10,111

142

5.57

3,743

41

4.35

Loans held for sale

6,062

88

5.74

23,395

179

3.04

SBA-PPP loans receivable

2,435

28

4.59

116,595

1,347

4.58

Portfolio loans receivable(2)

1,675,434

38,647

9.15

1,465,878

31,709

8.58

Total interest earning assets

2,101,617

41,348

7.81

1,997,117

33,788

6.71

Noninterest earning assets

34,539

69,166

Total assets

$

2,136,156

$

2,066,283

Liabilities and Stockholders’ Equity

Interest bearing liabilities:

Interest bearing demand accounts

$

218,518

61

0.11

$

315,933

39

0.05

Savings

8,261

1

0.05

6,575

1

0.06

Money market accounts

552,185

3,016

2.17

501,070

267

0.21

Time deposits

177,346

1,299

2.91

190,795

627

1.30

Borrowed funds

199,982

1,772

3.52

34,062

183

2.13

Total interest bearing liabilities

1,156,292

6,149

2.11

1,048,435

1,117

0.42

Noninterest bearing liabilities:

Noninterest bearing liabilities

23,941

26,504

Noninterest bearing deposits

735,416

796,014

Stockholders’ equity

220,507

195,330

Total liabilities and stockholders’ equity

$

2,136,156

$

2,066,283

Net interest spread

5.70

%

6.29

%

Net interest income

$

35,199

$

32,671

Net interest margin(3)

6.64

%

6.49

%

_______________

(1) Annualized.
(2) Includes nonaccrual loans.
(3) For the three months ended December 31, 2022 and December 31, 2021, collectively, SBA-PPP loans and credit card loans accounted for 273 and 279 basis points of the reported net interest margin, respectively.

Twelve Months Ended December 31,

2022

2021

Average
Outstanding
Balance

Interest Income/
Expense

Average
Yield/
Rate(1)

Average
Outstanding
Balance

Interest Income/
Expense

Average
Yield/
Rate(1)

(Dollars in thousands)

Assets

Interest earning assets:

Interest bearing deposits

$

156,751

$

2,007

1.28

%

$

228,420

$

283

0.12

%

Federal funds sold

2,959

44

1.49

2,850

—

—

Investment securities available for sale

248,869

3,912

1.57

150,750

2,010

1.33

Restricted stock and equity securities

5,475

275

5.02

3,774

166

4.40

Loans held for sale

9,696

435

4.49

43,126

1,224

2.84

SBA-PPP loans receivable

29,831

3,477

11.66

190,588

7,613

3.99

Portfolio loans receivable(1)

1,579,661

140,496

8.89

1,370,988

111,947

8.17

Total interest earning assets

2,033,242

150,646

7.41

1,990,496

123,243

6.19

Noninterest earning assets

44,559

45,348

Total assets

$

2,077,801

$

2,035,844

Liabilities and Stockholders’ Equity

Interest bearing liabilities:

Interest bearing demand accounts

$

253,923

174

0.07

$

289,285

202

0.07

Savings

8,917

5

0.06

6,470

3

0.05

Money market accounts

553,388

4,529

0.82

482,225

1,484

0.31

Time deposits

165,854

2,903

1.75

269,262

4,119

1.53

Borrowed funds

77,556

2,428

3.13

34,214

742

2.17

Total interest bearing liabilities

1,059,638

10,039

0.95

1,081,456

6,550

0.61

Noninterest bearing liabilities:

Noninterest bearing liabilities

23,797

24,128

Noninterest bearing deposits

781,971

750,760

Stockholders’ equity

212,395

179,500

Total liabilities and stockholders’ equity

$

2,077,801

$

2,035,844

Net interest spread

6.46

%

5.58

%

Net interest income

$

140,607

$

116,693

Net interest margin(2)

6.92

%

5.86

%

_______________

(1) Includes nonaccrual loans.
(2) For the twelve months ended December 31, 2022 and December 31, 2021, collectively, SBA-PPP loans and credit card loans accounted for 299 and 226 basis points of the reported net interest margin, respectively.

The Company’s reportable segments represent business units with discrete financial information whose results are regularly reviewed by management. The four segments include Commercial Banking, Capital Bank Home Loans (the Company’s mortgage loan division), OpenSky® (the Company’s credit card division) and the Corporate Office. The following schedule presents financial information for each reportable segment for the three and twelve months ended December 31, 2022 and December 31, 2021.

Segments

For the three months ended December 31, 2022

(in thousands)

Commercial Bank

CBHL

OpenSky®

Corporate(2)

Eliminations

Consolidated

Interest income

$

24,389

$

88

$

16,035

$

891

$

(55

)

$

41,348

Interest expense

5,990

33

—

181

(55

)

6,149

Net interest income

18,399

55

16,035

710

—

35,199

Provision for loan losses

—

—

2,384

—

—

2,384

Net interest income after provision

18,399

55

13,651

710

—

32,815

Noninterest income

550

696

4,314

1

—

5,561

Noninterest expense(1)

13,811

2,085

10,724

114

—

26,734

Net income (loss) before taxes

$

5,138

$

(1,334

)

$

7,241

$

597

$

—

$

11,642

Total assets

$

1,939,601

$

7,936

$

122,418

$

245,399

$

(191,699

)

$

2,123,655

For the three months ended December 31, 2021

Interest income

$

17,464

$

180

$

15,479

$

702

$

(37

)

$

33,788

Interest expense

857

129

—

168

(37

)

1,117

Net interest income

16,607

51

15,479

534

—

32,671

Provision for loan losses

—

—

1,100

—

—

1,100

Net interest income after provision

16,607

51

14,379

534

—

31,571

Noninterest income

520

3,382

6,676

39

—

10,617

Noninterest expense(1)

12,740

2,772

12,852

131

—

28,495

Net income before taxes

$

4,387

$

661

$

8,203

$

442

$

—