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National Capital Bancorp, Inc. Reports Third Quarter Earnings

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 $1,136,000, or $3.95 per common share, for the three months ended September 30, 2023, compared to net income of $1,285,000 or $4.47 per common share, for the quarter ended September 30, 2022. For the nine months ended September 30, 2023, the Company reported net income of $3,275,000, or $11.39 per share, compared to $3,233,000, or $11.26 for the nine months ended September 30, 2022. A recovery of provision for credit losses in the third quarter of the prior year was the leading factor in the decrease in Company profitability in the third quarter of 2023. Improvement in asset mix through continued loan growth along with enhanced expense control during the quarter helped to offset pressure from increased funding costs. Loan quality remains pristine with no non-performing loans as of September 30, 2023.

Total assets increased during the quarter to $682,002,000 on September 30, 2023. Total loans of $477,119,000 on September 30, 2023, increased by $12.0 million during the quarter and have increased $52.0 million on a year-to-date basis. Total deposits remained fairly stable during the quarter at $560,930,000 on September 30, 2023, and have decreased $10.8 million (1.9%) on a year-to-date basis. While the Company has begun to utilize borrowings from the FHLB and the Federal Reserve 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 3.23% during the third quarter of 2023 was down compared with 3.30% in the second quarter of 2023 but did improve from 3.08% in the third quarter of 2022. While the past several 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 again 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 $49,542,000 on September 30, 2023, from $45,925,000 a year ago due primarily to the retained earnings for the past twelve months. For the nine months ended September 30, 2023, the return on average assets and return on average equity was 0.67% and 8.70%, respectively.

“We continue to focus on growing core deposits while recognizing the pressure on our net interest margin given the rate environment,” said Jimmy Olevson, President and Chief Executive Officer of the Bank. Olevson continued, “Additionally, our loan operations team successfully launched the new FCM Collaboration Hub, (the hub), an FIS platform with built-in efficiencies to accelerate the loan onboarding process. The hub is a client accessible secure portal that is fully integrated with our core processor that reduces manual work, improves the client experience while also enhancing the Bank’s ability to manage our growing loan portfolio."

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 November 16, 2023. The dividend payout of $172,650.00 on 287,750 shares is payable November 30, 2023.

National Capital Bancorp, Inc. is the holding company for The National Capital Bank of Washington (NCB) 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 online and mobile banking services and sophisticated treasury management solutions– 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 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

 

Nine Months Ended

(Unaudited)

September 30

 

September 30

 

 

 

 

 

 

 

Condensed Statement of Income:

2023

 

2022

 

2023

 

2022

Interest income

$

7,219

 

$

5,786

 

$

20,827

 

$

15,965

 

Interest expense

 

2,092

 

 

537

 

 

5,191

 

 

1,182

 

Net interest income

 

5,127

 

 

5,249

 

 

15,636

 

 

14,783

 

Provision for (recovery of) credit losses

 

0

 

 

(194

)

 

0

 

 

(650

)

Net interest income after provision

 

5,127

 

 

5,443

 

 

15,636

 

 

15,433

 

Non-interest income

 

734

 

 

623

 

 

2,200

 

 

1,906

 

Non-interest expense

 

4,349

 

 

4,368

 

 

13,483

 

 

13,095

 

Income before taxes

 

1,512

 

 

1,698

 

 

4,353

 

 

4,244

 

Income tax provision

 

376

 

 

413

 

 

1,078

 

 

1,011

 

Net income

$

1,136

 

$

1,285

 

$

3,275

 

$

3,233

 

 
Share Data:
Weighted avg no. of shares outstanding

 

287,750

 

 

287,399

 

 

287,605

 

 

287,041

 

Period end shares outstanding

 

287,750

 

 

287,399

 

 

287,750

 

 

287,377

 

 
Per Common Share Data:
Net income

$

3.95

 

$

4.47

 

$

11.39

 

$

11.26

 

Closing Stock Price

$

155.00

 

$

175.00

 

Book Value

$

172.17

 

$

159.80

 

 
Profitability Ratios, Annualized:
Return on average stockholders' equity

 

8.95

%

 

10.50

%

 

8.70

%

 

8.58

%

Return on average total assets

 

0.69

%

 

0.73

%

 

0.67

%

 

0.63

%

Average equity to average total assets

 

7.73

%

 

6.97

%

 

7.65

%

 

7.32

%

 
 
Condensed Balance Sheets:

September 30

 

December 31

 

September 30

2023

 

2022

 

2022

Assets
Cash and equivalents

$

42,317

 

$

36,954

 

$

60,125

 

Securities, available for sale

 

64,621

 

 

84,714

 

 

92,704

 

Securities, held to maturity

 

68,316

 

 

72,344

 

 

73,900

 

Loans, held for sale

 

638

 

 

0

 

 

0

 

Loans, held in portfolio

 

477,119

 

 

425,149

 

 

417,719

 

Allowance for credit losses

 

(5,170

)

 

(5,069

)

 

(5,310

)

Premises and equipment, net

 

7,227

 

 

7,547

 

 

7,694

 

Bank owned life insurance

 

14,324

 

 

12,610

 

 

12,555

 

Other assets

 

12,610

 

 

9,907

 

 

10,593

 

Total assets

$

682,002

 

$

644,156

 

$

669,980

 

 
Liabilities and stockholders' equity
Deposits

$

560,930

 

$

571,751

 

$

597,750

 

Securities sold under agreement to repurchase

 

4,281

 

 

7,274

 

 

9,476

 

FHLB advances and other borrowings

 

50,000

 

 

0

 

 

0

 

Subordinated notes, net of issuance cost

 

13,720

 

 

13,679

 

 

13,665

 

Other liabilities

 

3,529

 

 

3,124

 

 

3,164

 

Stockholders' equity

 

49,542

 

 

48,328

 

 

45,925

 

Total liabilities and stockholders' equity

$

682,002

 

$

644,156

 

$

669,980

 

 
Other Data:
Non-performing loans to total loans

 

0.00

%

 

0.05

%

 

0.08

%

Allowance to total loans

 

1.08

%

 

1.19

%

 

1.27

%

Net charge-offs (recoveries) to average loans

 

0.00

%

 

0.00

%

 

0.00

%

Loan-to-deposit ratio

 

85.06

%

 

74.36

%

 

69.88

%

Net interest margin for the quarter

 

3.23

%

 

3.51

%

 

3.08

%

Net interest margin for the year

 

3.33

%

 

3.12

%

 

2.99

%

 

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