National Capital Bancorp, Inc. Reports Fourth Quarter Earnings

WASHINGTON–(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 $1,355,000, or $4.71 per common share, for the three months ended December 31, 2022, compared to net income of $1,323,000 or $4.62 per common share, for the quarter ended December 31, 2021. For the year ended December 31, 2022, the Company reported net income of $4,588,000, or $15.98 per share, compared to $4,646,000, or $16.23 for the year ended December 31, 2021. Solid organic loan growth during the current year has helped to offset the prior year’s favorable impact from the Company’s active role in the Paycheck Protection Program (PPP). In addition, the Company has benefitted from the interest rate increases instituted this year by the Federal Reserve Bank. Non-interest income declined as the Company recorded a $393,000 loss on the sale of securities in the fourth quarter of 2022 in an attempt to position the portfolio for better performance in 2023.

Total assets decreased year-over-year to $644,156,000 on December 31, 2022, compared to $734,709,000 on December 31, 2021. Total loans of $425,149,000 on December 31, 2022, increased by $7.4 million during the quarter and have increased from $396,453,000 the year before. Organic loan growth in 2022 was $51 million and was partially offset by PPP loan forgiveness received during the year. The remaining combined outstanding balance of PPP loans was $0.5 million on December 31, 2022, compared with a balance of $23 million on December 31, 2021. Total deposits decreased during the quarter by $26 million to $571,751,000 on December 31, 2022, and have decreased from $657,116,000 the year before. December 31, 2021, deposits included a year-end client deposit of $55 million which was transferred out in January 2022. The Company’s net interest margin improved to 3.51% during the fourth quarter of 2022 compared to 3.08% in the third quarter of 2022 and 3.10% in the fourth quarter of 2021. The favorable impact from the current-year interest rate increases on variable-rate loans, interest-bearing cash balances and for newly originated loans has helped to soften the negative impact of significantly reduced PPP fee accretion during the fourth quarter of 2022 in comparison to the fourth quarter of 2021.

Total shareholders’ equity decreased to $48,328,000 on December 31, 2022, from $54,854,000 a year ago due to the change in market valuation of the investment portfolio in a rising rate environment, and partially offset by retained earnings for the past twelve months. In order to partially mitigate the impact of higher interest rates on the valuation of the investment portfolio, the Bank transferred approximately $80 million of securities during the first quarter of 2022 to a held-to-maturity category which is valued at amortized cost rather than at fair market value. For the year ended December 31, 2022, the return on average assets and return on average equity was 0.67% and 9.29%, respectively.

Jimmy Olevson, President and Chief Executive Officer of the Bank said, “The fourth quarter was positive in terms of commercial loan growth, specifically those credit facilities with variable rates. Additionally, we were pleased with the improvement in the quarter’s net interest margin and overall net income as we continued to replace forgiven PPP loans with new commercial relationships.” Olevson continued, “We also completed two exciting initiatives in the fourth quarter. The first being the launch of Connections, a CRM platform through our core banking partner, FIS®. We are beginning to see the enhanced client experience and internal efficiencies this product offers and will continue to focus on its usage. We also launched our new website, www.NationalCapitalBank.bank. The new website has a refreshed look while also offering the added security of having a .BANK web address.”

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 February 14, 2023. The dividend payout of $172,380.00 on 287,300 shares is payable February 28, 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 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 Twelve Months Ended
(Unaudited) December 31 December 31
 
Condensed Statement of Income:

2022

2021

2022

2021

Interest income

$6,482

 

$5,359

 

$22,447

 

$21,264

 

Interest expense

844

 

290

 

2,026

 

1,031

 

Net interest income

5,638

 

5,069

 

20,421

 

20,233

 

Provision for (recovery of) loan losses

(241

)

(348

)

(891

)

(151

)

Net interest income after provision

5,879

 

5,417

 

21,312

 

20,384

 

Non-interest income

190

 

526

 

2,096

 

2,501

 

Non-interest expense

4,315

 

4,278

 

17,410

 

16,820

 

Income before taxes

1,754

 

1,665

 

5,998

 

6,065

 

Income tax provision

399

 

342

 

1,410

 

1,419

 

Net income

$1,355

 

$1,323

 

$4,588

 

$4,646

 

 
Share Data:
Weighted avg no. of shares outstanding

287,334

 

286,457

 

287,115

 

286,328

 

Period end shares outstanding

287,300

 

286,457

 

287,300

 

286,457

 

 
Per Common Share Data:
Net income

$4.71

 

$4.62

 

$15.98

 

$16.23

 

Closing Stock Price

$165.00

 

$197.00

 

Book Value

$168.21

 

$191.49

 

 
Profitability Ratios, Annualized:
Return on average stockholders’ equity

11.57

%

9.69

%

9.29

%

8.57

%

Return on average total assets

0.82

%

0.79

%

0.67

%

0.71

%

Average equity to average total assets

7.05

%

8.13

%

7.26

%

8.34

%

 
 
Condensed Balance Sheets: December 31 December 31

2022

2021

Assets
Cash and equivalents

$36,954

 

$138,607

 

Securities, available for sale

84,714

 

179,066

 

Securities, held to maturity

72,344

 

0

 

Loans, held for sale

0

 

0

 

Loans, held in portfolio

425,149

 

396,453

 

Allowance for loan losses

(5,069

)

(5,959

)

Premises and equipment, net

7,547

 

8,198

 

Bank owned life insurance

12,610

 

12,396

 

Other assets

9,907

 

5,948

 

Total assets

$644,156

 

$734,709

 

 
Liabilities and stockholders’ equity
Deposits

$571,751

 

$657,116

 

Securities sold under agreement to repurchase

7,274

 

6,327

 

FHLB advances

0

 

0

 

Subordinated notes, net of issuance cost

13,679

 

13,624

 

Other liabilities

3,124

 

2,788

 

Stockholders’ equity

48,328

 

54,854

 

Total liabilities and stockholders’ equity

$644,156

 

$734,709

 

 
Other Data:
Non-performing loans to total loans (1)

0.05

%

0.07

%

Allowance to total loans

1.19

%

1.50

%

Net charge-offs (recoveries) to average loans

0.00

%

0.00

%

Loan-to-deposit ratio

74.36

%

60.33

%

Net interest margin for the quarter

3.51

%

3.10

%

Net interest margin for the year

3.12

%

3.22

%

 
(1) NPL’s exclude accruing TDR’s
 

 

Contacts

Randal J. Rabe, EVP, Chief Financial Officer

Phone: 202-546-8000

Email: [email protected]

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