National Capital Bancorp, Inc. Reports First Quarter Earnings

Rhea-AI Summary

National Capital Bancorp (NACB) reported a net income of $949,000, or $3.30 per share for Q1 2023, compared to $837,000 or $2.92 per share in Q1 2022, driven by improved net interest margin of 3.45%. Despite a year-over-year decrease in total assets to $661.4 million, total loans increased to $438.4 million. Deposits, however, fell by $7.2 million to $564.6 million. The bank aims to reassure clients about safety following the recent bank failures and provides enhanced FDIC coverage options. The Board declared a dividend of $0.60 per share, payable on May 30, 2023.

Positive

• Net income increased by $112,000 year-over-year.
• Total loans rose by $13.3 million during the quarter.
• Net interest margin improved to 3.45% from 2.83% a year ago.

Negative

• Total assets decreased by $7.2 million compared to the previous year.
• Total deposits fell by $7.2 million during the quarter.

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 $949,000, or $3.30 per common share, for the three months ended March 31, 2023, compared to net income of $837,000 or $2.92 per common share, for the quarter ended March 31, 2022. The earnings improvement was primarily attributable to increased net interest margin compared to the same period in 2022.

Total assets decreased year-over-year to $661,365,000 on March 31, 2023 compared to $668,586,000 on March 31, 2022. Total loans of $438,413,000 on March 31, 2023 increased by $13.3 million during the quarter and have increased from $406,497,000 the year before. Total deposits decreased during the quarter by $7.2 million to $564,558,000 on March 31, 2023 and have decreased from $591,947,000 the year before. With the well-publicized failures of Silicon Valley Bank and Signature Bank, the Company has worked diligently with clients to provide information regarding the safety and soundness of the Bank as well as provide available options to enhance FDIC coverage according to client risk tolerance levels. The Bank has 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 3.45% during the first quarter of 2023 was stable compared with 3.51% in the fourth quarter of 2022 and improved from 2.83% in the first quarter of 2022. The most recent two quarters have benefited from the favorable impact of interest rate increases on variable-rate loans, interest-bearing cash balances and on newly originated loans. Due to recent increased competition for deposits along with some utilization of wholesale funding sources to enhance our liquidity position, we expect that our net interest margin will be negatively impacted as increases in the Company’s cost of funds will likely exceed the favorable impact of increases in yields on our earning assets.

Total shareholders’ equity increased slightly to $49,725,000 on March 31, 2023 from $49,642,000 a year ago due to the retained earnings for the past twelve months substantially offset by the negative impact of the change in market valuation of the investment portfolio in a rising rate environment. For the quarter ended March 31, 2023 the return on average assets and return on average equity was 0.59% and 7.83%, respectively.

“We began the quarter with strong loan growth however with the recent bank failures impact on confidence in the banking industry our focus quickly shifted to protecting our client’s deposits and maintaining a strong balance sheet,” said Jimmy Olevson, President and Chief Executive Officer of the Bank. Olevson continued: “A large majority of our deposits are FDIC insured and we continue to offer increased FDIC insurance using the IntraFi Network. Our deposit base is stable and the Bank continues to operate in a safe and sound manner, just as we have for 134 years.”

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 May 16, 2023. The dividend payout of $172,650.00 on 287,750 shares is payable May 30, 2022.

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
(Unaudited)		March 31
Condensed Statement of Income:		2023			2022
Interest income		$6,513			$4,889
Interest expense		1,214			283
Net interest income		5,299			4,606
Provision for (recovery of) credit losses		0			(158	)
Net interest income after provision		5,299			4,764
Non-interest income		679			663
Non-interest expense		4,722			4,341
Income before taxes		1,256			1,086
Income tax provision		307			249
Net income		$949			$837
Share Data:
Weighted avg no. of shares outstanding		287,310			286,495
Period end shares outstanding		287,750			286,832
Per Common Share Data:
Net income		$3.30			$2.92
Closing Stock Price		$164.00			$170.00
Book Value		$172.81			$173.07
Profitability Ratios, Annualized:
Return on average shareholders' equity		7.83	%		6.31	%
Return on average total assets		0.59	%		0.49	%
Average equity to average total assets		7.55	%		7.75	%
Condensed Balance Sheets:		March 31			December 31			March 31
		2023			2022			2022
Assets
Cash and equivalents		$40,831			$36,954			$53,118
Securities, available for sale		83,861			84,714			106,795
Securities, held to maturity		71,240			72,344			79,777
Loans, held for sale		0			0			0
Loans, held in portfolio		438,413			425,149			406,497
Allowance for credit losses		(5,170	)		(5,069	)		(5,802	)
Premises and equipment, net		7,485			7,547			8,053
Bank owned life insurance		14,176			12,610			12,448
Other assets		10,529			9,907			7,700
Total assets		$661,365			$644,156			$668,586
Liabilities and shareholders' equity
Deposits		$564,558			$571,751			$591,947
Securities sold under agreement to repurchase		10,100			7,274			10,997
FHLB advances		20,000			0			0
Subordinated notes, net of issuance cost		13,693			13,679			13,638
Other liabilities		3,289			3,124			2,362
Shareholders' equity		49,725			48,328			49,642
Total liabilities and shareholders' equity		$661,365			$644,156			$668,586
Other Data:
Non-performing loans to total loans		0.01	%		0.05	%		0.06	%
Allowance to total loans		1.18	%		1.19	%		1.43	%
Net charge-offs (recoveries) to average loans		0.00	%		0.00	%		0.00	%
Loan-to-deposit ratio		77.66	%		74.36	%		68.67	%
Net interest margin for the quarter		3.45	%		3.51	%		2.83	%
Net interest margin for the year		3.45	%		3.12	%		2.83	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230426005677/en/

Randal J. Rabe, EVP, Chief Financial Officer

Phone: 202-546-8000

Email: rrabe@nationalcapitalbank.bank

Source: National Capital Bancorp, Inc.

FAQ

What was National Capital Bancorp's net income for Q1 2023?

National Capital Bancorp reported a net income of $949,000 for Q1 2023.

How much did total loans increase for National Capital Bancorp in Q1 2023?

Total loans increased by $13.3 million during Q1 2023.

What is the dividend declared by National Capital Bancorp for May 2023?

National Capital Bancorp declared a dividend of $0.60 per share payable on May 30, 2023.

What was the net interest margin for National Capital Bancorp in Q1 2023?

The net interest margin for Q1 2023 was 3.45%.

How much did total deposits decrease for National Capital Bancorp in Q1 2023?

Total deposits decreased by $7.2 million during Q1 2023.