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 $1,285,000, or $4.47 per common share, for the three months ended September 30, 2022, compared to net income of $1,204,000 or $4.20 per common share, for the quarter ended September 30, 2021. For the nine months ended September 30, 2022, the Company reported net income of $3,233,000, or $11.26 per share, compared to $3,323,000, or $11.61 for the nine months ended September 30, 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. Finally, the Company recorded a $194,000 recovery of provision for loan losses in the third quarter of 2022 as a result of continued improvement of borrowers in industries most affected by the pandemic.

Total assets increased year-over-year to $669,980,000 on September 30, 2022 compared to $645,131,000 on September 30, 2021. Total loans of $417,719,000 on September 30, 2022 increased by $19 million during the quarter but have decreased from $432,514,000 the year before. Organic loan growth in the first nine months of 2022 was $44 million and was partially offset by PPP loan forgiveness received during the first nine months of 2022. The remaining combined outstanding balance of PPP loans was $0.5 million on September 30, 2022, compared with a balance of $23 million and $35 million on December 31, 2021 and September 30, 2021, respectively. Total deposits decreased during the quarter by $5.0 million to $597,750,000 on September 30, 2022 but have increased 5.3% from $567,724,000 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 remained stable at 3.08% during the third quarter of 2022 compared to 3.06% in the second quarter of 2022 and 3.14% in the third 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 third quarter of 2022 in comparison to the third quarter of 2021.

Total shareholders’ equity decreased to $45,925,000 on September 30, 2022 from $54,573,000 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 nine months ended September 30, 2022 the return on average assets and return on average equity was 0.63% and 8.58%, respectively.

Richard B. (Randy) Anderson, Jr. President and Chief Executive Officer said, “In response to the continuing rapid rise in interest rates, we were focused this quarter on managing the Company’s net interest margin while replacing the PPP loan runoff with new lending opportunities. Overall, we were satisfied with the results which included more variable rate credit facilities and business loans.” Anderson continued “Other initiatives gaining momentum during the quarter included the implementation of Connections, a CRM platform offered by our core banking partner, FIS™, enabling better coordination of client sales and service activities bank-wide and the development of a customer accessed documentation portal which will facilitate efficiencies in the collection, management and storage of loan and other types of account documentation. We plan on having these tools in place by year-end.”

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, 2022. The dividend payout of $172,439.40 on 287,399 shares is payable November 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.com.

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.

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