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ROCKVILLE, Md., Jan. 26, 2022 (GLOBE NEWSWIRE) — Capital Bancorp, Inc. (the “Company”) (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the “Bank”), today reported net income of $10.2 million, or $0.71 per diluted share, for the fourth quarter of 2021. By comparison, net income was $9.7 million, or $0.71 per diluted share, for the fourth quarter of 2020. Portfolio loans, net, increased $78.9 million when compared to the period ended September 30, 2021, and $208.5 million when compared to the period ended December 31, 2021.

“2021 was a tremendous year for Capital Bank,” said Steven Schwartz, Chairman of the Board of the Company. “The Commercial Bank, Capital Bank Home Loans and OpenSky® all outperformed expectations as investments in technology and people continued to deliver exceptional results. Building on the Bank’s success, we continue to seek out and invest in opportunities that will leverage our unique combination of technological innovation and community banking to build long-term shareholder value.”

“The fourth quarter’s results were driven by strong performance in the Commercial Bank and OpenSky^® which more than made up for the slowdown of our mortgage business,” said Ed Barry, CEO of the Company. “Capitalizing on market disruption, we made several strategic hires in the Commercial Bank which contributed to a 21.9 percent annualized portfolio loan growth in the fourth quarter. OpenSky^® is poised to remain an engine of growth with the fourth quarter launch of our unsecured credit card line to our highest performing OpenSky^® secured card holders. OpenSky’s^® annualized quarterly net loan growth of 18.1 percent continued to drive portfolio loan balances. Anticipated OpenSky^® card holder attrition resulted in a modest decline in open accounts for the quarter but remains well-below historical levels.”

Fourth Quarter 2021 Highlights

Capital Bancorp, Inc.

• Stable Earnings – Continued strong performance by the Commercial Bank and OpenSky^® contributed to the fourth quarter’s results. Quarterly net income increased to $10.2 million from $9.7 million in the fourth quarter of 2020. Earnings were $0.71 per diluted share for the three months ended December 31, 2021 and 2020.
• Outstanding Performance Ratios – Return on average assets (“ROAA”) and return on average equity (“ROAE”) were 1.95% and 20.66%, respectively, for the three months ended December 31, 2021 compared to 2.08% and 25.26%, respectively, for the three months ended December 31, 2020.
• Expanded Net Interest Margin – Net interest margin was 6.49% for the three months ended December 31, 2021, which is an increase of 92 basis points compared to 5.57% for the same three month period last year and an increase over linked quarter of 22 basis points, from 6.27%, for the three months ended September 30, 2021. The margin improvement over linked quarter was driven by an increase in average loans outstanding as well as management’s concentrated effort to lower funding costs.
• Robust Capital Positions – As of December 31, 2021, the Company reported a common equity tier 1 capital ratio of 14.28% and an allowance for loan losses to total loans ratio of 1.54%, or 1.65% excluding Small Business Administration Payroll Protection Program (“SBA-PPP”) loans. During the preceding twelve months, tangible book value per common share grew 22.4 percent to $14.17 at December 31, 2021.

Commercial Bank

• Accelerating Strong Portfolio Loan Growth – Portfolio loans, excluding credit cards, increased by $176.0 million, or 14.5 percent, to $1.4 billion at December 31, 2021 compared to December 31, 2020, and by $73.4 million, compared to September 30, 2021. The year over year growth was mainly due to a 41.7 percent increase in commercial real estate loans of $163.8 million, of which $102.2 million was owner occupied while $61.6 was non-owner occupied. Also contributing to the year over year growth was a 12.0 percent increase in commercial and industrial loans of $18.8 million and a 13.4 percent increase in construction real estate loans of $30.2 million. Offsetting total growth was a $36.3 million decrease in residential real estate loans.
• Growth in Core Deposits and Reduced Cost of Funds – Noninterest bearing deposits increased 29.4 percent compared to December 31, 2020. The $179.1 million year over year increase was primarily due to an increase in commercial demand deposits reflecting management’s ongoing strategic initiative to improve the deposit franchise. At December 31, 2021, noninterest bearing deposits represented 43.8% of total deposits compared to 36.8% at December 31, 2020. Overall, the cost of interest bearing liabilities was reduced 53 basis points, from 0.95% for the quarter ended December 31, 2020 to 0.42% for the quarter ended December 31, 2021.
• Improving Credit Metrics – Non-performing assets (“NPAs”) decreased to 0.56% of total assets at December 31, 2021 compared to 0.77% at September 30, 2021 primarily due to the disposition of $3.2 million in other real estate owned during the fourth quarter of 2021 and a reduction in nonaccrual loans of $2.3 million as management continues to focus on reducing non-performing assets. Primarily as a result of improving market conditions, the provision for loan losses declined $933.0 thousand compared to the fourth quarter of 2020. The current provision for the three months ended December 31, 2021 was $1.1 million and primarily related to the credit card portfolio.
• SBA-PPP Loans
  – SBA-PPP loans, net of $3.2 million in unearned fees, totaled $108.3 million at December 31, 2021 which was comprised of $4.4 million in 2020 originations and $103.9 million of 2021 originations. As of December 31, 2021, the Company has obtained forgiveness for $261.6 million of SBA-PPP loans.

Capital Bank Home Loans

• Softening Mortgage Performance – Origination volumes declined 58.7 percent, to $158.1 million, in the fourth quarter of 2021, when compared to $382.3 million in the fourth quarter of 2020. The continued steepening of the yield curve in the fourth quarter of 2021 slowed originations from the year earlier when low interest rates fueled refinance volumes. In the most recent quarter, mortgage origination volumes declined $59.1 million or 27.2 percent from the three months ended September 30, 2021 due to normal seasonal patterns as well as the rate-related slow-down in the mortgage industry which has disproportionately impacted refinance activity.
• Purchase Volume – Purchase volumes increased to 56.4 percent of total originations for the fourth quarter of 2021, up from 30.0 percent during the fourth quarter of 2020.

OpenSky

^®

• Strong Revenue Growth – OpenSky^® revenue grew by 38.2 percent to $22.2 million for the quarter ended December 31, 2021 from the same period in 2020. As account growth, line usage and customer behaviors continue to revert to traditional seasonal patterns, management anticipates modest seasonal declines in open accounts as account opening and attrition normalize.
• Continued Growth in OpenSky
  
  ^®
  
  Loans and Deposits – OpenSky^® loan balances, net of reserves, increased by $38.9 million to $141.1 million compared to $102.2 million in the fourth quarter of 2020 and from $135.0 million, or 4.5 percent, on a linked quarter basis. Corresponding deposit balances increased 19.2 percent or $37.0 million from $192.5 million at December 31, 2020 to $229.5 million at December 31, 2021.

2021 Highlights

Capital Bancorp

• Diversified Businesses Drive Net Income – Net income for the twelve months ended December 31, 2021 increased 54.8 percent to $40.0 million, or $2.84 per diluted share, from $25.8 million, or $1.87 per diluted share for the twelve months ended December 31, 2020. Continued strong operating results demonstrate the advantages of the Company’s diversified business lines that are, in certain respects, non-correlated across economic cycles.
• Top Tier Performance Ratios – Improved earnings supported ROAA and ROAE of 1.96% and 22.27%, respectively, for the twelve months ended December 31, 2021 compared to 1.56% and 18.00%, respectively, for the twelve months ended December 31, 2020.
• Expanded Net Interest Margin – For the twelve months ended December 31, 2021, net interest margin increased by 72 basis points to 5.86% compared to 5.14% for the twelve months ended December 31, 2020. The margin improvement was largely driven by the increase in OpenSky^® income.
• Stable Efficiency Ratio – The efficiency ratio increased slightly to 65.79% for the twelve months ended December 31, 2021 compared to 65.44% for the same twelve month period in the prior year.
• Strong Balance Sheet Growth – Total assets increased $178.7 million, or 9.5 percent during the twelve months ended December 31, 2021 and was primarily funded by a $145.0 million increase in deposits. The growth of earning assets on the balance sheet consisted primarily of increases in cash equivalents of $36.5 million, portfolio loans net of deferred fees of $208.5 million which includes OpenSky^® net loan growth of $30.1 million, investments available for sale of $84.7 million, and Bank Owned Life Insurance (“BOLI”) of $35.5 million. Asset growth was primarily offset by a decrease of $91.2 million in loans held for sale as well as a $92.7 million reduction in SBA-PPP loans.

Commercial Bank

• Strong Portfolio Loan Growth – Portfolio loans, excluding credit card loans, increased by $176.0 million, or 14.5 percent, to $1.4 billion at December 31, 2021 compared to $1.2 billion at December 31, 2020. The growth was primarily due to a 41.7 percent increase in commercial real estate loans of $163.8 million, of which $102.2 million was owner occupied while $61.6 was non owner occupied.
• Improved Deposit Franchise and Lower Cost of Funding – Noninterest bearing deposits increased by $179.1 million, or 29.4 percent, during the twelve months ended December 31, 2021 and represented 43.8 percent of total deposits at December 31, 2021. The cost of interest bearing liabilities declined to 0.61% from 1.29% for the same period in the prior year, due mainly to the average rate of interest bearing demand deposits dropping from 0.34% as of December 31, 2020 to 0.07% as of December 31, 2021.
• COVID-19 Related Deferrals – At December 31, 2021, outstanding loans deferred due to COVID-19 amounted to $4.0 million, a decrease of 86.9 percent from $30.5 million at December 31, 2020.

Capital Bank Home Loans

• Gain on Sale – The year-to-date gain on sale of mortgage loans decreased to $30.3 million at December 31, 2021 from $38.5 million at December 31, 2020 due mainly to the $314.4 million, or 24.0 percent, decline in mortgage originations. The steepening yield curve in 2021 has slowed originations from the year earlier period when low interest rates fueled refinance volumes. Gain on sale margins, down slightly from 3.02% for the twelve months ended December 31, 2020, remained strong at 2.79% for the twelve months ended December 31, 2021. Historically-low housing inventory, shortages in new home building materials, and fluctuating interest rates are likely to continue suppressing origination volumes into 2022.

OpenSky


^®

• Growth Elevates Performance – The 92 thousand net increase in the number of accounts in the twelve months ended December 31, 2021 resulted in a $37.0 million increase in noninterest bearing secured credit card deposits that totaled $229.5 million as of December 31, 2021. Credit card balances increased by $38.9 million, or 38.1 percent, for the twelve months ended December 31, 2021 and totaled $141.1 million at December 31, 2021. Account growth led to higher credit card fees, which increased by 64.4 percent to $27.9 million compared to $17.0 million for the same twelve month period last year, largely driven by the increase in the number of accounts in the portfolio.

COMPARATIVE FINANCIAL HIGHLIGHTS – Unaudited
	Quarter Ended											Twelve months ended
	December 31,											December 31,
(amounts in thousands except per share data)	2021				2020				% Change			2021				2020				% Change
Earnings Summary
Interest income	$	33,788			$	28,318			19.3	%		$	123,243			$	97,251			26.7	%
Interest expense		1,117				2,599			(57.0	)%			6,550				13,182			(50.3	)%
Net interest income		32,671				25,719			27.0	%			116,693				84,069			38.8	%
Provision for loan losses		1,100				2,033			(45.9	)%			3,359				11,242			(70.1	)%
Noninterest income		10,617				16,030			(33.8	)%			50,636				50,144			1.0	%
Noninterest expense		28,495				26,680			6.8	%			110,094				87,834			25.3	%
Income before income taxes		13,693				13,036			5.0	%			53,876				35,137			53.3	%
Income tax expense		3,522				3,347			5.2	%			13,898				9,314			49.2	%
Net income	$	10,171			$	9,689			5.0	%		$	39,978			$	25,823			54.8	%
Pre-tax pre-provision net revenue (“PPNR”) (2)	$	14,793			$	15,069			(1.8	)%		$	57,235			$	46,379			23.4	%
Weighted average common shares – Basic		13,877				13,686			1.4	%			13,799				13,793			—	%
Weighted average common shares – Diluted		14,290				13,707			4.3	%			14,081				13,800			2.0	%
Earnings per share – Basic	$	0.73			$	0.71			2.8	%		$	2.90			$	1.87			55.1	%
Earnings per share – Diluted	$	0.71			$	0.71			—	%		$	2.84			$	1.87			51.9	%
Return on average assets (1)		1.95	%			2.08	%		(6.3	)%			1.96	%			1.56	%		25.6	%
Return on average assets, excluding impact of SBA-PPP loans(1) (2)		1.80	%			1.88	%		(4.3	)%			1.75	%			1.42	%		23.2	%
Return on average equity		20.66	%			25.26	%		(18.2	)%			22.27	%			18.00	%		23.7	%

	Quarter Ended						4Q21 vs. 4Q20			Quarter Ended
	December 31,									September 30,			June 30,			March 31,
(in thousands except per share data)	2021			2020			% Change			2021			2021			2021
Balance Sheet Highlights
Assets	$	2,055,300		$	1,876,593		9.5	%		$	2,169,556		$	2,151,850		$	2,091,851
Investment securities available for sale		184,455			99,787		84.8	%			189,165			160,515			128,023
Mortgage loans held for sale		15,989			107,154		(85.1	)%			36,005			47,935			60,816
SBA-PPP loans, net of fees		108,285			201,018		(46.1	)%			137,178			202,763			265,712
Portfolio loans receivable (3)		1,523,982			1,315,502		15.8	%			1,445,126			1,392,471			1,312,375
Allowance for loan losses		25,181			23,434		7.5	%			24,753			24,079			23,550
Deposits		1,797,137			1,652,128		8.8	%			1,921,238			1,917,419			1,863,069
FHLB borrowings		22,000			22,000		—	%			22,000			22,000			22,000
Other borrowed funds		12,062			14,016		(13.9	)%			12,062			12,062			12,062
Total stockholders’ equity		197,903			159,311		24.2	%			189,080			177,204			167,003
Tangible common equity(2)		197,903			159,311		24.2	%			189,080			177,204			167,003
Common shares outstanding		13,962			13,754		1.5	%			13,802			13,772			13,759
Tangible book value per share (2)	$	14.17		$	11.58		22.4	%		$	13.70		$	12.87		$	12.14

______________

⁽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, 2021 and 2020

For the three months ended December 31, 2021, net interest income increased $7.0 million, or 27.0 percent, to $32.7 million from the same period in 2020, primarily due to an increase in interest earning assets and a decrease in rates on interest bearing liabilities. The net interest margin increased 92 basis point to 6.49% for the three months ended December 31, 2021 from the same period in 2020. Net interest margin, excluding credit card and SBA-PPP loans, was 3.70% for the fourth quarter of 2021 compared to 3.80% for the same period in 2020. For the three months ended December 31, 2021, average interest earning assets increased $160.0 million, or 8.7 percent, to $2.0 billion as compared to the same period in 2020, and the average yield on interest earning assets increased 58 basis points. Compared to the same period in the prior year, average interest-bearing liabilities decreased $37.8 million, or 3.5 percent, while the average cost of interest bearing liabilities decreased 53 basis points to 0.42% from 0.95%.

The provision for loan losses of $1.1 million for the three months ended December 31, 2021 was primarily related to growth in the credit card portfolio. Net charge-offs for the fourth quarter of 2021 were $671.6 thousand, or 0.18% on an annualized basis of average loans, compared to $615.0 thousand, or 0.19% on an annualized basis of average loans for the fourth quarter of 2020. The $671.6 thousand in net charge-offs during the quarter was related solely to the credit card portfolio.

For the quarter ended December 31, 2021, noninterest income was $10.6 million, a decrease of $5.4 million, or 33.8 percent, from $16.0 million in the prior year quarter. The decrease was primarily the result of reduced mortgage banking revenue.

Net credit card loan balances increased by $38.9 million to $141.1 million as of December 31, 2021 from $102.2 million at December 31, 2020. The related deposit account balances increased 19.2 percent to $229.5 million at December 31, 2021 when compared to $192.5 million at December 31, 2020. For the three months ended December 31, 2021, OpenSky’s^® secured credit card accounts decreased by 40 thousand net compared to 39 thousand net new accounts for the same period in 2020 suggesting consumer behaviors may be returning to historical trends after being elevated in response to COVID-19 throughout 2020 and the first two quarters of 2021.

The efficiency ratio for the three months ended December 31, 2021 increased to 65.83% compared to 63.91% for the three months ended December 31, 2020 due mainly to the reduction in mortgage income generated.

Noninterest expense was $28.5 million for the three months ended December 31, 2021, as compared to $26.7 million for the three months ended December 31, 2020, an increase of $1.8 million, or 6.8 percent. The increase was primarily driven by increases in salaries and employee benefits of $2.0 million, advertising expenses of $994.7 thousand, and data processing expenses of $390.1 thousand. Offsetting these expenses were decreases in occupancy and equipment expense of $507.2 thousand, loan processing expenses of $503.2 thousand, and professional fees of $474.0 thousand.

Operating Results – Comparison of Twelve Months Ended December 31, 2021 and 2020

For the twelve months ended December 31, 2021, net interest income increased $32.6 million, or 38.8 percent, to $116.7 million from the same period in 2020, primarily due to an increase in interest earning assets and a decrease in rates on interest bearing liabilities. The net interest margin increased 72 basis points to 5.86% for the twelve months ended December 31, 2021 from the same period in 2020. Net interest margin, excluding credit card and SBA-PPP loans, was 3.60% for the twelve months ended December 31, 2021 compared to 3.89% for the same period in 2020. For the twelve months ended December 31, 2021, average interest earning assets increased $356.1 million, or 21.8 percent, to $2.0 billion as compared to the same period in 2020, and the average yield on interest earning assets increased 24 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $60.3 million, or 5.9 percent, while the average cost of interest-bearing liabilities decreased 68 basis points to 0.61% from 1.29%.

For the twelve months ended December 31, 2021, the provision for loan losses was $3.4 million, a decrease of $7.9 million from the prior year. Net charge-offs for the twelve months ended December 31, 2021 were $1.6 million, or 0.12% of average portfolio loans, compared to $1.1 million, or 0.09% of average portfolio loans, for the same period in 2020. The $1.6 million in net charge-offs during the twelve months ended December 31, 2021 was comprised primarily of commercial real estate loan net charge-offs of $161.1 thousand and net charge-offs of $1.4 million in the credit card portfolio.

For the twelve months ended December 31, 2021, noninterest income was $50.6 million, an increase of $491.5 thousand, or 1.0 percent, from the same period in 2020. The increase was primarily driven by significant growth in credit card fees of $10.9 million, which was partially offset by a decrease in mortgage banking revenues of $8.9 million.

For the twelve months ended December 31, 2021, the Bank had net growth of 92 thousand new OpenSky^® secured credit card accounts, increasing the total number of open accounts to 660 thousand. This compares to 345 thousand new originations for the same period last year, which increased total open accounts to 568 thousand.

The efficiency ratio for the twelve months ended December 31, 2021 increased slightly to 65.79% compared to 65.44% for the twelve months ended December 31, 2020 due to increases in noninterest expense.

Noninterest expense was $110.1 million for the twelve months ended December 31, 2021, as compared to $87.8 million for the twelve months ended December 31, 2020, an increase of $22.3 million, or 25.3 percent. The increase was primarily driven by a $4.4 million, or 13.2 percent, increase in salaries and benefits, an increase in professional fees of 42.8 percent, or $2.1 million, a $12.3 million, or 45.8 percent, increase in data processing, a $2.3 million, or 89.8 percent, increase in advertising, and a $2.0 million, or 18.2 percent, increase in other operating expenses period over period. The increase of $12.3 million in data processing expenses was primarily due to the higher volume of open credit cards during the twelve months ended December 31, 2021. Additionally, operating expenses increased $2.0 million, primarily due to increases in outside service providers.

During the twelve months ended December 31, 2021, results of operations were impacted by the COVID-19 pandemic and the resulting issuance of SBA-PPP loans. At December 31, 2021, the $111.5 million of SBA-PPP loans had remaining deferred origination fees of $3.8 million, and deferred costs of $655.7 thousand.

Financial Condition

Total assets at December 31, 2021 were $2.1 billion, an increase of 9.5 percent from December 31, 2020. Portfolio loans, which exclude mortgage loans held for sale and SBA-PPP loans, totaled $1.5 billion as of December 31, 2021, an increase of 15.8 percent as compared to $1.3 billion at December 31, 2020.

Total deposits at December 31, 2021 were $1.8 billion, an increase of $145.0 million, or 8.8 percent, as compared to $1.7 billion at December 31, 2020. Noninterest bearing deposits increased by $179.1 million, or 29.4 percent, to $787.7 million at December 31, 2021 compared to the level at December 31, 2020. Deposit balances grew year over year in certain fiduciary accounts of title and property management companies, as well as noninterest bearing OpenSky^® deposits.

The Company recorded a provision for loan losses of $3.4 million during the twelve months ended December 31, 2021, which increased the allowance for loan losses to $25.2 million, or 1.54% of total loans (1.65%, excluding SBA-PPP loans, on a non-GAAP basis) at December 31, 2021. Nonperforming assets were $11.5 million, or 0.56% of total assets, as of December 31, 2021, down from $12.6 million, or 0.67% of total assets, at December 31, 2020. Of the $11.5 million in total nonperforming assets as of December 31, 2021, nonperforming loans represented $11.4 million and foreclosed real estate totaled $86.4 thousand. Included in nonperforming loans at December 31, 2021 were troubled debt restructurings of $534 thousand.

Stockholders’ equity increased to $197.9 million as of December 31, 2021, compared to $159.3 million at December 31, 2020. This increase was primarily attributable to earnings during the period. As of December 31, 2021, 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,
(in thousands)	2021			2020				2021			2020
Interest income
Loans, including fees	$	33,235		$	27,848			$	120,784		$	95,367
Investment securities available for sale		439			363				2,010			1,292
Federal funds sold and other		114			107				449			592
Total interest income		33,788			28,318				123,243			97,251
Interest expense
Deposits		934			2,323				5,808			11,524
Borrowed funds		183			276				742			1,658
Total interest expense		1,117			2,599				6,550			13,182
Net interest income		32,671			25,719				116,693			84,069
Provision for loan losses		1,100			2,033				3,359			11,242
Net interest income after provision for loan losses		31,571			23,686				113,334			72,827
Noninterest income
Service charges on deposits		136			143				609			520
Credit card fees		6,676			6,272				27,884			16,966
Mortgage banking revenue		3,365			8,748				20,843			29,732
Gain on sale of investment securities available for sale, net		—			20				153			20
Other fees and charges		440			847				1,147			2,906
Total noninterest income		10,617			16,030				50,636			50,144
Noninterest expenses
Salaries and employee benefits		10,564			8,592				37,843			33,442
Occupancy and equipment		1,005			1,512				4,327			5,170
Professional fees		1,454			1,928				6,996			4,900
Data processing		9,643			9,253				39,237			26,917
Advertising		1,650			655				4,803			2,530
Loan processing		857			1,360				3,527			3,811
Other real estate expenses, net		47			(68	)			368			69
Other operating		3,275			3,448				12,993			10,995
Total noninterest expenses		28,495			26,680				110,094			87,834
Income before income taxes		13,693			13,036				53,876			35,137
Income tax expense		3,522			3,347				13,898			9,314
Net income	$	10,171		$	9,689			$	39,978		$	25,823

Consolidated Balance Sheets
(in thousands except share data)	(unaudited) December 31, 2021				December 31, 2020
Assets
Cash and due from banks	$	42,914			$	18,456
Interest bearing deposits at other financial institutions		136,824				126,081
Federal funds sold		3,657				2,373
Total cash and cash equivalents		183,395				146,910
Investment securities available for sale		184,455				99,787
Marketable equity securities		245				245
Restricted investments		3,498				3,713
Loans held for sale		15,989				107,154
SBA-PPP loans receivable, net of fees		108,285				201,018
Portfolio loans receivable, net of deferred fees and costs		1,523,982				1,315,502
Less allowance for loan losses		(25,181	)			(23,434	)
Total portfolio loans held for investment, net		1,498,801				1,292,068
Premises and equipment, net		3,282				4,464
Accrued interest receivable		7,901				8,134
Deferred income taxes, net		9,793				6,818
Other real estate owned		86				3,326
Bank owned life insurance		35,506				—
Other assets		4,064				2,956
Total assets	$	2,055,300			$	1,876,593
Liabilities
Deposits
Noninterest bearing	$	787,650			$	608,559
Interest bearing		1,009,487				1,043,569
Total deposits		1,797,137				1,652,128
Federal Home Loan Bank advances		22,000				22,000
Other borrowed funds		12,062				14,016
Accrued interest payable		473				1,134
Other liabilities		25,725				28,004
Total liabilities		1,857,397				1,717,282
Stockholders’ equity
Common stock, $.01 par value; 49,000,000 shares authorized; 13,962,334 and 13,753,529 issued and outstanding		140				138
Additional paid-in capital		54,306				50,602
Retained earnings		144,533				106,854
Accumulated other comprehensive income (loss)		(1,076	)			1,717
Total stockholders’ equity		197,903				159,311
Total liabilities and stockholders’ equity	$	2,055,300			$	1,876,593

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,
	2021									2020
	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	$	198,070		$	73		0.15	%		$	152,720		$	37		0.10	%
Federal funds sold		2,048			—		—				5,537			—		—
Investment securities available for sale		186,603			439		0.93				73,931			363		1.95
Restricted stock and equity securities		3,743			41		4.35				3,947			70		7.08
Loans held for sale		23,395			179		3.04				105,922			701		2.63
SBA-PPP loans receivable		116,595			1,347		4.58				227,617			1,998		3.49
Portfolio loans receivable(2)		1,465,878			31,709		8.58				1,266,662			25,149		7.90
Total interest earning assets		1,996,332			33,788		6.71				1,836,336			28,318		6.13
Noninterest earning assets		69,951									18,509
Total assets	$	2,066,283								$	1,854,845
Liabilities and Stockholders’ Equity
Interest bearing liabilities:
Interest bearing demand accounts	$	315,933			39		0.05			$	238,078			102		0.17
Savings		6,575			1		0.06				4,828			1		0.05
Money market accounts		501,070			267		0.21				467,727			633		0.54
Time deposits		190,795			627		1.30				337,170			1,586		1.87
Borrowed funds		34,062			183		2.13				38,447			277		2.86
Total interest bearing liabilities		1,048,435			1,117		0.42				1,086,250			2,599		0.95
Noninterest bearing liabilities:
Noninterest bearing liabilities		26,504									23,810
Noninterest bearing deposits		796,014									592,193
Stockholders’ equity		195,330									152,592
Total liabilities and stockholders’ equity	$	2,066,283								$	1,854,845
Net interest spread							6.29	%								5.18	%
Net interest income				$	32,671								$	25,719
Net interest margin(3)							6.49	%								5.57	%

_______________

⁽¹⁾   Annualized.
⁽²⁾   Includes nonaccrual loans.
⁽³⁾   For the three months ended December 31, 2021 and December 31, 2020, collectively, SBA-PPP loans and credit card loans accounted for 279 and 177 basis points of the reported net interest margin, respectively.

	Twelve Months Ended December 31,
	2021									2020
	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	$	228,420		$	283		0.12	%		$	112,249		$	343		0.31	%
Federal funds sold		2,850			—		—				3,128			4		0.12
Investment securities available for sale		151,479			2,010		1.33				58,071			1,292		2.22
Restricted stock and equity securities		3,774			166		4.40				4,025			244		6.07
Loans held for sale		43,126			1,224		2.84				84,928			2,610		3.07
SBA-PPP loans receivable		190,588			7,613		3.99				157,630			4,479		2.84
Portfolio loans receivable(1)		1,370,988			111,947		8.17				1,215,049			88,279		7.27
Total interest earning assets		1,991,225			123,243		6.19				1,635,080			97,251		5.95
Noninterest earning assets		44,619									24,923
Total assets	$	2,035,844								$	1,660,003
Liabilities and Stockholders’ Equity
Interest bearing liabilities:
Interest bearing demand accounts	$	289,285			202		0.07			$	195,794			656		0.34
Savings		6,470			3		0.05				4,722			5		0.11
Money market accounts		482,225			1,484		0.31				480,218			4,786		1.00
Time deposits		269,262			4,119		1.53				297,997			6,077		2.04
Borrowed funds		34,214			742		2.17				42,471			1,658		3.90
Total interest bearing liabilities		1,081,456			6,550		0.61				1,021,202			13,182		1.29
Noninterest bearing liabilities:
Noninterest bearing liabilities		24,128									22,007
Noninterest bearing deposits		750,760									473,301
Stockholders’ equity		179,500									143,493
Total liabilities and stockholders’ equity	$	2,035,844								$	1,660,003
Net interest spread							5.58	%								4.66	%
Net interest income				$	116,693								$	84,069
Net interest margin(2)							5.86	%								5.14	%

_______________

⁽¹⁾   Includes nonaccrual loans.
⁽²⁾   For the twelve months ended December 31, 2021 and December 31, 2020, collectively, SBA-PPP loans and credit card loans accounted for 226 and 125 basis points of the reported net interest margin, respectively.

HISTORICAL FINANCIAL HIGHLIGHTS – Unaudited
		Quarter Ended
(Dollars in thousands except per share data)		December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020
Earnings:
Net income		$	10,171			$	11,177			$	9,648			$	8,982			$	9,689
Earnings per common share, diluted			0.71				0.79				0.68				0.65				0.71
Net interest margin			6.49	%			6.27	%			5.47	%			5.15	%			5.57	%
Net interest margin, excluding credit cards & SBA-PPP loans (1)			3.70	%			3.52	%			3.55	%			3.70	%			3.80	%
Return on average assets(2)			1.95	%			2.13	%			1.90	%			1.87	%			2.08	%
Return on average assets, excluding impact of SBA-PPP loans (1)(2)			1.80	%			1.99	%			1.65	%			1.60	%			1.88	%
Return on average equity(2)			20.66	%			23.87	%			22.36	%			22.30	%			25.26	%
Efficiency ratio			65.83	%			64.10	%			66.37	%			67.11	%			63.91	%
Balance Sheet:
Total assets		$	2,055,300			$	2,169,556			$	2,151,850			$	2,091,851			$	1,876,593
Asset Quality Ratios:
Nonperforming assets to total assets			0.56	%			0.77	%			0.54	%			0.58	%			0.67	%
Nonperforming assets to total assets, excluding the SBA-PPP loans (1)			0.59	%			0.83	%			0.60	%			0.66	%			0.75	%
Nonperforming loans to total loans			0.70	%			0.85	%			0.52	%			0.56	%			0.61	%
Nonperforming loans to portfolio loans (1)			0.75	%			0.94	%			0.60	%			0.67	%			0.70	%
Net charge-offs to average portfolio loans (1)(2)			0.18	%			0.08	%			0.08	%			0.12	%			0.19	%
Allowance for loan losses to total loans			1.54	%			1.56	%			1.51	%			1.49	%			1.54	%
Allowance for loan losses to portfolio loans (1)			1.65	%			1.71	%			1.73	%			1.79	%			1.78	%
Allowance for loan losses to non-performing loans			220.40	%			182.48	%			287.40	%			267.07	%			253.71	%
Bank Capital Ratios:
Total risk based capital ratio			13.79	%			13.86	%			13.51	%			13.55	%			12.60	%
Tier 1 risk based capital ratio			12.53	%			12.60	%			12.25	%			12.29	%			11.34	%
Leverage ratio			8.36	%			7.83	%			7.58	%			7.54	%			7.45	%
Common equity Tier 1 capital ratio			12.53	%			12.60	%			12.25	%			12.29	%			11.34	%
Tangible common equity			8.36	%			7.57	%			7.17	%			7.01	%			7.43	%
Holding Company Capital Ratios:
Total risk based capital ratio			16.41	%			15.75	%			16.14	%			16.07	%			15.19	%
Tier 1 risk based capital ratio			14.43	%			14.49	%			14.10	%			13.98	%			13.10	%
Leverage ratio			9.73	%			9.12	%			8.78	%			8.84	%			8.78	%
Common equity Tier 1 capital ratio			14.28	%			14.34	%			13.94	%			13.81	%			12.94	%
Tangible common equity			9.63	%			8.72	%			8.23	%			7.98	%			8.48	%
Composition of Loans:
Residential real estate		$	401,607			$	418,205			$	420,015			$	420,461			$	437,860
Commercial real estate			556,339				502,523				471,807				433,336				392,550
Construction real estate			255,147				251,256				223,832				221,277				224,904
Commercial and industrial – Other			175,956				143,244				158,392				149,914				157,127
Credit card, net of reserve			141,120				134,979				121,410				83,740				102,186
Other consumer loans			1,033				1,425				1,034				4,487				1,649
Portfolio loans receivable		$	1,531,202			$	1,451,632			$	1,396,490			$	1,313,215			$	1,316,276
Deferred origination fees, net			(7,220	)			(6,506	)			(4,019	)			(840	)			(774	)
Portfolio loans receivable, net		$	1,523,982			$	1,445,126			$	1,392,471			$	1,312,375			$	1,315,502
SBA-PPP loans, net		$	108,285			$	137,178			$	202,763			$	265,712			$	201,018
Composition of Deposits:
Noninterest bearing		$	787,650			$	833,187			$	828,308			$	771,924			$	608,559
Interest bearing demand			330,924				369,812				314,883				300,992				257,126
Savings			6,994				6,682				6,965				6,012				4,800
Money Markets			493,919				493,029				484,567				471,303				447,077
Time Deposits			177,650				218,528				282,696				312,838				334,566
Total Deposits		$	1,797,137			$	1,921,238			$	1,917,419			$	1,863,069			$	1,652,128
Capital Bank Home Loan Metrics:
Origination of loans held for sale		$	158,051			$	217,175			$	265,517			$	353,774			$	382,267
Mortgage loans sold			178,068				229,111				278,384				400,112				412,830
Gain on sale of loans			4,423				6,108				7,763				12,008				12,950
Purchase volume as a % of originations			56.44	%			50.98	%			50.64	%			24.59	%			30.03	%
Gain on sale as a % of loans sold(3)			2.48	%			2.67	%			2.79	%			3.00	%			3.14	%
Mortgage commissions		$	1,462			$	1,884			$	2,364			$	3,320			$	3,405
OpenSky ® Portfolio Metrics:
Active customer accounts			660,397				700,383				707,600				642,272				568,373
Credit card loans, net of reserve		$	141,120			$	134,979			$	121,410			$	83,740			$	102,186
Noninterest secured credit card deposits			229,530				242,405				241,724				215,883				192,520

_______________

⁽¹⁾   Refer to Appendix for reconciliation of non-GAAP measures.
⁽²⁾   Annualized.
⁽³⁾   Gain on sale percentage is calculated as gain on sale of loans divided by mortgage loans sold.   

Appendix

Reconciliation of Non-GAAP Measures

Return on Average Assets, as Adjusted	Quarters Ended
Dollars in thousands	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
Net Income	$	10,171		$	11,177		$	9,648		$	8,982		$	9,689
Less: SBA-PPP loan income		1,347			1,525			2,272			2,205			1,998
Net Income, as Adjusted	$	8,824		$	9,652		$	7,376		$	6,777		$	7,691
Average Total Assets		2,066,283			2,084,772			2,041,232			1,949,265			1,854,845
Less: Average SBA-PPP Loans		116,595			162,217			250,040			232,371			227,617
Average Total Assets, as Adjusted	$	1,949,688		$	1,922,555		$	1,791,192		$	1,716,894		$	1,627,228
Return on Average Assets, as Adjusted		1.80	%		1.99	%		1.65	%		1.60	%		1.88	%

Net Interest Margin, as Adjusted	Quarters Ended
Dollars in thousands	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
Net Interest Income	$	32,671		$	32,059		$	27,520		$	24,444		$	25,719
Less Secured credit card loan income		15,010			15,086			10,497			7,660			9,306
Less SBA-PPP loan income		1,347			1,525			2,272			2,205			1,998
Net Interest Income, as Adjusted	$	16,314		$	15,448		$	14,751		$	14,579		$	14,415
Average Interest Earning Assets		1,996,331			2,026,616			2,016,801			1,923,463			1,836,337
Less Average secured credit card loans		131,306			124,771			100,456			93,520			95,739
Less Average SBA-PPP loans		116,595			162,217			250,040			232,371			227,617
Total Average Interest Earning Assets, as Adjusted	$	1,748,430		$	1,739,628		$	1,666,305		$	1,597,572		$	1,512,981
Net Interest Margin, as Adjusted		3.70	%		3.52	%		3.55	%		3.70	%		3.80	%

Tangible Book Value per Share	Quarters Ended
Dollars in thousands, except per share amounts	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020
Total Stockholders’ Equity	$	197,903	$	189,080	$	177,204	$	167,003	$	159,311
Less: Preferred equity		—		—		—		—		—
Less: Intangible assets		—		—		—		—		—
Tangible Common Equity	$	197,903	$	189,080	$	177,204	$	167,003	$	159,311
Period End Shares Outstanding		13,962,334		13,801,936		13,771,615		13,759,218		13,753,529
Tangible Book Value per Share	$	14.17	$	13.70	$	12.87	$	12.14	$	11.58

Allowance for Loan Losses to Total Portfolio Loans	Quarters Ended
Dollars in thousands	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
Allowance for Loan Losses	$	25,181		$	24,753		$	24,079		$	23,550		$	23,434
Total Loans		1,632,267			1,582,304			1,595,234			1,578,087			1,516,520
Less: SBA-PPP loans		108,285			137,178			202,763			265,712			201,018
Total Portfolio Loans	$	1,523,982		$	1,445,126		$	1,392,471		$	1,312,375		$	1,315,502
Allowance for Loan Losses to Total Portfolio Loans		1.65	%		1.71	%		1.73	%		1.79	%		1.78	%
Nonperforming Assets to Total Assets, net SBA-PPP Loans	Quarters Ended
Dollars in thousands	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
Total Nonperforming Assets	$	11,512		$	16,801		$	11,615		$	12,112		$	12,563
Total Assets		2,055,300			2,169,556			2,151,850			2,091,851			1,876,593
Less: SBA-PPP loans		108,285			137,178			202,763			265,712			201,018
Total Assets, net SBA-PPP Loans	$	1,947,015		$	2,032,378		$	1,949,087		$	1,826,139		$	1,675,575
Nonperforming Assets to Total Assets, net SBA-PPP Loans		0.59	%		0.83	%		0.60	%		0.66	%		0.75	%
Nonperforming Loans to Portfolio Loans	Quarters Ended
Dollars in thousands	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
Total Nonperforming Loans	$	11,425		$	13,565		$	8,378		$	8,818		$	9,237
Total Loans		1,632,267			1,582,304			1,595,234			1,578,087			1,516,520
Less: SBA-PPP loans		108,285			137,178			202,763			265,712			201,018
Total Portfolio Loans	$	1,523,982		$	1,445,126		$	1,392,471		$	1,312,375		$	1,315,502
Nonperforming Loans to Total Portfolio Loans		0.75	%		0.94	%		0.60	%		0.67	%		0.70	%
Net Charge-offs to Average Portfolio Loans	Quarters Ended
Dollars in thousands	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
Total Net Charge-offs	$	672		$	301		$	251		$	388		$	615
Total Average Loans		1,582,473			1,569,198			1,567,973			1,532,093			1,494,279
Less: Average SBA-PPP loans		116,595			162,217			250,040			232,371			227,617
Total Average Portfolio Loans	$	1,465,878		$	1,406,981		$	1,317,933		$	1,299,722		$	1,266,662
Net Charge-offs to Average Portfolio Loans		0.18	%		0.08	%		0.08	%		0.12	%		0.19	%
Pre-tax, Pre-Provision Net Revenue (“PPNR”)	Quarters Ended
Dollars in thousands	December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
Net income	$	10,171		$	11,177		$	9,648		$	8,982		$	9,689
Add: Income Tax Expense		3,522			3,877			3,357			3,143			3,347
Add: Provision for Loan Losses		1,100			975			781			503			2,033
Pre-tax, Pre-Provision Net Revenue (“PPNR”)	$	14,793		$	16,029		$	13,786		$	12,628		$	15,069

ABOUT CAPITAL BANCORP, INC.

Capital Bancorp, Inc., Rockville, Maryland is a registered bank holding company incorporated under the laws of Maryland. The Company’s wholly-owned subsidiary, Capital Bank, N.A., is the fourth largest bank headquartered in Maryland at December 31, 2021. Capital Bancorp has been providing financial services since 1999 and now operates bank branches in five locations in the greater Washington, D.C. and Baltimore, Maryland markets. Capital Bancorp had assets of approximately $2.1 billion at December 31, 2021 and its common stock is traded in the NASDAQ Global Market under the symbol “CBNK.” More information can be found at the Company’s website www.CapitalBankMD.com under its investor relations page.

FORWARD-LOOKING STATEMENTS

This earnings release contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “optimistic,” “intends” and similar words or phrases. Any or all of the forward-looking statements in this earnings release may turn out to be inaccurate. The inclusion of forward-looking information in this earnings release should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements.  Accordingly, we caution you that any such forward-looking statements are not a guarantee of future performance and that actual results may prove to be materially different from the results expressed or implied by the forward-looking statements due to a number of factors. For details on some of the factors that could affect these expectations, see risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K and other periodic and current reports filed with the Securities and Exchange Commission.

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be fully reopened. As a result of the COVID-19 pandemic and the related adverse local and national economic consequences, we are exposed to all of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen as planned, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of decisions made by the Federal Open Market Committee of the Federal Reserve and other factors, our net interest margin and spread may decline, which would adversely affect our earnings; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and Federal Deposit Insurance Corporation premiums may increase if the agency experiences additional resolution costs.

These forward-looking statements are made as of the date of this communication, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by law.

FINANCIAL CONTACT: Alan Jackson (240) 283-0402

MEDIA CONTACT: Ed Barry (240) 283-1912

WEB SITE: www.CapitalBankMD.com

SAN JOSE, Calif., Jan. 26, 2022 (GLOBE NEWSWIRE) — At its meeting today, the California Water Service Group (NYSE: CWT) Board of Directors declared the company’s 308^th consecutive quarterly dividend, increasing the annual dividend by $0.08, or 8.7%, from $0.92 to $1.00. This represents the company’s 55th consecutive annual dividend increase. The quarterly dividend of $0.25 per common share will be payable on February 18, 2022 to stockholders of record on February 7, 2022.

California Water Service Group is the parent company of regulated utilities California Water Service, Hawaii Water Service, New Mexico Water Service, Washington Water Service, and now Texas Water Service, a utility holding company. Together, these companies provide regulated and non-regulated water and wastewater service to more than 2 million people in California, Hawaii, New Mexico, Texas, and Washington. California Water Service Group’s common stock trades on the New York Stock Exchange under the symbol “CWT.” Additional information is available online at www.calwatergroup.com.

This news release contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 (“Act”). The forward-looking statements are intended to qualify under provisions of the federal securities laws for “safe harbor” treatment established by the Act. Forward-looking statements are based on currently available information, expectations, estimates, assumptions and projections, and management’s judgment about the Company, the water utility industry and general economic conditions. Such words as would, expects, intends, plans, believes, may, estimates, assumes, anticipates, projects, predicts, targets, forecasts or variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not guarantees of future performance. They are subject to uncertainty and changes in circumstances. Actual results may vary materially from what is contained in a forward-looking statement. Factors that may cause a result different than expected or anticipated include, but are not limited to: the impact of the ongoing COVID-19 pandemic and related public health measures, including our receipt of state COVID-19 financial relief funds in a timely manner; our ability to invest or apply the proceeds from the issuance of common stock in an accretive manner; governmental and regulatory commissions’ decisions, including decisions on proper disposition of property; consequences of eminent domain actions relating to our water systems; changes in regulatory commissions’ policies and procedures; the outcome and timeliness of regulatory commissions’ actions concerning rate relief and other matters; increased risk of inverse condemnation losses as a result of climate conditions; inability to renew leases to operate water systems owned by others on beneficial terms; changes in California State Water Resources Control Board water quality standards; changes in environmental compliance and water quality requirements; electric power interruptions; housing and customer growth; the impact of opposition to rate increases; our ability to recover costs; availability of water supplies; issues with the implementation, maintenance or security of our information technology systems; civil disturbances or terrorist threats or acts; the adequacy of our efforts to mitigate physical and cyber security risks and threats; the ability of our enterprise risk management processes to identify or address risks adequately; labor relations matters as we negotiate with the unions; changes in customer water use patterns and the effects of conservation, including as a result of drought conditions; our ability to complete, successfully integrate and achieve anticipated benefits form announced acquisitions; the impact of weather, climate, natural disasters, and actual or threatened public health emergencies, including disease outbreaks, on our operations, water quality, water availability, water sales and operating results and the adequacy of our emergency preparedness; restrictive covenants in or changes to the credit ratings on our current or future debt that could increase our financing costs or affect our ability to borrow, make payments on debt or pay dividends; and, other risks and unforeseen events. When considering forward-looking statements, you should keep in mind the cautionary statements included in this paragraph, as well as the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.

Contact

Tom Smegal
408-367-8200 (analysts)

Shannon Dean
408-367-8243 (media)

HAMILTON, N.J., Jan. 26, 2022 (GLOBE NEWSWIRE) — First Bank (Nasdaq Global Market: FRBA) today announced results for the fourth quarter and full year 2021. Net income for the fourth quarter of 2021 was $7.8 million, or $0.40 per diluted share, compared to $6.2 million, or $0.31 per diluted share, for the fourth quarter of 2020. Return on average assets, return on average equity and return on average tangible equityⁱ for the fourth quarter of 2021 were 1.27%, 11.77% and 12.63%, respectively, compared to 1.06%, 10.44%, and 11.30%, respectively, for the fourth quarter of 2020. Excluding merger-related expenses, fourth quarter 2021 adjusted diluted earnings per shareⁱⁱ were $0.42, adjusted return on average assetsⁱⁱ was 1.33% and adjusted return on average tangible equityⁱⁱ was 13.26%.

Full year 2021 net income was $35.4 million, an increase of $16.0 million, or 82.2%, compared to $19.4 million for 2020. Diluted earnings per share for 2021 were $1.79, an increase of $0.82, or 84.5%, compared to $0.97 per diluted share in 2020. Return on average assets and return on average equity for the full year 2021 were 1.46% and 13.96%, respectively, compared to 0.87% and 8.45%, respectively, for the full year 2020. Excluding merger-related expenses, full year 2021 adjusted diluted earnings per shareⁱⁱ were $1.81, adjusted return on average assetsⁱⁱ was 1.48% and adjusted return on average equity was 14.16%.

Fourth Quarter and Full Year 2021 Performance Highlights:

• Completion of the acquisition of two branches during the fourth quarter of 2021, adding $100.9 million of deposits and $11.3 million of performing residential and consumer loans.
• Total net revenue (net interest income plus non-interest income) of $22.9 million for the quarter increased $1.8 million, or 8.6%, compared to the prior year quarter, while full year total net revenue was $89.6 million, an increase of $13.7 million, or 18.1%, compared to 2020.
• Total loans of $2.11 billion at December 31, 2021 reflected growth of $107.7 million, or 5.4%, from the end of the linked third quarter of 2021 and $64.4 million, or 3.1%, from December 31, 2020. Loan growth, excluding Paycheck Protection Program (PPP) loan activity, totaled $134.4 million in the fourth quarter of 2021 and $150.5 million for the full year 2021.
• Total deposits of $2.11 billion at December 31, 2021 were up $211.0 million, or 11.1%, from December 31, 2020 and $68.6 million, or 3.4%, from September 30, 2021. Non-interest bearing demand deposits increased to 26.4% of total deposits at December 31, 2021, compared to 22.3% at December 31, 2020, while time deposits decreased to 18.5% at December 31, 2021 from 27.5% of total deposits at December 31, 2020.
• Asset quality metrics remained solid during the quarter, with low net charge-offs of $6,000 during the fourth quarter of 2021, or 0.00% of average loans on an annualized basis, and nonperforming loans of $13.0 million, or 0.62% of total loans, at December 31, 2021 compared to $10.2 million, or 0.50% of total loans, at December 31, 2020.  
• Fourth consecutive quarter of an efficiency ratioⁱⁱⁱ below 50%, at 49.57% for the fourth quarter of 2021.

“First Bank’s fourth quarter performance provided a strong finish to 2021 highlighted by organic loan growth, revenue expansion and solid asset quality metrics, positioning us well heading into 2022,” said Patrick L. Ryan, President and Chief Executive Officer. “We put our liquidity to work in the fourth quarter and achieved significant loan growth, with non-PPP loans up $134.4 million during the quarter, while maintaining our nonperforming assets ratio under 60 basis points. The growth was driven primarily by organic growth in commercial and industrial, multi-family and owner-occupied commercial real estate lending. We also continued to enhance our deposit mix, expanding lower cost core deposits and reducing the proportion of higher cost time deposits on our balance sheet. These reduced funding costs supported a relatively stable net interest margin compared to the linked third quarter.”

Mr. Ryan continued, “We maintained an efficiency ratio below 50% for the fourth consecutive quarter, even as core operating expenses were elevated due to higher incentive compensation based on our strong 2021 performance. Our total non-interest expenses were also impacted by costs associated with our acquisition of two branches during the fourth quarter. Importantly, all remaining acquisition-related expenses related to this strategic in-market transaction were recorded during December and we have been very pleased with the performance of our two new branches since the transaction closed.”

“As we look ahead to 2022, we are excited by the opportunities. Our reputation as a committed and valuable financial partner was significantly enhanced by our response to the challenges faced in 2020 and 2021. We introduced our relationship-based banking approach to a large number of new customers and we deepened our relationships with existing ones. Our lending pipelines at year-end continued to be very strong and, with an expanded team and customer base as a result of our recent branch acquisition, we are well positioned to drive continued organic loan and deposit growth. During the fourth quarter we were also approved as a Preferred Lender by the U.S. Small Business Administration, which should drive continued growth in our SBA lending business. Our SBA team had a great year in 2021 and we’re excited about continued growth in this area.”

“Our ability to deliver strong profitability and earnings enables us to consistently reward our shareholders. We are pleased to announce another $0.06 dividend, which reflects an annualized yield of 1.62% based on our January 25, 2022 closing price, as part of our ongoing focus on creating shareholder value.”

Income Statement

First Bank’s net interest income for the fourth quarter of 2021 was $20.6 million, an increase of $917,000, or 4.6%, compared to $19.7 million in the fourth quarter of 2020, driven by a $1.5 million decrease in total interest expense. The reduction in interest expense was primarily a result of a 61 basis point reduction in the average rates paid on time deposits, along with a decrease of $131.7 million in the average balance of time deposits. As a result of our concerted effort to drive down costs, interest expense on all other interest bearing deposits also declined for the comparative period. Interest income decreased primarily due to a 17 basis point decline in average loan yields, partially offset by a $17.6 million increase in average loans compared with the fourth quarter of 2020. Interest income from loans in the fourth quarter of 2021 included $1.1 million in PPP loan fee income compared to $1.8 million in the fourth quarter of 2020 and $1.8 million in the linked third quarter of 2021. Also impacting loan interest income was prepayment income of $312,000 for the quarter ended December 31, 2021 compared to $138,000 for the quarter ended December 31, 2020 and $166,000 for the linked third quarter of 2021.

Full year 2021 net interest income totaled $81.9 million, an increase of $12.3 million, or 17.7%, compared to $69.6 million for 2020. The increase in 2021 net interest income was also primarily a result of lower interest paid on interest bearing deposits, primarily time deposits. The average rate for time deposits declined by 104 basis points, and the average balance declined by $141.5 million compared to the same period in 2020. Total interest and dividend income of $91.1 million for the full year 2021, increased $1.9 million, driven by higher PPP fee income, solid growth in average loans, which increased by $122.6 million, or 6.4%, from the prior year, partially offset by a 15 basis point decrease in the average yield on loans. The decrease in average yield on loans was primarily due to the low interest rate environment that persisted throughout 2021. Also impacting our average loan yields were the level of PPP loan fees and prepayment income. For the year ended December 31, 2021 PPP fee income was $5.8 million compared to $3.3 million for year ended December 31, 2020. Loan prepayment income was $1.9 million in 2021 compared to $709,000 in 2020.

The fourth quarter 2021 tax equivalent net interest margin was 3.52%, a decrease of four basis points compared to the prior year quarter and a decrease of two basis points compared to the linked third quarter of 2021. The modest decline in the margin compared to the third quarter of 2021 was primarily a result of a 7 basis point decrease in interest earning asset yields, partially offset by a 6 basis point decrease in the average cost of interest-bearing liabilities, primarily interest-bearing deposits. The full year 2021 tax equivalent net interest margin was 3.56%, an increase of 27 basis points compared to the prior year period. The increase in the full year net interest margin was principally a result of a 71 basis point reduction in the cost of interest-bearing deposits, partially offset by a 26 basis point decline in earning asset yields.

First Bank (the Bank) reported a provision for loan losses of $825,000 for the fourth quarter of 2021, compared to a provision for loan losses of $1.6 million in the fourth quarter of 2020. The provision for the quarter ended December 31, 2021 was due to strong loan growth offset somewhat by the low level of net charge-offs and continued stable asset quality metrics. For full year 2021, the Bank reported a credit to the provision for loan losses of $232,000, compared to provision expense of $9.5 million for the same period in 2020. The provision for loan losses in 2020 reflected a higher degree of economic uncertainty associated with the COVID-19 pandemic as well as an elevated level of charge-offs compared to 2021.

Fourth quarter 2021 non-interest income of $2.2 million increased $899,000, or 68.5%, from $1.3 million during the fourth quarter 2020. The increase between the periods was primarily the result of a $321,000 increase in gains on sale of loans, reflecting an increase in U.S. Small Business Administration (SBA) loan sales and a $305,000 increase in loan fees reflecting increased swap fees in the fourth quarter 2021. Non-interest income totaled $7.8 million for the full year ended December 31, 2021, compared to $6.4 million for the same period in 2020, an increase of $1.4 million, or 22.1%. The increase in non-interest income for the full year of 2021 was primarily a result of an increase of $1.6 million in gains on the sale of loans and an increase in other non-interest income of $331,000. For the full year ended December 31, 2021 gain on sale of loans included increased income from the Bank’s growing SBA business as well as gains on the sale of problem loan assets totaling $364,000. Other non-interest income during the year ended December, 31 2021 included a $159,000 gain on the sale of a former branch facility.

Non-interest expense for fourth quarter 2021 of $11.8 million increased $773,000, or 7.0%, compared to $11.1 million for the prior year quarter. The higher non-interest expense compared to fourth quarter 2020 was primarily a result of higher performance related compensation which was reflected in the $628,000 increase in salaries and employee benefits, along with merger-related expenses of $498,000 related to the acquisition of two former OceanFirst Bank branches. These increases were partially offset by reduced occupancy and equipment, regulatory fees, and marketing and advertising costs. Excluding merger-related expenses, non-interest expense would have increased 2.5% for the comparable periods.

On a linked quarter basis, fourth quarter 2021 non-interest expense increased $1.3 million compared to $10.5 million for the third quarter of 2021. The higher non-interest expense compared to the third quarter of 2021 was also due principally to an increase in performance related compensation and merger-related expenses.

Non-interest expense for the full year 2021 totaled $43.2 million, an increase of $2.8 million, or 6.8%, compared to $40.4 million for the same period in 2020. The increase was primarily a result of increased performance related compensation, merger-related expenses and data processing costs, partially offset by lower occupancy and equipment costs and other expense. Lower occupancy and equipment and other expense was primarily due to cost savings from the closure of two branches and administrative office space during 2021. Excluding merger-related expenses, non-interest expense would have increased 5.3% for the comparable periods.

Income tax expense for the three months ended December 31, 2021 was $2.4 million with an effective tax rate of 23.2%, compared to $2.2 million with an effective tax rate of 25.8% for the fourth quarter of 2020 and $3.0 million with an effective tax rate of 24.7% for the third quarter of 2021. Income tax expense for the full year ended December 31, 2021 was $11.3 million with an effective tax rate of 24.2%, compared to $6.5 million for the full year 2020 with an effective tax rate of 25.1%. The increase in the income tax expense is primarily due to higher pre-tax income for the current periods.

Balance Sheet

Total assets at December 31, 2021 were $2.51 billion, an increase of $164.0 million, or 7.0%, compared to $2.35 billion at December 31, 2020. Total loans increased $64.4 million, or 3.1%, to $2.11 billion at December 31, 2021 compared to $2.05 billion at December 31, 2020. The increase in loans for the full year 2021 reflects organic growth of $139.2 million and $11.3 million in acquired loans, offset by a net decline in PPP loans of $86.1 million. Total loans as of December 31, 2021 increased $107.7 million, or 5.4%, from $2.00 billion at September 30, 2021, reflecting organic, net non-PPP loan growth of $123.1 million and $11.3 million in acquired loans, offset by a net decline in PPP loans of $26.7 million. PPP loans outstanding at December 31, 2021 were $51.0 million.

Total deposits were $2.11 billion at December 31, 2021, an increase of $211.0 million, or 11.1%, from $1.90 billion at December 31, 2020, and an increase of $68.6 million, or 3.4%, compared to $2.05 billion at September 30, 2021. Non-interest-bearing deposits totaled $558.8 million at December 31, 2021, an increase of $134.7 million, or 31.7%, from December 31, 2020, and an increase of $21.9 million, or 4.1%, from September 30, 2021, reflective of continued growth in commercial deposits. The Bank continues to focus on enhancing its deposit mix and, as of December 31, 2021, had grown non-interest bearing deposits to 26.4% and lowered time deposits to 18.5% of total deposits.

Stockholders’ equity was $266.7 million at December 31, 2021, compared to $238.1 million on December 31, 2020. The growth of $28.6 million, or 12.0%, in stockholders’ equity was primarily a result of full year 2021 net income of $35.4 million, partially offset by repurchases of 344,458 shares of common stock totaling $4.1 million and cash dividends paid of $2.9 million during the full year ended December 31, 2021.

As of December 31, 2021, the Bank continued to exceed all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.15%, a Tier 1 Risk-Based capital ratio of 10.65%, a Common Equity Tier 1 Capital ratio of 10.65%, and a Total Risk-Based capital ratio of 12.97%.

Asset Quality

First Bank’s asset quality metrics have remained stable and favorable during the twelve months ended December 31, 2021. Net charge-offs were $6,000 for the fourth quarter of 2021, compared to net charge-offs of $465,000 for the fourth quarter of 2020 and net recoveries of $121,000 for the third quarter of 2021. Net charge-offs as an annualized percentage of average loans were 0.00% in fourth quarter 2021, compared to 0.09% in fourth quarter 2020. Nonperforming loans were $13.0 million at December 31, 2021, up from $10.2 million on December 31, 2020, and up from $11.5 million on September 30, 2021. Nonperforming loans as a percentage of total loans at December 31, 2021 were 0.62%, compared with 0.50%, at December 31, 2020 and 0.57% at September 30, 2021. The allowance for loan losses to nonperforming loans was 182.65% at December 31, 2021, compared with 234.24% at the end of fourth quarter 2020, and 199.57% at September 30, 2021.

COVID-19 Response

First Bank participated in the PPP, established by the Coronavirus Aid, Relief, and Economic Securities Act (CARES Act), during 2020 and 2021. The PPP was a specialized low-interest loan program funded by the U.S. Treasury Department and administered by the SBA. The PPP provided borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilized the loan proceeds to cover compensation and other business-related operating costs. The PPP ended on May 31, 2021 but the PPP loan forgiveness process is ongoing. As of December 31, 2021, First Bank had 341 PPP loans with outstanding balances of $51.0 million. During 2021, prior to the end of the PPP on May 31, 2021, First Bank originated 783 new PPP loans totaling $107.9 million. During the year ended December 31, 2021, PPP loans totaling $194.0 million were forgiven. During 2021, the Bank realized $5.8 million in fee income on these loans as any deferred fees remaining on the forgiven loans were accelerated. As of December 31, 2021, the Bank had $1.7 million in remaining unamortized fees associated with outstanding balances of PPP loans.

First Bank continues to monitor and analyze its COVID-19 related financial hardship payment deferrals (COVID-19 deferrals). As of December 31, 2021, the Bank’s population of COVID-19 deferrals consisted of three loans totaling $1.6 million, or 0.08% of total loans, down from $10.3 million, or 0.52% of total loans, at September 30, 2021.

Branch Acquisition Completed

At the close of business on December 3, 2021, First Bank completed the acquisition of two New Jersey branch locations from OceanFirst Bank. As part of the acquisition, First Bank also acquired $100.9 million of associated deposits and $11.3 million of select performing loans. Located in Flemington and Monroe, the two branches enhance First Bank’s existing Central New Jersey footprint and further strengthen its presence along the New York City to Philadelphia corridor. Through December 31, 2021 there have been no material fluctuations in the acquired loan or deposit balances since the acquisition.

Cash Dividend Declared

On January 18, 2022, First Bank’s Board of Directors declared a quarterly cash dividend of $0.06 per share to common stockholders of record at the close of business on February 11, 2022, payable on February 25, 2022.

Conference Call

First Bank will host its earnings call on Thursday, January 27, 2022 at 9:00 AM eastern time. The direct dial toll free number for the live call is 1-844-200-6205 and the access code is 448993. For those unable to participate in the call, a replay will be available by dialing 1-866-813-9403 (access code 410946) from one hour after the end of the conference call until April 27, 2022. Replay information will also be available on First Bank’s website at www.firstbanknj.com under the “About Us” tab. Click on “Investor Relations” to access the replay of the conference call.

About First Bank

First Bank is a New Jersey state-chartered bank with 18 full-service branches in Cinnaminson, Cranbury, Delanco, Denville, Ewing, Flemington (2), Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With $2.5 billion in assets as of December 31, 2021, First Bank offers a full range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia corridor. First Bank’s common stock is listed on the Nasdaq Global Market under the symbol “FRBA.”

Forward Looking Statements

This press release contains certain forward-looking statements, either express or implied, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding First Bank’s future financial performance, business and growth strategy, projected plans and objectives, and related transactions, integration of acquired businesses, ability to recognize anticipated operational efficiencies, and other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about First Bank, any of which may change over time and some of which may be beyond First Bank’s control. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: whether First Bank can: successfully implement its growth strategy, including identifying acquisition targets and consummating suitable acquisitions, sustain its internal growth rate, and provide competitive products and services that appeal to its customers and target markets; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which First Bank operates and in which its loans are concentrated, including the effects of declines in housing market values; the impact of disease pandemics, including COVID-19, on First Bank, its operations and its customers and employees; an increase in unemployment levels and slowdowns in economic growth; First Bank’s level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; changes in market interest rates may increase funding costs and reduce earning asset yields thus reducing margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of First Bank’s investment securities portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of First Bank’s operations, including changes in regulations affecting financial institutions and expenses associated with complying with such regulations; uncertainties in tax estimates and valuations, including due to changes in state and federal tax law; First Bank’s ability to comply with applicable capital and liquidity requirements, including First Bank’s ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; and possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Forward-Looking Statements” and “Risk Factors” in First Bank’s Annual Report on Form 10-K and any updates to those risk factors set forth in First Bank’s proxy statement, subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if First Bank’s underlying assumptions prove to be incorrect, actual results may differ materially from what First Bank anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and First Bank does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that First Bank or persons acting on First Bank’s behalf may issue.

CONTACT: Patrick L. Ryan, President and CEO
(609) 643-0168, [email protected]

_______________
ⁱ Return on average tangible equity is a non-U.S. GAAP financial measure and is calculated by dividing net income by average tangible equity (average equity minus average goodwill and other intangible assets). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

ⁱⁱ Adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average tangible equity are non-U.S. GAAP financial measures and are calculated by dividing net income adjusted for certain merger-related expenses and other one-time gains or expenses by diluted weighted average shares, average assets and average tangible equity, respectively. For a reconciliation of these non-U.S. GAAP financial measures, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

ⁱⁱⁱ The efficiency ratio is a non-U.S. GAAP financial measure and is calculated by dividing non-interest expense less merger-related expenses by total revenue (net interest income plus non-interest income). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data, unaudited)
	December 31, 2021				December 31, 2020
Assets
Cash and due from banks	$	25,076			$	24,203
Interest bearing deposits with banks		129,431				71,270
Cash and cash equivalents		154,507				95,473
Interest bearing time deposits with banks		2,170				4,371
Investment securities available for sale, at fair value		94,584				61,731
Investment securities held to maturity (fair value of $39,718 at December 31, 2021 and $38,319 at December 31, 2020)		39,547				37,593
Restricted investment in bank stocks		5,856				8,545
Other investments		8,062				6,498
Loans, net of deferred fees and costs		2,111,991				2,047,572
Less: Allowance for loan losses		23,746				23,974
Net loans		2,088,245				2,023,598
Premises and equipment, net		9,883				10,736
Other real estate owned, net		772				575
Accrued interest receivable		5,681				6,806
Bank-owned life insurance		56,633				50,197
Goodwill		17,826				16,253
Other intangible assets, net		2,145				1,745
Deferred income taxes		11,081				11,394
Other assets		13,306				10,755
Total assets	$	2,510,298			$	2,346,270
Liabilities and Stockholders’ Equity
Liabilities:
Non-interest bearing deposits	$	558,775			$	424,119
Interest bearing deposits		1,555,827				1,479,498
Total deposits		2,114,602				1,903,617
Borrowings		81,835				161,135
Subordinated debentures		29,620				29,508
Accrued interest payable		399				561
Other liabilities		17,176				13,341
Total liabilities		2,243,632				2,108,162
Stockholders’ Equity:
Preferred stock, par value $2 per share; 10,000,000 shares authorized; no shares issued and outstanding		–				–
Common stock, par value $5 per share; 40,000,000 shares authorized; 20,851,506 shares issued and 19,472,364 shares outstanding at December 31, 2021 and 20,742,158 shares issued and 19,707,474 outstanding at December 31, 2020		103,704				103,135
Additional paid-in capital		79,563				78,887
Retained earnings		95,924				63,431
Accumulated other comprehensive (loss) income		(206	)			839
Treasury stock, 1,379,142 shares at December 31, 2021 and 1,034,684 shares at December 31, 2020		(12,319	)			(8,184	)
Total stockholders’ equity		266,666				238,108
Total liabilities and stockholders’ equity	$	2,510,298			$	2,346,270

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data, unaudited)
	Three Months Ended								Year Ended
	December 31,								December 31,
		2021				2020				2021				2020
Interest and Dividend Income
Investment securities—taxable	$	553			$	500			$	2,149			$	2,229
Investment securities—tax-exempt		36				57				169				277
Interest bearing deposits with banks,
Federal funds sold and other		136				139				660				911
Loans, including fees		21,791				22,391				88,136				85,784
Total interest and dividend income		22,516				23,087				91,114				89,201
Interest Expense
Deposits		1,105				2,357				5,684				15,573
Borrowings		330				565				1,779				2,260
Subordinated debentures		440				441				1,761				1,815
Total interest expense		1,875				3,363				9,224				19,648
Net interest income		20,641				19,724				81,890				69,553
Provision for loan losses		825				1,633				(232	)			9,539
Net interest income after provision for loan losses		19,816				18,091				82,122				60,014
Non-Interest Income
Service fees on deposit accounts		246				189				760				629
Loan fees		384				79				1,338				1,659
Income from bank-owned life insurance		386				352				1,436				1,624
Gains on sale of loans		392				71				1,892				289
Gains on recovery of acquired loans		554				415				1,235				1,389
Other non-interest income		249				206				1,093				762
Total non-interest income		2,211				1,312				7,754				6,352
Non-Interest Expense
Salaries and employee benefits		7,229				6,601				25,404				22,809
Occupancy and equipment		1,265				1,533				5,762				6,130
Legal fees		130				191				769				864
Other professional fees		623				631				2,133				2,116
Regulatory fees		170				273				855				1,076
Directors’ fees		221				220				876				869
Data processing		584				515				2,264				1,933
Marketing and advertising		1				89				526				427
Travel and entertainment		65				15				148				147
Insurance		172				168				655				673
Other real estate owned expense, net		68				73				165				57
Merger-related expenses		498				–				643				–
Other expense		799				743				2,952				3,286
Total non-interest expense		11,825				11,052				43,152				40,387
Income Before Income Taxes		10,202				8,351				46,724				25,979
Income tax expense		2,363				2,156				11,295				6,531
Net Income	$	7,839			$	6,195			$	35,429			$	19,448
Basic earnings per common share	$	0.40			$	0.31			$	1.81			$	0.98
Diluted earnings per common share	$	0.40			$	0.31			$	1.79			$	0.97
Cash dividends per common share	$	0.06			$	0.03			$	0.15			$	0.12
Basic weighted average common shares outstanding		19,469,404				19,721,653				19,611,381				19,885,699
Diluted weighted average common shares outstanding		19,725,294				19,827,708				19,815,747				20,005,432

FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
	Three Months Ended December 31,
		2021											2020
	Average								Average			Average								Average
	Balance				Interest				Rate (5)			Balance				Interest				Rate (5)
Interest earning assets
Investment securities (1) (2)	$	133,768			$	596			1.77	%		$	103,736			$	569			2.18	%
Loans (3)		2,035,059				21,791			4.25	%			2,017,496				22,391			4.42	%
Interest bearing deposits with banks,
Federal funds sold and other		145,742				46			0.13	%			69,015				40			0.23	%
Restricted investment in bank stocks		5,912				73			4.90	%			7,199				84			4.64	%
Other investments		7,323				17			0.92	%			6,493				15			0.92	%
Total interest earning assets (2)		2,327,804				22,523			3.84	%			2,203,939				23,099			4.17	%
Allowance for loan losses		(23,529	)										(23,323	)
Non-interest earning assets		143,124											135,433
Total assets	$	2,447,399										$	2,316,049
Interest bearing liabilities
Interest bearing demand deposits	$	265,789			$	59			0.09	%		$	178,190			$	78			0.17	%
Money market deposits		656,772				404			0.24	%			576,608				624			0.43	%
Savings deposits		181,253				165			0.36	%			149,946				207			0.55	%
Time deposits		399,768				477			0.47	%			531,495				1,448			1.08	%
Total interest bearing deposits		1,503,582				1,105			0.29	%			1,436,239				2,357			0.65	%
Borrowings		83,066				330			1.58	%			168,396				565			1.33	%
Subordinated debentures		29,603				440			5.95	%			29,491				441			5.98	%
Total interest bearing liabilities		1,616,251				1,875			0.46	%			1,634,126				3,363			0.82	%
Non-interest bearing deposits		550,718											429,604
Other liabilities		16,214											16,220
Stockholders’ equity		264,216											236,099
Total liabilities and stockholders’ equity	$	2,447,399										$	2,316,049
Net interest income/interest rate spread (2)						20,648			3.38	%							19,736			3.35	%
Net interest margin (2) (4)									3.52	%										3.56	%
Tax equivalent adjustment (2)						(7	)										(12	)
Net interest income					$	20,641										$	19,724
(1) Average balance of investment securities available for sale is based on amortized cost.
(2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%.
(3) Average balances of loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
(5) Annualized.

FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
	Year Ended December 31,
		2021											2020
	Average								Average			Average								Average
	Balance				Interest				Rate			Balance				Interest				Rate
Interest earning assets
Investment securities (1) (2)	$	118,673			$	2,353			1.98	%		$	103,859			$	2,564			2.47	%
Loans (3)		2,036,855				88,136			4.33	%			1,914,266				85,784			4.48	%
Interest bearing deposits with banks,
Federal funds sold and other		134,109				248			0.18	%			83,840				425			0.51	%
Restricted investment in bank stocks		7,312				348			4.76	%			6,785				375			5.53	%
Other investments		6,727				64			0.95	%			6,462				111			1.72	%
Total interest earning assets (2)		2,303,676				91,149			3.96	%			2,115,212				89,259			4.22	%
Allowance for loan losses		(23,753	)										(20,768	)
Non-interest earning assets		140,594											132,466
Total assets	$	2,420,517										$	2,226,910
Interest bearing liabilities
Interest bearing demand deposits	$	225,945			$	224			0.10	%		$	165,346			$	455			0.28	%
Money market deposits		627,211				1,772			0.28	%			524,520				3,982			0.76	%
Savings deposits		179,705				739			0.41	%			139,091				1,047			0.75	%
Time deposits		458,980				2,949			0.64	%			600,447				10,089			1.68	%
Total interest bearing deposits		1,491,841				5,684			0.38	%			1,429,404				15,573			1.09	%
Borrowings		115,343				1,779			1.54	%			131,031				2,260			1.72	%
Subordinated debentures		29,561				1,761			5.96	%			28,367				1,815			6.40	%
Total interest bearing liabilities		1,636,745				9,224			0.56	%			1,588,802				19,648			1.24	%
Non-interest bearing deposits		514,137											391,686
Other liabilities		15,903											16,257
Stockholders’ equity		253,732											230,165
Total liabilities and stockholders’ equity	$	2,420,517										$	2,226,910
Net interest income/interest rate spread (2)						81,925			3.40	%							69,611			2.98	%
Net interest margin (2) (4)									3.56	%										3.29	%
Tax equivalent adjustment (2)						(35	)										(58	)
Net interest income					$	81,890										$	69,553
(1) Average balance of investment securities available for sale is based on amortized cost.
(2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%.
(3) Average balances of loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except for share and employee data, unaudited)
		As of or For the Quarter Ended
		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020
EARNINGS
Net interest income		$	20,641			$	20,781			$	20,421			$	20,047			$	19,724
Provision for loan losses			825				158				(162	)			(1,053	)			1,633
Non-interest income			2,211				1,901				1,342				2,300				1,312
Non-interest expense			11,825				10,522				10,155				10,650				11,052
Income tax expense			2,363				2,966				2,877				3,089				2,156
Net income			7,839				9,036				8,893				9,661				6,195
PERFORMANCE RATIOS
Return on average assets (1)			1.27	%			1.46	%			1.48	%			1.66	%			1.06	%
Adjusted return on average assets (1) (2)			1.33	%			1.48	%			1.48	%			1.66	%			1.06	%
Return on average equity (1)			11.77	%			13.86	%			14.26	%			16.21	%			10.44	%
Adjusted return on average equity (1) (2)			12.36	%			14.04	%			14.26	%			16.21	%			10.44	%
Return on average tangible equity (1) (2)			12.63	%			14.90	%			15.37	%			17.52	%			11.30	%
Adjusted return on average tangible equity (1) (2)			13.26	%			15.09	%			15.37	%			17.52	%			11.30	%
Net interest margin (1) (3)			3.52	%			3.54	%			3.57	%			3.60	%			3.56	%
Total cost of deposits (1)			0.21	%			0.25	%			0.30	%			0.39	%			0.50	%
Efficiency ratio (2)			49.57	%			45.75	%			46.66	%			47.66	%			52.54	%
SHARE DATA
Common shares outstanding			19,472,364				19,464,388				19,678,528				19,663,065				19,707,474
Basic earnings per share		$	0.40			$	0.46			$	0.45			$	0.49			$	0.31
Diluted earnings per share			0.40				0.46				0.45				0.49				0.31
Adjusted diluted earnings per share (2)			0.42				0.46				0.45				0.49				0.31
Tangible book value per share (2)			12.67				12.45				12.02				11.59				11.17
Book value per share			13.69				13.37				12.94				12.51				12.08
MARKET DATA
Market value per share		$	14.51			$	14.09			$	13.54			$	12.17			$	9.38
Market value / Tangible book value			114.53	%			113.21	%			112.61	%			104.97	%			83.98	%
Market capitalization		$	282,544			$	274,253			$	266,447			$	239,300			$	184,856
CAPITAL & LIQUIDITY
Tangible stockholders’ equity / tangible assets (2)			9.91	%			10.01	%			9.76	%			9.55	%			9.45	%
Stockholders’ equity / assets			10.62	%			10.67	%			10.42	%			10.23	%			10.15	%
Loans / deposits			99.88	%			97.96	%			100.87	%			102.62	%			107.56	%
ASSET QUALITY
Net charge-offs (recoveries)		$	6			$	(121	)		$	116			$	(5	)		$	465
Nonperforming loans			13,001				11,488				9,558				10,676				10,234
Nonperforming assets			13,773				11,967				10,038				11,251				10,809
Net charge offs (recoveries) / average loans (1)			0.00	%			(0.02	%)			0.02	%			0.00	%			0.09	%
Nonperforming loans / total loans			0.62	%			0.57	%			0.47	%			0.53	%			0.50	%
Nonperforming assets / total assets			0.55	%			0.49	%			0.41	%			0.47	%			0.46	%
Allowance for loan losses / total loans			1.12	%			1.14	%			1.10	%			1.13	%			1.17	%
Allowance for loan losses / total loans (excluding PPP loans)			1.15	%			1.19	%			1.18	%			1.24	%			1.25	%
Allowance for loan losses / nonperforming loans			182.65	%			199.57	%			236.95	%			214.74	%			234.24	%
OTHER DATA
Total assets		$	2,510,298			$	2,438,020			$	2,443,047			$	2,405,576			$	2,346,270
Total loans			2,111,991				2,004,289				2,053,938				2,022,187				2,047,572
Total deposits			2,114,602				2,045,966				2,036,228				1,970,491				1,903,617
Total stockholders’ equity			266,666				260,179				254,571				245,997				238,108
Number of full-time equivalent employees (4)			217				209				215				211				204
(1) Annualized.
(2) Non-U.S. GAAP financial measure that we believe provides management and investors with information that is useful in understanding our financial performance and condition. See accompanying table, “Non-U.S. GAAP Financial Measures”, for calculation and reconciliation.
(3) Tax equivalent using a federal income tax rate of 21%.
(4) Includes 4 full-time equivalent seasonal interns as of June 30, 2021.

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)
		As of the Quarter Ended
		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020
LOAN COMPOSITION
Commercial and industrial		$	350,103			$	308,991			$	379,916			$	432,869			$	388,886
Commercial real estate:
Owner-occupied			470,022				444,635				427,094				399,042				407,089
Investor			848,021				832,727				814,762				771,599				778,958
Construction and development			109,292				112,112				127,329				123,930				149,284
Multi-family			173,728				145,245				142,015				125,493				144,527
Total commercial real estate			1,601,063				1,534,719				1,511,200				1,420,064				1,479,858
Residential real estate:
Residential mortgage and first lien home equity loans			106,204				103,890				108,842				117,756				120,018
Home equity–second lien loans and revolving lines of credit			31,375				29,998				29,422				29,306				33,575
Total residential real estate			137,579				133,888				138,264				147,062				153,593
Consumer and other			27,762				31,946				31,584				29,213				30,368
Total loans prior to deferred loan fees and costs			2,116,507				2,009,544				2,060,964				2,029,208				2,052,705
Net deferred loan fees and costs			(4,516	)			(5,255	)			(7,026	)			(7,021	)			(5,133	)
Total loans		$	2,111,991			$	2,004,289			$	2,053,938			$	2,022,187			$	2,047,572
LOAN MIX
Commercial and industrial			16.6	%			15.4	%			18.5	%			21.4	%			19.0	%
Commercial real estate:
Owner-occupied			22.3	%			22.2	%			20.8	%			19.7	%			19.9	%
Investor			40.1	%			41.5	%			39.7	%			38.2	%			38.0	%
Construction and development			5.2	%			5.6	%			6.2	%			6.1	%			7.3	%
Multi-family			8.2	%			7.2	%			6.9	%			6.2	%			7.0	%
Total commercial real estate			75.8	%			76.5	%			73.5	%			70.2	%			72.2	%
Residential real estate:
Residential mortgage and first lien home equity loans			5.0	%			5.2	%			5.3	%			5.8	%			5.9	%
Home equity–second lien loans and revolving lines of credit			1.5	%			1.5	%			1.4	%			1.4	%			1.6	%
Total residential real estate			6.5	%			6.7	%			6.7	%			7.2	%			7.5	%
Consumer and other			1.4	%			1.7	%			1.6	%			1.5	%			1.6	%
Net deferred loan fees and costs			(0.3	%)			(0.3	%)			(0.3	%)			(0.3	%)			(0.3	%)
Total loans			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)
		As of the Quarter Ended
		12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020
DEPOSIT COMPOSITION
Non-interest bearing demand deposits		$	558,775			$	536,905			$	534,475			$	500,008			$	424,119
Interest bearing demand deposits			293,647				241,869				211,074				208,443				201,881
Money market and savings deposits			871,074				845,607				817,424				767,603				753,640
Time deposits			391,106				421,585				473,255				494,437				523,977
Total Deposits		$	2,114,602			$	2,045,966			$	2,036,228			$	1,970,491			$	1,903,617
DEPOSIT MIX
Non-interest bearing demand deposits			26.4	%			26.3	%			26.3	%			25.4	%			22.3	%
Interest bearing demand deposits			13.9	%			11.8	%			10.4	%			10.6	%			10.6	%
Money market and savings deposits			41.2	%			41.3	%			40.1	%			38.9	%			39.6	%
Time deposits			18.5	%			20.6	%			23.2	%			25.1	%			27.5	%
Total Deposits			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(in thousands, except for share data, unaudited)
	As of or For the Quarter Ended
	12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020
Return on Average Tangible Equity
Net income (numerator)	$	7,839			$	9,036			$	8,893			$	9,661			$	6,195
Average stockholders’ equity	$	264,216			$	258,596			$	250,143			$	241,674			$	236,099
Less: Average Goodwill and other intangible assets, net		17,910				17,937				18,001				18,023				18,062
Average Tangible stockholders’ equity (denominator)	$	246,306			$	240,659			$	232,142			$	223,651			$	218,037
Return on Average Tangible equity		12.63	%			14.90	%			15.37	%			17.52	%			11.30	%
Tangible Book Value Per Share
Stockholders’ equity	$	266,666			$	260,179			$	254,571			$	245,997			$	238,108
Less: Goodwill and other intangible assets, net		19,971				17,920				17,965				18,024				17,998
Tangible stockholders’ equity (numerator)	$	246,695			$	242,259			$	236,606			$	227,973			$	220,110
Common shares outstanding (denominator)		19,472,364				19,464,388				19,678,528				19,663,065				19,707,474
Tangible book value per share	$	12.67			$	12.45			$	12.02			$	11.59			$	11.17
Tangible Equity / Assets
Stockholders’ equity	$	266,666			$	260,179			$	254,571			$	245,997			$	238,108
Less: Goodwill and other intangible assets, net		19,971				17,920				17,965				18,024				17,998
Tangible stockholders’ equity (numerator)	$	246,695			$	242,259			$	236,606			$	227,973			$	220,110
Total assets	$	2,510,298			$	2,438,020			$	2,443,047			$	2,405,576			$	2,346,270
Less: Goodwill and other intangible assets, net		19,971				17,920				17,965				18,024				17,998
Tangible total assets (denominator)	$	2,490,327			$	2,420,100			$	2,425,082			$	2,387,552			$	2,328,272
Tangible stockholders’ equity / tangible assets		9.91	%			10.01	%			9.76	%			9.55	%			9.45	%
Efficiency Ratio
Non-interest expense	$	11,825			$	10,522			$	10,155			$	10,650			$	11,052
Less: Merger-related expenses		498				145				–				–				–
Adjusted non-interest expense (numerator)	$	11,327			$	10,377			$	10,155			$	10,650			$	11,052
Net interest income	$	20,641			$	20,781			$	20,421			$	20,047			$	19,724
Non-interest income		2,211				1,901				1,342				2,300				1,312
Total revenue	$	22,852			$	22,682			$	21,763			$	22,347			$	21,036
Efficiency ratio		49.57	%			45.75	%			46.66	%			47.66	%			52.54	%

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)
	For the Quarter Ended
	12/31/2021				9/30/2021				6/30/2021				3/31/2021				12/31/2020
Adjusted diluted earnings per share,
Adjusted return on average assets, and
Adjusted return on average equity
Net income	$	7,839			$	9,036			$	8,893			$	9,661			$	6,195
Add: Merger-related expenses (1)		393				115				–				–				–
Adjusted net income	$	8,232			$	9,151			$	8,893			$	9,661			$	6,195
Diluted weighted average common shares outstanding		19,725,294				19,842,817				19,883,076				19,834,319				19,827,708
Average assets	$	2,447,399			$	2,456,617			$	2,410,353			$	2,366,417			$	2,316,049
Average equity	$	264,216			$	258,596			$	250,143			$	241,674			$	236,099
Average Tangible Equity	$	246,306			$	240,659			$	232,142			$	223,651			$	218,037
Adjusted diluted earnings per share	$	0.42			$	0.46			$	0.45			$	0.49			$	0.31
Adjusted return on average assets (2)		1.33	%			1.48	%			1.48	%			1.66	%			1.06	%
Adjusted return on average equity (2)		12.36	%			14.04	%			14.26	%			16.21	%			10.44	%
Adjusted return on average tangible equity (2)		13.26	%			15.09	%			15.37	%			17.52	%			11.30	%
(1) Items are tax-effected using a federal income tax rate of 21%.
(2) Annualized.

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)
	Year Ended December 31,
		2021				2020
Adjusted diluted earnings per share,
Adjusted return on average assets, and
Adjusted return on average equity
Net income	$	35,429			$	19,448
Add: Merger-related expenses (1)		508				–
Adjusted net income	$	35,937			$	19,448
Diluted weighted average common shares outstanding		19,815,747				20,005,432
Average assets	$	2,420,517			$	2,226,910
Average equity	$	253,732			$	230,165
Average Tangible Equity	$	235,764			$	211,975
Adjusted diluted earnings per share	$	1.81			$	0.97
Adjusted return on average assets		1.48	%			0.87	%
Adjusted return on average equity		14.16	%			8.45	%
Adjusted return on average tangible equity		15.24	%			9.17	%
(1) Tax-effected using a federal income tax rate of 21%