National Capital Bancorp, Inc. Reports First Quarter Earnings

Rhea-AI Summary

National Capital Bancorp, Inc. (OTC Pink: NACB) reported a net income of $837,000 ($2.92 per share) for Q1 2022, down from $955,000 ($3.34 per share) in Q1 2021. Total assets rose to $668.6 million, while total deposits decreased by $65.2 million to $591.9 million due to a significant client deposit transfer. The company experienced a decline in net interest margin to 2.83% and a decrease in total loans to $406.5 million. A dividend of $0.60 per share was declared, payable on May 30, 2022.

Positive

• Dividend declared at $0.60 per share.
• Total assets increased year-over-year to $668.6 million.
• Organic loan growth of $18 million in Q1 2022.

Negative

• Net income dropped by 12.3% compared to Q1 2021.
• Total loans decreased by $72.9 million year-over-year.
• Net interest margin declined to 2.83%, down from 3.33% year-over-year.
• Total deposits decreased by $65.2 million in Q1 2022.

WASHINGTON--(BUSINESS WIRE)-- National Capital Bancorp, Inc. (the “Company”) (OTC Pink: NACB), the holding company for The National Capital Bank of Washington (“NCB” or the “Bank") reported net income of $837,000, or $2.92 per common share, for the three months ended March 31, 2022, compared to net income of $955,000 or $3.34 per common share, for the quarter ended March 31, 2021. The Company was an active participant in Paycheck Protection Program (PPP) lending during 2020 and the first half of 2021. Average PPP loan balances were $69 million during the first quarter of 2021 compared with $19 million during the first quarter of 2022 resulting in a year-over-year reduction in first quarter PPP-related income of nearly $300,000.

Total assets increased year-over-year to $668,586,000 on March 31, 2022 compared to $630,187,000 on March 31, 2021. Total loans of $406,497,000 on March 31, 2022 increased by $10.0 million during the quarter but have decreased from $479,407,000 the year before. Total deposits decreased during the quarter by $65.2 million to $591,947,000 on March 31, 2022 but have increased from $551,758,000 the year before. The deposit decrease was primarily the result of a 2021 year-end client deposit of $55 million which was transferred out in January 2022. Organic loan growth in the first quarter of 2022 was $18 million and was partially offset by PPP loan forgiveness received during the quarter. The remaining combined outstanding balance of PPP loans was $15 million on March 31, 2022, compared with a balance of $23 million and $83 million on December 31, 2021 and March 31, 2021, respectively. The Company’s net interest margin declined to 2.83% during the first quarter of 2022 compared to 3.10% in the fourth quarter of 2021 and 3.33% in first quarter of 2021. Much like the banking industry as a whole, the Bank is carrying a higher proportion of earning assets in lower yielding securities as loan demand has not kept pace with deposit growth. Additionally, lower PPP fee accretion during the first quarter of 2022 has negatively impacted the net interest margin in comparison to the prior quarter as well as the first quarter of 2021.

Total shareholders’ equity decreased to $49,642,000 on March 31, 2022 from $52,758,000 a year ago due to the change in market valuation of the investment portfolio in a rising rate environment, and partially offset by retained earnings for the past twelve months. In order to partially mitigate the impact of higher interest rates on the valuation of the investment portfolio, the Bank transferred approximately $80 million of securities to a held-to-maturity category which is valued at amortized cost rather than at fair market value. For the quarter ended March 31, 2022 the return on average assets and return on average equity was 0.49% and 6.31%, respectively.

Richard B. (Randy) Anderson, Jr. Chief Executive Officer said, “Increasing concerns regarding the pace of inflation and the Federal Reserve’s projected countermeasures to trim its balance sheet and aggressively raise the discount rate have created challenges for the banking industry not seen in decades. Managing so as to minimize the damage to the net interest margin and balancing the asset and liability mix will be a primary focus.” Anderson continued “Without the added lift of the now discontinued PPP and associated loan balances and fees, first quarter 2022 earnings fell short of the comparable period in 2021. However, we are encouraged by the loan growth and pipeline in commercial and commercial real estate lending in what has historically been a slower quarter. We are also pleased to have retained the elevated levels of non-interest-bearing deposits we enjoyed in 2021. Both of these factors should assist with meeting 2022’s challenges.”

The Company also announced today that its Board of Directors has declared a dividend of $0.60 per share for shareholders of record as of May 16, 2022. The dividend payout of $172,439.40 on 287,399 shares is payable May 30, 2022.

National Capital Bancorp, Inc. is the holding company for The National Capital Bank of Washington which was founded in 1889 and is Washington’s Oldest Bank. NCB is headquartered on Capitol Hill with offices in the Friendship Heights community in Northwest D.C., the Courthouse/Clarendon community in Arlington, Virginia and the Fox Hill senior living community of Bethesda, Maryland. NCB also operates residential mortgage and commercial lending offices and a wealth management services division. NCB product and service offerings include personal and business deposit accounts, robust eBanking, sophisticated treasury management solutions, remote deposit capture and merchant processing – all delivered with top-rated personal service. NCB is well-positioned to serve all the banking needs of those in our communities. For more information about NCB, visit www.nationalcapitalbank.com.

Forward Looking Statements

This news release may contain certain forward-looking statements, such as statements of the Company’s plans, objectives, expectations, estimates and intentions. Forward-looking statements may be identified using words such as “expects,” “subject,” “will,” “intends,” “will be” or “would,” These statements are subject to change based on various important factors (some of which are beyond the Company’s control) and actual results may differ materially. Accordingly, readers should not place undue reliance on any forward-looking statements (which reflect management’s analysis of factors only as of the date of which they are given). These factors include general economic conditions, trends in interest rates, the ability of the Company to effectively manage its growth and results of regulatory examinations, among other factors. The foregoing list of important factors is not exclusive.

National Capital Bancorp, Inc.
Financial Highlights
(In thousands, except share data)		Three Months Ended
(Unaudited)		March 31
Condensed Statement of Income:			2022				2021
Interest income		$	4,889			$	5,137
Interest expense			283				201
Net interest income			4,606				4,936
Provision for (recovery of) loan losses			(158	)			145
Net interest income after provision			4,764				4,791
Non-interest income			663				698
Non-interest expense			4,341				4,230
Income before taxes			1,086				1,258
Income tax provision			249				303
Net income		$	837			$	955
Share Data:
Weighted avg no. of shares outstanding			286,495				286,057
Period end shares outstanding			286,832				286,057
Per Common Share Data:
Net income		$	2.92			$	3.34
Closing Stock Price		$	170.00			$	178.85
Book Value		$	173.07			$	184.43
Profitability Ratios, Annualized:
Return on average stockholders' equity			6.31	%			7.13	%
Return on average total assets			0.49	%			0.61	%
Average equity to average total assets			7.75	%			8.61	%

	Condensed Balance Sheets:		March 31				December 31				March 31
				2022				2021				2021
	Assets
	Cash and equivalents		$	53,118			$	138,607			$	14,954
	Securities, available for sale			106,795				179,066				112,774
	Securities, held to maturity			79,777				0				0
	Loans, held for sale			0				0				2,194
	Loans, held in portfolio			406,497				396,453				479,407
	Allowance for loan losses			(5,802	)			(5,959	)			(6,160	)
	Premises and equipment, net			8,053				8,198				8,378
	Bank owned life insurance			12,448				12,396				12,230
	Other assets			7,700				5,948				6,410
	Total assets		$	668,586			$	734,709			$	630,187
	Liabilities and stockholders' equity
	Deposits		$	591,947			$	657,116			$	551,758
	Securities sold under agreement to repurchase			10,997				6,327				5,853
	FHLB advances			0				0				0
	Paycheck Protection Program Liquidity Facility			0				0				16,522
	Subordinated notes, net of issuance cost			13,638				13,624				0
	Other liabilities			2,362				2,788				3,296
	Stockholders' equity			49,642				54,854				52,758
	Total liabilities and stockholders' equity		$	668,586			$	734,709			$	630,187
	Other Data:
	Non-performing loans to total loans (1)			0.06	%			0.07	%			0.27	%
	Allowance to total loans			1.43	%			1.50	%			1.29	%
	Net charge-offs (recoveries) to average loans			0.00	%			0.00	%			0.08	%
	Loan-to-deposit ratio			68.67	%			60.33	%			86.89	%
	Net interest margin for the quarter			2.83	%			3.10	%			3.33	%
	Net interest margin for the year			2.83	%			3.22	%			3.33	%
	(1) NPL's exclude accruing TDR's

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220427005821/en/

Richard B. Anderson, Jr., President & CEO or

Randal J. Rabe, EVP, Chief Financial Officer

Phone: 202-546-8000

Email: randy.anderson@ncbwash.com or

rrabe@ncbwash.com

Source: National Capital Bancorp, Inc.

FAQ

What was National Capital Bancorp's net income for Q1 2022?

The net income for Q1 2022 was $837,000 ($2.92 per share).

How did total assets change for NACB year-over-year?

Total assets increased to $668.6 million from $630.2 million year-over-year.

What is the current state of NACB's loan portfolio?

Total loans decreased to $406.5 million in Q1 2022, down from $479.4 million a year ago.

When is the dividend payout for NACB shareholders?

The dividend of $0.60 per share is payable on May 30, 2022.

How did the net interest margin change for NACB?

The net interest margin fell to 2.83% in Q1 2022, down from 3.33% in Q1 2021.