National Capital Bancorp, Inc. Reports Fourth Quarter Earnings

Rhea-AI Summary

National Capital Bancorp, Inc. reported net income of $1,088,000 for the three months ended December 31, 2023, compared to $1,355,000 for the same period in 2022. For the year ended December 31, 2023, the Company reported net income of $4,363,000, compared to $4,588,000 in 2022. The recovery of provision for credit losses in the prior year and a stronger net interest margin were the leading factors in the decrease in Company profitability in the fourth quarter of 2023. The Company has implemented cost reduction initiatives to help offset the pressure from increased funding costs. Total assets increased to $703,051,000 on December 31, 2023, and total loans increased by $19.9 million during the quarter. While the net interest margin decreased slightly, the Company saw strong core deposit growth in the fourth quarter, reflecting the efforts of the commercial and retail team members. The Company's Board of Directors declared a dividend of $0.66 per share for shareholders of record as of February 14, 2024, representing a 10.0% increase over the prior quarterly dividend.

Positive

• Net income reported for the three months and year ended December 31, 2023
• Increase in total assets and total loans during the quarter
• Strong core deposit growth in the fourth quarter
• 10.0% increase in dividend payout over the prior quarterly dividend

Negative

• Decrease in net interest margin during the fourth quarter of 2023
• Pressure from increased funding costs

WASHINGTON--(BUSINESS WIRE)-- National Capital Bancorp, Inc. (the “Company”) (OTC Pink: NACB), the holding company for The National Capital Bank of Washington (“NCB” or the “Bank") reported net income of $1,088,000, or $3.78 per common share, for the three months ended December 31, 2023, compared to net income of $1,355,000 or $4.71 per common share, for the quarter ended December 31, 2022. For the year ended December 31, 2023, the Company reported net income of $4,363,000, or $15.17 per share, compared to $4,588,000, or $15.98 for the year ended December 31, 2022. A recovery of provision for credit losses in the fourth quarter of the prior year along with a stronger net interest margin in the prior year period were the leading factors in the decrease in Company profitability in the fourth quarter of 2023. Prior year non-interest income included a $393,000 loss on the sale of securities which occurred in the fourth quarter of 2022. The Company has implemented cost reduction initiatives during the most recent quarter to help offset the pressure from increased funding costs. Loan quality remains pristine with no non-performing loans as of December 31, 2023.

Total assets increased during the quarter to $703,051,000 on December 31, 2023. Total loans of $496,982,000 on December 31, 2023, increased by $19.9 million during the quarter and have increased $71.8 million on a year-to-date basis. Total deposits of $580,649,000 on December 31, 2023, increased $19.7 million during the quarter to provided funding for our loan growth and have increased $8.9 million on a year-to-date basis. While the Company has begun to utilize borrowings from the FHLB and the Federal Reserve in 2023 to help in meeting loan growth opportunities, it has a relatively low reliance on wholesale funding sources and maintains strong levels of available secured borrowing capacity to meet the financing and cash flow needs of our client base as well as continue to pursue desirable new relationship opportunities.

The Company’s net interest margin of 3.21% during the fourth quarter of 2023 was down slightly compared with 3.23% in the third quarter of 2023 and down compared with 3.51% in the fourth quarter of 2022. While the past several quarters have benefited from the favorable impact of interest rate increases on variable-rate loans, interest-bearing cash balances and on newly originated loans, we did see compression of our net interest margin again in the most recent quarter due to increased competition for deposits along with some utilization of wholesale funding sources to enhance our liquidity position and satisfy client borrowing needs and new loan opportunities.

Total shareholders’ equity increased to $53,370,000 on December 31, 2023, from $48,328,000 a year ago due primarily to the retained earnings for the past twelve months. For the year ended December 31, 2023, the return on average assets and return on average equity was 0.66% and 8.68%, respectively.

“We were pleased to see strong core deposit growth occur in the fourth quarter. Those results are a reflection of both our commercial and retail team members who continue to bring new relationships to the Bank,” said Jimmy Olevson, President and Chief Executive Officer of the Bank. Olevson continued, “Additionally in the fourth quarter, we executed a right sizing and restructuring with our staff. The moves made have positioned National Capital Bank to continually improve our efficiency while increasing shareholder return in the long run."

The Company also announced today that its Board of Directors has declared a dividend of $0.66 per share for shareholders of record as of February 14, 2024. The dividend payout of $189,817.32 on 287,602 shares is payable February 28, 2024, and represents a $0.06 per share, or 10.0% increase, over the prior quarterly dividend.

National Capital Bancorp, Inc. is the holding company for The National Capital Bank of Washington (NCB) 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 online and mobile banking services and sophisticated treasury management solutions– all delivered with top-rated personal service. NCB is well positioned to serve all the banking needs of those in our communities. For more information about NCB, visit www.nationalcapitalbank.bank

Forward Looking Statements

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

National Capital Bancorp, Inc.
Financial Highlights
(In thousands, except share data)		Three Months Ended								Twelve Months Ended
(Unaudited)		December 31								December 31
Condensed Statement of Income:		2023				2022				2023				2022
Interest income		$	7,694			$	6,482			$	28,521			$	22,447
Interest expense			2,489				844				7,680				2,026
Net interest income			5,205				5,638				20,841				20,421
Provision for (recovery of) credit losses			210				(241	)			210				(891	)
Net interest income after provision			4,995				5,879				20,631				21,312
Non-interest income			723				190				2,923				2,096
Non-interest expense			4,299				4,315				17,782				17,410
Income before taxes			1,419				1,754				5,772				5,998
Income tax provision			331				399				1,409				1,410
Net income		$	1,088			$	1,355			$	4,363			$	4,588
Share Data:
Weighted avg no. of shares outstanding			287,672				287,334				287,622				287,115
Period end shares outstanding			287,602				287,300				287,602				287,300
Per Common Share Data:
Net income		$	3.78			$	4.71			$	15.17			$	15.98
Closing Stock Price										$	172.75			$	165.00
Book Value										$	185.57			$	168.21
Profitability Ratios, Annualized:
Return on average shareholders' equity			8.64	%			11.57	%			8.68	%			9.29	%
Return on average total assets			0.65	%			0.82	%			0.66	%			0.67	%
Average equity to average total assets			7.49	%			7.05	%			7.61	%			7.26	%
Condensed Balance Sheets:		December 30				December 31
		2023				2022
Assets
Cash and equivalents		$	43,732			$	36,954
Securities, available for sale			67,039				84,714
Securities, held to maturity			67,110				72,344
Loans, held for sale			786				0
Loans, held in portfolio			496,982				425,149
Allowance for credit losses			(5,450	)			(5,069	)
Premises and equipment, net			6,939				7,547
Bank owned life insurance			14,402				12,610
Other assets			11,511				9,907
Total assets		$	703,051			$	644,156
Liabilities and shareholders' equity
Deposits		$	580,649			$	571,751
Securities sold under agreement to repurchase			0				7,274
FHLB advances and other borrowings			52,000				0
Subordinated notes, net of issuance cost			13,734				13,679
Other liabilities			3,298				3,124
Shareholders' equity			53,370				48,328
Total liabilities and shareholders' equity		$	703,051			$	644,156
Other Data:
Non-performing loans to total loans			0.00	%			0.05	%
Allowance to total loans			1.10	%			1.19	%
Net charge-offs (recoveries) to average loans			0.00	%			0.00	%
Loan-to-deposit ratio			85.59	%			74.36	%
Net interest margin for the quarter			3.21	%			3.51	%
Net interest margin for the year			3.30	%			3.12	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240124028593/en/

Randal J. Rabe, EVP, Chief Financial Officer

Phone: 202-546-8000

Email: rrabe@nationalcapitalbank.bank

Source: National Capital Bancorp, Inc.

FAQ

What was the net income reported for the three months ended December 31, 2023?

The net income reported for the three months ended December 31, 2023, was $1,088,000.

What was the net income reported for the year ended December 31, 2023?

The net income reported for the year ended December 31, 2023, was $4,363,000.

What was the increase in total assets on December 31, 2023?

Total assets increased to $703,051,000 on December 31, 2023.

What was the increase in total loans during the quarter?

Total loans increased by $19.9 million during the quarter.

What was the dividend payout for shareholders of record as of February 14, 2024?

The dividend payout was $0.66 per share, representing a 10.0% increase over the prior quarterly dividend.