National Capital Bancorp, Inc. Reports Fourth Quarter Earnings

National Capital Bancorp, Inc. (the “Company”) (OTC Pink: NACB), the holding company for The National Capital Bank of Washington (“NCB” or the “Bank") reported net income of $1,323,000, or $4.62 per common share, for the three months ended December 31, 2021, compared to net income of $1,003,000 or $3.51 per common share, for the quarter ended December 31, 2020. For the year ended December 31, 2021, the Company reported net income of $4,646,000, or $16.23 per share, compared to $2,648,000, or $9.26 for the year ended December 31, 2020. The prior year-to-date results included a $2.0 million build-up in the Bank’s allowance for loan losses in an aggressive response to the uncertain economic and other factors relating to the COVID-19 pandemic but were partially aided by a $0.6 million gain on sale of securities during the third quarter of 2020. While the Company’s asset quality metrics remained strong during 2021, the allowance for loan losses as a percentage of loans, excluding PPP loans, has remained stable at 1.60% on December 31, 2021 compared to 1.57% on December 31, 2020.

Total assets increased year-over-year to $734,709,000 on December 31, 2021 compared to $615,294,000 on December 31, 2020. Total loans of $396,453,000 on December 31, 2021 decreased by $36.1 million during the quarter and have decreased from $440,819,000 the year before. Total deposits increased during the quarter by $89.4 million to $657,116,000 on December 31, 2021 and have increased from $532,444,000 the year before. The deposit increase included a year-end client deposit of $55 million which was transferred out in January 2022. The Company was an active participant in PPP lending which resulted in new loans exceeding $45 million under the 2021 program and totaling over $108 million overall when combined with the 2020 program. PPP loan forgiveness received during the fourth quarter of 2021 was the largest single factor impacting the overall decline in loans for the quarter, with the remaining decline due to a combination of construction loan maturities and transaction-related prepayments of several commercial real estate loans. The remaining combined outstanding balance of PPP loans was $23 million on December 31, 2021, compared with a balance of $35 million and $51 million on September 30, 2021 and December 31, 2020, respectively. The Company has collected $3.9 million of processing fees on the PPP loans, which were deferred and are being recognized in income over the life of the loans. Of these fees $540,000 was recognized in interest income during the fourth quarter of 2021 and $2,205,000 for the full year of 2021 leaving remaining deferred fees of $0.8 million on December 31, 2021. The Company’s net interest margin declined to 3.10% during the fourth quarter of 2021 compared to 3.14% in the third quarter of 2021 and 3.26% in fourth quarter of 2020. 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.

Total shareholders’ equity increased to $54,854,000 on December 31, 2021 from $53,449,000 a year ago. The increase resulted primarily from retained earnings for the past twelve months. For the year ended December 31, 2021 the return on average assets and return on average equity was 0.71% and 8.57%, respectively.

Richard B. (Randy) Anderson, Jr. President and Chief Executive Officer said, “The increase in earnings, deposit growth and new relationships coming from our strong PPP efforts were rewarding and represent the highlights of 2021. However, the impact of the year’s ultra-low interest rates on loan pre-payments and continued pandemic hangover on business borrowing through much of the year were disappointing and represent challenges to overcome in 2022.” Anderson continued “On the bright side lending opportunities with our new relationships; new products, services and efficiencies facilitated by our mid-2020 core conversion; and the expanded capital base from our sub-debt raise in mid-2021 should help get us off to a good start in meeting these 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 February 14, 2022. The dividend payout of $171,874.20 on 286,457 shares is payable February 28, 2022, and represents a $0.05 per share, or 9.1% increase, over the prior quarterly dividend.

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

Forward Looking Statements

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

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