What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-16 compared with 2025-03-17 · 688 added, 462 removed, 1449 unchanged (44% of the section changed)

6 unchanged sentences

We have audited the accompanying consolidated balance sheets of Capital Bancorp, Inc.

and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the “financial statements”).

and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 17, 2025, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

Our report dated March 16, 2026 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

Basis for Opinion

19 unchanged sentences

Management also collectively evaluates purchased credit deteriorated (“PCD”) loans that do not meet the individually evaluated criteria.

For these loans, management uses an adverse “through-the-cycle” (“TTC”) probably of default and loss given default to reflect the “greater-than-insignificant” credit deterioration.

For these loans, management uses an adverse “through-the-cycle” (“TTC”) probability of default and loss given default to reflect the “greater-than-insignificant” credit deterioration.

These loans are separated from the non-PCD and originated pools to ensure that these loans receive a reserve that is calculated based on unpaid principal balance (“UPB”) and not amortized cost.

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■ We evaluated the reasonableness of assumptions and data used by the Company in developing the qualitative factors by comparing these data points to internally developed and third‐party sources, and other audit evidence gathered.

■ We performed analytical procedures to evaluate the directional consistency of changes that occurred in the allowance for credit losses for loans.

Critical Audit Matters, Continued

Business Combination - Valuation of Acquired Loan Portfolio

As described in Note 2 to the Company’s financial statements, on October 1, 2024, the Company acquired Integrated Financial Holdings, Inc.

The transaction has been accounted for as a business combination and accordingly, the assets acquired and liabilities assumed from IFH were recorded at fair value as of the acquisition date.

The fair value of acquired loans held for investments was $362.2 million.

Determining the fair value of acquired loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

The market rate adjustment represents the movement in market interest rates, irrespective of credit adjustments, compared to the contractual rates of the acquired loans.

The credit adjustment made on pools of homogeneous loans represents the changes in credit quality of the underlying borrowers from loan inception to the merger date.

We identified the fair value of acquired loans held for investment as a critical audit matter due to the high degree of complexity and auditor judgment involved and the extent of effort involved, including the use of professionals with specialized skill and knowledge, in testing the Company’s estimates and assumptions, including the discount rates and prepayment rates used in the discounted cash flow methodology.

The primary procedures we performed to address the critical audit matter include the following:

■ We tested the design and operating effectiveness of the Company’s process for estimating the acquired loans fair value, including management’s controls over establishing the discount rate used in the discounted cash flow methodology;

and evaluating the completeness and accuracy of key inputs and assumptions used in the discounted cash flow methodology, including loan data.

■ We tested the completeness and accuracy of certain underlying loan data provided by management that was significant to the discounted cash flow model.

■ We utilized internal valuation specialists to assist in evaluating management’s valuation methodologies and significant assumptions, including application of discount rates and prepayment rates by comparing management’s selected assumptions to independently developed ranges based on third party market data.

/s/ Elliott Davis, PLLC

8 unchanged sentences

We have audited Capital Bancorp, Inc.

and its subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023 and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2024 of the Company and our report dated March 17, 2025 expressed an unqualified opinion.

As described in the Report by Management on Internal Control over Financial Reporting, management has excluded Integrated Financial Holdings, Inc.

(“IFH”) from its assessment of internal control over financial reporting as of December 31, 2024, because it was acquired by the Company in a business combination in the fourth quarter of 2024.

We have also excluded IFH from our audit of internal control over financial reporting.

Total assets and net interest income and noninterest income of IFH represent approximately 14.6% and 6.8%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2025 of the Company and our report dated March 16, 2026 expressed an unqualified opinion.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment:

Management has identified a material weakness resulting from a combination of (i) lack of a dedicated control designed to clear items on loan clearing accounts dating back to the IFH transaction and (ii) turnover within the operations department that impacted the execution of controls over transactions related to government-guaranteed loan sales and participations.

The operational processes and systems used to book, sell and participate these loans were inherited from the IFH transaction.

Specifically, the controls relate to two clearing accounts that support transactional activity related to the sale and participation of these loans.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2025 financial statements, and this report does not affect our report dated March 16, 2026 on those financial statements.

Basis for Opinion

35 unchanged sentences

Premises and equipment, net

15,072 15,525

Accrued interest receivable 16,695 16,664

1 unchanged sentence

Intangible assets 14,771 15,817

Core deposit intangibles 1,745 —

Loan servicing assets 1,816 5,511

41 unchanged sentences

Provision for credit losses 14,965 17,720

Provision for (release of) credit losses on unfunded commitments 385 ( 101 )

Provision for credit losses on unfunded commitments 188 385

Net interest income after provision for credit losses 180,839 136,641

5 unchanged sentences

Government loan servicing revenue 15,513 3,993

Loan servicing rights (government guaranteed) 1,013 —

Loan servicing rights 545 1,013

Non-recurring equity and debt investment write-down — ( 2,620 )

8 unchanged sentences

Loan processing 3,988 2,431

Foreclosed real estate expenses, net 2 7

Merger-related expenses 3,361 3,930

Operational losses 3,714 4,613

Outside service providers 1,878 1,932

Operational and other card fraud related losses 3,509 3,714

Regulatory assessment expenses 3,371 1,937

32 unchanged sentences

Balance, December 31, 2023 13,922,532 $ 139 $ 50,640 $ 217,178 $ ( 13,097 ) $ 254,860

Cumulative effect adjustment due to adoption of the CECL standard — — — ( 29 ) — ( 29 )

Net income — — — 30,972 — 30,972

6 unchanged sentences

Shares repurchased and retired ( 67,869 ) — ( 1,399 ) — — ( 1,399 )

Issuance of common stock in acquisition of IFH 2,631,847 27 70,837 — — 70,864

Balance, December 31, 2024 16,662,626 167 123,566 242,875 ( 11,469 ) 355,139

8 unchanged sentences

Shares repurchased and retired ( 419,643 ) ( 4 ) ( 11,727 ) — — ( 11,731 )

Issuance of common stock in acquisition of IFH 2,631,847 27 70,837 — — 70,864

Balance, December 31, 2025 16,373,288 $ 164 $ 114,604 $ 292,749 $ ( 5,760 ) $ 401,757

9 unchanged sentences

Provision for credit losses 14,965 17,720

Provision for (release of) credit losses on unfunded commitments 385 ( 101 )

Release of mortgage put-back reserve, net ( 68 ) ( 188 )

Net amortization on investment securities available-for-sale 100 188

Provision for credit losses on unfunded commitments 188 385

Provision for (release of) mortgage put-back reserve, net 79 ( 68 )

Net (accretion) amortization on investment securities available-for-sale ( 150 ) 100

Premises and equipment depreciation 1,424 737

3 unchanged sentences

Increase in cash surrender value of BOLI ( 1,532 ) ( 1,466 )

Net change in loan servicing assets ( 996 ) —

Net decrease (increase) in loan servicing assets 1,588 ( 996 )

Executive long-term incentive plan expense 889 516

1 unchanged sentence

Director and employee compensation paid in Company stock 1,225 517

Deferred income tax (benefit) expense ( 1,814 ) 142

Valuation allowance on derivatives — 8

Decrease in valuation of loans held for sale carried at fair value 32 6

Deferred income tax expense (benefit) 1,097 ( 1,814 )

(Increase) decrease in valuation of loans held for sale carried at fair value ( 62 ) 32

Proceeds from sales of loans held for sale 352,846 281,384

11 unchanged sentences

Proceeds from calls and maturities of securities available-for-sale 56,107 53,208

Net (purchases) sales of restricted investments ( 126 ) 3,009

Net purchases of restricted investments ( 3,918 ) ( 126 )

Net increase in portfolio loans receivable ( 345,819 ) ( 320,651 )

1 unchanged sentence

Cash received from acquisitions, net — 65,170

Net cash used in investing activities ( 350,880 ) ( 269,952 )

See Notes to Consolidated Financial Statements

4 unchanged sentences

(in thousands) 2025 2024

Net cash used in investing activities ( 269,952 ) ( 130,838 )

Cash flows from financing activities

2 unchanged sentences

Interest-bearing deposits 289,448 299,045

Federal Home Loan Bank repayments, net — ( 85,000 )

Federal Home Loan Bank advances 28,000 —

Other borrowed funds ( 10,000 ) ( 15,000 )

1 unchanged sentence

Repurchase of common stock ( 11,731 ) ( 1,399 )

Net proceeds from exercise of stock options 1,077 1,791

Net proceeds from exercise of stock 1,158 1,077

Net cash provided by financing activities 331,392 386,394

Net decrease in cash and cash equivalents 151,368 ( 26,451 )

Net increase in cash and cash equivalents 50,233 151,368

Cash and cash equivalents, beginning of year 205,332 53,964

1 unchanged sentence

Noncash investing and financing activities:

Change in unrealized gains (losses) on investments $ 2,194 $ 5,066

Loans transferred to foreclosed real estate $ 3,856 $ —

Change in unrealized gains on investments $ 7,534 $ 2,194

Fair value of assets acquired, net of cash received $ — $ 460,455

2 unchanged sentences

Common Stock issued related to acquisition $ — $ 27

Goodwill measurement period adjustment $ 4,657 $ —

Cash paid during the period for:

9 unchanged sentences

Capital Bancorp, Inc.

is a Maryland corporation and bank holding company (the “Company”) for Capital Bank, N.A.

is a Maryland corporation and the bank holding company (the “Company”) for Capital Bank, N.A.

(the “Bank”).

The Company's primary operations are conducted by the Bank, which is headquartered in Rockville, Maryland.

The Company serves businesses, not-for-profit associations, entrepreneurs and others throughout Washington D.C., Baltimore, other Maryland metropolitan areas, Florida, Illinois and North Carolina through six commercial bank branches, one mortgage banking office, two loan production offices, three government loan servicing offices, and one credit card operations office.

The Bank is principally engaged in the business of investing in commercial, real estate, and credit card loans and attracting deposits.

The Company originates residential mortgages for sale in the secondary market through Capital Bank Home Loans (“CBHL”), the Bank’s residential mortgage banking arm, and issues credit cards through OpenSky ™ , a digitally-driven, nationwide credit card platform providing secured, partially secured, and unsecured credit solutions.

As discussed further in Note 2, on October 1, 2024 the Company completed its previously announced merger (the “Merger”) with Integrated Financial Holdings, Inc., a North Carolina corporation (“IFH”).

IFH was the holding company of West Town Bank & Trust, an Illinois state-chartered bank which provides banking services through its full-service office located in the greater Chicago area and is a nationwide originator of U.S.

Department of Agriculture (“USDA”) and U.S.

Small Business Administration (“SBA”) government guaranteed loans.

IFH was also the parent company of Windsor Advantage, LLC (“Windsor Advantage”), a loan service provider that offers community banks and credit unions a comprehensive outsourced SBA 7(a) and USDA lending platform.

Immediately following the Merger, West Town Bank & Trust merged with and into the Bank, with the Bank as the surviving bank.

The Company formed Church Street Capital, LLC (“Church Street Capital”) in 2014 to provide short-term secured real estate financing to Washington, D.C.

area investors and developers that may not meet all Bank credit criteria.

At December 31, 2024, Church Street Capital had loans totaling $ 6.8 million with a collectively assessed allowance for credit losses (“ACL”) of $ 184 thousand.

Refer to Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses to the Consolidated Financial Statements for further discussion of the consolidated ACL.

The Company operates three additional divisions including OpenSky TM , Windsor Advantage, LLC™ (“Windsor Advantage TM ”) and Capital Bank Home Loans (“CBHL”).

The Company serves businesses, not-for-profit associations, entrepreneurs and others throughout the Washington D.C., Baltimore, other Maryland markets, Delaware, Florida, Illinois and North Carolina through seven commercial bank branches, one mortgage banking office, three loan production offices, three government loan servicing offices, and one credit card operations office.

The Bank is principally engaged in providing commercial, real estate, and credit card loans along with other banking services, and attracting deposits.

The Company issues credit cards through OpenSky ™ , a digitally-driven, nationwide credit card platform providing secured, partially secured, and unsecured credit solutions.

Windsor Advantage TM , a wholly-owned subsidiary of the Company, is a loan service provider that offers community banks and credit unions a comprehensive U.S.

Small Business Administration (“SBA”) 7(a) and U.S.

Department of Agriculture (“USDA”) lending platform.

The Company originates residential mortgages for sale in the secondary market through Capital Bank Home Loans (“CBHL”), the Bank’s residential mortgage banking arm.

In addition, the Company owns all of the stock of Capital Bancorp (MD) Statutory Trust I (the “Trust”).

3 unchanged sentences

All intercompany transactions have been eliminated in consolidation.

The Company reports its activities as five business segments:

The Company reports its activities as four divisions and reporting segments:

Commercial Banking;

mortgage banking;

credit cards;

government loan servicing;

and corporate activities.

Windsor Advantage ™ ;

and Capital Bank Home Loans.

In determining the appropriateness of segment definition, the Company considers components of the business about which financial information is available and regularly evaluated relative to resource allocation and performance assessment.

2 unchanged sentences

The preparation of consolidated financial statements in accordance with GAAP requires estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.

The primary reference point for the estimates is on historical experience and assumptions believed to be reasonable regarding the value of certain assets and liabilities that are not readily available from other sources.

Estimates are evaluated on an ongoing basis.

Actual results may materially differ from these estimates under different assumptions or conditions.

Capital Bancorp, Inc.

3 unchanged sentences

Note 1 - Nature of Business and Basis of Presentation (continued)

Estimates are evaluated on an ongoing basis.

Actual results may materially differ from these estimates under different assumptions or conditions.

Business Combinations

5 unchanged sentences

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from financial institutions, interest-bearing deposits with financial institutions and federal funds sold.

Generally, only investments with original maturities of three months or less are reported as cash and cash equivalents.

Generally, federal funds are sold for one-day periods.

6 unchanged sentences

If either of the above criteria is not met, the Company evaluates whether the decline in fair value is the result of credit losses or other factors.

In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance on any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically related to the security.

If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an ACL, limited by the amount that the fair value is less than the amortized cost basis.

In making the assessment, the Company may consider various factors including the extent to which fair value is less than amortized cost, performance of any underlying collateral, downgrades in the ratings of the security by a rating agency, the failure of the issuer to make scheduled interest or principal payments and adverse conditions specifically related to the security.

If the assessment indicates that a credit loss exists, the present value of cash flows expected to be collected are compared to the amortized cost basis of the security and any excess is recorded as an allowance for credit losses (“ACL”), limited by the amount that the fair value is less than the amortized cost basis.

Any amount of unrealized loss that has not been recorded through an ACL is recognized in other comprehensive income.

1 unchanged sentence

Losses are charged against the ACL when management believes an AFS security is confirmed to be uncollectible or when either of the criteria regarding intent or requirement to sell is met.

At December 31, 2024, there was no ACL related to the AFS portfolio.

At December 31, 2025 and 2024, there was no ACL related to the AFS portfolio.

Capital Bancorp, Inc.

3 unchanged sentences

Note 1 - Nature of Business and Basis of Presentation (continued)

Restricted Investments

The Bank holds restricted stock of its regional Federal Home Loan Bank and Federal Reserve Bank as a condition of membership and to access funding and payment services.

These nonmarketable instruments lack a readily determinable fair value and are carried at cost (par value).

Shares are nontransferable and redeemable only at par with the issuer, subject to regulatory and issuer capital requirements.

Dividends are recognized in noninterest income when declared.

Loans held for sale

Gains and losses on loan sales are determined by the specific-identification method.

Interest on loans held for sale is credited to income based on the principal amounts outstanding.

The Company elects to measure loans held for sale at fair value to better align reported results with the underlying economic changes in value of the loans on the Company’s Consolidated Balance Sheet.

Mortgage loans held for sale

Mortgage loans originated and intended for sale are recorded at fair value, determined individually, as of the balance sheet date.

The fair value of mortgage loans are determined based on outstanding investor commitments, or in the absence of such commitments, based on current investor yield requirements.

Gains or losses on sales of government guaranteed loans are recognized based on the difference between the net sales proceeds and the carrying value of the sold portion of the loan, less the fair value of the servicing asset recognized, and are reflected as operating activities in the Consolidated Statements of Cash Flows.

The difference between the initial carrying balance of the retained portion of the loan and the relative fair value of the sold portion is recorded as a discount to the retained portion of the loan, establishing a new carrying balance.

The recorded discount is accreted to earnings on a level yield basis.

Government guaranteed loans are generally sold with servicing retained.

Gains and losses on loan sales are determined by the specific-identification method.

The Company’s current practice is to sell residential mortgage loans on a servicing released basis.

Interest on loans held for sale is credited to income based on the principal amounts outstanding.

Upon sale and delivery, loans are legally isolated from the Company and the Company has no ability to restrict or constrain the ability of third‑party investors to pledge or exchange the mortgage loans.

1 unchanged sentence

Unrealized and realized gains on loan sales are determined using the specific-identification method and are recognized through mortgage banking activity in the Consolidated Statements of Income.

Government guaranteed loans held for sale

The recorded discount is accreted to earnings on a level yield basis.

Government guaranteed loans are generally sold with servicing retained.

Portfolio loans and the ACL

The Company’s loan portfolio comprises several distinct loan segments that possess different risk characteristics and underwriting considerations, which inform both the recognition of interest income and the estimation of expected credit losses under the CECL framework.

Residential Real Estate Loans .

One-to-four family mortgage loans are primarily secured by owner-occupied primary and secondary residences and, to a lesser extent, investor-owned residences.

Residential loans are originated through the commercial sales teams and Capital Bank Home Loans division.

Residential loans also include home equity lines of credit.

Key risks arise from declines in real estate values and liquidity, interest-rate changes, and regional or economic downturn that affects the Washington, D.C.

and Baltimore metropolitan area.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 1 - Nature of Business and Basis of Presentation (continued)

Commercial Real Estate Loans .

Commercial real estate loans are originated on owner-occupied and non-owner-occupied properties.

These loans may be adversely affected by conditions in the real estate markets or in the general economy.

Business equity lines of credit and lender finance loans are also included in the commercial real estate loan category.

Lender finance loans are loans to companies used to purchase finance receivables or extend finance receivables to the underlying obligors and are secured primarily by the finance receivables held by our borrowers.

The primary sources of repayment are the operating incomes of the borrowers and the collection of the finance receivables securing the loans.

Commercial loans that are secured by owner-occupied commercial real estate and primarily collateralized by operating cash flows are included in the commercial real estate loan category.

The risk centers on property cash-flow dependence for repayment.

Regional real estate value declines or interest-rate changes can impair collateral coverage.

However, the properties securing the portfolio are diverse in type.

This diversity may help reduce the exposure to adverse economic events that affect any single industry.

Construction Loans .

Construction loans are offered primarily within the Company’s Washington, D.C.

and Baltimore, Maryland metropolitan operating areas to builders, primarily for the construction of single-family homes and condominium and townhouse conversions or renovations and, to a lesser extent, to individuals.

A decline in local economic conditions would likely have an adverse impact on construction loans.

Construction loans involve loans secured by a project under construction and the project is of uncertain value prior to completion.

It can be difficult to accurately evaluate the total funds required to complete a project, resulting in exposure to cost overruns and completions risk.

The Company performs a stress test of the construction loan portfolio at least once a year, and underlying real estate conditions are monitored as well as trends in sales outcomes versus underwriting valuations as part of ongoing risk management efforts.

The borrowers’ progress in construction buildout is monitored against the original underwriting guidelines for construction milestones and completion timelines.

Commercial and Industrial .

In addition to other loan products, general commercial loans, including commercial lines of credit, working capital loans, term loans, equipment financing, letters of credit, government guaranteed loans and solar energy related loans and other loan products, are offered, primarily in target markets, and underwritten based on each borrower’s ability to service debt from income.

These loans are primarily made based on the identified cash flows of the borrower and secondarily, on the underlying collateral provided by the borrower.

Most commercial business loans are secured by a lien on general business assets including, among other things, available real estate, accounts receivable, promissory notes, inventory and equipment.

Personal guaranties from the borrower or other principal are generally obtained.

Significant adverse changes in the economy or local market conditions in which our commercial lending customers operate could cause rapid declines in loan collectability and the values associated with general business assets resulting in inadequate collateral coverage.

The risk centers on borrower operating cash-flow stability, especially among small- and medium-sized businesses that are more vulnerable to downturns.

Credit Cards .

Through the OpenSky ™ credit card division, the Company offers secured, partially secured, and unsecured credit cards on a nationwide basis to under-banked populations and those looking to rebuild their credit scores through a fully digital and mobile platform.

The secured lines of credit are secured by a noninterest-bearing demand account at the Bank in an amount equal to the full credit limit of the credit card.

For the partially secured lines of credit, the Bank offers certain customers an unsecured line in excess of their secured line of credit by using a proprietary scoring model, which considers credit score and repayment history (typically a minimum of six months of on-time payments, but ultimately determined on a case-by-case basis).

Partially secured and unsecured credit cards are only extended to existing secured card customers who have demonstrated sound credit behaviors.

Risks include fraud, balances exceeding limits, ACH returns on intra-period payments, and delinquencies leading to charge-offs.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 1 - Nature of Business and Basis of Presentation (continued)

Other Consumer Loans.

To a limited extent and typically as an accommodation to existing customers, personal consumer loans, such as term loans, car loans and boat loans are offered.

Other consumer credit is exposed to borrower repayment capacity and interest-rate effects on payment affordability.

Loans are stated at the principal amount outstanding, adjusted for deferred origination fees and costs, discounts on loans acquired, and the ACL.

Interest is accrued based on the loan principal balances and stated interest rates.

Origination fees and costs are recognized as an adjustment to the related loan yield using approximate interest methods.

Origination fees and costs are recognized as an adjustment to the related loan yield using the effective interest method.

For credit card loans, loan origination fees and direct loan origination costs are amortized on a straight-line basis over a 12 or 24 month period.

7 unchanged sentences

repayments deemed to be extended out beyond reasonable time frames, customer bankruptcy and lack of assets, and/or collateral deficiencies.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 1 - Nature of Business and Basis of Presentation (continued)

On January 1, 2023, we adopted Accounting Standards Update (“ASU”) 2016-13 “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which replaces the incurred loss methodology for determining our provision for credit losses and ACL with an expected loss methodology that is referred to as the Current Expected Credit Loss model (“CECL”).

The ACL is estimated using an expected loss methodology that is referred to as the Current Expected Credit Loss model (“CECL”).

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans receivable and held-to-maturity (“HTM”) debt securities.

It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with ASU 2016-02 “Leases (Topic 842)”.

In addition, ASU 2016-13 made changes to the accounting for AFS debt securities.

One such change is to require credit-related impairments to be recognized as an ACL rather than as a write-down of the security’s amortized cost basis when the Company does not intend to sell or believes that the Company will be required to sell the securities prior to recovery of the security’s amortized cost basis.

The Company adopted ASU 2016-13 using the modified retrospective method.

Results for reporting periods beginning after January 1, 2023 are presented under ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The Company does not own HTM debt securities.

There was no ACL on available-for-sale securities at December 31, 2024 or at December 31, 2023.

The following table illustrates the impact of the adoption of ASC 326, or the CECL standard.

The adoption of the standard required an $ 804 thousand increase in the ACL and a $ 775 thousand reduction to the reserve for unfunded commitments (“RUC”).

The improved precision of the calculation of the historical utilization of unfunded commitments gave rise to the reduction.

The net impact of the adoption of the CECL standard to retained earnings was $ 29 thousand.

January 1, 2023

(in thousands) Pre-adoption of the CECL standard As Reported Under ASC 326 Impact of adoption of the CECL standard

Residential $ 484,735 $ 484,735 $ —

Commercial 664,551 664,551 —

Construction 238,099 238,099 —

Commercial and Industrial 220,221 220,221 —

Credit card, net of reserve 128,434 128,434 —

Other consumer 1,179 1,179 —

Portfolio loans receivable, gross $ 1,737,219 $ 1,737,219 $ —

Deferred origination fees, net ( 8,627 ) ( 8,627 ) —

Allowance for credit losses ( 26,385 ) ( 27,189 ) ( 804 )

Portfolio loans receivable, net $ 1,702,207 $ 1,701,403 $ ( 804 )

Reserve for unfunded commitments $ 1,682 $ 907 $ ( 775 )

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 1 - Nature of Business and Basis of Presentation (continued)

We maintain an ACL that represents management’s estimate of the expected credit losses and risks inherent in our loan portfolio.

8 unchanged sentences

The Company has elected to utilize a discounted cash flow methodology for all segments, except for the credit card and other consumer portfolio segments, which apply a simplified, non-discounted cash flow calculation.

Management also collectively evaluates purchased credit deteriorated ("PCD") loans that do not meet the individually evaluated criteria.

For those loans, management uses an adverse "through the cycle" probability of default (PD) and loss given default (LGD) to reflect the "greater than insignificant" credit deterioration.

These loans are separated from the non-PCD and originated pools to ensure that these loans receive a reserve that is calculated based on unpaid principal balance (UPB) and not amortized costs.

See further detail regarding our forecasting methodology in the “Cash Flow Method” section below.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 1 - Nature of Business and Basis of Presentation (continued)

Quarterly, the Company utilizes a Qualitative Scorecard to consider the need to qualitatively adjust expected credit loss estimates for information not already captured in the quantitative loss estimation process, which may impact expected credit losses.

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The scorecard results help the Company analyze directional consistency to risk conditions and circumstances that should be considered for each loan segment and to refine its estimates of expected credit losses.

As of December 31, 2024, there have been no significant changes applied through the Qualitative Scorecard subsequent to implementation on January 1, 2023.

During 2025, the Company refined the Qualitative Scorecard framework to expand the range of risk levels used for assessment, allowing for greater delineation within existing risk categories.

The refinement did not represent a significant change to the underlying methodology, which has remained consistent since implementation on January 1, 2023.

Purchased Credit Deterioration

Upon adoption of ASU 2016-13, loans which were previously identified as Purchase Credit Impaired under the incurred loss model are identified as Purchased Credit Deteriorated (“PCD”) loans at January 1, 2023 without reassessment.

When acquiring loans, some may have experienced more than insignificant credit deterioration since origination.

In those cases, the Company will consider certain criteria including days past due, accrual status, risk rating, credit mark, and other relevant factors in assessing whether purchased loans are PCD.

PCD loans are recorded at the amount paid and the Company will determine the initial ACL required for PCD assets with no impact to earnings.

The loan’s purchase price and ACL is then the initial amortized cost basis for PCD loans.

In those cases, the Company will consider certain criteria including days past due, accrual status, risk rating, credit mark, and other relevant factors in assessing whether purchased loans are purchased credit deteriorated ("PCD").

PCD loans are recorded at the amount paid at acquisition.

An initial ACL is recognized through a gross-up that increases the amortized cost basis of the loans, with no impact to earnings.

The loan’s purchase price and ACL establish the initial amortized cost basis for PCD loans.

The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan.

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Information regarding the PCD and non-PCD activity can be found within Note 2 - Business Combination and Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses, respectively.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 1 - Nature of Business and Basis of Presentation (continued)

Management also collectively evaluates PCD loans that do not meet the individually evaluated criteria.

For those loans, management uses an adverse "through the cycle" probability of default (PD) and loss given default (LGD) to reflect the "greater than insignificant" credit deterioration.

These loans are separated from the non-PCD and originated pools to ensure that these loans receive a reserve that is calculated based on unpaid principal balance (UPB) and not amortized costs.

Cash Flow Method

The Company uses the discounted cash flow (“DCF”) method to estimate expected credit losses for each portfolio loan segment, with the exception of credit card and other consumer loans, which use a non-discounted cash flow calculation.

The Company uses the discounted cash flow (“DCF”) method to estimate expected credit losses for each portfolio loan segment, with the exception of credit card, which use a non-discounted cash flow calculation.

For each of these loan segments, the Company generates cash flow projections at the instrument level.

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This analysis also determines how expected probability of default, loss given default, and lifetime loss rates will react to forecasted levels of the loss drivers.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 1 - Nature of Business and Basis of Presentation (continued)

For the credit card portfolio, the Company calculates the credit card ACL collectively, applying segmentation based on collateral positions:

secured, partially secured, and unsecured.

The credit card segments rely on non-discounted cash flow modeling.

The reserve is calculated as the difference between the charge-off rate and the recovery rate.

The charge-off rate is determined from the loss driver analysis discussed above, whereas the recovery rate is based on industry benchmark data.

For all DCF and loss rate models, the Company has elected to use a four quarter forecast period across all portfolio segments.

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The ACL reflects the difference between the amortized cost basis and the present value of the expected cash flows.

During 2024, as part of the Company's ongoing model monitoring procedures, the annual loss driver analysis was performed.

In addition, the Company performed new rates studies for prepayment rates, and funding rates.

During 2025, as part of the Company's ongoing model monitoring procedures, the annual loss driver analysis was updated.

In addition, the Company performed new rate studies for prepayment and curtailment rates.

These changes were part of the Company's standard process and included updates to the peer group and incorporated more recent historical data.

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If a loan is not collateral dependent, the loan will be analyzed based on a forecast of future cash flows.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 1 - Nature of Business and Basis of Presentation (continued)

Credit Losses on Off-Balance Sheet Credit Exposures

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Loan commitments and lines of credit are generally made on the same terms, including with regard to collateral, as outstanding loans.

The Company maintains a RUC on off-balance sheet credit exposures through a provision reflected in other liabilities.

The Company maintains a reserve for unfunded commitments (“RUC”) on off-balance sheet credit exposures through a provision reflected in other liabilities within the Company’s Consolidated Balance Sheets.

Increases or decreases in the reserve are charged to or released from the provision for credit losses for unfunded commitments in the Consolidated Statements of Income.

The provision for (recovery of) credit losses for off-balance sheet exposures prior to January 1, 2023 was included in other noninterest expense in the consolidated statements of income.

The RUC for off-balance credit exposures is estimated by loan segment at each balance sheet date under the current expected credit loss model based on the segment loss factor and the estimated utilization rate of the unfunded commitments.

The Company has analyzed its historic funding behavior at the segment level to determine an expected utilization rate.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 1 - Nature of Business and Basis of Presentation (continued)

The above methodology for determining an appropriate ACL is based on a comprehensive analysis of the loan portfolio in accordance with ASC 326.

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It is important to recognize that the related process, methodology, and underlying assumptions require a substantial degree of judgment.

Additional disclosure on the ACL, and qualitative factors can be found in Part II, Item 1A - Risk Factors and Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses.

Additional disclosure on the ACL and qualitative factors can be found in Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses.

Loan modifications

Effective January 1, 2023, the Company adopted ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures.

From time to time, the Company may elect to modify the contractual terms of loans to a borrower experiencing financial difficulties as a way to mitigate loss, to proactively work with borrowers in financial difficulty, or to comply with regulations regarding the treatment of certain bankruptcy filing and discharge situations.

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Under ASU 2022-02, modifications to a loan for a borrower experiencing financial difficulty that have occurred in the current reporting period are disclosed along with the impact of the modifications.

During the years ended December 31, 2024 and 2023, the Company modified loans to borrowers experiencing financial difficulty as disclosed in Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 1 - Nature of Business and Basis of Presentation (continued)

Loan servicing assets

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Fair value is based on market prices for comparable servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income.

Under the fair value measurement method, the Company measures servicing rights at fair value at each reporting date and reports changes in fair value of servicing assets in earnings in the period in which the changes occur and are included with noninterest income on the income statement.

The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income, which is reported in the consolidated statements of income as loan servicing rights (government guaranteed), is recorded for fees earned for servicing loans.

Servicing fee income, which is reported in the consolidated statements of income as loan servicing rights, is recorded for fees earned for servicing loans.

The fees are based on a contractual percentage of the outstanding principal;

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Expenditures for maintenance, repairs, and minor replacements are charged to noninterest expenses as incurred.

Premises and equipment are tested for impairment in accordance with the Company’s policy for long‑lived assets under ASC 360 when indicators of impairment are present.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 1 - Nature of Business and Basis of Presentation (continued)

The Company accounts for leases according to ASU 2016-02, Leases (Topic 842), and applies a right-of-use (“ROU”) model that requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the underlying asset and a liability to make lease payments.

The Company elected to apply the package of practical expedients permitting entities to not reassess:

1) whether any expired or existing contracts are or contain leases;

2) the lease classification for any expired or existing leases;

and 3) initial direct costs for any existing leases.

Lease liabilities are initially measured at the present value of future lease payments, discounted using the rate implicit in the lease, if readily determinable;

otherwise, the Company uses its incremental borrowing rate.

Additionally, as provided by ASU 2016-02, the Company elected not to apply the recognition requirements of ASC 842 to short-term leases, defined as leases with a term of 12 months or less, and to recognize the lease payments in net income on short-term leases on a straight-line basis over the lease term.

Right‑of‑use assets are tested for impairment in accordance with the Company’s policy for long‑lived assets under ASC 360 when indicators of impairment are present.

Fair value measurements

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In developing our fair value estimates, we strive to maximize the use of observable inputs and minimize the use of unobservable inputs.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 1 - Nature of Business and Basis of Presentation (continued)

The fair value hierarchy defines Level 1 valuations as those based on quoted prices (unadjusted) for identical assets or liabilities in active markets.

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Level 3 valuations are based on at least one significant assumption not observable in the market, or significant management judgment or estimation, some of which may be internally developed.

Financial assets that are recorded at fair value on a recurring basis include investment securities available-for-sale, and loans held for sale.

Financial assets that are recorded at fair value on a recurring basis include investment securities available-for-sale, loan servicing assets and loans held for sale.

See Note 18 - Fair Value.

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The Company reviews long-lived assets and other intangible assets for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, in which case an impairment charge would be recorded.

Goodwill is not amortized and is tested for impairment at least annually, or more frequently if events and circumstances exists that indicate that a goodwill impairment test should be performed.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 1 - Nature of Business and Basis of Presentation (continued)

Goodwill is not amortized and an impairment test is performed annually as of October 1, or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed.

The impairment testing process is conducted by assigning net assets and goodwill to each reporting unit.

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When the qualitative evaluation indicates that impairment is more likely than not, quantitative testing is required whereby the fair value of each reporting unit is calculated and compared to the recorded book value.

If the calculated fair value of the reporting unit exceeds its carrying value, goodwill is not considered impaired and no further testing is considered necessary.

If the calculated fair value of the reporting unit exceeds its carrying value, goodwill is not considered impaired.

If a reporting unit’s carrying amount exceeds its fair value, the Company will record an impairment charge based on the difference.

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Other intangible assets are intangible assets with finite useful lives, consisting primarily of customer list, trade name and core deposit intangibles.

Intangible assets are amortized using straight-line or accelerated methods over their estimated weighted average useful lives, ranging from 10 to 17 years years.

Intangible assets are amortized using straight-line or accelerated methods over their estimated weighted average useful lives, ranging from 10 to 17 years.

Intangible assets with finite useful lives are evaluated for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

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The Company's services that fall within the scope of this topic are presented within noninterest income and include service charges and fees and other transaction-based fees.

Revenue is recognized when the transactions occur or as services are preformed over primarily monthly or quarterly periods.

Revenue is recognized when the transactions occur or as services are performed over primarily monthly or quarterly periods.

Payment is typically received in the period the transactions occur.

Fees may be fixed or, where applicable, based on a percentage of transaction size.

Interest income is not within the scope of ASC Topic 606.

Bank-owned life insurance

The Company has purchased life insurance policies on certain current and past key employees where the insurance policy benefits and ownership are retained by the employer.

These policies are recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

The Company had $ 45.5 million of bank-owned life insurance at December 31, 2025 and $ 44.0 million at December 31, 2024.

The Company recognized income on bank-owned life insurance, which is included in other noninterest income, of $ 1.5 million for the years ended December 31, 2025 and December 31, 2024.

Capital Bancorp, Inc.

3 unchanged sentences

Note 1 - Nature of Business and Basis of Presentation (continued)

Bank-owned life insurance

The Company has purchased life insurance policies on certain current and past key employees where the insurance policy benefits and ownership are retained by the employer.

The Company had $ 44.0 million of bank-owned life insurance at December 31, 2024 and $ 37.7 million at December 31, 2023.

The Company recognized income on bank-owned life insurance, which is included in other noninterest income, of $ 1.5 million and $ 1.2 million for the years ended December 31, 2024 and December 31, 2023, respectively.

The Company employs the asset and liability method of accounting for income taxes as required by ASC Topic 740, “ Income Taxes .” Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities (i.e., temporary timing differences) and are measured at the enacted rates that will be in effect when these differences reverse.

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At December 31, 2025 and 2024, there were 487 and 417,045 stock options, respectively, excluded from the calculation as their effect would have been anti-dilutive.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 1 - Nature of Business and Basis of Presentation (continued)

The following is a reconciliation of the numerators and denominators used in computing basic and diluted earnings per common share:

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Total accumulated other comprehensive loss $ ( 5,760 ) $ ( 11,469 )

Reportable segments

The Company currently operates four divisions:

Commercial Banking, Capital Bank Home Loans, OpenSky ™ , and Windsor Advantage.

The Company reports its activities in five business segments:

commercial banking;

mortgage banking;

credit cards;

government loan servicing;

and corporate activities.

The Company’s chief operating decision maker is the Chief Executive Officer of Capital Bancorp, Inc.

For further discussion of management’s operating segments, see Note 18 - Segments.

Capital Bancorp, Inc.

3 unchanged sentences

Note 1 - Nature of Business and Basis of Presentation (continued)

Reportable segments

The Company currently operates four divisions and reporting segments:

Commercial Banking, OpenSky ™ , Windsor Advantage ™ , and Capital Bank Home Loans.

The Company’s chief operating decision maker is the Chief Executive Officer of Capital Bancorp, Inc.

For further discussion of management’s operating segments, see Note 19 - Segments.

Adoption of New Accounting Standards

In December 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, "Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures" ("ASU 2023-07").

ASU 2023-07 requires public entities to disclose significant segment expenses, an amount and description for other segment items, the title and position of the entity’s chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measures of profit or loss to assess segment performance, and, on an interim basis, certain segment related disclosures that previously were required only on an annual basis.

ASU 2023-07 also clarifies that entities with a single reportable segment are subject to both new and existing segment reporting requirements and that an entity is permitted to disclose multiple measures of segment profit or loss, provided that certain criteria are met.

ASU 2023-07 is effective for the Company for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023-07 effective December 31, 2024.

See Note 18 - Segments for new disclosures required by ASU 2023-07.

Recently issued accounting pronouncements:

In December 2023, the FASB issued Accounting Standards Update 2023-09, “Income Taxes (Topic 740), Improvements to Income Tax Disclosures" ("ASU 2023-09").

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ASU 2023-09 is effective for the Company for fiscal years beginning after December 15, 2024 with early adoption permitted.

The Company will update its income tax disclosures upon adoption.

The Company adopted ASU 2023-09 effective December 31, 2025.

See Note 13 - Income Taxes for new disclosures required by ASU 2023-09.

Recently issued accounting pronouncements:

In November 2024, the FASB issued Accounting Standards Update 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)" ("ASU 2024-03").

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The Company will update its expense disclosures upon adoption.

In September 2025, the FASB issued Accounting Standards Update 2025-06 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”).

ASU 2025-06 makes targeted improvements to Subtopic 350-40 to increase the operability of the recognition guidance considering different methods of software development.

ASU 2025-06 is effective for the Company for fiscal years beginning after December 15, 2027, and interim reporting periods in those years, with early adoption permitted.

The Company will update its software capitalization policy upon adoption.

In November 2025, the FASB issued Accounting Standards Update 2025-08 “Financial Instruments - Credit Losses (Topic 326):

Purchased Loans” (“ASU 2025-08”), which expands the gross-up approach applied to PCD loans in an acquisition to certain purchased financial assets, including certain seasoned loans that do not meet the definition of PCD.

Upon adoption of this guidance, qualifying seasoned loans acquired in future transactions would be recorded by grossing up the purchase price for the initial allowance for credit losses rather than recognizing the allowance through provision expense at acquisition.

As a result, future acquisitions may not generate the same level of initial provision expense and related earnings volatility associated with the historical accounting treatment.

The guidance would be effective for the Company for fiscal years beginning after December 15, 2026, with early adoption permitted, and is to be applied prospectively.

The Company is currently evaluating the impact of this standard and has not elected early adoption.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 1 - Nature of Business and Basis of Presentation (continued)

In November 2025, the FASB issued Accounting Standards Update 2025-09, “Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements” (“ASU 2025-09”).

ASU 2025-09 is intended to clarify guidance on hedge accounting and to address several incremental hedge accounting issues arising from the global reference rate reform initiative.

The guidance would be effective for the Company for fiscal years beginning after December 15, 2026, with early adoption permitted, and is to be applied prospectively.

The Company is currently evaluating the impact of this standard and has not elected early adoption.

In November 2025, the FASB issued Accounting Standards Update 2025-11, "Interim Reporting" ("ASU 2025-11").

ASU 2025-11 is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity.

ASU 2025-11 is effective for the Company for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact the adoption of ASU 2025-11 may have on the Company’s consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies are not expected to have a material impact on the Company's financial position, results of operations or cash flows.

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The reclassifications had no material effect on net income or total stockholders' equity.

Certain prior period amounts in the consolidated statements of changes in stockholders’ equity have been reclassified to conform to the current period presentation.

These reclassifications were made within total stockholders’ equity and had no impact on previously reported net income, earnings per share, or total stockholders’ equity .

Capital Bancorp, Inc.

3 unchanged sentences

Note 2 - Business Combination

On October 1, 2024, the Company completed its Merger with IFH, pursuant to the Merger Agreement, dated as of March 27, 2024.

On October 1 2024, IFH merged with and into the Company, with the Company continuing as the surviving corporation in the Merger.

Pursuant to the terms of the Merger Agreement, each share of IFH Common Stock was converted into the right to receive (a) 1.115 shares of the Company’s common stock, par value $ 0.01 per share (“Common Stock”);

and (b) $ 5.36 in cash per share of IFH Common Stock held immediately prior to the Merger, in addition to cash in lieu of fractional shares.

In addition, each stock option granted by IFH to purchase shares of IFH Common Stock, whether vested or unvested, outstanding immediately prior to the Merger, was assumed by the Company and converted into an equivalent option to purchase the Company’s Common Stock, with the same terms and conditions as applied to the IFH stock option.

On October 1, 2024, the Company completed its acquisition of IFH.

IFH merged with and into the Company, with the Company continuing as the surviving corporation in the acquisition.

Immediately following the acquisition, West Town Bank & Trust, merged with and into Capital Bank, with Capital Bank as the surviving bank.

During the first quarter of 2025, the Company converted IFH’s banking systems and operations onto Capital Bank’s platforms.

The assets acquired and liabilities assumed were recorded at their estimated fair value as of the acquisition date and have been accounted for under the acquisition method of accounting.

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Fair values are considered preliminary for a period not to exceed one year after the acquisition date and are subject to refinement as information relative to closing date fair values becomes available.

The following is a description of the valuation methodologies used to estimate the fair value of major categories of assets acquired and liabilities assumed.

In many cases, the fair values of the assets acquired and liabilities assumed were determined by estimating the cash flows expected to result from those assets and liabilities and applying the appropriate market discount rates.

Cash and cash equivalents :

The estimated fair value of cash and cash equivalents approximate their stated value.

The Company recorded $ 403.9 million of net acquired loans, including $ 41.7 million of loans held for sale.

The fair value for loans was based on a discounted cash flow methodology that considered credit loss and prepayment expectations, market interest rates and other market factors.

Loan cash flows were generated on an individual loan basis.

The probability of default, loss given default, exposure at default and prepayment assumptions are the key factors driving credit losses which are embedded into the estimated cash flows.

Deferred tax asset:

The Company recorded a deferred tax asset of $ 9.3 million related to tax attributes of IFH along with the effects of fair value adjustments resulting from acquisition accounting for the combination.

The deferred tax assets recorded were based on the expected federal and state tax benefits of when the acquired tax attributes and purchase accounting adjustments will reverse.

In recording the deferred tax asset, consideration was given to potential limitations on the realizability of such acquired tax attributes.

The Company recorded $ 459.0 million of assumed deposits.

The approximate fair value for deposits was determined by the acquisition date outstanding balance for nonmaturity deposits and by the contractual cash flows of the deposit accounts using prevailing market interest rates for time deposit accounts of similar type and duration for time deposits.

It was identified during the year ended December 31, 2025 that one of the loans acquired from IFH should have been assigned as a PCD loan based on facts and circumstances that existed as of the acquisition date.

The loan was reclassified as a PCD loan and a specific ACL reserve of $ 3.4 million was established and the related loan premium of $ 0.2 million was written off.

This resulted in $ 3.6 million of adjustments for PCD loans recorded as a measurement period adjustment to the Day-1 purchase accounting.

The Company has completed the accounting for the acquisition of IFH.

The measurement period closed on September 30, 2025, and all identifiable assets and liabilities have been recognized at their final fair values.

During the measurement period, the Company’s estimates of assets and liabilities resulted in a $ 4.8 million increase to Goodwill at December 31, 2025, as compared to December 31, 2024.

The adjustments were primarily related to loan adjustments of $ 3.7 million, fair value adjustments for servicing assets of $ 2.1 million, a corresponding $ 1.3 million adjustment for the related deferred tax assets, and $ 0.3 million related to unaccrued payables and other liabilities.

Capital Bancorp, Inc.

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Note 2 - Business Combination (continued)

The following table summarizes the consideration paid for IFH and the amounts of the assets acquired and liabilities assumed at the acquisition date:

Purchase Price Consideration and Net Assets Acquired

The following table summarizes the consideration paid for IFH and the amounts of the assets acquired and liabilities assumed at the acquisition date, along with measurement period adjustments:

Purchase Price Consideration and Net Assets Acquired As Initially Reported

October 1, 2024 Measurement Period Adjustments Final

September 30, 2025

(dollars in thousands, except shares issued and price per share)

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Goodwill $ 21,126 $ 4,843 $ 25,969

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Supplementary Information on Acquired Loans

October 1, 2024

October 1, 2024 Measurement Period Adjustments Final

September 30, 2025

Par value $ 124,566 $ ( 161 ) $ 124,405

6 unchanged sentences

Estimate of contractual cash flows not expected to be collected $ 4,110 $ — $ 4,110

Goodwill represents the intangible value of IFH’s business and reputation within the markets it previously served and is not expected to be deductible for income tax purposes.

The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date.

The fair value adjustments were determined using discounted contractual cash flows.

The Company believes that all contractual cash flows related to these financial instruments will be collected.

As such, these receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit deteriorated loans, which have shown evidence of credit deterioration since origination.

Receivables acquired that were not subject to these requirements include non-impaired loans, including loans held for sale, with a fair value and gross contractual amounts receivable of $ 296.5 million and $ 301.9 million on the date of acquisition.

The fair value of purchased financial assets with more-than-insignificant credit deterioration was $ 107.4 million on the date of acquisition.

The gross contractual amounts receivable relating to the purchased financial assets with more-than-insignificant credit deterioration was $ 124.6 million.

The Company estimates, on the date of acquisition, that $ 11.3 million of the contractual cash flows specific to the purchased financial assets with credit deterioration will not be collected.

In connection with the business combination with IFH, the Company recorded $ 21.1 million of goodwill, which represents the excess of the purchase price over the fair value of the net assets acquired.

Information regarding the allocation of goodwill to the Company’s reportable segments, as well as the carrying amounts and amortization of other transaction related intangible assets, can be found within Note 18 – Segments and Note 8 - Goodwill and Intangible Assets, respectively.

The Company recorded $ 12.2 million of customer list intangible and $ 2.1 million of trade name intangible which is being amortized over its expected useful life of 17 years and 15 years, respectively, using the straight-line method.

The $ 1.8 million of core deposit intangible will be amortized over its expected useful life of 10 years using the sum-of-the-years-digits method.

Capital Bancorp, Inc.

2 unchanged sentences

December 31, 2025 and 2024

Note 2 - Business Combination (continued)

The following table presents supplemental pro forma information as if the acquisition had occurred at the beginning of 2024.

The unaudited pro forma information includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, depreciation expense on property acquired, interest expense on deposits acquired, and the related income tax effects.

The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been effected on the assumed dates:

(unaudited) (unaudited)

(in thousands) 2024 2023

Total revenue (1)

$ 225,443 $ 215,161

Net income $ 52,991 $ 46,322

(1) Total revenue is calculated by the sum of net interest income and noninterest income.

Note 3 - Investment Securities

The following table summarizes the amortized cost, fair value and allowance for credit losses of securities available-for-sale at December 31, 2024 and 2023 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

The following table summarizes the amortized cost, fair value and allowance for credit losses of securities available-for-sale at December 31, 2025 and 2024 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss:

Cost Gross Unrealized

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Total $ 238,969 $ 74 $ ( 15,413 ) $ — $ 223,630

There was no ACL required on available-for-sale debt securities in an unrealized loss position at December 31, 2024 or 2023.

There were no securities sold during the year ended December 31, 2025 or December 31, 2024.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 3 - Investment Securities (continued)

There was no ACL required on available-for-sale debt securities in an unrealized loss position at December 31, 2025 or 2024.

The amortized cost and fair value of debt securities are shown by contractual maturity.

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(1) Asset-backed and Mortgage-backed securities are due in monthly installments.

There were no securities pledged at December 31, 2024 and 2023 to secure public deposits and repurchase agreements.

Pledged securities at the Federal Reserve's Bank Term Funding Program (“BTFP”) totaled $ 170.7 million at par value at December 31, 2023 with no securities pledged as of December 31, 2024 as the program ended during the first quarter 2024.

Securities pledged had a carrying amount of $ 1.0 million and $ 0.9 million at December 31, 2025 and 2024 to secure public deposits.

As of December 31, 2025, approximately $ 124.3 million of investment securities were pledged as collateral to the FHLB to secure FHLB advances.

As of December 31, 2024, no investment securities were pledged as collateral to the FHLB to secured FHLB advances.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 3 - Investment Securities (continued)

At December 31, 2025 and 2024, there were no holdings of securities of any one issuer, other than the U.S.

10 unchanged sentences

Corporate — — 3,404 ( 96 ) 3,404 ( 96 )

Asset-backed securities — — — — — —

Mortgage-backed securities

5 unchanged sentences

Corporate — — 4,711 ( 289 ) 4,711 ( 289 )

Asset-backed securities — — 5,154 ( 37 ) 5,154 ( 37 )

Mortgage-backed securities

1 unchanged sentence

Total $ 66,126 $ ( 994 ) $ 142,552 $ ( 14,419 ) $ 208,678 $ ( 15,413 )

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 3 - Investment Securities (continued)

At December 31, 2025, there was one treasury security and three mortgage-backed securities that had been in an unrealized loss position for less than twelve months.

At December 31, 2024, there were one treasury security and eighteen mortgage-backed securities that had been in an unrealized loss position for less than twelve months.

At December 31, 2025, there were ten treasury securities, ten municipal securities, three corporate securities, and eight mortgage-backed securities that had been in an unrealized loss position for greater than twelve months.

At December 31, 2024, there were fourteen treasury securities, ten municipal securities, five corporate securities, and seven mortgage-backed securities that had been in an unrealized loss position for greater than twelve months.

At December 31, 2025 management determined the Company does not have the intent to sell, nor is it more likely than not that it will be required to sell, available-for-sale debt securities in an unrealized loss position at December 31, 2025 before it is able to recover the amortized cost basis.

4 unchanged sentences

Corporate Securities – There have been no payment defaults on any of the Company’s holdings of corporate debt securities.

There are five securities all of which are subordinated debt of other financial institutions with face amounts ranging from $ 0.5 million to $ 2 million.

There are three securities all of which are subordinated debt of other financial institutions with face amounts ranging from $ 0.5 million to $ 2 million.

Municipal Securities – All of the Company’s holdings of municipal bonds were investment grade and there have been no payment defaults.

Summary ratings information at December 31, 2024, based on the amortized cost basis and reflecting the lowest enhanced or underlying rating by Moody’s, Standard & Poors or Fitch, is as follows:

Summary ratings information at December 31, 2025, based on the amortized cost basis and reflecting the lowest enhanced or underlying rating by Moody’s, Standard & Poor’s or Fitch, is as follows:

AAA – 76 % of the portfolio;

Asset-backed Securities – There were three investment grade asset-backed securities, and there have been no payment defaults on these securities.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 3 - Investment Securities (continued)

Asset-backed Securities – There are three investment grade asset-backed securities, and there have been no payment defaults on these securities.

As such, it is deemed the above listed securities are not in an unrealized loss position due to credit-related issues and no further analysis is warranted as of December 31, 2025.

Note 4 - Loan Servicing

Activity for loan servicing rights and the related valuation allowance follows:

Activity for loan servicing rights is as follows for the periods presented:

Loan servicing rights:

Beginning of year $ — $ —

Balance at beginning of period $ 5,511 $ —

Additions 182 5,096

Disposals — —

Measurement period adjustments ( 2,107 ) —

Other changes in fair value ( 1,770 ) 415

End of year $ 5,511 $ —

The fair value at December 31, 2024 was determined using a discount rate of 13.5 %, prepayment speeds ranging from 12.8 % to 18.2 %, depending on the stratification of the specific right, and a weighted average default rate of 0.7 %.

There were no such loan servicing rights during 2023.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Balance at end of period $ 1,816 $ 5,511

The loan servicing rights balance consisted of a principal balance o f $ 739 million and $ 807 million as of December 31, 2025 and December 31, 2024, respectively.

The fair value at December 31, 2025 was determined using a discount rate of 12.8 % , a weighted average prepayment speed of 16.6 % and a weighted average default rate of 0.7 % .

The fair value at December 31, 2024 was determined using a discount rate of 13.5 %, a weighted average prepayment speed of 15.6 % and a weighted average default rate of 0.7 %.

There were $ 2.1 million of measurement period adjustments to the Day-1 purchase accounting for the year ended December 31, 2025.

The measurement period adjustments consisted of a negative $ 2.9 million impact from the fair value adjustment related to the loan servicing portfolio and $ 0.8 million of additions to establish the unguaranteed servicing asset.

Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses

12 unchanged sentences

Portfolio loans receivable, net $ 2,904,797 $ 2,581,511

_______________

(1) Credit card loans are presented net of reserve for interest and fees.

The following tables set forth the changes in the ACL and an allocation of the ACL by loan segment class for the year ended December 31, 2024 and 2023.

During the year ended December 31, 2023, the Company recorded a $ 284 thousand increase to the ACL, reflected in “Other,” from residual non-accretable discounts on acquired loans post CECL adoption.

The ACL on loans at December 31, 2024 included $ 11.3 million of allowance for credit losses on acquired PCD loans established through acquisition accounting adjustments on the IFH acquisition date.

In addition, the provision for credit losses on loans in the year ended December 31, 2024 included $ 4.2 million to establish an ACL on non-PCD loans acquired in the IFH acquisition.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses (continued)

The ACL on loans at December 31, 2025 included $ 3.4 million on acquired PCD loans established as a measurement period adjustment to the Day 1 purchase accounting.

During 2025, the Company sold $ 69.7 million of previously charged-off credit card loans to a third party, which resulted in recoveries of $ 2.0 million recognized during the period.

The following tables set forth the changes in the ACL by loan segment class for the year ended December 31, 2025 and 2024.

(in thousands) Beginning

Balance Initial Allowance on Acquired PCD Loans Provision for

Credit Losses (1)

Charge-Offs Recoveries Ending

Balance Measurement Period Adjustment for Acquired PCD Loans Provision for (Release of)

Credit Losses Charge-Offs Recoveries Ending

Year Ended December 31, 2025

6 unchanged sentences

Total $ 48,652 $ 3,424 $ 14,965 $ ( 14,612 ) $ 2,231 $ 54,660

(1) Includes $ 4.2 million initial provision for credit losses on non-PCD loans.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses (continued)

(in thousands) Beginning

Balance, Prior to Adoption of the CECL Standard Impact of Adopting the CECL Standard Other Provision (Release of Provision) for

Balance Initial Allowance on Acquired PCD Loans Provision for

Credit Losses Charge-Offs Recoveries Ending

7 unchanged sentences

Total $ 28,610 $ 11,325 $ 17,720 $ ( 9,228 ) $ 225 $ 48,652

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses (continued)

Past due loans, segregated by age and class of loans, as of December 31, 2025 and 2024 were as follows:

23 unchanged sentences

There were $ 6.1 million and $ 7.2 million of loans secured by one-to-four family residential properties in the process of foreclosure as of December 31, 2025 and 2024, respectively.

The increase in loans 60-89 days past due at December 31, 2024 from December 31, 2023 includes a single owner-occupied commercial real estate loan relationship with a total outstanding exposure amount of $ 11.6 million.

The borrower fell behind in payments due to unexpected timing delays in the collection of outstanding receivables.

Payments have resumed.

The borrower remains actively engaged with the Company in resolving the past due status.

Of the total outstanding exposure, $ 3.9 million is now considered current at December 31, 2024.

Capital Bancorp, Inc.

5 unchanged sentences

December 31, 2025

Nonaccrual with No Allowance for Credit Loss Nonaccrual with an Allowance for Credit Loss Total Nonaccrual Loans Interest Recognized on Nonaccrual Loans

Nonaccrual with No Allowance for Credit Loss Nonaccrual with an Allowance for Credit Loss Total Nonaccrual Loans 1

(in thousands)

5 unchanged sentences

December 31, 2024

Nonaccrual with No Allowance for Credit Loss Nonaccrual with an Allowance for Credit Loss Total Nonaccrual Loans Interest Recognized on Nonaccrual Loans

Nonaccrual with No Allowance for Credit Loss Nonaccrual with an Allowance for Credit Loss Total Nonaccrual Loans 1

Residential $ 8,055 $ 597 $ 8,652

3 unchanged sentences

Total $ 15,816 $ 14,425 $ 30,241

_______________

(1) The Company did not recognize any interest income on nonaccrual loans during the years ended December 31, 2025 and 2024.

The Company has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty.

22 unchanged sentences

Of the collateral dependent loans as of December 31, 2025, a specific reserve of $ 40 thousand, $ 1.3 million and $ 4.2 million was assessed for residential real estate, commercial real estate and commercial and industrial loans, respectively.

Of the collateral dependent loans as of December 31, 2023, a specific reserve of $ 9.0 million was assessed for commercial and industrial loans.

Of the collateral dependent loans as of December 31, 2024, a specific reserve of $ 147 thousand, $ 4.1 million and $ 4.8 million was assessed for residential real estate, commercial real estate and commercial and industrial loans, respectively.

The Company made eight loan modifications on loans to borrowers experiencing financial difficulty during the year ended December 31, 2025 as follows:

Modifications

(in thousands) Amortized Cost Basis % of Total Loan Type Financial Effect

Commercial 374 0.033 % Reduced contractual floating interest rate based on Prime + 2.750 % to 4.000 % fixed for 36 months with no maturity extension and provided 6 months payment deferral on two loans

Commercial and Industrial 1,647 0.236 % Extended maturity date of two loans which reduced monthly payment amount for the borrowers;

Provided 10 months payment deferral on three loans.

The maturity date was extended to account for the deferral in order to fully amortize the loan;

Reduced contractual payment schedule for 24 months on one loan.

Total $ 2,021

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses (continued)

The Company made 13 loan modifications on loans to borrowers experiencing financial difficulty during the year ended December 31, 2024 as follows:

12 unchanged sentences

Total $ 5,003

The Company did not make any modifications on loans to borrowers experiencing financial difficulty during the year ended December 31, 2023.

The following table presents the payment status of loans that have been modified in the last twelve months:

December 31, 2025

Past Due Past Due

(in thousands) Current 30-89 Days 90 Days or More Nonaccrual Total

Commercial $ — $ — $ 412 $ 1,260 $ 1,672

Commercial and Industrial 252 — — 271 523

$ 252 $ — $ 412 $ 1,531 $ 2,195

During the current period, one financing receivable that was modified in 2024 to provide six-month payment deferral (with deferred payments added to the end of the loan term) experienced a payment default within twelve months of that modification, resulting in an additional modification in 2025 that provided a ten-month payment deferral (with deferred payments added to the end of the loan term).

The outstanding recorded investment as of December 31, 2025 was $ 0.9 million.

Capital Bancorp, Inc.

8 unchanged sentences

Credit quality indicators are reviewed and adjusted regularly to account for the degree of risk and expected credit loss that the Company believes to be appropriate for each financial asset.

A description of the general characteristics of loans characterized as classified is as follows:

A description of the general risk ratings are described as follows:

Loans characterized as pass includes loans graded exceptional, very good, good, satisfactory and pass/watch.

12 unchanged sentences

A doubtful loan has all the weaknesses associated with a substandard loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses (continued)

Ungraded loans represent credit card loans not included in the individual credit grading process due to the borrower type.

The credit quality indicator for credit card loans is based on the delinquency status of the borrower as of the date published.

The following table presents the balances of classified loans based on the most recent credit quality indicator analysis.

47 unchanged sentences

Commercial real estate — — — 197 — 1,695 — 1,892

Construction — — — — — 264 — 264

Commercial and Industrial — 101 2,339 347 8 625 — 3,420

79 unchanged sentences

Balance at beginning of period $ 1,191 $ 806

Impact of adopting the CECL standard on January 1, 2023 — ( 775 )

Provision for (release of) credit losses on unfunded commitments 385 ( 101 )

Provision for credit losses on unfunded commitments 188 385

Balance at end of period $ 1,379 $ 1,191

10 unchanged sentences

Balance at beginning of period $ 2,260 $ 985

Provision for (release of) mortgage loan put-back reserve 1,275 ( 188 )

Balance acquired from IFH — 1,207

Provision for mortgage loan put-back reserve 79 68

Balance at end of period $ 2,339 $ 2,260

The Company has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination.

The carrying amount of those loans is as follows:

(in thousands) 2024

Purchase price of loans at acquisition $ 107,444

Allowance for credit losses at acquisition 11,325

Non-credit discount at acquisition 5,797

Par value of acquired loans at acquisition $ 124,566

Note 6 - Premises and Equipment

3 unchanged sentences

Furniture and equipment 5,406 4,973

Vehicle 54 54

Software 5,932 3,440

22 unchanged sentences

As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The historical weighted average discount rate used was 5.08 % at December 31, 2024 and 3.79 % at December 31, 2023.

The historical weighted average discount rate used was 5.08 % at December 31, 2025 and December 31, 2024.

The operating lease ROU asset also includes any lease pre-payments.

21 unchanged sentences

Present value of net future lease payments $ 4,572

Operating lease and rent expense totaled $ 1.5 million and $ 1.3 million for the years ended December 31, 2024 and 2023, respectively.

Capital Bancorp, Inc.

2 unchanged sentences

December 31, 2025 and 2024

Note 7 - Leases (continued)

Operating lease and rent expense totaled $ 2.0 million and $ 1.5 million for the years ended December 31, 2025 and 2024, respectively.

Cash paid for operating leases was $ 2.0 million and $ 1.4 million for the years ended December 31, 2025 and 2024, respectively.

Note 8 - Goodwill and Intangible Assets

3 unchanged sentences

Acquired goodwill — 21,126

Impairment — —

Measurement period adjustment 4,843 —

Balance at end of period $ 25,969 $ 21,126

At December 31, 2024, the Company’s reporting units where goodwill was pushed down had positive equity and earnings.

During the year ended December 31, 2025, the Company revised the estimate of adjusted servicing assets, acquired PCD loans and other liabilities resulting in a $ 4.8 million increase in goodwill at December 31, 2025, as compared to December 31, 2024.

We have completed the purchase price allocation and the goodwill recorded is final.

At December 31, 2025, each of the Company’s segments that were assigned goodwill had positive equity and earnings.

The Company has elected to perform a qualitative assessment annually as of October 1 to determine if it is more than likely than not that the fair value of the reporting unit exceeded its carrying value, including goodwill.

The qualitative assessment indicated that it was more than likely than not that the fair value of the reporting unit exceeded the carrying value, resulting in no impairment.

The Company reviews its finite-lived intangible assets, including customer list, trade name, and core deposit intangibles, for indicators of impairment, and no indicators were noted during 2025.

Acquired amortizing intangible assets were as follows at December 31:

8 unchanged sentences

The core deposit intangible will be amortized over its expected useful life of 10 years using the sum-of-the-years-digits method.

Aggregate amortization expense was $ 262,000 and zero for the years ended December 31, 2024 and 2023, respectively.

At December 31, 2024, scheduled amortization of the intangible assets for each of the next five years is as follows:

(in thousands)

Thereafter 10,631

Total $ 15,817

Aggregate amortization expense was $ 1.0 million and $ 262 thousand for the years ended December 31, 2025 and 2024, respectively.

Capital Bancorp, Inc.

2 unchanged sentences

December 31, 2025 and 2024

Note 8 - Goodwill and Intangible Assets (continued)

At December 31, 2025, scheduled amortization of the intangible assets for each of the next five years is as follows:

(in thousands)

Thereafter 9,612

Total $ 14,771

Note 9 - Deposits

Time deposits that meet or exceed the FDIC Insurance Limit of $250,000 at year-end 2025 and 2024 were $ 177.3 million and $ 250.8 million.

As part of its funding strategy, the Company from time to time utilizes brokered time deposits to supplement core funding.

Brokered time deposits totaled $ 376.7 million and $ 333.0 million, or 12.2 % and 12.1 % of total deposits at December 31, 2025 and December 31, 2024, respectively.

The Company maintains relationships with a diversified group of approved broker-dealers for broker deposits, and the program is managed to diversify funding sources and limit reliance on any single broker or funding channel.

While the Company believes these relationships are strong, the loss of a significant portion of these broker-dealer relationships could adversely impact the Company’s liquidity position and require the Company to obtain alternative funding sources, which may be less readily available or more costly.

Scheduled maturities of time deposits for the next five years were as follows:

3 unchanged sentences

Total $ 866,365

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 10 - Borrowed Funds

2 unchanged sentences

FHLB fixed rate advance due October 16, 2025 $ — — % $ 22,000 0.93 %

FHLB daily rate advance due June 12, 2026 50,000 3.77 — —

Total - FHLB advances $ 50,000 3.77 % $ 22,000 0.93 %

Junior subordinated debentures due June 15, 2036 $ 2,062 5.85 % $ 2,062 6.49 %

Other subordinated notes due November 30, 2030 — — 10,000 5.00

Bank Term Funding Program borrowings — — 15,000 4.84

Total - Other borrowed funds $ 2,062 5.85 % $ 12,062 5.25 %

3 unchanged sentences

Concurrent with the issuance of the Capital Securities, the Trust issued trust common securities to the Company in the aggregate liquidation value of $ 62 thousand.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 10 - Borrowed Funds (continued)

The proceeds of the issuance of the Capital Securities and trust common securities were invested in the Company’s Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Floating Rate Debentures”).

7 unchanged sentences

The Floating Rate Debentures may be prepaid if certain events occur, including a change in the tax status or regulatory capital treatment of the Capital Securities, or a change in existing laws that requires the Trust to register as an investment company.

The junior subordinated debentures are treated as Tier 1 capital by the Company, to a limited extent, by the Federal Reserve.

The junior subordinated debentures are treated as Tier 1 capital by the Company and, to a limited extent, by the Federal Reserve.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 10 - Borrowed Funds (continued)

Other subordinated notes

4 unchanged sentences

The Company used the proceeds from the Notes to redeem the outstanding $ 13.5 million, 6.95 % fixed-to-floating rate subordinated notes issued in November 2015 and called on December 1, 2020.

Federal Reserve’s Bank Term Funding Program

On March 12, 2023, in response to liquidity concerns in the banking system, the Federal Deposit Insurance Corporation, Federal Reserve and U.S.

Department of Treasury, collaboratively approved certain actions with a stated intention to reduce stress across the financial system, support financial stability and minimize any impact on business, households, taxpayers, and the broader economy.

Among other actions, the Federal Reserve Board created the BTFP to make additional funding available to eligible depository institutions to help assure institutions can meet the needs of their depositors.

During the first quarter of 2023, we established a line of credit under the BTFP.

As of March 31, 2024, participation in the BTFP had concluded and the Company had no outstanding balances under the BTFP at December 31, 2024.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 10 - Borrowed Funds (continued)

On October 28, 2025, Capital Bancorp, Inc.

(the “Company”) provided notice to the holders of the Notes that the Company will redeem all outstanding Notes on November 30, 2025.

The outstanding balance of the Notes was $ 10.0 million.

The redemption price for the Notes was equal to 100 % of the principal amount of the Notes redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date of November 30, 2025.

The Notes were redeemed on November 28, 2025 in the amount of $ 10.0 million, plus $ 250 thousand for accrued and unpaid interest as of November 30, 2025.

Available lines of credit

1 unchanged sentence

There were no outstanding line of credit balances at December 31, 2025 and December 31, 2024.

The Company may borrow up to 25 % of its assets from the FHLB, based on collateral available to pledge to secure the borrowings.

The Company may borrow up to 25 % of its deposits from the FHLB, based on collateral available to pledge to secure the borrowings.

Borrowings from the FHLB are secured by a portion of the Company’s loan and/or investment portfolio.

As of December 31, 2024 and 2023, the Company had pledged loans providing borrowing capacity of $ 507.5 million and $ 313.5 million, respectively.

The Company did no t have any pledged investment securities to the FHLB at December 31, 2024 or December 31, 2023.

As of December 31, 2024 and 2023, the Company had available borrowing capacity, net of advances and amounts pledged for letters of credit, from the FHLB of $ 485.5 million and $ 291.5 million, respectively.

As of December 31, 2024 and 2023, the Company had pledged commercial loans to the Federal Reserve Bank of Richmond to secure a borrowing capacity totaling $ 20.6 million and $ 16.6 million, respectively, under its discount window program.

Further, the Company had pledged available-for-sale securities to the Federal Reserve Bank of Richmond to secure an additional borrowing capacity of $ 89.6 million at December 31, 2024 as compared to a borrowing capacity of $ 155.7 million under the BTFP as previously mentioned at December 31, 2023.

The Company limits its certificate of deposit funding through financial networks to 15 % of the Bank’s assets, or approximately $ 471.3 million and $ 326.5 million as of December 31, 2024 and 2023, respectively.

As of December 31, 2025, the Company had approximately $ 874.1 million in real estate loans and $ 124.3 million of investment securities that were pledged as collateral to the FHLB and our total borrowing capacity from the FHLB was $ 656.3 million.

As of December 31, 2024, the Company had approximately $ 625.0 million in real estate loans and no investment securities that were pledged as collateral to the FHLB and our total borrowing capacity from the FHLB was $ 507.5 million.

As of December 31, 2025 and 2024, the Company had $ 50.0 million and $ 22.0 million in outstanding advances and $ 606.3 million and $ 485.5 million in available borrowing capacity from the FHLB.

As of December 31, 2025 and 2024, the Company had pledged commercial loans to the Federal Reserve Bank of Richmond to secure a borrowing capacity totaling $ 31.1 million and $ 20.6 million, respectively, under the Federal Reserve’s borrower-in-custody arrangement.

Further, the Company had pledged available-for-sale securities to the Federal Reserve Bank of Richmond to secure additional borrowing capacity through the Federal Reserves national book-entry arrangement at December 31, 2025 and December 31, 2024 of $ 94.2 million and $ 89.6 million, respectively.

The Company limits its certificate of deposit funding through financial networks to 15 % of the Bank’s total deposits, or approximately $ 465.8 million and $ 416.2 million as of December 31, 2025 and 2024, respectively.

The Company had $ 376.7 million outstanding as of December 31, 2025 and $ 333.0 million outstanding as of December 31, 2024.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 11 - Retirement Plans

5 unchanged sentences

The LTIP was introduced in order to align long-term interests of the Bank with the Bank’s key executive management members.

Under the LTIP, the CEO is eligible to earn an annual contribution of 20 % of salary for achieving targeted performance levels while other executive management members are eligible to earn an annual contribution of 15 % of salary for achieving targeted performance levels.

Under the LTIP, the Company’s CEO is eligible to earn an annual contribution of 20 % of salary for achieving targeted performance levels while other executive management members are eligible to earn an annual contribution of 15 % of salary for achieving targeted performance levels.

The Compensation Committee may award more for overachievement of the targets, and all targets are set for participants at the beginning of a fiscal year.

3 unchanged sentences

Any executive not fulfilling either vesting requirement will forfeit any employer contributions.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 12 - Related-Party Transactions

10 unchanged sentences

Payments made in accordance with the lease were $ 83 thousand and $ 84 thousand in 2025 and 2024, respectively.

Company directors, or their related interests, held $ 2.5 million of the subordinated notes outstanding as of December 31, 2024.

These notes hold a fixed rate of interest until November 30, 2025, after which it converts to variable rate.

A director of the Bank owns an interest in an entity from which the Company entered into a consulting agreement with during the year ended December 31, 2025.

The Bank’s Board of Directors reviewed and approved this engagement, concluding that the terms are comparable to those that would be reached in an arm’s-length transaction with an unrelated party.

Consulting expense of $ 223 thousand was recognized during the year ended December 31, 2025 and is included in Professional fees in the accompanying consolidated statements of income.

Capital Bancorp, Inc.

2 unchanged sentences

December 31, 2025 and 2024

Note 12 - Related-Party Transactions (continued)

Company directors, or their related interests, held $ 2.5 million of the subordinated notes outstanding as of December 31, 2024.

The notes were paid off on November 28, 2025.

Note 13 - Income Taxes

Income tax expense was as follows:

Income Tax Expense

For the Years Ended December 31,

(in thousands) 2025 2024

Current expense

Current tax expense

Federal 14,077 10,472

State 2,600 2,202

Total current expense 12,674 10,212

Deferred tax expense (benefit) ( 1,814 ) 142

Total current tax expense 16,677 12,674

Deferred tax expense

Federal 1,033 ( 1,583 )

State 64 ( 231 )

Total deferred tax expense 1,097 ( 1,814 )

Total income tax expense $ 17,774 $ 10,860

Cash income taxes paid, net of refunds received, was as follows:

For the Years Ended December 31,

(in thousands) 2025 2024

Income taxes paid, net of refunds received

Federal $ 15,350 $ 7,000

Maryland 1,030 1,300

Other states *

Total $ 18,753 $ 9,098

_______________

* Jurisdictions below the 5% of total income taxes paid (net of total refunds) threshold for the period presented.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 13 - Income Taxes (continued)

The components of the net deferred tax asset at December 31, 2025 and 2024 were:

18 unchanged sentences

Purchase accounting adjustments - fixed assets 1,730 1,717

Other 281 362

Deferred tax liability 4,953 6,080

2 unchanged sentences

The Company reduces the carrying amounts of deferred tax assets by a valuation allowance, if, based on the available evidence, it is more likely than not that such assets will not be realized.

At December 31, 2024 a valuation allowance of $ 1.1 million was established for a deferred tax asset arising from the write-down of a legacy IFH equity investment for which realizability is uncertain.

At December 31, 2023, no valuation allowance was recognized.

The Company’s net deferred tax asset of $ 16.7 million at December 31, 2024 increased $ 4.4 million, compared to $ 12.3 million at December 31, 2024.

The variance in net deferred tax asset year over year included the allowance for credit losses of $ 4.7 million and was also augmented in part by the IFH acquisition, including net purchase accounting adjustments of $ 2.4 million, intangible assets of $ 2.4 million, mortgage and other servicing rights of $ 1.3 million and a write-down on an equity investment of $ 1.1 million for which a valuation allowance of $ 1.1 million was established.

At December 31, 2024 valuation allowance of $ 1.1 million was established for a deferred tax asset arising from the write-down of a legacy IFH equity investment, as realizability of the related capital loss carryforward is uncertain.

The Company does not have a history of generating capital gains necessary to utilize capital loss carryforwards, and there is currently no available source of capital gains sufficient to support recognition of the deferred tax asset.

The valuation allowance was unchanged and remains at $ 1.1 million at December 31, 2025.

The Company’s net deferred tax asset of $ 15.0 million at December 31, 2025 decreased $ 1.7 million, compared to $ 16.7 million at December 31, 2024.

The variance in net deferred tax asset year over year included the $ 2.6 million decrease in net purchase accounting adjustments and a $ 1.9 million decrease in the unrealized loss on investment securities available for sale, partially offset by an increase related to the allowance for credit losses of $ 1.6 million and a $ 0.9 million decrease in the deferred tax liability for mortgage and other servicing rights.

Capital Bancorp, Inc.

4 unchanged sentences

The differences between the federal income tax rate and the effective tax rate for the Company are reconciled as follows:

Year ending December 31, 2025

Year ending December 31, 2024

Amount % Amount %

Statutory federal income tax rate $ 15,738 21.00 % $ 8,785 21.00 %

1 unchanged sentence

State income taxes, net of federal income tax benefit 1

2,651 3.54 1,518 3.63

Tax credits, net of amortization ( 308 ) ( 0.41 ) ( 284 ) ( 0.26 )

Valuation allowance on deferred tax asset 2

Nondeductible merger expenses 0.64 —

Stock-based compensation expense 0.56 ( 0.05 )

Nontaxable or nondeductible items:

Bank-owned life insurance ( 322 ) ( 0.43 ) ( 308 ) ( 0.74 )

Tax credits, net of amortization ( 0.26 ) —

Tax-exempt interest and dividend income ( 25 ) ( 0.03 ) ( 5 ) ( 0.01 )

Nondeductible stock-based compensation, net of excess tax benefits 93 0.12 236 0.56

Nondeductible compensation expense 132 0.18 — —

Nondeductible merger expenses — — 267 0.64

Other adjustments:

Other, net ( 185 ) ( 0.25 ) 101 ( 0.18 )

Effective Tax Rate $ 17,774 23.72 % $ 10,860 25.96 %

The Company’s effective tax rate of 25.96 % for 2024 increased 3.56 %, compared to 22.40 % for 2023.

The change in effective tax rate was due, in part, to the write-down of a legacy IFH equity investment which resulted in a deferred tax asset with an offsetting valuation allowance, certain nondeductible merger related expenses and stock-based compensation expense.

Offsetting this includes tax credits, net of amortization, arising from the Company’s 2024 investment in low income housing tax credits reduced the effective tax rate in 2024.The Company does not have material uncertain tax positions and did not recognize any adjustments for unrecognized tax benefits.

_______________

(1) The state income taxes, net of federal income tax benefit represents the state and local incomes taxes in jurisdictions where we conduct our primary business operations.

State taxes in Maryland comprised the majority of the tax effect in this category.

(2) The valuation allowance relates to the write-down of a legacy IFH equity investment.

The Company’s effective tax rate of 23.72 % for 2025 decreased by 2.24 %, or $ 6.9 million, from 25.96 % for 2024.

The change in effective tax rate was due, in part, to 2024 including the write-down of a legacy IFH equity investment which resulted in a deferred tax asset with an offsetting valuation allowance and certain nondeductible merger related expenses.

The Company does not have material uncertain tax positions and did not recognize any adjustments for unrecognized tax benefits.

The Company remains subject to examination of income tax returns for the years ending after December 31, 2021.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 14 - Regulatory Capital Matters

5 unchanged sentences

Management believes as of December 31, 2025, that the Company and Bank meet all capital adequacy requirements to which they are subject.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 14 - Regulatory Capital Matters (continued)

Prompt corrective action regulations provide five classifications:

7 unchanged sentences

Actual and required capital amounts and ratios are presented below at year-end.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 14 - Regulatory Capital Matters (continued)

Regulatory Capital

14 unchanged sentences

December 31, 2024

Tier 1 leverage ratio (to average assets) $ 270,019 12.14 % $ 89,004 4.00 % N/A N/A

Tier 1 capital (to risk-weighted assets) 270,019 15.55 % 104,175 6.00 % N/A N/A

Tier 1 leverage ratio (to average assets) $ 346,840 11.07 % $ 125,348 4.00 % $ 156,685 5.00 %

Tier 1 capital (to risk-weighted assets) 346,840 13.83 % 150,512 6.00 % $ 200,683 8.00 %

Common equity tier 1 capital ratio (to risk-weighted assets)

267,957 15.43 % 78,132 4.50 % N/A N/A

Total capital ratio (to risk-weighted assets) 301,817 17.38 % 138,900 8.00 % N/A N/A

344,778 13.74 % 112,884 4.50 % $ 163,055 6.50 %

Total capital ratio (to risk-weighted assets) 388,425 15.48 % 200,683 8.00 % $ 250,853 10.00 %

Tier 1 leverage ratio (to average assets) $ 283,828 9.17 % $ 123,818 4.00 % $ 154,772 5.00 %

8 unchanged sentences

Note 15 - Stock-Based Compensation

Compensation cost is recognized for stock options and restricted stock awards issued to employees.

Compensation cost is recognized for stock options and restricted stock unit awards issued to employees.

Compensation cost is measured as the fair value of these awards on their date of grant.

A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used as the fair value of restricted stock awards.

Compensation cost is recognized over the required service period, generally defined as the vesting period for stock option awards and as the restriction period for restricted stock awards.

Compensation cost is recognized over the required service period, generally defined as the vesting period for stock option awards and as the restriction period for restricted stock unit awards.

For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

The expense recognition of employee stock option and restricted stock awards resulted in net expense of approximately $ 2.1 million and $ 1.8 million during the years ended December 31, 2024 and 2023, respectively.

Stock options:

The Company currently has two incentive compensation plans with outstanding stock options, the 2002 Stock Option Plan and the Amended and Restated 2017 Stock and Incentive Compensation Plan (the “Plan”).

Only the Plan, which authorizes the use of stock options, stock appreciation rights, restricted stock and/or restricted stock, is available to grant options and shares to employees and directors.

The Company recognizes a deferred tax asset for stock-based compensation as the related compensation cost is recognized over the requisite service period.

The income tax effects of stock-based compensation, including tax benefits and shortfalls arising upon stock option exercising and RSU vestings, are recognized in income tax expense in the period of settlement.

The expense recognition of employee stock option and restricted stock unit awards resulted in net expense of approximately $ 2.8 million and $ 2.1 million during the years ended December 31, 2025 and 2024, respectively.

The Company recorded an income tax benefit related to stock-based compensation of $ 0.1 million during the years ended December 31, 2025 and 2024.

The Company currently has two incentive compensation plans with outstanding stock options and RSUs, the 2002 Stock Option Plan and the Amended and Restated 2017 Stock and Incentive Compensation Plan (the “Plan”).

Only the Plan, which authorizes the use of stock options, stock appreciation rights, restricted stock and/or RSUs, is available to grant options and shares to employees and directors.

At inception, the Plan allowed for up to 1,120,000 shares of common stock to be issued.

2 unchanged sentences

Shares of common stock related to any unexercised or unvested award granted under the Plan that terminate or expire, or are subsequently forfeited or cancelled for any reason, become available for re-grant under the Plan.

Option prices are equal to or greater than the estimated fair value of the common stock at the date of grant.

Options outstanding vest over a four-year period, whereby 25 % of the options become exercisable on each anniversary of the grant date.

Stock options:

The exercise price of stock options granted under the Plan is established at the time of grant at an amount equal to or greater than the market value of the common stock.

Options outstanding generally vest over a four-year period, whereby 25 % of the options become exercisable on each anniversary of the grant date.

Upon the exercise stock options, the Company may, at the participant’s election, facilitate net-share settlement by withholding a portion of the shares otherwise issuable to cover some or all of the option exercise price.

Such withheld shares purchased internally by the Company and retired, and are treated as issued under the Plan.

The Company may, at the employee’s election, settle the related statutory tax withholding obligation by withholding a portion of the shares otherwise issuable upon exercise.

As a result, the number of shares delivered to the participant is reduced, and the Company remits the required tax withholding in cash on behalf of the participant.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 15 - Stock-Based Compensation (continued)

Information with respect to options outstanding during the years ended December 31, 2025 and 2024 is as follows:

3 unchanged sentences

Exercised ( 106,442 ) 15.45 ( 150,247 ) 14.97

Retired on exercise ( 89,352 ) 14.59 ( 124,939 ) 12.29

Shares withheld for net share settlement ( 70,462 ) 16.39 ( 89,352 ) 14.59

Expired/cancelled/forfeited ( 51,551 ) 23.35 ( 55,606 ) 23.22

2 unchanged sentences

The weighted average fair value of options granted during the years ended December 31, 2025 and 2024, was $ 5.29 and $ 10.57 , respectively.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 15 - Stock-Based Compensation (continued)

A summary of information about stock options outstanding is as follows:

25 unchanged sentences

Total unrecognized compensation expense related to stock options to be recognized over the next five years was $ 1.0 million and $ 1.6 million at December 31, 2025 and 2024, respectively.

The intrinsic value of stock options exercised was $ 1.8 million and $ 1.9 million during the years ended December 31, 2024 and 2023, respectively.

The weighted average fair value of options granted during 2024 and 2023 were estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:

Dividend yield 1.33 % 1.04 %

Risk free interest rate 4.02 % 4.52 %

Expected volatility 50.80 % 54.64 %

Expected life in years 5 5

Capital Bancorp, Inc.

3 unchanged sentences

Note 15 - Stock-Based Compensation (continued)

Restricted stock:

The Company from time-to-time also grants shares of restricted stock to key employees.

The intrinsic value of stock options exercised was $ 1.5 million and $ 1.8 million during the years ended December 31, 2025 and 2024, respectively.

The weighted average fair value of options granted during 2025 and 2024 were estimated using the Black-Scholes option-pricing model.

The Company determined expected volatility based upon the historical volatility of its common stock, estimated the expected term using the historical exercise behavior, used U.S.

Treasury yields commensurate with the expected term for the risk-free interest rate, and based the expected dividend yield on the Company’s current dividend policy.

The model used following weighted average assumptions:

Dividend yield 1.31 % 1.33 %

Risk free interest rate 3.99 % 4.02 %

Expected volatility 29.46 % 50.80 %

Expected life in years 5 5

Restricted stock units:

The Company from time-to-time also grants shares of restricted stock units to key employees.

These awards help align the interests of these employees with the interests of the stockholders of the Company by providing economic value directly related to increases in the value of the Company’s stock.

2 unchanged sentences

The Company recognizes expense, equal to the total value of such awards, ratably over the vesting period of the stock grants.

Upon the vesting and settlement of restricted stock units, the Company may, at the participant’s election, facilitate net-share settlement by withholding a portion of the shares otherwise deliverable, which are purchased internally by the Company, retired and treated as issued.

satisfy all or a portion of the related statutory withholding obligation by withholding a number of shares otherwise deliverable to the participant.

In such cases, the number of shares is reduced accordingly, and the Company remits the required tax withholding in cash on behalf of the participant.

All restricted stock agreements are conditioned upon continued employment.

6 unchanged sentences

Vested ( 23,855 ) 24.56 ( 11,829 ) 18.32

Retired on vesting ( 5,375 ) 18.12 ( 8,555 ) 16.46

Shares withheld for net share settlement ( 10,721 ) 24.59 ( 5,375 ) 18.12

Forfeited ( 6,619 ) 27.04 ( 1,333 ) 17.90

Nonvested at end of year 68,022 $ 28.95 46,950 $ 24.83

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 15 - Stock-Based Compensation (continued)

The vesting schedule of restricted shares as of December 31, 2025 is as follows:

There was $ 570 thousand and $ 78 thousand of total unrecognized compensation expense related to nonvested restricted stock at December 31, 2024 and 2023, respectively.

There was $ 1.2 million and $ 570 thousand of total unrecognized compensation expense related to nonvested restricted stock at December 31, 2025 and 2024, respectively.

Capital Bancorp, Inc.

10 unchanged sentences

Investment in Church Street Capital 7,936 7,357

Investment in Windsor 5,939 —

Investment in Windsor TM

Investment in Trust 62 62

2 unchanged sentences

Accrued interest receivable 239 92

Goodwill 3,521 —

Intangible assets 3 14,072

19 unchanged sentences

Dividend from Bank 14,900 19,500

Dividend from Windsor Advantage TM

Total interest and dividend revenue 23,378 21,915

1 unchanged sentence

Net interest income 22,788 21,259

Provision for credit losses 59 88

(Release of) provision for credit losses ( 15 ) 59

Net interest income after provision for credit losses 22,803 21,200

Noninterest income ( 2,615 ) 4

Noninterest loss ( 532 ) ( 2,615 )

Noninterest expenses 1,302 1,119

14 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses 59 88

(Release of) provision for credit losses ( 15 ) 59

Undistributed net income of subsidiaries ( 36,334 ) ( 13,658 )

1 unchanged sentence

Director and employee compensation paid in Company stock 1,225 517

Deferred income tax expense (benefit) 4 ( 65 )

Deferred income tax expense — 4

Amortization of intangible assets — 228

11 unchanged sentences

Cash flows from financing activities

Repayment of debt ( 10,000 ) —

Dividends paid ( 7,296 ) ( 5,275 )

Repurchase of common stock ( 11,731 ) ( 1,399 )

Net proceeds from exercise of stock options 1,077 1,791

Net proceeds from exercise of stock 1,158 1,077

Net cash used by financing activities ( 27,869 ) ( 5,597 )

Net increase in cash and cash equivalents 1,859 3,227

Net (decrease) increase in cash and cash equivalents ( 1,999 ) 1,859

Cash and cash equivalents, beginning of year 5,358 3,499

4 unchanged sentences

December 31, 2025 and 2024

Note 17 - Derivative Financial Instruments

The Company may enter into mortgage origination commitments, which are commitments to originate loans as part of its mortgage banking activities.

The Company then locks the loan with an investor and commits to deliver the loan if settlement occurs (Best Efforts).

Certain loans under mortgage origination commitments are covered under forward sales contracts.

Forward sales contracts are recorded at fair value with changes in fair value recorded in mortgage banking revenue.

Mortgage origination commitments and commitments to deliver loans to investors are considered to be derivatives.

These derivatives are used to economically manage interest rate risk in the Company’s mortgage banking pipeline and are not designated as hedging instruments.

Changes in fair value are reported in mortgage banking revenue.

The market value of mortgage origination commitments and best efforts contracts are not readily ascertainable with precision because they are not actively traded in stand-alone markets.

The Company determines the fair value of mortgage origination commitments by estimating the fair value of the underlying asset, which is impacted by current interest rates and takes into consideration the probability that the mortgage origination commitments will close or will be funded.

See Note 17 - Fair Value Measurements for information regarding valuation techniques, significant inputs, and fair value hierarchy classification for derivative instruments.

The notional amount and estimated fair value of mortgage banking derivatives included in the consolidated balance sheets is summarized as follows:

For the Year Ended December 31,

2025 2025 2024 2024

(in thousands) Notional Amount Estimated Fair Value Notional Amount Estimated Fair Value

Included in other assets:

Mortgage origination commitments $ 176,106 $ 5,892 $ 148,388 $ 4,207

Open mandatory delivery commitments $ 7,981 $ 31 $ 9,135 $ ( 32 )

Open forward delivery sales agreements (pipeline hedge) 4,772 18 — —

Open forward delivery sales agreements (hedge MTM) — — 7,000 25

Total included in assets $ 188,859 $ 5,941 $ 164,523 $ 4,200

Included in other liabilities:

Open forward delivery sales agreements (hedge MTM) $ 8,500 $ 30 $ — $ —

Open forward delivery sales agreements (pipeline hedge) — — 3,295 11

Open mandatory delivery commitments — —

Total included in other liabilities $ 8,500 $ 30 $ 3,295 $ 11

The net gains (losses) relating to mortgage banking derivative instruments included in mortgage banking revenue is summarized as follows:

Year Ended December 31,

(in thousands) 2025 2024

Mortgage origination commitments $ 1,685 $ 2,015

Open mandatory delivery commitments $ 63 $ ( 32 )

Open forward delivery sales agreements (pipeline hedge) $ 29 $ ( 11 )

Open forward delivery sales agreements (hedge MTM) $ ( 55 ) $ 25

Total $ 1,722 $ 1,997

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 18 - Fair Value

22 unchanged sentences

The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

See Note 17 - Derivative Financial Instruments for additional information on derivatives.

Capital Bancorp, Inc.

16 unchanged sentences

Loan servicing assets $ 1,816 $ — $ 1,816 $ —

Derivative assets $ 5,941 $ — $ 5,941 $ —

Derivative liabilities $ 30 $ — $ 30 $ —

December 31, 2024

8 unchanged sentences

Loan servicing assets $ 5,511 $ — $ 5,511

Derivative assets $ 4,200 $ — $ 4,200 $ —

Derivative liabilities $ 11 $ — $ 11 $ —

Financial instruments recorded using FASB ASC 825-10

24 unchanged sentences

The Company categorizes its foreclosed real estate as Level 3.

As of December 31, 2024 and December 31, 2023, there was no foreclosed real estate held by the Company.

As of December 31, 2025, the Company held $ 3.9 million of foreclosed real estate, which rolls up into Other assets on the consolidated balance sheet.

As of December 31, 2024, there was no foreclosed real estate held by the Company.

The Company has categorized its financial instruments measured at fair value on a nonrecurring basis as of December 31, 2025 and December 31, 2024 as follows:

(in thousands) 2025 2024

Individually evaluated loans

Level 3 Inputs 42,945

Foreclosed real estate

Level 3 Inputs 3,856

Capital Bancorp, Inc.

3 unchanged sentences

Note 18 - Fair Value (continued)

The Company has categorized its financial instruments measured at fair value on a nonrecurring basis as of December 31, 2024 and December 31, 2023 as follows:

Fair Value of Individually Evaluated Loans

(in thousands) 2024 2023

Individually evaluated loans for credit loss, net

Level 3 Inputs 25,521 15,620

Total $ 25,521 $ 15,620

The following table provides information describing the unobservable inputs used in Level 3 fair value measurements at December 31, 2025 and 2024:

Valuation Technique Unobservable Inputs General Range of Inputs

Individually evaluated loans Appraised Value/Discounted Cash Flows Discounts to appraisals or cash flows for estimated holding and/or selling costs 0 - 30 %

Valuation Technique Unobservable Inputs General Range of Inputs

Individually evaluated loans Appraised Value/Discounted Cash Flows Discounts to appraisals or cash flows for estimated holding and/or selling costs 0 - 30 %

Valuation Technique

Unobservable Inputs

General Range of Inputs

Individually evaluated loans

Appraised Value/Discounted Cash Flows

Discounts to appraisals or cash flows for estimated holding and/or selling costs

Foreclosed real estate

Appraised Value

Discounts to appraisals for estimated holding and/or selling costs

Valuation Technique

Unobservable Inputs

General Range of Inputs

Individually evaluated loans

Appraised Value/Discounted Cash Flows

Discounts to appraisals or cash flows for estimated holding and/or selling costs

_______________

(1) A discount rate of 63.4 % was used for the acquired PCD loan that was evaluated as a measurement period adjustment to the Day-1 purchase accounting.

All other individually evaluated loans used a range of 0 to 30 %.

Fair value of financial instruments

4 unchanged sentences

Since the fair value is estimated as of the balance sheet date, the amounts that will actually be realized or paid upon settlement or maturity on these various instruments could be significantly different.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 17 - Fair Value (continued)

As of December 31, 2025, the techniques used by the Company to estimate the exit price of the loan portfolio consists of similar procedures to those used as of December 31, 2024.

7 unchanged sentences

Fair values for individually evaluated loans are estimated using discounted cash flow models or based on the fair value of the underlying collateral.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 18 - Fair Value (continued)

The fair value of cash and cash equivalents and investments in restricted stocks is the carrying amount.

7 unchanged sentences

These instruments generate fees that approximate those currently charged to originate similar commitments.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2024 and 2023

Note 17 - Fair Value (continued)

The table below presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments.

7 unchanged sentences

Federal funds sold

58 58 407 407

Accrued interest receivable $ 16,695 $ 16,695 $ 16,664 $ 16,664

2 unchanged sentences

8,397 8,397 4,479 4,479

Foreclosed real estate 3,856 3,856 — —

Financial liabilities

11 unchanged sentences

Note 19 - Segments

The Company’s reportable segments represent business units with discrete financial performance and information whose results are regularly reviewed by management.

The five segments include Commercial Banking, Capital Bank Home Loans (the Company’s mortgage loan division), OpenSky ™ (the Company’s credit card division), Windsor Advantage (the Company’s government loan servicing division), and the Corporate Office.

The Company’s reportable segments represent business units with discrete financial information whose results are regularly reviewed by management.

The four segments include Commercial Banking, OpenSky ™ (the Company’s credit card division), Windsor Advantage™ (the Company’s SBA/USDA loan servicing provider) and CBHL (the Company’s residential mortgage loan division).

Our Commercial Banking division operates primarily in the Washington, D.C.

and Baltimore metropolitan areas and focuses on providing personalized service to commercial clients throughout our area of operations supplemented by lending outside of our primary market as well as engaging in government guaranteed lending on a national basis.

Additionally, the Commercial Bank engages in deposit verticals on a nationwide scale providing services to HOAs, mortgage companies and other customers.

The Company issues credit cards through OpenSky™, a digitally-driven, nationwide credit card platform providing secured, partially secured, and unsecured credit solutions, and originates residential mortgages for sale in the secondary market through CBHL, the Bank’s residential mortgage banking arm.

Additionally, Windsor Advantage TM , a wholly-owned subsidiary of the Company, is a loan service provider that offers community banks and credit unions with a comprehensive SBA 7(a) and USDA lending platform.

The Company’s reportable segments are determined by the Chief Executive Officer, who is the designated chief operating decision maker, based upon organizational design, leadership structure and the Company’s products and services offered.

5 unchanged sentences

Segment pretax income or loss is used to assess the performance of the OpenSky ™ segment by monitoring credit card interest income, interchange fees, and other fees.

Segment pretax income or loss is used to assess the performance of the Windsor Advantage segment by monitoring the service charge revenues from Windsor customers.

Segment pretax income or loss is used to assess the performance of the Windsor Advantage ™ segment by monitoring the service charge revenues from Windsor Advantage TM customers.

Loans, investments, and deposits and fees provide the revenues in the Commercial Bank, loan sales provide the revenues in CBHL, credit card loan interest and fees provide the revenues in OpenSky ™ , and service charges and ancillary fees provide the revenues in Windsor Advantage ™ .

Interest expense, provisions for credit losses and personnel provide the significant expenses in the commercial bank, cost of loan sales and personnel provide the significant expenses in CBHL, data processing and personnel provide the significant expenses in OpenSky ™ , and personnel provide the significant expenses in Windsor Advantage ™ .

Segment pretax income or loss is used to assess the performance of the Corporate segment by monitoring net interest income generated by revenue-producing assets from idle cash.

The Corporate segment includes non-recurring expenses, merger-related expenses, and operational expenses related to the Bank Holding Company.

All operations are domestic.

Effective January 1, 2024, the Company allocated certain expenses previously recorded directly to the Commercial Bank segment to the other segments.

These expenses are for shared services also consumed by OpenSky ™ , CBHL, Windsor Advantage and Corporate.

The Company performs an allocation process based on several metrics the Company believes more accurately ascribe shared service overhead to each segment.

The Company believes this reflects the cost of support for each segment that should be considered in assessing segment performance.

Historical information has been recast to reflect financial information consistently with the 2024 presentation.

Prior to January 1, 2025, the Company disclosed Corporate as a reportable segment.

The Company has determined that what was previously deemed the Corporate reportable segment consists of other business activities that are associated with the Commercial Bank and are reflected in the tabular disclosures that follow.

It should be noted that such restructuring of the tabular disclosure did not result in any changes to the Company’s revenue and expense allocation methodology.

The Company restructured prior period tabular disclosures to achieve appropriate comparability.

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 19 - Segments (continued)

The Company formed Church Street Capital, LLC (“Church Street Capital” or “CSC”) in 2014 to provide short-term secured real estate financing to Washington, D.C.

area investors and developers that may not meet all Bank credit criteria.

CSC operates as a wholly-owned subsidiary of Capital Bancorp, Inc.

CSC originates and services a portfolio of primarily mezzanine loans with certain characteristics that do not meet Capital Bank’s general underwriting standards, but command a higher rate of return.

At December 31, 2025, Church Street Capital had loans totaling $ 6.9 million with a collectively assessed ACL of $ 218 thousand.

Refer to Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses to the Consolidated Financial Statements for further discussion of the consolidated ACL.

Accounting policies for segments are the same as those described in Note 1.

2 unchanged sentences

Transactions among segments are made at fair value.

The following schedule reported internally for performance assessment by the chief operating decision maker presents financial information for each reportable segment at and for the years ended December 31, 2024 and 2023.

The following schedules reported internally for performance assessment by the chief operating decision maker presents financial information for each reportable segment at and for the years ended December 31, 2025 and 2024.

Capital Bancorp, Inc.

4 unchanged sentences

For the Year Ended December 31, 2025

(in thousands) Commercial Bank CBHL OpenSky ™

Windsor Advantage Corporate (2)

Eliminations Consolidated

(in thousands)

Commercial Bank (2)(3)

Windsor Advantage TM

Interest income $ 199,122 $ 60,943 $ — $ 806

5 unchanged sentences

Noninterest income

Noninterest expense (1)

Service charges on deposits 1,316 — — —

Credit card fees — 17,366 — —

Mortgage banking revenue 1,476 — — 5,996

Government lending revenue 4,222 — — —

Government loan servicing revenue (1)

( 4,116 ) — 19,629 —

Loan servicing rights 545 — — —

Other income 1,913 13 — 827

Total noninterest income 5,356 17,379 19,629 6,823

Noninterest expenses

Salaries and employee benefits

43,346 13,057 9,795 5,971

Occupancy and equipment 6,888 2,381 1,535 588

Professional fees 6,849 2,661 442 1,007

Data processing 2,270 27,320 118 80

Advertising 2,815 2,811 212 424

Loan processing 1,968 533 291 1,196

Merger-related expenses 3,361 — — —

Operational and other card fraud related losses 144 3,365 — —

Regulatory assessment expenses 2,743 388 143 97

Other operating 5,358 2,407 1,985 533

Total noninterest expenses 75,742 54,923 14,521 9,896

Net income (loss) before taxes $ 57,873 $ 14,606 $ 5,108 $ ( 2,643 )

Total assets (3)

$ 3,407,326 $ 140,914 $ 25,993 $ 31,974

_______________

(1) Windsor Advantage’s™ service charge revenues from Windsor™ customers, included within noninterest income, totaled $ 19.6 million, including $ 4.1 million of Capital Bank related servicing fees, for the year ended December 31, 2025.

(2) Commercial Bank’s return on assets of 1.70 % for the year ended December 31, 2025 is calculated by dividing net income before taxes by total assets.

(3) Commercial Bank’s efficiency ratio of 54.1 % for the year ended December 31, 2025 is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 19 - Segments (continued)

For the Year Ended December 31, 2024

(in thousands) Commercial Bank CBHL OpenSky ™

Windsor Advantage Corporate (2)

Eliminations Consolidated

(in thousands)

Commercial Bank (2)(3)

Windsor Advantage TM

Interest income $ 150,948 $ 61,785 $ — $ 568 $ 213,301

2 unchanged sentences

Provision for credit losses 10,391 7,329 — — 17,720

Release of credit losses on unfunded commitments ( 101 ) — — — — — ( 101 )

Provision for credit losses on unfunded commitments 385 — — — 385

Net interest income after provision 81,980 54,456 — 205 136,641

Noninterest income

Noninterest expense (1)

Service charges on deposits 883 — — — 883

Credit card fees — 15,999 — — 15,999

Mortgage banking revenue 1,072 — — 6,074 7,146

Government lending revenue 2,301 — — — 2,301

Government loan servicing revenue (1)

( 543 ) — 4,536 — 3,993

Loan servicing rights 1,013 — — — 1,013

Non-recurring equity and debt investment write-down ( 2,620 ) — — — ( 2,620 )

Other income 1,932 123 30 610 2,695

Total noninterest income 4,038 16,122 4,566 6,684

Noninterest expenses

Salaries and employee benefits

36,229 12,156 1,662 5,990 56,037

Occupancy and equipment 5,085 2,035 537 587 8,244

Professional fees 3,575 3,183 123 965 7,846

Data processing 1,496 25,991 32 170 27,689

Advertising 1,982 3,944 106 327 6,359

Loan processing 1,517 59 3 852 2,431

Merger-related expenses 3,930 — — — 3,930

Operational and other card fraud related losses 37 3,677 — — 3,714

Regulatory assessment expenses 1,909 21 1 6 1,937

Other operating 5,167 2,179 206 480 8,032

Total noninterest expenses (4)

$ 60,927 $ 53,245 $ 2,670 $ 9,377 $ 126,219

Net income (loss) before taxes

Total assets $ 2,051,945 $ 8,589 $ 117,477 $ — $ 277,565 $ ( 229,400 ) $ 2,226,176

$ 25,091 $ 17,333 $ 1,896 $ ( 2,488 ) $ 41,832

(1) Noninterest expense includes $ 24.9 million and $ 23.7 million in data processing expense in OpenSky’s™ segment for the years ended December 31, 2024 and 2023, respectively.

(2) The Corporate segment invests idle cash in revenue-producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.

(3) Total assets includes goodwill and intangible assets of $ 19.3 million at the Commercial Bank and $ 17.6 million within Windsor Advantage.

(4) Commercial Bank’s return on assets of 1.08 % and 1.39 % for the years ended December 31, 2024 and 2023, respectively, is calculated by dividing net income before taxes by total assets.

(5) Commercial Bank’s efficiency ratio of 55.3 % and 61.8 % for the years ended December 31, 2024 and 2023, respectively, is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).

(6) CBHL’s mortgage banking revenue from loans sales, included within noninterest income, totaled $ 6.1 million and $ 4.0 million for the years ended December 31, 2024 and 2023, respectively.

(7) OpenSky’s™ credit card interchange fees and other fees, included within noninterest income, totaled $ 16.0 million and $ 17.3 million for the years ended December 31, 2024 and 2023, respectively.

(8) Windsor Advantage’s service charge revenues from Windsor customers, included within noninterest income, totaled $ 4.6 million, including $ 0.6 million of Capital Bank related servicing fees, for the year ended December 31, 2024.

(9) Personnel expense for Commercial Bank, CBHL, OpenSky™ and Windsor Advantage, included within noninterest expense, totaled $ 44.5 million, $ 4.2 million, $ 6.0 million and $ 1.3 million, respectively, for the year ended December 31, 2024

(10) Personnel expense for Commercial Bank, CBHL and OpenSky™, included within noninterest expense, totaled $ 40.0 million, $ 3.6 million and $ 5.1 million, respectively, for the year ended December 31, 2023.

(11) CBHL’s cost of loan sales, or non-personnel noninterest expense, totaled $ 5.2 million and $ 4.6 million, respectively for the years ended December 31, 2024 and December 31, 2023.

$ 3,033,792 $ 125,913 $ 25,515 $ 21,691 $ 3,206,911

________________________

(1) Gross government loan servicing revenue totaled $ 4.5 million, including $ 0.5 million of servicing fees earned from the Commercial Bank by Windsor™, for the year ended December 31, 2024.

(2) Commercial Bank’s return on assets of 0.83 % for the year ended December 31, 2024 is calculated by dividing net income before taxes by total assets.

This measurement has been adjusted to reflect the inclusion of the Corporate reportable segment.

(3) Commercial Bank’s efficiency ratio of 62.9 % for the year ended December 31, 2024 is calculated by dividing noninterest expense by total revenue (net interest income plus noninterest income).

This measurement has been adjusted to reflect the inclusion of the Corporate reportable segment.

(4) Prior to March 31, 2025, the Company presented only the subtotals for noninterest income and noninterest expense.

The subtotals included the total amount of shared service expenses allocated to each segment but did not allocate the shared services to the individual components within noninterest expense.

Beginning March 31, 2025, the Company has performed the allocation of these shared services to the individual components of noninterest expense.

It should be noted that such restructuring of the tabular disclosure did not result in any changes to the Company’s methodology for allocating shared services to segments.

The Company restructured prior period tabular disclosure to achieve appropriate comparability.

Capital Bancorp, Inc.

2 unchanged sentences

December 31, 2025 and 2024

Note 19 - Segments (continued)

The following table presents financial information as of December 31, 2025 and December 31, 2024.

December 31, 2025

(in thousands) Commercial Bank OpenSky™ Windsor Advantage ™

CBHL Consolidated

Cash and cash equivalents $ 242,149 $ 8,039 $ 5,377 $ — $ 255,565

Goodwill 22,448 — 3,521 — 25,969

Intangible assets 3 — 13,243 — 13,246

Core deposit intangibles 1,525 — — — 1,525

Other segment assets 3,141,201 132,875 3,852 31,974 3,309,902

Total assets $ 3,407,326 $ 140,914 $ 25,993 $ 31,974 $ 3,606,207

December 31, 2024

(in thousands) Commercial Bank OpenSky™ Windsor Advantage ™

CBHL Consolidated

Cash and cash equivalents $ 193,860 $ 7,890 $ 3,582 $ — $ 205,332

Goodwill 17,605 — 3,521 — 21,126

Intangible assets 3 — 14,069 — 14,072

Core deposit intangibles 1,745 — — — 1,745

Other segment assets 2,820,579 118,023 4,343 21,691 2,964,636

Total assets $ 3,033,792 $ 125,913 $ 25,515 $ 21,691 $ 3,206,911

Capital Bancorp, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2025 and 2024

Note 20 - Interest Income and Interest Expense

The following table presents the components of interest income and interest expense:

Years Ended December 31,

(in thousands) 2025 2024

Interest income

Taxable interest income $ 260,338 $ 212,915

Non-taxable interest income 123 13

Dividends 410 373

Total interest income $ 260,871 $ 213,301

Interest expense

Deposits $ 63,771 $ 56,170

Short-term borrowings 275 1,363

Long-term debt 833 1,022

Total interest expense $ 64,879 $ 58,555

Note 21 - Litigation

5 unchanged sentences

In January 2026, the Company’s Board of Directors declared a $ 0.12 per share dividend, payable on February 25, 2026 to shareholders of record on February 9, 2026.

Management has reviewed all events through the date the audited consolidated financial statements were filed with the SEC and concluded that no other events required accrual or disclosure.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data