Capital Bancorp Inc 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 75 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Capital Bancorp, Inc. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Capital Bancorp, Inc. 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, 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 These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 76 Critical Audit Matters, Continued Allowance for Credit Losses As described in Note 5 to the Company’s financial statements, the Company has a gross loan portfolio of $3.0 billion and related allowance for credit losses (“ACL”) of $54.7 million as of December 31, 2025. As described by the Company in Note 1, in order to measure expected credit losses on a collective basis, the Company utilizes 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. Loans not sharing similar risk characteristics are evaluated on an individual basis. 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”) 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. Within the collectively evaluated component, the Company uses regression analysis of historical internal and peer data to determine suitable loss drivers in order to incorporate a reasonable and supportable forecast of losses within the modeled future expected credit loss. Additionally, a qualitative scorecard is used by management to assess the need for adjustments to expected credit loss estimates for information not already captured in the quantitative loss estimation process. The qualitative scorecard evaluates certain risks such as lending policies and procedures, economic conditions, changes in the nature and volume of portfolios, changes in experience, depth, and ability of lending management, changes in volume and severity of past due loans, quality of loan review system, changes in the value of underlying collateral, concentrations of credit, and other external factors. We identified the Company’s estimate of the allowance for credit losses as a critical audit matter. The principal considerations for our determination of the ACL as a critical audit matter relate to the high degree of complexity and judgment in the determination of significant model assumptions, specifically, the qualitative factor adjustments to quantitative loss rates. Auditing these complex judgments and assumptions made by the Company involves challenging auditor judgment due to the nature and extent of audit evidence and effort required to address these matters, including the extent of specialized skill or knowledge needed. The primary procedures we performed to address the critical audit matter include the following: ■ We tested the design and operating effectiveness of controls relating to the Company’s determination of the allowance for credit losses, including controls over management’s review and approval of qualitative factors. ■ We evaluated the relevance and the reasonableness of assumptions related to the evaluation of the loan portfolio, current and forecasted economic conditions, and other risk factors used within the qualitative factors. ■ We tested the completeness and accuracy of significant inputs to the model including the underlying data used to develop the qualitative factors. ■ We validated the mathematical accuracy of the calculation. ■ 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. /s/ Elliott Davis, PLLC We have served as the Company’s auditor since 2017. Raleigh, North Carolina March 16, 2026 77 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Capital Bancorp, Inc. and Subsidiaries Opinion on the Internal Control Over Financial Reporting We have audited Capital Bancorp, Inc. 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 The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Report by Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 78 Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Elliott Davis, PLLC Raleigh, North Carolina March 16, 2026 79 Capital Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets As of December 31, 2025 and 2024 (dollars in thousands, except share data) 2025 2024 Assets Cash and due from banks $ 30,894 $ 25,433 Interest-bearing deposits at other financial institutions 224,611 179,841 Federal funds sold 60 58 Total cash and cash equivalents 255,565 205,332 Investment securities available-for-sale 230,083 223,630 Restricted investments 8,397 4,479 Loans held for sale 25,828 17,063 Portfolio loans receivable, net of deferred fees and costs 2,959,457 2,630,163 Less allowance for credit losses ( 54,660 ) ( 48,652 ) Total portfolio loans held for investment, net 2,904,797 2,581,511 Premises and equipment, net 15,072 15,525 Accrued interest receivable 16,695 16,664 Goodwill 25,969 21,126 Intangible assets 14,771 15,817 Loan servicing assets 1,816 5,511 Deferred tax asset 14,992 16,670 Bank owned life insurance 45,488 43,956 Other assets 46,734 39,627 Total assets $ 3,606,207 $ 3,206,911 Liabilities Deposits Noninterest-bearing $ 852,741 $ 810,928 Interest-bearing 2,240,459 1,951,011 Total deposits 3,093,200 2,761,939 Federal Home Loan Bank advances 50,000 22,000 Other borrowed funds 2,062 12,062 Accrued interest payable 8,745 9,393 Other liabilities 50,443 46,378 Total liabilities 3,204,450 2,851,772 Stockholders' equity Common stock, $ .01 par value; 49,000,000 shares authorized; 16,373,288 and 16,662,626 issued and outstanding 164 167 Additional paid-in capital 114,604 123,566 Retained earnings 292,749 242,875 Accumulated other comprehensive loss ( 5,760 ) ( 11,469 ) Total stockholders' equity 401,757 355,139 Total liabilities and stockholders' equity $ 3,606,207 $ 3,206,911 See Notes to Consolidated Financial Statements 80 Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Income For the Years Ended December 31, 2025 and 2024 (dollars in thousands, except per share data) 2025 2024 Interest income Loans, including fees $ 245,272 $ 202,915 Investment securities available-for-sale 6,976 5,441 Federal funds sold and other 8,623 4,945 Total interest income 260,871 213,301 Interest expense Deposits 63,771 56,170 Borrowed funds 1,108 2,385 Total interest expense 64,879 58,555 Net interest income 195,992 154,746 Provision for credit losses 14,965 17,720 Provision for credit losses on unfunded commitments 188 385 Net interest income after provision for credit losses 180,839 136,641 Noninterest income Service charges on deposits 1,316 883 Credit card fees 17,366 15,999 Mortgage banking revenue 7,472 7,146 Government lending revenue 4,222 2,301 Government loan servicing revenue 15,513 3,993 Loan servicing rights 545 1,013 Non-recurring equity and debt investment write-down — ( 2,620 ) Other income 2,753 2,695 Total noninterest income 49,187 31,410 Noninterest expenses Salaries and employee benefits 72,169 56,037 Occupancy and equipment 11,392 8,244 Professional fees 10,959 7,846 Data processing 29,788 27,689 Advertising 6,262 6,359 Loan processing 3,988 2,431 Merger-related expenses 3,361 3,930 Operational and other card fraud related losses 3,509 3,714 Regulatory assessment expenses 3,371 1,937 Other operating 10,283 8,032 Total noninterest expenses 155,082 126,219 Income before income taxes 74,944 41,832 Income tax expense 17,774 10,860 Net income $ 57,170 $ 30,972 Basic earnings per share $ 3.45 $ 2.12 Diluted earnings per share $ 3.41 $ 2.12 Weighted average common shares outstanding: Basic 16,581,591 14,584,303 Diluted 16,767,565 14,640,177 See Notes to Consolidated Financial Statements 81 Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income For the Years Ended December 31, 2025 and 2024 (in thousands) 2025 2024 Net income $ 57,170 $ 30,972 Other comprehensive income: Unrealized gain on investment securities available-for-sale 7,534 2,194 Income tax expense relating to the items above ( 1,825 ) ( 566 ) Other comprehensive income 5,709 1,628 Comprehensive income $ 62,879 $ 32,600 See Notes to Consolidated Financial Statements 82 Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended December 31, 2025 and 2024 Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity (dollars in thousands, except per share data) Shares Amount Balance, December 31, 2023 13,922,532 $ 139 $ 50,640 $ 217,178 $ ( 13,097 ) $ 254,860 Net income — — — 30,972 — 30,972 Unrealized gain on investment securities available-for-sale, net of income taxes — — — — 1,628 1,628 Stock options exercised, net of shares withheld for purchase price 150,239 1 1,076 — — 1,077 Shares issued as compensation 25,877 — 517 — — 517 Stock-based compensation — — 1,895 — — 1,895 Cash dividends to stockholders ($ 0.36 per share) — — — ( 5,275 ) — ( 5,275 ) 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 Net income — — — 57,170 — 57,170 Unrealized gain on investment securities available-for-sale, net of income taxes — — — — 5,709 5,709 Stock options exercised, net of shares withheld for purchase price 106,450 1 675 — — 676 Shares issued as compensation 23,855 — 482 — — 482 Stock-based compensation — — 1,608 — — 1,608 Cash dividends to stockholders ($ 0.44 per share) — — — ( 7,296 ) — ( 7,296 ) Shares repurchased and retired ( 419,643 ) ( 4 ) ( 11,727 ) — — ( 11,731 ) Balance, December 31, 2025 16,373,288 $ 164 $ 114,604 $ 292,749 $ ( 5,760 ) $ 401,757 See Notes to Consolidated Financial Statements 83 Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2025 and 2024 (in thousands) 2025 2024 Cash flows from operating activities Net income $ 57,170 $ 30,972 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 14,965 17,720 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 Lease asset amortization 1,402 1,215 Amortization of intangible assets 1,046 262 Extinguishment of leases — ( 2,881 ) Increase in cash surrender value of BOLI ( 1,532 ) ( 1,466 ) Net decrease (increase) in loan servicing assets 1,588 ( 996 ) Executive long-term incentive plan expense 889 516 Stock-based compensation expense 1,608 1,895 Director and employee compensation paid in Company stock 1,225 517 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 Originations of loans held for sale ( 357,327 ) ( 292,872 ) Government lending revenue ( 4,222 ) ( 2,301 ) Changes in assets and liabilities: Accrued interest receivable ( 31 ) ( 762 ) Taxes payable ( 3,024 ) 3,358 Other assets ( 3,437 ) ( 15,517 ) Accrued interest payable ( 648 ) 2,533 Other liabilities 4,627 11,977 Net cash provided by operating activities 69,721 34,926 Cash flows from investing activities Purchases of securities available-for-sale ( 54,876 ) ( 65,396 ) Proceeds from calls and maturities of securities available-for-sale 56,107 53,208 Net purchases of restricted investments ( 3,918 ) ( 126 ) Net increase in portfolio loans receivable ( 345,819 ) ( 320,651 ) Net purchases of premises and equipment ( 2,374 ) ( 2,157 ) Cash received from acquisitions, net — 65,170 Net cash used in investing activities ( 350,880 ) ( 269,952 ) See Notes to Consolidated Financial Statements 84 Capital Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows For the Years Ended December 31, 2025 and 2024 (in thousands) 2025 2024 Cash flows from financing activities Net increase (decrease) in: Noninterest-bearing deposits 41,813 107,946 Interest-bearing deposits 289,448 299,045 Federal Home Loan Bank advances 28,000 — Other borrowed funds ( 10,000 ) ( 15,000 ) Dividends paid ( 7,296 ) ( 5,275 ) Repurchase of common stock ( 11,731 ) ( 1,399 ) Net proceeds from exercise of stock 1,158 1,077 Net cash provided by financing activities 331,392 386,394 Net increase in cash and cash equivalents 50,233 151,368 Cash and cash equivalents, beginning of year 205,332 53,964 Cash and cash equivalents, end of year $ 255,565 $ 205,332 Noncash investing and financing activities: 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 Goodwill from acquisition $ — $ 21,126 Fair value of liabilities assumed $ — $ 475,886 Common Stock issued related to acquisition $ — $ 27 Goodwill measurement period adjustment $ 4,657 $ — Cash paid during the period for: Taxes $ 18,753 $ 9,098 Interest $ 65,527 $ 54,745 See Notes to Consolidated Financial Statements 85 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 1 - Nature of Business and Basis of Presentation Nature of operations: Capital Bancorp, Inc. 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 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”). The Trust is a special purpose non-consolidated entity organized for the sole purpose of issuing trust preferred securities. Basis of presentation: The accompanying consolidated financial statements include the activity of the Company and its wholly-owned subsidiaries, the Bank, Windsor Advantage™, and Church Street Capital. All intercompany transactions have been eliminated in consolidation. The Company reports its activities as four divisions and reporting segments: Commercial Banking; OpenSky ™ ; 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. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and conform to general practices within the banking industry. Significant accounting policies: 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. 86 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) Business Combinations The Company accounts for its acquisitions under the Financial Accounting Standards Board (“FASB”) ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting. This method requires the use of fair values in determining the carrying values of the purchased assets and assumed liabilities, which are recorded at fair value at acquisition date, and identifiable intangible assets which are recorded at fair value. Costs directly related to the business combinations are recorded as expenses as they are incurred. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Cash and cash equivalents 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. Investment securities Investment securities are classified as available-for-sale and carried at fair value with unrealized gains and losses included in stockholders’ equity on an after-tax basis. Premiums and discounts on investment securities are amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. Changes in the fair value of debt securities available-for-sale are included in stockholder’s equity as unrealized gains and losses, net of the related tax effect. Management evaluates all investments in an unrealized loss position on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security, the security is written down to fair value and the entire loss is recorded in earnings. 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 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. Changes in the ACL are recorded as provision for (or reversal of) credit loss expense. 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, 2025 and 2024, there was no ACL related to the AFS portfolio. 87 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) 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. The Company’s current practice is to sell residential mortgage loans on a servicing released basis. 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. The Company does not have the entitlement or ability to repurchase the mortgage loans or unilaterally cause third‑party investors to put the mortgage loans back to the Company. 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 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. 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. 88 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. 89 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 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. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The Company discontinues the accrual of interest at the earlier of the date any portion of the principal and/or interest is 90 days past due, or at such time as we determine that it is probable that not all principal and interest payments will be collected, and that collateral is insufficient to discharge the debt in full. When the interest accrual is discontinued, all unpaid accrued interest is reversed from income. Generally, interest payments on nonaccrual loans are recorded as a reduction of the principal balance. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are generally charged-off in part or in full when management determines the loan, or a portion of the loan is expected, to be uncollectible. Factors for charge-off that may be considered include: repayments deemed to be extended out beyond reasonable time frames, customer bankruptcy and lack of assets, and/or collateral deficiencies. 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. The Company does not own HTM debt securities. We maintain an ACL that represents management’s estimate of the expected credit losses and risks inherent in our loan portfolio. The amount of the ACL should not be interpreted as an indication that charge-offs in future periods will necessarily occur in those amounts, or at all. The allowance immediately recognizes lifetime expected credit losses when a financial asset is originated or purchased. The ACL is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. Loans, or portions thereof, are charged-off against the allowance when they are deemed uncollectible. Factors for charge-off that may be considered include: repayments deemed to be extended out beyond reasonable time frames, customer bankruptcy and lack of assets, and/or collateral deficiencies. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. In determining the ACL, we estimate losses collectively based on quantitative analysis of historical credit losses adjusted for current conditions and reasonable and supportable forecasts of collectability of future cash flows over the remaining term of each financial instrument. 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. See further detail regarding our forecasting methodology in the “Cash Flow Method” section below. 90 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. The Qualitative Scorecard evaluates certain risk environments such as economic conditions, changes in the nature and volume of portfolios, changes in experience, depth, and ability of lending management, changes in volume and severity of past due loans and similar conditions, and changes in the value of underlying collateral. 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. 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 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 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. Subsequent to initial recognition, PCD loans are subject to the same interest income recognition and impairment model as non-PCD loans, with changes to the ACL recorded through provision expense. In connection with the business combination with IFH, the Company acquired PCD and non-PCD loans. 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. 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, which use a non-discounted cash flow calculation. For each of these loan segments, the Company generates cash flow projections at the instrument level. Payment expectations are adjusted for estimated prepayments and for probability and severity of a loss. The expected credit losses derived from the cash flow calculations are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The modeling of expected prepayment speeds is primarily based on historical internal data. Industry benchmark data is utilized when a statistically insufficient history exists. The contractual term excludes expected extensions, renewals and modifications. The Company uses regression analysis of historical internal and peer data to determine suitable portfolio segment level loss drivers to utilize when modeling lifetime probability of default, lifetime loss given default, and lifetime loss rates. 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. 91 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. After the forecasted period, the models will revert to a long run average of each economic factor over the following four quarters. The Company uses economic projections from reputable and independent third parties to inform its loss driver forecast over the forecast period. For the non-credit card and consumer portfolios, the combination of adjustments for credit expectations (default and loss) and timing expectations (prepayment, curtailment, and time to recovery) produces an expected cash flow stream at the instrument level. An effective interest rate is calculated by the Company, adjusted for any net deferred fees or costs, premium, or discount existing at the origination or acquisition, to produce an instrument-level net present value of expected cash flows. The ACL reflects the difference between the amortized cost basis and the present value of the expected cash flows. 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. Individual Evaluation The Company will evaluate individual instruments for expected credit losses when those instruments do not share similar risk characteristics with instruments evaluated on a collective basis. Instruments may be evaluated whether or not there is an expectation of collectability in place. Instruments evaluated individually are not included in the Company’s collective analysis. Collateral dependent or secured loans with respect to which the Company expects repayment to be provided substantially through the operation or sale of the collateral utilize a collateral-based methodology in which ACL is measured based on the difference between the net realizable value of the collateral and the amortized cost basis of the asset as of the measurement date. If the collateral valuation is equal to or greater than amortized cost, no reserve is applied. If a loan is not collateral dependent, the loan will be analyzed based on a forecast of future cash flows. Credit Losses on Off-Balance Sheet Credit Exposures The Company’s financial instruments include off-balance sheet credit instruments such as unfunded commitments to originate loans, commercial letters of credit issued, and commitments to fund other investments. The Company’s maximum exposure to credit loss in the event of nonperformance by the other party to the financial instrument for off-balance sheet loan commitments is represented by the contractual amount of the credit commitment. 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 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 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. 92 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. The analysis considers all significant factors that affect the expected collectability of the portfolio and supports the expected credit losses estimated by this process. 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 Note 5 - Portfolio Loans Receivable and Allowance for Credit Losses. Loan modifications 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. These modifications may include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. 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. Loan servicing assets When loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect included in noninterest income. 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 Consolidated Statements of Income. 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, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal; or a fixed amount per loan and are recorded as income when earned. Late fees and ancillary fees related to loan servicing are not material. Premises and equipment Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related property, generally over two to seven years . Leasehold improvements are amortized over the estimated term of the respective leases, which may include renewal options where management has the positive intent to exercise such options, or the estimated useful lives of the improvements, whichever is less. The costs of major renewals and improvements are capitalized with the corresponding costs associated with amortization or depreciation included as a component of occupancy and equipment expenses. 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. 93 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) Leases 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. 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 Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market inputs. For financial instruments that are traded actively and have quoted market prices or observable market inputs, there is minimal subjectivity involved in measuring fair value. However, when quoted market prices or observable market inputs are not fully available, significant management judgment may be necessary to estimate fair value. In developing our fair value estimates, we strive to maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines Level 1 valuations as those based on quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 valuations include inputs based on quoted prices for similar assets or liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. 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, loan servicing assets and loans held for sale. See Note 18 - Fair Value. Goodwill and Other Intangible Assets The excess of the cost of an acquisition over the fair value of the net assets acquired consists primarily of goodwill. 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. 94 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. An initial qualitative evaluation is made to assess the likelihood of impairment and determine whether further quantitative testing to calculate the fair value is necessary. 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. If a reporting unit’s carrying amount exceeds its fair value, the Company will record an impairment charge based on the difference. The impairment charge will be limited to the amount of goodwill allocated to the reporting unit. 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. 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. Revenue Recognition In addition to lending and related activities, the Company offers various services to customers that generate revenue, certain of which are governed by ASC Topic 606 Revenue from Contracts with Customers. 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 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. 95 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) Income taxes 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. The Company utilizes statutory requirements for its income tax accounting, and limits risks associated with potentially problematic tax positions that may incur challenge upon audit, where an adverse outcome is more likely than not. Therefore, no provisions are necessary for either uncertain tax positions nor accompanying potential tax penalties and interest for underpayments of income taxes in the Company’s tax reserves. In accordance with ASC Topic 740, the Company may establish a valuation allowance against deferred tax assets in those cases where realization is less than certain. Earnings per share Earnings per share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares outstanding, adjusted for the dilutive effect of stock options and restricted stock using the treasury stock method. 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. The following is a reconciliation of the numerators and denominators used in computing basic and diluted earnings per common share: For the Years Ended December 31, 2025 2024 (dollars in thousands) Income Weighted Average Shares Per Share Amount Income Weighted Average Shares Per Share Amount Basic EPS Net income available to common stockholders $ 57,170 16,581,591 $ 3.45 $ 30,972 14,584,303 $ 2.12 Effect of dilutive securities — 185,974 — 55,874 Dilutive EPS per common share $ 57,170 16,767,565 $ 3.41 $ 30,972 14,640,177 $ 2.12 Comprehensive loss The Company reports as comprehensive income (loss) all changes in stockholders' equity during the year from non-stockholder sources. Other comprehensive loss refers to all components (income, expenses, gains, and losses) of comprehensive loss that are excluded from net income. The Company's only component of other comprehensive loss is unrealized losses on investment securities available-for-sale, net of income taxes. Information concerning the Company's accumulated other comprehensive loss as of December 31, 2025 and 2024 are as follows: As of December 31, (in thousands) 2025 2024 Unrealized losses on securities available-for-sale $ ( 7,621 ) $ ( 15,156 ) Deferred tax benefit 1,861 3,687 Total accumulated other comprehensive loss $ ( 5,760 ) $ ( 11,469 ) 96 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) Reportable segments The Company currently operates four divisions and reporting segments: Commercial Banking, OpenSky ™ , 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. 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 2023-09, “Income Taxes (Topic 740), Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things. ASU 2023-09 is effective for the Company for fiscal years beginning after December 15, 2024 with early adoption permitted. 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"). ASU 2024-03 requires public entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. ASU 2024-03 is effective for the Company for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. 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. 97 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. Reclassifications: Certain reclassifications have been made to amounts reported in prior periods to conform to the current period presentation. 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 . 98 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 2 - Business Combination 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. The determination of fair value requires management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. Goodwill is established when the fair value of consideration paid exceeds the fair value of the identifiable assets acquired and liabilities assumed. 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. 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. 99 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 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, 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) Common share consideration Shares of common stock issued 2,631,847 — 2,631,847 Price per share on September 30, 2024 $ 25.71 $ — $ 25.71 Common stock consideration $ 67,665 $ — $ 67,665 Cash consideration 12,652 — 12,652 Consideration for other equity instruments 3,199 — 3,199 Purchase price consideration $ 83,516 $ — $ 83,516 Assets Cash and cash equivalents $ 77,822 $ — $ 77,822 Investment securities available-for-sale 1,019 — 1,019 Loans held for sale 41,723 — 41,723 Portfolio loans held for investment, net 362,180 ( 3,712 ) 358,468 Premises and equipment, net 7,104 — 7,104 Customer list intangible 12,200 — 12,200 Trade name intangible 2,100 — 2,100 Core deposits intangible 1,779 — 1,779 Loan servicing assets 4,515 ( 2,107 ) 2,408 Deferred tax asset 9,324 1,297 10,621 Bank owned life insurance 4,779 — 4,779 Other assets 13,731 — 13,731 Total assets acquired $ 538,276 $ ( 4,522 ) $ 533,754 Liabilities Deposits $ 458,952 $ — $ 458,952 Other liabilities 16,934 321 17,255 Total liabilities assumed $ 475,886 $ 321 $ 476,207 Total identifiable net assets $ 62,390 $ ( 4,843 ) $ 57,547 Goodwill $ 21,126 $ 4,843 $ 25,969 Supplementary Information on Acquired Loans Preliminary October 1, 2024 Measurement Period Adjustments Final September 30, 2025 PCD loans: Par value $ 124,566 $ ( 161 ) $ 124,405 ACL at acquisition ( 11,325 ) ( 3,424 ) ( 14,749 ) Non-credit discount ( 5,797 ) — ( 5,797 ) Purchase price $ 107,444 $ ( 3,585 ) $ 103,859 Non-PCD loans: Fair value $ 254,736 $ — $ 254,736 Gross contractual amounts receivable $ 260,183 $ ( 126 ) $ 260,057 Estimate of contractual cash flows not expected to be collected $ 4,110 $ — $ 4,110 100 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 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, 2025 and 2024 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value (in thousands) December 31, 2025 U.S. Treasuries $ 142,381 $ 157 $ ( 5,302 ) $ — $ 137,236 Municipal 15,615 66 ( 1,784 ) — 13,897 Corporate 3,500 — ( 96 ) — 3,404 Asset-backed securities 5,013 13 — — 5,026 Mortgage-backed securities 71,145 581 ( 1,206 ) — 70,520 Total $ 237,654 $ 817 $ ( 8,388 ) $ — $ 230,083 December 31, 2024 U.S. Treasuries $ 136,831 $ 42 $ ( 10,038 ) $ — $ 126,835 Municipal 11,698 5 ( 2,420 ) — 9,283 Corporate 5,000 — ( 289 ) — 4,711 Asset-backed securities 5,501 25 — — 5,526 Mortgage-backed securities 79,939 2 ( 2,666 ) — 77,275 Total $ 238,969 $ 74 $ ( 15,413 ) $ — $ 223,630 There were no securities sold during the year ended December 31, 2025 or December 31, 2024. 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. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. For the Years Ended December 31, 2025 2024 (in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Within one year $ 54,110 $ 53,767 $ 20,003 $ 19,882 One to five years 70,534 67,955 97,052 90,570 Five to ten years 34,346 30,847 29,785 25,446 Beyond ten years 2,506 1,968 6,689 4,931 Asset-backed securities (1) 5,013 5,026 5,501 5,526 Mortgage-backed securities (1) 71,145 70,520 79,939 77,275 Total $ 237,654 $ 230,083 $ 238,969 $ 223,630 (1) Asset-backed and Mortgage-backed securities are due in monthly installments. 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. 101 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. Government and its agencies, in an amount greater than 10% of stockholders’ equity. The following table summarizes debt securities available-for-sale in an unrealized loss position for which an allowance for credit losses has not been recorded at December 31, 2025 and 2024, aggregated by major security type and length of time in a continuous unrealized loss position: Less than 12 months 12 months or longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (in thousands) December 31, 2025 U.S. Treasuries $ 9,853 $ ( 32 ) $ 95,531 $ ( 5,270 ) $ 105,384 $ ( 5,302 ) Municipal — — 8,998 ( 1,784 ) 8,998 ( 1,784 ) Corporate — — 3,404 ( 96 ) 3,404 ( 96 ) Mortgage-backed securities 214 ( 29 ) 18,466 ( 1,177 ) 18,680 ( 1,206 ) Total $ 10,067 $ ( 61 ) $ 126,399 $ ( 8,327 ) $ 136,466 $ ( 8,388 ) December 31, 2024 U.S. Treasuries $ 10,883 $ ( 93 ) $ 111,196 $ ( 9,945 ) $ 122,079 $ ( 10,038 ) Municipal — — 8,373 ( 2,420 ) 8,373 ( 2,420 ) Corporate — — 4,711 ( 289 ) 4,711 ( 289 ) Mortgage-backed securities 55,243 ( 901 ) 18,272 ( 1,765 ) 73,515 ( 2,666 ) Total $ 66,126 $ ( 994 ) $ 142,552 $ ( 14,419 ) $ 208,678 $ ( 15,413 ) 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. Further, management reviewed the Company’s holdings as of December 31, 2025 and concluded there were no credit-related declines in fair value. Additional information related to the types of securities held at December 31, 2025, other than securities issued or guaranteed by U.S. Government entities or agencies including U.S. Treasuries and substantially all of the Company’s mortgage-backed securities, is as follows: Corporate Securities – There have been no payment defaults on any of the Company’s holdings of corporate debt securities. 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, 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; AA+ – 24 %. 102 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 is as follows for the periods presented: Loan servicing rights: 2025 2024 Balance at beginning of period $ 5,511 $ — Additions 182 5,096 Measurement period adjustments ( 2,107 ) — Other changes in fair value ( 1,770 ) 415 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 The following is a summary of the major categories of total loans outstanding: December 31, 2025 2024 (in thousands) Amount Percent Amount Percent Real estate: Residential $ 765,808 26 % $ 688,552 26 % Commercial 997,081 34 943,019 36 Construction 359,566 12 321,252 12 Commercial and Industrial 698,289 23 554,550 21 Credit card, net of reserve (1) 142,397 5 127,766 5 Other consumer 1,930 — 2,089 — Portfolio loans receivable, gross 2,965,071 100 % 2,637,228 100 % Deferred origination fees, net ( 5,614 ) ( 7,065 ) Allowance for credit losses ( 54,660 ) ( 48,652 ) Portfolio loans receivable, net $ 2,904,797 $ 2,581,511 _______________ (1) Credit card loans are presented net of reserve for interest and fees. 103 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 Measurement Period Adjustment for Acquired PCD Loans Provision for (Release of) Credit Losses Charge-Offs Recoveries Ending Balance Year Ended December 31, 2025 Real estate: Residential $ 6,945 $ — $ 390 $ — $ 109 $ 7,444 Commercial 16,041 — 768 ( 1,892 ) — 14,917 Construction 2,973 — 1,541 ( 264 ) — 4,250 Commercial and Industrial 16,377 3,424 3,388 ( 3,420 ) 49 19,818 Credit card 6,301 — 8,888 ( 9,036 ) 2,073 8,226 Other consumer 15 — ( 10 ) — — 5 Total $ 48,652 $ 3,424 $ 14,965 $ ( 14,612 ) $ 2,231 $ 54,660 (in thousands) Beginning Balance Initial Allowance on Acquired PCD Loans Provision for Credit Losses Charge-Offs Recoveries Ending Balance Year Ended December 31, 2024 Real estate: Residential $ 5,518 $ 394 $ 1,940 $ ( 907 ) $ — $ 6,945 Commercial 10,316 4,007 2,277 ( 570 ) 11 16,041 Construction 2,271 — 702 — — 2,973 Commercial and Industrial 4,406 6,924 5,560 ( 606 ) 93 16,377 Credit card 6,087 — 7,238 ( 7,145 ) 121 6,301 Other consumer 12 — 3 — — 15 Total $ 28,610 $ 11,325 $ 17,720 $ ( 9,228 ) $ 225 $ 48,652 104 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: Portfolio Loans Past Due Loans 90 or More Days Past Due Total Past Due Loans Current Loans Total Portfolio Loans Accruing Loans 90 or More days Past Due Nonaccrual Loans Loans 30-59 Days Past Due Loans 60-89 Days Past Due (in thousands) December 31, 2025 Real estate: Residential $ 3,886 $ 573 $ 8,480 $ 12,939 $ 752,869 $ 765,808 $ 740 $ 7,741 Commercial 8,148 1,166 15,660 24,974 972,107 997,081 862 15,624 Construction 2,591 — 4,717 7,308 352,258 359,566 — 4,717 Commercial and Industrial 3,501 5,134 22,496 31,131 667,158 698,289 279 26,339 Credit card 7,555 6,887 2,691 17,133 125,264 142,397 2,691 — Other consumer — — — — 1,930 1,930 — — Total $ 25,681 $ 13,760 $ 54,044 $ 93,485 $ 2,871,586 $ 2,965,071 $ 4,572 $ 54,421 December 31, 2024 Real estate: Residential $ 1,656 $ 4,913 $ 6,644 $ 13,213 $ 675,339 $ 688,552 $ — $ 8,652 Commercial 4,957 7,570 7,001 19,528 923,491 943,019 100 14,312 Construction 1,000 415 4,309 5,724 315,528 321,252 — 4,309 Commercial and Industrial 10,981 1,245 1,049 13,275 541,275 554,550 — 2,968 Credit card 6,923 6,561 1,544 15,028 112,738 127,766 1,544 — Other consumer — — — — 2,089 2,089 — — Total $ 25,517 $ 20,704 $ 20,547 $ 66,768 $ 2,570,460 $ 2,637,228 $ 1,644 $ 30,241 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. 105 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 following presents the nonaccrual loans as of December 31, 2025 and December 31, 2024: December 31, 2025 Nonaccrual with No Allowance for Credit Loss Nonaccrual with an Allowance for Credit Loss Total Nonaccrual Loans 1 (in thousands) Real estate: Residential $ 7,435 $ 306 $ 7,741 Commercial 10,159 5,465 15,624 Construction 4,717 — 4,717 Commercial and Industrial 6,907 19,432 26,339 Total $ 29,218 $ 25,203 $ 54,421 December 31, 2024 Nonaccrual with No Allowance for Credit Loss Nonaccrual with an Allowance for Credit Loss Total Nonaccrual Loans 1 Real estate: Residential $ 8,055 $ 597 $ 8,652 Commercial 3,205 11,107 14,312 Construction 4,309 — 4,309 Commercial and Industrial 247 2,721 2,968 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. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral dependent loans: • Residential real estate loans are primarily secured by owner-occupied primary residences and, to a lesser extent, investor-owned residences. • Commercial real estate loans can be secured by either owner-occupied commercial real estate or non-owner-occupied investment commercial real estate. Typically, owner-occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities and other commercial and industrial properties occupied by operating companies. Non-owner-occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development and/or industrial properties, as well as other commercial or industrial real estate. • Construction loans are typically secured by owner-occupied commercial real estate or non-owner-occupied investment real estate. Typically, owner-occupied construction loans are secured by office buildings, warehouses, manufacturing facilities, and other commercial and industrial properties that are in process of construction. Non-owner-occupied commercial construction loans are generally secured by office buildings and complexes, multi-family complexes, land under development and/or other commercial and industrial real estate in process of construction. • Commercial and industrial loans are generally secured by equipment, inventory, accounts receivable and/or other commercial property. 106 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) Collateral dependent loans amortized cost (in thousands) December 31, 2025 December 31, 2024 Real estate: Residential $ 6,449 $ 8,780 Commercial 15,653 14,803 Construction 5,079 4,301 Commercial and Industrial 18,605 6,551 Total $ 45,786 $ 34,435 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, 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 Real estate: 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 $ 2,021 107 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: Modifications (in thousands) Amortized Cost Basis % of Total Loan Type Financial Effect Real estate: Residential $ 806 0.126 % Payment recast based on new extended maturity to lower payments on one loan; Reduced contractual interest rate from 8.375 % to 6.375 % on one loan. Residential - Home Equity 90 0.181 % Reduced contractual interest rate from 10.490 % to 6.375 % on one loan. Commercial 1,577 0.167 % Provided 3 months, 6 months and 12 months payment deferral on three different loans through the Bank’s standard deferral program. The deferred payments were added to the end of the original loan terms. Commercial and Industrial 2,530 0.456 % Provided 9 months payment deferral on two loans and 12 months payment deferral on two loans through the Bank’s standard deferral program. The deferred payments were added to the end of the original loan terms; Extended maturity date of one loan which reduced monthly payment amount for the borrower; Reduced contractual floating interest rate based on Prime to 6.000 % fixed rate and extended terms for 60 months on one loan; Reduced contractual floating interest rate based on Prime to 6.000 % fixed rate, extended terms for 60 months and provided 3 months payment deferral on one loan with the deferred payments added to the end of the original loan terms. Total $ 5,003 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 Real estate: 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. 108 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) Credit quality indicators As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to the risk grade of loans, the level of classified loans, net charge-offs, nonperforming loans, and general economic conditions in the Company’s market. From a credit risk standpoint, the Company utilizes a risk grading matrix to assign a risk grade to each of its loans. The classifications of loans reflect a judgment about the risk of expected credit loss associated with each loan. 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 risk ratings are described as follows: Pass Loans characterized as pass includes loans graded exceptional, very good, good, satisfactory and pass/watch. The Company believes that there is a low likelihood of credit deterioration related to those loans that are considered pass. Special mention A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Borrowers may exhibit poor liquidity and leverage positions resulting from generally negative cash flow or negative trends in earnings. Access to alternative financing may be limited to finance companies for business borrowers and may be unavailable for commercial real estate borrowers. Substandard A substandard loan is inadequately protected by the current financial condition and paying capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Borrowers may exhibit recent or unexpected unprofitable operations, an inadequate debt service coverage ratio, or marginal liquidity and capitalization. These loans require more intense supervision by Company management. Doubtful 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. 109 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 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. Classified loans include Special Mention, Substandard and Doubtful loans. Pass classified loans include loans graded exceptional, very good, good, satisfactory, and pass/watch. Credit card loans are ungraded as they are not individually graded. Charge-offs presented represent gross charge-offs recognized in the current period: 110 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) December 31, 2025 Term Loans by Origination Year (in thousands) 2025 2024 2023 2022 2021 Prior Revolving Total Residential – Real estate Pass $ 217,066 $ 110,098 $ 99,956 $ 101,423 $ 68,092 $ 153,724 $ — $ 750,359 Special Mention — — 1,992 1,882 1,236 3,567 — 8,677 Substandard — 287 — 132 792 5,561 — 6,772 Doubtful — — — — — — — — Total 217,066 110,385 101,948 103,437 70,120 162,852 — 765,808 Commercial – Real estate Pass 197,639 206,587 56,303 126,746 125,612 218,736 — 931,623 Special Mention — — 2,300 39,276 4,933 2,820 — 49,329 Substandard — 86 5,957 5,860 1,744 2,482 — 16,129 Doubtful — — — — — — — — Total 197,639 206,673 64,560 171,882 132,289 224,038 — 997,081 Construction – Real estate Pass 110,320 94,973 77,852 41,729 7,198 18,856 — 350,928 Special Mention — — 1,000 — 724 — — 1,724 Substandard — — 255 2,197 1,536 2,926 — 6,914 Doubtful — — — — — — — — Total 110,320 94,973 79,107 43,926 9,458 21,782 — 359,566 Commercial and Industrial Pass 210,890 146,107 94,365 91,066 30,540 95,813 — 668,781 Special Mention — — — 320 — 221 — 541 Substandard — 892 14,941 2,414 5,401 5,319 — 28,967 Doubtful — — — — — — — — Total 210,890 146,999 109,306 93,800 35,941 101,353 — 698,289 Other consumer Pass 760 963 — 46 40 121 — 1,930 Special Mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Total 760 963 — 46 40 121 — 1,930 Credit card Ungraded — — — — — — 142,397 142,397 Portfolio loans receivable, gross $ 736,675 $ 559,993 $ 354,921 $ 413,091 $ 247,848 $ 510,146 $ 142,397 $ 2,965,071 December 31, 2025 (in thousands) 2025 2024 2023 2022 2021 Prior Revolving Total Gross Charge-offs Residential real estate $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate — — — 197 — 1,695 — 1,892 Construction — — — — — 264 — 264 Commercial and Industrial — 101 2,339 347 8 625 — 3,420 Credit card — — — — — — 9,036 9,036 Total $ — $ 101 $ 2,339 $ 544 $ 8 $ 2,584 $ 9,036 $ 14,612 111 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) December 31, 2024 Term Loans by Origination Year (in thousands) 2024 2023 2022 2021 2020 Prior Revolving Total Residential – Real estate Pass $ 155,867 $ 129,639 $ 122,203 $ 76,906 $ 69,647 $ 117,272 $ — $ 671,534 Special Mention — — 2,065 1,242 3,604 — — 6,911 Substandard — — — 3,422 189 6,496 — 10,107 Doubtful — — — — — — — — Total 155,867 129,639 124,268 81,570 73,440 123,768 — 688,552 Commercial – Real estate Pass 235,929 61,372 170,611 146,642 92,038 207,631 — 914,223 Special Mention — 2,300 10,747 5,052 — 788 — 18,887 Substandard — — 7,558 — 320 2,031 — 9,909 Doubtful — — — — — — — — Total 235,929 63,672 188,916 151,694 92,358 210,450 — 943,019 Construction – Real estate Pass 98,942 129,202 46,532 20,634 15,458 6,175 — 316,943 Special Mention — — — — — — — — Substandard — — — — 2,252 2,057 — 4,309 Doubtful — — — — — — — — Total 98,942 129,202 46,532 20,634 17,710 8,232 — 321,252 Commercial and Industrial Pass 129,043 130,647 117,346 42,747 21,356 107,953 — 549,092 Special Mention 232 — 489 — — 270 — 991 Substandard — 209 712 205 3,239 102 — 4,467 Doubtful — — — — — — — — Total 129,275 130,856 118,547 42,952 24,595 108,325 — 554,550 Other consumer Pass 1,226 278 73 95 76 341 — 2,089 Special Mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Total 1,226 278 73 95 76 341 — 2,089 Credit card Ungraded — — — — — — 127,766 127,766 Portfolio loans receivable, gross $ 621,239 $ 453,647 $ 478,336 $ 296,945 $ 208,179 $ 451,116 $ 127,766 $ 2,637,228 December 31, 2024 (in thousands) 2024 2023 2022 2021 2020 Prior Revolving Total Gross Charge-offs Residential real estate $ — $ — $ — $ — $ — $ 907 $ — $ 907 Commercial real estate — — 570 — — — — 570 Commercial and Industrial 84 80 306 — — 136 — 606 Credit card — — — — — — 7,145 7,145 Total $ 84 $ 80 $ 876 $ — $ — $ 1,043 $ 7,145 $ 9,228 112 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) Outstanding loan commitments were as follows: December 31, (in thousands) 2025 2024 Unused lines of credit Real Estate: Residential $ 22,858 $ 20,996 Residential - Home Equity 41,864 46,900 Commercial 69,887 44,201 Construction 91,203 85,984 Commercial and Industrial 90,990 79,961 Credit card (1) 138,632 124,732 Other consumer 232 255 Total $ 455,666 $ 403,029 Letters of credit $ 1,633 $ 3,122 _______________ (1) Outstanding loan commitments in the credit card portfolio include $ 95.9 million and $ 97.2 million in secured and partially secured balances as of December 31, 2025 and 2024, respectively. Lines of credit are agreements to lend to a customer as long as there is no violation of any condition of the contract. Lines of credit generally have variable interest rates. Such lines do not represent future cash requirements because it is unlikely that all customers will, at any given time, draw upon their lines in full. Loan commitments generally have variable interest rates, fixed expiration dates, and may require payment of a fee. The Company's maximum exposure to credit loss in the event of nonperformance by the customer is the contractual amount of the credit commitment. Loan commitments and lines of credit are generally made on the same terms, including with regard to collateral, as outstanding loans. Management is not aware of any accounting loss to be incurred by funding these loan commitments. The Company maintains an estimated reserve for unfunded commitments and certain off-balance sheet items such as unfunded lines of credit, which is reflected in other liabilities, with increases or decreases in the reserve being charged to or released from operating expense. Activity for this account is as follows for the periods presented: (in thousands) 2025 2024 Balance at beginning of period $ 1,191 $ 806 Provision for credit losses on unfunded commitments 188 385 Balance at end of period $ 1,379 $ 1,191 The Company makes representations and warranties that loans sold to investors meet the investors’ program guidelines and that the information provided by the borrowers is accurate and complete. In the event of a default on a loan sold, the investor may have the right to make a claim for losses due to document deficiencies, program non-compliance, early payment default, and fraud or borrower misrepresentations. 113 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 maintains a reserve for potential losses on mortgage loans sold, which is reflected in other liabilities, with changes being charged to or released from operating expense. Activity in this reserve is as follows for the periods presented: (in thousands) 2025 2024 Balance at beginning of period $ 2,260 $ 985 Balance acquired from IFH — 1,207 Provision for mortgage loan put-back reserve 79 68 Balance at end of period $ 2,339 $ 2,260 Note 6 - Premises and Equipment Year end premises and equipment owned and utilized in the operations of the Company and the related depreciation and amortization expense were as follows: (in thousands) 2025 2024 Leasehold improvements $ 3,068 $ 2,710 Furniture and equipment 5,406 4,973 Vehicle — 54 Software 5,932 3,440 Construction in progress 115 1,292 Land 700 700 Building 6,380 6,320 21,601 19,489 Less: Accumulated depreciation and amortization ( 10,548 ) ( 9,228 ) Premises and equipment 11,053 10,261 Net lease asset 4,019 5,264 Premises and equipment, net $ 15,072 $ 15,525 Depreciation and amortization expense $ 1,424 $ 737 Note 7 - Leases The Company’s primary leasing activities relate to certain real estate leases entered into in support of the Company’s branch operations and back office operations. The Company leases five of its full service branches and seven other locations for corporate/administration activities, operations, and loan production. All property leases under lease agreements have been designated as operating leases. The Company does not have leases designated as finance leases. 114 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 7 - Leases (continued) The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets are included in premises and equipment, and operating lease liabilities are included as other liabilities in the consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. 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, 2025 and December 31, 2024. The operating lease ROU asset also includes any lease pre-payments. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, which the Company has elected to account for separately as the non-lease component amounts are readily determinable under most leases. As of December 31, 2025, the Company’s net lease ROU assets and related lease liabilities were $ 4.0 million and $ 4.6 million, respectively, compared to December 31, 2024 balances of $ 5.3 million of ROU assets and $ 5.9 million of lease liabilities, and have remaining terms ranging from one to eight years , including extension options that the Company is reasonably certain will be exercised. As of December 31, 2025, the Company had not entered into any material leases that have not yet commenced. The Company’s lease information is summarized as follows: (in thousands) 2025 2024 Lease Right-of-Use Asset: Lease asset $ 6,978 $ 6,821 Less: Accumulated amortization ( 2,959 ) ( 1,557 ) Net lease asset $ 4,019 $ 5,264 Lease Liability: Lease liability $ 7,326 $ 7,154 Less: Accumulated amortization ( 2,754 ) ( 1,282 ) Net lease liability $ 4,572 $ 5,872 Future minimum payments for operating leases with initial or remaining terms of one year or more are as follows at December 31, 2025: (in thousands) 2025 Amounts due in: 2026 $ 1,969 2027 795 2028 622 2029 586 2030 411 Thereafter 777 Total future lease payments 5,160 Discount of cash flows ( 588 ) Present value of net future lease payments $ 4,572 115 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements 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 The change in goodwill during the years ended December 31, 2025 and 2024 is as follows: (in thousands) 2025 2024 Balance at beginning of period $ 21,126 $ — Acquired goodwill — 21,126 Measurement period adjustment 4,843 — Balance at end of period $ 25,969 $ 21,126 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: 2025 2024 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortized intangible assets: Customer list intangible $ 12,200 $ ( 879 ) $ 12,200 $ ( 188 ) Trade name intangible 2,100 ( 175 ) 2,100 ( 40 ) Core deposits intangible 1,779 ( 254 ) 1,779 ( 34 ) Total amortized intangible assets $ 16,079 $ ( 1,308 ) $ 16,079 $ ( 262 ) 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 customer list intangible and trade name intangible will be amortized over its expected useful life of 17 years and 15 years, respectively, using the straight-line method. 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 $ 1.0 million and $ 262 thousand for the years ended December 31, 2025 and 2024, respectively. 116 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements 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) 2026 $ 1,043 2027 1,038 2028 1,033 2029 1,026 2030 1,019 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: (in thousands) 2026 $ 744,350 2027 110,029 2028 11,322 2029 574 2030 43 Thereafter 47 Total $ 866,365 117 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 10 - Borrowed Funds As of December 31, 2025 and 2024, the Company was indebted as follows: 2025 2024 (dollars in thousands) Balance Interest Balance Interest 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 Total - Other borrowed funds $ 2,062 5.85 % $ 12,062 5.25 % The FHLB fixed rate advances accrue interest on a daily basis and are paid semi-annually. Junior subordinated debentures In June 2006, the Company formed Capital Bancorp (MD) Statutory Trust I (the “Trust”) and on June 15, 2006, the Trust issued 2,000 floating rate capital securities (the “Capital Securities”) with an aggregate liquidation value of $ 2.0 million to a third party in a private placement. 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. 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”). The Floating Rate Debentures for the Trust will mature on June 15, 2036, which may be shortened if certain conditions are met (including the Company having received prior approval of the Board of Governors of the Federal Reserve System and any other required regulatory approvals). These Floating Rate Debentures, which are the only assets of the Trust, are subordinate and junior in right of payment to all present and future senior indebtedness (as defined in the Indenture dated June 15, 2006) of the Company. The Floating Rate Debentures for the Trust accrue interest at a floating rate equal to the three-month CME Term SOFR plus a spread adjustment of 0.26161 % (or 26.161 basis points) plus 187 basis points, payable quarterly. As of December 31, 2025 and 2024, the rate for the Trust was 5.85 % and 6.49 %, respectively. The quarterly distributions on the Capital Securities will be paid at the same rate that interest is paid on the Floating Rate Debentures. The Company has fully and unconditionally guaranteed the Trust’s obligation under the Capital Securities. The Trust must redeem the Capital Securities when the Floating Rate Debentures are paid at maturity or upon any earlier prepayment of the Floating Rate Debentures. 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 and, to a limited extent, by the Federal Reserve. 118 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 10 - Borrowed Funds (continued) Other subordinated notes On November 30, 2020, the Company issued $ 10.0 million of subordinated notes (the “Notes”). The Notes mature on November 30, 2030 and are redeemable in whole or part on November 30, 2025. The Notes bear interest at a fixed annual rate of 5.00 % for the first five years , then adjust quarterly to an interest rate per annum equal to a benchmark rate, which is expected to be the three-month SOFR, plus 490 basis points. There were related debt issuance costs incurred totaling $ 50,000 which were fully expensed at the time of issuance. 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. 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 The Company has available lines of credit of $ 76.0 million with other correspondent banks. 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 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, 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. 119 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 11 - Retirement Plans The Company provides a defined contribution plan qualifying under Section 401(k) of the Internal Revenue Code to eligible employees. The Company contributes 3 % of eligible compensation on behalf of all full‑time employees up to limits prescribed by the Internal Revenue Code. The Company’s contribution to the plan was $ 1.5 million in 2025 and $ 1.1 million in 2024. The Bank adopted a Long-Term Incentive Plan (“LTIP”) for executive management members in 2021. The LTIP is in the form of a nonqualified deferred compensation plan and complies with Internal Revenue Code Section 409A as well as related guidance and regulations. 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 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. All participants are subject to the following vesting schedule for any earnings (or losses) on the investment of the contribution: 100 % vesting following completion of either (i) ten years of service by the applicable executive from the later of the effective date of the LTIP or the executive’s hire date or (ii) ten years of continuous, full-time employment with the Bank by the applicable executive (to include continuous employment prior to the effective date of the LTIP) and retirement, which is defined in the LTIP as the later of a participant’s separation from service or the executive attaining 67 years of age. In the event of a change in control, the LTIP will accelerate vesting. Any executive not fulfilling either vesting requirement will forfeit any employer contributions. Note 12 - Related-Party Transactions Certain executive officers and directors of the Company and Bank, and companies with which they are affiliated, are clients of and have banking transactions with the Company in the ordinary course of business. These transactions are conducted on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the Company. Activity in related-party loans during 2025 and 2024 is shown below: (in thousands) 2025 2024 Balance at beginning of year $ 28,643 $ 32,074 Add: New loans 23,452 — Less: Amounts collected ( 23,801 ) ( 3,431 ) Balance at end of year $ 28,294 $ 28,643 Deposits from officers and directors and their related interests were $ 140.4 million at December 31, 2025, and $ 92.0 million at December 31, 2024. A director of the Company owns an interest in an entity from which the Company leases space for one of its Rockville, Maryland locations. Payments made in accordance with the lease were $ 83 thousand and $ 84 thousand in 2025 and 2024, respectively. 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. 120 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements 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 tax expense Federal 14,077 10,472 State 2,600 2,202 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 * 2,373 798 Total $ 18,753 $ 9,098 _______________ * Jurisdictions below the 5% of total income taxes paid (net of total refunds) threshold for the period presented. 121 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: (in thousands) 2025 2024 Deferred tax assets: Allowance for credit losses $ 13,563 $ 11,928 Reserve for recourse on mortgage loans sold 577 553 Stock-based compensation 807 793 Long-term incentive program 721 497 Write-down of equity investments 1,054 1,054 Unrealized loss on investment securities available-for-sale 1,905 3,789 Lease liability, net of right of use asset 136 149 Purchase accounting adjustments - loans and deposits 1,505 4,137 Other reserves 731 904 Deferred tax asset before valuation allowance 20,999 23,804 Valuation allowance 1,054 1,054 Deferred tax asset 19,945 22,750 Deferred tax liabilities: Accumulated depreciation 213 249 Intangible assets 2,281 2,405 Mortgage and other servicing rights 448 1,347 Purchase accounting adjustments - fixed assets 1,730 1,717 Other 281 362 Deferred tax liability 4,953 6,080 Net deferred tax asset $ 14,992 $ 16,670 Based on the Company’s history of prior earnings and its expectations of the future, it is anticipated that operating income and the reversal pattern of its temporary differences will, more likely than not, be sufficient to realize a net deferred tax asset of $ 15.0 million at December 31, 2025 from continuing operations. 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 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. 122 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 13 - Income Taxes (continued) 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 % Increase (decrease) resulting from: 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 — — 550 1.32 Nontaxable or nondeductible items: Bank-owned life insurance ( 322 ) ( 0.43 ) ( 308 ) ( 0.74 ) 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 % _______________ (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. Note 14 - Regulatory Capital Matters The Company and Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. The net unrealized gain or loss on available-for-sale securities is not included in computing regulatory capital. Management believes as of December 31, 2025, that the Company and Bank meet all capital adequacy requirements to which they are subject. 123 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: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If not adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end 2025 and 2024, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category. At December 31, 2024, the Company reached the $3 billion asset level and is subject to separate minimum capital measurements. The Company exceeded the minimum capital measurements and remains “well-capitalized.” Actual and required capital amounts and ratios are presented below at year-end. Regulatory Capital Actual Minimum Capital Adequacy To Be Well Capitalized (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio December 31, 2025 The Company Tier 1 leverage ratio (to average assets) $ 371,638 10.71 % $ 138,757 4.00 % $ 173,446 5.00 % Tier 1 capital (to risk-weighted assets) 371,638 13.05 % 170,835 6.00 % 227,780 8.00 % Common equity tier 1 capital ratio (to risk-weighted assets) 369,576 12.98 % 128,126 4.50 % 185,071 6.50 % Total capital ratio (to risk-weighted assets) 407,481 14.31 % 227,780 8.00 % 284,725 10.00 % The Bank Tier 1 leverage ratio (to average assets) $ 316,082 9.24 % $ 136,858 4.00 % $ 171,073 5.00 % Tier 1 capital (to risk-weighted assets) 316,082 11.34 % 167,207 6.00 % 222,942 8.00 % Common equity tier 1 capital ratio (to risk-weighted assets) 316,082 11.34 % 125,405 4.50 % 181,141 6.50 % Total capital ratio (to risk-weighted assets) 351,170 12.60 % 222,942 8.00 % 278,678 10.00 % December 31, 2024 The Company 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) 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 % The Bank Tier 1 leverage ratio (to average assets) $ 283,828 9.17 % $ 123,818 4.00 % $ 154,772 5.00 % Tier 1 capital (to risk-weighted assets) 281,563 11.54 % 146,451 6.00 % 195,268 8.00 % Common equity tier 1 capital ratio (to risk-weighted assets) 281,563 11.54 % 109,838 4.50 % 158,655 6.50 % Total capital ratio (to risk-weighted assets) 312,304 12.79 % 195,268 8.00 % 244,085 10.00 % 124 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 15 - Stock-Based Compensation 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 unit 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 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. In 2021, an additional 900,000 shares were authorized for a total of 2,020,000 . As of December 31, 2025, there are 810,829 shares available for future grant. 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. 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. 125 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: 2025 2024 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Outstanding at beginning of year 614,360 $ 21.02 550,718 $ 19.21 Add: Granted 155,901 30.47 358,847 20.97 Less: Exercised ( 106,442 ) 15.45 ( 150,247 ) 14.97 Less: Shares withheld for net share settlement ( 70,462 ) 16.39 ( 89,352 ) 14.59 Less: Expired/cancelled/forfeited ( 51,551 ) 23.35 ( 55,606 ) 23.22 Outstanding at end of year 541,806 $ 25.21 614,360 $ 21.02 Exercisable at end of year 214,015 $ 23.24 287,136 $ 18.52 The weighted average fair value of options granted during the years ended December 31, 2025 and 2024, was $ 5.29 and $ 10.57 , respectively. A summary of information about stock options outstanding is as follows: Exercise Price Range Weighted Average Exercise Price Average Remaining Life (years) Outstanding Shares Exercisable Shares December 31, 2025 $ 8.77 - 14.70 $ 13.26 1.83 18,578 18,578 14.71 - 20.63 17.51 6.44 40,536 23,294 20.64 - 26.56 24.56 2.16 339,254 172,143 26.57 - 32.48 30.47 4.17 143,438 — Total outstanding options $ 25.21 3.00 541,806 214,015 Intrinsic value on December 31, 2025 $ 1,602,613 $ 1,054,755 December 31, 2024 $ 8.77 - 13.18 $ 8.77 0.39 4,036 4,036 13.19 - 17.59 14.21 0.63 180,744 161,658 17.60 - 22.00 18.85 3.31 42,883 14,415 22.01 - 26.41 24.57 3.16 386,697 107,027 Total outstanding options $ 21.02 2.41 614,360 287,136 Intrinsic value on December 31, 2024 $ 2,390,720 $ 2,131,880 The aggregate intrinsic value as presented in the preceding tables is the difference between the estimated fair value of the stock as of December 31, 2025 and 2024, and the exercise price of the option multiplied by the number of options outstanding. Stock options with exercise prices greater than the estimated fair value of the stock are not included in this calculation. 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. 126 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 15 - Stock-Based Compensation (continued) 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: 2025 2024 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. These awards typically hold service requirements over various vesting periods. The value of the stock awarded is established as the fair market value of the stock at the time of the grant. 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. Termination of employment prior to a vesting date, as described below, would terminate any interest in non-vested shares. All restricted shares will fully vest in the event of change in control of the Company. Nonvested restricted stock for the years ended December 31, 2025 and 2024 is summarized in the following table. 2025 2024 Shares Weighted Average Grant-Date Fair Value Shares Weighted Average Grant-Date Fair Value Nonvested at beginning of year 46,950 $ 24.83 28,176 $ 21.66 Add: Granted 62,267 29.42 37,311 23.94 Less: Vested ( 23,855 ) 24.56 ( 11,829 ) 18.32 Less: Shares withheld for net share settlement ( 10,721 ) 24.59 ( 5,375 ) 18.12 Less: Forfeited ( 6,619 ) 27.04 ( 1,333 ) 17.90 Nonvested at end of year 68,022 $ 28.95 46,950 $ 24.83 127 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: Year Shares 2026 31,009 2027 20,367 2028 10,339 2029 6,307 68,022 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. 128 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 16 - Parent Company Financial Information The balance sheets as of December 31, 2025 and 2024 and statements of income and cash flows for the years then ended, for Capital Bancorp, Inc. (Parent only) are presented below. Parent Company Only Balance Sheets (in thousands) 2025 2024 Assets Cash and cash equivalents $ 3,359 $ 5,358 Investment in Bank 334,760 292,185 Investment in Church Street Capital 7,936 7,357 Investment in Windsor TM 23,990 9,460 Investment in Trust 62 62 Loans receivable, net of allowance for credit losses of $ 460 and $ 475 at December 31, 2025 and 2024, respectively 37,206 41,693 Accrued interest receivable 239 92 Intangible assets 3 14,072 Deferred income taxes ( 3,081 ) ( 3,081 ) Other assets 373 336 Total assets $ 404,847 $ 367,534 Liabilities and Stockholders’ Equity Borrowed funds $ 2,062 $ 12,062 Accrued interest payable 5 49 Other liabilities 1,023 284 Total liabilities 3,090 12,395 Stockholders’ equity Common stock 164 167 Additional paid-in capital 114,604 128,598 Retained earnings 292,749 237,843 Accumulated other comprehensive loss ( 5,760 ) ( 11,469 ) Total stockholders’ equity 401,757 355,139 Total liabilities and stockholders’ equity $ 404,847 $ 367,534 Parent Company Only Statements of Income (in thousands) 2025 2024 Interest and dividend income $ 2,408 $ 2,415 Dividend from Bank 14,900 19,500 Dividend from Windsor Advantage TM 6,070 — Total interest and dividend revenue 23,378 21,915 Interest expense 590 656 Net interest income 22,788 21,259 (Release of) provision for credit losses ( 15 ) 59 Net interest income after provision for credit losses 22,803 21,200 Noninterest loss ( 532 ) ( 2,615 ) Noninterest expenses 1,302 1,119 Income before income taxes 20,969 17,466 Income tax expense 133 152 Income before undistributed net income of subsidiaries 20,836 17,314 Undistributed net income of subsidiaries 36,334 13,658 Net income $ 57,170 $ 30,972 129 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 16 - Parent Company Financial Information (continued) Parent Company Only Statements of Cash Flows (in thousands) 2025 2024 Cash flows from operating activities Net Income $ 57,170 $ 30,972 Adjustments to reconcile net income to net cash provided by operating activities: (Release of) provision for credit losses ( 15 ) 59 Undistributed net income of subsidiaries ( 36,334 ) ( 13,658 ) Stock-based compensation expense 1,608 1,895 Director and employee compensation paid in Company stock 1,225 517 Deferred income tax expense — 4 Amortization of intangible assets — 228 Changes in assets and liabilities: Accrued interest receivable ( 147 ) 278 Other assets ( 37 ) ( 25 ) Accrued interest payable ( 44 ) ( 250 ) Other liabilities ( 485 ) ( 194 ) Net cash provided by operating activities 22,941 19,826 Cash flows from investing activities Net decrease (increase) in portfolio loans receivable 4,502 ( 442 ) Capital contributions to subsidiaries ( 1,573 ) ( 5,512 ) Cash paid from acquisitions, net — ( 6,416 ) Net cash (used) provided by investing activities 2,929 ( 12,370 ) 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 1,158 1,077 Net cash used by financing activities ( 27,869 ) ( 5,597 ) Net (decrease) increase in cash and cash equivalents ( 1,999 ) 1,859 Cash and cash equivalents, beginning of year 5,358 3,499 Cash and cash equivalents, end of year $ 3,359 $ 5,358 130 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements 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 $ 1,997 131 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 18 - Fair Value Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values: Level 1 - Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. This includes certain U.S. Treasury and other U.S. Government and government agency securities actively traded in over-the-counter markets. Level 2 - Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 - Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. The Company used the following methods and significant assumptions to estimate fair value on a recurring basis: Investment securities available-for-sale - The fair values for investment securities available-for-sale are provided by an independent pricing service and are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing, which is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Loans held for sale - The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan (Level 2). Loan servicing assets - The fair values of loan servicing assets are determined at a tranche level, based on market prices for comparable servicing contracts (Level 2), when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model utilizes interest rate, prepayment speed, and default rate assumptions that market participants would use in estimating future net servicing income and that can be validated against available market data (Level 2). Derivative financial instruments - The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. 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. 132 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 18 - Fair Value (continued) The Company has categorized its financial instruments measured at fair value on a recurring basis as of December 31, 2025 and December 31, 2024 as follows: Fair Value Measurements Using: (in thousands) Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2025 Investment securities available-for-sale U.S. Treasuries $ 137,236 $ 137,236 $ — $ — Municipal 13,897 — 13,897 — Corporate 3,404 — 3,404 — Asset-backed securities 5,026 — 5,026 — Mortgage-backed securities 70,520 — 70,520 — Total $ 230,083 $ 137,236 $ 92,847 $ — Loans held for sale $ 25,828 $ — $ 25,828 $ — Loan servicing assets $ 1,816 $ — $ 1,816 $ — Derivative assets $ 5,941 $ — $ 5,941 $ — Derivative liabilities $ 30 $ — $ 30 $ — December 31, 2024 Investment securities available-for-sale U.S. Treasuries $ 126,835 $ 126,835 $ — $ — Municipal 9,283 — 9,283 — Corporate 4,711 — 4,711 — Asset-backed securities 5,526 — 5,526 — Mortgage-backed securities 77,275 — 77,275 — Total $ 223,630 $ 126,835 $ 96,795 $ — Loans held for sale $ 17,063 $ — $ 17,063 $ — 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 Under FASB ASC 825-10, the Company may elect to report most financial instruments and certain other items at fair value on an instrument-by-instrument basis with changes in fair value reported in net income. After the initial adoption, the election is made at the acquisition of an eligible financial asset, financial liability or firm commitment or when certain specified reconsideration events occur. The fair value election, with respect to an item, may not be revoked once an election is made. 133 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 18 - Fair Value (continued) The following table reflects the difference between the fair value carrying amount of loans held for sale, measured at fair value under FASB ASC 825-10, and the aggregate unpaid principal amount the Company is contractually entitled to receive at maturity: Fair Value of Loans Held for Sale (in thousands) December 31, 2025 December 31, 2024 Aggregate fair value $ 25,828 $ 17,063 Contractual principal 25,332 16,721 Difference $ 496 $ 342 The Company has elected to account for loans held for sale at fair value to eliminate the mismatch that would occur by recording changes in market value on derivative instruments used to hedge loans held for sale while carrying the loans at the lower of cost or market. As of December 31, 2025 and December 31, 2024, there were no held for sale loans which were classified as nonaccrual. Fair value measurements on a nonrecurring basis Individually evaluated loans - The Company has measured expected credit losses based on the fair value of the loan's collateral and discounted cash flow analysis, where appropriate. Fair value of the collateral is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values. As of December 31, 2025 and December 31, 2024, the fair values consist of loan balances of $ 52.1 million and $ 34.9 million, with specific reserves of $ 10.1 million and $ 9.3 million, respectively. Foreclosed real estate - The Company's foreclosed real estate is measured at fair value less cost to sell. Fair value is determined based on offers and/or appraisals. Cost to sell the real estate is based on standard market factors. The Company categorizes its foreclosed real estate as Level 3. 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 25,521 Foreclosed real estate Level 3 Inputs 3,856 — Total 46,801 25,521 134 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 18 - Fair Value (continued) 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 2025 Individually evaluated loans Appraised Value/Discounted Cash Flows Discounts to appraisals or cash flows for estimated holding and/or selling costs 0 - 30 % 1 Foreclosed real estate Appraised Value Discounts to appraisals for estimated holding and/or selling costs 0 - 30 % Valuation Technique Unobservable Inputs General Range of Inputs 2024 Individually evaluated loans Appraised Value/Discounted Cash Flows Discounts to appraisals or cash flows for estimated holding and/or selling costs 0 - 30 % _______________ (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 Fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practical to estimate the value is based upon the characteristics of the instruments and relevant market information. Financial instruments include cash, evidence of ownership in an entity, or contracts that convey or impose on an entity the contractual right or obligation to either receive or deliver cash for another financial instrument. The information used to determine fair value is highly subjective in nature and, therefore, the results are imprecise. Subjective factors include, among other things, estimates of cash flows, risk characteristics, credit quality, and interest rates, all of which are subject to change. 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. 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. The fair value of the Company’s loan portfolio includes a credit risk assumption in the determination of the fair value of its loans. This credit risk assumption is intended to approximate the fair value that a market participant would realize in a hypothetical orderly transaction. The Company’s loan portfolio is initially fair valued using a segmented approach. The Company divides its loan portfolio into the following categories: variable rate loans, individually analyzed loans, and all other loans. The results are then adjusted to account for credit risk as described above and a further credit risk discount is applied through the use of a discounted cash flow model to compensate for illiquidity risk, based on certain assumptions included within the discounted cash flow model, primarily the use of discount rates that better capture inherent credit risk over the lifetime of a loan. For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values approximate carrying values. Fair values for individually evaluated loans are estimated using discounted cash flow models or based on the fair value of the underlying collateral. 135 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. Restricted investments includes equity of the Federal Reserve and other banker’s banks. The fair value of noninterest-bearing deposits and securities sold under agreements to repurchase is the carrying amount. The fair value of checking, savings, and money market deposits is the amount payable on demand at the reporting date. Fair value of fixed maturity term accounts and individual retirement accounts is estimated using rates currently offered for accounts of similar remaining maturities. The fair value of certificates of deposit in other financial institutions is estimated based on interest rates currently offered for deposits of similar remaining maturities. The fair value of borrowings is estimated by discounting the value of contractual cash flows using current market rates for borrowings with similar terms and remaining maturities. The fair value of outstanding loan commitments, unused lines of credit, and letters of credit are not included in the table since the carrying value generally approximates fair value. These instruments generate fees that approximate those currently charged to originate similar commitments. The table below presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments. Fair Value of Financial Assets and Liabilities December 31, 2025 December 31, 2024 (in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Financial assets Level 1 Cash and due from banks $ 30,894 $ 30,894 $ 25,433 $ 25,433 Interest-bearing deposits at other financial institutions 224,611 224,611 179,841 179,841 Federal funds sold 60 60 58 58 Level 2 Accrued interest receivable $ 16,695 $ 16,695 $ 16,664 $ 16,664 Level 3 Portfolio loans receivable, net $ 2,904,797 $ 2,853,268 $ 2,581,511 $ 2,499,578 Restricted investments 8,397 8,397 4,479 4,479 Foreclosed real estate 3,856 3,856 — — Financial liabilities Level 1 Noninterest-bearing deposits $ 852,741 $ 852,741 $ 810,928 $ 810,928 Level 2 Accrued interest payable $ 8,745 $ 8,745 $ 9,393 $ 9,393 Level 3 Interest-bearing deposits $ 2,240,459 $ 2,243,002 $ 1,951,011 $ 1,960,728 FHLB advances and other borrowed funds 52,062 51,937 34,062 32,372 136 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 19 - Segments 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. The Company’s reportable segments are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business, which are then aggregated if operating performance, products/services, and customers are similar. The chief operating decision maker evaluates the financial performance of the Company’s business components by evaluating revenue streams, significant expenses, and variance to the annual financial plan to assess the performance of the Company’s segments and in the determination of allocating resources and investments. The chief operating decision maker uses revenue streams and other relevant market data to evaluate product pricing and significant expenses to assess segment performance. Segment pretax income or loss, return on assets and the efficiency ratio is used to assess the performance of the Commercial Bank segment by monitoring the margin between interest income and interest expense. Segment pretax income or loss is used to assess the performance of the CBHL segment by monitoring the mortgage banking revenue from loan originations and sales. 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 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 ™ . 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. 137 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. Segment performance is evaluated using income (loss) before taxes. Indirect expenses are allocated on revenue. Transactions among segments are made at fair value. 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. 138 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, 2025 (in thousands) Commercial Bank (2)(3) OpenSky ™ Windsor Advantage TM CBHL Consolidated Interest income $ 199,122 $ 60,943 $ — $ 806 $ 260,871 Interest expense 64,503 — — 376 64,879 Net interest income 134,619 60,943 — 430 195,992 Provision for credit losses 6,172 8,793 — — 14,965 Provision for credit losses on unfunded commitments 188 — — — 188 Net interest income after provision 128,259 52,150 — 430 180,839 Noninterest income Service charges on deposits 1,316 — — — 1,316 Credit card fees — 17,366 — — 17,366 Mortgage banking revenue 1,476 — — 5,996 7,472 Government lending revenue 4,222 — — — 4,222 Government loan servicing revenue (1) ( 4,116 ) — 19,629 — 15,513 Loan servicing rights 545 — — — 545 Other income 1,913 13 — 827 2,753 Total noninterest income 5,356 17,379 19,629 6,823 49,187 Noninterest expenses Salaries and employee benefits 43,346 13,057 9,795 5,971 72,169 Occupancy and equipment 6,888 2,381 1,535 588 11,392 Professional fees 6,849 2,661 442 1,007 10,959 Data processing 2,270 27,320 118 80 29,788 Advertising 2,815 2,811 212 424 6,262 Loan processing 1,968 533 291 1,196 3,988 Merger-related expenses 3,361 — — — 3,361 Operational and other card fraud related losses 144 3,365 — — 3,509 Regulatory assessment expenses 2,743 388 143 97 3,371 Other operating 5,358 2,407 1,985 533 10,283 Total noninterest expenses 75,742 54,923 14,521 9,896 155,082 Net income (loss) before taxes $ 57,873 $ 14,606 $ 5,108 $ ( 2,643 ) $ 74,944 Total assets $ 3,407,326 $ 140,914 $ 25,993 $ 31,974 $ 3,606,207 _______________ (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). 139 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 (2)(3) OpenSky ™ Windsor Advantage TM CBHL Consolidated Interest income $ 150,948 $ 61,785 $ — $ 568 $ 213,301 Interest expense 58,192 — — 363 58,555 Net interest income 92,756 61,785 — 205 154,746 Provision for credit losses 10,391 7,329 — — 17,720 Provision for credit losses on unfunded commitments 385 — — — 385 Net interest income after provision 81,980 54,456 — 205 136,641 Noninterest income 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 31,410 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 $ 25,091 $ 17,333 $ 1,896 $ ( 2,488 ) $ 41,832 Total assets $ 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. 140 Capital Bancorp, Inc. and Subsidiaries Notes to Consolidated Financial Statements 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 $ 3,206,911 141 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 In accordance with the current accounting standards for loss contingencies, the Company establishes reserves for litigation-related matters that arise in the ordinary course of its business activities when it is probable or reasonably possible that a loss associated with a claim or proceeding has been incurred and the amount of the loss can be reasonably estimated. Litigation claims and proceedings of all types are subject to many uncertain factors that generally cannot be predicted with assurance. In addition, the Company's defense of litigation claims may result in legal fees, which it expenses as incurred. None of the amounts the Company currently has recorded individually or in the aggregate are considered to be material to our financial condition as of December 31, 2025. Note 22 - Subsequent Events 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. 142 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.