Capital Bancorp Inc 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The Company’s management, including our Principal Executive Officer and Principal Financial Officer, is responsible for maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosures. In connection with preparing this report, the Company’s management, including our Principal Executive Officer and Principal Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective because of a material weakness in internal control over financial reporting. Notwithstanding the material weakness, based on additional analyses and other procedures performed, management believes the consolidated financial statements included in this report fairly present, in all material respects, the Company’s financial position, results of operations and cash flows, as of the periods presented, in accordance with GAAP. Report by Management on Internal Control over Financial Reporting Management is responsible for establishing and maintaining an effective system of internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company’s system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. There are inherent limitations in the effectiveness of any system of internal control over financial reporting, including the possibility of human error and circumvention or overriding of controls. Accordingly, even an effective system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Management has assessed the Company’s internal control over financial reporting as of December 31, 2025. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of December 31, 2025, the Company did not maintain effective internal control over financial reporting based on those criteria due to the presence of a material weakness as described below. A material weakness (as defined in Rule 12b-2 under the Exchange Act) exists when there 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 in the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. 143 In connection with management’s assessment of the Company’s internal control over financial reporting described above, management identified a material weakness in the Company’s internal control over financial reporting. This material weakness resulted 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. Management concluded that these control deficiencies neither resulted in any material misstatements, nor did they require revisions to the Company’s previously issued consolidated financial statements. Elliott Davis, PLLC, the independent registered public accounting firm that audited the Company’s consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the Company’s internal control over financial reporting as of December 31, 2025. Their report is included in Part II, Item 8. Financial Statements and Supplementary Data under the heading “Report of Independent Registered Public Accounting Firm.” Remediation Plan and Status The material weakness cannot be considered remediated until applicable controls have been designed, implemented, have operated for a sufficient period of time, and management has concluded, through testing, that these controls are operating effectively. Management and the Board of Directors are committed to maintaining an effective system of internal control over financial reporting. In response to the control deficiency that resulted in the material weakness described above, management has developed and has been executing on the following remediation plan: • Added loan operations personnel to support monitoring of these accounts and to address turnover within the loan operations function. • Continue to perform a daily reconciliation of items in both accounts. Revised procedures will require that aged items be escalated to the Chief Operating Officer, the Chief Financial Officer, Head of Operations and the Head of Loan Operations. • Continue to complete a monthly reconciliation between the Bank’s core system and the Government Guaranteed Lending loan system. Reconciliation differences will be escalated to the Chief Operating Officer and the Chief Financial Officer, who, together, will determine how to appropriately disposition these differences. • Establish, on a temporary basis, a sub-working group that meets bi-weekly to review the closing, amendment, sale, or participation of government guaranteed loans and all loans involving a participant. The sub-working group will confirm that these transactions are processed through the appropriate accounts and will review related entries. The sub-working group will include, at a minimum, the Chief Operating Officer, the Head of Loan Operations, and other key operations personnel. During each quarterly closing cycle, the sub-working group will also review all remaining entries in both suspense accounts and determine the appropriate disposition of any items not cleared. The sub-working group will report to Management’s Executive Sarbanes-Oxley Steering Committee. Management has made substantial progress remediating the underlying causes, though, as of the date of this filing, the matter has not yet been fully resolved. We believe that the actions outlined above will remediate the material weakness once a sufficient period of time has passed for management to conclude, through testing, that these controls are operating effectively. We will continue to assess the 144 effectiveness of our internal control over financial reporting and have taken steps to remediate the material weakness as expeditiously as possible. Changes in Internal Control Over Financial Reporting Except as described above, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the fourth quarter of 2025 to which this report relates that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. 145 ITEM 9B. OTHER INFORMATION Rule 10b5-1 Trading Plans During the quarter ended December 31, 2025, no officer or director of the Company adopted or terminated any contract, instruction, or written plan for the purchase or sale of securities of the Company’s common stock that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c), or adopted or terminated any non-Rule 10b5-1 trading arrangement as defined in 17 CFR § 229.408(c). ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 146 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this Item with respect to our directors and certain corporate governance practices is contained in our Proxy Statement for our 2026 Annual Meeting of Shareholders (the “Proxy Statement”) to be filed with the SEC within 120 days after the end of the Company’s fiscal year ended December 31, 2025. Such information is incorporated herein by reference. We have adopted a Code of Business Conduct and Ethics that applies to all of our directors and employees. Our Code of Business Conduct and Ethics is available on our website at www.capitalbankmd.com under the “Investor Relations” tab. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is incorporated herein by reference to our Proxy Statement to be filed with the SEC within 120 days after the end of the Company’s fiscal year ended December 31, 2025. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this Item regarding security ownership of certain beneficial owners and management is incorporated by reference to our Proxy Statement to be filed with the SEC within 120 days after the end of the Company’s fiscal year ended December 31, 2025. Information relating to securities authorized for issuance under the Company’s equity compensation plans is included in Part II of this Annual Report on Form 10-K under “Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.” ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this Item is incorporated herein by reference to our Proxy Statement to be filed with the SEC within 120 days after the end of the Company’s fiscal year ended December 31, 2025. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item is incorporated herein by reference to our Proxy Statement to be filed with the SEC within 120 days after the end of the Company’s fiscal year ended December 31, 2025. 147 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) (1) The following financial statements are incorporated by reference from Item 8 hereof: Report of Independent Registered Public Accounting Firm. PCAOB ID ( 149 ) Consolidated Balance Sheets as of December 31, 2025 and 2024. Consolidated Statements of Income for the Years Ended December 31, 2025 and 2024. Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2025 and 2024. Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2025 and 2024. Consolidated Statements of Cash Flows for the Years Ended December 31, 2025 and 2024. Notes to Consolidated Financial Statements. (2) All schedules for which provision is made in the applicable accounting regulation of the SEC are omitted because they are not applicable or the required information is included in the consolidated financial statements or related notes thereto. (b) The following exhibits are filed with or incorporated by reference in this Annual Report on Form 10-K, and this list includes the Exhibit Index. ITEM 16. FORM 10-K SUMMARY None. 148 INDEX TO EXHIBITS Exhibit Number Description 2.1 Agreement and Plan of Merger and Reorganization, dated March 27, 2024, by and between the Company and Integrated Financial Holdings Inc. (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on April 1, 2024) 3.1 Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on May 23, 2023) 3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed on May 23, 2023) 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Form S-1/A filed on September 17, 2018) 4.2 Description of Registrant’s Securities (incorporated by reference to Exhibit 4.2 to the Company’s Form 10-K filed on March 16, 2020) 4.3 Long-term borrowing instruments are omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K. The Company undertakes to furnish copies of such instruments to the SEC upon request. 10.1 Capital Bancorp, Inc. Amended and Restated 2017 Stock and Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed with the SEC on November 17, 2023) 10.2 Form of Restricted Stock Award Agreement under the Capital Bancorp, Inc. 2017 Stock and Incentive Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Form S-1/A filed on September 17, 2018) 10.3 Form of Non-Qualified Stock Option Award Agreement under the Capital Bancorp, Inc. 2017 Stock and Incentive Compensation Plan (incorporated by reference to Exhibit 10.5 to the Company’s Form S-1/A filed on September 17, 2018) 10.4 Form of Stock Appreciation Right Award Agreement under the Capital Bancorp, Inc. 2017 Stock and Incentive Compensation Plan (incorporated by reference to Exhibit 10.6 to the Company’s Form S-1/A filed on September 17, 2018) 10.5 Form of Amended and Restated 2017 Stock and Incentive Plan Incentive Stock Option Award Agreement for Executive Officers (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K filed on March 15, 2024) 10.6 Form of Amended and Restated 2017 Stock and Incentive Compensation Plan Restricted Stock Unit Award Agreement for Executive Officers (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed on March 15, 2024) 10.7 Employment Agreement dated January 1, 2022 between Capital Bank, N.A. and Scot R. Browning (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on January 6. 2022) 10.8 Amendment to Employment Agreement, dated April 13, 2023, between Capital Bank, N.A. and Scot R. Browning (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K filed on March 15, 2024) 10.9 Employment Contract, dated April 30, 2018, by and among Capital Bank, N.A. and Karl F. Dicker (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2020, filed on May 11, 2020) 10.10 Nonqualified Deferred Compensation Plan dated January 1, 2021 (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K filed on March 15, 2024) 10.11 Employment Agreement, effective June 29, 2022 between Capital Bank, N.A. and Edward F. Barry (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on July 1, 2022 ) 10.12 Employment Agreement, effective October 11, 2022 between Capital Bank, N.A. and Steven Poynot (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 11, 2022 ) 10.13 Amendment to Employment Agreement, dated April 13, 2023, between Capital Bank, N.A. and Steven Poynot (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed on March 15, 2024) 10.14 Second Amendment to Employment Agreement, dated May 5, 2025, between Capital Bank, N.A. and Steven Poynot (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on May 9, 2025) 10.15 Employment Agreement, dated July 15, 2024, between Capital Bank, N.A. and Dominic Canuso (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on July 8, 2024) 10.16 First Amendment to Employment Agreement, dated May 5, 2025, between Capital Bank, N.A. and Dominic Canuso (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on May 9, 2025) 10.17 Amended and Restated Employment Agreement, dated as of September 17, 2024, by and between Michael Breckheimer and Windsor Advantage, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on October 1, 2024) 10.18 Employment Agreement, dated November 1 4 , 202 5 , between Capital Bank, N.A. and Jacob “ Ja ke ” Dalaya (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on November 14 , 202 5 ) 10.19 Employment Agreement, effective January 1, 2026 between Capital Bank, N.A. and Edward F. Barry (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on December 31, 2025) 10.20 Employment Agreement, dated February 6, 2026, between Capital Bank, N.A., Capital Bancorp, Inc. and Steven Poynot (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on February 10, 2026) 149 19.1 Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Company’s Annual Report on Form 10-K filed on March 17, 2025) 21.0 Subsidiaries of Capital Bancorp, Inc. (reference is made to “Item 1. Business” for the required information) 23.1 Consent of Elliott Davis, PLLC 31.1 Rule 13a-14(a) Certification of the Principal Executive Officer 31.2 Rule 13a-14(a) Certification of the Principal Financial Officer 32.1 Section 1350 Certification of Principal Executive Officer and Principal Financial Officer 97.1 Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K filed on March 15, 2024) 101 The following materials from the Annual Report on Form 10-K of Capital Bancorp, Inc. for the year ended December 31, 2025, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statement of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 150 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CAPITAL BANCORP, INC. Date: March 16, 2026 By: /s/ Edward F. Barry Name: Edward F. Barry Title: Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date By: /s/ Edward F. Barry Chief Executive Officer and Director (Principal Executive Officer) March 16, 2026 Edward F. Barry By: /s/ Jacob Dalaya Executive Vice President Chief Financial Officer March 16, 2026 Jacob Dalaya (Principal Financial Officer) By: /s/ Jerome R. Bailey Director March 16, 2026 Jerome R. Bailey By: /s/ Joshua Bernstein Director March 16, 2026 Joshua Bernstein By: /s/ C. Scott Brannan Director March 16, 2026 C. Scott Brannan By: /s/ Scot. R. Browning Director March 16, 2026 Scot R. Browning By: /s/ Mark Caplan Director March 16, 2026 Mark Caplan By: /s/ Randall J. Levitt Director March 16, 2026 Randall J. Levitt 151 By: /s/ Fred J. Lewis Director March 16, 2026 Fred J. Lewis By: /s/ Marc McConnell Director March 16, 2026 Marc McConnell By: /s/ Deborah Ratner Salzberg Director March 16, 2026 Deborah Ratner Salzberg By: /s/ Steven J. Schwartz Chairman of the Board of Directors March 16, 2026 Steven J. Schwartz By: /s/ Mary Ann Scully Director March 16, 2026 Mary Ann Scully By: /s/ James F. Whalen Director March 16, 2026 James F. Whalen 152