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Item 9A. Controls and Procedures

2024-03-15 compared with 2023-03-15 · 35 added, 24 removed, 104 unchanged (36% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

The Company’s management, including our Principal Executive Officer and Principal Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act as of the end of the period covered by 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 defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) 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 effective 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 disclosure.

1 unchanged sentence

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 generally accepted accounting principles.

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.

4 unchanged sentences

Based on this assessment, management believes that, as of December 31, 2023, the Company maintained effective internal control over financial reporting based on those criteria.

Elliott Davis, PLLC, the independent registered public accounting firm, audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K.

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, 2023.

Their report is included in Part II, Item 8.

Financial Statements and Supplementary Data under the heading “Report of Independent Registered Public Accounting Firm.” The Annual Report on Form 10-K does not include an attestation report on the Company’s internal control over financial reporting from the Company’s independent registered public accounting firm due to the transition period established by the SEC for an Emerging Growth Company.

Financial Statements and Supplementary Data under the heading “Report of Independent Registered Public Accounting Firm.”

Changes in Internal Control over Financial Reporting

There has been no change 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 2023 to which this report relates that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

During March 2023, management designed additional internal controls around the review of the allowance for loan loss, created an Allowance for Loan Loss governance committee, and moved Loan Review under the management of the Bank’s Chief Risk Officer.

During the first quarter of 2024, additional controls were put into place or enhanced to improve the effectiveness of the Company’s internal controls over the allowance for credit losses.

These include process controls around model validation and allowance output review.

OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the quarter ended December 31, 2023, 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 any non-Rule 10b5-1 trading arrangement as defined in 17 CFR § 229.408(c).

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

3 unchanged sentences

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.

EXECUTIVE COMPENSATION

9 unchanged sentences

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1), (2) and (c) The following financial statements are incorporated by reference from Item 8 hereof:

(1) The following financial statements are incorporated by reference from Item 8 hereof:

Report of Independent Registered Public Accounting Firm.

6 unchanged sentences

Notes to Consolidated Financial Statements.

(a)(3) and (b) Exhibits required to be filed by Item 601 of Regulation S-K.

(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.

FORM 10-K SUMMARY

INDEX TO EXHIBITS

Exhibit Number Description

3.1 Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Form S-1 filed on August 31, 2018)

3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Form S-1 filed on August 31, 2018)

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 , 20 2 3 ) `

3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed on May 23 , 20 23 )

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)

16 unchanged sentences

10.8 Form of 2017 Stock and Incentive Compensation Plan Restricted Stock Unit Award Agreement for Executive Officers

10.9 Employment Agreement, effective January 1, 2019, by and among Capital Bancorp, Inc., Capital Bank, N.A.

and Edward F.

Barry (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on January 10, 2019)

10.10 Amendment to Employment Agreement, effective as of June 15, 2021, by and among Capital Bancorp, Inc., Capital Bank, N.A.

and Edward F.

Barry (incorporated by reference to Exhibit 99.1 to the Company’s Form 8-K filed on June 11, 2021)

10.9 Employment Agreement dated January 1, 2022 between Capital Bank, N.A.

Browning (incorporated by reference to Exhibit 10.1 to the Company’s 8-K filed on January 6.

Browning (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on January 6.

10.10 Amendment to Employment Agreement, dated April 13, 2023, between Capital Bank, N.A.

10.11 Employment Contract, dated April 30, 2018, by and among Capital Bank, N.A.

4 unchanged sentences

Barry (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on July 1, 2022 )

10.15 Employment Agreement, effective Octo ber 11, 2022 between Capital Bank, N.A.

10.14 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 )

10.15 Amendment to Employment Agreement, dated April 13, 2023, between Capital Bank, N.A.

and Steven Poynot

10.16 Employment Agreement effective June 26, 2023 between Capital Bank, N.A.

and Jennings "Jay" Walker (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K file d on June 13, 2023 )

10.17 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)

21.0 Subsidiaries of Capital Bancorp, Inc.

4 unchanged sentences

31.2 Rule 13a-14(a) Certification of the Principal Financial Officer

32.1 Section 1350 Certification of Principal Exec utive Officer and Principal Financial Officer

32.1 Section 1350 Certification of Principal Executive Officer and Principal Financial Officer

97.1 Compensation Recovery Policy

101 The following materials from the Annual Report on Form 10-K of Capital Bancorp, Inc.

for the year ended December 31, 2023, 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 Unaudited Consolidated Financial Statements.

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

FORM 10-K SUMMARY

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.

9 unchanged sentences

(Principal Executive Officer) March 15, 2024

/s/ Connie Egan

Senior Vice President

Chief Accounting Officer March 15, 2023

(Principal Financial and Accounting Officer)

/s/ Jay Walker

Executive Vice President

Chief Financial Officer March 15, 2024

(Principal Financial Officer)

/s/ Jerome R.

9 unchanged sentences

Director March 15, 2024

/s/ Mary Ann Scully

Director March 15, 2024

Mary Ann Scully

/s/ Deborah Ratner Salzberg

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures