CBNK Financial Analysis

Analysis Date: 1/30/2025

Business Model

Capital Bank generates revenue through multiple business lines including commercial banking, OpenSky secured credit cards, mortgage banking, and government guaranteed lending services through Windsor Advantage

Revenue Sources

• Commercial Banking - Net interest income and fees from commercial loans and deposits
• OpenSky - Interest and fees from secured credit card program
• Capital Bank Home Loans - Mortgage origination and sales revenue
• Windsor Advantage - Government loan servicing and processing fees

Revenue Distribution by Channel

• Commercial Banking: $32.7M revenue in Q4 2024 (~55% of total)
• OpenSky: $19.2M revenue in Q4 2024 (~32% of total)
• Windsor Advantage: $4.6M revenue in Q4 2024 (~8% of total)

Income Statement Analysis

• Net interest income increased $6.0M or 15.6% from Q3 due to loan growth including IFH acquisition
• Noninterest income increased $5.3M driven by Windsor Advantage acquisition but offset by $2.6M IFH investment writedown
• Noninterest expense increased $7.8M primarily from IFH acquisition including $2.6M merger costs

Balance Sheet Analysis

• Total assets increased $646.1M or 25.2% from Q3 2024 primarily due to IFH acquisition
• Portfolio loans increased $522.6M including $373.5M from IFH acquisition and $149.1M organic growth
• Deposits increased $575.7M including $459.0M from IFH and $116.7M organic growth

Cash Flow Analysis

• Cash and cash equivalents increased $48.6M from Q3 2024 to $205.3M

Capital Allocation

The company maintains strong capital ratios with CET1 ratio of 13.74%. Declared quarterly cash dividend of $0.10 per share. Focus on organic growth and strategic M&A as evidenced by IFH acquisition.

Management Commentary

Successfully closed IFH acquisition and focused on merger integration and complementary business opportunities

Strong commercial bank performance with record loan growth and stable core NIM

Outstanding organic growth expected to drive earnings growth in 2025 and beyond

IFH acquisition provides new loan servicing/processing business line and expanded government lending platform

Overall Sentiment: Positive with focus on successful IFH integration and continued organic growth momentum

Recommendation

Rating: Buy

Reason for Rating: Strong organic growth, successful IFH integration, and diversified business model support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/30/2025, 10:15:34 AM