Capital Bancorp Inc
For the period ended Sep 30, 2025. Filed Nov 10, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 10, 2025
CBNK$42.39-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-08.
0001419536-25-000081
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-10.
0001419536-25-000111
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 217 previous paragraphs and 232 current paragraphs.
158 unchanged; 55 reworded; 18 added; 4 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 36 previous and 36 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
•the effects of federal government shutdowns, debt ceiling standoff, or other fiscal policy uncertaintly;
Current report
Net income for the three months ended September 30, 2025 was $15.1 million, compared to net income of $8.7 million for the same period in 2024, a 73.7% increase. During the quarter, the Bank issued a call of brokered time deposits acquired from the IFH transaction (“Call of Brokered Time Deposits”), resulting in the accelerated accretion of $4.6 million, or $3.5 million after-tax income. The Bank also incurred $0.6 million after-tax merger-related expenses. Net income, as adjusted (non-GAAP) to exclude the after-tax impact of $3.5 million for the Call of Brokered Time Deposits and$0.6 million of after-tax merger-related expenses, was $12.2 million for the three months ended September 30, 2025, compared to adjusted net income (non-GAAP) of $9.2 million for the same period in 2024. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”
Current report
Noninterest expense was $116.0 million for the nine months ended September 30, 2025, as compared to $88.7 million for the nine months ended September 30, 2024, an increase of $27.3 million, or 30.7%. The change included increases in salaries and employee benefits expenses of $14.7 million, or 37.3%, occupancy and equipment expenses of $3.5 million, other operating expenses of $2.2 million, merger-related expenses of $2.0 million, data processing expense of $1.8 million, loan processing expenses of $1.4 million, regulatory assessment expenses of $1.1 million and professional fees of $1.0 million offset by a decrease in advertising expenses of $0.5 million.
Current report
$676.0 million, or 46.5%, and the average cost of interest-bearing liabilities decreased to 2.40%, a 150 basis point decrease from 3.90%, primarily due to the Call of Brokered Time Deposits, purchase accounting accretion, and a shift in the rate environment.
Current report
Credit card fees of $4.5 million for the three months ended September 30, 2025 increased $0.5 million as compared to the three months ended September 30, 2024, primarily driven by other credit-card related fees associated with the unsecured product. For the nine months ended September 30, 2025, credit card fees of $12.5 million increased $0.3 million, primarily driven by other credit-card related fees associated with the unsecured product.
Current report
Noninterest expense was $116.0 million for the nine months ended September 30, 2025, as compared to $88.7 million for the nine months ended September 30, 2024, an increase of $27.3 million, or 30.7%. The change included increases in salaries and employee benefits expenses which increased by $14.7 million, or 37.3%, occupancy and equipment expenses of $3.5 million, other operating expenses of $2.2 million, merger-related expenses of $2.0 million, data processing expense of $1.8 million, loan processing expense of $1.4 million, regulatory assessment expenses of $1.1 million and professional fees of $1.0 million offset by a decrease in advertising expenses of $0.5 million.
Current report
At September 30, 2025, the nonperforming assets were $52.2 million, an increase of $22.0 million from December 31, 2024. Credit metrics were impacted by the two loan relationships previously mentioned, both of which were acquired as part of the IFH transactions. These two loan relationships accounted for a combined $15.9 million increase to the nonperforming assets and the remaining $6.1 million increase in nonperforming assets is consistent with the $182.5 million increase in total assets.
Current report
•One relationship across three loans accounted for an $8.8 million increase to nonperforming assets. One loan of $5.0 million was previously identified as a PCD loan, which had a specific ACL reserve of $3.8 million established from Day-1 purchase accounting of the IFH acquisition. The other two are USDA loans with an unguaranteed balance of $3.8 million secured by underlying assets, which have no ACL reserve recorded.
Current report
•The other relationship accounted for a $7.1 million increase to nonperforming assets. As previously mentioned, the loan was reassigned to a PCD loan as a measurement period adjustment to the Day-1 purchase accounting from the IFH acquisition. The measurement period adjustment for this loan resulted in recording a specific ACL reserve of $3.4 million during the quarter, or a 12 bps impact to the ACL Coverage Ratio.
Current report
Past Due Loans
Current report
The past due loans balance increased $46.9 million, from $66.8 million or 2.5% of gross loans as of December 31, 2024 to $113.7 million or 4.0% of gross loans as of September 30, 2025. Management assessed the change in volume and severity of past due loans and identified that $40.1 million of the $46.9 million increase was isolated to the following:
Current report
•As described above, there were two loan relationships acquired from IFH, which amounted to $15.9 million and were identified as nonperforming assets as of September 30, 2025;
Current report
•Five loans that amounted to a total of $15.3 million as of September 30, 2025 were paid and processed immediately after period-end, becoming current as of October 2025;
Current report
•Loans for solar projects totaling $5.3 million that were paid in early October 2025 becoming current; and
Current report
•Two loans where the $3.6 million past due balance reflects the full outstanding balance, of which 75% is guaranteed by the SBA.
Current report
The remaining $6.8 million increase in the past due loans balance corresponds with the $192.3 million increase in the total loan portfolio from December 31, 2024. When the $40.1 million of loans described above are excluded from the balances as of September 30, 2025, the adjusted past due loan balance of $73.6 million represents 2.6% of adjusted gross loans, which is consistent with the 2.5% ratio at December 31, 2024.
Current report
It was identified during the three and nine months ended September 30, 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 as a measurement period adjustment to the Day-1 purchase accounting.
Current report
At September 30, 2025, the ACL coverage ratio was 1.88%, up 3 bps from December 31, 2024. It was identified during the three and nine months ended September 30, 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 as a measurement period adjustment to the Day-1 purchase accounting.
Removed paragraphs (4)
Previous report
Net income for the six months ended June 30, 2025 was $27.1 million, compared to net income of $14.8 million for the same period in 2024, a 83.3% increase. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP, excluding merger-related expenses), was $29.1 million for the six months ended June 30, 2025.
Previous report
Noninterest expense was $77.6 million for the six months ended June 30, 2025, as compared to $59.0 million for the six months ended June 30, 2024, an increase of $18.6 million, or 31.6%. The change included increases in salaries and employee benefits expenses of $10.3 million, or 39.5%, occupancy and equipment expenses of $2.4 million, merger-related expenses of $1.9 million, other operating expenses of $1.2 million, data processing expense of $1.1 million, professional fees of $0.8 million and other operating losses of $0.1 million partially offset by a decrease in advertising expenses of $1.0 million.
Previous report
Credit card fees of $4.3 million for the three months ended June 30, 2025 remained consistent as compared to the three months ended June 30, 2024. For the six months ended June 30, 2025, credit card fees of $8.0 million declined $0.2 million as a result of lower interchange and other fee income recognized compared to the prior year.
Previous report
Noninterest expense was $77.6 million for the six months ended June 30, 2025, as compared to $59.0 million for the six months ended June 30, 2024, an increase of $18.6 million, or 31.6%. The change included increases in salaries and employee benefits expenses which increased by $10.3 million, or 39.5%, occupancy and equipment expenses of $2.4 million, merger-related expenses of $1.9 million, data processing expense of $1.1 million, loan processing expense of $0.9 million, regulatory assessment expenses of $0.9 million, professional fees of $0.8 million, other operating expenses of $1.2 million and operational losses of $0.1 million partially offset by a decrease in advertising expenses of $1.0 million.
Reworded paragraphs (55)
Previous wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended as a review of significant factors affecting the Company’s financial condition and results of operations for the periods indicated. This discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes and the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The results for the three and six months ended June 30, 2025 are not necessarily indicative of the results expected for the year ending December 31, 2025.
Current wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended as a review of significant factors affecting the Company’s financial condition and results of operations for the periods indicated. This discussion and analysis should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes and the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results expected for the year ending December 31, 2025.
Previous wording
Net interest income increased by $10.6 million, or 28.6%, to $47.6 million when comparing the three months ended June 30, 2025 to the three months ended June 30, 2024, primarily driven by organic growth and the acquisition of IFH.
Current wording
Net interest income increased by $13.7 million, or 35.6%, to $52.0 million when comparing the three months ended September 30, 2025 to the three months ended September 30, 2024, primarily driven by organic growth and the acquisition of IFH. During the quarter, the Bank identified USDA and SBA servicing income related to legacy IFH loans that was incorrectly recorded as interest income in the first and second quarter of 2025, while also being properly recorded as Fee Revenue for the Bank’s retained portion of the loans during those periods. As a result, the Bank recorded a one-time reversal of the $1.3 million of interest income (“Interest Income Adjustment”). Excluding this adjustment, net interest income increased $15.0 million compared to the three months ended September 30, 2024.
Previous wording
The provision for credit losses for the three months ended June 30, 2025 was $4.1 million, an increase of $0.7 million from the same period in 2024. Net charge-offs for the three months ended June 30, 2025 were $5.1 million, or 0.75% on an annualized basis of average portfolio loans, compared to $1.9 million, or 0.39% on an annualized basis of average portfolio loans for the same period in 2024. Of the $5.1 million in net charge-offs during the quarter. Commercial Bank net charge-offs totaled $3.1 million including $1.7 million related to owner-occupied commercial real estate loans and $1.1 million related to commercial and industrial loans and OpenSky™ net charge-offs totaled $2.1 million including $1.3 million related to unsecured credit cards and $0.8 million related to secured and partially secured credit cards.
Current wording
The provision for credit losses for the three months ended September 30, 2025 was $4.7 million, an increase of $0.9 million from the same period in 2024. Net charge-offs for the three months ended September 30, 2025 were $2.5 million, or 0.35% on an annualized basis of average portfolio loans, compared to $2.7 million, or 0.51% on an annualized basis of average portfolio loans for the same period in 2024. Commercial Bank net charge-offs totaled $0.3 million and $0.3 million related to commercial and industrial loans and OpenSky™ net charge-offs totaled $2.1 million including $1.3 million related to unsecured credit cards and $0.8 million related to secured and partially secured credit cards.
Previous wording
For the three months ended June 30, 2025, noninterest income of $13.1 million increased $6.2 million, or 90.2%, from the same period in 2024, primarily due to the contributions made by the businesses IFH brought to the merged entity. Credit card fees of $4.3 million was the same for the three months ended June 30, 2025 compared to the same period in the prior year while mortgage banking revenue of $1.8 million decreased $0.2 million primarily due to a decline in home loan sales.
Current wording
For the three months ended September 30, 2025, noninterest income of $11.1 million increased $4.4 million, or 66.8%, from the same period in 2024, primarily due to the contributions made by the businesses IFH brought to the merged entity. Credit card fees of $4.5 million for the three months ended September 30, 2025 increased $0.5 million compared to the same period in the prior year while mortgage banking revenue of $1.9 million remained consistent.
Previous wording
Noninterest expense was $39.6 million for the three months ended June 30, 2025, as compared to $29.5 million for the three months ended June 30, 2024. The change included increases in salaries and employee benefits expenses of $5.2 million, merger-related expenses of $1.3 million, occupancy and equipment expenses of $1.1 million, professional fees of $0.7 million, data processing expense of $0.7 million, other operating expense of $0.7 million, loan processing expenses of $0.5 million, regulatory assessment expenses of $0.5 million and operational losses of $0.2 million. Offset by a decrease in advertising expenses of $0.7 million.
Current wording
Noninterest expense was $38.4 million for the three months ended September 30, 2025, as compared to $29.7 million for the three months ended September 30, 2024. The change included increases in salaries and employee benefits expenses of $4.4 million, occupancy and equipment expenses of $1.1 million, other operating expense of $1.0 million, data processing expense of $0.7 million, loan processing expenses of $0.5 million, advertising expenses of $0.5 million, regulatory assessment expenses of $0.3 million, merger-related expenses of $0.2 million and professional fees of $0.2 million offset by a decrease in operational losses of $0.1 million.
Previous wording
Net income for the three months ended June 30, 2025 was $13.1 million, compared to net income of $8.2 million for the same period in 2024, a 60.1% increase. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP, excluding merger-related expenses), was $14.2 million for the three months ended June 30, 2025, compared to net income of $8.3 million for the same period in 2024. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”
Current wording
Net income for the nine months ended September 30, 2025 was $42.1 million, compared to net income of $23.4 million for the same period in 2024, a 79.8% increase. Net income, as adjusted to exclude the impact of merger-related expenses and the Call of Brokered Time Deposits (non-GAAP), was $41.3 million for the nine months ended September 30, 2025, compared to net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP) of $24.6 million for the same period in 2024, a 67.7% increase.
Previous wording
Net interest income increased $21.6 million, or 30.0%, to $93.7 million when comparing the six months ended June 30, 2025 to the six months ended June 30, 2024, primarily driven by organic growth and the acquisition of IFH.
Current wording
Net interest income increased $35.3 million, or 32.0%, to $145.7 million when comparing the nine months ended September 30, 2025 to the nine months ended September 30, 2024, primarily driven by organic growth and the acquisition of IFH.
Previous wording
The provision for credit losses for the six months ended June 30, 2025 was $6.3 million, an increase of $0.2 million from the same period in 2024. Net charge-offs for the six months ended June 30, 2025 were $7.5 million, or 0.57% on an annualized basis of average portfolio loans, compared to $3.9 million, or 0.40% on an annualized basis of average loans for the same period in 2024.
Current wording
The provision for credit losses for the nine months ended September 30, 2025 was $11.0 million, an increase of $1.1 million from the same period in 2024. Net charge-offs for the nine months ended September 30, 2025 were $10.0 million, or 0.49% on an annualized basis of average portfolio loans, compared to $6.6 million, or 0.44% on an annualized basis of average loans for the same period in 2024.
Previous wording
For the six months ended June 30, 2025, noninterest income was $25.7 million, an increase of $12.8 million, or 99.5%, from the same period in 2024, primarily due to the contributions made by the businesses IFH brought to the merged entity. Mortgage banking revenue of $3.6 million increased $0.1 million while credit card fees of $8.0 million declined $0.2 million from lower interchange and other fee income recognized compared to the prior year.
Current wording
For the nine months ended September 30, 2025, noninterest income was $36.7 million, an increase of $17.2 million, or 88.4%, from the same period in 2024, primarily due to the contributions made by the businesses IFH brought to the merged entity. Mortgage banking revenue of $5.5 million increased $0.2 million while credit card fees of $12.5 million declined $0.3 million from lower interchange and other fee income recognized compared to the prior year.
Previous wording
The table below presents the average balances and weighted average rates of the major categories of the Company’s assets, liabilities and stockholders’ equity for the three and six months ended June 30, 2025 and 2024. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived by utilizing average daily balances for the time periods shown. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yield/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.
Current wording
The table below presents the average balances and weighted average rates of the major categories of the Company’s assets, liabilities and stockholders’ equity for the three and nine months ended September 30, 2025 and 2024. Weighted average yields are derived by dividing annualized income by the average balance of the related assets, and weighted average rates are derived by dividing annualized expense by the average balance of the related liabilities, for the periods shown. Average outstanding balances are derived by utilizing average daily balances for the time periods shown. The weighted average yields and rates include amortization of fees, costs, premiums and discounts, which are considered adjustments to yield/rates. Weighted average yields on tax-exempt securities are not calculated on a fully taxable equivalent basis.
Previous wording
(3)For the three months ended June 30, 2025 and 2024, collectively, Commercial Bank Loan Yield was 7.14% and 7.04%, respectively.
Current wording
(3)For the three months ended September 30, 2025 and 2024, collectively, Commercial Bank Loan Yield was 6.74% and 7.15%, respectively.
Previous wording
(4)For the three months ended June 30, 2025 and 2024, collectively, Commercial Bank Net Interest Margin was 4.36% and 3.90%, respectively.
Current wording
(4)For the three months ended September 30, 2025 and 2024, collectively, Commercial Bank Net Interest Margin was 4.64% and 4.01%, respectively.
Previous wording
The net interest margin decreased 42 basis points to 6.04% for the three months ended June 30, 2025 from the same period in 2024 due to the acquisition of commercial loans from IFH, diluting the impact from OpenSky TM. Commercial Bank net interest margin (non-GAAP) increased to 4.36% for the three months ended June 30, 2025, compared to 3.90% for the same period in 2024. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”
Current wording
The net interest margin decreased 5 basis points to 6.36% for the three months ended September 30, 2025 from the same period in 2024 due to the acquisition of commercial loans from IFH, diluting the impact from OpenSky TM. Commercial Bank net interest margin (non-GAAP) increased to 4.64% for the three months ended September 30, 2025, compared to 4.01% for the same period in 2024. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”
Previous wording
For the three months ended June 30, 2025, average interest earning assets increased $856.4 million, or 37.1%, to $3.2 billion as compared to the same period in 2024, and the average yield on interest earning assets decreased to 8.19%, a 63 basis point decrease from 8.82%. Compared to the same period in the prior year, average interest-bearing liabilities increased $658.0 million, or 46.6%, and the average cost of interest-bearing liabilities decreased to 3.28%, a 58 basis point decrease from 3.86%.
Current wording
For the three months ended September 30, 2025, average interest earning assets increased $865.7 million, or 36.4%, to $3.2 billion as compared to the same period in 2024, but the average yield on interest earning assets decreased to 7.93%, a 86 basis point decrease from 8.79% primarily due to the acquisition of commercial loans diluting the positive impact from OpenSky TMas well as a shift in the rate environment. Compared to the same period in the prior year, average interest-bearing liabilities increased
Previous wording
(3)For the six months ended June 30, 2025 and 2024, collectively, Commercial Bank Loan Yield was 7.14% and 7.00%, respectively.
Current wording
(3)For the nine months ended September 30, 2025 and 2024, collectively, Commercial Bank Loan Yield was 7.01% and 7.05%, respectively.
Previous wording
(4)For the six months ended June 30, 2025 and 2024, collectively, Commercial Bank Net Interest Margin was 4.33% and 3.84%, respectively.
Current wording
(4)For the nine months ended September 30, 2025 and 2024, collectively, Commercial Bank Net Interest Margin was 4.45% and 4.13%, respectively.
Previous wording
The net interest margin decreased 31 basis points to 6.04% for the six months ended June 30, 2025 from the same period in 2024. Commercial Bank net interest margin (non-GAAP) increased to 4.33% for the six months ended June 30, 2025, compared to 3.84% for the same period in 2024. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”
Current wording
The net interest margin decreased 22 basis points to 6.15% for the nine months ended September 30, 2025 from the same period in 2024. Commercial Bank net interest margin (non-GAAP) increased to 4.45% for the nine months ended September 30, 2025, compared to 4.13% for the same period in 2024. For more information on the computation of non-GAAP financial measures, see “Non-GAAP Financial Measures and Reconciliations.”
Previous wording
For the six months ended June 30, 2025, average interest earning assets increased $845.0 million, or 37.0%, to $3.1 billion as compared to the same period in 2024, and the average yield on interest earning assets decreased 51 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $649.1 million, or 46.5%, while the average cost of interest-bearing liabilities decreased 56 basis points to 3.32% from 3.88%.
Current wording
For the nine months ended September 30, 2025, average interest earning assets increased $852.1 million, or 36.8%, to $3.2 billion as compared to the same period in 2024, but the average yield on interest earning assets decreased 63 basis points, primarily due to the acquisition of commercial loans diluting the positive impact from OpenSky TMas well as a shift in the rate environment. Compared to the same period in the prior year, average interest-bearing liabilities increased $658.2 million, or 46.5%, while the average cost of interest-bearing liabilities decreased 89 basis points to 3.00% from 3.89% primarily due to the Call of Brokered Time Deposits, purchase accounting accretion, and a shift in the rate environment.
Previous wording
When comparing the three months ended June 30, 2025 to the three months ended June 30, 2024, the largest positive impact to total interest income was the growth in interest earning assets, from organic growth and the IFH acquisition. Growth (change due to volume) in the loan portfolio, excluding credit card loans, contributed $13.1 million to the increase in interest income. The variance in interest expense year over year was primarily impacted by organic growth in interest-bearing liabilities, and the IFH acquisition. Growth in interest bearing liabilities contributed $5.8 million to increased interest expense, while decreased rates contributed a reduction of $2.4 million of interest expense.
Current wording
When comparing the three months ended September 30, 2025 to the three months ended September 30, 2024, the largest positive impact to total interest income was the growth in interest earning assets, from organic growth and the IFH acquisition. Growth (change due to volume) in the loan portfolio, excluding credit card loans, contributed $12.5 million to the increase in interest income. The $1.4 million decrease in interest expense year over year was primarily driven by a $5.3 million benefit from net purchase accounting accretion, which included the $4.6 million benefit from the Call of Brokered Time Deposits, partly offset by organic growth in interest-bearing liabilities, and the IFH acquisition. Growth in interest bearing liabilities contributed $4.1 million to increased interest expense, while decreased rates contributed a reduction of $5.5 million of interest expense.
Previous wording
When comparing the six months ended June 30, 2025 to the same period in 2024, the largest positive impact to total interest income was the growth in interest earning assets, from organic growth and the IFH acquisition. Growth (change due to volume) in the loan portfolio, excluding credit card loans, contributed $25.2 million to the increase in interest income. The variance in interest expense year over year was primarily impacted by organic growth in interest-bearing liabilities, and the IFH acquisition. Growth in interest bearing liabilities contributed $11.5 million to increased interest expense, while decreased rates contributed a reduction of $4.6 million of interest expense.
Current wording
When comparing the nine months ended September 30, 2025 to the same period in 2024, the largest positive impact to total interest income was the growth in interest earning assets, from organic growth and the IFH acquisition. Growth (change due to volume) in the loan portfolio, excluding credit card loans, contributed $37.5 million to the increase in interest income. The $5.3 million increase in interest expense year over year was primarily impacted by organic growth in interest-bearing liabilities, and the IFH acquisition. Growth in interest bearing liabilities contributed $15.4 million to increased interest expense, while decreased rates contributed a reduction of $10.0 million of interest expense.
Previous wording
For the three months ended June 30, 2025, the provision for credit losses was $4.1 million, an increase of $0.7 million from the same period in 2024, primarily driven by $0.6 million higher provision from OpenSky™ due to higher volumes in the secured and unsecured portfolio. Net charge-offs for the three months ended June 30, 2025 were $5.1 million, or 0.75% on an annualized basis of average portfolio loans, compared to $1.9 million, or 0.39% on an annualized basis of average portfolio loans for the same period in 2024. Of the $5.1 million in net charge-offs during the quarter, Commercial Bank net charge-offs totaled $3.0 million including $1.7 million related to owner-occupied commercial real estate loans and $1.1 million related to commercial and industrial loans and OpenSky™ net charge-offs totaled $2.1 million including $1.3 million related to unsecured credit cards and $0.8 million related to secured and partially secured credit cards.
Current wording
For the three months ended September 30, 2025, the provision for credit losses was $4.7 million, an increase of $0.9 million from the same period in 2024, primarily driven by $0.5 million higher provision from OpenSky™ due to higher volumes in the secured and unsecured portfolio. Net charge-offs for the three months ended September 30, 2025 were $2.5 million, or 0.35% on an annualized basis of average portfolio loans, compared to $2.7 million, or 0.51% on an annualized basis of average portfolio loans for the same period in 2024. Of the $2.5 million in net charge-offs during the quarter, Commercial Bank net charge-offs totaled $0.3 million, $0.3 million related to commercial and industrial loans, and OpenSky™ net charge-offs totaled $2.1 million including $1.3 million related to unsecured credit cards and $0.8 million related to secured and partially secured credit cards.
Previous wording
For the six months ended June 30, 2025, the provision for credit losses was $6.3 million, an increase of $0.2 million from the same period in 2024, attributable primarily to portfolio loan growth and specific reserves of $6.5 million for collateral dependent loans at June 30, 2025, as compared to $1.1 million at June 30, 2024. Net charge-offs for the six months ended June 30, 2025 were $7.5 million, or 0.57% on an annualized basis of average portfolio loans, compared to $3.9 million, or 0.40% on an annualized basis of average portfolio loans, for the same period in 2024. The $7.5 million in net charge-offs during the six months ended June 30, 2025 was comprised primarily of credit card portfolio net charge-offs, with $1.7 million related to secured and partially secured credit cards while $2.7 million was related to unsecured credit cards. Further, $1.7 million of net charge-offs were related to owner-occupied commercial real estate loans, $0.3 million were related to construction loans and $1.2 million were related to commercial and industrial loans.
Current wording
For the nine months ended September 30, 2025, the provision for credit losses was $11.0 million, an increase of $1.1 million from the same period in 2024, attributable primarily to portfolio loan growth and specific reserves increased to $10.0 million for collateral dependent loans at September 30, 2025 from $1.0 million at September 30, 2024, mainly due to the acquisition of IFH. Net charge-offs for the nine months ended September 30, 2025 were $10.0 million, or 0.49% on an annualized basis of average portfolio loans, compared to $6.6 million, or 0.44% on an annualized basis of average portfolio loans, for the same period in 2024. The $10.0 million in net charge-offs during the nine months ended September 30, 2025 was comprised primarily of credit card portfolio net charge-offs, with $2.5 million related to secured and partially secured credit cards while $4.0 million was related to unsecured credit cards. Further, $1.7 million of net charge-offs were related to owner-occupied commercial real estate loans, $0.3 million were related to construction loans and $1.5 million were related to commercial and industrial loans. One PCD loan was attributable to $1.5 million of the $1.7 million of net charge-offs for owner-occupied commercial real estate loans. A specific reserve of $2.8 million was originally recorded for the loan, which was then sold to a third party allowing for $1.3 million of the reserve to be released and the remaining $1.5 million to be charged off. The $1.5 million net charge-offs for commercial and industrial loans were primarily attributable to the unguaranteed portions of SBA loans.
Previous wording
The ACL as a percent of portfolio loans was 1.73% at June 30, 2025, as compared to 1.85% at December 31, 2024. The maintenance of a high-quality loan portfolio, with an adequate allowance for expected credit losses, will continue to be a primary objective for the Company. See additional discussion regarding the Company’s ACL and reserve for unfunded commitments credit exposures at June 30, 2025 in “Financial Condition - Allowance for Credit Losses.”
Current wording
The ACL as a percent of portfolio loans was 1.88% at September 30, 2025, as compared to 1.85% at December 31, 2024. The maintenance of a high-quality loan portfolio, with an adequate allowance for expected credit losses, will continue to be a primary objective for the Company. See additional discussion regarding the Company’s ACL and reserve for unfunded commitments credit exposures at September 30, 2025 in “Financial Condition - Allowance for Credit Losses.”
Previous wording
For the three months ended June 30, 2025, noninterest income of $13.1 million increased $6.2 million, or 90.2%, from the same period in 2024 primarily due to contributions from the IFH acquisition. Government loan servicing revenue (Windsor Advantage™) totaled $3.6 million net of intercompany charges and government lending revenue (gain on sale) totaled $3.1 million.
Current wording
For the three months ended September 30, 2025, noninterest income of $11.1 million increased $4.4 million, or 66.8%, from the same period in 2024 primarily due to contributions from the IFH acquisition. Government loan servicing revenue (Windsor Advantage™) totaled $4.3 million net of intercompany charges and there was no government lending revenue (gain on sale).
Previous wording
For the six months ended June 30, 2025, noninterest income of $25.7 million increased $12.8 million, or 99.5%, from the same period in 2024 primarily due to contributions from the IFH acquisition. Government loan servicing revenue (Windsor Advantage™) totaled $7.2 million net of intercompany charges, government lending revenue (gain on sale) totaled $4.2 million.
Current wording
For the nine months ended September 30, 2025, noninterest income of $36.7 million increased $17.2 million, or 88.4%, from the same period in 2024 primarily due to contributions from the IFH acquisition. Government loan servicing revenue (Windsor Advantage™) totaled $11.5 million net of intercompany charges and government lending revenue (gain on sale) totaled $4.2 million.
Previous wording
Originations of loans held for sale within the Bank’s CBHL division decreased $2.0 million to $80.3 million in the second quarter of 2025 when compared to $82.4 million in the second quarter of 2024. The gain on sale margin increased to 2.68% for the three months ended June 30, 2025 from 2.61% for the three months ended June 30, 2024.
Current wording
Originations of loans held for sale within the Bank’s CBHL division increased $6.0 million to $80.7 million in the third quarter of 2025 when compared to $74.7 million in the third quarter of 2024. The gain on sale margin increased to 2.56% for the three months ended September 30, 2025 from 2.44% for the three months ended September 30, 2024.
Previous wording
Origination volumes increased $11.7 million to $146.1 million in the six months ended June 30, 2025 compared to the prior year. The gain on sale margin increased to 2.87% for the six months ended June 30, 2025 from 2.78% for the six months ended June 30, 2024.
Current wording
Origination volumes increased $17.7 million to $226.8 million in the nine months ended September 30, 2025 compared to the prior year. The gain on sale margin increased to 2.75% for the nine months ended September 30, 2025 from 2.65% for the nine months ended September 30, 2024.
Previous wording
Mortgage banking revenue of $1.8 million decreased $0.2 million for the three months ended June 30, 2025 due to a decline in salable originations as compared to the prior year. Mortgage banking revenue of $3.6 million for the six months ended June 30, 2025 increased $0.1 million as home loan sales remained stable compared to the prior year.
Current wording
Mortgage banking revenue of $1.9 million remained consistent as compared to the three months ended September 30, 2025. Mortgage banking revenue of $5.5 million for the nine months ended September 30, 2025 increased $0.2 million as home loan sales remained stable compared to the prior year.
Previous wording
Mortgage loans sold are subject to repurchase in circumstances where documentation is deficient or the underlying loan becomes delinquent or pays off within a specified period following loan funding and sale. The Bank has established a reserve under GAAP for possible repurchases. The reserve was $2.3 million and $2.3 million at June 30, 2025 and December 31, 2024, respectively. The Bank did not repurchase any loans during the six months ended June 30, 2025. The Bank repurchased one loan totaling $0.3 million during the six months ended June 30, 2024. The Bank does not originate “sub-prime” mortgage loans and has no exposure to this market segment.
Current wording
Mortgage loans sold are subject to repurchase in circumstances where documentation is deficient or the underlying loan becomes delinquent or pays off within a specified period following loan funding and sale. The Bank has established a reserve under GAAP for possible repurchases. The reserve was $2.3 million at September 30, 2025 and December 31, 2024. The Bank did not repurchase any loans during the nine months ended September 30, 2025. The Bank repurchased one loan totaling $0.3 million during the nine months ended September 30, 2024. The Bank does not originate “sub-prime” mortgage loans and has no exposure to this market segment.
Previous wording
Noninterest expense was $39.6 million for the three months ended June 30, 2025, as compared to $29.5 million for the three months ended June 30, 2024, an increase of $10.1 million. The change included increases in salaries and employee benefits expenses of $5.2 million, merger-related expenses of $1.3 million, occupancy and equipment expenses of $1.1 million, professional fees of $0.7 million, data processing expense of $0.7 million, other operating expenses of $0.7 million, loan processing expenses of $0.5 million, regulatory assessment expenses of $0.5 million and operational losses of $0.2 million. Offset by a decrease in advertising expenses of $0.7 million.
Current wording
Noninterest expense was $38.4 million for the three months ended September 30, 2025, as compared to $29.7 million for the three months ended September 30, 2024, an increase of $8.6 million, primarily driven by the acquisition of IFH. The change included increases in salaries and employee benefits expenses of $4.4 million, occupancy and equipment expenses of $1.1 million, other operating expenses of $1.0 million, data processing expense of $0.7 million, loan processing expenses of $0.5 million, advertising expenses of $0.5 million, regulatory assessment expenses of $0.3 million, merger-related expenses of $0.2 million and professional fees of $0.2 million offset by a decrease in operational losses of $0.1 million.
Previous wording
Income tax expense was $4.0 million and $8.3 million for the three and six months ended June 30, 2025, respectively, compared to $2.7 million and $4.8 million for the same periods, respectively, in 2024. Our effective tax rate decreased from 25.0% for the three months ended June 30, 2024 to 23.2% for the three months ended June 30, 2025, and from 24.5% for the six months ended June 30, 2024 to 23.5% for the six months ended June 30, 2025 due to a reduction in non-deductible merger and equity compensation costs, along with an increase in benefits from tax optimization strategies, including investments that are eligible for Low Income Housing Tax Credits.
Current wording
Income tax expense was $4.8 million and $13.1 million for the three and nine months ended September 30, 2025, respectively, compared to $2.8 million and $7.6 million for the same periods, respectively, in 2024. Our effective tax rate decreased from 24.6% for the three months ended September 30, 2024 to 24.2% for the three months ended September 30, 2025, and from 24.5% for the nine months ended September 30, 2024 to 23.8% for the nine months ended September 30, 2025 due to a reduction in non-deductible merger and equity compensation costs, along with an increase in investments that are eligible for Low Income Housing Tax Credits.
Previous wording
Total assets at June 30, 2025 increased $181.8 million from the balance at December 31, 2024. Net portfolio loans, which exclude mortgage loans held for sale, totaled $2.7 billion as of June 30, 2025, an increase of $109.6 million, or 4.2%, from $2.6 billion at December 31, 2024. Mortgage loans held for sale decreased $0.3 million, or 1.6%, when comparing the period end balances at June 30, 2025 to December 31, 2024.
Current wording
Total assets at September 30, 2025 increased $182.5 million from the balance at December 31, 2024. Net portfolio loans, which exclude mortgage loans held for sale, totaled $2.8 billion as of September 30, 2025, an increase of $191.8 million, or 7.3%, from $2.6 billion at December 31, 2024. Mortgage loans held for sale decreased $1.6 million, or 7.5%, when comparing the period end balances at September 30, 2025 to December 31, 2024.
Previous wording
Our primary source of income is derived from interest earned on loans. Our portfolio loans consist of loans secured by real estate as well as commercial business loans, credit card loans secured by corresponding deposits at the Bank and, to a limited extent, other consumer loans. Our loan customers primarily consist of small- to medium-sized businesses, professionals, real estate investors, small residential builders and individuals. Our owner-occupied commercial real estate loans, residential construction loans and commercial business and investment loans provide us with higher risk-adjusted returns, shorter maturities and more sensitivity to interest rate fluctuations, and are complemented by our relatively lower risk residential real estate loans to individuals. Our credit card portfolio supplements our traditional lending products with enhanced yields. Our traditional commercial real estate and commercial and industrial lending are principally directed to our market area consisting of the Washington, D.C. and Baltimore, Maryland metropolitan areas.
Current wording
Our primary source of income is derived from interest earned on loans. Our portfolio loans consist of loans secured by real estate as well as commercial business loans, credit card loans and, to a limited extent, other consumer loans. Our loan customers primarily consist of small- to medium-sized businesses, professionals, real estate investors, small residential builders and individuals. Our owner-occupied commercial real estate loans, residential construction loans and commercial business and investment loans provide us with higher risk-adjusted returns, shorter maturities and more sensitivity to interest rate fluctuations, and are complemented by our relatively lower risk residential real estate loans to individuals. Our credit card portfolio supplements our traditional lending products with enhanced yields. Our traditional commercial real estate and commercial and industrial lending are principally directed to our market area consisting of the Washington, D.C. and Baltimore, Maryland metropolitan areas.
Previous wording
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 totaling $2.9 million as of June 30, 2025 and $3.1 million as of December 31, 2024, are included in the commercial real estate loan category. Business equity lines of credit are commercial purpose lines of credit primarily secured by the business owners residential properties. Lender finance loans totaling $32.5 million as of June 30, 2025 and $28.6 million as of December 31, 2024, 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. Commercial real estate loan terms are generally extended for 10 years or less and amortize generally over 25 years or less. The interest rates on commercial real estate loans generally have initial fixed rate terms that adjust typically at five years. Origination fees are routinely charged for services. Personal guarantees from the principal owners of the business are generally required, supported by a review of the principal owners’ personal financial statements and global debt service obligations. 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.
Current wording
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 totaling $2.9 million as of September 30, 2025 and $3.1 million as of December 31, 2024, are included in the commercial real estate loan category. Business equity lines of credit are commercial purpose lines of credit primarily secured by the business owners residential properties. Lender finance loans totaling $31.9 million as of September 30, 2025 and $28.6 million as of December 31, 2024, 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. Commercial real estate loan terms are generally extended for 10 years or less and amortize generally over 25 years or less. The interest rates on commercial real estate loans generally have initial fixed rate terms that adjust typically at five years. Origination fees are routinely charged for services. Personal guarantees from the principal owners of the business are generally required, supported by a review of the principal owners’ personal financial statements and global debt service obligations. 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.
Previous wording
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. Approximately $86.4 million and $87.2 million in secured and partially secured credit card balances were protected by savings deposits held by the Company as of June 30, 2025 and December 31, 2024, respectively. Unsecured balances were $46.4 million and $42.4 million, respectively, at the same dates.
Current wording
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. Approximately $84.7 million and $87.2 million in secured and partially secured credit card balances were protected by savings deposits held by the Company as of September 30, 2025 and December 31, 2024, respectively. Unsecured balances were $53.6 million and $42.4 million, respectively, at the same dates.
Previous wording
Purchased Credit Deterioration. Acquired loans, including those acquired in a business combination, are evaluated to determine if they have experienced more-than-insignificant deterioration in credit quality since origination. When the condition exists, these loans are referred to as purchased credit deteriorated (“PCD”). An allowance is recognized for a PCD loan by adding it to the purchase price or fair value in a business combination. There is no provision for credit losses recognized upon acquisition of a PCD loan since the initial allowance is established through purchase accounting. After initial recognition, the accounting for a PCD loan follows the credit loss model that applies to the loan category. Purchased financial loans that do not have a more-than-significant deterioration in credit quality since origination are accounted for in a manner consistent with originated loans. An allowance for credit losses is recorded with a corresponding charge to provision for credit losses. Subsequent to the acquisition date, the methods utilized to estimate the required ACL for these loans is similar to the method used for organically originated loans. There were no loans purchased with credit deterioration during the three and six months ended June 30, 2025 or the three and six months ended June 30, 2024.
Current wording
Purchased Credit Deterioration. Acquired loans, including those acquired in a business combination, are evaluated to determine if they have experienced more-than-insignificant deterioration in credit quality since origination. When the condition exists, these loans are referred to as purchased credit deteriorated (“PCD”). An allowance is recognized for a PCD loan by adding it to the purchase price or fair value in a business combination. There is no provision for credit losses recognized upon acquisition of a PCD loan since the initial allowance is established through purchase accounting. After initial recognition, the accounting for a PCD loan follows the credit loss model that applies to the loan category. Purchased financial loans that do not have a more-than-significant deterioration in credit quality since origination are accounted for in a manner consistent with originated loans. An allowance for credit losses is recorded with a corresponding charge to provision for credit losses. Subsequent to the acquisition date, the methods utilized to estimate the required ACL for these loans is similar to the method used for organically originated loans. It was identified during the three and nine months ended September 30, 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 as a measurement period adjustment to the Day-1 purchase accounting.
Previous wording
(2)Other non-owner-occupied commercial real estate loans include a land loan of $12.5 million, skilled nursing loans of $9.7 million, special purpose loans of $9.3 million, and other loans of $8.2 million.
Current wording
(2)Other non-owner-occupied commercial real estate loans include a land loan of 13.7 million, skilled nursing loans of $9.7 million, special purpose loans of $8.7 million, and other loans of $8.2 million.
Previous wording
(3)Other owner-occupied commercial real estate loans include special purpose loans of $86.7 million, skilled nursing loans of $59.6 million, and other loans of $51.9 million.
Current wording
(3)Other owner-occupied commercial real estate loans include special purpose loans of $90.2 million, skilled nursing loans of $61.8 million, and other loans of $50.6 million.
Previous wording
At June 30, 2025, the recorded investment in individually assessed loans was $39.8 million, requiring a specific reserve of $6.5 million. At December 31, 2024, the recorded investment in individually assessed loans was $34.9 million, requiring a specific reserve of $9.3 million. The $34.9 million of individually assessed loans at December 31, 2024 included a single multi-unit residential real estate loan secured by four properties with a balance of $7.6 million at December 31, 2024.
Current wording
At September 30, 2025, the recorded investment in individually assessed loans was $44.1 million, requiring a specific reserve of $10.0 million. The $44.1 million of individually assessed loans at September 30, 2025 included two loan relationships totaling $15.9 million, with a combined reserve of $7.2 million as of September 30, 2025. At December 31, 2024, the recorded investment in individually assessed loans was $34.9 million, requiring a specific reserve of $9.3 million. The $34.9 million of individually assessed loans at December 31, 2024 included a single multi-unit residential real estate loan secured by four properties with a balance of $7.6 million at December 31, 2024.
Previous wording
Total charge-offs for the six months ended June 30, 2025 and for the same period in 2024 were primarily comprised of credit card charge-offs resulting both from the aging of the portfolio and the shift from an almost exclusively secured card portfolio to a portfolio that also includes partially secured and unsecured exposures. The following tables present a summary of the net charge-offs (recovery) of loans as a percentage of average loans for the periods indicated:
Current wording
Total charge-offs for the nine months ended September 30, 2025 and for the same period in 2024 were primarily comprised of credit card charge-offs resulting both from the aging of the portfolio and the shift from an almost exclusively secured card portfolio to a portfolio that also includes partially secured and unsecured exposures. The following tables present a summary of the net charge-offs (recovery) of loans as a percentage of average loans for the periods indicated:
Showing the first 40 of 55 pairs. Open the source sections for the rest.
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Current report — wording carried from elsewhere
Bank’s Bank Term Funding Program (“BTFP”). As of March 31, 2024, participation in the BTFP had concluded and the Company had no outstanding balances under the BTFP at September 30, 2024.