Second Quarter 2024 Results

• Net Income of $8.2 million, or $0.59 per share
  • Net Income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)⁽¹⁾, of $8.3 million, or $0.59 per share
• Net Interest Income increased $2.1 million, or 5.9%, from 1Q 2024
• Net Interest Margin ("NIM") increased to 6.46% as compared to 6.24% (1Q 2024)
  • Core NIM, as adjusted to exclude the impact of credit card loans (non-GAAP)⁽¹⁾ increased to 4.00% as compared to 3.85% (1Q 2024)
• Loan Growth of $57.1 million, or 11.7% annualized for 2Q 2024
• Deposit Growth of $94.7 million, or 19.0% annualized for 2Q 2024; Noninterest bearing deposits increased $18.8 million, or 11.3% annualized from 1Q 2024
• Cash dividend of $0.10 per share declared, or 25% higher than the prior quarter

ROCKVILLE, Md., July 22, 2024 (GLOBE NEWSWIRE) -- Capital Bancorp, Inc. (the "Company") (NASDAQ: CBNK), the holding company for Capital Bank, N.A. (the "Bank"), today reported net income of $8.2 million, or $0.59 per diluted share, for the second quarter 2024, compared to net income of $6.6 million, or $0.47 per diluted share, for the first quarter 2024, and $7.3 million, or $0.52 per diluted share, for the second quarter 2023. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)⁽¹⁾, was $8.3 million, or $0.59 per diluted share, for the second quarter 2024, compared to $7.1 million, or $0.51 per diluted share, for the first quarter 2024.

The Company also declared a cash dividend on its common stock of $0.10 per share. The dividend is payable on August 21, 2024 to shareholders of record on August 5, 2024. The dividend declared of $0.10 is $0.02, or 25.0% higher than the prior quarter dividend reflecting the strength of earnings and capital position. The Company has increased its dividend each year since it first started paying dividends in 2021.

“All of our businesses continued to make progress in the second quarter with sustained loan and deposit growth, increased credit card accounts and revenue growth, mortgage banking income growth, and continued credit stability,” said Ed Barry, Chief Executive Officer of the Company and the Bank. “These positive trends drove stable deposit costs, record net interest income, and increased net interest margin. We were also pleased to receive approval for our pending acquisition of Integrated Financial Holdings, Inc. from the Federal Reserve and we continue to work towards obtaining all approvals and closing requirements. IFHI's expertise in niche C&I lending will further diversify our lending and fee generating capabilities while enhancing shareholder value.”

"The Board is very pleased with the second quarter results and, in particular, with the improvement in our NIM and the growth of our loan and deposit balances. If the economy cooperates, we anticipate these improvements will result in continued steady growth in our EPS and TBV,” said Steven J Schwartz, Chairman of the Company. “We reaffirm our steadfast commitment to smartly grow enterprise value of the Company, while continually expanding and improving the services and products we offer to our customers.”

⁽¹⁾ Reconciliations of the non–U.S. generally accepted accounting principles ("GAAP") measures are set forth in the Appendix at the end of this press release.

Pending Acquisition of Integrated Financial Holdings, Inc.

Regarding the previously announced pending merger with Integrated Financial Holdings, Inc. ("IFHI"), the Company incurred pre-tax merger-related expenses of $0.1 million for the second quarter 2024 compared to $0.7 million for the first quarter 2024, consistent with modeled expectations.

On July 9, 2024, the Company received regulatory approval from the Federal Reserve Bank of Richmond, acting on delegated authority from the Board of Governors of the Federal Reserve System, for the proposed merger of IFHI with and into the Company. Completion of the merger remains subject to the approval of the Office of the Comptroller of the Currency, the approval of the Company's and IFHI’s shareholders and the satisfaction of customary closing conditions. The special meeting of the Company will be held on August 15, 2024 at 3:00 p.m., Eastern Time.

The following table provides a reconciliation of the Company's net income under GAAP to non-GAAP results excluding merger-related expenses.

^{Note: The tax benefit associated with merger-related expenses has been adjusted to reflect the estimated nondeductible portion of the expenses.}

Second Quarter 2024 Highlights

Capital Bancorp, Inc.

Earnings Summary - Net income of $8.2 million, or $0.59 per diluted share, increased $1.6 million compared to $6.6 million, or $0.47 per diluted share, for the first quarter 2024. Net income, as adjusted to exclude the impact of merger-related expenses (non-GAAP)⁽¹⁾, was $8.3 million, or $0.59 per diluted share, for the second quarter 2024 compared to $7.1 million, or $0.51 per diluted share, for the first quarter 2024.

• Net interest income of $37.1 million increased $2.1 million compared to $35.0 million for the first quarter 2024. Interest income of $50.6 million increased $2.2 million compared to $48.4 million for the first quarter 2024, primarily due to interest income from $65.3 million in average portfolio loan growth. Interest expense of $13.6 million increased $0.2 million compared to $13.4 million for the first quarter 2024 as interest expense from time deposits increased $0.3 million as growth in average balances increased $15.9 million.
• The provision for credit losses was $3.4 million, an increase of $0.7 million from the first quarter 2024 primarily driven by unsecured credit card loan growth in the quarter. Net charge-offs totaled $1.9 million in the second quarter including $1.5 million from credit card related loans and $0.4 million from residential loans. Net charge-offs totaled $2.0 million in the first quarter 2024 including $1.7 million from credit card related loans and $0.3 million from commercial loans. At June 30, 2024, the allowance for credit losses to total loans ratio was 1.53%.
• Noninterest income of $6.9 million increased $0.9 million compared to $6.0 million for the first quarter 2024. Mortgage banking revenue increased $0.5 million primarily due to increased mortgage loans sold while credit card fees increased $0.4 million primarily related to interchange income.
• Noninterest expense of $29.5 million remained stable as compared to $29.5 million for the first quarter 2024. Within this category, variances included the following:
  • Salaries and employee benefits of $13.3 million increased $0.4 million due to an increase in base salaries expense of $0.2 million, incentive based compensation expense of $0.1 million and a decrease in deferred salary expense (an increase in expense) of $0.1 million as we continue to invest in talent.
  • Occupancy and equipment expense of $1.9 million increased $0.3 million related to software licensing expense to support business growth.
  • Merger-related expenses totaled $0.1 million in the second quarter 2024 as compared to $0.7 million in the first quarter 2024, consistent with modeled expectations. Primarily all merger-related expenses have been related to professional fees including legal fees, third party consulting fees and other outside service provider expenses.
    
• Income tax expense of $2.7 million, or 25.0% of pre-tax income for the second quarter 2024, increased $0.7 million from $2.1 million, or 23.9% of pre-tax income for the first quarter 2024, reflective of an increase in the weighted average state income tax rate.
  

Performance and Efficiency Ratios – Annualized return on average assets ("ROAA") and annualized return on average equity ("ROAE") were 1.40% and 12.53%, respectively, for the three months ended June 30, 2024, compared to 1.15% and 10.19%, respectively, for the three months ended March 31, 2024.

• Annualized ROAA and annualized ROAE, as adjusted to exclude the impact of merger-related expenses (non-GAAP)⁽¹⁾, were 1.41% and 12.62%, respectively, for the three months ended June 30, 2024, compared to 1.24% and 11.03%, respectively, for the three months ended March 31, 2024.
• The efficiency ratio was 67.11% for the three months ended June 30, 2024, compared to 71.95% for the three months ended March 31, 2024. The efficiency ratio, as adjusted to exclude the impact of merger-related expenses (non-GAAP)⁽¹⁾, was 66.92% for the three months ended June 30, 2024 compared to 70.22% for the three months ended March 31, 2024.

Balance Sheet – Total assets of $2.4 billion at June 30, 2024 increased $114.3 million, or 4.9%, from March 31, 2024.

• Cash and cash equivalents of $136.5 million at June 30, 2024 increased $51.3 million from March 31, 2024, as total deposits increased $94.7 million, and Federal Home Loan Bank advances increased $10.0 million, partially offset by an increase in total portfolio loans of $57.1 million.
• Total portfolio loans of $2.0 billion at June 30, 2024 increased $57.1 million, or 2.9% growth from March 31, 2024. Total average loans increased $65.3 million quarter over quarter.
• Total deposits of $2.1 billion at June 30, 2024 increased $94.7 million, or 4.7% growth, from March 31, 2024, while total average deposits increased $53.2 million quarter over quarter. The increase in deposits, when comparing June 30, 2024 to March 31, 2024, includes $18.8 million of noninterest-bearing deposits primarily related to growth in title company deposit balances. Average portfolio loans-to-deposit ratio of 99.10% for the three months ended June 30, 2024 increased from 98.46% for the three months ended March 31, 2024.
• The investment securities portfolio continues to be classified as available for sale and had a fair market value of $207.9 million, or 8.5% of total assets, at June 30, 2024 up from $202.3 million at March 31, 2024. The amortized cost of the investment securities portfolio was $227.1 million, with an effective duration of 2.92 years. U.S. Treasury securities represented 64.3% of the overall investment portfolio at June 30, 2024. The accumulated other comprehensive loss on the investment securities portfolio decreased $0.5 million during the quarter to $13.1 million as of June 30, 2024, which represents 4.9% of total stockholders' equity. The Company does not have a held to maturity investment securities portfolio.

Net Interest Margin - Net interest margin increased to 6.46% for the three months ended June 30, 2024, compared to 6.24% for the three months ended March 31, 2024. Core Net Interest Margin, as adjusted to exclude the impact of credit card loans (non-GAAP)⁽¹⁾ increased to 4.00% and included 4 basis points from interest income recognized from nonaccrual loans as compared to 3.85% for the three months ended March 31, 2024.

• The average yield on interest earning assets of 8.82% increased 19 basis points compared to the first quarter 2024. The yield on portfolio loans, as adjusted to exclude the impact of credit card loans (non-GAAP)⁽¹⁾, of 7.04% for the second quarter 2024, increased 8 basis points primarily from portfolio turnover. New portfolio loans (excluding credit card loans) originated in the second quarter 2024 totaled $112.3 million with a weighted average yield of 8.25% as compared to $122.7 million with a weighted average yield of 8.24% in the first quarter 2024.
• The average rate on total deposits of 2.64% for the second quarter 2024 decreased 3 basis points from the first quarter 2024, primarily driven by title company balance growth in low and no interest bearing deposits.

Deposits - Total deposits at June 30, 2024 increased by $94.7 million, or 4.7% unannualized growth, compared to March 31, 2024, primarily driven by growth in low interest-bearing demand and noninterest-bearing deposits from title companies of $86.4 million.

• Noninterest-bearing deposits of $684.6 million increased $18.8 million, or 2.8%, compared to March 31, 2024. Interest-bearing deposits of $1.4 billion increased $76.0 million, or 5.7%, compared to March 31, 2024 including an increase in interest-bearing demand accounts of $72.1 million. Brokered time deposits totaled $155.1 million at June 30, 2024, a decrease of $5.5 million from March 31, 2024.
  

Cost of Interest-Bearing Liabilities - Growth in interest-bearing demand accounts resulted in the average cost of interest-bearing liabilities decreasing to 3.86% for the quarter ended June 30, 2024, compared to 3.90% for the first quarter 2024.

• Average interest-bearing demand accounts of $216.2 million increased $33.0 million, or 18.0%, compared to March 31, 2024.
• Average time deposits of $465.8 million increased $15.9 million, or 3.5%, compared to March 31, 2024.
• Average noninterest-bearing deposits of $653.0 million increased $15.9 million, or 2.5%, compared to March 31, 2024, and represented 32.5% of total average deposits at June 30, 2024.
  

Capital Positions - As of June 30, 2024, the Company reported a robust common equity tier 1 capital ratio of 15.08%, compared to 14.92% at March 31, 2024. At June 30, 2024, the Company maintains regulatory capital ratios that exceed all capital adequacy requirements.

Credit Metrics and Asset Quality - The allowance for credit losses to total loans ratio was 1.53% at June 30, 2024 as compared to an allowance for credit losses to total loans ratio of 1.49% at March 31, 2024. Nonperforming assets decreased 4 basis points to 0.58% of total assets at June 30, 2024 compared to 0.62% at March 31, 2024 as a result of a decrease in nonaccrual loans at June 30, 2024 to $14.1 million compared to $14.4 million at March 31, 2024. At June 30, 2024 special mention loans totaled $23.3 million, or 1.2% of total portfolio loans, as compared to $27.5 million, or 1.4% of total portfolio loans, at March 31, 2024. At June 30, 2024, substandard loans totaled $22.1 million, or 1.2% of total portfolio loans, as compared to $14.1 million, or .7% of total portfolio loans, at March 31, 2024.

Consistent Tangible Book Value Growth - Tangible book value per common share⁽¹⁾ grew 3.1% to $19.26 at June 30, 2024 when compared to March 31, 2024. The Company did not have goodwill or other intangible assets during any of the periods presented and therefore, tangible book value per share⁽¹⁾ is equal to book value per share.

Liquidity - Total sources of available borrowings at June 30, 2024 totaled $764.2 million, including available collateralized lines of credit of $570.2 million, unsecured lines of credit with other banks of $76.0 million and unpledged investment securities available as collateral for potential additional borrowings of $118.0 million.

Commercial Bank

Continued Portfolio Loan Growth - Portfolio loans, excluding credit cards, increased by $47.4 million, to $1.9 billion, gross, at June 30, 2024 compared to March 31, 2024. The increase in portfolio loans, as disclosed in the Composition of Loans table within the Historical Financial Highlights includes residential real estate loans of $24.2 million, lender finance loans of $19.8 million and commercial real estate loans of $8.4 million, partially offset by a decrease in business equity lines of credit of $11.8 million. Lender finance loans are loans to companies used to purchase finance receivables or to extend financing to the underlying obligors and are secured primarily by the finance receivables held by our borrowers.

Net Interest Income - Interest income of $33.9 million increased $1.4 million compared to $32.5 million for the first quarter 2024, driven by loan growth and higher loan yields. Interest expense of $13.3 million increased $0.2 million, driven by an increase in average balances in the second quarter 2024.

Credit Metrics - Nonperforming assets decreased 4 basis points to 0.58% of total assets at June 30, 2024 compared to 0.62% at March 31, 2024 as a result of a decrease in nonaccrual loans at June 30, 2024 to $14.1 million compared to $14.4 million at March 31, 2024.

The following tables present non-owner-occupied and owner-occupied commercial real estate loans and multi-family loans and the weighted average loan-to-value ("LTV").

Non-owner-occupied commercial real estate loans, including multi-family

Owner-occupied commercial real estate loans

(1) The weighted average LTV of the loan categories previously mentioned are calculated by reference to the most recent appraisal of the property securing each loan.

(2) Other owner-occupied commercial real estate loans include special purpose loans of $58.3 million, skilled nursing loans of $53.8 million, and other loans of $27.5 million.

Classified and Criticized Loans - At June 30, 2024, special mention loans totaled $23.3 million, or 1.2% of total portfolio loans, as compared to $27.5 million, or 1.4% of total portfolio loans, at March 31, 2024. At June 30, 2024, substandard loans totaled $22.1 million, or 1.2% of total portfolio loans, as compared to $14.1 million, or 0.7% of total portfolio loans, at March 31, 2024.

OpenSky^™

Revenues - Total revenue of $20.2 million increased $1.3 million from the first quarter 2024. Interest income of $15.8 million increased $0.9 million from the first quarter 2024. Average OpenSky^™ loan balances, net of reserves and deferred fees of $111.3 million for the second quarter 2024, increased $0.8 million, or 0.7%, compared to $110.5 million for the first quarter 2024. Noninterest income of $4.4 million increased $0.5 million from the first quarter 2024 primarily related to interchange income.

Noninterest Expense - Total noninterest expense of $13.8 million increased $0.2 million from the first quarter 2024 primarily related to data processing expense.

Loan and Deposit Balances - OpenSky^™ loan balances, net of reserves, of $122.2 million at June 30, 2024 increased by $10.3 million, or 9.2%, compared to $111.9 million at March 31, 2024. Corresponding deposit balances of $173.5 million at June 30, 2024 increased $1.7 million, or 1.0%, compared to $171.8 million at March 31, 2024. Gross unsecured loan balances of $33.6 million at June 30, 2024 increased $5.1 million, or 17.7%, compared to $28.5 million at March 31, 2024. During the second quarter 2024, the number of OpenSky^™ credit card accounts increased by 10,784 to 537,734 from March 31, 2024.

OpenSky^™ Credit - Card delinquencies remained stable in the second quarter 2024 when compared to the first quarter 2024. The provision for credit losses increased $0.7 million compared to the first quarter 2024 as card balances, net of reserves, increased $10.3 million during the second quarter 2024 as compared to a decrease of $11.4 million during the first quarter 2024.

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⁽¹⁾ Refer to Appendix for reconciliation of non-GAAP measures.

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⁽¹⁾ Refer to Appendix for reconciliation of non-GAAP measures.

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⁽¹⁾ Refer to Appendix for reconciliation of non-GAAP measures.
⁽²⁾ Loans are reflected net of deferred fees and costs.

Operating Results - Comparison of Three Months Ended June 30, 2024 and 2023

For the three months ended June 30, 2024, net interest income of $37.1 million increased $1.7 million from $35.3 million in the same period in 2023. The net interest margin decreased 17 basis points to 6.46% for the three months ended June 30, 2024 from the same period in 2023 as the increase in cost of deposits, including money market accounts and time deposits, outpaced the increase in portfolio loan yields, including credit card loans. Net interest margin, excluding credit card loans⁽¹⁾, decreased to 4.00% for the three months ended June 30, 2024, compared to 4.06% for the same period in 2023.

For the three months ended June 30, 2024, average interest earning assets increased $170.1 million, or 8.0%, to $2.3 billion as compared to the same period in 2023, and the average yield on interest earning assets increased 36 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $164.4 million, or 13.2%, and the average cost of interest-bearing liabilities increased to 3.86%, a 73 basis point increase from 3.13%.

For the three months ended June 30, 2024, the provision for credit losses was $3.4 million, an increase of $0.6 million from the same period in 2023, primarily driven by unsecured credit card loan growth. Net charge-offs for the three months ended June 30, 2024 were $1.9 million, or 0.39% on an annualized basis of average portfolio loans, compared to $1.6 million, or 0.35% on an annualized basis of average loans for the same period in 2023. Of the $1.9 million in net charge-offs during the second quarter 2024, $0.9 million related to secured and partially secured cards in the credit card portfolio and $0.6 million related to unsecured cards. Of the $1.6 million in net charge-offs during the second quarter 2023, $1.5 million related to secured and partially secured cards in the credit card portfolio and $0.1 million related to unsecured cards.

For the three months ended June 30, 2024, noninterest income of $6.9 million increased $0.2 million, or 3.0%, from the same period in 2023. Mortgage banking revenue of $2.0 million increased $0.7 million due to an increase in salable originations. Credit card fees of $4.3 million decreased $0.4 million primarily related to lower interchange and other fee income.

Credit card loan balances, net of reserves, decreased by $0.7 million to $122.2 million as of June 30, 2024, from $122.9 million at June 30, 2023. The related deposit account balances decreased 7.0% to $173.5 million at June 30, 2024 when compared to $186.6 million at June 30, 2023, reflective of the reduction in the number of open secured card customer accounts year over year.

The efficiency ratio for the three months ended June 30, 2024 was 67.11% compared to 70.41% for the three months ended June 30, 2023.

For the three months ended June 30, 2024, noninterest expense of $29.5 million decreased $0.1 million, or 0.3%, from $29.6 million for the same period in 2023. The change includes decreases in professional fees of $0.8 million, advertising expense of $0.6 million, operational losses of $0.4 million and loan processing expense of $0.2 million. Offsetting increases include salaries and employee benefits expense of $1.1 million, occupancy and equipment expense of $0.3 million, data processing expense of $0.2 million, other operating expense of $0.2 million and merger-related expenses of $0.1 million.

Operating Results - Comparison of Six Months Ended June 30, 2024 and 2023

For the six months ended June 30, 2024, net interest income of $72.1 million increased $2.2 million from the same period in 2023, primarily due to increased average balances of $182.2 million in portfolio loans combined with an 11 basis point increase in the yield on portfolio loans, offset by increases in the cost of funding. The net interest margin decreased 29 basis points to 6.35% for the six months ended June 30, 2024 from the same period in 2023. Net interest margin, excluding credit card loans⁽¹⁾, was 3.93% for the six months ended June 30, 2024, compared to 3.94% for the same period in 2023.

For the six months ended June 30, 2024, average interest earning assets increased $160.3 million, or 7.6%, to $2.3 billion as compared to the same period in 2023, and the average yield on interest earning assets increased 31 basis points. Compared to the same period in the prior year, average interest-bearing liabilities increased $154.2 million, or 12.4%, while the average cost of interest-bearing liabilities increased 85 basis points to 3.88% from 3.03%.

For the six months ended June 30, 2024, the provision for credit losses was $6.1 million, an increase of $1.6 million from the prior year, attributable primarily to portfolio loan growth and specific reserves of $1.1 million for collateral dependent loans at June 30, 2024 as compared to $0.3 million at June 30, 2024. Net charge-offs for the six months ended June 30, 2024 were $3.9 million, or 0.40% annualized of average portfolio loans, compared to $4.2 million, or 0.48% annualized of average portfolio loans, for the same period in 2023. The $3.9 million in net charge-offs during the six months ended June 30, 2024 was comprised primarily of credit card portfolio net charge-offs, with $2.1 million related to secured and partially secured cards while $1.1 million was related to unsecured cards.

For the six months ended June 30, 2024, noninterest income of $12.9 million increased $0.2 million, or 1.2%, from the same period in 2023. Mortgage banking revenue of $3.4 million increased $1.0 million due to an increase in home loan sales while credit card fees of $8.2 million declined $0.7 million as the number of open customer accounts declined to 537,734 at June 30, 2024 from 540,058 year over year, which resulted in lower interchange and other fee income recognized compared to the prior year.

The efficiency ratio for the six months ended June 30, 2024 was 69.45% compared to 67.62% for the six months ended June 30, 2023.

For the six months ended June 30, 2024, noninterest expense of $59.0 million increased $3.2 million, or 5.7%, from the same period in 2023. The change includes increases in salaries and employee benefits of $1.5 million, or 6.0%, advertising expense of $0.9 million, merger-related expenses of $0.8 million, occupancy and equipment expense of $0.7 million and other operating expenses of $0.7 million partially offset by a decrease in professional fees of $1.3 million.

Financial Condition

Total assets at June 30, 2024 were $2.4 billion, an increase of $114.3 million, or 4.9%, from the balance at March 31, 2024 and an increase of $210.7 million, or 9.5%, from the balance at June 30, 2023.

Net portfolio loans, which exclude mortgage loans held for sale, totaled $2.0 billion at June 30, 2024, an increase of $57.1 million, up 2.9% or 11.6% annualized, compared to March 31, 2024, and an increase of $183.5 million, or 10.0%, compared to $1.8 billion at June 30, 2023.

The Company recorded a provision for credit losses of $6.1 million during the six months ended June 30, 2024, which increased the allowance for credit losses to $30.8 million, or 1.53% of total loans at June 30, 2024, representing an increase of $1.5 million over the balance at March 31, 2024.

Nonperforming assets, which were comprised solely of nonperforming loans as of June 30, 2024, were $14.1 million, or 0.58% of total assets, down from $14.4 million, or 0.62% of total assets at March 31, 2024, and down from $15.7 million, or 0.71% of total assets at June 30, 2023.

Deposits were $2.1 billion at June 30, 2024, an increase of $94.7 million, or 4.7%, from the balance at March 31, 2024 and an increase of $166.1 million, or 8.6%, from the balance at June 30, 2023. Average deposits of $2.0 billion for the three months ended June 30, 2024 increased $53.2 million, or 2.7%, as compared to the three months ended March 31, 2024.

Rising interest rates have resulted in some customers moving balances from noninterest-bearing deposit accounts to interest-bearing deposit accounts. As a result of the migration, average noninterest-bearing deposit balances decreased $23.3 million to $653.0 million as of June 30, 2024, as compared to June 30, 2023.

Noninterest-bearing deposits represented 32.6% of total deposits at June 30, 2024 compared to 35.8% at June 30, 2023. Uninsured deposits were approximately $923.7 million as of June 30, 2024, representing 44.0% of the Company's deposit portfolio, compared to $855.7 million, or 42.7%, at March 31, 2024, and $860.4 million, or 44.5%, at June 30, 2023.

Stockholders’ equity increased to $267.9 million as of June 30, 2024, compared to $259.5 million at March 31, 2024 and $237.4 million at June 30, 2023. As of June 30, 2024, the Bank's capital ratios continued to exceed the regulatory requirements for a “well-capitalized” institution.

The following tables show the average outstanding balance of each principal category of our assets, liabilities and stockholders’ equity, together with the average yields on our assets and the average costs of our liabilities for the periods indicated. Such yields and costs are calculated by dividing the annualized income or expense by the average daily balances of the corresponding assets or liabilities for the same period.

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⁽¹⁾ Annualized.
⁽²⁾ Includes nonaccrual loans.
⁽³⁾ For the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, collectively, portfolio loans yield excluding credit card loans was 7.04%, 6.96% and 6.65%, respectively.
⁽⁴⁾ For the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, collectively, credit card loans accounted for 246, 239 and 257 basis points of the reported net interest margin, respectively.

⁽¹⁾ Annualized.
⁽²⁾ Includes nonaccrual loans.
⁽³⁾ For the six months ended June 30, 2024 and 2023, collectively, portfolio loans yield excluding credit card loans was 7.00% and 6.48%, respectively.
⁽⁴⁾ For the six months ended June 30, 2024 and 2023, collectively, credit card loans accounted for 242 and 270 basis points of the reported net interest margin, respectively.

The Company’s reportable segments represent business units with discrete financial information whose results are regularly reviewed by management. The four segments include Commercial Banking, Capital Bank Home Loans (the Company’s mortgage loan division), OpenSky^™ (the Company’s credit card division) and the Corporate Office.

Effective January 1, 2024, the Company allocated certain expenses previously recorded directly to the Commercial Bank segment to the other segments. These expenses are for shared services also consumed by OpenSky^™, CBHL, and Corporate. The Company performs an allocation process based on several metrics the Company believes more accurately ascribe shared service overhead to each segment. The Company believes this reflects the cost of support for each segment that should be considered in assessing segment performance. Historical information has been recast to reflect financial information consistently with the 2024 presentation.

The following schedule presents financial information for the periods indicated. Total assets are presented as of June 30, 2024, March 31, 2024, and June 30, 2023.

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⁽¹⁾ Noninterest expense includes $6.3 million, $6.1 million, and $5.9 million in data processing expense in OpenSky’s^™ segment for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, respectively.
⁽²⁾ The Corporate segment invests idle cash in revenue-producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.

⁽¹⁾ Noninterest expense includes $12.5 million and $11.9 million in data processing expense in OpenSky’s^™ segment for the six months ended June 30, 2024 and 2023, respectively.
⁽²⁾ The Corporate segment invests idle cash in revenue-producing assets including interest-bearing cash accounts, loan participations and other appropriate investments for the Company.