National Capital Bank of Washington : Reports Fourth Quarter 2017 Results

FOR IMMEDIATE RELEASE January 24, 2018

Contact: Richard B. Anderson, Jr., President & CEO or Jeffrey L. Karafa, EVP & CFO

Phone: [phone]

Email:[e-mail]

The National Capital Bank of Washington Reports Fourth Quarter Results

Washington, D.C. - The National Capital Bank of Washington (NCB) reported a net loss of $(277,000), or $(0.96) per common share, for the three months ended December 31, 2017, compared to net income of $937,000 or $3.25 per share for the quarter ended December 31, 2016. Included in the $(277,000) loss is a one-time write-down of $880,000 of deferred tax assets due to the reduction in corporate tax rates for 2018. For the year ended December 31, 2017, NCB reported net income of $1,971,000, or $6.83 per share, compared to $4,685,000, or $16.27 per share for the year ended December 31, 2016. NCB continues to improve asset quality which resulted in a reversal of loan provision expense in the amount of $1,264,000 for the twelve months of 2017 compared to a $3,662,000 provision reversal for the same period in 2016. Non-performing loans to total loans have decreased from 1.95% to 0.20% over the last year.

Total assets increased year-over-year to $429,752,000 at December 31, 2017 compared to $412,162,000 at December 31, 2016. Total loans of $271,037,000 at December 31, 2017 increased 29.8% from $208,724,000 the year before as the Bank continued to build and expand its commercial and commercial real estate lending programs. Of this growth, $16,900,000 occurred during the fourth quarter. Total deposits grew to $380,651,000 at December 31, 2017, a 5.1% increase over $362,170,000 the year before with $16,985,000 gathered in the fourth quarter. The Bank's net interest margin increased to 3.26% at December 31, 2017 up from 2.87% a year ago as a result of the improvements in credit quality, loan growth and a change in the mix of the loan portfolio.

Total shareholders' equity increased to $43,628,000 at December 31, 2017 from $40,985,000 a year ago. For the year ended December 31, 2017 the return on average assets and return on average equity was 0.47% and 4.51%, respectively.

Richard B. (Randy) Anderson, Jr. President and Chief Executive Officer said, "Adjusting for the impact of the one-time deferred tax asset write-down, as well as the loan loss provision reversals and gains on sale of securities, we are excited about the continued progress made during 2017 to improve the core earnings potential of the Bank and position it for greater profitability in 2018. Net interest income has improved significantly and the lending, business development and support staff are now in place to continue this momentum without any significant additions."

The National Capital Bank of Washington was founded in 1889 and is Washington's Oldest Bank. NCB is headquartered on Capitol Hill with a second branch located in Friendship Heights, as well as residential mortgage and commercial lending offices and a wealth management services division. NCB product and service offerings include personal and business deposit accounts, robust online and mobile banking, sophisticated treasury management solutions, remote deposit capture and merchant processing - all delivered with top-rated personal service. NCB is well-positioned to serve all the banking needs of those in our community. For more information about NCB, visitwww.nationalcapitalbank.com.

The Bank trades under the symbol NACB.

Forward Looking Statements

This news release may contain certain forward-looking statements, such as statements of the Bank's plans, objectives, expectations, estimates and intentions. Forward-looking statements may be identified by the use of words such as "expects," "subject," "will," "intends," "will be" or "would," These statements are subject to change based on various important factors (some of which are beyond the Bank's control) and actual results may differ materially. Accordingly, readers should not place undue reliance on any forward-looking statements (which reflect management's analysis of factors only as of the date of which they are given). These factors include general economic conditions, trends in interest rates, the ability of the Bank to effectively manage its growth and results of regulatory examinations, among other factors. The foregoing list of important factors is not exclusive.

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The National Capital Bank of Washington Financial Highlights (In thousands, except share data) (Unaudited) Three Months Ended Twelve Months Ended December 31 December 31 Condensed Statement of Income: Interest income 2017 2016 2017 2016 $3,580 $3,182 $13,529 $11,822 Interest expense Net interest income 151 111 508 447 3,429 3,071 13,021 11,375 Provision (reversal) for loan losses Net interest income after provision Non-interest income 0 (892) (1,264) (3,662) 3,429 3,963 14,285 15,037 502 446 1,982 2,319 Non-interest expense Income before taxes Income tax provision 3,124 2,775 11,733 9,545 807 1,634 4,534 7,811 204 697 1,683 3,126 Writedown of deferred tax assets due to change in corporate tax rates 880 0 Net income (loss) ($277) $937 880 $1,971 0 $4,685 Share Data: Weighted avg. no. of shares outstanding Period end shares outstanding 288,777 288,777 288,033 288,033 288,632 287,893 288,777 288,033 Per Common Share Data:
Net income -$0.96 $3.25	$6.83 $16.27
Closing Stock Price	$220.49 $176.00
Book Value $151.08 $142.29
Profitability Ratios, Annualized:
Return on average stockholders' equity -2.48% 10.50%	4.51% 11.28%
Return on average total assets -0.26% 0.90%	0.47% 1.13%
Average equity to average total assets 10.49% 10.08%	10.38% 10.06%
Condensed Balance Sheets: December 31 2017 December 31 2016 Assets Cash and equivalents Securities, available for sale Loans $24,791 $23,912 117,243 164,695 271,037 208,724 Allowance for loan losses Premises and equipment, net Bank owned life insurance Other assets (3,479) (4,711) 2,782 2,710 11,395 11,115 5,983 5,717 Total assets $429,752 $412,162 Liabilities and stockholders' equity Deposits $380,651 $362,170 Securities sold under agreement to repurchase Other liabilities 4,067 6,662 1,406 2,345 Stockholders' equity 43,628 40,985 Total liabilities and stockholders' equity $429,752 $412,162 Other Data: Non-performing loans to total loans Allowance to total loans 0.20% 1.95% 1.28% 2.26% Net charge-offs (recoveries) to average loans Net interest margin for the quarter -0.01% -1.68% 3.40% 3.02% Net interest margin for the year 3.26% 2.87%