Capital Bancorp

1 serious warning sign in Capital Bancorp’s filings.

We look for five warning signs: doubt it can keep going, weak checks on its own accounts, a notice that its past accounts can't be relied on, a change of auditor, and one customer bringing in a big share of sales. We don't check lawsuits, investigations or debt yet.

We checked the auditor's report, internal controls, restatement notices, auditor changes and big customers in the 10-K filed 16 Mar 2026, plus the 10-Q filed 7 Aug 2026 and 8 later 8-Ks.

• Weak checks on its own accounts

  Serious

  The company said its checks on its own accounts did not work at the end of its latest quarter. Mistakes could slip into the numbers.

  “As a result of this material weakness, the Company’s Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.”

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  As previously disclosed in Item 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, management identified a material weakness in the Company’s internal control over financial reporting. As a result of this material weakness, the Company’s Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report. Notwithstanding the material weakness, based on additional analyses and other procedures performed, management believes the consolidated financial statements included in this report fairly present, in all material respects, the Company’s financial position, results of operations and cash flows, as of the periods presented, in accordance with GAAP.

  From the 10-Q filed 7 August 2026, Part I, Item 4. Controls and Procedures. Read it in the filing

• Changed auditor

  Worth knowing

  The company changed its auditor (the firm that checks its books) in the last two years.

  “On August 14, 2026, Capital Bancorp, Inc., a Maryland corporation (the “Company”) dismissed Elliott Davis, PLLC as the Company’s independent registered public accounting firm, and informed Crowe LLP that the Audit Committee of the Company’s Board of Directors had approved the selection of Crowe LLP”

  From an 8-K filed 14 August 2026: Change of auditor. Read it in the filing

Cheap for a reason is the question the numbers cannot answer.

Whether the price already reflects the risks is what the deep dive is for.

• Failure to maintain an effective system of internal control and disclosure controls and procedures could have a material adverse effect on our results of operations, financial condition and stock price.

  As disclosed in Part II - Item 9A. Controls and Procedures, management has identified a material weakness in our internal control over financial reporting and, as a result, concluded that our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2025. We are currently working to remediate the material weakness. However, there can be no assurance that these remediation efforts will be successful. In addition, these remediation efforts will place a burden on management and may result in additional expenses.

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• Failure to maintain an effective system of internal control and disclosure controls and procedures could have a material adverse effect on our results of operations, financial condition and stock price.

  Could happen

  If we are unable to remediate this material weakness, or are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, result in violations of applicable securities laws, prejudice our ability to meet NASDAQ listing requirements, negatively affect investor confidence in the accuracy and completeness of our financial statements, and adversely impact the trading price of our securities.

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• The development and use of AI presents risks that may adversely impact our business.

  Could happen

  AI systems may produce inaccurate, biased or inconsistent outputs, including as a result of flawed data, model limitations or inadequate oversight. Reliance on such outputs could lead to operational errors, customer harm, regulatory scrutiny or legal liability. In addition, the use of AI may raise concerns related to data privacy, intellectual property, cybersecurity and model governance, particularly where third-party vendors or externally developed tools are involved. The legal and regulatory environment governing AI remains rapidly evolving. Federal and state regulators may introduce new rules, supervisory expectations or guidance regarding transparency, consumer protection, fair lending, model risk management, data usage or vendor oversight. Compliance with these evolving requirements could increase costs, restrict our use of certain technologies or require modifications to existing processes or systems. Further, failures or perceived misuse of AI technologies could result in reputational harm, loss of customer confidence or competitive disadvantage. Operational disruptions, technology failures or security vulnerabilities associated with AI tools or service providers could adversely affect our business continuity or information security posture. We maintain governance, risk management and oversight processes designed to manage the risks associated with AI, but there can be no assurance that such processes will be effective in identifying or mitigating all risks. As a result, the use of AI and similar technologies could materially and adversely affect our business and results of operations.

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• The development and use of AI presents risks that may adversely impact our business.

  Could happen

  We are evaluating and may continue to expand our use of AI, and other emerging technologies in various aspects of our operations, including customer service, internal processes, risk management, and data analytics. Furthermore, our vendors or third parties may develop or incorporate AI technology in certain business processes, services or products. While these technologies may enhance efficiency and decision-making, their adoption presents risks and challenges.

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• Our customers and businesses in the Washington, D.C. metropolitan area may be adversely impacted as a result of the government shutdown and changes in government spending.

  Disagreement over the U.S. federal budget, specifically regarding expiring tax credits and spending priorities, caused the U.S. federal government to shut down from October 1, 2025 to November 12, 2025. The government shutdown resulted in furloughs and layoffs for hundreds of thousands of federal employees. Recently, there have been several additional instances where there has been uncertainty regarding the ability of Congress and the President to collectively reach agreement on federal budgetary and spending matters. A period of failure to reach agreement on these matters, particularly if accompanied by another government shutdown, may have an adverse impact on the U.S. economy.

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