National Capital Bancorp Launches Share Repurchase Program

National Capital Bancorp, Inc. (NACB), the holding company for The National Capital Bank of Washington, has announced a share repurchase program worth up to $600,000. This program, valid until February 28, 2026, allows the company to repurchase up to 12,000 shares, representing approximately 1.0% of outstanding shares. The repurchases can be made in open market or private transactions, with management having sole discretion over the timing and actual number of shares repurchased.



This share repurchase program aligns with NACB's long-term growth strategy and is expected to create value for shareholders. By reducing the number of outstanding shares, the earnings per share (EPS) for remaining shareholders will increase. For instance, if the company repurchases the maximum allowed under the program, the EPS would increase by approximately 1.0%. Additionally, share repurchases can signal to the market that the company's management believes its stock is undervalued, potentially leading to an increase in the stock price.



The share repurchase program also complements NACB's recent earnings performance and dividend growth. In the third quarter of 2024, the company reported net income of $1,726,000, or $6.00 per common share, compared to $1,136,000, or $3.95 per common share, in the same quarter of the previous year. For the nine months ended September 30, 2024, the company reported net income of $4,416,000, or $15.35 per common share, compared to $3,275,000, or $11.39 per common share, in the same period of the previous year. The earnings improvement was primarily attributable to productivity improvement and cost-reduction initiatives, as well as higher net interest income driven by continued growth in average earning assets.

In addition to strong earnings performance, NACB has also demonstrated dividend growth. The company declared a dividend of $0.66 per share for shareholders of record as of November 12, 2024, which is payable on November 26, 2024. This dividend represents a 14.63% year-over-year growth in the dividend per share.

The share repurchase program is sustainable for NACB, given its strong balance sheet and cash flow position. The company has $44.93 million in cash and cash equivalents, which is more than enough to fund the share repurchase program. Additionally, NACB's net cash position of $22.14 million or $19.28 per share indicates that it has sufficient liquidity to cover its debt obligations and fund the share repurchase program.

In conclusion, National Capital Bancorp's share repurchase program is a strategic move that aligns with the company's long-term growth strategy and complements its recent earnings performance and dividend growth. The program is expected to create value for shareholders by increasing EPS and potentially boosting the stock price. However, investors should monitor the company's financial performance to ensure that the share repurchase program is executed effectively.