Capital Bancorp Inc

Item 1A. RISK FACTORS.

TOther than the are dditional risk factor referenced below, there are no material changes to the risk factors as previously disclosed under Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2024 and those referenced in other reports on file with the SEC.

The continuation of the U.S. federal government shutdown could adversely affect the U.S. and global economy and our business, financial condition and results of operations.

Disagreement over the U.S. federal budget has caused the U.S. federal government to shut down in recent weeks, which may continue for an indeterminate period of time. We originate, sell and service loans under various programs sponsored by the U.S. federal government, including the SBA and the USDA. During the shutdown, the SBA and USDA are not processing new loan applications. Any inability to engage in our commercial SBA and USDA origination and servicing business, as well as the inability of our clients through Windsor Advantage, could have a material adverse impact on our business, including through a reduction in sales income and decreased revenue within Windsor Advantage. Furthermore, upon the resumption of government operations, the SBA and USDA will likely experience a significant backlog of applications, which may lead to extended processing times and further delays. These delays could impair our financial performance, increase credit risk exposure, and negatively affect our relationships with borrowers and lending partners.

Additionally, the Washington, D.C. metropolitan area is characterized by a significant number of businesses that are federal government contractors or subcontractors, or which depend on such businesses for a significant portion of their revenues. In addition, federal government employees make up a significant proportion of the population of the Washington, D.C. metropolitan area. The government shutdown has resulted in furloughs for hundreds of thousands of federal employees and has led to layoffs. Furloughed employees are put on unpaid leave, while excepted employees continue to work without pay. The shutdown also has an adverse effect on government contractors, as funding is halted, which can lead to layoffs and furloughs within those companies. The continuation of the shutdown, the negative financial impact on federal workers, government contractors and businesses reliant on government spending will have adverse impacts on the businesses in the Companys market and the general economy of the greater Washington, D.C. metropolitan area. The downturn in the local economy coupled with furloughs and delayed pay for federal employees and contractors could make it more difficult for our borrowers to repay their loans and may lead to loan losses that would not be offset by operations in other markets; it may also reduce the ability of our depositors to make or maintain deposits with us. Prolonged adverse political and economic conditions could have a material adverse effect on our business, financial condition and results of operations.