Capital Bancorp has replaced the auditor that reported its internal controls were not effective, and the incoming firm valued the acquisition that weakness traces back to

The 8-K arrived at one minute past four.

Capital Bancorp, the Maryland holding company for Capital Bank, said on Friday that it had dismissed Elliott Davis, PLLC as its independent registered public accounting firm and engaged Crowe LLP for the year ending December 31. The audit committee approved both moves. The reason the company gives is that it wanted a larger firm, with more resources and more industry expertise, to support its growth.

Elliott Davis had audited the bank since 2017.

What the outgoing auditor had reported

Five months ago Elliott Davis signed two reports on the same company, and they did not say the same thing. The report on the financial statements for 2025 and 2024 is unqualified. The separate report on internal control over financial reporting, measured against the 2013 framework of the Committee of Sponsoring Organizations of the Treadway Commission, is adverse: the company, in that report's words, has not maintained effective internal control over financial reporting as of December 31, 2025.

Both are dated March 16.

The 8-K says the audit reports contained no adverse opinion or disclaimer and were not qualified or modified. That is a statement about the reports on the financial statements, which is what the disclosure rule asks for. The adverse opinion sits in the separate internal control report, and the filing discloses the material weakness itself under the reportable events heading.

The weakness

The 10-K describes it as a combination of two things. There was no dedicated control designed to clear items sitting on loan clearing accounts dating back to the acquisition of Integrated Financial Holdings, Inc., and there was turnover in the operations department that affected the execution of controls over government-guaranteed loan sales and participations. Two clearing accounts are involved. The systems used to book, sell and participate those loans came into the bank with that deal, which closed on October 1, 2024.

The consultation paragraph

Item 304 requires a company changing auditors to disclose whether it consulted the incoming firm beforehand, and Capital Bancorp discloses one earlier engagement. In conjunction with the same October 2024 acquisition, it hired Crowe to value the loan portfolio, the core deposit customer relationship intangible, certificates of deposit, customer relationships, the trade name, the assembled workforce and the Windsor Advantage entity.

So the incoming auditor priced the assets that came in with the transaction. The weakness concerns the clearing accounts and processes that came in with the same transaction. The filing draws no line between those two facts, and neither does this item.

Elliott Davis wrote to the Commission the same day, as the rule requires. Its letter agrees with the statements the company makes about Elliott Davis and says it has no basis to agree or disagree with the rest, which is the standard shape of those letters rather than an objection to anything in this one.