John Marshall Bancorp, Inc. Reports Core Deposit and Loan Growth

Net Interest Margin Expands and Asset Quality Remains Pristine

John Marshall Bancorp, Inc. (Nasdaq: JMSB) (the “Company”), parent company of John Marshall Bank (the “Bank”), reported net income of $4.2 million ($0.30 per diluted common share) for the quarter ended September 30, 2024, compared to net income of $3.9 million ($0.27 per diluted common share) for the quarter ended June 30, 2024 and a net loss of $10.1 million ($(0.72) per diluted common share) for the quarter ended September 30, 2023. The loss for the quarter ended September 30, 2023 was primarily attributable to the previously disclosed restructuring of the securities portfolio and surrender of bank owned life insurance (the “Restructuring”).

Selected Highlights

Earnings Growth – The Company’s third quarter 2024 diluted earnings per share represents an 11.1% increase over the second quarter 2024. Pre-tax, pre-provision earnings (Non-GAAP) of $5.7 million for the quarter ended September 30, 2024 represent a 21.5% increase over the $4.7 million for the three months ended June 30, 2024.
Margin Expansion – For the three months ended September 30, 2024, the Company reported an 11 basis points increase in net interest margin when compared to the three months ended June 30, 2024 and 23 basis points increase in net interest margin when compared to the three months ended September 30, 2023. In light of the liability sensitivity of the Company’s balance sheet, management anticipates continued margin expansion should the Federal Reserve continue to decrease the federal funds target rate.
Core Deposit Growth – Since June 30, 2024, the Company grew core customer funding sources $40.0 million or 6.8% annualized. Non-interest bearing demand deposits constituted the majority with growth of $35.3 million or 32.1% annualized from June 30, 2024.
Improved Funding Mix – On a year-to-date basis, the Company has grown core customer funding sources $79.4 million or 6.7% annualized. For the nine months ended September 30, 2024, the Company has reduced wholesale funding by $57.9 million or 19.6% annualized.
Loan Pipeline Growth – The Company’s loan pipeline remained strong with $128.1 million in new commitments recorded during the three months ended September 30, 2024, a 44.9% improvement on the $88.4 million of new commitments recorded during the three months ended June 30, 2024. New commitments represent loans closed, but not necessarily fully funded as of the end of the respective reporting period.
Pristine Asset Quality & Robust Capitalization – For the twentieth consecutive quarter, the Company had no non-performing loans, no other real estate owned and no loans 30 days or more past due. There were no charge-offs during the quarter. The Company continues to adhere to strict underwriting standards and proactively manages the portfolio. Each of the Bank’s regulatory capital ratios remained well in excess of the well-capitalized thresholds as of September 30, 2024.
Growing Book Value per Share – Book value per share has increased from $15.61 as of September 30, 2023 to $17.07 as of September 30, 2024, for an increase of 9.4%. When factoring in the $0.25 cash dividend per share paid in July 2024, the book value per share return has been 11.0% over the last twelve months.

Chris Bergstrom, President and Chief Executive Officer, commented, “The third quarter of 2024 reflects continued improvements in margin and net interest income. We expect to see opportunities to reprice loans at higher yields, reposition our funding base and lower funding costs. With the Federal Reserve taking an initial step in September to begin to lower the target range for the federal funds rate, we believe our margin improvement could accelerate. We have seen continued momentum with loan commitments and our capital, asset quality and liquidity positions are well-positioned to drive growth.”

Balance Sheet, Liquidity and Credit Quality

Total assets were $2.27 billion at September 30, 2024, $2.24 billion at December 31, 2023, and $2.30 billion at September 30, 2023. Total assets have decreased $23.8 million or 1.0% since September 30, 2023 and increased $31.8 million or 1.4% since December 31, 2023. As discussed below, the Company has decreased wholesale funds $18.2 million since September 30, 2023 and $57.9 million since December 31, 2023. Had the Company not redeemed these wholesale funds, total assets would have decreased $5.6 million or 0.2% since September 30, 2023 and increased $89.7 million or 4.0% since December 31, 2023.

Total loans, net of unearned income, increased $22.5 million or 1.2% to $1.84 billion at September 30, 2024, compared to $1.82 billion at September 30, 2023. The increase in loans was primarily attributable to growth in the investor real estate loan and residential mortgage portfolios, partially offset by a decrease in the commercial owner-occupied real estate and construction & development loan portfolio.

Total loans, net of unearned income, increased $15.4 million during the quarter ended September 30, 2024 from $1.83 billion at June 30, 2024. The Bank continued to gain momentum in its loan pipeline with $128.1 million in new loan commitments recorded during the quarter ended September 30, 2024 compared to $88.4 million in new loan commitments recorded during the quarter ended June 30, 2024.

The carrying value of the Company’s fixed income securities portfolio was $237.5 million at September 30, 2024, $265.5 million at December 31, 2023 and $265.4 million at September 30, 2023. The decrease in carrying value of the Company’s fixed income securities portfolio since September 30, 2023 was attributable to runoff of the portfolio. As of September 30, 2024, 95.7% of our bond portfolio carried the implied guarantee of the United States government or one of its agencies. At September 30, 2024, 61% of the fixed income portfolio was invested in amortizing bonds, which provides the Company with a source of steady cash flow. At September 30, 2024, the fixed income portfolio had an estimated weighted average life of 4.0 years. The available-for-sale portfolio comprised approximately 63% of the fixed income securities portfolio and had a weighted average life of 2.8 years at September 30, 2024. The held-to-maturity portfolio comprised approximately 37% of the fixed income securities portfolio and had a weighted average life of 6.0 years at September 30, 2024. The Company did not purchase or sell any fixed income securities during the three month period ended September 30, 2024.

The Company’s balance sheet remains highly liquid. The Company’s liquidity position, defined as the sum of cash, unencumbered securities and available secured borrowing capacity, totaled $775.5 million as of September 30, 2024 compared to $639.0 million as of December 31, 2023 and represented 34.1% and 28.5% of total assets, respectively. In addition to available secured borrowing capacity, the Bank had available federal funds lines of $110.0 million at September 30, 2024.

Total deposits were $1.94 billion at September 30, 2024, $1.91 billion at December 31, 2023 and $1.98 billion at September 30, 2023. During the quarter ended September 30, 2024, deposits increased $23.3 million or 1.2% primarily due to a 32.1% annualized increase in non-interest bearing demand deposits of $35.3 million. The Bank continued to manage reductions in costlier brokered deposits with a $17.5 million or 23.3% annualized decrease during the quarter. Absent the decrease in brokered deposits during the quarter, total deposits would have increased $64.1 million or 3.4%. As further detailed in the tables included in this release, core funding sources have increased $79.4 million and wholesale funding sources have decreased $57.9 million since December 31, 2023. As of September 30, 2024, the Company had $714.2 million deposits that were not insured or not collateralized compared to $634.1 million at December 31, 2023.

On September 3, 2024, the Company paid off its $77.0 million Bank Term Funding Program (“BTFP”) advance and concurrently secured three Federal Home Loan Bank (“FHLB”) advances totaling $56.0 million. The FHLB advances have a weighted average fixed interest rate of 4.01% compared to the BTFP advance fixed rate of 4.76%. Total borrowings as of September 30, 2024 consisted of subordinated debt totaling $24.7 million and the FHLB advances totaling $56.0 million.

Shareholders’ equity increased $22.5 million or 10.2% to $243.1 million at September 30, 2024 compared to $220.5 million at September 30, 2023. Book value per share was $17.07 as of September 30, 2024 compared to $15.61 as of September 30, 2023, an increase of 9.4%. The year-over-year change in book value per share was primarily due to the Company’s earnings over the previous twelve months and a decrease in accumulated other comprehensive loss. This increase was partially offset by increased cash dividends paid and increased share count from shareholder option exercises and restricted share award issuances. The decrease in accumulated other comprehensive loss was primarily attributable to decreases in unrealized losses on our available-for-sale investment portfolio due to market value increases.

The Bank’s capital ratios at September 30, 2024 remained well above regulatory thresholds for well-capitalized banks. As of September 30, 2024, the Bank’s total risk-based capital ratio was 16.3%, compared to 15.7% at September 30, 2023 and 15.7% at December 31, 2023. As outlined below, the Bank would continue to remain well above regulatory thresholds for well-capitalized banks at September 30, 2024 in the hypothetical scenario where the entire bond portfolio was sold at fair market value and any losses realized (Non-GAAP). Refer to “Explanation of Non-GAAP Measures” and the “Reconciliation of Certain Non-GAAP Financial Measures” table for further details about financial measures used in this release that were determined by methods other than in accordance with GAAP.

Bank Regulatory Capital Ratios (As Reported)

Well- Capitalized Threshold

September 30, 2024

December 31, 2023

September 30, 2023

Total risk-based capital ratio

10.0

16.3

15.7

Tier 1 risk-based capital ratio

8.0

15.3

14.7

14.6

Common equity tier 1 ratio

6.5

15.3

14.7

14.6

Leverage ratio

5.0

11.9

11.6

11.3

Adjusted Bank Regulatory Capital Ratios (Hypothetical Scenario of Selling All Bonds at Fair Market Value - Non-GAAP)

Well- Capitalized Threshold

September 30, 2024

December 31, 2023

September 30, 2023

Adjusted total risk-based capital ratio

10.0

15.6

14.7

14.1

Adjusted tier 1 risk-based capital ratio

8.0

14.5

13.5

12.9

Adjusted common equity tier 1 ratio

6.5

14.5

13.5

12.9

Adjusted leverage ratio

5.0

11.2

10.6

11.3

The Company recorded no charge-offs during the nine months ended September 30, 2024. As of September 30, 2024, the Company had no loans greater than 30 days past due, no non-accrual loans, and no other real estate owned assets.

At September 30, 2024, the allowance for loan credit losses was $18.4 million or 1.00% of outstanding loans, net of unearned income, compared to $19.5 million or 1.05% of outstanding loans, net of unearned income, at December 31, 2023. The decrease in the allowance as a percentage of outstanding loans, net of unearned income, resulted from changes in the Company’s loss driver analysis and assumptions, changes in the composition of the loan portfolio, improved economic forecasts used in the quantitative portion of the model and considerations of qualitative factors combined with the continued strong credit performance of our loan portfolio segments.

At September 30, 2024, the allowance for credit losses on unfunded loan commitments was $1.0 million compared to $0.6 million at December 31, 2023. The increase in the allowance for credit losses on unfunded loan commitments was primarily the result of increases in unfunded loan commitments.

The Company did not have an allowance for credit losses on held-to-maturity securities as of September 30, 2024 or December 31, 2023. As of September 30, 2024, 93.5% of our held-to-maturity portfolio carried the implied guarantee of the United States Government or one of its agencies.

The Company’s owner occupied and non-owner occupied CRE portfolios continue to be of sound credit quality. The following table provides a detailed breakout of the two aforementioned segments as of September 30, 2024, demonstrating their strong debt-service-coverage and loan-to-value ratios.

Commercial Real Estate

Owner Occupied

Non-owner Occupied

Asset Class

Weighted Average Loan- to-Value(1)

Weighted Average Debt Service Coverage Ratio(2)

Number of Total Loans

Principal Balance(3) (Dollars in thousands)

Weighted Average Loan- to-Value(1)

Weighted Average Debt Service Coverage Ratio(2)

Number of Total Loans

Principal Balance(3) (Dollars in thousands)

Warehouse & Industrial

56.4

3.0

77,492

50.1

2.5

113,421

Office

58.9

3.5

134

82,502

49.5

1.9

114,462

Retail

60.5

3.3

70,048

50.4

1.9

141

417,652

Church

28.5

2.7

32,249

- -

Hotel/Motel

- -

61.6

1.9

49,301

Other(4)

47.0

3.5

81,615

41.8

3.0

31,935

Total

287

343,906

261

726,771

____________________

(1)

Loan-to-value is determined at origination date and is divided by principal balance as of September 30, 2024.

(2)

The debt service coverage ratio (“DSCR”) is calculated from the primary source of repayment for the loan. Owner occupied DSCR’s are derived from cash flows from the owner occupant’s business, property and their guarantors, while non-owner occupied DSCR’s are derived from the net operating income of the property.

(3)

Principal balance excludes deferred fees or costs.

(4)

Other asset class is primarily comprised of schools, daycares and country clubs.

Income Statement Review

Quarterly Results

The Company reported net income of $4.2 million for the third quarter of 2024, an increase of $14.3 million when compared to the net loss of $10.1 million for the third quarter of 2023. The previously disclosed Restructuring, whereby the Company sold certain lower-yielding available-for-sale investment securities with a total par value of $161.2 million and agreed to surrender $21.4 million of bank owned life insurance (“BOLI”) contracts, resulted in a non-recurring, after-tax loss of $14.6 million that was recorded during the third quarter of 2023. Core net income (Non-GAAP) defined as reported net income excluding the non-recurring after-tax loss and taxes paid in conjunction with the Restructuring, was $4.5 million for the third quarter of 2023.

Net interest income for the third quarter of 2024 increased $1.2 million or 9.8% compared to the third quarter of 2023, driven primarily by the increase in yield on interest-earning assets, the increase in non-interest bearing deposit balances, and the decrease in interest-bearing deposit balances. The annualized net interest margin and tax-equivalent net interest margin (Non-GAAP) for the three months ended September 30, 2024 was 2.30%, as compared to 2.07% and 2.08%, respectively, for the same period in the prior year. The increase in net interest margin was primarily due to the increase in yields on the Company’s interest-earning assets outpacing the increase in cost of interest-bearing liabilities.

The yield on interest earning assets was 4.97% for the third quarter of 2024 compared to 4.54% for the same period in 2023. The increase in yield on interest earning assets was primarily due to higher yields on the Company’s loan portfolio as a result of repricing of assets subsequent to the third quarter of 2023. The cost of interest-bearing liabilities was 3.86% for the third quarter of 2024 compared to 3.41% for the same quarter in the prior year. The increase in the cost of interest-bearing liabilities was primarily due to the increase in the cost of interest-bearing deposits. During 2023, the Federal Reserve increased the federal funds rate 100 basis points, which generally resulted in an increase in rates offered on money market, NOW and savings deposit accounts and an increased cost when repricing time deposits since the third quarter of 2023. The Company continues to improve its funding mix. Average non-interest bearing demand deposits represented 22.6% of average funding for the three months ended September 30, 2024 versus 20.5% for the three months ended September 30, 2023. Average time deposits represented 36.2% of average funding for the three months ended September 30, 2024 versus 40.6% for the three months ended September 30, 2023.

The Company recorded a $400 thousand provision for credit losses for the third quarter of 2024 compared to a release of provision for credit losses of $829 thousand for the third quarter of 2023. The provision for credit losses during the third quarter of 2024 was primarily a result of increased unfunded loan commitments and changes in modeled probability of default and prepayment, curtailment and funding rates used in determining the allowance for credit losses.

Non-interest income was $617 thousand for the third quarter of 2024 compared to a loss of $16.8 million for the third quarter of 2023. Core non-interest income (Non-GAAP) defined as reported non-interest income excluding the $17.1 million loss stemming from the bond sale portion of the Restructuring was $299 thousand for the third quarter 2023. The increase in non-interest income of $318 thousand was primarily attributable to an increase of $199 thousand due to favorable mark-to-market adjustments on investments related to the Company’s nonqualified deferred compensation plan (“NQDC”) and a $133 thousand increase in gains recorded on the sale of the guaranteed portion of SBA 7(a) loans due to increased sale activity. These increases were partially offset by a decrease in BOLI income of $23 thousand due to the surrender of all BOLI policies in July 2023.

Non-interest expense increased $371 thousand or 4.8% during the third quarter of 2024 compared to the third quarter of 2023. The increase was primarily due to a non-recurring $322 thousand reversal of a litigation reserve during the third quarter of 2023. Excluding the effects of the $322 thousand reversal in 2023, non-interest expense increased $49 thousand or 0.6% during the third quarter of 2024 when compared to adjusted third quarter of 2023. The increase was primarily due to increases in professional fees and data processing expense, partially offset by lower salaries and employee benefit expense. The increase in professional fees was due to increased contract costs and services. The increase in data processing fees was primarily due to contractual increases and volume based activity. The decrease in salaries and employee benefits was due to lower incentive accruals and higher direct loan origination costs when compared to the same period of the prior year, partially offset by higher deferred compensation expense as result of mark-to-market fluctuations on the Company’s NQDC. The Company continues to analyze cost savings opportunities on existing leases and material contracts.

For the three months ended September 30, 2024, annualized non-interest expense to average assets was 1.39% compared to 1.30% for the three months ended September 30, 2023. The increase was primarily due to higher reported non-interest expense when comparing the two periods, as discussed above.

For the three months ended September 30, 2024, the annualized efficiency ratio was 58.3% compared to the annualized core efficiency ratio, which excludes the impact of the Restructuring (Non-GAAP), of 62.4% for the three months ended September 30, 2023. The decrease was primarily due to an increase in interest income.

Year-to-Date Results

The Company reported net income of $12.3 million for the nine months ended September 30, 2024, an increase of $11.7 million when compared to net income of $656 thousand for the nine-months ended September 30, 2023. This increase was primarily attributable to the Restructuring, as previously discussed, that resulted in an after-tax loss of $14.6 million. Core net income (Non-GAAP) was $15.3 million for the nine months ended September 30, 2023.

Net interest income for the nine months ended September 30, 2024 decreased $1.5 million or 3.8% compared to the same period of 2023, driven primarily by the increase in costs of interest-bearing liabilities outpacing the increase in yield on interest-earning assets. The yield on interest earning assets was 4.88% for the nine months ended September 30, 2024 compared to 4.32% for the same period in 2023. The increase in yield on interest earning assets was primarily due to higher yields on the Company’s loans and deposits in banks as a result of increases in interest rates and repricing of assets subsequent to the third quarter of 2023. The cost of interest-bearing liabilities was 3.83% for the nine months ended September 30, 2024 compared to 2.89% for the nine months ended September 30, 2023. The increase in the cost of interest-bearing liabilities was primarily due to a 94 basis points increase in the cost of interest-bearing deposits as a result of the repricing of the Company’s time deposits coupled with an increase in rates offered on money market, NOW and savings deposit accounts since the third quarter of 2023. The annualized net interest margin and tax-equivalent net interest margin (Non-GAAP) for the nine-months ended September 30, 2024 were both 2.20%, as compared to 2.21% and 2.24%, respectively, for the same period in the prior year. The decrease in net interest margin was primarily due to the increase in cost of interest-bearing deposits, which was partially offset by an increase in yields on the Company’s interest-earning assets.

The Company recorded a $0.7 million release of provision for credit losses for the nine months ended September 30, 2024 compared to $2.5 million release of provision for credit losses for the nine months ended September 30, 2023. The release of provision for credit losses during the nine months ended September 30, 2024 was primarily a result of changes in the composition and volume of the loan portfolio, improved economic forecasts used in the quantitative portion of the model and considerations of qualitative factors combined with the continued strong credit performance of our loan portfolio segments.

Non-interest income was $2.0 million for the nine months ended September 30, 2024 compared to a loss of $15.6 million for the nine months ended September 30, 2023. As previously disclosed and discussed herein, the Company recorded a loss on the sale of certain available-for-sale bonds of $17.1 million during the third quarter 2023. Core non-interest income (Non-GAAP) defined as reported non-interest income excluding the $17.1 million loss stemming from the bond sale portion of the Restructuring was $1.6 million for the nine months ended September 30, 2023. The 28.3% increase in non-interest income of $440 thousand was primarily attributable to a $459 thousand increase in gains recorded on the sale of the guaranteed portion of SBA 7(a) loans due to increased sale activity.

Non-interest expense increased $602 thousand or 2.6% during the nine months ended September 30, 2024 compared to the same period in 2023. The increase was primarily due to the non-recurring $322 thousand reversal of a litigation reserve during the third quarter of 2023 and previously disclosed non-recurring expenses totaling $138 thousand incurred during the first quarter of 2024. The first quarter 2024 non-recurring expenses were incurred in connection with a strategic opportunity that was explored and ultimately did not materialize. Excluding the effects of the $322 thousand reversal in 2023 and non-recurring expenses totaling $138 thousand incurred during 2024, non-interest expense increased $142 thousand or 0.6% during the adjusted nine months ended September 30, 2024 when compared to adjusted nine months ended September 30, 2023. The increase was primarily due to increases in professional fees and data processing expense, partially offset by lower salaries and employee benefit expense. The increase in professional fees was due to increased contract costs and services. The increase in data processing fees was primarily due to contractual increases and volume based activity. The decrease in salaries and employee benefits was due to lower incentive accruals and higher direct loan origination costs when compared to the same period of the prior year, partially offset by higher deferred compensation expense as result of mark-to-market fluctuations on the Company’s NQDC.

For the nine months ended September 30, 2024, annualized non-interest expense to average assets was 1.41% compared to 1.33% for the nine months ended September 30, 2023. The increase was primarily due to higher reported non-interest expense when comparing the two periods.

For the nine months ended September 30, 2024, the annualized efficiency ratio was 61.2% compared to the annualized core efficiency ratio (Non-GAAP) of 58.1% for the nine months ended September 30, 2023. The decrease in efficiency ratio was primarily due to a decrease in net interest income.

Explanation of Non-GAAP Financial Measures

This release contains financial information determined by methods other than in accordance with GAAP. Management believes that the supplemental Non-GAAP information provides a better comparison of period-to-period operating performance and the impact of non-recurring expenses and unrealized losses in the Company’s bond portfolio on the Bank’s regulatory capital ratios. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. Non-GAAP measures used in this release consist of the following:

Tax-equivalent net interest margin reflects adjustments for differences in tax treatment of interest income sources;
Adjusted Bank regulatory capital ratios in the hypothetical scenario where the entire bond portfolio was sold at fair market value and any losses realized;
Pre-tax, pre-provision earnings excludes income tax expense and the provision for (recovery of) credit losses; and
Core non-interest income, income before taxes, income tax expense, net income, earnings per share (basic and diluted), return on average assets (annualized), return on average equity (annualized), non-interest income as a percentage of average assets (annualized) and efficiency ratio excluding the impact of losses recognized in July 2023 on the sale of available-for-sale securities and taxes paid on the early surrender of BOLI policies.

These disclosures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to Non-GAAP performance measures which may be presented by other companies. Please refer to the Reconciliation of Certain Non-GAAP Financial Measures table and Average Balance Sheets, Interest and Rates tables for the respective periods for a reconciliation of these Non-GAAP measures to the most directly comparable GAAP measure.

About John Marshall Bancorp, Inc.

John Marshall Bancorp, Inc. is the bank holding company for John Marshall Bank. The Bank is headquartered in Reston, Virginia with eight full-service branches located in Alexandria, Arlington, Loudoun, Prince William, Reston, and Tysons, Virginia, as well as Rockville, Maryland, and Washington, D.C. The Bank is dedicated to providing exceptional value, personalized service and convenience to local businesses and professionals in the Washington, D.C. Metropolitan area. The Bank offers a comprehensive line of sophisticated banking products and services that rival those of the largest banks along with experienced staff to help achieve customers’ financial goals. Dedicated relationship managers serve as direct points-of-contact, providing subject matter expertise in a variety of niche industries including charter and private schools, government contractors, health services, nonprofits and associations, professional services, property management companies and title companies. Learn more at www.johnmarshallbank.com.

Cautionary Note Regarding Forward-Looking Statements

In addition to historical information, this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and the Bank include, but are not limited to, the following: the concentration of our business in the Washington, D.C. metropolitan area and the effect of changes in the economic, political and environmental conditions on this market; adequacy of our allowance for loan credit losses; allowance for unfunded commitments credit losses, and allowance for credit losses associated with our held-to-maturity and available-for-sale securities portfolios; deterioration of our asset quality; future performance of our loan portfolio with respect to recently originated loans; the level of prepayments on loans and mortgage-backed securities; liquidity, interest rate and operational risks associated with our business; changes in our financial condition or results of operations that reduce capital; our ability to maintain existing deposit relationships or attract new deposit relationships; changes in consumer spending, borrowing and savings habits; inflation and changes in interest rates that may reduce our margins or reduce the fair value of financial instruments; changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System; additional risks related to new lines of business, products, product enhancements or services; increased competition with other financial institutions and fintech companies; adverse changes in the securities markets; changes in the financial condition or future prospects of issuers of securities that we own; our ability to maintain an effective risk management framework; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory structure and in regulatory fees and capital requirements; compliance with legislative or regulatory requirements; results of examination of us by our regulators, including the possibility that our regulators may require us to increase our allowance for credit losses or to write-down assets or take similar actions; potential claims, damages, and fines related to litigation or government actions; the effectiveness of our internal controls over financial reporting and our ability to remediate any future material weakness in our internal controls over financial reporting; geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, negatively impacting business and economic conditions in the U.S. and abroad; the effects of weather-related or natural disasters, which may negatively affect our operations and/or our loan portfolio and increase our cost of conducting business; public health events (such as the COVID-19 pandemic) and governmental and societal responses thereto; technological risks and developments, and cyber threats, attacks, or events; the additional requirements of being a public company; changes in accounting policies and practices; our ability to successfully capitalize on growth opportunities; our ability to retain key employees; deteriorating economic conditions, either nationally or in our market area, including higher unemployment and lower real estate values; implications of our status as a smaller reporting company and as an emerging growth company; and other factors discussed in the Company’s reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

John Marshall Bancorp, Inc.

Financial Highlights (Unaudited)

(Dollar amounts in thousands, except per share data)

At or For the Three Months Ended

At or For the Nine Months Ended

September 30,

2024

2023

2024

2023

Selected Balance Sheet Data

Cash and cash equivalents

177,227

192,656

177,227

192,656

Total investment securities

247,840

272,881

247,840

272,881

Loans, net of unearned income

1,842,598

1,820,132

1,842,598

1,820,132

Allowance for loan credit losses

18,481

20,036

18,481

20,036

Total assets

2,274,363

2,298,202

2,274,363

2,298,202

Non-interest bearing demand deposits

472,422

437,880

472,422

437,880

Interest bearing deposits

1,463,728

1,543,743

1,463,728

1,543,743

Total deposits

1,936,150

1,981,623

1,936,150

1,981,623

Federal Home Loan Bank advances

56,000

- -

56,000

Federal Reserve Bank borrowings

- -

54,000

- -

54,000

Shareholders' equity

243,118

220,567

243,118

220,567

Summary Results of Operations

Interest income

28,428

26,263

82,138

74,171

Interest expense

15,272

14,284

45,158

35,715

Net interest income

13,156

11,979

36,980

38,456

Provision for (recovery of) credit losses

400

(829

)

(667

)

(2,471

)

Net interest income after provision for (recovery of) credit losses

12,756

12,808

37,647

40,927

Non-interest income (loss)

617

(16,815

)

1,990

(15,564

)

Core non-interest income(1)

617

299

1,990

1,550

Non-interest expense

8,031

7,660

23,863

23,261

Income (loss) before income taxes

5,342

(11,667

)

15,774

2,102

Core income before income taxes(1)

5,342

5,447

15,774

19,216

Net income (loss)

4,235

(10,137

)

12,344

656

Core net income(1)

4,235

4,484

12,344

15,277

Per Share Data and Shares Outstanding

Earnings (loss) per share - basic

0.30

(0.72

)

0.87

0.05

Core earnings per share - basic(1)

0.30

0.32

0.87

1.08

Earnings (loss) per share - diluted

0.30

(0.72

)

0.87

0.05

Core earnings per share - diluted(1)

0.30

0.32

0.87

1.08

Book value per share

17.07

15.61

17.07

15.61

Weighted average common shares (basic)

14,187,691

14,080,026

14,164,060

14,126,522

Weighted average common shares (diluted)

14,214,586

14,080,026

14,198,332

14,199,179

Common shares outstanding at end of period

14,238,677

14,126,084

14,238,677

14,126,084

Performance Ratios

Return on average assets (annualized)

0.73

(1.73

0.73

0.04

Core return on average assets (annualized)(1)

0.73

0.76

0.73

0.87

Return on average equity (annualized)

7.00

(18.24

6.97

0.40

Core return on average equity (annualized)(1)

7.00

8.07

6.97

9.25

Net interest margin

2.30

2.07

2.20

2.22

Tax-equivalent net interest margin (Non-GAAP)

2.30

2.08

2.20

2.25

Non-interest income (loss) as a percentage of average assets (annualized)

0.11

(2.86

0.12

(0.89

Core non-interest income as a percentage of average assets (annualized)(1)

0.11

0.05

0.12

0.09

Non-interest expense to average assets (annualized)

1.39

1.30

1.41

1.33

Efficiency ratio

58.3

(158.4

61.2

101.6

Core efficiency ratio(1)

58.3

62.4

61.2

58.1

Asset Quality

Non-performing assets to total assets

- -

Non-performing loans to total loans

- -

Allowance for loan credit losses to non-performing loans

N/M

Allowance for loan credit losses to total loans

1.00

1.10

1.00

1.10

Net charge-offs (recoveries) to average loans (annualized)

0.00

Loans 30-89 days past due and accruing interest

- -

Non-accrual loans

- -

Other real estate owned

- -

Non-performing assets (2)

- -

Capital Ratios (Bank Level)

Equity / assets

11.6

10.6

11.6

10.6

Total risk-based capital ratio

16.3

15.7

16.3

15.7

Tier 1 risk-based capital ratio

15.3

14.6

15.3

14.6

Common equity tier 1 ratio

15.3

14.6

15.3

14.6

Leverage ratio

11.9

11.3

11.9

11.3

Other Information

Number of full time equivalent employees

134

138

134

138

# Full service branch offices

__________________

(1)

Non-GAAP financial measure. Refer to “Reconciliation of Certain Non-GAAP Financial Measures” for further details.

(2)

Non-performing assets consist of non-accrual loans, loans 90 days or more past due and still accruing interest and other real estate owned.

John Marshall Bancorp, Inc.

Consolidated Balance Sheets

(Dollar amounts in thousands, except per share data)

% Change

September 30,

December 31,

September 30,

Last Nine

Year Over

2024

2023

Months

Year

Assets

(Unaudited)

Cash and due from banks

8,164

7,424

7,642

10.0

6.8

Interest-bearing deposits in banks

169,063

91,581

185,014

84.6

(8.6

Securities available-for-sale, at fair value

144,649

169,993

169,084

(14.9

(14.5

Securities held-to-maturity at amortized cost, fair value of $79,731, $79,532, and $75,733 at 9/30/2024, 12/31/2023, and 9/30/2023, respectively.

92,863

95,505

96,347

(2.8

(3.6

Restricted securities, at cost

7,630

5,012

5,007

52.2

52.4

Equity securities, at fair value

2,698

2,792

2,443

(3.4

10.4

Loans, net of unearned income

1,842,598

1,859,967

1,820,132

(0.9

1.2

Allowance for credit losses

(18,481

)

(19,543

)

(20,036

)

(5.4

(7.8

Net loans

1,824,117

1,840,424

1,800,096

(0.9

1.3

Bank premises and equipment, net

1,179

1,281

1,264

(8.0

(6.7

Accrued interest receivable

5,657

6,110

5,701

(7.4

(0.8

Right of use assets

3,824

4,176

4,136

(8.4

(7.5

Other assets

14,519

18,251

21,468

(20.4

(32.4

Total assets

2,274,363

2,242,549

2,298,202

1.4

(1.0

Liabilities and Shareholders' Equity

Liabilities

Deposits:

Non-interest bearing demand deposits

472,422

411,374

437,880

14.8

7.9

Interest-bearing demand deposits

685,385

607,971

675,819

12.7

1.4

Savings deposits

43,779

52,061

57,408

(15.9

(23.7

Time deposits

734,564

835,194

810,516

(12.0

(9.4

Total deposits

1,936,150

1,906,600

1,981,623

1.5

(2.3

Federal funds purchased

- -

10,000

- -

(100.0

N/M

Federal Home Loan Bank advances

56,000

- -

N/M

Federal Reserve Bank borrowings

- -

54,000

(100.0

Subordinated debt, net

24,770

24,708

24,687

0.3

Accrued interest payable

2,304

4,559

2,610

(49.5

(11.7

Lease liabilities

4,090

4,446

4,415

(8.0

(7.4

Other liabilities

7,931

8,322

10,300

(4.7

(23.0

Total liabilities

2,031,245

2,012,635

2,077,635

0.9

(2.2

Shareholders' Equity

Preferred stock, par value $0.01 per share; authorized 1,000,000 shares; none issued

- -

N/M

Common stock, nonvoting, par value $0.01 per share; authorized 1,000,000 shares; none issued

- -

N/M

Common stock, voting, par value $0.01 per share; authorized 30,000,000 shares; issued and outstanding, 14,238,677 at 9/30/24 including 45,753 unvested shares, issued and outstanding, 14,148,533 at 12/31/2023 including 47,318 unvested shares, and 14,126,084 at 9/30/2023 including 45,871 unvested shares

142

141

0.7

Additional paid-in capital

97,017

95,636

95,510

1.4

1.6

Retained earnings

155,174

146,388

141,886

6.0

9.4

Accumulated other comprehensive loss

(9,215

)

(12,251

)

(16,970

)

(24.8

(45.7

Total shareholders' equity

243,118

229,914

220,567

5.7

10.2

Total liabilities and shareholders' equity

2,274,363

2,242,549

2,298,202

1.4

(1.0

* Derived from audited consolidated financial statements.

John Marshall Bancorp, Inc.

Consolidated Statements of Income

(Dollar amounts in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30

2024

2023

% Change

2024

2023

% Change

(Unaudited)

Interest and Dividend Income

Interest and fees on loans

24,306

21,925

10.9

71,289

63,355

12.5

Interest on investment securities, taxable

1,138

1,507

(24.5

3,602

5,895

(38.9

Interest on investment securities, tax-exempt

(10.0

(40.0

Dividends

29.3

262

222

18.0

Interest on deposits in other banks

2,878

2,746

4.8

6,958

4,654

49.5

Total interest and dividend income

28,428

26,263

8.2

82,138

74,171

10.7

Interest Expense

Deposits

14,102

13,273

6.2

41,484

33,590

23.5

Federal funds purchased

- -

N/M

Federal Home Loan Bank advances

174

- -

N/M

174

N/M

Federal Reserve Bank borrowings

647

662

(2.3

2,451

1,001

144.9

Subordinated debt

349

1,047

Total interest expense

15,272

14,284

6.9

45,158

35,715

26.4

Net interest income

13,156

11,979

9.8

36,980

38,456

(3.8

Provision for (recovery of) Credit Losses

400

(829

)

(148.3

(667

)

(2,471

)

(73.0

Net interest income after provision for (recovery of) credit losses

12,756

12,808

(0.4

37,647

40,927

(8.0

Non-interest Income

Service charges on deposit accounts

(1.2

260

239

8.8

Bank owned life insurance

- -

N/M

- -

224

N/M

Other service charges and fees

160

- -

474

677

(30.0

Losses on sale of available-for-sale securities

- -

(17,114

)

N/M

- -

(17,316

)

N/M

Insurance commissions

18.5

357

310

15.2

Gain on sale of government guaranteed loans

160

N/M

509

N/M

Non-qualified deferred compensation plan asset gains (loss), net

139

(60

)

N/M

298

112

166.1

Other income

- -

140

(34.3

Total non-interest income (loss)

617

(16,815

)

(103.7

1,990

(15,564

)

(112.8

)

Non-interest Expenses

Salaries and employee benefits

4,897

5,052

(3.1

14,583

14,929

(2.3

Occupancy expense of premises

444

445

1,343

1,363

(1.5

Furniture and equipment expenses

304

282

7.8

902

882

2.3

Other expenses

2,386

1,881

26.8

7,035

6,087

15.6

Total non-interest expenses

8,031

7,660

4.8

23,863

23,261

2.6

Income (Loss) before income taxes

5,342

(11,667

)

(145.8

15,774

2,102

650.4

Income Tax Expense (Benefit)

1,107

(1,530

)

(172.4

3,430

1,446

137.2

Net income (Loss)

4,235

(10,137

)

(141.8

12,344

656

1,781.7

Earnings Per Share

Basic

0.30

(0.72

)

N/M

0.87

0.05

N/M

Diluted

0.30

(0.72

)

N/M

0.87

0.05

N/M

John Marshall Bancorp, Inc.

Historical Trends - Quarterly Financial Data (Unaudited)

(Dollar amounts in thousands, except per share data)

2024

2023

September 30

June 30

March 31

December 31

September 30

June 30

March 31

Profitability for the Quarter:

Interest income

28,428

26,791

26,919

26,598

26,263

24,455

23,453

Interest expense

15,272

14,710

15,175

14,571

14,284

12,446

8,984

Net interest income

13,156

12,081

11,744

12,027

11,979

12,009

14,469

Provision for (recovery of) credit losses

400

(292

)

(776

)

(781

)

(829

)

(868

)

(774

)

Non-interest income (loss)

617

555

818

624

(16,815

)

685

566

Non-interest expenses

8,031

7,909

7,924

7,554

7,660

7,831

7,770

Income (loss) before income taxes

5,342

5,019

5,414

5,878

(11,667

)

5,731

8,039

Income tax expense (benefit)

1,107

1,114

1,210

1,376

(1,530

)

1,241

1,735

Net income (loss)

4,235

3,905

4,204

4,502

(10,137

)

4,490

6,304

Financial Performance:

Return on average assets (annualized)

0.73

0.70

0.75

0.78

(1.73

0.77

1.10

Return on average equity (annualized)

7.00

6.68

7.23

7.91

(18.24

8.13

11.83

Net interest margin

2.30

2.19

2.10

2.11

2.07

2.09

2.56

Tax-equivalent net interest margin (Non-GAAP)

2.30

2.19

2.11

2.12

2.08

2.10

2.57

Non-interest income (loss) as a percentage of average assets (annualized)

0.11

0.10

0.15

0.11

(2.86

0.12

0.10

Non-interest expense to average assets (annualized)

1.39

1.42

1.41

1.31

1.30

1.34

1.35

Efficiency ratio

58.3

62.6

63.1

59.7

(158.4

61.7

51.7

Per Share Data:

Earnings (loss) per share - basic

0.30

0.27

0.30

0.32

(0.72

)

0.32

0.45

Earnings (loss) per share - diluted

0.30

0.27

0.30

0.32

(0.72

)

0.32

0.44

Book value per share

17.07

16.54

16.51

16.25

15.61

15.50

15.63

Dividends declared per share

- -

0.25

- -

0.22

- -

Weighted average common shares (basic)

14,187,691

14,173,245

14,130,986

14,082,762

14,080,026

14,077,658

14,067,047

Weighted average common shares (diluted)

14,214,586

14,200,171

14,181,254

14,145,607

14,080,026

14,143,253

14,156,724

Common shares outstanding at end of period

14,238,677

14,229,853

14,209,606

14,148,533

14,126,084

14,126,138

14,125,208

Non-interest Income:

Service charges on deposit accounts

Bank owned life insurance

- -

101

100

Other service charges and fees

160

165

149

161

160

314

203

Losses on sale of available-for-sale securities

- -

(17,114

)

- -

(202

)

Insurance commissions

252

206

Gain on sale of government guaranteed loans

160

216

133

- -

Non-qualified deferred compensation plan asset gains (losses), net

139

124

205

(60

)

Other income

Total non-interest income (loss)

617

555

818

624

(16,815

)

685

566

Non-interest Expenses:

Salaries and employee benefits

4,897

4,875

4,810

4,507

5,052

4,965

4,912

Occupancy expense of premises

444

448

451

448

445

448

470

Furniture and equipment expenses

304

301

297

296

282

304

296

Other expenses

2,386

2,285

2,366

2,303

1,881

2,114

2,092

Total non-interest expenses

8,031

7,909

7,924

7,554

7,660

7,831

7,770

Balance Sheets at Quarter End:

Total loans, net of unearned income

1,842,598

1,827,187

1,825,931

1,859,967

1,820,132

1,769,801

1,771,272

Allowance for loan credit losses

(18,481

)

(18,433

)

(18,671

)

(19,543

)

(20,036

)

(20,629

)

(21,619

)

Investment securities

247,840

249,582

261,341

273,302

272,881

429,954

445,785

Interest-earning assets

2,259,501

2,249,350

2,234,592

2,224,850

2,278,027

2,315,368

2,312,404

Total assets

2,274,363

2,269,757

2,251,837

2,242,549

2,298,202

2,364,250

2,351,307

Total deposits

1,936,150

1,912,840

1,900,990

1,906,600

1,981,623

2,046,309

2,088,642

Total interest-bearing liabilities

1,544,498

1,577,420

1,598,050

1,583,934

1,622,430

1,691,044

1,665,837

Total shareholders' equity

243,118

235,346

234,550

229,914

220,567

218,970

220,823

Quarterly Average Balance Sheets:

Total loans, net of unearned income

1,818,472

1,810,722

1,835,966

1,837,855

1,790,720

1,767,831

1,772,922

Investment securities

249,354

255,940

270,760

273,264

310,407

441,778

463,254

Interest-earning assets

2,277,427

2,222,658

2,247,620

2,260,356

2,301,642

2,305,050

2,295,677

Total assets

2,292,385

2,239,261

2,264,544

2,280,060

2,331,403

2,344,712

2,334,695

Total deposits

1,939,601

1,883,010

1,914,173

1,956,039

2,012,934

2,051,702

2,066,139

Total interest-bearing liabilities

1,573,631

1,551,953

1,600,197

1,587,179

1,660,980

1,667,597

1,621,131

Total shareholders' equity

240,609

235,136

233,952

225,718

220,473

221,608

220,282

Financial Measures:

Average equity to average assets

10.5

10.3

9.9

9.5

9.4

Investment securities to earning assets

11.0

11.1

11.7

12.3

12.0

18.6

19.3

Loans to earning assets

81.5

81.2

81.7

83.6

79.9

76.4

76.6

Loans to assets

81.0

80.5

81.1

82.9

79.2

74.9

75.3

Loans to deposits

95.2

95.5

96.1

97.6

91.9

86.5

84.8

Capital Ratios (Bank Level):

Equity / assets

11.6

11.4

11.3

11.1

10.6

10.2

10.3

Total risk-based capital ratio

16.3

16.4

16.1

15.7

16.1

Tier 1 risk-based capital ratio

15.3

15.4

15.1

14.7

14.6

15.0

14.9

Common equity tier 1 ratio

15.3

15.4

15.1

14.7

14.6

15.0

14.9

Leverage ratio

11.9

12.2

11.8

11.6

11.3

11.6

11.5

John Marshall Bancorp, Inc.

Loan, Deposit and Borrowing Detail (Unaudited)

(Dollar amounts in thousands)

2024

2023

September 30

June 30

March 31

December 31

September 30

June 30

March 31

Loans

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

Commercial business loans

39,741

2.2

41,806

2.3

42,779

2.3

45,073

2.4

37,793

2.1

40,156

2.3

41,204

2.3

Commercial PPP loans

126

0.0

127

0.0

129

0.0

131

0.0

132

0.0

133

0.0

135

0.0

Commercial owner-occupied real estate loans

343,906

18.7

349,644

19.2

356,335

19.6

360,102

19.4

363,017

20.0

360,859

20.4

363,495

20.6

Total business loans

383,773

20.9

391,577

21.5

399,243

21.9

405,306

21.8

400,942

22.1

401,148

22.7

404,834

22.9

Investor real estate loans

726,771

39.5

722,419

39.6

692,418

38.0

689,556

37.1

683,686

37.6

654,623

37.0

660,740

37.4

Construction & development loans

161,466

8.8

138,744

7.6

151,476

8.3

180,922

9.8

179,570

9.9

179,656

10.2

179,606

10.2

Multi-family loans

91,426

5.0

91,925

5.1

94,719

5.2

96,458

5.2

86,366

4.8

86,061

4.9

88,670

5.0

Total commercial real estate loans

979,663

53.3

953,088

52.3

938,613

51.5

966,936

52.1

949,622

52.3

920,340

52.1

929,016

52.6

Residential mortgage loans

473,787

25.8

476,764

26.2

482,254

26.5

482,182

26.1

464,509

25.7

443,305

25.2

433,076

24.5

Consumer loans

877

0.0

876

0.0

772

0.0

560

0.0

467

0.0

646

0.0

324

0.0

Total loans

1,838,100

100.0

1,822,305

100.0

1,820,882

100.0

1,854,984

100.0

1,815,540

100.0

1,765,439

100.0

1,767,250

100.0

Less: Allowance for loan credit losses

(18,481)

(18,433)

(18,671)

(19,543)

(20,036)

(20,629)

(21,619)

Net deferred loan costs (fees)

4,498

4,882

5,049

4,983

4,592

4,362

4,022

Net loans

1,824,117

1,808,754

1,807,260

1,840,424

1,800,096

1,749,172

1,749,653

2024

2023

September 30

June 30

March 31

December 31

September 30

June 30

March 31

Deposits

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

$ Amount

% of Total

Non-interest bearing demand deposits

472,422

24.4

437,169

22.8

404,669

21.3

411,374

21.6

437,880

22.1

433,931

21.2

447,450

21.4

Interest-bearing demand deposits:

NOW accounts(1)

324,660

16.8

321,702

16.8

318,445

16.8

297,321

15.6

345,522

17.4

311,225

15.2

284,872

13.7

Money market accounts(1)

360,725

18.6

346,249

18.1

326,135

17.1

310,650

16.3

330,297

16.6

341,413

16.7

392,962

18.8

Savings accounts

43,779

2.3

45,884

2.4

50,664

2.7

52,061

2.8

57,408

3.0

68,013

3.4

81,150

3.9

Certificates of deposit

$250,000 or more

334,591

17.3

339,908

17.8

355,766

18.7

357,768

18.7

364,805

18.4

376,899

18.4

338,824

16.2

Less than $250,000

86,932

4.5

91,258

4.8

99,694

5.2

101,567

5.3

103,600

5.2

105,956

5.2

94,429

4.5

QwickRate® certificates of deposit

4,119

0.2

4,119

0.2

5,117

0.3

9,686

0.5

11,526

0.6

12,772

0.6

16,952

0.8

IntraFi® certificates of deposit

32,801

1.7

32,922

1.7

34,443

1.8

45,748

2.4

41,659

2.1

49,729

2.4

53,178

2.5

Brokered deposits

276,121

14.3

293,629

15.4

306,057

16.1

320,425

16.8

288,926

14.6

346,371

16.9

378,825

18.2

Total deposits

1,936,150

100.0

1,912,840

100.0

1,900,990

100.0

1,906,600

100.0

1,981,623

100.0

2,046,309

100.0

2,088,642

100.0

Borrowings

Federal funds purchased

- -

0.0

- -

0.0

- -

0.0

10,000

11.3

- -

0.0

- -

0.0

- -

0.0

Federal Home Loan Bank advances

56,000

69.3

- -

0.0

- -

0.0

- -

0.0

- -

0.0

- -

0.0

- -

0.0

Federal Reserve Bank borrowings

- -

0.0

77,000

75.7

77,000

75.7

54,000

60.9

54,000

68.6

54,000

68.6

- -

0.0

Subordinated debt, net

24,770

30.7

24,749

24.3

24,729

24.3

24,708

27.8

24,687

31.4

24,666

31.4

24,645

100.0

Total borrowings

80,770

100.0

101,749

100.0

101,729

100.0

88,708

100.0

78,687

100.0

78,666

100.0

24,645

100.0

Total deposits and borrowings

2,016,920

2,014,589

2,002,719

1,995,308

2,060,310

2,124,975

2,113,287

Core customer funding sources (2)

1,655,910

83.1

1,615,092

81.2

1,589,816

80.4

1,576,489

80.0

1,681,171

82.6

1,687,166

80.3

1,692,865

81.1

Wholesale funding sources (3)

336,240

16.9

374,748

18.8

388,174

19.6

394,111

20.0

354,452

17.4

413,143

19.7

395,777

18.9

Total funding sources

1,992,150

100.0

1,989,840

100.0

1,977,990

100.0

1,970,600

100.0

2,035,623

100.0

2,100,309

100.0

2,088,642

100.0

______________________

(1)

Includes IntraFi® accounts.

(2)

Includes reciprocal IntraFi Demand®, IntraFi Money Market® and IntraFi CD® deposits, which are maintained by customers.

(3)

Consists of QwickRate® certificates of deposit, brokered deposits, federal funds purchased, Federal Home Loan Bank advances and Federal Reserve Bank borrowings.

John Marshall Bancorp, Inc.

Average Balance Sheets, Interest and Rates (unaudited)

(Dollar amounts in thousands)

Nine Months Ended September 30, 2024

Nine Months Ended September 30, 2023

Interest Income /

Average

Interest Income /

Average

(Dollars in thousands)

Average Balance

Expense

Rate

Average Balance

Expense

Rate

Assets:

Securities:

Taxable

257,272

3,864

2.01

401,623

6,117

2.04

Tax-exempt(1)

1,379

3.29

2,678

2.80

Total securities

258,651

3,898

2.01

404,301

6,173

2.04

Loans, net of unearned income(2):

Taxable

1,802,807

70,858

5.25

1,748,904

62,664

4.79

Tax-exempt(1)

18,901

546

3.86

28,319

875

4.13

Total loans, net of unearned income

1,821,708

71,404

5.24

1,777,223

63,539

4.78

Interest-bearing deposits in other banks

168,979

6,958

5.50

119,002

4,654

5.23

Total interest-earning assets

2,249,338

82,260

4.88

2,300,526

74,366

4.32

Total non-interest earning assets

16,133

36,572

Total assets

2,265,471

2,337,098

Liabilities & Shareholders’ Equity:

Interest-bearing deposits

NOW accounts

312,255

6,533

2.79

291,217

4,484

2.06

Money market accounts

340,362

8,190

3.21

374,053

7,560

2.70

Savings accounts

50,060

529

1.41

75,273

673

1.20

Time deposits

773,537

26,232

4.53

855,076

20,873

3.26

Total interest-bearing deposits

1,476,214

41,484

3.75

1,595,619

33,590

2.81

Federal funds purchased

7.22

294

4.55

Subordinated debt

24,737

1,047

5.65

24,653

1,047

5.68

Federal Reserve Bank borrowings

68,543

2,451

4.78

27,494

1,001

4.86

Federal Home Loan Bank advances

5,723

174

4.06

1,989

4.50

Total interest-bearing liabilities

1,575,254

45,158

3.83

1,650,049

35,715

2.89

Demand deposits

436,147

447,778

Other liabilities

17,489

18,483

Total liabilities

2,028,890

2,116,310

Shareholders’ equity

236,581

220,788

Total liabilities and shareholders’ equity

2,265,471

2,337,098

Tax-equivalent net interest income and spread (Non-GAAP)(1)

37,102

1.06

38,651

1.43

Less: tax-equivalent adjustment

122

195

Net interest income and spread (GAAP)

36,980

1.05

38,456

1.40

Interest income/earning assets

4.88

4.29

Interest expense/earning assets

2.68

2.08

Net interest margin

2.20

2.21

Tax-equivalent interest income/earning assets (Non-GAAP)(1)

4.88

4.32

Interest expense/earning assets

2.68

2.08

Tax-equivalent net interest margin (Non-GAAP)(3)

2.20

2.24

________________

(1)

Tax-equivalent income and related measures have been adjusted using the federal statutory tax rate of 21%. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $122 thousand and $195 thousand for the nine months ended September 30, 2024 and September 30, 2023, respectively.

(2)

The Company did not have any loans on non-accrual as of September 30, 2024 and September 30, 2023.

(3)

Tax-equivalent net interest margin adjusts for differences in tax treatment of interest income sources. The entire tax-equivalent adjustment is attributable to interest income on earning assets. Interest expense and the related cost of interest-bearing liabilities and cost of funds ratios are not affected by the tax-equivalent components.

John Marshall Bancorp, Inc.

Average Balance Sheets, Interest and Rates (unaudited)

(Dollar amounts in thousands)

Three Months Ended September 30, 2024

Three Months Ended September 30, 2023

Interest Income /

Average

Interest Income /

Average

(Dollars in thousands)

Average Balance

Expense

Rate

Average Balance

Expense

Rate

Assets:

Securities:

Taxable

247,975

1,235

1.98

308,723

1,582

2.03

Tax-exempt(1)

1,379

3.17

1,684

3.06

Total securities

249,354

1,246

1.99

310,407

1,595

2.04

Loans, net of unearned income(2):

Taxable

1,801,422

24,173

5.34

1,762,653

21,695

4.88

Tax-exempt(1)

17,050

168

3.92

28,067

292

4.13

Total loans, net of unearned income

1,818,472

24,341

5.33

1,790,720

21,987

4.87

Interest-bearing deposits in other banks

209,601

2,878

5.46

200,515

2,746

5.43

Total interest-earning assets

2,277,427

28,465

4.97

2,301,642

26,328

4.54

Total non-interest earning assets

14,958

29,761

Total assets

2,292,385

2,331,403

Liabilities & Shareholders’ Equity:

Interest-bearing deposits

NOW accounts

319,463

2,321

2.89

327,309

2,239

2.71

Money market accounts

374,141

3,068

3.26

341,672

2,609

3.03

Savings accounts

45,980

168

1.45

63,956

198

1.23

Time deposits

738,680

8,545

4.60

849,270

8,227

3.84

Total interest-bearing deposits

1,478,264

14,102

3.80

1,582,207

13,273

3.33

Federal funds purchased

—

N/M

—

Subordinated debt

24,758

349

5.61

24,674

349

5.61

Federal Reserve Bank borrowings

53,565

647

4.81

54,000

662

4.86

Federal Home Loan Bank advances

17,044

174

4.06

—

Total interest-bearing liabilities

1,573,631

15,272

3.86

1,660,980

14,284

3.41

Demand deposits

461,337

430,727

Other liabilities

16,808

19,223

Total liabilities

2,051,776

2,110,930

Shareholders’ equity

240,609

220,473

Total liabilities and shareholders’ equity

2,292,385

2,331,403

Tax-equivalent net interest income and spread (Non-GAAP)(1)

13,193

1.11

12,044

1.13

Less: tax-equivalent adjustment

Net interest income and spread (GAAP)

13,156

1.11

11,979

1.12

Interest income/earning assets

4.97

4.53

Interest expense/earning assets

2.67

2.46

Net interest margin

2.30

2.07

Tax-equivalent interest income/earning assets (Non-GAAP)(1)

4.97

4.54

Interest expense/earning assets

2.67

2.46

Tax-equivalent net interest margin (Non-GAAP)(3)

2.30

2.08

___________________

(1)

Tax-equivalent income and related measures have been adjusted using the federal statutory tax rate of 21%. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $37 thousand and $65 thousand for the three months ended September 30, 2024 and September 30, 2023, respectively.

(2)

The Company did not have any loans on non-accrual as of September 30, 2024 and September 30, 2023.

(3)

John Marshall Bancorp, Inc.

Reconciliation of Certain Non-GAAP Financial Measures (unaudited)

(Dollar amounts in thousands)

As of

September 30, 2024

December 31, 2023

September 30, 2023

Regulatory Ratios (Bank)

Total risk-based capital (GAAP)

291,881

282,082

280,891

Less: Unrealized losses on available-for-sale securities, net of tax benefit (1)

9,304

12,401

17,143

Less: Unrealized losses on held-to-maturity securities, net of tax benefit (1)

10,285

12,469

16,285

Adjusted total risk-based capital, excluding unrealized losses on available-for-sale and held-to-maturity securities, net of tax benefit (Non-GAAP)

272,292

257,212

247,463

Tier 1 capital (GAAP)

273,529

263,637

261,666

Less: Unrealized losses on available-for-sale securities, net of tax benefit (1)

9,304

12,401

17,143

Less: Unrealized losses on held-to-maturity securities, net of tax benefit (1)

10,285

12,469

16,285

Adjusted tier 1 capital, excluding unrealized losses on available-for-sale and held-to-maturity securities, net of tax benefit (Non-GAAP)

253,940

238,767

228,238

Risk weighted assets (GAAP)

1,787,663

1,794,769

1,794,603

Less: Risk weighted available-for-sale securities

21,440

24,184

25,094

Less: Risk weighted held-to-maturity securities

16,618

17,079

17,229

Adjusted risk weighted assets, excluding available-for-sale and held-to-maturity securities (Non-GAAP)

1,749,605

1,753,506

1,752,280

Total average assets for leverage ratio (GAAP)

2,290,205

2,274,911

2,326,722

Less: Unrealized losses on available-for-sale securities, net of tax benefit (1)

9,304

12,401

206,116

Less: Unrealized losses on held-to-maturity securities, net of tax benefit (1)

10,285

12,469

96,988

Adjusted total average assets for leverage ratio, excluding available-for-sale and held-to-maturity securities (Non-GAAP)

2,270,616

2,250,041

2,023,618

Total risk-based capital ratio (2)

Total risk-based capital ratio (GAAP)

16.3

15.7

Adjusted total risk-based capital ratio (Non-GAAP) (3)

15.6

14.7

14.1

Tier 1 capital ratio (4)

Tier 1 risk-based capital ratio (GAAP)

15.3

14.7

14.6

Adjusted tier 1 risk-based capital ratio (Non-GAAP) (5)

14.5

13.5

12.9

Common equity tier 1 ratio (6)

Common equity tier 1 ratio (GAAP)

15.3

14.7

14.6

Adjusted common equity tier 1 ratio (Non-GAAP) (7)

14.5

13.5

12.9

Leverage ratio (8)

Leverage ratio (GAAP)

11.9

11.6

11.3

Adjusted leverage ratio (Non-GAAP) (9)

11.2

10.6

11.3

___________________

(1)

Includes tax benefit calculated using the federal statutory tax rate of 21%.

(2)

The total risk-based capital ratio is calculated by dividing total risk-based capital by risk weighted assets.

(3)

The adjusted total risk-based capital ratio is calculated by dividing adjusted total risk-based capital by adjusted risk weighted assets.

(4)

The tier 1 capital ratio is calculated by dividing tier 1 capital by risk weighted assets.

(5)

The adjusted tier 1 capital ratio is calculated by dividing adjusted tier 1 capital by adjusted risk weighted assets.

(6)

The common equity tier 1 ratio is calculated by dividing tier 1 capital by risk weighted assets.

(7)

The adjusted common equity tier 1 ratio is calculated by dividing adjusted tier 1 capital by adjusted risk weighted assets.

(8)

The leverage ratio is calculated by dividing tier 1 capital by total average assets for leverage ratio.

(9)

The adjusted leverage ratio is calculated by dividing adjusted tier 1 capital by adjusted total average assets for leverage ratio.

John Marshall Bancorp, Inc.

Reconciliation of Certain Non-GAAP Financial Measures (unaudited)

(Dollar amounts in thousands, except per share data)

For the Three Months Ended

For the Nine Months Ended

September 30, 2023

Non-interest income (loss) (GAAP)

(16,815

)

(15,564

)

Adjustment: Pre-tax loss recognized on sale of available-for-sale securities

17,114

Core non-interest income (Non-GAAP)

299

1,550

Income (loss) before taxes (GAAP)

(11,667

)

2,102

Adjustment: Pre-tax loss recognized on sale of available-for-sale securities

17,114

Core income before taxes (Non-GAAP)

5,447

19,216

Income tax expense (benefit) (GAAP)

(1,530

)

1,446

Adjustment: Tax and 10% modified endowment contract penalty on early surrender of BOLI policies

(1,101

)

(1,101

)

Adjustment: Tax benefit of loss recognized on sale of available-for-sale securities

3,594

Core income tax expense (Non-GAAP)(1)

963

3,939

Net income (loss) (GAAP)

(10,137

)

656

Core net income (Non-GAAP)(2)

4,484

15,277

Earnings (loss) per share - basic (GAAP)

(0.72

)

0.05

Core earnings per share - basic (Non-GAAP)(3)

0.32

1.08

Earnings (loss) per share - diluted (GAAP)

(0.72

)

0.05

Core earnings per share - diluted (Non-GAAP)(3)

0.32

1.08

Return on average assets (annualized) (GAAP)

(1.73

0.04

Core return on average assets (annualized) (Non-GAAP)(4)

0.76

0.87

Return on average equity (annualized) (GAAP)

(18.24

0.40

Core return on average equity (annualized) (Non-GAAP)(5)

8.07

9.25

Non-interest income (loss) as a percentage of average assets (annualized) (GAAP)

(2.86

(0.89

)

Core non-interest income as a percentage of average assets (annualized) (Non-GAAP)(6)

0.05

0.09

Efficiency ratio (GAAP)

(158.4

101.6

Core efficiency ratio (Non-GAAP)(7)

62.4

58.1

For the Three Months Ended

September 30, 2024

June 30, 2024

March 31, 2024

Pre-tax, pre-provision earnings (Non-GAAP)

Income before income taxes

5,342

5,019

5,414

Adjustment: Provision for (recovery of) credit losses

400

(292

)

(776

)

Pre-tax, pre-provision earnings (Non-GAAP)(8)

5,742

4,727

4,638

_____________________

(1)

Includes tax benefit (expense) calculated using the federal statutory tax rate of 21%.

(2)

Core net income reflects net income adjusted for the non-recurring tax effected loss recognized on the sale of available-for-sale securities in and non-recurring tax expense associated with the surrender of the Company’s BOLI policies in July 2023. It is calculated by subtracting core income tax expense from core income before taxes for each period presented.

(3)

Core earnings per share – basic and core earnings per share – diluted is calculated by dividing core net income by basic weighted average shares outstanding and diluted weighted average shares outstanding, respectively, for each period presented.

(4)

Core return on average assets (annualized) is calculated by dividing annualizing core net income by average assets for each period presented.

(5)

Core return on average equity (annualized) is calculated by dividing annualizing core net income by average equity for each period presented.

(6)

Core non-interest income as a percentage of average assets (annualized) is calculated by dividing annualized core non-interest income by average assets for each period presented.

(7)

Core efficiency ratio is calculated by dividing non-interest expense by the sum of core non-interest income and net interest income for each period presented.

(8)

Pre-tax, pre-provision earnings is calculated by adjusting income before taxes for provision for (recovery of) credit losses.

Category: Earnings

View source version on businesswire.com: https://www.businesswire.com/news/home/20241023470216/en/

Christopher W. Bergstrom, (703) 584-0840 Kent D. Carstater, (703) 289-5922

John Marshall Bancorp (NASDAQ:JMSB)
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John Marshall Bancorp (NASDAQ:JMSB)
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