John Marshall Bancorp, Inc. Reports Margin Expansion, Pristine Asset Quality, and Strong Core Deposit Growth and Loan Demand

John Marshall Bancorp, Inc. (Nasdaq: JMSB) (the “Company”), parent company of John Marshall Bank (the “Bank”), reported net income of $3.9 million ($0.27 per diluted common share) for the quarter ended June 30, 2024 and $8.1 million ($0.57 per diluted common share) for the six months ended June 30, 2024. Pre-tax, pre-provision earnings (Non-GAAP) was $4.7 million for the quarter ended June 30, 2024 compared to $4.6 million for the quarter ended March 31, 2024.

Selected Highlights

Margin Expansion – The Company improved its earning asset yield and funding composition. For the three months ended June 30, 2024, the Company reported a nine basis point increase in net interest margin when compared to the three months ended March 31, 2024.
Net Interest Income Growth – Annualized net interest income grew 11.5% during the three months ended June 30, 2024 when compared to the same period ended March 31, 2024. The three months ended June 30, 2024 represented the highest quarter of net interest income since the first quarter of 2023.
Core Deposit Growth – The Company grew non-interest bearing demand deposits $32.5 million or 32.3% annualized from March 31, 2024 and reduced wholesale deposits approximately $13.4 million or 17.3% annualized from March 31, 2024. Certificates of deposit as a percentage of total deposits decreased 2.3% from March 31, 2024 to June 30, 2024. Non-interest bearing deposits to total deposits was 22.8% as of June 30, 2024 versus 21.3% as of March 31, 2024.
Loan Pipeline Growth – The Company’s loan pipeline remained strong with $88.4 million in new commitments recorded during the three months ended June 30, 2024. New commitments represent loans closed, but not necessarily fully funded as of June 30, 2024.
Pristine Asset Quality – For the nineteenth consecutive quarter, the Company had no non-performing loans, no other real estate owned and no loans 30 days or more past due. As of June 30, 2024, there were no loans greater than 10 days past due. There were no charge-offs during the quarter. The Company continues to adhere to strict underwriting standards and proactively manages the portfolio. As of June 30, 2024, there were no credits classified as substandard, doubtful or loss.
Loan Portfolio Strength – The Company believes its loan portfolio remains of exceptionally high quality. As of June 30, 2024, the Company’s office related commercial real estate (“CRE”) non-owner occupied and owner-occupied portfolios had a weighted average loan-to-values of 49.0% and 58.6%, respectively, and weighted average debt service coverage ratios of 1.9x and 3.7x, respectively. The overwhelming majority of the Company’s office CRE portfolio is located outside of the Washington, D.C. central business district.
Rigorous Expense Management – The Company remains focused on managing costs while investing for future growth and continues to revisit contracts for further savings opportunities. Non-interest expense for the three months ended June 30, 2024 was $7.9 million compared to $7.9 million for the three months ended March 31, 2024 and $7.8 million for the three months ended June 30, 2023.

Chris Bergstrom, President and Chief Executive Officer, commented, “The second quarter of 2024 reflects improvements in margin and net interest income as a result of purposeful actions we have taken in combating an unprecedented rate environment. Our non-interest income initiatives are growing and contributing an increasing percentage of revenue. I remain optimistic about our growth for the remainder of the year given the strong loan pipeline and opportunities we are seeing in the market. The strength of our balance sheet, the growing loan pipeline and the continued improvement in our funding keep us well-positioned for the future.”

Balance Sheet, Liquidity and Credit Quality

Total assets were $2.27 billion at June 30, 2024, $2.24 billion at December 31, 2023, and $2.36 billion at June 30, 2023.

Total loans, net of unearned income, increased $57.4 million or 3.2% to $1.83 billion at June 30, 2024, compared to $1.77 billion at June 30, 2023. The increase in loans was primarily attributable to growth in the residential mortgage and investor real estate loan portfolios, partially offset by a decrease in the construction & development loan portfolio.

Total loans, net of unearned income, increased $1.3 million during the quarter ended June 30, 2024 from $1.83 billion at March 31, 2024. As mentioned in the selected highlights above, the Company’s loan pipeline headed into the third quarter of 2024 is robust and gaining momentum.

The carrying value of the Company’s fixed income securities portfolio was $241.6 million at June 30, 2024, $253.4 million at March 31, 2024 and $422.7 million at June 30, 2023. The decrease in carrying value of the Company’s fixed income securities portfolio since June 30, 2023 was primarily attributable to the July 2023 sale of certain available-for-sale investment securities, as previously disclosed. As of June 30, 2024, 95.7% of our bond portfolio carried the implied guarantee of the United States government or one of its agencies. At June 30, 2024, 62% of the fixed income portfolio was invested in amortizing bonds, which provides the Company with a source of steady cash flow. At June 30, 2024, the fixed income portfolio had an estimated weighted average life of 4.2 years. The available-for-sale portfolio comprised approximately 64% of the fixed income securities portfolio and had a weighted average life of 3.0 years at June 30, 2024. The held-to-maturity portfolio comprised approximately 36% of the fixed income securities portfolio and had a weighted average life of 6.3 years at June 30, 2024. The Company did not purchase or sell any fixed income securities during the three month period ended June 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 $796.0 million as of June 30, 2024 compared to $638.9 million as of December 31, 2023 and represented 35.1% 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 June 30, 2024.

Total deposits were $1.91 billion at June 30, 2024, $1.91 billion at December 31, 2023 and $2.05 billion at June 30, 2023. The $11.9 million increase in deposit balances during the quarter was primarily due to a 32.3% annualized increase in non-interest bearing demand deposits of $32.5 million and 14.6% annualized increase in interest bearing demand deposit deposits of $23.4 million. The Bank continued to manage reductions in costlier wholesale deposits including brokered and QwickRate CDs. As of June 30, 2024, the Company had $677.0 million of deposits that were not insured or not collateralized by securities compared to $634.1 million at December 31, 2023.

The Company refinanced its $54.0 million advance and secured an additional $23.0 million from the Bank Term Funding Program (“BTFP”) in January 2024. In doing so, we obtained lower funding costs relative to wholesale deposits and the prior outstanding BTFP advance. The $77.0 million BTFP advance matures January 2025, bears interest at a fixed rate of 4.76% and can be prepaid at any time, in whole or in part, without penalty prior to maturity. Total borrowings as of June 30, 2024 consisted of subordinated debt totaling $24.7 million and the BTFP advance totaling $77.0 million.

Shareholders’ equity increased $16.4 million or 7.5% to $235.3 million at June 30, 2024 compared to $219.0 million at June 30, 2023. Book value per share was $16.54 as of June 30, 2024 compared to $15.50 as of June 30, 2023, an increase of 6.7%. 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 the July 2023 sale of certain available-for-sale investment securities, as previously disclosed, and decreases in unrealized losses on our available-for-sale investment portfolio due to market value increases. For the three months ended June 30, 2024 basic earnings per share of $0.27 exceeded the $0.25 dividend declared during the quarter. Book value per share increased from $16.51 as of March 31, 2024.

The Bank’s capital ratios at June 30, 2024 remained well above regulatory thresholds for well-capitalized banks. As of June 30, 2024, the Bank’s total risk-based capital ratio was 16.4%, compared to 16.1% at June 30, 2023 and 15.7% at December 31, 2023 (GAAP). As outlined below, the Bank would continue to remain well above regulatory thresholds for well-capitalized banks at June 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

June 30, 2024

December 31, 2023

June 30, 2023

Total risk-based capital ratio

10.0

16.4

15.7

16.1

Tier 1 risk-based capital ratio

8.0

15.4

14.7

15.0

Common equity tier 1 ratio

6.5

15.4

14.7

15.0

Leverage ratio

5.0

12.2

11.6

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

Well-Capitalized Threshold

June 30, 2024

December 31, 2023

June 30, 2023

Adjusted total risk-based capital ratio

10.0

15.3

14.7

14.3

Adjusted tier 1 risk-based capital ratio

8.0

14.3

13.5

13.0

Adjusted common equity tier 1 ratio

6.5

14.3

13.5

13.0

Adjusted leverage ratio

5.0

11.2

10.6

9.9

The Company recorded no charge-offs during the six months ended June 30, 2024. As of June 30, 2024, the Company had no loans greater than 10 days past due, no non-accrual loans, and no other real estate owned assets.

At June 30, 2024, the allowance for loan credit losses was $18.4 million or 1.01% of outstanding loans, net of unearned income, compared to $18.7 million or 1.02% of outstanding loans, net of unearned income, at March 31, 2024. The decrease in the allowance as a percentage of outstanding loans, net of unearned income, resulted primarily from changes in the composition of the loan portfolio, improved economic forecasts used in the quantitative portion of the model and an assessment of management’s considerations of qualitative factors combined with the continued strong credit performance of our loan portfolio segments.

At June 30, 2024, the allowance for credit losses on unfunded loan commitments was $0.7 million compared to $0.7 million at March 31, 2024.

The Company did not have an allowance for credit losses on held-to-maturity securities as of June 30, 2024 or March 31, 2024. As of June 30, 2024, 93.6% 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 June 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

56.5

2.8

81,825

49.6

2.9

106,162

Office

58.6

3.7

130

80,744

49.0

1.9

115,830

Retail

61.0

3.3

68,794

50.4

1.9

141

416,811

Church

29.4

2.6

33,635

- -

Hotel/Motel

- -

59.2

2.6

51,339

Other(4)

48.3

4.0

84,646

42.4

3.0

32,277

Total

286

349,644

262

722,419

___________________________

(1)

Loan-to-value is determined at origination date and is divided by principal balance as of June 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 $3.9 million for the second quarter of 2024, a decrease of $0.6 million when compared to $4.5 million for the second quarter of 2023.

Net interest income for the second quarter of 2024 increased $72 thousand or 0.6% compared to the second quarter of 2023, driven primarily by the increase in yield on and volume of interest-earning assets outpacing the increase in costs of interest-bearing liabilities coupled with the decrease in overall funding balances. The annualized net interest margin for the second quarter of 2024 was 2.19% as compared to 2.09% for the same quarter of the prior year. The increase in net interest margin was primarily due to increases in yields on the Company’s interest-earning assets.

The yield on interest earning assets was 4.85% for the second quarter of 2024 compared to 4.27% 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 and deposits in banks as a result of increases in interest rates and repricing of assets subsequent to the second quarter of 2023. The cost of interest-bearing liabilities was 3.81% for the second quarter of 2024 compared to 2.99% for the same quarter in the prior year. The increase in the cost of interest-bearing liabilities was primarily due the 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 second quarter of 2023. The increase in the overall cost of interest-bearing liabilities in the second quarter of 2024 relative to the same period of the prior year is largely due to rate hikes totaling 5.25% by the Federal Reserve Bank since the beginning of 2023, which has increased cost of funds and compressed net interest margins across the banking industry. The Company continues to improve its funding mix. Average non-interest bearing demand deposits represented 21.8% of average funding for the three months ended June 30, 2024 versus 20.8% for the three months ended June 30, 2023. Average time deposits represented 39.0% of average funding for the three months ended June 30, 2024 versus 42.8% for the three months ended June 30, 2023.

The Company recorded a $292 thousand release of provision for credit losses for the second quarter of 2024 compared to a release of provision for credit losses of $868 thousand for the second quarter of 2023. The release of provision for credit losses during the second quarter of 2024 was primarily a result of improved economic forecasts used in the quantitative portion of the model and an assessment of management’s considerations of existing economic versus historical conditions combined with the continued strong credit performance of our loan portfolio segments.

Non-interest income decreased $130 thousand during the second quarter of 2024 compared to the second quarter of 2023. A portion of this decrease was due to a decrease in bank owned life insurance (“BOLI”) income of $101 thousand due to the surrender of all BOLI policies in July 2023 and a decrease of $48 thousand due to unfavorable mark-to-market adjustments on investments related to the Company’s nonqualified deferred compensation plan (“NQDC”) when compared to the second quarter of 2023. Excluding the effects from the Company’s BOLI policy surrender and mark-to-market adjustments on the Company’s NQDC, core non-interest income (Non-GAAP) was $520 thousand for the second quarter of 2024 compared to $501 thousand for the second quarter of 2023. The increase in core non-interest income (Non-GAAP) was primarily due to a $193 thousand increase in gains recorded on the sale of the guaranteed portion of SBA 7(a) loans due to increased sale activity, partially offset by lower service charges and fees of $149 thousand due to lower penalty fee income recognized on the early withdrawal of certificates of deposit.

Non-interest expense increased $78 thousand or 1.0% during the second quarter of 2024 compared to the second quarter of 2023 primarily due to increases in data processing expense and professional fees, partially offset by lower FDIC insurance expense and lower salaries and employee benefit expense. The increase in data processing fees was primarily due to contractual increases and volume based activity. The increase in professional fees was due to increased contract costs. The decrease in salaries and employee benefits was due to lower deferred compensation expense, lower incentive accruals, and higher direct loan origination costs when compared to the same period of the prior year. Salaries and employee benefit expense is reduced to account for the portion of salary costs incurred to originate a loan and are subsequently amortized into income to match the costs incurred with the economic benefit derived from originating a loan. The decrease in FDIC insurance expense was the result of a lower assessment base. The Company continues to analyze cost savings opportunities on existing leases and material contracts.

For the three months ended June 30, 2024, annualized non-interest expense to average assets was 1.42% compared to 1.34% for the three months ended June 30, 2023. The increase was primarily due to lower average assets when comparing the two periods.

For the three months ended June 30, 2024, the annualized efficiency ratio was 62.6% compared to 61.7% for the three months ended June 30, 2023. The increase was primarily due to a decrease in non-interest income and increase in non-interest expense.

Year-to-Date Results

The Company reported net income of $8.1 million for the six months ended June 30, 2024, a decrease of $2.7 million when compared to the same period in 2023.

Net interest income for the six months ended June 30, 2024 decreased $2.7 million or 10.0% 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 4.84% for the six months ended June 30, 2024 compared to 4.21% 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 and deposits in banks as a result of increases in interest rates and repricing of assets subsequent to the second quarter of 2023. The cost of interest-bearing liabilities was 3.81% for the six months ended June 30, 2024 compared to 2.63% for the six months ended June 30, 2023. The increase in the cost of interest-bearing liabilities was primarily due to a 117 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 second quarter of 2023. The annualized net interest margin and tax-equivalent net interest margin for the six months ended June 30, 2024 was 2.14% and 2.15%, respectively, as compared to 2.32% and 2.33%, 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 $1.1 million release of provision for credit losses for the six months ended June 30, 2024 compared to $1.6 million release of provision for credit losses for the six months ended June 30, 2023. The release of provision for credit losses during the six months ended June 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 an assessment of management’s considerations of qualitative factors combined with the continued strong credit performance of our loan portfolio segments.

Non-interest income increased $122 thousand during the six months ended June 30, 2024 compared to the same period of 2023. Excluding the effects from decreased BOLI income of $201 thousand, unfavorable mark-to-market adjustments on the Company’s NQDC totaling $13 thousand, and non-recurring losses of $202 thousand recognized on the sale of certain investment securities during the first quarter of 2023, core non-interest income (Non-GAAP) was $1.2 million for the six months ended June 30, 2024 compared to $1.1 million for the same period in 2023. The increase in core non-interest income (Non-GAAP) was primarily due to increases of $326 thousand in gains recorded on the sale of the guaranteed portion of SBA 7(a) loans, partially offset by decreases of $203 thousand in other service charges and fees due to lower penalty fee income recognized on the early withdrawal of certificates of deposit.

Non-interest expense increased $232 thousand or 1.5% during the six months ended June 30, 2024 compared to the same period in 2023 primarily due to previously disclosed non-recurring expenses totaling $138 thousand incurred during the first quarter of 2024 in connection with a strategic opportunity that was explored and ultimately did not materialize. The remaining $93 thousand increase was due to increases in data processing expense and professional fees, partially offset by lower salaries and employee benefit expense as discussed in the quarterly results.

For the six months ended June 30, 2024, annualized non-interest expense to average assets was 1.41% compared to 1.34% for the six months ended June 30, 2023. The increase was primarily due to lower average assets when comparing the two periods.

For the six months ended June 30, 2024, the annualized efficiency ratio was 62.8% compared to 56.3% for the six months ended June 30, 2023. The increase 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 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;
The 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 reflect non-interest income exclusive of BOLI income, mark-to-market adjustments on the Company’s NQDC and losses recognized on the sale of certain investment securities during the respective periods.

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. Metro 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 of 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 Six Months Ended

June 30,

2024

2023

2024

2023

Selected Balance Sheet Data

Cash and cash equivalents

182,605

129,551

182,605

129,551

Total investment securities

249,582

429,954

249,582

429,954

Loans, net of unearned income

1,827,187

1,769,801

1,827,187

1,769,801

Allowance for loan credit losses

18,433

20,629

18,433

20,629

Total assets

2,269,757

2,364,250

2,269,757

2,364,250

Non-interest bearing demand deposits

437,169

433,931

437,169

433,931

Interest bearing deposits

1,475,671

1,612,378

1,475,671

1,612,378

Total deposits

1,912,840

2,046,309

1,912,840

2,046,309

Federal Reserve Bank borrowings

77,000

54,000

77,000

54,000

Shareholders' equity

235,346

218,970

235,346

218,970

Summary Results of Operations

Interest income

26,791

24,455

53,710

47,908

Interest expense

14,710

12,446

29,885

21,430

Net interest income

12,081

12,009

23,825

26,478

Provision for (recovery of) credit losses

(292)

(868)

(1,068)

(1,642)

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

12,373

12,877

24,893

28,120

Non-interest income

555

685

1,373

1,251

Non-interest expense

7,909

7,831

15,833

15,601

Income before income taxes

5,019

5,731

10,433

13,770

Net income

3,905

4,490

8,109

10,794

Per Share Data and Shares Outstanding

Earnings per share - basic

0.27

0.32

0.57

0.76

Earnings per share - diluted

0.27

0.32

0.57

0.76

Book value per share

16.54

15.50

16.54

15.50

Weighted average common shares (basic)

14,173,245

14,077,658

14,152,115

14,150,155

Weighted average common shares (diluted)

14,200,171

14,143,253

14,189,517

14,228,155

Common shares outstanding at end of period

14,229,853

14,126,138

14,229,853

14,126,138

Performance Ratios

Return on average assets (annualized)

0.70

0.77

0.72

0.93

Return on average equity (annualized)

6.68

8.13

6.95

9.85

Net interest margin

2.19

2.10

2.15

2.33

Tax-equivalent net interest margin (Non-GAAP)

2.19

2.09

2.14

2.32

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

0.10

0.12

0.11

Non-interest expense to average assets (annualized)

1.42

1.34

1.41

1.34

Efficiency ratio

62.6

61.7

62.8

56.3

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

1.01

1.17

1.01

1.17

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 (1)

- -

Capital Ratios (Bank Level)

Equity / assets

11.4

10.2

11.4

10.2

Total risk-based capital ratio

16.4

16.1

16.4

16.1

Tier 1 risk-based capital ratio

15.4

15.0

15.4

15.0

Common equity tier 1 ratio

15.4

15.0

15.4

15.0

Leverage ratio

12.2

11.6

12.2

11.6

Other Information

Number of full time equivalent employees

140

144

140

144

# Full service branch offices

__________________________

(1)

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

June 30,

December 31,

June 30,

Last Six

Year Over

2024

2023

Months

Year

Assets

(Unaudited)

Cash and due from banks

10,024

7,424

13,938

35.0

(28.1

Interest-bearing deposits in banks

172,581

91,581

115,613

88.4

49.3

Securities available-for-sale, at fair value

147,753

169,993

325,271

(13.1

(54.6

Securities held-to-maturity at amortized cost, fair value of $77,268, $79,532, and $79,634 at 6/30/2024, 12/31/2023, and 6/30/2023, respectively.

93,830

95,505

97,453

(1.8

(3.7

Restricted securities, at cost

4,966

5,012

4,535

(0.9

9.5

Equity securities, at fair value

3,033

2,792

2,695

8.6

12.5

Loans, net of unearned income

1,827,187

1,859,967

1,769,801

(1.8

3.2

Allowance for credit losses

(18,433

)

(19,543

)

(20,629

)

(5.7

(10.6

Net loans

1,808,754

1,840,424

1,749,172

(1.7

3.4

Bank premises and equipment, net

1,184

1,281

1,370

(7.6

(13.6

Accrued interest receivable

6,196

6,110

5,178

1.4

19.7

Bank owned life insurance

- -

21,371

N/M

Right of use assets

4,105

4,176

4,443

(1.7

(7.6

Other assets

17,331

18,251

23,211

(5.0

(25.3

Total assets

2,269,757

2,242,549

2,364,250

1.2

(4.0

Liabilities and Shareholders' Equity

Liabilities

Deposits:

Non-interest bearing demand deposits

437,169

411,374

433,931

6.3

0.7

Interest-bearing demand deposits

667,951

607,971

652,638

9.9

2.3

Savings deposits

45,884

52,061

68,013

(11.9

(32.5

Time deposits

761,836

835,194

891,727

(8.8

(14.6

Total deposits

1,912,840

1,906,600

2,046,309

0.3

(6.5

Federal funds purchased

- -

10,000

- -

N/M

Federal Reserve Bank borrowings

77,000

54,000

42.6

Subordinated debt, net

24,749

24,708

24,666

0.2

0.3

Accrued interest payable

4,029

4,559

2,336

(11.6

72.5

Lease liabilities

4,366

4,446

4,733

(1.8

(7.8

Other liabilities

11,427

8,322

13,236

37.3

(13.7

Total liabilities

2,034,411

2,012,635

2,145,280

1.1

(5.2

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, 14,229,853 at 6/30/24 including 46,253 unvested shares, issued and outstanding, 14,148,533 at 12/31/2023 including 47,318 unvested shares, and 14,126,138 at 6/30/2023 including 46,291 unvested shares

142

141

0.7

Additional paid-in capital

96,817

95,636

95,380

1.2

1.5

Retained earnings

150,942

146,388

152,024

3.1

(0.7

Accumulated other comprehensive loss

(12,555

)

(12,251

)

(28,575

)

2.5

(56.1

Total shareholders' equity

235,346

229,914

218,970

2.4

7.5

Total liabilities and shareholders' equity

2,269,757

2,242,549

2,364,250

1.2

(4.0

* 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

Six Months Ended

June 30

2024

2023

% Change

2024

2023

% Change

(Unaudited)

Interest and Dividend Income

Interest and fees on loans

23,360

21,005

11.2

46,983

41,430

13.4

Interest on investment securities, taxable

1,194

2,140

(44.2

2,463

4,391

(43.9

Interest on investment securities, tax-exempt

(40.0

(47.1

Dividends

20.0

166

145

14.5

Interest on deposits in other banks

2,144

1,225

75.0

4,080

1,908

N/M

Total interest and dividend income

26,791

24,455

9.6

53,710

47,908

12.1

Interest Expense

Deposits

13,450

11,759

14.4

27,381

20,318

34.8

Federal funds purchased

- -

N/M

Federal Home Loan Bank advances

- -

N/M

- -

N/M

Federal Reserve Bank borrowings

911

338

N/M

1,804

338

N/M

Subordinated debt

349

698

Total interest expense

14,710

12,446

18.2

29,885

21,430

39.5

Net interest income

12,081

12,009

0.6

23,825

26,478

(10.0

Provision for (recovery of) Credit Losses

(292

)

(868

)

(66.4

(1,068

)

(1,642

)

(35.0

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

12,373

12,877

(3.9

24,893

28,120

(11.5

Non-interest Income

Service charges on deposit accounts

7.3

176

154

14.3

Bank owned life insurance

- -

101

N/M

- -

201

N/M

Other service charges and fees

165

314

(47.5

314

517

(39.3

Losses on sale of available-for-sale securities

- -

N/M

- -

(202

)

N/M

Insurance commissions

(20.0

292

256

14.1

Gain on sale of government guaranteed loans

216

N/M

349

N/M

Non-qualified deferred compensation plan asset gains, net

(57.8

159

172

(7.6

Other income

(65.6

130

(36.2

Total non-interest income

555

685

(19.0

1,373

1,251

9.8

Non-interest Expenses

Salaries and employee benefits

4,875

4,965

(1.8

9,685

9,877

(1.9

Occupancy expense of premises

448

899

918

(2.1

Furniture and equipment expenses

301

304

(1.0

598

600

(0.3

Other expenses

2,285

2,114

8.1

4,651

4,206

10.6

Total non-interest expenses

7,909

7,831

1.0

15,833

15,601

1.5

Income before income taxes

5,019

5,731

(12.4

10,433

13,770

(24.2

Income Tax Expense

1,114

1,241

(10.2

2,324

2,976

(21.9

Net income

3,905

4,490

(13.0

8,109

10,794

(24.9

Earnings Per Share

Basic

0.27

0.32

(15.6

0.57

0.76

(25.0

Diluted

0.27

0.32

(15.6

0.57

0.76

(25.0

John Marshall Bancorp, Inc.

Historical Trends - Quarterly Financial Data (Unaudited)

(Dollar amounts in thousands, except per share data)

2024

2023

June 30

March 31

December 31

September 30

June 30

March 31

Profitability for the Quarter:

Interest income

26,791

26,919

26,598

26,263

24,455

23,453

Interest expense

14,710

15,175

14,571

14,284

12,446

8,984

Net interest income

12,081

11,744

12,027

11,979

12,009

14,469

Provision for (recovery of) credit losses

(292

)

(776

)

(781

)

(829

)

(868

)

(774

)

Non-interest income (loss)

555

818

624

(16,815

)

685

566

Non-interest expenses

7,909

7,924

7,554

7,660

7,831

7,770

Income (loss) before income taxes

5,019

5,414

5,878

(11,667

)

5,731

8,039

Income tax expense (benefit)

1,114

1,210

1,376

(1,530

)

1,241

1,735

Net income (loss)

3,905

4,204

4,502

(10,137

)

4,490

6,304

Financial Performance:

Return on average assets (annualized)

0.70

0.75

0.78

(1.73

0.77

1.10

Return on average equity (annualized)

6.68

7.23

7.91

(18.24

8.13

11.83

Net interest margin

2.19

2.10

2.11

2.07

2.09

2.56

Tax-equivalent net interest margin (Non-GAAP)

2.19

2.11

2.12

2.08

2.10

2.57

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

0.10

0.15

0.11

(2.86

0.12

0.10

Non-interest expense to average assets (annualized)

1.42

1.41

1.31

1.30

1.34

1.35

Efficiency ratio

62.6

63.1

59.7

(158.4

61.7

51.7

Per Share Data:

Earnings (loss) per share - basic

0.27

0.30

0.32

(0.72

)

0.32

0.45

Earnings (loss) per share - diluted

0.27

0.30

0.32

(0.72

)

0.32

0.44

Book value per share

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)

14,173,245

14,130,986

14,082,762

14,080,026

14,077,658

14,067,047

Weighted average common shares (diluted)

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

14,229,853

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

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

216

133

- -

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

124

205

(60

)

Other income

Total non-interest income (loss)

555

818

624

(16,815

)

685

566

Non-interest Expenses:

Salaries and employee benefits

4,875

4,810

4,507

5,052

4,965

4,912

Occupancy expense of premises

448

451

448

445

448

470

Furniture and equipment expenses

301

297

296

282

304

296

Other expenses

2,285

2,366

2,303

1,881

2,114

2,092

Total non-interest expenses

7,909

7,924

7,554

7,660

7,831

7,770

Balance Sheets at Quarter End:

Total loans, net of unearned income

1,827,187

1,825,931

1,859,967

1,820,132

1,769,801

1,771,272

Allowance for loan credit losses

(18,433

)

(18,671

)

(19,543

)

(20,036

)

(20,629

)

(21,619

)

Investment securities

249,582

261,341

273,302

272,881

429,954

445,785

Interest-earning assets

2,249,350

2,234,592

2,224,850

2,278,027

2,315,368

2,312,404

Total assets

2,269,757

2,251,837

2,242,549

2,298,202

2,364,250

2,351,307

Total deposits

1,912,840

1,900,990

1,906,600

1,981,623

2,046,309

2,088,642

Total interest-bearing liabilities

1,577,420

1,598,050

1,583,934

1,622,430

1,691,044

1,665,837

Total shareholders' equity

235,346

234,550

229,914

220,567

218,970

220,823

Quarterly Average Balance Sheets:

Total loans, net of unearned income

1,810,722

1,835,966

1,837,855

1,790,720

1,767,831

1,772,922

Investment securities

255,940

270,760

273,264

310,407

441,778

463,254

Interest-earning assets

2,222,658

2,247,620

2,260,356

2,301,642

2,305,050

2,295,677

Total assets

2,239,261

2,264,544

2,280,060

2,331,403

2,344,712

2,334,695

Total deposits

1,883,010

1,914,173

1,956,039

2,012,934

2,051,702

2,066,139

Total interest-bearing liabilities

1,551,953

1,600,197

1,587,179

1,660,980

1,667,597

1,621,131

Total shareholders' equity

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

11.1

11.7

12.3

12.0

18.6

19.3

Loans to earning assets

81.2

81.7

83.6

79.9

76.4

76.6

Loans to assets

80.5

81.1

82.9

79.2

74.9

75.3

Loans to deposits

95.5

96.1

97.6

91.9

86.5

84.8

Capital Ratios (Bank Level):

Equity / assets

11.4

11.3

11.1

10.6

10.2

10.3

Total risk-based capital ratio

16.4

16.1

15.7

16.1

Tier 1 risk-based capital ratio

15.4

15.1

14.7

14.6

15.0

14.9

Common equity tier 1 ratio

15.4

15.1

14.7

14.6

15.0

14.9

Leverage ratio

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

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

Commercial business loans

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

127

0.0

129

0.0

131

0.0

132

0.0

133

0.0

135

0.0

Commercial owner-occupied real estate loans

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

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

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

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

91,925

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

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

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

876

0.0

772

0.0

560

0.0

467

0.0

646

0.0

324

0.0

Total loans

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

(18,433

)

(18,671

)

(19,543

)

(20,036

)

(20,629

)

(21,619

)

Net deferred loan costs (fees)

4,882

5,049

4,983

4,592

4,362

4,022

Net loans

1,808,754

1,807,260

1,840,424

1,800,096

1,749,172

1,749,653

2024

2023

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

Non-interest bearing demand deposits

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)

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)

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

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

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

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

5,117

0.3

9,686

0.5

11,526

0.6

12,772

0.6

16,952

0.8

IntraFi® certificates of deposit

32,922

1.7

34,443

1.8

45,748

2.4

41,659

2.1

49,729

2.4

53,178

2.5

Brokered deposits

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

1,912,840

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

10,000

11.3

- -

0.0

- -

0.0

- -

0.0

Federal Reserve Bank borrowings

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

24,749

24.3

24,729

24.3

24,708

27.8

24,687

31.4

24,666

31.4

24,645

100.0

Total borrowings

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

2,014,589

2,002,719

1,995,308

2,060,310

2,124,975

2,113,287

Core customer funding sources (2)

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)

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

1,989,840

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)

Six Months Ended June 30, 2024

Six Months Ended June 30, 2023

Interest Income /

Average

Interest Income /

Average

Average Balance

Expense

Rate

Average Balance

Expense

Rate

Assets:

Securities:

Taxable

261,970

2,629

2.02

449,272

4,536

2.04

Tax-exempt(1)

1,380

3.21

3,184

2.72

Total securities

263,350

2,651

2.02

452,456

4,579

2.04

Loans, net of unearned income(2):

Taxable

1,803,507

46,684

5.21

1,741,915

40,969

4.74

Tax-exempt(1)

19,837

378

3.83

28,447

584

4.14

Total loans, net of unearned income

1,823,344

47,062

5.19

1,770,362

41,553

4.73

Interest-bearing deposits in other banks

148,445

4,080

5.53

77,571

1,908

4.96

Total interest-earning assets

2,235,139

53,793

4.84

2,300,389

48,040

4.21

Total non-interest earning assets

16,726

39,342

Total assets

2,251,865

2,339,731

Liabilities & Shareholders’ Equity:

Interest-bearing deposits

NOW accounts

308,612

4,211

2.74

272,872

2,245

1.66

Money market accounts

323,287

5,122

3.19

390,511

4,951

2.56

Savings accounts

52,122

361

1.39

81,025

475

1.18

Time deposits

791,157

17,687

4.50

858,027

12,647

2.97

Total interest-bearing deposits

1,475,178

27,381

3.73

1,602,435

20,318

2.56

Federal funds purchased

7.31

392

4.63

Subordinated debt, net

24,726

698

5.68

24,643

698

5.71

Federal Reserve Bank borrowings

76,116

1,804

4.77

14,022

338

4.86

Other borrowed funds

—

N/M

3,001

4.50

Total interest-bearing liabilities

1,576,075

29,885

3.81

1,644,493

21,430

2.63

Demand deposits

423,414

456,445

Other liabilities

17,832

17,845

Total liabilities

2,017,321

2,118,783

Shareholders’ equity

234,544

220,948

Total liabilities and shareholders’ equity

2,251,865

2,339,731

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

23,908

1.03

26,610

1.58

Less: tax-equivalent adjustment

132

Net interest income and spread (GAAP)

23,825

1.02

26,478

1.57

Interest income/earnings assets

4.83

4.20

Interest expense/earning assets

2.69

1.88

Net interest margin

2.14

2.32

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

4.84

4.21

Interest expense/earning assets

2.69

1.88

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

2.15

2.33

_______________________

(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 $83 thousand and $132 thousand for the six months ended June 30, 2024 and June 30, 2023, respectively.

(2)

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

Three Months Ended June 30, 2023

Interest Income /

Average

Interest Income /

Average

Average Balance

Expense

Rate

Average Balance

Expense

Rate

Assets:

Securities:

Taxable

254,561

1,278

2.02

438,845

2,210

2.02

Tax-exempt(1)

1,379

3.21

2,933

2.74

Total securities

255,940

1,289

2.03

441,778

2,230

2.02

Loans, net of unearned income(2):

Taxable

1,793,487

23,227

5.21

1,739,511

20,775

4.79

Tax-exempt(1)

17,235

169

3.94

28,320

292

4.14

Total loans, net of unearned income

1,810,722

23,396

5.20

1,767,831

21,067

4.78

Interest-bearing deposits in other banks

155,996

2,144

5.53

95,441

1,225

5.15

Total interest-earning assets

2,222,658

26,829

4.85

2,305,050

24,522

4.27

Total non-interest earning assets

16,603

39,662

Total assets

2,239,261

2,344,712

Liabilities & Shareholders’ Equity:

Interest-bearing deposits

NOW accounts

303,745

2,012

2.66

287,094

1,483

2.07

Money market accounts

321,822

2,545

3.18

352,373

2,476

2.82

Savings accounts

51,179

186

1.46

74,483

231

1.24

Time deposits

773,470

8,707

4.53

901,104

7,569

3.37

Total interest-bearing deposits

1,450,216

13,450

3.73

1,615,054

11,759

2.92

Subordinated debt, net

24,737

349

5.67

24,653

349

5.68

Federal Reserve Bank borrowings

77,000

911

4.76

27,890

338

4.86

Total interest-bearing liabilities

1,551,953

14,710

3.81

1,667,597

12,446

2.99

Demand deposits

432,794

436,648

Other liabilities

19,378

18,859

Total liabilities

2,004,125

2,123,104

Shareholders’ equity

235,136

221,608

Total liabilities and shareholders’ equity

2,239,261

2,344,712

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

12,119

1.04

12,076

1.28

Less: tax-equivalent adjustment

Net interest income and spread (GAAP)

12,081

1.04

12,009

1.27

Interest income/earnings assets

4.85

4.26

Interest expense/earning assets

2.66

2.17

Net interest margin

2.19

2.09

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

4.85

4.27

Interest expense/earning assets

2.66

2.17

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

2.19

2.10

_______________________

(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 $38 thousand and $67 thousand for the three months ended June 30, 2024 and June 30, 2023, respectively.

(2)

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

(3)

John Marshall Bancorp, Inc.

Reconciliation of Certain Non-GAAP Financial Measures (unaudited)

(Dollar amounts in thousands)

As of

June 30, 2024

December 31, 2023

June 30, 2023

Regulatory Ratios (Bank)

Total risk-based capital (GAAP)

290,228

282,082

291,262

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

12,661

12,401

28,770

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

12,978

12,469

14,077

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

264,589

257,212

248,415

Tier 1 capital (GAAP)

272,276

263,637

271,209

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

12,661

12,401

28,770

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

12,978

12,469

14,077

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

246,637

238,767

228,362

Risk weighted assets (GAAP)

1,769,472

1,794,769

1,813,541

Less: Risk weighted available-for-sale securities

22,343

24,184

56,621

Less: Risk weighted held-to-maturity securities

16,788

17,079

17,425

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

1,730,341

1,753,506

1,739,495

Total average assets for leverage ratio (GAAP)

2,236,987

2,274,911

2,343,457

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

12,661

12,401

28,770

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

12,978

12,469

14,077

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

2,211,348

2,250,041

2,300,610

Total risk-based capital ratio (2)

Total risk-based capital ratio (GAAP)

16.4

15.7

16.1

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

15.3

14.7

14.3

Tier 1 capital ratio (4)

Tier 1 risk-based capital ratio (GAAP)

15.4

14.7

15.0

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

14.3

13.5

13.0

Common equity tier 1 ratio (6)

Common equity tier 1 ratio (GAAP)

15.4

14.7

15.0

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

14.3

13.5

13.0

Leverage ratio (8)

Leverage ratio (GAAP)

12.2

11.6

Adjusted leverage ratio (Non-GAAP) (9)

11.2

10.6

9.9

_______________________

(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)

For the Three Months Ended

June 30, 2024

March 31, 2024

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

Income before income taxes

5,019

5,414

Adjustment: Provision for (recovery of) credit losses

(292

)

(776

)

Pre-tax, pre-provision earnings (Non-GAAP)(1)

4,727

4,638

For the Three Months Ended

For the Six Months Ended

June 30, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Core non-interest income (Non-GAAP)

Non-interest income (GAAP)

555

685

1,373

1,251

Adjustments:

BOLI income

- -

101

- -

201

Mark-to-market adjustments on NQDC plan assets

159

172

Loss recognized on sale of available-for-sale securities

- -

(202

)

Core non-interest income (Non-GAAP)(2)

520

501

1,214

1,080

_______________________

(1)

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

(2)

Core non-interest income is calculated by adjusting non-interest income for BOLI income, mark-to-market adjustments on NQDC plan assets and loss recognized on the sale of available-for-sale securities.

Category: Earnings

View source version on businesswire.com: https://www.businesswire.com/news/home/20240724102719/en/

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

John Marshall Bancorp (NASDAQ:JMSB)
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