Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries John Marshall Bancorp, Inc. Reports Margin Expansion, Pristine Asset Quality, and Strong Core Deposit Growth and Loan Demand By: John Marshall via Business Wire July 24, 2024 at 09:00 AM EDT 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 % 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 x 54 $ 81,825 49.6 % 2.9 x 43 $ 106,162 Office 58.6 % 3.7 x 130 80,744 49.0 % 1.9 x 59 115,830 Retail 61.0 % 3.3 x 40 68,794 50.4 % 1.9 x 141 416,811 Church 29.4 % 2.6 x 19 33,635 - - - - - - - - Hotel/Motel - - - - - - - - 59.2 % 2.6 x 9 51,339 Other(4) 48.3 % 4.0 x 43 84,646 42.4 % 3.0 x 10 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, 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 % 0.12 % 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 N/M N/M 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 % 0.00 % 0.00 % 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 8 8 8 8 __________________________ (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 2023 Months Year Assets (Unaudited) * (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 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 N/M Federal Reserve Bank borrowings 77,000 54,000 54,000 42.6 % 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 N/M Common stock, nonvoting, par value $0.01 per share; authorized 1,000,000 shares; none issued - - - - - - N/M 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 142 141 141 0.7 % 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 June 30 2024 2023 % Change 2024 2023 % Change (Unaudited) (Unaudited) (Unaudited) (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 9 15 (40.0 )% 18 34 (47.1 )% Dividends 84 70 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 2 9 N/M Federal Home Loan Bank advances - - - - N/M - - 67 N/M Federal Reserve Bank borrowings 911 338 N/M 1,804 338 N/M Subordinated debt 349 349 -- % 698 698 -- % 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 88 82 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 40 50 (20.0 )% 292 256 14.1 % Gain on sale of government guaranteed loans 216 23 N/M 349 23 N/M Non-qualified deferred compensation plan asset gains, net 35 83 (57.8 )% 159 172 (7.6 )% Other income 11 32 (65.6 )% 83 130 (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 448 448 -- % 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 $ 88 $ 88 $ 91 $ 85 $ 82 $ 72 Bank owned life insurance - - - - - - 23 101 100 Other service charges and fees 165 149 161 160 314 203 Losses on sale of available-for-sale securities - - - - - - (17,114 ) - - (202 ) Insurance commissions 40 252 76 54 50 206 Gain on sale of government guaranteed loans 216 133 81 27 23 - - Non-qualified deferred compensation plan asset gains (losses), net 35 124 205 (60 ) 83 89 Other income 11 72 10 10 32 98 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 % 9.5 % 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 % 15.7 % 16.1 % 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 22 3.21 % 3,184 43 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 55 2 7.31 % 392 9 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 67 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 83 132 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 11 3.21 % 2,933 20 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 38 67 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) 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. 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 % 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 35 83 159 172 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/Contacts Christopher W. Bergstrom (703) 584-0840 Kent D. Carstater (703) 289-5922 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
John Marshall Bancorp, Inc. Reports Margin Expansion, Pristine Asset Quality, and Strong Core Deposit Growth and Loan Demand By: John Marshall via Business Wire July 24, 2024 at 09:00 AM EDT 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 % 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 x 54 $ 81,825 49.6 % 2.9 x 43 $ 106,162 Office 58.6 % 3.7 x 130 80,744 49.0 % 1.9 x 59 115,830 Retail 61.0 % 3.3 x 40 68,794 50.4 % 1.9 x 141 416,811 Church 29.4 % 2.6 x 19 33,635 - - - - - - - - Hotel/Motel - - - - - - - - 59.2 % 2.6 x 9 51,339 Other(4) 48.3 % 4.0 x 43 84,646 42.4 % 3.0 x 10 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, 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 % 0.12 % 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 N/M N/M 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 % 0.00 % 0.00 % 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 8 8 8 8 __________________________ (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 2023 Months Year Assets (Unaudited) * (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 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 N/M Federal Reserve Bank borrowings 77,000 54,000 54,000 42.6 % 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 N/M Common stock, nonvoting, par value $0.01 per share; authorized 1,000,000 shares; none issued - - - - - - N/M 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 142 141 141 0.7 % 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 June 30 2024 2023 % Change 2024 2023 % Change (Unaudited) (Unaudited) (Unaudited) (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 9 15 (40.0 )% 18 34 (47.1 )% Dividends 84 70 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 2 9 N/M Federal Home Loan Bank advances - - - - N/M - - 67 N/M Federal Reserve Bank borrowings 911 338 N/M 1,804 338 N/M Subordinated debt 349 349 -- % 698 698 -- % 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 88 82 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 40 50 (20.0 )% 292 256 14.1 % Gain on sale of government guaranteed loans 216 23 N/M 349 23 N/M Non-qualified deferred compensation plan asset gains, net 35 83 (57.8 )% 159 172 (7.6 )% Other income 11 32 (65.6 )% 83 130 (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 448 448 -- % 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 $ 88 $ 88 $ 91 $ 85 $ 82 $ 72 Bank owned life insurance - - - - - - 23 101 100 Other service charges and fees 165 149 161 160 314 203 Losses on sale of available-for-sale securities - - - - - - (17,114 ) - - (202 ) Insurance commissions 40 252 76 54 50 206 Gain on sale of government guaranteed loans 216 133 81 27 23 - - Non-qualified deferred compensation plan asset gains (losses), net 35 124 205 (60 ) 83 89 Other income 11 72 10 10 32 98 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 % 9.5 % 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 % 15.7 % 16.1 % 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 22 3.21 % 3,184 43 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 55 2 7.31 % 392 9 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 67 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 83 132 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 11 3.21 % 2,933 20 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 38 67 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) 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. 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 % 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 35 83 159 172 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/Contacts Christopher W. Bergstrom (703) 584-0840 Kent D. Carstater (703) 289-5922
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 % 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 x 54 $ 81,825 49.6 % 2.9 x 43 $ 106,162 Office 58.6 % 3.7 x 130 80,744 49.0 % 1.9 x 59 115,830 Retail 61.0 % 3.3 x 40 68,794 50.4 % 1.9 x 141 416,811 Church 29.4 % 2.6 x 19 33,635 - - - - - - - - Hotel/Motel - - - - - - - - 59.2 % 2.6 x 9 51,339 Other(4) 48.3 % 4.0 x 43 84,646 42.4 % 3.0 x 10 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, 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 % 0.12 % 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 N/M N/M 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 % 0.00 % 0.00 % 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 8 8 8 8 __________________________ (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 2023 Months Year Assets (Unaudited) * (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 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 N/M Federal Reserve Bank borrowings 77,000 54,000 54,000 42.6 % 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 N/M Common stock, nonvoting, par value $0.01 per share; authorized 1,000,000 shares; none issued - - - - - - N/M 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 142 141 141 0.7 % 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 June 30 2024 2023 % Change 2024 2023 % Change (Unaudited) (Unaudited) (Unaudited) (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 9 15 (40.0 )% 18 34 (47.1 )% Dividends 84 70 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 2 9 N/M Federal Home Loan Bank advances - - - - N/M - - 67 N/M Federal Reserve Bank borrowings 911 338 N/M 1,804 338 N/M Subordinated debt 349 349 -- % 698 698 -- % 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 88 82 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 40 50 (20.0 )% 292 256 14.1 % Gain on sale of government guaranteed loans 216 23 N/M 349 23 N/M Non-qualified deferred compensation plan asset gains, net 35 83 (57.8 )% 159 172 (7.6 )% Other income 11 32 (65.6 )% 83 130 (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 448 448 -- % 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 $ 88 $ 88 $ 91 $ 85 $ 82 $ 72 Bank owned life insurance - - - - - - 23 101 100 Other service charges and fees 165 149 161 160 314 203 Losses on sale of available-for-sale securities - - - - - - (17,114 ) - - (202 ) Insurance commissions 40 252 76 54 50 206 Gain on sale of government guaranteed loans 216 133 81 27 23 - - Non-qualified deferred compensation plan asset gains (losses), net 35 124 205 (60 ) 83 89 Other income 11 72 10 10 32 98 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 % 9.5 % 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 % 15.7 % 16.1 % 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 22 3.21 % 3,184 43 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 55 2 7.31 % 392 9 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 67 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 83 132 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 11 3.21 % 2,933 20 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 38 67 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) 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. 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 % 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 35 83 159 172 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/