John Marshall Bancorp, Inc. (Nasdaq: JMSB) (the “Company”),
parent company of John Marshall Bank (the “Bank”), reported its
financial results for the three and six months ended June 30,
2023.
Selected Highlights
- Pristine Asset Quality – For the fifteenth consecutive
quarter, the Company had no nonperforming loans, no other real
estate owned and no loans 30 days or more past due. As of June 30,
2023, there were no loans greater than 10 days past due. There were
no charge-offs during the quarter. The Company remains steadfast in
adhering to our strict underwriting standards and the diligent
management of the portfolio.
- Increasingly Well-Capitalized – The Bank’s capital
ratios remain significantly above regulatory thresholds for
well-capitalized banks. Our regulatory capital ratios have
increased or remained the same as the prior quarter in each of the
past four quarters.
- Significant Liquidity – The Company’s liquidity
position, defined as the sum of cash, unencumbered securities and
available secured borrowing capacity, totaled $839.4 million as of
June 30, 2023, representing 35.5% of total assets. The Company’s
liquidity position represented 120% of uninsured,
non-collateralized deposits at June 30, 2023, up from 113% at March
31, 2023.
- Strength in CRE Loan Portfolio – The Company’s loan
portfolio remains a source of strength. As of June 30, 2023, the
Company’s commercial real estate (“CRE”) non-owner occupied and
owner-occupied portfolios had a weighted average loan-to-values of
51.7% and 55.8%, respectively, and weighted average debt service
coverage ratios of 2.3x and 3.3x, respectively.
- Initial SBA Loan Sale – During the quarter, the Company
completed its first Small Business Administration (“SBA”) loan
sale. The Company is accelerating activity in this business line
and intends to become a preferred lender. We believe the preferred
lender status will allow us to streamline the SBA borrowing process
for our existing and potential customers and thereby increase loan
and deposit balances and fee income.
- Profitability – Annualized return on average equity for
the three months ended June 30, 2023 was 8.13%. The Company’s
profitability has been impacted by the significant increase in
short-term rates that affected funding costs. Long-term
profitability will be positively impacted by the restructuring, as
further discussed below, and anticipated loan growth.
On July 17, 2023, the Company sold $161.7 million in
lower-yielding available-for-sale investment securities and
redeemed $21.4 million of Bank Owned Life Insurance (“BOLI”) assets
(the “restructuring”), resulting in a non-recurring, after-tax loss
of $14.6 million. The sale of the available-for-sale securities
will not impact book-value-per-share as the after-tax loss of $13.5
million was already reflected in accumulated other comprehensive
loss as of June 30, 2023. The remaining $1.1 million after-tax loss
stems from the taxation on the gain associated with the expected
cash payout from the BOLI policies. The proceeds from the
restructuring will be reinvested in higher yielding assets with an
expected after-tax loss earn back of less than 3 years. The
restructuring is expected to improve the Company’s earnings, while
maintaining strong capital ratios on a generally accepted
accounting principles (“GAAP”) basis and continuing to meaningfully
exceed well-capitalized ratios on a regulatory basis. Upon
completion of the sale, the Company’s available-for-sale and
held-to-maturity fixed income securities portfolio has an estimated
weighted average life of 4.6 years and the available-for-sale
portfolio has an estimated weighted average life of 3.2 years.
Nearly 65% of the remaining portfolio is invested in amortizing
bonds and is expected to return, on average, $2.5 million in cash
flows each month.
Chris Bergstrom, President and Chief Executive Officer,
commented, “The Federal Reserve’s rapid increase in the federal
funds rate from 0.25% to 5.25% over the past 15 months has resulted
in a challenging environment. Short-term yields have exceeded
long-term yields causing an inverted yield curve. Inverted yield
curves drive up funding costs with comparatively less relief from
increased loan yields and exert pressure on net interest margin. As
demonstrated by our 15th consecutive quarter of zero non-performing
assets, we remain laser focused on credit. Furthermore, we have
organically increased both our capital and liquidity positions for
the opportunities that we believe are ahead. Our loan pipeline,
with credits that meet our stringent criteria, is building for very
promising growth in the second half of this year. The restructuring
that we executed in July provides additional funding to be
redeployed in higher yielding assets. This will benefit our net
interest margin and bottom line. In short, we are well-positioned
to continue to develop and grow relationships with competitive
financial products and services and access to the Bank’s decision
makers. Recession or soft landing, we believe the strength of our
balance sheet provides flexibility to pursue prudent and profitable
growth.”
Balance Sheet, Liquidity and Credit
Quality
Total assets were $2.36 billion at June 30, 2023, $2.35 billion
at March 31, 2023 and $2.32 billion at June 30, 2022. Asset growth
from June 30, 2022 to June 30, 2023 was $47.9 million or 2.1%.
Total loans, net of unearned income, increased $77.1 million or
4.6% to $1.77 billion at June 30, 2023, compared to $1.69 billion
at June 30, 2022. The increase in loans was primarily attributable
to growth in the residential mortgage and commercial investor real
estate loan portfolios.
Total loans, net of unearned income, decreased $1.5 million
during the quarter ended June 30, 2023 or 0.1% from $1.77 billion
at March 31, 2023. The decrease in loans was primarily attributable
to loan pay downs and payoffs exceeding originations in the
investor real estate, multifamily, commercial business and
commercial owner occupied real estate loan portfolios. The
Company’s loan pipeline headed into the third quarter of 2023 is
robust and gaining momentum. We are seeing increased lending
opportunities that meet our underwriting standards and, in many
cases, fewer competitors for those loans as some market
participants have scaled back lending efforts.
The carrying value of the Company’s fixed income securities
investment portfolio was $422.7 million at June 30, 2023, $438.7
million at March 31, 2023 and $467.4 million at June 30, 2022. Only
$11.7 million or 2.8% of our bond portfolio is not covered by the
implied guarantee of the United States government or one of its
agencies and is largely comprised of high-quality Virginia and
Maryland municipal bonds rated AA or better at June 30, 2023. At
June 30, 2023, nearly 70% of the fixed income portfolio is invested
in amortizing bonds, which provides the Company with a source of
steady cash flow. At June 30, 2023, the fixed income portfolio had
an estimated weighted average life of 4.4 years. The
available-for-sale portfolio comprised approximately 79% of the
fixed income securities portfolio and had a weighted average life
of 3.6 years at June 30, 2023. The held-to-maturity portfolio
comprised approximately 21% of the fixed income securities
portfolio and had a weighted average life of 7.1 years at June 30,
2023. The Company did not purchase any fixed income securities
during the three or six month periods ended June 30, 2023.
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 $839.4
million as of June 30, 2023 compared to $852.6 million as of March
31, 2023 and represented 35.5% and 36.3% of total assets,
respectively. The decrease in the Company’s liquidity position
during the quarter resulted primarily from pledging securities to
obtain the Bank Term Funding Program (“BTFP”) advance, as discussed
below. Wholesale deposits, defined as brokered and QwickRate
certificates of deposit, decreased $36.7 million or 9.3% from
$395.8 million at March 31, 2023 to $359.1 million at June 30,
2023.
Liquidity Trends
June 30, 2023
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
(Dollars in thousands)
Amount
% of Assets
Amount
% of Assets
Amount
% of Assets
Amount
% of Assets
Amount
% of Assets
Cash
$
129,551
5.5
%
$
103,359
4.4
%
$
61,599
2.6
%
$
74,756
3.2
%
$
120,887
5.2
%
Unencumbered Securities
233,695
9.9
%
298,194
12.7
%
313,618
13.4
%
345,987
15.0
%
351,675
15.2
%
Available Secured Borrowing Capacity
476,144
20.1
%
451,008
19.2
%
388,257
16.5
%
401,828
17.4
%
402,840
17.4
%
Total Liquidity
$
839,390
35.5
%
$
852,561
36.3
%
$
763,474
32.5
%
$
822,571
35.6
%
$
875,402
37.8
%
On May 15, 2023, the Company obtained a $54.0 million advance
from the Federal Reserve Bank’s BTFP to secure lower funding costs
relative to wholesale deposits. The BTFP advance has a term of one
year and bears interest at a fixed rate of 4.80%.
If the Company were to avail itself of additional BTFP funding,
we estimate an incremental increase in our liquidity position of
approximately $29.1 million, increasing our potential liquidity to
$868.5 million as of June 30, 2023. In addition to available
secured borrowing capacity, the Bank had available federal funds
lines of $110.0 million at June 30, 2023.
Total deposits were $2.05 billion at June 30, 2023, $2.09
billion at March 31, 2023 and $2.04 billion at June 30, 2022.
Deposits increased $2.6 million or 0.1% when compared to June 30,
2022. The increase in deposits was primarily due to time deposit
growth. Total deposits decreased $42.3 million or 2.0% when
compared to March 31, 2023. The decrease was primarily due to a
decrease in costlier wholesale deposits of $36.7 million or 9.3%
from $395.8 million at March 31, 2023 to $359.1 million at June 30,
2023. NOW deposits increased $26.4 million to partially offset the
decrease in wholesale deposits. As of June 30, 2023, the Company
had $697.0 million of deposits that were not insured or not
collateralized by securities compared to $756.0 million at March
31, 2023. Deposits that were not insured or not collateralized by
securities represented only 34.1% of total deposits at June 30,
2023 compared to 36.2% at March 31, 2023.
Total borrowings as of June 30, 2023 consisted of subordinated
debt totaling $24.6 million and a BTFP advance totaling $54.0
million. On May 15, 2023, the Company obtained a $54.0 million
advance from the Federal Reserve Bank’s BTFP to secure lower
funding costs relative to wholesale deposits. The BTFP advance has
a term of one year, bears interest at a fixed rate of 4.80% and can
be prepaid without penalty prior to maturity. The Company did not
have any FHLB advances or federal funds purchased outstanding as of
June 30, 2023.
Shareholders’ equity increased $11.4 million or 5.5% to $219.0
million at June 30, 2023 compared to $207.5 million at June 30,
2022. Book value per share was $15.50 as of June 30, 2023 compared
to $14.80 as of June 30, 2022. The year-over-year change in book
value per share was primarily due to the Company’s earnings over
the previous twelve months, partially offset by an increase in
accumulated other comprehensive loss, increased share count from
shareholder option exercises and restricted share award issuances
and dividends paid. The increase in accumulated other comprehensive
loss was primarily attributable to increases in unrealized losses
on our available-for-sale investment portfolio due to market value
changes as a result of rising interest rates.
The Bank’s capital ratios at June 30, 2023 improved when
compared to June 30, 2022. We remain well above regulatory
thresholds for well-capitalized banks. As of June 30, 2023, the
Bank’s total risk-based capital ratio was 16.1%, compared to 15.1%
at June 30, 2022 (GAAP). As outlined below, the Bank would continue
to remain well above regulatory thresholds for well-capitalized
banks at June 30, 2023 in the hypothetical scenario where the
entire bond portfolio was sold at fair market value and the 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, 2023
December 31, 2022
June 30, 2022
Total risk-based capital ratio
10.0
%
16.1
%
15.6
%
15.1
%
Tier 1 risk-based capital ratio
8.0
%
15.0
%
14.4
%
14.0
%
Common equity tier 1 ratio
6.5
%
15.0
%
14.4
%
14.0
%
Leverage ratio
5.0
%
11.6
%
11.3
%
11.0
%
Bank Regulatory Capital Ratios
(Hypothetical Scenario of Selling All Bonds at Fair Market Value -
Non-GAAP)
Well- Capitalized
Threshold
June 30, 2023
December 31, 2022
June 30, 2022
Total risk-based capital ratio
10.0
%
14.3
%
13.8
%
14.2
%
Tier 1 risk-based capital ratio
8.0
%
13.0
%
12.6
%
13.0
%
Common equity tier 1 ratio
6.5
%
13.0
%
12.6
%
13.0
%
Leverage ratio
5.0
%
12.0
%
11.8
%
12.1
%
The Company recorded no charge-offs during the second quarter of
2023, during the first quarter of 2023 or during the second quarter
of 2022. As of June 30, 2023, the Company had no non-accrual loans,
no loans greater than 10 days past due and no other real estate
owned assets.
At June 30, 2023, the allowance for loan credit losses was $20.6
million or 1.17% of outstanding loans, net of unearned income,
compared to $21.6 million or 1.22% of outstanding loans, net of
unearned income, at March 31, 2023. The decrease in the allowance
as a percentage of outstanding loans, net of unearned income, was
primarily a result of improvement in the forecasted housing price
index used in the quantitative component of the CECL model and
changes in qualitative factors.
At June 30, 2023, the allowance for credit losses on unfunded
loan commitments was $1.1 million compared to $1.0 million at March
31, 2023. The increase in the allowance for credit losses on
unfunded loan commitments was primarily the result of an increase
in unfunded commitment balances during the quarter.
The Company did not have an allowance for credit losses on
held-to-maturity securities as of June 30, 2023 or March 31,
2023.
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
portfolios, 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)
Office
61.0
%
3.9
x
129
$
83,018
49.1
%
1.9
x
66
$
124,532
Retail
60.9
%
2.7
x
43
59,903
51.9
%
2.0
x
141
381,009
Warehouse
59.6
%
2.3
x
28
35,606
47.1
%
2.7
x
23
32,565
Church
34.0
%
3.2
x
18
38,017
- -
- -
- -
- -
Hotel/Motel
- -
- -
- -
- -
61.0
%
1.9
x
7
39,590
Industrial
56.4
%
4.8
x
25
37,960
52.7
%
5.5
x
14
53,347
Other(4)
55.3
%
3.2
x
51
106,355
50.4
%
1.8
x
15
23,580
Total
294
$
360,859
266
$
654,623
(1)
Loan-to-value is determined at origination
date and is divided by principal balance as of June 30, 2023.
(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
Net income for the second quarter of 2023 decreased $3.4 million
or 43.0% to $4.5 million compared to $7.9 million for the second
quarter of 2022. Earnings per diluted share for the three months
ended June 30, 2023 were $0.32, a 42.9% decrease when compared to
the $0.56 reported for the three months ended June 30, 2022.
Annualized Return on Average Assets (“ROAA”) was 0.77% and
annualized Return on Average Equity (“ROAE”) was 8.13% for the
three months ended June 30, 2023.
Net interest income for the second quarter of 2023 decreased
$5.3 million or 30.6% compared to the second quarter of 2022,
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 4.27% for the
second quarter of 2023 compared to 3.57% for the same period in
2022. The increase in yield on interest earning assets was
primarily due to higher yields on the Company’s loan and investment
portfolios and deposits in banks as a result of increases in
interest rates subsequent to the second quarter of 2022. The cost
of interest-bearing liabilities was 2.99% for the second quarter of
2023 compared to 0.60% for the same quarter of the prior year. The
increase in the cost of interest-bearing liabilities was primarily
due to a 2.46% 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 2022. The increase in
the overall cost of interest-bearing liabilities in the second
quarter of 2023 relative to the same period of the prior year is
largely due to rate hikes totaling 5.00% by the Federal Reserve
Bank since the beginning of 2022, which is increasing cost of funds
and compressing net interest margins across the banking industry.
The annualized net interest margin for the second quarter of 2023
was 2.10% as compared to 3.16% for the same quarter of 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 an $868 thousand release of provision for
credit losses for the second quarter of 2023 compared to no
provision for the second quarter of 2022. The release of provision
for credit losses during the second quarter of 2023 was due to an
improvement in the forecasted housing price index used in the
quantitative component of the CECL model, changes in qualitative
factors and a decrease in loan balances during the second quarter
of 2023.
Non-interest income increased $576 thousand during the second
quarter of 2023 compared to the second quarter of 2022 (GAAP). The
increase in non-interest income was primarily due to an increase of
$357 thousand as a result of mark-to-market adjustments on
investments related to the Company’s nonqualified deferred
compensation plan. The Company also had an increase in other
service charges and fee income of $157 thousand primarily as a
result of penalty fee income recognized on the early withdrawal of
certificates of deposit. The increase in non-interest income was
also attributable to a $23 thousand gain recorded as a result of
the Company’s first sale of the guaranteed portion of a SBA 7(a)
loan. Excluding mark-to-market adjustments on nonqualified deferred
compensation plan investments, non-interest income increased $219
thousand or 57.3% when compared to the same period in 2022
(Non-GAAP).
Non-interest expense increased $150 thousand or 2.0% during the
second quarter of 2023 compared to the three months ended June 30,
2022. The increase in non-interest expense was primarily due to an
increase in salaries and employee benefit expense as a result of
lower loan origination costs due to lower loan origination volume
in the second quarter of 2023 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 increase in non-interest expense was also attributable to
increases in FDIC insurance expense and franchise tax expense. The
increase in FDIC insurance expense resulted from the FDIC
increasing the base assessment rate for all insured depository
institutions. The increase in franchise tax expense was due to an
increase in the Bank’s equity as that is the basis the Commonwealth
of Virginia uses to assess taxes on banking institutions. The
increase in non-interest expense was partially offset by decreases
in professional fees, occupancy expense of premises and furniture
and equipment expense. The decrease in professional fees was due to
non-recurring professional fees incurred in the second quarter of
2022 as part of our registration with the Securities and Exchange
Commission (“SEC”) and timing of projects. The decrease in
occupancy expense of premises was due to a decrease in office rent
as a result of the renegotiation of certain leases. The decrease in
furniture and equipment expense was due to lower depreciation
expense on fixed assets. The Company continues to analyze cost
savings opportunities on existing leases and material
contracts.
For the three months ended June 30, 2023, annualized
non-interest expense to average assets was 1.34% compared to 1.38%
for the three months ended June 30, 2022. The decrease was
primarily due to lower overhead costs as a result of continued cost
consciousness.
For the three months ended June 30, 2023, the annualized
efficiency ratio was 61.7% compared to 44.1% for the three months
ended June 30, 2022. The increase was primarily due to a decrease
in net interest income and to a lesser extent, an increase in
non-interest expense, which was partially offset by an increase in
non-interest income.
Year-to-Date Results
Net income for the six months ended June 30, 2023 decreased $4.8
million or 30.6% to $10.8 million compared to $15.6 million for the
same period of 2022. Earnings per diluted share for the six months
ended June 30, 2023 were $0.76, a 31.3% decrease when compared to
the $1.10 reported for the six months ended June 30, 2022.
Annualized ROAA was 0.93% and annualized ROAE was 9.85% for the six
months ended June 30, 2023.
Net interest income for the six months ended June 30, 2023
decreased $8.7 million or 24.8% compared to the same period of
2022, 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 4.21% for the six
months ended June 30, 2023 compared to 3.62% for the same period in
2022. The increase in yield on interest earning assets was
primarily due to higher yields on the Company’s loan and investment
portfolios and deposits in banks as a result of increases in
interest rates subsequent to the second quarter of 2022. The cost
of interest-bearing liabilities was 2.63% for the six months ended
June 30, 2023 compared to 0.55% for the six months ended June 30,
2022. The increase in the cost of interest-bearing liabilities was
primarily due to a 2.14% 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 2022.
The annualized net interest margin for the six months ended June
30, 2023 was 2.33% as compared to 3.25% for the period of 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 $1.6 million release of provision for
credit losses for the six months ended June 30, 2023 compared to no
provision for the six month ended June 30, 2022. The release of
provision for credit losses during the six months ended June 30,
2023 was due to an improvement in the forecasted housing price
index used in the quantitative component of the CECL model, changes
in qualitative factors and a decrease in loan balances during the
first half of the year.
Non-interest income increased $728 thousand during the six
months ended June 30, 2023 compared to the same period of 2022
(GAAP). The increase in non-interest income was primarily due to an
increase of $563 thousand as a result of mark-to-market adjustments
on investments related to the Company’s nonqualified deferred
compensation plan. The Company also had an increase in other
service charges and fee income of $223 thousand primarily as a
result of penalty fee income recognized on the early withdrawal of
certificates of deposit, as well as a $91 thousand increase in
customer interest rate swap fee income. These increases were
partially offset by losses of $202 thousand recognized on the sale
of $12.0 million of investment securities during six months ended
June 30, 2023. The sales were executed to manage the Company’s
interest rate risk position, allow for the reinvestment of proceeds
into higher yielding assets and as a risk management strategy to
reduce the Company’s exposure to municipalities. Excluding
mark-to-market adjustments on nonqualified deferred compensation
plan investments and the loss on securities sold, non-interest
income increased $367 thousand or 40.2% when compared to the same
period in 2022 (Non-GAAP).
Non-interest expense decreased $866 thousand or 5.3% for the six
months ended June 30, 2023 compared to the six months ended June
30, 2022. The decrease in non-interest expense was primarily due to
decreases in salaries and employee benefits expense, professional
fees, occupancy expense of premises and furniture and equipment
expense. The decrease in salaries and employee benefits was
primarily due to a reduction in incentive compensation accruals
when compared to the same period of the prior year. Incentive
compensation accruals can fluctuate materially from quarter to
quarter, based upon the Company’s financial performance and
conditions measured against, among other evaluation criteria, our
strategic plan and budget. At the end of each year, the ultimate
determination of the incentive compensation is approved by the
Board of Directors. The decrease in professional fees was due to
non-recurring professional fees incurred in the first half of 2022
as part of our registration with the SEC and timing of projects.
The decrease in occupancy expense of premises was due to a decrease
in office rent as a result of the renegotiation of certain leases.
The decrease in furniture and equipment expense was due to lower
depreciation expense on fixed assets. The decrease in non-interest
expense was partially offset by increases in FDIC insurance
expense, franchise tax expense and director compensation expense.
The increase in FDIC insurance expense was attributable to the FDIC
increasing the base assessment rate for all insured depository
institutions. The increase in franchise tax expense was due to an
increase in the Bank’s equity as that is the basis the Commonwealth
of Virginia uses to assess taxes on banking institutions. The
increase in director compensation expense was primarily due to the
accelerated vesting of restricted stock awards as a result of the
death of a director during the first quarter of 2023.
For the six months ended June 30, 2023, annualized non-interest
expense to average assets was 1.34% compared to 1.49% for the six
months ended June 30, 2022. The decrease was primarily due to lower
overhead costs as a result of continued cost consciousness.
For the six months ended June 30, 2023, the annualized
efficiency ratio was 56.3% compared to 46.1% for the six months
ended June 30, 2022. The increase was primarily due to a decrease
in net interest income, which more than offset the increase in
non-interest income and decrease in non-interest expense.
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 the impact of unrealized losses in the Company’s bond
portfolio on the Bank’s regulatory capital ratios and
period-to-period operating performance, respectively. 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:
- The impact to the Bank’s regulatory capital ratios in the
hypothetical scenario where the entire bond portfolio was sold at
fair market value and the losses realized.
- Non-interest income excluding the impact of mark-to-market
adjustments on investments related to the Company’s nonqualified
deferred compensation plan and losses recognized on the sale of
available-for-sale securities.
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 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 a $2.36 billion asset bank 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.
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 credit losses; 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 potential
adverse effects of unusual and infrequently occurring events, such
as weather-related disasters, terrorist acts, geopolitical
conflicts (such as the ongoing war between Russia and Ukraine) or
public health events (such as COVID-19), 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 SEC. 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,
2023
2022
2023
2022
Selected Balance Sheet Data
Cash and cash equivalents
$
129,551
$
120,887
$
129,551
$
120,887
Total investment securities
429,954
473,914
429,954
473,914
Loans, net of unearned income
1,769,801
1,692,652
1,769,801
1,692,652
Allowance for loan credit losses
20,629
20,031
20,629
20,031
Total assets
2,364,250
2,316,374
2,364,250
2,316,374
Non-interest bearing demand deposits
433,931
512,284
433,931
512,284
Interest bearing deposits
1,612,378
1,531,457
1,612,378
1,531,457
Total deposits
2,046,309
2,043,741
2,046,309
2,043,741
Federal funds purchased
- -
- -
- -
- -
Federal Home Loan Bank advances
- -
- -
- -
- -
Federal Reserve Bank borrowings
54,000
- -
54,000
- -
Shareholders' equity
218,970
207,530
218,970
207,530
Summary Results of Operations
Interest income
$
24,455
$
19,555
$
47,908
$
39,300
Interest expense
12,446
2,247
21,430
4,076
Net interest income
12,009
17,308
26,478
35,224
Provision for (recovery of) credit
losses
(868
)
- -
(1,642
)
- -
Net interest income after provision for
(recovery of) credit losses
12,877
17,308
28,120
35,224
Non-interest income
685
109
1,251
523
Non-interest expense
7,831
7,681
15,601
16,467
Income before income taxes
5,731
9,736
13,770
19,280
Net income
4,490
7,882
10,794
15,556
Per Share Data and Shares
Outstanding
Earnings per share - basic
$
0.32
$
0.56
$
0.76
$
1.11
Earnings per share - diluted
$
0.32
$
0.56
$
0.76
$
1.10
Book value per share
$
15.50
$
14.80
$
15.50
$
14.80
Weighted average common shares (basic)
14,077,658
13,932,256
14,150,155
13,858,057
Weighted average common shares
(diluted)
14,143,253
14,085,160
14,228,155
14,042,205
Common shares outstanding at end of
period
14,126,138
14,026,589
14,126,138
14,026,589
Performance Ratios
Return on average assets (annualized)
0.77
%
1.41
%
0.93
%
1.41
%
Return on average equity (annualized)
8.13
%
15.28
%
9.85
%
15.02
%
Net interest margin
2.10
%
3.16
%
2.33
%
3.25
%
Non-interest income as a percentage of
average assets (annualized)
0.12
%
0.02
%
0.11
%
0.05
%
Non-interest expense to average assets
(annualized)
1.34
%
1.38
%
1.34
%
1.49
%
Efficiency ratio
61.7
%
44.1
%
56.3
%
46.1
%
Asset Quality
Non-performing assets to total assets
- -
%
- -
%
- -
%
- -
%
Non-performing loans to total loans
- -
%
- -
%
- -
%
- -
%
Allowance for loan credit losses to
non-performing loans
N/M
N/M
N/M
N/M
Allowance for loan credit losses to total
loans
1.17
%
1.18
%
1.17
%
1.18
%
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
10.2
%
9.9
%
10.2
%
9.9
%
Total risk-based capital ratio
16.1
%
15.1
%
16.1
%
15.1
%
Tier 1 risk-based capital ratio
15.0
%
14.0
%
15.0
%
14.0
%
Common equity tier 1 ratio
15.0
%
14.0
%
15.0
%
14.0
%
Leverage ratio
11.6
%
11.0
%
11.6
%
11.0
%
Other Information
Number of full time equivalent
employees
144
144
144
144
# Full service branch offices
8
8
8
8
# Loan production or limited service
branch offices
- -
1
- -
1
(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
2023
2022
2022
Months
Year
Assets
(Unaudited)
*
(Unaudited)
Cash and due from banks
$
13,938
$
6,583
$
12,915
111.7
%
7.9
%
Interest-bearing deposits in banks
115,613
55,016
107,972
110.1
%
7.1
%
Securities available-for-sale, at fair
value
325,271
357,576
365,134
(9.0
)%
(10.9
)%
Securities held-to-maturity, fair value of
$79,634, $81,161, and $88,862 at 6/30/2023, 12/31/2022, and
6/30/2022, respectively.
97,453
99,415
102,265
(2.0
)%
(4.7
)%
Restricted securities, at cost
4,535
4,425
4,417
2.5
%
2.7
%
Equity securities, at fair value
2,695
2,115
2,098
27.4
%
28.5
%
Loans, net of unearned income
1,769,801
1,789,508
1,692,652
(1.1
)%
4.6
%
Allowance for credit losses
(20,629
)
(20,208
)
(20,031
)
2.1
%
3.0
%
Net loans
1,749,172
1,769,300
1,672,621
(1.1
)%
4.6
%
Bank premises and equipment, net
1,370
1,219
1,443
12.4
%
(5.1
)%
Accrued interest receivable
5,178
5,531
4,451
(6.4
)%
16.3
%
Bank owned life insurance
21,371
21,170
21,188
0.9
%
0.9
%
Right of use assets
4,443
4,611
4,281
(3.6
)%
3.8
%
Other assets
23,211
21,274
17,589
9.1
%
32.0
%
Total assets
$
2,364,250
$
2,348,235
$
2,316,374
0.7
%
2.1
%
Liabilities and Shareholders'
Equity
Liabilities
Deposits:
Non-interest bearing demand deposits
$
433,931
$
476,697
$
512,284
(9.0
)%
(15.3
)%
Interest-bearing demand deposits
652,638
691,945
738,666
(5.7
)%
(11.6
)%
Savings deposits
68,013
95,241
112,276
(28.6
)%
(39.4
)%
Time deposits
891,727
803,857
680,515
10.9
%
31.0
%
Total deposits
2,046,309
2,067,740
2,043,741
(1.0
)%
0.1
%
Federal funds purchased
- -
25,500
- -
N/M
N/M
Federal Home Loan Bank advances
- -
- -
- -
N/M
N/M
Federal Reserve Bank borrowings
54,000
- -
- -
N/M
N/M
Subordinated debt, net
24,666
24,624
49,560
0.2
%
(50.2
)%
Accrued interest payable
2,336
1,035
896
125.7
%
160.7
%
Lease liabilities
4,733
4,858
4,538
(2.6
)%
4.3
%
Other liabilities
13,236
11,678
10,109
13.3
%
30.9
%
Total liabilities
2,145,280
2,135,435
2,108,844
0.5
%
1.7
%
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,
14,126,138 at 6/30/2023 including 46,291 unvested shares,
14,098,986 at 12/31/2022 including 55,185 unvested shares, and
14,026,589 at 6/30/2022, including 58,536 unvested shares
141
141
140
- -
%
0.7
%
Additional paid-in capital
95,380
94,726
93,935
0.7
%
1.5
%
Retained earnings
152,024
146,630
130,383
3.7
%
16.6
%
Accumulated other comprehensive loss
(28,575
)
(28,697
)
(16,928
)
(0.4
)%
68.8
%
Total shareholders' equity
218,970
212,800
207,530
2.9
%
5.5
%
Total liabilities and shareholders'
equity
$
2,364,250
$
2,348,235
$
2,316,374
0.7
%
2.1
%
* 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,
2023
2022
% Change
2023
2022
% Change
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Interest and Dividend Income
Interest and fees on loans
$
21,005
$
17,334
21.2
%
$
41,430
$
35,518
16.6
%
Interest on investment securities,
taxable
2,140
1,893
13.0
%
4,391
3,273
34.2
%
Interest on investment securities,
tax-exempt
15
30
(50.0
)%
34
60
(43.3
)%
Dividends
70
64
9.4
%
145
124
16.9
%
Interest on deposits in other banks
1,225
234
N/M
1,908
325
N/M
Total interest and dividend income
24,455
19,555
25.1
%
47,908
39,300
21.9
%
Interest Expense
Deposits
11,759
1,698
N/M
20,318
3,021
N/M
Federal funds purchased
- -
- -
N/M
9
- -
N/M
Federal Home Loan Bank advances
- -
12
N/M
67
42
59.5
%
Federal Reserve Bank borrowings
338
- -
N/M
338
- -
N/M
Subordinated debt
349
537
(35.0
)%
698
1,013
(31.1
)%
Total interest expense
12,446
2,247
453.9
%
21,430
4,076
425.8
%
Net interest income
12,009
17,308
(30.6
)%
26,478
35,224
(24.8
)%
Provision for (recovery of) Credit
Losses
(868
)
- -
N/M
(1,642
)
- -
N/M
Net interest income after provision for
(recovery of) credit losses
12,877
17,308
(25.6
)%
28,120
35,224
(20.2
)%
Non-interest Income
Service charges on deposit accounts
82
84
(2.4
)%
154
161
(4.3
)%
Bank owned life insurance
101
95
6.3
%
201
190
5.8
%
Other service charges and fees
314
157
100.0
%
517
294
75.9
%
Losses on sale of available-for-sale
securities
- -
- -
N/M
(202
)
- -
N/M
Insurance commissions
50
44
13.6
%
256
265
(3.4
)%
Gain on sale of government guaranteed
loans
23
- -
N/M
23
- -
N/M
Other income (loss)
115
(271
)
N/M
302
(387
)
N/M
Total non-interest income
685
109
528.4
%
1,251
523
139.2
%
Non-interest Expenses
Salaries and employee benefits
4,965
4,655
6.7
%
9,877
10,682
(7.5
)%
Occupancy expense of premises
448
482
(7.1
)%
918
975
(5.8
)%
Furniture and equipment expenses
304
341
(10.9
)%
600
666
(9.9
)%
Other expenses
2,114
2,203
(4.0
)%
4,206
4,144
1.5
%
Total non-interest expenses
7,831
7,681
2.0
%
15,601
16,467
(5.3
)%
Income before income taxes
5,731
9,736
(41.1
)%
13,770
19,280
(28.6
)%
Income tax Expense
1,241
1,854
(33.1
)%
2,976
3,724
(20.1
)%
Net income
$
4,490
$
7,882
(43.0
)%
$
10,794
$
15,556
(30.6
)%
Earnings Per Share
Basic
$
0.32
$
0.56
(42.9
)%
$
0.76
$
1.11
(31.5
)%
Diluted
$
0.32
$
0.56
(42.9
)%
$
0.76
$
1.10
(31.3
)%
John Marshall Bancorp,
Inc.
Historical Trends - Quarterly
Financial Data (Unaudited)
(Dollar amounts in thousands,
except per share data)
2023
2022
June 30
March 31
December 31
September 30
June 30
March 31
Profitability for the Quarter:
Interest income
$
24,455
$
23,453
$
23,557
$
21,208
$
19,555
$
19,745
Interest expense
12,446
8,984
6,052
3,516
2,247
1,829
Net interest income
12,009
14,469
17,505
17,692
17,308
17,916
Provision for (recovery of) credit
losses
(868
)
(774
)
175
- -
- -
- -
Non-interest income
685
566
718
450
109
414
Non-interest expenses
7,831
7,770
7,449
7,958
7,681
8,786
Income before income taxes
5,731
8,039
10,599
10,184
9,736
9,544
Income tax expense
1,241
1,735
2,397
2,139
1,854
1,870
Net income
$
4,490
$
6,304
$
8,202
$
8,045
$
7,882
$
7,674
Financial Performance:
Return on average assets (annualized)
0.77
%
1.10
%
1.40
%
1.38
%
1.41
%
1.40
%
Return on average equity (annualized)
8.13
%
11.83
%
15.65
%
15.07
%
15.28
%
14.76
%
Net interest margin
2.10
%
2.57
%
3.05
%
3.10
%
3.16
%
3.34
%
Non-interest income as a percentage of
average assets (annualized)
0.12
%
0.10
%
0.12
%
0.08
%
0.02
%
0.08
%
Non-interest expense to average assets
(annualized)
1.34
%
1.35
%
1.27
%
1.36
%
1.38
%
1.61
%
Efficiency ratio
61.7
%
51.7
%
40.9
%
43.9
%
44.1
%
47.9
%
Per Share Data:
Earnings per share - basic
$
0.32
$
0.45
$
0.58
$
0.57
$
0.56
$
0.55
Earnings per share - diluted
$
0.32
$
0.44
$
0.58
$
0.57
$
0.56
$
0.55
Book value per share
$
15.50
$
15.63
$
15.09
$
14.37
$
14.80
$
14.68
Dividends declared per share
$
0.22
$
- -
$
- -
$
- -
$
- -
$
0.20
Weighted average common shares (basic)
14,077,658
14,067,047
14,019,429
13,989,414
13,932,256
13,783,034
Weighted average common shares
(diluted)
14,143,253
14,156,724
14,131,352
14,108,286
14,085,160
13,991,692
Common shares outstanding at end of
period
14,126,138
14,125,208
14,098,986
14,070,080
14,026,589
13,950,570
Non-interest Income:
Service charges on deposit accounts
$
82
$
72
$
84
$
79
$
84
$
77
Bank owned life insurance
101
100
99
255
95
95
Other service charges and fees
314
203
187
175
157
137
Losses on securities
- -
(202
)
- -
- -
- -
- -
Insurance commissions
50
206
70
47
44
221
Gain on sale of government guaranteed
loans
23
- -
- -
- -
- -
- -
Other income (loss)
115
187
278
(106
)
(271
)
(116
)
Total non-interest income
$
685
$
566
$
718
$
450
$
109
$
414
Non-interest Expenses:
Salaries and employee benefits
$
4,965
$
4,912
$
4,436
$
5,072
$
4,655
$
6,027
Occupancy expense of premises
448
470
458
461
482
493
Furniture and equipment expenses
304
296
336
323
341
325
Other expenses
2,114
2,092
2,219
2,102
2,203
1,941
Total non-interest expenses
$
7,831
$
7,770
$
7,449
$
7,958
$
7,681
$
8,786
Balance Sheets at Quarter End:
Total loans, net of unearned income
$
1,769,801
$
1,771,272
$
1,789,508
$
1,725,114
$
1,692,652
$
1,631,260
Allowance for loan credit losses
(20,629
)
(21,619
)
(20,208
)
(20,032
)
(20,031
)
(20,031
)
Investment securities
429,954
445,785
463,531
473,478
473,914
409,692
Interest-earning assets
2,315,368
2,312,404
2,308,055
2,258,822
2,274,968
2,217,553
Total assets
2,364,250
2,351,307
2,348,235
2,305,540
2,316,374
2,249,609
Total deposits
2,046,309
2,088,642
2,067,740
2,063,341
2,043,741
1,983,099
Total interest-bearing liabilities
1,691,044
1,665,837
1,641,167
1,552,758
1,581,017
1,530,133
Total shareholders' equity
218,970
220,823
212,800
202,212
207,530
204,855
Quarterly Average Balance
Sheets:
Total loans, net of unearned income
$
1,767,831
$
1,772,922
$
1,759,747
$
1,684,796
$
1,641,914
$
1,620,533
Allowance for loan credit losses
(21,326
)
(21,481
)
(20,042
)
(20,032
)
(20,031
)
(20,032
)
Investment securities
441,778
463,254
468,956
488,860
447,688
376,608
Interest-earning assets
2,305,050
2,295,677
2,289,061
2,277,325
2,204,709
2,183,897
Total assets
2,344,712
2,334,695
2,330,307
2,314,825
2,240,119
2,216,131
Total deposits
2,051,702
2,066,139
2,079,161
2,057,640
1,980,231
1,946,882
Total interest-bearing liabilities
1,667,597
1,621,131
1,566,902
1,547,766
1,504,574
1,505,854
Total shareholders' equity
221,608
220,282
207,906
212,147
206,967
210,900
Financial Measures:
Average equity to average assets
9.5
%
9.4
%
8.9
%
9.2
%
9.2
%
9.5
%
Investment securities to earning
assets
18.6
%
19.3
%
20.1
%
21.0
%
20.8
%
18.5
%
Loans to earning assets
76.4
%
76.6
%
77.5
%
76.4
%
74.4
%
73.6
%
Loans to assets
74.9
%
75.3
%
76.2
%
74.8
%
73.1
%
72.5
%
Loans to deposits
86.5
%
84.8
%
86.5
%
83.6
%
82.8
%
82.3
%
Capital Ratios (Bank Level):
Equity / assets
10.2
%
10.3
%
10.0
%
9.7
%
9.9
%
10.2
%
Total risk-based capital ratio
16.1
%
16.1
%
15.6
%
15.4
%
15.1
%
15.4
%
Tier 1 risk-based capital ratio
15.0
%
14.9
%
14.4
%
14.3
%
14.0
%
14.2
%
Common equity tier 1 ratio
15.0
%
14.9
%
14.4
%
14.3
%
14.0
%
14.2
%
Leverage ratio
11.6
%
11.5
%
11.3
%
11.0
%
11.0
%
10.8
%
John Marshall Bancorp,
Inc.
Loan, Deposit and Borrowing
Detail (Unaudited)
(Dollar amounts in
thousands)
2023
2022
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
$
40,156
2.3
%
$
41,204
2.3
%
$
44,788
2.5
%
$
44,967
2.6
%
$
47,654
2.8
%
$
52,569
3.2
%
Commercial PPP loans
133
0.0
%
135
0.0
%
136
0.0
%
138
0.0
%
224
0.0
%
7,781
0.5
%
Commercial owner-occupied real estate
loans
360,859
20.4
%
363,495
20.6
%
366,131
20.5
%
362,346
21.1
%
378,457
22.4
%
339,933
20.9
%
Total business loans
401,148
22.7
%
404,834
22.9
%
411,055
23.0
%
407,451
23.7
%
426,335
25.2
%
400,283
24.6
%
Investor real estate loans
654,623
37.0
%
660,740
37.4
%
662,769
37.1
%
622,415
36.1
%
598,501
35.5
%
553,093
34.0
%
Construction & development loans
179,656
10.2
%
179,606
10.2
%
195,027
11.0
%
199,324
11.6
%
189,644
11.2
%
219,160
13.4
%
Multi-family loans
86,061
4.9
%
88,670
5.0
%
89,227
5.0
%
106,460
6.2
%
106,236
6.3
%
99,100
6.1
%
Total commercial real estate loans
920,340
52.1
%
929,016
52.6
%
947,023
53.1
%
928,199
53.9
%
894,381
53.0
%
871,353
53.5
%
Residential mortgage loans
443,305
25.2
%
433,076
24.5
%
426,841
23.9
%
385,696
22.4
%
368,370
21.8
%
356,331
21.9
%
Consumer loans
646
0.0
%
324
0.0
%
529
0.0
%
585
0.0
%
651
0.0
%
513
0.0
%
Total loans
$
1,765,439
100.0
%
$
1,767,250
100.0
%
$
1,785,448
100.0
%
$
1,721,931
100.0
%
$
1,689,737
100.0
%
$
1,628,480
100.0
%
Less: Allowance for loan credit losses
(20,629
)
(21,619
)
(20,208
)
(20,032
)
(20,031
)
(20,031
)
Net deferred loan costs (fees)
4,362
4,022
4,060
3,183
2,915
2,780
Net loans
$
1,749,172
$
1,749,653
$
1,769,300
$
1,705,082
$
1,672,621
$
1,611,229
2023
2022
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
$
433,931
21.2
%
$
447,450
21.4
%
$
476,697
23.1
%
$
535,186
25.9
%
$
512,284
25.1
%
$
495,811
25.0
%
Interest-bearing demand deposits:
NOW accounts(1)
311,225
15.2
%
284,872
13.7
%
253,148
12.3
%
293,558
14.2
%
338,789
16.6
%
345,087
17.4
%
Money market accounts(1)
341,413
16.7
%
392,962
18.8
%
438,797
21.2
%
412,035
20.0
%
399,877
19.6
%
414,987
20.9
%
Savings accounts
68,013
3.4
%
81,150
3.9
%
95,241
4.6
%
102,909
5.0
%
112,276
5.4
%
114,427
5.8
%
Certificates of deposit
$250,000 or more
376,899
18.4
%
338,824
16.2
%
314,738
15.2
%
280,027
13.6
%
255,411
12.5
%
241,230
12.1
%
Less than $250,000
105,956
5.2
%
94,429
4.5
%
89,247
4.3
%
88,421
4.3
%
87,505
4.3
%
91,050
4.6
%
QwickRate® certificates of deposit
12,772
0.6
%
16,952
0.8
%
22,163
1.1
%
20,154
1.0
%
20,154
1.0
%
23,136
1.2
%
IntraFi® certificates of deposit
49,729
2.4
%
53,178
2.5
%
25,757
1.2
%
46,305
2.2
%
32,686
1.6
%
39,628
2.0
%
Brokered deposits
346,371
16.9
%
378,825
18.2
%
351,952
17.0
%
284,746
13.8
%
284,759
13.9
%
217,743
11.0
%
Total deposits
$
2,046,309
100.0
%
$
2,088,642
100.0
%
$
2,067,740
100.0
%
$
2,063,341
100.0
%
$
2,043,741
100.0
%
$
1,983,099
100.0
%
Borrowings
Federal funds purchased
$
- -
0.0
%
$
- -
0.0
%
$
25,500
50.9
%
$
- -
0.0
%
$
- -
0.0
%
$
- -
0.0
%
Federal Home Loan Bank advances
- -
0.0
%
- -
0.0
%
- -
- -
%
- -
- -
%
- -
- -
%
18,000
42.0
%
Federal Reserve Bank borrowings
54,000
68.6
%
- -
0.0
%
- -
0.0
%
- -
0.0
%
- -
0.0
%
- -
0.0
%
Subordinated debt
24,666
31.4
%
24,645
100.0
%
24,624
49.1
%
24,603
100.0
%
49,560
100.0
%
24,845
58.0
%
Total borrowings
$
78,666
100.0
%
$
24,645
100.0
%
$
50,124
100.0
%
$
24,603
100.0
%
$
49,560
100.0
%
$
42,845
100.0
%
Total deposits and borrowings
$
2,124,975
$
2,113,287
$
2,117,864
$
2,087,944
$
2,093,301
$
2,025,944
Core customer funding sources (2)
$
1,687,166
80.3
%
$
1,692,865
81.1
%
$
1,693,625
80.9
%
$
1,758,441
85.2
%
$
1,738,828
85.1
%
$
1,742,220
87.1
%
Wholesale funding sources (3)
413,143
19.7
%
395,777
18.9
%
399,615
19.1
%
304,900
14.8
%
304,913
14.9
%
258,879
12.9
%
Total funding sources
$
2,100,309
100.0
%
$
2,088,642
100.0
%
$
2,093,240
100.0
%
$
2,063,341
100.0
%
$
2,043,741
100.0
%
$
2,001,099
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,
2023
Six Months Ended June 30,
2022
Interest Income /
Average
Interest Income /
Average
Average Balance
Expense
Rate
Average Balance
Expense
Rate
Assets:
Securities:
Taxable
$
449,272
$
4,536
2.04
%
$
407,341
$
3,397
1.68
%
Tax-exempt(1)
3,184
43
2.72
%
5,004
76
3.06
%
Total securities
$
452,456
$
4,579
2.04
%
$
412,345
$
3,473
1.70
%
Loans, net of unearned income(2):
Taxable
1,741,915
40,969
4.74
%
1,611,916
35,209
4.40
%
Tax-exempt(1)
28,447
584
4.14
%
19,367
391
4.07
%
Total loans, net of unearned income
$
1,770,362
$
41,553
4.73
%
$
1,631,283
$
35,600
4.40
%
Interest-bearing deposits in other
banks
$
77,571
$
1,908
4.96
%
$
150,734
$
325
0.43
%
Total interest-earning assets
$
2,300,389
$
48,040
4.21
%
$
2,194,362
$
39,398
3.62
%
Total non-interest earning assets
39,342
33,830
Total assets
$
2,339,731
$
2,228,192
Liabilities & Shareholders’
Equity:
Interest-bearing deposits
NOW accounts
$
272,872
$
2,245
1.66
%
$
323,546
$
424
0.26
%
Money market accounts
390,511
4,951
2.56
%
395,532
789
0.40
%
Savings accounts
81,025
475
1.18
%
111,312
177
0.32
%
Time deposits
858,027
12,647
2.97
%
635,359
1,631
0.52
%
Total interest-bearing deposits
$
1,602,435
$
20,318
2.56
%
$
1,465,749
$
3,021
0.42
%
Federal funds purchased
392
9
4.63
%
—
—
0.00
%
Subordinated debt
24,643
698
5.71
%
27,007
1,013
7.56
%
Other borrowed funds
17,023
405
4.80
%
12,453
42
0.68
%
Total interest-bearing liabilities
$
1,644,493
$
21,430
2.63
%
$
1,505,209
$
4,076
0.55
%
Demand deposits
456,445
497,899
Other liabilities
17,845
16,161
Total liabilities
$
2,118,783
$
2,019,269
Shareholders’ equity
$
220,948
$
208,923
Total liabilities and shareholders’
equity
$
2,339,731
$
2,228,192
Tax-equivalent net interest income and
spread
$
26,610
1.58
%
$
35,322
3.07
%
Less: tax-equivalent adjustment
132
98
Net interest income
$
26,478
$
35,224
Tax-equivalent interest income/earnings
assets
4.21
%
3.62
%
Interest expense/earning assets
1.88
%
0.37
%
Net interest margin(3)
2.33
%
3.25
%
(1)
Tax-equivalent income has 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 $132 thousand and $98 thousand for the
six months ended June 30, 2023 and June 30, 2022, respectively.
(2)
The Company did not have any loans on
non-accrual as of June 30, 2023 or June 30, 2022.
(3)
The net interest margin has been
calculated on a tax-equivalent basis.
John Marshall Bancorp,
Inc.
Average Balance Sheets,
Interest and Rates (unaudited)
(Dollar amounts in
thousands)
Three Months Ended June 30,
2023
Three Months Ended June 30,
2022
Interest Income /
Average
Interest Income /
Average
Average Balance
Expense
Rate
Average Balance
Expense
Rate
Assets:
Securities:
Taxable
$
438,845
$
2,210
2.02
%
$
442,686
$
1,957
1.77
%
Tax-exempt(1)
2,933
20
2.74
%
5,002
38
3.05
%
Total securities
$
441,778
$
2,230
2.02
%
$
447,688
$
1,995
1.79
%
Loans, net of unearned income(2):
Taxable
1,739,511
20,775
4.79
%
1,622,666
17,180
4.25
%
Tax-exempt(1)
28,320
292
4.14
%
19,248
195
4.06
%
Total loans, net of unearned income
$
1,767,831
$
21,067
4.78
%
$
1,641,914
$
17,375
4.24
%
Interest-bearing deposits in other
banks
$
95,441
$
1,225
5.15
%
$
115,107
$
234
0.82
%
Total interest-earning assets
$
2,305,050
$
24,522
4.27
%
$
2,204,709
$
19,604
3.57
%
Total non-interest earning assets
39,662
35,410
Total assets
$
2,344,712
$
2,240,119
Liabilities & Shareholders’
Equity:
Interest-bearing deposits
NOW accounts
$
287,094
$
1,483
2.07
%
$
322,255
$
222
0.28
%
Money market accounts
352,373
2,476
2.82
%
398,641
439
0.44
%
Savings accounts
74,483
231
1.24
%
114,216
89
0.31
%
Time deposits
901,104
7,569
3.37
%
633,273
948
0.60
%
Total interest-bearing deposits
$
1,615,054
$
11,759
2.92
%
$
1,468,385
$
1,698
0.46
%
Federal funds purchased
—
—
0.00
%
—
—
0.00
%
Subordinated debt, net
24,653
349
5.68
%
29,222
537
7.37
%
Other borrowed funds
27,890
338
4.86
%
6,967
12
0.69
%
Total interest-bearing liabilities
$
1,667,597
$
12,446
2.99
%
$
1,504,574
$
2,247
0.60
%
Demand deposits
436,648
511,846
Other liabilities
18,859
16,732
Total liabilities
$
2,123,104
$
2,033,152
Shareholders’ equity
$
221,608
$
206,967
Total liabilities and shareholders’
equity
$
2,344,712
$
2,240,119
Tax-equivalent net interest income and
spread
$
12,076
1.28
%
$
17,357
2.97
%
Less: tax-equivalent adjustment
67
49
Net interest income
$
12,009
$
17,308
Tax-equivalent interest income/earnings
assets
4.27
%
3.57
%
Interest expense/earning assets
2.17
%
0.41
%
Net interest margin(3)
2.10
%
3.16
%
(1)
Tax-equivalent income has 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 $67 thousand and $49 thousand for the
three months ended June 30, 2023 and June 30, 2022,
respectively.
(2)
The Company did not have any loans on
non-accrual as of June 30, 2023 or June 30, 2022.
(3)
The net interest margin has been
calculated on a tax-equivalent basis.
John Marshall Bancorp,
Inc.
Reconciliation of Certain
Non-GAAP Financial Measures (unaudited)
(Dollar amounts in
thousands)
As of and For the Three Months
Ended
June 30, 2023
December 31, 2022
June 30, 2022
Regulatory Ratios (Bank)
Total risk-based capital (GAAP)
$
291,262
$
283,471
$
265,874
Less: Unrealized losses on
available-for-sale securities, net of tax benefit (1)
28,770
28,942
17,237
Less: Unrealized losses on
held-to-maturity securities, net of tax benefit (1)
14,077
14,421
10,588
Total risk-based capital, excluding
unrealized losses on available-for-sale and held-to-maturity
securities, net of tax benefit (Non-GAAP)
$
248,415
$
240,108
$
238,049
Tier 1 capital (GAAP)
$
271,209
$
262,960
$
245,489
Less: Unrealized losses on
available-for-sale securities, net of tax benefit (1)
28,770
28,942
17,237
Less: Unrealized losses on
held-to-maturity securities, net of tax benefit (1)
14,077
14,421
10,588
Tier 1 capital, excluding unrealized
losses on available-for-sale and held-to-maturity securities, net
of tax benefit (Non-GAAP)
$
228,362
$
219,597
$
217,664
Risk weighted assets (GAAP)
$
1,813,541
$
1,819,305
$
1,757,891
Less: Risk weighted available-for-sale
securities
56,621
60,894
59,353
Less: Risk weighted held-to-maturity
securities
17,425
17,762
18,268
Risk weighted assets, excluding
available-for-sale and held-to-maturity securities (Non-GAAP)
$
1,739,495
$
1,740,649
$
1,680,270
Total average assets for leverage ratio
(GAAP)
$
2,343,457
$
2,327,939
$
2,237,633
Less: Average available-for-sale
securities
336,116
362,024
337,084
Less: Average held-to-maturity
securities
98,091
100,050
103,305
Total average assets for leverage ratio,
excluding available-for-sale and held-to-maturity securities
(Non-GAAP)
$
1,909,250
$
1,865,865
$
1,797,244
Total risk-based capital ratio (2)
Total risk-based capital ratio (GAAP)
16.1
%
15.6
%
15.1
%
Total risk-based capital ratio
(Non-GAAP)
14.3
%
13.8
%
14.2
%
Tier 1 capital ratio (3)
Tier 1 risk-based capital ratio (GAAP)
15.0
%
14.4
%
14.0
%
Tier 1 risk-based capital ratio
(Non-GAAP)
13.0
%
12.6
%
13.0
%
Common equity tier 1 ratio (4)
Common equity tier 1 ratio (GAAP)
15.0
%
14.4
%
14.0
%
Common equity tier 1 ratio (Non-GAAP)
13.0
%
12.6
%
13.0
%
Leverage ratio (5)
Leverage ratio (GAAP)
11.6
%
11.3
%
11.0
%
Leverage ratio (Non-GAAP)
12.0
%
11.8
%
12.1
%
Non-interest Income
Non-interest Income (GAAP)
$
685
$
109
Less: Mark-to-market ("MTM") adjustment on
investments related to the Company’s nonqualified deferred
compensation ("NQDC") plan
84
(273
)
Non-interest income, excluding MTM
adjustments on investments related to the Company's NQDC plan
(Non-GAAP)
$
601
$
382
For the Six Months
Ended
June 30, 2023
June 30, 2022
Non-interest Income (GAAP)
$
1,251
$
523
Less: MTM adjustment on investments
related to the Company’s NQDC plan
172
(391
)
Plus: Losses on sale of available-for-sale
securities
(202
)
- -
Non-interest income, excluding MTM
adjustments on investments related to the Company's NQDC plan and
losses on available-for-sale securities (Non-GAAP)
$
1,281
$
914
(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 tier 1 capital ratio is calculated by
dividing tier 1 capital by risk weighted assets.
(4)
The common equity tier 1 ratio is
calculated by dividing tier 1 capital by risk weighted assets.
(5)
The leverage ratio is calculated by
dividing tier 1 capital by total average assets for leverage
ratio.
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230721718529/en/
Christopher W. Bergstrom (703) 584-0840 Kent D. Carstater (703)
289-5922
John Marshall Bancorp (NASDAQ:JMSB)
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John Marshall Bancorp (NASDAQ:JMSB)
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