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JMSB Reports Record ROAA of 1.30% and ROAE of 13.35% for 3Q2021; Linked Quarter Loan Growth (excluding PPP) of 11.2% Annualized

 

John Marshall Bancorp, Inc. (OTCQB: JMSB) (the “Company”), parent company of John Marshall Bank (the “Bank”), reported its financial results for the three and nine months ended September 30, 2021.

Selected Highlights

  • Strong Growth – Year-over-year total assets increased 12.5% or $233.6 million to $2.10 billion at September 30, 2021. Gross loans net of unearned income and Paycheck Protection Program (“PPP”) loans grew $142.3 million or 10.3% from September 30, 2020 to September 30, 2021. Total deposits grew $215.4 million or 13.3% from September 30, 2020 to September 30, 2021. Non-interest bearing demand deposits grew 20.2% or $78.0 million from September 30, 2020 to September 30, 2021.
  • Record Quarterly Returns – Annualized Return on Average Assets (ROAA) was 1.30% and Return on Average Equity (ROAE) was 13.35% for the three months ended September 30, 2021. Excluding the second quarter of 2010, when the Company realized a significant, non-recurring income tax benefit from the removal of the valuation allowance on its deferred tax assets, these returns represent quarterly records for the Company.
  • Eleventh Consecutive Quarter of Record Earnings – The Company reported net income of $6.8 million for the three months ended September 30, 2021, a 45.0% increase over the $4.7 million reported for the three months ended September 30, 2020. The Company reported net income of $17.9 million for the nine months ended September 30, 2021, a 30.5% increase over the $13.7 million reported for the nine months ended September 30, 2020. Earnings per diluted share for the three months ended September 30, 2021 were $0.48, a 41.2% increase over the $0.34 reported for the three months ended September 30, 2020. Earnings per diluted share for the nine months ended September 30, 2021 were $1.29, a 29.0% increase over the $1.00 reported for the nine months ended September 30, 2020.
  • Consistent Interest Rate Spread – Excluding the impact of PPP loans, the Company’s interest rate spread, defined as yield on earning assets less the cost of funds, has been consistent. Excluding PPP loans, the interest rate spread for the three months ended September 30, 2021 was 3.91% versus 3.99% for the three months ended June 30, 2021, 3.90% for the three months ended December 31, 2020 and 3.90% for the three months ended September 30, 2020. The interest rate spread for the three months ended June 30, 2021 was inflated by extraordinary payoff volume.
  • Increased Operating Leverage – Revenues, defined as the sum of net interest income and noninterest income, were $16.5 million or 11.6% greater in the third quarter of 2021 as compared to $14.8 million for the third quarter of 2020. This $1.7 million increase more than offset the increase in noninterest expense for the third quarter of 2021 of $406 thousand or 5.6% to $7.6 million, when compared to the $7.2 million for the third quarter of 2020. This continued improvement in operating leverage enabled the efficiency ratio to decrease from 48.8% for the three months ended September 30, 2020 to 46.2% for the three months ended September 30, 2021. Noninterest expense to average assets declined from 1.60% for the three months ended September 30, 2020 to 1.46% for the three months ended September 30, 2021.
  • Asset Quality Remains Pristine – For the eighth consecutive quarter, the Company had no non-performing loans, no loans 30 days or more past due, and no other real estate owned assets at quarter-end September 30, 2021. During the first nine months of 2021, the Company reported charge-offs totaling $90 thousand. There were no charge-offs during the same period in 2020. Troubled debt restructurings were $554 thousand at September 30, 2021, a decrease of $65 thousand, from $619 thousand at September 30, 2020. The Company had no COVID-19 modifications as of September 30, 2021. The Company believes its allowance for loan losses is appropriate for the inherent risks and uncertainties associated with the portfolio.

Chris Bergstrom, President and Chief Executive Officer, commented, “Despite the economic strains caused by the Delta variant, John Marshall continued to grow high-quality loans and core deposits to produce record earnings and returns during the 3rd quarter. We have leveraged our investments in technology to become more efficient, and are evaluating additional such investments to further accelerate our growth. The Company continues to have a strong capital position, excellent asset quality and a liquid balance sheet. As the number of COVID-19 cases declines, we are seeing increased lending opportunities and believe that we are well-positioned for future growth.”

Balance Sheet Review

Assets

Total assets were $2.10 billion at September 30, 2021, $1.89 billion at December 31, 2020 and $1.86 billion at September 30, 2020. Year-over-year asset growth from September 30, 2020 to September 30, 2021 was $233.6 million or 12.5%. Year-to-date asset growth from December 31, 2020 to September 30, 2021 was $210.1 million or 14.9% annualized. During the third quarter of 2021, assets increased $29.6 million or 5.7% annualized.

Loans

Gross loans were $1.60 billion at September 30, 2021, $1.56 billion at December 31, 2020 and $1.53 billion at September 30, 2020. Gross loans net of unearned income increased $69.7 million or 4.5% from September 30, 2020 to September 30, 2021. Excluding PPP loans, gross loans net of unearned income increased $142.3 million or 10.3% from September 30, 2020 to September 30, 2021. Gross loans net of unearned income grew $39.9 million or 3.4% annualized, during the nine months ended September 30, 2021 and increased $35.3 million or 8.9% annualized during the three months ended September 30, 2021.

Excluding the impact of PPP loans, gross loans net of unearned income grew $78.8 million, 7.3% annualized, during the nine months ended September 30, 2021 and increased $42.0 million or 11.2% annualized during the three months ended September 30, 2021.

Investment Securities

The Company’s portfolio of investments in fixed income securities was $342.1 million at September 30, 2021, $151.9 million at December 31, 2020 and $131.2 million at September 30, 2020. During the quarter ended September 30, 2021, the Company transferred $99.0 million in debt securities from available-for-sale to held-to-maturity and began classifying certain newly purchased debt securities as held-to-maturity, as it has the intent and ability to hold these securities to maturity. Year-over-year bond growth from September 30, 2020 to September 30, 2021 was $210.9 million or 160.7%. The year-over-year and year-to-date increase in fixed income securities was funded by primarily PPP loan payoffs and deposit growth.

Interest-Bearing Deposits in Banks

Interest-bearing deposits in banks were $110.5 million at September 30, 2021, $130.2 million at December 31, 2020 and $154.6 million at September 30, 2020. The Company expects to continue to reinvest these funds in higher yielding assets as opportunities and liquidity management allow.

Deposits

Total deposits were $1.84 billion at September 30, 2021, $1.64 billion at December 31, 2020 and $1.62 billion at September 30, 2020. Year-over-year deposit growth from September 30, 2020 to September 30, 2021 was $215.4 million or 13.3%. Deposits grew $197.4 million or 16.1% annualized during the nine months ended September 30, 2021 and $22.5 million or 4.9% annualized during the three months ended September 30, 2021. The slower third quarter annualized deposit growth resulted from a reduction in retail and wholesale time deposits, as discussed further below.

Non-interest bearing demand deposits were $463.9 million at September 30, 2021, $362.6 million at December 31, 2020 and $385.9 million at September 30, 2020. Year-over-year non-interest bearing demand deposit growth from September 30, 2020 to September 30, 2021 was $78.0 million or 20.2%. During the nine months ended September 30, 2021, non-interest bearing deposits grew $101.3 million or 37.4% annualized, and decreased $14.8 million or -12.3% annualized during the three months ended September 30, 2021. The decrease in non-interest bearing deposits during the three months ended September 30, 2021 was primarily the result of the distribution of proceeds from the sale of a customer’s business. Non-interest bearing demand deposits represented 25.2% of total deposits at September 30, 2021, 22.1% of total deposits at December 31, 2020 and 23.8% at September 30, 2020.

Core customer funding (which includes reciprocal IntraFi Demand®, IntraFi Money Market® and IntraFi CD® deposits maintained by customers) was $1.59 billion at September 30, 2021, $1.40 billion at December 31, 2020 and $1.43 billion at September 30, 2020. Year-over-year core customer funding sources increased by $162.5 million or 11.4% from September 30, 2020 to September 30, 2021. Non-maturing deposits were 64.7% of total deposits as of September 30, 2021, 60.3% as of December 31, 2020 and 61.4% as of September 30, 2020.

IntraFi CD® certificates of deposits (formerly known as Certificate of Deposit Account Registry Service [CDARS]) were $66.9 million at September 30, 2021, $39.7 million at December 31, 2020 and $36.9 million at September 30, 2020. Year-over-year, IntraFi® certificates of deposits increased $30.0 million from September 30, 2020 to September 30, 2021.

In total, time deposits, which includes retail customer, QwickRate, IntraFi and brokered certificates of deposit accounts, decreased $21.4 million or -12.7% annualized from June 30, 2021 to September 30, 2021 and decreased $3.5 million or -0.7% annualized from December 31, 2020 to September 30, 2021. Certificates of deposit with retail customers were $337.2 million at September 30, 2021, $374.4 million at December 31, 2020 and $398.5 million at September 30, 2020. Year-over-year certificates of deposit with retail customers decreased $61.3 million from September 30, 2020 to September 30, 2021. QwickRate® certificates of deposit were $29.0 million at September 30, 2021 and $29.8 million at both December 31, 2020 and September 30, 2020. Year-over-year QwickRate® certificates of deposit decreased $783 thousand from September 30, 2020 to September 30, 2021. Brokered deposits were $214.8 million at September 30, 2021, $207.6 million at December 31, 2020 and $161.1 million at September 30, 2020. Brokered deposits decreased $5.6 million from June 30, 2021 to September 30, 2021. Management continues to selectively utilize wholesale funding in order to realize lower funding costs and achieve certain asset/liability management objectives.

Borrowings

Borrowings, consisting of Federal Home Loan Bank of Atlanta (“FHLB”) advances were $18.0 million at September 30, 2021 and $22.0 million at both December 31, 2020 and September 30, 2020. FHLB advances decreased $4.0 million or 18.2% from September 30, 2020 to September 30, 2021 and from December 31, 2020 to September 30, 2021. Management continues to retire FHLB advances as they mature to increase contingent funding sources. As of September 30, 2021, the Bank had approximately $289 million remaining in secured borrowing capacity with the FHLB, an increase of $34 million over the $255 million of FHLB secured borrowing capacity as of September 30, 2020.

The Company had subordinated notes with a balance of $24.7 million at September 30, 2021, December 31, 2020 and September 30, 2020. The notes are callable, in whole or part, at the Company’s option commencing July 2022.

Shareholders’ Equity and Capital Levels

Total shareholders’ equity was $202.2 million at September 30, 2021, $186.1 million at December 31, 2020 and $181.4 million at September 30, 2020. Year-over-year shareholders’ equity increased by $20.8 million or 11.5%. Accumulated other comprehensive income declined from $4.1 million at September 30, 2020 to $1.4 million at September 30, 2021. An increase in market yields for investments has reduced the Company’s unrealized gains in its bond portfolio, as bond prices and yields vary inversely.

Total common shares outstanding increased from 13,573,601, including 46,483 shares relating to unvested stock awards, at September 30, 2020, to 13,644,985, including 60,575 shares relating to unvested stock awards, at September 30, 2021. The year-over-year increase in shares outstanding was the result of exercises of share options and additional grants of unvested stock awards.

The Bank’s capital ratios remain well above regulatory minimums for well-capitalized banks. As of September 30, 2021, the Bank’s total risk-based capital ratio was 15.2%, compared to 14.6% at September 30, 2020.

Asset Quality

As of September 30, 2021, for the eighth consecutive quarter, the Company had no non-accrual loans, no loans 30 days or more past due and no other real estate owned assets.

Troubled debt restructurings were $554 thousand at September 30, 2021, a decrease of $65 thousand, from $619 thousand at September 30, 2020. All troubled debt restructurings were performing in accordance with their modified terms as of September 30, 2021 and September 30, 2020.

The Company did not have any loans with COVID-19 loan modifications as of September 30, 2021.

Income Statement Review

Net Interest Income

Net interest income was $16.2 million for the three months ended September 30, 2021, an increase of $1.7 million or 12.1% from $14.4 million for the three months ended September 30, 2020. The net interest margin was 3.15% for the three months ended September 30, 2021 as compared to 3.26% for the three months ended September 30, 2020.

Average loans net of unearned income increased $59.6 million or 3.9% compared to the three months ended September 30, 2020, with a 27 basis point decline in yield. Average securities increased $189.8 million or 140.3% compared to the three months ended September 30, 2020, with an 81 basis point decline in yield. Average interest-bearing deposits in other banks increased $29.7 million or 28.8% compared to the three months ended September 30, 2020, with a 2 basis point increase in yield. The average yield on interest-earning assets decreased 54 basis points from 4.05% for the three months ended September 30, 2020 to 3.51% for the three months ended September 30, 2021, primarily due to the decline in rates since the end of the first quarter of 2020.

The average cost of interest-bearing liabilities declined 60 basis points or 52.9% from 1.14% for the three months ended September 30, 2020 to 0.54% for the three months ended September 30, 2021. The average cost of interest-bearing deposits decreased 60 basis points when comparing the quarter ended September 30, 2020 to the quarter ended September 30, 2021. The average cost of other borrowed funds decreased 31 basis points when comparing the quarter ended September 30, 2020 to the quarter ended September 30, 2021. The declines in funding costs were also primarily due to the decline in rates since the end of the first quarter of 2020.

Net interest margin, excluding PPP loans, was 3.19% for the three months ended September 30, 2021 and 3.32% for the same period in 2020. The yield on interest-earning assets would have been 3.57% and the yield on loans would have been 4.31% for the three months ended September 30, 2021, if PPP loans were excluded.

Net interest income was $48.9 million for the nine months ended September 30, 2021, an increase of $7.8 million or 19.0% from $41.1 million for the nine months ended September 30, 2020. The net interest margin was 3.29% for the nine months ended September 30, 2021 as compared to 3.28% for the nine months ended September 30, 2020.

Average loans net of unearned income increased $149.5 million or 10.4% compared to the nine months ended September 30, 2020, with a 34 basis point decline in yield. Average securities increased $117.7 million or 86% compared to the nine months ended September 30, 2020, with an 80 basis point decline in yield. Average interest-bearing deposits in other banks increased $45.9 million or 46.0% compared to the nine months ended September 30, 2020, with a 37 basis point decline in yield. The average yield on interest-earning assets decreased 56 basis points from 4.29% for the nine months ended September 30, 2020 to 3.73% for the nine months ended September 30, 2021, primarily due to the decline in rates since the end of the first quarter of 2020.

The average cost of interest-bearing liabilities declined 81 basis points or 56.2% from 1.44% for the nine months ended September 30, 2020 to 0.63% for the nine months ended September 30, 2021. The average cost of interest-bearing deposits decreased 81 basis points when comparing the nine months ended September 30, 2020 to same period in 2021. The average cost of other borrowed funds decreased 59 basis points when comparing the nine months ended September 30, 2020 to the same period in 2021. The declines in funding costs were also primarily due to the decline in rates since the end of the first quarter of 2020.

Net interest margin, excluding PPP loans, was 3.25% for the nine months ended September 30, 2021 compared to 3.28% for the nine months ended September 30, 2020. The yield on interest-earning assets would have been 3.71% and the yield on loans would have been 4.41% for the nine months ended September 30, 2021, if PPP loans were excluded.

On a linked quarterly basis, net interest margin, excluding PPP loans, decreased 13 basis points from 3.32% for the quarter ended June 30, 2021 to 3.19% for the quarter ended September 30, 2021. The decrease was due to higher fee income reported during the second quarter as a result of the elevated payoff activity within the commercial and construction and development loan portfolios that did not occur at the same volume this quarter. For the three months ended September 30, 2021, the average yield on interest-earning assets, excluding PPP loans, was 3.57% and average yield on loans, excluding PPP loans, was 4.31%, a decrease of 21 and 16 basis points, respectively, when compared to the three months ended June 30, 2021. The average cost of interest-bearing deposits decreased 8 basis points from 0.52% for the three months ended June 30, 2021 to 0.44% for the three months ended September 30, 2021. The average cost of other borrowed funds increased 1 basis point from 0.67% for the three months ended June 30, 2021 to 0.68% for the three months ended September 30, 2021.

Provision for Loan Losses

The Company had a $325 thousand provision for loan losses for the three months ended September 30, 2021, compared to $1.7 million for the same period in 2020. There were no charge-offs during the third quarter of 2021 or 2020.

The Company had a $2.8 million provision for loan losses for the nine months ended September 30, 2021, compared to $3.6 million for the same period in 2020. The Company had $90 thousand in charge-offs during the nine months ended 2021 and $43 thousand in net loan recoveries during the first nine months of 2020.

The allowance for loan losses as a percentage of total loans increased from 0.94% at September 30, 2020 to 1.23% at September 30, 2021. The allowance for loan losses increased $5.3 million or 36.5% from September 30, 2020 to September 30, 2021. The allowance for loan losses as a percentage of total loans (excluding PPP loans) increased from 1.04% at September 30, 2020 to 1.29% at September 30, 2021. The Company does not have a reserve on PPP loan balances, as they are 100% guaranteed by the U.S. Small Business Administration.

The Company continues to monitor and evaluate additional information as it becomes available concerning COVID-19 and a number of economic performance metrics, including those related to the overall economy as well as specific industry sectors. The Company believes the allowance for loan losses was adequate to absorb probable losses inherent in the loan portfolio as of September 30, 2021. The continued evolution of COVID-19 and the intensity of its socioeconomic effects, which are inherently uncertain, may positively or negatively impact the level of the allowance and provision in future periods.

Noninterest Income

The Company’s recurring sources of noninterest income consist primarily of bank owned life insurance income, service charges on deposit accounts and insurance commissions. Generally speaking, loan fees are included in interest income on the loan portfolio and not reported as noninterest income.

For the three months ended September 30, 2021, the Company reported total noninterest income of $325 thousand compared to $357 thousand for the same period in 2020. The decrease in noninterest income was primarily due to a market adjustments on the Company’s equity securities and bank owned life insurance income.

For the nine months ended September 30, 2021, the Company reported total noninterest income of $1.21 million compared to $1.24 million for the nine months ended September 30, 2020. The decrease in noninterest income was primarily due to a decrease in gains on sales of securities. Excluding gains from the sale of securities, the Company experienced an increase of $266 thousand during the nine months ended September 30, 2021 when compared to the same period in 2020. These increases were primarily attributable to increases in insurance commissions as a result of higher production and related incentives, an increase in other income as a result of a loan commitment fee received for a loan that did not close, and increases due to service charges on deposits.

Noninterest Expense

For the three months ended September 30, 2021, noninterest expense increased 5.6% to $7.6 million relative to the same period in 2020. Salaries and employee benefits expense was $5.0 million during the three months ended September 30, 2021, up $274 thousand or 5.8% when compared to $4.7 million during the three months ended September 30, 2020. Other operating expense increased by 5.0% or $86 thousand when comparing the three months ended September 30, 2021 to the same period in 2020.

For the nine months ended September 30, 2021, noninterest expense increased 13.2% to $24.6 million relative to the same period in 2020. For the nine months ended September 30, 2021, salaries and employee benefits expense increased 14.8% or $2.0 million compared to the nine months ended September 30, 2020. Other operating expense increased by 18.2% or $980 thousand, during the nine months ended September 30, 2021, compared to the same period in 2020.

For both the three and nine months ended September 30, 2021, the increase in salaries and employee benefits was primarily related to increases in headcount within the Bank and incentive compensation tied to performance. The headcount increases are investments in the Bank’s future growth. As in the past, management expects these staffing additions will lead to subsequent increases in revenues. Incentive compensation expense accruals can fluctuate significantly from quarter to quarter, based upon the Company’s financial performance and condition measured against, among other evaluation criteria, our strategic plan and budget. The increase in other operating expense for the three and nine months ended September 30, 2021 when compared to the same periods in 2020 was primarily due to increases in legal expenses (including contemplated registration of the Company’s shares with the Securities and Exchange Commission), consulting expenses, marketing expenses, state bank franchise taxes, and expense associated with higher Federal Deposit Insurance Corporation deposit insurance that correlates directly to the Bank’s increase of insured deposit balances.

For the three months ended September 30, 2021, annualized noninterest expense to average assets was 1.46% compared to 1.60% for the three months ended September 30, 2020. For the nine months ended September 30, 2021, annualized noninterest expense to average assets was 1.63% compared to 1.70% for the nine months ended September 30, 2020. The Company believes its ratio of noninterest expense to average assets compares favorably to peers.

About John Marshall Bancorp, Inc.

John Marshall Bancorp, Inc. is the bank holding company for John Marshall Bank. John Marshall Bank (JMB) is one of the largest community banks 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. with one loan production office in Arlington, Virginia. The Bank is dedicated to providing exceptional value, personalized service and convenience to local businesses and professionals in the Washington DC Metro area. JMB 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 certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which 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. The Company’s 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 its subsidiary include, but are not limited to the following: changes in interest rates, general economic conditions, public health crises (such as the governmental, social and economic effects of COVID-19), levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, 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, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area, accounting principles and guidelines, and other conditions which by their nature are not susceptible to accurate forecast, and are subject to significant uncertainty. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

John Marshall Bancorp, Inc.
Financial Highlights (Unaudited)
(Dollar amounts in thousands, except per share data)
 
At or For the Three Months Ended At or For the Nine Months Ended
September 30, September 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

Selected Balance Sheet Data
Cash and cash equivalents

$

121,074

$

162,499

$

121,074

$

162,499

Total investment securities

 

348,742

 

137,715

 

348,742

 

137,715

Loans, net of unearned income

 

1,602,377

 

1,532,713

 

1,602,377

 

1,532,713

Allowance for loan losses

 

19,706

 

14,441

 

19,706

 

14,441

Total assets

 

2,095,504

 

1,861,904

 

2,095,504

 

1,861,904

Non-interest bearing demand deposits

 

463,868

 

385,885

 

463,868

 

385,885

Interest bearing deposits

 

1,373,680

 

1,236,261

 

1,373,680

 

1,236,261

Total deposits

 

1,837,548

 

1,622,146

 

1,837,548

 

1,622,146

Shareholders' equity

 

202,222

 

181,427

 

202,222

 

181,427

 
Summary Results of Operations
Interest income

$

18,042

$

17,907

$

55,416

$

53,780

Interest expense

 

1,876

 

3,487

 

6,477

 

12,660

Net interest income

 

16,166

 

14,420

 

48,939

 

41,120

Provision for loan losses

 

325

 

1,716

 

2,780

 

3,642

Net interest income after provision for loan losses

 

15,841

 

12,704

 

46,159

 

37,478

Noninterest income

 

325

 

357

 

1,206

 

1,239

Noninterest expense

 

7,623

 

7,217

 

24,583

 

21,723

Income before income taxes

 

8,543

 

5,844

 

22,782

 

16,994

Net income

 

6,761

 

4,662

 

17,914

 

13,722

 
Per Share Data and Shares Outstanding
Earnings per share - basic

$

0.50

$

0.34

$

1.31

$

1.02

Earnings per share - diluted

$

0.48

$

0.34

$

1.29

$

1.00

Tangible book value per share

$

14.82

$

13.37

$

14.82

$

13.37

Weighted average common shares (basic)

 

13,580,538

 

13,526,792

 

13,570,449

 

13,438,286

Weighted average common shares (diluted)

 

13,883,104

 

13,638,644

 

13,865,226

 

13,642,607

Common shares outstanding at end of period

 

13,644,985

 

13,573,601

 

13,644,985

 

13,573,601

 
Performance Ratios
Return on average assets (annualized)

 

1.30%

 

1.03%

 

1.19%

 

1.07%

Return on average equity (annualized)

 

13.35%

 

10.30%

 

12.32%

 

10.55%

Net interest margin

 

3.15%

 

3.26%

 

3.29%

 

3.28%

Noninterest income as a percentage of average assets (annualized)

 

0.06%

 

0.08%

 

0.08%

 

0.10%

Noninterest expense to average assets (annualized)

 

1.46%

 

1.60%

 

1.63%

 

1.70%

Efficiency ratio

 

46.2%

 

48.8%

 

49.0%

 

51.3%

 
Asset Quality
Non-performing assets to total assets

 

0.00%

 

0.00%

 

0.00%

 

0.00%

Non-performing loans to total loans

 

0.00%

 

0.00%

 

0.00%

 

0.00%

Allowance for loan losses to non-performing loans

 

N/M

 

N/M

 

N/M

 

N/M

Allowance for loan losses to total loans (1)

 

1.23%

 

0.94%

 

1.23%

 

0.94%

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

 

0.00%

 

0.00%

 

0.01%

 

0.00%

 
Loans 30-89 days past due and accruing interest

$

- -

$

- -

$

- -

$

- -

Non-accrual loans

$

- -

$

- -

$

- -

$

- -

Other real estate owned

$

- -

$

- -

$

- -

$

- -

Non-performing assets (2)

$

- -

$

- -

$

- -

$

- -

Troubled debt restructurings (total)

$

554

$

619

$

554

$

619

Performing in accordance with modified terms

$

554

$

619

$

554

$

619

Not performing in accordance with modified terms

$

- -

$

- -

$

- -

$

- -

 
Bank Capital Ratios
Tangible equity / tangible assets

 

10.8%

 

10.9%

 

10.8%

 

10.9%

Total risk-based capital ratio

 

15.2%

 

14.6%

 

15.2%

 

14.6%

Tier 1 risk-based capital ratio

 

14.0%

 

13.6%

 

14.0%

 

13.6%

Leverage ratio

 

10.8%

 

11.1%

 

10.8%

 

11.1%

Common equity tier 1 ratio

 

14.0%

 

13.6%

 

14.0%

 

13.6%

 
Other Information
Number of full time equivalent employees

 

142

 

134

 

142

 

134

# Full service branch offices

 

8

 

8

 

8

 

8

# Loan production or limited service branch offices

 

1

 

1

 

1

 

1

  (1) The allowance for loan losses to total loans, excluding PPP loans of $73.7 million, was 1.29% at September 30, 2021. The allowance for loan losses to total loans, excluding PPP loans of $148.2 million, was 1.04% at September 30, 2020. PPP loans received no allocations in the allowance estimate due to the underlying guarantees.
  (2) Non-performing assets consist of non-accrual loans, loans 90 days or more past due and still accruing interest, and other real estate owned. Does not include troubled debt restructurings which were accruing interest at the date indicated.
John Marshall Bancorp, Inc.
     
Consolidated Balance Sheets
(Dollar amounts in thousands, except per share data)
     
  % Change
September 30, December 31, September 30,   Last Nine   Year Over

 

2021

 

 

2020

 

 

2020

  Months   Year

Assets

(Unaudited) (Unaudited) (Unaudited)    
     
Cash and due from banks

$

10,624

$

8,228

$

7,918

 

29.1%

 

34.2%

Interest-bearing deposits in banks

 

110,450

 

130,229

 

154,581

 

-15.2%

 

-28.5%

Securities available-for-sale, at fair value

 

238,628

 

151,900

 

131,211

 

57.1%

 

81.9%

Securities held-to-maturity, fair value of $102,051 at 9/30/2021

 

103,486

 

- -

 

- -

 

N/M

 

N/M

Restricted securities, at cost

 

4,948

 

5,676

 

5,673

 

-12.8%

 

-12.8%

Equity securities, at fair value

 

1,680

 

967

 

831

 

73.7%

 

102.2%

Loans, net of unearned income

 

1,602,377

 

1,562,524

 

1,532,713

 

2.6%

 

4.5%

Allowance for loan losses

 

(19,706)

 

(17,017)

 

(14,441)

 

15.8%

 

36.5%

Net loans

 

1,582,671

 

1,545,507

 

1,518,272

 

2.4%

 

4.2%

Bank premises and equipment, net

 

1,754

 

2,422

 

2,209

 

-27.6%

 

-20.6%

Accrued interest receivable

 

4,661

 

5,308

 

5,708

 

-12.2%

 

-18.3%

Bank owned life insurance

 

20,896

 

20,587

 

20,470

 

1.5%

 

2.1%

Right of use assets

 

5,261

 

5,944

 

6,274

 

-11.5%

 

-16.1%

Other assets

 

10,445

 

8,728

 

8,757

 

19.7%

 

19.3%

     
Total assets

$

2,095,504

$

1,885,496

$

1,861,904

 

11.1%

 

12.5%

     
Liabilities and Shareholders' Equity    
     

Liabilities

   
Deposits:    
Non-interest bearing demand deposits

$

463,868

$

362,582

$

385,885

 

27.9%

 

20.2%

Interest bearing demand deposits

 

630,912

 

563,956

 

549,576

 

11.9%

 

14.8%

Savings deposits

 

94,840

 

62,138

 

60,418

 

52.6%

 

57.0%

Time deposits

 

647,928

 

651,444

 

626,267

 

-0.5%

 

3.5%

Total deposits

 

1,837,548

 

1,640,120

 

1,622,146

 

12.0%

 

13.3%

Federal Home Loan Bank advances

 

18,000

 

22,000

 

22,000

 

-18.2%

 

-18.2%

Subordinated debt

 

24,716

 

24,679

 

24,667

 

0.1%

 

0.2%

Accrued interest payable

 

611

 

877

 

770

 

-30.3%

 

-20.6%

Lease liabilities

 

5,534

 

6,208

 

6,532

 

-10.9%

 

-15.3%

Other liabilities

 

6,873

 

5,531

 

4,362

 

24.3%

 

57.6%

Total liabilities

 

1,893,282

 

1,699,415

 

1,680,477

 

11.4%

 

12.7%

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

 

- -

 

- -

 

- -

 

- -

 

- -

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

 

- -

 

- -

 

- -

 

- -

 

- -

Common stock, voting, par value $0.01 per share; authorized    
30,000,000 shares; issued and outstanding, 13,644,985    
at 9/30/2021 including 60,575 unvested shares, 13,606,558    
shares at 12/31/2020 including 74,000 unvested shares    
and 13,573,601 at 9/30/2020, including 46,483 unvested shares

 

136

 

135

 

135

 

0.7%

 

0.7%

Additional paid-in capital

 

90,607

 

89,995

 

89,821

 

0.7%

 

0.9%

Retained earnings

 

110,079

 

92,165

 

87,361

 

19.4%

 

26.0%

Accumulated other comprehensive income

 

1,400

 

3,786

 

4,110

 

-63.0%

 

-65.9%

     
Total shareholders' equity

 

202,222

 

186,081

 

181,427

 

8.7%

 

11.5%

     
Total liabilities and shareholders' equity

$

2,095,504

$

1,885,496

$

1,861,904

 

11.1%

 

12.5%

John Marshall Bancorp, Inc.
   
Consolidated Statements of Income
(Dollar amounts in thousands, except per share data)
   
Three Months Ended Nine Months Ended  
September 30, September 30,  

 

2021

 

 

2020

 

% Change

 

 

2021

 

 

2020

  % Change
(Unaudited) (Unaudited) (Unaudited) (Unaudited)  
Interest and Dividend Income  
Interest and fees on loans

$

16,737

$

17,079

-2.0%

$

52,075

$

50,869

 

2.4%

Interest on investment securities, taxable

 

1,159

 

697

66.3%

 

2,921

 

2,213

 

32.0%

Interest on investment securities, tax-exempt

 

30

 

32

-6.3%

 

90

 

84

 

7.1%

Dividends

 

65

 

65

0.0%

 

196

 

247

 

-20.6%

Interest on deposits in banks

 

51

 

34

50.0%

 

134

 

367

 

-63.5%

Total interest and dividend income

 

18,042

 

17,907

0.8%

 

55,416

 

53,780

 

3.0%

   
Interest Expense  
Deposits

 

1,473

 

3,052

-51.7%

 

5,268

 

11,209

 

-53.0%

Federal Home Loan Bank advances

 

31

 

63

-50.8%

 

94

 

335

 

-71.9%

Subordinated debt

 

372

 

372

0.0%

 

1,115

 

1,115

 

0.0%

Other short-term borrowings

 

- -

 

- -

N/M

 

- -

 

1

 

-100.0%

Total interest expense

 

1,876

 

3,487

-46.2%

 

6,477

 

12,660

 

-48.8%

   
Net interest income

 

16,166

 

14,420

12.1%

 

48,939

 

41,120

 

19.0%

   
Provision for loan losses

 

325

 

1,716

-81.1%

 

2,780

 

3,642

 

-23.7%

   
Net interest income after provision for loan losses

 

15,841

 

12,704

24.7%

 

46,159

 

37,478

 

23.2%

   
Noninterest Income  
Service charges on deposit accounts

 

140

 

107

30.8%

 

392

 

343

 

14.3%

Bank owned life insurance

 

102

 

118

-13.6%

 

309

 

352

 

-12.2%

Other service charges and fees

 

50

 

38

31.6%

 

135

 

120

 

12.5%

Gain on sale of securities

 

- -

 

- -

N/M

 

10

 

309

 

-96.8%

Insurance commissions

 

28

 

12

133.3%

 

205

 

46

 

345.7%

Other operating income

 

5

 

82

-93.9%

 

155

 

69

 

124.6%

Total noninterest income

 

325

 

357

-9.0%

 

1,206

 

1,239

 

-2.7%

   
Noninterest Expenses  
Salaries and employee benefits

 

4,977

 

4,703

5.8%

 

15,646

 

13,631

 

14.8%

Occupancy expense of premises

 

484

 

480

0.8%

 

1,505

 

1,456

 

3.4%

Furniture and equipment expenses

 

373

 

331

12.7%

 

1,073

 

1,257

 

-14.6%

Other operating expenses

 

1,789

 

1,703

5.0%

 

6,359

 

5,379

 

18.2%

Total noninterest expenses

 

7,623

 

7,217

5.6%

 

24,583

 

21,723

 

13.2%

   
Income before income taxes

 

8,543

 

5,844

46.2%

 

22,782

 

16,994

 

34.1%

   
Income tax expense

 

1,782

 

1,182

50.8%

 

4,868

 

3,272

 

48.8%

   
Net income

$

6,761

$

4,662

45.0%

$

17,914

$

13,722

 

30.5%

   
Earnings Per Share  
Basic

$

0.50

$

0.34

47.1%

$

1.31

$

1.02

 

28.4%

Diluted

$

0.48

$

0.34

41.2%

$

1.29

$

1.00

 

29.0%

John Marshall Bancorp, Inc.
 
Loan, Deposit and Borrowing Detail (Unaudited)
(Dollar amounts in thousands)
 

2021

2020

Loans

September 30 June 30 March 31 December 31 September 30 June 30 March 31
$ Amount % of Total $ Amount % of Total $ Amount % of Total $ Amount % of Total $ Amount % of Total $ Amount % of Total $ Amount % of Total
Commercial business loans

$

53,166

3.3%

$

55,375

3.5%

$

60,637

3.8%

$

67,549

4.4%

$

77,709

5.1%

$

77,987

5.1%

$

81,553

6.1%

Commercial PPP loans

 

75,496

4.7%

 

82,190

5.2%

 

117,796

7.3%

 

114,411

7.3%

 

148,156

9.6%

 

148,156

9.7%

 

- -

0.0%

Commercial owner-occupied real estate loans

 

326,585

20.4%

 

320,519

20.4%

 

307,918

19.2%

 

290,802

18.6%

 

260,575

17.0%

 

267,032

17.6%

 

255,010

19.1%

Total business loans

 

455,247

28.4%

 

458,084

29.2%

 

486,351

30.3%

 

472,762

30.3%

 

486,440

31.7%

 

493,175

32.4%

 

336,563

25.2%

 
Investor real estate loans

 

519,384

32.4%

 

505,605

32.3%

 

502,940

31.3%

 

497,087

31.8%

 

498,352

32.5%

 

480,220

31.6%

 

470,163

35.2%

Construction & development loans

 

228,993

14.3%

 

219,175

14.0%

 

250,208

15.6%

 

243,741

15.6%

 

237,195

15.4%

 

236,927

15.6%

 

243,023

18.2%

Multi-family loans

 

81,226

5.1%

 

92,203

5.9%

 

84,689

5.3%

 

69,367

4.4%

 

49,277

3.2%

 

55,797

3.7%

 

58,362

4.3%

Total commercial real estate loans

 

829,603

51.8%

 

816,983

52.1%

 

837,837

52.2%

 

810,195

51.8%

 

784,824

51.1%

 

772,944

50.9%

 

771,548

57.7%

 
Residential mortgage loans

 

316,549

19.8%

 

291,615

18.6%

 

281,964

17.5%

 

278,763

17.8%

 

262,049

17.1%

 

252,494

16.6%

 

227,172

17.0%

Consumer loans

 

631

0.0%

 

916

0.1%

 

793

0.0%

 

1,000

0.1%

 

1,208

0.1%

 

1,448

0.1%

 

1,099

0.1%

Total loans

$

1,602,030

100.0%

$

1,567,598

100.0%

$

1,606,945

100.0%

$

1,562,720

100.0%

$

1,534,521

100.0%

$

1,520,061

100.0%

$

1,336,382

100.0%

Less: Allowance for loan losses

 

(19,706)

 

(19,381)

 

(19,381)

 

(17,017)

 

(14,441)

 

(12,725)

 

(11,176)

Net deferred loan costs (fees)

 

347

 

(486)

 

(1,162)

 

(196)

 

(1,808)

 

(2,430)

 

439

Net loans

$

1,582,671

$

1,547,731

$

1,586,402

$

1,545,507

$

1,518,272

$

1,504,906

$

1,325,645

 
 

2021

2020

September 30 June 30 March 31 December 31 September 30 June 30 March 31

Deposits

$ Amount % of Total $ Amount % of Total $ Amount % of Total $ Amount % of Total $ Amount % of Total $ Amount % of Total $ Amount % of Total
Noninterest-bearing demand deposits

$

463,868

25.2%

$

478,705

26.4%

$

419,796

23.8%

$

362,582

22.1%

$

385,885

23.8%

$

398,670

25.5%

$

274,878

19.9%

Interest-bearing demand deposits:
NOW accounts(1)

 

294,261

16.0%

 

254,060

14.0%

 

245,274

13.9%

 

233,993

14.3%

 

227,816

14.1%

 

207,558

13.3%

 

179,197

13.0%

Money market accounts(1)

 

336,651

18.3%

 

333,818

18.4%

 

344,807

19.6%

 

329,960

20.1%

 

321,760

19.8%

 

303,378

19.4%

 

289,131

21.0%

Savings accounts

 

94,840

5.2%

 

79,119

4.4%

 

72,102

4.1%

 

62,138

3.8%

 

60,418

3.7%

 

49,896

3.2%

 

32,745

2.4%

Certificates of deposit
$250,000 or more

 

232,722

12.7%

 

243,662

13.4%

 

265,772

15.1%

 

258,744

15.8%

 

281,302

17.4%

 

250,779

16.1%

 

249,802

18.1%

Less than $250,000

 

104,463

5.7%

 

112,991

6.2%

 

119,828

6.8%

 

115,634

7.0%

 

117,171

7.2%

 

121,600

7.8%

 

128,176

9.3%

QwickRate® certificates of deposit

 

28,998

1.6%

 

31,481

1.7%

 

38,565

2.2%

 

29,765

1.8%

 

29,781

1.8%

 

31,764

2.0%

 

20,011

1.4%

IntraFi® certificates of deposit

 

66,926

3.6%

 

60,761

3.3%

 

38,284

2.2%

 

39,725

2.4%

 

36,909

2.3%

 

37,320

2.4%

 

57,398

4.2%

Brokered deposits

 

214,819

11.7%

 

220,435

12.1%

 

216,962

12.3%

 

207,579

12.7%

 

161,104

9.9%

 

160,626

10.3%

 

148,104

10.7%

Total deposits

$

1,837,548

100.0%

$

1,815,032

100.0%

$

1,761,390

100.0%

$

1,640,120

100.0%

$

1,622,146

100.0%

$

1,561,591

100.0%

$

1,379,442

100.0%

 

Borrowings

Federal Home Loan Bank advances

 

18,000

42.1%

$

18,000

42.2%

$

22,000

47.1%

$

22,000

47.1%

$

22,000

47.1%

$

26,000

51.3%

$

37,000

60.0%

Subordinated debt

 

24,716

57.9%

 

24,704

57.8%

 

24,692

52.9%

 

24,679

52.9%

 

24,667

52.9%

 

24,655

48.7%

 

24,642

40.0%

Total borrowings

$

42,716

100.0%

$

42,704

100.0%

$

46,692

100.0%

$

46,679

100.0%

$

46,667

100.0%

$

50,655

100.0%

$

61,642

100.0%

 
Total deposits and borrowings

$

1,880,264

$

1,857,736

$

1,808,082

$

1,686,799

$

1,668,813

$

1,612,246

$

1,441,084

 
Core customer funding sources (2)

$

1,593,731

85.9%

$

1,563,116

85.3%

$

1,505,863

84.4%

$

1,402,776

84.4%

$

1,431,261

87.1%

$

1,369,201

86.2%

$

1,211,327

85.5%

Wholesale funding sources (3)

 

261,817

14.1%

 

269,916

14.7%

 

277,527

15.6%

 

259,344

15.6%

 

212,885

12.9%

 

218,390

13.8%

 

205,115

14.5%

Total funding sources

$

1,855,548

100.0%

$

1,833,032

100.0%

$

1,783,390

100.0%

$

1,662,120

100.0%

$

1,644,146

100.0%

$

1,587,591

100.0%

$

1,416,442

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 and Federal Home Loan Bank advances.
John Marshall Bancorp, Inc.
 
Average Balance Sheets, Interest and Rates (unaudited)
(Dollar amounts in thousands)
 
Three Months Ended September 30, 2021 Three Months Ended September 30, 2020
Interest Average Interest Average
Average Income- Yields Average Income- Yields
Balance Expense /Rates Balance Expense /Rates
Assets
Securities

$

325,027

$

1,254

1.53%

$

135,242

$

794

2.34%

Loans, net of unearned income

 

1,580,695

 

16,737

4.20%

 

1,521,091

 

17,079

4.47%

Interest-bearing deposits in other banks

 

132,662

 

51

0.15%

 

102,984

 

34

0.13%

Total interest-earning assets

$

2,038,384

$

18,042

3.51%

$

1,759,317

$

17,907

4.05%

Other assets

 

30,759

 

37,594

Total assets

$

2,069,143

$

1,796,911

Liabilities & Shareholders' equity
Interest-bearing deposits
NOW accounts

$

277,117

$

203

0.29%

$

213,608

$

240

0.45%

Money market accounts

 

327,144

 

296

0.36%

 

313,281

 

387

0.49%

Savings accounts

 

87,935

 

75

0.34%

 

56,379

 

74

0.52%

Time deposits

 

649,963

 

899

0.55%

 

584,229

 

2,351

1.60%

Total interest-bearing deposits

$

1,342,159

$

1,473

0.44%

$

1,167,497

$

3,052

1.04%

 
Federal funds purchased

$

- -

$

- -

0.00%

$

1

$

- -

0.00%

Subordinated debt

 

24,708

 

372

5.97%

 

24,659

 

372

6.00%

Other borrowed funds

 

18,000

 

31

0.68%

 

25,337

 

63

0.99%

Total interest-bearing liabilities

$

1,384,867

$

1,876

0.54%

$

1,217,494

$

3,487

1.14%

Demand deposits

 

470,476

 

386,509

Other liabilities

 

12,810

 

12,827

Total liabilities

$

1,868,153

$

1,616,830

Shareholders' equity

 

200,990

 

180,081

Total liabilities and shareholders' equity

$

2,069,143

$

1,796,911

Interest rate spread

2.97%

2.91%

Net interest income and margin

$

16,166

3.15%

$

14,420

3.26%

 
 
Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020
Interest Average Interest Average
Average Income- Yields Average Income- Yields
Balance Expense /Rates Balance Expense /Rates
Assets
Securities

$

254,490

$

3,207

1.68%

$

136,831

$

2,544

2.48%

Loans, net of unearned income

 

1,586,240

 

52,075

4.39%

 

1,436,699

 

50,869

4.73%

Interest-bearing deposits in other banks

 

145,618

 

134

0.12%

 

99,706

 

367

0.49%

Total interest-earning assets

$

1,986,348

$

55,416

3.73%

$

1,673,236

$

53,780

4.29%

Other assets

 

30,863

 

37,581

Total assets

$

2,017,211

$

1,710,817

Liabilities & Shareholders' equity
Interest-bearing deposits
NOW accounts

$

255,791

$

594

0.31%

$

185,124

$

867

0.63%

Money market accounts

 

333,366

 

927

0.37%

 

302,281

 

1,843

0.81%

Savings accounts

 

76,910

 

210

0.37%

 

42,151

 

265

0.84%

Time deposits

 

663,257

 

3,537

0.71%

 

586,637

 

8,234

1.87%

Total interest-bearing deposits

$

1,329,324

$

5,268

0.53%

$

1,116,193

$

11,209

1.34%

 
Federal funds purchased

$

- -

$

- -

0.00%

$

245

$

1

0.55%

Subordinated debt

 

24,696

 

1,115

6.04%

 

24,647

 

1,115

6.04%

Other borrowed funds

 

18,502

 

94

0.68%

 

35,157

 

335

1.27%

Total interest-bearing liabilities

$

1,372,522

$

6,477

0.63%

$

1,176,242

$

12,660

1.44%

Demand deposits

 

437,905

 

348,572

Other liabilities

 

12,439

 

12,256

Total liabilities

$

1,822,866

$

1,537,070

Shareholders' equity

 

194,345

 

173,747

Total liabilities and shareholders' equity

$

2,017,211

$

1,710,817

Interest rate spread

3.10%

2.85%

Net interest income and margin

$

48,939

3.29%

$

41,120

3.28%

 

Contacts

Christopher W. Bergstrom, President & CEO of John Marshall Bancorp, Inc.

(703) 584-0840

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