Earnings and Balance Sheet Growth Along with Pristine Asset Quality Continues - Efficiency Ratio Drops Below 49%

RESTON, Va.--()--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, 2020.

Selected Highlights

  • Seventh Consecutive Quarter of Record Earnings - The Company reported net income of $4.7 million for the three months ended September 30, 2020 compared to $4.0 million for the three months ended September 30, 2019, an increase of 15.7%. Earnings per diluted share was $0.34 for the three months ended September 30, 2020, an increase of 17.2% from $0.29 per diluted share for the three months ended September 30, 2019. The Company reported net income of $13.7 million for the nine months ended September 30, 2020, compared to $11.4 million for the nine months ended September 30, 2019, an increase of 19.9%. Earnings per diluted share was $1.00 for the nine months ended September 30, 2020, an increase of 19.0% from $0.84 per for the nine months ended September 30, 2019.
  • Peer Leading Asset Quality - For the fourth consecutive quarter, the Company had no non-performing assets, no loans 30 days or more past due and no real estate owned at quarter-end September 30, 2020. During the first nine months of 2020, the Company reported $43 thousand in net recoveries, compared to $145 thousand in net charge-offs during the first nine months of 2019. Troubled debt restructurings were $619 thousand at September 30, 2020, a decline of $1.7 million, compared to $2.3 million at September 30, 2019. COVID loan modifications are performing as expected and as of October 16, 2020 represented 0.76% of total (excluding Paycheck Protection Program (“PPP”)) loans as of September 30, 2020.
  • Record Pre-Tax, Pre-Provision Income - The Company achieved record pre-tax, pre-provision (“PTPP”) income of $7.6 million for the three months ended September 30, 2020, a 40.9% increase from the same period a year ago. The PTPP return on average assets increased from 1.42% for the three months ended September 30, 2019 to 1.67% for the same period in 2020. PTPP income increased 33.8% to $20.6 million for the nine months ended September 30, 2020 from $15.4 million for the nine months ended September 30, 2019. As discussed above, asset quality remained strong as of September 30, 2020; management believes PTPP income enables financial statement users to assess the Company’s ability to generate capital to cover potential credit losses.
  • Expense Management Drives Sub-49%Efficiency Ratio - Revenues were $14.8 million, or 15.9% greater in the third quarter of 2020 as compared to $12.8 million for the third quarter of 2019. Noninterest expense for the third quarter of 2020 decreased $173 thousand or 2.3% to $7.2 million, when compared to the $7.4 million for the third quarter of 2019. This continued improvement in operating leverage enabled the efficiency ratio to decrease from 57.9% for the three months ended September 30, 2019 to 48.8% for the three months ended September 30, 2020. Noninterest expense to average assets declined from 1.96% for the three months ended September 30, 2019 to 1.60% for the three months ended September 30, 2020.
  • Well-Capitalized with Strong Liquidity - While the Company is exempt from the regulatory capital rules at the holding company level, both the Company and the Bank materially exceed the regulatory thresholds defining well-capitalized. The Bank’s total risk-based capital ratio has improved from 13.7% at September 30, 2019 to 14.6% at September 30, 2020. Cash and unencumbered securities equaled $222.9 million, or 12.0% of total assets as of September 30, 2020. Exclusive of the available PPP Lending Facility, the Company had $308.0 million of secured borrowing capacity as well as significant unsecured (correspondent borrowing lines and brokered deposits) funding capacity available at September 30, 2020.

Chris Bergstrom, President and Chief Executive Officer, commented “Despite the challenges of 2020, John Marshall Bank’s commitment to providing an exceptional customer experience is unwavering. I am incredibly proud of the flexibility and ingenuity demonstrated by our associates who have driven record results in the face of adversity. Through those efforts we have developed our Home Pursuit program that provides a path to homeownership, our purchasing card program that enables businesses to be more efficient and we continue to refine our digital banking platform that increases customer convenience. We are constantly evaluating opportunities to provide value to our customers, strengthen our balance sheet and grow the Company in a prudent fashion. Continuous improvement, coupled with conservative management, positions the Company well and should yield benefits for our customers, communities, employees and shareholders.”

Balance Sheet Review

Assets

Total assets were $1.86 billion at September 30, 2020, $1.58 billion at December 31, 2019 and $1.51 billion at September 30, 2019. During the third quarter of 2020, assets increased $59.3 million, or 13.1% annualized. Asset growth was $348.7 million, or 23.0%, from September 30, 2019 to September 30, 2020.

Loans

Gross loans were $1.53 billion at September 30, 2020, $1.33 billion at December 31, 2019 and $1.26 billion at September 30, 2019. Gross loans net of unearned income grew $15.1 million or 4.0% annualized during the third quarter of 2020. Excluding PPP, gross loans net of unearned income increased $128.6 million or 10.2% from September 30, 2019 to September 30, 2020. Non-PPP loan growth during the first nine months of 2020 was reduced by payoffs and paydowns totaling $328.6 million.

Investment Securities

The Company’s portfolio of investments in fixed income securities was $131.2 million at September 30, 2020, $122.7 million at December 31, 2019 and $108.0 million at September 30, 2019. Year-over-year bond growth, from September 30, 2019 to September 30, 2020, was $23.3 million, or 21.5%. The Company also had restricted equity securities totaling $5.7 million at September 30, 2020, $7.2 million at December 31, 2019 and $6.5 million at September 30, 2019. The reduction in restricted equity securities reflects the decrease in Federal Home Loan Bank of Atlanta (“FHLB”) stock, which decreased commensurately with the Bank’s FHLB advances.

Interest Bearing Deposits in Banks

Interest-bearing deposits in banks were $154.6 million at September 30, 2020, $87.0 million at December 31, 2019 and $98.0 million at September 30, 2019. The Company expects to operate with a higher level of liquidity in the current economic environment.

Deposits

Total deposits were $1.62 billion at September 30, 2020, $1.31 billion at December 31, 2019 and $1.27 billion at September 30, 2019. During the third quarter of 2020, deposits grew $60.6 million or 15.4% annualized. During the first nine months of 2020, deposits grew $313.4 million, or 32.0% annualized. Year-over-year deposit growth, from September 30, 2019 to September 30, 2020, was $351.2 million, or 27.6%.

Non-interest bearing demand deposits were $385.9 million at September 30, 2020, $273.5 million at December 31, 2019 and $254.4 million at September 30, 2019. During the first nine months of 2020, non-interest bearing demand deposits grew $112.4 million, or 41.1%. Year-over-year non-interest bearing demand deposit growth, from September 30, 2019 to September 30, 2020, was $131.5 million, or 51.7%. Non-interest bearing demand deposits represented 23.8% of total deposits at September 30, 2020, 20.9% at December 31, 2019 and 20.0% at September 30, 2019.

Core customer funding was $1.43 billion at September 30, 2020, $1.17 billion at December 31, 2019 and $1.14 billion at September 30, 2019. Year-over-year core customer funding sources increased by $290.9 million, or 25.5%, from September 30, 2019 to September 30, 2020. Core customer funding was 85.8% of all funding sources as of September 30, 2020, as compared to 82.8% at December 31, 2019 and 85.0% as of September 30, 2019. Non-maturing deposits were 61.5% of total deposits as of September 30, 2020, 55.9% as of December 31, 2019 and 55.4% as of September 30, 2019.

Insured Cash Sweep (“ICS”) deposits were $233.1 million at September 30, 2020, $187.4 million at December 31, 2019 and $175.3 million at September 30, 2019. Year-over-year, ICS deposits increased $57.7 million from September 30, 2019 to September 30, 2020. Certificate of Deposit Account Registry Service (“CDARS”) deposits were $36.9 million at September 30, 2020, $50.9 million at December 31, 2019 and $65.9 million at September 30, 2019.

Certificates of deposits were $398.5 million at September 30, 2020, $383.5 million at December 31, 2019 and $369.3 million at September 30, 2019. Year-over-year certificates of deposit increased $29.2 million from September 30, 2019 to September 30, 2020. QwickRate certificates of deposit were $29.8 million at September 30, 2020, $18.0 million at December 31, 2019 and $17.9 million at September 30, 2019. Year-over-year QwickRate certificates of deposit increased $11.9 million from September 30, 2019 to September 30, 2020. Brokered deposits were $161.1 million at September 30, 2020, $125.1 million at December 31, 2019 and $112.7 million at September 30, 2019. Brokered deposits increased $48.4 million from September 30, 2019 to September 30, 2020. The increase in brokered deposits continues to be related to a migration of borrowings from FHLB and Federal funds purchased to brokered deposits.

Borrowings

Total borrowings, consisting of FHLB advances and Federal funds purchased, were $22.0 million at September 30, 2020, $74.0 million at December 31, 2019 and $47.0 million at September 30, 2019. Total borrowings decreased $25.0 million, or 53.2%, from September 30, 2019 to September 30, 2020 and decreased $52.0 million, or 70.3% from December 31, 2019 to September 30, 2020. For the nine months ended September 30, 2020, brokered and QwickRate certificates of deposit in aggregate increased $47.8 million, while borrowings decreased $52.0 million. Wholesale funding represented 12.8% of total funding sources at September 30, 2020, down from 15.4% at December 31, 2019.

Management has chosen to retire FHLB advances as they mature so as to increase contingent funding sources. As of September 30, 2020, the Bank had approximately $255 million remaining in borrowing capacity with the FHLB.

The Company had subordinated notes with a balance of $24.7 million at September 30, 2020 and $24.6 million at December 31, 2019 and September 30, 2019.

Shareholders’ Equity and Capital Levels

Total shareholders’ equity was $181.4 million at September 30, 2020, $162.0 million at December 31, 2019 and $157.3 million at September 30, 2019. Year-over-year shareholders’ equity increased by $24.1 million, or 15.3%. Total common shares outstanding increased from 13,076,081, including 49,068 shares relating to unvested stock awards, at September 30, 2019, to 13,573,601, including 46,483 shares relating to unvested stock awards, at September 30, 2020. The year-over-year increase in shares outstanding was primarily from the exercise of stock options.

The Bank’s capital ratios remain well above regulatory minimums for well-capitalized banks. As of September 30, 2020, the Bank’s total risk-based capital ratio was 14.6%, compared to 13.7% at September 30, 2019.

Income Statement Review

Net Interest Income

Net interest income, the Company’s primary source of revenue, was $14.4 million for the three months ended September 30, 2020, up 16.2% from $12.4 million for the three months ended September 30, 2019. Balance sheet growth, improved funding composition and the downward repricing of our funding base enabled net interest income for the three months ended September 30, 2020 to increase 16.2% when compared to the three months ended September 30, 2019.

The net interest margin was 3.26% for the three months ended September 30, 2020 as compared to 3.38% for the three months ended September 30, 2019. Average loans net of unearned income increased $272.3 million, or 21.8% compared to the three months ended September 30, 2019, with a 76 basis point decline in yield. Average securities increased $20.4 million, or 17.7%, compared to the three months ended September 30, 2019, with a 32 basis point decline in yield. Average interest-bearing deposits in other banks increased $11.5 million, or 12.6% compared to the three months ended September 30, 2019, with a 206 basis point decline in yield. The average yield on interest-bearing assets decreased 79 basis points from 4.84% for the three months ended September 30, 2019, to 4.05% for the three months ended September 30, 2020.

The average cost of funds declined 73 basis points, or 45.9% from 1.59% for the three months ended September 30, 2019, to 0.86% for the three months ended September 30, 2020. The average cost of interest-bearing deposits decreased 85 basis points when comparing the quarter ended September 30, 2019 to the quarter ended September 30, 2020. The average cost of other borrowed funds decreased 88 basis points when comparing the quarter ended September 30, 2019 to the quarter ended September 30, 2020. The average cost of interest-bearing liabilities decreased 84 basis points when comparing the quarter ended September 30, 2019 to the quarter ended September 30, 2020.

On a linked quarterly basis, net interest margin decreased 1 basis point to 3.26% for the three months ended September 30, 2020, with the yield on earning assets declining from 4.25% for the three months ended June 30, 2020, to 4.05% for the three months ended September 30, 2020. The average cost of interest-bearing liabilities declined 29 basis points from 1.43% for the three months ended June 30, 2020, compared to 1.14% for the three months ended September 30, 2020.

For the nine months ended September 30, 2020, net interest income was $41.1 million, up 13.9% from $36.1 million for the nine months ended September 30, 2019. The net interest margin was 3.28% during the first nine months of 2020, compared to 3.43% during the first nine months of 2019. Despite the 150 basis point rate cuts made by the Federal Reserve in March 2020, net interest income increased by 13.9% during the first nine months of 2020, compared to the first nine months of 2020, resulting primarily from a $268.3 million, or 19.1%, increase in average earning assets during the first nine months of 2020, compared to the first nine months of 2019.

Provision for Loan Losses

The Company had a $1.7 million provision for loan losses for the three months ended September 30, 2020, compared to $205 thousand for the same period in 2019. The Company had $1 thousand in net loan recoveries during the third quarter of 2020 and no loan charge-offs during the third quarter of 2019.

During the nine months ended September 30, 2020, the Company recognized a provision for loan losses of $3.6 million, compared to a provision of $810 thousand during the first nine months of 2019. The Company reported $43 thousand in net recoveries during the first nine months of 2020, compared to $145 thousand in net charge-offs during the first nine months of 2019.

The increase in the Company’s provision for loan losses during 2020 periods as compared to the corresponding periods in the prior year is primarily related to COVID and its impact on the qualitative factors included in the allowance estimate. The provision increased the allowance for loan losses as a percentage of total loans from 0.81% at December 31, 2019 to 0.94% at September 30, 2020. Excluding PPP loan balances, the provision increased the allowance for loan losses as a percentage of total loans from 0.93% at June 30, 2020 to 1.04% at September 30, 2020. The Company does not have a reserve on PPP loan balances, as they are 100% guaranteed by the Small Business Administration. The Company continues to monitor and evaluate the adequacy of the allowance for loan losses as additional economic data becomes available and changes to the Company's portfolio as a result of the pandemic become known.

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. The majority of loan fees are included in interest income on the loan portfolio and not reported as noninterest income.

For the three months ended September 30, 2020, the Company reported total noninterest income of $357 thousand, compared to $344 thousand during the three months ended September 30, 2019. Service charges on deposit accounts declined $28 thousand and other service charges and fees declined $18 thousand for the three months ended September 30, 2020 when compared to the same period in 2019. The year-over-year decline in service charges and other fees is mostly related to lower ATM fees, overdraft fees and foreign exchange fees when comparing the three months ended September 30, 2020 to the same period in 2019. Other operating income for the three months ended September 30, 2020 increased $68 thousand when compared to the same period in 2019 with $38 thousand in market adjustments recorded on the Company’s equity securities and a $12 thousand increase in insurance commissions in the three months ended September 30, 2020.

For the nine months ended September 30, 2020, the Company reported total noninterest income of $1.2 million, compared to $1.0 million during the first nine months of 2019, an increase of $219 thousand, or 21.5%. Service charges on deposit accounts declined $81 thousand for the nine months ended September 30, 2020 when compared to the same period in 2019. Bank owned life insurance declined $24 thousand for the nine months ended September 30, 2020 when compared to the same period in 2019. Other service charges and fees declined $19 thousand for the nine months ended September 30, 2020 when compared to the same period in 2019. Other operating income for the nine months ended September 30, 2020 increased $48 thousand when compared to the same period in 2019. The increase in noninterest income for the nine months ended September 30, 2020 was primarily attributed to gains on sales of securities totaling $309 thousand. During the second quarter of 2020, the Company sold $10.8 million of fixed income securities, resulting in a pre-tax gain of $297 thousand. Excluding the securities gains, the year-over-year decline in service charges for the nine months ended September 30, 2020 as compared to the same period in 2019 was attributable to lower ATM fees, analysis fees and overdraft fees.

Noninterest Expense

For the three months ended September 30, 2020, noninterest expense decreased 2.3%, to $7.2 million, compared to $7.4 million for the same period in 2019. Salary and employee benefit expense was $4.7 million during the three months ended September 30, 2020, up $114 thousand, or 2.5% when compared to $4.6 million during the three months ended September 30, 2019. Occupancy expense decreased 13.7%, or $76 thousand and furniture and equipment expense decreased 6.8% or $24 thousand when comparing the three months ended September 30, 2020 to the same period in 2019. The reduction in occupancy expense was due to the renegotiation of leases at the end of 2019. Other operating expense decreased by 9.9%, or $187 thousand when comparing the three months ended September 30, 2020 to the same period in 2019. For the three months ended September 30, 2020 when compared to the same period in 2019, other operating expense declined with lower marketing and travel expenses and the renegotiation of certain operating contracts.

For the nine months ended September 30, 2020, noninterest expense increased only 0.2% to $21.7 million when compared to the same period in 2019. For the nine months ended September 30, 2020, salaries and employee benefits expense decreased 1.1%, or $158 thousand, compared to the nine months ended September 30, 2019. Occupancy expense decreased 12.4%, or $206 thousand and furniture and equipment expense increased 21.1%, or $219 thousand when comparing the nine months ended September 30, 2020 to the same period in 2019. Furniture and equipment expense increased due to additional software costs and personal protection equipment for offices purchased during the nine months ended September 30, 2020 when compared to the same period in 2019. Other operating expense increased by 3.6%, or $185 thousand, during the nine months ended September 30, 2020, compared to the same period in 2019. The increase in operating expense is related to additional office supplies associated with the COVID pandemic during the nine months ended September 30, 2020 when compared to the same period in 2019.

Asset Quality

For the fourth consecutive quarter, the Company had no non-accrual loans, no loans 30 days or more past due and no other real estate owned at quarter-end September 30, 2020. As of September 30, 2019, non-accrual loans totaled $1.4 million. Non-performing assets were 0.09% of total assets at September 30, 2019. The Company had no other real estate owned as of September 30, 2019.

Troubled debt restructurings were $619 thousand at September 30, 2020, a decline of $1.7 million, compared to $2.3 million at September 30, 2019. All troubled debt restructurings were performing in accordance with their modified terms as of September 30, 2020. There were $909 thousand of the troubled debt restructurings that were performing in accordance with their modified terms as of September 30, 2019.

As of October 16, 2020, six loans with COVID deferrals remained. These six loans totaled $10.6 million and represented 0.76% of total loans (excluding PPP) as of September 30, 2020. The Company has reduced modified loans originally reported as of June 30, 2020 by 97% in terms of number of loans or 96% when measured by dollar volume.

The Company anticipates that the remaining six loans totaling $10.6 million will resume making regularly scheduled monthly payments and expects that the COVID modification process will be materially completed by December 31, 2020. Five of the modified loans amounting to $10.3 million are paying interest and have deferred principal. The remaining modified loan equaled $297 thousand and has deferred both principal and interest.

Anticipated Resumption Schedule (10/16/2020)
 
Expected Activity
Month # of Loans $ (millions)

Oct-20

2

$

2.5

Nov-20

2

 

0.6

Dec-20

2

 

7.5

Remaining

6

$

10.6

Of the remaining loans subject to COVID loan modifications as of October 16, 2020, there was one commercial and industrial loan totaling $153 thousand and five commercial real estate (CRE) loans totaling $10.4 million. The following table summarizes the CRE loans still subject to COVID loan modifications as of October 16, 2020:

 

 

 

 

 

 

Loan-To-Value

 

 

 

 

 

 

Weighted

 

Range:

Collateral

 

# of Loans

 

$ (millions)

 

Average

 

Low

 

High

Retail

2

$

2.6

60%

59%

70%

Office

1

 

0.3

70%

70%

70%

Multifamily

2

 

7.5

63%

63%

64%

5

$

10.4

62%

The loan-to-value ratios in the table above were based on the most recent appraisals in each individual credit file.

The Company has not approved any new COVID loan modifications since June 30, 2020. The two relationships that were previously granted second deferrals, as disclosed on September 10, 2020, resumed making their regularly scheduled payments in October 2020. The resumption rate on loan modifications that have expired as of October 16, 2020 equaled 100% in terms of number of loans and 100% in terms of loan balances.

About John Marshall Bancorp, Inc.

John Marshall Bancorp, Inc. is the bank holding company for John Marshall Bank. John Marshall Bank is headquartered in Reston, Virginia with eight full-service branches located in Alexandria, Arlington, Loudoun, Prince William, Reston, Rockville, Tysons, and Washington, D.C. and one loan production office in Arlington, Virginia. The Company is dedicated to providing an exceptional customer experience and value to local businesses, business owners and consumers in the Washington D.C. Metro area. The Bank offers a comprehensive line of sophisticated banking products, services and a digital platform that rival those of the largest banks. Dedicated relationship managers serving as direct point-of-contact along with an experienced staff help achieve customer’s financial goals. 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), 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,

 

2020

 

2019

 

2020

 

2019

Selected Balance Sheet Data  
Cash and cash equivalents  

$

7,918

$

11,305

$

7,918

 

11,305

Total investment securities  

 

137,715

 

114,879

 

137,715

 

114,879

Loans net of unearned income  

 

1,532,713

 

1,255,877

 

1,532,713

 

1,255,877

Allowance for loan losses  

 

14,441

 

10,396

 

14,441

 

10,396

Total assets  

 

1,861,904

 

1,513,223

 

1,861,904

 

1,513,223

Non-interest bearing demand deposits  

 

385,885

 

254,359

 

385,885

 

254,359

Interest bearing deposits  

 

1,236,261

 

1,016,575

 

1,236,261

 

1,016,575

Total deposits  

 

1,622,146

 

1,270,934

 

1,622,146

 

1,270,934

Shareholders' equity  

 

181,427

 

157,339

 

181,427

 

157,339

   
Summary Results of Operations  
Interest income  

$

17,907

$

17,738

$

53,780

$

51,194

Interest expense  

 

3,487

 

5,328

 

12,660

 

15,105

Net interest income  

 

14,420

 

12,410

 

41,120

 

36,089

Provision for loan losses  

 

1,716

 

205

 

3,642

 

810

Net interest income after provision for loan losses  

 

12,704

 

12,205

 

37,478

 

35,279

Noninterest income  

 

357

 

344

 

1,239

 

1,020

Noninterest expense  

 

7,217

 

7,390

 

21,723

 

21,683

Income before income taxes  

 

5,844

 

5,159

 

16,994

 

14,616

Net income  

 

4,662

 

4,030

 

13,722

 

11,449

   
Per Share Data and Shares Outstanding  
Earnings per share - basic  

$

0.34

$

0.31

$

1.02

$

0.88

Earnings per share - diluted  

$

0.34

$

0.29

$

1.00

$

0.84

Tangible book value per share  

$

13.37

$

12.03

$

13.37

$

12.03

Weighted average common shares (basic)  

 

13,526,792

 

13,026,739

 

13,438,286

 

12,974,104

Weighted average common shares (diluted)  

 

13,638,644

 

13,611,615

 

13,642,607

 

13,574,417

Common shares outstanding at end of period  

 

13,573,601

 

13,076,081

 

13,573,601

 

13,076,081

   
Performance Ratios  
Return on average assets (annualized)  

 

1.03%

 

1.07%

 

1.07%

 

1.06%

Return on average equity (annualized)  

 

10.30%

 

10.26%

 

10.55%

 

10.18%

Net interest margin  

 

3.26%

 

3.38%

 

3.28%

 

3.43%

Noninterest income as a percentage of average assets (annualized)  

 

0.08%

 

0.09%

 

0.10%

 

0.09%

Noninterest expense to average assets (annualized)  

 

1.60%

 

1.96%

 

1.70%

 

2.01%

Efficiency ratio  

 

48.8%

 

57.9%

 

51.3%

 

58.4%

   
Asset Quality  
Non-performing assets to total assets  

 

0.00%

 

0.09%

 

0.00%

 

0.09%

Non-performing loans to total loans  

 

0.00%

 

0.11%

 

0.00%

 

0.11%

Allowance for loan losses to non-performing loans  

 

N/M

7.4x

 

N/M

7.4x
Allowance for loan losses to total loans (2)  

 

0.94%

 

0.83%

 

0.94%

 

0.83%

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

 

0.00%

 

0.00%

 

0.00%

 

0.02%

   
Loans 30-89 days past due and accruing interest  

$

- -

$

406

$

- -

$

406

Non-accrual loans  

$

- -

$

1,406

$

- -

$

1,406

Other real estate owned  

$

- -

$

- -

$

- -

$

- -

Non-performing assets (1)  

$

- -

$

1,406

$

- -

$

1,406

Troubled debt restructurings (total)  

$

619

$

2,315

$

619

$

2,315

Performing in accordance with modified terms  

$

619

$

909

$

619

$

909

Not performing in accordance with modified terms  

$

- -

$

1,406

$

- -

$

1,406

   
Bank Capital Ratios  
Tangible equity / tangible assets  

 

10.9%

 

11.9%

 

10.9%

 

11.9%

Total risk-based capital ratio  

 

14.6%

 

13.7%

 

14.6%

 

13.7%

Tier 1 risk-based capital ratio  

 

13.6%

 

12.9%

 

13.6%

 

12.9%

Leverage ratio  

 

11.1%

 

11.9%

 

11.1%

 

11.9%

Common equity tier 1 ratio  

 

13.6%

 

12.9%

 

13.6%

 

12.9%

   
Other Information  
Number of full time equivalent employees  

 

134

 

131

 

134

 

131

# Full service branch offices  

 

8

 

8

 

8

 

8

# Loan production or limited service branch offices  

 

1

 

1

 

1

 

1

(1) Non-performing assets consist of non-accrual loans, loans 90 day 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.

(2) 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.

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

 

2020

 

2019

 

2019

 

Months

 

Year

Assets

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

$

7,918

$

7,471

$

11,305

6.0%

-30.0%

Interest-bearing deposits in banks  

 

154,581

 

87,019

 

98,000

77.6%

57.7%

Securities available-for-sale, at fair value  

 

131,211

 

122,729

 

107,951

6.9%

21.5%

Restricted securities, at cost  

 

5,673

 

7,188

 

6,544

-21.1%

-13.3%

Equity securities, at fair value  

 

831

 

431

 

384

92.8%

116.4%

Loans net of unearned income  

 

1,532,713

 

1,325,532

 

1,255,877

15.6%

22.0%

Allowance for loan losses  

 

(14,441)

 

(10,756)

 

(10,396)

34.3%

38.9%

Net loans  

 

1,518,272

 

1,314,776

 

1,245,481

15.5%

21.9%

Bank premises and equipment, net  

 

2,209

 

2,318

 

2,391

-4.7%

-7.6%

Accrued interest receivable  

 

5,708

 

4,010

 

3,715

42.3%

53.6%

Bank owned life insurance  

 

20,470

 

20,118

 

19,993

1.7%

2.4%

Right of use assets  

 

6,274

 

7,254

 

8,515

-13.5%

-26.3%

Other assets  

 

8,757

 

8,569

 

8,944

2.2%

-2.1%

   
Total assets  

$

1,861,904

$

1,581,883

$

1,513,223

17.7%

23.0%

   

Liabilities and Shareholders' Equity

 
   

Liabilities

 
Deposits:  
Non-interest bearing demand deposits  

$

385,885

$

273,459

$

254,359

41.1%

51.7%

Interest bearing demand deposits  

 

549,576

 

428,529

 

424,690

28.2%

29.4%

Savings deposits  

 

60,418

 

29,208

 

26,198

106.9%

130.6%

Time deposits  

 

626,267

 

577,508

 

565,687

8.4%

10.7%

Total deposits  

 

1,622,146

 

1,308,704

 

1,270,934

24.0%

27.6%

Federal funds purchased  

 

- -

 

12,000

 

- -

N/M

N/M

Federal Home Loan Bank advances  

 

22,000

 

62,000

 

47,000

-64.5%

-53.2%

Subordinated debt  

 

24,667

 

24,630

 

24,618

0.2%

0.2%

Accrued interest payable  

 

770

 

1,106

 

1,086

-30.4%

-29.1%

Lease liabilities  

 

6,532

 

7,474

 

8,782

-12.6%

-25.6%

Other liabilities  

 

4,362

 

3,987

 

3,464

9.4%

25.9%

Total liabilities  

 

1,680,477

 

1,419,901

 

1,355,884

18.4%

23.9%

   
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 20,000,000 shares; issued and outstanding, 13,573,601 at 9/30/2020 including 46,483 unvested shares, 13,127,661 shares at 12/31/2019 including 51,548 unvested shares and 13,076,081 at 9/30/2019, including 49,068 unvested shares  

 

135

 

131

 

130

3.1%

3.8%

Additional paid-in capital  

 

89,821

 

87,435

 

86,766

2.7%

3.5%

Retained earnings  

 

87,361

 

73,639

 

69,168

18.6%

26.3%

Accumulated other comprehensive income  

 

4,110

 

777

 

1,275

429.0%

222.4%

   
Total shareholders' equity  

 

181,427

 

161,982

 

157,339

12.0%

15.3%

   
Total liabilities and shareholders' equity  

$

1,861,904

$

1,581,883

$

1,513,223

17.7%

23.0%

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,

 

 

 

2020

 

2019

 

% Change

 

2020

 

2019

 

% Change

 

(Unaudited)

 

(Unaudited)

 

 

 

(Unaudited)

 

(Unaudited)

 

 

Interest and Dividend Income  
Interest and fees on loans  

$

17,079

$

16,463

3.7%

$

50,869

$

47,389

7.3%

Interest on investment securities, taxable  

 

697

 

652

6.9%

 

2,213

 

1,813

22.1%

Interest on investment securities, tax-exempt  

 

32

 

17

88.2%

 

84

 

116

-27.6%

Dividends  

 

65

 

102

-36.3%

 

247

 

329

-24.9%

Interest on federal funds sold  

 

- -

 

- -

N/M

 

- -

 

1

N/M

Interest on deposits in banks  

 

34

 

504

-93.3%

 

367

 

1,546

-76.3%

Total interest and dividend income  

 

17,907

 

17,738

1.0%

 

53,780

 

51,194

5.1%

   
Interest Expense  
Deposits  

 

3,052

 

4,733

-35.5%

 

11,209

 

13,172

-14.9%

Federal Home Loan Bank advances  

 

63

 

224

-71.9%

 

335

 

816

-58.9%

Subordinated debt  

 

372

 

371

0.3%

 

1,115

 

1,115

0.0%

Other short-term borrowings  

 

- -

 

- -

N/M

 

1

 

2

-50.0%

Total interest expense  

 

3,487

 

5,328

-34.6%

 

12,660

 

15,105

-16.2%

   
Net interest income  

 

14,420

 

12,410

16.2%

 

41,120

 

36,089

13.9%

   
Provision for loan losses  

 

1,716

 

205

737.1%

 

3,642

 

810

349.6%

   
Net interest income after provision for loan losses  

 

12,704

 

12,205

4.1%

 

37,478

 

35,279

6.2%

   
Noninterest Income  
Service charges on deposit accounts  

 

107

 

135

-20.7%

 

343

 

424

-19.1%

Bank owned life insurance  

 

118

 

126

-6.3%

 

352

 

376

-6.4%

Other service charges and fees  

 

38

 

56

-32.1%

 

120

 

139

-13.7%

Gain on sale of securities  

 

- -

 

1

N/M

 

309

 

14

2107.1%

Other operating income  

 

94

 

26

261.5%

 

115

 

67

71.6%

Total noninterest income  

 

357

 

344

3.8%

 

1,239

 

1,020

21.5%

   
Noninterest Expenses  
Salaries and employee benefits  

 

4,703

 

4,589

2.5%

 

13,631

 

13,789

-1.1%

Occupancy expense of premises  

 

480

 

556

-13.7%

 

1,456

 

1,662

-12.4%

Furniture and equipment expenses  

 

331

 

355

-6.8%

 

1,257

 

1,038

21.1%

Other operating expenses  

 

1,703

 

1,890

-9.9%

 

5,379

 

5,194

3.6%

Total noninterest expenses  

 

7,217

 

7,390

-2.3%

 

21,723

 

21,683

0.2%

   
Income before income taxes  

 

5,844

 

5,159

13.3%

 

16,994

 

14,616

16.3%

   
Income tax expense  

 

1,182

 

1,129

4.7%

 

3,272

##

 

3,167

3.3%

   
Net income  

$

4,662

$

4,030

15.7%

$

13,722

$

11,449

19.9%

   
Earnings Per Share  
Basic  

$

0.34

$

0.31

9.7%

$

1.02

$

0.88

15.9%

Diluted  

$

0.34

$

0.29

17.2%

$

1.00

$

0.84

19.0%

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

September 30, 2020

 

December 31, 2019

 

September 30, 2019

 

Percentage Change

Loans

 

$ Amount

 

% of Total

 

$ Amount

 

% of Total

 

$ Amount

 

% of Total

 

Last 9 Mos

 

Last 12 Mos

Mortgage loans on real estate  
Commercial  

$

808,204

 

52.7

%

$

794,142

 

59.9

%

$

761,004

 

60.6

%

1.8

%

6.2

%

Construction and land development  

 

237,195

 

15.4

%

 

252,079

 

19.0

%

 

246,561

 

19.6

%

-5.9

%

-3.8

%

Residential  

 

262,049

 

17.1

%

 

202,512

 

15.3

%

 

176,661

 

14.0

%

29.4

%

48.3

%

Total mortgage loans on real estate  

$

1,307,448

 

85.2

%

$

1,248,733

 

94.2

%

$

1,184,226

 

94.2

%

4.7

%

10.4

%

Commercial loans  

 

225,865

 

14.7

%

 

76,096

 

5.8

%

 

71,416

 

5.7

%

196.8

%

216.3

%

Consumer loans  

 

1,208

 

0.1

%

 

653

 

0.0

%

 

855

 

0.1

%

85.0

%

41.3

%

Total loans  

$

1,534,521

 

100.0

%

$

1,325,482

 

100.0

%

$

1,256,497

 

100.0

%

15.8

%

22.1

%

Less: Allowance for loan losses  

 

(14,441

)

 

(10,756

)

 

(10,396

)

Net deferred loan costs (fees)  

 

(1,808

)

 

50

 

 

(620

)

Net loans  

$

1,518,272

 

$

1,314,776

 

$

1,245,481

 

   
   
 

September 30, 2020

 

December 31, 2019

 

September 30, 2019

 

Percentage Change

Deposits

 

$ Amount

 

% of Total

 

$ Amount

 

% of Total

 

$ Amount

 

% of Total

 

Last 9 Mos

 

Last 12 Mos

Noninterest-bearing demand deposits  

$

385,885

 

23.8

%

$

273,459

 

20.9

%

$

254,359

 

20.0

%

41.1

%

51.7

%

Interest-bearing demand deposits:  
NOW accounts  

 

101,792

 

6.3

%

 

60,835

 

4.7

%

 

66,015

 

5.2

%

67.3

%

54.2

%

Money market accounts  

 

214,701

 

13.3

%

 

180,253

 

13.8

%

 

183,324

 

14.4

%

19.1

%

17.1

%

Savings accounts  

 

60,418

 

3.7

%

 

29,208

 

2.2

%

 

26,198

 

2.0

%

106.9

%

130.6

%

Certificates of deposit  
$250,000 or more  

 

281,302

 

17.3

%

 

255,220

 

19.5

%

 

245,173

 

19.3

%

10.2

%

14.7

%

Less than $250,000  

 

117,171

 

7.2

%

 

128,283

 

9.8

%

 

124,109

 

9.8

%

-8.7

%

-5.6

%

QwickRate® Certificates of deposit  

 

29,781

 

1.8

%

 

18,030

 

1.4

%

 

17,851

 

1.4

%

65.2

%

66.8

%

ICS®  

 

233,083

 

14.4

%

 

187,439

 

14.3

%

 

175,349

 

13.8

%

24.4

%

32.9

%

CDARS®  

 

36,909

 

2.3

%

 

50,884

 

3.9

%

 

65,877

 

5.2

%

-27.5

%

-44.0

%

Brokered deposits  

 

161,104

 

9.9

%

 

125,093

 

9.6

%

 

112,679

 

8.9

%

28.8

%

43.0

%

Total deposits  

$

1,622,146

 

100.0

%

$

1,308,704

 

100.0

%

$

1,270,934

 

100.0

%

24.0

%

27.6

%

   

Borrowings

 
Federal funds purchased  

$

- -

 

0.0

%

$

12,000

 

12.1

%

$

- -

 

0.0

%

N/M

 

N/M

 

Federal Home Loan Bank advances  

 

22,000

 

47.1

%

 

62,000

 

62.9

%

 

47,000

 

65.6

%

-64.5

%

-53.2

%

Subordinated debt  

 

24,667

 

52.9

%

 

24,630

 

25.0

%

 

24,618

 

34.4

%

0.2

%

0.2

%

Total borrowings  

$

46,667

 

100.0

%

$

98,630

 

100.0

%

$

71,618

 

100.0

%

-52.7

%

-34.8

%

   
Total deposits and borrowings  

$

1,668,813

 

$

1,407,334

 

$

1,342,552

 

18.6

%

24.3

%

   
Core customer funding sources (1)  

$

1,431,261

 

85.8

%

$

1,165,581

 

82.8

%

$

1,140,404

 

85.0

%

22.8

%

25.5

%

Wholesale funding sources (2)  

 

212,885

 

12.8

%

 

217,123

 

15.4

%

 

177,530

 

13.2

%

-2.0

%

19.9

%

Subordinated debt (3)  

 

24,667

 

1.5

%

 

24,630

 

1.8

%

 

24,618

 

1.8

%

0.2

%

0.2

%

Total funding sources  

$

1,668,813

 

100.0

%

$

1,407,334

 

100.0

%

$

1,342,552

 

100.0

%

18.6

%

24.3

%

(1) Includes ICS and CDARS(r), which are all reciprocal deposits maintained by customers.

(2) Consists of QwickRate(r) certificates of deposit, brokered deposits, federal funds purchased and Federal Home Loan Bank advances.

(3) Subordinated debt obligation qualifies as Tier 2 capital.

John Marshall Bancorp, Inc.
   
Average Balance Sheets, Interest and Rates (unaudited)
(Dollar amounts in thousands)
   
 

Three Months Ended September 30, 2020

 

Three Months Ended September 30, 2019

 

 

 

Interest

 

Average

 

 

 

Interest

 

Average

 

Average

 

Income-

 

Yields

 

Average

 

Income-

 

Yields

 

Balance

 

Expense

 

/Rates

 

Balance

 

Expense

 

/Rates

Assets  
Securities  

$

135,242

$

794

2.34%

$

114,872

$

771

2.66%

Loans, net of unearned income  

 

1,521,091

 

17,079

4.47%

 

1,248,779

 

16,463

5.23%

Interest-bearing deposits in other banks  

 

102,984

 

34

0.13%

 

91,497

 

504

2.19%

Federal funds sold  

 

- -

 

- -

0.00%

 

10

 

- -

0.00%

Total interest-earning assets  

$

1,759,317

$

17,907

4.05%

$

1,455,158

$

17,738

4.84%

Other assets  

 

37,594

 

41,135

Total assets  

$

1,796,911

$

1,496,293

Liabilities & Shareholders' equity  
Interest-bearing deposits  
NOW accounts  

$

213,608

$

240

0.45%

$

145,841

$

456

1.24%

Money market accounts  

 

313,281

 

387

0.49%

 

281,700

 

1,101

1.55%

Savings accounts  

 

56,379

 

74

0.52%

 

26,025

 

98

1.49%

Time deposits  

 

584,229

 

2,351

1.60%

 

540,207

 

3,078

2.26%

Total interest-bearing deposits  

$

1,167,497

$

3,052

1.04%

$

993,773

$

4,733

1.89%

   
Federal funds purchased  

$

1

$

- -

0.00%

$

- -

$

- -

0.00%

Subordinated debt  

 

24,659

 

372

6.00%

 

24,610

 

371

5.98%

Other borrowed funds  

 

25,337

 

63

0.99%

 

47,418

 

224

1.87%

Total interest-bearing liabilities  

$

1,217,494

$

3,487

1.14%

$

1,065,801

$

5,328

1.98%

Demand deposits  

 

386,509

 

260,940

Other liabilities  

 

12,827

 

13,755

Total liabilities  

$

1,616,830

$

1,340,496

Shareholders' equity  

 

180,081

 

155,797

Total liabilities and shareholders' equity  

$

1,796,911

$

1,496,293

Interest rate spread  

2.91%

2.86%

Net interest income and margin  

$

14,420

3.26%

$

12,410

3.38%

   
   
  Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019
  Interest Average Interest Average
  Average Income- Yields Average Income- Yields
  Balance Expense /Rates Balance Expense /Rates
Assets  
Securities  

$

136,831

$

2,544

2.48%

$

111,397

$

2,258

2.71%

Loans, net of unearned income  

 

1,436,699

 

50,869

4.73%

 

1,205,221

 

47,389

5.26%

Interest-bearing deposits in other banks  

 

99,706

 

367

0.49%

 

88,223

 

1,546

2.34%

Federal funds sold  

 

- -

 

- -

0.00%

 

72

 

1

1.86%

Total interest-earning assets  

$

1,673,236

$

53,780

4.29%

$

1,404,913

$

51,194

4.87%

Other assets  

 

37,581

 

38,891

Total assets  

$

1,710,817

$

1,443,804

Liabilities & Shareholders' equity  
Interest-bearing deposits  
NOW accounts  

$

185,124

$

867

0.63%

$

135,600

$

1,248

1.23%

Money market accounts  

 

302,281

 

1,843

0.81%

 

277,172

 

3,173

1.53%

Savings accounts  

 

42,151

 

265

0.84%

 

19,469

 

194

1.33%

Time deposits  

 

586,637

 

8,234

1.87%

 

523,495

 

8,557

2.19%

Total interest-bearing deposits  

$

1,116,193

$

11,209

1.34%

$

955,736

$

13,172

1.84%

   
Federal funds purchased  

$

245

$

1

0.55%

$

99

$

2

2.70%

Subordinated debt  

 

24,647

 

1,115

6.04%

 

24,598

 

1,115

6.06%

Other borrowed funds  

 

35,157

 

335

1.27%

 

54,852

 

816

1.99%

Total interest-bearing liabilities  

$

1,176,242

$

12,660

1.44%

$

1,035,285

$

15,105

1.95%

Demand deposits  

 

348,572

 

247,396

Other liabilities  

 

12,256

 

10,787

Total liabilities  

$

1,537,070

$

1,293,468

Shareholders' equity  

 

173,747

 

150,336

Total liabilities and shareholders' equity  

$

1,710,817

$

1,443,804

Interest rate spread  

2.85%

2.92%

Net interest income and margin  

$

41,120

3.28%

$

36,089

3.43%

 

Contacts

Chris Bergstrom
(703) 584-0840

Contacts

Chris Bergstrom
(703) 584-0840