John Marshall Bank: John Marshall Bancorp, Inc. Reports Annualized Net Interest Income Increases 27.5%, Balance Sheet Well-Positioned for 2025 Growth

John Marshall Bancorp, Inc. (Nasdaq: JMSB) (the "Company"), parent company of John Marshall Bank (the "Bank"), reported net income of $4.8 million ($0.33 per diluted common share) for the quarter ended December 31, 2024, compared to net income of $4.2 million ($0.30 per diluted common share) for the quarter ended September 30, 2024 and net income of $4.5 million ($0.32 per diluted common share) for the quarter ended December 31, 2023. Selected Highlights Significant Increase in Net Interest Income and Margin - For the three months ended December 31, 2024, the Company reported net interest income of $14.1 million, a $912 thousand or 27.5% annualized increase over the $13.2 million reported for the three months ended September 30, 2024. Net interest margin for the three months ended December 31, 2024 was 2.52%, a 22 basis points improvement when compared to the 2.30% net interest margin for the three months ended September 30, 2024 and a 40 basis points improvement when compared to the 2.12% net interest margin for the three months ended December 31, 2023. Net income increased 12.8% or 50.8% annualized when compared to the three months ended September 30, 2024. Earnings Accelerating - Pre-tax pre-provision earnings (Non-GAAP) for the three months ended December 31, 2024 was $6.4 million, representing an increase of $1.3 million or 25.6% when compared to the three months ended December 31, 2023. The Federal Reserve initiated a series of fed funds rate reductions commencing mid-September 2024. Reported net income was $4.8 million for the three months ended December 31, 2024 compared to $4.2 million for the three months ended September 30, 2024 and $4.5 million for the three months ended December 31, 2023. Refer to "Explanation of Non-GAAP Measures" and the "Reconciliation of Certain Non-GAAP Financial Measures" table for further details about financial measures used in this release that were determined by methods other than in accordance with GAAP. Loan Growth - The Company's loan portfolio grew $29.6 million or 6.4% annualized during the fourth quarter 2024. The strength in the Company's loan pipeline continued during the fourth quarter with $118.6 million in new loan commitments, which represented a $52.5 million or 79.4% increase compared to the same period in 2023. New loan commitments represent loans closed, but not necessarily fully funded. Excellent Asset Quality - As of December 31, 2024, the Company had no non-accrual loans and no other real estate owned assets ("OREO"). The Company had one loan that was 90 days past due and still accruing interest as of December 31, 2024. The loan paid off, in full, on January 7, 2025. As of the date of this release, the Bank had no non-performing loans, OREO or loans 30 or more days past due. Based upon our loan trial balance as of the date of this earnings release, the Company expects that there will be no loans 30 or more days past due as of January 31, 2025. Robust Capitalization - Each of the Bank's regulatory capital ratios remained well in excess of the well-capitalized thresholds as of December 31, 2024. Growing Book Value per Share - Book value per share increased from $17.07 as of September 30, 2024 to $17.28 as of December 31, 2024. For 2024, book value per share increased $1.03 or 6.3% from $16.25 as of December 31, 2023 to $17.28 as of December 31, 2024. When factoring in the $0.25 cash dividend per share paid in July 2024, the book value per share return was 7.9%. Chris Bergstrom, President and Chief Executive Officer, commented, "In the fourth quarter, we continued to make excellent progress, increasing our net interest margin by 22 basis points. We increased loan balances $29.6 million in the fourth quarter. Our unfunded loan commitments continued to grow during the fourth quarter, and we expect these will be a significant component of our 2025 growth as the loans fund. Our capital levels are strong and well in excess of regulatory requirements for well-capitalized banks. Our balance sheet and the Company are well-positioned to pursue growth in 2025. As always, I want to thank our hardworking associates for their inspired efforts in advancing the interests of our customers and the Company." Balance Sheet, Liquidity and Credit Quality Total assets were $2.23 billion at December 31, 2024, $2.27 billion at September 30, 2024, and $2.24 billion at December 31, 2023. Total assets have decreased $39.4 million or 1.7% since September 30, 2024 and decreased $7.6 million or 0.3% since December 31, 2023. Total loans, net of unearned income, increased $12.2 million or 0.7% to $1.87 billion at December 31, 2024, compared to $1.86 billion at December 31, 2023 and increased $29.6 million during the quarter ended December 31, 2024 or 6.4% annualized from $1.84 billion at September 30, 2024. The increase in loans was primarily attributable to growth in the investor real estate loan portfolio, partially offset by a decrease in the commercial owner-occupied real estate and construction & development loan portfolios. Refer to the Loan, Deposit and Borrowing table for further information. The carrying value of the Company's fixed income securities portfolio was $222.3 million at December 31, 2024, $237.5 million at September 30, 2024 and $265.5 million at December 31, 2023. The decrease in carrying value of the Company's fixed income securities portfolio since December 31, 2023 was attributable to amortization of the portfolio. As of December 31, 2024, 95.5% of our bond portfolio carried the implied guarantee of the United States government or one of its agencies. At December 31, 2024, 62% of the fixed income portfolio was invested in amortizing bonds, which provides the Company with a source of steady cash flow. At December 31, 2024, the fixed income portfolio had an estimated weighted average life of 4.2 years. The available-for-sale portfolio comprised approximately 61% of the fixed income securities portfolio and had a weighted average life of 3.1 years at December 31, 2024. The held-to-maturity portfolio comprised approximately 39% of the fixed income securities portfolio and had a weighted average life of 6.0 years at December 31, 2024. The Company did not purchase or sell any fixed income securities during the three and twelve month periods ended December 31, 2024. The Company's balance sheet remains highly liquid. The Company's liquidity position, defined as the sum of cash, unencumbered securities and available secured borrowing capacity, totaled $727.3 million as of December 31, 2024 compared to $639.0 million as of December 31, 2023 and represented 37.5% and 28.5% of total assets, respectively. In addition to available secured borrowing capacity, the Bank had available federal funds lines of $110.0 million at December 31, 2024. Total deposits were $1.89 billion at December 31, 2024, $1.94 billion at September 30, 2024 and $1.91 billion at December 31, 2023. During the quarter, total deposits decreased $43.7 million or 2.3% when compared to September 30, 2024. Deposits decreased $14.2 million or 0.7% when compared to December 31, 2023. The Bank reduced costlier deposits (certificates of deposit, Qwickrate CDs, IntraFi CDs, and brokered CDs) by $125.5 million since December 31, 2023. As further detailed in the tables included in this release, core funding sources have increased $39.2 million and wholesale funding sources have decreased $61.3 million since December 31, 2023. As of December 31, 2024, the Company had $659.2 million of deposits that were not insured or not collateralized compared to $634.1 million at December 31, 2023. On September 3, 2024, the Company paid off its $77.0 million Bank Term Funding Program ("BTFP") advance and concurrently secured three Federal Home Loan Bank ("FHLB") advances totaling $56.0 million. The FHLB advances have a weighted average fixed interest rate of 4.01% compared to 4.76% for the retired BTFP advance. Total borrowings as of December 31, 2024 consisted of subordinated debt totaling $24.8 million and the FHLB advances. Shareholders' equity increased $16.7 million or 7.3% to $246.6 million at December 31, 2024 compared to $229.9 million at December 31, 2023. Book value per share was $17.28 as of December 31, 2024 compared to $16.25 as of December 31, 2023, an increase of 6.3%. The year-over-year change in book value per share was primarily due to the Company's earnings over the previous twelve months and a decrease in accumulated other comprehensive loss. This increase was partially offset by increased cash dividends paid and increased share count from shareholder option exercises and restricted share award issuances. The decrease in accumulated other comprehensive loss was attributable to decreases in unrealized losses on our available-for-sale investment portfolio due to market value increases. The Bank's capital ratios remained well above regulatory thresholds for well-capitalized banks. As of December 31, 2024, the Bank's total risk-based capital ratio was 16.2%, compared to 15.7% at December 31, 2023. As outlined below, the Bank would continue to remain well above regulatory thresholds for well-capitalized banks at December 31, 2024 in the hypothetical scenario where the entire bond portfolio was sold at fair market value and any losses realized (Non-GAAP). Refer to "Explanation of Non-GAAP Measures" and the "Reconciliation of Certain Non-GAAP Financial Measures" table for further details about financial measures used in this release that were determined by methods other than in accordance with GAAP. Bank Regulatory Capital Ratios (As Reported) Well-Capitalized Threshold December 31, 2024 December 31, 2023 Total risk-based capital ratio 10.0 % 16.2 % 15.7 % Tier 1 risk-based capital ratio 8.0 % 15.2 % 14.7 % Common equity tier 1 ratio 6.5 % 15.2 % 14.7 % Leverage ratio 5.0 % 12.4 % 11.6 % Adjusted Bank Regulatory Capital Ratios (Hypothetical Scenario of Selling All Bonds at Fair Market Value - Non-GAAP) Well-Capitalized