Business Overview John Marshall Bancorp, Inc. (NASDAQ: JMSB) has established itself as a reliable financial institution, weathering economic storms and positioning itself for continued growth. With a rich history spanning nearly two decades, the company has demonstrated resilience and adaptability, cementing its place as a trusted partner for businesses and individuals alike.
John Marshall Bancorp, Inc. was formed on April 21, 2016, under the laws of the Commonwealth of Virginia. The company's wholly-owned subsidiary, John Marshall Bank, was formed on April 5, 2005, and received its charter as a bank on February 9, 2006, from the Virginia Bureau of Financial Institutions. John Marshall Bank officially opened for business on April 17, 2006, primarily serving the Washington, D.C. metropolitan area.
In March 2017, John Marshall Bancorp became the registered bank holding company for John Marshall Bank through a one-for-one share exchange. This reorganization solidified the Company's structure as the parent company of the Bank, with shareholders receiving one share of the Company's voting common stock for each share of the Bank's voting common stock they held.
The company has faced its share of challenges while growing its franchise. In 2020, the COVID-19 pandemic presented significant economic disruption, which the Bank navigated by working closely with its customers and maintaining disciplined underwriting standards. During this period, the Bank also had to contend with a historically low interest rate environment, which put pressure on its net interest margin.
Despite these challenges, John Marshall Bank has achieved steady growth and profitability. As of December 31, 2023, the Bank reported impressive financial metrics, including total assets of $2.24 billion, total loans net of unearned income of $1.84 billion, total deposits of $1.91 billion, and total shareholders' equity of $229.9 million. The Bank's strong capital position and credit quality have enabled it to continue supporting the financial needs of businesses and individuals in its communities.
Navigating Challenges and Seizing Opportunities Despite the turbulent economic landscape, John Marshall Bancorp has demonstrated its ability to adapt and thrive. In 2023, the company underwent a strategic restructuring, selling lower-yielding investment securities and surrendering bank-owned life insurance policies. While this process resulted in a one-time, non-recurring loss, it positioned the bank to capitalize on rising interest rates and improve its net interest margin.
The company's commitment to prudent risk management is evident in its pristine asset quality. As of September 30, 2024, the bank did not have any nonperforming assets or loans past due 90 days or more. This disciplined approach has allowed John Marshall Bancorp to maintain a strong balance sheet and weather economic fluctuations.
Driving Growth through Targeted Initiatives John Marshall Bancorp has been actively expanding its commercial banking presence, hiring seasoned professionals to lead its growth initiatives. In 2025, the company welcomed Pete Follansbee as Senior Vice President, Commercial Team Lead in Prince William County, and Joe Malazo as Vice President, Commercial Relationship Manager in Loudoun. These strategic hires underscore the bank's commitment to cultivating deep relationships with local businesses and bolstering its commercial lending capabilities.
Moreover, the bank has recently opened a new banking center in Loudoun County, a testament to its dedication to serving the evolving needs of the communities it operates in. This new location, coupled with the bank's existing footprint, positions John Marshall Bancorp to capitalize on the robust economic growth and development in the region.
Financial Performance and Resilience John Marshall Bancorp's financial performance has been a testament to its prudent management and adaptability. For the fiscal year 2024, the company reported net income of $16.2 million, with an annualized return on average assets (ROAA) of 0.73% and an annualized return on average equity (ROAE) of 6.97%. These results were achieved despite the one-time restructuring charges incurred during the year.
The bank's balance sheet remains well-capitalized, with a total risk-based capital ratio of 16.30% as of September 30, 2024, well above the regulatory minimum. This strong capital position provides the flexibility to support future growth initiatives and weather potential economic headwinds.
For the fiscal year 2023, John Marshall Bancorp reported annual revenue of $35.54 million and annual net income of $5.16 million. The company's annual operating cash flow for 2023 was $18 million, with annual free cash flow of $17.39 million. In the most recent quarter (Q3 2024), the company reported a net income of $1.87 billion, showcasing significant growth.
Liquidity John Marshall Bancorp maintains a robust liquidity position, ensuring it can meet its financial obligations and support customer needs. The bank's diverse funding sources, including a stable deposit base and access to various borrowing facilities, contribute to its strong liquidity profile. This financial flexibility allows the bank to navigate market fluctuations and capitalize on growth opportunities as they arise.
As of December 31, 2023, the company held $99 million in cash and cash equivalents. John Marshall Bancorp has a strong liquidity position with a current ratio and quick ratio of 4.69. The company has no debt, as evidenced by a debt-to-equity ratio of 0. Furthermore, the bank has significant borrowing capacity, with the ability to access up to $101.6 million at the Federal Reserve discount window and $110 million in federal funds lines of credit with correspondent banks for overnight borrowing, none of which had been drawn upon as of September 30, 2024.
Product Segments and Loan Portfolio John Marshall Bancorp operates through several primary product segments, with real estate loans being the largest component of its portfolio. As of September 30, 2024, real estate loans comprised 63.22% of total gross loans. The commercial real estate loan portfolio totaled $1.16 billion, with yields averaging 5.34% during the third quarter of 2024. Construction and land development loans amounted to $161.47 million, while residential real estate loans were $473.79 million, both portfolios yielding 5.33% for the third quarter.
The commercial loan segment, excluding real estate loans, made up 2.17% of total gross loans, with a balance of $39.87 million and yields of 5.34% during the third quarter. Consumer loans, including personal loans and lines of credit, represented a small portion of the overall loan portfolio at 0.05% of total gross loans, or $877 million, with yields averaging 5.33% during the period.
The company's asset quality remains strong, with no nonperforming loans or nonperforming assets as of September 30, 2024. The allowance for loan credit losses stood at $18.48 million, or 1.00% of total gross loans, down from 1.05% at the end of 2023. This decrease was primarily due to changes in JMSB's loss analysis and assessments of economic conditions combined with the continued strong performance of the loan portfolio.
Funding and Deposit Base John Marshall Bancorp funds its lending activities primarily through a diverse deposit base, which totaled $1.94 billion as of September 30, 2024. Non-interest bearing demand deposits made up 24.40% of total deposits, while interest-bearing deposits, including NOW accounts, money market accounts, savings accounts, and time deposits, accounted for the remaining 75.60%. The company focuses on growing its core deposit franchise, which represented 85.50% of total deposits at the end of the third quarter.
Looking Ahead As the economic landscape continues to evolve, John Marshall Bancorp is poised to capitalize on emerging opportunities. The company's focus on commercial lending, supported by strategic hires and new branch openings, positions it to capture the vibrant business activity in its core markets. Furthermore, the bank's disciplined approach to risk management and its ability to adapt to changing conditions instill confidence in its long-term sustainability.
With a steadfast commitment to serving its customers and communities, John Marshall Bancorp is well-equipped to navigate the challenges and seize the opportunities that lie ahead. As the company continues to execute its growth strategy, investors can look forward to the bank's ongoing transformation and its ability to deliver consistent value.