John Marshall Bancorp, Inc. Reports Record Earnings for 2020

John Marshall Bancorp, Inc. (OTCQB: JMSB) (the “Company”), parent company of John Marshall Bank (the “Bank”), reported its financial results for the three and twelve months ended December 31, 2020.

Selected Highlights

• Record Earnings for the Year and Quarter - Net income increased 16.4% to $18.5 million for the twelve months ended December 31, 2020, compared to $15.9 million for the twelve months ended December 31, 2019. Earnings per diluted share were $1.35 for the twelve months ended December 31, 2020, an increase of 15.4% from $1.17 per diluted share for the twelve months ended December 31, 2019. The Company reported its eighth consecutive quarter of record earnings with net income of $4.8 million for the three months ended December 31, 2020 compared to $4.5 million for the three months ended December 31, 2019, an increase of 7.4%. Earnings per diluted share were $0.35 for the three months ended December 31, 2020, an increase of 6.1% from $0.33 per diluted share for the three months ended December 31, 2019.

• Record Pre-Tax, Pre-Provision Income - The Company achieved record pre-tax, pre-provision (“PTPP”) income of $29.3 million for the twelve months ended December 31, 2020, an increase of $8.0 million or 37.5% over the $21.3 million for the same period in 2019. The PTPP return on average assets increased from 1.45% for the twelve months ended December 31, 2019 to 1.68% for the same period in 2020. PTPP income was $8.7 million for the three months ended December 31, 2020, a 47.3% increase from the same period a year ago. PTPP annualized return on average assets was 1.85% for the three months ended December 31, 2020 versus 1.50% for the three months ended December 31, 2019. Management believes PTPP income enables financial statement users to assess the Company’s ability to generate capital to cover potential credit losses which could arise before the COVID pandemic’s eradication.

• Stable Net Interest Margin - The net interest margin was 3.43% for the three months ended December 31, 2020 as compared to 3.31% for the three months ended December 31, 2019. During the fourth quarter of 2020, Paycheck Protection Program (“PPP”), loans declined $33.7 million from $148.2 million at September 30, 2020 to $114.4 million at December 31, 2020. The net interest margin, exclusive of the impact of PPP loans, was 3.34% for both the three months ended September 30, 2020 and December 31, 2020.

• Sub-50% Efficiency Ratio - The efficiency ratio declined from 54.4% for the three months ended December 31, 2019 to 46.2% for the three months ended December 31, 2020. Revenues increased 24.8% to $16.1 million in the fourth quarter of 2020 as compared to $12.9 million for the same period in 2019. Noninterest expense increased 6.0% to $7.4 million in the fourth quarter of 2020 as compared to $7.0 million for the same period in 2019. Noninterest expense to average assets declined from 1.80% for the three months ended December 31, 2019 to 1.59% for the three months ended December 31, 2020. The efficiency ratio decreased from 57.4% for the twelve months ended December 31, 2019 to 49.9% for the twelve months ended December 31, 2020. Noninterest expense to average assets declined from 1.95% for the twelve months ended December 31, 2019 to 1.67% for the twelve months ended December 31, 2020.

• Superb Asset Quality Continues - For the fifth 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 December 31, 2020. During the twelve months ended December 31, 2020, the Company reported $43 thousand in net recoveries, compared to $145 thousand in net charge-offs during the same period in 2019. Troubled debt restructurings were $604 thousand at December 31, 2020, a decline of $291 thousand, compared to $895 thousand at December 31, 2019. The Company had no COVID modifications as of December 31, 2020.

• Record Balance Sheet Growth -Total assets were $1.89 billion at December 31, 2020, an increase of $303.6 million or 19.2% when compared to December 31, 2019. Gross loans net of unearned income increased $237.0 million or 17.9% from December 31, 2019 to December 31, 2020. Total deposits grew $331.4 million, or 25.3% from December 31, 2019 to December 31, 2020. Non-interest bearing demand deposits grew $89.1 million, or 32.6% from December 31, 2019 to December 31, 2020.

Chris Bergstrom, President and Chief Executive Officer, commented, “John Marshall Bank achieved record results despite the near-zero interest rate environment brought about by the pandemic. We made extensive use of our digital platform to keep our employees safe and provide our customers with the needed services to sustain and grow their businesses. We believe our strong growth in assets, loans, deposits and earnings in 2020 demonstrates the resiliency of our team and our commitment to providing exceptional client experiences. We expect that our results will compare favorably to our peers. Our Company has ample capital, liquidity and excellent asset quality. We feel we are well-positioned with solid momentum heading into 2021.”

Balance Sheet Review

Assets

Total assets were $1.89 billion at December 31, 2020, $1.86 billion at September 30, 2020 and $1.58 billion at December 31, 2019. Year-over-year asset growth was $303.6 million, or 19.2%, from December 31, 2019 to December 31, 2020. During the fourth quarter of 2020, assets increased $23.6 million, or 5.0% annualized.

Loans

Gross loans were $1.56 billion at December 31, 2020, $1.53 billion at September 30, 2020 and $1.33 billion at December 31, 2019. Gross loans net of unearned income increased $237.0 million or 17.9% from December 31, 2019 to December 31, 2020. Excluding PPP loans, gross loans net of unearned income increased $122.6 million or 9.2% from December 31, 2019 to December 31, 2020. Gross loans net of unearned income grew $29.8 million or 7.7% annualized during the fourth quarter of 2020. PPP loans decreased $33.7 million during the fourth quarter of 2020. Core loan growth, defined as gross loan growth excluding changes in PPP loans, was $63.6 million during the fourth quarter or 18.3% annualized.

Investment Securities

The Company’s portfolio of investments in fixed income securities was $151.9 million at December 31, 2020, $131.2 million at September 30, 2020 and $122.7 million at December 31, 2019. Year-over-year bond growth, from December 31, 2019 to December 31, 2020, was $29.2 million, or 23.8%. The Company also had restricted equity securities totaling $5.7 million at December 31, 2020 and September 30, 2020 and $7.2 million at December 31, 2019. The year-over-year reduction in restricted equity securities reflects a decrease in our required ownership of Federal Home Loan Bank of Atlanta (“FHLB”) stock, which is directly related to the 64.5% decrease in the Bank’s FHLB advances over the last twelve months.

Interest Bearing Deposits in Banks

Interest-bearing deposits in banks were $130.2 million at December 31, 2020, $154.6 million at September 30, 2020 and $87.0 million at December 31, 2019. The quarterly decrease in interest-bearing deposits reflects the increase in fixed income securities. Given the current economic environment, management believes the current level of liquidity is appropriate.

Deposits

Total deposits were $1.64 billion at December 31, 2020, $1.62 billion at September 30, 2020 and $1.31 billion at December 31, 2019. Year-over-year deposit growth, from December 31, 2019 to December 31, 2020, was $331.4 million, or 25.3%. During the fourth quarter of 2020, deposits grew $18.0 million or 4.4% annualized.

Non-interest bearing demand deposits were $362.6 million at December 31, 2020, $385.9 million at September 30, 2020 and $273.5 million at December 31, 2019. Year-over-year non-interest bearing demand deposit growth, from December 31, 2019 to December 31, 2020, was $89.1 million, or 32.6%. Non-interest bearing demand deposits represented 22.1% of total deposits at December 31, 2020, 23.8% at September 30, 2020 and 20.9% at December 31, 2019.

Core customer funding was $1.40 billion at December 31, 2020, $1.43 billion at September 30, 2020 and $1.17 billion at December 31, 2019. Year-over-year core customer funding sources increased by $237.2 million, or 20.3%, from December 31, 2019 to December 31, 2020. Core customer funding was 83.2% of all funding sources at December 31, 2020 as compared to 85.8% at September 30, 2020 and 82.8% at December 31, 2019. Non-maturing deposits were 60.3% of total deposits as of December 31, 2020, 61.5% as of September 30, 2020 and 55.9% as of December 31, 2019.

Insured Cash Sweep (“ICS”) deposits were $235.8 million at December 31, 2020, $233.1 million at September 30, 2020 and $187.4 million at December 31, 2019. Year-over-year, ICS deposits increased $48.4 million from December 31, 2019 to December 31, 2020. Certificate of Deposit Account Registry Service (“CDARS”) deposits were $39.7 million at December 31, 2020, $36.9 million at September 30, 2020 and $50.9 million at December 31, 2019. Year-over-year, CDARS decreased $11.2 million from December 31, 2019 to December 31, 2020.

Certificates of deposits were $374.4 million at December 31, 2020, $398.5 million at September 30, 2020 and $383.5 million at December 31, 2019. Year-over-year certificates of deposit decreased $9.1 million from December 31, 2019 to December 31, 2020. QwickRate certificates of deposit were $29.8 million at December 31, 2020 and September 30, 2020 and $18.0 million at December 31, 2019. Year-over-year QwickRate certificates of deposit increased $11.7 million from December 31, 2019 to December 31, 2020. Brokered deposits were $207.6 million at December 31, 2020, $161.1 million at September 30, 2020 and $125.1 million at December 31, 2019. Brokered deposits increased $82.5 million from December 31, 2019 to December 31, 2020. The majority of the $82.5 million brokered deposit increase was the result of reducing borrowings by $52.0 million, as discussed below. The Company has also experienced lower customer demand for long-term certificates of deposits. As a result, the Company from time-to-time utilizes the wholesale funding market to extend the duration of its interest-bearing liabilities. Management intends to continue to reduce the wholesale funding percentage, but may selectively utilize wholesale funding when it is economically advantageous to do so or in order to achieve certain asset/liability management objectives.

Borrowings

Total borrowings, consisting of FHLB advances and Federal funds purchased were $22.0 million at December 31, 2020 and September 30, 2020 and $74.0 million at December 31, 2019. Total borrowings decreased $52.0 million, or 70.3%, from December 31, 2019 to December 31, 2020. Wholesale funding represented 15.4% of total funding sources at December 31, 2020 and 2019. Management has chosen to retire FHLB advances as they mature to increase contingent funding sources. As of December 31, 2020, the Bank had approximately $264 million remaining in secured borrowing capacity with the FHLB, an increase of $98 million over the $166 million of FHLB secured borrowing capacity as of December 31, 2019.

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

Shareholders’ Equity and Capital Levels

Total shareholders’ equity was $186.1 million at December 31, 2020, $181.4 million at September 30, 2020 and $162.0 million at December 31, 2019. Year-over-year shareholders’ equity increased by $24.1 million, or 14.9%. Total common shares outstanding increased from 13,127,661, including 51,548 shares relating to unvested stock awards, at December 31, 2019, to 13,606,558, including 74,000 shares relating to unvested stock awards, at December 31, 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 December 31, 2020, the Bank’s total risk-based capital ratio was 14.6%, compared to 13.5% at December 31, 2019.

Asset Quality

For the fifth 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 December 31, 2020.

Troubled debt restructurings were $604 thousand at December 31, 2020, a decrease of $291 thousand, from $895 thousand at December 31, 2019. All troubled debt restructurings were performing in accordance with their modified terms as of December 31, 2020 and December 31, 2019.

As reported in our earnings release for the third quarter of 2020, as of October 16, 2020 the Company had six loans totaling $10.6 million with COVID deferrals. During the remainder of the fourth quarter, all six loans resumed making regularly scheduled monthly payments. The Company has not approved any additional COVID loan modifications since June 30, 2020.

Income Statement Review

Net Interest Income

Net interest income, the Company’s primary source of revenue, was $15.7 million for the three months ended December 31, 2020, up 25.0% from $12.6 million for the three months ended December 31, 2019. Balance sheet growth, improved funding composition, the downward repricing of our funding base along with the accretion of the remaining net deferred fees on $33.7 million of PPP loans that were repaid during the fourth quarter of 2020 enabled net interest income for the three months ended December 31, 2020 to increase 25.0% when compared to the three months ended December 31, 2019.

The net interest margin was 3.43% for the three months ended December 31, 2020 as compared to 3.31% for the three months ended December 31, 2019. Average loans net of unearned income increased $256.7 million, or 20.0% compared to the three months ended December 31, 2019, with a 50 basis point decline in yield. Average securities increased $24.6 million, or 20.2%, compared to the three months ended December 31, 2019, with a 57 basis point decline in yield. Average interest-bearing deposits in other banks increased $32.1 million, or 31.1% compared to the three months ended December 31, 2019, with a 157 basis point decline in yield. The average yield on interest-bearing assets decreased 61 basis points from 4.68% for the three months ended December 31, 2019, to 4.07% for the three months ended December 31, 2020.

The average cost of funds declined 79 basis points, or 56.0% from 1.42% for the three months ended December 31, 2019, to 0.63% for the three months ended December 31, 2020. The average cost of interest-bearing deposits decreased 97 basis points when comparing the quarter ended December 31, 2019 to the quarter ended December 31, 2020. The average cost of other borrowed funds decreased 95 basis points when comparing the quarter ended December 31, 2019 to the quarter ended December 31, 2020. The average cost of interest-bearing liabilities decreased 96 basis points when comparing the quarter ended December 31, 2019 to the quarter ended December 31, 2020.

On a linked quarterly basis, net interest margin increased 17 basis points to 3.43% for the three months ended December 31, 2020, with the yield on earning assets increasing from 4.05% for the three months ended September 30, 2020, to 4.07% for the three months ended December 31, 2020. The average cost of interest-bearing liabilities declined 22 basis points from 1.14% for the three months ended September 30, 2020, compared to 0.92% for the three months ended December 31, 2020.

For the twelve months ended December 31, 2020, net interest income was $56.8 million, up 16.8% from $48.7 million for the twelve months ended December 31, 2019. The net interest margin was 3.32% during the twelve months ended December 31, 2020, compared to 3.40% for the same period in 2019. Net interest income increased by 16.8% during the twelve months ended December 31, 2020, as compared to the same period in 2019, resulting primarily from a $279.6 million, or 19.5%, increase in average earning assets during the twelve months ended December 31, 2020, as compared to the same period in 2019. Excluding PPP loans, the margin would have been 3.34%, for the three months ended December 31, 2020. The yield on earning assets would have been 4.03% for the three months ended December 31, 2020. PPP loan income included the accretion of the remaining net fees for PPP loans that were forgiven/repaid, which had a positive effect on the loan yield and margin.

Provision for Loan Losses

The Company had a $2.6 million provision for loan losses for the three months ended December 31, 2020, compared to $360 thousand for the same period in 2019. The Company had no charge-offs during the fourth quarter of 2020 or fourth quarter of 2019.

During the twelve months ended December 31, 2020, the Company recognized a provision for loan losses of $6.2 million, compared to a provision of $1.2 million during the same period in 2019. The Company reported $43 thousand in net recoveries in 2020, compared to $145 thousand in net loan charge-offs in 2019.

During 2020, the increase in the Company’s provision for loan losses when 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 increased reserves take into consideration, among other things, the rising number of COVID cases, increased hospitalizations and deaths in the Bank’s market area, the elevated level of unemployment and uncertainty around the amount and timing of additional stimulus and additional restrictions mandated by the Governors of Virginia and Maryland and the Mayor of the District of Columbia. The provision increased the allowance for loan losses as a percentage of total loans from 0.81% at December 31, 2019 to 1.09% at December 31, 2020. Excluding PPP loan balances, the provision increased the allowance for loan losses as a percentage of total loans from 1.04% at September 30, 2020 to 1.17% at December 31, 2020. The Company does not have a reserve on PPP loan balances, as they are 100% guaranteed by the Small Business Administration. The ongoing pandemic and its related consequences may continue to influence customer behavior and the Company’s reserves beyond eradication of COVID. The adequacy of the allowance for loan losses continues to be monitored and evaluated by the Company as new economic and other data becomes available.

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 December 31, 2020, the Company reported total noninterest income of $374 thousand, compared to $315 thousand during the three months ended December 31, 2019. Service charges on deposit accounts declined $10 thousand and bank owned life insurance declined $8 thousand for the three months ended December 31, 2020 when compared to the same period in 2019. Other service charges and fees increased $11 thousand for the three months ended December 31, 2020 when compared to the same period in 2019. The year-over-year decline in service charges and other fees was mostly related to lower overdraft fees when comparing the three months ended December 31, 2020 to the same period in 2019. Other operating income for the three months ended December 31, 2020 increased $66 thousand when compared to the same period in 2019 with $58 thousand in market adjustments recorded on the Company’s equity securities and a $6 thousand increase in insurance commissions in the three months ended December 31, 2020.

For the twelve months ended December 31, 2020, the Company reported total noninterest income of $1.6 million, compared to $1.3 million during the same period of 2019, an increase of $278 thousand, or 20.8%. Service charges on deposit accounts declined $91 thousand for the twelve months ended December 31, 2020 when compared to the same period in 2019. Bank owned life insurance declined $32 thousand for the twelve months ended December 31, 2020 when compared to the same period in 2019. Other service charges and fees declined $8 thousand for the twelve months ended December 31, 2020 when compared to the same period in 2019. Other operating income for the twelve months ended December 31, 2020 increased $114 thousand when compared to the same period in 2019. The increase in noninterest income for the twelve months ended December 31, 2020 was primarily attributed to gains on sales of securities totaling $309 thousand. The year-over-year decline in service charges for the twelve months ended December 31, 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 December 31, 2020, noninterest expense increased 6.0%, to $7.4 million, compared to $7.0 million for the same period in 2019. Salary and employee benefit expense was $4.5 million during the three months ended December 31, 2020, up $313 thousand, or 7.4% when compared to $4.2 million during the three months ended December 31, 2019. Occupancy expense decreased 4.4%, or $23 thousand and furniture and equipment expense decreased 3.4% or $13 thousand when comparing the three months ended December 31, 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 increased by 7.6%, or $145 thousand when comparing the three months ended December 31, 2020 to the same period in 2019. The higher other operating expense for the three months ended December 31, 2020 when compared to the same period in 2019, was mostly related to higher Federal Deposit Insurance Corporation (“FDIC”) deposit insurance and state bank franchise tax.

For the twelve months ended December 31, 2020, noninterest expense increased 1.6% to $29.2 million when compared to the same period in 2019. For the twelve months ended December 31, 2020, salaries and employee benefits expense increased 0.9%, or $155 thousand, compared to the same period in 2019. Occupancy expense decreased 10.5%, or $229 thousand and furniture and equipment expense increased 14.5% or $206 thousand when comparing the twelve months ended December 31, 2020 to the same period in 2019. The reduction in occupancy expense from December 31, 2019 to December 31, 2020 was due to the renegotiation of leases at the end of 2019. Furniture and equipment expense increased due to additional software costs and personal protection equipment for offices purchased because of the COVID pandemic during the twelve months ended December 31, 2020 when compared to the same period in 2019. Other operating expense increased by 4.7%, or $330 thousand, during the twelve months ended December 31, 2020, compared to the same period in 2019. The increase in operating expense is related to higher FDIC deposit insurance, higher state bank franchise tax and additional office supplies associated with the COVID pandemic during the twelve months ended December 31, 2020 when compared to the same period in 2019. Noninterest expense to average assets declined from 1.80% for the three months ended December 31, 2019 to 1.59% for the three months ended December 31, 2020. Noninterest expense to average assets declined from 1.95% for the twelve months ended December 31, 2019 to 1.67% for the twelve months ended December 31, 2020.

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 Twelve Months Ended
		December 31,						December 31,
		2020			2019			2020			2019
Selected Balance Sheet Data
Cash and cash equivalents		$	8,228		$	7,471		$	8,228			7,471
Total investment securities			158,543			130,348			158,543			130,348
Loans net of unearned income			1,562,524			1,325,532			1,562,524			1,325,532
Allowance for loan losses			17,017			10,756			17,017			10,756
Total assets			1,885,496			1,581,883			1,885,496			1,581,883
Non-interest bearing demand deposits			362,582			273,459			362,582			273,459
Interest bearing deposits			1,277,538			1,035,245			1,277,538			1,035,245
Total deposits			1,640,120			1,308,704			1,640,120			1,308,704
Shareholders' equity			186,081			161,982			186,081			161,982
Summary Results of Operations
Interest income		$	18,666		$	17,796		$	72,446		$	68,990
Interest expense			2,947			5,217			15,607			20,322
Net interest income			15,719			12,579			56,839			48,668
Provision for loan losses			2,575			360			6,217			1,170
Net interest income after provision for loan losses			13,144			12,219			50,622			47,498
Noninterest income			374			315			1,613			1,335
Noninterest expense			7,440			7,018			29,163			28,701
Income before income taxes			6,078			5,516			23,072			20,132
Net income			4,804			4,472			18,526			15,921
Per Share Data and Shares Outstanding
Earnings per share - basic		$	0.35		$	0.34		$	1.37		$	1.22
Earnings per share - diluted		$	0.35		$	0.33		$	1.35		$	1.17
Tangible book value per share		$	13.68		$	12.34		$	13.68		$	12.34
Weighted average common shares (basic)			13,528,409			13,044,751			13,460,940			12,991,911
Weighted average common shares (diluted)			13,707,301			13,628,507			13,658,618			13,574,984
Common shares outstanding at end of period			13,606,558			13,127,661			13,606,558			13,127,661
Performance Ratios
Return on average assets (annualized)			1.03%			1.14%			1.06%			1.08%
Return on average equity (annualized)			10.34%			11.05%			10.49%			10.41%
Net interest margin			3.43%			3.31%			3.32%			3.40%
Noninterest income as a percentage of average assets (annualized)			0.08%			0.08%			0.09%			0.09%
Noninterest expense to average assets (annualized)			1.59%			1.80%			1.67%			1.95%
Efficiency ratio			46.2%			54.4%			49.9%			57.4%
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 (2)			1.09%			0.81%			1.09%			0.81%
Net charge-offs (recoveries) to average loans (annualized)			0.00%			0.00%			0.00%			0.01%
Loans 30-89 days past due and accruing interest		$	- -		$	- -		$	- -		$	- -
Non-accrual loans		$	- -		$	- -		$	- -		$	- -
Other real estate owned		$	- -		$	- -		$	- -		$	- -
Non-performing assets (1)		$	- -		$	- -		$	- -		$	- -
Troubled debt restructurings (total)		$	604		$	895		$	604		$	895
Performing in accordance with modified terms		$	604		$	895		$	604		$	895
Not performing in accordance with modified terms		$	- -		$	- -		$	- -		$	- -
Bank Capital Ratios
Tangible equity / tangible assets			9.9%			10.2%			9.9%			10.2%
Total risk-based capital ratio			14.6%			13.5%			14.6%			13.5%
Tier 1 risk-based capital ratio			13.5%			12.8%			13.5%			12.8%
Leverage ratio			11.0%			11.9%			11.0%			11.9%
Common equity tier 1 ratio			13.5%			12.8%			13.5%			12.8%
Other Information
Number of full time equivalent employees			136			131			136			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 $114.4 million was 1.17% at December 31, 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
		December 31,				September 30,				December 31,				Last Three		Year Over
		2020				2020				2019				Months		Year
Assets		(Unaudited)				(Unaudited)				(Unaudited)
Cash and due from banks		$	8,228			$	7,918			$	7,471			3.9%		10.1%
Interest-bearing deposits in banks			130,229				154,581				87,019			-15.8%		49.7%
Securities available-for-sale, at fair value			151,900				131,211				122,729			15.8%		23.8%
Restricted securities, at cost			5,676				5,673				7,188			0.1%		-21.0%
Equity securities, at fair value			967				831				431			16.4%		124.4%
Loans net of unearned income			1,562,524				1,532,713				1,325,532			1.9%		17.9%
Allowance for loan losses			(17,017	)			(14,441	)			(10,756	)		17.8%		58.2%
Net loans			1,545,507				1,518,272				1,314,776			1.8%		17.5%
Bank premises and equipment, net			2,422				2,209				2,318			9.6%		4.5%
Accrued interest receivable			5,308				5,708				4,010			-7.0%		32.4%
Bank owned life insurance			20,587				20,470				20,118			0.6%		2.3%
Right of use assets			5,944				6,274				7,254			-5.3%		-18.1%
Other assets			8,728				8,757				8,569			-0.3%		1.9%
Total assets		$	1,885,496			$	1,861,904			$	1,581,883			1.3%		19.2%
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing demand deposits		$	362,582			$	385,885			$	273,459			-6.0%		32.6%
Interest bearing demand deposits			563,956				549,576				428,529			2.6%		31.6%
Savings deposits			62,138				60,418				29,208			2.8%		112.7%
Time deposits			651,444				626,267				577,508			4.0%		12.8%
Total deposits			1,640,120				1,622,146				1,308,704			1.1%		25.3%
Federal funds purchased			- -				- -				12,000			N/M		N/M
Federal Home Loan Bank advances			22,000				22,000				62,000			0.0%		-64.5%
Subordinated debt			24,679				24,667				24,630			0.0%		0.2%
Accrued interest payable			877				770				1,106			13.9%		-20.7%
Lease liabilities			6,208				6,532				7,474			-5.0%		-16.9%
Other liabilities			5,531				4,362				3,987			26.8%		38.7%
Total liabilities			1,699,415				1,680,477				1,419,901			1.1%		19.7%
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 20,000,000 shares; issued and outstanding, 13,606,558 at 12/31/2020 including 74,000 unvested shares, 13,573,601 shares at 9/30/2020 including 46,483 unvested shares and 13,127,661 at 12/31/2019, including 51,548 unvested shares			135				135				131			0.0%		3.1%
Additional paid-in capital			89,995				89,821				87,435			0.2%		2.9%
Retained earnings			92,165				87,361				73,639			5.5%		25.2%
Accumulated other comprehensive income			3,786				4,110				777			-7.9%		387.3%
Total shareholders' equity			186,081				181,427				161,982			2.6%		14.9%
Total liabilities and shareholders' equity		$	1,885,496			$	1,861,904			$	1,581,883			1.3%		19.2%

John Marshall Bancorp, Inc.
Consolidated Statements of Income
(Dollar amounts in thousands, except per share data)
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2020			2019			% Change		2020			2019			% Change
		(Unaudited)			(Unaudited)					(Unaudited)			(Unaudited)
Interest and Dividend Income
Interest and fees on loans		$	17,845		$	16,531		7.9%		$	68,714		$	63,920		7.5%
Interest on investment securities, taxable			683			715		-4.5%			2,896			2,528		14.6%
Interest on investment securities, tax-exempt			33			19		73.7%			117			135		-13.3%
Dividends			68			95		-28.4%			315			424		-25.7%
Interest on federal funds sold			- -			- -		N/M			- -			1		N/M
Interest on deposits in banks			37			436		-91.5%			404			1,982		-79.6%
Total interest and dividend income			18,666			17,796		4.9%			72,446			68,990		5.0%
Interest Expense
Deposits			2,533			4,645		-45.5%			13,742			17,817		-22.9%
Federal Home Loan Bank advances			42			199		-78.9%			377			1,015		-62.9%
Subordinated debt			372			372		0.0%			1,487			1,487		0.0%
Other short-term borrowings			- -			1		N/M			1			3		-66.7%
Total interest expense			2,947			5,217		-43.5%			15,607			20,322		-23.2%
Net interest income			15,719			12,579		25.0%			56,839			48,668		16.8%
Provision for loan losses			2,575			360		615.3%			6,217			1,170		431.4%
Net interest income after provision for loan losses			13,144			12,219		7.6%			50,622			47,498		6.6%
Noninterest Income
Service charges on deposit accounts			122			132		-7.6%			465			556		-16.4%
Bank owned life insurance			117			125		-6.4%			469			501		-6.4%
Other service charges and fees			52			41		26.8%			172			180		-4.4%
Gain on sale of securities			- -			- -		N/M			309			14		N/M
Other operating income			83			17		388.2%			198			84		135.7%
Total noninterest income			374			315		18.7%			1,613			1,335		20.8%
Noninterest Expenses
Salaries and employee benefits			4,536			4,223		7.4%			18,167			18,012		0.9%
Occupancy expense of premises			494			517		-4.4%			1,950			2,179		-10.5%
Furniture and equipment expenses			369			382		-3.4%			1,626			1,420		14.5%
Other operating expenses			2,041			1,896		7.6%			7,420			7,090		4.7%
Total noninterest expenses			7,440			7,018		6.0%			29,163			28,701		1.6%
Income before income taxes			6,078			5,516		10.2%			23,072			20,132		14.6%
Income tax expense			1,274			1,044		22.0%			4,546			4,211		8.0%
Net income		$	4,804		$	4,472		7.4%		$	18,526		$	15,921		16.4%
Earnings Per Share
Basic		$	0.35		$	0.34		2.9%		$	1.37		$	1.22		12.3%
Diluted		$	0.35		$	0.33		6.1%		$	1.35		$	1.17		15.4%

John Marshall Bancorp, Inc.
Loan, Deposit and Borrowing Detail (Unaudited)
(Dollar amounts in thousands)
		December 31, 2020						September 30, 2020						December 31, 2019						Percentage Change
Loans		$ Amount				% of Total		$ Amount				% of Total		$ Amount				% of Total		Last 3 Mos		Last 12 Mos
Mortgage loans on real estate
Commercial		$	857,256			54.9%		$	808,204			52.7%		$	794,142			59.9%		6.1%		7.9%
Construction and land development			243,741			15.6%			237,195			15.4%			252,079			19.0%		2.8%		-3.3%
Residential			278,763			17.8%			262,049			17.1%			202,512			15.3%		6.4%		37.7%
Total mortgage loans on real estate		$	1,379,760			88.3%		$	1,307,448			85.2%		$	1,248,733			94.2%		5.5%		10.5%
Commercial loans			181,960			11.6%			225,865			14.7%			76,096			5.8%		-19.4%		139.1%
Consumer loans			1,000			0.1%			1,208			0.1%			653			0.0%		-17.2%		53.1%
Total loans		$	1,562,720			100.0%		$	1,534,521			100.0%		$	1,325,482			100.0%		1.8%		17.9%
Less: Allowance for loan losses			(17,017	)					(14,441	)					(10,756	)
Net deferred loan costs (fees)			(196	)					(1,808	)					50
Net loans		$	1,545,507					$	1,518,272					$	1,314,776
		December 31, 2020						September 30, 2020						December 31, 2019						Percentage Change
Deposits		$ Amount				% of Total		$ Amount				% of Total		$ Amount				% of Total		Last 3 Mos		Last 12 Mos
Noninterest-bearing demand deposits		$	362,582			22.1%		$	385,885			23.8%		$	273,459			20.9%		-6.0%		32.6%
Interest-bearing demand deposits:
NOW accounts			105,122			6.4%			101,792			6.3%			60,835			4.7%		3.3%		72.8%
Money market accounts			223,007			13.6%			214,701			13.3%			180,253			13.8%		3.9%		23.7%
Savings accounts			62,138			3.8%			60,418			3.7%			29,208			2.2%		2.8%		112.7%
Certificates of deposit
$250,000 or more			258,744			15.8%			281,302			17.3%			255,220			19.5%		-8.0%		1.4%
Less than $250,000			115,634			7.0%			117,171			7.2%			128,283			9.8%		-1.3%		-9.9%
QwickRate Certificates of deposit			29,765			1.8%			29,781			1.8%			18,030			1.4%		-0.1%		65.1%
ICS			235,824			14.4%			233,083			14.4%			187,439			14.3%		1.2%		25.8%
CDARS			39,725			2.4%			36,909			2.3%			50,884			3.9%		7.6%		-21.9%
Brokered deposits			207,579			12.7%			161,104			9.9%			125,093			9.6%		28.8%		65.9%
Total deposits		$	1,640,120			100.0%		$	1,622,146			100.0%		$	1,308,704			100.0%		1.1%		25.3%
Borrowings
Federal funds purchased		$	- -			0.0%		$	- -			0.0%		$	12,000			12.1%		N/M		-100.0%
Federal Home Loan Bank advances			22,000			47.1%			22,000			47.1%			62,000			62.9%		0.0%		-64.5%
Subordinated debt			24,679			52.9%			24,667			52.9%			24,630			25.0%		0.0%		0.2%
Total borrowings		$	46,679			100.0%		$	46,667			100.0%		$	98,630			100.0%		0.0%		-52.7%
Total deposits and borrowings		$	1,686,799					$	1,668,813					$	1,407,334					1.1%		19.9%
Core customer funding sources (1)		$	1,402,776			83.2%		$	1,431,261			85.8%		$	1,165,581			82.8%		-2.0%		20.3%
Wholesale funding sources (2)			259,344			15.4%			212,885			12.8%			217,123			15.4%		21.8%		19.4%
Subordinated debt (3)			24,679			1.5%			24,667			1.5%			24,630			1.8%		0.0%		0.2%
Total funding sources		$	1,686,799			100.0%		$	1,668,813			100.0%		$	1,407,334			100.0%		1.1%		19.9%
(1) Includes ICS(r) 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 December 31, 2020								Three Months Ended December 31, 2019
					Interest			Average					Interest			Average
		Average			Income-			Yields		Average			Income-			Yields
		Balance			Expense			/Rates		Balance			Expense			/Rates
Assets
Securities		$	146,863		$	784		2.12%		$	122,228		$	829		2.69%
Loans, net of unearned income			1,541,184			17,845		4.61%			1,284,437			16,531		5.11%
Interest-bearing deposits in other banks			135,300			37		0.11%			103,194			436		1.68%
Total interest-earning assets		$	1,823,347		$	18,666		4.07%		$	1,509,859		$	17,796		4.68%
Other assets			34,785								40,123
Total assets		$	1,858,132							$	1,549,982
Liabilities & Shareholders' equity
Interest-bearing deposits
NOW accounts		$	231,479		$	219		0.38%		$	151,188		$	413		1.08%
Money market accounts			336,131			359		0.42%			285,440			970		1.35%
Savings accounts			62,488			65		0.41%			28,541			101		1.40%
Time deposits			593,010			1,890		1.27%			563,712			3,161		2.22%
Total interest-bearing deposits		$	1,223,108		$	2,533		0.82%		$	1,028,881		$	4,645		1.79%
Federal funds purchased		$	- -		$	- -		N/M		$	130		$	1		3.05%
Subordinated debt			24,671			372		6.00%			24,622			372		5.99%
Other borrowed funds			20,533			42		0.81%			44,859			199		1.76%
Total interest-bearing liabilities		$	1,268,312		$	2,947		0.92%		$	1,098,492		$	5,217		1.88%
Demand deposits			392,436								276,981
Other liabilities			12,528								13,988
Total liabilities		$	1,673,276							$	1,389,461
Shareholders' equity			184,856								160,521
Total liabilities and shareholders' equity		$	1,858,132							$	1,549,982
Interest rate spread								3.15%								2.80%
Net interest income and margin					$	15,719		3.43%					$	12,579		3.31%
		Twelve Months Ended December 31, 2020								Twelve Months Ended December 31, 2019
					Interest			Average					Interest			Average
		Average			Income-			Yields		Average			Income-			Yields
		Balance			Expense			/Rates		Balance			Expense			/Rates
Assets
Securities		$	139,352		$	3,328		2.39%		$	114,127		$	3,087		2.70%
Loans, net of unearned income			1,462,963			68,714		4.70%			1,225,187			63,920		5.22%
Interest-bearing deposits in other banks			108,654			404		0.37%			91,997			1,982		2.15%
Federal funds sold			- -			- -		N/M			54			1		1.84%
Total interest-earning assets		$	1,710,969		$	72,446		4.23%		$	1,431,365		$	68,990		4.82%
Other assets			36,878								39,202
Total assets		$	1,747,847							$	1,470,567
Liabilities & Shareholders' equity
Interest-bearing deposits
NOW accounts		$	196,776		$	1,086		0.55%		$	139,529		$	1,661		1.19%
Money market accounts			310,789			2,202		0.71%			279,256			4,143		1.48%
Savings accounts			47,263			330		0.70%			21,755			295		1.36%
Time deposits			588,239			10,124		1.72%			533,633			11,718		2.20%
Total interest-bearing deposits		$	1,143,068		$	13,742		1.20%		$	974,173		$	17,817		1.83%
Federal funds purchased		$	184		$	1		0.54%		$	107		$	3		2.80%
Subordinated debt			24,653			1,487		6.03%			24,604			1,487		6.04%
Other borrowed funds			31,481			377		1.20%			52,333			1,015		1.94%
Total interest-bearing liabilities		$	1,199,386		$	15,607		1.30%		$	1,051,217		$	20,322		1.93%
Demand deposits			359,598								254,830
Other liabilities			12,323								11,617
Total liabilities		$	1,571,307							$	1,317,664
Shareholders' equity			176,540								152,903
Total liabilities and shareholders' equity		$	1,747,847							$	1,470,567
Interest rate spread								2.93%								2.89%
Net interest income and margin					$	56,839		3.32%					$	48,668		3.40%

 

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