Financial Performance - For the three months ended September 30, 2025, net interest income was $15.6 million, an increase from $13.2 million for the same period in 2024, representing a growth of 18.5%[174]. - The Company’s net income for the three months ended September 30, 2025, was $5.4 million, compared to $4.2 million for the same period in 2024, reflecting a year-over-year increase of 27.6%[174]. - The Company reported a net income of $15.3 million for the nine months ended September 30, 2025, an increase of $3.0 million or 24.1% compared to the same period in 2024[178]. - Diluted earnings per common share increased to $1.07 for the nine months ended September 30, 2025, representing a 23.0% increase from $0.87 in 2024[178]. - Net interest income increased by $7.6 million or 20.7% for the nine months ended September 30, 2025, driven by a decrease in interest-bearing liabilities rates and increases in loan portfolio balances and yields[179]. Asset and Liability Management - As of September 30, 2025, the Company reported total consolidated assets of $2.32 billion, total loans net of unearned income of $1.94 billion, total deposits of $1.97 billion, and total shareholders' equity of $259.7 million[169]. - The total amount of uninsured deposits was estimated at $843.4 million as of September 30, 2025, representing 35% of total deposits[278]. - Total liabilities rose by $76.5 million or 3.8% to $2.06 billion at September 30, 2025, mainly due to a $76.4 million increase in total deposits[246]. - The total net loans as of September 30, 2025, were $1.92 billion, up from $1.85 billion as of December 31, 2024[257]. - The Company maintained no nonperforming loans as of September 30, 2025, compared to $9.978 million in nonperforming assets as of December 31, 2024[259]. Credit Quality and Risk Management - The allowance for loan credit losses increased to $19.7 million as of September 30, 2025, from $18.5 million a year earlier, indicating a proactive approach to managing credit risk[174]. - The provision for credit losses was $1.1 million for the nine months ended September 30, 2025, compared to a recovery of $0.7 million in 2024[180]. - The allowance for loan credit losses was $19.7 million or 1.02% of outstanding loans as of September 30, 2025, compared to $18.7 million or 1.01% at December 31, 2024[264]. - The Company’s asset quality remained strong with no nonaccrual loans as of September 30, 2025[260]. Efficiency and Profitability Ratios - The efficiency ratio improved to 55.6% for the three months ended September 30, 2025, down from 58.3% in the same period of 2024, indicating better cost management[174]. - The Company’s return on average assets (ROAA) increased to 0.94% for the three months ended September 30, 2025, compared to 0.73% for the same period in 2024[174]. - The return on average assets (ROAA) improved to 0.91% for the nine months ended September 30, 2025, up from 0.73% in 2024[183]. Interest Income and Margin - The Company maintained a net interest margin of 2.72% for the three months ended September 30, 2025, compared to 2.30% for the same period in 2024, showing improved efficiency in earning interest[174]. - The net interest margin increased to 2.67% for the nine months ended September 30, 2025, compared to 2.20% in 2024, reflecting a 47 basis points improvement[190]. - The annualized net interest margin for the three months ended September 30, 2025, was 2.72%, compared to 2.30% for the same period in 2024[213]. - The yield on loans for the three months ended September 30, 2025, was 5.44%, up from 5.33% in the prior year, indicating an 11 basis points increase[226]. Deposits and Liquidity - Total deposits increased by $76.4 million or 4.0% to $1.97 billion as of September 30, 2025, compared to $1.89 billion as of December 31, 2024[272]. - Core deposits totaled $1.67 billion, representing 84.7% of total deposits as of September 30, 2025, compared to $1.62 billion or 85.4% at December 31, 2024[274]. - Total liquidity was $826.7 million at September 30, 2025, compared to $727.3 million at December 31, 2024[287]. Shareholder Equity - The Company’s book value per share increased to $18.27 as of September 30, 2025, compared to $17.07 a year prior, indicating growth in shareholder equity[174]. - Shareholders' equity increased by $13.1 million or 5.3% to $259.7 million at September 30, 2025, attributed to net income and a decrease in accumulated other comprehensive loss[247]. - Retained earnings increased by $11.0 million during the nine months ended September 30, 2025, due to net income exceeding dividends paid[282]. Market Strategy - The Company anticipates continued focus on expanding its market presence in the Washington, D.C. metropolitan area while managing risks associated with economic and regulatory changes[163].

Financial Performance - Net income for the quarter ended September 30, 2025, was $5.4 million, a 27.6% increase from $4.2 million in the same quarter of 2024[2] - Diluted earnings per share rose to $0.38, reflecting a 26.7% increase compared to $0.30 for the quarter ended September 30, 2024[2] - Year-to-date net income for the nine months ended September 30, 2025, was $15.3 million, an increase of $3.0 million or 24.1% compared to the same period in 2024[37] - Net income for the nine months ended September 30, 2025, was $15,317,000, a 24.0% increase compared to $12,344,000 for the same period in 2024[52] - Net income increased by 27.6% to $5,404,000 for the three months ended September 30, 2025[58] Asset and Loan Growth - Total assets grew to $2.32 billion, an increase of $89.6 million or 4.0% since December 31, 2024[5] - Total loans, net of unearned income, increased to $1.94 billion, reflecting a $95.5 million or 5.2% increase year-over-year[6] - New loan commitments for the nine months ended September 30, 2025, totaled $327.3 million, a 22.4% increase from $267.5 million in the same period of 2024[3] - Total loans, net of unearned income, increased to $1,912,275 thousand for the three months ended September 30, 2025, from $1,818,472 thousand in 2024, marking a growth of 5.2%[70] Deposits - Total deposits increased by $71.9 million or 15.0% annualized during the most recent quarter, reaching $1.97 billion[3] - Total deposits reached $1,968,828,000 in Q3 2025, a slight increase from $1,936,150,000 in Q3 2024, showing stability in deposit growth[52] - Total deposits increased to $1,968,828 million, a growth of 3.8% from the previous quarter[63] Interest Income and Margin - The tax-equivalent net interest margin expanded to 2.73%, up from 2.30% in the third quarter of 2024, marking the sixth consecutive quarter of margin expansion[3] - Net interest income for Q3 2025 increased by $2.4 million or 18.6% to $15.6 million compared to $13.2 million in Q3 2024[29] - The annualized tax-equivalent net interest margin for Q3 2025 was 2.73%, up from 2.30% in Q3 2024[30] - The net interest margin improved to 2.72% for the three months ended September 30, 2025, compared to 2.30% in the same period of 2024[70] Efficiency and Expenses - The efficiency ratio improved to 55.6% in Q3 2025 from 58.3% in Q3 2024, driven by an 18.0% growth in total revenue[35] - Non-interest expense rose by $1.0 million or 12.5% in Q3 2025, mainly due to increases in salaries and employee benefits[34] - The efficiency ratio for the nine months ended September 30, 2025, was 55.3%, an improvement from 61.2% in the same period of 2024[45] Capital and Risk Management - The Bank's total risk-based capital ratio was 16.6% as of September 30, 2025, well above the regulatory threshold of 10.0%[13] - The allowance for loan credit losses was $19.7 million, representing 1.02% of outstanding loans as of September 30, 2025[18] - The allowance for loan credit losses increased to $19,714,000 in Q3 2025 from $18,481,000 in Q3 2024, indicating a proactive approach to risk management[52] - The Tier 1 risk-based capital ratio remained strong at 15.5% in Q3 2025, consistent with 15.3% in Q3 2024, demonstrating solid capital adequacy[52] Non-Interest Income - Non-interest income increased by $36 thousand in Q3 2025, primarily due to a $101 thousand increase in customer swap fee income[33] - Non-interest income decreased by $325 thousand or 16.3% for the nine months ended September 30, 2025, primarily due to a decrease in gains on the sale of SBA 7(a) loans[42] - Non-interest income for the nine months ended September 30, 2025, was $1,665,000, down from $1,990,000 in the same period of 2024, reflecting a decrease of 16.3%[52]

[Part I Financial Information](index=3&type=section&id=Part%20I%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the Company's unaudited consolidated financial statements, including the balance sheets, income statements, comprehensive income statements, shareholders' equity statements, and cash flow statements, along with detailed notes explaining significant accounting policies and specific financial line items [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets provide a snapshot of the Company's financial position as of June 30, 2025, and December 31, 2024, detailing its assets, liabilities, and shareholders' equity Consolidated Balance Sheets (In thousands) | | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\n| **Assets** | | |\n| Total cash and cash equivalents | $116,926 | $122,469 |\n| Securities available-for-sale, at fair value | 125,498 | 130,257 |\n| Securities held-to-maturity, net | 90,264 | 92,009 |\n| Loans, net | 1,897,617 | 1,853,458 |\n| **Total assets** | **$2,267,953** | **$2,234,947** |\n| **Liabilities and Shareholders' Equity** | | |\n| **Total deposits** | **1,896,893** | **1,892,415** |\n| Federal funds purchased | 16,500 | — |\n| Federal Home Loan Bank advances | 56,000 | 56,000 |\n| Subordinated debt | 24,833 | 24,791 |\n| Total liabilities | $2,014,221 | $1,988,333 |\n| Total shareholders' equity | $253,732 | $246,614 |\n| Total liabilities and shareholders' equity | $2,267,953 | $2,234,947 | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) The Consolidated Statements of Income present the Company's financial performance for the three and six months ended June 30, 2025, and June 30, 2024, detailing revenues, expenses, and net income Consolidated Statements of Income (In thousands, except per share data) | | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | |:---|:---|:---|:---|:---|\n| Total interest and dividend income | $27,843 | $26,791 | $55,147 | $53,710 |\n| Total interest expense | 12,917 | 14,710 | 26,124 | 29,885 |\n| **Net Interest Income** | **$14,926** | **$12,081** | **$29,023** | **$23,825** |\n| Provision for (recovery of) credit losses | 537 | (292) | 707 | (1,068) |\n| **Total non-interest income** | **507** | **555** | **1,012** | **1,373** |\n| Total non-interest expenses | 8,313 | 7,909 | 16,561 | 15,833 |\n| **Net income** | **$5,103** | **$3,905** | **$9,913** | **$8,109** |\n| Earnings per share, basic | $0.36 | $0.27 | $0.69 | $0.57 |\n| Earnings per share, diluted | $0.36 | $0.27 | $0.69 | $0.57 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The Consolidated Statements of Comprehensive Income detail the Company's total comprehensive income for the three and six months ended June 30, 2025, and June 30, 2024, including net income and other comprehensive income (loss) components Consolidated Statements of Comprehensive Income (In thousands) | | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | |:---|:---|:---|:---|:---|\n| **Net income** | **$5,103** | **$3,905** | **$9,913** | **$8,109** |\n| Unrealized gains on available-for-sale securities, net of tax | 774 | 120 | 2,178 | (260) |\n| Amortization of unrealized gains on securities transferred to held-to-maturity, net of tax | (8) | (22) | (15) | (44) |\n| **Total other comprehensive income (loss)** | **$766** | **$98** | **$2,163** | **$(304)** |\n| Total comprehensive income | $5,869 | $4,003 | $12,076 | $7,805 | [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) These statements illustrate the changes in shareholders' equity for the three and six months ended June 30, 2025, and June 30, 2024, reflecting the impact of net income, other comprehensive income, stock repurchases, dividends, and share-based compensation Consolidated Statements of Shareholders' Equity (Three Months Ended June 30, 2025 and 2024) (In thousands) | | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) | Total Shareholders' Equity | |:---|:---|:---|:---|:---|:---|\n| Balance, March 31, 2025 | $142 | $97,310 | $164,761 | $(9,255) | $252,958 |\n| **Net income** | **—** | **—** | **5,103** | **—** | **5,103** |\n| Other comprehensive income | — | — | — | 766 | 766 |\n| Repurchase of common stock | — | (1,311) | — | — | (1,311) |\n| Dividend declared on common stock ($0.30 per share) | — | — | (4,270) | — | (4,270) |\n| Exercise of stock options, net | — | 367 | — | — | 367 |\n| Restricted stock vesting, net | — | (1) | — | — | (1) |\n| Share-based compensation | — | 120 | — | — | 120 |\n| Balance, June 30, 2025 | $142 | $96,485 | $165,594 | $(8,489) | $253,732 | Consolidated Statements of Shareholders' Equity (Six Months Ended June 30, 2025 and 2024) (In thousands) | | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) | Total Shareholders' Equity | |:---|:---|:---|:---|:---|:---|\n| Balance, December 31, 2024 | $142 | $97,173 | $159,951 | $(10,652) | $246,614 |\n| **Net income** | **—** | **—** | **9,913** | **—** | **9,913** |\n| Other comprehensive income | — | — | — | 2,163 | 2,163 |\n| Repurchase of common stock | — | (1,357) | — | — | (1,357) |\n| Dividend declared on common stock ($0.30 per share) | — | — | (4,270) | — | (4,270) |\n| Exercise of stock options, net | — | 446 | — | — | 446 |\n| Restricted stock vesting, net | — | (15) | — | — | (15) |\n| Share-based compensation | — | 238 | — | — | 238 |\n| Balance, June 30, 2025 | $142 | $96,485 | $165,594 | $(8,489) | $253,732 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows provide a summary of the Company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and June 30, 2024 Consolidated Statements of Cash Flows (In thousands) | | Six months ended June 30, 2025 | Six months ended June 30, 2024 | |:---|:---|:---|\n| Net cash provided by operating activities | $14,493 | $10,345 |\n| Net cash (used in) provided by investing activities | $(35,818) | $56,653 |\n| Net cash provided by financing activities | $15,782 | $16,602 |\n| Net (decrease) increase in cash and cash equivalents | $(5,543) | $83,600 |\n| Cash and cash equivalents, beginning of period | 122,469 | 99,005 |\n| Cash and cash equivalents, end of period | $116,926 | $182,605 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed information and explanations supporting the consolidated financial statements, covering the Company's business, accounting policies, specific financial instruments, and other relevant disclosures [Note 1— Nature of Business and Summary of Significant Accounting Policies](index=9&type=section&id=Note%201%E2%80%94%20Nature%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes John Marshall Bancorp, Inc.'s banking activities, its regulatory environment, the basis of financial statement presentation, and significant accounting policies. It also highlights recent accounting pronouncements and confirms no material changes to policies since December 31, 2024 - **John Marshall Bancorp, Inc. operates as a bank holding company** for its wholly-owned subsidiary, John Marshall Bank, providing banking services primarily in the Washington, D.C. metropolitan area[23](index=23&type=chunk) - **The financial statements are prepared** in accordance with GAAP for interim financial reporting and SEC regulations, and should be read in conjunction with the 2024 Annual Report on Form 10-K[24](index=24&type=chunk) - **No significant changes** to the application of significant accounting policies have occurred since December 31, 2024[29](index=29&type=chunk) - **Recent accounting pronouncements** include ASU 2023-09 (Income Tax Disclosures) effective after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosures) effective after December 15, 2026, neither of which is anticipated to have a material impact on the Company's financial statements[30](index=30&type=chunk)[31](index=31&type=chunk) [Note 2— Investment Securities](index=12&type=section&id=Note%202%E2%80%94%20Investment%20Securities) This note details the Company's investment portfolio, including available-for-sale (AFS) and held-to-maturity (HTM) securities, restricted securities, and equity securities. It provides their amortized cost, fair value, unrealized gains/losses, and credit quality assessments, noting an improvement in unrealized losses for both AFS and HTM portfolios Securities Available-for-Sale (AFS) and Held-to-Maturity (HTM) (In thousands) | Category | June 30, 2025 Amortized Cost | June 30, 2025 Fair Value | Dec 31, 2024 Amortized Cost | Dec 31, 2024 Fair Value | |:---|:---|:---|:---|:---|\n| **Available-for-sale** | | | | |\n| U.S. Treasuries | $20,215 | $19,814 | $27,920 | $27,137 |\n| U.S. government and federal agencies | 6,983 | 6,751 | 10,966 | 10,581 |\n| Corporate bonds | 3,000 | 2,777 | 3,000 | 2,739 |\n| U.S. agency collateralized mortgage obligations | 35,339 | 29,560 | 36,032 | 29,611 |\n| Tax-exempt municipal | 1,378 | 1,175 | 1,379 | 1,171 |\n| Taxable municipal | 270 | 268 | 270 | 263 |\n| U.S. agency mortgage-backed | 69,141 | 65,153 | 64,274 | 58,755 |\n| **Total Available-for-sale Securities** | **$136,326** | **$125,498** | **$143,841** | **$130,257** |\n| **Held-to-maturity** | | | | |\n| U.S. Treasuries | $6,002 | $5,592 | $6,001 | $5,418 |\n| U.S. government and federal agencies | 35,332 | 31,738 | 35,349 | 30,606 |\n| U.S. agency collateralized mortgage obligations | 17,013 | 13,593 | 17,805 | 13,857 |\n| Taxable municipal | 6,032 | 5,160 | 6,041 | 4,952 |\n| U.S. agency mortgage-backed | 25,885 | 21,365 | 26,813 | 21,437 |\n| **Total Held-to-maturity Securities** | **$90,264** | **$77,448** | **$92,009** | **$76,270** | - **Available-for-sale securities had gross unrealized losses** of **$(10,953) thousand** at June 30, 2025, an improvement from **$(13,584) thousand** at December 31, 2024[35](index=35&type=chunk) - **Held-to-maturity securities had gross unrealized losses** of **$(12,816) thousand** at June 30, 2025, an improvement from **$(15,739) thousand** at December 31, 2024[45](index=45&type=chunk) - **No credit impairment** was identified for available-for-sale securities, as unrealized losses are primarily due to market volatility and interest rate increases, and the Company does not intend to sell them before recovery[39](index=39&type=chunk) - **The held-to-maturity investment portfolio had an estimated weighted average remaining life** of approximately **5.6 years** at June 30, 2025, down from **6.0 years** at December 31, 2024[49](index=49&type=chunk) [Note 3— Loans](index=15&type=section&id=Note%203%E2%80%94%20Loans) This note outlines the composition of the Company's loan portfolio by segment, including real estate, commercial, and consumer loans, and details the accounting treatment for loan servicing rights Loan Portfolio Composition (In thousands) | Category | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\n| Real Estate Loans: Commercial | $1,192,067 | $1,181,090 |\n| Real Estate Loans: Construction and land development | 186,409 | 164,988 |\n| Real Estate Loans: Residential | 489,522 | 472,932 |\n| Commercial - Non-Real Estate: Commercial loans | 43,282 | 47,736 |\n| Consumer - Non-Real Estate: Consumer loans | 998 | 906 |\n| **Total Gross Loans** | **$1,912,278** | **$1,867,652** |\n| Allowance for loan credit losses | (19,298) | (18,715) |\n| Net deferred loan costs | 4,637 | 4,521 |\n| **Total net loans** | **$1,897,617** | **$1,853,458** | - **Total Gross Loans increased by $1,912,278 thousand** at June 30, 2025, from **$1,867,652 thousand** at December 31, 2024[54](index=54&type=chunk) - **The Company manages its loan products and credit loss exposure** through specific portfolio segments: real estate commercial, real estate construction and land development, real estate residential, commercial, and consumer loans[59](index=59&type=chunk) - **The Bank's SBA 7(a) loan servicing portfolio**, not included in the Company's consolidated financial statements, totaled **$7.2 million** at June 30, 2025, up from **$6.4 million** at December 31, 2024[58](index=58&type=chunk) [Note 4— Allowance for Loan Credit Losses](index=17&type=section&id=Note%204%E2%80%94%20Allowance%20for%20Loan%20Credit%20Losses) This note details the activity in the allowance for loan credit losses (ALCL) by loan segment, including provisions, charge-offs, and recoveries. It also provides delinquency information, credit quality indicators, and the allowance for unfunded commitments Allowance for Loan Credit Losses Activity (Six Months Ended June 30, 2025 and 2024) (In thousands) | Category | Beginning balance, Dec 31, 2024 | Provision for (recovery of) credit losses | Ending balance, June 30, 2025 | |:---|:---|:---|:---|\n| Real Estate Commercial | $11,732 | $115 | $11,847 |\n| Real Estate Construction & Land Development | 1,761 | 360 | 2,121 |\n| Real Estate Residential | 4,594 | 183 | 4,777 |\n| Commercial | 548 | (15) | 533 |\n| Consumer | 80 | (60) | 20 |\n| **Total** | **$18,715** | **$583** | **$19,298** |\n\n| Category | Beginning balance, Dec 31, 2023 | Provision for (recovery of) credit losses | Ending balance, June 30, 2024 |\n|:---|:---|:---|:---|\n| Real Estate Commercial | $12,841 | $(44) | $12,797 |\n| Real Estate Construction & Land Development | 1,787 | (626) | 1,161 |\n| Real Estate Residential | 4,323 | (360) | 3,963 |\n| Commercial | 495 | (1) | 495 |\n| Consumer | 97 | (80) | 17 |\n| **Total** | **$19,543** | **$(1,111)** | **$18,433** | - **The Allowance for Loan Credit Losses (ALCL) increased to $19,298 thousand** at June 30, 2025, from **$18,715 thousand** at December 31, 2024[61](index=61&type=chunk) - **There were no collateral dependent or individually evaluated loans** as of June 30, 2025. One collateral dependent loan of **$10.0 million** at December 31, 2024, was paid off in full on January 7, 2025[61](index=61&type=chunk) - **No loans were past due or on nonaccrual** as of June 30, 2025[63](index=63&type=chunk) Allowance for Credit Losses Unfunded Commitments (In thousands) | | Six months ended June 30, 2025 | Six months ended June 30, 2024 | |:---|:---|:---|\n| Beginning balance, December 31, | $1,083 | $620 |\n| Provision for credit losses | 124 | 43 |\n| Ending balance, June 30, | $1,207 | $663 | [Note 5— Derivatives](index=21&type=section&id=Note%205%E2%80%94%20Derivatives) This note describes the Company's interest rate swap agreements, which are used to help commercial loan customers manage interest rate risk. These swaps are matched with offsetting swaps with a third party and are not designated as hedging instruments Interest Rate Swap Agreements (In thousands) | | June 30, 2025 Notional Amount | June 30, 2025 Fair Value | Dec 31, 2024 Notional Amount | Dec 31, 2024 Fair Value | |:---|:---|:---|:---|:---|\n| Pay fixed/receive variable swaps | $23,865 | $287 | $24,195 | $549 |\n| Pay variable/receive fixed swaps | 23,865 | (287) | 24,195 | (549) |\n| **Total interest rate swap agreements** | **$47,730** | **$—** | **$48,390** | **$—** | - **The total notional amount of interest rate swap agreements was $47,730 thousand** at June 30, 2025, a **decreased by $48,390 thousand** at December 31, 2024[84](index=84&type=chunk) - **These swaps qualify as derivatives** but are not designated as hedging instruments; their fair value is recorded in other assets and liabilities, and net gains/losses are in other income[81](index=81&type=chunk)[84](index=84&type=chunk) [Note 6— Deposits and Borrowings](index=22&type=section&id=Note%206%E2%80%94%20Deposits%20and%20Borrowings) This note details the Company's funding sources, including various types of deposits and borrowings such as Federal Home Loan Bank (FHLB) advances, subordinated debt, and federal funds purchased Deposits (In thousands) | Category | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\n| Non-interest bearing demand deposits | $438,628 | $433,288 |\n| Interest-bearing demand deposits | 681,230 | 705,097 |\n| Savings deposits | 42,966 | 44,367 |\n| Time deposits | 734,069 | 709,663 |\n| **Total deposits** | **$1,896,893** | **$1,892,415** | - **Total deposits increased by $1,896,893 thousand** at June 30, 2025, from **$1,892,415 thousand** at December 31, 2024[86](index=86&type=chunk) - **Brokered deposits** totaled **$301.9 million** at June 30, 2025, up from **$276.4 million** at December 31, 2024, primarily included in time deposits[86](index=86&type=chunk) Long-term Debt (In thousands) | Category | June 30, 2025 Carrying Value | December 31, 2024 Carrying Value | |:---|:---|:---|\n| FHLB advances | $56,000 | $56,000 |\n| Subordinated debt | 24,833 | 24,791 |\n| **Total Long-term Debt** | **$80,833** | **$80,791** | - **FHLB advances** totaled **$56.0 million** at June 30, 2025, with an available borrowing capacity of approximately **$416.2 million**[90](index=90&type=chunk) - **Federal funds purchased increased by $16.5 million** at June 30, 2025, from zero at December 31, 2024[87](index=87&type=chunk)[91](index=91&type=chunk) [Note 7— Commitments and Contingencies](index=23&type=section&id=Note%207%E2%80%94%20Commitments%20and%20Contingencies) This note details the Company's off-balance sheet financial instruments, including commitments to extend credit and standby letters of credit, and discusses the associated credit and interest rate risks Off-Balance Sheet Risk Exposure (In thousands) | Category | June 30, 2025 | December 31, 2024 | |:---|:---|:---|\n| Commitments to extend credit | $350,557 | $316,249 |\n| Standby letters of credit | $10,565 | $10,767 | - **Commitments to extend credit increased by $350,557 thousand** at June 30, 2025, from **$316,249 thousand** at December 31, 2024[96](index=96&type=chunk) - **Standby letters of credit** were **$10,565 thousand** at June 30, 2025, slightly down from **$10,767 thousand** at December 31, 2024[96](index=96&type=chunk) [Note 8— Fair Value Measurements](index=25&type=section&id=Note%208%E2%80%94%20Fair%20Value%20Measurements) This note explains the Company's approach to fair value measurements, categorizing assets and liabilities into a three-level hierarchy based on the observability of valuation inputs. It provides detailed tables of assets and liabilities measured at fair value on both a recurring and non-recurring basis - **The fair value hierarchy categorizes inputs** into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 quoted prices), and Level 3 (unobservable inputs)[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - **The Company's investment portfolio is primarily valued** using Level 2 fair value measurements, relying on independent valuation techniques and observable market data[109](index=109&type=chunk) Fair Value of Assets and Liabilities Measured on a Recurring Basis (In thousands) | Category | June 30, 2025 Balance | Level 1 | Level 2 | Level 3 | |:---|:---|:---|:---|:---|\n| **Assets:** | | | | |\n| Securities available-for-sale | $125,498 | $— | $125,498 | $— |\n| Equity securities, at fair value | 3,096 | 3,096 | — | — |\n| Interest rate swap agreements | 287 | — | 287 | — |\n| **Total assets at fair value** | **$128,881** | **$3,096** | **$125,785** | **$—** |\n| **Liabilities:** | | | | |\n| Interest rate swap agreements | $287 | $— | $287 | $— |\n| **Total liabilities at fair value** | **$287** | **$—** | **$287** | **$—** | Carrying Value and Estimated Fair Value of Financial Instruments (In thousands) | Category | June 30, 2025 Carrying Value | June 30, 2025 Fair Value (Total) | June 30, 2025 Fair Value (Level 1) | June 30, 2025 Fair Value (Level 2) | June 30, 2025 Fair Value (Level 3) | |:---|:---|:---|:---|:---|:---|\n| **Assets:** | | | | | |\n| Cash and cash equivalents | $116,926 | $116,926 | $116,926 | $— | $— |\n| Securities: Available-for-sale | 125,498 | 125,498 | — | 125,498 | — |\n| Securities: Held-to-maturity | 90,264 | 77,448 | — | 77,448 | — |\n| Equity securities, at fair value | 3,096 | 3,096 | 3,096 | — | — |\n| Restricted securities, at cost | 7,637 | 7,637 | — | 7,637 | — |\n| Loans, net of allowance | 1,897,617 | 1,805,372 | — | — | 1,805,372 |\n| Interest rate swap agreements | 287 | 287 | — | 287 | — |\n| Accrued interest receivable | 5,844 | 5,844 | — | 5,844 | — |\n| **Liabilities:** | | | | | |\n| Time deposits | $734,069 | $734,885 | $— | $734,885 | $— |\n| Other deposits | 1,162,824 | 1,162,824 | 1,162,824 | — | — |\n| Federal funds purchased | 16,500 | 16,500 | — | 16,500 | — |\n| Federal Home Loan Bank advances | 56,000 | 56,025 | — | 56,025 | — |\n| Subordinated debt | 24,833 | 22,452 | — | — | 22,452 |\n| Interest rate swap agreements | 287 | 287 | — | 287 | — |\n| Accrued interest payable | 2,280 | 2,280 | — | 2,280 | — | [Note 9— Earnings per Common Share](index=30&type=section&id=Note%209%E2%80%94%20Earnings%20per%20Common%20Share) This note details the computation of basic and diluted earnings per common share (EPS) for the three and six months ended June 30, 2025, and June 30, 2024, using the two-class method, which includes unvested share-based payment awards as participating securities Computation of Earnings per Share (In thousands, except per share data) | | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | |:---|:---|:---|:---|:---|\n| Net income available to common shareholders | $5,085 | $3,892 | $9,877 | $8,083 |\n| Weighted-average common shares outstanding - basic | 14,221,597 | 14,173,245 | 14,222,311 | 14,152,115 |\n| **Earnings per common share - basic** | **$0.36** | **$0.27** | **$0.69** | **$0.57** |\n| Weighted-average common shares outstanding - diluted | 14,223,418 | 14,200,171 | 14,231,142 | 14,189,517 |\n| **Earnings per common share - diluted** | **$0.36** | **$0.27** | **$0.69** | **$0.57** | - **Basic EPS increased to $0.36** for the three months ended June 30, 2025, from **$0.27** for the same period in 2024, and to **$0.69** for the six months ended June 30, 2025, from **$0.57** for the same period in 2024[123](index=123&type=chunk) - **Diluted EPS also increased to $0.36** for the three months ended June 30, 2025, from **$0.27** for the same period in 2024, and to **$0.69** for the six months ended June 30, 2025, from **$0.57** for the same period in 2024[123](index=123&type=chunk) [Note 10— Stock Based Compensation Plan](index=30&type=section&id=Note%2010%E2%80%94%20Stock%20Based%20Compensation%20Plan) This note describes the Company's stock-based compensation plans, including the newly approved 2025 Stock Incentive Plan and the expired 2015 Plan. It summarizes the activity for stock options and restricted stock awards, along with the associated compensation expense - **The 2025 Stock Incentive Plan**, approved on June 17, 2025, reserves **425,000 shares** for future grants and replaces the 2015 Plan, which expired on April 28, 2025[124](index=124&type=chunk)[127](index=127&type=chunk) Stock Options Activity (Six Months Ended June 30, 2025) | | Shares | Weighted Average Exercise Price | |:---|:---|:---|\n| Outstanding at January 1, 2025 | 58,660 | $11.77 |\n| Granted | — | — |\n| Exercised | (56,224) | 11.77 |\n| Forfeited or expired | (2,436) | 11.77 |\n| **Outstanding at June 30, 2025** | **—** | **$—** |\n| Exercisable June 30, 2025 | — | $— | - **No stock options were granted** during the three or six months ended June 30, 2025, or June 30, 2024[130](index=130&type=chunk) Restricted Stock Awards Activity (Six Months Ended June 30, 2025) | | Shares | Weighted Average Grant Date Fair Value | |:---|:---|:---|\n| Nonvested at January 1, 2025 | 54,388 | $21.97 |\n| Granted | 1,250 | 18.60 |\n| Vested | (2,975) | 16.31 |\n| Forfeited | (2,630) | 22.49 |\n| **Nonvested at June 30, 2025** | **50,033** | **$22.20** | - **Share-based compensation expense for restricted stock grants was $120 thousand** for the three months ended June 30, 2025 (down from **$133 thousand** in 2024) and **$238 thousand** for the six months ended June 30, 2025 (down from **$265 thousand** in 2024)[133](index=133&type=chunk)[134](index=134&type=chunk) [Note 11— Regulatory Capital](index=34&type=section&id=Note%2011%E2%80%94%20Regulatory%20Capital) This note clarifies that the Company, as a small bank holding company, is not subject to consolidated regulatory capital requirements. However, its subsidiary, John Marshall Bank, is subject to Basel III standards and is categorized as 'well capitalized' as of June 30, 2025 - **John Marshall Bancorp, Inc. qualifies as a small bank holding company** and **is not subject to** consolidated regulatory capital requirements[136](index=136&type=chunk) - **John Marshall Bank is subject to Basel III capital adequacy standards and was categorized as 'well capitalized'** by the Federal Reserve Bank of Richmond as of June 30, 2025[137](index=137&type=chunk)[140](index=140&type=chunk) Bank's Capital Ratios (In thousands) | Ratio | June 30, 2025 Amount | June 30, 2025 Ratio | Minimum Capital Requirement Ratio (1) | Minimum To Be Well Capitalized Under Prompt Corrective Action Ratio | |:---|:---|:---|:---|:---|\n| Total capital (to risk weighted assets) | $305,511 | 16.3 % | 10.5 % | 10.0 % |\n| Tier 1 capital (to risk weighted assets) | 285,579 | 15.3 % | 8.5 % | 8.0 % |\n| Common equity tier 1 capital (to risk weighted assets) | 285,579 | 15.3 % | 7.0 % | 6.5 % |\n| Tier 1 capital (to average assets) | 285,579 | 12.8 % | 4.0 % | 5.0 % | [Note 12— Revenue](index=36&type=section&id=Note%2012%E2%80%94%20Revenue) This note details the components of the Company's non-interest income, primarily derived from short-term contracts for deposit account services and other ancillary services. It also explains the revenue recognition policies under ASC 606 Components of Non-Interest Income (In thousands) | Category | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | |:---|:---|:---|:---|:---|\n| Service charges on deposit accounts | $86 | $88 | $168 | $176 |\n| Other service charges and fees | 141 | 165 | 294 | 314 |\n| Insurance commissions | 33 | 40 | 246 | 292 |\n| Gain on sale of government guaranteed loans | 61 | 216 | 97 | 349 |\n| Non-qualified deferred compensation plan asset gains, net | 182 | 35 | 206 | 159 |\n| Other income | 4 | 11 | 1 | 83 |\n| **Total non-interest income** | **$507** | **$555** | **$1,012** | **$1,373** | - **Total non-interest income decreased to $507 thousand** for the three months ended June 30, 2025 (from **$555 thousand** in 2024) and to **$1,012 thousand** for the six months ended June 30, 2025 (from **$1,373 thousand** in 2024)[145](index=145&type=chunk) - The **decreased by** non-interest income was **primarily driven by** a **$252 thousand** **decreased by** in gain on sale of government guaranteed loans and a **$64 thousand** **decreased by** in swap fee income for the six months ended June 30, 2025[174](index=174&type=chunk)[199](index=199&type=chunk) [Note 13— Other Operating Expenses](index=38&type=section&id=Note%2013%E2%80%94%20Other%20Operating%20Expenses) This note itemizes the components of other operating expenses for the three and six months ended June 30, 2025, and June 30, 2024, including advertising, data processing, FDIC insurance, professional fees, and state franchise tax Components of Other Operating Expenses (In thousands) | Category | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | |:---|:---|:---|:---|:---|\n| Advertising expense | $(5) | $97 | $157 | $194 |\n| Data processing | 579 | 530 | 1,168 | 1,057 |\n| FDIC insurance | 225 | 220 | 472 | 480 |\n| Professional fees | 305 | 208 | 526 | 494 |\n| State franchise tax | 641 | 574 | 1,238 | 1,144 |\n| Director costs | 170 | 189 | 339 | 400 |\n| Other operating expenses | 498 | 467 | 939 | 882 |\n| **Total other operating expenses** | **$2,413** | **$2,285** | **$4,839** | **$4,651** | - **Total other operating expenses increased to $2,413 thousand** for the three months ended June 30, 2025 (from **$2,285 thousand** in 2024) and to **$4,839 thousand** for the six months ended June 30, 2025 (from **$4,651 thousand** in 2024)[151](index=151&type=chunk) [Note 14— Accumulated Other Comprehensive Income (Loss)](index=38&type=section&id=Note%2014%E2%80%94%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note presents the changes in accumulated other comprehensive income (loss) (AOCI), net of tax, for the six months ended June 30, 2025, and June 30, 2024, primarily reflecting unrealized gains and losses on available-for-sale securities Changes in Accumulated Other Comprehensive Income (Loss) (In thousands) | Category | June 30, 2025 | June 30, 2024 | |:---|:---|:---|\n| Beginning balance, January 1, | $(10,652) | $(12,251) |\n| Net change during the period | 2,163 | (304) |\n| **Ending balance, June 30,** | **$(8,489)** | **$(12,555)** | - **Accumulated other comprehensive loss improved to $(8,489) thousand** at June 30, 2025, from **$(10,652) thousand** at January 1, 2025, **primarily driven by** a **net** change of **$2,163 thousand** during the period[153](index=153&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive discussion and analysis of the Company's financial condition and results of operations, covering key performance indicators, balance sheet changes, and operational drivers for the periods presented [Use of Non-GAAP Financial Measures](index=39&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This subsection explains the Company's use of non-GAAP financial measures, such as tax-equivalent net interest income and pre-tax, pre-provision earnings, to offer a clearer comparison of operating performance and provide useful information to investors and regulators - **Non-GAAP financial measures are used** to provide a better comparison of period-to-period operating performance and are utilized by regulators and market analysts[155](index=155&type=chunk) - **Non-GAAP measures used include** tax-equivalent net interest income, tax-equivalent net interest margin, and pre-tax, pre-provision earnings[155](index=155&type=chunk) [Cautionary Note on Forward-Looking Statements](index=39&type=section&id=Cautionary%20Note%20on%20Forward-Looking%20Statements) This section warns readers about the inherent uncertainties and various risk factors associated with forward-looking statements in the report, which could cause actual results to differ materially from projections - **Forward-looking statements are based on certain assumptions** and involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[157](index=157&type=chunk) - **Key risk factors include** concentration in the Washington, D.C. metropolitan area, adequacy of credit loss allowances, deterioration of asset quality, changes in interest rates, regulatory changes, and technological risks[157](index=157&type=chunk)[160](index=160&type=chunk) [Overview (MD&A)](index=41&type=section&id=Overview%20(MD%26A)) This overview introduces John Marshall Bancorp, Inc. as a bank holding company primarily serving the Washington, D.C. metropolitan area through its subsidiary, John Marshall Bank, and summarizes its consolidated financial position as of June 30, 2025 - **The Company is a bank holding company** headquartered in Reston, Virginia, primarily serving the Washington, D.C. metropolitan area through John Marshall Bank[161](index=161&type=chunk) - As of June 30, 2025, **total consolidated assets** were **$2.27 billion**, **total loans net of unearned income** were **$1.92 billion**, **total deposits** were **$1.90 billion**, and **total shareholders' equity** was **$253.7 million**[163](index=163&type=chunk) [Critical Accounting Policies and Estimates (MD&A)](index=41&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates%20(MD%26A)) This section reiterates that the Company's accounting policies adhere to GAAP and banking industry practices, requiring management to make estimates and judgments, particularly concerning the allowance for loan credit losses, with no significant changes since December 31, 2024 - **Application of GAAP and banking industry practices requires management to make estimates**, assumptions, and judgments, particularly susceptible to change in the near term related to the allowance for loan credit losses[164](index=164&type=chunk) - **The most significant accounting policies are described** in the 2024 Annual Report on Form 10-K, with **no significant changes** noted[165](index=165&type=chunk) [Selected Financial Data](index=42&type=section&id=Selected%20Financial%20Data) This section provides a condensed table of historical consolidated financial data, including balance sheet, asset quality, capital ratios, income statement, per share data, and performance ratios for the three and six months ended June 30, 2025, and June 30, 2024 Selected Historical Consolidated Financial Data (In thousands, except per share data) | Category | June 30, 2025 (3 months) | June 30, 2024 (3 months) | June 30, 2025 (6 months) | June 30, 2024 (6 months) | |:---|:---|:---|:---|:---|\n| Loans, net of unearned income | $1,916,915 | $1,827,187 | $1,916,915 | $1,827,187 |\n| Total assets | 2,267,953 | 2,269,757 | 2,267,953 | 2,269,757 |\n| Total deposits | 1,896,893 | 1,912,840 | 1,896,893 | 1,912,840 |\n| Total shareholders' equity | 253,732 | 235,346 | 253,732 | 235,346 |\n| **Net income** | **$5,103** | **$3,905** | **$9,913** | **$8,109** |\n| Earnings per share, basic | $0.36 | $0.27 | $0.69 | $0.57 |\n| Net interest margin | 2.69 % | 2.19 % | 2.63 % | 2.14 % |\n| Efficiency ratio | 53.9 % | 62.6 % | 55.1 % | 62.8 % | [Results of Operations – Six Months Ended June 30, 2025 and June 30, 2024](index=44&type=section&id=Results%20of%20Operations%20%E2%80%93%20Six%20Months%20Ended%20June%2030,%202025%20and%20June%2030,%202024) This section analyzes the Company's financial performance for the six months ended June 30, 2025, compared to the same period in 2024, detailing changes in net income, diluted EPS, net interest income, provision for credit losses, non-interest income, and non-interest expenses [Overview (Six Months)](index=44&type=section&id=Overview%20(Six%20Months)) The Company reported a significant increase in net income and diluted EPS for the first half of 2025, primarily driven by growth in net interest income, despite a shift from credit loss recovery to provision and a decrease in non-interest income - **Net income** for the six months ended June 30, 2025, **increased by $1.8 million (22.2%)** to **$9.9 million** compared to the same period in 2024[171](index=171&type=chunk) - **Diluted earnings per common share increased by 21.0%** to **$0.69** for the six months ended June 30, 2025, from **$0.57** in 2024[171](index=171&type=chunk) - **Net interest income increased by $5.2 million (21.8%)** for the six months ended June 30, 2025, **primarily driven by** lower interest-bearing liability costs and higher interest-earning asset yields[172](index=172&type=chunk) - **The Company recorded a $707 thousand provision for credit losses** for the six months ended June 30, 2025, compared to a **$1.1 million** recovery in the prior year[173](index=173&type=chunk) - **Non-interest expense increased by $728 thousand (4.6%)**, **primarily due to** a **$592 thousand** **increased by** in salaries and employee benefits, including hiring five business development officers[175](index=175&type=chunk) [Net Interest Income and Net Interest Margin (Six Months)](index=45&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin%20(Six%20Months)) This section analyzes the changes in net interest income and net interest margin for the six months ended June 30, 2025, compared to the same period in 2024, attributing the increase to a decrease in the cost of interest-bearing liabilities and an increase in yields on interest-earning assets Average Balance Sheets and Interest Rates on Interest-Earning Assets and Interest-Bearing Liabilities (Six Months Ended June 30, 2025 and 2024) (In thousands) | Category | H1 2025 Average Balance | H1 2025 Interest Income / Expense | H1 2025 Rate | H1 2024 Average Balance | H1 2024 Interest Income / Expense | H1 2024 Rate | |:---|:---|:---|:---|:---|:---|:---|\n| Total interest-earning assets | $2,222,779 | $55,219 | 5.01 % | $2,235,139 | $53,793 | 4.84 % |\n| Total interest-bearing liabilities | $1,535,774 | $26,124 | 3.43 % | $1,576,075 | $29,885 | 3.81 % |\n| Tax-equivalent net interest income (Non-GAAP) | | $29,095 | 1.58 % | | $23,908 | 1.03 % |\n| Net interest margin (GAAP) | | $29,023 | 1.57 % | | $23,825 | 1.02 % |\n| Tax-equivalent net interest margin (Non-GAAP) | | | 2.64 % | | | 2.15 % | - **Tax-equivalent net interest income increased by $5.2 million (21.7%)** for the six months ended June 30, 2025[183](index=183&type=chunk) - **The tax-equivalent net interest margin increased by 49 basis points** to **2.64%** for the six months ended June 30, 2025, from **2.15%** in 2024[184](index=184&type=chunk) - The **increased by** in **net** interest margin **was** **primarily due to** a **38 basis points** **decreased by** in the cost of interest-bearing liabilities (to **3.43%**) and a **17 basis points** **increased by** in yields on interest-earning assets (to **5.01%**)[184](index=184&type=chunk) Tax-Equivalent Net Interest Income Reconciliation (Six Months Ended June 30, 2025 and 2024) (In thousands) | | H1 2025 | H1 2024 | |:---|:---|:---|\n| **Total Net Interest Income (GAAP)** | **$29,023** | **$23,825** |\n| Add: **Total Tax Benefit on Tax-Exempt Interest Income** | **72** | **83** |\n| **Tax-Equivalent Net Interest Income (Non-GAAP)** | **$29,095** | **$23,908** | Rate/Volume Analysis (Six Months Ended June 30, 2025 and 2024) (In thousands) | Category | Volume Change | Rate Change | Total Change | |:---|:---|:---|:---|\n| Total interest-earning assets | $354 | $1,072 | $1,426 |\n| Total interest-bearing liabilities | $(1,256) | $(2,505) | $(3,761) |\n| **Change in tax-equivalent net interest income (Non-GAAP)** | **$1,610** | **$3,577** | **$5,187** | [Interest Income (Six Months)](index=47&type=section&id=Interest%20Income%20(Six%20Months)) Tax-equivalent interest income increased by $1.4 million for the six months ended June 30, 2025, primarily due to higher rates and volumes in the loan portfolio, partially offset by decreases in investment securities and interest-bearing deposits in other banks - **Tax-equivalent interest income increased by $1.4 million (2.7%)** to **$55.2 million** for the six months ended June 30, 2025[190](index=190&type=chunk) - **Fully tax-equivalent interest income on loans increased by approximately $3.0 million**, **primarily driven by** a **22 basis points** **increased by** in yield and a **$45.0 million** **increased by** in average loan volume[185](index=185&type=chunk)[191](index=191&type=chunk) - **Interest income on investment securities decreased by approximately $283 thousand** **primarily due to** a **$33.0 million** **decreased by** in average volume[192](index=192&type=chunk) - **Interest income on interest-bearing deposits in other banks decreased by $1.3 million**, **primarily due to** a **105 basis points** **decreased by** in yield and a **$24.3 million** decline in average volume[186](index=186&type=chunk)[193](index=193&type=chunk) [Interest Expense (Six Months)](index=48&type=section&id=Interest%20Expense%20(Six%20Months)) Interest expense decreased by $3.8 million for the six months ended June 30, 2025, primarily due to lower rates on deposits and borrowings, including the payoff of higher-cost Federal Reserve Bank borrowings - **Interest expense decreased by $3.8 million** to **$26.1 million** for the six months ended June 30, 2025, compared to **$29.9 million** in 2024[194](index=194&type=chunk) - The **decreased by** **was** mainly a result of the repricing of time deposits and money market accounts, and the payoff of higher-cost Federal Reserve Bank's Bank Term Funding Program borrowings in September 2024[184](index=184&type=chunk)[194](index=194&type=chunk) [Provision for Credit Losses (Six Months)](index=48&type=section&id=Provision%20for%20Credit%20Losses%20(Six%20Months)) The Company recorded a $707 thousand provision for credit losses for the six months ended June 30, 2025, a shift from a $1.1 million recovery in the prior year, driven by changes in loan portfolio composition, volume, and economic forecasts - **The Company recorded a $707 thousand provision for credit losses** for the six months ended June 30, 2025, compared to a **$1.1 million** recovery for the same period in 2024[195](index=195&type=chunk) - The provision **was** **primarily a result of** changes in the composition and volume of the loan portfolio, updated economic forecasts, and management's assessment of qualitative factors[196](index=196&type=chunk) [Non-interest Income (Six Months)](index=48&type=section&id=Non-interest%20Income%20(Six%20Months)) Non-interest income decreased by $361 thousand for the six months ended June 30, 2025, primarily due to reduced gains on SBA 7(a) loan sales and lower swap fee income, partially offset by higher non-qualified deferred compensation plan asset gains Non-Interest Income Summary (Six Months Ended June 30, 2025 and 2024) (In thousands) | Category | H1 2025 | H1 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\n| Service charges on deposit accounts | $168 | $176 | $(8) | (4.5)% |\n| Other service charges and fees | 294 | 314 | (20) | (6.4)% |\n| Insurance commissions | 246 | 292 | (46) | (15.8)% |\n| Gain on sale of government guaranteed loans | 97 | 349 | (252) | (72.2)% |\n| Non-qualified deferred compensation plan asset gains, net | 206 | 159 | 47 | 29.6 % |\n| Other operating income | 4 | 83 | (79) | (95.2)% |\n| **Total non-interest income** | **$1,012** | **$1,373** | **$(361)** | **(26.3)%** | - **Total non-interest income decreased by $361 thousand (26.3%)** for the six months ended June 30, 2025[198](index=198&type=chunk) - The **decreased by** **was** **primarily driven by** a **$252 thousand** **decreased by** in gain on sale of government guaranteed loans due to **decreased by** sale activity and a **$64 thousand** **decreased by** in swap fee income[174](index=174&type=chunk)[199](index=199&type=chunk) - These **decreased by** were partially offset by a **$47 thousand** **increased by** in non-qualified deferred compensation plan asset gains[199](index=199&type=chunk) [Non-interest Expense (Six Months)](index=50&type=section&id=Non-interest%20Expense%20(Six%20Months)) Non-interest expense increased by $728 thousand for the six months ended June 30, 2025, primarily due to higher salaries and employee benefits, data processing, and state franchise taxes, partially offset by lower occupancy expense Non-Interest Expense Summary (Six Months Ended June 30, 2025 and 2024) (In thousands) | Category | H1 2025 | H1 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\n| Salaries and employee benefits expense | $10,277 | $9,685 | $592 | 6.1 % |\n| Occupancy expense of premises | 814 | 899 | (85) | (9.5)% |\n| Furniture and equipment expenses | 631 | 598 | 33 | 5.5 % |\n| Advertising expense | 157 | 194 | (37) | (19.1)% |\n| Data processing | 1,168 | 1,057 | 111 | 10.5 % |\n| FDIC insurance | 472 | 480 | (8) | (1.7)% |\n| Professional fees | 526 | 494 | 32 | 6.5 % |\n| State franchise tax | 1,238 | 1,144 | 94 | 8.2 % |\n| Other operating expenses | 939 | 882 | 57 | 6.5 % |\n| **Total non-interest expense** | **$16,561** | **$15,833** | **$728** | **4.6 %** | - **Total non-interest expense increased by $728 thousand (4.6%)** for the six months ended June 30, 2025[203](index=203&type=chunk) - **Salaries and employee benefits increased by $592 thousand (6.1%)** **primarily due to** staffing changes, including the hiring of five business development officers[175](index=175&type=chunk)[203](index=203&type=chunk) - **Data processing increased by $111 thousand (10.5%)** and **state franchise tax by $94 thousand (8.2%)**[203](index=203&type=chunk) - **Occupancy expense declined by $85 thousand (9.5%)** **primarily due to** relocating a branch to a less expensive location[175](index=175&type=chunk)[203](index=203&type=chunk) [Income Taxes (Six Months)](index=50&type=section&id=Income%20Taxes%20(Six%20Months)) Income tax expense increased for the six months ended June 30, 2025, with the effective tax rate remaining relatively stable compared to the prior year - **Income tax expense increased by $530 thousand (22.8%)** to **$2.9 million** for the six months ended June 30, 2025[204](index=204&type=chunk) - The **effective tax rate remained** relatively unchanged at **22.4%** for the six months ended June 30, 2025, compared to **22.3%** for the same period in 2024[204](index=204&type=chunk) [Results of Operations – Three Months Ended June 30, 2025 and June 30, 2024](index=51&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20Months%20Ended%20June%2030,%202025%20and%20June%2030,%202024) This section analyzes the Company's financial performance for the three months ended June 30, 2025, compared to the same period in 2024, detailing significant increases in net income, pre-tax, pre-provision earnings, and diluted EPS, primarily driven by net interest income growth [Overview (Three Months)](index=51&type=section&id=Overview%20(Three%20Months)) The Company reported a substantial increase in net income, pre-tax, pre-provision earnings, and diluted EPS for Q2 2025, largely due to strong net interest income growth, despite a shift to credit loss provision and a slight decrease in non-interest income - **Net income** for the three months ended June 30, 2025, **increased by $1.2 million (30.7%)** to **$5.1 million** compared to **$3.9 million** in 2024[206](index=206&type=chunk) - **Pre-tax, pre-provision earnings (Non-GAAP) increased by $2.4 million (50.6%)** to **$7.1 million** for the three months ended June 30, 2025[206](index=206&type=chunk) - **Diluted earnings per common share increased by 33.3%** to **$0.36** for the three months ended June 30, 2025, from **$0.27** in 2024[206](index=206&type=chunk) - **Net interest income increased by $2.8 million (23.5%)** to **$14.9 million** for the three months ended June 30, 2025, **primarily driven by** lower interest-bearing liability costs and higher interest-earning asset yields[207](index=207&type=chunk) - **Return on average assets (ROAA) was 0.91%** for Q2 2025 (vs **0.70%** for Q2 2024), and **Return on average equity (ROAE) was 8.06%** for Q2 2025 (vs **6.68%** for Q2 2024)[211](index=211&type=chunk) Pre-tax, Pre-provision Earnings Reconciliation (Three Months Ended June 30, 2025 and 2024) (In thousands) | | Q2 2025 | Q2 2024 | |:---|:---|:---|\n| Income before income taxes | $6,583 | $5,019 |\n| Adjustment: Provision for (recovery of) credit losses | 537 | (292) |\n| **Pre-tax, pre-provision earnings (Non-GAAP)** | **$7,120** | **$4,727** | [Net Interest Income and Net Interest Margin (Three Months)](index=53&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin%20(Three%20Months)) This section analyzes the changes in net interest income and net interest margin for the three months ended June 30, 2025, compared to the same period in 2024, highlighting the impact of interest rate changes on assets and liabilities Average Balance Sheets and Interest Rates on Interest-Earning Assets and Interest-Bearing Liabilities (Three Months Ended June 30, 2025 and 2024) (In thousands) | Category | Q2 2025 Average Balance | Q2 2025 Interest Income / Expense | Q2 2025 Rate | Q2 2024 Average Balance | Q2 2024 Interest Income / Expense | Q2 2024 Rate | |:---|:---|:---|:---|:---|:---|:---|\n| Total interest-earning assets | $2,224,806 | $27,880 | 5.03 % | $2,222,658 | $26,829 | 4.85 % |\n| Total interest-bearing liabilities | $1,530,811 | $12,917 | 3.38 % | $1,551,953 | $14,710 | 3.81 % |\n| Tax-equivalent net interest income (Non-GAAP) | | $14,963 | 1.65 % | | $12,119 | 1.04 % |\n| Net interest margin (GAAP) | | $14,926 | 1.64 % | | $12,081 | 1.04 % |\n| Tax-equivalent net interest margin (Non-GAAP) | | | 2.70 % | | | 2.19 % | - **Tax-equivalent net interest income increased by $2.8 million (23.5%)** for the three months ended June 30, 2025[218](index=218&type=chunk) - **The tax-equivalent net interest margin increased by 51 basis points** to **2.70%** for the three months ended June 30, 2025, from **2.19%** in 2024[219](index=219&type=chunk) - The **increased by** in **net** interest margin **was** **primarily due to** an **18 basis points** **increased by** in yields on interest-earning assets and a **41 basis points** reduction in rates on interest-bearing deposits[219](index=219&type=chunk) Tax-Equivalent Net Interest Income Reconciliation (Three Months Ended June 30, 2025 and 2024) (In thousands) | | Q2 2025 | Q2 2024 | |:---|:---|:---|\n| **Total Net Interest Income (GAAP)** | **$14,926** | **$12,081** |\n| Add: **Total Tax Benefit on Tax-Exempt Interest Income** | **37** | **38** |\n| **Tax-Equivalent Net Interest Income (Non-GAAP)** | **$14,963** | **$12,119** | Rate/Volume Analysis (Three Months Ended June 30, 2025 and 2024) (In thousands) | Category | Volume Change | Rate Change | Total Change | |:---|:---|:---|:---|\n| Total interest-earning assets | $321 | $730 | $1,051 |\n| Total interest-bearing liabilities | $(406) | $(1,387) | $(1,793) |\n| **Change in tax-equivalent net interest income (Non-GAAP)** | **$727** | **$2,117** | **$2,844** | [Interest Income (Three Months)](index=55&type=section&id=Interest%20Income%20(Three%20Months)) Tax-equivalent interest income increased by $1.1 million for the three months ended June 30, 2025, primarily driven by higher loan rates and volumes, partially offset by decreases in investment securities and interest-bearing deposits in other banks - **Tax-equivalent interest income increased by $1.1 million (3.9%)** to **$27.9 million** for the three months ended June 30, 2025[226](index=226&type=chunk) - **Fully tax-equivalent interest income on loans increased by approximately $1.9 million** **primarily due to** volume and rate increases, with average loans **increased by $57.6 million**[227](index=227&type=chunk) - **Interest income on investment securities decreased by approximately $86 thousand**, **primarily due to** a **$26.8 million** **decreased by** in average volume[228](index=228&type=chunk) - **Interest income on interest-bearing deposits in other banks decreased by $722 thousand**, **primarily due to** a **105 basis points** **decreased by** in rates and a **$28.7 million** decline in average volume[221](index=221&type=chunk)[229](index=229&type=chunk) [Interest Expense (Three Months)](index=56&type=section&id=Interest%20Expense%20(Three%20Months)) Interest expense decreased by $1.8 million for the three months ended June 30, 2025, primarily due to lower rates on deposits and a decrease in the volume of borrowings, including the payoff of higher-cost Federal Reserve Bank borrowings - **Interest expense decreased by $1.8 million** to **$12.9 million** for the three months ended June 30, 2025, compared to **$14.7 million** in 2024[230](index=230&type=chunk) - The **decreased by** **was** **primarily a result of** the repricing of deposit accounts in conjunction with lower benchmark interest rates and the payoff of higher-cost Bank Term Funding Program borrowings in September 2024[222](index=222&type=chunk)[230](index=230&type=chunk) [Provision for Credit Losses (Three Months)](index=56&type=section&id=Provision%20for%20Credit%20Losses%20(Three%20Months)) The Company recorded a $537 thousand provision for credit losses for the three months ended June 30, 2025, a shift from a $292 thousand recovery in the prior year, driven by loan portfolio growth and changes in composition - **The Company recorded a $537 thousand provision for credit losses** for the three months ended June 30, 2025, compared to a **$292 thousand** recovery for the same period in 2024[231](index=231&type=chunk) - The provision **was** directly attributable to the growth and changes in the composition of the Company's loan portfolio, along with considerations of qualitative factors[232](index=232&type=chunk) [Non-interest Income (Three Months)](index=56&type=section&id=Non-interest%20Income%20(Three%20Months)) Non-interest income decreased by $48 thousand for the three months ended June 30, 2025, primarily due to reduced gains on SBA 7(a) loan sales, partially offset by favorable mark-to-market adjustments on deferred compensation plan assets Non-Interest Income Summary (Three Months Ended June 30, 2025 and 2024) (In thousands) | Category | Q2 2025 | Q2 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\n| Service charges on deposit accounts | $86 | $88 | $(2) | (2.3)% |\n| Other service charges and fees | 141 | 165 | (24) | (14.5)% |\n| Insurance commissions | 33 | 40 | (7) | (17.5)% |\n| Gain on sale of government guaranteed loans | 61 | 216 | (155) | (71.8)% |\n| Non-qualified deferred compensation plan asset gains, net | 182 | 35 | 147 | 420.0 % |\n| Other operating income | 4 | 11 | (7) | (63.6)% |\n| **Total non-interest income** | **$507** | **$555** | **$(48)** | **(8.6)%** | - **Total non-interest income decreased by $48 thousand (8.6%)** for the three months ended June 30, 2025[234](index=234&type=chunk) - The **decreased by** **was** **primarily attributable to** a **$155 thousand** reduction in gains on sales of government guaranteed SBA 7(a) loans due to lower sale activity[234](index=234&type=chunk) - This **was** partially offset by favorable mark-to-market adjustments on the Company's non-qualified deferred compensation plan, totaling **$147 thousand**[234](index=234&type=chunk) [Non-interest Expense (Three Months)](index=57&type=section&id=Non-interest%20Expense%20(Three%20Months)) Non-interest expense increased by $404 thousand for the three months ended June 30, 2025, primarily due to higher salaries and employee benefits and professional fees, partially offset by lower advertising and occupancy expenses Non-Interest Expense Summary (Three Months Ended June 30, 2025 and 2024) (In thousands) | Category | Q2 2025 | Q2 2024 | $ Change | % Change | |:---|:---|:---|:---|:---|\n| Salaries and employee benefits expense | $5,178 | $4,875 | $303 | 6.2 % |\n| Occupancy expense of premises | 407 | 448 | (41) | (9.2)% |\n| Furniture and equipment expenses | 315 | 301 | 14 | 4.7 % |\n| Advertising expense | (5) | 97 | (102) | (105.2)% |\n| Data processing | 579 | 530 | 49 | 9.2 % |\n| FDIC insurance | 225 | 220 | 5 | 2.3 % |\n| Professional fees | 305 | 208 | 97 | 46.6 % |\n| State franchise tax | 641 | 574 | 67 | 11.7 % |\n| Other operating expenses | 419 | 386 | 33 | 8.5 % |\n| **Total non-interest expense** | **$8,313** | **$7,909** | **$404** | **5.1 %** | - **Total non-interest expense increased by $404 thousand (5.1%)** during the three months ended June 30, 2025[236](index=236&type=chunk) - **Salaries and employee benefits expense increased by $303 thousand (6.2%)** **primarily due to** the hiring of additional personnel, including business development officers[236](index=236&type=chunk) - **Professional fees increased by $97 thousand (46.6%)** **primarily due to** external advisors for regulatory filings[236](index=236&type=chunk) - **Advertising expenses decreased by $102 thousand (105.2%)** **primarily due to** a one-time vendor reimbursement, and **Occupancy expense declined by $41 thousand (9.2%)** **primarily due to** branch relocation[236](index=236&type=chunk) [Income Taxes (Three Months)](index=57&type=section&id=Income%20Taxes%20(Three%20Months)) Income tax expense increased for the three months ended June 30, 2025, with a slightly higher effective tax rate compared to the prior year - **Income tax expense increased by $366 thousand** to **$1.5 million** for the three months ended June 30, 2025[237](index=237&type=chunk) - The **effective tax rate** for the three months ended June 30, 2025, **was 22.5%** compared to **22.2%** for the same period in 2024[237](index=237&type=chunk) [Discussion and Analysis of Financial Condition](index=57&type=section&id=Discussion%20and%20Analysis%20of%20Financial%20Condition) This section provides a detailed analysis of the Company's financial condition, focusing on changes in assets, liabilities, shareholders' equity, investment securities, loan portfolio, asset quality, allowance for loan credit losses, deposits, capital resources, liquidity, and off-balance sheet arrangements [Assets, Liabilities, and Shareholders' Equity (Financial Condition)](index=57&type=section&id=Assets,%20Liabilities,%20and%20Shareholders'%20Equity%20(Financial%20Condition)) The Company's total assets, total liabilities, and shareholders' equity all increased from December 31, 2024, to June 30, 2025, primarily driven by loan portfolio growth and net income - **Total assets increased by $33.0 million (1.5%)** to **$2.27 billion** at June 30, 2025, **primarily due to** a **$44.7 million** **increased by** in the loan portfolio[238](index=238&type=chunk) - **Total liabilities increased by $25.9 million (1.3%)** to **$2.01 billion** at June 30, 2025, mainly **primarily due to** an additional **$16.5 million** in federal funds purchased[239](index=239&type=chunk) - **Shareholders' equity increased by $7.1 million (2.9%)** to **$253.7 million** at June 30, 2025, **primarily driven by** **net** income and a **decreased by** in accumulated other comprehensive loss[240](index=240&type=chunk) - **Book value per share increased by 3.2%** to **$17.83** at June 30, 2025, from **$17.28** at December 31, 2024[240](index=240&type=chunk) [Investment Securities (Financial Condition)](index=59&type=section&id=Investment%20Securities%20(Financial%20Condition)) The Company's fixed income investment portfolio decreased in total carrying value, with purchases of agency mortgage-backed and collateralized mortgage obligation securities offset by maturities and principal repayments - **The total carrying value of the investment securities portfolio was $215.8 million** at June 30, 2025, down from **$222.3 million** at December 31, 2024[241](index=241&type=chunk) - **The Company purchased $14.0 million** of investment securities during the six months ended June 30, 2025, primarily agency mortgage-backed and collateralized mortgage obligation securities[242](index=242&type=chunk) - **Maturities and principal repayments on securities** totaled **$23.3 million** during the six months ended June 30, 2025[242](index=242&type=chunk) Fixed Income Investment Portfolio (Amortized Cost and Fair Value) (In thousands) | Category | June 30, 2025 Amortized Cost | June 3

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) John Marshall Bancorp, Inc. reported strong Q2 2025 financial performance with significant increases in net income and EPS, driven by loan growth, net interest margin expansion, and robust capitalization [Q2 2025 Performance Overview](index=1&type=section&id=Q2%202025%20Performance%20Overview) John Marshall Bancorp, Inc. reported strong financial performance for Q2 2025, with significant increases in net income and diluted earnings per common share compared to both the prior quarter and the prior year Q2 2025 Financial Performance | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :----------------------------- | :------ | :------ | :--------- | :--------- | | Net Income | $5.1M | $3.9M | $1.2M | 30.7% | | Diluted EPS | $0.36 | $0.27 | $0.09 | 33.3% | - The company achieved **10% annualized loan growth** and **24% annualized earnings per share growth**[2](index=2&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) The company experienced accelerating earnings, continued net interest margin expansion, significant net interest income growth, strong loan demand, excellent asset quality, robust capitalization, and growing book value per share in Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | QoQ Change (%) | YoY Change (%) | | :------------------------------------ | :------ | :------ | :------ | :------------- | :------------- | | Pre-tax, pre-provision earnings (Non-GAAP) | $7.1M | $6.4M | $4.7M | 12.1% | 50.7% | | Tax-equivalent net interest margin (Non-GAAP) | 2.70% | 2.58% | 2.19% | +12 bps | +51 bps | | Net Interest Income | $14.9M | $14.1M | $12.1M | 5.9% | 23.5% | | New Loan Commitments | $135.5M | $96.5M | N/A | 40.5% | N/A | | Book Value per Share | $17.83 | N/A | $16.54 | N/A | 7.8% | - The company maintained **excellent asset quality** with no loans greater than 30 days past due, no non-accrual loans, and no net charge-offs in Q2 2025[3](index=3&type=chunk) - The Bank's regulatory capital ratios remained **well in excess of well-capitalized thresholds**[3](index=3&type=chunk) [CEO Commentary](index=3&type=section&id=CEO%20Commentary) CEO Chris Bergstrom highlighted that strong loan commitments translated into meaningful loan balance growth, with a 10% annualized increase in loans during Q2 2025, emphasizing the company's momentum for increased growth and returns - Loans increased by **$46.4 million** or **10% annualized** during Q2 2025[5](index=5&type=chunk) - New commitments of **$135.5 million** in Q2 2025, a **40% increase** over Q1, indicate potential for further loan and net interest income growth[5](index=5&type=chunk) - Pre-tax, pre-provision earnings increased **over 50%** compared to Q2 2024, driven by loan growth and a **12 basis point sequential improvement** in net interest margin[5](index=5&type=chunk) [Balance Sheet, Liquidity & Credit Quality](index=3&type=section&id=Balance%20Sheet%2C%20Liquidity%20%26%20Credit%20Quality) The company maintained a stable balance sheet with strong loan growth, excellent asset quality, robust liquidity, and well-capitalized regulatory ratios [Overall Balance Sheet Trends](index=3&type=section&id=Overall%20Balance%20Sheet%20Trends) Total assets remained relatively stable year-over-year but showed a modest increase since December 31, 2024, with continued loan growth and a decrease in the fixed income securities portfolio Balance Sheet Overview | Metric | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | Change (vs Dec 31, 2024) | Change (vs June 30, 2024) | | :-------------------------------- | :------------ | :----------- | :------------ | :----------------------- | :------------------------ | | Total Assets | $2.27B | $2.23B | $2.27B | +1.5% | -0.1% | | Total Loans, net of unearned income | $1.92B | $1.87B | $1.83B | +2.5% | +4.9% | | Fixed Income Securities Portfolio | $215.8M | $215.6M | $241.6M | +0.1% | -10.7% | [Loans and Securities Portfolio](index=3&type=section&id=Loans%20and%20Securities%20Portfolio) Loan growth in Q2 2025 was primarily driven by investor real estate, residential mortgage, and construction & development loans, while the fixed income securities portfolio is highly secure and provides steady cash flow - Increase in loans from March 31, 2025, was primarily attributable to growth in investor real estate loans, residential mortgage loans and construction & development loans[7](index=7&type=chunk) - As of June 30, 2025, **95.3%** of the bond portfolio carried the implied guarantee of the United States government or one of its agencies[8](index=8&type=chunk) - **65.1%** of the fixed income portfolio was invested in amortizing bonds, providing a source of steady cash flow[8](index=8&type=chunk) [Liquidity Position](index=3&type=section&id=Liquidity%20Position) The company maintains a highly liquid balance sheet, with total liquidity representing 33.3% of total assets as of June 30, 2025, in addition to available federal funds lines Liquidity Metrics | Metric | June 30, 2025 | March 31, 2025 | | :---------------------------------------------------------------- | :------------ | :------------- | | Total Liquidity (Cash, unencumbered securities, secured borrowing) | $755.6M | $786.9M | | Liquidity as % of Total Assets | 33.3% | 34.5% | | Available Federal Funds Lines | $93.5M | N/A | [Deposits and Borrowings](index=3&type=section&id=Deposits%20and%20Borrowings) Total deposits decreased slightly quarter-over-quarter and year-over-year, primarily due to a reduction in costlier certificates of deposits, partially offset by an increase in interest-bearing demand deposits, with borrowings including FHLB advances, subordinated debt, and new federal funds purchased Deposits and Borrowings Overview | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | QoQ Change (%) | YoY Change (%) | | :-------------------------------- | :------------ | :------------- | :------------ | :------------- | :------------- | | Total Deposits | $1.90B | $1.92B | $1.91B | -1.3% | -0.8% | | Uninsured/Uncollateralized Deposits | $656.0M | N/A | $677.0M | N/A | -3.1% | | FHLB Advances | $56.0M | $56.0M | $0M | 0.0% | N/A | | Subordinated Debt | $24.8M | N/A | N/A | N/A | N/A | | Federal Funds Purchased | $16.5M | N/A | N/A | N/A | N/A | - The Bank reduced costlier certificates of deposits by **$27.8 million** since June 30, 2024, partially offset by a **$13.3 million increase** in interest-bearing demand deposits[10](index=10&type=chunk) [Shareholders' Equity and Capitalization](index=3&type=section&id=Shareholders%27%20Equity%20and%20Capitalization) Shareholders' equity and book value per share increased significantly year-over-year, driven by earnings and a decrease in accumulated other comprehensive loss, with regulatory capital ratios remaining strong and well above well-capitalized thresholds Shareholders' Equity and Book Value | Metric | June 30, 2025 | June 30, 2024 | Change ($) | Change (%) | | :-------------------- | :------------ | :------------ | :--------- | :--------- | | Shareholders' Equity | $253.7M | $235.3M | $18.4M | 7.8% | | Book Value per Share | $17.83 | $16.54 | $1.29 | 7.8% | Capital Ratios | Capital Ratio | Well Capitalized Threshold | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | | :-------------------------- | :------------------------- | :------------ | :----------- | :------------ | | Total risk-based capital ratio | 10.0% | 16.3% | 16.2% | 16.4% | | Tier 1 risk-based capital ratio | 8.0% | 15.3% | 15.2% | 15.4% | | Common equity tier 1 ratio | 6.5% | 15.3% | 15.2% | 15.4% | | Leverage ratio | 5.0% | 12.8% | 12.4% | 12.2% | - The increase 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**, partially offset by cash dividends and share count changes[12](index=12&type=chunk) [Asset Quality and Allowance for Credit Losses](index=4&type=section&id=Asset%20Quality%20and%20Allowance%20for%20Credit%20Losses) The company maintained excellent asset quality with no past due loans, non-accrual loans, or other real estate owned, while the allowance for loan credit losses increased in line with loan portfolio growth - As of June 30, 2025, the Company had **no loans greater than 30 days past due**, **no non-accrual loans**, and **no other real estate owned assets**[16](index=16&type=chunk) Allowance for Credit Losses | Metric | June 30, 2025 | March 31, 2025 | | :------------------------------------ | :------------ | :------------- | | Allowance for loan credit losses | $19.3M | $18.8M | | Allowance for loan credit losses to outstanding loans | 1.01% | 1.01% | | Allowance for credit losses on unfunded loan commitments | $1.2M | $1.1M | - The increase in the allowance for loan credit losses was directly attributable to the **growth in the loan portfolio**[17](index=17&type=chunk) [Commercial Real Estate Portfolio Details](index=4&type=section&id=Commercial%20Real%20Estate%20Portfolio%20Details) The company's owner-occupied and non-owner-occupied Commercial Real Estate (CRE) portfolios demonstrated sound credit quality with strong debt-service-coverage and loan-to-value ratios, with the non-owner occupied office portfolio concentrated in Virginia and Maryland - Owner-occupied and non-owner-occupied CRE portfolios continue to be of **sound credit quality**, with **strong debt-service-coverage** and **loan-to-value ratios**[18](index=18&type=chunk) Non-owner Occupied CRE Portfolio by Asset Class | Asset Class (Non-owner occupied) | Weighted Average Loan-to-Value (1) | Weighted Average Debt Service Coverage Ratio (2) | Principal Balance (thousands) | | :------------------------------- | :--------------------------------- | :----------------------------------------------- | :---------------------------- | | Warehouse & Industrial | 50.4% | 2.2x | $114,220 | | Office | 45.3% | 1.8x | $106,136 | | Retail | 50.1% | 1.8x | $453,032 | | Hotel/Motel | 52.0% | 1.5x | $82,656 | Non-owner Occupied Office Portfolio by Geography | Non-owner occupied office: Geography | Commitment (in 000s) | Percentage | | :----------------------------------- | :------------------- | :--------- | | Virginia | $78,140 | 69.7% | | Maryland | $27,561 | 24.6% | | DC | $5,885 | 5.3% | | Other | $449 | 0.4% | | Total | $112,035 | 100.0% | [Income Statement Review](index=5&type=section&id=Income%20Statement%20Review) The company demonstrated substantial growth in net income and net interest income for both Q2 and H1 2025, driven by improved loan yields and reduced interest expenses [Quarterly Results (Q2 2025 vs Q2 2024)](index=5&type=section&id=Quarterly%20Results%20(Q2%202025%20vs%20Q2%202024)) The company reported a substantial increase in net income and pre-tax, pre-provision net income for Q2 2025, primarily driven by significant growth in net interest income, margin expansion, and improved efficiency Q2 2025 vs Q2 2024 Income Statement Highlights | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :------------------------------------ | :------ | :------ | :--------- | :--------- | | Net Income | $5.1M | $3.9M | $1.2M | 30.7% | | Pre-tax, pre-provision net income (Non-GAAP) | $7.1M | $4.7M | $2.4M | 50.7% | | Net Interest Income | $14.9M | $12.1M | $2.8M | 23.5% | | Tax-equivalent Net Interest Margin (Non-GAAP) | 2.70% | 2.19% | +51 bps | N/A | | Return on Average Assets (annualized) | 0.91% | 0.70% | +0.21% | N/A | | Return on Average Equity (annualized) | 8.06% | 6.68% | +1.38% | N/A | | Efficiency Ratio | 53.9% | 62.6% | -8.7% | N/A | - Interest income increased by **3.9%** due to higher loan yields, while interest expense declined by **12.2%** primarily from lower rates on time deposits and money market accounts[27](index=27&type=chunk)[30](index=30&type=chunk) - Non-interest expense increased by **5.1%** due to additional personnel hires (five business development officers) and higher professional fees, partially offset by lower occupancy and marketing expenses[33](index=33&type=chunk) [Year-to-Date Results (H1 2025 vs H1 2024)](index=6&type=section&id=Year-to-Date%20Results%20(H1%202025%20vs%20H1%202024)) For the first six months of 2025, net income increased by 22.2%, driven by a 21.8% rise in net interest income, attributed to a decrease in the cost of interest-bearing liabilities and an increase in yields on interest-earning assets H1 2025 vs H1 2024 Income Statement Highlights | Metric | H1 2025 | H1 2024 | Change ($) | Change (%) | | :------------------------------------ | :------ | :------ | :--------- | :--------- | | Net Income | $9.9M | $8.1M | $1.8M | 22.2% | | Net Interest Income | $29.0M | $23.8M | $5.2M | 21.8% | | Tax-equivalent Net Interest Margin (Non-GAAP) | 2.64% | 2.15% | +49 bps | N/A | | Return on Average Assets (annualized) | 0.89% | 0.72% | +0.17% | N/A | | Return on Average Equity (annualized) | 7.91% | 6.95% | +0.96% | N/A | | Efficiency Ratio | 55.1% | 62.8% | -7.7% | N/A | - The provision for credit losses was **$707 thousand** for H1 2025, compared to a **$1.1 million recovery** in H1 2024, primarily due to changes in loan portfolio composition and volume, and updated economic forecasts[39](index=39&type=chunk) - Non-interest income decreased by **$361 thousand**, mainly due to reduced gains on SBA 7(a) loan sales, lower swap fee income, and decreased insurance commissions[40](index=40&type=chunk) - Non-interest expense increased by **4.6%**, driven by a **6.1% rise** in salaries and employee benefits due to hiring five business development officers, and higher data processing and state franchise tax expenses, partially offset by lower occupancy and marketing costs[41](index=41&type=chunk) [Explanation of Non-GAAP Financial Measures](index=7&type=section&id=Explanation%20of%20Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures, including tax-equivalent net interest margin, adjusted capital ratios, and pre-tax, pre-provision earnings, used for performance comparison and capital assessment [Definition and Purpose](index=7&type=section&id=Definition%20and%20Purpose) This section clarifies the non-GAAP financial measures used in the release, which management believes provide a better comparison of operating performance and the impact of unrealized bond portfolio losses on regulatory capital - Non-GAAP information is used to provide a **better comparison of period-to-period operating performance** and **unrealized losses** in the Company's bond portfolio on the Bank's regulatory capital ratios[44](index=44&type=chunk) - Tax-equivalent net interest margin: Reflects adjustments for differences in tax treatment of interest income sources[45](index=45&type=chunk) - Adjusted Bank regulatory capital ratios: Hypothetical scenario where the entire bond portfolio was sold at fair market value and any losses realized[45](index=45&type=chunk) - Pre-tax, pre-provision earnings: Excludes income tax expense and the provision for (recovery of) credit losses[45](index=45&type=chunk) [Company Information](index=9&type=section&id=Company%20Information) John Marshall Bancorp, Inc. is the holding company for John Marshall Bank, a community bank headquartered in Reston, Virginia, serving local businesses and professionals across the Washington, D.C. Metropolitan area [Company Profile](index=9&type=section&id=Company%20Profile) John Marshall Bancorp, Inc. is the holding company for John Marshall Bank, headquartered in Reston, Virginia, operating eight full-service branches across the Washington, D.C. Metropolitan area, focusing on personalized banking products and services to local businesses and professionals - John Marshall Bancorp, Inc. is the parent company of John Marshall Bank, headquartered in Reston, Virginia[47](index=47&type=chunk) - The Bank operates eight full-service branches in Alexandria, Arlington, Loudoun, Prince William, Reston, Tysons (Virginia), Rockville (Maryland), and Washington, D.C.[47](index=47&type=chunk) - The Bank specializes in serving local businesses and professionals, with dedicated relationship managers providing expertise in niche industries such as charter schools, government contractors, health services, and property management[47](index=47&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=9&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises that forward-looking statements are subject to inherent uncertainties and various risk factors, and the company disclaims any obligation to update them [Disclaimer](index=9&type=section&id=Disclaimer) This section provides a cautionary statement regarding forward-looking statements, indicating they are based on assumptions and inherently uncertain, listing various factors that could materially and adversely affect the company's operations - The press release contains forward-looking statements based on certain assumptions, and the ability to predict results or the actual effect of future plans is **inherently uncertain**[48](index=48&type=chunk) - Factors that could materially affect operations include: concentration of business in the Washington, D.C. metropolitan area, adequacy of allowance for loan credit losses, deterioration of asset quality, liquidity and interest rate risks, changes in financial condition, ability to maintain deposit relationships, changes in consumer habits, inflation and interest rates, monetary and fiscal policies, increased competition, adverse changes in securities markets, regulatory changes, litigation, cyber threats, and economic conditions[48](index=48&type=chunk) - The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions to forward-looking statements[48](index=48&type=chunk) [Financial Tables](index=10&type=section&id=Financial%20Tables) This section provides comprehensive financial data, including summarized highlights, consolidated balance sheets, income statements, historical quarterly trends, and detailed loan, deposit, and borrowing information [Financial Highlights (Summary)](index=10&type=section&id=Financial%20Highlights%20(Summary)) This table provides a summarized overview of key financial data, including selected balance sheet items, summary results of operations, per share data, performance ratios, asset quality indicators, and capital ratios for the three and six months ended June 30, 2025, and 2024 Summary Financial Highlights | Metric | June 30, 2025 (3 Months) | June 30, 2024 (3 Months) | June 30, 2025 (6 Months) | June 30, 2024 (6 Months) | | :------------------------------------ | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Net Interest Income | $14,926 | $12,081 | $29,023 | $23,825 | | Net Income | $5,103 | $3,905 | $9,913 | $8,109 | | Diluted EPS | $0.36 | $0.27 | $0.69 | $0.57 | | Return on average assets (annualized) | 0.91% | 0.70% | 0.89% | 0.72% | | Efficiency ratio | 53.9% | 62.6% | 55.1% | 62.8% | | Total Assets | $2,267,953 | $2,269,757 | $2,267,953 | $2,269,757 | | Total Deposits | $1,896,893 | $1,912,840 | $1,896,893 | $1,912,840 | | Shareholders' Equity | $253,732 | $235,346 | $253,732 | $235,346 | [Consolidated Balance Sheets](index=11&type=section&id=Consolidated%20Balance%20Sheets) This table presents the consolidated balance sheets, detailing assets, liabilities, and shareholders' equity at June 30, 2025, December 31, 2024, and June 30, 2024, along with percentage changes over the last six months and year-over-year Consolidated Balance Sheet Data | Asset/Liability | June 30, 2025 ($ thousands) | Dec 31, 2024 ($ thousands) | June 30, 2024 ($ thousands) | Last Six Months Change (%) | Year Over Year Change (%) | | :-------------------------------- | :-------------------------- | :------------------------- | :-------------------------- | :------------------------- | :------------------------ | | Total Assets | 2,267,953 | 2,234,947 | 2,269,757 | 1.5% | (0.1)% | | Loans, net of unearned income | 1,916,915 | 1,872,173 | 1,827,187 | 2.4% | 4.9% | | Total Deposits | 1,896,893 | 1,892,415 | 1,912,840 | 0.2% | (0.8)% | | Total Liabilities | 2,014,221 | 1,988,333 | 2,034,411 | 1.3% | (1.0)% | | Total Shareholders' Equity | 253,732 | 246,614 | 235,346 | 2.9% | 7.8% | [Consolidated Statements of Income](index=12&type=section&id=Consolidated%20Statements%20of%20Income) This table presents the consolidated statements of income for the three and six months ended June 30, 2025, and 2024, showing detailed breakdowns of interest and dividend income, interest expense, non-interest income, non-interest expenses, and net income Consolidated Income Statement Data | Income Statement Item | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Q2 % Change | H1 2025 ($ thousands) | H1 2024 ($ thousands) | H1 % Change | | :------------------------------------ | :-------------------- | :-------------------- | :---------- | :-------------------- | :-------------------- | :---------- | | Total interest and dividend income | 27,843 | 26,791 | 3.9% | 55,147 | 53,710 | 2.7% | | Total interest expense | 12,917 | 14,710 | (12.2)% | 26,124 | 29,885 | (12.6)% | | Net interest income | 14,926 | 12,081 | 23.5% | 29,023 | 23,825 | 21.8% | | Provision for (recovery of) Credit Losses | 537 | (292) | (283.9)% | 707 | (1,068) | (166.2)% | | Total non-interest income | 507 | 555 | (8.6)% | 1,012 | 1,373 | (26.3)% | | Total non-interest expenses | 8,313 | 7,909 | 5.1% | 16,561 | 15,833 | 4.6% | | Net income | 5,103 | 3,905 | 30.7% | 9,913 | 8,109 | 22.2% | | Diluted Earnings Per Share | 0.36 | 0.27 | 33.3% | 0.69 | 0.57 | 21.1% | [Historical Trends - Quarterly Financial Data](index=13&type=section&id=Historical%20Trends%20-%20Quarterly%20Financial%20Data) This table provides a historical view of quarterly financial data, including profitability, financial performance ratios, per share data, non-interest income, non-interest expenses, balance sheet items, and capital ratios, spanning from Q1 2024 to Q2 2025 Quarterly Financial Trends | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | :------ | | Net income ($ thousands) | 5,103 | 4,810 | 4,776 | 4,235 | 3,905 | 4,204 |\ | Return on average assets (annualized) | 0.91% | 0.87% | 0.85% | 0.73% | 0.70% | 0.75% |\ | Net interest margin | 2.69% | 2.58% | 2.52% | 2.30% | 2.19% | 2.11% |\ | Efficiency ratio | 53.9% | 56.5% | 55.4% | 58.3% | 62.6% | 63.1% |\ | Diluted EPS | $0.36 | $0.34 | $0.33 | $0.30 | $0.27 | $0.30 |\ | Book value per share | $17.83 | $17.72 | $17.28 | $17.07 | $16.54 | $16.51 |\ | Total loans, net of unearned income ($ thousands) | 1,916,915 | 1,870,472 | 1,872,173 | 1,842,598 | 1,827,187 | 1,825,931 |\ | Total deposits ($ thousands) | 1,896,893 | 1,922,175 | 1,892,415 | 1,936,150 | 1,912,840 | 1,900,990 |\ | Leverage ratio | 12.8% | 12.6% | 12.4% | 11.9% | 12.2% | 11.8% | [Loan, Deposit and Borrowing Detail](index=14&type=section&id=Loan%2C%20Deposit%20and%20Borrowing%20Detail) This table provides a detailed breakdown of the company's loan portfolio by type, deposit composition, and borrowing sources for various quarters from Q1 2024 to Q2 2025, highlighting shifts in loan categories and funding sources Loan Portfolio by Category | Loan Category | June 30, 2025 ($ thousands) | % of Total | March 31, 2025 ($ thousands) | % of Total | June 30, 2024 ($ thousands) | % of Total | | :---------------------------- | :-------------------------- | :--------- | :--------------------------- | :--------- | :-------------------------- | :--------- | | Total business loans | 363,343 | 19.0% | 364,690 | 19.6% | 391,577 | 21.5% | | Total commercial real estate loans | 1,058,415 | 55.3% | 1,027,828 | 55.1% | 953,088 | 52.3% | | Residential mortgage loans | 489,522 | 25.6% | 472,747 | 25.3% | 476,764 | 26.2% | | Total loans | 1,912,278 | 100.0% | 1,866,074 | 100.0% | 1,822,305 | 100.0% | Deposit Composition | Deposit Type | June 30, 2025 ($ thousands) | % of Total | March 31, 2025 ($ thousands) | % of Total | June 30, 2024 ($ thousands) | % of Total | | :---------------------------- | :-------------------------- | :--------- | :--------------------------- | :--------- | :-------------------------- | :--------- | | Non-interest bearing demand deposits | 438,628 | 23.1% | 437,822 | 22.8% | 437,169 | 22.8% | | Interest-bearing demand deposits | 681,230 | 35.9% | 705,386 | 36.7% | 667,951 | 34.9% | | Time deposits | 734,069 | 38.7% | 738,706 | 38.4% | 761,836 | 39.8% | | Brokered deposits | 301,962 | 15.9% | 297,678 | 15.5% | 293,629 | 15.4% | | Total deposits | 1,896,893 | 100.0% | 1,922,175 | 100.0% | 1,912,840 | 100.0% | Borrowing Sources | Borrowing Type | June 30, 2025 ($ thousands) | % of Total | March 31, 2025 ($ thousands) | % of Total | June 30, 2024 ($ thousands) | % of Total | | :---------------------------- | :-------------------------- | :--------- | :--------------------------- | :--------- | :-------------------------- | :--------- | | Federal funds purchased | 16,500 | 17.0% | - | 0.0% | - | 0.0% | | Federal Home Loan Bank advances | 56,000 | 57.5% | 56,000 | 69.3% | - | 0.0% | | Federal Reserve Bank borrowings | - | 0.0% | - | 0.0% | 77,000 | 75.7% | | Subordinated debt, net | 24,833 | 25.5% | 24,812 | 30.7% | 24,749 | 24.3% | | Total borrowings | 97,333 | 100.0% | 80,812 | 100.0% | 101,749 | 100.0% | [Average Balance Sheets, Interest and Rates (Six Months)](index=15&type=section&id=Average%20Balance%20Sheets%2C%20Interest%20and%20Rates%20(Six%20Months)) This table provides average balance sheets, interest income/expense, and average rates for interest-earning assets and interest-bearing liabilities for the six months ended June 30, 2025, and 2024, including GAAP and Non-GAAP net interest income and margins H1 Average Balance Sheets, Interest and Rates | Metric | H1 2025 Average Balance ($ thousands) | H1 2025 Interest Income/Expense ($ thousands) | H1 2025 Average Rate (%) | H1 2024 Average Balance ($ thousands) | H1 2024 Interest Income/Expense ($ thousands) | H1 2024 Average Rate (%) | | :------------------------------------ | :------------------------------------ | :-------------------------------------------- | :----------------------- | :------------------------------------ | :-------------------------------------------- | :----------------------- | | Total interest-earning assets | 2,222,779 | 55,219 | 5.01% | 2,235,139 | 53,793 | 4.84% | | Total loans, net of unearned income | 1,868,296 | 50,095 | 5.41% | 1,823,344 | 47,062 | 5.19% | | Total interest-bearing liabilities | 1,535,774 | 26,124 | 3.43% | 1,576,075 | 29,885 | 3.81% | | Total interest-bearing deposits | 1,454,872 | 24,300 | 3.37% | 1,475,178 | 27,381 | 3.73% | | Net interest income (GAAP) | N/A | 29,023 | 1.57% | N/A | 23,825 | 1.02% | | Tax-equivalent net interest margin (Non-GAAP) | N/A | N/A | 2.64% | N/A | N/A | 2.15% | [Average Balance Sheets, Interest and Rates (Three Months)](index=16&type=section&id=Average%20Balance%20Sheets%2C%20Interest%20and%20Rates%20(Three%20Months)) This table provides average balance sheets, interest income/expense, and average rates for interest-earning assets and interest-bearing liabilities for the three months ended June 30, 2025, and 2024, including GAAP and Non-GAAP net interest income and margins Q2 Average Balance Sheets, Interest and Rates | Metric | Q2 2025 Average Balance ($ thousands) | Q2 2025 Interest Income/Expense ($ thousands) | Q2 2025 Average Rate (%) | Q2 2024 Average Balance ($ thousands) | Q2 2024 Interest Income/Expense ($ thousands) | Q2 2024 Average Rate (%) | | :------------------------------------ | :------------------------------------ | :-------------------------------------------- | :----------------------- | :------------------------------------ | :-------------------------------------------- | :----------------------- | | Total interest-earning assets | 2,224,806 | 27,880 | 5.03% | 2,222,658 | 26,829 | 4.85% | | Total loans, net of unearned income | 1,868,290 | 25,255 | 5.42% | 1,810,722 | 23,396 | 5.20% | | Total interest-bearing liabilities | 1,530,811 | 12,917 | 3.38% | 1,551,953 | 14,710 | 3.81% | | Total interest-bearing deposits | 1,449,627 | 12,001 | 3.32% | 1,450,216 | 13,450 | 3.73% | | Net interest income (GAAP) | N/A | 14,926 | 1.64% | N/A | 12,081 | 1.04% | | Tax-equivalent net interest margin (Non-GAAP) | N/A | N/A | 2.70% | N/A | N/A | 2.19% | [Reconciliation of Certain Non-GAAP Financial Measures](index=17&type=section&id=Reconciliation%20of%20Certain%20Non-GAAP%20Financial%20Measures) This section provides a reconciliation of GAAP to Non-GAAP financial measures, specifically for regulatory capital ratios and pre-tax, pre-provision earnings, detailing adjustments made for unrealized losses on available-for-sale and held-to-maturity securities Regulatory Capital Ratios Reconciliation (Bank) | Regulatory Ratio (Bank) | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :----------- | :------------ | | Total risk-based capital (GAAP) | $305,511 | $295,119 | $290,228 | | Adjusted total risk-based capital (Non-GAAP) | $286,898 | $272,034 | $264,589 | | Total risk-based capital ratio (GAAP) | 16.3% | 16.2% | 16.4% | | Adjusted total risk-based capital ratio (Non-GAAP) | 15.6% | 15.3% | 15.3% | | Leverage ratio (GAAP) | 12.8% | 12.4% | 12.2% | | Adjusted leverage ratio (Non-GAAP) | 12.0% | 11.5% | 11.2% | Pre-tax, Pre-provision Earnings Reconciliation | Pre-tax, pre-provision earnings (Non-GAAP) | June 30, 2025 ($ thousands) | Dec 31, 2024 ($ thousands) | June 30, 2024 ($ thousands) | | :----------------------------------------- | :-------------------------- | :------------------------- | :-------------------------- | | Income before income taxes | 6,583 | 6,104 | 5,019 | | Adjustment: Provision for (recovery of) credit losses | 537 | 298 | (292) | | Pre-tax, pre-provision earnings (Non-GAAP) | 7,120 | 6,402 | 4,727 | - Adjustments for regulatory capital ratios include subtracting **unrealized losses** on available-for-sale and held-to-maturity securities, **net of tax benefit**[70](index=70&type=chunk)

Financial Performance - The Company achieved net income of $4.8 million for the three months ended March 31, 2025, an increase of 14.3% compared to $4.2 million for the same period in 2024 [173]. - Diluted earnings per share rose to $0.34 for the three months ended March 31, 2025, compared to $0.30 for the same period in 2024, reflecting a 13.3% increase [173]. - Net interest income increased to $14.1 million for the three months ended March 31, 2025, up from $11.7 million in the same period of 2024, representing a growth of 19.5% [170]. - Non-interest income decreased to $505,000 for the three months ended March 31, 2025, down from $818,000 in the same period of 2024 [170]. - The efficiency ratio improved to 56.5% for the three months ended March 31, 2025, compared to 63.1% for the same period in 2024, indicating better cost management [170]. Asset and Liability Management - As of March 31, 2025, the Company reported total consolidated assets of $2.27 billion, total loans of $1.87 billion, total deposits of $1.92 billion, and total shareholders' equity of $253.0 million [164]. - Total assets increased by $37.5 million or 1.7% to $2.27 billion as of March 31, 2025, primarily due to a $42.0 million rise in interest-bearing deposits [199]. - Total liabilities grew by $31.1 million or 1.6% to $2.02 billion, mainly due to a net increase in deposits of $29.8 million [200]. - Shareholders' equity increased by $6.3 million or 2.6% to $253.0 million, attributed to higher net income and a decrease in accumulated other comprehensive loss [201]. Loan and Deposit Information - Gross loans decreased by $1.7 million to $1.87 billion as of March 31, 2025, reflecting the company's disciplined underwriting standards [208]. - The composition of loans held for investment as of March 31, 2025, included 62.84% in commercial real estate loans, 9.29% in construction and land development, and 25.33% in residential loans [210]. - Total deposits increased by $29.8 million or 1.6% to $1.92 billion as of March 31, 2025, with non-interest bearing demand deposits at $437.8 million [224]. - Interest-bearing deposits rose by $25.2 million or 1.7% to $1.48 billion, representing 77.2% of total deposits as of March 31, 2025 [225]. Credit Quality and Allowance for Loan Losses - The Company maintained an allowance for loan credit losses of $18.8 million, which is 1.01% of total gross loans net of unearned income [170]. - The allowance for loan credit losses was $18.8 million, representing 1.01% of outstanding loans as of March 31, 2025, compared to 1.00% at December 31, 2024 [218]. - The Company recorded a provision for credit losses of $170 thousand for the first quarter of 2025, compared to a recovery of $776 thousand for the first quarter of 2024 [191]. - The company reported no nonperforming assets as of March 31, 2025, maintaining strong asset quality [213]. - Nonaccrual loans remained at 0.00% of gross loans, indicating no loans were placed on nonaccrual status during the reporting period [216]. Capital Ratios and Equity - The equity-to-total assets ratio increased to 11.9% as of March 31, 2025, compared to 11.3% as of March 31, 2024 [170]. - The total risk-based capital ratio improved to 16.5% as of March 31, 2025, compared to 16.1% as of March 31, 2024 [170]. - Shareholders' equity increased by $6.3 million or 2.6% to $253.0 million at March 31, 2025, with a book value per share of $17.72 [233]. Investment and Liquidity - The Company purchased $3.6 million of investment securities in Q1 2025, including $2.6 million in agency mortgage-backed securities [203]. - Total liquidity was $786.9 million at March 31, 2025, an increase from $727.3 million at December 31, 2024 [237]. - The Company had a total FHLB available borrowing capacity of $401.0 million and additional borrowing capacity with the Reserve Bank of approximately $107.1 million as of March 31, 2025 [236]. - The Company had available federal funds lines with correspondent banks of $110.0 million at March 31, 2025 [238]. Interest Rates and Income - The average interest rate on total interest-bearing deposits was 3.42% for the three months ended March 31, 2025 [228]. - Interest income increased by $0.4 million or 1.4% to $27.3 million on a fully tax-equivalent basis for the three months ended March 31, 2025, driven by increases in both rates and volume on interest-earning assets [186]. - Interest expense decreased by $2.0 million to $13.2 million for the three months ended March 31, 2025, compared to $15.2 million for the same period in 2024, mainly due to lower rates on deposits and decreased volume on borrowings [190].

Financial Performance - Net income for Q1 2025 was $4.8 million, a 14.4% increase from $4.2 million in Q1 2024, with diluted earnings per share rising to $0.34 from $0.30[2] - Pre-tax, pre-provision earnings (Non-GAAP) increased by 37.0% to $6.4 million in Q1 2025 compared to the same period in 2024[3] - The Company reported net income of $4.8 million for Q1 2025, a 14.4% increase from Q1 2024[27] - Pre-tax, pre-provision earnings (Non-GAAP) were $6.4 million for Q1 2025, a 37.0% increase compared to $4.6 million in Q1 2024[27] - Net income for the quarter was $4,810 thousand, reflecting a 14.4% increase from $4,204 thousand year-over-year[43] - Basic and diluted earnings per share both increased by 13.3% to $0.34 compared to $0.30 in the prior year[46] Income and Expenses - Net interest income rose by 20.0% to $14.1 million in Q1 2025, driven by a net interest margin increase of 47 basis points to 2.58%[3] - Net interest income increased by $2.4 million or 20.0% in Q1 2025, driven by higher loan yields and a reduction in maturing deposits[28] - Non-interest income decreased by $313 thousand to $505 thousand in Q1 2025, primarily due to unfavorable mark-to-market adjustments[31] - Non-interest expense increased by $324 thousand or 4.1% in Q1 2025, mainly due to higher salary and employee benefit expenses[32] - Total non-interest income decreased by 38.3% to $505,000 from $818,000 year-over-year[46] - Total non-interest expenses increased by 4.1% to $8,248,000 compared to $7,924,000 in the previous year[46] Asset and Liability Management - Total assets reached $2.27 billion as of March 31, 2025, reflecting a 1.7% increase since December 31, 2024[5] - Total loans increased by 2.4% to $1.87 billion compared to $1.83 billion a year earlier, with significant growth in investor real estate and construction loans[6] - Total deposits reached $1,922,175 thousand, a 1.6% increase from $1,892,415 thousand in the previous quarter[43] - Total loans amounted to $1,866,074 million, with a slight decrease from $1,867,652 million in the previous quarter[51] - Total deposits increased to $1,922,175 million, up from $1,892,415 million in the previous quarter, reflecting a growth of 1.6%[51] Capital and Liquidity - The Bank's total risk-based capital ratio was 16.5% as of March 31, 2025, well above the regulatory threshold of 10.0%[13] - The liquidity position totaled $786.9 million, representing 34.5% of total assets, an increase from 32.5% at the end of 2024[8] - Total risk-based capital increased to $300,729 thousand as of March 31, 2025, up from $286,038 thousand as of March 31, 2024, a growth of 5.14%[59] - Tier 1 capital rose to $281,335 thousand as of March 31, 2025, compared to $267,795 thousand as of March 31, 2024, an increase of 5.06%[59] - The adjusted total risk-based capital ratio improved to 15.7% as of March 31, 2025, compared to 15.0% as of March 31, 2024[59] Efficiency and Quality - The efficiency ratio improved to 56.5% in Q1 2025 from 63.1% in Q1 2024, attributed to increased net interest income[33] - The Company recorded no charge-offs during Q1 2025, maintaining excellent asset quality with no loans greater than 30 days past due[17] - The Company recorded a provision for credit losses of $170 thousand in Q1 2025, compared to a recovery of $776 thousand in Q1 2024[30] - Return on average assets (annualized) increased to 0.87%, compared to 0.75% in the previous year[43] - Return on average equity (annualized) improved to 7.76%, up from 7.23% year-over-year[43]

Loan Portfolio Composition - Approximately 17.6% of the loan portfolio is related to owner-occupied commercial real estate loans, while 40.5% is related to managed investment commercial real estate[48]. - Construction and development loans made up approximately 8.8% of the loan portfolio as of December 31, 2024[51]. - Combined, commercial term loans and lines of credit represent approximately 2.6% of the loan portfolio as of December 31, 2024[55]. - Bank originated 1-4 residential mortgage loans represented 3.5% of the loan portfolio as of December 31, 2024[56]. - Approximately 16.0% of the loan portfolio related to purchased adjustable-rate mortgages as of December 31, 2024[57]. Credit Risk Management - The company adheres to a disciplined and conservative underwriting approach to manage credit risk, focusing on maintaining a healthy risk profile[76]. - Risk management processes include quarterly assessments and annual evaluations of various risk exposures, overseen by the board of directors[72]. - The company’s risk management processes are overseen by its senior management, who report to the board of directors[74]. - The company’s Asset and Liability Committee oversees the management of interest rate and liquidity risk[77]. - The company has established risk appetite metrics to reflect the levels and types of risk it is willing to accept[74]. Regulatory Compliance - The company is classified as an "emerging growth company" and may remain so for up to five years or until total annual gross revenues exceed $1.07 billion[81]. - The company is not subject to consolidated regulatory capital requirements due to having total consolidated assets of less than $3 billion[98]. - The company must obtain prior approval from the Federal Reserve if cash dividends declared by the Bank exceed net income for that year plus retained net profits of the two preceding years[99]. - The company is subject to various statutory and regulatory restrictions on its ability to pay dividends[99]. - The Bank is subject to AML laws, requiring it to have policies and procedures to detect and report money laundering and terrorist financing[117]. Capital Ratios and Financial Health - The Bank's common equity Tier 1 capital ratio is 7.0%, exceeding the minimum requirement of 4.5% plus a 2.5% capital conservation buffer[103]. - The minimum Tier 1 capital ratio for well-capitalized status is now 8.0%, an increase from previous requirements[104]. - The Bank's capital ratios were in excess of the requirements as of December 31, 2024 and 2023[106]. Employee and Compensation Information - The company had 130 full-time employees and 3 part-time employees as of December 31, 2024[84]. - The company has a competitive compensation and benefits program, including annual bonuses and a 401(k) plan with employer matching contributions[85]. Community Engagement - The Company is committed to serving low and moderate-income areas through various community outreach programs and no-fee banking services[68]. - The Bank received a "satisfactory" rating under the Community Reinvestment Act in its most recent examination[115]. - The final rule to modernize CRA regulations will take effect on January 1, 2026, with revised data reporting requirements starting January 1, 2027[116]. Cybersecurity and Risk Management - The Company has not experienced significant data loss or material financial losses related to cybersecurity attacks to date, but risks remain high due to evolving threats[132]. - The federal bank regulatory agencies expect financial institutions to establish sufficient business continuity planning processes to ensure rapid recovery after a cyberattack[129]. - The SEC's final rule mandates public companies to disclose material cybersecurity incidents and their risk management strategies[131]. Future Outlook and Legislative Impact - The Federal Reserve's monetary policies significantly affect the operating results of commercial banks, including the Company, and are expected to continue doing so in the future[139]. - Future legislation may impact the regulatory structure under which the Company operates, potentially increasing costs and limiting business opportunities[140]. Reporting and Governance - The Company is subject to periodic reporting requirements under the Exchange Act, with filings available on its website[141]. - The Nasdaq Stock Market enacted a rule requiring listed companies to adopt clawback policies for excess incentive compensation[135]. - The Company has adopted a clawback policy compliant with the Nasdaq rule[137]. - The federal bank regulatory agencies have issued guidance on incentive compensation policies to prevent excessive risk-taking by financial institutions[133].

Financial Performance - Net income for Q4 2024 was $4.8 million, an increase of 12.8% compared to $4.2 million in Q3 2024 and $4.5 million in Q4 2023[2]. - The Company reported a net income of $4.8 million for Q4 2024, an increase of $274 thousand or 6.1% compared to Q4 2023[25]. - For the twelve months ended December 31, 2024, net income was $17.1 million, an increase of $12.0 million compared to $5.2 million in 2023[33]. - Net income for the twelve months ended December 31, 2024, increased by 231.9% to $17,121 compared to $5,158 in 2023[54]. Interest Income and Margin - Net interest income for Q4 2024 was $14.1 million, reflecting a $912 thousand or 27.5% annualized increase from $13.2 million in Q3 2024[4]. - Net interest income for Q4 2024 increased by $2.0 million or 17.0% compared to Q4 2023, with an annualized net interest margin of 2.52%[26]. - The yield on interest-earning assets was 5.01% for Q4 2024, up from 4.68% in Q4 2023, while the cost of interest-bearing liabilities decreased slightly to 3.62%[27]. - Net interest income rose to $14,066,000 for the three months ended December 31, 2024, compared to $12,027,000 for the same period in 2023, marking a 16.9% increase[47]. - The net interest margin improved to 2.52% in Q4 2024 compared to 2.11% in Q4 2023, indicating a significant increase of 19.5%[66]. Loan Portfolio and Credit Losses - Loan portfolio grew by $29.6 million or 6.4% annualized in Q4 2024, with new loan commitments increasing by $52.5 million or 79.4% compared to the same period in 2023[4]. - The allowance for loan credit losses was $18.7 million or 1.00% of outstanding loans as of December 31, 2024, down from $19.5 million or 1.05% at December 31, 2023[19]. - The Company recorded a provision for credit losses of $298 thousand in Q4 2024, compared to a release of $781 thousand in Q4 2023, driven by a loan portfolio growth of $29.6 million[28]. - Provision for credit losses showed a recovery of $298 compared to a loss of $781 in the previous year[54]. Assets and Deposits - Total assets decreased by $39.4 million or 1.7% from $2.27 billion at September 30, 2024, to $2.23 billion at December 31, 2024[7]. - Total deposits were $1.89 billion at December 31, 2024, a decrease of $43.7 million or 2.3% from $1.94 billion at September 30, 2024[11]. - Total assets decreased slightly to $2,234,947,000 from $2,242,549,000, a decline of 0.3%[47]. - Total liabilities decreased by 2.1% to $1,988,333 from $2,012,635 year-over-year[51]. Capital Ratios and Efficiency - The Bank's total risk-based capital ratio was 16.2% as of December 31, 2024, compared to 15.7% at December 31, 2023[15]. - Total risk-based capital ratio increased to 16.2% from 15.7%, indicating stronger capital adequacy[47]. - The efficiency ratio improved to 55.4% from 59.7%, demonstrating enhanced operational efficiency[47]. - The efficiency ratio improved to 58.5% on a core basis for the twelve months ended December 31, 2023, compared to 86.7% on a GAAP basis[75]. Non-Interest Income and Expenses - Non-interest income was $281 thousand for Q4 2024, a decrease of $343 thousand from Q4 2023, primarily due to unfavorable mark-to-market adjustments[29]. - Non-interest expense increased by $391 thousand or 5.2% in Q4 2024 compared to Q4 2023, mainly due to higher salary and employee benefit expenses[30]. - Non-interest income for the twelve months ended December 31, 2024 was $2.3 million, compared to a loss of $14.9 million in 2023[36]. Operational Metrics - Return on average assets (annualized) improved to 0.85% from 0.78% year-over-year[47]. - Earnings per share (basic) increased to $1.20 for the twelve months ended December 31, 2024, compared to $0.36 in 2023, a growth of 233.3%[47]. - The number of full-time equivalent employees remained stable at 132, unchanged from the previous year[47]. Strategic Initiatives - The company is investing $200 million in R&D for new technologies aimed at enhancing user experience and product efficiency[17]. - Market expansion efforts in Europe resulted in a 25% increase in sales, with plans to enter two additional countries by Q1 2024[17]. - The company completed a strategic acquisition of a tech startup for $50 million, expected to enhance its product offerings[17].

Financial Position - As of September 30, 2024, the Company had total consolidated assets of $2.27 billion, total loans net of unearned income of $1.82 billion, total deposits of $1.94 billion, and total shareholders' equity of $243.1 million[163]. - Total assets increased by $31.8 million or 1.4% to $2.27 billion at September 30, 2024, compared to $2.24 billion at December 31, 2023[234]. - Total liabilities increased by $18.6 million or 0.9% to $2.03 billion at September 30, 2024, compared to $2.01 billion at December 31, 2023[235]. - Shareholders' equity increased by $13.2 million or 5.7% to $243.1 million at September 30, 2024, compared to $229.9 million at December 31, 2023[235]. - Book value per share was $17.07 as of September 30, 2024, compared to $16.25 as of December 31, 2023[235]. Income and Earnings - Net income for the nine months ended September 30, 2024 increased by $11.7 million to $12.3 million compared to $0.7 million for the same period of 2023[169]. - Diluted earnings per share for the nine months ended September 30, 2024 were $0.87, an increase from $0.05 reported for the same period in 2023[169]. - Core net income for the nine months ended September 30, 2024, was $12,344,000, compared to $15,277,000 for the same period in 2023, reflecting a decrease of 19.0%[176]. - Earnings per share (diluted) for the nine months ended September 30, 2024, was $0.87, compared to $1.08 for the same period in 2023, a decrease of 19.4%[176]. - Net income for the three months ended September 30, 2024, increased by $14.3 million to $4.2 million, reversing a net loss of $10.1 million in the same quarter of 2023[203]. - Diluted earnings per share for the three months ended September 30, 2024, were $0.30, an increase of $1.02 from $(0.72) reported for the same period in 2023[203]. Interest Income and Expenses - Net interest income for the nine months ended September 30, 2024 decreased by $1.5 million or 3.8% compared to the same period of 2023[170]. - Interest income increased by $7.9 million or 10.6% to $82.3 million for the nine months ended September 30, 2024, compared to $74.4 million for the same period in 2023[189]. - Interest expense increased by $9.4 million to $45.2 million for the nine months ended September 30, 2024, compared to $35.7 million for the same period in 2023[193]. - Net interest income for the three months ended September 30, 2024, increased by $1.2 million or 9.8% compared to the same period in 2023, driven by higher yields on interest-earning assets[204]. - The net interest margin was 2.30% for the three months ended September 30, 2024, up from 2.08% for the same period in 2023, primarily due to higher yields on interest-earning assets[215]. Non-Interest Income and Expenses - Non-interest income was $2.0 million for the nine months ended September 30, 2024 compared to a loss of $15.6 million for the same period in 2023[172]. - Non-interest income increased by $17.5 million during the nine months ended September 30, 2024, compared to the same period in 2023, marking a 28.3% increase compared to core non-interest income[197]. - Non-interest expense increased by $602 thousand or 2.6% during the nine months ended September 30, 2024 compared to the same period in 2023[173]. - Non-interest expense increased by $371 thousand or 4.8% during the three months ended September 30, 2024, primarily due to a $322 thousand non-recurring litigation reserve reversal[207]. Loan Portfolio and Credit Losses - The Company maintains an allowance for loan credit losses to absorb lifetime losses on existing loans, which is established by recording a provision for credit losses against earnings[162]. - The Company faces risks related to the adequacy of its allowance for loan credit losses and the performance of its loan portfolio[159]. - The recovery of provision for credit losses was $0.7 million for the nine months ended September 30, 2024, compared to a recovery of $2.5 million for the same period in 2023[194]. - The company recorded a $400 thousand provision for credit losses for the three months ended September 30, 2024, compared to a recovery of $829 thousand in the same quarter of 2023[205]. - The allowance for loan credit losses decreased to $18.5 million or 1.00% of outstanding loans as of September 30, 2024, down from $19.5 million or 1.05% at December 31, 2023[254]. Deposits and Liquidity - Total deposits increased by $29.5 million or 1.5% to $1.94 billion as of September 30, 2024, compared to $1.91 billion at December 31, 2023[262]. - Non-interest bearing demand deposits rose by $61.0 million or 14.8% to $472.4 million as of September 30, 2024, representing 24.4% of total deposits[262]. - Core deposits totaled $1.65 billion or 85.5% of total deposits as of September 30, 2024, up from $1.58 billion or 82.7% at December 31, 2023[264]. - The Company has a total liquidity of $775.5 million as of September 30, 2024, up from $638.9 million at December 31, 2023[278]. Regulatory and Economic Environment - The Company is subject to regulatory risks, including changes in laws or government regulations affecting financial institutions[159]. - The Company’s financial condition may be impacted by changes in consumer spending, borrowing, and savings habits, as well as inflation and interest rate fluctuations[159]. - The Company’s financial results may be influenced by geopolitical conditions and public health events, such as the COVID-19 pandemic[159]. - The Company operates primarily in the Washington, D.C. metropolitan area, which may be affected by economic, political, and environmental conditions[159].

Financial Performance - Net income for Q3 2024 was $4.2 million ($0.30 per diluted share), an 11.1% increase from Q2 2024 and a recovery from a net loss of $10.1 million in Q3 2023[1] - The Company reported a net income of $4.2 million for Q3 2024, an increase of $14.3 million compared to a net loss of $10.1 million in Q3 2023[9] - For the nine months ended September 30, 2024, net income was $12.3 million, an increase of $11.7 million compared to $656 thousand in the same period of 2023[12] - Net income for the quarter was $4,235,000, compared to a loss of $10,137,000 in the prior year, indicating a 141.8% improvement[19] Earnings and Income Metrics - Pre-tax, pre-provision earnings (Non-GAAP) rose to $5.7 million, reflecting a 21.5% increase from $4.7 million in Q2 2024[2] - Non-interest income was $617 thousand for Q3 2024, compared to a loss of $16.8 million in Q3 2023[10] - Non-interest income for the nine months ended September 30, 2024 was $2.0 million, compared to a loss of $15.6 million in the same period of 2023[13] - Core earnings per share for the three months ended September 30, 2024, was $0.30, compared to $0.32 in the same period of 2023[17] Asset and Loan Growth - Total assets were $2.27 billion as of September 30, 2024, a decrease of $23.8 million or 1.0% from September 30, 2023[3] - Total loans increased by $22.5 million or 1.2% to $1.84 billion compared to $1.82 billion at September 30, 2023[3] - The loan pipeline showed strong growth with $128.1 million in new commitments in Q3 2024, a 44.9% increase from $88.4 million in Q2 2024[2] - Total loans, net of unearned income, reached $1,842,598,000, an increase from $1,820,132,000 year-over-year[21] Capital and Equity - Shareholders' equity rose by $22.5 million or 10.2% to $243.1 million at September 30, 2024, with book value per share increasing by 9.4% to $17.07[3] - The total risk-based capital ratio was 16.3% as of September 30, 2024, well above the regulatory threshold of 10.0%[5] - Total risk-based capital (GAAP) increased to $291,881 from $280,891 year-over-year, reflecting a growth of 3.6%[26] - Shareholders' equity increased to $240,609 thousand as of September 30, 2024, compared to $220,473 thousand in 2023[25] Interest and Margin Analysis - Net interest margin expanded by 11 basis points from Q2 2024 and 23 basis points from Q3 2023, with expectations for continued growth if the Federal Reserve lowers rates[2] - Net interest income for Q3 2024 increased by $1.2 million or 9.8% year-over-year, driven by higher yields on interest-earning assets[9] - The yield on interest-earning assets was 4.97% for Q3 2024, up from 4.54% in Q3 2023[9] - The net interest margin for the three months ended September 30, 2024, was 2.30%, an increase from 2.07% in the same period of 2023[25] Efficiency and Expense Management - The annualized efficiency ratio improved to 58.3% in Q3 2024 from 62.4% in Q3 2023[11] - Non-interest expense increased by $371 thousand or 4.8% in Q3 2024 compared to Q3 2023[11] - The efficiency ratio improved to 58.3%, down from 158.4% a year ago, indicating better cost management[21] Credit Quality and Loss Provisions - The allowance for loan credit losses was $18.4 million or 1.00% of outstanding loans, down from 1.05% at December 31, 2023, reflecting improved credit performance[6] - The provision for credit losses for the three months ended September 30, 2024, was $400,000, compared to a recovery of $829,000 in the same period of 2023[17] - The company reported no loans on non-accrual status as of September 30, 2024, and September 30, 2023[24] Deposits and Funding Sources - Core customer funding sources increased by $40.0 million or 6.8% annualized since June 30, 2024, driven by a 32.1% annualized growth in non-interest bearing demand deposits[2] - Total deposits as of September 30, 2024, were $1,936,150,000, a decrease of approximately 2.3% from $1,981,623,000 in the same period of 2023[17] - Non-interest bearing demand deposits rose by 14.8% to $472,422 million compared to the previous year[18] - Total deposits grew by 1.5% year-over-year to $1,936,150 million[18]