John Marshall Bancorp(JMSB) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights 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 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] Key Financial Highlights 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] - The Bank's regulatory capital ratios remained well in excess of well-capitalized thresholds[3] CEO Commentary 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] - 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] - 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] Balance Sheet, Liquidity & Credit Quality 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 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 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] - 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] - 65.1% of the fixed income portfolio was invested in amortizing bonds, providing a source of steady cash flow[8] Liquidity Position 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 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 $13.3 million increase in interest-bearing demand deposits[10] Shareholders' Equity and Capitalization Shareholders' equity and book value per share increased significantly year-over-year, driven by earnings and a decrease in accumulated other comprehensive loss, with regulatory capital ratios remaining strong and well above well-capitalized thresholds Shareholders' Equity and Book Value | Metric | June 30, 2025 | June 30, 2024 | Change ($) | 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] Asset Quality and Allowance for Credit Losses 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] 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] Commercial Real Estate Portfolio Details 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] 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 | $112,035 | 100.0% | Income Statement Review The company demonstrated substantial growth in net income and net interest income for both Q2 and H1 2025, driven by improved loan yields and reduced interest expenses Quarterly Results (Q2 2025 vs Q2 2024) The company reported a substantial increase in net income and pre-tax, pre-provision net income for Q2 2025, primarily driven by significant growth in net interest income, margin expansion, and improved efficiency Q2 2025 vs Q2 2024 Income Statement Highlights | Metric | Q2 2025 | Q2 2024 | Change ($) | 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 | $2.8M | 23.5% | | Tax-equivalent Net Interest Margin (Non-GAAP) | 2.70% | 2.19% | +51 bps | N/A | | Return on Average Assets (annualized) | 0.91% | 0.70% | +0.21% | N/A | | Return on Average Equity (annualized) | 8.06% | 6.68% | +1.38% | N/A | | Efficiency Ratio | 53.9% | 62.6% | -8.7% | N/A | - Interest income increased by 3.9% due to higher loan yields, while interest expense declined by 12.2% primarily from lower rates on time deposits and money market accounts[27][30] - Non-interest expense increased by 5.1% due to additional personnel hires (five business development officers) and higher professional fees, partially offset by lower occupancy and marketing expenses[33] Year-to-Date Results (H1 2025 vs H1 2024) For the first six months of 2025, net income increased by 22.2%, driven by a 21.8% rise in net interest income, attributed to a decrease in the cost of interest-bearing liabilities and an increase in yields on interest-earning assets H1 2025 vs H1 2024 Income Statement Highlights | Metric | H1 2025 | H1 2024 | Change ($) | 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] - 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] - 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] Explanation of Non-GAAP Financial Measures 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 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] - Tax-equivalent net interest margin: Reflects adjustments for differences in tax treatment of interest income sources[45] - Adjusted Bank regulatory capital ratios: Hypothetical scenario where the entire bond portfolio was sold at fair market value and any losses realized[45] - Pre-tax, pre-provision earnings: Excludes income tax expense and the provision for (recovery of) credit losses[45] Company Information 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 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] - The Bank operates eight full-service branches in Alexandria, Arlington, Loudoun, Prince William, Reston, Tysons (Virginia), Rockville (Maryland), and Washington, D.C.[47] - 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] Cautionary Note Regarding Forward-Looking Statements 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 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] - 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] - The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions to forward-looking statements[48] Financial Tables 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) 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 | $235,346 | Consolidated Balance Sheets This table presents the consolidated balance sheets, detailing assets, liabilities, and shareholders' equity at June 30, 2025, December 31, 2024, and June 30, 2024, along with percentage changes over the last six months and year-over-year Consolidated Balance Sheet Data | Asset/Liability | June 30, 2025 ($ 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 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 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 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) 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) 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 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]