John Marshall Bancorp(US:JMSB)2025-08-12 13:00Part I Financial Information Item 1. Financial Statements 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 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 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 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 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 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 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 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 area23 - 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-K24 - No significant changes to the application of significant accounting policies have occurred since December 31, 202429 - 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 statements3031 Note 2— Investment Securities 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, 202435 - 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, 202445 - 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 recovery39 - 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, 202449 Note 3— Loans 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, 202454 - 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 loans59 - 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, 202458 Note 4— Allowance for Loan Credit Losses 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, 202461 - 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, 202561 - No loans were past due or on nonaccrual as of June 30, 202563 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 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, 202484 - 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 income8184 Note 6— Deposits and Borrowings 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, 202486 - Brokered deposits totaled $301.9 million at June 30, 2025, up from $276.4 million at December 31, 2024, primarily included in time deposits86 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 million90 - Federal funds purchased increased by $16.5 million at June 30, 2025, from zero at December 31, 20248791 Note 7— Commitments and Contingencies 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, 202496 - Standby letters of credit were $10,565 thousand at June 30, 2025, slightly down from $10,767 thousand at December 31, 202496 Note 8— Fair Value Measurements 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)102103104 - The Company's investment portfolio is primarily valued using Level 2 fair value measurements, relying on independent valuation techniques and observable market data109 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 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 2024123 - 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 2024123 Note 10— Stock Based Compensation Plan 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, 2025124127 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, 2024130 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)133134 Note 11— Regulatory Capital 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 requirements136 - 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, 2025137140 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 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 - 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, 2025174199 Note 13— Other Operating Expenses 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 Note 14— Accumulated Other Comprehensive Income (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 period153 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 analysts155 - Non-GAAP measures used include tax-equivalent net interest income, tax-equivalent net interest margin, and pre-tax, pre-provision earnings155 Cautionary Note on Forward-Looking Statements 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 materially157 - 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 risks157160 Overview (MD&A) 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 Bank161 - 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 million163 Critical Accounting Policies and Estimates (MD&A) 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 losses164 - The most significant accounting policies are described in the 2024 Annual Report on Form 10-K, with no significant changes noted165 Selected Financial Data 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 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) 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 2024171 - Diluted earnings per common share increased by 21.0% to $0.69 for the six months ended June 30, 2025, from $0.57 in 2024171 - 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 yields172 - 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 year173 - 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 officers175 Net Interest Income and Net Interest Margin (Six Months) 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, 2025183 - 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 2024184 - 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 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) 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, 2025190 - 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 volume185191 - Interest income on investment securities decreased by approximately $283 thousand primarily due to a $33.0 million decreased by in average volume192 - 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 volume186193 Interest Expense (Six Months) 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 2024194 - 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 2024184194 Provision for Credit Losses (Six Months) 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 2024195 - 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 factors196 Non-interest Income (Six Months) 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, 2025198 - 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 income174199 - These decreased by were partially offset by a $47 thousand increased by in non-qualified deferred compensation plan asset gains199 Non-interest Expense (Six Months) 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, 2025203 - Salaries and employee benefits increased by $592 thousand (6.1%) primarily due to staffing changes, including the hiring of five business development officers175203 - Data processing increased by $111 thousand (10.5%) and state franchise tax by $94 thousand (8.2%)203 - Occupancy expense declined by $85 thousand (9.5%) primarily due to relocating a branch to a less expensive location175203 Income Taxes (Six Months) 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, 2025204 - 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 2024204 Results of Operations – Three Months Ended June 30, 2025 and June 30, 2024 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) 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 2024206 - 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, 2025206 - Diluted earnings per common share increased by 33.3% to $0.36 for the three months ended June 30, 2025, from $0.27 in 2024206 - 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 yields207 - 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 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) 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, 2025218 - 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 2024219 - 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 deposits219 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) 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, 2025226 - 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 million227 - Interest income on investment securities decreased by approximately $86 thousand, primarily due to a $26.8 million decreased by in average volume228 - 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 volume221229 Interest Expense (Three Months) 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 2024230 - 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 2024222230 Provision for Credit Losses (Three Months) 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 2024231 - The provision was directly attributable to the growth and changes in the composition of the Company's loan portfolio, along with considerations of qualitative factors232 Non-interest Income (Three Months) 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, 2025234 - 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 activity234 - This was partially offset by favorable mark-to-market adjustments on the Company's non-qualified deferred compensation plan, totaling $147 thousand234 Non-interest Expense (Three Months) 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, 2025236 - Salaries and employee benefits expense increased by $303 thousand (6.2%) primarily due to the hiring of additional personnel, including business development officers236 - Professional fees increased by $97 thousand (46.6%) primarily due to external advisors for regulatory filings236 - 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 relocation236 Income Taxes (Three Months) 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, 2025237 - The effective tax rate for the three months ended June 30, 2025, was 22.5% compared to 22.2% for the same period in 2024237 Discussion and Analysis of Financial Condition 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) 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 portfolio238 - 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 purchased239 - 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 loss240 - Book value per share increased by 3.2% to $17.83 at June 30, 2025, from $17.28 at December 31, 2024240 Investment Securities (Financial Condition) 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, 2024241 - 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 securities242 - Maturities and principal repayments on securities totaled $23.3 million during the six months ended June 30, 2025242 Fixed Income Investment Portfolio (Amortized Cost and Fair Value) (In thousands) | Category | June 30, 2025 Amortized Cost | June 3