John Marshall Bancorp(JMSB) - 2022 Q2 - Quarterly Report

Part I Financial Information Item 1. Financial Statements The company's unaudited consolidated financial statements and accompanying notes for the periods ended June 30, 2022 Consolidated Balance Sheets Financial Position as of June 30, 2022 | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $2,316,374 | $2,149,309 | | Net Loans | $1,672,621 | $1,646,437 | | Total Deposits | $2,043,741 | $1,881,553 | | Total Liabilities | $2,108,844 | $1,940,839 | | Total Shareholders' Equity | $207,530 | $208,470 | - Total assets grew to $2.32 billion at June 30, 2022, from $2.15 billion at December 31, 2021, primarily driven by increases in securities available-for-sale and net loans[8] - Total shareholders' equity slightly decreased to $207.5 million from $208.5 million, mainly due to a significant increase in accumulated other comprehensive loss to $(16.9) million[8] Consolidated Statements of Income Income Performance for the Three and Six Months Ended June 30, 2022 | Metric (in thousands, except EPS) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $17,308 | $16,491 | $35,224 | $32,773 | | Provision for Loan Losses | $0 | $90 | $0 | $2,455 | | Net Income | $7,882 | $6,079 | $15,556 | $11,153 | | Earnings Per Share, Diluted | $0.56 | $0.44 | $1.10 | $0.80 | - Net income for the six months ended June 30, 2022, increased by 39.5% year-over-year to $15.6 million, driven by higher net interest income and a zero provision for loan losses[10] Consolidated Statements of Comprehensive Income (Loss) - For the six months ended June 30, 2022, the company reported a total comprehensive loss of $(972) thousand, a significant shift from a comprehensive income of $8.7 million in 2021, primarily due to a $(16.5) million other comprehensive loss from unrealized losses on available-for-sale securities[12] Consolidated Statements of Shareholders' Equity - Shareholders' equity decreased from $208.5 million at year-end 2021 to $207.5 million at June 30, 2022, driven by a $(16.5) million other comprehensive loss and a $2.8 million dividend declaration, which were largely offset by $15.6 million in net income[18] Consolidated Statements of Cash Flows Cash Flow Summary for the Six Months Ended June 30 | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $16,587 | $14,075 | | Net Cash Used in Investing Activities | $(170,046) | $(155,617) | | Net Cash Provided by Financing Activities | $168,547 | $171,089 | | Net Increase in Cash and Cash Equivalents | $15,088 | $29,547 | - Investing activities primarily consisted of a net increase in loans of $(26.2) million and the purchase of $(173.4) million in available-for-sale securities, while financing activities were driven by a $162.2 million net increase in deposits[21] Notes to Consolidated Financial Statements - The company plans to adopt the Current Expected Credit Losses (CECL) standard for fiscal years beginning after December 15, 2022, and is currently assessing its impact[30] - The company's loan portfolio is primarily composed of real estate loans, with Commercial Real Estate loans making up the largest segment at $1.08 billion as of June 30, 2022[51] - The Bank is categorized as "well capitalized" under the regulatory framework, with all capital ratios exceeding the minimum requirements as of June 30, 2022[132][133] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial condition and results of operations for the periods ended June 30, 2022, highlighting key performance drivers Results of Operations – Six Months Ended June 30, 2022 and June 30, 2021 Six-Month Performance Comparison | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Net Income | $15.6 million | $11.2 million | +39.5% | | Diluted EPS | $1.10 | $0.80 | +37.5% | | Net Interest Income | $35.2 million | $32.8 million | +7.5% | | Provision for Loan Losses | $0 | $2.5 million | -100% | | ROAA | 1.41% | 1.13% | +28 bps | | ROAE | 15.02% | 11.78% | +324 bps | - The absence of a provision for loan losses in the first half of 2022, compared to a $2.5 million provision in 2021, was a primary driver of increased net income[169] - Non-interest income decreased by 40.6% due to a $(490) thousand mark-to-market adjustment on investments related to a nonqualified deferred compensation plan[170] Results of Operations – Three Months Ended June 30, 2022 and June 30, 2021 Three-Month Performance Comparison | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Net Income | $7.9 million | $6.1 million | +29.7% | | Diluted EPS | $0.56 | $0.44 | +27.3% | | Net Interest Income | $17.3 million | $16.5 million | +5.0% | | Non-interest Expense | $7.7 million | $9.1 million | -15.3% | - The significant 15.3% decrease in non-interest expense was primarily driven by a $1.0 million (18.0%) reduction in salaries and employee benefits[216][243] Discussion and Analysis of Financial Condition - Total assets increased by 7.8% to $2.32 billion at June 30, 2022, from year-end 2021, driven by a $122.6 million increase in the investment portfolio and a $26.2 million increase in net loans[246] - Asset quality remained strong, with zero nonperforming assets as of June 30, 2022, and December 31, 2021[262][264] - Total deposits grew by 8.6% to $2.04 billion, providing the primary funding for asset growth, with core deposits representing 85.1% of total deposits[279][281] - The company maintains a strong liquidity position with liquid assets of $422.5 million (18.2% of total assets) and significant available borrowing capacity[297][298] Quantitative and Qualitative Disclosures about Market Risk Disclosure is not required as the company qualifies as a smaller reporting company - Disclosure is not required for smaller reporting companies[301] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[302] - No material changes occurred in the company's internal control over financial reporting during the second quarter of 2022[303] Part II Other Information Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently party to any material legal proceedings[306] Risk Factors No material changes have been identified in the risk factors previously disclosed in the Form 10 registration statement - No material changes have occurred in the risk factors disclosed in the company's Form 10 registration statement[307] Unregistered Sales of Equity Securities and Use of Proceeds The company did not conduct any unregistered sales of equity securities during the reporting period - None reported[308] Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None reported[309] Mine Safety Disclosures This disclosure requirement is not applicable to the company's operations - Not Applicable[310] Other Information No additional information was reported under this item for the period - None reported[311] Exhibits This section lists all exhibits filed with the Form 10-Q, including debt agreements and required certifications