John Marshall Bancorp, Inc. Reports Record Earnings and Growth Asset Quality, Capital and Liquidity Positions Remain Strong

John Marshall Bancorp, Inc. JMSB (the "Company"), parent company of John Marshall Bank (the "Bank") reported its financial results for the three and six months ended June 30, 2020.

Selected Highlights

• Seventh Consecutive Quarter of Record Earnings - The Company reported net income of $4.6 million for the three months ended June 30, 2020 compared to $3.8 million for the three months ended June 30, 2019, an increase of 19.7%. The Company reported net income of $9.1 million for the six months ended June 30, 2020, compared to $7.4 million for the six months ended June 30, 2019, an increase of 22.1%. Earnings per diluted share was $0.33 for the three months ended June 30, 2020, an increase of 17.9% from $0.28 per diluted share for the three months ended June 30, 2019. Earnings per diluted share was $0.66 for the six months ended June 30, 2020, an increase of 22.2% from $0.54 per for the six months ended June 30, 2019.

• Company Best Growth in Assets, Loans and Deposits – Growth in assets, loans and deposits in the second quarter of 2020 represented records for the Company. Total assets exceeded $1.80 billion at June 30, 2020, an increase of $308.3 million or 20.6% when compared to the same period in 2019. Gross loans net of unearned income increased $275.5 million, or 22.2% from June 30, 2019 to June 30, 2020. Total deposits grew $298.2 million, or 23.6% from June 30, 2019 to June 30, 2020.

• Outstanding Asset Quality – The second quarter of 2020 marked the third consecutive quarter of no non-performing assets, no loans 30 days or more past due and no real estate owned. There have been no charge-offs during the first six months of 2020. The Company reported $42 thousand in net loan recoveries during the first six months of 2020, compared to $146 thousand in net loan charge-offs during the first six months of 2019.

• Strong Capital and Liquidity - While the Company is exempt from the regulatory capital rules at the holding company level, both the Company and the Bank materially exceed the regulatory thresholds defining well-capitalized. Cash and unencumbered securities equaled $207 million, or 11.5% of total assets as of June 30, 2020. Exclusive of the available PPP Lending Facility, the Company had $293 million of secured borrowing capacity available at June 30, 2020. The Company had significant unsecured (correspondent borrowing lines and brokered deposits) funding capacity available as of June 30, 2020.

• Improved Funding Composition - Non-interest bearing deposits grew $125.2 million or 45.8% during the first six months of 2020 and represented 25.5% of total deposits at June 30, 2020. Core customer funding grew $237.1 million or 20.9% since June 30, 2019 and represented 84.9% of funding sources as of June 30, 2020. Non-maturing deposits constituted 61.4% of total deposits as of June 30, 2020, 55.9% as of December 31, 2019 and 56.3% as of June 30, 2019. Wholesale funding represented 13.6% of total funding sources at June 30, 2020, down from 15.4% at December 31, 2019. Balance sheet growth and the downward repricing of our funding base enabled the Company to report record net interest income per day of $153 thousand during the second quarter of 2020, a 14.7% increase from the $133 thousand per day during the same period in 2019.

• Operating Leverage Continues to Improve with Growing Revenues - Revenues were $14.5 million, or 16.4% greater in the second quarter of 2020 relative to $12.5 million for the second quarter of 2019. Noninterest expense for the second quarter of 2020 was $7.4 million, or 1.5% greater than the $7.3 million for the second quarter of 2019. This positive operating leverage enabled the efficiency ratio to decrease from 58.2% for the second quarter of 2019 to 50.8% for the second quarter of 2020. Noninterest expense to average assets declined from 2.03% for the three months ended June 30, 2019 to 1.70% for the three months ended June 30, 2020.

• Highest Pre-Tax, Pre-Provision Income in Company History –The Company reported record pre-tax, pre-provision ("PTPP") income of $7.1 million for the three months ended June 30, 2020, a 37.2% increase from the same period a year ago. PTPP income increased 30.0% from $10.1 million for the six months ended June 30, 2019, to $13.1 million for the six months ended June 30, 2020. While the Company's asset quality remains strong, management believes that PTPP is a useful financial measure because it enables users to assess the Company's ability to generate capital to cover potential credit losses.

Chris Bergstrom, President and Chief Executive Officer, commented "As we continue to tackle the challenges of the ongoing pandemic, John Marshall Bank has been focused on the needs of our customers, staff and surrounding communities we serve. We have been able to provide our customers enhanced products and services using our digital platform. We have leveraged our technology investment to enable most employees to work from home and invested in safeguards for those working onsite. We delivered record earnings and balance sheet growth. We continue to improve our funding composition. Despite these challenging times, our asset quality remains strong as our underwriting remains rigorous. We believe we are well positioned for continued profitable growth with a well-capitalized, liquid balance sheet."

Balance Sheet Review

Assets

Total assets were $1.80 billion at June 30, 2020, $1.58 billion at December 31, 2019 and $1.49 billion at June 30, 2019. During the second quarter of 2020, assets increased $179.5 million, or 11.1%. Asset growth was $308.3 million, or 20.6%, from June 30, 2019 to June 30, 2020.

Loans

Gross loans at June 30, 2020 included $148.2 million in Paycheck Protection Program Loans ("PPP loans"). PPP loans are guaranteed by the U.S. Small Business Administration ("SBA"). As part of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), PPP loans were designed by the United States Treasury and the SBA to provide an incentive for small businesses to keep their workers on the payroll. The Paycheck Protection Program ("PPP") provides for forgiveness of up to the full principal amount of qualifying loans provided that all employee retention criteria are met and the funds are used for eligible expenses within a time period of either eight or twenty-four weeks. PPP loans have an interest rate of 1%. The majority of the PPP loans were issued prior to June 5, 2020 and have a maturity of 2 years. Two loans, totaling $302 thousand, were funded after June 5, 2020 and have a maturity of 5 years.

The Company fielded PPP applications from small businesses, submitted those applications to the SBA and disbursed approved loan funds to their respective applicants. As compensation for originating and ongoing administration of these PPP loans, the Company received fees of $4.0 million which are net of loan origination costs of $1.2 million. These net fees were deferred at origination and are being recognized in interest income over the remaining lives of the loans. Income recognition will be accelerated upon forgiveness or repayment of PPP loans.

Excluding PPP loans, gross loans net of unearned income grew $32.7 million or 2.4% during the second quarter of 2020 and increased $127.4 million or 10.3% from June 30, 2019 to June 30, 2020. Non-PPP loan growth during the first six months of 2020 was restrained by payoffs and paydowns totaling $165.4 million.

Investment Securities

The Company's portfolio of investments in debt securities was $127.7 million at June 30, 2020, $122.7 million at December 31, 2019 and $106.7 million at June 30, 2019. Year-over-year bond growth, from June 30, 2019 to June 30, 2020, was $21.1 million, or 19.7%. During the second quarter of 2020, the Company sold $10.8 million of fixed income securities, resulting in a pre-tax gain of $297 thousand. The Company also had restricted securities totaling $5.8 million at June 30, 2020, $7.2 million at December 31, 2019 and $6.3 million at June 30, 2019. The reduction in restricted securities stems from decreased Federal Home Loan Bank of Atlanta ("FHLB") advances.

Interest Bearing Deposits in Banks

Interest-bearing deposits in banks were $109.9 million at June 30, 2020, $87.0 million at December 31, 2019 and $93.8 million at June 30, 2019. The higher cash balances at June 30, 2020 are a result of continued deposit growth and management's strategic decision to operate with a higher level of liquidity in the current economic environment.

Deposits

Total deposits were $1.56 billion at June 30, 2020, $1.31 billion at December 31, 2019 and $1.26 billion at June 30, 2019. During the second quarter of 2020, deposits grew $182.1 million or 13.2%. During the first six months of 2020, deposits grew $252.9 million, or 19.3%. Year-over-year deposit growth, from June 30, 2019 to June 30, 2020, was $298.2 million, or 23.6%.

Non-interest bearing demand deposits were $398.7 million at June 30, 2020, $273.5 million at December 31, 2019 and $267.5 million at June 30, 2019. During the second quarter of 2020, non-interest bearing demand deposits grew $123.8 million or 45.0%. During the first six months of 2020, non-interest bearing demand deposits grew $125.2 million, or 45.8%. Year-over-year non-interest bearing demand deposit growth, from June 30, 2019 to June 30, 2020, was $131.2 million, or 49.0%.

Core customer funding was $1.37 billion at June 30, 2020, $1.17 billion at December 31, 2019 and $1.13 billion at June 30, 2019. Year-over-year core customer funding sources increased by $237.1 million, or 20.9%, from June 30, 2019 to June 30, 2020. Core customer funding was 84.9% of all funding sources as of June 30, 2020, as compared to 82.8% at December 31, 2019 and 85.2% as of June 30, 2019. Transaction accounts constituted 61.4% of total deposits as of June 30, 2020, 55.9% as of December 31, 2019 and 56.3% as of June 30, 2019.

Insured Cash Sweep ("ICS") deposits were $228.3 million at June 30, 2020, $187.4 million at December 31, 2019 and $172.2 million at June 30, 2019. Year-over-year, ICS deposits increased $56.1 million from June 30, 2019 to June 30, 2020. Certificate of Deposit Account Registry Service ("CDARS") deposits were $37.3 million at June 30, 2020, $50.9 million at December 31, 2019 and $79.5 million at June 30, 2019. Reciprocal deposit growth fluctuates with customers' preferences to receive fixed (CDARS) or floating (ICS) yields.

Certificates of deposits were $372.4 million at June 30, 2020, $383.5 million at December 31, 2019 and $341.0 million at June 30, 2019. QwickRate certificates of deposit were $31.8 million at June 30, 2020, $18.0 million at December 31, 2019 and $19.8 million at June 30, 2019. Year-over-year QwickRate certificates of deposit increased $12.0 million from June 30, 2019 to June 30, 2020. Brokered deposits were $160.6 million at June 30, 2020, $125.1 million at December 31, 2019 and $111.5 million at June 30, 2019. Brokered deposits increased $49.1 million from June 30, 2019 to June 30, 2020. The increase in brokered deposits is mostly related to a migration of borrowings from FHLB and Federal funds purchased to brokered deposits.

Borrowings

Total borrowings, consisting of FHLB advances and Federal funds purchased, were $26.0 million at June 30, 2020, $74.0 million at December 31, 2019 and $40.5 million at June 30, 2019. Total borrowings decreased $14.5 million, or 35.8%, from June 30, 2019 to June 30, 2020 and decreased $48.0 million, or 64.9% from December 31, 2019 to June 30, 2020. Management has chosen to retire FHLB advances as they mature so as to increase contingent funding sources. As of June 30, 2020, the Bank had over $240 million remaining in borrowing capacity with the FHLB.

The Company had subordinated notes with a balance of $24.7 million at June 30, 2020 and $24.6 million at December 31, 2019 and June 30, 2019. The notes qualify as Tier 2 capital for the Company for regulatory purposes.

Shareholders' Equity and Capital Levels

Total shareholders' equity was $176.3 million at June 30, 2020, $162.0 million at December 31, 2019 and $152.7 million at June 30, 2019. Year-over-year shareholders' equity increased by $23.6 million, or 15.5%. Total common shares outstanding increased from 13,077,090, including 50,889 shares relating to unvested stock awards, at June 30, 2019, to 13,573,601, including 47,403 shares relating to unvested stock awards, at June 30, 2020. The year-over-year increase in shares outstanding was primarily from the exercise of stock options.

The Company's capital ratios remain well above regulatory minimums for well capitalized banks. As of June 30, 2020, the Company's total risk-based capital ratio was 14.4%, compared to 13.6% at June 30, 2019.

Income Statement Review

Net Interest Income

Net interest income, the Company's primary source of revenue, was $13.9 million for the three months ended June 30, 2020, up 14.7% from $12.1 million for the three months ended June 30, 2019. The net interest margin was 3.27% for the three months ended June 30, 2020 as compared to 3.49% for the three months ended June 30, 2019. Average net loans increased $266.7 million compared to the three months ended June 30, 2019, with a 59 basis point decline in yield. Average securities increased $26.9 million, compared to the three months ended June 30, 2019, with a 28 basis point decline in yield. The average yield on interest-bearing assets decreased 68 basis points from 4.93% for the three months ended June 30, 2019, to 4.25% for the three months ended June 30, 2020. Average interest-bearing deposits in other banks increased $25.8 million compared to the three months ended June 30, 2019, with a 228 basis point decline in yield. The average cost of interest-bearing liabilities decreased 54 basis points when comparing the quarter ended June 30, 2019 to the quarter ended June 30, 2020.

For the six months ended June 30, 2020, net interest income was $26.7 million, up 12.8% from $23.7 million for the six months ended June 30, 2019. The net interest margin was 3.30% during the first six months of 2020, compared to 3.46% during the first six months of 2019. In March of 2020, the Federal Reserve cut rates 150 basis points, which adversely impacted the earning asset yield for both the three and six months ended June 30, 2020. Despite the rate cuts, net interest income increased by 12.8% during the first six months of 2020, compared to the first six months of 2020, resulting primarily from a $249.9 million, or 18.1%, increase in average earning assets during the first six months of 2020, compared to the first six months of 2019.

On a linked quarterly basis, net interest margin decreased 6 basis points to 3.27% for the three months ended June 30, 2020, with the yield on earning assets declining from 4.62% for the three months ended March 31, 2020, to 4.25% for the three months ended June 30, 2020. The average cost of interest-bearing liabilities declined 34 basis points from 1.77% for the three months ended March 31, 2020, compared to 1.43% for the three months ended June 30, 2020.

Provision for Loan Losses

The Company had a $1.5 million provision for loan losses for the three months ended June 30, 2020, compared to $384 thousand for the same period in 2019. The Company had $42 thousand in net loan recoveries during the second quarter of 2020, compared to net $23 thousand in net loan recoveries in the second quarter of 2019.

During the six months ended June 30, 2020, the Company recognized a provision for loan losses of $1.9 million, compared to a provision of $605 during the first six months of 2019. The Company reported $42 thousand in net loan recoveries during the first six months of 2020, compared to $146 thousand in net loan charge-offs during the first six months of 2019.

The increase in the Company's provision for loan losses during 2020 as compared to the corresponding periods in the prior year was primarily related to our consideration of COVID-19 and its impact on the qualitative factors included in the allowance estimate. The provision increased the allowance for loan losses as a percentage of total loans from 0.81% at December 31, 2019 to 0.84% at June 30, 2020. Excluding PPP loan balances, the provision increased the allowance for loan losses as a percentage of total loans from 0.84% at March 31, 2020 to 0.93% at June 30, 2020. PPP loan balances are 100% guaranteed by the SBA and carry no reserve. The Company continues to evaluate the adequacy of its allowance for loan losses with regards to the pandemic and will update its estimate as changes within the Company's portfolio become known and more economic data becomes available.

Noninterest Income

The Company's recurring sources of noninterest income consist primarily of bank owned life insurance income and service charges on deposit accounts. The majority of loan fees are included in interest income on the loan portfolio and not reported as noninterest income.

For the three months ended June 30, 2020, the Company reported total noninterest income of $638 thousand, compared to $369 thousand during the three months ended June 30, 2019. Service charges on deposit accounts declined $51 thousand for the three months ended June 30, 2020 when compared to the same period in 2019. Other operating income for the three months ended June 30, 2020 included a $21 thousand increase in insurance commissions as compared to the three months ended June 30, 2019.

For the six months ended June 30, 2020, the Company reported total noninterest income of $882 thousand, compared to $676 thousand during the first six months of 2019, an increase of $206 thousand, or 30.5%. Service charges on deposit accounts declined $53 thousand for the six months ended June 30, 2020 when compared to the same period in 2019. Other operating income for the six months ended June 30, 2020 declined $20 thousand when compared to the same period in 2019. The decline in other operating income for the six months ended June 30, 2020 was related to mark-to-market adjustments recorded on the Company's equity securities.

The increase in noninterest income for both the three months and six months ended June 30, 2020 was primarily attributed to gains on sales of securities totaling $297 thousand and $309 thousand, respectively. Excluding the securities gains, the year-over-year decline for both the three and six months periods ended June 30, 2020 for service charges were attributable to lower ATM fees and lower overdraft fees.

Noninterest Expense

For the three months ended June 30, 2020, noninterest expense increased 1.5%, to $7.4 million, compared to $7.3 million for the same period in 2019. Salary and employee benefit expense was $4.4 million during the three months ended June 30, 2020, down $148 thousand, or 3.2% when compared to $4.6 million for the three months ended June 30, 2019. Occupancy expense decreased 13.6%, or $77 thousand and furniture and equipment increased 60.1% or $209 thousand when comparing the three months ended June 30, 2020 to the same period in 2019. Other operating expense increased by 6.9%, or $122 thousand when comparing the three months ended June 30, 2020 to the same period in 2019.

For the six months ended June 30, 2020, noninterest expense increased 1.5% to $14.5 million, compared to $14.3 million for the same period in 2019. For the six months ended June 30, 2020, salaries and employee benefits expense decreased 3.0%, or $272 thousand, compared to the six months ended June 30, 2019. Occupancy expense decreased 11.8%, or $130 thousand and furniture and equipment increased 35.6%, or $243 thousand when comparing the six months ended June 30, 2020 to the same period in 2019. Other operating expense increased by 11.3%, or $372 thousand, during the six months ended June 30, 2020, compared to the same period in 2019.

For both the three and six months ended June 30, 2020, occupancy expense declined due to the renegotiation of leases at the end of 2019. Furniture and equipment expense increased due to additional software costs and additional supplies associated with the pandemic and the majority of the increase in operating expense is related to higher FDIC insurance expense and franchise taxes.

Asset Quality

For the third consecutive quarter, the Company had no non-accrual loans, no loans 30 days or more past due and no other real estate owned as of June 30, 2020. As of June 30, 2019, non-accrual loans totaled $1.4 million. Non-performing assets were 0.09% at June 30, 2019. The Company had no other real estate owned as of June 30, 2020 and 2019.

Troubled debt restructurings were $633 thousand at June 30, 2020, a decline of $1.7 million, compared to $2.3 million at June 30, 2019. All troubled debt restructurings were performing in accordance with their modified terms as of June 30, 2020. There were $922 thousand of the troubled debt restructurings that were performing in accordance with their modified terms as of June 30, 2019.

In 2020, the federal banking agencies issued regulatory guidance to work with borrowers as outlined in Section 4013 of the CARES Act. The guidance interprets current accounting standards and indicates that a Company can conclude that a borrower is not experiencing financial difficulty if short-term modifications are made in response to COVID-19, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant related to the loans in which the borrower is less than 30 days past due on its contractual payments at the time a modification program is implemented. As of June 30, 2020, the Bank had modified 172 loans with outstanding balances of $250.2 million, representing 16.5% of total loans. Of the total 172 COVID modifications, 43 loans totaling $113.6 million or 7.5% of total loans were secured by retail oriented commercial real estate collateral. The weighted average loan-to-value of these loans was 60.8% and the weighted average debt service coverage ratio was 1.7 times. There were 7 loans totaling $34.6 million or 2.3% of total loans that were secured by hotels. The hotel loans with COVID modifications had a weighted average loan-to-value of 65.8% and the weighted average debt service coverage ratio was 1.7 times. There were 21 loans totaling $25.6 million or 1.7% of total loans that were secured by office oriented commercial real estate. The office loans with COVID modifications had a weighted average loan-to-value of 64.3% and the weighted average debt service coverage ratio was 1.8 times. For the commercial real estate loan COVID modifications, the weighted average loan-to-value ratios were based on the most recent appraisals in each individual credit file and the debt service coverage ratios were based on the most recent tax returns received as of June 30, 2020. The single family mortgage loans with COVID modifications represent less than 1% of total loans. Of the 172 COVID loan modifications, 94% of the loans are located within the Washington metropolitan statistical area and 99% of the loans are located within Virginia, Maryland and the District of Columbia.

About John Marshall Bancorp, Inc.

John Marshall Bancorp, Inc. is the bank holding company for John Marshall Bank. John Marshall Bank is headquartered in Reston, Virginia with eight full-service branches located in Alexandria, Arlington, Loudoun, Prince William, Reston, Rockville, Tysons, and Washington, D.C. and one loan production office in Arlington, Virginia. The Company is dedicated to providing an exceptional customer experience and value to local businesses, business owners and consumers in the Washington D.C. Metro area. The Bank offers a comprehensive line of sophisticated banking products, services and a digital platform that rival those of the largest banks. Dedicated relationship managers serving as direct point-of-contact along with an experienced staff help achieve customer's financial goals. Learn more at www.johnmarshallbank.com.

In addition to historical information, this press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," "will," "should," "may," "view," "opportunity," "potential," or similar expressions or expressions of confidence. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiary include, but are not limited to the following: changes in interest rates, general economic conditions, public health crises (such as the governmental, social and economic effects of the novel coronavirus), levels of unemployment in the Bank's lending area, real estate market values in the Bank's lending area, future natural disasters, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area, accounting principles and guidelines, and other conditions which by their nature are not susceptible to accurate forecast, and are subject to significant uncertainty. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Annualized, pro forma, projected and estimated numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

John Marshall Bancorp, Inc.
Financial Highlights (Unaudited)
(Dollar amounts in thousands, except per share data)
		At or For the Three Months Ended								At or For the Six Months Ended
		June 30,								June 30,
		2020				2019				2020				2019
Selected Balance Sheet Data
Cash and cash equivalents		$	10,214			$	10,802				10,214				10,802
Total investment securities			134,304				113,323				134,304				113,323
Loans net of unearned income			1,517,631				1,242,101				1,517,631				1,242,101
Allowance for loan losses			12,725				10,190				12,725				10,190
Total assets			1,802,573				1,494,231				1,802,573				1,494,231
Non-interest bearing demand deposits			398,670				267,475				398,670				267,475
Interest bearing deposits			1,162,921				995,885				1,162,921				995,885
Total deposits			1,561,591				1,263,360				1,561,591				1,263,360
Shareholders' equity			176,326				152,678				176,326				152,678
Summary Results of Operations
Interest income		$	18,055			$	17,079			$	35,873			$	33,456
Interest expense			4,182				4,979				9,173				9,777
Net interest income			13,873				12,100				26,700				23,679
Provision for loan losses			1,507				384				1,926				605
Net interest income after provision for loan losses			12,366				11,716				24,774				23,074
Noninterest income			638				369				882				676
Noninterest expense			7,366				7,260				14,506				14,293
Income before income taxes			5,638				4,825				11,150				9,457
Net income			4,559				3,809				9,060				7,419
Per Share Data and Shares Outstanding
Earnings per share - basic		$	0.34			$	0.29			$	0.67			$	0.57
Earnings per share - diluted		$	0.33			$	0.28			$	0.66			$	0.54
Tangible book value per share		$	12.99			$	11.68			$	12.99			$	11.68
Weighted average common shares (basic)			13,504,858				12,983,455				13,393,546				12,947,351
Weighted average common shares (diluted)			13,635,927				13,561,915				13,664,108				13,555,967
Common shares outstanding at end of period			13,573,601				13,077,090				13,573,601				13,077,090
Performance Ratios
Return on average assets (annualized)			1.05	%			1.07	%			1.09	%			1.06	%
Return on average equity (annualized)			10.51	%			10.19	%			10.68	%			10.14	%
Net interest margin			3.27	%			3.49	%			3.30	%			3.46	%
Noninterest income as a percentage of average assets (annualized)			0.15	%			0.10	%			0.11	%			0.10	%
Noninterest expense to average assets (annualized)			1.70	%			2.03	%			1.75	%			2.03	%
Efficiency ratio			50.8	%			58.2	%			52.6	%			58.7	%
Asset Quality
Non-performing assets to total assets			0.00	%			0.09	%			0.00	%			0.09	%
Non-performing loans to total loans			0.00	%			0.11	%			0.00	%			0.11	%
Allowance for loan losses to non-performing loans			N/M				7.2x				N/M				7.2x
Allowance for loan losses to total loans (2)			0.84	%			0.82	%			0.84	%			0.82	%
Net charge-offs (recoveries) to average loans (annualized)			(0.01	)%			(0.01	)%			(0.01	)%			0.02	%
Loans 30-89 days past due and accruing interest		$	- -			$	- -			$	- -			$	- -
Non-accrual loans		$	- -			$	1,406			$	- -			$	1,406
Other real estate owned		$	- -			$	- -			$	- -			$	- -
Non-performing assets (1)		$	- -			$	1,406			$	- -			$	1,406
Troubled debt restructurings (total)		$	633			$	2,328			$	633			$	2,328
Performing in accordance with modified terms		$	633			$	922			$	633			$	922
Not performing in accordance with modified terms		$	- -			$	1,406			$	- -			$	1,406
Capital Ratios
Tangible equity / tangible assets			9.8	%			10.2	%			9.8	%			10.2	%
Total risk-based capital ratio			14.4	%			13.6	%			14.4	%			13.6	%
Tier 1 risk-based capital ratio			11.9	%			11.1	%			11.9	%			11.1	%
Leverage ratio			9.9	%			10.7	%			9.9	%			10.7	%
Common equity tier 1 ratio			11.9	%			11.1	%			11.9	%			11.1	%
Other Information
Number of full time equivalent employees			133				142				133				142
# Full service branch offices			8				7				8				7
# Loan production or limited service branch offices			1				2				1				2

(1) Non-performing assets consist of non-accrual loans, loans 90 day or more past due and still accruing interest, and other real estate owned. Does not include troubled debt restructurings which were accruing interest at the date indicated.

(2) The allowance for loan losses to total loans, excluding PPP loans of $148.2 million was 0.93% at June 30, 2020. PPP loans received no allocations in the allowance estimate due to the underlying guarantees.

John Marshall Bancorp, Inc.
Consolidated Balance Sheets
(Dollar amounts in thousands, except per share data)
														% Change
		June 30,				December 31,				June 30,				Last Six			Year Over
		2020				2019				2019				Months			Year
Assets		(Unaudited)				(Unaudited)				(Unaudited)
Cash and due from banks		$	10,214			$	7,471			$	10,802			36.7	%		-5.4	%
Federal funds sold			- -				- -				84			N/M			N/M
Interest-bearing deposits in banks			109,892				87,019				93,770			26.3	%		17.2	%
Securities available-for-sale, at fair value			127,724				122,729				106,659			4.1	%		19.7	%
Restricted securities, at cost			5,839				7,188				6,304			-18.8	%		-7.4	%
Equity securities, at fair value			741				431				360			71.9	%		105.8	%
Loans net of unearned income			1,517,631				1,325,532				1,242,101			14.5	%		22.2	%
Allowance for loan losses			(12,725	)			(10,756	)			(10,190	)		18.3	%		24.9	%
Net loans			1,504,906				1,314,776				1,231,911			14.5	%		22.2	%
Bank premises and equipment, net			2,213				2,318				2,575			-4.5	%		-14.1	%
Accrued interest receivable			5,469				4,010				4,133			36.4	%		32.3	%
Bank owned life insurance			20,353				20,118				19,867			1.2	%		2.4	%
Right of use assets			6,603				7,254				8,861			-9.0	%		-25.5	%
Other assets			8,619				8,569				8,905			0.6	%		-3.2	%
Total assets		$	1,802,573			$	1,581,883			$	1,494,231			14.0	%		20.6	%
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing demand deposits		$	398,670			$	273,459			$	267,475			45.8	%		49.0	%
Interest bearing demand deposits			510,936				428,529				418,606			19.2	%		22.1	%
Savings deposits			49,896				29,208				25,533			70.8	%		95.4	%
Time deposits			602,089				577,508				551,746			4.3	%		9.1	%
Total deposits			1,561,591				1,308,704				1,263,360			19.3	%		23.6	%
Federal funds purchased			- -				12,000				- -			N/M			N/M
Federal Home Loan Bank advances			26,000				62,000				40,500			-58.1	%		-35.8	%
Subordinated debt			24,655				24,630				24,605			0.1	%		0.2	%
Accrued interest payable			958				1,106				1,202			-13.4	%		-20.3	%
Lease liabilities			6,853				7,474				9,108			-8.3	%		-24.8	%
Other liabilities			6,190				3,987				2,778			55.3	%		122.8	%
Total liabilities			1,626,247				1,419,901				1,341,553			14.5	%		21.2	%
Shareholders' Equity
Preferred stock, par value $0.01 per share; authorized
1,000,000 shares; none issued			- -				- -				- -			- -			- -
Common stock, nonvoting, par value $0.01 per share; authorized
1,000,000 shares; none issued			- -				- -				- -			- -			- -
Common stock, voting, par value $0.01 per share; authorized
20,000,000 shares; issued and outstanding, 13,573,601
at 6/30/2020 including 47,403 unvested shares, 13,127,661
shares at 12/31/2019 including 51,548 unvested shares
and 13,077,090 at 6/30/2019, including 50,889 unvested shares			135				131				130			3.1	%		3.8	%
Additional paid-in capital			89,718				87,435				86,564			2.6	%		3.6	%
Retained earnings			82,700				73,639				65,138			12.3	%		27.0	%
Accumulated other comprehensive income			3,773				777				846			385.6	%		346.0	%
Total shareholders' equity			176,326				161,982				152,678			8.9	%		15.5	%
Total liabilities and shareholders' equity		$	1,802,573			$	1,581,883			$	1,494,231			14.0	%		20.6	%

John Marshall Bancorp, Inc.
Consolidated Statements of Income
(Dollar amounts in thousands, except per share data)
		Three Months Ended									Six Months Ended
		June 30,									June 30,
		2020			2019			% Change			2020			2019			% Change
		(Unaudited)			(Unaudited)						(Unaudited)			(Unaudited)
Interest and Dividend Income
Interest and fees on loans		$	17,165		$	15,848		8.3	%		$	33,790		$	30,926		9.3	%
Interest on investment securities, taxable			744			632		17.7	%			1,516			1,161		30.6	%
Interest on investment securities, tax-exempt			26			27		-3.7	%			52			99		-47.5	%
Dividends			87			111		-21.6	%			182			227		-19.8	%
Interest on federal funds sold			- -			- -		N/M				- -			1		N/M
Interest on deposits in banks			33			461		-92.8	%			333			1,042		-68.0	%
Total interest and dividend income			18,055			17,079		5.7	%			35,873			33,456		7.2	%
Interest Expense
Deposits			3,699			4,353		-15.0	%			8,157			8,439		-3.3	%
Federal Home Loan Bank advances			112			254		-55.9	%			272			592		-54.1	%
Subordinated debt			371			372		-0.3	%			743			744		-0.1	%
Other short-term borrowings			- -			- -		N/M				1			2		-50.0	%
Total interest expense			4,182			4,979		-16.0	%			9,173			9,777		-6.2	%
Net interest income			13,873			12,100		14.7	%			26,700			23,679		12.8	%
Provision for loan losses			1,507			384		292.4	%			1,926			605		218.3	%
Net interest income after provision for loan losses			12,366			11,716		5.5	%			24,774			23,074		7.4	%
Noninterest Income
Service charges on deposit accounts			102			153		-33.3	%			236			289		-18.3	%
Bank owned life insurance			115			124		-7.3	%			234			250		-6.4	%
Other service charges and fees			35			40		-12.5	%			82			83		-1.2	%
Gain on sale of securities			297			13		2184.6	%			309			13		2276.9	%
Other operating income			89			39		128.2	%			21			41		-48.8	%
Total noninterest income			638			369		72.9	%			882			676		30.5	%
Noninterest Expenses
Salaries and employee benefits			4,442			4,590		-3.2	%			8,928			9,200		-3.0	%
Occupancy expense of premises			489			566		-13.6	%			976			1,106		-11.8	%
Furniture and equipment expenses			557			348		60.1	%			926			683		35.6	%
Other operating expenses			1,878			1,756		6.9	%			3,676			3,304		11.3	%
Total noninterest expenses			7,366			7,260		1.5	%			14,506			14,293		1.5	%
Income before income taxes			5,638			4,825		16.8	%			11,150			9,457		17.9	%
Income tax expense			1,079			1,016		6.2	%			2,090			2,038		2.6	%
Net income		$	4,559		$	3,809		19.7	%		$	9,060		$	7,419		22.1	%
Earnings Per Share
Basic		$	0.34		$	0.29		17.2	%		$	0.67		$	0.57		17.5	%
Diluted		$	0.33		$	0.28		17.9	%		$	0.66		$	0.54		22.2	%

John Marshall Bancorp, Inc.
Loan, Deposit and Borrowing Detail (Unaudited)
(Dollar amounts in thousands)
		June 30, 2020							December 31, 2019							June 30, 2019							Percentage Change
Loans		$ Amount				% of Total			$ Amount				% of Total			$ Amount				% of Total			Last 6 Mos			Last 12 Mos
Mortgage loans on real estate
Commercial		$	803,049			52.8	%		$	794,142			59.9	%		$	764,132			61.4	%		1.1	%		5.1	%
Construction and land development			236,927			15.6	%			252,079			19.0	%			240,224			19.3	%		-6.0	%		-1.4	%
Residential			252,494			16.6	%			202,512			15.3	%			172,288			13.9	%		24.7	%		46.6	%
Total mortgage loans on real estate		$	1,292,470			85.0	%		$	1,248,733			94.2	%		$	1,176,644			94.6	%		3.5	%		9.8	%
Commercial loans			226,143			14.9	%			76,096			5.8	%			65,499			5.3	%		197.2	%		245.3	%
Consumer loans			1,448			0.1	%			653			0.0	%			991			0.1	%		121.7	%		46.1	%
Total loans		$	1,520,061			100.0	%		$	1,325,482			100.0	%		$	1,243,134			100.0	%		14.7	%		22.3	%
Less: Allowance for loan losses			(12,725	)						(10,756	)						(10,190	)
Net deferred loan costs (fees)			(2,430	)						50							(1,033	)
Net loans		$	1,504,906						$	1,314,776						$	1,231,911
		June 30, 2020							December 31, 2019							June 30, 2019							Percentage Change
Deposits		$ Amount				% of Total			$ Amount				% of Total			$ Amount				% of Total			Last 6 Mos			Last 12 Mos
Noninterest-bearing demand deposits		$	398,670			25.5	%		$	273,459			20.9	%		$	267,475			21.2	%		45.8	%		49.0	%
Interest-bearing demand deposits:
NOW accounts			81,194			5.2	%			60,835			4.7	%			58,892			4.7	%		33.5	%		37.9	%
Money market accounts			201,428			12.9	%			180,253			13.8	%			187,474			14.8	%		11.7	%		7.4	%
Savings accounts			49,896			3.2	%			29,208			2.2	%			25,533			2.0	%		70.8	%		95.4	%
Certificates of deposit
$250,000 or more			250,779			16.1	%			255,220			19.5	%			220,672			17.5	%		-1.7	%		13.6	%
Less than $250,000			121,600			7.8	%			128,283			9.8	%			120,280			9.5	%		-5.2	%		1.1	%
QwickRate® Certificates of deposit			31,764			2.0	%			18,030			1.4	%			19,784			1.6	%		76.2	%		60.6	%
ICS®			228,314			14.6	%			187,439			14.3	%			172,238			13.6	%		21.8	%		32.6	%
CDARS®			37,320			2.4	%			50,884			3.9	%			79,512			6.3	%		-26.7	%		-53.1	%
Brokered deposits			160,626			10.3	%			125,093			9.6	%			111,500			8.8	%		28.4	%		44.1	%
Total deposits		$	1,561,591			100.0	%		$	1,308,704			100.0	%		$	1,263,360			100.0	%		19.3	%		23.6	%
Borrowings
Federal funds purchased		$	- -			N/M			$	12,000			12.1	%		$	- -			N/M			N/M			N/M
Federal Home Loan Bank advances			26,000			51.3	%			62,000			62.9	%			40,500			62.2	%		-58.1	%		-35.8	%
Subordinated debt			24,655			48.7	%			24,630			25.0	%			24,605			37.8	%		0.1	%		0.2	%
Total borrowings		$	50,655			100.0	%		$	98,630			100.0	%		$	65,105			100.0	%		-48.6	%		-22.2	%
Total deposits and borrowings		$	1,612,246						$	1,407,334						$	1,328,465						14.6	%		21.4	%
Core customer funding sources (1)		$	1,369,201			84.9	%		$	1,165,581			82.8	%		$	1,132,076			85.2	%		17.5	%		20.9	%
Wholesale funding sources (2)			218,390			13.6	%			217,123			15.4	%			171,784			12.9	%		0.6	%		27.1	%
Subordinated debt (3)			24,655			1.5	%			24,630			1.8	%			24,605			1.9	%		0.1	%		0.2	%
Total funding sources		$	1,612,246			100.0	%		$	1,407,334			100.0	%		$	1,328,465			100.0	%		14.6	%		21.4	%

(1) Includes ICS and CDARS(r), which are all reciprocal deposits maintained by customers.

(2) Consists of QwickRate(r) certificates of deposit, brokered deposits, federal funds purchased and Federal Home Loan Bank advances.

(3) Subordinated debt obligation qualifies as Tier 2 capital.

John Marshall Bancorp, Inc.
Average Balance Sheets, Interest and Rates (unaudited)
(Dollar amounts in thousands)
		Three Months Ended June 30, 2020									Three Months Ended June 30, 2019
					Interest			Average						Interest			Average
		Average			Income-			Yields			Average			Income-			Yields
		Balance			Expense			/Rates			Balance			Expense			/Rates
Assets
Securities		$	138,350		$	857		2.49	%		$	111,478		$	770		2.77	%
Loans, net of unearned income			1,467,631			17,165		4.70	%			1,200,959			15,848		5.29	%
Interest-bearing deposits in other banks			102,625			33		0.13	%			76,784			461		2.41	%
Federal funds sold			- -			- -		0.00	%			93			- -		0.00	%
Total interest-earning assets		$	1,708,606		$	18,055		4.25	%		$	1,389,314		$	17,079		4.93	%
Other assets			36,417									42,296
Total assets		$	1,745,023								$	1,431,610
Liabilities & Shareholders' equity
Interest-bearing deposits
NOW accounts		$	192,375		$	282		0.59	%		$	138,185		$	445		1.29	%
Money market accounts			300,554			553		0.74	%			270,897			1,039		1.54	%
Savings accounts			39,121			90		0.93	%			22,239			80		1.45	%
Time deposits			582,820			2,774		1.91	%			508,663			2,789		2.20	%
Total interest-bearing deposits		$	1,114,870		$	3,699		1.33	%		$	939,984		$	4,353		1.86	%
Federal funds purchased		$	605		$	- -		0.00	%		$	- -		$	- -		0.00	%
Subordinated debt			24,647			371		6.05	%			24,598			372		6.07	%
Other borrowed funds			35,538			112		1.27	%			50,221			254		2.03	%
Total interest-bearing liabilities		$	1,175,660		$	4,182		1.43	%		$	1,014,803		$	4,979		1.97	%
Demand deposits and other liabilities			394,874									266,813
Total liabilities		$	1,570,534								$	1,281,616
Shareholders' equity			174,489									149,994
Total liabilities and shareholders' equity		$	1,745,023								$	1,431,610
Interest rate spread								2.82	%								2.96	%
Net interest income and margin					$	13,873		3.27	%					$	12,100		3.49	%
		Six Months Ended June 30, 2020									Six Months Ended June 30, 2019
					Interest			Average						Interest			Average
		Average			Income-			Yields			Average			Income-			Yields
		Balance			Expense			/Rates			Balance			Expense			/Rates
Assets
Securities		$	137,204		$	1,750		2.56	%		$	109,631		$	1,487		2.74	%
Loans, net of unearned income			1,394,039			33,790		4.87	%			1,183,080			30,926		5.27	%
Interest-bearing deposits in other banks			98,049			333		0.68	%			86,559			1,042		2.43	%
Federal funds sold			- -			- -		0.00	%			104			1		1.94	%
Total interest-earning assets		$	1,629,292		$	35,873		4.43	%		$	1,379,374		$	33,456		4.89	%
Other assets			38,005									37,751
Total assets		$	1,667,297								$	1,417,125
Liabilities & Shareholders' equity
Interest-bearing deposits
NOW accounts		$	170,726		$	627		0.74	%		$	130,394		$	792		1.22	%
Money market accounts			296,720			1,456		0.99	%			274,872			2,072		1.52	%
Savings accounts			34,959			191		1.10	%			16,136			96		1.20	%
Time deposits			587,855			5,883		2.01	%			515,001			5,479		2.15	%
Total interest-bearing deposits		$	1,090,260		$	8,157		1.50	%		$	936,403		$	8,439		1.82	%
Federal funds purchased		$	368		$	1		0.55	%		$	149		$	2		2.71	%
Subordinated debt			24,641			743		6.06	%			24,592			744		6.10	%
Other borrowed funds			40,121			272		1.36	%			58,630			592		2.04	%
Total interest-bearing liabilities		$	1,155,390		$	9,173		1.60	%		$	1,019,774		$	9,777		1.93	%
Demand deposits and other liabilities			341,361									249,791
Total liabilities		$	1,496,751								$	1,269,565
Shareholders' equity			170,546									147,560
Total liabilities and shareholders' equity		$	1,667,297								$	1,417,125
Interest rate spread								2.83	%								2.96	%
Net interest income and margin					$	26,700		3.30	%					$	23,679		3.46	%

 

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