John Marshall Bancorp, Inc. (OTCQB: JMSB) (the “Company”), parent company of John Marshall Bank (the “Bank”) reported its financial results for the three and twelve months ended December 31, 2018.

Selected Highlights

  • Improved Sequential Quarter Performance – Owing to the Tax Cuts and Jobs Act implemented in December 2017, the Company believes that a comparison of fourth quarter 2018 to third quarter 2018 is a more relevant comparison than fourth quarter 2017. Quarterly ROAA increased from 0.86% for the three months ended September 30, 2018, to 0.89% for the three months ended December 31, 2018. Quarterly ROAE increased from 8.09% for the three months ended September 30, 2018, to 8.57% for the three months ended December 31, 2018. The net interest margin increased from 3.43% for the third quarter 2018 to 3.50% for the fourth quarter 2018. The efficiency ratio decreased from 64.6% for the third quarter 2018 to 64.4% for the fourth quarter 2018. Non-performing assets to total assets decreased from 0.07% for the three months ended September 30, 2018, to 0.03% for the three months ended December 31, 2018.
  • Annual Asset Growth of 18.7% - Total assets surpassed $1.39 billion at December 31, 2018, an increase of $219.6 million or 18.7% since December 31, 2017. Total Assets increased $71.6 million or 21.5% (annualized) since September 30, 2018.
  • Annual Loan Growth of 15.4% - Gross loans topped $1.16 billion at December 31, 2018. Net Loans surpassed $1.15 billion at December 31, 2018. Net loans increased $153.8 million or 15.4% since December 31, 2017. Net Loans increased $54.6 million or 19.8% (annualized) since September 30, 2018.
  • Annual Deposit Growth 26.9% - Total deposits equaled $1.14 billion at December 31, 2018, an increase of $241.4 million or 26.9% since December 31, 2017. Total Deposits increased $51.7 million or 18.9% (annualized) since September 30, 2018.
  • Outstanding Asset Quality – Net charge-offs to average loans (annualized) was 0.06% for the three months ended December 31, 2018, compared to 0.13% for the three months ended December 31, 2017. Non-performing assets represented 0.03% of total assets as of December 31, 2018, compared to 0.09% at December 31, 2017. The Company had no loans 30 days or more past due and no non-accrual loans as of December 31, 2018.
  • Improved Funding Composition - Non-interest bearing deposits grew $47.6 million or 27.3% during 2018 and represented 19.5% of total deposits at December 31, 2018. In addition, wholesale funding decreased $13.3 million or 7.2% year-over-year from December 31, 2017 to December 31, 2018. Wholesale funding represented 13.8% of total funding sources at December 31, 2018 compared to 17.9% at December 31, 2017.
  • Record Quarterly Net Interest Income – The Company reported Net Interest Income of $11.6 million for the 4th quarter of 2018, a 10.0% increase from $10.6 million for the 4th quarter of 2017. On a year-to-date basis, total funding sources growth has exceeded Net Loan growth by $52.7 million. The Company believes interest income will improve as the balances in interest-bearing deposits in banks are deployed to fund higher yielding loans.

Chris Bergstrom, President and Chief Executive Officer, commented “It was most gratifying to conclude 2018 with strong fourth quarter balance sheet growth, earnings performance and exceptional asset quality. We hired several experienced local banking professionals and expanded our footprint to new locations, including a loan production office in Arlington, a full service branch in Washington, DC, our Tysons Corner, Virginia loan production office which moved into a larger space and converted to a full service branch and our branch in Woodbridge, Virginia. These investments have improved our liquidity and funding composition and positioned the Company well for continued loan growth. We are pleased with the results, but realize that we need to continue to lever these investments to enhance returns.”

Balance Sheet Review

Assets

Total assets were $1.39 billion at December 31, 2018, $1.32 billion at September 30, 2018 and $1.18 billion at December 31, 2017. During the fourth quarter of 2018 assets increased $71.6 million, or 5.4%. Year-over-year asset growth, from December 31, 2017 to December 31, 2018, was $219.6 million, or 18.7%.

Loans

Gross loans were $1.163 billion at December 31, 2018, $1.108 billion at September 30, 2018 and $1.009 billion at December 31, 2017. During the fourth quarter, gross loans grew $54.7 million or 4.9%. Year-over-year gross loans increased $154.5 million, or 15.3% from December 31, 2017 to December 31, 2018.

Investment Securities

The Company’s investment portfolio comprised of held-to-maturity and available-for-sale securities was $97.2 million at December 31, 2018, $97.7 million at September 30, 2018 and $96.3 million at December 31, 2017. Year-over-year the investment portfolio growth, from December 31, 2017 to December 31, 2018, was $963 thousand, or 1.0%. As of December 31, 2018, the Company held $36.2 million of its investment portfolio as held-to-maturity, and $61.1 million as available-for-sale. The Company also had restricted securities totaling $7.3 million at December 31, 2018 and September 30, 2018 and $8.4 million at December 31, 2017.

Interest Bearing Deposits in Banks

Interest-bearing deposits in banks were $93.7 million at December 31, 2018, $75.0 million at September 30, 2018 and $30.9 million at December 31, 2017. The higher cash balances at the period ending December 31, 2018 are a result of the deposit growth and will continue to be deployed into higher earning assets.

Deposits

Total deposits were $1.138 billion at December 31, 2018, $1.087 billion at September 30, 2018 and $896.9 million at December 31, 2017. During the fourth quarter, deposits grew $51.7 million or 4.8%. Year-over-year deposit growth, from December 31, 2017 to December 31, 2018, was $241.4 million, or 26.9%. Core customer funding was $1.050 billion at December 31, 2018, $1.008 billion at September 30, 2018 and $829.8 million at December 31, 2017. Year-over-year core customer funding sources, which include ICS and CDARs, increased by $219.8 million, or 26.5%, from December 31, 2017 to December 31, 2018. The Company continues to focus on the growth of core deposits.

QwickRate certificates of deposit were $20.6 million at December 31, 2018, $24.1 million at September 30, 2018 and $24.7 million at December 31, 2017. Year-over-year QwickRate certificates of deposit decreased $4.1 million from December 31, 2017 to December 31, 2018. ICS deposits were $135.1 million at December 31, 2018, $94.1 million at September 30, 2018 and $65.3 million at December 31, 2017. Year-over-year, ICS deposits increased $69.8 million from December 31, 2017 to December 31, 2018. CDARs were $112.2 million at December 31, 2018, $112.9 million at September 30, 2018 and $77.5 million at December 31, 2017. Year-over-year CDARs increased $34.7 million from December 31, 2017 to December 31, 2018. Brokered deposits were $68.2 million at December 31, 2018, $55.0 million at September 30, 2018 and $42.4 million at December 31, 2017. Brokered deposits increased $25.8 million from December 31, 2017 to December 31, 2018. Brokered deposits were used to replace certain FHLB advances at more attractive rates.

Borrowings

Total borrowings, consisting of Federal Home Loan Bank advances and Federal funds purchased, were $83.5 million at December 31, 2018, $69.0 million at September 30, 2018 and $118.5 million at December 31, 2017. Total borrowings decreased $35.0 million, or 29.5%, from December 31, 2017 to December 31, 2018. Federal Home Loan Bank advances were $68.5 million at December 31, 2018, $69.0 million at September 30, 2018 and $108.5 million at December 31, 2017. The 29.5% decrease year-over-year in borrowings was a result of the significant growth in core customer deposits.

The Company had subordinated notes with a balance of $24.6 million at December 31, 2018 and September 30, 2018 and $24.5 million at December 31, 2017. The notes qualify as Tier 2 capital for the Company for regulatory purposes.

Shareholders’ Equity and Capital Levels

Total shareholders’ equity was $142.0 million at December 31, 2018, $138.0 million at September 30, 2018 and $128.9 million at December 31, 2017. Year-over-year shareholders’ equity increased by $13.2 million, or 10.2%. Total common shares outstanding increased from 12,824,233, including 85,007 unvested shares, at December 31, 2017, to 12,900,125, including 86,400 unvested shares, at December 31, 2018.

The Company’s capital ratios remain well above regulatory minimums for well capitalized banks. As of December 31, 2018, the Company’s total risk-based capital ratio was 13.9%, compared to 14.5% at December 31, 2017.

Income Statement Review

Net Interest Income

Net interest income, the Company’s primary source of revenue, was $11.6 million for the three months ended December 31, 2018, up 10.0% from $10.6 million for the three months ended December 31, 2017. The net interest margin was 3.50% for the three months ended December 31, 2018 as compared to 3.68% for the three months ended December 31, 2017. Average net loans increased $147.1 million compared to the three months ended December 31, 2017, with a 22 basis point increase in yield. Average interest-bearing deposits in other banks increased $30.9 million compared to the three months ended December 31, 2017, with a 91 basis point increase in yield. Higher interest-bearing deposit balances continue to be deployed into higher earning assets. The average cost of interest bearing liabilities increased 57 basis points when comparing the quarter ended December 31, 2017 to the quarter ended December 31, 2018. Average interest bearing deposits increased $158.0 million with a 63 basis point increase. During 2018, the Federal Reserve increased rates by 100 basis points to a target of 2.25% to 2.50%. The increase in short-term interest rates continues to have an impact on the cost of deposits.

For the year ended December 31, 2018, net interest income was $43.7 million, up 7.8% from $40.5 million for the year ended December 31, 2017. The net interest margin was 3.51% during year ended December 31, 2018, compared to 3.72% during the same period in 2017. The increase in the cost of liabilities during 2018 was related to a full year of interest expense related to the Company’s issuance of subordinated debt versus six months of expense in 2017 as well as increased cost on interest bearing liabilities. Despite the decline in the net interest margin over the past year, net interest income increased by 7.8% during 2018, compared to the twelve months ended December 31, 2017, resulting primarily from a $155.4 million, or 14.3%, increase in average earning assets during 2018, compared to the same period in 2017.

Provision for Loan Losses

The Company had a $403 thousand provision for loan losses for the three months ended December 31, 2018, compared to a provision of $235 thousand for the same period in 2017. The Company had $180 thousand in net loan charge-offs during the fourth quarter of 2018, compared to net loan charge-offs of $324 thousand in the fourth quarter of 2017.

The Company recognized a provision for loan losses of $1.1 million for the year ended December 31, 2018, compared to a provision of $1.4 million for the same period in 2017. The Company reported $265 thousand in net loan charge-offs in 2018, compared to $655 thousand in net loan charge-offs during 2017.

Noninterest Income

The Company’s noninterest income consists 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 December 31, 2018, the Company reported total noninterest income of $303 thousand, compared to $266 thousand during the three months ended December 31, 2017. Service charges on deposit accounts increased $38 thousand, or 37.6%, for the three months ended December 31, 2018 as compared to the same period in the prior year. Other service charges and fees increased $16 thousand for the three months ended December 31, 2018 as compared to the same period in the prior year. The increase in other service charges and fees was related to higher fees earned on CDARs balances.

The Company reported total noninterest income of $1.2 million for both the years ended December 31, 2018 and December 31, 2017. Service charges on deposit accounts increased $125 thousand, or 32.6%, for the year ended December 31, 2018 as compared to the same period in the prior year. Other service charges and fees increased $89 thousand for the year ended December 31, 2018 as compared to the same period in the prior year. In 2017, we reported gains on sales of securities totaling $134 thousand. There was no gain on sale of securities in 2018.

Noninterest Expense

For the three months ended December 31, 2018, salaries and employee benefits expense increased 23.1% to $4.9 million, compared to $4.0 million for the same period in 2017. All other noninterest expenses increased by 15.9%, or $382 thousand, during the fourth quarter of 2018, compared to the same period in 2017.

For the year ended December 31, 2018, salaries and employee benefits expense increased by 23.7%, to $18.3 million, compared to $14.8 million during the same period in 2017. All other operating expenses increased by 9.6%, or $889 thousand, to $10.2 million, for the twelve months ended 2018, compared to $9.3 million during the twelve months ended 2017.

The increase in salaries and benefits for both the three and twelve month periods ended December 31, 2018 was primarily attributable to the increased employee count year-over-year, including staff for: expansion of our Arlington office space owing to growth, our full service branch in Washington, DC, our branch in Woodbridge, Virginia and our Tysons Corner, Virginia loan production office which moved into a larger space and converted to a branch. In addition to the staff needed at our new locations, we hired key executives, loan and business development officers as well as support staff in our operations office. The new employees are complementary to the overall growth initiatives for the Company. The increase in occupancy and furniture and equipment expenses was mostly related to additional rent and furniture expense related to the new locations listed above.

Asset Quality

The Company had no non-accrual loans and no loans 30 days or more past due as of December 31, 2018. As of December 31, 2017, non-accrual loans totaled $639 thousand and there were $1.2 million in loans 30-89 days past due and still accruing interest. Non-performing assets were 0.03% of total assets at December 31, 2018, compared to 0.09% at December 31, 2017. The Company’s allowance for loan losses covered non-performing loans by 14.0 times as of December 31, 2017.

Troubled debt restructurings were $853 thousand at December 31, 2018, compared to $495 thousand at December 31, 2017. All troubled debt restructurings were performing in accordance with modified terms as of December 31, 2018. The Company had $379 thousand in other real estate owned as of December 31, 2018, September 30, 2018 and December 31, 2017.

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 and has eight full-service banking centers located in Reston, Leesburg, Arlington Alexandria, Tysons Corner and Woodbridge, Virginia; Rockville, Maryland; Washington, DC and one loan production office in Arlington, Virginia. Further information on the Bank can be obtained by visiting its website at www.johnmarshallbank.com.

This press release contains forward-looking statements within the meaning of the Securities and Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast, and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company’s past results are not necessarily indicative of future performance.

 
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 Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
Selected Balance Sheet Data
Cash and cash equivalents $ 7,853 $ 7,256 7,853 7,256
Total investment securitites 104,635 104,716 104,635 104,716
Total loans, net of deferred fees 1,161,455 1,006,872 1,161,455 1,006,872
Allowance for loan losses 9,731 8,927 9,731 8,927
Total assets 1,394,621 1,175,025 1,394,621 1,175,025
Non-interest bearing demand deposits 222,299 174,686 222,299 174,686
Interest bearing deposits 916,069 722,255 916,069 722,255
Total deposits 1,138,368 896,941 1,138,368 896,941
Shareholders' equity 142,018 128,867 142,018 128,867
 
Summary Results of Operations
Interest income $ 16,063

 

$ 13,211 $ 57,890

 

$ 49,318
Interest expense 4,415

 

2,621 14,190

 

8,793
Net interest income 11,648 10,590 43,700 40,525
Provision for loan losses 403

 

235

 

1,069

 

1,380
Net interest income after provision for loan losses 11,245 10,355 42,631 39,145
Noninterest income 303

 

266 1,237

 

1,229
Noninterest expense 7,702

 

6,398 28,522

 

24,126
Net income before income taxes 3,846

 

4,223 15,346

 

16,248
Net income 3,031

 

1,118 12,174

 

8,984
 
Per share Data and Shares Outstanding
Earnings per share - basic $ 0.24 $ 0.09 $ 0.95 $ 0.70
Earnings per share - diluted $ 0.22 $ 0.08 $ 0.89 $ 0.66
Tangible book value per share $ 11.01 $ 10.05 $ 11.01 $ 10.05
Weighted average common shares (basic) 12,803,202 12,738,895 12,783,717 12,715,999
Weighted average common shares (diluted) 13,527,479 13,498,593 13,531,858 13,486,450
Common shares outstanding at end of period 12,900,125 12,824,233 12,900,125 12,824,233
 
Performance Ratios
Return on average assets (annualized) 0.89 % 0.38 % 0.95 % 0.80 %
Return on average equity (annualized) 8.57 % 3.40 % 8.98 % 7.14 %
Net interest margin 3.50 % 3.68 % 3.51 % 3.72 %
Noninterest income as a percentage of average assets (annualized) 0.09 % 0.09 % 0.10 % 0.11 %
Noninterest expense to average assets (annualized) 2.26 % 2.16 % 2.23 % 2.15 %
Efficiency ratio 64.4 % 58.9 % 63.5 % 57.8 %
 
Asset Quality
Non-performing assets to total assets 0.03 % 0.09 % 0.03 % 0.09 %
Non-performing loans to total loans 0.00 % 0.06 % 0.00 % 0.06 %
Allowance for loan losses to non-performing loans N/M 14.0x N/M 14.0x
Allowance for loan losses to total loans 0.84 % 0.89 % 0.84 % 0.89 %
Net charge-offs to average loans (annualized) 0.06 % 0.13 % 0.03 % 0.07 %
 
Loans 30-89 days past due and accruing interest $ - - $ 1,189 $ - - $ 1,189
Non-accrual loans $ - - $ 639 $ - - $ 639
Other real estate owned $ 379 $ 379 $ 379 $ 379
Non-performing assets (1) $ 379 $ 1,018 $ 379 $ 1,018
Troubled debt restructurings (total) $ 853 $ 495 $ 853 $ 495
Performing in accordance with modified terms $ 853 $ 495 $ 853 $ 495
Not performing in accordance with modified terms $ - - $ - - $ - - $ - -
 
Capital Ratios
Tangible equity / tangible assets 10.2 % 11.0 % 10.2 % 11.0 %
Total risk-based capital ratio 13.9 % 14.5 % 13.9 % 14.5 %
Tier 1 risk-based capital ratio 11.2 % 11.5 % 11.2 % 11.5 %
Leverage ratio 11.2 % 11.5 % 11.2 % 11.5 %
Common equity tier 1 ratio 11.2 % 11.0 % 11.2 % 11.0 %
 
Other Information
Number of full time equivalent employees 140 125 140 125
# Full service branch offices 8 5 8 5
# Loan production or limited service branch offices 1 3 1 3
 
(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 ("TDRs") which were accruing interest at the date indicated.
 
 
John Marshall Bancorp, Inc.
         
Consolidated Balance Sheets
(Dollar amounts in thousands, except per share data)
 
% Change
December 31, September 30, December 31, Last Three Year Over
2018 2018 2017 Months Year
Assets (Unaudited) (Unaudited) (Unaudited)
 
Cash and due from banks $ 7,853 $ 9,918 $ 7,256 -20.8 % 8.2 %
Federal funds sold 126 96 40 31.3 % 215.0 %
Interest-bearing deposits in banks 93,716 74,982 30,873 25.0 % 203.6 %
Securities available-for-sale, at fair value 61,055 60,915 54,699 0.2 % 11.6 %

Securities held-to-maturity, fair value of $35,589 at 12/31/2018, $35,730 at 9/30/2018 and $41,500 at 12/31/2017

36,177 36,803 41,570 -1.7 % -13.0 %
Restricted securities, at cost 7,283 7,339 8,447 -0.8 % -13.8 %
Equity securitites, at fair value 120 102 - - 17.6 % N/M

Loans, net of allowance for loan losses of $9,731 at 12/31/2018, $9,508 at 9/30/2018 and $8,927 at 12/31/2017

1,151,724 1,097,102 997,945 5.0 % 15.4 %
Bank premises and equipment, net 2,852 2,561 2,480 11.4 % 15.0 %
Accrued interest receivable 3,623 3,613 3,263 0.3 % 11.0 %
Bank owned life insurance 19,617 19,485 19,093 0.7 % 2.7 %
Other real estate owned 379 379 379 0.0 % 0.0 %
Other assets   10,096     9,733     8,980   3.7 % 12.4 %
 
Total assets $ 1,394,621   $ 1,323,028   $ 1,175,025   5.4 % 18.7 %
 
Liabilities and Shareholders' Equity
 
Liabilities
Deposits:
Non-interest bearing demand deposits $ 222,299 $ 217,430 $ 174,686 2.2 % 27.3 %
Interest bearing demand deposits 367,656 346,146 258,306 6.2 % 42.3 %
Savings deposits 6,987 6,724 6,709 3.9 % 4.1 %
Time deposits   541,426     516,368     457,240   4.9 % 18.4 %
Total deposits 1,138,368 1,086,668 896,941 4.8 % 26.9 %
Federal funds purchased 15,001 - - 10,001 N/M 50.0 %
Federal Home Loan Bank advances 68,500 69,000 108,500 -0.7 % -36.9 %
Subordinated Debt 24,581 24,568 24,531 0.1 % 0.2 %
Accrued interest payable 1,243 843 996 47.4 % 24.8 %
Other liabilities   4,910     3,974     5,189   23.6 % -5.4 %
Total liabilities   1,252,603     1,185,053     1,046,158   5.7 % 19.7 %
 
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, 12,900,125 at 12/31/2018 including 86,400 unvested shares, 12,888,350 shares at 9/30/2018 including 86,725 unvested shares and 12,824,233 at 12/31/17, including 85,007 unvested shares

128 128 127 0.0 % 0.8 %
Additional paid-in capital 85,127 84,828 83,867 0.4 % 1.5 %
Retained earnings 57,718 54,574 45,544 5.8 % 26.7 %
Accumulated other comprehensive loss   (955 )   (1,555 )   (671 ) 38.6 % -42.3 %
 
Total shareholders' equity   142,018     137,975     128,867   2.9 % 10.2 %
 
Total liabilities and shareholders' equity $ 1,394,621   $ 1,323,028   $ 1,175,025   5.4 % 18.7 %
 
 
John Marshall Bancorp, Inc.
Consolidated Statements of Income
           
(Dollar amounts in thousands, except per share data)
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2018 2017 % Change   2018 2017 % Change
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest and Dividend Income
Interest and fees on loans $ 14,924 $ 12,456 19.8 % $ 53,716 $ 46,667 15.1 %
Interest on investment securities, taxable 490 392 25.0 % 1,757 1,445 21.6 %
Interest on investment securities, tax-exempt 79 85 -7.1 % 330 269 22.7 %
Dividends 109 108 0.9 % 470 417 12.7 %
Interest on federal funds sold 1 - - N/M 1 - - N/M
Interest on deposits in banks   460     170 170.6 %   1,616     520 210.8 %

Total interest and dividend income

  16,063     13,211 21.6 %   57,890     49,318 17.4 %
 
Interest Expense
Deposits 3,755 1,924 95.2 % 11,307 6,752 67.5 %
Federal Home Loan Bank advances 287 324 -11.4 % 1,393 1,300 7.2 %
Subordinated debt 372 372 0.0 % 1,487 719 106.8 %
Other short-term borrowings   1     1 0.0 %   3     22 -86.4 %
Total interest expense   4,415     2,621 68.4 %   14,190     8,793 61.4 %
 
Net interest income 11,648 10,590 10.0 % 43,700 40,525 7.8 %
 
Provision for loan losses   403     235 71.5 %   1,069     1,380 -22.5 %
 
Net interest income after provision for loan losses   11,245     10,355 8.6 %   42,631     39,145 8.9 %
 
Noninterest Income
Service charges on deposit accounts 139 101 37.6 % 508 383 32.6 %
Bank owned life insurance 133 137 -2.9 % 525 553 -5.1 %
Other service charges and fees 44 28 57.1 % 194 105 84.8 %
Gain on sale of securities - - - - N/M - - 134 N/M
Other real estate owned 7 - - N/M 23 - - N/M
Gain on sale of fixed assets - - - - N/M - - 1 N/M
Other operating income (loss)   (20 )   - - N/M     (13 )   53 -124.5 %
Total noninterest income   303     266 13.9 %   1,237     1,229 0.7 %
 
Noninterest Expenses
Salaries and employee benefits 4,914 3,992 23.1 % 18,327 14,820 23.7 %
Occupancy expense of premises 529 499 6.0 % 2,030 1,843 10.1 %
Furniture and equipment expenses 351 315 11.4 % 1,307 1,183 10.5 %
Other real estate owned expenses 2 20 N/M 5 20 N/M
Other operating expenses   1,906     1,572 21.2 %   6,853     6,260 9.5 %
Total noninterest expenses   7,702     6,398 20.4 %   28,522     24,126 18.2 %
 
Income before income taxes 3,846 4,223 -8.9 % 15,346 16,248 -5.6 %
 
Income tax expense  

815

    3,105 -73.8 %  

3,172

    7,264 -56.3 %
 
Net income $ 3,031   $ 1,118 171.1 % $ 12,174   $ 8,984 35.5 %
 
Earnings Per Share
Basic $ 0.24 $ 0.09 166.7 % $ 0.95 $ 0.70 35.7 %
Diluted $ 0.22 $ 0.08 175.0 % $ 0.89 $ 0.66 34.8 %
 
 
John Marshall Bancorp, Inc.
                                 
Loan, Deposit and Borrowing Detail (Unaudited)
(Dollar amounts in thousands)
 
December 31, 2018 September 30, 2018 December 31, 2017 Percentage Change
Loans $ Amount % of Total $ Amount % of Total $ Amount % of Total Last 3 Mos Last 12 Mos
Mortgage loans on real estate
Commercial $ 747,342 64.2 % $ 683,259 61.6 % $ 577,016 57.1 % 9.4 % 29.5 %
Construction and land development 204,986 17.6 % 216,242 19.5 % 218,538 21.7 % -5.2 % -6.2 %
Residential   143,811   12.4 %   136,038   12.3 %   135,791   13.5 % 5.7 % 5.9 %
Total mortgage loans on real estate $ 1,096,139 94.2 % $ 1,035,539 93.4 % $ 931,345 92.3 % 5.9 % 17.7 %
Commercial loans 65,815 5.7 % 71,258 6.4 % 76,573 7.6 % -7.6 % -14.0 %
Consumer loans   1,198   0.1 %   1,686   0.2 %   777   0.1 % -28.9 % 54.2 %
Total loans $ 1,163,152 100.0 % $ 1,108,483 100.0 % $ 1,008,695 100.0 % 4.9 % 15.3 %
Less: Allowance for loan losses (9,731 ) (9,508 ) (8,927 )
Net deferred loan fees   (1,697 )   (1,873 )   (1,823 )
Net loans $ 1,151,724   $ 1,097,102   $ 997,945  
 
 
December 31, 2018 September 30, 2018 December 31, 2017 Percentage Change
Deposits $ Amount % of Total $ Amount % of Total $ Amount % of Total Last 3 Mos Last 12 Mos
Noninterest-bearing demand deposits $ 222,299 19.5 % $ 217,430 20.0 % $ 174,686 19.5 % 2.2 % 27.3 %
Interest-bearing demand deposits:
NOW accounts 44,884 3.9 % 50,541 4.6 % 33,505 3.7 % -11.2 % 34.0 %
Money market accounts 186,626 16.4 % 200,503 18.5 % 159,508 17.8 % -6.9 % 17.0 %
Savings accounts 6,987 0.6 % 6,724 0.6 % 6,709 0.8 % 3.9 % 4.1 %
Certificates of deposit
$250,000 or more 232,491 20.4 % 217,549 20.0 % 199,161 22.2 % 6.9 % 16.7 %
Less than $250,000 108,911 9.6 % 107,900 9.9 % 113,374 12.6 % 0.9 % -3.9 %
QwickRate® Certificates of deposit 20,642 1.8 % 24,076 2.2 % 24,735 2.8 % -14.3 % -16.5 %
ICS® 135,135 11.9 % 94,095 8.7 % 65,293 7.3 % 43.6 % 107.0 %
CDARS® 112,196 9.9 % 112,870 10.4 % 77,531 8.6 % -0.6 % 44.7 %
Brokered deposits   68,197   6.0 %   54,980   5.1 %   42,439   4.7 % 24.0 % 60.7 %
Total deposits $ 1,138,368   100.0 % $ 1,086,668   100.0 % $ 896,941   100.0 % 4.8 % 26.9 %
 
Borrowings
Federal funds purchased $ 15,001 13.9 % $ - - 0.0 % $ 10,001 7.0 %

N/M

50.0 %
Federal Home Loan Bank advances 68,500 63.4 % 69,000 73.7 % 108,500 75.9 % -0.7 % -36.9 %
Subordinated debt   24,581   22.7 %   24,568   26.3 %   24,531   17.2 % 0.1 % 0.2 %
Total borrowings $ 108,082   100.0 % $ 93,568   100.0 % $ 143,032   100.0 % 15.5 % -24.4 %
 
Total deposits and borrowings $ 1,246,450   $ 1,180,236   $ 1,039,973   5.6 % 19.9 %
 
Core customer funding sources (1) $ 1,049,529 84.2 % $ 1,007,612 85.4 % $ 829,767 79.8 % 4.2 % 26.5 %
Wholesale funding sources (2) 172,340 13.8 % 148,056 12.5 % 185,675 17.9 % 16.4 % -7.2 %
Subordinated debt (3)   24,581   2.0 %   24,568   2.1 %   24,531   2.4 % 0.1 % 0.2 %
Total funding sources $ 1,246,450   100.0 % $ 1,180,236   100.0 % $ 1,039,973   100.0 % 5.6 % 19.5 %
 
(1) Includes ICS and CDARS(r), which are all reciprocal deposits maintained by customers.
(2) Consists of QwickRate(r) certificates of deposit, brokered deposits 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 December 31, 2018 Three Months Ended December 31, 2017
Interest Average Interest Average
Average Income- Yields Average Income- Yields
Balance Expense /Rates Balance Expense /Rates
Assets
Securities $ 104,961 $ 678 2.56 % $ 104,081 $ 585 2.23 %
Loans, net of unearned income 1,134,841 14,924 5.22 % 987,726 12,456 5.00 %
Interest-bearing deposits in other banks 80,437 460 2.27 % 49,537 170 1.36 %
Federal funds sold   128   1 3.10 %   59 - 0.00 %
Total interest-earning assets $ 1,320,367 $ 16,063 4.83 % $ 1,141,403 $ 13,211 4.59 %
Other assets   33,632   33,469
Total assets $ 1,353,999 $ 1,174,872
Liabilities & Shareholders' equity
Interest-bearing deposits
NOW accounts $ 91,449 $ 235 1.02 % $ 72,977 $ 73 0.40 %
Money market accounts 268,554 973 1.44 % 204,952 338 0.65 %
Savings accounts 7,302 4 0.22 % 7,482 4 0.21 %
Time deposits   527,178   2,543 1.91 %   451,037   1,509 1.33 %
Total interest-bearing deposits $ 894,483 $ 3,755 1.67 % $ 736,448 $ 1,924 1.04 %
 
Federal funds purchased $ 163 $ 1 2.43 % $ 335 $ 1 1.18 %
Subordinated debt 24,573 372 6.01 % 24,523 372 6.02 %
Other borrowed funds   64,022   287 1.78 %   96,201   324 1.34 %
Total interest-bearing liabilities $ 983,241 $ 4,415 1.78 % $ 857,507 $ 2,621 1.21 %
Demand deposits and other liabilities   230,384   186,919
Total liabilities $ 1,213,625 $ 1,044,426
Shareholders' equity   140,374   130,446
Total liabilities and shareholders' equity $ 1,353,999 $ 1,174,872
Interest rate spread 3.05 % 3.38 %
Net interest income and margin $ 11,648 3.50 % $ 10,590 3.68 %
 
 
Twelve Months Ended December 31, 2018 Twelve Months Ended December 31, 2017
Interest Average Interest Average
Average Income- Yields Average Income- Yields
Balance Expense /Rates Balance Expense /Rates
Assets
Securities $ 104,214 $ 2,557 2.45 % $ 98,170 $ 2,131 2.17 %
Loans, net of unearned income 1,056,324 53,716 5.09 % 947,287 46,667 4.93 %
Interest-bearing deposits in other banks 83,935 1,616 1.93 % 43,662 520 1.19 %
Federal funds sold   83   1 1.20 %   58 - 0.00 %
Total interest-earning assets $ 1,244,556 $ 57,890 4.65 % $ 1,089,177 $ 49,318 4.53 %
Other assets   32,479   32,839
Total assets $ 1,277,035 $ 1,122,016
Liabilities & Shareholders' equity
Interest-bearing deposits
NOW accounts $ 75,301 $ 555 0.74 % $ 44,269 $ 181 0.41 %
Money market accounts 234,173 2,577 1.10 % 201,501 1,181 0.59 %
Savings accounts 6,953 16 0.23 % 7,250 17 0.23 %
Time deposits   495,206   8,159 1.65 %   435,923   5,373 1.23 %
Total interest-bearing deposits $ 811,633 $ 11,307 1.39 % $ 688,943 $ 6,752 0.98 %
 
Federal funds purchased $ 123 $ 3 2.44 % $ 4,997 $ 22 0.44 %
Subordinated debt 24,554 1,487 6.06 % 12,026 719 5.98 %
Other borrowed funds   87,503   1,393 1.59 %   103,095   1,300 1.26 %
Total interest-bearing liabilities $ 923,813 $ 14,190 1.54 % $ 809,061 $ 8,793 1.09 %
Demand deposits and other liabilities   217,712   187,197
Total liabilities $ 1,141,525 $ 996,258
Shareholders' equity   135,510   125,758
Total liabilities and shareholders' equity $ 1,277,035 $ 1,122,016
Interest rate spread 3.11 % 3.44 %
Net interest income and margin $ 43,700 3.51 % $ 40,525 3.72 %