Reports 27.5% Rise in Net Interest Income, Ready for 2025 Growth – John Marshall Bancorp
John Marshall Bancorp, Inc. (Nasdaq: JMSB), the parent company of John Marshall Bank (the Bank), reports impressive financial results for the quarter ending December 31, 2024. The Company reports net income of $4.8 million, or $0.33 per diluted common share, compared to $4.2 million ($0.30 per diluted common share) for the quarter ending September 30, 2024. This shows a solid year-over-year performance, with net income for the same period in 2023 reported at $4.5 million ($0.32 per diluted common share).
Key Financial Highlights:
Net Interest Income and Margin Growth:
John Marshall Bancorp reports a 27.5% annualized increase in net interest income, reaching $14.1 million for Q4 2024. This is up from $13.2 million reported for the quarter ending September 30, 2024. The Company reports a 22-basis point increase in net interest margin, which rose to 2.52% from 2.30% in Q3 2024. Compared to the same period in 2023, the net interest margin reports an improvement of 40 basis points, showcasing strong operational performance.
Accelerating Earnings:
Pre-tax, pre-provision earnings (Non-GAAP) for Q4 2024 stand at $6.4 million, up 25.6% compared to the same period last year. Despite the Federal Reserve’s fed fund rate reductions in mid-September 2024, John Marshall Bancorp reports that net income for Q4 2024 grew by 12.8% compared to Q3 2024 and showed a healthy performance over Q4 2023.
Loan Growth:
The Company reports growth in its loan portfolio, expanding by $29.6 million, or 6.4% annualized, in Q4 2024. New loan commitments totaled $118.6 million, showing a remarkable 79.4% increase compared to Q4 2023. These new commitments indicate a strong pipeline for future growth, even though they represent loans that have not necessarily been fully funded yet.
Asset Quality:
John Marshall Bancorp reports strong asset quality, with no non-accrual loans or other real estate owned (OREO) assets as of December 31, 2024. There was one loan that was 90 days past due but still accruing interest, which was fully paid off by January 7, 2025. This reflects a healthy loan portfolio and positive prospects for the future.
Capitalization and Book Value:
The Company reports maintaining a robust capital position. As of December 31, 2024, shareholders’ equity increased to $246.6 million, a 7.3% increase year-over-year. Book value per share rose to $17.28, up 6.3% from $16.25 at the end of 2023. Including the $0.25 dividend paid in July 2024, John Marshall Bancorp reports a 7.9% return on book value for 2024.
Management Commentary:
Chris Bergstrom, President and CEO of John Marshall Bancorp, expressed satisfaction with the fourth-quarter results. “In Q4, we achieved excellent progress, notably increasing our net interest margin by 22 basis points,” Bergstrom reports. “Loan balances grew by $29.6 million, and we continue to see growth in our loan commitments. Our capital levels remain strong, and we are poised for continued growth in 2025.”
Bergstrom emphasized that the Company’s solid financial position, paired with its sound capital ratios, positions John Marshall Bancorp well for future growth opportunities.
Liquidity and Credit Quality:
As of December 31, 2024, the Company reports total assets of $2.23 billion, a slight decrease from $2.27 billion at the end of September 2024. However, total loans increased to $1.87 billion, showing a 6.4% annualized growth compared to the prior quarter. The carrying value of the fixed-income securities portfolio stood at $222.3 million, down from $237.5 million in Q3 2024, primarily due to portfolio amortization.
John Marshall Bancorp reports solid liquidity, with a liquidity position—comprising cash, unencumbered securities, and available secured borrowing capacity—totaling $727.3 million at December 31, 2024, up from $639.0 million at the end of 2023. Total deposits stood at $1.89 billion, reflecting a decrease of $43.7 million compared to Q3 2024, mainly due to a reduction in higher-cost deposits.
With these positive financial reports, John Marshall Bancorp remains well-positioned for future growth in 2025, reporting strong earnings, expanding loan commitments, and robust liquidity and capital levels..3 million at December 31, 2024, up from $639.0 million at the end of 2023. Total deposits were $1.89 billion, reflecting a decrease of $43.7 million compared to Q3 2024, primarily due to a reduction in costlier deposits.
Strong Capital Ratios:
John Marshall Bank’s regulatory capital ratios remained well above the minimum thresholds required for well-capitalized institutions. As of December 31, 2024, the Company’s total risk-based capital ratio was 16.2%, up from 15.7% at the end of 2023. The Bank’s strong capital position supports its growth initiatives and enhances its ability to continue serving clients.
Commercial Real Estate Performance Review
The company divides its real estate portfolio into two categories: owner-occupied and non-owner occupied properties. Here is a breakdown of key metrics for these asset classes as of December 31, 2024:
| Asset Class | Owner Occupied Loans | Non-owner Occupied Loans |
|---|---|---|
| Weighted Average Loan-to-Value (LTV) | Debt Service Coverage Ratio (DSCR) | |
| Warehouse & Industrial | 49.8% | 3.5x |
| Office | 57.6% | 3.7x |
| Retail | 57.1% | 3.5x |
| Church | 27.7% | 2.6x |
| Hotel/Motel | – | – |
| Other | 40.5% | 3.6x |
Total Portfolio Summary
- Total Loans (Owner Occupied): 285 loans with a principal balance of $329,021 thousand
- Total Loans (Non-owner Occupied): 264 loans with a principal balance of $757,173 thousand
Income Statement Overview
Fourth Quarter 2024 Results
- Net Income: $4.8 million, up by $274 thousand (6.1%) from Q4 2023.
- Net Interest Income: Increased by $2.0 million (17.0%), driven by higher yields on interest-earning assets and an increase in non-interest-bearing deposits. The net interest margin for Q4 2024 was 2.52%, compared to 2.11% for Q4 2023.
- Provision for Credit Losses: $298 thousand in Q4 2024, compared to a $781 thousand release in Q4 2023. This was mainly due to growth in the loan portfolio by $29.6 million.
- Non-interest Income: Decreased by $343 thousand to $281 thousand due to lower gains on SBA 7(a) loan sales and unfavorable mark-to-market adjustments.
- Non-interest Expense: Increased by $391 thousand (5.2%), primarily due to higher employee benefits, franchise tax fees, professional fees, and data processing expenses.
Year-End 2024 Results
- Net Income: $17.1 million for the year, up $12.0 million from $5.2 million in 2023. This increase is mainly due to a restructuring in 2023 that involved the securities portfolio and the surrender of bank-owned life insurance, resulting in a non-recurring loss of $14.6 million.
- Net Interest Income: Increased by $0.6 million (1.1%) for the year, driven by higher yields on interest-bearing assets. The yield on interest-earning assets rose to 4.92% in 2024 from 4.41% in 2023.
- Provision for Credit Losses: A $0.4 million release in 2024, compared to a $3.3 million release in 2023. This reflects the strong credit performance of the loan portfolio.
- Non-interest Income: Increased to $2.3 million, reversing a $14.9 million loss in 2023 due to the restructuring.
- Non-interest Expense: Increased by $994 thousand (3.2%) compared to 2023. Excluding non-recurring items, adjusted non-interest expense increased by 1.6%.
Key Metrics
- Non-interest Expense to Average Assets: 1.41% for the year, up from 1.33% in 2023.
- Efficiency Ratio: 59.7% for 2024, significantly improved from 86.7% in 2023, largely due to the restructuring.
Non-GAAP Financial Measures
The company uses Non-GAAP financial measures to offer a clearer view of its operating performance. These measures exclude non-recurring expenses and unrealized losses, helping investors assess the company’s ongoing operations.
Key Non-GAAP Measures Include:
- Tax-equivalent net interest margin
- Adjusted bank regulatory capital ratios
- Core non-interest income and efficiency ratio
