News Details

RESTON, Va.--(BUSINESS WIRE)-- John Marshall Bank (OTCQB: JMSB) (the “Bank”) reported net income of $6.6 million for the nine months ended September 30, 2015, an increase of $724 thousand, or 12.4%, as compared to net income of $5.8 million reported for the nine months ended September 30, 2014. Net income per diluted share increased 12.5% to $0.63 per share during the first nine months of 2015, compared to $0.56 per share during the same period in 2014, as adjusted for the 6 for 5 stock split in the form of a 20% dividend paid July 1, 2015. As of September 30, 2015, the Bank’s tangible book value per share was $10.68, up 9.3% compared to $9.77 as of September 30, 2014, as adjusted for the 6 for 5 stock split in the form of a 20% dividend paid July 1, 2015.

The Bank’s nine month results produced an annualized return of 1.05% on average assets and 8.44% on average equity, compared to 1.10% and 8.24%, respectively, for the same period a year ago.

The Bank’s capital ratios remain well above regulatory minimums for well capitalized banks. As of September 30, 2015, the Bank’s total risk-based capital ratio was 13.5%, compared to 14.4% at September 30, 2014.

Balance Sheet Review

At September 30, 2015, total assets were $884.5 million, an increase of $97.7 million, or 12.4%, from total assets of $786.8 million at December 31, 2014, and an increase of $126.3 million, or 16.7% from total assets of $758.3 million at September 30, 2014. Gross loans increased $81.7 million, or 11.9%, to $766.3 million at September 30, 2015, compared to $684.6 million at December 31, 2014. Year-over-year loan growth, from September 30, 2014 to September 30, 2015, was $113.2 million, or 17.3%. The Bank’s investment portfolio increased $18.3 million, or 26.7% to $87.1 million at September 30, 2015, compared to $68.8 million at December 31, 2014, and increased $24.2 million, or 38.5%, compared to $62.9 million at September 30, 2014. As of September 30, 2015, the Bank held $47.6 million of its investment portfolio as held-to-maturity, and $33.4 million as available-for-sale. The Bank had $1.0 million in other real estate owned (“OREO”) as of September 30, 2015, as compared to no OREO as of December 31, 2014 and September 30, 2014.

Total deposits were $690.9 million at September 30, 2015, representing an increase of $73.3 million or 11.9%, compared to $617.6 million at December 31, 2014. Year-over-year deposit growth, from September 30, 2014 to September 30, 2015, was $92.8 million, or 15.5%. Total borrowings, consisting of Federal Home Loan Bank advances and customer repurchase agreements, were $81.8 million at September 30, 2015, an increase of $17.4 million, or 27.0%, compared to $64.4 million at December 31, 2014. Year-over-year, from September 30, 2014 to September 30, 2015, total borrowings increased by $23.5 million, or 40.4%.

During the first nine months of 2015, certificates of deposit obtained through a deposit listing service provided by QwickRate, Inc. increased by $10.3 million. Year-over-year, QwickRate certificates of deposit increased by $12.0 million. Brokered certificates of deposit declined by $1.2 million during the first nine months of 2015 and increased by $3.2 million, or 19.2% since September 30, 2014. Federal Home Loan Bank advances increased by $18.0 million, or 34.6%, during the first nine months of 2015, and by $24.0 million, or 52.2%, compared to September 30, 2014. Core customer funding sources increased by $63.6 million, or 10.7% during the first nine months of 2015, and by $77.2 million, or 13.3%, compared to September 30, 2014.

Total shareholders’ equity was $106.9 million at September 30, 2015, an increase of $7.3 million, or 7.3%, compared to $99.6 million at December 31, 2014. Year-over-year, total shareholders’ equity increased by $9.6 million, or 9.8%, compared to $97.4 million at September 30, 2014. The majority of the increase in shareholders’ equity over the past year is attributed to net income retained during the period the past twelve months. Total common shares outstanding increased from 9,965,953 at September 30, 2014 to 10,011,624 at September 30, 2015, as adjusted for the 6 for 5 stock split in the form of a 20% dividend paid July 1, 2015.

Income Statement Review

Net interest income

Net interest income, the Bank’s primary source of revenue, was $25.0 million for the nine months ended September 30, 2015, up 13.7% from $22.0 million for the nine months ended September 30, 2014. The net interest margin was 4.06% during the first nine months of 2015, compared to 4.23% during the first nine months of 2014. The decline in the net interest margin from year-to-year is primarily attributed to a decline in the Bank’s yield on earning assets to 4.68% during the first nine months of 2015 from 4.86% during the first nine months of 2014, which is substantially the result of a 25 basis point year-to-year decline in loan yields and a 27 basis point decline in securities yields. In addition, the average balance for securities increased $24.4 million from September 30, 2014 to September 30, 2015.

Notwithstanding the decline in the net interest margin over the past year, net interest income increased by 13.7% during the first nine months of 2015, compared to the first nine months of 2014, resulting primarily from a $127.8 million, or 18.4%, increase in average earning assets during the first nine months of 2015, compared to the first nine months of 2014.

Provision for loan losses

The Bank recognized a provision for loan losses of $1.1 million during the first nine months of 2015, compared to a provision of $716 thousand during the first nine months of 2014. In addition, the Bank reported net loan charge-offs of $621 thousand during the first nine months of 2015, compared to $261 thousand during the first nine months of 2014. The loan charge-offs reported in 2015 were on two commercial loans that had been in non-accrual status and fully reserved in prior periods.

Noninterest income

The Bank’s primary source of noninterest income is service charges on deposit accounts. Loan fees are included in interest income on the loan portfolio and not reported as noninterest income. For the nine months ended September 30, 2015, the Bank reported total noninterest income of $422 thousand, compared to $340 thousand during the first nine months of 2014, an increase of 24.1%.

Noninterest expense

The largest component of the Bank’s noninterest expense is employee salaries and benefits. Salary and employee benefits expense increased by 14.3%, to $8.6 million, during the first nine months of 2015 compared to $7.5 million during the first nine months of 2014. All other operating expenses increased by 10.3%, or $523 thousand, to $5.6 million, during the first nine months of 2015, compared to $5.1 million during the first nine months of 2014.

The increase in salary and benefits expense was due to additional staffing required to support the Bank’s growth. The increase in occupancy expense and furniture and equipment was associated with the expansion of our Reston corporate/operations office during the past year. Other operating expense increased due to data processing and technology related expenses associated with a growing customer base.

Asset Quality Review

Asset quality continues to remain exceptionally strong and is significantly better than the Bank’s peers. As of September 30, 2015, non-performing assets were $1.4 million, or 0.15% of total assets, compared to $645 thousand, or 0.09%, at September 30, 2014. Included in total non-performing assets as of September 30, 2015, was $1.0 million in other real estate owned. The Bank’s allowance for loan losses covered non-performing loans by 19.1 times as of September 30, 2015, compared to 13.2 times at September 30, 2014.

Non-performing loans decreased $107 thousand from $471 thousand as of September 30, 2014, to $364 thousand at September 30, 2015. Additionally, the Bank had total troubled debt restructurings of $1.5 million as of September 30, 2015 and 2014. All restructured loans were performing in accordance with modified terms as of September 30, 2015.

John Marshall Bank is headquartered in Reston, Virginia and has five full-service branches located in Reston, Leesburg, Arlington, Alexandria and Rockville. The Bank also has a limited-service commercial branch located in Washington, DC. 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 Bank 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 Bank’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 Bank’s past results are not necessarily indicative of future performance.

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John Marshall Bank
John R. Maxwell, 703-584-0840

Source: John Marshall Bank