John Marshall Bancorp reported higher third-quarter earnings, rising net interest income and stronger deposit growth, alongside continued improvement in operating efficiency. The Reston, Virginia-based parent of John Marshall Bank also declared a $0.10-per-share dividend and reiterated that its planned all-stock combination with Eagle Financial Services is expected to close in the first quarter of 2027.
Key details
-
Earnings rose year over year and from the prior quarter. Net income was $7.5 million, up 39.5% from $5.4 million a year earlier and 7.4% from $7.0 million in the second quarter. Diluted earnings per share increased to $0.53 from $0.38 a year earlier and $0.50 in the prior quarter. The company said it was the ninth consecutive quarter of higher net income and its strongest quarterly net income since the fourth quarter of 2022.
-
Underlying earnings grew more sharply than reported results from the prior quarter. Third-quarter results included $332,000 of merger-related costs. The second quarter, by contrast, included an $835,000 gain from selling an equity investment. Excluding those items, the company’s non-GAAP core net income was $7.8 million, up 22.7% from $6.4 million in the second quarter; core diluted earnings per share rose 22.8%, to $0.55 from $0.45.
-
Interest income increased, while the margin narrowed sequentially. Net interest income was $17.8 million, up $2.2 million, or 14%, from a year earlier. It rose $500,000 from the second quarter, equivalent to a 10.4% annualized increase. Net interest margin was 2.91%, up 19 basis points year over year but down eight basis points from the prior quarter, mainly because the cost of interest-bearing deposits increased.
-
Deposits grew as wholesale funding declined. Total deposits rose $71.3 million in the quarter, a 14.2% annualized rate. Core deposits increased $83.3 million, or 19.8% annualized, while wholesale funding fell $52.0 million, or 12.5%. Over the 12 months through September 30, total deposits grew $95.4 million, or 4.8%.
-
Loans increased over the year but were little changed from the prior quarter. Loans, net of unearned income, totaled $2.01 billion at September 30, up $73.0 million, or 3.8%, from a year earlier and roughly unchanged from June 30. Average loan balances increased $33.1 million from the second quarter, a 6.6% annualized rise.
-
Revenue growth and lower expenses improved efficiency. Revenue increased 11.1% year over year while non-interest expense declined 3.9%. The reported efficiency ratio improved to 48.1% from 55.6%. Excluding merger costs, core non-interest expense was down 7.6% year over year and the core efficiency ratio improved to 46.2%.
-
Credit quality remained strong. The bank recorded no loan charge-offs in the quarter and had no foreclosed real estate. One $267,000 Small Business Administration 7(a) loan was placed on non-accrual status; it is fully guaranteed by the SBA, and the bank has requested payment under that guarantee.
-
Book value and the dividend increased. Book value per share rose 7.5% year over year, to $19.64 from $18.27. The board declared a quarterly dividend of $0.10 per share, payable December 2 to shareholders of record November 10. The CEO said total dividends for 2026 would amount to $0.38 per share, 27% above 2025.
-
The bank reported capital well above regulatory thresholds. Each of its regulatory capital ratios was above the level required for a “well-capitalized” bank; the company did not provide the ratios in the release.
-
The planned Eagle combination remains pending. Under the agreement announced in September, Eagle Financial Services, the parent of Bank of Clarke, will merge into John Marshall Bancorp in an all-stock transaction. The combined company is projected to have about $4.3 billion in assets and 23 banking offices. Closing is expected in the first quarter of 2027, subject to regulatory and shareholder approvals and other customary conditions.
What changes for investors
The quarter’s results show both higher earnings and a shift toward core deposits as wholesale funding declined. The planned Eagle transaction would combine the two banking organizations under John Marshall Bancorp in an all-stock deal, but it has not yet closed and remains subject to approvals.