John Marshall Bancorp, Inc. (JMSB) stock intrinsic value fair value estimate & owner earnings analysis

John Marshall Bancorp is the holding company for John Marshall Bank, a commercial bank headquartered in Reston, Virginia. It lends mainly to local business owners, professionals and real estate investors in the Washington, D.C. area, from eight branches in Arlington, Fairfax, Loudoun and Prince William counties in Virginia, Montgomery County in Maryland, and the District of Columbia. At the end of 2025 it held about $1.97 billion of loans and $1.97 billion of deposits, with shareholders' equity of $265.6 million, or $18.69 per share. How we measured earnings. For a bank, we start from cash generated by operations, remove swings in working capital (accrued interest and other assets and liabilities), and subtract stock compensation and the equipment spending needed to keep branches running. On that basis owner earnings per share were $2.14 in 2021, $2.45 in 2022, $1.44 in 2023, $1.18 in 2024 and $1.61 in 2025. The two earlier years were higher, but net income has stayed below its 2022 level of $31.8 million in every year since, so we anchor on the middle value of 2023 to 2025, $1.44 per share, as the better picture of the bank as it operates now. Note that 2023 is helped by an add-back: the bank sold available-for-sale securities that year at a pre-tax loss of $17.3 million. The loss reduces reported profit but does not reduce operating cash flow, so we treat it as a sunk cost. Leaving 2023 out gives about $1.40, so the anchor is not sensitive to it. Recent results are running ahead of this level (net income of $13.1 million in the first half of 2026 versus $9.9 million a year earlier), but one half-year is not enough to raise the anchor. Growth. Owner earnings rose about 36% in 2025 ($1.18 to $1.61), but that was a rebound from a weak 2024, not a rate we can extend. Our base case therefore starts from the $1.44 anchor and credits growth only from the bank's proven process: it has grown loans 8.8% a year and deposits 10.4% a year over the eight years through 2025, supported by retained earnings and growing deposits (it paid a $0.30 dividend against $1.49 of earnings per share in 2025). Because retained earnings are what pay for growth, we deduct the capital that growth requires; that is why growth adds only modestly to value. We credit 5% a year for ten years, below both the long-run record and what retained earnings can support, and then assume no further growth. We left out new branches, acquisitions and any improvement in profit margins, because none is contracted or already under way. Base case: about $26.40 per share. Owner earnings of $1.44 per share growing with 5% annual balance-sheet growth for ten years, then held flat. Bear case: about $18.70 per share, roughly the current book value. Earnings settle at the 2024 low of $1.18 per share with no growth, and the bank absorbs loan losses of about 1% of loans beyond its reserve (about $1.10 per share assuming a 21% tax rate, spread over three years). The risk is named: 59.6% of loans are commercial real estate and another 11.3% are construction and land loans, all in one metropolitan area. The bank has been strong on credit (no non-accrual loans at year-end 2025 and net charge-offs of no more than 0.02% of average loans in each of the past five years), but loans 90 days past due were $10.0 million (0.53% of loans) at the end of 2024, which shows the exposure is real. Bull case: about $31.40 per share. Earnings hold at the 2025 level of $1.61 per share, and the bank grows 6% a year for ten years, close to what retained earnings can fund at its current return on equity of 8.3%, and then holds flat. What could make this wrong: a downturn in Washington-area commercial real estate that produces losses well beyond the bear case, or a further squeeze on the gap between what the bank earns on loans and pays on deposits. Conversely, the base case does not count on rates or margins improving. Margin-of-safety price: $16.50, below the bear case and below book value, reflecting the concentration in real estate lending in one market and the small size of the company (about $232 million of shares held by non-affiliates as of June 30, 2025). One item we could not fully trace: adding up net income and the main non-cash items for 2025 comes within about 4% of reported operating cash flow, and we did not separately identify the smaller remaining items.