John Marshall Bancorp (JMSB) risk factors, FY2025 10-K

Risks Related to Our Lending Activities

1. 01We may not be able to measure and limit our credit risk adequately, which could adversely affect our profitability
2. 02Our allowance for loan credit losses may be inadequate to absorb expected losses inherent in the loan portfolio52% rewritten
3. 03loan credit losses are necessarily subjective and their accuracy depends on the outcome of future events. As of December 31, 2025, the allowance for loan credit losses was $19.8 million or 1.00% of total loans, net of unearned incomeNew
4. 04If our non-performing assets increase, our earnings will be adversely affected21% rewritten
5. 05Our focus on lending to small to medium-sized businesses may increase our credit risk
6. 06We are exposed to higher credit risk by commercial real estate, commercial and industrial and construction and development-based lending as well as relationship exposure with a number of large borrowers28% rewritten
7. 07holding costs. In addition, we may be required to fund additional amounts to complete the project and may have to hold the property for an unspecified period of time while we attempt to dispose of itNew
8. 08A significant percentage of our loans are attributable to a relatively small number of borrowers33% rewritten
9. 09Lack of seasoning of our loan portfolio could increase risk of credit defaults in the future23% rewritten
10. 10The appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property and other real estate owned may not accurately reflect the net value of the asset

Risks Related to Funding and Liquidity

1. 11Our deposit portfolio includes significant concentrations and a large percentage of our deposits are attributable to a relatively small number of customers23% rewritten
2. 12Limits on our ability to use brokered deposits as part of our funding strategy may adversely affect our ability to grow
3. 13Liquidity risk could impair our ability to fund operations and meet our obligations as they become due35% rewritten
4. 14The proportion of our deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk in times of financial distress31% rewritten
5. 15Unrealized losses in our securities portfolio could affect liquidity

Risks Related to Our Business, Industry and Markets

1. 16We operate in a highly competitive market and face increasing competition from a variety of traditional and new financial services providers
2. 17Failure to keep up with the rapid technological changes in the financial services industry could have an adverse effect on our competitive position and profitability
3. 18Interest rate shifts may reduce net interest income and otherwise negatively impact our financial condition and results of operations67% rewritten
4. 19our earnings. Many factors impact interest rates, including governmental monetary policies, inflation, recession, changes in unemployment, the money supply, and international disorder and instability in domestic and foreign financial marketsNew
5. 20The fair value of our investment securities can fluctuate due to factors outside of our control
6. 21Inflation can have an adverse impact on our business and on our customers
7. 22Monetary policies and regulations of the Federal Reserve could have an adverse effect on our business, financial condition and results of operations

Risks Related to Our Operations

1. 23We are subject to certain operational risks, including, but not limited to, customer or employee fraud and data processing system failures and errors
2. 24We rely on third parties to provide key components of our business infrastructure
3. 25We follow a relationship-based operating model and our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance
4. 26We may be adversely affected by the lack of soundness of other financial institutions or market utilities
5. 27External and internal risk has proliferated in recent years
6. 28Our risk management framework may not be effective in mitigating risks and/or losses to us
7. 29System failure or breaches of our network security, including as a result of cyber-attacks or data security breaches, could subject us to increased operating costs as well as litigation and other liabilities22% rewritten
8. 30The Company’s business continuity plans or data security systems could prove to be inadequate, resulting in a material interruption in, or disruption to, its business and a negative impact on results of operations
9. 31We are dependent on the use of data and modeling in both our management’s decision-making generally and in meeting regulatory expectations in particular
10. 32We are exposed to risk of environmental liabilities with respect to properties to which we obtain title

Risks Related to our Regulatory Environment

1. 33Our industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a materially adverse effect on our operations
2. 34Federal regulations establish minimum capital requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, and defines “capital” for calculating these ratios
3. 35Our use of third party vendors and our other ongoing third party business relationships are subject to increasing regulatory requirements and attention
4. 36Regulatory requirements affecting our loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability
5. 37Changes in accounting standards could materially impact our financial statements
6. 38Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact our business

Risks Related to an Investment in Our Common Stock

1. 39We currently qualify as an “emerging growth company” and a “smaller reporting company,” and the reduced disclosures and relief from certain other significant disclosure requirements that are available to emerging growth companies and smaller reporting companies may make our common stock less attractive to investors41% rewritten
2. 40If we fail to design, implement and maintain effective internal control over financial reporting or remediate any future material weakness in our internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud
3. 41We may issue additional equity securities, or engage in other transactions, which could affect the priority of our common stock, which may adversely affect the market price of our common stock
4. 42Our common stock is subordinate to our existing and future indebtedness
5. 43Our corporate governance documents, and corporate and banking laws applicable to us, could make a takeover more difficult and adversely affect the market price of our common stock
6. 44An investment in our common stock is not an insured deposit and is not guaranteed by the FDIC, so you could lose some or all of your investment
7. 45We currently intend to pay dividends on our common stock; however, our future ability to pay dividends is subject to restrictions
8. 46While the Company’s common stock is currently listed on the Nasdaq Capital Market, it has less liquidity than stocks for larger companies listed on national securities exchanges
9. 47If we are not able to continue our historical levels of growth, we may not be able to maintain our historical revenue trends
10. 48Scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to the Company’s environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks
11. 49We are dependent on our management team and key employees
12. 50The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact the Company’s business
13. 51We are subject to the potential adverse effects of a U.S. federal government shutdownNew