John Marshall Bancorp, Inc. Income Taxes Disclosure
Note 9— Income Taxes
The Company files income tax returns in the U.S. federal jurisdiction, the Commonwealth of Virginia, the District of Columbia, the State of Maryland, the State of North Carolina and the State of West Virginia. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2022.
The following table presents the significant components of the Company’s deferred tax assets and deferred tax liabilities as of December 31, 2025 and December 31, 2024.
Table 9.1: Significant Components of Deferred Tax Assets and Liabilities
(Dollars in thousands) | | December 31, 2025 | | December 31, 2024 | ||
Deferred Tax Assets: |
| |
| | ||
Allowance for credit losses | $ | 4,789 | $ | 4,465 | ||
Lease liabilities |
| 1,092 |
| 1,219 | ||
Share-based compensation expense |
| 86 |
| 122 | ||
Unrealized losses on debt securities |
| 1,891 |
| 2,831 | ||
Other |
| 701 |
| 587 | ||
Total Deferred Tax Assets | $ | 8,559 | $ | 9,224 | ||
Deferred Tax Liabilities: |
| |
| | ||
Right-of-use assets |
| 1,032 |
| 1,136 | ||
Depreciation |
| 27 |
| 50 | ||
Net deferred loan costs |
| 1,152 |
| 1,025 | ||
Other |
| 211 |
| 97 | ||
Total Deferred Tax Liabilities | $ | 2,422 | $ | 2,308 | ||
Net Deferred Tax Assets | $ | 6,137 | $ | 6,916 | ||
The following table summarizes the Company’s provision for income taxes charged to operations for the years ended December 31, 2025 and December 31, 2024, respectively.
Table 9.2: Provision for Income Taxes
(Dollars in thousands) | | December 31, 2025 | | December 31, 2024 | ||
Current tax expense | $ | 6,312 | $ | 5,042 | ||
Deferred tax (benefit) expense |
| (162) |
| (284) | ||
Total Income Tax Expense | $ | 6,150 | $ | 4,758 | ||
Federal tax expense | $ | 5,614 | $ | 4,365 | ||
State tax expense |
| 536 |
| 393 | ||
Total Income Tax Expense | $ | 6,150 | $ | 4,758 | ||
The following table presents the factors driving the difference between the amount of income tax determined by applying the statutory federal income tax rate to income before income taxes and the amount of income tax expense reflected in the Consolidated Statements of Income for the years ended December 31, 2025 and December 31, 2024, respectively.
Table 9.3: Effective Income Tax Reconciliation
(Dollars in thousands) | | December 31, 2025 | | December 31, 2024 |
| ||||||
Amount | Percentage of Pre-Tax Income | Amount | Percentage of Pre-Tax Income | ||||||||
Computed “expected” tax expense | $ | 5,750 | 21.0 | % | $ | 4,595 | 21.0 | % | |||
Increase (decrease) in income taxes resulting from: |
| |
| | |||||||
Nondeductible compensation | 104 | 0.4 | 37 | 0.2 | |||||||
State income taxes, net of federal benefit (1) |
| 424 | 1.6 |
| 310 | 1.3 | |||||
Low income housing tax credit |
| (110) | (0.4) |
| (109) | (0.5) | |||||
Tax-exempt interest income |
| (25) | (0.1) |
| (19) | (0.1) | |||||
Excess tax benefit on share-based compensation |
| (14) | (0.1) |
| (28) | (0.1) | |||||
Other, net |
| 21 | 0.1 |
| (28) | (0.1) | |||||
$ | 6,150 | 22.5 | % | $ | 4,758 | 21.7 | % | ||||
| (1) | The state of Maryland made up the majority (greater than 50%) of the tax effect in this category. |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
| 2023 | Mar 20, 2024 | |
| 2022 | Mar 23, 2023 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.