John Marshall Bancorp and Eagle Financial Services Announce $253 Million All-Stock Merger

John Marshall Bancorp and Eagle Financial Services announced an approximately $253 million all-stock merger on Tuesday that would bring their Virginia community-banking franchises under the John Marshall Bancorp name. The companies signed the definitive merger agreement on September 7 and announced it publicly on September 8.

Eagle Financial Services, the parent of Bank of Clarke, would merge into John Marshall Bancorp, the parent of John Marshall Bank. Based on John Marshall’s September 4 closing price of $23.36, the companies valued the merger at $46.72 for each Eagle share, an 11.5% premium to Eagle’s $41.90 closing price that day. The value can change before closing because Eagle shareholders are receiving John Marshall stock rather than a fixed cash payment.

Eagle shareholders get 2.0 John Marshall shares each

Under the terms announced by the companies, every outstanding Eagle common share would be converted into the right to receive 2.0 John Marshall common shares, with cash paid instead of fractional shares. The investor presentation puts aggregate consideration at $252.8 million, assuming about 5.41 million Eagle shares outstanding, and says John Marshall would issue roughly 10.8 million shares to Eagle investors.

The resulting ownership split is expected to be 56.6% for existing John Marshall shareholders and 43.4% for existing Eagle shareholders. John Marshall also expects to raise its quarterly cash dividend to $0.155 per share after closing. At the 2.0-for-1 exchange ratio, that would give former Eagle shareholders an equivalent quarterly dividend of $0.31 for each Eagle share they owned before the merger, matching Eagle’s current quarterly dividend.

The two lenders entered the agreement from different but adjacent market positions. At June 30, John Marshall reported $2.4 billion of assets, about $2.0 billion of loans and roughly $2.0 billion of deposits. Eagle reported $1.8 billion of assets, $1.5 billion of gross loans and $1.6 billion of deposits, while its wealth-management business had about $599 million of assets under management. John Marshall has focused on the Washington, D.C. metropolitan area, while Bank of Clarke has a longer-established franchise stretching from the Shenandoah Valley into Northern Virginia.

The companies’ financial model assumes cost savings equal to 15% of their combined annual noninterest expense base, with 75% of those savings phased in during 2027 and the full amount thereafter. Management also modeled $24 million of one-time pretax merger expenses. Those figures are assumptions rather than realized savings, and the presentation cautions that its annualized, pro forma and estimated figures are illustrative and are not forecasts.

A $4.4 billion bank would connect Virginia and the D.C. area

On the companies’ modeled closing balance sheet, the merged organization would have about $4.4 billion of assets, $3.7 billion of deposits and $3.6 billion of loans. The planned network includes 23 banking offices after one branch closure assumed in the presentation, creating a footprint from the Shenandoah Valley through Northern Virginia and into Montgomery County, Maryland and Washington, D.C.

The geographic fit is one of the central reasons management gives for the merger. John Marshall currently operates eight full-service branches in Northern Virginia, Maryland and Washington. Bank of Clarke has 14 full-service branches, a drive-through facility and a loan production office, with a stronger presence west of the Washington suburbs. The presentation says the resulting franchise would have about $796 million of deposits across seven locations in the Winchester metropolitan area and about $2.9 billion across 16 locations in the Washington metropolitan area.

The companies also expect their product mix to broaden. Eagle brings wealth management, mortgage banking and Small Business Administration activities that produce a larger share of fee income than at John Marshall. Its wealth platform had nearly $600 million under management at the end of June. John Marshall, meanwhile, highlighted its commercial lending base, limited branch model and credit metrics. Management argues that putting those businesses together should diversify both lending and revenue, but those benefits depend on execution after the merger closes.

The brands will not disappear immediately. The holding company is expected to retain the John Marshall Bancorp name and remain headquartered in Reston, Virginia. The banking subsidiary would be headquartered in Berryville, Virginia. The companies plan to keep the Bank of Clarke brand in legacy markets west of Virginia Route 15 and the John Marshall brand east of Route 15. The public company would continue trading on Nasdaq under the JMSB ticker.

Governance is structured evenly at the board level. The merged company’s board is expected to have 12 directors, with six coming from John Marshall and six from Eagle. Christopher W. Bergstrom, currently John Marshall’s president and chief executive officer, is slated to become executive chairman. Eagle President and CEO Brandon C. Lorey is expected to become CEO and a director of both the holding company and the banking subsidiary.

Other leadership roles would also be divided across the two organizations. John Marshall Chief Financial Officer Kent D. Carstater is expected to become president of the holding company and chief operating officer of the bank, while Eagle Chief Banking Officer Joseph T. Zmitrovich would become chief revenue officer of the holding company and president of the bank. Cary C. Nelson is expected to serve as lead independent director.

Shareholder and regulatory approvals still stand between signing and closing

The merger is expected to close early in the first quarter of 2027, but it still requires approval from shareholders of both John Marshall and Eagle as well as the required banking and other regulatory approvals. Directors and certain executive officers on both sides have entered voting agreements supporting the merger, subject to the conditions and exceptions in those agreements.

The September 7 merger agreement also sets an outside date of September 30, 2027. Either company can terminate under specified circumstances, including failure to obtain required regulatory or shareholder approvals or an uncured material breach that prevents a closing condition from being satisfied. A $10.1 million termination fee can apply in certain cases, including a qualifying change in a board recommendation or some circumstances involving a competing acquisition proposal after termination.

John Marshall will also need to file a Form S-4 registration statement with the Securities and Exchange Commission for the new shares it plans to issue. That filing is expected to include the joint proxy statement and prospectus that shareholders will use in considering the required votes. Until those approvals are obtained and the other closing conditions are satisfied, John Marshall Bancorp and Eagle Financial Services remain separate public companies and John Marshall Bank and Bank of Clarke continue operating as separate banks.

The merger therefore has a defined financial structure and leadership plan, but several of its most important economic outcomes remain prospective. Management’s presentation estimates roughly 38% fully phased 2027 earnings-per-share accretion, about 14% tangible-book-value dilution at closing and a tangible-book-value earnback period of about 3.1 years under the crossover method. Those estimates incorporate purchase-accounting adjustments, planned cost savings and other assumptions, so actual results could differ if the timing, expenses, credit marks, revenue or post-closing performance vary from management’s model.