ALEXANDRIA, Va., Oct. 25,
2024 /PRNewswire/ -- Burke & Herbert Financial
Services Corp. (the "Company" or "Burke & Herbert") (Nasdaq:
BHRB) reported financial results for the quarter ended September 30, 2024. In addition, at its meeting
on October 24, 2024, the board of
directors declared a $0.55 per share
regular cash dividend to be paid on December
2, 2024, to shareholders of record as of the close of
business on November 15, 2024,
representing a 3.8% increase from the prior quarter dividend.
Q3 2024 Highlights
- Financial results reflect a full quarter following the
May 3, 2024 completion of the merger
of Summit Financial Group, Inc. ("Summit"), with and into Burke
& Herbert and the merger of Summit Community Bank, Inc., with
and into Burke & Herbert Bank
& Trust Company.
- Net income applicable to common shares of $27.4 million; adjusted (non-GAAP1)
operating net income applicable to common shares of $29.8 million.
- Earnings per diluted common share ("EPS") of $1.82; adjusted (non-GAAP1) diluted
EPS of $1.98.
- Net interest income for the quarter was $73.2 million; net interest income on a fully
taxable equivalent basis (non-GAAP1) for the quarter was
$74.0 million.
- Net interest margin on a fully taxable equivalent basis
(non-GAAP1) for the quarter was 4.07%.
- Non-interest expense for the quarter was $50.8 million; adjusted (non-GAAP1)
non-interest expense for the quarter was $47.7 million.
- The balance sheet remains strong with ample liquidity. Total
liquidity, including all available borrowing capacity with cash and
cash equivalents, totaled $2.6
billion at the end of the third quarter.
- Ending total gross loans of $5.6
billion and ending total deposits of $6.6 billion; ending loan-to-deposit ratio of
84.4%.
- Asset quality remains stable across the loan portfolio with
adequate reserves.
- The Company continues to be well-capitalized, ending the
quarter with 11.3%2 Common Equity Tier 1 capital to
risk-weighted assets, 14.3%2 Total risk-based capital to
risk-weighted assets, and a leverage ratio of
9.6%2.
From David P. Boyle, Company Chair and Chief
Executive Officer
"Our results for the third quarter and the increase in the
dividend demonstrate the financial benefits of the merger with
Summit and are in line with our expectations. In addition, the team
is working diligently toward the planned systems integration in the
fourth quarter, which should lead to additional efficiencies and
position us to deliver even greater value for our
shareholders."
Results of Operations
Third Quarter 2024
The Company reported third quarter 2024 net income applicable to
common shares of $27.4 million, or
$1.82 per diluted common share.
Included in the third quarter were pre-tax charges of
$3.1 million of expenses related to
the merger with Summit. Excluding these items from the current
quarter on a tax effected basis, adjusted (non-GAAP1)
operating net income was $29.8
million, or $1.98 per diluted
share.
- Period-end average total gross loans were $5.6 billion at September
30, 2024, up from $4.5 billion
at June 30, 2024, primarily due to
results that reflect a full quarter after the merger
completion.
- Period-end average total deposits were $6.6 billion at September
30, 2024, up from $5.4 billion
at June 30, 2024, primarily due to
results that reflect a full quarter after the merger
completion.
- Net interest income increased to $73.2
million in the third quarter of 2024 compared to
$59.8 million in the second quarter
of 2024, primarily due to results that reflect a full quarter of
combined income after the merger completion.
- Net interest margin on a fully taxable equivalent basis
(non-GAAP1) increased to 4.07% versus 4.06% in the
second quarter of 2024.
- Accretion income on loans during the quarter was $15.4 million and the amortization expense impact
on interest expense was $3.8 million,
or 16.0 bps of net interest margin in the third quarter of
2024.
- The cost of total deposits was 2.38% in the third quarter of
2024, compared to 2.25% in the second quarter of 2024.
- The Company recorded a provision expense on loans in the third
quarter of 2024 of $85.0 thousand,
reflecting relatively stable asset quality.
- The allowance for credit losses at September 30, 2024, was $67.8 million, or 1.2% of total loans.
- Total non-interest income for the third quarter of 2024 was
$10.6 million, an increase of
$1.1 million from the second quarter
of 2024, primarily due to results that reflect a full quarter of
combined income after the merger completion.
- Non-interest expense for the third quarter of 2024 was
$50.8 million and included
$3.1 million of merger-related
charges.
Regulatory capital ratios2
The Company continues to be well-capitalized with capital ratios
that are above regulatory requirements. As of September 30,
2024, our Common Equity Tier 1 capital to risk-weighted asset and
Total risk-based capital to risk-weighted asset ratios were
11.3%2 and 14.3%2, respectively, and
significantly above the well-capitalized requirements of 6.5% and
10%, respectively. The leverage ratio was 9.6%2 compared
to a 5% level to be considered well-capitalized.
Burke & Herbert Bank &
Trust Company ("the Bank"), the Company's wholly-owned bank
subsidiary, also continues to be well-capitalized with capital
ratios that are above regulatory requirements. As of
September 30, 2024, the Bank's Common Equity Tier 1 capital to
risk-weighted asset and Total risk-based capital to risk-weighted
asset ratios were 13.0%2 and 14.1%2,
respectively, and significantly above the well-capitalized
requirements. In addition, the Bank's leverage ratio of
10.6%2 is considered to be well-capitalized.
For more information about the Company's financial condition,
including additional disclosures pertinent to recent events in the
banking industry, please see our financial statements and
supplemental information attached to this release.
About Burke & Herbert
Burke & Herbert Financial Services Corp. is the financial
holding company for Burke & Herbert
Bank & Trust Company. Burke & Herbert Bank & Trust Company is the oldest
continuously operating bank under its original name headquartered
in the greater Washington, D.C.
metropolitan area. With over 75 branches across Delaware, Kentucky, Maryland, Virginia, and West
Virginia, Burke & Herbert
Bank & Trust Company offers a full range of business and
personal financial solutions designed to meet customers' banking,
borrowing, and investment needs. Learn more at
investor.burkeandherbertbank.com.
Cautionary Note Regarding Forward-Looking
Statements
This communication contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
with respect to the beliefs, goals, intentions, and expectations of
the Company regarding revenues, earnings, earnings per share, loan
production, asset quality, and capital levels, among other matters;
our estimates of future costs and benefits of the actions we may
take; our assessments of expected losses on loans; our assessments
of interest rate and other market risks; our ability to achieve our
financial and other strategic goals; the expected cost savings,
synergies, returns, and other anticipated benefits from the
integration of Summit following the recently completed merger of
Summit with and into the Company; and other statements that are not
historical facts.
Forward–looking statements are typically identified by such
words as "believe," "expect," "anticipate," "intend," "outlook,"
"estimate," "forecast," "project," "will," "should," and other
similar words and expressions, and are subject to numerous
assumptions, risks, and uncertainties, which change over time.
Additionally, forward–looking statements speak only as of the date
they are made; the Company does not assume any duty, does not
undertake, and specifically disclaims any obligation to update such
forward–looking statements, whether written or oral, that may be
made from time to time, whether because of new information, future
events, or otherwise, except as required by law. Furthermore,
because forward–looking statements are subject to assumptions and
uncertainties, actual results or future events could differ,
possibly materially, from those indicated in or implied by such
forward-looking statements because of a variety of factors, many of
which are beyond the control of the Company. Accordingly, you
should not place undue reliance on forward-looking statements.
The risks and uncertainties that could cause actual results to
differ from those described in the forward-looking statements
include, but are not limited to, the following: costs or
difficulties associated with newly developed or acquired
operations; risks related to our ability to successfully integrate
Summit into the Company and operate the combined company; changes
in general economic trends (either nationally or locally in the
areas in which we conduct, or will conduct, business), including
inflation, interest rates, market and monetary fluctuations;
increased competition; changes in consumer demand for financial
services; our ability to control costs and expenses; adverse
developments in borrower industries or declines in real estate
values; changes in and compliance with federal and state laws and
regulations that pertain to our business and capital levels; our
ability to raise capital as needed; the effects of any
cybersecurity breaches; and the other factors discussed in the
"Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of the
Company's Annual Report on Form 10–K for the year ended
December 31, 2023, the Company's
Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2024, June 30, 2024, and other reports the Company
files with the SEC.
|
Burke & Herbert
Financial Services Corp.
Consolidated Statements of
Income (unaudited)
(In thousands)
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Interest
income
|
|
|
|
|
|
|
|
|
|
Taxable loans,
including fees
|
|
$
103,682
|
|
$
26,425
|
|
$
213,400
|
|
$
74,485
|
|
Tax-exempt loans,
including fees
|
|
48
|
|
—
|
|
81
|
|
—
|
|
Taxable
securities
|
|
10,076
|
|
8,909
|
|
29,949
|
|
28,130
|
|
Tax-exempt
securities
|
|
3,135
|
|
1,376
|
|
7,052
|
|
4,243
|
|
Other interest
income
|
|
1,585
|
|
562
|
|
2,886
|
|
1,858
|
|
Total interest
income
|
|
118,526
|
|
37,272
|
|
253,368
|
|
108,716
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
39,441
|
|
11,277
|
|
82,745
|
|
26,708
|
|
Short-term
borrowings
|
|
3,080
|
|
3,078
|
|
10,806
|
|
10,495
|
|
Subordinated
debt
|
|
2,798
|
|
—
|
|
4,658
|
|
—
|
|
Other interest
expense
|
|
28
|
|
28
|
|
84
|
|
58
|
|
Total interest
expense
|
|
45,347
|
|
14,383
|
|
98,293
|
|
37,261
|
|
Net interest
income
|
|
73,179
|
|
22,889
|
|
155,075
|
|
71,455
|
|
|
|
|
|
|
|
|
|
|
Credit loss expense -
loans
|
|
85
|
|
200
|
|
19,515
|
|
1,034
|
|
Credit loss expense
(recapture) - off-balance sheet
credit exposures
|
|
62
|
|
35
|
|
3,872
|
|
(70)
|
|
Total provision for
credit losses
|
|
147
|
|
235
|
|
23,387
|
|
964
|
|
Net interest income
after credit loss
expense
|
|
73,032
|
|
22,654
|
|
131,688
|
|
70,491
|
|
|
|
|
|
|
|
|
|
|
Non-interest
income
|
|
|
|
|
|
|
|
|
|
Fiduciary and wealth
management
|
|
2,352
|
|
1,354
|
|
5,982
|
|
3,996
|
|
Service charges and
fees
|
|
5,453
|
|
1,583
|
|
11,147
|
|
4,959
|
|
Net gains (losses) on
securities
|
|
—
|
|
(1)
|
|
613
|
|
(112)
|
|
Income from
company-owned life insurance
|
|
1,330
|
|
589
|
|
2,799
|
|
1,720
|
|
Other non-interest
income
|
|
1,481
|
|
764
|
|
3,834
|
|
2,565
|
|
Total non-interest
income
|
|
10,616
|
|
4,289
|
|
24,375
|
|
13,128
|
|
|
|
|
|
|
|
|
|
|
Non-interest
expense
|
|
|
|
|
|
|
|
|
|
Salaries and
wages
|
|
20,858
|
|
9,867
|
|
51,271
|
|
29,283
|
|
Pensions and other
employee benefits
|
|
4,678
|
|
2,242
|
|
12,346
|
|
7,116
|
|
Occupancy
|
|
3,412
|
|
1,462
|
|
7,947
|
|
4,464
|
|
Equipment rentals,
depreciation and
maintenance
|
|
4,699
|
|
1,435
|
|
18,643
|
|
4,231
|
|
Other
operating
|
|
17,179
|
|
7,417
|
|
46,216
|
|
19,042
|
|
Total non-interest
expense
|
|
50,826
|
|
22,423
|
|
136,423
|
|
64,136
|
|
Income before
income taxes
|
|
32,822
|
|
4,520
|
|
19,640
|
|
19,483
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
5,200
|
|
464
|
|
3,725
|
|
1,869
|
|
Net
income
|
|
27,622
|
|
4,056
|
|
15,915
|
|
17,614
|
|
Preferred stock
dividends
|
|
225
|
|
—
|
|
450
|
|
—
|
|
Net income
applicable to
common shares
|
|
$
27,397
|
|
$
4,056
|
|
$
15,465
|
|
$
17,614
|
|
Burke & Herbert
Financial Services Corp.
Consolidated Balance
Sheets
(In thousands)
|
|
|
|
September 30,
2024
|
|
December 31,
2023
|
|
|
(Unaudited)
|
|
(Audited)
|
|
Assets
|
|
|
|
|
|
Cash and due from
banks
|
|
$
44,902
|
|
$
8,896
|
|
Interest-earning
deposits with banks
|
|
246,863
|
|
35,602
|
|
Cash and cash
equivalents
|
|
291,765
|
|
44,498
|
|
Securities
available-for-sale, at fair value
|
|
1,436,431
|
|
1,248,439
|
|
Restricted stock, at
cost
|
|
16,832
|
|
5,964
|
|
Loans held-for-sale, at
fair value
|
|
4,216
|
|
1,497
|
|
Loans
|
|
5,574,037
|
|
2,087,756
|
|
Allowance for credit
losses
|
|
(67,817)
|
|
(25,301)
|
|
Net loans
|
|
5,506,220
|
|
2,062,455
|
|
Other real estate
owned
|
|
2,576
|
|
—
|
|
Premises and equipment,
net
|
|
134,770
|
|
61,128
|
|
Accrued interest
receivable
|
|
32,791
|
|
15,895
|
|
Intangible
assets
|
|
61,598
|
|
—
|
|
Goodwill
|
|
32,783
|
|
—
|
|
Company-owned life
insurance
|
|
182,380
|
|
94,159
|
|
Other assets
|
|
162,551
|
|
83,544
|
|
Total
Assets
|
|
$
7,864,913
|
|
$
3,617,579
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Non-interest-bearing
deposits
|
|
$
1,392,123
|
|
$
830,320
|
|
Interest-bearing
deposits
|
|
5,208,702
|
|
2,171,561
|
|
Total
deposits
|
|
6,600,825
|
|
3,001,881
|
|
Short-term
borrowings
|
|
320,163
|
|
272,000
|
|
Subordinated
debentures, net
|
|
93,532
|
|
—
|
|
Subordinated debentures
owed to unconsolidated subsidiary trusts
|
|
16,950
|
|
—
|
|
Accrued interest and
other liabilities
|
|
95,384
|
|
28,948
|
|
Total
Liabilities
|
|
7,126,854
|
|
3,302,829
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
Preferred stock and
surplus
|
|
10,413
|
|
—
|
|
Common stock
|
|
7,767
|
|
4,000
|
|
Common stock,
additional paid-in capital
|
|
400,377
|
|
14,495
|
|
Retained
earnings
|
|
422,844
|
|
427,333
|
|
Accumulated other
comprehensive income (loss)
|
|
(75,758)
|
|
(103,494)
|
|
Treasury
stock
|
|
(27,584)
|
|
(27,584)
|
|
Total Shareholders'
Equity
|
|
738,059
|
|
314,750
|
|
Total Liabilities
and Shareholders' Equity
|
|
$
7,864,913
|
|
$
3,617,579
|
|
Burke & Herbert
Financial Services Corp.
Details of Net Interest Margin (unaudited)
For the three months ended
|
|
|
Details of Net
Interest Margin - Yield Percentages
|
|
|
|
|
|
|
|
|
|
|
|
September
30
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
Interest-earning
assets:
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
Taxable
loans
|
7.34 %
|
|
7.33 %
|
|
5.41 %
|
|
5.24 %
|
|
5.15 %
|
|
Tax-exempt
loans
|
5.63
|
|
5.55
|
|
—
|
|
—
|
|
—
|
|
Total loans
|
7.34
|
|
7.33
|
|
5.41
|
|
5.24
|
|
5.15
|
|
Interest-earning
deposits and
fed funds sold
|
3.43
|
|
3.54
|
|
3.82
|
|
4.35
|
|
4.50
|
|
Securities:
|
|
|
|
|
|
|
|
|
|
|
Taxable
securities
|
4.05
|
|
4.48
|
|
3.63
|
|
3.73
|
|
3.57
|
|
Tax-exempt
securities
|
3.58
|
|
3.05
|
|
2.67
|
|
2.64
|
|
2.63
|
|
Total
securities
|
3.91
|
|
4.05
|
|
3.43
|
|
3.50
|
|
3.37
|
|
Total
interest-earning assets
|
6.56 %
|
|
6.49 %
|
|
4.66 %
|
|
4.59 %
|
|
4.47 %
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
demand
|
3.19 %
|
|
3.00 %
|
|
0.63 %
|
|
0.61 %
|
|
0.56 %
|
|
Savings
|
1.43
|
|
1.53
|
|
1.97
|
|
1.97
|
|
1.82
|
|
Time
|
4.82
|
|
4.55
|
|
4.12
|
|
3.97
|
|
3.73
|
|
Total
interest-bearing
deposits
|
3.02
|
|
2.90
|
|
2.41
|
|
2.31
|
|
2.09
|
|
Borrowings:
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
4.06
|
|
4.38
|
|
4.82
|
|
4.76
|
|
4.69
|
|
Subordinated debt
borrowings and other
|
10.16
|
|
10.30
|
|
—
|
|
—
|
|
—
|
|
Total
interest-bearing
liabilities
|
3.21 %
|
|
3.14 %
|
|
2.71 %
|
|
2.59 %
|
|
2.37 %
|
|
|
|
|
|
|
|
|
|
|
|
Taxable-equivalent
net
interest spread
|
3.35
|
|
3.35
|
|
1.95
|
|
2.00
|
|
2.10
|
|
Benefit from use of
non-
interest-bearing deposits
|
0.72
|
|
0.71
|
|
0.73
|
|
0.70
|
|
0.66
|
|
Taxable-equivalent
net
interest margin (non-GAAP1)
|
4.07 %
|
|
4.06 %
|
|
2.68 %
|
|
2.70 %
|
|
2.76 %
|
|
Burke & Herbert
Financial Services Corp.
Details of Net Interest Margin (unaudited)
For the three months ended
(In thousands)
|
|
|
Details of Net
Interest Margin - Average Balances
|
|
|
|
|
|
|
|
|
|
|
|
September
30
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning
assets:
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
Taxable
loans
|
$
5,621,531
|
|
$
4,481,993
|
|
$
2,085,826
|
|
$
2,069,738
|
|
$
2,034,275
|
|
Tax-exempt
loans
|
4,310
|
|
3,041
|
|
—
|
|
—
|
|
—
|
|
Total loans
|
5,625,841
|
|
4,485,034
|
|
2,085,826
|
|
2,069,738
|
|
2,034,275
|
|
Interest-earning
deposits and
fed funds sold
|
175,265
|
|
94,765
|
|
41,692
|
|
40,524
|
|
49,501
|
|
Securities:
|
|
|
|
|
|
|
|
|
|
|
Taxable
securities
|
996,749
|
|
988,492
|
|
989,875
|
|
961,396
|
|
991,170
|
|
Tax-exempt
securities
|
440,781
|
|
426,092
|
|
259,699
|
|
261,075
|
|
262,336
|
|
Total
securities
|
1,437,530
|
|
1,414,584
|
|
1,249,574
|
|
1,222,471
|
|
1,253,506
|
|
Total
interest-earning assets
|
$
7,238,636
|
|
$
5,994,383
|
|
$
3,377,092
|
|
$
3,332,733
|
|
$
3,337,282
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
demand
|
$
2,144,567
|
|
$
1,587,914
|
|
$
489,779
|
|
$
514,760
|
|
$
537,644
|
|
Savings
|
1,725,387
|
|
1,480,985
|
|
922,732
|
|
920,600
|
|
952,001
|
|
Time
|
1,328,076
|
|
1,141,758
|
|
745,945
|
|
711,575
|
|
654,952
|
|
Total
interest-bearing
deposits
|
5,198,030
|
|
4,210,657
|
|
2,158,456
|
|
2,146,935
|
|
2,144,597
|
|
Borrowings:
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
304,849
|
|
376,063
|
|
307,446
|
|
282,426
|
|
262,521
|
|
Subordinated debt
borrowings and other
|
109,557
|
|
72,643
|
|
—
|
|
—
|
|
—
|
|
Total
interest-bearing
liabilities
|
$
5,612,436
|
|
$
4,659,363
|
|
$
2,465,902
|
|
$
2,429,361
|
|
$
2,407,118
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing
deposits
|
$
1,389,134
|
|
$
1,207,443
|
|
$
812,199
|
|
$
852,120
|
|
$
860,983
|
|
Burke & Herbert
Financial Services Corp.
Supplemental Information
(unaudited)
As of or for the three months
ended
(In thousands, except ratios and per share
amounts)
|
|
|
September
30
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Per common share
information
|
|
Basic earnings
(loss)
|
$
1.83
|
|
$
(1.41)
|
|
$
0.70
|
|
$
0.68
|
|
$
0.55
|
|
Diluted earnings
(loss)
|
1.82
|
|
(1.41)
|
|
0.69
|
|
0.67
|
|
0.55
|
|
Cash
dividends
|
0.53
|
|
0.53
|
|
0.53
|
|
0.53
|
|
0.53
|
|
Book value
|
48.63
|
|
45.72
|
|
42.92
|
|
42.37
|
|
36.46
|
|
Tangible book value
(non-GAAP1)
|
42.32
|
|
39.11
|
|
42.92
|
|
42.37
|
|
36.46
|
|
|
|
|
|
|
|
|
|
|
|
Balance
sheet-related (at period end, unless otherwise
indicated)
|
|
Assets
|
$
7,864,913
|
|
$
7,810,193
|
|
$
3,696,390
|
|
$
3,617,579
|
|
$
3,585,188
|
|
Average
interest-earning
assets
|
7,238,636
|
|
5,994,383
|
|
3,377,092
|
|
3,332,733
|
|
3,337,282
|
|
Loans
(gross)
|
5,574,037
|
|
5,616,724
|
|
2,118,155
|
|
2,087,756
|
|
2,070,616
|
|
Loans (net)
|
5,506,220
|
|
5,548,707
|
|
2,093,549
|
|
2,062,455
|
|
2,044,505
|
|
Securities,
available-for-
sale, at fair value
|
1,436,431
|
|
1,414,870
|
|
1,275,520
|
|
1,248,439
|
|
1,224,395
|
|
Intangible
assets
|
61,598
|
|
65,895
|
|
—
|
|
—
|
|
—
|
|
Goodwill
|
32,783
|
|
32,783
|
|
—
|
|
—
|
|
—
|
|
Non-interest-bearing
deposits
|
1,392,123
|
|
1,397,030
|
|
822,767
|
|
830,320
|
|
853,385
|
|
Interest-bearing
deposits
|
5,208,702
|
|
5,242,541
|
|
2,167,346
|
|
2,171,561
|
|
2,132,233
|
|
Deposits,
total
|
6,600,825
|
|
6,639,571
|
|
2,990,113
|
|
3,001,881
|
|
2,985,618
|
|
Brokered
deposits
|
345,328
|
|
403,668
|
|
370,847
|
|
389,011
|
|
389,018
|
|
Uninsured
deposits
|
1,999,403
|
|
1,931,786
|
|
700,846
|
|
677,308
|
|
670,735
|
|
Short-term
borrowings
|
320,163
|
|
285,161
|
|
360,000
|
|
272,000
|
|
299,000
|
|
Subordinated debt,
net
|
110,482
|
|
109,064
|
|
—
|
|
—
|
|
—
|
|
Unused borrowing
capacity3
|
2,353,963
|
|
2,162,112
|
|
704,233
|
|
914,980
|
|
883,525
|
|
Total equity
|
738,059
|
|
693,126
|
|
319,308
|
|
314,750
|
|
270,819
|
|
Total common
equity
|
727,646
|
|
682,713
|
|
319,308
|
|
314,750
|
|
270,819
|
|
Accumulated other
comprehensive income
(loss)
|
(75,758)
|
|
(100,430)
|
|
(100,954)
|
|
(103,494)
|
|
(146,159)
|
|
Burke & Herbert
Financial Services Corp.
Supplemental Information
(unaudited)
As of or for the three months
ended
(In thousands, except ratios and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
Income
statement
|
|
Interest
income
|
$
118,526
|
|
$
96,097
|
|
$
38,745
|
|
$
38,180
|
|
$
37,272
|
|
Interest
expense
|
45,347
|
|
36,332
|
|
16,614
|
|
15,876
|
|
14,383
|
|
Non-interest
income
|
10,616
|
|
9,505
|
|
4,254
|
|
4,824
|
|
4,289
|
|
Total revenue
(non-
GAAP1)
|
83,795
|
|
69,270
|
|
26,385
|
|
27,128
|
|
27,178
|
|
Non-interest
expense
|
50,826
|
|
64,432
|
|
21,165
|
|
22,300
|
|
22,423
|
|
Pretax,
pre-provision
earnings (non-GAAP1)
|
32,969
|
|
4,838
|
|
5,220
|
|
4,828
|
|
4,755
|
|
Provision for
(recapture
of) credit losses
|
147
|
|
23,910
|
|
(670)
|
|
(750)
|
|
235
|
|
Income (loss)
before
income taxes
|
32,822
|
|
(19,072)
|
|
5,890
|
|
5,578
|
|
4,520
|
|
Income tax expense
(benefit)
|
5,200
|
|
(2,153)
|
|
678
|
|
500
|
|
464
|
|
Net income
(loss)
|
27,622
|
|
(16,919)
|
|
5,212
|
|
5,078
|
|
4,056
|
|
Preferred stock
dividends
|
225
|
|
225
|
|
—
|
|
—
|
|
—
|
|
Net income
(loss)
applicable to common
shares
|
$
27,397
|
|
$
(17,144)
|
|
$
5,212
|
|
$
5,078
|
|
$
4,056
|
|
|
|
|
|
|
|
|
|
|
|
Ratios
|
|
Return on average
assets
(annualized)
|
1.40 %
|
|
(1.06) %
|
|
0.58 %
|
|
0.56 %
|
|
0.45 %
|
|
Return on average
equity
(annualized)
|
15.20
|
|
(12.44)
|
|
6.67
|
|
7.30
|
|
5.60
|
|
Net interest margin
(non-
GAAP1)
|
4.07
|
|
4.06
|
|
2.68
|
|
2.70
|
|
2.76
|
|
Efficiency
ratio
|
60.66
|
|
93.02
|
|
80.22
|
|
82.20
|
|
82.50
|
|
Loan-to-deposit
ratio
|
84.44
|
|
84.59
|
|
70.84
|
|
69.55
|
|
69.35
|
|
Common Equity Tier
1
(CET1) capital ratio2
|
11.30
|
|
10.91
|
|
16.56
|
|
16.85
|
|
16.44
|
|
Total risk-based
capital
ratio2
|
14.34
|
|
13.91
|
|
17.54
|
|
17.88
|
|
17.48
|
|
Leverage
ratio2
|
9.59
|
|
9.04
|
|
11.36
|
|
11.31
|
|
11.32
|
|
Burke & Herbert
Financial Services Corp.
Non-GAAP Reconciliations (unaudited)
(In thousands, except ratios and per share
amounts)
|
|
|
Operating net
income, adjusted diluted EPS, and adjusted non-interest expense
(non-GAAP1)
|
|
|
For the three months
ended
|
|
|
September
30
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
Net income (loss)
applicable to common
shares
|
|
$
27,397
|
|
$
(17,144)
|
|
$
5,212
|
|
$
5,078
|
|
$
4,056
|
|
Add back
significant
items (tax effected):
|
|
|
|
|
|
|
|
|
|
|
|
Listing-related
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Merger-related
|
|
2,449
|
|
18,806
|
|
537
|
|
1,141
|
|
1,592
|
|
Day 2 non-PCD
Provision
|
|
—
|
|
23,305
|
|
—
|
|
—
|
|
—
|
|
Total significant
items
|
|
2,449
|
|
42,111
|
|
537
|
|
1,141
|
|
1,592
|
|
Operating net
income
|
|
$
29,846
|
|
$
24,967
|
|
$
5,749
|
|
$
6,219
|
|
$
5,648
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
dilutive shares
|
|
15,040,145
|
|
12,262,979
|
|
7,527,489
|
|
7,508,289
|
|
7,499,278
|
|
Adjusted diluted
EPS4
|
|
$
1.98
|
|
$
2.04
|
|
$
0.76
|
|
$
0.83
|
|
$
0.75
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
expense
|
|
$
50,826
|
|
$
64,432
|
|
$
21,165
|
|
$
22,300
|
|
$
22,423
|
|
Remove significant
items:
|
|
|
|
|
|
|
|
|
|
|
|
Listing-related
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Merger-related
|
|
3,101
|
|
23,805
|
|
680
|
|
1,444
|
|
2,015
|
|
Total significant
items
|
|
$
3,101
|
|
$
23,805
|
|
$
680
|
|
$
1,444
|
|
$
2,015
|
|
Adjusted
non-interest
expense
|
|
$
47,725
|
|
$
40,627
|
|
$
20,485
|
|
$
20,856
|
|
$
20,408
|
Operating net income is a non-GAAP measure that is derived from
net income adjusted for significant items. The Company believes
that operating net income is useful in periods with certain
significant items, such as listing-related, merger-related
expenses, or Day 2 non-PCD provision. The operating net income
is more reflective of management's ability to grow the business and
manage expenses. Adjusted non-interest expense also removes these
significant items such as listing-related and merger-related
expenses. Management believes it represents a more normalized
non-interest expense total for periods with identified significant
items.
|
Total Revenue
(non-GAAP1)
|
|
|
For the three months
ended
|
|
|
September
30
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
Interest
income
|
|
$
118,526
|
|
$
96,097
|
|
$
38,745
|
|
$
38,180
|
|
$
37,272
|
|
Interest
expense
|
|
45,347
|
|
36,332
|
|
16,614
|
|
15,876
|
|
14,383
|
|
Non-interest
income
|
|
10,616
|
|
9,505
|
|
4,254
|
|
4,824
|
|
4,289
|
|
Total revenue
(non-
GAAP1)
|
|
$
83,795
|
|
$
69,270
|
|
$
26,385
|
|
$
27,128
|
|
$
27,178
|
Total revenue is a non-GAAP measure and is derived from total
interest income less total interest expense plus total non-interest
income. We believe that total revenue is a useful tool to determine
how the Company is managing its business and demonstrates how
stable our revenue sources are from period to period.
|
Pretax,
Pre-Provision Earnings (non-GAAP1)
|
|
|
|
|
For the three months
ended
|
|
|
September
30
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
Income (loss) before
taxes
|
|
$
32,822
|
|
$
(19,072)
|
|
$
5,890
|
|
$
5,578
|
|
$
4,520
|
|
Provision for
(recapture of)
credit losses
|
|
147
|
|
23,910
|
|
(670)
|
|
(750)
|
|
235
|
|
Pretax, pre-
provision earnings
(non-GAAP1)
|
|
$
32,969
|
|
$
4,838
|
|
$
5,220
|
|
$
4,828
|
|
$
4,755
|
Pretax, pre-provision earnings is a non-GAAP measure and is
based on adjusting income before income taxes and to exclude
provision for (recapture of) credit losses. We believe that pretax,
pre-provision earnings is a useful tool to help evaluate the
ability to provide for credit costs through operations and provides
an additional basis to compare results between periods by isolating
the impact of provision for (recapture of) credit losses, which can
vary significantly between periods.
|
Tangible Common
Equity (non-GAAP1)
|
|
|
|
|
For the three months
ended
|
|
|
September
30
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
Common
shareholders'
equity
|
|
$
727,646
|
|
$
682,713
|
|
$
319,308
|
|
$
314,750
|
|
$
270,819
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
|
61,598
|
|
65,895
|
|
—
|
|
—
|
|
—
|
|
Goodwill
|
|
32,783
|
|
32,783
|
|
—
|
|
—
|
|
—
|
|
Tangible common
equity
(non-GAAP1)
|
|
$
633,265
|
|
$
584,035
|
|
$
319,308
|
|
$
314,750
|
|
$
270,819
|
|
Shares outstanding at
end
of period
|
|
14,963,003
|
|
14,932,169
|
|
7,440,025
|
|
7,428,710
|
|
7,428,710
|
|
Tangible book value
per
common share
|
|
$
42.32
|
|
$
39.11
|
|
$
42.92
|
|
$
42.37
|
|
$
36.46
|
In management's view, tangible common equity measures are
capital adequacy metrics that may be meaningful to the Company, as
well as analysts and investors, in assessing the Company's use of
equity and in facilitating comparisons with peers. These non-GAAP
measures are valuable indicators of a financial institution's
capital strength because they eliminate intangible assets from
stockholders' equity and retain the effect of accumulated other
comprehensive income/(loss) in stockholders' equity.
|
Net Interest Margin
& Taxable-Equivalent Net Interest Income (non-GAAP1)
|
|
|
|
|
As of or for the
three months ended
|
|
|
September
30
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
|
2024
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
Net interest
income
|
|
$
73,179
|
|
$
59,765
|
|
$
22,131
|
|
$
22,304
|
|
$
22,889
|
|
Taxable-equivalent
adjustments
|
|
847
|
|
688
|
|
362
|
|
365
|
|
366
|
|
Net interest
income
(Fully Taxable-
Equivalent - FTE)
|
|
$
74,026
|
|
$
60,453
|
|
$
22,493
|
|
$
22,669
|
|
$
23,255
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
interest-earning
assets
|
|
$
7,238,636
|
|
$
5,994,383
|
|
$
3,377,092
|
|
$
3,332,733
|
|
$
3,337,282
|
|
Net interest
margin
(non-GAAP1)
|
|
4.07 %
|
|
4.06 %
|
|
2.68 %
|
|
2.70 %
|
|
2.76 %
|
The interest income earned on certain earning assets is
completely or partially exempt from federal income tax. As such,
these tax-exempt instruments typically yield lower returns than
taxable investments. To provide more meaningful comparisons of net
interest income, we use net interest income on a fully
taxable-equivalent (FTE) basis by increasing the interest income
earned on tax-exempt assets to make it fully equivalent to interest
income earned on taxable investments. FTE net interest income is
calculated by adding the tax benefit on certain financial interest
earning assets, whose interest is tax-exempt, to total interest
income then subtracting total interest expense. Management believes
FTE net interest income is a standard practice in the banking
industry, and when net interest income is adjusted on an FTE basis,
yields on taxable, nontaxable, and partially taxable assets are
comparable; however, the adjustment to an FTE basis has no impact
on net income and this adjustment is not permitted under GAAP. FTE
net interest income is only used for calculating FTE net interest
margin, which is calculated by annualizing FTE net interest income
and then dividing by the average earning assets. The tax rate used
for this adjustment is 21%. Net interest income shown elsewhere in
this presentation is GAAP net interest income.
|
1 Non-GAAP
financial measures referenced in this release are used by
management to measure performance in operating the business that
management believes enhances investors' ability to better
understand the underlying business performance and trends related
to core business activities. Reconciliations of non-GAAP operating
measures to the most directly comparable GAAP financial measures
are included in the non-GAAP reconciliation tables in this release.
Non-GAAP measures should not be used as a substitute for the
closest comparable GAAP measurements.
2 September 30, 2024, are estimated.
3 Includes Federal Home Loan Bank, Borrower-in-Custody
(BIC), and correspondent bank availability.
4 Weighted average diluted shares for Q2 2024 calculated
only for computation of adjusted diluted EPS. Weighted average
diluted shares for GAAP diluted EPS are the same as shares for
calculating basic EPS due to the antidilutive effect of the diluted
shares when considering the GAAP net loss for the
quarter.
|
|
CONTACT:
Investor Relations
703-666-3555
bhfsir@burkeandherbertbank.com
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SOURCE Burke & Herbert Financial Services Corp.