Burke & Herbert Financial Services Corp. Announces Second Quarter 2024 Results and Declares Common Stock Dividend
Burke & Herbert Financial Services Corp. (NASDAQ: BHRB) reported Q2 2024 results and declared a $0.53 per share dividend. Key highlights:
- Completed merger with Summit Financial Group, creating a $7.8 billion asset company with 75+ branches across five states.
- Reported net loss of $17.1 million, primarily due to merger-related expenses and CECL provisions.
- Adjusted operating net income of $25.0 million; adjusted EPS of $2.04.
- Net interest income increased to $59.8 million; net interest margin at 4.06%.
- Total loans at $5.6 billion; total deposits at $6.6 billion.
- Well-capitalized with Common Equity Tier 1 ratio of 10.9% and Total risk-based capital ratio of 13.8%.
Burke & Herbert Financial Services Corp. (NASDAQ: BHRB) ha riportato i risultati del secondo trimestre 2024 e ha dichiarato un dividendo di $0,53 per azione. Principali elementi salienti:
- Completata la fusione con Summit Financial Group, creando un'azienda con asset per $7,8 miliardi e oltre 75 filiali in cinque stati.
- Registrata una perdita netta di $17,1 milioni, principalmente a causa delle spese legate alla fusione e delle accantonamenti CECL.
- Reddito netto operativo rettificato di $25,0 milioni; EPS rettificato di $2,04.
- Il reddito netto da interessi è aumentato a $59,8 milioni; margine di interesse netto al 4,06%.
- Prestiti totali pari a $5,6 miliardi; depositi totali pari a $6,6 miliardi.
- Ben capitalizzata con un rapporto Common Equity Tier 1 del 10,9% e un rapporto di capitale totale basato sul rischio del 13,8%.
Burke & Herbert Financial Services Corp. (NASDAQ: BHRB) informó los resultados del segundo trimestre de 2024 y declaró un dividendo de $0.53 por acción. Aspectos destacados:
- Se completó la fusión con Summit Financial Group, creando una empresa con activos de $7.8 mil millones y más de 75 sucursales en cinco estados.
- Se reportó una pérdida neta de $17.1 millones, principalmente debido a los gastos relacionados con la fusión y a las provisiones de CECL.
- Ingreso neto operativo ajustado de $25.0 millones; EPS ajustado de $2.04.
- Los ingresos netos por intereses aumentaron a $59.8 millones; margen de interés neto del 4.06%.
- Préstamos totales por $5.6 mil millones; depósitos totales por $6.6 mil millones.
- Bien capitalizada con una relación de Capital Común Nivel 1 del 10.9% y una relación de capital total basado en riesgos del 13.8%.
Burke & Herbert Financial Services Corp. (NASDAQ: BHRB)는 2024년 2분기 결과를 발표하며 주당 $0.53의 배당금을 선언했습니다. 주요 사항:
- Summit Financial Group과의 합병이 완료되어, 78억 달러의 자산을 가진 회사가 되며 5개 주에 75개 이상의 지점을 두게 되었습니다.
- 합병 관련 비용과 CECL 준비금으로 인해 1710만 달러의 순손실을 기록했습니다.
- 조정된 운영 순이익은 2500만 달러; 조정 EPS는 2.04달러입니다.
- 순이자 수익은 5980만 달러로 증가했으며, 순이자 마진은 4.06%입니다.
- 총 대출은 56억 달러, 총 예금은 66억 달러입니다.
- 자본 비율은 10.9%의 일반 자본 Tier 1 비율과 13.8%의 총 위험 기반 자본 비율로 양호합니다.
Burke & Herbert Financial Services Corp. (NASDAQ: BHRB) a publié ses résultats pour le deuxième trimestre 2024 et a déclaré un dividende de 0,53 $ par action. Principaux points forts :
- Fusion réalisée avec Summit Financial Group, créant une entreprise d'un actif de 7,8 milliards $ avec plus de 75 agences réparties dans cinq États.
- Perte nette de 17,1 millions $ signalée, principalement en raison des frais liés à la fusion et des provisions CECL.
- Revenu net d'exploitation ajusté de 25,0 millions $ ; BPA ajusté de 2,04 $.
- Le revenu net d'intérêts a augmenté à 59,8 millions $ ; marge d'intérêt nette de 4,06 %.
- Total des prêts à 5,6 milliards $ ; total des dépôts à 6,6 milliards $.
- Bien capitalisé avec un ratio Common Equity Tier 1 de 10,9 % et un ratio total de capital basé sur les risques de 13,8 %.
Burke & Herbert Financial Services Corp. (NASDAQ: BHRB) hat die Ergebnisse für das zweite Quartal 2024 veröffentlicht und eine Dividende von 0,53 $ pro Aktie erklärt. Wichtige Highlights:
- Fusion mit der Summit Financial Group abgeschlossen, wodurch ein Unternehmen mit Vermögenswerten von 7,8 Milliarden $ und über 75 Filialen in fünf Bundesstaaten entstand.
- Ein Nettoverlust von 17,1 Millionen $ wurde gemeldet, hauptsächlich aufgrund von fusionsbedingten Kosten und CECL-Rückstellungen.
- Bereinigtes Betriebsergebnis von 25,0 Millionen $; bereinigter EPS von 2,04 $.
- Nettozinsaufwand stieg auf 59,8 Millionen $; Nettozinsmarge bei 4,06 %.
- Gesamtforderungen von 5,6 Milliarden $; Gesamteinlagen von 6,6 Milliarden $.
- Gut kapitalisiert mit einem Common Equity Tier 1 Verhältniss von 10,9 % und einem Gesamt-Risiko-Kapitalverhältnis von 13,8 %.
- Completed merger with Summit Financial Group, expanding to $7.8 billion in assets and 75+ branches across five states
- Adjusted operating net income of $25.0 million, with adjusted EPS of $2.04
- Net interest income increased to $59.8 million, with net interest margin improving to 4.06%
- Strong liquidity position with $2.4 billion in total liquidity
- Well-capitalized with Common Equity Tier 1 ratio of 10.9% and Total risk-based capital ratio of 13.8%
- Reported net loss of $17.1 million for Q2 2024
- CECL Day 2 non-PCD provision expense of $29.5 million
- Merger-related expenses of $23.8 million
- Increase in cost of total deposits to 2.43% from 1.75% in Q1 2024
Burke & Herbert Financial Services Corp.'s Q2 2024 results reveal a complex financial picture, primarily influenced by its recent merger with Summit Financial Group. The reported net loss of
Key positives include:
- Adjusted operating net income of
$25 million , translating to$2.04 per diluted share - Significant growth in total assets to over
$7.8 billion - Expansion of branch network to more than 75 locations across five states
- Strong liquidity position of
$2.4 billion - Robust capital ratios, with Common Equity Tier 1 at
10.9% and Total risk-based capital at13.8%
However, investors should note the increased cost of deposits, rising from
The declared dividend of
The merger between Burke & Herbert and Summit Financial Group represents a significant strategic move in the regional banking landscape. This consolidation has created a more substantial entity with over
Several aspects of this merger are noteworthy:
- The expanded geographic footprint across five states provides diversification benefits and new growth opportunities.
- The combined entity's increased size may improve access to capital markets and potentially reduce funding costs over time.
- The
84.6% loan-to-deposit ratio indicates a healthy balance between lending activities and deposit funding. - The substantial liquidity position of
$2.4 billion provides a strong buffer against potential market stresses.
However, the integration process will be crucial. The
The increase in the cost of deposits to
In the current banking environment, where scale and efficiency are increasingly important, this merger positions Burke & Herbert more favorably within the regional banking competitive landscape.
Q2 2024 Highlights
- On May 3, 2024, the Company announced the 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. The merger created a financial holding company with more than
in assets and more than 75 branches across$7.8 billion Virginia ,West Virginia ,Maryland ,Delaware , andKentucky , with more than 800 employees serving our communities. - Related to the merger, the total aggregate consideration paid was approximately
and resulted in approximately$397.4 million of preliminary goodwill subject to adjustment in accordance with ASC 805.$32.8 million - Reflective of the current expected credit losses ("CECL") provision expenses related to the day 2 purchase accounting impact from acquired loans and merger related expenses, the Company reported a net loss applicable to common shares of
for the quarter; adjusted (non-GAAP1) operating net income applicable to common shares of$17.1 million for the quarter.$25.0 million - Basic and diluted loss per common share for the quarter was
; adjusted (non-GAAP1) diluted EPS for the quarter was$1.41 .$2.04 - Net interest income for the quarter was
; net interest income on a fully taxable equivalent basis (non-GAAP1) for the quarter was$59.8 million .$60.5 million - Net interest margin on a fully taxable equivalent basis (non-GAAP1) for the quarter was
4.06% . - Non-interest expense for the quarter was
; adjusted (non-GAAP1) non-interest expense for the quarter was$64.4 million .$40.6 million - Provision for credit losses ("provision") of
for the quarter;$23.9 million of CECL Day 2 non-purchased credit deteriorated ("non-PCD") provision expense2.$29.5 million - Balance sheet remains strong with ample liquidity. Total liquidity, including all available borrowing capacity with cash and cash equivalents, totaled
at the end of the second quarter.$2.4 billion - Ending total loans of
and ending total deposits of$5.6 billion ; ending loan-to-deposit ratio of$6.6 billion 84.6% . - Asset quality remains stable across the loan portfolio with adequate reserves.
- The Company continues to be well-capitalized, ending the quarter with
10.9% Common Equity Tier 1 capital to risk-weighted assets3,13.8% Total risk-based capital to risk-weighted assets3, and a leverage ratio of9.0% 3.
From David P.
"The consummation of our partnership with Summit brought together two organizations committed to being the quintessential community bank in our markets, where we care about the people who live and work among us. Our results for the second quarter demonstrate the financial benefits of the merger and we look forward to delivering increased value not only for our shareholders but for our customers, employees, and communities."
Results of Operations
Second Quarter 2024
The Company reported second quarter 2024 net loss applicable to common shares of
Included in the second quarter were pre-tax charges of
- Period-end total loans were
at June 30, 2024, up from$5.6 billion at December 31, 2023, primarily due to the merger.$2.1 billion - Period-end total deposits were
at June 30, 2024, up from$6.6 billion at December 31, 2023, primarily due to the merger.$3.0 billion - Net interest income increased to
in the second quarter of 2024 compared to$59.8 million in the first quarter of 2024.$22.1 million - Net interest margin on a fully taxable equivalent basis increased 138.1 bps to
4.06% compared to2.68% in the first quarter of 2024, driven by the mix of interest-earning assets added by the merger and the impact of the fair value accretion and amortization marks. - Accretion income on loans was
and the amortization expense impact on interest expense was$13.4 million , or 18.2 bps of net interest margin in the second quarter of 2024.$2.5 million - The cost of total deposits was
2.43% in the second quarter of 2024 compared to1.75% in the first quarter of 2024. - The Company recorded a total provision expense in the second quarter of 2024 of
, which included$23.9 million of CECL Day 2 non-PCD provision expense related to the allowance for credit losses established on acquired non-PCD loans and$29.5 million attributable to the provision for unfunded commitments, compared to$3.2 million of total provision recapture in the first quarter of 2024.$0.7 million - The allowance for credit losses at June 30, 2024, was
, or$68.0 million 1.2% of total loans, which included of CECL Day 2 non-PCD provision expense related to acquired non-PCD loans and$29.5 million of allowance related to acquired PCD loans.$23.5 million - Total non-interest income for the second quarter of 2024 was
, an increase of$9.5 million from the first quarter of 2024 due to the merger.$5.3 million - Non-interest expense for the second quarter of 2024 was
and included$64.4 million of merger-related charges.$23.8 million
Regulatory capital ratios4
The Company continues to be well-capitalized with capital ratios that are above regulatory requirements. As of June 30, 2024, our Common Equity Tier 1 capital to risk-weighted asset and Total risk-based capital to risk-weighted asset ratios were
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 June 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
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
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 Report on Form 10-Q for the quarter ended March 31, 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 June 30 | Six months ended June 30 | |||||||
2024 | 2023 | 2024 | 2023 | |||||
Interest income | ||||||||
Taxable loans, including fees | $ 81,673 | $ 25,300 | $ 109,718 | $ 48,060 | ||||
Tax-exempt loans, including fees | 33 | — | 33 | — | ||||
Taxable securities | 10,930 | 9,419 | 19,873 | 19,221 | ||||
Tax-exempt securities | 2,556 | 1,409 | 3,917 | 2,867 | ||||
Other interest income | 905 | 988 | 1,301 | 1,296 | ||||
Total interest income | 96,097 | 37,116 | 134,842 | 71,444 | ||||
Interest expense | ||||||||
Deposits | 30,373 | 10,030 | 43,304 | 15,431 | ||||
Borrowed funds | 4,071 | 3,279 | 7,726 | 7,417 | ||||
Subordinated debt | 1,860 | — | 1,860 | — | ||||
Other interest expense | 28 | 15 | 56 | 30 | ||||
Total interest expense | 36,332 | 13,324 | 52,946 | 22,878 | ||||
Net interest income | 59,765 | 23,792 | 81,896 | 48,566 | ||||
Credit loss expense - loans and available-for- | 20,100 | (97) | 19,430 | 834 | ||||
Credit loss expense - off-balance sheet credit | 3,810 | 311 | 3,810 | (105) | ||||
Total provision for (recapture of) credit losses | 23,910 | 214 | 23,240 | 729 | ||||
Net interest income after credit loss expense | 35,855 | 23,578 | 58,656 | 47,837 | ||||
Non-interest income | ||||||||
Fiduciary and wealth management | 2,211 | 1,305 | 3,630 | 2,642 | ||||
Service charges and fees | 4,088 | 1,741 | 5,694 | 3,376 | ||||
Net gains (losses) on securities | 613 | (111) | 613 | (111) | ||||
Income from company-owned life insurance | 922 | 571 | 1,469 | 1,131 | ||||
Other non-interest income | 1,671 | 1,119 | 2,353 | 1,801 | ||||
Total non-interest income | 9,505 | 4,625 | 13,759 | 8,839 | ||||
Non-interest expense | ||||||||
Salaries and wages | 20,895 | 9,922 | 30,413 | 19,416 | ||||
Pensions and other employee benefits | 5,303 | 2,406 | 7,668 | 4,874 | ||||
Occupancy | 2,997 | 1,545 | 4,535 | 3,002 | ||||
Equipment rentals, depreciation and | 12,663 | 1,457 | 13,944 | 2,796 | ||||
Other operating | 22,574 | 6,018 | 29,037 | 11,625 | ||||
Total non-interest expense | 64,432 | 21,348 | 85,597 | 41,713 | ||||
Income (loss) before income taxes | (19,072) | 6,855 | (13,182) | 14,963 | ||||
Income tax expense (benefit) | (2,153) | 821 | (1,475) | 1,405 | ||||
Net income (loss) | (16,919) | 6,034 | (11,707) | 13,558 | ||||
Preferred stock dividends | 225 | — | 225 | — | ||||
Net income (loss) applicable to | $ (17,144) | $ 6,034 | $ (11,932) | $ 13,558 |
Burke & Herbert Financial Services Corp. | ||||
Consolidated Balance Sheets | ||||
(In thousands) | ||||
June 30, 2024 | December 31, | |||
(Unaudited) | (Audited) | |||
Assets | ||||
Cash and due from banks | $ 35,072 | $ 8,896 | ||
Interest-earning deposits with banks | 176,848 | 35,602 | ||
Cash and cash equivalents | 211,920 | 44,498 | ||
Securities available-for-sale, at fair value | 1,414,870 | 1,248,439 | ||
Restricted stock, at cost | 15,169 | 5,964 | ||
Loans held-for-sale, at fair value | 3,268 | 1,497 | ||
Loans | 5,616,724 | 2,087,756 | ||
Allowance for credit losses | (68,017) | (25,301) | ||
Net loans | 5,548,707 | 2,062,455 | ||
Property held-for-sale | 3,334 | — | ||
Premises and equipment, net | 135,581 | 61,128 | ||
Accrued interest receivable | 33,371 | 15,895 | ||
Intangible assets | 65,895 | — | ||
Goodwill | 32,783 | — | ||
Company-owned life insurance | 182,112 | 94,159 | ||
Other assets | 163,183 | 83,544 | ||
Total Assets | $ 7,810,193 | $ 3,617,579 | ||
Liabilities and Shareholders' Equity | ||||
Liabilities | ||||
Non-interest-bearing deposits | $ 1,397,030 | $ 830,320 | ||
Interest-bearing deposits | 5,242,541 | 2,171,561 | ||
Total deposits | 6,639,571 | 3,001,881 | ||
Short-term borrowings | 285,161 | 272,000 | ||
Subordinated debentures, net | 92,178 | — | ||
Subordinated debentures owed to unconsolidated subsidiary trusts | 16,886 | — | ||
Accrued interest and other liabilities | 83,271 | 28,948 | ||
Total Liabilities | 7,117,067 | 3,302,829 | ||
Shareholders' Equity | ||||
Preferred stock and surplus | 10,413 | — | ||
Common Stock | 7,752 | 4,000 | ||
Common stock, additional paid-in capital | 399,553 | 14,495 | ||
Retained earnings | 403,422 | 427,333 | ||
Accumulated other comprehensive income (loss) | (100,430) | (103,494) | ||
Treasury stock | (27,584) | (27,584) | ||
Total Shareholders' Equity | 693,126 | 314,750 | ||
Total Liabilities and Shareholders' Equity | $ 7,810,193 | $ 3,617,579 |
Burke & Herbert Financial Services Corp. | |||||||||
Supplemental Information (unaudited) | |||||||||
As of or for the three months ended | |||||||||
(In thousands, except ratios and per share amounts) | |||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | |||||
2024 | 2024 | 2023 | 2023 | 2023 | |||||
Per common share information | |||||||||
Basic earnings (loss) | $ (1.41) | $ 0.70 | $ 0.68 | $ 0.55 | $ 0.81 | ||||
Diluted earnings (loss) | (1.41) | 0.69 | 0.67 | 0.55 | 0.80 | ||||
Cash dividends | 0.53 | 0.53 | 0.53 | 0.53 | 0.53 | ||||
Book value | 45.72 | 42.92 | 42.37 | 36.46 | 39.05 | ||||
Tangible book value (non-GAAP1) | 39.11 | 42.92 | 42.37 | 36.46 | 39.05 | ||||
Balance sheet-related (at period end, unless indicated) | |||||||||
Assets | $ 7,810,193 | $ 3,696,390 | $ 3,617,579 | $ 3,585,188 | $ 3,569,226 | ||||
Average earning assets | 5,994,383 | 3,377,092 | 3,332,733 | 3,337,282 | 3,379,534 | ||||
Loans (gross) | 5,616,724 | 2,118,155 | 2,087,756 | 2,070,616 | 2,000,969 | ||||
Loans (net) | 5,548,707 | 2,093,549 | 2,062,455 | 2,044,505 | 1,975,050 | ||||
Securities, available-for- | 1,414,870 | 1,275,520 | 1,248,439 | 1,224,395 | 1,252,190 | ||||
Intangible assets | 65,895 | — | — | — | — | ||||
Goodwill | 32,783 | — | — | — | — | ||||
Non-interest-bearing deposits | 1,397,030 | 822,767 | 830,320 | 853,385 | 876,396 | ||||
Interest-bearing deposits | 5,242,541 | 2,167,346 | 2,171,561 | 2,132,233 | 2,128,867 | ||||
Deposits, total | 6,639,571 | 2,990,113 | 3,001,881 | 2,985,618 | 3,005,263 | ||||
Brokered deposits | 403,668 | 370,847 | 389,011 | 389,018 | 389,051 | ||||
Uninsured deposits | 1,931,786 | 700,846 | 677,308 | 670,735 | 681,908 | ||||
Short-term borrowings | 285,161 | 360,000 | 272,000 | 299,000 | 249,000 | ||||
Subordinated debt, net | 109,064 | — | — | — | — | ||||
Unused borrowing capacity5 | 2,162,112 | 704,233 | 914,980 | 883,525 | 958,962 | ||||
Total equity | 693,126 | 319,308 | 314,750 | 270,819 | 290,072 | ||||
Total common equity | 682,713 | 319,308 | 314,750 | 270,819 | 290,072 | ||||
Accumulated other | (100,430) | (100,954) | (103,494) | (146,159) | (126,177) |
Burke & Herbert Financial Services Corp. | |||||||||
Supplemental Information (unaudited) | |||||||||
As of or for the three months ended | |||||||||
(In thousands, except ratios and per share amounts) | |||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | |||||
2024 | 2024 | 2023 | 2023 | 2023 | |||||
Income statement | |||||||||
Interest income | $ 96,097 | $ 38,745 | $ 38,180 | $ 37,272 | $ 37,116 | ||||
Interest expense | 36,332 | 16,614 | 15,876 | 14,383 | 13,324 | ||||
Non-interest income | 9,505 | 4,254 | 4,824 | 4,289 | 4,625 | ||||
Total revenue (non- | 69,270 | 26,385 | 27,128 | 27,178 | 28,417 | ||||
Non-interest expense | 64,432 | 21,165 | 22,300 | 22,423 | 21,348 | ||||
Pretax, pre-provision | 4,838 | 5,220 | 4,828 | 4,755 | 7,069 | ||||
Provision for (recapture | 23,910 | (670) | (750) | 235 | 214 | ||||
Income (loss) before | (19,072) | 5,890 | 5,578 | 4,520 | 6,855 | ||||
Income tax expense | (2,153) | 678 | 500 | 464 | 821 | ||||
Net income (loss) | (16,919) | 5,212 | 5,078 | 4,056 | 6,034 | ||||
Preferred stock dividends | 225 | — | — | — | — | ||||
Net income (loss) | $ (17,144) | $ 5,212 | $ 5,078 | $ 4,056 | $ 6,034 | ||||
Ratios | |||||||||
Return on average assets | (1.06) % | 0.58 % | 0.56 % | 0.45 % | 0.67 % | ||||
Return on average equity | (12.44) | 6.67 | 7.30 | 5.60 | 8.34 | ||||
Net interest margin (non- | 4.06 | 2.68 | 2.70 | 2.76 | 2.87 | ||||
Efficiency ratio | 93.02 | 80.22 | 82.20 | 82.50 | 75.12 | ||||
Loan-to-deposit ratio | 84.59 | 70.84 | 69.55 | 69.35 | 66.58 | ||||
Common Equity Tier 1 | 10.92 | 16.56 | 16.85 | 16.44 | 17.60 | ||||
Total risk-based capital | 13.82 | 17.54 | 17.88 | 17.48 | 18.71 | ||||
Leverage ratio6 | 9.04 | 11.36 | 11.31 | 11.32 | 11.20 |
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-GAAP) | ||||||||||
For the three months ended | ||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||||||
2024 | 2024 | 2023 | 2023 | 2023 | ||||||
Net income (loss) | $ (17,144) | $ 5,212 | $ 5,078 | $ 4,056 | $ 6,034 | |||||
Add back significant | ||||||||||
Listing-related | — | — | — | — | 79 | |||||
Merger-related | 18,806 | 537 | 1,141 | 1,592 | 92 | |||||
Day 2 non-PCD | 23,305 | — | — | — | — | |||||
Total significant items | 42,111 | 537 | 1,141 | 1,592 | 171 | |||||
Operating net income | $ 24,967 | $ 5,749 | $ 6,219 | $ 5,648 | $ 6,205 | |||||
Weighted average | 12,262,979 | 7,527,489 | 7,508,289 | 7,499,278 | 7,514,955 | |||||
Adjusted diluted | $ 2.04 | $ 0.76 | $ 0.83 | $ 0.75 | $ 0.83 | |||||
Non-interest expense | $ 64,432 | $ 21,165 | $ 22,300 | $ 22,423 | $ 21,348 | |||||
Remove significant | ||||||||||
Listing-related | — | — | — | — | 100 | |||||
Merger-related | 23,805 | 680 | 1,444 | 2,015 | 116 | |||||
Total significant items | $ 23,805 | $ 680 | $ 1,444 | $ 2,015 | $ 216 | |||||
Adjusted non- | $ 40,627 | $ 20,485 | $ 20,856 | $ 20,408 | $ 21,132 |
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-GAAP) | ||||||||||
For the three months ended | ||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||||||
2024 | 2024 | 2023 | 2023 | 2023 | ||||||
Interest income | $ 96,097 | $ 38,745 | $ 38,180 | $ 37,272 | $ 37,116 | |||||
Interest expense | 36,332 | 16,614 | 15,876 | 14,383 | 13,324 | |||||
Non-interest income | 9,505 | 4,254 | 4,824 | 4,289 | 4,625 | |||||
Total revenue (non- | $ 69,270 | $ 26,385 | $ 27,128 | $ 27,178 | $ 28,417 | |||||
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-GAAP) | ||||||||||
For the three months ended | ||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||||||
2024 | 2024 | 2023 | 2023 | 2023 | ||||||
Income (loss) before taxes | $ (19,072) | $ 5,890 | $ 5,578 | $ 4,520 | $ 6,855 | |||||
Provision for (recapture of) | 23,910 | (670) | (750) | 235 | 214 | |||||
Pretax, pre- | $ 4,838 | $ 5,220 | $ 4,828 | $ 4,755 | $ 7,069 |
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-GAAP) | ||||||||||
For the three months ended | ||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||||||
Actual balances | 2024 | 2024 | 2023 | 2023 | 2023 | |||||
Common shareholders' | $ 682,713 | $ 319,308 | $ 314,750 | $ 270,819 | $ 290,072 | |||||
Less: | ||||||||||
Intangible assets | 65,895 | — | — | — | — | |||||
Goodwill | 32,783 | — | — | — | — | |||||
Tangible common equity | $ 584,035 | $ 319,308 | $ 314,750 | $ 270,819 | $ 290,072 | |||||
Shares outstanding at end | 14,932,169 | 7,440,025 | 7,428,710 | 7,428,710 | 7,428,710 | |||||
Tangible book value per | $ 39.11 | $ 42.92 | $ 42.37 | $ 36.46 | $ 39.05 |
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-GAAP) | ||||||||||
As of or for the three months ended | ||||||||||
June 30 | March 31 | December 31 | September 30 | June 30 | ||||||
2024 | 2024 | 2023 | 2023 | 2023 | ||||||
Net interest income | $ 59,765 | $ 22,131 | $ 22,304 | $ 22,889 | $ 23,792 | |||||
Taxable-equivalent | 688 | 362 | 365 | 366 | 375 | |||||
Net interest income | $ 60,453 | $ 22,493 | $ 22,669 | $ 23,255 | $ 24,167 | |||||
Average earning assets | $ 5,994,383 | $ 3,377,092 | $ 3,332,733 | $ 3,337,282 | $ 3,379,534 | |||||
Net interest margin | 4.06 % | 2.68 % | 2.70 % | 2.76 % | 2.87 % |
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
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 Refers to the initial increase in allowance for credit losses required on acquired non-PCD loans through the provision for credit losses. |
3 Estimated. |
4 Estimated. |
5 Includes Federal Home Loan Bank, Borrower-in-Custody (BIC), and correspondent bank availability. |
6 Estimated. |
7 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.
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