KBRA Assigns Ratings to Burke & Herbert Financial Services Corp.
KBRA has assigned ratings to Burke & Herbert Financial Services Corp. (NASDAQ: BHRB) and its subsidiary, Burke and Herbert Bank and Trust Company. The company received a BBB senior unsecured debt rating, BBB- subordinated debt rating, and K3 short-term debt rating. The bank subsidiary was assigned BBB+ deposit and senior unsecured debt ratings, BBB subordinated debt rating, and K2 short-term deposit and debt ratings.
The ratings are supported by BHRB's strong funding profile, with core deposits at 85% of total funding and below-average costs. The recent merger with Summit Financial Group has enhanced market diversification and deposit base granularity. BHRB has a history of strong credit performance and is expected to benefit from the merger through improved earnings and a higher concentration of loans within its earning asset mix.
KBRA ha assegnato valutazioni a Burke & Herbert Financial Services Corp. (NASDAQ: BHRB) e alla sua controllata, Burke and Herbert Bank and Trust Company. La società ha ricevuto un rating di debito non garantito senior BBB, un rating di debito subordinato BBB- e un rating di debito a breve termine K3. La controllata bancaria ha ricevuto rating di deposito e debito non garantito senior BBB+, rating di debito subordinato BBB e rating di deposito e debito a breve termine K2.
Le valutazioni sono sostenute dal forte profilo di funding di BHRB, con depositi core che rappresentano l'85% del totale dei finanziamenti e costi inferiori alla media. La recente fusione con Summit Financial Group ha migliorato la diversificazione del mercato e la granularità della base di depositi. BHRB ha una storia di forte performance creditizia e ci si aspetta che benefici della fusione attraverso il miglioramento degli utili e una maggiore concentrazione di prestiti all'interno del suo mix di attivi generanti reddito.
KBRA ha asignado calificaciones a Burke & Herbert Financial Services Corp. (NASDAQ: BHRB) y su subsidiaria, Burke and Herbert Bank and Trust Company. La compañía recibió una calificación de deuda no asegurada senior BBB, una calificación de deuda subordinada BBB- y una calificación de deuda a corto plazo K3. La subsidiaria bancaria recibió calificaciones de depósitos y deuda no asegurada senior BBB+, calificación de deuda subordinada BBB y calificaciones de depósitos y deuda a corto plazo K2.
Las calificaciones están respaldadas por el fuerte perfil de financiamiento de BHRB, con depósitos básicos que representan el 85% del financiamiento total y costos por debajo de la media. La reciente fusión con Summit Financial Group ha mejorado la diversificación en el mercado y la granularidad de la base de depósitos. BHRB tiene un historial de sólido rendimiento crediticio y se espera que se beneficie de la fusión a través de una mejora en las ganancias y una mayor concentración de préstamos dentro de su mix de activos generadores de ingresos.
KBRA는 Burke & Herbert Financial Services Corp. (NASDAQ: BHRB)와 그 자회사인 Burke and Herbert Bank and Trust Company에 등급을 부여했습니다. 이 회사는 BBB급 선순위 무담보 채권 등급, BBB-급 후순위 채권 등급, 및 K3단기 채권 등급을 받았습니다. 은행 자회사는 BBB+급 예금 및 선순위 무담보 채권 등급, BBB급 후순위 채권 등급, 및 K2단기 예금 및 채권 등급이 부여되었습니다.
이 등급은 BHRB의 강력한 자금 조달 프로필이 뒷받침하고 있으며, 총 자금의 85%가 핵심 예금을 차지하고 평균 이하의 비용을 유지하고 있습니다. Summit Financial Group과의 최근 합병은 시장 다각화와 예금 기반의 세분화를 강화했습니다. BHRB는 강력한 신용 성과의 역사를 가지고 있으며, 합병을 통해 수익 개선과 함께 수익 자산 구성 내 대출 집중도가 높아질 것으로 기대됩니다.
KBRA a attribué des notations à Burke & Herbert Financial Services Corp. (NASDAQ: BHRB) et à sa filiale, la Burke and Herbert Bank and Trust Company. L'entreprise a reçu une notation de dette senior non sécurisée BBB, une notation de dette subordonnée BBB- et une notation de dette à court terme K3. La filiale bancaire a reçu des notations de dépôts et de dette senior non sécurisée BBB+, une notation de dette subordonnée BBB et des notations de dépôts et de dette à court terme K2.
Les notations sont soutenues par le fort profil de financement de BHRB, avec des dépôts de base représentant 85 % du financement total et des coûts inférieurs à la moyenne. La récente fusion avec Summit Financial Group a renforcé la diversification du marché et la granularité de la base de dépôts. BHRB a un historique de solide performance crédit et devrait bénéficier de la fusion grâce à une amélioration des bénéfices et une concentration accrue des prêts dans son mix d'actifs générant des revenus.
KBRA hat Bewertungen für Burke & Herbert Financial Services Corp. (NASDAQ: BHRB) und deren Tochtergesellschaft, die Burke and Herbert Bank and Trust Company, vergeben. Das Unternehmen erhielt eine BBB-Bewertung für unbesicherte Senior-Anleihen, eine BBB--Bewertung für nachrangige Anleihen sowie eine K3-Bewertung für kurzfristige Anleihen. Der Bankenkonzern erhielt BBB+-Bewertungen für Einlagen und unbesicherte Senior-Anleihen, BBB-Bewertungen für nachrangige Anleihen sowie K2-Bewertungen für kurzfristige Einlagen und Anleihen.
Die Bewertungen basieren auf dem starken Finanzierungsprofil von BHRB, wobei die Kerneinlagen 85% der Gesamteinlagen ausmachen und die Kosten unter dem Durchschnitt liegen. Die kürzliche Fusion mit Summit Financial Group hat die Marktvielfalt und die Granularität der Einlagenbasis verbessert. BHRB hat eine Geschichte starker Kreditperformance und wird voraussichtlich von der Fusion profitieren, indem sich die Erträge verbessern und die Konzentration von Krediten im Vermögensmix steigt.
- Strong funding profile with 85% core deposits and below-average costs
- Enhanced market diversification and deposit base granularity through merger with Summit Financial Group
- Long history of low credit losses with NCO ratio below 0.2% since the Global Financial Crisis
- Expanded branch network to over 75 retail offices across multiple states
- Expected earnings improvement due to higher loan concentration in earning asset mix
- Targeted CET1 ratio expected to track towards the higher-end of the rated peer group
- CET1 ratio fell nearly 600 bps to 10.9% at 2Q24 due to merger
- New lending strategy yet to be tested through a credit cycle
Insights
Burke & Herbert Financial Services Corp. (BHRB) has received ratings from KBRA that reflect its solid financial position. The BBB+ deposit and senior unsecured debt ratings for its subsidiary bank indicate a good credit quality. The company's strong funding profile is a key strength, with
The recent merger with Summit Financial Group has significantly expanded BHRB's market presence and diversified its deposit base. This strategic move should enhance earnings potential by increasing the loan concentration within its earning asset mix, potentially boosting net interest margin (NIM).
However, investors should note the substantial drop in the CET1 ratio to
Overall, this rating assignment suggests a stable outlook for BHRB, reflecting its improved market position and solid fundamentals, despite some near-term capital pressures.
The KBRA ratings for BHRB highlight several positive aspects that could appeal to investors. The company's expanded footprint across multiple states (MD, VA, WV, DE and KY) through the Summit merger enhances its market diversification and potential for growth. This geographical expansion reduces concentration risk and may lead to more stable earnings over time.
BHRB's below-average funding costs (
The shift towards more relationship-based lending and away from participation lending suggests a more sustainable and potentially less risky business model. However, investors should monitor how this new strategy performs through a full credit cycle.
While the capital ratio decline is significant, the expected quick rebuild aligns with prudent management practices. Investors should watch for progress on this front in upcoming quarters to ensure the company meets its capital targets.
The ratings are supported by the company’s strong funding profile which includes a limited reliance on wholesale borrowings (core deposits were
BHRB has a long history of outperformance with regards to credit losses with an NCO ratio tracking below
Earnings should benefit from the merger as it manages towards a higher concentration of loans within its earning asset mix (average loans are expected to track close to
To access rating and relevant documents, click here.
Click here to view the report.
Methodologies
- Financial Institutions: Bank & Bank Holding Company Global Rating Methodology
- ESG Global Rating Methodology
Disclosures
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the
Doc ID: 1005952
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Analytical Contacts
Jason Szelc, Senior Director (Lead Analyst)
+1 301-969-3174
jason.szelc@kbra.com
Kevin Gray, Director
+1 646-731-1466
kevin.gray@kbra.com
Ashley Phillips, Managing Director (Rating Committee Chair)
+1 301-969-3185
ashley.phillips@kbra.com
Business Development Contact
Justin Fuller, Managing Director
+1 312-680-4163
justin.fuller@kbra.com
Source: Kroll Bond Rating Agency, LLC
FAQ
What ratings did KBRA assign to Burke & Herbert Financial Services Corp. (BHRB)?
How did the merger with Summit Financial Group impact BHRB's business?
What is BHRB's core deposit percentage as of the latest report?
How has the merger affected BHRB's capital ratios?
What is BHRB's historical performance in terms of credit losses?
