On July 26, 2024, Burke & Herbert Financial Services Corp (BHRB, Financial) released its 8-K filing detailing the financial results for the quarter ended June 30, 2024. The company, a bank holding entity offering a comprehensive range of financial solutions through its over 20 branches in Northern Virginia and commercial loan offices in Virginia and Maryland, reported significant developments and financial metrics for the quarter.
Merger Completion and Financial Impact
One of the key highlights for Burke & Herbert Financial Services Corp (BHRB, Financial) in Q2 2024 was the completion of the merger with Summit Financial Group, Inc. This merger, finalized on May 3, 2024, resulted in a financial holding company with over $7.8 billion in assets and more than 75 branches across multiple states. The total consideration for the merger was approximately $397.4 million, leading to $32.8 million in preliminary goodwill.
Performance and Challenges
Despite the merger's strategic benefits, Burke & Herbert Financial Services Corp (BHRB, Financial) reported a net loss applicable to common shares of $17.1 million for the quarter, translating to a basic and diluted loss per common share of $1.41. This loss was primarily driven by $29.5 million in CECL Day 2 non-PCD provision expenses and $23.8 million in merger-related expenses. Adjusted for these items, the company achieved an operating net income applicable to common shares of $25.0 million, or $2.04 per diluted share.
Financial Achievements
Burke & Herbert Financial Services Corp (BHRB, Financial) reported net interest income of $59.8 million for Q2 2024, a significant increase from $22.1 million in Q1 2024. The net interest margin on a fully taxable equivalent basis also improved to 4.06%, up from 2.68% in the previous quarter. These improvements were attributed to the merger's impact on the mix of interest-earning assets and fair value accretion and amortization marks.
Key Financial Metrics
Key metrics from the financial statements include:
| Metric | Q2 2024 | Q1 2024 |
|---|---|---|
| Net Interest Income | $59.8 million | $22.1 million |
| Net Interest Margin (FTE) | 4.06% | 2.68% |
| Total Loans | $5.6 billion | $2.1 billion |
| Total Deposits | $6.6 billion | $3.0 billion |
Commentary from Leadership
"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." - David P. Boyle, Company Chair and Chief Executive Officer
Analysis and Outlook
The merger with Summit Financial Group has significantly expanded Burke & Herbert Financial Services Corp (BHRB, Financial)'s asset base and market presence. However, the associated merger-related expenses and CECL provision expenses have impacted the company's short-term profitability. The increase in net interest income and net interest margin indicates a positive trend in core banking operations, which could bode well for future quarters as merger-related costs normalize.
Overall, Burke & Herbert Financial Services Corp (BHRB, Financial) remains well-capitalized with a strong balance sheet, positioning it favorably for continued growth and value creation for shareholders.
Explore the complete 8-K earnings release (here) from Burke & Herbert Financial Services Corp for further details.
