Burke & Herbert Financial Services Corp. · NASDAQ:BHRB
Burke & Herbert Financial Services — Q2 2023 Earnings Presentation
18 slides from Burke & Herbert Financial Services's earnings presentation, July 2023
Slide 1: 2Q23 Update
2Q23 Update (Nasdaq: BHRB) July 2023 1
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward‐Looking Information This presentation contains statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward‐looking statements are neither historical facts nor assurances of future performance. Instead, they are based on curren
Slide 3: Introduction
Introduction • Thank you for your interest in Burke & Herbert Financial Services Corp. and its wholly owned subsidiary Burke & Herbert Bank & Trust Company. A proud and flourishing community institution, we are headquartered in Old Town Alexandria, Virginia and have served the banking, borrowing and
Slide 4: Key Takeaways
Key Takeaways • Burke & Herbert Financial Services Corp. was established in September 2022 as the holding company for Burke & Herbert Bank & Trust Company, which has been offering banking services in Northern Virginia since 1852 • We have a seasoned executive management team and an experienced Board
Slide 5: Executive Team
Seasoned Executive Team Executive Team Name Role Years in Banking Years at BHB Prior Institution Experience David Boyle Chair, CEO, President 25+ years 4 years PNC Financial Services / National City Bank Roy Halyama EVP, Chief Financial Officer 25+ years 2 years JP Morgan / PNC Financial Services /
Slide 6: Company Overview & Financial Performance
Solid Performance and Well‐ Company Overview & Financial Performance Positioned Overview Financial Performance FY20 FY21 FY22 2Q23 • The Bank was founded in 1852, making us the oldest, continuously operating Balance Sheet Highlights (millions) Bank in Virginia Assets $ 3,425 $ 3,622 $ 3,563 $ 3,569
Slide 7: Loan Portfolio as of 2Q23
Solid Performance and Well‐ Loan Portfolio as of 2Q23 ($ in 000s) Positioned Portfolio Commercial Real Estate Category $ % $2,000,969 Residential Retail Real Estate $ 280,431 23% $522,944 Office Buildings / Condos 219,911 18% Industrial / Warehouse 205,874 17% 27% Multi‐Family 139,704 12% Hotels / M
Slide 8: Security Portfolio as of 2Q23
Solid Performance and Well‐ Security Portfolio as of 2Q23 ($ in 000s) Positioned Portfolio FV Net Unrealized Category Amortized Cost WA Yield $1,252,190 Other Losses Asset‐backed $7,965 U.S Treasury & agency $ 22,195 $ 197,592 1.36% $74,479 1% Municipal 82,332 538,194 5.13 U.S Treasury & Agency RMBS
Slide 9: Funding Sources as of 2Q23
Solid Performance and Well‐ Funding Sources as of 2Q23 ($ in 000s) Positioned Deposits Category Average Rate $3,005,262 Demand (non‐interest bearing) ‐ Time deposits & other Demand (interest bearing) 0.27% $244,993 Money market & savings 1.39% Brokered certificates of deposit 4.50% 7% Demand (non‐ T
Slide 10: Capital Trends as of 2Q23
Solid Performance and Well‐ Capital Trends as of 2Q23 Positioned Capital Management Common Equity Tier 1 Ratio Total Capital Ratio • We take a forward‐looking, disciplined approach to capital management that emphasizes acceptable risk‐adjusted 18.8% 18.9% 18.7% returns over the long‐term 17.6% 18.0%
Slide 11: Asset Quality as of 2Q23
Solid Performance and Well‐ Asset Quality as of 2Q23 Positioned Credit Management Allowance coverage ratio NCOs / Average Loans • Our objective is to maintain a moderate risk profile through the economic cycle 1.78% 1.82% • Credit risk management is embedded in our risk culture and in our decision‐m
Slide 12: Market Footprint & Recent Expansion
Executable Market Footprint & Recent Expansion Strategic Plan Our Footprint Market Demographics • Our market area is one of the most attractive and well‐known MSAs Bethesda|August 2022 • The greater Washington MSA is the 6th largest, according to the U.S. Ashburn|October 2021 Census Bureau • Sixteen
Slide 13: Transforming Digital Capabilities
Executable Transforming Digital Capabilities Strategic Plan Our Focus Digital Optimization Employee & Customer Experience Digital Transformation Improving our existing operating processes and Developing a digital‐first culture that focuses on Using digital technology to create new revenue business m
Slide 14: Fee-based Revenue
Executable Fee‐based Revenue Strategic Plan • Building a culture to bring the full Burke & Herbert experience to customers Wealth Services • Launched new lockbox service in 2022 Treasury Management • 2Q23 year‐over‐year improvement Digital banking ‐ Merchant services revenue up 14% Payables, Receiva
Slide 15: Final Thoughts
Final Thoughts • Burke & Herbert Financial Services Corp. was established in September 2022 as the holding company for Burke & Herbert Bank & Trust Company • Burke & Herbert Bank & Trust Company is a $3.6 billion growth‐oriented commercial bank headquartered in Alexandria, Virginia • We have a seaso
Slide 16: Appendix: Notes on non-GAAP financial measures
Appendix: Notes on non‐GAAP financial measures Total Revenue: Total revenue is a non‐GAAP measure and is derived from net interest income plus total non‐interest income. We believe that total revenue is a useful tool to determine how the Company is managing its business and how stable our revenue so
Slide 17: Appendix: Notes on non-GAAP financial measures
Appendix: Notes on non‐GAAP financial measures Net Interest Margin: 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
Slide 18: Appendix: Notes on non-GAAP financial measures
Appendix: Notes on non‐GAAP financial measures Tangible Book Value per share (TBVPS) & TBVPS (excluding Securities AOCI): TBVPS represents the Company’s tangible common equity at period‐end divided by common shares at period‐end. Currently, there are no adjustments from common equity to determine ta
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