Burke & Herbert Financial Services Corp. · NASDAQ:BHRB
Burke & Herbert Financial Services — Q1 2024 Earnings Presentation
23 slides from Burke & Herbert Financial Services's earnings presentation, Apr 19, 2024
Slide 1: 1Q24 Update
1Q24 Update (Nasdaq: BHRB) April 2024 On April 19, 2024, the Company and Summit Financial Group, Inc. (“Summit”) (Nasdaq: SMMF) announced receipt of the final regulatory approval required to complete the previously announced merger of equals pursuant to the Agreement and Plan of Reorganization, date
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information This communication includes “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 193
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
Executive Team Name Role Years in Banking Years at BHRB Prior Institution Experience David Boyle Chair, CEO, President 25+ years 5 years PNC Financial Services / National City Bank Roy Halyama EVP, Chief Financial Officer 25+ years 3 years JP Morgan / PNC Financial Services / Fifth Third Bank Jeffre
Slide 6: Company Overview
Company Overview Overview Financial Performance FY21 FY22 FY23 1Q24 • The Bank was founded in 1852, making us the oldest, continuously operating Balance Sheet Highlights (millions) Bank in Virginia Assets $ 3,622 $ 3,563 $ 3,618 $ 3,696 • Our primary market area includes Virginia / Maryland / DC wit
Slide 7: Loan Portfolio as of 1Q24
Loan Portfolio as of 1Q24 ($ in 000s) Portfolio Commercial Real Estate Category in dollars in percentage $2,118,115 Residential Retail Real Estate $ 361,374 28% $524,804 Industrial/Warehouse 210,113 16% Office Bldgs/Condos 188,179 15% Multi-Family 183,144 14% Hotels/Motels 142,774 11% Owner-Occupied
Slide 8: Security Portfolio as of 1Q24
Security Portfolio as of 1Q24 ($in 000s) Portfolio FV Net Unrealized $1,275,520 Category Amortized Cost WA Yield Losses Other U.S. Treasury & Agency $ 19,211 $ 196,742 1.36% Asset-Backed $12,719 U.S Treasury & Municipal 75,340 533,934 2.11% $82,858 Agency Agency RMBS 4,114 47,108 3.67% $177,531 Non-
Slide 9: Funding Sources as of 1Q24
Funding Sources as of 1Q24 ($ in 000s) Deposits Category Average Rate $2,990,113 Demand (non-interest bearing) −% Demand (interest bearing) 0.63% Time Deposits & Other Money Market & Savings 1.97% $384,022 Demand (non- Brokered Certificate of Deposits 4.65% interest) Time Deposits & Other 3.57% $822
Slide 10: Capital Trends as of 1Q24
Capital Trends as of 1Q24 Capital Management Common Equity Tier 1 Ratio Total Capital Ratio • We take a forward-looking, disciplined approach to capital management that emphasizes acceptable risk- 18.8% 18.9% adjusted returns over the long-term 17.6% 18.0% 17.9% 17.5% 16.9% 16.6% • Our capital manag
Slide 11: Asset Quality as of 1Q24
Asset Quality as of 1Q24 Allowance Coverage Ratio NCOs / Average Loans Credit Management • Our objective is to maintain a moderate risk profile through the economic cycle 1.82% • Credit risk management is embedded in our risk culture and in our decision-making processes 1.11% 1.21% 1.16% 0.18% - Man
Slide 12: Final Burke & Herbert Standalone Thoughts
Final Burke & Herbert Standalone 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 $3.7 billion growth- oriented commercial bank headquartered in Alexandri
Slide 13: Merger of Equals with Summit Financial Group
Burke & Herbert Financial Services Corp. (Nasdaq: BHRB) Merger of Equals with Summit Financial Group, Inc. (Nasdaq: SMMF) Previously Announced on August 24th, 2023 All data related to pages 13 – 20 are as of the merger announcement date or otherwise indicated 13
Slide 14: Strategic Rationale
Strategic Rationale Scale: Creates a ~$8 billion bank with >75 branch locations across an attractive 5-state 1 Mid-Atlantic and Southeast footprint Management Strength: Culturally compatible organizations with combined 2 management depth supportive of growth to $10 billion of assets and beyond Strat
Slide 15: Creating a Diversified, High Performing Community Banking Institution
Creating a Diversified, High Performing Community Banking Institution Mid-Atlantic & Southeast Franchise With Scale(1) Attractive Deposit Franchise $8.1bn $5.6bn $6.7bn >75 #3 Top 10 Largest Bank Deposit Market Share Assets Gross Loans Deposits Branches Headquartered in in Both Virginia and Virginia
Slide 16: Combined Leadership: Executive Management Bios
Combined Leadership: Executive Management Bios David Boyle Charlie Maddy Roy Halyama Rob Tissue Joe Hager Chief Executive Officer President Chief Financial Officer EVP of Financial Strategy Chief Operating Officer Served as the President and CEO of BHRB Served as the President and Chief Served
Slide 17: Pro Forma Financial Impact
Pro Forma Financial Impact Financial Results GAAP Financial Results GAAP Financial Results Excluding AOCI and Rate Marks (1) Excluding CECL Day-2 Double Count (2) Earnings 71% 92% 30% 49% 63% 86% Impact 2024E 2025E 2024E 2025E 2024E 2025E EPS Accretion EPS Accretion EPS Accretion EPS Accretion EPS A
Slide 18: Combined Footprint
Combined Footprint Indicates higher than U.S. National Average (1) Key Combined Markets of Operation Greater Washington D.C. Charleston, WV Eastern Shore of MD (2) Capital of the U.S. Capital of West Virginia Population: 6.44mm Population: 70k Population: 252k Pop. CAGR: 1.01% Pop. CAG
Slide 19: Diversified Pro Forma Loan Composition
Diversified Pro Forma Loan Composition BHRB SMMF Pro Forma Consumer & Commercial & Other Construction Industrial 2.7% 4.6% Non-Owner Commercial & Industrial Commercial & Industrial 3.0% Occupied CRE Non-Owner 9.4% 13.0% 35.1% Occupied CRE Non-Owner 44.0% Residential R.E. Consumer & Other Occupied CR
Slide 20: Pro Forma Deposit Composition
Pro Forma Deposit Composition BHRB SMMF Pro Forma Retail Time Deposits MMDA & Other MMDA & Other Retail Time 16.9% Savings Savings Deposits MMDA & Other Jumbo Time 46.2% 39.8% 12.1% Deposits Retail Time Savings 4.2% Deposits 32.0% 8.3% Jumbo Time Deposits $3.0bn $3.7bn Jumbo Time $6.7bn 5.0% Deposit
Slide 21: 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 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
Slide 22: 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 23: 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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