Burke & Herbert Financial Services (BHRB) - 2025 Q1 - Quarterly Results

Q1 2025 Financial Results and Corporate Actions Q1 2025 Highlights The company reported strong Q1 2025 results with significant net income and EPS growth from Q4 2024 | Metric | Q1 2025 | Q4 2024 (GAAP) | Q4 2024 (Adjusted Non-GAAP) | | :--- | :--- | :--- | :--- | | Net Income to Common Shares | $27.0 million | $19.6 million | $26.6 million | | Diluted EPS | $1.80 | $1.30 | $1.77 | | Metric | Value (as of or for Q1 2025) | | :--- | :--- | | Annualized Return on Average Assets | 1.41% | | Annualized Return on Average Equity | 14.57% | | Total Gross Loans | $5.6 billion | | Total Deposits | $6.5 billion | | Loan-to-Deposit Ratio | 86.3% | | Net Interest Margin (non-GAAP) | 4.18% | | Total Liquidity | $4.2 billion | | Common Equity Tier 1 Capital Ratio | 11.7% | - The CEO expressed satisfaction with the first full quarter's results post-merger, emphasizing a strong balance sheet and improved expense management while continuing to invest for growth[4] Corporate Actions The Board declared a quarterly cash dividend and authorized a new $50.0 million share repurchase program - A regular cash dividend of $0.55 per share was declared, payable on June 2, 2025[1] - The board authorized a share repurchase program for up to $50.0 million of its common shares[2] Financial Performance Analysis Results of Operations (Q1 2025 vs. Q4 2024) Net income increased significantly quarter-over-quarter, driven by higher net interest income and post-merger cost savings | Metric | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Net Income to Common Shares | $27.0 million | $19.6 million | | Diluted EPS | $1.80 | $1.30 | | Net Interest Income | $73.0 million | $70.7 million | | Net Interest Margin (non-GAAP) | 4.18% | 3.91% | | Non-interest Expense | $49.7 million | $52.5 million (Adjusted) | - Total gross loans decreased by $24.7 million to $5.6 billion, while total deposits increased by $26.6 million to $6.5 billion[7] - The increase in net interest income was driven by a $4.3 million decrease in interest expense, primarily from lower deposit costs[7] - Non-interest expense decreased, reflecting the realization of cost savings following the merger-related conversion in Q4 2024[7][8] Capital Adequacy The holding company and its bank subsidiary remained well-capitalized, exceeding all regulatory requirements | Company Capital Ratios (March 31, 2025) | Actual | "Well-Capitalized" Requirement | | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 11.7% | 6.5% | | Total Risk-Based Capital | 14.7% | 10.0% | | Leverage Ratio | 10.1% | 5.0% | | Bank Subsidiary Capital Ratios (March 31, 2025) | Value | | :--- | :--- | | Common Equity Tier 1 (CET1) | 13.5% | | Total Risk-Based Capital | 14.6% | | Leverage Ratio | 11.2% | Consolidated Financial Statements (Unaudited) Consolidated Statements of Income The company reported net interest income of $73.0 million and net income of $27.0 million for Q1 2025 | Income Statement Item | Q1 2025 (in thousands) | | :--- | :--- | | Total Interest Income | $110,786 | | Total Interest Expense | $37,799 | | Net Interest Income | $72,987 | | Total Provision for Credit Losses | $501 | | Total Non-interest Income | $10,023 | | Total Non-interest Expense | $49,664 | | Income Before Income Taxes | $32,845 | | Net Income Applicable to Common Shares | $26,976 | Consolidated Balance Sheets Total assets reached $7.84 billion, supported by $6.54 billion in deposits and $758.0 million in equity | Balance Sheet Item | March 31, 2025 (in thousands) | | :--- | :--- | | Total Assets | $7,838,090 | | Net Loans | $5,579,754 | | Securities Available-for-Sale | $1,436,869 | | Total Liabilities | $7,080,090 | | Total Deposits | $6,541,871 | | Total Shareholders' Equity | $758,000 | Details of Net Interest Margin The taxable-equivalent net interest margin expanded to 4.18% in Q1 2025, up from 3.91% in the prior quarter | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Yield on Total Interest-Earning Assets | 6.31% | 6.22% | 4.66% | | Cost of Total Interest-Bearing Liabilities | 2.76% | 2.98% | 2.71% | | Taxable-Equivalent Net Interest Spread | 3.55% | 3.24% | 1.95% | | Taxable-Equivalent Net Interest Margin | 4.18% | 3.91% | 2.68% | - Average total interest-earning assets for Q1 2025 were $7.17 billion, while average total interest-bearing liabilities were $5.55 billion[22] Supplemental Financial Information This section presents a five-quarter trend of key per-share data and performance ratios | Per Common Share Data | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Diluted Earnings (loss) | $1.80 | $1.30 | $0.69 | | Cash Dividends | $0.55 | $0.55 | $0.53 | | Book Value | $49.90 | $48.08 | $42.92 | | Tangible Book Value (non-GAAP) | $44.17 | $42.06 | $42.92 | | Key Ratios (Annualized) | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Return on Average Assets | 1.41% | 1.00% | 0.58% | | Return on Average Equity | 14.57% | 10.49% | 6.67% | | Efficiency Ratio | 59.83% | 74.44% | 80.22% | | Loan-to-Deposit Ratio | 86.33% | 87.06% | 70.84% | Non-GAAP Financial Measures and Reconciliations Reconciliation of Operating Net Income and Adjusted EPS The company reconciles GAAP net income to non-GAAP operating net income, adjusting for merger-related expenses in Q4 2024 | Reconciliation (Q4 2024, in thousands) | Amount | | :--- | :--- | | Net Income Applicable to Common Shares (GAAP) | $19,568 | | Add: Merger-related items (tax effected) | $7,069 | | Operating Net Income (non-GAAP) | $26,637 | Reconciliation of Pretax, Pre-Provision Earnings Pretax, pre-provision earnings increased to $33.3 million in Q1 2025 from $21.1 million in Q4 2024 | PPNR Calculation (in thousands) | Q1 2025 | Q4 2024 | | :--- | :--- | :--- | | Income Before Taxes (GAAP) | $32,845 | $20,258 | | Add: Provision for Credit Losses | $501 | $833 | | Pretax, Pre-Provision Earnings (non-GAAP) | $33,346 | $21,091 | Reconciliation of Tangible Common Equity Tangible book value per common share increased to $44.17 as of March 31, 2025 | Tangible Common Equity (in thousands) | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Common Shareholders' Equity (GAAP) | $747,587 | $719,744 | | Less: Intangible Assets | $53,002 | $57,300 | | Less: Goodwill | $32,842 | $32,783 | | Tangible Common Equity (non-GAAP) | $661,743 | $629,661 | | Tangible Book Value per Share | $44.17 | $42.06 | Reconciliation of Net Interest Margin (FTE) The fully taxable-equivalent net interest margin was 4.18% for Q1 2025 after adjustments | FTE NIM Calculation (Q1 2025, in thousands) | Amount | | :--- | :--- | | Net Interest Income (GAAP) | $72,987 | | Add: Taxable-equivalent adjustments | $881 | | Net Interest Income (FTE, non-GAAP) | $73,868 | | Average Interest-Earning Assets | $7,171,931 | | Net Interest Margin (FTE, non-GAAP) | 4.18% | Forward-Looking Statements and Company Information About Burke & Herbert The company is the holding company for the oldest continuously operating bank in the Washington, D.C. area - The company is the financial holding company for Burke & Herbert Bank & Trust Company, the oldest continuously operating bank under its original name in the greater Washington, D.C. area[10] - The bank operates over 75 branches across Delaware, Kentucky, Maryland, Virginia, and West Virginia, providing a full range of financial services[10] Cautionary Note Regarding Forward-Looking Statements This report contains forward-looking statements that are subject to significant risks and uncertainties - The report contains forward-looking statements regarding revenues, earnings, and strategic goals, which are subject to numerous risks and uncertainties[11][12] - Key risks that could cause actual results to differ include changes in economic conditions, interest rates, competition, and asset quality[14]