Burke & Herbert Financial Services (US:BHRB)2025-10-23 20:01Financial Performance - For Q3 2025, net income applicable to common shares was $29.7 million, maintaining a diluted EPS of $1.97, consistent with Q2 2025 results [4]. - Net income for the three months ended September 30, 2025, was $29,964,000, compared to $27,622,000 in the previous quarter, reflecting an increase of 8.5% [17]. - Net income applicable to common shares for Q3 2025 was $29,739,000, compared to $29,672,000 in Q2 2025, reflecting a slight increase of 0.23% [29]. - Return on average assets (annualized) for Q3 2025 was 1.50%, compared to 1.51% in Q2 2025, indicating a marginal decline [34]. - Return on average equity (annualized) for Q3 2025 was 14.88%, down from 15.50% in Q2 2025, a decrease of 4.00% [34]. - The efficiency ratio for Q3 2025 was 56.34%, slightly improved from 56.60% in Q2 2025 [34]. - Adjusted diluted EPS for Q3 2025 was $1.97, unchanged from Q2 2025, indicating stable earnings per share [29]. Loan and Deposit Activity - Total gross loans at the end of Q3 2025 were $5.6 billion, a decrease of $31.0 million from Q2 2025, while new loan commitments amounted to $228.9 million [9]. - Total deposits increased to $6.4 billion, up by $21.1 million from Q2 2025, with core deposits rising by $28.8 million [9]. - Total deposits decreased to $6,412,052,000 as of September 30, 2025, from $6,515,239,000 at the end of 2024, a decline of 1.6% [19]. - The loan-to-deposit ratio for Q3 2025 was 86.70%, a decrease from 87.47% in Q2 2025, indicating improved liquidity [34]. Interest Income and Margin - The net interest margin for Q3 2025 was 4.08%, down from 4.17% in Q2 2025, primarily due to lower loan interest income [9]. - Total interest income for the three months ended September 30, 2025, was $111,209,000, compared to $118,526,000 for the previous quarter, reflecting a decrease of 6.4% [17]. - Interest income for Q3 2025 was $111,209,000, slightly lower than $111,858,000 in Q2 2025, a decrease of 0.58% [32]. - The taxable-equivalent net interest margin for the three months ended September 30, 2025, was 4.08%, compared to 4.17% in the previous quarter [21]. - The net interest margin (non-GAAP) for Q3 2025 was 4.08%, down from 4.17% in Q2 2025 [39]. Non-Interest Income and Expense - Non-interest income for Q3 2025 was $11.6 million, a decrease from $12.9 million in the prior quarter [9]. - Total non-interest income for the three months ended September 30, 2025, was $11,585,000, an increase of 9.1% from $10,616,000 in the previous quarter [17]. - Non-interest expense decreased to $48.1 million in Q3 2025, reflecting operational efficiency gains post-merger [9]. - Non-interest expense for Q3 2025 was $48,092,000, a decrease from $49,305,000 in Q2 2025, down by 2.46% [29]. Credit Quality - The Company reported a credit provision expense of $262 thousand, with an allowance for credit losses at 1.2% of total loans [9]. - The company reported a total provision for credit losses of $1,387,000 for the nine months ended September 30, 2025, significantly lower than $23,387,000 in the same period last year [17]. - Provision for credit losses decreased to $262 thousand for the three months ended September 30, 2025, down from $624 thousand in the previous quarter, a reduction of 58.13% [24]. - Nonperforming loans rose to $89,051 thousand as of September 30, 2025, compared to $85,531 thousand as of June 30, 2025, an increase of 1.77% [24]. - Total delinquencies increased to 34,722 thousand as of September 30, 2025, from 29,056 thousand as of June 30, 2025, an increase of 19.83% [24]. Capital and Assets - As of September 30, 2025, the Common Equity Tier 1 capital ratio was 12.7%, and the Total risk-based capital ratio was 15.4%, both above regulatory requirements [8]. - Total assets as of September 30, 2025, reached $7,889,037,000, compared to $7,812,185,000 at the end of 2024, indicating a growth of 1.0% [19]. - The company’s retained earnings increased to $495,400,000 as of September 30, 2025, from $434,106,000 at the end of 2024, showing a growth of 14.1% [19]. - Total equity increased to $822,231 thousand as of September 30, 2025, up from $780,018 thousand as of June 30, 2025, representing a growth of 5.39% [24]. Branch Expansion - The Company opened its first branch in Bethesda, Maryland, and is expanding into new markets in Virginia, which are exceeding expectations [3].