Burke & Herbert Financial Services (US:BHRB)2025-11-07 14:01Financial Position - As of September 30, 2025, the company reported total consolidated assets of $7.9 billion, gross loans of $5.6 billion, total deposits of $6.4 billion, and total shareholders' equity of $822.2 million[178]. - As of September 30, 2025, total assets increased to $7,889,037, compared to $7,864,913 as of September 30, 2024, reflecting a growth of approximately 0.31%[227]. - Total deposits decreased to $6,412,052 from $6,600,825, representing a decline of approximately 2.85%[227]. - Total shareholders' equity increased to $822,200,000 as of September 30, 2025, up from $730,200,000 at December 31, 2024, reflecting an increase of $92,100,000[330]. - The investment portfolio's fair value was $1.598 billion as of September 30, 2025, with gross unrealized losses of $89.2 million[299]. - The overall weighted average duration of the investment portfolio is 4.6 years as of September 30, 2025[300]. Loan Portfolio - The bank's loan portfolio includes a substantial portion secured by real estate, indicating a focus on real estate-backed lending[176]. - As of September 30, 2025, the Bank's exposure to commercial real estate (CRE) was $2.8 billion, representing 50.4% of its gross loan portfolio[197]. - Total exposure to commercial real estate, including owner-occupied properties and acquisition, construction & development, was $3.8 billion, or 68.1% of total gross loans[197]. - The total amount of commercial real estate loans was $2,804,175,000 as of September 30, 2025, compared to $2,637,802,000 at the end of 2024[303]. - The company’s loan portfolio includes $1,127,952,000 in single-family residential loans, a decrease from $1,173,749,000 at December 31, 2024[303]. - The owner-occupied commercial real estate segment accounted for $612.56 million, or 11.0% of the total gross loan portfolio[198]. - The acquisition, construction & development loans totaled $375.03 million, representing 6.7% of the total gross loan portfolio[198]. - As of September 30, 2025, total loans outstanding were $5,559,479,000, a slight decrease from $5,574,037,000 as of September 30, 2024[315]. Income and Expenses - Net interest income for the three months ended September 30, 2025, was $73,770, compared to $73,179 for the same period in 2024, showing a growth of about 0.81%[227]. - Net income applicable to common shares for the three months ended September 30, 2025, was $29,739 for the three months ended September 30, 2025, up from $27,397 in 2024, reflecting an increase of approximately 4.88%[227]. - Non-interest income increased by $10.1 million, or 41.5%, to $34.5 million for the nine months ended September 30, 2025, compared to $24.4 million for the same period in 2024[235]. - Non-interest expense increased by $10.6 million, or 7.8%, to $147.1 million for the nine months ended September 30, 2025, compared to $136.4 million for the same period in 2024[236]. - Total interest income for the nine months ended September 30, 2025, was $333.9 million, up from $253.4 million for the same period in 2024[251]. - Total net interest income for the nine months ended September 30, 2025, was $220.99 million, compared to $155.08 million for the same period in 2024[251]. - Total interest expense was $112.9 million for the nine months ended September 30, 2025, up from $98.3 million in the same period of 2024, reflecting a full nine months of combined operations after the Merger[257]. Credit Quality - The company maintains an allowance for credit losses (ACL) to absorb expected credit losses, which is critical for evaluating the loan portfolio's risk characteristics[187]. - Non-performing loans as a percentage of total loans increased to 1.60% as of September 30, 2025, compared to 0.64% in 2024, highlighting a potential increase in credit risk[228]. - The allowance for credit losses (ACL) as a percentage of gross loans was 1.22% as of September 30, 2025, unchanged from the previous year[313]. - The company’s non-performing loans, which include non-accrual loans and loans 90 days past due, totaled $89,051,000 as of September 30, 2025[309]. - Total non-performing assets reached $91,793,000, an increase of $50.6 million from $41,151,000 at December 31, 2024[309]. - Provision for credit losses decreased significantly to $1.4 million for the nine months ended September 30, 2025, compared to $23.4 million for the same period in 2024[258]. Interest Rate Risk Management - The Company actively manages its interest rate sensitivity position to control exposure of net interest income to risks associated with interest rate movements[338]. - The Company utilizes interest rate sensitivity analysis, market value of portfolio equity analysis, and interest rate simulations to manage interest rate risk[339]. - The ALCO is responsible for managing the Company's interest rate sensitivity position through policies approved by the Board[338]. - Interest rate risk sensitivity cannot be predicted with certainty due to varying economic and market conditions[340]. - The Company models a set of interest rate scenarios to understand its sensitivity to interest rate changes[341]. - The analysis of interest rate risk includes assessing the impact of embedded options within the balance sheet[341].