Deal propels Virginia's Burke & Herbert into Pennsylvania

Core Viewpoint - Burke & Herbert Financial Services Corp. has announced its second acquisition, acquiring Linkbancorp for $354.2 million in stock, marking a significant step in its regional expansion strategy [2][3]. Company Overview - Burke & Herbert Financial Services Corp. has $7.9 billion in assets and is Virginia's oldest bank, established 173 years ago [2][3]. - Linkbancorp, founded in 2018, has $3.1 billion in assets and has previously engaged in M&A to drive growth [6]. Acquisition Details - The acquisition of Linkbancorp will increase Burke & Herbert's total assets to $11 billion and deposits to $9.1 billion [3]. - The deal is expected to yield cost savings of 37.5% on Linkbancorp's noninterest expenses, which were $74.9 million in 2024 [3]. - Earnings-per-share accretion is projected to be 18% in 2027, the first full year of combined operations [3]. Market Expansion - This acquisition allows Burke & Herbert to enter the Pennsylvania market, expanding its footprint to over 100 locations across six states [8]. - The deal is viewed as a strategic move to enhance geographic diversification and scale [8][9]. Management and Governance - Linkbancorp shareholders will own approximately 25% of the merged entity, with two Linkbancorp directors joining Burke & Herbert's board [7]. - Linkbancorp's CEO will serve as a senior advisor and join the board of Burke & Herbert Bank [7]. Analyst Insights - Analysts have described the acquisition as transformative, enhancing Burke & Herbert's earnings potential and mitigating the impact of losing interchange income due to asset thresholds [4][8]. - The previous merger with Summit Financial Group exceeded expectations in terms of cost savings and capital generation, indicating a positive trend for future acquisitions [10].