BHRB Financial Analysis

Analysis Date: 1/27/2025

Business Model

Burke & Herbert generates revenue primarily through traditional banking operations including interest income from loans and securities, and non-interest income from various banking services

Revenue Sources

• Interest income from loans (70% of total revenue)
• Interest income from securities (8% of total revenue)
• Non-interest income (14% of total revenue)

Revenue Distribution by Channel

• Over 75 branches across Delaware, Kentucky, Maryland, Virginia and West Virginia

Income Statement Analysis

• Net interest margin decreased to 3.91% from 4.07% due to lower loan accretion income
• Cost of deposits improved to 2.17% from 2.38% quarter-over-quarter
• Non-interest income increased 11.1% driven by securities gains and higher insurance proceeds

Balance Sheet Analysis

• Loan growth of $98.2 million quarter-over-quarter
• Deposit decrease of $85.6 million driven by $100.5 million reduction in brokered deposits
• Strong capital ratios with CET1 at 11.5%

Capital Allocation

The company maintains a quarterly dividend of $0.55 per share. Capital ratios remain strong with CET1 at 11.5% and total risk-based capital at 14.6%. The company has filed an S-3 registration statement allowing for potential future securities offerings up to $350 million.

Management Commentary

Q4 results demonstrate financial benefits of Summit merger

Loan and core deposit growth achieved despite system integration focus

Balance sheet reflects ample liquidity and capital entering 2025

Overall Sentiment: Positive, with management expressing confidence in merger integration progress and overall financial position

Recommendation

Rating: Buy

Reason for Rating: Strong fundamentals and successful merger integration support positive outlook

Disclaimer: This analysis is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research and consult a financial professional before making investment decisions.

Generated on: 1/27/2025, 10:29:25 AM