ALEXANDRIA, Va. - Burke & Herbert Financial Services Corp. (NASDAQ:BHRB) announced its third-quarter financial results, reflecting the first full quarter since its merger with Summit Financial Group (NASDAQ:SMMF), Inc. The company also declared an increased regular cash dividend of $0.55 per share, a 3.8% rise from the previous quarter.
The financial institution reported a net income applicable to common shares of $27.4 million, with earnings per diluted common share (EPS) at $1.82. When adjusted for non-GAAP considerations, the operating net income applicable to common shares stood at $29.8 million, translating to an adjusted diluted EPS of $1.98.
Net interest income for the quarter was $73.2 million, with a net interest margin on a fully taxable equivalent basis (non-GAAP) of 4.07%. Non-interest expense was reported at $50.8 million, which included $3.1 million of merger-related charges. After adjustments, the non-interest expense for the quarter was $47.7 million.
The company's balance sheet remained robust, with total liquidity, including available borrowing capacity, at $2.6 billion at the end of the quarter. The ending total gross loans were $5.6 billion, and total deposits reached $6.6 billion, resulting in a loan-to-deposit ratio of 84.4%. Asset quality was reported as stable with adequate reserves.
David P. Boyle, Company Chair and Chief Executive Officer, stated that the positive results and the dividend increase are in line with expectations following the merger with Summit. He also noted that the team is working towards the planned systems integration in the fourth quarter, which is expected to lead to further efficiencies and increased value for shareholders.
The company remains well-capitalized, ending the quarter with a Common Equity Tier 1 capital to risk-weighted assets ratio of 11.3%, a Total risk-based capital to risk-weighted assets ratio of 14.3%, and a leverage ratio of 9.6%.
Burke & Herbert Bank & Trust Company, the wholly-owned bank subsidiary of the company, also maintains strong capital ratios above regulatory requirements.
The information in this article is based on a press release statement from Burke & Herbert Financial Services Corp.
In other recent news, Burke & Herbert Financial Services Corp. has come under the spotlight following its recent merger with Summit Financial Group. Analysts from DA Davidson have initiated coverage on the company with a Buy rating and a price target of $76. They believe the Virginia-based commercial bank is set for increased profitability and growth, thanks in part to the merger.
The merger is anticipated to accelerate both asset and earnings growth for Burke & Herbert Financial Services. The bank's valuation, which is currently 7.9 times its estimated 2025 earnings per share (EPS) and 1.2 times its estimated 2025 tangible book value (TBV), has been highlighted as a compelling investment opportunity.
DA Davidson's analysts forecast rapid EPS growth for the bank over the coming years. By 2025, they expect the bank to outperform its peers with a return on assets (ROA) of 1.45% and a return on tangible common equity (ROTCE) of 16.5%. These strong performance indicators are expected to lead to an expansion in the bank's valuation.
The $76 price target set by DA Davidson represents a 25% upside from the current valuation. The bullish stance is based on the bank's potential to succeed in its market and the anticipated growth in earnings. These recent developments underline the growth potential and future prospects of Burke & Herbert Financial Services.
InvestingPro Insights
Burke & Herbert Financial Services Corp.'s (NASDAQ:BHRB) recent financial results and dividend increase are complemented by several key insights from InvestingPro.
According to InvestingPro data, the company's market capitalization stands at $962.75 million, reflecting its position in the financial services sector. The company's revenue for the last twelve months as of Q2 2024 was $124.67 million, with a quarterly revenue growth of 62.23% in Q2 2024. This substantial growth aligns with the company's positive post-merger performance highlighted in the article.
InvestingPro Tips suggest that analysts anticipate sales growth in the current year, which is consistent with the company's reported strong financial results. Additionally, Burke & Herbert has maintained dividend payments for 18 consecutive years, underscoring the recent 3.8% increase in regular cash dividend mentioned in the article.
It's worth noting that while the company reported a net income of $27.4 million for the quarter, InvestingPro data indicates it was not profitable over the last twelve months. However, analysts predict the company will be profitable this year, which could be attributed to the expected efficiencies and increased value following the merger and planned systems integration.
The company's dividend yield stands at 3.29%, which may be attractive to income-focused investors. Moreover, the stock's price has shown a strong performance, with a 45.51% total return over the past year.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. In fact, there are 6 more InvestingPro Tips available for Burke & Herbert Financial Services Corp., providing a deeper understanding of the company's financial health and prospects.
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