ALEXANDRIA, Va., July 28,
2023 /PRNewswire/ -- Burke & Herbert Financial
Services Corp. (the "Company") (Nasdaq: BHRB) reported financial
results for the quarter ended June 30, 2023. In addition, at
its meeting on July 27, 2023, the board of directors declared
a $0.53 per share regular cash
dividend to be paid on September 1, 2023, to shareholders of
record as of the close of business August 15, 2023.
The Company notes the following highlights:
- Balance sheet remains strong with ample liquidity and capital
ratios significantly higher than regulatory defined
well-capitalized levels;
- Asset quality remains stable across the loan portfolio with
adequate reserves; and
- Focus remains on strategic initiatives to profitably expand
market share, transform the Company's digital capabilities and grow
sources of non-interest income.
From David P. Boyle,
Company Chair, President and Chief Executive Officer
"Despite the headwinds facing the industry and the resulting
pressure on bank earnings, our focus remains on executing our
strategic priorities. This quarter we increased loans, maintained a
strong liquidity position, and continued to make investments in our
businesses designed to deliver increased shareholder value over the
long-term."
Results of Operations
Second Quarter 2023 - Comparison to prior year
quarter
Net income for the three months ended June 30, 2023, was
$6.0 million or $4.4 million lower than the three months ended
June 30, 2022, primarily due to
increased funding costs and the change in provision for credit
losses that included a recapture of credit losses in the prior year
quarter.
Total revenue (non-GAAP) for the three months ended
June 30, 2023, was $28.4 million or 6% lower than the three
months ended June 30, 2022, and included $25.3 million in interest and fees on loans
and $10.8 million in investment
security income, which was a 45% increase and a 20% increase,
respectively, over the prior year three months ended June 30,
2022. Overall, interest income for the three months ended
June 30, 2023, was $37.1 million
or 40% higher than the three months ended June 30, 2022. The
increase in interest income for the Company's loans was due to
increased loan growth and higher rates, and the interest income
increase in investment securities was due to higher rates.
Loans, net of allowance for credit losses, ended the quarter at
$2.0 billion or 14% higher than
June 30, 2022, while the investment portfolio fair value ended
the quarter at $1.3 billion or 17%
lower than the prior year quarter.
The increase in interest income was offset by an increase in
interest expense, which was $13.3
million for the three months ended June 30, 2023, or
$12.4 million higher than the prior
year period. The rapidly rising rate environment resulted in an
increase in the Company's cost of funds that outpaced the resulting
benefit of higher rates on assets. The Company's deposit and
borrowing interest expense was $10.0
million and $3.3 million or
$9.7 million and $2.8 million higher, respectively, for the three
months ended June 30, 2023. Total deposits ended the quarter
at $3.0 billion or 2% higher than the
same period in 2022. Non-interest-bearing deposits decreased by 11%
to $876.4 million, and borrowed funds
decreased by 20% to $249.0 million
from the prior year quarter ended June 30, 2022.
Non-interest income for the three months ended June 30,
2023, increased $0.1 million from the
same period last year to $4.6
million. The increase was primarily due to higher other
non-interest income revenue. Within other non-interest income, the
Company received an increase in dividend income from the Federal
Home Loan Bank ("FHLB") and also included increased fee income from
customer swap activity when compared to the prior year quarter
ended June 30, 2022.
For the three months ended June 30, 2023, the Company
recorded a provision for credit losses of $0.2 million compared to a recapture of credit
losses of $2.5 million in the
prior year quarter. Total revenue (non-GAAP) after provision for
credit losses was $28.2 million for
the three months ended June 30, 2023, which was a decrease of
14% compared to the same period last year due to the recapture of
credit losses recorded in the prior year quarter.
Non-interest expense increased by $1.0
million, or 5%, for the three months ended June 30,
2023, from the prior year three months ended June 30, 2022.
The increase was driven by higher personnel related expenses,
primarily benefits and pension, due to increased healthcare costs
and general macro-economic conditions. The Company also incurred
expenses during the second quarter of 2023 related to the efforts
of listing our common stock on the Nasdaq stock exchange and the
filing of a Form 10 Registration Statement with the U.S. Securities
and Exchange Commission ("SEC") to register our common stock under
the Securities Exchange Act of 1934, as amended.
As of June 30, 2023, total shareholders' equity was
$290.1 million or $1.1 million lower than June 30, 2022, due
to the impact of higher rates on the fair value of our securities
portfolio.
Six months ended June 30, 2023 - Comparison to prior
year period
Net income for the six months ended June 30, 2023, was
$13.6 million or $6.0 million lower than the six months ended
June 30, 2022.
Total revenue (non-GAAP) for the six months ended June 30,
2023, was $57.4 million or 1% lower
than the six months ended June 30, 2022, and included
$48.1 million in interest and fees on
loans and $22.1 million in investment
security income, which was a 42% increase and a 31% increase,
respectively, over the prior year six months ended June 30,
2022. Overall, interest income for the six months ended
June 30, 2023, was $71.4 million
or 41% higher than the six months ended June 30, 2022. The
increase in interest income for the Company's loans was due to
increased loan growth and higher rates, and the interest income
increase on investment securities was due to higher rates.
The increase in interest income was offset by an increase in
interest expense, which was $22.9
million for the six months ended June 30, 2023, or
$21.2 million higher than the prior
year period. The rapidly rising rate environment resulted in an
increase in the Company's cost of funds that outpaced the resulting
benefit of higher rates on assets. The Company's deposit and
borrowing interest expense was $15.4
million and $7.4 million or
$14.7 million and $6.5 million higher, respectively, for the six
months ended June 30, 2023, than for the six months ended
June 30, 2022.
Non-interest income for the six months ended June 30, 2023,
increased $0.2 million from the same
period last year to $8.8 million. The
increase was primarily due to higher other non-interest income
revenue. Within other non-interest income, the Company received an
increase in dividend income from the FHLB and also included
increased fee income from customer swap activity when compared to
the prior year period ended June 30, 2022.
For the six months ended June 30, 2023, the Company
recorded a provision for credit losses of $0.7 million compared to a recapture of credit
losses of $5.2 million in the prior
year period. Total revenue (non-GAAP) after provision for credit
losses was $56.7 million for the six
months ended June 30, 2023, which was a decrease of 10%
compared to the same period last year.
Non-interest expense increased by $2.2
million, or 6%, for the six months ended June 30, 2023,
from the prior year six months ended June 30, 2022. The
increase was driven by higher personnel related expenses, primarily
benefits and pension, due to increased healthcare costs and general
macro-economic conditions. The Company also incurred expenses
during 2023 related to the efforts of listing our common stock on
the Nasdaq stock exchange and the filing of a Form 10 Registration
Statement with the SEC to register our common stock under the
Securities Exchange Act of 1934, as amended.
Regulatory capital ratios
The Company continues to be well-capitalized with capital ratios
that are above regulatory requirements. As of June 30, 2023,
our Common Equity Tier 1 capital to risk-weighted asset and Total
risk-based capital to risk weighted asset ratios were 17.6% and
18.7%, respectively, and significantly above the well-capitalized
requirements of 6.5% and 10%, respectively. The leverage ratio was
11.2% compared to a 5% level to be considered well-capitalized.
Burke & Herbert Bank &
Trust Company ("the Bank"), the Company's wholly-owned bank
subsidiary, continues to be well-capitalized with capital ratios
that are above regulatory requirements. As of June 30, 2023,
the Bank's Common Equity Tier 1 capital to risk-weighted asset and
Total risk-based capital to risk weighted asset ratios were 17.5%
and 18.6%, respectively, and significantly above the
well-capitalized requirements. In addition, the Bank's leverage
ratio of 11.1% is considered to be well-capitalized.
For more information about the Company's financial condition,
including additional disclosures pertinent to recent events in the
banking industry, please see our financial statements and
supplemental information attached to this release.
Burke & Herbert Financial Services Corp. is the bank holding
company for Burke & Herbert Bank
& Trust Company. Burke & Herbert
Bank & Trust Company is the oldest continuously
operating bank under its original name headquartered in the greater
Washington DC Metro area. The Bank
offers a full range of business and personal financial solutions
designed to meet customers' banking, borrowing, and investment
needs and has over 20 branches throughout the Northern Virginia region and commercial loan
offices in Fredericksburg,
Loudoun County, Richmond, and in Bethesda, Maryland. Learn more at
www.burkeandherbertbank.com.
|
Non-GAAP financial
measures referenced in this release are used by management to
measure performance in operating the business that management
believes enhances investors' ability to better understand the
underlying business performance and trends related to core business
activities. Reconciliations of non-GAAP operating measures to the
most directly comparable GAAP financial measures are included in
the non-GAAP reconciliation tables in this release.
|
Member FDIC; Equal Housing Lender
Cautionary Note Regarding Forward-Looking Statements
This press release may contain certain forward-looking
statements that are based on certain assumptions and describe
future plans, strategies and expectations of the Company and the
Bank, including with respect to the Company's ability to maintain
adequate liquidity, meet and exceed regulatory capitalization
requirements, execute on strategic priorities and initiatives,
expand market share, and transform its digital capabilities. These
forward-looking statements are generally identified by use of the
words "believe," "expect," "intend," "anticipate," "estimate,"
"project," "will," "should," "may," "view," "opportunity,"
"potential," or similar expressions or expressions of confidence.
The Company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. The Company's
forward-looking statements are subject to the following principal
risks and uncertainties: the risk factors discussed in the
Company's Registration Statement on Form 10, as amended, and as
ordered effective by the SEC on April 21,
2023 and in subsequent 2023 Quarterly Reports on Form 10-Q
and other 2023 filings with the SEC. These risks and uncertainties
should be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements. Any
forward-looking statement made by us in this release is based only
on information currently available to us and speaks only as of the
date on which it is made. The Company does not undertake, and
specifically disclaims any obligation, to publicly release the
result of any revisions which may be made to any forward-looking
statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or
unanticipated events.
Burke & Herbert
Financial Services Corp.
Consolidated Statements of Income (unaudited)
(In thousands)
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Interest
income
|
|
|
|
|
|
|
|
Loans, including
fees
|
$
25,300
|
|
$
17,418
|
|
$
48,060
|
|
$
33,868
|
Taxable
securities
|
9,419
|
|
6,572
|
|
19,221
|
|
11,930
|
Tax-exempt
securities
|
1,409
|
|
2,464
|
|
2,867
|
|
4,890
|
Other interest
income
|
988
|
|
88
|
|
1,296
|
|
106
|
Total interest
income
|
37,116
|
|
26,542
|
|
71,444
|
|
50,794
|
Interest
expense
|
|
|
|
|
|
|
|
Deposits
|
10,030
|
|
368
|
|
15,431
|
|
769
|
Borrowed
funds
|
3,279
|
|
527
|
|
7,417
|
|
892
|
Other interest
expense
|
15
|
|
16
|
|
30
|
|
31
|
Total interest
expense
|
13,324
|
|
911
|
|
22,878
|
|
1,692
|
Net interest
income
|
23,792
|
|
25,631
|
|
48,566
|
|
49,102
|
|
|
|
|
|
|
|
|
Provision for
(recapture of) credit losses
|
214
|
|
(2,538)
|
|
729
|
|
(5,176)
|
Net interest income
after credit loss expense
|
23,578
|
|
28,169
|
|
47,837
|
|
54,278
|
|
|
|
|
|
|
|
|
Non-interest
income
|
|
|
|
|
|
|
|
Fiduciary and wealth
management
|
1,305
|
|
1,362
|
|
2,642
|
|
2,667
|
Service charges and
fees
|
1,741
|
|
1,761
|
|
3,376
|
|
3,394
|
Net gains (losses) on
securities
|
(111)
|
|
—
|
|
(111)
|
|
104
|
Income from life
insurance
|
571
|
|
542
|
|
1,131
|
|
1,079
|
Other non-interest
income
|
1,119
|
|
831
|
|
1,801
|
|
1,367
|
Total non-interest
income
|
4,625
|
|
4,496
|
|
8,839
|
|
8,611
|
|
|
|
|
|
|
|
|
Non-interest
expense
|
|
|
|
|
|
|
|
Salaries and
wages
|
9,922
|
|
9,617
|
|
19,416
|
|
19,146
|
Pensions and other
employee benefits
|
2,406
|
|
1,901
|
|
4,874
|
|
3,940
|
Occupancy
|
1,545
|
|
1,609
|
|
3,002
|
|
3,155
|
Equipment rentals,
depreciation and maintenance
|
1,457
|
|
1,383
|
|
2,796
|
|
2,762
|
Other
operating
|
6,018
|
|
5,858
|
|
11,625
|
|
10,530
|
Total non-interest
expense
|
21,348
|
|
20,368
|
|
41,713
|
|
39,533
|
Income before
income taxes
|
6,855
|
|
12,297
|
|
14,963
|
|
23,356
|
|
|
|
|
|
|
|
|
Income tax
expense
|
821
|
|
1,900
|
|
1,405
|
|
3,833
|
Net
income
|
$
6,034
|
|
$
10,397
|
|
$
13,558
|
|
$
19,523
|
Burke & Herbert
Financial Services Corp.
Consolidated Balance Sheets
(In thousands)
|
|
|
|
|
|
June 30,
2023
|
|
December 31,
2022
|
|
(Unaudited)
|
|
(Audited)
|
Assets
|
|
|
|
Cash and due from
banks
|
$
9,047
|
|
$
9,124
|
Interest-earning
deposits with banks
|
71,752
|
|
41,171
|
Cash and cash
equivalents
|
80,799
|
|
50,295
|
Securities
available-for-sale, at fair value
|
1,252,190
|
|
1,371,757
|
Restricted stock, at
cost
|
3,914
|
|
16,443
|
Loans held-for-sale, at
fair value
|
456
|
|
—
|
Loans
|
2,000,969
|
|
1,887,221
|
Allowance for credit
losses
|
(25,919)
|
|
(21,039)
|
Net loans
|
1,975,050
|
|
1,866,182
|
Premises and equipment,
net
|
56,183
|
|
53,170
|
Accrued interest
receivable
|
14,781
|
|
15,481
|
Company-owned life
insurance
|
93,625
|
|
92,487
|
Other assets
|
92,228
|
|
97,083
|
Total
Assets
|
$
3,569,226
|
|
$
3,562,898
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Liabilities
|
|
|
|
Non-interest-bearing
deposits
|
$
876,396
|
|
$
960,692
|
Interest-bearing
deposits
|
2,128,867
|
|
1,959,708
|
Total
deposits
|
3,005,263
|
|
2,920,400
|
Borrowed
funds
|
249,000
|
|
343,100
|
Accrued interest and
other liabilities
|
24,891
|
|
25,945
|
Total
Liabilities
|
3,279,154
|
|
3,289,445
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
Common Stock
|
4,000
|
|
4,000
|
Additional paid-in
capital
|
13,208
|
|
12,282
|
Retained
earnings
|
426,625
|
|
424,391
|
Accumulated other
comprehensive income (loss)
|
(126,177)
|
|
(139,495)
|
Treasury
stock
|
(27,584)
|
|
(27,725)
|
Total Shareholders'
Equity
|
290,072
|
|
273,453
|
Total Liabilities
and Shareholders' Equity
|
$
3,569,226
|
|
$
3,562,898
|
Burke & Herbert
Financial Services Corp.
Supplemental Information (unaudited)
As of or for the three months ended
(In thousands, except ratios and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
June
30
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Per common share
information
|
Basic
earnings
|
$
0.81
|
|
$
1.01
|
|
$
1.80
|
|
$
1.50
|
|
$
1.40
|
Diluted
earnings
|
0.80
|
|
1.00
|
|
1.78
|
|
1.49
|
|
1.39
|
Cash
dividends
|
0.53
|
|
0.53
|
|
0.53
|
|
0.53
|
|
0.53
|
Book value
|
39.05
|
|
39.02
|
|
36.82
|
|
34.40
|
|
39.21
|
|
|
|
|
|
|
|
|
|
|
Balance
sheet-related (at period end, unless indicated)
|
Assets
|
$
3,569,226
|
|
$
3,671,186
|
|
$
3,562,898
|
|
$
3,501,145
|
|
$
3,585,822
|
Average earning
assets
|
3,379,534
|
|
3,331,920
|
|
3,255,213
|
|
3,328,594
|
|
3,342,045
|
Loans
(gross)
|
2,000,969
|
|
1,951,738
|
|
1,887,221
|
|
1,751,827
|
|
1,748,508
|
Loans (net)
|
1,975,050
|
|
1,926,034
|
|
1,866,182
|
|
1,730,874
|
|
1,725,146
|
Securities,
available-for-sale, at fair value
|
1,252,190
|
|
1,362,785
|
|
1,371,757
|
|
1,453,104
|
|
1,515,974
|
Non-interest-bearing
deposits
|
876,396
|
|
906,723
|
|
960,692
|
|
980,714
|
|
987,748
|
Interest-bearing
deposits
|
2,128,867
|
|
2,125,668
|
|
1,959,708
|
|
1,996,946
|
|
1,972,675
|
Deposits,
total
|
3,005,263
|
|
3,032,391
|
|
2,920,400
|
|
2,977,660
|
|
2,960,423
|
Brokered
deposits
|
389,051
|
|
389,185
|
|
100,273
|
|
—
|
|
—
|
Uninsured
deposits
|
681,908
|
|
715,053
|
|
843,431
|
|
847,973
|
|
897,669
|
Borrowed
funds
|
249,000
|
|
321,700
|
|
343,100
|
|
243,000
|
|
310,000
|
Unused borrowing
capacity(1)
|
958,962
|
|
809,127
|
|
622,186
|
|
743,456
|
|
977,935
|
Equity
|
290,072
|
|
289,783
|
|
273,453
|
|
255,471
|
|
291,138
|
Accumulated other
comprehensive income (loss)
|
(126,177)
|
|
(123,809)
|
|
(139,495)
|
|
(147,578)
|
|
(104,221)
|
|
|
|
|
|
|
|
|
|
|
(1) Includes Federal
Home Loan Bank and correspondent bank availability.
|
Burke & Herbert
Financial Services Corp.
Supplemental Information (unaudited)
As of or for the three months ended
(In thousands, except ratios and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
June
30
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Ratios
|
Return on average
assets (annualized)
|
0.67 %
|
|
0.85 %
|
|
1.51 %
|
|
1.23 %
|
|
1.17 %
|
Return on average
equity (annualized)
|
8.34
|
|
10.83
|
|
20.66
|
|
14.99
|
|
13.48
|
Net interest margin
(non-GAAP)
|
2.87
|
|
3.06
|
|
3.46
|
|
3.25
|
|
3.15
|
Efficiency
ratio
|
75.12
|
|
70.25
|
|
51.24
|
|
64.48
|
|
67.61
|
Loans to deposit
ratio
|
66.58
|
|
64.36
|
|
64.62
|
|
58.83
|
|
59.06
|
Common Equity Tier 1
(CET1) capital ratio(2)
|
17.47
|
|
17.40
|
|
17.89
|
|
18.23
|
|
18.09
|
Total capital to
risk-weighted assets ratio(2)
|
18.57
|
|
18.50
|
|
18.81
|
|
19.18
|
|
19.16
|
Leverage
ratio(2)
|
11.11
|
|
11.09
|
|
11.30
|
|
11.03
|
|
10.94
|
|
|
|
|
|
|
|
|
|
|
Income
statement
|
Interest
income
|
$
37,116
|
|
$
34,328
|
|
$
32,574
|
|
$
29,265
|
|
$
26,542
|
Interest
expense
|
13,324
|
|
9,554
|
|
4,665
|
|
2,584
|
|
911
|
Non-interest
income
|
4,625
|
|
4,214
|
|
4,217
|
|
4,259
|
|
4,496
|
Total revenue
(non-GAAP)
|
28,417
|
|
28,988
|
|
32,126
|
|
30,940
|
|
30,127
|
Non-interest
expense
|
21,348
|
|
20,365
|
|
16,462
|
|
19,951
|
|
20,368
|
Pretax, pre-provision
earnings (non-GAAP)
|
7,069
|
|
8,623
|
|
15,664
|
|
10,989
|
|
9,759
|
Provision for
(recapture of) credit losses
|
214
|
|
515
|
|
98
|
|
(2,388)
|
|
(2,538)
|
Income before income
taxes
|
6,855
|
|
8,108
|
|
15,566
|
|
13,377
|
|
12,297
|
Income tax
expense
|
821
|
|
584
|
|
2,213
|
|
2,240
|
|
1,900
|
Net
income
|
$
6,034
|
|
$
7,524
|
|
$
13,353
|
|
$
11,137
|
|
$
10,397
|
|
|
|
|
|
|
|
|
|
|
(2) Ratios are for
Burke & Herbert Bank & Trust Company for all periods
presented.
|
Burke & Herbert
Financial Services Corp.
Non-GAAP Reconciliations (unaudited)
As of or for the three months ended (In
thousands)
|
|
|
|
Total Revenue
(non-GAAP)
|
|
|
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
June
30
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
2022
|
Interest
income
|
|
$
37,116
|
|
$
34,328
|
|
$
32,574
|
|
$
29,265
|
|
$
26,542
|
Interest
expense
|
|
13,324
|
|
9,554
|
|
4,665
|
|
2,584
|
|
911
|
Non-interest
income
|
|
4,625
|
|
4,214
|
|
4,217
|
|
4,259
|
|
4,496
|
Total revenue
(non-GAAP)
|
|
$
28,417
|
|
$
28,988
|
|
$
32,126
|
|
$
30,940
|
|
$
30,127
|
Total revenue is a non-GAAP measure and is derived from total
interest income less total interest expense plus total non-interest
income. We believe that total revenue is a useful tool to determine
how the Company is managing its business and how stable our revenue
sources are from period to period.
Pretax,
Pre-Provision Earnings (non-GAAP)
|
|
|
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
June
30
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
2022
|
Income before
taxes
|
|
$
6,855
|
|
$
8,108
|
|
$
15,566
|
|
$
13,377
|
|
$
12,297
|
Provision for
(recapture of) credit losses
|
|
214
|
|
515
|
|
98
|
|
(2,388)
|
|
(2,538)
|
Pretax, pre-provision
earnings (non-GAAP)
|
|
$
7,069
|
|
$
8,623
|
|
$
15,664
|
|
$
10,989
|
|
$
9,759
|
Pretax pre-provision earnings is a non-GAAP measure and is based
on adjusting income before income taxes and to exclude provision
for (recapture of) credit losses. We believe that pretax,
pre-provision earnings is a useful tool to help evaluate the
ability to provide for credit costs through operations and provides
an additional basis to compare results between periods by isolating
the impact of provision for (recapture of) credit losses, which can
vary significantly between periods.
Net Interest Margin
& Taxable-Equivalent Net Interest Income
(non-GAAP)
|
|
|
|
|
June
30
|
|
March
31
|
|
December
31
|
|
September
30
|
|
June
30
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
2022
|
Net interest
income
|
|
$
23,792
|
|
$
24,774
|
|
$
27,909
|
|
$
26,681
|
|
$
25,631
|
Taxable-equivalent
adjustments
|
|
375
|
|
387
|
|
455
|
|
621
|
|
655
|
Net interest income
(Fully Taxable-Equivalent - FTE)
|
|
$
24,167
|
|
$
25,161
|
|
$
28,364
|
|
$
27,302
|
|
$
26,286
|
|
|
|
|
|
|
|
|
|
|
|
Average earning
assets
|
|
3,379,534
|
|
3,331,920
|
|
3,255,213
|
|
3,328,594
|
|
3,342,045
|
Net interest margin
(non-GAAP)
|
|
2.87 %
|
|
3.06 %
|
|
3.46 %
|
|
3.25 %
|
|
3.15 %
|
The interest income earned on certain earning assets is
completely or partially exempt from federal income tax. As such,
these tax-exempt instruments typically yield lower returns than
taxable investments. To provide more meaningful comparisons of net
interest income, we use net interest income on a fully
taxable-equivalent (FTE) basis by increasing the interest income
earned on tax-exempt assets to make it fully equivalent to interest
income earned on taxable investments. FTE net interest income
is calculated by adding the tax benefit on certain financial
interest earning assets, whose interest is tax-exempt, to total
interest income then subtracting total interest expense. Management
believes FTE net interest income is a standard practice in the
banking industry, and when net interest income is adjusted on an
FTE basis, yields on taxable, nontaxable, and partially taxable
assets are comparable; however, the adjustment to an FTE basis has
no impact on net income and this adjustment is not permitted under
GAAP. FTE net interest income is only used for calculating FTE net
interest margin, which is calculated by annualizing FTE net
interest income and then dividing by the average earning assets.
The tax-rate used for this adjustment is 21%. Net interest income
shown elsewhere in this presentation is GAAP net interest
income.
Contact Investor Relations:
Email address: bhfsir@burkeandherbertbank.com
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SOURCE Burke & Herbert Financial Services Corp.