Burke & Herbert Financial Services Corp. · NASDAQ:BHRB
Burke & Herbert Financial Services — Merger or Acquisition (August 2023)
24 slides from Burke & Herbert Financial Services's merger presentation, Aug 24, 2023
Slide 1: Merger of Equals with Summit Financial Group, Inc.
Burke & Herbert Financial Services Corp. (Nasdaq: BHRB) Merger of Equals with Summit Financial Group, Inc. (Nasdaq: SMMF) August 24, 2023
Slide 2: Disclaimer: Forward-looking Statements
Disclaimer Forward-looking Statements This presentation includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with re
Slide 3: Disclaimer: Additional Information and Where to Find It
Disclaimer Additional Information and Where to Find It In connection with the proposed transaction, BHRB will file a registration statement on Form S-4 with the SEC. The registration statement will include a joint proxy statement of BHRB and SMMF, which also constitutes a prospectus of BHRB, that wi
Slide 4: Creating a Diversified, High Performing Community Banking Institution
Creating a Diversified, High Performing Community Banking Institution Mid-Atlantic & Southeast Franchise With Scale(1) Attractive Deposit Franchise $8.1bn $5.6bn $6.7bn >75 #3 Top 10 Largest Bank Deposit Market Share Assets Gross Loans Deposits Branches Headquartered in in Both Virginia and Virginia
Slide 5: Strategic Rationale
Strategic Rationale Scale: Creates a ~$8 billion bank with >75 branch locations across an attractive 5-state 1 Mid-Atlantic and Southeast footprint Management Strength: Culturally compatible organizations with combined 2 management depth supportive of growth to $10 billion of assets and beyond Strat
Slide 6: Burke & Herbert Financial Services Corp. (BHRB)
Burke & Herbert Financial Services Corp. (BHRB) Key Financials Branch Footprint (Dollars in Millions) YE 12/31/2022 YTD 6/30/2023 McLean Washington D.C. BHRB Branch Balance Sheet Centerville Total Assets $3,563 $3,569 Richmond, VA Office Alexandria to open in Q4 2023 Total Net Loans 1,866 1,976 Dale
Slide 7: Summit Financial Group, Inc. (SMMF)
Summit Financial Group, Inc. (SMMF) Key Financials Branch Footprint (Dollars in Millions) YE 12/31/2022 YTD 6/30/2023 SMMF Branch Balance Sheet Total Assets $3,917 $4,552 Morgantown Martinsburg Total Net Loans 3,044 3,507 Deposits 3,170 3,735 Washington D.C. Delaware Balance Sheet Ratios Moorefield
Slide 8: Combined Footprint
Combined Footprint Indicates higher than U.S. National Average (1) Key Combined Markets of Operation Greater Washington D.C. Charleston, WV Eastern Shore of MD (2) Capital of the U.S. Capital of West Virginia Population: 6.44mm Population: 70k Population: 252k Pop. CAGR: 1.01% Pop. CAG
Slide 9: Combined Footprint
Combined Footprint Virginia Deposit Market Share West Virginia Deposit Market Share Deposits in Deposit Deposits in Deposit Number of Market Market Number of Market Market Rank Institution Branches ($mm) Share (%) Rank Institution Branches ($mm) Share (%) 1. Capital One Financial Corp. (VA) 27 119,6
Slide 10: Diversified Pro Forma Loan Composition
Diversified Pro Forma Loan Composition BHRB SMMF Pro Forma Consumer & Commercial & Other Construction Industrial 2.7% 4.6% Non-Owner Commercial & Industrial Commercial & Industrial 3.0% Occupied CRE Non-Owner 9.4% 13.0% 35.1% Occupied CRE Non-Owner 44.0% Residential R.E. Consumer & Other Occupied CR
Slide 11: Pro Forma Deposit Composition
Pro Forma Deposit Composition BHRB SMMF Pro Forma Retail Time Deposits MMDA & Other MMDA & Other Retail Time 16.9% Savings Savings Deposits MMDA & Other Jumbo Time 46.2% 39.8% 12.1% Deposits Retail Time Savings 4.2% Deposits 32.0% 8.3% Jumbo Time Deposits $3.0bn $3.7bn Jumbo Time $6.7bn 5.0% Deposit
Slide 12: Combined Leadership Team: Executive Management and Board of Directors
Combined Leadership Team: Executive Management and Board of Directors Combined Executive Management Team Pro Forma Board Split Charlie Maddy David Boyle President CEO Joe Hager COO Roy Halyama CFO 8 8 SMMF BHRB Directors Directors Rob Tissue Jeff Welch EVP of Financial Strategy CCO David Boyle (BH
Slide 13: Thorough Reciprocal Due Diligence Effort
Thorough Reciprocal Due Diligence Effort Full management review of all key functional areas for both companies Mutual Credit Review Details External review of loan portfolios 3rd party diligence scope mutually determined in conjunction with credit risk management to ensure ‐ Third party loan rev
Slide 14: Transaction Overview
Transaction Overview Merger of Equals Accounting and Legal Acquirer: Summit Financial Group, Inc. (SMMF) merges into Burke and Herbert Financial Services Corp. (BHRB), with BHRB surviving as the bank holding company and Merger Structure deemed to be the acquiring entity Bank Merger: Summit Com
Slide 15: Key Assumptions
Key Assumptions BHRB’s earnings per internal company estimates Earnings Assumptions SMMF’s earnings per Street consensus estimates, as adjusted for lost income from interest rate derivative positions Merger Costs One-time merger expenses of approximately $45.5 million after-tax Cost savings
Slide 16: Pro Forma Financial Impact
Pro Forma Financial Impact Financial Results GAAP Financial Results GAAP Financial Results Excluding AOCI and Rate Marks (1) Excluding CECL Day-2 Double Count (2) Earnings 71% 92% 30% 49% 63% 86% Impact 2024E 2025E 2024E 2025E 2024E 2025E EPS Accretion EPS Accretion EPS Accretion EPS Accretion EPS A
Slide 17: Combination Benefits All Constituents
Combination Benefits All Constituents Creating a Diversified, High Performing Mid-Atlantic & Southeast Community Bank with Exceptional Performance and Scale Clients Communities Employees Shareholders Greater capabilities and Significant community Strong cultural alignment Significant earning
Slide 18: Conclusion
Conclusion Scale Management Strength Strategically Compelling Balance Sheet Flexibility Investment in Franchise 18
Slide 19: Appendix
Burke & Herbert Financial Services Corp. Appendix 19
Slide 20: Deposit and Loan Composition Details
Deposit and Loan Composition Details Deposits Loans Deposit Portfolio ($000) Amount Balance by Market ($bn) Loan Portfolio ($000) Amount Balance by Market ($bn) Demand Deposits $876,396 Construction $92,730 MD VA NOW & Other Trans. Accts 534,236 Residential R.E. 472,347 $0.3 $2.7 VA MD Owner Occupie
Slide 21: Combined Leadership: Executive Management Bios
Combined Leadership: Executive Management Bios David Boyle Charlie Maddy Roy Halyama Rob Tissue Joe Hager Chief Executive Officer President Chief Financial Officer EVP of Financial Strategy Chief Operating Officer Served as the President and CEO of BHRB Served as the President and Chief Served
Slide 22: Pro Forma Net Income Reconciliation
Pro Forma Net Income Reconciliation Pro Forma Earnings Reconciliation Earnings Buildup ($mm) 2024E $23.3 Dollars in millions, except per share data Pro Forma $118.1 (1) Combined Net Income to Common 86.2 ($12.7) $21.3 After - Tax Transaction Adjustments Cost Savings - Fully Realized 14.6 $86.2 Oppor
Slide 23: Stacking up vs. Post-Transaction Peers
Stacking up vs. Post-Transaction Peers Post-Transaction Peers include public banks headquartered in the Mid-Atlantic and Southeast regions with total assets between $5 billion and $10 billion 2024 ROAA (%) 2024 ROATCE (%) 2024 Efficiency Ratio (%) Ranks 2nd Amongst Post-Transaction Peers Ranks 2nd A
Slide 24: Non-GAAP Reconciliation: SMMF
Non – GAAP Reconciliation: SMMF SMMF Dollar values in thousands YTD 6/30/2023 Unadjusted Earnings Net Income $ 22,310 Less: Preferred Stock Dividends 450 Net Income to Common 21,860 Core Adjustments Plus: Realized Loss on AFS Debt Securities 270 Less: Net Gains on Equity Investments 195 Plus: Nonrec
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