EX-99.1 2 a4q2024earningspressrelease.htm EX-99.1 Document
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Burke & Herbert Financial Services Corp. Announces Fourth Quarter and Full Year 2024 Results and Declares Common Stock Dividend

For Immediate Release
January 24, 2025

Alexandria, VA – Burke & Herbert Financial Services Corp. (the “Company” or “Burke & Herbert”) (Nasdaq: BHRB) reported financial results for the quarter and the year ended December 31, 2024. In addition, at its meeting on January 23, 2025, the board of directors declared a $0.55 per share regular cash dividend to be paid on March 3, 2025, to shareholders of record as of the close of business on February 14, 2025.

Q4 2024 Highlights

•On December 31, 2024, Burke & Herbert Bank & Trust Company became a new member of the Federal Reserve System and purchased shares of Federal Reserve Bank Stock in the amount of $14.8 million.

•On December 11, 2024, the Company’s form S-3 was declared effective by the Securities and Exchange Commission and may allow the Company from time to time to offer securities whose aggregate initial offering price will not exceed $350 million.

•Financial results reflect the May 3, 2024, completion of the merger of Summit Financial Group, Inc. ("Summit"), with and into Burke & Herbert and the merger of Summit Community Bank, Inc., with and into Burke & Herbert Bank & Trust Company.

•For the quarter, net income applicable to common shares totaled $19.6 million, and earnings per diluted common share (“EPS”) was $1.30.

•For the quarter, adjusted (non-GAAP1) operating net income applicable to common shares totaled $26.6 million, and adjusted (non-GAAP1) diluted EPS was $1.77.

•For the twelve months ended December 31, 2024, net income applicable to common shares totaled $35.0 million, and earnings per diluted common share was $2.82.

•For the twelve months ended December 31, 2024, adjusted (non-GAAP1) operating net income applicable to common shares totaled $87.2 million, and adjusted (non-GAAP1) diluted EPS was $7.01.

•The balance sheet remains strong with ample liquidity. Total liquidity, including all available borrowing capacity with cash and cash equivalents, totaled $4.2 billion at the end of the fourth quarter.

•Ending total gross loans of $5.7 billion and ending total deposits of $6.5 billion; ending loan-to-deposit ratio of 87.1%.

•Asset quality remains stable across the loan portfolio with adequate reserves.

•The Company continues to be well-capitalized, ending the quarter with 11.5%2 Common Equity Tier 1 capital to risk-weighted assets, 14.6%2 Total risk-based capital to risk-weighted assets, and a leverage ratio of 9.8%2.


(1) 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. Non-GAAP measures should not be used as a substitute for the closest comparable GAAP measurements.
(2) December 31, 2024, are estimated.
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From David P. Boyle, Company Chair and Chief Executive Officer

"Our results for the quarter demonstrate the financial benefits of the merger with Summit and the teamwork involved with the systems integration that took place in November. Despite the amount of time and energy committed to the conversion, we grew both loans and core deposits during the quarter. In addition, the balance sheet reflects ample liquidity and capital as we enter 2025 and we look forward to delivering increased value for our customers, employees, communities, and shareholders.”

Results of Operations

Fourth Quarter 2024

The Company reported fourth quarter 2024 net income applicable to common shares of $19.6 million, or $1.30 per diluted common share.

Included in the fourth quarter were pre-tax charges of $8.9 million of expenses related to the merger with Summit. Excluding these items from the current quarter on a tax effected basis, adjusted (non-GAAP1) operating net income was $26.6 million, or $1.77 per diluted common share.

•Period-end total gross loans were $5.7 billion at December 31, 2024, an increase of $98.2 million from September 30, 2024.

•Period-end total deposits were $6.5 billion at December 31, 2024, a decrease of $85.6 million from September 30, 2024, primarily due to a $100.5 million decrease in brokered deposits.

•Net interest income for the quarter was $70.7 million compared to $73.2 million in the prior quarter primarily due to a decrease in loan interest income related to lower accelerated loan accretion income offset by a decrease in deposit cost.

•Net interest margin on a fully taxable equivalent basis (non-GAAP1) decreased to 3.91% versus 4.07% in the third quarter of 2024 primarily due to lower accelerated loan accretion income.

•Accretion income on loans during the quarter was $12.0 million, and the amortization expense impact on interest expense was $3.8 million, or 11.4 bps of net interest margin in the fourth quarter of 2024. In the prior quarter, accretion income on loans during the quarter was $15.4 million, and the amortization expense impact on interest expense was $3.8 million, or 16.0 bps of net interest margin.

•The cost of total deposits, including non-interest bearing deposits, was 2.17% in the fourth quarter of 2024, compared to 2.38% in the third quarter of 2024.

•The Company recorded a provision expense on loans in the fourth quarter of 2024 of $1.0 million, reflecting relatively stable asset quality and steady loan growth during the quarter.

•The allowance for credit losses at December 31, 2024, was $68.0 million, or 1.2% of total loans.

•Total non-interest income for the fourth quarter of 2024 was $11.8 million compared to $10.6 million in the prior quarter, primarily due to a gain on sale of securities and an increase in insurance proceeds from the Company’s owned life insurance policies.

•Non-interest expense for the fourth quarter of 2024 was $61.4 million and included $8.9 million of merger-related charges.






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Regulatory capital ratios2

The Company continues to be well-capitalized with capital ratios that are above regulatory requirements. As of December 31, 2024, our Common Equity Tier 1 capital to risk-weighted asset and Total risk-based capital to risk-weighted asset ratios were 11.5%2 and 14.6%2, respectively, and significantly above the well-capitalized requirements of 6.5% and 10%, respectively. The leverage ratio was 9.8%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, also continues to be well-capitalized with capital ratios that are above regulatory requirements. As of December 31, 2024, the Bank’s Common Equity Tier 1 capital to risk-weighted asset and Total risk-based capital to risk-weighted asset ratios were 13.3%2 and 14.4%2, respectively, and significantly above the well-capitalized requirements. In addition, the Bank’s leverage ratio of 10.9%2 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.

About Burke & Herbert

Burke & Herbert Financial Services Corp. is the financial 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, D.C. metropolitan area. With over 75 branches across Delaware, Kentucky, Maryland, Virginia, and West Virginia, Burke & Herbert Bank & Trust Company offers a full range of business and personal financial solutions designed to meet customers’ banking, borrowing, and investment needs. Learn more at investor.burkeandherbertbank.com.

Cautionary Note Regarding Forward-Looking Statements

This communication contains “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 respect to the beliefs, goals, intentions, and expectations of the Company regarding revenues, earnings, earnings per share, loan production, asset quality, and capital levels, among other matters; our estimates of future costs and benefits of the actions we may take; our assessments of expected losses on loans; our assessments of interest rate and other market risks; our ability to achieve our financial and other strategic goals; the expected cost savings, synergies, returns, and other anticipated benefits from the integration of Summit following the recently completed merger of Summit with and into the Company; and other statements that are not historical facts.

Forward–looking statements are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “will,” “should,” and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. Additionally, forward–looking statements speak only as of the date they are made; the Company does not assume any duty, does not undertake, and specifically disclaims any obligation to update such forward–looking statements, whether written or oral, that may be made from time to time, whether because of new information, future events, or otherwise, except as required by law. Furthermore, because forward–looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in or implied by such forward-looking statements because of a variety of factors, many of which are beyond the control of the Company. Accordingly, you should not place undue reliance on forward-looking statements.

The risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to, the following: costs or difficulties associated with



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newly developed or acquired operations; risks related to our ability to successfully integrate Summit into the Company and operate the combined company; changes in general economic trends (either nationally or locally in the areas in which we conduct, or will conduct, business), including inflation, interest rates, market and monetary fluctuations; increased competition; changes in consumer demand for financial services; our ability to control costs and expenses; adverse developments in borrower industries or declines in real estate values; changes in and compliance with federal and state laws and regulations that pertain to our business and capital levels; our ability to raise capital as needed; the effects of any cybersecurity breaches; and the other factors discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s Annual Report on Form 10–K for the year ended December 31, 2023, the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024, June 30, 2024, September 30, 2024, and other reports the Company files with the SEC.



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Burke & Herbert Financial Services Corp.
Consolidated Statements of Income (unaudited)
(In thousands)
Three Months Ended December 31,Twelve Months Ended December 31,
202420232024
20233
Interest income
Taxable loans, including fees$97,903 $27,315 $311,303 $101,800 
Tax-exempt loans, including fees37 — 118 — 
Taxable securities9,868 9,049 39,817 37,179 
Tax-exempt securities3,191 1,372 10,243 5,615 
Other interest income1,794 444 4,680 2,302 
Total interest income112,793 38,180 366,161 146,896 
Interest expense
Deposits35,919 12,487 118,664 39,195 
Short-term borrowings3,383 3,361 14,189 13,856 
Subordinated debt2,754 — 7,412 — 
Other interest expense27 28 111 86 
Total interest expense42,083 15,876 140,376 53,137 
Net interest income70,710 22,304 225,785 93,759 
Credit loss expense (recapture) - loans and available-for-sale securities960 (799)20,475 235 
Credit loss expense (recapture) - off-balance sheet credit exposures(127)49 3,745 (21)
Total provision for (recapture of) credit losses833 (750)24,220 214 
Net interest income after credit loss expense69,877 23,054 201,565 93,545 
Non-interest income
Fiduciary and wealth management2,429 1,358 8,411 5,354 
Service charges and fees4,447 1,711 15,594 6,670 
Net gains (losses) on securities744 — 1,357 (112)
Income from company-owned life insurance1,887 1,124 4,686 2,844 
Other non-interest income2,284 631 6,118 3,196 
Total non-interest income11,791 4,824 36,166 17,952 
Non-interest expense
Salaries and wages25,818 9,964 77,089 39,247 
Pensions and other employee benefits4,840 2,285 17,186 9,401 
Occupancy3,630 1,571 11,577 6,035 
Equipment rentals, depreciation and maintenance4,531 1,539 23,174 5,770 
Other operating22,591 6,941 68,807 25,983 
Total non-interest expense61,410 22,300 197,833 86,436 
Income before income taxes20,258 5,578 39,898 25,061 
Income tax expense 465 500 4,190 2,369 
Net income19,793 5,078 35,708 22,692 
Preferred stock dividends225 — 675 — 
Net income applicable to common shares$19,568 $5,078 $35,033 $22,692 
(3) The full year 2023 Consolidated Income Statement is audited.


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Burke & Herbert Financial Services Corp.
Consolidated Balance Sheets
(In thousands)
December 31, 2024December 31, 2023
(Unaudited)(Audited)
Assets
Cash and due from banks$35,554 $8,896 
Interest-earning deposits with banks99,760 35,602 
Cash and cash equivalents135,314 44,498 
Securities available-for-sale, at fair value1,432,371 1,248,439 
Restricted stock, at cost33,559 5,964 
Loans held-for-sale, at fair value2,331 1,497 
Loans5,672,236 2,087,756 
Allowance for credit losses(68,040)(25,301)
Net loans5,604,196 2,062,455 
Other real estate owned2,783 — 
Premises and equipment, net132,270 61,128 
Accrued interest receivable34,454 15,895 
Intangible assets57,300 — 
Goodwill32,783 — 
Company-owned life insurance182,834 94,159 
Other assets161,990 83,544 
Total Assets
$7,812,185 $3,617,579 
Liabilities and Shareholders’ Equity
Liabilities
Non-interest-bearing deposits$1,379,940 $830,320 
Interest-bearing deposits5,135,299 2,171,561 
Total deposits6,515,239 3,001,881 
Short-term borrowings365,000 272,000 
Subordinated debentures, net94,872 — 
Subordinated debentures owed to unconsolidated subsidiary trusts17,013 — 
Accrued interest and other liabilities89,904 28,948 
Total Liabilities 7,082,028 3,302,829 
Shareholders’ Equity
Preferred stock and surplus10,413 — 
Common stock7,770 4,000 
Common stock, additional paid-in capital401,172 14,495 
Retained earnings434,106 427,333 
Accumulated other comprehensive income (loss)(95,720)(103,494)
Treasury stock(27,584)(27,584)
Total Shareholders’ Equity 730,157 314,750 
Total Liabilities and Shareholders’ Equity $7,812,185 $3,617,579 




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Burke & Herbert Financial Services Corp.
Details of Net Interest Margin (unaudited)
For the three months ended
Details of Net Interest Margin - Yield Percentages
December 31September 30June 30March 31December 31
20242024202420242023
Interest-earning assets:
Loans:
Taxable loans
6.91 %7.34 %7.33 %5.41 %5.24 %
Tax-exempt loans
5.87 5.63 5.55 — — 
Total loans
6.91 7.34 7.33 5.41 5.24 
Interest-earning deposits and fed funds sold
4.48 3.43 3.54 3.82 4.35 
Securities:
Taxable securities
3.82 4.05 4.48 3.63 3.73 
Tax-exempt securities
3.55 3.58 3.05 2.67 2.64 
Total securities
3.75 3.91 4.05 3.43 3.50 
Total interest-earning assets6.22 %6.56 %6.49 %4.66 %4.59 %
Interest-bearing liabilities:
Deposits:
Interest-bearing demand
2.51 %3.19 %3.00 %0.63 %0.61 %
Savings
1.60 1.43 1.53 1.97 1.97 
Time
4.55 4.82 4.55 4.12 3.97 
Total interest-bearing deposits
2.76 3.02 2.90 2.41 2.31 
Borrowings:
Short-term borrowings
4.17 4.06 4.38 4.82 4.76 
Subordinated debt borrowings and other
9.87 10.16 10.30 — — 
Total interest-bearing liabilities
2.98 %3.21 %3.14 %2.71 %2.59 %
Taxable-equivalent net interest spread
3.24 3.35 3.35 1.95 2.00 
Benefit from use of non-interest-bearing deposits0.67 0.72 0.71 0.73 0.70 
Taxable-equivalent net interest margin (non-GAAP1)
3.91 %4.07 %4.06 %2.68 %2.70 %

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Burke & Herbert Financial Services Corp.
Details of Net Interest Margin (unaudited)
For the three months ended
(In thousands)
Details of Net Interest Margin - Average Balances
December 31September 30June 30March 31December 31
20242024202420242023
Interest-earning assets:
Loans:
Taxable loans
$5,634,157 $5,621,531 $4,481,993 $2,085,826 $2,069,738 
Tax-exempt loans
3,115 4,310 3,041 — — 
Total loans
5,637,272 5,625,841 4,485,034 2,085,826 2,069,738 
Interest-earning deposits and fed funds sold
152,537 175,265 94,765 41,692 40,524 
Securities:
Taxable securities
1,031,024 996,749 988,492 989,875 961,396 
Tax-exempt securities
452,937 440,781 426,092 259,699 261,075 
Total securities
1,483,961 1,437,530 1,414,584 1,249,574 1,222,471 
Total interest-earning assets$7,273,770 $7,238,636 $5,994,383 $3,377,092 $3,332,733 
Interest-bearing liabilities:
Deposits:
Interest-bearing demand
$2,560,445 $2,144,567 $1,587,914 $489,779 $514,760 
Savings
1,366,276 1,725,387 1,480,985 922,732 920,600 
Time
1,247,900 1,328,076 1,141,758 745,945 711,575 
Total interest-bearing deposits
5,174,621 5,198,030 4,210,657 2,158,456 2,146,935 
Borrowings:
Short-term borrowings
325,084 304,849 376,063 307,446 282,426 
Subordinated debt borrowings and other
111,021 109,557 72,643 — — 
Total interest-bearing liabilities
$5,610,726 $5,612,436 $4,659,363 $2,465,902 $2,429,361 
Non-interest-bearing deposits
$1,411,202 $1,389,134 $1,207,443 $812,199 $852,120 
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Burke & Herbert Financial Services Corp.
Supplemental Information (unaudited)
As of or for the three months ended
(In thousands, except ratios and per share amounts)


December 31September 30June 30March 31December 31
20242024202420242023
Per common share information
Basic earnings (loss)
$1.31 $1.83 $(1.41)$0.70 $0.68 
Diluted earnings (loss)
1.30 1.82 (1.41)0.69 0.67 
Cash dividends0.55 0.53 0.53 0.53 0.53 
Book value48.08 48.63 45.72 42.92 42.37 
Tangible book value (non-GAAP1)
42.06 42.32 39.11 42.92 42.37 
Balance sheet-related (at period end, unless otherwise indicated)
Assets$7,812,185 $7,864,913 $7,810,193 $3,696,390 $3,617,579 
Average interest-earning assets
7,273,770 7,238,636 5,994,383 3,377,092 3,332,733 
Loans (gross)5,672,236 5,574,037 5,616,724 2,118,155 2,087,756 
Loans (net)5,604,196 5,506,220 5,548,707 2,093,549 2,062,455 
Securities, available-for-sale, at fair value1,432,371 1,436,431 1,414,870 1,275,520 1,248,439 
Intangible assets57,300 61,598 65,895 — — 
Goodwill32,783 32,783 32,783 — — 
Non-interest-bearing deposits1,379,940 1,392,123 1,397,030 822,767 830,320 
Interest-bearing deposits5,135,299 5,208,702 5,242,541 2,167,346 2,171,561 
Deposits, total6,515,239 6,600,825 6,639,571 2,990,113 3,001,881 
Brokered deposits244,802 345,328 403,668 370,847 389,011 
Uninsured deposits1,926,724 1,999,403 1,931,786 700,846 677,308 
Short-term borrowings365,000 320,163 285,161 360,000 272,000 
Subordinated debt, net111,885 110,482 109,064 — — 
Unused borrowing capacity4
4,092,378 2,353,963 2,162,112 704,233 914,980 
Total equity730,157 738,059 693,126 319,308 314,750 
Total common equity719,744 727,646 682,713 319,308 314,750 
Accumulated other comprehensive income (loss)(95,720)(75,758)(100,430)(100,954)(103,494)




(4) Includes Federal Home Loan Bank, Borrower-in-Custody (BIC), and correspondent bank availability.



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Burke & Herbert Financial Services Corp.
Supplemental Information (unaudited)
As of or for the three months ended
(In thousands, except ratios and per share amounts)


December 31September 30June 30March 31December 31
20242024202420242023
Income statement
Interest income$112,793 $118,526 $96,097 $38,745 $38,180 
Interest expense42,083 45,347 36,332 16,614 15,876 
Non-interest income11,791 10,616 9,505 4,254 4,824 
Total revenue (non-GAAP1)
82,501 83,795 69,270 26,385 27,128 
Non-interest expense61,410 50,826 64,432 21,165 22,300 
Pretax, pre-provision earnings (non-GAAP1)
21,091 32,969 4,838 5,220 4,828 
Provision for (recapture of) credit losses833 147 23,910 (670)(750)
Income (loss) before income taxes
20,258 32,822 (19,072)5,890 5,578 
Income tax expense (benefit)
465 5,200 (2,153)678 500 
Net income (loss)19,793 27,622 (16,919)5,212 5,078 
Preferred stock dividends225 225 225 — — 
Net income (loss) applicable to common shares
$19,568 $27,397 $(17,144)$5,212 $5,078 
Ratios
Return on average assets (annualized)1.00 %1.40 %(1.06)%0.58 %0.56 %
Return on average equity (annualized)10.49 15.20 (12.44)6.67 7.30 
Net interest margin (non-GAAP1)
3.91 4.07 4.06 2.68 2.70 
Efficiency ratio74.44 60.66 93.02 80.22 82.20 
Loan-to-deposit ratio87.06 84.44 84.59 70.84 69.55 
Common Equity Tier 1 (CET1) capital ratio2
11.51 11.40 10.91 16.56 16.85 
Total risk-based capital ratio2
14.55 14.45 13.91 17.54 17.88 
Leverage ratio2
9.78 9.66 9.04 11.36 11.31 


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Burke & Herbert Financial Services Corp.
Non-GAAP Reconciliations (unaudited)
(In thousands, except ratios and per share amounts)

Operating net income, adjusted diluted EPS, and adjusted non-interest expense (non-GAAP1)
For the three months ended
December 31September 30June 30March 31December 31
20242024202420242023
Net income (loss) applicable to common shares$19,568 $27,397 $(17,144)$5,212 $5,078 
Add back significant items (tax effected):
Merger-related7,069 2,449 18,806 537 1,141 
Day 2 non-PCD Provision— — 23,305 — — 
Total significant items7,069 2,449 42,111 537 1,141 
Operating net income$26,637 $29,846 $24,967 $5,749 $6,219 
Weighted average dilutive shares15,038,442 15,040,145 12,262,979 7,527,489 7,508,289 
Adjusted diluted EPS5
$1.77 $1.98 $2.04 $0.76 $0.83 
Non-interest expense$61,410 $50,826 $64,432 $21,165 $22,300 
Remove significant items:
Merger-related8,948 3,101 23,805 680 1,444 
Total significant items$8,948 $3,101 $23,805 $680 $1,444 
Adjusted non-interest expense$52,462 $47,725 $40,627 $20,485 $20,856 

Operating net income is a non-GAAP measure that is derived from net income adjusted for significant items. The Company believes that operating net income is useful in periods with certain significant items such as merger-related expenses or Day 2 non-PCD provision. The operating net income is more reflective of management’s ability to grow the business and manage expenses. Adjusted non-interest expense also removes these significant items such as merger-related expenses. Management believes it represents a more normalized non-interest expense total for periods with identified significant items.

Total Revenue (non-GAAP1)
For the three months ended
December 31September 30June 30March 31December 31
20242024202420242023
Interest income$112,793 $118,526 $96,097 $38,745 $38,180 
Interest expense42,083 45,347 36,332 16,614 15,876 
Non-interest income11,791 10,616 9,505 4,254 4,824 
Total revenue (non-GAAP1)
$82,501 $83,795 $69,270 $26,385 $27,128 
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 demonstrates how stable our revenue sources are from period to period.

(5) Weighted average diluted shares for Q2 2024 calculated only for computation of adjusted diluted EPS. Weighted average diluted shares for GAAP diluted EPS are the same as shares for calculating basic EPS due to the antidilutive effect of the diluted shares when considering the GAAP net loss for the quarter.



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Burke & Herbert Financial Services Corp.
Non-GAAP Reconciliations (unaudited)
(In thousands, except ratios and per share amounts)
Pretax, Pre-Provision Earnings (non-GAAP1)
For the three months ended
December 31September 30June 30March 31December 31
20242024202420242023
Income (loss) before taxes
$20,258 $32,822 $(19,072)$5,890 $5,578 
Provision for (recapture of) credit losses833 147 23,910 (670)(750)
Pretax, pre-provision earnings (non-GAAP1)
$21,091 $32,969 $4,838 $5,220 $4,828 
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.

Tangible Common Equity (non-GAAP1)
For the three months ended
December 31September 30June 30March 31December 31
20242024202420242023
Common shareholders' equity$719,744 $727,646 $682,713 $319,308 $314,750 
Less:
Intangible assets57,300 61,598 65,895 — — 
Goodwill32,783 32,783 32,783 — — 
Tangible common equity (non-GAAP1)
$629,661 $633,265 $584,035 $319,308 $314,750 
Shares outstanding at end of period14,969,104 14,963,003 14,932,169 7,440,025 7,428,710 
Tangible book value per common share$42.06 $42.32 $39.11 $42.92 $42.37 

In management's view, tangible common equity measures are capital adequacy metrics that may be meaningful to the Company, as well as analysts and investors, in assessing the Company's use of equity and in facilitating comparisons with peers. These non-GAAP measures are valuable indicators of a financial institution's capital strength because they eliminate intangible assets from stockholders' equity and retain the effect of accumulated other comprehensive income/(loss) in stockholders' equity.

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Burke & Herbert Financial Services Corp.
Non-GAAP Reconciliations (unaudited)
(In thousands, except ratios and per share amounts)
Net Interest Margin & Taxable-Equivalent Net Interest Income (non-GAAP1)
As of or for the three months ended
December 31September 30June 30March 31December 31
20242024202420242023
Net interest income$70,710 $73,179 $59,765 $22,131 $22,304 
Taxable-equivalent adjustments858 847 688 362 365 
Net interest income (Fully Taxable-Equivalent - FTE)$71,568 $74,026 $60,453 $22,493 $22,669 
Average interest-earning assets
$7,273,770 $7,238,636 $5,994,383 $3,377,092 $3,332,733 
Net interest margin (non-GAAP1)
3.91 %4.07 %4.06 %2.68 %2.70 %
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.
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