Document

Alexandria, VA – Burke & Herbert Financial Services Corp. (the “Company” or “Burke & Herbert”) (Nasdaq: BHRB) reported financial results for the quarter year ended March 31, 2025, and disclosed that, at its meeting on April 24, 2025, the board of directors declared a $0.55 per share regular cash dividend to be paid on June 2, 2025, to shareholders of record as of the close of business on May 15, 2025.

In addition, the Company announced that its board of directors has authorized a share repurchase program (“program”), pursuant to which the Company may purchase up to $50.0 million of Burke & Herbert common shares in the open market or in privately negotiated transactions. The timing and price of repurchases as well as the actual number of shares repurchased under the program will be at the discretion of the Company and will depend on a variety of factors, including general market conditions, the stock price, share availability, alternate uses of capital, the Company’s financial performance, and other factors. The program may be discontinued, suspended or reimplemented at any time at the Company’s discretion.

•For the quarter, net income applicable to common shares totaled $27.0 million, and diluted earnings per common share (“EPS”) was $1.80. For the quarter ended December 31, 2024, net income applicable to common shares totaled $19.6 million, and diluted EPS was $1.30. For the quarter ended December 31, 2024, adjusted (non-GAAP1) operating net income applicable to common shares totaled $26.6 million and adjusted diluted (non-GAAP1) EPS was $1.77.

“I’m pleased with our first quarter results that represent the first full quarter following our merger-related systems conversion. The balance sheet remains strong with ample liquidity, solid capital ratios, and adequate loss reserves. Expense management improved even as we continue to make investments for the long-term, including technology improvements to drive efficiency, our expansion in Bethesda, Maryland, and Richmond, Virginia, and the relocation of certain operating activities to lower cost markets. With this start to 2025, we are well-positioned for disciplined growth that should deliver increased value for our customers, employees, communities, and shareholders.”

(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) Ratios as of March 31, 2025, are estimated.

•Net interest income for the quarter was $73.0 million compared to $70.7 million in the prior quarter due to a decrease in interest expense of $4.3 million, partially offset by a decrease in interest income of $2.0 million. Lower interest expense was primarily attributable to lower deposit costs and the decrease in interest income was due to lower loan and security interest income. Lower loan interest income was mainly due to lower loan accretion related to purchase accounting treatment.

•Net interest margin on a fully taxable equivalent basis (non-GAAP1) increased to 4.18% versus 3.91% in the fourth quarter of 2024, primarily due to an increase in yield from interest earning assets combined with a lower rate on interest-bearing liabilities compared to the fourth quarter of 2024. The increase in yield from interest earning assets was slightly offset by lower accelerated loan accretion income when compared to the fourth quarter of 2024.

•Accretion income on loans during the quarter was $11.4 million, and the amortization expense impact on interest expense was $2.2 million, or 12.9 bps of net interest margin, in the first quarter of 2025. In the prior quarter, 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.

•Total non-interest income for the first quarter of 2025 was $10.0 million compared to $11.8 million in the prior quarter, primarily due to a gain on sale of securities and collection of death proceeds from company owned-life insurance which increased non-interest income by $1.4 million in the fourth quarter of 2024 compared to the first quarter of 2025.

The Company continues to be well-capitalized with capital ratios that are above regulatory requirements. As of March 31, 2025, our Common Equity Tier 1 capital to risk-weighted asset and Total risk-based capital to risk-weighted asset ratios were 11.7%2 and 14.7%2, respectively, and significantly above the well-capitalized requirements of 6.5% and 10%, respectively. The leverage ratio was 10.1%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 March 31, 2025, the Bank’s Common Equity Tier 1 capital to risk-weighted asset and Total risk-based capital to risk-weighted asset ratios were 13.5%2 and 14.6%,2 respectively, and significantly above the well-capitalized requirements. In addition, the Bank’s leverage ratio of 11.2%2 is considered to be well-capitalized.

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.

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; 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. Further, factors identified herein are not necessarily all of the factors that could cause the Company’s actual results, performance or

achievements to differ materially from those expressed in or implied by any of the forward-looking statements. Other factors, including unknown or unpredictable factors, also could harm the Company. Accordingly, you should consider all of these risks, uncertainties and other factors carefully in evaluating all such forward-looking statements made by the Company and 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 newly developed or acquired operations; changes in general economic, political, or market trends (either nationally or locally in the areas in which we conduct, or will conduct, business), including inflation, changes in interest rates, market volatility and monetary fluctuations, and changes in federal government policies and practices, as well as the impact from recently announced and future tariffs on the markets we serve; increased competition; changes in consumer confidence and demand for financial services, including changes in consumer borrowing, repayment, investment, and deposit practices; changes in asset quality and credit risk; 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 impact, extent and timing of technological changes; 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, 2024, 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.


	Three Months Ended
	March 31,				December 31,
	2025		2024		2024
Interest income
Taxable loans, including fees	$	97,031	$	28,045	$	97,903
Tax-exempt loans, including fees	46		—		37
Taxable securities	9,487		8,943		9,868
Tax-exempt securities	3,267		1,361		3,191
Other interest income	955		396		1,794
Total interest income	110,786		38,745		112,793
Interest expense
Deposits	31,851		12,931		35,919
Short-term borrowings	3,192		3,655		3,383
Subordinated debt	2,729		—		2,754
Other interest expense	27		28		27
Total interest expense	37,799		16,614		42,083
Net interest income	72,987		22,131		70,710

Credit loss expense (recapture) - loans and available-for-sale securities	900		(670)		960
Credit loss (recapture) - off-balance sheet credit exposures	(399)		—		(127)
Total provision for (recapture of) credit losses	501		(670)		833
Net interest income after credit loss expense	72,486		22,801		69,877

Non-interest income
Fiduciary and wealth management	2,443		1,419		2,429
Service charges and fees	2,089		1,606		4,447
Net gains on securities	1		—		744
Income from company-owned life insurance	1,193		547		1,887
Other non-interest income	4,297		682		2,284
Total non-interest income	10,023		4,254		11,791

Non-interest expense
Salaries and wages	20,941		9,518		25,818
Pensions and other employee benefits	5,136		2,365		4,840
Occupancy	4,045		1,538		3,630
Equipment rentals, depreciation and maintenance	4,084		1,281		4,531
Other operating	15,458		6,463		22,591
Total non-interest expense	49,664		21,165		61,410
Income before income taxes	32,845		5,890		20,258

Income tax expense	5,644		678		465
Net income	27,201		5,212		19,793
Preferred stock dividends	225		—		225
Net income applicable to common shares	$	26,976	$	5,212	$	19,568


	March 31, 2025		December 31, 2024
	(Unaudited)		(Audited)
Assets
Cash and due from banks	$	63,294	$	35,554
Interest-earning deposits with banks	85,552		99,760
Cash and cash equivalents	148,846		135,314
Securities available-for-sale, at fair value	1,436,869		1,432,371
Restricted stock, at cost	35,112		33,559
Loans held-for-sale, at fair value	1,302		2,331
Loans	5,647,507		5,672,236
Allowance for credit losses	(67,753)		(68,040)
Net loans	5,579,754		5,604,196
Other real estate owned	2,625		2,783
Premises and equipment, net	132,289		132,270
Accrued interest receivable	34,481		34,454
Intangible assets	53,002		57,300
Goodwill	32,842		32,783
Company-owned life insurance	184,018		182,834
Other assets	196,950		161,990
Total Assets	$	7,838,090	$	7,812,185

Liabilities and Shareholders’ Equity
Liabilities
Non-interest-bearing deposits	$	1,382,427	$	1,379,940
Interest-bearing deposits	5,159,444		5,135,299
Total deposits	6,541,871		6,515,239
Short-term borrowings	300,000		365,000
Subordinated debentures, net	96,212		94,872
Subordinated debentures owed to unconsolidated subsidiary trusts	17,077		17,013
Accrued interest and other liabilities	124,930		89,904
Total Liabilities	7,080,090		7,082,028

Shareholders’ Equity
Preferred stock and surplus	10,413		10,413
Common stock	7,777		7,770
Common stock, additional paid-in capital	402,682		401,172
Retained earnings	452,736		434,106
Accumulated other comprehensive income (loss)	(88,024)		(95,720)
Treasury stock	(27,584)		(27,584)
Total Shareholders’ Equity	758,000		730,157
Total Liabilities and Shareholders’ Equity	$	7,838,090	$	7,812,185


Details of Net Interest Margin - Yield Percentages

	March 31		December 31		September 30		June 30		March 31
	2025		2024		2024		2024		2024
Interest-earning assets:
Loans:
Taxable loans	6.96	%	6.91	%	7.34	%	7.33	%	5.41	%
Tax-exempt loans	5.80		5.87		5.63		5.55		—
Total loans	6.96		6.91		7.34		7.33		5.41
Interest-earning deposits and fed funds sold	5.76		4.48		3.43		3.54		3.82
Securities:
Taxable securities	3.85		3.82		4.05		4.48		3.63
Tax-exempt securities	3.85		3.55		3.58		3.05		2.67
Total securities	3.85		3.75		3.91		4.05		3.43
Total interest-earning assets	6.31	%	6.22	%	6.56	%	6.49	%	4.66	%

Interest-bearing liabilities:
Deposits:
Interest-bearing demand	2.16	%	2.51	%	3.19	%	3.00	%	0.63	%
Money market & savings	2.02		1.60		1.43		1.53		1.97
Brokered CDs & time deposits	3.85		4.55		4.82		4.55		4.12
Total interest-bearing deposits	2.53		2.76		3.02		2.90		2.41
Borrowings:
Short-term borrowings	3.88		4.17		4.06		4.38		4.82
Subordinated debt borrowings and other	9.85		9.87		10.16		10.30		—
Total interest-bearing liabilities	2.76	%	2.98	%	3.21	%	3.14	%	2.71	%

Taxable-equivalent net interest spread	3.55		3.24		3.35		3.35		1.95
Benefit from use of non-interest-bearing deposits	0.63		0.67		0.72		0.71		0.73
Taxable-equivalent net interest margin (non-GAAP1)	4.18	%	3.91	%	4.07	%	4.06	%	2.68	%


Details of Net Interest Margin - Average Balances

	March 31		December 31		September 30		June 30		March 31
	2025		2024		2024		2024		2024

Interest-earning assets:
Loans:
Taxable loans	$	5,651,937	$	5,634,157	$	5,621,531	$	4,481,993	$	2,085,826
Tax-exempt loans	4,057		3,115		4,310		3,041		—
Total loans	5,655,994		5,637,272		5,625,841		4,485,034		2,085,826
Interest-earning deposits and fed funds sold	40,757		152,537		175,265		94,765		41,692
Securities:
Taxable securities	1,039,391		1,031,024		996,749		988,492		989,875
Tax-exempt securities	435,789		452,937		440,781		426,092		259,699
Total securities	1,475,180		1,483,961		1,437,530		1,414,584		1,249,574
Total interest-earning assets	$	7,171,931	$	7,273,770	$	7,238,636	$	5,994,383	$	3,377,092

Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	2,216,243	$	2,560,445	$	2,144,567	$	1,587,914	$	489,779
Money market & savings	1,633,307		1,366,276		1,725,387		1,480,985		922,732
Brokered CDs & time deposits	1,253,841		1,247,900		1,328,076		1,141,758		745,945
Total interest-bearing deposits	5,103,391		5,174,621		5,198,030		4,210,657		2,158,456
Borrowings:
Short-term borrowings	336,245		325,084		304,849		376,063		307,446
Subordinated debt borrowings and other	112,383		111,021		109,557		72,643		—
Total interest-bearing liabilities	$	5,552,019	$	5,610,726	$	5,612,436	$	4,659,363	$	2,465,902

Non-interest-bearing deposits	$	1,371,615	$	1,411,202	$	1,389,134	$	1,207,443	$	812,199


	March 31		December 31		September 30		June 30		March 31
	2025		2024		2024		2024		2024

Per common share information
Basic earnings (loss)	$	1.80	$	1.31	$	1.83	$	(1.41)	$	0.70
Diluted earnings (loss)	1.80		1.30		1.82		(1.41)		0.69
Cash dividends	0.55		0.55		0.53		0.53		0.53
Book value	49.90		48.08		48.63		45.72		42.92
Tangible book value (non-GAAP1)	44.17		42.06		42.32		39.11		42.92

Balance sheet-related (at period end, unless otherwise indicated)
Assets	$	7,838,090	$	7,812,185	$	7,864,913	$	7,810,193	$	3,696,390
Average interest-earning assets	7,171,931		7,273,770		7,238,636		5,994,383		3,377,092
Loans (gross)	5,647,507		5,672,236		5,574,037		5,616,724		2,118,155
Loans (net)	5,579,754		5,604,196		5,506,220		5,548,707		2,093,549
Securities, available-for-sale, at fair value	1,436,869		1,432,371		1,436,431		1,414,870		1,275,520
Intangible assets	53,002		57,300		61,598		65,895		—
Goodwill	32,842		32,783		32,783		32,783		—
Non-interest-bearing deposits	1,382,427		1,379,940		1,392,123		1,397,030		822,767
Interest-bearing deposits	5,159,444		5,135,299		5,208,702		5,242,541		2,167,346
Deposits, total	6,541,871		6,515,239		6,600,825		6,639,571		2,990,113
Brokered deposits	246,902		244,802		345,328		403,668		370,847
Uninsured deposits	1,943,227		1,926,724		1,999,403		1,931,786		700,846
Short-term borrowings	300,000		365,000		320,163		285,161		360,000
Subordinated debt, net	113,289		111,885		110,482		109,064		—
Unused borrowing capacity3	4,082,879		4,092,378		2,353,963		2,162,112		704,233
Total equity	758,000		730,157		738,059		693,126		319,308
Total common equity	747,587		719,744		727,646		682,713		319,308
Accumulated other comprehensive income (loss)	(88,024)		(95,720)		(75,758)		(100,430)		(100,954)



	March 31			December 31			September 30			June 30			March 31
	2025			2024			2024			2024			2024
Income statement
Interest income	$	110,786		$	112,793		$	118,526		$	96,097		$	38,745
Interest expense	37,799			42,083			45,347			36,332			16,614
Non-interest income	10,023			11,791			10,616			9,505			4,254
Total revenue (non-GAAP1)	83,010			82,501			83,795			69,270			26,385
Non-interest expense	49,664			61,410			50,826			64,432			21,165
Pretax, pre-provision earnings (non-GAAP1)	33,346			21,091			32,969			4,838			5,220
Provision for (recapture of) credit losses	501			833			147			23,910			(670)
Income (loss) before income taxes	32,845			20,258			32,822			(19,072)			5,890
Income tax expense (benefit)	5,644			465			5,200			(2,153)			678
Net income (loss)	27,201			19,793			27,622			(16,919)			5,212
Preferred stock dividends	225			225			225			225			—
Net income (loss) applicable to common shares	$	26,976		$	19,568		$	27,397		$	(17,144)		$	5,212

Ratios
Return on average assets (annualized)	1.41		%	1.00		%	1.40		%	(1.06)		%	0.58		%
Return on average equity (annualized)	14.57			10.49			15.20			(12.44)			6.67
Net interest margin (non-GAAP1)	4.18			3.91			4.07			4.06			2.68
Efficiency ratio	59.83			74.44			60.66			93.02			80.22
Loan-to-deposit ratio	86.33			87.06			84.44			84.59			70.84
Common Equity Tier 1 (CET1) capital ratio2	11.72			11.53			11.40			10.91			16.56
Total risk-based capital ratio2	14.73			14.57			14.45			13.91			17.54
Leverage ratio2	10.09			9.80			9.66			9.04			11.36
Allowance coverage ratio	1.20			1.20			1.22			1.21			1.16
Allowance for credit losses as a percentage of non-performing loans	104.63			177.34			189.05			207.10			91.99
Non-performing loans as a percentage of total loans	1.15			0.68			0.64			0.58			1.26
Non-performing assets as a percentage of total assets	0.86			0.53			0.49			0.46			0.72
Net charge-offs to average loans (annualized)	8.5 bps			5.2 bps			2.0 bps			5.4 bps			0.5 bps


Operating net income, adjusted diluted EPS, and adjusted non-interest expense (non-GAAP1)
	For the three months ended
	March 31		December 31		September 30		June 30		March 31
	2025		2024		2024		2024		2024
Net income (loss) applicable to common shares	$	26,976	$	19,568	$	27,397	$	(17,144)	$	5,212
Add back significant items (tax effected):
Merger-related	—		7,069		2,449		18,806		537
Day 2 non-PCD Provision	—		—		—		23,305		—
Total significant items	—		7,069		2,449		42,111		537
Operating net income	$	26,976	$	26,637	$	29,846	$	24,967	$	5,749

Weighted average dilutive shares	15,026,376		15,038,442		15,040,145		12,262,979		7,527,489
Adjusted diluted EPS4	$	1.80	$	1.77	$	1.98	$	2.04	$	0.76

Non-interest expense	$	49,664	$	61,410	$	50,826	$	64,432	$	21,165
Remove significant items:
Merger-related	—		8,948		3,101		23,805		680
Total significant items	$	—	$	8,948	$	3,101	$	23,805	$	680
Adjusted non-interest expense	$	49,664	$	52,462	$	47,725	$	40,627	$	20,485

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
	March 31		December 31		September 30		June 30		March 31
	2025		2024		2024		2024		2024
Interest income	$	110,786	$	112,793	$	118,526	$	96,097	$	38,745
Interest expense	37,799		42,083		45,347		36,332		16,614
Non-interest income	10,023		11,791		10,616		9,505		4,254
Total revenue (non-GAAP1)	$	83,010	$	82,501	$	83,795	$	69,270	$	26,385


Pretax, Pre-Provision Earnings (non-GAAP1)
	For the three months ended
	March 31		December 31		September 30		June 30		March 31
	2025		2024		2024		2024		2024
Income (loss) before taxes	$	32,845	$	20,258	$	32,822	$	(19,072)	$	5,890
Provision for (recapture of) credit losses	501		833		147		23,910		(670)
Pretax, pre-provision earnings (non-GAAP1)	$	33,346	$	21,091	$	32,969	$	4,838	$	5,220

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
	March 31		December 31		September 30		June 30		March 31
	2025		2024		2024		2024		2024
Common shareholders' equity	$	747,587	$	719,744	$	727,646	$	682,713	$	319,308
Less:
Intangible assets	53,002		57,300		61,598		65,895		—
Goodwill	32,842		32,783		32,783		32,783		—
Tangible common equity (non-GAAP1)	$	661,743	$	629,661	$	633,265	$	584,035	$	319,308
Shares outstanding at end of period	14,982,807		14,969,104		14,963,003		14,932,169		7,440,025
Tangible book value per common share	$	44.17	$	42.06	$	42.32	$	39.11	$	42.92

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.


Net Interest Margin & Taxable-Equivalent Net Interest Income (non-GAAP1)
	As of or for the three months ended
	March 31			December 31			September 30			June 30			March 31
	2025			2024			2024			2024			2024
Net interest income	$	72,987		$	70,710		$	73,179		$	59,765		$	22,131
Taxable-equivalent adjustments	881			858			847			688			362
Net interest income (Fully Taxable-Equivalent - FTE)	$	73,868		$	71,568		$	74,026		$	60,453		$	22,493

Average interest-earning assets	$	7,171,931		$	7,273,770		$	7,238,636		$	5,994,383		$	3,377,092
Net interest margin (non-GAAP1)	4.18		%	3.91		%	4.07		%	4.06		%	2.68		%

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.