Key Highlights

  • Net income to common shares was USD 36.2 million, or USD 1.78 per share.
  • Adjusted Diluted Earnings per Share were USD 2.14.
  • Net interest Margin was 4.21%, up from 4.15% in the second quarter.
  • The board declared a quarterly Dividend of USD 0.55 per share.

Merger Quarter Results

Burke & Herbert Financial Services Corp. (NASDAQ:BHRB) reported third-quarter 2026 results on Thursday. Net Income applicable to common shares was USD 36.2 million, or USD 1.78 per diluted share, against USD 9.3 million, or USD 0.50, in the second quarter. Adjusted operating net income, which excludes merger-related items, was USD 43.4 million, or USD 2.14 per diluted share. The quarter is the first to include a full period after the May 1, 2026 Merger of LINKBANCORP into Burke & Herbert and of LINKBANK into Burke & Herbert Bank & Trust Company.

Return on average Assets was 1.30%, return on average common Equity was 12.02% and return on average tangible common equity was 14.14%. On an adjusted basis those were 1.57%, 14.42% and 16.96%.

Net Interest Income

Net interest income was USD 105.0 million against USD 93.0 million in the second quarter, as interest income rose USD 17.7 million and interest expense rose USD 5.8 million, mostly from the full quarter of LINKBANCORP. The fully taxable equivalent margin was 4.21% against 4.15%, helped by higher average Loan balances and loan yields, and partly offset by higher funding costs.

Loan accretion income was USD 9.3 million, and with a USD 1.5 million amortization effect on interest expense it contributed 30.4 basis points to the margin, against 34.0 in the second quarter. The cost of total deposits was 1.83% against 1.75%.

Loans, Deposits, Credit and Fees

Gross loans were USD 8.1 billion, up USD 62.2 million, with USD 406.9 million of new relationship based loan commitments originated. Deposits were USD 9.0 billion, down USD 12.4 million, and brokered deposits of USD 120.7 million were 1.35% of the total. The loan to deposit ratio was 90.0%. Total liquidity, including available borrowing capacity, was USD 6.5 billion.

The company recorded a USD 1.5 million provision on loans and a USD 0.8 million recapture on unfunded commitments. The allowance for credit losses was USD 92.5 million, or 1.15% of loans. Delinquencies rose USD 4.9 million to USD 89.6 million, and nonperforming loans rose USD 12.7 million to USD 108.0 million. Management said the increases were concentrated in a limited number of isolated credits, that they do not reflect broad deterioration, and that it does not currently see material charge-offs resulting from them.

Non-interest income rose USD 873 thousand to USD 14.7 million. The second quarter included a USD 1.9 million loss on LINKBANCORP related transactions. Non-interest expense fell to USD 74.5 million from USD 93.5 million.

Capital and Dividend

Shareholders' equity was USD 1.2 billion, and tangible common equity to tangible assets was 8.77%. The common equity tier 1 ratio was an estimated 12.03%, the total risk based ratio was 15.45% and the Leverage Ratio was 10.43%. The company completed a USD 100 million subordinated Debt offering. The board declared a dividend of USD 0.55 per share, payable Dec. 1 to holders of record on Nov. 13.

Reference Points

Reported earnings per share of USD 1.78 and adjusted earnings per share of USD 2.14 differ by USD 0.36, the effect of merger-related items. Items to follow include nonperforming loans at USD 108.0 million after a USD 12.7 million rise, the margin at 4.21%, accretion contribution of 30.4 basis points, and the cost of deposits at 1.83%.