ALEXANDRIA, Va., April 26, 2024 /PRNewswire/ --Burke & Herbert Financial Services Corp. (the "Company" or "Burke & Herbert") (NASDAQ:BHRB) reported financial results for the quarter ended March 31, 2024. In addition, at its meeting on April 25, 2024, the board of directors declared a $0.53 per share regular cash dividend to be paid on June 3, 2024, to shareholders of record as of the close of business on May 15, 2024. Net income totaled $5.2 million for the quarter, compared to $5.1 million the previous quarter and $7.5 million for the same quarter in 2023. Diluted earnings per share for the quarter was $0.69, compared to $0.67 the previous quarter and $1.00 for the same quarter in 2023. Excluding significant items1, operating net income (non-GAAP2) totaled $5.7 million for the quarter, compared to $6.2 million the previous quarter and $7.7 million for the same quarter in 2023. Excluding significant items1, adjusted diluted earnings per share (non-GAAP2) for the quarter was $0.76, compared to $0.83 the previous quarter and $1.02 for the same quarter in 2023. The Company notes the following highlights: Balance sheet remains strong with ample liquidity. Total liquidity, including all available borrowing capacity with cash and cash equivalents, totaled $758.3 million at the end of the first quarter. Total gross loans increased $166.4 million, or 8.5%, year-over-year and the Company ended the first quarter with a loan-to-deposit ratio of 70.8%. Total deposits were relatively stable and ended the quarter at $3.0 billion. Asset quality remains stable across the loan portfolio with adequate reserves. The Company continues to be well-capitalized, ending the quarter with 16.6% Common Equity Tier 1 capital to risk-weighted assets, 17.5% Total risk-based capital to risk-weighted assets, and a leverage ratio of 11.4%. On April 19, 2024, the Company and Summit Financial Group, Inc. ("Summit") (NASDAQ:SMMF) announced receipt of the final regulatory approval required to complete the previously announced merger of equals pursuant to the Agreement and Plan of Reorganization, dated as of August 24, 2023, by and between Burke & Herbert and Summit. The merger is expected to close on May 3, 2024, pending satisfaction of customary closing conditions. When the merger is completed, the combination will create a financial holding company with more than $8 billion in assets and more than 75 branches across Virginia, West Virginia, Maryland, Delaware, and Kentucky, with more than 800 employees serving our communities. From David P. Boyle, Company Chair, President and Chief Executive Officer "I'm pleased with the progress being made on our financial results compared to the previous quarters. Our balance sheet is well-positioned for multiple economic scenarios, asset quality is stable, our lending teams remain active in our markets, our deposit base is strong and dependable, and our merger integration teams are working hard to ensure a smooth and successful outcome for our customers, communities, employees, and shareholders." Results of Operations First Quarter 2024 - Comparison to prior year quarter Net income for the three months ended March 31, 2024, was $5.2 million, or $2.3 million lower than the three months ended March 31, 2023, primarily due to increased funding costs and merger-related costs that were partially offset by an increase in loan interest income, due to increased loan balances and higher rates, and a recapture of credit loss provision in the current quarter. Total revenue (non-GAAP2) for the three months ended March 31, 2024, was $26.4 million, or 9% lower than the three months ended March 31, 2023, and included $28.0 million in interest and fees on loans and $10.3 million in investment security income, which was a 23% increase and a 8% decrease, respectively, over the prior year three months ended March 31, 2023. Overall, interest income for the three months ended March 31, 2024, was $38.7 million, or 13% higher than the three months ended March 31, 2023. The increase in interest income for the Company's loans was due to increased loan balances and higher rates, and the interest income decrease in investment securities was due to a lower level of investment securities. Loans, net of allowance for credit losses, ended the quarter at $2.1 billion, or 9% higher than March 31, 2023, while the investment portfolio fair value ended the quarter at $1.3 billion, or 6% lower than the prior year quarter. The increase in interest income was offset by an increase in interest expense, which was $16.6 million for the three months ended March 31, 2024, or $7.1 million higher than the prior year quarter. The rapid rise in interest rates last year 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 interest expense was $12.9 million, or $7.5 million higher, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Total deposits ended the quarter at $3.0 billion, which was slightly lower than the balance in the prior year quarter. Non-interest-bearing deposits decreased by 9% to $822.8 million, and interest-bearing deposits increased by 2% to $2.2 billion from the prior year quarter ended March 31, 2023, reflecting the changing deposit mix from non-interest-bearing to interest-bearing that has resulted in higher interest rate expense. The Company's borrowed funds increased by 12% to $360.0 million from the prior year quarter ended March 31, 2023. Overall, net interest income decreased by $2.6 million from the prior year quarter. Non-interest income for the three months ended March 31, 2024, increased slightly from the same period last year and totaled $4.3 million for the current period. The slight increase was primarily related to an increase in fiduciary and wealth management fees of $0.1 million when compared to the prior year quarter. For the three months ended March 31, 2024, the Company recorded a recapture of credit losses of $0.7 million, compared to a provision for credit losses of $0.5 million in the prior year quarter due to improving portfolio credit quality and continued diversification of the loan portfolio. Total revenue (non-GAAP2) after provision for credit losses was $27.1 million for the three months ended March 31, 2024, which was a decrease of 5% compared to the same period last year. Non-interest expense increased by $0.8 million, or 4%, for the three months ended March 31, 2024, from the prior year three months ended March 31, 2023. The increase was primarily due to other non-interest expenses associated with merger-related activities, including legal, consulting, and integration-related costs. As of March 31, 2024, total shareholders' equity was $319.3 million, or $29.5 million higher than March 31, 2023, primarily the result of higher fair value marks for our security portfolio resulting in lower accumulated other comprehensive loss by $22.9 million. Regulatory capital ratios The Company continues to be well-capitalized with capital ratios that are above regulatory requirements. As of March 31, 2024, our Common Equity Tier 1 capital to risk-weighted asset and Total risk-based capital to risk-weighted asset ratios were 16.6% and 17.5%, respectively, and significantly above the well-capitalized requirements of 6.5% and 10%, respectively. The leverage ratio was 11.4% 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, 2024, the Bank's Common Equity Tier 1 capital to risk-weighted asset and Total risk-based capital to risk-weighted asset ratios were 16.4% and 17.4%, respectively, and significantly above the well-capitalized requirements. In addition, the Bank's leverage ratio of 11.3% 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 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. Member FDIC; Equal Housing Lender Cautionary Note Regarding Forward-Looking Statements This communication 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 respect to the beliefs, goals, intentions, and expectations of Burke & Herbert regarding the proposed merger, 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 timing of completion of the proposed merger; the expected cost savings, synergies, returns, and other anticipated benefits from the proposed merger; 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. These forward-looking statements include, without limitation, those relating to the terms, timing, and closing of the proposed  merger. Additionally, forward–looking statements speak only as of the date they are made; Burke & Herbert does not assume any duty, and does not undertake, to update such forward–looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. 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 as a result of a variety of factors, many of which are beyond the control of Burke & Herbert. Such statements are based upon the current beliefs and expectations of the management of Burke & Herbert and are subject to significant risks and uncertainties outside of the control of the parties. Caution should be exercised against placing undue reliance on forward-looking statements. The factors that could cause actual results to differ materially include the following: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between Burke & Herbert and Summit; the outcome of any legal proceedings that may be instituted against Burke & Herbert or Summit; the possibility that the proposed merger will not close when expected, or at all; the ability of Burke & Herbert and Summit to meet expectations regarding the timing, completion, and accounting and tax treatments of the proposed merger; the risk that any announcements relating to the proposed merger could have adverse effects on the market price of the common stock of either or both parties to the proposed merger; the possibility that the anticipated benefits of the proposed merger will not be realized when expected, or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Burke & Herbert and Summit do business; certain restrictions during the pendency of the proposed merger that may impact the parties' ability to pursue certain business opportunities or strategic transactions; the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes, or at all and to successfully integrate Summit's operations and those of Burke & Herbert; such integration may be more difficult, time-consuming or costly than expected; revenues following the proposed merger may be lower than expected; Burke & Herbert's and Summit's success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by Burke & Herbert's issuance of additional shares of its capital stock in connection with the proposed merger; effects of the announcement, pendency, or completion of the proposed merger on the ability of Burke & Herbert and Summit to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally; and risks related to the potential impact of general economic, political and market factors on the companies or the proposed merger and other factors that may affect future results of Burke & Herbert and Summit; and the other factors discussed in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of Burke & Herbert's Annual Report on Form 10–K for the year ended December 31, 2023, and other reports Burke & Herbert files with the SEC. Burke & Herbert Financial Services Corp. Consolidated Statements of Income (unaudited) (In thousands) Three months ended March 31, 2024 2023 Interest income Loans, including fees $              28,045 $              22,760 Taxable securities 8,943 9,802 Tax-exempt securities 1,361 1,458 Other interest income 396 308 Total interest income 38,745 34,328 Interest expense Deposits 12,931 5,401 Borrowed funds 3,655 4,138 Other interest expense 28 15 Total interest expense 16,614 9,554 Net interest income 22,131 24,774 Provision for (recapture of) credit losses (670) 515 Net interest income after credit loss expense 22,801 24,259 Non-interest income Fiduciary and wealth management 1,419 1,337 Service charges and fees 1,606 1,635 Net gains (losses) on securities — — Income from company-owned life insurance 547 560 Other non-interest income 682 682 Total non-interest income 4,254 4,214 Non-interest expense Salaries and wages 9,518 9,494 Pensions and other employee benefits 2,365 2,468 Occupancy 1,538 1,457 Equipment rentals, depreciation, and maintenance 1,281 1,339 Other operating 6,463 5,607 Total non-interest expense