XML 54 R35.htm IDEA: XBRL DOCUMENT
v3.25.1

Business Combination | 12 Months Ended
--- | ---
Dec. 31, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Business Combination | Business Combination Effective on May 3, 2024, Burke & Herbert completed the Merger with Summit, pursuant to the Merger Agreement. In the Merger, holders of Summit common stock outstanding at the effective time of the Merger received 0.5043 shares of Burke & Herbert Common Stock for each share of Summit common stock they owned, subject to the payment of cash in lieu of fractional shares. The total aggregate consideration payable in the Merger was approximately 7,405,772 shares of Burke & Herbert Common Stock. Additionally, each share of Summit’s 6.0% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series 2021 issued and outstanding was converted into the right to receive a share of Burke & Herbert Series 2021 Preferred Stock. Summit’s results of operations from May 3, 2024, were included in the Company’s results beginning with reporting as of June 30, 2024. Net interest income and pre-tax net income for Summit were estimated to be $99.9 million and $111.3 million, respectively, since the date of the acquisition through December 31, 2024, and are included in the Company’s Consolidated Statement of Income. Pre-tax net income for Summit only includes income and expense that are still being recorded on Summit’s core operating system. As the Company is merging data and processes, certain legacy Summit expenses, including occupancy and salaries, are now merged within the Company’s core system. Merger-related costs of $36.5 million are included in non-interest expense in the Company’s income statement for the year ended, December 31, 2024. A portion of these merger-related costs is captured in Other Operating Non-Interest Expense as further description in Note 20 - Other Operating Expense and an additional $19.5 million of such merger-related costs is captured in Salaries and Wages, Pensions and Other Employee Benefits, Occupancy, and Equipment rentals, depreciation and maintenance. These costs captured in those line items represent change-in-control payments, acceleration of benefit due to the change-in-control, software breakage, and other lease breakage fees. The fair value of the common shares issued as part of the consideration paid for Summit was determined in the basis of the closing price of the Company’s common shares on the date of completion of the Merger. We accounted for the Merger using the acquisition method of accounting in accordance with ASC 805, Business Combinations, and accordingly, the assets and liabilities of Summit were recorded at their respective fair values on the date of completion of the Merger. The fair values of assets and liabilities are subject to refinement for up to one year after the acquisition date if any additional information relative to the acquisition date fair values becomes available. We recognized goodwill of $32.8 million in connection with the acquisition, which is not amortized for financial reporting purposes, but is subject to annual impairment testing. The goodwill arising from the transaction is not deductible for tax purposes and consisted largely of synergies and the cost savings resulting from the combining of the operations of the companies. The core deposit intangible represents the value of long-term deposit relationships acquired in this transaction and will be amortized over an estimated weighted average life of 7 years using an accelerated method which approximates the estimated run-off of the acquired deposits. The fair value of intangible assets related to core deposits was $68.8 million on the date of acquisition. The fair value of purchased financial assets with credit deterioration was $380.8 million on the date of the acquisition. The gross contractual amounts receivable relating to the purchased financial assets with credit deterioration was $442.3 million. The Company estimates, on the date of the acquisition, that $23.9 million of the contractual cash flows specific to the purchased financial assets with credit deterioration will not be collected. The following table details the total consideration paid for Summit on May 3, 2024, the fair values of the assets acquired and liabilities assumed and the resulting goodwill at the acquisition date.
($ in thousands, except share information) |  |
Consideration |  | May 3, 2024
Common stock of Summit Financial Group, Inc. |  | 14,686,738
Exchange ratio |  | 0.5043
Expected Burke & Herbert common stock to be issued |  | 7,406,522 |
Actual Burke & Herbert common stock issued |  | 7,405,772 |
Fractional common stock to be paid in cash |  | 750 |
Actual Burke & Herbert common stock issued |  | 7,405,772 |
Price per share of Burke & Herbert common stock issued |  | $ | 51.67 |
Purchase price consideration for common stock issued |  | $ | 382,656 |
Fractional common stock to be paid in cash |  | 750 |
Average 10 day closing price used to pay fractional common stock |  | $ | 53.66 |
Cash paid for fractional shares |  | $ | 40 |
Implied value of stock appreciation rights ("SARs") and restricted stock units |  | 4,336 |
Fair value of preferred stock issued by Burke & Herbert |  | 10,413 |
Fully diluted transaction value |  | 397,445 |
Goodwill |  | $ | 32,783 |
|  | As Recorded |  | Estimated |  | Estimated
|  | by Summit |  | Fair Value |  | Fair Value
($ in thousands) |  | May 3, 2024 |  | Adjustments |  | May 3, 2024
Total purchase price consideration |  |  |  |  |  | $ | 397,445 |
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash and equivalents |  | $ | 53,357 |  |  | $ | — |  |  | $ | 53,357 |
Securities, available-for-sale, at fair value |  | 491,608 |  |  | — |  |  | 491,608 |
Securities, held-to-maturity, at amortized cost |  | 93,573 |  |  | (7,430) |  |  | 86,143 |
Equity and other investments |  | 36,085 |  |  | — |  |  | 36,085 |
Loans, gross |  | 3,707,940 |  |  | (153,306) |  |  | 3,554,634 |
Allowance for credit losses |  | (49,471) |  |  | 25,991 |  |  | (23,480) |
Loans, net of allowance |  | 3,658,469 |  |  | (127,315) |  |  | 3,531,154 |
Premises and equipment, net |  | 62,255 |  |  | 13,276 |  |  | 75,531 |
Accrued interest receivable |  | 19,610 |  |  | — |  |  | 19,610 |
Company-owned life insurance |  | 86,363 |  |  | — |  |  | 86,363 |
Goodwill and intangibles |  | 73,144 |  |  | (4,384) |  |  | 68,760 |
Other assets |  | 43,169 |  |  | 11,322 |  |  | 54,491 |
Total identifiable assets acquired |  | 4,617,633 |  |  | (114,531) |  |  | 4,503,102 |
Deposits |  | 3,704,072 |  |  | (7,136) |  |  | 3,696,936 |
Borrowings |  | 283,398 |  |  | — |  |  | 283,398 |
Subordinated debentures and trust preferred securities |  | 123,533 |  |  | (16,466) |  |  | 107,067 |
Unfunded reserve liability |  | 6,692 |  |  | (3,190) |  |  | 3,502 |
Accrued interest and other liabilities |  | 47,537 |  |  | — |  |  | 47,537 |
Total liabilities |  | 4,165,232 |  |  | (26,792) |  |  | 4,138,440 |
Total identifiable net assets |  | $ | 452,401 |  |  | $ | (87,739) |  |  | $ | 364,662 |
Goodwill |  | $ | 32,783 |
Post Merger, all of the securities, held-to-maturity were reclassified as available-for-sale. The following table presents supplemental pro forma information as if the Merger had occurred on January 1, 2024 and on January 1, 2023. The unaudited pro forma information includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, depreciation expense on property acquired, interest expense on deposits acquired, and the related income tax effects. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed dates.
($ in thousands) | June 30, 2024 |  | June 30, 2023
Net Interest Income | $ | 287,481 |  |  | $ | 293,300 |
Net Income | 110,122 |  |  | 55,453 |

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationAndAssetAcquisitionAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration