Burke & Herbert Third-Quarter Earnings Rise After Linkbancorp Close

The Tip Desk · November 8, 2026 · 4 min read

Net interest income reached $105.0 million in the third quarter as the May 1 Linkbancorp merger contributed a full period, lifting diluted EPS to $1.78 from $0.50.

Burke & Herbert Financial Services Corp. (BHRB), the Washington-area community bank holding company, reported net interest income of $105.0 million for the three months ended September 30, 2026, up from $93.0 million in the second quarter, as results reflected a full quarter following the May 1 merger of LINKBANCORP, Inc. into Burke & Herbert Financial Services Corp. and the merger of LINKBANK into Burke & Herbert Bank & Trust Company.

Interest income rose $17.7 million and interest expense rose $5.8 million, the company said, primarily on the full-quarter impact of LNKB. Average total loans increased to $7.96 billion from $7.16 billion in the second quarter, after a $1.78 billion sequential jump from $5.38 billion in the first quarter. Period-end gross loans were $8.1 billion, up $62.2 million from June 30.

The fully taxable-equivalent net interest margin expanded 6 basis points to 4.21% from 4.15%, matching the 6 bps expansion from 4.09% in the first quarter. The company attributed the latest lift to growth in average loan balances and higher loan yields, partially offset by higher funding costs, and to a rising interest-rate environment. Total loan yield rose to 6.69% from 6.54%. Cost of total deposits increased to 1.83% from 1.75%, and the cost of interest-bearing deposits rose to 2.36% from 2.25%, the company said, on higher average interest-bearing balances and rates.

Net income applicable to common shares was $36.2 million, or $1.78 a share, versus $9.3 million, or $0.50 a share, in the second quarter, when merger-related items weighed on GAAP results. Adjusted operating net income applicable to common shares was $43.4 million, or $2.14 a share, compared with $37.5 million, or $2.03 a share, in the second quarter. Annualized return on average assets was 1.30% and return on average common equity was 12.02%. On an adjusted basis, ROA was 1.57% and ROCE was 14.42%.

Non-interest income was $14.7 million. The second quarter had included a $1.9 million LNKB-related loss; the company said the third-quarter increase still reflected an extra month of combined debit-card income and higher fiduciary and wealth-management income. Non-interest expense was $74.5 million, down from $93.5 million in the second quarter. Adjusted non-interest expense rose to $65.3 million from $61.1 million, primarily on the full quarter of LNKB, the company said. The efficiency ratio improved to 62.20% from 87.48%.

Credit costs remained modest. The company recorded a $1.5 million provision on loans and a $0.8 million recapture on unfunded commitments, for a total provision of $0.7 million. The allowance for credit losses was $92.5 million, or 1.15% of loans. Net loan charge-offs were $2.9 million, or 14.3 bps of average loans annualized, versus $1.2 million, or 6.5 bps, in the second quarter.

Nonperforming loans rose $12.7 million to $108.0 million, or 1.34% of loans, from $95.3 million, or 1.19%, at June 30. The company said the increase was concentrated in a limited number of isolated credits and did not reflect broad-based deterioration, and that it does not currently expect those credits to result in material charge-offs. Total delinquencies were $89.6 million.

Period-end total deposits were $9.0 billion, down $12.4 million from June 30. Non-interest-bearing deposits were $2.02 billion. Brokered deposits were $120.7 million, or 1.35% of total deposits. The loan-to-deposit ratio was 90.0%.

The company completed a $100 million subordinated debt offering. Subordinated debt, net, was $233.9 million at September 30, up from $152.2 million at June 30. Common Equity Tier 1 capital to risk-weighted assets was 12.03% at September 30, versus 11.76% at June 30. Total shareholders’ equity was $1.2 billion. The board declared a $0.55 a share regular cash dividend, payable December 1, 2026.