Burke & Herbert Bank & Company risk analysis
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Burke & Herbert Bank & Company (BHRB) Risk Analysis
Risk Overview Q2, 2026
Source: the company's latest filing for the period ended Jun 30, 2026, filed Aug 07, 2026
Risk Change Over Time
- Share Price & Shareholder Rights - Risk 1We currently qualify as an "emerging growth company", and the reduced disclosures and relief from certain other significant disclosure requirements that are available to emerging growth companies may make our Common Stock less attractive to investors.
We are an "emerging growth company," as defined in the federal securities laws, and we intend to continue to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, less extensive disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements to hold non-binding advisory votes on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the first sale of our common equity securities in an offering registered under the Securities Act, though we may cease to be an emerging growth company earlier, if our gross revenues exceed $1.235 billion, if we issue more than $1.0 billion in non-convertible debt in a three-year period, or if the market value of our Common Stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. Investors and securities analysts may find it more difficult to evaluate our Common Stock because we rely on one or more of these exemptions. If, as a result, some investors find our Common Stock less attractive, there may be a less active trading market for our Common Stock, which could result in reductions and greater volatility in the prices of our Common Stock.
- Debt & Financing - Risk 2Loss of deposits or a change in deposit mix could increase our cost of funding.
Deposits are generally a low-cost and stable source of funding. We compete with banks and other financial institutions for deposits. Funding costs may increase if we lose deposits and are forced to replace them with more expensive sources. Depending on the interest rate environment and competitive factors, low-cost deposits may need to be replaced with higher cost funding, resulting in a decrease in net interest income and net income.
Risk Highlights Q2, 2026
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 53
- Share Price & Shareholder Rights - Risk 1Shareholder litigation could prevent or delay the completion of the LNKB Merger or otherwise negatively impact the business and operations of the Company and LNKB.
Shareholders of the Company and/or of LNKB may file lawsuits against the Company, LNKB and/or the directors and officers of either company in connection with the LNKB Merger. One of the conditions to the closing is that no order, injunction or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint preventing the consummation of the Holding Company Merger, the Bank Merger or any of the other transactions contemplated by the Merger Agreement be in effect. If any plaintiff were successful in obtaining an injunction prohibiting the Company or LNKB defendants from completing the Holding Company Merger, the Bank Merger or any of the other transactions contemplated by the Merger Agreement, then such injunction may delay or prevent the effectiveness of the LNKB Merger and could result in significant costs to the Company and/or LNKB, including any cost associated with the indemnification of directors and officers of each company. The Company and LNKB may incur costs in connection with the defense or settlement of any shareholder lawsuits filed in connection with the LNKB Merger. Such litigation could have an adverse effect on the financial condition and results of operations of the Company and LNKB and could prevent or delay the completion of the LNKB Merger.
- Share Price & Shareholder Rights - Risk 2The market price of the Company's Common Stock after the LNKB Merger may be affected by factors different from those currently affecting the shares of the Company's Common Stock or LNKB common Stock.
At the effective time of the LNKB Merger, LNKB shareholders will become shareholders of the Company. The Company's business differs from that of LNKB and certain adjustments may be made to the Company's business as a result of the LNKB Merger. Accordingly, the results of operations of the continuing corporation and the market price of the Company's Common Stock after the completion of the LNKB Merger may be affected by factors different from those currently affecting the independent results of operations of each of the Company and LNKB.
- Share Price & Shareholder Rights - Risk 3Issuance of shares of the Company's Common Stock in connection with the LNKB Merger may adversely affect the market price of the Company's Common Stock.
In connection with the payment of the LNKB Merger consideration, the Company expects to issue approximately 5.1 million shares of the Company's Common Stock to LNKB shareholders. The issuance of these new shares of the Company's Common Stock may result in fluctuations in the market price of the Company's Common Stock, including a stock price decrease.
- Share Price & Shareholder Rights - Risk 4The dilution caused by the issuance of shares of the Company's Common Stock in connection with the LNKB Merger may adversely affect the market price of the Company's Common Stock.
The dilution caused by the issuance of the new shares of the Company's Common Stock to LNKB shareholders in connection with the payment of the LNKB Merger consideration may result in fluctuations in the market price of the Company's Common Stock, including a stock price decrease.
- Share Price & Shareholder Rights - Risk 5Our shareholders and LNKB shareholders will have reduced ownership and voting interest in the continuing corporation after the consummation of the LNKB Merger and will exercise less influence over management.
Our shareholders and LNKB shareholders currently have the right to vote in the election of the board of directors and on other matters affecting Burke & Herbert and LNKB, respectively. When the LNKB Merger is completed, each Burke & Herbert shareholder and each LNKB shareholder will become a holder of common stock of the continuing corporation, with a percentage ownership of the continuing corporation that is smaller than the holder's percentage ownership of either the Company or LNKB individually, as applicable, prior to the consummation of the LNKB Merger. Based on the number of shares of the Company's Common Stock and LNKB's common stock outstanding as of the close of business on the respective record dates for each company's special meeting of shareholders, and based on the number of shares of the Company's Common Stock expected to be issued in the LNKB Merger, the former LNKB shareholders, as a group, are estimated to own approximately 25% of the fully diluted shares of the continuing corporation immediately after the LNKB Merger and current shareholders of the Company as a group are estimated to own approximately 75% of the fully diluted shares of the continuing corporation immediately after the LNKB Merger. Additionally, two LNKB continuing director will join the board of directors of the continuing corporation as of the effective time, and the board of directors of the continuing corporation will be expanded to 17 directors. Because of this, LNKB shareholders may have less influence on the management and policies of the continuing corporation than they now have on the management and policies of LNKB, and our shareholders may have less influence on the management and policies of the continuing corporation than they now have on the management and policies of the Company.
- Share Price & Shareholder Rights - Risk 6Our Bylaws designate the United States District Court for the Eastern District of Virginia, Alexandria Division, or in the event that court lacks jurisdiction, the Circuit Court of the City of Alexandria, Virginia, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders, which may not be enforced and could discourage lawsuits against us and our directors and officers.
Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the United States District Court for the Eastern District of Virginia, Alexandria Division, or in the event that court lacks jurisdiction, the Circuit Court of the City of Alexandria, Virginia, will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of us, any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee, or other agent of ours to us or our shareholders, any action asserting a claim arising pursuant to any provision of the Virginia Stock Corporation Act ("VSCA") or our Articles of Incorporation or Bylaws, or any action asserting a claim governed by the internal affairs doctrine, including, without limitation, any action to interpret, apply, enforce, or determine the validity of the Articles of Incorporation or Bylaws, in each case subject to such court having personal jurisdiction over the indispensable parties named as defendants in any such action. By its terms, the exclusive forum provision in our Bylaws would apply to claims made under the Exchange Act or the Securities Act. However, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. In addition, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result of these provisions, the exclusive forum provisions may not apply to, and there is uncertainty as to whether a court would enforce such exclusive forum provisions with respect to, suits brought to enforce any duty or liability created by the Exchange Act or the Securities Act or any other claim for which the federal and state courts have concurrent jurisdiction, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to this provision of our Bylaws. The exclusive forum provision may limit the ability of our shareholders to bring a claim in a judicial forum that such shareholders find favorable for disputes with us or our directors or officers and the provision may increase costs on a shareholder pursuing any claims against us, which may discourage such lawsuits against us and our directors and officers. Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, results of operations, and financial condition.
- Share Price & Shareholder Rights - Risk 7Holders of our junior subordinated debentures and preferred stock have rights that are senior to those of our common stockholders.
We have three statutory business trusts for which we became sponsors in connection with the merger with Summit. The trusts have issued mandatorily redeemable securities (the "capital securities") for which we are obligated to third-party investors related, and hold our junior subordinated debentures (the "debentures"). The debentures held by the trusts are their sole assets. Our subordinated debentures of these unconsolidated statutory trusts totaled approximately $19.6 million excluding the related fair value mark incurred as of acquisition, at December 31, 2025. Payments of the principal and interest on the trust preferred securities of the statutory trusts are conditionally guaranteed by us. The junior subordinated debentures are senior to our shares of common stock. As a result, we must make payments on the junior subordinated debentures before any dividends can be paid on our Common Stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the junior subordinated debentures must be satisfied before any distributions can be made on our Common Stock. We have the right to defer distributions on the junior subordinated debentures (and the related trust preferred securities) for up to five (5) years, during which time no dividends may be paid on our Common Stock. See Note 7 - Borrowed Funds in Notes to Consolidated Financial Statements for additional information regarding our trust preferred securities. We also have 1,500 shares of our 6.0% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series 2021 outstanding, which is senior to our Common Stock with respect to dividends upon liquidation or dissolution of the Company. While the regular dividends payable on such preferred stock are non-cumulative, we are not permitted to pay dividends on or repurchase our Common Stock to the extent we do not pay dividends on such preferred stock for each applicable dividend period.
- Share Price & Shareholder Rights - Risk 8An investment in our Common Stock is not an insured deposit and is not guaranteed by the FDIC, so you could lose some or all of your investment.
An investment in our Common Stock is not a deposit account or other obligation of the Bank and, therefore, is not insured against loss or guaranteed by the FDIC, any other deposit insurance fund, or by any other governmental, public, or private entity. An investment in our Common Stock is inherently risky for the reasons described herein. As a result, if you acquire our Common Stock, you could lose some or all of your investment.
- Share Price & Shareholder Rights - Risk 9We may issue additional equity securities, or engage in other transactions, which could affect the priority of our Common Stock, which may adversely affect the market price of our Common Stock.
Our Board may determine from time to time, that we need to raise additional capital by issuing additional shares of our Common Stock or other securities. Sales of substantial amounts of our Common Stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Common Stock. We are not restricted from issuing additional shares of Common Stock, including securities that are convertible into, or exchangeable for, or that represent the right to receive Common Stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any future offerings, or the prices at which such offerings may be effected. Any additional issuance of Common Stock could be dilutive to existing common shareholders. We may also issue, without shareholder approval, shares of preferred stock that will provide investors in such shares with rights, preferences, and privileges that are senior to, and that adversely affect, our then current common shareholders. Additionally, if we raise additional capital by making additional offerings of debt or preferred equity securities, upon liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive distributions of our available assets prior to the holders of our Common Stock, which ranks junior to our customer deposits and indebtedness. Additional equity offerings may dilute the holdings of our existing shareholders or reduce the market price of our Common Stock, or both. Holders of our Common Stock are not entitled to preemptive rights or other protections against dilution.
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