What the changes say
- The risk profile is heavily dominated by the pending LNKB Merger pushing assets over $10 billion and associated integration challenges.
- Non-performing assets nearly doubled to $76.9 million while the allowance for credit losses shifted slightly to $67.8 million.
What changed since the prior 10-K
New
- NewRisks Related to Our Operations
additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities
The Bank faces continuous cyber-attack threats including e-fraud on customer accounts and breaches of sensitive customer data.
- NewRisks Related to an Investment in Our Common Stock
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
Our Bylaws include an exclusive forum provision that may limit shareholders' ability to bring claims in favorable judicial forums and increase their costs.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
The Company and LNKB have, and the Company following the closing is expected to, incur substantial costs related to the LNKB Merger and integration
The Company and LNKB have incurred and will incur substantial non-recurring advisory, legal, systems consolidation, and employee-related costs for the LNKB Merger.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
Combining the Company and LNKB may be more difficult, costly, or time-consuming than expected, and the Company and LNKB may fail to realize the anticipated benefits of the LNKB Merger
Combining the Company and LNKB may be difficult and costly, risking failure to realize anticipated cost savings and synergies.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
Our results following the LNKB Merger may suffer if we do not effectively manage our expanded operations, including complying with any enhanced regulatory requirements
The combined company will exceed $10 billion in total assets, increasing operational complexity and regulatory scrutiny.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
The continuing corporation may be unable to retain Company and/or LNKB personnel successfully after the LNKB Merger is completed
The company may fail to retain key personnel and management from both Burke & Herbert and LNKB following the merger.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
Regulatory approvals for the Holding Company Merger and the Bank Merger may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the continuing corporation following the LNKB Merger
Regulatory approvals for the merger may be delayed, denied, or conditioned in ways that adversely affect the continuing corporation.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
The Merger Agreement may be terminated in accordance with its terms and the LNKB Merger may not be completed. Such failure to complete the LNKB Merger could negatively impact the Company or LNKB
The Merger Agreement is subject to closing conditions including shareholder approvals and listing authorization that could fail, negatively impacting the company.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
In connection with the LNKB Merger, we will assume LNKB’s outstanding debt obligations, and our level of indebtedness following the completion of the LNKB Merger could adversely affect our ability to raise additional capital and to meet our obligations under our existing indebtedness
The assumption of LNKB's outstanding indebtedness will increase our debt load and restrict our ability to obtain additional financing or pay dividends.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
The Company and LNKB will be subject to business uncertainties and contractual restrictions while the LNKB Merger is pending
Pending merger uncertainties and contractual operating restrictions may impair our ability to retain key personnel, attract customers, and pursue business opportunities.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
Our 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
Existing shareholders will experience reduced ownership and voting influence, with current Burke & Herbert holders owning approximately 75% of the combined company.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
Interest rate volatility may adversely impact the fair value adjustments of investments and loans acquired in the LNKB Merger
Interest rate volatility could increase purchase accounting fair value adjustments on LNKB's loan and investment portfolios, worsening initial tangible book value dilution.
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
The 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
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
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
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
The 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
- NewRisks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
Shareholder litigation could prevent or delay the completion of the LNKB Merger or otherwise negatively impact the business and operations of the Company and LNKB
Dropped
- DroppedRisk Related to Funding and Liquidity
Loss of deposits or a change in deposit mix could increase our cost of funding
- DroppedRisks Related to Our Operations
share prices and on the availability of credit for financial institutions and corporations, while also driving up interest rates, further complicating borrowing and lending activities
- DroppedRisks Related to an Investment in Our Common Stock
We 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
Reworded
- 85% rewrittenRisks Related to Our Business, Industry and Markets
Failure to keep up with the rapid technological changes in the financial services industry could have an adverse effect on our competitive position and profitability
Added specific risks that developing or acquiring new technologies may require significant investments, take considerable time, and ultimately fail.
- 50% rewrittenRisks Related to Our Operations
System failure or breaches of our network security, including as a result of cyber-attacks or data security breaches, could subject us to increased operating costs, as well as litigation and other liabilities
Expanded vulnerability to include network security breaches of third-party vendors upon which the bank is highly dependent.
- 45% rewrittenRisk Related to Funding and Liquidity
Liquidity risk could impair our ability to fund operations and meet our obligations as they become due
Liquidity risk text was retained with minor phrasing adjustments.
- 39% rewrittenRisk Related to Our Lending Activities
Our decisions regarding credit risk could be inaccurate and our allowance for credit losses may be inadequate, which could materially and adversely affect our business, financial condition, results of operations, cash flows, and/or future prospects
Updated allowance for credit losses figures from $68.0 million (1.20% of gross loans) as of December 31, 2024 to $67.8 million (1.26%) as of December 31, 2025.
- 36% rewrittenRisks Related to Our Operations
Demand for the Company’s services is influenced by general economic and consumer trends beyond the Company’s control, including disruptions in the financial services industry, in general, and events such as geopolitical conflict and global pandemics
Streamlined geopolitical instability references from specific past conflicts to broader growing geopolitical tensions and conflicts.
Was: Demand for the Company’s services is influenced by general economic and consumer trends beyond the Company’s control, including disruptions in the financial services industry, in general, and events such as global pandemics and geopolitical conflict
- 32% rewrittenRisks Related to Our Business, Industry and Markets
We are subject to physical and financial risks associated with climate change and other weather and natural disaster impacts
Climate change and severe weather risk text was retained without material substantive changes.
- 32% rewrittenRisk Related to Our Lending Activities
If our non-performing assets increase, our earnings will be adversely affected
Updated non-performing assets figure from $41.2 million at December 31, 2024 to $76.9 million at December 31, 2025.
- 32% rewrittenRisks Related to Our Business, Industry and Markets
Our financial performance may be negatively affected if we are unable to execute our strategy
Explicitly added the merger with Summit and the LNKB Merger as examples of select acquisitions supplementing organic growth strategy.
- 30% rewrittenRisks Related to Our Business, Industry and Markets
We operate in a highly competitive market and face increasing competition from a variety of traditional and new financial services providers
- 28% rewrittenRisk Related to Our Lending Activities
We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with foreclosure and the ownership of real property
- 26% rewrittenRisk Related to Our Lending Activities
A significant percentage of our loans are attributable to a relatively small number of borrowers
- 23% rewrittenRisks Related to an Investment in Our Common Stock
Holders of our junior subordinated debentures and preferred stock have rights that are senior to those of our common stockholders
- 20% rewrittenRisks Related to our Regulatory Environment
Regulatory requirements affecting our loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability
All 54 risk factors
Headings as the filing states them, in filing order.
Risk Related to Our Lending Activities
- 01We may not be able to measure and limit our credit risk adequately, which could adversely affect our profitability
- 02Our decisions regarding credit risk could be inaccurate and our allowance for credit losses may be inadequate, which could materially and adversely affect our business, financial condition, results of operations, cash flows, and/or future prospects39% rewritten
- 03If our non-performing assets increase, our earnings will be adversely affected32% rewritten
- 04Our focus on lending to small to medium-sized businesses may increase our credit risk
- 05Adverse changes in the real estate market or economy in our market area could lead to higher levels of problem loans and charge-offs, adversely affecting our earnings and financial condition
- 06We are exposed to higher credit risk by commercial real estate, commercial and industrial, and acquisition, construction & development-based lending as well as large lending relationships
- 07We engage in lending secured by real estate and may be forced to foreclose on the collateral and own the underlying real estate, subjecting us to the costs and potential risks associated with foreclosure and the ownership of real property28% rewritten
- 08A significant percentage of our loans are attributable to a relatively small number of borrowers26% rewritten
- 09The appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property and other real estate owned may not accurately reflect the net value of the asset
Risk Related to Funding and Liquidity
- 10Liquidity risk could impair our ability to fund operations and meet our obligations as they become due45% rewritten
- 11Limits on our ability to use brokered deposits as part of our funding strategy may affect our profitability
Risks Related to Our Business, Industry and Markets
- 12We operate in a highly competitive market and face increasing competition from a variety of traditional and new financial services providers30% rewritten
- 13Our financial performance may be negatively affected if we are unable to execute our strategy32% rewritten
- 14Failure to keep up with the rapid technological changes in the financial services industry could have an adverse effect on our competitive position and profitability85% rewritten
- 15We follow a relationship-based operating model. Our ability to maintain our reputation is critical to the success of our business, and the failure to do so may materially adversely affect our performance
- 16We are dependent on our management team and key employees
- 17Changes in interest rates and monetary policy may negatively affect our earnings, income, and financial condition, as well as the value of our assets
- 18We are subject to physical and financial risks associated with climate change and other weather and natural disaster impacts32% rewritten
Risks Related to Our Operations
- 19We face risks related to our operational, technological, and organizational infrastructure
- 20System failure or breaches of our network security, including as a result of cyber-attacks or data security breaches, could subject us to increased operating costs, as well as litigation and other liabilities50% rewritten
- 21additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilitiesNew
- 22We rely on third parties to provide key components of our business infrastructure, and a failure of these parties to perform for any reason could disrupt our operations
- 23We could be subject to losses, regulatory action, or reputational harm due to fraudulent and negligent acts on the part of loan applicants, our employees, and vendors
- 24We are subject to claims and litigation pertaining to intellectual property
- 25We may be adversely affected by the lack of soundness of other financial institutions or other market participants
- 26Our risk management framework may not be effective in mitigating risks and/or losses to us
- 27Demand for the Company’s services is influenced by general economic and consumer trends beyond the Company’s control, including disruptions in the financial services industry, in general, and events such as geopolitical conflict and global pandemics36% rewritten
- 28Our results may suffer if we do not effectively manage our expanded operations, including complying with any enhanced regulatory requirements
Risks Related to our Regulatory Environment
- 29Our industry is highly regulated, and the regulatory framework, together with any future legislative or regulatory changes, may have a materially adverse effect on our operations
- 30We are subject to stringent capital requirements, which could have an adverse effect on our operations
- 31We face a risk of noncompliance and enforcement action with the BSA and other anti-money laundering statutes and regulations
- 32We are subject to laws regarding the privacy, information security, and protection of personal information and any violation of these laws or other incident involving personal, confidential, or proprietary information of individuals could damage our reputation and otherwise adversely affect our business
- 33Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention
- 34Regulatory requirements affecting our loans secured by commercial real estate could limit our ability to leverage our capital and adversely affect our growth and profitability20% rewritten
- 35Evolving expectations from customers, regulators, investors, and other stakeholders with respect to environmental, social, and governance (“ESG”) practices may impose additional costs on us or expose us to new or additional risks
Risks Related to an Investment in Our Common Stock
- 36If we fail to design, implement and maintain effective internal control over financial reporting or remediate any future material weakness in our internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud
- 37We 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
- 38An 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
- 39Holders of our junior subordinated debentures and preferred stock have rights that are senior to those of our common stockholders23% rewritten
- 40concurrent jurisdiction, and our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunderNew
Risks Relating to the Consummation of the LNKB Merger and the Company Following the LNKB Merger
- 41The Company and LNKB have, and the Company following the closing is expected to, incur substantial costs related to the LNKB Merger and integrationNew
- 42Combining the Company and LNKB may be more difficult, costly, or time-consuming than expected, and the Company and LNKB may fail to realize the anticipated benefits of the LNKB MergerNew
- 43Our results following the LNKB Merger may suffer if we do not effectively manage our expanded operations, including complying with any enhanced regulatory requirementsNew
- 44The continuing corporation may be unable to retain Company and/or LNKB personnel successfully after the LNKB Merger is completedNew
- 45Regulatory approvals for the Holding Company Merger and the Bank Merger may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the continuing corporation following the LNKB MergerNew
- 46The Merger Agreement may be terminated in accordance with its terms and the LNKB Merger may not be completed. Such failure to complete the LNKB Merger could negatively impact the Company or LNKBNew
- 47In connection with the LNKB Merger, we will assume LNKB’s outstanding debt obligations, and our level of indebtedness following the completion of the LNKB Merger could adversely affect our ability to raise additional capital and to meet our obligations under our existing indebtednessNew
- 48The Company and LNKB will be subject to business uncertainties and contractual restrictions while the LNKB Merger is pendingNew
- 49Our 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 managementNew
- 50Interest rate volatility may adversely impact the fair value adjustments of investments and loans acquired in the LNKB MergerNew
- 51The 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 StockNew
- 52Issuance 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 StockNew
- 53The 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 StockNew
- 54Shareholder litigation could prevent or delay the completion of the LNKB Merger or otherwise negatively impact the business and operations of the Company and LNKBNew
Other Burke & Herbert Financial Services 10-Ks
- FY2024 10-K risk factors41 risks
Concentrated exposure to commercial real estate and small-to-medium business lending drives asset quality risks. Growth initiatives face regulatory scrutiny if total assets exceed $10 billion. Cybersecurity threats and third-party vendor dependencies threaten operational continuity.
Filed Mar 17, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.