United States securities and exchange commission logo
March 29, 2023
Roy Halyama
Chief Financial Officer
Burke & Herbert Financial Services Corp.
100 S. Fairfax Street
Alexandria, Virginia 22314
Re: Burke & Herbert
Financial Services Corp.
Registration
Statement on Form 10
Filed on February
28, 2023
File No. 001-41633
Dear Roy Halyama:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response and any amendment you may file in
response to these
comments, we may have additional comments.
Form 10 filed on February 28, 2023
Industry and Market Data, page iii
1. We note the statement
that "there can be no assurance as to the accuracy or completeness"
of information. Please
delete as this is an inappropriate disclaimer to the investor's ability
to rely on the
disclosure.
Business Overview, page 1
2. In the last sentence on
page 4, please briefly define "deposit listing services" and clarify
whether these could
include brokered deposits.
3. Please revise page 4 or
where appropriate to provide a separate discussion for each loan
category in your
portfolio and discuss the risks that are unique to each category.
Roy Halyama
FirstName LastNameRoy
Burke & Herbert FinancialHalyama
Services Corp.
Comapany
March NameBurke & Herbert Financial Services Corp.
29, 2023
March2 29, 2023 Page 2
Page
FirstName LastName
The Bank, page 9
4. Where you identify capital and regulatory ratios and your actual
ratios, please revise to
cross reference to the tabular disclosure provided elsewhere, for
example on page 123.
5. We note the discussion of cybersecurity on page 13. Please revise here
or where
appropriate to clarify the nature of the board s role in overseeing
the company s
cybersecurity risk management, the manner in which the board
administers this oversight
function and any effect this has on the board s leadership
structure.
The expected replacement or discontinuation of London Interbank Offered Rate
(LIBOR) as a
benchmark..., page 31
6. We note in the last sentence of "Recent Accounting Pronouncements" on
page 102 you
state, "The Company has limited exposure to the number of loans tied
to LIBOR and the
loan documents allow for the index to move to an alternative rate if
the index currently in
place, LIBOR, no longer exists. For any new loans, the Company is
using an alternative
rate as an index." Please revise this risk factor to be consistent
with the financial statement
disclosures. Additionally, please advise us of the status of your
efforts to modify the 7
loans indexed to LIBOR and tell us their approximate dollar amount.
Managements Discussion and Analysis of Financial Condition and Results of
Operations, page
37
7. We note in the final sentence on page 1 that, "...additional employees
and infrastructure
are expected to be needed to manage the increasing customer
relationships that would
come with sustained growth." We also note the statement in the second
from last
paragraph of the carryover risk factor on pages 33-34 that, "Our
investment in compliance
with existing and evolving regulatory requirements will result in
increased administrative
expenses that we did not previously incur. These costs may materially
increase our
general and administrative expenses." Please revise the MD&A to
discuss material trends,
demands, commitments, events and uncertainties that could impact the
company's
liquidity, financial condition or operating results.
Executive Incentive Compensation, page 69
8. We note disclosure of the incentive weighting and amounts of actual
incentive
payments for 2022. Please revise to further clarify and quantify the
targets for each metric
that were used to calculate the actual incentive amounts paid. See
Item 402(o) of
Regulation S-K.
Roy Halyama
FirstName LastNameRoy
Burke & Herbert FinancialHalyama
Services Corp.
Comapany
March NameBurke & Herbert Financial Services Corp.
29, 2023
March3 29, 2023 Page 3
Page
FirstName LastName
Description of the Registrant's Securities to Be Registered, page 81
9. Please revise to reconcile the number of authorized common shares
identified here (20
million) with the amount in your articles of incorporation filed as
Exhibit 3.1 (500,000).
The series preferred amounts also do not reconcile. Please revise
accordingly.
Item 13. Financial Statements and Supplementary Data
Consolidated Statements of Income, page 89
10. Please revise the face of your consolidated statements of income to
comply with the
presentation requirements under Rule 9-04 of Regulation S-X. For
example, we note that
the line item for Provision for (recapture of) loan losses
should be presented below the
line item Net interest income and should also present a subtotal for
net interest income
after provision for (recapture of) loan losses.
Note 1 Nature of Business Activities and Significant Accounting Policies
Loans, page 96
11. Please revise to disclose your accounting policy for charging off
loans. To the extent that
there are different criteria used by loan portfolio segment or other
relevant factors,
describe as applicable.
General
12. In light of recent market events and activities within the banking
sector, please revise
Business, Risk Factors, Management s Discussion and Analysis and
other sections, where
appropriate, to address any material impact these events and
activities have had on your
financial condition, operations, customer base, liquidity, capital
position and risk profile.
Provide quantitative and qualitative disclosure as appropriate and
clarify what actions
management is undertaking in response to the market events and
activities.
13. In this regard, examples of expanded disclosure may include but are
not limited to the
following:
Provide an update on your liquidity management and capital
position as of a more
recent date. Include qualitative and quantitative information
about your cash
position, investment securities, deposits, borrowings and sources
of available but
unused borrowings. For example, we note that you had gross
unrealized losses of
$165.8 million on AFS securities at December 31, 2022. Any such
revised
disclosures should include identifying and discussing material
stress testing
scenarios, metrics or measures that you have utilized to
evaluate, monitor and
manage your liquidity and capital position;
Discuss material trends and recent activities, as of a more recent
date, in your
deposits balance, such as deposit inflows, withdrawals, uninsured
vs. insured deposits
and average rates offered by type of deposit (e.g., demand
deposits, time deposits,
etc.);
Roy Halyama
Burke & Herbert Financial Services Corp.
March 29, 2023
Page 4
Disclose and discuss any significant market, industry or
individual concentrations in
your deposit balance and how you manage the concentration risk,
if applicable. For
example, revise to disclose if there are any significant
industries or other
concentrations within the population of depositors with any
deposits in excess of the
FDIC insurance limit of $250,000; and
In regard to your Quantitative and Qualitative Disclosures
about Market Risk, expand
your discussion of interest rate risk and interest rate
sensitivity to help readers better
understand and assess potential impacts to various financial
statement line items
impacting your financial condition and results of operations.
14. We note the statement on page 59 that your Asset/Liability Committee
manages interest
rate sensitivity by changing the mix, pricing and re-pricing
characteristics of its assets
and liabilities, through the management of its investment portfolio,
its offerings of loan
and selected deposit terms and through wholesale funding. Explain
and quantify the
existence of material asset liability mismatch, if applicable, for the
periods presented or as
of a more recent date, and discuss how the ALCO considers, measures,
and manages
mismatch and related risks, including what information it has
considered related to recent
market events. Please disclose whether you have a Chief Risk Officer,
which individuals
or committees are responsible for the risk management practices
referenced on pages 18
and 28, and disclose the frequency of meetings by the relevant
individuals and/or
committees.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Michael Henderson at 202-551-3364 or Cara Lubit at
202-551-5909 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Todd K. Schiffman at 202-551-3491 or James Lopez at 202-551-3536 with
any other
questions.
FirstName LastNameRoy Halyama Sincerely,
Comapany NameBurke & Herbert Financial Services Corp.
Division of Corporation
Finance
March 29, 2023 Page 4 Office of Finance
FirstName LastName