Burke & Herbert Embarks on a New Journey in Pennsylvania
Alexandria-based bank Burke & Herbert, a stalwart of Virginia’s banking sector for over 170 years, has recently revealed plans for its second acquisition. The bank has always been cautious with its expansion, with its first acquisition only happening recently. However, it now seems ready to take another leap, this time into Pennsylvania’s banking market.
This expansion, marking a transformative milestone in Burke & Herbert’s long and illustrious history, is set to take place through a $354 million stock deal for Linkbancorp in Camp Hill, Pennsylvania. “Our entry into Pennsylvania and the expanded presence across key Mid-Atlantic markets underscores our unwavering commitment to community banking and reinforces our reputation as a trusted financial partner wherever we operate,” commented Burke & Herbert Chairman and CEO David Boyle.
Details of the Acquisition
The deal, announced late Thursday, would bring Burke & Herbert’s assets to $11 billion, with $9.1 billion in deposits. Burke & Herbert is also anticipating cost savings equal to 37.5% of Linkbancorp’s non-interest expense base, projecting earnings-per-share accretion totaling 18% in 2027, the first full year of combined operations.
Janney Montgomery Scott Analyst Daniel Cardenas terms the deal as “transformative,” extending the company’s footprint into the Pennsylvania market and providing a meaningful boost to earnings-per-share in 2027.
Linkbancorp, founded in 2018, has also utilized mergers and acquisitions to stimulate growth, acquiring GNB Financial Services in 2021, and Partners Bancorp two years later. The merger with Burke & Herbert will “accelerate our ability to deliver value for all our stakeholders,” according to Linkbancorp CEO Andrew Samuel.
Implications for Shareholders
Linkbancorp shareholders are expected to own about 25% of the merged company, with two Linkbancorp directors anticipated to join Burke & Herbert’s board. Additionally, Samuel will join the board of Burke & Herbert Bank and serve as a senior advisor. Two Linkbancorp executives, Carl Lundblad and Brent Smith, are slated to join the Burke & Herbert management team.
Expert Analysis
Dan Sondhelm, CEO of Sondhelm Partners, an Alexandria-based financial services consulting firm, referred to the deal as “a straightforward play for scale and expanded footprint.” Cardenas from Janney Montgomery Scott also chimed in, noting that the transaction “appears to be sound and helps provide geographic diversification to Burke & Herbert’s footprint.”
While Burke & Herbert doesn’t have an extensive history in M&A, its first venture in the space with Summit Financial Group exceeded expectations for cost savings, capital generation, and return on average assets, demonstrating its strategic prowess in making calculated, beneficial deals.
This acquisition marks a new chapter in the story of Burke & Herbert, a bank that has stood the test of time and is now ready to make its mark in a new territory. It is a testament to its commitment to community banking and its ability to adapt and grow in a changing financial landscape.
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