Burke & Herbert Bank

Number of Branch Offices

Office Locations by State · Owned · Leased · Total

Virginia · 23 · 13 · 36

West Virginia · 25 · 4 · 29

Maryland · 5 · 5 · 10

Delaware · — · 1 · 1

Kentucky · — · 1 · 1

Total · 53 · 24 · 77

We believe that our current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion. For each property that we lease, we believe that upon expiration of the lease we will be able to extend the lease on satisfactory terms or relocate to another acceptable location.

• Adverse 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.
• We 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.
• 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.
• A significant percentage of our loans are attributable to a relatively small number of borrowers.
• The 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
• Liquidity risk could impair our ability to fund operations and meet our obligations as they become due.
• Limits 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
• We operate in a highly competitive market and face increasing competition from a variety of traditional and new financial services providers.
• Our financial performance may be negatively affected if we are unable to execute our strategy.
• 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.
• We 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.
• We are dependent on our management team and key employees.
• Changes in interest rates and monetary policy may negatively affect our earnings, income, and financial condition, as well as the value of our assets.
• We are subject to physical and financial risks associated with climate change and other weather and natural disaster impacts.
• Risks Related to Our Operations
• We face risks related to our operational, technological, and organizational infrastructure.
• 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.
• We 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.
• We 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.
• We are subject to claims and litigation pertaining to intellectual property.
• We may be adversely affected by the lack of soundness of other financial institutions or other market participants.
• Our risk management framework may not be effective in mitigating risks and/or losses to us.
• 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.
• Our 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
• Our 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.
• We are subject to stringent capital requirements, which could have an adverse effect on our operations.
• We face a risk of noncompliance and enforcement action with the BSA and other anti-money laundering statutes and regulations.
• We 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.
• Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention.
• 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.
• Evolving 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
• If 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.
• We 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.
• Holders of our junior subordinated debentures and preferred stock have rights that are senior to those of our common stockholders.
• Our 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.
• Risks 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.
• 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.
• 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 continuing corporation may be unable to retain Company and/or LNKB personnel successfully after the LNKB Merger is completed.
• 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.
• 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.
• 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 Company and LNKB will be subject to business uncertainties and contractual restrictions while the LNKB Merger is pending.
• 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.
• Interest rate volatility may adversely impact the fair value adjustments of investments and loans acquired in 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.
• 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 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.
• 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.