Burke & Herbert Financial Services Corp. and Summit Financial Group, Inc. announced they have entered into a definitive agreement under which Summit will merge with and into Burke & Herbert in an all-stock merger of equals valued at approximately $371.5 million or $25.20 per share of Summit common stock, based on a closing price for Burke & Herbert's common stock of $49.98 as of Aug. 23.

Highlights of the Transaction:

• Merger of equals that creates a bank holding company with more than $8 billion in assets and a combined market capitalization of nearly $750 million
• Ownership split of approximately 50 percent Burke & Herbert and 50 percent Summit
• The transaction is expected to result in a combined earnings per share of approximately $7.90 in the first full year of combined operations (assuming fully realized cost savings)
• The combined company will have more than 75 branches across Virginia, West Virginia, Maryland, Delaware and Kentucky, and more than 800 employees serving our communities
• Closely aligned leadership cultures dedicated to the success of our customers, communities, employees and shareholders
• Significant operational presence will be based in Moorefield, WV and the headquarters of the combined company will be located in Alexandria, VA.
• Establishes a $5 million community foundation to ensure continued strong support of Summit's communities.

David P. Boyle, Burke & Herbert Chair, President and Chief Executive Officer, "This partnership brings together two organizations dedicated to a community banking model that places an emphasis on service and dedication to the people who live and work among us. The rich and storied history of our franchises and our combined financial strength creates a promising future for our customers through a broader set of products and services, for our employees with new and expanded opportunities for advancement, for our communities by having more resources to support and care for them, and for our shareholders due to favorable profitability metrics and a larger foundation for future growth. The senior management teams are looking forward to working together to deliver on our collective mission and I'm especially eager to work with Charlie who is a proven leader and industry veteran."

Charles (Charlie) Maddy III, Summit President and Chief Executive Officer, “Our organizations are unified by a shared vision, values, and a forward-thinking approach to banking. Our synergistic cultures stand as a bedrock for sustained success. We are poised to broaden our 'Service Beyond Expectations' ethos, underpinning robust growth and enhancing shareholder returns. This alliance doesn't just extend our influence; it strategically positions us for future growth. It also lays the foundation for cultivating richer relationships and underscores our aspiration to become the most sought-after community bank in our markets. Collaborating with David, a distinguished leader, and his adept team, I am unwavering in my belief that this partnership will elevate us to heights neither of our organizations could have reached on their own."

Transaction Details

Under the terms of the definitive agreement, which was unanimously approved by the boards of directors of both companies, holders of Summit common stock will have the right to receive 0.5043 shares of Burke & Herbert common stock. Existing Burke & Herbert shareholders will own approximately 50 percent of the outstanding shares of the combined company and Summit shareholders are expected to own approximately 50 percent.

Operations, Name, Branding and Headquarters

A significant operational presence will be based in Moorefield, West Virginia and the combined company will be headquartered in Alexandria, VA. The company will operate under the name "Burke & Herbert Financial Services Corp." and will trade under the Burke & Herbert ticker symbol "BHRB" on the Nasdaq Capital Market. The combined bank will continue to operate under the "Burke & Herbert Bank & Trust Company" brand.

Governance and Leadership

The combined company's board of directors will have 16 directors, consisting of eight directors from Burke & Herbert and eight directors from Summit with Boyle serving as Chair. Summit's current Chair, Oscar M. Bean, will join as a Vice Chair of the combined board of directors.

The combined company will be led by a highly regarded management team with significant financial services experience.

• Boyle, Burke & Herbert's current Chief Executive Officer, will continue to serve in that role for the combined company
• Maddy, Summit's current President and Chief Executive Officer, will serve as President and as a director of the combined company
• Rob Tissue, Summit's current Chief Financial Officer, will serve as Executive Vice President of Financial Strategy of the combined company
• Roy Halyama, Burke & Herbert's current Chief Financial Officer, will continue to serve in that role for the combined company
• Joe Hager, Summit's current Chief Risk Officer, will serve as Chief Operating Officer of the combined company
• Jeff Welch, Burke & Herbert's current Chief Credit Officer, will continue to serve in that role for the combined company
• Danyl Freeman, Summit's current Chief Human Resources Officer, will continue to serve in that role for the combined company
• Jennifer Schmidt, Burke & Herbert's current Chief Compliance Officer, will serve as Chief Risk Officer for the combined company
• Brad Ritchie, Summit's current Executive Vice President and President of Summit Community Bank, will serve as Chief Lending Officer of the combined company
• Shannon Rowan, Burke & Herbert's current Director of Trust & Wealth Management, will continue to serve in that role for the combined company
• The remainder of the executive team will be drawn from both Burke & Herbert and Summit.

Timing and Approvals

The transaction is expected to close in the first quarter of 2024, subject to satisfaction of customary closing conditions, including regulatory approvals and shareholder approval from Burke & Herbert and Summit shareholders. Summit directors and executive officers have entered into agreements with Burke & Herbert pursuant to which they have committed to vote their shares of Summit common stock in favor of the merger. Burke & Herbert directors and executive officers have entered into agreements with Summit pursuant to which they have committed to vote their shares of Burke & Herbert common stock in favor of the merger. For additional information about the proposed merger of Summit with and into Burke & Herbert, shareholders are encouraged to carefully read the definitive agreement that will be filed with the Securities and Exchange Commission ("SEC") tomorrow.

Advisors

Keefe, Bruyette & Woods, A Stifel Company, acted as financial advisor to Burke & Herbert in the transaction and delivered a fairness opinion to the Board of Directors. Troutman Pepper Hamilton Sanders LLP served as legal counsel to Burke & Herbert. D.A. Davidson & Co. acted as financial advisor to Summit and delivered a fairness opinion to the Board of Directors of Summit. Bowles Rice LLP served as legal counsel to Summit.