Form 4: H. Charles Maddy III Reports Changes in Beneficial Ownership Following Burke & Herbert and Summit Financial Group Merger

H. Charles Maddy III, President of Burke & Herbert Financial Services Corp., reports changes in beneficial ownership of common stock and stock appreciation rights following the merger with Summit Financial Group, Inc. on May 3, 2024.

Summary

• H. Charles Maddy III, President of Burke & Herbert Financial Services Corp., filed a Form 4 on May 6, 2024, reporting changes in beneficial ownership.
• The changes are a result of the merger between Burke & Herbert and Summit Financial Group, Inc., which closed on May 3, 2024.
• As part of the merger agreement, each share of Summit common stock was converted into 0.5043 shares of Burke & Herbert common stock.
• Maddy's direct holdings increased by 20,802 shares of Burke & Herbert common stock due to the merger.
• His indirect holdings through his spouse increased by 19,592 shares and through the ESOP Trust by 16,965 shares.
• Summit's ESOP was terminated as part of the merger agreement.
• Summit's stock appreciation rights (SARs) were converted into Burke & Herbert SARs.
• The closing price of Burke & Herbert's common stock on May 2, 2024, was $51.67 per share.

Sentiment

Score: 7

Explanation: The document primarily reports factual information about the merger and its impact on beneficial ownership. The sentiment is neutral to slightly positive, as the merger has been successfully completed.

Positives

• The merger between Burke & Herbert and Summit Financial Group has been successfully completed.
• H. Charles Maddy III's holdings in Burke & Herbert have increased as a result of the merger.
• The conversion of Summit's stock appreciation rights into Burke & Herbert's ensures continuity for those holding the rights.

Negatives

• The Summit ESOP was terminated, which may have implications for the employees who were participating in it.

Risks

• The integration of Summit Financial Group into Burke & Herbert may present operational and financial challenges.
• The conversion of Summit shares into Burke & Herbert shares could lead to dilution for existing Burke & Herbert shareholders.
• The termination of the Summit ESOP could lead to employee dissatisfaction.

Future Outlook

The document does not contain specific forward-looking statements beyond the completion of the merger.

Industry Context

The merger reflects a trend of consolidation in the financial services industry, as companies seek to achieve economies of scale and expand their market presence.

Comparison to Industry Standards

• Comparing the merger to other bank mergers, the conversion ratio of 0.5043 appears to be within a typical range, but the specific value would depend on the relative valuations of Burke & Herbert and Summit Financial Group.
• Similar transactions, such as the merger of two regional banks, often involve a premium paid to the acquired company's shareholders, which is reflected in the conversion ratio.
• The termination of the Summit ESOP is a common practice in mergers, as the acquiring company typically integrates the acquired company's employees into its own benefit plans.

Stakeholder Impact

• Shareholders of Summit Financial Group received Burke & Herbert shares as a result of the merger.
• Employees of Summit Financial Group may be affected by the termination of the ESOP and integration into Burke & Herbert's benefit plans.

Key Dates