Burke & Herbert Financial Completes $100M Subordinated Note Offering

What Happened Burke & Herbert Financial Services Corp. announced on its Form 8-K that it completed an underwritten public offering of $100,000,000 aggregate principal amount of 7.00% Fixed-to-Floating Rate Subordinated Notes due 2036 on September 30, 2026. The notes were offered under the company’s effective Form S-3 registration statement and a prospectus supplement dated September 28, 2026; Keefe, Bruyette & Woods, Inc. acted as sole underwriter. Wilmington Trust, National Association is trustee under the indenture, and Troutman Pepper Locke LLP issued a legal opinion included as an exhibit.

Key Details

• Offering size: $100,000,000 of subordinated notes issued September 30, 2026.
• Interest and maturity: 7.00% fixed interest from 9/30/2026 to 10/1/2031 (semiannual payments), then floating (expected Three‑Month Term SOFR + 222 bps, reset quarterly) from 10/1/2031 to maturity on 10/1/2036; callable by the company at par beginning 10/1/2031.
• Use of proceeds: repay $4.5M outstanding 6.875% subordinated note (matures 4/1/2028), $18.1M of July 2030 subordinated notes, $20.0M of Oct 2030 subordinated notes (plus accrued interest); potentially repay some or all of $75.0M 3.25% subordinated notes (maturing 12/1/2031); potentially redeem up to $15.0M of 2021 preferred stock; and for general corporate purposes including capital to the bank.
• Security and ranking: Notes are unsecured and subordinated—junior to senior debt, equal with other subordinated debt, senior to capital trust junior subordinated debt, and structurally subordinated to obligations of the company’s subsidiaries (including bank deposits).

Why It Matters This transaction refinances and extends Burke & Herbert’s subordinated debt maturities and provides capital flexibility. For investors, the company’s interest expense profile will include a fixed 7.00% coupon through 2031 and a lower spread-based floating rate thereafter (SOFR + 222 bps), and the notes remain subordinated (meaning senior creditors and subsidiary creditors rank ahead in claims). The offering also enables targeted repayments and potential redemptions of existing subordinated notes and preferred stock and supplies capital to support the bank’s growth.