Category: Banking

  • MIL-OSI: Home BancShares, Inc. Announces Increase in Quarterly Cash Dividend

    Source: GlobeNewswire (MIL-OSI)

    CONWAY, Ark., April 23, 2025 (GLOBE NEWSWIRE) — Home BancShares, Inc. (NYSE: HOMB), parent company of Centennial Bank, today announced that its Board of Directors has declared a regular $0.20 per share quarterly cash dividend payable June 4, 2025, to shareholders of record May 14, 2025. This cash dividend represents a $0.005 per share, or 2.6%, increase over the $0.195 cash dividend paid during the first quarter of 2025.

    “After a strong 2024 and a record setting first quarter of 2025, we felt the timing was right for a small increase to reward our shareholders,” said John Allison, Chairman and CEO of HOMB.

    Home BancShares, Inc. is a bank holding company, headquartered in Conway, Arkansas. Its wholly-owned subsidiary, Centennial Bank, provides a broad range of commercial and retail banking plus related financial services to businesses, real estate developers, investors, individuals and municipalities. Centennial Bank has branch locations in Arkansas, Florida, Texas, South Alabama and New York City. The Company’s common stock is traded through the New York Stock Exchange under the symbol “HOMB.”

    FOR MORE INFORMATION CONTACT:

    Donna Townsell
    Senior Executive Vice President &
    Director of Investor Relations
    (501) 328-4625

    The MIL Network

  • MIL-OSI: Northfield Bancorp, Inc. Announces First Quarter 2025 Results

    Source: GlobeNewswire (MIL-OSI)

    NOTABLE ITEMS FOR THE QUARTER INCLUDE:

    • DILUTED EARNINGS PER SHARE WERE $0.19 FOR THE CURRENT QUARTER COMPARED TO $0.27 FOR THE TRAILING QUARTER, AND $0.15 FOR THE FIRST QUARTER OF 2024.
      • Fourth Quarter 2024 earnings included a gain of $3.4 million, or $0.06 per share, on the sale and consolidation of a branch in December 2024.
    • NET INTEREST MARGIN INCREASED TO 2.38% FOR THE CURRENT QUARTER AS COMPARED TO 2.18% FOR THE TRAILING QUARTER AND 2.03% FOR THE FIRST QUARTER OF 2024, REFLECTING LOWER FUNDING COSTS AND HIGHER YIELDS ON INTEREST-EARNING ASSETS.
    • DEPOSITS (EXCLUDING BROKERED) INCREASED $133.6 MILLION, OR 13.8% ANNUALIZED, FROM DECEMBER 31, 2024. COST OF DEPOSITS AT MARCH 31, 2025 WAS 1.94% AS COMPARED TO 1.95% AT DECEMBER 31, 2024.
    • LOANS DECLINED BY $30.7 MILLION, OR 3.0% ANNUALIZED, FROM DECEMBER 31, 2024, PRIMARILY DUE TO A DECREASE IN MULTIFAMILY LOANS, PARTIALLY OFFSET BY INCREASES IN HOME EQUITY AND CONSTRUCTION AND LAND LOANS.
    • ASSET QUALITY REMAINS STRONG WITH NON-PERFORMING LOANS TO TOTAL LOANS AT 0.48% AT MARCH 31, 2025 AND 0.51% AT DECEMBER 31, 2024.
    • THE COMPANY MAINTAINED STRONG LIQUIDITY WITH APPROXIMATELY $1.12 BILLION IN UNPLEDGED AVAILABLE-FOR-SALE SECURITIES AND LOANS READILY AVAILABLE-FOR-PLEDGE OF APPROXIMATELY $547 MILLION.
    • THE BOARD OF DIRECTORS APPROVED A $10.0 MILLION REPURCHASE PLAN ON APRIL 23, 2025. THE PREVIOUSLY APPROVED $5.0 MILLION PLAN WAS COMPLETED DURING THE CURRENT QUARTER AND THE COMPANY REPURCHASED 440,150 SHARES.
    • CASH DIVIDEND DECLARED OF $0.13 PER SHARE OF COMMON STOCK, PAYABLE ON MAY 21, 2025, TO STOCKHOLDERS OF RECORD AS OF MAY 7, 2025.

    WOODBRIDGE, N.J., April 23, 2025 (GLOBE NEWSWIRE) — NORTHFIELD BANCORP, INC. (Nasdaq:NFBK) (the “Company”), the holding company for Northfield Bank, reported net income of $7.9 million, or $0.19 per diluted share, for the three months ended March 31, 2025, compared to $11.3 million, or $0.27 per diluted share, for the three months ended December 31, 2024, and $6.2 million, or $0.15 per diluted share, for the three months ended March 31, 2024. The decrease in net income for the three months ended March 31, 2025, compared to the trailing quarter was primarily due to a $3.4 million, or $0.06 per share, gain on sale of property in the trailing quarter. The increase in net income in the current quarter as compared to the first quarter of 2024 was primarily the result of an increase in net interest income, attributable to lower funding costs and higher yields on interest-earning assets, partially offset by an increase in the provision for credit losses on loans.

    Commenting on the quarter, Steven M. Klein, the Company’s Chairman and Chief Executive Officer stated, “The Northfield team continued to focus on growing our franchise, deploying our strong capital base, and delivering solid financial performance for the quarter.” Mr. Klein commented further, “We remained focused on serving our communities, and the fundamentals of reducing our funding costs and increasing the yield on our interest-earning assets resulting in higher net interest income and net interest margin.” Mr. Klein further stated, “We remain committed to prudently managing our operating expenses, maintaining strong asset quality, and managing our strong capital levels through dividends and stock repurchases.”

    Mr. Klein concluded, “I am pleased to announce that the Board of Directors has declared a cash dividend of $0.13 per common share, payable on May 21, 2025 to stockholders of record on May 7, 2025.”

    Results of Operations

    Comparison of Operating Results for the Three Months Ended March 31, 2025 and 2024

    Net income was $7.9 million and $6.2 million for the three months ended March 31, 2025 and March 31, 2024, respectively. Significant variances from the comparable prior year period are as follows: a $3.9 million increase in net interest income, a $2.2 million increase in the provision for credit losses on loans, a $359,000 decrease in non-interest income, an $897,000 decrease in non-interest expense, and a $616,000 increase in income tax expense.

    Net interest income for the three months ended March 31, 2025, increased $3.9 million, or 14.0%, to $31.8 million, from $27.9 million for the three months ended March 31, 2024, due to a $2.5 million decrease in interest expense and a $1.4 million increase in interest income. The decrease in interest expense was primarily due to a decrease in the cost of interest-bearing liabilities which decreased by 15 basis points to 2.74% for the three months ended March 31, 2025, from 2.89% for the three months ended March 31, 2024, driven by a 20 basis point decrease in the cost of borrowed funds to 3.67% from 3.87%, partially offset by a two basis point increase in the cost of interest-bearing deposits to 2.51% from 2.49%, due to a higher concentration of certificates of deposit. The decrease in the average balance of interest-bearing liabilities was primarily due to a $413.6 million, or 37.3% decrease in the average balance of borrowed funds, partially offset by a $307.8 million, or 9.9%, increase in the average balance of interest-bearing deposits. The increase in interest income was primarily due to a 23 basis point increase in the yield on interest-earning assets, specifically higher yields on mortgage-backed securities, partially offset by a $104.0 million, or 1.9%, decrease in the average balance of interest earning assets. The decrease in the average balance of interest-earning assets was primarily due to decreases in the average balance of other securities of $273.9 million, the average balance of loans of $167.4 million and the average balance of interest-earning deposits in financial institutions of $143.9 million, partially offset by an increase in the average balance of mortgage-backed securities of $483.9 million.

    Net interest margin increased by 35 basis points to 2.38% for the three months ended March 31, 2025, from 2.03% for the three months ended March 31, 2024. The increase in net interest margin was primarily due to higher yields on mortgage-backed securities, coupled with a decrease in the cost of borrowed funds. The Company accreted interest income related to purchased credit-deteriorated (“PCD”) loans of $223,000 for the three months ended March 31, 2025, as compared to $426,000 for the three months ended March 31, 2024. Net interest income for the three months ended March 31, 2025, included loan prepayment income of $245,000 as compared to $351,000 for the three months ended March 31, 2024.

    The provision for credit losses on loans increased by $2.2 million to $2.6 million for the three months ended March 31, 2025, compared to $415,000 for the three months ended March 31, 2024, primarily due to higher net charge-offs, changes in model assumptions, including a reduction in prepayment speeds and an increase in loss given defaults in the multifamily loans related to risk rating downgrades of certain loans in the portfolio. Net charge-offs were $2.8 million for the three months ended March 31, 2025, primarily due to $2.4 million in net charge-offs on small business unsecured commercial and industrial loans, as compared to net charge-offs of $911,000 for the three months ended March 31, 2024. Management continues to closely monitor the small business unsecured commercial and industrial loan portfolio, which totaled $25.5 million at March 31, 2025.

    Non-interest income decreased by $359,000, or 10.6%, to $3.0 million for the three months ended March 31, 2025, compared to $3.4 million for the three months ended March 31, 2024. The decrease was primarily due to a decrease of $998,000 in gains on sales of trading securities, partially offset by an increase in income on bank-owned life insurance of $675,000, primarily related to the exchange of certain policies late in the fourth quarter of 2024 which have higher yields. Losses on trading securities in the three months ended March 31, 2025, were $299,000, as compared to gains of $699,000 in the three months ended March 31, 2024. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the plan. The participants of this plan, at their election, defer a portion of their compensation.  Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the plan.

    Non-interest expense decreased $897,000, or 4.0%, to $21.4 million for the three months ended March 31, 2025, compared to $22.3 million for the three months ended March 31, 2024. The decrease was primarily due to a $990,000 decrease in employee compensation and benefits, primarily attributable to a decrease in deferred compensation expense, which is described above, and had no effect on net income. Additionally, there was a $268,000 decrease in advertising expense. Partially offsetting the decreases were increases of $263,000 in professional fees related to outsourced audit services and recruitment fees and $164,000 in other expense.

    The Company recorded income tax expense of $2.9 million for the three months ended March 31, 2025, compared to $2.3 million for the three months ended March 31, 2024. The effective tax rate for both the three months ended March 31, 2025, and March 31, 2024, was 27.0%. The effective tax rate for three months ending March 31, 2025, and March 31, 2024, were negatively impacted by increased tax expense of $79,000 and $18,000, respectively, as a result of vesting of stock awards.

    Comparison of Operating Results for the Three Months Ended March 31, 2025 and December 31, 2024

    Net income was $7.9 million and $11.3 million for the quarters ended March 31, 2025, and December 31, 2024, respectively. Significant variances from the prior quarter are as follows: a $2.1 million increase in net interest income, a $640,000 increase in the provision for credit losses on loans, a $4.0 million decrease in non-interest income, a $613,000 increase in non-interest expense, and a $246,000 increase in income tax expense.

    Net interest income for the quarter ended March 31, 2025, increased by $2.1 million, or 7.1%, primarily due to a $1.7 million decrease in interest expense and a $370,000 increase in interest income. The decrease in interest expense was primarily due to an 11 basis point decrease in the cost of interest-bearing liabilities to 2.74% for the quarter ended March 31, 2025, from 2.85% for the quarter ended December 31, 2024, and a $7.0 million, or 0.2%, decrease in the average balance of interest-bearing liabilities attributable to an $80.4 million decrease in the average balance of borrowed funds, partially offset by a $73.3 million increase in the average balance of interest-bearing deposits. The increase in interest income was primarily due to an 11 basis point increase in the yield on interest-earning assets and a $206,000 increase in the average balance of interest-earning assets primarily due to an increase in the average balance of mortgage-backed securities of $182.4 million, partially offset by decreases in the average balance of interest-earning deposits in financial institutions of $85.2 million, the average balance of other securities of $59.4 million, and the average balance of loans of $37.5 million.

    Net interest margin increased by 20 basis points to 2.38% for the quarter ended March 31, 2025, from 2.18% for the quarter ended December 31, 2024, primarily due to higher yields on loans and mortgage-backed securities coupled with a decrease in the cost of funds. Net interest income for the quarter ended March 31, 2025, included loan prepayment income of $245,000 as compared to $215,000 for the quarter ended December 31, 2024. The Company accreted interest income related to PCD loans of $223,000 for the quarter ended March 31, 2025, as compared to $568,000 for the quarter ended December 31, 2024.

    The provision for credit losses on loans increased by $640,000 to $2.6 million for the quarter ended March 31, 2025, from $1.9 million for the quarter ended December 31, 2024. The increase in the provision for the current quarter was primarily due to an increase in reserves in the commercial and industrial and in multifamily loans related to risk rating downgrades of certain loans in the portfolio, and higher net charge-offs. Net charge-offs were $2.8 million for the quarter ended March 31, 2025, as compared to net charge-offs of $2.0 million for the quarter ended December 31, 2024.

    Non-interest income decreased by $4.0 million, or 56.9%, to $3.0 million for the quarter ended March 31, 2025, from $7.0 million for the quarter ended December 31, 2024. The decrease was primarily due to a $3.4 million gain on sale of property in the quarter ended December 31, 2024. Additionally, there was a $367,000 decrease in gains on sales of trading securities, net, and a $561,000 decrease in other income, primarily due to lower swap fee income. For the quarter ended March 31, 2025, losses on trading securities, net, were $299,000, compared to gains of $68,000 for the quarter ended December 31, 2024. Partially offsetting the decreases was a $362,000 increase in income on bank owned life insurance, primarily related to the exchange of certain policies late in the fourth quarter of 2024 which have higher yields.

    Non-interest expense increased by $613,000, or 2.9%, to $21.4 million for the quarter ended March 31, 2025, from $20.8 million for the quarter ended December 31, 2024. The increase was primarily due to increases of $280,000 in occupancy expense, related to higher repairs and maintenance costs, $201,000 in data processing costs due to an increase in core system expenses, $310,000 in professional fees primarily due to an increase in outsourced audit services and recruitment fees, and a $158,000 increase in credit loss expense/(benefit) for off-balance sheet exposure. The increase in credit loss/(benefit) for off-balance sheet exposure was due to a provision of $103,000 recorded during the quarter ended March 31, 2025, as compared to a benefit of $55,000 recorded during the quarter ended December 31, 2024. Partially offsetting the decreases was a $283,000 decrease in other expense.

    The Company recorded income tax expense of $2.9 million for the quarter ended March 31, 2025, compared to $2.7 million for the quarter ended December 31, 2024. The effective tax rate for the quarter ended March 31, 2025 was 27.0%, compared to 19.2% for the quarter ended December 31, 2024. The effective tax rate for the quarter ending December 31, 2024, was positively impacted by the revaluation of certain state deferred tax assets.

    Financial Condition

    Total assets increased by $43.6 million, or 0.8%, to $5.71 billion at March 31, 2025, from $5.67 billion at December 31, 2024. The increase was primarily due to an increase in available-for-sale debt securities of $145.7 million, or 13.2%, partially offset by decreases in cash and cash equivalents of $66.1 million, or 39.4%, loans receivable of $30.7 million, or 0.8% and other assets of $4.5 million, or 9.6%.

    Cash and cash equivalents decreased by $66.1 million, or 39.4%, to $101.7 million at March 31, 2025, from $167.7 million at December 31, 2024, as excess liquidity was deployed into purchasing higher-yielding mortgage-backed securities. Balances fluctuate based on the timing of receipt of security and loan repayments and the redeployment of cash into higher-yielding assets such as loans and securities, or the funding of deposit outflows or borrowing maturities.

    Loans held-for-investment, net, decreased by $30.7 million, or 0.8%, to $3.99 billion at March 31, 2025 from $4.02 billion at December 31, 2024, primarily due to decreases in multifamily real estate loans, partially offset by increases in home equity and lines of credit and construction and land loans. The decrease in loan balances reflects the Company’s continued strategic focus on managing concentration risk within its commercial and multifamily real estate loan portfolios, while maintaining disciplined loan pricing. Multifamily loans decreased $29.6 million, or 1.1%, to $2.57 billion at March 31, 2025 from $2.60 billion at December 31, 2024, commercial real estate loans decreased $7.2 million, or 0.8%, to $882.6 million at March 31, 2025 from $889.8 million at December 31, 2024, one-to-four family residential loans decreased $3.4 million, or 2.3%, to $146.8 million at March 31, 2025 from $150.2 million at December 31, 2024, and commercial and industrial loans decreased $1.3 million, or 0.8%, to $162.1 million at March 31, 2025 from $163.4 million at December 31, 2024, and other loans decreased $754,000, or 34.8%, to $1.4 million at March 31, 2025 from $2.2 million at December 31, 2024. Partially offsetting these decreases were increases in home equity and lines of credit of $7.3 million, or 4.2%, to $181.4 million at March 31, 2025 from $174.1 million at December 31, 2024, and construction and land loans of $4.4 million, or 12.2%, to $40.3 million at March 31, 2025 from $35.9 million at December 31, 2024.

    As of March 31, 2025, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 424%. Management believes that Northfield Bank (the “Bank”) maintains appropriate risk management practices including risk assessments, board-approved underwriting policies and related procedures, which includes monitoring Bank portfolio performance, performing market analysis (economic and real estate), and stressing of the Bank’s commercial real estate portfolio under severe, adverse economic conditions. Although management believes the Bank has implemented appropriate policies and procedures to manage its commercial real estate concentration risk, the Bank’s regulators could require it to implement additional policies and procedures or could require it to maintain higher levels of regulatory capital, which might adversely affect its loan originations, the Company’s ability to pay dividends, and overall profitability.

    Our real estate portfolio includes credit risk exposure to loans collateralized by office buildings and multifamily properties in New York State subject to some form of rent regulation limiting rent increases for rent stabilized multifamily properties. At March 31, 2025, office-related loans represented $182.4 million, or 4.6% of our total loan portfolio, with an average balance of $1.7 million (although we have originated these type of loans in amounts substantially greater than this average) and a weighted average loan-to-value ratio of 59%. Approximately 39% were owner-occupied. The geographic locations of the properties collateralizing our office-related loans are: 50.0% in New York, 48.5% in New Jersey and 1.5% in Pennsylvania. At March 31, 2025, our largest office-related loan had a principal balance of $90.0 million (with a net active principal balance for the Bank of $29.5 million as we have a 33.3% participation interest), was secured by an office facility located in Staten Island, New York, and was performing in accordance with its original contractual terms. At March 31, 2025, multifamily loans that have some form of rent stabilization or rent control totaled approximately $435.8 million, or approximately 11% of our total loan portfolio, with an average balance of $1.7 million (although we have originated these type of loans in amounts substantially greater than this average) and a weighted average loan-to-value ratio of 51%. At March 31, 2025, our largest rent-regulated loan had a principal balance of $16.7 million, was secured by an apartment building located in Staten Island, New York, and was performing in accordance with its original contractual terms. Management continues to closely monitor its office and rent-regulated portfolios. For further details on our rent-regulated multifamily portfolio see “Asset Quality”.

    PCD loans totaled $9.0 million and $9.2 million at March 31, 2025 and December 31, 2024, respectively. The majority of the remaining PCD loan balance consists of loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accreted interest income of $223,000 attributable to PCD loans for three months ended March 31, 2025, compared to $426,000 for three months ended March 31, 2024. PCD loans had an allowance for credit losses of approximately $2.7 million at March 31, 2025.

    Loan balances are summarized as follows (dollars in thousands):

      March 31, 2025   December 31, 2024
    Real estate loans:      
    Multifamily $ 2,567,913   $ 2,597,484
    Commercial mortgage   882,600     889,801
    One-to-four family residential mortgage   146,791     150,217
    Home equity and lines of credit   181,354     174,062
    Construction and land   40,284     35,897
    Total real estate loans   3,818,942     3,847,461
    Commercial and industrial loans   162,133     163,425
    Other loans   1,411     2,165
    Total commercial and industrial and other loans   163,544     165,590
    Loans held-for-investment, net (excluding PCD)   3,982,486     4,013,051
    PCD loans   9,043     9,173
    Total loans held-for-investment, net $ 3,991,529   $ 4,022,224
     

    The Company’s available-for-sale debt securities portfolio increased by $145.7 million, or 13.2%, to $1.25 billion at March 31, 2025, from $1.10 billion at December 31, 2024. The increase was primarily attributable to purchases of securities, partially offset by paydowns and maturities. At March 31, 2025, $1.21 billion of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. In addition, the Company held $33.4 million in corporate bonds, substantially all of which were investment grade, $683,000 in municipal bonds and $608,000 in U.S. Government agency securities at March 31, 2025. Unrealized losses, net of tax, on available-for-sale debt securities and held-to-maturity securities approximated $16.7 million and $307,000, respectively, at March 31, 2025, and $21.8 million and $400,000, respectively, at December 31, 2024.

    Equity securities were $10.9 million at March 31, 2025 and $14.3 million at December 31, 2024. Equity securities are primarily comprised of an investment in a Small Business Administration Loan Fund. This investment is utilized by the Bank as part of its Community Reinvestment Act program. The decrease in equity securities was primarily due to a decrease in money market mutual funds.

    Total liabilities increased $37.2 million, or 0.7%, to $5.00 billion at March 31, 2025, from $4.96 billion at December 31, 2024. The increase was primarily attributable to an increase in borrowings of $42.8 million, partially offset by a decrease in total deposits of $6.5 million. The Company routinely utilizes brokered deposits and borrowed funds to manage interest rate risk, the cost of interest-bearing liabilities, and funding needs related to loan originations and deposit activity.

    Deposits decreased $6.5 million, or 0.2%, to $4.13 billion at March 31, 2025 as compared to $4.14 billion at December 31, 2024. Brokered deposits decreased by $140.1 million, or 53.2%, as the Company placed less reliance on brokered deposits which were used as a lower-cost alternative to borrowings in the trailing quarter. Deposits, excluding brokered deposits, increased $133.6 million, or 3.4%. The increase in deposits, excluding brokered deposits, was primarily attributable to increases of $97.1 million in transaction accounts and $41.6 million in time deposits, partially offset by decreases of $4.5 million in savings accounts, and $579,000 in money market accounts. Growth in transaction accounts and time deposits was primarily due to new municipal relationships and new commercial customer relationships.

    Estimated gross uninsured deposits at March 31, 2025 were $1.95 billion. This total includes fully collateralized uninsured governmental deposits and intercompany deposits of $1.01 billion, leaving estimated uninsured deposits of approximately $934.7 million, or 22.6%, of total deposits. At December 31, 2024, estimated uninsured deposits totaled $896.5 million, or 21.7% of total deposits.

    Deposit account balances are summarized as follows (dollars in thousands):

      March 31, 2025   December 31, 2024
    Transaction:      
    Non-interest bearing checking $ 722,994   $ 706,976
    Negotiable orders of withdrawal and interest-bearing checking   1,367,219     1,286,154
    Total transaction   2,090,213     1,993,130
    Savings and money market:      
    Savings   899,674     904,163
    Money market   271,566     272,145
    Total savings   1,171,240     1,176,308
    Certificates of deposit:      
    $250,000 and under   602,959     580,940
    Over $250,000   144,255     124,681
    Brokered deposits   123,289     263,418
    Total certificates of deposit   870,503     969,039
    Total deposits $ 4,131,956   $ 4,138,477
     

    Included in the table above are business and municipal deposit account balances as follows (dollars in thousands):

      March 31, 2025   December 31, 2024
           
    Business customers $ 891,545   $ 885,769
    Municipal (governmental) customers $ 929,611   $ 859,319
               

    Borrowed funds increased to $770.7 million at March 31, 2025, from $727.8 million at December 31, 2024. The increase in borrowings for the period was primarily due to a $67.0 million increase in borrowings under an overnight line of credit, partially offset by a decrease of $24.2 million in other borrowings due to maturities. Management utilizes borrowings to mitigate interest rate risk, for short-term liquidity, and to a lesser extent from time to time, as part of leverage strategies.

    The following table sets forth borrowing maturities (excluding overnight borrowings and subordinated debt) and the weighted average rate by year at March 31, 2025 (dollars in thousands):

    Year   Amount   Weighted Average Rate
    2025   $160,684   3.89%
    2026   148,000   4.36%
    2027   173,000   3.19%
    2028   154,288   3.96%
        $635,972   3.83%
     

    Total stockholders’ equity increased by $6.5 million to $711.1 million at March 31, 2025, from $704.7 million at December 31, 2024. The increase was attributable to net income of $7.9 million for the three months ended March 31, 2025, an $8.1 million increase in accumulated other comprehensive income, associated with an increase in the estimated fair value of our debt securities available-for-sale portfolio, and a $900,000 increase in equity award activity, partially offset by $5.0 million in stock repurchases and $5.4 million in dividend payments. On February 26, 2025, the Board of Directors of the Company approved a $5.0 million stock repurchase program. During the three months ended March 31, 2025, the Company repurchased 440,150 of its common stock outstanding at an average price of $11.36 for a total of $5.0 million pursuant to approved stock repurchase plan. As of March 31, 2025, the Company has no outstanding repurchase program.

    The Company’s most liquid assets are cash and cash equivalents, corporate bonds, and unpledged mortgage-related securities issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac, that we can either borrow against or sell. We also have the ability to surrender bank-owned life insurance contracts. The surrender of these contracts would subject the Company to income taxes and penalties for increases in the cash surrender values over the original premium payments. We also have the ability to obtain additional funding from the Federal Home Loan Bank and Federal Reserve Bank of New York utilizing unencumbered and unpledged securities and multifamily loans. The Company expects to have sufficient funds available to meet current commitments in the normal course of business. The Company’s on-hand liquidity ratio as of March 31, 2025 was 24.3%.

    The Company had the following primary sources of liquidity at March 31, 2025 (dollars in thousands):

    Cash and cash equivalents(1)   $ 89,139
    Corporate bonds(2)   $ 19,323
    Multifamily loans(2)   $ 547,043
    Mortgage-backed securities (issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac)(2)   $ 1,102,759
         

    (1) Excludes $12.5 million of cash at Northfield Bank.
    (2) Represents estimated remaining borrowing potential.

    The Company and the Bank utilize the Community Bank Leverage Ratio (“CBLR”) framework. At March 31, 2025, the Company and the Bank’s estimated CBLR ratios were 12.08% and 12.62%, respectively, which exceeded the minimum requirement to be considered well-capitalized of 9%.

    Asset Quality

    The following table details total non-accrual loans (excluding PCD), non-performing assets, loans over 90 days delinquent on which interest is accruing, and accruing loans 30 to 89 days delinquent at March 31, 2025 and December 31, 2024 (dollars in thousands):

      March 31, 2025   December 31, 2024
    Non-accrual loans:      
    Held-for-investment      
    Real estate loans:      
    Multifamily $ 2,565     $ 2,609  
    Commercial mortgage   4,565       4,578  
    Home equity and lines of credit   1,267       1,270  
    Commercial and industrial   4,972       5,807  
    Total non-accrual loans   13,369       14,264  
    Loans delinquent 90 days or more and still accruing:      
    Held-for-investment      
    Real estate loans:      
    Multifamily         164  
    One-to-four family residential   878       882  
    Home equity and lines of credit   140       140  
    Total loans held-for-investment delinquent 90 days or more and still accruing   1,018       1,186  
    Non-performing loans held-for-sale      
    Commercial mortgage   4,397       4,397  
    Commercial and industrial   500       500  
    Total non-performing loans held-for-sale   4,897       4,897  
    Total non-performing loans   19,284       20,347  
    Total non-performing assets $ 19,284     $ 20,347  
    Non-performing loans to total loans   0.48 %     0.51 %
    Non-performing assets to total assets   0.34 %     0.36 %
    Accruing loans 30 to 89 days delinquent $ 6,845     $ 9,336  
     

    Accruing Loans 30 to 89 Days Delinquent

    Loans 30 to 89 days delinquent and on accrual status totaled $6.8 million and $9.3 million at March 31, 2025 and December 31, 2024, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at March 31, 2025 and December 31, 2024 (dollars in thousands):

      March 31, 2025   December 31, 2024
    Held-for-investment      
    Real estate loans:      
    Multifamily $ 1,296   $ 2,831
    Commercial mortgage   147     78
    One-to-four family residential   2,584     2,407
    Home equity and lines of credit   1,141     1,472
    Commercial and industrial loans   1,674     2,545
    Other loans   3     3
    Total delinquent accruing loans held-for-investment $ 6,845   $ 9,336
     

    The decrease in delinquent multifamily loans was primarily due to one relationship totaling $2.1 million that became current during the quarter ended March 31, 2025. The decrease in delinquent commercial and industrial loans was primarily due to five unsecured small business loans that were charged off totaling $797,000. Management continues to monitor the unsecured small business commercial and industrial loan portfolio which represents the majority of the commercial and industrial delinquencies in the table above.

    PCD Loans (Held-for-Investment)

    The Company accounts for PCD loans at estimated fair value using discounted expected future cash flows deemed to be collectible on the date acquired. Based on its detailed review of PCD loans and experience in loan workouts, management believes it has a reasonable expectation about the amount and timing of future cash flows and accordingly has classified PCD loans ($9.0 million at March 31, 2025 and $9.2 million at December 31, 2024, respectively) as accruing, even though they may be contractually past due. At March 31, 2025, 2.1% of PCD loans were past due 30 to 89 days, and 25.2% were past due 90 days or more, as compared to 2.9% and 27.1%, respectively, at December 31, 2024.

    Our multifamily loan portfolio at March 31, 2025 totaled $2.57 billion, or 64% of our total loan portfolio, of which $435.8 million, or 11%, included loans collateralized by properties in New York with units subject to some percentage of rent regulation. The table below sets forth details about our multifamily loan portfolio in New York (dollars in thousands).

    % Rent Regulated   Balance   % Portfolio Total NY Multifamily Portfolio   Average Balance   Largest Loan   LTV*   Debt Service Coverage Ratio (DSCR)*   30-89 Days Delinquent   Non-Accrual   Special Mention   Substandard
    0   $ 279,630   39.1 %   $ 1,175   $ 16,441   50.6 %   1.48x   $ 580   $ 499   $   $ 1,800
    >0-10     4,696   0.6       1,565     2,107   50.9     1.33                
    >10-20     18,397   2.6       1,415     2,834   48.7     1.40                
    >20-30     19,268   2.7       2,141     5,449   53.2     1.65                
    >30-40     14,958   2.1       1,247     3,037   47.8     1.59                
    >40-50     21,558   3.0       1,268     2,710   46.9     1.77                
    >50-60     9,298   1.3       1,550     2,313   39.4     1.80                
    >60-70     20,765   2.9       2,966     11,181   53.4     1.51                
    >70-80     22,158   3.1       2,462     4,874   47.5     1.43                
    >80-90     20,516   2.9       1,140     3,124   46.1     1.64             1,124    
    >90-100     284,164   39.7       1,733     16,698   51.6     1.60     665     2,067     3,630     4,389
    Total   $ 715,408   100.0 %   $ 1,442   $ 16,698   50.6 %   1.55x   $ 1,245   $ 2,566   $ 4,754   $ 6,189
     

    The table below sets forth our New York rent-regulated loans by county (dollars in thousands).

    County   Balance   LTV*   DSCR*
    Bronx   $ 116,944   51.2 %   1.60x
    Kings     184,545   50.5 %   1.57
    Nassau     2,155   35.8 %   1.88
    New York     48,838   46.3 %   1.61
    Queens     37,633   44.3 %   1.69
    Richmond     32,258   60.1 %   1.41
    Westchester     13,405   58.7 %   1.78
    Total   $ 435,778   50.6 %   1.59x
                 

    * Weighted Average

    None of the loans that are rent-regulated in New York are interest only. During the remainder of 2025, 27 loans with an aggregate principal balance of $46.0 million will re-price.

    About Northfield Bank

    Northfield Bank, founded in 1887, operates 37 full-service banking offices in Staten Island and Brooklyn, New York, and Hunterdon, Middlesex, Mercer, and Union counties, New Jersey. For more information about Northfield Bank, please visit www.eNorthfield.com.

    Forward-Looking Statements: This release may contain certain “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “should,” “plan,” “estimate,” “predict,” “continue,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Northfield Bancorp, Inc. Any or all of the forward-looking statements in this release and in any other public statements made by Northfield Bancorp, Inc. may turn out to be wrong. They can be affected by inaccurate assumptions Northfield Bancorp, Inc. might make or by known or unknown risks and uncertainties as described in our SEC filings, including, but not limited to, those related to general economic conditions, particularly in the market areas in which the Company operates, competition and demand for financial services in our market area, fluctuations in real estate values and both residential and commercial real estate market conditions, changes in liquidity, the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio, competition among depository and other financial institutions, including with respect to fees and interest rates, changes in laws or government regulations or policies affecting financial institutions, including changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the imposition of tariffs or other domestic or international governmental policies, changes in the quality and/or composition of our loan and securities portfolios, prepayment speeds, charge-offs and/or credit loss provisions, our ability to access cost-effective funding, changes in the value of our goodwill or other intangible assets, changes in regulatory fees, assessments  and capital requirements, inflation and changes in the interest rate environment that reduce our margins, reduce the fair value of financial instruments or reduce our ability to originate loans, the failure to maintain current technologies and to successfully implement future information technology enhancements, cyber security and fraud risks against our information technology and those of our third-party providers, the ability of third-party providers to perform their obligations to us, the effects of war, conflict, and acts of terrorism, our ability to successfully integrate acquired entities, and adverse changes in the securities markets. Consequently, no forward-looking statement can be guaranteed. Northfield Bancorp, Inc. does not intend to update any of the forward-looking statements after the date of this release, or conform these statements to actual events.

    Company Contact:
    William R. Jacobs
    Chief Financial Officer
    Tel: (732) 499-7200 ext. 2519

    (Tables follow)

    NORTHFIELD BANCORP, INC.
    SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
    (Dollars in thousands, except per share amounts) (unaudited)
     
      At or For the Three Months Ended
      March 31,   December 31
      2025   2024   2024
    Selected Financial Ratios:          
    Performance Ratios (1)          
    Return on assets (ratio of net income to average total assets) 0.56 %   0.43 %   0.79 %
    Return on equity (ratio of net income to average equity) 4.52     3.59     6.40  
    Average equity to average total assets 12.43     12.04     12.28  
    Interest rate spread 1.76     1.39     1.54  
    Net interest margin 2.38     2.03     2.18  
    Efficiency ratio (2) 61.57     71.43     56.75  
    Non-interest expense to average total assets 1.53     1.55     1.46  
    Non-interest expense to average total interest-earning assets 1.61     1.63     1.53  
    Average interest-earning assets to average interest-bearing liabilities 129.42     128.66     129.20  
    Asset Quality Ratios:          
    Non-performing assets to total assets 0.34     0.29     0.36  
    Non-performing loans (3) to total loans (4) 0.48     0.41     0.51  
    Allowance for credit losses to non-performing loans (5) 242.73     214.83     227.72  
    Allowance for credit losses to total loans held-for-investment, net (6) 0.87     0.89     0.87  
     

    (1) Annualized where appropriate.
    (2) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
    (3) Non-performing loans consist of non-accruing loans and loans 90 days or more past due and still accruing (excluding PCD loans), and are included in total loans held-for-investment, net.
    (4) Includes originated loans held-for-investment, PCD loans, acquired loans and loans held-for-sale.
    (5) Excludes loans held-for-sale.
    (6) Includes originated loans held-for-investment, PCD loans, and acquired loans.

    NORTHFIELD BANCORP, INC.
    CONSOLIDATED BALANCE SHEETS
    (Dollars in thousands, except share and per share amounts) (unaudited)
     
      March 31, 2025   December 31, 2024
    ASSETS:      
    Cash and due from banks $ 12,523     $ 13,043  
    Interest-bearing deposits in other financial institutions   89,139       154,701  
    Total cash and cash equivalents   101,662       167,744  
    Trading securities   13,003       13,884  
    Debt securities available-for-sale, at estimated fair value   1,246,473       1,100,817  
    Debt securities held-to-maturity, at amortized cost   8,883       9,303  
    Equity securities   10,855       14,261  
    Loans held-for-sale   4,897       4,897  
    Loans held-for-investment, net   3,991,529       4,022,224  
    Allowance for credit losses   (34,921 )     (35,183 )
    Net loans held-for-investment   3,956,608       3,987,041  
    Accrued interest receivable   19,648       19,078  
    Bank-owned life insurance   177,398       175,759  
    Federal Home Loan Bank of New York stock, at cost   38,350       35,894  
    Operating lease right-of-use assets   27,345       27,771  
    Premises and equipment, net   21,431       21,985  
    Goodwill   41,012       41,012  
    Other assets   42,435       46,932  
    Total assets $ 5,710,000     $ 5,666,378  
           
    LIABILITIES AND STOCKHOLDERS’ EQUITY:      
    LIABILITIES:      
    Deposits $ 4,131,956     $ 4,138,477  
    Federal Home Loan Bank advances and other borrowings   709,159       666,402  
    Subordinated debentures, net of issuance costs   61,498       61,442  
    Lease liabilities   31,630       32,209  
    Advance payments by borrowers for taxes and insurance   29,270       24,057  
    Accrued expenses and other liabilities   35,338       39,095  
    Total liabilities   4,998,851       4,961,682  
           
    STOCKHOLDERS’ EQUITY:      
    Total stockholders’ equity   711,149       704,696  
    Total liabilities and stockholders’ equity $ 5,710,000     $ 5,666,378  
           
    Total shares outstanding   42,676,274       42,903,598  
    Tangible book value per share(1) $ 15.70     $ 15.46  
     

    (1) Tangible book value per share is calculated based on total stockholders’ equity, excluding intangible assets (goodwill and core deposit intangibles), divided by total shares outstanding as of the balance sheet date. Core deposit intangibles were $57 and $69 at March 31, 2025 and December 31, 2024, respectively, and are included in other assets.

    NORTHFIELD BANCORP, INC.
    CONSOLIDATED STATEMENTS OF INCOME
    (Dollars in thousands, except share and per share amounts) (unaudited)
     
      For the Three Months Ended
      March 31,   December 31,
        2025       2024     2024  
    Interest income:          
    Loans $ 45,283     $ 46,047   $ 45,902  
    Mortgage-backed securities   12,009       4,398     9,160  
    Other securities   797       3,841     1,428  
    Federal Home Loan Bank of New York dividends   862       970     885  
    Deposits in other financial institutions   1,141       3,392     2,347  
    Total interest income   60,092       58,648     59,722  
    Interest expense:          
    Deposits   21,191       19,273     22,031  
    Borrowings   6,291       10,663     7,169  
    Subordinated debt   819       828     837  
    Total interest expense   28,301       30,764     30,037  
    Net interest income   31,791       27,884     29,685  
    Provision for credit losses   2,582       415     1,942  
    Net interest income after provision for credit losses   29,209       27,469     27,743  
    Non-interest income:          
    Fees and service charges for customer services   1,620       1,615     1,634  
    Income on bank-owned life insurance   1,639       964     1,277  
    (Losses)/gains on trading securities, net   (299 )     699     68  
    Gain on sale of property             3,402  
    Other   62       103     623  
    Total non-interest income   3,022       3,381     7,004  
    Non-interest expense:          
    Compensation and employee benefits   11,775       12,765     11,761  
    Occupancy   3,533       3,553     3,253  
    Furniture and equipment   414       484     436  
    Data processing   2,122       2,147     1,921  
    Professional fees   1,072       809     762  
    Advertising   250       518     287  
    Federal Deposit Insurance Corporation insurance   617       588     625  
    Credit loss expense/(benefit) for off-balance sheet exposures   103       83     (55 )
    Other   1,549       1,385     1,832  
    Total non-interest expense   21,435       22,332     20,822  
    Income before income tax expense   10,796       8,518     13,925  
    Income tax expense   2,920       2,304     2,674  
    Net income $ 7,876     $ 6,214   $ 11,251  
    Net income per common share:          
    Basic $ 0.19     $ 0.15   $ 0.28  
    Diluted $ 0.19     $ 0.15   $ 0.27  
    Basic average shares outstanding   40,864,529       42,367,243     40,889,355  
    Diluted average shares outstanding   40,922,829       42,408,953     41,029,275  
     
    NORTHFIELD BANCORP, INC.
    ANALYSIS OF NET INTEREST INCOME
    (Dollars in thousands) (unaudited)
     
      For the Three Months Ended
      March 31, 2025   December 31, 2024   March 31, 2024
      Average Outstanding Balance   Interest   Average Yield/ Rate(1)   Average Outstanding Balance   Interest   Average Yield/ Rate(1)   Average Outstanding Balance   Interest   Average Yield/ Rate(1)
    Interest-earning assets:                                  
    Loans(2) $ 4,007,266   $ 45,283   4.58 %   $ 4,044,787   $ 45,902   4.51 %   $ 4,174,668   $ 46,047   4.44 %
    Mortgage-backed securities(3)   1,132,715     12,009   4.30       950,309     9,160   3.83       648,811     4,398   2.73  
    Other securities(3)   118,082     797   2.74       177,462     1,428   3.20       391,980     3,841   3.94  
    Federal Home Loan Bank of New York stock   36,929     862   9.47       37,065     885   9.50       39,599     970   9.85  
    Interest-earning deposits in financial institutions   118,983     1,141   3.89       204,146     2,347   4.57       262,884     3,392   5.19  
    Total interest-earning assets   5,413,975     60,092   4.50       5,413,769     59,722   4.39       5,517,942     58,648   4.27  
    Non-interest-earning assets   277,586             277,067             266,428        
    Total assets $ 5,691,561           $ 5,690,836           $ 5,784,370        
                                       
    Interest-bearing liabilities:                                  
    Savings, NOW, and money market accounts $ 2,502,664   $ 12,148   1.97 %   $ 2,424,370   $ 11,997   1.97 %   $ 2,464,297   $ 12,331   2.01 %
    Certificates of deposit   923,713     9,043   3.97       928,658     10,034   4.30       654,328     6,942   4.27  
    Total interest-bearing deposits   3,426,377     21,191   2.51       3,353,028     22,031   2.61       3,118,625     19,273   2.49  
    Borrowed funds   695,281     6,291   3.67       775,722     7,169   3.68       1,108,880     10,663   3.87  
    Subordinated debt   61,461     819   5.40       61,406     837   5.42       61,239     828   5.44  
    Total interest-bearing liabilities   4,183,119     28,301   2.74       4,190,156     30,037   2.85       4,288,744     30,764   2.89  
    Non-interest bearing deposits   706,217             703,886             699,640        
    Accrued expenses and other liabilities   94,819             97,918             99,594        
    Total liabilities   4,984,155             4,991,960             5,087,978        
    Stockholders’ equity   707,406             698,876             696,392        
    Total liabilities and stockholders’ equity $ 5,691,561           $ 5,690,836           $ 5,784,370        
                                       
    Net interest income     $ 31,791           $ 29,685           $ 27,884    
    Net interest rate spread(4)         1.76 %           1.54 %           1.39 %
    Net interest-earning assets(5) $ 1,230,856           $ 1,223,613           $ 1,229,198        
    Net interest margin(6)         2.38 %           2.18 %           2.03 %
    Average interest-earning assets to interest-bearing liabilities         129.42 %           129.20 %           128.66 %
     

    (1) Average yields and rates are annualized.
    (2) Includes non-accruing loans.
    (3) Securities available-for-sale and other securities are reported at amortized cost.
    (4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
    (5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
    (6) Net interest margin represents net interest income divided by average total interest-earning assets.

    The MIL Network

  • MIL-OSI: Beneficient Reminds Stockholders to Vote on Proxy Proposals Ahead of the Company’s Annual Meeting on April 30, 2025

    Source: GlobeNewswire (MIL-OSI)

    DALLAS, April 23, 2025 (GLOBE NEWSWIRE) — Beneficient (NASDAQ: BENF) (“Beneficient,” “Ben,” or the “Company”), a technology-enabled platform providing exit opportunities, primary capital solutions, and related trust and custody services to holders of alternative assets through its proprietary online platform, AltAccess, reminds stockholders to vote on proxy proposals before the upcoming Annual Meeting of Stockholders at 9:00 a.m. Central Time on April 30, 2025.

    Stockholders who have not yet voted are encouraged to do so by 11:59 p.m. Central Time on April 29, 2025. Votes can be cast online at https://www.cstproxyvote.com, by telephone at 1 (866) 894-0536, or by mailing a completed proxy card to the Corporate Secretary at Beneficient, 325 N. Saint Paul Street, Suite 4850, Dallas, Texas 75201.

    The Annual Meeting will be held virtually at https://www.cstproxy.com/beneficient/2025.

    The Company continues to solicit proxies for the proposals outlined in its proxy statement. Proxies already submitted will be counted at the meeting unless revoked. Stockholders who have already voted do not need to take further action unless they wish to change their vote.

    PLEASE VOTE. YOUR VOTE COUNTS TOWARDS THE QUORUM REQUIREMENT TO HOLD THE ANNUAL MEETING. THE COMPANY CANNOT HOLD THE ANNUAL MEETING IF THE QUORUM REQUIREMENT IS NOT MET.

    The Board of Directors recommends that stockholders vote in favor of all proposals, believing they are in the best interests of the Company and its stockholders.

    About Beneficient

    Beneficient (Nasdaq: BENF) – Ben, for short – is on a mission to democratize the global alternative asset investment market by providing traditionally underserved investors − mid-to-high net worth individuals, small-to-midsized institutions and General Partners seeking exit options, anchor commitments and valued-added services for their funds− with solutions that could help them unlock the value in their alternative assets. Ben’s AltQuote™ tool provides customers with a range of potential exit options within minutes, while customers can log on to the AltAccess® portal to explore opportunities and receive proposals in a secure online environment.

    Its subsidiary, Beneficient Fiduciary Financial, L.L.C., received its charter under the State of Kansas’ Technology-Enabled Fiduciary Financial Institution (TEFFI) Act and is subject to regulatory oversight by the Office of the State Bank Commissioner. 

    Additional Information and where to find it

    The Company has filed a definitive proxy statement and associated proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with the solicitation of proxies for the Annual Meeting of Stockholders of the Company (the “Annual Meeting”). The Company, its directors, its executive officers and certain other individuals set forth in the definitive proxy statement will be deemed participants in the solicitation of proxies from shareholders in respect of the Annual Meeting. Information regarding the names of the Company’s directors and executive officers and certain other individuals and their respective interests in the Company by security holdings or otherwise are set forth in the definitive proxy statement filed with the SEC on March 21, 2025. BEFORE MAKING ANY VOTING DECISION, STOCKHOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING THE DEFINITIVE PROXY STATEMENT AND ANY SUPPLEMENTS THERETO AND ACCOMPANYING PROXY CARD, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and shareholders can obtain a copy of the documents filed by the Company with the SEC, including the definitive proxy statement, free of charge by visiting the SEC’s website, www.sec.gov. The Company’s stockholders can also obtain, without charge, a copy of the definitive proxy statement and other relevant filed documents when available from the Company’s website at www.trustben.com. 

    Contact

    investors@beneficient.com

    The MIL Network

  • MIL-OSI: CVB Financial Corp. Reports Earnings for the First Quarter 2025

    Source: GlobeNewswire (MIL-OSI)

    First Quarter 2025

    • Net Earnings of $51.1 million, or $0.36 per share
    • Return on Average Assets of 1.37%
    • Return on Average Tangible Common Equity of 14.51%
    • Net Interest Margin of 3.31%

    ONTARIO, CA, April 23, 2025 (GLOBE NEWSWIRE) — CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank (the “Company”), announced earnings for the quarter ended March 31, 2025.

    CVB Financial Corp. reported net income of $51.1 million for the quarter ended March 31, 2025, compared with $50.9 million for the fourth quarter of 2024 and $48.6 million for the first quarter of 2024. Diluted earnings per share were $0.36 for the first quarter, compared to $0.36 for the prior quarter and $0.35 for the same period last year.

    For the first quarter of 2025, annualized return on average equity (“ROAE”) was 9.31%, annualized return on average tangible common equity (“ROATCE”) was 14.51%, and an annualized return on average assets (“ROAA”) was 1.37%.

    David Brager, President and Chief Executive Officer of Citizens Business Bank, commented, “Citizens Business Bank’s performance in the first quarter demonstrates our continued financial strength and focus on our vision of serving the comprehensive financial needs of small to medium sized businesses and their owners. Our consistent financial performance is highlighted by our 192 consecutive quarters, or 48 years, of profitability, and our 142 consecutive quarters of paying cash dividends. I would like to thank our customers and associates for their continuing commitment and loyalty.”

    Highlights for the First Quarter of 2025

    • Pretax income was $69.5 million, up $1.5 million or 2%, from the prior quarter
    • Efficiency ratio of 46.7%
    • Net gain of $2.2 million on sale of $19.3 million of OREO assets
    • Net interest margin of 3.31%, increased by 13 basis points compared to the fourth quarter of 2024
    • Cost of funds decreased to 1.04% from 1.13% in the fourth quarter of 2024
    • Noninterest bearing deposits grew by $147 million from the end of 2024
    • Dairy and Livestock loans decreased by $168 million or 44% from the end of 2024
    • Net Recoveries of $130,000 and $2 million recapture of credit losses
    • TCE Ratio of 10.0% & CET1 Ratio of 16.5%

    INCOME STATEMENT HIGHLIGHTS

      Three Months Ended  
      March 31, 2025
      December 31, 2024
      March 31, 2024
     
      (Dollars in thousands, except per share amounts)  
    Net interest income $ 110,444     $ 110,418     $ 112,461    
    Recapure of (provision for) credit losses   2,000       3,000          
    Noninterest income   16,229       13,103       14,113    
    Noninterest expense   (59,144 )     (58,480 )     (59,771 )  
    Income taxes   (18,425 )     (17,183 )     (18,204 )  
    Net earnings $ 51,104     $ 50,858     $ 48,599    
    Earnings per common share:            
    Basic $ 0.37     $ 0.36     $ 0.35    
    Diluted $ 0.36     $ 0.36     $ 0.35    
                 
    NIM   3.31 %     3.18 %     3.10 %  
    ROAA   1.37 %     1.30 %     1.21 %  
    ROAE   9.31 %     9.14 %     9.31 %  
    ROATCE   14.51 %     14.31 %     15.13 %  
    Efficiency ratio   46.69 %     47.34 %     47.22 %  
                 

    Net Interest Income
    Net interest income was $110.4 million for the first quarter of 2025, essentially equal to the fourth quarter of 2024, and a $2.02 million, or 1.79%, decrease from the first quarter of 2024. Compared to the prior quarter, net interest income in the first quarter of 2025 was impacted by a 13-basis point increase in net interest margin that was offset by a $405.6 million decline in earning assets.

    The decline in net interest income of $2 million compared to the first quarter of 2024 was the net result of a $1.09 billion decline in earning assets partially offset by a 21-basis point increase in net interest margin. The decrease in earning assets was primarily due to the deleveraging strategy deployed in the second half of 2024, which resulted in the Company’s borrowings declining by $1.48 billion.

    Net Interest Margin
    Our tax equivalent net interest margin was 3.31% for the first quarter of 2025, compared to 3.18% for the fourth quarter of 2024 and 3.10% for the first quarter of 2024. The 13 basis points increase in our net interest margin compared to the fourth quarter of 2024, was the combined result of a four-basis point increase in our interest-earning assets and a nine-basis point decrease in our cost of funds, including a seven-basis point decrease in cost of deposits. The four-basis point increase in our interest-earning asset yield was primarily due to a seven-basis point increase in loan yields and a five-basis points increase in investment securities yields. We experienced an increase in yields on investments in the first quarter of 2025, as a result of the sale of lower-yielding available-for-sale (“AFS”) securities and the purchase of higher-yielding AFS securities during the fourth quarter of 2024. However, this increase in investment yields was partially offset by a decrease during the first quarter of 2025 in the positive carry on our fair value hedging instruments that pay a fixed interest rate while receiving daily SOFR.

    Net interest margin for the first quarter of 2025 increased by 21-basis points compared to the first quarter of 2024, primarily as a result of 27-basis point decrease in cost of funds from 1.31% for the first quarter of 2024 to 1.04% for the first quarter of 2025. The decrease in cost of funds was primarily due to a $1.48 billion decline in borrowings, which had an average cost of 4.76% in the first quarter of 2024. For the first quarter of 2025, the Company had average borrowings of $513 million at a cost of 4.61% and average deposits and customer repos of $12.19 billion at a cost of .87%, which compares to the first quarter of 2024 in which borrowings averaged $2 billion at a cost of 4.76% and average deposits and customer repos of $11.95 billion at a cost of .73%. The decrease in cost of funds was offset by lower interest earning asset yields that declined by 6 basis points from 4.34% in the first quarter of 2024 to 4.28% in the first quarter of 2025. The lower earning asset yields included lower loan yields, which declined from 5.30% for the first quarter of 2024 to 5.22% for the first quarter of 2025.

    Earning Assets and Deposits
    On average, earning assets decreased by $405.6 million compared to the fourth quarter of 2024 and declined by $1.09 billion when compared to the first quarter of 2024. The decline in earning assets from the fourth quarter of 2024 was primarily a $323 million decrease in funds held at the Federal Reserve, as well as a $55 million average decline in outstanding loans. Compared to the first quarter of 2024, the average balance of outstanding loans was $357 million lower, investment securities decreased by $449.0 million and the average amount of funds held at the Federal Reserve decreased by $272.0 million. Noninterest-bearing deposits declined on average by $109.7 million, or 1.54%, from the fourth quarter of 2024 and interest-bearing deposits and customer repurchase agreements declined on average by $270.9 million. Compared to the first quarter of 2024, total deposits and customer repurchase agreements increased on average by $243.9 million, or 2.04%, including an increase of $420.2 million in interest-bearing deposits and customer repurchase agreements. On average, noninterest-bearing deposits were 59.01% of total deposits during the most recent quarter, compared to 58.74% for the fourth quarter of 2024 and 61.72% for the first quarter of 2024.

        Three Months Ended  
    SELECTED FINANCIAL HIGHLIGHTS March 31, 2025   December 31, 2024   March 31, 2024  
        (Dollars in thousands)  
    Yield on average investment securities (TE)   2.63%       2.58%       2.64%    
    Yield on average loans   5.22%       5.15%       5.30%    
    Yield on average earning assets (TE)   4.28%       4.24%       4.34%    
    Cost of deposits   0.86%       0.93%       0.74%    
    Cost of funds   1.04%       1.13%       1.31%    
    Net interest margin (TE)   3.31%       3.18%       3.10%    
                               
    Average Earning Asset Mix Avg   % of Total   Avg   % of Total   Avg   % of Total
      Total investment securities $ 4,908,718   36.21 %   $ 4,936,514   35.36 %   $ 5,357,708   36.59 %  
      Interest-earning deposits with other institutions   162,389   1.20 %     485,103   3.47 %     444,101   3.03 %  
      Loans   8,467,465   62.46 %     8,522,587   61.04 %     8,824,579   60.26 %  
      Total interest-earning assets   13,556,584         13,962,216         14,644,400      
                               


    Provision for Credit Losses

    There was a $2.0 million recapture of provision for credit losses in the first quarter of 2025, compared to a $3.0 million recapture of provision for credit losses in the fourth quarter of 2024 and no provision in the first quarter of 2024. Net recoveries for the first quarter of 2025 were $130,000 compared to net recoveries of $180,000 in the prior quarter. Allowance for credit losses represented 0.94% of gross loans at March 31, 2025 and December 31, 2024.

    Noninterest Income
    Noninterest income was $16.2 million for the first quarter of 2025, compared with $13.1 million for the fourth quarter of 2024 and $14.1 million for the first quarter of 2024. During the first quarter of 2025, the Bank sold four OREO properties resulting in a gain of $2.2 million. Income from Bank Owned Life Insurance (“BOLI”) increased in the first quarter of 2025 by $445,000 from the fourth quarter of 2024 and decreased by $762,000 compared to the first quarter of 2024. Compared to the fourth quarter of 2024 and the first quarter of 2024, income from various equity investments increased by $750,000 and $450,000, respectively.

    Noninterest Expense
    Noninterest expense for the first quarter of 2025 was $59.1 million, compared to $58.5 million for the fourth quarter of 2024 and $59.8 million for the first quarter of 2024. The $664,000 quarter-over-quarter increase includes a $500,000 provision for unfunded loan commitments in the first quarter of 2025, compared to no provision or recapture of provision in the first and fourth quarter of 2024. Salaries and employee benefit costs increased $479,000, as the first quarter of each calendar year reflects higher payroll taxes than the fourth quarter of the prior year. Offsetting those quarter-over-quarter increases was a decline in legal expenses of $326,000.

    The year-over-year decrease in noninterest expense of $627,000 was impacted by the higher level of assessment expense in the first quarter of 2024, in which we had an additional accrual of $2.3 million associated with the 2023 FDIC special assessment. The decline in assessment expense was offset by increases in software expenses of $696,000 and occupancy expenses of $433,000, as well as the $500,000 recapture of provision for unfunded loan commitments in the first quarter of 2025. As a percentage of average assets, noninterest expense was 1.58% for the first quarter of 2025, compared to 1.49% for the fourth quarter of 2024 and 1.48% for the first quarter of 2024. The efficiency ratio for the first quarter of 2025 was 46.69%, compared to 47.34% for the fourth quarter of 2024 and 47.22% for the first quarter of 2024.

    Income Taxes
    Our effective tax rate for the quarter ended March 31, 2025 was 26.50%, compared with 25.25% for the fourth quarter of 2024, and 27.25% for the same period of 2024. Our estimated annual effective tax rate can vary depending upon the level of tax-advantaged income from municipal securities and BOLI, as well as available tax credits.

    BALANCE SHEET HIGHLIGHTS

    Assets
    The Company reported total assets of $15.26 billion at March 31, 2025. This represented an increase of $102.9 million, or 0.68%, from total assets of $15.15 billion at December 31, 2024. The increase in assets included a $290.3 million increase in interest-earning balances due from the Federal Reserve, offset by a $27.6 million decrease in investment securities, and a $170.9 million decrease in net loans.

    Total assets at March 31, 2025 decreased by $1.2 billion, or 7.36%, from total assets of $16.47 billion at March 31, 2024. The decrease in assets was primarily due to a decrease of $476.5 million in interest-earning balances due from the Federal Reserve, a decrease of $397.5 million in investment securities and a $402.5 million decrease in net loans.

    Investment Securities
    Total investment securities were $4.89 billion at March 31, 2025, a decrease of $27.6 million, or 0.56% from December 31, 2024, and a decrease of $397.5 million, or 7.51%, from $5.29 billion at March 31, 2024.  

    At March 31, 2025, investment securities held-to-maturity (“HTM”) totaled $2.36 billion, a decrease of $20.5 million, or 0.86% from December 31, 2024, and a decrease of $95.4 million, or 3.89%, from March 31, 2024.

    At March 31, 2025, investment securities available-for-sale (“AFS”) totaled $2.54 billion, inclusive of a pre-tax net unrealized loss of $338.4 million. AFS securities decreased by $7.0 million, or 0.28% from December 31, 2024 and decreased by $302.0 million, or 10.65%, from $2.84 billion at March 31, 2024. The pre-tax unrealized loss decreased by $58.9 million from December 31, 2024 and decreased by $97.2 million from March 31, 2024.

    Loans
    Total loans and leases, at amortized cost, of $8.36 billion at March 31, 2025 decreased by $172.8 million, or 2.02%, from December 31, 2024. The quarter-over quarter decrease in loans included decreases of $16.8 million in commercial real estate loans and $167.8 million in dairy & livestock loans, partially offset by an increase of $17.1 million in commercial and industrial loans.

    Total loans and leases, at amortized cost, decreased by $407.1 million, or 4.64%, from March 31, 2024. The $407.1 million decrease included decreases of $229.9 million in commercial real estate loans, $43.1 million in construction loans, $20.8 million in commercial and industrial loans, $99.1 million in dairy & livestock and agribusiness loans, $6.8 million in municipal lease financings, and $7.0 million in SFR mortgage loans.

    Asset Quality
    During the first quarter of 2025, we experienced credit charge-offs of $40,000 and total recoveries of $170,000, resulting in net recoveries of $130,000. The allowance for credit losses (“ACL”) totaled $78.3 million at March 31, 2025, compared to $80.1 million at December 31, 2024 and $82.8 million at March 31, 2024. At March 31, 2025, ACL as a percentage of total loans and leases outstanding was 0.94%. This compares to 0.94% and 0.94% at December 31, 2024 and March 31, 2024, respectively.

    Nonperforming loans, defined as nonaccrual loans, including modified loans on nonaccrual, plus loans 90 days past due and accruing interest, and nonperforming assets, defined as nonperforming plus OREO, are highlighted below.

    Nonperforming Assets and Delinquency Trends March 31, 2025
      December 31, 2024
      March 31, 2024
    Nonperforming loans   (Dollars in thousands)
    Commercial real estate   $ 24,379     $ 25,866     $ 10,661  
    SBA     1,024       1,529       54  
    Commercial and industrial     173       340       2,727  
    Dairy & livestock and agribusiness     60       60       60  
    SFR mortgage                 308  
    Consumer and other loans                  
    Total   $ 25,636     $ 27,795     $ 13,810  
    % of Total loans     0.31 %     0.33 %     0.16 %
    OREO            
    Commercial real estate   $ 495     $ 18,656     $  
    Commercial and industrial                 647  
    SFR mortgage           647        
    Total   $ 495     $ 19,303     $ 647  
                 
    Total nonperforming assets   $ 26,131     $ 47,098     $ 14,457  
    % of Nonperforming assets to total assets     0.17 %     0.31 %     0.09 %
                 
    Past due 30-89 days (accruing)            
    Commercial real estate   $     $     $ 19,781  
    SBA     718       88       408  
    Commercial and industrial           399       6  
    Dairy & livestock and agribusiness                  
    SFR mortgage                  
    Consumer and other loans                  
    Total   $ 718     $ 487     $ 20,195  
    % of Total loans     0.01 %     0.01 %     0.23 %
    Total nonperforming, OREO, and past due   $ 26,849     $ 47,585     $ 34,652  
                 
    Classified Loans   $ 94,169     $ 89,549     $ 103,080  
     

    The $21.0 million decrease in nonperforming assets from December 31, 2024 was primarily due to the sale of $19.3 million of OREO at a net gain of $2.2 million during the first quarter of 2025. Classified loans are loans that are graded “substandard” or worse. Classified loans increased $4.6 million quarter-over-quarter, primarily due to increases of $6.5 million in classified dairy and livestock loans.

    Deposits & Customer Repurchase Agreements
    Deposits of $12.0 billion and customer repurchase agreements of $276.2 million totaled $12.27 billion at March 31, 2025. This represented a net increase of $55.8 million compared to December 31, 2024. Total deposits and customer repurchase agreements increased $95.4 million, or .78% when compared to $12.17 billion at March 31, 2024.

    Noninterest-bearing deposits were $7.18 billion at March 31, 2025, an increase of $147.2 million, or 2.09%, when compared to $7.04 billion at December 31, 2024. Noninterest-bearing deposits increased by $71.5 million, or 1.00% when compared to $7.11 billion at March 31, 2024. At March 31, 2025, noninterest-bearing deposits were 59.92% of total deposits, compared to 58.90% at December 31, 2024 and 59.80% at
    March 31, 2024.

    Borrowings
    As of March 31, 2025, total borrowings consisted of $500 million of FHLB advances. The FHLB advances include maturities of $300 million, at an average cost of approximately 4.73%, maturing in May of 2026, and $200 million, at a cost of 4.27% maturing in May of 2027. Total borrowings decreased by $1.5 billion from March 31, 2024. The $2.0 billion of borrowings at March 31, 2024 consisted of one-year advances from the Federal Reserve’s Bank Term Funding Program, at an average cost of approximately 4.75%, all of which were redeemed before the end of 2024.

    Capital
    The Company’s total equity was $2.23 billion at March 31, 2025. This represented an overall increase of $42.1 million from total equity of $2.19 billion at December 31, 2024. Increases to equity included $51.1 million in net earnings and a $34.8 million increase in other comprehensive income that were partially offset by $27.9 million in cash dividends. During the first quarter of 2025, we repurchased, under our stock repurchase plan, 782,063 shares of common stock, at an average repurchase price of $19.55, totaling $15.3 million.   Our tangible book value per share at March 31, 2025 was $10.45.

    Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory standards.

            CVB Financial Corp. Consolidated  
    Capital Ratios   Minimum Required Plus Capital Conservation Buffer   March 31, 2025   December 31, 2024   March 31, 2024  
                       
    Tier 1 leverage capital ratio   4.0%   11.8%   11.5%   10.5%  
    Common equity Tier 1 capital ratio   7.0%   16.5%   16.2%   14.9%  
    Tier 1 risk-based capital ratio   8.5%   16.5%   16.2%   14.9%  
    Total risk-based capital ratio   10.5%   17.3%   17.1%   15.8%  
                       
    Tangible common equity ratio       10.0%   9.8%   8.3%  
                       

    CitizensTrust
    As of March 31, 2025 CitizensTrust had approximately $4.7 billion in assets under management and administration, including $3.38 billion in assets under management. Revenues were $3.4 million for the first quarter of 2025, compared to $3.5 million in the fourth quarter of 2024 and $3.2 million for the first quarter of 2024. CitizensTrust provides trust, investment and brokerage related services, as well as financial, estate and business succession planning.

    Corporate Overview
    CVB Financial Corp. (“CVBF”) is the holding company for Citizens Business Bank. CVBF is one of the 10 largest bank holding companies headquartered in California with more than $15 billion in total assets. Citizens Business Bank is consistently recognized as one of the top performing banks in the nation and offers a wide array of banking, lending and investing services with more than 60 banking centers and three trust office locations serving California.

    Shares of CVB Financial Corp. common stock are listed on the NASDAQ under the ticker symbol “CVBF”. For investor information on CVB Financial Corp., visit our Citizens Business Bank website at www.cbbank.com and click on the “Investors” tab.

    Conference Call

    Management will hold a conference call at 7:30 a.m. PDT/10:30 a.m. EDT on Thursday, April 24, 2025, to discuss the Company’s first quarter 2025 financial results. The conference call can be accessed live by registering at: https://register-conf.media-server.com/register/BI643a97d119af4b899539fee84f093408

    The conference call will also be simultaneously webcast over the Internet; please visit our Citizens Business Bank website at www.cbbank.com and click on the “Investors” tab to access the call from the site. Please access the website 15 minutes prior to the call to download any necessary audio software. This webcast will be recorded and available for replay on the Company’s website approximately two hours after the conclusion of the conference call and will be available on the website for approximately 12 months.

    Safe Harbor
    Certain statements set forth herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “will likely result”, “aims”, “anticipates”, “believes”, “could”, “estimates”, “expects”, “hopes”, “intends”, “may”, “plans”, “projects”, “seeks”, “should”, “will,” “strategy”, “possibility”, and variations of these words and similar expressions help to identify these forward-looking statements, which involve risks and uncertainties that could cause actual results or performance to differ materially from those projected. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies, goals and statements about the Company’s outlook regarding revenue and asset growth, financial performance and profitability, capital and liquidity levels, loan and deposit levels, growth and retention, yields and returns, loan diversification and credit management, stockholder value creation, tax rates, the impact of economic developments, the impact of monetary, fiscal and trade policies, and the impact of acquisitions we have made or may make. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company, and there can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors, in addition to those set forth below, could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements.

    General risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which we conduct business; the effects of, and changes in, immigration, trade, tariff, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market and monetary fluctuations; the effect of acquisitions we have made or may make, including, without limitation, the failure to obtain the necessary regulatory approvals, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target and key personnel into our operations; the timely development of competitive products and services and the acceptance of these products and services by new and existing customers; the impact of changes in financial services policies, laws, and regulations, including those concerning banking, taxes, securities, and insurance, and the application thereof by regulatory agencies; the effectiveness of our risk management framework and quantitative models; changes in the level of our nonperforming assets and charge-offs; the transition away from USD LIBOR and uncertainties regarding potential alternative reference rates, including SOFR; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the U.S. Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters; possible credit related impairments or declines in the fair value of loans and securities held by us; possible impairment charges to goodwill on our balance sheet; changes in customer spending, borrowing, and savings habits; the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; periodic fluctuations in commercial or residential real estate prices or values; our ability to attract or retain deposits or to access government or private lending facilities and other sources of liquidity; the possibility that we may reduce or discontinue the payment of dividends on our common stock; changes in the financial performance and/or condition of our borrowers; changes in the competitive environment among financial and bank holding companies and other financial service providers; technological changes in banking and financial services; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism, and/or military conflicts, which could impact business and economic conditions in the United States and abroad; catastrophic events or natural disasters, including earthquakes, drought, climate change or extreme weather events that may affect our assets, communications or computer services, customers, employees or third party vendors; public health crises and pandemics, and their effects on the economic and business environments in which we operate, including on our asset credit quality, business operations, and employees, as well as the impact on general economic and financial market conditions; cybersecurity threats and fraud and the costs of defending against them, including the costs of compliance with legislation or regulations to combat fraud and cybersecurity threats; our ability to recruit and retain key executives, board members and other employees, and our ability to comply with federal and state in employment laws and regulations; ongoing or unanticipated regulatory or legal proceedings or outcomes; and our ability to manage the risks involved in the foregoing.

    Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s 2024 Annual Report on Form 10-K filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).

    The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements, except as required by law. Any statements about future operating results, such as those concerning accretion and dilution to the Company’s earnings or shareholders, are for illustrative purposes only, are not forecasts, and actual results may differ.

    Non-GAAP Financial Measures — Certain financial information provided in this earnings release has not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and is presented on a non-GAAP basis. Investors and analysts should refer to the reconciliations included in this earnings release and should consider the Company’s non-GAAP measures in addition to, not as a substitute for or as superior to, measures prepared in accordance with GAAP. These measures may or may not be comparable to similarly titled measures used by other companies.

    Contact:
    David A. Brager
    President and Chief Executive Officer
    (909) 980-4030

    CVB FINANCIAL CORP. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited)
    (Dollars in thousands)
                 
                 
        March 31,
    2025
      December 31,
    2024
      March 31,
    2024
    Assets            
    Cash and due from banks   $ 187,981     $ 153,875     $ 131,955  
    Interest-earning balances due from Federal Reserve     341,108       50,823       817,634  
    Total cash and cash equivalents     529,089       204,698       949,589  
    Interest-earning balances due from depository institutions     3,451       480       12,632  
    Investment securities available-for-sale     2,535,066       2,542,115       2,837,100  
    Investment securities held-to-maturity     2,359,141       2,379,668       2,454,586  
    Total investment securities     4,894,207       4,921,783       5,291,686  
    Investment in stock of Federal Home Loan Bank (FHLB)     18,012       18,012       18,012  
    Loans and lease finance receivables     8,363,632       8,536,432       8,770,713  
    Allowance for credit losses     (78,252 )     (80,122 )     (82,817 )
    Net loans and lease finance receivables     8,285,380       8,456,310       8,687,896  
    Premises and equipment, net     26,772       27,543       43,448  
    Bank owned life insurance (BOLI)     318,301       316,248       310,744  
    Intangibles     8,812       9,967       13,853  
    Goodwill     765,822       765,822       765,822  
    Other assets     406,745       432,792       374,464  
    Total assets   $ 15,256,591     $ 15,153,655     $ 16,468,146  
    Liabilities and Stockholders’ Equity            
    Liabilities:            
    Deposits:            
    Noninterest-bearing   $ 7,184,267     $ 7,037,096     $ 7,112,789  
    Investment checking     533,220       551,305       545,066  
    Savings and money market     3,710,612       3,786,387       3,561,512  
    Time deposits     561,822       573,593       675,554  
    Total deposits     11,989,921       11,948,381       11,894,921  
    Customer repurchase agreements     276,163       261,887       275,720  
    Other borrowings     500,000       500,000       1,995,000  
    Other liabilities     262,088       257,071       215,680  
    Total liabilities     13,028,172       12,967,339       14,381,321  
    Stockholders’ Equity            
    Stockholders’ equity     2,505,719       2,498,380       2,422,110  
    Accumulated other comprehensive loss, net of tax     (277,300 )     (312,064 )     (335,285 )
    Total stockholders’ equity     2,228,419       2,186,316       2,086,825  
    Total liabilities and stockholders’ equity   $ 15,256,591     $ 15,153,655     $ 16,468,146  
                 
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED AVERAGE BALANCE SHEETS
    (Unaudited)
    (Dollars in thousands)
                 
                 
        Three Months Ended
        March 31,
    2025
      December 31,
    2024
      March 31,
    2024
    Assets            
    Cash and due from banks   $ 154,328     $ 152,966     $ 162,049  
    Interest-earning balances due from Federal Reserve     161,432       484,038       433,421  
    Total cash and cash equivalents     315,760       637,004       595,470  
    Interest-earning balances due from depository institutions     957       1,065       10,680  
    Investment securities available-for-sale     2,539,211       2,542,649       2,900,097  
    Investment securities held-to-maturity     2,369,507       2,393,865       2,457,611  
    Total investment securities     4,908,718       4,936,514       5,357,708  
    Investment in stock of FHLB     18,012       18,012       18,012  
    Loans and lease finance receivables     8,467,465       8,522,587       8,824,579  
    Allowance for credit losses     (80,113 )     (82,960 )     (85,751 )
    Net loans and lease finance receivables     8,387,352       8,439,627       8,738,828  
    Premises and equipment, net     27,408       29,959       44,380  
    Bank owned life insurance (BOLI)     316,643       316,938       309,609  
    Intangibles     9,518       10,650       14,585  
    Goodwill     765,822       765,822       765,822  
    Other assets     419,116       406,898       350,319  
    Total assets   $ 15,169,306     $ 15,562,489     $ 16,205,413  
    Liabilities and Stockholders’ Equity            
    Liabilities:            
    Deposits:            
    Noninterest-bearing   $ 7,006,357     $ 7,116,050     $ 7,182,718  
    Interest-bearing     4,866,318       4,998,424       4,454,135  
    Total deposits     11,872,675       12,114,474       11,636,853  
    Customer repurchase agreements     317,322       456,145       309,272  
    Other borrowings     513,078       500,000       1,991,978  
    Other liabilities     239,283       278,314       168,442  
    Total liabilities     12,942,358       13,348,933       14,106,545  
    Stockholders’ Equity            
    Stockholders’ equity     2,523,923       2,507,060       2,432,075  
    Accumulated other comprehensive loss, net of tax     (296,975 )     (293,504 )     (333,207 )
    Total stockholders’ equity     2,226,948       2,213,556       2,098,868  
    Total liabilities and stockholders’ equity   $ 15,169,306     $ 15,562,489     $ 16,205,413  
                 
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
    (Unaudited)
    (Dollars in thousands, except per share amounts)
                 
                 
        Three Months Ended
        March 31,
    2025
      December 31,
    2024
      March 31,
    2024
    Interest income:            
    Loans and leases, including fees   $ 109,071     $ 110,277     $ 116,349  
    Investment securities:            
    Investment securities available-for-sale     18,734       18,041       21,446  
    Investment securities held-to-maturity     13,021       13,020       13,402  
    Total investment income     31,755       31,061       34,848  
    Dividends from FHLB stock     379       380       419  
    Interest-earning deposits with other institutions     1,797       5,881       6,073  
    Total interest income     143,002       147,599       157,689  
    Interest expense:            
    Deposits     25,322       28,317       21,366  
    Borrowings and customer repurchase agreements     6,800       8,291       23,862  
    Other     436       573        
    Total interest expense     32,558       37,181       45,228  
    Net interest income before (recapture of) provision for credit losses     110,444       110,418       112,461  
    (Recapture of) provision for credit losses     (2,000 )     (3,000 )      
    Net interest income after (recapture of) provision for credit losses     112,444       113,418       112,461  
    Noninterest income:            
    Service charges on deposit accounts     4,908       5,097       5,036  
    Trust and investment services     3,411       3,512       3,224  
    Loss on sale of AFS investment securities           (16,735 )      
    Gain on OREO, net     2,183              
    Gain on sale leaseback transactions           16,794        
    Other     5,727       4,435       5,853  
    Total noninterest income     16,229       13,103       14,113  
    Noninterest expense:           .
    Salaries and employee benefits     36,477       35,998       36,401  
    Occupancy and equipment     5,998       5,866       5,565  
    Professional services     2,081       2,646       2,255  
    Computer software expense     4,221       3,921       3,525  
    Marketing and promotion     1,988       1,757       1,630  
    Amortization of intangible assets     1,155       1,163       1,438  
    Provision for unfunded loan commitments     500              
    Other     6,724       7,129       8,957  
    Total noninterest expense     59,144       58,480       59,771  
    Earnings before income taxes     69,529       68,041       66,803  
    Income taxes     18,425       17,183       18,204  
    Net earnings   $ 51,104     $ 50,858     $ 48,599  
                 
    Basic earnings per common share   $ 0.37     $ 0.36     $ 0.35  
    Diluted earnings per common share   $ 0.36     $ 0.36     $ 0.35  
    Cash dividends declared per common share   $ 0.20     $ 0.20     $ 0.20  
                 
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited)
    (Dollars in thousands, except per share amounts)
                 
        Three Months Ended
        March 31,
    2025
      December 31,
    2024
      March 31,
    2024
    Interest income – tax equivalent (TE)   $ 143,525     $ 148,128     $ 158,228  
    Interest expense     32,558       37,181       45,228  
    Net interest income – (TE)   $ 110,967     $ 110,947     $ 113,000  
                 
    Return on average assets, annualized     1.37 %     1.30 %     1.21 %
    Return on average equity, annualized     9.31 %     9.14 %     9.31 %
    Efficiency ratio [1]     46.69 %     47.34 %     47.22 %
    Noninterest expense to average assets, annualized     1.58 %     1.49 %     1.48 %
    Yield on average loans     5.22 %     5.15 %     5.30 %
    Yield on average earning assets (TE)     4.28 %     4.24 %     4.34 %
    Cost of deposits     0.86 %     0.93 %     0.74 %
    Cost of deposits and customer repurchase agreements     0.87 %     0.97 %     0.73 %
    Cost of funds     1.04 %     1.13 %     1.31 %
    Net interest margin (TE)     3.31 %     3.18 %     3.10 %
    [1] Noninterest expense divided by net interest income before provision for credit losses plus noninterest income.
                 
    Tangible Common Equity Ratio (TCE) [2]            
    CVB Financial Corp. Consolidated     10.04 %     9.81 %     8.33 %
    Citizens Business Bank     9.92 %     9.64 %     8.23 %
    [2] (Capital – [GW+Intangibles])/(Total Assets – [GW+Intangibles])
                 
    Weighted average shares outstanding            
    Basic     138,973,996       138,661,665       138,428,596  
    Diluted     139,294,401       139,102,524       138,603,324  
    Dividends declared   $ 27,853     $ 27,978     $ 27,886  
    Dividend payout ratio [3]     54.50 %     55.01 %     57.38 %
    [3] Dividends declared on common stock divided by net earnings.
                 
    Number of shares outstanding – (end of period)     139,089,612       139,689,686       139,641,884  
    Book value per share   $ 16.02     $ 15.65     $ 14.94  
    Tangible book value per share   $ 10.45     $ 10.10     $ 9.36  
                 
        March 31,
    2025
      December 31,
    2024
      March 31,
    2024
           
    Nonperforming assets:            
    Nonaccrual loans   $ 25,636     $ 27,795     $ 13,810  
    Other real estate owned (OREO), net     495       19,303       647  
    Total nonperforming assets   $ 26,131     $ 47,098     $ 14,457  
    Modified loans/performing troubled debt restructured loans (TDR) [4]   $ 11,949     $ 6,467     $ 10,765  
                 
    [4] Effective January 1, 2023, performing and nonperforming TDRs are reflected as Loan Modifications to borrowers experiencing financial difficulty.
                 
    Percentage of nonperforming assets to total loans outstanding and OREO     0.31 %     0.55 %     0.16 %
    Percentage of nonperforming assets to total assets     0.17 %     0.31 %     0.09 %
    Allowance for credit losses to nonperforming assets     299.46 %     170.12 %     572.85 %
                 
        Three Months Ended
        March 31,
    2025
      December 31,
    2024
      March 31,
    2024
    Allowance for credit losses:            
    Beginning balance   $ 80,122     $ 82,942     $ 86,842  
    Total charge-offs     (40 )     (64 )     (4,267 )
    Total recoveries on loans previously charged-off     170       244       242  
    Net recoveries (charge-offs)     130       180       (4,025 )
    (Recapture of) provision for credit losses     (2,000 )     (3,000 )      
    Allowance for credit losses at end of period   $ 78,252     $ 80,122     $ 82,817  
                 
    Net recoveries (charge-offs) to average loans     0.002 %     0.002 %     -0.046 %
                             
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited)
    (Dollars in millions)
                                   
    Allowance for Credit Losses by Loan Type                          
                                   
        March 31, 2025   December 31, 2024   March 31, 2024
        Allowance
    For Credit
    Losses
      Allowance
    as a % of
    Total Loans
    by Respective
    Loan Type
      Allowance
    For Credit
    Losses
      Allowance
    as a % of
    Total Loans
    by Respective
    Loan Type
      Allowance
    For Credit
    Losses
      Allowance
    as a % of
    Total Loans
    by Respective
    Loan Type
                                   
    Commercial real estate   $ 65.3       1.01 %   $ 66.2       1.02 %   $ 69.4       1.03 %
    Construction     0.2       1.52 %     0.3       1.94 %     1.3       2.20 %
    SBA     2.6       0.96 %     2.6       0.96 %     2.5       0.94 %
    Commercial and industrial     6.1       0.65 %     6.1       0.66 %     5.1       0.53 %
    Dairy & livestock and agribusiness     2.8       1.12 %     3.6       0.86 %     3.3       0.92 %
    Municipal lease finance receivables     0.2       0.32 %     0.2       0.31 %     0.2       0.27 %
    SFR mortgage     0.5       0.16 %     0.5       0.16 %     0.5       0.17 %
    Consumer and other loans     0.6       0.94 %     0.6       1.04 %     0.5       0.97 %
                                   
    Total   $ 78.3       0.94 %   $ 80.1       0.94 %   $ 82.8       0.94 %
                                   
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited)
    (Dollars in thousands, except per share amounts)
                             
    Quarterly Common Stock Price
                             
          2025       2024       2023  
    Quarter End   High   Low   High   Low   High   Low
    March 31,   $ 21.71     $ 18.22     $ 20.45     $ 15.95     $ 25.98     $ 16.34  
    June 30,   $     $     $ 17.91     $ 15.71     $ 16.89     $ 10.66  
    September 30,   $     $     $ 20.29     $ 16.08     $ 19.66     $ 12.89  
    December 31,   $     $     $ 24.58     $ 17.20     $ 21.77     $ 14.62  
                             
    Quarterly Consolidated Statements of Earnings
                             
            Q1   Q4   Q3   Q2   Q1
              2025       2024       2024       2024       2024  
    Interest income                        
    Loans and leases, including fees       $ 109,071     $ 110,277     $ 114,929     $ 114,200     $ 116,349  
    Investment securities and other         33,931       37,322       50,823       44,872       41,340  
    Total interest income         143,002       147,599       165,752       159,072       157,689  
    Interest expense                        
    Deposits         25,322       28,317       29,821       25,979       21,366  
    Borrowings and customer repurchase agreements     6,800       8,291       22,312       22,244       23,862  
    Other         436       573                    
    Total interest expense         32,558       37,181       52,133       48,223       45,228  
    Net interest income before (recapture of)                    
    provision for credit losses         110,444       110,418       113,619       110,849       112,461  
    (Recapture of) provision for credit losses     (2,000 )     (3,000 )                  
    Net interest income after (recapture of)                    
    provision for credit losses         112,444       113,418       113,619       110,849       112,461  
                             
    Noninterest income         16,229       13,103       12,834       14,424       14,113  
    Noninterest expense         59,144       58,480       58,835       56,497       59,771  
    Earnings before income taxes         69,529       68,041       67,618       68,776       66,803  
    Income taxes         18,425       17,183       16,394       18,741       18,204  
    Net earnings       $ 51,104     $ 50,858     $ 51,224     $ 50,035     $ 48,599  
                             
    Effective tax rate         26.50 %     25.25 %     24.25 %     27.25 %     27.25 %
                             
    Basic earnings per common share       $ 0.37     $ 0.36     $ 0.37     $ 0.36     $ 0.35  
    Diluted earnings per common share     $ 0.36     $ 0.36     $ 0.37     $ 0.36     $ 0.35  
                             
    Cash dividends declared per common share   $ 0.20     $ 0.20     $ 0.20     $ 0.20     $ 0.20  
                             
    Cash dividends declared       $ 27,853     $ 27,978     $ 27,977     $ 28,018     $ 27,886  
                             
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited)
    (Dollars in thousands)
                         
    Loan Portfolio by Type
        March 31,   December 31,   September 30,
      June 30,   March 31,
          2025       2024       2024       2024       2024  
                         
    Commercial real estate   $ 6,490,604     $ 6,507,452     $ 6,618,637     $ 6,664,925     $ 6,720,538  
    Construction     15,706       16,082       14,755       52,227       58,806  
    SBA     271,844       273,013       272,001       267,938       268,320  
    SBA – PPP     179       774       1,255       1,757       2,249  
    Commercial and industrial     942,301       925,178       936,489       956,184       963,120  
    Dairy & livestock and agribusiness     252,532       419,904       342,445       350,562       351,624  
    Municipal lease finance receivables     65,203       66,114       67,585       70,889       72,032  
    SFR mortgage     269,493       269,172       267,181       267,593       276,475  
    Consumer and other loans     55,770       58,743       52,217       49,771       57,549  
    Gross loans, at amortized cost     8,363,632       8,536,432       8,572,565       8,681,846       8,770,713  
    Allowance for credit losses     (78,252 )     (80,122 )     (82,942 )     (82,786 )     (82,817 )
    Net loans   $ 8,285,380     $ 8,456,310     $ 8,489,623     $ 8,599,060     $ 8,687,896  
                         
                         
                         
    Deposit Composition by Type and Customer Repurchase Agreements
                         
        March 31,   December 31,   September 30,
      June 30,   March 31,
          2025       2024       2024       2024       2024  
                         
    Noninterest-bearing   $ 7,184,267     $ 7,037,096     $ 7,136,824     $ 7,090,095     $ 7,112,789  
    Investment checking     533,220       551,305       504,028       515,930       545,066  
    Savings and money market     3,710,612       3,786,387       3,745,707       3,409,320       3,561,512  
    Time deposits     561,822       573,593       685,930       774,980       675,554  
    Total deposits     11,989,921       11,948,381       12,072,489       11,790,325       11,894,921  
                         
    Customer repurchase agreements     276,163       261,887       394,515       268,826       275,720  
    Total deposits and customer repurchase agreements   $ 12,266,084     $ 12,210,268     $ 12,467,004     $ 12,059,151     $ 12,170,641  
                         
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited)
    (Dollars in thousands)
                         
    Nonperforming Assets and Delinquency Trends
        March 31,   December 31,   September 30,
      June 30,   March 31,
          2025       2024       2024       2024       2024  
    Nonperforming loans:                    
    Commercial real estate   $ 24,379     $ 25,866     $ 18,794     $ 21,908     $ 10,661  
    Construction                              
    SBA     1,024       1,529       151       337       54  
    Commercial and industrial     173       340       2,825       2,712       2,727  
    Dairy & livestock and agribusiness     60       60       143             60  
    SFR mortgage                             308  
    Consumer and other loans                              
    Total   $ 25,636     $ 27,795     $ 21,913     $ 24,957     $ 13,810  
    % of Total loans     0.31 %     0.33 %     0.26 %     0.29 %     0.16 %
                         
    Past due 30-89 days (accruing):                    
    Commercial real estate   $     $     $ 30,701     $ 43     $ 19,781  
    Construction                              
    SBA     718       88                   408  
    Commercial and industrial           399       64       103       6  
    Dairy & livestock and agribusiness                              
    SFR mortgage                              
    Consumer and other loans                              
    Total   $ 718     $ 487     $ 30,765     $ 146     $ 20,195  
    % of Total loans     0.01 %     0.01 %     0.36 %     0.00 %     0.23 %
                         
    OREO:                    
    Commercial real estate   $ 495     $ 18,656     $     $     $  
    SBA                              
    Commercial and industrial                              
    SFR mortgage           647       647       647       647  
    Total   $ 495     $ 19,303     $ 647     $ 647     $ 647  
    Total nonperforming, past due, and OREO   $ 26,849     $ 47,585     $ 53,325     $ 25,750     $ 34,652  
    % of Total loans     0.32 %     0.56 %     0.62 %     0.30 %     0.40 %
     
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited)
                     
    Regulatory Capital Ratios
                     
                     
                     
            CVB Financial Corp. Consolidated
    Capital Ratios   Minimum Required Plus
    Capital Conservation Buffer
      March 31,
    2025
      December 31,
    2024
      March 31,
    2024
                     
    Tier 1 leverage capital ratio     4.0 %     11.8 %     11.5 %     10.5 %
    Common equity Tier 1 capital ratio     7.0 %     16.5 %     16.2 %     14.9 %
    Tier 1 risk-based capital ratio     8.5 %     16.5 %     16.2 %     14.9 %
    Total risk-based capital ratio     10.5 %     17.3 %     17.1 %     15.8 %
                     
    Tangible common equity ratio         10.0 %     9.8 %     8.3 %
                     
    Tangible Book Value Reconciliations (Non-GAAP)
                           
    The tangible book value per share is a Non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of tangible book value to the Company stockholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of March 31, 2025, December 31, 2024 and March 31, 2024.
     
     
        March 31,
    2025
          December 31,
    2024
          March 31,
    2024
     
        (Dollars in thousands, except per share amounts)
                           
    Stockholders’ equity $ 2,228,419     $ 2,186,316     $ 2,086,825  
    Less: Goodwill   (765,822 )     (765,822 )     (765,822 )
    Less: Intangible assets   (8,812 )     (9,967 )     (13,853 )
    Tangible book value $ 1,453,785     $ 1,410,527     $ 1,307,150  
    Common shares issued and outstanding   139,089,612       139,689,686       139,641,884  
    Tangible book value per share $ 10.45     $ 10.10     $ 9.36  
     
    Return on Average Tangible Common Equity Reconciliations (Non-GAAP)
     
    The return on average tangible common equity is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of net income, adjusted for tax-effected amortization of intangibles, to net income computed in accordance with GAAP; a reconciliation of average tangible common equity to the Company’s average stockholders’ equity computed in accordance with GAAP; as well as a calculation of return on average tangible common equity.
                             
                             
        Three Months Ended
          March 31,       December 31,       March 31,    
          2025       2024       2024    
        (Dollars in thousands)    
                               
    Net Income   $ 51,104     $ 50,858     $ 48,599    
    Add: Amortization of intangible assets     1,155       1,163       1,438    
    Less: Tax effect of amortization of intangible assets (1)     (341 )     (344 )     (425 )  
    Tangible net income   $ 51,918     $ 51,677     $ 49,612    
                               
    Average stockholders’ equity   $ 2,226,948     $ 2,213,556     $ 2,098,868    
    Less: Average goodwill     (765,822 )     (765,822 )     (765,822 )  
    Less: Average intangible assets     (9,518 )     (10,650 )     (14,585 )  
    Average tangible common equity   $ 1,451,608     $ 1,437,084     $ 1,318,461    
                               
    Return on average equity, annualized (2)     9.31 %     9.14 %     9.31 %  
    Return on average tangible common equity, annualized (2)     14.51 %     14.31 %     15.13 %  
                               
                               
    (1) Tax effected at respective statutory rates.                          
    (2) Annualized where applicable.                          

    The MIL Network

  • MIL-OSI: Live Oak Bancshares, Inc. Reports First Quarter 2025 Results

    Source: GlobeNewswire (MIL-OSI)

    WILMINGTON, N.C., April 23, 2025 (GLOBE NEWSWIRE) — Live Oak Bancshares, Inc. (NYSE: LOB) (“Live Oak” or “the Company”) today reported first quarter of 2025 net income attributable to the Company of $9.7 million, or $0.21 per diluted share.

    Live Oak’s performance in the quarter compared to the fourth quarter of 2024, includes these notable items:

    • Record first quarter production of $1.40 billion accompanied by strong deposit growth of $635.5 million, with total assets growing by 5.0% to $13.60 billion
    • Net interest income increased 3.1% and net interest margin increased 5 basis points from 3.15% to 3.20%
    • 1.5% decline in revenue and 3.4% increase in noninterest expenses generated 10% decline in pre-provision net revenue1
    • Provision expense for credit losses of $29.0 million, principally driven by loan growth amid a challenging macroeconomic environment, where elevated interest rates and inflationary pressures placed financial strain on some small business borrowers
    • Two key initiatives saw positive momentum — non-interest bearing deposit growth and small dollar loan production

    “Live Oak Bank demonstrated strong growth across our lending and deposit franchises in the first quarter, all while navigating the current small business credit cycle and a backdrop of economic uncertainty,” said Live Oak Chairman and CEO James S. (Chip) Mahan III. “We have an unwavering dedication to small business and staying close to our customers in these turbulent times remains paramount. Small business is the backbone of America, and we continue to support our nation’s entrepreneurs with the capital they need to create jobs, drive innovation, and serve their communities well.”

    Conference Call

    Live Oak will host a conference call to discuss the Company’s financial results and business outlook tomorrow, April 24, 2025, at 9:00 a.m. ET. The call will be accessible by telephone and webcast using Conference ID: 75855. A supplementary slide presentation will be posted to the website prior to the event, and a replay will be available for 12 months following the event. The conference call details are as follows:

    Live Telephone Dial-In

    U.S.: 800.549.8228
    International: +1 646.564.2877
    Pass Code: None Required

    Live Webcast Log-In

    Webcast Link: investor.liveoakbank.com
    Registration: Name and Email Required
    Multi-Factor Code: Provided After Registration

    (1) See accompanying GAAP to Non-GAAP Reconciliation.

       
    First Quarter 2025 Key Measures  
       
    (Dollars in thousands, except per share data)       Increase (Decrease)    
      1Q 2025   4Q 2024   Dollars   Percent   1Q 2024
    Total revenue (1) $ 126,113     $ 128,067     $ (1,954 )   (1.5 )%   $ 116,208  
    Total noninterest expense   84,017       81,257       2,760     3.4       77,737  
    Income before taxes   13,132       13,229       (97 )   (0.7 )     22,107  
    Effective tax rate   26.4 %     25.6 %     n/a     n/a     (24.8 )%
    Net income attributable to Live Oak Bancshares, Inc. $ 9,717     $ 9,900     $ (183 )   (1.8 )%   $ 27,586  
    Diluted earnings per share   0.21       0.22       (0.01 )   (5 )     0.60  
    Loan and lease production:                        
    Loans and leases originated $ 1,396,223     $ 1,421,118     $ (24,895 )   (1.8 )%   $ 805,129  
    % Fully funded   46.0 %     42.4 %     n/a     n/a       43.8 %
    Total loans and leases: $ 11,061,866     $ 10,579,376     $ 482,490     4.6 %   $ 9,223,310  
    Total assets:   13,595,704       12,943,380       652,324     5.0       11,505,569  
    Total deposits:   12,395,945       11,760,494       635,451     5.4       10,383,361  

    (1) Total revenue consists of net interest income and total noninterest income.


    Important Note Regarding Forward-Looking Statements

    Statements in this press release that are based on other than historical data or that express the Company’s plans or expectations regarding future events or determinations are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company’s expectations regarding future events. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance or determinations, nor should they be relied upon as representing management’s views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those presented, either expressed or implied, in this press release. Factors that could cause actual results to differ materially from those expressed in the forward-looking statements include changes in Small Business Administration (“SBA”) rules, regulations or loan products, including the Section 7(a) program, changes in SBA standard operating procedures or changes in Live Oak Banking Company’s status as an SBA Preferred Lender; changes in rules, regulations or procedures for other government loan programs, including those of the United States Department of Agriculture; the impacts of any pandemic or public health situation on trade (including supply chains and export levels), travel, employee productivity and other economic activities that may have a destabilizing and negative effect on financial markets, economic activity and customer behavior; adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments; a reduction in or the termination of the Company’s ability to use the technology-based platform that is critical to the success of its business model, including a failure in or a breach of operational or security systems or those of its third-party service providers; risks relating to the material weakness we identified in our internal control over financial reporting; technological risks and developments, including cyber threats, attacks, or events; competition from other lenders; the Company’s ability to attract and retain key personnel; market and economic conditions and the associated impact on the Company; operational, liquidity and credit risks associated with the Company’s business; changes in political and economic conditions, including any prolonged U.S. government shutdown; the impact of heightened regulatory scrutiny of financial products and services and the Company’s ability to comply with regulatory requirements and expectations; changes in tariffs and trade barriers, including potential changes in U.S. and international trade policies and the resulting impact on the Company and its customers; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget; adverse results, including related fees and expenses, from pending or future lawsuits, government investigations or private actions; and the other factors discussed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) and available at the SEC’s Internet site (http://www.sec.gov). Except as required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

    About Live Oak Bancshares, Inc.

    Live Oak Bancshares, Inc. (NYSE: LOB) is a financial holding company and the parent company of Live Oak Bank. Live Oak Bancshares and its subsidiaries partner with businesses that share a groundbreaking focus on service and technology to redefine banking. To learn more, visit www.liveoak.bank.

    Contacts:

    Walter J. Phifer | CFO | Investor Relations | 910.202.6926
    Claire Parker | Corporate Communications | Media Relations | 910.597.1592

     
    Live Oak Bancshares, Inc.
    Quarterly Statements of Income (unaudited)
    (Dollars in thousands, except per share data)
     
      Three Months Ended   1Q 2025 Change vs.
      1Q 2025   4Q 2024   3Q 2024   2Q 2024   1Q 2024   4Q 2024   1Q 2024
    Interest income                     %   %
    Loans and fees on loans $ 195,616     $ 194,821     $ 192,170     $ 181,840     $ 176,010     0.4     11.1  
    Investment securities, taxable   11,089       10,490       9,750       9,219       8,954     5.7     23.8  
    Other interest earning assets   6,400       7,257       7,016       7,389       7,456     (11.8 )   (14.2 )
    Total interest income   213,105       212,568       208,936       198,448       192,420     0.3     10.7  
    Interest expense                          
    Deposits   110,888       113,357       110,174       105,358       101,998     (2.2 )   8.7  
    Borrowings   1,685       1,737       1,762       1,770       311     (3.0 )   441.8  
    Total interest expense   112,573       115,094       111,936       107,128       102,309     (2.2 )   10.0  
    Net interest income   100,532       97,474       97,000       91,320       90,111     3.1     11.6  
    Provision for loan and lease credit losses   28,964       33,581       34,502       11,765       16,364     (13.7 )   77.0  
    Net interest income after provision for loan and lease credit losses   71,568       63,893       62,498       79,555       73,747     12.0     (3.0 )
    Noninterest income                          
    Loan servicing revenue   8,298       8,524       8,040       7,347       7,624     (2.7 )   8.8  
    Loan servicing asset revaluation   (4,728 )     (2,326 )     (4,207 )     (2,878 )     (2,744 )   (103.3 )   (72.3 )
    Net gains on sales of loans   18,648       18,356       16,646       14,395       11,502     1.6     62.1  
    Net (loss) gain on loans accounted for under the fair value option   (1,034 )     195       2,255       172       (219 )   (630.3 )   (372.1 )
    Equity method investments (loss) income   (2,239 )     (2,739 )     (1,393 )     (1,767 )     (5,022 )   18.3     55.4  
    Equity security investments (losses) gains, net   20       12       909       161       (529 )   66.7     (103.8 )
    Lease income   2,573       2,456       2,424       2,423       2,453     4.8     4.9  
    Management fee income               1,116       3,271       3,271         (100.0 )
    Other noninterest income   4,043       6,115       7,142       11,035       9,761     (33.9 )   (58.6 )
    Total noninterest income   25,581       30,593       32,932       34,159       26,097     (16.4 )   (2.0 )
    Noninterest expense                          
    Salaries and employee benefits   48,008       45,214       44,524       46,255       47,275     6.2     1.6  
    Travel expense   2,795       2,628       2,344       2,328       2,438     6.4     14.6  
    Professional services expense   3,024       2,797       3,287       3,061       1,878     8.1     61.0  
    Advertising and marketing expense   3,665       1,979       2,473       3,004       3,692     85.2     (0.7 )
    Occupancy expense   2,737       2,558       2,807       2,388       2,247     7.0     21.8  
    Technology expense   9,251       9,406       9,081       7,996       7,723     (1.6 )   19.8  
    Equipment expense   3,745       3,769       3,472       3,511       3,074     (0.6 )   21.8  
    Other loan origination and maintenance expense   4,585       4,812       4,872       3,659       3,911     (4.7 )   17.2  
    Renewable energy tax credit investment (recovery) impairment         1,172       115       170       (927 )   (100.0 )   (100.0 )
    FDIC insurance   3,551       3,053       1,933       2,649       3,200     16.3     11.0  
    Other expense   2,656       3,869       2,681       2,635       3,226     (31.4 )   (17.7 )
    Total noninterest expense   84,017       81,257       77,589       77,656       77,737     3.4     8.1  
    Income before taxes   13,132       13,229       17,841       36,058       22,107     (0.7 )   (40.6 )
    Income tax expense   3,464       3,386       4,816       9,095       (5,479 )   2.3     (163.2 )
    Net income   9,668       9,843       13,025       26,963       27,586     (1.8 )   (65.0 )
    Net loss attributable to non-controlling interest   49       57                       (14.0 )   100.0  
    Net income attributable to Live Oak Bancshares, Inc. $ 9,717     $ 9,900     $ 13,025     $ 26,963     $ 27,586     (1.8 )   (64.8 )
    Earnings per share                          
    Basic $ 0.21     $ 0.22     $ 0.28     $ 0.60     $ 0.62     (4.5 )   (66.1 )
    Diluted $ 0.21     $ 0.22     $ 0.28     $ 0.59     $ 0.60     (4.5 )   (65.0 )
    Weighted average shares outstanding                          
    Basic   45,377,965       45,224,470       45,073,482       44,974,942       44,762,308          
    Diluted   45,754,499       46,157,979       45,953,947       45,525,082       45,641,210          
     
    Live Oak Bancshares, Inc.
    Quarterly Balance Sheets (unaudited)
    (Dollars in thousands)
     
      As of the quarter ended   1Q 2025 Change vs.
      1Q 2025   4Q 2024   3Q 2024   2Q 2024   1Q 2024   4Q 2024   1Q 2024
    Assets                     %   %
    Cash and due from banks $ 744,263     $ 608,800     $ 666,585     $ 615,449     $ 597,394     22.3     24.6  
    Certificates of deposit with other banks   250       250       250       250       250          
    Investment securities available-for-sale   1,312,680       1,248,203       1,233,466       1,151,195       1,120,622     5.2     17.1  
    Loans held for sale   367,955       346,002       359,977       363,632       310,749     6.3     18.4  
    Loans and leases held for investment (1)   10,693,911       10,233,374       9,831,891       9,172,134       8,912,561     4.5     20.0  
    Allowance for credit losses on loans and leases   (190,184 )     (167,516 )     (168,737 )     (137,867 )     (139,041 )   (13.5 )   (36.8 )
    Net loans and leases   10,503,727       10,065,858       9,663,154       9,034,267       8,773,520     4.4     19.7  
    Premises and equipment, net   259,113       264,059       267,032       267,864       258,071     (1.9 )   0.4  
    Foreclosed assets   2,108       1,944       8,015       8,015       8,561     8.4     (75.4 )
    Servicing assets   56,911       56,144       52,553       51,528       49,343     1.4     15.3  
    Other assets   348,697       352,120       356,314       376,370       387,059     (1.0 )   (9.9 )
    Total assets $ 13,595,704     $ 12,943,380     $ 12,607,346     $ 11,868,570     $ 11,505,569     5.0     18.2  
    Liabilities and shareholders’ equity                          
    Liabilities                          
    Deposits:                          
    Noninterest-bearing $ 386,108     $ 318,890     $ 258,844     $ 264,013     $ 226,668     21.1     70.3  
    Interest-bearing   12,009,837       11,441,604       11,141,703       10,443,018       10,156,693     5.0     18.2  
    Total deposits   12,395,945       11,760,494       11,400,547       10,707,031       10,383,361     5.4     19.4  
    Borrowings   110,247       112,820       115,371       117,745       120,242     (2.3 )   (8.3 )
    Other liabilities   58,065       66,570       83,672       82,745       74,248     (12.8 )   (21.8 )
    Total liabilities   12,564,257       11,939,884       11,599,590       10,907,521       10,577,851     5.2     18.8  
    Shareholders’ equity                          
    Preferred stock, no par value, 1,000,000 shares authorized, none issued or outstanding                                    
    Class A common stock (voting)   370,513       365,607       361,925       356,381       349,648     1.3     6.0  
    Class B common stock (non-voting)                                    
    Retained earnings   724,215       715,767       707,026       695,172       669,307     1.2     8.2  
    Accumulated other comprehensive loss   (67,698 )     (82,344 )     (61,195 )     (90,504 )     (91,237 )   17.8     25.8  
    Total shareholders’ equity attributed to Live Oak Bancshares, Inc.   1,027,030       999,030       1,007,756       961,049       927,718     2.8     10.7  
    Non-controlling interest   4,417       4,466                       (1.1 )   100.0  
    Total shareholders’ equity   1,031,447       1,003,496       1,007,756       961,049       927,718     2.8     11.2  
    Total liabilities and shareholders’ equity $ 13,595,704     $ 12,943,380     $ 12,607,346     $ 11,868,570     $ 11,505,569     5.0     18.2  

    (1) Includes $316.8 million, $328.7 million, $343.4 million, $363.0 million and $379.2 million measured at fair value for the quarters ended March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024, and March 31, 2024 respectively.

     
    Live Oak Bancshares, Inc.
    Quarterly Selected Financial Data
    (Dollars in thousands, except per share data)
     
      As of and for the three months ended
      1Q 2025   4Q 2024   3Q 2024   2Q 2024   1Q 2024
    Income Statement Data                  
    Net income attributable to Live Oak Bancshares, Inc. $ 9,717     $ 9,900     $ 13,025     $ 26,963     $ 27,586  
    Per Common Share                  
    Net income, diluted $ 0.21     $ 0.22     $ 0.28     $ 0.59     $ 0.60  
    Dividends declared   0.03       0.03       0.03       0.03       0.03  
    Book value   22.62       22.12       22.32       21.35       20.64  
    Tangible book value (1)   22.55       22.05       22.24       21.28       20.57  
    Performance Ratios                  
    Return on average assets (annualized)   0.30 %     0.31 %     0.43 %     0.93 %     0.98 %
    Return on average equity (annualized)   3.78       3.85       5.21       11.39       11.93  
    Net interest margin   3.20       3.15       3.33       3.28       3.33  
    Efficiency ratio (1)   66.62       63.45       59.72       61.89       66.89  
    Noninterest income to total revenue   20.28       23.89       25.35       27.22       22.46  
    Selected Loan Metrics                  
    Loans and leases originated $ 1,396,223     $ 1,421,118     $ 1,757,856     $ 1,171,141     $ 805,129  
    Outstanding balance of sold loans serviced   4,949,962       4,715,895       4,452,750       4,292,857       4,329,097  
    Asset Quality Ratios                  
    Allowance for credit losses to loans and leases held for investment (3)   1.83 %     1.69 %     1.78 %     1.57 %     1.63 %
    Net charge-offs (3) $ 6,774     $ 33,566     $ 1,710     $ 8,253     $ 3,163  
    Net charge-offs to average loans and leases held for investment (2) (3)   0.27 %     1.39 %     0.08 %     0.38 %     0.15 %
                       
    Nonperforming loans and leases at historical cost (3)                  
    Unguaranteed $ 99,907     $ 81,412     $ 49,398     $ 37,340     $ 43,117  
    Guaranteed   322,993       222,885       166,177       122,752       105,351  
    Total   422,900       304,297       215,575       160,092       148,468  
    Unguaranteed nonperforming historical cost loans and leases, to loans and leases held for investment (3)   0.96 %     0.82 %     0.52 %     0.42 %     0.51 %
                       
    Nonperforming loans at fair value (4)                  
    Unguaranteed $ 9,938     $ 9,115     $ 8,672     $ 9,590     $ 7,942  
    Guaranteed   58,100       54,873       49,822       51,570       47,620  
    Total   68,038       63,988       58,494       61,160       55,562  
    Unguaranteed nonperforming fair value loans to fair value loans held for investment (4)   3.14 %     2.77 %     2.53 %     2.64 %     2.09 %
                       
    Capital Ratios                  
    Common equity tier 1 capital (to risk-weighted assets)   10.70 %     11.04 %     11.19 %     11.85 %     11.89 %
    Tier 1 leverage capital (to average assets)   8.03       8.21       8.60       8.71       8.69  

    Notes to Quarterly Selected Financial Data
    (1) See accompanying GAAP to Non-GAAP Reconciliation.
    (2) Quarterly net charge-offs as a percentage of quarterly average loans and leases held for investment, annualized.
    (3) Loans and leases at historical cost only (excludes loans measured at fair value).
    (4) Loans accounted for under the fair value option only (excludes loans and leases carried at historical cost).

     
    Live Oak Bancshares, Inc.
    Quarterly Average Balances and Net Interest Margin
    (Dollars in thousands)
     
      Three Months Ended
    March 31, 2025
      Three Months Ended
    December 31, 2024
      Average
    Balance
      Interest   Average
    Yield/Rate
      Average
    Balance
      Interest   Average
    Yield/Rate
    Interest-earning assets:                      
    Interest-earning balances in other banks $ 581,267     $ 6,400   4.47 %   $ 603,758     $ 7,257   4.78 %
    Investment securities   1,379,797       11,089   3.26       1,340,027       10,490   3.11  
    Loans held for sale   407,953       8,612   8.56       339,394       7,361   8.63  
    Loans and leases held for investment (1)   10,388,872       187,004   7.30       10,030,353       187,460   7.44  
    Total interest-earning assets   12,757,889       213,105   6.77       12,313,532       212,568   6.87  
    Less: Allowance for credit losses on loans and leases   (165,320 )             (155,498 )        
    Noninterest-earning assets   534,133               551,265          
    Total assets $ 13,126,702             $ 12,709,299          
    Interest-bearing liabilities:                      
    Interest-bearing checking $ 350,491     $ 3,929   4.55 %   $ 350,304     $ 4,350   4.94 %
    Savings   5,540,147       51,604   3.78       5,333,338       52,308   3.90  
    Money market accounts   127,908       120   0.38       138,021       176   0.51  
    Certificates of deposit   5,563,004       55,235   4.03       5,376,290       56,523   4.18  
    Total deposits   11,581,550       110,888   3.88       11,197,953       113,357   4.03  
    Borrowings   111,919       1,685   6.11       114,561       1,737   6.03  
    Total interest-bearing liabilities   11,693,469       112,573   3.90       11,312,514       115,094   4.05  
    Noninterest-bearing deposits   342,482               281,874          
    Noninterest-bearing liabilities   58,739               83,373          
    Shareholders’ equity   1,027,547               1,028,426          
    Non-controlling interest   4,465               3,112          
    Total liabilities and shareholders’ equity $ 13,126,702             $ 12,709,299          
    Net interest income and interest rate spread     $ 100,532   2.87 %       $ 97,474   2.82 %
    Net interest margin         3.20             3.15  
    Ratio of average interest-earning assets to average interest-bearing liabilities         109.10 %           108.85 %

    (1) Average loan and lease balances include non-accruing loans and leases.

     
    Live Oak Bancshares, Inc.
    GAAP to Non-GAAP Reconciliation
    (Dollars in thousands)
     
      As of and for the three months ended
      1Q 2025   4Q 2024   3Q 2024   2Q 2024   1Q 2024
    Total shareholders’ equity $ 1,031,447     $ 1,003,496     $ 1,007,756     $ 961,049     $ 927,718  
    Less:                  
    Goodwill   1,797       1,797       1,797       1,797       1,797  
    Other intangible assets   1,529       1,568       1,606       1,644       1,682  
    Tangible shareholders’ equity (a) $ 1,028,121     $ 1,000,131     $ 1,004,353     $ 957,608     $ 924,239  
    Shares outstanding (c)   45,589,633       45,359,425       45,151,691       45,003,856       44,938,673  
    Total assets $ 13,595,704     $ 12,943,380     $ 12,607,346     $ 11,868,570     $ 11,505,569  
    Less:                  
    Goodwill   1,797       1,797       1,797       1,797       1,797  
    Other intangible assets   1,529       1,568       1,606       1,644       1,682  
    Tangible assets (b) $ 13,592,378     $ 12,940,015     $ 12,603,943     $ 11,865,129     $ 11,502,090  
    Tangible shareholders’ equity to tangible assets (a/b)   7.56 %     7.73 %     7.97 %     8.07 %     8.04 %
    Tangible book value per share (a/c) $ 22.55     $ 22.05     $ 22.24     $ 21.28     $ 20.57  
    Efficiency ratio:                  
    Noninterest expense (d) $ 84,017     $ 81,257     $ 77,589     $ 77,656     $ 77,737  
    Net interest income   100,532       97,474       97,000       91,320       90,111  
    Noninterest income   25,581       30,593       32,932       34,159       26,097  
    Total revenue (e) $ 126,113     $ 128,067     $ 129,932     $ 125,479     $ 116,208  
    Efficiency ratio (d/e)   66.62 %     63.45 %     59.72 %     61.89 %     66.89 %
    Pre-provision net revenue (e-d) $ 42,096     $ 46,810     $ 52,343     $ 47,823     $ 38,471  
                                           

    This press release presents non-GAAP financial measures. The adjustments to reconcile from the non-GAAP financial measures to the applicable GAAP financial measure are included where applicable in financial results presented in accordance with GAAP. The Company considers these adjustments to be relevant to ongoing operating results. The Company believes that excluding the amounts associated with these adjustments to present the non-GAAP financial measures provides a meaningful base for period-to-period comparisons, which will assist regulators, investors, and analysts in analyzing the operating results or financial position of the Company. The non-GAAP financial measures are used by management to assess the performance of the Company’s business for presentations of Company performance to investors, and for other reasons as may be requested by investors and analysts. The Company further believes that presenting the non-GAAP financial measures will permit investors and analysts to assess the performance of the Company on the same basis as that applied by management. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although non-GAAP financial measures are frequently used by shareholders to evaluate a company, they have limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of results reported under GAAP.

    The MIL Network

  • MIL-OSI: TowneBank Reports First Quarter 2025 Earnings

    Source: GlobeNewswire (MIL-OSI)

    SUFFOLK, Va., April 23, 2025 (GLOBE NEWSWIRE) — TowneBank (the “Company” or “Towne”) (NASDAQ: TOWN) today reported earnings for the quarter ended March 31, 2025 of $50.59 million, or $0.67 per diluted share, compared to $34.69 million, or $0.46 per diluted share, for the quarter ended March 31, 2024. Excluding certain items affecting comparability, core earnings (non-GAAP) were $50.98 million, or $0.68 per diluted share, in the current quarter compared to $36.27 million, or $0.48 per diluted share, for the quarter ended March 31, 2024.

    “Our Company had a very strong start to the year earning $0.67 per share and delivering nearly 7% annualized loan growth. Our continued focus on measured growth aligned with a deliberate strategy to maintain healthy liquidity and capital levels should position our Company well during periods of economic uncertainty. While growth could be challenged in the short run, we believe our conservative Main Street approach to relationship banking coupled with our diversified fee income businesses can serve as a pillar of strength for our members, shareholders and the communities we serve,” said G. Robert Aston, Jr., Executive Chairman.

    Highlights for First Quarter 2025:

    • Total revenues were $192.04 million, an increase of $24.94 million, or 14.93%, compared to first quarter 2024. Net interest income increased $17.26 million, driven primarily by lower deposit costs, while noninterest income increased $7.68 million.
    • Total deposits were $14.61 billion, an increase of $482.47 million, or 3.42%, compared to first quarter 2024. Total deposits increased 1.19%, or $171.25 million, in comparison to December 31, 2024, 4.81% on an annualized basis.
    • Noninterest-bearing deposits increased 2.85%, to $4.31 billion, compared to first quarter 2024 and represented 29.53% of total deposits. Compared to the linked quarter, noninterest-bearing deposits increased 1.42%.
    • Loans held for investment were $11.65 billion, an increase of $200.40 million, or 1.75%, compared to March 31, 2024, and $193.69 million, 1.69%, or 6.86% on an annualized basis, compared to December 31, 2024.
    • Annualized return on common shareholders’ equity was 9.57% compared to 6.89% in first quarter 2024. Annualized return on average tangible common shareholders’ equity (non-GAAP) was 13.21% compared to 9.98% in first quarter 2024.
    • Net interest margin was 3.14% for the quarter and tax-equivalent net interest margin (non-GAAP) was 3.17%, including purchase accounting accretion of 3 basis points, compared to the prior year quarter net interest margin of 2.72% and tax-equivalent net interest margin (non-GAAP) of 2.75%, including purchase accounting accretion of 4 basis points.
    • Compared to the linked quarter, net interest margin increased 15 basis points and spread increased 26 basis points.  
    • The effective tax rate was 13.95% in the quarter compared to 17.31% in first quarter 2024 and 13.92% in the linked quarter. The lower effective tax rate in the current quarter as compared to first quarter 2024 was primarily due to the impact on state and federal taxes from the increase in credits and losses related to tax advantaged investment properties placed in service over the past 12 months and purchase accounting adjustments for a prior partnership acquisition.   

    “We were pleased to close our partnership with Village Bank and Trust Financial Corp. on April 1, 2025 followed by our latest announcement of the signing of a definitive agreement with Old Point Financial Corporation. Both transactions are strategically important for our Company and follow our disciplined model of targeting partnerships that enhance shareholder returns with low execution risk,” stated William I. Foster III, President and Chief Executive Officer.

    Quarterly Net Interest Income:

    • Net interest income was $120.48 million compared to $103.22 million for the quarter ended March 31, 2024.
    • On an average basis, loans held for investment, with a yield of 5.38%, represented 74.15% of earning assets at March 31, 2025 compared to a yield of 5.37% and 74.54% of earning assets at March 31, 2024.
    • The cost of interest-bearing deposits was 2.69% for the quarter ended March 31, 2025, compared to 3.24% in first quarter 2024. Interest expense on deposits decreased $11.26 million, or 14.36%, from the prior year quarter driven by decreases in rate.
    • Our total cost of deposits decreased to 1.89% from 2.26% for the quarter ended March 31, 2024 due to lower interest-bearing deposit rates. The Federal Reserve Open Market Committee lowered the overnight funds rate a total of 100 basis points in the last four months of 2024.
    • Average interest-earning assets totaled $15.55 billion at March 31, 2025 compared to $15.27 billion at March 31, 2024, an increase of 1.84%. The Company anticipates approximately $760 million of cash flows from its securities portfolio to be available for reinvestment in the next 24 months.
    • Average interest-bearing liabilities totaled $10.42 billion, an increase of $212.32 million, or 2.08%, from prior year, driven by demand and money market deposit growth. Borrowings have declined between periods. There were no short term FHLB borrowings in first quarter 2025, compared to an average of $174.73 million in the prior year quarter.

    Quarterly Provision for Credit Losses:

    • The quarterly provision for credit losses was an expense of $2.42 million compared to a benefit of $0.88 million in the prior year quarter and an expense of $1.61 million in the linked quarter.
    • The allowance for credit losses on loans increased $2.21 million in first quarter 2025, compared to the linked quarter. The increase in the allowance was driven by increases in the loan portfolio combined with a continuation of our use of higher weightings of more adverse macroeconomic forecast scenarios utilized in our model.
    • Net loan charge-offs were $626 thousand in the quarter compared to $520 thousand in the prior year quarter and $382 thousand in the linked quarter.
    • The ratio of net charge-offs to average loans on an annualized basis was 0.02% in first quarter 2025, compared to 0.02% in first quarter 2024 and 0.01% in the linked quarter.
    • The allowance for credit losses on loans represented 1.08% of total loans at March 31, 2025, compared to 1.10% at March 31, 2024, and 1.08% at December 31, 2024. The allowance for credit losses on loans was 19.15 times nonperforming loans compared to 18.01 times at March 31, 2024 and 16.69 times at December 31, 2024.

    Quarterly Noninterest Income:

    • Total noninterest income was $71.57 million compared to $63.88 million in 2024, an increase of $7.68 million, or 12.02%.
    • Total net insurance commissions increased $0.89 million, or 3.47%, to $26.42 million in first quarter 2025 compared to 2024. This increase was primarily attributable to increases in property and casualty commissions, which were driven by organic growth.
    • Property management fee revenue increased 16.26%, or $2.73 million, to $19.50 million in first quarter 2025 compared to 2024. Future reservations increased compared to the prior year, primarily driven by an acquisition in 2024.
    • Residential mortgage banking income was $10.36 million compared to $10.48 million in first quarter 2024. Loan volume increased to $445.19 million in first quarter 2025 from $424.39 million in first quarter 2024. Residential purchase activity was 89.94% of production volume in the first quarter of 2025 compared to 95.66% in first quarter 2024.
    • At 3.18% gross margins on residential mortgage sales decreased 7 basis points from the linked quarter and 16 basis points from 3.34% in first quarter 2024.

    Quarterly Noninterest Expense:

    • Total noninterest expense was $130.54 million compared to $125.59 million in 2024, an increase of $4.95 million, or 3.94%.   This increase was primarily attributable to growth in salaries and employee benefits of $3.70 million.
    • Salaries and benefits expense increases were driven by annual base salary adjustments that went into effect October 2024, an increase in banking personnel, and production incentives.

    Consolidated Balance Sheet Highlights:

    • Total assets were $17.51 billion for the quarter ended March 31, 2025, a $264.99 million increase compared to $17.25 billion at December 31, 2024. Total assets increased $627.64 million, or 3.72%, from $16.88 billion at March 31, 2024.
    • Loans held for investment increased $193.69 million, or 1.69%, compared to the linked quarter and $200.40 million, or 1.75%, compared to prior year. Real estate construction and development loans declined, but were offset by growth in non owner occupied and multifamily commercial real estate. The Company continues to maintain a strong credit discipline.
    • Mortgage loans held for sale increased $17.78 million, or 11.80%, compared to prior year but decreased $31.95 million, or 15.94%, compared to the linked quarter, driven by production levels.
    • Total deposits increased $482.47 million, or 3.42%, driven by interest-bearing demand deposits, compared to prior year. In the linked quarter comparison, total deposits increased $171.25 million, or 4.81% on an annualized basis.
    • Noninterest-bearing deposits increased $119.42 million, or 2.85%, compared to prior year and $60.50 million, or 1.42%, or 5.77% on an annualized basis, compared to the linked quarter.
    • Total borrowings decreased $6.88 million, or 2.37%, compared to first quarter 2024 and $12.80 million, or 4.31%, compared to the linked quarter, due to declines in repurchase agreements and other borrowings.

    Investment Securities:

    • Total investment securities were $2.70 billion compared to $2.59 billion at December 31, 2024 and $2.54 billion at March 31, 2024. The weighted average duration of the portfolio at March 31, 2025 was 3.3 years. The carrying value of the available-for-sale debt securities portfolio included net unrealized losses of $119.25 million at March 31, 2025, compared to $155.28 million at December 31, 2024 and $170.84 million at March 31, 2024, with the changes in fair value due to the change in interest rates.

    Loans and Asset Quality:

    • Total loans held for investment were $11.65 billion at March 31, 2025, $11.46 billion at December 31, 2024, and $11.45 billion at March 31, 2024.
    • Nonperforming assets were $7.37 million, or 0.04% of total assets, compared to $7.77 million, or 0.05%, at March 31, 2024, and $7.87 million, or 0.05%, in the linked quarter end.
    • Nonperforming loans were 0.06% of period end loans at March 31, 2025, March 31, 2024, and the linked quarter end.
    • Foreclosed property consisted of $235 thousand in other real estate owned and $551 thousand in repossessed autos, for a total of $786 thousand in foreclosed property at March 31, 2025, compared to $175 thousand in other real estate owned and $605 thousand in repossessed autos, for a total of $780 thousand in foreclosed property at March 31, 2024.

    Deposits and Borrowings:

    • Total deposits were $14.61 billion compared to $14.44 billion at December 31, 2024 and $14.13 billion at March 31, 2024.
    • The ratio of period end loans held for investment to deposits was 79.77% compared to 79.37% at December 31, 2024 and 81.07% at March 31, 2024.
    • Noninterest-bearing deposits were 29.53% of total deposits at March 31, 2025 compared to 29.46% at December 31, 2024 and 29.69% at March 31, 2024. Noninterest-bearing deposits increased $119.42 million, or 2.85%, compared to March 31, 2024, and $60.50 million, or 1.42%, or 5.77% on an annualized basis, compared to the linked quarter.
    • Total borrowings were $284.10 million compared to $296.90 million at December 31, 2024 and $290.98 million at March 31, 2024.

    Capital:

    • Common equity tier 1 capital ratio of 12.75%(1).
    • Tier 1 leverage capital ratio of 10.61%(1).
    • Tier 1 risk-based capital ratio of 12.87%(1).
    • Total risk-based capital ratio of 15.65% (1) .
    • Book value per common share was $29.19 compared to $28.43 at December 31, 2024 and $27.33 at March 31, 2024.
    • Tangible book value per common share (non-GAAP) was $22.36 compared to $21.55 at December 31, 2024 and $20.31 at March 31, 2024.

    (1) Preliminary.

    About TowneBank:
    Founded in 1999, TowneBank is a company built on relationships, offering a full range of banking and other financial services, with a focus of serving others and enriching lives. Dedicated to a culture of caring, Towne values all employees and members by embracing their diverse talents, perspectives, and experiences.

    Today, TowneBank operates over 55 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its affiliated companies that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices RW Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $17.51 billion as of March 31, 2025, TowneBank is one of the largest banks headquartered in Virginia.

    Non-GAAP Financial Measures:
    This press release contains certain financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Such non-GAAP financial measures include the following: fully tax-equivalent net interest margin, core operating earnings, core net income, tangible book value per common share, total risk-based capital ratio, tier one leverage ratio, tier one capital ratio, and the tangible common equity to tangible assets ratio. Management uses these non-GAAP financial measures to assess the performance of TowneBank’s core business and the strength of its capital position. Management believes that these non-GAAP financial measures provide meaningful additional information about TowneBank to assist investors in evaluating operating results, financial strength, and capitalization. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant charges for credit costs and other factors. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. The computations of the non-GAAP financial measures used in this presentation are referenced in a footnote or in the appendix to this presentation.

    Forward-Looking Statements:
    This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts, but instead represent only the beliefs, expectations, or opinions of TowneBank and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional terms, such as “will,” “would,” “should,” “could,” “may,” “likely,” “probably,” or “possibly.” These statements may address issues that involve significant risks, uncertainties, estimates, and assumptions made by management. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, competitive pressures in the banking industry that may increase significantly; changes in the interest rate environment that may reduce margins and/or the volumes and values of loans made or held as well as the value of other financial assets held; an unforeseen outflow of cash or deposits or an inability to access the capital markets, which could jeopardize our overall liquidity or capitalization; changes in the creditworthiness of customers and the possible impairment of the collectability of loans; insufficiency of our allowance for credit losses due to market conditions, inflation, changing interest rates or other factors; adverse developments in the financial industry generally, such as the 2023 bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; general economic conditions, either nationally or regionally, that may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services; geopolitical instability, including wars, conflicts, trade restrictions and tariffs, civil unrest, and terrorist attacks and the potential impact, directly or indirectly, on our business; the effects of weather-related or natural disasters, which may negatively affect our operations and/or our loan portfolio and increase our cost of conducting business; public health events (such as the COVID-19 pandemic) and governmental and societal responses to them; changes in the legislative or regulatory environment, including changes in accounting standards and tax laws, that may adversely affect our business; our ability to successfully integrate the businesses of Old Point Financial Corporation (“Old Point”), a pending merger, and Village Bank and Trust Financial Corp. (“Village”), a recently completed merger, to the extent that it may take longer or be more difficult, time-consuming, or costly to accomplish than expected, our ability to close the transaction with Old Point when expected or at all because required approvals and other conditions to closing are not received or satisfied on the proposed terms or on the anticipated schedule; deposit attrition, operating costs, customer losses, and business disruption associated with pending or recently completed acquisitions, including reputational risk and adverse effects on relationships with employees, customers or other business partners, that may be greater than expected; costs or difficulties related to the integration of the businesses we have acquired that may be greater than expected; expected growth opportunities or cost savings associated with pending or recently completed acquisitions may not be fully realized or realized within the expected time frame; the diversion of management’s attention and time from ongoing business operations and opportunities on merger related matters; cybersecurity threats or attacks, whether directed at us or at vendors or other third parties with which we interact, the implementation of new technologies, and the ability to develop and maintain reliable electronic systems; our competitors may have greater financial resources and develop products that enable them to compete more successfully; changes in business conditions; changes in the securities market; and changes in our local economy with regard to our market area, including any adverse impact of actual and proposed cuts to federal spending, including defense, security and military spending, on the Greater Hampton Roads economy. Any forward-looking statements made by us or on our behalf speak only as of the date they are made or as of the date indicated, and we do not undertake any obligation to update forward-looking statements as a result of new information, future events, or otherwise. For additional information on factors that could materially influence forward-looking statements included in this report, see the “Risk Factors” in TowneBank’s Annual Report on Form 10-K for the year ended December 31, 2024 and related disclosures in other filings that have been, or will be, filed by TowneBank with the Federal Deposit Insurance Corporation.

    Media contact:
    G. Robert Aston, Jr., Executive Chairman, 757-638-6780
    William I. Foster III, President and Chief Executive Officer, 757-417-6482

    Investor contact:
    William B. Littreal, Chief Financial Officer, 757-638-6813

     
    TOWNEBANK
    Selected Financial Highlights (unaudited)
    (dollars in thousands, except per share data)
         
        Three Months Ended
        March 31,   December 31,   September 30,   June 30,   March 31,
        2025       2024       2024       2024       2024  
    Income and Performance Ratios:                  
      Total revenue $ 192,044     $ 177,160     $ 174,518     $ 174,970     $ 167,102  
      Net income   50,887       41,441       43,126       43,039       35,127  
      Net income available to common shareholders   50,592       41,265       42,949       42,856       34,687  
      Net income per common share – diluted   0.67       0.55       0.57       0.57       0.46  
      Book value per common share   29.19       28.43       28.59       27.62       27.33  
      Book value per common share – tangible (non-GAAP)   22.36       21.55       21.65       20.65       20.31  
      Return on average assets   1.19 %     0.95 %     1.00 %     1.01 %     0.83 %
      Return on average assets – tangible (non-GAAP)   1.29 %     1.03 %     1.09 %     1.11 %     0.92 %
      Return on average equity   9.50 %     7.64 %     8.12 %     8.43 %     6.84 %
      Return on average equity – tangible (non-GAAP)   13.08 %     10.68 %     11.42 %     12.03 %     9.87 %
      Return on average common equity   9.57 %     7.70 %     8.18 %     8.49 %     6.89 %
      Return on average common equity – tangible (non-GAAP)   13.21 %     10.79 %     11.54 %     12.16 %     9.98 %
      Noninterest income as a percentage of total revenue   37.27 %     33.36 %     35.66 %     37.68 %     38.23 %
    Regulatory Capital Ratios (1):                  
      Common equity tier 1   12.75 %     12.77 %     12.63 %     12.43 %     12.20 %
      Tier 1   12.87 %     12.89 %     12.76 %     12.55 %     12.32 %
      Total   15.65 %     15.68 %     15.54 %     15.34 %     15.10 %
      Tier 1 leverage ratio   10.61 %     10.36 %     10.38 %     10.25 %     10.15 %
    Asset Quality:                  
      Allowance for credit losses on loans to nonperforming loans 19.15x   16.69x   18.70x   19.08x   18.01x
      Allowance for credit losses on loans to period end loans   1.08 %     1.08 %     1.08 %     1.10 %     1.10 %
      Nonperforming loans to period end loans   0.06 %     0.06 %     0.06 %     0.06 %     0.06 %
      Nonperforming assets to period end assets   0.04 %     0.05 %     0.04 %     0.04 %     0.05 %
      Net charge-offs (recoveries) to average loans (annualized)   0.02 %     0.01 %     0.02 %     %     0.02 %
      Net charge-offs (recoveries) $ 626     $ 382     $ 677     $ (19 )   $ 520  
                         
      Nonperforming loans $ 6,586     $ 7,424     $ 6,588     $ 6,582     $ 6,987  
      Foreclosed property   786       443       884       581       780  
      Total nonperforming assets $ 7,372     $ 7,867     $ 7,472     $ 7,163     $ 7,767  
      Loans past due 90 days and still accruing interest $ 15     $ 1,264     $ 510     $ 368     $ 323  
      Allowance for credit losses on loans $ 126,131     $ 123,923     $ 123,191     $ 125,552     $ 125,835  
    Mortgage Banking:                  
      Loans originated, mortgage $ 300,699     $ 385,238     $ 421,571     $ 430,398     $ 289,191  
      Loans originated, joint venture   144,495       180,188       176,612       196,583       135,197  
      Total loans originated $ 445,194     $ 565,426     $ 598,183     $ 626,981     $ 424,388  
      Number of loans originated   1,181       1,489       1,637       1,700       1,247  
      Number of originators   161       160       159       169       176  
      Purchase %   89.94 %     89.46 %     91.49 %     94.85 %     95.66 %
      Loans sold $ 475,518     $ 629,120     $ 526,998     $ 605,134     $ 410,895  
      Rate lock asset $ 1,880     $ 1,150     $ 1,548     $ 1,930     $ 1,681  
      Gross realized gain on sales and fees as a % of loans originated   3.18 %     3.25 %     3.28 %     3.28 %     3.34 %
    Other Ratios:                  
      Net interest margin   3.14 %     2.99 %     2.90 %     2.86 %     2.72 %
      Net interest margin-fully tax-equivalent (non-GAAP)   3.17 %     3.02 %     2.93 %     2.89 %     2.75 %
      Average earning assets/total average assets   90.32 %     90.57 %     90.43 %     90.36 %     90.52 %
      Average loans/average deposits   80.01 %     78.71 %     80.07 %     80.80 %     81.48 %
      Average noninterest deposits/total average deposits   29.68 %     30.14 %     30.19 %     30.06 %     30.25 %
      Period end equity/period end total assets   12.66 %     12.50 %     12.58 %     12.24 %     12.24 %
      Efficiency ratio (non-GAAP)   67.10 %     70.28 %     70.93 %     68.98 %     73.25 %
      (1) Current reporting period regulatory capital ratios are preliminary.            
    TOWNEBANK
    Selected Data (unaudited)
    (dollars in thousands)
     
    Investment Securities             % Change
      Q1   Q1   Q4   Q1 25 vs.   Q1 25 vs.
    Available-for-sale securities, at fair value   2025       2024       2024     Q1 24   Q4 24
    U.S. agency securities $ 320,190     $ 294,723     $ 293,917     8.64 %   8.94 %
    U.S. Treasury notes   78,184       27,534       28,429     183.95 %   175.01 %
    Municipal securities   439,379       447,323       439,115     (1.78 )%   0.06 %
    Trust preferred and other corporate securities   98,463       87,983       95,279     11.91 %   3.34 %
    Mortgage-backed securities issued by GSEs and GNMA   1,535,217       1,347,920       1,497,951     13.90 %   2.49 %
    Allowance for credit losses   (1,262 )     (1,382 )     (1,326 )   (8.68 )%   (4.83 )%
    Total $ 2,470,171     $ 2,204,101     $ 2,353,365     12.07 %   4.96 %
    Gross unrealized gains (losses) reflected in financial statements            
    Total gross unrealized gains $ 5,909     $ 1,868     $ 2,572     216.33 %   129.74 %
    Total gross unrealized losses   (125,156 )     (172,708 )     (157,851 )   (27.53 )%   (20.71 )%
    Net unrealized gains (losses) and other adjustments on AFS securities $ (119,247 )   $ (170,840 )   $ (155,279 )   (30.20 )%   (23.20 )%
    Held-to-maturity securities, at amortized cost                  
    U.S. agency securities $ 92,805     $ 102,042     $ 102,622     (9.05 )%   (9.57 )%
    U.S. Treasury notes   96,481       197,356       96,710     (51.11 )%   (0.24 )%
    Municipal securities   5,390       5,294       5,366     1.81 %   0.45 %
    Trust preferred corporate securities   2,107       2,159       2,121     (2.41 )%   (0.66 )%
    Mortgage-backed securities issued by GSEs   5,235       5,659       5,533     (7.49 )%   (5.39 )%
    Allowance for credit losses   (68 )     (82 )     (77 )   (17.07 )%   (11.69 )%
    Total $ 201,950     $ 312,428     $ 212,275     (35.36 )%   (4.86 )%
                       
    Total gross unrealized gains $ 176     $ 265     $ 178     (33.58 )%   (1.12 )%
    Total gross unrealized losses   (6,563 )     (14,262 )     (8,647 )   (53.98 )%   (24.10 )%
    Net unrealized gains (losses) in HTM securities $ (6,387 )   $ (13,997 )   $ (8,469 )   (54.37 )%   (24.58 )%
    Total unrealized gains (losses) on AFS and HTM securities $ (125,634 )   $ (184,837 )   $ (163,748 )   (32.03 )%   (23.28 )%
                  % Change
    Loans Held For Investment Q1   Q1   Q4   Q1 25 vs.   Q1 25 vs.
        2025       2024       2024     Q1 24   Q4 24
    Real estate – construction and development $ 1,006,086     $ 1,255,741     $ 1,082,161     (19.88 )%   (7.03 )%
    Commercial real estate – owner occupied   1,654,401       1,700,753       1,628,731     (2.73 )%   1.58 %
    Commercial real estate – non owner occupied   3,329,728       3,178,947       3,196,665     4.74 %   4.16 %
    Real estate – multifamily   841,330       595,075       801,079     41.38 %   5.02 %
    Residential 1-4 family   1,886,107       1,882,296       1,891,470     0.20 %   (0.28 )%
    HELOC   429,152       386,361       410,594     11.08 %   4.52 %
    Commercial and industrial business (C&I)   1,337,254       1,288,550       1,280,394     3.78 %   4.44 %
    Government   511,676       528,341       513,039     (3.15 )%   (0.27 )%
    Indirect   570,795       555,482       567,245     2.76 %   0.63 %
    Consumer loans and other   86,217       80,797       87,677     6.71 %   (1.67 )%
    Total $ 11,652,746     $ 11,452,343     $ 11,459,055     1.75 %   1.69 %
                       
                  % Change
    Deposits Q1   Q1   Q4   Q1 25 vs.   Q1 25 vs.
        2025       2024       2024     Q1 24   Q4 24
    Noninterest-bearing demand $ 4,313,553     $ 4,194,132     $ 4,253,053     2.85 %   1.42 %
    Interest-bearing:                  
    Demand and money market accounts   7,463,355       6,916,701       7,329,669     7.90 %   1.82 %
    Savings   312,151       326,179       311,841     (4.30 )%   0.10 %
    Certificates of deposits   2,519,489       2,689,062       2,542,735     (6.31 )%   (0.91 )%
    Total   14,608,548       14,126,074       14,437,298     3.42 %   1.19 %
    TOWNEBANK
    Average Balances, Yields and Rate Paid (unaudited)
    (dollars in thousands)
     
      Three Months Ended   Three Months Ended   Three Months Ended
      March 31, 2025   December 31, 2024   March 31, 2024
          Interest   Average       Interest   Average       Interest   Average
      Average   Income/   Yield/   Average   Income/   Yield/   Average   Income/   Yield/
      Balance   Expense   Rate (1)   Balance   Expense   Rate (1)   Balance   Expense   Rate (1)
    Assets:                                  
    Loans (net of unearned income
    and deferred costs)
    $ 11,527,915     $ 153,068     5.38 %   $ 11,455,253     $ 155,710     5.41 %   $ 11,379,323     $ 151,811     5.37 %
    Taxable investment securities   2,478,048       21,301     3.44 %     2,421,253       20,722     3.42 %     2,440,652       18,716     3.07 %
    Tax-exempt investment securities   176,081       1,860     4.23 %     176,266       1,832     4.16 %     161,538       1,549     3.84 %
    Total securities   2,654,129       23,161     3.49 %     2,597,519       22,554     3.47 %     2,602,190       20,265     3.12 %
    Interest-bearing deposits   1,199,650       11,801     3.99 %     1,451,121       15,796     4.33 %     1,167,322       14,234     4.90 %
    Mortgage loans held for sale   164,358       2,653     6.46 %     209,315       3,088     5.90 %     116,868       1,716     5.87 %
    Total earning assets   15,546,052       190,683     4.97 %     15,713,208       197,148     4.99 %     15,265,703       188,026     4.95 %
    Less: allowance for loan losses   (124,265 )             (123,068 )             (127,413 )        
    Total nonearning assets   1,790,075               1,758,988               1,725,945          
    Total assets $ 17,211,862             $ 17,349,128             $ 16,864,235          
    Liabilities and Equity:                                  
    Interest-bearing deposits                                  
    Demand and money market $ 7,279,365     $ 40,606     2.26 %   $ 7,157,076     $ 43,894     2.44 %   $ 6,828,053     $ 47,985     2.83 %
    Savings   312,118       714     0.93 %     315,414       777     0.98 %     329,036       881     1.08 %
    Certificates of deposit   2,540,438       25,813     4.12 %     2,694,236       31,214     4.61 %     2,583,938       29,522     4.60 %
    Total interest-bearing deposits   10,131,921       67,133     2.69 %     10,166,726       75,885     2.97 %     9,741,027       78,388     3.24 %
    Borrowings   29,606       (300 )   (4.05 )%     36,708       (151 )   (1.61 )%     212,375       3,078     5.73 %
    Subordinated debt, net   260,070       2,304     3.54 %     257,667       2,261     3.51 %     255,878       2,236     3.50 %
    Total interest-bearing liabilities   10,421,597       69,137     2.69 %     10,461,101       77,995     2.97 %     10,209,280       83,702     3.30 %
    Demand deposits   4,276,586               4,386,911               4,224,104          
    Other noninterest-bearing liabilities   353,665               353,005               390,576          
    Total liabilities   15,051,848               15,201,017               14,823,960          
    Shareholders’ equity   2,160,014               2,148,111               2,040,275          
    Total liabilities and equity $ 17,211,862             $ 17,349,128             $ 16,864,235          
    Net interest income (tax-equivalent basis) (4)     $ 121,546             $ 119,153             $ 104,324      
    Reconciliation of Non-GAAP Financial Measures                                
    Tax-equivalent basis adjustment       (1,068 )             (1,096 )             (1,106 )    
    Net interest income (GAAP)     $ 120,478             $ 118,057             $ 103,218      
                                       
    Interest rate spread (2)(4)         2.28 %           2.02 %           1.65 %
    Interest expense as a percent of average earning assets       1.80 %           1.97 %           2.21 %
    Net interest margin (tax-equivalent basis) (3)(4)       3.17 %           3.02 %           2.75 %
    Total cost of deposits         1.89 %           2.07 %           2.26 %
                                       

    (1) Yields and interest income are presented on a tax-equivalent basis using the federal statutory tax rate of 21%.
    (2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax-equivalent.
    (3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax-equivalent.
    (4) Non-GAAP.

    TOWNEBANK
    Consolidated Balance Sheets
    (dollars in thousands, except share data)
       
         
      March 31,   December 31,
        2025       2024  
      (unaudited)   (audited)
    ASSETS      
    Cash and due from banks $ 126,526     $ 108,750  
    Interest-bearing deposits at FRB   1,090,555       1,127,878  
    Interest-bearing deposits in financial institutions   100,249       102,847  
    Total Cash and Cash Equivalents   1,317,330       1,339,475  
    Securities available for sale, at fair value (amortized cost of $2,590,680 and $2,509,970, and allowance for credit losses of $1,262 and $1,326 at March 31, 2025 and December 31, 2024, respectively)   2,470,171       2,353,365  
    Securities held to maturity, at amortized cost (fair value of $195,631 and $203,883 at March 31, 2025 and December 31, 2024, respectively)   202,018       212,352  
    Less: allowance for credit losses   (68 )     (77 )
    Securities held to maturity, net of allowance for credit losses   201,950       212,275  
    Other equity securities   12,223       12,100  
    FHLB stock   12,425       12,136  
    Total Securities   2,696,769       2,589,876  
    Mortgage loans held for sale   168,510       200,460  
    Loans, net of unearned income and deferred costs   11,652,746       11,459,055  
    Less: allowance for credit losses   (126,131 )     (123,923 )
    Net Loans   11,526,615       11,335,132  
    Premises and equipment, net   373,111       368,876  
    Goodwill   457,619       457,619  
    Other intangible assets, net   57,145       60,171  
    BOLI   280,344       279,802  
    Other assets   634,437       615,479  
    TOTAL ASSETS $ 17,511,880     $ 17,246,890  
           
    LIABILITIES AND EQUITY      
    Deposits:      
    Noninterest-bearing demand $ 4,313,553     $ 4,253,053  
    Interest-bearing:      
    Demand and money market accounts   7,463,355       7,329,669  
    Savings   312,151       311,841  
    Certificates of deposit   2,519,489       2,542,735  
    Total Deposits   14,608,548       14,437,298  
    Advances from the FHLB   3,029       3,218  
    Subordinated debt, net   260,198       260,001  
    Repurchase agreements and other borrowings   20,875       33,683  
    Total Borrowings   284,102       296,902  
    Other liabilities   402,252       357,063  
    TOTAL LIABILITIES   15,294,902       15,091,263  
    Preferred stock, authorized and unissued shares – 2,000,000          
    Common stock, $1.667 par value: 150,000,000 shares authorized;      
    75,392,225 and 75,255,205 shares issued at      
    March 31, 2025 and December 31, 2024, respectively   125,679       125,455  
    Capital surplus   1,123,330       1,122,147  
    Retained earnings   1,039,518       1,007,775  
    Common stock issued to deferred compensation trust, at cost:      
    1,049,002 and 1,046,121 shares at March 31, 2025 and December 31, 2024, respectively   (21,969 )     (21,868 )
    Deferred compensation trust   21,969       21,868  
    Accumulated other comprehensive income (loss)   (87,869 )     (116,045 )
    TOTAL SHAREHOLDERS’ EQUITY   2,200,658       2,139,332  
    Noncontrolling interest   16,320       16,295  
    TOTAL EQUITY   2,216,978       2,155,627  
    TOTAL LIABILITIES AND EQUITY $ 17,511,880     $ 17,246,890  
    TOWNEBANK
    Consolidated Statements of Income (unaudited)
    (dollars in thousands, except per share data)
           
           
      Three Months Ended
      March 31,
        2025       2024  
    INTEREST INCOME:      
    Loans, including fees $ 152,322     $ 150,974  
    Investment securities   22,839       19,996  
    Interest-bearing deposits in financial institutions and federal funds sold   11,801       14,234  
    Mortgage loans held for sale   2,653       1,716  
    Total interest income   189,615       186,920  
    INTEREST EXPENSE:      
    Deposits   67,133       78,388  
    Advances from the FHLB   25       2,438  
    Subordinated debt, net   2,304       2,236  
    Repurchase agreements and other borrowings   (325 )     640  
    Total interest expense   69,137       83,702  
    Net interest income   120,478       103,218  
    PROVISION FOR CREDIT LOSSES   2,420       (877 )
    Net interest income after provision for credit losses   118,058       104,095  
    NONINTEREST INCOME:      
    Residential mortgage banking income, net   10,361       10,477  
    Insurance commissions and related income, net   26,424       25,539  
    Property management income, net   19,500       16,773  
    Service charges on deposit accounts   3,327       3,079  
    Credit card merchant fees, net   1,697       1,551  
    Investment commissions, net   3,075       2,343  
    BOLI   1,872       1,842  
    Gain on sale of equity investment   2,000        
    Other income   3,310       2,206  
    Net gain on investment securities         74  
    Total noninterest income   71,566       63,884  
    NONINTEREST EXPENSE:      
    Salaries and employee benefits   75,078       71,377  
    Occupancy   9,333       9,422  
    Furniture and equipment   4,621       4,478  
    Amortization – intangibles   3,026       3,246  
    Software   6,293       6,100  
    Data processing   3,835       3,916  
    Professional fees   2,653       3,180  
    Advertising and marketing   4,472       4,582  
    FDIC and other insurance   2,860       4,358  
    Acquisition related expenses   420       595  
    Other expenses   17,945       14,337  
    Total noninterest expense   130,536       125,591  
    Income before income tax expense and noncontrolling interest   59,088       42,388  
    Provision for income tax expense   8,201       7,261  
    Net income $ 50,887     $ 35,127  
    Net income attributable to noncontrolling interest   (295 )     (440 )
    Net income attributable to TowneBank $ 50,592     $ 34,687  
    Per common share information      
    Basic earnings $ 0.67     $ 0.46  
    Diluted earnings $ 0.67     $ 0.46  
    Cash dividends declared $ 0.25     $ 0.25  
    TOWNEBANK
    Consolidated Balance Sheets – Five Quarter Trend
    (dollars in thousands, except share data)
     
                       
      March 31,   December 31,   September 30,   June 30,   March 31,
        2025       2024       2024       2024       2024  
      (unaudited)   (audited)   (unaudited)   (unaudited)   (unaudited)
    ASSETS                  
    Cash and due from banks $ 126,526     $ 108,750     $ 131,068     $ 140,028     $ 75,802  
    Interest-bearing deposits at FRB   1,090,555       1,127,878       1,061,596       1,062,115       926,635  
    Interest-bearing deposits in financial institutions   100,249       102,847       103,400       99,303       98,673  
    Total Cash and Cash Equivalents   1,317,330       1,339,475       1,296,064       1,301,446       1,101,110  
    Securities available for sale   2,470,171       2,353,365       2,363,176       2,250,679       2,204,101  
    Securities held to maturity   202,018       212,352       212,422       212,488       312,510  
    Less: allowance for credit losses   (68 )     (77 )     (77 )     (79 )     (82 )
    Securities held to maturity, net of allowance for credit losses   201,950       212,275       212,345       212,409       312,428  
    Other equity securities   12,223       12,100       12,681       13,566       13,661  
    FHLB stock   12,425       12,136       12,134       12,134       12,139  
    Total Securities   2,696,769       2,589,876       2,600,336       2,488,788       2,542,329  
    Mortgage loans held for sale   168,510       200,460       264,320       200,762       150,727  
    Loans, net of unearned income and deferred costs   11,652,746       11,459,055       11,412,518       11,451,747       11,452,343  
    Less: allowance for credit losses   (126,131 )     (123,923 )     (123,191 )     (125,552 )     (125,835 )
    Net Loans   11,526,615       11,335,132       11,289,327       11,326,195       11,326,508  
    Premises and equipment, net   373,111       368,876       365,764       340,348       342,569  
    Goodwill   457,619       457,619       457,619       457,619       457,619  
    Other intangible assets, net   57,145       60,171       63,265       65,460       68,758  
    BOLI   280,344       279,802       279,325       277,434       279,293  
    Other assets   634,437       615,479       572,000       610,791       615,324  
    TOTAL ASSETS $ 17,511,880     $ 17,246,890     $ 17,188,020     $ 17,068,843     $ 16,884,237  
    LIABILITIES AND EQUITY                  
    Deposits:                  
    Noninterest-bearing demand $ 4,313,553     $ 4,253,053     $ 4,267,628     $ 4,303,773     $ 4,194,132  
    Interest-bearing:                  
    Demand and money market accounts   7,463,355       7,329,669       6,990,103       6,940,086       6,916,701  
    Savings   312,151       311,841       319,970       312,881       326,179  
    Certificates of deposit   2,519,489       2,542,735       2,785,469       2,715,848       2,689,062  
    Total Deposits   14,608,548       14,437,298       14,363,170       14,272,588       14,126,074  
    Advances from the FHLB   3,029       3,218       3,405       3,591       3,775  
    Subordinated debt, net   260,198       260,001       256,444       256,227       256,011  
    Repurchase agreements and other borrowings   20,875       33,683       30,970       35,351       31,198  
    Total Borrowings   284,102       296,902       290,819       295,169       290,984  
    Other liabilities   402,252       357,063       371,316       411,770       401,307  
    TOTAL LIABILITIES   15,294,902       15,091,263       15,025,305       14,979,527       14,818,365  
                       
    Preferred stock                            
    Common stock, $1.667 par value   125,679       125,455       125,139       125,090       125,009  
    Capital surplus   1,123,330       1,122,147       1,117,279       1,115,759       1,114,038  
    Retained earnings   1,039,518       1,007,775       985,343       961,162       937,065  
    Common stock issued to deferred compensation                  
    trust, at cost   (21,969 )     (21,868 )     (22,224 )     (22,756 )     (20,915 )
    Deferred compensation trust   21,969       21,868       22,224       22,756       20,915  
    Accumulated other comprehensive income (loss)   (87,869 )     (116,045 )     (81,482 )     (129,224 )     (126,586 )
    TOTAL SHAREHOLDERS’ EQUITY   2,200,658       2,139,332       2,146,279       2,072,787       2,049,526  
    Noncontrolling interest   16,320       16,295       16,436       16,529       16,346  
    TOTAL EQUITY   2,216,978       2,155,627       2,162,715       2,089,316       2,065,872  
    TOTAL LIABILITIES AND EQUITY $ 17,511,880     $ 17,246,890     $ 17,188,020     $ 17,068,843     $ 16,884,237  
    TOWNEBANK
    Consolidated Statements of Income – Five Quarter Trend (unaudited)
    (dollars in thousands, except share data)
       
       
      Three Months Ended
      March 31,   December 31,   September 30,   June 30,   March 31,
        2025       2024       2024       2024       2024  
    INTEREST INCOME:                  
    Loans, including fees $ 152,322     $ 154,933     $ 155,792     $ 154,549     $ 150,974  
    Investment securities   22,839       22,236       22,334       22,928       19,996  
    Interest-bearing deposits in financial institutions and federal funds sold   11,801       15,796       15,249       14,512       14,234  
    Mortgage loans held for sale   2,653       3,087       3,247       2,945       1,716  
    Total interest income   189,615       196,052       196,622       194,934       186,920  
    INTEREST EXPENSE:                  
    Deposits   67,133       75,885       82,128       82,023       78,388  
    Advances from the FHLB   25       26       29       942       2,438  
    Subordinated debt, net   2,304       2,261       2,237       2,236       2,236  
    Repurchase agreements and other borrowings   (325 )     (177 )     (54 )     685       640  
    Total interest expense   69,137       77,995       84,340       85,886       83,702  
    Net interest income   120,478       118,057       112,282       109,048       103,218  
    PROVISION FOR CREDIT LOSSES   2,420       1,606       (1,100 )     (177 )     (877 )
    Net interest income after provision for credit losses   118,058       116,451       113,382       109,225       104,095  
    NONINTEREST INCOME:                  
    Residential mortgage banking income, net   10,361       11,272       11,786       13,422       10,477  
    Insurance commissions and related income, net   26,424       23,265       25,727       24,031       25,539  
    Property management income, net   19,500       8,186       11,221       14,312       16,773  
    Service charges on deposit accounts   3,327       3,289       3,117       3,353       3,079  
    Credit card merchant fees, net   1,697       1,486       1,830       1,662       1,551  
    Investment commissions, net   3,075       3,195       2,835       2,580       2,343  
    BOLI   1,872       4,478       1,886       3,238       1,842  
    Other income   5,310       3,932       3,834       3,324       2,206  
    Net gain on investment securities                           74  
    Total noninterest income   71,566       59,103       62,236       65,922       63,884  
    NONINTEREST EXPENSE:                  
    Salaries and employee benefits   75,078       74,399       72,123       71,349       71,377  
    Occupancy   9,333       9,819       9,351       9,717       9,422  
    Furniture and equipment   4,621       4,850       4,657       4,634       4,478  
    Amortization – intangibles   3,026       3,095       3,130       3,298       3,246  
    Software   6,293       6,870       6,790       7,056       6,100  
    Data processing   3,835       3,788       4,701       4,606       3,916  
    Professional fees   2,653       3,446       4,720       3,788       3,180  
    Advertising and marketing   4,472       3,359       4,162       3,524       4,582  
    Other expenses   21,225       17,815       17,266       16,012       19,290  
    Total noninterest expense   130,536       127,441       126,900       123,984       125,591  
    Income before income tax expense and noncontrolling interest   59,088       48,113       48,718       51,163       42,388  
    Provision for income tax expense   8,201       6,672       5,592       8,124       7,261  
    Net income   50,887       41,441       43,126       43,039       35,127  
    Net income attributable to noncontrolling interest   (295 )     (176 )     (177 )     (183 )     (440 )
    Net income attributable to TowneBank $ 50,592     $ 41,265     $ 42,949     $ 42,856     $ 34,687  
    Per common share information                  
    Basic earnings $ 0.67     $ 0.55     $ 0.57     $ 0.57     $ 0.46  
    Diluted earnings $ 0.67     $ 0.55     $ 0.57     $ 0.57     $ 0.46  
    Basic weighted average shares outstanding   75,149,668       75,034,688       74,940,827       74,925,877       74,816,420  
    Diluted weighted average shares outstanding   75,527,713       75,309,989       75,141,661       75,037,955       74,979,501  
    Cash dividends declared $ 0.25     $ 0.25     $ 0.25     $ 0.25     $ 0.25  
    TOWNEBANK
    Banking Segment Financial Information (unaudited)
    (dollars in thousands)
     
               
      Three Months Ended   Increase/(Decrease)
      March 31,   December 31,   YTD 2025 over 2024
        2025       2024       2024     Amount   Percent
    Revenue                  
    Net interest income $ 119,584     $ 102,682     $ 117,137     $ 16,902     16.46 %
    Service charges on deposit accounts   3,327       3,079       3,289       248     8.05 %
    Credit card merchant fees   1,697       1,551       1,486       146     9.41 %
    Investment commissions, net   3,075       2,343       3,195       732     31.24 %
    Other income   6,495       3,429       6,456       3,066     89.41 %
    Subtotal   14,594       10,402       14,426       4,192     40.30 %
    Net gain/(loss) on investment securities         74             (74 )   N/M
    Total noninterest income   14,594       10,476       14,426       4,118     39.31 %
    Total revenue   134,178       113,158       131,563       21,020     18.58 %
                       
    Provision for credit losses   2,367       (976 )     1,525       3,343     (342.52 )%
                       
    Expenses                  
    Salaries and employee benefits   49,684       46,474       50,130       3,210     6.91 %
    Occupancy   6,979       7,061       7,362       (82 )   (1.16 )%
    Furniture and equipment   3,808       3,648       4,087       160     4.39 %
    Amortization of intangible assets   981       1,162       1,027       (181 )   (15.58 )%
    Software   4,022       4,054       4,548       (32 )   (0.79 )%
    Data processing   2,609       2,548       2,581       61     2.39 %
    Accounting and professional fees   2,010       2,659       2,649       (649 )   (24.41 )%
    Advertising and marketing   2,897       3,008       1,985       (111 )   (3.69 )%
    FDIC and other insurance   2,590       4,122       2,244       (1,532 )   (37.17 )%
    Acquisition related   420       147       268       273     185.71 %
    Other expenses   11,971       10,415       11,315       1,556     14.94 %
    Total expenses   87,971       85,298       88,196       2,673     3.13 %
    Income before income tax, corporate allocation and noncontrolling interest   43,840       28,836       41,842       15,004     52.03 %
    Corporate allocation   1,396       1,069       1,172       327     30.59 %
    Income before income tax provision and noncontrolling interest   45,236       29,905       43,014       15,331     51.27 %
    Provision for income tax expense   4,681       4,105       5,275       576     14.03 %
    Net income   40,555       25,800       37,739       14,755     57.19 %
    Noncontrolling interest   42       120       (63 )     (78 )   (65.00 )%
    Net income attributable to TowneBank $ 40,597     $ 25,920     $ 37,676     $ 14,677     56.62 %
                       
    Efficiency ratio (non-GAAP)   64.83 %     74.40 %     66.26 %   (9.57 )%   (12.86 )%
    TOWNEBANK
    Mortgage Segment Financial Information (unaudited)
    (dollars in thousands)
     
           
      Three Months Ended   Increase/(Decrease)
      March 31,   December 31,   YTD 2025 over 2024
        2025       2024       2024     Amount   Percent
    Revenue                  
    Residential mortgage brokerage income, net $ 10,580     $ 10,798     $ 11,580     $ (218 )   (2.02 )%
    Income (loss) from unconsolidated subsidiary   42       30       68       12     40.00 %
    Net interest and other income   1,110       768       1,661       342     44.53 %
    Total revenue   11,732       11,596       13,309       136     1.17 %
                       
    Provision for credit losses   53       99       81       (46 )   (46.46 )%
                       
    Expenses                  
    Salaries and employee benefits   7,031       6,656       6,712       375     5.63 %
    Occupancy   939       1,061       981       (122 )   (11.50 )%
    Furniture and equipment   195       178       158       17     9.55 %
    Amortization of intangible assets         144             (144 )   (100.00 )%
    Software   727       787       719       (60 )   (7.62 )%
    Data processing   163       148       194       15     10.14 %
    Accounting and professional fees   226       234       252       (8 )   (3.42 )%
    Advertising and marketing   389       382       406       7     1.83 %
    FDIC and other insurance   96       102       112       (6 )   (5.88 )%
    Acquisition related                         N/M
    Other expenses   2,461       2,222       2,652       239     10.76 %
    Total expenses   12,227       11,914       12,186       313     2.63 %
                       
    Income before income tax, corporate allocation and noncontrolling interest   (548 )     (417 )     1,042       (131 )   31.41 %
    Corporate allocation   (350 )     (348 )     (437 )     (2 )   0.57 %
    Income before income tax provision and noncontrolling interest   (898 )     (765 )     605       (133 )   17.39 %
    Provision for income tax expense   (240 )     (202 )     121       (38 )   18.81 %
    Net income   (658 )     (563 )     484       (95 )   16.87 %
    Noncontrolling interest   (117 )     (115 )     (156 )     (2 )   1.74 %
    Net income attributable to TowneBank $ (775 )   $ (678 )   $ 328     $ (97 )   14.31 %
                       
    Efficiency ratio excluding gain on equity investment (non-GAAP)   104.22 %     101.50 %     91.56 %     2.72 %   2.68 %
    TOWNEBANK
    Resort Property Management Segment Financial Information (unaudited)
    (dollars in thousands)
     
               
      Three Months Ended   Increase/(Decrease)
      March 31,   December 31,   YTD 2025 over 2024
        2025       2024       2024     Amount   Percent
    Revenue                  
    Property management fees, net $ 19,500     $ 16,773     $ 8,186     $ 2,727     16.26 %
    Net interest and other income   13       16       3       (3 )   (18.75 )%
    Total revenue   19,513       16,789       8,189       2,724     16.22 %
                       
    Expenses                  
    Salaries and employee benefits   5,448       5,532       4,796       (84 )   (1.52 )%
    Occupancy   614       508       640       106     20.87 %
    Furniture and equipment   405       416       435       (11 )   (2.64 )%
    Amortization of intangible assets   637       533       637       104     19.51 %
    Software   859       608       939       251     41.28 %
    Data processing   944       1,102       896       (158 )   (14.34 )%
    Accounting and professional fees   126       152       304       (26 )   (17.11 )%
    Advertising and marketing   892       1,038       807       (146 )   (14.07 )%
    FDIC and other insurance   67       35       70       32     91.43 %
    Acquisition related         447             (447 )   (100.00 )%
    Other expenses   2,613       942       466       1,671     177.39 %
    Total expenses   12,605       11,313       9,990       1,292     11.42 %
                       
    Income before income tax, corporate allocation and noncontrolling interest   6,908       5,476       (1,801 )     1,432     26.15 %
    Corporate allocation   (320 )                 (320 )   N/M
    Income before income tax provision and noncontrolling interest   6,588       5,476       (1,801 )     1,112     20.31 %
    Provision for income tax expense   1,629       1,358       (337 )     271     19.96 %
    Net income   4,959       4,118       (1,464 )     841     20.42 %
    Noncontrolling interest   (220 )     (445 )     43       225     (50.56 )%
    Net income attributable to TowneBank $ 4,739     $ 3,673     $ (1,421 )   $ 1,066     29.02 %
                       
    Efficiency ratio excluding gain on equity investment (non-GAAP)   61.33 %     64.21 %     114.21 %   (2.88 )%   (4.49 )%
    TOWNEBANK
    Insurance Segment Financial Information (unaudited)
    (dollars in thousands)
     
               
      Three Months Ended   Increase/(Decrease)
      March 31,   December 31,   YTD 2025 over 2024
        2025       2024       2024     Amount   Percent
    Commission and fee income                  
    Property and casualty $ 23,322     $ 20,722     $ 20,576     $ 2,600     12.55 %
    Employee benefits   4,725       4,826       4,335       (101 )   (2.09 )%
    Specialized benefit services         9       1       (9 )   (100.00 )%
    Total commissions and fees   28,047       25,557       24,912       2,490     9.74 %
                       
    Contingency and bonus revenue   3,620       4,503       2,924       (883 )   (19.61 )%
    Other income   4       11       221       (7 )   (63.64 )%
    Total revenue   31,671       30,071       28,057       1,600     5.32 %
                       
    Employee commission expense   5,050       4,512       3,958       538     11.92 %
    Revenue, net of commission expense   26,621       25,559       24,099       1,062     4.16 %
                       
    Salaries and employee benefits   12,915       12,715       12,761       200     1.57 %
    Occupancy   801       792       836       9     1.14 %
    Furniture and equipment   213       236       170       (23 )   (9.75 )%
    Amortization of intangible assets   1,408       1,407       1,431       1     0.07 %
    Software   685       651       664       34     5.22 %
    Data processing   119       118       117       1     0.85 %
    Accounting and professional fees   291       135       241       156     115.56 %
    Advertising and marketing   294       154       161       140     90.91 %
    FDIC and other insurance   107       99       108       8     8.08 %
    Acquisition related         1             (1 )   (100.00 )%
    Other expenses   900       758       580       142     18.73 %
    Total operating expenses   17,733       17,066       17,069       667     3.91 %
    Income before income tax, corporate allocation and noncontrolling interest   8,888       8,493       7,030       395     4.65 %
    Corporate allocation   (726 )     (721 )     (735 )     (5 )   0.69 %
    Income before income tax provision and noncontrolling interest   8,162       7,772       6,295       390     5.02 %
    Provision for income tax expense   2,131       2,000       1,613       131     6.55 %
    Net income   6,031       5,772       4,682       259     4.49 %
    Noncontrolling interest                         N/M
    Net income attributable to TowneBank $ 6,031     $ 5,772     $ 4,682     $ 259     4.49 %
                    0      
    Provision for income taxes   2,131       2,000       1,613       131     6.55 %
    Depreciation, amortization and interest expense   1,527       1,553       1,550       (26 )   (1.67 )%
    EBITDA (non-GAAP) $ 9,689     $ 9,325     $ 7,845     $ 364     3.90 %
                       
    Efficiency ratio (non-GAAP)   61.32 %     61.27 %     65.48 %     0.05 %   0.08 %
    TOWNEBANK
    Reconciliation of Non-GAAP Financial Measures
    (dollars in thousands)
     
      Three Months Ended
      March 31,   March 31,   December 31,
        2025       2024       2024  
               
    Return on average assets (GAAP)   1.19 %     0.83 %     0.95 %
    Impact of excluding average goodwill and other
     intangibles and amortization
      0.10 %     0.09 %     0.08 %
    Return on average tangible assets (non-GAAP)   1.29 %     0.92 %     1.03 %
               
    Return on average equity (GAAP)   9.50 %     6.84 %     7.64 %
    Impact of excluding average goodwill and other
     intangibles and amortization
      3.58 %     3.03 %     3.04 %
    Return on average tangible equity (non-GAAP)   13.08 %     9.87 %     10.68 %
               
    Return on average common equity (GAAP)   9.57 %     6.89 %     7.70 %
    Impact of excluding average goodwill and other
     intangibles and amortization
      3.64 %     3.09 %     3.09 %
    Return on average tangible common equity
    (non-GAAP)
      13.21 %     9.98 %     10.79 %
               
    Book value (GAAP) $ 29.19     $ 27.33     $ 28.43  
    Impact of excluding average goodwill and other
     intangibles and amortization
      (6.83 )     (7.02 )     (6.88 )
    Tangible book value (non-GAAP) $ 22.36     $ 20.31     $ 21.55  
               
    Efficiency ratio (GAAP)   67.97 %     75.16 %     71.94 %
    Impact of exclusions (0.87 )%   (1.91 )%   (1.66 )%
    Efficiency ratio (non-GAAP)   67.10 %     73.25 %     70.28 %
               
    Average assets (GAAP) $ 17,211,862     $ 16,864,235     $ 17,349,128  
    Less: average goodwill and intangible assets   516,661       522,675       519,691  
    Average tangible assets (non-GAAP) $ 16,695,201     $ 16,341,560     $ 16,829,437  
               
    Average equity (GAAP) $ 2,160,014     $ 2,040,275     $ 2,148,111  
    Less: average goodwill and intangible assets   516,661       522,675       519,691  
    Average tangible equity (non-GAAP) $ 1,643,353     $ 1,517,600     $ 1,628,420  
               
    Average common equity (GAAP) $ 2,143,806     $ 2,024,169     $ 2,131,778  
    Less: average goodwill and intangible assets   516,661       522,675       519,691  
    Average tangible common equity (non-GAAP) $ 1,627,145     $ 1,501,494     $ 1,612,087  
               
    Net income (GAAP) $ 50,592     $ 34,687     $ 41,265  
    Amortization of intangibles, net of tax   2,391       2,564       2,445  
    Tangible net income (non-GAAP) $ 52,983     $ 37,251     $ 43,710  
               
    Total revenue (GAAP) $ 192,044     $ 167,102     $ 177,160  
    Net (gain)/loss on investment securities/equity investments   (2,000 )     (74 )     (218 )
    Total revenue for efficiency calculation (non-GAAP) $ 190,044     $ 167,028     $ 176,942  
               
    Noninterest expense (GAAP) $ 130,536     $ 125,591     $ 127,441  
    Less: amortization of intangibles   3,026       3,246       3,095  
    Noninterest expense net of amortization (non-GAAP) $ 127,510     $ 122,345     $ 124,346  
    TOWNEBANK
    Reconciliation of Non-GAAP Financial Measures
    (dollars in thousands, except per share data)
                       
                       
    Reconciliation of GAAP Earnings to Operating
    Earnings Excluding Certain Items Affecting
    Comparability
    Three Months Ended
      March 31,   December 31,   September 30,   June 30,   March 31,
        2025       2024       2024       2024       2024  
    Net income available to common shareholders (GAAP) $ 50,592     $ 41,265     $ 42,949     $ 42,856     $ 34,687  
                       
    Adjustments                  
    Plus: Acquisition-related expenses, net of tax   389       250       460       18       564  
    Plus: Initial provision for acquired loans, net of tax                            
    Plus: FDIC special assessment, net of tax                     (310 )     1,021  
    Less: Gain on sale of equity investments, net of noncontrolling interest         (99 )     (16 )            
    Core operating earnings, excluding certain items affecting comparability (non-GAAP) $ 50,981     $ 41,416     $ 43,393     $ 42,564     $ 36,272  
    Annualized interest impact of Series IV Notes, net of tax   42                          
    Core net income for diluted earnings (non-GAAP) $ 51,023     $ 41,416     $ 43,393     $ 42,564     $ 36,272  
                       
    Weighted average diluted shares   75,527,713       75,309,989       75,141,661       75,037,955       74,979,501  
    Diluted EPS (GAAP) $ 0.67     $ 0.55     $ 0.57     $ 0.57     $ 0.46  
    Diluted EPS, excluding certain items affecting
     comparability (non-GAAP)
    $ 0.68     $ 0.55     $ 0.58     $ 0.57     $ 0.48  
    Average assets $ 17,211,862     $ 17,349,128     $ 17,028,141     $ 16,982,482     $ 16,864,235  
    Average tangible equity $ 1,643,353     $ 1,628,420     $ 1,582,830     $ 1,520,500     $ 1,517,600  
    Average common tangible equity $ 1,627,145     $ 1,612,087     $ 1,566,455     $ 1,504,028     $ 1,501,494  
    Return on average assets, excluding certain items affecting comparability (non-GAAP)   1.20 %     0.95 %     1.01 %     1.01 %     0.87 %
    Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)   13.17 %     10.72 %     11.53 %     11.95 %     10.29 %
    Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)   13.30 %     10.82 %     11.65 %     12.08 %     10.40 %
    Efficiency ratio, excluding certain items affecting comparability (non-GAAP)   66.87 %     70.12 %     70.67 %     68.96 %     72.89 %

    The MIL Network

  • MIL-OSI: Horizon Bancorp, Inc. Reports First Quarter 2025 Results

    Source: GlobeNewswire (MIL-OSI)

    MICHIGAN CITY, Ind., April 23, 2025 (GLOBE NEWSWIRE) — (NASDAQ GS: HBNC) – Horizon Bancorp, Inc. (“Horizon” or the “Company”), the parent company of Horizon Bank (the “Bank”), announced its unaudited financial results for the three months ended March 31, 2025.

    “Horizon’s first quarter earnings displayed continued positive momentum in our core financial metrics and management’s commitment to deliver long term value to its shareholders. Our results were highlighted by a sixth consecutive quarter of margin expansion, now above 3%, strong loan growth with exceptional credit metrics and a core funding base that continues to deliver value, even in an uncertain economic environment. The team also delivered a more efficient expense base entering 2025 and added optionality to our capital position through the successful sale of our mortgage warehouse business”, President and CEO, Thomas Prame stated. “We are pleased with our first quarter results and the positive momentum across our community banking model. The core franchise remains strong and our investments in expanding our local relationship banking model is paying dividends”.

    Net income for the three months ended March 31, 2025 was $23.9 million, or $0.54 per diluted share, compared to net loss of $10.9 million, or $0.25, for the fourth quarter of 2024 and compared to $14.0 million, or $0.32 per diluted share, for the first quarter of 2024.

    First Quarter 2025 Highlights

    • Net interest margin, on a fully taxable equivalent (“FTE”) basis1, expanded for the sixth consecutive quarter, to 3.04% compared with 2.97% for the three months ended December 31, 2024 and 2.50% for the three months ended March 31, 2024.
    • Total loans held for investment (“HFI”) increased 5% linked quarter annualized, with strong organic commercial loan growth of $103.3 million, or 14% annualized. This growth was partially funded by the continued strategic runoff of lowering yielding indirect auto loans of approximately $36 million.
    • Core deposits continued to be stable, with non-interest-bearing balances growing $62.5 million during the period, or 24% annualized.
    • Credit quality remained strong, with annualized net charge offs of 0.07% of average loans during the first quarter. Non-performing assets remain well within expected ranges, with no material change from the prior quarter.
    • On January 17, 2025, the Company completed the sale of its mortgage warehouse business to an unrelated third party, resulting in a pre-tax gain of $7.0 million.
    • Expenses were down $5.6 million from the fourth quarter of 2024, reflecting management’s commitment to creating a more efficient expense base in 2025.

    _________________________________
    1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

     
    Financial Highlights
    (Dollars in Thousands Except Share and Per Share Data and Ratios)
      Three Months Ended
      March 31,   December 31,   September 30,   June 30,   March 31,
      2025   2024   2024   2024   2024
    Income statement:                  
    Net interest income $ 52,267     $ 53,127     $ 46,910     $ 45,279     $ 43,288  
    Credit loss expense   1,376       1,171       1,044       2,369       805  
    Non-interest income (loss)   16,499       (28,954 )     11,511       10,485       9,929  
    Non-interest expense   39,306       44,935       39,272       37,522       37,107  
    Income tax expense (benefit)   4,141       (11,051 )     (75 )     1,733       1,314  
    Net income (loss) $ 23,943     $ (10,882 )   $ 18,180     $ 14,140     $ 13,991  
                       
    Per share data:                  
    Basic earnings (loss) per share $ 0.55     $ (0.25 )   $ 0.42     $ 0.32     $ 0.32  
    Diluted earnings (loss) per share   0.54       (0.25 )     0.41       0.32       0.32  
    Cash dividends declared per common share   0.16       0.16       0.16       0.16       0.16  
    Book value per common share   17.72       17.46       17.27       16.62       16.49  
    Market value – High   17.76       18.76       16.57       12.74       14.44  
    Market value – Low   15.00       14.57       11.89       11.29       11.75  
    Weighted average shares outstanding – Basic   43,777,109       43,721,211       43,712,059       43,712,059       43,663,610  
    Weighted average shares outstanding – Diluted   43,954,164       43,721,211       44,112,321       43,987,187       43,874,036  
    Common shares outstanding (end of period)   43,785,932       43,722,086       43,712,059       43,712,059       43,726,380  
                       
    Key ratios:                  
    Return on average assets   1.25 %   (0.55 )%     0.92 %     0.73 %     0.72 %
    Return on average stockholders’ equity   12.44       (5.73 )     9.80       7.83       7.76  
    Total equity to total assets   10.18       9.79       9.52       9.18       9.18  
    Total loans to deposit ratio   85.21       87.75       83.92       85.70       82.78  
    Allowance for credit losses to HFI loans   1.07       1.07       1.10       1.08       1.09  
    Annualized net charge-offs of average total loans(1)   0.07       0.05       0.03       0.05       0.04  
    Efficiency ratio   57.16       185.89       67.22       67.29       69.73  
                       
    Key metrics (Non-GAAP)(2):                  
    Net FTE interest margin   3.04 %     2.97 %     2.66 %     2.64 %     2.50 %
    Return on average tangible common equity   15.79       (7.35 )     12.65       10.18       10.11  
    Tangible common equity to tangible assets   8.20       7.83       7.58       7.22       7.20  
    Tangible book value per common share $ 13.96     $ 13.68     $ 13.46     $ 12.80     $ 12.65  
                       
                       
    (1) Average total loans includes loans held for investment and held for sale.
    (2) Non-GAAP financial metrics. See non-GAAP reconciliation included herein for the most directly comparable GAAP measures.
     

    Income Statement Highlights

    Net Interest Income

    Net interest income was $52.3 million in the first quarter of 2025, compared to $53.1 million in the fourth quarter of 2024. Continued expansion of the Company’s net FTE interest margin was offset by a decline in average interest earning asset balances and two fewer days when compared with the prior quarter. Horizon’s net FTE interest margin2 was 3.04% for the first quarter of 2025, compared to 2.97% for the fourth quarter of 2024, attributable to the favorable mix shift in average interest earning assets toward higher-yielding loans and in the average funding mix toward deposit balances, in addition to continued disciplined pricing strategies on both sides of the balance sheet. Additionally, as previously noted, the fourth quarter net FTE interest margin included approximately five basis points related to interest recoveries on specific commercial loans that did not recur.

    Provision for Credit Losses

    During the first quarter of 2025, the Company recorded a provision for credit losses of $1.4 million. This compares to a provision for credit losses of $1.2 million during the fourth quarter of 2024, and $0.8 million during the first quarter of 2024. The increase in the provision for credit losses during the first quarter of 2025 when compared with the fourth quarter of 2024 was primarily attributable to increased net growth in commercial loans HFI and changes in economic factors, partially offset by the reduction of specific reserves and the reserves for unfunded commitments in the current quarter.

    For the first quarter of 2025, the allowance for credit losses included net charge-offs of $0.9 million, or an annualized 0.07% of average loans outstanding, compared to net charge-offs of $0.6 million, or an annualized 0.05% of average loans outstanding for the fourth quarter of 2024, and net charge-offs of $0.3 million, or an annualized 0.04% of average loans outstanding, in the first quarter of 2024.

    The Company’s allowance for credit losses as a percentage of period-end loans HFI was 1.07% at March 31, 2025, compared to 1.07% at December 31, 2024 and 1.09% at March 31, 2024.

    Non-Interest Income

    For the Quarter Ended March 31,   December 31,   September 30,   June 30,   March 31,
    (Dollars in Thousands) 2025   2024   2024
      2024
      2024
    Non-interest Income                  
    Service charges on deposit accounts $ 3,208     $ 3,276     $ 3,320     $ 3,130     $ 3,214  
    Wire transfer fees   71       124       123       113       101  
    Interchange fees   3,241       3,353       3,511       3,826       3,109  
    Fiduciary activities   1,326       1,313       1,394       1,372       1,315  
    Loss on sale of investment securities   (407 )     (39,140 )                  
    Gain on sale of mortgage loans   1,076       1,071       1,622       896       626  
    Mortgage servicing income net of impairment   385       376       412       450       439  
    Increase in cash value of bank owned life insurance   335       335       349       318       298  
    Other income   7,264       338       780       380       827  
    Total non-interest income (loss) $ 16,499     $ (28,954 )   $ 11,511     $ 10,485     $ 9,929  
                                           

    Total non-interest income was $16.5 million in the first quarter of 2025, compared to non-interest loss of $29.0 million in the fourth quarter of 2024. The increase in non-interest income of $45.5 million is primarily due to a pre-tax loss on sale of investment securities of $39.1 million from the completion of the repositioning of $332.2 million of available-for-sale securities during the fourth quarter of 2024, compared to a loss on the sale of investment securities of $0.4 million in the first quarter of 2025. In addition, the Company completed the sale of its mortgage warehouse business to an unrelated third party in the current period, resulting in a pre-tax gain of $7.0 million.

    _________________________________
    1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

    Non-Interest Expense

    For the Quarter Ended March 31,   December 31,   September 30,   June 30,   March 31,
    (Dollars in Thousands) 2025
      2024
      2024
      2024
      2024
    Non-interest Expense                  
    Salaries and employee benefits $ 22,414     $ 25,564     $ 21,829     $ 20,583     $ 20,268  
    Net occupancy expenses   3,702       3,431       3,207       3,192       3,546  
    Data processing   2,872       2,841       2,977       2,579       2,464  
    Professional fees   826       736       676       714       607  
    Outside services and consultants   3,265       4,470       3,677       3,058       3,359  
    Loan expense   689       1,285       1,034       1,038       719  
    FDIC insurance expense   1,288       1,193       1,204       1,315       1,320  
    Core deposit intangible amortization   816       843       844       844       872  
    Merger related expenses   305                          
    Other losses   228       371       297       515       16  
    Other expense   2,901       4,201       3,527       3,684       3,936  
    Total non-interest expense $ 39,306     $ 44,935     $ 39,272     $ 37,522     $ 37,107  
                                           

    Total non-interest expense was $39.3 million in the first quarter of 2025, compared with $44.9 million in the fourth quarter of 2024. The current period included $0.3 million of direct expenses related to the sale of the mortgage warehouse business. The decrease in non-interest expense during the first quarter of 2025 when compared with the prior period was primarily driven by a $3.2 million decrease in salaries and employee benefits expense, which is attributable to expenses incurred in the fourth quarter of 2024 related to the termination of legacy compensation and benefits programs that did not recur in the current period, and lower incentive compensation expense. Additionally, outside services and consultants expense decreased by $1.2 million, partially attributable to expense related to specific corporate initiatives in the fourth quarter of 2024 that did not recur in the current period. Other expenses decreased $1.3 million, partially attributable to a decrease in marketing expense.

    Income Taxes

    Horizon recorded a net tax expense of $4.1 million for the first quarter of 2025, representing an effective tax rate of 14.8%. Net tax expense in the fourth quarter of 2024 was impacted by the realized securities loss and the reversal of the $5.2 million tax valuation allowance.

    Balance Sheet Highlights

    Total assets decreased by $175.5 million, or 2.2%, to $7.6 billion as of March 31, 2025, from $7.8 billion as of December 31, 2024. The decrease in total assets is primarily due to the sale of the mortgage warehouse portfolio and a decrease in interest-bearing cash related to the payoff of FHLB advances and deposit outflows.

    Total investment securities decreased by $26.1 million, or 1.2%, to $2.1 billion as of March 31, 2025.

    Total loans were $4.9 billion at March 31, 2025, a decrease of $1.6 million from December 31, 2024 balances. The decrease is primarily due to the sale of the mortgage warehouse business during the quarter, which was offset by continued organic commercial loan growth.

    Total deposits increased by $165.1 million, or 2.9%, to $5.8 billion as of March 31, 2025 when compared to balances as of December 31, 2024. Time deposits increased by $155.9 million, or 14.3% during the quarter, while non-interest bearing deposits grew by $62.5 million, or 5.9%. Total borrowings decreased by $330.1 million during the quarter, to $812.2 million as of March 31, 2025, due to the pay down of FHLB advances. Balances subject to repurchase agreements declined by $2.1 million, to $87.9 million.

    Capital

    The following table presents the consolidated regulatory capital ratios of the Company for the previous three quarters, and the Company’s preliminary estimate of its consolidated regulatory capital ratios for the quarter ended March 31, 2025:

    For the Quarter Ended March 31,   December 31,   September 30,   June 30,
      2025*   2024   2024   2024
    Consolidated Capital Ratios              
    Total capital (to risk-weighted assets)   14.28 %     13.91 %     13.45 %     13.41 %
    Tier 1 capital (to risk-weighted assets)   12.35       12.00       11.63       11.59  
    Common equity tier 1 capital (to risk-weighted assets)   11.34       11.00       10.68       10.63  
    Tier 1 capital (to average assets)   9.25       8.88       9.02       9.02  
    *Preliminary estimate – may be subject to change    
         

    As of March 31, 2025, the ratio of total stockholders’ equity to total assets is 10.18%. Book value per common share was $17.72, increasing $0.26 during the first quarter of 2025.

    Tangible common equity3 totaled $611.4 million at March 31, 2025, and the ratio of tangible common equity to tangible assets1 was 8.20% at March 31, 2025, up from 7.83% at December 31, 2024. Tangible book value, which excludes intangible assets from total equity, per common share1 was $13.96, increasing $0.28 during the first quarter of 2025 behind the growth in retained earnings.

    Credit Quality

    As of March 31, 2025, total non-accrual loans increased by $3.0 million, or 12%, from December 31, 2024, to 0.59% of total loans HFI. Total non-performing assets increased $4.0 million, or 15%, to $31.4 million, compared to $27.4 million as of December 31, 2024. The ratio of non-performing assets to total assets increased to 0.41% compared to 0.35% as of December 31, 2024.

    As of March 31, 2025, net charge-offs increased by $0.2 million to $0.9 million, compared to $0.6 million as of December 31, 2024 and remain just 0.07% annualized of average loans.

    _________________________________
    1 Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.

    Earnings Conference Call

    As previously announced, Horizon will host a conference call to review its first quarter financial results and operating performance.

    Participants may access the live conference call on April 24, 2025 at 7:30 a.m. CT (8:30 a.m. ET) by dialing 833-974-2379 from the United States, 866-450-4696 from Canada or 1-412-317-5772 from international locations and requesting the “Horizon Bancorp, Inc. Call.” Participants are asked to dial in approximately 10 minutes prior to the call.

    A telephone replay of the call will be available approximately one hour after the end of the conference through May 2, 2025. The replay may be accessed by dialing 877-344-7529 from the United States, 855-669-9658 from Canada or 1–412–317-0088 from other international locations, and entering the access code 6313653.

    About Horizon Bancorp, Inc.

    Horizon Bancorp, Inc. (NASDAQ GS: HBNC) is the $8 billion-asset commercial bank holding company for Horizon Bank, which serves customers across diverse and economically attractive Midwestern markets through convenient digital and virtual tools, as well as its Indiana and Michigan branches. Horizon’s retail offerings include prime residential and other secured consumer lending to in-market customers, as well as a range of personal banking and wealth management solutions. Horizon also provides a comprehensive array of in-market business banking and treasury management services, as well as equipment financing solutions for customers regionally and nationally, with commercial lending representing over half of total loans. More information on Horizon, headquartered in Northwest Indiana’s Michigan City, is available at horizonbank.com and investor.horizonbank.com.

    Use of Non-GAAP Financial Measures

    Certain information set forth in this press release refers to financial measures determined by methods other than in accordance with GAAP. Specifically, we have included non-GAAP financial measures relating to net income, diluted earnings per share, pre-tax, pre-provision net income, net interest margin, tangible stockholders’ equity and tangible book value per share, efficiency ratio, the return on average assets, the return on average common equity, and return on average tangible equity. In each case, we have identified special circumstances that we consider to be non-recurring and have excluded them. We believe that this shows the impact of such events as acquisition-related purchase accounting adjustments and swap termination fees, among others we have identified in our reconciliations. Horizon believes these non-GAAP financial measures are helpful to investors and provide a greater understanding of our business and financial results without giving effect to the purchase accounting impacts and one-time costs of acquisitions and non–recurring items. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the tables and other information below and contained elsewhere in this press release for reconciliations of the non-GAAP information identified herein and its most comparable GAAP measures.

    Forward Looking Statements

    This press release may contain forward–looking statements regarding the financial performance, business prospects, growth and operating strategies of Horizon Bancorp, Inc. and its affiliates (collectively, “Horizon”). For these statements, Horizon claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Horizon, including the information in the filings we make with the Securities and Exchange Commission (the “SEC”). Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance.

    Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include: effects on Horizon’s business resulting from new U.S. domestic or foreign governmental trade measures, including but not limited to tariffs, import and export controls, foreign exchange intervention accomplished to offset the effects of trade policy or in response to currency volatility, and other restrictions on free trade; uncertain conditions within the domestic and international macroeconomic environment, including trade policy, monetary and fiscal policy, and conditions in the investment, credit, interest rate, and derivatives markets, and their impact on Horizon and its customers; current financial conditions within the banking industry; changes in the level and volatility of interest rates, changes in spreads on earning assets and changes in interest bearing liabilities; increased interest rate sensitivity; the aggregate effects of elevated inflation levels in recent years; loss of key Horizon personnel; increases in disintermediation; potential loss of fee income, including interchange fees, as new and emerging alternative payment platforms take a greater market share of the payment systems; estimates of fair value of certain of Horizon’s assets and liabilities; changes in prepayment speeds, loan originations, credit losses, market values, collateral securing loans and other assets; changes in sources of liquidity; legislative and regulatory actions and reforms; changes in accounting policies or procedures as may be adopted and required by regulatory agencies; litigation, regulatory enforcement, and legal compliance risk and costs; rapid technological developments and changes; cyber terrorism and data security breaches; the rising costs of cybersecurity; the ability of the U.S. federal government to manage federal debt limits; climate change and social justice initiatives; the inability to realize cost savings or revenues or to effectively implement integration plans and other consequences associated with mergers, acquisitions, and divestitures; acts of terrorism, war and global conflicts, such as the Russia and Ukraine conflict and the Israel and Hamas conflict; and supply chain disruptions and delays. These and additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Horizon’s reports (such as the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K) filed with the SEC and available at the SEC’s website (www.sec.gov). Undue reliance should not be placed on the forward–looking statements, which speak only as of the date hereof. Horizon does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward–looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

       
      Condensed Consolidated Statements of Income
      (Dollars in Thousands Except Per Share Data, Unaudited)
      Three Months Ended
      March 31,   December 31,   September 30,   June 30,   March 31,
      2025   2024   2024   2024
      2024
    Interest Income                  
    Interest and fees on loans $ 74,457     $ 76,747     $ 75,488     $ 71,880     $ 66,954  
    Investment securities – taxable   6,039       6,814       8,133       7,986       7,362  
    Investment securities – tax-exempt   6,192       6,301       6,310       6,377       6,451  
    Other   2,487       3,488       957       738       4,497  
    Total interest income   89,175       93,350       90,888       86,981       85,264  
    Interest Expense                  
    Deposits   25,601       27,818       30,787       28,447       27,990  
    Short and long-term borrowings   9,188       10,656       11,131       11,213       11,930  
    Subordinated notes   829       829       830       829       831  
    Junior subordinated debentures issued to capital trusts   1,290       920       1,230       1,213       1,225  
    Total interest expense   36,908       40,223       43,978       41,702       41,976  
    Net Interest Income   52,267       53,127       46,910       45,279       43,288  
    Provision for loan losses   1,376       1,171       1,044       2,369       805  
    Net Interest Income after Credit Loss Expense   50,891       51,956       45,866       42,910       42,483  
    Non-interest Income                  
    Service charges on deposit accounts   3,208       3,276       3,320       3,130       3,214  
    Wire transfer fees   71       124       123       113       101  
    Interchange fees   3,241       3,353       3,511       3,826       3,109  
    Fiduciary activities   1,326       1,313       1,394       1,372       1,315  
    Loss on sale of investment securities   (407 )     (39,140 )                  
    Gain on sale of mortgage loans   1,076       1,071       1,622       896       626  
    Mortgage servicing income net of impairment   385       376       412       450       439  
    Increase in cash value of bank owned life insurance   335       335       349       318       298  
    Other income   7,264       338       780       380       827  
    Total non-interest (loss) income   16,499       (28,954 )     11,511       10,485       9,929  
    Non-interest Expense                  
    Salaries and employee benefits   22,414       25,564       21,829       20,583       20,268  
    Net occupancy expenses   3,702       3,431       3,207       3,192       3,546  
    Data processing   2,872       2,841       2,977       2,579       2,464  
    Professional fees   826       736       676       714       607  
    Outside services and consultants   3,265       4,470       3,677       3,058       3,359  
    Loan expense   689       1,285       1,034       1,038       719  
    FDIC insurance expense   1,288       1,193       1,204       1,315       1,320  
    Core deposit intangible amortization   816       843       844       844       872  
    Merger related expenses   305                          
    Other losses   228       371       297       515       16  
    Other expense   2,901       4,201       3,527       3,684       3,936  
    Total non-interest expense   39,306       44,935       39,272       37,522       37,107  
    Income (Loss) Before Income Taxes   28,084       (21,933 )     18,105       15,873       15,305  
    Income tax expense (benefit)   4,141       (11,051 )     (75 )     1,733       1,314  
    Net Income (Loss) $ 23,943     $ (10,882 )   $ 18,180     $ 14,140     $ 13,991  
    Basic Earnings (Loss) Per Share $ 0.55     $ (0.25 )   $ 0.42     $ 0.32     $ 0.32  
    Diluted Earnings (Loss) Per Share   0.54       (0.25 )     0.41       0.32       0.32  
                                           
      Condensed Consolidated Balance Sheet
      (Dollar in Thousands)
       
      Three Months Ended for the Period
      March 31,
    2025
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
    Assets                  
    Interest earning assets                  
    Federal funds sold $     $     $ 113,912     $ 34,453     $ 161,704  
    Interest-bearing deposits in banks   80,023       201,131       12,107       4,957       9,178  
    Interest earning time deposits         735       735       1,715       1,715  
    Federal Home Loan Bank stock   45,412       53,826       53,826       53,826       53,826  
    Investment securities, available for sale   231,431       233,677       541,170       527,054       535,319  
    Investment securities, held to maturity   1,843,851       1,867,690       1,888,379       1,904,281       1,925,725  
    Loans held for sale   3,253       67,597       2,069       2,440       922  
    Gross loans held for investment (HFI)   4,909,815       4,847,040       4,803,996       4,822,840       4,618,175  
    Total Interest earning assets   7,113,785       7,271,696       7,416,194       7,351,566       7,306,564  
    Non-interest earning assets                  
    Allowance for credit losses   (52,654 )     (51,980 )     (52,881 )     (52,215 )     (50,387 )
    Cash and due from banks   89,643       92,300       108,815       106,691       100,206  
    Cash value of life insurance   37,409       37,450       37,115       36,773       36,455  
    Other assets   140,672       152,635       119,026       165,656       160,593  
    Goodwill   155,211       155,211       155,211       155,211       155,211  
    Other intangible assets   9,407       10,223       11,067       11,910       12,754  
    Premises and equipment, net   93,499       93,864       93,544       93,695       94,303  
    Interest receivable   38,663       39,747       39,366       43,240       40,008  
    Total non-interest earning assets   511,850       529,450       511,263       560,961       549,143  
    Total assets $ 7,625,635     $ 7,801,146     $ 7,927,457     $ 7,912,527     $ 7,855,707  
    Liabilities                  
    Savings and money market deposits $ 3,393,371     $ 3,446,681     $ 3,420,827     $ 3,364,726     $ 3,350,673  
    Time deposits   1,245,088       1,089,153       1,220,653       1,178,389       1,136,121  
    Short and long-term borrowings   812,218       1,142,340       1,142,744       1,229,165       1,219,812  
    Repurchase agreements   87,851       89,912       122,399       128,169       139,309  
    Subordinated notes   55,772       55,738       55,703       55,668       55,634  
    Junior subordinated debentures issued to capital trusts   57,531       57,477       57,423       57,369       57,315  
    Total interest earning liabilities   5,651,831       5,881,301       6,019,749       6,013,486       5,958,864  
    Non-interest bearing deposits   1,127,324       1,064,818       1,085,535       1,087,040       1,093,076  
    Interest payable   11,441       11,137       11,400       11,240       7,853  
    Other liabilities   58,978       80,308       55,951       74,096       74,664  
    Total liabilities   6,849,574       7,037,564       7,172,635       7,185,862       7,134,457  
    Stockholders’ Equity                  
    Preferred stock                            
    Common stock                            
    Additional paid-in capital   360,522       363,761       358,453       357,673       356,599  
    Retained earnings   452,945       436,122       454,050       442,977       435,927  
    Accumulated other comprehensive loss   (37,406 )     (36,301 )     (57,681 )     (73,985 )     (71,276 )
    Total stockholders’ equity   776,061       763,582       754,822       726,665       721,250  
    Total liabilities and stockholders’ equity $ 7,625,635     $ 7,801,146     $ 7,927,457     $ 7,912,527     $ 7,855,707  
                                           
      Loans and Deposits        
      (Dollars in Thousands)        
      March 31,   December 31,   September 30,   June 30,   March 31,   % Change
      2025
      2024
      2024
      2024
      2024
      Q1’25 vs
    Q4’24
      Q1’25 vs
    Q1’24
    Loans:                          
    Commercial real estate $ 2,262,910     $ 2,202,858     $ 2,105,459     $ 2,117,772     $ 1,984,723       3 %     14 %
    Commercial & Industrial   918,541       875,297       808,600       786,788       765,043       5 %     20 %
    Total commercial   3,181,451       3,078,155       2,914,059       2,904,560       2,749,766       3 %     16 %
    Residential Real estate   801,726       802,909       801,356       797,956       782,071       %     3 %
    Mortgage warehouse               80,437       68,917       56,548       %     (100 )%
    Consumer   926,638       965,976       1,008,144       1,051,407       1,029,790       (4 )%     (10 )%
    Total loans held for investment   4,909,815       4,847,040       4,803,996       4,822,840       4,618,175       1 %     6 %
    Loans held for sale   3,253       67,597       2,069       2,440       922       (95 )%     253 %
    Total loans $ 4,913,068     $ 4,914,637     $ 4,806,065     $ 4,825,280     $ 4,619,097       %     6 %
                               
    Deposits:                          
    Interest-bearing demand deposits $ 1,713,991     $ 1,767,983     $ 1,688,998     $ 1,653,508     $ 1,613,806       (3 )%     6 %
    Savings and money market deposits   1,679,380       1,678,697       1,731,830       1,711,218       1,736,866       %     (3 )%
    Time deposits   1,245,088       1,089,153       1,220,653       1,178,389       1,136,121       14 %     10 %
    Total Interest bearing deposits   4,638,459       4,535,833       4,641,481       4,543,115       4,486,793       2 %     3 %
    Non-interest bearing deposits                          
    Non-interest bearing deposits   1,127,324       1,064,819       1,085,534       1,087,040       1,093,077       6 %     3 %
    Total deposits $ 5,765,783     $ 5,600,652     $ 5,727,015     $ 5,630,155     $ 5,579,870       3 %     3 %
                                                           
      Average Balance Sheet
      (Dollars in Thousands, Unaudited)
      Three Months Ended
      March 31, 2025 December 31, 2024 March 31, 2024
      Average
    Balance
    Interest(4)(6) Average
    Rate(4)
    Average
    Balance
    Interest(4)(6) Average
    Rate(4)
    Average
    Balance
    Interest(4)(6) Average
    Rate(4)
    Assets
    Interest earning assets                  
    Interest-bearing deposits in banks $ 223,148   $ 2,487     4.52 % $ 290,693   $ 3,488     4.77 % $ 331,083     4,497     5.46 %
    Federal Home Loan Bank stock   51,769     1,012     7.93 %   53,826     1,516     11.20 %   37,949     784     8.31 %
    Investment securities – taxable (1)   974,109     5,027     2.09 %   1,079,377     5,298     1.95 %   1,326,246     6,578     1.99 %
    Investment securities – non-taxable (1)   1,120,249     7,838     2.84 %   1,129,622     7,976     2.81 %   1,149,957     8,166     2.86 %
    Total investment securities   2,094,358     12,865     2.49 %   2,208,999     13,274     2.39 %   2,476,203     14,744     2.39 %
    Loans receivable (2) (3)   4,865,449     74,840     6.24 %   4,842,660     77,142     6.34 %   4,448,324     67,307     6.09 %
    Total interest earning assets   7,234,724     91,204     5.11 %   7,396,178     95,420     5.13 %   7,293,559     87,332     4.82 %
    Non-interest earning assets                  
    Cash and due from banks   88,624         85,776         105,795      
    Allowance for credit losses   (51,863 )       (52,697 )       (49,960 )    
    Other assets   483,765         409,332         486,652      
    Total average assets $ 7,755,250       $ 7,838,589       $ 7,836,046      
                       
    Liabilities and Stockholders’ Equity
    Interest bearing liabilities                  
    Interest-bearing demand deposits $ 1,750,446   $ 6,491     1.50 % $ 1,716,598   $ 6,861     1.59 % $ 1,658,709   $ 6,516     1.58 %
    Savings and money market deposits   1,674,590     8,263     2.00 %   1,701,012     9,336     2.18 %   1,664,518     9,373     2.26 %
    Time deposits   1,212,386     10,847     3.63 %   1,160,527     11,621     3.98 %   1,176,921     12,101     4.14 %
    Total interest bearing deposits   4,637,422     25,601     2.24 %   4,578,137     27,818     2.42 %   4,500,148     27,990     2.50 %
    Borrowings   971,496     8,772     3.66 %   1,130,301     10,138     3.57 %   1,200,728     10,904     3.65 %
    Repurchase agreements   88,469     416     1.91 %   91,960     518     2.24 %   138,052     1,026     2.99 %
    Subordinated notes   55,750     829     6.03 %   55,717     829     5.92 %   55,558     831     6.02 %
    Junior subordinated debentures issued to capital trusts   57,497     1,290     9.10 %   57,443     920     6.37 %   57,279     1,225     8.60 %
    Total interest bearing liabilities   5,810,634     36,908     2.58 %   5,913,558     40,223     2.71 %   5,951,765     41,976     2.84 %
    Non-interest bearing liabilities
    Demand deposits   1,085,826         1,099,574         1,077,183      
    Accrued interest payable and other liabilities   78,521         70,117         82,015      
    Stockholders’ equity   780,269         755,340         725,083      
    Total average liabilities and stockholders’ equity $ 7,755,250       $ 7,838,589       $ 7,836,046      
    Net FTE interest income (non-GAAP) (5)   $ 54,296       $ 55,197       $ 45,356    
    Less FTE adjustments (4)     2,029         2,070         2,068    
    Net Interest Income   $ 52,267       $ 53,127       $ 43,288    
    Net FTE interest margin (Non-GAAP) (4)(5)       3.04 %       2.97 %       2.50 %
     
    (1) Securities balances represent daily average balances for the fair value of securities. The average rate is calculated based on the daily average balance for the amortized cost of securities.
    (2) Includes fees on loans held for sale and held for investment. The inclusion of loan fees does not have a material effect on the average interest rate.
    (3) Non-accruing loans for the purpose of the computation above are included in the daily average loan amounts outstanding. Loan totals are shown net of unearned income and deferred loan fees.
    (4) Management believes fully taxable equivalent, or FTE, interest income is useful to investors in evaluating the Company’s performance as a comparison of the returns between a tax-free investment and a taxable alternative. The Company adjusts interest income and average rates for tax-exempt loans and securities to an FTE basis utilizing a 21% tax rate.
    (5) Non-GAAP financial metric. See non-GAAP reconciliation included herein for the most directly comparable GAAP measure.
    (6) Includes dividend income on Federal Home Loan Bank stock
     
      Credit Quality        
      (Dollars in Thousands Except Ratios)        
      Quarter Ended        
      March 31,   December 31,   September 30,   June 30,   March 31,   % Change
      2025   2024   2024   2024   2024   1Q25 vs
    4Q24
      1Q25 vs
    1Q24
    Non-accrual loans                          
    Commercial $ 8,172     $ 5,658     $ 6,830     $ 4,321     $ 5,493       44 %     49 %
    Residential Real estate   12,763       11,215       9,529       8,489       8,725       14 %     46 %
    Mortgage warehouse                                 %     %
    Consumer   7,875       8,919       7,208       5,453       4,835     (12 )%     63 %
    Total non-accrual loans   28,810       25,792       23,567       18,263       19,053       12 %     22 %
    90 days and greater delinquent – accruing interest   1,582       1,166       819       1,039       108       36 %     1365 %
    Total non-performing loans $ 30,392     $ 26,958     $ 24,386     $ 19,302     $ 19,161       13 %     59 %
                               
    Other real estate owned                          
    Commercial   360       407       1,158       1,111       1,124     (12 )%   (68 )%
    Residential Real estate   641                               %     %
    Mortgage warehouse                                 %     %
    Consumer   34       17       36       57       50       98 %   (32 )%
    Total other real estate owned   1,035       424       1,194       1,168       1,174       144 %   (12 )%
                               
    Total non-performing assets $ 31,427     $ 27,382     $ 25,580     $ 20,470     $ 20,335       14.8 %     55 %
                               
    Loan data:                          
    Accruing 30 to 89 days past due loans $ 19,034     $ 23,075     $ 18,087     $ 19,785     $ 15,154     (18 )%     26 %
    Substandard loans   66,714       64,535       59,775       51,221       47,469       3 %     41 %
    Net charge-offs (recoveries)                          
    Commercial $ (47 )   $ (32 )   $ (52 )   $ 57     $ (171 )   (47 )%     73 %
    Residential Real estate   (47 )     (10 )     (9 )     (4 )     (5 )   (370 )%   (840 )%
    Mortgage warehouse                                 %     %
    Consumer   963       668       439       534       488       44 %     97 %
    Total net charge-offs $ 869     $ 626     $ 378     $ 587     $ 312       39 %     179 %
                               
    Allowance for credit losses                          
    Commercial $ 32,640     $ 30,953     $ 32,854     $ 31,941     $ 30,514       5 %     7 %
    Residential Real estate   3,167       2,715       2,675       2,588       2,655       17 %     19 %
    Mortgage warehouse               862       736       659       %   (100 )%
    Consumer   16,847       18,312       16,490       16,950       16,559     (8 )%     2 %
    Total allowance for credit losses $ 52,654     $ 51,980     $ 52,881     $ 52,215     $ 50,387       1 %     4 %
                               
    Credit quality ratios                          
    Non-accrual loans to HFI loans   0.59 %     0.53 %     0.49 %     0.38 %     0.41 %        
    Non-performing assets to total assets   0.41 %     0.35 %     0.32 %     0.26 %     0.26 %        
    Annualized net charge-offs of average total loans   0.07 %     0.05 %     0.03 %     0.05 %     0.04 %        
    Allowance for credit losses to HFI loans   1.07 %     1.07 %     1.10 %     1.08 %     1.09 %        
                                                   
    Non–GAAP Reconciliation of Net Fully-Taxable Equivalent (“FTE”) Interest Margin
    (Dollars in Thousands, Unaudited)
        Three Months Ended
        March 31,   December 31,   September 30,   June 30,   March 31,
        2025   2024   2024   2024   2024
    Interest income (GAAP) (A) $ 89,175     $ 93,350     $ 90,888     $ 86,981     $ 85,264  
    Taxable-equivalent adjustment:                    
    Investment securities – tax exempt (1)     1,646       1,675       1,677       1,695       1,715  
    Loan receivable (2)     383       395       340       328       353  
    Interest income (non-GAAP) (B)   91,204       95,420       92,905       89,004       87,332  
    Interest expense (GAAP) (C)   36,908       40,223       43,978       41,702       41,976  
    Net interest income (GAAP) (D) =(A) – (C) $ 52,267     $ 53,127     $ 46,910     $ 45,279     $ 43,288  
    Net FTE interest income (non-GAAP) (E) = (B) – (C) $ 54,296     $ 55,197     $ 48,927     $ 47,302     $ 45,356  
    Average interest earning assets (F)   7,234,724       7,396,178       7,330,263       7,212,788       7,293,559  
    Net FTE interest margin (non-GAAP) (G) = (E*) / (F)   3.04 %     2.97 %     2.66 %     2.64 %     2.50 %
                         
    (1) The following represents municipal securities interest income for investment securities classified as available-for-sale and held-to-maturity
    (2) The following represents municipal loan interest income for loan receivables classified as held for sale and held for investment
    *Annualized
     
    Non–GAAP Reconciliation of Return on Average Tangible Common Equity
    (Dollars in Thousands, Unaudited)
        Three Months Ended
        March 31,   December 31,   September 30,   June 30,   March 31,
        2025   2024   2024   2024   2024
                         
    Net income (loss) (GAAP) (A) $ 23,943     $ (10,882 )   $ 18,180     $ 14,140     $ 13,991  
                         
    Average stockholders’ equity (B) $ 780,269     $ 755,340     $ 738,372     $ 726,332     $ 725,083  
    Average intangible assets (C)   165,138       165,973       166,819       167,659       168,519  
    Average tangible equity (Non-GAAP) (D) = (B) – (C) $ 615,131     $ 589,367     $ 571,553     $ 558,673     $ 556,564  
    Return on average tangible common equity (“ROACE”) (non-GAAP) (E) = (A*) / (D)   15.79 %   (7.35 )%     12.65 %     10.18 %     10.11 %
    *Annualized                    
                         
    Non–GAAP Reconciliation of Tangible Common Equity to Tangible Assets
    (Dollars in Thousands, Unaudited)
        Three Months Ended
        March 31,   December 31,   September 30,   June 30,   March 31,
        2025   2024   2024   2024   2024
    Total stockholders’ equity (GAAP) (A) $ 776,061     $ 763,582     $ 754,822     $ 726,665     $ 721,250  
    Intangible assets (end of period) (B)   164,618       165,434       166,278       167,121       167,965  
    Total tangible common equity (non-GAAP) (C) = (A) – (B) $ 611,443     $ 598,148     $ 588,544     $ 559,544     $ 553,285  
                         
    Total assets (GAAP) (D) $ 7,625,635     $ 7,801,146     $ 7,927,457     $ 7,912,527     $ 7,855,707  
    Intangible assets (end of period) (B)   164,618       165,434       166,278       167,121       167,965  
    Total tangible assets (non-GAAP) (E) = (D) – (B) $ 7,461,017     $ 7,635,712     $ 7,761,179     $ 7,745,406     $ 7,687,742  
                         
    Tangible common equity to tangible assets (Non-GAAP) (G) = (C) / (E)   8.20 %     7.83 %     7.58 %     7.22 %     7.20 %
                                             
    Non–GAAP Reconciliation of Tangible Book Value Per Share
    (Dollars in Thousands, Unaudited)
        Three Months Ended
        March 31,   December 31,   September 30,   June 30,   March 31,
        2025
      2024
      2024
      2024
      2024
    Total stockholders’ equity (GAAP) (A) $ 776,061     $ 763,582     $ 754,822     $ 726,665     $ 721,250  
    Intangible assets (end of period) (B)   164,618       165,434       166,278       167,121       167,965  
    Total tangible common equity (non-GAAP) (C) = (A) – (B) $ 611,443     $ 598,148     $ 588,544     $ 559,544     $ 553,285  
    Common shares outstanding (D)   43,785,932       43,722,086       43,712,059       43,712,059       43,726,380  
                         
    Tangible book value per common share (non-GAAP) (E) = (C) / (D) $ 13.96     $ 13.68     $ 13.46     $ 12.80     $ 12.65  
                                             
    Contact: John R. Stewart, CFA
      EVP, Chief Financial Officer
    Phone: (219) 814–5833
    Fax: (219) 874–9280
    Date: April 23, 2025

    The MIL Network

  • MIL-OSI: Brookline Bancorp Announces First Quarter Results

    Source: GlobeNewswire (MIL-OSI)

    Net Income of $19.1 million, EPS of $0.21

    Operating Earnings of $20.0 million, Operating EPS of $0.22

    Quarterly Dividend of $0.135

    BOSTON, April 23, 2025 (GLOBE NEWSWIRE) — Brookline Bancorp, Inc. (NASDAQ: BRKL) (the “Company”) today announced net income of $19.1 million, or $0.21 per basic and diluted share, for the first quarter of 2025, compared to net income of $17.5 million, or $0.20 per basic and diluted share, for the fourth quarter of 2024, and $14.7 million, or $0.16 per basic and diluted share, for the first quarter of 2024. The Company reported operating earnings after tax (non-GAAP) of $20.0 million, or $0.22 per basic and diluted share, for the first quarter of 2025, compared to operating earnings after tax (non-GAAP) of $20.7 million, or $0.23 per basic and diluted share, for the fourth quarter of 2024, and $14.7 million, or $0.16 per basic and diluted share, for the first quarter of 2024.

    Commenting on the first quarter’s performance, Mr. Perrault stated, “We are pleased to report solid earnings for the first quarter of the year. Despite external economic headwinds, our bankers continue to perform well and grow deposits. The contraction in our loan portfolios is intentional as we reduce our commercial real estate exposure while increasing our participation in the C&I markets.”

    BALANCE SHEET

    Total assets at March 31, 2025 were $11.5 billion, representing a decrease of $385.5 million from $11.9 billion at December 31, 2024, primarily driven by a reduction of cash and cash equivalents and loans and leases. Total assets decreased $22.9 million from March 31, 2024.

    At March 31, 2025, total loans and leases were $9.6 billion, representing a decrease of $136.6 million from December 31, 2024, and a decrease of $12.4 million from March 31, 2024.

    Total investment securities at March 31, 2025 decreased $12.7 million to $882.4 million from $895.0 million at December 31, 2024, and increased $16.6 million from $865.8 million at March 31, 2024. Total cash and cash equivalents at March 31, 2025 decreased $186.1 million to $357.5 million from $543.7 million at December 31, 2024, and increased $55.7 million from $301.9 million at March 31, 2024. As of March 31, 2025, total investment securities and total cash and cash equivalents represented 10.8 percent of total assets, compared to 12.1 percent and 10.1 percent as of December 31, 2024 and March 31, 2024, respectively.

    Total deposits at March 31, 2025 increased $9.8 million to $8.9 billion from December 31, 2024, primarily driven by an increase of $113.8 million in customer deposits partially offset by a decline of $104.0 million in brokered deposits. Total deposits increased $192.8 million from $8.7 billion at March 31, 2024, primarily driven by an increase of $398.8 million in customer deposits partially offset by a decline of $206.0 million in brokered deposits.

    Total borrowed funds at March 31, 2025 decreased $364.0 million to $1.2 billion from December 31, 2024, and decreased $206.1 million from $1.4 billion at March 31, 2024.

    The ratio of stockholders’ equity to total assets was 10.77 percent at March 31, 2025, as compared to 10.26 percent at December 31, 2024, and 10.35 percent at March 31, 2024. The ratio of tangible stockholders’ equity to tangible assets (non-GAAP) was 8.73 percent at March 31, 2025, as compared to 8.27 percent at December 31, 2024, and 8.25 percent at March 31, 2024. Tangible book value per common share (non-GAAP) increased $0.22 from $10.81 at December 31, 2024 to $11.03 at March 31, 2025, and increased $0.56 from $10.47 at March 31, 2024.

    NET INTEREST INCOME

    Net interest income increased $0.8 million to $85.8 million during the first quarter of 2025 from $85.0 million for the quarter ended December 31, 2024. The net interest margin increased 10 basis points to 3.22 percent for the three months ended March 31, 2025 from 3.12 percent for the three months ended December 31, 2024, primarily driven by lower funding costs partially offset by lower yields on loans and leases.

    NON-INTEREST INCOME

    Total non-interest income for the quarter ended March 31, 2025 decreased $0.9 million to $5.7 million from $6.6 million for the quarter ended December 31, 2024. The decrease was primarily driven by a decline of $1.0 million in loan level derivative income, net.

    PROVISION FOR CREDIT LOSSES

    The Company recorded a provision for credit losses of $6.0 million for the quarter ended March 31, 2025, compared to $4.1 million for the quarter ended December 31, 2024. The increase in provision was largely driven by deterioration in a single commercial credit that required a specific reserve.

    Total net charge-offs for the first quarter of 2025 were $7.6 million, compared to $7.3 million in the fourth quarter of 2024. The $7.6 million in net charge-offs was driven by one large $7.1 million charge-off in commercial loans, the majority of which was previously reserved for. The ratio of net loan and lease charge-offs to average loans and leases on an annualized basis increased to 31 basis points for the first quarter of 2025 from 30 basis points for the fourth quarter of 2024.

    The allowance for loan and lease losses represented 1.29 percent of total loans and leases at March 31, 2025, compared to 1.28 percent at December 31, 2024, and 1.24 percent at March 31, 2024.

    ASSET QUALITY

    The ratio of nonperforming loans and leases to total loans and leases was 0.65 percent at March 31, 2025, a decrease from 0.71 percent at December 31, 2024. Total nonaccrual loans and leases decreased $6.2 million to $63.1 million at March 31, 2025 from $69.3 million at December 31, 2024. The ratio of nonperforming assets to total assets was 0.56 percent at March 31, 2025, a decrease from 0.59 percent at December 31, 2024. Total nonperforming assets decreased $6.4 million to $64.0 million at March 31, 2025 from $70.5 million at December 31, 2024.

    NON-INTEREST EXPENSE

    Non-interest expense for the quarter ended March 31, 2025 decreased $3.7 million to $60.0 million from $63.7 million for the quarter ended December 31, 2024. The decrease was primarily driven by a decrease of $2.4 million in merger and acquisition expense related to the previously announced proposed merger of the Company with Berkshire Hills Bancorp, Inc. (“Berkshire”), and a decrease of $1.3 million in compensation and employee benefits expense.

    PROVISION FOR INCOME TAXES

    The effective tax rate was 25.0 percent for the three months ended March 31, 2025 compared to 26.4 percent for the three months ended December 31, 2024 and 24.7 percent for the three months ended March 31, 2024.

    RETURNS ON AVERAGE ASSETS AND AVERAGE EQUITY

    The annualized return on average assets increased to 0.66 percent during the first quarter 2025 from 0.61 percent for the fourth quarter of 2024.

    The annualized return on average stockholders’ equity increased to 6.19 percent during the first quarter of 2025 from 5.69 percent for the fourth quarter of 2024. The annualized return on average tangible stockholders’ equity (non-GAAP) increased to 7.82 percent for the first quarter of 2025 from 7.21 percent for the fourth quarter of 2024.

    DIVIDEND DECLARED

    The Company’s Board of Directors approved a dividend of $0.135 per share for the quarter ended March 31, 2025. The dividend will be paid on May 23, 2025 to stockholders of record on May 9, 2025.

    CONFERENCE CALL

    The Company will conduct a conference call/webcast at 1:30 PM Eastern Time on Thursday, April 24, 2025 to discuss the results for the quarter, business highlights and outlook. A copy of the Earnings Presentation is available on the Company’s website, www.brooklinebancorp.com. To listen to the call and view the Company’s Earnings Presentation, please join the call via https://events.q4inc.com/attendee/955891780. To listen to the call without access to the slides, interested parties may dial 833-470-1428 (United States) or 404-975-4839 (internationally) and ask for the Brookline Bancorp, Inc. conference call (Access Code 941481). A recorded playback of the call will be available for one week following the call on the Company’s website under “Investor Relations” or by dialing 866-813-9403 (United States) or 929-458-6194 (internationally) and entering the passcode:324302.

    ABOUT BROOKLINE BANCORP, INC.

    Brookline Bancorp, Inc., a bank holding company with $11.5 billion in assets and branch locations in Massachusetts, Rhode Island, and the Lower Hudson Valley of New York State, is headquartered in Boston, Massachusetts and operates as the holding company for Brookline Bank, Bank Rhode Island, and PCSB Bank (the “banks”). The Company provides commercial and retail banking services, cash management and investment services to customers throughout Central New England and the Lower Hudson Valley of New York State. More information about Brookline Bancorp, Inc. and its banks can be found at the following websites: www.brooklinebank.com, www.bankri.com and www.pcsb.com.

    FORWARD-LOOKING STATEMENTS

    Certain statements contained in this press release that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in other documents we file with the Securities and Exchange Commission (“SEC”), in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters, including statements regarding the Company’s business, credit quality, financial condition, liquidity and results of operations. Forward-looking statements may differ, possibly materially, from what is included in this press release due to factors and future developments that are uncertain and beyond the scope of the Company’s control. These include, but are not limited to, the occurrence of any event, change or other circumstances that could give rise to the right of the Company or Berkshire to terminate the merger agreement; the outcome of any legal proceedings that may be instituted against Berkshire or Company; delays in completing the proposed transaction with Berkshire; the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction) or stockholder approvals, or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all, including the ability of Berkshire and the Company to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the impact of certain restrictions during the pendency of the proposed transaction on the parties’ ability to pursue certain business opportunities and strategic transactions; diversion of management’s attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction; changes in interest rates; general economic conditions (including the impact of recently imposed tariffs by the U.S. Administration and foreign governments, inflation, and concerns about liquidity) on a national basis or in the local markets in which the Company operates; ongoing turbulence in the capital and debt markets; competitive pressures from other financial institutions; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; changes in the value of securities and other assets in the Company’s investment portfolio; increases in loan and lease default and charge-off rates; the adequacy of allowances for loan and lease losses; decreases in deposit levels that necessitate increases in borrowing to fund loans and investments; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters, and future pandemics; changes in regulation; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions and adverse economic developments; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; and changes in assumptions used in making such forward-looking statements. Forward-looking statements involve risks and uncertainties which are difficult to predict. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among others, the risks outlined in the Company’s Annual Report on Form 10-K, as updated by its Quarterly Reports on Form 10-Q and other filings submitted to the SEC. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

    BASIS OF PRESENTATION

    The Company’s consolidated financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) as set forth by the Financial Accounting Standards Board in its Accounting Standards Codification and through the rules and interpretive releases of the SEC under the authority of federal securities laws. Certain amounts previously reported have been reclassified to conform to the current period’s presentation.

    NON-GAAP FINANCIAL MEASURES

    The Company uses certain non-GAAP financial measures, such as operating earnings after tax, operating earnings per common share, operating return on average assets, operating return on average tangible assets, operating return on average stockholders’ equity, operating return on average tangible stockholders’ equity, tangible book value per common share, tangible stockholders’ equity to tangible assets, return on average tangible assets (annualized) and return on average tangible stockholders’ equity (annualized). These non-GAAP financial measures provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial services sector. A detailed reconciliation table of the Company’s GAAP to the non-GAAP measures is attached.

    INVESTOR RELATIONS:
    Contact: Carl M. Carlson
    Brookline Bancorp, Inc.
    Co-President and Chief Financial and Strategy Officer
    (617) 425-5331
    carl.carlson@brkl.com
       
     
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Selected Financial Highlights (Unaudited)
                                 
      At and for the Three Months Ended
      March 31,
    2025
        December 31,
    2024
        September 30,
    2024
        June 30,
    2024
        March 31,
    2024
     
      (Dollars In Thousands Except per Share Data)
    Earnings Data:                        
    Net interest income $ 85,830     $ 84,988     $ 83,008     $ 80,001     $ 81,588  
    Provision for credit losses on loans 5,974     4,141     4,832     5,607     7,423  
    Provision (recovery) of credit losses on investments 12     (104 )   (172 )   (39 )   (44 )
    Non-interest income 5,660     6,587     6,348     6,396     6,284  
    Non-interest expense 60,022     63,719     57,948     59,184     61,014  
    Income before provision for income taxes 25,482     23,819     26,748     21,645     19,479  
    Net income 19,100     17,536     20,142     16,372     14,665  
                                 
    Performance Ratios:                            
    Net interest margin (1) 3.22 %   3.12 %   3.07 %   3.00 %   3.06 %
    Interest-rate spread (1) 2.38 %   2.35 %   2.26 %   2.14 %   2.21 %
    Return on average assets (annualized) 0.66 %   0.61 %   0.70 %   0.57 %   0.51 %
    Return on average tangible assets (annualized) (non-GAAP) 0.68 %   0.62 %   0.72 %   0.59 %   0.53 %
    Return on average stockholders’ equity (annualized) 6.19 %   5.69 %   6.63 %   5.49 %   4.88 %
    Return on average tangible stockholders’ equity (annualized) (non-GAAP) 7.82 %   7.21 %   8.44 %   7.04 %   6.26 %
    Efficiency ratio (2) 65.60 %   69.58 %   64.85 %   68.50 %   69.44 %
                                 
    Per Common Share Data:                            
    Net income — Basic $ 0.21     $ 0.20     $ 0.23     $ 0.18     $ 0.16  
    Net income — Diluted 0.21     0.20     0.23     0.18     0.16  
    Cash dividends declared 0.135     0.135     0.135     0.135     0.135  
    Book value per share (end of period) 13.92     13.71     13.81     13.48     13.43  
    Tangible book value per share (end of period) (non-GAAP) 11.03     10.81     10.89     10.53     10.47  
    Stock price (end of period) 10.90     11.80     10.09     8.35     9.96  
                                 
    Balance Sheet:                            
    Total assets $ 11,519,869     $ 11,905,326     $ 11,676,721     $ 11,635,292     $ 11,542,731  
    Total loans and leases 9,642,722     9,779,288     9,755,236     9,721,137     9,655,086  
    Total deposits 8,911,452     8,901,644     8,732,271     8,737,036     8,718,653  
    Total stockholders’ equity 1,240,182     1,221,939     1,230,362     1,198,480     1,194,231  
                                 
    Asset Quality:                            
    Nonperforming assets $ 64,021     $ 70,452     $ 72,821     $ 62,683     $ 42,489  
    Nonperforming assets as a percentage of total assets 0.56 %   0.59 %   0.62 %   0.54 %   0.37 %
    Allowance for loan and lease losses $ 124,145     $ 125,083     $ 127,316     $ 121,750     $ 120,124  
    Allowance for loan and lease losses as a percentage of total loans and leases 1.29 %   1.28 %   1.31 %   1.25 %   1.24 %
    Net loan and lease charge-offs $ 7,597     $ 7,252     $ 3,808     $ 8,387     $ 8,781  
    Net loan and lease charge-offs as a percentage of average loans and leases (annualized) 0.31 %   0.30 %   0.16 %   0.35 %   0.36 %
                                 
    Capital Ratios:                            
    Stockholders’ equity to total assets 10.77 %   10.26 %   10.54 %   10.30 %   10.35 %
    Tangible stockholders’ equity to tangible assets (non-GAAP) 8.73 %   8.27 %   8.50 %   8.23 %   8.25 %
                                 
    (1) Calculated on a fully tax-equivalent basis.
    (2) Calculated as non-interest expense as a percentage of net interest income plus non-interest income.
                                 
     
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets (Unaudited)
                 
      March 31,
    2025
    December 31,
    2024
      September 30,
    2024
    June 30,
    2024
    March 31,
    2024
    ASSETS (In Thousands Except Share Data)
    Cash and due from banks $ 78,741     $ 64,673     $ 82,168     $ 60,067     $ 45,708  
    Short-term investments   278,805       478,997       325,721       283,017       256,178  
    Total cash and cash equivalents   357,546       543,670       407,889       343,084       301,886  
    Investment securities available-for-sale   882,353       895,034       855,391       856,439       865,798  
    Total investment securities   882,353       895,034       855,391       856,439       865,798  
    Allowance for investment security losses   (94 )     (82 )     (186 )     (359 )     (398 )
    Net investment securities   882,259       894,952       855,205       856,080       865,400  
    Loans and leases held-for-sale                           6,717  
    Loans and leases:            
    Commercial real estate loans   5,580,982       5,716,114       5,779,290       5,782,111       5,755,239  
    Commercial loans and leases   2,512,912       2,506,664       2,453,038       2,443,530       2,416,904  
    Consumer loans   1,548,828       1,556,510       1,522,908       1,495,496       1,482,943  
    Total loans and leases   9,642,722       9,779,288       9,755,236       9,721,137       9,655,086  
    Allowance for loan and lease losses   (124,145 )     (125,083 )     (127,316 )     (121,750 )     (120,124 )
    Net loans and leases   9,518,577       9,654,205       9,627,920       9,599,387       9,534,962  
    Restricted equity securities   67,537       83,155       82,675       78,963       74,709  
    Premises and equipment, net of accumulated depreciation   84,439       86,781       86,925       88,378       89,707  
    Right-of-use asset operating leases   44,144       43,527       41,934       35,691       33,133  
    Deferred tax asset   52,176       56,620       50,827       60,032       60,484  
    Goodwill   241,222       241,222       241,222       241,222       241,222  
    Identified intangible assets, net of accumulated amortization   16,030       17,461       19,162       20,830       22,499  
    Other real estate owned and repossessed assets   917       1,103       1,579       1,974       1,817  
    Other assets   255,022       282,630       261,383       309,651       310,195  
    Total assets $ 11,519,869     $ 11,905,326     $ 11,676,721     $ 11,635,292     $ 11,542,731  
    LIABILITIES AND STOCKHOLDERS’ EQUITY            
    Deposits:            
    Demand checking accounts $ 1,664,629     $ 1,692,394     $ 1,681,858     $ 1,638,378     $ 1,629,371  
    NOW accounts   625,492       617,246       637,374       647,370       654,748  
    Savings accounts   1,793,852       1,721,247       1,736,989       1,735,857       1,727,893  
    Money market accounts   2,183,855       2,116,360       2,041,185       2,073,557       2,065,569  
    Certificate of deposit accounts   1,878,665       1,885,444       1,819,353       1,718,414       1,670,147  
    Brokered deposit accounts   764,959       868,953       815,512       923,460       970,925  
    Total deposits   8,911,452       8,901,644       8,732,271       8,737,036       8,718,653  
    Borrowed funds:            
    Advances from the FHLB   957,848       1,355,926       1,345,003       1,265,079       1,150,153  
    Subordinated debentures and notes   84,362       84,328       84,293       84,258       84,223  
    Other borrowed funds   113,617       79,592       68,251       80,125       127,505  
    Total borrowed funds   1,155,827       1,519,846       1,497,547       1,429,462       1,361,881  
    Operating lease liabilities   45,330       44,785       43,266       37,102       34,235  
    Mortgagors’ escrow accounts   15,264       15,875       14,456       17,117       16,245  
    Reserve for unfunded credits   5,296       5,981       6,859       11,400       15,807  
    Accrued expenses and other liabilities   146,518       195,256       151,960       204,695       201,679  
    Total liabilities   10,279,687       10,683,387       10,446,359       10,436,812       10,348,500  
    Stockholders’ equity:            
    Common stock, $0.01 par value; 200,000,000 shares authorized; 96,998,075 shares issued, 96,998,075 shares issued, 96,998,075 shares issued, 96,998,075 shares issued, and 96,998,075 shares issued, respectively   970       970       970       970       970  
    Additional paid-in capital   903,696       902,584       901,562       904,775       903,726  
    Retained earnings   465,898       458,943       453,555       445,560       441,285  
    Accumulated other comprehensive income   (42,498 )     (52,882 )     (38,081 )     (61,693 )     (60,841 )
    Treasury stock, at cost;            
    7,037,610, 7,019,384, 7,015,843, 7,373,009, and 7,354,399 shares, respectively   (87,884 )     (87,676 )     (87,644 )     (91,132 )     (90,909 )
    Total stockholders’ equity   1,240,182       1,221,939       1,230,362       1,198,480       1,194,231  
    Total liabilities and stockholders’ equity $ 11,519,869     $ 11,905,326     $ 11,676,721     $ 11,635,292     $ 11,542,731  
                 
                 
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Consolidated Statements of Income (Unaudited)
       
      Three Months Ended
      March 31,
    2025
    December 31,
    2024
    September 30,
    2024
    June 30,
    2024
    March 31,
    2024
      (In Thousands Except Share Data)
    Interest and dividend income:          
    Loans and leases $ 143,309   $ 147,436     $ 149,643     $ 145,585     $ 145,265  
    Debt securities   6,765     6,421       6,473       6,480       6,878  
    Restricted equity securities   1,203     1,460       1,458       1,376       1,492  
    Short-term investments   2,451     2,830       1,986       1,914       1,824  
    Total interest and dividend income   153,728     158,147       159,560       155,355       155,459  
    Interest expense:          
    Deposits   53,478     56,562       59,796       59,721       56,884  
    Borrowed funds   14,420     16,597       16,756       15,633       16,987  
    Total interest expense   67,898     73,159       76,552       75,354       73,871  
    Net interest income   85,830     84,988       83,008       80,001       81,588  
    Provision for credit losses on loans   5,974     4,141       4,832       5,607       7,423  
    Provision (recovery) of credit losses on investments   12     (104 )     (172 )     (39 )     (44 )
    Net interest income after provision for credit losses   79,844     80,951       78,348       74,433       74,209  
    Non-interest income:          
    Deposit fees   2,361     2,297       2,353       3,001       2,897  
    Loan fees   393     439       464       702       789  
    Loan level derivative income, net   70     1,115             106       437  
    Gain on sales of loans and leases held-for-sale   24     406       415       130        
    Other   2,812     2,330       3,116       2,457       2,161  
    Total non-interest income   5,660     6,587       6,348       6,396       6,284  
    Non-interest expense:          
    Compensation and employee benefits   35,853     37,202       35,130       34,762       36,629  
    Occupancy   5,721     5,393       5,343       5,551       5,769  
    Equipment and data processing   7,012     6,780       6,831       6,732       7,031  
    Professional services   1,726     1,345       2,143       1,745       1,900  
    FDIC insurance   2,037     2,017       2,118       2,025       1,884  
    Advertising and marketing   868     1,303       859       1,504       1,574  
    Amortization of identified intangible assets   1,430     1,701       1,668       1,669       1,708  
    Merger and restructuring expense   971     3,378             823        
    Other   4,404     4,600       3,856       4,373       4,519  
    Total non-interest expense   60,022     63,719       57,948       59,184       61,014  
    Income before provision for income taxes   25,482     23,819       26,748       21,645       19,479  
    Provision for income taxes   6,382     6,283       6,606       5,273       4,814  
    Net income $ 19,100   $ 17,536     $ 20,142     $ 16,372     $ 14,665  
    Earnings per common share:          
    Basic $ 0.21   $ 0.20     $ 0.23     $ 0.18     $ 0.16  
    Diluted $ 0.21   $ 0.20     $ 0.23     $ 0.18     $ 0.16  
    Weighted average common shares outstanding during the period:        
    Basic   89,103,510     89,098,443       89,033,463       88,904,692       88,894,577  
    Diluted   89,567,747     89,483,964       89,319,611       89,222,315       89,181,508  
    Dividends paid per common share $ 0.135   $ 0.135     $ 0.135     $ 0.135     $ 0.135  
               
               
     
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Asset Quality Analysis (Unaudited)
       
      At and for the Three Months Ended
      March 31,
    2025
    December 31,
    2024
      September 30,
    2024
    June 30,
    2024
    March 31,
    2024
      (Dollars in Thousands)
    NONPERFORMING ASSETS:            
    Loans and leases accounted for on a nonaccrual basis:            
    Commercial real estate mortgage $ 10,842     $ 11,525     $ 11,595     $ 11,659     $ 18,394  
    Multi-family mortgage   6,576       6,596       1,751              
    Total commercial real estate loans   17,418       18,121       13,346       11,659       18,394  
                 
    Commercial   7,415       14,676       15,734       16,636       3,096  
    Equipment financing   32,975       31,509       37,223       27,128       13,668  
    Total commercial loans and leases   40,390       46,185       52,957       43,764       16,764  
                 
    Residential mortgage   3,962       3,999       3,862       4,495       4,563  
    Home equity   1,333       1,043       1,076       790       950  
    Other consumer   1       1       1       1       1  
    Total consumer loans   5,296       5,043       4,939       5,286       5,514  
                 
    Total nonaccrual loans and leases   63,104       69,349       71,242       60,709       40,672  
                 
    Other real estate owned   700       700       780       780       780  
    Other repossessed assets   217       403       799       1,194       1,037  
    Total nonperforming assets $ 64,021     $ 70,452     $ 72,821     $ 62,683     $ 42,489  
                 
    Loans and leases past due greater than 90 days and still accruing $ 3,009     $ 811     $ 16,091     $ 4,994     $ 363  
                 
    Nonperforming loans and leases as a percentage of total loans and leases   0.65 %     0.71 %     0.73 %     0.62 %     0.42 %
    Nonperforming assets as a percentage of total assets   0.56 %     0.59 %     0.62 %     0.54 %     0.37 %
                 
    PROVISION AND ALLOWANCE FOR LOAN AND LEASE LOSSES:        
    Allowance for loan and lease losses at beginning of period $ 125,083     $ 127,316     $ 121,750     $ 120,124     $ 117,522  
    Charge-offs   (9,073 )     (8,414 )     (4,183 )     (8,823 )     (5,390 )
    Recoveries   1,476       1,162       375       436       309  
    Net charge-offs   (7,597 )     (7,252 )     (3,808 )     (8,387 )     (5,081 )
    Provision for loan and lease losses excluding unfunded commitments *   6,659       5,019       9,374       10,013       7,683  
    Allowance for loan and lease losses at end of period $ 124,145     $ 125,083     $ 127,316     $ 121,750     $ 120,124  
                 
    Allowance for loan and lease losses as a percentage of total loans and leases   1.29 %     1.28 %     1.31 %     1.25 %     1.24 %
                 
    NET CHARGE-OFFS:            
    Commercial real estate loans $     $     $     $ 3,819     $ 606  
    Commercial loans and leases **   7,647       7,257       3,797       4,571       8,179  
    Consumer loans   (50 )     (5 )     11       (3 )     (4 )
    Total net charge-offs $ 7,597     $ 7,252     $ 3,808     $ 8,387     $ 8,781  
                 
    Net loan and lease charge-offs as a percentage of average loans and leases (annualized)   0.31 %     0.30 %     0.16 %     0.35 %     0.36 %
                 
    *Provision for loan and lease losses does not include (credit) provision of $(0.7 million), $(0.9 million), $(4.5 million), $(4.4 million), and $(0.3 million) for credit losses on unfunded commitments during the three months ended March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024, and March 31, 2024, respectively.
    ** The balance at March 31, 2024 includes a $3.7 million charge-off on a letter of credit which impacted the provision.
                 
     
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Average Yields / Costs (Unaudited)
     
      Three Months Ended
      March 31, 2025 December 31, 2024 March 31, 2024
      Average Balance Interest (1) Average Yield/ Cost Average Balance Interest (1) Average Yield/ Cost Average Balance Interest (1) Average Yield/ Cost
      (Dollars in Thousands)
    Assets:                  
    Interest-earning assets:                  
    Investments:                  
    Debt securities (2) $ 888,913   $ 6,814 3.07 %   $ 856,065   $ 6,463 3.02 %   $ 893,228   $ 6,927 3.10 %
    Restricted equity securities (2)   69,784     1,204 6.90 %     75,879     1,459 7.69 %     76,335     1,493 7.82 %
    Short-term investments   202,953     2,451 4.83 %     236,784     2,830 4.78 %     130,768     1,824 5.58 %
    Total investments   1,161,650     10,469 3.60 %     1,168,728     10,752 3.68 %     1,100,331     10,244 3.72 %
    Loans and Leases:                  
    Commercial real estate loans (3)   5,651,390     77,243 5.47 %     5,752,591     81,195 5.52 %     5,761,735     81,049 5.56 %
    Commercial loans (3)   1,237,078     19,698 6.37 %     1,170,295     19,750 6.61 %     1,026,467     17,507 6.75 %
    Equipment financing (3)   1,281,425     25,965 8.11 %     1,310,143     26,295 8.03 %     1,374,426     26,895 7.83 %
    Consumer loans (3)   1,548,973     20,861 5.41 %     1,529,654     20,881 5.44 %     1,482,819     19,978 5.40 %
    Total loans and leases   9,718,866     143,767 5.92 %     9,762,683     148,121 6.07 %     9,645,447     145,429 6.03 %
    Total interest-earning assets   10,880,516     154,236 5.67 %     10,931,411     158,873 5.81 %     10,745,778     155,673 5.79 %
    Non-interest-earning assets   662,814         649,161         671,407      
    Total assets $ 11,543,330       $ 11,580,572       $ 11,417,185      
                       
    Liabilities and Stockholders’ Equity:                  
    Interest-bearing liabilities:                  
    Deposits:                  
    NOW accounts $ 628,346     1,005 0.65 %   $ 630,408     1,056 0.67 %   $ 671,914     1,261 0.75 %
    Savings accounts   1,743,688     10,173 2.37 %     1,741,355     10,896 2.49 %     1,694,220     11,352 2.69 %
    Money market accounts   2,187,581     13,587 2.52 %     2,083,033     13,856 2.65 %     2,076,303     15,954 3.09 %
    Certificates of deposit   1,886,386     19,593 4.21 %     1,857,483     20,691 4.43 %     1,624,118     16,672 4.13 %
    Brokered deposit accounts   767,275     9,120 4.82 %     797,910     10,063 5.02 %     896,784     11,645 5.22 %
    Total interest-bearing deposits   7,213,276     53,478 3.01 %     7,110,189     56,562 3.16 %     6,963,339     56,884 3.29 %
    Borrowings                  
    Advances from the FHLB   1,007,508     11,847 4.70 %     1,144,157     13,958 4.77 %     1,164,534     14,633 4.97 %
    Subordinated debentures and notes   84,345     1,701 8.07 %     84,311     1,944 9.22 %     84,206     1,377 6.54 %
    Other borrowed funds   71,462     872 4.95 %     65,947     695 4.20 %     93,060     977 4.22 %
    Total borrowings   1,163,315     14,420 4.96 %     1,294,415     16,597 5.02 %     1,341,800     16,987 5.01 %
    Total interest-bearing liabilities   8,376,591     67,898 3.29 %     8,404,604     73,159 3.46 %     8,305,139     73,871 3.58 %
    Non-interest-bearing liabilities:                  
    Demand checking accounts   1,680,527         1,693,138         1,631,472      
    Other non-interest-bearing liabilities   251,011         250,303         278,670      
    Total liabilities   10,308,129         10,348,045         10,215,281      
    Stockholders’ equity   1,235,201         1,232,527         1,201,904      
    Total liabilities and equity $ 11,543,330       $ 11,580,572       $ 11,417,185      
    Net interest income (tax-equivalent basis) /Interest-rate spread (4)     86,338 2.38 %       85,714 2.35 %       81,802 2.21 %
    Less adjustment of tax-exempt income     508       726       214  
    Net interest income   $ 85,830     $ 84,988     $ 81,588  
    Net interest margin (5)     3.22 %       3.12 %       3.06 %
                       
    (1) Tax-exempt income on debt securities, equity securities and revenue bonds included in commercial real estate loans is included on a tax-equivalent basis.
    (2) Average balances include unrealized gains (losses) on investment securities. Dividend payments may not be consistent and average yield on equity securities may vary from month to month.
    (3) Loans on nonaccrual status are included in the average balances.
    (4) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
    (5) Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets on an actual/actual basis.
                       
     
    BROOKLINE BANCORP, INC. AND SUBSIDIARIES
    Non-GAAP Financial Information (Unaudited)
     
            At and for the
    Three Months Ended
    March 31,
              2025       2024  
    Reconciliation Table – Non-GAAP Financial Information     (Dollars in Thousands Except Share Data)
             
    Reported Pretax Income     $ 25,482     $ 19,479  
    Add:          
    Merger and restructuring expense       971        
    Operating Pretax Income       $ 26,453     $ 19,479  
    Effective tax rate         24.3 %     24.7 %
    Provision for income taxes         6,416       4,814  
    Operating earnings after tax     $ 20,037     $ 14,665  
               
    Operating earnings per common share:          
    Basic       $ 0.22     $ 0.16  
    Diluted       $ 0.22     $ 0.16  
               
    Weighted average common shares outstanding during the period:        
    Basic         89,103,510       88,894,577  
    Diluted         89,567,747       89,181,508  
               
    Return on average assets *       0.66 %     0.51 %
    Add:          
    Merger and restructuring expense (after-tax) *       0.03 %     %
    Operating return on average assets *       0.69 %     0.51 %
               
    Return on average tangible assets *       0.68 %     0.53 %
    Add:          
    Merger and restructuring expense (after-tax) *       0.03 %     %
    Operating return on average tangible assets *       0.71 %     0.53 %
               
               
    Return on average stockholders’ equity *       6.19 %     4.88 %
    Add:          
    Merger and restructuring expense (after-tax) *       0.24 %     %
    Operating return on average stockholders’ equity *       6.43 %     4.88 %
               
               
    Return on average tangible stockholders’ equity *       7.82 %     6.26 %
    Add:          
    Merger and restructuring expense (after-tax) *       0.30 %     %
    Operating return on average tangible stockholders’ equity *       8.12 %     6.26 %
               
    * Ratios at and for the three months ended are annualized.        
             
      At and for the Three Months Ended
      March 31,
    2025
    December 31,
    2024
    September 30,
    2024
    June 30,
    2024
    March 31,
    2024
      (Dollars in Thousands)
               
    Net income, as reported $ 19,100     $ 17,536     $ 20,142     $ 16,372     $ 14,665  
               
    Average total assets $ 11,543,330     $ 11,580,572     $ 11,451,338     $ 11,453,394     $ 11,417,185  
    Less: Average goodwill and average identified intangible assets, net   257,941       259,496       261,188       262,859       264,536  
    Average tangible assets $ 11,285,389     $ 11,321,076     $ 11,190,150     $ 11,190,535     $ 11,152,649  
               
    Return on average tangible assets (annualized)   0.68 %     0.62 %     0.72 %     0.59 %     0.53 %
               
    Average total stockholders’ equity $ 1,235,201     $ 1,232,527     $ 1,216,037     $ 1,193,385     $ 1,201,904  
    Less: Average goodwill and average identified intangible assets, net   257,941       259,496       261,188       262,859       264,536  
    Average tangible stockholders’ equity $ 977,260     $ 973,031     $ 954,849     $ 930,526     $ 937,368  
               
    Return on average tangible stockholders’ equity (annualized)   7.82 %     7.21 %     8.44 %     7.04 %     6.26 %
               
    Total stockholders’ equity $ 1,240,182     $ 1,221,939     $ 1,230,362     $ 1,198,480     $ 1,194,231  
    Less:          
    Goodwill   241,222       241,222       241,222       241,222       241,222  
    Identified intangible assets, net   16,030       17,461       19,162       20,830       22,499  
    Tangible stockholders’ equity $ 982,930     $ 963,256     $ 969,978     $ 936,428     $ 930,510  
               
    Total assets $ 11,519,869     $ 11,905,326     $ 11,676,721     $ 11,635,292     $ 11,542,731  
    Less:          
    Goodwill   241,222       241,222       241,222       241,222       241,222  
    Identified intangible assets, net   16,030       17,461       19,162       20,830       22,499  
    Tangible assets $ 11,262,617     $ 11,646,643     $ 11,416,337     $ 11,373,240     $ 11,279,010  
               
    Tangible stockholders’ equity to tangible assets   8.73 %     8.27 %     8.50 %     8.23 %     8.25 %
               
    Tangible stockholders’ equity $ 982,930     $ 963,256     $ 969,978     $ 936,428     $ 930,510  
               
    Number of common shares issued   96,998,075       96,998,075       96,998,075       96,998,075       96,998,075  
    Less:          
    Treasury shares   7,037,610       7,019,384       7,015,843       7,373,009       7,354,399  
    Unvested restricted shares   855,860       880,248       883,789       713,443       749,099  
    Number of common shares outstanding   89,104,605       89,098,443       89,098,443       88,911,623       88,894,577  
               
    Tangible book value per common share $ 11.03     $ 10.81     $ 10.89     $ 10.53     $ 10.47  
               

    PDF available: http://ml.globenewswire.com/Resource/Download/e23d70f5-f96e-4a22-ac83-0bee735aa434

    The MIL Network

  • MIL-OSI Russia: Global Sovereign Debt Roundtable – 4th Cochairs Progress Report

    Source: IMF – News in Russian

    Global Sovereign Debt Roundtable – 4th Cochairs Progress Report

    April 23, 2025

    Washington, DC: The Global Sovereign Debt Roundtable (GSDR) met today and reviewed progress on the work to improve debt restructuring processes and timelines, and to help address debt vulnerabilities. Participants also discussed priority areas for the work going forward. At the end of the meeting, the International Monetary Fund Managing Director Kristalina Georgieva, World Bank Group President Ajay Banga, and Finance Minister of South Africa, G20 Presidency, Enoch Godongwana, co-chairs of the GSDR, issued the attached “Restructuring Playbook”, which aims to provide debtor country authorities considering a debt restructuring with the key steps, concepts and processes for such an operation. They also issued the attached GSDR 4th Cochairs Report as well as the compilation of technical issues discussed by the GSDR so far.

    The GSDR brings together debtor countries and official and private creditors with the objective to build common understanding among key stakeholders on debt sustainability and debt restructuring challenges, and ways to address them.

    IMF Communications Department
    MEDIA RELATIONS

    PRESS OFFICER: Randa Elnagar

    Phone: +1 202 623-7100Email: MEDIA@IMF.org

    https://www.imf.org/en/News/Articles/2025/04/23/pr25119-global-sovereign-debt-roundtable-4th-cochairs-progress-report

    MIL OSI

    MIL OSI Russia News

  • MIL-OSI: Origin Bancorp, Inc. Reports Earnings For First Quarter 2025

    Source: GlobeNewswire (MIL-OSI)

    RUSTON, La., April 23, 2025 (GLOBE NEWSWIRE) — Origin Bancorp, Inc. (NYSE: OBK) (“Origin,” “we,” “our” or the “Company”), the holding company for Origin Bank (the “Bank”), today announced net income of $22.4 million, or $0.71 diluted earnings per share (“EPS”) for the quarter ended March 31, 2025, compared to net income of $14.3 million, or $0.46 diluted earnings per share, for the quarter ended December 31, 2024. Pre-tax, pre-provision (“PTPP”)(1) earnings were $32.0 million for the quarter ended March 31, 2025, compared to $12.6 million for the linked quarter.

    “Origin reported solid results for the quarter, and I am proud of how our bankers remain responsive to our customers and communities,” said Drake Mills, chairman, president and CEO of Origin Bancorp, Inc. “During last quarter’s earnings call, we introduced Optimize Origin, which is our plan to deliver sustainable elite-level financial performance. I am pleased with the overwhelming focus and commitment our employees have on accomplishing this goal and the progress we have made since launch.”

    (1) PTPP earnings is a non-GAAP financial measure, please see the last few pages of this document for a reconciliation of this alternative financial measure to its most directly comparable GAAP measure.

             

    Optimize Origin

    • In January 2025, we announced our initiative to drive elite financial performance and enhance our award-winning culture.
    • Built on three primary pillars:
      • Productivity, Delivery & Efficiency
      • Balance Sheet Optimization
      • Culture & Employee Engagement
    • Established near term target of greater than a 1% ROAA run rate by 4Q25 and an ultimate target of top quartile ROAA.
    • Near term target is being achieved in part by branch consolidation, headcount reduction, securities optimization, capital optimization, cash/liquidity management, mortgage restructuring, as well as other opportunistic efficiency optimizations throughout the organization.
    • We believe the actions we have taken will drive earnings improvement of approximately $23.4 million annually on a pre-tax pre-provision basis.
             

    Financial Highlights

    • Net interest income was $78.5 million for the quarter ended March 31, 2025, reflecting an increase of $110,000, or 0.1%, compared to the linked quarter and is at its highest level in eight quarters.
    • Net income was $22.4 million for the quarter ended March 31, 2025, reflecting an increase of $8.1 million, or 57.0% compared to the linked quarter.
    • Our fully tax equivalent net interest margin (“NIM-FTE”) expanded 11 basis points for the quarter ended March 31, 2025, compared to the quarter ended December 31, 2024. This expansion was driven primarily by a 34 basis point reduction in rates paid on interest-bearing liabilities, offset by a 12 basis point decline in our yield earned on interest-earning assets.
    • Return on average assets (“ROAA”), annualized, was 0.93% for the quarter ended March 31, 2025, a 63.2% increase when compared to 0.57% in the linked quarter. PTPP ROAA(1), annualized, was 1.32% for the quarter ended March 31, 2025, reflecting an increase of 164.0% compared to 0.50% in the linked quarter.
    • Total loans held for investment (“LHFI”) were $7.59 billion at March 31, 2025, reflecting an increase of $11.8 million, or 0.2%, compared to December 31, 2024. Average LHFI were $7.50 billion for the quarter ended March 31, 2025, reflecting a decrease of $298.2 million, or 3.83%, compared to the quarter ended December 31, 2024.
    • Total deposits were $8.34 billion at March 31, 2025, reflecting an increase of $115.3 million, or 1.4%, compared to December 31, 2024. Deposits, excluding brokered deposits, were $8.29 billion at March 31, 2025, reflecting an increase of $145.5 million, or 1.8%, compared to December 31, 2024.

    (1) PTPP ROAA is a non-GAAP financial measure, please see the last few pages of this document for a reconciliation of this alternative financial measure to its most directly comparable GAAP measure.

    Results of Operations for the Quarter Ended March 31, 2025

    Net Interest Income and Net Interest Margin

    Net interest income for the quarter ended March 31, 2025, was $78.5 million, an increase of $110,000, or 0.1%, compared to the quarter ended December 31, 2024. The increase was primarily driven by a $7.7 million decrease in interest expense paid on interest-bearing deposits and increases of $1.4 million and $1.3 million in interest income earned on investment securities and average interest-earning balances due from banks, partially offset by a decrease of $9.9 million in interest income earned on LHFI.

    The decrease in average rates of interest-bearing deposits during the quarter ended March 31, 2025, and two fewer days in the current quarter, reduced interest expense by $5.8 million and $1.2 million, respectively, when compared to the quarter ended December 31, 2024. The average rate on interest-bearing deposits was 3.23% for the quarter ended March 31, 2025, a decrease of 38 basis points, from 3.61% for the quarter ended December 31, 2024.

    The $1.4 million increase in interest income earned on investment securities was primarily driven by the bond portfolio optimization strategy we executed during the quarter ended December 31, 2024, in which we replaced securities with a total book value of $188.2 million and a weighted average yield of 1.51% with new securities totaling $173.7 million with a weighted average yield of 5.22%.

    The $1.3 million increase in interest income earned on average interest-earning balances due from banks was primarily driven by a $149.0 million increase in average interest-earning balances due from banks which led to a $1.8 million increase in interest income, partially offset by a reduction in average yield.

    The decrease in average LHFI principal balance, the impact of two fewer calendar days and a decline in average rates during the quarter ended March 31, 2025, resulted in decreases to interest income of $5.5 million, $2.6 million and $1.8 million, respectively, when compared to the quarter ended December 31, 2024. The decrease in average LHFI principal balance was primarily driven by decreases of $170.2 million and $114.4 million in mortgage warehouse lines of credit (“MW LOC”) and average construction/land/land development loan balances. The average rate on LHFI was 6.33% for the quarter ended March 31, 2025, a decrease of 14 basis points, compared to 6.47% for the quarter ended December 31, 2024.

    The Federal Reserve Board sets various benchmark rates, including the federal funds rate, and thereby influences the general market rates of interest, including the loan and deposit rates offered by financial institutions. On September 18, 2024, the Federal Reserve reduced the federal funds target rate range by 50 basis points, to a range of 4.75% to 5.00%, marking the first rate reduction since early 2020. Subsequently, it implemented two additional reductions, with the current federal funds target range set to 4.25% to 4.50% on December 18, 2024. The Federal Reserve maintained this target range throughout the first quarter of 2025. In total, the federal funds target range has decreased 100 basis points from its recent cycle high.

    Our NIM-FTE was 3.44% for the quarter ended March 31, 2025, representing 11- and 25-basis-point increases compared to the linked quarter and the prior year same quarter, respectively. The yield earned on interest-earning assets for the quarter ended March 31, 2025, was 5.79%, a decrease of 12 and 20 basis points compared to the linked quarter and the quarter ended March 31, 2024. The average rate paid on total interest-bearing liabilities for the quarter ended March 31, 2025, was 3.30%, representing 34- and 58-basis point decreases compared to the linked quarter and the quarter ended March 31, 2024, respectively.

    Credit Quality

    The table below includes key credit quality information:

      At and For the Three Months Ended   Change   % Change
    (Dollars in thousands, unaudited) March 31,
    2025
      December 31,
    2024
      March 31,
    2024
      Linked
    Quarter
      Linked
    Quarter
    Past due LHFI $ 72,774     $ 42,437     $ 32,835     $ 30,337     71.5 %
    Allowance for loan credit losses (“ALCL”)   92,011       91,060       98,375       951     1.0  
    Classified loans   127,676       118,782       84,217       8,894     7.5  
    Total nonperforming LHFI   81,368       75,002       40,439       6,366     8.5  
    Provision (benefit) for credit losses   3,444       (5,398 )     3,012       8,842     N/M  
    Net charge-offs (recoveries)   2,728       (560 )     2,582       3,288     N/M  
    Credit quality ratios(1):                    
    ALCL to nonperforming LHFI   113.08 %     121.41 %     243.27 %     (8.33 )%   N/A  
    ALCL to total LHFI   1.21       1.20       1.25       0.01     N/A  
    ALCL to total LHFI, adjusted(2)   1.28       1.25       1.30       0.03     N/A  
    Classified loans to total LHFI   1.68       1.57       1.07       0.11     N/A  
    Nonperforming LHFI to LHFI   1.07       0.99       0.51       0.08     N/A  
    Net charge-offs to total average LHFI (annualized)   0.15       (0.03 )     0.13       0.18     N/A  
                                       

    ___________________________

      N/M = Not meaningful.
      N/A = Not applicable.
    (1) Please see the Loan Data schedule at the back of this document for additional information.
    (2) The ALCL to total LHFI, adjusted, is calculated by excluding the ALCL for MW LOC loans from the total LHFI ALCL in the numerator and excluding the MW LOC loans from the LHFI in the denominator. Due to their low-risk profile, MW LOC loans require a disproportionately low allocation of the ALCL.
       

    Past due loans increased $30.3 million for the current quarter compared to the linked quarter. The increase was primarily due to 11 relationships totaling $39.8 million. The increase in past due loan relationships primarily consisted of residential real estate totaling $18.0 million, commercial real estate totaling $8.3 million, commercial and industrial totaling $9.7 million and construction/land/land development totaling $3.9 million. These increases were partially offset by a $4.5 million decrease in three previously past due residential real estate relationships, one of which paid off during the current quarter.

    Nonperforming LHFI increased $6.4 million for the current quarter compared to the linked quarter, evidenced by an increase in the percentage of nonperforming LHFI to LHFI to 1.07% compared to 0.99% for the linked quarter. The increase in nonperforming loans was primarily driven by two loan relationships totaling $8.2 million at March 31, 2025, with residential real estate loans totaling $5.1 million of the increase. The increase in nonperforming loans was partially offset by one residential real estate loan relationship totaling $2.1 million that paid off during the current quarter, but was considered nonperforming at December 31, 2024.

    Classified loans increased $8.9 million to $127.7 million at March 31, 2025, compared to $118.8 million at December 31, 2024. As discussed in previous filings, our classified and nonperforming LHFI were negatively impacted beginning in the second quarter of 2024 as a result of litigation against the bank brought in response to certain questioned activity involving a former banker in our East Texas market. We continue to work toward a resolution in this matter.

    Our results included a credit loss provision expense of $3.4 million during the quarter ended March 31, 2025, which includes a $3.7 million provision for loan credit losses, compared to provision release of $5.5 million for the linked quarter. Our allowance for credit losses increased $1.0 million during the current quarter, primarily driven by the $1.4 million increase in the individually evaluated portion of the reserve as a result of the increase in nonperforming loans.

    Net charge-offs increased $3.3 million for the quarter ended March 31, 2025, when compared to the quarter ended December 31, 2024, primarily due to total charge-offs of $4.8 million in the current quarter, consisting primarily of two commercial and industrial loan relationships with charge-offs totaling $2.6 million.

    Noninterest Income

    Noninterest income for the quarter ended March 31, 2025, was $15.6 million, an increase of $15.9 million from the linked quarter, primarily driven by the $14.6 million loss on sales of securities, net, in the linked quarter and the $2.5 million increase in insurance commission and fee income in the current quarter. These increases were offset by a decrease of $1.6 million in limited partnership investment (loss) income.

    The loss on sales of securities, net, during the linked quarter was due to the execution of the bond portfolio optimization strategy security sale, with no such sale in the current quarter.

    The increase in insurance commission and fee income was primarily driven by a seasonal increase in annual contingency fee income recognized in the first quarter.

    The decrease in limited partnership investment income (loss) was due to $1.6 million in fair value adjustments on multiple limited partnership investments.

    Noninterest Expense

    Noninterest expense for the quarter ended March 31, 2025, was $62.1 million, a decrease of $3.4 million, or 5.1% from the linked quarter. The decrease was primarily driven by decreases of $3.1 million, $814,000 and $796,000 in other noninterest expense, professional services and advertising and marketing expense, respectively, that was partially offset by an increase of $1.3 million in salaries and employee benefit expense.

    The decrease in other noninterest expense was primarily due to $3.1 million in contingency expense recorded during the linked quarter. There was no such contingency reserve recorded in the current quarter.

    The $814,000 decrease in professional services was primarily due to a decrease of $668,000 in forensic accounting fees compared to the linked quarter.

    The $796,000 decrease in advertising and marketing was primarily due to a decrease in targeted marketing efforts in the current quarter compared to the prior quarter.

    The $1.3 million increase in salaries and employee benefit expense was primarily due to an Employee Retention Credit (“ERC”) of $1.7 million that was recorded in the linked quarter and related to the operations of BTH Bank, N.A., which we acquired in 2022. The ERC is a refundable tax credit for certain eligible businesses that had employees affected during the COVID-19 pandemic. This was partially offset by a decrease in incentive compensation due to the adjustment of the incentive compensation accrual during the current quarter.

    Financial Condition

    Loans

    • Total LHFI at March 31, 2025, were $7.59 billion, an increase of $11.8 million, or 0.2%, from $7.57 billion at December 31, 2024, and a decrease of $314.5 million, or 4.0%, compared to March 31, 2024.
    • The primary driver of the increase during the quarter ended March 31, 2025, compared to the linked quarter, were increases in multi-family real estate, MW LOC, residential real estate – single family and commercial and industrial loans of $64.3 million, $55.1 million, $33.1 million and $19.5 million, respectively. These increases were partially offset by decreases of $93.6 million and $65.4 million in total commercial real estate and construction/land/land development loans, respectively.

    Securities

    • Total securities at March 31, 2025 were $1.18 billion, an increase of $58.8 million, or 5.3%, from $1.12 billion at December 31, 2024, and a decrease of $30.4 million, or 2.5%, compared to March 31, 2024.
    • The increase in securities was due to purchases of $73.1 million in the current quarter. This was partially offset by maturities, scheduled principal payments and calls.
    • Accumulated other comprehensive loss, net of taxes, primarily associated with unrealized losses within the available for sale portfolio, was $90.4 million at March 31, 2025, a decrease of $15.6 million, or 14.7% , from the linked quarter.
    • The weighted average effective duration for the total securities portfolio was 4.10 years as of March 31, 2025, compared to 4.46 years as of December 31, 2024.

    Deposits

    • Total deposits at March 31, 2025, were $8.34 billion, an increase of $115.3 million, or 1.4%, compared to the linked quarter, and a decrease of $167.1 million, or 2.0%, from March 31, 2024. The increase in the current quarter compared to the linked quarter was primarily due to an increase of $278.9 million in money market deposits. The increase was partially offset by decreases of $78.0 million and $67.1 million in time deposits (excluding brokered time deposits) and interest-bearing demand deposits, respectively.
    • At March 31, 2025, noninterest-bearing deposits as a percentage of total deposits were 22.7%, compared to 23.1% and 22.2% at December 31, 2024, and March 31, 2024, respectively. Excluding brokered deposits, noninterest-bearing deposits as a percentage of total deposits were 22.8%, compared to 23.3% and 23.9% at December 31, 2024, and March 31, 2024, respectively.

    Subordinate debentures

    • Total subordinated debentures at March 31, 2025, were $89.6 million, a decrease of $70.3 million, or 44.0%, from $159.9 million at December 31, 2024, and a decrease of $71.1 million, or 44.2%, compared to March 31, 2024.
    • The decrease was due to the redemption of $70.0 million in subordinated debentures in conjunction with our Optimize Origin initiative, as forecasted in our fourth quarter 2024 investor presentation. We recognized $681,000 in original issue discount amortization related to the redemption during the current quarter. Based upon our forecast, the redemption is expected to result in approximately $2.1 million in annualized future interest expense savings.

    Conference Call

    Origin will hold a conference call to discuss its first quarter 2025 results on Thursday, April 24, 2025, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time). To participate in the live conference call, please dial +1 (929) 272-1574 (U.S. Local / International 1); +1 (857) 999-3259 (U.S. Local / International 2); +1 (888) 700-7550 (U.S. Toll Free), enter Conference ID: 66134 and request to be joined into the Origin Bancorp, Inc. (OBK) call. A simultaneous audio-only webcast may be accessed via Origin’s website at www.origin.bank under the investor relations, News & Events, Events & Presentations link or directly by visiting https://dealroadshow.com/e/ORIGINQ125.

    If you are unable to participate during the live webcast, the webcast will be archived on the Investor Relations section of Origin’s website at www.origin.bank, under Investor Relations, News & Events, Events & Presentations.

    About Origin

    Origin Bancorp, Inc. is a financial holding company headquartered in Ruston, Louisiana. Origin’s wholly owned bank subsidiary, Origin Bank, was founded in 1912 in Choudrant, Louisiana. Deeply rooted in Origin’s history is a culture committed to providing personalized relationship banking to businesses, municipalities, and personal clients to enrich the lives of the people in the communities it serves. Origin provides a broad range of financial services and currently operates more than 55 locations in Dallas/Fort Worth, East Texas, Houston, North Louisiana, Mississippi, South Alabama and the Florida Panhandle. For more information, visit www.origin.bank.

    Non-GAAP Financial Measures

    Origin reports its results in accordance with generally accepted accounting principles in the United States of America (“GAAP”). However, management believes that certain supplemental non-GAAP financial measures may provide meaningful information to investors that is useful in understanding Origin’s results of operations and underlying trends in its business. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Origin’s reported results prepared in accordance with GAAP. The following are the non-GAAP measures used in this release: PTPP earnings, PTPP ROAA, tangible book value per common share, adjusted tangible book value per common share, ROATCE, and core efficiency ratio.

    Please see the last few pages of this release for reconciliations of non-GAAP measures to the most directly comparable financial measures calculated in accordance with GAAP.

    Forward-Looking Statements

    This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding Origin Bancorp, Inc’s (“Origin”, “we”, “our” or the “Company”) future financial performance, business and growth strategies, projected plans and objectives, and any expected purchases of its outstanding common stock, and related transactions and other projections based on macroeconomic and industry trends, including changes to interest rates by the Federal Reserve and the resulting impact on Origin’s results of operations, estimated forbearance amounts and expectations regarding the Company’s liquidity, including in connection with advances obtained from the FHLB, which are all subject to change and may be inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such changes may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions and current expectations, estimates and projections about Origin and its subsidiaries, any of which may change over time and some of which may be beyond Origin’s control. Statements or statistics preceded by, followed by or that otherwise include the words “assumes,” “anticipates,” “believes,” “estimates,” “expects,” “foresees,” “intends,” “plans,” “projects,” and similar expressions or future or conditional verbs such as “could,” “may,” “might,” “should,” “will,” and “would” and variations of such terms are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. Further, certain factors that could affect Origin’s future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: (1) the impact of current and future economic conditions generally and in the financial services industry, nationally and within Origin’s primary market areas, including the impact of tariffs, as well as the financial stress on borrowers and changes to customer and client behavior as a result of the foregoing; (2) changes in benchmark interest rates and the resulting impacts on net interest income; (3) deterioration of Origin’s asset quality; (4) factors that can impact the performance of Origin’s loan portfolio, including real estate values and liquidity in Origin’s primary market areas; (5) the financial health of Origin’s commercial borrowers and the success of construction projects that Origin finances; (6) changes in the value of collateral securing Origin’s loans; (7) the impact of generative artificial intelligence; (8) Origin’s ability to anticipate interest rate changes and manage interest rate risk; (9) the impact of heightened regulatory requirements, reduced debit interchange and overdraft income and the possibility of facing related adverse business consequences if our total assets grow in excess of $10 billion as of December 31 of any calendar year; (10) the effectiveness of Origin’s risk management framework and quantitative models; (11) Origin’s inability to receive dividends from Origin Bank and to service debt, pay dividends to Origin’s common stockholders, repurchase Origin’s shares of common stock and satisfy obligations as they become due; (12) the impact of labor pressures; (13) changes in Origin’s operation or expansion strategy or Origin’s ability to prudently manage its growth and execute its strategy; (14) changes in management personnel; (15) Origin’s ability to maintain important customer relationships, reputation or otherwise avoid liquidity risks; (16) increasing costs as Origin grows deposits; (17) operational risks associated with Origin’s business; (18) significant turbulence or a disruption in the capital or financial markets and the effect of market disruption and interest rate volatility on our investment securities; (19) increased competition in the financial services industry, particularly from regional and national institutions, as well as from fintech companies; (20) compliance with governmental and regulatory requirements and changes in laws, rules, regulations, interpretations or policies relating to financial institutions; (21) periodic changes to the extensive body of accounting rules and best practices; (22) further government intervention in the U.S. financial system; (23) a deterioration of the credit rating for U.S. long-term sovereign debt; (24) Origin’s ability to comply with applicable capital and liquidity requirements, including its ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; (25) natural disasters and other adverse weather events, pandemics, acts of terrorism, war, and other matters beyond Origin’s control; (26) developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance; (27) fraud or misconduct by internal or external actors (including Origin employees); (28) cybersecurity threats or security breaches and the cost of defending against them; (29) Origin’s ability to maintain adequate internal controls over financial and non-financial reporting; and (30) potential claims, damages, penalties, fines, costs and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions. For a discussion of these and other risks that may cause actual results to differ from expectations, please refer to the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Origin’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any updates to those sections set forth in Origin’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Origin’s underlying assumptions prove to be incorrect, actual results may differ materially from what Origin anticipates. Accordingly, you should not place undue reliance on any forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Origin does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

    New risks and uncertainties arise from time to time, and it is not possible for Origin to predict those events or how they may affect Origin. In addition, Origin cannot assess the impact of each factor on Origin’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Origin or persons acting on Origin’s behalf may issue. Annualized, pro forma, adjusted, projected, and estimated numbers are used for illustrative purposes only, are not forecasts, and may not reflect actual results.

    This press release contains projected financial information with respect to Origin, including with respect to certain goals and strategic initiatives of Origin and the anticipated benefits thereof. This projected financial information constitutes forward-looking information and is for illustrative purposes only and should not be relied upon as necessarily being indicative of future results. The assumptions and estimates underlying such projected financial information are inherently uncertain and are subject to significant business, economic (including interest rate), competitive, and other risks and uncertainties. Actual results may differ materially from the results contemplated by the projected financial information contained herein and the inclusion of such projected financial information in this release should not be regarded as a representation by any person that such actions will be taken or accomplished or that the results reflected in such projected financial information with respect thereto will be achieved.

    Contact:

    Investor Relations
    Chris Reigelman
    318-497-3177
    chris@origin.bank

    Media Contact
    Ryan Kilpatrick
    318-232-7472
    rkilpatrick@origin.bank

    Origin Bancorp, Inc.
    Selected Quarterly Financial Data
    (Unaudited)
     
      Three Months Ended
      March 31,
    2025
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
                       
    Income statement and share amounts (Dollars in thousands, except per share amounts)
    Net interest income $ 78,459     $ 78,349     $ 74,804     $ 73,890     $ 73,323  
    Provision (benefit) for credit losses   3,444       (5,398 )     4,603       5,231       3,012  
    Noninterest income   15,602       (330 )     15,989       22,465       17,255  
    Noninterest expense   62,068       65,422       62,521       64,388       58,707  
    Income before income tax expense   28,549       17,995       23,669       26,736       28,859  
    Income tax expense   6,138       3,725       5,068       5,747       6,227  
    Net income $ 22,411     $ 14,270     $ 18,601     $ 20,989     $ 22,632  
    PTPP earnings(1) $ 31,993     $ 12,597     $ 28,272     $ 31,967     $ 31,871  
    Basic earnings per common share   0.72       0.46       0.60       0.68       0.73  
    Diluted earnings per common share   0.71       0.46       0.60       0.67       0.73  
    Dividends declared per common share   0.15       0.15       0.15       0.15       0.15  
    Weighted average common shares outstanding – basic   31,205,752       31,155,486       31,130,293       31,042,527       30,981,333  
    Weighted average common shares outstanding – diluted   31,412,010       31,308,805       31,239,877       31,131,829       31,078,910  
                       
    Balance sheet data                  
    Total LHFI $ 7,585,526     $ 7,573,713     $ 7,956,790     $ 7,959,171     $ 7,900,027  
    Total LHFI excluding MW LOC   7,181,395       7,224,632       7,461,602       7,452,666       7,499,032  
    Total assets   9,750,372       9,678,702       9,965,986       9,947,182       9,892,379  
    Total deposits   8,338,412       8,223,120       8,486,568       8,510,842       8,505,464  
    Total stockholders’ equity   1,180,177       1,145,245       1,145,673       1,095,894       1,078,853  
                       
    Performance metrics and capital ratios                  
    Yield on LHFI   6.33 %     6.47 %     6.67 %     6.58 %     6.58 %
    Yield on interest-earnings assets   5.79       5.91       6.09       6.04       5.99  
    Cost of interest-bearing deposits   3.23       3.61       4.01       3.95       3.85  
    Cost of total deposits   2.52       2.79       3.14       3.08       2.99  
    NIM – fully tax equivalent (“FTE”)   3.44       3.33       3.18       3.17       3.19  
    Return on average assets (annualized) (“ROAA”)   0.93       0.57       0.74       0.84       0.92  
    PTPP ROAA (annualized)(1)   1.32       0.50       1.13       1.28       1.30  
    Return on average stockholders’ equity (annualized) (“ROAE”)   7.79       4.94       6.57       7.79       8.57  
    Book value per common share $ 37.77     $ 36.71     $ 36.76     $ 35.23     $ 34.79  
    Tangible book value per common share(1)   32.43       31.38       31.37       29.77       29.24  
    Adjusted tangible book value per common share(1)   35.33       34.78       34.39       33.86       33.27  
    Return on average tangible common equity (annualized) (“ROATCE”)(1)   9.09 %     5.78 %     7.74 %     9.25 %     10.24 %
    Efficiency ratio(2)   65.99       83.85       68.86       66.82       64.81  
    Core efficiency ratio(1)   65.33       82.79       67.48       65.55       65.24  
    Common equity tier 1 to risk-weighted assets(3)   13.57       13.32       12.46       12.15       11.97  
    Tier 1 capital to risk-weighted assets(3)   13.76       13.52       12.64       12.33       12.15  
    Total capital to risk-weighted assets(3)   15.81       16.44       15.45       15.16       14.98  
    Tier 1 leverage ratio(3)   11.47       11.08       10.93       10.70       10.66  
                                           

    ___________________________

    (1) PTPP earnings, PTPP ROAA, tangible book value per common share, adjusted tangible book value per common share, ROATCE, and core efficiency ratio are either non-GAAP financial measures or use a non-GAAP contributor in the formula. For a reconciliation of these alternative financial measures to their most directly comparable GAAP measures, please see the last few pages of this release.
    (2) Calculated by dividing noninterest expense by the sum of net interest income plus noninterest income.
    (3) March 31, 2025, ratios are estimated and calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve Board.
       
    Origin Bancorp, Inc.
    Consolidated Quarterly Statements of Income
    (Unaudited)
     
      Three Months Ended
      March 31,
    2025
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
                       
    Interest and dividend income (Dollars in thousands, except per share amounts)
    Interest and fees on loans $ 117,075     $ 127,021     $ 133,195   $ 129,879   $ 127,186  
    Investment securities-taxable   8,076       6,651       6,536     6,606     6,849  
    Investment securities-nontaxable   968       964       905     893     910  
    Interest and dividend income on assets held in other financial institutions   6,424       5,197       3,621     4,416     3,756  
    Total interest and dividend income   132,543       139,833       144,257     141,794     138,701  
    Interest expense                  
    Interest-bearing deposits   51,779       59,511       67,051     65,469     62,842  
    FHLB advances and other borrowings   96       88       482     514     518  
    Subordinated indebtedness   2,209       1,885       1,920     1,921     2,018  
    Total interest expense   54,084       61,484       69,453     67,904     65,378  
    Net interest income   78,459       78,349       74,804     73,890     73,323  
    Provision (benefit) for credit losses   3,444       (5,398 )     4,603     5,231     3,012  
    Net interest income after provision for credit losses   75,015       83,747       70,201     68,659     70,311  
    Noninterest income                  
    Insurance commission and fee income   7,927       5,441       6,928     6,665     7,725  
    Service charges and fees   4,716       4,801       4,664     4,862     4,688  
    Other fee income   2,301       2,152       2,114     2,404     2,247  
    Mortgage banking revenue   915       1,151       1,153     1,878     2,398  
    Swap fee income   533       116       106     44     57  
    (Loss) gain on sales of securities, net         (14,617 )     221         (403 )
    Limited partnership investment (loss) income   (1,692 )     (62 )     375     68     138  
    Change in fair value of equity investments                   5,188      
    Other income   902       688       428     1,356     405  
    Total noninterest income (loss)   15,602       (330 )     15,989     22,465     17,255  
    Noninterest expense                  
    Salaries and employee benefits   37,731       36,405       38,491     38,109     35,818  
    Occupancy and equipment, net   8,544       7,913       6,298     7,009     6,645  
    Data processing   2,957       3,414       3,470     3,468     3,145  
    Office and operations   2,972       2,883       2,984     3,072     2,502  
    Intangible asset amortization   1,761       1,800       1,905     2,137     2,137  
    Regulatory assessments   1,392       1,535       1,791     1,842     1,734  
    Advertising and marketing   1,133       1,929       1,449     1,328     1,444  
    Professional services   1,250       2,064       2,012     1,303     1,231  
    Electronic banking   1,354       1,377       1,308     1,238     1,239  
    Loan-related expenses   599       431       751     1,077     905  
    Franchise tax expense   675       884       721     815     477  
    Other expenses   1,700       4,787       1,341     2,990     1,430  
    Total noninterest expense   62,068       65,422       62,521     64,388     58,707  
    Income before income tax expense   28,549       17,995       23,669     26,736     28,859  
    Income tax expense   6,138       3,725       5,068     5,747     6,227  
    Net income $ 22,411     $ 14,270     $ 18,601   $ 20,989   $ 22,632  
                                       
    Origin Bancorp, Inc.
    Consolidated Balance Sheets
    (Unaudited)
                       
    (Dollars in thousands) March 31,
    2025
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
    Assets                  
    Cash and due from banks $ 112,888     $ 132,991     $ 159,337     $ 137,615     $ 98,147  
    Interest-bearing deposits in banks   373,314       337,258       161,854       150,435       193,365  
    Total cash and cash equivalents   486,202       470,249       321,191       288,050       291,512  
    Securities:                  
    AFS   1,161,368       1,102,528       1,160,965       1,160,048       1,190,922  
    Held to maturity, net of allowance for credit losses   11,094       11,095       11,096       11,616       11,651  
    Securities carried at fair value through income   6,512       6,512       6,533       6,499       6,755  
    Total securities   1,178,974       1,120,135       1,178,594       1,178,163       1,209,328  
    Non-marketable equity securities held in other financial institutions   71,754       71,643       67,068       64,010       53,870  
    Loans held for sale   10,191       10,494       7,631       18,291       14,975  
    LHFI   7,585,526       7,573,713       7,956,790       7,959,171       7,900,027  
    Less: ALCL   92,011       91,060       95,989       100,865       98,375  
    LHFI, net of ALCL   7,493,515       7,482,653       7,860,801       7,858,306       7,801,652  
    Premises and equipment, net   123,847       126,620       126,751       121,562       120,931  
    Cash surrender value of bank-owned life insurance   41,021       40,840       40,602       40,365       40,134  
    Goodwill   128,679       128,679       128,679       128,679       128,679  
    Other intangible assets, net   38,212       37,473       39,272       41,177       43,314  
    Accrued interest receivable and other assets   177,977       189,916       195,397       208,579       187,984  
    Total assets $ 9,750,372     $ 9,678,702     $ 9,965,986     $ 9,947,182     $ 9,892,379  
    Liabilities and Stockholders’ Equity                  
    Noninterest-bearing deposits $ 1,888,808     $ 1,900,651     $ 1,893,767     $ 1,866,622     $ 1,887,066  
    Interest-bearing deposits excluding brokered interest-bearing deposits, if any   5,536,636       5,301,243       5,137,940       4,984,817       4,990,632  
    Time deposits   862,968       941,000       1,023,252       1,022,589       1,030,656  
    Brokered deposits   50,000       80,226       431,609       636,814       597,110  
    Total deposits   8,338,412       8,223,120       8,486,568       8,510,842       8,505,464  
    FHLB advances and other borrowings   12,488       12,460       30,446       40,737       13,158  
    Subordinated indebtedness   89,599       159,943       159,861       159,779       160,684  
    Accrued expenses and other liabilities   129,696       137,934       143,438       139,930       134,220  
    Total liabilities   8,570,195       8,533,457       8,820,313       8,851,288       8,813,526  
    Stockholders’ equity:                  
    Common stock   156,220       155,988       155,837       155,543       155,057  
    Additional paid-in capital   538,790       537,366       535,662       532,950       530,380  
    Retained earnings   575,578       557,920       548,419       534,585       518,325  
    Accumulated other comprehensive loss   (90,411 )     (106,029 )     (94,245 )     (127,184 )     (124,909 )
    Total stockholders’ equity   1,180,177       1,145,245       1,145,673       1,095,894       1,078,853  
      Total liabilities and stockholders’ equity $ 9,750,372     $ 9,678,702     $ 9,965,986     $ 9,947,182     $ 9,892,379  
                                           
    Origin Bancorp, Inc.
    Loan Data
    (Unaudited)
       
      At and For the Three Months Ended
      March 31,
    2025
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
                       
    LHFI (Dollars in thousands)
    Owner occupied commercial real estate $ 937,985     $ 975,947     $ 991,671     $ 959,850     $ 948,624  
    Non-owner occupied commercial real estate   1,445,864       1,501,484       1,533,093       1,563,152       1,472,164  
    Construction/land/land development   798,609       864,011       991,545       1,017,389       1,168,597  
    Residential real estate – single family   1,465,192       1,432,129       1,414,013       1,421,027       1,373,532  
    Multi-family real estate   489,765       425,460       434,317       398,202       359,765  
    Total real estate loans   5,137,415       5,199,031       5,364,639       5,359,620       5,322,682  
    Commercial and industrial   2,022,085       2,002,634       2,074,037       2,070,947       2,154,151  
    MW LOC   404,131       349,081       495,188       506,505       400,995  
    Consumer   21,895       22,967       22,926       22,099       22,199  
    Total LHFI   7,585,526       7,573,713       7,956,790       7,959,171       7,900,027  
    Less: ALCL   92,011       91,060       95,989       100,865       98,375  
    LHFI, net $ 7,493,515     $ 7,482,653     $ 7,860,801     $ 7,858,306     $ 7,801,652  
                       
    Nonperforming assets(1)                  
    Nonperforming LHFI                  
    Commercial real estate $ 5,465     $ 4,974     $ 2,776     $ 2,196     $ 4,474  
    Construction/land/land development   17,694       18,505       26,291       26,336       383  
    Residential real estate(2)   40,749       36,221       14,313       13,493       14,918  
    Commercial and industrial   17,325       15,120       20,486       33,608       20,560  
    Consumer   135       182       407       179       104  
    Total nonperforming LHFI   81,368       75,002       64,273       75,812       40,439  
    Other real estate owned/repossessed assets   1,990       3,635       6,043       6,827       3,935  
    Total nonperforming assets $ 83,358     $ 78,637     $ 70,316     $ 82,639     $ 44,374  
    Classified assets $ 129,666     $ 122,417     $ 113,529     $ 125,081     $ 88,152  
    Past due LHFI(3)   72,774       42,437       38,838       66,276       32,835  
                       
    Allowance for loan credit losses                  
    Balance at beginning of period $ 91,060     $ 95,989     $ 100,865     $ 98,375     $ 96,868  
    Provision (benefit) for loan credit losses   3,679       (5,489 )     4,644       5,436       4,089  
    Loans charged off   4,848       2,025       11,226       3,706       6,683  
    Loan recoveries   2,120       2,585       1,706       760       4,101  
    Net charge-offs (recoveries)   2,728       (560 )     9,520       2,946       2,582  
    Balance at end of period $ 92,011     $ 91,060     $ 95,989     $ 100,865     $ 98,375  
                       
    Credit quality ratios                  
    Total nonperforming assets to total assets   0.85 %     0.81 %     0.71 %     0.83 %     0.45 %
    Nonperforming LHFI to LHFI   1.07       0.99       0.81       0.95       0.51  
    Past due LHFI to LHFI   0.96       0.56       0.49       0.83       0.42  
    ALCL to nonperforming LHFI   113.08       121.41       149.35       133.05       243.27  
    ALCL to total LHFI   1.21       1.20       1.21       1.27       1.25  
    ALCL to total LHFI, adjusted(4)   1.28       1.25       1.28       1.34       1.30  
    Net charge-offs (recoveries) to total average LHFI (annualized)   0.15       (0.03 )     0.48       0.15       0.13  
                                           

    ___________________________

    (1) Nonperforming assets consist of nonperforming/nonaccrual loans and property acquired through foreclosures or repossession, as well as bank-owned property not in use and listed for sale, if any.
    (2) Includes multi-family real estate.
    (3) Past due LHFI are defined as loans 30 days or more past due.
    (4) The ALCL to total LHFI, adjusted is calculated by excluding the ALCL for MW LOC loans from the total LHFI ALCL in the numerator and excluding the MW LOC loans from the LHFI in the denominator. Due to their low-risk profile, MW LOC loans require a disproportionately low allocation of the ALCL.
       
    Origin Bancorp, Inc.
    Average Balances and Yields/Rates
    (Unaudited)
       
      Three Months Ended
      March 31, 2025   December 31, 2024   March 31, 2024
      Average Balance   Yield/Rate   Average Balance   Yield/Rate   Average Balance   Yield/Rate
                           
    Assets (Dollars in thousands)
    Commercial real estate $ 2,448,099   5.82 %   $ 2,499,279   5.89 %   $ 2,438,476   5.84 %
    Construction/land/land development   821,754   6.87       936,134   6.92       1,130,355   7.25  
    Residential real estate(1)   1,909,922   5.53       1,847,399   5.50       1,739,105   5.40  
    Commercial and industrial (“C&I”)   2,004,034   7.37       2,028,290   7.68       2,121,502   7.89  
    MW LOC   289,521   7.07       459,716   7.26       306,248   7.59  
    Consumer   22,709   7.45       23,393   7.64       23,319   8.07  
    LHFI   7,496,039   6.33       7,794,211   6.47       7,759,005   6.58  
    Loans held for sale   8,590   6.18       10,981   6.81       12,906   5.86  
    Loans receivable   7,504,629   6.33       7,805,192   6.47       7,771,911   6.58  
    Investment securities-taxable   1,021,904   3.21       1,002,216   2.64       1,095,480   2.51  
    Investment securities-nontaxable   140,875   2.79       149,307   2.57       148,077   2.47  
    Non-marketable equity securities held in other financial institutions   71,669   2.35       69,070   2.78       58,455   3.77  
    Interest-earning balances due from banks   543,821   4.48       394,790   4.75       240,432   5.37  
    Total interest-earning assets   9,282,898   5.79       9,420,575   5.91       9,314,355   5.99  
    Noninterest-earning assets   525,317         557,968         546,881    
    Total assets $ 9,808,215       $ 9,978,543       $ 9,861,236    
                           
    Liabilities and Stockholders’ Equity                    
    Liabilities                      
    Interest-bearing liabilities                      
    Savings and interest-bearing transaction accounts $ 5,538,710   3.14 %   $ 5,341,028   3.48 %   $ 5,009,117   3.69 %
    Time deposits   972,176   3.69       1,213,565   4.20       1,563,992   4.35  
    Total interest-bearing deposits   6,510,886   3.23       6,554,593   3.61       6,573,109   3.85  
    FHLB advances and other borrowings   14,148   2.75       12,698   2.76       42,284   4.92  
    Subordinated indebtedness   124,133   7.22       159,910   4.69       165,252   4.91  
    Total interest-bearing liabilities   6,649,167   3.30       6,727,201   3.64       6,780,645   3.88  
    Noninterest-bearing liabilities                      
    Noninterest-bearing deposits   1,837,365         1,940,689         1,866,496    
    Other liabilities   154,934         161,425         151,390    
    Total liabilities   8,641,466         8,829,315         8,798,531    
    Stockholders’ Equity   1,166,749         1,149,228         1,062,705    
    Total liabilities and stockholders’ equity $ 9,808,215       $ 9,978,543       $ 9,861,236    
    Net interest spread     2.49 %       2.27 %       2.11 %
    NIM     3.43         3.31         3.17  
    NIM-FTE(2)     3.44         3.33         3.19  
                                 

    ___________________________

    (1) Includes multi-family real estate.
    (2) In order to present pre-tax income and resulting yields on tax-exempt investments comparable to those on taxable investments, a tax-equivalent adjustment has been computed. This adjustment also includes income tax credits received on Qualified School Construction Bonds.
       
    Origin Bancorp, Inc.
    Notable Items
    (Unaudited)
       
      At and For the Three Months Ended
      March 31,
    2025
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      $ Impact   EPS
    Impact(1)
      $ Impact   EPS
    Impact(1)
      $ Impact   EPS
    Impact(1)
      $ Impact   EPS
    Impact(1)
      $ Impact   EPS
    Impact(1)
                                           
      (Dollars in thousands, except per share amounts)
    Notable interest income items:                                    
    Interest income reversal on relationships impacted by questioned banker activity $     $     $     $     $     $     $ (1,206 )   $ (0.03 )   $     $  
    Notable interest expense items:                                    
    OID amortization – subordinated debenture redemption   (681 )     (0.02 )                                                
    Notable provision expense items:                                    
    Provision release (expense) related to questioned banker activity               3,212       0.08                   (3,212 )     (0.08 )            
    Provision release (expense) on relationships impacted by questioned banker activity   375       0.01                               (4,131 )     (0.11 )            
    Notable noninterest income items(2):                                
    MSR gain (impairment)                                                   410       0.01  
    (Loss) gain on sales of securities, net               (14,617 )     (0.37 )     221       0.01                   (403 )     (0.01 )
    Gain on sub-debt repurchase                                       81                    
    Positive valuation adjustment on non-marketable equity securities                                       5,188       0.13              
    Net (loss) gain on OREO properties(2)   (212 )     (0.01 )     198                         800       0.02              
    BOLI payout   208       0.01                                                  
    Notable noninterest expense items:                                
    Operating expense related to questioned banker activity   (543 )     (0.01 )     (4,069 )     (0.10 )     (848 )     (0.02 )     (1,452 )     (0.04 )            
    Operating expense related to strategic Optimize Origin initiatives   (1,615 )     (0.04 )     (1,121 )     (0.03 )                                    
    Employee Retention Credit   213       0.01       1,651       0.04                                      
    Total notable items $ (2,255 )     (0.06 )   $ (14,746 )     (0.37 )   $ (627 )     (0.02 )   $ (3,932 )     (0.10 )   $ 7        
                                                                                   

    ___________________________

    (1) The diluted EPS impact is calculated using a 21% effective tax rate. The total of the diluted EPS impact of each individual line item may not equal the calculated diluted EPS impact on the total notable items due to rounding.
    (2) The $212,000 net (loss) gain on OREO properties for the quarter ended March 31, 2025, includes a $444,000 expected insurance settlement recovery that was included in noninterest income on the face of the income statement and a $148,000 repair cost that was included in noninterest expense.
       
    Origin Bancorp, Inc.
    Non-GAAP Financial Measures
    (Unaudited)
     
      At and For the Three Months Ended
      March 31,
    2025
      December 31,
    2024
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
                       
      (Dollars in thousands, except per share amounts)
    Calculation of PTPP earnings:                  
    Net income $ 22,411     $ 14,270     $ 18,601     $ 20,989     $ 22,632  
    Provision (benefit) for credit losses   3,444       (5,398 )     4,603       5,231       3,012  
    Income tax expense   6,138       3,725       5,068       5,747       6,227  
    PTPP earnings (non-GAAP) $ 31,993     $ 12,597     $ 28,272     $ 31,967     $ 31,871  
                       
    Calculation of PTPP ROAA:                  
    PTPP earnings $ 31,993     $ 12,597     $ 28,272     $ 31,967     $ 31,871  
    Divided by number of days in the quarter   90       92       92       91       91  
    Multiplied by the number of days in the year   365       366       366       366       366  
    PTPP earnings, annualized $ 129,749     $ 50,114     $ 112,473     $ 128,571     $ 128,184  
                       
    Divided by total average assets $ 9,808,215     $ 9,978,543     $ 9,985,836     $ 10,008,225     $ 9,861,236  
    ROAA (annualized) (GAAP)   0.93 %     0.57 %     0.74 %     0.84 %     0.92 %
    PTPP ROAA (annualized) (non-GAAP)   1.32       0.50       1.13       1.28       1.30  
                       
    Calculation of tangible book value per common share and adjusted tangible book value per common share:
    Total common stockholders’ equity $ 1,180,177     $ 1,145,245     $ 1,145,673     $ 1,095,894     $ 1,078,853  
    Goodwill   (128,679 )     (128,679 )     (128,679 )     (128,679 )     (128,679 )
    Other intangible assets, net   (38,212 )     (37,473 )     (39,272 )     (41,177 )     (43,314 )
    Tangible common equity   1,013,286       979,093       977,722       926,038       906,860  
    Accumulated other comprehensive loss   90,411       106,029       94,245       127,184       124,909  
    Adjusted tangible common equity   1,103,697       1,085,122       1,071,967       1,053,222       1,031,769  
    Divided by common shares outstanding at the end of the period   31,244,006       31,197,574       31,167,410       31,108,667       31,011,304  
    Book value per common share (GAAP) $ 37.77     $ 36.71     $ 36.76     $ 35.23     $ 34.79  
    Tangible book value per common share (non-GAAP)   32.43       31.38       31.37       29.77       29.24  
    Adjusted tangible book value per common share (non-GAAP)   35.33       34.78       34.39       33.86       33.27  
                       
    Calculation of ROATCE:                
    Net income $ 22,411     $ 14,270     $ 18,601     $ 20,989     $ 22,632  
    Divided by number of days in the quarter   90       92       92       91       91  
    Multiplied by number of days in the year   365       366       366       366       366  
    Annualized net income $ 90,889     $ 56,770     $ 74,000     $ 84,417     $ 91,025  
                       
    Total average common stockholders’ equity $ 1,166,749     $ 1,149,228     $ 1,125,697     $ 1,084,269     $ 1,062,705  
    Average goodwill   (128,679 )     (128,679 )     (128,679 )     (128,679 )     (128,679 )
    Average other intangible assets, net   (38,254 )     (38,646 )     (40,487 )     (42,563 )     (44,700 )
    Average tangible common equity   999,816       981,903       956,531       913,027       889,326  
                       
    ROATCE (non-GAAP)   9.09 %     5.78 %     7.74 %     9.25 %     10.24 %
    Calculation of core efficiency ratio:                  
    Total noninterest expense $ 62,068     $ 65,422     $ 62,521     $ 64,388     $ 58,707  
    Insurance and mortgage noninterest expense   (8,230 )     (8,497 )     (8,448 )     (8,402 )     (8,045 )
    Adjusted total noninterest expense   53,838       56,925       54,073       55,986       50,662  
                       
    Net interest income $ 78,459     $ 78,349     $ 74,804     $ 73,890     $ 73,323  
    Insurance and mortgage net interest income   (2,815 )     (2,666 )     (2,578 )     (2,407 )     (2,795 )
    Total noninterest income   15,602       (330 )     15,989       22,465       17,255  
    Insurance and mortgage noninterest income   (8,842 )     (6,592 )     (8,081 )     (8,543 )     (10,123 )
    Adjusted total revenue   82,404       68,761       80,134       85,405       77,660  
                       
    Efficiency ratio (GAAP)   65.99 %     83.85 %     68.86 %     66.82 %     64.81 %
    Core efficiency ratio (non-GAAP)   65.33       82.79       67.48       65.55       65.24  

    The MIL Network

  • MIL-OSI: Northrim BanCorp Earns $13.3 Million, or $2.38 Per Diluted Share, in First Quarter 2025

    Source: GlobeNewswire (MIL-OSI)

    ANCHORAGE, Alaska, April 23, 2025 (GLOBE NEWSWIRE) — Northrim BanCorp, Inc. (NASDAQ:NRIM) (“Northrim” or the “Company”) today reported net income of $13.3 million, or $2.38 per diluted share, in the first quarter of 2025, compared to $10.9 million, or $1.95 per diluted share, in the fourth quarter of 2024, and $8.2 million, or $1.48 per diluted share, in the first quarter a year ago. The increase in first quarter 2025 profitability as compared to the first quarter a year ago was primarily the result of an increase in purchased receivable income, higher net interest income, increased mortgage banking income, and a benefit for the provision for credit losses, which were only partially offset by higher other operating expenses. Purchased receivable income increased primarily due to the Company’s acquisition of Sallyport Commercial Finance, LLC (“Sallyport or SCF”), which was completed on October 31, 2024. Sallyport and its direct and indirect subsidiaries provide services and products related to purchased receivable factoring and asset-based lending in the United States, Canada, and the United Kingdom.

    Dividends per share in the first quarter of 2025 increased to $0.64 per share as compared to $0.62 per share in the fourth quarter of 2024 and $0.61 per share in the first quarter of 2024.

    “Our record first quarter earnings are the result of Northrim’s focus on profitable, market share driven growth,” said Mike Huston, Northrim’s President and Chief Executive Officer. “Our strong financial performance is due to our history of investing in our people and banking infrastructure to consistently deliver ‘Superior Customer First Service’. We remain confident that our dedication to serving our customers and communities will support future growth.”

    First Quarter 2025 Highlights:

    • Net interest income in the first quarter of 2025 increased 1% to $31.3 million compared to $30.8 million in the fourth quarter of 2024 and increased 18% compared to $26.4 million in the first quarter of 2024.
    • Net interest margin on a tax equivalent basis (“NIMTE”)* was 4.61% for the first quarter of 2025, up 14-basis points from the fourth quarter of 2024 and up 39-basis points from the first quarter a year ago.
    • Return on average assets (“ROAA”) was 1.76% and return on average equity (“ROAE”) was 19.70% for the first quarter of 2025. ROAA was 1.19% and ROAE was 13.84% for the first quarter of 2024.
    • Portfolio loans were $2.12 billion at March 31, 2025, down slightly from the preceding quarter and up 17% from a year ago. Portfolio loans in the first quarter of 2025 decreased from the preceding quarter primarily due to the reclassification of $100 million of consumer mortgages previously held as residential real estate loans to loans held for sale. The consumer mortgages are expected to be sold in the second quarter of 2025 to reduce the concentration of residential real estate loans and provide additional liquidity for future commercial and construction loan growth.
    • Total deposits were $2.78 billion at March 31, 2025, up 4% from the preceding quarter, and up 14% from $2.43 billion a year ago. Non-interest bearing demand deposits increased 5% from the preceding quarter and increased 4% year-over-year to $742.6 million at March 31, 2025 and represent 27% of total deposits.
    • The average cost of interest-bearing deposits was 2.01% at March 31, 2025, down from 2.15% at December 31, 2024 and 2.13% at March 31, 2024.
    • Mortgage loan originations were $121.6 million in the first quarter of 2025, down from $185.9 million in the fourth quarter of 2024 and up from $101.7 million in the first quarter a year ago. Mortgage loans funded for sale were $108.5 million in the first quarter of 2025, compared to $162.5 million in the fourth quarter of 2024 and $84.3 million in the first quarter of 2024.
    Financial Highlights Three Months Ended
    (Dollars in thousands, except per share data) March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024
    Total assets $ 3,140,960   $ 3,041,869   $ 2,963,392   $ 2,821,668   $ 2,759,560  
    Total portfolio loans $ 2,124,330   $ 2,129,263   $ 2,007,565   $ 1,875,907   $ 1,811,135  
    Total deposits $ 2,777,977   $ 2,680,189   $ 2,625,567   $ 2,463,806   $ 2,434,083  
    Total shareholders’ equity $ 279,756   $ 267,116   $ 260,050   $ 247,200   $ 239,327  
    Net income $ 13,324   $ 10,927   $ 8,825   $ 9,020   $ 8,199  
    Diluted earnings per share $ 2.38   $ 1.95   $ 1.57   $ 1.62   $ 1.48  
    Return on average assets   1.76 %   1.43 %   1.22 %   1.31 %   1.19 %
    Return on average shareholders’ equity   19.70 %   16.32 %   13.69 %   14.84 %   13.84 %
    NIM   4.55 %   4.41 %   4.29 %   4.24 %   4.16 %
    NIMTE*   4.61 %   4.47 %   4.35 %   4.30 %   4.22 %
    Efficiency ratio   64.47 %   66.96 %   66.11 %   68.78 %   68.93 %
    Total shareholders’ equity/total assets   8.91 %   8.78 %   8.78 %   8.76 %   8.67 %
    Tangible common equity/tangible assets*   7.41 %   7.23 %   8.28 %   8.24 %   8.14 %
    Book value per share $ 50.67   $ 48.41   $ 47.27   $ 44.93   $ 43.52  
    Tangible book value per share* $ 41.47   $ 39.17   $ 44.36   $ 42.03   $ 40.61  
    Dividends per share $ 0.64   $ 0.62   $ 0.62   $ 0.61   $ 0.61  
    Common stock outstanding   5,520,892     5,518,210     5,501,943     5,501,562     5,499,578  
                                   

    * References to NIMTE, tangible book value per share, and tangible common equity to tangible common assets, (both of which exclude intangible assets) represent non-GAAP financial measures. Management has presented these non-GAAP measurements in this earnings release, because it believes these measures are useful to investors. See the end of this release for reconciliations of these non-GAAP financial measures to GAAP financial measures.

    Alaska Economic Update
    (Note: sources for information included in this section are included on page 13.)

    The Alaska Department of Labor (“DOL”) has reported Alaska’s seasonally adjusted unemployment rate in February of 2025 was 4.7% compared to the U.S. rate of 4.1%. The total number of payroll jobs in Alaska, not including uniformed military, increased 1.6% or 5,200 jobs between February of 2024 and February of 2025.

    According to the DOL, the Oil and Gas sector had the largest growth rate in new jobs of 7.5% through February 2025 compared to the prior year, up 600 direct jobs. The Construction sector added 1,000 positions for a year-over-year growth rate of 6.1% in February of 2025. The larger Health Care sector grew by 1,400 jobs for an annual growth rate of 3.4%. Transportation, Warehousing and Utilities added 1,100 jobs for a 5% growth rate. Leisure and Hospitality increased 500 jobs year-over-year through February of 2025, up 1.6%.

    The Government sector grew by 600 jobs for 0.7% growth, adding 100 Federal jobs, and 500 State positions in Alaska over the same period. Declining sectors between February 2024 and February 2025 were Manufacturing (primarily seafood processing) shrinking 500 positions (-4.4%), Financial Activities, down 100 jobs (-0.9%), and Retail lost 100 jobs (-0.3%).

    Alaska’s seasonally adjusted personal income was $56.5 billion in the fourth quarter of 2024 according to the Federal Bureau of Economic Analysis (“BEA”). This was an annualized improvement in the fourth quarter of 4.7% for Alaska, compared to the national average of 4.6%. Alaska enjoyed an annual personal income improvement of 6% in 2024 compared to the U.S. increase of 5.4%, ranking Alaska 6th best in the nation. The $650 million increase in personal income in the fourth quarter in Alaska came from a $446 million increase in net earnings from wages, $154 million growth in government transfer receipts, and a $49 million increase in investment income.

    Alaska’s Gross State Product (“GSP”) in 2024, reached $70 billion for the first time according to the BEA. Alaska’s inflation adjusted “real” GSP increased 1.5% in 2024 and 4% annualized in the fourth quarter of 2024, placing Alaska third best of all 50 states for the quarter. The average U.S. GDP growth rate was 2.8% for the year and 2.4% in the fourth quarter of 2024. Alaska’s real GSP improvement in the fourth quarter of 2024 was primarily caused by growth in the Mining, Oil & Gas; Transportation & Warehousing; and to a lesser extent the Health Care sector. Construction played a larger role in the annual state GSP performance.

    Based on data from the U.S. Chamber of Commerce, Alaska exported $5.2 billion in goods to foreign countries in 2023. China is the largest importer of Alaska’s products at $1.2 billion, followed by Japan at $710 million and Korea at $702 million in 2023. Fish and related maritime products accounted for the largest volume at $2.1 billion, followed by minerals and ores $1.5 billion, and primary metals at $780 million in 2023. Chief Credit Officer and Bank Economist Mark Edwards stated, “President Trump’s significant changes to international tariffs has created uncertainty in trade markets. At this time, it is unknown how each country will respond. Alaska’s natural resources are highly valued commodities throughout the world. If issues arise with one country, such as China, it is most likely that Alaska’s products will be redirected to other markets like Japan and South Korea or sold domestically in the United States. Canada is the largest long-term investor in Alaska’s mining industry. This involves significant fixed capital investments made over decades that are unlikely to shift dramatically in the short-run.”

    According to the US Bureau of Labor Statistics, the Consumer Price Index, or CPI, for the U.S. increased 2.8% between February of 2024 and February of 2025. In Alaska, the rate of increase was 2.9% for the same time period. Food and beverage; housing rents and mortgage rates; transportation; and medical care costs are the largest causes for inflation. Declining motor fuel prices, new and used car prices, and household furnishing costs have helped moderate inflationary pressures in Alaska.

    The monthly average price of Alaska North Slope (“ANS”) crude oil was $76.39 in January, $74.03 in February and $73.39 in March of 2025. The Alaska Department of Revenue (“DOR”) calculated ANS crude oil production was 461 thousand barrels per day (“bpd”) in Alaska’s fiscal year ending June 30, 2024. Through nine months of the fiscal year 2025, production has averaged slightly above the State of Alaska forecast of 467 thousand bpd. In the Spring 2025 Revenue Forecast published March 12, 2025, the DOR expects production to continue to grow to 663 thousand bpd by fiscal year 2034. This is primarily a result of new production coming on-line in and around the NPR-A region west of Prudhoe Bay. A partnership between Santos and Repsol is constructing the new Pikka oil field and ConocoPhillips is developing the new Willow oil field. There are also a number of smaller new oil fields in Alaska’s North Slope that are contributing to the State of Alaska’s production growth estimates.

    The Alaska Permanent Fund is seeded annually by the oil wealth the State continues to save each year and has grown significantly over 40 years of successful investment. As of February 28, 2025 the funds value was $81.35 billion. According to the DOR it is scheduled to contribute $3.7 billion to the Alaska General Fund in fiscal year 2025 for general government spending and to pay the annual dividend to Alaskan residents.

    According to the Alaska Multiple Listing Services, the average sales price of a single family home in Anchorage rose 6.2% in 2024 to $510,109, following a 5.2% increase in 2023. This was the seventh consecutive year of price increases.

    The average sales price for single family homes in the Matanuska Susitna Borough rose 3.8% in 2024 to $412,859, after increasing 4% in 2023. This continues a trend of average price increases for more than a decade in the region. These two markets represent where the vast majority of the residential lending activity for Northrim Bank (the”Bank”) occurs.

    The Alaska Multiple Listing Services reported a 3.4% increase in the number of units sold in Anchorage when comparing 2024 to 2023. There was virtually no change in the number of homes sold in the Matanuska Susitna Borough, with only four fewer homes sold in 2024 than in 2023 or -0.2%.

    Northrim Bank sponsors the Alaskanomics blog to provide news, analysis, and commentary on Alaska’s economy. Join the conversation at Alaskanomics.com, or for more information on the Alaska economy, visit: www.northrim.com and click on the “Business Banking” link and then click “Learn.” Information from our website is not incorporated into, and does not form, a part of this earnings release.

    Review of Income Statement

    Consolidated Income Statement

    In the first quarter of 2025, Northrim generated a ROAA of 1.76% and a ROAE of 19.70%, compared to 1.43% and 16.32%, respectively, in the fourth quarter of 2024 and 1.19% and 13.84%, respectively, in the first quarter a year ago.

    Net Interest Income/Net Interest Margin

    Net interest income increased 1% to $31.3 million in the first quarter of 2025 compared to $30.8 million in the fourth quarter of 2024 and increased 18% compared to $26.4 million in the first quarter of 2024. Interest expense on deposits decreased to $9.9 million in the first quarter of 2025 compared to $10.6 million in the fourth quarter of 2024 and increased compared to $9.2 million in the first quarter of 2024.

    NIMTE* was 4.61% in the first quarter of 2025 up from 4.47% in the preceding quarter and 4.22% in the first quarter a year ago. NIMTE* increased 39 basis points in the first quarter of 2025 compared to the first quarter of 2024 primarily due to a favorable change in the mix of earning-assets towards higher loan balances as a percentage of total earning-assets, slightly higher yields on those assets, and a decrease in costs on interest-bearing liabilities. The weighted average interest rate for new loans booked in the first quarter of 2025 was 7.30% compared to 7.23% in the fourth quarter of 2024 and 7.84% in the first quarter a year ago. The yield on the investment portfolio in the first quarter of 2025 increased to 2.97% from 2.84% in the fourth quarter of 2024 and 2.82% in the first quarter of 2024. “We are starting to see some benefit from lower deposit costs that benefit our net interest margin and outweigh the impact of the recent Fed rate cuts on our loan portfolio, which we could continue to see for the next couple of quarters,” said Jed Ballard, Chief Financial Officer. Northrim’s NIMTE* continues to remain above the peer average of 3.23% posted by the S&P U.S. Small Cap Bank Index with total market capitalization between $250 million and $1 billion as of December 31, 2024.

    Provision for Credit Losses

    Northrim recorded a benefit to the provision for credit losses of $1.4 million in the first quarter of 2025, which was comprised of a benefit to the provision for credit losses on loans of $1.1 million, a $322,000 benefit to the provision for credit losses on unfunded commitments, and a provision for credit losses on purchased receivables of $46,000. This compares to a provision for credit losses of $1.2 million in the fourth quarter of 2024, and provision for credit losses of $149,000 in the first quarter a year ago.

    The benefit to the provision for unfunded commitments in the first quarter of 2025 was primarily due to a decrease in estimated loss rates due to changes in mix that was only partially offset by management’s assessment of economic conditions and estimated funding rates. The decrease to the provision for credit losses on loans in the first quarter of 2025 as compared to the prior quarter and the same quarter a year ago was primarily a result of the reclassification of $100 million in mortgage loans to loans held for sale, which provided a benefit to the provision of $2.2 million in the Home Mortgage Lending segment for the first quarter of 2025. This benefit was only partially offset by a $1.5 million provision for credit losses in the Home Mortgage Lending segment due to changes in the Company’s loss rate regression models for home mortgage loans. Additionally, the Company recorded $1.7 million net benefit for credit losses in the Community Banking segment related to changes in the Company’s loss rate regression models for commercial, commercial real estate, and construction loans. These decreases in the provision were only partially offset by increases in estimated loss rates for management’s assessment of economic conditions, an increase for higher loan balances in other loan segments, and specific provisions for credit losses in the Specialty Finance segment. These items reduced the overall benefit by $1.3 million. The provision for credit losses related to the Specialty Finance segment of $666,000 in the first quarter of 2025 consisted of a $621,000 provision for credit losses on loans and a $46,000 provision for credit losses on purchased receivables and represents management’s estimate of collateral shortfalls for four loans.

    Nonperforming loans, net of government guarantees, increased during the quarter to $8.0 million at March 31, 2025, compared to $7.5 million at December 31, 2024, and $5.3 million at March 31, 2024.

    The allowance for credit losses on loans was 262% of nonperforming loans, net of government guarantees, at the end of the first quarter of 2025, compared to 292% three months earlier and 333% a year ago.

    Other Operating Income

    In addition to home mortgage lending, Northrim has interests in other businesses that complement its core community banking activities, including purchased receivables financing and wealth management. Other operating income contributed $14.2 million, or 31% of total first quarter 2025 revenues, as compared to $13.0 million, or 30% of revenues in the fourth quarter of 2024, and $7.8 million, or 23% of revenues in the first quarter of 2024. The increase in other operating income in the first quarter of 2025 as compared to the preceding quarter and the first quarter of 2024 was primarily the result of increased purchased receivable income due to the Company’s acquisition of Sallyport on October 31, 2024. The fair market value of marketable equity securities decreased $50,000 in the first quarter of 2025 compared to a decrease of $364,000 in the prior quarter and an increase of $314,000 in the first quarter of 2024. Additionally, the increase in other operating income in the first quarter of 2025 as compared to the fourth quarter of 2024 was partially offset by a decrease in mortgage banking income due to a lower volume of mortgage activity. See further discussion regarding mortgage activity contained under “Home Mortgage Lending” below.

    Other Operating Expenses

    Operating expenses were $29.3 million in the first quarter of 2025, compared to $29.4 million in the fourth quarter of 2024, and $23.6 million in the first quarter of 2024. The decrease in other operating expenses in the first quarter of 2025 compared to the fourth quarter of 2024 was primarily due to a decrease in salaries and other personnel expense, including $623,000 in lower mortgage commissions expense due to lower mortgage volume and a decrease in profit share expense. Professional fees decreased in the first quarter of 2025 compared to the fourth quarter of 2024 primarily due to one-time deal costs associated with the acquisition of Sallyport of $1.1 million recorded in the fourth quarter of 2024. These decreases were only partially offset by $600,000 in compensation expense for Sallyport acquisition payments and an increase in other operating expense for a decrease in fair value of loans held for sale of $1.2 million as a result of reclassifying the consumer mortgages discussed above. The increase in other operating expenses in the first quarter of 2025 compared to the first quarter a year ago was primarily due to an increase in salaries and other personnel expense, the increase in compensation expense for Sallyport acquisition payments, the increase in other operating expense for the decrease in fair value of loans held for sale, as well as an increase in other real estate owned, or OREO, expense due to a gain on sale recorded in the first quarter of 2024 for proceeds received related to a government guarantee on an OREO property in prior years. Total other operating expense increased $2.7 million in the Specialty Finance segment in the first quarter of 2025 compared to the first quarter of 2024 from the addition of Sallyport on October 31, 2024.

    Income Tax Provision

    In the first quarter of 2025, Northrim recorded $4.3 million in state and federal income tax expense for an effective tax rate of 24.2%, compared to $2.4 million, or 17.8% in the fourth quarter of 2024 and $2.3 million, or 21.9% in the first quarter a year ago. The increase in the tax rate in the first quarter of 2025 as compared to the fourth and first quarters of 2024 is primarily the result of a decrease in tax credits and tax exempt interest income as a percentage of pre-tax income in 2025 as compared to 2024.

    Community Banking

    Northrim is committed to meeting the needs of the diverse communities in which it operates. As a testament to that support, the Bank has branches in four regions of Alaska identified by the Federal Reserve as ‘distressed or underserved non-metropolitan middle-income geographies’.

    Net interest income in the Community Banking segment totaled $28.2 million in the first quarter of 2025, compared to $27.6 million in the fourth quarter of 2024 and $24.2 million in the first quarter of 2024. Net interest income increased slightly in the first quarter of 2025 as compared to the fourth quarter of 2024 mostly due to lower interest expense on deposits and borrowings and higher interest income on loans. These increases were only partially offset by lower interest income on investments.

    Other operating expenses in the Community Banking segment totaled $18.6 million in the first quarter of 2025, down $535,000 or 3% from $19.1 million in the fourth quarter of 2024, and up $1.4 million or 8% from $17.2 million in the first quarter a year ago. The decrease in the first quarter of 2025 as compared to the prior quarter was mostly due to decreases in salaries and other personnel expense, marketing expense, and professional and outside services expense. The increase in the first quarter of 2025 as compared to the first quarter a year ago was primarily due to an increase in OREO expense due to a gain on sale recorded in the first quarter of 2024 for proceeds received related to a government guarantee on an OREO property sold in prior years, as well as increases in data processing expense, insurance expense, salaries and other personnel expense, and marketing expense.

    The following table provides highlights of the Community Banking segment of Northrim:

      Three Months Ended
    (Dollars in thousands, except per share data) March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024
    Net interest income $ 28,151   $ 27,643   $ 25,928   $ 24,318   $ 24,215  
    (Benefit) provision for credit losses   (1,768 )   771     1,492     (184 )   197  
    Other operating income   2,703     2,535     3,507     2,450     2,468  
    Other operating expense   18,581     19,116     18,723     18,068     17,178  
    Income before provision for income taxes   14,041     10,291     9,220     8,884     9,308  
    Provision for income taxes   3,253     1,474     2,133     1,786     1,966  
    Net income $ 10,788   $ 8,817   $ 7,087   $ 7,098   $ 7,342  
    Weighted average shares outstanding, diluted   5,608,102     5,597,889     5,583,055     5,558,580     5,554,930  
    Diluted earnings per share attributable to Community Banking $ 1.93   $ 1.58   $ 1.26   $ 1.27   $ 1.32  
                                   

    Home Mortgage Lending

    During the first quarter of 2025, mortgage loans funded for sale were $108.5 million, compared to $162.5 million in the fourth quarter of 2024, and $84.3 million in the first quarter of 2024.

    During the first quarter of 2025, the Bank purchased loans of $13.1 million from its subsidiary, Residential Mortgage. of which approximately half were jumbos, one-quarter were mortgages for second homes, and one-quarter were adjustable rate mortgages, with a weighted average interest rate of 6.39%, as compared to $23.4 million and 6.30% in the fourth quarter of 2024, and $17.4 million and 6.65% in the first quarter of 2024. Net interest income contributed $3.0 million to total Home Mortgage Lending revenue in the first quarter of 2025, down from $3.3 million in the prior quarter, and up from $2.2 million in the first quarter a year ago.

    The income statement impact from the reclassification of the consumer mortgages was a decrease in provision for credit losses of $2.2 million and a $1.2 million decrease in the fair value of mortgages.

    The Arizona, Colorado, and Pacific Northwest mortgage expansion markets were responsible for 20% of Residential Mortgage’s $122 million total production in the first quarter of 2025, 19% of $186 million total production in the fourth quarter of 2024, and 19% of $102 million total production in the first quarter of 2024.

    The net change in fair value of mortgage servicing rights decreased mortgage banking income by $855,000 during the first quarter of 2025 compared to an increase of $873,000 for the fourth quarter of 2024 and a decrease of $25,000 for the first quarter of 2024. Mortgage servicing revenue decreased to $2.7 million in the first quarter of 2025 from $2.8 million in the prior quarter and increased from $1.6 million in the first quarter of 2024 due to an increase in production of Alaska Housing Finance Corporation (AHFC) mortgages, which contribute to servicing revenues at origination. In the first quarter of 2025, the Company’s servicing portfolio increased $24.0 million compared to a $294.1 million increase in the fourth quarter of 2024, which included the purchase of the AHFC servicing portfolio of $235.6 million, and an increase of $15.5 million in the first quarter of 2024.

    As of March 31, 2025, Northrim serviced 6,391 loans in its $1.48 billion home-mortgage-servicing portfolio, a 2% increase compared to the $1.46 billion serviced as of the end of the fourth quarter of 2024, and a 40% increase from the $1.06 billion serviced a year ago.

    The following table provides highlights of the Home Mortgage Lending segment of Northrim:

      Three Months Ended
    (Dollars in thousands, except per share data) March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024
    Mortgage commitments $ 68,258   $ 32,299   $ 77,591   $ 88,006   $ 56,208  
               
    Mortgage loans funded for sale $ 108,499   $ 162,530   $ 209,960   $ 152,339   $ 84,324  
    Mortgage loans funded for investment   13,061     23,380     38,087     29,175     17,403  
    Total mortgage loans funded $ 121,560   $ 185,910   $ 248,047   $ 181,514   $ 101,727  
    Mortgage loan refinances to total fundings   11 %   11 %   6 %   6 %   4 %
    Mortgage loans serviced for others $ 1,484,714   $ 1,460,720   $ 1,166,585   $ 1,101,800   $ 1,060,007  
               
    Net realized gains on mortgage loans sold $ 2,740   $ 3,747   $ 5,079   $ 3,188   $ 1,980  
    Change in fair value of mortgage loan commitments, net   660     (665 )   60     391     386  
    Total production revenue   3,400     3,082     5,139     3,579     2,366  
    Mortgage servicing revenue   2,696     2,847     2,583     2,164     1,561  
    Change in fair value of mortgage servicing rights:          
    Due to changes in model inputs of assumptions1   (322 )   1,372     (566 )   239     289  
    Other2   (533 )   (499 )   (402 )   (320 )   (314 )
    Total mortgage servicing revenue, net   1,841     3,720     1,615     2,083     1,536  
    Other mortgage banking revenue   170     238     293     222     129  
    Total mortgage banking income $ 5,411   $ 7,040   $ 7,047   $ 5,884   $ 4,031  
               
    Net interest income $ 3,046   $ 3,280   $ 2,941   $ 2,775   $ 2,232  
    Provision (benefit) for credit losses   (307 )   305     571     64     (48 )
    Mortgage banking income   5,411     7,040     7,047     5,884     4,031  
    Other operating expense   7,650     7,198     7,643     6,697     6,086  
    Income (loss) before provision for income taxes   1,114     2,817     1,774     1,898     225  
    Provision (benefit) for income taxes   310     842     497     532     63  
    Net income (loss) $ 804   $ 1,975   $ 1,277   $ 1,366   $ 162  
               
    Weighted average shares outstanding, diluted   5,608,102     5,597,889     5,583,055     5,558,580     5,554,930  
    Diluted earnings per share attributable to Home Mortgage Lending $ 0.14   $ 0.35   $ 0.23   $ 0.25   $ 0.03  

    1Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
    2Represents changes due to collection/realization of expected cash flows over time.

    Specialty Finance

    The Company’s Specialty Finance segment includes Northrim Funding Services and Sallyport Commercial Finance. Northrim Funding Services is a division of the Bank and has offered factoring solutions to small businesses since 2004. Sallyport is a leading provider of factoring, asset-based lending and alternative working capital solutions to small and medium sized enterprises in the United States, Canada, and the United Kingdom that the Company acquired on October 31, 2024 in an all cash transaction valued at approximately $53.9 million. The composition of revenues for the Specialty Finance segment are primarily purchased receivable income, but also includes interest income and other fee income.

    The acquisition of Sallyport included $1.1 million in one-time deal related costs which are reflected in other operating expenses for the fourth quarter of 2024 in the tables below. Total pre-tax income for Sallyport for the first quarter of 2025 was $1.3 million compared to $945,000 for the two months of operations in the fourth quarter of 2024, excluding transaction costs.

    Average purchased receivables and loan balances at Sallyport were $59.9 million for the first quarter of 2025, and yielded 35.8%. This included the recognition of $899,000 in fee income collected during the quarter related to two nonperforming receivables that was previously deferred and the collection of a $350,000 line termination fee. The yield excluding these items for the first quarter of 2025 was 27.4%.

    The following table provides highlights of the Specialty Finance segment of Northrim:

      Three Months Ended
    (Dollars in thousands, except per share data) March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024
    Purchased receivable income $ 6,150   $ 3,526   $ 1,033   $ 1,243   $ 1,345  
    Other operating income   (64 )   (68 )            
    Interest income   596     407     158     170     212  
    Total revenue   6,682     3,865     1,191     1,413     1,557  
    Provision for credit losses   666     125              
    Compensation expense – SCF acquisition payments   600                  
    Other operating expense   2,500     3,063     362     429     374  
    Interest expense   496     489     185     210     212  
    Total expense   4,262     3,677     547     639     586  
    Income before provision for income taxes   2,420     188     644     774     971  
    Provision for income taxes   688     53     183     218     276  
    Net income Specialty Finance segment $ 1,732   $ 135   $ 461   $ 556   $ 695  
    Weighted average shares outstanding, diluted   5,608,102     5,597,889     5,583,055     5,558,580     5,554,930  
    Diluted earnings per share attributable to Specialty Finance $ 0.31   $ 0.02   $ 0.08   $ 0.10   $ 0.13  
                                   

    Balance Sheet Review

    Northrim’s total assets were $3.14 billion at March 31, 2025, up 3% from the preceding quarter and up 14% from a year ago. Northrim’s loan-to-deposit ratio was 76% at March 31, 2025, down from 79% at December 31, 2024, and up from 74% at March 31, 2024.

    At March 31, 2025, our liquid assets, investments, and loans maturing within one year were $1.11 billion and our funds available for borrowing under our existing lines of credit were $571.7 million. Given these sources of liquidity and our expectations for customer demands for cash and for our operating cash needs, we believe our sources of liquidity to be sufficient for the foreseeable future.

    Average interest-earning assets were $2.78 billion in the first quarter of 2025, down slightly from $2.79 billion in the fourth quarter of 2024 and up 9% from $2.56 billion in the first quarter a year ago. The average yield on interest-earning assets was 6.10% in the first quarter of 2025, up slightly from 6.02% in the preceding quarter and up from 5.69% in the first quarter a year ago.

    Average investment securities decreased to $523.8 million in the first quarter of 2025, compared to $565.8 million in the fourth quarter of 2024 and $670.9 million in the first quarter a year ago. The average net tax equivalent yield on the securities portfolio was 2.97% for the first quarter of 2025, up from 2.84% in the preceding quarter and up from 2.82% in the year ago quarter. The average estimated duration of the investment portfolio at March 31, 2025, was approximately 2.4 years compared to approximately 2.7 years at March 31, 2024. As of March 31, 2025, $70.0 million of available for sale securities with a weighted average yield of 2.25% are scheduled to mature in the next six months, $80.7 million with a weighted average yield of 1.16% are scheduled to mature in six months to one year, and $168.6 million with a weighted average yield of 1.67% are scheduled to mature in the following year, representing a total of $319.4 million or 11% of earning assets that are scheduled to mature in the next 24 months.

    Total unrealized losses, net of tax, on available for sale securities decreased by $2.8 million in the first quarter of 2025 resulting in total unrealized loss, net of tax, of $5.5 million compared to $8.3 million at December 31, 2024, and $17.2 million a year ago. The average maturity of the available for sale securities with the majority of the unrealized loss is 1.3 years. Total unrealized losses on held to maturity securities were $1.1 million at March 31, 2025, compared to $1.0 million at December 31, 2024, and $3.4 million a year ago.

    Average interest bearing deposits in other banks decreased to $38.0 million in the first quarter of 2025 from $72.2 million in the fourth quarter of 2024 and decreased from $61.6 million in the first quarter of 2024, as cash was used to fund the loan growth and provide liquidity.

    Loans held for sale increased to $159.6 million at March 31, 2025, compared to $60.0 million at December 31, 2024, and $43.8 million a year ago, largely due to the reclassification of $100 million consumer mortgage loans from portfolio loans in the first quarter of 2025. Management expects to sell these loans with servicing retained which will result in an increase to mortgage servicing rights when the sale closes in the second quarter of 2025.

    Portfolio loans were $2.12 billion at March 31, 2025, consistent with the preceding quarter and up 17% from a year ago. Portfolio loans, excluding consumer mortgage loans, were $1.94 billion at March 31, 2025, up $77.4 million or 4% from the preceding quarter and up 22% from a year ago. This increase in the first quarter of 2025 was diversified throughout the loan portfolio including nonowner-occupied commercial real estate and multi-family loans increasing by $70.8 million, commercial loans increasing by $55.4 million, and commercial real estate owner-occupied loans increasing $10.4 million from the preceding quarter. These increases were partially offset by a $57.9 million decrease in construction loans. Average portfolio loans in the first quarter of 2025 were $2.17 billion, which was up 5% from the preceding quarter and up 21% from a year ago. Yields on average portfolio loans in the first quarter of 2025 decreased to 6.89% from 6.93% in the fourth quarter and increased from 6.75% in the first quarter of 2024. The decrease in the yield on portfolio loans in the first quarter of 2025 compared to the fourth quarter of 2024 is primarily due to a change in the mix of loans as construction loans decreased and commercial real estate loans increased as a percentage of the overall portfolio. The yield on new portfolio loans, excluding consumer mortgage loans, was 7.43% in the first quarter of 2025 as compared to 7.40% in the fourth quarter of 2024 and 8.39% in the first quarter of 2024.

    Northrim’s loans and credit lines are subject to approval procedures and amount limitations. These limitations apply to the borrower’s total outstanding indebtedness and commitments to us, including the indebtedness of any guarantor. Generally, Northrim is permitted to make loans to one borrower of up to 15% of the unimpaired capital and surplus of the Bank. The legal lending limit was $37.6 million at March 31, 2025. At March 31, 2025, Northrim had 23 relationships totaling $520.2 million in portfolio loans whose total direct and indirect commitments were greater than 50% of the legal lending limit.

    Alaskans continue to account for substantially all of Northrim’s deposit base. Total deposits were $2.78 billion at March 31, 2025, up 4% from $2.68 billion at December 31, 2024, and up 14% from $2.43 billion a year ago. “The increase in deposits in the first quarter of 2025 was not consistent with our customers’ normal business cycles as we normally see decreases in balances during the first quarter, however deposits from new relationships in the quarter were more than able to offset our normal seasonal deposit movement,” said Ballard. At March 31, 2025, 74% of total deposits were held in business accounts and 26% of deposit balances were held in consumer accounts. Northrim had approximately 34,000 deposit customers with an average balance of $61,000 as of March 31, 2025. Northrim had 27 customers with balances over $10 million as of March 31, 2025, which accounted for $694.7 million, or 26%, of total deposits. Demand deposits increased by 5% from the prior quarter and increased 4% from the prior year to $742.6 million at March 31, 2025. Demand deposits remained consistent at 27% of total deposits at both March 31, 2025 and December 31, 2024 and were down from 29% of total deposits at March 31, 2024. Average interest-bearing deposits were up 2% to $2.00 billion with an average cost of 2.01% in the first quarter of 2025, compared to $1.95 billion and an average cost of 2.15% in the fourth quarter of 2024, and up 16% compared to $1.73 billion and an average cost of 2.13% in the first quarter of 2024. Uninsured deposits totaled $1.04 billion or 37% of total deposits as of March 31, 2025 compared to $1.08 billion or 40% of total deposits as of December 31, 2024.

    Shareholders’ equity was $279.8 million, or $50.67 book value per share, at March 31, 2025, compared to $267.1 million, or $48.41 book value per share, at December 31, 2024 and $239.3 million, or $43.52 book value per share, a year ago. Tangible book value per share* was $41.47 at March 31, 2025, compared to $39.17 at December 31, 2024, and $40.61 per share a year ago. The increase in shareholders’ equity in the first quarter of 2025 as compared to the fourth quarter of 2024 was largely the result of earnings of $13.3 million and an increase in the fair value of the available for sale securities portfolio, which increased $5.5 million, net of tax, which were only partially offset by dividends paid of $3.6 million. The Company did not repurchase any shares of common stock in the first quarter of 2025 and currently has no plans to continue to repurchase shares. Tangible common equity to tangible assets* was 7.41% as of March 31, 2025, compared to 7.23% as of December 31, 2024 and 8.14% as of March 31, 2024. Northrim continues to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” with Tier 1 Capital to Risk Adjusted Assets of 9.76% at March 31, 2025, compared to 9.76% at December 31, 2024, and 11.55% at March 31, 2024.

    Asset Quality

    Northrim believes it has a consistent lending approach throughout economic cycles, which emphasizes appropriate loan-to-value ratios, adequate debt coverage ratios, and competent management.

    Nonperforming assets (“NPAs”) net of government guarantees were $12.3 million at March 31, 2025, up from $11.6 million at December 31, 2024 and $5.4 million a year ago. Of the NPAs at March 31, 2025, $4.5 million are attributable to the Community Banking segment and $7.6 million are attributable to the Specialty Finance segment.

    Net adversely classified loans were $20.4 million at March 31, 2025, as compared to $9.6 million at December 31, 2024, and $7.2 million a year ago. Adversely classified loans are loans that Northrim has classified as substandard, doubtful, and loss, net of government guarantees. The increase in adversely classified loans, net of government guarantees, at March 31, 2025 as compared to the prior quarter and prior year is mostly attributable to two commercial relationships totaling $9.4 million. Net loan recoveries were $34,000 in the first quarter of 2025, compared to net loan recoveries of $51,000 in the fourth quarter of 2024, and net loan recoveries of $42,000 in the first quarter of 2024. Additionally, Northrim had three new loan modifications to borrowers experiencing financial difficulty totaling $813,000, for a total of 14 totaling $3.8 million, net of government guarantees in the first quarter of 2025.

    Northrim had $140.7 million, or 7% of portfolio loans, in the Healthcare sector, $122.5 million, or 6% of portfolio loans, in the Tourism sector, $110.9 million, or 5% of portfolio loans, in the Accommodations sector, $91.2 million, or 4% of portfolio loans, in the Retail sector, $85.7 million, or 4% of portfolio loans, in the Aviation (non-tourism) sector, $75.5 million, or 4% of portfolio loans, in the Fishing sector, and $60.2 million, or 3% in the Restaurants and Breweries sector as of March 31, 2025.

    Northrim estimates that $106.3 million, or approximately 5% of portfolio loans, had direct exposure to the oil and gas industry in Alaska, as of March 31, 2025, and $1.5 million of these loans are adversely classified. As of March 31, 2025, Northrim has an additional $32.6 million in unfunded commitments to companies with direct exposure to the oil and gas industry in Alaska, and no unfunded commitments on adversely classified loans. Northrim defines direct exposure to the oil and gas sector as loans to borrowers that provide oilfield services and other companies that have been identified as significantly reliant upon activity in Alaska related to the oil and gas industry, such as lodging, equipment rental, transportation and other logistics services specific to this industry.

    About Northrim BanCorp

    Northrim BanCorp, Inc. is the parent company of Northrim Bank, an Alaska-based community bank with 20 branches throughout the state and differentiates itself with its detailed knowledge of Alaska’s economy and its “Customer First Service” philosophy. The Bank has two wholly-owned subsidiaries, Sallyport Commercial Finance, LLC, a specialty finance company and Residential Mortgage Holding Company, LLC, a regional home mortgage company. Pacific Wealth Advisors, LLC is an affiliated company.

    www.northrim.com

    Forward-Looking Statement
    This release may contain “forward-looking statements” as that term is defined for purposes of Section 21E of the Securities Exchange Act of 1934, as amended. These statements are, in effect, management’s attempt to predict future events, and thus are subject to various risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy, management’s plans and objectives for future operations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to Northrim and its management are intended to help identify forward-looking statements. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward-looking statements, are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include: descriptions of Northrim’s and Sallyport’s financial condition, results of operations, asset based lending volumes, asset and credit quality trends and profitability and statements about the expected financial benefits and other effects of the acquisition of Sallyport by Northrim Bank; expected cost savings, synergies and other financial benefits from the acquisition of Sallyport by Northrim Bank might not be realized within the expected time frames and costs or difficulties relating to integration matters might be greater than expected; the ability of Northrim and Sallyport to execute their respective business plans; potential further increases in interest rates; the value of securities held in our investment portfolio; the impact of the results of government initiatives, including tariffs, on the regulatory landscape, natural resource extraction industries, and capital markets; the impact of declines in the value of commercial and residential real estate markets, high unemployment rates, inflationary pressures and slowdowns in economic growth; changes in banking regulation or actions by bank regulators; potential further increases in inflation, supply-chain constraints, and potential geopolitical instability, including the wars in Ukraine and the Middle East; financial stress on borrowers (consumers and businesses) as a result of higher rates or an uncertain economic environment; the general condition of, and changes in, the Alaska economy; our ability to maintain or expand our market share or net interest margin; the sufficiency of our allowance for credit losses and the accuracy of the assumptions or estimates used in preparing our financial statements, including those related to current expected credit losses accounting guidance; our ability to maintain asset quality; our ability to implement our marketing and growth strategies; our ability to identify and address cyber-security risks, including security breaches, “denial of service attacks,” “hacking,” and identity theft; disease outbreaks; and our ability to execute our business plan. Further, actual results may be affected by competition on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy. In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates. Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and from time to time are disclosed in our other filings with the Securities and Exchange Commission. However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ from our expectations. These forward-looking statements are made only as of the date of this release, and Northrim does not undertake any obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this release.

    References:

    https://www.bea.gov/

    http://almis.labor.state.ak.us/

    http://www.tax.alaska.gov/programs/oil/prevailing/ans.aspx

    http://www.tax.state.ak.us/

    www.mba.org

    https://www.alaskarealestate.com/MLSMember/RealEstateStatistics.aspx

    https://www.akleg.gov/basis/Bill/Text/34?Hsid=HJR011C

    https://www.uschamber.com/assets/static/maps/international-trade/AK_Chamber_2024.pdf

    https://tax.alaska.gov/programs/programs/reports/RSB.aspx?Year=2025&Type=Spring

    https://www.capitaliq.spglobal.com/web/client?auth=inherit&overridecdc=1&#markets/indexFinancials

    Income Statement      
    (Dollars in thousands, except per share data) Three Months Ended
    (Unaudited) March 31, December 31, March 31,
        2025     2024     2024  
    Interest Income:      
    Interest and fees on loans $ 37,470   $ 37,059   $ 30,450  
    Interest on portfolio investments   3,675     3,844     4,520  
    Interest on deposits in banks   416     883     838  
    Total interest income   41,561     41,786     35,808  
    Interest Expense:      
    Interest expense on deposits   9,935     10,568     9,180  
    Interest expense on borrowings   329     377     181  
    Total interest expense   10,264     10,945     9,361  
    Net interest income   31,297     30,841     26,447  
           
    (Benefit) provision for credit losses   (1,409 )   1,201     149  
    Net interest income after provision for credit losses   32,706     29,640     26,298  
           
    Other Operating Income:      
    Purchased receivable income   6,150     3,526     1,345  
    Mortgage banking income   5,411     7,040     4,031  
    Bankcard fees   1,074     1,148     917  
    Service charges on deposit accounts   677     622     549  
    Unrealized gain (loss) on marketable equity securities   (50 )   (364 )   314  
    Other income   938     949     688  
    Total other operating income   14,200     13,033     7,844  
           
    Other Operating Expense:      
    Salaries and other personnel expense   17,223     18,254     15,417  
    Data processing expense   3,104     3,108     2,659  
    Occupancy expense   1,889     1,893     1,962  
    Professional and outside services   1,115     1,967     755  
    Insurance expense   1,017     894     779  
    Marketing expense   672     965     513  
    Compensation expense – SCF acquisition payments   600          
    OREO expense, net rental income and gains on sale   3     2     (391 )
    Other operating expense   3,708     2,294     1,944  
    Total other operating expense   29,331     29,377     23,638  
           
    Income before provision for income taxes   17,575     13,296     10,504  
    Provision for income taxes   4,251     2,369     2,305  
    Net income $ 13,324   $ 10,927   $ 8,199  
           
    Basic EPS $ 2.41   $ 1.99   $ 1.49  
    Diluted EPS $ 2.38   $ 1.95   $ 1.48  
    Weighted average shares outstanding, basic   5,519,998     5,509,078     5,499,578  
    Weighted average shares outstanding, diluted   5,608,102     5,597,889     5,554,930  
                       
    Balance Sheet      
    (Dollars in thousands)      
    (Unaudited) March 31, December 31, March 31,
        2025     2024     2024  
           
    Assets:      
    Cash and due from banks $ 29,671   $ 42,101   $ 30,159  
    Interest bearing deposits in other banks   35,852     20,635     50,205  
    Investment securities available for sale, at fair value   463,096     478,617     592,479  
    Investment securities held to maturity   36,750     36,750     36,750  
    Marketable equity securities, at fair value   8,669     8,719     13,467  
    Investment in Federal Home Loan Bank stock   5,342     5,331     3,236  
    Loans held for sale   159,603     59,957     43,818  
           
    Portfolio loans   2,124,330     2,129,263     1,811,135  
    Allowance for credit losses, loans   (20,922 )   (22,020 )   (17,533 )
    Net portfolio loans   2,103,408     2,107,243     1,793,602  
    Purchased receivables, net   95,489     74,078     37,698  
    Mortgage servicing rights, at fair value   26,814     26,439     20,055  
    Other real estate owned, net            
    Premises and equipment, net   37,070     37,757     40,836  
    Lease right of use asset   7,632     7,455     8,867  
    Goodwill and intangible assets   50,824     50,968     15,967  
    Other assets   80,740     85,819     72,421  
    Total assets $ 3,140,960   $ 3,041,869   $ 2,759,560  
           
    Liabilities:      
    Demand deposits $ 742,560   $ 706,225   $ 714,244  
    Interest-bearing demand   1,187,465     1,108,404     889,581  
    Savings deposits   256,650     250,900     246,902  
    Money market deposits   193,842     196,290     209,785  
    Time deposits   397,460     418,370     373,571  
    Total deposits   2,777,977     2,680,189     2,434,083  
    Other borrowings   13,136     23,045     13,569  
    Junior subordinated debentures   10,310     10,310     10,310  
    Lease liability   7,682     7,487     8,884  
    Other liabilities   52,099     53,722     53,387  
    Total liabilities   2,861,204     2,774,753     2,520,233  
           
    Shareholders’ Equity:      
    Total shareholders’ equity   279,756     267,116     239,327  
    Total liabilities and shareholders’ equity $ 3,140,960   $ 3,041,869   $ 2,759,560  
           

    Additional Financial Information
    (Dollars in thousands)
    (Unaudited)

    Composition of Portfolio Loans                        
      March 31, 2025   December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024
      Balance % of total   Balance % of total   Balance % of total   Balance % of total   Balance % of total
    Commercial loans $ 573,593   27 %   $ 518,148   24 %   $ 492,414   24 %   $ 495,781   26 %   $ 475,220   26 %
    Commercial real estate:                            
    Owner occupied properties   430,442   20 %     420,060   20 %     412,827   20 %     383,832   20 %     372,507   20 %
    Nonowner occupied and multifamily properties   690,277   32 %     619,431   29 %     584,302   31 %     551,130   30 %     529,904   30 %
    Residential real estate:                            
    1-4 family properties secured by first liens   188,219   9 %     270,535   13 %     248,514   12 %     222,026   12 %     218,552   12 %
    1-4 family properties secured by junior liens & revolving secured by first liens   53,836   3 %     48,857   2 %     45,262   2 %     41,258   2 %     35,460   2 %
    1-4 family construction   34,017   2 %     39,789   2 %     39,794   2 %     29,510   2 %     27,751   2 %
    Construction loans   156,211   7 %     214,068   10 %     185,362   9 %     154,009   8 %     153,537   8 %
    Consumer loans   7,424   %     7,562   %     7,836   %     6,679   %     6,444   %
    Subtotal   2,134,019         2,138,450         2,016,311         1,884,225         1,819,375    
    Unearned loan fees, net   (9,689 )       (9,187 )       (8,746 )       (8,318 )       (8,240 )  
    Total portfolio loans $ 2,124,330       $ 2,129,263       $ 2,007,565       $ 1,875,907       $ 1,811,135    
                                 
    Composition of Deposits                        
      March 31, 2025   December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024
      Balance % of total   Balance % of total   Balance % of total   Balance % of total   Balance % of total
    Demand deposits $ 742,560   27 %   $ 706,225   27 %   $ 763,595   29 %   $ 704,471   29 %   $ 714,244   29 %
    Interest-bearing demand   1,187,465   43 %     1,108,404   41 %     979,238   37 %     906,010   36 %     889,581   37 %
    Savings deposits   256,650   9 %     250,900   9 %     245,043   9 %     238,156   10 %     246,902   10 %
    Money market deposits   193,842   7 %     196,290   7 %     204,821   8 %     195,159   8 %     209,785   9 %
    Time deposits   397,460   14 %     418,370   16 %     435,870   17 %     420,010   17 %     373,571   15 %
    Total deposits $ 2,777,977       $ 2,680,189       $ 2,628,567       $ 2,463,806       $ 2,434,083    
                                                     

    Additional Financial Information
    (Dollars in thousands)
    (Unaudited)

    Asset Quality March 31,   December 31,   March 31,
        2025       2024       2024  
    Nonaccrual loans – Community Banking $ 4,274     $ 4,337     $ 4,472  
    Nonaccrual loans – Home Mortgage Lending   221       233       263  
    Nonaccrual loans – Specialty Finance   3,573       2,946       525  
    Nonaccrual loans – Total   8,068       7,516       5,260  
    Loans 90 days past due and accruing – Community Banking         17        
    Loans 90 days past due and accruing – Total         17        
    Total nonperforming loans – Community Banking   4,274       4,354       4,472  
    Total nonperforming loans – Home Mortgage Lending   221       233       263  
    Total nonperforming loans – Specialty Finance   3,573       2,946       525  
    Total nonperforming loans – Total   8,068       7,533       5,260  
    Nonperforming loans guaranteed by gov’t – Community Banking   80              
    Nonperforming loans guaranteed by gov’t – Total   80              
    Net nonperforming loans – Community Banking   4,194       4,354       4,472  
    Net nonperforming loans – Home Mortgage Lending   221       233       263  
    Net nonperforming loans – Specialty Finance   3,573       2,946       525  
    Net nonperforming loans – Total   7,988       7,533       5,260  
                 
    Repossessed assets – Community Banking   297       297        
    Repossessed assets – Total   297       297        
                 
    Nonperforming purchased receivables – Specialty Finance   4,007       3,768       183  
                 
    Net nonperforming assets – Community Banking   4,491       4,651       4,472  
    Net nonperforming assets – Home Mortgage Lending   221       233       263  
    Net nonperforming assets – Specialty Finance   7,580       6,714       708  
    Net nonperforming assets – Total $ 12,292     $ 11,598     $ 5,443  
                 
    Adversely classified loans, net of gov’t guarantees – Community Banking $ 16,592     $ 6,332     $ 6,374  
    Adversely classified loans, net of gov’t guarantees – Home Mortgage Lending   252       358       307  
    Adversely classified loans, net of gov’t guarantees – Specialty Finance   3,573       2,946       525  
    Adversely classified loans, net of gov’t guarantees – Total $ 20,417     $ 9,636     $ 7,206  
                 
    Special mention loans, net of gov’t guarantees – Community Banking $ 14,496     $ 19,769     $ 9,976  
    Special mention loans, net of gov’t guarantees – Home Mortgage Lending   637              
    Special mention loans, net of gov’t guarantees – Total $ 15,133     $ 19,769     $ 9,976  
                           
    Asset Quality, Continued March 31, December 31, March 31,
        2025     2024     2024  
    Nonperforming loans, net of government guarantees / portfolio loans   0.38 %   0.35 %   0.29 %
    Nonperforming loans, net of government guarantees / portfolio loans, net of government guarantees   0.40 %   0.38 %   0.31 %
    Nonperforming assets, net of government guarantees / total assets   0.39 %   0.38 %   0.20 %
    Nonperforming assets, net of government guarantees / total assets net of government guarantees   0.41 %   0.40 %   0.20 %
                 
    Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans   0.04 %   0.11 %   0.03 %
    Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans, net of government guarantees   0.04 %   0.11 %   0.04 %
                 
    Allowance for credit losses for loans / portfolio loans   0.98 %   1.03 %   0.97 %
    Allowance for credit losses for loans / portfolio loans, net of gov’t guarantees   1.06 %   1.10 %   1.03 %
    Allowance for credit losses for loans / nonperforming loans, net of government guarantees   262 %   292 %   333 %
                 
    Gross loan charge-offs for the quarter – Community Banking $ 50   $ 44   $ 25  
    Gross loan charge-offs for the quarter – Specialty Finance       105      
    Gross loan charge-offs for the quarter – Total   50     149     25  
                 
    Gross loan recoveries for the quarter – Community Banking   (84 )   (200 )   (67 )
    Gross loan recoveries for the quarter – Home Mortgage Lending            
    Gross loan recoveries for the quarter – Specialty Finance            
    Gross loan recoveries for the quarter – Total $ (84 ) $ (200 ) $ (67 )
                 
    Net loan (recoveries) charge-offs for the quarter – Community Banking $ (34 ) $ (156 ) $ (42 )
    Net loan (recoveries) charge-offs for the quarter – Specialty Finance       (105 )    
    Net loan (recoveries) charge-offs for the quarter – Total $ (34 ) $ (51 ) $ (42 )
                 
    Net loan charge-offs (recoveries) for the quarter / average loans, for the quarter   %   %   %
                 
    Allowance for credit losses for purchased receivables / purchased receivables   3.72 %   4.69 %   %
                 
    Net purchased receivable charge-offs (recoveries) for the quarter $   $   $  
                 

    Additional Financial Information
    (Dollars in thousands)
    (Unaudited)

    Average Balances, Yields, and Rates                
      Three Months Ended
      March 31, 2025   December 31, 2024   March 31, 2024
        Average     Average     Average
      Average Tax Equivalent   Average Tax Equivalent   Average Tax Equivalent
      Balance Yield/Rate   Balance Yield/Rate   Balance Yield/Rate
    Assets                
    Interest bearing deposits in other banks $ 37,969   4.44 %   $ 72,212   4.72 %   $ 61,561   5.38 %
    Portfolio investments   523,753   2.97 %     565,785   2.84 %     670,937   2.82 %
    Loans held for sale   46,223   5.86 %     83,304   5.97 %     32,635   6.13 %
    Portfolio loans   2,173,425   6.89 %     2,066,216   6.93 %     1,793,425   6.75 %
    Total interest-earning assets   2,781,370   6.10 %     2,787,517   6.02 %     2,558,558   5.69 %
    Nonearning assets   293,415         251,364         201,137    
    Total assets $ 3,074,785       $ 3,038,881       $ 2,759,695    
                     
    Liabilities and Shareholders’ Equity                
    Interest-bearing deposits $ 2,002,594   2.01 %   $ 1,954,495   2.15 %   $ 1,731,923   2.13 %
    Borrowings   37,081   3.55 %     29,251   3.95 %     23,944   2.95 %
    Total interest-bearing liabilities   2,039,675   2.04 %     1,983,746   2.18 %     1,755,867   2.14 %
                     
    Noninterest-bearing demand deposits   697,534         738,911         705,134    
    Other liabilities   63,348         49,815         60,407    
    Shareholders’ equity   274,228         266,409         238,287    
    Total liabilities and shareholders’ equity $ 3,074,785       $ 3,038,881       $ 2,759,695    
    Net spread   4.06 %     3.84 %     3.55 %
    NIM   4.55 %     4.41 %     4.16 %
    NIMTE*   4.61 %     4.47 %     4.22 %
    Cost of funds   1.52 %     1.59 %     1.53 %
    Average portfolio loans to average interest-earning assets   78.14 %       74.12 %       70.10 %  
    Average portfolio loans to average total deposits   80.49 %       76.71 %       73.59 %  
    Average non-interest deposits to average total deposits   25.83 %       27.43 %       28.93 %  
    Average interest-earning assets to average interest-bearing liabilities   136.36 %       140.52 %       145.71 %  
                                 

    Additional Financial Information
    (Dollars in thousands, except per share data)
    (Unaudited)

    Capital Data (At quarter end)          
      March 31, 2025   December 31, 2024   March 31, 2024
    Book value per share $ 50.67     $ 48.41     $ 43.52  
    Tangible book value per share* $ 41.47     $ 39.17     $ 40.61  
    Total shareholders’ equity/total assets   8.91 %     8.78 %     8.67 %
    Tangible Common Equity/Tangible Assets*   7.41 %     7.23 %     8.14 %
    Tier 1 Capital / Risk Adjusted Assets   9.76 %     9.76 %     11.55 %
    Total Capital / Risk Adjusted Assets   10.62 %     10.94 %     12.47 %
    Tier 1 Capital / Average Assets   8.02 %     7.68 %     9.01 %
    Shares outstanding   5,520,892       5,518,210       5,499,578  
    Total unrealized loss on AFS debt securities, net of income taxes $ (5,452 )   $ (8,295 )   $ (17,205 )
    Total unrealized gain on derivatives and hedging activities, net of income taxes $ 1,097     $ 1,272     $ 1,172  
                           
    Profitability Ratios                            
      March 31, 2025   December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024
    For the quarter:                            
    NIM 4.55 %   4.41 %   4.29 %   4.24 %   4.16 %
    NIMTE* 4.61 %   4.47 %   4.35 %   4.30 %   4.22 %
    Efficiency ratio 64.47 %   66.96 %   66.11 %   68.78 %   68.93 %
    Return on average assets 1.76 %   1.43 %   1.22 %   1.31 %   1.19 %
    Return on average equity 19.70 %   16.32 %   13.69 %   14.84 %   13.84 %

    *Non-GAAP Financial Measures
    (Dollars and shares in thousands, except per share data)
    (Unaudited)

    Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of the Company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP.

    Net interest margin on a tax equivalent basis

    Net interest margin on a tax equivalent basis (“NIMTE”) is a non-GAAP performance measurement in which interest income on non-taxable investments and loans is presented on a tax equivalent basis using a combined federal and state statutory rate of 28.43% in both 2025 and 2024. The most comparable GAAP measure is net interest margin and the following table sets forth the reconciliation of NIMTE to net interest margin for the periods indicated.

      Three Months Ended
      March 31, 2025   December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024
    Net interest income $ 31,297     $ 30,841     $ 28,842     $ 27,053     $ 26,447  
    Divided by average interest-bearing assets   2,781,370       2,787,517       2,674,291       2,568,266       2,558,558  
    Net interest margin (“NIM”)2   4.55 %     4.41 %     4.29 %     4.24 %     4.16 %
                       
    Net interest income $ 31,297     $ 30,841     $ 28,842     $ 27,053     $ 26,447  
    Plus: reduction in tax expense related to tax-exempt interest income   379       379       385       378       379  
      $ 31,676     $ 31,220     $ 29,227     $ 27,431     $ 26,826  
    Divided by average interest-bearing assets   2,781,370       2,787,517       2,674,291       2,568,266       2,558,558  
    NIMTE2   4.61 %     4.47 %     4.35 %     4.30 %     4.22 %
                                           

    2Calculated using actual days in the quarter divided by 365 for the quarters ended in 2025 and 366 for the quarters ended in 2024, respectively.

    *Non-GAAP Financial Measures
    (Dollars and shares in thousands, except per share data)
    (Unaudited)

    Tangible Book Value Per Share

    Tangible book value per share is a non-GAAP measure defined as shareholders’ equity, less intangible assets, divided by shares outstanding. The most comparable GAAP measure is book value per share and the following table sets forth the reconciliation of tangible book value per share and book value per share for the periods indicated.

      March 31, 2025   December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024
                       
    Total shareholders’ equity $ 279,756     $ 267,116     $ 260,050     $ 247,200     $ 239,327  
    Divided by shares outstanding   5,521       5,518       5,502       5,502       5,500  
    Book value per share $ 50.68     $ 48.41     $ 47.26     $ 44.93     $ 43.52  
                                           
      March 31, 2025   December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024
                       
    Total shareholders’ equity $ 279,756     $ 267,116     $ 260,050     $ 247,200     $ 239,327  
    Less: goodwill and intangible assets   50,824       50,968       15,967       15,967       15,967  
      $ 228,932     $ 216,148     $ 244,083     $ 231,233     $ 223,360  
    Divided by shares outstanding   5,521       5,518       5,502       5,502       5,500  
    Tangible book value per share $ 41.47     $ 39.17     $ 44.36     $ 42.03     $ 40.61  
                                           

    Tangible Common Equity to Tangible Assets

    Tangible common equity to tangible assets is a non-GAAP ratio that represents total equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets. The most comparable GAAP measure of shareholders’ equity to total assets is calculated by dividing total shareholders’ equity by total assets and the following table sets forth the reconciliation of tangible common equity to tangible assets and shareholders’ equity to total assets for the periods indicated.

    Northrim BanCorp, Inc. March 31, 2025   December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024
                       
    Total shareholders’ equity $ 279,756     $ 267,116     $ 260,050     $ 247,200     $ 239,327  
    Total assets   3,140,960       3,041,869       2,963,392       2,821,668       2,759,560  
    Total shareholders’ equity to total assets   8.91 %     8.78 %     8.78 %     8.76 %     8.67 %
    Northrim BanCorp, Inc. March 31, 2025   December 31, 2024   September 30, 2024   June 30, 2024   March 31, 2024
    Total shareholders’ equity $ 279,756     $ 267,116     $ 260,050     $ 247,200     $ 239,327  
    Less: goodwill and other intangible assets, net   50,824       50,968       15,967       15,967       15,967  
    Tangible common shareholders’ equity $ 228,932     $ 216,148     $ 244,083     $ 231,233     $ 223,360  
                       
    Total assets $ 3,140,960     $ 3,041,869     $ 2,963,392     $ 2,821,668     $ 2,759,560  
    Less: goodwill and other intangible assets, net   50,824       50,968       15,967       15,967       15,967  
    Tangible assets $ 3,090,136     $ 2,990,901     $ 2,947,425     $ 2,805,701     $ 2,743,593  
    Tangible common equity ratio   7.41 %     7.23 %     8.28 %     8.24 %     8.14 %
                                           
    Contact:     Mike Huston, President, CEO, and COO
    (907) 261-8750
    Jed Ballard, Chief Financial Officer
    (907) 261-3539
         

    Note Transmitted on GlobeNewswire on April 23, 2025, at 12:15 pm Alaska Standard Time.

    The MIL Network

  • MIL-OSI: Gouverneur Bancorp, Inc. Announces Fiscal 2025 Second Quarter and Six Months Results

    Source: GlobeNewswire (MIL-OSI)

    GOUVERNEUR, N.Y., April 23, 2025 (GLOBE NEWSWIRE) — Gouverneur Bancorp, Inc. (OTCQB: GOVB) (the “Company”), the holding company for Gouverneur Savings and Loan Association (the “Bank”), today announced the Company’s results for the second quarter and six months of fiscal year 2025, ended March 31, 2025.

    The Company reported net income of $118,000, or $0.11 per basic and diluted share, for the quarter ended March 31, 2025, compared to net income of $102,000, or $0.10 per basic and diluted share, for the quarter ended March 31, 2024. The Company also reported net income of $278,000, or $0.27 per basic and diluted share, for the six months ended March 31, 2025, compared to net income of $220,000, or $0.21 per basic and diluted share, for the six months ended March 31, 2024.

    Summary of Financial Results

    Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, consisting primarily of loans and securities, and the interest we pay on our interest-bearing liabilities, consisting of savings and club accounts, NOW and money market accounts and time certificates. Our results of operations also are affected by our provisions for credit losses, non-interest income and non-interest expense. Non-interest income currently consists primarily of service charges, earnings on bank owned life insurance and loan servicing fees. Non-interest expense currently consists primarily of salaries and employee benefits, directors’ fees, occupancy and data processing expense and professional fees. Our results of operations also may be affected significantly by other factors including, but not limited to, general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

    Total assets increased by $0.1 million or 0.06%, from $197.3 million at September 30, 2024 to $197.4 million at March 31, 2025. Securities available for sale decreased $2.5 million, or 5.59%, from $45.3 million as of September 30, 2024 to $42.8 million as of March 31, 2025 as the Bank received principal paydowns and maturities along with a decrease in the market value as market rates fluctuate. Net loans increased by $1.1 million or 0.91%, from September 30, 2024 to March 31, 2025. The Bank recorded no credit loss provisions for the three months ended March 31, 2025 and 2024. The Bank made a $15,000 provision for credit loss during the first six months of fiscal 2025, a decrease from the $70,000 provision made in the same period of fiscal 2024.

    Deposits increased $1.9 million or 1.20%, to $161.8 million at March 31, 2025 from $159.9 million at September 30, 2024 due to seasonal fluctuations. The Bank currently holds no Federal Home Loan Bank (FHLB) advances or brokered deposits.

    Shareholders’ equity was $31.4 million at March 31, 2025, representing a decrease of 4.30% from the September 30, 2024 balance of $32.8 million. The decrease in shareholders’ equity was primarily a result of a $1.0 million decrease to the market value of the securities portfolio included in accumulated other comprehensive loss, and the repurchase of common stock by the Company. The Company declared dividends of $0.08 per share totaling $89,000 during the six months ended March 31, 2025. The Company’s book value was $29.63 per common share based on 1,107,134 shares issued and 1,058,399 shares outstanding at March 31, 2025. The Company’s book value was $29.59 per common share based on 1,107,134 shares issued and outstanding at September 30, 2024.

    Total interest income decreased $8,000, or 0.37%, from $2.2 million for the quarter ended March 31, 2024 to $2.1 million for the quarter ended March 31, 2025 due to a decrease in interest on taxable and non-taxable securities, partially offset by an increase in loan income. For the six months ended March 31, 2025, total interest income increased $30,000, or 0.70%, from $4.2 million for the six months ended March 31, 2024 to $4.3 million. Interest income on loans increased $51,000, or 3.13%, from $1.6 million for the quarter ended March 31, 2024 to $1.7 million for the quarter ended March 31, 2025. For the six months ended March 31, 2025, interest income on loans increased $142,000, or 4.39%, from the same period in fiscal 2024 due to an increase in market rates resulting in higher interest rates on loan originations and repricing, along with a slight increase in loan volume.

    Total interest expense increased $53,000, or 15.73%, from $337,000 for the quarter ended March 31, 2024 to $390,000 for the quarter ended March 31, 2025. For the six months ended March 31, 2025, total interest expense increased $130,000, or 19.67%, from $661,000 for the six months ended March 31, 2024 to $791,000. Interest expense on deposits increased $98,000, from $292,000 for the quarter ended March 31, 2024 to $390,000 for the quarter ended March 31, 2025. For the six months ended March 31, 2025, interest expense on deposits increased $256,000, from $535,000 for the six months ended March 31, 2024 to $791,000. Interest expense on FHLB borrowings decreased $75,000 and $206,000 for the three and six months ended March 31, 2025, respectively, compared to the same periods in fiscal 2024 as the Bank currently holds no FHLB advances. The increase in total interest expense for the three- and six-month periods ended March 31, 2025 was due to the increase in interest on deposits, resulting from higher deposit rates from the respective prior year periods, and a decrease in income earned on swap agreements hedged against certain borrowings partially offset by a decrease in borrowing interest expense.

    Net interest margin, which represents net interest income as a percentage of average interest-earning assets, was 4.06% for the quarters ended March 31, 2025 and 2024, and 4.02% and 4.03% for the six months ended March 31, 2025 and 2024, respectively. While net interest income declined as a result of rising interest expense, net interest margin remained steady due to a slight decrease in average interest-earning assets.

    Non-interest income increased $12,000, from $196,000 for the quarter ended March 31, 2024 to $208,000 for the quarter ended March 31, 2025. For the six months ended March 31, 2025, non-interest income increased $109,000 to $452,000, from $343,000 for the six months ended March 31, 2024. This includes the unrealized market value loss on swap agreements held with FHLBNY of $9,000 and $181,000 for the six months ended March 31, 2025 and 2024, respectively. Other non-interest income increased $42,000 during the six months ended March 31, 2025 compared to the same period last year, primarily due to the recognition of additional income from a tax-related refund.

    Non-interest expense decreased $66,000, from $1.9 million for the quarter ended March 31, 2024 to $1.8 million for the quarter ended March 31, 2025. The decrease included a $41,000 decrease in salaries and employee benefits primarily due to staff retirements. For the six months ended March 31, 2025, non-interest expense decreased $11,000 compared to the same period in fiscal 2024. This included a decrease in salaries and employee benefits of $31,000 and a $43,000 decrease in earnings on the Bank’s deferred fees plan due to fluctuations in market rates. Data processing and occupancy expenses also decreased during the six months ended March 31, 2025. Other non-interest expense increased $156,000 during the six months ended March 31, 2025, primarily due to operational expenses related to the Company’s operations as a public company.

    Financial and Operational Metrics (GAAP) – The following information is preliminary and based on the Company’s data available at the time of presentation.

      03/31/2025   09/30/2024
      (In Thousands)
      (unaudited)    
    Statement of Condition      
    Assets      
    Cash and Cash Equivalents $ 7,873     $ 6,370  
    Securities Available-for-Sale   42,812       45,348  
    Loans Receivable, Net of Allowance for Credit      
    Losses and Deferred Loan Fees   125,385       124,257  
    Premises and Equipment, Net   2,891       2,924  
    Goodwill and Intangible Assets   5,716       5,901  
    Accrued Interest Receivable and Other Assets   12,694       12,460  
    Total Assets $ 197,371     $ 197,260  
           
    Liabilities and Shareholders’ Equity      
    Deposits $ 161,821     $ 159,902  
    Accrued Interest Payable and Other Liabilities   4,193       4,593  
    Total Liabilities   166,014       164,495  
           
    Common Stock (and related surplus)   6,507       6,498  
    Retained Earnings   28,602       28,413  
    Accumulated Other Comprehensive Loss   (2,653 )     (1,606 )
    Other Equity Capital Components   (1,099 )     (540 )
    Total Shareholders’ Equity   31,357       32,765  
    Total Liabilities and Shareholders’ Equity $ 197,371     $ 197,260  
     
      For the Quarter Ended   For the Six Months Ended
      03/31/2025   03/31/2024   03/31/2025   03/31/2024
      (In Thousands except per share data)
      (unaudited)
    Statement of Earnings              
    Interest Income $ 2,137     $ 2,145     $ 4,303     $ 4,273  
    Interest Expense   390       337       791       661  
    Net Interest Income   1,747       1,808       3,512       3,612  
                   
    Provision for Credit Loss               15       70  
    Net Interest Income After Provision for Credit Loss   1,747       1,808       3,497       3,542  
                   
    Non-interest Income   208       196       452       343  
    Non-interest Expenses   1,853       1,919       3,688       3,699  
                   
    Income Before Income Tax Benefit   102       85       261       186  
    Income Tax Benefit   (16 )     (17 )     (17 )     (34 )
    Net Income $ 118     $ 102     $ 278     $ 220  
                   
    Performance Ratios              
    Basic and Diluted Earnings per Share $ 0.11     $ 0.10     $ 0.27     $ 0.21  
    Annualized Return on Average Assets   0.24 %     0.20 %     0.28 %     0.21 %
    Annualized Return on Average Equity   1.52 %     1.29 %     1.74 %     1.48 %
    Net Interest Spread   3.87 %     3.92 %     3.83 %     3.88 %
    Net Interest Margin   4.06 %     4.06 %     4.02 %     4.03 %
     

    About Gouverneur Bancorp, Inc.

    Gouverneur Bancorp, Inc. is the holding company for Gouverneur Savings and Loan Association, which is a New York chartered savings and loan association founded in 1892 that offers deposit and loan services for businesses, families and individuals. At March 31, 2025, Gouverneur Bancorp, Inc. had total assets of $197.4 million, total deposits of $161.8 million and total stockholders’ equity of $31.4 million.

    Forward-Looking Statements

    This press release may contain forward-looking statements, which can be identified by the use of words such as “believes,” “expects,” “anticipates,” “estimates” or similar expressions. Such forward-looking statements and all other statements that are not historic facts are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. These factors include, among others, the following: changes in interest rates; national and regional economic conditions; legislative and regulatory changes; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the impacts of tariffs, sanctions and other trade policies of the United States and its global trading counterparts; the size, quality and composition of the loan or investment portfolios; demand for loan products; deposit flows and our ability to effectively manage liquidity; competition; demand for financial services in our market area; changes in real estate market values in our market area; changes in relevant accounting principles and guidelines; our ability to attract and retain key employees; our ability to maintain the security of our data processing and information technology systems; and that the Company may not be successful in the implementation of its business strategy. Additionally, other risks and uncertainties are described in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024 and other reports the Company files with the SEC, which are available through the SEC’s EDGAR website located at www.sec.gov. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Should one or more of these risks materialize, actual results may vary from those anticipated, estimated or projected.

    Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as may be required by applicable law or regulation, the Company and the Bank assume no obligation to update any forward-looking statements.

    For more information, contact Robert W. Barlow, President and Chief Executive Officer at (315) 287-2600.

    The MIL Network

  • MIL-OSI: Univest Financial Corporation Reports First Quarter Results

    Source: GlobeNewswire (MIL-OSI)

    SOUDERTON, Pa., April 23, 2025 (GLOBE NEWSWIRE) — Univest Financial Corporation (“Univest” or the “Corporation”) (NASDAQ: UVSP), parent company of Univest Bank and Trust Co. (the “Bank”) and its insurance, investments and equipment financing subsidiaries, announced net income for the quarter ended March 31, 2025 of $22.4 million, or $0.77 diluted earnings per share, compared to net income of $20.3 million, or $0.69 diluted earnings per share, for the quarter ended March 31, 2024.

    Dividend
    On April 23, 2025, Univest declared a quarterly cash dividend of $0.22 per share to be paid on May 21, 2025 to shareholders of record as of May 7, 2025, which represents an increase of $0.01 per share, or 4.8%. Univest had last increased its dividend by $0.01 per share in May 2022.

    One-Time Items
    The financial results for the quarter included tax-free bank owned life insurance (“BOLI”) death benefits claims of $1.0 million, which represented $0.04 diluted earnings per share.

    Loans
    Gross loans and leases increased $6.5 million, or 0.1% (0.4% annualized), from December 31, 2024. Gross loans and leases increased $254.0 million, or 3.9%, from March 31, 2024, primarily due to increases in commercial, commercial real estate, residential mortgage loans and home equity loans, partially offset by decreases in construction loans and lease financings.

    Deposits, Borrowings and Liquidity
    Total deposits decreased $100.8 million, or 1.5% (6.0% annualized), from December 31, 2024, primarily due to seasonal declines in public funds deposits and decreases in commercial and consumer deposits, partially offset by an increase in brokered deposits. Total deposits increased $253.1 million, or 4.0%, from March 31, 2024, due to increases in consumer, commercial, and public funds deposits, partially offset by a decrease in brokered deposits. Noninterest-bearing deposits totaled $1.4 billion and represented 21.5% of total deposits at March 31, 2025, compared to $1.4 billion representing 20.9% of total deposits at December 31, 2024. Unprotected deposits, which excludes insured, internal, and collateralized deposit accounts, totaled $1.5 billion at March 31, 2025 and December 31, 2024. This represented 21.9% of total deposits at March 31, 2025, compared to 22.0% at December 31, 2024.

    Total borrowings decreased $57.0 million, or 14.8%, from December 31, 2024, primarily due to maturities of long-term FHLB advances totaling $50.0 million. These borrowings were replaced with brokered deposits during the quarter.

    As of March 31, 2025, the Corporation and its subsidiaries reported cash and cash equivalents totaling $169.1 million and had committed borrowing capacity of $3.7 billion, of which $2.3 billion was available. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $468.0 million at March 31, 2025. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.

    Net Interest Income and Margin
    Net interest income of $56.8 million for the first quarter of 2025 increased $5.3 million, or 10.3%, from the first quarter of 2024 and $1.3 million, or 2.4%, from the fourth quarter of 2024. The increase in net interest income for the first quarter of 2025 compared to the first quarter of 2024 was driven by higher average balances of loans and increased yields on interest earning assets, as well as a reduction in our overall cost of funds. The increase in net interest income for the first quarter of 2025 compared to the fourth quarter of 2024 was primarily driven by lower average balances of interest-bearing liabilities and related costs outpacing decreases in income from interest-earning deposits with other banks.

    Net interest margin, on a tax-equivalent basis, was 3.09% for the first quarter of 2025, compared to 2.88% for the first and fourth quarters of 2024. Excess liquidity reduced net interest margin by approximately three basis points for the quarter ended March 31, 2025 compared to approximately 14 basis points for the quarter ended December 31, 2024 and approximately three basis points for the quarter ended March 31, 2024. Excluding the impact of excess liquidity, the net interest margin, on a tax-equivalent basis, would have been 3.12% for the quarter ended March 31, 2025 compared to 3.02% for the quarter ended December 31, 2024 and 2.91% for the quarter ended March 31, 2024.

    Noninterest Income
    Noninterest income for the quarter ended March 31, 2025 was $22.4 million, a decrease of $3.2 million, or 12.4%, from the comparable period in the prior year.

    Other service fee income decreased $3.7 million, or 57.8%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to a $3.4 million net gain from the sale of mortgage servicing rights associated with $591.1 million of serviced loans in the first quarter of 2024. Additionally, net servicing fees on sold mortgage loans decreased by $177 thousand, primarily attributable to the previously mentioned sale of mortgage servicing rights.

    Other income decreased $780 thousand, or 76.1%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to decreases in other real estate owned income, fees on risk participation agreements for interest rate swaps and gains on sale of Small Business Administration loans.

    Net gain on mortgage banking activities decreased $292 thousand, or 31.1%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to decreased salable volume.

    Insurance commission and fee income decreased $312 thousand, or 4.3%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to a decrease in contingent income of $700 thousand, which was $1.6 million and $2.3 million, for the three months ended March 31, 2025 and 2024, respectively. Contingent income is largely recognized in the first quarter of the year. The decrease was partially offset by an increase of $404 thousand in revenue for commercial lines.

    BOLI income increased $1.1 million, or 132.7%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to the previously discussed death benefits claims.

    Investment advisory commission and fee income increased $419 thousand, or 8.1%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to new customer relationships and appreciation of assets under management and supervision.

    Service charges on deposit accounts increased $323 thousand, or 17.3%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to an increase in treasury management income.

    Noninterest Expense
    Noninterest expense for the quarter ended March 31, 2025 was $49.3 million, a decrease of $746 thousand, or 1.5%, from the comparable period in the prior year.

    Salaries, benefits and commissions decreased $512 thousand, or 1.6%, for the quarter ended March 31, 2025 compared to the comparable period in the prior year, primarily due to an increase in compensation capitalized and a decrease in medical claims expense, partially offset by an increase in incentive compensation due to increased profitability.

    Tax Provision
    The effective income tax rate was 18.7% and 20.5% for the quarters ended March 31, 2025 and March 31, 2024, respectively. The discrete tax effect of vested equity compensation awards favorably impacted the first quarter of 2025 by 71 basis points and unfavorably impacted the first quarter of 2024 by 74 basis points. Additionally, the effective tax rate for the three months ended March 31, 2025 was favorably impacted by 76 basis points from the proceeds of BOLI death benefits. Excluding the discrete impact of vested equity compensation awards and BOLI death benefits, the effective tax rate was 20.2% for the three months ended March 31, 2025 compared to 19.8% for the three months ended March 31, 2024.

    Asset Quality and Provision for Credit Losses
    Nonperforming assets totaled $34.0 million at March 31, 2025, $33.2 million at December 31, 2024, and $40.0 million at March 31, 2024.

    Net loan and lease charge-offs were $1.7 million for the three months ended March 31, 2025 compared to $767 thousand and $1.4 million for the three months ended December 31, 2024 and March 31, 2024, respectively.

    The provision for credit losses was $2.3 million for the three months ended March 31, 2025 compared to $2.4 million and $1.4 million for the three months ended December 31, 2024 and March 31, 2024, respectively. The allowance for credit losses on loans and leases as a percentage of loans and leases held for investment was 1.28% at March 31, 2025 and December 31, 2024, and 1.30% at March 31, 2024.

    Share Repurchases
    During the quarter ended March 31, 2025, the Corporation repurchased 221,760 shares of common stock at an average price of $29.22 per share. Including brokerage fees and excise tax, the average price per share was $29.54. As of March 31, 2025, 1,178,394 shares are available for repurchase under the Share Repurchase Plan.

    Conference Call
    Univest will host a conference call to discuss first quarter 2025 results on Thursday, April 24, 2025 at 9:00 a.m. EST. Participants may preregister at https://www.netroadshow.com/events/login?show=175e015e&confId=80607. The general public can access the call by dialing 1-833-470-1428; using Access Code 021974. A replay of the conference call will be available through May 1, 2025 by dialing 1-866-813-9403; using Access Code 718470.

    About Univest Financial Corporation
    Univest Financial Corporation (UVSP), including its wholly-owned subsidiary Univest Bank and Trust Co., Member FDIC, has approximately $8.0 billion in assets and $5.2 billion in assets under management and supervision through its Wealth Management lines of business at March 31, 2025. Headquartered in Souderton, Pa. and founded in 1876, the Corporation and its subsidiaries provide a full range of financial solutions for individuals, businesses, municipalities and nonprofit organizations primarily in the Mid-Atlantic Region. Univest delivers these services through a network of more than 50 offices and online at www.univest.net.  

    This press release and the reports Univest files with the Securities and Exchange Commission often contain “forward-looking statements” relating to trends or factors affecting the financial services industry and, specifically, the financial condition and results of operations, business, prospects and strategies of Univest. These forward-looking statements involve certain risks and uncertainties in that there are a number of important factors that could cause Univest’s future financial condition, results of operations, business, prospects or strategies to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to: (1) competition and demand for financial services in our market area; (2) inflation and/or changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and/or lead to higher operating costs and higher costs we pay to retain and attract deposits; (3) changes in asset quality, prepayment speeds, loan sale volumes, charge-offs and/or credit loss provisions; (4) fluctuations in real estate values and both residential and commercial real estate market conditions; (5) changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio; (6) our ability to access cost-effective funding; (7) changes in economic conditions nationally and in our market, including potential recessionary conditions and the levels of unemployment in our market area; (8) changes in the economic assumptions or methodology used to calculate our allowance for credit losses; (9) legislative, regulatory, accounting or tax changes; (10) monetary and fiscal policies of the U.S. government, including the policies of the Board of Governors of the Federal Reserve System; (11) the imposition of tariffs or other domestic or international governmental policies; (12) the failure to maintain current technologies and to successfully implement future information technology enhancements; (13) technological issues that may adversely affect our operations or those of our customers; (14) a failure or breach in our operational or security systems or infrastructure, including cyberattacks; (15) changes in the securities markets; (16) the current or anticipated impact of military conflict, terrorism or other geopolitical events; (17) our ability to enter into new markets successfully and capitalize on growth opportunities and/or (18) risk factors mentioned in the reports and registration statements Univest files with the Securities and Exchange Commission.

     

    (UVSP – ER)

     
    Univest Financial Corporation
    Consolidated Selected Financial Data (Unaudited)
    March 31, 2025
    (Dollars in thousands)                  
                       
    Balance Sheet (Period End) 03/31/25   12/31/24   09/30/24   06/30/24   03/31/24
    ASSETS                  
    Cash and due from banks $ 73,319     $ 75,998     $ 78,346     $ 66,808     $ 49,318  
    Interest-earning deposits with other banks   95,815       252,846       426,354       124,103       152,288  
    Cash and cash equivalents   169,134       328,844       504,700       190,911       201,606  
    Investment securities held-to-maturity   130,889       134,111       137,681       140,112       143,474  
    Investment securities available for sale, net of allowance for credit losses   364,503       357,361       354,100       342,776       350,819  
    Investments in equity securities   1,667       2,506       2,406       2,995       3,355  
    Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost   35,732       38,980       40,235       37,438       37,394  
    Loans held for sale   13,150       16,653       17,131       28,176       13,188  
    Loans and leases held for investment   6,833,037       6,826,583       6,730,734       6,684,837       6,579,086  
    Less: Allowance for credit losses, loans and leases   (87,790 )     (87,091 )     (86,041 )     (85,745 )     (85,632 )
    Net loans and leases held for investment   6,745,247       6,739,492       6,644,693       6,599,092       6,493,454  
    Premises and equipment, net   47,175       46,671       47,411       48,174       48,739  
    Operating lease right-of-use assets   27,182       28,531       29,260       29,985       30,702  
    Goodwill   175,510       175,510       175,510       175,510       175,510  
    Other intangibles, net of accumulated amortization   8,061       8,309       7,158       7,701       7,473  
    Bank owned life insurance   139,482       139,351       138,744       137,823       137,896  
    Accrued interest and other assets   117,435       112,098       106,708       114,753       102,958  
    Total assets $ 7,975,167     $ 8,128,417     $ 8,205,737     $ 7,855,446     $ 7,746,568  
                       
    LIABILITIES                  
    Noninterest-bearing deposits $ 1,433,995     $ 1,414,635     $ 1,323,953     $ 1,397,308     $ 1,401,806  
    Interest-bearing deposits:   5,224,503       5,344,624       5,530,195       5,098,014       5,003,552  
    Total deposits   6,658,498       6,759,259       6,854,148       6,495,322       6,405,358  
    Short-term borrowings   4,031       11,181       8,256       11,781       4,816  
    Long-term debt   175,000       225,000       225,000       250,000       250,000  
    Subordinated notes   149,386       149,261       149,136       149,011       148,886  
    Operating lease liabilities   30,062       31,485       32,246       33,015       33,744  
    Accrued expenses and other liabilities   54,718       64,930       59,880       62,180       60,095  
    Total liabilities   7,071,695       7,241,116       7,328,666       7,001,309       6,902,899  
                       
    SHAREHOLDERS’ EQUITY                  
    Common stock, $5 par value: 48,000,000 shares authorized and 31,556,799 shares issued   157,784       157,784       157,784       157,784       157,784  
    Additional paid-in capital   300,634       302,829       301,262       300,166       298,914  
    Retained earnings   541,776       525,780       512,938       500,482       488,790  
    Accumulated other comprehensive loss, net of tax benefit   (37,922 )     (43,992 )     (41,623 )     (54,124 )     (54,740 )
    Treasury stock, at cost   (58,800 )     (55,100 )     (53,290 )     (50,171 )     (47,079 )
    Total shareholders’ equity   903,472       887,301       877,071       854,137       843,669  
    Total liabilities and shareholders’ equity $ 7,975,167     $ 8,128,417     $ 8,205,737     $ 7,855,446     $ 7,746,568  
                       
                       
      For the three months ended,
    Balance Sheet (Average) 03/31/25   12/31/24   06/30/24   03/31/24   12/31/23
    Assets $ 7,981,043     $ 8,163,347     $ 8,005,265     $ 7,721,540     $ 7,696,575  
    Investment securities, net of allowance for credit losses   500,078       500,748       493,334       493,140       500,983  
    Loans and leases, gross   6,856,503       6,758,649       6,730,791       6,640,536       6,577,365  
    Deposits   6,617,653       6,804,483       6,641,324       6,353,752       6,303,854  
    Shareholders’ equity   896,811       880,237       864,406       844,572       842,546  
                                           
    Univest Financial Corporation
    Consolidated Summary of Loans by Type and Asset Quality Data (Unaudited)
    March 31, 2025
    (Dollars in thousands)                  
                       
    Summary of Major Loan and Lease Categories (Period End) 03/31/25   12/31/24   09/30/24   06/30/24   03/31/24
    Commercial, financial and agricultural $ 1,034,361     $ 1,037,835     $ 1,044,043     $ 1,055,332     $ 1,014,568  
    Real estate-commercial   3,546,402       3,530,451       3,442,083       3,373,889       3,283,729  
    Real estate-construction   281,785       274,483       285,616       313,229       379,995  
    Real estate-residential secured for business purpose   536,082       536,095       530,674       532,628       524,196  
    Real estate-residential secured for personal purpose   992,767       994,972       969,562       952,665       922,412  
    Real estate-home equity secured for personal purpose   189,119       186,836       182,901       179,150       177,446  
    Loans to individuals   16,930       21,250       26,794       26,430       27,200  
    Lease financings   235,591       244,661       249,061       251,514       249,540  
    Total loans and leases held for investment, net of deferred income   6,833,037       6,826,583       6,730,734       6,684,837       6,579,086  
    Less: Allowance for credit losses, loans and leases   (87,790 )     (87,091 )     (86,041 )     (85,745 )     (85,632 )
    Net loans and leases held for investment $ 6,745,247     $ 6,739,492     $ 6,644,693     $ 6,599,092     $ 6,493,454  
                       
                       
    Asset Quality Data (Period End) 03/31/25   12/31/24   09/30/24   06/30/24   03/31/24
    Nonaccrual loans and leases, including nonaccrual loans held for sale $ 11,126     $ 12,667     $ 15,319     $ 16,200     $ 20,363  
    Accruing loans and leases 90 days or more past due   322       321       310       205       268  
    Total nonperforming loans and leases   11,448       12,988       15,629       16,405       20,631  
    Other real estate owned   22,433       20,141       20,915       20,007       19,220  
    Repossessed assets   79       76       79       149       167  
    Total nonperforming assets $ 33,960     $ 33,205     $ 36,623     $ 36,561     $ 40,018  
    Nonaccrual loans and leases / Loans and leases held for investment   0.16 %     0.19 %     0.23 %     0.24 %     0.31 %
    Nonperforming loans and leases / Loans and leases held for investment   0.17 %     0.19 %     0.23 %     0.25 %     0.31 %
    Nonperforming assets / Total assets   0.43 %     0.41 %     0.45 %     0.47 %     0.52 %
                       
    Allowance for credit losses, loans and leases $ 87,790     $ 87,091     $ 86,041     $ 85,745     $ 85,632  
    Allowance for credit losses, loans and leases / Loans and leases held for investment   1.28 %     1.28 %     1.28 %     1.28 %     1.30 %
    Allowance for credit losses, loans and leases / Nonaccrual loans and leases   789.05 %     687.54 %     561.66 %     529.29 %     420.53 %
    Allowance for credit losses, loans and leases / Nonperforming loans and leases   766.86 %     670.55 %     550.52 %     522.68 %     415.06 %
                       
                       
      For the three months ended,
      03/31/25   12/31/24   09/30/24   06/30/24   03/31/24
    Net loan and lease charge-offs $ 1,686     $ 767     $ 820     $ 809     $ 1,406  
    Net loan and lease charge-offs (annualized)/Average loans and leases   0.10 %     0.05 %     0.05 %     0.05 %     0.09 %
                       
    Univest Financial Corporation
    Consolidated Selected Financial Data (Unaudited)
    March 31, 2025
    (Dollars in thousands, except per share data)                  
      For the three months ended,
    For the period: 03/31/25   12/31/24   09/30/24   06/30/24   03/31/24
    Interest income $ 103,416   $ 107,476   $ 106,438   $ 99,832   $ 98,609
    Interest expense   46,635     52,004     53,234     48,805     47,142
    Net interest income   56,781     55,472     53,204     51,027     51,467
    Provision for credit losses   2,311     2,380     1,414     707     1,432
    Net interest income after provision for credit losses   54,470     53,092     51,790     50,320     50,035
    Noninterest income:                  
    Trust fee income   2,161     2,265     2,110     2,008     2,108
    Service charges on deposit accounts   2,194     2,192     2,037     1,982     1,871
    Investment advisory commission and fee income   5,613     5,457     5,319     5,238     5,194
    Insurance commission and fee income   6,889     4,743     5,238     5,167     7,201
    Other service fee income   2,707     3,473     1,815     3,044     6,415
    Bank owned life insurance income   1,959     1,012     921     1,086     842
    Net gain on sales of investment securities           18        
    Net gain on mortgage banking activities   647     1,320     1,296     1,710     939
    Other income   245     868     1,396     745     1,025
    Total noninterest income   22,415     21,330     20,150     20,980     25,595
    Noninterest expense:                  
    Salaries, benefits and commissions   30,826     31,518     30,702     30,187     31,338
    Net occupancy   2,853     2,751     2,723     2,679     2,872
    Equipment   1,122     1,147     1,107     1,088     1,111
    Data processing   4,364     4,146     4,154     4,161     4,495
    Professional fees   1,797     1,669     1,579     1,466     1,688
    Marketing and advertising   353     552     490     715     416
    Deposit insurance premiums   1,151     1,102     1,097     1,098     1,135
    Intangible expenses   130     155     164     188     187
    Other expense   6,732     7,618     6,536     7,126     6,832
    Total noninterest expense   49,328     50,658     48,552     48,708     50,074
    Income before taxes   27,557     23,764     23,388     22,592     25,556
    Income tax expense   5,162     4,823     4,810     4,485     5,251
    Net income $ 22,395   $ 18,941   $ 18,578   $ 18,107   $ 20,305
    Net income per share:                  
    Basic $ 0.77   $ 0.65   $ 0.64   $ 0.62   $ 0.69
    Diluted $ 0.77   $ 0.65   $ 0.63   $ 0.62   $ 0.69
    Dividends declared per share $ 0.21   $ 0.21   $ 0.21   $ 0.21   $ 0.21
    Weighted average shares outstanding   29,000,567     29,070,039     29,132,948     29,246,977     29,413,999
    Period end shares outstanding   28,962,648     29,045,877     29,081,108     29,190,640     29,337,919
                       
    Univest Financial Corporation
    Consolidated Selected Financial Data (Unaudited)
    March 31, 2025
                       
                       
                       
      For the three months ended,
    Profitability Ratios (annualized) 03/31/25   12/31/24   09/30/24   06/30/24   03/31/24
                       
    Return on average assets   1.14 %     0.92 %     0.92 %     0.94 %     1.06 %
    Return on average shareholders’ equity   10.13 %     8.56 %     8.55 %     8.62 %     9.69 %
    Return on average tangible common equity (1)(3)   12.69 %     10.79 %     10.84 %     11.01 %     12.38 %
    Net interest margin (FTE)   3.09 %     2.88 %     2.82 %     2.84 %     2.88 %
    Efficiency ratio (2)   61.6 %     65.5 %     65.7 %     67.1 %     64.6 %
                       
    Capitalization Ratios                  
                       
    Dividends declared to net income   27.2 %     32.2 %     33.0 %     33.9 %     30.5 %
    Shareholders’ equity to assets (Period End)   11.33 %     10.92 %     10.69 %     10.87 %     10.89 %
    Tangible common equity to tangible assets (1)   9.31 %     8.92 %     8.71 %     8.81 %     8.80 %
    Common equity book value per share $ 31.19     $ 30.55     $ 30.16     $ 29.26     $ 28.76  
    Tangible common equity book value per share (1) $ 25.06     $ 24.43     $ 24.05     $ 23.17     $ 22.70  
                       
    Regulatory Capital Ratios (Period End)                  
    Tier 1 leverage ratio   9.80 %     9.51 %     9.53 %     9.74 %     9.65 %
    Common equity tier 1 risk-based capital ratio   10.97 %     10.85 %     10.88 %     10.72 %     10.71 %
    Tier 1 risk-based capital ratio   10.97 %     10.85 %     10.88 %     10.72 %     10.71 %
    Total risk-based capital ratio   14.35 %     14.19 %     14.27 %     14.09 %     14.11 %
                       
    (1) Non-GAAP metric. A reconciliation of this and other non-GAAP to GAAP performance measures is included below.        
    (2) Noninterest expense to net interest income before loan loss provision plus noninterest income adjusted for tax equivalent income.    
    (3) Net income before amortization of intangibles to average tangible common equity.                
                       
    Univest Financial Corporation  
    Average Balances and Interest Rates (Unaudited)  
        For the Three Months Ended,      
    Tax Equivalent Basis March 31, 2025   December 31, 2024  
      Average Income/ Average   Average Income/ Average  
    (Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
    Assets:                
    Interest-earning deposits with other banks $ 119,997   $ 1,360 4.60 % $ 402,753   $ 4,852 4.79 %
    Obligations of state and political subdivisions*   879     4 1.85     1,290     7 2.16  
    Other debt and equity securities   499,199     4,019 3.27     499,458     3,815 3.04  
    Federal Home Loan Bank, Federal Reserve Bank and other stock   37,561     687 7.42     39,407     746 7.53  
    Total interest-earning deposits, investments and other interest-earning assets   657,636     6,070 3.74     942,908     9,420 3.97  
                     
    Commercial, financial, and agricultural loans   990,860     17,020 6.97     972,840     17,492 7.15  
    Real estate—commercial and construction loans   3,704,232     52,676 5.77     3,631,142     53,163 5.82  
    Real estate—residential loans   1,729,146     21,542 5.05     1,708,795     21,249 4.95  
    Loans to individuals   19,438     393 8.20     25,803     522 8.05  
    Tax-exempt loans and leases   230,133     2,861 5.04     233,036     2,652 4.53  
    Lease financings   182,694     3,240 7.19     187,033     3,296 7.01  
    Gross loans and leases   6,856,503     97,732 5.78     6,758,649     98,374 5.79  
    Total interest-earning assets   7,514,139     103,802 5.60     7,701,557     107,794 5.57  
    Cash and due from banks   56,690           56,989        
    Allowance for credit losses, loans and leases   (87,822 )         (86,812 )      
    Premises and equipment, net   46,852           47,155        
    Operating lease right-of-use assets   27,761           28,891        
    Other assets   423,423           415,567        
    Total assets $ 7,981,043         $ 8,163,347        
                     
    Liabilities:                
    Interest-bearing checking deposits $ 1,222,012   $ 7,075 2.35 % $ 1,275,348   $ 8,504 2.65 %
    Money market savings   1,840,194     18,035 3.97     1,954,246     20,653 4.20  
    Regular savings   702,543     763 0.44     705,222     817 0.46  
    Time deposits   1,476,495     16,106 4.42     1,499,998     17,247 4.57  
    Total time and interest-bearing deposits   5,241,244     41,979 3.25     5,434,814     47,221 3.46  
                     
    Short-term borrowings   6,909     14 0.82     7,102     1 0.06  
    Long-term debt   217,500     2,361 4.40     225,000     2,501 4.42  
    Subordinated notes   149,319     2,281 6.20     149,194     2,281 6.08  
    Total borrowings   373,728     4,656 5.05     381,296     4,783 4.99  
    Total interest-bearing liabilities   5,614,972     46,635 3.37     5,816,110     52,004 3.56  
    Noninterest-bearing deposits   1,376,409           1,369,669        
    Operating lease liabilities   30,675           31,864        
    Accrued expenses and other liabilities   62,176           65,467        
    Total liabilities   7,084,232           7,283,110        
    Total interest-bearing liabilities and noninterest-bearing deposits (“Cost of Funds”)   6,991,381     2.71     7,185,779     2.88  
                     
    Shareholders’ Equity:                
    Common stock   157,784           157,784        
    Additional paid-in capital   302,653           301,895        
    Retained earnings and other equity   436,374           420,558        
    Total shareholders’ equity   896,811           880,237        
    Total liabilities and shareholders’ equity $ 7,981,043         $ 8,163,347        
    Net interest income   $ 57,167       $ 55,790    
                     
    Net interest spread     2.23       2.01  
    Effect of net interest-free funding sources     0.86       0.87  
    Net interest margin     3.09 %     2.88 %
    Ratio of average interest-earning assets to average interest-bearing liabilities   133.82 %         132.42 %      
                     
    * Obligations of states and political subdivisions are tax-exempt earning assets.          
    Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
    Net interest income includes net deferred costs amortization of $554 thousand and $676 thousand for the three months ended March 31,
    2025 and December 31, 2024, respectively.              
    Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included  
    in the average loan balances. Tax-equivalent amounts for the three months ended March 31, 2025 and December 31, 2024 have  
    been calculated using the Corporation’s federal applicable rate of 21.0%.          
                     
    Univest Financial Corporation  
    Average Balances and Interest Rates (Unaudited)  
       For the Three Months Ended March 31,    
    Tax Equivalent Basis 2025   2024  
      Average Income/ Average   Average Income/ Average  
    (Dollars in thousands) Balance Expense Rate   Balance Expense Rate  
    Assets:                
    Interest-earning deposits with other banks $ 119,997   $ 1,360 4.60 % $ 120,845   $ 1,609 5.36 %
    Obligations of state and political subdivisions*   879     4 1.85     1,951     12 2.47  
    Other debt and equity securities   499,199     4,019 3.27     499,032     3,647 2.94  
    Federal Home Loan Bank, Federal Reserve Bank and other stock   37,561     687 7.42     39,115     724 7.44  
    Total interest-earning deposits, investments and other interest-earning assets   657,636     6,070 3.74     660,943     5,992 3.65  
                     
    Commercial, financial, and agricultural loans   990,860     17,020 6.97     934,649     16,523 7.11  
    Real estate—commercial and construction loans   3,704,232     52,676 5.77     3,575,142     50,641 5.70  
    Real estate—residential loans   1,729,146     21,542 5.05     1,618,188     19,555 4.86  
    Loans to individuals   19,438     393 8.20     27,315     548 8.07  
    Tax-exempt loans and leases   230,133     2,861 5.04     232,380     2,464 4.26  
    Lease financings   182,694     3,240 7.19     189,691     3,169 6.72  
    Gross loans and leases   6,856,503     97,732 5.78     6,577,365     92,900 5.68  
    Total interest-earning assets   7,514,139     103,802 5.60     7,238,308     98,892 5.49  
    Cash and due from banks   56,690           54,870        
    Allowance for credit losses, loans and leases   (87,822 )         (86,495 )      
    Premises and equipment, net   46,852           50,592        
    Operating lease right-of-use assets   27,761           31,121        
    Other assets   423,423           408,179        
    Total assets $ 7,981,043         $ 7,696,575        
                     
    Liabilities:                
    Interest-bearing checking deposits $ 1,222,012   $ 7,075 2.35 % $ 1,180,696   $ 8,218 2.80 %
    Money market savings   1,840,194     18,035 3.97     1,705,291     19,220 4.53  
    Regular savings   702,543     763 0.44     769,926     905 0.47  
    Time deposits   1,476,495     16,106 4.42     1,238,878     13,630 4.42  
    Total time and interest-bearing deposits   5,241,244     41,979 3.25     4,894,791     41,973 3.45  
                     
    Short-term borrowings   6,909     14 0.82     10,127     5 0.20  
    Long-term debt   217,500     2,361 4.40     292,486     2,883 3.96  
    Subordinated notes   149,319     2,281 6.20     148,818     2,281 6.16  
    Total borrowings   373,728     4,656 5.05     451,431     5,169 4.61  
    Total interest-bearing liabilities   5,614,972     46,635 3.37     5,346,222     47,142 3.55  
    Noninterest-bearing deposits   1,376,409           1,409,063        
    Operating lease liabilities   30,675           34,166        
    Accrued expenses and other liabilities   62,176           64,578        
    Total liabilities   7,084,232           6,854,029        
    Total interest-bearing liabilities and noninterest-bearing deposits (“Cost of Funds”)   6,991,381     2.71     6,755,285     2.81  
                     
    Shareholders’ Equity:                
    Common stock   157,784           157,784        
    Additional paid-in capital   302,653           300,679        
    Retained earnings and other equity   436,374           384,083        
    Total shareholders’ equity   896,811           842,546        
    Total liabilities and shareholders’ equity $ 7,981,043         $ 7,696,575        
    Net interest income   $ 57,167       $ 51,750    
                     
    Net interest spread     2.23       1.94  
    Effect of net interest-free funding sources     0.86       0.94  
    Net interest margin     3.09 %     2.88 %
    Ratio of average interest-earning assets to average interest-bearing liabilities   133.82 %         135.39 %      
                     
    * Obligations of states and political subdivisions are tax-exempt earning assets.          
    Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
    Net interest income includes net deferred costs amortization of $554 thousand and $453 thousand for the three months ended
    March 31, 2025 and 2024, respectively.
    Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included
    in the average loan balances. Tax-equivalent amounts for the three months ended March 31, 2025 and 2024 have been
    calculated using the Corporation’s federal applicable rate of 21.0%.
                     
    Univest Financial Corporation
    Loan Portfolio Overview (Unaudited)
    March 31, 2025
             
    (Dollars in thousands)        
    Industry Description Total Outstanding Balance   % of Commercial Loan Portfolio  
    CRE – Retail $ 469,397   8.7 %
    Animal Production   394,279   7.3  
    CRE – Multi-family   360,743   6.7  
    CRE – Office   299,751   5.6  
    CRE – 1-4 Family Residential Investment   278,386   5.2  
    CRE – Industrial / Warehouse   253,136   4.7  
    Hotels & Motels (Accommodation)   207,710   3.8  
    Specialty Trade Contractors   189,427   3.5  
    Nursing and Residential Care Facilities   177,053   3.3  
    Motor Vehicle and Parts Dealers   146,911   2.7  
    Merchant Wholesalers, Durable Goods   146,037   2.7  
    Homebuilding (tract developers, remodelers)   140,612   2.6  
    Repair and Maintenance   134,183   2.5  
    Crop Production   110,882   2.1  
    CRE – Mixed-Use – Residential   109,872   2.0  
    Wood Product Manufacturing   101,606   1.9  
    Professional, Scientific, and Technical Services   95,730   1.8  
    Food Services and Drinking Places   86,916   1.6  
    Administrative and Support Services   83,145   1.5  
    Merchant Wholesalers, Nondurable Goods   83,088   1.5  
    Fabricated Metal Product Manufacturing   78,181   1.4  
    Real Estate Lenders, Secondary Market Financing   75,461   1.4  
    Religious Organizations, Advocacy Groups   65,857   1.2  
    CRE – Mixed-Use – Commercial   64,683   1.2  
    Miniwarehouse / Self-Storage   64,553   1.2  
    Personal and Laundry Services   64,508   1.2  
    Education   62,362   1.2  
    Amusement, Gambling, and Recreation Industries   61,437   1.1  
    Food Manufacturing   56,400   1.0  
    Industries with >$50 million in outstandings $ 4,462,306   82.7 %
    Industries with <$50 million in outstandings $ 936,324   17.3 %
    Total Commercial Loans $ 5,398,630   100.0 %
             
             
    Consumer Loans and Lease Financings Total Outstanding Balance      
    Real Estate-Residential Secured for Personal Purpose   992,767      
    Real Estate-Home Equity Secured for Personal Purpose   189,119      
    Loans to Individuals   16,930      
    Lease Financings   235,591      
    Total – Consumer Loans and Lease Financings $ 1,434,407      
    Total $ 6,833,037      
             
    Univest Financial Corporation
    Non-GAAP Reconciliation
    March 31, 2025
                             
     
     
    Non-GAAP to GAAP Reconciliation
    Management uses non-GAAP measures in its analysis of the Corporation’s performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of the Corporation. See the table below for additional information on non-GAAP measures used throughout this earnings release.
                             
            As of or for the three months ended,
    (Dollars in thousands) 03/31/25   12/31/24   09/30/24   06/30/24   03/31/24
    Net income $ 22,395     $ 18,941     $ 18,578     $ 18,107     $ 20,305  
    Amortization of intangibles, net of tax   103       122       130       149       148  
    Net income before amortization of intangibles $ 22,498     $ 19,063     $ 18,708     $ 18,256     $ 20,453  
                             
    Shareholders’ equity $ 903,472     $ 887,301     $ 877,071     $ 854,137     $ 843,669  
    Goodwill   (175,510 )     (175,510 )     (175,510 )     (175,510 )     (175,510 )
    Other intangibles (a)     (2,104 )     (2,263 )     (2,147 )     (2,157 )     (2,273 )
    Tangible common equity $ 725,858     $ 709,528     $ 699,414     $ 676,470     $ 665,886  
                             
    Total assets $ 7,975,167     $ 8,128,417     $ 8,205,737     $ 7,855,446     $ 7,746,568  
    Goodwill   (175,510 )     (175,510 )     (175,510 )     (175,510 )     (175,510 )
    Other intangibles (a)     (2,104 )     (2,263 )     (2,147 )     (2,157 )     (2,273 )
    Tangible assets $ 7,797,553     $ 7,950,644     $ 8,028,080     $ 7,677,779     $ 7,568,785  
                             
    Average shareholders’ equity $ 896,811     $ 880,237     $ 864,406     $ 844,572     $ 842,546  
    Average goodwill   (175,510 )     (175,510 )     (175,510 )     (175,510 )     (175,510 )
    Average other intangibles (a)     (2,162 )     (2,146 )     (2,086 )     (2,222 )     (2,318 )
    Average tangible common equity $ 719,139     $ 702,581     $ 686,810     $ 666,840     $ 664,718  
                             
    (a) Amount does not include mortgage servicing rights                  
                             

    The MIL Network

  • MIL-OSI: Eagle Bancorp, Inc. Announces First Quarter 2025 Results and Cash Dividend

    Source: GlobeNewswire (MIL-OSI)

    BETHESDA, Md., April 23, 2025 (GLOBE NEWSWIRE) — Eagle Bancorp, Inc. (“Eagle”, the “Company”) (NASDAQ: EGBN), the Bethesda-based holding company for EagleBank, one of the largest community banks in the Washington D.C. area, reported its unaudited results for the first quarter ended March 31, 2025.

    Eagle reported net income of $1.7 million or $0.06 per diluted share for the first quarter 2025, compared to net income of $15.3 million or $0.50 per diluted share during the fourth quarter. Pre-provision net revenue (“PPNR”)1 in the first quarter was $28.4 million compared to $30.3 million for the prior quarter.

    The $13.6 million decrease in net income from the prior quarter is primarily due to a $14.1 million increase in provision expense, a $5.1 million decline in net interest income, and a $0.9 million increase in noninterest expenses. These factors were partially offset by a $4.1 million increase in noninterest income.

    Additionally, the Company is announcing today a cash dividend in the amount of $0.165 per share. The cash dividend will be payable on May 16, 2025 to shareholders of record on May 5, 2025.

    “In the first quarter, we began to see tangible results from our strategic focus,” said Susan G. Riel, Chair, President, and Chief Executive Officer of the Company. “We achieved solid period-end growth in our C&I portfolio, which increased by $109 million, or 4.3%, and total deposits grew by $146.2 million, or 1.6%. Both increases reflect the continued emphasis we’ve placed on these core areas of our business. We are encouraged by this early progress, and we remain focused on executing our strategy and positioning the Company to return to sustained profitability as we navigate this environment.”

    Eric R. Newell, Chief Financial Officer of the Company said, “We grew deposits across both digital and branch channels in the first quarter, though a continued shift from noninterest bearing to interest bearing accounts pressured net interest margin. Valuation risk in our office portfolio remains a concern and was the primary driver of the provision for credit losses. The credit loss reserve coverage rose to 1.63% of total loans, up 19 basis points from last quarter. Our capital position remains strong, with common equity tier one capital at 14.6% and our tangible common equity1 ratio exceeding 10%. We will continue to evaluate capital allocation decisions, in alignment with long-term franchise value and our objective of capital accretion.”

    Ms. Riel added, “I want to thank all our employees for their continued dedication and for helping to cultivate a culture grounded in respect, collaboration, and service — both within our organization and across the communities we serve.”

    First Quarter 2025 Key Elements

    • The Company announces today the declaration of a common stock dividend of $0.165 per share.
    • The ACL as a percentage of total loans was 1.63% at quarter-end; up from 1.44% at the prior quarter-end. Performing office coverage2 was 5.78% at quarter-end; as compared to 3.81% at the prior quarter-end.
    • Nonperforming assets decreased $8.5 million to $202.9 million as of March 31, 2025 and were 1.79% of total assets compared to 1.90% as of December 31, 2024. Inflows to non-performing loans in the quarter totaled $4.6 million offset by a reduction of $12.9 million. The reduction was predominantly associated with the $11.2 million nonperforming loans that were charged off during the quarter.
    • Substandard loans increased $75.2 million to $501.6 million primarily reflecting continued stress within the office loan portfolio. Special mention loans increased $28.6 million to $273.4 million at March 31, 2025 as we proactively identified credits showing signs of potential weakness. These increases reflect our conservative credit risk management approach and the ongoing impact of the uncertain operating environment in the Washington DC metro area.
    • Annualized quarterly net charge-offs for the first quarter were 0.57% compared to 0.48% for the fourth quarter 2024.
    • The net interest margin (“NIM”) decreased to 2.28% for the first quarter 2025, compared to 2.29% for the prior quarter, primarily due to an increase in the average mix of interest-bearing deposits versus noninterest bearing deposits in the first quarter versus the fourth quarter.
    • At quarter-end, the common equity ratio, tangible common equity ratio1, and common equity tier 1 capital (to risk-weighted assets) ratio were 11.00%, 11.00%, and 14.61%, respectively.
    • Total estimated insured deposits decreased at quarter-end to $6.9 billion, or 74.7% of deposits, compared to $7.0 billion, or 76.4% of deposits from the fourth quarter.
    • Total on-balance sheet liquidity and available capacity was $4.8 billion, up $244.9 million from the prior quarter.

    Income Statement

    • Net interest income was $65.6 million for the first quarter 2025, compared to $70.8 million for the prior quarter. The decrease in net interest income was primarily driven by two fewer days in the quarter, lower average interest bearing cash balances, lower rates on loans, and a higher average mix of interest bearing deposits. Both interest income and interest expense declined due to lower rates.
    • Provision for credit losses was $26.3 million for the first quarter 2025, compared to $12.1 million for the prior quarter. The increase in the provision for the quarter is attributed predominately to the replenishment of the reserve following net charge-offs of $11.2 million and an increase in the qualitative overlay. The increase in the overlay relates to updated assumptions associated with the probability of default and probability of loss associated with commercial real estate office loans. Reserve for unfunded commitments was a reversal of $0.3 million due primarily to lower unfunded commitments in our construction portfolio. This compared to a reversal for unfunded commitments in the prior quarter of $1.6 million.
    • Noninterest income was $8.2 million for the first quarter 2025, compared to $4.1 million for the prior quarter. The primary driver for the increase was an increase in income associated with a $200 million separate account BOLI transaction that was entered into in the first quarter.
    • Noninterest expense was $45.5 million for the first quarter 2025, compared to $44.5 million for the prior quarter. The increase over the comparative quarters was primarily due to increased legal, accounting, and professional fees.

    Loans and Funding

    • Total loans were $7.9 billion at March 31, 2025, up 0.1% from the prior quarter-end. The increase in total loans was driven by an increase in owner occupied commercial real estate loans from the prior quarter-end, offset by a decrease in income producing commercial real estate loans.
    • Total deposits at quarter-end were $9.3 billion, up $146.2 million, or 1.6%, from the prior quarter-end. The increase was primarily attributable to an increase in time deposit accounts. Period end deposits have increased $775.8 million when compared to prior year comparable period end of March 31, 2024.
    • Other short-term borrowings were $0.5 billion at March 31, 2025, consistent with the prior quarter-end.

    Asset Quality

    • Allowance for credit losses was 1.63% of total loans held for investment at March 31, 2025, compared to 1.44% at the prior quarter-end. Performing office coverage was 5.78% at quarter-end; as compared to 3.81% at the prior quarter-end.
    • Net charge-offs were $11.2 million for the quarter compared to $9.5 million in the fourth quarter of 2024.
    • Nonperforming assets were $202.9 million at March 31, 2025.
      • NPAs as a percentage of assets were 1.79% at March 31, 2025, compared to 1.90% at the prior quarter-end. At March 31, 2025, other real estate owned consisted of four properties with an aggregate carrying value of $2.5 million. The decrease in NPAs was predominantly associated with charge-offs as previously noted.
      • Loans 30-89 days past due were $83.0 million at March 31, 2025, compared to $26.8 million at the prior quarter-end.

    Capital

    • Total shareholders’ equity was $1.2 billion at March 31, 2025, up 1.5% from the prior quarter-end. The increase in shareholders’ equity of $18.8 million was due to an increase in valuations of available-for-sale securities.
    • Book value per share and tangible book value per share3 was $40.99 and $40.99, up 1.0% from the prior quarter-end.

    Additional financial information: The financial information that follows provides more detail on the Company’s financial performance for the three months ended March 31, 2025 as compared to the three months ended December 31, 2024 and March 31, 2024, as well as eight quarters of trend data. Persons wishing additional information should refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, and other reports filed with the SEC.

    About Eagle Bancorp: The Company is the holding company for EagleBank, which commenced operations in 1998. The Bank is headquartered in Bethesda, Maryland, and operates through twelve banking offices and four lending offices located in Suburban Maryland, Washington, D.C. and Northern Virginia. The Company focuses on building relationships with businesses, professionals and individuals in its marketplace, and is committed to a culture of respect, diversity, equity and inclusion in both its workplace and the communities in which it operates.

    Conference call: Eagle Bancorp will host a conference call to discuss its first quarter 2025 financial results on Thursday, April 24, 2025 at 10:00 a.m. Eastern Time.

    The listen-only webcast can be accessed at:

    Forward-looking statements: This press release contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “can,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” “could,” “strive,” “feel” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market (including reductions in the size of the federal government workforce; changes in government spending; the proposal, announcement or imposition of tariffs; volatility in interest rates and interest rate policy; inflation levels; competitive factors) and other conditions (such as the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks), which by their nature are not susceptible to accurate forecast and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results in the future may differ materially from those indicated herein. For details on factors that could affect these expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and in other periodic and current reports filed with the SEC. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Company’s past results are not necessarily indicative of future performance, and nothing contained herein is meant to or should be considered and treated as earnings guidance of future quarters’ performance projections. All information is as of the date of this press release. Any forward-looking statements made by or on behalf of the Company speak only as to the date they are made. Except to the extent required by applicable law or regulation, the Company undertakes no obligation to revise or update publicly any forward-looking statement for any reason.

     
    Eagle Bancorp, Inc.
    Consolidated Statements of Operations (Unaudited)
    (Dollars in thousands, except per share data)
               
      Three Months Ended
      March 31,   December 31,   March 31,
      2025   2024   2024
    Interest Income          
    Interest and fees on loans $ 126,136     $ 132,943     $ 137,994  
    Interest and dividends on investment securities   11,912       12,307       12,680  
    Interest on balances with other banks and short-term investments   15,803       23,045       24,862  
    Interest on federal funds sold   27       122       66  
    Total interest income   153,878       168,417       175,602  
    Interest Expense          
    Interest on deposits   77,211       83,002       79,383  
    Interest on customer repurchase agreements   260       294       315  
    Interest on other short-term borrowings   8,733       9,530       21,206  
    Interest on long-term borrowings   2,025       4,797        
    Total interest expense   88,229       97,623       100,904  
    Net Interest Income   65,649       70,794       74,698  
    Provision for Credit Losses   26,255       12,132       35,175  
    Provision (Reversal) for Credit Losses for Unfunded Commitments   (297 )     (1,598 )     456  
    Net Interest Income After Provision for Credit Losses   39,691       60,260       39,067  
               
    Noninterest Income          
    Service charges on deposits   1,743       1,744       1,699  
    Gain on sale of loans                
    Net gain on sale of investment securities   4       4       4  
    Increase in cash surrender value of bank-owned life insurance   4,282       742       703  
    Other income   2,178       1,577       1,183  
    Total noninterest income   8,207       4,067       3,589  
    Noninterest Expense          
    Salaries and employee benefits   21,968       22,597       21,726  
    Premises and equipment expenses   3,203       2,635       3,059  
    Marketing and advertising   1,371       1,340       859  
    Data processing   3,978       3,870       3,293  
    Legal, accounting and professional fees   3,122       641       2,507  
    FDIC insurance   8,962       9,281       6,412  
    Other expenses   2,847       4,168       2,141  
    Total noninterest expense   45,451       44,532       39,997  
    Income Before Income Tax Expense   2,447       19,795       2,659  
    Income Tax Expense   772       4,505       2,997  
    Net (Loss) Income $ 1,675     $ 15,290     $ (338 )
               
    (Loss) Earnings Per Common Share          
    Basic $ 0.06     $ 0.51     $ (0.01 )
    Diluted $ 0.06     $ 0.50     $ (0.01 )
                           
     
    Eagle Bancorp, Inc.
    Consolidated Balance Sheets (Unaudited)
    (Dollars in thousands, except per share data)
      March 31,   December 31,   March 31,
      2025   2024   2024
    Assets          
    Cash and due from banks $ 12,516     $ 11,882     $ 10,076  
    Federal funds sold   2,968       2,581       11,343  
    Interest-bearing deposits with banks and other short-term investments   661,173       619,017       696,453  
    Investment securities available-for-sale at fair value (amortized cost of $1,330,077, $1,408,935, and $1,613,659 respectively, and allowance for credit losses of $0, $22, and $17, respectively)   1,214,237       1,267,404       1,445,034  
    Investment securities held-to-maturity at amortized cost, net of allowance for credit losses of $1,275, $1,306, and $1,957 respectively (fair value of $820,530, $820,381, and $878,159 respectively)   924,473       938,647       1,000,732  
    Federal Reserve and Federal Home Loan Bank stock   51,467       51,763       54,678  
    Loans held for sale   15,251              
    Loans   7,943,306       7,934,888       7,982,702  
    Less: allowance for credit losses   (129,469 )     (114,390 )     (99,684 )
    Loans, net   7,813,837       7,820,498       7,883,018  
    Premises and equipment, net   7,079       7,694       9,504  
    Operating lease right-of-use assets   32,769       18,494       17,679  
    Deferred income taxes   84,798       91,472       87,813  
    Bank-owned life insurance   320,055       115,806       113,624  
    Goodwill and intangible assets, net   11       16       104,611  
    Other real estate owned   2,459       2,743       773  
    Other assets   174,268       181,491       177,310  
    Total Assets   11,317,361       11,129,508       11,612,648  
    Liabilities and Shareholders’ Equity          
    Liabilities          
    Deposits:          
    Noninterest-bearing demand   1,607,826       1,544,403       1,835,524  
    Interest-bearing transaction   926,722       1,211,791       1,207,566  
    Savings and money market   3,558,919       3,599,221       3,235,391  
    Time deposits   3,183,801       2,775,663       2,222,958  
    Total deposits   9,277,268       9,131,078       8,501,439  
    Customer repurchase agreements   32,357       33,157       37,059  
    Other short-term borrowings   490,000       490,000       1,669,948  
    Long-term borrowings   76,181       76,108        
    Operating lease liabilities   38,484       23,815       21,611  
    Reserve for unfunded commitments   3,166       3,463       6,045  
    Other liabilities   155,014       145,826       117,133  
    Total Liabilities   10,072,470       9,903,447       10,353,235  
    Shareholders’ Equity          
    Common stock, par value $0.01 per share; shares authorized 100,000,000, shares issued and outstanding 30,368,843, 30,202,003, and 30,185,732 respectively   300       298       297  
    Additional paid-in capital   386,535       384,932       377,334  
    Retained earnings   978,995       982,304       1,047,550  
    Accumulated other comprehensive loss   (120,939 )     (141,473 )     (165,768 )
    Total Shareholders’ Equity   1,244,891       1,226,061       1,259,413  
    Total Liabilities and Shareholders’ Equity $ 11,317,361     $ 11,129,508     $ 11,612,648  
                           
     
    Loan Mix and Asset Quality
    (Dollars in thousands)
               
      March 31,   December 31,   March 31,
      2025   2024   2024
      Amount %   Amount %   Amount %
    Loan Balances – Period End:                
    Commercial $ 1,178,343   15 %   $ 1,183,341   15 %   $ 1,408,767   18 %
    PPP loans   226   %     287   %   $ 467   %
    Income producing – commercial real estate   3,967,124   49 %     4,064,846   51 %   $ 4,040,655   50 %
    Owner occupied – commercial real estate   1,403,668   18 %     1,269,669   16 %   $ 1,185,582   15 %
    Real estate mortgage – residential   48,821   1 %     50,535   1 %   $ 72,087   1 %
    Construction – commercial and residential   1,210,788   15 %     1,210,763   15 %   $ 1,082,556   13 %
    Construction – C&I (owner occupied)   83,417   1 %     103,259   1 %   $ 138,379   2 %
    Home equity   50,121   1 %     51,130   1 %   $ 53,251   1 %
    Other consumer   798   %     1,058   %   $ 958   %
    Total loans $ 7,943,306   100 %   $ 7,934,888   100 %   $ 7,982,702   100 %
      Three Months Ended or As Of
      March 31,
      December 31,
      March 31,
      2025
      2024
      2024
    Asset Quality:          
    Nonperforming loans $ 200,447     $ 208,707     $ 91,491  
    Other real estate owned   2,459       2,743       773  
    Nonperforming assets $ 202,906     $ 211,450     $ 92,264  
    Net charge-offs $ 11,230     $ 9,535     $ 21,430  
    Special mention $ 273,380     $ 244,807     $ 265,348  
    Substandard $ 501,565     $ 426,366     $ 361,776  
                           
     
    Eagle Bancorp, Inc.
    Consolidated Average Balances, Interest Yields And Rates vs. Prior Quarter (Unaudited)
    (Dollars in thousands)
                           
      Three Months Ended
      March 31, 2025   December 31, 2024
      Average Balance   Interest   Average
    Yield/Rate
      Average Balance   Interest   Average
    Yield/Rate
    ASSETS                      
    Interest earning assets:                      
    Interest-bearing deposits with other banks and other short-term investments $ 1,445,054     $ 15,803   4.44 %   $ 1,948,436     $ 23,045   4.71 %
    Loans held for sale(1)   169         %             %
    Loans(1) (2)   7,933,695       126,136   6.45 %     7,971,907       132,943   6.63 %
    Investment securities available-for-sale(2)   1,321,954       6,858   2.10 %     1,417,958       7,142   2.00 %
    Investment securities held-to-maturity(2)   933,880       5,055   2.20 %     952,800       5,165   2.16 %
    Federal funds sold   5,410       27   2.02 %     12,839       122   3.78 %
    Total interest earning assets   11,640,162       153,879   5.36 %     12,303,940       168,417   5.45 %
    Total noninterest earning assets   596,585               386,014          
    Less: allowance for credit losses   (118,557 )             (114,232 )        
    Total noninterest earning assets   478,028               271,782          
    TOTAL ASSETS $ 12,118,190             $ 12,575,722          
                           
    LIABILITIES AND SHAREHOLDERS’ EQUITY                    
    Interest bearing liabilities:                      
    Interest-bearing transaction $ 1,368,609     $ 9,908   2.94 %   $ 1,674,997     $ 13,048   3.10 %
    Savings and money market   3,682,217       32,389   3.57 %     3,648,502       35,262   3.84 %
    Time deposits   2,951,111       34,914   4.80 %     2,804,870       34,692   4.92 %
    Total interest bearing deposits   8,001,937       77,211   3.91 %     8,128,369       83,002   4.06 %
    Customer repurchase agreements   36,572       260   2.88 %     38,750       294   3.02 %
    Other short-term borrowings   682,222       8,733   5.19 %     1,003,587       12,296   4.87 %
    Long-term borrowings   76,146       2,025   10.79 %     75,939       2,031   10.64 %
    Total interest bearing liabilities   8,796,877       88,229   4.07 %     9,246,645       97,623   4.20 %
    Noninterest bearing liabilities:                      
    Noninterest bearing demand   1,881,296               1,928,094          
    Other liabilities   197,212               170,411          
    Total noninterest bearing liabilities   2,078,508               2,098,505          
    Shareholders’ equity   1,242,805               1,230,573          
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 12,118,190             $ 12,575,723          
    Net interest income     $ 65,650           $ 70,794    
    Net interest spread         1.29 %           1.25 %
    Net interest margin         2.28 %           2.29 %
    Cost of funds         3.35 %           3.48 %
    (1)   Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $3.8 million and $4.3 million for the three months ended March 31, 2025 and December 31, 2024, respectively.
    (2)   Interest and fees on loans and investments exclude tax equivalent adjustments.
         
     
    Eagle Bancorp, Inc.
    Consolidated Average Balances, Interest Yields And Rates vs. Year Ago Quarter (Unaudited)
    (Dollars in thousands)
                           
      Three Months Ended March 31,
      2025   2024
      Average Balance   Interest   Average
    Yield/Rate
      Average Balance   Interest   Average
    Yield/Rate
    ASSETS                      
    Interest earning assets:                      
    Interest-bearing deposits with other banks and other short-term investments $ 1,445,054     $ 15,803   4.44 %   $ 1,841,771     $ 24,862   5.43 %
    Loans held for sale(1)   169         %             %
    Loans(1) (2)   7,933,695       126,136   6.45 %     7,988,941       137,994   6.95 %
    Investment securities available-for-sale(2)   1,321,954       6,858   2.10 %     1,516,503       7,247   1.92 %
    Investment securities held-to-maturity(2)   933,880       5,055   2.20 %     1,011,231       5,433   2.16 %
    Federal funds sold   5,410       27   2.02 %     7,051       66   3.76 %
    Total interest earning assets   11,640,162       153,879   5.36 %     12,365,497       175,602   5.71 %
    Total noninterest earning assets   596,585               508,987          
    Less: allowance for credit losses   (118,557 )             (90,014 )        
    Total noninterest earning assets   478,028               418,973          
    TOTAL ASSETS $ 12,118,190             $ 12,784,470          
                           
    LIABILITIES AND SHAREHOLDERS’ EQUITY                    
    Interest bearing liabilities:                      
    Interest-bearing transaction $ 1,368,609     $ 9,908   2.94 %   $ 1,833,493     $ 16,830   3.69 %
    Savings and money market   3,682,217       32,389   3.57 %     3,423,388       35,930   4.22 %
    Time deposits   2,951,111       34,914   4.80 %     2,187,320       26,623   4.90 %
    Total interest bearing deposits   8,001,937       77,211   3.91 %             4.29 %
    Customer repurchase agreements   36,572       260   2.88 %     36,084       315   3.51 %
    Other short-term borrowings   682,222       8,733   5.19 %     1,796,863       21,206   4.75 %
    Long-term borrowings   76,146       2,025   10.79 %             %
    Total interest bearing liabilities   8,796,877       88,229   4.07 %     9,277,148       100,904   4.37 %
    Noninterest bearing liabilities:                      
    Noninterest bearing demand   1,881,296               2,057,460          
    Other liabilities   197,212               160,206          
    Total noninterest bearing liabilities   2,078,508               2,217,666          
    Shareholders’ equity   1,242,805               1,289,656          
    TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 12,118,190             $ 12,784,470          
    Net interest income     $ 65,650           $ 74,698    
    Net interest spread         1.29 %           1.34 %
    Net interest margin         2.28 %           2.43 %
    Cost of funds         3.35 %           3.58 %
    (1)   Loans placed on nonaccrual status are included in average balances. Net loan fees and late charges included in interest income on loans totaled $3.8 million and $5.1 million for the three months ended March 31, 2025 and 2024, respectively.
    (2)   Interest and fees on loans and investments exclude tax equivalent adjustments.
         
     
    Eagle Bancorp, Inc.
    Statements of Operations and Highlights Quarterly Trends (Unaudited)
    (Dollars in thousands, except per share data)
      Three Months Ended
      March 31,   December 31,   September 30,   June 30,   March 31,   December 31,   September 30,   June 30,
    Income Statements: 2025   2024   2024   2024   2024   2023   2023   2023
    Total interest income $ 153,878     $ 168,417     $ 173,813     $ 169,731     $ 175,602     $ 167,421     $ 161,149     $ 156,510  
    Total interest expense   88,229       97,623       101,970       98,378       100,904       94,429       90,430       84,699  
    Net interest income   65,649       70,794       71,843       71,353       74,698       72,992       70,719       71,811  
    Provision for credit losses   26,255       12,132       10,094       8,959       35,175       14,490       5,644       5,238  
    Provision (reversal) for credit losses for unfunded commitments   (297 )     (1,598 )     (1,593 )     608       456       (594 )     (839 )     318  
    Net interest income after provision for credit losses   39,691       60,260       63,342       61,786       39,067       59,096       65,914       66,255  
    Noninterest income before investment gain   8,203       4,063       6,948       5,329       3,585       2,891       6,342       8,593  
    Net gain on sale of investment securities   4       4       3       3       4       3       5       2  
    Total noninterest income   8,207       4,067       6,951       5,332       3,589       2,894       6,347       8,595  
    Salaries and employee benefits   21,968       22,597       21,675       21,770       21,726       18,416       21,549       21,957  
    Premises and equipment expenses   3,203       2,635       2,794       2,894       3,059       2,967       3,095       3,227  
    Marketing and advertising   1,371       1,340       1,588       1,662       859       1,071       768       884  
    Goodwill impairment                     104,168                          
    Other expenses   18,909       17,960       17,557       15,997       14,353       14,644       12,221       11,910  
    Total noninterest expense   45,451       44,532       43,614       146,491       39,997       37,098       37,633       37,978  
    (Loss) income before income tax expense   2,447       19,795       26,679       (79,373 )     2,659       24,892       34,628       36,872  
    Income tax expense   772       4,505       4,864       4,429       2,997       4,667       7,245       8,180  
    Net (loss) income   1,675       15,290       21,815       (83,802 )     (338 )     20,225       27,383       28,692  
    Per Share Data:                              
    (Loss) earnings per weighted average common share, basic $ 0.06     $ 0.51     $ 0.72     $ (2.78 )   $ (0.01 )   $ 0.68     $ 0.91     $ 0.94  
    (Loss) earnings per weighted average common share, diluted $ 0.06     $ 0.50     $ 0.72     $ (2.78 )   $ (0.01 )   $ 0.67     $ 0.91     $ 0.94  
    Weighted average common shares outstanding, basic   30,275,001       30,199,433       30,173,852       30,185,609       30,068,173       29,925,557       29,910,218       30,454,766  
    Weighted average common shares outstanding, diluted   30,404,262       30,321,644       30,241,699       30,185,609       30,068,173       29,966,962       29,944,692       30,505,468  
    Actual shares outstanding at period end   30,368,843       30,202,003       30,173,200       30,180,482       30,185,732       29,925,612       29,917,982       29,912,082  
    Book value per common share at period end $ 40.99     $ 40.60     $ 40.61     $ 38.75     $ 41.72     $ 42.58     $ 40.64     $ 40.78  
    Tangible book value per common share at period end(1) $ 40.99     $ 40.59     $ 40.61     $ 38.74     $ 38.26     $ 39.08     $ 37.12     $ 37.29  
    Dividend per common share $ 0.17     $     $ 0.17     $ 0.45     $ 0.45     $ 0.45     $ 0.45     $ 0.45  
    Performance Ratios (annualized):                              
    Return on average assets   0.06 %     0.48 %     0.70 %   (2.73 )%   (0.01 )%     0.65 %     0.91 %     0.96 %
    Return on average common equity   0.55 %     4.94 %     7.22 %   (26.67 )%   (0.11 )%     6.48 %     8.80 %     9.24 %
    Return on average tangible common equity(1)   0.55 %     4.94 %     7.22 %   (28.96 )%   (0.11 )%     7.08 %     9.61 %     10.08 %
    Net interest margin   2.28 %     2.29 %     2.37 %     2.40 %     2.43 %     2.45 %     2.43 %     2.49 %
    Efficiency ratio(1)(2)   61.50 %     59.50 %     55.40 %     191.00 %     51.10 %     48.90 %     48.83 %     47.20 %
    Other Ratios:                              
    Allowance for credit losses to total loans(3)   1.63 %     1.44 %     1.40 %     1.33 %     1.25 %     1.08 %     1.05 %     1.00 %
    Allowance for credit losses to total nonperforming loans   64.59 %     54.81 %     83.25 %     110.06 %     108.76 %     131.16 %     118.78 %     267.50 %
    Nonperforming assets to total assets   1.79 %     1.90 %     1.22 %     0.88 %     0.79 %     0.57 %     0.64 %     0.28 %
    Net charge-offs (recoveries) (annualized) to average total loans(3)   0.57 %     0.48 %     0.26 %     0.11 %     1.07 %     0.60 %     0.02 %     0.29 %
    Tier 1 capital (to average assets)   11.11 %     10.74 %     10.77 %     10.58 %     10.26 %     10.73 %     10.96 %     10.84 %
    Total capital (to risk weighted assets)   15.86 %     15.86 %     15.51 %     15.07 %     14.87 %     14.79 %     14.54 %     14.51 %
    Common equity tier 1 capital (to risk weighted assets)   14.61 %     14.63 %     14.30 %     13.92 %     13.80 %     13.90 %     13.68 %     13.55 %
    Tangible common equity ratio(1)   11.00 %     11.02 %     10.86 %     10.35 %     10.03 %     10.12 %     10.04 %     10.21 %
    Average Balances (in thousands):                              
    Total assets $ 12,118,190     $ 12,575,722     $ 12,360,899     $ 12,361,500     $ 12,784,470     $ 12,283,303     $ 11,942,905     $ 11,960,111  
    Total earning assets $ 11,640,162     $ 12,303,940     $ 12,072,891     $ 11,953,446     $ 12,365,497     $ 11,837,722     $ 11,532,186     $ 11,546,050  
    Total loans(2) $ 7,933,695     $ 7,971,907     $ 8,026,524     $ 8,003,206     $ 7,988,941     $ 7,963,074     $ 7,795,144     $ 7,790,555  
    Total deposits $ 9,883,233     $ 10,056,463     $ 9,344,414     $ 9,225,266     $ 9,501,661     $ 9,471,369     $ 8,946,641     $ 8,514,938  
    Total borrowings $ 794,940     $ 1,118,276     $ 1,654,736     $ 1,721,283     $ 1,832,947     $ 1,401,917     $ 1,646,179     $ 2,102,507  
    Total shareholders’ equity $ 1,242,805     $ 1,230,573     $ 1,201,477     $ 1,263,627     $ 1,289,656     $ 1,238,763     $ 1,235,162     $ 1,245,647  
    (1)   A reconciliation of non-GAAP financial measures to the nearest GAAP measure is provided in the tables that accompany this document.
    (2)   Computed by dividing noninterest expense by the sum of net interest income and noninterest income.
    (3)   Excludes loans held for sale.
         
     
    GAAP Reconciliation to Non-GAAP Financial Measures (unaudited)
    (dollars in thousands, except per share data)
               
      March 31,
      December 31,
      March 31,
      2025
      2024
      2024
    Tangible common equity          
    Common shareholders’ equity $ 1,244,891     $ 1,226,061     $ 1,259,413  
    Less: Intangible assets   (11 )     (16 )     (104,611 )
    Tangible common equity $ 1,244,880     $ 1,226,045     $ 1,154,802  
               
    Tangible common equity ratio          
    Total assets $ 11,317,361     $ 11,129,508     $ 11,612,648  
    Less: Intangible assets   (11 )     (16 )     (104,611 )
    Tangible assets $ 11,317,350     $ 11,129,492     $ 11,508,037  
               
    Tangible common equity ratio   11.00 %     11.02 %     10.03 %
               
    Per share calculations          
    Book value per common share $ 40.99     $ 40.60     $ 41.72  
    Less: Intangible book value per common share $     $ (0.01 )   $ (3.46 )
    Tangible book value per common share $ 40.99     $ 40.59     $ 38.26  
               
    Shares outstanding at period end   30,368,843       30,202,003       30,185,732  
        Three Months Ended
        March 31,
      December 31,
      March 31,
        2025
      2024
      2024
    Average tangible common equity            
    Average common shareholders’ equity   $ 1,242,805     $ 1,230,573     $ 1,289,656  
    Less: Average intangible assets     (14 )     (19 )     (104,718 )
    Average tangible common equity   $ 1,242,791     $ 1,230,554     $ 1,184,938  
                 
    Return on average tangible common equity            
    Net (loss) income   $ 1,675     $ 15,290     $ (338 )
    Return on average tangible common equity     0.55 %     4.94 %   (0.11 )%
                 
    Efficiency ratio            
    Net interest income   $ 65,649     $ 70,794     $ 74,698  
    Noninterest income     8,207       4,067       3,589  
    Operating revenue   $ 73,856     $ 74,861     $ 78,287  
    Noninterest expense   $ 45,451     $ 44,532     $ 39,997  
                 
    Efficiency ratio     61.54 %     59.49 %     51.09 %
                 
    Pre-provision net revenue            
    Net interest income   $ 65,649     $ 70,794     $ 74,698  
    Noninterest income     8,207       4,067       3,589  
    Less: Noninterest expense     (45,451 )     (44,532 )     (39,997 )
    Pre-provision net revenue   $ 28,405     $ 30,329     $ 38,290  
                             

    Tangible common equity, tangible common equity to tangible assets (the “tangible common equity ratio”), tangible book value per common share, average tangible common equity, and annualized return on average tangible common equity are non-GAAP financial measures derived from GAAP based amounts. The Company calculates the tangible common equity ratio by excluding the balance of intangible assets from common shareholders’ equity, or tangible common equity, and dividing by tangible assets. The Company calculates tangible book value per common share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which the Company calculates by dividing common shareholders’ equity by common shares outstanding. The Company calculates the annualized return on average tangible common equity ratio by dividing net income available to common shareholders by average tangible common equity, which is calculated by excluding the average balance of intangible assets from the average common shareholders’ equity. Tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk based ratios, and as such tangible equity and related measures are useful for investors, regulators, management and others to evaluate capital adequacy and to compare against other financial institutions.

    The efficiency ratio is a non-GAAP measure calculated by dividing GAAP noninterest expense by the sum of GAAP net interest income and GAAP noninterest income. The efficiency ratio measures a bank’s overhead as a percentage of its revenue. The Company believes that reporting the non-GAAP efficiency ratio more closely measures its effectiveness of controlling operational activities.

    Pre-provision net revenue is a non-GAAP financial measure calculated by subtracting noninterest expenses from the sum of net interest income and noninterest income. The Company considers this information important to shareholders because it illustrates revenue excluding the impact of provisions and reversals to the allowance for credit losses on loans.

    ____________________________
    1
    A reconciliation of non-GAAP financial measures and the nearest GAAP measures is provided in the GAAP Reconciliation to Non-GAAP Financial Measures tables that accompany this document.
    2 Calculated as the ACL attributable to loans collateralized by performing office properties as a percentage of total loans.
    3 A reconciliation of non-GAAP financial measures and the nearest GAAP measures is provided in the GAAP Reconciliation to Non-GAAP Financial Measures tables that accompany this document.

    EAGLE BANCORP, INC.
    CONTACT:
    Eric R. Newell
    240.497.1796

    For the March 31, 2025 Earnings Presentation, click http://ml.globenewswire.com/Resource/Download/f1f31917-6800-4f81-8c02-417b49f279cc

    The MIL Network

  • MIL-OSI Africa: From Aid to Investment: Africa Investment Forum Builds $225B Momentum in Making Continent Bankable

    Source: Africa Press Organisation – English (2) – Report:

    WASHINGTON D.C., United States of America, April 23, 2025/APO Group/ —

    Buoyed by last year’s successful Africa Investment Forum’s Market Days that generated $29.2 billion of investment interest, its nine founding partners are bracing for an even bigger and better event later this year.

    The 2024 Africa Investment Forum Market Days attracted more than 2,300 investors and participants from 83 countries around the world, more than 40 boardrooms, and 15 sponsors, including investment banks, insurers, and export credit agencies. Many more sponsors are lining up for the 2025 edition.

    Meeting on Monday evening in Washington, DC, on the sidelines of the World Bank and IMF Spring Meetings, the partners reflected on the Forum’s remarkable seven-year journey, which has mobilized more than $225 billion in investment interest and established itself as a global investment movement for Africa.

    The partners include the African Development Bank, Afreximbank, Africa50, Africa Finance Corporation, Development Bank of Southern Africa, Islamic Development, European Investment Bank, Trade and Development Bank, and newcomer, the Arab Bank for Economic Development in Africa  (BADEA).

    The President of the African Development Bank Group and Chairman of the Africa Investment Forum, Dr. Akinwumi Adesina  said, “We have elevated Africa. We have showcased Africa. We have changed perceptions on Africa,” adding, “We have shown our belief in Africa, which has demonstrated to the world that indeed Africa is a bankable destination.”

    “Africa will not be developed by aid. It will be developed by investment,” Adesina said, a vision that has guided the Forum since its launch in 2018.

    The meeting outlined how the Forum has transformed perceptions about investing in Africa while delivering high-quality deal pipelines. To date, 22 deals have closed, with 41% of the financing provided by founding partners alongside other institutional investors.

    Partners also discussed the Africa Investment Forum Partnership Framework to guarantee the Forum’s sustainability, The long-term governance and sustainability framework is expected to be formally signed at the May African Development Bank Annual Meetings in Abidjan, Côte d’Ivoire.

    As Adesina prepares to conclude his tenure as president of the African Development Bank in September, he expressed profound gratitude to the partners for their support and commitment to the Forum.

    At Monday’s meeting, the partners unanimously committed to the Africa Investment Forum because of its convening power to mobilize critical investments for transformative projects across the continent.

    The CEO of Africa 50, Alain Ebobise spoke about the  Forum’s uniqueness because “it  focuses not on speeches but on people transacting in boardrooms,” adding, “We are ready to bring on board more sponsors.”

    The President and CEO of Africa Finance  Corporation, Samaila Zubairu said, “As Africans we have to take ownership of our development. The Africa Investment Forum is an initiative that demonstrates that.”

    Boitumelo Mosako, the CEO of the Development Bank of Southern  Africa, reiterated this, saying, ” The only way to be certain about the future is by creating it.”

    Praising last year’s Market Days event as “fantastic,” the President of the Trade and Development Bank, Admassu Tadesse, pointed to the forum’s strength as a strong global brand promoting synergies among its founding partners.

    Representing BADEA, the Director of Private  Sector, Diab Karrar said that even though BADEA joined the Africa Investment Forum last year, they had always supported the initiative because “we believe in it.”

    The Executive Vice President of Global Trade Bank, Afreximbank, Haytham El Maayergi, expressed a strong commitment to supporting the Africa Investment Forum.

    Andrew McDowell, Director General of the European Investment Bank Global, spoke about the importance of institutional collaboration, which helps institutions like his make informed decisions about investment in Africa.

    “It has been my greatest honor to develop and advance the Africa Investment Forum with you all. “Let us continue to fast-track Africa’s development together, now and in the future!” declared Adesina 

    MIL OSI Africa

  • MIL-OSI Africa: Ghana Sets Stage for Artisanal and Small-Scale Mining (ASM) Reform, Responsible Gold Leadership at Mining in Motion Webinar

    Source: Africa Press Organisation – English (2) – Report:

    ACCRA, Ghana, April 23, 2025/APO Group/ —

    The Ashanti Green Initiative (AGI) today hosted a high-level virtual briefing to provide an exclusive preview of the upcoming Mining in Motion Summit, set to take place on June 2–4, 2025 in Accra, Ghana. The webinar, led by mining governance expert Charles Kwarteng Antwi, presented a bold advocacy agenda for formalizing Ghana’s artisanal and small-scale mining (ASM) sector, with the aim of positioning the country as a leader in responsible gold production. 

    “Today’s conversation goes beyond gold – it is about people, progress and possibilities. We are here to explore how innovation, responsibility and collective will can transform the artisanal mining sector into a force for good,” said Charles during his keynote. 

    Ghana, which produces more than 130 metric tonnes of gold annually – 35% of it from ASM – faces a critical inflection point. While the ASM sector supports more than 1.1 million people across over 100 districts, it remains largely informal, limiting miners’ access to finance, safety standards and global markets. “The paradox is clear: while ASM contributes over $2 billion in annual gold exports, the very actors producing this gold remain marginalized from its value,” said Charles. “The solution lies in the formalization of the sector, not as a tool for punishment, but to be seen as a tool for empowerment.” 

    The Mining in Motion Summit, organized by AGI in collaboration with the World Bank, World Gold Council and other global partners, will convene public and private sector leaders, development organizations and traditional authorities. Key participants include H.E. John Dramani Mahama, President of Ghana, alongside delegations from South Africa, Mali, Côte d’Ivoire, ECOWAS, the African Union and the United Nations Development Program. 

    The event will feature site visits to artisanal mining areas undergoing rehabilitation, and a three-day agenda of panels and working groups focused on responsible sourcing, traceability, formalization strategies and ESG compliance. “[This] is where Africa asserts its place in the global gold economy – not as a passive exporter, but as a standard-setter, innovator and unifier within the space,” said Charles.  

    Additionally, he emphasized the importance of aligning with global gold standards, including the OECD Due Diligence Guidance, the London Bullion Market Association’s Responsible Gold Guidance and the UAE Good Delivery Standard. However, implementation requires investment and infrastructure. “Setting up a compliance infrastructure comes at a cost: miners need training; cooperatives need formal recognition; certification requires labs, logistics and digital systems. This is why AGI is calling for international investments to ensure desired growth and outcomes,”said Charles.   

    AGI’s long-term vision is to make Ghana a global leader in gold traceability by 2030. “Our vision is one where Ghanaian gold is fully traceable from mine to market, produced under conditions that respect human rights and the environment, recognized globally but rooted locally, and used as a tool not just for export, but for domestic and continental economic empowerment.” 

    The webinar closed with a message of shared responsibility and opportunity: “Ghana’s gold must power more than profits. It must power schools, health clinics, clean rivers, forest restoration and create thriving and sustainable communities.” 

    To secure your spot at the Mining in Motion 2025 Summit, visit www.MininginMotionSummit.com 

    MIL OSI Africa

  • MIL-OSI Video: Climate, Gaza & other topics – Daily Press Briefing | United Nations

    Source: United Nations (Video News)

    Noon Briefing by Stéphane Dujarric, Spokesperson for the Secretary-General.

    Highlights:

    – Climate
    – Deputy Secretary-General
    – Occupied Palestinian Territory
    – Yemen
    – Sudan
    – Sudan/Humanitarian
    – Democratic Republic of the Congo
    – Democratic Republic of the Congo/Peacekeeping
    – Somalia
    – Ukraine
    – Kashmir
    – International Days
    – Briefings Tomorrow

    CLIMATE
    This morning, the Secretary-General and President Lula of Brazil convened a virtual leaders’ session on climate and just transition.
    After the meeting he spoke to some of you and said that he heard a unifying message: our world faces massive headwinds and a multitude of crises, but we cannot allow climate commitments to be blown off course.
    The Secretary-General added that we must keep building momentum for action at COP30 in Brazil— and that today was an important part of that effort.
    The Secretary-General also said that renewables are the economic opportunity of the century. Dissenters and fossil fuel interests may try to stand in the way, but the world is moving forward – full speed ahead.
    The Secretary-General urged leaders to take action on two fronts: first — to step up efforts to submit the strongest possible national climate plans well ahead of COP30.
    And second, to scale-up support for developing countries.

    DEPUTY SECRETARY-GENERAL
    The Deputy Secretary-General, Amina Mohammed, is travelling to Washington, D.C. this afternoon, to attend the World Bank/International Monetary Fund Annual Spring Meetings and engage in discussions with key stakeholders and government officials.
    Ms. Mohammed will participate in a ministerial roundtable to discuss the upcoming fourth International Conference on Financing for Development (FfD4) and priority actions to support the Sustainable Development Goals. She will separately meet with Finance Ministers, leaders of International Financial Institutions and Multilateral Development Banks to discuss the challenging global economic context, its implications for sustainable development, and how to mitigate the risks for the world’s poorest countries.
    The Deputy Secretary-General will return to New York tomorrow evening. 

    Full Highlights: https://www.un.org/sg/en/content/noon-briefing-highlight?date%5Bvalue%5D%5Bdate%5D=23%20April%202025

    https://www.youtube.com/watch?v=31B80i3kYCM

    MIL OSI Video

  • MIL-OSI Europe: REPORT on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section VII – Committee of the Regions – A10-0046/2025

    Source: European Parliament

    2. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

    with observations forming an integral part of the decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section VII – Committee of the Regions

    (2024/2026(DEC))

    The European Parliament,

     having regard to its decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section VII – Committee of the Regions,

     having regard to Rule 102 of and Annex V to its Rules of Procedure,

     having regard to the report of the Committee on Budgetary Control (A10-0046/2025),

    A. whereas in the context of the discharge procedure, the discharge authority wishes to stress the particular importance of further strengthening the democratic legitimacy of the Union institutions by improving transparency and accountability, and implementing the concept of performance-based budgeting and good governance of human resources;

    B. whereas the Committee of the Regions (the ‘Committee’) is a political assembly of 329 members elected in the regions, cities, villages and municipalities of the 27 Member States of the Union, operating as a consultative body for the Union institutions, with the mission of contributing to the Union policy shaping and decision making process from the point of view of the local and regional authorities, and at the same time contributing to make the Union more effective and closer to the citizens;

    C. whereas the consultation of the Committee by the Commission or the Council is mandatory in certain cases, while the Committee may also adopt opinions on its own initiative and enjoys a wide area for referral, as set out in the Treaties, allowing it to be consulted by Parliament;

    D. whereas the Committee’s activities are defined on the basis of its overall political strategy as set out in its resolution of 2 July 2020 on its priorities for 2020-2025[7], and whereas the Committee adopted three political priorities for the 2020-2025 mandate, accompanied by three communication campaigns: Bringing Europe closer to people, Building resilient regional and local communities, and Promoting cohesion as a fundamental value of the EU;

    E. whereas the local and regional administrations account for one third of public spending, half of public investment and one fourth of tax revenues and, in many Member States, hold competencies in key areas such as education, economic development and cohesion, environment, social protection, health and services of general interest, hence the coordination of local, regional, national and European levels increases the legitimacy of the legislation, improves ownership and pursues more effectively the benefit of citizens;

    F. whereas the Committee pursues its political goal to strengthen its involvement in the entire Union political and legislative cycle while making more tangible the connection with Union citizens using the Committee’s members as powerful multipliers in their communities and in their national associations of local and regional authorities;

    G. whereas the Committee identified eleven key priority areas to make its action more strategic and impactful in 2023: (1) Follow-up to the Conference on the Future of Europe, Active Subsidiarity and Better Regulation; (2) Ukraine and Enlargement; (3) Energy and climate crisis; (4) Environment; (5) Cohesion Policy – Ramping up Cohesion policy implementation and shaping its future for the post-2027 period; (6) Multi-annual Financial Framework; (7) Economic governance for a fair and sustainable Europe; (8) European Year of Skills 2023; (9) Partnership for Regional Innovation and the promotion of territorial missions; (10) Civil protection; (11) Food security;

    H. whereas Regulation (EU) 2021/1060[8], governing Union cohesion policy and funding between 2021 and 2027, that entered into force in July 2021, encompasses references to the partnership and multilevel governance principle, supported by the Committee and Parliament and entailing the involvement of regions and their local and regional authorities; strongly supports the strengthening of Union investments linked to regional and local resilience in the next Multiannual Financial Framework (MFF);

    I. whereas the over 400 national and regional programmes in place for the delivery of Union cohesion policy in the 2021-2027 programming period will make available around EUR 380 billion, under different funds, to tackle the economic, social and environmental challenges that Union regions, cities, villages and municipalities are facing;

    J. whereas, on 19 February 2021, Regulation (EU) 2021/241[9], establishing the Union’s Recovery and Resilience Facility, entered into force, providing the legal basis for distributing funds and loans of up to EUR 672,5 billion (in 2018 prices) to the Member States between 2021 and 2026 and also aiming to support economic, social and territorial cohesion and to address disparities between the regions of the Union;

    K. whereas, as a Union institution within the meaning of the Financial Regulation, the Committee is required to adopt its own annual accounts, prepared in accordance with the accounting rules adopted by the Commission’s accounting officer (European Union Accounting Rules) and based on the International Public Sector Accounting Standards, which are ultimately consolidated into those of the Union;

    1. Notes that the budget of the Committee falls under MFF Heading 7 ‘European public administration’ (‘Heading 7’), which amounted to a total of EUR 12,3 billion, i.e., 6,4 % of Union budget spending, in 2023; notes that, in 2023, the budget of the Committee represented 0,95 % of MFF Heading 7 appropriations;

    2. Notes that the Court of Auditors (the ‘Court’), in its annual report (the ‘Court’s report’) for the financial year 2023, examined a sample of 70 transactions under Heading 7, of which 21 (30 %) contained errors; further notes that for five of those errors, which were quantified by the Court, the Court estimated a level of error below the materiality threshold;

    3. Notes from the Court’s report its observation that administrative expenditure comprises expenditure on human resources including pensions, which in 2023 accounted for about 70 % of the total administrative expenditure, and expenditure on buildings, equipment, energy, communications and information technology; welcomes the Court’s renewed opinion that, overall, administrative spending is low risk;

    4. Notes with regret from the Court’s report its opinion regarding a transaction made by the Committee in 2023, whereby the 10-year duration of a building maintenance contract was not sufficiently justified;

    Budgetary and financial management

    5. Notes from the Committee’s annual activity report for 2023  that the final adopted budget of the Committee was EUR 116 675 392 in 2023, including the Amending Budget 4/2023 (salary and energy related), representing an increase of EUR 6 698 534 (i.e., +6,10 %) compared to 2022; notes with satisfaction that the rate of the Committee’s budget implementation of current year commitment appropriations increased from 99,20 % in 2022 to 99,9 % in 2023, and the current year payment appropriations execution rate increased from 88 % in 2022 to 91,20 % in 2023; welcomes further an increase in the execution rate of C8 appropriations from 81,60 % in 2022 to 85 % in 2023; considers that these high execution rates are on the one hand a sign of good budgetary and financial management by the Committee, on the account of strengthened budget execution monitoring, timely budget forecasting and reallocation of resources to address unforeseen events, but on the other hand could also be a sign that the Committee needs additional resources; calls on the Commission and the budgetary authority to take this into account in the framework of the budgetary procedure;

    6. Notes that in the course of 2023, the Committee implemented 31 transfers for a total of EUR 2,84 million, of which 25 internal transfers for a total of EUR 0,98 million and six external transfers for a total of EUR 1,86 million, of which approximately EUR 0,8 million transferred to budget lines covering contracts impacted by high inflation/indexation; notes that impact of Russia’s war of aggression against Ukraine continued to create budgetary pressure for the Committee in 2023; notes in this context that the Committee was most affected by the high inflation rate, directly or indirectly, in areas such as travel costs (missions), energy, rents and lease of buildings, maintenance contracts, construction projects and paper and offset plates;

    7. Notes an increase by approximately 20 % of payments made for the members of the Committee, from EUR 6 573 307 in 2022 to EUR 7 955 968 in 2023, with payments made for travel expenses (8 119 payments), travel allowances (4 449 payments), meeting allowances for in-person participation (7 845 payments) and remote participation (152 payments);

    8. Notes that the mission’s budget (current year appropriations) remained stable, with EUR 420 833 in 2023 (compared to EUR 419 657 in 2022) and execution rate of approximately 80 % in 2023 (similar to 2022); notes that, despite an increase in the average cost of accommodation and travel costs, the Committee’s missions budget remained stable due to a reduction of 13 % in the number of missions carried out in 2023 compared to 2022; welcomes that the allowance for the Committee’s Presidency (President and First Vice-President) for travel and meeting expenses, financed from the general budget for members’ expenses, decreased from EUR 71 810 to EUR 62 268, representing a 13 % reduction between 2022 and 2023; encourages the Committee to further rationalize and reduce expenditure in this area, ensuring optimal allocation of resources in line with the principles of sound financial management;

    9. Observes with concern an increase in the current year appropriations for interpreting services of approximately 19 %, from EUR 3,494 million in 2022 to EUR 4,167 million in 2022; asks the Committee to explain the reasons for that increase, given the fact that at the same time the Committee has reported savings in connection with the use of remote interpretation in 2023;

    10. Notes that until 23 July 2023, the flat-rate remote meeting allowance paid by the Committee to its members, their alternates, as well as to rapporteurs’ experts and speakers invited to attend remote or hybrid meetings was EUR 200; notes further that on that date, new rules on the matter entered into force setting the flat-rate remote meeting allowance at 50 % of the regular meeting allowance, with the latter being EUR 359 and the former EUR 179,50; notes in this context a significant decrease in the total amount paid for remote meeting allowances from EUR 1 742 000 in 2021 and EUR 489 600 in 2022 to EUR 32 632 in 2023, while the overall expenditure linked to budget line 1004 (‘Travel and subsistence allowances, attendance at meetings and associated expenditure’) has increased considerably from approximately EUR 6,6 million in 2022 to approximately EUR 8 million in 2023, mainly due to a strong return to in-person meetings in 2023 and the increase in the travel related prices in the aftermath of the Covid-19 pandemic;

    11. Expresses concern over the significant increase in travel and meeting allowances paid to Committee members, rising from EUR 6,6 million in 2022 to EUR 8 million in 2023; calls on the Committee to adopt a clear cost-efficiency strategy for travel expenditures, including greater use of remote participation and hybrid meetings to reduce unnecessary costs and emissions while maintaining political engagement;

    12. Regrets that the average time for payment increased from 17,87 days in 2022 to 21,88 days in 2023; understands nevertheless that that increase is the result of the fact that in 2023 the Committee processed and paid a record number of invoices, i.e., 5 723 compared to 4 260 in 2022; notes in this context that the share of commercial invoices received electronically by the Committee has increased from 68 % in 2022 to 76 % in 2023 and continued to increase in 2024;

    Internal management, performance and internal control

    13. Acknowledges that the Committee plays a fundamental role in contributing to the Union’s policy development and decision-making processes by representing the interests of local and regional authorities within the Union; notes that for 2023, as part of its annual operational plan, the reporting of the performance of the Committee was based on 25 objectives, the achievement of which was assessed through 80 quantitative indicators, whereas the targets of the majority of those indicators (approximately 75 %) was achieved with a level of 90 % or more;

    14. Recalls that the Committee contributes to the Union policy and decision making process from the perspective of the regional and local authorities within the Union and provides a framework to enhance cooperation between the local, regional, national and European levels and to bring Europe closer to its citizens; regrets that budget limitations have impaired the Committee’s ability to fully deliver on its objective of bringing citizens closer to the Union, limiting the Committee’s added value;

    15. Considering the important role of the Committee in increasing the democratic legitimacy of Union legislation by providing an active coordination of regional and local authorities, supports the Committee in its effort to provide more territorial impact assessments (TIA), also in line with the Conference on the Future of Europe final report and recommendations;

    16. Commends the Committee for its political achievements in its key priority areas in 2023; notes that the Committee pursues its mission through opinions, which refer to legislative proposals made by the Commission (referrals), own-initiative opinions, which call on the Union institutions to take action, and through resolutions, which highlight the Committee’s positions on specific topics; notes that, in 2023, the Committee adopted 53 opinions and 6 resolutions, a decrease from 55 opinions and 8 resolutions adopted in 2022 despite the increase in appropriations and staff; encourages the Committee to continue to work on the performance improvement as well as effectiveness improvement; welcomes the Committee’s efforts to introduce reformative and innovative solutions, streamline the administration and avoid overlapping roles with other bodies;

    17. Appreciates that in 2023 the Committee continued implementing measures to modernise its administration and enhance cost-effectiveness in the context of the ‘Going for IMPact’ programme; notes in this context the progress made with regard to digitalisation and workflow optimisation, the modernisation of the Committee’s planning and reporting instruments, the creation of a central meeting service, and the enhancement of cooperation with other institutions or bodies (e.g., the European Economic and Social Committee (‘EESC’), Commission, Parliament, Office for Infrastructure and Logistics), among others; commends the Committee for having implemented almost 90 % of the simplification projects launched in 2021, in the areas of administrative processes, written procedures and (internal) legal documents;

    18. Notes with satisfaction from the Committee’s replies to the questionnaire submitted by the Parliament’s Committee on Budgetary Control for the 2023 budgetary discharge (the ‘Questionnaire’) that, thanks to the ‘Going for IMPact’ programme, the Committee has managed in 2023 to align its objectives to the available resources which were under pressure as a result of the inflationary effects of the war in Ukraine; commends in particular the progress made by the Committee in implementing ‘Project Convergence’ (a SharePoint-based tool for planning, reporting, risk assessment, and business continuity) and the new business continuity policy;

    19. Acknowledges the impact of the Committee’s work, in particular its opinions, some which were reflected in resolutions, positions, proposals, reports, reviews, conclusions or trilogues of the Commission, Parliament or the Council in 2023; invites the Committee to continue on the path of providing useful and relevant input, such as data from the ground and analysis, to Union institutions and other beneficiaries of Union policies; welcomes the Committee’s strengthened involvement along the whole political and legislative cycle of the Union through cooperation agreements and action plans with the Commission, Parliament and the European Investment Bank; considers that members of the Committee and of the EESC should be invited to relevant parliamentary meetings on matters within their remit; notes that, in 2023, Committee members also met the Council and Permanent Representations and participated in the events organised by the Council’s Presidency, in order to ensure that the Committee’s positions are reflected in the Union’s legislation; congratulates the Committee for strengthening its involvement in legislative trilogues, notably by being granted access, for the first time, to trilogue documents in 2023;

    20. Calls on the Committee to ensure stronger involvement of regional and local governments in Union decision-making by creating structured consultation mechanisms with regional and local authorities, including parliaments, municipalities, and local civil society organizations before issuing opinions; urges the Committee to advocate for a mandatory consultation process on legislative matters that significantly impact regional development and cohesion policy;

    21. Notes with regard to its new internal control framework, that the Committee implemented a new methodology on ex post controls as of 2023, aiming to simplify and align the approach to the practice of the other Union institutions, with the ex post controls now being centralised instead of the prior decentralised practice; notes that, in 2023, ex post controls focused on the basic salary and the time worked, with 55 files having been verified, and that the statistical estimate of the error affecting the reference population was 0 %; notes further that in 2023 the Committee renewed its compliance and effectiveness exercise to assess the extent of the Committee’s compliance with certain internal control standards and the effectiveness of their implementation; commends the Committee for reporting an improvement in this matter compared to the results of the 2022 exercise; encourages the Committee to continue its efforts to further step up the level of compliance and the degree of effectiveness of the internal control measures in place; notes with satisfaction, as regards the new sensitive posts policy, that in 2023 the Committee ran a screening exercise to identify the level of risk of each post and, thus, the sensitivity level thereof, as well as the necessary measures to mitigate those risks;

    22. Notes that the Committee launched in 2023 two new audits: one on the compliance of various functions (e.g., risk management, planning, control system) with the relevant data protection legislation and another one on the performance of the IT organisation in Joint Services (the Committee and the EESC’s new joint Directorate for Innovation and IT); notes that for each of those audits: 11 recommendations were issued and seven recommendations were considered very important; notes further that following the audit on management of the vacant posts launched in 2022, 10 recommendations were issued, three of which were very important; calls on the Committee to implement all pending recommendations as soon as possible and keep the discharge authority informed of progress in this matter;

    Human resources, equality and staff well-being

    23. Notes that, at the end of 2023, the Committee had a total of 559 members of staff (seconded national experts, interim, intra muros and trainees not included), compared to 533 in 2022; notes that 74 contract agents, compared to 56 contract agents in 2022 and 96 temporary agents, compared to 89 temporary agents in 2022, were employed by the Committee at the end of 2023, out of which 21 contract agents had an open-ended contract, 53 contract agents had a time-limited contract, 53 temporary agents were on permanent posts with time-limited contract, 50 temporary agents had an open-ended contract and 3 temporary agents held a temporary position (in two cases with an indefinite contract and, in the case of the Secretary-General, for a fixed duration of five years); notes, in addition, that the Committee employed 5 interim agents and 12 external members of staff working on-site, excluding external service providers in the fields of logistics and IT; hopes that the increase in staff has its reasonable justification; notes that in 2023 the occupation rate of the posts in the establishment plan was 98 % (an increase from 96 % in 2022) and the turnover rate was 6,6 % (a decrease from 10,80 % in 2022), respectively;

    24. Observes an increased reliance of the Committee on contract agents and temporary agents (representing up to 26 % of the Committee’s staff); notes from the Questionnaire that said reliance is due in particular to the absence of EPSO reserve lists for generalist administrator profiles since 2018; is worried that the Committee’s long-term stability and business continuity are threatened by the absence of attractiveness of the time-limited contracts offered; underlines the importance of permanent staff in maintaining skills, continuity and productive working environment; notes that the Committee organised an internal competition for generalists across five grades (AST/SC1, AST1, AST3, AD5, and AD7) in 2024; supports the Committee in its endeavours to respond to those challenges; asks the Committee to report to the discharge authority on such competitions organised in 2024;

    25. Notes that, at the end of 2023, the Committee employed 56,9 % women and 43,1 % men; regrets that the Committee has not yet achieved gender parity in leadership positions, but acknowledges the significant progress made under the Committee’s five-year diversity and inclusion strategy and action plan for 2022-2026, including a marked increase in the proportion of women in senior management positions from 37,5 % in 2022 to 44,4 % in 2023; recommends measures to enhance inclusivity in vacancy notices and to encourage greater female participation in senior and middle management roles, including through gender balance targets, balanced representation on selection boards, targeted training opportunities for female staff aspiring to managerial positions, and the promotion of more flexible working arrangements; encourages the Committee to continue its efforts for achieving gender balance and requires, in this context, Member States to nominate both a male and a female candidate for appointments for Committee membership to improve representation at all levels;

    26. Notes that, as a result of a pilot project on a hybrid working regime and a staff satisfaction survey launched in 2022, the Committee adopted on 1 January 2024 a decision which provides for a hybrid working regime and a personalised weekly working schedule for each staff, as well as the possibility to work from home for up to 60 % of staff’s working time (except for staff categories incompatible with telework) and work from outside the city of employment for up to 15 days per year; recognises that these measures aim to enhance work-life balance while maintaining operational efficiency and staff satisfaction;

    27. Notes with satisfaction that the Committee’s hybrid working regime has had a positive impact with regard to short-term sick leave, whereas: – the number of staff without sick leave increased from 71 (or 12 % of all staff) in 2018 to 211 (or 36 % of all staff) in 2023; – the number of staff on sick leave for less than seven days decreased from 257 (or 46 % of all staff) in 2018 to 201 (or 35 % of all staff) in 2023 and; – the number of staff on sick leave for a duration between 7,5 and 21 days decreased from 140 (or 25 % of all staff) in 2018 to 92 (or 16 % of all staff) in 2023; invites the Committee to monitor the impact of the new working regime and keep this topic in upcoming staff satisfaction surveys; notes with satisfaction that 90,25 % (82 % in the case of managers) of those that responded to the staff survey of December 2022 indicated their satisfaction with the flexible arrangements;

    28. Notes with concern that 18 cases of burnout were reported in the Committee in 2023, representing an increase from 16 cases in 2022; underlines the significant social and professional impact of burnout on staff well-being and performance; notes further that the Committee managed to reintegrate 16 members of staff in 2023 after long-term absence as a result of burnout, thanks to a personalised follow-up of long-term sickness leave; welcomes the preventive actions taken by the Committee to reduce psychosocial risks and burnout; appreciates in this regard the proactive approach of the medical service and the awareness-raising conferences, trainings and courses organised by the Committee; stresses, however, the need for further strengthening of efforts to address the root causes of burnout and to foster a healthier work environment;

    29. Notes that in 2023 the Committee continued to raise awareness of the measures put in place to prevent and combat harassment in the workplace, in accordance with its Decision of 26 April 2021 on protecting dignity at work, managing conflict and combatting harassment, notably through dedicated guidance, internal communication and the organisation of several information sessions for staff and managers; welcomes in particular the organisation of five training sessions on ‘Preventing psychological and sexual harassment’ and ‘Respect and Dignity for a high-performing team’ in 2023 and recommends continuity of this initiative; further notes with satisfaction that no new, ongoing, or closed cases concerning sexual harassment were reported during the year;

    30. Commends the Committee for its actions taken in 2023 in connection with the integration of persons with disabilities, such as making accessible the Committee’s buildings to persons with reduced mobility and ensuring that all job vacancies are accessible to candidates with disabilities;

    31. Notes that, in 2023, the Committee was employing staff representing all Union nationalities (and one staff member of Ukrainian nationality), with some of them being overrepresented (e.g., Belgium); welcomes the additional efforts of the Committee aiming at balancing the geographical distribution among staff by targeting a wider audience through the publication on its website and social media of calls for expression of interest for contract and temporary staff; regrets the persistent lack of geographical balance within the Committee’s staff, with certain nationalities remaining overrepresented in comparison to others; encourages the Committee to intensify its efforts to achieve a more balanced geographical distribution, particularly at the management level; asks the Committee to keep the discharge authority informed of the outcome of this type of action;

    32. Welcomes the participation of the Committee’s Traineeships Office, for the second consecutive time, in the session titled ‘Opportunities for young Roma’ in April 2023; commends the initiative to present the Committee’s traineeships scheme to young and motivated Roma and non-Roma participants, reflecting a strong commitment to promoting inclusivity, diversity, and equal opportunities; encourages the continuation and expansion of such initiatives to further engage underrepresented communities and foster a more inclusive European workforce;

    33. Welcomes the progress made with regard to gender balance in management, with an increase of the percentage of women both in middle management positions (from 29,7 % in 2022 to 32,5 % in 2023) and in senior management positions (from 37,5 % in 2022 to 44,4 % in 2023);

    Ethical framework and transparency

    34. Welcomes the work done by the Committees in 2023 to consolidate ethical rules and practices into a single ethical legal framework (Decision n⁰ 157/2023) covering disciplinary procedure, dignity at work, conflict management, combatting harassment, outside activities and whistleblowing among others; notes that that work culminated with a decision (n⁰ 157/2023) which was the outcome of comprehensive consultations with different stakeholders, as well as a follow-up to an internal survey on staff ethics awareness and the implementation of an internal audit recommendation on that topic; commends the Committee for continuing to offer training courses on ethics, integrity and respect and dignity at work to different groups of staff ranging from newcomers, managers and staff overall in 2023;

    35. Notes that the European Anti-Fraud Office (OLAF) processed two cases in 2023: one case on alleged outside gainful activities of a Committee member and another case on allegations of recidivism on unauthorised external activities by a staff member; notes that in the former case no OLAF investigation was opened on the grounds of lack of proportionality between the resources needed to conduct an investigation and the expected results, while the Committee considered that there were no conflicts of interest on the grounds that Committee members do not receive any remuneration from the Union, nor are they required to declare their professional activities, for which they may be paid for local or regional mandates that those members may have; notes with regard to the latter case that OLAF opened an investigation which was concluded with two recommendations, which the Committee implemented by opening a disciplinary procedure against the staff member concerned and by recovering gains in connection with that person’s unauthorised outside activities; recalls that the case closed in 2022 on allegations of financial wrongdoings, harassment and mismanagement in a Committee-EESC joint service, gave rise to a conflict-management exercise involving the persons concerned and to a five-point action plan; notes with satisfaction from the Committee’s follow-up report to Parliament’s discharge decision covering the Committee’s budget implementation year 2022 that that action plan was fully implemented by the end of 2023;

    36. Recalls that the Committee adopted Regulation n⁰ 6/2023 of 4 July 2023 laying down transparency measures that focus on office-holding members and rapporteurs; commends in this context the Committee for having formally joined the EU Transparency Register on 1 January 2024;

    37. Urges the Committee to enhance the detection and prevention of conflicts of interest by introducing a mandatory cooling-off period for outgoing members before they can engage in lobbying or advisory roles involving Union institutions; calls for the proactive publication of all recusal decisions taken by Committee members due to conflicts of interest;

    38. Welcomes the Committee’s renewed efforts in the area of detection and prevention of conflicts of interest in 2023; notes that thanks to its Decision n⁰157/2023, the Committee defined the concept of conflicts of interest and has put in place a mechanism to detect and prevent it whereby staff are required to declare whether they might have a conflict of interest (potential or possible), by filling in a form at various key moments of their career or professional activities; notes with satisfaction from the Questionnaire that the annual information regarding the occupation activities of former senior officials is published in a transparent way on the Committee’s website; notes that the Committee did not detect any situations of conflicts of interest which would have required follow-up by the administration in 2023;

    39. Notes that no cases of whistleblowing were reported to the Committee in 2023, except for information received from OLAF about a whistleblowing case against a staff member of the Committee, which was eventually dismissed by OLAF; notes that the Committee did not adopt any new measures concerning whistleblowing in 2023 and continued to rely on the measures in place since 2015 and to promote them through ethics training and awareness raising; supports regular mandatory ethic trainings both for staff as well as for management level;

    40. Notes that the Committee has had in place a range of anti-fraud measures and actions applicable to its members and its staff which are implemented by different services; observes that no anti-fraud strategy was in place in 2023 despite Parliament’s requests in previous discharge resolutions; notes with satisfaction, following Parliament’s recommendation, and as indicated in the Questionnaire, the Committee’s commitment to further strengthen the existing anti-fraud measures by adopting an anti-fraud strategy in 2025; encourages the Committee to facilitate regular and compulsory anti-fraud trainings as part of the strategy; asks the Committee to keep the discharge authority informed on this matter;

    Digitalisation, cybersecurity and data protection

    41. Notes that the combined IT budget of the Committee and the EESC was EUR 12,7 million in 2023, compared to EUR 11,712 million in 2022, i.e., an increase of 8,40 %, whereas EUR 350 000 of that budget was paid for cybersecurity in 2023;

    42. Welcomes the Committee’s new ‘Digital Strategy 2024-2026’ adopted at the end of 2023; commends in this context the Committee for its digitalisation progress made in 2023 in different areas such as the administrative processes (including staff selection), procurement and interpretation, among others; calls on the Committee to accelerate digital transformation efforts by ensuring the full implementation of electronic workflows, e-signatures, and digital case management tools by 2026, reducing paper-based processes in line with sustainability commitments, shifting towards a more paperless administration;

     

    43. Notes with satisfaction that 90 % of the projects for simplification through digitalisation under the ‘Going for impact’ initiative were fully implemented by the end of 2023; notes in addition that further efficiencies were tapped due to an IT project to define the best tool for the electronic management of form-based workflows with, as a result, many of the Committee’s processes having begun to be simplified and digitalised through Microsoft 365 tools; notes with satisfaction that the Committee uses procurement modules such as e-Tendering, e-Notices, e-Submission, MyWorkplace, as well as the qualified electronic signature, for the signature of contracts, introduced in 2023; welcomes the adoption by the Committee of internal guidelines on use of artificial intelligence laying the ground for possible future solutions and encourages introduction of regular mandatory trainings on safe use of artificial intelligence;

    44. Notes further that the European Data Protection Supervisor (‘EDPS’) did not conduct any investigation or enquiry into the processing of personal data by the Committee in 2023; notes that in 2023 the EDPS launched a general questionnaire on the designation and position of the data protection officer (DPO), which was answered by the Committee’s DPO;

    45. Notes that the Committee did not encounter any cyber-attacks in 2023, other than certain denial of service attacks against the Committee’s externally hosted website; notes from the Questionnaire of the Committee’s tools and strategies for real-time threat monitoring and identifying vulnerabilities in the Committee’s systems; commends the Committee for adhering to standards in matters related to cybersecurity-related risk assessments, as well as for having put in place a system based on incident response plans, recovery measures and lessons learned; notes with satisfaction that the Committee and the EESC adopted the NIST Cybersecurity Framework with focus, in 2023, on the principles: ‘protect’ and ‘detect’; encourages the Committee to raise the cybersecurity awareness of their members and staff, to carry out regular risk assessments of its IT infrastructure and to ensure regular audits and tests of its cyber defences;

    Buildings

    46. Notes that the Committee’s budget (current year appropriations) in 2023 was EUR 18,594 million (compared to EUR 18,930 million in 2022) with a payment execution rate of 93,70 % (compared to 82,60 % in 2022); notes with satisfaction that, as result of exchanging the B68 and TRE74 buildings for the VMA building in 2022, savings were achieved due to lower costs of renting the entire VMA in 2023;

    47. Notes that renovation works of the VMA (third to ninth floor) continued in 2023; notes further a low payment execution rate with regard to the C8 appropriations (carried over from 2022 to 2023), i.e., 18,90 %, used for the fitting-out of the VMA premises; understands the Committee’s explanation for that low rate whereas the contractor was not able to finish parts of the renovation works in the VMA buildings; reiterates its call to the Committee to provide the discharge authority with an update on the return on investment in relation to the smart technologies installed in the VMA;

    48. Welcomes the commitment of the Committee and the EESC to apply systematically the ‘design for all’ principle to their infrastructure, ensuring accessibility of their building by design; notes that the Committees took a range of different measures to ensure accessibility of their buildings to people with various kinds of disabilities (wheelchair users, blind and visually impaired people, deaf persons, elderly people with muscular or vascular problems);

    Environment and sustainability

    49. Notes that the Committee continued to implement a variety of green practices in 2023, such as the use of innovative energy-efficient building installations, the purchase of 100 % green electricity, the replacement of paperless workflows with digital signatures, the application of environmental criteria in all tender procedures (with customised green criteria for calls for tender above EUR 60 000), a focus on waste reduction and increase in the recycling rate, the implementation of measures for a more sustainable travel by staff, including financial contributions by the Committee to its staff’s public transport costs, the use of full remote interpretation for statutory meetings, and other energy saving measures; notes with satisfaction from the Questionnaire a reduction of carbon emissions linked to the Committee’s administration’s activities by 18 % compared to 2019;

    50. Notes with satisfaction from the questionnaire that, thanks to its energy saving measures, the Committee’s energy consumption was reduced by an estimated 3,4 % in 2023 compared to 2022, corresponding to a financial gain of EUR 64 240; congratulates the Committees for having exceeded the EMAS objectives for 2021-2025 in all areas (electricity, gas, water, waste, waste sorting, paper for office use, CO2 emissions);

    Interinstitutional cooperation

    51. Welcomes the budgetary and administrative savings achieved through interinstitutional cooperation, and in particular the close cooperation established at administrative level with the EESC, with which the Committee shares premises and joint services in the areas of translation, infrastructure, logistics and IT, with 470 members of staff and approximately EUR 60 million (excluding salary related expenditures) pooled together by both institutions in 2023; notes with satisfaction that the Committee further extended its cooperation with the EESC by exploiting additional synergies through joint medical services and joint central data protection register and processing operations based on the Joint Controllership Arrangement signed by the Committee and the EESC in 2023; reiterates its call on the Committee to pursue and expand that cooperation in other areas with a view to avoiding duplication and further rationalising the operating costs of services available in the premises shared by the Committee and the EESC; invites the Committee and the EESC to explore the possibility of setting up a single administration for their joint services, keeping separate directorates or units for the services dealing with matters related to their specific and independent mandates; encourages the Committee and the EESC to continue their efforts to develop further cooperation and synergies;

    52. Welcomes the Committee’s search for synergies by purchasing services from other institutions through service-level agreements and by participating in interinstitutional coordination bodies and interinstitutional procurement procedures; welcomes the efficiency gains, with regard to the communication for the 2024 European elections, reported by the Committee in the Questionnaire; notes that those gains were possible because the Committee signed with Parliament a Memorandum of Understanding in February 2024 and a new Cooperation Agreement (CP) in May 2024; notes further that the CP also covered cooperation at political and administrative level between the two institutions;

    53. Calls on the Committee to deepen its cooperation with Parliament and the Commission by establishing a structured annual dialogue between Committee representatives and Union legislators on key legislative files affecting regional development, climate policy, and social cohesion; urges the Committee to explore joint initiatives with Parliament’s Committees on Regional Development (REGI) and on the Environment, Climate and Food Safety (ENVI) to promote sustainable regional investments;

    54. Notes that the Committee cooperates with the Commission (for an annual fee) for the handling of HR matters and the use of various IT platforms for financial management and HR; notes further that the Committee holds its plenary sessions in the premises of Parliament and the Commission to compensate for the lack of capacity in its own conference rooms and buys interpreting services from those two institutions; 

    55. Welcomes the reviewing in 2023 of the Cooperation Agreement of the Committee with Parliament in view of its final signature in 2024; supports the cooperation of the Committee with several parliamentary committees, intergroups and directorates-general of Parliament and convene to considers vital that members of the Committee and EESC be regularly and systematically invited to relevant parliamentary exchanges, including committee meetings, on issues they are dealing with;

    Communication

    56. Notes that the Committee’s communication activities focus on relationship with press, organisation of events and digital content and social media with a total budget (current year appropriations) of approximately EUR 2,8 million in 2023; regrets a very low payment execution rate in those areas (ranging from 24,70 % to 48,20 %); notes nevertheless a high execution rate with regard to C8 appropriations (carried over from 2022 to 2023) of between 98 % and 100 %; calls on the Committee to take measures for improving its budgetary planning with regard to communication related budgetary items;

    57. Notes with satisfaction the Committee’s achievements in promoting Union policies and programs at local and regional level, improving the outreach of its consultative works and enhancing its visibility and impact; notes that the Committee’s communication strategy seeks to strengthen its institutional and political profile as the voice of the Union’s regions, cities, villages, and municipalities, while showcasing the essential contributions of its members in connecting Union policies with citizens and fostering engagement at the local and regional level; notes in this context the Committee’s communication actions in 2023 in areas such as: – cohesion (e.g., the ‘Promoting cohesion as a fundamental value of the Union’s campaign in the framework of the EURegionsWeek with more than 8 000 participants); – climate change (e.g., the ‘Building resilient and innovative local communities’ campaign); – democracy (e.g., the ‘A new chapter for EU democracy’ campaign with 1 400 registrations for participation at the 14th EuropCom conference); – rural development (the ‘2023 LEADER European Congress’ conference) in 2023; commends the Committee for the increase in the number of persons registered in the Network of Regional and Local EU Councillors (from 2 307 in 2022 to 3 000 in 2023) and the number of participants in the Young Elected Politicians programme (from 775 in 2022 to 836 in 2023);

    58. Welcomes the Committee’s efforts to increase outreach to regional governments and local communities, including the expansion of the Network of Regional and Local EU Councillors and the Young Elected Politicians program; calls on the Committee to allocate additional resources to support regional capacity-building programs that empower local governments to better implement Union policies;

    59. Notes the Committee’s success with regard to media outreach as shown by the overall metrics for 2023, such as: 13 210 media mentions, 129 % increase on web visitors and 11 % increase on followers; notes that in terms of digital engagement, the Committee fell short of achieving its target for 2023; notes that, at the end of 2023, the Committee had 200 000 followers on its social media channels, i.e., 15 % more than in 2022 of which 57 603 followers (+5 %) on X (ex-Twitter), 61 170 (+5 %) on Facebook, 68 613 (+31 %) on LinkedIn and 15 392 (+47 %) on Instagram;

    60. Notes with satisfaction from the Questionnaire the Committee’s initiatives to raise awareness about the specific measures of the Digital Services Act and the Digital Markets Acts, as well as cybersecurity and online safety; acknowledges the Committee’s role in advancing the Union’s path to a digital future; commends in this context the Committee for organising in 2023 the Digital Masterclass series, for both staff and external audiences.

    MIL OSI Europe News

  • MIL-OSI Europe: REPORT on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section V – Court of Auditors – A10-0047/2025

    Source: European Parliament

    2. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

    with observations forming an integral part of the decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section V – Court of Auditors

    (2024/2023(DEC))

    The European Parliament,

     having regard to its decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section V – Court of Auditors,

     having regard to Rule 102 of and Annex V to its Rules of Procedure,

     having regard to the report of the Committee on Budgetary Control (A10-0047/2025),

    A. whereas in the context of the discharge procedure, the discharge authority wishes to stress the particular importance of further strengthening the democratic legitimacy of Union institutions by improving transparency and accountability and by implementing the concept of performance-based budgeting and good governance of human resources;

    B. whereas the Court of Auditors (the ‘Court’) is the Union’s external auditor, entrusted, by way of independent, professional and impactful audit work, with assessing the economy, effectiveness, efficiency, legality and regularity of Union action to improve accountability, transparency and financial management, thereby enhancing citizens’ trust and responding effectively to current and future challenges facing the Union;

    C. whereas, without prejudice to Articles 287 and 319 of the Treaty on the Functioning of the European Union (TFEU), each year since the close of the 1987 financial year, the Court has had its revenue and expenditure accounts audited by an independent external auditor and, since the report on the 1992 financial year, the external auditor’s reports have been published in the Official Journal of the European Union;

    D. whereas management accountability to the budgetary authorities is provided via the annual activity report of the Secretary-General of the Court, the purpose of which, according to Article 74(9) of the Financial Regulation, is to provide information about the use made of resources, including systems, and about the efficiency and effectiveness of the Court’s internal control systems;

    E. whereas, by performing its tasks in a transparent and independent way, the Court contributes to democratic oversight, public debate and the sound financial management of the Union;

    F. whereas the Court has taken the position that, in order to assess the governance, accountability and transparency of the Union and the quality and reliability of the information and data reported on the implementation of Union policies, the best solution would be for the Court to be mandated to audit all Union institutions, bodies, offices and agencies set up by or under the Treaties and all the intergovernmental structures of key relevance to the functioning of the Union; whereas Parliament strongly supports the Court and would welcome initiatives that would strengthen the ability of the Court to deliver on its mandate;

    1. Notes that the budget of the Court falls under MFF heading 7, ‘European public administration’, which amounted to EUR 12,3 billion in 2023 (representing 6,4 % of the total Union budget); notes that the Court’s budget of approximately EUR 0,2 billion represents approximately 1,5 % of the total administrative expenditure of the Union and less than 0,1 % of total Union spending;

    2. Notes that the Court, in its annual report for the 2023 financial year examined a sample of 70 transactions under Administration, 10 more than were examined in 2022; further notes that the Court reported that administrative expenditure comprises expenditure on human resources, including expenditure on pensions, which in 2023 accounted for about 70 % of the total administrative expenditure, and expenditure on buildings, equipment, energy, communications and information technology, and that its work over many years indicates that, overall, that spending is low risk;

    3. Welcome the continuous increase in the number of transactions audited by the Court under the heading Administration; take note of an audit planned on the Union civil service, but recalls the importance of having a more in-depth investigation into the administrative expenditure and repeats its call to include in its work comprehensive data on all institutions in order to provide a coherent basis for a consistent discharge procedure;

    4. Notes that 21 (30 %) of the 70 transactions contained errors but that the Court, based on the 5 errors which were quantified, estimates the level of error to be below the materiality threshold;

    5. Notes that the financial statements of the Court are audited by an independent external auditor in order to ensure the same principles of transparency, accountability and independence as the Court applies to its auditees;

    Budgetary and financial management

    6. Notes that the overall budget of the Court for 2023 amounted to EUR 175 059 922, equivalent to an increase of 7,97 % from EUR 162 141 175 in 2022; notes that the increase was primarily due to salary adjustments and nine new temporary posts related to NextGenerationEU; notes that for 2023 88,5 % of appropriations were for its Members and staff, while 11,5 % were for buildings, equipment and miscellaneous expenditure;

    7. Notes that the implementation rate for commitments and payments was high, though slightly lower than in 2022; observes that the utilisation rate for appropriations stood at 97,92 %, and payments represented 94,45 % of total commitments, compared to 98,12 % and 95,26 %, respectively, in 2022;

    8. Notes that Russia’s illegal and unjustified war of aggression against Ukraine in various ways created budgetary pressures for the Court, including through rising inflation and salary adjustments, strongly increasing electricity and heating costs;

    9. Highlights that the budgetary execution for 2023 was impacted by two factors, which explain the slightly lower rate than in 2022:

    1. the higher-than-budgeted level of inflation and the resulting price indexations affecting new and existing contracts, which triggered additional budgetary needs to cover non-salary expenditure and, in particular, the energy and IT budget lines; those increases in appropriations were eventually made possible mainly as a result of an underutilisation of some appropriations in Chapter 10 (Members of the Institutions), in Chapter 12 (Officials and temporary staff) and in Title 2 on budget lines such as Publications, Limited consultations, studies and surveys and Interpretation costs;

    2. the higher turnover of contract staff and SNEs (some SNE contracts were not extended and a few SNEs passed an internal competition for temporary staff), delays and difficulties in recruitment procedures as for any European bodies located in Luxembourg;

    10. Notes that, in the course of 2023, the Court carried out 36 budgetary transfers totalling EUR 5 676 379, which were aimed at ensuring that the Court’s various departments operated smoothly and that any related needs were met;

    11. Notes that, in 2023, the Court purchased goods and services totalling EUR 23 426 750,05 (EUR 5 512 853 in 2022 and EUR 15 215 515 in 2021), of which purchases from local suppliers amounted to EUR 21 453 665,05 (EUR 4 848 701 in 2022 and EUR 10 144 812 in 2021);

    12. Notes with satisfaction that the external auditor declared that the resources allocated had been used for their intended purpose and that the control procedures put in place by the authorising officers provided for the necessary guarantees to ensure that financial operations were in compliance with the applicable rules and regulations;

    13. Welcomes that the overall mission budget of the Court (Members and staff) initially set at EUR 2 722 500 has declined by 4,4 % to EUR 2 602 500 given changes in the Court’s working methods following the pandemic;

    14. Calls on the Court to conduct a comprehensive review of travel and meeting allowances, ensuring that expenditures are cost-effective, justified, and environmentally sustainable, including an increased reliance on hybrid meetings to reduce unnecessary spending and carbon emissions;

    Internal management, performance and internal control

    15. Welcomes the fact that, in 2023, the Court significantly increased its on-the-spot visits compared to the previous three years, when COVID-related travel and public health restrictions were still partly in place; notes that the Court spent a total of 4 897 days in Member States and outside the Union compared to 2 984 days in 2022, 1 156 days in 2021, 1 190 days in 2020 and 3 605 days in 2019;

    16. Notes that, in the course of 2023, the Court presented 2 annual reports, 4 specific annual reports, 29 special reports, 4 opinions and 6 reviews, totalling 45 items;

    17. Notes that of the 29 strategic measures of the Court’s 2021-2025 strategy, 1 has been cancelled and the other 28 fully implemented;

    18. Appreciates that the Court measures the implementation of its recommendations based on the follow-up carried out by its auditors; notes that, in 2023, the Court analysed the recommendations addressed to the Commission and other institutions in its 2019 reports; appreciates that the analysis showed that of the recommendations that have been followed up, 100 % of the 15 recommendations made in the Court’s 2019 annual report and 85 % of the 208 recommendations in the Court’s 2019 special reports had been implemented either in full or in some or most respects;

    19. Welcomes the readiness of the Court to respond to Parliament’s request to focus its audit work on the most pressing challenges, as well as to improve cooperation with Parliament’s CCC; stresses that the Court should have full access to fraud risk assessment tools, including Commission and Member State databases regarding fraud cases related to Union funding, to enhance early warning systems against fraudulent activities; regrets deeply that the Court’s access to FENIX, the new reporting tool on the Recovery and Resilience Facility (RRF), remains an open issue due to the fact the Commission only grants the Court access to some of the FENIX modules, and the information contained therein is not updated in a timely manner; urges the Commission to grant the Court full and immediate access to all FENIX modules without delay; notes that the Commission’s Directorate-General for Economic and Financial Affairs has endeavoured to grant the Court access to FENIX files within 2 weeks of approving a payment request; is alarmed, however, that in practice, that deadline is not being met in many cases and that delays of up to 2,5 months have been encountered in some instances, significantly slowing down the delivery of Court findings; recalls that the Commissioner for Budget in the CONT meeting on 10 October 2024 openly stated that the Court has a full mandate on the RRF which indicates the need for a speedy improvement of the Court’s access to all tools to deliver on its mandate;

    20. Calls on the Court to expand its audit scope to include European Investment Bank (EIB) operations financed with the EIB’s own funds, given the EIB’s growing role in EU economic,financial, and industrial policy; urges the Commission and Member States to grant ECA the legal mandate required for this expansion;

    21. Commends the timely and pertinent special reports on the implementation of the RRF, which enable the discharge authority to effectively exercise its prerogatives and provide recommendations to the Commission for enhancing the functioning of this instrument; urges the Court to strengthen its role in combating fraud in the Union budget by identifying weaknesses, engaging in anti-fraud discussions, intensifying audits, cooperating with fraud detection bodies, and providing relevant feedback to the discharge authority;

    22.  Notes that the Court, at the end of 2023, had 969 members of staff; notes that in 2023, women constitute 53 % of the staff and men 47 %, unchanged from the previous year, 2022; regrets that women represent only 30 % of senior management, a significant decline from 36,4 % in 2022; highlights that the overall proportion of women in management positions has decreased in 2023; calls on the Court to continue its efforts to promote gender balance for the middle and senior management;

    Human resources, equality and staff well-being

    23. Is alarmed that the recruitment process required additional effort, as around 50 % of candidates turned down the job offers from the Court, in part due to the limited attractiveness of Luxembourg as a place of employment and the high cost of living; notes, however, that the big audit firms present in Luxembourg are also facing challenges and are now turning to Asian markets to recruit auditors; stresses that such an approach cannot be applied by the Court due to security and eligibility concerns; acknowledges the Court’s efforts and encourages it to collaborate with other Luxembourg-based institutions within the High Level Interinstitutional Group to enhance Luxembourg’s appeal to prospective staff through identified measures, such as higher relocation allowances, housing allowances to mitigate high rental costs for lower-grade staff and reasonably priced temporary housing for short stays to make employment in Luxembourg more attractive;

    24. Recalls the Treaty on the European Union, that the EU and its institutions, shall promote solidarity and equality between women and men;

    25. Shares the Court’s concern that, in general, the audit profession is facing recruitment issues due to a lack of interest in audit and control jobs among young workers; calls for proactive solutions and immediate systematic inter-institutional cooperation to address this issue;

    26. Shares the Court’s observations that EPSO competitions do not always achieve the objective of attracting and selecting relevant profiles of candidates from the private sector; highlights the several issues with EPSO competitions, for example technical problems with remote testing leading to the cancellation of one competition and putting all others on hold; acknowledges the concerns related to the recruitment and the selection procedures of new staff; encourages the Court to continue its effort to address this situation in order to safeguard the continuity of the Court’s activity; notes with appreciation that the Court has engaged in cooperation with EPSO in order to organise audit competitions at regular intervals; suggests possible cooperation with other relevant Union bodies in order to optimise hiring processes;

    27. Appreciates the fact that the Court has organised flexible and varied selection procedures as provided for in the Staff Regulations and the Conditions of Employment of Other Servants of the European Union and has put in place procedures to retain talented staff;

    28. Notes the teleworking regime (up to 10 days per month) offered by the Court in order to mitigate the recruitment challenges; welcomes the measures taken by the Court in 2023 in order to ensure the physical and mental well-being of staff;

    29. Notes that the vacancy rate in December 2023 was 2,27 % and the staff turnover rate (number of staff leaving as a proportion of all staff) was 6,6 %;

    30. Appreciates the Court’s effort to keep the vacancy rate low in 2023; however, fully shares the concern about the lack of geographical balance among new recruits, making the Court’s staff as a whole even less geographically representative; notes that, according to the Court, there is a risk that within the space of five years several Nordic Member States will not be covered by the audit given a potential absence of auditors from those Member States;

    31. Welcomes the fact that the Court took various steps to tackle the issue of geographical balance, such as increasing publicity for the Court’s competition and vacancy notices in significantly underrepresented Member States, cooperating with Members of the Court to disseminate its notices and reaching out to potential candidates by attending career fairs in certain Member States; encourages further steps being taken into consideration, such as early engagement strategies, attracting young talent from the countries with low representation; notes with a certain regret that there is still some way to go to reach gender balance in middle and senior management;

    32. Welcomes the fact that, at the end of 2023, all 29 additional posts required for the RRF audit of EUR 723,8 billion were filled; however, underscores that the materiality, complexity, large amounts and rapid disbursements from the RRF continue to pose challenges and that not all aspects of the RRF can be covered with the resources available, which allow the Court to assess the satisfactory fulfilment of milestones and targets and therefore the legality and regularity of RRF payments, but they are not sufficient to systematically cover compliance of RRF expenditure with Union and national laws; highlights the importance of ensuring that the Court is consistently provided with adequate staffing levels to fulfil both its mandate and additional responsibilities stemming from new financing instruments such as the RRF; commends the efforts done by the Court to carry out its duties regarding the RRF so far despite the lack of availability of fully adequate resources;

    33. Is aware that the Court has no role in the selection process for Members under Article 286(2) TFEU; points out, however, that there is still an important gender imbalance among the Members of the Court, with only 10 women out of 27 members; regrets that 12 Member States have never nominated a woman to the Court; calls on the Court to evaluate its overall composition and provide this analysis to the Council and the Member States, in order to ensure that gender balance is appropriately considered in future nomination processes; reiterates its call for Member States to propose candidates of different genders, aiming for a more balanced and representative composition of the Court;

    34. Regrets that over the years the Council repeatedly proceeds to nominate members of the Court despite those nominees being rejected by Parliament; underlines that Parliament should have a binding role in assessing the suitability of candidates for the Court;

    35. Expresses regret that the Council has repeatedly nominated members of the Court despite their rejection by Parliament; emphasizes that Parliament should hold a binding role in evaluating the suitability of candidates for the Court;

    36. Notes that, in 2023, the average absence due to illness was 10 days per staff member, compared to 12,2 days in 2022; notes furthermore that, in 2023, 4 staff members (compared to 8 in 2022) were absent due to prolonged illness, defined as lasting more than 200 days in a year;

    37. Notes with concern that 7 cases of burnout were reported in 2023, reflecting the same troubling number as in 2022; welcomes the fact that the Court took several steps to reduce the risk of burnout by introducing a full wellbeing programme, offering a resilience training, publishing and implementing guidelines on returning to work after long-term sick leave, continuing to offer mental health first aid, and providing financial support to staff by covering the cost of 10 sessions with a psychologist of their choice;

    38. Notes with appreciation that in 2023 the Court again exceeded the professional training target of five days of non-language training per years for auditors (6.7 days), in line with the International Federation of Accountants’ recommendations; notes in particular the training of the Court’s staff on the NGEU and the RRF;

    39. Welcomes the adoption of a new policy in December 2022 to ensure a respectful and harassment-free workplace, focusing on prevention, awareness-raising, and early detection; highlights measures such as a presentation to all staff in January 2023 to enhance understanding of the policy, the rollout of a harmonized reporting form, and the publication of the first aggregated annual report on policy implementation;

    40. Welcomes the Court’s Diversity and Inclusion Action Plan 2021-2025; notes with satisfaction the organisation of the third Disabilities Awareness Week and interinstitutional initiatives to foster inclusivity; emphasizes the ECA’s efforts, including its survey on workplace accessibility, participation in the Ombudsman Award for Good Administration, and the external audit on building accessibility in compliance with Luxembourg’s 2023 accessibility legislation;

    41. Emphasises the critical role of the Court as the Union’s independent external auditor and guardian of its finances, which requires the Court to uphold the highest standards of integrity, professionalism, and accountability, serving as a model institution to inspire confidence and credibility; recalls that, in accordance with Article 285 TFEU, the members of the Court must exercise complete independence and adhere to the highest ethical principles, demonstrating integrity, objectivity, professional conduct, dignity, commitment, and loyalty;

    Ethical framework and transparency

    42. Welcomes the fact that the internal rules on reporting serious irregularities (whistleblowing) were updated in order to make them clearer and more detailed and to provide more information to staff; notes that there were no whistleblowing cases at the Court in 2023; notes furthermore that, in 2023, the Court also launched the process of updating the Court’s rules on conducting administrative investigations and disciplinary procedures, which was finalised in early 2024;

    43. Notes that, in 2023, the Court organised 3 training events specifically dedicated to ethics, which attracted 60 participants; takes into account the fact that the Court’s ethics-related courses were open to all staff, including managers, and that the standard courses are compulsory for newcomers and cover public ethics and the Court’s anti-harassment policy; regrets that the ethics-related courses were not compulsory to all staff on a regular basis;

    44. Appreciates the fact that the Court has organised 6 training courses on fraud, including fraud in procurement, VAT fraud, and fraud in relation to the RRF; welcomes the fact that, in June 2023, the European Anti-Fraud Office (OLAF) provided training on interviewing in cases of suspected fraud and corruption; notes that, in November 2023, the Court joined the European Public Prosecutor’s Office (EPPO) and OLAF in organising a 2-day course on public procurement fraud in the Union;

    45. Is concerned by media’s report that an EPPO investigation on misuse of funds by the former President of the Court is currently blocked by the decision of the Court not to lift his immunity; requests the Court to fully cooperate with EPPO on any investigations they may activate and to report on the reasons for the decision not to lift the immunity;

    46. Calls on the Court to ensure that all Members and senior staff publish their financial interests, gifts, and hospitality declarations in a public online database, in line with best practices in EU transparency rules;

    47. Regrets that the Court has failed to fully cooperate with EPPO by refusing to lift the immunity of its former President and by denying EPPO access to conduct a search within its premises in relation to a probe into possible wrongdoing, which could be considered an interference with the proper conduct of an investigation, according to the EPPO; recalls that, as the Union’s external auditor, the Court is bound by the principles of accountability, integrity, and transparency, as well as the principle of mutual sincere cooperation between EU’s institutions; calls on the Court to ensure that immunity is not invoked to hinder legitimate judicial proceedings and to take all necessary measures to ensure full compliance with interinstitutional cooperation in the prevention and investigation of fraud;

    48. Notes with concern that, according to media reports, the European Public Prosecutor’s Office (EPPO) has requested the lifting of immunity of several ECA staff members in 2023 and that, to date, the Court has refused to grant this request; stresses that while immunity serves to protect the independence of EU institutions, it should not be misused to shield individuals from legitimate judicial scrutiny; considers that requests for the lifting of immunity should only be refused in exceptional circumstances; calls on the Court to provide a detailed justification to the discharge authority for its decision in this case, outlining the specific legal and procedural concerns that led to the refusal, if any; further urges the Court to maintain a high level of transparency and accountability in its cooperation with EPPO and other EU bodies responsible for combating fraud and misconduct;

    49. Notes that, in 2023, neither OLAF nor the European Ombudsman initiated any investigations involving the Court;

    50. Welcomes that, in 2024, the Court, jointly with the Court of Justice, invited the Commission to participate in an interinstitutional dialogue with a view to agreeing on common rules regarding the use of official cars, which is in line with the remark included in Parliament’s resolutions of 11 April 2022 on discharge in respect of the implementation of the budgets of the Court of Auditors and of the Court of Justice; emphasises the call on all Union institutions to agree on a single system to be applied horizontally, which would reduce confusion and increase transparency and efficiency in the use of public money; notes that a working group will be created in the framework of the interinstitutional Preparatory Committee for Matters relating to the Staff Regulations; appreciates the Court’s readiness to align the rules with the applicable rules of the Commission, but reiterates the criticism already expressed on previous discharge resolutions on the new decision from 2022 concerning members’ travel, missions and use of drivers and cars, which is against the general principle that the use of the car fleet outside of the strict performance of the duties of the members of the Court should not take place under any circumstance;

    51. Notes that, in 2023, the Court’s Internal Audit Service (IAS) made 16 audit recommendations with regard to ethics, the transparency portal, conflicts of interest for staff, the Ethics Committee and Members of the Court; notes that out of 16 recommendations, 5 recommendations were completed by 30 July 2024, 8 recommendations will be completed by the end of 2024, and the completion of 3 recommendations has been delayed;

    52. Welcomes the extension of scope of information published on Members’ mission, but recalls Parliament’s request to provide information about missions for the whole mandate of the Members; welcomes the revision of the Code of Conduct of members which forbid Members from holding any honorary position in political organisation, implementing Parliament’s request for Members not to have formalised political links; takes note that conclusions of the internal audit report on ethics was to be communicated to the EP President and the Chair of the Budgetary Control Committee in the third quarter of 2024, and invites the Court to share this with the Committee of Budgetary Control in its entirety; invites the Court to publish refusal decisions in cases where Members or staff declare conflicts of interest, ensuring greater transparency in the audit process;

    53. Notes that all the Members of the Court have their primary residence in Luxembourg, as required by Article 10 of the Code of Conduct for the Members and former Members of the Court of Auditors;

    54. Welcomes the fact that the Court has revised the policy on public access to documents, reflecting the evolution of European case law, and simplified the procedure for dealing with requests to access documents and with confirmatory requests; recalls the fact that application of the Scandinavian principle of public access to official records in the Union was a prerequisite for some Member States to join the Union and underlines the fact that non-delivery would be detrimental to the reputation of the Union as a community based on the rule of law;

    55. Regrets that an annual list of contracts above Directive threshold (>EUR 140 000 for services/supplies; >EUR 5 382 000 for works) concluded in 2023 is not available on the website of the Court; calls on the Court to publish that list as a separate document without undue delay and ensure user-friendly access to it;

    56. Appreciates and awaits with eagerness the Court’s consolidation of all internal anti-fraud strategy rules into one joint document;

    57. Continues to reject the rationale of the Court for its decision not to join the Transparency Register, as it does not have a vested interest in influencing decision making, beyond providing facts and objective feedback about Union programmes; notes that all of the Court’s reports are publicly available and subject to a rigorous clearing procedure with the auditees; reiterate its strong call for the Court to join the EU Transparency Register in order to adhere to basic principles of transparency while at the same time not creating any obstacles to the full independence of the Court;

    58. Strongly encourages the Court to reconsider its position regarding the EU Transparency Register, established by the interinstitutional agreement of 20 May 2021 between the European Parliament, the Council of the European Union, and the European Commission on a mandatory transparency register1a;

    59. Welcomes the significant progress made in 2023 towards establishing the Document Management Ecosystem (DOME), namely the delivery and implementation by means of concrete document approval processes of both the new electronic signature and the core approval module for PASS (Process to Approve, Sign and Send documents); encourages the Court to further pursue its objectives of digitalizing the review and approval workflows and improving their efficiency;

    60. Notes that the Court continued being actively involved in the Emerging technology group of the Interinstitutional Committee for Digital Transformation; notes that the DATA Team (Data and Technology for Audit), established in 2021, continued working on the implementation of the development plan for better use of technology in support of the Court’s audit objectives; notes in particular the preparation of an analysis of AI opportunities and challenges for the Court and for its audit work; recalls the importance of improving the digitalisation of the audit work; welcomes all the efforts in this direction that the Court continues to make, whereas digitalisation combined with the increased number of on-the-spot visits, can define a system of efficient and accurate audit work;

    Digitalisation, cybersecurity and data protection

    61. Commends the Court for good progress in implementing its 2022-2024 cybersecurity plan over the past two years; notes that seven of the high-priority tasks have been completed, six are underway and one is on hold; notes that two of the medium-priority tasks have been completed, four are ongoing and three have not yet been started;

    62. Appreciates the fact that the following tasks are among those completed:

    1. the deployment of an EDR solution on the endpoints and adoption of a cloud-based XDR solution that correlates the telemetry sent by the EDR agents with threat intelligence data from varied sources to detect indicators of compromise;

    2. a revamp of the architecture and configuration of the SIEM platform, which has improved the system‘s performance and reliability, coupled with additional sources of logs that have been added to enhance the security monitoring of the IT environment;

    3. the replacement of the VPN appliances for remote access with a zero-trust cloud-based SASE service, which reduces the attack surface and allows granular remote access to applications;

    4. the reinforcement of the protection against email threats by enabling new features on email security filters that allow improved detection of both spam and malicious attachments;

    5. the execution of pen tests of Court departments exposed to the internet;

    6. the deployment of a software tool to protect the confidentiality of sensitive information transmitted in file shares;

    63. Urges the Court to develop a cybersecurity audit framework for EU institutions and agencies, ensuring harmonized security standards and resilience measures against cyber threats;

    64. Notes with appreciation that the Court conducts at least three simulated phishing exercises per year to raise users’ awareness of that cyber threat; notes furthermore that the Court conducts a comprehensive cybersecurity risk assessment every three years; Suggests to the Court to organise on a regular basis compulsory training for al staff on cyber threat including good practices for a safe use of AI;

    65. Notes with relief that there was no trace of data exfiltration or lateral movement of the intruder to other Court IT systems during the July 2023 cyber-incident, during which one of the perimeter security gateways was compromised by the exploitation of a software vulnerability; notes that the software vulnerability had been disclosed by the vendor just two days before the incident;

    66. Commends the work of the Cybersecurity Service for the Union institutions, bodies, offices and agencies (CERT-EU), which notified the Court of the incident, helped to investigate its scope and performed the forensic analysis; notes that, in the aftermath of the incident, the Court has restored a clean backup of the system and applied the software update that remediated the vulnerabilities exploited by the attacker; notes furthermore that in the following weeks the Court gradually applied a few additional preventive measures recommended by CERT-EU to the appliances to ensure that any possible undetected trace of the malware was eradicated;

    67. Notes with appreciation that the Court reviewed and updated its Cybersecurity Incident Response Plan in 2023 and created a form for recording such incidents in the IT service management tool; highlights the fact that the form took account of the lessons learned from the July 2023 incident in that it was geared towards collecting all information that could be useful in handling a cybersecurity incident;

    Buildings

    68. Notes that, in 2023, the work to upgrade the technical installations on all floors of the K2 building and optimise the use of its common spaces was completed; notes that the Court has committed EUR 6 445 635,82 from a total budget of EUR 6 902 185,54; commends the Court for not exceeding the estimated budget; calls on other Union institutions to follow the exemplary budgetary management of the Court;

    69. Appreciates that, in February 2023, the results of an accessibility audit of all Court buildings to meet the needs of people with reduced mobility or other disabilities conducted by an external consultant were delivered; notes that the audit covered all three buildings, the common spaces, car parks and other spaces; is aware that the actions proposed are being reviewed and would normally be the subject of a specific project, but that their implementation will depend largely on budget availability;

    Environment and sustainability

    70. Notes that, in 2023, the Court invested a lot of its environmental impact reduction effort in energy-saving measures such as the replacement of traditional light bulbs with LEDs, the reduction of the number of hours of ventilation and the overhaul of certain technical systems in its buildings; notes furthermore that the Court introduced special energy-saving measures in the summer of 2023, which reduced electricity consumption by 12 % compared to the summer of 2022, generating savings of EUR 26 976;

    71. Notes that, in 2023, the Court signed an agreement with the Luxembourgish authorities to establish a mobility plan; looks forward to updates about that initiative;

    Interinstitutional cooperation

    72. Highlights the fact that, in 2023, the Court’s auditors spent 1 370 days at Union institutions, bodies, offices and agencies and at various international organisations and private audit firms, compared to 945 days in 2022;

    73. Calls for the formalization of an annual interinstitutional dialogue between the ECA, European Parliament, Council, and Commission on budgetary control, ensuring systematic follow-up on audit findings and improved oversight of EU expenditure;

    74. Recalls once again that effective cooperation between the Court and the Commission will remain limited unless the Commission adopts the Court’s methodology for assessing error rates, which is based on an independent and comprehensive evaluation of all rule breaches, in contrast to the Commission’s focus on recoverable errors;

    75. Welcomes the fact that the Court cooperates closely with both OLAF and the EPPO, including by organising workshops and awareness-raising events and by exchanging knowledge and experience; furthermore notes that the Court, in 2023, forwarded 20 cases of suspected fraud to OLAF and 17 such cases to the EPPO; emphasizes its position that all suspicions of fraud should be promptly referred to OLAF and EPPO for thorough investigation;

    76. Calls on the Court to establish a structured fraud-detection collaboration mechanism with OLAF and EPPO, including real-time data-sharing agreements and a joint audit approach for high-risk EU funding areas;

    77. Is convinced that a single integrated IT system for data-mining and risk scoring could be a valuable source of data, which would allow the Court, OLAF and the EPPO to strengthen their audit and control efforts; stresses that unlimited access should be provided to such a system and the data contained therein, that no unjustified restrictions should be placed on that access and that the exploration and use of further digital tools and emerging technologies should immediately be allowed as part of the Court’s audits;

    78. Regrets that, despite improved access to European Investment Bank (EIB) documents and information, the Court lacks a mandate to audit operations financed with the EIB’s own funds; calls for that mandate to be granted to the Court, given the EIB’s mission to pursue Union objectives and its growing role in the Union’s economic and political landscape, which extends beyond utilising the Union budget to guarantee its operations; highlights Special Report 05/2023 of the Court entitled ‘The EU’s financial landscape – a patchwork construction requiring further simplification and accountability’ in which the Court stated that a public audit mandate should be established for all types of financing for Union policies;

    79. Notes that, in 2023, the Court presented 29 special reports, 1 review and 1 opinion to 22 different Council committees and working parties; further notes that the same year Court representatives participated in 23 meetings focused on the discharge of the Union budget for the 2021 and 2022 financial years;

    80. Notes with appreciation that the Members and management of the Court demonstrated active engagement in 2023, presenting their work at 120 meetings with national governments and governmental bodies across 25 Member States, the majority of which involved ministers or ministries of finance; further notes that in the same year, Members and staff of the Court presented their work at 91 meetings with national or regional parliaments in 19 Member States, primarily through committees focused on budgetary, financial, audit or EU affairs; urges the Court to intensify its engagement with the governments of countries where error rates are highest, fostering greater dialogue and collaboration in order to address those issues effectively;

    Communication

    81. Notes that, in 2023, the budget allocated for the Court’s communication and promotional activities amounted to EUR 225 000 with a utilisation rate of 81,13 % (EUR 182 549,84); notes that most of the budget was spent on both media monitoring services (EUR 81 650) and press actions (EUR 12 348), followed by expenditure on stakeholder relations, which mainly comprised the cost of a policy intelligence platform (EUR 57 891), communication activities (EUR 28 002,88), social media (EUR 1 486,52) and publications (EUR 1 171,44);

    82. Strongly supports the Court’s growing media strategy, which resulted in a record of more than 22 000 online press articles related to its audit reports, other publications or the Court in general, thus confirming the upward trend in coverage observed over the recent years (2022: 20 000; 2021: 18 000); highlights the fact that nearly 54 000 posts on social media shows the continuation of an organic growth, with numbers for 2022 being an outlier (2022: 110 000; 2021: 49 000);

    83. Welcomes the fact that, in 2023, the Court issued 45 press releases in 24 Union languages, as well as various information notes, media advisories and ready-to-use audio-statements in certain languages; notes furthermore that the Court held 21 online press briefings and 6 additional country-specific press briefings for the annual report; highlights the fact that, altogether, the Court’s briefings have attracted 590 journalists, most representing major national media outlets in the Member States;

    84. Notes with appreciation that, in 2023, the Court launched a new website, receiving over one and half million visits, with around 700 000 unique visitors, which represents an increase of more than 14 % compared to 2022; welcomes the fact that, by the end of 2023, the Court’s three main social media accounts (X (ex-Twitter), LinkedIn and Facebook) had attracted over 48 000 followers, up from 45 000 in 2022 and 39 000 in 2021;

    85. Highly appreciates that the Court assesses the likely impact and usefulness of its work, as perceived by the readers of its reports at Parliament, the Council, the Commission, Union agencies, Member States’ permanent representations, Member States’ agencies and SAIs, NGOs, academia, the media and other parties; in that regard, notes that, since 2018, the Court has carried out anonymised electronic surveys to ask its readers to provide qualitative feedback on selected reports and make general suggestions for its work; stresses that, in 2023, 85 % of around 1 060 respondents considered the Court’s reports useful for their work, and 78 % felt that they had an impact.

    MIL OSI Europe News

  • MIL-OSI Europe: REPORT on the European Water Resilience Strategy – A10-0073/2025

    Source: European Parliament

    MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

    on the European Water Resilience Strategy

    (2024/2104(INI))

    The European Parliament,

     having regard to the Treaty of the Functioning of the European Union (TFEU), in particular Article 191 thereof,

     having regard to the Agreement adopted at the 21st Conference of the Parties to the UNFCCC (COP21) in Paris on 12 December 2015 (the Paris Agreement),

     having regard to the United Nations 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs), with particular emphasis on the SDG 6 onclean water and sanitation,

     having regard to the Kunming-Montreal Global Biodiversity Framework, adopted in December 2022,

     having regard to the Stockholm Convention on Persistent Organic Pollutants of 22 May 2021,

     having regard to the precautionary principle and the principles that preventive action should be taken, that environmental damage should, as a priority, be rectified at source and that the polluter should pay, as enshrined in Article 191(2) TFEU,

     having regard to Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (European Climate Law)[1],

     having regard to Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework for Community action in the field of water policy[2] (Water Framework Directive),

     having regard to Directive 2006/118/EC of the European Parliament and of the Council of 12 December 2006 on the protection of groundwater against pollution and deterioration[3] (Groundwater Directive),

     having regard to Directive 2008/105/EC of the European Parliament and of the Council of 16 December 2008 on environmental quality standards in the field of water policy, amending and subsequently repealing Council Directives 82/176/EEC, 83/513/EEC, 84/156/EEC, 84/491/EEC, 86/280/EEC and amending Directive 2000/60/EC of the European Parliament and of the Council[4] (Environmental Quality Standards Directive),

     having regard to Directive 2007/60/EC of the European Parliament and of the Council of 23 October 2007 on the assessment and management of flood risks[5],

     having regard to Directive (EU) 2020/2184 of the European Parliament and of the Council of 16 December 2020 on the quality of water intended for human consumption[6] (Drinking Water Directive),

     having regard to Regulation (EU) 2020/741 of the European Parliament and of the Council of 25 May 2020 on minimum requirements for water reuse[7] (Water Reuse Regulation),

     having regard to Directive 2008/56/EC of the European Parliament and of the Council of 17 June 2008 establishing a framework for community action in the field of marine environmental policy (Marine Strategy Framework Directive)[8],

     having regard to Directive (EU) 2024/3019 of the European Parliament and of the Council of 27 November 2024 concerning urban wastewater treatment[9] (revised Urban Wastewater Treatment Directive),

     having regard to Directive (EU) 2024/1785 of the European Parliament and of the Council of 24 April 2024 amending Directive 2010/75/EU on industrial emissions (integrated pollution prevention and control) and Council Directive 1999/31/EC on the landfill of waste[10],

     having regard to Council Directive 91/676/EEC of 12 December 1991 concerning the protection of waters against pollution caused by nitrates from agricultural sources[11],

     having regard to Regulation (EU) 2024/1991 of the European Parliament and of the Council of 24 June 2024 on nature restoration and amending Regulation (EU) 2022/869[12],

     having regard to Directive (EU) 2022/2557 of the European Parliament and of the Council of 14 December 2022 on the resilience of critical entities and repealing Council Directive 2008/114/EC[13] (Critical Entities Resilience Directive),

     having regard to Directive (EU) 2022/2555 of the European Parliament and of the Council on 14 December 2022 on measures for a high common level of cybersecurity across the Union, amending Regulation (EU) No 910/2014 and Directive (EU) 2018/1972, and repealing Directive (EU) 2016/1148 (NIS 2 Directive)[14],

     having regard to Directive 2009/128/EC of the European Parliament and of the Council of 21 October 2009 establishing a framework for Community action to achieve the sustainable use of pesticides[15],

     having regard to Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021 establishing rules on support for strategic plans to be drawn up by Member States under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) No 1305/2013 and (EU) No 1307/2013[16],

     having regard to Commission Regulation (EU) 2024/3190 of 19 December 2024 on the use of bisphenol A (BPA) and other bisphenols and bisphenol derivatives with harmonised classification for specific hazardous properties in certain materials and articles intended to come into contact with food, amending Regulation (EU) No 10/2011 and repealing Regulation (EU) 2018/213[17],

     having regard to the Commission communication of 19 February 2021 entitled ‘A Vision for Agriculture and Food’ (COM(2025)0075),

     having regard to the Commission communication of 11 December 2019 on the European Green Deal (COM(2019)0640),

     having regard to the Commission communication of 29 January 2025 entitled ‘A Competitiveness Compass for the EU’ (COM(2025)0030),

     having regard to the Commission communication of 12 May 2021 entitled ‘Pathway to a Healthy Planet for All – EU Action Plan: ‘Towards Zero Pollution for Air, Water and Soil’’ (COM(2021)0400),

     having regard to the Commission communication of 24 February 2021 entitled ‘Forging a climate-resilient Europe – the new EU Strategy on Adaptation to Climate Change’ (COM(2021)0082),

     having regard to the Commission communication of 18 July 2007 on addressing the challenge of water scarcity and droughts in the European Union (COM(2007)0414),

     having regard to the Commission communication of 11 March 2020 entitled ‘A new Circular Economy Action Plan: For a cleaner and more competitive Europe’ (COM(2020)0098),

     having regard to the Commission communication of 14 November 2012 entitled ‘A Blueprint to Safeguard Europe’s Water Resources’ (COM(2012)0673),

     having regard to the EU biodiversity strategy for 2030,

     having regard to the COP29 Declaration on Water for Climate Action, endorsed by the European Union,

     having regard to the European Oceans Pact announced by Commission President von der Leyen in her political guidelines for the next European Commission (2024-2029) on 18 July 2024,

     having regard to the European climate adaptation plan and the European water resilience strategy announced by Commission President von der Leyen in her political guidelines for the next European Commission (2024-2029) on 18 July 2024,

     having regard to the EU’s 8th environment action programme,

     having regards to its resolution of 5 October 2022 entitled ‘Access to water as a human right – the external dimension’[18],

     having regard to its resolution of 19 September 2024 on the devastating floods in central and eastern Europe, the loss of lives and the EU’s preparedness to act on such disasters exacerbated by climate change[19],

     having regard to its resolution of 6 October 2022 on momentum for the ocean: strengthening ocean governance and biodiversity[20],

     having regard to its resolution of 28 November 2019 on the climate and environment emergency[21],

     having regard to its resolution of 14 November 2024 on the UN climate change conference in Baku, Azerbaijan (COP29)[22],

     having regard to the Commission report  of 4February 2025 on the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) entitled ‘Third river basin management plans – Second flood risk management plans’ (COM(2025)0002),

     having regard to the European Court of Auditors special report 15/2024 of 16 October 2024 entitled ‘Climate adaptation in the EU – action not keeping up with ambition’,

     having regard to former Finnish President Sauli Niinistö’s report of 30 October 2024 entitled ‘Safer Together – Strengthening Europe’s civil and military preparedness and readiness’,

     having regard to Enrico Letta’s report of April 2024 entitled ‘Much more than a market’,

     having regard to its resolution of 17 December 2020 on the implementation of the EU water legislation[23],

     having regard to the European Court of Auditors special report 33/2018 of 18 December 2018 entitled ‘Combating desertification in the EU: a growing threat in need of more action,

     having regard to the European citizens’ initiative (ECI) on the right to water,

     having regard to its resolution of 8 September 2015 on the follow-up to the European Citizens’ Initiative Right2Water[24],

     having regard to UN General Assembly Resolution 64/292 of 28 July 2010, which recognises the human right to water and sanitation,

     having regard to the Strategic Dialogue on the future of EU agriculture,

     having regard to the European Court of Auditors special report 20/2024 of 30 September 2024 entitled ‘Common Agricultural Policy Plans – Greener, but not matching the EU’s ambitions for the climate and the environment’,

     having regard to European Environment Agency report 07/2024 of 15 October 2024 entitled ‘Europe’s state of water 2024: the need for improved water resilience’ (EEA Report 07/2024),

     having regard to the Environment Council conclusions of 17 June 2024 on the 8th environment action programme,

     having regard to European Court of Auditors special report 20/2021 of 28 September 2021 entitled ‘Sustainable water use in agriculture: CAP funds more likely to promote greater rather than more efficient water use’,

     having regard to the European Economic and Social Committee declaration of 26 October 2023 for an EU Blue Deal,

     having regard to the Commission proposal of 5 July 2023 for a directive of the European Parliament and of the Council on Soil Monitoring and Resilience (Soil Monitoring Law) (COM(2023)0416),

     having regard to its position  at first reading of 24 April 2024 on the proposal for a directive of the European Parliament and of the Council amending Directive 2000/60/EC establishing a framework for Community action in the field of water policy, Directive 2006/118/EC on the protection of groundwater against pollution and deterioration and Directive 2008/105/EC on environmental quality standards in the field of water policy[25],

     having regard to Rule 55 of its Rules of Procedure,

     having regard to the opinion of the Committee on Agriculture and Rural Development,

     having regard to the report of the Committee on the Environment, Climate and Food Safety (A10-0073/2025),

    A. whereas water is essential for life and humanity; whereas the EU has to manage current and future water resources efficiently and respond effectively to the current water challenges, as they directly affect human health, the environment and its ecosystems, strategic socio-economic activities such as energy production, agriculture and food security, and the EU’s competitiveness;

    B. whereas water is a scarce and limited resource and, while 70 % of the earth’s surface is water-covered, available and usable fresh water accounts for only 0.5 % of water on earth[26]; whereas mountains are real water towers and important freshwater reservoirs in Europe, the Alps alone providing 40 % of Europe’s fresh water[27];

    C. whereas groundwater supplies two thirds of the EU’s drinking water and supports many ecosystems[28]; whereas the services provided by freshwater ecosystems are worth over EUR 11 trillion in Europe, and provide considerable health and recreational benefits, such as from angling[29];

    D. whereas water stress is already occurring in Europe, affecting approximately 20 % of Europe’s territory and 30 % of the population on average every year, figures that are likely to increase in the future on account of climate change[30], despite the fact that total water abstraction at the EU-27 level appeared to decrease by 15 % between 2000 and 2019; whereas the increase in the number and recurrence of extreme weather events such as droughts and floods, and the fact that they are expected to become yet more frequent in the near future, poses a risk to human life and the EU’s food sovereignty and could lead to regions in Europe becoming uninhabitable;

    E. whereas 78 % of Europeans consider that the EU should propose additional measures to address water-related issues in Europe and 21 % of Europeans consider pollution to be the main threat linked to water in their country[31];

    F. whereas the human right to water and sanitation was recognised as a human right in a resolution adopted by the UN General Assembly on 28 July 2010;

    G. whereas the European Citizens’ Initiative Right2Water was the first ever to gather the required number of signatories, calling for the EU to ensure the right to water for all;

    H. whereas the provisions of Article 14 TFEU and Protocol No 26 thereto on Services of General Interest are key elements to be prominently taken into account in all aspects of the design and implementation of the European water resilience strategy (EWRS), thus safeguarding the status of Europe’s water services as essential public services, and ensuring accessibility, equity, affordability and the maintenance of high quality standards;

    I. whereas the Member States should follow up on the recommendations of the Commission report of November 2023[32] in order to improve water balances as the knowledge basis for making decisions about water allocation;

    J. whereas substantive corporate value may be at risk owing to worsening water insecurity, with a decrease in the capacity of production or its complete halt as a consequence; whereas assets in water-stressed regions could become stranded, temporarily or permanently, if assumptions made about water availability and access prove inaccurate, if regulatory responses are unanticipated or if risk mitigation and stewardship plans are not put in place[33];

    K. whereas the deadline set by the Water Framework Directive (WFD) for European rivers, lakes, transitional waters, coastal waters and groundwaters to achieve ‘good’ status was 2015, with a possible postponement to 2027 under certain conditions; whereas the objective of achieving good chemical status for all EU water bodies by 2027 remains far from being achieved, primarily due to substances such as mercury, brominated flame retardants and polycyclic aromatic hydrocarbons[34];

    L. whereas the 2025 report on the implementation of the WFD shows that delays in meeting the WFD’s targets are not due to a deficiency in the legislation but to a lack of funding, slow implementation and insufficient integration of environmental objectives into sectoral policies; whereas analysis has shown that the Member States are not meeting the annual investment needs, which are estimated to be EUR 77 billion, with a financing gap currently estimated at around EUR 25 billion a year; whereas the report also shows the clear need for the Member States to increase their level of ambition and accelerate action to reduce the compliance gap as much as possible before 2027, to increase investment and ensure adequate financing, including via EU funds, to achieve the objectives of their programmes of measures, as well as to put in place additional measures to reduce current persistent environmental challenges to and improve transboundary cooperation;

    M. whereas the water legislation has been evaluated as fit for purpose; whereas it establishes a framework for the protection of inland surface waters, transitional waters, coastal waters and groundwater; whereas, at the same time, it allows for less stringent environmental objectives to be achieved if socio-economic needs served by such human activity cannot be achieved by other means and it allows for a failure to achieve the objectives for water bodies if the reason for the failure is overriding public interest; whereas the legislation is proportionate and mandates the authorities of the Member States, in line with the principle of subsidiarity, to decide on the overriding public interest; whereas in some cases this may be the protection of the environment and in others a socio-economic activity;

    N. whereas industry accounts for approximately 40 % of total water abstraction in Europe; whereas the largest categories of the annual water abstraction in the EU-27, according to the statistical classification of economic activities in the European Community (NACE), are abstraction for cooling in electricity generation (34 %), followed by abstraction for agriculture (29 %), public water supply (21 %) and manufacturing (15 %)[35]; whereas data on water abstraction and use in the EU is historical and poor[36];

    O. whereas electricity production is the largest water-abstracting sector, but most of the water is returned to the environment after cooling or turbine propulsion; whereas overall, agriculture is the highest net water-consuming sector at the EU level, as most of the water is consumed by the crop or evaporates; whereas other uses, such as industry and water utilities, abstract and consume comparatively less water, but they can represent significant pressures at a local level, especially on groundwater[37];

    P. whereas all industrial activity requires water to produce its end products or to support production activities; whereas businesses depend on water for their daily operations, and as water scarcity increases, it can disrupt operations, raise costs and create regulatory and reputational risks;

    Q. whereas the energy sector relies heavily on water resources; whereas this dependency poses a serious risk as water scarcity can impact energy production processes and supply security, especially where water is used as feedstock or for cooling; whereas the transition to renewable energy, particularly wind and solar energy, offers sustainable and water-efficient decarbonisation pathways and the opportunity to halt or reverse the trend of increasing water consumption;

    R. whereas water is an essential resource for agriculture in the production of high-quality food, feed and renewable raw materials; whereas agriculture depends on water availability and irrigation helps to shield farmers from irregular rainfall and to increase the viability, yield and quality of the crops, but is a significant drain on water resources; whereas in view of climate change, changing weather patterns and increased frequency of floods and droughts, the importance of water as a resource for the production of high-quality agricultural products and of the need for water to be used efficiently will therefore be fundamental to the security of food supply and to the solutions to address water scarcity; whereas reducing pressure on surface water and groundwater from agriculture must go hand in hand with investment aimed at the use of reclaimed water and innovative desalination technologies, thereby achieving a better water balance as well as promoting clean alternative energies such as green hydrogen;

    S. whereas reliable data on water accounting, that is, the systematic study of the current status and trends in water supply, demand, accessibility and use in domains that have been specified[38], is crucial for an assessment of the current situation in the EU and for European competitiveness;

    T. whereas the potential of wastewater as an alternative water supply is underestimated, given that 60-70 % of the potential value of wastewater across the EU is currently unexploited[39] and less than 3 % of treated wastewater is reused in the EU[40]; whereas there is significant potential for circular approaches to water in households, as only a small amount of the water in households is used for drinking and eating and therefore requires the highest quality standards;

    U. whereas a very large quantity of water is lost due to obsolete or ageing water networks and the lack of necessary maintenance; whereas investment in the maintenance, improvement and development of resilient innovative irrigation infrastructures is essential for reducing and improving the efficiency of water consumption in agriculture; whereas such improvements in efficiency enable the water saved to be used for other purposes or enable the natural flow rates of watercourses to be maintained;

    V. whereas clean and sufficient water is an essential element in implementing and achieving a real sustainable circular economy in the EU;

    W. whereas water leakage is an underestimated global issue, which significantly exacerbates water scarcity, with an average of 23 % of treated water lost during distribution in the EU due to leaky pipes, outdated treatment facilities and insufficient reservoirs[41]; whereas the revised Drinking Water Directive included measures to reduce water leakages, as well as risk assessment and management of the catchment areas for drinking water abstraction;

    X. whereas in 2021, 91 % of Europe’s groundwater bodies were reported as having achieved ‘good quantitative status’, while 77 % were reported as having ‘good chemical status’[42];

    Y. whereas in 2021, only 37 % of Europe’s surface water bodies were reported as being in ‘good’ or ‘high’ ecological status, while 29 % achieved ‘good chemical status’[43];

    Z. whereas the European Environment Agency emphasises that the proportion of surface waters failing to achieve good ecological status is uneven across Europe, and that these are more prevalent in parts of central and western Europe, and stresses that differences in water status between the Member States may be caused by different pressures, but that those differences may also result from varying approaches to monitoring and assessment[44];

    AA. whereas the quality of surface waters across the continent reflects continuing and combined pressures, in particular diffuse pollution and the degradation of their natural flow and physical features; whereas pollution by nutrients and persistent priority substances, as well as by substances newly emerging as pollutants, continues; whereas groundwaters are affected by diffuse pollution and also suffer from intensive abstraction[45];

    AB. whereas groundwater supplies 65 % of water for drinking and 25 % of water for agricultural irrigation in the EU[46]; whereas it is a finite resource that needs to be protected from pollution and over-exploitation[47];

    AC. whereas monitoring data from the European Environment Agency indicates widespread pollution by per- and polyfluoralkyl substances (PFAS), commonly referred to as ‘forever chemicals’, in European waters, posing significant risks to aquatic ecosystems and human health; whereas short-chain PFAS trifluoroacetic acid (TFA) has been detected in drinking water all over Europe; whereas PFAS persist in the environment, bioaccumulate in living organisms and cause adverse (eco)toxicological effects; whereas from a group of 6 000 to 10 000 individual substances, only a few have been extensively studied and their impact on human health and environment is known; whereas 99 % of PFAS remain undetected in the environment as a result of limits in monitoring;

    AD. whereas the lack of EU-wide quality standards for PFAS in groundwater and insufficient monitoring of less-studied PFAS compounds exacerbate the challenge of achieving good chemical status for EU waters in line with the WFD and pose a substantial technical and financial burden on health systems and on water service providers while jeopardising applications of water and sewage sludge reuse;

    AE. whereas hazardous chemicals, including heavy metals and other pollutants, released into water bodies by industrial activities, significantly impact water quality and aquatic ecosystems[48];

    AF. whereas pharmaceutical substances are increasingly identified in surface water and groundwater; whereas pollution caused by pharmaceutical residues necessitates advanced water treatment technologies, including membrane filtration, activated carbon treatment, advanced oxidation processes and other innovative purification techniques;

    AG. whereas Directive 2010/75/EU[49] mandates that the potential aggravation of the impact of industrial discharges on the state of water bodies due to variations of water flow dynamics should be explicitly taken into account in the granting and reviewing of permits; whereas the best available techniques will newly incorporate notions of environmental performance levels related to water and permits, which translate the use of these techniques into environmental performance limit values; whereas this is a welcome change with a potential improvement to the industry’s resilience, as EU installations may already face a lower production capacity seasonally due to water scarcity;

    AH. whereas urban wastewater is one of the main sources of water pollution, if not properly collected and treated; whereas the objectives of the Urban Wastewater Treatment Directive should not be lowered, and its scope should be extended to other sectors and substances that contribute to water pollution;

    AI. whereas nutrient pollution in EU water bodies leads to eutrophication, loss of biodiversity, and degradation of aquatic ecosystems[50]; whereas pesticide run-off contaminates surface water and groundwater, threatening water quality and human health;

    AJ. whereas research indicates that exposure in Europe to the synthetic chemical bisphenol A (BPA), which is used in products ranging from plastic and metal food containers to reusable water bottles, is well above acceptable health safety levels[51];

    AK. whereas soil and nutrient management lies at the basis of improving water quality and availability; whereas the EWRS should focus on improving nutrient management, with the aim of closing nutrient loops to reduce nutrient emissions to waterways; whereas the safe use of sewage sludge in agriculture will also reduce the EU’s very high dependency on the import of phosphorus mineral fertiliser, for example, from Russia; whereas the safe use of sludge should therefore also be considered as contributing to European resilience and strategic autonomy;

    AL. whereas climate change represents a major threat to water resources and aquatic ecosystems; whereas many impacts of climate change are felt through water, such as more intense and frequent droughts, more extreme flooding and more erratic seasonal rainfall; whereas floods and water scarcity compromise food and water security, and the health of the general population, ultimately affecting social cohesion, economic prosperity and stability, as well as jeopardising the long-term availability of this valuable resource;

    AM. whereas the European climate risk assessment recognised that Europe’s policies and adaptation actions are not keeping pace with the rapidly growing risks that threaten ecosystems, infrastructure, food and water supply and people’s health, as well as the economy and finance[52];

    AN. whereas assessments by the Intergovernmental Panel on Climate Change show that the sea level rise due to climate change is leading to an increase in the salinity of soils and freshwaters, compromising ecosystem health and water quality, as well as affecting 80 million Europeans living in low elevation coastal zones and flood plains; whereas freshwater and marine ecosystems are interconnected as riverine pollution, disruption to sediment flows and water shortages all have a very strong impact on the health of marine ecosystems, particularly the coastal ones, as well as on the viability of social and economic activities that depend on them, such as transport, fisheries, agriculture, aquaculture and tourism;

    AO. whereas prolonged drought, extreme heat and large-scale flooding events, caused by changing weather patterns, will intensify and become more frequent throughout the continent, damaging ecosystems and human health and leading to major disruption to economic activities and decreasing the overall quantity and quality of available water; whereas preserving water resources and the natural functions of rivers, while supplying sufficient water of good quality, is becoming a major challenge that will require increased climate change mitigation and adaptation efforts, effective management and innovative measures to increase water availability; whereas managing water scarcity and flood risks affordably and sustainably will increasingly become important across the EU;

    AP. whereas in 2022, Europe experienced its hottest summer and the second warmest year on record, leading to drought impacting over 15 % of EU territory; whereas the average annual economic loss caused by droughts in the EU between1981 and 2010 was estimated at around EUR 9 billion per year; whereas with no adaptation measures, it is estimated that annual drought losses in Europe and the UK could increase to EUR 45 billion per year up to 2100 with warming of 3°C[53]; whereas in the period of 1998-2020, floods comprised 43 % of all disaster events in Europe; whereas climate change impacts and socio-economic developments are leading to more frequent flooding, affecting an increasing number of people and causing increasing damage; whereas 12 % of Europe’s population lives in floodplains[54];

    AQ. whereas the cost of inaction in addressing water-related challenges is extremely high, given that 90 % of disasters are related to water[55]; whereas without policy action, the cost of economic losses from coastal floods alone could exceed EUR 1 trillion per year by the end of the century in the EU[56] and the economic cost of droughts in Europe could exceed EUR 65 billion a year by 2100[57];

    AR. whereas significant differences exist between the Member States in water availability, management strategies and usage patterns, and vulnerability to climate change impacts can vary considerably; whereas a tailored approach is required to enhance water resilience and ensure sustainable water management;

    AS. whereas droughts constitute one of the chief catastrophic consequences of climate change; whereas around 23 % of the EU’s territory is moderately susceptible to desertification and 8 % is highly susceptible to it; whereas Hungary, Bulgaria, Spain and Italy are among the countries most affected, and 74 % of Spain’s surface area is at risk of desertification; whereas the EWRS should look beyond prolonged droughts, but rather address the reality that the semi-arid line is moving north, resulting in increasing areas in the EU that will face chronic long-term unavailability of sufficient freshwater resources;

    AT. whereas policies related to desertification, water consumption and climate change are closely interconnected; whereas as part of the United Nations Convention to Combat Desertification, the EU reaffirmed in 2015 and later re-confirmed in 2024[58] its commitment to achieving land degradation neutrality by 2030, which, according to the European Court of Auditors special report on desertification, is unlikely to be achieved;

    AU. whereas water infrastructure can help maintain a constant and predictable flow and supply of water; whereas in 2022, the annual average river discharge across Europe was the second lowest since records began in 1991[59];

    AV. whereas downstream areas are particularly dependent on upstream water management and abstraction; whereas the Member States should refrain from implementing measures that significantly increase flood risks upstream or downstream of other countries in the same river basin, in accordance with the WFD;

    AW. whereas nature-based solutions are pertinent interventions that, when tailored to specific ecosystems and needs, can increase resilience in the water cycle and provide multiple benefits in terms of biodiversity protection, carbon sequestration, improved water quality, nutrient retention, supply of drinking water, wildfire prevention and flood risk mitigation; whereas nature-based solutions can enhance the effectiveness and the operable life of water infrastructure, therefore ensuring, in many cases, complementarity of both solutions;

    AX. whereas natural water retention measures are nature-based solutions that aim to store water in natural, agricultural, forested and urban landscapes;

    AY. whereas water is not a commercial product like any other but, rather, a heritage which must be protected, defended and treated as such; whereas, under Directive (EU) 2024/1203 on the protection of the environment through criminal law[60], abstraction of surface water or groundwater within the meaning of the WFD constitutes a criminal offence where such conduct is unlawful and intentional, and causes, or is likely to cause, substantial damage to the ecological status or the ecological potential of surface water bodies or to the quantitative status of groundwater bodies;

    AZ. whereas soil biodiversity and soil organic carbon affect water retention capacity; whereas soil erosion, compaction and certain soil management practices that cause soil degradation lead to a steady decrease in the water retention capacity of soil, which as a consequence exacerbates drought and flood events with a direct negative impact on farming; whereas healthy soil is therefore one of the drivers of water resilience, which itself should be approached and managed at river basin level; whereas better land management is key to preventing disasters;

    BA. whereas the current multiannual financial framework (MFF) includes an ambitious but non-binding target of dedicating at least 7.5 % of annual EU spending to the biodiversity objectives in 2024 and 10 % in both 2026 and 2027; whereas the new financial framework should incorporate a water perspective with a view to allocating sufficient resources to the future EWRS in order to ensure resilient water ecosystems and infrastructure, and security of water supply, and to facilitate investments in innovative solutions;

    BB. whereas cohesion funding has played a crucial role in improving water and sanitation services across the Member States; whereas continued support is required to ensure their long-term resilience and compliance with increasingly stringent quality standards;

    BC. whereas pricing policies can improve the efficiency of water use; whereas such policies are a national competence and account for the regional differences in water availability and the source of water supply; whereas pricing can play a significant role in prompting households and other economic sectors to optimise consumption, as well as in ensuring that water users effectively participate in recovering the costs of water services; whereas pricing policies should also consider affordability for households and small businesses;

    BD. whereas digitalisation and innovation can effectively assist the Member States, regional bodies and the Commission in collecting data on and monitoring water management; whereas the EU is at the forefront of new technological developments in the water sector, accounting for 40 % of all international patent families in this sector between 1992 and 2021[61], a position that needs to be fostered and nurtured, and the potential of the internal market fully exploited; whereas hurdles for the introduction and scaling-up of new water technologies need to be examined and a just European level playing field guaranteed; whereas continued support for research in water technology innovation is needed to secure and to create jobs and boost European competitiveness;

    BE. whereas innovation is a crucial tool to help the water sector meet the challenges of the United Nation’s SDGs, adapt to climate change and become more water-efficient;

    BF. whereas deployment of monitoring and modelling technologies is still lagging behind in many Member States, and the digitalisation of the sector is too slow; whereas provisions on the river basin management plans in the WFD do not explicitly include concrete measures to digitise the water sector; whereas common shortcomings for the current policies harnessing the potential digital solutions are related to the lack of technology guidance, monitoring standards, policy integration, standardisation and public involvement;

    BG. whereas the water sector is vulnerable to various threats, including physical attacks, cyberattacks and contamination with harmful agents; whereas such incidents could result in widespread illness, casualties and service disruptions, significantly impacting public health, the environment and economic stability; whereas the digitalisation of  water management might introduce further security risks in a context of increasing hostile attacks on critical infrastructure; whereas the implementation of the NIS2 Directive and Critical Entities Resilience Directive can contribute to mitigating security risks to vital (drinking) water systems and (drinking) water infrastructure, arising from geopolitical tensions;

    BH. whereas advances in sensor technology, computing, artificial intelligence (AI) and big data management can help monitor water quantity and quality and inform the operational decisions of the policymakers and water management companies; whereas innovations in nature-based systems to manage water are available and can contribute to resilient water management;

    BI. whereas water is a vital component in the life cycle of AI, both in the operation of data centres and the manufacture of hardware; whereas the rapid expansion of AI could result in an exponential increase in water demand; whereas that dependency on an increasingly scarce resource poses significant challenges in terms of sustainability; whereas strategic technologies, such as semiconductors, hydrogen, electric vehicle batteries and data centres, play a key role in achieving a competitive and autonomous EU;

    BJ. whereas chiller and cooling tower systems, based on innovative cooling technologies such as evaporative and closed-loop cooling, are already available and can contribute to reducing water consumption in industrial, heating, ventilation and air conditioning systems applications;

    BK. whereas research must be promoted with a view to producing alternative active ingredients to combat pests, to ensure greater plant health and reduce the use of inputs and phytosanitary products;

    BL. whereas water resilience is crucial in education and teaching, and in raising awareness and giving information about the functioning of the water cycle;

    BM. whereas limited access to water and related infrastructure has a negative impact, especially on women, as it undermines the realisation of other human rights, such as self-determination, economic independence and education;

    BN. whereas 60 % of European river basin districts are transnational, which makes effective transboundary cooperation crucial; whereas 20 European countries depend on other countries for more than 10 % of their water resources, with five countries relying on more than 75 % of their resources coming from abroad via rivers[62]; whereas this cooperation should be strengthened to account for current and future climate challenges such as droughts and floods;

    BO. whereas United Nations Secretary-General António Guterres appointed a Special Envoy on Water, aiming to enhance international cooperation and synergies among international water processes;

    BP. whereas clean water access and sustainable and resilient sanitation infrastructure are key components of the One Health approach, recognising the interconnection between the health of humans and water pollution;

    BQ. whereas water cooperation across borders and sectors generates many benefits, including enhancing food security, sustaining healthy livelihoods and ecosystems, helping address resilience to climate change, contributing to disaster risk reduction, providing renewable energy, supporting cities and industry, and fostering regional integration and peace;

    BR. whereas geopolitical developments demonstrate that the EU should be ready to withstand the challenges that go beyond the environmental sphere; whereas non-environmental threats, such as recent accidents related to the damaged cable in the Baltic Sea, send the EU a strong message that strengthening transboundary cooperation is key in addressing both the environmental and security-related objectives;

    BS. whereas about 41 000 kilometres of inland waterways flow through 25 of the Member States; whereas inland waterways, which rely on the availability of water resources, perform a crucial role in optimising water supply and mitigating the impact of droughts and floods, as well as supporting the economic activities and the development of regions;

    BT. whereas the increasing water scarcity, inequalities in access to water, and external shocks to the water sector have heightened interdependencies, increasing competition for water and leading to complex economic repercussions;

    General remarks

    1. Welcomes and supports President von der Leyen’s announcement in the political guidelines for the next European Commission (2024-2029) on putting forward a European Water Resilience Strategy (EWRS) addressing water efficiency, scarcity, pollution and water-related risks, as well as the recognition that water is an indispensable resource that is increasingly under stress from climate change and increasing demands;

    2. Believes that while implementing legislation, economic competitiveness should be taken into account in line with the Competitiveness Compass; calls for the implementation of EU environmental legislation in order to build a resilient and competitive Europe, mitigate and adapt to climate change, halt biodiversity loss, prevent pollution, ensure food security, limit resource use and waste, and strive towards efficient use of resources, including water, while taking into account the precautionary principle, the control-at-source principle and the polluter-pays principle; highlights the fact that water availability impacts the quantity, quality, variety and seasonal availability of foods that can be produced;

    3. Calls for the EU to integrate its commitments to the COP29 Baku Dialogue on Water for Climate Action and the UN 2023 Water Conference into the international dimension of the strategy;

    4. Stresses the urgent need to enhance water resilience and management to ensure sustainable freshwater supplies for people, the economy and the environment; emphasises that the EWRS should be developed in coordination with the European Oceans Pact, ensuring a cohesive and integrated approach to managing freshwater and ocean resources, addressing interconnected challenges, enhancing competitiveness and promoting sustainable water management across inland and marine environments, while ensuring a holistic ‘source-to-sea’ approach;

    5. Insists on the need for a comprehensive and holistic EWRS that integrates water quality, quantity, security, infrastructure, technology and management aspects and includes the restoration of the water cycle as a key element, as it underpins economic activities, ensures resource availability and contributes to climate regulation;

    6. Stresses the importance of water supply, in particular drinking water, as well as water security of supply; points out that all environmental restoration projects should take into account the water security aspects, prioritising solutions that not only provide environmental benefits, but also guarantee the supply and efficient management of water; emphasises, furthermore, that ecological restoration measures should be carried out in synergy with the development of the EU’s renewable energy potential and not impact the overall energy resilience;

    7. Recommends that lakes and other freshwater-dependent habitats be included in the strategy, alongside rivers, transitional waters and groundwater, as essential components of the EU’s water resilience efforts;

    8. Stresses the urgent need to improve crisis-warning systems with regard to heavy water incidents, as well as to improve preventive measures;

    9. Calls on the Commission to present a European climate adaptation plan, including concrete legislative proposals and actions, particularly regarding infrastructure resilience, water management and nature-based solutions, while prioritising the protection of vulnerable communities, to make the EU more resilient and to lead by example;

    10. Reiterates that access to clean and safe drinking water and sanitation is a human right; emphasises that this right must be unequivocally ensured, with everyone having access to affordable and good quality water services, including the inhabitants of islands and outermost regions;

    11. Notes that industrial activities and agricultural production require water to produce their end products or to support production activities, with the amount of water used varying depending on the type of activity; highlights the fact that ensuring Europe’s competitiveness and strategic autonomy requires a water-smart society where technology and data enhance a circular economy, fostering sustainable and water-efficient practices; calls on all relevant actors to accelerate the transition towards water-efficient, circular industry and agriculture by promoting and investing in innovative solutions, including digital tools and technologies, resource recovery, water reuse, renewable energy production, infrastructure, nature-based solutions and inclusive governance mechanisms;

    12. Urges the Commission to integrate and mainstream the water dimension into internal and external EU policies through a cross-sectoral approach in order to ensure that water resilience, sustainability and security is woven into the fabric of European policies; calls on the Commission, in particular, to carry out a water-related assessment of any regulatory measure, including related to energy, as part of the socio-economic and environmental impact assessment; emphasises that assessing how each EU policy, and EU-funded projects and infrastructure, can impact water resources in terms of quantity, quality and accessibility would ensure that water resilience is a cornerstone of policy formulation and implementation, thus shifting the paradigm from treating water as an infinite resource to recognising its intrinsic value for humanity and for the EU’s ecological and socio-economic landscape and its competitiveness;

    Water efficiency

    13. Stresses that efficient water use is essential for preserving the EU’s water resources and that water efficiency should be a key objective of the EU; calls, in this regard, for a consequential reduction in water demand, including by addressing excessive leakage levels, investing in research and innovative solutions, modernising industrial and production processes, upgrading water infrastructure, managing water resources and peak demands sustainably, prioritising uses and ensuring that higher water efficiency results in a reduction in overall freshwater consumption as well as in an increase in water availability in water-stressed areas at the local and regional levels; believes that areas affected by prolonged drought and desertification should be given priority;

    14. Calls for a legislative framework setting sectoral water efficiency and water abstraction targets at basin level, based on up-to-date assessments of water availability and climate risks, including a water valuation approach that accounts for ecosystem services and long-term sustainability, and covering all water uses, including industry, energy, agriculture, public institutions and households; underlines the fact that these targets should be ambitious yet adaptable, taking into account the specific circumstances and progress already achieved by each Member State to ensure continued efforts towards efficiency gains across all regions; stresses the importance of efficient and uniform data collection practices across the Member States and all sectors, including through the use of innovative technologies, as well as real-time data collection points for more transparency on water consumption; emphasises the need to carry out an appropriate assessment of the environmental and socio-economic impacts of water use;

    15. Reiterates the need to develop a common EU methodology for setting water efficiency and water abstraction targets to ensure the sustainable use of available renewable water resources within an integrated water resources management framework which gives due consideration to linkages beyond the water sector through the water-energy-food-ecosystems nexus, thus enabling decision-makers and economic actors to plan the necessary investment to ensure water supply security in an increasingly sustainable manner, while giving due consideration to the characteristics of the water bodies concerned;

    16. Calls for close collaboration on integrated energy and water resource planning and related technologies across all sectors at national, regional and local levels, including between all stakeholders, in order to establish mechanisms for ensuring coherence across water and energy policies;

    17. Calls on the Commission to put forward a comprehensive policy on sustainable water management for industry based on reducing, recovering, reusing and recycling, including a focus on the use of water-efficient and circular technologies, water recycling, pollutant reduction strategies and the promotion of closed-loop systems;

    18. Recalls that the growing threat of water scarcity is jeopardising industries and projects that are key to Europe’s competitiveness drive, including semiconductors, data centres, renewable hydrogen and electric vehicle battery production; notes that these industries will increasingly face pressure to reduce their environmental impact and improve water resource efficiency, including both direct and indirect water usage; calls on the Member States to support water-intensive industries in setting up water-efficiency plans aimed at saving, reusing and recycling water, preventing water pollution and implementing water-efficient technologies; calls on the Commission to incorporate comprehensive water management strategies into relevant EU industrial policies and sector-specific transition pathways, with a particular focus on strategic water-intensive sectors;

    19. Stresses that knowledge, data, research and technology are key for efficient water use; calls for adequate financial and technical support to be given to the Member States to implement efficient water management measures, including by means of innovative and modern technologies;

    20. Welcomes the recommendations of the final report of the Strategic Dialogue on the future of EU agriculture underlining that sustainable farming practices and new business models need to be scaled up to promote more efficient use of natural resources, especially water;

    21. Calls for the transition to a more sustainable and competitive farming model, assisted by the implementation of sustainable practices and innovative solutions that promote biodiversity, reduce chemical inputs and enable water resources to be managed efficiently, including nature-based solutions, regenerative management, smart precision irrigation technologies, digital monitoring systems, advanced treatment methods and smart water distribution networks, optimising consumption and preventing water resource depletion, and that help ensure continued productivity while enabling agriculture to reduce pollution, use pesticides and fertilisers efficiently, improve the hydrological cycle, enhance groundwater recharge and adapt to lower water use; considers that technological solutions can also include measures that can increase water absorption, infiltration and retention in agricultural systems, which are important amid increasing occurrences of both drought and heavy rains;

    22. Points out that innovative irrigation solutions and practices can enhance water efficiency in agriculture, gaining an economic advantage while also reducing environmental burdens; notes that farmers generally lack sufficient means and incentives to know about water use by crops, actual irrigation applications, the yield responses of crops to different water management practices, and thus current on-farm water-efficiency levels; calls on the Commission and the Member States to incentivise the uptake and support the maintenance of innovative irrigation solutions such as drip irrigation to allow for an active management of water levels and efficient use of water resources, as well as to promote continuous knowledge exchange, so that all relevant stakeholders can share greater responsibility across the entire water supply chain;

    23. Recommends better consideration of the nutrient cycle in agricultural production and the exploitation of the value in urban wastewater; calls for more research into the effective use of nutrients and the development of nutrient recovery technologies, in order to decrease the Union’s dependence on imported raw materials; recognises the high potential for nutrient recovery from water and calls on the Member States to support the agricultural sector to optimise their nutrient consumption including by using resources (nitrate and phosphorus) recovered from wastewater treatment plants; calls on the Commission to propose an integrated nutrient management action plan to effectively address loss of valuable agricultural inputs, recycling of nutrients, nutrient pollution and inefficiencies in the nutrient cycle;

    24. Emphasises, in line with the final report of the Strategic Dialogue on the future of EU agriculture, the need to support the transition to regionally adapted crop and seed varieties and the switch to different crops, with reduced water requirements and greater drought resistance, as well as the need to support the adoption of appropriate soil management practices; considers the need for stronger support for scientific research and technological development related to the breeding of new species, to enable the production and supply of foodstuffs to be diversified and their quality enhanced, while raising the level of protection for human health and the environment; notes the potential of plant varieties that are more resistant to water stress and pests and could play a role in reducing water use and could reduce the environmental footprint of crops;

    25. Calls for financial and technical support for farmers and rural communities, particularly in water-stressed areas, to help them adopt sustainable land management practices that improve soil and water quality, contribute to biodiversity and mitigate climate change; emphasises the need for special attention to be given to regions that are particularly vulnerable to soil degradation and water scarcity;

    26. Points to the success of the agricultural  European Innovation Partnership EIP‑AGRI and calls for the continuation of knowledge exchange, expertise and peer-to-peer learning via the EU’s Common Agricultural Policy (CAP) Network;

    27. Notes the links between carbon sinking and water availability, and calls for coherence between the water resilience strategy and carbon farming schemes;

    28. Reiterates that the Water Reuse Regulation aims at reducing the pressure on water bodies by setting out provisions on reusing water after appropriate treatment extends its life cycle, thereby preserving water resources; emphasises, however, that regulatory, financial and technological barriers, including the economic competitiveness of reclaimed wastewater, risk management planning and the sharing of responsibilities, contribute to the slow uptake of reuse of reclaimed water for agriculture; calls, therefore, on the Commission and the Member States to adopt supportive policies, at both the EU and the local level, that incentivise water reuse practices, taking into account the importance of adapting wastewater treatment and quality requirements to the intended water use; notes that treated wastewater also finds valuable applications in various industrial processes and urban contexts, contributing to reducing the pressure on freshwater resources and the conservation of drinking water; calls therefore on the Commission to assess a possible extension of the scope of the Water Reuse Regulation in order to establish, at EU level, minimum water quality standards for safe water reuse for industrial and urban purposes;

    29. Calls on the Commission and the Member States to specify systems of regulatory and financial incentives for the reuse of treated wastewater in water-intensive sectors and to provide specific funding for the construction of infrastructure connecting wastewater treatment plants and refined water distribution networks; urges a streamlined approach in EU legislation to remove administrative barriers and promote safe and efficient water recycling across the Member States; calls on the Member States to set up national water reuse and saving plans to incentivise cross-sectoral cooperation in water management;

    30. Reiterates that reused water could alleviate abstraction from rivers, lakes and groundwater for irrigated agriculture; underlines the fact that reused water can contribute to maintaining base flows and minimum water levels during dry periods;

    31. Highlights the potential of the building sector to save water, for example, with the help of smart sub-metering systems, efficient greywater systems, reuse of domestic wastewater or rainwater harvesting; stresses that the energy performance of buildings can be enhanced by water efficiency, reducing greenhouse gas emissions; calls on the Member States and local authorities to incentivise water-saving features in new buildings; stresses, in this regard, that water-efficient practices should be factored into urban planning; highlights the fact that harvesting rain water as well as using and reusing water efficiently can improve climate adaptation in cities;

    32. Calls for the transition, in industry and in the energy and digital sectors, to optimised cooling efficiency and alternative cooling methods that are less water-dependent, in order to ensure significant water savings in these sectors;

    33. Points out that, while households represent 10 % of the overall water consumption in the EU, action on improving domestic water efficiency is also necessary; notes that water-saving technological solutions are readily available and can reduce water consumption in households without compromising comfort or requiring high investment; calls on the Member States to support consumers in transitioning towards such technologies and to strengthen consumer awareness of water consumption and potential efficiency gains by anchoring domestic water efficiency in water, building and consumer policies across the EU;

    34. Notes that the leakage rates from pipes are high in some Member States, which increases the total share of domestic water consumption; welcomes the provisions of the new Drinking Water Directive on leakage rates and the ongoing work of the Commission to evaluate those rates and set threshold values that will trigger action in the Member States concerned; calls on the Member States to urgently tackle leakage in water supply networks and to fully implement the monitoring and reporting requirements of the Drinking Water Directive, so that the Commission can set a threshold value for leakage by January 2028; emphasises the need for sustainable urban irrigation networks to be modernised, to curb leakages and reduce their water footprint; calls on the Member States to regularly inform the public about the efficiency and effectiveness of their water supplies;

    35. Points out that public sector organisations provide significant untapped potential for saving water by virtue of their size or their nature as public organisations; believes that the public sector should act as a role model for other sectors;

    36. Calls on the Commission and the Member States to promote easily accessible and free information, training, advisory programmes and information campaigns aimed at raising public awareness of sustainable water resource management;

    37. Recommends that water-efficiency aspects, such as reductions in water loss and reuse of water, be integrated in the upcoming revision of the public procurement framework;

    Water pollution

    38. Underlines the fact that the existing EU water policy framework is designed to address the effective management of water resources and the protection and restoration of freshwater and marine ecosystems, but that its poor implementation and enforcement, insufficient funding and lack of proper cost-benefit analyses of the implementation measures undermine its effectiveness;

    39. Calls on the Commission and the Member States to implement and enforce the current legislation, in particular the WFD and its ‘daughter’ directives (the Groundwater Directive and the Environmental Quality Standards Directive), with a particular focus on strengthening the monitoring and reporting mechanisms to ensure that all Member States consistently implement the required water protection measures; recalls the need for sufficient funding to implement these acts;

    40. Stresses that the chemical pollution of surface water and groundwater poses a threat to the aquatic environment, with effects such as acute and chronic toxicity in aquatic organisms, accumulation of pollutants in the ecosystem and loss of habitats and biodiversity, as well as to human health;

    41. Calls for the establishment of a comprehensive EU-wide quality standard for PFAS totals in groundwater and surface water; stresses that respective updates of the relevant directives are essential for safeguarding water quality and achieving good chemical status for water bodies as mandated under the WFD;

    42. Insists that essential uses of PFAS, for example for medical devices, pharmaceuticals and products necessary for the transition to climate neutrality, are not endangered; calls on the Commission to propose to phase out forever chemicals (PFAS) in consumer goods with proven concerns for human health and the environment, and only where there are safe alternatives;

    43. Calls on the Commission to propose updated limits on PFAS in drinking water, taking into account the latest scientific knowledge;

    44. Emphasises the urgency of addressing, primarily at the source, and effectively monitoring pollution from pharmaceuticals, bisphenols, antimicrobial resistance genes, persistent organic pollutants and other existing and emerging pollutants, to align with the EU’s zero pollution ambition and the goal of achieving good chemical status for all water bodies;

    45. Calls on the Commission to close the gaps with enhanced funding and the enforcement of current laws, and the integration of circular economy principles to mitigate pollution at its source and safeguard water ecosystems for future generations; underscores the fact that antibiotic-resistant bacteria and certain emerging pollutants remain insufficiently addressed, necessitating further innovation and investment; emphasises the need for all sectors to apply sustainable production processes and circular practices, proactively preventing pollutants from entering water systems;

    46. Recalls that microplastics may enter drinking water sources in a number of ways: from surface run-off (for example, after a rain event) to wastewater effluent (both treated and untreated), combined sewer overflows, industrial effluent, degraded plastic waste and atmospheric deposition; calls on the Commission to put forward, in line with the requirements of the Drinking Water Directive, a full risk assessment of microplastics in drinking water, while continuously working on reliable and robust sampling and analytical methods in order to appropriately address the potential threat of this emerging pollutant to sources of water intended for human consumption;

    47. Emphasises the need to improve the monitoring and regulation of plastic pollution in freshwater and marine environments, with particular attention to microplastics and single-use plastics; encourages the Commission to assess current enforcement mechanisms and consider further measures to protect water quality;

    48. Calls on the stakeholders to develop safe water contact materials, to substitute BPA and other bisphenols and ensure compliance with Regulation (EU) 1935/2004 on materials and articles intended to come into contact with food[63] and the recently adopted provisions as regards the use of BPA and other bisphenols and bisphenol derivatives (Commission Regulation (EU) 2024/3190);

    49. Recalls that the revised Urban Wastewater Treatment Directive, in effect since 1 January 2025, imposes new obligations regarding water purification, requiring pharmaceutical and cosmetic producers to cover at least 80 % of the costs of removing micropollutants from wastewater, with the aim of reducing harmful substances in the environment;

    50. Calls for increased EU support for local authorities for the modernisation of wastewater treatment plants and the promotion of water reuse, to align with the EU’s zero pollution ambition, ensuring that municipal wastewater management contributes effectively to good chemical and ecological water status;

    51. Calls for increased monitoring of pesticide residues in water bodies and enforcement of pesticide application regulations to mitigate their impact on water quality; stresses the need for increased funding to support farmers in the adoption of low-input and organic farming practices that reduce reliance on chemical pesticides and fertilisers, as well as to provide appropriate training and independent advisory services to farmers and other operators on the use, effectiveness and toxicity of pesticides, as well as best practice;

    52. Insists on the integration of circular economy principles to reduce hazardous chemical use in industrial processes; stresses the need for additional funding to support industries in transitioning to clean technologies that minimise water pollution[64];

    53. Recognises the role of treated sludge as a local and circular source of fertiliser, contributing to soil health, nutrient recycling and reduced dependency on synthetic fertilisers; emphasises the importance of preventing PFAS, heavy metals, microplastics and other harmful substances from entering sewer networks in order to enable the safe and sustainable use of high-quality sewage sludge in agriculture;

    54. Calls on the Commission to include an overview of measures in an annex to the EWRS, with a timeline for achieving the objectives in question;

    Adaptation to climate change: floods, droughts, stress areas, disaster preparedness

    55. Calls for the climate adaptation proofing of all new EU legislative and non-legislative acts in order to ensure the integration of climate adaptation into sectoral plans and policy measures affecting water and land use; highlights, in this regard, the need for increased climate ambition as part of the fight against climate change, while urging the Member States to ensure that all climate adaptation measures affecting water use contribute to long-term, improved water resilience; calls on the Commission to take fully into account the geographical and environmental conditions in the Member States, as well as the specific situation of islands, outermost regions and other areas of high vulnerability, such as areas affected by desertification, when adopting new legislative and non-legislative proposals; asks the Commission to present a roadmap for current and ongoing legislative and non-legislative policy measures, including targets and monitoring requirements affecting water and land use;

    56. Emphasises the need for tailored climate adaptation measures for the Mediterranean region, which faces unique challenges such as prolonged droughts and saline intrusion into freshwater resources;

    57. Stresses the specific challenges faced by island areas due to the scarcity of drinking water and calls for targeted measures to protect island water resources, including improving rainwater collection and storage infrastructure, and implementing alternative water sources, while enhancing water resource monitoring and management systems; calls, further, on the Member States to take better account of mountainous regions in national adaptation plans in order to meet the specific challenges of water management in mountainous areas;

    58. Reiterates that climate change mitigation and adaptation solutions should not come at the cost of ecosystem degradation, and should avoid increasing the demand for water- and energy-intensive activities, and should instead prioritise energy- and water-efficient innovation and technologies as part of moving towards a more resource-efficient economy, without undermining its productivity, while ensuring equitable access to water for all; points out that, in order to be effective, climate change mitigation and adaptation solutions should be tailored to national circumstances, while enhancing competitiveness and productivity in the short and long term; points out the possibilities of synergies, in this regard, with innovative energy production such as photovoltaics and biogas, as it can also contribute to an increase in agricultural income;

    59. Recognises the importance of reserving water for nature and the need to maintain healthy freshwater ecosystems, for the good functioning of the water cycle, for human activities and for mitigating the impacts of droughts and water scarcity; underlines, in the context of restoring freshwater ecosystems and the natural functions of rivers, the importance of removing ‘obsolete barriers’, namely artificial barriers that no longer fulfil their original purpose or are no longer needed, wherever such opportunities exist, on the basis of current knowledge and experience; calls for the establishment of specific programmes for the cleaning and conservation of river channels, ensuring minimum flow and reducing the accumulation of debris and sediment that can affect water storage and distribution capacity;

    60. Insists that, with climate change impact becoming more persistent, flood and drought management must fully integrate the arising risks, including changing weather patterns, such as increased rain patterns leading to excess of water; is convinced that a combination of monitoring and data collection, preparedness, emergency and recovery responses taking into account the principle of ‘building back better’[65]on the one hand, and adapting societal and economic activities on the other, is essential to reduce vulnerability and increase resilience, especially in the light of the quantitative aspect of water becoming more prominent; stresses, in this regard, the need for climate-resilient nature-based solutions and infrastructure that take into account the impact of extreme climate events in their development to ensure their viability in the face of extreme climate events;

    61. Recalls that in 2007, the WFD was supplemented by Directive 2007/60/EC on the assessment and management of flood risks, which aims to establish a framework to reduce the adverse consequences of flooding on human health, the environment, cultural heritage and economic activity; notes that making the two directives mutually compatible is achieved through risk management plans and river basin flood management plans as the components of an integrated water management system in which coordination is crucial; recalls that flood prevention is closely connected to urban green spaces, soil protection strategies and investment in drainage networks;

    62. Stresses that preparedness for water scarcity and drought can be significantly improved in the EU, considering that no drought management plans are in place in several Member States[66]; calls on the Member States and, where applicable, competent regional and local authorities, to develop drought management plans, particularly with a view to ensuring the provision of drinking water, ensuring food production and integrating digitalised monitoring, control and early warning systems in order to support effective and data-based decisions on protection, response and communication measures with clearly defined areas of responsibility; points out the need to introduce EU-level provisions as regards drought management plans, similar to the ones on flood management plans;

    63. Insists, in view of the numerous climatic events, such as floods, droughts and cyclones, which have affected Europe, on the importance of the EU having a robust mechanism for responding to such crises, including systems for warning and providing assistance to the civilian population; points out that digital monitoring, adequate public display of relevant data and early warning systems are key to developing effective drought and flood management plans at the level of the Member States; emphasises, further, the importance of fully using the available EU tools, such as the flood forecasts of the European Flood Awareness System and the Global Flood Awareness System, and the Global Flood Monitoring tool, as part of the Copernicus Emergency Management Service;

    64. Stresses the importance of the Union Civil Protection Mechanism (UCPM) in helping countries hit by water-related disasters such as flood and droughts; calls for increased funding to provide the UCPM with sufficient and upgraded resources in order to increase preparedness and improve capacity building;

    65. Calls on the Commission and the Member States to enhance citizen preparedness in the event of water-related disasters or crisis; stresses the importance of information campaigns and demonstration exercises in education facilities, public administration and businesses in order to build a ‘preparedness culture’ for citizens;

    66. Calls on the Member States to systematically renew and upgrade their water infrastructure, including drinking water and sanitation infrastructure, as well as infrastructure regulating river flows, and to invest in innovative solutions based on good practice, making water systems more resilient to climate change, ensuring stable drinking water supply, enabling the early detection of losses and reducing water leakages and waste, while optimising water transport and storage systems; highlights the fact that funding for innovative water infrastructure is insufficient compared to the investment needs across the EU; calls, in this regard, for dedicated funding, on national, regional or EU level, to ensure adequate financing for the development, maintenance and modernisation of water-resilient infrastructure, to foster innovative solutions and technologies and ensure long-term sustainability of that water infrastructure;

    67. Regrets that, despite the threat that desertification poses to water quality and availability, soil fertility and food production, and despite the fact that 13 Member States have declared themselves to be affected by desertification in the context of the United Nations Convention to Combat Desertification, the Commission is not addressing desertification effectively and efficiently; urges the Commission, therefore, in line with the Council conclusions of 14 October 2024 on desertification, land degradation and drought, to present an integrated EU-wide action plan to combat desertification, land degradation and drought, aiming at building resilience to drought and achieving land degradation neutrality in the EU by 2030, based on a full impact assessment;

    68. Calls on the Member States to create natural water reserves based on up-to-date assessments of climate risks to protect critical water supplies and their catchments, and taking into consideration the environmental and socio-economic impact of developing such reserves; points out that such natural water reserves would complement the WFD’s requirement for Member States to identify water bodies used for drinking water abstraction, making sure they meet the objectives set out in Article 4 WFD and in the Drinking Water Directive, and would ensure their necessary protection; notes that such natural water reserves already exist under different forms in various Member States; stresses that assistance should be given to Member States or local and regional governments to help them develop natural water reserves;

    69. Notes the potential of retention infrastructure as an example of water generation systems created using the best available, cost-effective techniques that have the lowest environmental impact, including by means of wastewater reuse or rainwater collection, in order to reduce the risks of droughts and floods, increase water security and foster circularity, water reclamation and reuse; believes that water retention facilities may be useful tools provided that they are authorised by local or national authorities under clear conditions, including the capacity of local groundwater to sustain such activities and the need for farmers accessing the water resource to adapt their practices to more sustainable practices, in particular in terms of water needs and water quality; calls on the Commission to use its available tools, including financial support, to streamline this approach among the Member States;

    70. Deplores the unlawful or intentional abstraction of water, which is likely to cause substantial damage to water bodies; calls for strong dissuasive measures to be applied, including through the criminal law, to protect the ecological status or the ecological potential of surface water bodies or of the quantitative status of groundwater bodies; notes that additional support for training and knowledge transfer for national enforcement capacities is needed;

    71. Notes the important cross-cutting role of nature-based solutions in addressing the challenges of the triple planetary crisis and restoring the natural water cycle; calls on the Commission and the Member States to prioritise, taking into account the environmental and socio-economic impacts, the deployment of nature-based solutions for water resilience in their policy actions and recommendations, such as the re-wetting of wetlands and peatlands to increase ground water availability and surrounding soil moisture, the restoration and protection of floodplains, natural water retention measures, revegetation as a barrier against floods, and rainwater conservation, in order to strengthen water availability, mitigate climate change risks and support long-term resilience for communities, businesses and food production; underlines that, in addition to nature-based solutions, complementary investment in engineering solutions remains necessary to ensure successful climate adaptation and water resilience in the long term;

    Funding and pricing

    72. Notes that nature-based solutions and natural water retention measures have the potential to restore groundwater levels and support ecological flows while reducing water-related risks from water scarcity, floods and droughts; notes that in flood management, nature-based solutions cannot usually replace existing solutions and may not be effective for the most extreme events; points out, however, that nature-based solutions can enhance the effectiveness and operable life of grey infrastructure by increasing water absorption capacity, reducing water velocity and regulating peak flows; reiterates, in this regard, that the effectiveness of nature-based solutions is context-specific and must be adapted to the local situation; emphasises in this regard that a ‘one solution that fits all’ does not exist;

    73. Stresses the need to provide financial support for sustainable innovative methods and solutions, while having due regard to public-private partnerships;

    74. Stresses, in the context of climate adaptation, the importance of healthy soils in ensuring water security and circularity; emphasises that the natural water retention of soils must be improved through measures to enhance soil health, minimising carbon losses, as well as actions at the level of the water body, such as the stabilisation of riverbanks, including through re-naturalisation, and the restoration of the retention capacities of aquifers;

    75. Notes that thoroughly designed forest management measures can improve watershed health, regulate water flow and reduce drought and flood stress, given the essential role of trees and forests in water cycle regulation, through their ability to purify water, increase the availability of water resources and improve soil moisture retention; proposes that this be duly considered when the Commission, in cooperation with the Member States, develops Union disaster resilience goals and that it be considered in the development and refinement of disaster risk management and contingency planning; highlights the need, in this regard, for more research, data collection, innovation and funding to support land managers in preventing the impact of environmental stressors such as drought floods and diminishing watershed function;

    76. Recognises that urban areas are increasingly vulnerable to water-related climate risks such as flooding, water shortages and heat stress; calls for the integration of urban water resilience planning into climate adaptation strategies, including investment in green roofs, permeable infrastructure, rainwater harvesting and storm water retention systems, as well as measures aimed at increasing green and blue spaces in urban areas, in order to mitigate extreme weather impacts and to reduce the risks to human life and property; calls further for the maintenance of, and regained access to, urban waterways in cities;

    77. Emphasises that the EWRS should ensure adequate funding from public and private sources in order to support the modernisation, upgrading, adaptation and maintenance of resilient water infrastructure, sustainable water management, data collection, research, effective monitoring, digitalisation, upskilling, nature-based solutions, the development and the uptake of innovative water-efficient technologies, as well as to ensure environmental and socio-economic sustainability in line with the goals set by the new European Competitiveness Compass;

    78. Calls on the Commission to create a separate and dedicated fund for water resilience within the upcoming MFF; believes that specific financial mechanisms should also be established within the European Regional Development Fund and the Cohesion Fund to support water-smart technologies and water investment; strongly believes that, in the interim, water should be prioritised in existing funding frameworks, including the Cohesion Fund; stresses that EU funding mechanisms must incorporate considerations of social equity and affordability, in particular in the context of providing water services to the population, ensuring support for Member States and citizens with greater financial constraints and specific realities, while meeting water management obligations; highlights the importance of adjusting existing funding, subsidies and financing streams related to water management and other related land uses, moving away from outdated engineering solutions to innovative ones, as well as nature-based solutions or a combination thereof;

    79. Calls for targeted funding, via Horizon Europe and the EIP-AGRI, for field trials on the water relations of different cropping systems; calls for the recognition of the role of women in water policies and for specific funding to be identified to promote their access to agriculture;

    80. Recalls that the lack of dedicated funding for water or binding funding targets within the current MFF limits the EU’s capacity to direct targeted investment towards essential water resilience measures, including infrastructure modernisation, innovation, climate adaptation measures and the implementation of nature-based solutions, and thus its competitive capacity, as the absence of a water balance creates an additional burden for the economy of the regions; notes that outermost and mountainous regions and islands in the EU are particularly struggling to access funding or public-private partnerships to support local and regional investment in water management and infrastructure;

    81. Stresses the important role of the European Investment Bank (EIB) in water financing; highlights the fact that the EIB is actively investing in and supporting the water sector; stresses that the EU should collaborate with the EIB to share best practice and calls, further, on the EIB and other financial institutions to strengthen their role in the funding of innovative and resilient water infrastructure, improved sanitation and drinking water infrastructure, digitalisation, as well as to support projects aimed at flood risk reduction, erosion prevention and the revitalization of watercourses, by facilitating favourable conditions for water investment;

    82. Urges the Commission to explore and promote innovative financing mechanisms, including payments for ecosystem services and green bonds, while ensuring regulatory clarity and safeguards to prevent market distortions; calls on the EIB and other financial institutions to prioritise low-interest loans and credits for Member States and regional and local authorities undertaking large-scale restoration projects, with specific provisions to support economically disadvantaged regions;

    83. Highlights the importance of public-private partnerships as a source of funding for water investment; calls on the Commission to incentivise private investment in the water sector by creating a supportive regulatory framework that may include co-financing opportunities and public-private partnerships in order to drive innovation, improve infrastructure and ensure sustainable water management solutions across the Member States; underlines, nevertheless, that the involvement of private investment in the EU water sector must not undermine the status of water as a public good and a public service, and that the long-term resilience of the sector, as well as the principles of accessibility, affordability and sustainability must be ensured;

    84. Calls on the Member States to adopt governance frameworks that clearly define the roles and responsibilities of stakeholders in planning, financing and implementing nature-based solutions; believes that these frameworks should integrate funding from diverse sources, including philanthropic contributions and private-sector partnerships, while ensuring equitable access to resources for small-scale projects, particularly managed at local or regional levels;

    85. Urges the Commission and the Member States to address water aspects in their budgets and to improve governance within the regions in the use of EU funds;

    86. Underlines the need to provide targeted financial and technical assistance to municipalities to facilitate compliance with water-related legislation;

    87. Encourages the Member States to accelerate the granting of authorisations for sustainable and innovative resilient water infrastructure projects to enable their rapid implementation in the face of the urgent challenges;

    88. Notes that the application of the cost recovery principle on water services, which provides that all water users effectively and proportionately participate financially in the recovery of the costs of water services, remains low to non-existent in several Member States; calls on the Member States and their regional authorities to implement adequate water pricing policies and apply the cost recovery principle for both environmental and resource costs in line with the WFD; calls on the Member States to take into account the long investment cycles when implementing the cost recovery principle and to ensure sufficient funding is available for needed (re)investment;

    89. Stresses the importance of ensuring that water pricing supports long-term water security by reflecting the economic, environmental and resource costs of water use; encourages the Member States and competent regional and local authorities to ensure that water pricing is economically sustainable, socially fair and promotes efficient water use, and that it reflects the availability of water across different Member States and regions, particularly in water-stressed regions, while safeguarding affordability for households and small businesses; calls on the Member States and competent regional and local authorities to insure transparent water prices and to raise awareness of the value of water services;

    90. Points out that competent national water authorities will play a central role in implementing new water management and conservation plans at the level of the Member States; calls, therefore, on the Members States to financially and technically increase the capacity of those competent authorities to play a more significant enabling and advisory role in sustainable and future-proof water management and storage infrastructure; believes that EU funds, such as the Just Transition Fund, should be used to further assist Member States and water agencies in implementation;

    Digitalisation, security and technological innovation

    91. Stresses the potential and the necessity for digitalisation and AI in improving the management and monitoring of bodies of water and water infrastructure, as well as in reporting and ensuring the comparability of data reflecting different geographical flow conditions;

    92. Calls on the Commission, the Member States and water providers to mainstream transparency and digitalisation as fundamental principles in water management and to enhance the use of management and metering data, with the aim of strengthening  monitoring, assessment, accountability and decision-making, while optimising and simplifying reporting obligations; calls for digitally enabled water technologies to facilitate real-time, sample-based and distance monitoring and reporting on water quality, leakages, usage and resources; calls for improved efficiency in the use of public funds and public spending in this area; recognises that widespread deployment of innovative digital technologies needs to be accompanied by digital skills training;

    93. Emphasises the need to promote digitalisation and data-centric solutions in building a water-smart society; stresses the need to develop digital solutions for monitoring water consumption and optimising the use of water resources across all sectors; calls on the Commission, in cooperation with the Member States, to provide financial support for the implementation of smart water management systems, focusing on the needs of small and medium-sized enterprises (SMEs);

    94. Points out that water systems, including water treatment and distribution systems, are considered one of the nation’s critical infrastructures and security pillars, and hence key for the EU’s strategic autonomy, and require increased protection and the ability of utilities to detect, respond to, and recover from physical and cyberthreats and cyberattacks; notes that a higher level of digitalisation comes with new vulnerabilities; points out that, in the event of a threat or an attack, water system operators can lose their ability to control the flow and quality of the water or lose the ability to track the true status of the water system; insists that vulnerability assessments and an emergency response plan should be an integral part of the water management system in every Member State; encourages the promotion of information sharing about threats to cybersecurity and procedures to exchange best practice among operators, as well as to establish a cybersecurity culture through technical security measures, competence building and awareness creation and communication; draws attention to the measures and provisions in the NIS2 Directive and the Critical Entities Resilience Directive which could help mitigate the arising security risks; calls on the Commission to take the lead in reinforcing the EU-level coordination formats and to propose effective tools in the upcoming Preparedness Union Strategy with the aim of ensuring timely preparedness to tackle environmental and non-environmental risks to the water bodies that are threatening the EU’s overall security;

    95. Calls on the Commission and the Member States to increase the involvement of women in decisions regarding water resilience; calls for the adoption of a methodological approach that effectively considers gender-related needs in the implementation of water supply projects, by implementing monitoring, reporting and tracking that use tools and indicators disaggregated by gender;

    96. Notes that better data and data analysis are key to evidence-based decision-making and the swift identification of small changes in water quality that could present a threat to bodies of water, together with the evaluation of best practice and identification of the most cost-effective and impactful measures;

    97. Stresses that improved, reliable and interoperable data on water supply, demand, distribution, accessibility and use are needed and that data points need to be established; urges the Commission and the Member States to enhance data collection and improve data interoperability across all levels to support the implementation of current water legislation, as well as to facilitate circular economy and water-smart industrial symbiosis strategies; highlights the fact that data and AI could be used in modelling water and energy consumption as well as reuse and recycling capacities;

    98. Calls on the Commission to better recognise the fundamental role of the water sector in bolstering EU competiveness by fostering research and innovation and promoting entrepreneurship and talent; emphasises, in this regard, the importance of ramping up innovation in the water sector; points out that the European Innovation Centre for Industrial Transformation and Emissions, created as part of Directive 2010/75/EU, could play a role in this regard, as it evaluates the environmental performance of industrial technologies and gathers information on innovative industrial environmental techniques; points, further, to existing partnerships like the Water4All Partnership, a funding programme for scientific research;

    99. Believes that there is a need to build and nurture multi-stakeholder platforms to promote innovation uptake at all levels, local and national; recommends that these platforms involve a wide range of participants – the public and private sectors, and civil society associations – to build a coalition of partners to bring about change; supports the promotion of knowledge sharing on how digital water technologies can support the implementation of existing EU water legislation, as well as capacity building at local, regional and national levels; calls on the Commission and the Members States to expand digital skills, and research and development (R&D) programmes targeting water, including through collaboration with universities, research centres and SMEs;

    100. Acknowledges the critical role of data centres in the digital economy; notes with concern that the rapid expansion of the technology could lead to a substantial increase in AI’s demand for water resources associated with their operations, which could undermine the environmental benefits that AI promises to deliver, such as resource optimisation and carbon emission reductions, and stresses the need to integrate water efficiency measures in their design and operation; urges the Commission to address the use of water resources by information and communications technologies (ICT) and, in particular, by AI and data centres in its EWRS, in particular by encouraging data centres to reuse treated water and to promote the design of more efficient chips and components to reduce the need for cooling; recommends that the Member States prioritise water resilience strategies that address the specific challenges posed by data centres to ensure the sustainability of both the digital and the environmental agendas;

    101. Recalls that seawater desalination is the process of removing salt from sea or brackish water to make it useable for a range of ‘fit for use’ purposes, including drinking, and that it is thus an important technological solution for people’s livelihoods; notes that, at the same time, desalination is an energy-intensive process and should ideally be done using renewable energy, whenever possible, in order to minimise environmental impacts; reiterates that desalination produces a by-product, brine (a concentrated salt solution), that must be properly disposed of to avoid adverse impacts on the marine environment; considers, therefore, that desalination based on reverse osmosis or thermal technologies should be applied, if other more environmentally sustainable options are not available or cannot be implemented, particularly in remote areas and islands; highlights, in this regard, the ongoing work on new technological solutions, such as microbial desalination cells, offering an environmentally sustainable and innovative alternative to traditional desalination methods, particularly to provide clean water and wastewater treatment to small, isolated locations without electricity;

    102. Stresses the need for increased funding and R&D into technologies such as innovative desalination techniques in order to increase the efficiency, sustainability and the scaling up of such technologies; calls for research into the possibilities of using such technologies in agriculture to diversify the water supply points and therefore decrease the vulnerability of the sector to water stress;

    103. Notes that in the last decade, there have been many scientific breakthroughs for making water treatment smarter and more circular, with these solutions offering opportunities for using digital solutions, AI and remote sensing to use water more efficiently and by reusing treated wastewater for irrigation and recovering energy and nutrients from wastewater;

    104. Calls on the Commission and the Member States to address the regulatory obstacles within the single market to facilitate the development, scaling-up, and placing on the market of innovative biotechnology and biomanufacturing solutions and the promotion of cleaner manufacturing and circularity;

    105. Calls for the funding, development and authorisation of innovative solutions for crop protection and fertilisation, including biological control agents and active substances with lower impact on the environment, which are needed for a just transition to more sustainable agricultural systems;

    106. Calls for specific programmes to be established for the cleaning and conservation of river channels, ensuring adequate flow and reducing the accumulation of debris and sediment that can affect water storage and distribution capacity;

    Cross-border and international cooperation

    107. Stresses the need for a comprehensive EWRS that fosters cross-border cooperation, more uniform data collection and reporting, sharing best practice between local, regional and national actors, ensuring sustainable water management and equitable resource distribution among the Member States, preventing water challenges such as scarcity and flood risk from being passed on to other Member States;

    108. Emphasises that climate change represents a major threat to water resources and aquatic ecosystems; notes that floods and water scarcity compromise food and water security and the health of the general population, ultimately affecting social cohesion and stability; recognises that water resilience is crucial for preventing and addressing current and future health, food, energy and security crises; emphasises that water resilience promotes transboundary water cooperation, serving as a catalyst for peace and security, as countries are interconnected through shared rivers and groundwater resources;

    109. Calls for increased cross-border cooperation between the Member States in the management of shared river basins and groundwater aquifers and in the effective collection and sharing of data on water quality, pollution levels and water levels; recommends the establishment of regional cooperation centres to coordinate the implementation of joint water resilience strategies, taking into account the climate, social and economic challenges of each territory;

    110. Calls for enhanced international cooperation, including at the level of river basins, to address the growing water crisis, ensure clean and high-quality water, promote sustainable water management and implement various innovative water technologies, including nature-based solutions; calls for the anchoring of cooperation across borders at operational, tactical and strategic levels;

    111. Calls for the establishment of cross-border projects under Interreg and other EU funds to improve regional cooperation in the management of water resources, with a particular focus on ensuring the fair distribution of water between sectors and Member States;

    112. Stresses the need to strengthen EU monitoring capacities through digitalisation and modern technologies, including satellite surveillance and real-time pollution tracking, which are essential for preventing and combating cross-border pollution;

    113. Urges the Commission to implement a specific diplomatic role dedicated to resolving water-related conflicts, promoting water cooperation and protecting water sources and systems, particularly during armed conflicts and in transboundary contexts;

    114. Urges the EU to lead international efforts to protect and restore water ecosystems in line with the SDG 6 on clean water and sanitation;

    °

    ° °

    115. Instructs its President to forward this resolution to the Council and the Commission.

    MIL OSI Europe News

  • MIL-OSI Europe: Answer to a written question – Clean Industrial Deal – E-000279/2025(ASW)

    Source: European Parliament

    Europe’s industrial base is essential for competitiveness and prosperity. Yet, rising geopolitical tensions, slow economic growth and technological competition pose important challenges.

    The high cost of energy, which weighs on European citizens and penalises European industry in global competition, sheds light on the urgency to reduce the EU’s dependency on fossil fuels and to accelerate the transition towards clean energy and technologies.

    The Clean Industrial Deal[1] brings forward concrete initiatives to strengthen the business case for competitiveness and decarbonisation in Europe.

    It includes actions to improve access to affordable energy, lead markets, materials and circularity, funding and skills, as well as to a level international playing field, thus answering to the call of European industry[2].

    For instance, it announces counter-guarantees to facilitate the take up of corporate power purchase agreements, simplification of permitting to access energy infrastructure and more funding through the Industrial Decarbonisation Bank and the revision of InvestEU[3].

    The implementation of these actions will tackle challenges that European industries face and will thus have a positive impact on the EU’s competitiveness.

    Most of the actions announced by the Clean Industrial Deal will be implemented or, in the case of legislative proposals, presented by the Commission in 2025.

    The measures will not impose burdens on individual companies. Instead, they will support industry, in particular energy intensive and clean tech industries, and workers involved in the industrial transition.

    • [1] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52025DC0085
    • [2] https://antwerp-declaration.eu/
    • [3] https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32021R0523

    MIL OSI Europe News

  • MIL-OSI Europe: REPORT on the control of the financial activities of the European Investment Bank – annual report 2023 – A10-0068/2025

    Source: European Parliament

    MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

    on the control of the financial activities of the European Investment Bank – annual report 2023

    (2024/2052(INI))

    The European Parliament,

     having regard to the European Investment Bank Group (‘EIB Group’) 2023 activity report of 1 February 2024 entitled ‘A Blueprint for Sustainable Living’, and to the EIB Group document of 2 February 2023 entitled ‘EIB Group Operational Plan 2023-2025’,–  having regard to the European Investment Bank (‘EIB’, ‘the Bank’) Investment Report 2023/2024 entitled ‘Transforming for competitiveness’, published on 7 February 2024,

     having regard to the EIB document of 8 May 2023 entitled ‘Mid-term review of the EIB Energy Lending Policy’,

     having regard to the EIB Group report on the implementation of the EIB Group Transparency Policy in 2023, published on 1 July 2024,

     having regard to the EIB Group document of 27 November 2023 entitled ‘The EIB Group PATH Framework – Version 1.2 of November 2023 – Supporting counterparties on their pathways to align with the Paris Agreement’,

     having regard to the EIB Group and EIB documents of 21 June 2024 entitled ‘EIB Group 2024-2027 Strategic Roadmap’ and of 29 November 2023 entitled ‘EIB Global Strategic Roadmap’,

     having regard to the EIB Group Sustainability Report 2023, published on 25 July 2024,

     having regard to the EIB information note of 6 February 2023 entitled ‘The European Investment Bank’s approach to human rights’,

     having regard to the EIB Group Complaints Mechanism Report 2023, published on 10 June 2024,

     having regard to the EIB Group document of 14 October 2024 entitled ‘Diversity, Equity and Inclusion at the EIB Group’,

     having regard to the EIB publication of 23 September 2024 entitled ‘EIB Audit Committee Annual Reports for the year 2023’,

     having regard to the EIB Group report of 15 July 2024 entitled ‘EIB Group activities in EU cohesion regions 2023’,–  having regard to the EIB report of 19 October 2023 entitled ‘EIB Investment Survey 2023 – European Union overview’,

      having regard to the EIB Group report of 26 June 2024 entitled ‘EIB Group support for EU businesses: Evidence of impact in addressing market failures’,

     having regard to the joint communication from the Commission and the High Representative of the Union for Foreign Affairs and Security Policy of 5 March 2024 entitled ‘A new European Defence Industrial Strategy: Achieving EU readiness through a responsive and resilient European Defence Industry’ (JOIN(2024)0010),

     having regard to European Court of Auditors Special Report 22/2024 entitled ‘Double funding from the EU budget’,

     having regard to the EIB Group report of 29 December 2023 entitled ‘European Investment Bank Group Risk Management Disclosure Report – June 2023’,

     having regard to the joint communication of 19 March 2025 from the Commission and the High Representative of the Union for Foreign Affairs and Security Policy entitled ‘Joint White Paper for European Defence Readiness 2030’ (JOIN(2025)0120),

     having regard to Rule 55 of its Rules of Procedure,

     having regard to the report of the Committee on Budgetary Control (A10-0068/2025),

    A. whereas the EIB Group includes the EIB and the European Investment Fund (EIF); whereas the EIB stands as the world’s largest multilateral development bank; whereas the EIB is treaty-bound to contribute to EU integration; whereas the EIB’s key priorities include providing funding for projects to foster European integration and social cohesion; whereas the EIF acts as a dedicated body for supporting the European Union’s policy objectives in the areas of entrepreneurship, job creation and economic cohesion;

    B. whereas, as a bank owned by the EU Member States, the EIB is governed by a Board of Governors, a Board of Directors and a Management Committee, and it maintains robust internal mechanisms for accountability, governance and audit; whereas the EIF is owned by the EIB (60 %), the EU (30 %) and financial institutions (10 %) from the Member States, the UK and Türkiye, and is managed by the General Meeting of EIF shareholders, the Board of Directors and the Chief Executive, with independent internal mechanisms for accountability, governance and audit, some of which are shared at the Group level;

    C. whereas both the EIB and the EIF operate within a competitive market but are held to high standards of transparency and stakeholder engagement as EU bodies;

    D. whereas the EIB Group promotes EU policies both within and outside the EU and collaborates closely with other EU and national institutions, aligning its financing with the EU’s political priorities; whereas the EIB Group outlined eight strategic priorities in its Strategic Roadmap for 2024-2027: climate action, digital transformation, defence, cohesion, agriculture, social infrastructure, external financing and promoting the Capital Markets Union;

    E. whereas the EIB is also tasked with securing resources through borrowing activities, which are crucial for implementing the EU’s policies;

    F. whereas the European Council’s strategic agenda for 2024-2029 envisages an enhanced role for the EIB Group as a driver of EU defence and security, and emphasises the need to boost EU competitiveness and improve citizens’ economic and social well-being through significant collective investment efforts, leveraging both public and private funding;

    G. whereas the Draghi report on the future of European competitiveness[1] proposed numerous ways to expand the EIB’s role in financing EU policies and to enable the EIB to assume more risk;

    H. whereas the EIB Group’s core mission is to bolster Europe’s potential for job creation and economic growth; whereas its investments should tackle inequalities by improving access to jobs, training opportunities, housing and education in order to address poverty and unemployment; whereas it is crucial to overcome barriers to financing for small and medium-sized enterprises (SMEs) and mid-caps; whereas public lending and guarantee schemes serve as vital countercyclical policy tools, especially during economic downturns, and help mitigate structural market failures;

    I. whereas the EIB is a cornerstone of the European financial architecture for development and the largest multilateral lender in the EU’s neighbouring regions, including the Eastern Neighbourhood countries, the Western Balkans, the Middle East, and North Africa; whereas the EIB is expected to help close the gap in productive investment between Europe and its main competitors by increasing investment in innovation, communication technology and intellectual property;

    J. whereas the success of the EU’s policy objectives and their effective implementation increasingly depend on the EIB Group; whereas the depth and quality of Parliament’s oversight of the EIB’s financial operations should therefore be in line with the intensity of EIB-Commission cooperation, which has become very significant;

    K. whereas the EIB’s business model requires the highest standards of integrity, accountability and transparency, and robust measures must be implemented and regularly updated to combat financial fraud, corruption, money laundering, terrorism, organised crime and both tax evasion and avoidance; whereas the EIB Group has a control framework aimed at preventing and mitigating sanctions risks;

    L. whereas the EIB Group adheres to the Basel Committee on Banking Supervision’s definition of compliance risk, with the aim of preventing the risk of legal or regulatory sanctions, material financial loss, or damage to reputation; whereas the Bank takes appropriate measures to mitigate such risks by ensuring strict compliance with legal and regulatory frameworks, both at EU and international level;

    Financial operations and performance

    1. Acknowledges that the EIB has operated effectively and efficiently in a landscape marked by significant global challenges, including geopolitical tensions, climate change impacts and other factors influencing the global economy; suggests exploring both the EIB’s effectiveness and efficiency through thoughtful analysis, particularly focusing on the impact on competitiveness and growth;

    2. Recognises that EIB financing is becoming increasingly crucial in the context of high interest rates and constrained public finances; expects the EIB, in the context of a challenging economic outlook and increased global competition, to address constraints to EU competitiveness, such as volatile energy prices, skills shortages in key sectors and insufficient investments in innovation and new technologies;

    3. Notes that the EIB Group achieved strong consolidated results amounting to EUR 2.272 billion in 2023 under the International Financial Reporting Standards (IFRS), compared to EUR 2.327 billion in 2022, reflecting a year-on-year decrease of 2.4 %; calls for a detailed analysis of the factors contributing to this decrease, especially since the period was marked by steady economic growth; observes that EIB reserves reached over EUR 56 billion in 2023, up from EUR 53.9 billion in 2022 and EUR 36 billion in 2014;

    4. Notes that the EIB’s total liquidity ratio remained well within internal limits to the end of 2023 and that the EIB’s Common Equity Tier 1 (CET1) ratio stood at 33.1 % in 2023, significantly higher than the average ratio of significant institutions supervised by the European Central Bank (ECB) at that time; emphasises that maintaining the EIB’s AAA rating with a ‘stable’ outlook is crucial for securing favourable market financing at preferential rates and should be preserved; underlines that the EIB’s high credit standing is key to its successful business model;

    5. Calls on the EIB to maintain its strong capital position and consistently high profits, but notes that the Bank has potential to absorb potential fluctuations in returns without compromising shareholder capital or its credit rating, has the capacity to take on more risk in strategic investments and is well-equipped to invest more in higher-risk innovative projects where private capital remains hesitant;

    6. Highlights that the EIB’s total disbursements reached EUR 54.4 billion in 2023, with EUR 53.4 billion from its own resources, compared to EUR 54.3 billion (EUR 53.3 billion from its own resources) in 2022; observes that the EIF’s disbursements on private equity investments amounted to EUR 139.7 million in 2023, compared to EUR 113.7 million in 2022; notes that, according to an economic model developed jointly by the EIB’s Economics Department and the Commission’s Joint Research Centre, the EIB Group’s overall investment within the EU in 2023 is expected to create around 1 460 000 new jobs in the EU-27 by 2027 and boost the EU’s GDP by 1.03 percentage points; calls on the EIB Group to ensure a more balanced geographical distribution of investments to maximise their impact across all EU regions, promoting cohesive and inclusive growth throughout the Union, with particular attention to under-represented and less developed areas;

    7. Recalls that the EIB’s Statute mandates geographical balance among its staff and that the selection of staff members must be based on merit, while also considering fair representation of nationals from all Member States; encourages the Bank to continuously monitor geographical balance among its staff and to adjust the recruitment process accordingly, if needed;

    8. Welcomes the fact that the EIB Group upholds a rigorous policy against tax fraud, tax evasion, tax avoidance, money laundering and terrorism financing;

    InvestEU, the simplification of the multiannual financial framework, and the Recovery and Resilience Facility

    9. Welcomes the adoption, on 13 December 2023, of the EIB Group Operational Plan 2024-2026, which outlines the priorities and activities for implementing the EIB Group’s strategy over the next three years; calls for adjustments to new market conditions, including simplification and a reduction of bureaucracy to remove barriers to financing for SMEs, which must be significantly increased; acknowledges that increasing higher-risk activities and mandates is crucial for providing effective support to high value-added and innovative sectors;

    10. Recalls that the EIB Group has been allocated 75 % (EUR 19.6 billion) of the EU budgetary guarantee under the InvestEU Regulation[2]; highlights that, in 2023 alone, the EIB approved 30 operations under InvestEU totalling EUR 9.1 billion; believes that in order to stay competitive, significant investments are needed, primarily from the private sector; believes that focusing on innovative projects, start-ups and scale-ups would enhance European competitiveness and growth; notes that this requires mobilising private investments; calls, therefore, on the EIB to play a more significant role in strategic de-risking through guarantees, thereby encouraging private capital investment;

    11. Stresses that, within the current 2021-2027 multiannual financial framework, the EIB manages 87 mandates from the Commission, increasing to about 130 if those relating to shared management and assigned by local governments and the Member States are included, and notes that the EIB produces no fewer than 457 reports a year for these; points out that de-bureaucratisation and simplification are deemed necessary to enable better use of resources;

    12. Emphasises that the EIB is managing six Recovery and Resilience Facility (RRF) mandates in four Member States, signed in 2021 (Greece and Italy), 2022 (Romania) and 2024 (Spain), totalling EUR 8.7 billion; acknowledges that the adoption of ‘financing not linked to costs’ instruments, which have significantly expanded with the RRF, inherently raises the risk of errors and double funding; expresses its concern about the transparency, auditing and monitoring of the implementation of the RRF; calls on the EIB to cooperate with Member States to address government capacity constraints and the lack of technical skills so as to ensure that RRF resources are managed as effectively as possible, in alignment with national structures and complying with all RRF reporting requirements, especially in the implementation of investment projects and reforms; urges the Commission and the EIB, in its advisory role, to refrain from proposing new financing mechanisms based on the RRF model without taking corrective measures, including in the upcoming post-2027 multiannual financial framework; stresses that, while the EIB seeks simplification, it must not compromise the soundness of EU resource management or the ability to maintain oversight and accountability, as mandated by the Treaties;

    Energy security

    13. Notes the EIB’s continued support for security of supply, which mainly takes the form of reinforcing electricity grids and cross-border infrastructure, of reducing energy demand through energy efficiency projects and of fostering low-carbon power generation; commends the fact that the EIB has supported new dimensions of energy security, such as demand response and energy storage, and has promoted the development of a sustainable supply of critical raw materials (CRM) needed for the energy transition; calls for an urgent analysis of the real impact of these projects implemented to date, especially of their impact on the availability and cost of energy and thus on the general competitiveness of European companies;

    14. Reiterates the need to address energy poverty and emphasises the need for a fair and inclusive energy transition; recalls that the energy crisis is exacerbating inflation, increasing food insecurity and straining household budgets; encourages the EIB to leverage the Just Transition Mechanism and the Modernisation Fund to support regions and populations most affected by the energy transition; stresses the importance of using the Just Transition Mechanism to support workers and regions affected by the phase out of fossil fuels, ensuring access to retraining and quality jobs; recognises that numerous sectors are grappling with challenges stemming from the combined effects of adaption to European Green Deal objectives and the repercussions of the energy crisis and inflation; stresses that accelerating the deployment of innovative low-carbon technologies requires bringing their costs to a level that is competitive with fossil fuels and adjusting to the ongoing reform of the green policies;

    15. Acknowledges that the REPowerEU plan is a crucial new element in the EU policy response to the energy crisis; notes that, in July 2023, the EIB Group increased the financing targets of the October 2022 commitment from EUR 30.0 billion until 2027 to EUR 45.0 billion (REPowerEU+), in order to scale up its efforts to support the EU’s energy security; calls for a clear overview of potential double funding of energy projects;

    16. Underlines that in 2023, the EIB provided approximately EUR 21.4 billion in financing for energy-related projects, of which around EUR 19.8 billion in the EU and EUR 1.6 billion outside the EU; considers it necessary to increase not only the volume of financing for energy-related projects, but also the efficiency of the investments; underlines, in this regard, the importance of the EIB’s combined offer of competent technical assistance and innovative financial support, and encourages the Bank to expand the range of innovative financing products offered to economic operators, going beyond the standard market offer;

    17. Believes that hydrogen and its derivatives, particularly when sourced from renewable energy, can significantly contribute to the EU’s decarbonisation goals and reduce dependence on fossil fuels; urges the EIB to take a leading role in mobilising private investments, which are essential for scaling up hydrogen production across the EU, while ensuring technological neutrality and supporting a diverse range of innovative solutions for decarbonisation, including further scientific research aimed at enhancing and stabilising the efficiency of hydrogen technology; encourages the Bank to consider the cost-effectiveness of such projects from the perspective of their total life cycle;

    Defence and security policy

    18. Welcomes the significant role that the EIB Group plays in supporting the EU’s defence and security policy by providing funding and leveraging private investment to enhance the Union’s strategic autonomy and resilience; stresses the importance of the EIB’s investment capabilities, supporting initiatives that contribute to strengthening the EU’s defence industry, advancing cybersecurity infrastructure and promoting innovation in critical defence technologies;

    19. Appreciates that security and defence is set as one of the Bank’s core priorities in its Strategic Roadmap for 2024-2027; highlights that in May 2024, the EIB’s Board of Directors approved the EIB Group Security and Defence Industry Action Plan, which follows the EIB Group 2022 Strategic European Security Initiative aimed at supporting innovation in dual-use technology, in order to enhance support for the EU’s security and defence industry; notes, with satisfaction, that EIB Group support is provided to SMEs and innovative start-ups within the security and defence sector under the ‘dual-use’ principle, upholding the ‘credible civil use’ criterion, but waiving the revenue test; welcomes the decision of the EIB Board of Directors of 21 March 2025 to expand the Bank’s eligibilities for financing Europe’s security and defence industry and infrastructure, by ensuring that excluded activities are as limited as possible in scope;

    20. Welcomes the EIB’s targeted investments in both defence and civilian infrastructure and emphasises the need for strategic investment in technologies that serve both civilian and defence purposes, in line with the EU’s broader goals of promoting innovation and enhancing the Union’s security; calls on the EIB Group to conduct a review of the impact of the extension of its new dual-use goods policy;

    21. Stresses the importance of SMEs, start-ups and mid-caps in the security and defence industry and in developing a common European market for defence; believes that smaller actors play a crucial role in strengthening the Union’s capacity and autonomy to develop innovative defence products; encourages the EIB to further support cross-border research and development (R&D) cooperation, particularly by paving the way for smaller actors to take part in the defence supply chains; stresses that greater EIB investment in the defence sector can encourage investment by commercial banks in the same area and considers it necessary to increase the flexibility of lending to SMEs in this regard;

    22. Notes that the resources allocated to support the defence and security sector mainly come from the European Defence Fund (EDF) (EUR 8 billion), the EIB Strategic European Security Initiative (SESI) (EUR 8 billion) and the European Defence Industry Programme (EDIP) (EUR 1.5 billion); calls for a dedicated capital allocation on defence and the further adjustment of the scope of eligible investments in order to meet the ambitious role of contributing to Europe’s peace and security set by the White Paper on European Defence Readiness 2030 for the EIB Group; welcomes the integration of the EIB’s existing EUR 8 billion SESI into a cross-cutting and permanent public policy goal and the removal of a predefined ceiling for financing in this area; believes that these measures will allow the Bank to respond to the investment needs in security and defence, while safeguarding its operations and strong financial position; believes that the decision by the Board of Governors in June 2024 to increase the gearing ratio of the Bank will enable increased investments in areas of strategic importance, including in security and defence;

    23. Underlines the added value of the innovative measures that the EIB has adopted to accelerate investments in security and defence, and of the ‘one-stop shop’ that acts as the single point of entry for clients and external stakeholders, to whom it offers expert assistance to streamline access and speed up deployment of financing available under the SESI; encourages the EIB to continue developing and implementing agreed upon measures that simplify client procedures and further accelerate investment processes, while ensuring that the AAA rating is preserved;

    24. Notes, with appreciation, that in June 2023, the EIB approved an increase in SESI for security investments in the EU from EUR 6.0 billion to EUR 8.0 billion for the period from 2022 to 2027, also including the space and cybersecurity sectors; encourages the EIB to strengthen institutional partnerships with the EU Agency for the Space Programme and other potentially relevant partners, in accordance with EU competition rules;

    25. Commends the EIB’s cooperation with all relevant stakeholders, including Member State governments, the European Defence Agency (EDA) and the NATO Innovation Fund; appreciates, in particular, the EIB Group’s cooperation with the EDA and welcomes the signing of an update to the memorandum of understanding between the two bodies on 3 October 2024, which will allow them to strengthen strategic partnerships and jointly identify financing needs to better support research, development and innovation (RDI) in the area of security and defence in the Union;

    26. Invites the EIB to further strengthen such collaboration with key stakeholders with a view to increasing impact, synergies and complementarity with EU defence programmes, ensuring that its investments complement broader EU defence policy goals and contribute to achieving economies of scale in European defence capabilities; asks the EIB to enhance regional security and resilience, particularly in Eastern Europe and the Mediterranean through the creation of infrastructure that supports regional security and fosters greater cooperation between EU Member States on defence matters; stresses, furthermore, the importance of exploring cooperation with the NATO Innovation Fund in order to improve access to financing for technology start-ups, in parallel to the deployment of the EIF Defence Equity Facility;

    Social infrastructure and housing

    27. Asks the EIB to increase risk-taking for projects providing essential services with long-term clear and measurable benefits; welcomes, in this vein, the EIB Group’s actions and measures in the area of housing and social infrastructure that contribute to affordable housing, social inclusion and regional development, while also supporting sustainability and innovation; calls on the EIB to prioritise its investments towards these goals in order to achieve better economic growth, social inclusion and regional cohesion, while also supporting the EU’s sustainability objectives; invites the Bank to focus on sustainable urban development and inclusive growth by ensuring that the EU’s housing and infrastructure needs are met for a stronger, more cohesive and prosperous Europe;

    28. Emphasises that housing purchase and rental costs have surged significantly in recent years, reducing the affordability of many metropolitan areas in the EU and limiting access to housing; stresses that the EIB must play a stronger role in addressing the housing crisis; welcomes the inclusion of support for social infrastructure in the EIB Group’s eight strategic priorities for 2024-2027 and agrees that investments in energy-efficient, sustainable and accessible housing, and education within easy reach are crucial for boosting productivity and fostering strong and resilient societies; encourages the EIB to prioritise investments in housing cooperatives, energy-efficient social housing and renovation projects targeting low-income households; believes that addressing the EU’s major housing investment gaps requires overcoming both financial and non-financial investment barriers and the large-scale mobilisation of resources and capacities;

    29. Welcomes that the EIB, in collaboration with the Commission, has initiated a pan-European investment platform aimed at promoting affordable and sustainable housing, combining advisory services and financing, and encourages the participants to continue this initiative;

    30. Welcomes the EIB’s commitment to easing the pressure on housing markets in Europe; stresses that housing purchase and rental prices have increased significantly in recent years, reducing the affordability of many metropolitan areas in the EU and compromising access to these; emphasises that EIB analysis shows that the EU needs about 1.5 million new housing units per year to cope with demand, and that about 75 % of the EU’s building stock needs to be renovated, representing an additional 5 million units per year; welcomes the fact that the EIB supports the reconstruction of existing housing and the construction of new social and affordable accommodation; encourages the EIB to mobilise more funding for affordable housing projects among the Member States;

    31. Calls for the strengthening of technical assistance and financial expertise in support of local and regional authorities, especially in areas with low investment capacity, in order to improve access to EIB funding; believes that cooperation with local authorities, local governments and civil society representatives should foster the development of social housing suitable for all, and especially for the most vulnerable citizens of the concerned Member State; is aware that the effectiveness of the EIB’s action in the housing and social infrastructure sector also depends on the removal of policy and regulatory hurdles;

    32. Notes that, in 2023, the EIB signed EUR 8.3 billion in financial support for energy efficiency operations, of which 65 % was for energy efficiency in buildings; invites the EIB to prioritise long-term affordable and accessible solutions, and sustainable investments, such as energy-efficient renovations and the reuse of vacant buildings;

    33. Believes that the related investments should ensure sufficient durability before any change of destination or use is authorised;

    34. Invites the EIB to build on its long-standing experience as an accelerator of European investments and to also deploy its potential in the education and training and healthcare sectors, including through advisory services; calls on the Bank to strengthen support for healthcare capacities, both within and outside the EU, thus  ensuring a stronger role for Europe in the world;

    Support for SMEs, mid-caps, start-ups, scale-ups and businesses in rural and remote areas, the Capital Markets Union and the role of the EIF

    35. Highlights that SMEs, start-ups and scale-ups are vital for the EU’s economy; notes that these businesses encounter significant hurdles in accessing financing, markets and talent, which constrains their growth; asserts that business growth, dynamism and public investment are essential for fostering innovation, competitiveness and productivity; encourages the EIB Group to continue addressing these challenges, notably in the current geopolitical context, through customised financial programmes, risk-sharing mechanisms and targeted financial instruments, while ensuring the additionality of public resources for these purposes and avoiding the crowding out of private capital; notes that different instruments to support lending to businesses can be combined depending on the context, and that different EIB Group instruments target different market failures and firm types; stresses the need to provide technical assistance to SMEs before project approval, in order to improve access to EIB funding;

    36. Notes that the development of a well-functioning securitisation market can be a key first step towards establishing a strong Capital Markets Union (CMU); believes that the CMU will benefit consumers and SMEs by offering high-yield investment opportunities in the real economy and will eventually boost the venture capital market by improving access to diversified funding sources; believes that financing European scale-ups with European capital should be a priority, as exemplified by the European Tech Champions Initiative, which was launched in February 2023 to finance promising European tech companies and prevent the sale of businesses to foreign investors because of the lack of European investment; encourages the EIF to explore establishing the second generation of this initiative; observes that the European Tech Champions Initiative is complemented by the European Scale-up Initiative, which aims to provide crucial financing for Europe’s high-tech companies in their late-stage development; notes that these investments should be in line with policy actions at EU and national level; is aware of the comparative weaknesses of the European venture capital market in respect of other competitors’ markets, and that European start-ups and scale-ups are often obliged to relocate or search for foreign buyers or rely on sources of financing other than venture capital, hence less suited to high-growth;

    37. Acknowledges the mission of the EIF to support access to financing for European micro, small and medium-sized enterprises; believes that the EIF should significantly step up its activities for the development of the European venture capital ecosystem, while maintaining a geographical balance; calls for the EIF’s activities to be strengthened, enabling increased investment in high-growth sectors, enhancing risk-sharing between public and private investors, and promoting innovation throughout Europe; considers it necessary to monitor the rate of increase in support for micro, small and medium-sized enterprises;

    38. Encourages the EIF to further develop its monitoring tools to better track the long-term performance of venture capital funds and SME financing operations, especially in terms of job creation, innovation diffusion and regional impact; stresses also the critical role of large European companies in Europe’s economic structure, particularly those operating in essential sectors such as energy, defence and infrastructure; calls for a balanced approach that ensures the EIB continues to support large European companies in securing investment capital for major projects and research and development initiatives, thereby enhancing Europe’s global competitiveness;

    39. Praises the support provided by the EIB Group to about 400 000 SMEs and mid-caps in 2023 alone, with EUR 31.1 billion in financing, including loans and guarantees for businesses (of which EUR 14.9 billion was deployed by the EIF), resulting in the mobilisation of over EUR 134 billion, and notes that it teamed up with almost 300 partner institutions across Europe to this end; encourages the EIB to continue its role in improving access to financing for SMEs, which often face barriers to funding from traditional financial institutions, providing targeted financing to ensure sufficient resources to grow and thrive; welcomes and calls for the constant expansion of the number of partner institutions to reach a wide geographical and sectoral coverage;

    40. Recalls that the deployment of the European Guarantee Fund ended in 2023 and that its disbursements to help SMEs to recover from the adverse impact of the pandemic reached approximately 200 000 SMEs across the EU; recalls the concerns expressed in previous resolutions about the transparency of the decision-making processes and information about final recipients;

    41. Welcomes that EIF measures on anti-money-laundering, countering the financing of terrorism and tax avoidance encompass risk assessments for products and transactions, thorough due diligence on counterparties and screening the ownership structures and key individuals against sanctions and adverse media; welcomes the introduction of mandatory staff training and the conclusion of an agreement with the Financial Intelligence Unit of Luxembourg on the reporting of and follow-up on any suspicious transactions detected;

    Key policy areas of cohesion, climate action and environmental sustainability, and digitalisation

    42. Appreciates that in its 2021-2027 Cohesion Orientation, the EIB committed to dedicating at least 40 % of its total financing in the EU between 2022 and 2024 to projects in cohesion regions; notes that, in 2023, such financing amounted to EUR 29.8 billion, equivalent to 45 % of the Bank’s total signatures in the EU; underlines that the share of EIB financing allocated to less developed regions increased from 24 % in 2022 to 26 % in 2023, totalling EUR 17.2 billion, well above the 21 % target set in the EIB Cohesion Orientation for 2023; reiterates the call for the EIB to continue monitoring, analysing and addressing the shortcomings that prevent certain regions or countries from fully benefiting from the EIB’s financial support and assistance;

    43. Acknowledges the role played by the EIF in contributing to economic and social cohesion in the Union through a wide range of financial instruments; notes that EIF commitments to credit guarantees, venture capital and private equity investments for cohesion regions in 2023 stood at EUR 6.8 billion, representing 48 % of total EIF commitments in the EU; notes that in 2023, the EIF was especially active in Central and Eastern Europe;

    44. Notes that the EIB Environmental and Social Sustainability Framework includes revised environmental and social policy and standards promoting an integrated approach to impact and risk assessment and management;

    45. Acknowledges that over the past 15 years, EIB Advisory has supported over 1 000 projects in cohesion regions; calls on the Bank to actively promote financing opportunities in less developed and transition regions, including by boosting the presence of advisory services in EIB local offices; considers it necessary to also take into account the geographical distribution of EIB support for increasing social cohesion;

    46. Highlights the EIB’s initiatives in cohesion regions to support the healthcare sector, including the HERA Invest programme, a EUR 100 million guarantee established with the Commission to support research and development in addressing pressing cross-border health threats; encourages the EIB to promote targeted investments in key systemic enablers such as healthcare, education, social housing, digital connectivity and local financing for cities and regions, ensuring a better geographical balance, either through direct lending or financial instruments, and to leverage synergies between EU grants and EIB loans to enhance cross-border rail connectivity, which is crucial for better integration within the EU single market;

    47. Acknowledges the EIB’s strategic orientation since 2019 to be the EU Climate Bank; emphasises that in 2023 alone, the EIB signed EUR 41.8 billion in financing for climate action and EUR 25.1 billion for environmental sustainability (EUR 35.1 billion and EUR 15.9 billion respectively in 2022); notes that EIB financing for climate change adaptation totalled EUR 2.7 billion in 2023, corresponding to 6.4 % of its total climate action (compared to EUR 1.9 billion, or 5.4 %, in 2022); welcomes that climate action and environmental sustainability financing, as a whole, accounted for 60 % of EIB financing in 2023; calls for maintaining technological neutrality in its investment strategy in climate and sustainable financing;

    48. Recalls that the EIB Energy Lending Policy (ELP), adopted in 2019, established a ‘phase out support to energy projects reliant on unabated fossil fuels’ and introduced a transition period during which the Bank could continue to approve projects already under appraisal, but the Board of Directors did not approve any such project after the end of 2021; remarks that, in 2022, the EIB Group introduced a temporary and exceptional extension of the exemptions to the Paris Alignment for Counterparties Framework (so-called PATH) in support of REPowerEU, to cover projects with high innovative content and renewable energy projects and electric vehicle charging infrastructure in the EU; observes that, in 2023, the EIB Group decided to apply the same temporary and exceptional extension also for projects in the spirit of REPowerEU outside the EU; notes that such temporary and exceptional extensions are expected to run until 2027, subject to a Climate Bank roadmap review expected in 2025; recalls its previous resolution[3] and maintains that PATH offers the appropriate framework for supporting counterparties on their pathways to align with the Paris Agreement objectives; emphasises that the EIB is expected to intensify its engagement with all of its clients to foster the development of their decarbonisation plans;

    49. Notes the EIB Group Climate Bank Roadmap mid-term review, approved in 2023, which includes a simplified Paris Alignment framework for microenterprises, the revision of the PATH framework’s disclosure requirements for financial intermediaries and a temporary extension of the list of countries in which the EIB can act as a sole financier of climate adaptation projects due to their particular vulnerability to climate change;

    50. Welcomes the EIB Group’s inclusion of agriculture and bioeconomy among its key priorities, but notes that agriculture, fisheries and forestry received only 1.1 % of the EIB’s lending stock in 2023; considers it important for the EIB to programme significant amounts for financing the agricultural sector and through simplified procedures;

    51. Underlines that agriculture is a key driver of growth and development in rural areas; acknowledges the increasing challenges faced by the agricultural sector and the need for EU farmers to adapt to the European Green Deal objectives, cope with the energy crisis and manage rising inflation; calls on the EIB Group to enhance support and foster innovation for this vital sector, which plays a significant role in ensuring food security, leveraging the EU’s One Health approach by integrating human, animal, plant and environmental health to create sustainable, resilient and productive agri-food systems; highlights the financial challenges faced by farmers, particularly young and small operators, noting that farmers and the enterprises in this sector experience lower success rates when applying for financing;

    52. Stresses that EIB support should have a just transition approach in order to achieve sustainable agriculture that protects the environment, human health and animal welfare, while improving farmers’ livelihoods, in particular for small and medium-sized farms; maintains that supporting rural areas is essential for promoting balanced and inclusive development, generational renewal and equal access to financial opportunities for women and men; reiterates its call on the EIB Group to increase its involvement in the agricultural sector by improving access to funding;

    53. Appreciates that the EIB Group is one of the key supporters of digitalisation in the EU, particularly in financing digital infrastructure and supporting innovative digital start-ups; encourages the EIB to enhance its support for digital networks strengthening the EU’s technological autonomy and innovation in key technologies;

    54. Believes that reducing digital inequality and preventing social exclusion requires significant public investment in telecommunications infrastructure, particularly in rural areas; encourages the EIB to support European citizens in acquiring adequate digital literacy to fully participate in society, with a special focus on the elderly and those with disabilities;

    55. Recognises the critical role of the cybersecurity sector in protecting businesses and governments from advanced digital threats and foreign influence; welcomes the increase in security investments from EUR 6 billion to EUR 8 billion, financed through the SESI to address security challenges, including those in the New Space industry;

    56. Welcomes the EIB’s focus on gender equality and women’s economic empowerment, resulting in a total of EUR 5.8 billion in investment in this field in 2023 (compared to EUR 5.1 billion in 2022); believes that the EIB could further increase microfinance loans to women-led businesses, which still face discrimination in access to financing;

    57. Highlights that the security of supply of critical raw materials is crucial for both the green and digital transitions, as well as for the defence sector and the EU industrial base in general; calls on the EIB to increase investments in the CRM sector to help diversify the supply of both primary and secondary raw materials and to develop circular economy solutions, in particular R&D for alternative materials, such as bio-based materials; welcomes, in this regard, the adoption on 21 March 2025 of a new CRM strategic initiative, with an expected EUR 2 billion in financing for CRM investment in 2025, a new CRM Task Force and a dedicated one-stop shop to build and manage a pipeline of CRM operations and advisory activities and increased technical expertise and partnerships;

    The EIB’s activities outside the EU

    58. Underlines that in EIB Global’s second year of existence, it provided financing amounting to EUR 8.4 billion (compared to EUR 9.1 billion in 2022); notes that, as EIB Global financing is limited to 50 % of the total cost of a project, investment co-financing with development finance institutions and multilateral development banks is recurring; calls on the EIB and the Commission to invest in internal audit and independent control functions to guarantee the integrity and soundness of all operations;

    59. Recalls that EIB Global is among the key implementing actors of the European Global Gateway and, as such, is expected to apply the highest standards of transparency and accountability;

    60. Notes the adoption by the EIB Board of Directors of the EIB Global Strategic Roadmap and its commitment to respect and promote human rights and the rule of law in the projects it supports;

    61. Highlights the importance of ensuring that the EIB Group’s interventions in Ukraine are guided by the priorities for the country’s reconstruction agreed with the EU, and are consistent with the methods and frameworks laid out in the Ukraine Plan and with the provisions of the EU Treaties; notes that the EIB is further enhancing its efforts to address fraud and corruption in relation to the EIB Group projects implemented in Ukraine; calls for the continued application of appropriate conditionality on the financial assistance provided to Ukraine, with a focus on ensuring effective oversight mechanisms, such as access to information and premises, and the monitoring of visits, and calls for conditionality to be extended to all non-EU countries for which it provides financing;

    62. Urges the strengthening of the administrative and audit capacity of Ukrainian authorities responsible for implementing, monitoring, controlling and supervising funded actions, in particular for the prevention of fraud, corruption, conflicts of interest and irregularities; reiterates that the EIB should have clear and unrestricted oversight at all times;

    63. Believes that a greater role for the EIB will bring added value for both the reconstruction of Ukraine and the enlargement process and for prospective partnerships under the EU’s Global Gateway agenda and neighbourhood policy and in support of the Sustainable Development Goals; encourages the Commission to maximise cooperation with the EIB to leverage the EU’s strategic autonomy, particularly on energy and raw materials;

    64. Welcomes the adoption, in 2024, of the Ukraine Facility, which follows the EIB’s EU for Ukraine (EU4U) initiative and establishes a support mechanism based on EU budget resources; encourages the Member States to ensure that solid support continues to be provided to the country, in line with its needs;

    65. Stresses that, in order to support Ukraine, the EIB has built up a loan portfolio of over EUR 7 billion since the beginning of the conflict with Russia in 2014; underlines that, as of 31 December 2023, the EIB’s exposure (disbursed and not yet disbursed) amounted to EUR 5.750 billion, predominantly covered by EU guarantees under the External Lending Mandate; notes that, in addition, the Bank also granted financial guarantees on exposures to counterparties located in Ukraine, fully covered by EU Comprehensive Guarantees, for a signed amount of EUR 388.7 million at the end of 2023 (compared to EUR 478.8 million at the end of 2022);

    66. Notes the growing financial engagement of the EIB in Ukraine; calls on the Bank to provide regular, detailed updates to the budgetary authority and relevant audit bodies regarding the disbursement and implementation of funds covered by EU guarantees;

    67. Underlines the disproportionate impact of the Russian war of aggression against Ukraine on eastern EU regions bordering Russia and Belarus; draws attention to the costs borne by these regions and Member States as a result of their shared border with hostile neighbouring countries, notably their need to increasingly redirect public funds towards security, defence and preparedness, while dealing with severely reduced resources due to a disruption in economic activities, cross-border trade and other exchanges, and in cohesion programmes; calls on the EIB to take this into account in its financing decisions;

    68. Welcomes the significant investments made in Moldova to support economic resilience, improving energy security, enhancing infrastructure and aiding the country’s progress towards EU integration; acknowledges that in the Western Balkans, EIB Global invested EUR 1.2 billion in 2023, plus an additional EUR 700 million to enhance road safety and improve railway networks; welcomes the adoption of the Reform and Growth Facility for the Western Balkans in 2024 and the Reform and Growth Facility for Moldova approved by the European Parliament;

    69. Recognises the role played by the EIB in supporting the Western Balkans on their path to Union membership, in line with the EU’s enlargement policy; observes that EIB Global invested EUR 1.2 billion in the Western Balkans in 2023, mobilising a total of over EUR 6 billion in investments; notes that the majority of the financing was allocated to sustainable connectivity, followed by credit lines for SMEs, infrastructure projects in the healthcare, education and skills sectors, and water supply and sanitation;

    70. Asks the EIB to collaborate with other bilateral and multilateral institutions to develop and apply common methodologies for development impact analysis, with a view to ensuring added value and long-term, positive impacts;

    EIB accountability architecture

    71. Recalls that internal oversight at the EIB is headed by the Inspectorate General (IG), which comprises three accountability-related divisions – operations evaluation, the complaints mechanism and fraud investigation – that hold complementary roles, contributing to the consistent handling of allegations and complaints;

    72. Observes that the EIB Complaints Mechanism (EIB-CM) handled a total of 104 cases in 2023 (97 in 2022); notes that 60 new complaints were received in 2023 (54 in 2022), of which 44 were considered admissible and 29 were related to EIB-financed projects, of which 27 were located outside Europe;

    73. Notes that the EIB Procurement Complaints Committee is the independent EIB committee handling complaints about project procurement procedures relating to EIB-financed projects outside the EU;

    74. Welcomes the efforts of the Investigative Division (IG/IN) to cooperate and coordinate efforts with the other components of the EU’s anti-fraud architecture, in particular the European Anti-Fraud Office (OLAF) and the European Public Prosecutor’s Office (EPPO), which received 37 % of the referrals made for investigations in 2023 (27 cases out of 74); encourages the IG/IN to strengthen its cooperation with all components of the EU’s anti-fraud architecture;

    75. Notes that the IG/IN carries out proactive fraud detection activities using the Fraud and Integrity Risk Scoring Tool and the Corruption Risk In Procurement robot and that, in 2023, 24 reviews identified targets for three full and in-depth proactive integrity reviews; invites the Bank to assess how these digital tools could be further enhanced to support transparency and financial accountability;

    76. Regrets the fact that, despite repeated calls by Parliament, the IG/IN annual report does not provide adequate information about the financial magnitude of the cases it handles, the funds or mandates affected, the kinds of projects concerned, the mitigating measures adopted, the role of the EIB services and of the intermediaries or partners in the cases, or even the Member States concerned; invites the representatives of the IG/IN to increase the level of engagement, interactions and transparency with Parliament, especially regarding the control of the financial activities; reiterates its call to the IG/IN to go beyond providing a mere narrative description of a few case studies, and to periodically report valuable insights into the extent to which financial interests are safeguarded; suggests that the IG/IN adopt a reporting model similar to those used by other investigative bodies, such as EPPO and OLAF, where a proper balance between transparency and duty of confidentiality or of professional secrecy is pursued;

    77. Is aware that the EIB Exclusion Policy provides for an autonomous exclusion process that is not fully equivalent to the Commission’s Early Detection and Exclusion System in terms of decision-making standards, results and remedies; reiterates its call on the EIB Group and the Commission to cooperate in identifying the potential gaps and proposing remedies, including an expedited procedure to enforce EIB exclusion decisions via the Early Detection and Exclusion System; observes that in 2023, exclusion proceedings based on IG/IN findings excluded five companies from participating in any EIB-financed activity for a period of five years;

    78. Welcomes the approval, in 2023, of the EIB Group’s Internal Control Framework Policy; acknowledges the results of the group alignment process between the EIB and the EIF insofar as they reflect the different business models and governance structures of the two entities; refers, in particular, to the Audit Committee’s remarks that both internal audit and the internal control framework should evolve to become group functions;

    79. Notes that the EIB’s independent external auditor is the third line of defence; points out that the regular rotation of auditors and assignments allows fresh perspectives, and therefore observes that the EIB external auditor should be rotated periodically, yet its mandate was extended until 2027 and it has been the auditor of the EIB Group since 2009;

    80. Appreciates that the EIB Group Risk Management Framework and EIB Group’s semi-annual Risk Management Disclosure Reports are effective and are aligned with the requirements and technical standards of the European Banking Authority;

    81. Stresses that, in 2023, despite difficult market conditions, the EIB’s portfolio continued to exhibit very low levels of non-performing exposures (NPEs); takes the view that even if a significant portion of the Bank’s loan portfolio benefits from credit enhancements or from EU Member State guarantees, the high quality of the EIB’s portfolio results from the diligent implementation of very effective EIB lending policies;

    82. Highlights that the EIB does not fall within the scope of application of the EU’s legislation applicable to credit institutions, in particular the Capital Requirements Regulation[4] and Directive[5] (CRR, CRD), thus the Bank is entitled to determine its capital and liquidity requirements in a manner that is adequate and appropriate to its activities, its mission and the market conditions; points out that the EIB Group is committed to conform to the best banking and market practices and can determine their applicability in line with the proportionality principle; stresses that the implementation of these norms should not create unwarranted burden; welcomes the fact that the EIB Group voluntarily performed the Review and Evaluation Process; points out that this should be in line with the EIB’s governance structure and mission;

    83. Understands that, in line with the EU’s evolving needs, the EU institutions approved, in 2024, the change in statute proposed by the EIB Board of Governors by amending the statutory limit on its gearing ratio[6] and raising it from 250 % to 290 %, to enable the EIB to invest more without increasing its equity base;

    84. Notes that the amended gearing ratio paves the way for increased risk-taking; acknowledges that investments in renewable energy, sustainable infrastructure and innovative technologies are crucial for the EU’s competitiveness, but often carry greater risk because of the uncertainty of returns; points out that increased risk-taking may increase the volatility of the EIB’s returns, but observes that the EIB maintains capital buffers that would support expanded risk activities;

    85. Is alarmed by the situation of Northvolt AB, a battery manufacturer considered pivotal in the green transition; stresses that Northvolt has benefited from a substantial EIB lending package of slightly over EUR 942.6 million as part of the debt financing to expand a gigafactory site; notes that Northvolt filed for bankruptcy in March 2025; calls on the EIB to provide details about the evaluation and decision-making process to fund Northvolt AB and the causes that led to the failure of the project;

    86. Stresses that the expansion of the gigafactory site was expected to increase the annual output capacity for battery production and was of strategic importance for global competitiveness and was consistent with the EU’s strategies in the sector;

    87. Calls on the Commission and the EIB Board of Directors to launch an in-depth internal review without undue delay to verify the financial damage, the reasons for and the background to the failure of this flagship project and to learn from this experience in order to prevent the recurrence of a similar situation or enable the early detection thereof;

    88. Maintains that the greatest added value of EU support lies in fostering higher-risk investments in innovative projects, scaling up EU strategic goals and enabling long-term transition projects that cannot get funding from the private sector; believes that to effectively pursue its targets in innovation and competitiveness, the InvestEU programme should focus on financing higher-risk and more scale-up investment and that the EIB Group should take on more and larger high-risk projects, which should involve primarily and preferentially European investors, combining a more risk-absorption-oriented deployment of InvestEU resources with an equivalent orientation in the use of the EIB Group’s own financial resources; urges the EIB to introduce stricter conditions to prevent EU public financing from being used to subsidise companies relocating production outside Europe, ensuring that all EIB-funded projects contribute to long-term European industrial resilience;

    89. Is aware that members of the EIB’s Management Committee are often civil servants in their countries of origin before beginning their terms at the EIB, which typically last for two to six years, and that they are therefore entitled to pursue professional development opportunities subject to certain conditions during the cooling-off period (which has been extended to a period of 24 months after the end of their term at the EIB); notes that Management Committee members are asked to inform the Ethics and Compliance Committee and seek approval as soon as possible for any negotiations regarding prospective employment;

    90. Strongly echoes Parliament’s repeated calls to strengthen the mechanism to prevent conflicts of interest within the EIB and to improve the handling of such cases, and to better define the terms under which EIB vice-presidents can participate in decisions about operations in their countries of origin, and insists that these matters be addressed in a future revision of the Management Committee code of conduct;

    91. Highlights that on 31 October 2023, the European Ombudsman ruled in Case 611/2022/KR that a former vice-president had participated in approving financing agreements between the EIB and a national promotional bank[7] in his country of origin just weeks before becoming the Chief Executive Officer of that national promotional bank, despite the EIB’s Chief Compliance Officer advising against such actions during the appointment process; understands that this case predates the entry into force of the current Management Committee code of conduct, which now includes specific provisions regarding the prospective employment of its members; notes that, in the future review of the rules applicable to its Ethics and Compliance Committee, the EIB has committed to consider the European Ombudsman recommendation to make public the Committee’s decisions;

    92. Observes that mitigating measures, such as ring-fencing and cooling-off periods, are the most common precautionary clauses to be used when handling a revolving-doors case and understands that such measures are implemented and are complied with by the members of the Management Committee, including those recently reported on in the media;

    93. Shares the view of the European Ombudsman that the role of the EIB Ethics and Compliance Committee should be strengthened when it comes to overseeing the intended new jobs of Management Committee members and that it should be able to impose and enforce risk-mitigating measures; understands that the role of the Ethics and Compliance Committee has become more prominent in recent years and that internal discussions are ongoing on how to enhance its efficiency;

    94. Invites the Bank to boost the participation of European companies in procurement processes launched for projects financed by the EIB; encourages the Bank to advise borrowers to prioritise eligibility for European companies in order to strengthen European competitiveness;

    95. Reiterates its call on the EIB to ensure proper geographical representation, including at middle and senior management levels, and calls on it to publish an annual breakdown of the gender and nationality for middle and senior management positions;

    Scrutiny, transparency and oversight

    96.  Strongly regrets the fact that the European Court of Auditors (ECA) still lacks full access to all data relating to EIB operations; acknowledges that not all the activities of the EIB are directly financed by the EU and, therefore, not all activities are automatically accessible to the ECA; insists that the ECA should have access to the necessary information to comprehensively and exhaustively assess all EIB operations involving EU funds, including those conducted through financial intermediaries, designed to implement EU policies; calls on the ECA to fully scrutinise, to the best of its abilities, all operations involving the EU budget to any degree;

    97. Observes that the main relevant audit tasks are entrusted to the EIB Audit Committee, which is a fully independent body; believes that the participation of qualified external representatives in specific Audit Committee tasks could enhance the objectivity of the Audit Committee’s analyses;

    98. Notes that the EIB’s Transparency Policy strikes a compromise between the principle of openness and the need to safeguard sensitive information; observes that the policy indicates what information should be published proactively and when – stipulating, for instance, that project summaries should be published at least three weeks before the project’s financing is considered for approval by the EIB Board of Directors – and sets out the relevant derogations; calls for these summaries to provide meaningful information to stakeholders;

    99. Notes that in 2023, 449 projects were approved by the EIB Board of Directors and that almost all (94 %) of the project summaries were published, in the majority (57 %) of cases before approval; observes that all EIB operations conducted through financial intermediaries are published on the EIB’s website and that the EIB provides details on request;

    100. Recalls that all EIB documents are accessible to the public in line with the presumption in favour of disclosure; emphasises that all applicants should be informed in advance about public access to documents, and any refusals should be based solely on specified exceptions; stresses that the EIB should consider publishing, in a timely manner, information regarding the rationale and context for projects and the explanation of their alignment with and contribution to EU policy goals; calls on the EIB to systematically publish audit results of its largest financial operations, ensuring independent scrutiny of its risk management and impact assessments; expects the EIB to limit non-disclosure to the applicable exceptions listed in Regulation (EC) No 1049/2001[8] and Regulation (EC) No 1367/2006[9]; calls for the full implementation of the Ombudsman’s recommendations issued following its inquiries into EIB disclosure policy and related requests for access to documents;

    101. Recalls that all recipients of EU funding have a general obligation to acknowledge its origin and ensure the visibility of any EU funding received; calls on the EIB Group to ensure that final recipients comply with the visibility criteria of the EU’s financial support;

    102. Highlights that the Bank is working to reduce the time needed to bring a product from conception to market availability (time to market) by fully digitising its project cycles; calls for the Bank to intensify its efforts in the digitalisation of its operations;

    103 Reiterates its call on the EIB to strengthen and fully implement its policy on tax fraud, evasion and avoidance, including by refraining from funding beneficiaries or financial intermediaries which have been found to be, or are at high risk of being, involved in such practices;

    104. Reiterates that more structured dialogue between Parliament and the EIB would be enhanced by the adoption of a memorandum of cooperation; praises, in this connection, the EIB’s unprecedented cooperation with Parliament for the preparation of this resolution, noting that it is a tangible expression of openness and transparency;

    Follow-up on Parliament’s recommendations

    105. Urges the EIB to continue reporting on the status of previous recommendations issued by Parliament, particularly regarding the outcomes achieved and the impact of the actions taken to implement its priorities and the EU’s policies, especially as regards:

    (a) impact (economic, environmental and social) of its investment strategy and results achieved in contributing to the balanced and steady development of the internal market in the interests of the Union;

    (b) actions adopted to enhance the prevention and countering of conflicts of interest, fraud, corruption and other potential forms of misconduct;

    (c) new measures to strengthen transparency;

    (d) measures to strengthen support for SMEs and eligible economic operators during the implementation of EU policies;

    (e) follow-up on the calls and requests adopted via the present resolution;

    °

    ° °

    106. Instructs its President to forward this resolution to the Council and the Commission, and asks that the Council and the EIB Board of Directors hold a debate on Parliament’s positions presented herein.

    MIL OSI Europe News

  • MIL-OSI Europe: REPORT on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section IV – Court of Justice – A10-0050/2025

    Source: European Parliament

    2. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

    with observations forming an integral part of the decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section IV – Court of Justice of the European Union

    (2024/2022(DEC))

    The European Parliament,

     having regard to its decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section IV – Court of Justice of the European Union,

     having regard to Rule 102 of and Annex V to its Rules of Procedure,

     having regard to the opinion of the Committee on Legal Affairs,

     having regard to the report of the Committee on Budgetary Control (A10-0050/2025),

    A. whereas in the context of the discharge procedure, the discharge authority wishes to stress the particular importance of further strengthening the democratic legitimacy of the Union institutions by improving transparency and accountability, and by implementing the concept of performance-based budgeting and good governance of human resources;

    B. whereas the Court of Justice of the European Union (CJEU) is the judicial institution of the Union, having the task of ensuring compliance with Union law by overseeing the uniform interpretation and application of the Treaties and ensuring the lawfulness of measures adopted by the Union institutions, bodies, offices and agencies;

    C. whereas the CJEU helps preserving the values of the Union and, through its case-law, works towards the building of Europe;

    D. whereas the CJEU comprises two courts: the Court of Justice and the General Court;

    E. whereas Parliament and Council amended Protocol No 3 on the Statute of the CJEU (the ‘Statute’)[7] in 2024 with respect to the transfer of preliminary rulings in specific areas to the jurisdiction of the General Court;

    1. Notes that the budget of the CJEU falls under MFF heading 7, ‘European public administration’, which amounted to EUR 12,3 billion in 2023 (representing 6,4 % of the total Union budget); notes that the CJEU’s budget of approximately EUR 0,5 billion represents approximately 3,9 % of the total administrative expenditure of the Union;

    2. Notes that the Court of Auditors (the ‘Court’), in its Annual Report for the financial year 2023 (the ‘Court’s report’) examined a sample of 70 transactions under the heading ‘Administration’, 10 more than were examined in 2022; the Court further states that administrative expenditure comprises expenditure on human resources, including expenditure on pensions, which in 2023 accounted for approximately 70 % of the total administrative expenditure, and expenditure on buildings, equipment, energy, communications and information technology (IT), and that its work over many years indicates that, overall, this spending is low risk;

    3. Notes that 21 (30 %) of the 70 transactions contained errors but that the Court, based on the five errors which were quantified, estimates the level of error to be below the materiality threshold;

    4. Notes that the Court’s report did not identify any specific issues concerning the CJEU;

    Budgetary and financial management

    5. Notes that the budget allocated for the CJEU in 2023 amounted to EUR 486 025 796, which represented an increase of 3,9 % compared to 2022; notes that this increase was mainly related to salary adjustments forecasted for 2023; stresses that the budget of the CJEU is essentially administrative, with around 75 % of the appropriations related to expenditure for its members and staff, and almost all of the rest related to expenditure for buildings and IT;

    6. Notes that the overall implementation rate of the budget at the end of 2023 was 97,72%; notes that five transfers were submitted to the budgetary authority in accordance with Article 29 of the Financial Regulation to reinforce the budget lines for ‘Energy consumption’, ‘Purchases, work, servicing and maintenance of equipment and software’ and ‘buildings’ from other budget lines, mainly the budget line for staff ‘Remuneration and allowances’; notes that Russia’s war of aggression against Ukraine continued to create budgetary pressure for the CJEU, including through rising inflation and salary adjustments, strongly increasing energy costs and costs for a number of goods and services;

    7. Notes with satisfaction that the authorising officer by delegation declared that the resources allocated had been used for the purpose intended and in accordance with the principle of sound financial management and that the control procedures put in place provided the necessary guarantees as to the legality and regularity of the underlying transactions;

    8. Notes that the average payment time stood at 23,1 days in 2023 compared to 24,32 days in 2022; calls on the CJEU to continue its efforts to reduce the time for payment, particularly considering that 81 % of invoices were received electronically in 2023;

    9. Notes that the CJEU’s mission budget, which stood at EUR 638 000 for both staff and Members in 2023, continued to decrease by 3,3 % in 2023 compared to 2022; notes that 85,1 % of the appropriations for missions in 2023 were used compared to 46,6 % in 2022 due to the persistent travel restrictions in application at that time;

    Internal management, performance and internal control

    10. Notes the significant steps taken by the CJEU in 2023 towards its judicial reform which has led to the partial transfer of jurisdiction to give preliminary rulings from the Court of Justice to the General Court; notes that a political agreement with Parliament and Council was reached at the end of 2023 in view of the amendment to the Statute of the CJEU and with a view to improving the functioning of the CJEU against the background of a steady increase in the caseload and in the complexity and sensitive nature of questions raised; notes that, further to the adoption of the reform in 2024, detailed rules and procedures were adopted in order to complete the reform and allow the implementation of the new regulatory framework as of 1 October 2024;

    11. Notes that, in 2023, the Court of Justice ruled on five cases concerning the principle of primacy in the context of four preliminary rulings brought by the courts in Germany, Ireland, Poland, and Romania, as well as one infringement case concerning Poland; stresses the fundamental importance of the principle of primacy of Union law, which ensures the uniform interpretation and application of Union law across all Member States and safeguards the rule of law as a core value of the Union; strongly reaffirms that the primacy of Union law is the cornerstone of the Union’s legal order and highlights the pivotal role of the CJEU in upholding the rule of law across the Union. Furthermore, notes that the General Court ruled on six cases related to measures for the protection of the Union budget against breaches of the principles of the rule of law by the Hungarian government, which systematically undermines core Union values; urges the Commission to take decisive enforcement actions against any Member State that challenges or disregards the binding nature of CJEU rulings;

    12. Condemns any national measures or legislative actions that seek to undermine the codification and enforcement of CJEU judgments; calls for the establishment of a formal monitoring mechanism to track Member State compliance with CJEU rulings and recommends linking compliance with EU funding disbursement under the rule of law conditionality framework;

    13. Notes that 821 new cases were submitted to the Court of Justice in 2023, compared to 806 in 2022, out of which 63% were references for preliminary ruling and 28,6% were appeals against decisions of the General Court; notes that the General Court saw a major increase of cases with 1 271 new cases in 2023 compared to 904 in 2022, including an exceptional series of 404 joint cases submitted in October 2023; notes that in 2023 for the General Court, 37% of the new cases, including the series of 404 joint cases, concerned actions relating to institutional law, 24,3% concerned actions relating to intellectual property and 6 % concerned disputes between institutions of the Union and their staff; notes that the total number of pending cases remains stable when compared to previous years: considering the previously mentioned 404 cases as a single case, 2 587 cases were pending at the end of 2023, compared to 2 585 at the end of 2022 and 2 541 at the end of 2021;

    14. Notes that the Court of Justice closed 783 cases in 2023, compared to 808 in 2022, and that the General Court closed 904 cases in 2023, compared to 858 in 2022;

    15. Welcomes the decrease in the average length of proceedings for the cases closed by the Court of Justice, whereas in 2023 that average was 16,1 months, compared to 16,4 months in 2022; notes that the average duration for the cases closed by the General Court was 18,2 months, compared to 16,2 months in 2022, which the General Court explained was due to the nature and related complexity of the proceedings managed in 2023;

    16. Notes the decrease in the average time taken to deal with direct actions before the Court of Justice (from 23,5 months in 2022 to 20,8 months in 2023) and with references for preliminary rulings (from 17,3 months to 16,8 months); notes that, as regards the litigation before the Court of Justice, there was a significant increase in the number of direct actions, in particular in the field of the environment, and that the questions referred to the Court of Justice for a preliminary ruling in 2023 related principally to the area of freedom, security and justice, followed by taxation, consumer protection and transport; notes that, as regards the litigation before the General Court, there was an increase of cases in the fields of intellectual property and economic and monetary policy, including banking;

    17. Notes with satisfaction the high use rate of e-Curia in 2023, with 10 502 e-Curia accounts being registered: 94 % of lodgements before the General Court were made via e-Curia, which is the same as in 2022, while the use rate of e-Curia at the Court of Justice went up to approximately 89 %, compared to 87 % in 2022;

    18. Appreciates the progress made in digitising the judicial archives with a view to preserving documents for future consultation and facilitating access for researchers and the public by means of a digital portal;

    19. Welcomes the performance-based approach developed by the CJEU, allowing the CJEU to take decisions based on performance outcomes and the level of achievement of its objectives, measured through a set of workload and operational indicators; notes that the key performance indicators used by the CJEU cover a wide range of specific areas in support of the five management objectives relating to the proper functioning of the CJEU, digitalisation and emerging technologies, openness and transparency, multilingualism and human resources management;

    20. Notes that the internal control framework of the CJEU was subject to an in-depth evaluation in 2022-2023, which confirmed its soundness; notes that, as part of that evaluation, the financial control circuits were adapted in order to make the controls more efficient;

    21. Notes that the main internal audits carried out in 2023 concerned the CJEU’s expenditure on the cleaning of buildings, the effectiveness of the internal control system to safeguard the CJEU’s IT assets and the staff selection procedures; notes that an internal audit also carried out a study on the use of artificial intelligence in the area of justice in relation to the implementation of a “strategy for integrating tools based on artificial intelligence into the operation of the CJEU”; notes that, in many cases, the services of the CJEU took actions to implement the internal audit recommendations before the formal finalisation of the internal audits and that those actions were considered satisfactory by the internal auditor;

    Human resources, equality and staff well-being

    22. Notes that, at the end of 2023, the CJEU employed 1340 officials (58 %), 765 temporary agents (33 %) under Articles 2(a), 2(b) and 2(c) of the Conditions of Employment of Other Staff of the EU, and 198 contract agents (9 %); notes that, at the end of 2023, the occupation rate of the establishment plan stood at 97,11 %; notes further that the annual turnover of staff was 7,8 % in 2023, which was particularly due to the 20% of those staff who left the CJEU by taking retirement;

    23. Notes that the Court of Justice is composed of 27 Judges and 11 Advocates General and that no new Judge or Advocate General took office in 2023; notes further that the General Court is composed of 54 Judges and that two new Judges, one woman and one man, took office during 2023; notes further that a new Registrar for the General Court was elected in 2023;

    24. Welcomes the CJEU’s detailed responses to the questionnaire from Parliament’s Committee on Budgetary Control, provided as part of the current discharge procedure, particularly regarding staff distribution at the end of 2023; notes that the gender composition of the Court of Justice and the General Court continues to be very unbalanced; expresses its appreciation of the letter from the President of the General Court to the President of the Conference of the Representatives of the Member States in 2024, calling on Member States to take the need for gender balance into account when nominating candidates for the replacement of Judges and Advocates General; calls on Member States to take the need for gender balance into account when nominating candidates for the replacement of judges;

    25. Takes note that, of the 2 303 officials and agents serving at the end of 2023, 61 % are women; welcomes the fact that the proportion of women in administrative positions is 55 %, and especially the fact that, in managerial posts, the proportion has increased to 43 %, compared to 40 % in 2022 and 2021, confirming the upward trend recorded since 2018 (41 % in 2020, 39 % in 2019 and 37,5 % in 2018); notes however that representation of women was the highest in assistant grades, whereas it was the lowest in senior management positions; calls on the CJEU to ensure a greater representation of women in senior management positions and take further measures to promote gender balance at all levels; welcomes the efforts deployed by the CJEU in favour of equality, inclusion and diversity, especially at recruitment stage;

    26. Calls on the CJEU to publish an annual Gender and Diversity Report to provide transparency on gender representation at all levels of the institution, including Judges, Advocates General, and administrative staff, as well as to provide for concrete measures of improving gender parity in senior positions;

    27. Welcomes that all Union nationalities are represented in the staff of the CJEU, but notes that certain nationalities are more represented than others; welcomes the continued efforts of the CJEU to promote a better geographical balance among its staff, in particular by fostering the visibility and attractiveness of its job vacancies, creating and offering more favourable job conditions to attract temporary agents from certain less-represented Member States and communicating widely to varied audiences on the job opportunities at the CJEU in 2023; notes that a significant effort was made to attract many talented young people from different Member States though the CJEU’s internship programme; invites the CJEU to examine whether trainees are proportionally represented from all member states;

    28. Urges the CJEU to promote a multilingual working environment, recognizing its potential to enhance the fair distribution of nationalities among its staff; calls on all EU institutions to uphold and ensure the principle of multilingualism;

    29. Welcomes the work done by the High Level Interinstitutional Group on enhancing the attractiveness of Luxembourg as a place of work for staff; calls on the CJEU to maintain and enhance cooperation with other Luxembourg-based institutions across different initiatives; notes with appreciation that the budgetary authority approved for the financial year 2025 the necessary appropriations in order to allow the granting of a housing allowance to staff at lower grades, as recommended by the High Level Interinstitutional Group; asks that Parliament be updated on the progress of such initiatives intended to improve the attractiveness of Luxembourg as a place of work;

    30. Notes that, in 2023, the CJEU implemented several initiatives to promote physical and mental wellbeing of staff through specialised workshops and awareness-raising activities; notes that the teleworking scheme, which entered into force on 1 May 2022, was assessed positively by the managers, among whom 92 % replied that the productivity of staff teleworking was either equivalent or better than prior to the existence of the teleworking scheme; notes that, with a view to achieving a better work and personal-life balance, in 2023, the CJEU renewed the possibility for its staff to telework from outside the place of employment up to 10 days per year, especially during the judicial vacations;

    31. Welcomes the ongoing awareness-raising, information and training campaigns aiming at promoting inclusion, mutual respect, cooperation and support for people with disabilities and their helpers;

    32. Notes that the number of working days of sick leave was 20 198 in 2023, corresponding to a reduction of 14,78 % compared to 2022; notes with concern that the medical service reported 11 cases of burnout in 2023; welcomes a thorough analysis of diagnostic reports undertaken by the CJEU to identify instances of professional burnout and the CJEU’s focus on preventive measures, especially the reinforcement of its medical and social workers’ team, the prevention of psychosocial risks in the workplace and the introduction of awareness-raising activities for management on the right to disconnect and the risks of over-performance; encourages the CJEU to maintain focus on this problem in order to prevent any further cases associated with burnout and inform the Parliament of the measures taken in this regard;

    33. Notes that an administrative enquiry was launched in 2023 on an alleged case of sexual harassment concerning a member of staff and that this case was closed in 2024 with a sanction; expresses concern that a procedure of assistance for alleged harassment concerning a judge was also filed in 2023 but no harassment was established in that case; notes that an interdepartmental working group, established in March 2023, therefore ahead of the ratification of the Council of Europe Convention on preventing and combating violence against women and domestic violence, examined the rules and procedures in place in the CJEU to prevent harassment and made some recommendations with a view to improving these rules and procedures; encourages the CJEU to follow up and continue to show no tolerance for harassment in the workplace by introducing mandatory training on unconscious bias and ethical standards for all judges and senior officials to prevent abuse of power;

    Ethical framework

    34. Notes with satisfaction that, as requested in previous discharge recommendations, the new code of conduct on the rights and obligations of officials and other servants of the CJEU reflecting the CJEU’s values and commitment to ethics was drawn up in 2023 and adopted in March 2024; notes that the code of conduct includes provisions on conflict of interests, duty of loyalty, duty of confidentiality and discretion, outside activities, occupational activities after leaving the service and publications and also applies to seconded national experts and trainee judges hosted under the European Judicial Training Network; notes that, in 2023, awareness-raising activities and revamped training on the code of conduct were organised for staff and managers, with a particular focus on newcomers; calls for a mandatory training for all staff on a regular basis and asks that Parliament be kept informed about the implementation of the code of conduct;

    35. Notes that, before the code of conduct entered into force, two potential cases of conflict of interest were declared and handled in accordance with the procedures in place, with the aim of ensuring that the new members of staff concerned were not involved in the management of files that they knew from a previous job;

    36. Notes that, further to the adoption of the code of conduct for Members and former Members of the CJEU, the declaration of interests of the Members have been published online to avoid any potential conflict of interest in the handling of cases; notes that the CJEU is constantly reassessing its internal rules on this matter with a view to updating those rules and to ensuring the highest possible standards of ethical behaviour; calls on the CJEU to establish an independent ethics committee to oversee compliance with the code of conduct and investigate potential breaches; calls for mandatory annual ethics training for all CJEU personnel, including Judges and Advocates General to preserve the integrity of the Court; asks the CJEU to inform Parliament about the results of any further assessment of the effectiveness of that measure aimed at the prevention of conflicts of interest;

    37. Welcomes the publication of the declarations of interests of the Members of the CJEU but calls for the introduction of a standard pre-appointment screening process to identify and mitigate potential conflicts of interest at an early stage; urges the Council to establish transparent guidelines for Member States when nominating candidates for judicial positions at the CJEU;

    38. Urges the CJEU to introduce a mandatory recusal policy for judges in cases where they have past professional affiliations with litigants appearing before the Court; calls for stricter conflict-of-interest screening for judges and high-ranking staff, including regular updates to financial disclosure requirements; asks for the publication of real-time recusal decisions in cases where judges declare a conflict of interest, ensuring greater transparency in the judicial process and reinforcing public confidence in the impartiality and integrity of the CJEU;

    39. Notes that in 2023, all Members of the CJEU were resident of Luxembourg in accordance with Article 14 of the Statute;

    40. Notes that the list of external activities carried out by the Members of both the Court of Justice and the General Court has been published on the CJEU website since 2018; further notes that the list is difficult to read for the general public and recommends its revision to ensure greater clarity and informativeness; notes that the prior authorisation by the general meeting of the Court of Justice or by the plenary conference of the General Court is only granted when the external activity is compatible with the requirements of the code of conduct and with the Members’ obligations to be available for judicial activities; asks the CJEU to inform the discharge authority about any initiatives to improve the readability of the information related to external activities, in line with previous discharge recommendations;

    41. Notes that the rules governing Members’ travels, missions and use of drivers and cars, as updated in 2021, provide that only the running costs resulting from the car use for purposes related to the execution of a mission order or to the exercise of his or her mandate within a limit of 10 000 km are borne by the CJEU; reiterates its opinion that the use of the car fleet outside of the strict performance of the duties of the Members of the CJEU should not take place under any circumstances, notes that the CJEU reported to be in discussion with other institutions in order to obtain a harmonised set of rules for the use of official vehicles, while respecting the autonomy of each institution; invites all Union institutions to agree on a single system to be applied horizontally, which would reduce the confusion and increase transparency and efficiency in the use of public money; asks the CJEU to keep Parliament informed of any progress in this matter;

    42. Notes that an OLAF case, referred to in previous discharge resolutions, which dealt with the conduct of a  member of staff that might have constituted a serious failure to comply with their obligations, was closed in 2023; notes that the CJEU is not aware of any new OLAF investigation or recommendation in 2023;

    43. Notes that the CJEU did not report any cases of fraud, corruption or misuse of Union funds in 2023; notes that the CJEU’s anti-fraud strategy is an integral part of its integrated internal control and risk management framework, with a particular focus on the risks of improper disclosure of information;

    Transparency and access to justice for citizens

    44. Welcomes the CJEU’s engagement to enhance transparency, access to justice and public openness, thus contributing to foster public trust in the Union institutions;

    45. Notes that, in 2023, the CJEU consolidated the streaming service for hearings of the Court of Justice and of the General Court on the Curia website, thus facilitating the access of citizens to the judicial activities of the CJEU; welcomes the improvement of the CVRIA website, in terms of its structure, functionalities and content; welcomes that the delivery of judgments of the Court of Justice, the reading of opinions of the Advocates General, the hearings of the Grand Chamber and certain hearings of chambers sitting with five Judges have been broadcast live on the Curia website since 2023; calls on the CJEU to further improve transparency by broadcasting all hearings of the two Courts on its website and permanently storing them online;

    46. Welcomes that, further to the reform of its Statute, the CJEU will publish statements of case or written observations lodged in preliminary ruling proceedings after the closure of such proceedings, except in cases of objection to the publication of a person’s statement of case or observation; underlines that such publication will improve transparency and access to justice for citizens and calls on the CJEU to publish all documents related to a file on its website; calls on the CJEU to implement a procedure that could be used by any person to access in house all the documents related to a case;

    47. Notes that rules on the use of videoconferencing were adopted by the General Court in April 2023 and by the Court of Justice in September 2024, according to which a party may request the use of videoconferencing where security or other serious reasons prevent that party’s representative from participating in a hearing in person;

    48. Notes that the rules laid down by the CJEU decision of 26 November 2019 concerning public access to documents held by the CJEU in the exercise of its administrative function do not apply to judicial documents for which access is governed by the Rules of Procedure of the Courts; notes that the CJEU registered 21 requests of public access to administrative documents in 2023 and granted access to administrative documents in 12 cases; notes that the European Ombudsman found no instances of maladministration on the part of the CJEU in 2023;

    49. Invites the Court to simplify the process of finding specific rulings on e-curia; welcomes efforts to make the interface more client-friendly and intuitive;

    Digitalisation, cybersecurity and data protection

    50. Notes that compared to 2022 the budget expenditure increased by 10,9 % for IT projects, by 13 % for IT equipment, by 59 % for cybersecurity projects and by 72 % for cybersecurity services, licences and equipment in 2023;

    51. Notes that the implementation of major digitalisation projects under the digital transformation strategy remained a priority for the CJEU in 2023, such as the development of the integrated case management system (SIGA), the promotion of the use of the e-Curia application for the lodging and notification of procedural documents by electronic means, the adoption of eSignature and the adoption of HAN/Ares electronic document record and management system; notes that the CJEU tracks the return on investment in digitalisation projects in terms of costs and resources efficiency and asks the CJEU to keep the discharge authority informed of its findings in that area;

    52. Notes that, as part of its comprehensive initiative to increase accessibility and inclusion for persons with vulnerability, the CJEU has continued to implement the “accessibility by design” approach for any change and evolution of its IT systems; notes that, following an audit of the Curia website, the CJEU started to improve the site’s accessibility to a wide range of users, such as people with visual impairments, hearing impairments or learning disabilities;

    53. Notes that the CJEU implemented several projects based on artificial intelligence (AI), such as the automation of document analysis for references to applicable legislation and assistance with invoice verification through robotic processes and hearing transcription, in line with its new AI integration strategy adopted in June 2023; underlines that it is of vital importance that AI is used in a manner which fully preserves the independence, the quality and the serenity of the legal processes, is in full consideration of ethical matters and is used under human oversight and allowing human intervention in order to avoid negative consequences or risks, or stop the system if it does not perform as intended; notes that, as part of that strategy, the CJEU set up an AI management board composed of members of the Court of Justice and of the General Court to oversee the ethical aspects of AI use within the CJEU and to set clear boundaries for its application; welcomes the staff guidelines on the use of AI issued by the board; welcomes the initiatives in place to upskill employees in digital competencies through the training path developed in cooperation with the Interinstitutional Committee for Digital Transformation (ETA); emphasises that the digitalisation of justice and the adoption of emerging technologies such as AI will offer significant advantages for the efficient functioning of the Court; recommends however that the Court of justice anticipate the associated cybersecurity risks and strengthen even more its collaboration with the EU Agency for Cybersecurity and CERT-EU;

    54. Notes that no EDPS enquiries were communicated to the CJEU in 2023; notes that, in 2023, EDPS had not addressed any specific recommendation to the CJEU following its investigation regarding the use of cloud services by Amazon web services; notes that EDPS published a decision in 2023 confirming compliance of the CJEU’s use of cloud videoconferencing services with data protection law; reiterates however its concerns regarding the use of external cloud services, given the growing threats about cybersecurity and digital sovereignty;

    55. Welcomes the CJEU adoption of a cyber roadmap in 2023 and strengthening of its cybersecurity operational capabilities to better protect its systems against the increasing number of cyberattacks; underlines furthermore that a robust cybersecurity strategy is an essential tool to fight against foreign interferences aiming to undermine the integrity of the European Institutions; notes that the CJEU has taken various measures to reinforce its cybersecurity preparedness and ability to recover from security incidents, including through its participation in the governance of the Interinstitutional Cybersecurity Board and through a combination of cybersecurity controls and tools in line with the recommendations of CERT-EU; notes that the budgetary authority approved for the financial year 2025 the necessary appropriations for two additional posts in order to reinforce the CJEU’s staff capacities in the field of cybersecurity;

    56. Welcomes the measures taken, such as cybersecurity audits, staff training and rapid incident response protocols, to protect the CJEU’s technological infrastructure from cyber threats; stresses that the digitisation of justice and the use of new technologies such as artificial intelligence will bring many benefits in terms of the smooth functioning of the CJEU, but also entail risks that the Court needs to pre-empt and protect itself against; suggests in this regard that the Court of Justice develop a cybersecurity strategy and step up collaboration with other Union institutions, in particular ENISA (the EU Agency for Cybersecurity), on the prevention of cyber-attacks, the number and sophistication of which are growing exponentially in Europe;

    57. Welcomes the initiative to assign fictitious names to anonymised cases, by using a computerised automatic name generator, in order to strengthen the protection of personal data and facilitate the identification of individual cases;

    58. Notes with satisfaction the amendment to the Rules of Procedure of the General Court, which will clarify and simplify judicial procedures, including the possibility of using videoconferencing for hearings, electronic signature of decisions and the designation of pilot cases;

    Buildings

    59. Notes that, following-up on the cross services reflection about the most efficient use of the CJEU’s premises, that was concluded in 2023, pilot projects were launched; notes that the results of those projects, together with other factors, such as environmental and budgetary aspects, quality of justice, well-being at work, inclusion, accessibility and the attractiveness of the CJEU, will be taken into account in the final decision on the use of the CJEU’s buildings; asks that Parliament be kept informed about the implementation of those conclusions and the consequences for the organisation of the workspace;

    60. Notes that, in 2023, the CJEU further pursued its comprehensive initiative to increase accessibility and inclusion for persons with disabilities, with the aim of guaranteeing access to the CJEU, physically or virtually, to all individuals, participants in proceedings and visitors; notes further that, in 2023, the CJEU started to make an inventory of its infrastructure with a view to complying with the new national accessibility legislation as of 1 January 2032; asks that Parliament be kept informed about further initiatives in this area;

    Environment and sustainability

    61. Notes with satisfaction that, in 2023, the CJEU continued to significantly reduce its energy consumption and carbon footprint compared to 2015, which is the baseline for the implementation of the CJEU’s eco-management and audit scheme strategy, thanks to energy-saving measures and optimisation of its heating, cooling  and lighting infrastructures; notes that heating consumption was reduced by 33,5 %, electricity by 28,7 %, water by 20,1 %, office paper by 63 %, office and canteen waste by 43% and greenhouse gas emissions by 30,2 % in 2023 compared to 2015; welcomes that the CJEU applied green procurement criteria in 10 calls for tender above EUR 60 000; welcomes the CJEU’s commitment to the Eco-Management and Audit Scheme (EMAS); encourages the CJEU to continue its efforts in reducing its environmental impact, with a strategy to reach carbon neutrality by 2035;

    62. Welcomes that the CJEU has taken several initiatives to support and increase sustainable mobility for its staff and Members, including subsidies for public transportation, subsidies for self-service bicycles, improved bike parking facilities and improved facilities for hybrid and electrical cars;

    Interinstitutional cooperation

    63. Welcomes the budgetary savings achieved through cooperation with other institutions and in particular the shared applications and hosting services based on service-level agreements with the Commission as well as the participation in interinstitutional procurement procedures, which have allowed the CJEU to optimise costs and resources;

    64. Welcomes the efforts of the European Judicial Training Network (EJTN) in training national judges on EU law; notes with appreciation that, in line with the CJEU’s declaration entitled “Supporting the EJTN to shape a sustainable European judicial culture”, the CJEU and the EJTN sought to increase the diversity of long-term trainees in 2023, with the aim of ultimately increasing their number to one per Member State; notes that the measures taken have already been successful since the CJEU has trainees from some Member States which previously did not actively participate in the programme; notes that 15 remunerated traineeships were offered for the year 2023-24; calls on the CJEU to further develop its knowledge-sharing initiatives, including joint case-law databases and virtual collaboration platforms to support national courts in complex legal interpretations;

    65. Emphasises that traineeships should be remunerated in compliance with the European Parliament’s resolution of 14 June 2023 on Quality Traineeships in the Union (2020/2005(INL)), which calls for all internships in Europe to be paid; welcomes that currently all trainees at the CJEU receive a grant during their stay, mainly from the CJEU and, in some specific cases, from other sources; take notes that the CJEU only accepts a few trainees (less than 10 per year) paid by other sources, and for short periods (on average 2 months); welcomes that in such cases, the CJEU administration carefully checks that these trainees receive a grant, allowance or remuneration for this traineeship, paid directly by their employer or academic institution;

    66. Appreciates that the CJEU fully cooperates with OLAF, the Court of Auditors, the EDPS and the European Ombudsman; notes that, in 2023, the CJEU has continued to work towards maintaining the established dialogue with national courts, and in particular with the constitutional and supreme courts, and that the CJEU hosted a number of meetings, including the annual meeting of national judges; encourages deeper cooperation between the CJEU and national courts to strengthen uniform application of Union law; recommends establishing a permanent judicial exchange programme for judges from Member States to work alongside their CJEU counterparts, fostering best practices in the interpretation of Union law;

    Communication

    67. Notes that, in 2023, the CJEU strengthened its efforts to engage with Union citizens by enhancing its outreach on social media; notes that, at the end of 2023, the number of subscribers to the CJEU’s LinkedIn account increased by 32 % and the number of followers on the CJEU’s two accounts on X (formerly Twitter) by 9 %,while the views on its YouTube channel increased by 84,96 % compared to the previous year;

    68. Welcomes the CJEU’s efforts to enhance strategic communication and transparency towards Union citizens on the judicial activities of the CJEU, especially through the organisation of an open day, the offer for visitors, in particular the special virtual visits, in which 800 students participated in 2023, and the review of the drafting of its press releases and online publications in an accessible style, about matters of media interest or which have an impact on the lives of citizens.

    OPINION OF THE COMMITTEE ON LEGAL AFFAIRS (30.1.2025)

    for the Committee on Budgetary Control

    on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section IV – Court of Justice of the European Union

    (2024/2022(DEC))

    Rapporteur for opinion: Ilhan Kyuchyuk

     

    OPINION

    The Committee on Legal Affairs calls on the Committee on Budgetary Control, as the committee responsible, to incorporate the following suggestions into its motion for a resolution:

    1. Appreciates the CJEU’s very high budgetary implementation rate for 2023 (99,2 %), a further increase as compared to previous years (98,4 % in 2022 and 98,7 % in 2021);

    2. Stresses that the budget of the CJEU is essentially administrative, with around 75 % of the appropriations related to expenditure for its members and staff, and almost all of the rest related to expenditure for buildings and IT;

    3. Welcomes the recent amendment to Protocol n° 3 on the Statute of the CJEU, enacted by Regulation (EU, Euratom) 2024/2019 of the European Parliament and of the Council[8], that transfers part of the Court of Justice’s jurisdiction for preliminary rulings to the General Court and extends the mechanism for the Court of Justice to decide whether appeals shall be allowed to proceed or not, for considerations relating to legal certainty and expedition, in order to preserve the ability of the Court of Justice to deliver high quality judgements in a timely manner, hence serving to guarantee the right to effective remedy by the national authorities; as well as strengthening access to justice by facilitating intervention in judicial proceedings by the European Parliament, the Council and the European Central Bank where a particular interest is invoked; Welcomes that with the amendment to Protocol n° 3 on the Statute of the CJEU, transparency and openness of judicial proceedings will be strengthened through the publication of written submissions submitted by an interested person on the website of the CJEU, after the closing of the case, unless that person raises objections to the publication of that person’s own written submissions; stresses in this regard the need for a reflection on the implementation of the Statute through the constructive dialogue between the European Parliament and the CJEU;

    4. Notes that the number of cases brought before the Court of Justice in 2023 was just one short of the exact average for the last three years –  in 2023, 821 new cases were registered, 15 more than in 2022 (806 cases) and 17 fewer than in 2021 (838 cases); takes note that the breakdown of litigation by type of case is also broadly similar to that in previous years – with the number of requests for preliminary rulings and appeals still accounting for over 90 % of all the cases brought before the Court; also notes the increase in the number of direct actions brought before the Court in 2023;

    5. Welcomes the fact that the average length of proceedings for cases completed before the Court of Justice decreased to 16,1 months in 2023, compared to 16,4 months in 2022, and notes that the average length of proceedings before the General Court was 18,2 months, compared to 16,2 months in 2022, which increase was mainly due to the closure of several complex cases or groups of cases, in particular in the fields of state aid and competition;

    6. Notes the decrease in the average time taken to deal with direct actions before the Court of Justice (from 23.5 months in 2022 to 20.8 months in 2023) and with references for preliminary rulings (from 17.3 months to 16.8 months);

    7. Notes that the number of cases brought before the two courts in 2023 exceeded, for the first time, the emblematic threshold of 2 000 (2 092 cases), including a series of 404 essentially identical cases brought before the General Court, and that, even if those cases are counted as a single case, the number of cases remains at a very high level (1 689), close to that of the preceding years (1 710 cases in 2022 and 1 720 in 2021);

    8. Underlines that, together, the Court of Justice and the General Court were able to complete 1 687 cases in 2023, compared to 1 666 cases in 2022, with an average duration of proceedings of 17.2 months, and notes that the total number of pending cases remains stable when compared to previous years: considering the previously mentioned 404 cases as a single case, 2 587 cases were pending at the end of 2023, compared to 2 585 at the end of 2022 and 2 541 at the end of 2021;

    9. Notes with satisfaction the high use rate of e-Curia in 2023, with 10 502 e-Curia accounts being registered: 94 % of lodgements before the General Court were made via e-Curia, which is the same as in 2022, while the use rate of e-Curia at the Court of Justice went up to approximately 89 %, compared to 87 % in 2022;

    10. Notes that, as regards the litigation before the Court of Justice, there was a significant increase in the number of direct actions, in particular in the field of the environment, and that the questions referred to the Court of Justice for a preliminary ruling in 2023 related principally to the area of freedom, security and justice, followed by taxation, consumer protection and transport;

    11. Notes that, as regards the litigation before the General Court, there was an increase of cases in the fields of intellectual property and economic and monetary policy, including banking; 

    12. Points out that dialogue and cooperation with national courts is central to the Court’s mission; acknowledges and welcomes the pursuit of the activities carried out by the Judicial Network of the European Union, which contributes to fostering and facilitating the cooperation between the CJEU and the national courts, and especially with the constitutional and supreme courts, and welcomes the strengthening of the cooperation between the CJEU and the European Judicial Training Network, which allows for the presence of national judges for traineeships, study visits and annual seminars at the CJEU; welcomes the adoption by the Court, in 2023, of the declaration entitled ‘Supporting the European Judicial Training Network to shape a sustainable European judicial culture’, which shows the Court’s commitment to that network;

    13. Appreciates the progress made in digitising the judicial archives with a view to preserving documents for future consultation and facilitating access for researchers and the public by means of a digital portal;

    14. Welcomes the adoption by the CJEU of an Artificial Intelligence Strategy of the Court of Justice of the European Union’, which seeks to improve the efficiency and efficacy of administrative and judicial processes, enhance the quality and consistency of court decisions and improve access to justice and transparency for EU citizens, followed by the setting up of an AI Management Board and the adoption of certain guidelines for the use of AI-based tools;

    15. Welcomes the measures taken, such as cybersecurity audits, staff training and rapid incident response protocols, to protect the CJEU’s technological infrastructure from cyber threats; stresses that the digitisation of justice and the use of new technologies such as artificial intelligence will bring many benefits in terms of the smooth functioning of the CJEU, but also entail risks that the Court needs to pre-empt and protect itself against; suggests in this connection that the Court of Justice develop a cybersecurity strategy and step up collaboration with other EU institutions, in particular ENISA (the EU Agency for Cybersecurity), on preventing of cyber-attacks, whose number and sophistication are growing exponentially in Europe;

    16. Welcomes the initiative to assign fictitious names to anonymised cases, through the use of a computerised automatic name generator, in order to strengthen the protection of personal data and facilitate the identification of individual cases;

    17. Notes with satisfaction the amendment to the Rules of Procedure of the General Court, which will clarify and simplify judicial procedures, including the possibility of using videoconferencing for hearings, electronic signature of decisions and the designation of pilot cases;

    18. Notes with satisfaction the adoption of a code of conduct for the staff or the CJEU, which code of conduct entered into force in March 2024;

    19. Appreciates the CJEU’s inter-departmental project that is focused on physical and digital accessibility and inclusion of persons with disabilities; accessibility is essential to enabling persons with disabilities to exercise their basic human rights;

    20. Takes notes that, of the 2 303 officials and agents serving at the end of 2023, 61 % are women; welcomes the fact that the proportion of women in administrative positions is 55 %, and especially the fact that, in managerial posts, the proportion has increased to 43 %, compared to 40 % in 2022 and 2021, confirming the upward trend recorded since 2018 (41 % in 2020, 39 % in 2019 and 37,5 % in 2018).

    21. Notes, however, the still existing imbalanced situation in terms of women’s representation among the judges of both the Court of Justice and the General Court; exhorts, once again, the Members of the Council to address this situation by actively promoting gender parity in the appointment of judges, in line with the principles enshrined in Article 8 TFEU and Article 23 of the Charter of Fundamental Rights of the European Union, and with the commitments taken under Regulations (EU, Euratom) 2015/2422[9] and (EU, Euratom) 2019/629[10] of the European Parliament and of the Council.

     

    ANNEX: ENTITIES OR PERSONS
    FROM WHOM THE RAPPORTEUR FOR THE OPINION HAS RECEIVED INPUT

     

    Pursuant to Article 8 of Annex I to the Rules of Procedure, the Chair in his capacity as rapporteur for opinion declares that he received input from the following entities or persons in the preparation of the opinion:

     

     

    Entity and/or person

    Court of Justice

     

     

     

     

    The list above is drawn up under the exclusive responsibility of the Chair in his capacity as rapporteur for opinion.

     

    Where natural persons are identified in the list by their name, by their function or by both, the Chair in his capacity as rapporteur for opinion declares that he has submitted to the natural persons concerned the European Parliament’s Data Protection Notice No 484 (https://www.europarl.europa.eu/data-protect/index.do), which sets out the conditions applicable to the processing of their personal data and the rights linked to that processing.

     

    INFORMATION ON ADOPTION BY COMMITTEE ASKED FOR OPINION

    Date adopted

    30.1.2025

     

     

     

    Result of final vote

    +:

    –:

    0:

    16

    4

    1

    Members present for the final vote

    Maravillas Abadía Jover, José Cepeda, Ton Diepeveen, Mario Furore, Juan Carlos Girauta Vidal, Ilhan Kyuchyuk, Sergey Lagodinsky, Mario Mantovani, Victor Negrescu, Kira Marie Peter-Hansen, Pascale Piera, René Repasi, Krzysztof Śmiszek, Dominik Tarczyński, Adrián Vázquez Lázara, Axel Voss, Marion Walsmann, Michał Wawrykiewicz, Dainius Žalimas

    Substitutes present for the final vote

    Angelika Niebler, Jana Toom

    Members under Rule 216(7) present for the final vote

    Lara Wolters

     

    MIL OSI Europe News

  • MIL-OSI Europe: REPORT on Banking Union – annual report 2024 – A10-0044/2025

    Source: European Parliament

    MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

    on Banking Union – annual report 2024

    (2024/2055(INI))

    The European Parliament,

     having regard to its resolution of 16 January 2024 on Banking Union – annual report 2023[1],

     having regard to the Commission’s follow-up to Parliament’s resolution of 16 January 2024 on Banking Union – annual report 2023,

     having regard to document published by the European Central Bank (ECB) on 25 March 2024, entitled ‘Feedback on the input provided by the European Parliament as part of its resolution on Banking Union 2023’,

     having regard to the ECB’s 2023 Annual Report on supervisory activities, published in March 2024,

     having regard to the 2023 Annual Report of the Single Resolution Board (SRB), published on 28 June 2024,

     having regard to the adoption of the Anti-Money Laundering Directive (AMLD)[2] and the Anti-Money Laundering Regulation (AMLR)[3], and to the establishment of the Anti-Money Laundering Authority (AMLA)[4],

     having regard to the implementation of the Basel III standards, namely to the adoption of amendments to the Capital Requirements Directive[5] and to the Capital Requirements Regulation[6],

     having regard to the adoption of Commission Delegated Regulation (EU) 2024/2795 of 24 July 2024 amending Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to the date of application of the own funds requirements for market risk[7],

     having regard to its position at first reading of 24 April 2024 on the proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No 806/2014 as regards early intervention measures, conditions for resolution and funding of resolution action[8],

     having regard to its position at first reading of 24 April 2024 on the proposal for a Directive of the European Parliament and of the Council amending Directive 2014/59/EU as regards early intervention measures, conditions for resolution and financing of resolution action[9],

     having regard to its position at first reading of 24 April 2024 on the proposal for a Directive of the European Parliament and of the Council amending Directive 2014/49/EU as regards the scope of deposit protection, use of deposit guarantee schemes funds, cross-border cooperation, and transparency[10],

     having regard to the report of its Committee on Economic and Monetary Affairs of 23 April 2024 on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) 806/2014 in order to establish a European Deposit Insurance Scheme,

     having regard to the Commission proposal of 14 March 2018 for a directive of the European Parliament and of the Council on credit servicers, credit purchasers and the recovery of collateral (COM(2018)0135),

     having regard to the Five Presidents’ Report of 22 June 2015 entitled ‘Completing Europe’s Economic and Monetary Union’,

     having regard to Enrico Letta’s report of 10 April 2024 entitled ‘Much more than a market – Speed, security, solidarity: empowering the Single Market to deliver a sustainable future and prosperity for all EU Citizens’,

     having regard to Mario Draghi’s report of 9 September 2024 entitled ‘The future of European competitiveness’,

     having regard to the Eurogroup statement of 11 March 2024 on the future of Capital Markets Union, and to the Eurogroup statement of 16 June 2022 on the future of the Banking Union and the Eurogroup follow-up thereto of 28 April 2023,

     having regard to the Basel Committee on Banking Supervision’s disclosure framework for banks’ cryptoasset exposures and to the targeted amendments to its prudential standard on banks’ exposures to cryptoassets, both published on 17 July 2024,

     having regard to the Basel Committee on Banking Supervision’s core principles for effective banking supervision, published on 25 April 2024,

     having regard to the ECB’s Financial Stability Review of May 2024,

     having regard to the ECB Occasional Paper No 328 of 2023 entitled ‘The Road to Paris: stress testing the transition towards a net-zero economy’,

     having regard to the Financial Stability Board publication of 9 November 2015 entitled ‘Principles on Loss-absorbing and Recapitalisation Capacity of G-SIBs in Resolution’,

     having regard to the Financial Stability Board report of 10 October 2023 entitled ‘2023 Bank Failures – Preliminary lessons learnt for resolution’,

     having regard to Peterson Institute for International Economics Working Paper No 24-15 of 25 June 2024 entitled ‘Europe’s banking union at ten: unfinished yet transformative’[11],

     having regard to the Single Supervisory Mechanism supervisory priorities for 2024-2026, published in December 2023,

     having regard to the SRB’s biannual reporting note to the Eurogroup of 13 May 2024,

     having regard to the outcome of the 2023 EU-wide transparency exercise of the European Banking Authority, published on 28 July 2023,

     having regard to Special Report 12/2023 of the European Court of Auditors of 12 May 2023 entitled ‘EU supervision of banks’ credit risk – The ECB stepped up its efforts but more is needed to increase assurance that credit risk is properly managed and covered’,

     having regard to the statements by Claudia Buch, Chair of the Supervisory Board of the ECB, at the hearings conducted by Parliament’s Committee on Economic and Monetary Affairs on 21 March 2024 and 2 September 2024,

     having regard to the statements by Dominique Laboureix, Chair of the SRB, at the hearings conducted by Parliament’s Committee on Economic and Monetary Affairs on 21 March 2024 and 23 September 2024,

     having regard to the European Banking Authority’s risk assessment reports of July 2024 and December 2024,

     having regard to its resolution of 14 March 2019 on gender balance in EU economic and monetary affairs nominations[12],

     having regard to its resolution of 25 March 2021 on strengthening the international role of the euro[13],

     having regard to Rule 55 of its Rules of Procedure,

     having regard to the report of the Committee on Economic and Monetary Affairs (A10-0044/2025),

    A. whereas the Banking Union (BU) encompasses the Single Supervisory Mechanism, the Single Resolution Mechanism and a European deposit insurance that is still missing;

    B.  whereas the main objective of the BU is to safeguard the stability of the banking sector in Europe and prevent the need to bail out banks at risk of failure with taxpayers’ money;

    C. whereas a completed BU would be a positive development for citizens and the EU economy, as it would improve the competitiveness and stability of the banking sector, reduce systemic risk, improve supply and consumer choice and offer increased opportunities for cross-border banking that enhances access to financing for households and businesses, thereby reducing costs for banks’ customers, while ensuring that public funds are not used to bail out the banking sector; whereas the ‘too big to fail’ risk has not yet been fully addressed;

    D.  whereas concluding the reform of the EU frameworks for bank crisis management and deposit insurance, focusing particularly on small and medium-sized banks, is fundamental in order to provide Europe’s banking sector with security, stability and resilience; whereas a complete BU with a true European deposit insurance scheme is a basic condition for ensuring that citizens trust European banks;

    E. whereas fragmentation and the lack of cross-border consolidation of the EU banking sector is affecting its global competitiveness; whereas the profitability gap between EU and US banks has widened;

    F. whereas a strong and diversified banking sector is key to delivering economic growth, increasing the possibility of home ownership, fostering investment and job creation, financing small and medium-sized enterprises (SMEs) and start-ups and ensuring the transition to a green and digital economy;

    G. whereas around 80 % of external financing for EU companies comes from banks, while only 20 % comes from the capital markets; whereas only 30 % of credit for US firms comes from banks, while 70 % is funded via capital markets, including corporate bond holdings and shares;

    H. whereas the EUR 356.1 billion in non-performing loans recorded at the 110 supervised institutions in 2024, compared with EUR 988.9 billion in non-performing loans recorded at the 102 supervised institutions in the second quarter of 2015, reflects a significant downward trajectory, leaving the total non-performing loan stock at 36 % of its 2015 level; whereas further efforts are required;

    I. whereas in April 2024, it adopted its position on the review of the crisis management and deposit insurance framework;

    J. whereas in April 2024, its Committee on Economic and Monetary Affairs adopted a report on the Commission’s proposal to establish a European deposit insurance scheme;

    K. whereas financial institutions rely increasingly on the use of information and communications technology (ICT); whereas the digitalisation of finance provides key opportunities for the banking sector and has brought about significant technological advances in the EU banking sector through increased efficiency in the provision of banking services and a greater appetite for innovation; whereas it also poses challenges, including with regard to data protection, reputational risks, anti-money laundering and consumer protection concerns; whereas the EU banking sector must increase its cyber resilience to ensure that ICT systems can withstand various types of cyber security threats; whereas the ECB is currently studying the establishment of a digital euro;

    L. whereas EU banks have withstood the impact of Russian aggression; whereas they play a pivotal role in ensuring the ongoing implementation of and compliance with the sanctions imposed by the EU against Russia in response to the invasion; whereas further coordination is needed to avoid circumvention of sanctions;

    M.  whereas climate change, environmental degradation and the transition to a low-carbon economy are factors to be taken into account when assessing the risks on banks’ balance sheets, as a source of risk potentially impacting investments across regions and sectors;

    General considerations

    1. Acknowledges the progress made over the last 10 years through the establishment of the Single Supervisory Mechanism (SSM) and Single Resolution Mechanism (SRM); notes that the BU will not be completed without the establishment of its third pillar, the European deposit insurance scheme;

    2. Asks the Commission to ensure that the completion of the BU and the Capital Markets Union remains a key priority; highlights that these projects offer households and SMEs access to broader funding, reduce the high reliance on bank credit to foster investments and job creation, increase financial stability, reduce the impact of economic downturns, support competitiveness, give additional investment opportunities, fund the transition to a green and digital economy and unlock the EU’s growth potential; notes that the Commission is requested to take into consideration the specificities of the different banking models, while preserving a level playing field;

    3. Notes the need to be prepared for episodes of banking stress that could potentially lead to bank runs such as those witnessed in some jurisdictions outside the EU in March 2023, and the need to ensure the stability of deposits;

    4. Points out that cyber resilience is a key element for the competitiveness of the EU banking sector, in particular taking into account the geopolitical situation and the need to preserve financial stability;

    5. Notes that a more integrated BU would help to make the EU banking sector more resilient, improve access to credit and reduce costs; notes that better cross-border integration of banking business would increase the potential for private risk sharing and ensure diversification in the EU banking market; points out that a more integrated BU is not necessarily the same as a more consolidated banking market and that there are benefits for competition in a diversified banking market; stresses that a fully developed BU would allow EU banks to grow and put them in a better position to compete in the international arena;

    6. Regrets that EU banks’ ability to finance major investments is constrained by lower profitability that is not sufficient to ensure their competitiveness; notes that the profitability gap as compared with other jurisdictions is due to both structural and regulatory factors and calls for a review to streamline the regulatory framework; notes that the specific character of the EU banking system, with its large number of smaller banks, calls for proportionate solutions that take this into account and are tailored to its characteristics, without undermining financial stability; remains mindful of the ‘too big to fail’ risk;

    7. Calls on the Commission to assess the need to develop targeted frameworks within the BU to enhance access to finance for SMEs and start-ups, recognising their role as the backbone of the EU economy;

    8. Regrets that EU banks’ cross-border activity is still rather limited, particularly with regard to granting loans; takes the view, therefore, that it is important to complete the BU in order to uphold the free movement of capital in a fully integrated internal market;

    9. Calls on the EU banks still operating in Russia to exit the Russian market as soon as possible; calls on supervisory institutions to ensure that those banks push ahead with exiting the Russian market swiftly;

    10. Invites the Commission to further explore whether the creation of a separate jurisdiction for EU banks with substantial cross-border operations[14] could help to complete the BU or whether this would increase banking sector fragmentation;

    11. Notes that a review of the securitisation framework to strengthen European markets and the introduction of European Secured Notes as a dual-recourse funding instrument for SMEs for long-term financing could be explored, taking due account of financial stability risks;

    12. Underlines that financial literacy is essential in modern economies, contributing to the resilience of the banking systems across Member States and encouraging cross-border financial activity;

    13. Underlines that a high level of consumer protection will make the BU more resilient;

    14. Takes the view that the Commission should focus on aspects that contribute to achieving the goals of digitalisation, modernisation, simplification, streamlining and increased competitiveness; maintains that legal certainty, security, predictability and stability are essential for EU banks to be able to operate under favourable conditions;

    15. Notes that, in addition to traditional loans, diverse sources of financing can be beneficial for EU growth and EU competitiveness, and recognises the low-risk nature of asset-backed financing solutions;

    16. Notes the ECB’s progress on the digital euro and the parliamentary dialogue being held with the ECB on the topic; understands existing reservations, such as with regard to its offline functionality, given that offline transactions reduce visibility and impair financial crime prevention; recalls that the digital euro should complement, not replace, cash; considers that the decision on whether or not to introduce a digital euro is ultimately a political decision that has to be taken by the EU’s co-legislators, given the profound potential impact of this decision on a wide range of EU domains, including privacy, consumer protection, financial stability, financial policy and other areas that go beyond the strict remit of monetary policy;

    17. Regrets the failure of some financial institutions to ensure gender balance, especially in their management bodies; stresses that gender balance on boards and in the workforce brings both societal and economic returns; calls on financial institutions to regularly update their diversity and inclusion policies and help to foster healthy working cultures that prioritise inclusivity; calls on private and public entities to address the lack of diversity and gender balance in the management bodies of financial institutions;

    Supervision

    18. Welcomes the adoption by the co-legislators of the new banking package implementing Basel III standards in the EU; notes the current lack of clarity concerning the implementation of the Basel III standards in some other jurisdictions and the potential risk for an international level playing field; stresses that the Commission should evaluate whether targeted changes could help to maintain the international competitiveness of EU banks without weakening their resilience; recalls that the delegated act on the date of application of the own funds requirements for market risk postponed the date of application of the new market risk framework by one year to 1 January 2026; calls on the Commission to assess whether the equivalence decisions taken with the jurisdictions not implementing the Basel III standards need to be reviewed in order to preserve the financial stability of the EU financial sector;

    19. Recalls that the Banking Package contains a high number of mandates to the European Banking Authority; calls on the European Banking Authority to respect these mandates;

    20. Notes that even within the existing regulatory framework the banking sector has shown its resilience during the market events of recent years, and that the average Common Equity Tier 1 ratio has remained at high levels, at 15.81 %;

    21. Notes that the non-performing loans ratio has remained stable at 2.30 % and the liquidity coverage ratio at 159.39 %;

    22. Notes the varying levels of exposure to non-performing loans and recalls that there are Member States which have exposure levels in the order of 1 % or even lower, while other Member States have exposure levels exceeding 4 %; considers that efforts to reduce European banks’ exposure to this type of loan should continue as good risk management practice;

    23. Highlights the fact that adverse macroeconomic conditions, geopolitical headwinds and the rapid development of deferred payment services may lead to a deterioration in asset quality and affect the level of non-performing loans in the future; highlights, therefore, the importance of prudent risk management and appropriate provisioning;

    24. Notes that the current levels of banking sector profitability may provide an opportunity for an increase in macroprudential buffers and help to preserve banking sector resilience; invites the Commission to further explore this option and carefully evaluate how to revise the macroprudential framework, taking into consideration the potential impact on capital requirements and bearing in mind a level playing field with other jurisdictions;

    25. Notes that the banking sector plays a role in supporting the transition to a digitalised and carbon neutral economy, in channelling funds to renewable energy sources and in supporting the achievement of the objectives of the EU Green Deal and the EU Climate Law;

    26. Notes that the ECB takes account of climate- and nature-related financial risks in its supervisory practices and monitors growing physical and transition risks closely;

    27. Welcomes the idea of increasing venture capital and unlocking capital to finance fast-growing companies in the EU; notes Commission President Ursula von der Leyen’s commitment to put forward risk-absorbing measures to make it easier for commercial banks, investors and venture capital to finance fast-growing companies[15]; notes that this must be done in a way that does not pose a systemic risk or moral hazard;

    28. Welcomes the creation of the new Authority for Anti-Money Laundering and Countering the Financing of Terrorism, which will allow more effective ways to combat money laundering and terrorist financing via direct supervision of certain financial entities and better cooperation, a better flow of information between national authorities and better coordination among sanctions enforcement authorities in Members States to help close gaps in the implementation of targeted sanctions;

    29. Stresses the need to enhance the resilience of non-bank financial intermediaries, including by designing specific regulatory and supervisory tools; points out that such measures must guarantee the security of the financial system and be in the best interests of the customer; welcomes the Commission consultation on macroprudential policies for non-bank financial intermediaries; supports the Eurosystem’s recommendation to introduce system-wide stress tests to identify and quantify risks to the resilience of core markets; invites the Commission to investigate whether there are any gaps in the supervisory toolkit, including in relation to potential liquidity crunches and implications for systemic risk;

    30. Notes that crypto-assets create new challenges and opportunities for the financial system but also pose risks to it, and that these require attention from the national supervisors, the SSM and the European Systemic Risk Board;

    Resolution

    31. Recalls that the position adopted by Parliament in April 2024 on the crisis management and deposit insurance framework ensures a more consistent approach across all Member States to the application of resolution tools and deposit protection to enhance financial stability, taxpayer protection and depositor confidence; notes that small banks have some specificities that may warrant a proportionate approach; stresses that European and national competent authorities should have at their disposal appropriate and sufficient tools to respond effectively to bank failures and safeguard financial stability, and that banks need to operate in an effective regulatory environment that fosters their development;

    32. Highlights the importance of preserving shareholders’ and creditors’ primary responsibility for bearing losses in the event of a bank’s failure; stresses that resorting to using taxpayers’ money must be avoided, which is still a key lesson learned from the global financial crisis; stresses that the bail-in of shareholders and creditors must remain the main source for resolution financing before any recourse is made to industry-funded sources;

    33. Recalls that a sufficient minimum requirement for own funds and eligible liabilities (MREL) is crucial for a credible resolution framework and for ensuring that resolution authorities have sufficient flexibility to effectively apply the resolution strategies needed in a specific crisis situation; underlines that this minimum requirement should be sufficient to effectively implement any of the resolution strategies included in a bank’s resolution plan; recalls that the resolution framework should avoid undue increases in MREL calibration and disproportionate contributions to the Single Resolution Fund;

    34. Stresses that if a bank’s eligible liabilities are issued to non-EU investors, the write-down or conversion of these liabilities should be enforceable with full certainty to safeguard the effective application of resolution tools;

    35. Notes that any reliance on taxpayer money for the resolution of banks, including for liquidity support, should be avoided, in keeping with the principles of fiscal and social responsibility and market discipline;

    36. Recalls that banks need to continue to meet their obligations and perform their key functions after the implementation of a resolution decision;

    37. Recalls the importance of clarifying the role of the ECB as liquidity provider in resolution, paying due attention to appropriate guarantees and the ECB’s mandate;

    38. Underlines the SRB’s announcement that it will enhance its capabilities for launching enforcement action to remove substantive impediments to resolvability; calls for the publication, at the end of each resolution planning cycle, of an anonymised list of identified impediments to resolvability and the actions adopted to address them;

    39. Welcomes the ‘SRM Vision 2028’ strategic review initiated by the SRB to set its long-term goals, address new challenges and further strengthen collaboration with the national resolution authorities and other stakeholders; notes, in particular, the SRB’s intention to identify areas where sustainability can be embedded further in its daily operations and core business; highlights the need to ensure efficiency and cost-effectiveness in the implementation of the new strategy;

    40. Welcomes the SRB plan to streamline the annual resolution planning cycle to ensure that it is increasingly efficient and has a greater focus on testing banks’ resolvability and the operationalisation of resolution strategies;

    41. Welcomes the fact that the Single Resolution Fund has now been built up; calls for the full ratification of the Amending Agreement to the ESM Treaty by all Member States, including the establishment of a common backstop to the Single Resolution Fund;

    42. Highlights the need for additional efforts to ensure full resolvability for all banks falling under the scope of resolution; recalls that achieving resolvability cannot be considered a ‘moving target’ and therefore calls for more standardisation and harmonisation of the resolvability assessment; recalls, nonetheless, the important role played by national resolution authorities in the assessment of resolvability;

    Deposit insurance

    43. Underlines the fact that the Commission’s proposal to establish a European deposit insurance scheme was published back in 2015 and that the landscape has changed significantly since then;

    44. Recalls that the position of its Committee on Economic and Monetary Affairs on a European deposit insurance scheme was adopted in April 2024; notes that that position deviates from the Commission’s 2015 proposal and adopts a new approach; is waiting for, and encourages the Council to move forward with, the negotiations on a European deposit insurance scheme;

    45. Notes that national deposit guarantee schemes were introduced successfully and have proved their functionality in a number of cases; underlines the need to take specific national characteristics into account and to preserve the well-functioning systems for smaller banks that are already in place in some Member States, such as institutional protection schemes, in a way that ensures a level playing field across the BU;

    °

    ° °

    46. Instructs its President to forward this resolution to the Council, the Commission, the European Central Bank, the Single Resolution Board and the European Banking Authority.

    EXPLANATORY STATEMENT

    While the Banking Union – annual reports 2022 and 2023 focused on the war in Ukraine and the ongoing Russian aggression against Ukraine, this report focuses more on the challenges for the EU and for the European Parliament, as mirrored in the new mandate of the Commission, namely the EU priorities to foster competitiveness, to strengthen the European single market and to boost economic growth.

    The Union is currently at a turning point, which will determine the economic future in the upcoming decades. The 2024 reports of Enrico Letta and Mario Draghi underline that the EU needs a major turnaround to be able to compete with the US or China. Against this background, the Banking Union is a major cornerstone of competitiveness. A strengthened Banking Union will enable the EU to generate the necessary capital to make the European economy fit for the future.

    EU banks play a key role in financing the required investments since bank loans are still the most important source of external financing for companies. However, EU banks suffer from a lower profitability compared to their US counterparts caused by too many regulatory hurdles and by an incomplete Banking Union. A robust and competitive banking sector is necessary to finalise the BU. In the last year, while co-legislators made much progress on crucial legislation for the Banking Union, the EU still has to monitor closely if the EU economy, EU citizens and EU banks benefit from those adopted proposals. This report provides realistic and achievable recommendations, which could help to strengthen further the Banking Union.

    However, not only EU businesses need better access to capital. EU citizens are currently struggling to afford housing or to finance investments in sustainable renovations. It is therefore crucial to boost the profitability of EU banks, since this would in turn allow them to provide private households with better and easier access to affordable loans.

    MIL OSI Europe News

  • MIL-OSI Europe: RECOMMENDATION FOR SECOND READING on the Council position at first reading with a view to the adoption of a regulation of the European Parliament and of the Council on European Union labour market statistics on businesses, repealing Council Regulation (EC) No 530/1999 and Regulations (EC) No 450/2003 and (EC) No 453/2008 of the European Parliament and of the Council – A10-0057/2025

    Source: European Parliament

    DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

    on the Council position at first reading with a view to the adoption of a regulation of the European Parliament and of the Council on European Union labour market statistics on businesses, repealing Council Regulation (EC) No 530/1999 and Regulations (EC) No 450/2003 and (EC) No 453/2008 of the European Parliament and of the Council

    (17082/1/2024 – C10‑0054/2025 – 2023/0288(COD))

    (Ordinary legislative procedure: second reading)

    The European Parliament,

     having regard to the Council position at first reading (17082/1/2024 – C10‑0054/2025),

     having regard to the opinion of the European Central Bank of 24 November 2023[1],

     having regard to its position at first reading[2] on the Commission proposal to Parliament and the Council (COM(2023)0459)),

     having regard to Article 294(7) of the Treaty on the Functioning of the European Union,

     having regard to the provisional agreement approved by the committee responsible under Rule 75(4) of its Rules of Procedure,

     having regard to Rule 68 of its Rules of Procedure,

     having regard to the recommendation for second reading of the Committee on Economic and Monetary Affairs (A10-0057/2025),

     

    1. Approves the Council position at first reading;

    2. Notes that the act is adopted in accordance with the Council position;

    3. Instructs its President to sign the act with the President of the Council, in accordance with Article 297(1) of the Treaty on the Functioning of the European Union;

    4. Instructs its Secretary-General to sign the act, once it has been verified that all the procedures have been duly completed, and, in agreement with the Secretary-General of the Council, to arrange for its publication in the Official Journal of the European Union;

    5. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

     

    SHORT JUSTIFICATION

    The Council position at first reading reflects the agreement reached between Parliament and the Council in interinstitutional negotiations at early second reading stage, after legal-linguistic verification. Since the Committee on Economic and Monetary Affairs (ECON), in its vote on 16 January 2025, already confirmed the outcome of those interinstitutional negotiations, as your rapporteur, I propose that ECON recommends that the Plenary confirms the position of the Council at first reading without amending it.

     

    ANNEX: ENTITIES OR PERSONS FROM WHOM THE RAPPORTEUR HAS RECEIVED INPUT

    Pursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur declares that she received input from the following entities or persons in the preparation of the report, prior to the adoption thereof in committee:

    Entity and/or person

    European Data Protection Supervisor (EDPS), opinion

    European Central Bank (ECB), opinion

    The list above is drawn up under the exclusive responsibility of the rapporteur.

     

    Where natural persons are identified in the list by their name, by their function or by both, the rapporteur declares that she has submitted to the natural persons concerned the European Parliament’s Data Protection Notice No 484 (https://www.europarl.europa.eu/data-protect/index.do), which sets out the conditions applicable to the processing of their personal data and the rights linked to that processing.

    PROCEDURE – COMMITTEE RESPONSIBLE

    Title

    European labour market statistics on businesses, repealing Council Regulation (EC) No 530/1999 and Regulations (EC) No 450/2003 and (EC) No 453/2008 of the European Parliament and of the Council

    References

    17082/1/2024 – C10-0054/2025 – 2023/0288(COD)

    Date of Parliament’s first reading – P number

    24.4.2024 T9-0356/2024

    Draft act considered at first reading

    COM(2023)0459 – C9-0316/2023

    Receipt of Council position at first reading announced in plenary

    3.4.2025

    Committee(s) responsible

    ECON

     

     

     

    Rapporteurs

     Date appointed

    Irene Tinagli

    12.9.2024

     

     

     

    Date adopted

    8.4.2025

     

     

     

    Result of final vote

    +:

    –:

    0:

    40

    4

    6

    Members present for the final vote

    Georgios Aftias, Rasmus Andresen, Stephen Nikola Bartulica, Isabel Benjumea Benjumea, Stefan Berger, Damian Boeselager, Gilles Boyer, Giovanni Crosetto, Fabio De Masi, Siegbert Frank Droese, Engin Eroglu, Marco Falcone, Markus Ferber, Jonás Fernández, Enikő Győri, Eero Heinäluoma, Billy Kelleher, Kinga Kollár, Tomáš Kubín, Aurore Lalucq, Rada Laykova, Marlena Maląg, Jorge Martín Frías, Denis Nesci, Luděk Niedermayer, Ľudovít Ódor, Nikos Papandreou, Gaetano Pedulla’, Lídia Pereira, Kira Marie Peter-Hansen, Pierre Pimpie, Evelyn Regner, René Repasi, Jussi Saramo, Paulius Saudargas, Ralf Seekatz, Irene Tinagli, Francesco Ventola, Lara Wolters, Auke Zijlstra, Roberts Zīle

    Substitutes present for the final vote

    Fernand Kartheiser, Martine Kemp, Eva Maydell, Andreas Schwab, Virginijus Sinkevičius

    Members under Rule 216(7) present for the final vote

    Estelle Ceulemans, Dóra Dávid, Isilda Gomes, Carolina Morace

    Date tabled

    9.4.2025

     

    MIL OSI Europe News

  • MIL-OSI Europe: REPORT on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section IX – European Data Protection Supervisor – A10-0053/2025

    Source: European Parliament

    2. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

    with observations forming an integral part of the decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section IX – European Data Protection Supervisor

    (2024/2028(DEC))

    The European Parliament,

     having regard to its decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section IX – European Data Protection Supervisor,

     having regard to Rule 102 of and Annex V to its Rules of Procedure,

     having regard to the opinion of the Committee on Civil Liberties, Justice and Home Affairs,

     having regard to the report of the Committee on Budgetary Control (A10-0053/2025),

    A. whereas, in the context of the discharge procedure, the discharge authority wishes to stress the particular importance of further strengthening the democratic legitimacy of the Union institutions by improving transparency and accountability, and implementing the concept of performance-based budgeting and good governance of human resources (HR);

    B. whereas data protection is a fundamental right, protected by Union law and enshrined in Article 8 of the Charter of Fundamental Rights of the European Union;

    C. whereas Article 16 of the Treaty on the Functioning of the European Union provides that compliance with the rules relating to the protection of individuals, with regard to the processing of personal data concerning them, is to be subject to control by an independent authority;

    D. whereas Regulation (EU) 2018/1725 provides for the establishment of an independent authority, the European Data Protection Supervisor (the ‘EDPS’), responsible for protecting and guaranteeing the right to data protection and privacy, and tasked with ensuring that the institutions and bodies, offices and agencies of the Union embrace a strong data protection culture;

    E. whereas the EDPS carries out its functions in close cooperation with fellow Data Protection Authorities (DPAs) as part of the European Data Protection Board (EDPB), and it serves the public interest while being guided by principles of impartiality, integrity, transparency, pragmatism and respects Union legislation;

    1. Notes that the budget of the EDPS falls under MFF Heading 7 ’European public administration’, which amounted to a total of EUR 12,3 billion, i.e. 6,4 % of Union budget spending, in 2023; notes that the budget of the EDPS represented 0,18 % of MFF Heading 7 appropriations;

    2. Notes that the Court of Auditors (the ‘Court’), in its Annual Report (the ‘Court’s report’) for the financial year 2023, examined a sample of 70 transactions under MFF Heading 7, of which 21 (30 %) contained errors; further notes that for five of those errors, which were quantified by the Court, the Court estimated a level of error below the materiality threshold;

    3. Notes from the Court’s report its observation that administrative expenditure comprises expenditure on HR including pensions, which in 2023 accounted for about 70 % of the total administrative expenditure, and on buildings, equipment, energy, communications and information technology; welcomes the Court’s renewed opinion that, overall, administrative spending is low risk;

    4. Notes from the Court’s report that in 2023 it audited a salary payment of an official who had last made a declaration concerning rights to family and child allowance in 2020; echoes the Court’s concern that delays in receiving and verifying such declarations increase the risk of ineligible payments;

    Budgetary and financial management

    5. Notes that the final adopted budget for the EDPS was EUR 22 711 559 in 2023, which represents an increase of 12,06 % compared to 2022; notes that the budget of the EDPS also covers the work of the independent Secretariat of the EDPB; notes from the Annual report of the EDPS for 2023 (the ‘Annual Report’) that the adopted budget of the EDPB was EUR 7,67 million in 2023, including EUR 300 000 granted by means of an amending budget which was needed due to an increase in litigation activities in 2023;

    6. Acknowledges that the budget monitoring and planning efforts of the EDPS in the financial year 2023 resulted in a budget implementation rate of current year commitment appropriations of 96 % in 2023 (slightly lower than in 2022 when that rate was 98 %); further notes from the report on the EDPS annual accounts for 2023 that the current year payment appropriations execution rate was 84 % (lower than 88 % in 2022); notes in addition, from EDPS replies to the questionnaire submitted by the Committee on Budgetary Control for the 2023 budgetary discharge (the ‘Questionnaire’), that the execution rate of payment appropriations overall was 91,33 % in 2023 (lower than 94,09 % in 2022);

    7. Notes further that the amount of carry-overs (C8) from 2023 to 2024 was EUR 2 517 942,67 or 11,08 % of the total budget for 2023, compared to EUR 1 827 354,23 or 9,01 % of the total budget for 2022; notes that the execution rate of the C8 budget in 2023 was 76,65 % (higher than 73,77 % in 2022);

    8. Welcomes an improvement in the average time to pay from 25 days in 2022 to 19 days in 2023, with 97,50 % of payments processed on time; notes that that improvement is also due to the EDPS having solved an old bug with the electronic payment system for invoices linked to mission costs; notes further a significant increase in the number of payments from 799 in 2022 to 1335 in 2023; observes in that context that the number of transactions is still lower than pre-pandemic levels due to changes in the way of working (such as hybrid meetings or virtual events for experts);

    9. Notes that the effects of illegal Russia’s war of aggression against Ukraine continued to create budgetary pressure on the EDPS in 2023, including through rising inflation and the consequent increase in energy costs, with the most affected budget lines being staff salaries, building security and rental costs, mission costs and services provided by external staff; commends in that context the EDPS for having re-adjusted its priorities and having implemented internal reallocation within budget chapters; understands that budgetary optimisation was necessary in order to successfully manage the indexation of staff salaries and rental costs, as well as an increase in the costs of external lawyer support services due to an increased number of EDPS binding decisions which led to a bigger number of cases to be defended before the Court of Justice of the European Union (CJEU) with the help of external legal assistance; regrets in that context that the EDPS had to postpone some of its activities, such as a feasibility study on artificial intelligence; calls on the EDPS to abide to the competences of its mandate with a collaborative approach with the Union institutions and agencies and to avoid initiating any legal action, especially those which are manifestly inadmissible, in order to avoid negative repercussions on the management of resources, which do not allow the EDPS to carry out its activities as an Institution;

    10. Expresses concern about the significant increase in EDPS staff mission costs, from EUR 28 789 in 2021 and EUR 176 903 in 2022, to EUR 284 580 in 2023; calls on the EDPS to assess whether the resources spent on missions are being used appropriately and effectively; notes that the EDPS ceased making public the number of missions funded by organisers, as well as information on which unit or sector participated in each mission, thus reducing transparency regarding mission expenses; calls on the EDPS to reinstate this practice; encourages the EDPS to promote the use of video-conferencing tools where suitable, as this could contribute to lowering the number of missions and reducing costs; calls on the EDPS to assess whether the resources spent on missions are being used appropriately and effectively.

    Internal management, performance and internal control

    11. Notes that the EPDS used nine key performance indicators (KPIs) to monitor its performance in 2023, in alignment with the main objectives of the EDPS Strategy 2020-2024 which is implemented through the Annual Management Plan; notes from the Annual Report that the EDPS over-delivered in almost all areas, as indicated by the results of KPIs for 2023, except for one KPI (the number of EDPS followers on some social media accounts); notes with concern that the EDPS encountered considerable challenges due to a growing workload and intricate data protection issues arising from the rapidly evolving digital landscape, as well as due to the extension of the EDPS mandate to supervisory activities (such as audits and investigations) and replies to consultations and prior consultations, all in the context of a limited budget; notes from the EDPS’ follow-up report to Parliament’s resolution on the implementation of the EDPS’ budget for 2022 (the ‘Follow-up Report’) that several legislative developments in the last two years have impacted the work and resources of the EDPS, due to the extension of Eurojust’s mandate, new information to be received by Europol under the Digital Services Act, the roll out of the new Union’s large-scale databases and interoperability framework in the justice and home affairs field and the entry into force of the Artificial Intelligence Act (the “AI Act”); calls on the Commission and on the budgetary authority to take those matters into consideration during the annual budgetary procedure;

    12. Welcomes the fact that, in 2023, the EDPS strengthened its ability to assess and prepare for emerging technological trends and their potential impact on privacy and data protection; notes that this was achieved through a foresight-based approach, with a focus on monitoring developments in areas such as large language models, digital identity wallets, the internet of behaviours, extended reality, and deep fake detection; welcomes in that context the publication by the EDPS of its third TechSonar initiative on emerging technologies; congratulates moreover the EDPS for having been awarded the GPA Global Privacy and Data Protection Awards 2023 in the category of innovation;

    13. Notes that 2023 was marked by several organisational changes or updates that were needed in order to respond and adapt to the evolving data protection challenges; welcomes in this context the appointment of a Secretary-General from 1 July 2023; notes in addition the transition of two sectors into units such as ‘Information and Communication’ and ‘Governance and Internal Control’ and the creation of three new specialised sectors under the ‘Technology and Privacy’ (T&P) unit: ‘Systems Oversight and Audit’, ‘Technology Monitoring and Foresight’ and ‘Digital Transformation’;

    14. Emphasises the role of the EDPS in supervising the processing of personal data by Union institutions, bodies, offices and agencies; notes with concern the length of proceedings before the EDPS, as the EDPS did not close a single investigation in 2023, but in comparison to the previous year, in 2023, the number of notifications beyond the 72 hours significantly decreased;

    15. Notes that the EDPS received 420 complaints, i.e. 53 more than in 2022, out of which 73 were admissible and 347 inadmissible in 2023; notes that the EDPS issued a final decision, opinion or reply in 31 out of 73 complaint cases received in 2023 within 44 days on average and responded to all 347 inadmissible complaints received; notes that, out of all admissible complaints (ongoing and received in 2023), 55 cases were finalised in 2023, which represents an increase of 17 % compared to 2022; acknowledges the efforts made by the EDPS to reduce the high number of complaints by developing a dynamic tool on the EPDS’ website, although the volume of complaints remained challenging due to limited resources in 2023; notes with satisfaction that the EDPS developed various procedural tools and policies to enhance its investigatory processes in 2023; commends in that context the EDPS for having amended its Rules of Procedure, whereby the “review procedure” is replaced by a “preliminary assessment” in order to safeguard the right to be heard of all the involved parties, thus contributing to a fair and timely handling of complaints and investigations;

    16. Underlines the important role of consultation and advice of EDPS in the legislative process; notes that, pursuant to Article 42(1) of Regulation (EU) 2018/1725, the EDPS responded to 80 formal legislative consultations and its advice took the form of 54 opinions (27 in 2022), 26 formal comments (49 in 2022) and 34 informal comments (30 in 2022) to the Commission and to the co-legislators in response to legislative consultation requests in 2023; commends the EDPS for its input with regard to the AI Act, in particular EDPS’ own-initiative opinion on the AI Act and advice on the AI liability rules, as well as for EDPS’ input to the GPA resolution on generative AI systems; acknowledges a significant increase (+93 %) of consultation requests over the last five years;

    17. Notes that, in 2023, the EDPS carried out eight investigations and five pre-investigations, marking a significant increase compared to previous years; notes that in 2023 the EDPS was actively involved in a total of 13 investigations and seven pre-investigations, either launched in 2023 or carried over from prior years; notes that the EPDS continued two complex and resource-intensive formal investigations from 2021 into the use by European Union Institutions, Bodies and Agencies (EUIBAs) of cloud services from non-EU/EEA entities, including a focus on the Commission’s use of Microsoft 365; urges the finalisation of those investigations on time because of their significant impact on the working of institutions; notes further that the EDPS also launched five investigations based on complaints about EUIBAs’ websites, focusing in a broad way on privacy and data protection issues, with preliminary assessments expected in 2024;

    18. Urges the EDPS to prioritise and enhance procedures for handling the personal data of minors under 15, particularly in the context of Europol’s systems, where such individuals may be marked as suspects; recognises the heightened vulnerability of that group and the need for robust safeguards;

    19. Notes that the EDPS investigated the Commission’s alleged use of micro-targeting on platform X and continued two pre-investigations: one case concerning EUIBAs’ use of Trello cloud service, which was closed in 2023 and another one on EUIBAs’ use of profiling, which was carried out in 2024; notes that a total of six investigations and four pre-investigations (one pre-investigation in 2022) were launched in the Area of Freedom, Security, and Justice (FSJ), reflecting a significant increase from 2022; notes the EDPS’ concerns with regard to the challenges that may arise in the case of investigations where joint action between national authorities and EUIBA’s is needed; notes in addition that, as part of its audit plan for 2023, the EDPS audited the following bodies: the European Personnel Selection Office, the European Investment Bank, the European Central Bank, the European Centre for Disease Prevention and Control and the European Medicines Agency;

    20. Recalls that in 2022 the EDPS brought an action for annulment of two provisions of the amended Europol Regulation before the General Court, which was later rejected; notes that meanwhile the EDPS decided to appeal the order of the General Court in case T-578/22[8], believing the issues raised should be addressed at the highest level; regrets that the EDPS did not realise the manifest inadmissibility of its appeal, even if the institution did not intend to challenge an act by Europol, but a retroactive change in the legal framework aimed at neutralising the effects of the EDPS’ enforcement actions; calls on the institution to cooperate with Union institutions and agencies, before initiating legal proceedings that prevent the fulfilment of its mandate and the use of its resources for purposes for which they were intended; notes further that the EDPS also followed up on the implementation of its Order of 3 January 2022, including checks on Europol’s reporting; regrets that the final report on that matter was communicated by the EDPS only on 22 July 2024;

    21. Notes that, after the pilot implementation of the new risk management framework at the EDPS in late 2022, an anonymous satisfaction survey was conducted in May 2023 to assess its effectiveness and gather additional suggestions; notes further that the survey results were positive, leading to the formal adoption of the framework on 26 June 2023;

    22. Notes that the internal audit service (IAS) carried out an audit on the methodology for the planning of EDPS audits in the EDPS in 2023; notes that the audit was concluded with two recommendations for which the EDPS submitted an action plan to the IAS; calls on the EDPS to keep the discharge authority informed on a regular basis on the progress made in that matter;

    23. Recalls the Treaty on the European Union that the EU and its institutions shall promote solidarity and equality between women and men;

    HR, equality and staff well-being

    24. Notes that, at the end of 2023, the EDPS had 129 members of staff, compared to 127 in 2022; notes that the EDPS employed 50 contract staff (CA) under Article 3(b) of the Staff Regulations of Officials and the Conditions of Employment of Other Servants (52 CA in 2022), 7 temporary agents (TA) under Article 2(b) and 2(c) (6 TA in 2022) and used the services of 12 external services providers (EXT) working intra-muros in 2023 (8 EXT in 2022); encourages the EDPS to continue its efforts towards a more balanced geographical representation among all Member States specifically at managerial level; welcomes the increased diversity of nationalities represented, but notes with regret the continued underrepresentation of women in senior management positions; calls for the adoption of a gender parity roadmap, including proactive recruitment measures and leadership training programs for female staff members;

    25. Notes that the EDPS had 23 nationalities (from the Member States) represented among its staff in 2023, which is an improvement in comparison with 22 nationalities in 2022; notes with dissatisfaction the over-representation of five nationalities and an underrepresentation of other nationalities; urges the EDPS to continue its efforts to achieve a balanced geographical distribution of nationals from all Member States within its staff, by improving communication, fostering visibility, and enhancing job conditions to attract underrepresented nationalities;

    26. Observes that, in 2023, the EDPS maintained a workforce comprising 65 % women and 35 % men, consistent with trends from previous years; regrets the absence of women in senior management roles, despite achieving gender parity among the six middle management positions; urges the EDPS to intensify its efforts to ensure gender-balanced representation across all staff levels, and invites the EDPS to promote the application of women also with a view to the next election of the Supervisor by Parliament;

    27. Notes a high occupancy rate of the establishment plan of 95,65 % but also a high turnover rate of 13 % in 2023; notes that most of the unfilled positions were a result of candidates being unsuitable, given the EDPS’ need for highly specialised profiles and the small pool of eligible candidates; welcomes the addressing of those challenges through republication with a wider or more targeted dissemination of the vacancy or by redrafting the requirements; welcomes the steps taken by the EDPS regarding the hiring process; calls on the EDPS to continue to address the challenges in finding suitable candidates and to keep the discharge authority informed about improvements on staff recruitment and turnover;

    28. Notes that, in the second half of 2023, the EDPS’ HR team launched a pilot for a new on-boarding process for newcomers, with sessions that cover, inter alia, presentations of core units’ work, ethics, procurement procedures and information security, whereas three on-boarding sessions were offered in 2023; invites the EDPS to continue offering to newcomers “on-boarding” and to all members of staff mandatory sessions that remind the importance of principles such as ethics, conflicts of interest, transparency, internal control and anti-fraud, as they have become the standard in the Union institutions; notes moreover that 12 individual sessions were offered for EDPS and EDPB staff, six sessions of group coaching in which participants (manager level) learned from each other, as well as a one-year team coaching with a designer for leadership development at the European School of Administration in 2023;

    29. Notes, from the Questionnaire, that the EDPS offers flexible and hybrid working arrangements, that are well-received by members of staff who can benefit, inter alia, from parental leave, time credits, part-time work or working from abroad for a limited number of days per year; notes that, in 2023, the majority of staff made use of those working conditions, whereas 86,30 % of staff made use of teleworking arrangements in 2023; considers that the building infrastructure should be optimised to reflect that high rate of teleworking, which could contribute to reducing operational costs and ensuring more efficient use of office space; welcomes the EDPS’ continued efforts to actively improve physical and mental well-being of its staff;

    30. Commends the EDPS for carrying out several awareness-raising actions during the year 2023 with information sharing on elimination of racial discrimination, International Women’s Day, EU diversity month and learning about neurodiversity; notes that currently the EDPS does not employ staff with disabilities but has an equal opportunities clause included in all EDPS vacancy notices and actively encourages applications from candidates with disabilities;

    31. Notes from the Questionnaire that the EDPS considers confidential any information on burnout cases, including the number thereof; disagrees with that opinion and calls the EDPS to provide the discharge authority with the number of burnout cases on a yearly basis; notes with satisfaction that, in 2023, there were no harassment cases reported at the EDPS; welcomes the fact that, in 2023, the EDPS continued to provide an anti-harassment presentation delivered by one of the EDPS’ confidential counsellors, as part of the induction training called the ‘EDPS Welcome Day’; commends the publication of the decision on anti-harassment and the role of the confidential counsellors on the EDPS’ intranet;

    Ethical framework and transparency

    32. Notes that, in 2023, the EDPS focused its efforts on increasing staff awareness of the EDPS/EDPB ethical framework by organising mandatory dedicated training sessions for all staff and induction trainings for EDPS/EDPB newcomers, appointing a new ethics officer and participating in the ‘Comité Paritaire des Questions Statuaries’ working group on ethics; welcomes the establishment of a mailbox by the EPDS, where members of staff can submit their requests regarding any ethics related inquiries, as well as the use of Commission’s Ethics module in Sysper; encourages the EDPS to continue raising awareness and organising surveys to assess the level of staff awareness of the EDPS/EDPB ethical framework;

    33. Welcomes the overall high level of transparency achieved by the EDPS concerning its activities, in particular as regards the publication of the agenda and the declaration of interests of the Supervisor and of the Head of EDPS Administration, in line with the Supervisor’s code of conduct of 2019; notes from the Follow-up Report that the EDPS has adopted two codes of conduct, whereas one of them applies to the Supervisor and the other one applies to the EDPS staff; understands that in cases when the Secretary-General is called to replace the Supervisor, the latter’s code of conduct also applies to the Secretary-General;

    34. Notes with satisfaction that the EDPS has never been involved in any investigations by the European Anti-Fraud Office (OLAF) since its establishment;

    35. Notes that, out of five inquiries opened by the Ombudsman in 2023 concerning the EDPS, four were closed without any further inquiry; notes that, for one enquiry, the decision was still pending and expected for Q4 2024; calls on the EDPS to keep the discharge authority informed as to the outcome of this enquiry;

    36. Regrets that the EDPS has still not formally joined the Union’s Transparency Register (TR); nevertheless notes from the Follow-up Report that, with a view to formally joining the TR, the EDPS has launched an internal assessment on transparency measures, whereas, in 2023, exploratory meetings and exchanges of the EDPS with secretariat of the TR took place; calls on the EDPS to inform the discharge authority of the outcome of that assessment exercise; reiterates its call on the EDPS to join and use the TR, including for the proactive disclosure of meetings with any third parties, to ensure transparency in EDPS’ regulatory and advisory functions;

    37. Notes with satisfaction that, in 2023, the EPDS established internal rules applicable to the hearing of persons that could be affected by an EDPS final decision adopted in own-initiative investigations and inquiries in order to ensure the proper exercise of their fundamental right to be heard in such proceedings; commends the EPDS for publishing a new factsheet on EDPS Investigations and a new EDPS Investigation Policy as well as for ensuring that all financial reports, including annual budgets, accounting and audit reports, are made publicly accessible through a Union institution website and other official channels, as the EPDS takes a leading role in enhancing the cybersecurity preparedness of the Union institutions;

    38. Notes with satisfaction from the Questionnaire that no cases of conflicts of interest, whistleblowing or fraud were reported in the EDPS in 2023; notes that the EDPS has set up a framework to prevent conflicts of interest at the level of senior management and staff through codes of conduct, awareness raising and declarations of absence of conflicts of interest and confidentiality; notes that, in addition to the mandatory introduction to the ethical framework of the EDPS for all new members of staff, new members of staff are also introduced to the EDPS’ anti-fraud strategy;

    39. Notes from the Questionnaire that the EDPS has internal rules on whistleblowing, which define safe routes and channels through which staff may raise concerns about fraud, corruption or any other serious wrongdoing, without prejudice to the confidentiality of the identity of the whistleblower and of the information reported; notes that, so far, there has never been a whistleblowing case reported to the EDPS;

    40. Urges the EDPS to publicly disclose any recusals due to conflicts of interest in its enforcement decisions, ensuring full transparency in regulatory oversight and decision-making;

    Digitalisation, cybersecurity and data protection

    41. Notes from the Questionnaire that the 2023 budget for IT equipment and projects was 9,5 % lower compared to 2022; notes that that decrease was primarily because no new IT feasibility studies were being commissioned in 2023, as opposed to 2022 where such studies represented a substantial portion of the IT budget; notes further that other cost elements remain relatively stable between the two years, including general IT services and maintenance;

    42. Notes from the Follow-up Report and the Questionnaire the conclusions of the IT feasibility study carried out in 2022, whereby there are gaps between what the IT tools and services provided by the Commission and Parliament can offer and the specific needs of the EDPS; notes that those gaps should be addressed by developing in-house capabilities and applications for which a minimum of five IT staff and partial outsourcing EDPS was deemed necessary; regrets that, due to budgetary constraints, implementation of the recommendations of the study remained on hold; calls on the EDPS to consider a step-by-step approach by starting with those recommendations and projects that would require fewer resources;

    43. Commends the progress made in 2023 by the EDPS in digitalising its workflows and processes, with the introduction of ARES, the qualified digital signature (e-IDAS) and a collaborative platform (Nextcloud) for drafting documents and video-conferencing, as well as updates to the tool (Website Evidence Collector) that automates the collection of personal data processing on websites of data controllers and processors, the adoption of the acceptance environment of EU Send Web, a service/channel to exchange sensitive non-classified information with other EUIBAs and further progress made towards implementing services that cannot be outsourced, such as the form and the electronic workflow to manage data breach notifications; notes nevertheless issues with regard to the use and maintenance of the e-procurement system;

    44. Welcomes the EDPS’s focus on ensuring that external contractors meet the necessary moral and ethical standards expected of all Union institutions, bodies, offices and agencies, particularly in light of the previous use of external companies by EDPS that, according to Yale University’s ranking, continue to operate in Russia;

    45. Acknowledges that the EDPS successfully relies on many of the administrative systems used by the Commission, particularly in the field of HR and business administration processes, as well as on some of Parliament’s services, including the provision of laptops, network infrastructure and video-conferencing; commends the fact that the project to improve the quality and performance of the computers provided to EDPS staff, in collaboration with Parliament, with a view to the generalisation of hybrid work, has been completed;

    46. Acknowledges the leading role of EDPS in enhancing the cybersecurity preparedness of the Union institutions, while working closely with bodies such as European Union Agency for Cybersecurity (ENISA) and cybersecurity hubs such as CERT-EU; urges it to develop a structured audit framework for cybersecurity risks within Union bodies; notes that, in 2023, the EDPS continued to improve its readiness to protect personal data and sensitive information against cyber-attacks in view of the rapidly changing cybersecurity threat landscape; commends in that context the EDPS for reviewing its security policies and methodologies in preparation for the impact of the Cybersecurity Regulation (Regulation (EU, Euratom) 2023/2841); notes from the Questionnaire that the EDPS introduced a request for two additional full-time equivalents to cover cybersecurity infrastructure in connection with EDPS’s obligations under that Regulation as well as the EDPS’ role as a member of the Interinstitutional Cybersecurity Board (IICB); notes further with appreciation that the EPDS upgraded its Information Security Policy and the EDPS Acceptable Use Policy to address specific cybersecurity threats in relation to teleworking, use of personal mobile devices and banning of dangerous applications (TikTok); notes that the EDPS did not encounter any cyber-attacks in 2023; calls for annual public reporting on detected threats, response measures, and institutional cyber resilience;

    47. Commends the EDPS for updating cybersecurity training for all staff and revamping the security training model for newcomers; appreciates that the EPDS has been proactive in raising awareness about cyber security risks, for instance by preparing fact sheets, conducting surveys with EUIBAs and running awareness campaigns; encourages the EDPS to ensure that staff receives compulsory training on the safe and ethical use of AI tools to enhance their understanding and mitigate potential risks;

    Buildings

    48. Notes that in 2023, as in 2022, the EDPS and EDPB were the sole tenants of Parliament’s building where they were located, following the move of the Ombudsman at the end of 2021 and that by renting their premises from the Parliament rather than the private market the EDPS intends to keep the rental and maintenance costs at a reasonable level; notes that the EDPS had to request an additional EUR 81 856,84 for paying rental costs to Parliament, given that the indexation rate was 8,82 % and thus higher than the 2 % ceiling for administrative expenditures;

    49. Notes that, in terms of accessibility of its building, the EDPS relies on the decisions taken and implemented by Parliament, as part of their building policy; notes from the Follow-up Report that the EDPS employs staff with physical impairments due to serious illness; welcomes the commitment of the EDPS to explore the possibilities of hiring trainees with reduced mobility or disabilities;

    Environment and sustainability

    50. Notes that the EDPS has not joined the Eco-Management and Audit Scheme (EMAS) but has implemented several measures to reduce its environmental footprint, such as regulating the temperature automatically and centrally, turning lights off automatically when there is no movement in the room, purchasing eco-friendly products and services and automating the workflows with the introduction of ARES; notes from the Follow-up Report that according to the information received by Parliament’s Directorate-General for Infrastructure and Logistics, responsible for the management of the building rented by the EDPS, solar panels are installed on that building; asks the EDPS to inform the discharge authority to report on the share (%) of the solar-panel produced electricity in the EDPS’ total energy consumption needs per year; calls further on the EDPS to inform the discharge authority of any new developments regarding the EMAS certification process;

    51. Notes that the EPDS has not assessed its carbon footprint in 2023; welcomes, however, that the EDPS continues to apply measures that reduce the carbon footprint by reducing the travel of journey to the office through teleworking possibilities, reimbursing 50 % of staff’s monthly/annual subscriptions for the use of public transport, encouraging the staff to favour videoconferencing and train travel for short distances, managing the cycle for invoices electronically and achieving an entirely paperless selection procedure and appraisal exercise as regards HR;

    52. Urges the EDPS to adopt the EMAS to systematically monitor and improve its environmental footprint, particularly in terms of energy consumption, waste reduction, and sustainable office policies;

    53. Notes that the EDPS addresses sustainability-related risks (such as environmental, social and governance risks) in a comprehensive way through an annual risk assessment exercise; welcomes in that context that the EDPS adopted its new risk management process in 2023, which should help the EDPS to target and better analyse those risks and consequently better calibrate mitigating actions;

    Interinstitutional cooperation

    54. Welcomes the budgetary and administrative savings achieved by the EDPS through inter-institutional cooperation, particularly the conclusion of service-level agreements with Parliament for the rental of its premises and the use of IT system applications, hardware supplies and maintenance and with the Commission for HR and business administration processes, as well as through participation in large interinstitutional framework contracts in areas such as IT consultancy, interim services and office supplies; commends in addition the EDPS for maintaining a structured cooperation with the Ombudsman, the Agency for Fundamental Rights and CERT-EU through memorandums of understanding;

    55. Notes that the EDPS participates in meetings of various interinstitutional bodies; welcomes in this context the participation of the EPDS in meetings of the Heads of Administration and the Interinstitutional Online Communication Committee, led by Parliament’s Directorate-General for Communication; acknowledges that interinstitutional cooperation with EDPS, in his supervisory role, is of key importance for the other Union institutions to enhance their level of compliance with the data protection legal framework;

    56. Calls for closer cooperation between the EDPS, the Court of Auditors, OLAF, and the European Public Prosecutor’s Office (EPPO) to develop common protocols for fraud detection in digital data and financial transactions within EU institutions; stresses the need for joint audits on AI-based fraud risks;

    57. Welcomes the pivotal role played by the EDPS in 2023 in the coordination of the Data Protection Authorities of the Member States (DPAs) to promote consistent data protection across the Union; notes that the EDPS joined 26 DPAs in a coordinated enforcement action on the role and tasks of data protection officers (DPOs), assessing their compliance with Regulation (EU) 2018/1725; notes the continued active involvement of the EPDS in the Coordinated Supervision Committee (CSC) within the area of FSJ addressing issues such as handling complaints against Europol and enhancing cooperation processes; appreciates furthermore all the other steps taken to improve cooperation between the EDPS and the DPAs such as the conduction of a joint Europol inspection with national authorities (Poland and Lithuania) and the participation in the coordinated supervisory action on processing minors’ data in Europol systems, the participation in an operational visit to the European Delegated Prosecutor’s office in Lisbon under a Working Arrangement with Portugal’s DPA and the coordination of an onsite inspection in Lesvos with Greece’s DPA to verify data collection practices during Joint Operations by Frontex; acknowledges that those interinstitutional engagements help the EDPS align with best practices of Union institutions and benefit from the exchange of information with peer departments;

    Communication

    58. Notes that the budget for public communication and promotional activities in 2023 amounted to EUR 468 000, which represented an increase of 54 % compared to 2022;

    59. Notes with satisfaction that the EDPS organised several communication events online as well as in person in 2023, aimed at raising awareness of EDPS’ role and mission among a wider public and the importance of respecting Union data protection rules, such as Data Protection Day, the EDPS Trainees’ conference (twice a year), the EDPS Seminar on the essence of the fundamental rights to privacy and data protection, and other international events;

    60. Notes that the EDPS communicates online via its website and its social media accounts on X (ex-twitter) (29 400 followers), LinkedIn (71 000 followers), YouTube (2 900 followers), EU-Voice (5 900 followers) and EU-Video (750 followers);

    61. Notes that the pilot project of the platforms EU Voice and EU Video (free and open-source social media networks, privacy-oriented and based on Mastodon and PeerTube software) continued in 2023; welcomes in that context the EDPS’ contribution to the Union’s strategy on data and digital sovereignty in order to promote the Union’s independence in the digital world and compliance with the data protection legal framework.

    MIL OSI Europe News

  • MIL-OSI Europe: REPORT on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section VIII – European Ombudsman – A10-0055/2025

    Source: European Parliament

    2. MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

    with observations forming an integral part of the decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section VIII – European Ombudsman

    (2024/2027(DEC))

    The European Parliament,

     having regard to its decision on discharge in respect of the implementation of the general budget of the European Union for the financial year 2023, Section VIII – European Ombudsman,

     having regard to Rule 102 of and Annex V to its Rules of Procedure,

     having regard to the report of the Committee on Budgetary Control (A10-0055/2025),

    A. whereas in the context of the discharge procedure, the discharge authority wishes to stress the particular importance of further strengthening the democratic legitimacy of the Union institutions by improving transparency and accountability, and by implementing the concept of performance-based budgeting and good governance of human resources;

    B. whereas Article 228 of the Treaty on the functioning of the European Union provides for the election of a European Ombudsman (the ‘Ombudsman’) by the European Parliament who shall be empowered to receive complaints from any citizen of the Union or any natural or legal person residing or having its registered office in a Member State concerning instances of maladministration in the activities of the Union institutions, bodies, offices or agencies, with the exception of the Court of Justice of the European Union acting in its judicial role, and to examine such complaints and report on them;

    C. whereas Regulation (EU, Euratom) 2021/1163 of the European Parliament of 24 June 2021[7] lays down the regulations and general conditions governing the performance of the Ombudsman’s duties (Statute of the European Ombudsman);

    D. whereas, following the adoption of Regulation (EU, Euratom) 2021/1163, the Ombudsman adopted its revised implementing provisions[8] on 21 June 2023;

    1. Notes that the budget of the Ombudsman falls under MFF heading 7 ’European public administration’, which amounted to a total of EUR 12,3 billion, i.e. 6,4 % of Union budget spending, in 2023; notes that the budget of the Ombudsman represented 0,11 % of MFF heading 7 appropriations;

    2. Notes that the Court of Auditors (the ‘Court’), in its Annual Report for the financial year 2023 (the ‘Court’s report’), examined a sample of 70 transactions under the heading ‘European public administration’, of which 21 (30 %) contained errors; further notes that for five of those errors, which were quantified by the Court, the Court estimated a level of error below the materiality threshold; notes with satisfaction from the Court’s report that for 2023 the Court did not identify any significant issues concerning the Ombudsman;

    3. Notes from the Court’s report its observation that administrative expenditure comprises expenditure on human resources including pensions, which in 2023 accounted for about 70 % of the total administrative expenditure, and on buildings, equipment, energy, communications and information technology; welcomes the fact that the Court concluded, as it did in previous years, that, overall, administrative spending is low risk;

    Budgetary and financial management

    4. Notes that the budget of the Ombudsman amounted to EUR 13 212 447 in 2023, which represents an increase of EUR 990 339 (i.e. +8,1 %) compared to 2022; takes note, from the Ombudsman’s replies to the questionnaire submitted by the Committee on Budgetary Control for the 2023 budgetary discharge (the ‘Questionnaire’), that this increase is mainly due to salary adjustments and two additional posts that were needed to reinforce the Ombudsman’s core activities;

    5. Notes that the budget monitoring efforts during the financial year 2023 resulted in a budget implementation rate of 95,39 %, representing a decrease of 1,58 % compared to 2022; notes that the current year payment appropriations execution rate was 97,58 %, representing an increase of 1,31 % compared to 2022, which led to a decrease in automatic carry-overs from 3,73 % (or 442 209) in 2002 to 2,42 % (or 304 550 EUR) in 2023; regrets, nevertheless, the lower execution rate of the automatic carry-overs of appropriations from the previous year, which in 2023 was 73,27 % compared to 92,59 % in 2022; calls for an improvement in this regard;

    6. Notes that in the course of 2023, the Ombudsman made nine budgetary transfers pursuant to Article 29 of the Financial Regulation, representing a total of EUR 241 150 or 1,8 % of the appropriations for that financial year, compared to 2,8 % in 2022; notes that those transfers were needed for the reinforcement of various budget lines on, for example, furniture, security and surveillance buildings, digitalisation of archives or informatics; observes in this context that the IT expenditure has increased by 41 %, from EUR 159 714 in 2022 to EUR 224 698 in 2023;

    7. Notes a further increase, for the third consecutive year, of the average time for executing payments; acknowledges that, despite increasing the time for payments from 11,35 days in 2021 to 13,50 days in 2023, the average time for payments continues to be relatively short and below the regulatory maximum payment time (30 days); welcomes in this context the fact that the Ombudsman has meanwhile fully implemented an electronic invoicing system which should further improve the efficiency of the payment process as of 2024;

    8. Notes that, for 2023, the European Parliament had not passed onto the Ombudsman any significant increase with regard to the rent and the lump-sum building charges, which has allowed the Ombudsman to reduce its budget line for rent by 8,06 % in order to reinforce other budget lines in 2023; takes note, however, that for 2024 the Ombudsman expects an increase of building related expenses by 170 % (or EUR 122 260);

    9. Welcomes the fact that the budget for staff missions decreased from EUR 120 000 in 2022 to EUR 100 000 in 2023 thanks to an extensive use of videoconference facilities in both places of work; commends, in this context, the Ombudsman for the reduction in its staff missions’ budget for the fourth consecutive year; notes that the missions and travel budget for the Ombudsman remained the same in 2023 as in the previous years (2021 and 2022), i.e. EUR 35 000;

    Internal management, performance and internal control

    10. Notes that the Ombudsman has linked to the high level objectives of its strategy ‘Towards 2024’ nine Key Performance Indicators (KPIs) consisting of 19 components, as set out in the Ombudsman’s Annual Management Plan for 2023; observes that 14 of those KPI components have been reached or exceeded in 2023;

    11. Observes an overall increase in the Ombudsman’s workload compared to the previous year, whereas in 2023 the Ombudsman handled 2 392 new complaints (2 223 in 2022), opened 398 inquiries (348 in 2022), including 56 inquiries of public importance (60 in 2022), closed 372 inquiries (330 in 2022) and dealt with a record number of public access complaints which has increased from 117 in 2022 to a record number of 167 in 2023, 118 of which were followed up with inquiries; commends, in this context, the Ombudsman for the efficiency gains made in 2023 to lower the number of complaints by simplifying the handling of the ‘failure to reply’ inquiries, and streamlining the processing of the ‘out of mandate complaints’ and information requests; calls on the Ombudsman to work on more targeted communication to address this issue in the future; welcomes its efforts to continue  streamlining and process simplification for the following years;

    12. Commends the Ombudsman for having reduced the time needed to process files at different levels of the procedure, such as the time taken on admissibility (from 16 days in 2022 to 11 days in 2023) or the average time taken to close cases in the area of public access to documents (from 46 days in 2022 to 42 days in 2023); regrets however that the average time (165 days) for dealing with an inquiry remained high in 2023; understands, nevertheless, the Ombudsman’s explanation that this average was impacted by delayed closing of inquiries due to repeated exchanges with the institutions concerned;

    13. Notes further an improvement with regard to positive replies by the Union institutions to the Ombudsman’s proposals to improve their administration, with an overall acceptance rate of 81 % in 2023 (compared to 79 % in 2022); asks the Ombudsman to continue working towards generating greater compliance with its findings, recommendations and suggestions;

    14. Acknowledges the efforts made by the Ombudsman in 2023 to enhance awareness and understanding of the Ombudsman’s mandate; observes with satisfaction in this context an increase of 20 % in the number of complaints within the mandate from 740 in 2022 to 885 in 2023, as well as an increase in the share of that type of complaints, from 33 % in 2022 to 37 % in 2023;

    15. Recognises the efforts made by and the positive impact of the Ombudsman in the areas of ethics, transparency and accountability in 2023, especially as a result of inquiries on public access to documents and conflicts of interest concerning various Union institutions, agencies or the European Investment Bank; expresses its appreciation for the special report the Ombudsman issued in September 2023 on the Commission delays in dealing with access to documents requests;

    16. Takes note, from the Ombudsman’s report to the discharge authority entitled ‘Report on the follow-up to the discharge for the financial year 2022’, of the issues observed in the area of the Recovery and Resilience Facility (RRF), namely significant delays encountered by the European Commission in replying to requests for access to information, especially the delayed publication of the largest RRF recipients by Member States, undermining transparency, as well as with regard to the reasoning on the basis of which the Commission established the level for granting public access to documents in some cases; expresses concern with regard to the Commission’s decision not to accept all the suggestions and solution proposals that the Ombudsman made in that regard, recalling the importance of the good practice principles for governmental transparency in the use of recovery funds produced in cooperation with the OECD; regrets that significant divergences persist at the national level regarding the timeliness and completeness of information on final recipients; calls on the Commission to intensify its efforts to address these shortcomings as part of its ongoing monitoring and control functions; stresses the importance of consistent and complete reporting across all Member States to ensure transparency and accountability; calls on the Ombudsman to maintain its monitoring of the Commission’s efforts to ensure transparency and effective supervision of the RRF; calls further on the Ombudsman to continue informing the budgetary authority periodically about the difficulties encountered in its work on the transparency and accountability of the RRF;

    17. Highlights the fact that, in 2023, following an own-initiative inquiry that revealed that, when individuals seek a review of an access decision, known as a confirmatory request, the Commission misses the deadlines set out in the law in 85 % of cases, the Ombudsman urged the European Commission to promptly address systemic delays in processing access to documents requests; calls for the swift implementation of the Ombudsman’s urgent recommendation for a thorough reassessment to ensure compliance with the deadlines set out in Union law, such as Regulation (EC) No 1049/2001; commends the Ombudsman for its special report to the European Parliament, asking the institution for its formal support in getting the Commission to act on her recommendation; recalls that the Ombudsman discussed the report with Members of the European Parliament in the Committee for Civil Liberties, Justice and Home Affairs in November 2023[9];

    18. Notes with great concern that the Ombudsman receives many  complaints from citizens about extreme delays in gaining access to requested documents; supports the Ombudsman’s views that access delayed is effectively access denied and that administrative processes should be streamlined to ensure that citizens receive access to documents in a timely manner[10];

    19. Notes that the internal auditor carried out a review of the Ombudsman’s risk management framework; notes that the parties agreed on a nine-point action plan to be implemented by the end of 2024; calls on the Ombudsman to inform the discharge authority on progress made in implementing that plan;

    Human resources, equality and staff well-being

    20. Notes an increase of 11 % in the total number of the Ombudsman’s staff from 74 in 2022 to 82 in 2023, mainly due to an increase in the number of contract staff and temporary staff; notes further that, in 2023, 40 officials were employed by the Ombudsman, compared to 39 and 38 in 2022 and 2021 respectively, 33 temporary staff, compared to 28 and 30 in 2022 and 2021 respectively, and 9 contract agents, compared to 7 and 6 in 2022 and 2021 respectively; notes with satisfaction an increase in the share of staff working on the core-business of the Ombudsman (complaints and inquiries), from 40,54 % in 2022 to 42,68 % in 2023; notes with satisfaction that the staff occupation rate increased from 91,8 % in 2022 to 95 % in 2023 and the turnover rate decreased from 9,9 % in 2022 to 5,2 % in 2023;

    21. Regrets that the post of the Secretary-General of the Ombudsman has been vacant for more than two years, namely since 1 September 2022; notes from the Questionnaire that “as a courtesy to the new Ombudsman, who will be elected by the end of 2024, the current Ombudsman decided to leave the post vacant for her successor to decide on the appointment”; calls on the next Ombudsman to make sure that the periods of vacancy of management positions remain as short as possible and are not longer than the time necessary for recruitment of new staff in those positions;

    22. Commends the Ombudsman for its call for expressions of interest for jobs (inquiry officers) which was successfully concluded in 2023 with the establishment of a reserve list of 19 candidates, 6 of them having been recruited the same year; notes that this has allowed the Ombudsman to reduce the time needed for recruitment which has been an issue in the past; notes further that the Ombudsman organised, with the help of EPSO, three internal competitions in 2023, in order to retain in-house talent; acknowledges that such actions help to improve the institution’s efficiency;

    23. Notes that, despite being a small institution, the Ombudsman managed to have 19 nationalities represented in its staff in 2023, as a result of proactive communication and outreach activity, notably through social media and online platforms to advertise vacancies; notes with dissatisfaction, however, an overrepresentation of some nationalities (for example French and Irish) and an underrepresentation of other nationalities (for example Romanian and Spanish); urges the Ombudsman to continue its efforts to achieve a balanced geographical distribution of nationals from all Member States within its staff, in particular at management level, by improving communication, fostering visibility, and enhancing job conditions to attract underrepresented nationalities;

    24. Notes that, in terms of gender balance, the Ombudsman employs more women than men in all categories of staff, in particular at management level, with the women-to-men overall ratio in 2023 remaining the same as in 2022, i.e. 67 % women and 33 % men; encourages the Ombudsman to continue its efforts towards achieving a more balanced gender representation among its staff;

    25. Notes that the Ombudsman makes efforts to ensure the physical and mental well-being of its staff at work and focuses on reinforcing team-spirit; welcomes in this context the  result of the general staff survey conducted in 2023 showing an overall staff satisfaction rate of 87 %, with, in particular, 95 % of the survey participants having responded positively to the question regarding the Ombudsman caring for the wellbeing of its staff, 97 % were satisfied with the Ombudsman’s hybrid and flexible working arrangements and 90 % were satisfied with the equipment and material their employer supplied to them to work remotely; notes with satisfaction that in 2023 the Ombudsman decided to provide ergonomic chairs to all staff who request them;

    26. Acknowledges that the small size of the Ombudsman’s Office allows managers to closely monitor the staff workload and make necessary adjustments, enabling the early detection of potential burnouts; notes that the 2023 staff survey indicated no issues with workload distribution or work-related health problems, and that the European Parliament’s medical service reported no long-term illnesses related to burnout;

    27. Notes with satisfaction that no harassment cases were reported in 2023; acknowledges the efforts made by the Ombudsman to provide a working environment that is free from sexual and psychological harassment, in particular through awareness raising and training; notes with satisfaction that a survey carried out in 2023 in the context of an internal audit on the ethical framework showed that 90 % of staff were aware of the policy and guidelines regarding harassment of any type;

    28. Notes with satisfaction that the Ombudsman welcomed 18 paid trainees in 2023 (the same number as in 2022), one of which was selected following the Ombudsman’s first call aimed at candidates with disabilities; acknowledges that this initiative promotes inclusivity and equal opportunities by providing trainees with valuable experience in the EU institutions;

    Ethical framework and transparency

    29. Welcomes the Ombudsman’s continued efforts to strengthen and raise awareness about the ethical framework of the institution; notes with appreciation that in 2023 the Ombudsman revised the whistleblower policy to strengthen protections for potential whistleblowers, ensure better alignment with data protection standards, enhance confidentiality and support, and incorporate provisions on ethics correspondents; further welcomes the full deployment of the SYSPER ethics tool that allows staff to update declarations (on their conflicts of interest and on their spouses’/partners’ professional activities) and organised an interactive training course entitled ‘Respect and dignity at work and our roles as actors, recipients and bystanders’; welcomes the result of the general staff survey carried out in 2023 confirming high levels of staff awareness about ethical matters; calls for the publication of all high-level meetings of the Ombudsman’s office with external actors, including corporate entities, interest groups and EU agencies, to ensure transparency in decision-making and advocacy efforts;

    30. Notes that the internal audit (report 22/03) on the Ombudsman’s ethical framework was finalised in 2023 with six issued recommendations to be implemented by 31 December 2024; notes from the Questionnaire that four of those recommendations have been fully implemented; invites the Ombudsman to report to the discharge authority on the implementation status of the remaining two recommendations;

    31. Notes that the anti-fraud strategy of the Ombudsman is largely based on the ethical framework in place and the principle of the segregation of duties for financial functions; notes that in 2023 the Ombudsman reviewed and adopted the code of professional standards applicable to staff involved in the control of financial operations setting out the duties and responsibilities in the detection of fraudulent transactions, including the procedure to follow in cases of suspected fraud;

    32. Notes with satisfaction that no cases of conflicts of interest and no cases of whistleblowing were reported in 2023;

    33. Notes from the Questionnaire that the Ombudsman did not formally join the EU transparency register (set up by the Interinstitutional Agreement of 20 May 2021 between the European Parliament, the Council of the European Union and the European Commission on a mandatory transparency register) in order to ensure that she can also look into potential complaints concerning the secretariat of that transparency register; notes, however, that the Ombudsman has aligned its practices on the principles of the transparency register, checking that speakers or interlocutors in events or meetings organised by the Ombudsman are registered therein; welcomes the high degree of transparency achieved by the Ombudsman by the publication on its website of information on inquiries, missions, meetings and events in which the Ombudsman takes part;

    34. Calls on the Ombudsman to introduce a mandatory declaration of financial interests for senior staff, with real-time public access to information regarding potential conflicts of interest, external engagements, and financial assets;

    Buildings

    35. Welcomes the fact that the Ombudsman’s final (after transfers) budget for buildings and associated costs decreased by approx. 15 %, from EUR 1 622 200 in 2022 to EUR 1 373 000 in 2023; notes that the appropriations for rent decreased by 26 %, from EUR 1 177 700 in 2022 to EUR 866 100 in 2023, with a payment execution rate in both years of close to 100 %;

    36. Notes that, following the move of the Ombudsman Brussels’ Office to new facilities provided by the Parliament in 2021, the building was organised as a collaborative workspace with very few individual offices and flexible collaborative meeting facilities; notes with satisfaction that the Ombudsman does not practice hot-desking and that all members of staff have their own desk with ample storage; notes that no changes were made to the offices in 2023 and that a general staff survey conducted in 2023 showed that the majority of staff (56 %) replied positively regarding the physical arrangements in their offices in Brussels;

    37. Recalls that the Ombudsman does not own its own buildings but rents a building in Brussels and office space in Strasbourg; notes with satisfaction that the Havel building in Strasbourg is fully accessible to persons with reduced mobility or other disabilities and strongly regrets that accessibility to the building rented in Brussels needs improvement; calls on the Parliament to improve accessibility to the building rented to the Ombudsman in Brussels;

    Digitalisation, cybersecurity and data protection

    38. Acknowledges the  success of the Ombudsman’s long-standing approach of leveraging integrated systems and resources from other Union institutions, in particular the Parliament and the Commission, in order to optimise budget utilisation and enhance coordination, for example in the area of digitalisation; notes, in this context, the successful implementation of the Commission’s machine translation tools that have been integrated into the Ombudsman’s systems (e.g. the website) in 2023; notes with satisfaction from the Questionnaire that this project has led to a reduction in translation costs estimated at over 30 % per year, as well as to a reduced administrative burden;

    39. Welcomes the full implementation of the qualified electronic signature allowing staff to sign documents in a secure way, as well the use of the Commission’s QSign allowing staff to sign and manage documents, including procurement and contractual documents;

    40. Notes that, since 2023, the Ombudsman has been actively exploring the opportunities that the use of artificial intelligence (AI) could bring; welcomes in this context the Ombudsman’s partnership with the European Commission’s Joint Research Centre to experiment with large language models, and test and evaluate AI use cases; notes further that the Ombudsman purchased several AI tools which have successfully contributed to video content creation; welcomes the adoption by the Ombudsman of internal guidelines to ensure that external AI tools are used in a responsible and transparent manner; encourages the Ombudsman to ensure that staff receives compulsory training on the safe and ethical use of AI tools to enhance their understanding and mitigate potential risks; invites the Ombudsman to keep the discharge authority informed of the progress made in testing and using AI solutions;

    41. Notes that, in terms of IT, the Ombudsman relies on Parliament’s infrastructure and cybersecurity framework and cooperates closely with the Commission concerning the integration and maintenance of the Union’s corporate tools (SYSPER, ABAC, MiPS and ARES) and the use of IT framework contracts; notes that, given that its level of control over the data is limited, the Ombudsman concluded service-level agreements with the institutions concerned to ensure that the handling of personal data complies with the applicable legal framework; notes with satisfaction that the Ombudsman did not encounter any cyberattack in 2023;

    42. Encourages the Ombudsman to work in close cooperation with ENISA (the European Union Agency for Cybersecurity); suggests that regularly updated cybersecurity-related training programmes be offered to all staff within the Ombudsman;

    43. Notes, with regard to the Internal Audit Report 21/03 on the review of the Ombudsman’s Data Protection Framework, that one action remained open in the fourth quarter of 2023 and, with regard to the internal audit report 20/04 on the Ombudsman’s ICT security, that there were seven ongoing actions in 2023; invites the Ombudsman to keep the discharge authority updated as to the progress made in these matters;

    Environment and sustainability

    44. Welcomes the fact that, over the years, the Ombudsman has reduced its environmental footprint, in particular through the digitalisation of its processes, the removal of individual printers, the non-replacement of central processing units when they reach end of life, measures to make events more sustainable and the extensive use of videoconference systems to avoid missions; notes that, in terms of the environmental footprint of its buildings, the Ombudsman relies on the measures taken by the Parliament in its capacity as owner of the buildings; notes with satisfaction that both buildings where the Ombudsman has offices run on 100 % clean energy; welcomes the installation by the Parliament of solar panels, including on the Havel building in Strasbourg in 2024;

    45. Notes that the Ombudsman continued to encourage sustainable mobility in 2023; welcomes, in this sense, the fact that the Ombudsman adopted a new mobility policy that provides for the payment of a flat-rate contribution to staff up to grade AST8/AD8 who use sustainable modes of transport to get to work; notes further from the Questionnaire that the initiative whereby the Ombudsman provided bicycles for staff use during working hours was unsuccessful, as bicycles were hardly used during the trial period;

    Interinstitutional cooperation

    46. Welcomes the financial and administrative savings achieved through inter-institutional cooperation, in particular the wide-range of service-level agreements (SLAs) concluded with the Parliament and the Commission and the participation in interinstitutional procurement procedures; welcomes the formalisation of the collaboration between the Parliament and the Ombudsman in the field of cybersecurity through a revised inter-institutional agreement which provides a framework for the Parliament to continue providing solid cybersecurity support to the Ombudsman; notes further that in 2023 the Ombudsman signed a SLA with EPSO for the organisation of internal competitions;

    47. Commends the Ombudsman for its good collaboration with OLAF, ECA and EPPO which in 2023 took the form of meetings and exchanges of views on, for example, ways to improve the transparency and integrity of Union institutions or the Union’s oversight framework; recalls that the Ombudsman and OLAF have put in place a system to avoid duplication of investigations; notes from the Questionnaire that the Ombudsman and the EDPS cooperate mainly on an ad-hoc and informal basis aiming for a quick and efficient collaboration when needed; encourages the Ombudsman to work closely in cooperation with the other institutions and European Agencies;

    48. Calls on the Ombudsman to establish a formalized annual dialogue with the European Parliament’s CONT and LIBE Committees, ensuring systematic follow-up on institutional transparency, governance reforms and fundamental rights protection;

    49. Recognises the importance of maintaining a high level of exchanges and coordination with the European Network of Ombudsmen (ENO); welcomes the organisation of the ENO annual conference with sessions on topics such as migration, artificial intelligence and ethics in public administration in 2023; notes with satisfaction that, through the query procedure, the Ombudsman assists ENO members in resolving investigations at national and regional level, whereas, in 2023, the Ombudsman concluded five queries originating from five Union Member States; commends the organisation of the ENO annual conference in 2023 as a valuable platform for dialogue on key issues influencing the activities of Ombudsmen across Europe;

    50. Welcomes the fact that the Ombudsman in 2023 continued its close cooperation with relevant European Parliament Committees on important inquiries, either by presenting the work directly in Committee meetings or through information being sent to the Committee Chairs; underlines that the strategic initiatives and inquiries conducted by the Ombudsman are key to improving the transparency and accountability of the Union’s administration;

    Communication

    51. Notes that the overall budget for communication and promotional activities (publications, event organisation, digital communication etc.) increased by 17,20 % from EUR 132 400 in 2022 to EUR 155 200 in 2023;

    52. Welcomes the efforts of and actions taken by the Ombudsman in 2023 to raise citizens’ awareness about its role and the possibility of recourse to it in the event of maladministration by a Union institution; notes in this sense the communication campaigns carried out in 2023 around a series of videos presenting the Ombudsman’s work and explaining three of the key areas of its interventions, an explainer in the form of a scrollable story on the impact of the Ombudsman’s work over time and an access to documents guide; welcomes moreover the organisation of the ‘Award for Good Administration’ ceremony and the participation of the Ombudsman at the EU Open Day in Brussels and Strasbourg, where it hosted targeted stakeholder events with academics and think tanks, and at the European Youth Event in Strasbourg in 2023;

    53. Recognises the efforts undertaken by the Ombudsman to provide transparent information and publish data (including statistics on its caseload) in an informative and user friendly format on the Ombudsman website (although such data are not available in open format); welcomes the publication on the website of a timeline for all inquiries into complaints providing information about past and future milestones in each inquiry;

    °

    ° °

    54. Notes that the Ombudsman has social media accounts on Instagram, LinkedIn, X (ex-Twitter), where the number of followers and the engagement rates continued to grow in 2023; welcomes the participation of the Ombudsman in a pilot project led by the EDPS aimed at bringing Union institutions onto EU Voice and EU Video, which are two free, open-source social media networks, based on Mastodon software, allowing Union institutions to interact with the public by sharing texts, images, videos and podcasts.

    MIL OSI Europe News

  • MIL-OSI Europe: REPORT on the protection of the European Union’s financial interests – combating fraud – annual report 2023 – A10-0049/2025

    Source: European Parliament

    MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

    on the protection of the European Union’s financial interests – combating fraud – annual report 2023

    (2024/2083(INI))

    The European Parliament,

     having regard to Articles 310(6) and 325(5) of the Treaty on the Functioning of the European Union (TFEU),

     having regard to the Commission report of 25 July 2024 entitled ‘35th Annual Report on the protection of the European Union’s financial interests and the fight against fraud – 2023’ (COM(2024)0318) (2023 PIF Report),

     having regard to the European Anti-Fraud Office (OLAF) 2023 annual report[1] and the Activity report of the Supervisory Committee of OLAF – 2023[2],

     having regard to the European Public Prosecutor’s Office (EPPO) 2023 Annual Report published on 1 March 2024,

     having regard to Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget[3] (the Conditionality Regulation),

     having regard to Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law [4] (the Whistleblower Directive) and to the Commission report of 3 July 2024 on its implementation and application (COM(2024)0269),

     having regard to the Commission communication of 5 July 2023 entitled ‘2023 Rule of Law Report – The rule of law situation in the European Union’ (COM(2023)0800), and to the European Parliament resolution of 28 February2024 entitled ‘Report on the Commission’s 2023 Rule of Law report’[5],

     having regard to the Commission’s decision of 16 December 2024 not to lift the measure imposed in application of Article 2(2) of Council Implementing Decision (EU) 2022/2506 of 15 December 2022 on measures for the protection of the Union budget against breaches of the principles of the rule of law in Hungary,

     having regard to the judgments of the Court of Justice of the European Union (CJEU) of 16 February 2022 in Cases C-156/21[6] and C-157/21[7] and to Council Implementing Decision (EU) 2022/2506 of 15 December 2022 on measures for the protection of the Union budget against breaches of the principles of the rule of law in Hungary, all of which refer to the Conditionality Regulation,

     having regard to Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union[8] (the Financial Regulation),

     having regard to Regulation (EU) 2024/1624[9], Regulation (EU) 2024/1620[10] and Directive (EU) 2024/1640[11], all of the European Parliament and of the Council, all adopted on 31 May 2024 and all concerning the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, including through the establishment of the Authority for Anti-Money Laundering and Countering the Financing of Terrorism,

     having regard to Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law[12] (the PIF Directive),

     having regard to the Commission report of 16 September 2022 entitled ‘Second report on the implementation of Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law’ (COM(2022)0466),

     having regard to the Commission report of 3 July 2024 on the implementation and application of Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (COM(2024)0269),

     having regard to Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy[13] (the Common Provisions Regulation),

     having regard to the Commission communication of 24 July 2024 entitled ‘2024 Rule of Law Report – The rule of law situation in the European Union’ (COM(2024)0800),

     having regard to the study entitled ‘Strengthening the fight against organised crime: Assessing the legislative framework’, published in December 2022[14],

     having regard to the study entitled ‘Strengthening the fight against corruption: assessing the legislative and policy framework’, published in January 2023[15],

     having regard to the study entitled ‘Compliance assessment of measures adopted by the Member States to adapt their systems to Council Regulation (EU) 2017/1939 of 12 October 2017 implementing enhanced cooperation on the establishment of the European Public Prosecutor’s Office (‘the EPPO’)’ and its extension, both published in December 2023[16],

     having regard to the joint communication from the Commission and the High Representative of the Union for Foreign Affairs and Security Policy of 3 May 2023 on the fight against corruption (JOIN(2023)0012) and to the Commission proposal of 3 May 2023 for a directive of the European Parliament and of the Council on combating corruption, replacing Council Framework Decision 2003/568/JHA and the Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union and amending Directive (EU) 2017/1371 of the European Parliament and of the Council (COM(2023)0234),

     having regard to the joint Europol-OLAF report of 6 June 2023 entitled ‘Assessing the Threats to the NextGenerationEU (NGEU) Fund’,

     having regard to the European Ombudsman’s closing note of 12 September 2023 on the Strategic Initiative concerning the transparency and accountability of the Recovery and Resilience Facility in relation to Case SI/6/2021/PVV, opened on 24 February 2022,

     having regard to the European Court of Auditors (ECA) report entitled ‘Our activities in 2023’, published on 9 October 2024,

     having regard to ECA Review 04/2023 of 6 July 2023 entitled ‘Digitalising the management of EU funds’,

     having regard to Special Eurobarometer 534 entitled ‘Citizens’ attitudes towards corruption in the EU in 2023’[17],

     having regard to ECA special report 06/2023 of 13 March 2023 entitled ‘Conflict of interest in EU cohesion and agricultural spending – Framework in place but gaps in transparency and detection measures’,

     having regard to Regulation (EU) 2021/785 of the European Parliament and of the Council of 29 April 2021 establishing the Union Anti-Fraud Programme and repealing Regulation (EU) No 250/2014[18],

     having regard to its resolution of 18 January 2024 on the protection of the European Union’s financial interests – combating fraud – annual report 2022[19],

     having regard to Rule 55 of its Rules of Procedure,

     having regard to the report of the Committee on Budgetary Control (A10-0049/2025),

    A. whereas, in line with the obligation laid down in Article 325(5) TFEU, each year, the Commission submits to the European Parliament and to the Council a report drafted in cooperation with the Member States on the measures taken for the implementation of this article (known as PIF reports);

    B. whereas PIF reports are based mainly on information provided by the Member States, including data on irregularities and fraud detected, via the Irregularity Management System (IMS), and on data extracted from the Commission’s accounting system (ABAC);

    C. whereas effective measures to protect the EU’s financial interests at EU level have to be implemented on the basis of data-based knowledge of the specific situation in each Member State, particularly in cases involving complex criminal activity;

    D. whereas the number of irregularities detected and reported demonstrates the results of Member States’ efforts to counter illegal activities in this area and is not to be interpreted, by itself, as an indication of the level of mismanagement or fraud in the Member States;

    E. whereas the links between irregularities’ occurrence, their detection and the reporting level require a wider overall assessment;

    F. whereas sound management of public resources and protecting the EU’s financial interests across all EU policies should be key to increasing citizens’ confidence by ensuring the proper and effective use of taxpayers’ money;

    G. whereas protecting the EU budget involves multiple actors at various levels who can only achieve their mandate through a structured network of relationships and coordination within the anti-fraud architecture (AFA)[20];

    H. whereas the diversity of legal and administrative systems in the Member States and their varying levels of digitalisation need to be adequately addressed with the creation of more unified, interoperable and comparable administrative and reporting systems in the EU in order to effectively prevent and counter fraud, corruption, irregularities and other infringements;

    I. whereas solid cooperation between authorities conducting administrative investigations and those conducting criminal investigations at both EU and Member State levels should be encouraged;

    J. whereas the Early Detection and Exclusion System (EDES) and ARACHNE are effective tools to protect the EU budget from risks of insolvency, negligence, fraud or irregularity committed by private actors, in the case of the EDES, and via a data-mining and risk-scoring approach, in the case of ARACHNE;

    K. whereas criminal networks operating in the EU are fully embracing the entire range of cutting-edge information technology, including artificial intelligence (AI), to facilitate their criminal activities, posing an even more complex threat to the EU budget and a new challenge for law enforcement and requiring the AFA to fast-track its exploration of AI use in the fight against fraud;

    L. whereas respect for the values on which the EU is founded and for fundamental rights, as well as compliance with the Charter of Fundamental Rights of the European Union, are prerequisites for accessing EU funding;

    M. whereas the rule of law conditionality mechanism applies across the entire EU budget as a prerequisite for accessing all EU funds and allows measures to be taken in cases of breaches of the rule of law principles that affect or seriously risk affecting the sound financial management of the EU budget or the EU’s financial interests;

    N. whereas Article 22 of Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility[21] (the RRF Regulation) contains provisions concerning the protection of the EU’s financial interests;

    General remarks on PIF reporting and on major threats

    1. Welcomes the 2023 PIF Report and its analyses on the relevant findings, and endorses its recommendations;

    2. Shares the view that effective protection of the Union’s financial interests requires the acceleration of the digitalisation that facilitates knowledge sharing, data accessibility and data processing and that would enhance the governance of the overall AFA; maintains that both the EU and national authorities should intensify the use of digital tools with a view to facilitating cooperation;

    3. Reiterates that a more measurable and results-oriented governance of the activities of the AFA’s many components is key both to effectively protecting the Union’s financial interests and to assessing the AFA’s efficiency;

    4. Recalls that solid cooperation between the administrative and judicial authorities conducting investigations at both EU and Member State levels is essential; reiterates its concerns over the still suboptimal situation, in particular as regards the detection and reporting of suspected fraud and irregularities and their follow-up, in which there are marked differences between Member States; encourages the Member States, therefore, to take a proactive approach to protecting the Union’s financial interests and to enhance the exchange of information between their national authorities and with EU bodies and agencies, including in order to identify and address emerging risks and fraud trends in a timely manner; underlines the fact that the fight against fraud requires a holistic and comprehensive approach, covering all stages of the anti-fraud cycle and reflecting the multiple, interconnected and interdependent actors and processes in place for the protection of the financial interests of the Union;

    5. Notes that the overall number of cases of fraud and irregularities reported by the competent EU and national authorities increased significantly, by 9 %, in 2023 (13 563) compared to 2022 (12 455); regrets the fact that this is an all-time high and is the continuation of a growing trend over the last five years; observes, further, that the overall financing concerned in relation to these cases in 2023 (EUR 1.90 billion) was markedly higher than in 2022 (EUR 1.77 billion), having increased by 7.3 %; acknowledges that the multiannual cycle of implementation of numerous programmes makes comparisons based on a five-year average more appropriate than year-to-year comparisons for identifying real-time situations and obtaining reliable analysis of trends and patterns; appreciates, accordingly, that the 2023 PIF Report refers to the results of the 2019-2023 period; observes that the rise in the number of irregularities and in funding that achieves no positive results highlights the need to correlate budgets with the performance indicators of the competent institutions;

    6. Is concerned by the overall scenario depicted by the multiannual analysis in the 2023 PIF Report; emphasises that the current situation justifies the efforts made to ensure more effective deployment of adequate resources and their more efficient use, which requires better governance and cooperation; underlines that fraud, corruption and violations of democracy, justice and the rule of law are deeply interconnected and cannot be tackled in isolation; calls on the Commissioners on budget, fraud and public administration and on democracy, justice and the rule of law to work closely and immediately on launching initiatives to make the actions and the results of the AFA measurable and more tangible and to present them to Parliament, in line with the commitment made at the confirmation hearings; suggests that stronger synergies be created between the Commission’s Directorate-General for Budget and other Commission directorates-general working on the rule of law and the protection of other EU values, particularly the Directorate-General for Justice and Consumers, the Directorate-General for Employment, Social Affairs and Inclusion and the Directorate-General for Regional and Urban Policy, to ensure that all the departments work together, rather than in silos, to address these systemic challenges more effectively;

    7. Reiterates the call for a holistic approach in PIF reports, which are also considered an AFA governance tool, in order to provide a comprehensive overview of the synergies between all the relevant actors, identify best practices and address shortcomings; is aware that, as emphasised in the 2023 PIF Report, the operational protection of the Union’s financial interests from fraud, irregularities and other illicit activities is entrusted to national authorities, OLAF and the EPPO, and welcomes the integration of OLAF and EPPO findings in the 2023 PIF Report; asks for a deeper analysis of the interaction between the AFA components, and for the introduction of measures to increase the efficiency of the competent institutions with a view to reducing fraud and irregularities; calls for the further improvement of this holistic approach to provide a clearer, more complete and more concrete picture of the overall state of play of the protection of the Union’s financial interests, encompassing the entirety of anti-fraud action at both national and EU levels;

    8. Welcomes OLAF’s investigative performance, in particular the increased number of recommendations issued (309 compared to 275 in 2022) and the overall amount recommended for financial recovery (EUR 1 043.8 million compared to EUR 426.8 million in 2022) against a stable number of cases opened (190 in 2023 and 192 in 2022) and concluded (265 in 2023 and 256 in 2022); points out, in particular, that over the 2019-2023 period, more than 88 % of the irregularities identified as potentially fraudulent and related to expenditure disbursed under direct management were detected following OLAF investigations; regrets that the long duration of the investigations can have a negative impact regarding the consequential late launching of remedial measures; reiterates its request to receive comprehensive and adequately detailed figures on the amounts effectively recovered by the Commission on the grounds of the financial recommendations issued by OLAF; calls on the Commission also to integrate in the next PIF reports ad hoc sections on OLAF in order to develop a more granular analysis and reporting of its activities and of the financial recoveries carried out;

    9. Welcomes the way in which the EPPO, operationally active since June 2021, has developed and increased its activities, which is well-reflected in the numbers of opened investigations (1 371 compared to 865 in 2022), of overall currently active investigations (1 927 compared to 1 117 in 2022) and of indictments (139 compared to 87 in 2022); appreciates the level of detail in EPPO reporting, which offers relevant information on many trends and on the situation in the participating Member States; calls for greater EPPO efficiency, with this being reflected in the amounts recovered and not just in the number of investigations;

    10. Stresses the added value that EU bodies bring to the protection of the financial interests of the Union and the fight against fraud, especially when it comes to cross-border crime, as shown by the operational results of the EPPO and OLAF in 2023 too; reiterates its call for all relevant EU actors involved in the fight against fraud to be guaranteed adequate resources and, in this regard, reminds the Commission and the Council that every euro spent on investigation and anti-fraud action returns to the EU budget;

    11. Is concerned that the substantial financial loss of value added tax (VAT) fraud reported by the EPPO is having a detrimental effect on the national budgets of the Member States while simultaneously threatening fair taxation and fair competition between businesses in the single market; underlines the fact that VAT is an important resource for the Union’s budget too; deems it appropriate to take into account the complexity of the underlying provisions on the system of own resources of the Union when quantifying the financial impact of the EPPO’s activities[22]; points out the concerning number of investigations into the recovery and resilience programmes (233) and the estimated financial loss (EUR 1.86 billion); calls, therefore, for adequate measures to be taken at both national and EU levels;

    12. Calls on the Commission to develop and implement solutions allowing a follow-up to OLAF recommendations and EPPO prosecutions, their analysis and the measurability of the actual impact of their actions on the protection of the Union’s budget in terms of recovery of both mismanaged funds and of uncollected resources, with a view to providing additional justification for results-oriented policymaking; calls on the Commission to notify Parliament of the outcomes of EPPO prosecutions;

    13. States that communication and transparency are essential to address fraud and corruption; emphasises the importance of engaging civil society, the media and investigative journalism to enhance awareness; underlines the central role played by the media and investigative journalism in the fight against fraud, corruption, conflicts of interest and other misuse of public funds; considers that it is essential to safeguard the media from political pressure and influence to protect its independence and its role as a watchdog of democracy and the sound management of public funds;

    14. Underlines that transparency plays an important role in the management of public funds; encourages the Commission and the Member States to maximise transparency in the use of funds, including with regard to information about final beneficiaries;

    15. Underlines the importance of the role played by public authorities in fostering a zero-tolerance culture with regard to fraud and states that communication and transparency are essential to address fraud and corruption; emphasises the importance of engaging civil society, the private sector, the media and investigative journalism to enhance awareness; encourages the Commission to provide support to these relevant actors in the form of training programmes, funding and any other measures required to ensure their independence from external influence and from unlawful state surveillance, intimidation and attempts to undermine their legitimacy, in line with EU fundamental rights and the rule of law; invites the Commission to launch an EU-wide public awareness campaign on the risks of fake news, misinformation and deepfake content in fraud cases affecting EU-funded projects;

    16. Is concerned about the EPPO’s and Europol’s clear warning on the increasing presence of groups of organised criminals behind the most relevant cases of cross-border fraud; notes that the EPPO’s annual report indicates 209 investigated offences concerning PIF-focused criminal organisations in its active investigations up to the end of 2023; understands that organised crime affects Union resources substantially and that the scale of fraud affecting the financial interests of the Union, in particular on the revenue side of the budget, can only be explained by the heavy involvement of serious organised criminal groups; is aware that the current analysis and reporting tools do not allow its quantification in a way that is satisfactory for evaluating the effectiveness or the shortcomings of the measures and policies in place; calls on the Commission to swiftly launch all necessary actions to address the analysis and reporting issue;

    17. Maintains that the fact that the relevant EU legislation has not been transposed efficiently into the national legislation of many Member States and the fact that the Member States’ national laws are not harmonised give organised criminal groups opportunities to conduct a number of illegal cross-border activities in areas affecting the Union’s financial interests; reiterates, therefore, its previous calls for the revision of Council Framework Decision 2008/841/JHA on the fight against organised crime[23] and for the introduction of a new common definition of organised crime, taking into account, in particular, the use of corruption, violence, threat or intimidation to obtain control of economic activities or procurement;

    18. Points out the results of the 2023 Eurobarometer survey on ‘Citizens’ attitudes towards corruption in the EU in 2023’, showing that corruption is a serious concern for EU citizens and businesses in the EU; maintains that high-level corruption, including in EU institutions, not only affects the Union’s financial interests and the EU economy as a whole, but also undermines citizens’ trust in democratic institutions, both in the EU and in the Member States; underlines that organised criminal groups are increasingly using corruption to infiltrate public administrations and gain economic advantages;

    19. Points out that, in relation to corruption cases, the EPPO reported 131 investigated offences up to the end of 2023 (there were 87 cases in 2022) and that, over the years 2019-2023, 65 cases were reported to the Commission via IMS[24] by 11 countries, and that the reported irregular amounts linked to such cases come to about EUR 50.5 million; calls on the Commission to request that the EPPO inform Parliament of how much of that EUR 50.5 million has been recovered;

    20. Acknowledges that anti-corruption strategies are in place in the Member States; calls for an evaluation and a periodical revision of these strategies; emphasises the importance of taking into account and fully addressing country-specific recommendations relating to the fight against corruption;

    21. Acknowledges the Commission’s efforts to prevent and address cases of conflict of interest in the management of the Union’s financial resources; observes that, in the 2019-2023 period, 419 cases were reported via the IMS related to conflict of interest (there were 375 in 2018-2022), involving in total about EUR 112 million; stresses that the ECA has indicated in its audit work[25] that the main source of information on conflict of interest is the IMS and that the quantity and quality of the data recorded in the IMS varies between Member States; underlines that where Member States consider a conflict of interest to be a minor component in a wider fraud case, they do not report such cases as relating to conflicts of interest; calls on the Commission to adopt initiatives necessary to ensure consistent and adequately detailed reporting in the IMS of the above situations; calls for the provisions on conflicts of interest to be applied in a way that ensures legal certainty, be based on a clear and proportionate assessment of the risks and allow practical application by the competent authorities;

    Revenue

    22. Observes that, in 2023, the overall number of fraudulent and non-fraudulent irregularities related to traditional own resources (TOR) (5 118 compared to 4 661 in 2022) was 10 % higher than the five-year average (2019-2023), but that the amount involved decreased by 12 % to EUR 478 million (compared to EUR 783 million bat the end of2022); regrets that while the data show improved recovery for non-fraudulent cases (82 %), the recovery rate for fraudulent cases remains unchanged at 25 %, which is still low and is distributed unevenly across the Member States;

    23. Points out that, in 2023, the Commission considered that in only five of the new write-off reports submitted to it by the Member States had it been satisfactorily demonstrated that TOR had been lost for reasons not imputable to the Member States in question and that the latter were not financially responsible for the loss; notes, by contrast, that in 81 cases, amounting to almost EUR 69 million, the Commission considered that the Member States had not satisfactorily demonstrated that TOR had been lost for reasons not imputable to them and that they were therefore financially responsible for the loss; concludes, therefore, that there is actionable room for improvement in the collection of TOR by the Member States;

    24  Underlines that it is essential for Member States to live up to their responsibility to collect TOR in order to ensure that the burden of financing EU expenditure is shared fairly among the Member States and maintain a level playing field for economic actors in the single market; calls on the Member States to step up their efforts to improve the effectiveness of their national administrations’ activity in the field of recovery, following the detection of irregularities and fraud relating to VAT, in order to increase the amount of TOR made available to the EU budget; acknowledges that the VAT compliance gap relates to more than just fraud and evasion, but also covers VAT lost as a result of insolvencies, bankruptcies, administrative errors and legal tax optimisation; believes, however, that VAT fraud, such as missing trader intra-Community fraud, contributes meaningfully to VAT non-compliance and reiterates its call for the issue to be addressed through digital means, the fraud-proofing of VAT rules and stronger cooperation between national tax authorities and the competent EU investigative bodies;

    25. Acknowledges the current legal framework relating to cooperation with OLAF, the EPPO and Eurofisc; calls on the Commission to speed up the process of revising the current legal framework to provide a clear legal basis for direct cooperation between Eurofisc and the EPPO; encourages OLAF to maximise the possibilities offered by mutual administrative assistance practices to detect and identify customs fraud and related VAT fraud, as well as to report such cases to the EPPO without delay; stresses that, in 2023, the EPPO identified VAT fraud in about 20 % of its active cases (873 cases), making this the second most frequent type of crime after non-procurement expenditure fraud (1 586 cases); is concerned by the increasing participation of groups of organised criminals in VAT fraud operations and by the identified connections between this kind of fraud and other kinds of very serious crimes, such as money laundering;

    26. Reiterates its call on the Commission to reconsider the threshold of EUR 10 million set in the PIF Directive, which has a major impact on the EPPO’s activities in VAT fraud cases; maintains that different interpretations of the methodologies for calculating this threshold make the situation unclear; emphasises that the current threshold limits deterrence and allows perpetrators to seek out the weakest jurisdiction to elude the EPPO’s intervention; believes that the revision of the PIF Directive should either remove the threshold or substantially lower it; calls on the Commission, in the meantime, to provide adequate guidance on the calculation method for cases prior to the amendment of the PIF Directive;

    27. Stresses the importance of effective and efficient cooperation between OLAF and the EPPO in this specific revenue sector and maintains that adequate detection and data transmission by OLAF to the EPPO could increase the collection of VAT and customs revenue for the EU budget, and would help avoid any overlap between the activities of the two offices;

    Expenditure

    28. Is concerned by the high levels of fraud and irregularities detected, both in 2023 and in 2022, under the common agricultural policy, both in rural development and in support for agriculture; remarks that the data confirm patterns and risks identified in previous years; observes that, during the 2019-2023 period, fraudulent irregularities reported for rural development increased, mainly owing to a rising number of irregularities detected for the 2014-2020 programming period; notes that during the 2019-2023 period, the number of non-fraudulent rural development irregularities continuously increased in line with the implementation of the programmes;

    29. Observes that in cohesion policy the number and financial amounts of non-fraudulent irregularities reported for the 2014-2020 programming period are much lower than those reported during the first 10 years of implementation of the 2007-2013 programming period; points out that the fraud detection rate[26] (0.53 %) for the 2014-2020 programming period is similar to the rate for the 2007-2013 programming period, while the irregularity detection rate (0.67 %) is much lower than the rate recorded for the 2007-2013 programming period (2.5 %); notes that individual irregularities involving large financial amounts have a substantial impact on the fraud detection rate; calls for further clarification of the correlation between the fraud detection rate and the occurrence of fraud;

    30. Welcomes OLAF’s analytical report entitled ‘Fraud and irregularities by areas of the cohesion policy – comparing risks’, which refers to information from Member States for the 2014-2020 programming period up until December 2023 and identifies areas particularly exposed to fraud risk (such as investments for the environment, climate change and the transition to a low carbon economy, research, development and innovation); remarks that the largest financial amounts in fraud cases were in environmental protection and research, technology development and innovation;

    31. Reiterates its concern over the lengthy administrative procedures for dealing with the fraudulent cases reported; points out that, on average, during the 2019-2023 period, under the common agricultural policy, nearly four years were required from the start of an irregularity to arrive at a suspicion of fraudulent activity, and nearly three more years to close the case after its being reported to the Commission; highlights that, for cohesion, on average and during the 2014-2020 period, it took about a year and a half to arrive at a suspicion that a fraudulent irregularity had been committed and more than two years to close the case after its being reported to the Commission; asks the Commission to intensify dialogue with, and provide advice to, the Member State authorities to reduce the length of administrative procedures;

    32. Observes that, for direct management between 2019 and 2023, OLAF was mentioned as the source of detection of fraudulent irregularities for 88.4 % of recovery items, corresponding to 92.1 % of total recovery amounts; asks the Commission to provide clear information on the data and on the actions taken to enhance swift recovery, including data on overall recovery levels for fraudulent and non-fraudulent irregularities;

    33. Emphasises that when, despite preventive measures, fraudulent or non-fraudulent irregularities are detected, recovery is the measure that protects the Union’s financial interests, allowing for the correct implementation of EU policies and for the refunding of disbursed expenditure that is non-compliant with the funding requirements; stresses the findings of ECA special report 7/2024[27] when referring to the 2014-2020 period, for which the reported irregular expenditure was EUR 14 billion, which is to be refunded via recovery; stresses the need to speed up the recovery process by establishing clear deadlines and imposing penalties for delays, so that funds are returned to the EU budget as quickly as possible; calls on the Commission to propose adequate measures to provide complete information on irregular expenditure and the associated corrective measures taken;

    34. Stresses the importance of follow-up measures after the necessary corrective actions have been taken, with a view to learning from cases of fraud and improving procedures to prevent similar cases from occurring in the future; considers it important, in this regard, that the Member States thoroughly follow up on cases by analysing the enabling factors behind fraud and assessing the need to revise their management and control systems accordingly;

    35. Understands that, following a lack of support in the Council for its initiatives in 2004 and 2014, the Commission is not willing to put forward another legislative proposal for mutual administrative assistance in the areas of EU spending that do not currently provide for this practice; encourages the Commission to take advantage of the revision of the OLAF Regulation[28], which already provides OLAF with an enhanced mandate for the coordination of Member States’ actions in order to further develop the current provisions with a view to filling this gap;

    36. Notes that civil society organisations are an essential component of a vibrant democratic society, ensuring the broad coverage of diverse views in public debates; recognises that these organisations may receive Union funds to support their work in contributing to democratic dialogue and public engagement; emphasises that transparency in stakeholder meetings is fundamental to democratic integrity and should apply equally to all entities engaging with EU institutions; stresses that clear documentation and disclosure of such interactions strengthens public trust and democratic accountability; stresses that lobbying should be transparent, with full disclosure of all parties involved; takes notes of the allegations that the Commission subsidises NGOs to influence Members of the European Parliament; stresses that, if their existence is confirmed, such practices could distort policy discussions and contravene the principle of separation of powers and should therefore be ended; calls on the ECA to audit the programmes concerned and give its recommendations; expects the future ECA report to bring clarity on these issues; recalls that the ECA asked, in special report 05/2024[29], for more efforts to be made to improve checks on the ground; notes with concern the ECA’s observation that lobbyists can choose to which category they belong, regardless of their legal form, to avoid disclosing financial information; notes that the EU is one of the largest global funders of civil society organisations; underlines the need for the EU Transparency Register Secretariat to enhance its systematic checks of the self-declarations of entities declaring themselves to be ‘NGOs, platforms, networks and similar’; observes that such systematic checks could be based on a set of criteria, including non-profit status, objectives relating to public benefit, and independence, to strengthen the trust in all entities registered in the EU Transparency Register, and should be supported by robust requirements for accountability and transparency;

    37. Considers that when assessing delivery models for EU expenditure, the susceptibility of the various options to fraud and other misuse should be taken into account; calls on the Commission to ensure that the lessons learnt from the design and implementation of the RRF, including the recommendations addressed to it by the ECA and Parliament, are taken into account in future EU funding instruments, notably the post-2027 multiannual financial framework (MFF); underlines that the shortcomings identified in the implementation of the RRF, including risks of fraud, double funding, and lack of transparency, must serve as a lesson for future EU financial frameworks; opposes any replication of the RRF model in its current form and stresses that any future performance-based funding must be accompanied by significantly stronger safeguards, transparency requirements and fraud prevention mechanisms to ensure the sound management of EU funds;

    NextGenerationEU (NGEU) and the Recovery and Resilience Facility (RRF)

    38. Appreciates the efforts made by the Commission in the revision of the 27 recovery and resilience plans (RRPs) to adjust to the energy market disruptions following Russia’s full-scale invasion of Ukraine; notes that the integration into the RRPs of REPowerEU is expected to contribute to reducing dependence on Russian fossil fuels and increasing European self-sufficiency;

    39. Recalls, nevertheless, that delays can be observed in the implementation of the RRF and calls on the Commission to remain vigilant, in particular towards the end of the RRF life cycle, in order to ensure that Member States adequately protect the financial interests of the EU and that EU taxpayers’ money is spent appropriately;

    40. Underlines the importance of robust management and control systems in preventing fraud as they have the effect of deterring criminals from attempting to defraud public authorities; expresses concerns about the ECA’s repeated observations pointing to persistent weaknesses in the implementation of Member State control systems, as this poses risks to the availability of complete and accurate data underlying payment requests, access to those requests for control purposes, and the effective functioning of Member State control systems to protect the EU’s financial interests; regrets that in several Member States, the control systems were not fully functional when the national RRPs started to be implemented, and underlines that such issues pose risks to the regularity of RRF payments and to the protection of the EU’s financial interests; calls on the Commission to ensure that the Member States remedy the inadequacies identified in their control frameworks without delay, including by implementing the recommendations addressed to it by the ECA;

    41. Observes that the Commission’s control framework for the RRF relies primarily on the responsibility of the Member States to protect the EU’s financial interests; calls on the Commission to maintain a high level of attention to the fulfilment by the Member States of the specific audit and control milestones added to those RRPs which had lacked robustness and to continue efforts to close accountability gaps; takes notes of the actions launched by the Commission following the ECA’s recommendations on the identifiable weaknesses of some Member States’ control and reporting systems; urges the Commission to take decisive and swift action whenever necessary and to make full use of the provisions of the RRF Regulation if deficiencies persist in the control systems of Member States;

    42. Notes with grave concern that ECA special report 14/2024 found that the climate impact of green spending under the RRF could have been overestimated by up to EUR 34.5 billion, with some projects having minimal impact on the energy transition or even causing environmental harm while also increasing the risk of fraud;

    43. Calls for the establishment of clear, measurable criteria for green investments under the EU budget and the RRF to ensure that only projects with significant and proven environmental and economic benefits receive funding, thereby enhancing accountability and long-term sustainability while reducing the risk of fraud;

    44. Observes that, for the RRF in 2023, the 2023 PIF Report indicates the number of cases of suspected fraud reported by the Commission (15) and the number of audits (13, compared with 16 carried out in 2022), but it does not include the concerningly high number of EPPO investigations (233 investigations referred to recovery and resilience programmes, with an estimated financial loss of EUR 1.86 billion); is concerned by a possible increase in the number of cases of fraud, corruption, double funding and conflicts of interest in the coming years and urges the Commission and the Member States to act swiftly in order to ensure the sound management and fair distribution of RRF funds;

    45. Calls on the Commission to introduce mandatory fraud reporting via the IMS for all RRF-related cases, ensuring that irregularities and fraud affecting RRF funds are systematically recorded and monitored; notes with concern the lack of transparency in reporting fraud linked to RRF funds and insists that all Member States comply with standardised reporting obligations;

    46. Asks OLAF to continue its risk analysis, which, in 2023, was made available to Member States along with an updated version of the ‘RRF risk framework’, and with the training and seminars for Member State authorities; endorses the use of the IMS for reporting RRF irregularities; reiterates its call on the Commission, on the specialised EU agencies and bodies, as well as on Member States, to actively cooperate and interact to ensure the protection of the EU’s financial interests when implementing the NGEU;

    47. Observes that, as part of the Guidance on RRPs, the Commission has adopted[30] Annex IV on the framework for reduction and recoveries under the RRF; understands that the reduction of a payment is feasible when there are still payments to be effected; recalls that the RRF ends in 2026; points out that recovery is only to be launched whenever no further instalments remain; is concerned by the fact that this recovery procedure, borrowed from the model for implementing cohesion funds, has proved to be extremely ineffective and was abandoned in the current MFF; strongly regrets the fact that by the end of 2023 there were no recovery orders in ABAC concerning the RRF, and that there is still no obligation for Member States to report irregularities related to the RRF via the IMS;

    48. Reiterates that transparency plays a vital role in exposing fraudulent schemes and discouraging fraudsters; reiterates its dissatisfaction with the interpretation endorsed by the Commission of the concept of ‘final recipient’ under the RRF; rejects the Commission’s incomplete and misleading interpretation[31]; remarks that, even according to the Commission guidelines[32], the ‘final recipient’ is the ‘last entity’ that receives funds for an RRF measure, and that any initial or intermediary recipient of funding, such as ministries or agencies operating merely as distributors of the funds, should not be considered to be the ‘last entity’; asks the Commission again to request that the Member States provide information on the ‘final recipient’ or ‘last entity’ and not to accept from Member States any information on ‘second-level recipients’ that is not in line with the agreement between the co-legislators; calls on the Commission to review its guidance by providing cases and examples that can clarify the provision and be a solid term of reference for the national authorities, in such a way as to endorse an adequate transparency level and a homogeneous interpretation across all the Member States; stresses that, should the Commission continue to refuse to ensure full transparency, Parliament must consider all available measures to enforce compliance;

    49. Is concerned by the ECA’s opinion[33] on the increasing risk of EU funds being spent twice on the same measure and handed out twice for the same action; understands that corresponding measures in similar areas, such as transport and energy infrastructure, are financed from both the EU budget and the RRF, because the EU’s pandemic recovery fund finances actions similar to those covered by standard EU programmes; acknowledges that complementarity between the RRF and other EU instruments is allowed, but observes that this could result in delivering milestones that are fully financed by funds other than the RRF, because the RRF is not linked to the reimbursement of costs effectively incurred, but rather rewards the fulfilment of milestones and targets; emphasises that the several layers of governance, the fragmented IT landscape and the limited exchanges of data or use of data-mining tools such as ARACHNE, prevent the detection of double funding, and therefore the control mechanisms in place may be insufficient to properly mitigate this increased risk; maintains that the absence of direct access to the full list of RRF final recipients limits the Commission’s capacity to detect potential cases of double funding; believes that the precaution adopted by some Member States of avoiding combining the RRF with other EU instruments contributes to mitigating the risk of double funding; calls on the Commission to increase its controls in this regard;

    50. Observes that Member States may include measures in their RRPs with no estimated costs or estimated costs of zero[34]; points out also that these ‘cost-free’ milestones are the main term of reference for assessing the correct use of RRF resources for their intended purposes; understands that the payments for these ‘cost-free’ or ‘zero-cost’ milestones are released following the milestones’ achievement, irrespective of the cost sustained, in line with the ‘financing not linked to cost’ approach under the RRF; observes, however, that such milestones make it impossible to verify the sound management of paid RRF resources, because such resources are disbursed in connection with a milestone for which they have not been deployed; calls on the Commission to reconsider its assumption that a ‘zero-cost’ measure cannot induce double funding, irrespective of whether other EU funds are used to implement it; strongly calls on the Commission to strengthen controls on ‘zero-cost’ measures and to give guidance to the Member States on how to address the financial design of the measures concerned in order to prevent such risk;

    51. Reiterates its calls on the Commission to maintain adequate ex post audit procedures and to pay close attention to the risk of reversal after payment for the achievement of targets previously audited and assessed as satisfactorily fulfilled;

    52. Follows up on the Ombudsman’s strategic initiative, launched in February 2022 and closed in September 2023, conducted on the transparency and accountability of the RRF, whose results it fully endorses; welcomes the ongoing dialogue between the Commission and the Ombudsman to address the suboptimal situations detected, in particular concerning the scoreboard and the proactive publication of documents related to the RRF;

    Digitalisation and transparency to enhance the fight against fraud

    53. Welcomes the political agreement reached on the proposed recast text of the Financial Regulation; believes that extending the scope of EDES to include shared management, and the adoption of a legal basis to use ARACHNE as a model for an EU-wide data-mining and risk-scoring tool, will strengthen the protection of the EU’s financial interests; recalls the calls made in previous reports to ensure that all Member States make use of data-mining tools, especially ARACHNE, to ensure timely and diligent reporting standards;

    54. Shares the view that the IMS, the system through which Member States report to the Commission on irregularities and fraud affecting the EU budget, has potential for greater interoperability with other corporate tools of the Commission, such as ARACHNE and EDES, and with digital tools in Member States; asks to be informed, following the recast of the Financial Regulation, on the progress of the EDES-IMS interface and about the possible use of IMS data within the data-mining and risk-scoring tool (ARACHNE);

    55. Reiterates its call for increased interoperability between data systems and for the harmonisation of reporting, monitoring and auditing in the Union; is aware of the crosscutting nature of interoperability and appreciates the adoption of the Interoperable Europe Act[35];

    56. Underlines the findings of ECA Review 4/2023 of 6 July 2023 on digitalising the management of EU funds; recalls the positive effects of digitalisation on prevention and detection of fraud and irregularities, as well as on the management, control and auditing of EU funds, by allowing easier and quicker access to data and remote cross-checks, thereby limiting costs by reducing the need for controls and on-the-spot checks;

    57. Recognises that taking advantage of a real-time and data-driven economy has significant benefits for the protection of the Union’s financial interests, while reducing the administrative burden on public authorities and businesses operating and trading across borders within the EU; calls for the EU and the Member States to improve the effectiveness of data sharing by creating a digital ecosystem allowing for the seamless, real-time and secure movement of standardised, structured and machine-readable data between businesses and public authorities, in particular national tax administrations, with a view to limiting possibilities for committing fraud and tax evasion;

    58. Shares the view that digitalisation should be at the core of every anti-fraud strategy, and in particular that it should be integrated into national anti-fraud strategies to allow coordination between its constituent parts and for the threats posed by new technologies to be factored in;

    59. Believes that digitalisation offers opportunities for tangible improvements to the governance of the anti-fraud network and that by facilitating communication and accessibility it helps to improve reporting, thereby allowing for a better understanding of the obstacles that persist and a more timely and comprehensive response by decision-makers and co-legislators; welcomes the fact that over half of the Member States have taken steps to identify and address skills gaps in digitalisation, in particular a lack of information and access to data on digitalisation; encourages the Member States and actors in the AFA to continue addressing skills gaps through measures involving, inter alia, knowledge sharing, training and the broadening of know-how and skills in the field of digitalisation;

    60. Welcomes the efforts of many components of the AFA in assessing and further developing the options offered by AI and machine learning in identifying and detecting irregularities and pursuing efficiency gains in both analysis and classic administrative tasks; reiterates that human assessment must remain the pivotal characteristic of every process; adds that AI has the potential to be a game changer in the fight against fraud, allowing the rapid analysis of large data sets, as well as enhancing fraud detection and identification of fraud patterns; recalls that the successful use of AI relies on effective collaboration between all stakeholders and on the availability of high quality data, underpinned by the effective use of ARACHNE; urges the Commission to work towards developing AI in Europe so as to uphold data sovereignty and ensure robust data protection, aligning with the principles outlined in the AI Act[36] and the General Data Protection Regulation[37] (GDPR); calls on all anti-fraud actors to strengthen their cooperation to leverage the use of AI effectively and responsibly in the fight against fraud;

    61. Recognises the growing risk of AI-generated content being used to manipulate procurement processes, financial transactions and evidence in fraud investigations; calls on the Commission to prioritise research and policy measures to combat fraudulent activities enabled by artificial intelligence, including deepfake technology and AI-driven disinformation campaigns that could compromise financial and anti-fraud mechanisms; calls on the Commission to propose stricter legal provisions and penalties for entities found to be using AI to commit or facilitate financial fraud, including AI-driven money laundering schemes, falsification of contracts, and digital identity theft in procurement processes;

    62.  Acknowledges the importance of the use of AI to make improvements in the quality and completeness of data exchanged with Member States; welcomes, in this regard, OLAF’s actions, including recommendations in the annual PIF reports, structured bilateral dialogues with Member States, the revision of the Commission Anti-Fraud Strategy action plan, and interinstitutional exchanges focusing on these matters;

    63. Further calls for a dedicated EU-wide initiative to develop AI-driven fraud detection mechanisms within OLAF, the EPPO, and Europol, to increase efficiency in tracking and preventing financial crimes against the EU budget; recommends the establishment of an EU-wide task force composed of representatives from OLAF, the EPPO, Europol and national anti-fraud units, with a dedicated focus on digital fraud threats, including deepfake technology, AI-generated fake documents and synthetic identity fraud; underlines that this task force should develop and share best practices with the Member States;

    64. Stresses the need for increased cross-border cooperation and data-sharing mechanisms between Member States to combat AI-enabled fraud, particularly in high-risk areas such as VAT, customs and financial aid distribution; encourages the creation of a joint EU intelligence hub to track fraudulent AI activity in real time; calls on the Commission and the Member States to integrate AI and data analytics into fraud detection systems, ensuring interoperability between national and EU-level databases while maintaining strong data protection safeguards;

    65. Calls on the Commission and the Member States to implement strict transparency and audit measures in AI-based fraud detection tools to prevent bias, algorithmic manipulation and misuse in financial oversight systems; urges the development of AI ethics guidelines for anti-fraud institutions to ensure accountability;

    66. Calls for a mandatory forensic verification process for all digital evidence submitted in financial fraud cases, ensuring the authenticity of documents and audio and video material used in investigations;

    The internal layer of the EU’s AFA – 2023 key measures at EU level

    67. Underlines the fact that the EU’s AFA is a composite institutional architecture designed to detect, prevent and combat fraud and other forms of misconduct affecting the EU’s financial interests, built on a multi-layered network of cooperation in which the first layer (OLAF, the EPPO, Europol, Eurojust, AMLA, the Commission, the ECA and the European Investment Bank (EIB)) is grounded on horizontal cooperation between the EU institutions, bodies, offices and agencies, while the other layers are based on vertical relationships between EU and national authorities, and between EU authorities and international organisations; points out that the AFA has evolved over the years through a series of separate decisions that have led to an innovative network of entities; underlines that their coordinated activities in recent years have generated valuable experience that should be considered in the future revision of the relevant regulations; stresses that with the creation of the EPPO, the first European prosecutorial authority was established, enabling prompt and direct criminal law investigations and prosecutions, and that the lessons learnt in the first years of its operational activity need to be adequately integrated in the legislative framework to be able to take full advantage of the available tools and resources; stresses the importance of clear mandates between the various EU institutions, bodies, offices and agencies in order to minimise the risk of overlaps and duplication and thereby ensure the efficiency of the functioning of the AFA;

    68. Appreciates the integration in the 2023 PIF Report of the main administrative and judicial results achieved by OLAF and the EPPO, respectively, which follows the many calls from Parliament for more comprehensive reporting of the actions carried out by the components of the AFA; considers, however, that the differences in nature, scope and granularity between the two reports should be addressed and that the areas of cooperation should be indicated clearly; deems the differences in the figures provided by OLAF, the EPPO and the 2023 PIF Report to be justified in the current circumstances; highlights that reporting bodies in the Member States may report on criminal investigations only when the relevant judicial authorities grant the authorisation for them to do so, and this implies that while the EPPO and OLAF report data on active investigations, the reporting bodies are often unable to enter these details in the IMS database because of the need to protect confidentiality and ensure the proper conduct of investigations; understands that these cases result in a divergence in the data (‘delta’) that can only be eliminated when the investigations are completed and the relevant data are included in the reporting to the Commission so they can be included in a future PIF Report;

    69. Welcomes the adoption by the Commission, in May 2023, of a package of anti-corruption measures which encompasses a proposal for a directive on combating corruption; believes that prevention and prosecution of corruption need to be stepped up and calls on the Commission to intensify the monitoring of the enforcement of measures in the Member States;

    70. Welcomes the establishment of a network against corruption, which met for the first time on 20 September 2023, believes that the mapping of areas at a high-risk of corruption could contribute effectively to the further development of the EU anti-corruption strategy;

    71. Underlines the importance of the rule of law as one of the fundamental values of the Union and stresses that the rule of law conditionality mechanism is crucial in order to ensure that Member States continue to respect rule of law principles; reiterates its deep concern regarding the situation concerning the rule of law in certain Member States, which is deeply worrying in its own right and can lead to serious losses for the Union budget; calls on the Commission to ensure the strict and fast implementation of all elements of the mechanism when Member States breach rule of law principles and when this affects, or risks affecting, EU financial interests; further insists on the need for coherence across various instruments when assessing the rule of law situation in Member States;

    72. Notes that the fourth Commission Report 2023 on the rule of law, adopted in February 2024, provides a follow-up to the recommendations issued in the previous year’s Rule of Law Report; acknowledges that, in the fight against corruption, various Member States have updated or launched a revision of their national strategies and/or action plans, while others have reformed criminal law to strengthen the fight against corruption; observes that for many Member States the main obstacle to the fight against corruption is the limited resources of prosecution services; calls on the Commission to continue encouraging and supporting the efforts of Member States to reform and improve the efficacy of criminal proceedings and addressing the other challenges identified in the report; reminds the Commission of the effective tools at its disposal to safeguard the rule of law, such as infringement procedures, funding conditionality and the Article 7 TEU procedures, and expects it to make full use of them all; highlights, in this regard, that the new Financial Regulation introduces conditionality linked to the values enshrined in Article 2 TEU and calls on the Commission to start applying it, particularly in cases where infringement procedures have already been launched against a Member State for violations of the values enshrined in Article 2 TEU, as this constitutes a clear recognition of an ongoing breach that could also impact the sound financial management of the Union budget;

    73. Takes note of the Commission’s decision not to lift the measure under Article 2(2) of Council Implementing Decision (EU) 2022/2506 of 15 December 2022 on measures for the protection of the Union budget against breaches of the principles of the rule of law in Hungary[38]; expects the Commission and the Council to lift the adopted measures only where evidence is collected that the remedial measures adopted by the Hungarian Government have proven effective in practice and, in particular, that no regression has been detected on already adopted measures; condemns the threats, such as espionage, to which EU institution staff are exposed, such as OLAF staff during their investigative missions in Hungary; stresses that such actions gravely undermine the rule of law and the integrity of the EU institutions; calls for the swift establishment of robust protection measures to safeguard EU institution staff on missions; calls on the Hungarian authorities to take immediate and concrete steps to safeguard judicial independence, uphold media freedom and fully implement the recommendations of the Commission’s Rule of Law Report to restore democratic checks and balances; urges the Council to continue the Article 7 TEU procedure against the Hungarian Government;

    74. Emphasises that respect for the rule of law, including the fight against corruption, is a key determinant of the single market environment that fosters investment, growth, jobs and innovation, and protects small and medium-sized enterprises (SMEs) and economic operators operating across borders; stresses that the Commission is accountable for rigorous verification, as a condition for disbursing funding, of the fulfilment of the rule of law-related milestones integrated in the various Member State RRPs; recalls that the Commissioner for democracy, justice and rule of law, working in close coordination with the recently appointed Commissioner on budget, anti-fraud and public administration, holds primary responsibility for the full application of the general regime of conditionality; calls on the Commission not to use ‘dialogue’ with Member States or the ‘pilot’ procedure as an open-ended means to avoid launching actual infringement procedures; calls, furthermore, on the Commission to prioritise horizontally infringements affecting the EU’s financial interests, in particular regarding the PIF Directive and the EPPO Regulation[39]; welcomes the statement in the Commission Political Guidelines on the importance of the rule of law for EU funds and the commitment by the Commissioner for budget, anti-fraud and public administration to introduce strong safeguards on the rule of law in the next MFF;

    75. Considers that the protection of the common EU values enshrined in Article 2 TEU currently included in the Common Provisions Regulation needs to be further strengthened; calls on the Commission to explore how a mechanism equivalent to the horizontal enabling conditions could be developed as a general feature in all areas of the EU budget, with a view to linking a wider range of policies to all the values set out in Article 2 TEU; calls on the Commission to explore means of linking funding to rule of law conditions and the completion of necessary reforms in order to ensure a comprehensive approach, applied horizontally to all EU funds; calls on the Commission to pursue a comprehensive approach and to put forward proposals for further strengthening the Union’s rule of law toolbox as a priority, including strengthened rule of law conditionality for funds deployed in the current programming period;

    76. Maintains that corruption is intrinsically linked to money laundering, and that money laundering is one of the most important enablers of illegal activities by organised criminals, as it allows them to transfer the proceeds of their crime into the legal economy; recognises that the heterogeneous national legal systems and fragmented application of the Union’s anti-money laundering framework have made it difficult to prevent, detect and counter money laundering; welcomes, in this regard, the adoption of the ambitious legislative package on anti-money laundering and countering the financing of terrorism, which will unify national rules and thus enhance the collective fight against money laundering across the Union; welcomes the establishment of the new Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA); considers that the new agency will play a central role in the new anti-money laundering framework through its coordinating and supervisory responsibilities; recalls that money laundering and terrorist financing are intrinsically linked and calls for the EPPO, OLAF and the ECA to have a stronger role in countering these phenomena;

    77. Shares the view that the protection of the EU’s financial interests has been strengthened by the recast Financial Regulation; points out that the scope of EDES has been extended to encompass shared and direct management and provide new grounds for exclusion; welcomes the introduction of a legal basis for a risk-scoring and data-mining tool to be used by all Member States and in all management modes; regrets that both these measures will enter into force only in 2028 and only from the next MFF, resulting in several more years without comprehensive transparency regarding the final recipients of EU funds and missing a crucial opportunity to use these data to strengthen safeguards against corruption and fraud;

    78. Appreciates the adoption of an updated action plan[40] for the 2019 Commission Anti-Fraud Strategy; notes that it includes 44 actions distributed over seven themes covering, in particular, digitalisation, cooperation, the RRF, customs fraud, and awareness-raising in ethical and anti-fraud culture matters;

    79. Points out that the EU’s anti-fraud programme (UAFP) is the only spending programme specifically dedicated to fighting fraud affecting the EU’s financial interests and that it provides relevant support to all Member States’ authorities as components of the external layer of the AFA, in order to strengthen the fight against fraud; observes that the UAFP has the flexibility needed to adapt to the constantly changing anti-fraud landscape and is aligned with the seven-year period (2021-2027) of the current MFF; notes that, so far, 55 % of the total implementation of the UAFP has contributed to the digital transition;

    80. Calls on the Commission to build on the success of the UAFP and encourages the Commissioner on budget and anti-fraud to consider the UAFP as a model to be extended in the next MFF, in line with the task, indicated in the mission letter, of securing support for Member States’ efforts to protect the Union’s financial interests;

    81. Welcomes the first UAFP association request received in 2023 from a non-EU country, namely Ukraine, with which an association agreement covering its participation in the programme has been negotiated and was adopted in March 2024;

    82. Expresses concern that the Commission’s latest interim evaluation of Hercule III found aspects that may have hampered the programme’s effectiveness, notably that certain Member States’ administrations lacked the resources to enable them to cope with the programme’s administrative requirements;

    83. Takes note of the reiterated calls from the EPPO to bolster the detection capacity of the relevant components of the AFA, and recalls that, in line with the Commission Anti-Fraud Strategy, emphasis is to be given to data analysis as a tool for detecting fraud; highlights, in this regard, the importance of harmonising definitions in order to obtain comparable data across the EU; encourages the Commission to strengthen the use of the IMS as a tool to support auditors’ risk analysis when preparing audit activities; invites OLAF to increase its training offer to Commission staff, including auditors and relevant actors in the financial flow circuit;

    84. Is aware that the decentralised structure of the EPPO entails an interplay between national law and EU law and between national authorities and the EPPO; understands that the EPPO operates based on the directly applicable EU regulations but that it also requires adequate implementing measures to be adopted via national legislation transposing the PIF Directive and other relevant Union acts; calls on the Commission to ensure that national legislation is fully in line with the EPPO Regulation and the PIF Directive, launch infringement proceedings and propose the revision of these legal acts in order to make the EPPO more effective in the exercise of its mandate;

    85. Notes the results of the Compliance assessment of measures adopted by the Member States to adapt their systems to the EPPO Regulation[41], which was presented in September 2023; regrets that many situations are still suboptimal and need to be addressed because they weaken the effectiveness of the protection of the Union’s financial interests by means of criminal investigations; refers, in particular, to the attribution of competence between national prosecution services and the EPPO; stresses also that the EPPO Regulation stipulates the reporting of possible EPPO cases directly and without undue delay; calls on the Commission to verify and monitor Member States’ full compliance with the EPPO Regulation and their prompt reporting of suspicions of fraud in areas within the EPPO’s competence directly to it;

    86. Is concerned that in many Member States the designated national authority deciding on disagreements between the EPPO and national authorities on the competence for prosecuting a case is not a ‘court’ or a ‘tribunal’; calls on the Commission to verify and monitor whether Member States are fully complying with Article 25(6) and Article 42(2)(c) of the EPPO Regulation, which requires the possibility of an appeal to the Court of Justice of the European Union (CJEU) against a decision by a national authority on the attribution of competence;

    87. Stresses that the current control by national authorities over the ‘necessary’ resources and equipment of the European Delegated Prosecutors (EDPs) and the need to refer to the national authorities’ provisions for ‘adequate arrangements’ on social security, pensions and insurance coverage could constrain the autonomy and independence of the EPPO’s actions; calls on the Commission to propose adequate solutions in the forthcoming revision of the EPPO Regulation;

    88. Points out that the transposition of the PIF Directive differs between Member States, which, in some cases, affects the cross-border exercise of EPPO competences; calls on the Commission to ensure proper implementation of the PIF Directive and to propose its revision, based on the experience gathered;

    89. Underlines that Article 25(3) of the EPPO Regulation, which elaborates on the exercise of the EPPO’s competence in the event of non-PIF offences inextricably linked to PIF offences, raises legal and practical questions and requires further streamlining in order to make effective use of the EPPO’s legal framework; calls on the Commission to propose suitable solutions in the forthcoming revision of the EPPO Regulation in order to reinforce the EPPO’s ability to investigate cross-border organised crime;

    90. Reiterates[42] that the EPPO has an important role in safeguarding the rule of law and in combating corruption in the Union, and encourages the Commission to closely monitor Member States’ level of cooperation with the EPPO in the rule of law reports; welcomes the accession of Poland and Sweden to the EPPO; notes with approval Ireland’s recent announcement of its intention to participate; calls on the Government of Hungary, the sole remaining Member State that has not yet joined the EPPO, despite the absence of any legal or constitutional impediment, to join the EPPO without further delay; recalls that broad public support for Hungary’s accession has been demonstrated by the collection of 680 000 signatures in favour of joining the EPPO, underscoring a strong societal demand for enhanced legal safeguards against fraud and corruption affecting the Union’s financial interests;

    91. Reiterates its call for the launch of an exchange of views on the possible clarification of the competence of the EPPO within its mandate, as defined in the Treaty, as regards protecting the financial interests of the Union;

    92. Notes that in 2023, cooperation between the relevant actors increased, with the EPPO and Eurojust cooperating on 26 ongoing cases at the end of 2023; observes that also in 2023 the EPPO and Europol cooperated efficiently on various operational matters, and understands that this cooperation almost doubled in 2023, with Europol providing support on 47 cases upon the EPPO’s request; calls on the Commission to request that the EPPO and Eurojust specify the efficiency criteria on the basis of which they conduct their activities;

    93. Welcomes the efforts by OLAF and the EPPO to strengthen their cooperation; understands that information is being exchanged between the two offices in order to avoid parallel investigations into the same matters, and that, in 2023, 22 complementary investigations were opened by OLAF and four supporting investigations were requested by the EPPO; is aware that the synergies resulting from the use of complementary investigations (ex Article 12(f) of the OLAF Regulation) and investigations in support (ex Article 12(e) of the OLAF Regulation) are suboptimal; calls on the Commission to address the legal and operational causes of this when reviewing its regulations;

    94. Is concerned about the lack of analysis and accurate information on the recoveries to the benefit of the Union’s budget that should follow both OLAF and EPPO investigations; is aware that the impact of the AFA on the security of citizens and on the enforcement of the rule of law in the Union goes beyond the quantification of financial recoveries alone; stresses, however, that the results of the efforts made to create the AFA should tend towards measurability and be tangible at least as regards the budgetary aspects; emphasises that the impact of the activities implemented for the protection of the Union’s financial interests should be assessed and taken into consideration in the allocation of resources and definition of mandates;

    95. Understands that the Commission has yet to provide data on the recoveries to the benefit of the Union budget following the EPPO activities reported to the Commission, as provided by Article 103(2) of the EPPO Regulation, and that this matter is included in the mission letter of the Commissioner for budget, anti-fraud and public administration; observes that the freezing of assets is essential to combat crime affecting the EU budget and that a certain amount of time is needed for freezing to be converted into actual confiscations and recoveries; highlights that the amount confiscated is not expected to return by default to the Union’s budget; notes that, in line with Article 38 of the EPPO Regulation, the potential revenue resulting from seizure and confiscation measures taken by EDPs in Member States should flow back into the EU budget and could be accounted for in the EU budget as non-assigned revenue; calls on the Commission to make the necessary arrangements with the relevant national authorities to allow these sums to enter the EU budget;

    96. Points out that data on effective recoveries following OLAF financial recommendations are not published in the OLAF Annual Report or in any other official report from the Commission; regrets that only aggregated data are made available and they refer to 2 299 financial recommendations issued by OLAF between 2012 and 2023 for an overall amount of about EUR 9 billion; remarks that the analysis of the available figures suggests considerable room for improvement; observes that a large gap exists between the amounts recommended for recovery by OLAF, the amount established as recoverable by the Commission’s services and the amount eventually effectively recovered; is concerned by the low recovery rates for undue expenditure (for activities implemented under shared and indirect management modes the rate is 34 % and 11 %, respectively, and for recovery under direct management only 22 %); calls on the Commission to provide data with adequate granularity on recovery and to assess the reasons behind the recovery gap; stresses the need for OLAF and the Commission to agree upon, and apply consistently, common evaluation criteria that ensure greater convergence and clarity, thereby improving the efficiency and effectiveness of financial recovery assessment; emphasises that recovery following an OLAF recommendation and the EPPO’s investigations is an important measurement of the efficiency of the AFA and calls for more transparency in this regard;

    The external layer of the EU’s AFA – key measures at national level in 2023

    97. Understands that the overall level of implementation by the Member States of the Commission’s recommendations issued in the 2022 PIF Report is considered satisfactory; highlights, however, that significant differences between Member States persist; is concerned, in particular, by the cases of inadequate reporting of irregularities by some Member States via the IMS; recalls that reporting is mandatory under the current regulations and encourages OLAF to strengthen its oversight and monitoring actions with a view to achieving uniform reporting across the Union;

    98. Calls on the Commission to monitor the comprehensiveness of the reporting in IMS by countries benefiting from pre-accession assistance and welcomes the initiatives of the Directorate-General for Neighbourhood and Enlargement Negotiations to enforce candidate countries’ obligations to report irregularities in the IMS on a regular basis;

    99. Encourages the Member States to report in the IMS the irregularities related to the RRF, in line with the ECA recommendations; calls on the Commission to facilitate such use of the IMS by the Member States by providing support in the form of training, seminars and exchange of best practices;

    100. Welcomes the participation of Sweden and Poland in the EPPO, decided on in 2024, as well as the objective of the new Irish Government to join the EPPO; insists that Member States that are not yet participating must do so without delay and calls on the Commission to incentivise participation in the EPPO through positive measures;

    101. Reiterates that Member States’ ineffective, untimely or lack of cooperation with the EPPO and OLAF constitute grounds for action under the Conditionality Regulation; calls on the Commission to take into due consideration all information from the EPPO and OLAF on situations where Member States fail to comply with their obligations;

    102. Maintains that National Anti-Fraud Strategies (NAFS) are the most effective tool for coordination between the various national, regional and sectoral authorities and the many local entities entrusted with the tasks into which the anti-fraud cycle is organised; notes that, in 2023, 21 out of 27 Member States reported having an anti-fraud strategy; observes that out of 21, only 10 Member States had a full national anti-fraud strategy[43] while 11 Member States had only sectoral rather than national anti-fraud strategies in place; recognises that the approach taken by Member States in their anti-fraud strategies today varies widely; regrets that six Member States do not have any anti-fraud strategy at all; strongly regrets this highly unsatisfactory situation, which compromises the integrity of EU spending and undermines citizens’ trust in EU institutions;

    103. Maintains that Member States would benefit from a periodic evaluation of their anti-fraud frameworks; calls on the Commission to encourage Member States to run independent or peer reviews of their anti-fraud frameworks to enhance consistency and pursue high standards;

    104. Encourages the Commission to propose enforceable initiatives to clarify the relationship and consider establishing a link between the adoption of NAFS by the Member States and the level of financial support they receive;

    105. Asks the Commission to launch, in preparation for the revision of the OLAF Regulation, a monitoring exercise on the state of play of the Anti-Fraud Coordination Services (AFCOS) established in the Member States; encourages the Commission to plan for the update and redesign of their structure, role, responsibilities and mandate; regrets the suboptimal staffing level across the majority of the AFCOS in the Member States; underlines the need to ensure sufficient levels of expertise among staff in national anti-fraud coordinating structures; calls on the Commission to encourage and support Member States in addressing these issues as a matter of priority, including in the context of the European Semester cycle;

    106. Underlines the role played by public authorities in fostering a zero-tolerance culture against fraud and stresses, in particular, the importance of fraud prevention to ensure that fraud, corruption, conflicts of interest and other misuse of funds do not occur in the first place; recalls that the correct transposition of the PIF Directive, adopted on 5 July 2017, is crucial for the protection of the Union budget, for the implementation of all the EU policies for which EU money is used, including in the context of RRF deployment, and for establishing the scope of investigations and prosecutions by the EPPO, whose competence is established by reference to the PIF Directive, as implemented by national law; expects national authorities, including governments, in all Member States unequivocally to condemn fraud, corruption, conflicts of interest and any other misuse of public funds, taking a proactive approach in protecting the financial interests of the Union through effective measures in areas including risk assessment, communication and information sharing, and training of staff; calls on the Commission to intervene in a timely manner through infringement procedures to ensure the consistent transposition of the PIF Directive and the effective liability of – and sanctions for – legal and natural persons;

    107. Reiterates that whistleblowers play a key role in boosting fraud detection, investigation and prosecution; understands that, by the end of 2023, 24 Member States had adopted national legislation to transpose the Whistleblower Directive and declared their transposition complete; regrets, however, that in March 2023, after analysis of the national measures adopted, the Commission was obliged to refer six Member States to the CJEU for their failure to transpose the Directive and failure to notify transposition measures, asking the Court to impose financial sanctions; is concerned by the further infringement proceedings[44] ongoing against six other Member States; calls on the Commission to intensify the monitoring of national transposition measures and report to Parliament accordingly; stresses that Parliament itself must also urgently ensure the proper transposition of the Directive, as confirmed by the CJEU ruling of 11 September 2024, which found that Parliament’s current framework fails to provide balanced and effective protection against retaliation; calls for Parliament to immediately adopt robust rules in line with the Directive to safeguard its own whistleblowers;

    108. Notes that the Investigative Division of the European Investment Bank (EIB IG/IN) had made 10 referrals to the EPPO and 17 to OLAF by the end of 2023; is aware that entities which have been found by EIB IG/IN to engage in prohibited practices may be excluded, in other words declared ineligible, for a stated period, from being awarded any contracts or entering into any relationship with the EIB; observes that, in 2023, these exclusion proceedings resulted in the exclusion of five economic operators for a minimum duration of three years, while five other companies reached settlement agreements applying conditionality to their eligibility;

    External dimension of the protection of the EU’s financial interests

    109. Welcomes the Commission’s reaction to its call to increase the monitoring of, and control over, the funds under the Global Europe, Neighbourhood, Development and International Cooperation Instrument for assistance to non-EU countries, as well as via the joint communication with the High Representative of the Union for Foreign Affairs and Security Policy[45]; appreciates the Commission’s continuous efforts to ensure that anti-corruption measures are mainstreamed into EU external action instruments; reiterates its recommendation to suspend budgetary support and de-commit funds to non-EU countries, including candidate countries, where the authorities clearly fail to take genuine action against widespread corruption, without compromising support for the civil population; emphasises that respect for and commitment to promoting EU values is an essential precondition for all partners aspiring to join the Union; reiterates that accession to the EU is a merit-based process whereby each applicant is assessed on its own merits and its fulfilment of the Copenhagen criteria; considers that when applying the revised enlargement methodology there should be a particular focus on fundamental reforms, and that fair and rigorous conditionality should be applied as well as reversibility where setbacks occur; considers that appropriate tools must be used to ensure that candidate countries show concrete and sustainable compliance with the rule of law, democratic principles and fundamental rights, both before and after joining the Union;

    110. Observes that in the context of the Russian war of aggression against Ukraine, Ukraine will continue to require substantial support in the current and next MFF and, in the perspective of a fair and sustainable peace agreement, Ukraine will need support for post-war reconstruction, including for central government services and reforms;

    111. Considers that the three pillars of the Ukraine Facility could be reshaped accordingly and that reconstruction should align with pre-accession requirements; emphasises the importance of close coordination and cooperation with the Ukraine coordination mechanism established by the G7; calls for the EU and all Member States to increase their support for Ukraine, while putting appropriate measures in place to protect the financial interests of the EU through the prevention, detection and correction of fraud, corruption, conflicts of interest and irregularities in the use of Union funds, including by performing more thorough checks, in order to ensure that EU funds sent to Ukraine and to its neighbouring countries are adequately monitored and controlled and end up benefiting those most in need;

    112. Stresses that the unprecedented volume of financial support received by Ukraine from the EU in recent years, and deployed in the extremely adverse conditions imposed by the ongoing war, imply the adoption of appropriate measures to ensure that such resources are employed as intended, in particular where they are aimed at benefiting infrastructure and people in need;

    113. Appreciates the work carried out by OLAF and the EPPO in protecting the financial interests of the Union by providing training to increase administrative capacity and autonomy, carrying out investigations in Ukraine and agreeing on the working arrangement with the National Anti-Corruption Bureau of Ukraine to facilitate cooperation in the investigation of corruption; invites the competent EU offices to continue their cooperation with and support for the Ukrainian authorities;

    114. Acknowledges, in this regard, the progress made by Ukraine in advancing reforms related to judicial independence, accountability, anti-corruption and anti-money laundering, despite the difficult conditions caused by Russia’s ongoing war of aggression; encourages Ukraine to continue on the path of reform, including with regard to the influence of oligarchs in politics;

    115. Welcomes the enhanced sanctions adopted by the EU against Russia so far, encompassing the banning of Russian nationals and entities from participating in public procurement contracts in the EU and restrictions on EU funding for Russian publicly owned or controlled entities; recognises, however, that despite the current measures, individuals and entities subject to the sanctions against Russia can still find ways to circumvent the sanctions and calls, therefore, for the EU and the Member States to maintain, reinforce and extend the scope and effectiveness of the sanctions policy against Russia and Belarus;

    116. Recognises that the Member States and their relevant competent authorities are responsible for the effective implementation and enforcement of EU sanctions, as well as for identifying breaches and imposing appropriate penalties; underlines the role played by customs authorities and the importance of their close cooperation in strengthening the uniform enforcement of sanctions; welcomes, in this regard, the Baltic Customs Initiative;

    117. Underlines that the EU is the biggest provider of external assistance to Palestinian refugees; stresses that the Union budget must continue to provide support to build peace and stability in the Middle East region, combat terrorism, hate, fundamentalism and disinformation, as well as promote human rights, fight impunity and strengthen adherence to the rule of law; emphasises, accordingly, that EU budgets must not support, under any circumstances, activities that go against these objectives; notes that, following the heinous terror attacks of 7 October 2023 by Hamas and allegations of misuse of EU funds for terrorism, a funding review has been conducted by the Commission, which, although concluding that no evidence has been found, to date, that money had been diverted for unintended purposes (including for support for incarcerated terrorists) and reporting that the safeguards in place worked well, still called for certain additional measures that were deemed necessary; recalls that all hostages taken by Hamas have to be released; emphasises the importance of ensuring that EU funds are effectively allocated and managed in order to achieve their intended goals, even via scrutiny by the EPPO, OLAF and the ECA where appropriate; recalls the ongoing issue of the destruction of EU-funded projects in Gaza and the West Bank and calls for greater accountability and safeguards in this context;

    118. Stresses that suspension of budgetary support in non-EU countries, including candidate countries, is an appropriate measure in the event of failure to take genuine action against widespread corruption; expects priority to be given to the fight against corruption in pre-accession negotiations, with capacity building via the establishment of specialised anti-corruption bodies; asks the Commission to ensure, also in cases where funding is suspended, assistance for civil populations, where possible through alternative channels;

    119. Underlines the importance of cooperation with international organisations in combating fraud; regrets the lack of cooperation by some international organisations in providing the ECA with complete, unlimited and timely access to the documents necessary to carry out its tasks; notes that the Commission has stepped up communication with international organisations and calls on it to further intensify efforts to ensure access to all requested documentation;

     

    °

    ° °

    120. Instructs its President to forward this resolution to the Council and the Commission.

     

    MIL OSI Europe News

  • MIL-OSI Banking: Xbox app now available on LG Smart TVs

    Source: Microsoft

    Headline: Xbox app now available on LG Smart TVs

    Getting Ready

    To experience Xbox on your LG Smart TV, here is what you need:

    • A compatible LG Smart TV.
    • An Xbox Game Pass Ultimate membership.
    • Bluetooth-enabled wireless controller such as the Xbox Wireless Controller, Xbox Adaptive Controller, Xbox Elite Wireless Controller Series 2, or the DualSense controller.

    How to Access the Xbox App on LG TV’s Gaming Portal

    Players with 2025 LG TVs can power on their LG Smart TV, find the Xbox app in the new LG Gaming Portal, which can be accessed from the Gaming Q-Card on the TV home page, and start gaming instantly!

    For owners of LG TVs running latest webOS 24 and newer – including 2022 OLED TVs and select 2023 LG Smart TVs which received a firmware upgrade – you can download the Xbox app from the app store. Once downloaded, the Xbox app is designed to offer a smooth and seamless cloud gaming experience. Here’s how it works:

    1. Navigate to the LG Gaming Portal from either Gaming Q-Card or LG Gaming Portal on the Home Page.
    2. Download and launch the Xbox app.
    3. Sign into or create your Microsoft account.
    4. Connect a compatible Bluetooth-enabled wireless controller. Controllers like the Xbox Wireless Controller, Xbox Adaptive Controller, Xbox Elite Wireless Controller Series 2, PlayStation DualSense, or DualShock 4 controller are all compatible.
    5. Pick a game and start playing!

    We’re constantly exploring new ways to invite more people into the world gaming, and with LG Smart TVs, we can do just that. We’re excited to take this new step with LG Electronics to bring more games to more people around the world, on the devices you choose to play with. And if you are new to gaming, this is an easy way to discover the joy gaming offers.

    To learn more about Xbox Cloud Gaming (Beta) and how you can play across TVs and browsers on supported devices like smartphones, Windows PCs, and tablets, visit xbox.com/cloudgaming.

    MIL OSI Global Banks

  • MIL-OSI USA: Huffman, Bergman Announced as Co-Chairs of Congressional National Marine Sanctuary Caucus

    Source: United States House of Representatives – Congressman Jared Huffman Representing the 2nd District of California

    April 22, 2025

    Silver Spring, MD Today, the National Marine Sanctuary Foundation announced that Rep. Jared Huffman (CA-02) and Rep. Jack Bergman (MI-01) will co-chair the bipartisan Congressional National Marine Sanctuary Caucus in the 119th Congress. 

    Members of the bipartisan National Marine Sanctuary Caucus are champions of a network of underwater parks in the ocean and Great Lakes, and the coastal communities that steward and rely on them. The caucus serves as a strong voice among their peers in Congress –working to raise awareness and strengthen commitment to the National Marine Sanctuary System. The caucus will highlight the National Marine Sanctuary System’s importance to local economies and jobs, and public private partnerships in conservation, maritime heritage, outdoor tourism and recreation, and education across the country.

    The caucus supports and promotes public policy that conserves our nation’s most iconic natural and cultural marine resources for all Americans; raises awareness and understanding of national marine sanctuaries and shares their successes as models for marine conservation worldwide; supports continued and robust funding for marine sanctuaries; and builds a coalition of champions for our national marine sanctuaries and our coastal communities.

    “National Marine Sanctuaries are not only treasured areas that protect natural, historical, and cultural places across our oceans and lakes, but they also are essential to our coastal economies,” said Rep. Huffman. “Sanctuaries can take on any number of breathtaking natural features, from kelp forests to rocky and coral reefs and so much more – and I am honored to have not one, but two national marine sanctuaries in my district. Our spectacular underwater parks, Greater Farallones and Cordell Bank, protect critical ocean ecosystems and conserve wildlife. So I am proud to welcome my colleague, Congressman Bergman, to join me in relaunching this bipartisan caucus to raise awareness of sanctuaries and prioritize sanctuary issues on behalf of coastal communities and our nation.”

    “From the freshwater shores of the Great Lakes to our Nation’s saltwater coastlines, productive maritime economies rely on fishing, tourism, recreation, and scientific research,” said Rep. Bergman. “In Michigan’s First District, the Thunder Bay National Marine Sanctuary stands as a strong example of how conservation and education can go hand-in-hand to support these industries. This caucus builds on that foundation—promoting opportunities to experience and appreciate our unique marine environments. By engaging both lawmakers and constituents in the importance of protecting these habitats, we’re helping to ensure that future generations can continue to enjoy and benefit from the natural resources that define our way of life.”

    “We welcome Rep. Jack Bergman and returning co-chair Rep. Jared Huffman to their leadership of the House National Marine Sanctuary Caucus, and we thank the entire caucus for their commitment to these special waters valued by all Americans. We look forward to working with the caucus leaders to protect and restore our most treasured habitat and heritage in our ocean and Great Lakes and catalyzing more opportunities for the coastal communities who rely on national marine sanctuaries,” said Joel Johnson, president and CEO of the National Marine Sanctuary Foundation.

    Alongside the co-chairs, the current membership of the Congressional National Marine Sanctuary Caucus includes Representatives Nanette Barragan (D-CA);  Don Beyer (D-VA); Suzanne Bonamici (D-OR); Julia Brownley (D-CA); Salud Carbajal (D-CA); Buddy Carter (R-GA); Ed Case (D-HI); Danny K. Davis (D-IL); Suzan DelBene (D-WA); Debbie Dingell (D-MI); Jimmy Gomez (D-CA); James A. Himes (D-CT); Sara Jacobs (D-CA); Pramila Jayapal (D-WA); Nick LaLota (R-NY); John B. Larson (D-CT); Nancy Mace (R-SC); Nicole Malliotakis (R-NY); Doris O. Matsui (D-CA); Joseph Morelle (D-NY); Jerrold Nadler (D-NY); Eleanor Holmes Norton (D-DC); Jimmy Panetta (D-CA); Chris Pappas (D-NH); John Rutherford (R-FL); Maria Salazar (R-FL); Linda Sanchez (D-CA); Adam Smith (D-WA); Darren Soto (D-FL); Debbie Wasserman Schultz (D-FL); Jill Tokuda (D-HI);  and Robert J. Wittman (R-VA).

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