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Category: Banking

  • MIL-OSI Russia: Moscow Metro Celebrates 3 Years of Biometric Payments, Sets New Cashless Payment Record

    Translation. Region: Russian Federation –

    Source: Moscow Metro

    Moscow Metro celebrates milestone: three years of successful biometric payment

    Maxim Liksutov, Deputy Mayor of Moscow for Transport and Industry, noted the convenience of this payment method, which is now available at turnstiles throughout the city:

    – the metro and the Moscow Central Circle (MCC)

    – Aeroexpress

    – regular river transport

    – several stations of the Moscow Central Diameter (MCD).

    Here are some impressive numbers:

    – More than 1,100 turnstiles equipped with a biometric payment system

    – More than 160,000 daily travel tickets issued using biometrics

    – About 375,000 users have registered with the service

    In 2021, we launched biometric payment in the metro. Passengers no longer need cards, phones or wallets to pass through the turnstiles. They just look into the camera, and the passage opens. Users have already made more than 125 million passes. Nowhere in the world is this service as convenient as in the Russian capital. Over these 3 years, it has proven its maximum security and reliability, – Liksutov noted.

    The Moscow Metro also set a new record:

    The Moscow Metro system has reached a new milestone: a record 91.2% of passengers now use non-cash payment methods. This is the highest figure since the launch of these services, and it is a clear sign of the transition to more convenient and efficient transport for our citizens. By introducing digital solutions, we have made convenient, fast and environmentally friendly payment instruments easily accessible, – added Maxim Liksutov.

    The most popular methods of cashless payment include:

    – Biometric payment

    – Virtual card “Troika”

    – Fast Payment System (FPS)

    – Bank cards and payment stickers

    Moscow is becoming a world leader in the number of available payment methods for public transport. Following the instructions of Moscow Mayor Sergei Sobyanin, we will continue to develop modern, domestic services in our city’s transport system, Liksutov concluded.

    This achievement highlights Moscow’s commitment to modernising its infrastructure and introducing innovative technologies to improve the lives of its citizens.”

    MIL OSI Russia News –

    January 24, 2025
  • MIL-OSI: Federal Home Loan Bank of Indianapolis partners with Michigan State Housing Development Authority to launch Rate Relief Mortgage Program

    Source: GlobeNewswire (MIL-OSI)

    INDIANAPOLIS, Oct. 23, 2024 (GLOBE NEWSWIRE) — In an effort to make homeownership more accessible and affordable in Michigan, the Federal Home Loan Bank of Indianapolis (FHLBank Indianapolis or the Bank) and the Michigan State Housing Development Authority (MSHDA) have created the MSHDA Rate Relief Mortgage Program to benefit low-income, first-time homebuyers in the state.

    This new program will allow qualified low-income first-time homebuyers to reduce the cost of their mortgage by one full percentage point if they finance through a MSHDA-approved lender that also is a Bank member. This will allow hundreds of Michigan’s first-time homebuyers to save money every month on their mortgage.

    “Every Michigander should be able to raise their family in a home they love,” said Lt. Governor Garlin Gilchrist II. “That is why we have made historic investments to build or rehabilitate 34,000 housing units and announced the largest housing investment in state history. The MSHDA Rate Relief Mortgage program will lower the mortgage interest rate for eligible homebuyers by a full percentage point, saving families hundreds each year, keeping money in their pockets, and helping more Michigan families achieve their dream of homeownership. Let’s keep working together to build more affordable housing and create a brighter future for Michigan families.”

    FHLBank Indianapolis is supporting the program by purchasing a $50 million MSHDA bond (Series F), allowing Bank members the opportunity to sell single-family mortgage loans to MSHDA at below-market rates.

    “Everyone should have the opportunity to own a home,” said Cindy Konich, President and CEO of FHLBank Indianapolis. “That’s why the MSHDA Rate Relief Mortgage Program — and our growing partnership with MSHDA — is so important. It reflects our shared vision and values of providing affordable housing solutions, eliminates financing barriers, and opens the door to a brighter future for hundreds of first-time homebuyers in Michigan.”

    Amy Hovey, CEO and Executive Director of MSHDA, agreed.

    “This program is a game changer for Michigan families. Saving first-time homebuyers a full percentage point on their mortgages will make a big difference, helping more families make it in Michigan,” Hovey said.

    MSHDA’s Homeownership Division offers mortgages with competitive interest rates, connections to homebuyer education and counseling, and up to $10,000 in down-payment assistance. Last year, this team backed mortgages and down-payment assistance worth more than $728 million, helping 5,082 first-time homebuyers achieve access to this important wealth-building tool. The Michigan Legislature is currently considering House Bill 5032, which would eliminate the current cap of $224,500 on mortgages eligible for MSHDA support.

    Key facts about the program:

    • Who’s eligible? First-time homebuyers with a qualifying income at or below 80% of Area Median Income (AMI); a credit score of 640 or higher; and must work through an FHLBank Indianapolis member that is also a MSHDA-participating lender.
    • Other qualifications: New or existing single-family residences, including some types of manufactured homes; 30-year terms; and a maximum sales price limit of $224,500 (per Michigan law. Other restrictions may apply.)
    • Launch date: The program opened Oct. 21, 2024, and will continue until funds are depleted on a first-come, first-served basis.
    • How to apply: Interested first-time homebuyers can get more information at their local lending institution. FHLBank Indianapolis members can find more specifics on the Bank’s MemberLink portal and through the Bank’s direct member communications.

    Current MSHDA participating lenders who also are FHLBank Indianapolis members are below:

    • 1st State Bank
    • Adventure Credit Union
    • Bank of Ann Arbor
    • Case Credit Union
    • ChoiceOne Bank
    • Commercial Bank
    • Dart Bank
    • Dort Federal Credit Union
    • Financial Plus Credit Union
    • First Merchants Bank (Level One Bank)
    • Grand River Bank
    • Horizon Bank
    • Independent Bank
    • Kellogg Community Credit Union
    • Lake Michigan Credit Union
    • Macatawa Bank
    • Mercantile Bank of MI
    • Metro Community Development, Inc.
    • Michigan First Mortgage, a division of Michigan First Credit Union
    • Northland Area Credit Union
    • Northpointe Bank
    • Superior National Bank and Trust
    • United Bank of Michigan
    • United Federal Credit Union
    • University Bank
    • West Shore Bank
         

    This is the second housing partnership the Bank and MSHDA have created this year. In January, they jointly announced the launch of the Tribal Nations Housing Development Assistance Program (TNHDAP). That program is aimed at building on tribal nations’ existing capacity and providing resources and support to develop affordable housing programs and projects that respond to their unique housing needs. FHLBank Indianapolis is supporting the program with a grant of up to $3 million.

    Media contacts:
    FHLBank Indianapolis Corporate Communications
    Scott Thien, Sr. Communications Lead
    sthien@fhlbi.com

    Michigan State Housing Development Authority (MSHDA)
    Katie Bach, Communications Director
    Partnerships and Engagement Division
    BachK@michigan.gov

    About Federal Home Loan Bank of Indianapolis:
    FHLBank Indianapolis is a regional bank in the Federal Home Loan Bank System. FHLBanks are government-sponsored enterprises created by Congress to provide access to low-cost funding for their member financial institutions, with particular attention paid to providing solutions that support the housing and small business needs of members’ customers. FHLBanks are privately capitalized and funded, and they receive no Congressional appropriations. One of 11 independent regional cooperative banks across the U.S., FHLBank Indianapolis is owned by its Indiana and Michigan financial institution members, including commercial banks, credit unions, insurance companies, savings institutions and community development financial institutions. For more information about FHLBank Indianapolis, visit http://www.fhlbi.com and follow the Bank on LinkedIn, and Instagram and X at @FHLBankIndy.

    About MSHDA
    The Michigan State Housing Development Authority (MSHDA), established in 1966, provides financial and technical assistance through public and private partnerships to create and preserve safe and decent affordable housing, engage in community economic development activities, develop vibrant cities, towns and villages, and address homeless issues.

    The MIL Network –

    January 24, 2025
  • MIL-OSI Africa: Afreximbank Signs term Sheet for US$3Million Facility for Mediwood Studios’ Expansion

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

    ALGIERS, Algeria, October 23, 2024/APO Group/ —

     African Export-Import Bank (Afreximbank) (www.Afreximbank.com) and Mediwood Studios in Tunisia have signed a Term Sheet for a US$3 million facility aimed to Strengthen Mediwood’s position as a key contributor to the growth of the Tunisian film industry.  

    As part of the agreement, signed on 19 October 2024 on the sidelines of the just concluded Creative Africa Nexus Weekend (CANEX WKND) 2024, Mediwood Studios will use the proceeds of the term loan facility for the expansion of its studio facilities so as to showcase Tunisia as a filmmaking destination and provide world class facilities for both domestic and international productions in the Middle East and North Africa. 

    Signing the Term Sheet on behalf of Afreximbank was Mrs. Kanayo Awani, Executive Vice President, Intra-African Trade Bank, and Mr. Mehdi Ajroudi, Chief Executive Officer of Mediwood Studios, on behalf of his company. 

    Commenting on the deal, Mrs. Awani stated that Afreximbank was committed to ensuring that Africa’s creative economy remained relevant on the global stage while enhancing economic integration, job creation and bridging of cultural divides. 

    “By enhancing Tunisia’s filmmaking infrastructure, we hope to attract international productions, foster local talent and promote authentic regional narratives, thereby reinforcing Africa’s cultural influence globally. This is part of our mandate to support Africa’s creative industries through the CANEX Programme. The expansion of Mediwood Tunisia’s studio facilities will position Tunisia as an attractive hub for domestic and international film productions, enhancing the country’s visibility and appeal to global filmmakers and support the promotion of Africa’s narratives and talent.” 

    Mr. Ajroudi, on his part, said that the expanded studio facilities would foster job creation and skills development across pre-production, production and post-production activities as the world-class infrastructure would accommodate large-scale productions capable of stimulating economic activity in Tunisia’s creative sector.  

    “At Mediwood Studios, we believe it’s time for Africa to become the storyteller – sharing our heritage, dreams, and voices with the world,” he said. 

    The four-day CANEX WKND 2024, organised by Afreximbank was held from October 16 to 19 under the theme “One People, United in Culture, Creating for the World” and was attended by almost 4,000 participants — representing a diversity of creative sectors from across Africa. 

    It featured live performances, speeches by industry leaders and experts, masterclass sessions, fashion shows, sporting events, high energy music concerts and gastronomical showcases alongside a vibrant market and exhibition. 

    MIL OSI Africa –

    January 24, 2025
  • MIL-OSI Global: Halloween candy binges can overload your gut microbiome – a gut doctor explains how to minimize spooking your helpful bacteria

    Source: The Conversation – USA – By Christopher Damman, Associate Professor of Gastroenterology, School of Medicine, University of Washington

    It’s probably best to enjoy your Halloween spoils in moderation. Jupiterimages/The Image Bank via Getty Images

    Each October, as the days shorten and the air grows crisp, millions of Americans prepare for the beloved – and often sugar-fueled – tradition of Halloween. From jack-o’-lanterns glowing on porches to costumes ranging from the whimsical to the gory, Halloween is a time of playful scares, childhood memories and, of course, candy.

    But as the wrappers pile up and the sugar rush hits, there’s something far more sinister brewing beneath the surface: the negative effects of candy on your gut health.

    Sugar and other ingredients in Halloween treats can cast a sickly spell on the trillions of microorganisms that reside in your gut, collectively known as the gut microbiome. As a gastroenterologist and gut microbiome researcher at the University of Washington School of Medicine, I have dedicated my career to decoding the cipher of how food affects this microbial community within your gut.

    While no candy is truly healthy, some options are better for your gut than others. And there are ways you can help wake your gut from its sugar “spell” after holiday indulgence.

    Gut-busting treats

    What does all this candy do to your gut?

    In a healthy state, your gut microbiome acts like a microbial factory. It digests nutrients your body can’t – such as fiber and colorful, health-conferring plant compounds called polyphenols – and produces important molecules called metabolites that protect against infection and support brain health. It also regulates metabolism, or the transformation of food into useful components that power and grow cells.

    A balanced diet keeps your gut’s microbial cauldron churning smoothly. But the concentrated sugar, saturated fat and additives in candy can throw things into disarray by feeding inflammatory microbes that weaken your gut barrier – the protective lining that separates your microbiome from the rest of the body.

    Once the gut barrier is breached, even friendly microbes can stir up inflammation, causing health issues ranging from overweight to obesity, infections to autoimmune disease, and mild cognitive impairment to Alzheimer’s.

    The food you eat shapes your gut microbes, which in turn shape your overall health.

    Sugar and inflammation impair your microbiome’s ability to digest food and regulate metabolism. Instead of producing healthy byproducts – such as butyrate from fiber and urolithin A from polyphenols – candy lacking these nutrients may trick your system into storing more fat, providing less energy for your muscles and brain.

    Too much candy can also affect your immune system. A healthy gut microbiome helps your immune system distinguish between friend and foe, reducing the risk of infections and autoimmune disorders. Sugar and inflammation undermine the microbiome’s role in training the immune system to distinguish between harmful invaders and harmless substances. Without a carefully calibrated immune system, your body may not effectively clear infections or may strongly react to its own cells.

    Neurologically, excess sweets can also affect the gut-brain axis, the two-way communication between the gut and brain. A healthy microbiome normally produces neurotransmitters and metabolites, such as serotonin and butyrate, that influence mood and cognitive performance. Sugar and inflammation adversely affects the microbiome’s role in mental health and cognitive function, contributing to depression, anxiety and memory troubles.

    The candy conundrum

    Not all Halloween treats are created equal, especially when it comes to their nutritional value and effects on gut health. Sugar-coated nuts and fruit such as honey-roasted almonds and candy apples rank among the top, offering whole food benefits just beneath the sugary coating. Packed with fiber and polyphenols, they help support gut health and healthy metabolism.

    On the opposite end of the spectrum are chewy treats such as candy corn, Skittles, Starbursts and Twizzlers. These sugar-laden confections are mostly made of high fructose corn syrup, saturated fat and additives. They can increase the unsavory bacterial species in your gut and lead to inflammation, making them one of the least healthy Halloween choices.

    Chocolate-based candies, however, stand out as a more microbiome-friendly option. While varieties such as Twix, Three Musketeers and Milky Way contain only a small amount of chocolate, pure chocolate bars – especially dark chocolate – are rich in fiber and polyphenols. In moderation, dark chocolate with at least 80% to 85% cacao may even benefit your gut microbiome and mood by encouraging beneficial bacterial species to grow.

    Candy apples usually provide a serving of fruit and nuts.
    Ryan Benyi Photography/Connect Images via Getty Images

    Chocolates with whole nuts, such as almonds or peanuts, offer a boost of fiber, protein and omega-3 fats, making them a healthier choice. Dark chocolate with nuts is best. But when sorting through Halloween treats, Peanut M&Ms, 100 Grands and Almond Joys may be better options over Rolos, Krackels and Crunches. Even candies with processed nuts, such as Reese’s Peanut Butter Cups and Butterfingers, retain small amounts of fiber and protein, making them preferable to nut-free options.

    At the bottom of the list, along with chewy sugar candies, are pure sugar candies such as lollipops, Jolly Ranchers, gummies and Smarties. These sweets lack nutritional value, and their high sugar content can contribute to the growth of unhealthy bacteria in your gut microbiome.

    In the end, all candies are high in sugar, which can be harmful when consumed in large quantities. Moderation and an otherwise balanced diet is key to enjoying Halloween treats.

    Rebalancing after indulgence

    If the microbiome is critical for health, and candy can disrupt its balance, how can you restore gut health after Halloween?

    One simple strategy is focusing on the four F’s of food: fiber, phytochemicals, unsaturated fats and fermented foods. These food components can help support gut health.

    Fiber-rich foods such as whole grains, nuts, seeds, beans, fruits and vegetables regulate digestion and nourish beneficial gut bacteria.

    Dark chocolate is a treat that may offer some health benefits.
    Wachiwit/iStock via Getty Images Plus

    Polyphenol-rich foods such as dark chocolate, berries, red grapes, green tea and extra virgin olive oil help reduce inflammation and encourage the growth of healthy gut bacteria.

    Unsaturated fats such as omega-3 fats, walnuts, chia seeds, flaxseed, avocados and fatty fish such as salmon can also support a healthy microbiome.

    Fermented foods such as sauerkraut, kimchi, yogurt, kefir and miso help replenish beneficial bacteria and restore gut balance.

    To make tracking your diet easier, consider using a food calculator to measure how well your meals align with the four F’s and microbiome friendly options. Like a virtual “spellbook,” an online tool can help ensure your food choices support your gut health and ward off the effects of sugar overload.

    As my daughters often remind me, it’s perfectly fine to indulge every now and then in a few tricks and treats. But remember, moderation is key. With a balanced diet, you’ll keep your gut healthy and strong long after the Halloween season ends.

    Christopher Damman is on the scientific advisory board at Oobli, Supergut, and One BIO.

    – ref. Halloween candy binges can overload your gut microbiome – a gut doctor explains how to minimize spooking your helpful bacteria – https://theconversation.com/halloween-candy-binges-can-overload-your-gut-microbiome-a-gut-doctor-explains-how-to-minimize-spooking-your-helpful-bacteria-240504

    MIL OSI – Global Reports –

    January 24, 2025
  • MIL-OSI: Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Nine Months Ended September 30, 2024

    Source: GlobeNewswire (MIL-OSI)

    WAUWATOSA, Wis., Oct. 22, 2024 (GLOBE NEWSWIRE) — Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $4.7 million, or $0.26 per diluted share, for the quarter ended September 30, 2024, compared to net income of $3.3 million, or $0.16 per diluted share for the quarter ended September 30, 2023. Net income per diluted share was $0.72 for the nine months ended September 30, 2024, compared to net income per diluted share of $0.46 for the nine months ended September 30, 2023.

    “The Community Banking segment achieved growth in its loan and core deposit (excluding brokered deposits) balances,” said William Bruss, Chief Executive Officer of Waterstone Financial, Inc. “We continue to maintain strong asset quality metrics and remain in a net recovery position, resulting in a negative provision during the quarter. While the decrease in our wholesale borrowing rate during the quarter captures a portion of the benefit from the 50 bps cut in the Federal Funds rate during September, the competitive retail funding environment remains a headwind. The Mortgage Banking segment experienced a decrease in fundings; however, it remained profitable due in large part to our continued focus on cost control. Waterstone Financial, Inc. remained active in share repurchases and once again declared a dividend, as we are committed to shareholder returns.” 

    Highlights of the Quarter Ended September 30, 2024

    Waterstone Financial, Inc. (Consolidated)

     ● Consolidated net income of Waterstone Financial, Inc. totaled $4.7 million for the quarter ended September 30, 2024, compared to net income of $3.3 million for the quarter ended September 30, 2023.
    ● Consolidated return on average assets was 0.83% for the quarter ended September 30, 2024, compared to 0.58% for the quarter ended September 30, 2023.
    ● Consolidated return on average equity was 5.55% for the quarter ended September 30, 2024, and 3.63% for the quarter ended September 30, 2023.
    ● Dividends declared during the quarter ended September 30, 2024, totaled $0.15 per common share.
    ● During the quarter ended September 30, 2024, we repurchased approximately 71,000 shares at a cost (including the federal excise tax) of $979,000, or $13.75 per share.
    ● Nonperforming assets as a percentage of total assets was 0.25% at September 30, 2024, 0.25% at June 30, 2024, and 0.20% at September 30, 2023.  
    ● Past due loans as a percentage of total loans was 0.63% at September 30, 2024, 0.76% at June 30, 2024, and 0.53% at September 30, 2023. 
    ● Book value per share was $17.58 at September 30, 2024 and $16.94 at December 31, 2023. 

    Community Banking Segment

    ● Pre-tax income totaled $5.6 million for the quarter ended September 30, 2024, which represents a $14,000, or 0.2%, decrease compared to $5.7 million for the quarter ended September 30, 2023.
    ● Net interest income totaled $12.3 million for the quarter ended September 30, 2024, which represents a $181,000, or 1.5%, decrease compared to $12.4 million for the quarter ended September 30, 2023.
    ● Average loans held for investment totaled $1.69 billion during the quarter ended September 30, 2024, which represents an increase of $60.9 million, or 3.7%, compared to $1.63 billion for the quarter ended September 30, 2023. The increase was primarily due to increases in the construction, commercial real estate, and over four family mortgages. Average loans held for investment increased $19.7 million compared to $1.67 billion for the quarter ended June 30, 2024. The increase was primarily due to increases in construction and over four family mortgages.
    ● Net interest margin decreased 13 basis points to 2.13% for the quarter ended September 30, 2024, compared to 2.26% for the quarter ended September 30, 2023, which was a result of an increase in weighted average cost of deposits and borrowings as the federal funds rate increases resulted in increased funding rates. Net interest margin increased 12 basis points compared to 2.01% for the quarter ended June 30, 2024, primarily driven by an increase in weighted average yield on loans receivable and held for sale.     
    ● Past due loans at the community banking segment totaled $8.0 million at September 30, 2024, $9.3 million at June 30, 2024, and $6.7 million at September 30, 2023.
    ● The segment had a negative provision for credit losses related to funded loans of $218,000 for the quarter ended September 30, 2024, compared to a provision for credit losses related to funded loans of $206,000 for the quarter ended September 30, 2023. The current quarter decrease was primarily due to a decrease in historical loss rates, net recoveries for the period, and improvements in certain internal asset quality metrics offset by an adjustment in the qualitative factors primarily related to increases in economic risks related to commercial real estate loans during the quarter. The negative provision for credit losses related to unfunded loan commitments was $84,000 for the quarter ended September 30, 2024, compared to a provision for credit losses related to unfunded loan commitments of $239,000 for the quarter ended September 30, 2023. The negative provision for credit losses related to unfunded loan commitments for the quarter ended September 30, 2024, was due primarily to a decrease of loans that are currently waiting to be funded compared to the prior quarter end.  
    ● The efficiency ratio, a non-GAAP ratio, was 60.35% for the quarter ended September 30, 2024, compared to 54.43% for the quarter ended September 30, 2023.
    ● Average deposits (excluding escrow accounts) totaled $1.25 billion during the quarter ended September 30, 2024, an increase of $47.9 million, or 4.0%, compared to $1.20 billion during the quarter ended September 30, 2023. Average deposits increased $27.6 million, or 9.1% annualized, compared to $1.22 billion for the quarter ended June 30, 2024.  The increases were primarily due to an increase in certificates of deposit balances.  The segment had $2.0 million in brokered certificate of deposits at September 30, 2024.

    Mortgage Banking Segment

     ● Pre-tax income totaled $144,000 for the quarter ended September 30, 2024, compared to $2.1 million of pre-tax loss for the quarter ended September 30, 2023.
    ● Loan originations decreased $38.8 million, or 6.5%, to $558.7 million during the quarter ended September 30, 2024, compared to $597.6 million during the quarter ended September 30, 2023. Origination volume relative to purchase activity accounted for 88.9% of originations for the quarter ended September 30, 2024, compared to 95.4% of total originations for the quarter ended September 30, 2023.
    ● Mortgage banking non-interest income decreased $66,000, or 0.3%, to $21.4 million for the quarter ended September 30, 2024, compared to $21.5 million for the quarter ended September 30, 2023.
    ● Gross margin on loans sold totaled 3.83% for the quarter ended September 30, 2024, compared to 3.62% for the quarter ended September 30, 2023.  
    ● Total compensation, payroll taxes and other employee benefits decreased $1.3 million, or 7.3%, to $15.9 million during the quarter ended September 30, 2024, compared to $17.2 million during the quarter ended September 30, 2023. The decrease primarily related to decreased salary expense and incentives expense driven by reduced employee headcount and a decrease in new branches added over the past year.


    About Waterstone Financial, Inc.

    Waterstone Financial, Inc. is the savings and loan holding company for WaterStone Bank. WaterStone Bank was established in 1921 and offers a full suite of personal and business banking products. The Bank has branches in Wauwatosa/State St, Brookfield, Fox Point/North Shore, Franklin/Hales Corners, Germantown/Menomonee Falls, Greenfield/Loomis Rd, Milwaukee/Oklahoma Ave, Oak Creek/27th St, Oak Creek/Howell Ave, Oconomowoc/Lake Country, Pewaukee, Waukesha, West Allis/Greenfield Ave, and West Allis/National Ave, Wisconsin. WaterStone Bank is the parent company to Waterstone Mortgage, which has the ability to lend in 48 states. For more information about WaterStone Bank, go to http://www.wsbonline.com.

    Forward-Looking Statements

    This press release contains statements or information that may constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding expected financial and operating activities and results that are preceded by, followed by, or that include words such as “may,” “expects,” “anticipates,” “estimates” or “believes.” Any such statements are based upon current expectations that involve a number of risks and uncertainties and are subject to important factors that could cause actual results to differ materially from those anticipated by the forward-looking statements. Factors that might cause such a difference include changes in interest rates; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other factors, including risk factors referenced in Item 1A. Risk Factors in Waterstone’s most recent Annual Report on Form 10-K and as may be described from time to time in Waterstone’s subsequent SEC filings, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect only Waterstone’s belief as of the date of this press release.

    Non-GAAP Financial Measures 

    Management uses non-GAAP financial information in its analysis of the Company’s performance. Management believes that this non-GAAP measure provides a greater understanding of ongoing operations and enhance comparability of results of operations with prior periods. The Company’s management believes that investors may use this non-GAAP measure to analyze the Company’s financial performance without the impact of unusual items or events that may obscure trends in the Company’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in this measure and that different companies might calculate this measure differently. 

    Contact: Mark R. Gerke
    Chief Financial Officer
    414-459-4012
    markgerke@wsbonline.com

     WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF INCOME

    (Unaudited)  

       For The Three Months Ended September 30,   For The Nine Months Ended September 30,
      2024     2023   2024     2023
      (In Thousands, except per share amounts)
    Interest income:                          
    Loans $ 26,590     $ 23,825   $ 76,675     $ 65,860
    Mortgage-related securities   1,137       1,060     3,360       2,972
    Debt securities, federal funds sold and short-term investments   1,464       1,492     4,081       3,682
    Total interest income   29,191       26,377     84,116       72,514
    Interest expense:                          
    Deposits   10,477       7,442     29,163       17,485
    Borrowings   7,197       6,946     21,620       16,570
    Total interest expense   17,674       14,388     50,783       34,055
    Net interest income   11,517       11,989     33,333       38,459
    Provision (credit) for credit losses   (377 )     445     (535 )     1,091
    Net interest income after provision (credit) for loan losses   11,894       11,544     33,868       37,368
    Noninterest income:                          
    Service charges on loans and deposits   545       450     1,434       1,491
    Increase in cash surrender value of life insurance   410       334     1,562       1,373
    Mortgage banking income   21,294       21,172     66,200       59,856
    Other   303       274     1,101       1,589
    Total noninterest income   22,552       22,230     70,297       64,309
    Noninterest expenses:                          
    Compensation, payroll taxes, and other employee benefits   21,017       21,588     62,655       64,035
    Occupancy, office furniture, and equipment   1,857       1,993     5,994       6,302
    Advertising   926       916     2,827       2,749
    Data processing   1,297       1,229     3,745       3,441
    Communications   232       243     698       719
    Professional fees   569       745     2,070       1,779
    Real estate owned   –       1     14       3
    Loan processing expense   697       722     2,604       2,672
    Other   1,965       2,584     5,762       8,350
    Total noninterest expenses   28,560       30,021     86,369       90,050
    Income before income taxes   5,886       3,753     17,796       11,627
    Income tax expense   1,158       500     4,318       2,212
    Net income $ 4,728     $ 3,253   $ 13,478     $ 9,415
    Income per share:                          
    Basic $ 0.26     $ 0.16   $ 0.72     $ 0.46
    Diluted $ 0.26     $ 0.16   $ 0.72     $ 0.46
    Weighted average shares outstanding:                          
    Basic   18,350       19,998     18,631       20,420
    Diluted   18,445       20,022     18,677       20,473
    WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

       September 30,     December 31,  
      2024     2023  
      (Unaudited)          
    Assets (In Thousands, except per share amounts)  
    Cash $ 35,770     $ 30,667  
    Federal funds sold   5,359       5,493  
    Interest-earning deposits in other financial institutions and other short-term investments   278       261  
    Cash and cash equivalents   41,407       36,421  
    Securities available for sale (at fair value)   213,164       204,907  
    Loans held for sale (at fair value)   155,846       164,993  
    Loans receivable   1,695,403       1,664,215  
    Less: Allowance for credit losses (“ACL”) – loans   18,198       18,549  
    Loans receivable, net   1,677,205       1,645,666  
                   
    Office properties and equipment, net   19,450       19,995  
    Federal Home Loan Bank stock (at cost)   21,681       20,880  
    Cash surrender value of life insurance   69,601       67,859  
    Real estate owned, net   145       254  
    Prepaid expenses and other assets   45,837       52,414  
    Total assets $ 2,244,336     $ 2,213,389  
                   
    Liabilities and Shareholders’ Equity              
    Liabilities:              
    Demand deposits $ 180,449     $ 187,107  
    Money market and savings deposits   279,188       273,233  
    Time deposits   804,204       730,284  
    Total deposits   1,263,841       1,190,624  
                   
    Borrowings   560,127       611,054  
    Advance payments by borrowers for taxes   27,847       6,607  
    Other liabilities   50,519       61,048  
    Total liabilities   1,902,334       1,869,333  
                   
    Shareholders’ equity:              
    Preferred stock   –       –  
    Common stock   194       203  
    Additional paid-in capital   92,789       103,908  
    Retained earnings   274,748       269,606  
    Unearned ESOP shares   (10,979 )     (11,869 )
    Accumulated other comprehensive loss, net of taxes   (14,750 )     (17,792 )
    Total shareholders’ equity   342,002       344,056  
    Total liabilities and shareholders’ equity $ 2,244,336     $ 2,213,389  
                   
    Share Information              
    Shares outstanding   19,457       20,315  
    Book value per share $ 17.58     $ 16.94  
     WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES

    SUMMARY OF KEY QUARTERLY FINANCIAL DATA

    (Unaudited)

       At or For the Three Months Ended  
      September 30,     June 30,     March 31,     December 31,     September 30,  
      2024     2024     2024     2023     2023  
      (Dollars in Thousands, except per share amounts)  
    Condensed Results of Operations:                                      
    Net interest income $ 11,517     $ 10,679     $ 11,137     $ 11,756     $ 11,989  
    Provision (credit) for credit losses   (377 )     (225 )     67       (435 )     445  
    Total noninterest income   22,552       26,497       21,248       16,876       22,230  
    Total noninterest expense   28,560       30,259       27,550       29,662       30,021  
    Income (loss) before income taxes (benefit)   5,886       7,142       4,768       (595 )     3,753  
    Income tax expense (benefit)   1,158       1,430       1,730       (555 )     500  
    Net income (loss) $ 4,728     $ 5,712     $ 3,038     $ (40 )   $ 3,253  
    Income (loss) per share – basic $ 0.26     $ 0.31     $ 0.16     $ (0.00 )   $ 0.16  
    Income (loss) per share – diluted $ 0.26     $ 0.31     $ 0.16     $ (0.00 )   $ 0.16  
    Dividends declared per common share $ 0.15     $ 0.15     $ 0.15     $ 0.15     $ 0.15  
                                           
    Performance Ratios (annualized):                                      
    Return on average assets – QTD   0.83 %     1.02 %     0.56 %     -0.01 %     0.58 %
    Return on average equity – QTD   5.55 %     6.84 %     3.56 %     -0.05 %     3.63 %
    Net interest margin – QTD   2.13 %     2.01 %     2.15 %     2.25 %     2.26 %
                                           
    Return on average assets – YTD   0.81 %     0.79 %     0.56 %     0.44 %     0.59 %
    Return on average equity – YTD   5.30 %     5.17 %     3.56 %     2.62 %     3.46 %
    Net interest margin – YTD   2.09 %     2.08 %     2.15 %     2.46 %     2.53 %
                                           
    Asset Quality Ratios:                                      
    Past due loans to total loans   0.63 %     0.76 %     0.64 %     0.68 %     0.53 %
    Nonaccrual loans to total loans   0.32 %     0.33 %     0.29 %     0.29 %     0.25 %
    Nonperforming assets to total assets   0.25 %     0.25 %     0.23 %     0.23 %     0.20 %
    Allowance for credit losses – loans to loans receivable   1.07 %     1.10 %     1.11 %     1.11 %     1.12 %
     WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES

    SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS

    (Unaudited)

       At or For the Three Months Ended  
      September 30,     June 30,     March 31,     December 31,     September 30,  
      2024     2024     2024     2023     2023  
    Average balances (Dollars in Thousands)  
    Interest-earning assets                                      
    Loans receivable and held for sale $ 1,870,627     $ 1,859,608     $ 1,805,102     $ 1,797,988     $ 1,797,233  
    Mortgage related securities   170,221       171,895       172,077       172,863       174,202  
    Debt securities, federal funds sold and short-term investments   115,270       107,992       110,431       106,504       132,935  
    Total interest-earning assets   2,156,118       2,139,495       2,087,610       2,077,355       2,104,370  
    Noninterest-earning assets   104,600       104,019       103,815       105,073       105,714  
    Total assets $ 2,260,718     $ 2,243,514     $ 2,191,425     $ 2,182,428     $ 2,210,084  
                                           
    Interest-bearing liabilities                                      
    Demand accounts $ 89,334     $ 91,300     $ 87,393     $ 91,868     $ 90,623  
    Money market, savings, and escrow accounts   304,116       293,483       281,171       302,121       306,806  
    Certificates of deposit   786,228       758,252       739,543       735,418       719,708  
    Total interest-bearing deposits   1,179,678       1,143,035       1,108,107       1,129,407       1,117,137  
    Borrowings   600,570       622,771       602,724       549,210       584,764  
    Total interest-bearing liabilities   1,780,248       1,765,806       1,710,831       1,678,617       1,701,901  
    Noninterest-bearing demand deposits   91,532       93,637       92,129       102,261       106,042  
    Noninterest-bearing liabilities   49,787       48,315       45,484       56,859       46,805  
    Total liabilities   1,921,567       1,907,758       1,848,444       1,837,737       1,854,748  
    Equity   339,151       335,756       342,981       344,691       355,336  
    Total liabilities and equity $ 2,260,718     $ 2,243,514     $ 2,191,425     $ 2,182,428     $ 2,210,084  
                                           
    Average Yield/Costs (annualized)                                      
    Loans receivable and held for sale   5.65 %     5.54 %     5.46 %     5.36 %     5.26 %
    Mortgage related securities   2.66 %     2.63 %     2.57 %     2.48 %     2.41 %
    Debt securities, federal funds sold and short-term investments   5.05 %     4.82 %     4.82 %     4.94 %     4.45 %
    Total interest-earning assets   5.39 %     5.27 %     5.18 %     5.10 %     4.97 %
                                           
    Demand accounts   0.11 %     0.11 %     0.11 %     0.11 %     0.11 %
    Money market and savings accounts   1.94 %     1.89 %     1.79 %     1.64 %     1.54 %
    Certificates of deposit   4.54 %     4.41 %     4.19 %     3.76 %     3.43 %
    Total interest-bearing deposits   3.53 %     3.42 %     3.26 %     2.90 %     2.64 %
    Borrowings   4.77 %     4.92 %     4.54 %     4.83 %     4.71 %
    Total interest-bearing liabilities   3.95 %     3.95 %     3.71 %     3.53 %     3.35 %
    COMMUNITY BANKING SEGMENT

    SUMMARY OF KEY QUARTERLY FINANCIAL DATA

    (Unaudited)

       At or For the Three Months Ended  
      September 30,     June 30,     March 31,     December 31,     September 30,  
      2024     2024     2024     2023     2023  
      (Dollars in Thousands)  
    Condensed Results of Operations:                                      
    Net interest income $ 12,250     $ 11,234     $ 11,598     $ 12,056     $ 12,431  
    Provision (credit) for credit losses   (302 )     (279 )     105       (550 )     445  
    Total noninterest income   1,227       1,491       990       894       966  
    Noninterest expenses:                                      
    Compensation, payroll taxes, and other employee benefits   5,326       5,116       5,360       5,397       4,618  
    Occupancy, office furniture and equipment   904       983       1,000       916       852  
    Advertising   311       229       174       363       200  
    Data processing   720       687       693       626       672  
    Communications   80       72       65       75       70  
    Professional fees   190       177       208       186       176  
    Real estate owned   –       1       13       1       1  
    Loan processing expense   –       –       –       –       –  
    Other   602       672       691       628       703  
    Total noninterest expense   8,133       7,937       8,204       8,192       7,292  
    Income before income taxes   5,646       5,067       4,279       5,308       5,660  
    Income tax expense   941       718       1,639       1,234       1,121  
    Net income $ 4,705     $ 4,349     $ 2,640     $ 4,074     $ 4,539  
                                           
    Efficiency ratio – QTD (non-GAAP)   60.35 %     62.37 %     65.17 %     63.26 %     54.43 %
    Efficiency ratio – YTD (non-GAAP)   62.58 %     63.77 %     65.17 %     56.86 %     54.94 %
     MORTGAGE BANKING SEGMENT

    SUMMARY OF KEY QUARTERLY FINANCIAL DATA

    (Unaudited)

      At or For the Three Months Ended  
      September 30,     June 30,     March 31,     December 31,     September 30,  
      2024     2024     2024     2023     2023  
      (Dollars in Thousands)  
    Condensed Results of Operations:                                      
    Net interest loss $ (760 )   $ (552 )   $ (541 )   $ (367 )   $ (550 )
    Provision (credit) for credit losses   (75 )     54       (38 )     115       –  
    Total noninterest income   21,386       25,081       20,328       16,028       21,452  
    Noninterest expenses:                                      
    Compensation, payroll taxes, and other employee benefits   15,930       16,886       14,756       14,881       17,186  
    Occupancy, office furniture and equipment   953       1,046       1,108       1,105       1,141  
    Advertising   615       758       740       667       716  
    Data processing   570       549       508       583       551  
    Communications   152       168       161       194       173  
    Professional fees   379       569       520       704       564  
    Real estate owned   –       –       –       –       –  
    Loan processing expense   697       861       1,046       756       722  
    Other   1,261       1,641       617       2,701       1,935  
    Total noninterest expense   20,557       22,478       19,456       21,591       22,988  
    Income (loss) before income taxes (benefit)   144       1,997       369       (6,045 )     (2,086 )
    Income tax expense (benefit)   194       684       71       (1,827 )     (657 )
    Net (loss) income $ (50 )   $ 1,313     $ 298     $ (4,218 )   $ (1,429 )
                                           
    Efficiency ratio – QTD (non-GAAP)   99.67 %     91.64 %     98.33 %     137.86 %     109.98 %
    Efficiency ratio – YTD (non-GAAP)   96.23 %     94.62 %     98.33 %     116.99 %     111.63 %
                                           
    Loan originations $ 558,729     $ 634,109     $ 485,109     $ 458,363     $ 597,562  
    Purchase   88.9 %     92.7 %     93.0 %     95.7 %     95.4 %
    Refinance   11.1 %     7.3 %     7.0 %     4.3 %     4.6 %
    Gross margin on loans sold(1)   3.83 %     3.93 %     4.10 %     3.51 %     3.62 %

    (1) Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations.

    The MIL Network –

    January 24, 2025
  • MIL-OSI Europe: Debates – Monday, 21 October 2024 – Strasbourg – Provisional edition

    Source: European Parliament

    Verbatim report of proceedings
     413k  815k
    Monday, 21 October 2024 – Strasbourg Provisional edition

       

    IN THE CHAIR: ROBERTA METSOLA
    President

     
    1. Resumption of the session

     

      President. – I declare resumed the session of the European Parliament adjourned on Thursday, 10 October 2024.

     

    2. Opening of the sitting

       

    (The sitting opened at 17:03)

     

    3. Statements by the President

     

      President. – Dear colleagues, on the results of the presidential election and referendum in Moldova, the people in Moldova have chosen their future: they chose hope, stability, opportunity. They chose Europe.

    (Applause)

    The European Parliament strongly condemns any activities and interferences in Moldova’s presidential election and constitutional referendum on EU integration.

    We are proud to be one of Moldova’s strongest allies and supporters. We understand that Moldova’s future lies within the European Union and we fully support its EU accession path.

    President Maia Sandu and her government have already made remarkable progress in implementing reforms. And while the road ahead may not always be easy, I want to assure our European Moldovan friends that the European Parliament will continue to be with them every step of the way.

    Also, dear colleagues, on 16 October we marked 7 years since the brutal assassination of Daphne Caruana Galizia, a Maltese investigative journalist who exposed corruption and organised crime. Those who thought they could silence her were wrong. In fact, her work sparked a movement that echoes in every corner where we pursue a Europe that protects journalists, that respects the rule of law.

    I am grateful to have known Daphne beyond her writing: as a woman battling the odds; as a mother who was so proud of the men her boys grew into; as a daughter, wife and sister who wanted more from her country. And she raised the bar for all of us in politics. But most of all, today I think about how we must keep Daphne’s memory alive; how the European Parliament will keep pushing for the truth, for justice and for accountability.

    It is for this reason that the European Parliament is proud to be hosting the fourth edition of the Daphne Caruana Galizia Prize for outstanding journalism. And I take this moment to encourage you to attend the award ceremony this Wednesday in the Daphne Caruana Galizia Press Room, to honour the bravery of all those who continue to carry her legacy forward.

    This House remembers her and we honour her legacy.

    (Applause)

     

    4. Approval of the minutes of the previous sitting

     

      President. – The minutes and the texts adopted of the sitting of 10 October 2024 are available. Are there any comments? No? The minutes are therefore approved.

     

    5. Composition of Parliament

     

      President. – The competent authorities of Poland have notified me of the election of Hanna Gronkiewicz-Waltz to the European Parliament, replacing Marcin Kierwiński with effect from 10 October 2024.

    I wish to welcome our new colleague and recall that she takes her seat in Parliament and its bodies in full enjoyment of her rights, pending the verification of her credentials.

     

    6. Composition of committees and delegations

     

      President. – The PfE Group has notified me of decisions relating to changes to appointments within the committees and delegations. These decisions will be set out in the minutes of today’s sitting and take effect on the date of this announcement.

     

    7. Negotiations ahead of Council’s first reading (Rule 73)

     

      President. – The TRAN Committee has decided to enter into interinstitutional negotiations ahead of Council’s first reading, pursuant to Rule 73 of the Rules of Procedure.

    The positions adopted by Parliament at first reading, which constitute the mandates for those negotiations, are available on the plenary webpage, and their titles will be published in the minutes of this sitting.

     

    8. Corrigenda (Rule 251)

     

      President. – The competent committees have transmitted nine corrigenda to texts adopted by Parliament.

    Pursuant to Rule 251, these corrigenda will be deemed approved unless, no later than 24 hours after their announcement, a request is made by a political group or Members reaching at least the low threshold that they be put to the vote.

    The corrigenda are available on the plenary webpage. Their titles will be published in the minutes of this sitting.

     

    9. Signing of acts adopted in accordance with the ordinary legislative procedure (Rule 81)




     

      Marc Botenga (The Left). – Madame la Présidente, vous savez que, sur la base de l’article 188, les députés européens gagnent facilement 14 000 euros par mois. Pourtant, chaque année, notre groupe demande de baisser ces salaires pour que les députés soient un tout petit peu plus en phase avec la réalité des travailleurs, qui, eux, peinent à boucler les fins de mois. Chaque année, ce vote permet de démasquer les députés qui, d’une part, prêchent l’austérité et la misère pour les travailleurs, mais, d’autre part, s’octroient, eux, un salaire généreux de 14 000 euros par mois.

    Mais aujourd’hui, en coulisses, vous nous dites que ce n’est plus acceptable et vous voulez empêcher ce vote – je sais bien, chers collègues, que vous ne voulez pas que l’on touche à vos privilèges. Vous nous dites que ces revenus sont garantis par d’autres textes. Mais justement, en refusant aujourd’hui de voter le budget nécessaire, nous pouvons ouvrir cette porte pour faire le premier pas et revoir tout cela.

    L’année dernière, vous aviez permis ces amendements. Qu’est-ce qui a changé, qui ne serait plus vrai aujourd’hui? Serait-ce parce que la campagne électorale est terminée? Madame la Présidente, je vous prie, revoyez cette décision. La politique sert à servir et non à se servir.

     
       

     

      President. – Thank you very much, Mr Botenga. I will give you the explanation.

    You file a point of order under Rule 188, which is actually a point of order, but I will answer you. The amendments tabled by your group on the lines and figures of the general budget 2025 concerning salaries and allowances, etc., have been examined and declared inadmissible, simply because we want to apply the rules.

    And I will tell you why: it is because they are in contradiction with the existing regulations, in other words, the Statute for Members of the European Parliament and the Council Regulation determining the emoluments of EU high-level public office holders, based on Articles 243 TFEU and 223 TFEU. So the right procedure would be to call on the responsible institutions to amend the mentioned regulations.

    However, you will have seen as well, in this spirit, that the corresponding amendment that you tabled to the resolution on the general budget calling for this change has been declared admissible, because that can be declared admissible.

     
       

     

      João Oliveira (The Left). – Senhora Presidente, quero expressar o meu total desacordo com a sua decisão discricionária e sem fundamento de recusar, sem justificação, a proposta de debate sobre o agravamento da situação humanitária em Gaza, na sequência das declarações do coordenador especial da ONU para o processo de paz no Médio Oriente. Na quinta-feira, a ONU declarou que mais de um milhão e oitocentos mil palestinianos enfrentam fome extrema. Ontem mesmo, aquele coordenador especial da ONU emitiu um comunicado falando de pesadelo, cenas horripilantes na zona norte, ataques israelitas implacáveis e uma crise humanitária cada vez pior e, cito, que «nenhum lugar é seguro em Gaza», condenando os contínuos ataques contra civis. Aquele responsável disse: «A guerra tem de parar agora».

    Apesar de tudo isto ter acontecido em condições que permitiam que o debate aqui fosse feito, a senhora presidente recusou aceitar sequer a proposta. Desafio-a a colocar à votação este pedido de debate. Enquanto continuarem a chover bombas em Gaza, a morrer crianças, mulheres e civis, este debate será sempre urgente e imprescindível.

     
       


     

      Virginie Joron (PfE). – Madame la Présidente, chers collègues, chers démocrates, chers légalistes, je souhaite faire un rappel au règlement. Son article 219 prévoit le respect de l’égalité des genres dans la composition des bureaux des commissions. Cette égalité n’est pourtant pas respectée, pas plus que le résultat des urnes, c’est-à-dire de la démocratie.

    En effet, Madame la Présidente, vous avez accepté de ne pas respecter la démocratie en accordant une dérogation au principe de l’égalité des genres pour M. Weber dans plusieurs bureaux de commissions, ignorant par là même plus de 20 millions de nos électeurs.

    Comment pouvez-vous accepter que la commission CONT, qui contrôle le budget de l’Union européenne – et qui doit donner l’exemple –, continue de ne pas respecter nos règles? Vous souhaitez exporter l’égalité des genres jusqu’au Kazakhstan ou encore lui consacrer une semaine en décembre, mais ce principe n’est déjà pas respecté au sein de la commission CONT, au cœur même de notre institution. En ne disposant pas d’une quatrième vice-présidence, la composition du bureau de la commission CONT viole notre règlement.

    Madame la Présidente, je vous remercie de faire le nécessaire pour mettre un terme à cette hypocrisie et respecter notre devise, «Unie dans la diversité».

     
       


     

      Manon Aubry (The Left). – Madame la Présidente, chers collègues, ça tombe bien, j’avais envie de vous parler de démocratie et de faire un rappel au règlement sur la base de l’article 154, qui traite des accords interinstitutionnels, pour évoquer l’état des négociations entre l’Union européenne et le Mercosur. Je vais commencer, chers collègues, par une question assez simple: qui trouve normal que le plus important accord de libre-échange jamais conclu par l’Union européenne soit en train d’être signé en catimini, sans que notre Parlement ait la moindre information, quelle qu’elle soit? Allez-y, dites-moi qui est d’accord avec cela et levez la main.

    Vous le voyez bien – et j’ai fait le compte –, cela fait exactement cinq ans que la Commission européenne n’a pas donné ni publié le moindre compte-rendu officiel sur l’état des négociations. Bien entendu, cet accord de libre-échange aura un impact désastreux sur nos agriculteurs, qui souffrent déjà, sur la santé et sur la planète.

    Mes chers collègues, c’est aussi un scandale démocratique. Comment accepter d’être ainsi tenus à l’écart? C’est pourquoi, Madame la Présidente, je vous prierais de demander des comptes à la Commission européenne afin qu’elle nous tienne enfin informés, parce qu’on ne peut pas se laisser ainsi «bananer». Il est temps!

     
       


     

      President. – As you can see, your colleagues agree with you. This is something that has been an outstanding issue and we can put pressure on the incoming Commission to respect the deadlines that we have set.

     

    10. Order of business


     

      Terry Reintke, on behalf of the Verts/ALE Group. – Madam President, dear colleagues, last Friday, an Italian court invalidated the detention of 16 asylum applicants sent to Albania by the Italian Government. Italy is a democracy, with an independent judiciary and courts that can freely rule on existing cases, also to stop illegal actions by the government. Still, members of the ruling far-right coalition, including members of the government, attacked this independent judiciary and the judges that ruled in this case.

    Colleagues, we cannot stay silent on this: rule of law, including separation of powers, is a key fundament of the European Union. We have waited for far too long regarding Hungary to speak up. We cannot make the same mistake again. That is why my group requests a debate with the following title: ‘Commission statement regarding the ruling of the Italian court related to the agreement between Italy and Albania on migration’.

     
       



     

      Tomas Tobé (PPE). – Madam President, I think it is clear and already stated that this request should not be supported. It’s very clear. It’s not about a protocol about Italy and Albania, as you say in what you’re asking for. Also, it’s not even a final decision in the court, and it’s also a decision based on an EU directive that actually will be replaced once the new migration pact is fully adopted.

    I think it’s also about the general question, because we had a request in plenary before, from the Patriots, about another decision. We could, of course, make this Chamber nothing else than debating different court decisions. I think when it comes to migration policy, we should be serious, we should be balanced, and we should use our time to actually debate real things and not only try to make court decisions that you may like or not like to be in favour of them.

    So that is why the EPP will reject this request.

     
       


     

      Fabienne Keller, au nom du groupe Renew. – Madame la Présidente, nous savons que le nouveau pacte sur la migration et l’asile et la politique migratoire ont occupé l’essentiel du Conseil européen de la fin de la semaine dernière. C’est un sujet de préoccupation pour nos concitoyens.

    Nous sommes fiers, tous ici dans cette Chambre, d’avoir adopté un pacte, d’avoir trouvé un équilibre pour traiter la question de la migration illégale, tout en respectant nos valeurs. Nous savons aussi, chers collègues, qu’il nous faudra encore deux années pour le mettre en œuvre. Nous ne pouvons dès lors pas accepter qu’un État membre utilise une voie détournée pour contourner ce que prévoit le pacte et les règles précises que nous avons définies ensemble.

    C’est pourquoi nous proposons de rebondir sur la proposition des Verts et d’ajouter la dimension «mise en œuvre du pacte» dans son ensemble, c’est-à-dire vis-à-vis de ses devoirs, de l’application de ses règles, mais aussi des garanties des droits de l’homme et du respect des droits fondamentaux que nous y avons intégrés. C’est dans cet esprit que nous proposons ce débat amendé.

     
       

     

      President. – Ms Reintke, do you agree with the alternative proposal? So the Green Group does not. Therefore, I will put the original request by the Green Group to a vote by roll call.

    (Parliament rejected the request)

    I now ask Ms Keller: do you want to keep your request? Yes, Ms Keller wants to keep the request, so the proposal from the Renew Group is now put to a vote by roll call.

    (Parliament rejected the request)

    So the agenda remains unchanged.

    The agenda is now adopted and the order of business is thus established.

     

    11. International Day for the Eradication of Poverty (debate)

     

      President. – The first item is the debate on Parliament’s statement on the International Day for the Eradication of Poverty (2024/2881(RSP)).

    Dear colleagues, last week, on 17 October, we marked the International Day of the Eradication of Poverty. Poverty is not inevitable. It is a challenge that we can – and we must – overcome. Across the world, far too many people still struggle. Far too many people do not have access to clean water, to clothing, shelter, health care or education. And far too many people are excluded from society, denied the possibility of a dignified job, not given the opportunities to achieve their potential. Given that 1 in 5 Europeans and 1 in 4 children under the age of 18 in the European Union is at risk of poverty or social exclusion, the reality is as serious as it is alarming.

    Here in the European Parliament, we refuse to be bystanders. We are proud of all the work we have done already in making our Europe a front-liner in the fight against poverty, and yet more work remains. Poverty is a symptom of inequality, and we understand the responsibility that we bear to ensure that every person – no matter who they are or where they come from – has a chance to live with dignity, with purpose.

    This is why the European Parliament is looking forward to seeing the European Union’s first anti-poverty strategy that was announced in the 2024-2029 Political Guidelines of the European Commission. This is a positive step forward. By investing in education, affordable housing and job creation, by ensuring our social safety net works, we can lift millions out of poverty.

    This House will continue turning our policies into concrete action, and we will continue to fight for fairness, for dignity and for opportunity for all.

     
       


     

      Gabriele Bischoff, im Namen der S&D-Fraktion. – Frau Präsidentin, werte Kolleginnen und Kollegen! In der Tat: Wir sprechen inzwischen von 100 Millionen Menschen, die in Europa, einem der reichsten Kontinente, von Armut und sozialer Ausgrenzung bedroht sind; Frau Präsidentin hat es gesagt: mehr als jeder fünfte Mensch hier in Europa. Und dieser Internationale Tag zur Abschaffung der Armut, der muss wirklich ein Weckruf hier sein, weil wir mehr brauchen.

    Ja, wir brauchen eine Armutsstrategie, aber wir brauchen auch konkrete Politiken, und eine davon ist in der Tat, dass wir ein festes Budget von 20 Milliarden in einem eigenen ESF+ für die Kindergarantie brauchen, um die 19 Millionen Kinder – 19 Millionen, denen die Zukunft gestohlen wurde – besser vor Armut zu schützen, und wir brauchen Maßnahmen.

    Aber wir dürfen nicht nur national bleiben, sondern nach den Verträgen ist Armutsbekämpfung auch das Hauptziel der europäischen Entwicklungspolitik. Das muss so bleiben und muss unser Kompass sein zur Bekämpfung der Armut auf der ganzen Welt.

     
       

     

      Malika Sorel, au nom du groupe PfE. – Madame la Présidente, chers collègues, 34 % des Européens renoncent à des soins médicaux, et nombre de jeunes, de nos jeunes, sont en grande souffrance. C’est la tiers-mondisation de nos nations. L’Europe d’Hippocrate, de Pasteur et de Marie Curie n’est même plus capable de soigner les siens, tandis qu’elle érige en dogme la préférence extra-européenne.

    Alors que la pauvreté touche chacune de nos nations, la Commission va verser 1,8 milliard d’euros à la Moldavie. De plus, l’immigration issue des couches sociales les plus pauvres bat des records. Pour Enrico Letta, aucune réforme, aucun progrès ne sera possible sans la participation des citoyens. Cette participation, je vous le dis, est impossible, car ces conditions ne sont pas réunies.

    Relisons Jean-Jacques Rousseau: «Voulons-nous que les peuples soient vertueux? Commençons donc par leur faire aimer la patrie: mais comment l’aimeront-ils si la patrie ne leur accorde que ce qu’elle ne peut refuser à personne?». Nous sommes là au cœur du mal qui détruit l’Europe. Chers collègues, j’aimerais comprendre: est-ce l’indifférence – ou pire: le cynisme – qui conduit à nous lamenter sur une pauvreté que nous organisons?

     
       

     

      Chiara Gemma, a nome del gruppo ECR. – Signora Presidente, onorevoli colleghi, la povertà non è soltanto una questione economica: è una piaga sociale che mina la dignità e la speranza delle persone. Combatterla è un dovere morale e una responsabilità politica che deve impegnarci tutti, senza eccezioni.

    C’è un aspetto che merita una particolare attenzione e che troppo spesso viene trascurato: la condizione delle persone con disabilità, che sono tra le più esposte al rischio di povertà. I dati parlano chiaro: il 28,8% delle persone con disabilità in Europa vive in condizioni di povertà e di esclusione sociale.

    Questo dato è inaccettabile, soprattutto se pensiamo che stiamo parlando di una categoria già vulnerabile, che deve affrontare non solo le difficoltà economiche, ma anche le barriere strutturali, culturali e sociali che la società impone.

    Non possiamo tollerare che in un’Europa che si proclama “paladina dei diritti umani e dell’inclusione”, quasi un terzo delle persone con disabilità viva in condizioni di disagio economico. La nostra forza si misura dalla capacità di includere chi è già più debole.

     
       

     

      Charles Goerens, au nom du groupe Renew. – Madame la Présidente, Monsieur le Commissaire, la lutte contre la pauvreté doit se manifester tant à l’intérieur qu’à l’extérieur de l’Union européenne. Cela étant, la pratique semble confirmer ce propos.

    L’Union européenne n’a certes pas réussi à éliminer la pauvreté, comme chacun de nous le souhaiterait. À sa décharge, rappelons que ses compétences sont insuffisantes pour régler ce problème. Les États membres, par contre, disposent de moyens ô combien supérieurs à ceux dont dispose la Commission. À ce propos, l’on constate que les États membres qui ont de meilleurs résultats en matière de lutte contre la misère chez eux sont souvent les mêmes que ceux qui s’impliquent le plus dans la coopération au développement en faveur des pays du Sud.

    Cette corrélation n’est pas anodine. Elle nous fait penser que la solidarité est indivisible. C’est donc une question de cohérence, une question d’équité, qui s’applique dans le même esprit tant à l’intérieur qu’à l’extérieur de l’Union européenne. Pour appuyer mon propos, il suffit de lire les rapports annuels du Programme des Nations unies pour le développement et d’en comparer les résultats à ceux obtenus en matière de lutte contre la misère au sein des États membres.

     
       


     

      Leila Chaibi, au nom du groupe The Left. – Madame la Présidente, Monsieur le Commissaire, chers collègues, en France, 1 jeune sur 4 vit sous le seuil de pauvreté, et 1 étudiant sur 2 est obligé de sauter un repas par jour. Vous vous souvenez de ces files d’attente interminables devant l’aide alimentaire pendant la pandémie de COVID-19? Ces images, elles avaient fait le tour du monde. C’était il y a quatre ans. Et que s’est il passé depuis? Rien.

    Pourquoi l’Union européenne ne demande-t-elle pas aux gouvernements de proposer le repas à 1 euro pour les étudiants? Pourquoi continuons-nous à agir comme si la pauvreté était un phénomène météorologique, une espèce de catastrophe naturelle? Non, la pauvreté ne tombe pas du ciel. Sans inégalités, il n’y a pas de pauvreté. Bernard Arnault, l’homme le plus riche du monde, a vu sa fortune dépasser les 200 milliards d’euros, soit plus que le PIB de la Slovaquie. Imaginez ce qu’on pourrait faire avec cette somme. On pourrait faire 200 000 hôpitaux, 40 000 écoles.

    Vous voulez agir contre la pauvreté? Taxez les plus riches, taxez les multinationales, allez chercher l’argent là où il est.

     
       

     

      Petar Volgin, от името на групата ESN. – Скъпи колеги, дълго време силните на деня обясняваха, че когато глобализацията окончателно победи, когато бъдат премахнати всички държавни граници и всички държавни пречки пред бизнеса, ние ще станем богати и щастливи. Разказваха ни, че когато милионерът стане милиардер, това ще направи и нас, обикновените хора богати. Защото нали според постулатите на така наречената „трикъл даун” икономика („trickle down economy“) или икономика на просмукването, приливът повдигал всички лодки. Само че действителността се оказа много по-различна.

    Да, богатите ставаха още по-богати, милионерите ставаха милиардери, но лодките на обикновенните хора не се повдигаха, даже много от тях потънаха. Колкото повече държавата минаваше на заден план, толкова повече се увеличаваха неравенствата и бедността. Има само един начин, по който може да бъде преодоляно това. Държавата отново трябва да стане активна. Тя трябва да създаде такива правила, които да помагат на работещите хора да живеят по-добре. Наднационалните институции няма да направят това. Те се грижат за интересите на мега корпорациите. Нужна ни е повече държава и по-малко транснационални институции.

     
       


     

     

      Georgiana Teodorescu (ECR), în scris. – Prin acțiunile sale, Uniunea Europeană s-a declarat responsabilă pentru înverzirea Globului, pentru eliminarea surplusului de carbon, pentru tot ce e „eco” și „bio” la nivel mondial, pentru salvarea migranților, precum și pentru încetarea unor războaie din afara granițelor UE.

    Totuși, când vine vorba de sărăcia în care trăiesc unii dintre europeni, mai ales despre construirea unor programe concrete și asigurarea unui buget corespunzător pentru acest lucru, rămânem la stadiul de discuții frumoase. Iată că marcăm o zi oficială pentru eradicarea sărăciei, în loc să o eradicăm efectiv. În România, unul din cinci cetățeni trăiește sub pragul sărăciei, cifrele fiind mult mai ridicate în rândul tinerilor. Pe acești oameni, ziua internațională a eradicării sărăciei nu îi ajută. Este nevoie de bani și de măsuri concrete.

    Sigur, e onorabil să avem o astfel de zi, nu ne opunem, dar haideți să ne concentrăm mai mult pe fapte și mai puțin pe discursuri pompoase, care au zero efect în asigurarea hranei copiilor săraci ai Europei sau în oferirea unor programe care să-i încurajeze să-și continue studiile.

     

    12. Address by Enrico Letta – Presentation of the report ‘Much More Than a Market’

     

      President. – The next item is the debate on the address by Enrico Letta – presentation of the report ‘Much more than a market’.

    We have today with us former Prime Minister of Italy Enrico Letta to present his report ‘Much more than a market’. Caro Enrico, welcome back to the European Parliament. Your report came at an extremely timely moment.

    As we embark on a new legislative term, this House recognises that the future of Europe will be defined by our ability to make ourselves more competitive; how we are able to grow our economies and pay back our debts, to fuel our innovation and turn seemingly impossible challenges into opportunities, to create jobs and futures with dignity. That is what our people are asking from us. It is why Europeans went to the polls last June, and what our voters are expecting us to deliver on.

    To do all this, we do not need to reinvent the wheel. We already have many tools in place. For over 30 years, the single market has been our Union’s unique growth model, a powerful engine of convergence and our most valuable asset. But we are again at a moment where the single market is in need of a boost.

    The time is now for us to renew our engagement to it, to deepen it, especially when it comes to energy, to finance, telecoms, banking, capital markets and services – to bring it back on par with the needs of the current context.

    Boosting it also means doing more to level the playing field, to reduce excessive bureaucracy and to cut red tape. This is how our single market works best. So, Mr Letta, dear Enrico, the European Parliament is eager to hear your findings and recommendations on how we can bolster our single market and make Europe more competitive.

     
       

     

      Enrico Letta, author of the report ‘Much more than a market’. – Madam President, esteemed Members, I would like to express my deepest gratitude to President Roberta Metsola, the Members of the European Parliament and the groups. It is a particularly emotional moment for me to do so in this Chamber once chaired by David Sassoli. The last time I spoke from this very place was to commemorate him some days after his death. His legacy and his commitment to European values continues to guide and inspire all of us.

    I must also express my deep gratitude to those who commissioned this report and entrusted me with the responsibility to undertake it: the Belgian and Spanish presidencies of the Council of the European Union, along with the President of the Commission and the President of the European Council. It is a great honour for me to be here today, especially after a year of engaging with the European Parliament: more than 20 meetings, groups, committees – the IMCO Committee in particular, subcommittees fostering meaningful dialogue and collaboration.

    This is a decisive moment for the life of the report. The pragmatic proposals it contains can only make a real impact if this very Chamber embraces and advances them.

    This report is not mine. I bear full responsibility for it, of course, but above all, it is the result of a collective exercise developed during a journey that spanned almost the entire European Union, reaching out also to candidate countries for accession and non-EU countries that share with us the single market. Throughout this journey across Europe, I visited 65 cities and took part in over 4 400 meetings, I engaged open social dialogue with all stakeholders. This was not an ideological pursuit, but a pragmatic endeavour. I traveled across Europe and engaged with all stakeholders to find common ground for tangible solutions. And there is one thing I want to stress out here: all the proposals contained in the report do not require Treaty changes. They are very concrete and can be implemented immediately.

    Madame la Présidente, par cette méthode j’ai cherché à honorer l’esprit même du projet d’intégration européenne. Un projet qui s’épanouit dans le dialogue entre les grands et les petits pays, entre les grandes villes et les petites communes, entre des modèles divers de relations industrielles, ainsi qu’entre différentes cultures et histoires. C’était la vision de Jacques Delors, à la mémoire duquel ce rapport est dédié.

    Jacques Delors visait à poser une base solide sur laquelle les grands idéaux européens pourraient prospérer. Il reconnaissait que la passion seule ne pouvait bâtir l’Europe. Il fallait des projets pragmatiques, qui améliorent concrètement la vie des citoyens. Jacques Delors croyait fermement que le succès de l’intégration européenne ne se mesurait pas à l’aune des bénéfices pour les États, mais à l’amélioration de la vie des citoyens. C’est cette approche que j’ai poursuivie et qui m’a inspiré en rédigeant ce rapport.

    The single market has been our greatest achievement. It has fuelled prosperity and it embodies our values. But it was born in a very different era, an era in which both the European Union and the world were smaller, simpler and far less interconnected. More than 20 years ago, we succeeded in integrating our currencies. We created the euro. We integrated this critical dimension which carries important emotional and practical significance for our citizens.

    However, we have not achieved the same level of integration in other key strategic sectors that, paradoxically, would have been far less difficult to integrate: sectors that are now vital for the future of the European economy, in particular. At the inception, three sectors were deliberately kept outside the single market, considered too strategic to extend beyond national borders: finance, electronic communications and energy. In reality, when it comes to these issues, Europe is merely a geographical expression. We are 27, not 1, on telecommunication. We have 27 financial markets, not 1 financial market. The exclusion of these sectors from the completion of the single market was motivated by the belief at that time that domestic control would better serve strategic interests.

    In an increasingly interconnected world and a vastly larger global market, the national dimension is no longer sufficient. It is becoming a ceiling in these sectors. We need to address this paradox, which is one of the main drivers of the current gap with other global powers, and we must act now. Inertia or inaction on this front risks reducing our choices to a single question: whether we want to become a colony of the United States or of China in ten years’ time. Telecommunications, energy and financial markets must be integrated, as we did for the euro. The integration of these sectors is a precondition for our competitiveness and security. There can be no security without independence in connectivity, energy and finance.

    In the report, I propose a roadmap for telecommunications to move from 27 separate markets to 1, from the approximately 80 operators of today to 10, 20 operators. I am not suggesting that we mimic the American or Chinese models here in Europe. These models do not adequately protect consumers as we aim to do in the European Union, but with a single telecoms market, 10, 20 operators can compete while ensuring consumer protection. At the same time, they will be larger and stronger on the global stage. That is what is not happening today with the fragmentation in 27 different markets.

    For energy, the key mission is to invest in interconnections. We must reduce the energy prices in Europe, and the only way is to maximise the diversification of energy sources through a highly interconnected European system. We win through cooperation, not through fragmentation. However, the most important sector to integrate is the financial one, which is in reality today the sum of 27 separate financial markets. This fragmentation is a major factor in Europe’s loss of competitiveness, creating the paradox of having a single currency, the euro, without a fully integrated financial market. We are falling behind the US, which has surged ahead in this sector over the last 15 years, and we are paying a steep price for it. Without a unified financial system, we will be unable to create a new paradigm for economic development, unable to innovate and unable to ensure our security.

    Having unified and significantly larger financial markets would allow Europe to invest in innovation and support its real economy. It would also enable Europe to effectively finance the Green Deal.

    During my journey, one topic has emerged as a priority everywhere: how to support and finance the just, green and digital transition. Let’s be very clear: the Green Deal remains the top priority for the coming years. It is no longer a question of whether Europe will pursue it, but rather how it will be achieved. The legislative term began with a debate on how to approach the Green Deal. In the report, I propose solutions for implementing it that reduce the potential social and economic consequences for Europe. We cannot allow the Green Deal to become a luxury that only the wealthy can afford in our societies. The social and economic dimensions of the Green Deal are essential.

    If we are committed to this, we must also clearly outline how we intend to finance it. Otherwise, we risk engaging in an unrealistic declaration of intent. Without a concrete plan on how to finance it, political backlash and delays are inevitable – outcomes that neither the EU nor the planet can afford. That is why all our energy must be focused on financially supporting the transition. We need an innovative set of tools that can leverage both public and private financing, as both are crucial to meet our massive investment needs.

    There are differing views within the European Union on how to address this funding challenge. We have to be honest: there are often opposing views on this matter. It makes no sense to ignore or hide these differences. But I firmly believe that the single market is not only a fundamental tool, but also the common ground where these diverse positions can converge.

    The initial priority should be to mobilise private capital, where the EU lags behind and has enormous untapped potential. Let me offer two clear as significant examples. Each year, EUR 300 billion of European savings cross the Atlantic to fuel the American financial markets and their real economy. This happens because our financial markets, fragmented as they are, are unable to absorb these resources. But the effect is a paradox. This money ultimately strengthens American companies, which then return to Europe to buy our European companies with our European savers’ money.

    We need a change in mindset. The current lack of integration of Europe’s financial markets is unacceptable. Take also the case of international payment systems: every day, each of us makes several credit or debit card transactions, billions of transactions in total. Yet Italians aren’t happy using a French system. The French aren’t happy using a German system. The Germans aren’t happy to use a Spanish one. As a result, we are all end up being happy to rely on an American system. This example alone highlights the inefficiency of our fragmented approach.

    We have to be pragmatic, not ideological. The fragmentation of Europe’s financial markets plays directly into the hands of other global players, keeping Wall Street and China satisfied and very happy. And this is why, in the report, I proposed the creation of the savings and investments union, building on the incomplete capital markets union. By fully integrating financial markets, the savings and investments union aims to close the gap in a sector where we have enormous potential and provide a concrete tool to finance our ambitions.

    What I want to emphasise is the importance of forging a strong link between the fair, green and digital transition and the financial integration of the single market. One of the main reasons the capital markets union failed to succeed is that it was seen as an end in itself. True financial market integration in Europe will only be achieved when both citizens and policymakers recognise that this integration is not just beneficial for the financial sector, but it is essential for achieving broader, more critical goals such as the fair, green and digital transition.

    Ultimately, progress in the area of private investments will enable us to tackle the role, structures and regulations governing public investments. As I have noted, this is a divisive issue, but it is essential that we confront it openly. Closing the current gap in private investments is a critical first step in moving this debate forward. The massive investment needs of the European Union require both private and public sources of funding. We must strike a balance between different sensibilities and pave the way for a more constructive, integrated and efficient funding strategy.

    This also extends to the debate on state aid. In the report, I have presented some ideas to overcome the current impasse. We need new solutions that can swiftly mobilise targeted national public support for industry, while also preventing fragmentation of the single market and ensuring a level playing field.

    Combining private resources and public investments, considering various instruments, is the only way to achieve a compromise in this chamber and within the European Council. Finance, energy and telecommunications are interconnected and serve as critical boost within a broader concept of security. However, the current geopolitical situation compels us to accelerate the strengthening of our common defence capabilities.

    Greater integration within our common market can serve as a pivotal tool to overcome existing duplications and inefficiencies, yet substantial investments are required. We need to act on this front, and we must do swiftly in order to preserve a crucial level of autonomy in our foreign security and defence policy.

    The EU must continue its unwavering support for Ukraine in its fight for freedom, while also striving to play a pivotal role in ending the conflict in the Middle East. Both are essential steps towards securing long-term peace and stability. To address this significant challenge, we must consider innovative financing mechanisms here as well. In the report, I propose several options, but I believe, and I want to underline here, the most pragmatic and impactful approach involves the use of the ESM, the European Stability Mechanism.

    One of the consequences of fragmentation and the lack of unity in key sectors is the difficulty we are facing in terms of innovation. The EU has not yet developed a robust industry capable of harnessing the benefits of the new wave of technological advancements. As a result, we have become increasingly reliant on external technologies that are now critical to European companies. It is essential that we unlock the full potential of the single market, and to do so, we need to leverage our unexploited common strength in research and development.

    The single market, as we know, was built on four fundamental freedoms: the free movement of goods, services, capital and people. However, this structure is outdated and too closely aligned with the 20th century vision. I believe something is missing in today’s complex and dynamic environment, something intangible yet vital. The economy of the future will be driven by innovation, knowledge and tangible assets, a dimension that is vital to our progress.

    In the report, I argue for the addition of a fifth freedom, one that encompasses a range of essential fields: research, data, skills, knowledge, education. This is possible within the framework of the existing Treaties, as demonstrated in the report. This new fifth freedom will not just be about facilitating the movement of research and innovation outputs; it will embed the drivers of research and innovation at the heart of the single market. With this framework, the EU will not only better position itself as a global leader in setting ethical standards for innovation, but also as a creator and pioneer of new technologies.

    The EU’s ability to innovate depends also on creating an ecosystem where businesses can thrive. This is why the simplification of the single market rules is a central theme. It is a topic that I have heard repeatedly during my travels. However, when we speak of simplification, too frequently, these words are not followed by concrete, actionable proposals. In the report, I present two pragmatic proposals to significantly ease businesses’ access to the benefits of the single market. The first proposal is that EU institutions should unequivocally prioritise the use of regulations over directives when setting single market rules. This would reduce uncertainty and eliminate barriers. The second proposal is the idea of the ’28th regime’ to operate within the single market, a virtual 28th state that companies could choose for smoother, more practical operation at the European level. Both these proposals cover regulatory aspects that help to reduce bureaucracy without in an in any way undermining social standards, on which we do not want to see any race to the bottom. I’m very happy to speak on behalf and in front of the Commission on these topics.

    I conclude, Madam President: Jacques Delors always insisted on the crucial point of the importance of a single market with convergence, and the success of the single market is fundamental. If we add to the freedom to move the freedom to stay, the freedom to stay is fundamental for the people who want to stay in their own regions, with the idea to be allowed to grow up there and to have services of general interest across all the EU regions and also in the periphery regions.

    My conclusion: President von der Leyen’s decision to outline an ambitious plan for reform and relaunch of the European project, drawing on some of these ideas from both my report and that of Mario Draghi opens a window of opportunity we cannot afford to miss. In a time when divisions among us – between countries, political parties and populations are growing – I stand before you to affirm that the single market is what keeps us united. We must rally around it and remain firm in our commitment to the relaunch and completion of the single market. The question before us is clear: if not now, when? Now more than ever, we must defend, strengthen and relaunch the single market.

    I hope that with all these arguments, I have convinced you that, as I wrote in the title of my report, the single market is really much more than a market.

     
       

       

    PRZEWODNICTWO: EWA KOPACZ
    Wiceprzewodnicząca

     
       

     

      President. – Thank you very much, Mr Letta.

     

    13. Empowering the Single Market to deliver a sustainable future and prosperity for all EU citizens (debate)


     

      Andreas Schwab, im Namen der PPE-Fraktion. – Frau Präsidentin, lieber Enrico Letta, Herr Kommissar! Zunächst einmal im Namen der EVP-Fraktion einen großen Glückwunsch für diese intensive Arbeit und auch für die Präsentation der Ergebnisse hier.

    Es ist deutlich geworden, dass der Bericht und auch Sie ganz persönlich, Herr Letta, nochmals in Erinnerung rufen, dass der Binnenmarkt der Motor unseres europäischen Wohlstandes ist. Das finde ich beachtlich, weil natürlich ein Stück weit in den vergangenen Jahren in Vergessenheit geraten ist, dass der wirtschaftliche Austausch – egal ob es um Waren oder Dienstleistungen, egal ob es um Autos oder um Tourismus geht – im Zentrum dessen steht, was uns als Europäerinnen und Europäer reich und viele auch zufrieden macht.

    Deswegen, glaube ich, muss man an dieser Stelle noch einmal sagen: Der Binnenmarkt kann eben am besten entscheiden, was die richtige Leistung ist. Deswegen sollten wir den Bürgerinnen und Bürgern auch die Möglichkeit geben, dass sie entscheiden können in einem offenen Markt in Europa, welche Leistung, welchen Tourismusort, welches Auto sie kaufen können. Dafür ist der Titel vielleicht ein bisschen gefährlich, denn mehr als ein Markt bedeutet ja im Umkehrschluss, dass wir einen echten Binnenmarkt vollständig schon haben. Da, glaube ich, müssen wir sagen, gibt es noch einiges zu tun.

    Es gibt noch einiges zu tun, damit Arbeitnehmerinnen und Arbeitnehmer problemlos von einem Land in ein anderes fahren können. Auch wenn sie das Recht, dort zu bleiben, wo sie sein wollen, behalten sollen, müssen sie die Freiheit genießen können – in der Überarbeitung der Verordnung (EG) Nr. 883/2004 –, die Grenze zu überschreiten. Deswegen, liebe Freundinnen und Freunde, meine Damen und Herren, glaube ich, die Anpassung an eine neue geopolitische Bedingung, die rasche Entbürokratisierung und die Kapitalmarktunion sind sicher Kernforderungen des Berichts, die wir alle unterstützen.

    Ich bin froh, dass Enrico Letta in die gleiche Richtung wie Mario Draghi gegangen ist. Deswegen, glaube ich, gilt es jetzt, dass die Europäische Kommission liefert: ein 28. Regime dort, wo es notwendig ist, eine neue Grundfreiheit und einen einheitlichen Telekommunikationsbinnenmarkt. Es gibt viel zu tun.

     
       

     

      Gabriele Bischoff, on behalf of the S&D Group. – Madam President and dear Enrico Letta, I think it is very important that we still keep a vision of what we could do and what is possible, but where we lack the courage so far to do so. Jacques Delors always said that no one falls in love with the common market. That was true in the past, it’s also true today, but you show that it’s not only a single market, but it is what it does for people, how it enables people. And therefore we really have to boost the common market indeed, but also – in the spirit of Jacques Delors – to always have in mind that this always needs a strong social dimension going for it, if we want to also convince the citizens that it’s in their interest to do so.

    But I also have to say I could comment on many things, because your report is very rich. I want to highlight the fifth freedom, a fair mobility, a new push here for innovation, and to deliver for our citizens.

     
       



     

      Svenja Hahn, im Namen der Renew-Fraktion. – Frau Präsidentin! Liebe Kollegen, wenn wir in der Welt über Werte wie Demokratie reden, hat man uns zugehört, weil wir ein attraktiver Markt waren. Der Binnenmarkt ist das Herzstück der EU – er hat uns wirtschaftlich stark werden und zusammenwachsen lassen. Doch der Binnenmarkt kränkelt vor sich hin, auch weil die Kommission zu wenig für seine Zukunft getan hat.

    Herr Letta gibt uns eine lange To-do-Liste mit: allem voran sind es massive Überregulierung, hohe Energiekosten, Steuern und Abgaben und on top noch ein mindset, das Innovation und unternehmerischem Erfolg misstraut. Das ist Gift für unseren Binnenmarkt, das ist Gift für Wirtschaftswachstum.

    Und wer jetzt die Lösung in neuen Steuern, Umverteilung und Subventionen sieht, ist doch aus der Zeit gefallen. Wir machen die EU nicht fit für die Zukunft mit Ideen von gestern, sondern mit strukturellen Reformen. Für mehr Wirtschaftswachstum brauchen wir jetzt einen radikalen Bürokratieabbau und eine Fastenkur für neue EU-Gesetze. Und es muss Schluss sein mit Protektionismus in unserem Binnenmarkt.

    Wachstum muss das Ziel sein, denn eine starke Wirtschaft schafft Arbeitsplätze, finanziert Bildung und unseren Sozialstaat und sorgt auch dafür, dass wir uns verteidigen können. Ein starker Binnenmarkt ist die Grundlage für unsere Gesellschaft, unseren Zusammenhalt und unsere Sicherheit.

     
       

     

      Anna Cavazzini, im Namen der Verts/ALE-Fraktion. – Frau Präsidentin, liebe Kolleginnen und Kollegen! Lieber Enrico Letta, erst einmal vielen Dank für deinen Bericht und die gute Zusammenarbeit mit diesem Haus, insbesondere mit dem Ausschuss für Binnenmarkt und Verbraucherschutz. Einige Leute sind ja fest davon überzeugt – und Gabriele hat es schon gesagt –, dass man sich nicht in einen EU-Binnenmarkt verlieben kann; einer davon hieß Jacques Delors.

    Aber ich muss schon sagen, dass die aktuelle Binnenmarktgesetzgebung ziemlich attraktiv ist, ein Schlüssel gegen die multiplen Krisen unserer Zeit. Mit dem Gesetz über digitale Dienste und dem Gesetz über digitale Märkte legen wir demokratische Regeln für die Onlinewelt fest. Mit der Gesetzgebung für die Kreislaufwirtschaft und dem Recht auf Reparatur machen wir Nachhaltigkeit zur Norm auf dem Binnenmarkt. Und – das ist wirklich ein Projekt zum Verlieben – das gemeinsame Ladekabel macht endlich Schluss mit unserem Kabelsalat in den Schubladen. Diese Beispiele zeigen, dass sich die Aufgabe, einen gemeinsamen europäischen Markt zu schaffen, in den letzten 30 Jahren weiterentwickelt hat.

    Von der Veränderung des Marktes mit seinen vier Freiheiten – Waren, Dienstleistungen, Kapital und Menschen – nutzen wir ihn heute immer mehr, um unsere gemeinsamen politischen Ziele zu erreichen: Souveränität, die Regulierung von großen Tech-Unternehmen, die Stärkung von Rechten von Verbrauchern und vor allem auch der Schutz unseres Planeten und des Klimas.

    Und das ist auch die Geschichte – finde ich –, die wir den Bürgern heute erzählen müssen. Tatsächlich wird sich niemand in die abstrakte Idee der wirtschaftlichen Integration verlieben. Aber die Bürgerinnen und Bürger in der EU wollen hohe Verbraucherschutzstandards, eine gesunde Wirtschaft, Umweltschutz; und der Binnenmarkt und unsere Binnenmarktregeln können all das liefern, wenn wir es richtig machen.

    Ich finde, wenn wir die Unterstützung unserer Bürger erhalten wollen, muss der Binnenmarkt sie schützen. Riesige Proteste in ganz Europa und zwei gescheiterte EU-Verfassungsreferenden waren damals die Folge, als die Kommission bei der Marktintegration mit der Dienstleistungsrichtlinie zu weit gegangen ist. Dieses Parlament hat damals, 2006, den Vorschlag geändert und ausgewogener gestaltet. Wir haben in den vergangenen Jahren erfolgreich für eine stärkere soziale Dimension des Binnenmarktes gekämpft und müssen dies auch weiterhin tun.

    Ja, viele unsinnige Hürden im Binnenmarkt müssen schnellstens abgebaut werden. Aber Marktintegration darf niemals, aber auch niemals zum Abbau von Schutzstandards führen.

     
       

     

      Νικόλας Φαραντούρης, εξ ονόματος της ομάδας The Left. – Κυρία Πρόεδρε, αγαπητέ κύριε Letta, σας καλωσορίζω στο Ευρωπαϊκό Κοινοβούλιο. Καλωσορίζουμε κάποιες από τις προτάσεις σας, όπως αυτές για μια κοινή φορολογική πολιτική ή για μια κοινή ευρωπαϊκή βιομηχανική πολιτική. Δεν με βρίσκει όμως σύμφωνο η περαιτέρω απορρύθμιση των εργασιακών σχέσεων και η αποκλειστική έμφαση μονάχα στην κινητικότητα των επενδύσεων.

    Επίσης, σας καλώ, εσάς και την Ευρωπαϊκή Επιτροπή, να λάβετε υπόψη σας το γεγονός ότι ένας βασικός πυλώνας της εσωτερικής αγοράς από δημιουργίας της Ευρωπαϊκής Ένωσης, η πολιτική ανταγωνισμού, οι κανόνες ανταγωνισμού και η αντιμονοπωλιακή νομοθεσία, σε πολλές χώρες της Ευρωπαϊκής Ένωσης και στην ίδια την Ευρωπαϊκή Ένωση δεν λειτουργεί. Υπάρχουν χώρες, όπως για παράδειγμα η δική μου χώρα, η Ελλάδα, όπου είναι απολύτως καρτελοποιημένοι κάποιοι κρίσιμοι κλάδοι της οικονομίας, όπως επίσης και κλάδοι βασικών κοινωνικών αγαθών. Γι’ αυτό, θα πρέπει να ενταθούν οι προσπάθειες, ξανά από την αρχή, ώστε οι βασικοί πυλώνες της εσωτερικής αγοράς, όπως είναι οι κανόνες ανταγωνισμού, να γίνονται σεβαστοί και εφαρμόζονται αυστηρά.

    Καλώ, λοιπόν, την Ευρωπαϊκή Επιτροπή, στο πλαίσιο του ευρωπαϊκού δικτύου ανταγωνισμού, να δείξει μεγαλύτερη προσοχή σε καρτελοποιημένες αγορές και να δώσει μεγαλύτερη έμφαση στην κοινωνική διάσταση της εσωτερικής αγοράς.

     
       

     

      René Aust, im Namen der ESN-Fraktion. – Frau Präsidentin! Der Binnenmarkt ist eine der größten Errungenschaften der europäischen Zusammenarbeit. Er ist ein lebendiges Beispiel dafür, wie souveräne Nationen gemeinsam ihre Ziele erreichen können, wenn sie ihre Kräfte in einem wichtigen Bereich bündeln. Der Binnenmarkt hat Innovationen angeregt und für zusätzlichen Wohlstand in Europa gesorgt.

    Doch heute sehen wir leider, dass sich die Europäische Union immer weiter von diesen zentralen Aufgaben entfernt. Statt sich auf ihre wenigen, aber entscheidenden Aufgaben zu konzentrieren, wie eben den Binnenmarkt, den Schutz unserer gemeinsamen europäischen Außengrenzen oder auch die Koordination einer gesamteuropäischen Verteidigungsgemeinschaft, mischt sie sich in immer mehr Lebensbereiche ein, in denen sie eigentlich nichts zu suchen hat.

    Anstatt den Schwerpunkt auf grenzüberschreitende Herausforderungen wie Handel, Wettbewerb, Innovation oder gemeinsame Sicherheitsstandards zu legen, wird die EU zunehmend zu einem Gemischtwarenladen, der sich um alles Mögliche kümmert, vom Weltklima bis zur Genderideologie, aber das Wesentliche vernachlässigt. Diese Überdehnung der EU-Aufgaben schreckt private Investoren und Entrepreneure ab und schadet damit ganz Europa. Doch jede Kritik an dieser Entwicklung wird sofort als antieuropäisch verunglimpft und sehr schnell in die Ecke der Europafeinde gesteckt.

    Dabei braucht Europa eine Rückbesinnung auf das, was wirklich wichtig ist, und nationale Souveränität ist eine Voraussetzung für eine funktionierende europäische Zusammenarbeit. Darum kann man uns Patrioten auch die Zukunft Europas anvertrauen, weil wir eben verstanden haben, dass mehr nicht immer besser ist. Wir wollen eine handlungsfähige Gemeinschaft europäischer Nationalstaaten, die den Binnenmarkt fortentwickelt, die Außengrenzen sichert und unseren Kontinent schützt.

     
       

     

      Lídia Pereira (PPE). – Senhora Presidente, a participação da União Europeia na economia global está a cair. As economias asiáticas ultrapassam‑nos a uma velocidade vertiginosa, tal como o relatório de Enrico Letta e o relatório de Mário Draghi o confirmam. As condições de vida dos europeus estão a degradar‑se. O PIB per capita nos Estados Unidos cresceu o dobro do europeu desde que foi criado o Mercado Único, em 1993. Portanto, não podemos continuar a ficar para trás.

    E o mais chocante é a nossa produção de bens essenciais, incluindo em áreas como a saúde, que desceu de 53 % para menos de 25 % em pouco mais de duas décadas. Estamos dependentes de outros, quando nunca precisámos tanto de garantir a nossa autonomia estratégica.

    Enrico Letta disse‑o ainda há pouco, mas continuamos, infelizmente, a ver mais de 300 mil milhões de EUR das poupanças dos europeus serem desviadas para fora da Europa. É trágico, porque estamos a financiar a economia dos outros, em vez de fortalecermos a nossa.

    Queremos ter um mercado mais competitivo, então precisamos de uma união bancária completa. Queremos proteger as poupanças dos nossos cidadãos e relançar a inovação, precisamos de uma união de mercado de capitais. E, acima de tudo, precisamos mesmo de reformar o mercado único europeu, acrescentando‑lhe a livre circulação do conhecimento, porque só com investigação e inovação seremos capazes de ter mais empresas competitivas a nível global.

    Creio que já temos relatórios o quanto basta. Precisamos mesmo é de decisões, e está na hora de as tomarmos.

    (A oradora aceita responder a uma pergunta «cartão azul»)

     
       

     

      João Oliveira (The Left), Pergunta segundo o procedimento «cartão azul». – Senhora Presidente, fazer a defesa do mercado único a partir da apologia da política de concorrência, ignorando a concentração e a centralização a que essa política e esse mercado têm conduzido, não nos serve de muito. Basta olhar para o setor bancário português e perceber que, sem o aprofundamento do mercado único, ficaram os bancos todos nas mãos de capital estrangeiro, com exceção da Caixa Geral de Depósitos, que, por ser pública, continua a ser nacional.

    Trazer aqui a defesa do mercado único a partir da ideia de que é isso que permite reduzir os preços – quando o setor energético mostra exatamente o contrário, com o aumento dos custos da energia – ou agora a partir do setor financeiro, achando que é isso que resolve os problemas, pode servir às multinacionais, mas não serve um país como Portugal, Senhora Deputada.

     
       


     

      Camilla Laureti (S&D). – Signora Presidente, onorevoli colleghi, grazie a Enrico Letta per il rapporto. Alexander Langer diceva che la conversione ecologica potrà affermarsi solo se apparirà socialmente desiderabile: per questo in Europa servono investimenti comuni, perché il Green Deal è una rivoluzione necessaria che impatta sul modello di sviluppo e sulla vita delle persone, e nelle persone può generare paura.

    Se sapremo realizzarlo, avremo i cittadini al nostro fianco, le aziende più competitive e un’Europa più forte. Gli Stati Uniti, la Cina e l’India stanno andando veloci e in questa direzione – l’Europa non può permettersi di restare indietro. La risposta è un sistema comunitario di aiuti di Stato: dobbiamo integrare i principi dell’economia circolare per spingere sostenibilità e competitività.

    La libertà di muoversi, dice anche Letta nel rapporto, deve essere una scelta – oggi non lo è. Un terzo della popolazione europea vive in regioni che da anni sono immobili: le aree interne d’Europa. Qui si vince la sfida della crescita sostenibile, fatta di investimenti comuni, capaci di garantire i servizi di interesse generale per non lasciare indietro nessuno.

     
       

     

      Enikő Győri (PfE). – Tisztelt Elnök Asszony! Az egységes piac az Unió legközérthetőbb értéke. Az olcsóbb repülés, vagy annak előnye, hogy otthoni szeretteinkkel ingyen telefonálhatunk, nem szorul magyarázatra. Persze szereztünk keserű tapasztalatokat is. Szolgáltatási irányelv, kiküldött munkavállalók, mobilitási csomag. Ezek elfogadásakor a Bizottság mindig a nyugat-európaiak érdekét tartotta előbbre valónak.

    Ahol az EU keleti fele versenyképesebb, ott nem akarta lebontani az akadályokat. A feladat tehát csak, hogy olyan területeken mélyítsük az egységes piacot, mely fokozza a versenyképességet, és földrajzi helytől függetlenül megkönnyíti a polgárok és cégek életét. Ne központosítsunk ott, ahol a kisebbek vagy fejletlenebbek rosszul állnak. Több összeköttetés tehát, de például az energia- vagy telekommunikációs szektor centralizáltásával bánjunk csínján, ne tűnjenek el a helyi szereplők, ne dráguljon a szolgáltatás. A pénzügyi piacok közötti átjárhatóság jó irány, de legyünk óvatosak a nemzeti felügyeletek egységesítésével, ne fojtsuk meg a kisebb nemzeti tőkepiacokat, amelyek nélkül nincs helyi ökoszisztéma.

    Elnök úr említette az ötödik szabadságot, a tudás mozgását. Ez nagyon klassz. Csak kérdezem, hogy az Európai Bizottság miért blokkolja a magyar kutatók részvételét a Horizont programban, vagy a magyar diákok mozgását az Erasmus program keretein belül? Regionális különbségek kiegyenlítése nélkül nincs versenyképesség. Az agyelszívás ellen tenni kell. Ösztönözni kell a helyben boldogulást. Tartsuk meg a kohéziós politikát, hiszen ezt az egységes piac ellensúlyozására találták ki, hol nehézségeket okozott. Ezt fenn kell tartani kondicionalitás nélkül, mert az durva politikai eszközzé vált a Bizottság kezében.

     
       

     

      Denis Nesci (ECR). – Signora Presidente, onorevoli colleghi, Presidente Letta, la relazione che discutiamo oggi mette in luce una delle sfide cruciali: il rafforzamento del mercato unico è senza dubbio un obiettivo fondamentale per il futuro dell’Unione europea.

    Tuttavia, non possiamo ignorare le criticità evidenti. Le eccessive regolamentazioni burocratiche rappresentano un ostacolo reale che rischia di soffocare l’innovazione e la crescita delle PMI. Se poi ci troviamo di fronte a perfidie come quella della direttiva ETS, giusto per citarne una, che mette a rischio la competitività delle infrastrutture portuali del Mediterraneo – come il porto di Gioia Tauro – con forti ricadute anche sul livello occupazionale, non parliamo di mercato unico, bensì di un distorto mercato unico.

    Per rilanciare la nostra competitività nell’ambito del mercato unico abbiamo bisogno di una politica economica adeguata e solidale, accompagnata da regole che vadano incontro alle esigenze di tutti gli Stati membri. Per questo è essenziale che il mercato unico non diventi un vantaggio riservato solo ad alcune aree: serve un mercato unico realmente inclusivo, che possa offrire opportunità anche alle regioni meno sviluppate, mettendo al centro l’uomo e non le “eco-follie”, e che sia a favore di famiglie, consumatori e imprese.

     
       

     

      Sandro Gozi (Renew). – Madame la Présidente, chers collègues, caro Enrico, le plus grand succès de l’Union, le marché unique, doit être renouvelé et complété. «Rico» Letta l’affirme avec force, et il a raison.

    Renouvelé, car il est impossible de réussir la transition écologique et numérique sans rendre le marché unique plus durable et plus simplifié pour les producteurs et pour les consommateurs. Complété, car il faut éliminer tous les obstacles qui empêchent les PME d’en profiter pleinement et qui nous empêchent d’avoir une union de l’énergie, des télécoms, des capitaux et des investissements. Le coût de la «non-Europe» est trop grand pour ne pas agir. L’approfondissement du marché européen pourrait générer jusqu’à 1,1 trillion d’euros de production économique supplémentaire par an.

    Il est aussi urgent – le rapport le dit très bien – de dégager les ressources sociales et économiques nécessaires à l’accompagnement du pacte vert et de la transition numérique.

    Enfin, nous devons développer une dimension extérieure du marché unique en lien avec notre politique commerciale. Dans ce cadre, nous devons également réformer les marchés publics, qui doivent aussi nous aider à réduire notre dépendance vis-à-vis des pays tiers. Cela doit être notre grande mission pour l’innovation et la compétitivité.

     
       


     

      Marcin Sypniewski (ESN). – Pani Przewodnicząca, Szanowni Państwo, jestem posłem od kilku miesięcy i jestem szczerze zdumiony, że w tym krótkim czasie po raz kolejny debatujemy nad nowym sprawozdaniem, które ma nam wskazać, jak mamy stać się bardziej konkurencyjni, bogatsi, silniejsi czy piękniejsi. Najwyraźniej oprócz biegunki legislacyjnej mamy również do czynienia z biegunką ekspertyz, analiz i sprawozdań. Zamiast tego polecam poczytać Rothbarda, Misesa czy Hayeka, których dzieła przetrwały próbę czasu we wskazywaniu, co jest dobre dla rozwoju gospodarczego i wolności jednostki.

    Noblista Fryderyk von Hayek wskazuje, że wiedza w swojej naturze jest rozproszona. To rynek za pośrednictwem cen przesyła informacje do przedsiębiorców i konsumentów. Dzięki temu rynek samodzielnie się stabilizuje i dostosowuje się do zmieniających się warunków i potrzeb. Politycy i urzędnicy nie są do tego w ogóle potrzebni. Alternatywą dla takiego spontanicznego i rozproszonego działania jest centralne planowanie, które wielokrotnie wprowadzane zawsze zawodziło, ponieważ politycy nigdy nie posiądą całości rozproszonej wiedzy.

    Rynek nie jest tabelką w Excelu, ale żywym, dynamicznie zmieniającym się organizmem, a prawdziwymi przywódcami na rynku są konsumenci. To ich wymagania starają się spełnić przedsiębiorcy. Rozwiązaniem, które ewentualnie pobudziłoby rynek, jest porzucenie praw własności intelektualnej w postaci chociażby patentów. Informacja może przecież znajdować się w kilku miejscach jednocześnie, bez wzajemnej szkody. Nie jest to dobro rzadkie, dlatego nie powinno być chronione jak własność prywatna. Własność intelektualna to sztuczny twór, a jej ochrona jest fikcją prawną. Chcecie bogactwa i dobrej przyszłości? Postawcie na rynek, a nie na biurokrację i na sprawozdania.

     
       


     

      Mohammed Chahim (S&D). – Voorzitter, de heer Letta is vrij helder in zijn analyse, net zoals de heer Draghi kort daarna. Het gaat echt ergens over, namelijk hoe kunnen we onze interne markt versterken? Hoe kunnen we de eenheid van Europa versterken? Hoe zorgen we ervoor dat we een sterke concurrentie krijgen binnen Europa, maar vooral ook met de rest van de wereld? En dit gebaseerd op een gelijk speelveld, op innovatie en op vergroening?

    Simpel gezegd zijn er twee stromingen in Europa: enerzijds conservatief rechts, dat de ontwikkelingen buiten de EU negeert, blind is voor de massale groene investeringen in de VS en wegkijkt van de modernisering van de Chinese economie; anderzijds een stroming die deze ontwikkelingen wil inhalen door meer – en niet minder – op Europese schaal samen te werken, te investeren in groene technologieën en ons niet te blijven blindstaren, zoals Draghi zei, op onze deels verouderde industrie.

    De keuze is simpel. Kiezen we voor modernisering en vergroening en dus voor vooruitgang? Of kiezen we voor nostalgie en stilstand?

    (De spreker stemt ermee in om te antwoorden op een “blauwe kaart”-vraag)

     
       



     

      Roman Haider (PfE). – Frau Präsidentin! Der Letta-Bericht benennt viele Probleme des Binnenmarkts richtig: steigende Energiepreise, mangelhafte Infrastruktur, vor allem bei den Hochleistungsbahnstrecken, Rückstand bei den Zukunftstechnologien, Überbürokratisierung vor allem. Das ist alles richtig; es ist nicht neu, aber es stimmt. So richtig aber die Analyse und die Diagnose im Letta-Bericht ist, so falsch sind leider die Vorschläge zur Verbesserung. Das war beim Draghi-Bericht so, und das ist auch beim Letta-Bericht so.

    Den beiden fällt zur Lösung der Probleme der EU nur eines ein: noch mehr EU, noch mehr Kompetenzen für Brüssel, noch mehr EU-Institutionen, eine neue Fiskalkapazität, die Kapitalunion, und dabei ist aber genau das das Problem. Noch mehr Kompetenzen für Brüssel bedeuten noch mehr Bürokratie, noch mehr unnütze Vorschriften, noch weniger Flexibilität für die Mitgliedstaaten.

    Es ist höchst an der Zeit für neue Wege, für weniger Zentralismus, für weniger EU, für mehr Flexibilität für die Mitgliedstaaten, mehr Subsidiarität und mehr Freiheit.

     
       

     

      Kosma Złotowski (ECR). – Pani Przewodnicząca! Panie Premierze! Od sukcesu jednolitego rynku zależy przyszłość Unii Europejskiej. Ten bardzo dobry projekt gospodarczy wciąż jest jednak daleki od ideału, gdyż ogranicza potencjał rozwojowy wszystkich państw członkowskich. Wreszcie możemy o tym głośno mówić.

    Istnieje wiele barier dla firm, zwłaszcza małych i średnich, które chcą prowadzić działalność ponad granicami w sektorze usług, transporcie, budownictwie czy handlu internetowym. Już zidentyfikowane problemy, takie jak geoblocking, gold-plating czy nadmierne i uciążliwe kontrole, skutecznie należy zwalczać. Europejski Zielony Ład jest wyłącznie kolejną taką barierą dla wzrostu gospodarczego.

    Nierealistyczne cele klimatyczne w takich obszarach jak rolnictwo, motoryzacja, transport czy budownictwo muszą zostać w tej kadencji Parlamentu zmienione. Zacznijmy w końcu deregulować, umożliwiać małym i średnim przedsiębiorstwom dostęp do rynków zagranicznych, wspierać innowacje i cyfryzację. To przełoży się na wzrost zatrudnienia oraz niższe ceny towarów i usług dla Europejczyków.

     
       

     

      Billy Kelleher (Renew). – Madam President, the Letta report and the Draghi report are a wake-up call for the European Union in terms of digitisation, the Green Deal, our knowledge economy, investing in innovation, research and development, ensuring that we have growth and competitiveness. The single market, the internal market, is a cornerstone on which all of this is built, and we have to protect it and ensure that it prospers and flourishes.

    The fact of the matter is, at the moment we are very short on capital in the European Union to invest in all of the above. So we have to advance the Capital Markets Union and the Banking Union to ensure that we have the capital to invest in the knowledge economy, in the Green Deal and other areas of research and development.

    The free movement of people, goods and services and capital is the cornerstone. Of course, we do have some in this Chamber who are even trying to undermine the basic principle of free movement of people. We have to be very conscious that we can’t cherry‑pick the Single Market – free movement of capital, goods, services and people is the cornerstone and we must all defend it to the last.

    More broadly, over the next number of months, we have to ensure that we respond to the Letta report and the Draghi report in what they observe are the challenges ahead for our competitiveness.

     
       


     

      Fulvio Martusciello (PPE). – Signora Presidente, onorevoli colleghi, come sottolineato nella sua relazione e in quella di Mario Draghi, un solido mercato unico europeo è essenziale per la competitività delle imprese, perché può stimolare la crescita economica e l’innovazione, garantendo accesso al mercato ed eliminando la burocrazia inutile.

    L’Europa però ha bisogno di una forte strategia industriale per le tecnologie e le catene del valore, che promuova competitività, sostenibilità e innovazione. Questa strategia deve sviluppare una visione coerente, che dia priorità ad un quadro normativo, con politiche basate su dati scientifici e valutazioni di impatto approfondite, fornendo alle imprese la stabilità di cui hanno bisogno. Da questo punto di vista riteniamo molto positive le lettere di missione sulla creazione di una vera e propria economia circolare competitiva.

    Negli ultimi decenni le aziende europee hanno infatti investito miliardi di euro in tecnologie all’avanguardia, hanno generato enormi progressi nell’eco-design di prodotti, nella sicurezza dei consumatori e nell’industria del riciclo, dove l’Italia e l’Europa detengono posizioni di leadership mondiale, sia in termini di innovazione industriale che di sostenibilità ambientale.

    Purtroppo, l’eccesso di regolamentazione degli ultimi anni ha generato un’enorme incertezza, spingendo interi settori industriali a posticipare i propri investimenti, compromettendo gli obiettivi di crescita complessivi, con spreco di tempo e di risorse.

    In questo mandato sarà dunque necessario evitare a tutti i costi di produrre ulteriori iniziative legislative motivate da logiche falsamente ambientaliste e non basate su evidenze scientifiche, che rischiano di penalizzare le imprese europee. Sarà imperativo garantire la conformità con le norme europee da parte dei Paesi terzi, garantendo standard che riducano la dipendenza dai fornitori esteri e rafforzino la competitività dell’industria e delle economie europee per affrontare le sfide delle concorrenze globali di Cina e Stati Uniti.

     
       

     

      Laura Ballarín Cereza (S&D). – Señora presidenta, señor Letta, señorías, treinta años después de su creación, el informe Letta nos brinda una oportunidad única para avanzar hacia el futuro del mercado único en tres aspectos clave:

    En primer lugar, inspirados por Jacques Delors, apoyamos su idea de añadir una nueva libertad a la libertad de movimiento, que es la libertad de permanecer en el rincón de la Unión Europea que queramos. No queremos solo una Unión donde podamos movernos libremente en busca de una vida mejor: también queremos cohesión, oportunidades y desarrollo en todas las regiones de la Unión Europea, y acceso a la vivienda para proteger las zonas rurales y las más pobladas.

    En segundo lugar, necesitamos profundizar en la integración del mercado de capitales y el de las telecomunicaciones porque, como bien dice el señor Letta, no es coherente que compartamos una moneda única, pero tengamos aún fronteras digitales y prefijos nacionales.

    Y, en tercer lugar, la quinta libertad, la del conocimiento y la innovación. Nos quedan cinco años para profundizar en el mercado único y hacer que más europeos se enamoren de esta idea, tal como quería Jacques Delors, en contra de la extrema derecha que está aquí en esta Cámara sentada.

     
       

     

      Roberts Zīle (ECR). – Priekšsēdētājas kundze! Godātais Lettes kungs, es pilnīgi piekrītu jūsu ziņojumam, ka vienotais tirgus ir kaut kas vairāk kā tirgus, un arī jūsu norādītām nepilnībām gan sektoru ziņā: finanses, enerģētika, telekomunikācijas un it īpaši privātā kapitāla izvietošana.

    Ja kopumā Eiropā ir 33 triljonu eiro uzkrātā kapitāla un katru gadu 300 miljardi eiro tiek investēti ārpus Eiropas Savienības, Amerikā un citās vietās, tad kaut kas nav kārtībā ar šo. Un ar publisko naudu vien mēs nespēsim izdarīt tos uzdevumus, kas ir nepieciešami Eiropas Savienībai gan militārās industrijas jomā, gan zaļā kursa, gan paplašināšanās, gan citās jomās.

    Jūsu ieteiktās zāles arī ļoti vērā ņemamas par piekto pamatbrīvību, par Uzkrājumu un investīciju savienību. Bet dažas zāles, kā, teiksim, radīt siltumnīcas apstākļos Eiropas čempionus, kas var kļūt par globāliem čempioniem, es ļoti baidos, ka tas to nesasniegs. Vēl jo vairāk tas var noplicināt no perifērijas gan naudas resursus, gan arī cilvēku – gudrāko cilvēku – resursus uz dažiem centriem Eiropā, kas varbūt nebūs Eiropas Savienības veiksmes stāsts.

     
       


     

      Regina Doherty (PPE). – Madam President, Mr Letta, you’re absolutely right when you say that the single market is the best tool that we have to increase opportunities, improve our well-being and the living standards for all of the citizens across the European Union. And we absolutely can’t take it for granted, because if we do, it’s going to fail. Your report, which is really welcome, helps to illuminate many of the current problems that we are seeing and that the single market is facing.

    Europe’s economy is not growing strongly enough. Our small businesses are not given the opportunity to grow and to scale up. Approximately 30 % of the high-value companies founded in the EU between 2008 and 2021 relocated their headquarters out of the EU, and mostly to the US. Some 60 % of the issues that we identified by businesses in 2002 still exist in the European market today, because progress on removing the barriers has been so slow, and it’s particularly true in the case of our service industry.

    We see the distorting effects of current rules around the EU state aid rules, which allow larger countries to subsidise businesses at the expense of smaller ones, like my own, Ireland. In 2023, almost 80 % of EU state aid came from just two Member States, and 85 % from three Member States.

    Europe will not be able to spend its way out to growth. Instead, we must reduce the unnecessary red tape and bureaucracy that everybody has been speaking about daily since I arrived here in June. But it’s also vital to avoid EU protectionism in the form of high external tariffs, a hostility towards investment from third countries and an over-reliance on those subsidies.

     
       

     

      Estelle Ceulemans (S&D). – Madame la Présidente, Monsieur Letta, Mesdames et Messieurs les Commissaires, chers collègues, il est aussi bon de rappeler que le rapport de M. Letta sera – Mme von der Leyen l’a elle-même dit – l’un des fils rouges de la prochaine Commission. Il était donc vraiment important que vous veniez nous le présenter et que nous puissions en débattre aujourd’hui.

    Merci, Monsieur Letta, de reprendre les mots de Jacques Delors, artisan du marché unique, qui nous dit que le marché n’est pas une fin en soi: il est là pour améliorer la vie des citoyens, qui ne sont pas que des consommateurs. Le marché unique a en effet permis de développer la prospérité et la compétitivité, mais il a aussi creusé les disparités et la pauvreté – comme cela a été dit dans le débat précédent, qui nous rappelle que, malheureusement, 1 Européen sur 5 fait face à un risque de pauvreté.

    Merci, donc, Monsieur Letta, de rappeler que le marché ne peut fonctionner que sur la base de politiques sociales fortes, et de rappeler aussi qu’il faut, sous cette législature, investir dans les deux transitions, pour qu’elles soient justes. Je voudrais rappeler aussi que nous attendons de la prochaine Commission qu’elle s’engage, tout comme l’a fait M. Nicolas Schmit, sur des matières sociales importantes.

     
       

     

      Adrian-George Axinia (ECR). – Doamnă președintă, piața unică europeană este o idee foarte bună, care, din păcate, în anumite domenii de activitate nu funcționează așa cum trebuie. Vă dau trei exemple: piața de energie, acolo unde România, care produce mai multă electricitate decât consumă, plătește cele mai mari facturi din Uniunea Europeană. A doua disfuncționalitate, care este încă nerezolvată, ține de agricultură. În continuare, cerealele și anumite produse alimentare exportate din Ucraina ajung pe piața românească, bulgărească sau poloneză și creează o concurență neloială producătorilor agricoli autohtoni.

    Merită subliniat și refuzul implementării procesului de convergență externă, care ar trebui să ducă la egalizarea subvențiilor pentru fermieri în toate țările Uniunii Europene. Nu în ultimul rând, recent, Curtea de Justiție a Uniunii Europene a declarat nelegale mai multe prevederi din pachetul de mobilitate orientate împotriva transportatorilor din România, ceea ce confirmă raportul Draghi. Există în continuare o suprareglementare a pieței unice și aceasta afectează competiția liberă. Aș mai puncta și faptul că uciderea spațiului Schengen de către țările care introduc controale generale la frontieră și statele care țin încă România și Bulgaria pe margine afectează în continuare buna funcționare a pieței unice.

     
       

     

      Ľudovít Ódor (Renew). – Vážená pani predsedajúca, tak ako vidíme aj z tejto diskusie, skutočný jednotný trh je niečo, na čom vieme stavať aj v tomto Parlamente, a musíme v najbližších rokoch urobiť maximum pre to, aby sme tento koncept rozšírili aj na ďalšie sektory. Rád by som upozornil na tri veci, ktoré sú pre mňa prioritné. Po prvé, svet sa zmenšil a trhy sa trošku zmenili. V digitálnom svete dominujú tí najlepší. Víťaz berie takmer všetko, dosť dobre už nestačí. Potrebujeme naozaj silných európskych globálnych hráčov, a nie desiatky trpaslíkov. Po druhé, svet inovácií je aj o riziku. Bohužiaľ, náš bankami dominovaný finančný systém, a ako aj občania preferujú menej rizika, a preto bez Únie, úspor a investícií, ako aj lepšej finančnej gramotnosti to tak aj zostane. Peniaze máme, no nevieme ich dostať k inovatívnym firmám. A po tretie, pri dobrých nápadoch a podnikaní nemôžeme tolerovať bariéry pri prechode každej vnútornej hranice.

     
       


     

      Marc Angel (S&D). – Madam President, the single market is the crown jewel of the European construction, and in my eyes gives the EU a competitive advantage. A stronger single market means a more competitive Europe.

    Mr Letta, as your excellent report shows, we can improve a lot and we must perfect it. We need better implementation of the existing rules. We need to ensure that it contributes to a more sustainable and a more social Europe, and we need to consider strengthening integration in crucial sectors, as a stronger single energy market, for example, driven notably by better interconnectivity, can lead to more secure and affordable energy and cheaper electricity bills for companies and our citizens.

    Furthermore, for the S&D Group, more integration means more competitiveness for our companies, better consumer protection and more prosperity for Europeans – while adopting national solutions will lead to more fragmentation and ultimately a weaker Europe.

    Further harmonisation of rules also means less bureaucracy and a reduced administrative burden for our companies, especially for SMEs, which will no longer have to navigate through a jungle of 27 different sets of national rules.

    So let us leverage the power of integration to tap into the full potential of the single market.

     
       

     

      Ivars Ijabs (Renew). – Madam President, thank you, Mr Letta, for your excellent report. Well, of course, the single market is a strength of the EU: it’s the main instrument. This is how we achieve our goals. But what are actually our goals today? Let me remind you that the Russian aggression in Ukraine is still going on. And the Russian attack on an EU country is possibly, still, a question of the nearest future.

    And that’s why I really like the part in your report which deals with a common market for security and defence industries. This is a real necessity for the EU right now. Some 80 % of the military help to Ukraine is right now spent on non-European materials.

    But how to achieve that common market? European investment in defence is lagging. It is very seriously hindered by red tape, by excessive regulatory requirements, by fragmentation. There is an immense potential of a single market in defence industry, but one must have a political will to implement it – and quickly. Time is running out.

     
       

     

      Salvatore De Meo (PPE). – Signora Presidente, onorevoli colleghi, la relazione Letta, unitamente a quella del Presidente Draghi, arrivano all’inizio di questa legislatura, che io vorrei diventasse riformatrice, ambiziosa, coraggiosa ma responsabile, perché l’Unione europea non sia più spettatrice in una scena globale ma diventi protagonista.

    E abbiamo gli strumenti per farlo: un mercato unico che in questi anni non solo è stato strumento di integrazione ma ha consentito la nostra crescita economica e la prosperità, uno strumento che va semplificato da un punto di vista burocratico, ma soprattutto rafforzato, per esprimere ulteriormente le sue potenzialità e affrontare le nuove opportunità.

    Così come è necessario arrivare a un mercato unico dell’energia, un mercato finanziario che permetta ovviamente di garantire condizioni di competitività. E allora noi abbiamo davanti a noi sfide importanti, per le quali solo un mercato unico forte potrà garantirci un futuro all’altezza delle nostre ambizioni climatiche, sociali e produttive.

     
       

     

      Jonás Fernández (S&D). – Señora presidenta, señor comisario, señor Letta, es un placer tenerle aquí en un momento en el que estamos empezando a definir las prioridades de este mandato y, sin duda, acelerar la integración del mercado único —especialmente en el ámbito de los servicios, donde aún tenemos relevantes problemas, como ha expuesto en su informe— es absolutamente necesario.

    Pero me va a permitir decirle que lo que más me ha llamado la atención del informe es la exigencia de evitar la huida de ahorro europeo a otras jurisdicciones. Porque algunos llevamos años en esta Cámara pidiendo reducir los superávits por cuenta corriente de algunos países —superávits por cuenta corriente que, en algunos casos, llegan a dos dígitos en relación con el PIB de esos países— y, ciertamente, en los debates que teníamos aquí en estos años, nadie o muy pocos me seguían.

    Y yo creo que es importante que, ahora que pedimos que el ahorro se invierta en Europa, seamos capaces de explicar a la Cámara que lo que estamos pidiendo es más demanda interna y reducir los superávits por cuenta corriente que ahogan el crecimiento de la Unión Europea.

     
       

     

      Biljana Borzan (S&D). – Poštovana predsjedavajuća, zajedničko tržište jedno je od najvećih europskih postignuća.

    Svaka kriza produbljuje nejednakosti na tržištu, bogati se još više bogate, siromašni postaju još siromašniji. Troškovi života najveći su problem u cijeloj Europskoj uniji, a nejednakosti između i unutar država članica u cijenama, plaćama, mirovinama i stopi siromaštva se samo povećavaju.

    Izvješće ističe zaštitu potrošača kao jedan od uvjeta za pošteno tržište, ali geoblocking, teritorijalne barijere, viši rast cijena hrane u istočnoj Europi samo su neki od gorućih problema. Izvješće hvali Zakon o osnaživanju potrošača u zelenoj tranziciji na koju sam i sama ponosna, ali rješenje je provedba naših pravila u svakom dijelu Europske unije. Više od 80 posto građana moje zemlje smatra da su potrošači nezaštićeni protiv tržišnih igrača.

    Moramo ojačati europske alate, potrošačke udruge, inspekcijski nadzor i svijest građana o vlastitim pravima. Ne smijemo biti oni tamo negdje u Bruxellesu. Mi moramo raditi za ljude.

     
       


       

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      Davor Ivo Stier (PPE). – Poštovana predsjedavajuća, gospodin Letta ispravno govori o tome što ubrzanje integracije unutarnjeg tržišta ima jednu geopolitičku važnost u današnjim uvjetima.

    Ja bih to nadopunio time što unutarnje tržište moramo isto tako i povezati s procesom proširenja. Pogledajmo, na primjer, situaciju na zapadnom Balkanu, ima puno političkih problema. Ne smijemo čekati da se oni riješe, da te zemlje postanu punopravne članice, nego bismo ih već prije mogli, doduše možda na jedan postupni način, ali već prije mogli integrirati u naše jedinstveno tržište. Kao što, na primjer, činimo kada je u pitanju roaming. Mislim da je to jedan dobar primjer, ali moramo to proširiti i na druge slobode.

    Na taj način će i ljudi u toj regiji imati svoje pravo na ostanak, a Europska unija će imati veći utjecaj i više će pridonijeti stabilnosti tog dijela europskog kontinenta.

     
       

     

      Maria Grapini (S&D). – Doamnă președintă, domnule comisar, domnule Letta, vă salut și în această săptămână. Aș spune multe. În primul rând vă felicit: este o radiografie corectă, dar nu numai o radiografie, sunt și măsuri concrete. V-aș întreba, estimați dumneavoastră oare cât din acest raport se va aplica? Pentru că, iată, noua comisie nu are un comisar, nu există un portofoliu pentru piața internă. Cine se ocupă atunci de piața internă? Cum să ne ducem la măsurile concrete pe care le-ați spus dumneavoastră? Ați spus că piața unică ne unește; este oare o piață unică acum?

    Sunt de acord să avem cea de a cincea libertate de mișcare, dar cel puțin o libertate de mișcare ne lipsește acum, domnule Letta. Știți oare cât a pierdut o țară care de 17 ani nu este în spațiul Schengen și are costuri la transport? Cât a pierdut economia țării mele? Apoi, avem acum, când vorbim, îngrădirea în interiorul spațiului Schengen a granițelor. Deci trebuie – toată piața unică, e adevărat, ați spus că ne unește – dar trebuie să luăm cu pragmatism măsuri care să ducă la rezultate și la o viață mai bună a oamenilor.

     
       

     

      Silvia Sardone (PfE). – Signora Presidente, onorevoli colleghi, le istituzioni europee hanno deciso di affidare ad Enrico Letta l’incarico di scrivere una relazione sul futuro dell’Europa. Eh, niente, fa già ridere così.

    Letta è l’ex leader del Partito democratico, ex premier della sinistra in Italia, volto di punta dei socialisti europei: rappresenta praticamente tutti i responsabili del disastro dell’Unione europea degli ultimi anni, tra l’altro sonoramente sconfitti in Italia.

    Per Letta la transizione verde è indispensabile e bisogna accompagnare agricoltori, imprese, industria dell’auto: esattamente ciò che però la sua maggioranza non ha fatto. Anzi, grazie a voi questi settori sono in crisi. Letta ci ricorda che l’Europa non deve cedere sul ruolo di leader nel settore manifatturiero: ma è proprio grazie ai vincoli, tasse e burocrazia volute dall’Europa che ci troviamo in questa condizione.

    Enrico Letta: uno che ha uno strano concetto di democrazia e ci ha tenuto a dire che i cordoni sanitari sono fondamentali per fermare le destre. Lui, proprio lui, che ha ribadito che servono più migranti regolari per lo sviluppo, andando contro diversi Paesi, anche socialisti, che finalmente dicono che bisogna fermare l’immigrazione.

    Insomma, veramente vogliamo farci dare lezioni da Letta, colui che dice che l’ex ministro Fornero è stato un ministro ottimo quando invece ha solo distrutto il nostro Paese?

     
       


     

      João Oliveira (The Left). – Senhora Presidente, visto a partir do conselho de administração de uma multinacional, o aprofundamento do mercado único pode parecer um filão; visto a partir da realidade dos trabalhadores e dos povos, das micro, pequenas e médias empresas, das possibilidades de desenvolvimento de um país como Portugal, o aprofundamento do mercado único é um pesado fardo que nos arrasta para o fundo.

    Há algumas décadas atrás, o militante do PCP e ex‑deputado deste Parlamento, Sérgio Ribeiro, antecipava que a transferência de instrumentos de política para a esfera supranacional, nomeadamente através da transferência da política monetária e financeira para o BCE, conduziria a uma política tendencialmente única. Por meio do mercado único e das políticas que lhe estão associadas, que o senhor Letta hoje adjetiva de motor de mudança da União Europeia, retirou‑se capacidade de decisão aos governos nacionais, abriu‑se mais espaço à concentração e centralização do capital, colocaram‑se sob ataque os direitos sociais e laborais.

    O aprofundamento do mercado único serve às multinacionais, mas não serve ao desenvolvimento económico nem à justiça social.

     
       

     

      Lukas Sieper (NI). – Madam President, dear honourable House, dear people of Europe, Mr Letta, before I came here to this Parliament, I finished my law studies at the University of Cologne. During this time, I put a lot of effort into learning the four European freedoms: the freedom to move people, services, goods and capital. And I can tell you, learning all the law-related details – especially the court rulings – that was a pain in the ass, indeed. Names like Dassonville or Cassis de Dijon, who will tell you here nothing, send a shiver down the spine of every law student.

    But at the same time, whenever I opened my books, I felt love for Europe. Because what is Europe if not the idea of freedom? And that’s why, Mr Letta, I would like to take the time to give you my deepest support for one of the main ideas of your report: the implementation of a fifth freedom – the freedom of research, innovation, knowledge and education. Because as Europe is an idea, ideas should roam free on this continent.

     
       

       

    (Koniec zgłoszeń z sali)

     
       


     

     

      Giuseppe Lupo (S&D), per iscritto. – Penso che il Parlamento europeo debba condividere e sostenere la strategia della relazione Letta per modernizzare il mercato unico dell’UE.

    Condivido in particolare che, se vogliamo che il mercato unico migliori davvero la vita della gente, deve avere un’anima che è il dialogo sociale, che deve fare partecipare e coinvolgere le persone, la società, i corpi sociali intermedi, i sindacati dei lavoratori e delle imprese, rilanciando il dialogo sociale come lo ha voluto e praticato con successo Jacques Delors, anche grazie alla collaborazione dell’allora segretario della CES, Emilio Gabaglio.

    La grande sfida da affrontare, credo, sia adesso la promozione di una politica fiscale comune, per sostenere con condizioni fiscali di vantaggio le aree territoriali più deboli, superando le differenze dei sistemi fiscali nazionali che ostacolano la leale concorrenza.

     

    14. Implementation of the Single European Sky (debate)


     

      Jens Gieseke, Berichterstatter. – Sehr geehrte Frau Präsidentin, sehr geehrter Herr Kommissar Hoekstra, liebe Kolleginnen und Kollegen! 30 000 Flüge täglich, 600 Mio. Passagiere jährlich, über 500 000 Arbeitsplätze bei Fluggesellschaften, weniger als 17 000 Arbeitsplätze in der nationalen Verkehrskontrolle, überlastete Flughäfen, ein Flickenteppich an Strecken aufgrund der Flugsicherung entlang nationaler Grenzen – das ist das Bild des letzten europäischen Monopols: die Flugsicherungsdienste.

    Ich bin heute hier, um Sie zu bitten: Sagen Sie Ja zu kürzeren Strecken, zu mehr Effizienz, zu mehr Leistungen, zu mehr Zusammenarbeit, und Ja zu einem wirklich europäischen einheitlichen Luftraum. Warum gibt es kein Leistungsüberprüfungsgremium? Warum gibt es nicht ein gemeinsames Leistungssystem? Warum gibt es nicht einen europäischen Netzwerkmanager? Das sind alles wichtige Elemente, um die Leistungen der Flugsicherung zu verbessern und den Schaden für die Passagiere zu begrenzen. Fluglotsen behalten ihren Arbeitsplatz, sie werden weniger gestresst arbeiten, sie werden besser arbeiten, weil sie mit ihren Nachbarn zusammenarbeiten. Ich bin hier, um Ihnen zu sagen: Ja, wir können Flüge sicherer, kürzer, umweltfreundlicher und erschwinglicher für den Durchschnittsbürger der Europäischen Union machen.

    Wir haben hier ein riesiges Potenzial. Milliarden Euro wurden sowohl von der Europäischen Union als auch von privaten Interessenträgern im Rahmen des SESAR-Projektes investiert. SESAR liefert den digitalen europäischen Luftraum. Es liegt nun in unserer Hand, aber wir können uns nicht nur auf Investitionen in Technologien verlassen. Während der technologische Fortschritt durch das SESAR-Programm fortgeschritten ist, sind die Strukturreformen, die hier erforderlich sind, um sowohl die Kapazitäts- als auch die Umweltperformance zu erreichen, seit mehr als einem Jahrzehnt ins Stocken geraten und halten uns in der Vergangenheit fest. Hier haben die Mitgliedstaaten auch nicht mitgemacht, die standen auf der Bremse.

    Sehen Sie sich nun allein diesen Sommer an: Von Juni bis August haben die Flugsicherungen in Europa 16,9 Millionen – ich wiederhole: 16,9 Millionen – Minuten an Verspätungen im europäischen Netzwerk angehäuft. Das waren 41 % mehr als im gesamten Sommer 2023. Zum Vergleich: Im Jahr 2017 – im ganzen Jahr – gab es 15,9 Millionen Minuten. Wenn man die wetterbedingten Verspätungen herausnimmt, dann haben sich die Verspätungen im Vergleich zum Sommer 2023 um 82 % erhöht, und nur sieben nationale Flugsicherungen haben 85 % dieser Verspätungen verursacht.

    Das zeigt, dass die Situation von Jahr zu Jahr schlechter wird – leider –, insbesondere jetzt, da der Flugverkehr wieder das Niveau von vor der Pandemie erreicht hat. Diese Reform, die wir nun hier haben, die wird gebraucht, sie wird dringend gebraucht! Die Schaffung eines wirklich einheitlichen europäischen Luftraums wurde viel zu lange von den Mitgliedstaaten blockiert, die nicht bereit waren, sich auf eine Restrukturierung der Flugsicherung zum Wohle der Allgemeinheit, zum Wohle der Passagiere einzulassen.

    Dank der unermüdlichen Arbeit von Herrn Marian-Jean Marinescu, unserem Berichterstatter der EVP, für den einheitlichen europäischen Luftraum und für EASA in den letzten 16 Jahren werden wir nun in der Lage sein, diese neue Luftraumverordnung umzusetzen. Hier möchte ich aber auch an die großartige Arbeit von Herrn David Maria Sassoli, unserem verstorbenen Parlamentspräsidenten, erinnern, mit dem Herr Marinescu zusammen an der EASA-Grundverordnung gearbeitet hat. Ich möchte aber auch meinen sozialistischen Kollegen Bogusław Liberadzki nicht vergessen, der mit Herrn Marinescu stark zusammengearbeitet hat, so wie es jetzt Johan Danielsson mit mir tut.

    Gestatten Sie mir, Frau Präsidentin, die Mitgliedstaaten nun aufzufordern, die Fehler, die wir noch haben, nun zügig bei der Umsetzung umzuarbeiten. Es besteht ein riesiges Potenzial zum Wohle der Bürgerinnen und Bürger und um am Ende auch die Klimaziele einzuhalten. Also, wir müssen weiterarbeiten.

     
       

     

      Johan Danielsson, Föredragande. – Fru talman! Varje år genomförs omkring en miljard resor med flyg inom EU. Över tid har flyget blivit en allt viktigare del av vår vardag och vår ekonomi. För ett land som Sverige är en välfungerande flygtrafik avgörande. Vi har stora avstånd och är glest befolkade. Flyget knyter samman vårt land, vår kontinent och kopplar oss till omvärlden.

    Men sektorn står inför stora utmaningar. Under 2023 var nästan tre av tio flyg mer än 15 minuter försenade. Den genomsnittliga förseningen per flygning i Europa är cirka 18 minuter. Samtidigt står flyget globalt för omkring 2 till 3 % av våra totala koldioxidutsläpp.

    I dag liknar Europas luftrum ett stort pussel där varje land har sin egen bit, och tyvärr passar inte alla bitar ihop. Det leder till omvägar, till väntetider och till onödiga kostnader. Singel European Sky ska lösa delar av detta pussel. Efter mer än ett decennium av förhandlingar har vi äntligen nått fram till en överenskommelse.

    Lagstiftningen handlar om att göra flyget säkrare, punktligare och klimatvänligare. Det gynnar resenärer, det kommer att gynna industrin och det kommer att gynna klimatet. Och det är ett viktigt steg för att modernisera Europas luftrum.

    Jag vill tacka alla som arbetat med det här förslaget. Ett särskilt tack till tidigare föredragande Bogusław Liberadzki och Marian-Jean Marinescu, som jobbade med detta oförtröttligt under den föregående mandatperioden. Och så ett tack till Jens Gieseke, min medföredragande den här gången. Det visar vad vi kan åstadkomma om vi arbetar tillsammans över partigränserna i det här huset.

    Men låt mig vara tydlig: Singel European Sky är ingen revolution – det är en evolution. Det är en kompromiss som tar oss i rätt riktning. Vi kommer att se förbättringar och effektivitet och samordning. Men även om förändringarna kanske inte blev så stora som vi hade tänkt oss, innehåller det viktiga steg framåt.

    Vi stärker till exempel övervakningen på EU-nivå, vilket kommer att vara avgörande för att säkerställa att våra europeiska regler efterföljs. Förändringarna ger oss en god plattform att bygga vidare på mot ett enhetligt, effektivt och hållbart europeiskt luftrum.

    Enligt beräkningarna kan Singel European Sky bidra till att minska koldioxidutsläppen med upp till 10 % per flygning. Det här är ett viktigt steg och en del av lösningen för att också göra flyget mer hållbart.

    Men vi måste fortsätta arbetet på flera fronter. Vi kommer att behöva säkerställa en marknad för hållbara flygbränslen. Vi kommer att behöva fortsätta arbeta med ökad effektivitet i bränsleförbrukningen i flyget. Vi kommer också att se till att de fantastiska innovationer som är på väg fram, inte minst för att elektrifiera regionalflyget, kan få en praktisk omsättning på vår europeiska flygmarknad. Jag ser fram emot en bra debatt i dag och ett bra beslut senare i veckan. Och jag är hoppfull om att resultatet kommer att bli ett bättre europeiskt luftrum.

     
       

     

      Wopke Hoekstra, Member of the Commission. – Madam President, honourable Members, let me start by wholeheartedly thanking Mr Gieseke, Mr Danielsson and the TRAN Committee for all the great work that they have been doing. But let me also thank the former rapporteurs, Mr Marinescu and Mr Liberadzki, who might be with us virtually, for successfully concluding the interinstitutional negotiations with the Council on the regulation on the implementation of the Single European Sky.

    Ladies and gentlemen, our skies – and the two rapporteurs have said that – need fixing for the good of passengers, airlines and the environment. And to illustrate what is really at stake here, let me just recall this summer, when every second flight was delayed. Every second flight was delayed. And we all know how that feels and what it is like.

    Now some of those delays were unavoidable, for example because of bad weather conditions. But if you then go into the details, you will find that many of those delayed and cancelled flights could actually simply have been reduced by improving the way we manage air traffic today. And that is, of course, the ultimate aim. That is the ultimate aim of this new regulation.

    This agreement will update rules which are 15 years old. Let me be clear – and it was said here before – it is not as ambitious as the Commission, and I feel many in this room, would have wanted. And some would consider it far away from our original plan. But what is also true is that it does represent a clear step forward, and it improves the performance of the European airspace and the provision of air navigation services in the years to come.

    The new rules will strengthen the European network, tackling the fragmentation of European airspace, and they will reduce congestion and suboptimal flight routes, which today create delays for our passengers, extra fuel consumption and unnecessary CO2 emissions.

    Ladies and gentlemen, the agreement will also stimulate innovation and facilitate new services for air traffic management. It will create incentives to reduce the environmental footprint of aviation. For example, air navigation service providers will now have to introduce environment and climate performance targets on a wider range of services. The charges that airlines will need to pay for flying over our skies will be more favourable for those carriers emitting fewer CO2 emissions and with less impact on the environment.

    Finally, more know-how will be introduced when we regulate the performance of monopoly air navigation service providers. A new performance review board will be created to support the Commission, bringing independent expertise and improving the temporary solutions that we have today.

    Madam President, honourable Members, please allow me to conclude. More than 10 years have passed since the Commission presented what was then its original proposal. Believe me, it was not an easy task. In order to reap the benefits that the agreement brings, in my view it is now urgent that the Parliament finalises the adoption of the regulation by supporting the Council’s first reading position this week. Implementation work can then start as soon as possible.

    Thank you very much, once again, in particular to the TRAN Committee and the rapporteurs, and I’m very much looking forward to the continuation of our interaction today.

     
       

     

      Sophia Kircher, im Namen der PPE-Fraktion. – Sehr geehrte Frau Präsidentin, Herr Kommissar, liebe Kolleginnen und Kollegen! Wir reisen heute fast grenzenlos durch Europa. Doch über den Wolken, wo die Freiheit wohl grenzenlos scheint, stoßen wir im EU-Luftraum immer noch auf viele unsichtbare Grenzbalken – dadurch wird der europäische Luftverkehr stark eingeschränkt. Flugzeuge fliegen oft unnötige Umwege, weil veraltete nationale Vorschriften das erzwingen. Das führt zu Verspätungen, zu Kosten und 10 % mehr CO2-Ausstoß pro Jahr.

    Der Grund dafür: Der europäische Luftraum gleicht aktuell einem komplizierten Fleckerlteppich aus vielen nationalen Vorschriften. Statt eines gemeinsamen europäischen Systems mit einheitlichen Bestimmungen überwacht derzeit jeder Mitgliedstaat seinen Luftraum eigenständig, ohne eine ausreichende Zusammenarbeit mit anderen EU-Staaten.

    Mit diesem Gesetzespaket schaffen wir nun die Grundlage für mehr Zusammenarbeit mit anderen EU-Staaten, die wir so dringend brauchen, und somit werden wir in Zukunft günstiger, schneller und nachhaltiger fliegen können. Das ist eine Win-win-Situation für uns alle. Trotz dessen bleibt noch viel zu tun. Mit diesem Gesetzespaket gelingt uns ein wichtiger Schritt, aber es liegen noch viele Meilen vor uns.

     
       

     

      Matteo Ricci, a nome del gruppo S&D. – Signora Presidente, onorevoli colleghi, dopo oltre dieci anni di trattative, siamo finalmente giunti a un accordo sul cielo unico europeo, un tema che incide direttamente sulla vita quotidiana di milioni di cittadini.

    Tuttavia, dobbiamo essere chiari: il testo che adotteremo domani non è all’altezza delle aspettative. L’Europa ha bisogno di uno spazio aereo unificato con una gestione integrata e rotte dirette per ridurre ritardi, costi e soprattutto l’impatto ambientale.

    Oggi la frammentazione del nostro spazio aereo genera inefficienze gravi, costando ai passeggeri tempo e denaro. Ogni ritardo si traduce in maggiori emissioni e questo è un prezzo che il nostro pianeta non può più permettersi di pagare.

    Il regolamento che ci apprestiamo a votare promuove una maggiore cooperazione tra le autorità nazionali ma non impone regole vincolanti per una vera integrazione dello spazio aereo europeo. È un compromesso necessario, ma non sufficiente.

    Personalmente lo considero solo un primo passo. Non dobbiamo fermarci: l’Europa ha bisogno di un cielo unico europeo per essere più competitiva.

     
       

     

      Julien Leonardelli, au nom du groupe PfE. – Madame la Présidente, nous nous défions de tout projet qui penche vers le fédéralisme, à plus forte raison lorsqu’il est placé sous l’égide de la Commission européenne. Cela ne nous empêche pas d’être pragmatiques et responsables. Le projet de ciel unique européen vise, nous dit-on, à faciliter les trajets aériens à l’intérieur de l’Union européenne et à faire économiser 5 milliards d’euros par an de kérosène pour les compagnies aériennes.

    La Commission européenne ne pouvait que briller sur ce sujet technique, qui bénéficie d’un véritable consensus européen. Cette initiative, soutenue par une large majorité, ne devait être qu’une formalité. Mais la Commission, trop occupée à outrepasser ses compétences, en oublie ses objectifs premiers. Ce texte ne verra pas l’instauration d’un ciel unique européen, malgré des années de tractations. La montagne a accouché d’une souris. C’est en tout cas ce qui ressort des positions des professionnels du transport aérien, qui ne cachent pas leur déception à l’égard de ce texte.

    Le maintien d’un millefeuille à la fois administratif et technocratique ne plaît à personne. Pendant que l’Europe brasse du vent et se penche sur un texte ridicule, qui ne change rien tant ces changements sont insignifiants, les Etats-Unis, eux, produisent déjà en très grande partie la nouvelle génération de carburants par des subventions massives dans la recherche et l’industrie. En matière d’industrie comme d’énergie, les pays européens restent à la traîne, et la Commission européenne n’y est pas pour rien. Madame von der Leyen, sur la souveraineté faites preuve de plus de retenue, et sur le ciel unique montrez plus d’ambition.

     
       


       

    PREȘEDINȚIA: VICTOR NEGRESCU
    Vicepreședinte

     
       

     

      Jan-Christoph Oetjen, im Namen der Renew-Fraktion. – Herr Präsident, Herr Kommissar, verehrte Kolleginnen und Kollegen! Zehn Jahre hat es gedauert, dass wir dieses Gesetz, diesen einheitlichen europäischen Luftraum, auf den Weg gebracht haben. Nicht etwa, weil wir hier im Parlament lange gebraucht hätten, sondern es hat an den Mitgliedstaaten gelegen, die sich sehr lange hinter nationalen Kompetenzen versteckt haben. Diese nationalen Kompetenzen haben dazu gedient, zu kaschieren, dass es in den Mitgliedstaaten staatliche Monopole in der Flugsicherung gibt, die sie nicht angetastet sehen wollen. Und zur Wahrheit gehört: So richtig antasten tun wir sie jetzt auch nicht. Das, was wir machen, ist keine Reform, sondern ein Reförmchen, aber sie adressiert wichtige Themen.

    Wir kriegen endlich dieses performance review, das heißt endlich ein Benchmark für die Flugsicherung – ob sie gut funktionieren, ob sie genügend Leute haben, wie es klappt mit den Verspätungen, an denen – nicht immer, aber sehr häufig – eben auch die Flugsicherung mit Schuld ist.

    Wir haben eine Kapazitätsfrage, die sich dadurch adressieren lässt, und von daher können wir am Ende dieser Reform zustimmen. Aber sie ist weit von dem entfernt, was wir uns eigentlich erhoffen und was wir bräuchten, damit wir die Verspätungen in Europa endlich in den Griff bekommen.

     
       

     

      Merja Kyllönen, The Left-ryhmän puolesta. – Arvoisa puhemies, yhtenäisellä eurooppalaisella ilmatilalla on pitkä historia. Tavoitteena on vähentää viivytyksiä, lisätä turvallisuutta, lieventää ympäristövaikutuksia ja alentaa palvelujen tarjoamiseen liittyviä kustannuksia ilmailualalla. Euroopan ilmatilan pirstoutumisen vähentäminen tehokkaammalla ilmaliikenteen hallintajärjestelmällä on enemmän kuin tarpeellista. Vaikka politiikka on edennyt, niin SES ei ole onnistunut saavuttamaan täysin siltä odotettua edistystä. Tämän seurauksena Euroopan ilmatila on edelleen valitettavan pirstoutunut, kallis, tehoton ja kapasiteettiongelmat jatkuvat nopeasti kasvavan lentoliikenteen vuoksi. Työn on siis jatkuttava, paikoilleen emme voi jämähtää.

    Nykyinen sääntelykehys on pitkän aikavälin työ. Siinä on ollut mukana monenlaisia toimijoita. Siinä on ollut mukana monenlaista vääntöä sellaisia historian paloja, taisteluita, joita muun muassa Yhdistynyt kuningaskunta ja Espanja kävivät aikanaan, esimerkiksi Gibraltarin osalta. Kun Brexit poisti tämän esteen, komissio on muuttanut alkuperäistä ehdotustaan, ja hyvä niin.

    Jäsenvaltiot tarvitsevat laajaa yhteistyötä ja koordinointia toiminnallisissa ilmatilan lohkoissa, myös yhtenäisen eurooppalaisen ilmatilan sääntelykehyksen luomisen jälkeen. Tässä säädöksessä tunnustetaan olemassa olevien yhteistyöjärjestelyjen arvo ilmatilan hallinnan tehostamisessa ja lentoliikennevirtojen optimoinnissa tietyillä maantieteellisillä alueilla.

    Liikenteessä yleisesti, mutta lentoliikenteessä erityisesti, turvallisuusnäkökulma korostuu ja siksi kaikissa muutoksissa on mentävä ehdottomasti turvallisuusnäkökulma edellä. Safety first! Ja ihan pakko on sanoa rakkaat terveiset aina upealle taisteluparilleni Marinesculle. Ja rakkaat terveiset myös britti Jodie Fosterille, jota ei voi kyllä tämä talo unohtaa. Olisinpa videoinut parhaat palat uusille päättäjille. Piccolino, magnifico, amato David Sassoli.

     
       

     

      Siegbert Frank Droese, im Namen der ESN-Fraktion. – Herr Präsident! Seit 20 Jahren plant die EU einen einheitlichen Luftraum, aber wenig ist passiert. Wir teilen die Kritik der Airlines an dem Vorschlag der Kommission zum einheitlichen europäischen Luftraum. Es wird zu höheren Steuern führen, mehr Bürokratie, mehr Berichtspflichten – all das wollen wir nicht. Europa ist bisher schon ein sehr sicherer Luftraum. Warum also auf Biegen und Brechen die Kompetenzen der nationalen Flugsicherungsdienste beschneiden und alles in den EU-Topf werfen?

    Es muss nicht alles harmonisiert oder einheitlich zertifiziert werden. Wichtig dagegen wäre für uns die Abschaffung von Sanktionen, z. B. gegenüber Russland. Dann könnten Flugzeuge schneller und vor allem umweltschonender nach Asien fliegen und so CO2 reduzieren. Aber immer neue Steuern und Vorschriften vertreiben Fluggesellschaften aus Europa und verteuern das Fliegen unnötig. Wir wollen, dass auch in Zukunft sich der Arbeiter noch seinen wohlverdienten Urlaubsflug leisten kann und nicht nur die Eurokraten.

    Die Kommission könnte sich unserer Meinung nach mal mit wichtigen Dingen beschäftigen, beispielsweise mit der Migration, oder vielleicht gibt es in Zukunft auch Tausende von Abschiebeflügen zu organisieren – da würden wir gern mal einen schönen Vorschlag hören. Diesem Vorschlag, der hier vorliegt, können wir nicht zustimmen.

     
       

     

      Lukas Sieper (NI). – Herr Präsident, verehrte Damen und Herren! Der berühmte deutsche Lyriker Reinhard Mey sang einst „Über den Wolken, da muss die Freiheit wohl grenzenlos sein“, und in diesen Worten steckt aus europapolitischer Sicht endlos viel Wahrheit. Denn über den Wolken gibt es keine Grenzen, da ist man einfach irgendwo über Europa. Deswegen unterstütze ich die Aktualisierung des Einheitlichen Europäischen Luftraums, auch wenn sie halb so lange gedauert hat, wie ich auf dieser Welt bin.

    Gleichzeitig sollten wir aber nicht aufhören, wo wir jetzt angefangen haben, und über weitere Dinge nachdenken. Ich möchte Ihnen da zwei Sachen vorschlagen.

    Zum einen braucht es eine Gebührenanpassung für klimafreundliche Flüge. Wir haben in der Vergangenheit gemerkt, dass wir vor allen Dingen über so etwas die Entwicklung in der Gesellschaft steuern können, und der Klimawandel kennt nun mal keine Grenzen.

    Zum anderen benötigen wir einen einheitlichen europäischen Luft-Datenraum. Wir müssen also den Datenaustausch zwischen den Mitgliedstaaten im Luftverkehr optimieren und damit effizienter machen, denn auch Daten kennen keine Grenzen. Die Arbeit am Einheitlichen Europäischen Luftraum ist wertvoll – sie ist noch nicht vorbei.

     
       

     

      Alvise Pérez (NI). – Señor presidente, ¿de verdad este Parlamento no entiende lo que se pretende hoy aquí, imponiendo el Cielo Único Europeo?

    No se trata de fomentar la competencia, no se trata de mejorar ninguna descentralización ni de ahorrarnos un 10 % más de CO2. Esa es la gran farsa: ¿qué poder en Europa está más centralizado que la propia Comisión Europea? ¿Qué entidad ha centralizado más poder que la Comisión? Ninguna. ¿Y siguen de verdad creyéndose estas iniciativas en pro del supuesto medio ambiente?

    Lo que busca con esto la Comisión es que hasta nuestros cielos dependan de una nueva entidad europea bajo el control férreo de Von der Leyen con la excusa del CO2. El Cielo Único Europeo no es más que un instrumento para expandir la supervisión y la regulación comunitaria imponiendo aún más objetivos ambientales, aún más cargas y aún más tarifas contra los usuarios de este continente. La señora Von der Leyen demuestra un desprecio absoluto por la soberanía de los países, y esta Cámara, también.

    Y aquí, un orgulloso español les responde que el desprecio, evidentemente, es mutuo. Solo que hay una diferencia esencial: quien parasita y esclaviza a nuestro país es ella, mientras que nosotros solo anhelamos libertad.

    Si queremos preocuparnos por el cielo europeo, defendámonos de las intrusiones y las amenazas militares por cielo, mar y aire con las que Marruecos y todas las falsas ONG del sur de Europa están atentando contra nuestro país.

    Esta no era la Europa que nos prometieron. Esta es una Europa mesiánica en la que no nos reconocemos.

     
       

       

    Intervenții la cerere

     
       

     

      Maria Grapini (S&D). – Domnule președinte, domnule comisar, stimați colegi, zece ani am fost în Comisia pentru transport și am tot dezbătut nevoia de îmbunătățire a Cerului unic european. Transportul prin aviație este extrem de important. Vorbeam mai devreme la raportul domnului Letta despre conectivitate, despre libera circulație. Domnule comisar, am patru zboruri pe săptămână – nu numai datorită condițiilor meteorologice sunt întârzieri. Întârzierile, așa cum ați spus și dumneavoastră, sunt frecvente și din alte cauze: lipsa de organizare, să stai pe pistă să aștepți că nu ai culoar de zbor.

    Asta înseamnă că este nevoie să aplicăm acest regulament și îl susțin, pentru că s-a lucrat la el, îmbunătățește Cerul unic european și cred că avem nevoie de un transport reformat și pe aviație pentru, sigur, eficiență economică în piața internă și, de ce nu, pentru protejarea drepturilor pasagerilor. Prețurile nu se schimbă când ai întârziere, dar ajungi foarte târziu la destinație și câteodată îți pierzi practic întâlnirile pe care ți le-ai programat.

     
       

     

      Γεάδης Γεάδη (ECR). – Κύριε Πρόεδρε, η εισήγηση για δημιουργία ενιαίου ευρωπαϊκού ουρανού αποτελεί μια προσπάθεια για βελτίωση της ασφάλειας, της αποδοτικότητας και της περιβαλλοντικής βιωσιμότητας των αεροπορικών υπηρεσιών, όπως έχει αναφερθεί.

    Όμως, πώς μπορούμε να μιλάμε για ασφάλεια όταν κλείνουμε τα μάτια στις παρανομίες; Θα γίνω πιο συγκεκριμένος. Η λειτουργία του παράνομου αεροδρομίου της κατεχόμενης Τύμπου στην Κύπρο θέτει σε κίνδυνο τις πτήσεις και χιλιάδες πολίτες καθημερινώς, αφού ελλοχεύει τεράστιος κίνδυνος για αεροπορικά ατυχήματα.

    Διερωτώμαι: δεν θα αντιδρούσατε αν λίγα μέτρα από το αεροδρόμιο της Φρανκφούρτης, δίπλα από το αεροδρόμιο στο Παρίσι, πλησίον του αεροδρομίου της Ρώμης, των Βρυξελλών, της Μαδρίτης, του Βερολίνου, λειτουργούσε ένα παράνομο αεροδρόμιο με δικούς του κανόνες; Φυσικά.

    Επομένως, ας αφήσουμε τα λόγια και ας περάσουμε στις πράξεις, που δεν είναι ο συντονισμός και η επικοινωνία με κατοχικές αρχές —κάτι που θα οδηγούσε στην κανονικοποίηση της παρανομίας— αλλά η απαγόρευση της λειτουργίας του, που θα συνοδεύεται με αυστηρότατες κυρώσεις σε αεροπορικές εταιρείες που χρησιμοποιούν το παράνομο αεροδρόμιο.

     
       

     

      João Oliveira (The Left). – Senhor Presidente, é certo que esta nova versão do Regulamento Céu Único Europeu não vai tão longe como a posição que o Parlamento Europeu havia aprovado, com tudo o que ela representava de ataque sem equívocos à soberania nacional, numa abordagem abertamente mercantilista e de liberalização ainda maior do setor aéreo, visando a sua concentração e centralização. Mas, esses não deixam de ser traços que persistem no documento final, mesmo que de forma matizada, traços que rejeitamos.

    Em nome do que esta proposta não é, não faltará certamente quem procure ir além dela, nomeadamente em Portugal, dando continuidade e consequência às ameaças que têm recaído sobre a NAV, com vista ao desmembramento da sua atividade, com prejuízo para a soberania nacional e para a economia.

    Pela nossa parte, daqui reafirmamos que continuaremos a intervir, rejeitando o caminho de liberalização do controlo aéreo e em defesa da NAV, empresa pública estratégica para o desenvolvimento nacional.

     
       

       

    (Încheierea intervențiilor la cerere)

     
       


     

      Wopke Hoekstra, Member of the Commission. – Mr President, ladies and gentlemen, dear Members, let me mention two quick points in response. The first one is on sovereignty. For those who are concerned about the impacts on the sovereignty of Member States over their airspace, let me be clear, and let me underline that all the provisions aim to foster better coordination within Europe. Member States will continue to decide whether and which parts of their airspace they open or they close. Full stop. It’s that simple. So I feel sovereignty will continue to be fully in place.

    Secondly, in response to the Members who have been speaking, let me reiterate what I said in the first term, and that is that more is needed. More needs to be done, and more today would have been better. But politics is also quite often the art of the possible. We are where we are today. Let’s seal this now and then let’s move forward from there.

     
       

     

      Jens Gieseke, Berichterstatter. – Herr Präsident, Herr Kommissar Hoekstra, liebe Kolleginnen und Kollegen! Ich danke für diesen konstruktiven Austausch. Obwohl das natürlich ganz rechts und ganz links schwerfällt, bei so einem sachlichen Thema konstruktiv mitzuarbeiten, glaube ich, dass wir insgesamt eine gute Debatte hatten.

    Der einheitliche europäische Luftraum zeigt einmal mehr unser europäisches und auch unser EVP-Engagement für die kontinuierliche Unterstützung der Fluggäste, der Luftfahrtindustrie, der Forschung und Entwicklung, auch im Luftfahrt- und im Raumfahrtsektor, sowie auch die Einhaltung der Umweltversprechen. Wir streben ganz sicher nach effizienteren Flugsicherungsdiensten, weniger Verspätungen, einem geringeren ökologischen Fußabdruck und auch geringeren Kosten für Passagiere und Fluggesellschaften.

    Der einheitliche europäische Luftraum ist ein erster Schritt vorwärts, um die Engpässe im Luftraum zu beseitigen, um endlich einen wirklich einheitlichen EU-Raum zu schaffen, ohne die nationale Souveränität zu beeinträchtigen. Das wird dann auch zu weniger Kosten und zu einer besseren Umweltleistung führen.

    Ich glaube, morgen kann wirklich ein guter Tag werden für Europa. Von daher mein klarer Appell an alle Kolleginnen und Kollegen, morgen pünktlich zur Abstimmung zu kommen und für diese Neufassung zu stimmen. Ich stimme mit dem Kommissarsanwärter, aktuellen Kommissar und demnächst hoffentlich wiedergewählten Kommissar Hoekstra überein: Das ist ein erster Schritt heute, es werden weitere in den nächsten fünf Jahren folgen müssen. Aber für die EVP kann ich sagen: Wir sind bereit, diese Arbeit fortzusetzen. Unsere Bürger werden es sicherlich danken.

     
       

     

      Johan Danielsson, Föredragande. – Herr talman! Jag blir glad över det engagemang som visats under debatten. Avslutningsvis vill jag betona att vårt arbete inom flygsektorn inte slutar här. Vi har, som många konstaterat, fortfarande mycket att göra för att säkerställa en rättvis och hållbar flygsektor i Europa.

    Smidiga gränsöverskridande transporter är viktiga men får aldrig ske på bekostnad av arbetstagares rättigheter. Under denna mandatperiod hoppas jag därför att vi kan ta itu också med andra viktiga frågor som berör sektorn.

    En revidering av EU:s förordning om luftfartstjänster står högt på agendan. För det första måste vi stärka reglerna kring så kallad wet leasing, där flygbolag hyr in plan med besättning. Wet leasing ska naturligtvis kunna användas för att möta oförutsedda händelser, men inte för att konkurrera med löner och arbetsvillkor.

    Utvecklingen – där på ytan seriösa flygbolag skapar dotterbolag med enda syftet att pressa tillbaka personalens arbetsvillkor – är inte värdig och måste få ett slut. För det andra behöver vi tydligare definitioner kring personalens hemmabas. Vi har sett hur bolag i dag utnyttjar skillnader i nationell lagstiftning för att pressa ner lönekostnaderna. Också detta måste få ett slut.

    Med det sagt återstår nu att genomföra Single European Sky. Det kommer att kräva fortsatt hårt arbete från EU-kommissionen i övervakningen av de regler som vi nu ändå får på plats, för att säkerställa att det verkligen blir ett steg framåt och inte ett slag i luften. Jag hoppas att alla är här och röstar för förslaget i morgon.

     
       

     

      President. – The debate is closed.

    The vote will take place tomorrow.

     

    15. A stronger Europe for safer products to better protect consumers and tackle unfair competition: boosting EU oversight in e-commerce and imports (debate)


     

      Didier Reynders, membre de la Commission. – Monsieur le Président, Mesdames et Messieurs les députés, je suis ravi d’être parmi vous aujourd’hui pour débattre des défis que pose le commerce électronique, tant en matière de protection des consommateurs que de concurrence loyale ou de durabilité. Ces dernières années, des milliards de colis individuels ont été expédiés directement aux consommateurs de l’Union, notamment par voie aérienne, et de nouveaux acteurs du commerce électronique, principalement installés en dehors de l’Union, dominent désormais le marché. Quatre milliards de colis devraient être livrés en 2024.

    La Commission est consciente que cet afflux de marchandises achetées en ligne pose des défis en matière de conformité au cadre juridique applicable et de sécurité, de concurrence déloyale et de durabilité. En effet, bon nombre de ces produits s’avèrent dangereux, non conformes ou contrefaits.

    En raison de l’urgence de la situation, nous devons identifier une réponse européenne collective pour garantir la sécurité et la conformité des produits vendus sur ces plateformes de commerce électronique situées dans des pays tiers, pour préserver les consommateurs de pratiques commerciales déloyales et pour assurer des conditions de concurrence justes et équitables aux entreprises européennes.

    The Commission is ready to act in cooperation with the market surveillance authorities, the consumer protection and customs authorities, as well as with the digital services coordinators under the DSA to effectively enforce Union legislation and increase the controls on those platforms and products. We have instruments at our disposal that we are already using.

    First, the Digital Services Act is a powerful tool and it is a priority to enforce this regulation. The Commission is fully committed to ensuring strong and effective enforcement against very large online platforms, notably marketplaces not complying with all rules, which risk fines up to 6% of their global turnover. The DSA gives the Commission unprecedented enforcement powers that are already available. The recent enforcement action by the Commission, which resulted in TikTok’s commitment to withdraw its ‘lite rewards’ system from the EU market, as it raised concerns of addictiveness, is a good example of what the DSA can deliver for the whole European Union.

    More specifically, regarding e-commerce, the Commission has already launched an investigation in relation to AliExpress’ practices, including on suspicions related to the risk of dissemination of illegal products and the possible negative impact to consumer protection. We have also recently designated Temu and Shein as very large online platforms under the DSA, and already launched investigative actions in relation to these two online marketplaces. Consumer protection and compliance by online marketplaces is and will remain one of our enforcement priorities. We take this responsibility seriously and will not refrain to act decisively. The Commission will also coordinate closely with the digital services coordinators, which are responsible for the smaller online marketplaces, to ensure that smaller online marketplaces also follow the rules, and that these rules are consistently applied in the European Union. The European Board for Digital Services is crucial in this respect.

    Second, customs authorities are the first line of defence when it comes to products imported from third countries. They are also key actors in the supply chain to identify and suspend the release of non-compliant and dangerous goods. The customs reform, proposed by the Commission in 2023, is currently being discussed by the European Parliament and the Council. Under this proposed reform, the implementation of an EU customs data hub would enable risk management at EU level, making the enforcement of compliance with product requirements more targeted and effective. Additionally, the proposal includes an abolition of the current threshold that exempts goods valued at less than EUR 150 from customs duties. These measures would be important tools for combating fraud and abuse. However, customs authorities cannot act alone. It is crucial for them to collaborate with market surveillance authorities and digital services coordinators to combine their tools, capacity and expertise.

    Third, the Consumer Protection Cooperation Network, under the coordination of the Commission, has carried out several enforcement actions in recent years against key market players, such as Amazon and AliExpress, to bring them into line with EU consumer protection legislation. In May, the consumer organisation BEUC informed the Commission about practices of the e-commerce platform Temu and its alleged non-compliance with, among others, EU consumer laws. The Commission has immediately informed the CPC Network about this complaint, and discussions under that format are ongoing. Compliance by major e-commerce players, including those targeting European consumers from third countries, is a top priority for the Commission and national authorities. The Commission will continue to fully support and coordinate the enforcement work of the network.

    Looking ahead, it will be essential to further tackle challenges with e-commerce platforms and strengthen measures to prevent non-EU compliant products from entering the EU market. This would include ensuring an optimal articulation between the General Product Safety Regulation, the Market Surveillance Regulation and the Digital Services Act. To further improve online product safety and compliance with relevant rules, it will be our priority to fully use the enforcement toolbox provided for under these regulations, for example, by organising product safety control to check and improve compliance of the e-commerce sector with EU product safety requirements, organising joint product sampling and testing activities involving online mystery shopping, and facilitating further the cooperation between market surveillance and customs authorities to give an unified response to the challenges of e-commerce.

    To ensure that manufacturers outside the EU comply with all rules, the new GPSR also introduces a new obligation to appoint a responsible person for their products. This will guarantee traceability and responsibility for any goods sold on the open market. To address the issue at its source, it is also paramount to continue cooperating with manufacturing third countries. We are, for example, committed to continue the awareness-raising and training activities on EU product safety rules with Chinese companies. Apart from legal obligations, it is also important to explore voluntary cooperation mechanisms, such as the product safety pledge, which has enabled the removal of close to 60 000 unsafe products listings in the past six months.

    It will also be crucial to further improve the current enforcement framework for cross-border infringement of EU consumer law, in order to preserve the level playing field in the Union and the competitiveness of EU businesses. To achieve this aim, we will continue to explore possible approaches to strengthen the Commission’s role in specific circumstances that affect consumers throughout the Union and to further improve the enforcement cooperation among national authorities. Moreover, the Commission encouraged the swift adoption of some proposed legislative initiatives, namely the ‘VAT in the digital age’ package and the customs reform, that aim to structurally improve the transparency and control on the flow of goods entering and leaving the union, starting by e-commerce goods.

    I thank you for your attention. Of course, I am now looking forward to our debate and to try to collect your proposals, remarks, or maybe some criticism.

     
       

     

      Andreas Schwab, im Namen der PPE-Fraktion. – Herr Präsident, Herr Kommissar, liebe Kolleginnen und Kollegen! Onlineplattformen haben die Art und Weise, wie Verbraucher einkaufen, grundlegend geändert. Verbraucherinnen und Verbraucher sind nicht mehr auf lokale Anbieter beschränkt, sondern können Waren bei internationalen Händlern einkaufen, wodurch ihre Auswahl erweitert wird und sie oft bessere Preise finden. Sie haben ja gerade angesprochen, Herr Kommissar: 4 Milliarden Pakete allein in diesem Jahr zeigen, dass die europäischen Verbraucherinnen und Verbraucher an internationalen Produkten interessiert sind und auf den besten Preis achten. Aber viele Drittstaatenplattformen stehen in der Kritik wegen mangelhafter Produktqualität, unzureichender Kontrollen und damit unfairer Wettbewerbsbedingungen.

    Deswegen ist es gut, Herr Kommissar, dass Sie den Dreiklang aus Maßnahmen, die greifen können, dargestellt haben. Zoll: Wir haben nach wie vor 27 unterschiedliche Zollsysteme, obwohl das einheitliche europäische Zollrecht angewendet werden muss, und es wird leider unterschiedlich angewendet. Wir haben zum Zweiten die Marktaufsichtsbehörden, die alle in nationaler Hand sind und unterschiedlich stark ausgestattet sind, und wir haben das Gesetz über digitale Dienste. Und hier, Herr Kommissar, hätte ich mir etwas mehr erwartet, denn das Gesetz über digitale Dienste wird jetzt schon zum zweiten Mal gegenüber Temu in Anwendung gebracht – aber immer mit der Bitte um Auskunftserteilung und nicht mit Entscheidungen.

    Hier müssen wir schneller vorankommen, denn mit dem Gesetz über digitale Dienste und dem Gesetz über digitale Märkte hat das Europäische Parlament hier – dieses Haus – in den vergangenen Jahren wichtige Schritte unternommen, um das Vertrauen der Bürger in die Sicherheit des Internets zu stärken und um europäischen Unternehmen fairen Wettbewerb anzubieten. Daran wollen wir festhalten, und deshalb ist die Europäische Kommission gefordert, hier Schritte folgen zu lassen.

     
       

     

      Laura Ballarín Cereza, en nombre del Grupo S&D. – Señor presidente, señor comisario, un 71 % de la población europea compra bienes y servicios en línea. El comercio en línea es cómodo, es barato, pero tiene muchos riesgos. Por ello, regularlo bien es ya inaplazable.

    Sabemos que plataformas de comercio electrónico, como Amazon, Aliexpress, Temu o Shein, están afectando a nuestro comercio en tres aspectos clave.

    En primer lugar, en la seguridad de productos que consumimos: juguetes, ropa, etc. Todos conocemos esos productos que nos llegan a casa y que no cumplen las condiciones mínimas.

    En segundo lugar, en el enorme impacto que tienen sobre el comercio local de nuestros municipios, que está siendo asfixiado por la competencia desleal de estas plataformas a nuestras pymes europeas.

    Y, en tercer lugar, en el medio ambiente, porque sabemos que estas empresas abandonan a su suerte toneladas de paquetes devueltos por clientes en Europa y en otros continentes, lo que pone en riesgo la salud de todo el planeta.

    Para eso tenemos leyes, apliquémoslas: más controles en las aduanas, y comercio y consumo responsable para proteger nuestro medio ambiente, a nuestros consumidores y nuestro comercio local.

     
       

     

      Virginie Joron, au nom du groupe PfE. – Monsieur le Président, chers collègues, Monsieur le Commissaire, nous voici en marche vers cinq ans de teutonneries supplémentaires. On avait espéré en 2019 que le premier mandat von der Leyen ferait état d’une gestion saine et honnête. Mais on a eu le matraquage des automobilistes, un dérapage budgétaire et les fourberies de Pfizer.

    Ce soir, nous parlons donc de la surveillance européenne des marchés du commerce en ligne, pendant que nos commerces de proximité ferment les uns après les autres. La vente de produits dangereux, illicites, contrefaits ou volés est encore légion sur les grandes plateformes. Cette lutte, c’était pourtant ce que vous aviez promis lors de l’adoption de toutes les législations précédentes sur la question. Votre slogan? «Le règlement sur les services numériques protégera vos enfants.» Aujourd’hui, ce n’est plus un règlement sur les services numériques, mais un règlement sur la surveillance numérique qui a été mis en place, sous l’impulsion du démissionnaire Thierry Breton. Les associations de consommateurs ont signalé en avril dernier le géant chinois Temu, parce qu’il n’assurait pas l’identification des vendeurs. C’est l’article 30 du règlement sur les services numériques. Ces mêmes associations ont fait état de cas où le consommateur est manipulé par des prix qui changent ou qui ne correspondent pas au produit choisi. C’est l’article 25 du règlement sur les services numériques. On a eu la directive de 1998 sur les indications de prix, la directive de 2005 sur les pratiques commerciales prohibées, les nouvelles règles de sécurité des jouets ou encore la réforme du code des douanes.

    Mais la réalité, c’est une jungle de normes qui empêchent nos entreprises françaises ou européennes de se développer, et des pays tiers, comme la Chine, leader mondial du commerce électronique, qui contournent sans problème nos règles – dixit un inspecteur de l’OLAF – ou, pis, qui bénéficient d’exemptions des frais de douane pour les achats dont la valeur ne dépasse pas 150 euros. Une jungle où, finalement, c’est Bruxelles qui tire une balle dans le pied du commerce électronique européen.

     
       

     

      Piotr Müller, w imieniu grupy ECR. – Panie Przewodniczący! Panie Komisarzu! Szanowni Państwo! Regulacje dotyczące bezpieczeństwa produktów w Europie są niezwykle ważne. One powodują, że z jednej strony konsumenci są bezpieczni, a z drugiej strony, że standaryzujemy pewnego rodzaju rozwiązania produkcyjne w Europie, co oczywiście też przynosi wymierne korzyści i bezpieczeństwo dla konsumentów. Jednak widzimy tę rosnącą konkurencję ze strony w szczególności rynków azjatyckich i moją obawą jest to, że te przepisy w praktyce nie będą obowiązywały właśnie wobec tych krajów, które dostają się na rynek europejski w sposób inny niż produkcja na naszym rodzimym rynku.

    W związku z tym mam pytanie do Pana Komisarza, jakie działania tutaj można byłoby podjąć (chociażby być może zapisując w nowej perspektywie budżetowej, nad którą będziemy pracować, dodatkowe środki dla urzędów, dla instytucji krajowych i unijnych, ale przede wszystkim krajowych, bo one najczęściej kontrolują jakość produktów), aby właśnie rzeczywista kontrola tych produktów, które pochodzą w szczególności z Azji, miała miejsce.

     
       

     

      Svenja Hahn, im Namen der Renew-Fraktion. – Herr Präsident! Wenn Spielzeuge für Babys so leicht auseinanderfallen, dass sie daran ersticken können, dann haben Eltern zu Recht Angst. Vor allem, wenn Untersuchungen zeigen, dass mehr als die Hälfte von Spielzeugen aus Drittländern wie China gefährlich ist.

    Wenn Designs von kleinen europäischen Designern kopiert werden und die Klamotten aus fragwürdiger Produktion mit giftigen Chemikalien belastet sind und dann auch noch über Plattformen wie Temu und Shein zu Billigpreisen verschleudert werden, dann leiden wir Verbraucher, unsere Umwelt und unsere Unternehmen, die sich an Recht und Gesetz halten.

    Illegale und unsichere Produkte dürfen nicht in unseren Binnenmarkt kommen, am besten, weil sie bereits vor Verkauf gestoppt werden. Die Kommission und die Mitgliedstaaten müssen geltendes Recht rigoros durchsetzen: das Gesetz über digitale Dienste und die neuen Regeln zu Produktsicherheit. Wir müssen gemeinsam unsere Marktüberwachung und unseren Zoll stärken. Vor allem die Digitalisierung des Zolls muss schneller vorangehen, damit wir die digitale Voranmeldung und auch den Wegfall der Freigrenze für illegale Produkte haben können, damit wir illegale Produkte aus unserem Markt fernhalten können.

    Ich baue darauf, dass die Kommission zügig einen Aktionsplan mit den Mitgliedstaaten umsetzen wird, damit unsere Kleinsten sicher sind, damit Shopping weder zur Ausbeutung von Umwelt noch von Menschen führt und Wettbewerb fair ist.

     
       

     

      Saskia Bricmont, au nom du groupe Verts/ALE. – Monsieur le Président, Monsieur le Commissaire, vous l’avez dit: Temu, Shein, AliExpress, Amazon et de plus petites plateformes inondent le marché européen de produits à faible coût. Mais, derrière ces bas prix, il y a des coûts énormes, notamment des techniques de manipulation en ligne incitant à l’hyperconsommation ou des produits de mauvaise qualité pouvant s’avérer dangereux pour la santé et la sécurité.

    Une enquête a même révélé que 80 % des jouets testés ayant été importés par le biais de ces plateformes ne respectaient pas les normes de sécurité européennes. Cela induit aussi une concurrence déloyale pour les entreprises européennes qui respectent les normes sociales, environnementales, de produits, de sécurité. Ces normes existent au niveau européen pour de bonnes raisons: la protection des consommateurs, des travailleurs, de l’environnement. Elles doivent donc être respectées par tout le monde, y compris par les entreprises importatrices et par les plateformes de pays tiers.

    Des centaines de milliers de colis arrivent chez nous tous les jours, en un clic et sans avoir fait l’objet de contrôles. Autant de produits potentiellement dangereux, qui ne respectent pas les normes européennes. Cette concurrence déloyale touche tous les secteurs et constitue souvent un frein au développement de filières locales durables et sociétalement responsables. C’est le cas notamment du secteur textile, où la concurrence déloyale de l’«ultrafast fashion» venant des plateformes chinoises menace l’émergence d’un secteur textile durable en Europe.

    L’Union européenne est bien là pour protéger les consommateurs et nos entrepreneurs: il faut donc assurer effectivement le respect des règles, la transparence et l’information des consommateurs, mais aussi des contrôles douaniers renforcés et les moyens nécessaires à de tels contrôles, des droits de douane même pour les achats de moins de 150 euros, et un renforcement des sanctions à l’égard des plateformes qui ne respectent pas les règles.

     
       

     

      Hanna Gedin, för The Left gruppen. – Herr talman! Jag ska börja med att säga att jag är glad att vi har den här diskussionen, för situationen är ohållbar.

    Från Vänstern har vi länge krävt ett stramare regelverk för e-handelsplattformar. Ett test som nyligen gjordes av leksaksbranschen visar att åtta av tio leksaker som importeras till EU och kan köpas på olika internetsajter riskerar att kväva eller förgifta barn – kväva och förgifta våra barn.

    De uppfyller inte EU:s säkerhetskrav. Vår uppgift som lagstiftare är att se till att minska risken för olyckor, att se till att medborgarna är trygga och säkra. Det gör vi genom att premiera miljövänliga och säkra produkter, samtidigt som vi ser till att arbetsvillkoren för dem som producerar de här sakerna är bra.

    Det är inte bara barn och andra konsumenter i Europa som riskerar att skadas. Det finns återkommande indikationer på att många av de här produkterna, förutom att de är skadliga, dessutom är tillverkade genom tvångsarbete.

    Kommissionen måste agera – inte bara för att den här slapphäntheten mot utländska internetsajter konkurrerar med lägre standarder och sämre arbetsvillkor än varor som produceras i enlighet med EU-lagstiftning. Dagens regelverk leder faktiskt till stora risker för alla medborgare – inte minst för våra barn. Lösningen måste vara att även utländska sajter får samma skyldigheter som inhemska aktörer, att tullen får större resurser och att varor som importeras, till exempel från Kina, inte längre ska subventioneras när det kommer till exempelvis fraktkostnader.

     
       

     

      Zsuzsanna Borvendég, a ESN képviselőcsoport nevében. – Tisztelt Elnök Úr! A helyi termelők által helyben előállított termékek védik a környezetet és a nemzetgazdaságot is erősítik, vagyis minden szempontból a társadalom jólétét szolgálják. Emiatt kezdett pártom, a Mi Hazánk Mozgalom hazai termelői vásárokat szervezni Magyarországon, ezzel is népszerűsítve a jó minőségű helyi termékek fogyasztását. Az élelmiszeripar különösen veszélyeztetett ezen a területen. Vissza kell szorítani a globális élelmiszerláncok sokszor gyenge minőségű, földrészeken át utaztatott, agyonvegyszerezett termékeinek dömpingjét.

    A multik gazdasági érdekei nem írhatják felül az emberek egészséges élethez való jogát, de meg kell akadályozni azt is, hogy politikai elfogultság alapján olyan mezőgazdasági termékeknek nyissunk szabad utat, amelyek nem felelnek meg az EU-s előírásoknak, ahogy az számos ukrán termék esetében megtörténik. Azonnali hatállyal meg kell tiltani a harmadik országokból érkező hamisított méz importját is. Ennek érdekében egy előterjesztést is készítettem, amelyet az ESN frakció benyújtott, de az AGRI bizottság napirendre sem volt hajlandó ezt tűzni. Kérem, gondolják ezt át újra!

     
       


     

      Christel Schaldemose (S&D). – Hr. Formand, kommissær. Flere og flere handler på nettet. Legetøj, tøj, gaver. Det er nemt, det er bekvemt, og det er praktisk. Men hvis man handler på platforme som Temu, så kan det altså skade både din sundhed, vores miljø og den europæiske konkurrenceevne, og alt for mange af f.eks. Temu’s produkter de lever simpelthen ikke op til de europæiske regler. De er sundhedsskadelige, miljøskadelige, og så er de også ødelæggende for vores konkurrencesituation for vores europæiske virksomheder. Derfor er der brug for, at der sker noget. Vi har fået mange nye regler, men vi har brug for, at de bliver håndhævet. Derfor vil jeg gerne opfordre EU-Kommissionen til at komme i gang med at håndhæve reglerne og gøre det lidt hurtigere, end det, der sker i dag. Vi har fået nogle gode regler i det, jeg sagde. Spørgsmålet er, om de er gode nok, spørgsmålet er, om der skal mere til. Noget af det, som jeg tror, vi skal kigge på, er, om vi egentlig ikke burde give disse handelsplatforme et importøransvar, så de fik et meget konkret og direkte ansvar for at sikre, at de produkter, de sælger, overholder de europæiske regler. Så hurtigere og bedre, og hvis ikke det er nok, så tror jeg, at vi skal se på, om der skal endnu flere strammere regler til.

     
       

     

      Ernő Schaller-Baross (PfE). – Tisztelt Elnök Úr! A termékbiztonság egyre sürgetőbb kérdés Európában, különösen az e-kereskedelem gyors ütemű terjedése révén. Mondjuk ki őszintén, a piacfelügyelet rendszere ma nem elég hatékony, hogy lépést tartson a digitális világ kihívásaival. A fellépés hiánya komoly kockázatot jelent polgáraink biztonságára nézve, és hosszú távon veszélyezteti Európa versenyképességét is. Az e-kereskedelem gyors üteme és a határokon átnyúló eladások miatt a tagállami hatóságoknak nehéz feladatuk van, hogy minden egyes terméket ellenőrizzenek.

    Így a fogyasztók biztonsága gyakran veszélybe kerül, és a szabályozás átláthatóságának fenntartására s kihívásokkal szembesül. Az Európai Parlament nem blokkolhatja tovább a háromoldalú tárgyalásokat, kezdje el a munkát. Kezdje el a termékbiztonságot érintő javaslatok, többek között a játékbiztonságról szóló szabályok tárgyalását is. Ne hagyjuk, hogy a késlekedés ára az európai polgárok vagy gyermekeink biztonsága legyen! Tegyük meg a szükséges lépéseket közösen, hogy Európa továbbra is az innováció és a biztonságos termékek kontinense lehessen. A jelenlévő vagy nem jelenlévő TISZA párti képviselőknek pedig azt üzenem, hogy ne féljenek, ha kérdést tesznek föl ebben a Házban, ebben a teremben válaszolni is lehet.

     
       

     

      Denis Nesci (ECR). – Signor Presidente, onorevoli colleghi, la protezione dei consumatori e la lotta alla concorrenza sleale, soprattutto nel commercio online, sono una questione prioritaria per l’Europa.

    Troppi prodotti non conformi agli standard europei continuano a entrare nel nostro mercato attraverso l’e-commerce, mettendo a rischio la sicurezza dei consumatori e penalizzando le nostre aziende, in particolare le piccole e medie imprese italiane ed europee.

    Non possiamo più accettare che le nostre imprese siano costrette a competere ad armi impari con prodotti di bassa qualità provenienti da paesi che non rispettano le nostre regole. Le aziende che rispettano rigorosamente la normativa europea su sicurezza e qualità sono penalizzate da una concorrenza sleale.

    Dobbiamo rafforzare i controlli alle frontiere, garantire che i prodotti importati rispettino gli stessi standard che le nostre imprese sono tenute a seguire. Chiediamo che l’Unione europea intervenga con decisione: è fondamentale che le piattaforme di e-commerce non diventino un canale privilegiato per la vendita di prodotti non conformi. Questo è un punto essenziale per difendere la sovranità economica italiana e quella europea, proteggendo il nostro tessuto produttivo.

    Come abbiamo spesso sottolineato, la nostra economia non può continuare a subire le conseguenze di politiche commerciali che favoriscono attori esterni a scapito delle nostre eccellenze.

     
       


     

      Majdouline Sbai (Verts/ALE). – Monsieur le Président, chers collègues, en dix ans, le chiffre d’affaires du commerce électronique a été multiplié par trois. Rien qu’en France, le chiffre d’affaires du site Shein se monte à 1,63 milliard d’euros. C’est un tsunami économique.

    Alors oui, oui à la protection des consommateurs, oui à la fin de l’exonération des droits de douane en dessous de 150 euros d’achats, oui à une enquête précise sur les soupçons de subventions chinoises et de concurrence déloyale, oui à la fin de la publicité mensongère, oui, encore oui au contrôle sur la toxicité, la propriété intellectuelle et la sécurité des données personnelles.

    Oui, mais quand? Combien d’enseignes et de marques européennes auront fermé entre-temps? Combien de chaussures pour enfants intoxiquées au plomb aurons-nous achetées? Combien de jeunes auront adopté des comportements de consommation détestables pour notre avenir?

    Alors, oui à tout cela, mais quand? Je vous le dis: agissons maintenant!

     
       

     

      Leila Chaibi (The Left). – Monsieur le Président, chers collègues, des ballons de baudruche à gonfler soi-même bourrés de substances cancérigènes, des jouets comprenant des pièces qui peuvent être avalées, des casques de moto pour enfants qui, en fait ne protègent pas du tout, des détecteurs de fumée qui ne détectent pas la fumée… Ces produits dangereux ne sont pas des exceptions: ils pullulent sur des plateformes de vente en ligne comme Amazon, Temu ou Wish. Les associations de consommateurs les ont testées, et le constat est alarmant.

    Comment est-il possible que ces objets puissent envahir le marché européen? La réponse est simple. Pour les géants du commerce électronique, la priorité c’est: les profits, et le marché européen, c’est le jackpot.

    C’est un triple jackpot, en réalité. D’abord, un jackpot sur les normes de sécurité, car ces plateformes ignorent les normes de sécurité en vigueur chez nous. Elles inondent l’Union européenne de produits qui ne respectent pas les réglementations en matière de sécurité, et mettent donc les Européens en danger.

    C’est un jackpot sur les conditions de travail, car ces produits sont fabriqués dans des conditions inacceptables, en exploitant les travailleurs et en détruisant la planète.

    C’est un jackpot sur les obligations fiscales, car, pour couronner le tout, ces plateformes trouvent le moyen d’échapper à leurs obligations fiscales. Et tout cela permet à ces plateformes de commerce électronique de casser les prix et d’écraser nos entreprises européennes, qui ne peuvent pas rivaliser face à cette concurrence déloyale.

    Chers collègues, il est temps de sonner la fin de la récré pour Amazon, pour Temu, pour Alibaba et compagnie. L’Union européenne passe beaucoup de temps à discuter, à légiférer sur le poids des pommes ou sur la pulpe des poires. Je ne dis pas que ce n’est pas intéressant, que ce n’est pas important, mais je crois qu’il y a plus important et plus urgent en matière de normalisation au sein du marché unique.

    Les plateformes de commerce électronique doivent assumer leurs responsabilités et se soumettre à nos règles communes. Elles doivent être tenues pour responsables des produits qu’elles vendent, comme n’importe quel commerçant en réalité. Si elles veulent jouer dans notre cour, alors elles doivent se conformer à nos règles. Pas de passe-droit. La santé et la sécurité des Européennes et des Européens passent avant leurs profits.

     
       

     

      Kateřina Konečná (NI). – Pane předsedající, kolegyně a kolegové, hračky pro batolata, které se snadno rozbijí na malé kousky, u nichž hrozí vdechnutí, nefungující plynové alarmy či hračky a kosmetika obsahující nebezpečné chemikálie – zkrátka produkty, které ohrožují spotřebitele a které jsou v Evropské unii zakázány vyrábět i prodávat.

    Jenže e-shopy až do této chvíle dokáží naše pravidla zdatně obcházet a společně s nimi je obchází i výrobci ze zemí mimo Evropskou unii. Tyto zdraví i život ohrožující výrobky, jež často cílí na děti, nadále zaplavují evropský trh díky e-shopům a nízkým nákladům na jejich výrobu. Budu ráda, pokud konečně tuto skulinu, jednou provždy, odstraníme. On-line platformy musí také nést odpovědnost za produkty, které na svých stránkách nabízejí. Jejich stahování musí mít jasná pravidla. Informační systémy musí být lépe připraveny a pokuty za jejich prodávání musí být značně vyšší, než byly dosud. Jsem ráda, že alespoň zde se věci mají s novými pravidly ubírat správným směrem.

     
       

     

      Kamila Gasiuk-Pihowicz (PPE). – Panie Komisarzu! Koledzy, koleżanki! Unia Europejska jest liderem we wprowadzaniu regulacji chroniących konsumentów na rynku cyfrowym, a jednocześnie miliony Europejczyków korzystają z niespełniających standardów Unii Europejskiej produktów. Dlaczego? Po pierwsze dlatego, że europejski rynek jest zalewany przez chińskie subsydiowane towary sprzedawane po bezkonkurencyjnie niskich cenach. 2023 rok 2 miliardy paczek, 2024 rok dwa razy tyle paczek – 4 miliardy.

    Po drugie wjeżdżają niebezpieczne produkty. W liście, który otrzymałam od 100 producentów zabawek z Polski, wskazano na sprawozdanie Toy Industries of Europe, z którego dowiadujemy się, że 18 z 19 zabawek kupionych na platformie Temu stanowi rzeczywiste zagrożenie dla bezpieczeństwa dzieci. Po trzecie chińskie platformy sprzedażowe stosują agresywny marketing i manipulują klientami. Często informacje o tym, kto sprzedaje i za ile sprzedaje wymagają dziesiątki kliknięć, a i tak na koniec są podawane po chińsku.

    Co możemy zrobić, żeby przywrócić uczciwą konkurencję? Po pierwsze wprowadzić poza nielicznymi wyjątkami cła na paczki o wartości do 150 euro. Po drugie Komisja musi skutecznie i szybko egzekwować istniejące prawo. Po trzecie działania organów nadzoru krajowych i unijnych muszą być skoordynowane. Musimy to zatrzymać, zanim będzie za późno, zanim miliony produktów niespełniających standardów bezpieczeństwa trafią do naszych domów, do rąk naszych dzieci, zanim setki tysięcy miejsc w Europie znikną. Musimy to zrobić teraz.

     
       

     

      Maria Grapini (S&D). – Domnule președinte, stimați colegi, discutăm de protecția consumatorului și concurența loială în piață, domnule comisar. Sigur, am dezbătut astăzi și dezbatem comerțul online. Avem foarte multe reglementări, le-ați enumerat și dumneavoastră. Întreb: poate un cetățean, un consumator care a achiziționat online un produs să se apere dacă produsul e defect, dacă se îmbolnăvește, dacă produsul nu este conform? Avem reglementare de la etichetare până la dreptul la repararea produselor.

    Totuși, în piața internă sunt extrem de multe produse neconforme din țări terțe și – sigur nu vă dau, cred, o noutate – și în comerțul online avem produse din țări terțe pentru că acordurile nu sunt bine comercial făcute. Nu este subliniată respectarea standardelor de produs, cele europene, și atunci întrebarea este: cum le aplicăm? Reformarea vămilor – pentru prima dată vom avea o autoritate europeană pentru vămi. Problema este de aplicare, nu de reglementare. Am rămas în urmă cu implementarea și cred că aici trebuie să punem accent împreună cu statele membre, evident, ca să protejăm cu adevărat consumatorii.

     
       

     

      Gilles Pennelle (PfE). – Monsieur le Président, nous ne pouvons bien évidemment, au groupe des Patriotes pour l’Europe, que saluer l’intention de protéger les consommateurs européens. Cependant, le rapport Letta nous démontre que nous assistons à une augmentation des fraudes, à une augmentation de la concurrence déloyale et à ces fameuses importations de produits dangereux.

    Alors certes, on a beaucoup parlé des jouets. Je voudrais aussi parler des médicaments, par exemple, qui sont extrêmement dangereux pour la santé lorsqu’ils sont achetés sur des sites que personne ne contrôle. Dans la réalité, vous récoltez, à la Commission et dans cette Union européenne, les fruits de votre politique. C’est le résultat du dogme suprême du libre-échange qui nous amène là où nous en sommes.

    En effet, comment contrôler cette jungle qu’est devenu aujourd’hui le commerce électronique, où les géants du numérique règnent en maîtres. Je pense que les solutions ne sont, comme d’habitude, pas celles que vous proposez. Les solutions sont nationales. Il faut renforcer les douanes nationales pour contrôler ces importations de produits dangereux.

    Je voudrais, puisqu’il me reste quelques secondes, rappeler que, dans la plus grande opacité, dans le plus grand secret, la Commission européenne négocie actuellement le traité de libre-échange avec le Mercosur. Mais, là aussi, nous allons probablement importer des produits dangereux, des viandes de très mauvaise qualité, nourries par des produits interdits dans l’Union européenne.

    Finalement, vous êtes face à vos contradictions. Il est temps de changer de politique.

     
       

     

      Francesco Torselli (ECR). – Signor Presidente, onorevoli colleghi, oggi l’Unione europea sta subendo un vero e proprio attacco da parte di certe nazioni straniere a colpi di prodotti non conformi, di bassissima qualità, spesso anche pericolosi per il consumatore finale.

    Un attacco che sfrutta due falle esistenti nel nostro sistema di difesa: la prima, la possibilità di aggirare facilmente le regole da parte di certe piattaforme online; e la seconda, il fatto che l’Europa negli ultimi anni ha promulgato una serie di regolamenti autolesionisti, che spesso sembravano più favorire chi stava fuori dall’Europa piuttosto che le nostre imprese.

    È essenziale che oggi l’Unione europea intensifichi i controlli alle frontiere, protegga i consumatori, contrasti la concorrenza sleale. Dobbiamo migliorare la cooperazione, responsabilizzare le piattaforme online. Cooperazione e responsabilità: queste sono le ricette per un’Europa più forte che contrasti il commercio illegale.

     
       

     

      Nikola Minchev (Renew). – Mr President, the European Union is a global leader in setting high standards with the aim of ensuring quality and protecting our consumers. ‘Made in the EU’ is not just a label; it’s an unmatched guarantee of quality and safety. Yet we allow unreasonably cheap, low-quality, sometimes even dangerous, products to flood our markets, undercutting our industries. This must change.

    We need stronger enforcement of anti-dumping measures to defend the integrity of our single market. The European Commission has made recent strides, improving trade defence instruments by over 40 % to allow faster investigations and duties on unfair imports. But more action and especially enforcement of the existing rules is needed.

    Take my own country, Bulgaria. As the EU’s sixth largest exporter of electric bikes, our manufacturers face competition from cheap, lower quality imports from non-EU countries. These imports threaten to destabilise the growing sector. Robust enforcement, like recent EU actions against Chinese e-bikes, is essential to protect jobs, innovation and fair competition across Europe.

     
       

     

      Anna Cavazzini (Verts/ALE). – Herr Präsident, liebe Kolleginnen und Kollegen! Der Teddybär auf der Onlineplattform Temu, der sieht süß und flauschig aus und kostet auch nur zwölf Euro. Aber wenn die Verbraucherinnen und Verbraucher diesen Teddy bestellen, besteht die 95-prozentige Wahrscheinlichkeit, dass er den europäischen Vorgaben für Produktsicherheit nicht entspricht. In anderen Worten: Das Kuscheltier ist gefährlich: Seine Augen können verschluckt werden, oder das Fell ist vielleicht giftig.

    Dem immer schneller wachsenden Anteil des Onlinehandels, besonders mit Billigprodukten aus China, stehen Zoll und Marktüberwachung hier in Europa hilflos gegenüber. Dieses Jahr gehen Schätzungen zufolge vier Milliarden Pakete in die Europäische Union ein, die unter der Zollgrenze von 150 Euro liegen, und sie landen direkt bei den Verbraucherinnen und Verbrauchern.

    Es ist allerhöchste Zeit, unseren hohen europäischen Verbraucherschutz auch im Onlinehandel durchzusetzen. Die Kommission muss das Gesetz über digitale Dienste konsequent umsetzen und Online-Marktplätze mehr in die Verantwortung nehmen. Die EU-Zollreform ist der Schlüssel, um Kontrollen an unseren Grenzen zu verbessern. Das Parlament hat seine Hausaufgaben gemacht; der Rat schleicht und blockiert, und wir verlieren kostbare Zeit.

    Wir brauchen endlich mehr rechtliche und finanzielle Verantwortung für die Onlineplattformen. Den großen Wurf hat leider die konservative Seite dieses Parlaments in der letzten Legislatur blockiert; jetzt erkennen alle, glaube ich, dass es ein Fehler war.

     
       

     

      Christian Doleschal (PPE). – Herr Präsident, Herr Kommissar, liebe Kolleginnen und Kollegen! Ein T-Shirt für drei Euro, eine Jacke für sieben oder ein Kinder-Plüschtier für wenige Cents: E-Commerce-Händler wie Temu oder Shein überfluten mit aggressiven Vermarktungsstrategien und Dumpingpreisen unsere Märkte. Allein 2023 exportierten Shein und Temu zusammen täglich 9000 Tonnen Fracht nach Europa. Mit ihren unlauteren Praktiken setzen sie unsere Onlinehändler, aber auch unsere Geschäfte in unseren schönen Innenstädten unter enormen Druck. Während diese sich an strenge europäische Vorschriften halten, verstoßen Temu und Shein gegen Vorgaben zur Produktsicherheit, Arbeitsbedingungen, Nachhaltigkeit, Urheberrecht und Datenschutz – ohne spürbare Konsequenzen.

    Doch eigentlich mangelt es nicht an Regeln, sondern an deren konsequenter Durchsetzung. E-Commerce-Plattformen wie Temu oder Shein nutzen geschickt Lücken in der Marktüberwachung und bei der Wareneinfuhr zu ihrem Vorteil. Fehlende innereuropäische Vernetzung beim Datenaustausch, unzureichende Zollkontrollen und die aktuell noch gültigen Zollbestimmungen begünstigen die oftmals ungeprüfte Einfuhr von Waren aus dem Ausland in massenhaften Paketen mit geringem Warenwert.

    Ja, es ist wichtig, die Aufhebung der Zollbefreiung von Waren unter 150 Euro im Rahmen der EU-Zollreform anzuregen, und dafür danke ich der Kommission. Wir müssen sehen, dass diese neuen Regeln so schnell wie möglich in Kraft treten und durchgesetzt werden. Es geht nicht darum, Protektionismus zu fördern, vielmehr geht es um fairen Wettbewerb – wenn unsere Innenstädte leer gefegt und unsere europäischen Onlinehändler zerstört sind, ist es zu spät.

     
       

     

      Bernd Lange (S&D). – Herr Präsident, Herr Kommissar, liebe Kolleginnen und Kollegen! Die Temu-Schlagzeile „Shoppen wie ein Millionär“ müsste man wahrscheinlich umdichten in „Verkaufen wie ein Milliardär“. Wir haben gehört, vier Milliarden Päckchen kommen dieses Jahr von den Onlineplattformen Temu, Shein und AliExpress, und da frage ich mich schon, Herr Kommissar: Warum haben wir da nicht eine Gleichbehandlung mit Verkäufen innerhalb der Europäischen Union?

    Ich möchte ja nicht den Markt zumachen, überhaupt nicht. Aber es kann doch nicht sein, wenn wir innerhalb der Europäischen Union RAPEX haben, andere Möglichkeiten haben und wenn da ein Laden Produkte verkauft, die nicht akzeptabel sind, wird der Laden zugemacht, und hier fragen wir immer nur nach Informationen und machen im Grunde nicht klar, wenn ein Produkt auf der Plattform ist, und das ist mehrmals passiert, dass diese Plattform eben nicht mehr liefern kann.

    Oder auch – Sie sagen, die 150 Euro müssen fallen. Fallen die 2028, wie die Kommission vorschlägt, oder eben früher? Und was ist mit dem Rat und der Zollreform? Auch hier passiert zu wenig. Nicht nur klagen, sondern auch handeln für einen fairen Wettbewerb.

     
       

     

      Valérie Deloge (PfE). – Monsieur le Président, quand on entend parler de contrefaçons, on ne pense pas tout de suite à la nourriture. Pourtant, rien qu’en 2023, ce sont 1 150 000 produits alimentaires contrefaits qui ont été saisis en France. Yaourts, pâtes, fromages, mais aussi vin, cognac, huîtres et petits pots pour bébé: tout y passe. Ces produits sont faits pour ressembler à s’y méprendre aux originaux, mais ils ne répondent pas à nos normes et peuvent causer des risques pour notre santé. Pis: ces contrefaçons sont souvent 20 % à 70 % moins chères que les originaux. Nombreux sont les consommateurs qui les achètent, pensant profiter d’offres attrayantes sur des lots de déstockage.

    Cette situation est aussi dangereuse qu’intolérable. Elle signifie que nos agriculteurs et nos transformateurs ne sont pas seulement en concurrence avec les pays étrangers qui inondent notre marché à cause d’accords de libre-échange irresponsables, ils sont aussi en concurrence avec ces fraudes, qui ternissent l’image des filières et véhiculent une image négative des produits.

    Après les manifestations de l’an dernier, vous avez dit entendre la colère du monde agricole. Vous prétendez vouloir rétablir la réputation des agriculteurs et défendre les filières européennes: voici une bonne occasion de le faire. Traquez ces produits, contrôlez l’entrée des marchandises de mauvaise qualité ou qui ne répondent pas à nos normes et rendez au consommateur l’assurance qu’en achetant des produits européens ils achèteront de la qualité. La colère des agriculteurs, elle, est toujours là. À vous maintenant de prouver que vous pouvez vraiment agir.

     
       

     

      Nicolas Bay (ECR). – Monsieur le Président, à quoi bon avoir les normes les plus strictes et les plus exigeantes du monde si c’est pour laisser notre marché être inondé par des importations qui ne les respectent pas? À quoi bon étouffer nos producteurs par la paperasse, les taxes, les règles, si c’est pour laisser leurs concurrents tricher?

    Face à la concurrence déloyale, l’Union doit autant protéger ses consommateurs que défendre ses entreprises et ses producteurs. La réciprocité et des conditions équitables de concurrence sont nécessaires pour que le commerce soit bénéfique à tous. Il est impératif de multiplier les contrôles sur les importations et il est surtout impératif de ne pas nouer des accords commerciaux déséquilibrés. Le traité avec le Mercosur, en particulier, que la Commission cherche à conclure dans la précipitation, sacrifiera comme toujours nos agriculteurs. C’est une telle certitude, d’ailleurs, qu’un fonds est déjà prévu pour les indemniser.

    Nos producteurs sont les plus respectueux à la fois des consommateurs, de leurs animaux et de l’environnement. Leurs produits sont les meilleurs au monde. Ils ne veulent pas vivre de la charité. Ils veulent vivre du plus vieux et du plus noble des métiers: le travail de la terre, le travail de nos pères. Libérons-les et laissons-les se battre à armes égales en cessant d’organiser la concurrence déloyale, qui les condamne à la disparition.

     
       

     

      Anna Stürgkh (Renew). – Herr Präsident! Ja, bei fast jeder Diskussion zur EU fällt ein Wort wie das Amen im Gebet: Regulierung. Die EU als Regulierungsweltmeister und die Regulierung als quasi Endgegner der Innovation, ganz nach dem Motto „Du, glückliches Europa, reguliere“. Dabei steckt ja hinter den Regulierungen eigentlich ein wichtiges Ziel: nämlich Menschen und Unternehmen zu schützen und sie zu unterstützen, sicherzugehen, dass sie nicht Produzentinnen und Produzenten ausgeliefert werden, die Gesetze mit Füßen treten und Profit am Ende sogar noch mit dem Leben ihrer Konsumentinnen und Konsumenten machen.

    Dafür müssen wir aber die richtige Regulierung machen, und dafür müssen wir uns auch trauen, manchmal hinderliche Regulierungen wegzulassen. Wir müssen Menschen die Sicherheit geben, dass die Produkte, die sie in Europa auch online kaufen, nicht ihre Gesundheit oder ihr Leben gefährden. Wir müssen dafür sorgen, dass die Regeln, die für europäische Produzentinnen und Produzenten gelten, auch für Produkte gelten, die in unserem Land aus Drittstaaten in unsere Haushalte kommen. Wir müssen sichergehen, dass europäische Regeln auch europäisch gelten und nicht 27-mal unterschiedlich ausgelegt werden.

    Die Ziele sind richtig, der Weg noch holprig. Aber ja, „Du glückliches Europa – reguliere“.

     
       


     

      Δημήτρης Τσιόδρας (PPE). – Κύριε Πρόεδρε, αγαπητοί συνάδελφοι, οι Ευρωπαίοι πολίτες σε πολλές περιπτώσεις νιώθουν απροστάτευτοι από αθέμιτες πρακτικές, αλλά και από τον τρόπο με τον οποίο γίνονται πολλές συναλλαγές, ιδιαίτερα στο νέο ψηφιακό περιβάλλον.

    Στο ηλεκτρονικό εμπόριο πολλές φορές οι καταναλωτές δεν αισθάνονται ότι έχουν τον πλήρη έλεγχο των συναλλαγών τους λόγω των πολύπλοκων κανόνων και των ρητρών που περιλαμβάνονται στα περιβόητα ψιλά γράμματα. Σε πολλές περιπτώσεις υπάρχουν συγκαλυμμένες χρεώσεις, ενώ ο σχεδιασμός πολλών ψηφιακών υπηρεσιών δημιουργεί εθισμό στα παιδιά και οδηγεί σε πρόσθετες χρεώσεις μέσω βιντεοπαιχνιδιών. Παράλληλα, κάθε χρόνο, καταναλωτές στην Ευρωπαϊκή Ένωση αγοράζουν, χωρίς να το γνωρίζουν, προϊόντα τα οποία δεν πληρούν τα ευρωπαϊκά πρότυπα ποιότητας και ασφάλειας.

    Ένα άλλο σημαντικό θέμα είναι ότι μεγάλες πολυεθνικές εταιρείες εκμεταλλεύονται τη δεσπόζουσα θέση τους στην αγορά για να επιβάλουν γεωγραφικούς εφοδιαστικούς περιορισμούς, επιβάλλοντας αδικαιολόγητα υψηλές τιμές. Ο πρωθυπουργός Κυριάκος Μητσοτάκης έχει στείλει στην Επιτροπή μια σχετική επιστολή και πιστεύω ότι θα πρέπει να επιληφθεί του θέματος. Είναι αναγκαία η αυστηρή τήρηση των κανόνων και, όπου χρειάζεται, περαιτέρω αυστηροποίηση της νομοθεσίας και συνεργασία των αρχών, προκειμένου οι Ευρωπαίοι καταναλωτές να αισθάνονται ότι προστατεύονται.

     
       

     

      Biljana Borzan (S&D). – Gospodine predsjedavajući, potrošačke organizacije čak 17 država prijavile se Europskoj komisiji najnoviji kineski div Temu. Propituje se sigurnost proizvoda, štetnost za zdravlje, pa čak i prodajni lanac u smislu prodaje ilegalnih proizvoda. Temu i dalje prodaje, ljudi i dalje kupuju.

    Prije nekoliko godina 18 potrošačkih organizacija prijavilo je Tik Tok europskim tijelima radi štetnog utjecaja na maloljetnike, koji čine 30 posto njihovih korisnika. Narušavanje mentalnog zdravlja, izazivanje ovisnosti, poticanje nezdravih navika i ponašanja kod djece gorući su problemi koji traže hitnu reakciju. Unatoč tome, promjene na platformi su minimalne.

    Kako prisiliti internetske divove da poštuju europska pravila? Treba dati veće ovlasti Europskoj komisiji u slučaju povrede potrošačkih prava. Pokažimo građanima da nisu sami, da je udar na naše ljude, udar i na naše institucije i da će one brzo i efikasno odgovoriti ondje gdje ih najviše boli. One koji rade greške – udarimo ih po džepu.

     
       

     

      Philippe Olivier (PfE). – Monsieur le Président, la question de la sécurité des produits n’est pas toujours affaire de développement juridique ou de normes, mais de contrôles. Elle pose la question des portes d’entrée de l’Europe, et les portes d’entrée de l’Europe, ce sont les ports. Sur Le Havre, sur 6 000 conteneurs, seuls 5 sont contrôlés. D’une manière générale, tous les ports européens tendent à être pris en main par les mafias, soit par la peur et par la menace, soit par la corruption. Personne ne s’en préoccupe.

    Comment croire que le libre-échange puisse être vertueux quand même les règles les plus élémentaires de surveillance sont en pratique bafouées aux endroits où les contrôles devraient être implacables? Que dire des matières premières qui sont vendues en Europe par des pays qui ne les possèdent pas, mais qui les volent? La République démocratique du Congo est ainsi pillée par son voisin, le Rwanda, et l’Europe commet des actes de recel en achetant à Kigali de telles matières premières.

    Si vous souhaitez ramener un peu d’éthique dans le commerce sans limites et sans règles, rétablissez les contrôles nécessaires.

     
       


     

      Henrik Dahl (PPE). – Hr. Formand. Tak for ordet. Kinesiske online platforme som Temu og Sheen presser det europæiske marked med produkter, der for det første er lodret ulovlige og for det andet er farlige. Disse produkter er for det første en risiko for forbrugerne, men de er også en direkte trussel imod det indre marked. Temu undergraver systematisk de regler, vi har bygget op for at beskytte de europæiske borgere. De regler overholder de europæiske virksomheder i modsætning til Temu. Når Temu udnytter huller i lovgivningen, så får de en unfair konkurrencefordel, som de bruger til at udkonkurrere europæiske virksomheder. EU har skabt et robust regelsæt for forbrugersikkerhed, men uden en effektiv håndhævelse er de regler ikke noget værd. Vi skal ikke tolerere, at kinesiske platforme systematisk bryder reglerne og underminerer europæiske virksomheder. Derfor er det på tide at tage kampen op mod de aktører, der misbruger systemet, skader forbrugerne og fører en form for økonomisk krig imod Europa. Europa skal være stærkt, og derfor skal Europa sanktionere de kinesiske virksomheder, som bevidst bryder reglerne.

     
       

     

      Pierre Jouvet (S&D). – Monsieur le Président, chers collègues, pour éviter un anniversaire ou un Noël sans cadeaux, des parents achètent à bas prix des jouets sur des sites chinois. Comment leur en vouloir, quand les fins de mois sont devenues si difficiles? C’est pourtant un cadeau empoisonné, parce que ces jouets sont certes peu chers, mais très probablement toxiques. D’après des tests menés en laboratoire, près de 80 % d’entre eux sont dangereux.

    En plus de ces jouets toxiques, combien de parfums irritants, de lunettes de soleil inefficaces, de jeans de contrefaçon seront vendus par ces plateformes chinoises qui inondent le marché? Temu, Shein, AliExpress importeront près de 4 milliards d’articles en Europe cette année. Ce chiffre a triplé en trois ans. Ces plateformes profitent du seuil douanier de 150 euros sur les colis internationaux pour échapper à tout contrôle. Ces entreprises violent les droits des consommateurs et nuisent aux fabricants européens, qui, eux, respectent les normes sociales et environnementales.

    L’Europe doit se réveiller et faire respecter un principe simple: «Notre marché, nos règles.»

     
       

     

      Zala Tomašič (PPE). – Gospod predsednik. V skladu s Temujevo politiko zasebnosti se osebni podatki, kot so ime, priimek, naslov, zgodovina nakupov in lokacija, lahko delijo s tretjimi oglaševalci, ponudniki storitev in poslovnimi partnerji. Temu včasih ponuja storitve, Temu včasih ponuja izdelke celo brezplačno. Ampak potrebno se je zavedati, da nič ni brezplačno.

    V zameno platforma pridobiva osebne podatke in spremlja obnašanje potrošnikov na spletu. Obstajajo pa tudi skrbi, da se ti podatki potem prodajajo tudi naprej. Le malokateri potrošnik pa se tega tudi zaveda.

    Poleg tega je kvaliteta teh izdelkov vprašljiva. Slišali smo že, kako otroške igrače takoj razpadejo na majhne dele, kako detektorji dima dima ne zaznajo. Ampak problem so tudi kozmetični izdelki, ki lahko pustijo nepopravljive poškodbe sluznice in kože.

    Močno podpiram prosti trg in konkurenčnost na trgu, vendar pa moramo zaščititi tako potrošnike pred zlorabo osebnih podatkov in škodljivimi izdelki kot tudi naše podjetnike pred nelojalno konkurenco.

     
       

     

      Maria Guzenina (S&D). – Arvoisa puhemies, komission edustajat, EU:n pitäisi olla maailman turvallisin alue ostaa tavaraa. Meillä on tiukat standardit sille, millaisia tuotteita täällä saa myydä, joten miten ihmeessä on mahdollista, että tuoreissa testeissä jopa 80 prosenttia leluista, joita myydään muun muassa kiinalaisissa verkkokaupoissa, eivät täyttäneet lelujen turvallisuusvaatimuksia. Kyse on kuluttajien, erityisesti lasten terveydestä. Kyse on ympäristömme suojelemisesta. Kyse on turvallisuudesta ja kyse on eurooppalaisten yritysten mahdollisuudesta pärjätä.

    Kiinalaiset säännöistä piittaamattomat jättimäiset verkkokaupat toimittavat kiihtyvällä vauhdilla tavaroita Eurooppaan. Suomen tullin mukaan kiinalaisten pakettien valtava määrä vaarantaa jo tullinkin toimintakyvyn.

    Tuoteturvallisuusdirektiivi, se on hyvä alku, mutta on tärkeää, että me emme lisää vastuullisten eurooppalaisten yritysten sääntelyä, vaan meidän pitää varmistaa, että kiinalaiset kaupat noudattavat eurooppalaisia sääntöjä.

    Tämän asian ratkaisemisella on kiire. Komission on tehtävä tässä tehtävänsä. Euroopan on oltava yhtenäinen tässä asiassa. Kyse on eurooppalaisten terveydestä.

     
       

     

      Niels Flemming Hansen (PPE). – Mr President, dear Commissioner, honourable colleagues, e-commerce has rapidly expanded, offering consumers access to products from around the globe. A recent study found that 30 out of 38 products from the Temu platform failed to meet European safety standards, posing a serious risk to consumers. Some 30 out of 38, my dear friends: that’s 78 %.

    This is not about protectionism. It’s about ensuring fairness and safety. Non-compliance puts the consumers at risk and creates an uneven playing field, especially for European SMEs that follow EU rules. SMEs, which are the backbone of our economy, will suffer the most.

    The scale of e-commerce makes it impossible for national customs to manage alone. In Germany, it’s estimated that there are around 400 000 packages a day from China; 78 % of that is 320 000 packages.

    Finally, this is a test of the EU’s ability to address the challenges of a globalised marketplace. We must be decisive, not only to protect our consumers, but to prove that Europe can enforce its own rules and uphold fairness in the single market.

     
       

     

      Pierfrancesco Maran (S&D). – Signor Presidente, onorevoli colleghi, caro Commissario, come ha ben sottolineato, è necessario sistemare alcuni aspetti del mercato online e questo va fatto rapidamente.

    Oggi il 70% dei cittadini europei compra beni e servizi online. Eppure esistono due mercati: uno per chi rispetta le regole e uno per chi non le rispetta e le aggira. In molti abbiamo sottolineato come alcuni soggetti sono certamente protagonisti delle violazioni.

    Operatori come Temu, Shein, AliExpress – che insieme contano 300 milioni di utenti in Europa – immettono sul mercato migliaia di prodotti non sicuri a prezzi stracciati. Loro lo sanno bene e sanno che possono farlo, perché non mettiamo ancora in campo azioni strutturali che li rendano corresponsabili.

    Questo è il punto di lavoro principale, perché non possiamo pensare di andare ad inseguire ogni consegna alle dogane. È necessario agire alla fonte nei loro confronti, perché si adoperino per una svolta nei loro comportamenti commerciali.

    Lo dobbiamo ai cittadini europei, che devono sapere che i prodotti che comprano sono sempre sicuri e non essere tentati dalla convenienza del low cost senza regole. E lo dobbiamo alle aziende che invece rispettano le regole e che meritano di non avere questa concorrenza.

     
       


     

      Elisabeth Grossmann (S&D). – Herr Präsident, Herr Kommissar, meine sehr geehrten Damen und Herren! Die Digitalisierung und der wachsende E-Commerce haben unsere Märkte grundlegend verändert, und es ist unerlässlich, dass wir als EU entschlossen handeln, um Sicherheit und Fairness zu gewährleisten. Der europäische Handel gerät durch das Onlineangebot aus dem EU-Ausland zunehmend unter Druck, und große Plattformen, vorwiegend aus China, überschwemmen gerade den europäischen Markt mit Billigangeboten und nutzen die bestehenden Schlupflöcher aus, was den Wettbewerb verzerrt und europäische Unternehmen stark benachteiligt und auch europäische Arbeitsplätze kostet und natürlich auch europäische Wertschöpfung.

    Und ich sage Ihnen: Es ist nicht fünf vor zwölf, es ist fünf nach zwölf, weil es hat sich bereits das Kaufverhalten der Menschen erheblich verändert, und es sind bereits zahlreiche Unternehmen im Produktionsbereich und auch im Handelsbereich insolvent. Und hier haben wir in Zukunft mitunter auch ein Problem mit der Versorgungssicherheit.

    Deshalb ist dringendes Handeln, rasches Handeln geboten. Es ist mit dem Gesetz über digitale Dienste und dem Gesetz über digitale Märkte einiges gelungen – aber diese Gesetze gehören auch konsequent umgesetzt, und zwar sofort.

     
       

       

    IN THE CHAIR: ESTEBAN GONZÁLEZ PONS
    Vice-President

     
       

     

      Regina Doherty (PPE). – Mr President, Commissioner, EU consumer rights are worth absolutely nothing unless they are effectively enforced. We have made some progress with the General Product Safety Regulation, which is going to come into effect later on this year, and we are working on ambitious reforms, but it’s not just about laws.

    The EU’s many market surveillance authorities have to work together in order to take risk-based market surveillance seriously, because when it comes to illegal products coming into EU countries, we should be really, really vigilant. According to the Commission, last year, 2.3 billion items worth less than EUR 150 entered the EU last year. And we’re facing what could only be described as a flood of cheap products. Member State authorities are frequently overwhelmed and sometimes just to verify whether something meets a product safety standard is next to impossible. So we need to support these authorities and make sure that they have the resources they need to do their work online markets such as China’s Temu must meet the standards that we uphold every single European company to in order to have the right to operate in the EU market.

    We don’t want protectionism, we don’t want to reduce global trade. We just want to make sure that the level playing field is level and that the people who are consuming the goods are safe from them.

     
       

     

      Salvatore De Meo (PPE). – Signor Presidente, onorevoli colleghi, in questi mesi ricorre insistentemente il tema della competitività, soprattutto in quest’Aula. Però leggiamo dalla recente relazione Letta che il 75% dei prodotti pericolosi in circolazione in Europa deriva da Paesi terzi ed è un dato in crescita preoccupante.

    Potete ben capire che questo non solo mette a rischio la competitività delle nostre imprese ma anche la salute dei nostri consumatori, ai quali invece dobbiamo garantire prodotti sicuri con controlli rigorosi, in particolare quelli acquistati sull’e-commerce, piattaforme esplose durante il periodo del COVID.

    Dobbiamo intervenire con urgenza per contrastare l’eccessiva presenza di prodotti dei Paesi terzi, che attraverso le piattaforme riescono a raggiungere con comodità milioni di utenti in tempi rapidissimi. Questa situazione crea una concorrenza sleale che penalizza le nostre imprese, che invece sono obbligate a rispettare norme sempre più stringenti, mentre molti prodotti sono importati senza i dovuti controlli.

    E allora particolare attenzione va rivolta soprattutto ai giocattoli, oppure ai farmaci, perché rivolti ai bambini e alle persone che hanno bisogno di cure. Dobbiamo garantire standard di sicurezza.

    In questo contesto, l’unione doganale può fare ovviamente molto di più e auspichiamo che, ovviamente, la riforma che è stata avviata possa essere portata a termine per garantire una vigilanza più stringente sulle importazioni, proteggendo il nostro mercato e soprattutto i nostri cittadini.

    Solo così potremo assicurare una concorrenza equa e un futuro di crescita e sicurezza per tutti.

     
       

       

    Catch-the-eye procedure

     
       



     

      Lukas Sieper (NI). – Herr Präsident, sehr geehrte Menschen Europas, Hohes Haus! Wir haben heute bereits über die Wichtigkeit des europäischen Binnenmarkts gesprochen. Umso glücklicher bin ich über diese Debatte, denn wir müssen unseren Binnenmarkt auch schützen. Wir können es nicht akzeptieren, wenn Produkte den Markt fluten, die unter Missachtung der Menschenrechte, teilweise sogar von uigurischen Zwangsarbeitern in Konzentrationslagern hergestellt werden. Wir können es nicht hinnehmen, wenn Produkte den Markt fluten, die unseren Sicherheitsstandards nicht gerecht werden. Wir können es nicht tatenlos geschehen lassen, wenn diese Produkte von autoritären Staaten gezielt subventioniert werden.

    Wir können es uns nicht leisten, wenn diese Produkte von internationalen Großkonzernen unter bewusstem Ausnutzen verschiedener Steuersysteme innerhalb der EU vertrieben werden. Schließlich: Wir können es uns nicht leisten, wenn der Binnenmarkt zerstört wird, indem er von ausländischer Konkurrenz ausgespielt wird.

    Die Menschen wollen einen starken Binnenmarkt, nicht einen auf Wish bestellt; und das fängt, wie viele meiner Kollegen zu Recht betont haben, beim Zollsystem an.

     
       


       

    (End of catch-the-eye procedure)

     
       

     

      Didier Reynders, membre de la Commission. – Monsieur le Président, Mesdames et Messieurs les députés, je voudrais d’abord vous remercier pour ce débat sur le marché intérieur et la manière dont des produits arrivent sur ce marché intérieur. Les plateformes jouent un rôle de plus en plus important en la matière. J’entends bien l’ensemble des remarques sur les règles – qui, pour une grande part, existent, même s’il y a encore du travail à faire – et sur le besoin d’un contrôle renforcé.

    Je dirais tout d’abord que nous devons mieux utiliser les outils qui arrivent et qui sont parfois déjà à notre disposition. Je voudrais féliciter les autorités chargées de la protection des consommateurs dans les États membres, que nous avons organisées en réseau. Ce réseau d’acteurs, le réseau CPC, fait déjà aujourd’hui, en relation avec les associations de consommateurs, un travail sur le terrain remarquable pour détecter et retirer des produits régulièrement, non seulement des magasins, mais aussi des plateformes en ligne. Nous avons d’ailleurs développé au sein de la Commission un outil numérique qui permet de vérifier que ces produits ne reviennent pas sur les plateformes.

    Je ne dis pas que nous détectons l’ensemble des produits ou que nous retirons l’ensemble des produits dangereux, que ce soit pour la sécurité proprement dite ou pour la santé des consommateurs, mais je voudrais saluer ce travail, sur lequel il faudra d’ailleurs à nouveau se pencher. Beaucoup ont évoqué le rôle particulier des douanes. Je voudrais confirmer que la Commission souhaite avancer en la matière. Le dossier est entre les mains des colégislateurs pour l’instant. Plusieurs ont évoqué la limite des 150 euros: nous souhaitons l’abolir. J’espère que nous pourrons aboutir prochainement à un accord entre les colégislateurs sur ce sujet. Le travail des douanes est un travail important dans le cadre de la protection des consommateurs.

    Le règlement sur les services numériques est en vigueur. Des pouvoirs ont été octroyés à la Commission, des pouvoirs que nous avons commencé à utiliser, y compris dans les domaines que vous avez évoqués et en particulier dans le cadre de plateformes qui inondent l’Union européenne de produits à bas prix. Le règlement général sur la sécurité des produits, que j’ai évoqué tout à l’heure, entrera en vigueur le 13 décembre. À travers ce règlement, comme plusieurs d’entre vous l’ont évoqué, la responsabilité personnelle des plateformes pourra être mise en cause, non seulement celle des grandes plateformes, mais aussi celle des plus petites, puisque nous avons prévu qu’une personne responsable devait être désignée dans l’Union européenne lorsque des produits sont effectivement importés sur le marché. Mais, je le répète, ce règlement général, que nous avons souhaité mettre en place pour remplacer une directive, entre en vigueur le 13 décembre prochain. Je vous invite donc à utiliser, pour le moment, les outils à disposition ou dont disposeront bientôt les différents acteurs chargés de la protection des consommateurs.

    Pour ce qui est de la poursuite du dialogue avec nos partenaires, j’ai mis en place au cours de la législature écoulée un dialogue avec les autorités américaines, notamment en matière de protection des produits. En ce qui concerne la politique des consommateurs, il y a aux États-Unis trois agences différentes, et la commission américaine chargée de la sécurité des produits est en dialogue constant avec la Commission européenne. Nous développons un dialogue similaire avec le Royaume-Uni, le Canada, le Japon, ou la Corée du Sud.

    Pour la première fois, nous avons tenu, à Paris, au sein de l’OCDE, une réunion ministérielle concernant la politique des consommateurs. Et l’OCDE, pour une fois, s’est penchée non plus seulement sur la production, mais aussi sur la consommation, et donc, réellement, sur la sécurité des produits pour les consommateurs. On voit que ce thème progresse. Nous avons d’ailleurs tenu à Bruxelles, très récemment, une semaine consacrée à la sécurité des produits, avec l’ensemble des acteurs internationaux.

    Il est vrai que nous devons aussi poursuivre le travail entamé avec la Chine. Nous le faisons par un dialogue direct, nous le faisons aussi, parfois, en collaboration avec des partenaires internationaux – nous avons mené une action trilatérale avec nos collègues américains. Je ne suis pas naïf, mais on doit continuer à tenter de convaincre nos partenaires chinois qu’il s’agit aussi d’un enjeu de réputation pour leurs produits et pour leurs entreprises, et probablement pour un nombre croissant de consommateurs chinois, qui souhaitent eux-mêmes une plus grande sécurité de leurs produits. C’est un travail qui a aussi été entamé au cours de ces dernières années.

    Enfin, vous avez évoqué des cas concrets de sécurité des produits sur des plateformes, mais aussi de produits à bas prix – je pense à Temu ou à Shein. Je l’ai dit, des actions sont en cours. Nous avons saisi le réseau des agences chargées de la protection des consommateurs sur ce sujet. Le réseau CPC y travaille. Le règlement sur les services numériques est lui aussi à l’œuvre dans le cadre de procédures visant ces plateformes, lesquelles ne posent pas seulement un problème de sécurité de produits ou de santé des consommateurs, mais aussi, vous l’avez rappelé, de concurrence déloyale, en raison de prix très faibles, de prix particulièrement bas. Elles ne sont pas seulement en concurrence avec la production de nouveaux produits en Europe, elles le sont aussi avec le marché de seconde main.

    Nous avons, avec certains d’entre vous, beaucoup travaillé au développement du droit à la réparation, qui concerne chaque consommateur et qui permet par ailleurs de renforcer le marché de seconde main. Il est clair que nous devons la protéger contre l’évolution de la concurrence déloyale, tout en demandant bien entendu au secteur de la seconde main de garantir la sécurité de ses produits au même titre que le respect d’un certain nombre de règles européennes.

    Alors, bien entendu, je ne voudrais pas conclure sans évoquer un ou deux aspects, notamment une remarque plus personnelle. La Commission a vu ses compétences directes renforcées: aussi bien celles qu’elle détient, depuis longtemps, dans le domaine de la concurrence que celles acquises plus récemment dans celui des plateformes – à travers le règlement sur les services numériques.

    Pour ce qui est des consommateurs, il est peut-être temps aussi de se poser la question, au-delà du réseau des acteurs nationaux, d’une action possible et plus directe de la Commission pour des cas qui le méritent – des cas manifestement transfrontaliers et qui concernent l’ensemble des consommateurs européens. Cela nécessite des moyens, bien entendu. C’est donc un débat qui reviendra, je l’espère, dans les prochaines années: le travail en la matière ne doit plus se limiter aux agences nationales, il doit aussi advenir à l’échelon de la Commission.

    Je terminerai en vous disant que plusieurs ont évoqué la nécessité d’agir vite. J’ai notamment entendu des remarques sur la manière dont on produit un certain nombre de biens vendus sur le marché européen, parfois en violation des règles environnementales ou des droits de l’homme. Nous avons mis cinq ans à faire adopter une directive sur le devoir de vigilance. Maintenant, il faut en entamer la mise en œuvre.

    J’espère donc que la détermination de l’ensemble des acteurs – des colégislateurs comme des États membres – sera très grande pour agir: pas uniquement quand un produit arrive sur le marché européen, mais aussi sur les chaînes d’approvisionnement, en réfléchissant à la manière de faire respecter les règles environnementales aussi bien que celles en matière de droits de l’homme, tant par les entreprises européennes que par les entreprises de pays tiers qui viennent sur le marché intérieur – y compris à travers des plateformes.

    Beaucoup reste à faire, mais je crois que des règles sont en place. Il faut maintenant les rendre effectives et, surtout, renforcer le contrôle, pour une part à l’échelon européen – lorsque c’est nécessaire.

     
       

     

      President. – The debate is closed.

     

    16. One-minute speeches on matters of political importance


     

      Φρέντης Μπελέρης (PPE). – Κύριε Πρόεδρε, αγαπητοί συνάδελφοι, θα ήθελα να μοιραστώ μαζί σας μια όμορφη πρωτοβουλία στην Ελλάδα και συγκεκριμένα στη Φουρνά Ευρυτανίας, ένα ελληνικό χωριό όπου Δήμος, Περιφέρεια και Εκκλησία συνεργάζονται αρμονικά, προσφέροντας μια καλύτερη ζωή σε μέλη νέων οικογενειών με στόχο να τους πείσουν να εγκατασταθούν στον τόπο τους. Θέλω να σας πω ότι αυτές ακριβώς τις μικρές νίκες πρέπει να αναζητούμε απέναντι στη δημογραφική κρίση· τις μάχες, δηλαδή, που δίνονται μεμονωμένα, ώστε η ευρωπαϊκή ύπαιθρος να μη «σβήσει».

    Ας δούμε όμως και τη μεγάλη εικόνα. Είναι αναγκαία η άμεση επανεκκίνηση της ευρωπαϊκής περιφέρειας. Αυτό θα το πετύχουμε με την αξιοποίηση επιτυχημένων πολιτικών και σωστή αναδιάρθρωση του ευρωπαϊκού προϋπολογισμού. Η Ευρώπη δεν πρέπει να επανέλθει στις διαφορετικές ταχύτητες με τις οποίες εξαπλώνεται το δημογραφικό πρόβλημα στα 27 κράτη μέλη, αλλά να χρηματοδοτήσει δράσεις με την ίδια ένταση και να δώσει ουσιαστικά κίνητρα.

    Κλείνοντας, κύριοι συνάδελφοι, οφείλουμε να φροντίσουμε ώστε να μη νιώθουν οι περιφέρειες και τα νησιά μας απομονωμένα. Κάθε κουκκίδα στον ευρωπαϊκό χάρτη που διασυνδέουμε με μια άλλη, είναι αυτομάτως μια μεγάλη κατάκτηση προς τον κοινό μας στόχο: να δώσουμε ξανά πνοή στην ήπειρό μας.

     
       

     

      Gabriela Firea (S&D). – Domnule președinte, vinerea trecută, tocmai a trecut, a marcat Ziua Europeană de Luptă împotriva Traficului de Persoane, o zi care ne amintește cât de fragilă este siguranța pentru multe femei și mulți copii din Europa. Din păcate, traficul de persoane, care este strâns legat de violența domestică, continuă să fie o problemă gravă. Observăm la nivelul Uniunii Europene că se fac pași importanți. A fost adoptată o versiune revizuită a directivei antitrafic, cu măsuri mai stricte pentru combaterea noilor forme de exploatare, inclusiv a celor din mediul online. Programe precum Fondul pentru azil, migrație și integrare și Programul „Cetățeni, egalitate, drepturi și valori” sprijină victimele și încearcă să prevină traficul de persoane.

    Totuși, nu este suficient și este clar că avem nevoie de o mai bună coordonare între statele membre și de o utilizare mai eficientă a fondurilor, inclusiv prin Mecanismul de redresare și reziliență. Este vital să investim mai mult în educație, în prevenție și mai ales în protecția reală a victimelor, iar cei care comit aceste crime să fie aduși în fața justiției, pentru că asta înseamnă să facem dreptate: să-i protejăm pe cei vulnerabili și să nu lăsăm nicio victimă fără voce.

     
       

     

      Julien Sanchez (PfE). – Monsieur le Président, mes chers collègues, le récent rapport de la Cour des comptes européenne sur le fonds fiduciaire d’urgence en faveur de la stabilité et de la lutte contre les causes profondes de la migration irrégulière et du phénomène des personnes déplacées en Afrique, fonds doté rappelons-le de 5 milliards d’euros d’argent public de nos concitoyens, est édifiant et accablant.

    Si les besoins sont réels et la situation préoccupante, les exemples de gaspillage sans aucun contrôle sont hélas innombrables et choquants. Oui, la Commission européenne gère notre argent avec amateurisme et légèreté. Ainsi, en Gambie, des bénéficiaires ont reçu deux fois la même aide pour des projets agricoles qui, en plus, sont des projets fictifs. En Afrique subsaharienne, des mixeurs ont été distribués dans des écoles qui n’ont même pas accès à l’électricité. Il y a des dizaines d’exemples dans ce rapport, que j’invite chacun à lire.

    J’ai trois questions. Ce programme existe-t-il juste pour se donner bonne conscience? Comment peut-on balancer des milliards et se désintéresser à ce point de l’utilisation réelle et concrète de ces fonds? Enfin: n’avez-vous pas honte de voir l’argent des contribuables ainsi dilapidé? Comment tout cela est-il possible, et pourquoi les gens qui laissent faire cela ne sont-ils pas limogés?

     
       






     

      Barry Andrews (Renew). – Mr President, Commissioner and colleagues, we are broadly agreed across this House that nothing we do or say would reward Russia for its aggression and its contempt for human rights. Equally, we are broadly agreed that we would not do or say anything that would reward Iran for its aggression. Yet we are now slowly embarking on a policy to do just that, under the banner of so-called normalisation of relations with Assad’s Syria. This will send a clear message to Russia and Iran.

    Having stood by those who sought freedom, having passed countless resolutions condemning Assad’s prisons and gulags and executions, and his use of chemical warfare, and looking for an end to impunity, now we quietly return to restore normal relations at a time that can only send one clear message: the EU will stand by those who seek freedom, but if autocrats have the patience and seek the protection of Iran and Russia, they might just succeed.

     
       

     

      Vicent Marzà Ibáñez (Verts/ALE). – Señor presidente, mientras en este Parlamento, hace unos años, y en el Consejo, justo este mes, se ha aprobado una normativa, la nueva Directiva de calidad del aire ambiente, mucho más restrictiva de acuerdo con los criterios científicos, en la ciudad de Elx, en nuestra tercera ciudad valenciana, el Gobierno da rienda suelta a la contaminación y lo que hace es destruir carriles bici, pervertir la zona de bajas emisiones promoviendo el uso del coche y, además, poner en peligro doce millones de euros de fondos europeos que no va a ejecutar con el fin para el que fueron asignados.

    Por eso, desde aquí queremos lanzar esta denuncia, en relación con todas las denuncias ciudadanas que están luchando contra esta situación en Elx, en la tercera ciudad valenciana, y pedimos a la Comisión Europea que tome cartas en el asunto. Le queremos preguntar si va a seguir permitiendo que se destinen fondos europeos contra la salud de los ilicitanos y las ilicitanas.

     
       



     

      Katarína Roth Neveďalová (NI). – Vážený pán predsedajúci, v týchto dňoch si pripomíname osemdesiate výročie Slovenského národného povstania, ktoré vypuklo 29. augusta 1944, a osemdesiate výročie karpatsko-duklianskej operácie, ktorá bola najväčšou horskou bitkou druhej svetovej vojny a najväčšou bitkou v Československu. Bohužiaľ, dnes nás opustil jeden z posledných žijúcich partizánov na Slovensku, pán Karol Kuna, ktorý sa dožil 96 rokov, a tých pamätníkov Slovenského národného povstania máme stále menej a menej. Rada by som citovala pána Kunu, ktorý povedal: Keby nebolo toľkých, ktorí pretrhli putá zotročenia, dnes by sme nežili v slobodnej krajine. Slovenskí partizáni bojovali za hodnoty odboja proti fašizmu, ako bola sloboda, spravodlivosť a rovnosť, a len vďaka nim bolo nakoniec Československo a Slovenská republika slobodnou krajinou, ktorá stála na strane víťazov. Rada by som dnes vzdala česť týmto ľuďom, ktorí padli za našu slobodu. V Slovenskom národnom povstaní padlo približne desaťtisíc ľudí, ktorí boli nielen vojaci, nielen partizáni, ale takisto civilisti, ktorí pomáhali týmto ľuďom prežiť v horách. A takisto pri duklianskej operácii padlo asi 150 tisíc ľudí. Buď stratili svoj život, svoje zdravie, alebo boli zajatí. Česť ich pamiatke.

     
       



     

      Michele Picaro (ECR). – Signor Presidente, onorevoli colleghi, il turismo dentale nei paesi extra-UE è un fenomeno in crescita che solleva importanti preoccupazioni per la salute pubblica.

    Negli ultimi anni molti pazienti europei, in particolare italiani, si sono rivolti a destinazioni come Albania e Turchia per trattamenti odontoiatrici a prezzi competitivi. Tuttavia, un’indagine della British Dental Association ha evidenziato che il 70% dei pazienti che hanno cercato cure all’estero ha sperimentato eventi avversi gravi, come infezioni e ascessi o difficoltà masticatoria, condizioni che hanno compromesso non solo la loro salute, ma anche la durata di protesi e impianti, vanificando così il vantaggio economico iniziale.

    Le norme sanitarie in questi Paesi spesso mancano di una regolamentazione rigorosa. Per questo è necessario promuovere campagne informative che forniscano ai cittadini dati chiari e affidabili sui rischi e i benefici delle cure odontoiatriche all’estero. Informare i pazienti riguardo alle normative sanitarie dei Paesi di destinazione, alla formazione del personale medico, agli standard di qualità delle strutture è cruciale per consentire scelte consapevoli.

    Per tale ragione è imperativo che il Parlamento europeo consideri queste problematiche e promuova iniziative per garantire la sicurezza e la qualità delle cure odontoiatriche. Al contrario, si tratta di garantire ad ogni paziente scelte informate, sicure e supportate da normative adeguate. Solo così potremo garantire e proteggere la salute dei cittadini e mantenere la fiducia nel sistema sanitario.

     
       

     

      Ciaran Mullooly (Renew). – Mr President, reports along the corridors of this building say a trade deal with the Mercosur countries has all but been agreed by our Commission, and talk of compensation for Irish farmers and others is widespread. But I come here this evening to give you one message, and a message back to those who send those briefs. No way! No way will we accept this.

    A study by the Irish Government Department of Enterprise in 2021 indicated that Ireland’s beef sector would lose between EUR 44 million and EUR 55 million if the EU-Mercosur deal goes ahead.

    We are the fifth largest beef exporter in the world and the biggest EU exporter, with more than 90 % traded internationally on an annual basis.

    It is not acceptable that Ireland and key other European Member States incur high environmental food-safety traceability charges, while third countries just sail in here and are simply allowed to avoid such costs and undercut our beef in prime EU markets.

    This Parliament has and must insist on one rule for everyone equally applied to the Mercosur countries, and until this equality rule applies, Ireland says no deal and no sell-out!

     
       




     

      Christophe Clergeau (S&D). – Monsieur le Président, chers collègues, jeudi matin, j’étais dans ma ville de Nantes, aux côtés des salariés de General Electric, qui s’apprête à supprimer près de 400 emplois dans son usine et son centre de recherche-développement consacrés à la production d’éoliennes maritimes.

    Il y a plus de dix ans, alors que j’étais vice-président de ma région, j’avais œuvré à la naissance de cette filière et montré aux citoyens que l’écologie pouvait créer des centaines d’emplois: d’ouvriers, de techniciens et d’ingénieurs. Aujourd’hui, je vois ces emplois disparaître parce que l’Europe et la France sont incapables de développer des projets éoliens en mer à un tarif qui permettrait de rémunérer une chaîne de valeur et des emplois européens, incapables d’imposer un contenu européen là où il y a pourtant un soutien public important.

    Nos usines risquent de fermer alors que nous en aurons besoin pour équiper les nouveaux parcs éoliens en mer. Pendant ce temps, les Chinois construisent des usines en Écosse et en Italie pour assembler des éoliennes essentiellement fabriquées en Chine. Nous parlons de politique industrielle et de compétitivité, mais, dans la vie réelle, nous laissons s’effondrer les filières des industries vertes et nous sacrifions les emplois.

    L’Europe va-t-elle enfin se réveiller, ou va-t-elle s’enferrer dans ce lent suicide collectif? Il est temps de réagir et de lutter.

     
       

     

      Mélanie Disdier (PfE). – Monsieur le Président, mes chers collègues, si je m’adresse à vous aujourd’hui, c’est pour vous parler d’une filière en danger: celle du bois.

    En 2020, toutes les grandes centrales syndicales et patronales du secteur de l’industrie de transformation du bois ont pris l’initiative d’une déclaration commune pour dire stop à l’exportation massive de grumes en Asie, et particulièrement en Chine. L’exportation du bois non transformé prend des proportions inquiétantes, et pas uniquement pour le chêne – comme c’est le cas dans la forêt de Mormal, qui m’est chère. Toutes les essences sont concernées ou le seront à court terme. Les menuisiers, artisans, constructeurs, fabricants de parquets sont très nombreux à s’alarmer, car ils sont inquiets pour leur avenir. Si les scieries sont privées d’approvisionnement, c’est toute la filière qui va être touchée à court terme.

    Dans un contexte de pénurie de matériaux, il est donc suicidaire de laisser perdurer la situation sans réagir. Le bois est devenu une ressource stratégique, qui fait partie intégrante de notre souveraineté, et une clé de la neutralité carbone. Il est grand temps que l’Union européenne s’empare de ce dossier. Des milliers d’emplois sont en jeu en France et en Europe.

     
       

     

      Dick Erixon (ECR). – Herr talman! Efter polisrazzior i Öst- och Sydeuropa tidigare i år beslagtogs Rolexklockor, guld, diamanter, smycken, lägenheter, villor, kryptovaluta, Lamborghini, Porsche och en Audi Q8.

    Ett enda kriminellt gäng misstänks ha stulit över sex miljarder kronor från coronafonden Next Generation, med hjälp av experter på bidragsansökningar, AI-verktyg och bluffbolag. När socialdemokrater och moderater släppte igenom coronafonden lovades rigorösa kontroller. Så blev det inte. Den överdimensionerade EU-budgeten göder korruption och slöseri, men hjälper även kriminella som hittat en ny kassako att mjölka genom ekobrottslighet.

    Bidragen är så stora och mottagarna så många att rigorösa kontroller inte är möjliga. Detta måste få ett slut.

     
       

     

      João Oliveira (The Left). – Senhor Presidente, o inquérito pós‑eleitoral feito pelo Parlamento Europeu mostrou que a principal preocupação dos povos é o custo de vida. Este Parlamento deveria estar a discutir as soluções para esse problema, mas nenhum outro grupo político aceitou fazer esse debate. Nenhum outro grupo político quis discutir as opções para combater o aumento do custo de vida, as medidas de controlo e fixação dos preços dos bens essenciais, medidas de combate aos preços especulativos que garantem lucros milionários dos grupos da distribuição da energia e dos combustíveis, das telecomunicações ou da banca.

    Deveríamos também estar a discutir as consequências das novas regras da governação económica. Em Portugal, o Governo acabou de apresentar uma proposta de Orçamento do Estado que mostra bem os impactos dessas novas regras, que mostra os condicionamentos e restrições orçamentais, as limitações nos serviços públicos e nas funções sociais do Estado, as restrições ao investimento; tudo isso em contraste com as políticas de privilégio aos grupos económicos e às multinacionais. Também este debate foi travado, porque, para grande parte deste Parlamento, verdadeiramente as condições de vida dos povos pouco interessam.

     
       

     

      Juan Fernando López Aguilar (S&D). – Señor presidente, señor comisario, la solidaridad y la cohesión son el modelo social europeo y si hay una amenaza que pende sobre ese modelo es la dificultad de acceso a la vivienda que recorre toda Europa.

    Este último fin de semana en Canarias, de nuevo, miles de personas han vuelto a salir a la calle para protestar contra lo que consideran que es un exceso de presión turística, porque en Canarias se ha producido un incremento de población de un 30 % en los últimos veinte años y porque, además, se han declarado en los últimos años 60 000 ofertas alojativas extrahoteleras, lo que equivale a doce hoteles con 250 camas cada uno. Pero no se han realizado las inversiones correspondientes ni en hospitales, ni en residencias, ni en redes eléctricas, ni en aeropuertos, ni en conexiones marítimas, ni tampoco en el ciclo del agua y en relación con los vertidos al mar.

    Y tenemos puestas nuestras esperanzas en la próxima Comisión Von der Leyen, en la que va a haber por fin un comisario encargado de vivienda, el danés Dan Jørgensen, que podrá movilizar fondos europeos contra los fondos de inversión, contra los fondos buitre, para generar, por fin, oferta de vivienda en alquiler o en venta que permita la emancipación de la gente joven y el acceso a la vivienda de la clase trabajadora. Eso significará una oportunidad de restaurar el modelo social europeo con una política de vivienda europea.

     
       

     

      Csaba Dömötör (PfE). – Tisztelt Elnök Úr! A legutóbbi uniós csúcson a felek arra jutottak, hogy fokozni kell az erőfeszítéseket az uniós versenyképesség növelésére. Ezzel egyet is értünk, de azt is szomorúan állapíthatjuk meg, hogy hiányzik a szókimondó párbeszéd arról, hogy mi is okozza Európa egyre nagyobb leszakadását a versenyképességi versenyben. Sok okot azonosíthatunk, de a legfontosabb mégiscsak az, hogy elszálltak az energiaárak.

    Azért szálltak el, mert Európa a brüsszeli intézmények nyomására ideológiai okokból hátat fordított a vezetékes gáznak. A helyette beszerzett cseppfolyós gáz jóval drágább. A zöld energia a legtöbb esetben sajnos szintén drágább, és ez drasztikus terhet ró az európai vállalatokra, kicsikre és nagyokra is. Nem véletlen, hogy egyre több vállalat helyezi át a termelését máshová. A Draghi-jelentés szerint Európában ma kétszer-háromszor magasabbak az áramárak az Egyesült Államokhoz képest, a gázárak pedig négyszer-ötször. Ha ez tartósan így marad, akkor Európa maradék versenyképessége is megy a levesbe. Nem kell beletörődnünk, hogy ez így legyen, újratervezésre van szükség.

     
       

     

      Thierry Mariani (PfE). – Monsieur le Président, le Liban est en danger de mort. Ni l’Union européenne ni la France ne sont à la hauteur du drame humain qui s’y joue. Face à cette guerre impitoyable, l’Union européenne s’entête dans ses certitudes et refuse de venir en aide à Damas, qui est pourtant en première ligne pour gérer l’accueil des réfugiés dans cette crise.

    Chaque jour, des milliers de personnes traversent la frontière pour chercher refuge et protection en Syrie. Aujourd’hui, ce sont déjà près de 240 000 personnes qui ont fait le choix de passer en Syrie, considérant que ce pays est un territoire sûr. Mais l’Europe et la France restent immobiles, tandis que l’Italie, elle, plaide pour renouer le dialogue avec la République arabe syrienne. La situation au Liban ne fait qu’empirer, et avec elle, si rien n’est fait, plane la menace d’une nouvelle vague migratoire de réfugiés vers l’Europe.

    Les Syriens, derrière Bachar el-Assad, ont résisté vaillamment aux islamistes qu’une partie d’entre vous, dans cet hémicycle, avait soutenus. Il est urgent de renouer les liens avec la Syrie. C’est l’intérêt des réfugiés qu’elle accueille, mais également des pays de la région, et c’est aussi l’intérêt de l’Europe.

     
       



     

      Marko Vešligaj (S&D). – Poštovani predsjedavajući, uvažene kolege, ruralna područja čine 83 posto teritorija Europske unije, a u njima živi 137 milijuna ljudi.

    Ova područja su ključna za proizvodnju temeljnih resursa poput hrane i energije. Ipak, unatoč njihovoj važnosti, ruralne zajednice sustavno se marginaliziraju konkretnim politikama i programima financiranja. Da, postoje dokumenti poput Ruralnog pakta i dugoročne vizije za ruralna područja, koje su dobre smjernice, ali njihova implementacija je spora, a problemi se gomilaju.

    Iseljavanje, manjak javnih usluga, neadekvatna infrastruktura svakodnevica su lokalnih zajednica u ruralnim prostorima, a nedostatak podrške viših razina vlasti stvara neodrživu situaciju. Danas je dodatno ruralna Europa uslijed klimatskih promjena suočena i s prirodnim katastrofama, od klizanja tla, suša, poplava do potresa i požara.

    I za takve situacije trebamo brže i jednostavnije financijske mehanizme. Zato je nužno osigurati izravna i lako dostupna europska sredstva kao garanciju razvoja i održivosti ruralnih područja i ostanka ljudi u njima.

     
       



     

      Angéline Furet (PfE). – Monsieur le Président, sous couvert d’un humanisme totalement dévoyé et de faux bons sentiments, des politiciens traîtres aux peuples européens promeuvent une idéologie fanatique qu’ils ont érigée en dogme: l’immigrationnisme.

    Malheureusement, cette volonté de suicide altruiste imposée aux Européens a des conséquences concrètes au quotidien. La ville du Mans, en France, en est un triste exemple. L’immigration y a plus que doublé en quinze ans et, avec elle, les délits et les crimes. Augmentation des vols de plus de 300 %, augmentation des viols de plus de 500 % et augmentation des attaques au couteau, elle, de 1 000 %, carrément. Oui, dix fois plus qu’avant l’arrivée sur notre sol de ces étrangers délinquants, de ces criminels importés aux frais des Européens que vous appelez les «migrants».

    Le sang des victimes de cette abomination est sur les mains des membres de la Commission européenne qui ont ordonné cette submersion et sur les mains des députés qui l’ont votée.

     
       


     

      President. – That concludes this item.

     

    17. Agenda of the next sitting

     

      President. – The next sitting is tomorrow, Tuesday, 22 October 2024 at 09:00. The agenda has been published and is available on the European Parliament website.

     

    18. Approval of the minutes of the sitting

     

      President. – The minutes of the sitting will be submitted to Parliament for its approval tomorrow, at the beginning of the afternoon.

     

    19. Closure of the sitting

       

    (The sitting closed at 22:02)

     

    MIL OSI Europe News –

    January 24, 2025
  • MIL-OSI: First Community Bankshares, Inc. Announces Third Quarter 2024 Results and Quarterly Cash Dividend

    Source: GlobeNewswire (MIL-OSI)

    BLUEFIELD, Va., Oct. 22, 2024 (GLOBE NEWSWIRE) — First Community Bankshares, Inc. (NASDAQ: FCBC) (http://www.firstcommunitybank.com) (the “Company”) today reported its unaudited results of operations and other financial information for the quarter ended September 30, 2024. The Company reported net income of $13.03 million, or $0.71 per diluted common share, for the quarter ended September 30, 2024.  Net income for the nine months ended September 30, 2024, was $38.56 million or $2.09 per diluted common share.   

    The Company also declared a quarterly cash dividend to common shareholders of thirty-one cents, $0.31 per common share. The quarterly dividend is payable to common shareholders of record on November 8, 2024, and is expected to be paid on or about November 22, 2024. This marks the 39th consecutive year of regular dividends to common shareholders.

    The Company is working with borrowers and customers in North Carolina, Tennessee, Virginia, and southern West Virginia affected by the devastating floods, power outages, and water shortages from Hurricane Helene.  This includes payment relief for affected borrowers.  We will continue to monitor the situation over the coming weeks as it relates to asset quality.

    Third Quarter 2024 Highlights

    Income Statement

    • Net income of $13.03 million for the third quarter of 2024, was a decrease of $1.61 million, or 10.98%, from the same quarter of 2023.  Net income of $38.56 million for the first nine months of 2024, was an increase of $2.33 million, or 6.42%, from the same period of 2023.  
    • Net interest income decreased $1.75 million compared to the same quarter in 2023, primarily due to increases in rates paid on interest-bearing deposits.    
    • Net interest margin of 4.41% was a decrease of 10 basis points over the same quarter of 2023.  The yield on earning assets increased 26 basis points from the same period of 2023 and is attributable to an increase in interest income resulting from an increase in yield.  While there was an increase in yield for both loans and securities available for sale; the average balances decreased.  The average balance for interest-bearing deposits with banks increased $219.59 million over the same period of 2023; however, there was no change in the yield from the same period of 2023.  The yield on interest-bearing liabilities increased 58 basis points when compared with the same period of 2023 and is primarily attributable to increased rates on interest-bearing deposit liabilities.  
    • Noninterest income increased approximately $830 thousand, or 8.63%, when compared to the same quarter of 2023.  Noninterest income for the third quarter of 2024 included a gain of $825 thousand from the sale of  two closed branch properties; noninterest income for the same period of 2023 included a gain of $204 thousand for the sale of a closed branch property.  Noninterest expense increased $1.26 million, or 5.52%.    
    • Annualized return on average assets (“ROA”) was 1.60% for the third quarter and 1.60% for the first nine months of 2024 compared to 1.74% and 1.49% for the same periods, respectively, of 2023. Annualized return on average common equity (“ROE”) was 10.04% for the third quarter and 10.08% for the first nine months of 2024 compared to 11.63% and 10.25% for the same periods, respectively, of 2023.  Annualized return on average tangible common equity (“ROTCE”) was 14.46% for the third quarter and 14.61% for the first nine months of 2024 compared to 17.11% and 14.94% for the same periods, respectively, of 2023.

    Balance Sheet and Asset Quality

    • Consolidated assets totaled $3.22 billion at September 30, 2024.  
    • Loans decreased $128.19 million, or 4.98%, from December 31, 2023.  Securities available for sale decreased $114.29 million, or 40.68%, from December 31, 2023.  Deposits decreased $63.07 million, or 2.32%.  The net effect of these balance sheet changes resulted in an increase in cash and cash equivalents of $198.92 million, or 170.86%.    
    • The Company repurchased 12,854 common shares during the third quarter of 2024 at a total cost of $469 thousand.  The Company repurchased 257,294 common shares during the first nine months of 2024 at a total cost of $8.72 million.  
    • Non-performing loans to total loans increased to 0.82% when compared with the same quarter of 2023.  The Company experienced net charge-offs for the third quarter of 2024 of $1.13 million, or 0.18% of annualized average loans, compared to net charge-offs of $1.46 million, or 0.22%, of annualized average loans for the same period in 2023.
    • The allowance for credit losses to total loans was 1.44% at September 30, 2024, compared to 1.41% at December 31, 2023, and 1.39% for September 30, 2023.
    • Book value per share at September 30, 2024, was $ 28.47, an increase of $1.27 from year-end 2023.

    Non-GAAP Financial Measures

    In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. The non-GAAP financial measures presented in this news release include “tangible book value per common share,” “return on average tangible common equity,” “adjusted earnings,” “adjusted diluted earnings per share,” “adjusted return on average assets,” “adjusted return on average common equity,” “adjusted return on average tangible common equity,” and certain financial measures presented on a fully taxable equivalent (“FTE”) basis. FTE basis is calculated using the federal statutory income tax rate of 21%.  Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to that comparable GAAP financial measure can be found in the attached tables to this press release.  While the Company believes certain non-GAAP financial measures enhance the understanding of its business and performance, they are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions.

    About First Community Bankshares, Inc.

    First Community Bankshares, Inc., a financial holding company headquartered in Bluefield, Virginia, provides banking products and services through its wholly owned subsidiary First Community Bank. First Community Bank operated 53 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of September 30, 2024. First Community Bank offers wealth management and investment advice and services through its Trust Division and through its wholly owned subsidiary, First Community Wealth Management, which collectively managed and administered $1.64 billion in combined assets as of September 30, 2024. The Company reported consolidated assets of $3.22 billion as of September 30, 2024. The Company’s common stock is listed on the NASDAQ Global Select Market under the trading symbol, “FCBC”. Additional investor information is available on the Company’s website at http://www.firstcommunitybank.com.

    This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; changes in banking laws and regulations; the degree of competition by traditional and non-traditional competitors; the impact of natural disasters, extreme weather events, military conflict , terrorism or other geopolitical events; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent fiscal year end. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

     
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
    (Amounts in thousands, except share and per share data)                                                        
      Three Months Ended     Nine Months Ended  
      September 30,     June 30,     March 31,     December 31,     September 30,     September 30,  
      2024     2024     2024     2023     2023     2024     2023  
    Interest income                                                        
    Interest and fees on loans   $ 32,120     $ 32,696     $ 33,418     $ 33,676     $ 33,496     $ 98,234     $ 93,051  
    Interest on securities     1,070       1,211       1,698       1,888       1,912       3,979       6,068  
    Interest on deposits in banks     3,702       2,882       913       438       697       7,497       2,044  
    Total interest income     36,892       36,789       36,029       36,002       36,105       109,710       101,163  
    Interest expense                                                        
    Interest on deposits     5,298       4,877       4,365       3,935       2,758       14,540       5,406  
    Interest on borrowings     –       –       35       4       –       35       136  
    Total interest expense     5,298       4,877       4,400       3,939       2,758       14,575       5,542  
    Net interest income     31,594       31,912       31,629       32,063       33,347       95,135       95,621  
    Provision for credit losses     1,360       144       1,011       1,029       1,109       2,515       6,956  
    Net interest income after provision     30,234       31,768       30,618       31,034       32,238       92,620       88,665  
    Noninterest income     10,452       9,342       9,259       10,462       9,622       29,053       26,990  
    Noninterest expense     24,177       24,897       23,386       26,780       22,913       72,460       68,397  
    Income before income taxes     16,509       16,213       16,491       14,716       18,947       49,213       47,258  
    Income tax expense     3,476       3,527       3,646       2,932       4,307       10,649       11,022  
    Net income   $ 13,033     $ 12,686     $ 12,845     $ 11,784     $ 14,640     $ 38,564     $ 36,236  
                                                             
                                                             
    Earnings per common share                                                        
    Basic   $ 0.71     $ 0.69     $ 0.70     $ 0.64     $ 0.78     $ 2.10     $ 2.03  
    Diluted   $ 0.71     $ 0.71     $ 0.71     $ 0.66     $ 0.79     $ 2.09     $ 2.06  
    Cash dividends per common share                                                        
    Regular     0.31       0.29       0.29       0.29       0.29       0.89       0.87  
    Weighted average shares outstanding                                                        
    Basic     18,279,612       18,343,958       18,476,128       18,530,114       18,786,032       18,366,249       17,816,505  
    Diluted     18,371,907       18,409,876       18,545,910       18,575,226       18,831,836       18,432,023       17,857,494  
    Performance ratios                                                        
    Return on average assets     1.60 %     1.58 %     1.60 %     1.43 %     1.74 %     1.60 %     1.49 %
    Return on average common equity     10.04 %     10.02 %     10.18 %     9.39 %     11.63 %     10.08 %     10.25 %
    Return on average tangible common equity(1)     14.46 %     14.54 %     14.82 %     13.82 %     17.11 %     14.61 %     14.94 %
    ____________
    (1) A non-GAAP financial measure defined as net income divided by average stockholders’ equity less average goodwill and other intangible assets.
     
    CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE  (Unaudited)
     
    (Amounts in thousands)   Three Months Ended     Nine Months Ended  
      September 30,     June 30,     March 31,     December 31,     September 30,     September 30,  
      2024     2024     2024     2023     2023     2024     2023  
    Noninterest income                                                        
    Wealth management   $ 1,071     $ 1,064     $ 1,099     $ 1,052     $ 1,145     $ 3,234     $ 3,127  
    Service charges on deposits     3,661       3,428       3,310       3,637       3,729       10,399       10,359  
    Other service charges and fees     3,697       3,670       3,450       3,541       3,564       10,817       10,106  
    (Loss) gain on sale of securities     –       –       –       –       –       –       (21 )
    Other operating income     2,023       1,180       1,400       2,232       1,184       4,603       3,419  
    Total noninterest income   $ 10,452     $ 9,342     $ 9,259     $ 10,462     $ 9,622     $ 29,053     $ 26,990  
    Noninterest expense                                                        
    Salaries and employee benefits   $ 13,129     $ 12,491     $ 12,581     $ 12,933     $ 12,673     $ 38,201     $ 36,954  
    Occupancy expense     1,270       1,309       1,378       1,252       1,271       3,957       3,715  
    Furniture and equipment expense     1,574       1,687       1,545       1,489       1,480       4,806       4,389  
    Service fees     2,461       2,427       2,449       2,255       2,350       7,337       6,653  
    Advertising and public relations     967       933       796       843       968       2,696       2,457  
    Professional fees     221       330       372       787       172       923       780  
    Amortization of intangibles     536       530       530       536       536       1,596       1,195  
    FDIC premiums and assessments     365       364       369       376       392       1,098       1,135  
    Merger expense     –       –       –       –       –       –       2,393  
    Litigation expense     –       1,800       –       3,000       –       1,800       –  
    Other operating expense     3,654       3,026       3,366       3,309       3,071       10,046       8,726  
    Total noninterest expense   $ 24,177     $ 24,897     $ 23,386     $ 26,780     $ 22,913     $ 72,460     $ 68,397  
     
    RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)
     
    (Amounts in thousands, except per share data)   Three Months Ended     Nine Months Ended  
      September 30,     June 30,     March 31,     December 31,     September 30,     September 30,  
      2024     2024     2024     2023     2023     2024     2023  
    Adjusted Net Income for diluted earnings per share   $ 13,033     $ 12,686     $ 12,845     $ 12,314     $ 14,855     $ 38,564     $ 36,828  
    Non-GAAP adjustments:                                                        
    Loss (gain) on sale of securities     –       –       –       –       –       –       21  
    Merger expense     –       –       –       –       –       –       2,393  
    Day 2 provision for allowance for credit losses – Surrey     –       –       –       –       –       –       1,614  
    Litigation expense     –       1,800       –       3,000       –       1,800       –  
    Other items(1)     (825 )     –       –       –       (204 )     (825 )     –  
    Total adjustments     (825 )     1,800       –       3,000       (204 )     975       4,028  
    Tax effect     (198 )     432       –       720       (49 )     234       532  
    Adjusted earnings, non-GAAP   $ 12,406     $ 14,054     $ 12,845     $ 14,594     $ 14,700     $ 39,305     $ 40,324  
                                                             
    Adjusted diluted earnings per common share, non-GAAP   $ 0.68     $ 0.76     $ 0.69     $ 0.79     $ 0.78     $ 2.13     $ 2.26  
    Performance ratios, non-GAAP                                                        
    Adjusted return on average assets     1.53 %     1.75 %     1.60 %     1.77 %     1.75 %     1.63 %     1.66 %
    Adjusted return on average common equity     9.56 %     11.10 %     10.18 %     11.63 %     11.68 %     10.27 %     11.40 %
    Adjusted return on average tangible common equity (2)     13.77 %     16.11 %     14.82 %     17.11 %     17.18 %     14.89 %     16.62 %
    ____________
    (1) Includes other non-recurring income and expense items.
    (2) A non-GAAP financial measure defined as adjusted earnings divided by average stockholders’ equity less average goodwill and other intangible assets.
     
    AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
     
        Three Months Ended September 30,  
        2024     2023  
        Average             Average
    Yield/
        Average             Average
    Yield/
     
    (Amounts in thousands)   Balance     Interest(1)     Rate(1)     Balance     Interest(1)     Rate(1)  
    Assets                                                
    Earning assets                                                
    Loans(2)(3)   $ 2,455,807     $ 32,201       5.22 %   $ 2,604,885     $ 33,566       5.11 %
    Securities available for sale     133,654       1,099       3.27 %     284,659       1,952       2.72 %
    Interest-bearing deposits     270,440       3,701       5.44 %     50,855       697       5.44 %
    Total earning assets     2,859,901       37,001       5.15 %     2,940,399       36,215       4.89 %
    Other assets     371,358                       393,001                  
    Total assets   $ 3,231,259                     $ 3,333,400                  
                                                     
    Liabilities and stockholders’ equity                                                
    Interest-bearing deposits                                                
    Demand deposits   $ 656,780     $ 234       0.14 %   $ 699,066     $ 165       0.09 %
    Savings deposits     886,766       3,735       1.68 %     862,121       1,941       0.89 %
    Time deposits     245,020       1,329       2.16 %     263,940       652       0.98 %
    Total interest-bearing deposits     1,788,566       5,298       1.18 %     1,825,127       2,758       0.60 %
    Borrowings                                                
    Retail repurchase agreements     1,054       –       0.05 %     1,254       –       N/M  
    Total borrowings     1,054       –       0.05 %     1,254       –       N/M  
    Total interest-bearing liabilities     1,789,620       5,298       1.18 %     1,826,381       2,758       0.60 %
    Noninterest-bearing demand deposits     877,472                       964,093                  
    Other liabilities     47,892                       43,574                  
    Total liabilities     2,714,984                       2,834,048                  
    Stockholders’ equity     516,275                       499,352                  
    Total liabilities and stockholders’ equity   $ 3,231,259                     $ 3,333,400                  
    Net interest income, FTE(1)           $ 31,703                     $ 33,457          
    Net interest rate spread                     3.97 %                     4.29 %
    Net interest margin, FTE(1)                     4.41 %                     4.51 %
    ____________
    (1) Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.
    (2) Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.
    (3) Interest on loans includes non-cash and accelerated purchase accounting accretion of $592 thousand and $874 thousand for the three months ended September 30, 2024 and 2023, respectively.
     
    AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
     
        Nine Months Ended September 30,  
        2024     2023  
        Average             Average
    Yield/
        Average             Average
    Yield/
     
    (Amounts in thousands)   Balance     Interest(1)     Rate(1)     Balance     Interest(1)     Rate(1)  
    Assets                                                
    Earning assets                                                
    Loans(2)(3)   $ 2,501,209     $ 98,479       5.26 %   $ 2,523,814     $ 93,261       4.94 %
    Securities available for sale     172,331       4,073       3.16 %     306,435       6,191       2.70 %
    Interest-bearing deposits     182,773       7,499       5.48 %     51,759       2,047       5.29 %
    Total earning assets     2,856,313       110,051       5.15 %     2,882,008       101,499       4.71 %
    Other assets     372,663                       366,243                  
    Total assets   $ 3,228,976                     $ 3,248,251                  
                                                     
    Liabilities and stockholders’ equity                                                
    Interest-bearing deposits                                                
    Demand deposits   $ 662,433     $ 570       0.11 %   $ 682,820     $ 225       0.04 %
    Savings deposits     875,797       10,730       1.64 %     850,411       3,731       0.59 %
    Time deposits     247,088       3,240       1.75 %     272,435       1,450       0.71 %
    Total interest-bearing deposits     1,785,318       14,540       1.09 %     1,805,666       5,406       0.40 %
    Borrowings                                                
    Federal funds purchased     839       35       5.52 %     3,532       135       5.11 %
    Retail repurchase agreements     1,061       –       0.05 %     1,674       1       0.06 %
    Total borrowings     1,900       35       2.46 %     5,206       136       3.49 %
    Total interest-bearing liabilities     1,787,218       14,575       1.09 %     1,810,872       5,542       0.41 %
    Noninterest-bearing demand deposits     883,013                       924,591                  
    Other liabilities     47,772                       40,014                  
    Total liabilities     2,718,003                       2,775,477                  
    Stockholders’ equity     510,973                       472,774                  
    Total liabilities and stockholders’ equity   $ 3,228,976                     $ 3,248,251                  
    Net interest income, FTE(1)           $ 95,476                     $ 95,957          
    Net interest rate spread                     4.06 %                     4.30 %
    Net interest margin, FTE(1)                     4.46 %                     4.45 %
    ____________
    (1) Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.
    (2) Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.
    (3) Interest on loans includes non-cash and accelerated purchase accounting accretion of $2.04 million and $1.95 million for the nine months ended September 30, 2024 and 2023, respectively.
     
    CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
     
        September 30,     June 30,     March 31,     December 31,     September 30,  
    (Amounts in thousands, except per share data)   2024     2024     2024     2023     2023  
    Assets                                        
    Cash and cash equivalents   $ 315,338     $ 329,877     $ 248,905     $ 116,420     $ 113,397  
    Debt securities available for sale, at fair value     166,669       129,686       166,247       280,961       275,332  
    Loans held for investment, net of unearned income     2,444,113       2,473,268       2,519,833       2,572,298       2,593,472  
    Allowance for credit losses     (35,118 )     (34,885 )     (35,461 )     (36,189 )     (36,031 )
    Loans held for investment, net     2,408,995       2,438,383       2,484,372       2,536,109       2,557,441  
    Premises and equipment, net     49,654       50,528       51,333       50,680       51,205  
    Other real estate owned     346       100       374       192       243  
    Interest receivable     9,883       9,984       10,719       10,881       10,428  
    Goodwill     143,946       143,946       143,946       143,946       143,946  
    Other intangible assets     13,550       14,085       14,615       15,145       15,681  
    Other assets     115,980       116,230       115,470       114,211       116,552  
    Total assets   $ 3,224,361     $ 3,232,819     $ 3,235,981     $ 3,268,545     $ 3,284,225  
                                             
    Liabilities                                        
    Deposits                                        
    Noninterest-bearing   $ 869,723     $ 889,462     $ 902,396     $ 931,920     $ 944,301  
    Interest-bearing     1,789,530       1,787,810       1,779,819       1,790,405       1,801,835  
    Total deposits     2,659,253       2,677,272       2,682,215       2,722,325       2,746,136  
    Securities sold under agreements to repurchase     954       894       1,006       1,119       1,029  
    Interest, taxes, and other liabilities     43,460       45,769       45,816       41,807       41,393  
    Total liabilities     2,703,667       2,723,935       2,729,037       2,765,251       2,788,558  
                                             
    Stockholders’ equity                                        
    Common stock     18,291       18,270       18,413       18,502       18,671  
    Additional paid-in capital     168,691       168,272       173,041       175,841       180,951  
    Retained earnings     342,121       334,756       327,389       319,902       313,489  
    Accumulated other comprehensive loss     (8,409 )     (12,414 )     (11,899 )     (10,951 )     (17,444 )
    Total stockholders’ equity     520,694       508,884       506,944       503,294       495,667  
    Total liabilities and stockholders’ equity   $ 3,224,361     $ 3,232,819     $ 3,235,981     $ 3,268,545     $ 3,284,225  
                                             
    Shares outstanding at period-end     18,290,938       18,270,273       18,413,088       18,502,396       18,671,470  
    Book value per common share   $ 28.47     $ 27.85     $ 27.53     $ 27.20     $ 26.55  
    Tangible book value per common share(1)     19.86       19.20       18.92       18.60       18.00  
    ____________
    (1) A non-GAAP financial measure defined as stockholders’ equity less goodwill and other intangible assets, divided by shares outstanding.
     
    SELECTED CREDIT QUALITY INFORMATION (Unaudited)
     
        September 30,     June 30,     March 31,     December 31,     September 30,  
    (Amounts in thousands)   2024     2024     2024     2023     2023  
    Allowance for Credit Losses                                        
    Balance at beginning of period:                                        
    Allowance for credit losses – loans   $ 34,885     $ 35,461     $ 36,189     $ 36,031     $ 36,177  
    Allowance for credit losses – loan commitments     441       746       746       758       964  
    Total allowance for credit losses beginning of period     35,326       36,207       36,935       36,789       37,141  
    Adjustments to beginning balance:                                        
    Allowance for credit losses – loans – Surrey acquisition for purchased credit deteriorated loans     –       –       –       –       –  
    Allowance for credit losses – loan commitments     –       –       –       –       –  
    Net Adjustments     –       –       –       –       –  
    Provision for credit losses:                                        
    Provision for credit losses – loans     1,360       449       1,011       1,041       1,315  
    (Recovery of) provision for credit losses – loan commitments     –       (305 )     –       (12 )     (206 )
    Total provision for credit losses – loans and loan commitments     1,360       144       1,011       1,029       1,109  
    Charge-offs     (1,799 )     (1,599 )     (2,448 )     (2,105 )     (2,157 )
    Recoveries     672       574       709       1,222       696  
    Net (charge-offs) recoveries     (1,127 )     (1,025 )     (1,739 )     (883 )     (1,461 )
    Balance at end of period:                                        
    Allowance for credit losses – loans     35,118       34,885       35,461       36,189       36,031  
    Allowance for credit losses – loan commitments     441       441       746       746       758  
    Ending balance   $ 35,559     $ 35,326     $ 36,207     $ 36,935     $ 36,789  
                                             
    Nonperforming Assets                                        
    Nonaccrual loans   $ 19,754     $ 19,815     $ 19,617     $ 19,356     $ 18,366  
    Accruing loans past due 90 days or more     176       19       30       104       59  
    Modified loans past due 90 days or more     –       –       –       –       –  
    Total nonperforming loans     19,930       19,834       19,647       19,460       18,425  
    OREO     346       100       374       192       243  
    Total nonperforming assets   $ 20,276     $ 19,934     $ 20,021     $ 19,652     $ 18,668  
                                             
                                             
    Additional Information                                        
    Total modified loans   $ 2,320     $ 2,290     $ 2,177     $ 1,873     $ 1,674  
                                             
    Asset Quality Ratios                                        
    Nonperforming loans to total loans     0.82 %     0.80 %     0.78 %     0.76 %     0.71 %
    Nonperforming assets to total assets     0.63 %     0.62 %     0.62 %     0.60 %     0.57 %
    Allowance for credit losses to nonperforming loans     176.21 %     175.88 %     180.49 %     185.97 %     195.55 %
    Allowance for credit losses to total loans     1.44 %     1.41 %     1.41 %     1.41 %     1.39 %
    Annualized net charge-offs (recoveries) to average loans     0.18 %     0.16 %     0.27 %     0.14 %     0.22 %
    FOR MORE INFORMATION, CONTACT:
    David D. Brown
    (276) 326-9000

    The MIL Network –

    January 24, 2025
  • MIL-OSI: Hanmi Reports 2024 Third Quarter Results

    Source: GlobeNewswire (MIL-OSI)

    LOS ANGELES, Oct. 22, 2024 (GLOBE NEWSWIRE) — Hanmi Financial Corporation (NASDAQ: HAFC, or “Hanmi”), the parent company of Hanmi Bank (the “Bank”), today reported financial results for the third quarter of 2024.

    Net income for the third quarter of 2024 was $14.9 million, or $0.49 per diluted share, compared with $14.5 million, or $0.48 per diluted share, for the second quarter of 2024. The return on average assets for the third quarter of 2024 was 0.79% and the return on average equity was 7.55%, compared with a return on average assets of 0.77% and the return on average equity of 7.50% for the second quarter of 2024.

    CEO Commentary
    “Our third quarter results were strong, with solid performance across all key operating metrics in the third quarter,” said Bonnie Lee, President and Chief Executive Officer of Hanmi.  “Net interest margin increased five basis points to 2.74% driven by higher yields on interest-earning assets and lower funding costs. Loans grew by 2% driven by a 27% increase in loan production and total deposits were up led by 5% growth in noninterest-bearing demand deposits. These results reflect the continued success of our relationship banking model and our portfolio diversification strategy.”

    “During the quarter, we remained focused on our disciplined credit administration practices and are pleased to report that we resolved several criticized and nonaccrual loans and recognized a recovery on a previously charged-off loan. We also proactively moved three loans to the special mention category to monitor them more closely. These loans are current, and we are confident they are well protected.”

    “Hanmi is well-positioned for a strong close to 2024 with a robust balance sheet, ample liquidity, healthy capital ratios, and a solid loan pipeline. Our team remains committed to delivering the solutions our customers need and results our shareholders expect,” concluded Lee.

    Third Quarter 2024 Highlights: 

    • Third quarter net income was $14.9 million, or $0.49 per diluted share, compared with $14.5 million, or $0.48 per diluted share for the second quarter of 2024. The increase reflects a $2.0 million, or 9.4%, increase in pretax, preprovision income, propelled by a 2.9% increase in net interest income.
    • Loans receivable were $6.26 billion at September 30, 2024, up 1.3% from the end of the second quarter of 2024, driven by a 27% increase in loan production to $347.8 million with a weighted average interest rate of 7.92%.
    • Deposits were $6.40 billion at September 30, 2024, up 1.2% from the end of the second quarter of 2024; noninterest-bearing demand deposits were 32.0% of total deposits. During the quarter, noninterest bearing demand deposits grew 4.7%, while time deposits declined 3.2% from the prior quarter.
    • Net interest income for the third quarter was $50.1 million, up 2.9% from the second quarter of 2024, driven by strong operational performance. Net interest margin (taxable equivalent) expanded five basis points to 2.74%, as the average yield on loans increased to 6.00%, while the cost of interest-bearing deposits remained unchanged at 4.27%.
    • Noninterest expense was $35.1 million for the third quarter, down 0.6% from the second quarter of 2024, primarily reflecting the absence of the second quarter $0.3 million branch consolidation charge.
    • Credit loss expense for the third quarter was $2.3 million, compared with $1.0 million for the prior quarter. The allowance for credit losses increased $1.4 million to $69.2 million at September 30, 2024, or 1.11% of loans. For the third quarter, net loan charge-offs of $0.9 million included a $1.1 million charge-off on a nonaccrual loan transferred to held-for-sale and a $1.7 million recovery of a nonaccrual loan.
    • Asset quality included several notable actions: nonaccrual loans fell 18.8% to $15.2 million and included pay-offs of $6.8 million while criticized assets increased, with downgrades to special mention of three loans totaling $129.8 million, offset by the move to the held-for-sale nonaccrual loan category of the previously identified $28.3 million completed construction loan, upgrades of $6.1 million, and additional loan pay-offs of $1.3 million. Subsequent to the end of the third quarter, the Bank completed the sale of the nonaccrual loan.

    For more information about Hanmi, please see the Q3 2024 Investor Update (and Supplemental Financial Information), which is available on the Bank’s website at http://www.hanmi.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at http://www.sec.gov. Also, please refer to “Non-GAAP Financial Measures” herein for further details of the presentation of certain non-GAAP financial measures.

    Quarterly Highlights
    (Dollars in thousands, except per share data)

      As of or for the Three Months Ended     Amount Change  
      September 30,     June 30,     March 31,     December 31,     September 30,     Q3-24     Q3-24  
      2024     2024     2024     2023     2023     vs. Q2-24     vs. Q3-23  
                                             
    Net income $ 14,892     $ 14,451     $ 15,164     $ 18,633     $ 18,796     $ 441     $ (3,904 )
    Net income per diluted common share $ 0.49     $ 0.48     $ 0.50     $ 0.61     $ 0.62     $ 0.01     $ (0.13 )
                                             
    Assets $ 7,712,299     $ 7,586,347     $ 7,512,046     $ 7,570,341     $ 7,350,140     $ 125,952     $ 362,159  
    Loans receivable $ 6,257,744     $ 6,176,359     $ 6,177,840     $ 6,182,434     $ 6,020,785     $ 81,385     $ 236,959  
    Deposits $ 6,403,221     $ 6,329,340     $ 6,376,060     $ 6,280,574     $ 6,260,072     $ 73,881     $ 143,149  
                                             
    Return on average assets   0.79 %     0.77 %     0.81 %     0.99 %     1.00 %     0.02       -0.21  
    Return on average stockholders’ equity   7.55 %     7.50 %     7.90 %     9.70 %     9.88 %     0.06       -2.33  
                                             
    Net interest margin   2.74 %     2.69 %     2.78 %     2.92 %     3.03 %     0.05       -0.29  
    Efficiency ratio (1)   59.98 %     62.24 %     62.42 %     58.86 %     51.82 %     -2.26       8.16  
                                             
    Tangible common equity to tangible assets (2)   9.42 %     9.19 %     9.23 %     9.14 %     8.89 %     0.23       0.53  
    Tangible common equity per common share (2) $ 24.03     $ 22.99     $ 22.86     $ 22.75     $ 21.45       1.04       2.58  
                                             
    (1)       Noninterest expense divided by net interest income plus noninterest income.  
    (2)       Refer to “Non-GAAP Financial Measures” for further details.  


    Results of Operations

    Net interest income for the third quarter was $50.1 million, up 2.9% from $48.6 million for the second quarter of 2024. The increase was primarily due to an increase in loan interest income. The increase in loan interest income was a result of increases in loan yields and average balances. The yield on average loans for the third quarter increased slightly to 6.00% from 5.99% for the second quarter of 2024. Average loans were $6.11 billion for the third quarter of 2024, up 0.4% from $6.09 billion for the second quarter. The cost of interest-bearing deposits was 4.27% for the third quarter of 2024, unchanged from the prior quarter. Average interest-bearing deposits were $4.40 billion for the third quarter, up 0.3%, from $4.38 billion for the prior quarter. Net interest margin (taxable equivalent) for the third quarter was 2.74%, compared with 2.69% for the second quarter of 2024.

      For the Three Months Ended (in thousands)     Percentage Change  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,     Q3-24     Q3-24  
    Net Interest Income 2024     2024     2024     2023     2023     vs. Q2-24     vs. Q3-23  
                                             
    Interest and fees on loans receivable(1) $ 92,182     $ 90,752     $ 91,674     $ 89,922     $ 85,398       1.6 %     7.9 %
    Interest on securities   5,523       5,238       4,955       4,583       4,204       5.4 %     31.4 %
    Dividends on FHLB stock   356       357       361       341       317       -0.3 %     12.3 %
    Interest on deposits in other banks   2,356       2,313       2,604       2,337       4,153       1.9 %     -43.3 %
    Total interest and dividend income $ 100,417     $ 98,660     $ 99,594     $ 97,183     $ 94,072       1.8 %     6.7 %
                                             
    Interest on deposits   47,153       46,495       45,638       40,277       36,818       1.4 %     28.1 %
    Interest on borrowings   1,561       1,896       1,655       2,112       753       -17.7 %     107.3 %
    Interest on subordinated debentures   1,652       1,649       1,646       1,654       1,646       0.2 %     0.4 %
    Total interest expense   50,366       50,040       48,939       44,043       39,217       0.7 %     28.4 %
    Net interest income $ 50,051     $ 48,620     $ 50,655     $ 53,140     $ 54,855       2.9 %     -8.8 %
                                             
    (1)      Includes loans held for sale.  
      For the Three Months Ended (in thousands)     Percentage Change  
    Average Earning Assets and   Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,     Q3-24     Q3-24  
    Interest-bearing Liabilities 2024     2024     2024     2023     2023     vs. Q2-24     vs. Q3-23  
    Loans receivable (1) $ 6,112,324     $ 6,089,440     $ 6,137,888     $ 6,071,644     $ 5,915,423       0.4 %     3.3 %
    Securities   986,041       979,671       969,520       961,551       955,473       0.7 %     3.2 %
    FHLB stock   16,385       16,385       16,385       16,385       16,385       0.0 %     0.0 %
    Interest-bearing deposits in other banks   183,027       180,177       201,724       181,140       317,498       1.6 %     -42.4 %
    Average interest-earning assets $ 7,297,777     $ 7,265,673     $ 7,325,517     $ 7,230,720     $ 7,204,779       0.4 %     1.3 %
                                             
    Demand: interest-bearing $ 83,647     $ 85,443     $ 86,401     $ 86,679     $ 94,703       -2.1 %     -11.7 %
    Money market and savings   1,885,799       1,845,870       1,815,085       1,669,973       1,601,826       2.2 %     17.7 %
    Time deposits   2,427,737       2,453,154       2,507,830       2,417,803       2,438,112       -1.0 %     -0.4 %
    Average interest-bearing deposits   4,397,183       4,384,467       4,409,316       4,174,455       4,134,641       0.3 %     6.3 %
    Borrowings   143,479       169,525       162,418       205,951       120,381       -15.4 %     19.2 %
    Subordinated debentures   130,403       130,239       130,088       129,933       129,780       0.1 %     0.5 %
    Average interest-bearing liabilities $ 4,671,065     $ 4,684,231     $ 4,701,822     $ 4,510,339     $ 4,384,802       -0.3 %     6.5 %
                                             
    Average Noninterest Bearing Deposits                                        
    Demand deposits – noninterest bearing $ 1,908,833     $ 1,883,765     $ 1,921,189     $ 2,025,212     $ 2,136,156       1.3 %     -10.6 %
                                             
    (1)      Includes loans held for sale.                     
      For the Three Months Ended     Yield/Rate Change  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,     Q3-24     Q3-24  
    Average Yields and Rates 2024     2024     2024     2023     2023     vs. Q2-24     vs. Q3-23  
    Loans receivable(1)   6.00 %     5.99 %     6.00 %     5.88 %     5.73 %     0.01       0.27  
    Securities (2)   2.27 %     2.17 %     2.07 %     1.93 %     1.79 %     0.10       0.48  
    FHLB stock   8.65 %     8.77 %     8.87 %     8.25 %     7.67 %     -0.12       0.98  
    Interest-bearing deposits in other banks   5.12 %     5.16 %     5.19 %     5.12 %     5.19 %     -0.04       -0.07  
    Interest-earning assets   5.48 %     5.46 %     5.47 %     5.34 %     5.19 %     0.02       0.29  
                                             
    Interest-bearing deposits   4.27 %     4.27 %     4.16 %     3.83 %     3.53 %     0.00       0.74  
    Borrowings   4.33 %     4.50 %     4.10 %     4.07 %     2.48 %     -0.17       1.85  
    Subordinated debentures   5.07 %     5.07 %     5.06 %     5.09 %     5.07 %     0.00       0.00  
    Interest-bearing liabilities   4.29 %     4.30 %     4.19 %     3.88 %     3.55 %     -0.01       0.74  
                                             
    Net interest margin (taxable equivalent basis)   2.74 %     2.69 %     2.78 %     2.92 %     3.03 %     0.05       -0.29  
                                             
    Cost of deposits   2.97 %     2.98 %     2.90 %     2.58 %     2.33 %     -0.01       0.64  
                                             
    (1)      Includes loans held for sale.  
    (2)      Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.  

    Credit loss expense for the third quarter was $2.3 million, compared with $1.0 million for the second quarter of 2024. Third quarter credit loss expense included a $2.3 million credit loss expense for loan losses. Third quarter net loan charge-offs were $0.9 million, compared with second quarter net loan charge-offs of $1.8 million. Third quarter net loan charge-offs included a $1.1 million charge-off on a nonaccrual loan transferred to held-for-sale and a $1.7 million recovery on a nonaccrual loan.

    Noninterest income for the third quarter increased $0.3 million to $8.4 million, or 4.7%, from $8.1 million for the second quarter of 2024. Third quarter noninterest income included a $0.9 million gain from the sale and leaseback of a branch property, while second quarter noninterest income included a $0.3 million death benefit on bank-owned life insurance. Gains on sales of SBA loans were $1.5 million for the third quarter of 2024, compared with $1.6 million for the second quarter of 2024. The volume of SBA loans sold in the third quarter decreased to $23.0 million, from $23.5 million for the second quarter of 2024, while trade premiums were 8.54% for the third quarter of 2024, unchanged from the second quarter. Mortgage loans sold in the third quarter were $20.9 million, with a premium of 2.32%, compared with $19.5 million and 2.00% for the second quarter, resulting in income of $0.3 million for the third quarter, compared with $0.4 million for the prior quarter.

      For the Three Months Ended (in thousands)     Percentage Change  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,     Q3-24     Q3-24  
    Noninterest Income 2024     2024     2024     2023     2023     vs. Q2-24     vs. Q3-23  
    Service charges on deposit accounts $ 2,311     $ 2,429     $ 2,450     $ 2,391     $ 2,605       -4.9 %     -11.3 %
    Trade finance and other service charges and fees   1,254       1,277       1,414       1,245       1,155       -1.8 %     8.6 %
    Servicing income   817       796       712       772       838       2.6 %     -2.5 %
    Bank-owned life insurance income (expense)   320       638       304       (29 )     280       -49.8 %     14.3 %
    All other operating income   1,008       908       928       853       1,178       11.0 %     -14.4 %
    Service charges, fees & other   5,710       6,048       5,808       5,232       6,056       -5.6 %     -5.7 %
                                             
    Gain on sale of SBA loans   1,544       1,644       1,482       1,448       1,172       -6.1 %     31.7 %
    Gain on sale of mortgage loans   324       365       443       –       –       -11.2 %     100.0 %
    Gain on sale of bank premises   860       –       –       –       4,000       100.0 %     -78.5 %
    Total noninterest income $ 8,438     $ 8,057     $ 7,733     $ 6,680     $ 11,228       4.7 %     -24.8 %

    Noninterest expense for the third quarter decreased by $0.2 million to $35.1 million from $35.3 million for the second quarter of 2024. The decrease reflects primarily the absence of the $0.3 million branch consolidation expense recognized in the second quarter of 2024. The efficiency ratio for the third quarter was 60.0%, compared with 62.2% for the second quarter of 2024.

      For the Three Months Ended (in thousands)     Percentage Change  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,     Q3-24     Q3-24  
      2024     2024     2024     2023     2023     vs. Q2-24     vs. Q3-23  
    Noninterest Expense                                        
    Salaries and employee benefits $ 20,851     $ 20,434     $ 21,585     $ 20,062     $ 20,361       2.0 %     2.4 %
    Occupancy and equipment   4,499       4,348       4,537       4,604       4,825       3.5 %     -6.8 %
    Data processing   3,839       3,686       3,551       3,487       3,490       4.2 %     10.0 %
    Professional fees   1,492       1,749       1,893       1,977       1,568       -14.7 %     -4.8 %
    Supplies and communication   538       570       601       613       552       -5.6 %     -2.5 %
    Advertising and promotion   631       669       907       990       534       -5.7 %     18.2 %
    All other operating expenses   2,875       3,251       3,160       3,252       2,852       -11.6 %     0.8 %
    Subtotal   34,725       34,707       36,234       34,985       34,182       0.1 %     1.6 %
                                             
    Branch consolidation expense   –       301       –       –       –       -100.0 %     0.0 %
    Other real estate owned expense   77       6       22       15       16       1183.3 %     381.3 %
    Repossessed personal property expense   278       262       189       211       47       6.1 %     491.5 %
    Total noninterest expense $ 35,080     $ 35,276     $ 36,445     $ 35,211     $ 34,245       -0.6 %     2.4 %

    Hanmi recorded a provision for income taxes of $6.2 million for the third quarter of 2024, compared with $6.0 million for the second quarter of 2024, representing an effective tax rate of 29.5% and 29.3%, respectively.

    Financial Position
    Total assets at September 30, 2024 increased 1.7%, or $126.0 million, to $7.71 billion from $7.59 billion at June 30, 2024. The sequential quarter increase was due to a $125.3 million increase in loans and loans held-for-sale, and a $31.3 million increase in securities, offset partially by a $25.3 million decrease in cash and due from banks.

    Loans receivable, before allowance for credit losses, were $6.26 billion at September 30, 2024, up from $6.18 billion at June 30, 2024.

    Loans held-for-sale were $54.3 million at September 30, 2024, up from $10.5 million at June 30, 2024. At the end of the third quarter, loans held-for-sale consisted of $8.8 million of the guaranteed portion of SBA 7(a) loans, $18.3 million of residential mortgage loans and the $27.2 million nonaccrual loan. Subsequent to the end of the third quarter, the Bank completed the sale of this nonaccrual loan.

      As of (in thousands)     Percentage Change  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,     Q3-24     Q3-24  
      2024     2024     2024     2023     2023     vs. Q2-24     vs. Q3-23  
    Loan Portfolio                                        
    Commercial real estate loans $ 3,932,088     $ 3,888,505     $ 3,878,677     $ 3,889,739     $ 3,773,015       1.1 %     4.2 %
    Residential/consumer loans   939,285       954,209       970,362       962,661       926,326       -1.6 %     1.4 %
    Commercial and industrial loans   879,092       802,372       774,851       747,819       728,792       9.6 %     20.6 %
    Equipment finance   507,279       531,273       553,950       582,215       592,652       -4.5 %     -14.4 %
    Loans receivable   6,257,744       6,176,359       6,177,840       6,182,434       6,020,785       1.3 %     3.9 %
    Loans held for sale   54,336       10,467       3,999       12,013       11,767       419.1 %     361.8 %
    Total $ 6,312,080     $ 6,186,826     $ 6,181,839     $ 6,194,447     $ 6,032,552       2.0 %     4.6 %
      As of  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,  
      2024     2024     2024     2023     2023  
    Composition of Loan Portfolio                            
    Commercial real estate loans   62.3 %     62.9 %     62.7 %     62.8 %     62.5 %
    Residential/consumer loans   14.9 %     15.4 %     15.7 %     15.5 %     15.4 %
    Commercial and industrial loans   13.9 %     13.0 %     12.5 %     12.1 %     12.1 %
    Equipment finance   8.0 %     8.5 %     9.0 %     9.4 %     9.8 %
    Loans receivable   99.1 %     99.8 %     99.9 %     99.8 %     99.8 %
    Loans held for sale   0.9 %     0.2 %     0.1 %     0.2 %     0.2 %
    Total   100.0 %     100.0 %     100.0 %     100.0 %     100.0 %

    New loan production was $347.8 million for the third quarter of 2024 at an average rate of 7.92%, while payoffs were $77.6 million during the quarter at an average rate of 6.63%.

    Commercial real estate loan production for the third quarter of 2024 was $110.2 million. Commercial and industrial loan production was $105.1 million, SBA loan production was $51.6 million, equipment finance production was $40.1 million, and residential mortgage loan production was $40.8 million.

      For the Three Months Ended (in thousands)  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,  
      2024     2024     2024     2023     2023  
    New Loan Production                            
    Commercial real estate loans $ 110,246     $ 87,632     $ 60,085     $ 178,157     $ 106,151  
    Commercial and industrial loans   105,086       59,007       50,789       52,079       67,907  
    SBA loans   51,616       54,486       30,817       48,432       36,109  
    Equipment finance   40,066       42,594       39,155       57,334       71,075  
    Residential/consumer loans   40,758       30,194       53,115       53,465       55,026  
    Subtotal   347,772       273,913       233,961       389,467       336,268  
                                 
                                 
    Payoffs   (77,603 )     (148,400 )     (86,250 )     (77,961 )     (62,140 )
    Amortization   (151,674 )     (83,640 )     (90,711 )     (106,610 )     (116,411 )
    Loan sales   (43,868 )     (42,945 )     (55,321 )     (29,861 )     (22,496 )
    Net line utilization   9,426       1,929       (4,150 )     (11,609 )     (70,238 )
    Charge-offs & OREO   (2,668 )     (2,338 )     (2,123 )     (1,777 )     (9,369 )
                                 
    Loans receivable-beginning balance   6,176,359       6,177,840       6,182,434       6,020,785       5,965,171  
    Loans receivable-ending balance $ 6,257,744     $ 6,176,359     $ 6,177,840     $ 6,182,434     $ 6,020,785  

    Deposits were $6.40 billion at the end of the third quarter of 2024, up $73.9 million, or 1.2%, from $6.33 billion at the end of the prior quarter. Driving the change was a $91.8 million increase in noninterest-bearing demand deposits and a $64.0 million increase in money market and savings deposits, partially offset by a $78.3 million decrease in time deposits. Noninterest-bearing demand deposits represented 32.0% of total deposits at September 30, 2024 and the loan-to-deposit ratio was 97.7%.

      As of (in thousands)     Percentage Change  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,     Q3-24     Q3-24  
      2024     2024     2024     2023     2023     vs. Q2-24     vs. Q3-23  
    Deposit Portfolio                                        
    Demand: noninterest-bearing $ 2,051,790     $ 1,959,963     $ 1,933,060     $ 2,003,596     $ 2,161,238       4.7 %     -5.1 %
    Demand: interest-bearing   79,287       82,981       87,374       87,452       88,133       -4.5 %     -10.0 %
    Money market and savings   1,898,834       1,834,797       1,859,865       1,734,658       1,576,006       3.5 %     20.5 %
    Time deposits   2,373,310       2,451,599       2,495,761       2,454,868       2,434,695       -3.2 %     -2.5 %
    Total deposits $ 6,403,221     $ 6,329,340     $ 6,376,060     $ 6,280,574     $ 6,260,072       1.2 %     2.3 %
      As of  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,  
      2024     2024     2024     2023     2023  
    Composition of Deposit Portfolio                            
    Demand: noninterest-bearing   32.0 %     31.0 %     30.3 %     31.9 %     34.5 %
    Demand: interest-bearing   1.2 %     1.3 %     1.4 %     1.4 %     1.4 %
    Money market and savings   29.7 %     29.0 %     29.2 %     27.6 %     25.2 %
    Time deposits   37.1 %     38.7 %     39.1 %     39.1 %     38.9 %
    Total deposits   100.0 %     100.0 %     100.0 %     100.0 %     100.0 %

    Stockholders’ equity at September 30, 2024 was $736.7 million, up $29.6 million from $707.1 million at June 30, 2024. The increase was due to third quarter net income, net of dividends paid, adding $7.3 million to stockholders’ equity for the period. Additionally, there was a $20.7 million decrease in unrealized after-tax losses on securities available for sale and a $2.2 million decrease in unrealized after-tax losses on cash flow hedges, all due to changes in interest rates during the third quarter of 2024. Hanmi also repurchased 75,000 shares of common stock, or $1.4 million, during the quarter at an average share price of $19.10. At September 30, 2024, 1,255,000 shares remain under Hanmi’s share repurchase program. Tangible common stockholders’ equity was $725.7 million, or 9.42% of tangible assets, at September 30, 2024, compared with $696.0 million, or 9.19% of tangible assets at the end of the prior quarter. Please refer to the Non-GAAP Financial Measures section below for more information.

    Hanmi and the Bank exceeded minimum regulatory capital requirements, and the Bank continues to exceed the minimum for the “well capitalized” category. At September 30, 2024, Hanmi’s preliminary common equity tier 1 capital ratio was 11.95% and its total risk-based capital ratio was 15.04%, compared with 12.11% and 15.24%, respectively, at the end of the prior quarter.

      As of     Ratio Change  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,     Q3-24     Q3-24  
      2024     2024     2024     2023     2023     vs. Q2-24     vs. Q3-23  
    Regulatory Capital ratios (1)                                        
    Hanmi Financial                                        
    Total risk-based capital   15.04 %     15.24 %     15.20 %     14.95 %     15.07 %     -0.20       -0.03  
    Tier 1 risk-based capital   12.29 %     12.46 %     12.40 %     12.20 %     12.30 %     -0.17       -0.01  
    Common equity tier 1 capital   11.95 %     12.11 %     12.05 %     11.86 %     11.95 %     -0.16       0.00  
    Tier 1 leverage capital ratio   10.56 %     10.51 %     10.36 %     10.37 %     10.27 %     0.05       0.29  
    Hanmi Bank                                        
    Total risk-based capital   14.28 %     14.51 %     14.50 %     14.27 %     14.42 %     -0.23       -0.14  
    Tier 1 risk-based capital   13.24 %     13.47 %     13.44 %     13.26 %     13.42 %     -0.23       -0.18  
    Common equity tier 1 capital   13.24 %     13.47 %     13.44 %     13.26 %     13.42 %     -0.23       -0.18  
    Tier 1 leverage capital ratio   11.43 %     11.41 %     11.29 %     11.32 %     11.25 %     0.02       0.18  
                                             
    (1)      Preliminary ratios for September 30, 2024  


    Asset Quality

    Loans 30 to 89 days past due and still accruing were 0.24% of loans at the end of the third quarter of 2024, compared with 0.22% at the end of the prior quarter.

    Criticized loans totaled $160.0 million at September 30, 2024, up from $70.9 million at the end of the second quarter of 2024.

    During the third quarter, the Bank moved the previously identified $28.3 million completed construction loan for a memory-care and assisted-living facility from the special mention category to the held-for-sale nonaccrual category. In addition, the Bank recognized a $1.1 million charge-off on this loan. Subsequent to the end of the third quarter, the Bank completed the sale of this nonaccrual loan.

    Also, during the third quarter, the Bank downgraded to special mention two commercial real estate loans in the hospitality industry for $109.7 million and a commercial and industrial loan in the health care industry for $20.1 million.  Pay-offs of $8.1 million decreased criticized loans (and classified loans), while upgrades of $6.1 million also decreased criticized loans (and special mention loans). Offsetting the decrease in classified loans were additions of $2.5 million.

    Nonperforming loans were $15.5 million at September 30, 2024, down from $19.2 million at the end of the prior quarter. The decrease primarily reflects pay-offs of $6.8 million, where the pay-off of a previously identified $3.9 million nonperforming loan resulted in a $1.7 million recovery.  Offsetting the decrease were additions of $3.1 million.

    Nonperforming assets were $16.3 million at the end of the third quarter of 2024, down from $20.0 million at the end of the prior quarter. As a percentage of total assets, nonperforming assets were 0.21% at September 30, 2024, and 0.26% at the end of the prior quarter.

    Gross charge-offs for the third quarter of 2024 were $3.8 million, compared with $2.3 million for the preceding quarter. Charge-offs included $1.1 million on the previously identified $28.3 million completed construction loan. Recoveries of previously charged-off loans were $2.9 million in the third quarter of 2024, and included a $1.7 million recovery on a previously identified $3.9 million commercial loan in the health care industry. As a result, net charge-offs were $0.9 million for the third quarter of 2024, compared with net charge-offs of $1.8 million for the prior quarter.

    The allowance for credit losses was $69.2 million at September 30, 2024, compared with $67.7 million at June 30, 2024. Specific allowances for loans decreased $1.6 million, while the allowance for quantitative and qualitative considerations increased $3.1 million. The ratio of the allowance for credit losses to loans was 1.11% at September 30, 2024 and 1.10% at June 30, 2024.

      As of or for the Three Months Ended (in thousands)     Amount Change  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,     Q3-24     Q3-24  
      2024     2024     2024     2023     2023     vs. Q2-24     vs. Q3-23  
    Asset Quality Data and Ratios                                        
                                             
    Delinquent loans:                                        
    Loans, 30 to 89 days past due and still accruing $ 15,027     $ 13,844     $ 15,839     $ 10,263     $ 9,545     $ 1,183     $ 5,482  
    Delinquent loans to total loans   0.24 %     0.22 %     0.26 %     0.17 %     0.16 %     0.02       0.08  
                                             
    Criticized loans:                                        
    Special mention $ 131,575     $ 36,921     $ 62,317     $ 65,314     $ 76,473     $ 94,654     $ 55,102  
    Classified   28,377       33,945       23,670       31,367       33,134       (5,568 )     (4,757 )
    Total criticized loans $ 159,952     $ 70,866     $ 85,987     $ 96,681     $ 109,607     $ 89,086     $ 50,345  
                                             
    Nonperforming assets:                                        
    Nonaccrual loans $ 15,248     $ 19,245     $ 14,025     $ 15,474     $ 15,783     $ (3,997 )   $ (535 )
    Loans 90 days or more past due and still accruing   242       –       –       –       –       242       242  
    Nonperforming loans*   15,490       19,245       14,025       15,474       15,783       (3,755 )     (293 )
    Other real estate owned, net   772       772       117       117       117       –       655  
    Nonperforming assets** $ 16,262     $ 20,017     $ 14,142     $ 15,591     $ 15,900     $ (3,755 )   $ 362  
                                             
    Nonperforming assets to assets*   0.21 %     0.26 %     0.19 %     0.21 %     0.22 %     -0.05       -0.01  
    Nonperforming loans to total loans   0.25 %     0.31 %     0.23 %     0.25 %     0.26 %     -0.06       -0.01  
                                             
    * Excludes a $27.2 million nonperforming loan held-for-sale.                     
    ** Excludes repossessed personal property of $1.2 million, $1.2 million, $1.3 million, $1.3 million, and $1.3 million as of Q3-24, Q2-24, Q1-24, Q4-23, and Q3-23, respectively  
      As of or for the Three Months Ended (in thousands)  
      Sep 30,     Jun 30,     Mar 31,     Dec 31,     Sep 30,  
      2024     2024     2024     2023     2023  
    Allowance for credit losses related to loans:                            
    Balance at beginning of period $ 67,729     $ 68,270     $ 69,462     $ 67,313     $ 71,024  
    Credit loss expense (recovery) on loans   2,312       1,248       404       (2,880 )     5,167  
    Net loan (charge-offs) recoveries   (878 )     (1,789 )     (1,596 )     5,029       (8,878 )
    Balance at end of period $ 69,163     $ 67,729     $ 68,270     $ 69,462     $ 67,313  
                                 
    Net loan charge-offs (recoveries) to average loans (1)   0.06 %     0.12 %     0.10 %     -0.33 %     0.60 %
    Allowance for credit losses to loans   1.11 %     1.10 %     1.11 %     1.12 %     1.12 %
                                 
    Allowance for credit losses related to off-balance sheet items:                            
    Balance at beginning of period $ 2,010     $ 2,297     $ 2,474     $ 2,463     $ 2,476  
    Credit loss expense (recovery) on off-balance sheet items   (26 )     (287 )     (177 )     11       (13 )
    Balance at end of period $ 1,984     $ 2,010     $ 2,297     $ 2,474     $ 2,463  
                                 
    Unused commitments to extend credit $ 739,975     $ 795,391     $ 792,769     $ 813,960     $ 848,886  
                                 
    (1)      Annualized               


    Corporate Developments

    On July 25, 2024, Hanmi’s Board of Directors declared a cash dividend on its common stock for the 2024 third quarter of $0.25 per share. Hanmi paid the dividend on August 21, 2024, to stockholders of record as of the close of business on August 5, 2024.

    Earnings Conference Call
    Hanmi Bank will host its third quarter 2024 earnings conference call today, October 22, 2024, at 2:00 p.m. PT (5:00 p.m. ET) to discuss these results. This call will also be webcast. To access the call, please dial 1-877-407-9039 before 2:00 p.m. PT, using access code Hanmi Bank. To listen to the call online, either live or archived, please visit Hanmi’s Investor Relations website at https://investors.hanmi.com/ where it will also be available for replay approximately one hour following the call.

    About Hanmi Financial Corporation
    Headquartered in Los Angeles, California, Hanmi Financial Corporation owns Hanmi Bank, which serves multi-ethnic communities through its network of 32 full-service branches and eight loan production offices in California, Texas, Illinois, Virginia, New Jersey, New York, Colorado, Washington and Georgia. Hanmi Bank specializes in real estate, commercial, SBA and trade finance lending to small and middle market businesses. Additional information is available at http://www.hanmi.com.

    Forward-Looking Statements
    This press release contains forward-looking statements, which are included in accordance with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, statements about our anticipated future operating and financial performance, financial position and liquidity, business strategies, regulatory and competitive outlook, investment and expenditure plans, capital and financing needs and availability, plans and objectives of management for future operations, developments regarding our capital and strategic plans, and other similar forecasts and statements of expectation and statements of assumption underlying any of the foregoing. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that our forward-looking statements to be reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

    Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ from those expressed or implied by the forward-looking statements. These factors include the following:

    • a failure to maintain adequate levels of capital and liquidity to support our operations;
    • general economic and business conditions internationally, nationally and in those areas in which we operate, including any potential recessionary conditions;
    • volatility and deterioration in the credit and equity markets;
    • changes in consumer spending, borrowing and savings habits;
    • availability of capital from private and government sources;
    • demographic changes;
    • competition for loans and deposits and failure to attract or retain loans and deposits;
    • inflation and fluctuations in interest rates that reduce our margins and yields, the fair value of financial instruments, the level of loan originations or prepayments on loans we have made and make, the level of loan sales and the cost we pay to retain and attract deposits and secure other types of funding;
    • our ability to enter new markets successfully and capitalize on growth opportunities;
    • the current or anticipated impact of military conflict, terrorism or other geopolitical events;
    • the effect of potential future supervisory action against us or Hanmi Bank and our ability to address any issues raised in our regulatory exams;
    • risks of natural disasters;
    • legal proceedings and litigation brought against us;
    • a failure in or breach of our operational or security systems or infrastructure, including cyberattacks;
    • the failure to maintain current technologies;
    • risks associated with Small Business Administration loans;
    • failure to attract or retain key employees;
    • our ability to access cost-effective funding;
    • changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;
    • fluctuations in real estate values;
    • changes in accounting policies and practices;
    • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
    • the ability of Hanmi Bank to make distributions to Hanmi Financial Corporation, which is restricted by certain factors, including Hanmi Bank’s retained earnings, net income, prior distributions made, and certain other financial tests;
    • strategic transactions we may enter into;
    • the adequacy of and changes in the methodology for computing our allowance for credit losses;
    • our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses;
    • changes in the financial performance and/or condition of our borrowers and the ability of our borrowers to perform under the terms of their loans and other terms of credit agreements;
    • our ability to control expenses; and
    • cyber security and fraud risks against our information technology and those of our third-party providers and vendors.

    In addition, we set forth certain risks in our reports filed with the U.S. Securities and Exchange Commission, including, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K that we will file hereafter, which could cause actual results to differ from those projected. We undertake no obligation to update such forward-looking statements except as required by law.

    Investor Contacts:
    Romolo (Ron) Santarosa
    Senior Executive Vice President & Chief Financial Officer
    213-427-5636

    Lisa Fortuna
    Investor Relations
    Financial Profiles, Inc.
    lfortuna@finprofiles.com
    310-622-8251

     

    Hanmi Financial Corporation and Subsidiaries
    Consolidated Balance Sheets (Unaudited)
    (Dollars in thousands)

      September 30,     June 30,     Percentage     September 30,     Percentage  
      2024     2024     Change     2023     Change  
    Assets                            
    Cash and due from banks $ 287,767     $ 313,079       -8.1 %   $ 289,006       -0.4 %
    Securities available for sale, at fair value   908,921       877,638       3.6 %     817,242       11.2 %
    Loans held for sale, at the lower of cost or fair value   54,336       10,467       419.1 %     11,767       361.8 %
    Loans receivable, net of allowance for credit losses   6,188,581       6,108,630       1.3 %     5,953,472       3.9 %
    Accrued interest receivable   21,955       23,958       -8.4 %     20,715       6.0 %
    Premises and equipment, net   21,371       21,955       -2.7 %     20,707       3.2 %
    Customers’ liability on acceptances   67       551       -87.8 %     1,386       -95.2 %
    Servicing assets   6,683       6,836       -2.2 %     7,156       -6.6 %
    Goodwill and other intangible assets, net   11,031       11,048       -0.2 %     11,131       -0.9 %
    Federal Home Loan Bank (“FHLB”) stock, at cost   16,385       16,385       0.0 %     16,385       0.0 %
    Bank-owned life insurance   56,851       56,534       0.6 %     56,364       0.9 %
    Prepaid expenses and other assets   138,351       139,266       -0.7 %     144,809       -4.5 %
    Total assets $ 7,712,299     $ 7,586,347       1.7 %   $ 7,350,140       4.9 %
                                 
    Liabilities and Stockholders’ Equity                            
    Liabilities:                            
    Deposits:                            
    Noninterest-bearing $ 2,051,790     $ 1,959,963       4.7 %   $ 2,161,238       -5.1 %
    Interest-bearing   4,351,431       4,369,377       -0.4 %     4,098,834       6.2 %
    Total deposits   6,403,221       6,329,340       1.2 %     6,260,072       2.3 %
    Accrued interest payable   52,613       47,699       10.3 %     50,286       4.6 %
    Bank’s liability on acceptances   67       551       -87.8 %     1,386       -95.2 %
    Borrowings   300,000       292,500       2.6 %     162,500       84.6 %
    Subordinated debentures   130,478       130,318       0.1 %     129,860       0.5 %
    Accrued expenses and other liabilities   89,211       78,880       13.1 %     82,677       7.9 %
    Total liabilities   6,975,590       6,879,288       1.4 %     6,686,781       4.3 %
                                 
    Stockholders’ equity:                            
    Common stock   34       34       0.0 %     34       0.0 %
    Additional paid-in capital   589,567       588,647       0.2 %     586,169       0.6 %
    Accumulated other comprehensive income   (55,140 )     (78,000 )     29.3 %     (99,422 )     44.5 %
    Retained earnings   340,718       333,392       2.2 %     308,007       10.6 %
    Less treasury stock   (138,470 )     (137,014 )     -1.1 %     (131,429 )     -5.4 %
    Total stockholders’ equity   736,709       707,059       4.2 %     663,359       11.1 %
    Total liabilities and stockholders’ equity $ 7,712,299     $ 7,586,347       1.7 %   $ 7,350,140       4.9 %

     


    Hanmi Financial Corporation and Subsidiaries

    Consolidated Statements of Income (Unaudited)
    (Dollars in thousands, except share and per share data)

      Three Months Ended  
      September 30,     June 30,     Percentage     September 30,     Percentage  
      2024     2024     Change     2023     Change  
    Interest and dividend income:                            
    Interest and fees on loans receivable $ 92,182     $ 90,752       1.6 %   $ 85,398       7.9 %
    Interest on securities   5,523       5,238       5.4 %     4,204       31.4 %
    Dividends on FHLB stock   356       357       -0.3 %     317       12.3 %
    Interest on deposits in other banks   2,356       2,313       1.9 %     4,153       -43.3 %
    Total interest and dividend income   100,417       98,660       1.8 %     94,072       6.7 %
    Interest expense:                            
    Interest on deposits   47,153       46,495       1.4 %     36,818       28.1 %
    Interest on borrowings   1,561       1,896       -17.7 %     753       107.3 %
    Interest on subordinated debentures   1,652       1,649       0.2 %     1,646       0.4 %
    Total interest expense   50,366       50,040       0.7 %     39,217       28.4 %
    Net interest income before credit loss expense   50,051       48,620       2.9 %     54,855       -8.8 %
    Credit loss expense   2,286       961       137.9 %     5,154       -55.6 %
    Net interest income after credit loss expense   47,765       47,659       0.2 %     49,701       -3.9 %
    Noninterest income:                            
    Service charges on deposit accounts   2,311       2,429       -4.9 %     2,605       -11.3 %
    Trade finance and other service charges and fees   1,254       1,277       -1.8 %     1,155       8.6 %
    Gain on sale of Small Business Administration (“SBA”) loans   1,544       1,644       -6.1 %     1,172       31.7 %
    Other operating income   3,329       2,707       23.0 %     6,296       -47.1 %
    Total noninterest income   8,438       8,057       4.7 %     11,228       -24.8 %
    Noninterest expense:                            
    Salaries and employee benefits   20,851       20,434       2.0 %     20,361       2.4 %
    Occupancy and equipment   4,499       4,607       -2.3 %     4,825       -6.8 %
    Data processing   3,839       3,686       4.2 %     3,490       10.0 %
    Professional fees   1,492       1,749       -14.7 %     1,568       -4.8 %
    Supplies and communications   538       570       -5.6 %     552       -2.5 %
    Advertising and promotion   631       669       -5.7 %     534       18.2 %
    Other operating expenses   3,230       3,561       -9.3 %     2,915       10.8 %
    Total noninterest expense   35,080       35,276       -0.6 %     34,245       2.4 %
    Income before tax   21,123       20,440       3.3 %     26,684       -20.8 %
    Income tax expense   6,231       5,989       4.0 %     7,888       -21.0 %
    Net income $ 14,892     $ 14,451       3.1 %   $ 18,796       -20.8 %
                                 
    Basic earnings per share: $ 0.49     $ 0.48           $ 0.62        
    Diluted earnings per share: $ 0.49     $ 0.48           $ 0.62        
                                 
    Weighted-average shares outstanding:                            
    Basic   29,968,004       30,055,913             30,251,961        
    Diluted   30,033,679       30,133,646             30,292,872        
    Common shares outstanding   30,196,755       30,272,110             30,410,582        

     


    Hanmi Financial Corporation and Subsidiaries

    Consolidated Statements of Income (Unaudited)
    (Dollars in thousands, except share and per share data)

      Nine Months Ended  
      September 30,     September 30,     Percentage  
      2024     2023     Change  
    Interest and dividend income:                
    Interest and fees on loans receivable $ 274,608     $ 249,888       9.9 %
    Interest on securities   15,717       12,356       27.2 %
    Dividends on FHLB stock   1,075       888       21.1 %
    Interest on deposits in other banks   7,270       9,012       -19.3 %
    Total interest and dividend income   298,670       272,144       9.7 %
    Interest expense:                
    Interest on deposits   139,286       94,431       47.5 %
    Interest on borrowings   5,112       4,755       7.5 %
    Interest on subordinated debentures   4,948       4,828       2.5 %
    Total interest expense   149,346       104,014       43.6 %
    Net interest income before credit loss expense   149,324       168,130       -11.2 %
    Credit loss expense   3,474       7,210       -51.8 %
    Net interest income after credit loss expense   145,850       160,920       -9.4 %
    Noninterest income:                
    Service charges on deposit accounts   7,189       7,756       -7.3 %
    Trade finance and other service charges and fees   3,945       3,586       10.0 %
    Gain on sale of Small Business Administration (“SBA”) loans   4,669       4,253       9.8 %
    Other operating income   8,425       11,904       -29.2 %
    Total noninterest income   24,228       27,499       -11.9 %
    Noninterest expense:                
    Salaries and employee benefits   62,870       61,336       2.5 %
    Occupancy and equipment   13,643       13,737       -0.7 %
    Data processing   11,076       10,208       8.5 %
    Professional fees   5,134       4,278       20.0 %
    Supplies and communications   1,710       1,866       -8.4 %
    Advertising and promotion   2,207       2,114       4.4 %
    Other operating expenses   10,160       7,777       30.6 %
    Total noninterest expense   106,800       101,316       5.4 %
    Income before tax   63,278       87,103       -27.4 %
    Income tax expense   18,772       25,695       -26.9 %
    Net income $ 44,506     $ 61,408       -27.5 %
                     
    Basic earnings per share: $ 1.47     $ 2.01        
    Diluted earnings per share: $ 1.47     $ 2.01        
                     
    Weighted-average shares outstanding:                
    Basic   30,048,748       30,296,991        
    Diluted   30,117,269       30,338,678        
    Common shares outstanding   30,196,755       30,410,582        

     


    Hanmi Financial Corporation and Subsidiaries

    Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
    (Dollars in thousands)

      Three Months Ended  
      September 30, 2024     June 30, 2024     September 30, 2023  
            Interest   Average           Interest   Average           Interest   Average  
      Average     Income /   Yield /     Average     Income /   Yield /     Average     Income /   Yield /  
      Balance     Expense   Rate     Balance     Expense   Rate     Balance     Expense   Rate  
    Assets                                              
    Interest-earning assets:                                              
    Loans receivable (1) $ 6,112,324     $ 92,182     6.00 %   $ 6,089,440     $ 90,752     5.99 %   $ 5,915,423     $ 85,398     5.73 %
    Securities (2)   986,041       5,523     2.27 %     979,671       5,238     2.17 %     955,473       4,204     1.79 %
    FHLB stock   16,385       356     8.65 %     16,385       357     8.77 %     16,385       317     7.67 %
    Interest-bearing deposits in other banks   183,027       2,356     5.12 %     180,177       2,313     5.16 %     317,498       4,153     5.19 %
    Total interest-earning assets   7,297,777       100,417     5.48 %     7,265,673       98,660     5.46 %     7,204,779       94,072     5.19 %
                                                   
    Noninterest-earning assets:                                              
    Cash and due from banks   54,843                 55,442                 59,994            
    Allowance for credit losses   (67,906 )               (67,908 )               (70,173 )          
    Other assets   251,421                 252,410                 240,145            
                                                   
    Total assets $ 7,536,135               $ 7,505,617               $ 7,434,745            
                                                   
    Liabilities and Stockholders’ Equity                                              
    Interest-bearing liabilities:                                              
    Deposits:                                              
    Demand: interest-bearing $ 83,647     $ 31     0.15 %   $ 85,443     $ 32     0.15 %   $ 94,703     $ 32     0.13 %
    Money market and savings   1,885,799       17,863     3.77 %     1,845,870       17,324     3.77 %     1,601,826       12,485     3.09 %
    Time deposits   2,427,737       29,259     4.79 %     2,453,154       29,139     4.78 %     2,438,112       24,301     3.95 %
    Total interest-bearing deposits   4,397,183       47,153     4.27 %     4,384,467       46,495     4.27 %     4,134,641       36,818     3.53 %
    Borrowings   143,479       1,561     4.33 %     169,525       1,896     4.50 %     120,381       753     2.48 %
    Subordinated debentures   130,403       1,652     5.07 %     130,239       1,649     5.07 %     129,780       1,646     5.07 %
    Total interest-bearing liabilities   4,671,065       50,366     4.29 %     4,684,231       50,040     4.30 %     4,384,802       39,217     3.55 %
                                                   
    Noninterest-bearing liabilities and equity:                                              
    Demand deposits: noninterest-bearing   1,908,833                 1,883,765                 2,136,156            
    Other liabilities   171,987                 162,543                 159,127            
    Stockholders’ equity   784,250                 775,078                 754,660            
                                                   
    Total liabilities and stockholders’ equity $ 7,536,135               $ 7,505,617               $ 7,434,745            
                                                   
    Net interest income       $ 50,051               $ 48,620               $ 54,855      
                                                   
    Cost of deposits             2.97 %               2.98 %               2.33 %
    Net interest spread (taxable equivalent basis)             1.19 %               1.16 %               1.64 %
    Net interest margin (taxable equivalent basis)             2.74 %               2.69 %               3.03 %
                                                   
    (1)       Includes average loans held for sale        
    (2)       Income calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.  

     


    Hanmi Financial Corporation and Subsidiaries

    Average Balance, Average Yield Earned, and Average Rate Paid (Unaudited)
    (Dollars in thousands)

      Nine Months Ended  
      September 30, 2024     September 30, 2023  
            Interest   Average           Interest   Average  
      Average     Income /   Yield /     Average     Income /   Yield /  
      Balance     Expense   Rate     Balance     Expense   Rate  
    Assets                              
    Interest-earning assets:                              
    Loans receivable (1) $ 6,113,214     $ 274,608     6.00 %   $ 5,933,525     $ 249,888     5.63 %
    Securities (2)   978,439       15,717     2.17 %     969,146       12,356     1.73 %
    FHLB stock   16,385       1,076     8.77 %     16,385       888     7.25 %
    Interest-bearing deposits in other banks   188,290       7,269     5.16 %     247,581       9,012     4.87 %
    Total interest-earning assets   7,296,328       298,670     5.47 %     7,166,637       272,144     5.08 %
                                   
    Noninterest-earning assets:                              
    Cash and due from banks   56,217                 62,354            
    Allowance for credit losses   (68,305 )               (71,236 )          
    Other assets   249,517                 237,111            
                                   
    Total assets $ 7,533,757               $ 7,394,866            
                                   
    Liabilities and Stockholders’ Equity                              
    Interest-bearing liabilities:                              
    Deposits:                              
    Demand: interest-bearing $ 85,158     $ 92     0.14 %   $ 100,997     $ 88     0.12 %
    Money market and savings   1,849,053       51,740     3.74 %     1,506,776       29,687     2.63 %
    Time deposits   2,462,779       87,454     4.74 %     2,355,923       64,656     3.67 %
    Total interest-bearing deposits   4,396,990       139,286     4.23 %     3,963,696       94,431     3.19 %
    Borrowings   158,419       5,112     4.31 %     194,530       4,755     3.27 %
    Subordinated debentures   130,244       4,948     5.06 %     129,632       4,828     4.97 %
    Total interest-bearing liabilities   4,685,653       149,346     4.26 %     4,287,858       104,014     3.24 %
                                   
    Noninterest-bearing liabilities and equity:                              
    Demand deposits: noninterest-bearing   1,904,611                 2,223,891            
    Other liabilities   166,372                 140,070            
    Stockholders’ equity   777,121                 743,047            
                                   
    Total liabilities and stockholders’ equity $ 7,533,757               $ 7,394,866            
                                   
    Net interest income       $ 149,324               $ 168,130      
                                   
    Cost of deposits             2.95 %               2.04 %
    Net interest spread (taxable equivalent basis)             1.21 %               1.84 %
    Net interest margin (taxable equivalent basis)             2.74 %               3.14 %
                                   
    (1)       Includes average loans held for sale  
    (2)       Amounts calculated on a fully taxable equivalent basis using the federal tax rate in effect for the periods presented.  


    Non-GAAP Financial Measures

    Tangible Common Equity to Tangible Assets Ratio

    Tangible common equity to tangible assets ratio is supplemental financial information determined by a method other than in accordance with U.S. generally accepted accounting principles (“GAAP”). This non-GAAP measure is used by management in the analysis of Hanmi’s capital strength. Tangible common equity is calculated by subtracting goodwill and other intangible assets from stockholders’ equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from stockholders’ equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the capital strength of Hanmi. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

    The following table reconciles this non-GAAP performance measure to the GAAP performance measure for the periods indicated:

    Tangible Common Equity to Tangible Assets Ratio (Unaudited)
    (In thousands, except share, per share data and ratios)

      September 30,     June 30,     March 31,     December 31,     September 30,  
    Hanmi Financial Corporation 2024     2024     2024     2023     2023  
    Assets $ 7,712,299     $ 7,586,347     $ 7,512,046     $ 7,570,341     $ 7,350,140  
    Less goodwill and other intangible assets   (11,031 )     (11,048 )     (11,074 )     (11,099 )     (11,131 )
    Tangible assets $ 7,701,268     $ 7,575,299     $ 7,500,972     $ 7,559,242     $ 7,339,009  
                                 
    Stockholders’ equity (1) $ 736,709     $ 707,059     $ 703,100     $ 701,891     $ 663,359  
    Less goodwill and other intangible assets   (11,031 )     (11,048 )     (11,074 )     (11,099 )     (11,131 )
    Tangible stockholders’ equity (1) $ 725,678     $ 696,011     $ 692,026     $ 690,792     $ 652,228  
                                 
    Stockholders’ equity to assets   9.55 %     9.32 %     9.36 %     9.27 %     9.03 %
    Tangible common equity to tangible assets (1)   9.42 %     9.19 %     9.23 %     9.14 %     8.89 %
                                 
    Common shares outstanding   30,196,755       30,272,110       30,276,358       30,368,655       30,410,582  
    Tangible common equity per common share $ 24.03     $ 22.99     $ 22.86     $ 22.75     $ 21.45  
                                 
    (1)      There were no preferred shares outstanding at the periods indicated.  

    The MIL Network –

    January 24, 2025
  • MIL-OSI: National Bank Holdings Corporation Announces Third Quarter 2024 Financial Results and Increase to Quarterly Dividend

    Source: GlobeNewswire (MIL-OSI)

    DENVER, Oct. 22, 2024 (GLOBE NEWSWIRE) — National Bank Holdings Corporation (NYSE: NBHC) reported:

                                   
        For the quarter(1)   For the year(1)
        3Q24   2Q24   3Q23   2024   2023
    Net income ($000’s)   $ 33,105     $ 26,135     $ 36,087     $ 90,631     $ 108,927  
    Earnings per share – diluted   $ 0.86     $ 0.68     $ 0.94     $ 2.36     $ 2.85  
    Return on average assets     1.32 %     1.06 %     1.46 %     1.22 %     1.50 %
    Return on average tangible assets(2)     1.43 %     1.17 %     1.58 %     1.33 %     1.61 %
    Return on average equity     10.33 %     8.46 %     12.26 %     9.70 %     12.71 %
    Return on average tangible common equity(2)     14.84 %     12.44 %     18.38 %     14.14 %     18.81 %

                                                          

    (1 )   Ratios are annualized.
    (2 )   See non-GAAP reconciliations below.
           

    In announcing these results, Chief Executive Officer Tim Laney shared, “We delivered quarterly earnings of $0.86 per diluted share and a return on average tangible common equity of 14.84%. On the strength of our balance sheet, capital position and earnings, we are pleased to announce a 3.6% increase in our quarterly dividend to $0.29 per share. During the quarter, our disciplined approach to loan and deposit pricing drove 11 basis points of net interest margin expansion to 3.87%. Our teams delivered solid quarterly growth in our core banking fees, and we continued to leverage our diverse revenue streams across our franchise resulting in meaningful year-to-date fee income growth.”

    Mr. Laney added, “We continue to remain vigilant in monitoring our loan portfolio, delivering the lowest non-performing loan ratio since early 2023. Our teams adhere to prudent, disciplined approaches that limit concentrations in our loan book and our depositor base, and we regularly perform robust stress testing on our loan portfolio. We enter the fourth quarter from a position of strength and stability and expect to finish the year strong. We believe our Common Equity Tier 1 capital ratio of 12.88%, ample liquidity position, and diversified funding sources provide optionality for future growth.”

    Third Quarter 2024 Results
    (All comparisons refer to the second quarter of 2024, except as noted)

    Net income increased $7.0 million or 26.7% to $33.1 million or $0.86 per diluted share, compared to $26.1 million or $0.68 per diluted share. The quarter’s increase was driven by net interest income and fee income growth. Included in the prior quarter was $3.9 million of impairment related to venture capital investments. Fully taxable equivalent pre-provision net revenue increased $7.5 million or 20.6% to $43.7 million. The return on average tangible assets increased 26 basis points to 1.43%, and the return on average tangible common equity increased 240 basis points to 14.84%.

    Net Interest Income
    Fully taxable equivalent net interest income increased $4.2 million to $89.5 million, driven by a $74.7 million increase in average interest earning assets, a 12 basis point increase in average loan yields and one extra day in the quarter. The fully taxable equivalent net interest margin widened 11 basis points to 3.87%, driven by a 13 basis point increase in earning asset yields which was partially offset by a two basis point increase in the cost of funds.

    Loans
    Loans totaled $7.7 billion at September 30, 2024, consistent with the prior quarter. We generated quarterly loan fundings totaling $359.3 million, led by commercial loan fundings of $219.1 million. The average interest rate on the third quarter’s loan originations was 8.5%.

    Asset Quality and Provision for Credit Losses
    The Company recorded $2.0 million of provision expense for credit losses, compared to $2.8 million in the prior quarter. The current quarter’s provision expense was primarily driven by higher reserve requirements from changes in the CECL model’s underlying economic forecast. Annualized net charge-offs decreased four basis points to 0.18% of average total loans and included the resolution of one previously reserved credit during the quarter. Non-performing loans decreased three basis points to 0.31% of total loans at September 30, 2024, and non-performing assets decreased four basis points to 0.32% of total loans and OREO at September 30, 2024. The allowance for credit losses as a percentage of loans totaled 1.23% at September 30, 2024, compared to 1.25% in the prior quarter.

    Deposits
    Average total deposits increased $21.3 million to $8.4 billion during the third quarter 2024. The loan to deposit ratio totaled 90.8% at September 30, 2024. Average transaction deposits (defined as total deposits less time deposits) totaled $7.4 billion, consistent with the prior quarter. The mix of transaction deposits to total deposits was 88% at September 30, 2024, consistent with June 30, 2024.

    Non-Interest Income
    Non-interest income increased $4.4 million to $18.4 million driven by increases in our diversified sources of fee revenue. Service charges increased $0.6 million, swap fee income increased $0.3 million and trust fee income increased $0.1 million. These increases were partially offset by a $0.3 million decrease in mortgage banking income. Included in the prior quarter was $3.9 million of impairment related to venture capital investments.

    Non-Interest Expense
    Non-interest expense totaled $64.2 million during the third quarter, compared to $63.1 million in the prior quarter. Salaries and benefits increased $0.4 million driven by one additional payroll day in the quarter. Professional fees increased $0.4 million and data processing increased $0.3 million driven by our continued investments in technology. These increases were partially offset by a decrease in occupancy and equipment of $0.4 million. The fully taxable equivalent efficiency ratio, excluding other intangible assets amortization, improved 387 basis points to 57.7% for the third quarter.

    Income tax expense increased $1.2 million to $6.8 million, compared to $5.6 million in the prior quarter, due to the third quarter’s higher pre-tax income. The effective tax rate was 17.0%, compared to 17.7% for the second quarter.

    Capital
    Capital ratios continue to be strong and in excess of federal bank regulatory agency “well capitalized” thresholds. The tier 1 leverage ratio totaled 10.44%, and the common equity tier 1 capital ratio totaled 12.88% at September 30, 2024. Shareholders’ equity totaled $1.3 billion at September 30, 2024, increasing $44.4 million. The third quarter’s net income drove $22.2 million of growth in retained earnings, and changes in the interest rate environment led to a $17.9 million improvement in accumulated other comprehensive loss.

    Common book value per share increased $1.09 to $34.01 at September 30, 2024. Tangible common book value per share increased $1.17 to $24.91 as this quarter’s earnings and a decrease in accumulated other comprehensive loss outpaced the quarterly dividend.

    Dividend Announcement
    The quarterly cash dividend will increase 3.6% from $0.28 per share to $0.29 per share. The dividend will be payable on December 13, 2024 to shareholders of record at the close of business on November 29, 2024. This is the eighth consecutive semiannual increase to the quarterly dividend since early 2021.

    Year-Over-Year Review
    (All comparisons refer to the first nine months of 2023, except as noted)

    Net income totaled $90.6 million, or $2.36 per diluted share, compared to net income of $108.9 million, or $2.85 per diluted share, for the first nine months of 2023. The decrease over the same period prior year was largely driven by lower net interest income, due to an increase in cost of funds outpacing the increase in interest income. Partially offsetting this decrease was a 4.7% increase in non-interest income driven by our diversified sources of fee revenue. Fully taxable equivalent pre-provision net revenue totaled $120.5 million, compared to $144.9 million. The return on average tangible assets totaled 1.33%, compared to 1.61%, and the return on average tangible common equity was 14.14%, compared to 18.81%.

    Fully taxable equivalent net interest income totaled $260.5 million, compared to $276.9 million. Average earning assets increased $165.0 million, including average loan growth of $296.4 million, which was partially offset by a decrease in average investment securities of $70.2 million. The fully taxable equivalent net interest margin narrowed 32 basis points to 3.80%, as the increase in earning asset yields was more than offset by an increase in the cost of funds. Average interest bearing liabilities increased $555.3 million due to higher deposit balances, and the cost of funds totaled 2.31%, compared to 1.40% in the same period prior year.

    Loans outstanding totaled $7.7 billion, increasing $236.1 million or 3.2%. New loan fundings over the trailing twelve months totaled $1.5 billion, led by commercial loan fundings of $1.0 billion.  

    The Company recorded $4.8 million of provision expense for credit losses for the first nine months of 2024, compared to provision expense of $3.7 million in the same period prior year. Annualized net charge-offs totaled 0.13% of average total loans during the first nine months of 2024, compared to 0.02% of average total loans during the first nine months of 2023. Non-performing loans decreased 13 basis points to 0.31% of total loans at September 30, 2024, and non-performing assets decreased 17 basis points to 0.32% of total loans and OREO at September 30, 2024. The allowance for credit losses as a percentage of loans totaled 1.23% at September 30, 2024, compared to 1.25% at September 30, 2023.

    Average total deposits increased $418.6 million or 5.3% to $8.3 billion, and average transaction deposits increased $369.2 million or 5.3%. The mix of transaction deposits to total deposits was 88%, consistent with September 30, 2023.

    Non-interest income totaled $50.1 million, an increase of $2.3 million or 4.7%, driven by increases in our diversified sources of fee revenue. Other non-interest income increased $5.2 million, or 63.6%, and included increases in SBA loan income, trust income, Cambr income and swap fee income. Mortgage banking income decreased $2.7 million as the sustained higher-interest rate environment has lowered mortgage volume.

    Non-interest expense totaled $190.1 million, an increase of $10.2 million or 5.7%, largely due to ongoing investments in technology. Salaries and benefits increased $7.6 million, occupancy and equipment increased $2.4 million and data processing increased $2.3 million. Other intangible assets amortization increased $0.6 million due to our Cambr acquisition in April of 2023. These increases were partially offset by a decrease of $2.5 million in professional fees.

    Income tax expense totaled $19.9 million, a decrease of $7.9 million from the same period prior year, driven by lower pre-tax income. The effective tax rate was 18.0% for the first nine months of 2024, compared to 20.3%.

    Conference Call
    Management will host a conference call to review the results at 11:00 a.m. Eastern Time on Wednesday, October 23, 2024. Interested parties may listen to this call by dialing (888) 204-4368 using the participant passcode of 3279876 and asking for the NBHC Q3 2024 Earnings Call. The earnings release and a link to the replay of the call will be available on the Company’s website at http://www.nationalbankholdings.com by visiting the investor relations area.

    About National Bank Holdings Corporation
    National Bank Holdings Corporation is a bank holding company created to build a leading community bank franchise, delivering high quality client service and committed to stakeholder results. Through its bank subsidiaries, NBH Bank and Bank of Jackson Hole Trust, National Bank Holdings Corporation operates a network of over 90 banking centers, serving individual consumers, small, medium and large businesses, and government and non-profit entities. Its banking centers are located in its core footprint of Colorado, the greater Kansas City region, Utah, Wyoming, Texas, New Mexico and Idaho. Its comprehensive residential mortgage banking group primarily serves the bank’s core footprint. Its trust and wealth management business is operated in its core footprint under the Bank of Jackson Hole Trust charter. NBH Bank operates under a single state charter through the following brand names as divisions of NBH Bank: in Colorado, Community Banks of Colorado and Community Banks Mortgage; in Kansas and Missouri, Bank Midwest and Bank Midwest Mortgage; in Texas, Utah, New Mexico and Idaho, Hillcrest Bank and Hillcrest Bank Mortgage; and in Wyoming, Bank of Jackson Hole and Bank of Jackson Hole Mortgage. Additional information about National Bank Holdings Corporation can be found at http://www.nationalbankholdings.com. 

    For more information visit: cobnks.com, bankmw.com, hillcrestbank.com, bankofjacksonhole.com, or nbhbank.com, or connect with any of our brands on LinkedIn.

    About Non-GAAP Financial Measures
    Certain of the financial measures and ratios we present, including “tangible assets,” “return on average tangible assets,” “tangible common equity,” “return on average tangible common equity,” “tangible common book value per share,” “tangible common book value, excluding accumulated other comprehensive loss, net of tax,” “tangible common book value per share, excluding accumulated other comprehensive loss, net of tax,” “tangible common equity to tangible assets,” “non-interest expense excluding other intangible assets amortization,” “efficiency ratio excluding other intangible assets amortization,” “net income excluding the impact of other intangible assets amortization expense, after tax,” “pre-provision net revenue,” and “fully taxable equivalent” metrics, are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis. We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.

    These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance. A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.

    Forward-Looking Statements
    This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements contain words such as “anticipate,” “believe,” “can,” “would,” “should,” “could,” “may,” “predict,” “seek,” “potential,” “will,” “estimate,” “target,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “intend” or similar expressions that relate to the Company’s strategy, plans or intentions. Forward-looking statements involve certain important risks, uncertainties and other factors, any of which could cause actual results to differ materially from those in such statements. Such factors include, without limitation, the “Risk Factors” referenced in our most recent Form 10-K filed with the Securities and Exchange Commission (SEC), other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, and the following factors: the impact of potential regulatory changes to capital requirements, treatment of investment securities and FDIC deposit insurance levels and costs; our ability to execute our business strategy, including our digital strategy, as well as changes in our business strategy or development plans; business and economic conditions; effects of any potential government shutdowns; economic, market, operational, liquidity, credit and interest rate risks associated with the Company’s business, including increased competition for deposits due to prevailing market interest rates and banking sector volatility; effects of any changes in trade, monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; changes imposed by regulatory agencies to increase capital standards; effects of inflation, as well as interest rate, securities market and monetary supply fluctuations; changes in the economy or supply-demand imbalances affecting local real estate values; changes in consumer spending, borrowings and savings habits; changes in the fair value of our investment securities due to market conditions outside of our control; financial or reputational impacts associated with the increased prevalence of fraud or other financial crimes; with respect to our mortgage business, the inability to negotiate fees with investors for the purchase of our loans or our obligation to indemnify purchasers or repurchase related loans if the loans fail to meet certain criteria, or higher rate of delinquencies and defaults as a result of the geographic concentration of our servicing portfolio; the Company’s ability to identify potential candidates for, obtain regulatory approval for, and consummate, integrate and realize operating efficiencies from, acquisitions, consolidations and other expansion opportunities; our ability to integrate acquisitions or consolidations and to achieve synergies, operating efficiencies and/or other expected benefits within expected timeframes, or at all, or within expected cost projections, and to preserve the goodwill of acquired financial institutions; the Company’s ability to realize anticipated benefits from enhancements or updates to its core operating systems from time to time without significant change in client service or risk to the Company’s control environment; the Company’s dependence on information technology and telecommunications systems of third-party service providers and the risk of systems failures, interruptions or breaches of security, including those that could result in disclosure or misuse of confidential or proprietary client or other information; the Company’s ability to achieve organic loan and deposit growth and the competition for, and composition of, such growth; changes in sources and uses of funds; increased competition in the financial services industry; regulatory and financial impacts associated with the Company growing to over $10 billion in consolidated assets; increases in claims and litigation related to our fiduciary responsibilities in connection with our trust and wealth management business; the effect of changes in accounting policies and practices as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board (“FASB”) and other accounting standard setters; the share price of the Company’s stock; the Company’s ability to realize deferred tax assets or the need for a valuation allowance, or the effects of changes in tax laws on our deferred tax assets; the effects of tax legislation, including the potential of future increases to prevailing tax rules, or challenges to our positions; continued consolidation in the financial services industry; ability to maintain or increase market share and control expenses; costs and effects of changes in laws and regulations and of other legal and regulatory developments, including, but not limited to, changes in regulation that affect the fees that we charge, the resolution of legal proceedings or regulatory or other government inquiries, and the results of regulatory examinations, reviews or other inquiries, and changes in regulations that apply to us as a Colorado state-chartered bank and a Wyoming state-chartered bank; technological changes, including with respect to the advancement of artificial intelligence; the timely development and acceptance of new products and services, including in the digital technology space our digital solution 2UniFi; changes in our management personnel and the Company’s continued ability to attract, hire and maintain qualified personnel; ability to implement and/or improve operational management and other internal risk controls and processes and reporting system and procedures; regulatory limitations on dividends from our bank subsidiaries; changes in estimates of future credit reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; financial, reputational, or strategic risks associated with our investments in financial technology companies and initiatives; widespread natural and other disasters, pandemics, dislocations, political instability, acts of war or terrorist activities, cyberattacks or international hostilities through impacts on the economy and financial markets generally or on us or our counterparties specifically; a cybersecurity incident, data breach or a failure of a key information technology system; impact of reputational risk; other risks and uncertainties listed from time to time in the Company’s reports and documents filed with the Securities and Exchange Commission; and success at managing the risks involved in the foregoing items. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.

    Contacts:
    Analysts/Institutional Investors:
    Emily Gooden, Chief Accounting Officer and Investor Relations Director, (720) 554-6640, ir@nationalbankholdings.com
    Nicole Van Denabeele, Chief Financial Officer, (720) 529-3370, ir@nationalbankholdings.com

    Media:
    Jody Soper, Chief Marketing Officer, (303) 784-5925, Jody.Soper@nbhbank.com 

    NATIONAL BANK HOLDINGS CORPORATION
    FINANCIAL SUMMARY
    Consolidated Statements of Operations (Unaudited)
    (Dollars in thousands, except share and per share data)

                                 
      For the three months ended   For the nine months ended
      September 30,       June 30,       September 30,       September 30,       September 30, 
      2024   2024   2023   2024   2023
    Total interest and dividend income $ 138,003   $ 132,447   $ 126,110   $ 402,182   $ 360,712
    Total interest expense   50,350     48,873     38,333     146,925     88,262
    Net interest income   87,653     83,574     87,777     255,257     272,450
    Taxable equivalent adjustment   1,816     1,711     1,575     5,220     4,432
    Net interest income FTE(1)   89,469     85,285     89,352     260,477     276,882
    Provision expense for credit losses   2,000     2,776     1,125     4,776     3,725
    Net interest income after provision for credit losses FTE(1)   87,469     82,509     88,227     255,701     273,157
    Non-interest income:                            
    Service charges   4,912     4,295     4,849     13,598     13,394
    Bank card fees   4,832     4,882     4,993     14,292     14,721
    Mortgage banking income   2,981     3,296     4,688     8,932     11,614
    Other non-interest income   5,664     1,556     4,835     13,290     8,124
    Total non-interest income   18,389     14,029     19,365     50,112     47,853
    Non-interest expense:                            
    Salaries and benefits   37,331     36,933     35,027     110,784     103,231
    Occupancy and equipment   9,697     10,120     9,167     29,758     27,366
    Professional fees   2,111     1,706     2,215     5,463     7,951
    Data processing   4,398     4,117     3,546     12,581     10,257
    Other non-interest expense   8,648     8,222     8,640     25,523     25,693
    Other intangible assets amortization   1,977     1,977     2,008     5,962     5,378
    Total non-interest expense   64,162     63,075     60,603     190,071     179,876
                                 
    Income before income taxes FTE(1)   41,696     33,463     46,989     115,742     141,134
    Taxable equivalent adjustment   1,816     1,711     1,575     5,220     4,432
    Income before income taxes   39,880     31,752     45,414     110,522     136,702
    Income tax expense   6,775     5,617     9,327     19,891     27,775
    Net income $ 33,105   $ 26,135   $ 36,087   $ 90,631   $ 108,927
    Earnings per share – basic $ 0.86   $ 0.68   $ 0.95   $ 2.37   $ 2.87
    Earnings per share – diluted   0.86     0.68     0.94     2.36     2.85

                                                          

    (1 )      Net interest income is presented on a GAAP basis and fully taxable equivalent (FTE) basis, as the Company believes this non-GAAP measure is the preferred industry measurement for this item. The FTE adjustment is for the tax benefit on certain tax exempt loans using the federal tax rate of 21% for each period presented.
           

    NATIONAL BANK HOLDINGS CORPORATION
    Consolidated Statements of Financial Condition (Unaudited)
    (Dollars in thousands, except share and per share data)

                           
      September 30, 2024   June 30, 2024      December 31, 2023   September 30, 2023
    ASSETS                      
    Cash and cash equivalents $ 180,796     $ 144,993     $ 190,826     $ 291,291  
    Investment securities available-for-sale   708,987       691,076       628,829       620,445  
    Investment securities held-to-maturity   538,157       554,686       585,052       600,501  
    Non-marketable securities   72,353       72,987       90,477       87,817  
    Loans   7,714,495       7,722,153       7,698,758       7,478,438  
    Allowance for credit losses   (95,047 )     (96,457 )     (97,947 )     (93,446 )
    Loans, net   7,619,448       7,625,696       7,600,811       7,384,992  
    Loans held for sale   16,765       18,787       18,854       19,048  
    Other real estate owned   1,432       1,526       4,088       3,416  
    Premises and equipment, net   191,889       177,456       162,733       153,553  
    Goodwill   306,043       306,043       306,043       306,043  
    Intangible assets, net   60,390       62,356       66,025       68,283  
    Other assets   297,023       315,245       297,326       330,894  
    Total assets $ 9,993,283     $ 9,970,851     $ 9,951,064     $ 9,866,283  
    LIABILITIES AND SHAREHOLDERS’ EQUITY                      
    Liabilities:                      
    Non-interest bearing demand deposits $ 2,268,801     $ 2,229,432     $ 2,361,367     $ 2,483,174  
    Interest bearing demand deposits   1,407,667       1,420,942       1,480,042       1,358,445  
    Savings and money market   3,768,211       3,703,810       3,367,012       3,314,895  
    Total transaction deposits   7,444,679       7,354,184       7,208,421       7,156,514  
    Time deposits   1,052,449       1,022,741       981,970       992,494  
    Total deposits   8,497,128       8,376,925       8,190,391       8,149,008  
    Securities sold under agreements to repurchase   19,517       19,465       19,627       20,273  
    Long-term debt   54,433       54,356       54,200       54,123  
    Federal Home Loan Bank advances   —       35,000       340,000       316,770  
    Other liabilities   130,208       237,461       134,039       162,524  
    Total liabilities   8,701,286       8,723,207       8,738,257       8,702,698  
    Shareholders’ equity:                      
    Common stock   515       515       515       515  
    Additional paid in capital   1,164,395       1,161,804       1,162,269       1,160,706  
    Retained earnings   491,849       469,630       433,126       410,243  
    Treasury stock   (302,277 )     (303,880 )     (306,702 )     (307,026 )
    Accumulated other comprehensive loss, net of tax   (62,485 )     (80,425 )     (76,401 )     (100,853 )
    Total shareholders’ equity   1,291,997       1,247,644       1,212,807       1,163,585  
    Total liabilities and shareholders’ equity $ 9,993,283     $ 9,970,851     $ 9,951,064     $ 9,866,283  
    SHARE DATA                      
    Average basic shares outstanding   38,277,042       38,210,869       38,013,791       37,990,659  
    Average diluted shares outstanding   38,495,091       38,372,777       38,162,538       38,134,338  
    Ending shares outstanding   37,988,364       37,899,453       37,784,851       37,739,776  
    Common book value per share $ 34.01     $ 32.92     $ 32.10     $ 30.83  
    Tangible common book value per share(1) (non-GAAP)   24.91       23.74       22.77       21.43  
    Tangible common book value per share, excluding accumulated other comprehensive loss(1) (non-GAAP)   26.56       25.86       24.79       24.10  
    CAPITAL RATIOS                      
    Average equity to average assets   12.80 %     12.57 %     11.97 %     11.93 %
    Tangible common equity to tangible assets(1)   9.81 %     9.35 %     8.96 %     8.50 %
    Tier 1 leverage ratio   10.44 %     10.20 %     9.74 %     9.56 %
    Common equity tier 1 risk-based capital ratio   12.88 %     12.41 %     11.89 %     11.61 %
    Tier 1 risk-based capital ratio   12.88 %     12.41 %     11.89 %     11.61 %
    Total risk-based capital ratio   14.79 %     14.32 %     13.80 %     13.49 %

                                                          

    (1 )      Represents a non-GAAP financial measure. See non-GAAP reconciliations below.
           

    NATIONAL BANK HOLDINGS CORPORATION
    Loan Portfolio
    (Dollars in thousands)

    Period End Loan Balances by Type

                             
              September 30, 2024       September 30, 2024
              vs. June 30, 2024       vs. September 30, 2023
      September 30, 2024   June 30, 2024   % Change   September 30, 2023   % Change
    Originated:                        
    Commercial:                        
    Commercial and industrial $ 1,894,830   $ 1,906,095   (0.6 )%   $ 1,784,188   6.2 %
    Municipal and non-profit   1,096,843     1,063,706   3.1 %     1,012,967   8.3 %
    Owner-occupied commercial real estate   949,330     921,122   3.1 %     827,679   14.7 %
    Food and agribusiness   257,743     248,401   3.8 %     258,609   (0.3 )%
    Total commercial   4,198,746     4,139,324   1.4 %     3,883,443   8.1 %
    Commercial real estate non-owner occupied   1,113,796     1,116,424   (0.2 )%     1,026,133   8.5 %
    Residential real estate   933,644     923,313   1.1 %     897,804   4.0 %
    Consumer   13,600     14,385   (5.5 )%     16,700   (18.6 )%
    Total originated   6,259,786     6,193,446   1.1 %     5,824,080   7.5 %
                             
    Acquired:                        
    Commercial:                        
    Commercial and industrial   116,683     124,104   (6.0 )%     156,012   (25.2 )%
    Municipal and non-profit   282     288   (2.1 )%     305   (7.5 )%
    Owner-occupied commercial real estate   221,928     232,890   (4.7 )%     247,701   (10.4 )%
    Food and agribusiness   43,733     48,061   (9.0 )%     61,551   (28.9 )%
    Total commercial   382,626     405,343   (5.6 )%     465,569   (17.8 )%
    Commercial real estate non-owner occupied   720,384     752,040   (4.2 )%     787,926   (8.6 )%
    Residential real estate   349,916     369,003   (5.2 )%     398,187   (12.1 )%
    Consumer   1,783     2,321   (23.2 )%     2,676   (33.4 )%
    Total acquired   1,454,709     1,528,707   (4.8 )%     1,654,358   (12.1 )%
    Total loans $ 7,714,495   $ 7,722,153   (0.1 )%   $ 7,478,438   3.2 %
                                 

    Loan Fundings(1)

                                 
      Third quarter   Second quarter   First quarter   Fourth quarter   Third quarter
      2024   2024   2024   2023   2023
    Commercial:                            
    Commercial and industrial $ 93,711   $ 241,910   $ 53,978     $ 135,954   $ 89,297
    Municipal and non-profit   35,677     28,785     14,564       79,650     18,657
    Owner occupied commercial real estate   70,517     102,615     35,128       75,631     67,322
    Food and agribusiness   19,205     11,040     (7,204 )     10,646     16,191
    Total commercial   219,110     384,350     96,466       301,881     191,467
    Commercial real estate non-owner occupied   91,809     83,184     73,789       107,738     88,434
    Residential real estate   47,322     36,124     29,468       48,925     42,514
    Consumer   1,010     1,547     234       1,849     1,689
    Total $ 359,251   $ 505,205   $ 199,957     $ 460,393   $ 324,104

                                                          

    (1 )      Loan fundings are defined as closed end funded loans and net fundings under revolving lines of credit. Net fundings (paydowns) under revolving lines of credit were $16,302, $19,281, ($59,523), $16,954 and ($12,877) for the periods noted in the table above, respectively.
           

    NATIONAL BANK HOLDINGS CORPORATION
    Summary of Net Interest Margin
    (Dollars in thousands)

                                                           
        For the three months ended   For the three months ended   For the three months ended
        September 30, 2024   June 30, 2024   September 30, 2023
        Average               Average      Average               Average      Average               Average
        balance   Interest   rate   balance   Interest   rate   balance   Interest   rate
    Interest earning assets:                                                      
    Originated loans FTE(1)(2)   $ 6,251,827     $ 108,403     6.90 %   $ 6,074,199     $ 101,794     6.74 %   $ 5,803,157     $ 92,813     6.35 %
    Acquired loans     1,487,002       22,660     6.06 %     1,541,576       23,464     6.12 %     1,671,595       26,115     6.20 %
    Loans held for sale     18,078       319     7.02 %     16,862       318     7.59 %     22,154       383     6.86 %
    Investment securities available-for-sale     790,268       5,132     2.60 %     802,830       5,101     2.54 %     761,892       3,783     1.99 %
    Investment securities held-to-maturity     548,120       2,344     1.71 %     564,818       2,419     1.71 %     611,712       2,685     1.76 %
    Other securities     26,213       405     6.18 %     25,093       377     6.01 %     39,115       701     7.17 %
    Interest earning deposits     70,946       556     3.12 %     92,388       685     2.98 %     130,239       1,205     3.67 %
    Total interest earning assets FTE(2)   $ 9,192,454     $ 139,819     6.05 %   $ 9,117,766     $ 134,158     5.92 %   $ 9,039,864     $ 127,685     5.60 %
    Cash and due from banks   $ 86,887                 $ 100,165                 $ 104,308              
    Other assets     777,758                   771,475                   737,568              
    Allowance for credit losses     (96,369 )                 (97,741 )                 (92,831 )            
    Total assets   $ 9,960,730                 $ 9,891,665                 $ 9,788,909              
    Interest bearing liabilities:                                                      
    Interest bearing demand, savings and money market deposits   $ 5,134,650     $ 40,146     3.11 %   $ 5,109,924     $ 39,681     3.12 %   $ 4,535,183     $ 27,211     2.38 %
    Time deposits     1,039,563       9,220     3.53 %     1,015,371       8,536     3.38 %     992,755       6,212     2.48 %
    Securities sold under agreements to repurchase     17,146       5     0.12 %     17,449       5     0.12 %     19,288       6     0.12 %
    Long-term debt     54,383       519     3.80 %     54,307       518     3.84 %     54,074       519     3.81 %
    Federal Home Loan Bank advances     32,641       460     5.61 %     9,505       133     5.63 %     316,723       4,385     5.49 %
    Total interest bearing liabilities   $ 6,278,383     $ 50,350     3.19 %   $ 6,206,556     $ 48,873     3.17 %   $ 5,918,023     $ 38,333     2.57 %
    Demand deposits   $ 2,226,807                 $ 2,254,454                 $ 2,553,619              
    Other liabilities     180,667                   187,499                   149,068              
    Total liabilities     8,685,857                   8,648,509                   8,620,710              
    Shareholders’ equity     1,274,873                   1,243,156                   1,168,199              
    Total liabilities and shareholders’ equity   $ 9,960,730                 $ 9,891,665                 $ 9,788,909              
    Net interest income FTE(2)         $ 89,469               $ 85,285               $ 89,352      
    Interest rate spread FTE(2)                 2.86 %                 2.75 %                 3.03 %
    Net interest earning assets   $ 2,914,071                 $ 2,911,210                 $ 3,121,841              
    Net interest margin FTE(2)                 3.87 %                 3.76 %                 3.92 %
    Average transaction deposits   $ 7,361,457                 $ 7,364,378                 $ 7,088,802              
    Average total deposits     8,401,020                   8,379,749                   8,081,557              
    Ratio of average interest earning assets to average interest bearing liabilities     146.41 %                 146.91 %                 152.75 %            

                                                          

    (1 )      Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
    (2 )      Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $1,816, $1,711 and $1,575 for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
           

    NATIONAL BANK HOLDINGS CORPORATION
    Summary of Net Interest Margin
    (Dollars in thousands)

                                   
      For the nine months ended September 30, 2024   For the nine months ended September 30, 2023
      Average              Average   Average              Average
      balance   Interest   rate   balance   Interest   rate
    Interest earning assets:                              
    Originated loans FTE(1)(2) $ 6,124,757     $ 311,112   6.79 %   $ 5,656,309     $ 258,528   6.11 %
    Acquired loans   1,546,482       70,413   6.08 %     1,718,523       79,526   6.19 %
    Loans held for sale   15,661       862   7.35 %     23,494       1,189   6.77 %
    Investment securities available-for-sale   781,454       14,336   2.45 %     786,087       11,655   1.98 %
    Investment securities held-to-maturity   563,975       7,277   1.72 %     629,507       8,364   1.77 %
    Other securities   28,771       1,398   6.48 %     46,480       2,513   7.21 %
    Interest earning deposits   84,920       2,004   3.15 %     120,633       3,369   3.73 %
    Total interest earning assets FTE(2) $ 9,146,020     $ 407,402   5.95 %   $ 8,981,033     $ 365,144   5.44 %
    Cash and due from banks $ 96,510               $ 110,902            
    Other assets   768,521                 724,305            
    Allowance for credit losses   (97,327 )               (91,110 )          
    Total assets $ 9,913,724               $ 9,725,130            
    Interest bearing liabilities:                              
    Interest bearing demand, savings and money market deposits $ 5,064,386     $ 116,240   3.07 %   $ 4,197,603     $ 55,070   1.75 %
    Time deposits   1,015,081       25,340   3.33 %     965,750       14,545   2.01 %
    Securities sold under agreements to repurchase   17,839       16   0.12 %     19,863       17   0.11 %
    Long-term debt   54,307       1,555   3.82 %     53,997       1,555   3.85 %
    Federal Home Loan Bank advances   89,918       3,774   5.61 %     449,060       17,075   5.08 %
    Total interest bearing liabilities $ 6,241,531     $ 146,925   3.14 %   $ 5,686,273     $ 88,262   2.08 %
    Demand deposits $ 2,253,986               $ 2,751,537            
    Other liabilities   170,005                 141,110            
    Total liabilities   8,665,522                 8,578,920            
    Shareholders’ equity   1,248,202                 1,146,210            
    Total liabilities and shareholders’ equity $ 9,913,724               $ 9,725,130            
    Net interest income FTE(2)       $ 260,477             $ 276,882    
    Interest rate spread FTE(2)             2.81 %               3.36 %
    Net interest earning assets $ 2,904,489               $ 3,294,760            
    Net interest margin FTE(2)             3.80 %               4.12 %
    Average transaction deposits $ 7,318,372               $ 6,949,140            
    Average total deposits   8,333,453                 7,914,890            
    Ratio of average interest earning assets to average interest bearing liabilities   146.53 %               157.94 %          

                                                          

    (1 )      Originated loans are net of deferred loan fees, less costs, which are included in interest income over the life of the loan.
    (2 )      Presented on a fully taxable equivalent basis using the statutory tax rate of 21%. The tax equivalent adjustments included above are $5,220 and $4,432 for the nine months ended September 30, 2024 and September 30, 2023, respectively.
           

    NATIONAL BANK HOLDINGS CORPORATION
    Allowance for Credit Losses and Asset Quality
    (Dollars in thousands)

    Allowance for Credit Losses Analysis

                     
      As of and for the three months ended
      September 30, 2024   June 30, 2024   September 30, 2023
    Beginning allowance for credit losses $ 96,457     $ 97,607     $ 92,581  
    Charge-offs   (3,505 )     (4,605 )     (540 )
    Recoveries   95       499       280  
    Provision expense for credit losses   2,000       2,956       1,125  
    Ending allowance for credit losses (“ACL”) $ 95,047     $ 96,457     $ 93,446  
    Ratio of annualized net charge-offs to average total loans during the period   0.18 %     0.22 %     0.01 %
    Ratio of ACL to total loans outstanding at period end   1.23 %     1.25 %     1.25 %
    Ratio of ACL to total non-performing loans at period end   403.68 %     370.18 %     281.36 %
    Total loans $ 7,714,495     $ 7,722,153     $ 7,478,438  
    Average total loans during the period   7,714,765       7,582,506       7,443,869  
    Total non-performing loans   23,545       26,057       33,212  
                           

    Past Due and Non-accrual Loans

                     
      September 30, 2024   June 30, 2024   September 30, 2023
    Loans 30-89 days past due and still accruing interest $ 31,253     $ 27,159     $ 8,144  
    Loans 90 days past due and still accruing interest   9,509       3,498       154  
    Non-accrual loans   23,545       26,057       33,212  
    Total past due and non-accrual loans $ 64,307     $ 56,714     $ 41,510  
    Total 90 days past due and still accruing interest and non-accrual loans to total loans   0.43 %     0.38 %     0.45 %
                           

    Asset Quality Data

                     
      September 30, 2024   June 30, 2024   September 30, 2023
    Non-performing loans $ 23,545     $ 26,057     $ 33,212  
    OREO   1,432       1,526       3,416  
    Total non-performing assets $ 24,977     $ 27,583     $ 36,628  
    Total non-performing loans to total loans   0.31 %     0.34 %     0.44 %
    Total non-performing assets to total loans and OREO   0.32 %     0.36 %     0.49 %
                           

    NATIONAL BANK HOLDINGS CORPORATION
    Key Metrics(1)

                                 
      As of and for the three months ended   As of and for the nine months ended
      September 30,    June 30,    September 30,    September 30,    September 30, 
      2024   2024   2023   2024   2023
    Return on average assets   1.32 %     1.06 %     1.46 %     1.22 %     1.50 %
    Return on average tangible assets(2)   1.43 %     1.17 %     1.58 %     1.33 %     1.61 %
    Return on average equity   10.33 %     8.46 %     12.26 %     9.70 %     12.71 %
    Return on average tangible common equity(2)   14.84 %     12.44 %     18.38 %     14.14 %     18.81 %
    Loan to deposit ratio (end of period)   90.79 %     92.18 %     91.77 %     90.79 %     91.77 %
    Non-interest bearing deposits to total deposits (end of period)   26.70 %     26.61 %     30.47 %     26.70 %     30.47 %
    Net interest margin(3)   3.79 %     3.69 %     3.85 %     3.73 %     4.06 %
    Net interest margin FTE(2)(3)   3.87 %     3.76 %     3.92 %     3.80 %     4.12 %
    Interest rate spread FTE(4)   2.86 %     2.75 %     3.03 %     2.81 %     3.36 %
    Yield on earning assets(5)   5.97 %     5.84 %     5.53 %     5.87 %     5.37 %
    Yield on earning assets FTE(2)(5)   6.05 %     5.92 %     5.60 %     5.95 %     5.44 %
    Cost of interest bearing liabilities   3.19 %     3.17 %     2.57 %     3.14 %     2.08 %
    Cost of deposits   2.34 %     2.31 %     1.64 %     2.27 %     1.18 %
    Non-interest income to total revenue FTE(9)   17.05 %     14.13 %     17.81 %     16.13 %     14.74 %
    Non-interest expense to average assets   2.56 %     2.56 %     2.46 %     2.56 %     2.47 %
    Efficiency ratio   60.51 %     64.62 %     56.56 %     62.24 %     56.16 %
    Efficiency ratio excluding other intangible assets amortization FTE(2)   57.65 %     61.52 %     53.90 %     59.28 %     53.74 %
    Pre-provision net revenue $ 41,880     $ 34,528     $ 46,539     $ 115,298     $ 140,427  
    Pre-provision net revenue FTE(2)   43,696       36,239       48,114       120,518       144,859  
                                 
    Total Loans Asset Quality Data(6)(7)(8)                            
    Non-performing loans to total loans   0.31 %     0.34 %     0.44 %     0.31 %     0.44 %
    Non-performing assets to total loans and OREO   0.32 %     0.36 %     0.49 %     0.32 %     0.49 %
    Allowance for credit losses to total loans   1.23 %     1.25 %     1.25 %     1.23 %     1.33 %
    Allowance for credit losses to non-performing loans   403.68 %     370.18 %     281.36 %     403.68 %     281.36 %
    Net charge-offs to average loans   0.18 %     0.22 %     0.01 %     0.13 %     0.02 %

                                                          

    (1 )      Ratios are annualized.
    (2 )      Ratio represents non-GAAP financial measure. See non-GAAP reconciliations below.
    (3 )   Net interest margin represents net interest income, including accretion income on interest earning assets, as a percentage of average interest earning assets.
    (4 )      Interest rate spread represents the difference between the weighted average yield on interest earning assets, including FTE income, and the weighted average cost of interest bearing liabilities. Ratio represents a non-GAAP financial measure.
    (5 )   Interest earning assets include assets that earn interest/accretion or dividends. Any market value adjustments on investment securities or loans are excluded from interest earning assets.
    (6 )   Non-performing loans consist of non-accruing loans and modified loans on non-accrual.
    (7 )   Non-performing assets include non-performing loans and other real estate owned.
    (8 )   Total loans are net of unearned discounts and fees.
    (9 )   Non-interest income to total revenue represents non-interest income divided by the sum of net interest income FTE and non-interest income. Ratio represents a non-GAAP financial measure.
           

    NATIONAL BANK HOLDINGS CORPORATION
    NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS
    (Dollars in thousands, except share and per share data)

    Tangible Common Book Value Ratios

                             
        September 30, 2024   June 30, 2024      December 31, 2023   September 30, 2023
    Total shareholders’ equity   $ 1,291,997     $ 1,247,644     $ 1,212,807     $ 1,163,585  
    Less: goodwill and other intangible assets, net     (358,754 )     (360,732 )     (364,716 )     (366,724 )
    Add: deferred tax liability related to goodwill     13,203       12,871       12,208       11,876  
    Tangible common equity (non-GAAP)   $ 946,446     $ 899,783     $ 860,299     $ 808,737  
                             
    Total assets   $ 9,993,283     $ 9,970,851     $ 9,951,064     $ 9,866,283  
    Less: goodwill and other intangible assets, net     (358,754 )     (360,732 )     (364,716 )     (366,724 )
    Add: deferred tax liability related to goodwill     13,203       12,871       12,208       11,876  
    Tangible assets (non-GAAP)   $ 9,647,732     $ 9,622,990     $ 9,598,556     $ 9,511,435  
                             
    Tangible common equity to tangible assets calculations:                        
    Total shareholders’ equity to total assets     12.93 %     12.51 %     12.19 %     11.79 %
    Less: impact of goodwill and other intangible assets, net     (3.12 )%     (3.16 )%     (3.23 )%     (3.29 )%
    Tangible common equity to tangible assets (non-GAAP)     9.81 %     9.35 %     8.96 %     8.50 %
                             
    Tangible common book value per share calculations:                        
    Tangible common equity (non-GAAP)   $ 946,446     $ 899,783     $ 860,299     $ 808,737  
    Divided by: ending shares outstanding     37,988,364       37,899,453       37,784,851       37,739,776  
    Tangible common book value per share (non-GAAP)   $ 24.91     $ 23.74     $ 22.77     $ 21.43  
                             
    Tangible common book value per share, excluding accumulated other comprehensive loss calculations:                        
    Tangible common equity (non-GAAP)   $ 946,446     $ 899,783     $ 860,299     $ 808,737  
    Accumulated other comprehensive loss, net of tax     62,485       80,425       76,401       100,853  
    Tangible common book value, excluding accumulated other comprehensive loss, net of tax (non-GAAP)     1,008,931       980,208       936,700       909,590  
    Divided by: ending shares outstanding     37,988,364       37,899,453       37,784,851       37,739,776  
    Tangible common book value per share, excluding accumulated other comprehensive loss, net of tax (non-GAAP)   $ 26.56     $ 25.86     $ 24.79     $ 24.10  
                                     

    NATIONAL BANK HOLDINGS CORPORATION
    (Dollars in thousands, except share and per share data)
    Return on Average Tangible Assets and Return on Average Tangible Equity

                                   
        As of and for the three months ended   As of and for the nine months ended
        September 30,       June 30,       September 30,       September 30,       September 30, 
        2024      2024      2023      2024      2023
    Net income   $ 33,105     $ 26,135     $ 36,087     $ 90,631     $ 108,927  
    Add: impact of other intangible assets amortization expense, after tax     1,517       1,516       1,541       4,575       4,128  
    Net income excluding the impact of other intangible assets amortization expense, after tax (non-GAAP)   $ 34,622     $ 27,651     $ 37,628     $ 95,206     $ 113,055  
                                   
    Average assets   $ 9,960,730     $ 9,891,665     $ 9,788,909     $ 9,913,724     $ 9,725,130  
    Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill     (346,757 )     (349,030 )     (356,083 )     (348,717 )     (342,826 )
    Average tangible assets (non-GAAP)   $ 9,613,973     $ 9,542,635     $ 9,432,826     $ 9,565,007     $ 9,382,304  
                                   
    Average shareholders’ equity   $ 1,274,873     $ 1,243,156     $ 1,168,199     $ 1,248,202     $ 1,146,210  
    Less: average goodwill and other intangible assets, net of deferred tax liability related to goodwill     (346,757 )     (349,030 )     (356,083 )     (348,717 )     (342,826 )
    Average tangible common equity (non-GAAP)   $ 928,116     $ 894,126     $ 812,116     $ 899,485     $ 803,384  
                                   
    Return on average assets     1.32 %     1.06 %     1.46 %     1.22 %     1.50 %
    Return on average tangible assets (non-GAAP)     1.43 %     1.17 %     1.58 %     1.33 %     1.61 %
    Return on average equity     10.33 %     8.46 %     12.26 %     9.70 %     12.71 %
    Return on average tangible common equity (non-GAAP)     14.84 %     12.44 %     18.38 %     14.14 %     18.81 %
                                             

    Fully Taxable Equivalent Yield on Earning Assets and Net Interest Margin

                                   
        As of and for the three months ended   As of and for the nine months ended
        September 30,    June 30,    September 30,    September 30,    September 30, 
        2024   2024   2023   2024   2023
    Interest income   $ 138,003        $ 132,447        $ 126,110        $ 402,182     $ 360,712  
    Add: impact of taxable equivalent adjustment     1,816       1,711       1,575       5,220       4,432  
    Interest income FTE (non-GAAP)   $ 139,819     $ 134,158     $ 127,685     $ 407,402     $ 365,144  
                                   
    Net interest income   $ 87,653     $ 83,574     $ 87,777     $ 255,257     $ 272,450  
    Add: impact of taxable equivalent adjustment     1,816       1,711       1,575       5,220       4,432  
    Net interest income FTE (non-GAAP)   $ 89,469     $ 85,285     $ 89,352     $ 260,477     $ 276,882  
                                   
    Average earning assets   $ 9,192,454     $ 9,117,766     $ 9,039,864     $ 9,146,020     $ 8,981,033  
    Yield on earning assets     5.97 %     5.84 %     5.53 %     5.87 %     5.37 %
    Yield on earning assets FTE (non-GAAP)     6.05 %     5.92 %     5.60 %     5.95 %     5.44 %
    Net interest margin     3.79 %     3.69 %     3.85 %     3.73 %     4.06 %
    Net interest margin FTE (non-GAAP)     3.87 %     3.76 %     3.92 %     3.80 %     4.12 %
                                             

    Efficiency Ratio and Pre-Provision Net Revenue

                                   
        As of and for the three months ended   As of and for the nine months ended
           September 30,       June 30,       September 30,       September 30,       September 30, 
           2024      2024      2023      2024      2023
    Net interest income   $ 87,653     $ 83,574     $ 87,777     $ 255,257     $ 272,450  
    Add: impact of taxable equivalent adjustment     1,816       1,711       1,575       5,220       4,432  
    Net interest income FTE (non-GAAP)   $ 89,469     $ 85,285     $ 89,352     $ 260,477     $ 276,882  
                                   
    Non-interest income   $ 18,389     $ 14,029     $ 19,365     $ 50,112     $ 47,853  
                                   
    Non-interest expense   $ 64,162     $ 63,075     $ 60,603     $ 190,071     $ 179,876  
    Less: other intangible assets amortization     (1,977 )     (1,977 )     (2,008 )     (5,962 )     (5,378 )
    Non-interest expense excluding other intangible assets amortization (non-GAAP)   $ 62,185     $ 61,098     $ 58,595     $ 184,109     $ 174,498  
                                   
    Efficiency ratio     60.51 %     64.62 %     56.56 %     62.24 %     56.16 %
    Efficiency ratio excluding other intangible assets amortization FTE (non-GAAP)     57.65 %     61.52 %     53.90 %     59.28 %     53.74 %
    Pre-provision net revenue (non-GAAP)   $ 41,880     $ 34,528     $ 46,539     $ 115,298     $ 140,427  
    Pre-provision net revenue, FTE (non-GAAP)     43,696       36,239       48,114       120,518       144,859  

    The MIL Network –

    January 24, 2025
  • MIL-OSI: Chemung Financial Corporation Reports Third Quarter 2024 Net Income of $5.7 million, or $1.19 per share

    Source: GlobeNewswire (MIL-OSI)

    ELMIRA, N.Y., Oct. 22, 2024 (GLOBE NEWSWIRE) — Chemung Financial Corporation (the “Corporation”) (Nasdaq: CHMG), the parent company of Chemung Canal Trust Company (the “Bank”), today reported net income of $5.7 million, or $1.19 per share, for the third quarter of 2024, compared to $5.0 million, or $1.05 per share, for the second quarter of 2024, and $7.6 million, or $1.61 per share, for the third quarter of 2023.

    “Our balance sheet is well positioned as we enter into this rate cutting cycle. We are seeing the benefit of higher yielding loans driving interest income, while funding costs continue to moderate,” said Anders M. Tomson, President and CEO of Chemung Financial Corporation. “Strong non-interest income production and a stable credit environment were a welcome addition to an already strong quarter,” Tomson added.

    “As we begin operations in our new Williamsville, New York location, we are eager to continue fostering an environment committed to our mission of community-oriented banking, both in Western New York and throughout the Bank’s footprint,” concluded Tomson.

    Third Quarter Highlights:

    • The Corporation opened a full-service branch and regional banking center at 5529 Main Street in Williamsville, New York under the Canal Bank, a division of Chemung Canal Trust Company, name on October 11, 2024.
    • Tangible equity to tangible assets improved by 66 basis points to 7.22% as of September 30, 2024, compared to prior quarter-end, and 77 basis points compared to December 31, 2023.1
    • Cost of interest-bearing liabilities increased by three basis points during the third quarter of 2024, compared to a nine basis points increase during the second quarter of 2024.
    • Dividends declared during the third quarter 2024 were $0.31 per share.

    1 See the GAAP to Non-GAAP reconciliations.

    3rd Quarter 2024 vs 2nd Quarter 2024

    Net Interest Income:

    Net interest income for the third quarter of 2024 totaled $18.4 million compared to $17.8 million for the prior quarter, an increase of $0.6 million, or 3.4%, driven primarily by increases of $1.1 million in interest income on loans, including fees and $0.1 million in interest income on interest-earning deposits, offset primarily by increases of $0.3 million in interest expense on deposits and $0.1 million in interest expense on borrowed funds, and a decrease of $0.2 million in interest income on taxable securities.

    Interest income on loans, including fees, increased primarily due to an increase of 11 basis points in the average yield on commercial loans, compared to the prior quarter. The increase in the average yield on commercial loans was primarily attributable to higher yielding commercial real estate originations during 2024, and the recognition of $0.2 million in interest income on the payoff of a nonaccrual commercial real estate loan. Average balances of commercial loans increased $14.3 million, compared to the prior quarter. Average yields on residential mortgages and consumer loans increased 21 and 15 basis points, respectively, compared to the prior quarter, while average balances of residential mortgages and consumer loans decreased by $0.1 million and $3.8 million, respectively. The increase in interest income on interest-earning deposits was due to an increase of $5.7 million in the average balances of interest- earning deposits, compared to the prior quarter.

    Interest expense on deposits increased primarily due to growth in the average balances of customer time deposits of $25.5 million and an increase of five basis points in the average interest rate paid on customer time deposits, compared to the prior quarter. Customer time deposits comprised 23.0% of average total deposits for the three months ended September 30, 2024, compared to 21.9% for the three months ended June 30, 2024. Average balances of brokered deposits decreased $35.3 million, compared to the prior quarter, while the average interest rate paid on brokered deposits was flat quarter over quarter. Average balances of savings and money market deposits increased $10.1 million and average interest rates paid on savings and money market deposits increased nine basis points, compared to the prior quarter. Average balances of total interest-bearing deposits increased $6.1 million and the average interest rate paid on total interest-bearing deposits increased two basis points, compared to the prior quarter. The increase in the average balances and average cost of customer time deposits was primarily due to the continuation of CD campaigns in the current quarter. The increase in the average balances and average cost of savings and money market deposits was primarily due to a shift in the composition of deposits towards higher rate money market accounts and additional seasonal municipal deposits.

    The increase in interest expense on borrowed funds was due primarily to an increase in the average cost of total borrowings of four basis points, and an increase in the average balances of borrowed funds of $3.2 million in the current quarter, compared to the prior quarter. The average cost of total borrowings for the current quarter was 5.08%, compared to 5.04% in the prior quarter. Included in average balances of borrowed funds was $30.0 million in FHLB term advances that matured in September 2024. The decrease in interest income on taxable securities was primarily due to lower average balances of SBA pooled loan securities and additional amortization expense on SBA pooled loan securities, both due to paydown activity.

    Fully taxable equivalent net interest margin was 2.72% in the current quarter, compared to 2.66% in the prior quarter. Expansion of net interest margin in the current quarter was primarily attributable to an increase of nine basis points in the average yield of total interest-earning assets to 4.78%, offset by an increase of three basis points in the average cost of interest-bearing liabilities to 2.97%, compared to the prior quarter.

    Provision for Credit Losses:

    Provision for credit losses decreased $0.3 million in the current quarter, compared to the prior quarter. Provisioning in the current quarter was primarily attributable to unfavorable changes in economic forecasts and lower modeled prepayment speeds used in the Bank’s CECL model, as well as lower growth-related provisioning in the current quarter, compared to the prior quarter. Provisioning in the prior quarter included a $0.2 million specific allocation on a commercial and industrial loan.

    Non-Interest Income:

    Non-interest income for the third quarter of 2024 was $5.9 million, compared to $5.6 million for the prior quarter, an increase of $0.3 million, or 5.4%. The increase was driven primarily by increases of $0.1 million in each of wealth management group fee income, service charges on deposit accounts, change in fair value of equity investments, and gains on sales of loans held for sale.

    The increase in wealth management group fee income was primarily attributable to increases in fee rates effective July 1, 2024. The increase in service charges on deposit accounts was primarily attributable to an increase in overdraft transaction volume, compared to the prior quarter. The increase in the change in fair value of equity investments was primarily attributable to an increase in the market value of assets held for the Corporation’s deferred compensation plan, and the increase in gains on sales of loans held for sale was primarily attributable to an increase in the volume of loans sold to the secondary market during the current period, due to an increase in total residential loan originations in the current period.

    Non-Interest Expense:

    Non-interest expense for the third quarter of 2024 was $16.5 million, compared to $16.2 million for the prior quarter, an increase of $0.3 million, or 1.9%. The increase was driven primarily by increases of $0.3 million each in salaries and wages and data processing expenses, and $0.2 million in other non-interest expense, partially offset by a decrease of $0.5 million in pension and other employee benefits.

    The increase in salaries and wages compared to the prior quarter was primarily attributable to additional staffing for the Corporation’s newly established Western New York regional banking center, and expense related to an increase in the market value of assets held for the Corporation’s deferred compensation plan. The increase in data processing expense was primarily attributable to the timing of various vendor credits and rebates, and an increase in card procurement expense. The increase in other non-interest expense was primarily attributable to an increase supplies and postage expense, and an increase in charitable contributions. The decrease in pension and other employee benefits was primarily attributable to lower healthcare related expenses in the current quarter, compared to the prior quarter.

    Income Tax Expense:

    Income tax expense for the third quarter of 2024 was $1.5 million, compared to $1.3 million for the prior quarter, an increase of $0.2 million. The effective tax rate for the current quarter increased to 20.9% from 20.3% in the prior quarter. The increase in income tax expense was primarily attributable to an increase in pretax income.

    3rd Quarter 2024 vs 3rd Quarter 2023

    Net Interest Income:

    Net interest income for the third quarter of 2024 totaled $18.4 million compared to $18.0 million for the same period in the prior year, an increase of $0.4 million, or 2.2%, driven primarily by increases of $3.6 million in interest income on loans, including fees and $0.3 million in interest income on interest-earning deposits, partially offset by increases of $2.3 million in interest expense on deposits and $0.7 million in interest expense on borrowed funds, and a decrease of $0.5 million in interest income on taxable securities.

    Interest income on loans, including fees, increased primarily due to a $134.3 million increase in the average balances of commercial loans and an increase of 36 basis points in the average yield on commercial loans, compared to the same period in the prior year. The increase in average balances of commercial loans consisted of year over year growth in both commercial and industrial and commercial real estate balances, while the increase in the average yield was primarily due to higher origination yields in 2024. Average balances of residential mortgage loans decreased $9.2 million compared to the same period in the prior year due to an increase in sales of new originations to the secondary market, while the average yield on residential mortgage loans increased 36 basis points compared to the same period in the prior year. Average consumer loan balances decreased $13.9 million compared to the same period in the prior year, primarily due to lower indirect auto loan origination activity during the third quarter of 2024 compared to the prior year period, while the average yield on consumer loans increased 60 basis points, primarily due to runoff of older vintage indirect auto loans, replaced by higher yielding new originations. Interest income on interest-earning deposits increased primarily due to a $21.2 million increase in the average balances of interest-earning deposits, compared to the same period in the prior year.

    Interest expense on deposits increased primarily due to a 44 basis points increase in the average interest rate paid on total interest-bearing deposits, which included brokered deposits, and an increase of $175.6 million in the average balance of customer interest-bearing deposits. Both the increase in the average interest rate paid and the average balances of customer interest-bearing deposits were primarily attributable to CD campaigns throughout 2024, as well as a general shift in the deposit mix towards higher cost accounts. The average balances of brokered deposits decreased $123.7 million, while the average interest rate paid on brokered deposits increased nine basis points, compared to the same period in the prior year. Average balances of brokered deposits decreased primarily due to the utilization of the Bank Term Funding Program (BTFP) and FHLBNY term advances in the current quarter, which were not utilized in the same period in the prior year, as well as lower growth in loan balances during the current quarter, compared to the same period in the prior year.

    The increase in interest expense on borrowed funds was primarily attributable to a $54.8 million increase in the average balances of borrowed funds, partially offset by a decrease of 17 basis points in the average interest rate paid on borrowed funds. Changes in the composition of borrowed funds reflected the Corporation’s shift to the lower cost BTFP, as well as FHLBNY term advances, partially replacing FHLBNY overnight advances in the current quarter, compared to the same period in the prior year. The average balances of FHLBNY overnight advances decreased $17.3 million, while the average interest rate paid on FHLBNY overnight advances decreased 47 basis points, compared to the same period in the prior year. The decrease in interest income on taxable securities was primarily attributable to net paydowns and maturities of available for sale securities between the third quarter of 2023 and the third quarter of 2024 of $54.8 million, and an increase in amortization expense on SBA pooled loan securities, due to paydown activity.

    Fully taxable equivalent net interest margin was 2.72% for the third quarter of 2024, compared to 2.73% for the same period in the prior year. The average cost of interest-bearing liabilities increased 50 basis points to 2.97%, and the average balances of interest-bearing liabilities increased $106.7 million, compared to the same period in the prior year. The average yield on interest-earning assets increased 38 basis points to 4.78%, and the average balances of interest- earning assets increased $73.0 million, compared to the same period in the prior year.

    Provision for Credit Losses:

    Provision for credit losses increased $0.1 million for the third quarter of 2024, compared to the same period in the prior year. The increase was primarily attributable to unfavorable changes in FOMC forecasts in the third quarter of 2024, compared to favorable changes to forecasts in the third quarter of 2023, as well as a decline in modeled prepayment speeds. This increase was partially offset by a decrease of $0.3 million in net charge offs in the third quarter of 2024, compared to the third quarter of 2023.

    Non-Interest Income:

    Non-interest income for the third quarter of 2024 was $5.9 million compared to $7.8 million for the same period in the prior year, a decrease of $1.9 million, or 24.4%. The decrease was primarily driven by a decrease of $2.5 million in other non-interest income, partially offset by increases of $0.5 million in wealth management group fee income and $0.2 million in the change in fair value of equity investments. The decrease in other non-interest income was primarily attributable to the recognition of the employee retention tax credit (ERTC) in the third quarter of 2023. The increase in wealth management group fee income was primarily attributable to an increase in the market value of total assets under management or administration and fee rate increases effective in the third quarter of 2024, while the increase in the change in fair value of equity investments was primarily attributable to an increase in the value of assets held for the Corporation’s deferred compensation plan.

    Non-Interest Expense:

    Non-interest expense for the third quarter of 2024 was $16.5 million compared to $15.7 million for the same period in the prior year, an increase of $0.8 million, or 5.1%. The increase was primarily driven by increases of $0.6 million in salaries and wages and $0.3 million in other non-interest expense, partially offset by a decrease of $0.4 million in pension and other employee benefits.

    The increase in salaries and wages was primarily attributable to an increase in salaries, including additional staffing for the Corporation’s newly opened Western New York regional banking center, as well as an increase in the market value of the assets held for the Corporation’s deferred compensation plan. The increase in other non-interest expense was primarily attributable to increases in supplies and postage expense, and losses recognized on the sale of repossessed vehicles in the current quarter, compared to the same period in the prior year. The decrease in pension and other employee benefits was primarily attributable to a decrease in healthcare related expenses in the current quarter, compared to the same period in the prior year.

    Income Tax Expense:

    Income tax expense for the third quarter of 2024 was $1.5 million compared to $2.1 million for the third quarter of 2023, a decrease of $0.5 million. The effective tax rate for the current quarter was 20.9%, compared to 21.2% for the same period in the prior year. The decrease in income tax expense was primarily attributable to additional income tax expense recognized in the third quarter of 2023 due to filing amended tax returns in relation to the ERTC.

    Asset Quality

    Non-performing loans totaled $10.5 million as of September 30, 2024, or 0.52% of total loans, compared to $10.4 million, or 0.53% of total loans as of December 31, 2023. The slight increase in non-performing loans was primarily attributable to $3.9 million in commercial loan balances added to nonaccrual during the year, offset by $3.8 million in paydowns and payoffs of existing nonaccrual commercial loan balances during the year. Non-performing assets, which are comprised of non-performing loans, other real estate owned, and repossessed vehicles, were $11.1 million, or 0.40% of total assets as of September 30, 2024, compared to $10.7 million, or 0.40% of total assets as of December 31, 2023. Other real estate owned was $0.5 million and repossessed vehicles was $0.1 million as of September 30, 2024.

    Total loan delinquencies as of September 30, 2024 increased compared to December 31, 2023, primarily attributable to increases in residential mortgage and consumer loan delinquency rates during the period. The majority of past due residential mortgage balances were past due between 30-59 days. Commercial loan delinquency rates declined as of September 30, 2024, compared to December 31, 2023. Annualized net charge-offs to total average loans for the third quarter of 2024 were 0.02%, compared to 0.06% for the second quarter of 2024, and 0.04% for the nine months ended September 30, 2024, compared to 0.05% for the nine months ended September 30, 2023. Annualized consumer net charge-offs for the nine months ended September 30, 2024 were 0.31% of average consumer loan balances and 0.18% of average consumer loan balances for the third quarter of 2024, primarily concentrated in indirect auto loans, while commercial loans and residential mortgage loans each had net recovery rates for the nine months ended September 30, 2024 and the third quarter of 2024.

    The allowance for credit losses was $21.4 million as of September 30, 2024 and $22.5 million as of December 31, 2023. The allowance for credit losses on unfunded commitments, a component of other liabilities, was $0.8 million as of September 30, 2024 and $0.9 million as of December 31, 2023. The decrease in the allowance for credit losses was primarily attributable to the annual review and update to the loss drivers which the Bank’s CECL model is based upon. Recalibration of loss drivers resulted in a decline in the baseline loss rates which the model utilizes, and were applied beginning in the first quarter of 2024. Partially offsetting these declines were comparatively weaker FOMC projections for economic variables used in the model as of September 30, 2024 compared to as of December 31, 2023, in addition to declines in prepayment speeds between December 31, 2023 and September 30, 2024, and loan growth during 2024.

    The allowance for credit losses was 203.33% of non-performing loans as of September 30, 2024 and 216.28% as of December 31, 2023. The allowance for credit losses to total loans was 1.06% as of September 30, 2024 and 1.14% as of December 31, 2023. Provision for credit losses as a percentage of period-end loan balances was 0.03% for the third quarter of 2024.

    Balance Sheet Activity

    Total assets were $2.774 billion as of September 30, 2024 compared to $2.711 billion as of December 31, 2023, an increase of $63.7 million, or 2.3%. The increase was primarily attributable to increases of $56.3 million in loans, net of deferred origination fees and costs, and $43.6 million in cash and cash equivalents, partially offset by decreases of $30.9 million in total investment securities and $6.9 million in accrued interest receivable and other assets.

    The increase in loans, net of deferred origination fees and costs, was concentrated in the commercial loan portfolio, which increased by $76.9 million, or 5.5%, compared to prior year-end. Growth in commercial loans during the current period consisted of growth in both commercial and industrial and commercial real estate balances. Consumer loans decreased by $16.7 million, or 5.4%, primarily driven by lower indirect auto loan origination activity during the current period, and a relatively fast turnover rate in the portfolio. Residential mortgages decreased by $3.9 million, or 1.4%, as the Corporation continued to elect to sell a portion of originations into the secondary market.

    The increase in cash and cash equivalents was primarily due to $50.0 million in advances from the Federal Reserve’s BTFP, $41.8 million in paydowns and maturities of available for sale securities, and an increase of $21.7 million in total deposits, primarily offset by an increase of $56.3 million in loans, net of deferred origination fees and costs, and a decrease of $31.9 million in FHLB overnight advances, compared to prior year-end.

    Total investment securities decreased primarily due to a decrease of $29.4 million in securities available for sale, compared to prior year-end. Net paydowns and maturities on securities available for sale for the current period totaled $41.8 million, primarily attributable to paydowns on mortgage-backed securities and SBA pooled-loan securities. The market value of securities available for sale increased by $14.7 million, due to favorable changes in interest rates during the current period. The decrease in accrued interest receivable and other assets was primarily due to decreases in interest rate swap assets of $4.2 million, due to a decrease in the market value of swaps, and $3.9 million in deferred tax assets, due to improvements in the market value of the available for sale securities portfolio.

    Total liabilities were $2.554 billion as of September 30, 2024 compared to $2.515 billion as of December 31, 2023, an increase of $38.3 million, or 1.5%. The increase in total liabilities was primarily attributable to increases of $18.8 million in advances and other debt and of $21.7 million in deposits, partially offset by a decrease of $2.2 million in accrued interest payable and other liabilities.

    Total deposits increased by $21.7 million or 0.9%, compared to prior year-end, primarily driven by increases of $102.8 million in customer time deposits, or 21.9%, and $58.2 million in interest bearing demand deposits, or 20.0%. Partially offsetting these increases were decreases of $103.3 million in brokered deposits, or 72.3%, and $37.0 million in non- interest bearing demand deposits, or 5.7%. Additionally, money market deposits increased by $7.2 million, or 1.1% and savings deposits decreased by $6.2 million, or 2.5%. Non-interest bearing deposits comprised 25.1% and 26.9% of total deposits as of September 30, 2024 and December 31, 2023, respectively.

    The increase in advances and other debt was primarily attributable to a $50.0 million advance from the Federal Reserve’s BTFP, and an increase of $0.7 million in finance lease obligations, offset by a decrease of $31.9 million in FHLBNY overnight advances. The decrease in accrued interest payable and other liabilities was primarily due to a decrease in interest rate swap liabilities of $4.8 million, primarily due to a decrease in the market value of swaps, partially offset by increases in interest payable on borrowed funds of $1.7 million and interest payable on deposits of $1.2 million.

    Total shareholders’ equity was $220.7 million as of September 30, 2024, compared to $195.2 million as of December 31, 2023, an increase of $25.4 million, or 13.0%, primarily driven by an increase of $13.3 million in retained earnings and a decrease of $10.9 million in accumulated other comprehensive loss. The increase in retained earnings was primarily due to net income of $17.8 million, offset by dividends declared of $4.4 million during the nine months ended September 30, 2024. The decrease in accumulated other comprehensive loss was primarily attributable to the favorable impact of interest rates on available for sale securities during the current period.

    The total equity to total assets ratio was 7.95% as of September 30, 2024, compared to 7.20% as of December 31, 2023, and the tangible equity to tangible assets ratio was 7.22% as of September 30, 2024, compared to 6.45% as of December 31, 2023.1 Book value per share increased to $46.22 as of September 30, 2024 from $41.07 as of December 31, 2023. As of September 30, 2024, the Bank’s capital ratios were in excess of those required to be considered well- capitalized under the regulatory framework for prompt corrective action.

    1 See the GAAP to Non-GAAP reconciliations

    Liquidity

    The Corporation uses a variety of resources to manage its liquidity, and management believes it has the necessary liquidity to allow for flexibility in meeting its various operational and strategic needs. These include short-term investments, cash flow from lending and investing activities, core-deposit growth and non-core funding sources, such as time deposits of $250,000 or greater, brokered deposits, FHLBNY advances, and Federal Reserve Bank Term Funding Program (BTFP) advances. No new borrowings could be made under the BTFP after March 11, 2024. Borrowings may be used on a short-term basis for liquidity purposes or on a long-term basis to fund asset growth. As of September 30, 2024, the Corporation’s cash and cash equivalents balance was $80.4 million. The Corporation also maintains an investment portfolio of securities available for sale, comprised primarily of US Government treasury securities, SBA loan pools, mortgage-backed securities, and municipal bonds. Although this portfolio generates interest income for the Corporation, it also serves as an available source of liquidity and capital if the need should arise. As of September 30, 2024, the Corporation’s investment in securities available for sale was $554.6 million, $256.1 million of which was not pledged as collateral. Additionally, the Bank’s total advance line capacity at the Federal Home Loan Bank of New York was $224.2 million as of September 30, 2024, all of which was available as of September 30, 2024. In January 2024, the Corporation utilized the BTFP with an advance of $50.0 million, which the Corporation paid off in October 2024, without prepayment penalty.

    As of September 30, 2024, uninsured deposits totaled $708.9 million, or 28.9% of total deposits, including $216.2 million of municipal deposits that were collateralized by pledged assets, when appropriate. As of December 31, 2023, uninsured deposits totaled $655.7 million, or 27.0% of total deposits, including $153.2 million of municipal deposits that were collateralized by pledged assets. Due to their fluidity, the Corporation closely monitors uninsured deposit levels when considering liquidity management strategies.

    The Corporation considers brokered deposits to be an element of its deposit strategy, and anticipates it may continue utilizing brokered deposits as a secondary source of funding in support of growth. As of September 30, 2024, the Corporation had entered into brokered deposit arrangements with multiple brokers. As of September 30, 2024, brokered deposits carried terms between 2 and 48 months, totaling $39.5 million. Excluding brokered deposits, total deposits increased $125.0 million compared to December 31, 2023, due primarily to ongoing CD campaigns and seasonal inflows associated with municipal deposits.

    Other Items

    The market value of total assets under management or administration in our Wealth Management Group was $2.316 billion as of September 30, 2024, including $367.8 million of assets under management or administration for the Corporation, compared to $2.242 billion as of December 31, 2023, including $381.3 million of assets under management or administration for the Corporation, an increase of $73.2 million, or 3.3%, due primarily to market improvements during 2024.

    As previously announced on January 8, 2021, the Corporation’s Board of Directors approved a stock repurchase program. Under the repurchase program, the Corporation may repurchase up to 250,000 shares of its common stock, or approximately 5% of its then outstanding shares. The repurchase program permits shares to be repurchased in open market or privately negotiated transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. As of September 30, 2024, a total of 49,184 shares of common stock at a total cost of $2.0 million were repurchased by the Corporation under its share repurchase program. No shares were repurchased in the third quarter of 2024. The weighted average cost was $40.42 per share repurchased. Remaining buyback authority under the share repurchase program was 200,816 shares as of September 30, 2024.

    The Bank opened a full-service branch and regional banking center at 5529 Main Street in Williamsville, New York on October 11, 2024 under the Canal Bank, a division of Chemung Canal Trust Company, name. The Bank has received regulatory approval to convert its previous branch location in Clarence, New York into an administrative office in support of the Bank’s Western New York operations.

    About Chemung Financial Corporation

    Chemung Financial Corporation is a $2.8 billion financial services holding company headquartered in Elmira, New York and operates 31 retail offices through its principal subsidiary, Chemung Canal Trust Company, a full service community bank with trust powers. Established in 1833, Chemung Canal Trust Company is the oldest locally-owned and managed community bank in New York State. Chemung Financial Corporation is also the parent of CFS Group, Inc., a financial services subsidiary offering non-traditional services including mutual funds, annuities, brokerage services, tax preparation services, and insurance.

    This press release may be found at: http://www.chemungcanal.com under Investor Relations.

    Forward-Looking Statements

    This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, and the Private Securities Litigation Reform Act of 1995. The Corporation intends its forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in this press release. All statements regarding the Corporation’s expected financial position and operating results, the Corporation’s business strategy, the Corporation’s financial plans, forecasted demographic and economic trends relating to the Corporation’s industry and similar matters are forward-looking statements. These statements can sometimes be identified by the Corporation’s use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend.” The Corporation cannot promise that its expectations in such forward-looking statements will turn out to be correct. The Corporation’s actual results could be materially different from expectations because of various factors, including changes in economic conditions or interest rates, credit risk, inflation, cyber security risks, difficulties in managing the Corporation’s growth, competition, changes in law or the regulatory environment, and changes in general business and economic trends.

    Information concerning these and other factors, including Risk Factors, can be found in the Corporation’s periodic filings with the Securities and Exchange Commission (“SEC”), including the 2023 Annual Report on Form 10-K. These filings are available publicly on the SEC’s website at http://www.sec.gov, on the Corporation’s website at http://www.chemungcanal.com or upon request from the Corporate Secretary at (607) 737-3746. Except as otherwise required by law, the Corporation undertakes no obligation to publicly update or revise its forward-looking statements, whether as a result of new information, future events, or otherwise.

                 
    Chemung Financial Corporation            
    Consolidated Balance Sheets (Unaudited)            
        Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,
    (in thousands)   2024   2024   2024   2023   2023
    ASSETS                    
    Cash and due from financial institutions   $ 36,247     $ 23,184     $ 22,984     $ 22,247     $ 52,563  
    Interest-earning deposits in other financial institutions     44,193       47,033       71,878       14,600       23,017  
    Total cash and cash equivalents     80,440       70,217       94,862       36,847       75,580  
                                             
    Equity investments     3,244       3,090       3,093       3,046       2,811  
                                             
    Securities available for sale     554,575       550,927       566,028       583,993       569,004  
    Securities held to maturity     657       657       785       785       1,804  
    FHLB and FRB stock, at cost     4,189       5,506       4,071       5,498       4,053  
    Total investment securities     559,421       557,090       570,884       590,276       574,861  
                                             
    Commercial     1,464,205       1,445,258       1,425,437       1,387,321       1,341,017  
    Mortgage     274,099       271,620       277,246       277,992       281,361  
    Consumer     290,650       294,594       300,927       307,351       308,310  
    Loans, net of deferred loan fees     2,028,954       2,011,472       2,003,610       1,972,664       1,930,688  
    Allowance for credit losses     (21,441 )     (21,031 )     (20,471 )     (22,517 )     (20,252 )
    Loans, net     2,007,513       1,990,441       1,983,139       1,950,147       1,910,436  
                                             
    Loans held for sale     —       381       96       —       —  
    Premises and equipment, net     14,915       14,731       14,183       14,571       15,036  
    Operating lease right-of-use assets     5,637       5,827       6,018       5,648       5,850  
    Goodwill     21,824       21,824       21,824       21,824       21,824  
    Accrued interest receivable and other assets     81,221       92,212       90,791       88,170       101,436  
    Total assets   $ 2,774,215     $ 2,755,813     $ 2,784,890     $ 2,710,529     $ 2,707,834  
                         
    LIABILITIES AND SHAREHOLDERS’ EQUITY                    
    Deposits:                    
    Non-interest-bearing demand deposits   $ 616,126     $ 619,192     $ 656,330     $ 653,166     $ 683,348  
    Interest-bearing demand deposits     349,383       328,370       315,154       291,138       310,885  
    Money market accounts     630,870       613,131       631,350       623,714       626,256  
    Savings deposits     242,911       248,528       248,578       249,144       261,822  
    Time deposits     611,831       606,700       629,360       612,265       591,188  
    Total deposits     2,451,121       2,415,921       2,480,772       2,429,427       2,473,499  
                                             
    Advances and other debt     53,757       83,835       52,979       34,970       3,120  
    Operating lease liabilities     5,820       6,009       6,197       5,827       6,028  
    Accrued interest payable and other liabilities     42,863       48,826       47,814       45,064       55,123  
    Total liabilities     2,553,561       2,554,591       2,587,762       2,515,288       2,537,770  
                       
    Shareholders’ equity                  
    Common stock   53       53       53       53       53  
    Additional paid-in capital   48,457       48,102       47,794       47,773       47,974  
    Retained earnings   243,266       239,021       235,506       229,930       227,596  
    Treasury stock, at cost   (15,987 )     (16,043 )     (16,147 )     (16,502 )     (16,880 )
    Accumulated other comprehensive loss   (55,135 )     (69,911 )     (70,078 )     (66,013 )     (88,679 )
    Total shareholders’ equity   220,654       201,222       197,128       195,241       170,064  
    Total liabilities and shareholders’ equity $ 2,774,215     $ 2,755,813     $ 2,784,890     $ 2,710,529     $ 2,707,834  
                         
    Period-end shares outstanding 4,774   4,772   4,768   4,754   4,738  
                             
    Chemung Financial Corporation        
    Consolidated Statements of Income (Unaudited)        
        Three Months Ended
    September 30,
      Percent      Nine Months Ended
    September 30,
      Percent  
    (in thousands, except per share data)     2024       2023     Change       2024       2023     Change  
    Interest and dividend income:                                            
    Loans, including fees   $ 28,611     $ 25,033     14.3     $ 83,323     $ 71,113     17.2  
    Taxable securities     3,060       3,537     (13.5 )     9,868       10,750     (8.2 )
    Tax exempt securities     250       258     (3.1 )     762       778     (2.1 )
    Interest-earning deposits     441       187     135.8       1,014       400     153.5  
    Total interest and dividend income     32,362       29,015     11.5       94,967       83,041     14.4  
                                                 
    Interest expense:                                            
    Deposits     13,005       10,721     21.3       37,861       24,577     54.1  
    Borrowed funds     969       277     249.8       2,868       1,905     50.6  
    Total interest expense     13,974       10,998     27.1       40,729       26,482     53.8  
                                                 
    Net interest income     18,388       18,017     2.1       54,238       56,559     (4.1 )
    Provision (credit) for credit losses     564       449     25.6       (597 )     962     (162.1 )
    Net interest income after provision for credit losses     17,824       17,568     1.5       54,835       55,597     (1.4 )
                                                 
    Non-interest income:                                            
    Wealth management group fee income     2,991       2,533     18.1       8,554       7,716     10.9  
    Service charges on deposit accounts     1,016       1,018     (0.2 )     2,929       2,918     0.4  
    Interchange revenue from debit card transactions     1,123       1,141     (1.6 )     3,327       3,468     (4.1 )
    Change in fair value of equity investments     118       (68 )   273.5       233       (99 )   335.4  
    Net gains on sales of loans held for sale     91       67     35.8       162       90     80.0  
    Net gains (losses) on sales of other real estate owned     (19 )     —     N/M       (22 )     14     N/M  
    Income from bank owned life insurance     10       11     (9.1 )     29       32     (9.4 )
    Other     589       3,106     (81.0 )     1,962       4,539     (56.8 )
    Total non-interest income     5,919       7,808     (24.2 )     17,174       18,678     (8.1 )
                                                 
    Non-interest expense:                                            
    Salaries and wages     7,168       6,542     9.6       21,007       20,029     4.9  
    Pension and other employee benefits     1,627       1,979     (17.8 )     5,787       5,467     5.9  
    Other components of net periodic pension and postretirement benefits     (227 )     (174 )   (30.5 )     (691 )     (522 )   (32.4 )
    Net occupancy     1,422       1,337     6.4       4,360       4,242     2.8  
    Furniture and equipment     402       353     13.9       1,197       1,232     (2.8 )
    Data processing     2,567       2,480     3.5       7,437       7,334     1.4  
    Professional services     522       554     (5.8 )     1,639       1,596     2.7  
    Marketing and advertising     210       218     (3.7 )     943       720     31.0  
    Other real estate owned expense     55       10     N/M       116       49     136.7  
    FDIC insurance     524       525     (0.2 )     1,617       1,608     0.6  
    Loan expense     353       249     41.8       808       789     2.4  
    Other     1,887       1,595     18.3       5,207       4,873     6.9  
    Total non-interest expense     16,510       15,668     5.4       49,427       47,417     4.2  
                                                 
    Income before income tax expense     7,233       9,708     (25.5 )     22,582       26,858     (15.9 )
    Income tax expense     1,513       2,060     (26.6 )     4,825       5,660     (14.8 )
    Net income   $ 5,720     $ 7,648     (25.2 )   $ 17,757     $ 21,198     (16.2 )
                                                 
    Basic and diluted earnings per share   $ 1.19     $ 1.61           $ 3.72     $ 4.48        
    Cash dividends declared per share   $ 0.31     $ 0.31           $ 0.93     $ 0.93        
    Average basic and diluted shares outstanding     4,773       4,736             4,769       4,729        
                             
                             
    N/M – Not Meaningful                        
    Chemung Financial Corporation   As of or for the Three Months Ended   As of or for the
    Nine Months Ended
    Consolidated Financial Highlights (Unaudited)   Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,   Sept. 30,   Sept. 30,
    (in thousands, except per share data)     2024       2024       2024       2023       2023       2024       2023  
    RESULTS OF OPERATIONS                            
    Interest income   $ 32,362     $ 31,386     $ 31,219     $ 30,033     $ 29,015     $ 94,967     $ 83,041  
    Interest expense     13,974       13,625       13,130       12,135       10,998       40,729       26,482  
    Net interest income     18,388       17,761       18,089       17,898       18,017       54,238       56,559  
    Provision (credit) for credit losses     564       879       (2,040 )     2,300       449       (597 )     962  
    Net interest income after provision for credit losses     17,824       16,882       20,129       15,598       17,568       54,835       55,597  
    Non-interest income     5,919       5,598       5,657       5,871       7,808       17,174       18,678  
    Non-interest expense     16,510       16,219       16,698       16,826       15,668       49,427       47,417  
    Income before income tax expense     7,233       6,261       9,088       4,643       9,708       22,582       26,858  
    Income tax expense     1,513       1,274       2,038       841       2,060       4,825       5,660  
    Net income   $ 5,720     $ 4,987     $ 7,050     $ 3,802     $ 7,648     $ 17,757     $ 21,198  
                                 
    Basic and diluted earnings per share   $ 1.19     $ 1.05     $ 1.48     $ 0.80     $ 1.61     $ 3.72     $ 4.48  
    Average basic and diluted shares outstanding     4,773       4,770       4,764       4,743       4,736       4,769       4,729  
                                 
    PERFORMANCE RATIOS                            
    Return on average assets     0.83 %     0.73 %     1.04 %     0.56 %     1.14 %     0.87 %     1.07 %
    Return on average equity     10.81 %     10.27 %     14.48 %     8.63 %     16.89 %     11.82 %     15.93 %
    Return on average tangible equity (a)     12.07 %     11.56 %     16.29 %     9.86 %     19.22 %     13.27 %     18.15 %
    Efficiency ratio (unadjusted) (e)     67.92 %     69.43 %     70.32 %     70.79 %     60.67 %     69.21 %     63.02 %
    Efficiency ratio (adjusted) (a)     67.69 %     69.19 %     70.07 %     70.42 %     66.55 %     68.97 %     64.83 %
    Non-interest expense to average assets     2.39 %     2.38 %     2.47 %     2.48 %     2.33 %     2.41 %     2.39 %
    Loans to deposits     82.78 %     83.26 %     80.77 %     81.20 %     78.05 %     82.78 %     78.05 %
                                 
    YIELDS / RATES – Fully Taxable Equivalent                            
    Yield on loans     5.65 %     5.52 %     5.51 %     5.31 %     5.21 %     5.56 %     5.07 %
    Yield on investments     2.21 %     2.27 %     2.35 %     2.24 %     2.22 %     2.28 %     2.21 %
    Yield on interest-earning assets     4.78 %     4.69 %     4.70 %     4.50 %     4.40 %     4.72 %     4.27 %
    Cost of interest-bearing deposits     2.88 %     2.86 %     2.75 %     2.59 %     2.44 %     2.83 %     1.94 %
    Cost of borrowings     5.08 %     5.04 %     5.15 %     5.52 %     5.25 %     5.09 %     5.04 %
    Cost of interest-bearing liabilities     2.97 %     2.94 %     2.85 %     2.68 %     2.47 %     2.92 %     2.03 %
    Interest rate spread     1.81 %     1.75 %     1.85 %     1.82 %     1.93 %     1.80 %     2.24 %
    Net interest margin, fully taxable equivalent     2.72 %     2.66 %     2.73 %     2.69 %     2.73 %     2.70 %     2.91 %
                                 
    CAPITAL                            
    Total equity to total assets at end of period     7.95 %     7.30 %     7.08 %     7.20 %     6.28 %     7.95 %     6.28 %
    Tangible equity to tangible assets at end of period (a)     7.22 %     6.56 %     6.34 %     6.45 %     5.52 %     7.22 %     5.52 %
    Book value per share   $ 46.22     $ 42.17     $ 41.34     $ 41.07     $ 35.90     $ 46.22     $ 35.90  
    Tangible book value per share (a)     41.65       37.59       36.77       36.48       31.29       41.65       31.29  
    Period-end market value per share     48.02       48.00       42.48       49.80       39.61       48.02       39.61  
    Dividends declared per share     0.31       0.31       0.31       0.31       0.31       0.93       0.93  
                                 
    AVERAGE BALANCES                            
    Loans and loans held for sale (b)   $ 2,020,280     $ 2,009,823     $ 1,989,185     $ 1,956,022     $ 1,909,100     $ 2,006,479     $ 1,879,765  
    Interest-earning assets     2,699,968       2,699,402       2,681,059       2,654,638       2,627,012       2,693,499       2,609,999  
    Total assets     2,751,392       2,740,967       2,724,391       2,688,536       2,664,570       2,738,962       2,650,908  
    Deposits     2,410,735       2,419,169       2,402,215       2,397,663       2,410,931       2,410,706       2,371,021  
    Total equity     210,421       195,375       195,860       174,868       179,700       200,588       177,969  
    Tangible equity (a)     188,597       173,551       174,036       153,044       157,876       178,764       156,145  
                                 
    ASSET QUALITY                            
    Net charge-offs   $ 79     $ 306     $ 182     $ 171     $ 356     $ 566     $ 771  
    Non-performing loans (c)     10,545       8,195       7,835       10,411       6,826       10,545       6,826  
    Non-performing assets (d)     11,134       8,872       8,394       10,737       7,055       11,134       7,055  
    Allowance for credit losses     21,441       21,031       20,471       22,517       20,252       21,441       20,252  
    Annualized net charge-offs to average loans     0.02 %     0.06 %     0.04 %     0.03 %     0.07 %     0.04 %     0.05 %
    Non-performing loans to total loans     0.52 %     0.41 %     0.39 %     0.53 %     0.35 %     0.52 %     0.35 %
    Non-performing assets to total assets     0.40 %     0.32 %     0.30 %     0.40 %     0.26 %     0.40 %     0.26 %
    Allowance for credit losses to total loans     1.06 %     1.05 %     1.02 %     1.14 %     1.05 %     1.06 %     1.05 %
    Allowance for credit losses to non-performing loans     203.33 %     256.63 %     261.28 %     216.28 %     296.69 %     203.33 %     296.69 %
                                 
    (a) See the GAAP to Non-GAAP reconciliations.
    (b) Loans and loans held for sale do not reflect the allowance for credit losses.
    (c) Non-performing loans include non-accrual loans only.
    (d) Non-performing assets include non-performing loans plus other real estate owned and repossessed vehicles.
    (e) Efficiency ratio (unadjusted) is non-interest expense divided by the total of net interest income plus non-interest income.
                                 
    Chemung Financial Corporation                                  
    Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited)
      Three Months Ended
    September 30, 2024
      Three Months Ended
    September 30, 2023
      Three Months Ended
    September 30, 2024 vs. 2023
    (in thousands) Average
    Balance
      Interest   Yield /
    Rate
      Average
    Balance
      Interest   Yield /
    Rate
      Total
    Change
      Due to
    Volume
      Due to
    Rate
                                       
    Interest-earning assets:                                  
    Commercial loans $ 1,453,418     $ 21,854     5.98 %   $ 1,319,110     $ 18,672     5.62 %   $ 3,182     $ 1,953     $ 1,229  
    Mortgage loans   273,374       2,713     3.97 %     282,578       2,572     3.61 %     141       (92 )     233  
    Consumer loans   293,488       4,102     5.56 %     307,412       3,843     4.96 %     259       (183 )     442  
    Taxable securities   605,631       3,063     2.01 %     663,240       3,540     2.12 %     (477 )     (299 )     (178 )
    Tax-exempt securities   38,537       272     2.81 %     40,380       288     2.83 %     (16 )     (14 )     (2 )
    Interest-earning deposits   35,520       441     4.94 %     14,292       187     5.19 %     254       263       (9 )
    Total interest-earning assets   2,699,968       32,445     4.78 %     2,627,012       29,102     4.40 %     3,343       1,628       1,715  
                                       
    Non interest-earning assets:                                  
    Cash and due from banks   25,086               26,272                      
    Other assets   47,571               31,496                      
    Allowance for credit losses (3)   (21,233 )             (20,210 )                    
    Total assets $ 2,751,392             $ 2,664,570                      
                                       
    Interest-bearing liabilities:                                  
    Interest-bearing checking $ 311,406     $ 1,445     1.85 %   $ 281,106     $ 963     1.36 %   $ 482     $ 111     $ 371  
    Savings and money market   864,541       4,607     2.12 %     890,109       3,945     1.76 %     662       (117 )     779  
    Time deposits   554,605       6,056     4.34 %     383,786       3,269     3.38 %     2,787       1,701       1,086  
    Brokered deposits   65,913       897     5.41 %     189,628       2,543     5.32 %     (1,646 )     (1,688 )     42  
    FHLBNY overnight advances   541       7     5.06 %     17,879       249     5.53 %     (242 )     (223 )     (19 )
    FRB advances and other debt   75,305       962     5.08 %     3,144       29     3.66 %     933       918       15  
    Total interest-bearing liabilities   1,872,311       13,974     2.97 %     1,765,652       10,998     2.47 %     2,976       702       2,274  
                                       
    Non interest-bearing liabilities:                                  
    Demand deposits   614,270               666,302                      
    Other liabilities   54,390               52,916                      
    Total liabilities   2,540,971               2,484,870                      
    Shareholders’ equity   210,421               179,700                      
    Total liabilities and shareholders’ equity $ 2,751,392             $ 2,664,570                      
                                       
    Fully taxable equivalent net interest income       18,471               18,104         $ 367     $ 926     $ (559 )
    Net interest rate spread (1)         1.81 %           1.93 %            
    Net interest margin, fully taxable equivalent (2)         2.72 %           2.73 %            
    Taxable equivalent adjustment       (83 )             (87 )                
    Net interest income     $ 18,388             $ 18,017                  
                                       
    (1) Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
    (2) Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.
    (3) The Corporation implemented CECL as of January 1, 2023.
                                       
    Chemung Financial Corporation
    Average Consolidated Balance Sheets & Net Interest Income Analysis and Rate/Volume Analysis of Net Interest Income (Unaudited)
      Nine Months Ended
    September 30, 2024
      Nine Months Ended
    September 30, 2023
      Nine Months Ended
    September 30, 2024 vs. 2023
    (in thousands) Average
    Balance
      Interest   Yield/
    Rate
      Average
    Balance
      Interest   Yield /
    Rate
      Total
    Change

      Due to
    Volume
      Due to
    Rate
                                                     
    Interest earning assets:                                                
    Commercial loans $ 1,433,224     $ 63,501     5.92 %   $ 1,289,638     $ 53,047     5.50 %   $ 10,454     $ 6,201     $ 4,253  
    Mortgage loans   274,834       7,879     3.82 %     284,351       7,553     3.55 %     326       (253 )     579  
    Consumer loans   298,421       12,114     5.42 %     305,776       10,673     4.67 %     1,441       (261 )     1,702  
    Taxable securities   619,657       9,877     2.13 %     679,330       10,758     2.12 %     (881 )     (933 )     52  
    Tax-exempt securities   39,453       830     2.81 %     40,562       887     2.92 %     (57 )     (24 )     (33 )
    Interest-earning deposits   27,910       1,014     4.85 %     10,342       400     5.17 %     614       641       (27 )
    Total interest-earning assets   2,693,499       95,215     4.72 %     2,609,999       83,318     4.27 %     11,897       5,371       6,526  
                                                       
    Non interest-earning assets:                                                  
    Cash and due from banks   25,131                 25,512                      
    Other assets   41,807                 35,547                      
    Allowance for credit losses (3)   (21,475 )               (20,150 )                    
    Total assets $ 2,738,962               $ 2,650,908                      
                                         
    Interest-bearing liabilities:                                                                  
    Interest-bearing checking $ 308,318     $ 4,170     1.81 %   $ 286,220     $ 1,959     0.92 %   $ 2,211     $ 164     $ 2,047  
    Savings and money market   861,382       13,190     2.05 %     899,871       8,645     1.28 %     4,545       (389 )     4,934  
    Time deposits   521,997       16,603     4.25 %     350,846       8,041     3.06 %     8,562       4,764       3,798  
    Brokered deposits   96,056       3,898     5.42 %     153,774       5,932     5.16 %     (2,034 )     (2,322 )     288  
    FHLBNY overnight advances   15,359       646     5.53 %     47,321       1,819     5.14 %     (1,173 )     (1,304 )     131  
    FRB advances and other debt   59,584       2,222     4.98 %     3,212       86     3.58 %     2,136       2,089       47  
    Total interest-bearing liabilities   1,862,696       40,729     2.92 %     1,741,244       26,482     2.03 %     14,247       3,002       11,245  
                                         
    Non interest-bearing liabilities:                                            
    Demand deposits   622,953                 680,310                      
    Other liabilities   52,725                 51,385                      
    Total liabilities   2,538,374                 2,472,939                      
    Shareholders’ equity   200,588                 177,969                      
    Total liabilities and shareholders’ equity $ 2,738,962               $ 2,650,908                      
                                                               
    Fully taxable equivalent net interest income       54,486                 56,836           $ (2,350 )   $ 2,369     $ (4,719 )
    Net interest rate spread (1)         1.80 %           2.24 %          
    Net interest margin, fully taxable equivalent (2)             2.70 %               2.91 %          
    Taxable equivalent adjustment       (248 )               (277 )                
    Net interest income     $ 54,238               $ 56,559                  
     
    (1)  Net interest rate spread is the difference in the average yield on interest-earning assets less the average rate on interest-bearing liabilities.
    (2)  Net interest margin is the ratio of fully taxable equivalent net interest income divided by average interest-earning assets.
    (3)  The Corporation implemented CECL as of January 1, 2023.
     

    Chemung Financial Corporation

    GAAP to Non-GAAP Reconciliations (Unaudited)

    The Corporation prepares its Consolidated Financial Statements in accordance with GAAP. See the Corporation’s unaudited consolidated balance sheets and statements of income contained within this press release. That presentation provides the reader with an understanding of the Corporation’s results that can be tracked consistently from period-to-period and enables a comparison of the Corporation’s performance with other companies’ GAAP financial statements.

    In addition to analyzing the Corporation’s results on a reported basis, management uses certain non-GAAP financial measures, because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the Corporation and, therefore, facilitate a comparison of the Corporation with the performance of other companies. Non- GAAP financial measures used by the Corporation may not be comparable to similarly named non-GAAP financial measures used by other companies.

    The SEC has adopted Regulation G, which applies to all public disclosures, including earnings releases, made by registered companies that contain “non-GAAP financial measures.” Under Regulation G, companies making public disclosures containing non- GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure and a statement of the Corporation’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures. The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP. When these exempted measures are included in public disclosures, supplemental information is not required. The following measures used in this Report, which are commonly utilized by financial institutions, have not been specifically exempted by the SEC and may constitute “non- GAAP financial measures” within the meaning of the SEC’s rules, although we are unable to state with certainty that the SEC would so regard them.

    Fully Taxable Equivalent Net Interest Income and Net Interest Margin

    Net interest income is commonly presented on a tax-equivalent basis. That is, to the extent that some component of the institution’s net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total. This adjustment is considered helpful in comparing one financial institution’s net interest income to that of other institutions or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax- exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations. Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest-earning assets. For purposes of this measure as well, fully taxable equivalent net interest income is generally used by financial institutions, as opposed to actual net interest income, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution’s performance over time. The Corporation follows these practices. 

                                 
                            As of or for the
        As of or for the Three Months Ended   Nine Months Ended
        Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,   Sept. 30,   Sept. 30,
    (in thousands, except ratio data)     2024       2024       2024       2023       2023       2024       2023  
    NET INTEREST MARGIN – FULLY TAXABLE EQUIVALENT                            
    Net interest income (GAAP)   $ 18,388     $ 17,761     $ 18,089     $ 17,898     $ 18,017     $ 54,238     $ 56,559  
    Fully taxable equivalent adjustment     83       81       84       87       87       248       277  
    Fully taxable equivalent net interest income (non-GAAP)   $ 18,471     $ 17,842     $ 18,173     $ 17,985     $ 18,104     $ 54,486     $ 56,836  
                                 
    Average interest-earning assets (GAAP)   $ 2,699,968     $ 2,699,402     $ 2,681,059     $ 2,654,638     $ 2,627,012     $ 2,693,499     $ 2,609,999  
                                 
    Net interest margin – fully taxable equivalent (non-GAAP)     2.72 %     2.66 %     2.73 %     2.69 %     2.73 %     2.70 %     2.91 %
                                 

    Efficiency Ratio

    The unadjusted efficiency ratio is calculated as non-interest expense divided by total revenue (net interest income and non-interest income). The adjusted efficiency ratio is a non-GAAP financial measure which represents the Corporation’s ability to turn resources into revenue and is calculated as non-interest expense divided by total revenue (fully taxable equivalent net interest income and non- interest income), adjusted for one-time occurrences and amortization. This measure is meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s productivity measured by the amount of revenue generated for each dollar spent.

                                 
                            As of or for the
        As of or for the Three Months Ended   Nine Months Ended
        Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,   Sept. 30,   Sept. 30,
    (in thousands, except ratio data)     2024       2024       2024       2023       2023       2024       2023  
    EFFICIENCY RATIO                            
    Net interest income (GAAP)   $ 18,388     $ 17,761     $ 18,089     $ 17,898     $ 18,017     $ 54,238     $ 56,559  
    Fully taxable equivalent adjustment     83       81       84       87       87       248       277  
    Fully taxable equivalent net interest income (non-GAAP)   $ 18,471     $ 17,842     $ 18,173     $ 17,985     $ 18,104     $ 54,486     $ 56,836  
                                 
    Non-interest income (GAAP)   $ 5,919     $ 5,598     $ 5,657     $ 5,871     $ 7,808     $ 17,174     $ 18,678  
    Less: net (gains) losses on security transactions     —       —       —       39       —       —       —  
    Less: recognition of employee retention tax credit     —       —       —       —       (2,370 )     —       (2,370 )
    Adjusted non-interest income (non-GAAP)   $ 5,919     $ 5,598     $ 5,657     $ 5,910     $ 5,438     $ 17,174     $ 16,308  
                                 
    Non-interest expense (GAAP)   $ 16,510     $ 16,219     $ 16,698     $ 16,826     $ 15,668     $ 49,427     $ 47,417  
                                 
    Efficiency ratio (unadjusted)     67.92 %     69.43 %     70.32 %     70.79 %     60.67 %     69.21 %     63.02 %
    Efficiency ratio (adjusted)     67.69 %     69.19 %     70.07 %     70.42 %     66.55 %     68.97 %     64.83 %
                                 

    Tangible Equity and Tangible Assets (Period-End)

    Tangible equity, tangible assets, and tangible book value per share are each non-GAAP financial measures. Tangible equity represents the Corporation’s stockholders’ equity, less goodwill and intangible assets. Tangible assets represents the Corporation’s total assets, less goodwill and other intangible assets. Tangible book value per share represents the Corporation’s tangible equity divided by common shares at period-end. These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s use of equity.

                                 
                            As of or for the
        As of or for the Three Months Ended   Nine Months Ended
        Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,   Sept. 30,   Sept. 30,
    (in thousands, except per share and ratio data)     2024       2024       2024       2023       2023       2024       2023  
    TANGIBLE EQUITY AND TANGIBLE ASSETS                            
    (PERIOD END)                            
    Total shareholders’ equity (GAAP)   $ 220,654     $ 201,222     $ 197,128     $ 195,241     $ 170,064     $ 220,654     $ 170,064  
    Less: intangible assets     (21,824 )     (21,824 )     (21,824 )     (21,824 )     (21,824 )     (21,824 )     (21,824 )
    Tangible equity (non-GAAP)   $ 198,830     $ 179,398     $ 175,304     $ 173,417     $ 148,240     $ 198,830     $ 148,240  
                                 
    Total assets (GAAP)   $ 2,774,215     $ 2,755,813     $ 2,784,890     $ 2,710,529     $ 2,707,834     $ 2,774,215     $ 2,707,834  
    Less: intangible assets     (21,824 )     (21,824 )     (21,824 )     (21,824 )     (21,824 )     (21,824 )     (21,824 )
    Tangible assets (non-GAAP)   $ 2,752,391     $ 2,733,989     $ 2,763,066     $ 2,688,705     $ 2,686,010     $ 2,752,391     $ 2,686,010  
                                 
    Total equity to total assets at end of period (GAAP)     7.95 %     7.30 %     7.08 %     7.20 %     6.28 %     7.95 %     6.28 %
    Book value per share (GAAP)   $ 46.22     $ 42.17     $ 41.34     $ 41.07     $ 35.90     $ 46.22     $ 35.90  
                                 
    Tangible equity to tangible assets at end of period (non-GAAP)     7.22 %     6.56 %     6.34 %     6.45 %     5.52 %     7.22 %     5.52 %
    Tangible book value per share (non-GAAP)   $ 41.65     $ 37.59     $ 36.77     $ 36.48     $ 31.29     $ 41.65     $ 31.29  
                                 

     Tangible Equity (Average)

    Average tangible equity and return on average tangible equity are each non-GAAP financial measures. Average tangible equity represents the Corporation’s average stockholders’ equity, less average goodwill and intangible assets for the period. Return on average tangible equity measures the Corporation’s earnings as a percentage of average tangible equity. These measures are meaningful to the Corporation, as well as investors and analysts, in assessing the Corporation’s use of equity. 

                                 
                            As of or for the
        As of or for the Three Months Ended   Nine Months Ended
        Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,   Sept. 30,   Sept. 30,
    (in thousands, except ratio data)     2024       2024       2024       2023       2023       2024       2023  
    TANGIBLE EQUITY (AVERAGE)                            
    Total average shareholders’ equity (GAAP)   $ 210,421     $ 195,375     $ 195,860     $ 174,868     $ 179,700     $ 200,588     $ 177,969  
    Less: average intangible assets     (21,824 )     (21,824 )     (21,824 )     (21,824 )     (21,824 )     (21,824 )     (21,824 )
    Average tangible equity (non-GAAP)   $ 188,597     $ 173,551     $ 174,036     $ 153,044     $ 157,876     $ 178,764     $ 156,145  
                                 
    Return on average equity (GAAP)     10.81 %     10.27 %     14.48 %     8.63 %     16.89 %     11.82 %     15.93 %
    Return on average tangible equity (non-GAAP)     12.07 %     11.56 %     16.29 %     9.86 %     19.22 %     13.27 %     18.15 %
                                 

    In addition to disclosures of certain GAAP financial measures, including net income, EPS, ROA, and ROE, we may also provide comparative disclosures that adjust these GAAP financial measures for a particular period by removing from the calculation thereof the impact of certain transactions or other material items of income or expense occurring during the period, including certain nonrecurring items. The Corporation believes that the resulting non-GAAP financial measures may improve an understanding of its results of operations by separating out any such transactions or items that may have had a disproportionate positive or negative impact on the Corporation’s financial results during the particular period in question. In the Corporation’s presentation of any such non-GAAP (adjusted) financial measures not specifically discussed in the preceding paragraphs, the Corporation supplies the supplemental financial information and explanations required under Regulation G.

                                 
                            As of or for the
        As of or for the Three Months Ended   Nine Months Ended
        Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,   Sept. 30,   Sept. 30,
    (in thousands, except per share and ratio data)     2024       2024       2024       2023       2023       2024       2023  
    NON-GAAP NET INCOME                            
    Reported net income (GAAP)   $ 5,720     $ 4,987     $ 7,050     $ 3,802     $ 7,648     $ 17,757     $ 21,198  
    Net (gains) losses on security transactions (net of tax)     —       —       —       29       —       —       —  
    Recognition of employee retention tax credit (net of tax)     —       —       —       —       (1,873 )     —       (1,873 )
    Net income (non-GAAP)   $ 5,720     $ 4,987     $ 7,050     $ 3,831     $ 5,775     $ 17,757     $ 19,325  
                                 
    Average basic and diluted shares outstanding     4,773       4,770       4,764       4,743       4,736       4,769       4,729  
                                 
    Reported basic and diluted earnings per share (GAAP)   $ 1.19     $ 1.05     $ 1.48     $ 0.80     $ 1.61     $ 3.72     $ 4.48  
    Reported return on average assets (GAAP)     0.83 %     0.73 %     1.04 %     0.56 %     1.14 %     0.87 %     1.07 %
    Reported return on average equity (GAAP)     10.81 %     10.27 %     14.48 %     8.63 %     16.89 %     11.82 %     15.93 %
                                 
    Basic and diluted earnings per share (non-GAAP)   $ 1.19     $ 1.05     $ 1.48     $ 0.81     $ 1.21     $ 3.72     $ 4.08  
    Return on average assets (non-GAAP)     0.83 %     0.73 %     1.04 %     0.57 %     0.86 %     0.87 %     0.97 %
    Return on average equity (non-GAAP)     10.81 %     10.27 %     14.48 %     8.69 %     12.75 %     11.82 %     14.52 %
                                 

    Category: Financial

    Source: Chemung Financial Corp

    For further information contact:
    Dale M. McKim, III, EVP and CFO
    dmckim@chemungcanal.com
    Phone: 607-737-3714

    The MIL Network –

    January 24, 2025
  • MIL-OSI: Orrstown Financial Services, Inc. Reports Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    • Orrstown Financial Services, Inc. (“Orrstown” or the “Company”) closed the merger of equals transaction with Codorus Valley Bancorp, Inc. (“Codorus”) on July 1, 2024, creating a premier Pennsylvania and Maryland community bank; as a result, the Company’s results for the three months ended September 30, 2024 reflect the combined operating results of the combined companies;
    • Codorus contributed, after fair value purchase accounting adjustments, approximately $2.2 billion in total assets, $1.6 billion in loans, and $1.9 billion in deposits at July 1, 2024;
    • Net loss of $7.9 million, or $0.41 per diluted share, for the three months ended September 30, 2024 compared to net income of $7.7 million, or $0.73 per diluted share, for the three months ended June 30, 2024, reflecting the impact of $17.0 million in expenses related to the merger, $15.5 million of provision for credit losses on non-purchase credit deteriorated (“PCD”) loans and $4.8 million for the previously announced executive retirement, net of taxes, collectively the “non-recurring charges”;
    • Excluding the impact of the non-recurring charges, net income and diluted earnings per share, respectively, were $21.4 million(1) and $1.11(1) for the third quarter of 2024 compared to net income and diluted earnings per share of $8.7 million(1) and $0.83(1), respectively, as adjusted for the impact of $1.1 million in merger-related expenses, net of taxes, recorded for the second quarter of 2024;
    • Net interest margin, on a tax equivalent basis, was 4.14% in the third quarter of 2024 compared to 3.54% in the second quarter of 2024; the net accretion impact of purchase accounting marks on loans, deposits and borrowings was $5.8 million of net interest income, which represents 52 basis points of net interest margin;
    • Noninterest income increased by $5.1 million to $12.4 million in the three months ended September 30, 2024 compared to $7.2 million in the three months ended June 30, 2024; continued strength in wealth management and swap fee generation by commercial teams are driving fee income growth;
    • Return on average assets for the three months ended September 30, 2024 was (0.57)% compared to 0.97% for the three months ended June 30, 2024; excluding the non-recurring charges, return on average assets was 1.55%(1) for the three months ended September 30, 2024 compared to 1.09%(1) for the three months ended June 30, 2024, excluding merger-related expenses;
    • Return on average equity for the three months ended September 30, 2024 was (5.85)% compared to 11.41% for the three months ended June 30, 2024; excluding the non-recurring charges, return on average equity was 15.85%(1) for the three months ended September 30, 2024 compared to 12.88%(1) for the three months ended June 30, 2024, excluding merger related expenses;
    • The provision for credit losses was $13.7 million for the three months ended September 30, 2024 compared to $812 thousand for the three months ended June 30, 2024; the provision for credit losses on non-PCD loans for the three months ended September 30, 2024 was $15.5 million; excluding the impact of the merger, the provision for credit losses for the three months ended September 30, 2024 was a reversal of $1.8 million;
    • At September 30, 2024, nonaccrual loans totaled $26.9 million, an increase of $18.5 million from $8.4 million at June 30, 2024; non-accrual loans acquired from Codorus totaled $12.8 million;
    • Tangible book value per common share(1) decreased to $21.12 per share at September 30, 2024 compared to $24.08 per share at June 30, 2024; this decrease was primarily due to the impact of loan marks associated with the merger and the net loss incurred for the third quarter of 2024;
    • The Board of Directors declared a cash dividend of $0.23 per common share, payable November 12, 2024, to shareholders of record as of November 5, 2024.

    (1) Non-GAAP measure. See Appendix A for additional information.

    HARRISBURG, Pa., Oct. 22, 2024 (GLOBE NEWSWIRE) — Orrstown Financial Services, Inc. (NASDAQ: ORRF), the parent company of Orrstown Bank (the “Bank”), announced earnings for the three months ended September 30, 2024. Net loss totaled $7.9 million for the three months ended September 30, 2024, compared to net income of $7.7 million for the three months ended June 30, 2024 and $9.0 million for the three months ended September 30, 2023. Diluted loss per share was $0.41 for the three months ended September 30, 2024, compared to diluted earnings per share of $0.73 for the three months ended June 30, 2024 and $0.87 for the three months ended September 30, 2023. For the third quarter of 2024, excluding the impact from the non-recurring charges, net of taxes, net income and diluted earnings per share were $21.4 million(1) and $1.11(1), respectively. For the second quarter of 2024, excluding the impact of the merger-related expenses, net of taxes, net income and diluted earnings per share were $8.7 million(1) and $0.83(1), respectively.

    “While the results for the quarter reflected the impact of certain non-recurring charges, the core income generated by the business demonstrates the significant opportunities afforded by the additional scale and synergies created by the merger. Our core earnings were strong. We already have taken significant steps to achieve the cost savings announced in December, which we are on target to achieve in full in the defined timeline. Our system conversion in scheduled for completion in November 2024, at which time we expect further expense savings to be realized. We believe we are well on our way to improving our client experience, expanding and deepening our community presence, and enhancing shareholder value,” commented Thomas R. Quinn, Jr., President and Chief Executive Officer.

    DISCUSSION OF RESULTS

    Merger Update

    The Company acquired Codorus and its wholly-owned bank subsidiary PeoplesBank, A Codorus Valley Company on July 1, 2024. The merger and acquisition method of accounting was used to account for the transaction with the Company as the acquirer. The Company recorded the assets and liabilities of Codorus at their respective fair values as of July 1, 2024. The transaction was valued at approximately $234 million and expanded the Bank’s footprint into the York, Pennsylvania market while increasing its market penetration in its existing markets.

    At the time of the merger, Codorus contributed, after fair value purchase accounting adjustments, approximately $2.2 billion in assets, $1.6 billion in loans, $326.7 million in investment securities and $1.9 billion in deposits. The excess of the merger consideration over the fair value of net Codorus assets resulted in goodwill of $51.9 million. The merger led to a 12% dilution in our tangible book value per share which was $21.12 at September 30, 2024 compared to $24.08 at June 30, 2024. The principal cause of the dilution was the impact of the associated purchase accounting marks on loans. The Company’s tangible common equity ratio at September 30, 2024 was 7.5%. The loan fair value adjustments are expected to accrete back through income and capital as the loans mature and should lead to earnings per share and capital accretion moving forward. The fair value of assets and liabilities are subject to refinement for up to one year after the acquisition date as allowable under U.S. Generally Accepted Accounting Principles.

    The Company incurred expenses of $32.5 million and $34.3 million for the three and nine months ended September 30, 2023, respectively, related to merger costs and an increased allowance for credit losses on non-PCD portion of the loans assumed from Codorus.

    The Company’s financial results for any periods ended prior to July 1, 2024 reflect Orrstown’s results only on a standalone basis. As a result of this factor and the below listed adjustments related to the merger, the Company’s financial results for the third quarter of 2024 may not be directly comparable to prior reported periods.

    Balance Sheet

    Loans

    Loans held for investment increased by $1.7 billion from June 30, 2024 to September 30, 2024 as $1.6 billion of loans, net of purchase accounting marks, were assumed in the merger with Codorus.

    Investment Securities

    Investment securities, all of which are classified as available-for-sale, increased by $297.7 million to $826.8 million at September 30, 2024 from $529.1 million at June 30, 2024. Investments with a fair value of $326.7 million were assumed in the merger with Codorus. During the third quarter of 2024, investment securities totaling $162.7 million were sold from the portfolio acquired from Codorus. The portfolio was restructured to align the interest rate risk and credit profile for the combined balance sheet. Most of these proceeds were reinvested in investment securities as purchases of $140.4 million were made in the three months ended September 30, 2024. These purchases were partially offset by paydowns of investment securities of $20.6 million and two calls totaling $5.0 million. The overall duration of the Company’s investment securities portfolio was 4.6 years at September 30, 2024 compared to 4.2 years at June 30, 2024. See Appendix B for a summary of the Bank’s investment securities at September 30, 2024, highlighting their concentrations, credit ratings and credit enhancement levels.

    Deposits

    During the third quarter of 2024, deposits increased by $2.0 billion to approximately $4.7 billion at September 30, 2024 compared to $2.7 billion at June 30, 2024. Deposits of $1.9 billion were assumed in the merger. At September 30, 2024, deposits that are uninsured and not collateralized totaled $692.6 million, or 15% of total deposits compared to $422.3 million, or 16% of total deposits at June 30, 2024. The Bank’s loan-to-deposit ratio decreased slightly to 86% at September 30, 2024 from 87% at June 30, 2024.

    Borrowings

    The Bank actively manages its liquidity position through its various sources of funding to meet the needs of its clients. FHLB advances and other borrowings were $115.4 million at September 30, 2024 and $115.0 million at June 30, 2024. The Bank seeks to maintain sufficient liquidity to ensure client needs can be addressed on a timely basis. The Bank had available alternative funding sources, such as FHLB advances and other wholesale options, of approximately $1.0 billion at September 30, 2024. The Bank’s FHLB borrowing capacity at September 30, 2024 was not inclusive of Codorus, which will be reflected in the fourth quarter.

    The Company assumed $31.0 million aggregate principal amount of subordinated debentures and $10.3 million aggregate amount of trust preferred securities from Codorus in the merger. Fair value adjustments of $5.1 million were recorded on July 1, 2024 which reduced the amounts recorded on the balance sheet.

    Income Statement

    Net Interest Income and Margin

    Net interest income was $51.7 million for the three months ended September 30, 2024 compared to $26.1 million for the three months ended June 30, 2024. The net interest margin, on a tax equivalent basis, increased to 4.14% in the third quarter of 2024 from 3.54% in the second quarter of 2024. The net interest margin was positively impacted by the net accretion impact of purchase accounting marks on loans, deposits and borrowings of $5.8 million, which represents 52 basis points of net interest margin. Funding costs show signs of stabilizing.

    Several components of the net interest margin increased primarily as the result of the assets and liabilities assumed in the merger with Codorus.

    Interest income on loans, on a tax equivalent basis, increased by $35.2 million to $70.8 million for the three months ended September 30, 2024 compared to $35.7 million for the three months ended June 30, 2024.

    Interest income on investment securities, on a tax equivalent basis, was $10.1 million for the third quarter of 2024 compared to $6.1 million in the second quarter of 2024.

    Interest expense, on a tax equivalent basis, increased by $14.1 million to $31.3 million for the three months ended September 30, 2024 compared to $17.2 million for the three months ended June 30, 2024. Average interest-bearing deposits increased by $1.6 billion during the three months ended September 30, 2024 compared to the three months ended June 30, 2024. Average borrowings increased by $35.8 million during the three months ended September 30, 2024 compared to the three months ended June 30, 2024. Interest expense includes $0.4 million and $0 of amortization of purchase accounting marks for the three months ended September 30, 2024 and June 30, 2024, respectively.

    Provision for Credit Losses

    The Company recorded a provision for credit losses of $13.7 million for the three months ended September 30, 2024 compared to $0.8 million for the three months ended June 30, 2024. The allowance for credit losses (“ACL”) on loans increased to $49.6 million at September 30, 2024 from $29.9 million at June 30, 2024. The increase in the ACL was primarily due to the addition of $21.4 million of reserves as a result of the merger. This increase was made up of $15.5 million for non-PCD loans, which was recognized through the provision for credit losses, and $5.9 million for PCD loans which was recognized through retained earnings. The provision for credit losses for the three months ended September 30, 2024 included a provision reversal of $1.8 million due to changes in qualitative factors, a change in the peer group utilized for the calculation and a reduction in the required reserve for unfunded commitments. The ACL to total loans was 1.25% at September 30, 2024 compared to 1.27% at June 30, 2024. Net charge-offs were $0.3 million for the three months ended September 30, 2024 compared to net charge-offs of $0.1 million for the three months ended June 30, 2024.

    As a result of the merger, classified loans increased by $56.8 million to $105.5 million at September 30, 2024 from $48.7 million at June 30, 2024. Non-accrual loans increased by $18.5 million to $26.9 million at September 30, 2024 from $8.4 million at June 30, 2024 due primarily to the assumption of $12.8 million of non-accrual loans from Codorus. Nonaccrual loans to total loans increased to 0.68% at September 30, 2024 compared to 0.36% at June 30, 2024 and decreased from 1.11% at December 31, 2023. Management believes the ACL to be adequate based on current asset quality metrics and economic conditions.

    Noninterest Income

    Noninterest income increased by $5.1 million to $12.4 million in the three months ended September 30, 2024 compared to $7.2 million in the three months ended June 30, 2024 primarily due to the merger.

    Wealth management income increased to $5.0 million in the three months ended September 30, 2024 compared to $3.3 million for the three months ended June 30, 2024. The strong sales efforts, organic growth and stock market performance have collectively driven exceptional wealth results throughout the year. As a result of the merger, assets under management increased to approximately $3.2 billion at September 30, 2024 from $2.1 billion at June 30, 2024.

    During the third quarter of 2024, the Company recorded swap fee income of $0.5 million compared to $0.4 million in the three months ended June 30, 2024. Swap fee generation has been strong, but fluctuates based on market conditions and client demand.

    Noninterest Expenses

    Noninterest expenses increased by $37.7 million to $60.3 million in the three months ended September 30, 2024 from $22.6 million in the three months ended June 30, 2024 primarily due to the merger.

    For the three months ended September 30, 2024, merger-related expenses totaled $17.0 million, an increase of $15.9 million, compared to $1.1 million for the three months ended June 30, 2024. The increase is due to primarily to employee separation costs, vendor contract terminations, and professional fees incurred during the third quarter of 2024. The Company will incur additional merger-related expenses from the operational and technology processes to combine systems and services of both companies, which is expected to be completed in November 2024.

    Salaries and benefits expense increased by $14.0 million to $27.2 million for the three months ended September 30, 2024 compared to $13.2 million for the three months ended June 30, 2024. The three months ended September 30, 2024 includes $4.8 million of expenses associated with the retirement of an executive.

    Intangible asset amortization increased to $2.5 million for the three months ended September 30, 2024 compared to $0.2 million for the three months ended June 30, 2024. This increase is due to the amortization expense recognized on the core deposit intangible of $35.9 million and wealth customer relationship intangible of $10.4 million established on July 1, 2024 from the merger.

    Taxes other than income increased to $0.5 million in the three months ended September 30, 2024 compared to less than $0.1 million in the three months ended June 30, 2024. This increase reflects the tax credits recognized on the contributions during the second quarter of 2024.

    There was $257 thousand of restructuring expenses recognized in the three months ended September 30, 2024 associated with previously announced branch closures.

    Income Taxes

    The Company’s effective tax rate for the third quarter of 2024 was 20.1% compared to 21.2% for the second quarter of 2024. The Company’s effective tax rate for the three months ended September 30, 2024 is less than the 21% federal statutory rate primarily due to tax-exempt income, including interest earned on tax-exempt loans and securities and income from life insurance policies and tax credits partially offset by the disallowed portion of interest expense against earnings in association with the Bank’s tax-exempt investments under the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) and the impact of nondeductible merger-related costs. The Company regularly analyzes its projected taxable income and makes adjustments to the provision for income taxes accordingly.

    Capital

    Shareholders’ equity totaled $516.2 million at September 30, 2024, an increase of $237.8 million from $278.4 million at June 30, 2024. The increase was primarily attributable to the equity assumed in the merger, net of purchase accounting adjustments, partially offset by a net loss of $7.9 million and dividends paid of $4.4 million.

    Tangible book value per share(1) decreased to $21.12 per share at September 30, 2024 from $24.08 per share at June 30, 2024 due to the purchase accounting adjustments associated with the merger.

    The Company’s tangible common equity ratio decreased to 7.5% at September 30, 2024 from 8.1% at June 30, 2024 due to purchase accounting marks and a net loss recorded during the third quarter of 2024. The Company’s total risk-based capital ratio was 12.5% at September 30, 2024 compared to 13.3% at June 30, 2024. The Company’s Tier 1 leverage ratio was 8.0% at September 30, 2024 compared to 8.9% at June 30, 2024. The loan fair value adjustments are expected to accrete back through income and capital as the loans mature and should lead to earnings per share and capital accretion moving forward.

    At September 30, 2024, all four capital ratios applicable to the Company were above regulatory minimum levels to be deemed “well capitalized” under current bank regulatory guidelines. The Company continues to believe that capital is adequate to support the risks inherent in the balance sheet, as well as growth requirements.

    (1) Non-GAAP measure. See Appendix A for additional information.

    Investor Relations Contact:
    Neelesh Kalani
    Executive Vice President, Chief Financial Officer
    Phone (717) 510-7097
    FINANCIAL HIGHLIGHTS (Unaudited)              
                   
                   
      Three Months Ended   Nine Months Ended
      September 30,   September 30,   September 30,   September 30,
    (In thousands)   2024       2023       2024       2023  
                   
    Profitability for the period:              
    Net interest income $ 51,697     $ 26,219     $ 104,681     $ 78,888  
    Provision for credit losses   13,681       136       14,791       1,264  
    Noninterest income   12,386       5,925       26,188       19,161  
    Noninterest expenses   60,299       20,447       105,407       61,451  
    (Loss) income before income tax (benefit) expense   (9,897 )     11,561       10,671       35,334  
    Income tax (benefit) expense   (1,994 )     2,535       2,305       7,314  
    Net (loss) income available to common shareholders $ (7,903 )   $ 9,026     $ 8,366     $ 28,020  
                   
    Financial ratios:              
    Return on average assets (1) (0.57)%     1.18 %     0.28 %     1.25 %
    Return on average assets, adjusted (1) (2) (3)   1.55 %     1.18 %     1.33 %     1.25 %
    Return on average equity (1) (5.85)%     14.42 %     3.10 %     15.51 %
    Return on average equity, adjusted (1) (2) (3)   15.85 %     14.42 %     14.59 %     15.51 %
    Net interest margin (1)   4.14 %     3.73 %     3.88 %     3.83 %
    Efficiency ratio   94.1 %     63.6 %     80.5 %     62.7 %
    Efficiency ratio, adjusted (2) (3)   60.2 %     63.6 %     62.6 %     62.7 %
    (Loss) income per common share:              
    Basic $ (0.41 )   $ 0.87     $ 0.63     $ 2.71  
    Basic, adjusted (2) (3) $ 1.12     $ 0.87     $ 2.96     $ 2.71  
    Diluted $ (0.41 )   $ 0.87     $ 0.62     $ 2.68  
    Diluted, adjusted (2) (3) $ 1.11     $ 0.87     $ 2.93     $ 2.68  
                   
    Average equity to average assets   9.75 %     8.18 %     9.13 %     8.09 %
                   
    (1) Annualized for the three and nine months ended September 30, 2024 and 2023.
    (2) Ratio for the three and nine months ended September 30, 2024 has been adjusted for the non-recurring charges.
    (3) Non-GAAP based financial measure. Please refer to Appendix A – Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein.
    FINANCIAL HIGHLIGHTS (Unaudited)      
    (continued)      
      September 30,   December 31,
    (Dollars in thousands, except per share amounts)   2024       2023  
    At period-end:      
    Total assets $ 5,470,589     $ 3,064,240  
    Loans, net of allowance for credit losses   3,931,807       2,269,611  
    Loans held-for-sale, at fair value   3,561       5,816  
    Securities available for sale, at fair value   826,828       513,519  
    Total deposits   4,650,853       2,558,814  
    FHLB advances and other borrowings and Securities sold under agreements to repurchase   137,310       147,285  
    Subordinated notes and trust preferred debt   68,510       32,093  
    Shareholders’ equity   516,206       265,056  
           
    Credit quality and capital ratios (1):      
    Allowance for credit losses to total loans   1.25 %     1.25 %
    Total nonaccrual loans to total loans   0.68 %     1.11 %
    Nonperforming assets to total assets   0.49 %     0.83 %
    Allowance for credit losses to nonaccrual loans   184 %     112 %
    Total risk-based capital:      
    Orrstown Financial Services, Inc.   12.5 %     13.0 %
    Orrstown Bank   12.3 %     12.8 %
    Tier 1 risk-based capital:      
    Orrstown Financial Services, Inc.   10.0 %     10.8 %
    Orrstown Bank   11.1 %     11.6 %
    Tier 1 common equity risk-based capital:      
    Orrstown Financial Services, Inc.   9.8 %     10.8 %
    Orrstown Bank   11.1 %     11.6 %
    Tier 1 leverage capital:      
    Orrstown Financial Services, Inc.   8.0 %     8.9 %
    Orrstown Bank   8.8 %     9.5 %
           
    Book value per common share $ 26.65     $ 24.98  
           
    (1) Capital ratios are estimated for the current period, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses (“CECL”) to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the CECL standard.
    CONSOLIDATED BALANCE SHEETS (Unaudited)      
           
    (Dollars in thousands, except per share amounts) September 30, 2024   December 31, 2023
    Assets      
    Cash and due from banks $ 65,064     $ 32,586  
    Interest-bearing deposits with banks   171,716       32,575  
    Cash and cash equivalents   236,780       65,161  
    Restricted investments in bank stocks   20,247       11,992  
    Securities available for sale (amortized cost of $845,869 and $549,089 at September 30, 2024 and December 31, 2023, respectively)   826,828       513,519  
    Loans held for sale, at fair value   3,561       5,816  
    Loans   3,981,437       2,298,313  
    Less: Allowance for credit losses   (49,630 )     (28,702 )
    Net loans   3,931,807       2,269,611  
    Premises and equipment, net   49,839       29,393  
    Cash surrender value of life insurance   142,895       73,204  
    Goodwill   70,655       18,724  
    Other intangible assets, net   46,144       2,414  
    Accrued interest receivable   20,562       13,630  
    Deferred tax assets, net   38,517       22,017  
    Other assets   82,754       38,759  
    Total assets $ 5,470,589     $ 3,064,240  
           
    Liabilities      
    Deposits:      
    Noninterest-bearing $ 815,404     $ 430,959  
    Interest-bearing   3,835,449       2,127,855  
    Total deposits   4,650,853       2,558,814  
    Securities sold under agreements to repurchase and federal funds purchased   21,932       9,785  
    FHLB advances and other borrowings   115,378       137,500  
    Subordinated notes and trust preferred debt   68,510       32,093  
    Other liabilities   97,710       60,992  
    Total liabilities   4,954,383       2,799,184  
           
    Shareholders’ Equity      
    Preferred stock, $1.25 par value per share; 500,000 shares authorized; no shares issued or outstanding   —       —  
    Common stock, no par value—$0.05205 stated value per share; 50,000,000 shares authorized; 19,723,217 shares issued and 19,373,354 outstanding at September 30, 2024; 11,204,599 shares issued and 10,612,390 outstanding at December 31, 2023   1,027       583  
    Additional paid—in capital   422,177       189,027  
    Retained earnings   117,311       117,667  
    Accumulated other comprehensive loss   (15,888 )     (28,476 )
    Treasury stock— 349,863 and 592,209 shares, at cost at September 30, 2024 and December 31, 2023, respectively   (8,421 )     (13,745 )
    Total shareholders’ equity   516,206       265,056  
    Total liabilities and shareholders’ equity $ 5,470,589     $ 3,064,240  
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                     
        Three Months Ended   Nine Months Ended
        September 30,   September 30,   September 30,   September 30,
    (Dollars in thousands, except per share amounts)     2024       2023       2024     2023  
    Interest income                
    Loans   $ 70,647     $ 32,738     $ 142,417   $ 92,685  
    Investment securities – taxable     9,005       4,459       18,588     13,244  
    Investment securities – tax-exempt     883       861       2,641     2,591  
    Short-term investments     2,452       633       5,272     1,349  
    Total interest income     82,987       38,691       168,918     109,869  
    Interest expense                
    Deposits     28,603       10,582       57,384     25,392  
    Securities sold under agreements to repurchase and federal funds purchased     96       31       148     84  
    FHLB advances and other borrowings     1,154       1,354       3,780     3,992  
    Subordinated notes and trust preferred debt     1,437       505       2,925     1,513  
    Total interest expense     31,290       12,472       64,237     30,981  
    Net interest income     51,697       26,219       104,681     78,888  
    Provision for credit losses     13,681       136       14,791     1,264  
    Net interest income after provision for credit losses     38,016       26,083       89,890     77,624  
    Noninterest income                
    Service charges     2,360       1,260       4,843     3,668  
    Interchange income     1,779       963       3,651     2,921  
    Swap fee income     505       255       1,079     451  
    Wealth management income     5,037       2,826       11,451     8,395  
    Mortgage banking activities     491       (142 )     1,318     448  
    Investment securities gains (losses)     271       2       254     (8 )
    Other income     1,943       761       3,592     3,286  
    Total noninterest income     12,386       5,925       26,188     19,161  
    Noninterest expenses                
    Salaries and employee benefits     27,190       12,885       54,137     38,135  
    Occupancy, furniture and equipment     4,333       2,460       9,677     7,059  
    Data processing     2,046       1,248       4,548     3,666  
    Advertising and bank promotions     537       332       1,709     1,656  
    FDIC insurance     862       477       1,722     1,500  
    Professional services     1,119       965       2,551     2,203  
    Taxes other than income     503       387       1,046     847  
    Intangible asset amortization     2,464       228       2,904     717  
    Merger-related expenses     16,977       —       18,784     —  
    Restructuring expenses     257       —       257     —  
    Other operating expenses     4,011       1,465       8,072     5,668  
    Total noninterest expenses     60,299       20,447       105,407     61,451  
    (Loss) income before income tax (benefit) expense     (9,897 )     11,561       10,671     35,334  
    Income tax (benefit) expense     (1,994 )     2,535       2,305     7,314  
    Net (loss) income   $ (7,903 )   $ 9,026     $ 8,366   $ 28,020  
    continued
                     
        Three Months Ended   Nine Months Ended
        September 30,   September 30,   September 30,   September 30,
          2024       2023       2024     2023  
    Share information:                
    Basic (loss) earnings per share   $ (0.41 )   $ 0.87     $ 0.63   $ 2.71  
    Diluted (loss) earnings per share   $ (0.41 )   $ 0.87     $ 0.62   $ 2.68  
    Dividends paid per share   $ 0.23     $ 0.20     $ 0.63   $ 0.60  
    Weighted average shares – basic     19,088       10,319       13,298     10,346  
    Weighted average shares – diluted     19,226       10,405       13,441     10,440  
    ANALYSIS OF NET INTEREST INCOME        
    Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)    
      Three Months Ended
      9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
          Taxable-   Taxable-       Taxable-   Taxable-       Taxable-   Taxable-       Taxable-   Taxable-       Taxable-   Taxable-
     (In Average   Equivalent   Equivalent   Average   Equivalent   Equivalent   Average   Equivalent   Equivalent   Average   Equivalent   Equivalent   Average   Equivalent   Equivalent
     thousands) Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate
    Assets                                                          
    Federal funds sold & interest-bearing bank balances $ 184,465   $ 2,452     5.29 %   $ 142,868   $ 1,864     5.25 %   $ 74,523   $ 956     5.16 %   $ 37,873   $ 460     4.82 %   $ 57,778   $ 633     4.35 %
    Investment securities (1)(2)   849,700     10,123     4.77       538,451     6,114     4.54       519,851     5,694     4.39       508,891     5,890     4.63       521,234     5,548     4.26  
    Loans (1)(3)(4)(5)   3,989,259     70,849     7.07       2,324,942     35,690     6.17       2,308,103     36,382     6.34       2,286,678     34,055     5.91       2,256,727     32,878     5.78  
    Total interest-earning assets   5,023,424     83,424     6.61       3,006,261     43,668     5.84       2,902,477     43,032     5.96       2,833,442     40,405     5.67       2,835,739     39,059     5.47  
    Other assets   491,719             204,863             196,295             204,382             200,447        
    Total assets $ 5,515,143           $ 3,211,124           $ 3,098,772           $ 3,037,824           $ 3,036,186        
    Liabilities and Shareholders’ Equity                                                
    Interest-bearing demand deposits $ 2,554,743     16,165     2.52     $ 1,649,753     10,118     2.47     $ 1,570,622     9,192     2.35     $ 1,543,575     8,333     2.14     $ 1,541,728     7,476     1.92  
    Savings deposits   283,337     148     0.21       165,467     140     0.34       170,005     144     0.34       178,351     153     0.34       190,817     164     0.34  
    Time deposits   1,014,628     12,290     4.82       481,721     5,007     4.18       428,443     4,180     3.92       392,085     3,632     3.67       357,194     2,942     3.27  
    Total interest-bearing deposits   3,852,708     28,603     2.95       2,296,941     15,265     2.67       2,169,070     13,516     2.51       2,114,011     12,118     2.27       2,089,739     10,582     2.01  
    Securities sold under agreements to repurchase and federal funds purchased   23,075     96     1.66       13,412     27     0.81       12,010     25     0.85       13,874     30     0.85       15,006     31     0.83  
    FHLB advances and other borrowings   115,388     1,154     3.98       115,000     1,152     4.03       137,505     1,474     4.31       127,843     1,358     4.21       128,131     1,354     4.19  
    Subordinated notes and trust preferred debt   68,399     1,437     8.36       32,118     734     9.19       32,100     754     9.45       32,083     504     6.29       32,066     505     6.29  
    Total interest-bearing liabilities   4,059,570     31,290     3.07       2,457,471     17,178     2.81       2,350,685     15,769     2.70       2,287,811     14,010     2.43       2,264,942     12,472     2.19  
    Noninterest-bearing demand deposits   807,886             423,037             417,469             441,695             468,628        
    Other liabilities   110,017             57,828             62,329             59,876             54,353        
    Total liabilities   4,977,473             2,938,336             2,830,483             2,789,382             2,787,923        
    Shareholders’ equity   537,670             272,788             268,289             248,442             248,263        
    Total $ 5,515,143           $ 3,211,124           $ 3,098,772           $ 3,037,824           $ 3,036,186        
    Taxable-equivalent net interest income / net interest spread       52,134     3.55 %         26,490     3.02 %         27,263     3.26 %         26,395     3.24 %         26,587     3.29 %
    Taxable-equivalent net interest margin         4.14 %           3.54 %           3.77 %           3.71 %           3.73 %
    Taxable-equivalent adjustment       (437 )             (387 )             (382 )             (377 )             (368 )    
    Net interest income     $ 51,697             $ 26,103             $ 26,881             $ 26,018             $ 26,219      
    Ratio of average interest-earning assets to average interest-bearing liabilities         124 %           122 %           123 %           124 %           125 %
                                                               
    NOTES:                                                          
    (1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate.
    (2) Average balance of investment securities is computed at fair value.
    (3) Average balances include nonaccrual loans.
    (4) Interest income on loans includes prepayment and late fees, where applicable.
    (5) Interest income on loans includes interest recovered of $1.6 million from the payoff of a commercial real estate loan on nonaccrual status in the three months ended March 31, 2024.
    ANALYSIS OF NET INTEREST INCOME        
    Average Balances and Interest Rates, Taxable-Equivalent Basis (Unaudited)    
    (continued)                      
      Nine Months Ended
      September 30, 2024   September 30, 2023
          Taxable-   Taxable-       Taxable-   Taxable-
      Average   Equivalent   Equivalent   Average   Equivalent   Equivalent
    (In thousands) Balance   Interest   Rate   Balance   Interest   Rate
    Assets                      
    Federal funds sold & interest-bearing bank balances $ 134,136   $ 5,272     5.25 %   $ 41,861   $ 1,349     4.31 %
    Investment securities (1)(2)   636,781     21,931     4.60       524,365     16,523     4.21  
    Loans (1)(3)(4)(5)   2,878,171     142,921     6.63       2,223,701     93,051     5.59  
    Total interest-earning assets   3,649,088     170,124     6.23       2,789,927     110,923     5.31  
    Other assets   298,334             196,694        
    Total assets $ 3,947,422           $ 2,986,621        
    Liabilities and Shareholders’ Equity                      
    Interest-bearing demand deposits $ 1,927,337     35,475     2.46     $ 1,519,013     18,611     1.64  
    Savings deposits   206,552     432     0.28       204,832     431     0.28  
    Time deposits   642,959     21,477     4.46       320,000     6,350     2.65  
    Total interest-bearing deposits   2,776,848     57,384     2.76       2,043,845     25,392     1.66  
    Securities sold under agreements to repurchase and federal funds purchased   16,191     148     1.22       14,190     84     0.79  
    FHLB advances and other borrowings   122,604     3,780     4.12       122,300     3,992     4.36  
    Subordinated notes and trust preferred debt   44,294     2,925     8.82       32,049     1,513     6.29  
    Total interest-bearing liabilities   2,959,937     64,237     2.90       2,212,384     30,981     1.87  
    Noninterest-bearing demand deposits   550,407             480,006        
    Other liabilities   76,846             52,618        
    Total liabilities   3,587,190             2,745,008        
    Shareholders’ equity   360,232             241,613        
    Total liabilities and shareholders’ equity $ 3,947,422           $ 2,986,621        
    Taxable-equivalent net interest income / net interest spread       105,887     3.33 %         79,942     3.44 %
    Taxable-equivalent net interest margin         3.88 %           3.83 %
    Taxable-equivalent adjustment       (1,206 )             (1,054 )    
    Net interest income     $ 104,681             $ 78,888      
    Ratio of average interest-earning assets to average interest-bearing liabilities         123 %           126 %
                           
    NOTES TO ANALYSIS OF NET INTEREST INCOME:                
    (1) Yields and interest income on tax-exempt assets have been computed on a taxable-equivalent basis assuming a 21% tax rate.
    (2) Average balance of investment securities is computed at fair value.
    (3) Average balances include nonaccrual loans.
    (4) Interest income on loans includes prepayment and late fees, where applicable.
    (5) Interest income on loans includes interest recovered of $1.6 million from the payoff of a commercial real estate loan on nonaccrual status for the nine months ended September 30, 2024.
     
    HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)        
                       
    (In thousands) September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Profitability for the quarter:                  
    Net interest income $ 51,697     $ 26,103     $ 26,881     $ 26,018     $ 26,219  
    Provision for credit losses   13,681       812       298       418       136  
    Noninterest income   12,386       7,172       6,630       6,491       5,925  
    Noninterest expenses   60,299       22,639       22,469       22,392       20,447  
    (Loss) income before income taxes   (9,897 )     9,824       10,744       9,699       11,561  
    Income tax (benefit) expense   (1,994 )     2,086       2,213       2,056       2,535  
    Net (loss) income $ (7,903 )   $ 7,738     $ 8,531     $ 7,643     $ 9,026  
                       
    Financial ratios:                  
    Return on average assets (1) (0.57)%     0.97 %     1.11 %     1.00 %     1.18 %
    Return on average assets, adjusted (1)(2)(3)   1.55 %     1.09 %     1.19 %     1.13 %     1.18 %
    Return on average equity (1) (5.85)%     11.41 %     12.79 %     12.21 %     14.42 %
    Return on average equity, adjusted (1)(2)(3)   15.85 %     12.88 %     13.79 %     13.77 %     14.42 %
    Net interest margin (1)   4.14 %     3.54 %     3.77 %     3.71 %     3.73 %
    Efficiency ratio   94.1 %     68.0 %     67.0 %     68.9 %     63.6 %
    Efficiency ratio, adjusted (2)(3)   60.2 %     64.6 %     65.0 %     65.6 %     63.6 %
                       
    Per share information:                  
    (Loss) income per common share:                  
    Basic $ (0.41 )   $ 0.74     $ 0.82     $ 0.74     $ 0.87  
    Basic, adjusted (2)(3)   1.12       0.84       0.89       0.84       0.87  
    Diluted   (0.41 )     0.73       0.81       0.73       0.87  
    Diluted, adjusted (2)(3)   1.11       0.83       0.88       0.83       0.87  
    Book value   26.65       25.97       25.38       24.98       22.90  
    Tangible book value(3)   21.12       24.08       23.47       23.03       20.94  
    Cash dividends paid   0.23       0.20       0.20       0.20       0.20  
                       
    Average basic shares   19,088       10,393       10,349       10,321       10,319  
    Average diluted shares   19,226       10,553       10,482       10,419       10,405  
    (1) Annualized.
    (2) Ratio has been adjusted for non-recurring expenses for the three months ended September 30, 2024, June 30, 2024, March 31, 2024 and December 31, 2023.
    (3) Non-GAAP based financial measure. Please refer to Appendix A – Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations for a discussion of our use of non-GAAP based financial measures, including tables reconciling GAAP and non-GAAP financial measures appearing herein.
     
    HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)        
    (continued)                  
    (In thousands) September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Noninterest income:                  
    Service charges $ 2,360   $ 1,283     $ 1,200     $ 1,198     $ 1,260  
    Interchange income   1,779     961       911       952       963  
    Swap fee income   505     375       199       588       255  
    Wealth management income   5,037     3,312       3,102       2,945       2,826  
    Mortgage banking activities   491     369       458       143       (142 )
    Other income   1,943     884       765       704       761  
    Investment securities gains (losses)   271     (12 )     (5 )     (39 )     2  
    Total noninterest income $ 12,386   $ 7,172     $ 6,630     $ 6,491     $ 5,925  
                       
    Noninterest expenses:                  
    Salaries and employee benefits $ 27,190   $ 13,195     $ 13,752     $ 12,848     $ 12,885  
    Occupancy, furniture and equipment   4,333     2,705       2,639       2,534       2,460  
    Data processing   2,046     1,237       1,265       1,247       1,248  
    Advertising and bank promotions   537     774       398       501       332  
    FDIC insurance   862     419       441       460       477  
    Professional services   1,119     801       631       702       965  
    Taxes other than income   503     49       494       203       387  
    Intangible asset amortization   2,464     215       225       236       228  
    Merger-related expenses   16,977     1,135       672       1,059       —  
    Restructuring expenses   257     —       —       —       —  
    Other operating expenses   4,011     2,109       1,952       2,602       1,465  
    Total noninterest expenses $ 60,299   $ 22,639     $ 22,469     $ 22,392     $ 20,447  
                       
     
    HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)            
    (continued)                  
    (In thousands) September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Balance Sheet at quarter end:                  
    Cash and cash equivalents $ 236,780     $ 132,509     $ 182,722     $ 65,161     $ 94,939  
    Restricted investments in bank stocks   20,247       11,147       11,453       11,992       12,987  
    Securities available for sale   826,828       529,082       514,909       513,519       495,162  
    Loans held for sale, at fair value   3,561       1,562       535       5,816       6,448  
    Loans:                  
    Commercial real estate:                  
    Owner occupied   622,726       371,301       364,280       373,757       376,350  
    Non-owner occupied   1,164,501       710,477       707,871       694,638       630,514  
    Multi-family   276,296       151,542       147,773       150,675       143,437  
    Non-owner occupied residential   190,786       89,156       91,858       95,040       100,391  
    Commercial and industrial   601,469       374,976       365,524       367,085       374,190  
    Acquisition and development:                  
    1-4 family residential construction   56,383       32,439       22,277       24,516       25,642  
    Commercial and land development   262,317       129,883       118,010       115,249       153,279  
    Municipal   27,960       10,594       10,925       9,812       10,334  
    Total commercial loans   3,202,438       1,870,368       1,828,518       1,830,772       1,814,137  
    Residential mortgage:                  
    First lien   451,195       271,153       270,748       266,239       248,335  
    Home equity – term   6,508       4,633       4,966       5,078       5,223  
    Home equity – lines of credit   303,165       192,736       189,966       186,450       188,736  
    Installment and other loans   18,131       8,713       8,875       9,774       10,405  
    Total loans   3,981,437       2,347,603       2,303,073       2,298,313       2,266,836  
    Allowance for credit losses   (49,630 )     (29,864 )     (29,165 )     (28,702 )     (28,278 )
    Net loans held for investment   3,931,807       2,317,739       2,273,908       2,269,611       2,238,558  
    Goodwill   70,655       18,724       18,724       18,724       18,724  
    Other intangible assets, net   46,144       1,974       2,189       2,414       2,650  
    Total assets   5,470,589       3,198,782       3,183,331       3,064,240       3,054,435  
    Total deposits   4,650,853       2,702,884       2,695,951       2,558,814       2,546,435  
    FHLB advances and other borrowings and and Securities sold under agreements to repurchase   137,310       129,625       127,099       147,285       175,241  
    Subordinated notes and trust preferred debt   68,510       32,128       32,111       32,093       32,076  
    Total shareholders’ equity   516,206       278,376       271,682       265,056       243,080  
    HISTORICAL TRENDS IN QUARTERLY FINANCIAL DATA (Unaudited)            
    (continued)                  
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Capital and credit quality measures(1):                  
    Total risk-based capital:                  
    Orrstown Financial Services, Inc.   12.5 %     13.3 %     13.4 %     13.0 %     13.0 %
    Orrstown Bank   12.3 %     13.1 %     13.1 %     12.8 %     12.5 %
    Tier 1 risk-based capital:                  
    Orrstown Financial Services, Inc.   10.0 %     11.1 %     11.2 %     10.8 %     10.6 %
    Orrstown Bank   11.1 %     12.0 %     11.9 %     11.6 %     11.4 %
    Tier 1 common equity risk-based capital:                  
    Orrstown Financial Services, Inc.   9.8 %     11.1 %     11.2 %     10.8 %     10.6 %
    Orrstown Bank   11.1 %     12.0 %     11.9 %     11.6 %     11.4 %
    Tier 1 leverage capital:                  
    Orrstown Financial Services, Inc.   8.0 %     8.9 %     9.0 %     8.9 %     8.7 %
    Orrstown Bank   8.8 %     9.5 %     9.6 %     9.5 %     9.3 %
                       
    Average equity to average assets   9.75 %     8.50 %     8.66 %     8.18 %     8.18 %
    Allowance for credit losses to total loans   1.25 %     1.27 %     1.27 %     1.25 %     1.25 %
    Total nonaccrual loans to total loans   0.68 %     0.36 %     0.56 %     1.11 %     0.98 %
    Nonperforming assets to total assets   0.49 %     0.26 %     0.40 %     0.83 %     0.73 %
    Allowance for credit losses to nonaccrual loans   184 %     357 %     226 %     112 %     127 %
                       
    Other information:                  
    Net charge-offs (recoveries) $ 269     $ 113     $ (42 )   $ (6 )   $ 241  
    Classified loans   105,465       48,722       48,997       55,030       33,593  
    Nonperforming and other risk assets:                  
    Nonaccrual loans   26,927       8,363       12,886       25,527       22,324  
    Other real estate owned   138       —       —       —       —  
    Total nonperforming assets   27,065       8,363       12,886       25,527       22,324  
    Financial difficulty modifications still accruing   9,497       —       —       9       —  
    Loans past due 90 days or more and still accruing   337       187       99       66       277  
    Total nonperforming and other risk assets $ 36,899     $ 8,550     $ 12,985     $ 25,602     $ 22,601  
    (1) Capital ratios are estimated for the current period, subject to regulatory filings. The Company elected the three-year phase in option for the day-one impact of ASU 2016-13 for current expected credit losses (“CECL”) to regulatory capital. Beginning in 2023, the Company adjusted retained earnings, allowance for credit losses includable in tier 2 capital and the deferred tax assets from temporary differences in risk weighted assets by the permitted percentage of the day-one impact from adopting the new CECL standard.

    Appendix A- Supplemental Reporting of Non-GAAP Measures and GAAP to Non-GAAP Reconciliations

    Management believes providing certain other “non-GAAP” financial information will assist investors in their understanding of the effect on recent financial results from non-recurring charges.

    As a result of acquisitions, the Company has intangible assets consisting of goodwill, core deposit and other intangible assets, which totaled $116.8 million and $21.1 million at September 30, 2024 and December 31, 2023, respectively. In addition, during the three months ended September 30, 2024, June 30, 2024, March 31, 2024 and December 31, 2023, the Company incurred $17.0 million, $1.1 million, $0.7 million and $1.1 million in merger-related expenses, respectively. During the three months ended September 30, 2024, the Company incurred other non-recurring charges totaling $20.2 million.

    Tangible book value per common share and the impact of the non-recurring expenses on net income and associated ratios, as used by the Company in this earnings release, are determined by methods other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). While we believe this information is a useful supplement to GAAP based measures presented in this earnings release, readers are cautioned that this non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results and financial condition as reported under GAAP, nor are such measures necessarily comparable to non-GAAP performance measures that may be presented by other companies. This supplemental presentation should not be construed as an inference that our future results will be unaffected by similar adjustments to be determined in accordance with GAAP.

    The following tables present the computation of each non-GAAP based measure:

    (In thousands)

    Tangible Book Value per Common Share   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Shareholders’ equity (most directly comparable GAAP-based measure)   $ 516,206     $ 278,376     $ 271,682     $ 265,056     $ 243,080  
    Less: Goodwill     70,655       18,724       18,724       18,724       18,724  
    Other intangible assets     46,144       1,974       2,189       2,414       2,650  
    Related tax effect     (9,690 )     (415 )     (460 )     (507 )     (557 )
    Tangible common equity (non-GAAP)   $ 409,097     $ 258,093     $ 251,229     $ 244,425     $ 222,263  
                         
    Common shares outstanding     19,373       10,720       10,705       10,612       10,613  
                         
    Book value per share (most directly comparable GAAP-based measure)   $ 26.65     $ 25.97     $ 25.38     $ 24.98     $ 22.90  
    Intangible assets per share     5.53       1.89       1.91       1.95       1.96  
    Tangible book value per share (non-GAAP)   $ 21.12     $ 24.08     $ 23.47     $ 23.03     $ 20.94  
                         
    (In thousands) Three Months Ended   Nine Months Ended
    Adjusted Ratios for Non-recurring Charges September 30,
    2024
      June 30, 2024   March 31,
    2024
      December 31,
    2023
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Net (loss) income (A) – most directly comparable GAAP-based measure $ (7,903 )   $ 7,738     $ 8,531     $ 8,531     $ 9,026     $ 8,366     $ 28,020  
    Plus: Merger-related expenses (B)   16,977       1,135       672       672       —       18,784       —  
    Plus: Executive retirement expenses (B)   4,758       —       —       —       —       4,758       —  
    Plus: Provision for credit losses on non-PCD loans (B)   15,504       —       —       —       —       15,504       —  
    Less: Related tax effect (C)   (7,915 )     (139 )     (1 )     (1 )     —       (8,056 )     —  
    Adjusted net (loss) income (D=A+B-C) – Non-GAAP $ 21,421     $ 8,734     $ 9,202     $ 9,202     $ 9,026     $ 39,356     $ 28,020  
                               
    Average assets (E) $ 5,515,143     $ 3,211,124     $ 3,098,772     $ 3,098,772     $ 3,036,186     $ 3,947,422     $ 2,986,621  
    Return on average assets (= A / E) – most directly comparable GAAP-based measure (1) (0.57)%     0.97 %     1.11 %     1.11 %     1.18 %     0.28 %     1.25 %
    Return on average assets, adjusted (= D / E) – Non-GAAP (1)   1.55 %     1.09 %     1.19 %     1.19 %     1.18 %     1.33 %     1.25 %
                               
    Average equity (F) $ 537,670     $ 272,788     $ 268,289     $ 268,289     $ 248,263     $ 360,232     $ 241,613  
    Return on average equity (= A / F) – most directly comparable GAAP-based measure (1) (5.85)%     11.41 %     12.79 %     12.79 %     14.42 %     3.10 %     15.51 %
    Return on average equity, adjusted (= D / F) – Non-GAAP (1)   15.85 %     12.88 %     13.79 %     13.79 %     14.42 %     14.59 %     15.51 %
                               
    Weighted average shares – basic (G) – most directly comparable GAAP-based measure   19,088       10,393       10,349       10,349       10,319       13,298       10,346  
    Basic (loss) earnings per share (= A / G) – most directly comparable GAAP-based measure $ (0.41 )   $ 0.74     $ 0.82     $ 0.82     $ 0.87     $ 0.63     $ 2.71  
    Basic earnings per share, adjusted (= D / G) – Non-GAAP $ 1.12     $ 0.84     $ 0.89     $ 0.89     $ 0.87     $ 2.96     $ 2.71  
                               
    Weighted average shares – diluted (H) – most directly comparable GAAP-based measure   19,226       10,553       10,482       10,482       10,405       13,441       10,440  
    Diluted (loss) earnings per share (= A / H) – most directly comparable GAAP-based measure $ (0.41 )   $ 0.73     $ 0.81     $ 0.81     $ 0.87     $ 0.62     $ 2.68  
    Diluted earnings per share, adjusted (= D / H) – Non-GAAP $ 1.11     $ 0.83     $ 0.88     $ 0.88     $ 0.87     $ 2.93     $ 2.68  
                               
    continued
    (1) Annualized                          
      Three Months Ended   Nine Months Ended
      September 30,
    2024
      June 30, 2024   March 31,
    2024
      December 31,
    2023
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Noninterest expense (I) – most directly comparable GAAP-based measure $ 60,299     $ 22,639     $ 22,469     $ 22,469     $ 20,447     $ 105,407     $ 61,451  
    Less: Merger-related expenses (B)   (16,977 )     (1,135 )     (672 )     (672 )     —       (18,784 )     —  
    Less: Executive retirement expenses (B)   (4,758 )     —       —       —       —       (4,758 )     —  
    Adjusted noninterest expense (J = I – B) – Non-GAAP $ 38,564     $ 21,504     $ 21,797     $ 21,797     $ 20,447     $ 81,865     $ 61,451  
                               
    Net interest income (K) $ 51,697     $ 26,103     $ 26,881     $ 26,881     $ 26,219     $ 104,681     $ 78,888  
    Noninterest income (L)   12,386       7,172       6,630       6,630       5,925       26,188       19,161  
    Total operating income (M = K + L) $ 64,083     $ 33,275     $ 33,511     $ 33,511     $ 32,144     $ 130,869     $ 98,049  
                               
    Efficiency ratio (= I / M) – most directly comparable GAAP-based measure   94.1 %     68.0 %     67.0 %     67.0 %     63.6 %     80.5 %     62.7 %
    Efficiency ratio, adjusted (= J / M) – Non-GAAP   60.2 %     64.6 %     65.0 %     65.0 %     63.6 %     62.6 %     62.7 %
                               
                               
                               
    (1) Annualized                          

    Appendix B- Investment Portfolio Concentrations

    The following table summarizes the credit ratings and collateral associated with the Company’s investment security portfolio, excluding equity securities, at September 30, 2024:

    (In thousands)

    Sector Portfolio Mix   Amortized Book   Fair Value   Credit Enhancement   AAA   AA   A   BBB   NR   Collateral / Guarantee Type
    Unsecured ABS — %   $ 3,199   $ 2,975   27 %   — %   — %   — %   — %   100 %   Unsecured Consumer Debt
    Student Loan ABS 1       4,348     4,283   27     —     —     —     —     100     Seasoned Student Loans
    Federal Family Education Loan ABS 10       83,199     82,962   11     7     80     —     13     —     Federal Family Education Loan (1)
    PACE Loan ABS —       2,034     1,813   7     100     —     —     —     —     PACE Loans (2)
    Non-Agency CMBS 2       13,750     14,045   26     —     —     —     —     100      
    Non-Agency RMBS 2       16,749     14,212   16     100     —     —     —     —     Reverse Mortgages (3)
    Municipal – General Obligation 12       99,779     93,395       11     82     7     —     —      
    Municipal – Revenue 14       121,130     112,705       —     82     12     —     6      
    SBA ReRemic (5) —       2,427     2,409       —     100     —     —     —     SBA Guarantee (4)
    Small Business Administration 1       6,632     7,042       —     100     —     —     —     SBA Guarantee (4)
    Agency MBS 18       154,058     154,762       —     100     —     —     —     Residential Mortgages (4)
    Agency CMO 38       316,385     315,677       —     100     —     —     —      
    U.S. Treasury securities 2       20,047     18,373       —     100     —     —     —     U.S. Government Guarantee (4)
    Corporate bonds —       1,932     1,975       —     —     52     48     —      
      100 %   $ 845,669   $ 826,628       4 %   89 %   3 %   1 %   3 %    
                                           
    (1) 97% guaranteed by U.S. government
    (2) PACE acronym represents Property Assessed Clean Energy loans
    (3) Non-agency reverse mortgages with current structural credit enhancements
    (4) Guaranteed by U.S. government or U.S. government agencies
    (5) SBA ReRemic acronym represents Re-Securitization of Real Estate Mortgage Investment Conduits
                                           
    Note: Ratings in table are the lowest of the six rating agencies (Standard & Poor’s, Moody’s, Fitch, Morningstar, DBRS and Kroll Bond Rating Agency). Standard & Poor’s rates U.S. government obligations at AA+.

    About the Company

    With $5.5 billion in assets, Orrstown Financial Services, Inc. and its wholly-owned subsidiary, Orrstown Bank, provide a wide range of consumer and business financial services in Berks, Cumberland, Dauphin, Franklin, Lancaster, Perry, and York Counties, Pennsylvania and Anne Arundel, Baltimore, Harford, Howard, and Washington Counties, Maryland, as well as Baltimore City, Maryland. The Company’s lending area also includes adjacent counties in Pennsylvania and Maryland, as well as Loudon County, Virginia and Berkeley, Jefferson and Morgan Counties, West Virginia. Orrstown Bank is an Equal Housing Lender and its deposits are insured up to the legal maximum by the FDIC. Orrstown Financial Services, Inc.’s common stock is traded on Nasdaq (ORRF). For more information about Orrstown Financial Services, Inc. and Orrstown Bank, visit http://www.orrstown.com.

    Cautionary Note Regarding Forward-Looking Statements

    This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements reflect the current views of the Company’s management with respect to, among other things, future events and the Company’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates, predictions or projections about events or the Company’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond the Company’s control. Accordingly, the Company cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements and there can be no assurances that the Company will achieve the desired level of new business development and new loans, growth in the balance sheet and fee-based revenue lines of business, cost savings initiatives and continued reductions in risk assets or mitigation of losses in the future. Factors which could cause the actual results of the Company’s operations to differ materially from expectations include, but are not limited to: general economic conditions (including inflation and concerns about liquidity) on a national basis or in the local markets in which the Company operates; ineffectiveness of the Company’s strategic growth plan due to changes in current or future market conditions; changes in interest rates; the diversion of management’s attention from ongoing business operations and opportunities; the effects of competition and how it may impact our community banking model, including industry consolidation and development of competing financial products and services; changes in consumer behavior due to changing political, business and economic conditions, or legislative or regulatory initiatives; changes in laws and regulations; changes in credit quality; inability to raise capital, if necessary, under favorable conditions; volatility in the securities markets; the demand for our products and services; deteriorating economic conditions; geopolitical tensions; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters and future pandemics; expenses associated with litigation and legal proceedings; the possibility that the anticipated benefits of the merger with Codorus (the “Merger”) are not realized when expected or at all; the possibility that the Merger may be more expensive to complete than anticipated; the possibility that revenues following the Merger may be lower than expected; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the Merger; the ability to complete the integration of the two companies successfully; the dilution caused by the Company’s issuance of additional shares of its capital stock in connection with the Merger; and other risks and uncertainties, including those detailed in our Annual Report on Form 10-K for the year ended December 31, 2023 under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in subsequent filings made with the Securities and Exchange Commission.

    The foregoing list of factors is not exhaustive. If one or more events related to these or other risks or uncertainties materializes, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from what the Company anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company disclaims 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 the Company to predict those events or how they may affect it. In addition, the Company cannot assess the impact of each factor on its 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 press release 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 the Company or persons acting on the Company’s behalf may issue.

    The review period for subsequent events extends up to and includes the filing date of a public company’s financial statements, when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information presented in this announcement is subject to change. Annualized, pro forma, projected and estimated numbers in this document are used for illustrative purposes only and are not forecasts and may not reflect actual results.

    The MIL Network –

    January 24, 2025
  • MIL-OSI Economics: Dot plots for the Eurosystem? | Speech at Harvard University

    Source: Bundesbank

    Check against delivery.

    1 Introduction

    Ladies and gentlemen,

    it is a great pleasure to be at Harvard again, to meet long time companions like Hans-Helmut Kotz and to exchange ideas with top scientists such as Benjamin Friedman. When I was in this round two years ago, we were dealing with an unprecedented global inflation spike.[1] Fortunately, the worst is behind us, and inflation in the euro area is heading back to the Eurosystem’s target. We have not brought the inflation ship safely back into the 2% harbour, but the port is in sight. Thus, I can focus on another question today.

    Before I do that, let me share an analogy to set the stage for my discussion. Back in the 1970s and 1980s, the field of economics was split into two seemingly incompatible schools of thought: New Keynesian and New Classical. Their proponents were not too polite in their language, calling assumptions “foolishly restrictive” or comparing an opponent to someone attempting to pass himself off as Napoleon Bonaparte.[2] But, over time, ideas from both camps ultimately merged to form a consensus called the New Neoclassical Synthesis, the very foundation of modern macroeconomics.[3] Gregory Mankiw neatly described this story in his essay “The Macroeconomist as Scientist and Engineer”.[4]

    The takeaway from this analogy is that complex issues are rarely black or white. With this in mind, I want to explore whether the conduct of monetary policy in the euro area could be enhanced by offering more detailed and nuanced information regarding its future outlook. More specifically, today I will address the following question: Should the Eurosystem introduce dot plots?

    To explore this, I will first examine current experience with dot plots and other forms of forward guidance in both the United States and the euro area. I will then evaluate the advantages and disadvantages of incorporating dot plots into the Eurosystem’s communication strategy. In this analysis, I will concentrate on the implications for policymakers’ independence, the effectiveness of monetary policy and the management of uncertainty.

    2 The dot plot and other forms of forward guidance

    Let me begin with some basics. Most central banks in advanced economies have a clear mandate to keep prices stable. They do this mainly by setting the policy rate and communicating their decisions in order to manage the expectations of economic agents, including market participants, households and firms. When central banks provide explicit signals about the future path of the policy rate, we call it forward guidance.

    We can classify forward guidance into two ideal types: “Odyssean” and “Delphic”.[5] Odyssean forward guidance means the central bank makes a firm commitment to a future course of action, like promising to keep interest rates at a certain level for a certain time. Like Odysseus, who famously tied himself to the mast of his ship to resist the call of the sirens, central banks are committing to staying on course – whatever the future brings.

    In contrast, Delphic forward guidance is conditional and involves sharing information about the central bank’s economic outlook and policy intentions without making firm commitments. This term comes from the Oracle of Delphi, famous for its prophecies and predictions, which were so ambiguous and open to interpretation that they always seemed to be borne out in hindsight. A prime example of Delphic forward guidance is the policy rate forecasts published by central banks such as Norges Bank and Sweden’s Riksbank.

    A more subtle way of monetary policy communication is through the central bank’s reaction function. A reaction function indicates how the central bank adjusts its policy rate in response to key macroeconomic variables like the inflation rate or economic growth. When economic agents have a clear understanding of this reaction function, communication about the expected development of these macroeconomic variables can also help shape their expectations regarding the future trajectory of the policy rate.

    2.1 The Fed’s dot plot

    To consider if the Eurosystem should introduce dot plots, let me briefly recall what the Fed dot plots are and how market observers view them. Twelve years ago, the Fed began publishing the federal funds rate projections of the Federal Open Market Committee (FOMC) participants. Its intention was to boost transparency and communication with financial markets and the general public. On the other side of the Atlantic, the Eurosystem has, from its inception, held public press conferences and published monetary policy statements, the minutes of its meetings, and the results of its quarterly macroeconomic projections.

    As you are well aware, before the FOMC meeting, FOMC participants share their individual assessment of the appropriate level of the fed funds rate for the end of the current year, the end of the coming two to three years and over the longer run. The longer run projection refers to “each participant’s assessment of the value to which each variable would be expected to converge, over time, under appropriate monetary policy and in the absence of further shocks to the economy.”[6]

    Due to its visual representation in the Summary of Economic Projections (SEP), the combined projections of all FOMC members are known as the dot plot. These dots complement the FOMC participants’ projections for GDP growth, unemployment and inflation. While each FOMC participant submits their funds rate projection together with corresponding projections for macroeconomic variables, these correspondences are not revealed by the SEP. Accordingly, market observers cannot directly link the interest rate projections to the projections of the other macro variables.

    The dot plot was meant to complement the Fed’s communication, not to replace the forward guidance it provided in the monetary policy statement at that time during the press conference. For example, in January 2012, the FOMC statement provided explicit forward guidance on rates, saying that the Committee “[…] anticipates that economic conditions […] are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.”[7] During the accompanying press conference, Chairman Ben Bernanke introduced the dot plot, observing that “[…] eleven participants expect that the appropriate federal funds rate at the end of 2014 will be at or below 1 percent, while six participants anticipate higher rates at that time.”[8]

    Although the Federal Reserve did not introduce the dot plots as an explicit tool for forward guidance, many market analysts began to interpret them as such. When the forward guidance in the statement and the dot plot sent mixed signals, FOMC chairs often downplayed the dot plot’s importance.

    In 2014, Janet Yellen famously stated: “[…] one should not look to the dot plot, so to speak, as the primary way in which the Committee wants to or is speaking about policy […].”[9] Similarly, in 2019, Jerome Powell noted that “[…] the dot plot has, on occasion, been a source of confusion. Until now, forward guidance in the statement has been a main tool for communicating committee intentions and minimizing that confusion.”[10]

    And this is also how Fed watchers now see the dot plot, ranking it as the Fed’s fifth most important communication tool.[11] The top communication tools are the press conference, the Summary of Economic Projections (excluding the dots), the FOMC statement, and speeches by the chair.

    Numerous studies show that the Fed has successfully used monetary policy communication to influence long-term interest rates and other asset prices.[12] And some research suggests that the dot plots significantly and independently influence market interest rates. [13] But there is a fundamental issue about these results: it is very challenging to determine how much each communication channel contributes to the overall effect.

    To identify the causal effect of monetary policy, scholars often define a so-called event window around central banks’ monetary policy meetings. Changes in market interest rates during this event window are then attributed to monetary policy.

    But there is a problem: when the dot plot is released, it is published together with the monetary policy statement. That makes it hard to determine which one caused the interest rate changes observed during the event. And because of this, it is unclear whether those channels actually provide complementary information or are just substitutes.

    2.2 Monetary policy communication at the Eurosystem

    So, what does the Eurosystem’s monetary policy communication look like? The Eurosystem began using explicit forward guidance in the introductory statement to its July 2013 meeting. At that time, inflation in the euro area was low, and the Eurosystem expected underlying price pressures to stay subdued in the medium term. Interest rates were already at the effective zero lower bound.

    To provide further accommodation, the ECB’s Governing Council, which is the counterpart of the FOMC, announced in its July 2013 meeting that it “expects the key ECB interest rates to remain at present or lower levels for an extended period of time.”[14] The Governing Council continued to use variations of this statement for almost a decade. And there is now also ample evidence that the Eurosystem has been successful in implementing its forward guidance.[15]

    With the resurgence of inflation in 2021 and high uncertainty caused by major shocks and structural changes, the Eurosystem shifted to a data-dependent, meeting-by-meeting approach, largely stepping away from explicit forward guidance.

    More specifically, we now base our interest rate decisions on three elements: first, our assessment of the inflation outlook in light of the incoming economic and financial data, second, the dynamics of underlying inflation, and third, the strength of monetary policy transmission. These three elements can be seen as a further specification of our reaction function. However, the Governing Council does not pre-commit to any specific rate path.

    Taken together, apart from the publication of the dot plot, the approaches to monetary policy communication taken by the Federal Reserve System and the Eurosystem are largely comparable. Both institutions regard the monetary policy statement and the press conference as their primary communication tools. And both central banks have recently shifted from explicit forward guidance towards a data-dependent meeting-by-meeting approach.

    But the Eurosystem also continues to provide signals about future policy rates. It simply does it more implicitly. For example, the wording of the monetary policy statement and the answers of the ECB President during press conferences provide insights into future policy rates. As do speeches and interviews given by Governing Council members. Additionally, the Eurosystem influences market expectations through its quarterly staff projections.[16]

    Unlike some other central banks, the Eurosystem uses the interest rate implied by financial market prices on a specific cut-off day as a conditioning assumption for its macroeconomic projections. Specifically, this means that our medium-term inflation forecast aligns with market expectations for a particular policy rate path. Market participants can subsequently compare the exogenous path for the policy rate, as embedded in our macroeconomic projections, with our actual monetary policy decisions, in order to gain insights into our reaction function.

    You could say that the Eurosystem provides Athenian communication. Athena was known as the Goddess of wisdom and as a protector and guide to many Greek heroes. Rather than communicating directly with those she protected, Athena often used indirect guidance. And through her subtle guidance, Athena empowered the heroes she protected to take decisive action and make wise choices.

    3 A dot plot for the Eurosystem?

    Now, let us get to the heart of the matter. Should the Eurosystem introduce dot plots? Although this question can only be answered “yes” or “no”, complex issues are rarely black and white, as mentioned earlier.

    In the following, rather than simply listing the pros and cons of introducing dot plots in the Eurosystem, I will structure my discussion around three themes: First, the impact dot plots could have on the independence of the Eurosystem. Second, the potential for dot plots to improve the effectiveness of our monetary policy communication. And third, the role dot plots could play in capturing projection uncertainty around our baseline forecasts.

    Throughout, I will only consider adding projections for the policy rates to the existing macroeconomic projections by Eurosystem staff. For simplicity, I will not consider whether to also complement our current consensus projections for macroeconomic variables with individual macroeconomic projections.

    3.1 Independence

    Let me begin with the theme of independence. The ECB’s Governing Council consists of the six ECB Executive Board members and the 20 governors of the euro area’s national central banks. Although this setting may resemble that of the Federal Open Market Committee, which includes Federal Reserve Bank Presidents, there is a significant difference.

    The euro area is not composed of regions within a single country but of individual countries within a larger union, each with its own fiscal authority and national laws, as well as considerable differences in economic size and performance. Therefore, within the Governing Council we have a strong interest in finding and communicating a consensus perspective. This is, for example, enshrined in our statute, which states that the proceedings of the meetings of the Governing Council are confidential.

    When we discussed introducing ECB accounts from our Governing Council meetings – comparable to the published minutes of FOMC meetings – about a decade ago, we aimed to balance two things: On the one hand, to clearly articulate the consensus perspective. Yet on the other hand to represent the full spectrum of views in order to help market participants better understand the ECB Governing Council’s decision-making process.[17]

    In the end, the Eurosystem decided to represent the full spectrum of the discussion without naming individuals. Nevertheless, despite the anonymity of the arguments presented, markets and the media alike continue to attempt to discern the identities of the individuals behind them. Given that numerous members of the Governing Council express their views on monetary policy through speeches and interviews, identifying their positions is not a particular challenge.

    If there were anonymous dot plots of Governing Council members, media and the markets alike would probably attempt to match individual members to each dot as well. The primary distinction between speeches and dot plots is that Governing Council members deliver speeches voluntarily. In contrast, dot plots would force all Governing Council members to regularly articulate their perspectives on the future trajectory of interest rates. And this could potentially influence the Governing Council’s independence.

    Once national stakeholders become aware of “their” representative’s views on future interest rates, they may exert pressure on the representative to align with national interests. I am confident that, even if we were to publish dot plots, every member of the Governing Council would continue to act independently and in the best interests of the entire euro area. However, I believe we are well advised not to put ourselves in a situation that might increase pressure on us to act in ways others want us to.

    3.2 Effectiveness of monetary policy communication

    My second theme is whether a dot plot could significantly enhance the Eurosystem’s effectiveness of monetary policy communication. And here I am sceptical. To begin with, there is the previously discussed issue: the dot plot may conflict with the consensus message conveyed in the monetary policy statement. But the main reason for my scepticism is that comparative studies on different methods of monetary policy communication are inconclusive.

    A BIS working paper shows that interest rate projections provide additional information to macroeconomic projections, meaning that they are not redundant.[18] That could be seen as an argument for introducing dot plots. However, while market participants in countries that publish both interest rate projections and macroeconomic projections prefer the former, they might still be able to obtain sufficient information from macroeconomic projections alone.

    Furthermore, research on central bank communication in Norway and Sweden shows that publishing interest rate projections has not improved market understanding of what new macroeconomic information implies for future interest rate.[19] In other words, the publication of interest rate paths did not help market participants better understand the central banks’ reaction functions.

    This finding aligns with research published by the Reserve Bank of New Zealand that shows that announcements with interest rate forecasts and those with only written statements lead to similar market reactions across the yield curve.[20] The authors pointedly conclude that, while central bank communication is important, the exact form it takes is less relevant.

    This result echoes a seminal study by Blinder and co-authors, who concluded back in 2008 that there was no consensus on what constitutes an optimal communication strategy.[21]

    All things considered, I see no compelling evidence that the Eurosystem’s monetary policy communication would be significantly enhanced by the introduction of a dot plot.

    3.3 Projection uncertainty

    Now to the third and final theme – uncertainty. I am quite sure that the Eurosystem has room to improve how we handle projection uncertainty. Currently, the ECB’s Governing Council summarises its view on the uncertainty surrounding economic growth and inflation in the risk assessment section of its monetary policy statement. More specifically, the Eurosystem addresses the uncertainty around its baseline inflation forecast in two ways.[22]

    First, it produces fan charts with symmetric ranges around the point forecast, based on past projection errors. In this setup, past projection errors act as a catch-all proxy for uncertainty. Second, it occasionally publishes risk scenarios, conditional on assumptions different from those in the baseline projection. For instance, during the pandemic, the Eurosystem began using alternative assumptions about the future path of infections and contact restrictions to illustrate macroeconomic uncertainty.

    Could the use of dot plots enhance the communication of inflation forecast uncertainty within the Eurosystem? Given that dot plots offer only an indirect method for conveying uncertainty about the inflation outlook, there may be more effective alternatives.

    One might be to enhance the communication of our existing measures of uncertainty. Another might be to develop new measures, such as scenario and sensitivity analyses, as well as improved fan charts. We must carefully evaluate the pros and cons of each approach.

    Hence, it is quite fitting that the Eurosystem is currently performing an interim strategic review, which includes an analysis of how risk and uncertainty should inform both policy decisions and policy communication. I’m already looking forward to the results.

    4 Conclusion

    Ladies and gentlemen, let me conclude. I began my talk by discussing different schools of thought – New Keynesian and New Classical – and argued that complex issues are rarely black or white. When it comes to central bank communication about the future, there are certainly many promising approaches. And, undoubtedly, dot plots are an intriguing instrument for central bank communication.

    However, given the prevailing evidence, I do not see a compelling case for introducing dot plots for the Eurosystem.

    On the other hand, I firmly believe that we can and should enhance how we account for uncertainty in our macroeconomic projections. I have outlined a few options which the Eurosystem will address in the ongoing strategy review.

    Footnotes:

    1. Nagel, J. (2022), The ECB’s mandate: maintaining price stability in the euro area, speech at the Minda de Gunzburg Center for European Studies, Harvard University.
    2. Mankiw, G. (2006), The Macroeconomist as Scientist and Engineer, Journal of Economic Perspectives, Vol. 20(4), pp. 29-46.
    3. Goodfriend, M. and R. King (1997), The New Neoclassical Synthesis and the Role of Monetary Policy, in: NBER Macroeconomics Annual, Bernanke, B. and J. Rotemberg (eds.), MIT Press, pp. 231-283.
    4. Mankiw, G. (2006), op. cit.
    5. Campbell, J. et al. (2012), Macroeconomic Effects of Federal Reserve Forward Guidance, Brookings Papers on Economic Activity, Vol. 43(1), pp. 1-80. Another distinction is between time-dependent (or calendar-dependent) and state-dependent forward guidance. The former ties monetary policy to a specific time frame, whereas the latter ties future policy actions to specific economic conditions or thresholds. The concepts can overlap and be used in combination.
    6. SEP: Compilation and Summary of Individual Economic Projections, 24-25 January 2012.
    7. FOMC Statement, 25 January 2012.
    8. Bernanke, B. (2012), Transcript of Chairman Bernanke’s Press Conference, 25 January 2012,
    9. Yellen, J. (2014), Transcript of Chair Yellen’s Press Conference, 19 March 2014.
    10. Powell, J. (2019), Monetary Policy: Normalization and the Road Ahead, speech at the SIEPR Economic Summit, Stanford Institute of Economic Policy Research, Stanford, California.
    11. Wessel, D. and S. Boocker (2024), Federal Reserve communication – survey results, Hutchins Center on Fiscal and Monetary Policy at Brookings.
    12. See, for example, Gürkaynak, R. et al. (2005), Do Actions Speak Louder Than Words? The Response of Asset Prices to Monetary Policy Actions and Statements, International Journal of Central Banking, International Journal of Central Banking, Vol. 1(1), pp. 55-93; Wright, J. (2012), What Does Monetary Policy Do to Long‐term Interest Rates at the Zero Lower Bound?, Economic Journal, Vol. 122(564), pp. 447-466; and Swanson, E. (2021), Measuring the effects of federal reserve forward guidance and asset purchases on financial markets, Journal of Monetary Economics, Vol. 118(C), pp. 32-53.
    13. See, for example, Couture, C. (2021), Financial market effects of FOMC projections, Journal of Macroeconomics, Vol. 67 and Hillenbrand, S. (2023), The Fed and the Secular Decline in Interest Rates, Accepted, Review of Financial Studies.
    14. Draghi, M. and V. Constâncio (2013), Introductory statement to the press conference (with Q&A), Frankfurt am Main, 4 July 2013.
    15. See, for example, Altavilla, C. et al. (2021), Assessing the efficacy, efficiency and potential side effects of the ECB’s monetary policy instruments since 2014, ECB Occasional Paper, No. 278; Andrade, P. and F. Ferroni (2021), Delphic and Odyssean monetary policy shocks: Evidence from the euro area, Journal of Monetary Economics, Vol. (117), pp. 816-832; Kerssenfischer, M. (2022), Information effects of euro area monetary policy, Economics Letters, Vol. 216(C); and Monetary Policy Committee, Taskforce on Rate Forward Guidance and Reinvestment (2022), Rate forward guidance in an environment of large central bank balance sheets: A Eurosystem stock-taking assessment, ECB Occasional Paper No. 290.
    16. The Eurosystem produces macroeconomic projections four times a year. ECB staff produces them in March and September. In June and December, they are co-produced by ECB and national central bank staff.
    17. See Morris, S. and H. Shin (2005): Central Bank Transparency and the Signal Value of Prices, Brookings Papers on Economic Activity, Vol.36(2), pp. 1-66 for a general treatment of the role of transparency.
    18. Hofmann, B. and D. Xia (2022), Quantitative forward guidance through interest rate projections, BIS Working Paper No. 1009.
    19. Natvik, G. et al. (2020), Does publication of interest rate paths provide guidance?, Journal of International Money and Finance, Vol. 103.
    20. Detmers, G.-A (2021), Quantitative or Qualitative Forward Guidance: Does it Matter?, Economic Record, Vol. 97(319), pp. 491-503.
    21. Blinder, A. et al. (2008), Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence, Journal of Economic Literature, Vol. 46(4), pp. 910-945.
    22. See ECB (2024), ECB staff macroeconomic projections for the euro area, March 2023, box 6 for a rundown.

    MIL OSI Economics –

    January 24, 2025
  • MIL-OSI Economics: Breaking the vicious circle between banks and sovereigns for good | Joint guest contribution by Joachim Nagel and Nicolas Véron, op-ed for Politicoby Politico

    Source: Bundesbank

    Twelve years after its initiation, it is time to complete the banking union

    In the early hours of 29 June 2012, boldness and clarity came together. After a long night of negotiations, European leaders laid the foundations for the banking union project. They found strong and clear words on its purpose, stating it is imperative to break the vicious circle between banks and sovereigns.

    The decision was taken in the aftermath of a twin crisis that had shaken the euro area – a sovereign debt crisis coupled with a banking crisis. The close links between sovereigns and banks had created a “doom loop”: sovereigns bailed out teetering banks, straining public finances, and rising sovereign yields put pressure on banks’ home-biased sovereign exposures. Such loops emerged as a particular vulnerability of the euro area, with its unique institutional setup as a monetary union of otherwise sovereign states, increasing the pressure on the Eurosystem to save the day. The banking union was conceived as the sword that would sever the doom loop.

    Today’s banking union is primarily the result of intensive legislative efforts between 2012 and 2014. They established a complete framework for supervising European banks, and an incomplete one for dealing with banking crises. This helped to mitigate the vicious circle, in particular by creating the Single Supervisory Mechanism under the European Central Bank and the national supervisory authorities. That has proven its effectiveness, but the vicious circle has not yet been broken.

    Before the lessons of 2012 are forgotten, the new EU term offers an opportunity to finish the task and break the vicious circle between banks and sovereigns for good. Action must go both ways. First, block the direct contagion channel from banks to sovereigns. Taxpayers should not have to suffer when banks run into problems. Second, close the contagion channel from sovereigns to banks. A sovereign credit event cannot and should not be ruled out in a monetary union with sovereign fiscal policies at the national level. At the same time, it must not be permitted to drag down banks with it and thus further jeopardise financial stability.

    The first aim calls for strengthening the crisis intervention framework. Valuable progress has been made with the establishment of the Single Resolution Board and the Single Resolution Fund. The latter reached its target level, currently at €78 billion, after a decade of build-up. However, a more streamlined and predictable framework is needed. Specifically, resolution should be a credible and feasible option to manage more, if not all, failing banks under EU law, instead of the current confusing mix of European and national procedures that leaves too much scope for national state aid and moral hazard.

    The reform of the framework for crisis management is closely linked to deposit insurance. A common European deposit insurance mechanism would strengthen confidence in depositor protection and thus reduce the risk of bank runs. It is intended to weaken the link between banks and their national sovereigns and thus to contribute to making the euro area as a whole more resilient. The two of us have different views on how it should be structured, whether fully centralised or a hybrid involving national authorities. However, we share the firm conviction that deposit protection needs a European level. All banks in the euro area should participate in it. Its funding can and should be risk-based, taking into account arrangements such as the institutional protection schemes that play a significant role in Austria and Germany.

    Under that mechanism, certain risks would be shouldered jointly within the EU. Conversely, risks that are within the remit of the individual Member States must be appropriately limited. To reduce negative spillovers from sovereigns to banks – the second aim – it is crucial to avoid large and undiversified exposures of bank balance sheets to a single sovereign. Concentration limits and capital charges can serve as effective tools here. With adequate calibration and a transition phase, these tools could incentivise banks to diversify their sovereign exposures, thereby gradually overcoming home bias.

    As it turns out, the issues of crisis management, deposit insurance and banks’ sovereign exposures are intertwined. Attempts to make progress have so far failed, not least because they were not comprehensive enough. Part of why the European Commission’s 2015 legislative proposal on deposit insurance was shelved is because banks’ concentrated sovereign exposures were not tackled at the same time. It seems that Member States are unwilling to make concessions if the outcome is merely a halfway house. A comprehensive approach that addresses the interlinked issues holistically is worth considering. It could complete the work that began with a promise twelve years ago – to break the vicious circle between banks and sovereigns.

    Nicolas Véron is a French economist. He is a senior fellow at Bruegel in Brussels, which he co-founded in 2002–05, and at the Peterson Institute for International Economics in Washington DC.

    MIL OSI Economics –

    January 24, 2025
  • MIL-OSI USA: Statement Regarding Administrative Proceedings against SolarWinds Customers

    Source: Securities and Exchange Commission

    According to the Government Accountability Office, the 2019-2020 cyberattacks against SolarWinds Corporation (“SolarWinds”) and its Orion software were “one of the most widespread and sophisticated hacking campaigns ever conducted against the federal government and the private sector.”[1] It was an attack against America.[2] How has the Commission responded? By first charging SolarWinds in district court[3] and, in today’s settled proceedings,[4] charging four customers of its Orion software, with violations of the federal securities laws. Today’s proceedings impose nearly $7 million in penalties against these victims of the cyberattacks.

    The four proceedings can be divided into two categories. Two of the companies – Avaya Holdings Corp. (“Avaya”) and Mimecast Limited (“Mimecast”) – disclosed information about the cyberattack.[5] However, the Commission finds that the disclosures omitted certain material information.[6] The other two companies – Check Point Software Technologies Ltd. (“Check Point”) and Unisys Corporation (“Unisys”) – did not update an existing risk factor in response to the cyberattack.[7] The Commission finds that those risk factors became materially misleading without disclosure that the Orion software in the companies’ respective network had been compromised.[8]

    The common theme across the four proceedings is the Commission playing Monday morning quarterback. Rather than focusing on whether the companies’ disclosure provided material information to investors, the Commission engages in a hindsight review to second-guess the disclosure and cites immaterial, undisclosed details to support its charges. Accordingly, we dissent.

    Avaya and Mimecast

    Avaya

    With respect to Avaya, the Commission highlights “the likely attribution of the [cyberattack] to a nation-state threat actor” as an example of omitted material information.[9] The Commission’s view that such information is material is troubling for a couple of reasons.

    First, in its 2023 rulemaking on cybersecurity incident disclosure (the “2023 Cybersecurity Rule”),[10] neither investors nor the Commission expressed a view that the identity of the threat actor is material information. When proposing the 2023 Cybersecurity Rule, the Commission sought public feedback on whether there were specific types of information that should be disclosed for a material cybersecurity incident.[11] Not a single one of the 150-plus comment letters submitted on the proposal requested disclosure of the identity of the threat actor.[12] Accordingly, it is highly unlikely that investors consider this information to be material. When adopting the 2023 Cybersecurity Rule, the Commission stated that disclosure of cybersecurity incidents should “focus…primarily on the impacts of…[the]…incident, rather than on…details regarding the incident itself.”[13] The identity of the threat actor, while an obvious “detail…regarding the incident,” lacks a clear link to the “impact” of the incident. By using a settled proceeding to convey the view that this information is material, the Commission regulates by enforcement.

    Second, by the time Avaya disclosed information about the cyberattack in February 2021, there had already been widespread media reports[14] and a joint statement by government agencies[15] that Russia was the likely threat actor. Although Avaya’s disclosure did not tie its incident to the SolarWinds cyberattack, it is unlikely that attribution of the incident to Russia would have “significantly altered the ‘total mix’ of information”[16] about Avaya to a reasonable investor in light of the existing public information about the cyberattack.

    The Commission’s other factors for why Avaya omitted material information are equally unconvincing. The Commission cites “the long-term unmonitored presence of the threat actor in Avaya’s systems, the access to at least 145 shared files some of which contained confidential and/or proprietary information, and the fact that the mailbox the threat actor accessed belong to one of Avaya’s cybersecurity personnel.”[17] These are the “details regarding the incident itself” – as opposed to the “impact” of incident – that the Commission has said do not need to be disclosed.[18]

    Mimecast

    Although the Form 8-K requirements for disclosing material cybersecurity incidents, which were adopted as part of the 2023 Cybersecurity Rule, did not yet apply to Mimecast, it filed three Form 8-Ks related to the intrusion of the Orion software on its network.[19] In the third Form 8-K, Mimecast filed its three-page incident report for the cyberattack as an exhibit.[20] Mimecast’s efforts to inform its investors would not be rewarded; the Commission finds fault with its disclosures, particularly regarding “the large number of impacted customers and the percentage of code exfiltrated by the threat actor.”[21]

    The Commission highlights Mimecast’s failure to disclose that “the threat actor had accessed a database containing encrypted credentials for approximately 31,000 [of 40,000] customers.”[22] Where the compromised information consists of a large percentage of customer credentials, disclosure of such fact can be material. In assessing materiality in the Commission’s case against SolarWinds, the court stated that “perspective and context are critical” to evaluating whether a Form 8-K is materially misleading and that a filing is not misleading if “[the] disclosure, read as a whole, captured the big picture.”[23]

    Mimecast disclosed, without providing a percentage or number, that encrypted customer credentials had been accessed.[24] It said that the company was “resetting the affected…credentials.”[25] Mimecast further disclosed that it found “no evidence that the threat actor accessed email or archive content held by [it] on behalf of [its] customers.”[26]

    In bringing charges against Mimecast, the Commission focuses on the detail of the threat actor accessing a database containing customer credentials, as opposed to the larger picture of the effects of the incident. Access to credentials, by itself, may not be material if the threat actor does not use the credentials to misappropriate customer information. Mimecast’s disclosure, read as a whole, conveys the complete story about the unauthorized access of credentials and the lack of misappropriated information.

    With respect to disclosure of exfiltrated source code, Mimecast stated in its incident report that the threat actor had downloaded a “limited number” of its source code repositories but the company believed that the downloaded code was “incomplete and would be insufficient to build and run any aspect of the Mimecast service.”[27] The Commission finds that these statements were materially misleading because Mimecast did not disclose that the threat actor had exfiltrated “58% of its exgestion source code, 50% of its M365 authentication source code, and 76% of its M365 interoperability source code, representing the majority of the source code for those three areas.”[28]

    By calling for disclosure of specific percentages and types of source code, the Commission ignores the reasonable investor standard embedded within the materiality concept and the types of information that such investor would consider important in making an investment decision. We are doubtful that a reasonable investor would understand how exfiltration of such precise percentages of those three types of source code affects Mimecast. Similar to the Avaya case, such information is “details regarding the incident itself”[29] that do not need to be disclosed. For us, the material disclosure by Mimecast is that the cyberattack did not result in modifications of the company’s source code or have effects on its products.[30] Notably, the Commission did not find that such statement was materially misleading.

    Effect on Form 8-K, Item 1.05 Disclosure

    In addition to our concerns about the charges against Avaya and Mimecast, we are also concerned about how the proceedings against them will shape disclosure provided pursuant to new Item 1.05 of Form 8-K, which was adopted as part of the 2023 Cybersecurity Rule. This item requires companies to disclose “the material aspects of the nature, scope, and timing” of a material cybersecurity incident.[31]

    Companies reviewing today’s proceedings[32] reasonably could conclude that the Commission will evaluate their Item 1.05 disclosure with a hunger for details that runs contrary to statements in the adopting release.[33] To avoid being second-guessed by the Commission, companies may fill their Item 1.05 disclosures with immaterial details about an incident, or worse, provide disclosure under the item about immaterial incidents. The Commission staff has already identified the latter practice as an issue,[34] and today’s proceedings may exacerbate the problem. As the Commission recognized when adopting the 2023 Cybersecurity Rule, immaterial disclosure about cybersecurity incidents may “divert investor attention” and result in “mispricing of securities.”[35] However, if the Commission’s enforcement actions have the practical effect of requiring immaterial disclosure, then the benefits and underlying rationale used to support the 2023 Cybersecurity Rule may be undermined.

    Check Point and Unisys

    The Commission’s proceedings against Check Point and Unisys both rest on a similar theory: the company failed to update its cybersecurity risk factor for the Orion software compromise and left its risk factor generic (in the case of Check Point)[36] or as a hypothetical (in the case of Unisys).[37]

    Check Point

    In the SolarWinds case, the Commission argued that the SolarWinds risk factor was “unacceptably boilerplate and generic” because of “the company’s internal recognition that its security systems were faulty.”[38] The court rejected the argument after a detailed review of SolarWinds’ risk disclosure and concluded that “[v]iewed in totality, [such] disclosure was sufficient to alert the investing public of the types and nature of cybersecurity risks SolarWinds faced and the grave consequences these could present for the company’s financial health and future.”[39]

    In its proceeding against Check Point, the Commission argues that the company’s risk disclosure was generic and should have been revised because its cybersecurity risk profile had materially changed.[40] This contention, however, merits cautious consideration in light of the SolarWinds court’s reasoning in dismissing portions of the Commission’s case against SolarWinds, which, as illustrated below, was based on arguably similar disclosures.

    Court’s reason for why SolarWinds risk disclosure was not generic[41]

    SolarWinds risk factor, as quoted by the court[42]

    Check Point risk factor[43]

    Disclosed specific risks the company faced given its business model

    [SolarWinds was] vulnerable to damage or interruption from… traditional computer “hackers,” malicious code (such as viruses and worms)…denial-of-service attacks[, and] sophisticated nation-state and nation-state-supported actors (including advanced persistent threat intrusions).

    We or our products are a frequent target of computer hackers and organizations that intend to sabotage, take control of, or otherwise corrupt our manufacturing or other processes and products. We are also a target of malicious attackers who attempt to gain access to our network or data centers or those of our customers or end users; steal proprietary information related to our business, products, employees, and customers; or interrupt our systems or those of our customers or others.

    Warned about the increasing frequency of attacks

    The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hacks, foreign governments, and cyber terrorists, has generally increased the number, intensity and sophistication of attempted attacks.

    We believe such attempts are increasing in number.

    Warned that the company might prove unable to anticipate, prevent, or detect attacks

    Because the techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period and, therefore, have a greater impact on the products we offer, the proprietary data contained therein, and ultimately on our business.

    While we seek to detect and investigate all unauthorized attempts and attacks against our network and products, and to prevent their recurrence where practicable through changes to our internal processes and tools and/or changes or patches to our products, we remain potentially vulnerable to additional known or unknown threats.

    Alerted investors to the potential for a security breach to have very damaging consequences to the company

    The foregoing security problems could result in, among other consequences, damage to our own systems or our customers’ IT infrastructure or the loss or theft of our customers’ proprietary or other sensitive information. The costs to us to eliminate or address the foregoing security problems and security vulnerabilities before or after a cyber incident could be significant. Our remediation efforts may not be successful and could result in interruptions, delays or cessation of service and loss of existing or potential customers that may impede sales of our products or other critical functions. We could lose existing or potential customers in connection with any actual or perceived security vulnerabilities in our websites or our products.

    Such incidents, whether successful or unsuccessful, could result in our incurring significant costs related to, for example, rebuilding internal systems, reduced inventory value, providing modifications to our products and services, defending against litigation, responding to regulatory inquiries or actions, paying damages, or taking other remedial steps with respect to third parties. Publicity about vulnerabilities and attempted or successful incursions could damage our reputation with customers or users and reduce demand for our products and services.

    Unisys

    The Commission’s case against Unisys[44] rests on the finding that Unisys’s risk factor framed cybersecurity events as hypothetical, even though a compromise of the Orion software on the company’s network already had occurred.[45]

    Risk factors are designed to warn investors about events that could occur and materially affect the company. To the extent that an event has occurred and has materially affected the company, it is generally required to be disclosed in another part of a filing, such as the description of the business, management’s discussion and analysis, or the financial statements and notes thereto. Whether risk factors need to be updated because certain hypothetical risks have materialized is not always a straightforward matter,[46] and the Commission should be judicious in bringing charges in this area. If the Commission does not exercise restraint, it could find a violation in every company’s risk disclosure because risk factors cover a wide range of topics and are inherently disclosure of hypothetical events. Aggressive enforcement by the Commission may cause companies to fill their risk disclosures with occurrences of immaterial events, for fear of being second-guessed by the Commission. Such a result would frustrate the Commission’s goal of preventing a lengthy risk factor section filled with immaterial disclosure.[47]

    In light of these considerations, the case against Unisys is one that did not need to be brought. The Commission advances three reasons for why the company’s cybersecurity risk profile changed materially and its risk factor should have been updated.[48]

    First, the Commission states that a “persistent and reportedly nation-state supported threat actor compromised the company’s environment.”[49] This factor does not show materiality because it merely says that a cybersecurity incident occurred, and not every incident is material.

    Second, the Commission finds that “the threat actor persisted in the environment unmonitored for a combined span of at least sixteen months.”[50] While this fact is concerning from an information security perspective, the Commission fails to elaborate on why it is material from a securities law perspective. Notably, the Commission did not find that Unisys’s financial results were adversely affected or its reputation had measurably declined, especially relative to its peers given the widespread nature of the SolarWinds cyberattack.

    Finally, the Commission says that “[Unisys]’s investigation of the activity suffered from gaps that prevented it from identifying the full scope of the compromise.”[51] It is unclear to us how an after-the-fact investigation of a cybersecurity incident affects the materiality of the incident itself. The Commission did not find that the unidentified aspect of the compromise materially affected Unisys. Similar to the second reason, the Commission fails to explain how a subpar investigation relates to adverse effects on the company.

    Because we are not persuaded by the Commission’s arguments on the materiality of Unisys’s cybersecurity incident, we do not support the charges against the company.

    Conclusion

    Cybersecurity incidents are one of a myriad of issues that most companies face. The Commission needs to start treating companies subject to cyberattacks as victims of a crime, rather than perpetrators of one. Yes, the Commission must protect investors by ensuring that companies disclose material incidents, but donning a Monday morning quarterback’s jersey to insist that immaterial information be disclosed — as the Commission did in today’s four proceedings — does not protect investors. It does the opposite.


    [3] The court recently dismissed most of the claims the Commission brought against SolarWinds. SEC v. SolarWinds Corp., 2024 WL 3461952 (S.D.N.Y. July 18, 2024).

    [4] In the Matter of Avaya Holdings Corp., Release No. 34-101398 (Oct. 22, 2024) (“Avaya Order”), available at https://www.sec.gov/files/litigation/admin/2024/33-11320.pdf; In the Matter of Check Point Software Technologies Ltd., Release No. 34-101399 (Oct. 22, 2024) (“Check Point Order”), available at https://www.sec.gov/files/litigation/admin/2024/33-11321.pdf; In the Matter of Mimecast Limited, Release No. 34-101400 (Oct. 22, 2024) (“Mimecast Order”), available at https://www.sec.gov/files/litigation/admin/2024/33-11322.pdf; and In the Matter of Unisys Corporation, Release No. 34-101401 (Oct. 22, 2024) (“Unisys Order”), available at https://www.sec.gov/files/litigation/admin/2024/33-11323.pdf.

    [5] Avaya Order at paragraph 10 and Mimecast Order at paragraphs 9-13 and 15-16.

    [6] Avaya Order at paragraph 10 and Mimecast Order at paragraphs 9, 14, and 16-17.

    [7] Check Point Order at paragraph 13 and Unisys Order at paragraph 19.

    [8] Check Point Order at paragraphs 15-16 and Unisys Order at paragraph 19.

    [9] Avaya Order at paragraph 10.

    [10] While the facts of the proceedings against Avaya and the other three companies predate the 2023 Cybersecurity Rule, the new requirements inform our analysis of, and dissent on, these proceedings.

    [16] TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976).

    [17] Avaya Order at paragraph 10. The Commission also takes issue with Avaya’s disclosure that there was “no current evidence” of access to its “other internal systems.” Id. The Commission acknowledges that the statement was facially accurate but finds that it was made misleading because Avaya did not disclose the threat actor’s access to 145 shared files in an external cloud environment. Id. For the same reason that we do not believe that disclosure about 145 files being accessed is material, we also do not believe that Avaya’s statement about its internal systems is materially misleading.

    [18] Note 13, supra.

    [19] Mimecast Order at paragraphs 10-13.

    [21] Mimecast Order at paragraphs 9, 14, and 16.

    [22] Mimecast Order at paragraphs 6 and 14. The Commission also finds that Mimecast’s disclosure was materially misleading because it failed to disclose that the threat actor accessed server and configuration information for approximately 17,000 customers. Mimecast Order at paragraph 14. Mimecast disclosed in its incident report that the threat actor accessed server information. Mimecast Incident Report at p.1 (“[T]he threat actor accessed certain Mimecast-issued certificates and related customer server connection information.”). The Commission fails to explain why the specific number of customers whose server and configuration information was accessed is material when the company had already disclosed that server information was accessed.

    [23] SolarWinds Corp., supra note 3, at 44, 46.

    [24] Mimecast Incident Report at p.1 (“The threat actor also accessed a subset of email addresses and other contact information, as well as encrypted and/or hashed and salted credentials.”).

    [28] Mimecast Order at paragraph 16.

    [29] Note 13, supra.

    [30] Mimecast Incident Report at p.1 (“[W]e found no evidence of any modifications to our source code nor do we believe there was any impact on our products.”).

    [31] Item 1.05(a) of Form 8-K.

    [32] Although the charges against Avaya stem from the company’s risk factor disclosure, at issue is disclosure about a cybersecurity incident and so these charges may inform how companies provide disclosure under Item 1.05.

    [33] See note 13, supra, and accompanying text.

    [35] 2023 Cybersecurity Adopting Release at 51929 (“Item 1.05 is thus expected to elicit more pertinent information to aid investor decision-making. Additionally, the materiality requirement should minimize immaterial incident disclosure that might divert investor attention, which should reduce mispricing of securities.”).

    [36] Check Point Order at paragraphs 13 and 15-16.

    [37] Unisys Order at paragraph 19.

    [38] SolarWinds Corp., supra note 3, at 35.

    [39] Id. at 35-36. The court also expressed the view that cautionary language, such as risk factors, do not need to be “articulated with maximum specificity” and that doing so “may backfire.” Id. at 36. Additionally, the SolarWinds court dismissed the Commission’s charges against SolarWinds for not updating its allegedly hypothetical risk factor for incidents that had materialized. Id. at 37-39.

    [40] Check Point Order at paragraphs 12-13 and 15-16.

    [41] SolarWinds Corp., supra note 3, at 35.

    [44] In addition to fraud and reporting violations, the Commission also finds that Unisys did not maintain disclosure controls and procedures, in violation of rule 13a-15(a) under the Securities Exchange Act of 1934. Unisys Order at paragraphs 26 and 31. While we disagree with that finding, we do not address the issue in this statement. However, we note that in discussing Unisys’s cooperation, the Commission states that “Unisys took certain steps to remediate its control deficiencies, including…augmenting its cybersecurity personnel and tools, both internally and externally, to strengthen its cybersecurity risk management and protections.” Unisys Order at paragraph 32. The Commission lacks authority to require the use of certain tools, to compel the adoption of specific risk management practices, or to dictate the personnel decisions of companies in connection with cybersecurity.

    [45] Unisys Order at paragraph 19.

    [46] The U.S. Supreme Court is considering this issue in a pending case. See Facebook v. Amalgamated Bank, No. 23-980.

    [48] Unisys Order at paragraph 18.

    MIL OSI USA News –

    January 24, 2025
  • MIL-OSI Economics: Transcript of World Economic Outlook October 2024 Press Briefing

    Source: International Monetary Fund

    October 22, 2024

    Speakers:
    Pierre‑Olivier Gourinchas, Director, Research Department, IMF
    Petya Koeva Brooks, Deputy Director, Research Department, IMF
    Jean‑Marc Natal, Division Chief, Research Department, IMF

    Moderator:
    Jose Luis De Haro, Communications Officer, IMF

    Mr. De Haro: OK. I think we can start. First of all, welcome, everyone. Good morning for those who are joining, as online. I am Jose Luis De Haro with the Communications Department here at the IMF. And once again, we are gathered here today for the release of our new World Economic Outlook, titled Policy Pivot Raising Threats. I hope that by this time, all of you have had access to a copy of the flagship. If not, I would encourage you to go to IMF.org. There, you’re going to find the document, but also, you’re going to find Pierre‑Olivier’s blog, the underlying data for the charts, videos, and other assets that I think are going to be very, very helpful for your reporting. And what’s best, that to discuss all the details of the World Economic Outlook that, to be joined here today by Pierre‑Olivier Gourinchas, the Economic Counsellor Chief Economist and the Director of the Research Department. Next to him are Petya Koeva Brooks. She is the Deputy Director of the Research Department. And also with us, Jean‑Marc Natal, the Division Chief at the Research Department. We are going to start with some opening remarks from Pierre‑Olivier, and then we will proceed to take your questions. I want to remind everyone that this press conference is on the record and that we will also be taking questions online.

    With no further ado, Pierre‑Olivier, the floor is yours.

    Mr. Gourinchas: Thank you, Jose, and good morning, everyone. Let me start with the good news. The battle against inflation is almost won. After peaking at 9.4 percent year on year in the third quarter of 2022, we now project headline inflation will fall to 3.5 percent by the end of next year, and in most countries, inflation is now hovering close to central bank targets.

    Now, inflation came down while the global economy remained resilient. Growth is projected to hold steady at 3.2 percent in 2024 and 2025. The United States is expected to cool down, while other advanced economies will rebound. Performance in emerging Asia remains robust, despite the slight downward revision for China to 4.8 percent in 2024. Low‑income countries have seen their growth revised downwards, some of it because of conflicts and climate shocks.

    Now, the decline in inflation without a global recession is a major achievement. Much of that disinflation can be attributed to the unwinding of the unique combination of supply and demand shocks that caused the inflation in the first place, together with improvements in labor supply due to immigration in many advanced countries. But monetary policy played a decisive role, keeping inflation expectations anchored.

    Now, despite the good news, on inflation, risks are now tilted to the downside. This downside risks include an escalation in regional conflicts, especially in the Middle East, which could cause serious risks for commodity markets. Policy shifts toward undesirable trade and industrial policies could also significantly lower output, a sharp reduction in migration into advanced economies, which can unwind some of the supply gains that helped ease inflation in recent quarters. This could trigger an abrupt tightening of global financial conditions that would further depress output. And together, these represent about a 1.6 percent of global output in 2026.

    Now, to mitigate these downside risks and to strengthen growth, policymakers now need to shift gears and implement a policy triple pivot.

    The first pivot on monetary policy is already underway. The decline in inflation paved the way for monetary easing across major central banks. This will support activity at a time when labor markets are showing signs of cooling, with rising unemployment rates. So far, however, this rise has been gradual and does not point to an imminent slowdown. Lower interest rates in major economies will also ease the pressure on emerging market economies. However, vigilance remains key. Inflation in services remains too elevated, almost double prepandemic levels, and a few emerging market economies are seeing rising price pressures, calling for higher policy rates. Furthermore, we have now entered a world dominated by supply shocks, from climate, health, and geopolitical tensions. And this makes the job of central banks harder.

    The second pivot is on fiscal policy. It is urgent to stabilize debt dynamics and rebuild much‑needed fiscal buffers. For the United States and China, current fiscal plans do not stabilize debt dynamics. For other countries, despite early improvements, there are increasing signs of slippage. The path is narrow. Delaying consolidation increases the risk of disorderly adjustments, while an excessively abrupt turn toward fiscal tightening could hurt economic activity. Success requires implementing, where necessary, and without delay, a sustained and credible multi‑year fiscal adjustment.

    The third pivot and the hardest is toward growth‑enhancing reform. This is the only way we can address many of the challenges we face. Many countries are implementing industrial and trade policy measures to protect domestic workers and industries. These measures can sometimes boost investment and activity in the short run, but they often lead to retaliation and ultimately fail to deliver sustained improvements in standards of living. They should be avoided when not carefully addressing well‑identified market failures or narrowly defined national security concerns.

    Economic growth must come, instead, from ambitious domestic reforms that boost innovation, increase human capital, improve competition and resource allocation. Growth‑enhancing reforms often face significant social resistance. Our report shows that information strategies can help improve support, but they only go so far. Building trust between governments and citizens and inclusion of proper compensation measures are essential features.

    Building trust is an important lesson that should also resonate when thinking about ways to further improve international cooperation to address common challenges in the year that we celebrate the 80th anniversary of the Bretton Woods Institutions. Thank you.

    Mr. De Haro: Thank you, Pierre‑Olivier. Before we open the floor for your questions, let’s remind some ground rules. First of all, if you have any question that it is related to a country program or a country negotiation, I would recommend not to formulate that question here. Basically, those questions can be formulated in the different regional press briefings that are going to happen later this week.

    Also, if you want to ask a question, just raise your hand, wait until I call you. Identify yourself and the outlet that you represent. And let’s try to keep it to just one question. I know that there are going to be many, many questions. We might not be able to take all of you. So please be patient. There are going to be many other opportunities to ask questions throughout the week.

    Let me start—how I am going to start. I am going to start in the center. A couple of questions here. Then I am going to go to my right, and then I am going to go there. I am going to start in the first row, the lady with the white jacket, thank you.

    QUESTION: Thank you, Jose, for taking my question. I am Moaling Xiong from Xinhua News Agency. I want to ask about the geopolitical tensions that was mentioned in the report. It says there are rising geopolitical tensions. So far, the impact has been limited. But further intensification of geopolitical rifts could weigh on trade, investment, and beyond. I wonder whether Pierre‑Olivier, could you talk a little bit about what are the economic impacts of growing geopolitical tensions? Thank you.

    Mr. Gourinchas: Thank you. This is, of course, a very important question. This is something that we are very concerned about, the rising geoeconomic fragmentation, trade tensions between countries, measures that are disrupting trade, disrupting cross‑border investment. This is something that we have looked at in our World Economic Outlook report. In Chapter 1, we have a box that evaluates the impact of various adverse measures, measures that could be taken by policymakers or various of shocks that would impact output. And when we look at the impact that rising trade tensions could have, there are two dimensions of this. One is, of course, you are increasing tariffs, for instance, between different blocs. That would disrupt trade. That will misallocate resources. That will weigh down on economic activity. But there is also an associated layer that comes from the uncertainty that increases related to future trade policy. And that will also depress investment, depress economic activity and consumption. When we put these two together, what we find is, we find an impact on world output that is on the order of about 0.5 percent of output levels in 2026. So it’s a quite sizable effect of both an increase in tariffs between different countries and an increase in trade policy uncertainty.

    Mr. De Haro: OK. I’m going to continue here in the center. We’re going to go to the gentleman on the third row. Yep. There. There, third row, there. Third row. Thank you.

    QUESTION: Hi. Thanks very much for taking my question. I just want to ask about the inflation side of the WEO. You mentioned just now inflation, you know, the battle is almost won. I am just wondering, there’s sort of a divergence between the advanced economies and emerging markets and developing economies. When do you expect inflation to sort of fall toward that 2 percent target in emerging markets and developing economies? Thanks.

    Mr. Gourinchas: Yes. So inflation, the progress on inflation has been more pronounced for advanced economies, and now we expect advanced economies to be back to their target sometime in 2025 for most of them. For emerging markets and developing economies, there is more variation, and we see an increase in dispersion of inflation, so a lot of countries have made a lot of progress. You look, for instance, at emerging Asia. There are inflation levels very similar to advanced economies for a number of them. You look at other regions—in the Middle East, for instance, or sub‑Saharan Africa—and you have countries that still have double‑digital inflation rates and will maybe take more time to converge back. So we see an increased divergence that reflects some of the shocks that are specific to some of these regions. Of course, conflict or climate‑related shocks can have an impact on inflation, and that’s what we’re seeing in these two regions I mentioned.

    Mr. De Haro: OK. Now I’m going to move to my right. The first row here, the lady with the red suit.

    QUESTION: Hello. This is Norah from Asharq Business with Bloomberg from Dubai.

    Pierre, you mentioned that the geopolitical tensions could account for 0.5 percent of output if things kind of get out of hand. To what extent is this a very optimistic number here? Because we’re talking about tensions not only in the Middle East. You have things going down in the Taiwan Strait. We have the Russian‑Ukraine war still ongoing. And there is a very big risk that shipping lines, straits might get disrupted. And this would affect very substantially the price of oil and other commodities. To what extent this would affect output—again, global output and inflation levels? Would inflation be a big risk again if major commodities prices increased substantially?

    Mr. Gourinchas: Yes. So you are absolutely right. The scenario I was referring to earlier is a scenario where we have increased trade disruptions, tariffs, and trade policy uncertainty. But one can think also about geopolitical tensions impacting commodity market or shipping. Now, this is not something that we looked at in this report. That’s something that we had looked at in our April report. And in April, when we looked at the potential for escalation in conflicts in the Middle East, the impact it could have on oil prices or on shipping costs, we found that this would very much be in the nature of adverse supply shock. It would negatively impact output, and it would increase inflation pressures. Now, the numbers we had when we did that exercise back in April, they’re still very relevant for the environment we’re in now. And that was one of the layers I showed today, is that it would reduce output by another about 0.4 percent by 2026 and would increase inflation by something on the order of 0.7 percent higher inflation in 2025. So this is something that is very much on top of the other tensions that I mentioned. This is why we are living in this world where there are multiple layers of risk that could be compounding each other.

    Mr. De Haro: I’m going to stay here. First row, here. Thank you.

    QUESTION: Thank you. My name is Simon Ateba. I am with Today News Africa Washington, D.C. I would like you to talk a little bit more about the situation in Africa. I know two years ago it was about COVID and then Ukraine. What do you see now? And what are some of the recommendations for sub‑Saharan Africa? Thank you.

    Mr. Gourinchas: So sub‑Saharan African region is one that is seeing growth rates that are fairly steady this year, compared to last year, at about 3.6 percent, and then expected to increase to about 4.2 percent next year. So we’re seeing some pickup in growth from this year to next year. But now, this is certainly a region that’s been adversely impacted by weather shocks and, in some cases, conflict. So the growth remains subdued and somewhat uneven, and that’s certainly something that we are concerned about.

    Let me turn it over to my colleague Jean‑Marc Natal to add some color.

    Mr. Natal: I would be happy to. Do you hear me? OK.

    So yes, so there has been over the last year, year and a half, there has been some progress in the region. You saw, you know, inflation stabilizing in some countries going down even. And reaching close—level close to the target. But half of them is still at distance, large distance from the target. And a third of them are still having double‑digital inflation.

    In terms of growth, as Pierre‑Olivier mentioned, it’s quite uneven, but it remains too low. The other issue is debt in the region. Obviously, it is still high. It has not increased. It has stopped increasing, and in some countries already starting to consolidate. But it’s still too high. And the debt service is correspondingly still high in the region. So the challenges are still there. There has been some progress. So in terms of the recommendation, in countries where inflation is very high, you would recommend, you know, tight monetary policy and in some cases, when possible, helped by consolidation on the fiscal side.

    It’s complicated. In many countries, you know, there are trade‑offs, and, you know, consolidating fiscal is difficult when you also have to provide for relief, like in Nigeria, for example, due to the flooding. So targeting the support to the poor and the vulnerable is part of the package when you consolidate. I will stop here.

    Mr. De Haro: OK. I am moving to my left. I am going to go to the gentleman in the first row.

    QUESTION: Thank you very much. Joel Hills from ITV News. We know that the chancellor in the United Kingdom is planning on changing the fiscal rule on debt to allow for—to borrow more for investment. Pierre‑Olivier, do you support this idea? And what, in your view, are the risks? And should the U.K. government continue to target a fall in debt of some description or a rise in public sector net worth?

    Mr. De Haro: Pierre‑Olivier, before you answer, are there any other questions on the U.K. in the room? I am going to take just two more from this group of U.K. reporters on my right that they are very eager. Just two questions more. We do not want to overwhelm—

    QUESTION: Alex Brummer from the Daily Mail in London. Again, around the chancellor’s upcoming budget. In your opening remarks, you referred to the possibility of abrupt changes in fiscal policy, disrupting what might happen to economies. U.K., according to your forecast, is in a quite good place in terms of growth heading upward. Do you fear that too strong a change in direction in fiscal policy in the U.K. could affect future growth?

    Mr. De Haro: Just one more question.

    QUESTION: Mehreen Khan from The Times. You mentioned that there are some countries at risk of fiscal slippage because governments have promised to do their consolidation have struggled to execute. Is the U.K. in that group? Also, the IMF has previously recommended that countries are under fiscal strain should—can keep sort of investment flowing if they do shift to measures like public sector net worth. Is that still a recommendation that you stand by in particular relevance for the U.K.?

    Mr. De Haro: And to give Pierre‑Olivier a little bit of time, I just want to remind everyone that we will have regional press briefings later this week, and some of these questions can be brought to all heads of departments that are going to be talking later on in the week. Pierre‑Olivier?

    Mr. Gourinchas: First, I will make three quick remarks. We are going to wait and see at the end of this month, on October 30, the details of the budget that will be announced by the U.K. government. And at that point, we’ll be able to evaluate and see the detail of the measures and how they will impact the U.K. economy.

    The broader question, I think, is relevant for many countries, not just the U.K. And it goes to the second pivot I mentioned, this narrow path in terms of fiscal consolidation. I think when countries have elevated debt levels, when interest rates are high, when growth is OK but not great, there is a risk that things could escalate or get out of control quickly. And so there is a need to bring debt levels down, stabilize them when they are not stabilized and rebuild fiscal buffers. That is true for many countries around the world. And if you are not doing that—and that is getting to the question that was asked by the gentleman on the right here—if you’re not doing that, that’s when you find yourself potentially later on at the mercy of market pressures that will force an adjustment that is uncontrolled to a large extent. At which point you have very few degrees of freedom, so you do not want to get in that position. And I think the effort to stabilize public debt has to be seen in that context.

    Now, the other side of the narrow path is, of course, if you try to do too much too quickly, you might have an adverse impact on growth. And you have to be careful there because we do have important—most countries have important needs when it comes to spending, whether it’s about central services, what we think about healthcare, or if we think about public investment and climate transition. So we need to protect also the type of spending that can be good for growth. So finding ways—and this is something that our colleagues in the Fiscal Monitor report emphasize, finding ways to consolidate by reducing expenditures where it’s needed. Maybe raising revenues. Often, it’s a combination of both but doing so in a way that is least impactful on growth. It’s country by country. There is no general formula. But that’s kind of the nature of the exercise.

    That pivot, that second pivot is absolutely essential. At the point we’re at again precisely because we’re in a world in which there will be more shocks and countries need to be prepared and need to have some room on the fiscal side to be able to build that.

    Mr. De Haro: OK. Last question on this side. Then I will go online, and then I will go around the room again. The gentleman in the second row.

    QUESTION: Thanks, Jose. Pierre‑Olivier, a question on Argentina. The IMF is maintaining its projections for the country for next year, improving GDP and inflation, 45 percent at the end of the year. Oh, yes. Sorry. Alam Md Hasanul from International.

    A question on Argentina. The IMF is maintaining its projections for next year, but I wanted to see if you could give us a little bit more detail on, where do you see the economy going. And if it’s accurate to say at this point that the worst of the crisis is in the past? Thanks.

    Mr. De Haro: We have received other questions regarding Argentina online from Lilliana Franco. Basically, she wants to know what’s behind our expectations for inflation for 2025. And I think that there are other Argentine reporters in the room. I see them in the back. Please, if somebody can get them the mic and we can get all the questions on Argentina and then move on to other regions. There. There. Those two, please. Try to keep it short.

    QUESTION: Hi. Patricia Valli from El Cronista. You mentioned the need to keep going with the reforms. And the government in Argentina is implementing a series of reforms. What’s the take of the IMF in terms of these? And if they are perhaps hurting the most vulnerable due to the increase of poverty numbers in Argentina in the past report?

    QUESTION: Hello. Juan Manuel Barca from Clarín Newspaper. I want to know if you raised your employment projection compared to the April—compared to the July forecast.

    Mr. Gourinchas: Yes. So let me first state at the outset that our projections for Argentina have not been updated since July, and the reason for this is because there are ongoing program discussions between the authorities and the Fund. And so while that process is going on, we did not update the projections for the October round.

    Now, to come to the question that was asked on the left. There are two things that are relevant for Argentina, two main things. One is what’s happening on the inflation side. Here, I think the progress has been very substantial. We are now seeing month‑on‑month inflation in Argentina close to 3.5 percent, and this is down from about 25 percent month on month back in December of last year. So very, very significant decline in the inflation rate. So that’s something to acknowledge. And the hope is, of course, that the measures in place will continue to improve the situation on that front.

    On the growth front, what we are saying is that activity has contracted substantially in the first half of the year, but there are signs that it’s starting to gradually recover. Now how much again, I cannot give you an update because we do not have it as of now. But there are signs that there is a recovery in real wages and in private credit and activity.

    Now, of course, this has been difficult for the Argentine economy, the decline in growth of that nature. And that’s something that, again, we are engaged in discussions with the authorities on the best way forward. I cannot comment more than that.

    Mr. De Haro: OK. Now I am going to get a question from our colleagues on WebEx. I think that Weier is there.

    QUESTION: I have a question on China. Given China’s recent implementation of various stimulus measures, such as support for the real estate—real sector and interest rate reductions and other economic incentives, we’ve already seen a major boost in its capital market. So how do you assess the potential impact of these developments on China’s economic recovery and growth perspective?

    Also, how the external effects, such as the Federal Reserve’s easing monetary path, will play a role here. Thank you.

    Mr. De Haro: Before you answer on the Federal Reserve, there’s other questions on China of a similar nature. Recent stimulus announced by the Governor and its effects.

    Mr. Gourinchas: OK. So China, as I mentioned in my opening remarks, we have a slight downward revision for its 2024 growth, compared to our July projections to 4.8 percent. And that’s a revision that’s coming largely due to a weaker second quarter of the year. And that weaker second quarter of the year is reflecting continued decline in confidence in the household and corporate sector and also the continued problems in the property sector in China.

    Now, this is something that, of course, is a top priority to address for the Chinese authorities. And we’ve seen a number of measures that have been announced since the end of last month. First measures, monetary and financial measures announced by the People’s Bank of China, and then some fiscal measures that were announced a few weeks ago.

    These measures in general go in the right direction, from our perspective. They are trying to improve the situation in the property sector. They’re trying to, for instance, lowering borrowing rates or trying to improve the balance sheet of the property developers.

    In our view, in our assessment, the measures announced at the end of last month by the PBOC, although they go in the right direction, are not sufficient to lift growth in a substantially material way. And that’s why our forecast is still at about 4.8 percent for 2024 and is unchanged for next year, at 4.5 percent.

    The new, more recent measures announced a few weeks ago by the Ministry of Finance are not incorporated in our forecast. We are waiting to see the details. I should mention, however, that since then, there has also been a release of the Q3 growth for China, and this has also been a little bit on the disappointing side. So I would say that what we’re seeing in terms of where the Chinese economy might be going is a little bit of a downward revision coming from the Q3 forecast and then potentially some measures that will help lift the economy going forward.

    Mr. De Haro: OK. So we have an additional question online. Basically, it comes from a reporter in Israel who wants to know how the current conflict is affecting the region and the global economy. Also, if there’s any other questions regarding the ongoing conflict, we can go here in the first row, please.

    QUESTION: Hi. Amir Goumma from Asharq with Bloomberg. With the GCC countries increasingly focusing and diversifying their economies away from oil now, how the IMF sees the progress and how you assess that with geopolitical tensions that may affect the attraction of the investment?

    Mr. Gourinchas: OK. So on the impact of the conflict in the Middle East on the countries in the region, and more broadly, let me ask my colleague Petya Koeva Brooks to come in.

    Ms. Koeva Brooks: Sure. Indeed, the conflict has inflicted a heavy toll on the region, and our hearts go to all who have been affected by it. We are monitoring the situation very closely. And what we could say at this stage is apart from the enormous uncertainty that we see is that the fallout has been the hardest in the countries in the region, at the epicenter of the conflict. We’ve seen significant declines in output in West Bank, in Gaza. Lebanon has also been hard hit. Now, we’ve also seen impact in the—on the economy in Israel, although there, I think the—so far at least, the impact has been smaller.

    Now, beyond that, there has also been an impact on commodity prices, on oil prices. We’ve seen quite a lot of volatility, though, as other factors have also come in, such as the concerns about global demand kind of have pushed prices in the opposite direction.

    Now, beyond that, when it comes to specific countries in the GCC region, when it comes to, for instance, Saudi Arabia, we’ve seen there, actually the non‑oil output has done very well, and we do have a small downward revision in the overall growth rate, but that is pretty much because of the voluntary oil cuts that have now been extended through November. Let me stop here. Thank you.

    Mr. De Haro: OK. We are coming here to the center of the room. I’m going to go way back. The gentleman in the blue shirt that I think is the third row from the back. Yep. There. He has—there, there, there. A little bit. Can you stand up? Yep. Perfect. And then I will go with you, with the lady.

    QUESTION: Thank you for doing this. Your alternative scenario about the trade war does not seem so far from reality. Indeed, especially if Trump wins the elections. So could you augment about that? Thank you.

    Mr. De Haro: We have a couple of questions similar to that nature.

    Mr. Gourinchas: Yes. So, I mean, of course, I will first preface by saying we are not commenting on elections or potential platforms here at the IMF. What we are seeing and when we’re looking at the world economy goes beyond what might be happening in a single country. This is why the scenario that we are looking at in Box 1.2 of our World Economic Outlook is one that focuses on, if you want, an escalation of trade tensions between different regions—whether the U.S., the European Union, or China. And the numbers I quoted earlier are reflecting our model estimates of the cumulative impact of this increase in tensions. So I think that this is something that we are very concerned about. We’ve seen a very sharp increase in a number of trade‑distorting measures implemented by countries since 2019, roughly. They’ve gone from 1,000 to 3,000, so tripling of trade‑distorting measures implemented by countries, and 2019 was not a low point. That was already something that was above what we were seeing in the 2010s. So there is definitely, you know, a direction of travel here that we are very concerned about because a lot of these trade‑distorting measures could reflect decisions by countries that are self‑centered but could be ultimately harmful not just to the global economy, but this is the benefits of doing a scenario analysis like the one we did. They are also hurtful for the countries that want to implement them, as well, because the impact on global trade also makes the residents of a country poorer.

    Mr. De Haro: OK. I’m going to take a question from WebEx and then I’m going to go to you. I think that we have a question on the U.S. Please go ahead.

    QUESTION: My question would be regarding the U.S. resilience toward inflation shock. I remember talks about this during the April meetings and the April report. And I wanted to ask you whether you’re still committed to this forecast of the U.S. resiliency, and whether we can still see the risk of recession in the U.S. since recent talks about the unemployment data, it has not always come to the expectations of what the bond market or the stock exchange thinks.

    So is the U.S. still as resilient as you saw it in April this year?

    Mr. Gourinchas: Yes. So, I mean, the news on the U.S. is good in a sense. We have had an upgrade in growth forecasts for 2024 and 2025. The historical numbers have also been revised, so even upgraded 2023, that is already sort of behind us. But the numbers came in, and they were stronger than what was realized. And that strong growth performance has been happening in a context of a continued disinflation. There have been some bumps in the road. The disinflation may not have been proceeding, especially earlier in the year, as quickly as was projected, but lately it has been quite substantial.

    So what accounts for this is two things that are really important there. One is, there is strong productivity growth that we see when we look at the U.S. That’s somewhat unlike other advanced economies, in fact. When we look around the world. And the second is also a very significant role that immigration has played, the increase in foreign‑born workers in the U.S. that have been integrated fairly quickly into the labor force. Now, the increase in unemployment that we’ve seen recently—I just showed it in my opening remarks—reflects to a large extent the fact that you have this increase in foreign‑born workers. And it takes—they have been integrated quickly in the labor force, but still there was an influx of them or there was an influx of them, and it’s taken a little bit of time to absorb them. And that’s what is reflected in the increased unemployment rate. So the labor market picture remains one that is fairly, fairly robust, even though it has cooled off but from very, very tight levels. Growth is solid. So I think the answer to the question that was posed, I think a risk of a recession in the U.S. in the absence of a very sharp shock would be somewhat diminished.

    Now, that is really what paved the way when you think about what the Federal Reserve is doing, seeing this inflation coming down a lot but noticing the increase in unemployment, pivoting away from just fighting inflation, that fight is almost done, and now being more concerned about, maybe what might be happening going forward with the labor market and wanting to make sure that that cooling off of the labor market does not turn into something that is more negative.

    Mr. De Haro: OK. The clock here says that I have seven minutes that I can push a little bit, but we go there. Then we will go to this side. And come back here and maybe end around here.

    QUESTION: Thank you very much. My name is Hope Moses‑Ashike from Business Day Nigeria. So I am right here in this room, in April, you projected the Nigeria economy to grow by 3.3 percent, and you cited improved oil sector, security, and then agriculture. So I want to understand, what has changed since then in terms of Nigeria’s growth and the factors you mentioned? Thank you.

    Mr. Gourinchas: Thank you. Jean‑Marc, do you want to comment on Nigeria?

    Mr. Natal: Yes. Rightly so. We revised growth for Nigeria in 2024 by .2 down. And, you know, things are volatile, I suppose, because the reason for the revision is precisely issues in agriculture related to flooding. And also issues in the production of oil related to security issues, and also maintenance issues that have pushed down the production of oil. So these two factors have played a role.

    Mr. De Haro: OK. We go to this side. I’m going to go to the front row, the lady with the white jacket. Thank you.

    QUESTION: Thank you. So this is still a follow‑up question since you just answered on Nigeria. What’s the IMF’s projection for the social impacts on full subsidy removal, especially when you—full subsidy removal and forex unification in terms of poverty, inequality, and food insecurity? And also, can give us your medium‑term projections for Nigeria’s growth? Thank you.

    Mr. Gourinchas: So I am afraid on this one I will have to go back and check because I do not have the number ready on the impact of the removal of the fuel subsidies specifically that you asked about. I do not know if my colleagues—

    Mr. De Haro: And I would encourage you to formulate this question in the press briefing for the regional outlook for the African Department. Probably there, you will get your answer, but reach out to us bilaterally and then we will get you the question.

    We are going to stay—we’re going to go to the gentleman in the back. Yep.

    QUESTION: Thanks very much. Andy Robinson of La Vanguardia, Barcelona, Spain. There seems to be a strange sort of divergence in the euro zone economy in which Spain—you have revised upwards Spain’s GDP growth forecast a whole point, percentage point, whilst Germany is languishing. Could I ask you, is Spain’s performance sustainable? And Germany’s in a recession?

    Also, one other question. You seem in your box on inflation and wage share and profit share, wage share you seem to be suggesting if there’s any danger of increasing inflation in the future, it’s more an excessive profit share than exactly wage? Could you tell me if that’s a correct interpretation? Thanks.

    Mr. Gourinchas: Yes. So just a few words on the euro area in general. And then I will let my colleague Petya come in on Spain. We do see some divergence across the different countries of the euro area. And one of the drivers is how reliant they are on manufacturing, as one of the key sectors in domestic production. And what you are seeing is, there is a general weakness in manufacturing and that’s heating countries like Germany. While countries that are maybe a bit more reliant on services, including tourism—and Spain is one of them—are seeing a better performance.

    Now, on the second part of your question, and I will turn it over to Petya, on the profit share and wages. We’re seeing now wage growth that is in excess of inflation. And sometimes people say, well, that’s a problem because that means, you know, maybe that cannot be sustained and therefore there will be more inflation. Well, not quite. That’s not the view we have here at the Fund. A lot of the increase in wages in excess of inflation right now—so that’s an improvement in real wages in standards of living—is reflecting a catchup phenomenon. It’s after years during which inflation was higher than wage inflation, wage increase. So real wages are catching up. They are covering lost ground.

    Now, during those years when inflation was higher than wages, profit margins somewhere were higher in the economy. And that is the profit margin that is being eroded back. So it’s not that we’re squeezing profits inordinately right now. It’s just they’re coming back more toward their historical level as real wages are catching up, and that’s not necessarily a concern in terms of inflation dynamics going forward. With this, let me turn it over to Petya.

    Ms. Koeva Brooks: Thank you. Indeed Spain does stand out as one of the countries with a substantial upward revision for this year. We’re now projecting growth to be 2.9, after last year, when it was 2.7. So what’s behind this revision is the positive surprises that we’ve already seen, especially in the second quarter, as well as some of the revisions to the back data.

    And then when we look at the composition of these surprises, again, it was net exports and the receipts from tourism that were a substantial contributor. But also, private consumption and investment also played a role, which may imply that some of the impact of the national recovery plan and the EU funds that are being used could—we could already be seeing the impact of that. And then when we move forward, we are expecting a slowdown in growth next year, but, again, if these—if this investment continues, of course, that would be a very positive factor behind the recovery. Thanks.

    Mr. De Haro: OK. I have time for just one question because literally, we have 15 seconds. So I’m going to go with the gentleman here.

    QUESTION: Thank you. Barry Wood, Hong Kong Radio. Mr. Gourinchas, in April you said likely we will see one rate cut in the United States. We’ve seen it. The data, as you just said, is very good. Would further rate cuts be counterproductive?

    Mr. Gourinchas: Well, in our projections, of course, we need to make some assumptions about what central banks, and this round of projection is no exception. So in our projections just released today, we’re assuming that there will be two more rate cuts by the Fed in 2024 and then four additional rate cuts in 2025. And that would bring the policy rate towards the terminal rate that is around 2.75, 3. Why do we see the additional rate cuts? Well, in part it’s the progress on inflation. And then as I mentioned earlier, as an answer to an earlier question, the fact that we’re seeing the labor markets cooling and therefore the concern for the Fed is now to make sure that that last part of the disinflation process is not one that is going to hit activity. In the Chapter 2 of our report, we describe how that last mile could be somewhat more costly because, as the supply constraints have eased and moved away, it becomes harder to bring down inflation in that last mile without hurting economic activity, so it’s important to also adjust the policy rate path in a direction of a little bit more easing, as the economy is smooth landing.

    Mr. De Haro: OK. As in life, all good things have to come to an end. But before that, I want to thank you all, on behalf of Pierre‑Olivier, Petya, and Jean‑Marc. Also, on behalf of the Communications Department and a couple of reminders for all of you, the Global Financial Stability Report press briefing is going to happen in this same room at around 10:15 a.m. Tomorrow morning, you have the press briefing for the Fiscal Monitor, and later on in the week, you will have the Managing Director’s press briefing and all the regional press briefings that we’ve been talking about. I want to encourage you to go to IMF.org, download the flagships, the World Economic Outlook, and if you have any questions, comments, feedback, everything to media at IMF.org. So have a great day.

    IMF Communications Department
    MEDIA RELATIONS

    PRESS OFFICER:

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

    @IMFSpokesperson

    MIL OSI Economics –

    January 24, 2025
  • MIL-OSI: Peapack-Gladstone Financial Corporation Reports Third Quarter Results

    Source: GlobeNewswire (MIL-OSI)

    BEDMINSTER, N.J., Oct. 22, 2024 (GLOBE NEWSWIRE) — Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its third quarter 2024 financial results.

    This earnings release should be read in conjunction with the Company’s Q3 2024 Investor Update, a copy of which is available on our website at http://www.pgbank.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at http://www.sec.gov.

    During the third quarter of 2024, deposits grew $279 million, to $5.9 billion, which represents an annualized growth rate of 20%. Nearly half of the deposit growth during the quarter was attributed to an increase in noninterest-bearing demand deposit balances which grew $130 million to $1.1 billion. Strong core relationship growth throughout 2024 has allowed the Company to repay all outstanding short-term borrowings and strengthen its liquidity position.  The Company also saw an increase in loan demand during the third quarter. Outstanding loan balances increased by $51 million to $5.3 billion as of September 30, 2024.

    The Company recorded net income of $7.6 million and diluted earnings per share (“EPS”) of $0.43 for the quarter ended September 30, 2024 compared to net income of $7.5 million and EPS of $0.42 for the quarter ended June 30, 2024.

    Net interest income increased $2.6 million, or 8%, on a linked quarter basis to $37.7 million during the third quarter of 2024 compared to $35.0 million in the second quarter.  The growth in net interest income was driven by continued improvement in the net interest margin. The net interest margin increased to 2.34% for the quarter ended September 30, 2024 compared to 2.25% for the quarter ended June 30, 2024 and 2.20% for the quarter ended March 31, 2024.

    Douglas L. Kennedy, President and CEO said, “Our expansion into the metro New York market, leading with our ‘Single Point of Contact’ private banking strategy, continues to deliver results ahead of plan. Our third quarter results reflect this success through strong core deposit growth, continued improvement in net interest income and enhanced liquidity profile. Our New York Commercial Private Banking initiative is currently managing over $730 million in customer relationship deposits, which includes 31% in noninterest-bearing demand deposits. We expect that our expansion will become accretive to earnings in early 2025.”

    Mr. Kennedy also noted, “During the third quarter of 2024, Moody’s reaffirmed our investment grade ratings with a stable outlook after a thorough analysis of our business model and balance sheet. We are fully aware of the headwinds created by the current interest rate environment, and we are confident in our ability to manage through any of these issues that may arise as we execute our private banking strategy, which over time will deliver shareholder value.”

    The following are select highlights for the period ended September 30, 2024:

    Wealth Management:

    • AUM/AUA in our Wealth Management Division totaled a record $12.1 billion at September 30, 2024 compared to $10.9 billion at December 31, 2023.
    • Gross new business inflows for Q3 2024 totaled $140 million ($130 million managed).
    • Wealth Management fee income was $15.2 million in Q3 2024, which amounted to 27% of total revenue for the quarter.

    Commercial Banking and Balance Sheet Management:

    • Year-to-date total deposits have increased by $661 million, to $5.9 billion at September 30, 2024 compared to $5.3 billion at December 31, 2023. The Company intentionally allowed $121 million in high cost, non-core relationship deposits to roll off during the first nine months of 2024. Excluding this deposit run-off, core relationship deposits have grown by $782 million during 2024.
    • The Company has repaid $404 million in short-term borrowings as of September 30, 2024.
    • Total loans declined $116 million to $5.3 billion at September 30, 2024 from $5.4 billion at December 31, 2023. However, outstanding loans increased by $51 million during the three-month period ended September 30, 2024 after experiencing contraction during the first six months of 2024.
    • Commercial and industrial lending (“C&I”) drove a majority of the growth during the third quarter. C&I balances represent 42% of the total loan portfolio at September 30, 2024. A strong pipeline of new business has been built heading into Q4.
    • Fee income on unused commercial lines of credit totaled $845,000 for Q3 2024.
    • The net interest margin (“NIM”) was 2.34% in Q3 2024, an increase of 9 basis points compared to 2.25% at Q2 2024.
    • Noninterest-bearing demand deposits increased by $130 million during the third quarter of 2024 and represented 18% of total deposits as of September 30, 2024.

    Capital Management:

    • Tangible book value per share increased 6% to $32.00 per share at September 30, 2024 compared to $30.31 at December 31, 2023. Book value per share increased 5% to $34.57 per share at September 30, 2024 compared to $32.90 at December 31, 2023.
    • During the third quarter, the Company repurchased 100,000 shares of common stock at a total cost of $2.6 million, or an average cost of $25.92 per share. During the first nine months of 2024, the Company repurchased 300,000 shares of common stock at a cost of $7.2 million. For the full year 2023, the Company repurchased 455,341 shares at a cost of $12.5 million.
    • At September 30, 2024, the Tier 1 Leverage Ratio stood at 10.99% for Peapack-Gladstone Bank (the “Bank”) and 9.33% for the Company. The Common Equity Tier 1 Ratio (to Risk-Weighted Assets) was 13.75% for the Bank and 11.67% for the Company at September 30, 2024. These ratios remain significantly above well capitalized standards, as capital continues to benefit from net income generation.

    SUMMARY INCOME STATEMENT DETAILS:

    The following tables summarize specified financial details for the periods shown.

    Nine Months Ended September 30, 2024 Year Compared to Nine Months Ended September 30, 2023

        Nine Months Ended     Nine Months Ended                
        September 30,     September 30,       Increase/  
    (Dollars in millions, except per share data) (unaudited)   2024     2023       (Decrease)  
    Net interest income   $ 107.10     $ 119.41       $ (12.31 )     (10 )%
    Wealth management fee income     45.98       41.99         3.99       10  
    Capital markets activity     2.30       2.45         (0.15 )     (6 )
    Other income     10.91       11.55         (0.64 )     (6 )
    Total other income     59.19       55.99         3.20       6  
                               
    Total Revenue     166.29       175.40         (9.11 )     (5 )%
                               
    Operating expenses     127.82       110.68         17.14       15  
    Pretax income before provision for credit losses     38.47       64.72         (26.25 )     (41 )
    Provision for credit losses     5.76       9.06         (3.30 )     (36 )
    Pretax income     32.71       55.66         (22.95 )     (41 )
    Income tax expense     8.96       15.40         (6.44 )     (42 )
    Net income   $ 23.75     $ 40.26       $ (16.51 )     (41 )%
    Diluted EPS   $ 1.34     $ 2.23       $ (0.89 )     (40 )%
                               
    Return on average assets     0.49 %     0.84 %       (0.35 )      
    Return on average equity     5.42 %     9.66 %       (4.24 )      

    September 2024 Quarter Compared to Prior Year Quarter

        Three Months Ended       Three Months Ended              
        September 30,       September 30,     Increase/  
    (Dollars in millions, except per share data) (unaudited)   2024       2023     (Decrease)  
    Net interest income   $ 37.68       $ 36.52     $ 1.16       3 %
    Wealth management fee income     15.15         13.98       1.17       8  
    Capital markets activity     0.44         0.61       (0.17 )     (28 )
    Other income     3.35         4.76       (1.41 )     (30 )
    Total other income     18.94         19.35       (0.41 )     (2 )
                               
    Total Revenue     56.62         55.87       0.75       1 %
                               
    Operating expenses     44.65         37.41       7.24       19  
    Pretax income before provision for credit losses     11.97         18.46       (6.49 )     (35 )
    Provision for credit losses     1.22         5.86       (4.64 )     (79 )
    Pretax income     10.75         12.60       (1.85 )     (15 )
    Income tax expense     3.16         3.84       (0.68 )     (18 )
    Net income   $ 7.59       $ 8.76     $ (1.17 )     (13 )%
    Diluted EPS   $ 0.43       $ 0.49     $ (0.06 )     (12 )%
                               
    Return on average assets annualized     0.46 %       0.54 %     (0.08 )      
    Return on average equity annualized     5.12 %       6.20 %     (1.08 )      

    September 2024 Quarter Compared to Linked Quarter

        Three Months Ended     Three Months Ended                
        September 30,     June 30,       Increase/  
    (Dollars in millions, except per share data) (unaudited)   2024     2024       (Decrease)  
    Net interest income   $ 37.68     $ 35.04       $ 2.64       8 %
    Wealth management fee income     15.15       16.42         (1.27 )     (8 )
    Capital markets activity     0.44       0.59         (0.15 )     (25 )
    Other income     3.35       4.55         (1.20 )     (26 )
    Total other income     18.94       21.56         (2.62 )     (12 )
                               
    Total Revenue     56.62       56.60         0.02       0 %
                               
    Operating expenses     44.65       43.13         1.52       4  
    Pretax income before provision for credit losses     11.97       13.47         (1.50 )     (11 )
    Provision for credit losses     1.22       3.91         (2.69 )     (69 )
    Pretax income     10.75       9.56         1.19       12  
    Income tax expense     3.16       2.03         1.13       56  
    Net income   $ 7.59     $ 7.53       $ 0.06       1 %
    Diluted EPS   $ 0.43     $ 0.42       $ 0.01       2 %
                               
    Return on average assets annualized     0.46 %     0.47 %       (0.01 )      
    Return on average equity annualized     5.12 %     5.22 %       (0.10 )      

    SUPPLEMENTAL QUARTERLY DETAILS:

    Wealth Management

    AUM/AUA in the Bank’s Wealth Management Division reached a record high of $12.1 billion at September 30, 2024 compared to $10.9 billion at December 31, 2023.  For the September 2024 quarter, the Wealth Management Team generated $15.2 million in fee income, compared to $16.4 million for the June 30, 2024 quarter and $14.0 million for the September 2023 quarter. The equity markets continued to improve during 2024, contributing to the increase in AUM/AUA along with gross new business inflows of $547 million.

    John Babcock, President of the Bank’s Wealth Management Division, noted, “Q3 2024 saw continued strong client inflows totaling new accounts and client additions of $140 million ($130 million managed). Our new business pipeline is healthy, and we continue to remain focused on delivering excellent service and advice to our clients. Our highly skilled wealth management professionals, our fiduciary powers and expertise, our financial planning capabilities combined with our high-touch client service model distinguishes us in our market and continues to drive our growth and success.”

    Loans / Commercial Banking

    Total loans declined $116 million, or 2%, to $5.3 billion at September 30, 2024 compared to December 31, 2023, primarily driven by repayments, maturities and tighter lending standards. Most of the decline in outstanding loans during the first nine months of 2024 was related to reductions in multifamily and commercial real estate balances. Total C&I loans and leases at September 30, 2024 were $2.2 billion or 42% of the total loan portfolio.

    Mr. Kennedy noted, “Based on a more constructive economic backdrop, we recently began building our pipeline of C&I loans and leases and believe that loan demand will continue to show improvement as we look forward to coming periods ahead. We are proud to have built a leading middle market commercial banking franchise, as evidenced by our C&I Portfolio, Treasury Management services, Corporate Advisory and SBA businesses. We anticipate these business lines fit perfectly with our private banking business model and will generate solid production going forward. During the quarter we originated loans that carried an average spread of more than 4% above our cost of funds.  Having this capability will help us in the near term as the real estate market adjusts to changing market conditions.”

    Net Interest Income (NII)/Net Interest Margin (NIM)

    The Company’s NII of $37.7 million and NIM of 2.34% for Q3 2024 increased $2.6 million and 9 basis points from NII of $35.0 million and NIM of 2.25% for the linked quarter (Q2 2024), and increased $1.2 million and 6 basis points from NII of $36.5 million and NIM of 2.28% compared to the prior year period (Q3 2023). Our single point of contact private banking strategy continues to deliver lower cost core deposit relationships. Noninterest-bearing checking deposits increased by $130 million during the third quarter of 2024, which also drove the improvement in NIM.

    Funding / Liquidity / Interest Rate Risk Management

    Total deposits increased $661 million to $5.9 billion at September 30, 2024 from $5.3 billion at December 31, 2023.  The change in deposit balances included a decline in brokered deposits and non-core deposit relationships.  The overall growth in deposits has strengthened balance sheet liquidity and reduced reliance on outside borrowings and other non-core funding sources. There were no outstanding overnight borrowings at September 30, 2024, compared to $404 million at December 31, 2023.

    At September 30, 2024, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $1.2 billion, or 18% of assets. The Company maintains additional liquidity resources of approximately $3.0 billion through secured available borrowing facilities with the Federal Home Loan Bank and the Federal Reserve Discount Window.  The available funding from the Federal Home Loan Bank and the Federal Reserve are secured by the Company’s loan and investment portfolios. The Company’s total on and off-balance sheet liquidity totaled $4.2 billion, which amounts to 293% of the total uninsured/uncollateralized deposits currently on the Company’s balance sheet.

    Income from Capital Markets Activities

    Noninterest income from Capital Markets activities (detailed below) totaled $435,000 for the September 2024 quarter compared to $586,000 for the June 2024 quarter and $613,000 for the September 2023 quarter.

        Three Months Ended     Three Months Ended     Three Months Ended  
        September 30,     June 30,     September 30,  
    (Dollars in thousands, except per share data) (unaudited)   2024     2024     2023  
    Gain on loans held for sale at fair value (Mortgage banking)   $ 15     $ 34     $ 37  
    Gain on sale of SBA loans     365       449       491  
    Corporate advisory fee income     55       103       85  
    Total capital markets activity   $ 435     $ 586     $ 613  

    Other Noninterest Income (other than Wealth Management Fee Income and Income from Capital Markets Activities)        

    Other noninterest income was $3.4 million for Q3 2024 compared to $4.6 million for Q2 2024 and $4.8 million for Q3 2023. Q3 2024 included $225,000 of income recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases, compared to $1.6 million in Q2 2024 and $2.3 million in Q3 2023, respectively. Additionally, Q3 2024 included $845,000 of unused line fees compared to $786,000 for Q2 2024 and $794,000 for Q3 2023.

    Operating Expenses

    The Company’s total operating expenses were $44.6 million for the third quarter of 2024, compared to $43.1 million for the second quarter of 2024 and $37.4 million for the quarter ended September 2023. The third quarter of 2024 reflects the full run rate of expenses associated with the Company’s expansion into New York City.

    Mr. Kennedy noted, “We continue to make investments related to our strategic decision to expand into New York City and are confident that these investments will position us for future growth and profitability, which will ultimately translate to increased shareholder value.  We continue to look for opportunities to create efficiencies and manage expenses throughout the Company while investing in enhancements to the client experience.”

    Income Taxes

    The effective tax rate for the three months ended September 30, 2024 was 29.4%, as compared to 21.2% for the June 2024 quarter and 30.5% for the quarter ended September 30, 2023.  The June 2024 quarter included a one-time benefit related to the Company’s deferred tax assets associated with a surtax imposed by the State of New Jersey in June 2024. Excluding such benefit, the effective tax rate for the June 2024 quarter would have been approximately 29.0%.

    Asset Quality / Provision for Credit Losses

    Nonperforming assets remained elevated at $80.5 million, or 1.18% of total assets, at September 30, 2024, as compared to $82.1 million, or 1.26% of total assets, at June 30, 2024. Loans past due 30 to 89 days and still accruing were $31.4 million, or 0.59% of total loans, at September 30, 2024 compared to $34.7 million, or 0.66% of total loans, at June 30, 2024. Criticized and classified loans totaled $261.1 million at September 30, 2024, reflecting a decrease of $8.0 million as compared to $269.1 million at June 30, 2024. The Company currently has no loans or leases on deferral and still accruing.

    For the quarter ended September 30, 2024, the Company’s provision for credit losses was $1.2 million compared to $3.9 million for the June 2024 quarter and $5.9 million for the September 2023 quarter. The provision for credit losses in the third quarter of 2024 was driven by overall slower loan growth along with additional specific reserves related to certain isolated credits, of $1.8 million partially offset by a recovery of approximately $2.1 million. The higher provision for the second quarter of 2024 was primarily driven by charge-offs related to the sale of two problem loans, which were approaching foreclosure and transferred to other real estate owned.

    At September 30, 2024, the allowance for credit losses was $71.3 million (1.34% of total loans), compared to $68.0 million (1.29% of total loans) at June 30, 2024, and $68.6 million (1.25% of total loans) at September 30, 2023.

    Mr. Kennedy noted, “We are starting to see some of our asset quality metrics improve, which supports our position that most of our credit issues are isolated to a small number of specific borrowers and sponsors. We continue to work through each credit one at a time while building up reserve coverage. All of the multifamily loans that matured or repriced in 2024 have continued to make their scheduled payments despite the higher rate environment.”

    Capital

    The Company’s capital position increased during the third quarter of 2024 due to net income of $7.6 million, which was partially offset by the repurchase of 100,000 shares through the Company’s repurchase program at a total cost of $2.6 million and the quarterly dividend payment totaling $882,000. Additionally, during the third quarter of 2024, capital benefited from a reduction in accumulated other comprehensive losses of $13.5 million, net of tax. The total accumulated other comprehensive loss declined to $54.8 million as of September 30, 2024 ($57.6 million loss related to the available for sale securities portfolio partially offset by a $2.8 million gain on the cash flow hedges). 

    Tangible book value per share increased 6% to $32.00 at September 30, 2024 from $30.31 at December 31, 2023. Tangible book value per share is a non-GAAP financial measure. See the reconciliation tables included in this release for further detail. Book value per share increased 5% to $34.57 per share at September 30, 2024 compared to $32.90 at December 31, 2023. The Company’s and Bank’s regulatory capital ratios as of September 30, 2024 remain strong and reflect increases from December 31, 2023 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

    The Company employs quarterly capital stress testing modeling of an adverse case and severely adverse case. In the most recently completed stress test (as of June 30, 2024), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period.

    On September 25, 2024, the Company declared a cash dividend of $0.05 per share payable on November 22, 2024 to shareholders of record on November 7, 2024.

    ABOUT THE COMPANY

    Peapack-Gladstone Financial Corporation is a New Jersey based bank holding company with total assets of $6.8 billion and assets under management/administration of $12.1 billion as of September 30, 2024.  Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides Private Banking customized solutions through its wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses, not for profits and consumers.  Peapack Private, the bank’s wealth management division, offers comprehensive financial, tax, fiduciary and investment advice and solutions to individuals, families, privately-held businesses, family offices and not-for-profit organizations, which help them to establish, maintain and expand their legacy. Together, Peapack-Gladstone Bank and Peapack Private offer an unparalleled commitment to client service. Visit http://www.pgbank.com and http://www.peapackprivate.com for more information.

    FORWARD-LOOKING STATEMENTS

    The foregoing may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, investments, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as “expect,” “look,” “believe,” “anticipate,” “may” or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to:

    • our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
    • the impact of anticipated higher operating expenses in 2024 and beyond;
    • our ability to successfully integrate wealth management firm and team acquisitions;
    • our ability to successfully integrate our expanded employee base;
    • an unexpected decline in the economy, in particular in our New Jersey and New York market areas, including potential recessionary conditions;
    • declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
    • declines in the value in our investment portfolio;
    • impact from a pandemic event on our business, operations, customers, allowance for credit losses and capital levels;
    • higher than expected increases in our allowance for credit losses;
    • higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans or charge-offs;
    • inflation and 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 lead to higher operating costs;
    • decline in real estate values within our market areas;
    • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
    • successful cyberattacks against our IT infrastructure and that of our IT and third-party providers;
    • higher than expected FDIC insurance premiums;
    • adverse weather conditions;
    • the current or anticipated impact of military conflict, terrorism or other geopolitical events;
    • our inability to successfully generate new business in new geographic markets, including our expansion into New York City;
    • a reduction in our lower-cost funding sources;
    • changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
    • our inability to adapt to technological changes;
    • claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
    • our inability to retain key employees;
    • demands for loans and deposits in our market areas;
    • adverse changes in securities markets;
    • changes in New York City rent regulation law;
    • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
    • changes in accounting policies and practices; and/or
    • other unexpected material adverse changes in our financial condition, operations or earnings.

    A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2023. Except as may be required by the applicable law or regulation, we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

    Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

    Contact:
    Frank A. Cavallaro, SEVP and CFO
    Peapack-Gladstone Financial Corporation
    T: 908-306-8933

    (Tables to follow)

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    SELECTED CONSOLIDATED FINANCIAL DATA
    (Dollars in Thousands, except per share data)
    (Unaudited)

        For the Three Months Ended  
        Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
        2024     2024     2024     2023     2023  
    Income Statement Data:                              
    Interest income   $ 83,203     $ 79,238     $ 79,194     $ 80,178     $ 78,489  
    Interest expense     45,522       44,196       44,819       43,503       41,974  
    Net interest income     37,681       35,042       34,375       36,675       36,515  
    Wealth management fee income     15,150       16,419       14,407       13,758       13,975  
    Service charges and fees     1,327       1,345       1,322       1,255       1,319  
    Bank owned life insurance     390       328       503       357       310  
    Gain on loans held for sale at fair value
    (Mortgage banking)
        15       34       56       18       37  
    Gain on loans held for sale at lower
    of cost or fair value
        —       23       —       —       —  
    Gain on sale of SBA loans     365       449       400       239       491  
    Corporate advisory fee income     55       103       818       39       85  
    Other income     1,162       2,938       1,306       1,339       3,541  
    Fair value adjustment for CRA equity security     474       (84 )     (111 )     585       (404 )
    Total other income     18,938       21,555       18,701       17,590       19,354  
                                   
    Total revenue     56,619       56,597       53,076       54,265       55,869  
                                   
    Salaries and employee benefits     31,050       29,884       28,476       24,320       25,264  
    Premises and equipment     5,633       5,776       5,081       5,416       5,214  
    FDIC insurance expense     870       870       945       765       741  
    Other expenses     7,096       6,596       5,539       7,115       6,194  
    Total operating expenses     44,649       43,126       40,041       37,616       37,413  
    Pretax income before provision for credit losses     11,970       13,471       13,035       16,649       18,456  
    Provision for credit losses     1,224       3,911       627       5,026       5,856  
    Income before income taxes     10,746       9,560       12,408       11,623       12,600  
    Income tax expense     3,159       2,030       3,777       3,024       3,845  
    Net income   $ 7,587     $ 7,530     $ 8,631     $ 8,599     $ 8,755  
                                   
    Per Common Share Data:                              
    Earnings per share (basic)   $ 0.43     $ 0.42     $ 0.49     $ 0.48     $ 0.49  
    Earnings per share (diluted)     0.43       0.42       0.48       0.48       0.49  
    Weighted average number of common
    shares outstanding:
                                 
    Basic     17,616,046       17,747,070       17,711,639       17,770,158       17,856,961  
    Diluted     17,700,042       17,792,296       17,805,347       17,961,400       18,010,127  
    Performance Ratios:                              
    Return on average assets annualized (ROAA)     0.46 %     0.47 %     0.54 %     0.53 %     0.54 %
    Return on average equity annualized (ROAE)     5.12 %     5.22 %     5.94 %     6.13 %     6.20 %
    Return on average tangible equity annualized (ROATCE) (A)     5.54 %     5.67 %     6.45 %     6.68 %     6.75 %
    Net interest margin (tax-equivalent basis)     2.34 %     2.25 %     2.20 %     2.29 %     2.28 %
    GAAP efficiency ratio (B)     78.86 %     76.20 %     75.44 %     69.32 %     66.97 %
    Operating expenses / average assets annualized     2.73 %     2.70 %     2.51 %     2.33 %     2.31 %

    (A) Return on average tangible equity is calculated by dividing tangible equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
    (B) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    SELECTED CONSOLIDATED FINANCIAL DATA
    (Dollars in Thousands, except per share data)
    (Unaudited)

        For the Nine Months Ended              
        September 30,     Change  
        2024     2023     $     %  
    Income Statement Data:                        
    Interest income   $ 241,635     $ 223,832     $ 17,803       8 %
    Interest expense     134,537       104,418       30,119       29 %
    Net interest income     107,098       119,414       (12,316 )     -10 %
    Wealth management fee income     45,976       41,989       3,987       9 %
    Service charges and fees     3,994       3,897       97       2 %
    Bank owned life insurance     1,221       912       309       34 %
    Gain on loans held for sale at fair value (Mortgage banking)     105       73       32       44 %
    Gain on loans held for sale at lower of cost or fair value     23       —       23     N/A  
    Gain on sale of SBA loans     1,214       2,194       (980 )     -45 %
    Corporate advisory fee income     976       180       796       442 %
    Other income     5,406       7,147       (1,741 )     -24 %
    Fair value adjustment for CRA equity security     279       (404 )     683       -169 %
    Total other income     59,194       55,988       3,206       6 %
                             
    Total revenue     166,292       175,402       (9,110 )     -5 %
                             
    Salaries and employee benefits     89,410       76,204       13,206       17 %
    Premises and equipment     16,490       14,317       2,173       15 %
    FDIC insurance expense     2,685       2,181       504       23 %
    Other expenses     19,231       17,977       1,254       7 %
    Total operating expenses     127,816       110,679       17,137       15 %
    Pretax income before provision for credit losses     38,476       64,723       (26,247 )     -41 %
    Provision for credit losses     5,762       9,065       (3,303 )     -36 %
    Income before income taxes     32,714       55,658       (22,944 )     -41 %
    Income tax expense     8,966       15,403       (6,437 )     -42 %
    Net income   $ 23,748     $ 40,255     $ (16,507 )     -41 %
                             
                             
    Per Common Share Data:                        
    Earnings per share (basic)   $ 1.34     $ 2.25     $ (0.91 )     -40 %
    Earnings per share (diluted)     1.34       2.23       (0.89 )     -40 %
    Weighted average number of common shares outstanding:                        
    Basic     17,691,309       17,876,316       (185,007 )     -1 %
    Diluted     17,746,560       18,091,524       (344,964 )     -2 %
    Performance Ratios:                        
    Return on average assets (ROAA)     0.49 %     0.84 %     (0.35 )%     -41 %
    Return on average equity (ROAE)     5.42 %     9.66 %     (4.24 )%     -44 %
    Return on average tangible equity (ROATCE) (A)     5.88 %     10.55 %     (4.67 )%     -44 %
    Net interest margin (tax-equivalent basis)     2.26 %     2.54 %     (0.28 )%     -11 %
    GAAP efficiency ratio (B)     76.86 %     63.10 %     13.76 %     22 %
    Operating expenses / average assets     2.65 %     2.31 %     0.34 %     15 %

    (A) Return on average tangible equity is calculated by dividing tangible equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
    (B) Calculated as total operating expenses as a percentage of total revenue.  For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    CONSOLIDATED STATEMENTS OF CONDITION
    (Dollars in Thousands)
    (Unaudited)

        As of  
        Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
        2024     2024     2024     2023     2023  
    ASSETS                              
    Cash and due from banks   $ 8,129     $ 5,586     $ 5,769     $ 5,887     $ 7,400  
    Federal funds sold     —       —       —       —       —  
    Interest-earning deposits     484,529       310,143       189,069       181,784       180,469  
    Total cash and cash equivalents     492,658       315,729       194,838       187,671       187,869  
    Securities available for sale     682,713       591,884       550,870       550,617       521,005  
    Securities held to maturity     103,158       105,013       106,498       107,755       108,940  
    CRA equity security, at fair value     13,445       12,971       13,055       13,166       12,581  
    FHLB and FRB stock, at cost (A)     12,459       12,478       18,079       31,044       34,158  
                                   
    Residential mortgage     591,374       579,057       581,426       578,427       585,295  
    Multifamily mortgage     1,784,861       1,796,687       1,827,165       1,836,390       1,871,853  
    Commercial mortgage     578,559       600,859       615,964       637,625       622,469  
    Commercial and industrial loans     2,247,853       2,185,827       2,235,342       2,284,940       2,321,917  
    Consumer loans     78,160       69,579       66,827       62,036       57,227  
    Home equity lines of credit     38,971       37,117       35,542       36,464       34,411  
    Other loans     389       172       184       238       265  
    Total loans     5,320,167       5,269,298       5,362,450       5,436,120       5,493,437  
    Less: Allowance for credit losses     71,283       67,984       66,251       65,888       68,592  
    Net loans     5,248,884       5,201,314       5,296,199       5,370,232       5,424,845  
                                   
    Premises and equipment     25,716       24,932       24,494       24,166       23,969  
    Accrued interest receivable     31,973       33,534       32,672       30,676       22,889  
    Bank owned life insurance     47,837       47,716       47,580       47,581       47,509  
    Goodwill and other intangible assets     45,198       45,470       45,742       46,014       46,286  
    Finance lease right-of-use assets     1,020       1,055       1,900       2,087       2,274  
    Operating lease right-of-use assets     41,650       38,683       16,035       12,096       12,800  
    Due from brokers     —       3,184       —       —       —  
    Other assets     47,081       71,387       60,591       53,752       76,456  
    TOTAL ASSETS   $ 6,793,792     $ 6,505,350     $ 6,408,553     $ 6,476,857     $ 6,521,581  
                                   
    LIABILITIES                              
    Deposits:                              
    Noninterest-bearing demand deposits   $ 1,079,877     $ 950,368     $ 914,893     $ 957,687     $ 947,405  
    Interest-bearing demand deposits     3,316,217       3,229,814       3,029,119       2,882,193       2,871,359  
    Savings     103,979       105,602       108,305       111,573       117,905  
    Money market accounts     902,562       824,158       775,132       740,559       761,833  
    Certificates of deposit – Retail     515,297       502,810       486,079       443,791       422,291  
    Certificates of deposit – Listing Service     7,454       7,454       7,704       7,804       9,103  
    Subtotal “customer” deposits     5,925,386       5,620,206       5,321,232       5,143,607       5,129,896  
    IB Demand – Brokered     10,000       10,000       10,000       10,000       10,000  
    Certificates of deposit – Brokered     —       26,000       145,480       120,507       119,463  
    Total deposits     5,935,386       5,656,206       5,476,712       5,274,114       5,259,359  
    Short-term borrowings     —       —       119,490       403,814       470,576  
    Finance lease liability     1,388       1,427       3,104       3,430       3,752  
    Operating lease liability     44,775       41,347       17,630       12,876       13,595  
    Subordinated debt, net     133,489       133,417       133,346       133,274       133,203  
    Due to brokers     —       9,981       —       —       —  
    Other liabilities     71,140       74,650       75,892       65,668       82,140  
    TOTAL LIABILITIES     6,186,178       5,917,028       5,826,174       5,893,176       5,962,625  
    Shareholders’ equity     607,614       588,322       582,379       583,681       558,956  
    TOTAL LIABILITIES AND                              
    SHAREHOLDERS’ EQUITY   $ 6,793,792     $ 6,505,350     $ 6,408,553     $ 6,476,857     $ 6,521,581  
    Assets under management and / or administration at
    Peapack-Gladstone Bank’s Private Wealth Management
    Division (market value, not included above-dollars in billions)
      $ 12.1     $ 11.5     $ 11.5     $ 10.9     $ 10.4  

    (A) FHLB means “Federal Home Loan Bank” and FRB means “Federal Reserve Bank.”

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    SELECTED BALANCE SHEET DATA
    (Dollars in Thousands)
    (Unaudited)

        As of  
        Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
        2024     2024     2024     2023     2023  
    Asset Quality:                              
    Loans past due over 90 days and still accruing   $ —     $ —     $ 35     $ —     $ —  
    Nonaccrual loans     80,453       82,075       69,811       61,324       70,809  
    Other real estate owned     —       —       —       —       —  
    Total nonperforming assets   $ 80,453     $ 82,075     $ 69,846     $ 61,324     $ 70,809  
                                   
    Nonperforming loans to total loans     1.51 %     1.56 %     1.30 %     1.13 %     1.29 %
    Nonperforming assets to total assets     1.18 %     1.26 %     1.09 %     0.95 %     1.09 %
                                   
    Performing modifications (A)(B)   $ 51,796     $ 26,788     $ 12,311     $ 248     $ 248  
                                   
    Loans past due 30 through 89 days and still accruing   $ 31,446     $ 34,714     $ 73,699     $ 34,589     $ 9,780  
                                   
    Loans subject to special mention   $ 113,655     $ 140,791     $ 59,450     $ 71,397     $ 53,328  
                                   
    Classified loans   $ 147,422     $ 128,311     $ 117,869     $ 84,372     $ 94,866  
                                   
    Individually evaluated loans   $ 79,972     $ 81,802     $ 69,530     $ 60,710     $ 70,184  
                                   
    Allowance for credit losses (“ACL”):                              
    Beginning of quarter   $ 67,984     $ 66,251     $ 65,888     $ 68,592     $ 62,704  
    Provision for credit losses (C)     1,227       3,901       615       5,082       5,944  
    (Charge-offs)/recoveries, net (D)     2,072       (2,168 )     (252 )     (7,786 )     (56 )
    End of quarter   $ 71,283     $ 67,984     $ 66,251     $ 65,888     $ 68,592  
                                   
    ACL to nonperforming loans     88.60 %     82.83 %     94.85 %     107.44 %     96.87 %
    ACL to total loans     1.34 %     1.29 %     1.24 %     1.21 %     1.25 %
    Collectively evaluated ACL to total loans (E)     1.16 %     1.14 %     1.15 %     1.13 %     1.10 %

    (A) Amounts reflect modifications that are paying according to modified terms.
    (B) Excludes modifications included in nonaccrual loans of $3.7 million at September 30, 2024, $3.2 million at June 30, 2024, $3.2 million at March 31, 2024, $3.0 million at December 31, 2023 and $3.1 million at September 30, 2023.
    (C) Excludes a credit of $3,000 at September 30, 2024, a provision of $10,000 at June 30, 2024, a provision of $12,000 at March 31, 2024, a credit of $55,000 at December 31, 2023 and a credit of $88,000 at September 30, 2023 related to off-balance sheet commitments.
    (D) Net charge-offs for the quarter ended December 31, 2023 included charge-offs of $2.2 million of a previously established reserve to loans individually evaluated on one multifamily loan and $5.6 million on one equipment finance relationship.
    (E) Total ACL less reserves to loans individually evaluated equals collectively evaluated ACL.

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    SELECTED BALANCE SHEET DATA
    (Dollars in Thousands)
    (Unaudited)

        As of  
        September 30,     December 31,     September 30,  
        2024     2023     2023  
    Capital Adequacy                              
    Equity to total assets (A)         8.94 %         9.01 %         8.57 %
    Tangible equity to tangible assets (B)         8.33 %         8.36 %         7.92 %
    Book value per share (C)       $ 34.57         $ 32.90         $ 31.37  
    Tangible book value per share (D)       $ 32.00         $ 30.31         $ 28.77  
                                   
    Tangible equity to tangible assets excluding other comprehensive loss*         9.07 %         9.28 %         9.06 %
    Tangible book value per share excluding other comprehensive loss*       $ 35.11         $ 33.97         $ 33.36  

    *Excludes other comprehensive loss of $54.8 million for the quarter ended September 30, 2024, $64.9 million for the quarter ended December 31, 2023, and $81.7 million for the quarter ended September 30, 2023. See Non-GAAP financial measures reconciliation included in these tables.

    (A) Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at quarter end.
    (B) Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. Tangible equity as a percentage of tangible assets at quarter end is calculated by dividing tangible equity by tangible assets at quarter end. See Non-GAAP financial measures reconciliation included in these tables.
    (C) Book value per common share is calculated by dividing shareholders’ equity by quarter end common shares outstanding.
    (D) Tangible book value per share excludes intangible assets. Tangible book value per share is calculated by dividing tangible equity by quarter end common shares outstanding. See Non-GAAP financial measures reconciliation tables.

        As of
        September 30,   December 31,   September 30,
        2024     2023     2023  
    Regulatory Capital – Holding Company                              
    Tier I leverage   $ 615,486     9.33 %   $ 600,444     9.19 %   $ 592,061     9.05 %
    Tier I capital to risk-weighted assets     615,486     11.67       600,444     11.43       592,061     11.13  
    Common equity tier I capital ratio
    to risk-weighted assets
        615,474     11.67       600,432     11.43       592,043     11.13  
    Tier I & II capital to risk-weighted assets     800,961     15.19       785,413     14.95       784,777     14.76  
                                   
    Regulatory Capital – Bank                              
    Tier I leverage (E)   $ 724,038     10.99 %   $ 707,446     10.83 %   $ 702,517     10.75 %
    Tier I capital to risk-weighted assets (F)     724,038     13.75       707,446     13.48       702,517     13.22  
    Common equity tier I capital ratio
    to risk-weighted assets (G)
        724,026     13.75       707,434     13.47       702,499     13.22  
    Tier I & II capital to risk-weighted assets (H)     789,954     15.00       773,083     14.73       768,979     14.47  

    (E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($264 million)
    (F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($448 million)
    (G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($369 million)
    (H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($553 million)

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    LOANS CLOSED
    (Dollars in Thousands)
    (Unaudited)

        For the Quarters Ended  
        Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
        2024     2024     2024     2023     2023  
    Residential loans retained   $ 26,955     $ 16,087     $ 11,661     $ 5,895     $ 21,310  
    Residential loans sold     1,853       2,361       4,025       1,449       2,503  
    Total residential loans     28,808       18,448       15,686       7,344       23,813  
    Commercial real estate     4,300       2,600       11,500       21,375       3,900  
    Multifamily     11,295       4,330       1,900       5,725       3,000  
    Commercial (C&I) loans (A) (B)     242,829       103,065       145,803       145,397       176,845  
    SBA     9,106       8,200       2,790       7,326       300  
    Wealth lines of credit (A)     11,675       10,950       3,850       350       6,875  
    Total commercial loans     279,205       129,145       165,843       180,173       190,920  
    Installment loans     8,137       1,664       6,868       2,946       6,999  
    Home equity lines of credit (A)     10,421       4,787       2,103       4,174       6,275  
    Total loans closed   $ 326,571     $ 154,044     $ 190,500     $ 194,637     $ 228,007  
        For the Nine Months Ended  
        Sept 30,     Sept 30,  
        2024     2023  
    Residential loans retained   $ 54,703     $ 90,971  
    Residential loans sold     8,239       5,052  
    Total residential loans     62,942       96,023  
    Commercial real estate     18,400       66,125  
    Multifamily     17,525       59,812  
    Commercial (C&I) loans (A) (B)     491,697       543,631  
    SBA     20,096       23,963  
    Wealth lines of credit (A)     26,475       34,050  
    Total commercial loans     574,193       727,581  
    Installment loans     16,669       23,672  
    Home equity lines of credit (A)     17,311       15,303  
    Total loans closed   $ 671,115     $ 862,579  

    (A) Includes loans and lines of credit that closed in the period but not necessarily funded.
    (B) Includes equipment finance.

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    AVERAGE BALANCE SHEET
    (Tax-Equivalent Basis, Dollars in Thousands)
    (Unaudited)

        For the Three Months Ended  
        September 30, 2024     September 30, 2023  
        Average     Income/     Annualized     Average     Income/     Annualized  
        Balance     Expense     Yield     Balance     Expense     Yield  
    ASSETS:                                    
    Interest-earning assets:                                    
    Investments:                                    
    Taxable (A)   $ 865,892     $ 6,107       2.82 %   $ 806,861     $ 5,170       2.56 %
    Tax-exempt (A) (B)     —       —       —       1,198       11       3.67  
                                         
    Loans (B) (C):                                    
    Mortgages     579,949       5,834       4.02       580,951       5,208       3.59  
    Commercial mortgages     2,381,771       27,362       4.60       2,502,351       27,746       4.44  
    Commercial     2,159,648       37,588       6.96       2,298,723       37,357       6.50  
    Commercial construction     22,371       507       9.07       12,346       282       9.14  
    Installment     73,440       1,267       6.90       56,248       967       6.88  
    Home equity     38,768       814       8.40       34,250       680       7.94  
    Other     239       6       10.04       234       7       11.97  
    Total loans     5,256,186       73,378       5.58       5,485,103       72,247       5.27  
    Federal funds sold     —       —       —       —       —       —  
    Interest-earning deposits     326,707       3,982       4.88       136,315       1,463       4.29  
    Total interest-earning assets     6,448,785       83,467       5.18 %     6,429,477       78,891       4.91 %
    Noninterest-earning assets:                                    
    Cash and due from banks     7,521                   6,954              
    Allowance for credit losses     (70,317 )                 (63,625 )            
    Premises and equipment     25,530                   23,880              
    Other assets     139,042                   85,582              
    Total noninterest-earning assets     101,776                   52,791              
    Total assets   $ 6,550,561                 $ 6,482,268              
                                         
    LIABILITIES:                                    
    Interest-bearing deposits:                                    
    Checking   $ 3,214,186     $ 31,506       3.92 %   $ 2,813,080     $ 24,318       3.46 %
    Money markets     833,325       6,419       3.08       771,781       4,458       2.31  
    Savings     104,293       117       0.45       118,718       75       0.25  
    Certificates of deposit – retail     512,794       5,540       4.32       415,665       3,459       3.33  
    Subtotal interest-bearing deposits     4,664,598       43,582       3.74       4,119,244       32,310       3.14  
    Interest-bearing demand – brokered     10,000       134       5.36       10,000       136       5.44  
    Certificates of deposit – brokered     7,913       106       5.36       102,777       1,183       4.60  
    Total interest-bearing deposits     4,682,511       43,822       3.74       4,232,021       33,629       3.18  
    Borrowings     —       —       —       470,616       6,569       5.58  
    Capital lease obligation     1,401       15       4.28       3,863       46       4.76  
    Subordinated debt     133,449       1,685       5.05       133,163       1,730       5.20  
    Total interest-bearing liabilities     4,817,361       45,522       3.78 %     4,839,663       41,974       3.47 %
    Noninterest-bearing liabilities:                                    
    Demand deposits     1,016,014                   990,854              
    Accrued expenses and other liabilities     124,399                   86,598              
    Total noninterest-bearing liabilities     1,140,413                   1,077,452              
    Shareholders’ equity     592,787                   565,153              
    Total liabilities and shareholders’ equity   $ 6,550,561                 $ 6,482,268              
    Net interest income         $ 37,945                 $ 36,917        
    Net interest spread                 1.40 %                 1.44 %
    Net interest margin (D)                 2.34 %                 2.28 %

    (A) Average balances for available for sale securities are based on amortized cost.
    (B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
    (C) Loans are stated net of unearned income and include nonaccrual loans.
    (D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    AVERAGE BALANCE SHEET
    (Tax-Equivalent Basis, Dollars in Thousands)
    (Unaudited)

        For the Three Months Ended  
        September 30, 2024     June 30, 2024  
        Average     Income/     Annualized     Average     Income/     Annualized  
        Balance     Expense     Yield     Balance     Expense     Yield  
    ASSETS:                                    
    Interest-earning assets:                                    
    Investments:                                    
    Taxable (A)   $ 865,892     $ 6,107       2.82 %   $ 801,715     $ 5,168       2.58 %
    Tax-exempt (A) (B)     —       —       —       —       —       —  
                                         
    Loans (B) (C):                                    
    Mortgages     579,949       5,834       4.02       576,944       5,582       3.87  
    Commercial mortgages     2,381,771       27,362       4.60       2,420,570       26,881       4.44  
    Commercial     2,159,648       37,588       6.96       2,191,370       37,067       6.77  
    Commercial construction     22,371       507       9.07       21,628       489       9.04  
    Installment     73,440       1,267       6.90       67,034       1,143       6.82  
    Home equity     38,768       814       8.40       36,576       748       8.18  
    Other     239       6       10.04       200       6       12.00  
    Total loans     5,256,186       73,378       5.58       5,314,322       71,916       5.41  
    Federal funds sold     —       —       —       —       —       —  
    Interest-earning deposits     326,707       3,982       4.88       207,287       2,418       4.67  
    Total interest-earning assets     6,448,785       83,467       5.18 %     6,323,324       79,502       5.03 %
    Noninterest-earning assets:                                    
    Cash and due from banks     7,521                   7,537              
    Allowance for credit losses     (70,317 )                 (67,568 )            
    Premises and equipment     25,530                   24,820              
    Other assets     139,042                   99,838              
    Total noninterest-earning assets     101,776                   64,627              
    Total assets   $ 6,550,561                 $ 6,387,951              
                                         
    LIABILITIES:                                    
    Interest-bearing deposits:                                    
    Checking   $ 3,214,186     $ 31,506       3.92 %   $ 3,094,386     $ 29,252       3.78 %
    Money markets     833,325       6,419       3.08       791,385       6,016       3.04  
    Savings     104,293       117       0.45       105,825       96       0.36  
    Certificates of deposit – retail     512,794       5,540       4.32       504,313       5,367       4.26  
    Subtotal interest-bearing deposits     4,664,598       43,582       3.74       4,495,909       40,731       3.62  
    Interest-bearing demand – brokered     10,000       134       5.36       10,000       134       5.36  
    Certificates of deposit – brokered     7,913       106       5.36       98,642       1,242       5.04  
    Total interest-bearing deposits     4,682,511       43,822       3.74       4,604,551       42,107       3.66  
    Borrowings     —       —       —       27,247       381       5.59  
    Capital lease obligation     1,401       15       4.28       2,869       22       3.07  
    Subordinated debt     133,449       1,685       5.05       133,377       1,686       5.06  
    Total interest-bearing liabilities     4,817,361       45,522       3.78 %     4,768,044       44,196       3.71 %
    Noninterest-bearing liabilities:                                    
    Demand deposits     1,016,014                   945,231              
    Accrued expenses and other liabilities     124,399                   97,470              
    Total noninterest-bearing liabilities     1,140,413                   1,042,701              
    Shareholders’ equity     592,787                   577,206              
    Total liabilities and shareholders’ equity   $ 6,550,561                 $ 6,387,951              
    Net interest income         $ 37,945                 $ 35,306        
    Net interest spread                 1.40 %                 1.32 %
    Net interest margin (D)                 2.34 %                 2.25 %

    (A) Average balances for available for sale securities are based on amortized cost.
    (B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
    (C) Loans are stated net of unearned income and include nonaccrual loans.
    (D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    AVERAGE BALANCE SHEET
    (Tax-Equivalent Basis, Dollars in Thousands)
    (Unaudited)

        For the Nine Months Ended  
        September 30, 2024     September 30, 2023  
        Average     Income/           Average     Income/        
        Balance     Expense     Yield     Balance     Expense     Yield  
    ASSETS:                                    
    Interest-earning assets:                                    
    Investments:                                    
    Taxable (A)   $ 820,594     $ 16,411       2.67 %   $ 801,535     $ 14,541       2.42 %
    Tax-exempt (A) (B)     —       —       —       1,637       49       3.99  
                                         
    Loans (B) (C):                                    
    Mortgages     578,187       16,836       3.88       556,220       14,433       3.46  
    Commercial mortgages     2,420,772       81,783       4.50       2,495,175       80,503       4.30  
    Commercial     2,196,921       112,214       6.81       2,247,803       106,182       6.30  
    Commercial construction     20,981       1,425       9.06       7,903       536       9.04  
    Installment     68,605       3,524       6.85       49,214       2,416       6.55  
    Home equity     37,255       2,298       8.22       33,914       1,903       7.48  
    Other     218       19       11.62       260       22       11.28  
    Total loans     5,322,939       218,099       5.46       5,390,489       205,995       5.10  
    Federal funds sold     —       —       —       —       —       —  
    Interest-earning deposits     225,070       7,922       4.69       147,071       4,452       4.04  
    Total interest-earning assets     6,368,603       242,432       5.08 %     6,340,732       225,037       4.73 %
    Noninterest-earning assets:                                    
    Cash and due from banks     8,384                   8,388              
    Allowance for credit losses     (68,337 )                 (62,753 )            
    Premises and equipment     24,917                   23,850              
    Other assets     109,152                   76,992              
    Total noninterest-earning assets     74,116                   46,477              
    Total assets   $ 6,442,719                 $ 6,387,209              
                                         
    LIABILITIES:                                    
    Interest-bearing deposits:                                    
    Checking   $ 3,088,218     $ 88,192       3.81 %   $ 2,739,115     $ 63,018       3.07 %
    Money markets     794,297       17,959       3.01       893,567       13,185       1.97  
    Savings     106,200       302       0.38       128,437       148       0.15  
    Certificates of deposit – retail     498,353       15,762       4.22       386,488       7,650       2.64  
    Subtotal interest-bearing deposits     4,487,068       122,215       3.63       4,147,607       84,001       2.70  
    Interest-bearing demand – brokered     10,000       394       5.25       15,311       469       4.08  
    Certificates of deposit – brokered     78,042       2,950       5.04       51,916       1,584       4.07  
    Total interest-bearing deposits     4,575,110       125,559       3.66       4,214,834       86,054       2.72  
    Borrowings     87,224       3,848       5.88       331,170       13,249       5.33  
    Capital lease obligation     2,491       75       4.01       4,179       149       4.75  
    Subordinated debt     133,377       5,055       5.05       133,090       4,966       4.98  
    Total interest-bearing liabilities     4,798,202       134,537       3.74 %     4,683,273       104,418       2.97 %
    Noninterest-bearing liabilities:                                    
    Demand deposits     959,571                   1,066,162              
    Accrued expenses and other liabilities     101,247                   82,215              
    Total noninterest-bearing liabilities     1,060,818                   1,148,377              
    Shareholders’ equity     583,699                   555,559              
    Total liabilities and shareholders’ equity   $ 6,442,719                 $ 6,387,209              
    Net interest income         $ 107,895                 $ 120,619        
    Net interest spread                 1.34 %                 1.76 %
    Net interest margin (D)                 2.26 %                 2.54 %

    (A) Average balances for available for sale securities are based on amortized cost.
    (B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
    (C) Loans are stated net of unearned income and include nonaccrual loans.
    (D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    NON-GAAP FINANCIAL MEASURES RECONCILIATION

    Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by common shares outstanding at period end. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

    The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses, excluding other real estate owned provision, as determined under GAAP, by net interest income and total noninterest income as determined under GAAP, but excluding net gains/(losses) on loans held for sale at lower of cost or fair value and excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides a reasonable measure of core expenses relative to core revenue.

    We believe these non-GAAP financial measures provide information that is important to investors and useful in understanding our financial position, results and ratios because our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titles measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.

    (Dollars in thousands, except per share data)

        Three Months Ended  
        Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
    Tangible Book Value Per Share   2024     2024     2024     2023     2023  
    Shareholders’ equity   $ 607,614     $ 588,322     $ 582,379     $ 583,681     $ 558,956  
    Less: Intangible assets, net     45,198       45,470       45,742       46,014       46,286  
    Tangible equity   $ 562,416     $ 542,852     $ 536,637     $ 537,667     $ 512,670  
    Less: other comprehensive loss     (54,820 )     (68,342 )     (67,760 )     (64,878 )     (81,653 )
    Tangible equity excluding other comprehensive loss   $ 617,236     $ 611,194     $ 604,397     $ 602,545     $ 594,323  
                                   
    Period end shares outstanding     17,577,747       17,666,490       17,761,538       17,739,677       17,816,922  
    Tangible book value per share   $ 32.00     $ 30.73     $ 30.21     $ 30.31     $ 28.77  
    Tangible book value per share excluding other comprehensive loss   $ 35.11     $ 34.60     $ 34.03     $ 33.97     $ 33.36  
    Book value per share     34.57       33.30       32.79       32.90       31.37  
                                   
    Tangible Equity to Tangible Assets                              
    Total assets   $ 6,793,792     $ 6,505,350     $ 6,408,553     $ 6,476,857     $ 6,521,581  
    Less: Intangible assets, net     45,198       45,470       45,742       46,014       46,286  
    Tangible assets   $ 6,748,594     $ 6,459,880     $ 6,362,811     $ 6,430,843     $ 6,475,295  
    Less: other comprehensive loss     (54,820 )     (68,342 )     (67,760 )     (64,878 )     (81,653 )
    Tangible assets excluding other comprehensive loss   $ 6,803,414     $ 6,528,222     $ 6,430,571     $ 6,495,721     $ 6,556,948  
                                   
    Tangible equity to tangible assets     8.33 %     8.40 %     8.43 %     8.36 %     7.92 %
    Tangible equity to tangible assets excluding other comprehensive loss     9.07 %     9.36 %     9.40 %     9.28 %     9.06 %
    Equity to assets     8.94 %     9.04 %     9.09 %     9.01 %     8.57 %

    (Dollars in thousands)

        Three Months Ended  
        Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
    Return on Average Tangible Equity   2024     2024     2024     2023     2023  
    Net income   $ 7,587     $ 7,530     $ 8,631     $ 8,599     $ 8,755  
                                   
    Average shareholders’ equity   $ 592,787     $ 577,206     $ 581,003     $ 561,055     $ 565,153  
    Less: Average intangible assets, net     45,350       45,624       45,903       46,167       46,468  
    Average tangible equity   $ 547,437     $ 531,582     $ 535,100     $ 514,888     $ 518,685  
                                   
    Return on average tangible common equity     5.54 %     5.67 %     6.45 %     6.68 %     6.75 %
        For the Nine Months Ended  
        Sept 30,     Sept 30,  
    Return on Average Tangible Equity   2024     2023  
    Net income   $ 23,748     $ 40,255  
                 
    Average shareholders’ equity   $ 583,699     $ 555,559  
    Less: Average intangible assets, net     45,625       46,825  
    Average tangible equity     538,074       508,734  
                 
    Return on average tangible common equity     5.88 %     10.55 %

    (Dollars in thousands)

        Three Months Ended  
        Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
    Efficiency Ratio   2024     2024     2024     2023     2023  
    Net interest income   $ 37,681     $ 35,042     $ 34,375     $ 36,675     $ 36,515  
    Total other income     18,938       21,555       18,701       17,590       19,354  
    Add:                              
    Fair value adjustment for CRA equity security     (474 )     84       111       (585 )     404  
    Less:                              
    Gain on loans held for sale at lower of cost or fair value     —       (23 )     —       —       —  
    Income from life insurance proceeds     (55 )     —       (181 )     —       —  
    Total recurring revenue     56,090       56,658       53,006       53,680       56,273  
                                   
    Operating expenses     44,649       43,126       40,041       37,616       37,413  
    Total operating expense     44,649       43,126       40,041       37,616       37,413  
                                   
    Efficiency ratio     79.60 %     76.12 %     75.54 %     70.07 %     66.48 %

    (Dollars in thousands)

        For the Nine Months Ended  
        Sept 30,     Sept 30,  
    Efficiency Ratio   2024     2023  
    Net interest income   $ 107,098     $ 119,414  
    Total other income     59,194       55,988  
    Add:            
    Fair value adjustment for CRA equity security     (279 )     404  
    Less:            
    Gain on loans held for sale at lower of cost or fair value     (23 )     —  
    Income from life insurance proceeds     (236 )     —  
    Total recurring revenue     165,754       175,806  
                 
    Operating expenses     127,816       110,679  
    Less:            
    Accelerated Expense for Retirement     —       1,965  
    Branch Closure Expense     —       175  
    Total operating expense     127,816       108,539  
                 
    Efficiency ratio     77.11 %     61.74 %

    The MIL Network –

    January 24, 2025
  • MIL-OSI: FS Bancorp, Inc. Reports Third Quarter Net Income of $10.3 Million or $1.29 Per Diluted Share and the Forty-Seventh Consecutive Quarterly Cash Dividend

    Source: GlobeNewswire (MIL-OSI)

    MOUNTLAKE TERRACE, Wash., Oct. 22, 2024 (GLOBE NEWSWIRE) — FS Bancorp, Inc. (NASDAQ: FSBW) (the “Company”), the holding company for 1st Security Bank of Washington (the “Bank”) today reported 2024 third quarter net income of $10.3 million, or $1.29 per diluted share, compared to $9.0 million, or $1.13 per diluted share, for the comparable quarter one year ago. For the nine months ended September 30, 2024, net income was $27.6 million, or $3.45 per diluted share, compared to net income of $26.3 million, or $3.33 per diluted share, for the comparable nine-month period in 2023.

    “Deposit growth experienced in the third quarter of 2024 was a direct result of the Bank-wide focus and strategic planning objective to fund loan growth with core deposits,” stated Joe Adams, CEO. “We are also pleased that our Board of Directors approved our forty-seventh consecutive quarterly cash dividend of $0.27 per common share, demonstrating our continued commitment to returning value to shareholders.  The cash dividend will be paid on November 21, 2024, to shareholders of record as of November 7, 2024,” concluded Adams.

    2024 Third Quarter Highlights

    • Net income was $10.3 million for the third quarter of 2024, compared to $9.0 million for both the previous quarter and the comparable quarter one year ago;
    • Net interest margin (“NIM”) increased to 4.35% for the third quarter of 2024, compared to 4.29% in the previous quarter, and 4.34% for the comparable quarter one year ago;
    • Total deposits increased $44.5 million, or 1.9%, to $2.43 billion at September 30, 2024, primarily due to an increase in noninterest-bearing checking of $34.4 million and certificates of deposit (“CDs”) of $15.0 million, compared to $2.38 billion at June 30, 2024 and decreased $27.1 million, or 1.1%, from $2.45 billion at September 30, 2023.  Noninterest-bearing deposits were $657.8 million at September 30, 2024, $623.3 million at June 30, 2024, and $670.2 million at September 30, 2023; 
    • Borrowings decreased $18.1 million, or 9.9% to $163.8 million at September 30, 2024, compared to $181.9 million at June 30, 2024, as a result of the Company’s strategic planning objective to fund loan growth with core deposits; 
    • Loans receivable, net was unchanged at $2.46 billion at September 30, 2024, and June 30, 2024, and increased $88.1 million, or 3.7%, from $2.38 billion at September 30, 2023;
    • Consumer loans, of which 87.3% are home improvement loans, decreased $9.3 million, or 1.4%, to $632.4 million at September 30, 2024, compared to $641.7 million in the previous quarter, and decreased $7.7 million, or 1.2%, from $640.1 million in the comparable quarter one year ago. Yields on consumer loans increased 18 basis points to 7.59% from 7.41% at the end of the second quarter 2024. During the three months ended September 30, 2024, consumer loan originations included 80.4% of home improvement loans originated with a Fair Isaac Corporation (“FICO”) score above 720 and 83.9% of home improvement loans with a UCC-2 security filing;
    • For the third quarter of 2024, there was a tax benefit of $420,000, compared to tax provisions of $2.4 million in the prior quarter, and $2.5 million for the same quarter last year.  The tax benefit for the third quarter of 2024 was due to $28.4 million of energy tax credits purchased during the current quarter related to the Inflation Reduction Act of 2022;
    • Repurchased 97,000 shares of the Company’s common stock in the third quarter of 2024 at an average price of $43.58 per share with $1.4 million remaining for future purchases under the share repurchase plan that was approved in July 2024;
    • Book value per share increased $0.30 to $37.45 at September 30, 2024, compared to $37.15 at June 30, 2024, and increased $4.87 from $32.58 at September 30, 2023.  Tangible book value per share (non-GAAP financial measure) increased $0.44 to $35.10 at September 30, 2024, compared to $34.66 at June 30, 2024, and increased $5.37 from $29.73 at September 30, 2023. See, “Non-GAAP Financial Measures.”
    • Segment reporting in the third quarter of 2024 reflected net income of $9.3 million for the Commercial and Consumer Banking segment and $1.0 million for the Home Lending segment, compared to net income of $8.0 million and $1.0 million in the prior quarter, and net income of $8.8 million and $166,000 in the third quarter of 2023, respectively;
    • The percentage of available unencumbered cash and secured borrowing capacity at the Federal Home Loan Bank (“FHLB”) and the Federal Reserve Bank to uninsured deposits was 182% at September 30, 2024, compared to 191% in the prior quarter. The average deposit size per FDIC-insured account at the Bank was $33,000 and $32,000 for September 30, 2024 and June 30, 2024, respectively; and
    • Regulatory capital ratios at the Bank were 14.2% for total risk-based capital and 11.2% for Tier 1 leverage capital at September 30, 2024, compared to 13.9% for total risk-based capital and 10.9% for Tier 1 leverage capital at June 30, 2024.

    Segment Reporting

    The Company reports two segments: Commercial and Consumer Banking and Home Lending. The Commercial and Consumer Banking segment provides diversified financial products and services to our commercial and consumer customers. These products and services include deposit products; residential, consumer, business and commercial real estate lending portfolios and cash management services. This segment is also responsible for the management of the investment portfolio and other assets of the Bank. The Home Lending segment originates one-to-four-family residential mortgage loans primarily for sale in the secondary markets as well as loans held for investment.

    The Company reflected the sale of servicing rights in the first quarter of 2024 as a gain to the Commercial and Consumer Banking segment to offset the realized loss on sale of investment securities and will allocate the gain on a straight-line basis over four years as intercompany income from the Commercial and Consumer Banking segment to the Home Lending segment.

    The tables below provide a summary of segment reporting at or for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

        At or For the Three Months Ended September 30, 2024  
    Condensed income statement:   Commercial and Consumer Banking     Home Lending     Total  
    Net interest income (1)   $ 28,612     $ 2,632     $ 31,244  
    Provision for credit losses     (1,331 )     (182 )     (1,513 )
    Noninterest income (2)     2,257       3,710       5,967  
    Noninterest expense (3)     (20,199 )     (5,633 )     (25,832 )
    Income before (provision) benefit for income taxes     9,339       527       9,866  
    (Provision) benefit for income taxes     (71 )     491       420  
    Net income   $ 9,268     $ 1,018     $ 10,286  
    Total average assets for period ended   $ 2,347,855     $ 612,935     $ 2,960,790  
    Full-time employees (“FTEs”)     442       117       559  
        At or For the Three Months Ended September 30, 2023  
    Condensed income statement:   Commercial and Consumer Banking     Home Lending     Total  
    Net interest income (1)   $ 27,563     $ 3,071     $ 30,634  
    Provision for credit losses     (437 )     (111 )     (548 )
    Noninterest income (2)     2,680       2,302       4,982  
    Noninterest expense (3)     (18,539 )     (5,047 )     (23,586 )
    Income before provision for income taxes     11,267       215       11,482  
    Provision for income taxes     (2,480 )     (49 )     (2,529 )
    Net income   $ 8,787     $ 166     $ 8,953  
    Total average assets for period ended   $ 2,361,014     $ 540,372     $ 2,901,386  
    FTEs     434       128       562  
        At or For the Nine Months Ended September 30, 2024  
    Condensed income statement:   Commercial and Consumer Banking     Home Lending     Total  
    Net interest income (1)   $ 84,749     $ 7,242     $ 91,991  
    Provision for credit losses     (3,796 )     (193 )     (3,989 )
    Noninterest income (2)     6,919       10,027       16,946  
    Noninterest expense (3)     (58,250 )     (14,968 )     (73,218 )
    Income before (provision) benefit for income taxes     29,622       2,108       31,730  
    (Provision) benefit for income taxes     (4,253 )     165       (4,088 )
    Net income   $ 25,369     $ 2,273     $ 27,642  
    Total average assets for period ended   $ 2,369,740     $ 586,001     $ 2,955,741  
    FTEs     442       117       559  
        At or For the Nine Months Ended September 30, 2023  
    Condensed income statement:   Commercial and Consumer Banking     Home Lending     Total  
    Net interest income (1)   $ 83,332     $ 9,516     $ 92,848  
    Provision for credit losses     (2,555 )     (817 )     (3,372 )
    Noninterest income (2)     7,766       7,268       15,034  
    Noninterest expense (3)     (56,099 )     (15,215 )     (71,314 )
    Income before provision for income taxes     32,444       752       33,196  
    Provision for income taxes     (6,758 )     (157 )     (6,915 )
    Net income   $ 25,686     $ 595     $ 26,281  
    Total average assets for period ended   $ 2,288,996     $ 520,513     $ 2,809,509  
    FTEs     434       128       562  

    __________________________

    (1)   Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to the other segment. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of assigned liabilities to fund segment assets.
    (2)   Noninterest income includes activity from certain residential mortgage loans that were initially originated for sale and measured at fair value, and subsequently transferred to loans held for investment. Gains and losses from changes in fair value for these loans are reported in earnings as a component of noninterest income. For the three and nine months ended September 30, 2024, the Company recorded net increases in fair value of $262,000 and $448,000, respectively, as compared to net decreases in fair value of $343,000 and $285,000 for the three and nine months ended September 30, 2023. As of September 30, 2024 and 2023, there were $13.9 million and $15.2 million, respectively, in residential mortgage loans recorded at fair value as they were previously transferred from loans held for sale to loans held for investment.
    (3)   Noninterest expense includes allocated overhead expense from general corporate activities. Allocation is determined based on a combination of segment assets and FTEs.  For the three and nine months ended September 30, 2024 and 2023, the Home Lending segment included allocated overhead expenses of $1.8 million and $4.8 million, compared to $1.5 million and $4.7 million, respectively.
         

    Asset Summary

    Total assets increased $28.8 million, or 1.0%, to $2.97 billion at September 30, 2024, compared to $2.94 billion at June 30, 2024, and increased $50.1 million, or 1.7%, from $2.92 billion at September 30, 2023.  The increase in total assets at September 30, 2024, compared to June 30, 2024, included increases of $15.7 million in other assets, consisting primarily of a federal income tax receivable of $25.7 million, $7.3 million in total cash and cash equivalents, $7.0 million in securities available-for-sale, and $6.5 million in loans receivable, net, partially offset by decreases in loans held for sale (“HFS”) of $4.4 million,  and core deposit intangible (“CDI”), net of $897,000. The increase compared to September 30, 2023, was primarily due to increases in loans receivable, net of $88.1 million, loans HFS of $30.7 million, other assets of $13.1 million, and FHLB stock of $5.8 million. These increases were partially offset by decreases in total cash and cash equivalents of $40.3 million, securities available-for-sale of $23.7 million, mortgage servicing rights (“MSR”) of $8.9 million, certificates of deposit at other financial institutions of $5.6 million, CDI, net of $3.7 million, deferred tax asset, net of $3.2 million, operating lease right-of-use assets of $1.7 million, and premises and equipment, net of $900,000.

    LOAN PORTFOLIO                                                
    (Dollars in thousands)   September 30, 2024     June 30, 2024     September 30, 2023  
        Amount     Percent     Amount     Percent     Amount     Percent  
    REAL ESTATE LOANS                                                
    Commercial   $ 352,933       14.1 %   $ 359,404       14.4 %   $ 364,673       15.2 %
    Construction and development     292,366       11.7       274,209       11.0       289,873       12.0  
    Home equity     75,063       3.0       73,749       3.0       67,103       2.8  
    One-to-four-family (excludes HFS)     591,666       23.7       588,966       23.7       540,670       22.5  
    Multi-family     238,462       9.6       239,675       9.6       243,661       10.1  
    Total real estate loans     1,550,490       62.1       1,536,003       61.7       1,505,980       62.6  
                                                     
    CONSUMER LOANS                                                
    Indirect home improvement     552,226       22.2       563,621       22.7       562,650       23.4  
    Marine     76,845       3.1       74,627       3.0       73,887       3.1  
    Other consumer     3,346       0.1       3,440       0.1       3,547       0.1  
    Total consumer loans     632,417       25.4       641,688       25.8       640,084       26.6  
                                                     
    COMMERCIAL BUSINESS LOANS                                                
    Commercial and industrial (“C&I”)     296,773       11.9       285,183       11.5       236,520       9.8  
    Warehouse lending     15,249       0.6       25,548       1.0       23,489       1.0  
    Total commercial business loans     312,022       12.5       310,731       12.5       260,009       10.8  
    Total loans receivable, gross     2,494,929       100.0 %     2,488,422       100.0 %     2,406,073       100.0 %
                                                     
    Allowance for credit losses on loans     (31,232 )             (31,238 )             (30,501 )        
    Total loans receivable, net   $ 2,463,697             $ 2,457,184             $ 2,375,572          
     

    Loans receivable, net was unchanged at $2.46 billion at September 30, 2024 and June 30, 2024, and increased $88.1 million from $2.38 billion at September 30, 2023. Total real estate loans remained virtually unchanged at $1.55 billion at September 30, 2024, compared to June 30, 2024, however, there were notable shifts within the portfolio. Specifically, construction and development loans increased $18.2 million, one-to-four-family loans (excluding HFS) increased $2.7 million mainly due to new loan originations, and home equity loans increased $1.3 million. These gains were partially offset by declines of $6.5 million in commercial real estate loans and $1.2 million in multi-family loans.  In addition, commercial business loans increased $1.3 million to $312.0 million at September 30, 2024, up from $310.7 million on June 30, 2024, resulting from an increase of $11.6 million in C&I loans and a decrease of $10.3 million in warehouse lending.  Consumer loans decreased $9.3 million to $632.4 million at September 30, 2024, compared to June 30, 2024, resulting from an $11.4 million decrease in indirect home improvement loans, partially offset by an increase of $2.2 million in marine loans. 

    The composition of CRE loans at the dates indicated were as follows:

    (Dollars in thousands)                        
        September 30, 2024     June 30, 2024     September 30, 2023  
    CRE by Type:   Amount     Amount     Amount  
    Agriculture   $ 3,610     $ 3,639     $ 3,926  
    CRE Non-owner occupied:                        
    Office     40,672       41,381       41,878  
    Retail     36,070       37,507       37,865  
    Hospitality/restaurant     27,743       28,314       25,252  
    Self storage     19,130       19,141       21,381  
    Mixed use     17,881       18,062       16,768  
    Industrial     15,402       17,163       17,431  
    Senior housing/assisted living     7,621       7,675       8,556  
    Other (1)     6,684       6,847       7,814  
    Land     2,523       3,021       6,381  
    Education/worship     2,545       2,571       2,645  
    Total CRE non-owner occupied     176,271       181,682       185,971  
    CRE owner occupied:                        
    Industrial     63,577       63,969       63,307  
    Office     42,156       41,978       41,663  
    Retail     19,968       20,885       23,228  
    Hospitality/restaurant     10,528       10,800       14,153  
    Other (2)     8,116       8,354       8,850  
    Car wash     9,575       9,607       7,818  
    Automobile related     8,874       8,200       8,193  
    Education/worship     4,609       4,610       4,617  
    Mixed use     5,649       5,680       2,947  
    Total CRE owner occupied     173,052       174,083       174,776  
    Total   $ 352,933     $ 359,404     $ 364,673  

    __________________________________

    (1)   Primarily includes loans secured by mobile home parks totaling $774,000, $782,000, and $2.4 million, RV parks totaling $689,000, $692,000, and $702,000, automobile-related collateral totaling $594,000, $599,000, and $0, and other collateral totaling $4.6 million, $4.7 million, and $4.8 million at September 30, 2024, June 30, 2024, and September 30, 2023, respectively.
    (2)   Primarily includes loans secured by gas stations totaling $1.5 million, $1.6 million and $1.7 million, non-profit organization totaling $901,000, $908,000 and $928,000, and other collateral totaling $5.7 million, $5.1 million and $6.2 million at September 30, 2024, June 30, 2024, and September 30, 2023, respectively.
         

    The following tables includes CRE loans repricing or maturing within the next two years, excluding loans that reprice simultaneously with changes to the prime rate:

    (Dollars in thousands)     For the Quarter Ended         Current Weighted
        Dec 31,   Mar 31,   Jun 30,   Sep 30,   Dec 31,   Mar 31,   Jun 30,   Sep 30,         Average
    CRE by type:   2024   2025   2025   2025   2025   2026   2026   2026   Total   Rate
    Agriculture   $ 926   $ —   $ 424   $ —   $ 311   $ 181   $ 259   $ 306   $ 2,407   6.40%
    Apartment     9,990     9,817     5,271     1,829     18,671     1,908     14,485     9,797     71,768   4.87%
    Auto related     —     —     2,091     —     —     —     —     —     2,091   4.18%
    Hotel / hospitality     —     579     1,212     1,336     —     118     1,307     —     4,552   4.39%
    Industrial     8,337     897     588     —     10,361     584     173     1,636     22,576   5.29%
    Mixed use     795     1,750     3,490     250     318     —     —     —     6,603   5.00%
    Office     4,702     11,171     —     4,214     988     528     1,666     566     23,835   4.88%
    Other     1,227     —     116     1,168     246     901     —     2,545     6,203   4.96%
    Retail     1,266     2,006     —     83     —     465     3,285     —     7,105   4.15%
    Senior housing and assisted living     —     —     —     —     —     2,186     —     —     2,186   4.75%
    Total   $ 27,243   $ 26,220   $ 13,192   $ 8,880   $ 30,895   $ 6,871   $ 21,175   $ 14,850   $ 149,326   4.91%
     

    A breakdown of construction loans at the dates indicated were as follows:

    (Dollars in thousands)                                
        September 30, 2024     June 30, 2024  
    Construction Types:   Amount     Percent     Amount     Percent  
    Commercial construction ─ retail   $ 8,710       3.0 %   $ 8,698       3.2 %
    Commercial construction ─ office     4,737       1.6       4,737       1.7  
    Commercial construction ─ self storage     10,408       3.5       10,000       3.6  
    Commercial construction ─ car wash     7,807       2.7       7,807       2.8  
    Multi-family     30,931       10.6       30,960       11.3  
    Custom construction ─ single family residential and single family manufactured residential     43,528       14.9       46,107       16.8  
    Custom construction ─ land, lot and acquisition and development     8,220       2.8       7,310       2.7  
    Speculative residential construction ─ vertical     145,549       49.8       131,293       47.9  
    Speculative residential construction ─ land, lot and acquisition and development     32,476       11.1       27,297       10.0  
    Total   $ 292,366       100.0 %   $ 274,209       100.0 %
    (Dollars in thousands)                                
        September 30, 2024     September 30, 2023  
    Construction Types:   Amount     Percent     Amount     Percent  
    Commercial construction ─ retail   $ 8,710       3.0 %   $ 7,347       2.5 %
    Commercial construction ─ office     4,737       1.6       4,591       1.6  
    Commercial construction ─ self storage     10,408       3.5       10,734       3.7  
    Commercial construction ─ car wash     7,807       2.7       7,287       2.5  
    Multi-family     30,931       10.6       52,913       18.3  
    Custom construction ─ single family residential and single family manufactured residential     43,528       14.9       44,542       15.4  
    Custom construction ─ land, lot and acquisition and development     8,220       2.8       7,012       2.4  
    Speculative residential construction ─ vertical     145,549       49.8       124,244       42.8  
    Speculative residential construction ─ land, lot and acquisition and development     32,476       11.1       31,203       10.8  
    Total   $ 292,366       100.0 %   $ 289,873       100.0 %
     

    Originations of one-to-four-family loans to purchase and refinance a home for the periods indicated were as follows:

    (Dollars in thousands)   For the Three Months Ended     For the Three Months Ended                  
        September 30, 2024     June 30, 2024                  
        Amount     Percent     Amount     Percent     $ Change     % Change  
    Purchase   $ 168,088       85.7 %   $ 193,715       92.3 %   $ (25,627 )     (13.2 )%
    Refinance     28,001       14.3       16,173       7.7       11,828       73.1 %
    Total   $ 196,089       100.0 %   $ 209,888       100.0 %   $ (13,799 )     (6.5 )%
    (Dollars in thousands)   For the Three Months Ended September 30,                  
        2024     2023                  
        Amount     Percent     Amount     Percent     $ Change     % Change  
    Purchase   $ 168,088       85.7 %   $ 139,345       92.1 %   $ 28,743       20.6 %
    Refinance     28,001       14.3       12,001       7.9       16,000       133.3 %
    Total   $ 196,089       100.0 %   $ 151,346       100.0 %   $ 44,743       29.6 %
    (Dollars in thousands)   For the Nine Months Ended September 30,                  
        2024     2023                  
        Amount     Percent     Amount     Percent     $ Change     % Change  
    Purchase   $ 497,705       88.8 %   $ 387,211       91.8 %   $ 110,494       28.5 %
    Refinance     62,546       11.2       34,635       8.2       27,911       80.6 %
    Total   $ 560,251       100.0 %   $ 421,846       100.0 %   $ 138,405       32.8 %
     

    During the quarter ended September 30, 2024, the Company sold $167.6 million of one-to-four-family loans compared to $164.5 million during the previous quarter and $117.6 million during the same quarter one year ago. Gross margins on home loan sales were unchanged at 2.96% for both quarters ended September 30, 2024, and  June 30, 2024, and declined from 3.08% in the same quarter one year ago. Gross margins are defined as the margin on loans sold (cash sales) without the impact of deferred costs.

    Liabilities and Equity Summary

    Changes in deposits at the dates indicated were as follows:

    (Dollars in thousands)                                                
        September 30, 2024     June 30, 2024                  
    Transactional deposits:   Amount     Percent     Amount     Percent     $ Change     % Change  
    Noninterest-bearing checking   $ 641,270       26.4 %   $ 613,137       25.7 %   $ 28,133       4.6 %
    Interest-bearing checking (1)     165,944       6.8       166,839       7.0       (895 )     (0.5 )
    Escrow accounts related to mortgages serviced (2)     16,483       0.7       10,212       0.4       6,271       61.4  
    Subtotal     823,697       33.9       790,188       33.1       33,509       4.2  
    Savings     151,364       6.2       151,398       6.4       (34 )     (0.0 )
    Money market (3)     340,049       14.0       343,995       14.4       (3,946 )     (1.1 )
    Subtotal     491,413       20.2       495,393       20.8       (3,980 )     (0.8 )
    Certificates of deposit less than $100,000 (4)     533,441       22.0       530,537       22.3       2,904       0.5  
    Certificates of deposit of $100,000 through $250,000     452,705       18.7       427,893       18.0       24,812       5.8  
    Certificates of deposit greater than $250,000     126,075       5.2       138,792       5.8       (12,717 )     (9.2 )
    Subtotal     1,112,221       45.9       1,097,222       46.1       14,999       1.4  
    Total   $ 2,427,331       100.0 %   $ 2,382,803       100.0 %   $ 44,528       1.9 %
    (Dollars in thousands)                                                
        September 30, 2024     September 30, 2023                  
    Transactional deposits:   Amount     Percent     Amount     Percent     $ Change     % Change  
    Noninterest-bearing checking   $ 641,270       26.4 %   $ 643,670       26.2 %   $ (2,400 )     (0.4 )%
    Interest-bearing checking (1)     165,944       6.8       219,468       8.9       (53,524 )     (24.4 )
    Escrow accounts related to mortgages serviced (2)     16,483       0.7       26,489       1.1       (10,006 )     (37.8 )
    Subtotal     823,697       33.9       889,627       36.2       (65,930 )     (7.4 )
    Savings     151,364       6.2       157,901       6.4       (6,537 )     (4.1 )
    Money market (3)     340,049       14.0       389,962       15.9       (49,913 )     (12.8 )
    Subtotal     491,413       20.2       547,863       22.3       (56,450 )     (10.3 )
    Certificates of deposit less than $100,000 (4)     533,441       22.0       527,032       21.5       6,409       1.2  
    Certificates of deposit of $100,000 through $250,000     452,705       18.7       406,545       16.6       46,160       11.4  
    Certificates of deposit greater than $250,000     126,075       5.2       83,377       3.4       42,698       51.2  
    Subtotal     1,112,221       45.9       1,016,954       41.5       95,267       9.4  
    Total   $ 2,427,331       100.0 %   $ 2,454,444       100.0 %   $ (27,113 )     (1.1 )%

    __________________________________

    (1)   There were no brokered deposits at September 30, 2024 and  June 30, 2024, compared to $50.1 million at September 30, 2023.                  
    (2)   Noninterest-bearing accounts.
    (3)   Includes $1.0 million, $4.0 million and $51,000 of brokered deposits at September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
    (4)   Includes $250.2 million, $261.0 million, and $323.3 million of brokered deposits at September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
         

    At September 30, 2024, CDs, which include retail and non-retail CDs, totaled $1.11 billion, compared to $1.10 billion at June 30, 2024 and $1.02 billion at September 30, 2023, with non-retail CDs representing 22.5%, 24.9% and 33.2% of total CDs at such dates, respectively. At September 30, 2024, non-retail CDs, which include brokered CDs, online CDs and public funds CDs, decreased $10.4 million to $262.9 million, compared to $273.4 million at June 30, 2024, primarily due to a decrease of $10.8 million in brokered CDs. Non-retail CDs totaled $262.9 million at September 30, 2024, compared to $337.2 million at September 30, 2023.

    At September 30, 2024, the Bank had uninsured deposits of approximately $644.9 million, compared to approximately $586.6 million at June 30, 2024, and $591.6 million at September 30, 2023.  The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.

    At September 30, 2024, borrowings decreased $18.1 million to $163.8 million at September 30, 2024, from $181.9 million at June 30, 2024, and increased $41.9 million from $121.9 million at September 30, 2023. These borrowings were comprised of FHLB advances of $153.8 million, and overnight borrowings of $10.0 million.

    Total stockholders’ equity increased $4.9 million to $288.9 million at September 30, 2024, from $284.0 million at June 30, 2024, and increased $38.2 million, from $250.7 million at September 30, 2023. The increase in stockholders’ equity at September 30, 2024, compared to June 30, 2024, reflects net income of $10.3 million, partially offset by cash dividends paid of $2.1 million. Stockholders’ equity was also impacted by decreases in unrealized net losses on securities available for sale of $4.2 million, net of tax, and decreases in unrealized net gains on fair value and cash flow hedges of $7.0 million, net of tax, reflecting changes in market interest rates during the quarter, resulting in a $2.7 million increase in accumulated other comprehensive loss, net of tax. Book value per common share was $37.45 at September 30, 2024, compared to $37.15 at June 30, 2024, and $32.58 at September 30, 2023.

    The Bank is considered well capitalized under the capital requirements established by the Federal Deposit Insurance Corporation (“FDIC”) with a total risk-based capital ratio of 14.2%, a Tier 1 leverage capital ratio of 11.2%, and a common equity Tier 1 (“CET1”) capital ratio of 12.9% at September 30, 2024.

    The Company exceeded all regulatory capital requirements with a total risk-based capital ratio of 14.4%, a Tier 1 leverage capital ratio of 9.7%, and a CET1 ratio of 11.2% at September 30, 2024.

    Credit Quality

    The allowance for credit losses on loans (“ACLL”) was $31.2 million, or 1.25% of gross loans receivable (excluding loans HFS) at September 30, 2024, compared to $31.2 million, or 1.26% of gross loans receivable (excluding loans HFS), at June 30, 2024, and $30.5 million, or 1.27% of gross loans receivable (excluding loans HFS), at September 30, 2023. The virtually static balance in the ACLL at September 30, 2024, compared to the prior quarter was primarily due to insignificant changes in the loan portfolio period over period and provision for credit losses on loans that offset consumer loan net charge-offs.  The increase of $731,000 in the ACLL from the same quarter the prior year was primarily due to organic loan growth and increases in nonperforming loans and net charge-offs. The allowance for credit losses on unfunded loan commitments decreased $79,000 to $1.5 million at September 30, 2024, compared to $1.6 million at June 30, 2024, and decreased $291,000 from $1.8 million at September 30, 2023. 

    Nonperforming loans decreased $634,000 to $10.8 million at September 30, 2024, compared to $11.4 million at June 30, 2024, and increased $5.2 million from $5.6 million at September 30, 2023. The decrease in nonperforming loans compared to the prior quarter was primarily due to decreases in nonperforming indirect home improvement loans of $549,000 and marine loans of $94,000. The increase in nonperforming loans compared to the same quarter the prior year was primarily due to increases in nonperforming construction and development loans of $4.7 million and commercial business loans of $461,000.

    Loans classified as substandard decreased $1.1 million to $23.2 million at September 30, 2024, compared to $24.3 million at June 30, 2024, and increased $4.0 million from $19.2 million at September 30, 2023.  The decrease in substandard loans compared to the prior quarter was primarily due to a decrease of $549,000 in indirect home improvement loans, $323,000 in commercial real estate loans, $94,000 in marine loans, $74,000 in C&I loans, and $59,000 in one-to-four family loans.  The increase in substandard loans compared to the prior year was primarily due to increases of $4.7 million in construction and development loans, $108,000 in home equity loans, $102,000 in indirect home improvement loans, partially offset by decreases of $462,000 in C&I loans, $293,000 in one-to-four-family loans, and $173,000 in marine loans. There was no other real estate owned (“OREO”) property at September 30, 2024 and June 30, 2024, compared to one OREO property (a closed branch in Centralia, Washington) of $570,000 at September 30, 2023.

    Operating Results

    Net interest income increased $610,000 to $31.2 million for the three months ended September 30, 2024, from $30.6 million for the three months ended September 30, 2023, primarily due to an increase in interest and dividend income of $3.8 million, partially offset by an increase in interest expense of $3.2 million. The $3.8 million increase in total interest income was primarily due to an increase of $3.9 million in interest income on loans receivable, including fees, primarily as a result of new loans being originated at higher rates and variable rate loans repricing higher. The $3.2 million increase in total interest expense was primarily the result of higher market interest rates, higher utilization of borrowings and a shift in deposit mix from transactional accounts to higher cost CDs.

    For the nine months ended September 30, 2024, net interest income decreased $857,000 to $92.0 million, from $92.8 million for the nine months ended September 30, 2023, resulting from an increase in interest expense of $16.0 million and an increase in interest income of $15.1 million.

    NIM (annualized) increased one basis point to 4.35% for the three months ended September 30, 2024, from 4.34% for the same period in the prior year, and decreased 26 basis points to 4.30% for the nine months ended September 30, 2024, from 4.56% for the nine months ended September 30, 2023. The change in NIM for the three and nine months ended September 30, 2024 compared to the same periods in 2023, reflects the increased costs of deposits and borrowings, which outpaced the increased yields earned on interest-earning assets. 

    The average total cost of funds, including noninterest-bearing checking, increased 47 basis points to 2.39% for the three months ended September 30, 2024, from 1.92% for the three months ended September 30, 2023. This increase was predominantly due to higher market rates for deposits and increased utilization of higher cost borrowings. The average cost of funds increased 75 basis points to 2.33% for the nine months ended September 30, 2024, from 1.58% for the nine months ended September 30, 2023, also reflecting increases in market interest rates over last year and increased utilization of borrowings. Management remains focused on matching deposit/liability duration with the duration of loans/assets where feasible.

    For the three and nine months ended September 30, 2024, the provision for credit losses on loans was $1.5 million and $4.0 million, compared to $683,000 and $4.1 million for the three and nine months ended September 30, 2023. The provision for credit losses on loans reflects an increase in charge-off activity for the quarter and increases in the loan portfolio for the year-to-date periods.

    During the three months ended September 30, 2024, net charge-offs increased $1.1 million to $1.6 million, compared to $531,000 for the same period last year.  This increase was the result of increased net charge-offs of $996,000 in indirect home improvement loans and $82,000 in marine loans, partially offset by a net recovery of $8,000 in other consumer loans. Net charge-offs increased $2.7 million to $4.3 million during the nine months ended September 30, 2024, compared to $1.6 million during the nine months ended September 30, 2023.  This increase included net charge-off increases of $1.5 million in indirect home improvement loans, $1.0 million C&I loans, $146,000 in marine loans and $117,000 in other consumer loans. Management attributes the increase in net charge-offs over the year primarily to volatile economic conditions.

    Noninterest income increased $985,000 to $6.0 million for the three months ended September 30, 2024, from $5.0 million for the three months ended September 30, 2023. The increase reflects a $648,000 increase in gain on sale of loans, primarily as a result of the increased volume of loans sold and an increase of $566,000 in other noninterest income, primarily due to fair value changes on loans.  Noninterest income during the three months ended September 30, 2024, also reflects a $141,000 gain on the sale of MSRs, with no similar transaction occurring in the comparable quarter last year.  These increases were partially offset by a $400,000 decrease in service charges and fee income, primarily due to the sale of MSRs in the first quarter of 2024.  Noninterest income increased $1.9 million to $16.9 million for the nine months ended September 30, 2024, from $15.0 million for the nine months ended September 30, 2023.  This increase was primarily the result of an $8.4 million gain on sale of MSRs recorded during the first nine months of 2024 with no similar transaction occurring in the comparable nine month period in 2023, and a $1.5 million increase in gain on sale of loans, partially offset by a $7.8 million loss on sale of investment securities resulting from management’s strategic decision to increase the yields earned on and reduce the duration of the securities portfolio, and an $839,000 decrease in service charges and fee income due to a reduction in loan servicing fees due to the sale of MSRs in the first quarter of 2024. 

    Noninterest expense increased $2.2 million to $25.8 million for the three months ended September 30, 2024, from $23.6 million for the three months ended September 30, 2023. The increase in noninterest expense was primarily due to increases of $506,000 in impairment of MSRs, $482,000 in salaries and benefits, $557,000 in professional and board fees, which included $571,000 in nonrecurring consulting charges and legal fees related to application/system upgrades and tax credit work, $418,000 in operations, $315,000 in data processing, and a decrease of $105,000 in amortization of CDI. Noninterest expense increased $1.9 million to $73.2 million for the nine months ended September 30, 2024, from $71.3 million for the nine months ended September 30, 2023.  This increase was primarily due to increases of $1.1 million in data processing, $1.0 million in professional and board fees which included $824,000 in nonrecurring consulting charges and legal fees for the reasons stated above, $610,000 in operations expense, and $545,000 in impairment of MSRs, partially offset by a decrease of $1.6 million in acquisition costs as a result of no acquisition costs during the current period.

    For the three months ended September 30, 2024, the Company recorded a benefit for income taxes of $420,000 as compared to a provision for income taxes of $2.5 million for the three months ended September 30, 2023. The tax benefit was primarily due to the purchase during the quarter ended September 30, 2024, of alternative energy tax credits available under the Inflation Reduction Act of 2022, resulting in a gain of $2.3 million, which was partially offset by the $1.8 million provision for income taxes recorded on net income for the three months ended September 30, 2024. The Inflation Reduction Act of 2022 introduced several energy tax credits designed to promote clean energy investments, reduce carbon emissions, and accelerate the transition to renewable energy. The effective corporate income tax rates for the three months ended September 30, 2024 and 2023 were (4.3)% which was reduced by 2,300 basis points due to the energy tax credits discussed above, and 22.0%, respectively. The decrease in the effective corporate income tax rate, excluding the effects of the energy tax credits, was attributable to tax benefits derived from the exercises of employee stock options during the current quarter.

    About FS Bancorp

    FS Bancorp, Inc., a Washington corporation, is the holding company for 1st Security Bank of Washington. The Bank offers a range of loan and deposit services primarily to small- and middle-market businesses and individuals in Washington and Oregon.  It operates through 27 bank branches, one headquarters office that provides loans and deposit services, and loan production offices in various suburban communities in the greater Puget Sound area, the Kennewick-Pasco-Richland metropolitan area of Washington, also known as the Tri-Cities, and in Vancouver, Washington. Additionally, the Bank services home mortgage customers across the Northwest, focusing on markets in Washington State including the Puget Sound, Tri-Cities, and Vancouver.

    Forward-Looking Statements

    When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent management’s current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially from those currently expected or projected in these forward-looking statements. Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: adverse impacts to economic conditions in the Company’s local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels; labor shortages, the effects of inflation, a recession or slowed economic growth; changes in the interest rate environment, including the increases and decrease in the Federal Reserve benchmark rate and duration at which such interest rate levels are maintained, which could adversely affect our revenues and expenses, the values of our assets and obligations, and the availability and cost of capital and liquidity; the impact of inflation and the current and future monetary policies of the Federal Reserve in response thereto; the effects of any federal government shutdown;  increased competitive pressures, changes in the interest rate environment, adverse changes in the securities markets, the Company’s ability to execute its plans to grow its residential construction lending, mortgage banking, and warehouse lending operations, and the geographic expansion of its indirect home improvement lending; challenges arising from expanding into new geographic markets, products, or services; secondary market conditions for loans and the Company’s ability to originate loans for sale and sell loans in the secondary market; volatility in the mortgage industry; fluctuations in deposits; liquidity issues, including our ability to borrow funds or raise additional capital, if necessary; 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; legislative and regulatory changes, including changes in banking, securities and tax law, in regulatory policies and principles, or the interpretation of regulatory capital or other rules; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform critical processing functions for us; environmental, social and governance goals; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, civil unrest and other external events on our business; and other factors described in the Company’s latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other reports filed with or furnished to the SEC which are available on its website at http://www.fsbwa.com and on the SEC’s website at http://www.sec.gov.

    Any of the forward-looking statements that the Company makes in this press release and in the other public statements are based upon management’s beliefs and assumptions at the time they are made and may turn out to be incorrect because of the inaccurate assumptions the Company might make, because of the factors illustrated above or because of other factors that cannot be foreseen by the Company. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. The Company does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

    FS BANCORP, INC. AND SUBSIDIARY
    CONSOLIDATED BALANCE SHEETS
    (Dollars in thousands, except share amounts) (Unaudited)
     
                                Linked     Prior Year  
        September 30,     June 30,     September 30,     Quarter     Quarter  
        2024     2024     2023     % Change     % Change  
    ASSETS                                        
    Cash and due from banks   $ 17,950     $ 20,005     $ 18,137       (10 )     (1 )
    Interest-bearing deposits at other financial institutions     22,390       13,006       62,536       72       (64 )
    Total cash and cash equivalents     40,340       33,011       80,673       22       (50 )
    Certificates of deposit at other financial institutions     12,001       12,707       17,636       (6 )     (32 )
    Securities available-for-sale, at fair value     228,199       221,182       251,917       3       (9 )
    Securities held-to-maturity, net     8,455       8,455       8,455       —       —  
    Loans held for sale, at fair value     49,373       53,811       18,636       (8 )     165  
    Loans receivable, net     2,463,697       2,457,184       2,375,572       —       4  
    Accrued interest receivable     14,014       13,792       13,925       2       1  
    Premises and equipment, net     30,026       29,999       30,926       —       (3 )
    Operating lease right-of-use     5,365       5,784       7,042       (7 )     (24 )
    Federal Home Loan Bank stock, at cost     9,504       10,322       3,696       (8 )     157  
    Other real estate owned     —       —       570       —       (100 )
    Deferred tax asset, net     4,222       4,590       7,424       (8 )     (43 )
    Bank owned life insurance (“BOLI”), net     38,453       38,201       37,480       1       3  
    MSRs, held at the lower of cost or fair value     8,739       9,352       17,657       (7 )     (51 )
    Goodwill     3,592       3,592       3,592       —       —  
    Core deposit intangible, net     14,586       15,483       18,323       (6 )     (20 )
    Other assets     39,642       23,912       26,548       66       49  
    TOTAL ASSETS   $ 2,970,208     $ 2,941,377     $ 2,920,072       1       2  
    LIABILITIES                                        
    Deposits:                                        
    Noninterest-bearing accounts   $ 657,753     $ 623,349     $ 670,158       6       (2 )
    Interest-bearing accounts     1,769,578       1,759,454       1,784,286       1       (1 )
    Total deposits     2,427,331       2,382,803       2,454,444       2       (1 )
    Borrowings     163,806       181,895       121,895       (10 )     34  
    Subordinated notes:                                        
    Principal amount     50,000       50,000       50,000       —       —  
    Unamortized debt issuance costs     (423 )     (439 )     (489 )     (4 )     (13 )
    Total subordinated notes less unamortized debt issuance costs     49,577       49,561       49,511       —       —  
    Operating lease liability     5,548       5,979       7,269       (7 )     (24 )
    Other liabilities     35,044       37,113       36,288       (6 )     (3 )
    Total liabilities     2,681,306       2,657,351       2,669,407       1       —  
    COMMITMENTS AND CONTINGENCIES                                        
    STOCKHOLDERS’ EQUITY                                        
    Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued or outstanding     —       —       —       —       —  
    Common stock, $.01 par value; 45,000,000 shares authorized; 7,817,172 shares issued and outstanding at September 30, 2024, 7,742,607 at June 30, 2024, and 7,796,095 at September 30, 2023     78       77       78       1       —  
    Additional paid-in capital     55,264       55,834       57,464       (1 )     (4 )
    Retained earnings     251,843       243,651       222,532       3       13  
    Accumulated other comprehensive loss, net of tax     (18,283 )     (15,536 )     (29,409 )     18       (38 )
    Total stockholders’ equity     288,902       284,026       250,665       2       15  
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 2,970,208     $ 2,941,377     $ 2,920,072       1       2  
     
    FS BANCORP, INC. AND SUBSIDIARY
    CONSOLIDATED STATEMENTS OF INCOME
    (Dollars in thousands, except per share amounts) (Unaudited)
     
        Three Months Ended     Linked     Prior Year  
        September 30,     June 30,     September 30,     Quarter     Quarter  
        2024     2024     2023     % Change     % Change  
    INTEREST INCOME                                        
    Loans receivable, including fees   $ 43,800     $ 42,406     $ 39,874       3       10  
    Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions     3,243       3,534       3,396       (8 )     (5 )
    Total interest and dividend income     47,043       45,940       43,270       2       9  
    INTEREST EXPENSE                                        
    Deposits     13,486       13,252       10,462       2       29  
    Borrowings     1,828       1,801       1,689       1       8  
    Subordinated notes     485       486       485       —       —  
    Total interest expense     15,799       15,539       12,636       2       25  
    NET INTEREST INCOME     31,244       30,401       30,634       3       2  
    PROVISION FOR CREDIT LOSSES     1,513       1,077       548       40       176  
    NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES     29,731       29,324       30,086       1       (1 )
    NONINTEREST INCOME                                        
    Service charges and fee income     2,482       2,479       2,882       —       (14 )
    Gain on sale of loans     2,523       2,463       1,875       2       35  
    Gain on sale of MSRs     141       —       —       NM       NM  
    Gain on sale of investment securities, net     11       151       —       (93 )     NM  
    Earnings on cash surrender value of BOLI     252       242       233       4       8  
    Other noninterest income     558       533       (8 )     5       (7,075 )
    Total noninterest income     5,967       5,868       4,982       2       20  
    NONINTEREST EXPENSE                                        
    Salaries and benefits     13,985       13,378       13,503       5       4  
    Operations     3,827       3,519       3,409       9       12  
    Occupancy     1,662       1,669       1,588       —       5  
    Data processing     2,156       2,058       1,841       5       17  
    Loan costs     666       653       564       2       18  
    Professional and board fees     1,223       888       666       38       84  
    FDIC insurance     533       450       561       18       (5 )
    Marketing and advertising     377       377       452       —       (17 )
    Amortization of core deposit intangible     897       919       1,002       (2 )     (10 )
    Impairment (recovery) of servicing rights     506       (54 )     —       (1,037 )     NM  
    Total noninterest expense     25,832       23,857       23,586       8       10  
    INCOME BEFORE (BENEFIT) PROVISION FOR INCOME TAXES     9,866       11,335       11,482       (13 )     (14 )
    (BENEFIT) PROVISION FOR INCOME TAXES     (420 )     2,376       2,529       (118 )     (117 )
    NET INCOME   $ 10,286     $ 8,959     $ 8,953       15       15  
    Basic earnings per share   $ 1.32     $ 1.15     $ 1.15       15       15  
    Diluted earnings per share   $ 1.29     $ 1.13     $ 1.13       14       14  
     
        Nine Months Ended     Year  
        September 30,     September 30,     Over Year  
        2024     2023     % Change  
    INTEREST INCOME                        
    Loans receivable, including fees   $ 127,203     $ 114,082       12  
    Interest and dividends on investment securities, cash and cash equivalents, and certificates of deposit at other financial institutions     10,660       8,667       23  
    Total interest and dividend income     137,863       122,749       12  
    INTEREST EXPENSE                        
    Deposits     39,620       24,696       60  
    Borrowings     4,796       3,749       28  
    Subordinated note     1,456       1,456       —  
    Total interest expense     45,872       29,901       53  
    NET INTEREST INCOME     91,991       92,848       (1 )
    PROVISION FOR CREDIT LOSSES     3,989       3,372       18  
    NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES     88,002       89,476       (2 )
    NONINTEREST INCOME                        
    Service charges and fee income     7,513       8,352       (10 )
    Gain on sale of loans     6,824       5,298       29  
    Gain on sale of MSRs     8,356       —       NM  
    Loss on sale of investment securities, net     (7,836 )     —       NM  
    Earnings on cash surrender value of BOLI     734       681       8  
    Other noninterest income     1,355       703       93  
    Total noninterest income     16,946       15,034       13  
    NONINTEREST EXPENSE                        
    Salaries and benefits     40,920       40,880       —  
    Operations     10,354       9,744       6  
    Occupancy     5,036       4,670       8  
    Data processing     6,172       5,092       21  
    Loan costs     1,904       2,077       (8 )
    Professional and board fees     3,034       2,001       52  
    FDIC insurance     1,515       1,732       (13 )
    Marketing and advertising     981       1,072       (8 )
    Acquisition costs     —       1,562       100  
    Amortization of core deposit intangible     2,757       2,484       11  
    Impairment of servicing rights     545       —       NM  
    Total noninterest expense     73,218       71,314       3  
    INCOME BEFORE PROVISION FOR INCOME TAXES     31,730       33,196       (4 )
    PROVISION FOR INCOME TAXES     4,088       6,915       (41 )
    NET INCOME   $ 27,642     $ 26,281       5  
    Basic earnings per share   $ 3.54     $ 3.38       5  
    Diluted earnings per share   $ 3.45     $ 3.33       4  
     

    KEY FINANCIAL RATIOS AND DATA (Unaudited)

        At or For the Three Months Ended  
        September 30,     June 30,     September 30,  
        2024     2024     2023  
    PERFORMANCE RATIOS:                        
    Return on assets (ratio of net income to average total assets) (1)     1.38 %     1.22 %     1.22 %
    Return on equity (ratio of net income to average equity) (1)     14.08       12.72       13.81  
    Yield on average interest-earning assets (1)     6.56       6.48       6.13  
    Average total cost of funds (1)     2.39       2.38       1.92  
    Interest rate spread information – average during period     4.17       3.33       4.21  
    Net interest margin (1)     4.35       4.29       4.34  
    Operating expense to average total assets (1)     3.47       3.26       3.23  
    Average interest-earning assets to average interest-bearing liabilities (1)     144.28       166.25       145.14  
    Efficiency ratio (2)     69.42       65.78       66.22  
    Common equity ratio (ratio of stockholders’ equity to total assets)     9.73       9.66       8.58  
    Tangible common equity ratio (3)     9.17       9.07       7.89  
        For the Nine Months Ended  
        September 30,     September 30,  
        2024     2023  
    PERFORMANCE RATIOS:                
    Return on assets (ratio of net income to average total assets) (1)     1.25 %     1.25 %
    Return on equity (ratio of net income to average equity) (1)     13.05       14.13  
    Yield on average interest-earning assets (1)     6.44       6.03  
    Average total cost of funds (1)     2.33       1.58  
    Interest rate spread information – average during period     4.11       4.45  
    Net interest margin (1)     4.30       4.56  
    Operating expense to average total assets (1)     3.31       3.39  
    Average interest-earning assets to average interest-bearing liabilities     144.14       146.23  
    Efficiency ratio (2)     67.21       66.10  
        September 30,     June 30,     September 30,  
        2024     2024     2023  
    ASSET QUALITY RATIOS AND DATA:                        
    Nonperforming assets to total assets at end of period (4)     0.36 %     0.39 %     0.21 %
    Nonperforming loans to total gross loans (excluding loans HFS) (5)     0.43       0.46       0.23  
    Allowance for credit losses – loans to nonperforming loans (5)     290.07       273.95       493.46  
    Allowance for credit losses – loans to total gross loans (excluding loans HFS)     1.25       1.26       1.27  
        At or For the Three Months Ended  
        September 30,     June 30,     September 30,  
        2024     2024     2023  
    PER COMMON SHARE DATA:                        
    Basic earnings per share   $ 1.32     $ 1.15     $ 1.15  
    Diluted earnings per share   $ 1.29     $ 1.13     $ 1.13  
    Weighted average basic shares outstanding     7,676,102       7,688,246       7,667,981  
    Weighted average diluted shares outstanding     7,854,389       7,796,253       7,780,430  
    Common shares outstanding at end of period     7,713,359 (6)     7,644,463 (7)     7,693,951 (8)
    Book value per share using common shares outstanding   $ 37.45     $ 37.15     $ 32.58  
    Tangible book value per share using common shares outstanding (3)   $ 35.10     $ 34.66     $ 29.73  

    __________________________________

    (1)   Annualized.
    (2)   Total noninterest expense as a percentage of net interest income and total noninterest income.
    (3)   Represents a non-GAAP financial measure.  For a reconciliation to the most comparable GAAP financial measure, see “Non-GAAP Financial Measures” below.
    (4)   Nonperforming assets consist of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), foreclosed real estate and other repossessed assets.
    (5)   Nonperforming loans consist of nonaccruing loans and accruing loans 90 days or more past due.
    (6)   Common shares were calculated using shares outstanding of 7,817,172 at September 30, 2024, less 103,813 unvested restricted stock shares.
    (7)   Common shares were calculated using shares outstanding of 7,742,607 at June 30, 2024, less 98,144 unvested restricted stock shares.
    (8)   Common shares were calculated using shares outstanding of 7,796,095 at September 30, 2023, less 102,144 unvested restricted stock shares.
    (Dollars in thousands)   For the Three Months Ended September 30,     For the Nine Months Ended September 30,     Linked Qtr.     Prior Year Qtr.  
    Average Balances   2024     2023     2024     2023     $ Change     $ Change  
    Assets                                                
    Loans receivable, net (1)   $ 2,536,106     $ 2,423,691     $ 2,504,129     $ 2,362,885     $ 112,415     $ 141,244  
    Securities available-for-sale, at amortized cost     250,957       294,148       288,460       276,835       (43,191 )     11,625  
    Securities held-to-maturity     8,500       8,500       8,500       8,500       –       –  
    Interest-bearing deposits and certificates of deposit at other financial institutions     48,546       68,369       49,887       67,163       (19,823 )     (17,276 )
    FHLB stock, at cost     10,739       4,626       6,666       5,190       6,113       1,476  
    Total interest-earning assets     2,854,848       2,799,334       2,857,642       2,720,573       55,514       137,069  
    Noninterest-earning assets     105,941       102,052       98,099       88,936       3,889       9,163  
    Total assets   $ 2,960,789     $ 2,901,386     $ 2,955,741     $ 2,809,509     $ 59,403     $ 146,232  
    Liabilities                                                
    Interest-bearing deposit accounts   $ 1,737,793     $ 1,741,257     $ 1,788,324     $ 1,703,688     $ (3,464 )   $ 84,636  
    Borrowings     191,279       138,013       144,635       107,254       53,266       37,381  
    Subordinated notes     49,567       49,500       49,550       49,484       67       66  
    Total interest-bearing liabilities     1,978,639       1,928,770       1,982,509       1,860,426       49,869       122,083  
    Noninterest-bearing deposit accounts     650,852       676,000       648,345       664,319       (25,148 )     (15,974 )
    Other noninterest-bearing liabilities     40,606       39,365       41,965       36,095       1,241       5,870  
    Total liabilities   $ 2,670,097     $ 2,644,135     $ 2,672,819     $ 2,560,840     $ 25,962     $ 111,979  

    __________________________________

    (1)   Includes loans HFS.
         

    Non-GAAP Financial Measures:

    In addition to financial results presented in accordance with generally accepted accounting principles utilized in the United States (“GAAP”), this earnings release presents non-GAAP financial measures that include tangible book value per share, and tangible common equity ratio. Management believes that providing the Company’s tangible book value per share and tangible common equity ratio is consistent with the capital treatment utilized by the investment community, which excludes intangible assets from the calculation of risk-based capital ratios and facilitates comparison of the quality and composition of the Company’s capital over time and to its competitors. Where applicable, the Company has also presented comparable GAAP information.

    These non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. They should not be considered in isolation or as a substitute for total stockholders’ equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

    Reconciliation of the GAAP book value per share and common equity ratio and the non-GAAP tangible book value per share and tangible common equity ratio is presented below.

    (Dollars in thousands, except share and per share amounts)   September 30,   June 30,   September 30,  
    Tangible Book Value Per Share:   2024   2024   2023  
    Stockholders’ equity (GAAP)   $ 288,902     $ 284,026     $ 250,665    
    Less: goodwill and core deposit intangible, net     (18,178 )     (19,075 )     (21,915 )  
    Tangible common stockholders’ equity (non-GAAP)   $ 270,724     $ 264,951     $ 228,750    
                         
    Common shares outstanding at end of period     7,713,359 (1)     7,644,463 (2)     7,693,951 (3)  
                         
    Book value per share (GAAP)   $ 37.45     $ 37.15     $ 32.58    
    Tangible book value per share (non-GAAP)   $ 35.10     $ 34.66     $ 29.73    
                         
    Tangible Common Equity Ratio:                    
    Total assets (GAAP)   $ 2,970,208     $ 2,941,377     $ 2,920,072    
    Less: goodwill and core deposit intangible assets     (18,178 )     (19,075 )     (21,915 )  
    Tangible assets (non-GAAP)   $ 2,952,030     $ 2,922,302     $ 2,898,157    
                         
    Common equity ratio (GAAP)     9.73 %     9.66 %     8.58 %  
    Tangible common equity ratio (non-GAAP)     9.17       9.07       7.89    

    _________________________

    (1)   Common shares were calculated using shares outstanding of 7,817,172 at September 30, 2024, less 103,813 unvested restricted stock shares.
    (2)   Common shares were calculated using shares outstanding of 7,742,607 at June 30, 2024, less 98,144 unvested restricted stock shares.
    (3)   Common shares were calculated using shares outstanding of 7,796,095 at September 30, 2023, less 102,144 unvested restricted stock shares.
         

    Contacts:
    Joseph C. Adams,
    Chief Executive Officer
    Matthew D. Mullet,
    President/Chief Financial Officer
    (425) 771-5299
    http://www.FSBWA.com
      

    The MIL Network –

    January 24, 2025
  • MIL-OSI: Amalgamated Financial Corp. Declares Regular Quarterly Dividend

    Source: GlobeNewswire (MIL-OSI)

    NEW YORK, Oct. 22, 2024 (GLOBE NEWSWIRE) — Amalgamated Financial Corp. (“Amalgamated” or the “Company”) (Nasdaq: AMAL) today announced that its Board of Directors has declared a regular dividend to common stockholders of $0.12 per share, payable by the Company on November 21, 2024, to stockholders of record on November 5, 2024. The amount and timing of any future dividend payments to stockholders will be subject to the discretion of the Board of Directors.

    About Amalgamated Financial Corp.

    Amalgamated Financial Corp. is a Delaware public benefit corporation and a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, Amalgamated Bank. Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of five branches across New York City, Washington D.C., and San Francisco, and a commercial office in Boston. Amalgamated Bank was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions. Amalgamated Bank provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated Bank is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of June 30, 2024, our total assets were $8.3 billion, total net loans were $4.4 billion, and total deposits were $7.4 billion. Additionally, as of June 30, 2024, our trust business held $34.6 billion in assets under custody and $14.0 billion in assets under management.

    Investor Contact:
    Jamie Lillis
    Solebury Strategic Communications
    shareholderrelations@amalgamatedbank.com
    800-895-4172

    Source: Amalgamated Financial Corp.

    The MIL Network –

    January 24, 2025
  • MIL-OSI: Renasant Corporation Announces Earnings for the Third Quarter of 2024, Receipt of Shareholder Approval of the Merger With the First Bancshares, Inc.

    Source: GlobeNewswire (MIL-OSI)

    TUPELO, Miss., Oct. 22, 2024 (GLOBE NEWSWIRE) — Renasant Corporation (NYSE: RNST) (the “Company”) today announced earnings results for the third quarter of 2024.

    (Dollars in thousands, except earnings per share) Three Months Ended   Nine Months Ended
      Sep 30, 2024 Jun 30, 2024 Sep 30, 2023   Sep 30, 2024 Sep 30, 2023
    Net income and earnings per share:            
    Net income $ 72,455 $ 38,846 $ 41,833   $ 150,710 $ 116,554  
    After-tax gain on sale of insurance agency   38,951   —   —     38,951   —  
    After-tax loss on sale of securities (including impairments)   —   —   —     —   (17,859 )
    Basic EPS   1.18   0.69   0.75     2.60   2.08  
    Diluted EPS   1.18   0.69   0.74     2.59   2.07  
    Adjusted diluted EPS (Non-GAAP)(1)   0.70   0.69   0.74     2.03   2.38  
    Impact to diluted EPS from after-tax gain on sale of insurance agency   0.63   —   —     0.67   —  
    Impact to diluted EPS from after-tax loss on sale of securities (including impairments)   —   —   —     —   (0.31 )

    “The financial results for the quarter reflect solid performance and balance sheet strength,” remarked C. Mitchell Waycaster, Chief Executive Officer of the Company. “We were pleased to receive shareholder approval today and look forward to completing our merger with The First in the first half of 2025, pending all required regulatory approvals and satisfaction of all other conditions.”

    Quarterly Highlights

    Merger Agreement with The First Bancshares, Inc. and Other Transactions

    • On July 29, 2024, the Company announced its merger with The First Bancshares, Inc. (“The First”). Today, the shareholders of both Renasant and The First approved the merger and the related issuance of shares of Renasant common stock to the shareholders of The First
    • On July 31, 2024, Renasant completed its public offering of an aggregate of 7,187,500 shares of its common stock at a price of $32.00 per share. The net proceeds of the offering after deducting underwriting discounts and other offering expenses were approximately $217.0 million
    • Effective July 1, 2024, Renasant sold the assets of its insurance agency for cash proceeds of $56.4 million, recognizing a positive after-tax impact to earnings of $34.1 million, which is net of transaction expenses

    Earnings

    • Net income for the third quarter of 2024 was $72.5 million; diluted EPS and adjusted diluted EPS (non-GAAP)(1) were $1.18 and $0.70, respectively
    • Net interest income (fully tax equivalent) for the third quarter of 2024 was $133.6 million, up $6.0 million on a linked quarter basis
    • For the third quarter of 2024, net interest margin was 3.36%, up 5 basis points on a linked quarter basis
    • Cost of total deposits was 2.51% for the third quarter of 2024, up 4 basis points on a linked quarter basis
    • Noninterest income increased $50.5 million on a linked quarter basis primarily due to the $53.3 million pre-tax gain on the insurance agency sale, offset by the loss of insurance commissions as a result of the sale
    • Mortgage banking income decreased $1.3 million on a linked quarter basis. The mortgage division generated $543.6 million in interest rate lock volume in the third quarter of 2024, a decrease of $16.7 million on a linked quarter basis. Gain on sale margin was 1.56% for the third quarter of 2024, down 13 basis points on a linked quarter basis
    • Noninterest expense increased $10.0 million on a linked quarter basis. Merger and conversion expenses of $11.3 million for the third quarter of 2024 related to both the announced merger with The First and the insurance agency sale contributed to the increase

    Balance Sheet

    • Loans increased $22.9 million on a linked quarter basis, representing 0.7% annualized net loan growth
    • Securities decreased $9.0 million on a linked quarter basis. Cash flows related to principal payments reduced securities by $43.4 million which was offset by a positive fair market value adjustment in our available-for-sale portfolio of $34.4 million
    • Deposits at September 30, 2024 increased $254.5 million on a linked quarter basis. Brokered deposits decreased $31.8 million on a linked quarter basis to $126.8 million at September 30, 2024. Noninterest bearing deposits decreased $9.7 million on a linked quarter basis and represented 24.3% of total deposits at September 30, 2024

    Capital and Stock Repurchase Program

    • Book value per share and tangible book value per share (non-GAAP)(1) increased 0.1% and 8.9%, respectively, on a linked quarter basis
    • Effective October 22, 2024, the Company’s Board of Directors approved a $100.0 million stock repurchase program under which the Company is authorized to repurchase outstanding shares of its common stock either in open market purchases or privately-negotiated transactions. This plan replaces the Company’s $100.0 million stock repurchase program that expired in October 2024. There was no buyback activity during the third quarter of 2024

    Credit Quality

    • The Company recorded a provision for credit losses of $0.9 million for the third quarter of 2024, compared to $3.3 million for the second quarter of 2024
    • The ratio of allowance for credit losses on loans to total loans was 1.59% at September 30, 2024, unchanged on a linked quarter basis
    • The coverage ratio, or the allowance for credit losses on loans to nonperforming loans, was 168.07% at September 30, 2024, compared to 203.88% at June 30, 2024
    • Net loan charge-offs for the third quarter of 2024 were $0.7 million, or 0.02% of average loans on an annualized basis
    • Nonperforming loans to total loans increased to 0.94% at September 30, 2024 compared to 0.78% at June 30, 2024, and criticized loans (which include classified and Special Mention loans) to total loans increased to 3.02% at September 30, 2024, compared to 2.62% at June 30, 2024

    (1) This is a non-GAAP financial measure. A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.

    Income Statement

    (Dollars in thousands, except per share data) Three Months Ended   Nine Months Ended
      Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023   Sep 30, 2024 Sep 30, 2023
    Interest income                
    Loans held for investment $ 202,655   $ 198,397   $ 192,390   $ 188,535 $ 181,129     $ 593,442   $ 516,114  
    Loans held for sale   4,212     3,530     2,308     3,329   3,751       10,050     8,478  
    Securities   10,304     10,410     10,700     10,728   10,669       31,414     39,760  
    Other   11,872     7,874     7,781     7,839   10,128       27,527     22,536  
    Total interest income   229,043     220,211     213,179     210,431   205,677       662,433     586,888  
    Interest expense                
    Deposits   90,787     87,621     82,613     77,168   70,906       261,021     155,163  
    Borrowings   7,258     7,564     7,276     7,310   7,388       22,098     38,351  
    Total interest expense   98,045     95,185     89,889     84,478   78,294       283,119     193,514  
    Net interest income   130,998     125,026     123,290     125,953   127,383       379,314     393,374  
    Provision for credit losses                
    Provision for loan losses   1,210     4,300     2,638     2,518   5,315       8,148     16,275  
    Recovery of unfunded commitments   (275 )   (1,000 )   (200 )   —   (700 )     (1,475 )   (3,200 )
    Total provision for credit losses   935     3,300     2,438     2,518   4,615       6,673     13,075  
    Net interest income after provision for credit losses   130,063     121,726     120,852     123,435   122,768       372,641     380,299  
    Noninterest income   89,299     38,762     41,381     20,356   38,200       169,442     92,719  
    Noninterest expense   121,983     111,976     112,912     111,880   108,369       346,871     327,742  
    Income before income taxes   97,379     48,512     49,321     31,911   52,599       195,212     145,276  
    Income taxes   24,924     9,666     9,912     3,787   10,766       44,502     28,722  
    Net income $ 72,455   $ 38,846   $ 39,409   $ 28,124 $ 41,833     $ 150,710   $ 116,554  
                     
    Adjusted net income (non-GAAP)(1) $ 42,960   $ 38,846   $ 36,572   $ 42,887 $ 41,833     $ 118,588   $ 134,413  
    Adjusted pre-provision net revenue (“PPNR”) (non-GAAP)(1) $ 56,238   $ 51,812   $ 48,231   $ 52,614 $ 57,214     $ 156,281   $ 180,789  
                     
    Basic earnings per share $ 1.18   $ 0.69   $ 0.70   $ 0.50 $ 0.75     $ 2.60   $ 2.08  
    Diluted earnings per share   1.18     0.69     0.70     0.50   0.74       2.59     2.07  
    Adjusted diluted earnings per share (non-GAAP)(1)   0.70     0.69     0.65     0.76   0.74       2.03     2.38  
    Average basic shares outstanding   61,217,094     56,342,909     56,208,348     56,141,628   56,138,618       57,934,806     56,085,556  
    Average diluted shares outstanding   61,632,448     56,684,626     56,531,078     56,611,217   56,523,887       58,297,554     56,393,957  
    Cash dividends per common share $ 0.22   $ 0.22   $ 0.22   $ 0.22 $ 0.22     $ 0.66   $ 0.66  

    (1) This is a non-GAAP financial measure. A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.


    Performance Ratios

      Three Months Ended   Nine Months Ended
      Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023   Sep 30, 2024 Sep 30, 2023
    Return on average assets 1.63 % 0.90 % 0.92 % 0.65 % 0.96 %   1.16 % 0.90 %
    Adjusted return on average assets (non-GAAP)(1) 0.97   0.90   0.86   0.99   0.96     0.91   1.04  
    Return on average tangible assets (non-GAAP)(1) 1.75   0.98   1.00   0.71   1.05     1.25   0.99  
    Adjusted return on average tangible assets (non-GAAP)(1) 1.05   0.98   0.93   1.08   1.05     0.99   1.13  
    Return on average equity 11.29   6.68   6.85   4.93   7.44     8.38   7.04  
    Adjusted return on average equity (non-GAAP)(1) 6.69   6.68   6.36   7.53   7.44     6.59   8.12  
    Return on average tangible equity (non-GAAP)(1) 18.83   12.04   12.45   9.26   13.95     14.69   13.35  
    Adjusted return on average tangible equity (non-GAAP)(1) 11.26   12.04   11.58   13.94   13.95     11.61   15.35  
    Efficiency ratio (fully taxable equivalent) 54.73   67.31   67.52   75.11   64.38     62.33   66.28  
    Adjusted efficiency ratio (non-GAAP)(1) 64.62   66.60   68.23   66.18   63.60     66.46   62.61  
    Dividend payout ratio 18.64   31.88   31.43   44.00   29.33     25.38   31.73  


    Capital and Balance Sheet Ratios

      As of
      Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023
    Shares outstanding   63,564,028     56,367,924     56,304,860     56,142,207     56,140,713  
    Market value per share $ 32.50   $ 30.54   $ 31.32   $ 33.68   $ 26.19  
    Book value per share   41.82     41.77     41.25     40.92     39.78  
    Tangible book value per share (non-GAAP)(1)   26.02     23.89     23.32     22.92     21.76  
    Shareholders’ equity to assets   14.80 %   13.45 %   13.39 %   13.23 %   13.00 %
    Tangible common equity ratio (non-GAAP)(1)   9.76     8.16     8.04     7.87     7.55  
    Leverage ratio   11.32     9.81     9.75     9.62     9.48  
    Common equity tier 1 capital ratio   12.88     10.75     10.59     10.52     10.46  
    Tier 1 risk-based capital ratio   13.67     11.53     11.37     11.30     11.25  
    Total risk-based capital ratio   17.32     15.15     15.00     14.93     14.91  

    (1) This is a non-GAAP financial measure. A reconciliation of all non-GAAP financial measures disclosed in this release from GAAP to non-GAAP is included in the tables at the end of this release. The information below under the heading “Non-GAAP Financial Measures” explains why the Company believes the non-GAAP financial measures in this release provide useful information and describes the other purposes for which the Company uses non-GAAP financial measures.


    Noninterest Income and Noninterest Expense

    (Dollars in thousands) Three Months Ended   Nine Months Ended
      Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023   Sep 30, 2024 Sep 30, 2023
    Noninterest income                
    Service charges on deposit accounts $ 10,438 $ 10,286 $ 10,506 $ 10,603   $ 9,743     $ 31,230 $ 28,596  
    Fees and commissions   4,116   3,944   3,949   4,130     4,108       12,009   13,771  
    Insurance commissions   —   2,758   2,716   2,583     3,264       5,474   8,519  
    Wealth management revenue   5,835   5,684   5,669   5,668     5,986       17,188   16,464  
    Mortgage banking income   8,447   9,698   11,370   6,592     7,533       29,515   25,821  
    Gain on sale of insurance agency   53,349   —   —   —     —       53,349   —  
    Net losses on sales of securities (including impairments)   —   —   —   (19,352 )   —       —   (22,438 )
    Gain on extinguishment of debt   —   —   56   620     —       56   —  
    BOLI income   2,858   2,701   2,691   2,589     2,469       8,250   7,874  
    Other   4,256   3,691   4,424   6,923     5,097       12,371   14,112  
    Total noninterest income $ 89,299 $ 38,762 $ 41,381 $ 20,356   $ 38,200     $ 169,442 $ 92,719  
    Noninterest expense                
    Salaries and employee benefits $ 71,307 $ 70,731 $ 71,470 $ 71,841   $ 69,458     $ 213,508 $ 209,927  
    Data processing   4,133   3,945   3,807   3,971     3,907       11,885   11,224  
    Net occupancy and equipment   11,415   11,844   11,389   11,653     11,548       34,648   34,818  
    Other real estate owned   56   105   107   306     (120 )     268   (39 )
    Professional fees   3,189   3,195   3,348   2,854     3,338       9,732   10,817  
    Advertising and public relations   3,677   3,807   4,886   3,084     3,474       12,370   11,642  
    Intangible amortization   1,160   1,186   1,212   1,274     1,311       3,558   4,106  
    Communications   2,176   2,112   2,024   2,026     2,006       6,312   6,212  
    Merger and conversion related expenses   11,273   —   —   —     —       11,273   —  
    Other   13,597   15,051   14,669   14,871     13,447       43,317   39,035  
    Total noninterest expense $ 121,983 $ 111,976 $ 112,912 $ 111,880   $ 108,369     $ 346,871 $ 327,742  


    Mortgage Banking Income

    (Dollars in thousands) Three Months Ended   Nine Months Ended
      Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023   Sep 30, 2024 Sep 30, 2023
    Gain on sales of loans, net $ 4,499 $ 5,199 $ 4,535 $ 1,860 $ 3,297   $ 14,233 $ 12,713
    Fees, net   2,646   2,866   1,854   2,010   2,376     7,366   7,041
    Mortgage servicing income, net   1,302   1,633   4,981   2,722   1,860     7,916   6,067
    Total mortgage banking income $ 8,447 $ 9,698 $ 11,370 $ 6,592 $ 7,533   $ 29,515 $ 25,821


    Balance Sheet

    (Dollars in thousands) As of
      Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023
    Assets          
    Cash and cash equivalents $ 1,275,620   $ 851,906   $ 844,400   $ 801,351   $ 741,156  
    Securities held to maturity, at amortized cost   1,150,531     1,174,663     1,199,111     1,221,464     1,245,595  
    Securities available for sale, at fair value   764,844     749,685     764,486     923,279     909,108  
    Loans held for sale, at fair value   291,735     266,406     191,440     179,756     241,613  
    Loans held for investment   12,627,648     12,604,755     12,500,525     12,351,230     12,168,023  
    Allowance for credit losses on loans   (200,378 )   (199,871 )   (201,052 )   (198,578 )   (197,773 )
    Loans, net   12,427,270     12,404,884     12,299,473     12,152,652     11,970,250  
    Premises and equipment, net   280,550     280,966     282,193     283,195     284,368  
    Other real estate owned   9,136     7,366     9,142     9,622     9,258  
    Goodwill and other intangibles   1,004,136     1,008,062     1,009,248     1,010,460     1,011,735  
    Bank-owned life insurance   389,138     387,791     385,186     382,584     379,945  
    Mortgage servicing rights   71,990     72,092     71,596     91,688     90,241  
    Other assets   293,890     306,570     289,466     304,484     298,352  
    Total assets $ 17,958,840   $ 17,510,391   $ 17,345,741   $ 17,360,535   $ 17,181,621  
               
    Liabilities and Shareholders’ Equity          
    Liabilities          
    Deposits:          
    Noninterest-bearing $ 3,529,801   $ 3,539,453   $ 3,516,164   $ 3,583,675   $ 3,734,197  
    Interest-bearing   10,979,950     10,715,760     10,720,999     10,493,110     10,422,913  
    Total deposits   14,509,751     14,255,213     14,237,163     14,076,785     14,157,110  
    Short-term borrowings   108,732     232,741     108,121     307,577     107,662  
    Long-term debt   433,177     428,677     428,047     429,400     427,399  
    Other liabilities   249,102     239,059     250,060     249,390     256,127  
    Total liabilities   15,300,762     15,155,690     15,023,391     15,063,152     14,948,298  
               
    Shareholders’ equity:          
    Common stock   332,421     296,483     296,483     296,483     296,483  
    Treasury stock   (97,251 )   (97,534 )   (99,683 )   (105,249 )   (105,300 )
    Additional paid-in capital   1,488,678     1,304,782     1,303,613     1,308,281     1,304,891  
    Retained earnings   1,063,324     1,005,086     978,880     952,124     936,573  
    Accumulated other comprehensive loss   (129,094 )   (154,116 )   (156,943 )   (154,256 )   (199,324 )
    Total shareholders’ equity   2,658,078     2,354,701     2,322,350     2,297,383     2,233,323  
    Total liabilities and shareholders’ equity $ 17,958,840   $ 17,510,391   $ 17,345,741   $ 17,360,535   $ 17,181,621  


    Net Interest Income and Net Interest Margin

    (Dollars in thousands) Three Months Ended
      September 30, 2024 June 30, 2024 September 30, 2023
      Average
    Balance
    Interest
    Income/
    Expense
    Yield/  
     Rate
    Average
    Balance
    Interest
    Income/
    Expense
    Yield/  
     Rate
    Average
    Balance
    Interest
    Income/
    Expense
    Yield/  
     Rate
    Interest-earning assets:                  
    Loans held for investment $ 12,584,104 $ 204,935 6.47 % $ 12,575,651 $ 200,670 6.41 % $ 12,030,109 $ 183,521 6.06 %
    Loans held for sale   272,110   4,212 6.19 %   219,826   3,530 6.42 %   227,982   3,751 6.58 %
    Taxable securities   1,794,421   9,212 2.05 %   1,832,002   9,258 2.02 %   2,097,285   9,459 1.80 %
    Tax-exempt securities(1)   262,621   1,390 2.12 %   263,937   1,451 2.20 %   285,588   1,566 2.19 %
    Total securities   2,057,042   10,602 2.06 %   2,095,939   10,709 2.04 %   2,382,873   11,025 1.85 %
    Interest-bearing balances with banks   894,313   11,872 5.28 %   595,030   7,874 5.32 %   729,049   10,128 5.51 %
    Total interest-earning assets   15,807,569   231,621 5.82 %   15,486,446   222,783 5.77 %   15,370,013   208,425 5.39 %
    Cash and due from banks   189,425       187,519       180,708    
    Intangible assets   1,004,701       1,008,638       1,012,460    
    Other assets   679,901       688,766       672,232    
    Total assets $ 17,681,596     $ 17,371,369     $ 17,235,413    
    Interest-bearing liabilities:                  
    Interest-bearing demand(2) $ 7,333,508 $ 60,326 3.26 % $ 7,094,411 $ 56,132 3.17 % $ 6,520,145 $ 41,464 2.52 %
    Savings deposits   815,545   729 0.36 %   839,638   729 0.35 %   942,619   793 0.33 %
    Brokered deposits   150,991   1,998 5.25 %   294,650   3,944 5.37 %   947,387   12,732 5.33 %
    Time deposits   2,546,860   27,734 4.33 %   2,487,873   26,816 4.34 %   2,002,506   15,917 3.15 %
    Total interest-bearing deposits   10,846,904   90,787 3.32 %   10,716,572   87,621 3.28 %   10,412,657   70,906 2.70 %
    Borrowed funds   562,146   7,258 5.14 %   583,965   7,564 5.19 %   564,772   7,388 5.22 %
    Total interest-bearing liabilities   11,409,050   98,045 3.41 %   11,300,537   95,185 3.38 %   10,977,429   78,294 2.84 %
    Noninterest-bearing deposits   3,509,266       3,509,109       3,800,160    
    Other liabilities   209,763       223,992       226,219    
    Shareholders’ equity   2,553,517       2,337,731       2,231,605    
    Total liabilities and shareholders’ equity $ 17,681,596     $ 17,371,369     $ 17,235,413    
    Net interest income/ net interest margin   $ 133,576 3.36 %   $ 127,598 3.31 %   $ 130,131 3.36 %
    Cost of funding     2.61 %     2.58 %     2.11 %
    Cost of total deposits     2.51 %     2.47 %     1.98 %

    (1) U.S. Government and some U.S. Government Agency securities are tax-exempt in the states in which the Company operates.
    (2) Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.


    Net Interest Income and Net Interest Margin, continued

    (Dollars in thousands) Nine Months Ended
      September 30, 2024 September 30, 2023
      Average
    Balance
    Interest
    Income/
    Expense
    Yield/  
     Rate
    Average
    Balance
    Interest
    Income/
    Expense
    Yield/  
     Rate
    Interest-earning assets:            
    Loans held for investment $ 12,522,802 $ 600,245 6.39 % $ 11,866,662 $ 523,040 5.89 %
    Loans held for sale   215,978   10,050 6.20 %   175,100   8,478 6.46 %
    Taxable securities(1)   1,839,249   27,975 2.03 %   2,402,739   35,129 1.95 %
    Tax-exempt securities   265,601   4,346 2.18 %   349,617   6,076 2.32 %
    Total securities   2,104,850   32,321 2.05 %   2,752,356   41,205 2.00 %
    Interest-bearing balances with banks   687,318   27,527 5.35 %   573,498   22,536 5.25 %
    Total interest-earning assets   15,530,948   670,143 5.75 %   15,367,616   595,259 5.18 %
    Cash and due from banks   188,485       189,324    
    Intangible assets   1,007,710       1,012,613    
    Other assets   694,427       674,476    
    Total assets $ 17,421,570     $ 17,244,029    
    Interest-bearing liabilities:            
    Interest-bearing demand(2) $ 7,128,721 $ 168,958 3.16 % $ 6,235,322 $ 90,947 1.95 %
    Savings deposits   838,443   2,188 0.35 %   999,436   2,432 0.33 %
    Brokered deposits   296,550   11,929 5.36 %   719,603   27,445 5.10 %
    Time deposits   2,451,733   77,946 4.25 %   1,769,246   34,339 2.59 %
    Total interest-bearing deposits   10,715,447   261,021 3.25 %   9,723,607   155,163 2.13 %
    Borrowed funds   569,476   22,098 5.17 %   1,026,467   38,351 4.99 %
    Total interest-bearing liabilities   11,284,923   283,119 3.35 %   10,750,074   193,514 2.41 %
    Noninterest-bearing deposits   3,512,318       4,073,265    
    Other liabilities   221,932       208,491    
    Shareholders’ equity   2,402,397       2,212,199    
    Total liabilities and shareholders’ equity $ 17,421,570     $ 17,244,029    
    Net interest income/ net interest margin   $ 387,024 3.32 %   $ 401,745 3.49 %
    Cost of funding     2.55 %     1.75 %
    Cost of total deposits     2.45 %     1.50 %

    (1) U.S. Government and some U.S. Government Agency securities are tax-exempt in the states in which the Company operates.
    (2) Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.


    Supplemental Margin Information

    (Dollars in thousands) Three Months Ended   Nine Months Ended
      Sep 30, 2024 Jun 30, 2024 Sep 30, 2023   Sep 30, 2024 Sep 30, 2023
    Earning asset mix:            
    Loans held for investment   79.61 %   81.20 %   78.27 %     80.63 %   77.22 %
    Loans held for sale   1.72     1.42     1.48       1.39     1.14  
    Securities   13.01     13.53     15.50       13.55     17.91  
    Interest-bearing balances with banks   5.66     3.85     4.75       4.43     3.73  
    Total   100.00 %   100.00 %   100.00 %     100.00 %   100.00 %
                 
    Funding sources mix:            
    Noninterest-bearing demand   23.52 %   23.69 %   25.72 %     23.74 %   27.48 %
    Interest-bearing demand(1)   49.16     47.90     44.12       48.18     42.06  
    Savings   5.47     5.67     6.38       5.67     6.74  
    Brokered deposits   1.01     1.99     6.41       2.00     4.85  
    Time deposits   17.07     16.80     13.55       16.57     11.94  
    Borrowed funds   3.77     3.95     3.82       3.84     6.93  
    Total   100.00 %   100.00 %   100.00 %     100.00 %   100.00 %
                 
    Net interest income collected on problem loans $ 642   $ (146 ) $ (820 )   $ 619   $ (64 )
    Total accretion on purchased loans   1,089     897     1,290       2,786     3,049  
    Total impact on net interest income $ 1,731   $ 751   $ 470     $ 3,405   $ 2,985  
    Impact on net interest margin   0.04 %   0.02 %   0.01 %     0.03 %   0.03 %
    Impact on loan yield   0.05     0.02     0.02       0.04 %   0.03 %

    (1) Interest-bearing demand deposits include interest-bearing transactional accounts and money market deposits.


    Loan Portfolio

    (Dollars in thousands) As of
      Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023
    Loan Portfolio:          
    Commercial, financial, agricultural $ 1,804,961 $ 1,847,762 $ 1,869,408 $ 1,871,821 $ 1,819,891
    Lease financing   98,159   102,996   107,474   116,020   120,724
    Real estate – construction   1,198,838   1,355,425   1,243,535   1,333,397   1,407,364
    Real estate – 1-4 family mortgages   3,440,038   3,435,818   3,429,286   3,439,919   3,398,876
    Real estate – commercial mortgages   5,995,152   5,766,478   5,753,230   5,486,550   5,313,166
    Installment loans to individuals   90,500   96,276   97,592   103,523   108,002
    Total loans $ 12,627,648 $ 12,604,755 $ 12,500,525 $ 12,351,230 $ 12,168,023


    Credit Quality and Allowance for Credit Losses on Loans

    (Dollars in thousands) As of
      Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023
    Nonperforming Assets:          
    Nonaccruing loans $ 113,872   $ 97,795   $ 73,774   $ 68,816   $ 69,541  
    Loans 90 days or more past due   5,351     240     451     554     532  
    Total nonperforming loans   119,223     98,035     74,225     69,370     70,073  
    Other real estate owned   9,136     7,366     9,142     9,622     9,258  
    Total nonperforming assets $ 128,359   $ 105,401   $ 83,367   $ 78,992   $ 79,331  
               
    Criticized Loans          
    Classified loans $ 218,135   $ 191,595   $ 206,502   $ 166,893   $ 186,052  
    Special Mention loans   163,804     138,343     138,366     99,699     89,858  
    Criticized loans(1) $ 381,939   $ 329,938   $ 344,868   $ 266,592   $ 275,910  
               
    Allowance for credit losses on loans $ 200,378   $ 199,871   $ 201,052   $ 198,578   $ 197,773  
    Net loan charge-offs $ 703   $ 5,481   $ 164   $ 1,713   $ 1,933  
    Annualized net loan charge-offs / average loans   0.02 %   0.18 %   0.01 %   0.06 %   0.06 %
    Nonperforming loans / total loans   0.94     0.78     0.59     0.56     0.58  
    Nonperforming assets / total assets   0.71     0.60     0.48     0.46     0.46  
    Allowance for credit losses on loans / total loans   1.59     1.59     1.61     1.61     1.63  
    Allowance for credit losses on loans / nonperforming loans   168.07     203.88     270.87     286.26     282.24  
    Criticized loans / total loans   3.02     2.62     2.76     2.16     2.27  

    (1) Criticized loans include classified and Special Mention loans.


    CONFERENCE CALL INFORMATION:

    A live audio webcast of a conference call with analysts will be available beginning at 10:00 AM Eastern Time (9:00 AM Central Time) on Wednesday, October 23, 2024.

    The webcast is accessible through Renasant’s investor relations website at http://www.renasant.com or https://event.choruscall.com/mediaframe/webcast.html?webcastid=YvWBKrUB. To access the conference via telephone, dial 1-877-513-1143 in the United States and request the Renasant Corporation 2024 Third Quarter Earnings Webcast and Conference Call. International participants should dial 1-412-902-4145 to access the conference call.

    The webcast will be archived on http://www.renasant.com after the call and will remain accessible for one year. A replay can be accessed via telephone by dialing 1-877-344-7529 in the United States and entering conference number 8626805 or by dialing 1-412-317-0088 internationally and entering the same conference number. Telephone replay access is available until November 6, 2024.

    ABOUT RENASANT CORPORATION:
    Renasant Corporation is the parent of Renasant Bank, a 120-year-old financial services institution. Renasant has assets of approximately $18.0 billion and operates 186 banking, lending, mortgage and wealth management offices throughout the Southeast as well as offering factoring and asset-based lending on a nationwide basis.

    CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
    This press release may contain, or incorporate by reference, statements about Renasant Corporation that 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. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “projects,” “anticipates,” “intends,” “estimates,” “plans,” “potential,” “focus,” “possible,” “may increase,” “may fluctuate,” “will likely result,” and similar expressions, or future or conditional verbs such as “will,” “should,” “would” and “could,” are generally forward-looking in nature and not historical facts. Forward-looking statements include information about the Company’s future financial performance, business strategy, projected plans and objectives and are based on the current beliefs and expectations of management. The Company’s management believes these forward-looking statements are reasonable, but they are all inherently subject to significant business, economic and competitive risks and uncertainties, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ from those indicated or implied in the forward-looking statements, and such differences may be material. Prospective investors are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties and, accordingly, investors should not place undue reliance on these forward-looking statements, which speak only as of the date they are made.

    Important factors currently known to management that could cause our actual results to differ materially from those in forward-looking statements include the following: (i) the Company’s ability to efficiently integrate acquisitions (including its recently-announced acquisition of The First Bancshares, Inc. described under the “Quarterly Highlights” heading above) into its operations, retain the customers of these businesses, grow the acquired operations and realize the cost savings expected from an acquisition to the extent and in the timeframe anticipated by management (including the possibility that such cost savings will not be realized when expected, or at all, as a result of the impact of, or challenges arising from, the integration of the acquired assets and assumed liabilities into the Company, potential adverse reactions or changes to business or employee relationships, or as a result of other unexpected factors or events); (ii) potential exposure to unknown or contingent risks and liabilities we have acquired, or may acquire, or target for acquisition, including in connection with the proposed merger with The First Bancshares, Inc.; (iii) the effect of economic conditions and interest rates on a national, regional or international basis; (iv) timing and success of the implementation of changes in operations to achieve enhanced earnings or effect cost savings; (v) competitive pressures in the consumer finance, commercial finance, financial services, asset management, retail banking, factoring and mortgage lending and auto lending industries; (vi) the financial resources of, and products available from, competitors; (vii) changes in laws and regulations as well as changes in accounting standards; (viii) changes in policy by regulatory agencies or increased scrutiny by, and/or additional regulatory requirements of, regulatory agencies as a result of our proposed merger with The First Bancshares, Inc.; (ix) changes in the securities and foreign exchange markets; (x) the Company’s potential growth, including its entrance or expansion into new markets, and the need for sufficient capital to support that growth; (xi) changes in the quality or composition of the Company’s loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers or issuers of investment securities, or the impact of interest rates on the value of our investment securities portfolio; (xii) an insufficient allowance for credit losses as a result of inaccurate assumptions; (xiii) changes in the sources and costs of the capital we use to make loans and otherwise fund our operations, due to deposit outflows, changes in the mix of deposits and the cost and availability of borrowings; (xiv) general economic, market or business conditions, including the impact of inflation; (xv) changes in demand for loan and deposit products and other financial services; (xvi) concentrations of credit or deposit exposure; (xvii) changes or the lack of changes in interest rates, yield curves and interest rate spread relationships; (xviii) increased cybersecurity risk, including potential network breaches, business disruptions or financial losses; (xix) civil unrest, natural disasters, epidemics and other catastrophic events in the Company’s geographic area; (xx) 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; (xxi) the impact, extent and timing of technological changes; and (xxii) other circumstances, many of which are beyond management’s control.

    Management believes that the assumptions underlying the Company’s forward-looking statements are reasonable, but any of the assumptions could prove to be inaccurate. Investors are urged to carefully consider the risks described in the Company’s filings with the Securities and Exchange Commission (the “SEC”) from time to time, including its most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, which are available at http://www.renasant.com and the SEC’s website at http://www.sec.gov.

    The Company undertakes no obligation, and specifically disclaims any obligation, to update or revise forward-looking statements, whether as a result of new information or to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by federal securities laws.

    NON-GAAP FINANCIAL MEASURES:
    In addition to results presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), this press release and the presentation slides furnished to the SEC on the same Form 8-K as this release contain non-GAAP financial measures, namely, (i) adjusted loan yield, (ii) adjusted net interest income and margin, (iii) pre-provision net revenue (including on an as-adjusted basis), (iv) adjusted net income, (v) adjusted diluted earnings per share, (vi) tangible book value per share, (vii) the tangible common equity ratio, (viii) certain performance ratios (namely, the ratio of pre-provision net revenue to average assets, the return on average assets and on average equity, and the return on average tangible assets and on average tangible common equity (including each of the foregoing on an as-adjusted basis)), and (ix) the adjusted efficiency ratio.

    These non-GAAP financial measures adjust GAAP financial measures to exclude intangible assets, including related amortization, and/or certain gains or charges (such as, for the third quarter of 2024, merger and conversion expenses and the gain on the sale of the assets of the Company’s insurance agency), with respect to which the Company is unable to accurately predict when these charges will be incurred or, when incurred, the amount thereof. Management uses these non-GAAP financial measures when evaluating capital utilization and adequacy. In addition, the Company believes that these non-GAAP financial measures facilitate the making of period-to-period comparisons and are meaningful indicators of its operating performance, particularly because these measures are widely used by industry analysts for companies with merger and acquisition activities. Also, because intangible assets such as goodwill and the core deposit intangible can vary extensively from company to company and, as to intangible assets, are excluded from the calculation of a financial institution’s regulatory capital, the Company believes that the presentation of this non-GAAP financial information allows readers to more easily compare the Company’s results to information provided in other regulatory reports and the results of other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables below under the caption “Non-GAAP Reconciliations”.

    None of the non-GAAP financial information that the Company has included in this release or the accompanying presentation slides are intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Investors should note that, because there are no standardized definitions for the calculations as well as the results, the Company’s calculations may not be comparable to similarly titled measures presented by other companies. Also, there may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

    Non-GAAP Reconciliations

    (Dollars in thousands, except per share data) Three Months Ended   Nine Months Ended
      Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023   Sep 30, 2024 Sep 30, 2023
    Adjusted Pre-Provision Net Revenue (“PPNR”)            
    Net income (GAAP) $ 72,455   $ 38,846   $ 39,409   $ 28,124   $ 41,833     $ 150,710   $ 116,554  
    Income taxes   24,924     9,666     9,912     3,787     10,766       44,502     28,722  
    Provision for credit losses (including unfunded commitments)   935     3,300     2,438     2,518     4,615       6,673     13,075  
    Pre-provision net revenue (non-GAAP) $ 98,314   $ 51,812   $ 51,759   $ 34,429   $ 57,214     $ 201,885   $ 158,351  
    Merger and conversion expense   11,273     —     —     —     —       11,273     —  
    Gain on extinguishment of debt   —     —     (56 )   (620 )   —       (56 )   —  
    Gain on sales of MSR   —     —     (3,472 )   (547 )   —       (3,472 )   —  
    Gain on sale of insurance agency   (53,349 )   —     —     —     —       (53,349 )   —  
    Losses on sales of securities (including impairments)   —     —     —     19,352     —       —     22,438  
    Adjusted pre-provision net revenue (non-GAAP) $ 56,238   $ 51,812   $ 48,231   $ 52,614   $ 57,214     $ 156,281   $ 180,789  
                     
    Adjusted Net Income and Adjusted Tangible Net Income            
    Net income (GAAP) $ 72,455   $ 38,846   $ 39,409   $ 28,124   $ 41,833     $ 150,710   $ 116,554  
    Amortization of intangibles   1,160     1,186     1,212     1,274     1,311       3,558     4,106  
    Tax effect of adjustments noted above(1)   (296 )   (233 )   (237 )   (240 )   (269 )     (909 )   (838 )
    Tangible net income (non-GAAP) $ 73,319   $ 39,799   $ 40,384   $ 29,158   $ 42,875     $ 153,359   $ 119,822  
                     
    Net income (GAAP) $ 72,455   $ 38,846   $ 39,409   $ 28,124   $ 41,833     $ 150,710   $ 116,554  
    Merger and conversion expense   11,273     —     —     —     —       11,273     —  
    Gain on extinguishment of debt   —     —     (56 )   (620 )   —       (56 )   —  
    Gain on sales of MSR   —     —     (3,472 )   (547 )   —       (3,472 )   —  
    Gain on sale of insurance agency   (53,349 )   —     —     —     —       (53,349 )   —  
    Losses on sales of securities (including impairments)   —     —     —     19,352     —       —     22,438  
    Tax effect of adjustments noted above(1)   12,581     —     691     (3,422 )   —       13,482     (4,579 )
    Adjusted net income (non-GAAP) $ 42,960   $ 38,846   $ 36,572   $ 42,887   $ 41,833     $ 118,588   $ 134,413  
    Amortization of intangibles   1,160     1,186     1,212     1,274     1,311       3,558     4,106  
    Tax effect of adjustments noted above(1)   (296 )   (233 )   (237 )   (240 )   (269 )     (909 )   (838 )
    Adjusted tangible net income (non-GAAP) $ 43,824   $ 39,799   $ 37,547   $ 43,921   $ 42,875     $ 121,237   $ 137,681  
    Tangible Assets and Tangible Shareholders’ Equity            
    Average shareholders’ equity (GAAP) $ 2,553,517   $ 2,337,731   $ 2,314,281   $ 2,261,025   $ 2,231,605     $ 2,402,397   $ 2,212,199  
    Average intangible assets   1,004,701     1,008,638     1,009,825     1,011,130     1,012,460       1,007,710     1,012,613  
    Average tangible shareholders’ equity (non-GAAP) $ 1,548,816   $ 1,329,093   $ 1,304,456   $ 1,249,895   $ 1,219,145     $ 1,394,687   $ 1,199,586  
                     
    Average assets (GAAP) $ 17,681,596   $ 17,371,369   $ 17,203,013   $ 17,195,840   $ 17,235,413     $ 17,421,570   $ 17,244,029  
    Average intangible assets   1,004,701     1,008,638     1,009,825     1,011,130     1,012,460       1,007,710     1,012,613  
    Average tangible assets (non-GAAP) $ 16,676,895   $ 16,362,731   $ 16,193,188   $ 16,184,710   $ 16,222,953     $ 16,413,860   $ 16,231,416  
                     
    Shareholders’ equity (GAAP) $ 2,658,078   $ 2,354,701   $ 2,322,350   $ 2,297,383   $ 2,233,323     $ 2,658,078   $ 2,233,323  
    Intangible assets   1,004,136     1,008,062     1,009,248     1,010,460     1,011,735       1,004,136     1,011,735  
    Tangible shareholders’ equity (non-GAAP) $ 1,653,942   $ 1,346,639   $ 1,313,102   $ 1,286,923   $ 1,221,588     $ 1,653,942   $ 1,221,588  
                     
    Total assets (GAAP) $ 17,958,840   $ 17,510,391   $ 17,345,741   $ 17,360,535   $ 17,181,621     $ 17,958,840   $ 17,181,621  
    Intangible assets   1,004,136     1,008,062     1,009,248     1,010,460     1,011,735       1,004,136     1,011,735  
    Total tangible assets (non-GAAP) $ 16,954,704   $ 16,502,329   $ 16,336,493   $ 16,350,075   $ 16,169,886     $ 16,954,704   $ 16,169,886  
                     
    Adjusted Performance Ratios                
    Return on average assets (GAAP)   1.63 %   0.90 %   0.92 %   0.65 %   0.96 %     1.16 %   0.90 %
    Adjusted return on average assets (non-GAAP)   0.97     0.90     0.86     0.99     0.96       0.91     1.04  
    Return on average tangible assets (non-GAAP)   1.75     0.98     1.00     0.71     1.05       1.25     0.99  
    Pre-provision net revenue to average assets (non-GAAP)   2.21     1.20     1.21     0.79     1.32       1.55     1.23  
    Adjusted pre-provision net revenue to average assets (non-GAAP)   1.27     1.20     1.13     1.21     1.32       1.20     1.40  
    Adjusted return on average tangible assets (non-GAAP)   1.05     0.98     0.93     1.08     1.05       0.99     1.13  
    Return on average equity (GAAP)   11.29     6.68     6.85     4.93     7.44       8.38     7.04  
    Adjusted return on average equity (non-GAAP)   6.69     6.68     6.36     7.53     7.44       6.59     8.12  
    Return on average tangible equity (non-GAAP)   18.83     12.04     12.45     9.26     13.95       14.69     13.35  
    Adjusted return on average tangible equity (non-GAAP)   11.26     12.04     11.58     13.94     13.95       11.61     15.35  
                     
    Adjusted Diluted Earnings Per Share            
    Average diluted shares outstanding   61,632,448     56,684,626     56,531,078     56,611,217     56,523,887       58,297,554     56,393,957  
                     
    Diluted earnings per share (GAAP) $ 1.18   $ 0.69   $ 0.70   $ 0.50   $ 0.74     $ 2.59   $ 2.07  
    Adjusted diluted earnings per share (non-GAAP) $ 0.70   $ 0.69   $ 0.65   $ 0.76   $ 0.74     $ 2.03   $ 2.38  
                     
    Tangible Book Value Per Share                
    Shares outstanding   63,564,028     56,367,924     56,304,860     56,142,207     56,140,713       63,564,028     56,140,713  
                     
    Book value per share (GAAP) $ 41.82   $ 41.77   $ 41.25   $ 40.92   $ 39.78     $ 41.82   $ 39.78  
    Tangible book value per share (non-GAAP) $ 26.02   $ 23.89   $ 23.32   $ 22.92   $ 21.76     $ 26.02   $ 21.76  
                     
    Tangible Common Equity Ratio                
    Shareholders’ equity to assets (GAAP)   14.80 %   13.45 %   13.39 %   13.23 %   13.00 %     14.80 %   13.00 %
    Tangible common equity ratio (non-GAAP)   9.76 %   8.16 %   8.04 %   7.87 %   7.55 %     9.76 %   7.55 %
    Adjusted Efficiency Ratio                
    Net interest income (FTE) (GAAP) $ 133,576   $ 127,598   $ 125,850   $ 128,595   $ 130,131     $ 387,024   $ 401,745  
                     
    Total noninterest income (GAAP) $ 89,299   $ 38,762   $ 41,381   $ 20,356   $ 38,200     $ 169,442   $ 92,719  
    Gain on sales of MSR   —     —     3,472     547     —       3,472     —  
    Gain on extinguishment of debt   —     —     56     620     —       56     —  
    Gain on sale of insurance agency   53,349     —     —     —     —       53,349     —  
    Losses on sales of securities (including impairments)   —     —     —     (19,352 )   —       —     (22,438 )
    Total adjusted noninterest income (non-GAAP) $ 35,950   $ 38,762   $ 37,853   $ 38,541   $ 38,200     $ 112,565   $ 115,157  
                     
    Noninterest expense (GAAP) $ 121,983   $ 111,976   $ 112,912   $ 111,880   $ 108,369     $ 346,871   $ 327,742  
    Amortization of intangibles   1,160     1,186     1,212     1,274     1,311       3,558     4,106  
    Merger and conversion expense   11,273     —     —     —     —       11,273     —  
    Total adjusted noninterest expense (non-GAAP) $ 109,550   $ 110,790   $ 111,700   $ 110,606   $ 107,058     $ 332,040   $ 323,636  
                     
    Efficiency ratio (GAAP)   54.73 %   67.31 %   67.52 %   75.11 %   64.38 %     62.33 %   66.28 %
    Adjusted efficiency ratio (non-GAAP)   64.62 %   66.60 %   68.23 %   66.18 %   63.60 %     66.46 %   62.61 %
                     
    Adjusted Net Interest Income and Adjusted Net Interest Margin            
    Net interest income (FTE) (GAAP) $ 133,576   $ 127,598   $ 125,850   $ 128,595   $ 130,131     $ 387,024   $ 401,745  
    Net interest income collected on problem loans   642     (146 )   123     283     (820 )     619     (64 )
    Accretion recognized on purchased loans   1,089     897     800     1,117     1,290       2,786     3,049  
    Adjustments to net interest income $ 1,731   $ 751   $ 923   $ 1,400   $ 470     $ 3,405   $ 2,985  
    Adjusted net interest income (FTE) (non-GAAP) $ 131,845   $ 126,847   $ 124,927   $ 127,195   $ 129,661     $ 383,619   $ 398,760  
                     
    Net interest margin (GAAP)   3.36 %   3.31 %   3.30 %   3.33 %   3.36 %     3.32 %   3.49 %
    Adjusted net interest margin (non-GAAP)   3.32 %   3.29 %   3.28 %   3.29 %   3.35 %     3.30 %   3.47 %
                     
    Adjusted Loan Yield                
    Loan interest income (FTE) (GAAP) $ 204,935   $ 200,670   $ 194,640   $ 190,857   $ 183,521     $ 600,245   $ 523,040  
    Net interest income collected on problem loans   642     (146 )   123     283     (820 )     619     (64 )
    Accretion recognized on purchased loans   1,089     897     800     1,117     1,290       2,786     3,049  
    Adjusted loan interest income (FTE) (non-GAAP) $ 203,204   $ 199,919   $ 193,717   $ 189,457   $ 183,051     $ 596,840   $ 520,055  
                     
    Loan yield (GAAP)   6.47 %   6.41 %   6.30 %   6.18 %   6.06 %     6.39 %   5.89 %
    Adjusted loan yield (non-GAAP)   6.41 %   6.38 %   6.27 %   6.14 %   6.04 %     6.35 %   5.86 %

    (1) Tax effect is calculated based on the respective legal entity’s appropriate federal and state tax rates (as applicable) for the period, and includes the estimated impact of both current and deferred tax expense. The tax effect of the discrete gain on sale of insurance agency was calculated based on an estimated tax rate of 25.8%.

    Contacts: For Media:   For Financials:
      John S. Oxford   James C. Mabry IV
      Senior Vice President   Executive Vice President
      Chief Marketing Officer   Chief Financial Officer
      (662) 680-1219   (662) 680-1281

    The MIL Network –

    January 24, 2025
  • MIL-OSI: Veritex Holdings, Inc. Reports Third Quarter 2024 Operating Results

    Source: GlobeNewswire (MIL-OSI)

    DALLAS, Oct. 22, 2024 (GLOBE NEWSWIRE) — Veritex Holdings, Inc. (“Veritex”, the “Company”, “we” or “our”) (Nasdaq: VBTX), the holding company for Veritex Community Bank, today announced the results for the quarter ended September 30, 2024.

    “We are pleased to announce both our third quarter results and updates on our balance sheet transformation over the past 2 years,” said C. Malcolm Holland, III, the Company’s Chairman and Chief Executive Officer. “My team has remained focused on growing granular, attractively priced deposits, increasing capital, managing concentrations and reducing credit risk exposure all while continuing to grow a fortress balance sheet through full relationship banking. I could not be more proud of our team of nearly 900 employees who embraced the challenges we set forth back in 2022 and each day going forward.”

        Quarter to Date   Year to Date
    Financial Highlights   Q3 2024   Q2 2024   Q3 2024   Q3 2023
        (Dollars in thousands, except per share data)
    (unaudited)
    GAAP                
    Net income   $ 31,001     $ 27,202     $ 82,359     $ 104,762  
    Diluted EPS     0.56       0.50       1.50       1.92  
    Book value per common share     29.53       28.49       29.53       27.46  
    Return on average assets1     0.96 %     0.87 %     0.87 %     1.14 %
    Return on average equity1     7.79       7.10       7.08       9.35  
    Net interest margin     3.30       3.29       3.28       3.55  
    Efficiency ratio     61.94       59.11       61.15       50.88  
    Non-GAAP2                
    Operating earnings   $ 32,181     $ 28,310     $ 89,628     $ 110,489  
    Diluted operating EPS     0.59       0.52       1.63       2.02  
    Tangible book value per common share     21.72       20.62       21.72       19.44  
    Pre-tax, pre-provision operating earnings     44,555       44,420       132,631       174,523  
    Pre-tax, pre-provision operating return on average assets1     1.38 %     1.42 %     1.41 %     1.90 %
    Pre-tax, pre-provision operating return on average loans1     1.83       1.83       1.83       2.43  
    Operating return on average assets1     1.00       0.91       0.95       1.20  
    Return on average tangible common equity1     11.33       10.54       10.48       13.95  
    Operating return on average tangible common equity1     11.74       10.94       11.34       14.68  
    Operating efficiency ratio     60.63       58.41       59.28       49.53  

    1 Annualized ratio.
    2 Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of these non-generally accepted accounting principles (“GAAP”) financial measures to their most directly comparable GAAP measures.

    Other Third Quarter Financial, Credit and Company Highlights

    • Return on average assets (“ROAA”) increased 9 bps compared to June 30, 2024;
    • 7.2% linked quarter revenue growth;
    • Nonperforming assets (“NPAs”) decreased 13 bps from the prior quarter to 0.52% of total assets;
    • Total deposits grew $311.2 million, or 11.60% annualized, compared to June 30, 2024;
    • Common equity tier 1 capital grew 37 bps from the prior quarter to 10.86%;
    • Net interest margin (“NIM”) expanded to 3.30%;
    • Loan to deposit ratio, excluding mortgage warehouse loans, decreased to 81.9% as of September 30, 2024, compared to 85.9% as of June 30, 2024 and 90.7% as of September 30, 2023;
    • Tangible book value per common share increased to $21.72;
    • Allowance for credit losses (“ACL”) to total loans held for investment (“LHI”) increased to 1.21%, compared to 1.16% as of June 30, 2024 and 1.14% as of September 30, 2023; and
    • Declared quarterly cash dividend of $0.20 per share of outstanding common stock payable on November 22, 2024.

    Results of Operations for the Three Months Ended September 30, 2024

    Net Interest Income

    For the three months ended September 30, 2024, net interest income before provision for credit losses was $100.1 million and NIM was 3.30% compared to $96.2 million and 3.29%, respectively, for the three months ended June 30, 2024. The approximately $3.8 million increase, or 4.0%, in net interest income before provision for credit losses was primarily due to a $4.8 million increase in interest income on deposits in financial institutions and fed funds sold, a $1.4 million decrease in interest expense on advances from the Federal Home Loan Bank (“FHLB”), a $422 thousand increase in interest income on debt securities and a $282 thousand increase in interest income on loans. The increase was partially offset by a $1.6 million increase in interest expense on transactions and savings deposits and a $1.4 million increase in interest expense on certificates and other time deposits, during the three months ended September 30, 2024. NIM increased 1 basis point compared to the three months ended June 30, 2024, primarily due to a decrease in funding costs on deposits during the three months ended September 30, 2024, partially offset by a decrease in loan yields and average balances.

    Compared to the three months ended September 30, 2023, net interest income before provision for credit losses for the three months ended September 30, 2024 increased by $701 thousand, or 0.7%. The increase was primarily due to a $8.5 million decrease in interest expense on advances from the FHLB, a $5.4 million increase in interest income on deposits in financial institutions and fed funds sold and a $4.9 million increase in interest income on debt securities. The increase was partially offset by a $10.1 million increase in interest expense on certificates and other time deposits, a $7.3 million increase in interest expense on transaction and savings deposits and a $690 thousand decrease in interest income on equity securities and other investments. Compared to the three months ended September 30, 2023, NIM decreased 16 bps from 3.46% for the three months ended September 30, 2024. The decrease was primarily due to the increase in funding costs on deposits during the three months ended September 30, 2024, partially offset by an increase in loan yields and an increase in average balances and yields on debt securities.

    Noninterest Income

    Noninterest income for the three months ended September 30, 2024 was $13.1 million, an increase of $2.5 million, or 23.9%, compared to the three months ended June 30, 2024. The increase was primarily due to a $1.6 million increase in other income, driven by a $1.2 million increase in other real estate owned (“OREO”) income, a $1.1 million increase in loan fees and a $468 thousand increase in service charges and fees on deposits for the three months ended September 30, 2024. The increase was partially offset by a $540 thousand decrease in government guaranteed loan income.

    Compared to the three months ended September 30, 2023, noninterest income for the three months ended September 30, 2024 increased by $3.4 million, or 35.5%. The increase was primarily due to a $2.2 million increase in other income, driven by a $1.2 million increase in OREO income, a $1.7 million increase in loan fees and a $283 thousand increase in service charges and fees on deposit accounts. The increase was partially offset by a $1.0 million decrease in government guaranteed loan income, primarily driven by a decrease in the Company’s USDA sales.

    Noninterest Expense

    Noninterest expense was $70.1 million for the three months ended September 30, 2024, compared to $63.1 million for the three months ended June 30, 2024, an increase of $7.0 million, or 11.0%. The increase was primarily due to a $4.6 million increase in salaries and employee benefits primarily due to an increase in incentive accruals to 80% of target payout, a $1.9 million increase in other noninterest expense primarily driven by OREO expenses, a $805 thousand increase in marketing expenses and a $204 thousand increase in occupancy and equipment expense. The increase is partially offset by a decrease of $714 thousand in professional and regulatory fees compared to the three months ended June 30, 2024.

    Compared to the three months ended September 30, 2023, noninterest expense for the three months ended September 30, 2024 increased by $10.7 million, or 18.0%. The increase was primarily due to a $6.4 million increase in salaries and employee benefits primarily due to the increase in incentive accruals aforementioned, a $5.6 million increase in other noninterest expense, a $727 thousand increase data processing and software expense, and a $428 thousand increase in marketing expenses. The increase was partially offset by a $2.4 million decrease in professional and regulatory fees compared to the three months ended September 30, 2023.

    Financial Condition

    Total LHI was $9.03 billion at September 30, 2024, a decrease of $180.5 million compared to June 30, 2024.

    Total deposits were $11.04 billion at September 30, 2024, an increase of $311.2 million, or 11.6% linked quarter annualized. The increase was primarily the result of an increase of $227.2 million in noninterest bearing deposits and an increase of $225.3 million in interest-bearing transaction and savings deposits. The increase was partially offset by a decrease of $118.7 million in certificates and other time deposits and a decrease of $22.6 million in correspondent money market accounts.

    Credit Quality

    NPAs totaled $67.3 million, or 0.52% of total assets, of which $58.3 million represents LHI and $9.0 million represents OREO at September 30, 2024, compared to $83.0 million, or 0.65% of total assets, at June 30, 2024. The Company had net charge-offs of $269 thousand for the three months ended September 30, 2024. Annualized net charge-offs to average loans outstanding were 1bp, for the three months ended September 30, 2024, compared to 28 bps and 8 bps for the three months ended June 30, 2024 and September 30, 2023, respectively.

    ACL as a percentage of LHI was 1.21%, 1.16% and 1.14% at September 30, 2024, June 30, 2024 and September 30, 2023, respectively. The Company recorded a provision for credit losses of $4.0 million, $8.3 million and $8.6 million for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. The recorded provision for credit losses for the three months ended September 30, 2024, compared to the three months ended June 30, 2024, was primarily attributable to an increase in general reserves as a result of changes in economic factors which now represents 97% of the total ACL as a percentage of LHI. The balance for unfunded commitments for the three months ended September 30, 2024 remained relatively stable compared to the three months ended June 30, 2024 and recorded no benefit or provision for unfunded commitments for the three months ended September 30, 2024. The Company recorded no benefit or provision for unfunded commitments for the three months ended June 30, 2024 and a $909 thousand benefit for unfunded commitments for the three months ended September 30, 2023.

    Income Tax

    Income tax expense for the three months ended September 30, 2024 totaled $8.1 million, a decrease of $154 thousand, or 1.9%, compared to the three months ended June 30, 2024. The Company’s effective tax rate was approximately 20.6% for the three months ended September 30, 2024. The decrease was primarily due a $941 thousand change in the Company’s valuation allowance slightly offset by a return to provision of $224 thousand and a net discrete tax expense of $501 thousand associated with the recognition of an excess tax expense realized on share-based payment awards.

    Dividend Information

    After the close of the market on Tuesday, October 22, 2024, Veritex’s Board of Directors declared a quarterly cash dividend of $0.20 per share on its outstanding shares of common stock. The dividend will be paid on or after November 22, 2024 to stockholders of record as of the close of business on November 8, 2024.

    Non-GAAP Financial Measures

    Veritex’s management uses certain non-GAAP (U.S. generally accepted accounting principles) financial measures to evaluate its operating performance and provide information that is important to investors. However, non-GAAP financial measures are supplemental and should be viewed in addition to, and not as an alternative for, Veritex’s reported results prepared in accordance with GAAP. Specifically, Veritex reviews and reports tangible book value per common share of the Company; operating earnings; tangible common equity to tangible assets; return on average tangible common equity; pre-tax, pre-provision operating earnings; pre-tax, pre-provision operating return on average assets; pre-tax, pre-provision operating return on average loans; diluted operating earnings per share; operating return on average assets; operating return on average tangible common equity; and operating efficiency ratio. Veritex has included in this earnings release information related to these non-GAAP financial measures for the applicable periods presented. Please refer to “Reconciliation of Non-GAAP Financial Measures” after the financial highlights at the end of this earnings release for a reconciliation of these non-GAAP financial measures.

    Conference Call

    The Company will host an investor conference call and webcast to review the results on Wednesday, October 23, 2024, at 8:30 a.m. Central Time. Participants may pre-register for the call by visiting http://edge.media-server.com/mmc/p/99msavdf and will receive a unique PIN, which can be used when dialing in for the call.

    Participants may also register via teleconference: https://register.vevent.com/register/BI8a41df4f3f824d2888f9cf9a3e02c9b8. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

    A replay will be available within approximately two hours after the completion of the call, and made accessible for one week thereafter. You may access the replay via webcast through the investor relations section of Veritex’s website.

    About Veritex Holdings, Inc.

    Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit http://www.veritexbank.com.

    Forward-Looking Statements

    This earnings release includes “forward-looking statements”, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on various facts and derived utilizing assumptions, current expectations, estimates and projections and are subject to known and unknown risks, uncertainties and other factors, which change over time and are beyond our control, that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include, without limitation, statements relating to the expected payment of Veritex Holdings, Inc.’s (“Veritex”) quarterly cash dividend; the impact of certain changes in Veritex’s accounting policies, standards and interpretations; turmoil in the banking industry, responsive measures to mitigate and manage such turmoil and related supervisory and regulatory actions and costs; and Veritex’s future financial performance, business and growth strategy, projected plans and objectives, as well as other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such variations may be material.   Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,”   “seeks,” “targets,” “outlooks,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Veritex’s Annual Report on Form 10-K for the year ended December 31, 2023 and any updates to those risk factors set forth in Veritex’s Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at http://www.sec.gov. If one or more events related to these or other risks or uncertainties materialize, or if Veritex’s underlying assumptions prove to be incorrect, actual results may differ materially from what Veritex anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Veritex does not undertake any obligation, and specifically declines any obligation, to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, expressed or implied, included in this earnings release 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 Veritex or persons acting on Veritex’s behalf may issue.

    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (Unaudited)
     
        For the Quarter Ended   For the Nine Months Ended
        Sep 30, 2024   Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023   Sep 30, 2024   Sep 30, 2023
        (Dollars and shares in thousands, except per share data)
    Per Share Data (Common Stock):                            
    Basic EPS   $ 0.57     $ 0.50     $ 0.44     $ 0.06     $ 0.60     $ 1.51     $ 1.93  
    Diluted EPS     0.56       0.50       0.44       0.06       0.60       1.50       1.92  
    Book value per common share     29.53       28.49       28.23       28.18       27.46       29.53       27.46  
    Tangible book value per common share1     21.72       20.62       20.33       20.21       19.44       21.72       19.44  
    Dividends paid per common share outstanding2     0.20       0.20       0.20       0.20       0.20       0.60       0.60  
                                 
    Common Stock Data:                            
    Shares outstanding at period end     54,446       54,350       54,496       54,338       54,305       54,446       54,305  
    Weighted average basic shares outstanding for the period     54,409       54,457       54,444       54,327       54,300       54,437       54,233  
    Weighted average diluted shares outstanding for the period     54,932       54,823       54,842       54,691       54,597       54,866       54,563  
                                 
    Summary of Credit Ratios:                            
    ACL to total LHI     1.21 %     1.16 %     1.15 %     1.14 %     1.14 %     1.21 %     1.14 %
    NPAs to total assets     0.52       0.65       0.82       0.77       0.65       0.52       0.65  
    NPAs to total loans and OREO     0.70       0.85       1.06       0.99       0.83       0.70       0.83  
    Net charge-offs to average loans outstanding3     0.01       0.28       0.22       0.39       0.08       0.17       0.20  
                                 
    Summary Performance Ratios:                            
    Return on average assets3     0.96 %     0.87 %     0.79 %     0.11 %     1.06 %     0.87 %     1.14 %
    Return on average equity3     7.79       7.10       6.33       0.92       8.58       7.08       9.35  
    Return on average tangible common equity1,3      11.33       10.54       9.52       2.00       12.80       10.48       13.95  
    Efficiency ratio     61.94       59.11       62.45       77.49       54.49       61.15       50.88  
    Net interest margin     3.30       3.29       3.24       3.31       3.46       3.28       3.55  
                                 
    Selected Performance Metrics – Operating:                            
    Diluted operating EPS1   $ 0.59     $ 0.52     $ 0.53     $ 0.58     $ 0.60     $ 1.63     $ 2.02  
    Pre-tax, pre-provision operating return on average assets1,3     1.38 %     1.42 %     1.42 %     1.54 %     1.61 %     1.41 %     1.90 %
    Pre-tax, pre-provision operating return on average loans1,3     1.83       1.83       1.84       1.97       2.05       1.83       2.43  
    Operating return on average assets1,3     1.00       0.91       0.95       1.02       1.06       0.95       1.20  
    Operating return on average tangible common equity1,3     11.74       10.94       11.34       12.37       12.80       11.34       14.68  
    Operating efficiency ratio1     60.63       58.41       58.73       55.50       54.49       59.28       49.53  
                                 
    Veritex Holdings, Inc. Capital Ratios:                            
    Average stockholders’ equity to average total assets     12.31 %     12.26 %     12.43 %     12.27 %     12.30 %     12.33 %     12.21 %
    Tangible common equity to tangible assets1     9.37       9.14       9.02       9.18       8.86       9.37       8.86  
    Tier 1 capital to average assets (leverage)     10.06       10.06       10.12       10.03       10.10       10.06       10.10  
    Common equity tier 1 capital     10.86       10.49       10.37       10.29       10.11       10.86       10.11  
    Tier 1 capital to risk-weighted assets     11.13       10.75       10.63       10.56       10.37       11.13       10.37  
    Total capital to risk-weighted assets     13.91       13.45       13.33       13.18       12.95       13.91       12.95  
    Risk weighted assets   $ 11,290,800     $ 11,450,997     $ 11,407,446     $ 11,387,825     $ 11,617,229     $ 11,290,800     $ 11,617,229  

    1 Refer to the section titled “Reconciliation of Non-GAAP Financial Measures” after the financial highlights for a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures.
    2 Dividend amount represents dividend paid per common share subsequent to each respective quarter end.
    3 Annualized ratio for quarterly metrics.

    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (In thousands)
     
        Sep 30, 2024   Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023
        (unaudited)   (unaudited)   (unaudited)       (unaudited)
    ASSETS                    
    Cash and cash equivalents   $ 1,100,790     $ 651,837     $ 740,769     $ 629,063     $ 713,408  
    Debt securities, net     1,423,610       1,349,354       1,344,930       1,257,042       1,060,629  
    Other investments     71,257       75,885       76,788       76,238       80,869  
                         
    Loans held for sale (“LHFS”)     48,496       57,046       64,762       79,072       41,313  
    LHI, mortgage warehouse (“MW”)     630,650       568,047       449,531       377,796       390,767  
    LHI, excluding MW     9,028,575       9,209,094       9,249,551       9,206,544       9,237,447  
    Total loans     9,707,721       9,834,187       9,763,844       9,663,412       9,669,527  
    ACL     (117,162 )     (113,431 )     (112,032 )     (109,816 )     (109,831 )
    Bank-owned life insurance     84,776       84,233       85,359       84,833       84,867  
    Bank premises, furniture and equipment, net     114,202       105,222       105,299       105,727       106,118  
    Other real estate owned (“OREO”)     9,034       24,256       18,445       —       —  
    Intangible assets, net of accumulated amortization     32,825       35,817       38,679       41,753       44,294  
    Goodwill     404,452       404,452       404,452       404,452       404,452  
    Other assets     211,471       232,518       241,863       241,633       291,998  
    Total assets   $ 13,042,976     $ 12,684,330     $ 12,708,396     $ 12,394,337     $ 12,346,331  
    LIABILITIES AND STOCKHOLDERS’ EQUITY                    
    Deposits:                    
    Noninterest-bearing deposits   $ 2,643,894     $ 2,416,727     $ 2,349,211     $ 2,218,036     $ 2,363,340  
    Interest-bearing transaction and savings deposits     4,204,708       3,979,454       4,220,114       4,348,385       3,936,070  
    Certificates and other time deposits     3,625,920       3,744,596       3,486,805       3,191,737       3,403,427  
    Correspondent money market deposits     561,489       584,067       597,690       580,037       493,681  
    Total deposits     11,036,011       10,724,844       10,653,820       10,338,195       10,196,518  
    Accounts payable and other liabilities     168,415       180,585       186,027       195,036       229,116  
    Advances from FHLB     —       —       100,000       100,000       200,000  
    Subordinated debentures and subordinated notes     230,536       230,285       230,034       229,783       229,531  
    Total liabilities     11,434,962       11,135,714       11,169,881       10,863,014       10,855,165  
    Commitments and contingencies                    
    Stockholders’ equity:                    
    Common stock     613       612       611       610       609  
    Additional paid-in capital     1,324,929       1,321,995       1,319,144       1,317,516       1,314,459  
    Retained earnings     493,921       473,801       457,499       444,242       451,513  
    Accumulated other comprehensive loss     (40,330 )     (76,713 )     (71,157 )     (63,463 )     (107,833 )
    Treasury stock     (171,119 )     (171,079 )     (167,582 )     (167,582 )     (167,582 )
    Total stockholders’ equity     1,608,014       1,548,616       1,538,515       1,531,323       1,491,166  
    Total liabilities and stockholders’ equity   $ 13,042,976     $ 12,684,330     $ 12,708,396     $ 12,394,337     $ 12,346,331  
                                             
    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (In thousands, except per share data)
     
        For the Quarter Ended   For the Nine Months Ended
        Sep 30, 2024   Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023   Sep 30, 2024   Sep 30, 2023
        (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)   (unaudited)
    Interest income:                            
    Loans, including fees   $ 167,261   $ 166,979   $ 161,942     $ 165,443     $ 167,368     $ 496,182     $ 482,802  
    Debt securities     15,830     15,408     13,695       12,282       10,928       44,933       32,082  
    Deposits in financial institutions and Fed Funds sold     12,571     7,722     8,050       8,162       7,128       28,343       20,169  
    Equity securities and other investments     1,001     1,138     900       1,717       1,691       3,039       4,217  
    Total interest income     196,663     191,247     184,587       187,604       187,115       572,497       539,270  
    Interest expense:                            
    Transaction and savings deposits     47,208     45,619     46,784       46,225       39,936       139,611       102,750  
    Certificates and other time deposits     46,230     44,811     40,492       40,165       36,177       131,533       85,244  
    Advances from FHLB     47     1,468     1,391       2,581       8,523       2,906       38,443  
    Subordinated debentures and subordinated notes     3,116     3,113     3,114       3,100       3,118       9,343       9,252  
    Total interest expense     96,601     95,011     91,781       92,071       87,754       283,393       235,689  
    Net interest income     100,062     96,236     92,806       95,533       99,361       289,104       303,581  
    Provision for credit losses     4,000     8,250     7,500       9,500       8,627       19,750       33,012  
    (Benefit) provision for unfunded commitments     —     —     (1,541 )     (1,500 )     (909 )     (1,541 )     (541 )
    Net interest income after provisions     96,062     87,986     86,847       87,533       91,643       270,895       271,110  
    Noninterest income:                            
    Service charges and fees on deposit accounts     5,442     4,974     4,896       4,800       5,159       15,312       15,448  
    Loan fees     3,278     2,207     2,510       1,200       1,564       7,995       5,148  
    Loss on sales of debt securities     —     —     (6,304 )     —       —       (6,304 )     (5,321 )
    Government guaranteed loan income, net     780     1,320     2,614       4,378       1,772       4,714       15,604  
    Equity method investment (loss) income     —     —     —       (29,417 )     (136 )     —       (1,172 )
    Customer swap income     271     326     449       258       202       1,046       1,380  
    Other income     3,335     1,751     2,497       989       1,113       7,583       5,810  
    Total noninterest income (loss)     13,106     10,578     6,662       (17,792 )     9,674       30,346       36,897  
    Noninterest expense:                            
    Salaries and employee benefits     37,370     32,790     33,365       30,606       30,949       103,525       91,464  
    Occupancy and equipment     4,789     4,585     4,677       4,670       4,881       14,051       14,681  
    Professional and regulatory fees     4,903     5,617     6,053       7,626       7,283       16,573       18,540  
    Data processing and software expense     5,268     5,097     4,856       4,569       4,541       15,221       13,970  
    Marketing     2,781     1,976     1,546       1,945       2,353       6,303       6,759  
    Amortization of intangibles     2,438     2,438     2,438       2,438       2,438       7,314       7,401  
    Telephone and communications     335     365     261       356       362       961       1,195  
    Other     12,216     10,273     8,920       8,028       6,607       31,409       19,216  
    Total noninterest expense     70,100     63,141     62,116       60,238       59,414       195,357       173,226  
    Income before income tax expense     39,068     35,423     31,393       9,503       41,903       105,884       134,781  
    Income tax expense     8,067     8,221     7,237       6,004       9,282       23,525       30,019  
    Net income   $ 31,001   $ 27,202   $ 24,156     $ 3,499     $ 32,621     $ 82,359     $ 104,762  
                                 
    Basic EPS   $ 0.57   $ 0.50   $ 0.44     $ 0.06     $ 0.60     $ 1.51     $ 1.93  
    Diluted EPS   $ 0.56   $ 0.50   $ 0.44     $ 0.06     $ 0.60     $ 1.50     $ 1.92  
    Weighted average basic shares outstanding     54,409     54,457     54,444       54,327       54,300       54,437       54,233  
    Weighted average diluted shares outstanding     54,932     54,823     54,842       54,691       54,597       54,866       54,563  
                                                         
    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (Unaudited)
     
        For the Quarter Ended
        September 30, 2024   June 30, 2024   September 30, 2023
        Average
    Outstanding
    Balance
      Interest
    Earned/
    Interest
    Paid
      Average
    Yield/
    Rate
      Average
    Outstanding
    Balance
      Interest
    Earned/
    Interest
    Paid
      Average
    Yield/
    Rate
      Average
    Outstanding
    Balance
      Interest
    Earned/
    Interest
    Paid
      Average
    Yield/
    Rate
        (Dollars in thousands)
    Assets                                    
    Interest-earning assets:                                    
    Loans1   $ 9,184,182     $ 159,163   6.89 %   $ 9,344,482     $ 160,323   6.90 %   $ 9,267,366     $ 161,615   6.92 %
    LHI, MW     477,592       8,098   6.75       420,946       6,656   6.36       357,639       5,753   6.38  
    Debt securities     1,384,835       15,830   4.55       1,352,293       15,408   4.58       1,121,716       10,928   3.87  
    Interest-bearing deposits in other banks     924,685       12,571   5.41       560,586       7,722   5.54       520,785       7,128   5.43  
    Equity securities and other investments     75,884       1,001   5.25       78,964       1,138   5.80       135,714       1,691   4.94  
    Total interest-earning assets     12,047,178       196,663   6.49       11,757,271       191,247   6.54       11,403,220       187,115   6.51  
    ACL     (115,510 )             (115,978 )             (105,320 )        
    Noninterest-earning assets     930,250               937,413               961,162          
    Total assets   $ 12,861,918             $ 12,578,706             $ 12,259,062          
                                         
    Liabilities and Stockholders’ Equity                                    
    Interest-bearing liabilities:                                    
    Interest-bearing demand and savings deposits   $ 4,700,196     $ 47,208   4.00 %   $ 4,570,329     $ 45,619   4.01 %   $ 4,168,876     $ 39,936   3.80 %
    Certificates and other time deposits     3,678,718       46,230   5.00       3,591,035       44,811   5.02       3,151,704       36,177   4.55  
    Advances from FHLB and Other     3,261       47   5.73       106,648       1,468   5.54       725,543       8,523   4.66  
    Subordinated debentures and subordinated notes     230,393       3,116   5.38       230,141       3,113   5.44       229,389       3,118   5.39  
    Total interest-bearing liabilities     8,612,568       96,601   4.46       8,498,153       95,011   4.50       8,275,512       87,754   4.21  
                                         
    Noninterest-bearing liabilities:                                    
    Noninterest-bearing deposits     2,486,676               2,346,908               2,272,207          
    Other liabilities     179,273               192,036               203,173          
    Total liabilities     11,278,517               11,037,097               10,750,892          
    Stockholders’ equity     1,583,401               1,541,609               1,508,170          
    Total liabilities and stockholders’ equity   $ 12,861,918             $ 12,578,706             $ 12,259,062          
                                         
    Net interest rate spread2           2.03 %           2.04 %           2.30 %
    Net interest income and margin3       $ 100,062   3.30 %       $ 96,236   3.29 %       $ 99,361   3.46 %
                                                     

    1 Includes average outstanding balances of LHFS of $54.3 million, $58.5 million and $28.3 million for the quarters ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively, and average balances of LHI, excluding MW.
    2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
    3 Net interest margin is equal to net interest income divided by average interest-earning assets.

    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (In thousands, except percentages)
     
        For the Nine Months Ended
        September 30, 2024   September 30, 2023
        Average Outstanding Balance   Interest Earned/ Interest Paid   Average Yield/ Rate   Average Outstanding Balance   Interest Earned/ Interest Paid   Average Yield/ Rate
    Assets                        
    Interest-earning assets:                        
    Loans1   $ 9,270,510     $ 477,071   6.87 %   $ 9,231,814     $ 467,101   6.76 %
    LHI, MW     393,008       19,111   6.50       363,182       15,701   5.78  
    Debt securities     1,344,190       44,933   4.47       1,168,860       32,082   3.67  
    Interest-bearing deposits in other banks     692,434       28,343   5.47       527,805       20,169   5.11  
    Equity securities and other investments     77,035       3,039   5.27       132,895       4,217   4.24  
    Total interest-earning assets     11,777,177       572,497   6.49       11,424,556       539,270   6.31  
    ACL     (114,576 )             (100,228 )        
    Noninterest-earning assets     930,605               950,369          
    Total assets   $ 12,593,206             $ 12,274,697          
                             
    Liabilities and Stockholders’ Equity                        
    Interest-bearing liabilities:                        
    Interest-bearing demand and savings deposits   $ 4,636,889     $ 139,611   4.02 %   $ 4,079,436     $ 102,750   3.37 %
    Certificates and other time deposits     3,518,417       131,533   4.99       2,873,388       85,244   3.97  
    Advances from FHLB and Other     70,055       2,906   5.54       1,105,592       38,443   4.65  
    Subordinated debentures and subordinated notes     230,139       9,343   5.42       229,923       9,252   5.38  
    Total interest-bearing liabilities     8,455,500       283,393   4.48       8,288,339       235,689   3.80  
                             
    Noninterest-bearing liabilities:                        
    Noninterest-bearing deposits     2,396,629               2,305,745          
    Other liabilities     188,007               182,040          
    Total liabilities     11,040,136               10,776,124          
    Stockholders’ equity     1,553,070               1,498,573          
    Total liabilities and stockholders’ equity   $ 12,593,206             $ 12,274,697          
                             
    Net interest rate spread2           2.01 %           2.51 %
    Net interest income and margin3       $ 289,104   3.28 %       $ 303,581   3.55 %

    1 Includes average outstanding balances of LHFS of $55.5 million and $23.8 million for the nine months ended September 30, 2024 and 2023, respectively, and average balances of LHI, excluding MW.
    2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
    3 Net interest margin is equal to net interest income divided by average interest-earning assets.

    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (Unaudited)
    Yield Trend
     
        For the Quarter Ended
        Sep 30,
    2024
      Jun 30,
    2024
      Mar 31,
    2024
      Dec 31,
    2023
      Sep 30,
    2023
    Average yield on interest-earning assets:                    
    Loans1     6.89 %     6.90 %     6.83 %     6.88 %     6.92 %
    LHI, MW     6.75       6.36       6.27       5.82       6.38  
    Total Loans     6.89       6.88       6.81       6.85       6.90  
    Debt securities     4.55       4.58       4.25       4.10       3.87  
    Interest-bearing deposits in other banks     5.41       5.54       5.54       5.51       5.43  
    Equity securities and other investments     5.25       5.80       4.75       8.28       4.94  
    Total interest-earning assets     6.49 %     6.54 %     6.44 %     6.51 %     6.51 %
                         
    Average rate on interest-bearing liabilities:                    
    Interest-bearing demand and savings deposits     4.00 %     4.01 %     4.06 %     4.03 %     3.80 %
    Certificates and other time deposits     5.00       5.02       4.96       4.85       4.55  
    Advances from FHLB     5.73       5.54       5.54       5.60       4.66  
    Subordinated debentures and subordinated notes     5.38       5.44       5.45       5.36       5.39  
    Total interest-bearing liabilities     4.46 %     4.50 %     4.47 %     4.43 %     4.21 %
                         
    Net interest rate spread2     2.03 %     2.04 %     1.97 %     2.08 %     2.30 %
    Net interest margin3     3.30 %     3.29 %     3.24 %     3.31 %     3.46 %
                                             

    1Includes average outstanding balances of LHFS of $54.3 million, $58.5 million, $53.9 million, $31.2 million and $28.3 million for the three months ended September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively, and average balances of LHI, excluding MW.
    2 Net interest rate spread is the average yield on interest-earning assets minus the average rate on interest-bearing liabilities.
    3 Net interest margin is equal to net interest income divided by average interest-earning assets.

    Supplemental Yield Trend

        For the Quarter Ended   For the Nine Months Ended
        Sep 30,
    2024
      Jun 30,
    2024
      Mar 31,
    2024
      Dec 31,
    2023
      Sep 30,
    2023
      Sep 30,
    2024
      Sep 30,
    2023
    Average cost of interest-bearing deposits   4.44 %   4.46 %   4.43 %   4.38 %   4.12 %   4.44 %   3.62 %
    Average costs of total deposits, including noninterest-bearing   3.42     3.46     3.42     3.37     3.15     3.43     2.03  
                                               
    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (Unaudited)
     
    LHI and Deposit Portfolio Composition
     
        Sep 30,
    2024
      Jun 30,
    2024
      Mar 31,
    2024
      Dec 31,
    2023
      Sep 30,
    2023
        (Dollars in thousands)
    LHI1                                        
    Commercial and Industrial (“C&I”)   $ 2,728,544     30.2 %   $ 2,798,260     30.4 %   $ 2,785,987     30.1 %   $ 2,752,063     29.9 %   $ 2,841,024     30.7 %
    Real Estate:                                        
    Owner occupied commercial (“OOCRE”)     807,223     8.9       806,285     8.7       788,376     8.5       794,088     8.6       697,299     7.5  
    Non-owner occupied commercial (“NOOCRE”)     2,338,094     25.9       2,369,848     25.7       2,352,993     25.5       2,350,725     25.5       2,398,060     26.1  
    Construction and land     1,436,540     15.8       1,536,580     16.7       1,568,257     16.9       1,734,254     18.8       1,705,053     18.4  
    Farmland     32,254     0.4       30,512     0.3       30,979     0.3       31,114     0.3       59,684     0.6  
    1-4 family residential     944,755     10.5       917,402     10.0       969,401     10.5       937,119     10.2       933,225     10.1  
    Multi-family residential     738,090     8.2       748,740     8.1       751,607     8.1       605,817     6.6       603,395     6.5  
    Consumer     11,292     0.1       9,245     0.1       8,882     0.1       10,149     0.1       9,845     0.1  
    Total LHI   $ 9,036,792     100 %   $ 9,216,872     100 %   $ 9,256,482     100 %   $ 9,215,329     100 %   $ 9,247,585     100 %
                                             
    MW     630,650           568,047           449,531           377,796           390,767      
                                             
    Total LHI1   $ 9,667,442         $ 9,784,919         $ 9,706,013         $ 9,593,125         $ 9,638,352      
                                             
    Total LHFS     48,496           57,046           64,762           79,072           41,313      
                                             
    Total Loans   $ 9,715,938         $ 9,841,965         $ 9,770,775         $ 9,672,197         $ 9,679,665      
                                             
    Deposits                                        
    Noninterest-bearing   $ 2,643,894     24.0 %   $ 2,416,727     22.5 %   $ 2,349,211     22.1 %   $ 2,218,036     21.5 %   $ 2,363,340     23.2 %
    Interest-bearing transaction     421,059     3.8       523,272     4.9       724,171     6.8       927,193     8.9       739,098     7.2  
    Money market     3,462,709     31.4       3,268,286     30.5       3,326,742     31.2       3,284,324     31.8       3,096,498     30.4  
    Savings     320,940     2.9       187,896     1.8       169,201     1.6       136,868     1.3       100,474     1.0  
    Certificates and other time deposits     3,625,920     32.8       3,744,596     34.9       3,486,805     32.7       3,191,737     30.9       3,403,427     33.4  
    Correspondent money market accounts     561,489     5.1       584,067     5.4       597,690     5.6       580,037     5.6       493,681     4.8  
    Total deposits   $ 11,036,011     100 %   $ 10,724,844     100 %   $ 10,653,820     100 %   $ 10,338,195     100 %   $ 10,196,518     100 %
                                             
    Total Loans to Deposits Ratio     88.0 %         91.8 %         91.7 %         93.6 %         94.9 %    
                                             
    Total Loans to Deposit Ratio, excluding MW loans and LHFS     81.9 %         85.9 %         86.9 %         89.1 %         90.7 %    
                                                                 

    1 Total LHI does not include deferred fees of $8.2 million, $7.8 million, $6.9 million, $8.8 million and $10.1 million at September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023 and September 30, 2023, respectively.

    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Financial Highlights
    (Unaudited)
    Asset Quality
     
      For the Quarter Ended   For the Nine Months Ended
      Sep 30, 2024   Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023   Sep 30, 2024   Sep 30, 2023
      (Dollars in thousands)        
    NPAs:                          
    Nonaccrual loans $ 55,335     $ 58,537     $ 75,721     $ 79,133     $ 65,676     $ 55,335     $ 65,676  
    Nonaccrual PCD loans1   70       73       9,419       13,715       13,718       70       13,718  
    Accruing loans 90 or more days past due2   2,860       143       220       2,975       474       2,860       474  
    Total nonperforming loans held for investment (“NPLs”)   58,265       58,753       85,360       95,823       79,868       58,265       79,868  
    Other real estate owned   9,034       24,256       18,445       —       —       9,034       —  
    Total NPAs $ 67,299     $ 83,009     $ 103,805     $ 95,823     $ 79,868     $ 67,299     $ 79,868  
                               
    Charge-offs:                          
    1-4 family residential $ —     $ (31 )   $ —     $ (21 )   $ —     $ (31 )   $ —  
    Multifamily   —       (198 )     —       (192 )     —       (198 )     —  
    OOCRE   —       —       (120 )     (364 )     (375 )     (120 )     (491 )
    NOOCRE   —       (1,969 )     (4,293 )     (5,434 )     —       (6,262 )     (8,215 )
    C&I   (2,259 )     (5,601 )     (946 )     (3,893 )     (1,929 )     (8,806 )     (6,520 )
    Consumer   (54 )     (30 )     (71 )     (33 )     (49 )     (155 )     (203 )
    Total charge-offs $ (2,313 )   $ (7,829 )   $ (5,430 )   $ (9,937 )   $ (2,353 )   $ (15,572 )   $ (15,429 )
                               
    Recoveries:                          
    1-4 family residential $ 3     $ —     $ 1     $ 1     $ —     $ 4     $ 2  
    OOCRE   —       120       —       —       —       120       —  
    NOOCRE   —       —       —       —       200       —       350  
    C&I   1,962       361       96       387       308       2,419       778  
    Mortgage Warehouse   46       —       —       —       —       46       —  
    Consumer   33       497       49       34       14       579       66  
    Total recoveries $ 2,044     $ 978     $ 146     $ 422     $ 522     $ 3,168     $ 1,196  
                               
    Net charge-offs $ (269 )   $ (6,851 )   $ (5,284 )   $ (9,515 )   $ (1,831 )   $ (12,404 )   $ (14,233 )
                               
    Provision for credit losses $ 4,000     $ 8,250     $ 7,500     $ 9,500     $ 8,627     $ 19,750     $ 33,012  
                               
    ACL $ 117,162     $ 113,431     $ 112,032     $ 109,816     $ 109,831     $ 117,162     $ 109,831  
                               
    Asset Quality Ratios:                          
    NPAs to total assets   0.52 %     0.65 %     0.82 %     0.77 %     0.65 %     0.52 %     0.65 %
    NPAs, excluding nonaccrual PCD loans, to total assets   0.52       0.65       0.74       0.66       0.44       0.52       0.54  
    NPAs to total loans and OREO   0.70       0.85       1.06       0.99       0.83       0.70       0.83  
    NPLs to total LHI   0.60       0.60       0.88       1.00       0.83       0.60       0.83  
    NPLs, excluding nonaccrual PCD loans, to total LHI   0.60       0.60       0.78       0.86       0.69       0.60       0.69  
    ACL to total LHI   1.21       1.16       1.15       1.14       1.14       1.21       1.14  
    ACL to total loans, excluding MW and LHFS   1.30       1.23       1.21       1.19       1.19       1.30       1.19  
    Net charge-offs to average loans outstanding3   0.01       0.28       0.22       0.39       0.08       0.17       0.20  

    1 Nonaccrual PCD loans consist of PCD loans that transitioned upon adoption of ASC 326 Financial Instruments – Credit Losses and were accounted for on a pooled basis that have subsequently been placed on nonaccrual status.
    2 Accruing loans greater than 90 days past due exclude purchase credit deteriorated loans greater than 90 days past due that are accounted for on a pooled basis.
    3 Annualized ratio for quarterly metrics.

    VERITEX HOLDINGS, INC. AND SUBSIDIARIES
    Reconciliation of Non-GAAP Financial Measures
    (Unaudited)
     

    We identify certain financial measures discussed in this earnings release as being “non-GAAP financial measures.” In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP, in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios calculated using exclusively either one or both of (i) financial measures calculated in accordance with GAAP and (ii) operating measures or other measures that are not non-GAAP financial measures.

    The non-GAAP financial measures that we present in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we present in this earnings release may differ from that of other companies reporting measures with similar names. You should understand how such other financial institutions calculate their financial measures that appear to be similar or have similar names to the non-GAAP financial measures we have discussed in this earnings release when comparing such non-GAAP financial measures.

    Tangible Book Value Per Common Share. Tangible book value is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity less goodwill and core deposit intangibles, net of accumulated amortization; and (b) tangible book value per common share as tangible common equity (as described in clause (a)) divided by number of common shares outstanding. For tangible book value per common share, the most directly comparable financial measure calculated in accordance with GAAP is book value per common share.

    We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

    The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and presents our tangible book value per common share compared with our book value per common share:

        As of
        Sep 30, 2024   Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023
        (Dollars in thousands, except per share data)
    Tangible Common Equity                    
    Total stockholders’ equity   $ 1,608,014     $ 1,548,616     $ 1,538,515     $ 1,531,323     $ 1,491,166  
    Adjustments:                    
    Goodwill     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )
    Core deposit intangibles     (21,182 )     (23,619 )     (26,057 )     (28,495 )     (30,933 )
    Tangible common equity   $ 1,182,380     $ 1,120,545     $ 1,108,006     $ 1,098,376     $ 1,055,781  
    Common shares outstanding     54,446       54,350       54,496       54,338       54,305  
                         
    Book value per common share   $ 29.53     $ 28.49     $ 28.23     $ 28.18     $ 27.46  
    Tangible book value per common share   $ 21.72     $ 20.62     $ 20.33     $ 20.21     $ 19.44  
                                             

    Tangible Common Equity to Tangible Assets. Tangible common equity to tangible assets is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) tangible common equity as total stockholders’ equity, less goodwill and core deposit intangibles, net of accumulated amortization; (b) tangible assets as total assets less goodwill and core deposit intangibles, net of accumulated amortization; and (c) tangible common equity to tangible assets as tangible common equity (as described in clause (a)) divided by tangible assets (as described in clause (b)). For tangible common equity to tangible assets, the most directly comparable financial measure calculated in accordance with GAAP is total stockholders’ equity to total assets.

    We believe that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, in each case, exclusive of changes in core deposit intangibles. Goodwill and other intangible assets have the effect of increasing both total stockholders’ equity and assets while not increasing our tangible common equity or tangible assets.

    The following table reconciles, as of the dates set forth below, total stockholders’ equity to tangible common equity and total assets to tangible assets and presents our tangible common equity to tangible assets:

        As of
        Sep 30, 2024   Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023
        (Dollars in thousands)
    Tangible Common Equity                    
    Total stockholders’ equity   $ 1,608,014     $ 1,548,616     $ 1,538,515     $ 1,531,323     $ 1,491,166  
    Adjustments:                    
    Goodwill     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )
    Core deposit intangibles     (21,182 )     (23,619 )     (26,057 )     (28,495 )     (30,933 )
    Tangible common equity   $ 1,182,380     $ 1,120,545     $ 1,108,006     $ 1,098,376     $ 1,055,781  
    Tangible Assets                    
    Total assets   $ 13,042,976     $ 12,684,330     $ 12,708,396     $ 12,394,337     $ 12,346,331  
    Adjustments:                    
    Goodwill     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )
    Core deposit intangibles     (21,182 )     (23,619 )     (26,057 )     (28,495 )     (30,933 )
    Tangible Assets   $ 12,617,342     $ 12,256,259     $ 12,277,887     $ 11,961,390     $ 11,910,946  
    Tangible Common Equity to Tangible Assets     9.37 %     9.14 %     9.02 %     9.18 %     8.86 %
                                             

    Return on Average Tangible Common Equity. Return on average tangible common equity is a non-GAAP measure generally used by financial analysts and investment bankers to evaluate financial institutions. We calculate: (a) net income available for common stockholders adjusted for amortization of core deposit intangibles (which we refer to as “return”) as net income, plus amortization of core deposit intangibles, less tax benefit at the statutory rate; (b) average tangible common equity as total average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization; and (c) return (as described in clause (a)) divided by average tangible common equity (as described in clause (b)). For return on average tangible common equity, the most directly comparable financial measure calculated in accordance with GAAP is return on average equity.

    We believe that this measure is important to many investors in the marketplace who are interested in the return on common equity, exclusive of the impact of core deposit intangibles. Goodwill and core deposit intangibles have the effect of increasing total stockholders’ equity while not increasing our tangible common equity. This measure is particularly relevant to acquisitive institutions that may have higher balances in goodwill and core deposit intangibles than non-acquisitive institutions.

    The following table reconciles, as of the dates set forth below, average tangible common equity to average common equity and net income available for common stockholders adjusted for amortization of core deposit intangibles, net of taxes to net income and presents our return on average tangible common equity:

        For the Quarter Ended   For the Nine Months Ended
        Sep 30, 2024   Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023   Sep 30, 2024   Sep 30, 2023
        (Dollars in thousands)
    Net income available for common stockholders adjusted for amortization of core deposit intangibles                            
    Net income   $ 31,001     $ 27,202     $ 24,156     $ 3,499     $ 32,621     $ 82,359     $ 104,762  
    Adjustments:                            
    Plus: Amortization of core deposit intangibles     2,438       2,438       2,438       2,438       2,438       7,314       7,314  
    Less: Tax benefit at the statutory rate     512       512       512       512       512       1,536       1,536  
    Net income available for common stockholders adjusted for amortization of core deposit intangibles   $ 32,927     $ 29,128     $ 26,082     $ 5,425     $ 34,547     $ 88,137     $ 110,540  
                                 
    Average Tangible Common Equity                            
    Total average stockholders’ equity   $ 1,583,401     $ 1,541,609     $ 1,533,868     $ 1,510,286     $ 1,508,170     $ 1,553,070     $ 1,498,573  
    Adjustments:                            
    Average goodwill     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )
    Average core deposit intangibles     (22,789 )     (25,218 )     (27,656 )     (30,093 )     (32,540 )     (25,212 )     (34,939 )
    Average tangible common equity   $ 1,156,160     $ 1,111,939     $ 1,101,760     $ 1,075,741     $ 1,071,178     $ 1,123,406     $ 1,059,182  
    Return on Average Tangible Common Equity (Annualized)     11.33 %     10.54 %     9.52 %     2.00 %     12.80 %     10.48 %     13.95 %
                                                             

    Operating Earnings, Pre-tax, Pre-provision Operating Earnings and performance metrics calculated using Operating Earnings and Pre-tax, Pre-provision Operating Earnings, including Diluted Operating Earnings per Share, Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Assets, Pre-tax, Pre-Provision Operating Return on Average Loans, Operating Return on Average Tangible Common Equity and Operating Efficiency Ratio. Operating earnings, pre-tax, pre-provision operating earnings and the performance metrics calculated using these metrics, listed below, are non-GAAP measures used by management to evaluate the Company’s financial performance. We calculate (a) operating earnings as net income plus severance payments, plus loss on sale of debt securities AFS, net, plus M&A expenses less tax impact of adjustments, plus nonrecurring tax adjustments. We calculate (b) diluted operating earnings per share as operating earnings as described in clause (a) divided by weighted average diluted shares outstanding. We calculate (c) pre-tax, pre-provision operating earnings as operating earnings as described in clause (a) plus provision for income taxes, plus provision (benefit) for credit losses and unfunded commitments. We calculate (d) pre-tax, pre-provision operating return on average assets as pre-tax, pre-provision operating earnings as described in clause (a) divided by total average assets. We calculate (e) operating return on average assets as operating earnings as described in clause (a) divided by total average assets. We calculate (f) operating return on average tangible common equity as operating earnings as described in clause (a), adjusted for the amortization of intangibles and tax benefit at the statutory rate, divided by total average tangible common equity (average stockholders’ equity less average goodwill and average core deposit intangibles, net of accumulated amortization). We calculate (g) operating efficiency ratio as noninterest expense plus adjustments to operating noninterest expense divided by noninterest income plus adjustments to operating noninterest income, plus net interest income.

    We believe that these measures and the operating metrics calculated utilizing these measures are important to management and many investors in the marketplace who are interested in understanding the ongoing operating performance of the Company and provide meaningful comparisons to its peers.

    The following tables reconcile, as of the dates set forth below, operating net income and pre-tax, pre-provision operating earnings and related metrics:

        For the Quarter Ended   For the Nine Months Ended
        Sep 30, 2024   Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023   Sep 30, 2024   Sep 30, 2023
        (Dollars in thousands, except per share data)
    Operating Earnings                            
    Net income   $ 31,001     $ 27,202     $ 24,156     $ 3,499     $ 32,621     $ 82,359     $ 104,762  
    Plus: Severance payments1     1,487       613       —       —       —       2,100       1,950  
    Plus: Loss on sale of AFS securities, net     —       —       6,304       —       —       6,304       5,321  
    Plus: Equity method investment write-down     —       —       —       29,417       —       —       —  
    Plus: FDIC special assessment     —       134       —       768       —       134       —  
    Operating pre-tax income     32,488       27,949       30,460       33,684       32,621       90,897       112,033  
    Less: Tax impact of adjustments     307       166       1,323       2,059       —       1,796       1,544  
    Plus: Nonrecurring tax adjustments     —       527       —       —       —       527       —  
    Operating earnings   $ 32,181     $ 28,310     $ 29,137     $ 31,625     $ 32,621     $ 89,628     $ 110,489  
                                 
    Weighted average diluted shares outstanding     54,932       54,823       54,842       54,691       54,597       54,866       54,563  
    Diluted EPS   $ 0.56     $ 0.50     $ 0.44     $ 0.06     $ 0.60     $ 1.50     $ 1.92  
    Diluted operating EPS   $ 0.59     $ 0.52     $ 0.53     $ 0.58     $ 0.60     $ 1.63     $ 2.02  

    1 Severance payments relate to certain restructurings made during the periods disclosed.

        For the Quarter Ended   For the Nine Months Ended
        Sep 30, 2024   Jun 30, 2024   Mar 31, 2024   Dec 31, 2023   Sep 30, 2023   Sep 30, 2024   Sep 30, 2023
        (Dollars in thousands)
    Pre-Tax, Pre-Provision Operating Earnings                            
    Net income   $ 31,001     $ 27,202     $ 24,156     $ 3,499     $ 32,621     $ 82,359     $ 104,762  
    Plus: Provision for income taxes     8,067       8,221       7,237       6,004       9,282       23,525       30,019  
    Plus: Provision for credit losses and unfunded commitments     4,000       8,250       5,959       8,000       7,718       18,209       32,471  
    Plus: Severance payments     1,487       613       —       —       —       2,100       1,950  
    Plus: Loss on sale of AFS securities, net     —       —       6,304       —       —       6,304       5,321  
    Plus: Equity method investment write-down     —       —       —       29,417       —       —       —  
    Plus: FDIC special assessment     —       134       —       768       —       134       —  
    Pre-tax, pre-provision operating earnings   $ 44,555     $ 44,420     $ 43,656     $ 47,688     $ 49,621     $ 132,631     $ 174,523  
                                 
    Average total assets   $ 12,861,918     $ 12,578,706     $ 12,336,042     $ 12,306,634     $ 12,259,062     $ 12,593,206     $ 12,274,697  
    Pre-tax, pre-provision operating return on average assets1     1.38 %     1.42 %     1.42 %     1.54 %     1.61 %     1.41 %     1.90 %
                                 
    Average loans   $ 9,661,774     $ 9,765,428     $ 9,563,372     $ 9,581,784     $ 9,625,005     $ 9,663,518     $ 9,594,996  
    Pre-tax, pre-provision operating return on average loans1     1.83 %     1.83 %     1.84 %     1.97 %     2.05 %     1.83 %     2.43 %
                                 
    Average total assets   $ 12,861,918     $ 12,578,706     $ 12,336,042     $ 12,306,634     $ 12,259,062     $ 12,593,206     $ 12,274,697  
    Return on average assets1     0.96 %     0.87 %     0.79 %     0.11 %     1.06 %     0.87 %     1.14 %
    Operating return on average assets1     1.00       0.91       0.95       1.02       1.06       0.95       1.20  
                                 
    Operating earnings adjusted for amortization of core deposit intangibles                            
    Operating earnings   $ 32,181     $ 28,310     $ 29,137     $ 31,625     $ 32,621     $ 89,628     $ 110,489  
    Adjustments:                            
    Plus: Amortization of core deposit intangibles     2,438       2,438       2,438       2,438       2,438       7,314       7,314  
    Less: Tax benefit at the statutory rate     512       512       512       512       512       1,536       1,536  
    Operating earnings adjusted for amortization of core deposit intangibles   $ 34,107     $ 30,236     $ 31,063     $ 33,551     $ 34,547     $ 95,406     $ 116,267  
                                 
    Average Tangible Common Equity                            
    Total average stockholders’ equity   $ 1,583,401     $ 1,541,609     $ 1,533,868     $ 1,510,286     $ 1,508,170     $ 1,553,070     $ 1,498,573  
    Adjustments:                            
    Less: Average goodwill     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )     (404,452 )
    Less: Average core deposit intangibles     (22,789 )     (25,218 )     (27,656 )     (30,093 )     (32,540 )     (25,212 )     (34,939 )
    Average tangible common equity   $ 1,156,160     $ 1,111,939     $ 1,101,760     $ 1,075,741     $ 1,071,178     $ 1,123,406     $ 1,059,182  
    Operating return on average tangible common equity1     11.74 %     10.94 %     11.34 %     12.37 %     12.80 %     11.34 %     14.68 %
                                 
    Efficiency ratio     61.94 %     59.11 %     62.45 %     77.49 %     54.49 %     61.15 %     50.88 %
    Operating efficiency ratio                            
    Net interest income   $ 100,062     $ 96,236     $ 92,806     $ 95,533     $ 99,361     $ 289,104     $ 303,581  
    Noninterest income     13,106       10,578       6,662       (17,792 )     9,674       30,346       36,897  
    Plus: Loss on sale of AFS securities, net     —       —       6,304       —       —       6,304       5,321  
    Plus: Equity method investment write-down     —       —       —       29,417       —       —       —  
    Operating noninterest income     13,106       10,578       12,966       11,625       9,674       36,650       42,218  
    Noninterest expense     70,100       63,141       62,116       60,238       59,414       195,357       173,226  
    Less: FDIC special assessment     —       134       —       768       —       134       —  
    Less: Severance payments     1,487       613       —       —       —       2,100       1,950  
    Operating noninterest expense   $ 68,613     $ 62,394     $ 62,116     $ 59,470     $ 59,414     $ 193,123     $ 171,276  
    Operating efficiency ratio     60.63 %     58.41 %     58.73 %     55.50 %     54.49 %     59.28 %     49.53 %

    1 Annualized ratio for quarterly metrics.

    The MIL Network –

    January 24, 2025
  • MIL-OSI: Veritex Holdings, Inc. Declares Cash Dividend on Common Stock

    Source: GlobeNewswire (MIL-OSI)

    DALLAS, Oct. 22, 2024 (GLOBE NEWSWIRE) — Veritex Holdings, Inc. (Nasdaq: VBTX) (“Veritex” or the “Company”), the parent holding company for Veritex Community Bank, today announced the declaration of a quarterly cash dividend of $0.20 per share on its outstanding common stock. The dividend will be paid on or after November 22, 2024 to shareholders of record as of November 8, 2024.

    About Veritex Holdings, Inc.

    Headquartered in Dallas, Texas, Veritex is a bank holding company that conducts banking activities through its wholly-owned subsidiary, Veritex Community Bank, with locations throughout the Dallas-Fort Worth metroplex and in the Houston metropolitan area. Veritex Community Bank is a Texas state chartered bank regulated by the Texas Department of Banking and the Board of Governors of the Federal Reserve System. For more information, visit http://www.veritexbank.com.

    Forward Looking Statement

    This press release includes “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. The forward-looking statements include statements regarding Veritex’s projected plans and objectives, including the expected payment date of its common stock dividend. Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “target,” “estimate,” “seek,” “plan,” “outlook,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could” or “may”, or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time and are beyond Veritex’s control. Forward-looking statements speak only as of the date they are made and Veritex assumes no duty to supplement, update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

    Source: Veritex Holdings, Inc.

    The MIL Network –

    January 24, 2025
  • MIL-OSI: First Busey Corporation Announces 2024 Third Quarter Earnings

    Source: GlobeNewswire (MIL-OSI)

    CHAMPAIGN, Ill., Oct. 22, 2024 (GLOBE NEWSWIRE) — First Busey Corporation (Nasdaq: BUSE)

     Net Income of $32.0 million
    Diluted EPS of $0.55


    THIRD QUARTER 2024 HIGHLIGHTS

    • Adjusted net income1 of $33.5 million, or $0.58 per diluted common share
    • Noninterest income of $36.0 million, or 30.5% of operating revenue1
    • Record high quarterly revenue for the Wealth Management operating segment
    • Tangible book value per common share1 of $18.19 at September 30, 2024, compared to $16.97 at June 30, 2024, and $15.07 at September 30, 2023, a year-over-year increase of 20.7%
    • Tangible common equity1 increased to 8.96% of tangible assets at September 30, 2024, compared to 8.36% at June 30, 2024, and 7.06% at September 30, 2023
    • Announced transformative partnership with CrossFirst Bankshares

    For additional information, please refer to the 3Q24 Earnings Investor Presentation.

    MESSAGE FROM OUR CHAIRMAN & CEO

    Third Quarter Financial Results

    Net income for First Busey Corporation (“Busey,” “Company,” “we,” “us,” or “our”) was $32.0 million for the third quarter of 2024, or $0.55 per diluted common share, compared to $27.4 million, or $0.47 per diluted common share, for the second quarter of 2024, and $30.7 million, or $0.54 per diluted common share, for the third quarter of 2023. Adjusted net income1, which excludes the impact of acquisition and restructuring expenses, was $33.5 million, or $0.58 per diluted common share, for the third quarter of 2024, compared to $29.0 million, or $0.50 per diluted common share, for the second quarter of 2024 and $30.7 million or $0.55 per diluted common share for the third quarter of 2023. Annualized return on average assets and annualized return on average tangible common equity1 were 1.06% and 12.80%, respectively, for the third quarter of 2024. Annualized adjusted return on average assets1 and annualized adjusted return on average tangible common equity1 were 1.11% and 13.41%, respectively, for the third quarter of 2024.

    Third quarter results included $0.8 million in net securities gains, nearly all of which were unrealized, as well as immaterial follow-on adjustments from the mortgage servicing rights sale previously announced in the first quarter of 2024. Excluding these items, adjusted noninterest income1 was $35.1 million, or 29.9% of operating revenue1, during the third quarter of 2024, compared to $33.9 million, or 29.1% of operating revenue, for the second quarter of 2024 and $31.3 million, or 28.7% of operating revenue, for the third quarter of 2023. Further adjusted net income1 was $32.9 million for the third quarter of 2024 with these items excluded, equating to further adjusted earnings1 of $0.57 per diluted common share.

    Pre-provision net revenue1 was $41.7 million for the third quarter of 2024, compared to $41.1 million for the second quarter of 2024 and $38.1 million for the third quarter of 2023. Pre-provision net revenue to average assets1 was 1.38% for the third quarter of 2024, compared to 1.37% for the second quarter of 2024, and 1.24% for the third quarter of 2023. Adjusted pre-provision net revenue1 was $44.1 million for the third quarter of 2024, compared to $42.6 million for the second quarter of 2024 and $40.5 million for the third quarter of 2023. Adjusted pre-provision net revenue to average assets1 was 1.46% for the third quarter of 2024, compared to 1.42% for the second quarter of 2024 and 1.32% for the third quarter of 2023.

    Our fee-based businesses continue to add revenue diversification. Total noninterest income was $36.0 million for the third quarter of 2024, compared to $33.8 million for the second quarter of 2024 and $31.0 million for the third quarter of 2023. Busey’s Wealth Management and FirsTech operating segments contributed $16.2 million and $5.6 million, respectively, to our noninterest income for the third quarter of 2024, representing 60.4% of noninterest income on a combined basis.

    Busey views certain non-operating items, including acquisition-related expenses and restructuring charges, as adjustments to net income reported under U.S. generally accepted accounting principles (“GAAP”). Non-operating pretax adjustments for acquisition and restructuring expenses1 were $1.9 million in the third quarter of 2024. Busey believes that its non-GAAP measures (which are identified with the endnote labeled as 1) facilitate the assessment of its financial results and peer comparability. For more information and a reconciliation of these non-GAAP measures in tabular form, see “Non-GAAP Financial Information“.

    We remain deliberate in our efforts to prudently manage our expense base and operating efficiency given the economic outlook. Noninterest expense was $75.9 million in the third quarter of 2024, compared to $75.5 million in the second quarter of 2024 and $70.9 million in the third quarter of 2023. Adjusted core expense1, which excludes the amortization of intangible assets and new markets tax credits, acquisition and restructuring expenses, and the provision for unfunded commitments, was $71.0 million in the third quarter of 2024, compared to $71.1 million in the second quarter of 2024 and $66.0 million in the third quarter of 2023. The year-over-year comparable period growth in adjusted core expense can be attributed primarily to the acquisition of M&M and general inflationary pressures on compensation and benefits and to a lesser extent certain other expense categories.

    Quarterly pre-tax expense synergies resulting from our acquisition of Merchants and Manufacturers Bank Corporation (the “M&M acquisition”) are anticipated to be $1.6 million to $1.7 million per quarter when fully realized. Quarterly run-rate savings are projected to be achieved by the first quarter of 2025. During the third quarter of 2024, we achieved approximately 79% of the full quarterly savings. We expect to continue to prudently manage our expenses and to realize increased rates of M&M acquisition synergies during the final quarter of 2024.

    Planned Partnership with CrossFirst

    On August 26, 2024, Busey and CrossFirst Bankshares, Inc. (“CrossFirst”) entered into an agreement and plan of merger (the “merger agreement”) pursuant to which CrossFirst will merge with and into Busey (the “merger”) and CrossFirst’s wholly-owned subsidiary, CrossFirst Bank, will merge with and into Busey Bank. This partnership will create a premier commercial bank in the Midwest, Southwest, and Florida, with 77 full-service locations across 10 states—Arizona, Colorado, Florida, Illinois, Indiana, Kansas, Missouri, New Mexico, Oklahoma, and Texas—and approximately $20 billion in combined assets, $17 billion in total deposits, $15 billion in total loans, and $14 billion in wealth assets under care.

    Under the terms of the merger agreement, CrossFirst stockholders will have the right to receive for each share of CrossFirst common stock 0.6675 of a share of Busey’s common stock. Upon completion of the transaction, Busey’s stockholders will own approximately 63.5% of the combined company and CrossFirst’s stockholders will own approximately 36.5% of the combined company, on a fully-diluted basis. Busey common stock will continue to trade on the Nasdaq under the “BUSE” stock ticker symbol.

    Completion of the merger is subject to customary closing conditions, including the approval of both Busey and CrossFirst stockholders and the regulatory approvals for the merger and the bank merger. With approvals, the parties expect to close the merger in the first or second quarter of 2025. The combined holding company will continue to operate under the First Busey Corporation name and the combined bank will operate under the Busey Bank name. It is anticipated that CrossFirst Bank will merge with and into Busey Bank in mid-2025. At the time of the bank merger, CrossFirst Bank locations will become banking centers of Busey Bank. In connection with the merger, Busey incurred one-time pretax acquisition-related expenses of $1.3 million during the third quarter of 2024.

    For further details on the merger, see Busey’s Current Report on Form 8‑K announcing the merger, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 27, 2024.

    Busey’s Conservative Banking Strategy

    Busey’s financial strength is built on a long-term conservative operating approach. That focus will not change now or in the future.

    The quality of our core deposit franchise is a critical value driver of our institution. Our granular deposit base continues to position us well, with core deposits1 representing 96.5% of our deposits as of September 30, 2024. Our retail deposit base was comprised of more than 253,000 accounts with an average balance of $22 thousand and an average tenure of 16.7 years as of September 30, 2024. Our commercial deposit base was comprised of more than 33,000 accounts with an average balance of $97 thousand and an average tenure of 12.6 years as of September 30, 2024. We estimate that 29% of our deposits were uninsured and uncollateralized2 as of September 30, 2024, and we have sufficient on- and off-balance sheet liquidity to manage deposit fluctuations and the liquidity needs of our customers.

    Asset quality remains strong by both Busey’s historical and current industry trends. Non-performing assets decreased to $8.3 million during the third quarter of 2024, representing 0.07% of total assets. Busey’s results for the third quarter of 2024 include an insignificant provision expense for credit losses and a $0.4 million provision expense for unfunded commitments. The allowance for credit losses was $85.0 million as of September 30, 2024, representing 1.09% of total portfolio loans outstanding, and providing coverage of 10.34 times our non-performing loan balance. Busey recorded net charge-offs of $0.2 million in the third quarter of 2024. As of September 30, 2024, our commercial real estate loan portfolio of investor-owned office properties within Central Business District3 areas was minimal at $2.1 million. Our credit performance continues to reflect our highly diversified, conservatively underwritten loan portfolio, which has been originated predominantly to established customers with tenured relationships with our company.

    The strength of our balance sheet is also reflected in our capital foundation. In the third quarter of 2024, our Common Equity Tier 1 ratio4 was 13.78% and our Total Capital to Risk Weighted Assets ratio4 was 18.19%. Our regulatory capital ratios continue to provide a buffer of more than $580 million above levels required to be designated well-capitalized. Our Tangible Common Equity ratio1 increased to 8.96% during the third quarter of 2024, compared to 8.36% for the second quarter of 2024 and 7.06% for the third quarter of 2023. Busey’s tangible book value per common share1 increased to $18.19 at September 30, 2024, from $16.97 at June 30, 2024, and $15.07 at September 30, 2023, reflecting a 20.7% year-over-year increase. During the third quarter of 2024, we paid a common share dividend of $0.24.

    Community Banking

    In July 2024—based on their community involvement and academic achievements—Busey awarded 10 deserving students from across Busey’s footprint in Illinois, Missouri, Florida, and Indiana, a $2,500 scholarship to support their continuing education and bright futures. With 70 applications received, and a record number of eligible applicants, the students with the top scores, as determined by Busey’s Scholarship Committee, averaged a 4.16 GPA. Since the inception of the Busey Bank Bridge Scholarship program in 2022, Busey has awarded 30 scholarships to deserving students for a total $75,000. Full details on the scholarship’s eligibility criteria and application process can be found at https://www.busey.com/busey/busey-bank-bridge-scholarship.

    As we build upon Busey’s forward momentum and our strategic growth plans, we are grateful for the opportunities to consistently earn the business of our customers, based on the contributions of our talented associates and the continued support of our loyal shareholders. With our strong capital position, an attractive core funding base, and a sound credit foundation, we remain confident that we are well positioned as we move into the final quarter of 2024 and into 2025. We are mindful of the evolving economic outlook and remain focused on balance sheet strength, profitability, and growth, in that order. The pending CrossFirst transaction fits with our acquisition strategy and we are excited to welcome our CrossFirst colleagues into the Busey family.

        Van A. Dukeman
        Chairman and Chief Executive Officer
        First Busey Corporation
     
    SELECTED FINANCIAL HIGHLIGHTS (unaudited)
    (dollars in thousands, except per share amounts)
                       
      Three Months Ended   Nine Months Ended
      September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    EARNINGS & PER SHARE AMOUNTS                  
    Net income $ 32,004     $ 27,357     $ 30,666     $ 85,586     $ 96,816  
    Diluted earnings per common share   0.55       0.47       0.54       1.49       1.72  
    Cash dividends paid per share   0.24       0.24       0.24       0.72       0.72  
    Pre-provision net revenue1, 2   41,744       41,051       38,139       129,168       125,593  
    Operating revenue2   117,688       116,311       109,084       343,676       336,146  
                       
    Net income by operating segment:                  
    Banking   33,221       26,697       31,189       86,410       98,689  
    FirsTech   (61 )     28       317       53       505  
    Wealth Management   5,618       5,561       4,781       16,177       14,571  
                       
    AVERAGE BALANCES                  
    Cash and cash equivalents $ 502,127     $ 346,381     $ 252,730     $ 480,979     $ 237,370  
    Investment securities   2,666,269       2,737,313       3,148,759       2,769,862       3,254,054  
    Loans held for sale   11,539       9,353       2,267       8,585       1,955  
    Portfolio loans   7,869,798       8,010,636       7,834,285       7,826,741       7,767,378  
    Interest-earning assets   10,936,611       10,993,907       11,118,167       10,976,660       11,142,780  
    Total assets   12,007,702       12,089,692       12,202,783       12,040,414       12,225,232  
                       
    Noninterest-bearing deposits   2,706,858       2,816,293       2,925,244       2,743,777       3,082,884  
    Interest-bearing deposits   7,296,921       7,251,582       7,217,463       7,292,884       6,886,277  
    Total deposits   10,003,779       10,067,875       10,142,707       10,036,661       9,969,161  
                       
    Federal funds purchased and securities sold under agreements to repurchase   132,688       144,370       190,112       151,835       207,014  
    Interest-bearing liabilities   7,731,459       7,725,832       7,864,355       7,762,867       7,748,218  
    Total liabilities   10,643,325       10,757,877       10,994,376       10,716,295       11,029,374  
    Stockholders’ equity – common   1,364,377       1,331,815       1,208,407       1,324,119       1,195,858  
    Tangible common equity2   994,657       955,591       850,382       957,788       835,204  
                       
    PERFORMANCE RATIOS                  
    Pre-provision net revenue to average assets1, 2, 3   1.38 %     1.37 %     1.24 %     1.43 %     1.37 %
    Return on average assets3   1.06 %     0.91 %     1.00 %     0.95 %     1.06 %
    Return on average common equity3   9.33 %     8.26 %     10.07 %     8.63 %     10.82 %
    Return on average tangible common equity2, 3   12.80 %     11.51 %     14.31 %     11.94 %     15.50 %
    Net interest margin2, 4   3.02 %     3.03 %     2.80 %     2.94 %     2.93 %
    Efficiency ratio2   62.15 %     62.32 %     62.38 %     60.87 %     59.97 %
    Adjusted noninterest income to operating revenue2   29.86 %     29.13 %     28.69 %     29.95 %     27.91 %
                       
    NON-GAAP FINANCIAL INFORMATION                  
    Adjusted pre-provision net revenue1, 2 $ 44,104     $ 42,617     $ 40,491     $ 125,359     $ 132,067  
    Adjusted net income2   33,533       29,016       30,730       89,080       96,889  
    Adjusted diluted earnings per share2   0.58       0.50       0.55       1.55       1.72  
    Adjusted pre-provision net revenue to average assets2, 3   1.46 %     1.42 %     1.32 %     1.39 %     1.44 %
    Adjusted return on average assets2, 3   1.11 %     0.97 %     1.00 %     0.99 %     1.06 %
    Adjusted return on average tangible common equity2, 3   13.41 %     12.21 %     14.34 %     12.42 %     15.51 %
    Adjusted net interest margin2, 4   2.97 %     3.00 %     2.79 %     2.92 %     2.91 %
    Adjusted efficiency ratio2   60.50 %     60.57 %     62.31 %     60.91 %     59.95 %

    ___________________________________________

    1. Net interest income plus noninterest income, excluding securities gains and losses, less noninterest expense.
    2. See “Non-GAAP Financial Information” for reconciliation.
    3. For quarterly periods, measures are annualized.
    4. On a tax-equivalent basis, assuming a federal income tax rate of 21%.
     
    CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
    (dollars in thousands, except per share amounts)
     
      As of
      September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    ASSETS          
    Cash and cash equivalents $ 553,709     $ 285,269     $ 337,919  
    Debt securities available for sale   1,818,117       1,829,896       2,182,841  
    Debt securities held to maturity   838,883       851,261       882,614  
    Equity securities   10,315       9,618       8,782  
    Loans held for sale   11,523       11,286       3,051  
               
    Commercial loans   5,631,281       5,799,214       5,824,800  
    Retail real estate and retail other loans   2,177,816       2,199,698       2,031,360  
    Portfolio loans   7,809,097       7,998,912       7,856,160  
               
    Allowance for credit losses   (84,981 )     (85,226 )     (91,710 )
    Premises and equipment   120,279       121,647       122,538  
    Right of use asset   11,100       11,137       11,500  
    Goodwill and other intangible assets, net   368,249       370,580       356,343  
    Other assets   530,548       567,036       588,212  
    Total assets $ 11,986,839     $ 11,971,416     $ 12,258,250  
               
    LIABILITIES & STOCKHOLDERS’ EQUITY          
    Liabilities          
    Deposits:          
    Noninterest-bearing deposits $ 2,683,543     $ 2,832,776     $ 2,918,574  
    Interest-bearing checking, savings, and money market deposits   5,739,773       5,619,470       5,747,136  
    Time deposits   1,519,925       1,523,889       1,666,652  
    Total deposits   9,943,241       9,976,135       10,332,362  
               
    Securities sold under agreements to repurchase   128,429       140,283       183,702  
    Short-term borrowings   —       —       12,000  
    Long-term debt   227,482       227,245       243,666  
    Junior subordinated debt owed to unconsolidated trusts   74,754       74,693       71,946  
    Lease liability   11,470       11,469       11,783  
    Other liabilities   198,579       207,781       212,633  
    Total liabilities   10,583,955       10,637,606       11,068,092  
               
    Stockholders’ equity          
    Retained earnings   279,868       261,820       224,698  
    Accumulated other comprehensive income (loss)   (170,913 )     (220,326 )     (290,730 )
    Other1   1,293,929       1,292,316       1,256,190  
    Total stockholders’ equity   1,402,884       1,333,810       1,190,158  
    Total liabilities & stockholders’ equity $ 11,986,839     $ 11,971,416     $ 12,258,250  
               
    SHARE AND PER SHARE AMOUNTS          
    Book value per common share $ 24.67     $ 23.50     $ 21.51  
    Tangible book value per common share2 $ 18.19     $ 16.97     $ 15.07  
    Ending number of common shares outstanding   56,872,241       56,746,937       55,342,017  

    ___________________________________________

    1. Net balance of common stock ($0.001 par value), additional paid-in capital, and treasury stock.
    2. See “Non-GAAP Financial Information” for reconciliation.
     
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
    (dollars in thousands, except per share amounts)
                       
      Three Months Ended   Nine Months Ended
      September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    INTEREST INCOME                  
    Interest and fees on loans $ 111,336     $ 109,641     $ 99,844     $ 320,302     $ 284,423  
    Interest and dividends on investment securities   18,072       19,173       21,234       57,182       62,360  
    Other interest income   5,092       3,027       1,591       14,590       3,890  
    Total interest income $ 134,500     $ 131,841     $ 122,669     $ 392,074     $ 350,673  
                       
    INTEREST EXPENSE                  
    Deposits $ 46,634     $ 43,709     $ 37,068     $ 134,311     $ 78,576  
    Federal funds purchased and securities sold under agreements to repurchase   981       1,040       1,327       3,393       3,772  
    Short-term borrowings   26       418       1,964       676       12,527  
    Long-term debt   3,181       3,181       3,528       9,767       10,631  
    Junior subordinated debt owed to unconsolidated trusts   1,137       1,059       991       3,185       2,849  
    Total interest expense $ 51,959     $ 49,407     $ 44,878     $ 151,332     $ 108,355  
                       
    Net interest income $ 82,541     $ 82,434     $ 77,791     $ 240,742     $ 242,318  
    Provision for credit losses   2       2,277       364       7,317       1,944  
    Net interest income after provision for credit losses $ 82,539     $ 80,157     $ 77,427     $ 233,425     $ 240,374  
                       
    NONINTEREST INCOME                  
    Wealth management fees $ 15,378     $ 15,917     $ 14,235     $ 46,844     $ 43,594  
    Fees for customer services   8,168       7,798       7,502       23,022       21,560  
    Payment technology solutions   5,265       5,915       5,226       16,889       15,772  
    Mortgage revenue   355       478       311       1,579       871  
    Income on bank owned life insurance   1,189       1,442       1,001       4,050       3,682  
    Realized net gains (losses) on the sale of mortgage servicing rights   (18 )     277       —       7,724       —  
    Net securities gains (losses)   822       (353 )     (285 )     (5,906 )     (2,960 )
    Other noninterest income   4,792       2,327       3,018       10,550       8,349  
    Total noninterest income $ 35,951     $ 33,801     $ 31,008     $ 104,752     $ 90,868  
                       
    NONINTEREST EXPENSE                  
    Salaries, wages, and employee benefits $ 44,593     $ 43,478     $ 39,677     $ 130,161     $ 119,867  
    Data processing expense   6,910       7,100       5,930       20,560       17,472  
    Net occupancy expense of premises   4,633       4,590       4,594       13,943       13,896  
    Furniture and equipment expense   1,647       1,695       1,638       5,155       5,065  
    Professional fees   3,118       2,495       1,542       7,866       4,573  
    Amortization of intangible assets   2,548       2,629       2,555       7,586       7,953  
    Interchange expense   1,352       1,733       1,786       4,696       5,509  
    FDIC insurance   1,413       1,460       1,475       4,273       4,483  
    Other noninterest expense   9,712       10,357       11,748       27,992       31,735  
    Total noninterest expense $ 75,926     $ 75,537     $ 70,945     $ 222,232     $ 210,553  
                       
    Income before income taxes $ 42,564     $ 38,421     $ 37,490     $ 115,945     $ 120,689  
    Income taxes   10,560       11,064       6,824       30,359       23,873  
    Net income $ 32,004     $ 27,357     $ 30,666     $ 85,586     $ 96,816  
                       
    SHARE AND PER SHARE AMOUNTS                  
    Basic earnings per common share $ 0.56     $ 0.48     $ 0.55     $ 1.52     $ 1.75  
    Diluted earnings per common share $ 0.55     $ 0.47     $ 0.54     $ 1.49     $ 1.72  
    Average common shares outstanding   57,033,359       56,919,025       55,486,700       56,458,430       55,441,980  
    Diluted average common shares outstanding   57,967,848       57,853,231       56,315,492       57,411,299       56,230,624  
                                           

    BALANCE SHEET STRENGTH

    Our balance sheet remains a source of strength. Total assets were $11.99 billion as of September 30, 2024, compared to $11.97 billion as of June 30, 2024, and $12.26 billion as of September 30, 2023.

    We remain steadfast in our conservative approach to underwriting and disciplined approach to pricing, particularly given our outlook for the economy in the coming quarters, and this approach has impacted loan growth as predicted. Portfolio loans totaled $7.81 billion at September 30, 2024, compared to $8.00 billion at June 30, 2024, and $7.86 billion at September 30, 2023.

    Average portfolio loans were $7.87 billion for the third quarter of 2024, compared to $8.01 billion for the second quarter of 2024 and $7.83 billion for the third quarter of 2023. Average interest-earning assets were $10.94 billion for the third quarter of 2024, compared to $10.99 billion for the second quarter of 2024, and $11.12 billion for the third quarter of 2023.

    Total deposits were $9.94 billion at September 30, 2024, compared to $9.98 billion at June 30, 2024, and $10.33 billion at September 30, 2023. Average deposits were $10.00 billion for the third quarter of 2024, compared to $10.07 billion for the second quarter of 2024 and $10.14 billion for the third quarter of 2023. Deposit fluctuations over the last several quarters were driven by a number of elements, including (1) seasonal factors, including ordinary course public fund flows and fluctuations in the normal course of business operations of certain core commercial customers, (2) the macroeconomic environment, including prevailing interest rates and inflationary pressures, (3) depositors moving some funds to accounts at competitors offering above-market rates, and (4) deposits moving within the Busey ecosystem between deposit accounts and our wealth management group. Core deposits1 accounted for 96.5% of total deposits as of September 30, 2024. Cost of deposits was 1.85% in the third quarter of 2024, which represents an increase of 10 basis points from the second quarter of 2024. Excluding time deposits, Busey’s cost of deposits was 1.50% in the third quarter of 2024, an increase of 14 basis points from the second quarter of 2024. Non-maturity deposit cost of funds has increased as Busey Bank continues to offer savings account specials to customers with larger account balances, with the intention of migrating maturing CDs to these managed rate products. Pressure on non-interest bearing deposits along with some elevated balances of higher rate seasonal business and public funds accounts also contributed to increases in overall deposit funding cost during the quarter. Spot rates on total deposit costs, including noninterest bearing deposits, increased by 5 basis points from 1.75% at June 30, 2024, to 1.80% at September 30, 2024. Spot rates on interest bearing deposits increased by 1 basis point from 2.45% at June 30, 2024 to 2.46% at September 30, 2024.

    There were no short term borrowings as of September 30 or June 30, 2024, compared to $12.0 million at September 30, 2023. We had no borrowings from the Federal Home Loan Bank (“FHLB”) at the end of the third quarter of 2024, the second quarter of 2024, or the third quarter of 2023. We have sufficient on- and off-balance sheet liquidity5 to manage deposit fluctuations and the liquidity needs of our customers. As of September 30, 2024, our available sources of on- and off-balance sheet liquidity totaled $6.37 billion. We have executed various deposit campaigns to attract term funding and savings accounts at a lower rate than our marginal cost of funds. New certificate of deposit production in the third quarter of 2024 had a weighted average term of 8.1 months at a rate of 4.18%, 67 basis points below our average marginal wholesale equivalent-term funding cost during the quarter. Furthermore, our balance sheet liquidity profile continues to be aided by the cash flows we expect from our relatively short-duration securities portfolio. Those cash flows were approximately $81.1 million in the third quarter of 2024. For the remainder of 2024, cash flows from our securities portfolio are expected to be approximately $97.1 million with a current book yield of 2.18%.

    ASSET QUALITY

    Credit quality continues to be strong. Loans 30-89 days past due totaled $10.1 million as of September 30, 2024, compared to $23.5 million as of June 30, 2024, and $5.9 million as of September 30, 2023. The decrease in loans that were 30-89 days past due is primarily attributable to a single commercial real estate loan in the second quarter that is no longer past due as of September 30, 2024. Non-performing loans were $8.2 million as of September 30, 2024, compared to $9.1 million as of June 30, 2024, and $12.0 million as of September 30, 2023. Continued disciplined credit management resulted in non-performing loans as a percentage of portfolio loans of 0.11% as of both September 30, 2024, and June 30, 2024, and 0.15% as of September 30, 2023. Non-performing assets were 0.07% of total assets for the third quarter of 2024, compared to 0.08% for the second quarter of 2024 and 0.10% for the third quarter of 2023. Our total classified assets were $89.0 million at September 30, 2024, compared to $95.8 million at June 30, 2024, and $59.6 million at September 30, 2023. Our ratio of classified assets to estimated bank Tier 1 capital4 and reserves remains low by historical standards, at 5.9% as of September 30, 2024, compared to 6.4% as of June 30, 2024, and 4.1% as of September 30, 2023.

    Net charge-offs were $0.2 million for the third quarter of 2024, compared to $9.9 million for the second quarter of 2024, and $0.3 million for the third quarter of 2023. Charge-offs in the second quarter of 2024 were primarily in connection with a single commercial and industrial credit relationship that also experienced a partial charge-off during the first quarter of 2024. The allowance as a percentage of portfolio loans was 1.09% as of September 30, 2024, compared to 1.07% as of June 30, 2024, and 1.17% as of September 30, 2023. The ratio was impacted in 2024 by the acquisition of M&M’s Life Equity Loan® portfolio, as Busey did not record an allowance for credit loss for these loans due to no expected credit loss at default, as permitted under the practical expedient provided within the Accounting Standards Codification 326-20-35-6. The allowance coverage for non-performing loans was 10.34 times as of September 30, 2024, compared to 9.36 times as of June 30, 2024, and 7.64 times as of September 30, 2023.

    Busey maintains a well-diversified loan portfolio and, as a matter of policy and practice, limits concentration exposure in any particular loan segment.

     
    ASSET QUALITY (unaudited)
    (dollars in thousands)
               
      As of
      September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Total assets $ 11,986,839     $ 11,971,416     $ 12,258,250  
    Portfolio loans   7,809,097       7,998,912       7,856,160  
    Loans 30 – 89 days past due   10,141       23,463       5,934  
    Non-performing loans:          
    Non-accrual loans   8,192       8,393       11,298  
    Loans 90+ days past due and still accruing   25       712       709  
    Non-performing loans $ 8,217     $ 9,105     $ 12,007  
    Non-performing loans, segregated by geography:          
    Illinois / Indiana $ 3,981     $ 5,793     $ 7,951  
    Missouri   3,530       3,089       3,747  
    Florida   706       222       309  
    Other non-performing assets   64       90       96  
    Non-performing assets $ 8,281     $ 9,195     $ 12,103  
               
    Allowance for credit losses $ 84,981     $ 85,226     $ 91,710  
               
    RATIOS          
    Non-performing loans to portfolio loans   0.11 %     0.11 %     0.15 %
    Non-performing assets to total assets   0.07 %     0.08 %     0.10 %
    Non-performing assets to portfolio loans and other non-performing assets   0.11 %     0.11 %     0.15 %
    Allowance for credit losses to portfolio loans   1.09 %     1.07 %     1.17 %
    Coverage ratio of the allowance for credit losses to non-performing loans 10.34 x   9.36 x   7.64 x
    NET CHARGE-OFFS (RECOVERIES) AND PROVISION EXPENSE (RELEASE) (unaudited)
    (dollars in thousands)
                       
      Three Months Ended   Nine Months Ended
      September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Net charge-offs (recoveries) $ 247     $ 9,856     $ 293     $ 15,319     $ 1,842  
    Provision expense (release)   2       2,277       364       7,317       1,944  
                                           

    NET INTEREST MARGIN AND NET INTEREST INCOME

    Net interest margin1 was 3.02% for the third quarter of 2024, compared to 3.03% for the second quarter of 2024 and 2.80% for the third quarter of 2023. Excluding purchase accounting accretion, adjusted net interest margin1 was 2.97% for the third quarter of 2024, compared to 3.00% in the second quarter of 2024 and 2.79% in the third quarter of 2023. Net interest income was $82.5 million in the third quarter of 2024, compared to $82.4 million in the second quarter of 2024 and $77.8 million in the third quarter of 2023.

    After raising federal funds rates by a total of 525 basis points between March 2022 and July 2023, the Federal Open Market Committee (“FOMC”) lowered rates by 50 basis points in September 2024. In anticipation of the FOMC pivot to an easing cycle, we limited our exposure to term funding structures and intentionally priced savings specials to encourage maturing CD balances to migrate to managed rate non-maturity products. During September we began lowering rates on special priced deposit accounts and other managed rate products to benefit from the FOMC rate cuts. In addition, approximately 6% of our deposit portfolio is indexed and immediately repriced with the rate cuts by the FOMC. With our short duration CD balances comprising only 15% of the deposit funding base, we also have the ability to quickly reprice the book at lower market rates. We continue to offer CD specials with shorter term structures as well as offering attractive premium savings rates to encourage rotation of maturing CD deposits into nimble pricing products. Components of the 1 basis point decrease in net interest margin1 during the third quarter of 2024 include:

    • Increased cash and securities portfolio yield contributed +3 basis points
    • Increased loan portfolio and held for sale loan yields contributed +2 basis points
    • Increased purchase accounting contributed +2 basis points
    • Reduced borrowing expense +2 basis points
    • Reduced time deposit funding costs contributed +1 basis point
    • Increased non-maturity deposit funding costs contributed -11 basis points

    Based on our most recent Asset Liability Management Committee (“ALCO”) model, a +100 basis point parallel rate shock is expected to increase net interest income by 2.1% over the subsequent twelve-month period. Busey continues to evaluate off-balance sheet hedging and balance sheet restructuring strategies as well as embedding rate protection in our asset originations to provide stabilization to net interest income in lower rate environments. Time deposit and savings specials have provided funding flows, and we had excess earning cash during the third quarter of 2024. Since the onset of the current FOMC tightening cycle that began in the first quarter of 2022, our cumulative interest-bearing non-maturity deposit beta peaked at 41%. Our total deposit beta for the completed tightening cycle was 34%. Deposit betas were calculated based on an average federal funds rate of 5.43% during the third quarter of 2024. The average federal funds rate decreased by 7 basis points compared to the average rate of 5.50% in the second quarter of 2024.

    NONINTEREST INCOME

    Noninterest income was $36.0 million for the third quarter of 2024, as compared to $33.8 million for the second quarter of 2024 and $31.0 million for the third quarter of 2023. Excluding the impact of net securities gains and losses and immaterial follow-on adjustments from the previously announced mortgage servicing rights sale, adjusted noninterest income1 was $35.1 million, or 29.9% of operating revenue1, during the third quarter of 2024, $33.9 million, or 29.1% of operating revenue, for the second quarter of 2024, and $31.3 million, or 28.7% of operating revenue, for the third quarter of 2023.

    Consolidated wealth management fees were $15.4 million for the third quarter of 2024, compared to $15.9 million for the second quarter of 2024 and $14.2 million for the third quarter of 2023. Wealth management fees for the third quarter of 2024 declined by 3.4% compared to the second quarter of 2024 primarily based on seasonal tax preparation fees. On a segment basis, Wealth Management generated $16.2 million in revenue during the third quarter of 2024, a 12.7% increase over revenue of $14.4 million for the third quarter of 2023. Approximately $0.8 million of revenue attributed to the wealth segment is reported on a consolidated basis as part of other noninterest income. Third quarter of 2024 results marked a new record high reported quarterly revenue for the Wealth Management operating segment. The Wealth Management operating segment generated net income of $5.6 million in both the third quarter of 2024 and the second quarter of 2024, compared to $4.8 million in the third quarter of 2023. Busey’s Wealth Management division ended the third quarter of 2024 with $13.69 billion in assets under care, compared to $13.02 billion at the end of the second quarter of 2024 and $11.55 billion at the end of the third quarter of 2023. Our portfolio management team continues to focus on long-term returns and managing risk in the face of volatile markets and has outperformed its blended benchmark6 over the last three and five years.

    Payment technology solutions revenue was $5.3 million for the third quarter of 2024, compared to $5.9 million for the second quarter of 2024 and $5.2 million for the third quarter of 2023. Excluding intracompany eliminations, the FirsTech operating segment generated revenue of $5.6 million during the third quarter of 2024, compared to $6.2 million in the second quarter of 2024 and $5.7 million in the third quarter of 2023.

    Noninterest income generated from our Wealth Management and FirsTech operating segments comprised 60.4% of our total noninterest income for the quarter ended September 30, 2024, providing a balance to spread-based revenue from traditional banking activities.

    Fees for customer services were $8.2 million for the third quarter of 2024, compared to $7.8 million in the second quarter of 2024 and $7.5 million in the third quarter of 2023.

    Net securities gains were $0.8 million for the third quarter of 2024, comprised primarily of unrealized gains on equity securities.

    Other noninterest income was $4.8 million in the third quarter of 2024, compared to $2.3 million in the second quarter of 2024 and $3.0 million in the third quarter of 2023. Revenue associated with certain wealth management activities reported as other noninterest income on a consolidated basis was $0.8 million for the third quarter of 2024, compared to $0.2 million for the second quarter of 2024 and $0.1 million for the third quarter of 2023. Fluctuations in other noninterest income are primarily attributable to increases in venture capital investments, referral fees, and swap origination fees, partially offset by decreases in commercial loan sales gains. Increases for the year also reflect the addition of Life Equity Loan® servicing income beginning in the second quarter of 2024.

    OPERATING EFFICIENCY

    Noninterest expense was $75.9 million in the third quarter of 2024, compared to $75.5 million in the second quarter of 2024 and $70.9 million for the third quarter of 2023. The efficiency ratio1 was 62.1% for the third quarter of 2024, compared to 62.3% for the second quarter of 2024, and 62.4% for the third quarter of 2023. Adjusted core expense1 was $71.0 million in the third quarter of 2024, compared to $71.1 million in the second quarter of 2024 and $66.0 million in the third quarter of 2023. The adjusted core efficiency ratio1 was 60.2% for the third quarter of 2024, compared to 60.9% for the second quarter of 2024, and 60.2% for the third quarter of 2023. We expect to continue to prudently manage our expenses and to realize increased rates of M&M acquisition synergies during the final quarter of 2024.

    Noteworthy components of noninterest expense are as follows:

    • Salaries, wages, and employee benefits expenses were $44.6 million in the third quarter of 2024, compared to $43.5 million in the second quarter of 2024 and $39.7 million in the third quarter of 2023. Busey recorded $0.1 million of non-operating salaries, wages, and employee benefit expenses in the third quarter of 2024, compared to $1.1 million in the second quarter of 2024 and none in the third quarter of 2023. The increase in the third quarter of 2024 over the second quarter of 2024 was primarily attributable to performance metrics tied to bonus and equity compensation. Our associate-base consisted of 1,510 full-time equivalents as of September 30, 2024, compared to 1,520 as of June 30, 2024, and 1,484 as of September 30, 2023. The increase in our associate-base in the second quarter of 2024 was largely due to the M&M acquisition.
    • Data processing expense was $6.9 million in the third quarter of 2024, compared to $7.1 million in the second quarter of 2024 and $5.9 million in the third quarter of 2023. Busey recorded $0.1 million of non-operating data processing expenses in the third quarter of 2024, compared to $0.3 million in the second quarter of 2024 and none in the third quarter of 2023. Busey has continued to make investments in technology enhancements and has also experienced inflation-driven price increases.
    • Professional fees were $3.1 million in the third quarter of 2024, compared to $2.5 million in the second quarter of 2024 and $1.5 million in the third quarter of 2023. Busey recorded $1.4 million of non-operating professional fees in the third quarter of 2024, as compared to $0.4 million in the second quarter of 2024 and $0.1 million in the third quarter of 2023.
    • Other noninterest expense was $9.7 million for the third quarter of 2024, compared to $10.4 million in the second quarter of 2024 and $11.7 million in the third quarter of 2023. Busey recorded $0.4 million of non-operating costs in other noninterest expense in the third quarter of 2024, compared to $0.3 million in the second quarter of 2024 and none in the third quarter of 2023. In connection with Busey’s adoption of ASU 2023-02 on January 1, 2024, Busey began recording amortization of New Markets Tax Credits as income tax expense instead of other operating expense, which resulted in a decrease to other operating expenses of $2.3 million compared to the third quarter of 2023. Other items contributing to the fluctuations in other noninterest expense included the provision for unfunded commitments, mortgage servicing rights valuation expenses, fixed asset impairment, marketing, business development, and expenses related to recruiting and onboarding.

    Busey’s effective tax rate for the third quarter of 2024 was 24.8%, which was lower than the combined federal and state statutory rate of approximately 28.0% due to the impact of tax exempt interest income, such as municipal bond interest, bank owned life insurance income, and investments in various federal and state tax credits.

    Effective tax rates were higher in 2024, compared to 2023, due to the adoption of ASU 2023-02 in January 2024. Upon adoption of ASU 2023-02 Busey elected to use the proportional amortization method of accounting for equity investments made primarily for the purpose of receiving income tax credits. The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense as opposed to being presented on a gross basis on the income statement as a component of noninterest expense and income tax expense.

    CAPITAL STRENGTH

    Busey’s strong capital levels, coupled with its earnings, have allowed the Company to provide a steady return to its stockholders through dividends. On October 25, 2024, Busey will pay a cash dividend of $0.24 per common share to stockholders of record as of October 18, 2024. Busey has consistently paid dividends to its common stockholders since the bank holding company was organized in 1980.

    As of September 30, 2024, Busey continued to exceed the capital adequacy requirements necessary to be considered “well-capitalized” under applicable regulatory guidelines. Busey’s Common Equity Tier 1 ratio is estimated4 to be 13.78% at September 30, 2024, compared to 13.20% at June 30, 2024, and 12.52% at September 30, 2023. Our Total Capital to Risk Weighted Assets ratio is estimated4 to be 18.19% at September 30, 2024, compared to 17.50% at June 30, 2024, and 16.72% at September 30, 2023.

    Busey’s tangible common equity1 was $1.04 billion at September 30, 2024, compared to $970.9 million at June 30, 2024, and $841.2 million at September 30, 2023. Tangible common equity1 represented 8.96% of tangible assets at September 30, 2024, compared to 8.36% at June 30, 2024, and 7.06% at September 30, 2023. Busey’s tangible book value per common share1 increased to $18.19 at September 30, 2024, from $16.97 at June 30, 2024, and $15.07 at September 30, 2023, reflecting a 20.7% year-over-year increase. The ratios of tangible common equity to tangible assets1 and tangible book value per common share have been impacted by the fair value adjustment of Busey’s securities portfolio as a result of the current rate environment, which is reflected in the accumulated other comprehensive income (loss) component of shareholder’s equity.

    THIRD QUARTER EARNINGS INVESTOR PRESENTATION

    For additional information on Busey’s financial condition and operating results, please refer to the Q3 2024 Earnings Investor Presentation furnished via Form 8-K on October 22, 2024, in connection with this earnings release.

    CORPORATE PROFILE

    As of September 30, 2024, First Busey Corporation (Nasdaq: BUSE) was an $11.99 billion financial holding company headquartered in Champaign, Illinois.

    Busey Bank, a wholly-owned bank subsidiary of First Busey Corporation, had total assets of $11.95 billion as of September 30, 2024, and is headquartered in Champaign, Illinois. Busey Bank currently has 62 banking centers, with 21 in Central Illinois markets, 17 in suburban Chicago markets, 20 in the St. Louis Metropolitan Statistical Area, three in Southwest Florida, and one in Indianapolis. More information about Busey Bank can be found at busey.com.

    Through Busey’s Wealth Management division, the Company provides a full range of asset management, investment, brokerage, fiduciary, philanthropic advisory, tax preparation, and farm management services to individuals, businesses, and foundations. Assets under care totaled $13.69 billion as of September 30, 2024. More information about Busey’s Wealth Management services can be found at busey.com/wealth-management.

    Busey Bank’s wholly-owned subsidiary, FirsTech, specializes in the evolving financial technology needs of small and medium-sized businesses, highly regulated enterprise industries, and financial institutions. FirsTech provides comprehensive and innovative payment technology solutions, including online, mobile, and voice-recognition bill payments; money and data movement; merchant services; direct debit services; lockbox remittance processing for payments made by mail; and walk-in payments at retail agents. Additionally, FirsTech simplifies client workflows through integrations enabling support with billing, reconciliation, bill reminders, and treasury services. More information about FirsTech can be found at firstechpayments.com.

    For the first time, Busey was named among the World’s Best Banks for 2024 by Forbes, earning a spot on the list among 68 U.S. banks and 403 banks worldwide. Additionally, Busey Bank was honored to be named among America’s Best Banks by Forbes magazine for the third consecutive year. Ranked 40th overall in 2024, Busey was the second-ranked bank headquartered in Illinois of the six that made this year’s list and the highest-ranked bank of those with more than $10 billion in assets. Busey is humbled to be named among the 2023 Best Banks to Work For by American Banker, the 2023 Best Places to Work in Money Management by Pensions and Investments, the 2024 Best Places to Work in Illinois by Daily Herald Business Ledger, the 2024 Best Places to Work in Indiana by the Indiana Chamber of Commerce, and the 2024 Best Companies to Work For in Florida by Florida Trend magazine. We are honored to be consistently recognized globally, nationally and locally for our engaged culture of integrity and commitment to community development.

    For more information about us, visit busey.com.

    Category: Financial
    Source: First Busey Corporation

    Contacts:

    Jeffrey D. Jones, Chief Financial Officer
    217-365-4130

    NON-GAAP FINANCIAL INFORMATION

    This earnings release contains certain financial information determined by methods other than GAAP. Management uses these non-GAAP measures, together with the related GAAP measures, in analysis of Busey’s performance and in making business decisions, as well as for comparison to Busey’s peers. Busey believes the adjusted measures are useful for investors and management to understand the effects of certain non-core and non-recurring noninterest items and provide additional perspective on Busey’s performance over time.

    Below is a reconciliation to what management believes to be the most directly comparable GAAP financial measures—specifically, net interest income, total noninterest income, net security gains and losses, and total noninterest expense in the case of pre-provision net revenue, adjusted pre-provision net revenue, pre-provision net revenue to average assets, and adjusted pre-provision net revenue to average assets; net income in the case of adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, average tangible common equity, return on average tangible common equity, adjusted return on average tangible common equity; net income and net security gains and losses in the case of further adjusted net income and further adjusted diluted earnings per share; net interest income in the case of adjusted net interest income and adjusted net interest margin; net interest income, total noninterest income, and total noninterest expense in the case of adjusted noninterest income, adjusted noninterest expense, noninterest expense excluding non-operating adjustments, adjusted core expense, efficiency ratio, adjusted efficiency ratio, and adjusted core efficiency ratio; net interest income, total noninterest income, net securities gains and losses, and net gains and losses on the sale of mortgage servicing rights in the case of operating revenue and adjusted noninterest income to operating revenue; total assets and goodwill and other intangible assets in the case of tangible assets; total stockholders’ equity in the case of tangible book value per common share; total assets and total stockholders’ equity in the case of tangible common equity and tangible common equity to tangible assets; and total deposits in the case of core deposits and core deposits to total deposits.

    These non-GAAP disclosures have inherent limitations and are not audited. They should not be considered in isolation or as a substitute for operating results reported in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Tax effected numbers included in these non-GAAP disclosures are based on estimated statutory rates, estimated federal income tax rates, or effective tax rates, as noted with the tables below.

    RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

    Pre-Provision Net Revenue, Adjusted Pre-Provision Net Revenue,
    Pre-Provision Net Revenue to Average Assets, and
    Adjusted Pre-Provision Net Revenue to Average Assets
    (dollars in thousands)
                         
        Three Months Ended   Nine Months Ended
        September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    PRE-PROVISION NET REVENUE                     
    Net interest income   $ 82,541     $ 82,434     $ 77,791     $ 240,742     $ 242,318  
    Total noninterest income     35,951       33,801       31,008       104,752       90,868  
    Net security (gains) losses     (822 )     353       285       5,906       2,960  
    Total noninterest expense     (75,926 )     (75,537 )     (70,945 )     (222,232 )     (210,553 )
    Pre-provision net revenue     41,744       41,051       38,139       129,168       125,593  
    Non-GAAP adjustments:                    
    Acquisition and restructuring expenses     1,935       2,212       79       4,555       91  
    Provision for unfunded commitments     407       (369 )     13       (640 )     (357 )
    Amortization of New Markets Tax Credits     —       —       2,260       —       6,740  
    Realized (gain) loss on the sale of mortgage service rights     18       (277 )     —       (7,724 )     —  
    Adjusted pre-provision net revenue   $ 44,104     $ 42,617     $ 40,491     $ 125,359     $ 132,067  
                         
    Pre-provision net revenue, annualized [a] $ 166,069     $ 165,106     $ 151,312     $ 172,538     $ 167,917  
    Adjusted pre-provision net revenue, annualized [b]   175,457       171,405       160,644       167,450       176,573  
    Average total assets [c]   12,007,702       12,089,692       12,202,783       12,040,414       12,225,232  
                         
    Reported: Pre-provision net revenue to average total assets1 [a÷c]   1.38 %     1.37 %     1.24 %     1.43 %     1.37 %
    Adjusted: Pre-provision net revenue to average total assets1 [b÷c]   1.46 %     1.42 %     1.32 %     1.39 %     1.44 %

    ___________________________________________

    1. Annualized measure.
     
    Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted Return on Average Assets, Average Tangible Common Equity, Return on Average Tangible Common Equity, and Adjusted Return on Average Tangible Common Equity
    (dollars in thousands, except per share amounts)
                         
        Three Months Ended   Nine Months Ended
        September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    NET INCOME ADJUSTED FOR NON-OPERATING ITEMS                    
    Net income [a] $ 32,004     $ 27,357     $ 30,666     $ 85,586     $ 96,816  
    Non-GAAP adjustments for non-operating expenses:                    
    Acquisition expenses:                    
    Salaries, wages, and employee benefits     73       1,137       —       1,210       —  
    Data processing     90       344       —       534       —  
    Professional fees, occupancy, furniture and fixtures, and other     1,772       731       79       2,688       91  
    Restructuring expenses:                    
    Salaries, wages, and employee benefits     —       —       —       123       —  
    Acquisition and restructuring expenses     1,935       2,212       79       4,555       91  
    Related tax benefit1     (406 )     (553 )     (15 )     (1,061 )     (18 )
    Adjusted net income [b] $ 33,533     $ 29,016     $ 30,730     $ 89,080     $ 96,889  
                         
    DILUTED EARNINGS PER SHARE                    
    Diluted average common shares outstanding [c]   57,967,848       57,853,231       56,315,492       57,411,299       56,230,624  
                         
    Reported: Diluted earnings per share [a÷c] $ 0.55     $ 0.47     $ 0.54     $ 1.49     $ 1.72  
    Adjusted: Diluted earnings per share [b÷c] $ 0.58     $ 0.50     $ 0.55     $ 1.55     $ 1.72  
                         
    RETURN ON AVERAGE ASSETS                    
    Net income, annualized [d] $ 127,320     $ 110,029     $ 121,664     $ 114,323     $ 129,443  
    Adjusted net income, annualized [e]   133,403       116,702       121,918       118,990       129,540  
    Average total assets [f]   12,007,702       12,089,692       12,202,783       12,040,414       12,225,232  
                         
    Reported: Return on average assets2 [d÷f]   1.06 %     0.91 %     1.00 %     0.95 %     1.06 %
    Adjusted: Return on average assets2 [e÷f]   1.11 %     0.97 %     1.00 %     0.99 %     1.06 %
                         
    RETURN ON AVERAGE TANGIBLE COMMON EQUITY                    
    Average common equity   $ 1,364,377     $ 1,331,815     $ 1,208,407     $ 1,324,119     $ 1,195,858  
    Average goodwill and other intangible assets, net     (369,720 )     (376,224 )     (358,025 )     (366,331 )     (360,654 )
    Average tangible common equity [g] $ 994,657     $ 955,591     $ 850,382     $ 957,788     $ 835,204  
                         
    Reported: Return on average tangible common equity2 [d÷g]   12.80 %     11.51 %     14.31 %     11.94 %     15.50 %
    Adjusted: Return on average tangible common equity2 [e÷g]   13.41 %     12.21 %     14.34 %     12.42 %     15.51 %

    ___________________________________________

    1. Year-to-date tax benefits were calculated by multiplying year-to-date acquisition and restructuring expenses by the effective income tax rate for each year-to-date period, which for 2024 excludes a one-time deferred tax valuation adjustment resulting from a change in Illinois apportionment rate due to recently enacted regulations and deductibility of certain acquisition expenses. Tax rates used in these calculations were 23.3% and 19.8% for the nine months ended September 30, 2024 and 2023, respectively. Quarterly tax benefits were calculated as the year-to-date tax benefit amounts less the sum of amounts applied to previous quarters during the year, equating to tax rates of 21.0%, 25.0%, and 19.7% for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively.
    2. Annualized measure.
     
    Further Adjusted Net Income and Further Adjusted Diluted Earnings Per Share
    (dollars in thousands, except per share amounts)
                         
        Three Months Ended   Nine Months Ended
        September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Adjusted net income1 [a] $ 33,533     $ 29,016     $ 30,730     $ 89,080     $ 96,889  
    Further non-GAAP adjustments:                    
    Net securities (gains) losses     (822 )     353       285       5,906       2,960  
    Realized net (gains) losses on the sale of mortgage servicing rights     18       (277 )     —       (7,724 )     —  
    Tax effect for further non-GAAP adjustments2     199       (19 )     (52 )     453       (585 )
    Tax effected further non-GAAP adjustments3     (605 )     57       233       (1,365 )     2,375  
    Further adjusted net income3 [b] $ 32,928     $ 29,073     $ 30,963     $ 87,715     $ 99,264  
    One-time deferred tax valuation adjustment4     —       1,446       —       1,446       —  
    Further adjusted net income, excluding one-time deferred tax valuation adjustment3 [c] $ 32,928     $ 30,519     $ 30,963     $ 89,161     $ 99,264  
                         
    Diluted average common shares outstanding [d]   57,967,848       57,853,231       56,315,492       57,411,299       56,230,624  
                         
    Adjusted: Diluted earnings per share [a÷d] $ 0.58     $ 0.50     $ 0.55     $ 1.55     $ 1.72  
    Further Adjusted: Diluted earnings per share3 [b÷d] $ 0.57     $ 0.50     $ 0.55     $ 1.53     $ 1.77  
    Further Adjusted, excluding one-time deferred tax valuation adjustment: Diluted earnings per share3 [c÷d] $ 0.57     $ 0.53     $ 0.55     $ 1.55     $ 1.77  

    ___________________________________________

    1. Adjusted net income is a non-GAAP measure. See the table on the previous page for a reconciliation to the nearest GAAP measure.
    2. Tax effects for further non-GAAP adjustments were calculated by multiplying further non-GAAP adjustments by the effective income tax rate for each period. For the nine months ended September 30, 2024, the rate that we used excluded a one-time deferred tax valuation adjustment resulting from a change in Illinois apportionment rate due to recently enacted regulations. Effective income tax rates that we used to calculate the tax effect were 24.8%, 25.0%, and 18.2% for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, respectively, and were 24.9% and 19.8% for the nine months ended September 30, 2024 and 2023, respectively.
    3. Tax-effected measure.
    4. An estimated one-time deferred tax valuation adjustment of $1.4 million resulted from a change to our Illinois apportionment rate due to recently enacted regulations.
     
    Adjusted Net Interest Income and Adjusted Net Interest Margin
    (dollars in thousands)
                         
        Three Months Ended   Nine Months Ended
        September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Net interest income   $ 82,541     $ 82,434     $ 77,791     $ 240,742     $ 242,318  
    Non-GAAP adjustments:                    
    Tax-equivalent adjustment1     396       402       553       1,247       1,672  
    Tax-equivalent net interest income     82,937       82,836       78,344       241,989       243,990  
    Purchase accounting accretion related to business combinations     (1,338 )     (812 )     (277 )     (2,354 )     (1,093 )
    Adjusted net interest income   $ 81,599     $ 82,024     $ 78,067     $ 239,635     $ 242,897  
                         
    Tax-equivalent net interest income, annualized [a] $ 329,945     $ 333,165     $ 310,821     $ 323,241     $ 326,214  
    Adjusted net interest income, annualized [b]   324,622       329,899       309,722       320,096       324,752  
    Average interest-earning assets [c]   10,936,611       10,993,907       11,118,167       10,976,660       11,142,780  
                         
    Reported: Net interest margin2 [a÷c]   3.02 %     3.03 %     2.80 %     2.94 %     2.93 %
    Adjusted: Net interest margin2 [b÷c]   2.97 %     3.00 %     2.79 %     2.92 %     2.91 %

    ___________________________________________

    1. Tax-equivalent adjustments were calculated using an estimated federal income tax rate of 21%, applied to non-taxable interest income on investments and loans.
    2. Annualized measure.
     
    Adjusted Noninterest Income, Operating Revenue, Adjusted Noninterest Income to Operating Revenue, Noninterest Expense Excluding Amortization of Intangible Assets, Adjusted Noninterest Expense,
    Adjusted Core Expense, Noninterest Expense Excluding Non-Operating Adjustments,
    Efficiency Ratio, Adjusted Efficiency Ratio, and Adjusted Core Efficiency Ratio
    (dollars in thousands)
                         
        Three Months Ended   Nine Months Ended
        September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Net interest income [a] $ 82,541     $ 82,434     $ 77,791     $ 240,742     $ 242,318  
    Non-GAAP adjustments:                    
    Tax-equivalent adjustment1     396       402       553       1,247       1,672  
    Tax-equivalent net interest income [b]   82,937       82,836       78,344       241,989       243,990  
                         
    Total noninterest income     35,951       33,801       31,008       104,752       90,868  
    Non-GAAP adjustments:                    
    Net security (gains) losses     (822 )     353       285       5,906       2,960  
    Noninterest income excluding net securities gains and losses [c]   35,129       34,154       31,293       110,658       93,828  
    Further adjustments:                    
    Realized net (gains) losses on the sale of mortgage servicing rights     18       (277 )     —       (7,724 )     —  
    Adjusted noninterest income [d] $ 35,147     $ 33,877     $ 31,293     $ 102,934     $ 93,828  
                         
    Tax-equivalent revenue [e = b+c] $ 118,066     $ 116,990     $ 109,637     $ 352,647     $ 337,818  
    Adjusted tax-equivalent revenue [f = b+d]   118,084       116,713       109,637       344,923       337,818  
    Operating revenue [g = a+d]   117,688       116,311       109,084       343,676       336,146  
                         
    Adjusted noninterest income to operating revenue [d÷g]   29.86 %     29.13 %     28.69 %     29.95 %     27.91 %
                         
    Total noninterest expense   $ 75,926     $ 75,537     $ 70,945     $ 222,232     $ 210,553  
    Non-GAAP adjustments:                    
    Amortization of intangible assets [h]   (2,548 )     (2,629 )     (2,555 )     (7,586 )     (7,953 )
    Noninterest expense excluding amortization of intangible assets [i]   73,378       72,908       68,390       214,646       202,600  
    Non-operating adjustments:                    
    Salaries, wages, and employee benefits     (73 )     (1,137 )     —       (1,333 )     —  
    Data processing     (90 )     (344 )     —       (534 )     —  
    Professional fees, occupancy, furniture and fixtures, and other     (1,772 )     (731 )     (79 )     (2,688 )     (91 )
    Adjusted noninterest expense [j]   71,443       70,696       68,311       210,091       202,509  
    Provision for unfunded commitments     (407 )     369       (13 )     640       357  
    Amortization of New Markets Tax Credits     —       —       (2,260 )     —       (6,740 )
    Adjusted core expense [k] $ 71,036     $ 71,065     $ 66,038     $ 210,731     $ 196,126  
                         
    Noninterest expense, excluding non-operating adjustments [j-h] $ 73,991     $ 73,325     $ 70,866     $ 217,677     $ 210,462  
                         
    Reported: Efficiency ratio [i÷e]   62.15 %     62.32 %     62.38 %     60.87 %     59.97 %
    Adjusted: Efficiency ratio [j÷f]   60.50 %     60.57 %     62.31 %     60.91 %     59.95 %
    Adjusted: Core efficiency ratio [k÷f]   60.16 %     60.89 %     60.23 %     61.10 %     58.06 %

    ___________________________________________

    1. Tax-equivalent adjustments were calculated using an estimated federal income tax rate of 21%, applied to non-taxable interest income on investments and loans.
     
    Tangible Book Value and Tangible Book Value Per Common Share
    (dollars in thousands, except per share amounts)
                 
        As of
        September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Total stockholders’ equity   $ 1,402,884     $ 1,333,810     $ 1,190,158  
    Non-GAAP adjustments:            
    Goodwill and other intangible assets, net     (368,249 )     (370,580 )     (356,343 )
    Tangible book value [a] $ 1,034,635     $ 963,230     $ 833,815  
                 
    Ending number of common shares outstanding [b]   56,872,241       56,746,937       55,342,017  
                 
    Tangible book value per common share [a÷b] $ 18.19     $ 16.97     $ 15.07  
     
    Tangible Assets, Tangible Common Equity, and Tangible Common Equity to Tangible Assets
    (dollars in thousands)
                 
        As of
        September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Total assets   $ 11,986,839     $ 11,971,416     $ 12,258,250  
    Non-GAAP adjustments:            
    Goodwill and other intangible assets, net     (368,249 )     (370,580 )     (356,343 )
    Tax effect of other intangible assets1     7,178       7,687       7,354  
    Tangible assets2 [a] $ 11,625,768     $ 11,608,523     $ 11,909,261  
                 
    Total stockholders’ equity   $ 1,402,884     $ 1,333,810     $ 1,190,158  
    Non-GAAP adjustments:            
    Goodwill and other intangible assets, net     (368,249 )     (370,580 )     (356,343 )
    Tax effect of other intangible assets1     7,178       7,687       7,354  
    Tangible common equity2 [b] $ 1,041,813     $ 970,917     $ 841,169  
                 
    Tangible common equity to tangible assets2 [b÷a]   8.96 %     8.36 %     7.06 %

    ___________________________________________

    1. Net of estimated deferred tax liability, calculated using the estimated statutory tax rate of 28%.
    2. Tax-effected measure.
     
    Core Deposits, Core Deposits to Total Deposits, and Portfolio Loans to Core Deposits
    (dollars in thousands)
                 
        As of
        September 30,
    2024
      June 30,
    2024
      September 30,
    2023
    Portfolio loans [a] $ 7,809,097     $ 7,998,912     $ 7,856,160  
                 
    Total deposits [b] $ 9,943,241     $ 9,976,135     $ 10,332,362  
    Non-GAAP adjustments:            
    Brokered deposits, excluding brokered time deposits of $250,000 or more     (13,089 )     (43,089 )     (6,055 )
    Time deposits of $250,000 or more     (338,808 )     (314,461 )     (350,276 )
    Core deposits [c] $ 9,591,344     $ 9,618,585     $ 9,976,031  
                 
    RATIOS            
    Core deposits to total deposits [c÷b]   96.46 %     96.42 %     96.55 %
    Portfolio loans to core deposits [a÷c]   81.42 %     83.16 %     78.75 %
                             

    FORWARD-LOOKING STATEMENTS

    This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to Busey’s financial condition, results of operations, plans, objectives, future performance, and business. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of Busey’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should,” “position,” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and Busey undertakes no obligation to update any statement in light of new information or future events.

    A number of factors, many of which are beyond Busey’s ability to control or predict, could cause actual results to differ materially from those in any forward-looking statements. These factors include, among others, the following: (1) risks related to the proposed transaction with CrossFirst, including (i) the possibility that the proposed transaction will not close when expected or at all because required regulatory, stockholder, or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated (and the risk that required regulatory approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction); (ii) the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where Busey and CrossFirst do business; (iii) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (iv) diversion of management’s attention from ongoing business operations and opportunities; (v) the possibility that Busey may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all, and to successfully integrate CrossFirst’s operations with those of Busey or that such integration may be more difficult, time consuming or costly than expected; (vi) revenues following the proposed transaction may be lower than expected; and (vii) shareholder litigation that could prevent or delay the closing of the proposed transaction or otherwise negatively impact our business and operations; (2) the strength of the local, state, national, and international economy (including effects of inflationary pressures and supply chain constraints); (3) the economic impact of any future terrorist threats or attacks, widespread disease or pandemics, or other adverse external events that could cause economic deterioration or instability in credit markets (including Russia’s invasion of Ukraine and the conflict in the Middle East); (4) changes in state and federal laws, regulations, and governmental policies concerning Busey’s general business (including changes in response to the failures of other banks or as a result of the upcoming 2024 presidential election); (5) changes in accounting policies and practices; (6) changes in interest rates and prepayment rates of Busey’s assets (including the impact of sustained elevated interest rates); (7) increased competition in the financial services sector (including from non-bank competitors such as credit unions and fintech companies) and the inability to attract new customers; (8) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (9) the loss of key executives or associates; (10) changes in consumer spending; (11) unexpected results of other transactions (including the acquisition of M&M); (12) unexpected outcomes of existing or new litigation, investigations, or inquiries involving Busey (including with respect to Busey’s Illinois franchise taxes); (13) fluctuations in the value of securities held in Busey’s securities portfolio; (14) concentrations within Busey’s loan portfolio (including commercial real estate loans), large loans to certain borrowers, and large deposits from certain clients; (15) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; (16) the level of non-performing assets on Busey’s balance sheets; (17) interruptions involving information technology and communications systems or third-party servicers; (18) breaches or failures of information security controls or cybersecurity-related incidents; and (19) the economic impact of exceptional weather occurrences such as tornadoes, hurricanes, floods, blizzards, and droughts. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

    Additional information concerning Busey and its business, including additional factors that could materially affect Busey’s financial results, is included in Busey’s filings with the Securities and Exchange Commission.

    ADDITIONAL INFORMATION ABOUT THE TRANSACTION AND WHERE TO FIND IT

    Busey has filed a registration statement on Form S‑4 with the SEC to register the shares of Busey’s common stock that will be issued to CrossFirst stockholders in connection with the proposed transaction. The registration statement includes a preliminary joint proxy statement of Busey and CrossFirst, which also constitutes a prospectus of Busey. The definitive joint proxy statement/prospectus will be sent to the stockholders of each of Busey and CrossFirst seeking certain approvals related to the proposed transaction. INVESTORS AND SECURITY HOLDERS OF BUSEY AND CROSSFIRST AND THEIR RESPECTIVE AFFILIATES ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S‑4 AND THE JOINT PROXY STATEMENT/PROSPECTUS TO BE INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S‑4 WHEN THEY BECOME AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BUSEY, CROSSFIRST, AND THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copies of these documents, as well as other relevant documents filed with the SEC containing information about Busey and CrossFirst, without charge, at the SEC’s website (http://www.sec.gov). Copies of documents filed with the SEC by Busey will be made available free of charge in the “SEC Filings” section of Busey’s website, https://ir.busey.com. Copies of documents filed with the SEC by CrossFirst will be made available free of charge in the “Investor Relations” section of CrossFirst’s website, https://investors.crossfirstbankshares.com.

    PARTICIPANTS IN SOLICITATION

    Busey, CrossFirst, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction under the rules of the SEC. Information regarding Busey’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on April 12, 2024, and certain other documents filed by Busey with the SEC. Information regarding CrossFirst’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on March 26, 2024, and certain other documents filed by CrossFirst with the SEC. Other information regarding the participants in the solicitation of proxies in respect of the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials filed or to be filed with the SEC when they become available. Free copies of these documents, when available, may be obtained as described in the preceding paragraph.

    END NOTES

    1 Represents a non-GAAP financial measure. For a reconciliation to the most directly comparable financial measure calculated and presented in accordance with Generally Accepted Accounting Principles (“GAAP”), see “Non-GAAP Financial Information.”
    2 Estimated uninsured and uncollateralized deposits consist of account balances in excess of the $250 thousand FDIC insurance limit, less intercompany accounts and collateralized accounts (including preferred deposits).
    3 Central Business District areas within Busey’s footprint include downtown St. Louis, downtown Indianapolis, and downtown Chicago.
    4 Capital amounts and ratios for the third quarter of 2024 are not yet finalized and are subject to change.
    5 On- and off-balance sheet liquidity is comprised of cash and cash equivalents, debt securities excluding those pledged as collateral, brokered deposits, and Busey’s borrowing capacity through its revolving credit facility, the FHLB, the Federal Reserve Bank, and federal funds purchased lines.
    6 The blended benchmark consists of 60% MSCI All Country World Index and 40% Bloomberg Intermediate US Government/Credit Total Return Index.

    The MIL Network –

    January 24, 2025
  • MIL-OSI: CrossFirst Bankshares, Inc. Reports Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    LEAWOOD, Kan., Oct. 22, 2024 (GLOBE NEWSWIRE) — CrossFirst Bankshares, Inc. (Nasdaq: CFB), the bank holding company for CrossFirst Bank, today reported operating results for the third quarter ended September 30, 2024.

    The third quarter earnings release can be viewed here: https://investors.crossfirstbankshares.com/financials/quarterly-reports

    Investor Contact
    Mike Daley | CrossFirst Bankshares, Inc.
    913.754.9707 | mike.daley@crossfirstbank.com

    About CrossFirst Bankshares, Inc.

    CrossFirst Bankshares, Inc. (Nasdaq: CFB) is a Kansas corporation and a registered bank holding company for its wholly owned subsidiary, CrossFirst Bank, a full-service financial institution that offers products and services to businesses, professionals, individuals, and families. CrossFirst Bank, headquartered in Leawood, Kansas, has locations in Kansas, Missouri, Oklahoma, Texas, Arizona, Colorado, and New Mexico.

    The MIL Network –

    January 24, 2025
  • MIL-OSI United Kingdom: Governments launch largest review of sector since privatisation

    Source: United Kingdom – Executive Government & Departments

    The UK and Welsh Governments have introduced major legislation with new powers to bring criminal charges against water executives and a ban on bonuses.

    An Independent Commission into the water sector and its regulation will be launched by the government tomorrow (Wednesday 23 October), in what is expected to form the largest review of the industry since privatisation.   

    The Commission forms the next stage in the Government’s long-term approach to ensuring we have a sufficiently robust and stable regulatory framework to attract the investment needed to clean up our waterways, speed up infrastructure delivery and restore public confidence in the sector. 

    It follows the Government’s inaugural International Investment Summit last week at which the Prime Minister spoke of the need for regulation and regulators to support growth and investment in the UK.  

    Launched by the UK and Welsh governments, the Commission will report back next year with recommendations to the Government on how to tackle inherited systemic issues in the water sector to restore our rivers, lakes and seas to good health, meet the challenges of the future and drive economic growth. 

    These recommendations will form the basis of further legislation to attract long-term investment and clean up our waters for good – injecting billions of pounds into the economy, speeding up delivery on infrastructure to support house building and addressing water scarcity, given the country needs to source an additional 5 billion litres of water a day by 2050.  

    Former Deputy Governor of the Bank of England, Jon Cunliffe, will chair the Commission. With several decades of economic and regulatory experience, his appointment demonstrates the Government’s serious ambitions.  

    The Commission will draw upon a panel of experts from across the regulatory, environment, health, engineering, customer, investor and economic sectors. It forms part of the Government’s reset of the water sector by establishing a new partnership between government, water companies, customers, investors, and all those who enjoy our waters and work to protect our environment.  

    Launching the review, Secretary of State Steve Reed said:    

    Our waterways are polluted and our water system urgently needs fixing.   

    That is why today we have launched a Water Commission to attract the investment we need to clean up our waterways and rebuild our broken water infrastructure.  

    The Commission’s findings will help shape new legislation to reform the water sector so it properly serves the interests of customers and the environment. 

    Water Commission Chair Sir Jon Cunliffe said:  

    I’m honoured to be appointed as chair of the government’s new Water Commission. It is vital we deliver a better system to attract stable investment and speed up the building of water infrastructure.

    Working over many years in the public sector, in environment, transport and the Treasury, and the Bank of England, I have seen how the regulation of private firms can be fundamental to incentivising performance and innovation, securing resilience and delivering public policy objectives.  

    I am looking forward to working with experts from across the water sector, from environment and customer groups and investors, to help deliver a water sector that works successfully for both customers, investors and our natural environment.

    Huw Irranca Davies, Wales’ Deputy First Minister with responsibility for Climate Change and Rural Affairs, added:  

    This vital review couldn’t come at a more urgent time for our water environment and water industry.      

    This shows the fresh approach of our two governments working together on an issue which affects us all as consumers, investors and as stewards of the natural world.   

    Both the Welsh and UK Governments are determined to improve water quality and the resilience of the water sector for future generations. We have clear priorities for reform and a shared sense of the work needed across both countries’ policy and regulatory regimes to make this change happen.

    A set of recommendations will be delivered to the Defra Secretary of State, and Deputy First Minister and Cabinet Secretary for Climate Change and Rural Affairs next year. The UK Government and Welsh Government will then respond with the proposals they intend to take forward.  

    The objectives of the Commission are to recommend measures to ensure the regulatory system delivers:  

    • Clear Vision: Establishing clear outcomes for the future and a long-term vision for delivering environmental, public health, customer, and economic outcomes.  

    • Strategic Planning: Adopting a collaborative, strategic, catchment approach to managing water, tackling pollution and restoring nature.  

    • Better Regulation: Rationalising and clarifying requirements for companies to secure better customer and environmental outcomes. 

    • Empowered Regulators: Ensuring regulators are effective in holding water companies accountable, for example for illegal pollution.    

    • Improved Delivery: Enhancing the sector’s ability to meet obligations, including clean rivers, lakes, and seas, while driving innovation. 

    • Stable Framework: Ensuring a regulatory environment that attracts investment and supports financial resilience for water companies.  

    • Consumer Protection: Safeguarding consumer interests and affordability through transparent and fair governance.  

    • Resilient Infrastructure: Delivering and maintaining robust infrastructure on time, anticipating future needs and climate challenges.   

    The independent commission is the third stage of the government’s water strategy. In his first week in office, the Secretary of State secured an agreement from water companies and Ofwat to ringfence money for vital infrastructure upgrades so it cannot be diverted to shareholder payouts and bonus payments.   

    In just 70 days, the Government also introduced the Water (Special Measures) Bill, which sets out tough new measures to crack down on water companies failing their customers. This includes:    

    • Bringing criminal charges against persistent lawbreakers, including imprisonment.  

    • Strengthening regulation to ensure water bosses face personal criminal liability for lawbreaking.  

    • Giving the water regulator new powers to ban the payment of bonuses if environmental standards are not met.  

    • Boost accountability for water executives through a new ‘code of conduct’ for water companies, so customers can summon board members and hold executives to account.  

    • Introduce new powers to bring automatic and severe fines.  

    • Require water companies to install real-time monitors at every sewage outlet with data independently scrutinised by the water regulators.  

    In addition, the cost recovery powers of regulators will be expanded to ensure that water companies bear the cost of enforcement action taken in response to their failings. The Environment Agency will undertake a consultation on the implementation of these new powers.

    Further quotes

    Jon Phillips, Chief Executive of the Global Infrastructure Investor Association said:

    The Secretary of State should be congratulated for acting swiftly to put in place this much needed review and reset of the water sector. No parties involved in the sector can be happy with the current arrangements, and that includes investors whose capital is vital to addressing current and future environmental challenges.

    The government has heard loud and clear that the sector needs both a long-term plan and a regulatory framework that places greater emphasis on attracting investment. We look forward to the opportunity to support the Commission’s work and hope that its findings can be put into practice at the earliest opportunity.

    Gail Davies-Walsh, CEO of Afonydd Cymru, said:

    This independent review of Welsh and English water companies is very welcome news and something that we hope will ultimately result in a much needed boost for river health.

    We would like to understand how long-term water company investment can be secured to deliver the environmental performance that we need.

    Afonydd Cymru welcome the collaboration of Welsh Government and the UK Government on this matter, particularly given the current cross-border management issues that hinder river restoration efforts.

    Richard Benwell, CEO of Wildlife and Countryside Link, said:

    The water sector is a perfect example of where stronger, better enforced regulation can drive up investment and drive down pollution.

    We welcome this significant review as the next step in Defra’s work to clean up our water environment. We’ll be looking for strong new rules that tie the industry into environmental investment and improve the way that money is spent in every river catchment to deliver quick, clean results for nature and communities.

    Jamie Cook, CEO of Angling Trust, said:

    The Angling Community has been calling for a root and branch review of Britain’s failing water sector, so we are pleased the Government has moved swiftly to set up an independent commission to deliver this.

    However, there is inevitably going to be a difficult balancing act between economic, consumer and environmental priorities that this review will need to address. We are pleased the views of water users, like the two million anglers, are going to be a key part of this review. 

    The Angling Trust is committed to working with the commission to ensure the health of our rivers, lakes and seas remains front and centre of its work.

    Mark Lloyd, CEO of Rivers Trust, said:

    35 years after water privatisation, this review is long overdue, which makes it even more welcome.  Our rivers have been flatlining for far too long, alongside the failure of our current systems to manage ageing infrastructure and population increase they face huge strategic challenges from climate change and biodiversity decline.

    Incremental policy tweaks will not fix our water system, and the review must look beyond the water industry to include land and water management in both urban and rural areas.  There needs to be much more focus on delivery of cost-effective solutions, through an integrated systems approach. 

    We will be keeping a close eye on the work of the commission to ensure it considers land use, nature, drought, flood and pollution in concert, because they are all intrinsically linked.  We look forward to working closely with Sir Jon Cunliffe and his team on a new system.

    Nicci Russell, CEO of Waterwise, said:

    We welcome this review, its wide scope and the collaborative way the government is approaching it. We agree with the government that now is the time for a reset in the water sector – nothing happens without water, so access to water needs to be at the heart of everything the government does.

    We will aim to put water efficiency at the heart of the Commission’s work, and look forward to working with Sir Jon and his team of experts to do this. The first objective in our Water Efficiency Strategy to 2030 is that governments and regulators show clear, visible leadership for water efficiency and reflect this in their policy and regulatory frameworks. 

    We are also delighted to see that Ministers are placing environmental and social outcomes as equally important to economic ones – because nothing happens without water. This is a great opportunity for the water sector to play a part in the Government’s mission of national renewal – not just in delivering a vital public service, but also in playing a proactive role to ensure a just society and a strong economy.

    Joan Edwards, Director Policy and Public Affairs at The Wildlife Trusts, said:

    This review comes not a moment too soon, given the precarious and polluted state of our waters, and the looming threat of future water shortages.

    It’s crucial that regulation drives companies to invest in the solutions that can best deliver improvements for nature at the same time as limiting bill increases.

    We look forward to supporting the Commission’s work by feeding in on the importance of a healthy environment and the changes needed to get us there.

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    Published 22 October 2024

    MIL OSI United Kingdom –

    January 24, 2025
  • MIL-OSI USA: Rep. Banks Calls on Biden Admin to Stop Withholding Weapons from Israel

    Source: United States House of Representatives – Congressman Jim Banks (IN-03)

    Following the death of Hamas terrorist leader and architect of the October 7th, 2023 attack on Israel, Yahya Sinwar, Rep. Jim Banks (IN-03) sent a letter to Secretary of Defense Lloyd Austin and Secretary of State Anthony Blinken calling on the Biden administration to cease withholding the weapons that Israel needs to finish the fight against terrorists in Gaza and Lebanon. In the letter, Rep. Banks also condemns the Biden administration’s threatening Israeli officials with an arms embargo.

    Excerpt from Rep. Banks’ letter: “Your administration’s attempts to tie Israel’s hands have instead prolonged the war and only achieved record numbers of fruitless diplomatic meetings.”

    Find a copy of Rep. Banks’ letter to Secretaries Austin and Blinken here.

    The full text of the letter is below:

    Dear Secretary Blinken and Secretary Austin,

    I write to urge the Biden-Harris administration to cease withholding the weapons that Israel needs to finish the fight against terrorists in Gaza and Lebanon and for you to retract the absurd letter that you sent to Israeli officials this week threatening to impose an arms embargo.

    Now that the terror mastermind Yahya Sinwar has been killed in Rafah – a location which this administration spent months trying to prevent Israel from clearing of Hamas – it is vital that the United States provide our greatest ally in the region with what it needs to rescue the hostages and crush Hamas for good. As such, the Biden-Harris administration must immediately stop holding up arms shipments to Israel, including 2,000 lbs. bombs and other critical arms, on the false pretext that a ceasefire which leaves terrorist organizations such as Hamas intact will bring peace and return the hostages.

    Your administration’s attempts to tie Israel’s hands have instead prolonged the war and only achieved record numbers of fruitless diplomatic meetings. With the death of Sinwar, Israel has brought a hostage deal closer by killing the greatest obstacle to a hostage deal. With the death of Hamas and Hezbollah leaders like Hassan Nasrallah, Israel is forcing the conditions for a lasting peace upon the greatest obstacles to peace. Your opposition to Israel’s strategy and unjustified belief that victory was impossible has delayed this moment but not stopped it.

    The only path forward is to recognize the bankruptcy of your administration’s whole perspective on this conflict, retract your irrational letter threatening an arms embargo, and give Israel the weapons they need to end the threat of Hamas, Hezbollah, and their Iranian terrorist supporters. Despite your best efforts to the contrary, Israel is achieving peace through victory, on their terms and in America’s interests.

    Thank you for your consideration of this important matter. I look forward to your response.

    Sincerely,

    Jim Banks

    Member of Congress

    MIL OSI USA News –

    January 24, 2025
  • MIL-OSI United Nations: Note to Correspondents: Joint communiqué of the 8th AU-UN Annual Conference

    Source: United Nations secretary general

    1. On 21 October 2024, the African Union Commission Chairperson, Moussa Faki Mahamat and the United Nations Secretary-General António Guterres convened the Eighth African Union-United Nations Annual Conference in Addis Ababa, Ethiopia. They noted with deep concern the current state of peace and security globally, including armed conflicts and humanitarian crises, and in some cases profound disregard for international law and the shared principles of the two organizations.

    2. The Chairperson and the Secretary-General reviewed progress in the implementation of the “Joint UN-AU Framework for Enhanced Partnership in Peace and Security,” the “AU-UN Framework for the Implementation of Agenda 2063 and the 2030 Agenda for Sustainable Development,” and the “AU-UN Joint Framework on Human Rights.” They welcomed the progress made in the implementation of the three joint frameworks.

    3. The Chairperson and the Secretary-General welcomed the convening of the HighLevel Strategic Dialogue on Sustainable Development co-chaired by the Deputy Secretary-General of the United Nations and the Deputy Chairperson of the African Union Commission, which seeks to advance strategic coordination and alignment within the context of the African Union-United Nations Framework for the Implementation of Agenda 2063 and the 2030 Agenda for Sustainable Development. They reiterated their commitment to deliver socio-economic development and prosperity in line with the AU Agenda 2063 and UN 2030 Agenda. They welcomed the formulation of the Second Ten-Year Implementation Plan of Agenda 2063 and emphasized the need for the timely and effective implementation of the Plan, as well as a stronger working relationship between the AU and the UN at the continental, regional and national level in its realization towards Africa’s accelerated socio-economic transformation and development. In this regard, they saluted the decision of the AU-UN High-level Strategic Dialogue to engage the African Women Leaders Network to support the mainstreaming of gender throughout the AU-UN strategic coordination process. The Chairperson and the Secretary-General welcomed the progress made, and called for the full operationalization of mechanisms of the five thematic ‘college–to–college’ formations.

    4. The Chairperson and the Secretary-General noted their concern that the absence of fiscal space in African countries to invest in sustainable development continues to undermine progress in the implementation of Agenda 2063 and the 2030 Agenda and called on Member States to approach the 4th International Conference on Financing for Development with the level of ambition needed to achieve transformative results. They reaffirmed the commitment of the African Union and the United Nations to jointly advocate for urgent measures to generate fiscal space, such as the SDG Stimulus and the reform of the international financial architecture. They reaffirmed the readiness of the two organizations to jointly support African Member States in strengthening their domestic resource mobilization systems to ensure the long-term sustainability of financing for development, including the Global Africa Business Initiative (GABI) convened by the UN Global Compact in collaboration with UN partner agencies.

    5. The Annual Conference welcomed the African Union’s membership of the G20 and the commitment of the United Nations to work with and support the African Union in ensuring that Africa’s needs, interests and priorities are well articulated and take the center-stage in the processes, agenda, deliberations and outcomes of the G20 meetings.

    6. The Chairperson and the Secretary-General welcomed the adoption by the United Nations General Assembly of the Pact for the Future, the Global Digital Compact and the Declaration on Future Generations on 22 September, noting that they open pathways to new possibilities and opportunities towards a more effective, inclusive, networked multilateral system that is better equipped to effectively respond to today’s and tomorrow’s political, economic, environmental and technological challenges. They called for urgent and concerted action to implement all agreed commitments.

    7. The Annual Conference underscored the primacy of political solutions and the need to strengthen the capacities of both organizations in preventive diplomacy and mediation. The Annual Conference emphasized the imperative to prioritize good offices missions, and further strengthen collaboration between Africa Union and United Nations Special Representatives and Envoys deployed in various parts of the continent.

    8. The Annual Conference welcomed the ongoing initiatives in promoting the Women Peace and Security and the Youth Peace and Security agendas, as well as protection of children in conflict situations. They reiterated the importance of consolidating and building on the gains made in promoting inclusive political processes through effective engagement and participation of women and the youth in peace processes at the technical, operational, decision-making and policymaking levels.

    9. The Chairperson and the Secretary-General welcomed the ongoing elaboration of the Common African Position on Climate, Peace and Security, which would represent not only a global precedent, but also an important step for mitigation and adaptation strategies on the continent. They underscored the importance of the Common African Position both as a means of underscoring the effects of climate change on Africa’s peace, security, and development efforts, and as a means to strengthen Africa’s calls for support in its sustainable development and for equity in the name of climate justice. In particular, the Annual Conference highlighted the risks posed by the aggravating water crisis across the continent, and called for greater collaboration between the AU and the UN to overcome the crisis. The Annual Conference also looked forward to the outcome of the Ninth Session of the Africa Regional Platform and the High-Level Meeting on Disaster Risk Reduction, scheduled for the 21-24 October in Namibia, and in this context called for the accelerated development of early warning systems, to attain the goal of universal coverage by 2027.

    10.The Chairperson and the Secretary-General welcomed the adoption of United Nations Security Council resolution 2719 (2023) which represents a significant milestone toward ensuring adequate, predictable and sustainable funding for African Union-led peace support operations. They further recognized that the resolution provides opportunities to strengthen the partnership between the two organizations in peace and security under Chapter VIII of the Charter of the United Nations, whilst ensuring that peace operations in general adapt to present day realities. The Annual Conference endorsed the joint AU-UN roadmap on the operationalization of resolution 2719 (2023). The Annual Conference reaffirmed the preservation of the comparative advantages and complementarity of the African Union and the United Nations, based on their respective mandates, principles and shared objectives. It underscored the importance of the implementation of the resolution, whilst maintaining an integrated approach in addressing conflict situations comprehensively, by ensuring that capacities, systems, procedures and processes, as well as joint accountability and institutional readiness continue to be strengthened for the delivery and sustainment of African Union-led peace support operations deployed under resolution 2719 (2023).

    11.The Annual Conference expressed grave concern about the stalled political transition processes in Burkina Faso, Gabon, Guinea, Mali, Niger and Sudan, and called for the timely and peaceful return to constitutional order in these countries. The Annual Conference also noted with concern the heightened instability and insecurity, as well as the shrinking civic space in the affected States. The Annual Conference recognized the importance of dialogue and collaboration between affected States and sub-regional, continental, and global organizations in addressing the political, peace, security, development and human rights challenges.

    12.The Chairperson and the Secretary-General considered the final report of the High-Level Independent Panel on Security and Development in the Sahel presented by the Chair of the Panel, former President of the Republic of Niger Mahamadou Issoufou, and agreed to jointly take forward key recommendations through their respective organs and institutional mechanisms. The Annual Conference reaffirmed the commitment of the African Union and the United Nations to enhance their support in advancing democratic transitions in West Africa and the Sahel, working closely with the Economic Community of West African States (ECOWAS).

    13.On Libya, the Annual Conference welcomed efforts by the United Nations to foster inclusive political dialogue, including recent progress on the governance of the Central Bank. It took note of the persistent political stalemate and entrenched divisions in Libya, which continue to pose challenges for efforts to reunite the country and organize credible presidential and parliamentary elections to put in place unified, representative and legitimate Libyan institutions. The Annual Conference stressed that Libya’s sustainable peace and stability will only be realized through inclusive processes that will bring about legitimate governance and institutions; and in that regard, collective efforts, including of neighbors and international partners, must focus on supporting and encouraging the main Libyan leaders to take ownership of the political process, set aside personal interests and strive to reach political consensus in support for national reconciliation and the conduct of elections without further delays. The Conference expresses full support for the continued engagement of the African Union to promote national reconciliation through the adoption of the Charter on National Reconciliation.

    14.The Annual Conference observed that geopolitical dynamics in the Horn of Africa are becoming increasingly fragile and therefore noted the need for ever more coordinated preventive action and messaging by both organizations and partners on de-escalation and constructive engagement. On Somalia, the Annual Conference reiterated their close collaboration, including on the implementation of Security Council resolution 2748 (2024) to finalize the mission implementation plan for the PSC endorsed African Union Stabilization and Support Mission in Somalia. It also reaffirmed the importance of sustained and full implementation of the Cessation of Hostilities Agreement in Tigray, Ethiopia. On South Sudan, the Annual Conference agreed to enhance coordination of regional and international support for the process led by the Intergovernmental Authority on Development and called on the Transitional Government to sustain momentum in discussions on an agreed updated roadmap and timeline and advance the implementation of the Revitalized Agreement. On Sudan, the Annual Conference expressed grave concerned about the further escalation of fighting between the Sudanese Armed Forces and the Rapid Support Forces. They urged the parties to immediately engage in genuine dialogue to reach a permanent ceasefire, while stressing that the protection of civilians should be guaranteed at all times and unhindered and sustained humanitarian access should be ensured. The African Union and the United Nations strongly condemned external interference in Sudan and urged these actors to stop the flow of arms in Sudan, which continues to fuel the conflict. They welcomed the efforts spearheaded by the African Union and the Intergovernmental Authority on Development to support the transition to a fully democratic government that fulfils the aspirations of the Sudanese people. The Annual Conference also encouraged the good offices of the Personal Envoy of the Secretary-General on Sudan and AU High-Level Panel on Sudan and called for strengthened diplomatic push underpinned by the coordination and complementarity of initiatives. They welcomed the establishment of the PSC Presidential Ad Hoc Committee on Sudan, and reaffirmed their commitment to support the Committee in executing its mandate.

    15.On the Great Lakes region, the Annual Conference welcomed the 4 August ceasefire between the Democratic Republic of the Congo (DRC) and Rwanda, which has contributed to a reduction in hostilities in the North Kivu province of the DRC, while expressing concern about the humanitarian situation in North Kivu and Ituri, where armed groups activities continue to affect civilians and impede activities of humanitarian workers. The Annual Conference commended African Union mediator President João Lourenço of Angola for his steadfast efforts through the Luanda process, and the efforts deployed under the auspices of the East African Community (EAC) and the Southern African Development Community (SADC), including the deployment of the SADC Mission in the Democratic Republic of the Congo (SAMIDRC), aimed at restoring peace and security in the eastern Democratic Republic of the Congo. The Annual Conference stressed that attaining sustainable peace calls for addressing the root causes, including through full implementation of the Peace, Security and Cooperation Framework for the Democratic Republic of the Congo and the region, and in that regard, called for enhanced coordination of regional peace initiatives, including through the Quadripartite Process facilitated by the African Union.

    16.The Annual Conference took note of the expiry of the terms of office of the African Union Commission Chairperson, Deputy Chairperson and Commissioners in early 2025. The Secretary-General took the opportunity to commend the African Union Commission leadership for the commitment and support to the partnership during their terms of office. He paid special tribute to Chairperson Moussa Faki Mahamat for his leadership of the African Union Commission over the last eight years.

    17.The Chairperson and Secretary-General agreed to convene the Ninth African Union – United Nations Annual Conference in 2025 in New York at a mutually convenient date.

    MIL OSI United Nations News –

    January 24, 2025
  • MIL-OSI New Zealand: Government to overhaul anti-money laundering regime

    Source: New Zealand Government

    The Government will introduce a single supervisor and a new funding model in a major overhaul of New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) system, Associate Justice Minister Nicole McKee says.

    “Cabinet has approved an AML/CFT reform work programme which will change the supervisor structure that monitors AML/CFT compliance and introduce a new funding model for the system. These reforms will allow the system to be more responsive to industry and community needs, more agile, and more focused on the real risks posed by anti-money laundering to New Zealand businesses.

    “The changes will deliver a critical Government priority to reform key sectors where the cost of regulation is overly burdensome for businesses and improve the efficiency and effectiveness of the AML/CFT system to meet international standards.”

    The Government is introducing the changes following a Financial Action Task Force evaluation of New Zealand’s regulatory regime and a subsequent review of the Anti-Money Laundering and Counter Financing of Terrorism Act 2009.

    A single-supervisor model will replace the current three-supervisor model and will establish the Department of Internal Affairs as the sole supervisor of the AML/CFT system.  Currently, supervision of different parts of the AML/CFT system are overseen by the Reserve Bank, Financial Markets Authority, and Internal Affairs.

    “The Government is very aware of the risks money-laundering and financing of terrorism poses to New Zealand businesses and moving to a single supervisor will improve the efficiency of the system, establish a more risk-based approach, and enable more timely provision of guidance and support. I have heard from businesses that this will provide substantive regulatory relief,” Mrs McKee says. 

    “In considering how to improve the supervisory model, I will be focusing on how the positive effects can be felt as soon as possible, such as ensuring work on industry guidance and codes of practice starts promptly.”

    “The Government will also introduce a new sustainable funding model for the AML/CFT system as part of the reforms. The funding model will establish an industry-levy to support a flexible and coordinated system that will deliver sector benefits. The levy will be designed to ensure that costs are equitable and reasonable for the sector and will not place undue burden on small businesses.” 

    An AML/CFT National Strategy and work programme will be introduced as part of the funding model. Legislation will require any amendments to the levy to be informed by the National Strategy and work programme. 

    “This work programme will be developed in partnership with industry and agreed by Cabinet to ensure that the AML/CFT system is focussed on industry priorities. The new funding model will mean better and more efficient regulation, supervision, and support for industry.

    “The changes will ensure New Zealand maintains its international reputation and will align our AML/CFT system with the financial sectors of our key trading partners to support trade, investment and economic growth.”

    MIL OSI New Zealand News –

    January 24, 2025
  • MIL-OSI Australia: G20 meetings in the United States

    Source: Australian Treasurer

    I will join key economic ministers and central bank governors from the world’s most significant economies at the G20, International Monetary Fund and World Bank annual meetings over the coming days in Washington DC.

    Australia is not immune from the volatility and vulnerability which characterises the global economy.

    The risk of further escalation in the Middle East threatens a resurgence in oil prices and casts a dark shadow over the global outlook.

    Conflict in the Middle East compounds the pressures already coming at us from the war in Ukraine, the slowdown in China, persistent global inflation, tepid global growth and sharp movements on stock markets.

    There is always a premium on responsible economic management and engagement but especially now, with all this uncertainty around the world.

    This is a really critical time to confer with colleagues and counterparts.

    There will be in‑depth discussions on the global economy, the energy transformation, economic security and reform of our multilateral institutions.

    This will include meetings with:

    • New Japanese Finance Minister Katsonobu Kato, who I will meet for the first time;
    • US Treasury Secretary Janet Yellen, for our sixth bilateral;
    • Chair of the US Federal Reserve Jerome Powell;
    • Director of President Biden’s National Economic Council Lael Brainard;
    • South Korean Deputy Prime Minister and Minister of Economy Choi Sang‑Mok; and
    • Canadian Deputy Prime Minister Chrystia Freeland.

    I will participate in discussions as part of the G20 Taskforce on a Global Mobilisation Against Climate Change. Our focus will be on attracting the capital we need to create new jobs and opportunities in the transformation to cleaner and cheaper energy.

    I’ll also have an opportunity to be briefed on Australia’s interests in the United States by Ambassador Kevin Rudd.

    Responsible economic management is a defining feature of the Albanese Labor Government in these uncertain times.

    Our Budget surpluses aren’t an end in themselves, they help in the fight against inflation, provide room for our priorities and they help build buffers against some of this global volatility.

    Getting inflation down, helping with the cost of living, repairing the Budget and reforming our economy are the essential components of our strategy and we are making welcome progress.

    In a little over two years we have halved inflation, created a million new jobs, got real wages growing again, provided tax relief to every taxpayer, delivered the first back‑to‑back surpluses in two decades, avoided $150 billion of inherited debt and saved tens of billions of dollars in interest costs.

    These meetings will provide important perspectives on the global outlook and allow us to make further progress at home and with our key international partners.

    MIL OSI News –

    January 24, 2025
  • MIL-OSI: Enterprise Bancorp, Inc. Announces Third Quarter Financial Results

    Source: GlobeNewswire (MIL-OSI)

    LOWELL, Mass., Oct. 22, 2024 (GLOBE NEWSWIRE) — Enterprise Bancorp, Inc. (NASDAQ: EBTC), parent of Enterprise Bank, announced its financial results for the three months ended September 30, 2024. Net income amounted to $10.0 million, or $0.80 per diluted common share, for the three months ended September 30, 2024 compared to $9.5 million, or $0.77 per diluted common share, for the three months ended June 30, 2024 and $9.7 million, or $0.79 per diluted common share, for the three months ended September 30, 2023.

    Selected financial results at or for the quarter ended September 30, 2024 compared to June 30, 2024 were as follows:

    • The returns on average assets and average equity were 0.82% and 11.20%, respectively.
    • Tax-equivalent net interest margin (non-GAAP) (“net interest margin”) was 3.22%, an increase of 3 basis points.
    • Total loans amounted to $3.86 billion, an increase of 2.4%.
    • Total deposits amounted to $4.19 billion, a decrease of 1.4%.
    • Wealth assets under management and administration amounted to $1.51 billion, an increase of 8.5%.

    Chief Executive Officer Steven Larochelle commented, “Our team continued to deliver strong results in the third quarter. Loan growth was 2.4% for the quarter and 13.4% over the past twelve months. Customer deposits, which were down slightly during the quarter, have increased 5.3% in 2024 and 3.2% over the last twelve months. We continue to be primarily core funded and had no brokered deposits at September 30, 2024. Total borrowings were down $1.8 million compared to June 30, 2024, and amounted to only $59.9 million, or 1.3% of total assets. Higher deposit costs and the inverted yield curve continued to be a headwind, but net interest margin increased to 3.22% in the third quarter of 2024 from 3.19% in the prior quarter and benefited by 2 basis points from a large seasonal deposit.”

    Mr. Larochelle continued, “We remain committed to our long-term strategy of geographic expansion and customer acquisition through organic growth and investment in our team members, communities, products and technology. We are well positioned with a strong balance sheet, centered around a high-quality loan portfolio and favorable liquidity, core deposit funding and capital, paired with a conservative credit and reserve culture.”

    Executive Chairman & Founder George Duncan stated, “I would like to congratulate Steve, who completed his first quarter as CEO of Enterprise, and the whole team for a very successful quarter. I am particularly impressed that the team has been able to achieve such strong loan and deposit growth while stabilizing our net interest margin and without significant increases in wholesale funding. I firmly believe this is a testament to our relationship based, sales and service culture partnered with our strong commitment to community outreach and involvement.”

    Mr. Duncan added, “On September 5th, we were once again recognized at the Boston Business Journal’s Corporate Citizenship Summit for our significant contributions in employee volunteerism and corporate philanthropy. In particular, I am very proud that we ranked 2nd in the Commonwealth of Massachusetts for the highest average of volunteer hours per employee.”

    Net Interest Income
    Net interest income for the three months ended September 30, 2024, amounted to $38.0 million, a decrease of $482 thousand, or 1%, compared to the three months ended September 30, 2023. The decrease was due primarily to increases in deposit interest expense of $7.7 million and borrowings interest expense of $646 thousand and a decrease in income on other interest-earning assets of $971 thousand, partially offset by an increase in loan interest income of $9.3 million.

    The increase in interest expense during the period was attributed primarily to an increase in the cost of funds and changes in deposit mix, while the increase in interest income during the period was due primarily to loan growth and higher market interest rates.

    Net Interest Margin
    Net interest margin was 3.22% for the three months ended September 30, 2024, compared to 3.19% for the three months ended June 30, 2024 and 3.46% for the three months ended September 30, 2023.

    Asset yields for the third quarter of 2024 were 5.09%, an increase of 8 basis points compared to the second quarter of 2024, due primarily to new loan originations, loans repricing and an increase in the average balance of other interest-earning assets, which resulted mainly from deposit inflows during the period. Average total loans increased $105.3 million, or 3%, and average other interest-earning assets increased $57.6 million, or 46%, compared to the second quarter of 2024.

    The cost of funds for the third quarter of 2024 was 1.99%, an increase of 5 basis points compared to the second quarter of 2024. During the third quarter of 2024, average total deposits increased $128.8 million, or 3%, and the cost of deposits increased 6 basis points, compared to the second quarter of 2024. The increase in average total deposits was comprised of increases in average lower-cost checking account balances of $59.4 million, or 3%, which was driven primarily by a large seasonal deposit, and higher-cost savings, money market and certificate of deposit account balances of $69.4 million, or 3%.

    Provision for Credit Losses
    The provision for credit losses for the three-month periods ended September 30, 2024 and September 30, 2023 are presented below:

        Three months ended   Increase / (Decrease)
    (Dollars in thousands)   September 30,
    2024
      September 30,
    2023
    Provision for credit losses on loans – collectively evaluated   $ (663 )   $ (1,518 )   $ 855  
    Provision for credit losses on loans – individually evaluated     2,311       2,512       (201 )
    Provision for credit losses on loans     1,648       994       654  
                 
    Provision for unfunded commitments     (316 )     758       (1,074 )
                 
    Provision for credit losses   $ 1,332     $ 1,752     $ (420 )

    The increase in the provision for credit losses on loans of $654 thousand was due primarily to a net increase in reserves on individually evaluated loans. The increase in reserves on individually evaluated loans for the three months ended September 30, 2024 was driven by one individually evaluated commercial relationship which was downgraded, placed on non-accrual and assigned specific reserves of $3.4 million, partially offset by a reduction of $1.2 million in specific reserves resulting from a commercial relationship that experienced improvement in its collateral valuation during the period. The reduction in the provision for unfunded commitments of $1.1 million was driven primarily by a decrease in off-balance sheet commitments during the period.

    Non-Interest Income
    Non-interest income for the three months ended September 30, 2024, amounted to $6.1 million, an increase of $1.7 million compared to the three months ended September 30, 2023. The increase in non-interest income was due primarily to increases in gains on equity securities, wealth management fees and deposit and interchange fees.

    Non-Interest Expense
    Non-interest expense for the three months ended September 30, 2024, amounted to $29.4 million, an increase of $1.0 million, or 4%, compared to the three months ended September 30, 2023. The increase in non-interest expense was due primarily to an increase in salaries and employee benefits expense of $938 thousand, or 5%.

    Balance Sheet
    Total assets amounted to $4.74 billion at September 30, 2024, compared to $4.47 billion at December 31, 2023, an increase of 6%.

    Total investment securities at fair value amounted to $632.0 million at September 30, 2024, compared to $668.2 million at December 31, 2023. The decrease of 5% during the nine months ended September 30, 2024 was largely attributable to principal pay-downs, calls and maturities. Unrealized losses on debt securities amounted to $80.8 million at September 30, 2024, compared to $102.9 million at December 31, 2023, a decrease of 21% that resulted from lower term interest rates.

    Total loans amounted to $3.86 billion at September 30, 2024, compared to $3.57 billion at December 31, 2023. The increase of 8% during the nine months ended September 30, 2024 was due primarily to increases in commercial real estate and construction loans of $175.2 million and $89.3 million, respectively.

    Total deposits amounted to $4.19 billion at September 30, 2024, compared to $3.98 billion at December 31, 2023. The increase of 5% during the nine months ended September 30, 2024 was due primarily to increases in money market and certificate of deposit balances of $85.5 million and $153.6 million, respectively.

    Total borrowed funds amounted to $59.9 million at September 30, 2024, compared to $25.8 million at December 31, 2023. The increase during the nine months ended September 30, 2024 resulted from a term advance in the first quarter of 2024.

    Total shareholders’ equity amounted to $368.1 million at September 30, 2024, compared to $329.1 million at December 31, 2023. The increase of 12% during the nine months ended September 30, 2024 was due primarily to an increase in retained earnings of $19.1 million and a decrease in the accumulated other comprehensive loss of $17.1 million.

    Credit Quality
    Selected credit quality metrics at September 30, 2024, compared to December 31, 2023, were as follows:

    • The ACL for loans amounted to $63.7 million, or 1.65% of total loans, compared to $59.0 million, or 1.65% of total loans.
    • The reserve for unfunded commitments (included in other liabilities) amounted to $4.6 million, compared to $7.1 million.
    • Non-performing loans amounted to $25.9 million, or 0.67% of total loans, compared to $11.4 million, or 0.32% of total loans. The increase in non-performing loans during the nine months ended September 30, 2024 resulted primarily from two individually evaluated commercial construction loans which were placed on non-accrual.

    Net recoveries amounted to $7 thousand for the three months ended September 30, 2024, compared to $12 thousand for the three months ended September 30, 2023.

    Wealth Management
    Wealth assets under management and administration, which are not carried as assets on the Company’s consolidated balance sheets, amounted to $1.51 billion at September 30, 2024, an increase of $194.9 million, or 15%, compared to December 31, 2023, and resulted primarily from an increase in market values.

    About Enterprise Bancorp, Inc.
    Enterprise Bancorp, Inc. is a Massachusetts corporation that conducts substantially all its operations through Enterprise Bank and Trust Company, commonly referred to as Enterprise Bank, and has reported 140 consecutive profitable quarters. Enterprise Bank is principally engaged in the business of attracting deposits from the general public and investing in commercial loans and investment securities. Through Enterprise Bank and its subsidiaries, the Company offers a range of commercial, residential and consumer loan products, deposit products and cash management services, electronic and digital banking options, as well as wealth management, and trust services. The Company’s headquarters and Enterprise Bank’s main office are located at 222 Merrimack Street in Lowell, Massachusetts. The Company’s primary market area is the Northern Middlesex, Northern Essex, and Northern Worcester counties of Massachusetts and the Southern Hillsborough and Southern Rockingham counties in New Hampshire. Enterprise Bank has 27 full-service branches located in the Massachusetts communities of Acton, Andover, Billerica (2), Chelmsford (2), Dracut, Fitchburg, Lawrence, Leominster, Lexington, Lowell (2), Methuen, North Andover, Tewksbury (2), Tyngsborough and Westford and in the New Hampshire communities of Derry, Hudson, Londonderry, Nashua (2), Pelham, Salem and Windham.

    Forward-Looking Statements
    This earnings release contains statements about future events that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by references to a future period or periods or by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “will,” “should,” “could,” “plan,” and other similar terms or expressions. Forward-looking statements should not be relied on because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of the Company. These risks, uncertainties, and other factors may cause the actual results, performance, and achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed in, or implied by, the forward-looking statements. Factors that could cause such differences include, but are not limited to, the impact on us and our customers of a decline in general economic conditions and any regulatory responses thereto; potential recession in the United States and our market areas; the impacts related to or resulting from bank failures and any uncertainty in the banking industry, including the associated impact to the Company and other financial institutions of any regulatory changes or other mitigation efforts taken by government agencies in response thereto; increased competition for deposits and related changes in deposit customer behavior; the impact of changes in market interest rates, whether due to the current elevated interest rate environment or future reductions in interest rates and a resulting decline in net interest income; the resurgence of elevated levels of inflation or inflationary pressures in our market areas and the United States; the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Board of Governors of the Federal Reserve System; increases in unemployment rates in the United States and our market areas; declines in commercial real estate values and prices; uncertainty regarding United States fiscal debt, deficit and budget matters; cyber incidents or other failures, disruptions or breaches of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks; severe weather, natural disasters, acts of war or terrorism, geopolitical instability or other external events, including as a result of changes in U.S. presidential administrations or Congress; competition and market expansion opportunities; changes in non-interest expenditures or in the anticipated benefits of such expenditures; changes in tax laws; the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learnings; potential increased regulatory requirements and costs related to the transition and physical impacts of climate change; and current or future litigation, regulatory examinations or other legal and/or regulatory actions. Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized and readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. For more information about these factors, please see our reports filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q on file with the SEC, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Any forward-looking statements contained in this earnings release are made as of the date hereof, and we undertake no duty, and specifically disclaim any duty, to update or revise any such statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

    ENTERPRISE BANCORP, INC.
    Consolidated Balance Sheets
    (unaudited)

    (Dollars in thousands, except per share data)   September 30,
    2024
      December 31,
    2023
      September 30,
    2023
    Assets            
    Cash and cash equivalents:            
    Cash and due from banks   $ 60,466     $ 37,443     $ 45,345  
    Interest-earning deposits with banks     28,166       19,149       180,076  
    Total cash and cash equivalents     88,632       56,592       225,421  
    Investments:            
    Debt securities at fair value (amortized cost of $703,311, $763,981 and $806,077, respectively)     622,527       661,113       672,894  
    Equity securities at fair value     9,448       7,058       6,038  
    Total investment securities at fair value     631,975       668,171       678,932  
    Federal Home Loan Bank stock     2,482       2,402       2,403  
    Loans held for sale     1,229       200       —  
    Loans:            
    Total loans     3,858,940       3,567,631       3,404,014  
    Allowance for credit losses     (63,654 )     (58,995 )     (57,905 )
    Net loans     3,795,286       3,508,636       3,346,109  
    Premises and equipment, net     43,291       44,931       43,391  
    Lease right-of-use asset     24,291       24,820       24,979  
    Accrued interest receivable     20,529       19,233       18,572  
    Deferred income taxes, net     44,067       49,166       55,080  
    Bank-owned life insurance     66,899       65,455       65,106  
    Prepaid income taxes     4,645       1,589       2,548  
    Prepaid expenses and other assets     13,827       19,183       14,177  
    Goodwill     5,656       5,656       5,656  
    Total assets   $ 4,742,809     $ 4,466,034     $ 4,482,374  
    Liabilities and Shareholders‘Equity            
    Liabilities            
    Deposits   $ 4,189,461     $ 3,977,521     $ 4,060,403  
    Borrowed funds     59,949       25,768       4,290  
    Subordinated debt     59,736       59,498       59,419  
    Lease liability     24,010       24,441       24,589  
    Accrued expenses and other liabilities     32,116       45,011       31,288  
    Accrued interest payable     9,428       4,678       2,686  
    Total liabilities     4,374,700       4,136,917       4,182,675  
    Commitments and Contingencies            
    Shareholders‘Equity            
    Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued     —       —       —  
    Common stock, $0.01 par value per share; 40,000,000 shares authorized; 12,428,426, 12,272,674 and 12,256,964 shares issued and outstanding, respectively.     124       123       123  
    Additional paid-in capital     110,110       107,377       106,451  
    Retained earnings     320,497       301,380       296,291  
    Accumulated other comprehensive loss     (62,622 )     (79,763 )     (103,166 )
    Total shareholders’ equity     368,109       329,117       299,699  
    Total liabilities and shareholders’ equity   $ 4,742,809     $ 4,466,034     $ 4,482,374  

    ENTERPRISE BANCORP, INC.
    Consolidated Statements of Income
    (unaudited)

        Three months ended   Nine months ended
    (Dollars in thousands, except per share data)   September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Interest and dividend income:                    
    Other interest-earning assets   $         2,497             $         1,697           $         3,468             $         5,366             $         7,593          
    Investment securities             3,835                       3,943                     4,316                       11,812                       14,356          
    Loans and loans held for sale             53,809                       51,224                     44,501                       153,850                       125,855          
    Total interest and dividend income             60,141                       56,864                     52,285                       171,028                       147,804          
    Interest expense:                    
    Deposits             20,581                       19,172                     12,889                       57,025                       28,568          
    Borrowed funds             674                       664                     28                       2,032                       70          
    Subordinated debt             866                       867                     866                       2,600                       2,600          
    Total interest expense             22,121                       20,703                     13,783                       61,657                       31,238          
    Net interest income             38,020                       36,161                     38,502                       109,371                       116,566          
    Provision for credit losses             1,332                       137                     1,752                       2,091                       6,756          
    Net interest income after provision for credit losses             36,688                       36,024                     36,750                       107,280                       109,810          
    Non-interest income:                    
    Wealth management fees             2,025                       1,970                     1,673                       5,845                       4,933          
    Deposit and interchange fees             2,282                       2,284                     1,987                       6,635                       6,330          
    Income on bank-owned life insurance, net             518                       503                     327                       1,479                       950          
    Net losses on sales of debt securities             (2 )             —                     —                       (2 )             (2,419 )
    Net gains on sales of loans             57                       44                     14                       123                       34          
    Net gains (losses) on equity securities             604                       101                     (181 )             1,170                       (8 )
    Other income             656                       726                     666                       2,013                       2,242          
    Total non-interest income             6,140                       5,628                     4,486                       17,263                       12,062          
    Non-interest expense:                    
    Salaries and employee benefits             20,097                       19,675                     19,159                       58,948                       53,815          
    Occupancy and equipment expenses             2,438                       2,406                     2,433                       7,303                       7,439          
    Technology and telecommunications expenses             2,618                       2,658                     2,626                       8,021                       7,937          
    Advertising and public relations expenses             559                       674                     592                       1,976                       2,077          
    Audit, legal and other professional fees             569                       711                     735                       2,014                       2,157          
    Deposit insurance premiums             900                       862                     654                       2,621                       1,944          
    Supplies and postage expenses             261                       240                     251                       738                       753          
    Other operating expenses             1,911                       1,803                     1,862                       5,669                       5,853          
    Total non-interest expense             29,353                       29,029                     28,312                       87,290                       81,975          
    Income before income taxes             13,475                       12,623                     12,924                       37,253                       39,897          
    Provision for income taxes             3,488                       3,111                     3,225                       9,247                       9,746          
    Net income   $         9,987             $         9,512           $         9,699             $         28,006             $         30,151          
                         
    Basic earnings per common share   $         0.80             $         0.77           $         0.79             $         2.26             $         2.47          
    Diluted earnings per common share   $         0.80             $         0.77           $         0.79             $         2.26             $         2.46          
                         
    Basic weighted average common shares outstanding             12,428,543                       12,389,917                     12,247,892                       12,370,812                       12,210,740          
    Diluted weighted average common shares outstanding             12,438,160                       12,394,463                     12,264,778                       12,379,390                       12,233,861          

    ENTERPRISE BANCORP, INC.
    Selected Consolidated Financial Data and Ratios
    (unaudited)

        At or for the three months ended
    (Dollars in thousands, except per share data)   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Balance Sheet Data                    
    Total cash and cash equivalents   $ 88,632     $ 199,719     $ 147,834     $ 56,592     $ 225,421  
    Total investment securities at fair value     631,975       636,838       652,026       668,171       678,932  
    Total loans     3,858,940       3,768,649       3,654,322       3,567,631       3,404,014  
    Allowance for credit losses     (63,654 )     (61,999 )     (60,741 )     (58,995 )     (57,905 )
    Total assets     4,742,809       4,773,681       4,624,015       4,466,034       4,482,374  
    Total deposits     4,189,461       4,248,801       4,106,119       3,977,521       4,060,403  
    Borrowed funds     59,949       61,785       63,246       25,768       4,290  
    Subordinated debt     59,736       59,657       59,577       59,498       59,419  
    Total shareholders’ equity     368,109       340,441       333,439       329,117       299,699  
    Total liabilities and shareholders’ equity     4,742,809       4,773,681       4,624,015       4,466,034       4,482,374  
                         
    Wealth Management                    
    Wealth assets under management   $ 1,212,076     $ 1,129,147     $ 1,105,036     $ 1,077,761     $ 984,647  
    Wealth assets under administration   $ 302,891     $ 267,529     $ 268,074     $ 242,338     $ 211,046  
                         
    Shareholders’ Equity Ratios                    
    Book value per common share   $ 29.62     $ 27.40     $ 26.94     $ 26.82     $ 24.45  
    Dividends paid per common share   $ 0.24     $ 0.24     $ 0.24     $ 0.23     $ 0.23  
                         
    Regulatory Capital Ratios                    
    Total capital to risk weighted assets     13.07 %     13.07 %     13.20 %     13.12 %     13.45 %
    Tier 1 capital to risk weighted assets(1)     10.36 %     10.34 %     10.43 %     10.34 %     10.61 %
    Tier 1 capital to average assets     8.68 %     8.76 %     8.85 %     8.74 %     8.59 %
                         
    Credit Quality Data                    
    Non-performing loans   $ 25,946     $ 17,731     $ 18,527     $ 11,414     $ 11,656  
    Non-performing loans to total loans     0.67 %     0.47 %     0.51 %     0.32 %     0.34 %
    Non-performing assets to total assets     0.55 %     0.37 %     0.40 %     0.26 %     0.26 %
    ACL for loans to total loans     1.65 %     1.65 %     1.66 %     1.65 %     1.70 %
    Net (recoveries) charge-offs   $ (7 )   $ (130 )   $ 122     $ 15     $ (12 )
                         
    Income Statement Data                    
    Net interest income   $ 38,020     $ 36,161     $ 35,190     $ 36,518     $ 38,502  
    Provision for credit losses     1,332       137       622       2,493       1,752  
    Total non-interest income     6,140       5,628       5,495       5,547       4,486  
    Total non-interest expense     29,353       29,029       28,908       28,224       28,312  
    Income before income taxes     13,475       12,623       11,155       11,348       12,924  
    Provision for income taxes     3,488       3,111       2,648       3,441       3,225  
    Net income   $ 9,987     $ 9,512     $ 8,507     $ 7,907     $ 9,699  
                         
    Income Statement Ratios                    
    Diluted earnings per common share   $ 0.80     $ 0.77     $ 0.69     $ 0.64     $ 0.79  
    Return on average total assets     0.82 %     0.82 %     0.75 %     0.69 %     0.85 %
    Return on average shareholders’ equity     11.20 %     11.55 %     10.47 %     10.21 %     12.53 %
    Net interest margin (tax-equivalent)(2)     3.22 %     3.19 %     3.20 %     3.29 %     3.46 %

    (1)   Ratio also represents common equity tier 1 capital to risk weighted assets as of the periods presented.
    (2)   Tax-equivalent net interest margin is net interest income adjusted for the tax-equivalent effect associated with tax-exempt loan and investment income, expressed as a percentage of average interest-earning assets.

    ENTERPRISE BANCORP, INC.
    Consolidated Loan and Deposit Data
    (unaudited)

    Major classifications of loans at the dates indicated were as follows:

    (Dollars in thousands)   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Commercial real estate owner-occupied   $ 660,063     $ 660,478     $ 635,420     $ 619,302     $ 618,903  
    Commercial real estate non owner-occupied     1,579,827       1,544,386       1,524,174       1,445,435       1,413,555  
    Commercial and industrial     415,642       426,976       417,604       430,749       425,334  
    Commercial construction     674,434       622,094       583,711       585,113       501,179  
    Total commercial loans     3,329,966       3,253,934       3,160,909       3,080,599       2,958,971  
                         
    Residential mortgages     424,030       413,323       400,093       393,142       362,514  
    Home equity loans and lines     95,982       93,220       85,144       85,375       74,433  
    Consumer     8,962       8,172       8,176       8,515       8,096  
    Total retail loans     528,974       514,715       493,413       487,032       445,043  
    Total loans     3,858,940       3,768,649       3,654,322       3,567,631       3,404,014  
                         
    ACL for loans     (63,654 )     (61,999 )     (60,741 )     (58,995 )     (57,905 )
    Net loans   $ 3,795,286     $ 3,706,650     $ 3,593,581     $ 3,508,636     $ 3,346,109  

    Deposits are summarized as follows as of the periods indicated:

    (Dollars in thousands)   September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Non-interest checking   $ 1,064,424   $ 1,041,771   $ 1,038,887   $ 1,061,009   $ 1,118,714
    Interest-bearing checking     682,050     788,822     730,819     697,632     727,817
    Savings     279,824     294,566     285,090     294,865     302,381
    Money market     1,488,437     1,504,551     1,469,181     1,402,939     1,434,036
    CDs $250,000 or less     375,055     358,149     337,367     295,789     262,975
    CDs greater than $250,000     299,671     260,942     244,775     225,287     214,480
    Deposits   $ 4,189,461   $ 4,248,801   $ 4,106,119   $ 3,977,521   $ 4,060,403

    ENTERPRISE BANCORP, INC.
    Consolidated Average Balance Sheets and Yields (tax-equivalent basis)
    (unaudited)

    The following table presents the Company’s average balance sheets, net interest income and average rates for the periods indicated:

        Three months ended September 30, 2024   Three Months Ended June 30, 2024   Three months ended September 30, 2023
    (Dollars in thousands)   Average
    Balance
      Interest(1)   Average
    Yield(1)
      Average
    Balance
      Interest(1)   Average
    Yield(1)
      Average
    Balance
      Interest(1)   Average
    Yield(1)
    Assets:                                    
    Other interest-earning assets(2)   $ 181,465   $ 2,497   5.48 %   $ 123,887   $ 1,697   5.51 %   $ 260,475   $ 3,468   5.28 %
    Investment securities(3)(tax-equivalent)     731,815     3,945   2.16 %     750,822     4,057   2.16 %     820,156     4,444   2.17 %
    Loans and loans held for sale(4)(tax-equivalent)     3,813,800     53,956   5.63 %     3,708,485     51,366   5.57 %     3,372,754     44,644   5.25 %
    Total interest-earnings assets (tax-equivalent)     4,727,080     60,398   5.09 %     4,583,194     57,120   5.01 %     4,453,385     52,556   4.69 %
    Other assets     104,284             96,991             82,190        
    Total assets   $ 4,831,364           $ 4,680,185           $ 4,535,575        
                                         
    Liabilities and stockholders’ equity:                                    
    Non-interest checking   $ 1,069,130     —       $ 1,044,648     —       $ 1,186,243     —    
    Interest checking, savings and money market     2,574,439     13,017   2.01 %     2,520,439     12,381   1.98 %     2,491,229     9,185   1.47 %
    CDs     651,614     7,564   4.62 %     601,339     6,791   4.54 %     430,376     3,704   3.41 %
    Total deposits     4,295,183     20,581   1.91 %     4,166,426     19,172   1.85 %     4,107,848     12,889   1.24 %
    Borrowed funds     61,232     674   4.38 %     62,513     664   4.27 %     4,938     28   2.30 %
    Subordinated debt(5)     59,689     866   5.81 %     59,609     867   5.82 %     59,372     866   5.84 %
    Total funding liabilities     4,416,104     22,121   1.99 %     4,288,548     20,703   1.94 %     4,172,158     13,783   1.31 %
    Other liabilities     60,524             60,270             56,414        
    Total liabilities     4,476,628             4,348,818             4,228,572        
    Stockholders’ equity     354,736             331,367             307,003        
    Total liabilities and stockholders’ equity   $ 4,831,364           $ 4,680,185           $ 4,535,575        
                                         
    Net interest-rate spread (tax-equivalent)           3.10 %           3.07 %           3.38 %
    Net interest income (tax-equivalent)         38,277             36,417             38,773    
    Net interest margin (tax-equivalent)           3.22 %           3.19 %           3.46 %
    Less tax-equivalent adjustment         257             256             271    
    Net interest income       $ 38,020           $ 36,161           $ 38,502    
    Net interest margin           3.20 %           3.17 %           3.43 %

    (1)   Average yields and interest income are presented on a tax-equivalent basis, calculated using a U.S. federal income tax rate of 21% for each period presented, based on tax-equivalent adjustments associated with tax-exempt loans and investments interest income.
    (2)   Average other interest-earning assets include interest-earning deposits with banks, federal funds sold and Federal Home Loan Bank stock
    (3)   Average investment securities are presented at average amortized cost.
    (4)   Average loans and loans held for sale are presented at average amortized cost and include non-accrual loans.
    (5)   Subordinated debt is net of average deferred debt issuance costs.

    Contact Info:        Joseph R. Lussier, Executive Vice President, Chief Financial Officer and Treasurer (978) 656-5578

    The MIL Network –

    January 24, 2025
  • MIL-OSI: Altai Mourns the Passing of Chairman and President Niyazi Kacira, and Announces Election of the Board of Directors, Appointment of New Chairman and President, and Stock Option Grants

    Source: GlobeNewswire (MIL-OSI)

    TORONTO, Oct. 22, 2024 (GLOBE NEWSWIRE) — Altai Resources Inc. (ATI, TSX VENTURE; US SEC Rule 12g3-2(b) File # 82-2950) (“Altai” or the “Company”) announces with great sadness the passing of its Chairman and President, Dr. Niyazi Kacira following a short illness. We extend our deepest sympathies to his family.

    The Board and the Altai family will greatly miss his extraordinary passion and devotion to the Company, thoughtful leadership and ability to connect with people. He was a person of great integrity and unparalleled reputation.

    Dr. Kacira took over the helm of the dormant Black Cliff Mines Ltd. (later changed the name to Altai Resources Inc) in 1987, revived it and listed it on the Toronto Stock Exchange. Since 1987, he served as President (except for a short period of time) and Chairman until his passing. He has made an invaluable and immeasurable contribution in nurturing, building and growing Altai with his tremendous geological expertise and foresight and always with the best interest of the Company in mind and in action, and has set the highest standard of integrity for the Company.

    At its annual general meeting of the shareholders held on October 21, 2024 (the “Meeting”) in Toronto, Jeffrey S. Ackert, Maria Au and Eric Yao as described in the Management Information Circular of the Meeting, were elected as Directors of the Company. Due to his passing, Dr. Kacira was not nominated as director in the Meeting. In the Meeting, Kursat Kacira, who has advised that he is willing and able to serve as a Director of Altai if elected, was nominated as permitted in accordance with the Company’s Advance Notice By-laws and was duly elected as a Director of the Company.

    Mr. Kursat Kacira, a resident of Ontario, Canada, is an accomplished finance and investment executive with over 25 years of global experience in investment management, real estate, corporate finance, capital markets, investment banking, and public accounting. He is a Chartered Professional Accountant (Ontario), has a Master of Business Administration (Dean’s Scholarship) from the Stern School of Business at New York University, and a Bachelor of Mathematics (Honours) from the University of Waterloo.

    He is currently the President of Kacira Holdings Ltd., a private family office investment company. Previously, he served as Managing Director, Head of Global Capital Markets in the Private Markets group at Manulife Investment Management, the Global Wealth & Asset Management division of Manulife Financial Corporation. Prior to joining Manulife, he was the CEO and a director of Firm Capital American Realty Partners Corp., a publicly traded real estate company focused on investing in multi-family residential real estate in the United States. He has also previously been the CEO (and Board Trustee) of Maplewood International REIT (a publicly traded REIT focused on investing in commercial real estate in Europe); CFO of NorthWest International Healthcare Properties REIT (a publicly traded REIT focused on investing in healthcare real estate in Europe, South America, and Australasia); CFO of Whiterock REIT, a publicly traded REIT focused on investing in commercial real estate in Canada and the United States, where he was responsible for the ultimate sale of Whiterock to publicly traded Dundee REIT in 2012, for an enterprise value of $1.4 billion (at the time, the 3rd largest Canadian commercial real estate M&A transaction since 2006). Prior to the above, he had been Vice President & Director in the Real Estate Group, Investment Banking at TD Securities Inc. in Toronto, Ontario, in investment banking with Bear, Stearns & Co. Inc. in New York, US and in public accounting in Canada and Europe (Price Waterhouse in Toronto and Paris). Through his investment banking career in Canada and the United States, he was responsible for completing over $10 billion of capital raising (equity and debt) and M&A transactions for companies across numerous industries, primarily in the real estate sector.

    Mr. Harold Tan, a director of the Company since 2023, did not stand for renomination as a director in this Meeting, for personal reasons. Altai sincerely thanks him for his contributions to the Company during his directorship and wishes him well in all his future ventures.

    In the Meeting, CAN Partners LLP, Chartered Professional Accountants were appointed as Auditors of the Company.

    On October 21, 2024 and after the Meeting, the Board appointed Kursat Kacira as the Chairman and President of the Company.

    On October 21, 2024, the Company granted to each of the two new directors and a new officer, a stock option of 200,000 shares to purchase common shares of the Company at an exercise price of $0.10 per share and expiring October 19, 2029.

    ABOUT ALTAI
    Altai Resources Inc. is a resource company with a producing oil property in Alberta and an exploration gold property in Quebec.

    For further information, please contact
    Maria Au, Secretary-Treasurer
    Tel: (416) 383-1328 Fax: (416) 383-1686
    Email: info@altairesources.com Internet: http://www.altairesources.com

    Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

    The MIL Network –

    January 24, 2025
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