Category: Commerce

  • MIL-OSI USA: Memorandum on Advancing the United  States’ Leadership in Artificial Intelligence; Harnessing Artificial Intelligence to Fulfill National Security Objectives; and Fostering the Safety, Security, and Trustworthiness of Artificial  Intelligence

    US Senate News:

    Source: The White House
    MEMORANDUM FOR THE VICE PRESIDENT
                   THE SECRETARY OF STATE
                   THE SECRETARY OF THE TREASURY
                   THE SECRETARY OF DEFENSE
                   THE ATTORNEY GENERAL
                   THE SECRETARY OF COMMERCE
                   THE SECRETARY OF ENERGY
                   THE SECRETARY OF HEALTH AND HUMAN SERVICES
                   THE SECRETARY OF HOMELAND SECURITY
                   THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET
                   THE DIRECTOR OF NATIONAL INTELLIGENCE
                   THE REPRESENTATIVE OF THE UNITED STATES OF AMERICA TO THE UNITED NATIONS
                   THE DIRECTOR OF THE CENTRAL INTELLIGENCE AGENCY
                   THE ASSISTANT TO THE PRESIDENT AND CHIEF OF STAFF
                   THE ASSISTANT TO THE PRESIDENT FOR NATIONAL SECURITY AFFAIRS
                   THE ASSISTANT TO THE PRESIDENT FOR ECONOMIC
                      POLICY AND DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL
                   THE CHAIR OF THE COUNCIL OF ECONOMIC ADVISERS
                   THE DIRECTOR OF THE OFFICE OF SCIENCE AND TECHNOLOGY POLICY
                   THE ADMINISTRATOR OF THE UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT
                   THE DIRECTOR OF THE NATIONAL SCIENCE FOUNDATION
                   THE DIRECTOR OF THE FEDERAL BUREAU OF INVESTIGATION
                   THE NATIONAL CYBER DIRECTOR
                   THE DIRECTOR OF THE OFFICE OF PANDEMIC PREPAREDNESS AND RESPONSE POLICY
                   THE DIRECTOR OF THE NATIONAL SECURITY AGENCY
                   THE DIRECTOR OF THE NATIONAL GEOSPATIAL-INTELLIGENCE AGENCY
                   THE DIRECTOR OF THE DEFENSE INTELLIGENCE AGENCY
    SUBJECT:       Advancing the United States’ Leadership in
                   Artificial Intelligence; Harnessing Artificial
                   Intelligence to Fulfill National Security
                   Objectives; and Fostering the Safety, Security,
                   and Trustworthiness of Artificial Intelligence
         Section 1.  Policy.  (a)  This memorandum fulfills the directive set forth in subsection 4.8 of Executive Order 14110 of October 30, 2023 (Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence).  This memorandum provides further direction on appropriately harnessing artificial intelligence (AI) models and AI-enabled technologies in the United States Government, especially in the context of national security systems (NSS), while protecting human rights, civil rights, civil liberties, privacy, and safety in AI-enabled national security activities.  A classified annex to this memorandum addresses additional sensitive national security issues, including countering adversary use of AI that poses risks to United States national security.
         (b)  United States national security institutions have historically triumphed during eras of technological transition.  To meet changing times, they developed new capabilities, from submarines and aircraft to space systems and cyber tools.  To gain a decisive edge and protect national security, they pioneered technologies such as radar, the Global Positioning System, and nuclear propulsion, and unleashed these hard-won breakthroughs on the battlefield.  With each paradigm shift, they also developed new systems for tracking and countering adversaries’ attempts to wield cutting-edge technology for their own advantage.
         (c)  AI has emerged as an era-defining technology and has demonstrated significant and growing relevance to national security.  The United States must lead the world in the responsible application of AI to appropriate national security functions.  AI, if used appropriately and for its intended purpose, can offer great benefits.  If misused, AI could threaten United States national security, bolster authoritarianism worldwide, undermine democratic institutions and processes, facilitate human rights abuses, and weaken the rules-based international order.  Harmful outcomes could occur even without malicious intent if AI systems and processes lack sufficient protections.
         (d)  Recent innovations have spurred not only an increase in AI use throughout society, but also a paradigm shift within the AI field — one that has occurred mostly outside of Government.  This era of AI development and deployment rests atop unprecedented aggregations of specialized computational power, as well as deep scientific and engineering expertise, much of which is concentrated in the private sector.  This trend is most evident with the rise of large language models, but it extends to a broader class of increasingly general-purpose and computationally intensive systems.  The United States Government must urgently consider how this current AI paradigm specifically could transform the national security mission.
         (e)  Predicting technological change with certainty is impossible, but the foundational drivers that have underpinned recent AI progress show little sign of abating.  These factors include compounding algorithmic improvements, increasingly efficient computational hardware, a growing willingness in industry to invest substantially in research and development, and the expansion of training data sets.  AI under the current paradigm may continue to become more powerful and general-purpose.  Developing and effectively using these systems requires an evolving array of resources, infrastructure, competencies, and workflows that in many cases differ from what was required to harness prior technologies, including previous paradigms of AI.
         (f)  If the United States Government does not act with responsible speed and in partnership with industry, civil society, and academia to make use of AI capabilities in service of the national security mission — and to ensure the safety, security, and trustworthiness of American AI innovation writ large — it risks losing ground to strategic competitors.  Ceding the United States’ technological edge would not only greatly harm American national security, but it would also undermine United States foreign policy objectives and erode safety, human rights, and democratic norms worldwide.
         (g)  Establishing national security leadership in AI will require making deliberate and meaningful changes to aspects of the United States Government’s strategies, capabilities, infrastructure, governance, and organization.  AI is likely to affect almost all domains with national security significance, and its use cannot be relegated to a single institutional silo.  The increasing generality of AI means that many functions that to date have been served by individual bespoke tools may, going forward, be better fulfilled by systems that, at least in part, rely on a shared, multi-purpose AI capability.  Such integration will only succeed if paired with appropriately redesigned United States Government organizational and informational infrastructure.
         (h)  In this effort, the United States Government must also protect human rights, civil rights, civil liberties, privacy, and safety, and lay the groundwork for a stable and responsible international AI governance landscape.  Throughout its history, the United States has been a global leader in shaping the design, development, and use of new technologies not only to advance national security, but also to protect and promote democratic values.  The United States Government must develop safeguards for its use of AI tools, and take an active role in steering global AI norms and institutions.  The AI frontier is moving quickly, and the United States Government must stay attuned to ongoing technical developments without losing focus on its guiding principles.
         (i)  This memorandum aims to catalyze needed change in how the United States Government approaches AI national security policy.  In line with Executive Order 14110, it directs actions to strengthen and protect the United States AI ecosystem; improve the safety, security, and trustworthiness of AI systems developed and used in the United States; enhance the United States Government’s appropriate, responsible, and effective adoption of AI in service of the national security mission; and minimize the misuse of AI worldwide.
    Sec. 2.  Objectives.  It is the policy of the United States Government that the following three objectives will guide its activities with respect to AI and national security.
         (a)  First, the United States must lead the world’s development of safe, secure, and trustworthy AI.  To that end, the United States Government must — in partnership with industry, civil society, and academia — promote and secure the foundational capabilities across the United States that power AI development.  The United States Government cannot take the unmatched vibrancy and innovativeness of the United States AI ecosystem for granted; it must proactively strengthen it, ensuring that the United States remains the most attractive destination for global talent and home to the world’s most sophisticated computational facilities.  The United States Government must also provide appropriate safety and security guidance to AI developers and users, and rigorously assess and help mitigate the risks that AI systems could pose.
         (b)  Second, the United States Government must harness powerful AI, with appropriate safeguards, to achieve national security objectives.  Emerging AI capabilities, including increasingly general-purpose models, offer profound opportunities for enhancing national security, but employing these systems effectively will require significant technical, organizational, and policy changes.  The United States must understand AI’s limitations as it harnesses the technology’s benefits, and any use of AI must respect democratic values with regard to transparency, human rights, civil rights, civil liberties, privacy, and safety.
         (c)  Third, the United States Government must continue cultivating a stable and responsible framework to advance international AI governance that fosters safe, secure, and trustworthy AI development and use; manages AI risks; realizes democratic values; respects human rights, civil rights, civil liberties, and privacy; and promotes worldwide benefits from AI.  It must do so in collaboration with a wide range of allies and partners.  Success for the United States in the age of AI will be measured not only by the preeminence of United States technology and innovation, but also by the United States’ leadership in developing effective global norms and engaging in institutions rooted in international law, human rights, civil rights, and democratic values.
    Sec. 3.  Promoting and Securing the United States’ Foundational AI Capabilities.  (a)  To preserve and expand United States advantages in AI, it is the policy of the United States Government to promote progress, innovation, and competition in domestic AI development; protect the United States AI ecosystem against foreign intelligence threats; and manage risks to AI safety, security, and trustworthiness.  Leadership in responsible AI development benefits United States national security by enabling applications directly relevant to the national security mission, unlocking economic growth, and avoiding strategic surprise.  United States technological leadership also confers global benefits by enabling like-minded entities to collectively mitigate the risks of AI misuse and accidents, prevent the unchecked spread of digital authoritarianism, and prioritize vital research.
         3.1.  Promoting Progress, Innovation, and Competition in United States AI Development.  (a)  The United States’ competitive edge in AI development will be at risk absent concerted United States Government efforts to promote and secure domestic AI progress, innovation, and competition.  Although the United States has benefited from a head start in AI, competitors are working hard to catch up, have identified AI as a top strategic priority, and may soon devote resources to research and development that United States AI developers cannot match without appropriately supportive Government policies and action.  It is therefore the policy of the United States Government to enhance innovation and competition by bolstering key drivers of AI progress, such as technical talent and computational power.
         (b)  It is the policy of the United States Government that advancing the lawful ability of noncitizens highly skilled in AI and related fields to enter and work in the United States constitutes a national security priority.  Today, the unparalleled United States AI industry rests in substantial part on the insights of brilliant scientists, engineers, and entrepreneurs who moved to the United States in pursuit of academic, social, and economic opportunity.  Preserving and expanding United States talent advantages requires developing talent at home and continuing to attract and retain top international minds.
         (c)  Consistent with these goals:
    (i)    On an ongoing basis, the Department of State, the Department of Defense (DOD), and the Department of Homeland Security (DHS) shall each use all available legal authorities to assist in attracting and rapidly bringing to the United States individuals with relevant technical expertise who would improve United States competitiveness in AI and related fields, such as semiconductor design and production.  These activities shall include all appropriate vetting of these individuals and shall be consistent with all appropriate risk mitigation measures.  This tasking is consistent with and additive to the taskings on attracting AI talent in section 5 of Executive Order 14110.
    (ii)   Within 180 days of the date of this memorandum, the Chair of the Council of Economic Advisers shall prepare an analysis of the AI talent market in the United States and overseas, to the extent that reliable data is available.
    (iii)  Within 180 days of the date of this memorandum, the Assistant to the President for Economic Policy and Director of the National Economic Council shall coordinate an economic assessment of the relative competitive advantage of the United States private sector AI ecosystem, the key sources of the United States private sector’s competitive advantage, and possible risks to that position, and shall recommend policies to mitigate them.  The assessment could include areas including (1) the design, manufacture, and packaging of chips critical in AI-related activities; (2) the availability of capital; (3) the availability of workers highly skilled in AI-related fields; (4) computational resources and the associated electricity requirements; and (5) technological platforms or institutions with the requisite scale of capital and data resources for frontier AI model development, as well as possible other factors.
    (iv)   Within 90 days of the date of this memorandum, the Assistant to the President for National Security Affairs (APNSA) shall convene appropriate executive departments and agencies (agencies) to explore actions for prioritizing and streamlining administrative processing operations for all visa applicants working with sensitive technologies.  Doing so shall assist with streamlined processing of highly skilled applicants in AI and other critical and emerging technologies.  This effort shall explore options for ensuring the adequate resourcing of such operations and narrowing the criteria that trigger secure advisory opinion requests for such applicants, as consistent with national security objectives.
         (d)  The current paradigm of AI development depends heavily on computational resources.  To retain its lead in AI, the United States must continue developing the world’s most sophisticated AI semiconductors and constructing its most advanced AI-dedicated computational infrastructure.
         (e)  Consistent with these goals:
    (i)    DOD, the Department of Energy (DOE) (including national laboratories), and the Intelligence Community (IC) shall, when planning for and constructing or renovating computational facilities, consider the applicability of large-scale AI to their mission.  Where appropriate, agencies shall design and build facilities capable of harnessing frontier AI for relevant scientific research domains and intelligence analysis.  Those investments shall be consistent with the Federal Mission Resilience Strategy adopted in Executive Order 13961 of December 7, 2020 (Governance and Integration of Federal Mission Resilience).
    (ii)   On an ongoing basis, the National Science Foundation (NSF) shall, consistent with its authorities, use the National AI Research Resource (NAIRR) pilot project and any future NAIRR efforts to distribute computational resources, data, and other critical assets for AI development to a diverse array of actors that otherwise would lack access to such capabilities — such as universities, nonprofits, and independent researchers (including trusted international collaborators) — to ensure that AI research in the United States remains competitive and innovative.  This tasking is consistent with the NAIRR pilot assigned in section 5 of Executive Order 14110.
    (iii)  Within 180 days of the date of this memorandum, DOE shall launch a pilot project to evaluate the performance and efficiency of federated AI and data sources for frontier AI-scale training, fine-tuning, and inference.
    (iv)   The Office of the White House Chief of Staff, in coordination with DOE and other relevant agencies, shall coordinate efforts to streamline permitting, approvals, and incentives for the construction of AI-enabling infrastructure, as well as surrounding assets supporting the resilient operation of this infrastructure, such as clean energy generation, power transmission lines, and high-capacity fiber data links.  These efforts shall include coordination, collaboration, consultation, and partnership with State, local, Tribal, and territorial governments, as appropriate, and shall be consistent with the United States’ goals for managing climate risks.
    (v)    The Department of State, DOD, DOE, the IC, and the Department of Commerce (Commerce) shall, as appropriate and consistent with applicable law, use existing authorities to make public investments and encourage private investments in strategic domestic and foreign AI technologies and adjacent fields.  These agencies shall assess the need for new authorities for the purposes of facilitating public and private investment in AI and adjacent capabilities.
         3.2.  Protecting United States AI from Foreign Intelligence Threats.  (a)  In addition to pursuing industrial strategies that support their respective AI industries, foreign states almost certainly aim to obtain and repurpose the fruits of AI innovation in the United States to serve their national security goals.  Historically, such competitors have employed techniques including research collaborations, investment schemes, insider threats, and advanced cyber espionage to collect and exploit United States scientific insights.  It is the policy of the United States Government to protect United States industry, civil society, and academic AI intellectual property and related infrastructure from foreign intelligence threats to maintain a lead in foundational capabilities and, as necessary, to provide appropriate Government assistance to relevant non-government entities.
         (b)  Consistent with these goals:
    (i)   Within 90 days of the date of this memorandum, the National Security Council (NSC) staff and the Office of the Director of National Intelligence (ODNI) shall review the President’s Intelligence Priorities and the National Intelligence Priorities Framework consistent with National Security Memorandum 12 of July 12, 2022 (The President’s Intelligence Priorities), and make recommendations to ensure that such priorities improve identification and assessment of foreign intelligence threats to the United States AI ecosystem and closely related enabling sectors, such as those involved in semiconductor design and production.
    (ii)  Within 180 days of the date of this memorandum, and on an ongoing basis thereafter, ODNI, in coordination with DOD, the Department of Justice (DOJ), Commerce, DOE, DHS, and other IC elements as appropriate, shall identify critical nodes in the AI supply chain, and develop a list of the most plausible avenues through which these nodes could be disrupted or compromised by foreign actors.  On an ongoing basis, these agencies shall take all steps, as appropriate and consistent with applicable law, to reduce such risks.
         (c)  Foreign actors may also seek to obtain United States intellectual property through gray-zone methods, such as technology transfer and data localization requirements.  AI-related intellectual property often includes critical technical artifacts (CTAs) that would substantially lower the costs of recreating, attaining, or using powerful AI capabilities.  The United States Government must guard against these risks.
         (d)  Consistent with these goals:
    (i)  In furtherance of Executive Order 14083 of September 15, 2022 (Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States), the Committee on Foreign Investment in the United States shall, as appropriate, consider whether a covered transaction involves foreign actor access to proprietary information on AI training techniques, algorithmic improvements, hardware advances, CTAs, or other proprietary insights that shed light on how to create and effectively use powerful AI systems.
         3.3.  Managing Risks to AI Safety, Security, and Trustworthiness.  (a)  Current and near-future AI systems could pose significant safety, security, and trustworthiness risks, including those stemming from deliberate misuse and accidents.  Across many technological domains, the United States has historically led the world not only in advancing capabilities, but also in developing the tests, standards, and norms that underpin reliable and beneficial global adoption.  The United States approach to AI should be no different, and proactively constructing testing infrastructure to assess and mitigate AI risks will be essential to realizing AI’s positive potential and to preserving United States AI leadership.
         (b)  It is the policy of the United States Government to pursue new technical and policy tools that address the potential challenges posed by AI.  These tools include processes for reliably testing AI models’ applicability to harmful tasks and deeper partnerships with institutions in industry, academia, and civil society capable of advancing research related to AI safety, security, and trustworthiness.
         (c)  Commerce, acting through the AI Safety Institute (AISI) within the National Institute of Standards and Technology (NIST), shall serve as the primary United States Government point of contact with private sector AI developers to facilitate voluntary pre- and post-public deployment testing for safety, security, and trustworthiness of frontier AI models.  In coordination with relevant agencies as appropriate, Commerce shall establish an enduring capability to lead voluntary unclassified pre-deployment safety testing of frontier AI models on behalf of the United States Government, including assessments of risks relating to cybersecurity, biosecurity, chemical weapons, system autonomy, and other risks as appropriate (not including nuclear risk, the assessment of which shall be led by DOE).  Voluntary unclassified safety testing shall also, as appropriate, address risks to human rights, civil rights, and civil liberties, such as those related to privacy, discrimination and bias, freedom of expression, and the safety of individuals and groups.  Other agencies, as identified in subsection 3.3(f) of this section, shall establish enduring capabilities to perform complementary voluntary classified testing in appropriate areas of expertise.  The directives set forth in this subsection are consistent with broader taskings on AI safety in section 4 of Executive Order 14110, and provide additional clarity on agencies’ respective roles and responsibilities.
         (d)  Nothing in this subsection shall inhibit agencies from performing their own evaluations of AI systems, including tests performed before those systems are released to the public, for the purposes of evaluating suitability for that agency’s acquisition and procurement.  AISI’s responsibilities do not extend to the evaluation of AI systems for the potential use by the United States Government for national security purposes; those responsibilities lie with agencies considering such use, as outlined in subsection 4.2(e) of this memorandum and the associated framework described in that subsection.
         (e)  Consistent with these goals, Commerce, acting through AISI within NIST, shall take the following actions to aid in the evaluation of current and near-future AI systems:
    (i)    Within 180 days of the date of this memorandum and subject to private sector cooperation, AISI shall pursue voluntary preliminary testing of at least two frontier AI models prior to their public deployment or release to evaluate capabilities that might pose a threat to national security.  This testing shall assess models’ capabilities to aid offensive cyber operations, accelerate development of biological and/or chemical weapons, autonomously carry out malicious behavior, automate development and deployment of other models with such capabilities, and give rise to other risks identified by AISI.  AISI shall share feedback with the APNSA, interagency counterparts as appropriate, and the respective model developers regarding the results of risks identified during such testing and any appropriate mitigations prior to deployment.
    (ii)   Within 180 days of the date of this memorandum, AISI shall issue guidance for AI developers on how to test, evaluate, and manage risks to safety, security, and trustworthiness arising from dual-use foundation models, building on guidelines issued pursuant to subsection 4.1(a) of Executive Order 14110.  AISI shall issue guidance on topics including:
    (A)  How to measure capabilities that are relevant to the risk that AI models could enable the development of biological and chemical weapons or the automation of offensive cyber operations;
    (B)  How to address societal risks, such as the misuse of models to harass or impersonate individuals;
    (C)  How to develop mitigation measures to prevent malicious or improper use of models;
    (D)  How to test the efficacy of safety and security mitigations; and
    (E)  How to apply risk management practices throughout the development and deployment lifecycle (pre-development, development, and deployment/release).
    (iii)  Within 180 days of the date of this memorandum, AISI, in consultation with other agencies as appropriate, shall develop or recommend benchmarks or other methods for assessing AI systems’ capabilities and limitations in science, mathematics, code generation, and general reasoning, as well as other categories of activity that AISI deems relevant to assessing general-purpose capabilities likely to have a bearing on national security and public safety.
    (iv)   In the event that AISI or another agency determines that a dual-use foundation model’s capabilities could be used to harm public safety significantly, AISI shall serve as the primary point of contact through which the United States Government communicates such findings and any associated recommendations regarding risk mitigation to the developer of the model.
    (v)    Within 270 days of the date of this memorandum, and at least annually thereafter, AISI shall submit to the President, through the APNSA, and provide to other interagency counterparts as appropriate, at minimum one report that shall include the following:
    (A)  A summary of findings from AI safety assessments of frontier AI models that have been conducted by or shared with AISI;
    (B)  A summary of whether AISI deemed risk mitigation necessary to resolve any issues identified in the assessments, along with conclusions regarding any mitigations’ efficacy; and
    (C)  A summary of the adequacy of the science-based tools and methods used to inform such assessments.
         (f)  Consistent with these goals, other agencies specified below shall take the following actions, in coordination with Commerce, acting through AISI within NIST, to provide classified sector-specific evaluations of current and near-future AI systems for cyber, nuclear, and radiological risks:
    (i)    All agencies that conduct or fund safety testing and evaluations of AI systems shall share the results of such evaluations with AISI within 30 days of their completion, consistent with applicable protections for classified and controlled information.
    (ii)   Within 120 days of the date of this memorandum, the National Security Agency (NSA), acting through its AI Security Center (AISC) and in coordination with AISI, shall develop the capability to perform rapid systematic classified testing of AI models’ capacity to detect, generate, and/or exacerbate offensive cyber threats.  Such tests shall assess the degree to which AI systems, if misused, could accelerate offensive cyber operations.
    (iii)  Within 120 days of the date of this memorandum, DOE, acting primarily through the National Nuclear Security Administration (NNSA) and in close coordination with AISI and NSA, shall seek to develop the capability to perform rapid systematic testing of AI models’ capacity to generate or exacerbate nuclear and radiological risks.  This initiative shall involve the development and maintenance of infrastructure capable of running classified and unclassified tests, including using restricted data and relevant classified threat information.  This initiative shall also feature the creation and regular updating of automated evaluations, the development of an interface for enabling human-led red-teaming, and the establishment of technical and legal tooling necessary for facilitating the rapid and secure transfer of United States Government, open-weight, and proprietary models to these facilities.  As part of this initiative:
    (A)  Within 180 days of the date of this memorandum, DOE shall use the capability described in subsection 3.3(f)(iii) of this section to complete initial evaluations of the radiological and nuclear knowledge, capabilities, and implications of a frontier AI model no more than 30 days after the model has been made available to NNSA at an appropriate classification level.  These evaluations shall involve tests of AI systems both without significant modifications and, as appropriate, with fine-tuning or other modifications that could enhance performance.
    (B)  Within 270 days of the date of this memorandum, and at least annually thereafter, DOE shall submit to the President, through the APNSA, at minimum one assessment that shall include the following:
    (1)  A concise summary of the findings of each AI model evaluation for radiological and nuclear risk, described in subsection 3.3(f)(iii)(A) of this section, that DOE has performed in the preceding 12 months;
    (2)  A recommendation as to whether corrective action is necessary to resolve any issues identified in the evaluations, including but not limited to actions necessary for attaining and sustaining compliance conditions appropriate to safeguard and prevent unauthorized disclosure of restricted data or other classified information, pursuant to the Atomic Energy Act of 1954; and
    (3)  A concise statement regarding the adequacy of the science-based tools and methods used to inform the evaluations.
    (iv)   On an ongoing basis, DHS, acting through the Cybersecurity and Infrastructure Security Agency (CISA), shall continue to fulfill its responsibilities with respect to the application of AISI guidance, as identified in National Security Memorandum 22 of April 30, 2024 (Critical Infrastructure Security and Resilience), and section 4 of Executive Order 14110.
         (g)  Consistent with these goals, and to reduce the chemical and biological risks that could emerge from AI:
    (i)    The United States Government shall advance classified evaluations of advanced AI models’ capacity to generate or exacerbate deliberate chemical and biological threats.  As part of this initiative:
    (A)  Within 210 days of the date of this memorandum, DOE, DHS, and AISI, in consultation with DOD and other relevant agencies, shall coordinate to develop a roadmap for future classified evaluations of advanced AI models’ capacity to generate or exacerbate deliberate chemical and biological threats, to be shared with the APNSA.  This roadmap shall consider the scope, scale, and priority of classified evaluations; proper safeguards to ensure that evaluations and simulations are not misconstrued as offensive capability development; proper safeguards for testing sensitive and/or classified information; and sustainable implementation of evaluation methodologies.
    (B)  On an ongoing basis, DHS shall provide expertise, threat and risk information, and other technical support to assess the feasibility of proposed biological and chemical classified evaluations; interpret and contextualize evaluation results; and advise relevant agencies on potential risk mitigations.
    (C)  Within 270 days of the date of this memorandum, DOE shall establish a pilot project to provide expertise, infrastructure, and facilities capable of conducting classified tests in this area.
    (ii)   Within 240 days of the date of this memorandum, DOD, the Department of Health and Human Services (HHS), DOE (including national laboratories), DHS, NSF, and other agencies pursuing the development of AI systems substantially trained on biological and chemical data shall, as appropriate, support efforts to utilize high-performance computing resources and AI systems to enhance biosafety and biosecurity.  These efforts shall include:
    (A)  The development of tools for screening in silico chemical and biological research and technology;
    (B)  The creation of algorithms for nucleic acid synthesis screening;
    (C)  The construction of high-assurance software foundations for novel biotechnologies;
    (D)  The screening of complete orders or data streams from cloud labs and biofoundries; and
    (E)  The development of risk mitigation strategies such as medical countermeasures.
    (iii)  After the publication of biological and chemical safety guidance by AISI outlined in subsection 3.3(e) of this section, all agencies that directly develop relevant dual-use foundation AI models that are made available to the public and are substantially trained on biological or chemical data shall incorporate this guidance into their agency’s practices, as appropriate and feasible.
    (iv)   Within 180 days of the date of this memorandum, NSF, in coordination with DOD, Commerce (acting through AISI within NIST), HHS, DOE, the Office of Science and Technology Policy (OSTP), and other relevant agencies, shall seek to convene academic research institutions and scientific publishers to develop voluntary best practices and standards for publishing computational biological and chemical models, data sets, and approaches, including those that use AI and that could contribute to the production of knowledge, information, technologies, and products that could be misused to cause harm.  This is in furtherance of the activities described in subsections 4.4 and 4.7 of Executive Order 14110.
    (v)    Within 540 days of the date of this memorandum, and informed by the United States Government Policy for Oversight of Dual Use Research of Concern and Pathogens with Enhanced Pandemic Potential, OSTP, NSC staff, and the Office of Pandemic Preparedness and Response Policy, in consultation with relevant agencies and external stakeholders as appropriate, shall develop guidance promoting the benefits of and mitigating the risks associated with in silico biological and chemical research.
         (h)  Agencies shall take the following actions to improve foundational understanding of AI safety, security, and trustworthiness:
    (i)   DOD, Commerce, DOE, DHS, ODNI, NSF, NSA, and the National Geospatial-Intelligence Agency (NGA) shall, as appropriate and consistent with applicable law, prioritize research on AI safety and trustworthiness.  As appropriate and consistent with existing authorities, they shall pursue partnerships as appropriate with leading public sector, industry, civil society, academic, and other institutions with expertise in these domains, with the objective of accelerating technical and socio-technical progress in AI safety and trustworthiness.  This work may include research on interpretability, formal methods, privacy enhancing technologies, techniques to address risks to civil liberties and human rights, human-AI interaction, and/or the socio-technical effects of detecting and labeling synthetic and authentic content (for example, to address the malicious use of AI to generate misleading videos or images, including those of a strategically damaging or non-consensual intimate nature, of political or public figures).
    (ii)  DOD, Commerce, DOE, DHS, ODNI, NSF, NSA, and NGA shall, as appropriate and consistent with applicable law, prioritize research to improve the security, robustness, and reliability of AI systems and controls.  These entities shall, as appropriate and consistent with applicable law, partner with other agencies, industry, civil society, and academia.  Where appropriate, DOD, DHS (acting through CISA), the Federal Bureau of Investigation, and NSA (acting through AISC) shall publish unclassified guidance concerning known AI cybersecurity vulnerabilities and threats; best practices for avoiding, detecting, and mitigating such issues during model training and deployment; and the integration of AI into other software systems.  This work shall include an examination of the role of and vulnerabilities potentially caused by AI systems used in critical infrastructure.
         (i)  Agencies shall take actions to protect classified and controlled information, given the potential risks posed by AI:
    (i)  In the course of regular updates to policies and procedures, DOD, DOE, and the IC shall consider how analysis enabled by AI tools may affect decisions related to declassification of material, standards for sufficient anonymization, and similar activities, as well as the robustness of existing operational security and equity controls to protect classified or controlled information, given that AI systems have demonstrated the capacity to extract previously inaccessible insight from redacted and anonymized data.
    Sec. 4.  Responsibly Harnessing AI to Achieve National Security Objectives.  (a)  It is the policy of the United States Government to act decisively to enable the effective and responsible use of AI in furtherance of its national security mission.  Achieving global leadership in national security applications of AI will require effective partnership with organizations outside Government, as well as significant internal transformation, including strengthening effective oversight and governance functions.
         4.1.  Enabling Effective and Responsible Use of AI.  (a)  It is the policy of the United States Government to adapt its partnerships, policies, and infrastructure to use AI capabilities appropriately, effectively, and responsibly.  These modifications must balance each agency’s unique oversight, data, and application needs with the substantial benefits associated with sharing powerful AI and computational resources across the United States Government.  Modifications must also be grounded in a clear understanding of the United States Government’s comparative advantages relative to industry, civil society, and academia, and must leverage offerings from external collaborators and contractors as appropriate.  The United States Government must make the most of the rich United States AI ecosystem by incentivizing innovation in safe, secure, and trustworthy AI and promoting industry competition when selecting contractors, grant recipients, and research collaborators.  Finally, the United States Government must address important technical and policy considerations in ways that ensure the integrity and interoperability needed to pursue its objectives while protecting human rights, civil rights, civil liberties, privacy, and safety.
         (b)  The United States Government needs an updated set of Government-wide procedures for attracting, hiring, developing, and retaining AI and AI-enabling talent for national security purposes.
         (c)  Consistent with these goals:
    (i)   In the course of regular legal, policy, and compliance framework reviews, the Department of State, DOD, DOJ, DOE, DHS, and IC elements shall revise, as appropriate, their hiring and retention policies and strategies to accelerate responsible AI adoption.  Agencies shall account for technical talent needs required to adopt AI and integrate it into their missions and other roles necessary to use AI effectively, such as AI-related governance, ethics, and policy positions.  These policies and strategies shall identify financial, organizational, and security hurdles, as well as potential mitigations consistent with applicable law.  Such measures shall also include consideration of programs to attract experts with relevant technical expertise from industry, academia, and civil society — including scholarship for service programs — and similar initiatives that would expose Government employees to relevant non-government entities in ways that build technical, organizational, and cultural familiarity with the AI industry.  These policies and strategies shall use all available authorities, including expedited security clearance procedures as appropriate, in order to address the shortfall of AI-relevant talent within Government.
    (ii)  Within 120 days of the date of this memorandum, the Department of State, DOD, DOJ, DOE, DHS, and IC elements shall each, in consultation with the Office of Management and Budget (OMB), identify education and training opportunities to increase the AI competencies of their respective workforces, via initiatives which may include training and skills-based hiring.
         (d)  To accelerate the use of AI in service of its national security mission, the United States Government needs coordinated and effective acquisition and procurement systems.  This will require an enhanced capacity to assess, define, and articulate AI-related requirements for national security purposes, as well as improved accessibility for AI companies that lack significant prior experience working with the United States Government.
         (e)  Consistent with these goals:
    (i)    Within 30 days of the date of this memorandum, DOD and ODNI, in coordination with OMB and other agencies as appropriate, shall establish a working group to address issues involving procurement of AI by DOD and IC elements and for use on NSS.  As appropriate, the working group shall consult the Director of the NSA, as the National Manager for NSS, in developing recommendations for acquiring and procuring AI for use on NSS.
    (ii)   Within 210 days of the date of this memorandum, the working group described in subsection 4.1(e)(i) of this section shall provide written recommendations to the Federal Acquisition Regulatory Council (FARC) regarding changes to existing regulations and guidance, as appropriate and consistent with applicable law, to promote the following objectives for AI procured by DOD and IC elements and for use on NSS:
    (A)  Ensuring objective metrics to measure and promote the safety, security, and trustworthiness of AI systems;
    (B)  Accelerating the acquisition and procurement process for AI, consistent with the Federal Acquisition Regulation, while maintaining appropriate checks to mitigate safety risks;  
    (C)  Simplifying processes such that companies without experienced contracting teams may meaningfully compete for relevant contracts, to ensure that the United States Government has access to a wide range of AI systems and that the AI marketplace is competitive;
    (D)  Structuring competitions to encourage robust participation and achieve best value to the Government, such as by including requirements that promote interoperability and prioritizing the technical capability of vendors when evaluating offers;
    (E)  Accommodating shared use of AI to the greatest degree possible and as appropriate across relevant agencies; and
    (F)  Ensuring that agencies with specific authorities and missions may implement other policies, where appropriate and necessary.
    (iii)  The FARC shall, as appropriate and consistent with applicable law, consider proposing amendments to the Federal Acquisition Regulation to codify recommendations provided by the working group pursuant to subsection 4.1(e)(ii) of this section that may have Government-wide application.
    (iv)   DOD and ODNI shall seek to engage on an ongoing basis with diverse United States private sector stakeholders — including AI technology and defense companies and members of the United States investor community — to identify and better understand emerging capabilities that would benefit or otherwise affect the United States national security mission.
         (f)  The United States Government needs clear, modernized, and robust policies and procedures that enable the rapid development and national security use of AI, consistent with human rights, civil rights, civil liberties, privacy, safety, and other democratic values.
         (g)  Consistent with these goals:
    (i)    DOD and the IC shall, in consultation with DOJ as appropriate, review their respective legal, policy, civil liberties, privacy, and compliance frameworks, including international legal obligations, and, as appropriate and consistent with applicable law, seek to develop or revise policies and procedures to enable the effective and responsible use of AI, accounting for the following:
    (A)  Issues raised by the acquisition, use, retention, dissemination, and disposal of models trained on datasets that include personal information traceable to specific United States persons, publicly available information, commercially available information, and intellectual property, consistent with section 9 of Executive Order 14110;
    (B)  Guidance that shall be developed by DOJ, in consultation with DOD and ODNI, regarding constitutional considerations raised by the IC’s acquisition and use of AI;
    (C)  Challenges associated with classification and compartmentalization;
    (D)  Algorithmic bias, inconsistent performance, inaccurate outputs, and other known AI failure modes;
    (E)  Threats to analytic integrity when employing AI tools;
    (F)  Risks posed by a lack of safeguards that protect human rights, civil rights, civil liberties, privacy, and other democratic values, as addressed in further detail in subsection 4.2 of this section;
    (G)  Barriers to sharing AI models and related insights with allies and partners; and
    (H)  Potential inconsistencies between AI use and the implementation of international legal obligations and commitments.
    (ii)   As appropriate, the policies described in subsection 4.1(g) of this section shall be consistent with direction issued by the Committee on NSS and DOD governing the security of AI used on NSS, policies issued by the Director of National Intelligence governing adoption of AI by the IC, and direction issued by OMB governing the security of AI used on non-NSS.
    (iii)  On an ongoing basis, each agency that uses AI on NSS shall, in consultation with ODNI and DOD, take all steps appropriate and consistent with applicable law to accelerate responsible approval of AI systems for use on NSS and accreditation of NSS that use AI systems.
         (h)  The United States’ network of allies and partners confers significant advantages over competitors.  Consistent with the 2022 National Security Strategy or any successor strategies, the United States Government must invest in and proactively enable the co-development and co-deployment of AI capabilities with select allies and partners.
         (i)  Consistent with these goals:
    (i)  Within 150 days of the date of this memorandum, DOD, in coordination with the Department of State and ODNI, shall evaluate the feasibility of advancing, increasing, and promoting co-development and shared use of AI and AI-enabled assets with select allies and partners.  This evaluation shall include:
    (A)  A potential list of foreign states with which such co-development or co-deployment may be feasible;
    (B)  A list of bilateral and multilateral fora for potential outreach;
    (C)  Potential co-development and co-deployment concepts;
    (D)  Proposed classification-appropriate testing vehicles for co-developed AI capabilities; and
    (E)  Considerations for existing programs, agreements, or arrangements to use as foundations for future co-development and co-deployment of AI capabilities.
         (j)  The United States Government needs improved internal coordination with respect to its use of and approach to AI on NSS in order to ensure interoperability and resource sharing consistent with applicable law, and to reap the generality and economies of scale offered by frontier AI models.
         (k)  Consistent with these goals:
    (i)  On an ongoing basis, DOD and ODNI shall issue or revise relevant guidance to improve consolidation and interoperability across AI functions on NSS.  This guidance shall seek to ensure that the United States Government can coordinate and share AI-related resources effectively, as appropriate and consistent with applicable law.  Such work shall include:
    (A)  Recommending agency organizational practices to improve AI research and deployment activities that span multiple national security institutions.  In order to encourage AI adoption for the purpose of national security, these measures shall aim to create consistency to the greatest extent possible across the revised practices.
    (B)  Steps that enable consolidated research, development, and procurement for general-purpose AI systems and supporting infrastructure, such that multiple agencies can share access to these tools to the extent consistent with applicable law, while still allowing for appropriate controls on sensitive data.
    (C)  Aligning AI-related national security policies and procedures across agencies, as practicable and appropriate, and consistent with applicable law.
    (D)  Developing policies and procedures, as appropriate and consistent with applicable law, to share information across DOD and the IC when an AI system developed, deployed, or used by a contractor demonstrates risks related to safety, security, and trustworthiness, including to human rights, civil rights, civil liberties, or privacy.
         4.2.  Strengthening AI Governance and Risk Management.  (a)  As the United States Government moves swiftly to adopt AI in support of its national security mission, it must continue taking active steps to uphold human rights, civil rights, civil liberties, privacy, and safety; ensure that AI is used in a manner consistent with the President’s authority as Commander in Chief to decide when to order military operations in the Nation’s defense; and ensure that military use of AI capabilities is accountable, including through such use during military operations within a responsible human chain of command and control.  Accordingly, the United States Government must develop and implement robust AI governance and risk management practices to ensure that its AI innovation aligns with democratic values, updating policy guidance where necessary.  In light of the diverse authorities and missions across covered agencies with a national security mission and the rapid rate of ongoing technological change, such AI governance and risk management frameworks shall be:
    (i)    Structured, to the extent permitted by law, such that they can adapt to future opportunities and risks posed by new technical developments;
    (ii)   As consistent across agencies as is practicable and appropriate in order to enable interoperability, while respecting unique authorities and missions;
    (iii)  Designed to enable innovation that advances United States national security objectives;
    (iv)   As transparent to the public as practicable and appropriate, while protecting classified or controlled information;
    (v)    Developed and applied in a manner and with means to integrate protections, controls, and safeguards for human rights, civil rights, civil liberties, privacy, and safety where relevant; and
    (vi)   Designed to reflect United States leadership in establishing broad international support for rules and norms that reinforce the United States’ approach to AI governance and risk management.
         (b)  Covered agencies shall develop and use AI responsibly, consistent with United States law and policies, democratic values, and international law and treaty obligations, including international humanitarian and human rights law.  All agency officials retain their existing authorities and responsibilities established in other laws and policies.
         (c)  Consistent with these goals:
    (i)  Heads of covered agencies shall, consistent with their authorities, monitor, assess, and mitigate risks directly tied to their agency’s development and use of AI.  Such risks may result from reliance on AI outputs to inform, influence, decide, or execute agency decisions or actions, when used in a defense, intelligence, or law enforcement context, and may impact human rights, civil rights, civil liberties, privacy, safety, national security, and democratic values.  These risks from the use of AI include the following:
    (A)  Risks to physical safety:  AI use may pose unintended risks to human life or property.
    (B)  Privacy harms:  AI design, development, and operation may result in harm, embarrassment, unfairness, and prejudice to individuals.
    (C)  Discrimination and bias:  AI use may lead to unlawful discrimination and harmful bias, resulting in, for instance, inappropriate surveillance and profiling, among other harms.
    (D)  Inappropriate use:  operators using AI systems may not fully understand the capabilities and limitations of these technologies, including systems used in conflicts.  Such unfamiliarity could impact operators’ ability to exercise appropriate levels of human judgment.
    (E)  Lack of transparency:  agencies may have gaps in documentation of AI development and use, and the public may lack access to information about how AI is used in national security contexts because of the necessity to protect classified or controlled information.
    (F)  Lack of accountability:  training programs and guidance for agency personnel on the proper use of AI systems may not be sufficient, including to mitigate the risk of overreliance on AI systems (such as “automation bias”), and accountability mechanisms may not adequately address possible intentional or negligent misuse of AI-enabled technologies.
    (G)  Data spillage:  AI systems may reveal aspects of their training data — either inadvertently or through deliberate manipulation by malicious actors — and data spillage may result from AI systems trained on classified or controlled information when used on networks where such information is not permitted.
    (H)  Poor performance:  AI systems that are inappropriately or insufficiently trained, used for purposes outside the scope of their training set, or improperly integrated into human workflows may exhibit poor performance, including in ways that result in inconsistent outcomes or unlawful discrimination and harmful bias, or that undermine the integrity of decision-making processes.
    (I)  Deliberate manipulation and misuse:  foreign state competitors and malicious actors may deliberately undermine the accuracy and efficacy of AI systems, or seek to extract sensitive information from such systems.
         (d)  The United States Government’s AI governance and risk management policies must keep pace with evolving technology.
         (e)  Consistent with these goals:
    (i)   An AI framework, entitled “Framework to Advance AI Governance and Risk Management in National Security” (AI Framework), shall further implement this subsection.  The AI Framework shall be approved by the NSC Deputies Committee through the process described in National Security Memorandum 2 of February 4, 2021 (Renewing the National Security Council System), or any successor process, and shall be reviewed periodically through that process.  This process shall determine whether adjustments are needed to address risks identified in subsection 4.2(c) of this section and other topics covered in the AI Framework.  The AI Framework shall serve as a national security-focused counterpart to OMB’s Memorandum M-24-10 of March 28, 2024 (Advancing Governance, Innovation, and Risk Management for Agency Use of Artificial Intelligence), and any successor OMB policies.  To the extent feasible, appropriate, and consistent with applicable law, the AI Framework shall be as consistent as possible with these OMB policies and shall be made public.
    (ii)  The AI Framework described in subsection 4.2(e)(i) of this section and any successor document shall, at a minimum, and to the extent consistent with applicable law, specify the following:
    (A)  Each covered agency shall have a Chief AI Officer who holds primary responsibility within that agency, in coordination with other responsible officials, for managing the agency’s use of AI, promoting AI innovation within the agency, and managing risks from the agency’s use of AI consistent with subsection 3(b) of OMB Memorandum M-24-10, as practicable.
    (B)  Covered agencies shall have AI Governance Boards to coordinate and govern AI issues through relevant senior leaders from the agency.
    (C)  Guidance on AI activities that pose unacceptable levels of risk and that shall be prohibited.
    (D)  Guidance on AI activities that are “high impact” and require minimum risk management practices, including for high-impact AI use that affects United States Government personnel.  Such high-impact activities shall include AI whose output serves as a principal basis for a decision or action that could exacerbate or create significant risks to national security, international norms, human rights, civil rights, civil liberties, privacy, safety, or other democratic values.  The minimum risk management practices for high-impact AI shall include a mechanism for agencies to assess AI’s expected benefits and potential risks; a mechanism for assessing data quality; sufficient test and evaluation practices; mitigation of unlawful discrimination and harmful bias; human training, assessment, and oversight requirements; ongoing monitoring; and additional safeguards for military service members, the Federal civilian workforce, and individuals who receive an offer of employment from a covered agency.
    (E)  Covered agencies shall ensure privacy, civil liberties, and safety officials are integrated into AI governance and oversight structures.  Such officials shall report findings to the heads of agencies and oversight officials, as appropriate, using existing reporting channels when feasible.
    (F)  Covered agencies shall ensure that there are sufficient training programs, guidance, and accountability processes to enable proper use of AI systems.
    (G)  Covered agencies shall maintain an annual inventory of their high-impact AI use and AI systems and provide updates on this inventory to agency heads and the APNSA.
    (H)  Covered agencies shall ensure that whistleblower protections are sufficient to account for issues that may arise in the development and use of AI and AI systems.
    (I)  Covered agencies shall develop and implement waiver processes for high-impact AI use that balance robust implementation of risk mitigation measures in this memorandum and the AI Framework with the need to utilize AI to preserve and advance critical agency missions and operations.
    (J)  Covered agencies shall implement cybersecurity guidance or direction associated with AI systems issued by the National Manager for NSS to mitigate the risks posed by malicious actors exploiting new technologies, and to enable interoperability of AI across agencies.  Within 150 days of the date of this memorandum, and periodically thereafter, the National Manager for NSS shall issue minimum cybersecurity guidance and/or direction for AI used as a component of NSS, which shall be incorporated into AI governance guidance detailed in subsection 4.2(g)(i) of this section.
         (f)  The United States Government needs guidance specifically regarding the use of AI on NSS.
         (g)  Consistent with these goals:
    (i)  Within 180 days of the date of this memorandum, the heads of the Department of State, the Department of the Treasury, DOD, DOJ, Commerce, DOE, DHS, ODNI (acting on behalf of the 18 IC elements), and any other covered agency that uses AI as part of a NSS (Department Heads) shall issue or update guidance to their components/sub-agencies on AI governance and risk management for NSS, aligning with the policies in this subsection, the AI Framework, and other applicable policies.  Department Heads shall review their respective guidance on an annual basis, and update such guidance as needed.  This guidance, and any updates thereto, shall be provided to the APNSA prior to issuance.  This guidance shall be unclassified and made available to the public to the extent feasible and appropriate, though it may have a classified annex.  Department Heads shall seek to harmonize their guidance, and the APNSA shall convene an interagency meeting at least annually for the purpose of harmonizing Department Heads’ guidance on AI governance and risk management to the extent practicable and appropriate while respecting the agencies’ diverse authorities and missions.  Harmonization shall be pursued in the following areas:
    (A)  Implementation of the risk management practices for high-impact AI;
    (B)  AI and AI system standards and activities, including as they relate to training, testing, accreditation, and security and cybersecurity; and
    (C)  Any other issues that affect interoperability for AI and AI systems.
    Sec. 5.  Fostering a Stable, Responsible, and Globally Beneficial International AI Governance Landscape.  (a)  Throughout its history, the United States has played an essential role in shaping the international order to enable the safe, secure, and trustworthy global adoption of new technologies while also protecting democratic values.  These contributions have ranged from establishing nonproliferation regimes for biological, chemical, and nuclear weapons to setting the foundations for multi-stakeholder governance of the Internet.  Like these precedents, AI will require new global norms and coordination mechanisms, which the United States Government must maintain an active role in crafting.
         (b)  It is the policy of the United States Government that United States international engagement on AI shall support and facilitate improvements to the safety, security, and trustworthiness of AI systems worldwide; promote democratic values, including respect for human rights, civil rights, civil liberties, privacy, and safety; prevent the misuse of AI in national security contexts; and promote equitable access to AI’s benefits.  The United States Government shall advance international agreements, collaborations, and other substantive and norm-setting initiatives in alignment with this policy.
         (c)  Consistent with these goals:
    (i)  Within 120 days of the date of this memorandum, the Department of State, in coordination with DOD, Commerce, DHS, the United States Mission to the United Nations (USUN), and the United States Agency for International Development (USAID), shall produce a strategy for the advancement of international AI governance norms in line with safe, secure, and trustworthy AI, and democratic values, including human rights, civil rights, civil liberties, and privacy.  This strategy shall cover bilateral and multilateral engagement and relations with allies and partners.  It shall also include guidance on engaging with competitors, and it shall outline an approach to working in international institutions such as the United Nations and the Group of 7 (G7), as well as technical organizations.  The strategy shall:
    (A)  Develop and promote internationally shared definitions, norms, expectations, and standards, consistent with United States policy and existing efforts, which will promote safe, secure, and trustworthy AI development and use around the world.  These norms shall be as consistent as possible with United States domestic AI governance (including Executive Order 14110 and OMB Memorandum M-24-10), the International Code of Conduct for Organizations Developing Advanced AI Systems released by the G7 in October 2023, the Organization for Economic Cooperation and Development Principles on AI, United Nations General Assembly Resolution A/78/L.49, and other United States-supported relevant international frameworks (such as the Political Declaration on Responsible Military Use of AI and Autonomy) and instruments.  By discouraging misuse and encouraging appropriate safeguards, these norms and standards shall aim to reduce the likelihood of AI causing harm or having adverse impacts on human rights, democracy, or the rule of law.
    (B)  Promote the responsible and ethical use of AI in national security contexts in accordance with democratic values and in compliance with applicable international law.  The strategy shall advance the norms and practices established by this memorandum and measures endorsed in the Political Declaration on Responsible Military Use of AI and Autonomy.
    Sec. 6.  Ensuring Effective Coordination, Execution, and Reporting of AI Policy.  (a)  The United States Government must work in a closely coordinated manner to make progress on effective and responsible AI adoption.  Given the speed with which AI technology evolves, the United States Government must learn quickly, adapt to emerging strategic developments, adopt new capabilities, and confront novel risks.
         (b)  Consistent with these goals:
    (i)    Within 270 days of the date of this memorandum, and annually thereafter for at least the next 5 years, the heads of the Department of State, DOD, Commerce, DOE, ODNI (acting on behalf of the IC), USUN, and USAID shall each submit a report to the President, through the APNSA, that offers a detailed accounting of their activities in response to their taskings in all sections of this memorandum, including this memorandum’s classified annex, and that provides a plan for further action.  The Central Intelligence Agency (CIA), NSA, the Defense Intelligence Agency (DIA), and NGA shall submit reports on their activities to ODNI for inclusion in full as an appendix to ODNI’s report regarding IC activities.  NGA, NSA, and DIA shall submit their reports as well to DOD for inclusion in full as an appendix to DOD’s report.
    (ii)   Within 45 days of the date of this memorandum, the Chief AI Officers of the Department of State, DOD, DOJ, DOE, DHS, OMB, ODNI, CIA, DIA, NSA, and NGA, as well as appropriate technical staff, shall form an AI National Security Coordination Group (Coordination Group).  Any Chief AI Officer of an agency that is a member of the Committee on National Security Systems may also join the Coordination Group as a full member.  The Coordination Group shall be co-chaired by the Chief AI Officers of ODNI and DOD.  The Coordination Group shall consider ways to harmonize policies relating to the development, accreditation, acquisition, use, and evaluation of AI on NSS.  This work could include development of:
    (A)  Enhanced training and awareness to ensure that agencies prioritize the most effective AI systems, responsibly develop and use AI, and effectively evaluate AI systems;
    (B)  Best practices to identify and mitigate foreign intelligence risks and human rights considerations associated with AI procurement;
    (C)  Best practices to ensure interoperability between agency deployments of AI, to include data interoperability and data sharing agreements, as appropriate and consistent with applicable law;
    (D)  A process to maintain, update, and disseminate such trainings and best practices on an ongoing basis;
    (E)  AI-related policy initiatives to address regulatory gaps implicated by executive branch-wide policy development processes; and 
    (F)  An agile process to increase the speed of acquisitions, validation, and delivery of AI capabilities, consistent with applicable law.
    (iii)  Within 90 days of the date of this memorandum, the Coordination Group described in subsection (b)(ii) of this section shall establish a National Security AI Executive Talent Committee (Talent Committee) composed of senior AI officials (or designees) from all agencies in the Coordination Group that wish to participate.  The Talent Committee shall work to standardize, prioritize, and address AI talent needs and develop an updated set of Government-wide procedures for attracting, hiring, developing, and retaining AI and AI-enabling talent for national security purposes.  The Talent Committee shall designate a representative to serve as a member of the AI and Technology Talent Task Force set forth in Executive Order 14110, helping to identify overlapping needs and address shared challenges in hiring.
    (iv)   Within 365 days of the date of this memorandum, and annually thereafter for at least the next 5 years, the Coordination Group described in subsection (b)(ii) of this section shall issue a joint report to the APNSA on consolidation and interoperability of AI efforts and systems for the purposes of national security.
         Sec. 7.  Definitions.  (a)  This memorandum uses definitions set forth in section 3 of Executive Order 14110.  In addition, for the purposes of this memorandum:
    (i)     The term “AI safety” means the mechanisms through which individuals and organizations minimize and mitigate the potential for harm to individuals and society that can result from the malicious use, misapplication, failures, accidents, and unintended behavior of AI models; the systems that integrate them; and the ways in which they are used.
    (ii)    The term “AI security” means a set of practices to protect AI systems — including training data, models, abilities, and lifecycles — from cyber and physical attacks, thefts, and damage.
    (iii)   The term “covered agencies” means agencies in the Intelligence Community, as well as all agencies as defined in 44 U.S.C. 3502(1) when they use AI as a component of a National Security System, other than the Executive Office of the President.
    (iv)    The term “Critical Technical Artifacts” (CTAs) means information, usually specific to a single model or group of related models that, if possessed by someone other than the model developer, would substantially lower the costs of recreating, attaining, or using the model’s capabilities.  Under the technical paradigm dominant in the AI industry today, the model weights of a trained AI system constitute CTAs, as do, in some cases, associated training data and code.  Future paradigms may rely on different CTAs.
    (v)     The term “frontier AI model” means a general-purpose AI system near the cutting-edge of performance, as measured by widely accepted publicly available benchmarks, or similar assessments of reasoning, science, and overall capabilities.
    (vi)    The term “Intelligence Community” (IC) has the meaning provided in 50 U.S.C. 3003.
    (vii)   The term “open-weight model” means a model that has weights that are widely available, typically through public release.
    (viii)  The term “United States Government” means all agencies as defined in 44 U.S.C. 3502(1).
         Sec. 8.  General Provisions.  (a)  Nothing in this memorandum shall be construed to impair or otherwise affect:
    (i)   the authority granted by law to an executive department or agency, or the head thereof; or
    (ii)  the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
         (b)  This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
         (c)  This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
                                  JOSEPH R. BIDEN JR.

    MIL OSI USA News

  • MIL-OSI Economics: ACP Statement on Treasury Issuing Final Rules for 45X Advanced Manufacturing Tax Credits

    Source: American Clean Power Association (ACP)

    Headline: ACP Statement on Treasury Issuing Final Rules for 45X Advanced Manufacturing Tax Credits

    IRS Final Regs Provide U.S. Businesses with Needed Certainty
    WASHINGTON DC, October 24, 2024 – The American Clean Power Association (ACP) released the following statement from ACP Chief Advocacy Officer JC Sandberg after the U.S. Department of Treasury issued a final rule for the Advanced Manufacturing Production Tax Credit (45X MPTC), which applies to clean energy components made in the United States:
    “ACP commends the Treasury Department and IRS for finalizing the advanced manufacturing tax credits that are driving historic levels of investment in domestic clean energy manufacturing.
    “The finalization of the 45X regulations provides American businesses with the certainty they need to continue building domestic supply chains that strengthen the country’s energy independence, create tens of thousands good paying American jobs, and boost the nation’s economy.”
    According to ACP’s Clean Energy Investing in America report, since August 2022 federal tax credits have helped drive:
    More than 160 new or expanded utility-scale clean energy manufacturing facilities announced in the U.S.
    More than one-quarter (44) of these facilities are already operational, creating 20,000 new American manufacturing jobs.
    More than $60 billion in new private sector capital investment directed toward domestic clean energy manufacturing.

    MIL OSI Economics

  • MIL-OSI USA: IAM Illinois Local 660 Members on Strike for Fair Contract at Eaton

    Source: US GOIAM Union

    Approximately 400 members of International Association of Machinists and Aerospace Workers (IAM) Local 660 (District 9) are on strike for a fair contract at Eaton Corp., facilities in Highland and Troy, Ill.

    On Sunday, Oct. 20, IAM Local 660 members voted to reject a contract offer from Eaton management that had insufficient wages to keep pace with inflation and industry standards, high health insurance costs, no improvements to work-life balance, and substandard retirement security. IAM members at Eaton are currently forced to work six day work weeks. The company is also seeking to turn a 30-minute break into two 15-minute breaks, leaving little time to have a meal. Management also wants to eliminate the two 10-minute breaks per shift. 

    Members also voted to strike, which began on Monday, Oct. 21.

    “Eaton management needs to come back to the table and negotiate a contract that treats IAM members with respect,” said IAM District 9 Directing Business Representative Jason Tetidrick. “IAM Local 660 members are simply seeking a fair deal that provides a dignified living for their families and communities.”

    IAM members at Eaton, a global power management company in the aerospace and electric supply industries, are dedicated professionals whose jobs range from machinist to tool and die maker.

    “The entire IAM Union stands with our 400 IAM Local 660 members who are taking a stand for fairness and respect in the workplace,” said IAM Midwest Territory General Vice President Sam Cicinelli. “We will use every resource necessary to stand up to this company to get the strong and equitable contract our members rightfully deserve.”

    The International Association of Machinists and Aerospace Workers (IAM) is one of North America’s largest and most diverse industrial trade unions, representing approximately 600,000 active and retired members in the aerospace, defense, airlines, railroad, transit, healthcare, automotive, and other industries. 

    goIAM.org | @MachinistsUnion

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  • MIL-OSI: TAB Bank Powers Major Metal Manufacturer’s Expansion with $4 Million Infusion

    Source: GlobeNewswire (MIL-OSI)

    OGDEN, Utah, Oct. 24, 2024 (GLOBE NEWSWIRE) — TAB Bank closed a $4 million working capital facility with a rapidly growing, full-service metal manufacturer serving the aerospace, defense, medical, marine and renewable energy industries. The partnership will help the manufacturer consolidate two newly acquired machine shops and expand its operations to meet increased demand.

    The manufacturer has built a reputation for exceeding customer expectations with high-precision CNC milling and contract manufacturing services. The company serves major aerospace clients, such as Boeing, Blue Origin, the Department of Defense, SpaceX suppliers and other leading contractors. Its recent acquisition of two additional machine shops has positioned the business to scale further.

    “The machine shop consolidation starts a critical growth phase for the company, and we’re excited to be a part of it,” said Ryan Gabriel, TAB’s Business Development Officer covering the Pacific Northwest. “We customized this $4 million working capital facility deal specifically to the manufacturer’s needs so it can continue to streamline operations and optimize performance while delivering innovative solutions to its clients.”

    With $18 million in sales in 2023 and projections of $24 million for 2024, the business is well-positioned for sustained growth.

    TAB Bank provides tailored financial solutions, including working capital facilities, term loans and equipment financing, to help companies like this manufacturer grow and thrive in competitive industries.

    About TAB Bank
    At TAB Bank, our mission is to unlock dreams with bold financial solutions that empower individuals and businesses nationwide. We are committed to making financial success accessible to everyone through our innovative banking products. Our dedication drives us to continuously improve, ensuring that we meet the evolving needs of our clients with excellence and agility. For over 25 years, we have remained steadfast in offering tailored, technology-enabled solutions designed to simplify and enhance the banking experience. 

    Ryan Gabriel is TAB Bank’s Vice President and Business Development Officer based in Seattle. He has over 20 years of experience in structuring asset-based facilities to meet client needs. He can be reached at 206.391.9886 or at ryan.gabriel@tabbank.com.

    Contact Information:
    Trevor Morris
    Director of Marketing
    801-624-5172
    trevor.morris@tabbank.com

    The MIL Network

  • MIL-OSI Russia: Union of Knowledge. The visit of the Polytechnic delegation to Armenia became a new stage of cooperation

    Translation. Region: Russian Federation –

    Source: Peter the Great St Petersburg Polytechnic University – Peter the Great St Petersburg Polytechnic University –

    On October 24, a delegation from SPbPU headed by the rector of the university, academician of the Russian Academy of Sciences Andrey Rudskoy visited the Republic of Armenia. The key moments were meetings at the National Academy of Sciences of the Republic of Armenia and the Russian-Armenian University.

    The delegation of the Polytechnic University visited the National Academy of Sciences of the Republic of Armenia (NAS RA). The history of scientific and educational cooperation between Armenia and St. Petersburg goes back several centuries.

    Today we see the successful development of cooperation between scientific organizations and scientists of the Republic of Armenia and the Russian Federation. Your visit is another step in strengthening joint work. We already have experience of working together in various fields of science, and today we will consolidate our partnership with an agreement that will supplement the previously signed document on scientific and technical cooperation, – President of the NAS RA Ashot Sagyan greeted his colleagues.

    Continuing the traditions of such interaction, SPbB RAS and NAS RA, as well as SPbPU and NAS RA signed an agreement on scientific and technical cooperation. It covers a wide range of areas, including natural, mathematical and technical sciences, as well as life sciences.

    The St. Petersburg Branch of the Russian Academy of Sciences is actively developing international cooperation, which is one of the key areas of our activities. This year, the agreements of the SPbB RAS and SPbPU with the National Academy of Sciences of the Republic of Armenia will be an important step towards strengthening scientific ties with Armenia, with which we are united by a long history of cooperation and common scientific interests, Andrey Rudskoy emphasized.

    Particular attention will be paid to agrobiotechnology and agricultural sciences, astrophysics, physical and chemical research. Joint projects in social, humanitarian and applied sciences are also planned, which will contribute to strengthening scientific ties and technological development between the countries.

    The agreements signed today are intended to make a significant contribution to expanding the interaction between the academic and university communities and will allow our scientists to jointly solve complex problems and adapt the accumulated potential to new realities, noted Ambassador Extraordinary and Plenipotentiary of the Russian Federation to the Republic of Armenia Sergey Kopyrkin.

    During the visit, representatives of SPbPU visited the Russian-Armenian University (RAU), with which the university has had long-standing friendly and partnership relations.

    Since signing a strategic partnership agreement in 2014, RAU and SPbPU have been actively developing joint initiatives in the fields of education, science and youth programs. Over these ten years, the universities have organized numerous joint research projects, conferences and educational projects that facilitated the exchange of experience and knowledge between students and teachers.

    It should be emphasized that the activities envisaged by the comprehensive “Roadmap” of cooperation between SPbPU and RAU cover a wide range of activities and many areas of interest to both educational institutions. Within the framework of this strategic partnership, projects are being implemented in such key areas as physics, telecommunications, biomedicine, bioinformatics, economics, PR and linguistics. Particular attention is paid to the introduction of advanced methods and educational practices into the RAU curriculum.

    For these reasons, the Polytechnic delegation in Yerevan was quite impressive: SPbPU Rector Andrey Rudskoy, Vice-Rector for International Affairs Dmitry Arsenyev, Professor of the Institute of Biomedical Systems and Biotechnology Olga Vlasova, Head of the Project Office “Slavic Universities” and Deputy Head of the International Cooperation Department Nikita Golovin, Director of the Center for Continuing Professional Education PISh CI and Program Director of “Boiling Point – Polytechnic” Sergey Salkutsan, as well as a number of other leading SPbPU experts.

    The program of the visit began with a tour of the campus of the Russian-Armenian University. The rector of SPbPU got acquainted with the scientific and educational laboratories of the Institute of Biomedicine and Pharmacy, the Engineering Physics Institute, the Cast laboratory of the Institute of Mathematics and Informatics, as well as modern socially-oriented spaces.

    RAU is a shining example of how science and education can be effectively combined, creating conditions for training highly qualified specialists who are in demand on the labor market, shared Andrey Rudskoy.

    Andrey Rudskoy paid special attention to the project to create a “green campus”, which includes the generation of electricity using solar panels placed on the university’s territory.

    This is not just a step towards environmental sustainability, but also an opportunity for RAU to become energy independent and even share excess energy with external consumers, Andrey Ivanovich emphasized.

    One of the most striking joint events, the results of which can already be observed, is the methodological support for the creation of the youth space “Boiling Point” at RAU. The two universities actively developed the concept of this space, formulating tasks for the RAU development team. The logical conclusion of the year’s work was the grand opening of the Representative Office of “Boiling Point – Polytech” at RAU on October 24.

    The opening of the youth space “Boiling Point” at RAU is not just the end of our joint work, but the beginning of a new era for students, where their ideas and aspirations will find support and development. We are proud to see how our efforts are becoming a reality, and we are confident that this space will become a source of inspiration for future leaders, – Andrey Rudskoy spoke at the opening ceremony.

    After the excursion, a meeting was held with the management of RAU and the heads of RAU research groups implementing joint projects with SPbPU. The participants presented the results of current initiatives: four network educational programs were developed and implemented, participation in dissertation councils was organized, and more than forty joint scientific papers were published.

    We are watching the progress of your university and can say that, despite all the difficulties, RAU continues to move forward. Each new project, each event is a step towards the campus becoming not only a cozy home for students, but also a place where ideas are born that can change the world. We must join forces to develop this university together, which already today meets world standards, – noted Andrey Rudskoy.

    Scientific conferences on current topics are held annually, and professors from both universities participate in the mutual program “Invited Professor”. Colleagues also discussed tasks for the near future.

    Cooperation between our universities is not just an exchange of experience, it is an opportunity to create something new and significant for our society, Andrey Ivanovich is confident.

    At the meeting, SPbPU Rector Andrey Rudskoy and RAU Rector Edward Sandoyan signed an updated agreement on strategic partnership between SPbPU and RAU, as well as a Roadmap for the implementation of joint events between SPbPU and RAU aimed at supporting youth initiatives and developing student communities.

    Over the past two years, there has been a significant influx of students. Despite the difficulties, we continue to develop. In order to move forward, we need to adapt to new conditions and change our expectations, said Edward Sandoyan.

    We were pleased to renew the strategic partnership agreement that was signed on September 11, 2014. We cannot lose historical memory. The second document signed is a roadmap for the implementation of joint events to support youth initiatives. We have created a cozy corner for our youth, and despite the modest conditions, it has become a beautiful and warm place. In the future, we have the opportunity to expand and hold events, – Andrey Rudskoy summed up.

    In anticipation of the visit of the SPbPU delegation headed by Andrey Rudskoy, leading professors and experts of St. Petersburg held a number of events aimed at developing student communities at RAU. Deputy Director of the Center for Continuing Professional Education “Digital Engineering” of the Advanced Engineering School of SPbPU Pavel Kozlovsky, Deputy Head of the Youth Policy Department of SPbPU Georgy Kvekveskiri, Director of the Center for Continuing Professional Education of the PISh CI and Program Director of “Boiling Point – Polytech” Sergey Salkutsan held an accelerator, which was attended by more than 20 representatives of the RAU Student Council and such RAU associations as a large experimental workshop, an intellectual club, and a sports community.

    The accelerator participants considered the issues of creating and developing student communities, their positioning, forming a working internal structure, attracting and adapting new participants, as well as the topic of continuity of the community’s asset. Georgy Kvekveskiri made a report on the activities of the Youth Policy Department (YPD) of SPbPU, which managed to build an adaptive model of working with student communities at the university.

    The last day of the accelerator was dedicated to forming the image of communities for three years and creating a work program until the end of 2025 (the “Roadmap”, which was signed by the rectors of the two universities). The community accelerator was the first event within the framework of the activities of the new youth space – the Representative Office of “Boiling Point – Polytech” at RAU.

    The head of the training simulators department of the Center for Continuing Professional Education of the Advanced Engineering School “Digital Engineering” Vladislav Tereshchenko held training events and competitions for RAU students on the “Lean Manufacturing” simulator, which is part of CML-Bench platforms.I’m on my way. The event was attended by 1st and 3rd year students majoring in Economics. Three winners received the right to speak at the Winter University in Engineering Sciences at SPbPU in November of this year.

    The guys really liked the game. We plan to implement it in the educational process in several disciplines. It seems to me that the game allows us to objectively assess the degree of economic thinking in the guys, to check all the skills and competencies of students majoring in economics. I also really liked this simulator. I would gladly play it myself, – shared Mariam Voskanyan, Head of the Department of Economics and Finance of the Institute of Economics and Business of the Russian Agrarian University.

    Leading specialists from SPbPU organized lectures and seminars at RAU on physics, telecommunication technologies and biomedical systems. Director of the Higher School of Biomedical Systems and Technologies Olga Vlasova held a seminar on “Optogenetic (chemogenetic) modulation of metabotropic receptors of astrocytes restores cognitive functions in mice with a model of Alzheimer’s disease”. Head of the Laboratory of Microencapsulation and Controlled Delivery of Biologically Active Compounds Alexander Timin presented a seminar on the development of antitumor drugs in encapsulated and free form based on small molecules for the treatment of malignant neoplasms. Professor of the Higher School of Applied Physics and Space Technologies Sergey Makarov told Armenian students about spectrally effective signals.

    The joint work of SPbPU and RAU continues to bring tangible results, strengthening educational and scientific ties between the two universities and making a significant contribution to the development of higher education in Russia and Armenia.

    Please note: This information is raw content directly from the source of the information. It is exactly what the source states and does not reflect the position of MIL-OSI or its clients.

    MIL OSI Russia News

  • MIL-OSI United Kingdom: Judges bowled over by Jared at The Ultimate Pitch

    Source: Northern Ireland – City of Derry

    Judges bowled over by Jared at The Ultimate Pitch

    24 October 2024

    Judges were bowled over by local entrepreneur Jared Wilson when he spoke about his business ‘Cricket Jobs Ltd’ during the Derry City and Strabane District heat of Go Succeed: The Ultimate Pitch at the Guildhall.

    This exciting new initiative, backed by the government’s business support service, is aimed at individuals, businesses, and social enterprises across all sectors that have been trading for less than two years.

    A number of local applicants had the opportunity to present their ‘ultimate pitch’ to a panel of experienced judges, but it was Jared Wilson who impressed the most and walked away with a £1,000 prize as well as a year’s hot desk space and 12 months’ membership of the Derry Chamber of Commerce.

    Jared will join the Special Category winners from the Derry/Strabane heat at The Ultimate Pitch Final in Belfast in November. The Special Category Winners are as follows: The Rising Star winner – Clare Hamilton, The Influencer Hub; The Social Inclusion winner – Alannah Kerrigan, Wildflower Weddings; and The Social Enterprise winner – Caroline McGinness Brooks, Repair & Share Foyle.

    A professional cricketer, Jared’s innovative idea revolves around his company ‘Cricket Jobs’ which gives amateur and professional cricketers the opportunity to view playing and job opportunities around the world.

    Reflecting on the success of the local heat of the competition Business Development Manager with Derry City and Strabane District Council, Danielle McNally said: “We were really impressed with the calibre of applicants at the local heat of Go Succeed: The Ultimate Pitch. Our Pitchers had some great ideas which, with the right support, could become sustainable businesses. I would like to thank everyone who took part and to wish Jared, Clare, Alannah and Caroline all the best in the final in Belfast.”

    Anna Doherty, Chief Executive of Derry Chamber of Commerce, was one of the judges at the local heat. She said, “We were delighted to see so many local entrepreneurs coming forward to Pitch to us. Every one of them had obviously put a lot of work into their Pitch and I know many of them will go on to build successful businesses and contribute to our local economy. We at the Chamber of Commerce are delighted to be able to offer Jarad membership for one year and use of a hot desk space – we hope the networking opportunities this will present will help him bolster his future business plans.” 

    Overall winner Jared Wilson was delighted to secure the top prize. He said: “I’m delighted that the judges were impressed with my Pitch. The prize money and support from the Chamber of Commerce will be invaluable in helping to take ‘Cricket Jobs’ to the next level. I am really looking forward to taking part in the Final in Belfast next month and hopefully I can bring The Ultimate Pitch prize back to the North West.”

    Go Succeed (www.go-succeed.com) is funded by the UK Government and delivered by Northern Ireland’s 11 councils. The service supports entrepreneurs, new starts and existing businesses with easy-to-access advice and support including mentoring, master classes, peer networks, access to grant funding and a business plan, at every stage of their growth journey.

    To find out more information about Go Succeed: The Ultimate Pitch, view a full list of terms and conditions, and apply, visit www.go-succeed.com/TheUltimatePitch.

    MIL OSI United Kingdom

  • MIL-OSI United Kingdom: BLOG | Accounting for every pound of spending

    Source: City of Liverpool

    With just under a week to go until the Chancellor’s first budget, Council Leader Liam Robinson, explains why Liverpool City Council continues to manage our finances in a sound and prudent way.

    You’d have to have been living under a rock for the last three months not to know that the mood music coming from HM Treasury has not been positive.

    The inherited 14 years of austerity, the cost of living crisis and a £22 billion black hole in the nation’s finances means that difficult decision will need to be made.

    But we are seeing positive steps from the Government.

    A commitment to longer term financial settlements for councils; a pay rise for public sector workers; a commitment to planning reform to improve growth; funding for 300 new school-based nurseries and money for councils to build on brownfield sites is just the beginning of the change.

    Whilst we wait for the budget and for the dedicated spending review in the Spring, in Liverpool we are prudently basing our financial planning assumptions to make sure we manage our spend and make sure we account for every pound.

    In terms of spending, most of our money goes on things we are legally obliged to provide, such as adults and children’s social care to keep vulnerable people safe.  These two departments alone account for well over half of our total net budget – and demand for them has been rising due to a growing older population and more families needing support.  

    We’re also putting a huge amount of emphasis on making sure we bring in all the money we’re owed. Successes this year include:

    • Business Rates revenue up £7.2 million
    • Council Tax revenue up £9.3 million
    • Council Tax arrears collection up £1.7 million

    In addition, a review of the single person Council Tax discount to make sure only eligible households are claiming has brought in an additional £750k, while property debt enforcement has recovered £318k.  

    This programme of work will only accelerate, as we put ourselves on a firmer financial footing for the long-term. This is vital if we are to protect and improve the services each and every resident of Liverpool cherishes.

    MIL OSI United Kingdom

  • MIL-OSI USA: Disaster Recovery Centers to Close in Ascension, Assumption Parishes

    Source: US Federal Emergency Management Agency

    Headline: Disaster Recovery Centers to Close in Ascension, Assumption Parishes

    Disaster Recovery Centers to Close in Ascension, Assumption Parishes

    BATON ROUGE, La. –Disaster Recovery Centers (DRCs) serving Louisiana survivors of Hurricane Francine in Gonzales and Napoleonville will close at 5 p.m. Friday, Oct. 25.The Gonzales center (Ascension Parish) is located at Lamar Dixon Expo Center, 9039 St. Landry Road, Gonzales, LA 70737.The Napoleonville center (Assumption Parish) is located at Assumption High School, North Building, 4880 Hwy 308, Napoleonville, LA 70390.Additional locations in Lafourche, Jefferson, St. John the Baptist, St. Mary and Terrebonne parishes are open. To find the DRC nearest to you, visit DRC Locator (fema.gov).The centers will operate from 8 a.m. to 5 p.m., Monday through Saturday.Residents in all nine parishes can visit any DRC to meet with representatives of FEMA, the U.S. Small Business Administration, along with other community partners. No appointment is needed to visit the center. The centers are accessible to people with disabilities or access and functional needs and are equipped with assistive technology. If you need a reasonable accommodation or sign language interpreter, please call 833-285-7448 (press 2 for Spanish).You do not have to visit a center to apply for FEMA disaster assistance. The quickest way to apply is by going online at disasterassistance.gov/.Additional options when applying include:Download the FEMA App for mobile devices. Call the FEMA helpline at 800-621-3362 between 6 a.m. and 11 p.m. Help is available in most languages. If you use a relay service, such as video relay (VRS), captioned telephone or other service, give FEMA your number for that service.To view an accessible video about how to apply visit: Three Ways to Register for FEMA Disaster Assistance – YouTube.For the latest information visit fema.gov/disaster/4817. Follow FEMA Region 6 social media at X.com/FEMARegion6 or on Facebook at facebook.com/femaregion6.
    alexa.brown
    Thu, 10/24/2024 – 15:35

    MIL OSI USA News

  • MIL-OSI USA: West Virginians Have One Week Left to Apply for FEMA Assistance

    Source: US Federal Emergency Management Agency

    Headline: West Virginians Have One Week Left to Apply for FEMA Assistance

    West Virginians Have One Week Left to Apply for FEMA Assistance

      Oct. 24, 2024DR-4787-WV NR-014FEMA News Desk: 215-931-5597FEMAR3NewsDesk@fema.dhs.govNews releaseWest Virginians Have One Week Left to Apply for FEMA AssistanceCHARLESTON, W.Va. – Residents in Boone, Hancock, Kanawha, Marshall, Ohio, Roane, Wetzel and Wood counties have one week left to apply for FEMA Assistance for damages sustained during the severe storm of April 11-12, 2024. The deadline to apply is SATURDAY, NOV. 2.FEMA assistance for individuals and families affected by the flooding can cover home repairs, personal property losses and other disaster-related needs not covered by insurance.Residents may apply online at DisasterAssistance.gov or by phone at 800-621-3362. The toll-free telephone line operates from 7 a.m. to 11 p.m. If you use a relay service, such as video relay service (VRS), captioned telephone service or others, give FEMA the number for that service.Nov. 2 is also the deadline to apply for a U.S. Small Business Administration disaster loan. Residents can do so—and get more information –online at sba.gov/disaster.  They can also call SBA’s Customer Service Center at (800) 659-2955, or email disastercustomerservice@sba.gov for more information on SBA disaster assistance.For more information on West Virginia’s disaster recovery, visit emd.wv.gov, West Virginia Emergency Management Division Facebook page,www.fema.gov/disaster/4787 and www.facebook.com/FEMA.###FEMA’s mission is helping people before, during and after disasters. FEMA Region 3’s jurisdiction includes Delaware, the District of Columbia, Maryland, Pennsylvania, Virginia and West Virginia.Follow us on X at x.com/FEMAregion3 and on LinkedIn at linkedin.com/company/femaregion3Disaster recovery assistance is available without regard to race, color, religion, nationality, sex, age, disability, English proficiency, or economic status. If you or someone you know has been discriminated against, call FEMA toll-free at 833-285-7448. If you use a relay service, such as video relay service (VRS), captioned telephone service or others, give FEMA the number for that service. Multilingual operators are available (press 2 for Spanish and 3 for other languages).
    issa.mansaray
    Thu, 10/24/2024 – 15:15

    MIL OSI USA News

  • MIL-OSI: Cegedim: Revenue growth continued in the third quarter of 2024

    Source: GlobeNewswire (MIL-OSI)

         
     

    PRESS RELEASE

    Quarterly financial information as of September 30, 2024
    IFRS – Regulated information – Not audited

    Cegedim: Revenue growth continued in the third quarter of 2024

    • Revenue of €156.8 million in Q3 2024, up 5.7%
    • Marketing, BPO, HR, and cloud businesses led the way
    • Revenue for the first nine months of 2024 grew 5.9% to €475.8 million

    Boulogne-Billancourt, France, October 24, 2024, after the market close.
    Revenue

      Third quarter Change Q3 2024 / 2023
    in millions of euros 2024 2023
    reclassified(1)
    Reclassification(1) 2023
    Reported
    Reported
    vs. reclassified(1)
    Like for like(2)(3)
    vs. reclassified(1)
    Software & Services 75.6 76.0 -4.8 80.8 -0.5% -4.2%
    Flow 23.7 22.4 -0.4 22.8 5.5% 5.4%
    Data & Marketing 28.2 24.1 0.0 24.1 17.0% 17.1%
    BPO 21.6 19.0 0.0 19.0 13.9% 13.9%
    Cloud & Support 7.7 6.8 +5.2 1.6 12.5% 12.5%
    Cegedim 156.8 148.3 0.0 148.3 5.7% 3.8%
      First 9 months Change 9M 2023 / 2022
    in millions of euros 2024 2023
    reclassified(1)
    Reclassification(1) 2023
    Reported
    Reported
    vs. reclassified(1)
    Like for like(2)(4)
    vs. reclassified(1)
    Software & Services 227.7 226.6 -15.7 242.3 0.5% -2.6%
    Flow 73.2 69.2 -1.8 71.0 5.7% 5.6%
    Data & Marketing 87.5 79.0 0.0 79.0 10.8% 10.8%
    BPO 61.5 51.8 0.0 51.8 18.8% 18.8%
    Cloud & Support 25.8 22.6 +17.5 5.1 13.9% 13.9%
    Cegedim 475.8 449.3 0.0 449.3 5.9% 4.3%

    Cegedim posted consolidated third quarter revenues up 5.7% as reported and 3.8% like for like(2) compared with the same period in 2023. Revenues to end-September rose 5.9% as reported and 4.3% like for like compared with 9M 2023. Marketing, BPO, HR, and cloud businesses all delivered solid growth in the third quarter. As expected, the Software & Services division felt the impact of comparisons with Ségur public health investment spending in 2023 and a slowdown in international sales owing to the decision to refocus the Group’s UK doctor software activities on Scotland.
    Analysis of business trends by division 

    Software & Services

    Software & Services Third quarter Change Q3 2024 / 2023 First 9 months Change 9M 2024 / 2023
    in millions of euros 2024 2023 reclassified(3) Reported vs. reclassified(1) Like for like(2)
    vs.
    reclassified(1)
    2024 2023
    reclassified(1)
    Reported vs. reclassified(1) Like for like(2)
    vs.
    reclassified(1)
    Cegedim Santé 20.1 18.6 8.0% -6.2% 58.9 58.4 0.9% -9.8%
    Insurance, HR, Pharmacies,
    and other services
    42.7 43.9 -2.7% -2.7% 129.5 128.4 0.9% 0.8%
    International businesses 12.8 13.5 -5.0% -6.1% 39.3 39.8 -1.3% -2.8%
    Software & Services 75.6 76.0 -0.5% -4.2% 227.7 226.6 0.5% -2.6%

    Revenues at Cegedim Santé grew 8.0% as reported in the third quarter but fell 6.2% like for like. We did not fully meet our 2024 goal of offsetting last year’s Ségur impact and keeping like-for-like sales stable, but we are closing the gap with each quarter. Reported growth figures include Visiodent as of March 1, 2024. Visiodent’s gradual transition to Cegedim Group products for scheduling, databases, and so on is generating internal sales, which do not appear in the consolidated scope.

    Other French subsidiaries had a challenging quarter, with revenues down 2.7%. We saw positive growth at our insurance businesses, thanks to robust project-based sales, and in HR, which is still getting a boost from its client diversification strategy. Conversely, the €2 million in Ségur public health investment subsidies we recorded in Q3 2023 made for a demanding comparison in the pharmacy business, where equipment sales also flagged after accelerating last year.

    Internationally, revenues from software sales to UK doctors declined, as expected, following the decision to refocus the activity on Scotland.

    Flow

    Flow Third quarter Change Q3 2024 / 2023 First 9 months Change 9M 2024 / 2023
    in millions of euros 2024 2023
    reclassified(1)
    Reported vs. reclassified(1) Like for like(2)
    vs. reclassified(1)
    2024 2023 reclassified(1) Reported vs. reclassified(1) Like for like(2)
    vs. reclassified(1)
    e-business 13.5 13.5 -0.2% -0.4% 43.5 41.3 5.1% 4.8%
    Third-party payer 10.2 8.9 14.3% 14.3% 29.7 27.9 6.7% 6.7%
    Flow 23.7 22.4 5.5% 5.4% 73.2 69.2 5.7% 5.6%

    Third-quarter growth in e-business, e-invoicing, and digitized data exchanges was nearly flat, at -0.2%. Healthcare flows offset a relative slowdown in the Invoicing & Procurement segment, which last year enjoyed sustained growth in France ahead of the e-invoicing reform scheduled to take effect July 1, 2024, but which has since been postponed to September 2026.

    The digital data flow business dealing with reimbursement of healthcare payments in France (Third-party payer) experienced 14.3% yoy growth in Q3. It was boosted by strong growth in demand for its fraud and long-term illness detection offerings.

    Data & Marketing

    Data & Marketing Third quarter Change Q3 2024 / 2023 First 9 months Change 9M 2024 / 2023
    in millions of euros 2024 2023 reclassified(1) Reported vs. reclassified(1) Like for like(2)
    vs. reclassified(1)
    2024 2023 reclassified(1) Reported vs. reclassified(1) Like for like(2)
    vs. reclassified(1)
    Data 15.1 14.6 3.4% 3.4% 43.1 43.4 -0.7% -0.7%
    Marketing 13.1 9.5 38.0% 38.0% 44.4 35.6 24.8% 24.8%
    Data & Marketing 28.2 24.1 17.0% 17.1% 87.5 79.0 10.8% 10.8%

    Data business posted 3.4% yoy growth in the third quarter, resulting in nearly stable growth over nine months. Growth was led by French sales, which were more dynamic than international sales.

    The Marketing segment had a record third quarter, up 38% owing to special ad campaigns during the Olympics. The rising popularity of our phygital media offerings in pharmacies helped the segment post 24.8% growth over the first nine months.

    BPO

    BPO Third quarter Change Q3 2024 / 2023 First 9 months Change 9M 2024 / 2023
    in millions of euros 2024 2023 reclassified(1) Reported vs. reclassified(1) Like for like(2)
    vs. reclassified(1)
    2024 2023 reclassified(1) Reported vs. reclassified(1) Like for like(2)
    vs. reclassified
    Insurance BPO 15.9 13.8 15.7% 15.7% 44.6 35.9 24.2% 24.2%
    Business Services BPO 5.7 5.2 +9.2% +9.2% 16.9 15.9 6.5% 6.5%
    BPO 21.6 19.0 13.9% 13.9% 61.5 51.8 18.8% 18.8%

    The Insurance BPO business grew by more than 15.7% over the third quarter, chiefly owing to its overflow business, which has been flourishing since the start of the year. Growth over nine months amounted to 24.2%, partly thanks to a favorable comparison stemming from the April 1, 2023, launch of the Allianz contract.

    Business Services BPO (HR and digitalization) continues to report strong growth, up 9.2% yoy over the quarter on the back of a popular compliance offering and new clients.

    Cloud & Support

    Cloud & Support Third quarter Change Q3 2024 / 2023 First 9 months Change 9M 2024 / 2023
    in millions of euros 2024 2023
    reclassified(4)
    Reported vs. reclassified(1) Like for like(2)
    vs.
    reclassified(1)
    2024 2023
    reclassified(1)
    Reported vs. reclassified(1) Like for like(2)
    vs.
    reclassified(1)
    Cloud & Support 7.7 6.8 12.5% 12.5% 25.8 22.6 13.9% 13.9%

    The Cloud & Support division’s trajectory continued over the third quarter, with growth of 12.5% reflecting our expanded range of sovereign cloud-backed products and services.

    Highlights

    Apart from the items cited below, to the best of the company’s knowledge, there were no events or changes during Q3 2024 that would materially alter the Group’s financial situation.

    • New financing arrangement

    On July 31, 2024, Cegedim announced that it had secured a new financing arrangement consisting of a €230 million syndicated loan. The arrangement is split into €180 million of lines drawn upon closing to refinance the Group’s existing debt (RCF and Euro PP, which were to mature in October 2024 and October 2025 respectively) and an additional, undrawn revolving credit facility (RCF) of €50 million. This new financing arrangement will bolster the Group’s liquidity and extend the maturity of its debt to, respectively, 5 years (€30 million, payments every six months); 6 years (€60 million, repayable upon maturity); and 7 years (€90 million, repayable upon maturity).

    Significant transactions and events post September 30, 2024

    To the best of the company’s knowledge, there were no post-closing events or changes after September 30, 2024, that would materially alter the Group’s financial situation.

    Outlook

    Based on the currently available information, the Group expects 2024 like-for-like revenue(1) growth to be towards the lower end of the 5-8% range relative to 2023. That said, we still expect recurring operating income to continue to improve.
    These targets are not forecasts and may need to be revised if there is a significant worsening of geopolitical, macroeconomic, or currency risks.

    —————

    Webcast on October 24, 2024, at 6:15 pm (Paris time)
    The webcast is available at: www.cegedim.fr/webcast
     

    The Q3 2024 revenue presentation is available here:
    https://www.cegedim.fr/documentation/Pages/presentation.aspx

    Financial calendar:

    2025 January 29 after the close

    March 27 after the close

    March 28 at 10:00 am

    April 24 after the close

    June 13 at 9:30

    July 24 after the close

    September 25 after the close

    September 26 at 10:00 am

    October 23 after the close

    2024 revenue

    2024 results

    SFAF meeting

    Q1 2025 revenue

    Shareholders’ general meeting

    H1 2025 revenue

    H1 2025 results

    SFAF meeting

    Q3 2025 revenue

    Financial calendar: https://www.cegedim.fr/finance/agenda/Pages/default.aspx

    Disclaimer
    This press release is available in French and in English. In the event of any difference between the two versions, the original French version takes precedence. This press release may contain inside information. It was sent to Cegedim’s authorized distributor on October 24, 2024, no earlier than 5:45 pm Paris time.
    The figures cited in this press release include guidance on Cegedim’s future financial performance targets. This forward-looking information is based on the opinions and assumptions of the Group’s senior management at the time this press release is issued and naturally entails risks and uncertainty. For more information on the risks facing Cegedim, please refer to Chapter 7, “Risk management”, section 7.2, “Risk factors and insurance”, and Chapter 3, “Overview of the financial year”, section 3.6, “Outlook”, of the 2023 Universal Registration Document filled with the AMF on April 3, 2024, under number D.24-0233.

    About Cegedim:
    Founded in 1969, Cegedim is an innovative technology and services group in the field of digital data flow management for healthcare ecosystems and B2B, and a business software publisher for healthcare and insurance professionals. Cegedim employs more than 6,500 people in more than 10 countries and generated revenue of €616 million in 2023.
    Cegedim SA is listed in Paris (EURONEXT: CGM).
    To learn more please visit: www.cegedim.fr
    And follow Cegedim on X: @CegedimGroup, LinkedIn, and Facebook.

    Aude Balleydier
    Cegedim
    Media Relations
    and Communications Manager

    Tel.: +33 (0)1 49 09 68 81
    aude.balleydier@cegedim.fr

    Damien Buffet
    Cegedim
    Head of Financial
    Communication

    Tel.: +33 (0)7 64 63 55 73
    damien.buffet@cegedim.com

    Céline Pardo
    Becoming RP Agency
    Media Relations Consultant

    Tel.:        +33 (0)6 52 08 13 66
    cegedim@becoming-group.com

     

    Annexes

    Breakdown of revenue by quarter and division

    Year 2024

    In € million   Q1 Q2 Q3 Q4 Total
    Software & Services   74.3 77.8 75.6   227.7
    Flow   25.3 24.2 23.7   73.2
    Data & Marketing   27.0 32.3 28.2   87.5
    BPO   20.2 19.7 21.6   61.5
    Cloud & Support   9.0 9.1 7.7   25.8
    Group revenue   155.9 163.1 156.8   475.8

    Year 2023

    In € million   Q1
    reclassified
    Q2
    reclassified
    Q3

    reclassified

    Q4
    reclassified
    Total
    reclassified
    Software & Services   74.4 76.2 76.0   226.6
    Flow   24.0 22.8 22.4   69.2
    Data & Marketing   24.6 30.3 24.1   79.0
    BPO   14.4 18.4 19.0   51.8
    Cloud & Support   8.4 7.4 6.8   22.6
    Group revenue   145.9 155.1 148.3   449.4

    Breakdown of revenue by geographic zone, currency and division at September 30, 2024

    as a % of consolidated revenues   Geographic zone   Currency
      France EMEA
    ex. France
    Americas   Euro GBP Other
    Software & Services   82.8% 17.1% 0.1%   86.2% 12.0% 1.7%
    Flow   91.9% 8.1% 0.0%   94.5% 5.5% 0.0%
    Data & Marketing   97.9% 2.1% 0.0%   98.0% 0.0% 2.0%
    BPO   100.0% 0.0% 0.0%   100.0% 0.0% 0.0%
    Cloud & Support   99.9% 0.1% 0.0%   100.0% 0.0% 0.0%
    Cegedim   90.1% 9.8% 0.1%   92.2% 6.6% 1.2%

    1As of January 1, 2024, our Cegedim Outsourcing and Audiprint subsidiaries—which were previously housed in the Software & Services division—as well as BSV—formerly of the Flow division—have been moved to the Cloud & Support division in order to capitalize on operating synergies between cloud activities and IT solutions integration.

    2At constant scope and exchange rates. The positive currency impact of 0.2% was mainly due to the pound sterling. The positive scope effect of 1.8% was attributable to the first-time consolidation in Cegedim’s accounts of Visiodent starting March 1, 2024.The positive currency impact of 0.1% was mainly due to the pound sterling. The positive scope effect of 1.4% was attributable to the first-time consolidation in Cegedim’s accounts of Visiodent starting March 1, 2024.

    3To take advantage of synergies, Cegedim Outsourcing, Audiprint, and BSV have been reassigned to the Cloud & Support division.At constant scope and exchange rates.

    4To take advantage of synergies, Cegedim Outsourcing, Audiprint, and BSV have been reassigned to the Cloud & Support division.At constant scope and exchange rates.

    Attachment

    The MIL Network

  • MIL-OSI: Rudy R. Miller Instrument Safety Currency Program (ISCP) Embry-Riddle Aeronautical University, College of Aviation, Prescott Campus

    Source: GlobeNewswire (MIL-OSI)

    SCOTTSDALE, Ariz., Oct. 24, 2024 (GLOBE NEWSWIRE) —  The Rudy R. Miller Instrument Safety Currency Program (ISCP) at Embry-Riddle Aeronautical University, College of Aviation, Prescott Campus, was created and funded by Mr. Miller in 2023, with students receiving simulator time starting in Spring 2024. The ISCP was created to build a curriculum that was compliant with federal regulations for instrument currency. Embry-Riddle’s training experts completed that curriculum which was then reviewed and validated by Embry-Riddle’s Chief Instructor, Ryan Albrecht. Once the process was completed and approved, the curriculum was uploaded into the flight systems for logging and tracking of activity.

    Embry-Riddle Aeronautical University, in coordination with the Prescott’s College of Aviation’s Flight Department and Flight Director, Parker Northrup, oversees the administration of the ISCP fund. This program supports flight students in their junior year flight course to maintain the skills they learned in their instrument rating course where focus is spent on learning commercial performance maneuvers and often allows instrument skills to degrade. The ISCP provides simulator time to update the instrument currency as required by Federal Aviation Regulations.

    ISCP RECIPIENTS SPRING 2024

    Christopher Gurule, Aeronautical Science Degree
    Kaleo Mendoza, Aeronautical Science Degree
    Joseph Molitor, Aeronautical Science Degree
    Reza Parva, Aeronautical Science Degree

    Parker Northrup, Chair, Flight Department, College of Aviation, Prescott Campus, said “Mr. Rudy Miller’s engagement and generosity are such a valuable addition to what we strive to do with our students.  ISCP allows us to selectively reinforce the safety culture that depends on maintaining those skills critical to safe instrument flying

    Rudy R. Miller commented, “I would like to thank Parker Northrup and Steve Bobinsky, executive director of philanthropy, for their time plus all their remarkable team members’ assistance in supporting this outstanding program for qualified students. I have really enjoyed working on this project over the past year and plan to stay involved.

    “The future is bright regarding all the numerous new projects, expansions, and improvements that Embry-Riddle, Prescott Campus, is executing, from my perspective. I am currently involved in a total of five Embry-Riddle projects with respect to my personal time involvement and various funding capabilities.”

    About Embry-Riddle Aeronautical University, Prescott Campus

    Embry-Riddle Aeronautical University, Prescott Campus, is organized into four colleges: College of Arts and Sciences, College of Aviation, College of Engineering, and College of Business, Security and Intelligence (the nation’s first), and offers bachelor of science degrees in applied science, aviation, business, computers & technology, engineering, security, intelligence & safety, and space. The Prescott campus also offers master’s degrees in Safety Science, Security & Intelligence, and Cyber Intelligence & Security. The programs in aeronautics, air traffic management, applied meteorology, and aerospace studies are certified by the Federal Aviation Administration (FAA) and is the nation’s first FAA-approved training provider for student airline certification.

    About Rudy R. Miller

    Mr. Rudy R. Miller, a former member of the U.S. Armed Forces, is an entrepreneur, philanthropist, and investor in numerous industries. Mr. Miller is Chairman, President, and CEO of Miller Capital Corporation, an affiliate of The Miller Group of entities; for more information, including Mr. Miller’s biography, visit www.themillergroup.net.

    In 2023, Mr. Miller was selected by Embry-Riddle Aeronautical University to join two influential advisory boards for both the College of Aviation and the College of Business, Security and Intelligence. In addition to joining the advisory boards at Embry-Riddle, he established scholarships for students at both colleges and set up a fund to support simulator training to improve commercial pilot safety, the Rudy R. Miller Instrument Safety Currency Program (ISCP). Mr. Miller instituted the annual Rudy R. Miller Business – Finance Scholarship Program in 2008 to support Arizona State University, W. P. Carey School of Business. Since inception, Mr. Miller has issued three additional ASU scholarships, not included in the annual award process, totaling 23 ASU scholarships to date. Mr. Miller had the honor to serve as a member of ASU’s Dean’s Council of 100, a national group of prominent business executives invited by the Dean to play a leadership role in shaping the future of the W. P. Carey School of Business.

    His philanthropic endeavors include support for the non-profit arts community, selective universities, athletic foundations, and veterans’ projects. He is a member-sponsor of the Army Historical Foundation and the National Museum of the U.S. Army located at Fort Belvoir, VA. He served as Chairman of the Advisory Board of Thunderbird Field II Veterans Memorial, Inc. (Tbird2), an organization that honors veterans, from 2018 until March 2024. Mr. Miller developed its aviation scholarship program and process in 2018 and served as the first Chairman of the Scholarship Committee until June 2023. Tbird2 offers scholarships at six colleges, for both veteran and non-veteran students, including two 4-year universities, Embry-Riddle Aeronautical University and Arizona State University, Ira A. Fulton Schools of Engineering.

    Embry-Riddle Aeronautical University photographer, Connor McShane,
    Director of Enrollment Multimedia, 928 777-6912

    Miller Capital Corporation
    Kristina Caylor
    Vice President Admin & Corporate Controller
    kcaylor@themillergroup.net
    602.225.0505

    Keaton S. Ziem
    Senior Communications Officer
    ziemk@erau.edu
    386.226.4838

    Photos accompanying this announcement are available at https://www.globenewswire.com/NewsRoom/AttachmentNg/c327597f-75c9-4779-8d41-a0198005c64e

    https://www.globenewswire.com/NewsRoom/AttachmentNg/2c4c3dcc-9f44-4f68-9963-bda216c15103

    https://www.globenewswire.com/NewsRoom/AttachmentNg/40f71685-00ef-42f4-adbd-d5cefe243886

    The MIL Network

  • MIL-OSI: WENDEL: Q3 2024 Trading Update

    Source: GlobeNewswire (MIL-OSI)

    PRESS RELEASE – OCTOBER 24, 2024

    Fully diluted1Net Asset Value of €184.5

    up +13.7 %2year-to-date (+5.3% since June 30)

    With the announced acquisition of Monroe Capital, Wendel dramatically expands its Asset Management platform and rebalances its business model towards more recurring cash flows and growth

    Fully diluted Net Asset Value3as of September 30, 2024: €184.5 per share

    • Fully diluted NAV per share up +16.1%4 since the start of the year when restating for the €4 dividend paid in May 2024 reflecting:
      • Strong increase in Bureau Veritas’ share price (+34% YTD)
      • Slight decrease in value of non-listed assets
      • Positive contribution of Asset Management activities (IK Partners), reflecting the increase in market multiples

    Very active implementation of new strategic directions and active portfolio rotation

    • Principal Investment:
      • €2.3 billion proceeds and value crystallization through the sale of 9% of Bureau Veritas’ share capital and the disposal of Constantia Flexibles
      • €0.7 billion invested including €625 million in Globeducate, closed on October 16
    • Asset Management:
      • €0.4 billion invested for the acquisition of 51% of IK Partners
      • $1.13 billion will be invested in equity to acquire 75% of Monroe Capital, as announced on October 22, 2024 (closing expected in the first half of 2025)

    Wendel Asset Management business is now a significant performance driver

    • Considering the announced acquisition of Monroe Capital, Wendel’s Asset Management platform will represent c.€31bn of AuM in private assets5
    • In 2025, Wendel AM business is expected to generate c.€160m6 of Fee Related Earnings (“FRE”) and c.€185m of total pre-tax profit in 2025
    • IK Partners Fee Paying AuM up +19% over the first 9 months of 2024

    Consolidated 9M 2024 sales of €5,918.1 million, up +14.6% overall and +8.9% organically

    • Very strong organic growth at Bureau Veritas (+10.4% over 9 months)
    • Solid growth at CPI (+7.9%)    
    • ACAMS (+8%) in total over 9 months, due to the earlier timing of a flagship conference than in 2023
    • Encouraging first 9 months for Stahl (+1.6% total growth), with Q3 (-4.7%) impacted by a mixed environment in its industry
    • Scalian: slight decrease of -0.2% over 9 months

    Strong financial structure and committed to remain Investment Grade

    • Debt maturity of 3.9 years with an average cost of 2.4%
    • LTV ratio at -6.8% as of September 30, 2024, and 18.9%7 on a pro forma basis
    • Pro forma total liquidity of €1.48 billion as of September 30, 2024, including €0.5 billion in cash and €875 million in committed credit facility (fully undrawn)
    Laurent Mignon, Wendel Group CEO, commented:

    “The first nine months of 2024 have been generating good value creation for shareholders, with fully diluted Net Asset Value growing by 13.7%, driven notably by Bureau Veritas’ strong stock price and operating performances.

    We continue to enhance our cash flow generation and value creation profile, by executing our strategic plan with determination, rigor and financial discipline, as demonstrated by the Monroe Capital acquisition, announced two days ago, while also focusing on premium assets in our principal investment activities, highlighted by the recent acquisition of Globeducate.

    Our transformation to a dual-strategy model is now well-grounded, with top partners in asset management such as IK Partners in private equity and now Monroe Capital in private credit.

    Following the investment in Globeducate and the announced acquisition of Monroe Capital, the priorities of Wendel’s teams are to create value on existing assets, to successfully build the private asset management platform around IK Partners and Monroe Capital, and to maintain a solid financial structure.”

    Wendel’s net asset value as of September 30, 2024: €184.5 per share on a fully diluted basis

    Wendel’s Net Asset Value (NAV) as of September 30, 2024, was prepared by Wendel to the best of its knowledge and on the basis of market data available at this date and in compliance with its methodology.

    Fully diluted Net Asset Value was €184.5 per share as of September 30, 2024 (see detail in the table below), as compared to €162.3 on December 31, 2023, representing an increase of +13.7% since the start of the year and +16.1% restated for the dividend paid in 2024. Compared to the last 20-day average share price as of September 30, the discount to the September 30, 2024, fully diluted NAV per share was -50.6%.

    Bureau Veritas contributed very positively to the increase in Net Asset Value: on September 30, its 20-day average share price was up strongly (+34.3%) compared to December 31, 2023. Impacts from share price movements from IHS Towers (-30.0%) and Tarkett (-2.8%) were negligible given the weight of Bureau Veritas in the NAV. Total value creation per share of listed assets was therefore +€26.1 over the first nine months of 2024 on a fully diluted basis.

    Unlisted assets’ contribution to the growth of the NAV was slightly negative over the first nine months of the year with a total change per share of -€1.2, reflecting a positive evolution of the market multiples and from bolt-on acquisitions, more than entirely offset by negative FX effect and selective downward revisions of outlooks for the current year (compared to December 31, 2023).

    Asset management activities were consolidated and accounted in the NAV for the first time at the end of June following the acquisition of IK Partners. There is no sponsor money included in the NAV yet, as no capital has been called. IK Partners’ valuation is up by €1.5 per share over the third quarter, driven by positive market multiples evolution.

    Cash operating costs and net financing results impacted NAV by -€1.2 over 9 months, as Wendel benefited from a positive carry. The impact of year-to-date share buybacks on fully diluted NAV per share is +€1.4 per share more as of September 30, 2024, than as of December 31, 2023. Other assets and liabilities impacted NAV by -€0.5.

    Total Net Asset Value increase amounted to €26.2 per share over the first nine months of the year before dividend payment.

    Fully diluted NAV per share of €184.5 as of September 30, 2024

    (in millions of euros)     09/30/2024 12/31/2023
    Listed investments Number of shares Share price (1) 3,800 3,867
    Bureau Veritas 120.3m/160.8m €29.9/€22.2 3,591 3,575
    IHS 63.0m/63.0m $3.1/$4.4 174 251
    Tarkett   €8.9/€9.1 35 40
    Investment in unlisted assets (2) 3,158 4,360
    Asset Management Activities (3) 449
    Other assets and liabilities of Wendel and holding companies (4) 95 6
    Net cash position & financial assets (5) 3,027 1,286
    Gross asset value     10,530 9,518
    Wendel bond debt     -2,386 -2,401
    IK Partners transaction deferred payment -131
    Net Asset Value     8,012 7,118
    Of which net debt     509 -1,115
    Number of shares     44,430,864 44,430,554
    Net Asset Value per share 180.3 €160.2
    Wendel’s 20 days share price average   €91.1 €79.9
    Premium (discount) on NAV -49.5% -50.1%
    Number of shares – fully diluted 42,469,744 43,302,016
    Fully diluted Net Asset Value, per share 184.5 €162.3
    Premium (discount) on fully diluted NAV -50.6% -50.8%

    (1)   Last 20 trading days average as of September 30, 2024, and December 31, 2023.

    (2)   Investments in unlisted companies (Stahl, Crisis Prevention Institute, ACAMS, Scalian, Wendel Growth as of September 30, 2024, also included Constantia Flexibles as of December 31, 2023). Aggregates retained for the calculation exclude the impact of IFRS16.

    (3)   IK Partners’ activity, no sponsor money has been called at this stage. It is therefore not included in the NAV at this stage.

    (4)   Of which 1,961,120 treasury shares as of September 30, 2024, and 1,128,538 treasury shares as of December 31, 2023.

    (5)   Cash position and financial assets of Wendel and holdings.

    Assets and liabilities denominated in currencies other than the euro have been converted at exchange rates prevailing on the date of the NAV calculation.

    If co-investment and management LTIP conditions are realized, subsequent dilutive effects on Wendel’s economic ownership are accounted for in NAV calculations. See page 246 of the 2023 Universal Registration Document.

    Wendel’s Principal Investments’ portfolio rotation

    Since the beginning of the year, Wendel has realized a total of €2.3 billion in disposals for its own account and has invested €0.7 billion, reflecting the acceleration of the diversification of its investment portfolio, in line with the strategy announced a few months ago:

    • Wendel announced on January 4, 2024, that it had completed the sale of Constantia Flexibles, generating total net proceeds9 for Wendel of €1,121 million for its shares, i.e. a valuation over 10% higher than the latest NAV on record before the announcement of the transaction (as at March 31, 2023).
    • Wendel announced on April 5, 2024, that it had successfully completed the sale of 40.5 million shares in Bureau Veritas, representing c.9% of the Company’s share capital, for total proceeds of approximately €1.1 billion. The transaction was carried out at a price of €27.127, or a discount of 3% from the previous day’s share price.
    • Wendel Growth realized its investment in Preligens, a leader in artificial intelligence (AI) for aerospace and defence, generating net proceeds to Wendel of c.€14.6M, translating into a gross IRR of 28%10. In addition, Wendel Growth announced on June 11, 2024, the acquisition of a minority stake in YesWeHack through an equity investment of €14.5 million.
    • Wendel reinvested €43.7m in Scalian upon the acquisition of MANNARINO Systems & Software on June 21, 2024. This Canadian company is a leading engineering services specialist for advanced technology R&D for the aviation sector, primarily in North America, with recognized expertise in safety-critical embedded software and systems.
    • On October 16, 2024, Wendel completed the acquisition of c.50% of Globeducate, one of the world’s leading international K-12 education groups, from Providence Equity Partners. Wendel invested €625 million of equity, at an Enterprise Value of c.€2 billion11, to join Providence, and both firms will now own c.50% of the group.

    Wendel’s Asset Management platform evolution

    Acquisition of Monroe Capital dramatically expands Wendel’s Asset Management platform and rebalances its business model towards more recurring cash flows and growth

    Wendel announced on October 22 that it had entered into a definitive partnership agreement including the acquisition of 75% of Monroe Capital LLC (“Monroe Capital” or “the Company”), and a sponsoring program of $800 million to accelerate Monroe Capital’s growth, and will invest in GP commitment for up to $200 million.

    For Wendel, the acquisition of a controlling stake in Monroe Capital, a private credit market leader focused on the U.S. lower middle market that has established an outstanding track record, would represent a significant and transformational advancement of the strategy it announced in March 2023 to develop its third-party asset management platform to complement its longstanding Principal Investment business.

    With IK Partners and Monroe Capital, Wendel’s third party asset management platform will reach c.€31 billion in AUM12, c.€ 455 million revenues, c.€160 million pre-tax FRE (c.€101 million in pre-tax FRE (Wendel share) by 2025 and is expected to reach €150 million (Wendel share) in pre-tax FRE by 2027 through double-digit organic growth.

    For more information, see the October 22, 2024, announcement on http://www.wendelgroup.com.

    Third Party Asset Management value creation and performance

    9 months 2024 performance

    Over the first nine months of 2024, IK Partners had particularly strong activity, generating a total of €126.4 million in revenue. Total Assets under Management (€13.3 billion, of which €3.3 billion of Dry Powder13) grew by 20% since the beginning of the year, and FPAuM14 (€9.0 billion) by 19%. Over the period, €1.7 billion of new funds were raised (IK X, PFIII and IK SO) and 7 exits have been announced, for over €1.2 billion.

    Sponsor money invested by Wendel

    Wendel committed €400 million in IK Partners funds, of which €300 million in IK X. These commitments have not yet been called.

    Principal Investment companies’ value creation and performance

    Listed Assets: 36% of Gross Asset Value

    Bureau Veritas – Strong Q3 2024 organic revenue growth; refocused portfolio with ongoing acquisitions acceleration, in line with the LEAP | 28 strategy; 2024 revenue outlook upgraded

    (Full consolidation)

    Revenue in the first nine months of 2024 totaled € 4,569.6 million, a 5.6% increase year-to-date.

    Revenue in the third quarter of 2024 amounted to € 1,547.9 million, an 8.8% increase compared to Q3 2023. Organic growth achieved a strong 13.0%, which led to 10.5% on a 9-month basis. The scope effect was a positive 0.5%, reflecting bolt-on acquisitions (contributing to +1.1%) realized in the past few quarters and partly offset by the impact of small divestments completed over the last twelve months (contributing to -0.6%). Currency fluctuations had a negative impact of 4.7%, due to the strength of the euro against most currencies.

    Three businesses delivered very strong organic growth: Marine & Offshore, up 13.2%, Industry, up 23.8%, and Certification, up 17.7%. Buildings & Infrastructure further recovered, up 9.3% organically in the third quarter (after 4.3% in the first half) while both Consumer Products Services and Agri Food & Commodities grew high-single digits organically, both reflecting improving market trends.

    Based on the 9-month performance, leveraging a healthy and growing sales pipeline and strong underlying market growth, Bureau Veritas now expects to deliver for the full year 2024:

    • 9 to 10% organic revenue growth (from “high single-digit” previously);
    • Improvement in adjusted operating margin at constant exchange rates;
    • Strong cash flow, with a cash conversion above 90%.

    For more information: https://group.bureauveritas.com

    Tarkett – Slight organic decrease year-to-date, with Q3 2024 solid organic sales growth of +2.4%, as Sports division grew at a sustained pace in the most important quarter of the year. Activity remained sluggish in flooring, particularly in EMEA and the CIS countries

    (Equity method)

    Revenue in the first nine months of 2024 amounted to €2,560.7 million, down by -1.2% compared to the same period of 2023, reflecting an organic decline of -0.4%. Sales prices remained stable over the financial year, i.e. -0.3% compared to the first nine months of 2023. In Q3 2024, Group net sales came to €1,002 million, up +1.8% compared to the third quarter of 2023. Organic growth reached +2.4%. Sales prices remained broadly stable over the year, with a slight decline of -0.5% compared to the third quarter of 2023.

    For more information: https://www.tarkett-group.com/en/investors/

    IHS Towers (not consolidated) – IHS Towers will report its Q3 2024 results in the coming weeks

    Unlisted Assets: 30% of Gross Asset Value

      Sales (in millions)
      9 months 2023 9 months 2024
    Stahl €677.3 €687.9
    CPI $103.6 $112.0
    ACAMS $67.9 $76.8
    Scalian €402.2 €401.3

    Stahl – Total sales up 1.6% for the first 9 months of 2024 on the back of Q3 market challenges in the leather market for automotive and luxury goods

    (full consolidation) 

    Stahl, the world leader in specialty coatings for flexible materials, posted total sales of €687.9 million in the first 9 months of 2024, representing a total increase of +1.6% over the period. Organically, sales were slightly down -0.4%, in a context of tougher markets in automotive and luxury goods, while FX contributed -1.3%. The acquisition of ICP Industrial Solutions Group (ISG) in March 2023 contributed positively (+3.3%) to total sales variation.

    Stahl Q3 sales were down -4.7% (-3.1% organically and -1.6% due to FX) linked to the weaker market performance of the automotive and luxury goods sectors, notably in August, which was a particularly quiet month this year as many Italian tanneries were inactive for a four-week period due to reduced activity.

    On September 27, Stahl completed the acquisition of WEILBURGER Coatings, a leading German-based manufacturer of water-based and energy cured coatings for the graphic arts and packaging industry. The transaction significantly strengthens Stahl’s packaging coatings division and supports its strategy to broaden its franchise for specialty coatings for flexible materials. This acquisition strengthens Stahl’s strategic position in Europe, positioning the company as the second-largest packaging coatings player in the region. WEILBURGER Coatings posted sales of €70 million in 2023 and has over 140 employees, primarily based in Germany.

    Stahl also announced it maintained its Platinum EcoVadis rating for the third consecutive year, reaffirming its commitment to sustainability. In August, Stahl was awarded the Living Wage certification strengthening its commitment to fair compensation and employee well-being.

    Crisis Prevention Institute reports +8.2% revenue as compared with 9M 2023

    (full consolidation)

    CPI recorded first nine months 2024 revenues of $112 million, up +8.2% compared to 9M 2023, or +8.1% organically (FX impact was +0.1%), resulting from the addition of new certified instructors across end markets and geographies, and strong consumption of training materials, signifying active training of broader staff throughout the Company’s primary customers in educational, healthcare and human services settings. The company’s year-to-date results include relatively flat year-over-year revenue for the third quarter, however, reflecting what management describes as a temporary, seasonal slowdown in new certified instructors and a difficult year-over-year comparison resulting from an unusually large enterprise program added in the third quarter of 2023.

    2024 continues to be a pivotal year for CPI in growing its impact and reach, including further global expansion with the opening of its first office in the United Arab Emirates, and new program launches, including Reframing Behavior, a new certification program designed to help educators build a more positive, supportive learning environment and prevent disruptive classroom behavior. In addition, regulatory and legislative actions continue to provide support for workplace violence prevention programs and related training, including expanded requirements in New York, Texas and California during 2024.

    ACAMS – ACAMS reports positive total growth amid accelerated transformation

    (full consolidation)

    ACAMS, the global leader in training and certifications for anti-money laundering and financial crime prevention professionals, reported year-to-date bookings of $78 million, roughly flat with reported bookings for the same period in 2023, and revenue of $77 million for the first nine months of 2024, representing 8% year-over-year growth. The results for the first nine months of 2024 reflect continued growth and market expansion in North America and Europe, largely offset by declines with customers in the Asia-Pacific region. As well, the year-to-date results include the impact of ACAMS’ flagship Las Vegas conference that was held in the third quarter of 2024 and fourth quarter of 2023. Excluding the impact of this timing difference would reduce year-over-year bookings and revenue growth for the nine months ending September 30, 2024, to -0.8% and +0.3%, respectively.

    The Company has made considerable progress in its transformation this year. Having largely completed its separation and transition to a stand-alone, independent company in 2023, ACAMS has made many investments instrumental to the Company’s future growth, including organizational changes led by the CEO, Neil Sternthal, who joined ACAMS in early 2024 and subsequently added several executives, including a new Chief Financial Officer and a Chief Revenue Officer, investments in the Company’s technology platform, business analytics and sales organizations, and new product development, most notably with the planned introduction of its Certified Anti-Fraud Specialist (CAFS) certification.

    Scalian – Slight decrease of total sales of -0.2% year-to-date, in a context of overall market slowdown

    (full consolidation since July 2023.)  

    Scalian, a European leader in digital transformation, project management and operational performance consulting, reported total revenues of €401.3 million over the first 9 months in a context of continued industry slowdown, in particular supply chain tensions in the aeronautic sector as well as the turndown of the European automotive sector. Sales are down by -2.5% organically and benefited from a positive scope effect of +2.3%.

    Scalian announced the acquisition of Dulin Technology in January 2024, a Spanish-based consulting firm specializing in cybersecurity for the financial sector, and MANNARINO Systems & Software in June 2024, a Canadian-based company that is a leading engineering services specialist with a unique know-how in advanced technology R&D for the aviation sector.

    Agenda

    Friday, December 6, 2024,

    2024 Investor Day.

    Wednesday, February 26, 2025

    Full-Year 2024 Results – Publication of NAV as of December 31, 2024, and Full-Year consolidated financial statements (post-market release)

    Thursday, April 24, 2025

    Q1 2025 Trading update – Publication of NAV as of March 31, 2025 (post-market release)

    Thursday, May 15, 2025

    Annual General Meeting

    Wednesday, July 30, 2025

    H1 2025 results – Publication of NAV as of June 30, 2025, and condensed Half-Year consolidated financial statements (post-market release)

    Appendix 1: Nine-month 2024 sales of Group companies

    Nine-month 2024 consolidated sales

    (in millions of euros) 9-month 2023 9-month 2024            Δ Organic Δ
    Bureau Veritas 4,328.0 4,569.6 +5.6% +10.4%
    Stahl (1) 677.3 687.9 +1.6% -0.4%
    Scalian (2) n.a. 409.3 n.a. n.a.
    Crisis Prevention Institute 95.6 103.1 +7.9% +8.1%
    ACAMS (3) 62.7 70.6 +12.6% +8.6%
    IK Partners(4) n.a. 77.6 n.a. n.a.
    Consolidated net sales (3)(4) 5,163.5 5,918.1 +14.6% +8.9%

    (1)   Acquisition of ICP Industrial Solutions Group (ISG) since March 2023 (sales’ contribution of €70.8M vs €62.7M as of 9M 2023)
    (2)   Scalian has a different reporting date to Wendel. Consequently, sale’s contribution corresponds to 9 months’ sales between October 1st 2023 and June 30 2024.
    (3)   The sales include a PPA restatement for an impact of -€0.5M (vs -€3.2M as of 9M 2023). Excluding this restatement, the sales amount to €71.3M vs. €66.1M as of 9M 2023. The total growth of +12.6% include a PPA effect of +4.5% and the conference revenue which generated $5,9M while this event occurred in Q4 2023 last year.        
    (4)   Contribution of five months of sales        
                                                                            

    Nine-month 2024 sales of equity accounted companies

    (in millions of euros) 9-month 2023 9-month 2024           Δ Organic Δ
    Tarkett(5) 2,592.6 2,560.7 -1.2% -0.4%

    (5)   Sales price adjustments in CIS countries are historically intended to compensate for currency movements and are therefore excluded from the “organic growth” indicator.

    Q3 2024 sales of Group companies

    Q3 2024 consolidated sales

    (in millions of euros) Q3 2023 Q3 2024             Δ Organic Δ
    Bureau Veritas 1,423.8 1,547.9 +8.8% +13.0%
    Stahl 234.3 223.3 -4.7% -3.1%
    Scalian (1) n.a. 131.1 n.a. n.a.
    Crisis Prevention Institute 42.0 41.2 -1.8% -1.0%
    ACAMS (2) 20.2 26.1 +29.1% +28.6%
    IK Partners n.a. 44.2 n.a. n.a.
    Consolidated net sales 1,720.2 2,013.8 +17.1% +10.6%

    (1)   Scalian has a different reporting date to Wendel. Consequently, sale’s contribution corresponds to 3 months’ sales between April 1st 2024 and June 30 2024.
    (2)   ACAMS Q3 2024 sales includes the conference which generated $5,9M, while this event occurred in Q4 2023 last year.                        

    Q3 2024 sales of equity accounted companies

    (in millions of euros) Q3 2023 Q3 2024           Δ Organic Δ
    Tarkett(3) 984.3 1,002.0 +1.8% +2.4%

    (3)   Sales price adjustments in CIS countries are historically intended to offset exchange rate movements, and are therefore excluded from the “organic growth” indicator.


    1 Fully-diluted NAV per share assumes all treasury shares are cancelled and a complementary liability is booked to account for all LTIP related securities in the money as of the valuation date.
    2 +13.7% compared with fully diluted NAV of €162.3 as of Dec. 31, 2023.
    3 Fully diluted of share buybacks and treasury shares. Without adjusting for dilution, NAV stands at €8,012m and €180.3 per share.
    4 Including the €4.0 per share dividend paid in 2024, and on a non-fully diluted basis NAV is up 15.0%.
    5 As of September 2024.
    6 c.€101m of FRE expected in 2025, Wendel share.

    7 Proforma of Globeducate acquisition (€-625m), sponsor money commitment in IK (€-400m), IK Partners transaction deferred payment (€-131m), Monroe Capital 75% acquisition (including estimated earnout) and GP commitments in Monroe Capital ($-200m for 2025).

    8 Proforma of Globeducate acquisition (€-625m), sponsor money commitment in IK (€-400m), IK Partners transaction deferred payment (€-131m), Monroe Capital 75% acquisition (including estimated earnout) and GP commitments in Monroe Capital ($-200m for 2025).

    9 Net proceeds after ticking fees, financial debt, dilution to the benefit of the Company’s minority investors, transaction costs and other debt-like adjustments.
    10 Gross IRR of 28%. Net IRR of 26%.
    11 EV including IFRS 16 impacts. Excluding IFRS 16, EV stands at c.€1.86 billion.
    12 As of September 2024

    13 Commitments not yet invested

    14 Fee Paying AuM

    Attachment

    The MIL Network

  • MIL-OSI Global: ‘Our nuclear childhood’: the sisters who witnessed H-bomb tests over their Pacific island, and are still coming to terms with the fallout

    Source: The Conversation – UK – By Christopher Hill, Associate Professor (Research and Development), Faculty of Business and Creative Industries, University of South Wales

    Nuclear detonations were the backdrop to Teeua and Teraabo’s childhood. By the time the sisters were eight and four, the Pacific island on which they grew up, Kiritimati, had hosted 30 atomic and thermonuclear explosions – six during Operation Grapple, a British series between 1957 and 1958, and 24 during Operation Dominic, led by the US in 1962.

    The UK’s secretary of state for the colonies, Alan Lennox-Boyd, had claimed the Grapple series would put Britain “far ahead of the Americans, and probably the Russians too, in super-bomb development”. Grapple, the country’s largest tri-service operation since D-Day, also involved troops from Fiji and New Zealand. It sought to secure the awesome power of the hydrogen bomb: a thermonuclear device far more destructive than the atomic bomb.

    Britain’s seat at the top table of “super-bomb development” was emphatically announced in April 1958 with Grapple Y: an “H-bomb” 200 times more powerful than the bomb dropped on Hiroshima in 1945. This remains Britain’s largest nuclear detonation – one of more than 100 conducted by the UK, US and Soviet Union in 1958 alone.

    More than six decades later, the health effects on former servicemen based on Kiritimati, as well as at test locations in South and Western Australia, remain unresolved. Greater Manchester’s mayor, Andy Burnham, has called the treatment of UK nuclear test veterans “the longest-standing and, arguably, the worst” of all the British public scandals in recent history.




    Read more:
    Nobel peace prize awarded to Japanese atomic bomb survivors’ group for its efforts to free the world of nuclear weapons


    Unlike the Post Office, infected blood and Grenfell Tower inquiries in 2024, there has been no UK inquiry into British nuclear weapon tests in Australia and the Pacific. Yet veterans and their descendants maintain these tests caused hereditary ill-health effects and premature deaths among participants. The British government has been accused of hiding records of these health impacts for decades behind claims of national security.

    Over the past year, the life stories of British nuclear test veterans have been collected by researchers, including myself, for an oral history project in partnership with the British Library. Whether from a vantage point of air, land or sea, the veterans all recall witnessing nuclear explosions with startling clarity, as if the moment was seared on to their memories. According to Doug Herne, a ship’s cook with the Royal Navy:

    When the flash hit you, you could see the X-rays of your hands through your closed eyes. Then the heat hit you, and it was as if someone my size had caught fire and walked through me. To say it was frightening is an understatement. I think it shocked us into silence.

    British servicemen describe their nuclear test experiences. Video: Wester van Gaal/Motherboard.

    But what of the experiences of local people on Kiritimati? I have recently interviewed two sisters who are among the few surviving islanders who witnessed the nuclear tests. This is their story.

    ‘A mushroom cloud igniting the sky’

    At the start of Operation Grapple in May 1957, around 250 islanders lived on Kiritimati – the world’s largest coral reef atoll, slap bang in the centre of the Pacific Ocean, around 1,250 miles (2,000km) due south of Hawaii. The island’s name is derived from the English word “Christmas”, the atoll having been “discovered” by the British explorer James Cook on Christmas Eve 1777.

    In May 2023, I visited Kiritimati for a research project on “British nuclear imperialism”, which investigated how post-war Britain used its dwindling imperial assets and resources as a springboard for nuclear development. I sought to interview islanders who had remained on the atoll since the tests, including Teeua Tekonau, then aged 68. In 2024, I visited her younger sister, Teraabo Pollard, who lives more than 8,000 miles away in the contrasting surroundings of Burnley, north-west England.

    Far from descriptions of fear and terror, both Teeua and Teraabo looked back on the tests with striking enthusiasm. Teraabo recalled witnessing them from the local maneaba (open-air meeting place) or tennis court as a “pleasurable” experience full of “excitement”.

    She described having her ears plugged with cotton wool before being covered with a blanket. As if by magic, the blanket was then lifted to reveal a mushroom cloud igniting the night sky – a sight accompanied by sweetened bread handed out by American soldiers. So vivid was the light that Teraabo, then aged four, described “being excited about it being daytime again”.

    An Operation Grapple thermonuclear test near Kiritimati, 1957-58. Video: Imperial War Museums.

    In view of the violence of the tests, I was struck that Teeua and Teraabo volunteered these positive memories. Their enthusiasm seemed in marked contrast to growing concerns about the radioactive fallout – including those voiced by surviving test veterans and their descendants. As children, the tests seem to have offered the sisters a spectacle of fantasy and escapism – glazed with the saccharine of American treats and Disney films on British evacuation ships.

    Yet they have also lived through the premature deaths of family members and, in Teraabo’s case, a malignant tumour dating from the time of the tests. And there have been similar stories from other families who lived in the shadow of these very risky, loosely controlled experiments. Teraabo told me about a friend who had peeked out from her blanket as a young girl – and who suffered from eye and health problems ever since.

    ‘Only a very slight health hazard’

    Kiritimati forms part of the impossibly large Republic of Kiribati – a nation of 33 islands spread over 3.5 million square kilometres; the only one to have territory in all four hemispheres and, until 1995, on either side of the international date line. Before independence from Britain in 1979, Kiribati belonged to the Gilbert and Ellice Island Colony, which in effect made Kiritimati a “nuclear colony” for the purpose of British and American testing.

    In 1955, Teeua and Teraabo’s parents, Taraem and Tekonau Tetoa, left their home island of Tabiteuea, a small atoll belonging to the Gilbert group of islands in the western Pacific. They boarded a British merchant vessel bound for Christmas Island nearly 2,000 miles away. Setting sail with new-born Teeua in their arms, the family looked forward to a future cutting copra on Kiritimati’s British coconut plantation.

    The scale of this journey, with four young children, was immense. Just how the hundred or so Gilbertese passengers “managed to live [during the voyage] was better not asked”, according to one royal engineer who described a similar voyage a few years later. “There were piles of coconuts everywhere – perhaps they were for both food and drink.”



    The Insights section is committed to high-quality longform journalism. Our editors work with academics from many different backgrounds who are tackling a wide range of societal and scientific challenges.


    Within two years of their arrival, the family faced more upheaval as mother Taraem and her children were packed aboard another ship ahead of the first three sets of British nuclear tests in the Pacific. Known as Grapple 1, 2 and 3, they were to be detonated over Malden Island, an atoll some 240 miles to the south of Kiritimati – but still too close for the comfort of local residents.

    According to Teeua, the evacuation was prompted by disillusioned labourers brought to Kiritimati without their families, who went on strike after learning how much the British troops were being paid. But the islanders’ perspectives do not feature much in the colonial records, which give precedence to British disputes about logistical costs and safety calculations.

    The Grapple task force resolved that the safe limit set by the International Commission on Radiological Protection should be reduced, to limit the cost of evacuations. A meeting in November 1956 noted that “only a very slight health hazard to people would arise from this reduction – and that only to primitive peoples”.

    Shocking as this remark sounds, it is typical of the disregard that nuclear planners appear to have had, both for Indigenous communities and the mostly working-class soldiers. These lives did not seem to matter much in the context of Britain’s quest for nuclear supremacy. William Penney, Britain’s chief nuclear scientist, had bemoaned how critics during tests in Australia were “intent on thwarting the whole future of the British Empire for the sake of a few Aboriginals”.

    Tekonau, Teeua’s father, was one of the 30 or so I-Kiribati people to stay behind on Kiritimati during the Malden tests in May and June 1957. As one of the only labourers to speak English, he had gained the trust of the district commissioner, Percy Roberts, who invited Tekonau to accompany him during inspections of villagers’ houses in Port London, then the island’s only village. On one occasion, Teeua said, the islanders did not recognise her father as he had been given a “flat top” haircut like the Fijian soldiers. “This means he had a nice relationship with the soldiers,” she told me. “Thank God for giving me such a good and clever dad.”

    Since the initial tests did not produce a thermonuclear explosion, the task force embarked on further trials between November 1957 and September 1958, known as Grapple X, Y and Z. In view of expense and time, these were conducted on Kiritimati rather than Malden Island – and this time, the residents were not evacuated to other islands. Rather, families were brought aboard ships in the island’s harbour and shown films below deck.

    After these tests, the islanders returned to find the large X and Y detonations had cracked the walls of their homes and smashed their doors and furniture. One islander found their pet frigate bird, like so many of the wild birds on Kiritimati, had been blinded by the flash of Grapple Y. No compensation was ever paid to the islanders, although the Ministry of Supply did reimburse the colony for deterioration of “plantation assets”, including £4 for every damaged coconut tree (equivalent to £120 today).

    A month before Grapple Y, Teraabo was born. Her earliest and most vivid childhood memories are of the US-led Operation Dominic four years later, by which time evacuation procedures had been abandoned altogether.

    This series of tests was sanctioned by Britain in exchange for a nuclear-powered submarine and access to the Nevada Proving Grounds in the US – regarded as pivotal to the future of British weapons technology ahead of the signing of the Test Ban Treaty in October 1963, which would prohibit atmospheric testing.

    Dominic’s 24 detonations on Kiritimati – which usually took place after sunset around 6pm, between April and November 1962 – were “awesome”, according to Teraabo. Recalling the suspense as the “tannoy announced the countdown”, she described “coming out of cover [and] witnessing the bomb [as] an amazing experience … When the bomb set off, the brilliance of the light was tremendous.”

    Each explosion’s slow expiration would re-illuminate the Pacific sky. One, Starfish Prime, became known as a “rainbow bomb” because of the multi-coloured aurora it produced over the Pacific, having been launched into space where it exploded.

    So spectacular were these descriptions that I almost felt I had to suspend disbelief as I listened. At one point in my interview with Teraabo, she leaned in to reassure me that she had no interest in exaggerating these events: “I’m a very proud person,” she whispered, “I would never lie.”

    ‘In our blood’

    More than six decades on from the Grapple tests, I was sitting in Teeua’s kitchen in the village of Tabwakea (meaning “turtle”), near the northern tip of Kiritimati. I had driven here in a Subaru Forester, clapped-out from the many potholes on the island’s main road, itself built by royal engineers over 60 years ago.

    Teeua Tekonau in her kitchen during the author’s visit to Kiritimati in 2023.
    Christopher R. Hill., CC BY

    Teeua’s home, nestled down a sand track, had a wooden veranda at the front where she would teach children to read and write under shelter from the hot equatorial sun. Handcrafted mats lined the sand and coral floor, fanning out from the veranda to the kitchen at the back.

    The house felt full of the sounds of the local community, from the chatter of neighbours to the laughter of children outdoors. No one could feel lonely here, despite the vastness of the ocean that surrounds Kiritimati.

    As Teeua cooked rice and prepared coffee, we discussed the main reason for my visit: to understand the impacts of the nuclear tests on the islanders, their descendents, and the sensitive ecosystem in which they live. Teeua is chair of Kiritimati’s Association of Atomic Cancer Patients, and one of only three survivors of the tests still living on Kiritimati. She pulled up a seat and looked at me:

    Many, many died of cancer … And many women had babies that died within three months … I remember the coconut trees … when you drank [from the coconuts], you [were] poisoned.

    Both Teeua’s parents and four of her eight siblings had died of cancer or unexplained conditions, she said. Her younger brother, Takieta, died of leukaemia at the age of two in November 1963 – less than a year after Operation Dominic ended. Her sister Teraabo, who discovered a tumour in her stomach shortly after the trials, was only able to have her stomach treated once she moved to the UK in 1981, by which time the tumour had turned malignant.

    Teeua’s testimony pointed to the gendered impacts of the nuclear tests. She referred to the prevalence of menstrual problems and stillbirths, evidence of which can be inferred from the testimony of another nuclear survivor, Sui Kiritome, a fellow I-Kiribati who had arrived on Kiritimati in 1957 with her teacher husband. Sui has described how their second child, Rakieti, had “blood coming out of all the cavities of her body” at birth.

    A rare military hospital record from 1958 – stored in the UK’s National Archives at Kew in London – also refers to the treatment of a civilian woman for ante-partum haemorrhage and stillbirth, though it is unclear whether this was a local woman or one of the soldier’s wives on the passenger ship HMT Dunera, which visited briefly to “boost morale” after Grapple X.

    Members of the Kiritimati Association of Atomic Cancer Patients.
    Courtesy: Teeua Taukaro., CC BY-ND

    Having re-established the Association of Atomic Cancer Patients in 2009, Teeua has continued much of the work that Ken McGinley, first chair of the British Nuclear Tests Veterans Association, did after its establishment in 1983. She has documented the names of all I-Kiribati people present during the tests, along with their spouses, children and other relatives. And she has listed the cancers and illnesses from which they have suffered.

    In the absence of medical records at the island hospital, these handwritten notes are the closest thing on the atoll to epidemiological data about the tests. But according to Teeua, concerns about the health effects of the tests date back much longer, to 1965 when a labourer named Bwebwe spoke out about poisonous clouds. “Everyone thought he was crazy,” Teeua recalled.

    But Bwebwe’s speculations were lent credibility by Sui Kiritome’s testimony, and by the facial scars she bore that were visible for all to see. In an interview with her daughter, Sui explained how she was only 24 when she started to lose her hair, and “burns developed on my face, scalp and parts of my shoulder”.

    In a similar manner to claims made by British nuclear test veterans, Sui attributed her health problems to being rained on during Grapple Y – which may have been detonated closer to the atoll’s surface than the task force was prepared to admit.

    When I asked Teeua why her campaigning association was only reformed in 2009, she explained it had been prompted by a visit from British nuclear test veterans who “told us that everyone [involved in the tests] has cancer – blood cancer”. They had been told this in the past but, she said, “we did not believe it. But after years … after our children [also] died of cancer, then we remembered what they told us.”

    After some visiting researchers explained to Teeua and the community that the effects of the tests were “not good”, she concluded that “our kids died of cancer because of the tests … That’s why we start to combine together … the nuclear survivors, to talk about what they did to our kids”.

    I found Teeua’s testimony deeply troubling: not only because of the suffering she and other families have been through, but in the way that veterans had returned to Kiritimati as civilians, raising concerns among locals that may have lain dormant or been forgotten. The suggestion that radiation was “in her blood” must have been deeply disturbing for Teeua and her community.

    But I reminded myself that the veterans who came looking for answers in 2009 were also victims. They made the long journey seeking clues about their health problems, or a silver bullet to prove their government’s deception over the nuclear fallout.

    As young men, they were unwittingly burdened with a lifetime of uncertainty – compounded by endless legal disputes with the Ministry of Defence or inconclusive health studies that jarred with their personal medical histories. And, like the islanders, some of these servicemen died young after experiencing agonising illnesses.

    The scramble for the Pacific

    My research on British nuclear imperialism also sheds light on how imperial and settler colonial perceptions of “nature” shaped how these nuclear tests were planned and operationalised.

    British sites were selected on the basis of in-depth environmental research. When searching the site for Britain’s first atomic bomb (the Montebello Islands off the west coast of Australia), surveyors discovered 20 new species of insect, six new plants, and a species of legless lizard.

    Monitoring of radioactive fallout from nuclear tests fed into the rise of ecosystem ecologies as an academic discipline. In the words of one environmental specialist on the US tests, it seemed that “destruction was the enabling condition for understanding life as interconnected”.

    Since H-bombs would exceed the explosive yield deemed acceptable by Australia, Winston Churchill’s government in the mid-1950s had been forced to look for a new test site beyond Western and South Australia. British planners drew on a wealth of imperial knowledge and networks – but their proposal to use the Kermadec Islands, an archipelago 600 miles north-east of Auckland, was rejected by New Zealand on environmental grounds.

    So, when Teeua and her family landed on Kiritimati in 1955, their journey was part of “the scramble for the Pacific”: a race between Britain and the US to lay claim to the sovereignty of Pacific atolls in light of their strategic significance for air and naval power.

    The British government archives include some notable environmental “what ifs?” Had the US refused the UK’s selection of Kiritimati because of its own sovereignty claim, then it would have been probable, as Lennox-Boyd, Britain’s colonial secretary, admitted, that “the Antarctic region south of Australia might have to be used” for its rapidly expanding nuclear programme.

    Instead, this extraordinary period in global history recently took me to a Victorian mansion in the Lancashire town of Burnley, where I interviewed Teeua’s younger sister, Teraabo, about her memories of the Kiritimati tests.

    ‘No longer angry’

    Teraabo’s home felt like the antithesis of Teeua’s island abode 8,300 miles away: ordered instead of haphazard, private instead of communal, spacious instead of crowded. And our interview had a more detached, philosophical tone.

    Teraabo Pollard with her father’s nuclear test veteran medal.
    Christopher R. Hill., CC BY-ND

    Like her sister, Teraabo has worked to raise awareness about the legacy of the nuclear tests, including with the Christmas Island Appeal, an offshoot of the British Nuclear Test Veterans Association that sought to publicise the extent of the waste left on Kiritimati from the nuclear test period.

    The appeal succeeded in persuading Tony Blair’s UK government to tackle the remaining waste in Kiritimati – most of which was non-radiological, according to a 1998 environmental assessment. The island was “cleaned up” and remediated between 2004 and 2008, at a cost of around £5 million to the Ministry of Defence. Much of the waste was flown or shipped back to the UK, where 388 tonnes of low-grade radioactive material were deposited in a former salt mine at Port Clarence, near Middlesbrough.

    Yet Teraabo’s views have evolved. She told me she is “no longer angry” about the tests, a stark contrast to her position 20 years ago, when she told British journalist Alan Rimmer how islanders had “led a simple life with disease virtually unknown. But after the tests, everything changed. I now realise the whole island was poisoned.”

    Whereas the Teraabo of 2003 blamed “the British government for all this misery”, she has since become more reflective. In the context of the cold war and the nuclear arms race, she even told me she could understand the British rationale for selecting Kiritimati as a test site. This seemed a remarkable statement from a survivor who had lost so much.

    Over the course of the interview, it became clear Teraabo had grown tired of being angry – and that she had felt “trapped” by the tragic figure she was meant to represent in the campaigns of veterans and disarmers. Each time Teraabo rehearsed the doom-laden script of radiation exposure, she admitted she was also suppressing the joy of her childhood memories.

    A turning point for Teraabo seems to have come in 2007, when she last visited Kiritimati and met her sister Teeua. By this time, the atoll’s population was 4,000 – quite a leap from the 300 residents she grew up with. “It is no longer the island I remember,” she said.

    The Kiritimati of Teraabo’s memory was neat and well-structured. The one she described encountering in 2007 was chaotic and unkempt. She had come to the realisation that the Kiritimati she had been campaigning for – the pristine, untouched atoll of her parents – had long since moved on, so she should move on with it. The sorrow caused by the test operations would not define her.

    Radioactive colonialism

    Not long after I left Kiritimati in June 2023, the global nuclear disarmament organisation Ican began researching the atoll ahead of a major global summit to discuss the UN Treaty on the Prohibition of Nuclear Weapons. Descendants of Kiritimati’s nuclear test survivors were asked a series of questions, with those who provided the “right” answers being selected for a sponsored trip to UN headquarters in New York.

    The chosen representatives included Teeua’s daughter, Taraem. I wondered if the survivors of Kiritimati are doomed to forever rehearse the stories of their nuclear past – a burden that Teeua and Teraabo have had to carry ever since they stood in awe of atomic and thermonuclear detonations more than 60 years ago.

    They have had to deal with “radioactive colonialism” all their adult lives – the outside world demanding to see the imprint of radioactivity on their health and memories. But the sisters’ fondness for British order, despite all they have been through, prevails.

    Their positive memories of Britain may in part reflect the elevated role of their father, Tekonau Tetoa – a posthumous recipient of the test veteran medal – within the British colonial system. During my visit, I happened upon an old photo of Tekonau, looking immaculate as he hangs off the side of a plantation truck in a crisp white shirt. Knowing Teeua did not possess a photo of her parents, I took a scan and raced to her house down the road.

    “Do you recognise this man?” I asked, holding up my phone.

    She flickered with recognition. “Is that my father?”

    I nodded, and she shed a tear of joy.

    Tekonau Tetoa, father of Teeua and Teraabo, hangs off the door of a coconut plantation truck in Kiritimati.
    Courtesy: John Bryden., CC BY-ND

    Memories of Teeua and Teraabo’s father are preserved in the island landscape of their youth: pristine, regimented by the ostensible tidiness of colonial and military order.

    But such order masked contamination: an unknown quantity that would only become evident years later in ill-health and environmental damage. It was not only the nuclear tests: from 1957 to 1964, the atoll was sprayed four times a week with DDT, a carcinogenic insecticide, as part of attempts to reduce insect-borne disease. In the words of one of the pilots: “I had many a wave from the rather fat Gilbo ladies sitting on their loos as I passed overhead, and gave them some spray for good measure!” British tidiness concealed a special brand of poison.

    Today, the prospect of a meaningful response from the UK to the concerns raised by the islanders and servicemen alike seems slim. In October 2023, the UK and France followed North Korea and Russia in vetoing a Kiribati and Kazakhstan-proposed UN resolution on victim assistance and environmental remediation for people and places harmed by nuclear weapons use and testing.

    Over in Kiritimati, meanwhile, Teeua still tends to a small plot where Prince Philip planted a commemorative tree in April 1959, shortly after the British-led nuclear tests had ended. It is rumoured he did not drink from the atoll’s water while he was there.



    For you: more from our Insights series:

    To hear about new Insights articles, join the hundreds of thousands of people who value The Conversation’s evidence-based news. Subscribe to our newsletter.

    Christopher Hill receives funding from the Office for Veterans’ Affairs, UK Cabinet Office. The research for this article was also supported by funding from the Arts and Humanities Research Council (AHRC), UKRI. The author wishes to thank the following for their support with this article: Fiona Bowler, Ian Brailsford, Joshua Bushen, John Bryden, Jon Hogg, Brian Jones, Rens van Munster, Wesley Perriman, Maere Tekanene, Michael Walsh, Rotee Walsh and Derek Woolf. Sincere thanks to Teeua Tekonau and Teraabo Pollard for sharing their family stories.

    ref. ‘Our nuclear childhood’: the sisters who witnessed H-bomb tests over their Pacific island, and are still coming to terms with the fallout – https://theconversation.com/our-nuclear-childhood-the-sisters-who-witnessed-h-bomb-tests-over-their-pacific-island-and-are-still-coming-to-terms-with-the-fallout-239780

    MIL OSI – Global Reports

  • MIL-OSI: Westamerica Bancorporation Declares Quarterly Cash Dividend

    Source: GlobeNewswire (MIL-OSI)

    SAN RAFAEL, Calif., Oct. 24, 2024 (GLOBE NEWSWIRE) — The Board of Directors of Westamerica Bancorporation (NASDAQ: WABC) today declared a quarterly cash dividend of $0.44 per share on common stock outstanding to shareholders of record at the close of business November 4, 2024. The dividend is payable November 15, 2024.

    Chairman, President and CEO David Payne stated, “This quarterly dividend recognizes Westamerica’s reliable earnings stream, financial strength and conservative risk profile.”

    On October 17, 2024, Westamerica reported $35.1 million in net income for the three months ended September 30, 2024, or $1.31 diluted earnings per common share.

    Westamerica Bancorporation, through its wholly owned subsidiary, Westamerica Bank, operates banking and trust offices throughout Northern and Central California.

    Westamerica Bancorporation Web Address: www.westamerica.com

    For additional information contact:
    Westamerica Bancorporation
    1108 Fifth Avenue, San Rafael, CA 94901
    Robert A. Thorson – SVP & Treasurer
    707-863-6840
    investments@westamerica.com

    FORWARD-LOOKING INFORMATION:

    The following appears in accordance with the Private Securities Litigation Reform Act of 1995:

    This press release may contain forward-looking statements about the Company, including descriptions of plans or objectives of its management for future operations, products or services, and forecasts of its revenues, earnings or other measures of economic performance. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.”

    Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors — many of which are beyond the Company’s control — could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The Company’s most recent reports filed with the Securities and Exchange Commission, including the annual report for the year ended December 31, 2023 filed on Form 10-K and quarterly report for the quarter ended June 30, 2024 filed on Form 10-Q, describe some of these factors, including certain credit, interest rate, operational, liquidity and market risks associated with the Company’s business and operations. Other factors described in these reports include changes in business and economic conditions, competition, fiscal and monetary policies, disintermediation, cyber security risks, legislation including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Sarbanes-Oxley Act of 2002 and the Gramm-Leach-Bliley Act of 1999, and mergers and acquisitions.

    Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date forward looking statements are made.

    The MIL Network

  • MIL-OSI: Cointelegraph Accelerator opens applications for its upcoming cohort, offering investment to innovative projects

    Source: GlobeNewswire (MIL-OSI)

    DUBAI, United Arab Emirates, Oct. 24, 2024 (GLOBE NEWSWIRE) — Cointelegraph Accelerator, a startup booster leveraging Cointelegraph’s capabilities as a media and strategic partner, has announced the launch of the application process for its upcoming cohort, inviting innovative Web3 startups to apply for the program. The application period runs from October 24, 2024, to January 31, 2025, with the cohort set to commence in the first quarter of 2025.

    The program supports early-stage crypto and blockchain companies by providing them with the necessary resources to scale. Selected startups receive seed investments and benefit from Cointelegraph’s extensive media reach, marketing expertise, industry connections and mentorship from seasoned professionals, positioning them for accelerated growth and success in the competitive Web3 landscape.

    An accelerator designed for impact

    Cointelegraph Accelerator’s program structure is crafted to offer much more than just funding. Participants receive:

    • An investment of up to $100,000 to scale operations to enhance product development and expand market reach.
    • Mentorship and advisory from industry experts, providing guidance and insights from experienced leaders to help up-and-coming Web3 startups navigate challenges, refine business strategies and capitalize on emerging opportunities.
    • Integration into Cointelegraph’s network enables connections with a vast array of investors, strategic partners, KOLs and thought leaders in the crypto and blockchain sectors.
    • Access to Cointelegraph media products allows startups to utilize Cointelegraph’s global media platform to amplify visibility, engage with a broader audience and establish a strong market presence.
    • Marketing expertise from a team with over 10 years of Web3 experience, including a critical assessment of value proposition, enhancement of go-to-market strategies, and best practices for PR, social media and community management

    Focus areas for the cohort

    The accelerator program is seeking applications from projects that are innovating within key verticals poised to shape the future of the blockchain industry:

    Payments

    Projects focusing on innovative payment technologies that facilitate seamless, secure and cost-effective transactions using crypto and blockchain rails. These solutions aim to enhance global commerce by making financial exchanges more accessible and efficient for individuals and businesses.

    Infrastructure

    Projects developing infrastructure solutions that serve as the backbone of blockchain technology. This includes advancements in blockchain protocols, DePIN, scalability solutions, infrastructure layers supporting AI and interoperability frameworks that enable other projects to build and thrive upon these foundations.

    Decentralized finance (DeFi)

    Projects creating decentralized protocols and platforms that provide alternatives to conventional banking, lending and investment services. By leveraging blockchain technology, these solutions aim to democratize finance, reduce reliance on intermediaries and empower users with greater control over their assets.

    Real-world assets (RWA)

    Projects that bring tangible items — such as securities, real estate and commodities — onto the blockchain through real-world asset tokenization. This integration allows for fractional ownership, improved liquidity and broader investment opportunities, making markets more inclusive and efficient.

    Consumer Applications

    Projects that develop solutions in areas like digital identity management, loyalty and rewards programs, social media platforms and content delivery networks. These applications aim to simplify user experiences, enhance security and offer new value propositions to everyday users, thereby accelerating the integration of blockchain technology into daily life.

    Program Structure and Duration

    The Accelerator is a 12-week intensive program conducted entirely remotely, providing flexibility and accessibility to startups worldwide. Despite being remote, the program includes offline meetups and demo days, offering valuable face-to-face networking opportunities and the chance to present projects to potential investors and partners.

    During and upon completion of the program, startups will benefit from a media campaign lasting up to a year, leveraging Cointelegraph’s global reach to maintain momentum, increase brand awareness, and engage continuously with the broader blockchain community.

    Inside the Cointelegraph Accelerator

    Emphasizing the program’s commitment to fostering innovation in the industry, Paul Solntsev, managing director of Cointelegraph Accelerator, highlighted:

    “We are excited to launch the application stage for the new cohort and support pioneering projects that will shape the future of the crypto and blockchain industry. Our accelerator is committed to providing the capital, as well as the resources, network, and mentorship necessary for these projects to thrive.”

    Cointelegraph’s CEO, Yana Prikhodchenko, highlighted the profound impact of the accelerator program, saying:

    “At Cointelegraph, we’re redefining the role of media in the blockchain industry by actively participating in its growth. Through our accelerator program, we go beyond traditional media business and nurture groundbreaking projects. This initiative allows us to provide tangible value to the community of founders and investors to empower the next generation of blockchain pioneers.”

    About Cointelegraph Accelerator
    Cointelegraph Accelerator is working with early-stage Web3 projects to boost their growth by leveraging its access to a native Web3 audience, marketing expertise, and a broad network of partners in the industry. Accelerator participants also get mentorship support over key aspects of Web3 startup growth, e.g., token launch, liquidity management, token incentives design, etc. The equity/token-based program aligns the interests of the accelerator and the participants, allowing them to build meaningful partnerships for sustainable growth.

    For more information on the program and how to apply, visit the Cointelegraph Accelerator Program.

    Tags: Blockchain, DeFi, Web3, Startups, Business, Cointelegraph Accelerator, Announcement

    Contact:
    Paul Solntsev
    Head of Cointelegraph Accelerator
    ps@cointelegraph.com

    Disclaimer: This content is provided by Cointelegraph. The statements, views and opinions expressed in this column are solely those of the content provider. The information provided in this press release is not a solicitation for investment, nor is it intended as investment advice, financial advice, or trading advice. It is strongly recommended you practice due diligence, including consultation with a professional financial advisor, before investing in or trading cryptocurrency and securities. Please conduct your own research and invest at your own risk.

    A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/0b96b721-dd22-4a92-8c98-8b19ab8ccb28

    The MIL Network

  • MIL-OSI USA: Newhouse Introduces Bill To Reform Telework Locality Pay for Federal Employees

    Source: United States House of Representatives – Congressman Dan Newhouse (4th District of Washington)

    Headline: Newhouse Introduces Bill To Reform Telework Locality Pay for Federal Employees

    This week, Rep. Dan Newhouse (WA-04) introduced The Federal Employee Return to Work Act to crack down on wasteful government spending and incentivize federal employees to return to in-person work. Federal employees who telework from home currently receive annual locality bonuses despite not being required to physically attend their offices located in a high-cost-of-living area. This bill is the House companion to U.S. Senator Bill Cassidy of Louisiana’s bill.

    “The federal government pays for massive offices for agency employees in Washington, D.C. and we now know that 17 of the 24 federal agencies are using less than a quarter of their space because of work from home employees,” said Rep. Newhouse.

    Newhouse continued, “If agencies wish to allow their employees to work from home, that is within their right to do so. But if they do, then the government should not be paying locality bonuses to those employees and they should be treated like any other work from home federal employee that doesn’t receive such a bonus. Taxpayers pay for federal buildings and salaries; it is time to stop wasting their money on empty buildings and unneeded work from home bonuses.”

    U.S. Senator Bill Cassidy (R-LA) said“Federal employees get paid extra to work in higher-cost cities. But what if they don’t show up to work? Why should they get paid?” said Dr. Cassidy. “If you don’t show up for work, you don’t get paid at the same rate just for teleworking.”

    The U.S. Government Accountability Office (GAO) found that 17 of the 24 federal agencies were using 25% or less of their headquarters building’s capacity at the beginning of 2023. 

    GAO identified six agencies that were on average 91% vacant while their employees still received a 16.44% locality bonus compared to the rest of the country, regardless of their in-office attendance. These agencies included the Social Security Administration, the Small Business Administration, and the Department of Housing and Urban Development.

    The bill excludes certain federal employees who telework at least one day a week from receiving raises and special locality bonuses for their office location being in a high-cost-of-living area despite working from home.

    In the bill, the term “covered employee” means “an employee who teleworks not fewer than 1 day, or in the case of an alternative work schedule, not less than 20 percent a week.” The term does not include an employee who teleworks not fewer than 1 day a week; is disabled and receives reasonable accommodations; is a member of the Foreign Service; Federal law enforcement; Armed Services; or any other employee, the official worksite of whom is not described in section 531.605(a)(1) of title 5.

    If the employee meets the definition of “covered employee,” then they may not receive an annual adjustment under section 5303 of title 5. They shall be paid at the rate of basic pay under the applicable grade under the locality pay area designated as “Rest of U.S.”

    Full bill text can be found here.

    ###

    MIL OSI USA News

  • MIL-OSI: Origin Bancorp, Inc. Reports Earnings For Third Quarter 2024

    Source: GlobeNewswire (MIL-OSI)

    RUSTON, La., Oct. 23, 2024 (GLOBE NEWSWIRE) — Origin Bancorp, Inc. (NYSE: OBK) (“Origin,” “we,” “our” or the “Company”), the holding company for Origin Bank (the “Bank”), today announced net income of $18.6 million, or $0.60 diluted earnings per share for the quarter ended September 30, 2024, compared to net income of $21.0 million, or $0.67 diluted earnings per share, for the quarter ended June 30, 2024. Pre-tax, pre-provision (“PTPP”)(1) earnings was $28.3 million for the quarter ended September 30, 2024, compared to $32.0 million for the linked quarter.

    “I am pleased with the balance sheet trends we showed in the third quarter,” said Drake Mills, chairman, president and CEO of Origin Bancorp, Inc. “I am confident these trends will continue and our bankers will capitalize on opportunities throughout our markets.”

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

    Financial Highlights

    • Total loans held for investment (“LHFI”) were $7.96 billion at both September 30, 2024, and June 30, 2024. LHFI, excluding mortgage warehouse lines of credit (“MW LOC”), were $7.46 billion at September 30, 2024, reflecting an increase of $8.9 million, or 0.12%, compared to June 30, 2024.
    • Noninterest-bearing deposits were $1.89 billion at September 30, 2024, reflecting an increase of $27.1 million, or 1.5%, compared to June 30, 2024.
    • Net interest income was $74.8 million for the quarter ended September 30, 2024, reflecting an increase of $914,000, or 1.2%, compared to the linked quarter.
    • Our book value per common share was $36.76 as of September 30, 2024, reflecting an increase of $1.53, or 4.3%, compared to June 30, 2024. Tangible book value per common share(1) was $31.37 at September 30, 2024, reflecting an increase of $1.60, or 5.4%, compared to June 30, 2024.
    • Stockholders’ equity was $1.15 billion at September 30, 2024, reflecting an increase of $49.8 million, or 4.5%, compared to June 30, 2024.
    • At September 30, 2024, and June 30, 2024, the ratio of Company-level common equity Tier 1 capital to risk-weighted assets was 12.46%, and 12.15%, respectively, the Tier 1 leverage ratio was 10.93% and 10.70%, respectively, and the total capital ratio was 15.45% and 15.16%, respectively. The ratio of tangible common equity to tangible assets(1) was 9.98% at September 30, 2024, compared to 9.47% at June 30, 2024.

    (1) Tangible book value per common share and tangible common equity to tangible assets are non-GAAP financial measures. Please see the last few pages of this document for a reconciliation of these alternative financial measures to their most directly comparable GAAP measures.

    Results of Operations for the Three Months Ended September 30, 2024

    Net Interest Income and Net Interest Margin

    Net interest income for the quarter ended September 30, 2024, was $74.8 million, an increase of $914,000, or 1.2%, compared to the quarter ended June 30, 2024, $813,000 of which was driven by one additional day in the current quarter. Higher interest rates drove a net increase of $147,000 in net interest income, which was reflected in a $1.2 million increase in interest income earned on interest-earnings assets offset by a $1.1 million increase in interest expense paid on interest-bearing liabilities.

    Higher interest rates on LHFI drove a $2.0 million increase in the yield for the quarter ended September 30, 2024, compared to the quarter ended June 30, 2024, $1.5 million of which was driven by real estate-based loans. The average rate on LHFI increased to 6.67% for the quarter ended September 30, 2024, compared to 6.58% for the quarter ended June 30, 2024. Higher interest rates on savings and interest-bearing transaction accounts drove a $1.1 million increase in interest expense, compared to the quarter ended June 30, 2024. The average rate on interest-bearing deposits increased to 4.01% for the quarter ended September 30, 2024, compared to 3.95% for the quarter ended June 30, 2024.

    The Federal Reserve Board sets various benchmark rates, including the federal funds rate, and thereby influences the general market rates of interest, including the loan and deposit rates offered by financial institutions. The federal funds target rate range was reduced by 50 basis points on September 18, 2024, to a range of 4.75% to 5.00%, the first rate reduction since early 2020.

    The NIM-FTE was 3.18% for the quarter ended September 30, 2024, representing a one- and a four-basis-point increase compared to the linked quarter and the prior year same quarter, respectively. The yield earned on interest-earning assets for the quarter ended September 30, 2024, was 6.09%, an increase of five and 40 basis points compared to the linked quarter and the prior year same quarter, respectively. The average rate paid on total interest-bearing liabilities for the quarter ended September 30, 2024, was 4.04%, representing a six- and 45-basis point increase compared to the linked quarter and the prior year same quarter, respectively.

    As discussed in our June 30, 2024, Origin Bancorp, Inc. Earnings Release, we reversed $1.2 million of accrued loan interest during the quarter ended June 30, 2024, due to certain questioned activity involving a single banker, who has since been terminated, in our East Texas market. This reversal of accrued loan interest income negatively impacted the fully tax equivalent net interest margin (“NIM-FTE”) by five basis points for the linked quarter. Had we not experienced the reversal of the $1.2 million of accrued interest income during the quarter ended June 30, 2024, our NIM-FTE would have been 3.22% for the linked quarter, and we would have experienced a four-basis point decrease in our current NIM-FTE compared to the linked quarter. There was no equivalent interest income reversal during the current quarter and these loans remain on non-accrual.

    Credit Quality

    The table below includes key credit quality information:

      At and For the Three Months Ended   Change   % Change
    (Dollars in thousands, unaudited) September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      Linked
    Quarter
      Linked
    Quarter
    Past due LHFI $ 38,838     $ 66,276     $ 20,347     $ (27,438 )   (41.4)%
    Allowance for loan credit losses (“ALCL”)   95,989       100,865       95,177       (4,876 )   (4.8 )
    Classified loans   107,486       118,254       64,021       (10,768 )   (9.1 )
    Total nonperforming LHFI   64,273       75,812       31,608       (11,539 )   (15.2 )
    Provision for credit losses   4,603       5,231       3,515       (628 )   (12.0 )
    Net charge-offs   9,520       2,946       2,686       6,574     223.2  
    Credit quality ratios(1):                  
    ALCL to nonperforming LHFI   149.35 %     133.05 %     301.12 %     16.30 %   N/A
    ALCL to total LHFI   1.21       1.27       1.26       (0.06 )   N/A
    ALCL to total LHFI, adjusted(2)   1.28       1.34       1.30       (0.06 )   N/A
    Classified loans to total LHFI   1.35       1.49       0.85       (0.14 )   N/A
    Nonperforming LHFI to LHFI   0.81       0.95       0.42       (0.14 )   N/A
    Net charge-offs to total average LHFI (annualized)   0.48       0.15       0.14       0.33     N/A

    ___________________________

    (1) Please see the Loan Data schedule at the back of this document for additional information.
    (2)  The ALCL to total LHFI, adjusted, is calculated by excluding the ALCL for MW LOC loans from the total LHFI ALCL in the numerator and excluding the MW LOC loans from the LHFI in the denominator. Due to their low-risk profile, MW LOC loans require a disproportionately low allocation of the ALCL.
       

    As discussed in our June 30, 2024, Origin Bancorp, Inc. Earnings Release, our credit metrics were negatively impacted by certain questioned activity involving a single banker, who has since been terminated, in our East Texas market. Our investigation of this activity remains ongoing and is not final; however, as a result of a forbearance agreement with one of our impacted customer relationships, our past due LHFI declined $26.4 million when compared to the quarter ended June 30, 2024. There was no material change in the level of our nonperforming or classified LHFI principal balances between the current quarter and the linked quarter as a result of the questioned activity. We continue to work with an outside forensic accounting firm to confirm the bank’s identification and reconciliation of the activity, targeting a conclusion of this analysis by the end of this year. At this time, we believe that any ultimate loss arising from the situation will not be material to our financial position.

    Past due LHFI were $38.8 million for the quarter ended September 30, 2024, compared to $66.3 million at June 30, 2024. Of the $27.4 million decrease, $26.4 million were impacted by or related to the questioned activity. The remaining net decrease in past due LHFI was primarily due to charge-offs or payoffs in commercial and industrial past due loans during the quarter ended September 30, 2024.

    Nonperforming LHFI decreased $11.5 million for the quarter reflecting a decrease in the percentage of nonperforming LHFI to LHFI to 0.81% compared to 0.95% for the linked quarter. The decrease in nonperforming loans was primarily driven by three commercial and industrial loan relationships totaling $14.6 million at June 30, 2024, $10.4 million of which were charged-off and $4.2 million were paid down during the current quarter.

    Classified loans decreased $10.8 million to $107.5 million at September 30, 2024, reflecting 1.35% as a percentage of total LHFI, down 14 basis points from the linked quarter. The decrease in classified loans was primarily driven by the same three commercial and industrial loan relationships mentioned in the nonperforming loan paragraph directly above.

    Noninterest Income

    Noninterest income for the quarter ended September 30, 2024, was $16.0 million, a decrease of $6.5 million, or 28.8%, from the linked quarter. The decrease from the linked quarter was primarily driven by decreases of $5.2 million, $725,000 and $621,000 in the change in fair value of equity investments, mortgage banking revenue and other income, respectively.

    The decrease in change in fair value of equity investments was due to a $5.2 million positive valuation adjustment on a non-marketable equity security recognized during the linked quarter with no comparable amount recognized during the current quarter.

    The decrease in mortgage banking revenue was primarily due to an $833,000 combined decrease in the pipeline and interest rate lock commitment fair values during the current quarter compared to the linked quarter.

    The decrease in other income was primarily due to an $818,000 gain on sale of bank property recognized in the linked quarter with no comparable amount recognized in the current quarter.

    Noninterest Expense

    Noninterest expense for the quarter ended September 30, 2024, was $62.5 million, a decrease of $1.9 million, or 2.9% from the linked quarter. The decrease was primarily driven by a decrease of $1.6 million and in other noninterest expense.

    The decrease in other expenses resulted from recognizing contingent liabilities totaling approximately $1.2 million related to certain questioned activity involving a single banker, who has since been terminated, in our East Texas market, as described previously, in the linked quarter with no comparable liability incurred in the current quarter. Also, contributing to the quarter over quarter decline was a $357,000 decrease in corporate membership fees.

    Financial Condition

    Loans

    • Total LHFI were $7.96 billion at both September 30, 2024, and June 30, 2024, and reflected an increase of $388.7 million, or 5.1%, compared to September 30, 2023.
    • Total LHFI, excluding MW LOC, were $7.46 billion at September 30, 2024, representing an increase of $8.9 million, or 0.1%, from June 30, 2024, and an increase of $179.8 million, or 2.5%, from September 30, 2023.
    • During the quarter ended September 30, 2024, compared to the linked quarter, we experienced declines in construction/land/land development loans and MW LOC of $25.8 million and $11.3 million, respectively, partially offset by growth in multi-family real estate loans of $36.1 million.

    Securities

    • Total securities were $1.18 billion at both September 30, 2024, and June 30, 2024, and reflected a decrease of $129.8 million, or 9.9%, compared to September 30, 2023.
    • Accumulated other comprehensive loss, net of taxes, primarily associated with the available for sale (“AFS”) portfolio, was $94.2 million at September 30, 2024, an improvement of $32.9 million, or 25.9%, from the linked quarter.
    • The weighted average effective duration for the total securities portfolio was 4.21 years as of September 30, 2024, compared to 4.28 years as of June 30, 2024.

    Deposits

    • Total deposits at September 30, 2024, were $8.49 billion, a decrease of $24.3 million, or 0.3%, compared to the linked quarter, and represented an increase of $112.1 million, or 1.3%, from September 30, 2023. The decrease in the current quarter compared to the linked quarter was primarily due to a decrease of $205.2 million in brokered (which includes both brokered time and brokered interest-bearing demand) deposits. The decrease in brokered deposits was primarily replaced with customer deposits.
    • Excluding brokered deposits, total deposit increased $180.9 million, or 2.3%, to $8.05 billion, primarily due to increases of $87.0 million, $64.4 million and $27.1 million in money market deposits, interest-bearing demand deposits and noninterest-bearing demand deposits, respectively.
    • At September 30, 2024, noninterest-bearing deposits as a percentage of total deposits were 22.3%, compared to 21.9% and 24.0% at June 30, 2024, and September 30, 2023, respectively. Excluding brokered deposits, noninterest-bearing deposits as a percentage of total deposits were 23.5%, compared to 23.7% and 26.1% at June 30, 2024, and September 30, 2023, respectively.

    Borrowings

    • FHLB advances and other borrowings at September 30, 2024, were $30.4 million, a decrease of $10.3 million, or 25.3%, compared to the linked quarter and represented an increase of $18.2 million, or 149.3%, from September 30, 2023.

    Stockholders’ Equity

    • Stockholders’ equity was $1.15 billion at September 30, 2024, an increase of $49.8 million, or 4.5%, compared to $1.10 billion at June 30, 2024, and an increase of $146.7 million, or 14.7%, compared to September 30, 2023.
    • The increase in stockholders’ equity from the linked quarter is primarily due to a decrease in accumulated other comprehensive loss of $32.9 million and net income of $18.6 million, partially offset by dividends declared of $4.8 million during the current quarter.

    Conference Call

    Origin will hold a conference call to discuss its third quarter 2024 results on Thursday, October 24, 2024, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time). To participate in the live conference call, please dial +1 (929) 272-1574 (U.S. Local / International 1); +1 (857) 999-3259 (U.S. Local / International 2); +1 (800) 528-1066 (U.S. Toll Free), enter Conference ID: 84865 and request to be joined into the Origin Bancorp, Inc. (OBK) call. A simultaneous audio-only webcast may be accessed via Origin’s website at www.origin.bank under the investor relations, News & Events, Events & Presentations link or directly by visiting https://dealroadshow.com/e/ORIGINQ324.

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

    About Origin

    Origin Bancorp, Inc. is a financial holding company headquartered in Ruston, Louisiana. Origin’s wholly owned bank subsidiary, Origin Bank, was founded in 1912 in Choudrant, Louisiana. Deeply rooted in Origin’s history is a culture committed to providing personalized relationship banking to businesses, municipalities, and personal clients to enrich the lives of the people in the communities it serves. Origin provides a broad range of financial services and currently operates more than 60 locations from Dallas/Fort Worth, East Texas, Houston, North Louisiana, Mississippi, South Alabama and the Florida Panhandle. For more information, visit www.origin.bank.

    Non-GAAP Financial Measures

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

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

    Forward-Looking Statements

    This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding Origin’s future financial performance, business and growth strategies, projected plans and objectives, and any expected purchases of its outstanding common stock, and related transactions and other projections based on macroeconomic and industry trends, including changes to interest rates by the Federal Reserve and the resulting impact on Origin’s results of operations, estimated forbearance amounts and expectations regarding the Company’s liquidity, including in connection with advances obtained from the FHLB, which are all subject to change and may be inherently unreliable due to the multiple factors that impact broader economic and industry trends, and any such changes may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions and current expectations, estimates and projections about Origin and its subsidiaries, any of which may change over time and some of which may be beyond Origin’s control. Statements or statistics preceded by, followed by or that otherwise include the words “assumes,” “anticipates,” “believes,” “estimates,” “expects,” “foresees,” “intends,” “plans,” “projects,” and similar expressions or future or conditional verbs such as “could,” “may,” “might,” “should,” “will,” and “would” and variations of such terms are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. Further, certain factors that could affect Origin’s future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: the impact of current and future economic conditions generally and in the financial services industry, nationally and within Origin’s primary market areas, including the effects of declines in the real estate market, high-profile bank failures, high unemployment rates, inflationary pressures, elevated interest rates and slowdowns in economic growth, as well as the financial stress on borrowers and changes to customer and client behavior as a result of the foregoing; changes in benchmark interest rates and the resulting impacts on net interest income; deterioration of Origin’s asset quality; factors that can impact the performance of Origin’s loan portfolio, including real estate values and liquidity in Origin’s primary market areas; the financial health of Origin’s commercial borrowers and the success of construction projects that Origin finances; changes in the value of collateral securing Origin’s loans; developments in our mortgage banking business, including loan modifications, general demand, and the effects of judicial or regulatory requirements or guidance; Origin’s ability to anticipate interest rate changes and manage interest rate risk (including the impact of higher interest rates on macroeconomic conditions, competition, and the cost of doing business and the impact of prolonged elevated interest rates on our financial projections, models and guidance); the effectiveness of Origin’s risk management framework and quantitative models; Origin’s inability to receive dividends from Origin Bank and to service debt, pay dividends to Origin’s common stockholders, repurchase Origin’s shares of common stock and satisfy obligations as they become due; the impact of labor pressures; changes in Origin’s operation or expansion strategy or Origin’s ability to prudently manage its growth and execute its strategy; changes in management personnel; Origin’s ability to maintain important customer relationships, reputation or otherwise avoid liquidity risks; increasing costs as Origin grows deposits; operational risks associated with Origin’s business; significant turbulence or a disruption in the capital or financial markets and the effect of market disruption and interest rate volatility on our investment securities; increased competition in the financial services industry, particularly from regional and national institutions, as well as from fintech companies; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which Origin operates and in which its loans are concentrated; Origin’s level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial loans in Origin’s loan portfolio; changes in laws, rules, regulations, interpretations or policies relating to financial institutions, and potential expenses associated with complying with such regulations; periodic changes to the extensive body of accounting rules and best practices; further government intervention in the U.S. financial system; a deterioration of the credit rating for U.S. long-term sovereign debt or actions that the U.S. government may take to avoid exceeding the debt ceiling; a potential U.S. federal government shutdown and the resulting impacts; compliance with governmental and regulatory requirements, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and others relating to banking, consumer protection, securities, and tax matters; Origin’s ability to comply with applicable capital and liquidity requirements, including its ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; changes in the utility of Origin’s non-GAAP liquidity measurements and its underlying assumptions or estimates; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies and similar organizations; natural disasters and adverse weather events, acts of terrorism, an outbreak of hostilities (including the impacts related to or resulting from Russia’s military action in Ukraine or the conflict in Israel and surrounding areas, including the imposition of additional sanctions and export controls, as well as the broader impacts to financial markets and the global macroeconomic and geopolitical environments), regional or national protests and civil unrest (including any resulting branch closures or property damage), widespread illness or public health outbreaks or other international or domestic calamities, and other matters beyond Origin’s control; the impact of generative artificial intelligence; fraud or misconduct by internal or external actors (including Origin employees) which Origin may not be able to prevent, detect or mitigate, system failures, cybersecurity threats or security breaches and the cost of defending against them; Origin’s ability to maintain adequate internal controls over financial and non-financial reporting; and potential claims, damages, penalties, fines, costs and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions. For a discussion of these and other risks that may cause actual results to differ from expectations, please refer to the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Origin’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and any updates to those sections set forth in Origin’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Origin’s underlying assumptions prove to be incorrect, actual results may differ materially from what Origin anticipates. Accordingly, you should not place undue reliance on any forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Origin does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

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

    Contact:

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

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

    Origin Bancorp, Inc.
    Selected Quarterly Financial Data
    (Unaudited)

      Three Months Ended
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
                       
    Income statement and share amounts (Dollars in thousands, except per share amounts)
    Net interest income $ 74,804     $ 73,890     $ 73,323     $ 72,989     $ 74,130  
    Provision for credit losses   4,603       5,231       3,012       2,735       3,515  
    Noninterest income   15,989       22,465       17,255       8,196       18,119  
    Noninterest expense   62,521       64,388       58,707       60,906       58,663  
    Income before income tax expense   23,669       26,736       28,859       17,544       30,071  
    Income tax expense   5,068       5,747       6,227       4,119       5,758  
    Net income $ 18,601     $ 20,989     $ 22,632     $ 13,425     $ 24,313  
    PTPP earnings(1) $ 28,272     $ 31,967     $ 31,871     $ 20,279     $ 33,586  
    Basic earnings per common share   0.60       0.68       0.73       0.43       0.79  
    Diluted earnings per common share   0.60       0.67       0.73       0.43       0.79  
    Dividends declared per common share   0.15       0.15       0.15       0.15       0.15  
    Weighted average common shares outstanding – basic   31,130,293       31,042,527       30,981,333       30,898,941       30,856,649  
    Weighted average common shares outstanding – diluted   31,239,877       31,131,829       31,078,910       30,995,354       30,943,860  
                       
    Balance sheet data                  
    Total LHFI $ 7,956,790     $ 7,959,171     $ 7,900,027     $ 7,660,944     $ 7,568,063  
    Total LHFI excluding MW LOC   7,461,602       7,452,666       7,499,032       7,330,978       7,281,770  
    Total assets   9,965,986       9,947,182       9,892,379       9,722,584       9,733,303  
    Total deposits   8,486,568       8,510,842       8,505,464       8,251,125       8,374,488  
    Total stockholders’ equity   1,145,673       1,095,894       1,078,853       1,062,905       998,945  
                       
    Performance metrics and capital ratios                  
    Yield on LHFI   6.67 %     6.58 %     6.58 %     6.46 %     6.35 %
    Yield on interest-earnings assets   6.09       6.04       5.99       5.86       5.69  
    Cost of interest-bearing deposits   4.01       3.95       3.85       3.71       3.47  
    Cost of total deposits   3.14       3.08       2.99       2.84       2.61  
    NIM – fully tax equivalent (“FTE”)   3.18       3.17       3.19       3.19       3.14  
    Return on average assets (annualized) (“ROAA”)   0.74       0.84       0.92       0.55       0.96  
    PTPP ROAA (annualized)(1)   1.13       1.28       1.30       0.82       1.33  
    Return on average stockholders’ equity (annualized) (“ROAE”)   6.57       7.79       8.57       5.26       9.52  
    Book value per common share $ 36.76     $ 35.23     $ 34.79     $ 34.30     $ 32.32  
    Tangible book value per common share(1)   31.37       29.77       29.24       28.68       26.78  
    Adjusted tangible book value per common share(1)   34.39       33.86       33.27       32.59       32.37  
    Return on average tangible common equity (annualized) (“ROATCE”)(1)   7.74 %     9.25 %     10.24 %     6.36 %     11.48 %
    Efficiency ratio(2)   68.86       66.82       64.81       75.02       63.59  
    Core efficiency ratio(1)   67.48       65.55       65.24       70.55       60.49  
    Common equity tier 1 to risk-weighted assets(3)   12.46       12.15       11.97       11.83       11.46  
    Tier 1 capital to risk-weighted assets(3)   12.64       12.33       12.15       12.01       11.64  
    Total capital to risk-weighted assets(3)   15.45       15.16       14.98       15.02       14.61  
    Tier 1 leverage ratio(3)   10.93       10.70       10.66       10.50       10.00  

    __________________________

    (1) PTPP earnings, PTPP ROAA, tangible book value per common share, adjusted tangible book value per common share, ROATCE, and core efficiency ratio are either non-GAAP financial measures or use a non-GAAP contributor in the formula. For a reconciliation of these alternative financial measures to their most directly comparable GAAP measures, please see the last few pages of this release.
    (2) Calculated by dividing noninterest expense by the sum of net interest income plus noninterest income.
    (3) September 30, 2024, ratios are estimated and calculated at the Company level, which is subject to the capital adequacy requirements of the Federal Reserve Board.
       

    Origin Bancorp, Inc.
    Selected Year-To-Date Financial Data
    (Unaudited)

      Nine Months Ended September 30,
    (Dollars in thousands, except per share amounts)   2024       2023  
           
    Income statement and share amounts  
    Net interest income $ 222,017     $ 226,568  
    Provision for credit losses   12,846       14,018  
    Noninterest income   55,709       50,139  
    Noninterest expense   185,616       174,310  
    Income before income tax expense   79,264       88,379  
    Income tax expense   17,042       18,004  
    Net income $ 62,222     $ 70,375  
    PTPP earnings(1) $ 92,110     $ 102,397  
    Basic earnings per common share   2.00       2.29  
    Diluted earnings per common share   2.00       2.28  
    Dividends declared per common share   0.45       0.45  
    Weighted average common shares outstanding – basic   31,051,672       30,797,399  
    Weighted average common shares outstanding – diluted   31,160,867       30,903,222  
           
    Performance metrics      
    Yield on LHFI   6.61 %     6.19 %
    Yield on interest-earning assets   6.04       5.50  
    Cost of interest-bearing deposits   3.94       3.03  
    Cost of total deposits   3.07       2.22  
    NIM-FTE   3.18       3.24  
    Adjusted NIM-FTE(2)   3.18       3.21  
    ROAA (annualized)   0.84       0.94  
    PTPP ROAA (annualized)(1)   1.24       1.37  
    ROAE (annualized)   7.62       9.45  
    ROATCE (annualized)(1)   9.04       11.47  
    Efficiency ratio(3)   66.83       62.99  
    Core efficiency ratio(1)   66.09       59.94  

    ____________________________

    (1) PTPP earnings, PTPP ROAA, ROATCE, and core efficiency ratio are either non-GAAP financial measures or use a non-GAAP contributor in the formula. For a reconciliation of these alternative financial measures to their most directly comparable GAAP measures, please see the last few pages of this release.
    (2) Adjusted NIM-FTE is a non-GAAP financial measure and is calculated for nine months ended September 30, 2024, by removing the $20,000 net purchase accounting amortization from net interest income. And, for the nine months ended September 30, 2023, by removing the $2.2 million net purchase accounting accretion from net interest income.
    (3) Calculated by dividing noninterest expense by the sum of net interest income plus noninterest income.
       

    Origin Bancorp, Inc.
    Consolidated Quarterly Statements of Income
    (Unaudited)

      Three Months Ended
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
                       
    Interest and dividend income (Dollars in thousands, except per share amounts)
    Interest and fees on loans $ 133,195   $ 129,879   $ 127,186     $ 123,673     $ 121,204  
    Investment securities-taxable   6,536     6,606     6,849       7,024       8,194  
    Investment securities-nontaxable   905     893     910       1,124       1,281  
    Interest and dividend income on assets held in other financial institutions   3,621     4,416     3,756       3,664       4,772  
    Total interest and dividend income   144,257     141,794     138,701       135,485       135,451  
    Interest expense                  
    Interest-bearing deposits   67,051     65,469     62,842       59,771       55,599  
    FHLB advances and other borrowings   482     514     518       220       3,207  
    Subordinated indebtedness   1,920     1,921     2,018       2,505       2,515  
    Total interest expense   69,453     67,904     65,378       62,496       61,321  
    Net interest income   74,804     73,890     73,323       72,989       74,130  
    Provision for credit losses   4,603     5,231     3,012       2,735       3,515  
    Net interest income after provision for credit losses   70,201     68,659     70,311       70,254       70,615  
    Noninterest income                  
    Insurance commission and fee income   6,928     6,665     7,725       5,446       6,443  
    Service charges and fees   4,664     4,862     4,688       4,889       4,621  
    Other fee income   2,114     2,404     2,247       2,118       2,006  
    Mortgage banking revenue (loss)   1,153     1,878     2,398       (719 )     892  
    Swap fee income   106     44     57       196       366  
    Gain (loss) on sales of securities, net   221         (403 )     (4,606 )     (7,173 )
    Change in fair value of equity investments       5,188                 10,096  
    Other income   803     1,424     543       872       868  
    Total noninterest income   15,989     22,465     17,255       8,196       18,119  
    Noninterest expense                  
    Salaries and employee benefits   38,491     38,109     35,818       35,931       34,624  
    Occupancy and equipment, net   6,298     7,009     6,645       6,912       6,790  
    Data processing   3,470     3,468     3,145       3,062       2,775  
    Office and operations   2,984     3,072     2,502       2,947       2,868  
    Intangible asset amortization   1,905     2,137     2,137       2,259       2,264  
    Regulatory assessments   1,791     1,842     1,734       1,860       1,913  
    Advertising and marketing   1,449     1,328     1,444       1,690       1,371  
    Professional services   2,012     1,303     1,231       1,440       1,409  
    Loan-related expenses   751     1,077     905       1,094       1,220  
    Electronic banking   1,308     1,238     1,239       1,103       1,384  
    Franchise tax expense   721     815     477       942       520  
    Other expenses   1,341     2,990     1,430       1,666       1,525  
    Total noninterest expense   62,521     64,388     58,707       60,906       58,663  
    Income before income tax expense   23,669     26,736     28,859       17,544       30,071  
    Income tax expense   5,068     5,747     6,227       4,119       5,758  
    Net income $ 18,601   $ 20,989   $ 22,632     $ 13,425     $ 24,313  
    Basic earnings per common share $ 0.60   $ 0.68   $ 0.73     $ 0.43     $ 0.79  
    Diluted earnings per common share   0.60     0.67     0.73       0.43       0.79  
                                       

    Origin Bancorp, Inc.
    Consolidated Balance Sheets
    (Unaudited)

    (Dollars in thousands) September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
    Assets                  
    Cash and due from banks $ 159,337     $ 137,615     $ 98,147     $ 127,278     $ 141,705  
    Interest-bearing deposits in banks   161,854       150,435       193,365       153,163       163,573  
    Total cash and cash equivalents   321,191       288,050       291,512       280,441       305,278  
    Securities:                  
    AFS   1,160,965       1,160,048       1,190,922       1,253,631       1,290,839  
    Held to maturity, net of allowance for credit losses   11,096       11,616       11,651       11,615       10,790  
    Securities carried at fair value through income   6,533       6,499       6,755       6,808       6,772  
    Total securities   1,178,594       1,178,163       1,209,328       1,272,054       1,308,401  
    Non-marketable equity securities held in other financial institutions   67,068       64,010       53,870       55,190       63,842  
    Loans held for sale   7,631       18,291       14,975       16,852       14,944  
    Loans   7,956,790       7,959,171       7,900,027       7,660,944       7,568,063  
    Less: ALCL   95,989       100,865       98,375       96,868       95,177  
    Loans, net of ALCL   7,860,801       7,858,306       7,801,652       7,564,076       7,472,886  
    Premises and equipment, net   126,751       121,562       120,931       118,978       111,700  
    Mortgage servicing rights                     15,637       19,189  
    Cash surrender value of bank-owned life insurance   40,602       40,365       40,134       39,905       39,688  
    Goodwill   128,679       128,679       128,679       128,679       128,679  
    Other intangible assets, net   39,272       41,177       43,314       45,452       42,460  
    Accrued interest receivable and other assets   195,397       208,579       187,984       185,320       226,236  
    Total assets $ 9,965,986     $ 9,947,182     $ 9,892,379     $ 9,722,584     $ 9,733,303  
    Liabilities and Stockholders’ Equity                  
    Noninterest-bearing deposits $ 1,893,767     $ 1,866,622     $ 1,887,066     $ 1,919,638     $ 2,008,671  
    Interest-bearing deposits excluding brokered interest-bearing deposits   5,137,940       4,984,817       4,990,632       4,918,597       4,728,263  
    Time deposits   1,023,252       1,022,589       1,030,656       967,901       968,352  
    Brokered deposits   431,609       636,814       597,110       444,989       669,202  
    Total deposits   8,486,568       8,510,842       8,505,464       8,251,125       8,374,488  
    FHLB advances and other borrowings   30,446       40,737       13,158       83,598       12,213  
    Subordinated indebtedness   159,861       159,779       160,684       194,279       196,825  
    Accrued expenses and other liabilities   143,438       139,930       134,220       130,677       150,832  
    Total liabilities   8,820,313       8,851,288       8,813,526       8,659,679       8,734,358  
    Stockholders’ equity:                  
    Common stock   155,837       155,543       155,057       154,931       154,534  
    Additional paid-in capital   535,662       532,950       530,380       528,578       525,434  
    Retained earnings   548,419       534,585       518,325       500,419       491,706  
    Accumulated other comprehensive loss   (94,245 )     (127,184 )     (124,909 )     (121,023 )     (172,729 )
    Total stockholders’ equity   1,145,673       1,095,894       1,078,853       1,062,905       998,945  
    Total liabilities and stockholders’ equity $ 9,965,986     $ 9,947,182     $ 9,892,379     $ 9,722,584     $ 9,733,303  
                                           

    Origin Bancorp, Inc.
    Loan Data
    (Unaudited)

      At and For the Three Months Ended
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
                       
    LHFI (Dollars in thousands)
    Owner occupied commercial real estate $ 991,671     $ 959,850     $ 948,624     $ 953,822     $ 932,109  
    Non-owner occupied commercial real estate   1,533,093       1,563,152       1,472,164       1,488,912       1,503,782  
    Construction/land/land development   991,545       1,017,389       1,168,597       1,070,225       1,076,756  
    Residential real estate – single family   1,414,013       1,421,027       1,373,532       1,373,696       1,338,382  
    Multi-family real estate   434,317       398,202       359,765       361,239       349,787  
    Total real estate loans   5,364,639       5,359,620       5,322,682       5,247,894       5,200,816  
    Commercial and industrial   2,074,037       2,070,947       2,154,151       2,059,460       2,058,073  
    MW LOC   495,188       506,505       400,995       329,966       286,293  
    Consumer   22,926       22,099       22,199       23,624       22,881  
    Total LHFI   7,956,790       7,959,171       7,900,027       7,660,944       7,568,063  
    Less: ALCL   95,989       100,865       98,375       96,868       95,177  
    LHFI, net $ 7,860,801     $ 7,858,306     $ 7,801,652     $ 7,564,076     $ 7,472,886  
                       
    Nonperforming assets(1)                  
    Nonperforming LHFI                  
    Commercial real estate $ 2,776     $ 2,196     $ 4,474     $ 786     $ 942  
    Construction/land/land development   26,291       26,336       383       305       235  
    Residential real estate(2)   14,313       13,493       14,918       13,037       13,236  
    Commercial and industrial   20,486       33,608       20,560       15,897       17,072  
    Consumer   407       179       104       90       123  
    Total nonperforming loans   64,273       75,812       40,439       30,115       31,608  
    Repossessed assets   6,043       6,827       3,935       3,929       3,939  
    Total nonperforming assets $ 70,316     $ 82,639     $ 44,374     $ 34,044     $ 35,547  
    Classified assets $ 113,529     $ 125,081     $ 88,152     $ 84,474     $ 67,960  
    Past due LHFI(3)   38,838       66,276       32,835       26,043       20,347  
                       
    Allowance for loan credit losses                  
    Balance at beginning of period $ 100,865     $ 98,375     $ 96,868     $ 95,177     $ 94,353  
    Provision for loan credit losses   4,644       5,436       4,089       3,582       3,510  
    Loans charged off   11,226       3,706       6,683       3,803       3,202  
    Loan recoveries   1,706       760       4,101       1,912       516  
    Net charge-offs   9,520       2,946       2,582       1,891       2,686  
    Balance at end of period $ 95,989     $ 100,865     $ 98,375     $ 96,868     $ 95,177  
                       
    Credit quality ratios                  
    Total nonperforming assets to total assets   0.71 %     0.83 %     0.45 %     0.35 %     0.37 %
    Nonperforming LHFI to LHFI   0.81       0.95       0.51       0.39       0.42  
    Past due LHFI to LHFI   0.49       0.83       0.42       0.34       0.27  
    ALCL to nonperforming LHFI   149.35       133.05       243.27       321.66       301.12  
    ALCL to total LHFI   1.21       1.27       1.25       1.26       1.26  
    ALCL to total LHFI, adjusted(4)   1.28       1.34       1.30       1.31       1.30  
    Net charge-offs to total average LHFI (annualized)   0.48       0.15       0.13       0.10       0.14  

    ____________________________

    (1) Nonperforming assets consist of nonperforming/nonaccrual loans and property acquired through foreclosures or repossession, as well as bank-owned property not in use and listed for sale.
    (2) Includes multi-family real estate.
    (3) Past due LHFI are defined as loans 30 days or more past due.
    (4) The ALCL to total LHFI, adjusted is calculated by excluding the ALCL for MW LOC loans from the total LHFI ALCL in the numerator and excluding the MW LOC loans from the LHFI in the denominator. Due to their low-risk profile, MW LOC loans require a disproportionately low allocation of the ALCL.
       

    Origin Bancorp, Inc.
    Average Balances and Yields/Rates
    (Unaudited)

      Three Months Ended
      September 30, 2024   June 30, 2024   September 30, 2023
      Average Balance   Yield/Rate   Average Balance   Yield/Rate   Average Balance   Yield/Rate
                           
    Assets (Dollars in thousands)
    Commercial real estate $ 2,507,566   5.93 %   $ 2,497,490   5.91 %   $ 2,428,969   5.73 %
    Construction/land/land development   1,019,302   7.37       1,058,972   6.98       1,044,180   7.04  
    Residential real estate(1)   1,824,725   5.56       1,787,829   5.48       1,663,291   5.06  
    Commercial and industrial (“C&I”)   2,071,984   7.96       2,128,486   7.87       2,024,675   7.62  
    MW LOC   484,680   7.64       430,885   7.57       376,275   7.21  
    Consumer   22,739   7.93       22,396   8.06       23,704   7.74  
    LHFI   7,930,996   6.67       7,926,058   6.58       7,561,094   6.35  
    Loans held for sale   14,645   6.28       14,702   6.84       11,829   5.81  
    Loans receivable   7,945,641   6.67       7,940,760   6.58       7,572,923   6.35  
    Investment securities-taxable   1,038,634   2.50       1,046,301   2.54       1,310,459   2.48  
    Investment securities-nontaxable   146,619   2.46       143,232   2.51       216,700   2.35  
    Non-marketable equity securities held in other financial institutions   66,409   2.85       56,270   6.53       58,421   6.47  
    Interest-bearing balances due from banks   229,224   5.46       254,627   5.53       279,383   5.42  
    Total interest-earning assets   9,426,527   6.09       9,441,190   6.04       9,437,886   5.69  
    Noninterest-earning assets   559,309         567,035         597,678    
    Total assets $ 9,985,836       $ 10,008,225       $ 10,035,564    
                           
    Liabilities and Stockholders’ Equity                    
    Liabilities                      
    Interest-bearing liabilities                      
    Savings and interest-bearing transaction accounts $ 5,177,522   3.88 %   $ 5,130,224   3.80 %   $ 4,728,211   3.28 %
    Time deposits   1,469,849   4.47       1,534,679   4.46       1,626,935   4.04  
    Total interest-bearing deposits   6,647,371   4.01       6,664,903   3.95       6,355,146   3.47  
    FHLB advances and other borrowings   40,331   4.75       41,666   4.96       230,815   5.51  
    Subordinated indebtedness   159,826   4.78       159,973   4.83       196,792   5.07  
    Total interest-bearing liabilities   6,847,528   4.04       6,866,542   3.98       6,782,753   3.59  
    Noninterest-bearing liabilities                      
    Noninterest-bearing deposits   1,850,046         1,894,141         2,088,183    
    Other liabilities   162,565         163,273         151,716    
    Total liabilities   8,860,139         8,923,956         9,022,652    
    Stockholders’ Equity   1,125,697         1,084,269         1,012,912    
    Total liabilities and stockholders’ equity $ 9,985,836       $ 10,008,225       $ 10,035,564    
    Net interest spread     2.05 %       2.06 %       2.10 %
    NIM     3.16         3.15         3.12  
    NIM-FTE(2)     3.18         3.17         3.14  

    ____________________________

    (1) Includes multi-family real estate.
    (2) In order to present pre-tax income and resulting yields on tax-exempt investments comparable to those on taxable investments, a tax-equivalent adjustment has been computed. This adjustment also includes income tax credits received on Qualified School Construction Bonds.
       

    Origin Bancorp, Inc.
    Notable Items
    (Unaudited)

      At and For the Three Months Ended
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
      $ Impact   EPS
    Impact(1)
      $ Impact   EPS
    Impact(1)
      $ Impact   EPS
    Impact(1)
      $ Impact   EPS
    Impact(1)
      $ Impact   EPS
    Impact(1)
                                           
      (Dollars in thousands, except per share amounts)
    Notable interest income items:                                    
    Interest income reversal on relationships impacted by questioned banker activity $     $     $ (1,206 )   $ (0.03 )   $     $     $     $     $     $  
    Notable provision expense items:                                    
    Provision expense related to questioned banker activity               (3,212 )     (0.08 )                                    
    Provision expense on relationships impacted by questioned banker activity               (4,131 )     (0.10 )                                    
    Notable noninterest income items:                                    
    MSR gain (impairment)                           410       0.01       (1,769 )     (0.05 )            
    Gain (loss) on sales of securities, net   221       0.01                   (403 )     (0.01 )     (4,606 )     (0.12 )     (7,173 )     (0.18 )
    Gain on sub-debt repurchase               81                                            
    Positive valuation adjustment on non-marketable equity securities               5,188       0.13                               10,096       0.26  
    Gain on bank property sale               800       0.02                                      
    Notable noninterest expense items:                                    
    Operating expense related to questioned banker activity   (848 )     (0.02 )     (1,452 )     (0.04 )                                    
    Total notable items $ (627 )     (0.02 )   $ (3,932 )     (0.10 )   $ 7           $ (6,375 )     (0.16 )   $ 2,923       0.07  

    ____________________________

    (1) The diluted EPS impact is calculated using a 21% effective tax rate. The total of the diluted EPS impact of each individual line item may not equal the calculated diluted EPS impact on the total notable items due to rounding.
       

    Origin Bancorp, Inc.
    Notable Items – Continued
    (Unaudited)

      Nine Months Ended September 30,
        2024       2023  
      $ Impact   EPS Impact(1)   $ Impact   EPS Impact(1)
                   
      (Dollars in thousands, except per share amounts)
    Notable interest income items:              
    Interest income reversal on relationships impacted by questioned banker activity $ (1,206 )   $ (0.03 )   $     $  
    Notable provision expense items:              
    Provision expense related to questioned banker activity   (3,212 )     (0.08 )            
    Provision expense on relationships impacted by questioned banker activity   (4,131 )     (0.10 )            
    Notable noninterest income items:              
    MSR gain   410       0.01              
    Loss on sales of securities, net   (182 )           (7,029 )     (0.18 )
    Gain on sub-debt repurchase   81             471       0.01  
    Positive valuation adjustment on non-marketable equity securities   5,188       0.13       10,096       0.26  
    Gain on bank property sale   800       0.02              
    Notable noninterest expense items:        
    Operating expense related to questioned banker activity   (2,300 )     (0.06 )            
    Total notable items $ (4,552 )     (0.12 )   $ 3,538       0.09  

    ____________________________

    (1) The diluted EPS impact is calculated using a 21% effective tax rate. The total of the diluted EPS impact of each individual line item may not equal the calculated diluted EPS impact on the total notable items due to rounding.
       

    Origin Bancorp, Inc.
    Non-GAAP Financial Measures
    (Unaudited)

      At and For the Three Months Ended
      September 30,
    2024
      June 30,
    2024
      March 31,
    2024
      December 31,
    2023
      September 30,
    2023
                       
      (Dollars in thousands, except per share amounts)
    Calculation of PTPP earnings:                  
    Net income $ 18,601     $ 20,989     $ 22,632     $ 13,425     $ 24,313  
    Provision for credit losses   4,603       5,231       3,012       2,735       3,515  
    Income tax expense   5,068       5,747       6,227       4,119       5,758  
    PTPP earnings (non-GAAP) $ 28,272     $ 31,967     $ 31,871     $ 20,279     $ 33,586  
                       
    Calculation of PTPP ROAA:                  
    PTPP earnings $ 28,272     $ 31,967     $ 31,871     $ 20,279     $ 33,586  
    Divided by number of days in the quarter   92       91       91       92       92  
    Multiplied by the number of days in the year   366       366       366       365       365  
    PTPP earnings, annualized $ 112,473     $ 128,571     $ 128,184     $ 80,455     $ 133,249  
                       
    Divided by total average assets $ 9,985,836     $ 10,008,225     $ 9,861,236     $ 9,753,847     $ 10,035,564  
    ROAA (annualized) (GAAP)   0.74 %     0.84 %     0.92 %     0.55 %     0.96 %
    PTPP ROAA (annualized) (non-GAAP)   1.13       1.28       1.30       0.82       1.33  
                       
    Calculation of tangible common equity to tangible common assets, book value per common share and adjusted tangible book value per common share:
    Total assets $ 9,965,986     $ 9,947,182     $ 9,892,379     $ 9,722,584     $ 9,733,303  
    Goodwill   (128,679 )     (128,679 )     (128,679 )     (128,679 )     (128,679 )
    Other intangible assets, net   (39,272 )     (41,177 )     (43,314 )     (45,452 )     (42,460 )
    Tangible assets   9,798,035       9,777,326       9,720,386       9,548,453       9,562,164  
                       
    Total common stockholders’ equity $ 1,145,673     $ 1,095,894     $ 1,078,853     $ 1,062,905     $ 998,945  
    Goodwill   (128,679 )     (128,679 )     (128,679 )     (128,679 )     (128,679 )
    Other intangible assets, net   (39,272 )     (41,177 )     (43,314 )     (45,452 )     (42,460 )
    Tangible common equity   977,722       926,038       906,860       888,774       827,806  
    Accumulated other comprehensive loss   94,245       127,184       124,909       121,023       172,729  
    Adjusted tangible common equity   1,071,967       1,053,222       1,031,769       1,009,797       1,000,535  
    Divided by common shares outstanding at the end of the period   31,167,410       31,108,667       31,011,304       30,986,109       30,906,716  
    Book value per common share (GAAP) $ 36.76     $ 35.23     $ 34.79     $ 34.30     $ 32.32  
    Tangible book value per common share (non-GAAP)   31.37       29.77       29.24       28.68       26.78  
    Adjusted tangible book value per common share (non-GAAP)   34.39       33.86       33.27       32.59       32.37  
    Tangible common equity to tangible assets (non-GAAP)   9.98 %     9.47 %     9.33 %     9.31 %     8.66 %
                                           
    Calculation of ROATCE:                
    Net income $ 18,601     $ 20,989     $ 22,632     $ 13,425     $ 24,313  
    Divided by number of days in the quarter   92       91       91       92       92  
    Multiplied by number of days in the year   366       366       366       365       365  
    Annualized net income $ 74,000     $ 84,417     $ 91,025     $ 53,262     $ 96,459  
                       
    Total average common stockholders’ equity $ 1,125,697     $ 1,084,269     $ 1,062,705     $ 1,013,286     $ 1,012,912  
    Average goodwill   (128,679 )     (128,679 )     (128,679 )     (128,679 )     (128,679 )
    Average other intangible assets, net   (40,487 )     (42,563 )     (44,700 )     (46,825 )     (43,901 )
    Average tangible common equity   956,531       913,027       889,326       837,782       840,332  
                       
    ROATCE (non-GAAP)   7.74 %     9.25 %     10.24 %     6.36 %     11.48 %
                       
    Calculation of core efficiency ratio:                  
    Total noninterest expense $ 62,521     $ 64,388     $ 58,707     $ 60,906     $ 58,663  
    Insurance and mortgage noninterest expense   (8,448 )     (8,402 )     (8,045 )     (8,581 )     (8,579 )
    Adjusted total noninterest expense   54,073       55,986       50,662       52,325       50,084  
                       
    Net interest income $ 74,804     $ 73,890     $ 73,323     $ 72,989     $ 74,130  
    Insurance and mortgage net interest income   (2,578 )     (2,407 )     (2,795 )     (2,294 )     (2,120 )
    Total noninterest income   15,989       22,465       17,255       8,196       18,119  
    Insurance and mortgage noninterest income   (8,081 )     (8,543 )     (10,123 )     (4,727 )     (7,335 )
    Adjusted total revenue   80,134       85,405       77,660       74,164       82,794  
                       
    Efficiency ratio (GAAP)   68.86 %     66.82 %     64.81 %     75.02 %     63.59 %
    Core efficiency ratio (non-GAAP)   67.48       65.55       65.24       70.55       60.49  
                                           

    Origin Bancorp, Inc.
    Non-GAAP Financial Measures – Continued
    (Unaudited)

      Nine Months Ended September 30,
        2024       2023  
           
      (Dollars in thousands, except per share amounts)
    Calculation of PTPP earnings:      
    Net income $ 62,222     $ 70,375  
    Provision for credit losses   12,846       14,018  
    Income tax expense   17,042       18,004  
    PTPP earnings (non-GAAP) $ 92,110     $ 102,397  
           
    Calculation of PTPP ROAA:      
    PTPP Earnings $ 92,110     $ 102,397  
    Divided by the year-to-date number of days   274       273  
    Multiplied by number of days in the year   366       365  
    Annualized PTPP Earnings $ 123,037     $ 136,904  
           
    Divided by total average assets $ 9,951,890     $ 10,004,097  
    ROAA (annualized) (GAAP)   0.84 %     0.94 %
    PTPP ROAA (annualized) (non-GAAP)   1.24       1.37  
           
    Calculation of ROATCE:    
    Net income $ 62,222     $ 70,375  
    Divided by the year-to-date number of days   274       273  
    Multiplied by number of days in the year   366       365  
    Annualized net income $ 83,114     $ 94,091  
           
    Total average common stockholders’ equity $ 1,091,018     $ 995,395  
    Average goodwill   (128,679 )     (128,679 )
    Average other intangible assets, net   (42,576 )     (46,391 )
    Average tangible common equity   919,763       820,325  
           
    ROATCE   9.04 %     11.47 %
           
    Calculation of core efficiency ratio:      
    Total noninterest expense $ 185,616     $ 174,310  
    Insurance and mortgage noninterest expense   (24,895 )     (25,768 )
    Adjusted total noninterest expense   160,721       148,542  
           
    Net interest income $ 222,017     $ 226,568  
    Insurance and mortgage net interest income   (7,780 )     (5,187 )
    Total noninterest income   55,709       50,139  
    Insurance and mortgage noninterest income   (26,747 )     (23,714 )
    Adjusted total revenue   243,199       247,806  
           
    Efficiency ratio   66.83 %     62.99 %
    Core efficiency ratio   66.09       59.94  

    The MIL Network

  • MIL-OSI: TowneBank Reports Third Quarter 2024 Earnings

    Source: GlobeNewswire (MIL-OSI)

    SUFFOLK, Va., Oct. 23, 2024 (GLOBE NEWSWIRE) — TowneBank (the “Company” or “Towne”) (NASDAQ: TOWN) today reported earnings for the quarter ended September 30, 2024 of $42.95 million, or $0.57 per diluted share, compared to $44.86 million, or $0.60 per diluted share, for the quarter ended September 30, 2023.   Excluding certain items affecting comparability, core earnings (non-GAAP) were $43.39 million, or $0.58 per diluted share, in the current quarter compared to $44.88 million, or $0.60 per diluted share, for the quarter ended September 30, 2023.

    “Our third quarter results continued to deliver increased net interest income and noninterest income contributions from our diverse business model which were in line with expectations. We remain committed to prudent balance sheet management strategies. We were also excited to announce our partnership with Village Bank which will meaningfully enhance our Richmond presence, which is core to our franchise future growth. Lastly, the recently released FDIC Deposit Market Share Report for 2024 continues to demonstrate the strength of our Main Street banking model and core deposit franchise, resulting in the #1 market share, or 30%, in our legacy Virginia Beach-Norfolk-Newport News, VA-NC MSA,” said G. Robert Aston, Jr., Executive Chairman.

    Highlights for Third Quarter 2024:

    • Total revenues were $174.52 million, an increase of $1.65 million, or 0.96%, compared to third quarter 2023. Noninterest income increased $2.43 million, driven by growth in residential mortgage banking income and insurance commissions. Partially offsetting the increase in noninterest income was a $0.78 million decline in net interest income.
    • Total deposits were $14.36 billion, an increase of $482.37 million, or 3.48%, compared to third quarter 2023. Total deposits increased 0.63%, or $90.58 million, in comparison to June 30, 2024, 2.52% on an annualized basis.
    • Noninterest-bearing deposits decreased 3.99%, to $4.27 billion, compared to third quarter 2023 and represented 29.71% of total deposits. Compared to the linked quarter, noninterest-bearing deposits decreased 0.84%.
    • Loans held for investment were $11.41 billion, an increase of $239.55 million, or 2.14%, compared to September 30, 2023, but a decrease of $39.23 million, or 0.34%, compared to June 30, 2024.
    • Annualized return on common shareholders’ equity was 8.18% compared to 9.04% in third quarter 2023. Annualized return on average tangible common shareholders’ equity (non-GAAP) was 11.54% compared to 13.11% in third quarter 2023.
    • Net interest margin was 2.90% for the quarter and tax-equivalent net interest margin (non-GAAP) was 2.93%, including purchase accounting accretion of 3 basis points, compared to the prior year quarter net interest margin of 2.95% and tax-equivalent net interest margin (non-GAAP) of 2.98%, including purchase accounting accretion of 5 basis points.
    • Compared to the linked quarter, net interest margin increased 4 bp and spread increased 6 bp.  
    • The effective tax rate was 11.52% in the quarter compared to 17.34% in third quarter 2023 and 15.93% in the linked quarter. The lower effective tax rate in the current quarter was primarily due to the impact on state and federal taxes from the increase in credits and losses related to LIHTC investment properties placed in service during the period.

    “Growth has certainly been challenging in the current environment but we believe our balance sheet is well positioned to support mid-single digit growth rates as we look ahead to next year. We plan to aggressively expand Towne Insurance and evaluate other opportunities to enhance our fee-based lines of business to further drive our differentiated business model,” stated William I. Foster III, President and Chief Executive Officer.

    Quarterly Net Interest Income:

    • Net interest income was $112.28 million compared to $113.06 million for the quarter ended September 30, 2023. The decrease was driven by increased deposit costs, which were mostly offset by higher yields on earning assets.
    • On an average basis, loans held for investment, with a yield of 5.46%, represented 74.16% of earning assets at September 30, 2024 compared to a yield of 5.13% and 73.45% of earning assets in the third quarter of 2023.
    • The cost of interest-bearing deposits was 3.28% for the quarter ended September 30, 2024, compared to 2.77% in second quarter 2023. Interest expense on deposits increased $17.96 million, or 27.98%, over the prior year quarter driven by the increase in rate and growth in interest-bearing deposits.
    • Our total cost of deposits increased to 2.29% from 1.84% for the quarter ended September 30, 2023 due to a combination of higher interest-bearing deposit balances coupled with higher rates.   The Federal Reserve Open Market Committee lowered the overnight funds rate late in the third quarter. Management is expecting the decrease to have favorable impact on deposit costs in the fourth quarter of 2024.
    • Average interest-earning assets totaled $15.40 billion at September 30, 2024 compared to $15.21 billion at September 30, 2023, an increase of 1.26%. The Company anticipates approximately $604 million of cash flows from its securities portfolio to be available for reinvestment in the next twenty-four months.
    • Average interest-bearing liabilities totaled $10.25 billion, an increase of $493.95 million, or 5.06%, from prior year, driven by deposit growth. Borrowings have declined between periods. There were no short term FHLB borrowings in the third quarter of 2024, compared to an average of $248.91 million in the prior year quarter.

    Quarterly Provision for Credit Losses:

    • The quarterly provision for credit losses was a benefit of $1.10 million compared to an expense of $1.01 million in the prior year quarter and a benefit of $177 thousand in the linked quarter.
    • The allowance for credit losses on loans decreased $2.36 million in third quarter 2024, compared to the linked quarter. The decrease in the allowance was driven by a modest decline in the loan portfolio, primarily in higher-risk real estate construction and development loans, combined with continued strength in credit quality, and improvements in macroeconomic forecast scenarios utilized in our model.
    • Net loan charge-offs were $0.68 million in the quarter compared to net recoveries of $1.07 million in the prior year quarter and $19 thousand in the linked quarter.   Year-to-date 2024, net loan charge-offs were $1.18 million compared to net loan charge-offs of $2.81 million in first nine months of 2023.
    • The ratio of net charge-offs to average loans on an annualized basis was 0.02% in third quarter 2024, compared to (0.04)% in third quarter 2023 and 0.00% in the linked quarter.
    • The allowance for credit losses on loans represented 1.08% of total loans at September 30, 2024, compared to 1.12% at September 30, 2023, and 1.10% at June 30, 2024. The allowance for credit losses on loans was 18.70 times nonperforming loans compared to 17.60 times at September 30, 2023 and 19.08 times at June 30, 2024.

    Quarterly Noninterest Income:

    • Total noninterest income was $62.24 million compared to $59.81 million in 2023, an increase of $2.43 million, or 4.06%.
    • Residential mortgage banking income was $11.79 million compared to $10.65 million in third quarter 2023. Loan volume increased to $598.18 million in third quarter 2024 from $520.41 million in third quarter 2023. Both, the number of loans originated and the per-loan average balance increased in third quarter 2024 compared to third quarter 2023. Refinance activities increased in the quarter after more than a year of low activity. Residential purchase activity was 91.49% of production volume in the third quarter of 2024 compared to 95.96% in third quarter 2023.   Management expects mortgage production volumes to be positively impacted by any additional reductions in the Federal Reserve overnight rate.
    • While level with the linked quarter at 3.28%, gross margins on residential mortgage sales increased 11 basis points from 3.17% in third quarter 2023.
    • Total net insurance commissions increased $1.95 million, or 8.20%, to $25.73 million in third quarter 2024 compared to 2023. This increase was primarily attributable to increases in property and casualty commissions, which were driven by organic growth.
    • Property management fee revenue decreased 12.34%, or $1.58 million, to $11.22 million in third quarter 2024 compared to 2023. Reservation levels declined compared to the prior year.

    Quarterly Noninterest Expense:

    • Total noninterest expense was $126.90 million compared to $117.70 million in 2023, an increase of $9.20 million, or 7.81%. This increase was primarily attributable to growth in salaries and employee benefits of $4.87 million, professional fees of $1.95 million, software of $0.66 million, data processing of $0.56 million, and advertising and marketing of $0.51 million.
    • Salaries and benefits expense increases were driven by an increase in banking personnel and production incentives.
    • Investment in technology related to banking services and information monitoring continued to drive both direct and indirect costs. Professional fees increased due to consulting and outside services.   Software costs increased due to higher core system costs, while data processing increased due to higher processing costs and merchant fee increases.
    • Advertising and marketing increased, driven by business development.

    Consolidated Balance Sheet Highlights:

    • Management is focused on strategic balance sheet management with a concentration on controlled loan growth and maintaining strong levels of liquidity.
    • Total assets were $17.19 billion for the quarter ended September 30, 2024, a $119.18 million increase compared to $17.07 billion at June 30, 2024. Total assets increased $507.66 million, or 3.04%, from $16.68 billion at September 30, 2023.
    • Loans held for investment declined $39.23 million, or 0.34%, compared to the linked quarter but increased $239.55 million, or 2.14%, compared to prior year. There were declines in several loan categories from the linked quarter, with the most significant decline in the real estate construction and development category.   The Company continued to maintain strong credit discipline throughout the period.
    • Mortgage loans held for sale increased $76.27 million, or 40.56%, compared to prior year and $63.56 million, or 31.66%, compared to the linked quarter, driven by the increase in production.
    • Total deposits increased $482.37 million, or 3.48%, primarily in interest-bearing demand and time deposits, compared to prior year. In the linked quarter comparison, total deposits increased $90.58 million, or 2.52% on an annualized basis.
    • Noninterest-bearing deposits decreased $177.23 million, or 3.99%, compared to prior year and $36.15 million, or 0.84%, compared to the linked quarter, primarily in commercial and escrow accounts.
    • Total borrowings decreased $116.22 million, or 28.55%, compared to third quarter 2023 and $4.35 million, or 1.47%, compared to the linked quarter. Short-term FHLB advances were zero at each of September 30, 2024, and the linked quarter end, compared to $100 million at September 30, 2023.

    Investment Securities:

    • Total investment securities were $2.60 billion compared to $2.49 billion at June 30, 2024 and $2.54 billion at September 30, 2023. The weighted average duration of the portfolio at September 30, 2024 was 3.1 years. The carrying value of the available-for-sale debt securities portfolio included net unrealized losses of $110.62 million at September 30, 2024, compared to $172.93 million at June 30, 2024 and $238.52 million at September 30, 2023, with the changes in fair value due to the change in interest rates.

    Loans and Asset Quality:

    • Total loans held for investment were $11.41 billion at September 30, 2024, $11.45 billion June 30, 2024, and $11.17 billion at September 30, 2023.
    • Nonperforming assets were $7.47 million, or 0.04% of total assets, compared to $7.88 million, or 0.05%, at September 30, 2023, and $7.16 million, or 0.04%, in the linked quarter end.
    • Nonperforming loans were 0.06% of period end loans at September 30, 2024, September 30, 2023, and the linked quarter end.
    • Foreclosed property consisted of $884 thousand in repossessed autos at September 30, 2024, compared to $276 thousand in other real estate owned and $490 thousand in repossessed autos, for a total of $766 thousand in foreclosed property at September 30, 2023.

    Deposits and Borrowings:

    • Total deposits were $14.36 billion compared to $14.27 billion at June 30, 2024 and $13.88 billion at September 30, 2023.
    • The ratio of period end loans held for investment to deposits was 79.46% compared to 80.24% at June 30, 2024 and 80.49% at September 30, 2023.
    • Noninterest-bearing deposits were 29.71% of total deposits at September 30, 2024 compared to 30.15% at June 30, 2024 and 32.02% at September 30, 2023. Noninterest-bearing deposits declined $177.23 million, or 3.99%, compared to September 30, 2023, and $36.15 million, or 0.84%, compared to the linked quarter.
    • Total borrowings were $290.82 million compared to $295.17 million at June 30, 2024 and $407.03 million at September 30, 2023.

    Capital:

    • Common equity tier 1 capital ratio of 12.63%(1).
    • Tier 1 leverage capital ratio of 10.38%(1).
    • Tier 1 risk-based capital ratio of 12.75%(1).
    • Total risk-based capital ratio of 15.53% (1) .
    • Book value per common share was $28.59 compared to $27.62 at June 30, 2024 and $26.28 at September 30, 2023.
    • Tangible book value per common share (non-GAAP) was $21.65 compared to $20.65 at June 30, 2024 and $19.28 at September 30, 2023.

    (1) Preliminary.

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

    Now celebrating 25 years, TowneBank operates 50 banking offices throughout Hampton Roads and Central Virginia, as well as Northeastern and Central North Carolina – serving as a local leader in promoting the social, cultural, and economic growth in each community. Towne offers a competitive array of business and personal banking solutions, delivered with only the highest ethical standards. Experienced local bankers providing a higher level of expertise and personal attention with local decision-making are key to the TowneBank strategy. TowneBank has grown its capabilities beyond banking to provide expertise through its affiliated companies that include Towne Wealth Management, Towne Insurance Agency, Towne Benefits, TowneBank Mortgage, TowneBank Commercial Mortgage, Berkshire Hathaway HomeServices RW Towne Realty, Towne 1031 Exchange, LLC, and Towne Vacations. With total assets of $17.19 billion as of September 30, 2024, TowneBank is one of the largest banks headquartered in Virginia.

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

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

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

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

     
    TOWNEBANK
    Selected Financial Highlights (unaudited)
    (dollars in thousands, except per share data)
         
        Three Months Ended
        September 30,   June 30,   March 31,   December 31,   September 30,
        2024       2024       2024       2023       2023  
    Income and Performance Ratios:                  
      Total revenue $ 174,518     $ 174,970     $ 167,102     $ 155,546     $ 172,864  
      Net income   43,126       43,039       35,127       28,545       44,745  
      Net income available to common shareholders   42,949       42,856       34,687       28,804       44,862  
      Net income per common share – diluted   0.57       0.57       0.46       0.39       0.60  
      Book value per common share   28.59       27.62       27.33       27.24       26.28  
      Book value per common share – tangible (non-GAAP)   21.65       20.65       20.31       20.28       19.28  
      Return on average assets   1.00 %     1.01 %     0.83 %     0.68 %     1.06 %
      Return on average assets – tangible (non-GAAP)   1.09 %     1.11 %     0.92 %     0.77 %     1.17 %
      Return on average equity   8.12 %     8.43 %     6.84 %     5.75 %     8.96 %
      Return on average equity – tangible (non-GAAP)   11.42 %     12.03 %     9.87 %     8.53 %     12.97 %
      Return on average common equity   8.18 %     8.49 %     6.89 %     5.79 %     9.04 %
      Return on average common equity – tangible (non-GAAP)   11.54 %     12.16 %     9.98 %     8.62 %     13.11 %
      Noninterest income as a percentage of total revenue   35.66 %     37.68 %     38.23 %     30.74 %     34.60 %
    Regulatory Capital Ratios (1):                  
      Common equity tier 1   12.63 %     12.43 %     12.20 %     12.18 %     12.19 %
      Tier 1   12.75 %     12.55 %     12.32 %     12.29 %     12.31 %
      Total   15.53 %     15.34 %     15.10 %     15.06 %     15.09 %
      Tier 1 leverage ratio   10.38 %     10.25 %     10.15 %     10.17 %     10.06 %
    Asset Quality:                  
      Allowance for credit losses on loans to nonperforming loans 18.70x   19.08x   18.01x   18.48x   17.60x
      Allowance for credit losses on loans to period end loans   1.08 %     1.10 %     1.10 %     1.12 %     1.12 %
      Nonperforming loans to period end loans   0.06 %     0.06 %     0.06 %     0.06 %     0.06 %
      Nonperforming assets to period end assets   0.04 %     0.04 %     0.05 %     0.05 %     0.05 %
      Net charge-offs (recoveries) to average loans (annualized)   0.02 %     %     0.02 %     %   (0.04 )%
      Net charge-offs (recoveries) $ 677     $ (19 )   $ 520     $ 68     $ (1,074 )
                         
      Nonperforming loans $ 6,588     $ 6,582     $ 6,987     $ 6,843     $ 7,110  
      Foreclosed property   884       581       780       908       766  
      Total nonperforming assets $ 7,472     $ 7,163     $ 7,767     $ 7,751     $ 7,876  
      Loans past due 90 days and still accruing interest $ 510     $ 368     $ 323     $ 735     $ 970  
      Allowance for credit losses on loans $ 123,191     $ 125,552     $ 125,835     $ 126,461     $ 125,159  
    Mortgage Banking:                  
      Loans originated, mortgage $ 421,571     $ 430,398     $ 289,191     $ 302,616     $ 348,387  
      Loans originated, joint venture   176,612       196,583       135,197       126,332       172,021  
      Total loans originated $ 598,182     $ 626,981     $ 424,388     $ 428,948     $ 520,408  
      Number of loans originated   1,637       1,700       1,247       1,237       1,487  
      Number of originators   159       169       176       181       192  
      Purchase %   91.49 %     94.85 %     95.66 %     95.06 %     95.96 %
      Loans sold $ 526,998     $ 605,134     $ 410,895     $ 468,014     $ 567,291  
      Rate lock asset $ 1,548     $ 1,930     $ 1,681     $ 895     $ 1,348  
      Gross realized gain on sales and fees as a % of loans originated   3.28 %     3.28 %     3.34 %     3.06 %     3.17 %
    Other Ratios:                  
      Net interest margin   2.90 %     2.86 %     2.72 %     2.83 %     2.95 %
      Net interest margin-fully tax-equivalent (non-GAAP)   2.93 %     2.89 %     2.75 %     2.86 %     2.98 %
      Average earning assets/total average assets   90.43 %     90.36 %     90.52 %     90.48 %     90.73 %
      Average loans/average deposits   80.07 %     80.80 %     81.48 %     80.72 %     80.75 %
      Average noninterest deposits/total average deposits   30.19 %     30.06 %     30.25 %     31.69 %     33.50 %
      Period end equity/period end total assets   12.58 %     12.24 %     12.24 %     12.21 %     11.90 %
      Efficiency ratio (non-GAAP)   70.93 %     68.98 %     73.25 %     76.17 %     66.21 %
      (1) Current reporting period regulatory capital ratios are preliminary.            
     
    TOWNEBANK
    Selected Data (unaudited)
    (dollars in thousands)
     
    Investment Securities             % Change
      Q3   Q3   Q2   Q3 24 vs.   Q3 24 vs.
    Available-for-sale securities, at fair value   2024       2023       2024     Q3 23   Q2 24
    U.S. agency securities $ 291,814     $ 300,161     $ 281,934     (2.78 )%   3.50 %
    U.S. Treasury notes   28,655       26,721       27,701     7.24 %   3.44 %
    Municipal securities   455,722       484,587       442,474     (5.96 )%   2.99 %
    Trust preferred and other corporate securities   91,525       74,024       88,228     23.64 %   3.74 %
    Mortgage-backed securities issued by GSEs and GNMA   1,496,631       1,079,303       1,411,883     38.67 %   6.00 %
    Allowance for credit losses   (1,171 )     (1,343 )     (1,541 )   (12.81 )%   (24.01 )%
    Total $ 2,363,176     $ 1,963,453     $ 2,250,679     20.36 %   5.00 %
    Gross unrealized gains (losses) reflected in financial statements            
    Total gross unrealized gains $ 6,703     $ 475     $ 1,983     1,311.16 %   238.02 %
    Total gross unrealized losses   (117,319 )     (238,993 )     (174,911 )   (50.91 )%   (32.93 )%
    Net unrealized gains (losses) and other adjustments on AFS securities $ (110,616 )   $ (238,518 )   $ (172,928 )   (53.62 )%   (36.03 )%
    Held-to-maturity securities, at amortized cost                  
    U.S. agency securities $ 102,428     $ 101,659     $ 102,234     0.76 %   0.19 %
    U.S. Treasury notes   96,942       433,015       97,171     (77.61 )%   (0.24 )%
    Municipal securities   5,342       5,249       5,318     1.77 %   0.45 %
    Trust preferred corporate securities   2,133       2,185       2,147     (2.38 )%   (0.65 )%
    Mortgage-backed securities issued by GSEs   5,577       5,746       5,618     (2.94 )%   (0.73 )%
    Allowance for credit losses   (77 )     (85 )     (79 )   (9.41 )%   (2.53 )%
    Total $ 212,345     $ 547,769     $ 212,409     (61.23 )%   (0.03 )%
                       
    Total gross unrealized gains $ 323     $ 82     $ 175     293.90 %   84.57 %
    Total gross unrealized losses   (7,929 )     (23,505 )     (12,880 )   (66.27 )%   (38.44 )%
    Net unrealized gains (losses) in HTM securities $ (7,606 )   $ (23,423 )   $ (12,705 )   (67.53 )%   (40.13 )%
    Total unrealized gains (losses) on AFS and HTM securities $ (118,222 )   $ (261,941 )   $ (185,633 )   (54.87 )%   (36.31 )%
                  % Change
    Loans Held For Investment Q3   Q3   Q2   Q3 24 vs.   Q3 24 vs.
        2024       2023       2024     Q3 23   Q2 24
    Real estate – construction and development $ 1,118,669     $ 1,325,976     $ 1,190,768     (15.63 )%   (6.05 )%
    Commercial real estate – owner occupied   1,655,345       1,686,888       1,673,582     (1.87 )%   (1.09 )%
    Commercial real estate – non owner occupied   3,179,699       3,025,985       3,155,958     5.08 %   0.75 %
    Real estate – multifamily   750,906       542,611       682,537     38.39 %   10.02 %
    Residential 1-4 family   1,891,216       1,818,843       1,887,420     3.98 %   0.20 %
    HELOC   408,565       371,861       408,273     9.87 %   0.07 %
    Commercial and industrial business (C&I)   1,256,511       1,237,524       1,297,538     1.53 %   (3.16 )%
    Government   521,681       523,456       517,954     (0.34 )%   0.72 %
    Indirect   546,887       548,621       558,216     (0.32 )%   (2.03 )%
    Consumer loans and other   83,039       91,206       79,501     (8.95 )%   4.45 %
    Total $ 11,412,518     $ 11,172,971     $ 11,451,747     2.14 %   (0.34 )%
                       
                  % Change
    Deposits Q3   Q3   Q2   Q3 24 vs.   Q3 24 vs.
        2024       2023       2024     Q3 23   Q2 24
    Noninterest-bearing demand $ 4,267,628     $ 4,444,861     $ 4,303,773     (3.99 )%   (0.84 )%
    Interest-bearing:                  
    Demand and money market accounts   6,990,103       6,764,415       6,940,086     3.34 %   0.72 %
    Savings   319,970       350,031       312,881     (8.59 )%   2.27 %
    Certificates of deposits   2,785,469       2,321,498       2,715,848     19.99 %   2.56 %
    Total   14,363,170       13,880,805       14,272,588     3.48 %   0.63 %
     
    TOWNEBANK
    Average Balances, Yields and Rate Paid (unaudited)
    (dollars in thousands)
     
      Three Months Ended   Three Months Ended   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 (1)   Balance   Expense   Rate (1)   Balance   Expense   Rate (1)
    Assets:                                  
    Loans (net of unearned income
    and deferred costs)
    $ 11,419,428     $ 156,610     5.46 %   $ 11,471,669     $ 155,374     5.45 %   $ 11,169,924     $ 144,457     5.13 %
    Taxable investment securities   2,376,102       20,940     3.53 %     2,368,476       21,671     3.66 %     2,373,731       18,645     3.14 %
    Tax-exempt investment securities   168,768       1,686     4.00 %     156,503       1,521     3.89 %     206,639       1,993     3.86 %
    Total securities   2,544,870       22,626     3.56 %     2,524,979       23,192     3.67 %     2,580,370       20,638     3.20 %
    Interest-bearing deposits   1,226,445       15,249     4.95 %     1,182,816       14,512     4.93 %     1,230,582       15,031     4.85 %
    Mortgage loans held for sale   208,513       3,247     6.23 %     165,392       2,945     7.12 %     227,426       3,928     6.91 %
    Total earning assets   15,399,256       197,732     5.11 %     15,344,856       196,023     5.14 %     15,208,302       184,054     4.80 %
    Less: allowance for loan losses   (125,331 )             (126,792 )             (125,553 )        
    Total nonearning assets   1,754,216               1,764,418               1,680,110          
    Total assets $ 17,028,141             $ 16,982,482             $ 16,762,859          
    Liabilities and Equity:                                  
    Interest-bearing deposits                                  
    Demand and money market $ 6,917,622     $ 48,896     2.81 %   $ 6,896,176     $ 48,161     2.81 %   $ 6,605,853     $ 41,381     2.49 %
    Savings   315,338       842     1.06 %     317,774       845     1.07 %     356,116       938     1.05 %
    Certificates of deposit   2,723,437       32,390     4.73 %     2,715,615       33,017     4.89 %     2,236,102       21,852     3.88 %
    Total interest-bearing deposits   9,956,397       82,128     3.28 %     9,929,565       82,023     3.32 %     9,198,071       64,171     2.77 %
    Borrowings   33,867       (25 )   (0.29 )%     100,165       1,627     6.43 %     299,105       3,382     4.42 %
    Subordinated debt, net   256,309       2,237     3.49 %     256,093       2,236     3.49 %     255,446       2,245     3.52 %
    Total interest-bearing liabilities   10,246,573       84,340     3.27 %     10,285,823       85,886     3.36 %     9,752,622       69,798     2.84 %
    Demand deposits   4,305,783               4,267,590               4,633,856          
    Other noninterest-bearing liabilities   370,736               383,447               389,912          
    Total liabilities   14,923,092               14,936,860               14,776,390          
    Shareholders’ equity   2,105,049               2,045,622               1,986,469          
    Total liabilities and equity $ 17,028,141             $ 16,982,482             $ 16,762,859          
    Net interest income (tax-equivalent basis) (4)     $ 113,392             $ 110,137             $ 114,256      
    Reconciliation of Non-GAAP Financial Measures                                
    Tax-equivalent basis adjustment       (1,110 )             (1,089 )             (1,198 )    
    Net interest income (GAAP)     $ 112,282             $ 109,048             $ 113,058      
                                       
    Interest rate spread (2)(4)         1.84 %           1.78 %           1.96 %
    Interest expense as a percent of average earning assets       2.18 %           2.25 %           1.82 %
    Net interest margin (tax-equivalent basis) (3)(4)       2.93 %           2.89 %           2.98 %
    Total cost of deposits         2.29 %           2.32 %           1.84 %
                                       
    (1) Yields and interest income are presented on a tax-equivalent basis using the federal statutory tax rate of 21%.
    (2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax-equivalent.
    (3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax-equivalent.
    (4) Non-GAAP.
     
    TOWNEBANK
    Average Balances, Yields and Rate Paid (unaudited)
    (dollars in thousands)
     
      Nine Months Ended   Nine Months Ended
      September 30, 2024   September 30, 2023
          Interest   Average       Interest   Average
      Average   Income/   Yield/   Average   Income/   Yield/
      Balance   Expense   Rate (1)   Balance   Expense   Rate (1)
    Assets:                      
    Loans (net of unearned income and deferred costs) $ 11,423,458     $ 463,794     5.42 %   $ 11,159,329     $ 417,808     5.01 %
    Taxable investment securities   2,395,007       61,327     3.41 %     2,420,634       52,656     2.90 %
    Tax-exempt investment securities   162,294       4,756     3.91 %     201,535       5,883     3.89 %
    Total securities   2,557,301       66,083     3.45 %     2,622,169       58,539     2.98 %
    Interest-bearing deposits   1,192,319       43,995     4.93 %     1,179,952       40,168     4.55 %
    Mortgage loans held for sale   163,755       7,908     6.44 %     168,822       8,079     6.38 %
    Total earning assets   15,336,833       581,780     5.07 %     15,130,272       524,594     4.64 %
    Less: allowance for loan losses   (126,508 )             (120,420 )        
    Total nonearning assets   1,748,215               1,637,952          
    Total assets $ 16,958,540             $ 16,647,804          
    Liabilities and Equity:                      
    Interest-bearing deposits                      
    Demand and money market $ 6,880,752     $ 145,042     2.82 %   $ 6,349,422     $ 96,742     2.04 %
    Savings   320,696       2,569     1.07 %     376,282       2,676     0.95 %
    Certificates of deposit   2,674,509       94,928     4.74 %     1,964,718       47,358     3.22 %
    Total interest-bearing deposits   9,875,957       242,539     3.28 %     8,690,422       146,776     2.26 %
    Borrowings   115,171       4,679     5.34 %     505,856       17,644     4.60 %
    Subordinated debt, net   256,094       6,710     3.49 %     253,612       6,650     3.50 %
    Total interest-bearing liabilities   10,247,222       253,928     3.31 %     9,449,890       171,070     2.42 %
    Demand deposits   4,265,971               4,873,945          
    Other noninterest-bearing liabilities   381,547               353,459          
    Total liabilities   14,894,740               14,677,294          
    Shareholders’ equity   2,063,800               1,970,510          
    Total liabilities and equity $ 16,958,540             $ 16,647,804          
    Net interest income (tax-equivalent basis)(4)     $ 327,852             $ 353,524      
    Reconciliation of Non-GAAP Financial Measures                    
    Tax-equivalent basis adjustment       (3,304 )             (3,477 )    
    Net interest income (GAAP)     $ 324,548             $ 350,047      
                           
    Interest rate spread (2)(4)         1.76 %           2.22 %
    Interest expense as a percent of average earning assets       2.21 %           1.51 %
    Net interest margin (tax-equivalent basis) (3)(4)       2.86 %           3.12 %
    Total cost of deposits         2.29 %           1.45 %
                           
    (1) Yields and interest income are presented on a tax-equivalent basis using the federal statutory rate of 21%.
    (2) Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. Fully tax-equivalent.
    (3) Net interest margin is net interest income expressed as a percentage of average earning assets. Fully tax-equivalent.
    (4) Non-GAAP.
     
    TOWNEBANK
    Consolidated Balance Sheets
    (dollars in thousands, except share data)
       
         
      September 30,   December 31,
        2024       2023  
      (unaudited)   (audited)
    ASSETS      
    Cash and due from banks $ 131,068     $ 85,584  
    Interest-bearing deposits at FRB   1,061,596       939,356  
    Interest-bearing deposits in financial institutions   103,400       103,417  
    Total Cash and Cash Equivalents   1,296,064       1,128,357  
    Securities available for sale, at fair value (amortized cost of $2,474,963 and $2,292,963, and allowance for credit losses of $1,171 and $1,498 at September 30, 2024 and December 31, 2023, respectively)   2,363,176       2,129,342  
    Securities held to maturity, at amortized cost (fair value $204,816 and $462,656 at September 30, 2024 and December 31, 2023, respectively)   212,422       477,592  
    Less: Allowance for credit losses   (77 )     (84 )
    Securities held to maturity, net of allowance for credit losses   212,345       477,508  
    Other equity securities   12,681       13,792  
    FHLB stock   12,134       21,372  
    Total Securities   2,600,336       2,642,014  
    Mortgage loans held for sale   264,320       149,987  
    Loans, net of unearned income and deferred costs   11,412,518       11,329,021  
    Less: allowance for credit losses   (123,191 )     (126,461 )
    Net Loans   11,289,327       11,202,560  
    Premises and equipment, net   365,764       337,598  
    Goodwill   457,619       456,335  
    Other intangible assets, net   63,265       64,634  
    BOLI   279,325       277,445  
    Other assets   572,000       576,109  
    TOTAL ASSETS $ 17,188,020     $ 16,835,039  
           
    LIABILITIES AND EQUITY      
    Deposits:      
    Noninterest-bearing demand $ 4,267,628     $ 4,342,701  
    Interest-bearing:      
    Demand and money market accounts   6,990,103       6,757,619  
    Savings   319,970       336,492  
    Certificates of deposit   2,785,469       2,456,394  
    Total Deposits   14,363,170       13,893,206  
    Advances from the FHLB   3,405       203,958  
    Subordinated debt, net   256,444       255,796  
    Repurchase agreements and other borrowings   30,970       32,826  
    Total Borrowings   290,819       492,580  
    Other liabilities   371,316       393,375  
    TOTAL LIABILITIES   15,025,305       14,779,161  
    Preferred stock, authorized and unissued shares – 2,000,000          
    Common stock, $1.667 par value: 150,000,000 shares authorized;      
    75,068,662 and 74,893,462 shares issued at      
    September 30, 2024 and December 31, 2023, respectively   125,139       124,847  
    Capital surplus   1,117,279       1,112,761  
    Retained earnings   985,343       921,126  
    Common stock issued to deferred compensation trust, at cost:      
    1,056,823 and 1,004,717 shares at September 30, 2024 and December 31, 2023, respectively   (22,224 )     (20,813 )
    Deferred compensation trust   22,224       20,813  
    Accumulated other comprehensive income (loss)   (81,482 )     (118,762 )
    TOTAL SHAREHOLDERS’ EQUITY   2,146,279       2,039,972  
    Noncontrolling interest   16,436       15,906  
    TOTAL EQUITY   2,162,715       2,055,878  
    TOTAL LIABILITIES AND EQUITY $ 17,188,020     $ 16,835,039  
     
    TOWNEBANK
    Consolidated Statements of Income (unaudited)
    (dollars in thousands, except per share data)
                   
                   
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
        2024       2023       2024       2023  
    INTEREST INCOME:              
    Loans, including fees $ 155,792     $ 143,605     $ 461,316     $ 415,351  
    Investment securities   22,334       20,292       65,257       57,519  
    Interest-bearing deposits in financial institutions and federal funds sold   15,249       15,031       43,995       40,168  
    Mortgage loans held for sale   3,247       3,928       7,908       8,079  
    Total interest income   196,622       182,856       578,476       521,117  
    INTEREST EXPENSE:              
    Deposits   82,128       64,171       242,539       146,776  
    Advances from the FHLB   29       3,438       3,408       16,838  
    Subordinated debt, net   2,237       2,245       6,710       6,650  
    Repurchase agreements and other borrowings   (54 )     (56 )     1,271       806  
    Total interest expense   84,340       69,798       253,928       171,070  
    Net interest income   112,282       113,058       324,548       350,047  
    PROVISION FOR CREDIT LOSSES   (1,100 )     1,007       (2,154 )     16,232  
    Net interest income after provision for credit losses   113,382       112,051       326,702       333,815  
    NONINTEREST INCOME:              
    Residential mortgage banking income, net   11,786       10,648       35,685       31,380  
    Insurance commissions and related income, net   25,727       23,777       75,297       69,098  
    Property management income, net   11,221       12,800       42,306       40,433  
    Real estate brokerage income, net         (63 )           3,562  
    Service charges on deposit accounts   3,117       2,823       9,548       8,577  
    Credit card merchant fees, net   1,830       2,006       5,042       5,232  
    Investment commissions, net   2,835       2,363       7,759       6,581  
    BOLI   1,886       1,814       6,966       5,196  
    Gain on sale of equity investment   20       554       20       9,386  
    Other income   3,814       3,084       9,345       9,083  
    Net gain/(loss) on investment securities               74        
    Total noninterest income   62,236       59,806       192,042       188,528  
    NONINTEREST EXPENSE:              
    Salaries and employee benefits   72,123       67,258       214,849       204,124  
    Occupancy   9,351       9,027       28,490       27,579  
    Furniture and equipment   4,657       4,100       13,769       12,733  
    Amortization – intangibles   3,130       3,610       9,675       10,744  
    Software   6,790       6,130       19,947       17,922  
    Data processing   4,701       4,140       13,223       11,504  
    Professional fees   4,720       2,770       11,689       8,948  
    Advertising and marketing   4,162       3,653       12,268       12,012  
    Other expenses   17,266       17,014       52,565       61,762  
    Total noninterest expense   126,900       117,702       376,475       367,328  
    Income before income tax expense and noncontrolling interest   48,718       54,155       142,269       155,015  
    Provision for income tax expense   5,592       9,410       20,977       28,424  
    Net income $ 43,126     $ 44,745     $ 121,292     $ 126,591  
    Net income attributable to noncontrolling interest   (177 )     117       (800 )     (1,680 )
    Net income attributable to TowneBank $ 42,949     $ 44,862     $ 120,492     $ 124,911  
    Per common share information              
    Basic earnings $ 0.57     $ 0.60     $ 1.61     $ 1.67  
    Diluted earnings $ 0.57     $ 0.60     $ 1.61     $ 1.67  
    Cash dividends declared $ 0.25     $ 0.25     $ 0.75     $ 0.73  
     
    TOWNEBANK
    Consolidated Balance Sheets – Five Quarter Trend
    (dollars in thousands, except share data)
     
                       
      September 30,   June 30,   March 31,   December 31,   September 30,
        2024       2024       2024       2023       2023  
      (unaudited)   (unaudited)   (unaudited)   (audited)   (unaudited)
    ASSETS                  
    Cash and due from banks $ 131,068     $ 140,028     $ 75,802     $ 85,584     $ 83,949  
    Interest-bearing deposits at FRB   1,061,596       1,062,115       926,635       939,356       1,029,276  
    Interest-bearing deposits in financial institutions   103,400       99,303       98,673       103,417       102,527  
    Total Cash and Cash Equivalents   1,296,064       1,301,446       1,101,110       1,128,357       1,215,752  
    Securities available for sale   2,363,176       2,250,679       2,204,101       2,129,342       1,963,453  
    Securities held to maturity   212,422       212,488       312,510       477,592       547,854  
    Less: allowance for credit losses   (77 )     (79 )     (82 )     (84 )     (85 )
    Securities held to maturity, net of allowance for credit losses   212,345       212,409       312,428       477,508       547,769  
    Other equity securities   12,681       13,566       13,661       13,792       14,062  
    FHLB stock   12,134       12,134       12,139       21,372       16,634  
    Total Securities   2,600,336       2,488,788       2,542,329       2,642,014       2,541,918  
    Mortgage loans held for sale   264,320       200,762       150,727       149,987       188,048  
    Loans, net of unearned income and deferred costs   11,412,518       11,451,747       11,452,343       11,329,021       11,172,971  
    Less: Allowance for credit losses   (123,191 )     (125,552 )     (125,835 )     (126,461 )     (125,159 )
    Net Loans   11,289,327       11,326,195       11,326,508       11,202,560       11,047,812  
    Premises and equipment, net   365,764       340,348       342,569       337,598       335,522  
    Goodwill   457,619       457,619       457,619       456,335       456,684  
    Other intangible assets, net   63,265       65,460       68,758       64,634       67,496  
    BOLI   279,325       277,434       279,293       277,445       275,240  
    Other assets   572,000       610,791       615,324       576,109       551,884  
    TOTAL ASSETS $ 17,188,020     $ 17,068,843     $ 16,884,237     $ 16,835,039     $ 16,680,356  
    LIABILITIES AND EQUITY                  
    Deposits:                  
    Noninterest-bearing demand $ 4,267,628     $ 4,303,773     $ 4,194,132     $ 4,342,701     $ 4,444,861  
    Interest-bearing:                  
    Demand and money market accounts   6,990,103       6,940,086       6,916,701       6,757,619       6,764,415  
    Savings   319,970       312,881       326,179       336,492       350,031  
    Certificates of deposit   2,785,469       2,715,848       2,689,062       2,456,394       2,321,498  
    Total Deposits   14,363,170       14,272,588       14,126,074       13,893,206       13,880,805  
    Advances from the FHLB   3,405       3,591       3,775       203,958       104,139  
    Subordinated debt, net   256,444       256,227       256,011       255,796       255,580  
    Repurchase agreements and other borrowings   30,970       35,351       31,198       32,826       47,315  
    Total Borrowings   290,819       295,169       290,984       492,580       407,034  
    Other liabilities   371,316       411,770       401,307       393,375       408,305  
    TOTAL LIABILITIES   15,025,305       14,979,527       14,818,365       14,779,161       14,696,144  
                       
    Preferred stock                            
    Common stock, $1.667 par value   125,139       125,090       125,009       124,847       124,837  
    Capital surplus   1,117,279       1,115,759       1,114,038       1,112,761       1,111,152  
    Retained earnings   985,343       961,162       937,065       921,126       911,042  
    Common stock issued to deferred compensation trust, at cost   (22,224 )     (22,756 )     (20,915 )     (20,813 )     (20,740 )
    Deferred compensation trust   22,224       22,756       20,915       20,813       20,740  
    Accumulated other comprehensive income (loss)   (81,482 )     (129,224 )     (126,586 )     (118,762 )     (179,043 )
    TOTAL SHAREHOLDERS’ EQUITY   2,146,279       2,072,787       2,049,526       2,039,972       1,967,988  
    Noncontrolling interest   16,436       16,529       16,346       15,906       16,224  
    TOTAL EQUITY   2,162,715       2,089,316       2,065,872       2,055,878       1,984,212  
    TOTAL LIABILITIES AND EQUITY $ 17,188,020     $ 17,068,843     $ 16,884,237     $ 16,835,039     $ 16,680,356  
     
    TOWNEBANK
    Consolidated Statements of Income – Five Quarter Trend (unaudited)
    (dollars in thousands, except share data)
       
       
      Three Months Ended
      September 30,   June 30,   March 31,   December 31,   September 30,
        2024       2024       2024       2023       2023  
    INTEREST INCOME:                  
    Loans, including fees $ 155,792     $ 154,549     $ 150,974     $ 146,810     $ 143,605  
    Investment securities   22,334       22,928       19,996       20,464       20,292  
    Interest-bearing deposits in financial institutions and federal funds sold   15,249       14,512       14,234       13,967       15,031  
    Mortgage loans held for sale   3,247       2,945       1,716       2,886       3,928  
    Total interest income   196,622       194,934       186,920       184,127       182,856  
    INTEREST EXPENSE:                  
    Deposits   82,128       82,023       78,388       73,200       64,171  
    Advances from the FHLB   29       942       2,438       917       3,438  
    Subordinated debt, net   2,237       2,236       2,236       2,236       2,245  
    Repurchase agreements and other borrowings   (54 )     685       640       41       (56 )
    Total interest expense   84,340       85,886       83,702       76,394       69,798  
    Net interest income   112,282       109,048       103,218       107,733       113,058  
    PROVISION FOR CREDIT LOSSES   (1,100 )     (177 )     (877 )     2,446       1,007  
    Net interest income after provision for credit losses   113,382       109,225       104,095       105,287       112,051  
    NONINTEREST INCOME:                  
    Residential mortgage banking income, net   11,786       13,422       10,477       8,035       10,648  
    Insurance commissions and related income, net   25,727       24,031       25,539       21,207       23,777  
    Property management income, net   11,221       14,312       16,773       7,358       12,800  
    Real estate brokerage income, net                     (32 )     (63 )
    Service charges on deposit accounts   3,117       3,353       3,079       3,056       2,823  
    Credit card merchant fees, net   1,830       1,662       1,551       1,476       2,006  
    Investment commissions, net   2,835       2,580       2,343       2,380       2,363  
    BOLI   1,886       3,238       1,842       2,206       1,814  
    Other income   3,834       3,324       2,206       2,127       3,638  
    Net gain/(loss) on investment securities               74              
    Total noninterest income   62,236       65,922       63,884       47,813       59,806  
    NONINTEREST EXPENSE:                  
    Salaries and employee benefits   72,123       71,349       71,377       66,035       67,258  
    Occupancy   9,351       9,717       9,422       9,308       9,027  
    Furniture and equipment   4,657       4,634       4,478       4,445       4,100  
    Amortization – intangibles   3,130       3,298       3,246       3,411       3,610  
    Software   6,790       7,056       6,100       6,743       6,130  
    Data processing   4,701       4,606       3,916       3,529       4,140  
    Professional fees   4,720       3,788       3,180       3,339       2,770  
    Advertising and marketing   4,162       3,524       4,582       3,377       3,653  
    Other expenses   17,266       16,012       19,290       21,708       17,014  
    Total noninterest expense   126,900       123,984       125,591       121,895       117,702  
    Income before income tax expense and noncontrolling interest   48,718       51,163       42,388       31,205       54,155  
    Provision for income tax expense   5,592       8,124       7,261       2,660       9,410  
    Net income   43,126       43,039       35,127       28,545       44,745  
    Net income attributable to noncontrolling interest   (177 )     (183 )     (440 )     259       117  
    Net income attributable to TowneBank $ 42,949     $ 42,856     $ 34,687     $ 28,804     $ 44,862  
    Per common share information                  
    Basic earnings $ 0.57     $ 0.57     $ 0.46     $ 0.39     $ 0.60  
    Diluted earnings $ 0.57     $ 0.57     $ 0.46     $ 0.39     $ 0.60  
    Basic weighted average shares outstanding   74,940,827       74,925,877       74,816,420       74,773,335       74,750,294  
    Diluted weighted average shares outstanding   75,141,661       75,037,955       74,979,501       74,793,557       74,765,515  
    Cash dividends declared $ 0.25     $ 0.25     $ 0.25     $ 0.25     $ 0.25  
                       
    TOWNEBANK
    Banking Segment Financial Information (unaudited)
    (dollars in thousands)
     
                       
      Three Months Ended   Nine Months Ended   Increase/(Decrease)
      September 30,   June 30,   September 30,   YTD 2024 over 2023
        2024       2023       2024       2024       2023     Amount   Percent
    Revenue                          
    Net interest income $ 111,569     $ 112,189     $ 108,029     $ 322,280     $ 349,165     $ (26,885 )   (7.70 )%
    Service charges on deposit accounts   3,117       2,823       3,352       9,548       8,577       971     11.32 %
    Credit card merchant fees   1,830       2,006       1,662       5,042       5,232       (190 )   (3.63 )%
    Investment commissions, net   2,835       2,363       2,580       7,759       6,581       1,178     17.90 %
    Other income   4,828       4,224       4,840       13,096       12,012       1,084     9.02 %
    Subtotal   12,610       11,416       12,434       35,445       32,402       3,043     9.39 %
    Net gain/(loss) on investment securities                     74             74     N/M
    Total noninterest income   12,610       11,416       12,434       35,519       32,402       3,117     9.62 %
    Total revenue   124,179       123,605       120,463       357,799       381,567       (23,768 )   (6.23 )%
                               
    Provision for credit losses   (1,043 )     1,206       (170 )     (2,189 )     16,442       (18,631 )   (113.31 )%
                               
    Expenses                          
    Salaries and employee benefits   47,148       42,727       46,640       140,261       128,161       12,100     9.44 %
    Occupancy   6,963       6,637       7,194       21,217       19,717       1,500     7.61 %
    Furniture and equipment   3,878       3,273       3,810       11,336       10,150       1,186     11.68 %
    Amortization of intangible assets   1,072       1,296       1,117       3,352       3,918       (566 )   (14.45 )%
    Other expenses   26,674       22,595       23,587       77,215       80,215       (3,000 )   (3.74 )%
    Total expenses   85,735       76,528       82,348       253,381       242,161       11,220     4.63 %
    Income before income tax, corporate allocation and noncontrolling interest   39,487       45,871       38,285       106,607       122,964       (16,357 )   (13.30 )%
    Corporate allocation   1,223       1,291       1,232       3,524       3,763       (239 )   (6.35 )%
    Income before income tax provision and noncontrolling interest   40,710       47,162       39,517       110,131       126,727       (16,596 )   (13.10 )%
    Provision for income tax expense   3,495       7,440       5,130       12,731       21,204       (8,473 )   (39.96 )%
    Net income   37,215       39,722       34,387       97,400       105,523       (8,123 )   (7.70 )%
    Noncontrolling interest   (29 )           (58 )     34             34     N/M
    Net income attributable to TowneBank $ 37,186     $ 39,722     $ 34,329     $ 97,434     $ 105,523     $ (8,089 )   (7.67 )%
                               
    Efficiency ratio (non-GAAP)   68.18 %     60.86 %     67.43 %     69.89 %     62.44 %     7.45 %   11.93 %
     
    TOWNEBANK
    Realty Segment Financial Information (unaudited)
    (dollars in thousands)
     
           
      Three Months Ended   Nine Months Ended   Increase/(Decrease)
      September 30,   June 30,   September 30,   YTD 2024 over 2023
        2024       2023       2024       2024       2023     Amount   Percent
    Revenue                          
    Residential mortgage brokerage income, net $ 12,211     $ 10,955     $ 13,996     $ 37,006     $ 32,964     $ 4,042     12.26 %
    Real estate brokerage income, net         (63 )                 3,562       (3,562 )   (100.00 )%
    Title insurance and settlement fees                           443       (443 )   (100.00 )%
    Property management fees, net   11,221       12,800       14,312       42,306       40,433       1,873     4.63 %
    Income (loss) from unconsolidated subsidiary   51       (63 )     67       148       (884 )     1,032     116.74 %
    Gain on equity investment                           8,833       (8,833 )   (100.00 )%
    Net interest and other income   906       1,163       1,317       3,007       1,984       1,023     51.56 %
    Total revenue   24,389       24,792       29,692       82,467       87,335       (4,868 )   (5.57 )%
                               
    Provision for credit losses   (57 )     (199 )     (7 )     35       (210 )     245     116.67 %
                               
    Expenses                          
    Salaries and employee benefits   12,355       12,881       12,370       36,913       41,670       (4,757 )   (11.42 )%
    Occupancy   1,638       1,669       1,811       5,019       5,559       (540 )   (9.71 )%
    Furniture and equipment   604       600       596       1,794       1,933       (139 )   (7.19 )%
    Amortization of intangible assets   637       742       781       2,094       2,166       (72 )   (3.32 )%
    Other expenses   8,839       9,544       9,136       26,174       27,319       (1,145 )   (4.19 )%
    Total expenses   24,073       25,436       24,694       71,994       78,647       (6,653 )   (8.46 )%
                               
    Income before income tax, corporate allocation and noncontrolling interest   373       (445 )     5,005       10,438       8,898       1,540     17.31 %
    Corporate allocation   (484 )     (600 )     (490 )     (1,322 )     (1,800 )     478     (26.56 )%
    Income before income tax provision and noncontrolling interest   (111 )     (1,045 )     4,515       9,116       7,098       2,018     28.43 %
    Provision for income tax expense   18       (99 )     1,163       2,336       1,769       567     32.05 %
    Net income   (129 )     (946 )     3,352       6,780       5,329       1,451     27.23 %
    Noncontrolling interest   (148 )     117       (125 )     (834 )     (1,680 )     846     (50.36 )%
    Net income attributable to TowneBank $ (277 )   $ (829 )   $ 3,227     $ 5,946     $ 3,649     $ 2,297     62.95 %
                               
    Efficiency ratio excluding gain on equity investment (non-GAAP)   96.09 %     99.61 %     80.54 %     84.76 %     97.43 %   (12.67 )%   (13.00 )%
                               
    TOWNEBANK
    Insurance Segment Financial Information (unaudited)
    (dollars in thousands)
     
                       
      Three Months Ended   Nine Months Ended   Increase/(Decrease)
      September 30,   June 30,   September 30,   YTD 2024 over 2023
        2024       2023       2024       2024       2023     Amount   Percent
    Commission and fee income                          
    Property and casualty $ 23,157     $ 22,103     $ 22,225     $ 66,104     $ 60,259     $ 5,845     9.70 %
    Employee benefits   4,483       4,245       4,404       13,712       13,393       319     2.38 %
    Specialized benefit services         133             10       445       (435 )   (97.75 )%
    Total commissions and fees   27,640       26,481       26,629       79,826       74,097       5,729     7.73 %
                               
    Contingency and bonus revenue   2,731       2,335       2,951       10,185       9,343       842     9.01 %
    Other income   25       557       6       41       573       (532 )   (92.84 )%
    Total revenue   30,396       29,373       29,586       90,052       84,013       6,039     7.19 %
                               
    Employee commission expense   4,446       4,906       4,771       13,728       14,340       (612 )   (4.27 )%
    Revenue, net of commission expense   25,950       24,467       24,815       76,324       69,673       6,651     9.55 %
                               
    Salaries and employee benefits   12,620       11,650       12,339       37,675       34,293       3,382     9.86 %
    Occupancy   750       721       712       2,254       2,303       (49 )   (2.13 )%
    Furniture and equipment   175       227       228       639       650       (11 )   (1.69 )%
    Amortization of intangible assets   1,421       1,572       1,400       4,229       4,660       (431 )   (9.25 )%
    Other expenses   2,126       1,568       2,263       6,303       4,614       1,689     36.61 %
    Total operating expenses   17,092       15,738       16,942       51,100       46,520       4,580     9.85 %
    Income before income tax, corporate allocation and noncontrolling interest   8,858       8,729       7,873       25,224       23,153       2,071     8.94 %
    Corporate allocation   (739 )     (691 )     (742 )     (2,202 )     (1,963 )     (239 )   12.18 %
    Income before income tax provision and noncontrolling interest   8,119       8,038       7,131       23,022       21,190       1,832     8.65 %
    Provision for income tax expense   2,079       2,069       1,831       5,910       5,451       459     8.42 %
    Net income   6,040       5,969       5,300       17,112       15,739       1,373     8.72 %
    Noncontrolling interest                                     %
    Net income attributable to TowneBank $ 6,040     $ 5,969     $ 5,300     $ 17,112     $ 15,739     $ 1,373     8.72 %
                               
    Provision for income taxes   2,079       2,069       1,831       5,910       5,451       459     8.42 %
    Depreciation, amortization and interest expense   1,550       1,726       1,529       4,632       5,115       (483 )   (9.44 )%
    EBITDA (non-GAAP) $ 9,669     $ 9,764     $ 8,660     $ 27,654     $ 26,305     $ 1,349     5.13 %
                               
    Efficiency ratio (non-GAAP)   60.44 %     59.21 %     62.63 %     61.43 %     60.55 %     0.88 %   1.45 %
     
    TOWNEBANK
    Reconciliation of Non-GAAP Financial Measures
    (dollars in thousands)
             
      Three Months Ended   Nine Months Ended
      September 30,   September 30,   June 30,   September 30,   September 30,
        2024       2023       2024       2024       2023  
                       
    Return on average assets (GAAP)   1.00 %     1.06 %     1.01 %     0.95 %     1.00 %
    Impact of excluding average goodwill and other intangibles and amortization   0.09 %     0.11 %     0.10 %     0.09 %     0.11 %
    Return on average tangible assets (non-GAAP)   1.09 %     1.17 %     1.11 %     1.04 %     1.11 %
                       
    Return on average equity (GAAP)   8.12 %     8.96 %     8.43 %     7.80 %     8.48 %
    Impact of excluding average goodwill and other intangibles and amortization   3.30 %     4.01 %     3.60 %     3.31 %     3.87 %
    Return on average tangible equity (non-GAAP)   11.42 %     12.97 %     12.03 %     11.11 %     12.35 %
                       
    Return on average common equity (GAAP)   8.18 %     9.04 %     8.49 %     7.86 %     8.54 %
    Impact of excluding average goodwill and other intangibles and amortization   3.36 %     4.07 %     3.67 %     3.37 %     3.95 %
    Return on average tangible common equity
    (non-GAAP)
      11.54 %     13.11 %     12.16 %     11.23 %     12.49 %
                       
    Book value (GAAP) $ 28.59     $ 26.28     $ 27.62     $ 28.59     $ 26.28  
    Impact of excluding average goodwill and other intangibles and amortization   (6.94 )     (7.00 )     (6.97 )     (6.94 )     (7.00 )
    Tangible book value (non-GAAP) $ 21.65     $ 19.28     $ 20.65     $ 21.65     $ 19.28  
                       
    Efficiency ratio (GAAP)   72.71 %     68.09 %     70.86 %     72.88 %     68.20 %
    Impact of exclusions (1.78 )%   (1.88 )%   (1.88 )%   (1.86 )%   (0.82 )%
    Efficiency ratio (non-GAAP)   70.93 %     66.21 %     68.98 %     71.02 %     67.38 %
                       
    Average assets (GAAP) $ 17,028,141     $ 16,762,859     $ 16,982,482     $ 16,958,540     $ 16,647,804  
    Less: average goodwill and intangible assets   522,219       526,445       525,122       523,335       526,375  
    Average tangible assets (non-GAAP) $ 16,505,922     $ 16,236,414     $ 16,457,360     $ 16,435,205     $ 16,121,429  
                       
    Average equity (GAAP) $ 2,105,049     $ 1,986,469     $ 2,045,622     $ 2,063,800     $ 1,970,510  
    Less: average goodwill and intangible assets   522,219       526,445       525,122       523,335       526,375  
    Average tangible equity (non-GAAP) $ 1,582,830     $ 1,460,024     $ 1,520,500     $ 1,540,465     $ 1,444,135  
                       
    Average common equity (GAAP) $ 2,088,674     $ 1,969,898     $ 2,029,150     $ 2,047,482     $ 1,954,850  
    Less: average goodwill and intangible assets   522,219       526,445       525,122       523,335       526,375  
    Average tangible common equity (non-GAAP) $ 1,566,455     $ 1,443,453     $ 1,504,028     $ 1,524,147     $ 1,428,475  
                       
    Net income (GAAP) $ 42,949     $ 44,862     $ 42,856     $ 120,492     $ 124,911  
    Amortization of intangibles, net of tax   2,473       2,852       2,605       7,643       8,488  
    Tangible net income (non-GAAP) $ 45,422     $ 47,714     $ 45,461     $ 128,135     $ 133,399  
                       
    Total revenue (GAAP) $ 174,518     $ 172,864     $ 174,970     $ 516,590     $ 538,575  
    Net (gain)/loss on investment securities                     (74 )      
    Other nonrecurring (income) loss   (20 )     (554 )           (20 )     (9,386 )
    Total Revenue for efficiency calculation (non-GAAP) $ 174,498     $ 172,310     $ 174,970     $ 516,496     $ 529,189  
                       
    Noninterest expense (GAAP) $ 126,900     $ 117,702     $ 123,984     $ 376,475     $ 367,328  
    Less: amortization of intangibles   3,130       3,610       3,298       9,675       10,744  
    Noninterest expense net of amortization (non-GAAP) $ 123,770     $ 114,092     $ 120,686     $ 366,800     $ 356,584  
     
    TOWNEBANK
    Reconciliation of Non-GAAP Financial Measures
    (dollars in thousands, except per share data)
                         
                         
    Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability   Three Months Ended
        September 30,   June 30,   March 31,   December 31,   September 30,
          2024       2024       2023       2023       2023  
    Net income (GAAP)   $ 42,949     $ 42,856     $ 34,687     $ 28,804     $ 44,862  
                         
    Adjustments                    
    Plus: Acquisition-related expenses, net of tax     460       18       564       56       458  
    Plus: FDIC special assessment, net of tax           (310 )     1,021       4,083        
    Less: Gain on sale of equity investments, net of noncontrolling interest     (16 )                 (1,846 )     (438 )
    Core operating earnings, excluding certain items affecting comparability (non-GAAP)   $ 43,393     $ 42,564     $ 36,272     $ 31,097     $ 44,882  
    Weighted average diluted shares     75,141,661       75,037,955       74,979,501       74,793,557       74,765,515  
    Diluted EPS (GAAP)   $ 0.57     $ 0.57     $ 0.46     $ 0.39     $ 0.60  
    Diluted EPS, excluding certain items affecting comparability (non-GAAP)   $ 0.58     $ 0.57     $ 0.48     $ 0.42     $ 0.60  
    Average assets   $ 17,028,141     $ 16,982,482     $ 16,864,235     $ 16,683,041     $ 16,762,859  
    Average tangible equity   $ 1,582,830     $ 1,520,500       1,517,600     $ 1,465,216     $ 1,460,024  
    Average common tangible equity   $ 1,566,455     $ 1,504,028     $ 1,501,494     $ 1,449,052     $ 1,443,453  
    Return on average assets, excluding certain items affecting comparability (non-GAAP)     1.01 %     1.01 %     0.87 %     0.74 %     1.06 %
    Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)     11.53 %     11.95 %     10.29 %     9.15 %     12.97 %
    Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)     11.65 %     12.08 %     10.40 %     9.25 %     13.13 %
    Efficiency ratio, excluding certain items affecting comparability (non-GAAP)     72.45 %     70.85 %     74.84 %     78.33 %     67.76 %
                         
    TOWNEBANK
    Reconciliation of Non-GAAP Financial Measures
    (dollars in thousands, except per share data)
             
             
    Reconciliation of GAAP Earnings to Operating Earnings Excluding Certain Items Affecting Comparability   Nine Months Ended
        September 30,   September 30,
          2024       2023  
    Net income (GAAP)   $ 120,492     $ 124,911  
             
    Adjustments        
    Plus: Acquisition-related expenses, net of tax     1,040       7,718  
    Plus: FDIC special assessment, net of tax     711        
    Plus: Initial provision for acquired loans, net of tax           3,166  
    Less: Gain on sale of equity investments, net of noncontrolling interest and tax     (16 )     (5,951 )
    Core operating earnings, excluding certain items affecting comparability (non-GAAP)   $ 122,227     $ 129,844  
    Weighted average diluted shares     75,043,848       74,618,743  
    Diluted EPS (GAAP)   $ 1.61     $ 1.67  
    Diluted EPS, excluding certain items affecting comparability (non-GAAP)   $ 1.63     $ 1.74  
    Average assets   $ 16,958,540     $ 16,647,804  
    Average tangible equity   $ 1,540,465     $ 1,444,135  
    Average tangible common equity   $ 1,524,147     $ 1,428,475  
    Return on average assets, excluding certain items affecting comparability (non-GAAP)     0.96 %     1.04 %
    Return on average tangible equity, excluding certain items affecting comparability (non-GAAP)     11.26 %     12.81 %
    Return on average common tangible equity, excluding certain items affecting comparability (non-GAAP)     11.38 %     12.95 %
    Efficiency ratio, excluding certain items affecting comparability (non-GAAP)     72.68 %     67.61 %

    The MIL Network

  • MIL-OSI: Live Oak Bancshares, Inc. Reports Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    WILMINGTON, N.C., Oct. 23, 2024 (GLOBE NEWSWIRE) — Live Oak Bancshares, Inc. (NYSE: LOB) (“Live Oak” or “the Company”) today reported third quarter of 2024 net income of $13.0 million, or $0.28 per diluted share.

    “Live Oak delivered historic production levels this quarter as our teams continue to put capital into the hands of business owners across the country,” said Live Oak Chairman and Chief Executive Officer James S. (Chip) Mahan III. “We believe our business momentum is in an exciting place and our conservative approach to growth is driving positive operating leverage, revenue, and deeper customer relationships.”

    Third Quarter 2024 Key Measures

    (Dollars in thousands, except per share data)       Increase (Decrease)    
      3Q 2024   2Q 2024   Dollars   Percent   3Q 2023
    Total revenue(1) $ 129,932     $ 125,479     $ 4,453       3.5 %   $ 127,301  
    Total noninterest expense   77,589       77,656       (67 )     (0.1 )     74,262  
    Income before taxes   17,841       36,058       (18,217 )     (50.5 )     42,760  
    Effective tax rate   27.0 %     25.2 %     n/a       n/a       6.9 %
    Net income $ 13,025     $ 26,963     $ (13,938 )     (51.7 )%   $ 39,793  
    Diluted earnings per share   0.28       0.59       (0.31 )     (52.5 )     0.88  
    Loan and lease production:                  
    Loans and leases originated $ 1,757,856     $ 1,171,141     $ 586,715       50.1 %   $ 1,073,255  
    % Fully funded   42.4 %     38.2 %     n/a       n/a       52.2 %
    Total loans and leases: $ 10,191,868     $ 9,535,766     $ 656,102       6.9 %   $ 8,775,235  
    Total assets:   12,607,346       11,868,570       738,776       6.2       10,950,460  
    Total deposits:   11,400,547       10,707,031       693,516       6.5       10,003,642  

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

    Loans and Leases

    As of September 30, 2024, the total loan and lease portfolio was $10.19 billion, 6.9% above its level at June 30, 2024, and 16.1% above its level a year ago. Excluding historical Paycheck Protection Program loans, the third quarter of 2024 was the Company’s highest loan production quarter of all time. Compared to the second quarter of 2024, loans and leases held for investment increased $659.8 million, or 7.2%, to $9.83 billion while loans held for sale decreased $3.7 million, or 1.0%, to $360.0 million. Average loans and leases were $9.76 billion during the third quarter of 2024 compared to $9.38 billion during the second quarter of 2024. 

    The total loan and lease portfolio at September 30, 2024, and June 30, 2024, was comprised of 34.5% and 36.4% of guaranteed loans, respectively.

    Loan and lease originations totaled $1.76 billion during the third quarter of 2024, an increase of $586.7 million, or 50.1%, from the second quarter of 2024. Loan and lease originations increased $684.6 million, or 63.8%, from the third quarter of 2023.

    Deposits

    Total deposits increased to $11.40 billion at September 30, 2024, an increase of $693.5 million compared to June 30, 2024, and an increase of $1.40 billion compared to September 30, 2023. The increase in total deposits from prior periods was to support growth in the loan and lease portfolio as well as the Company’s targeted liquidity levels.

    Average total interest-bearing deposits for the third quarter of 2024 increased $287.5 million, or 2.8%, to $10.56 billion, compared to $10.27 billion for the second quarter of 2024. The ratio of average total loans and leases to average interest-bearing deposits was 92.5% for the third quarter of 2024, compared to 91.4% for the second quarter of 2024.

    Borrowings

    Borrowings totaled $115.4 million at September 30, 2024 compared to $117.7 million and $25.8 million at June 30, 2024, and September 30, 2023, respectively. During the first quarter of 2024, the Company increased long-term borrowings by $100.0 million through an unsecured 5.95% fixed rate 60-month term loan with a third party correspondent bank. This increase in borrowings was to strategically enhance capital levels in order to accommodate future growth expectations.

    Net Interest Income

    Net interest income for the third quarter of 2024 was $97.0 million compared to $91.3 million for the second quarter of 2024 and $89.4 million for the third quarter of 2023. The net interest margin for the third quarter of 2024 and second quarter of 2024 was 3.33% and 3.28%, respectively, an increase of five basis points quarter over quarter. During the third quarter of 2024, the average cost of interest-bearing liabilities increased by two basis points, while the average yield on interest-earning assets increased by six basis points.

    The increase in net interest income for the third quarter of 2024 compared to the third quarter of 2023 was largely driven by growth in average loans and leases held for investment. Partially mitigating this increase was a decrease in the net interest margin by four basis points arising from an increase in deposits and borrowings, combined with the increase in average cost of funds, outpacing the increase in average yield on interest-earning assets.

    Noninterest Income

    Noninterest income for the third quarter of 2024 was $32.9 million, a decrease of $1.2 million compared to the second quarter of 2024, and a decrease of $5.0 million compared to the third quarter of 2023. The primary drivers in noninterest income changes are outlined below.

    The loan servicing asset revaluation resulted in a loss of $4.2 million for the third quarter of 2024 compared to a $11.3 million gain for the third quarter of 2023. This decrease between periods was principally due to the third quarter of 2023 change in valuation techniques used to estimate the fair value of servicing rights which resulted in a nonrecurring gain of $13.7 million during that period.

    Net gains on sales of loans was $16.6 million, a $2.3 million increase compared to the second quarter of 2024 and a $4.0 million increase compared to the third quarter of 2023. The increase in net gains on sales of loans for both compared periods was the result of higher levels of market premiums combined with increased loan sale volumes. The average guaranteed loan sale premium was 107%, 106% and 105% for the third and second quarters of 2024 and third quarter of 2023, respectively. The volume of guaranteed loans sold was $266.3 million for the third quarter of 2024 compared to $250.5 million sold in the second quarter of 2024 and $225.6 million sold in the third quarter of 2023.

    Loans accounted for under the fair value option had a net gain of $2.3 million for the third quarter of 2024, compared to a net gain of $172 thousand for the second quarter of 2024 and a net loss of $568 thousand for the third quarter of 2023. The increased levels of net gains arising from the valuation of loans accounted for under the fair value option compared to the second quarter of 2024 was largely associated with lower market interest rates. The increase in net gains when compared to the third quarter of 2023 was principally due to the third quarter of 2023 change in valuation techniques used to estimate the fair value of loans measured at fair value, which resulted in a nonrecurring gain of $1.3 million during that period.

    Management fee income decreased by $2.2 million, as compared to both the second quarter of 2024 and third quarter of 2023. This decrease was the result of a restructuring of the Canapi Funds in the third quarter of 2024. In connection with that restructuring, the Company’s subsidiary Canapi Advisors voluntarily withdrew as an advisor to the funds. The Company remains an investor in the Canapi Funds and continues its focus on new and emerging financial technology companies.

    Other noninterest income for the third quarter of 2024 totaled $7.1 million compared to $11.0 million for the second quarter of 2024 and $3.5 million for the third quarter of 2023. The quarter over quarter decrease of $3.9 million was largely related to a $6.7 million gain arising from the sale of one of the Company’s aircraft in the second quarter of 2024, partially offset by a $2.4 million gain from the sale of a building in the third quarter of 2024. The $3.6 million increase compared to the third quarter of 2023 was largely related to the above mentioned $2.4 million gain from the sale of an idle building and accompanying land that was determined earlier in 2024 not to be best suited to serve the Company’s future expansion plans.

    Noninterest Expense

    Noninterest expense for the third quarter of 2024 totaled $77.6 million compared to $77.7 million for the second quarter of 2024 and $74.3 million for the third quarter of 2023. Compared to the third quarter of 2023, the increase in noninterest expense was principally impacted by smaller balance increases in various expense categories, partially offset by $2.2 million in decreased levels of FDIC insurance expense. The decrease in FDIC insurance expense was the product of favorable changes in the Company’s FDIC assessment rates.

    Asset Quality

    During the third quarter of 2024, the Company recognized net charge-offs for loans carried at historical cost of $1.7 million, compared to $8.3 million in the second quarter of 2024 and $9.1 million in the third quarter of 2023. Net charge-offs as a percentage of average held for investment loans and leases carried at historical cost, annualized, for the quarters ended September 30, 2024, June 30, 2024, and September 30, 2023, was 0.08%, 0.38% and 0.48%, respectively.

    Unguaranteed nonperforming (nonaccrual) loans and leases, excluding $8.7 million and $9.6 million accounted for under the fair value option at September 30, 2024, and June 30, 2024, respectively, increased to $49.4 million, or 0.52% of loans and leases held for investment which are carried at historical cost, at September 30, 2024, compared to $37.3 million, or 0.42%, at June 30, 2024.

    Provision for Credit Losses

    The provision for credit losses for the third quarter of 2024 totaled $34.5 million compared to $11.8 million for the second quarter of 2024 and $10.3 million for the third quarter of 2023. The level of provision expense in the third quarter of 2024 was primarily the result of specific reserve increases on individually evaluated loans and continued growth of the loan and lease portfolio. Provision expense for three individually evaluated loan relationships amounted to $13.6 million, or 60.0% and 56.3% of the increase in the total provision for loan and lease losses when compared to the second quarter of 2024 and third quarter of 2023, respectively.

    The allowance for credit losses on loans and leases totaled $168.7 million at September 30, 2024, compared to $137.9 million at June 30, 2024. The allowance for credit losses on loans and leases as a percentage of total loans and leases held for investment carried at historical cost was 1.78% and 1.57% at September 30, 2024, and June 30, 2024, respectively.

    Income Tax

    Income tax expense and related effective tax rate was $4.8 million and 27.0% for the third quarter of 2024, $9.1 million and 25.2% for the second quarter of 2024 and $3.0 million and 6.9% for the third quarter of 2023, respectively. The lower level of income tax expense for the third quarter of 2024 compared to the second quarter of 2024 was primarily the result of the decreased level of pretax income. The higher level of income tax expense for the third quarter of 2024 as compared to the third quarter of 2023 was primarily the result of lower levels of anticipated investment tax credits in 2024 as compared to the prior year.

    Conference Call

    Live Oak will host a conference call to discuss the Company’s financial results and business outlook tomorrow, October 24, 2024, at 9:00 a.m. ET. The call will be accessible by telephone and webcast using Conference ID: 04478. A supplementary slide presentation will be posted to the website prior to the event, and a replay will be available for 12 months following the event. The conference call details are as follows:

    Live Telephone Dial-In

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

    Live Webcast Log-In

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

    Important Note Regarding Forward-Looking Statements

    Statements in this press release that are based on other than historical data or that express the Company’s plans or expectations regarding future events or determinations are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Statements based on historical data are not intended and should not be understood to indicate the Company’s expectations regarding future events. Forward-looking statements provide current expectations or forecasts of future events or determinations. These forward-looking statements are not guarantees of future performance or determinations, nor should they be relied upon as representing management’s views as of any subsequent date. Forward-looking statements involve significant risks and uncertainties, and actual results may differ materially from those presented, either expressed or implied, in this press release. Factors that could cause actual results to differ materially from those expressed in the forward-looking statements include changes in Small Business Administration (“SBA”) rules, regulations or loan products, including the Section 7(a) program, changes in SBA standard operating procedures or changes in Live Oak Banking Company’s status as an SBA Preferred Lender; changes in rules, regulations or procedures for other government loan programs, including those of the United States Department of Agriculture; the impacts of global health crises and pandemics, such as the Coronavirus Disease 2019 (COVID-19) pandemic, on trade (including supply chains and export levels), travel, employee productivity and other economic activities that may have a destabilizing and negative effect on financial markets, economic activity and customer behavior; adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments; a reduction in or the termination of the Company’s ability to use the technology-based platform that is critical to the success of its business model, including a failure in or a breach of operational or security systems or those of its third-party service providers; technological risks and developments, including cyber threats, attacks, or events; competition from other lenders; the Company’s ability to attract and retain key personnel; market and economic conditions and the associated impact on the Company; operational, liquidity and credit risks associated with the Company’s business; changes in political and economic conditions, including any prolonged U.S. government shutdown; the impact of heightened regulatory scrutiny of financial products and services and the Company’s ability to comply with regulatory requirements and expectations; a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget; adverse results, including related fees and expenses, from pending or future lawsuits, government investigations or private actions; and the other factors discussed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) and available at the SEC’s Internet site (http://www.sec.gov). Except as required by law, the Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

    About Live Oak Bancshares, Inc.

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

    Contacts:

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

    Live Oak Bancshares, Inc.
    Quarterly Statements of Income (unaudited)
    (Dollars in thousands, except per share data)

      Three Months Ended   3Q 2024 Change vs.
      3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023   2Q 2024   3Q 2023
    Interest income                     %   %
    Loans and fees on loans $ 192,170     $ 181,840     $ 176,010     $ 169,531     $ 162,722       5.7       18.1  
    Investment securities, taxable   9,750       9,219       8,954       8,746       8,701       5.8       12.1  
    Other interest earning assets   7,016       7,389       7,456       8,259       9,188       (5.0 )     (23.6 )
    Total interest income   208,936       198,448       192,420       186,536       180,611       5.3       15.7  
    Interest expense                          
    Deposits   110,174       105,358       101,998       96,695       90,914       4.6       21.2  
    Borrowings   1,762       1,770       311       265       287       (0.5 )     513.9  
    Total interest expense   111,936       107,128       102,309       96,960       91,201       4.5       22.7  
    Net interest income   97,000       91,320       90,111       89,576       89,410       6.2       8.5  
    Provision for credit losses   34,502       11,765       16,364       8,995       10,279       193.3       235.7  
    Net interest income after provision for credit losses   62,498       79,555       73,747       80,581       79,131       (21.4 )     (21.0 )
    Noninterest income                          
    Loan servicing revenue   8,040       7,347       7,624       7,342       6,990       9.4       15.0  
    Loan servicing asset revaluation   (4,207 )     (2,878 )     (2,744 )     (3,974 )     11,335       (46.2 )     (137.1 )
    Net gains on sales of loans   16,646       14,395       11,502       12,891       12,675       15.6       31.3  
    Net gain (loss) on loans accounted for under the fair value option   2,255       172       (219 )     (170 )     (568 )     1211.0       497.0  
    Equity method investments (loss) income   (1,393 )     (1,767 )     (5,022 )     47       (1,034 )     21.2       (34.7 )
    Equity security investments gains (losses), net   909       161       (529 )     (384 )     (783 )     464.6       216.1  
    Lease income   2,424       2,423       2,453       2,439       2,498             (3.0 )
    Management fee income   1,116       3,271       3,271       3,309       3,277       (65.9 )     (65.9 )
    Other noninterest income   7,142       11,035       9,761       8,607       3,501       (35.3 )     104.0  
    Total noninterest income   32,932       34,159       26,097       30,107       37,891       (3.6 )     (13.1 )
    Noninterest expense                          
    Salaries and employee benefits   44,524       46,255       47,275       44,274       42,947       (3.7 )     3.7  
    Travel expense   2,344       2,328       2,438       1,544       2,197       0.7       6.7  
    Professional services expense   3,287       3,061       1,878       3,052       1,762       7.4       86.5  
    Advertising and marketing expense   2,473       3,004       3,692       2,501       3,446       (17.7 )     (28.2 )
    Occupancy expense   2,807       2,388       2,247       2,231       2,129       17.5       31.8  
    Technology expense   9,081       7,996       7,723       8,402       7,722       13.6       17.6  
    Equipment expense   3,472       3,511       3,074       3,480       3,676       (1.1 )     (5.5 )
    Other loan origination and maintenance expense   4,872       3,659       3,911       3,937       3,498       33.2       39.3  
    Renewable energy tax credit investment impairment (recovery)   115       170       (927 )     14,575             (32.4 )     100.0  
    FDIC insurance   1,933       2,649       3,200       4,091       4,115       (27.0 )     (53.0 )
    Other expense   2,681       2,635       3,226       5,117       2,770       1.7       (3.2 )
    Total noninterest expense   77,589       77,656       77,737       93,204       74,262       (0.1 )     4.5  
    Income before taxes   17,841       36,058       22,107       17,484       42,760       (50.5 )     (58.3 )
    Income tax expense (benefit)   4,816       9,095       (5,479 )     1,321       2,967       (47.0 )     62.3  
    Net income $ 13,025     $ 26,963     $ 27,586     $ 16,163     $ 39,793       (51.7 )     (67.3 )
    Earnings per share                          
    Basic $ 0.28     $ 0.60     $ 0.62     $ 0.36     $ 0.89       (53.3 )     (68.5 )
    Diluted $ 0.28     $ 0.59     $ 0.60     $ 0.36     $ 0.88       (52.5 )     (68.2 )
    Weighted average shares outstanding                          
    Basic   45,073,482       44,974,942       44,762,308       44,516,646       44,408,997          
    Diluted   45,953,947       45,525,082       45,641,210       45,306,506       45,268,745          

    Live Oak Bancshares, Inc.
    Quarterly Balance Sheets (unaudited)
    (Dollars in thousands)

      As of the quarter ended   3Q 2024 Change vs.
      3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023   2Q 2024   3Q 2023
    Assets                     %   %
    Cash and due from banks $ 666,585     $ 615,449     $ 597,394     $ 582,540     $ 534,774       8.3       24.6  
    Certificates of deposit with other banks   250       250       250       250       3,750             (93.3 )
    Investment securities available-for-sale   1,233,466       1,151,195       1,120,622       1,126,160       1,099,878       7.1       12.1  
    Loans held for sale   359,977       363,632       310,749       387,037       572,604       (1.0 )     (37.1 )
    Loans and leases held for investment(1)   9,831,891       9,172,134       8,912,561       8,633,847       8,202,631       7.2       19.9  
    Allowance for credit losses on loans and leases   (168,737 )     (137,867 )     (139,041 )     (125,840 )     (121,273 )     (22.4 )     (39.1 )
    Net loans and leases   9,663,154       9,034,267       8,773,520       8,508,007       8,081,358       7.0       19.6  
    Premises and equipment, net   267,032       267,864       258,071       257,881       258,041       (0.3 )     3.5  
    Foreclosed assets   8,015       8,015       8,561       6,481       6,701             19.6  
    Servicing assets   52,553       51,528       49,343       48,591       47,127       2.0       11.5  
    Other assets   356,314       376,370       387,059       354,476       346,227       (5.3 )     2.9  
    Total assets $ 12,607,346     $ 11,868,570     $ 11,505,569     $ 11,271,423     $ 10,950,460       6.2       15.1  
    Liabilities and shareholders’ equity                          
    Liabilities                          
    Deposits:                          
    Noninterest-bearing $ 258,844     $ 264,013     $ 226,668     $ 259,270     $ 239,536       (2.0 )     8.1  
    Interest-bearing   11,141,703       10,443,018       10,156,693       10,015,749       9,764,106       6.7       14.1  
    Total deposits   11,400,547       10,707,031       10,383,361       10,275,019       10,003,642       6.5       14.0  
    Borrowings   115,371       117,745       120,242       23,354       25,847       (2.0 )     346.4  
    Other liabilities   83,672       82,745       74,248       70,384       70,603       1.1       18.5  
    Total liabilities   11,599,590       10,907,521       10,577,851       10,368,757       10,100,092       6.3       14.8  
    Shareholders’ equity                          
    Preferred stock, no par value, 1,000,000 shares authorized, none issued or outstanding                                        
    Class A common stock (voting)   361,925       356,381       349,648       344,568       340,929       1.6       6.2  
    Class B common stock (non-voting)                                        
    Retained earnings   707,026       695,172       669,307       642,817       627,759       1.7       12.6  
    Accumulated other comprehensive loss   (61,195 )     (90,504 )     (91,237 )     (84,719 )     (118,320 )     32.4       48.3  
    Total shareholders’ equity   1,007,756       961,049       927,718       902,666       850,368       4.9       18.5  
    Total liabilities and shareholders’ equity $ 12,607,346     $ 11,868,570     $ 11,505,569     $ 11,271,423     $ 10,950,460       6.2       15.1  

    (1) Includes $343.4 million, $363.0 million, $379.2 million, $388.0 million and $410.1 million measured at fair value for the quarters ended September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively.

     

    Live Oak Bancshares, Inc.
    Statements of Income (unaudited)
    (Dollars in thousands, except per share data)

      Nine Months Ended
      September 30, 2024   September 30, 2023
    Interest income      
    Loans and fees on loans $ 550,020     $ 454,136  
    Investment securities, taxable   27,923       24,751  
    Other interest earning assets   21,861       22,852  
    Total interest income   599,804       501,739  
    Interest expense      
    Deposits   317,530       243,512  
    Borrowings   3,843       2,498  
    Total interest expense   321,373       246,010  
    Net interest income   278,431       255,729  
    Provision for credit losses   62,631       42,328  
    Net interest income after provision for credit losses   215,800       213,401  
    Noninterest income      
    Loan servicing revenue   23,011       20,057  
    Loan servicing asset revaluation   (9,829 )     8,860  
    Net gains on sales of loans   42,543       33,654  
    Net gain (loss) on loans accounted for under the fair value option   2,208       (3,369 )
    Equity method investments (loss) income   (8,182 )     (6,041 )
    Equity security investments gain (losses), net   541       (585 )
    Lease income   7,300       7,568  
    Management fee income   7,658       10,015  
    Other noninterest income   27,938       11,467  
    Total noninterest income   93,188       81,626  
    Noninterest expense      
    Salaries and employee benefits   138,054       130,778  
    Travel expense   7,110       7,378  
    Professional services expense   8,226       4,685  
    Advertising and marketing expense   9,169       10,058  
    Occupancy expense   7,442       6,259  
    Technology expense   24,800       23,456  
    Equipment expense   10,057       11,517  
    Other loan origination and maintenance expense   12,442       10,867  
    Renewable energy tax credit investment (recovery) impairment   (642 )     69  
    FDIC insurance   7,782       12,579  
    Other expense   8,542       12,035  
    Total noninterest expense   232,982       229,681  
    Income before taxes   76,006       65,346  
    Income tax expense   8,432       7,611  
    Net income $ 67,574     $ 57,735  
    Earnings per share      
    Basic $ 1.50     $ 1.30  
    Diluted $ 1.48     $ 1.28  
    Weighted average shares outstanding      
    Basic   44,937,409       44,298,798  
    Diluted   45,707,245       45,023,739  

    Live Oak Bancshares, Inc.
    Quarterly Selected Financial Data
    (Dollars in thousands, except per share data)

      As of and for the three months ended
      3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023
    Income Statement Data                  
    Net income $ 13,025     $ 26,963     $ 27,586     $ 16,163     $ 39,793  
    Per Common Share                  
    Net income, diluted $ 0.28     $ 0.59     $ 0.60     $ 0.36     $ 0.88  
    Dividends declared   0.03       0.03       0.03       0.03       0.03  
    Book value   22.32       21.35       20.64       20.23       19.12  
    Tangible book value(1)   22.24       21.28       20.57       20.15       19.04  
    Performance Ratios                  
    Return on average assets (annualized)   0.43 %     0.93 %     0.98 %     0.58 %     1.46 %
    Return on average equity (annualized)   5.21       11.39       11.93       7.36       18.68  
    Net interest margin   3.33       3.28       3.33       3.32       3.37  
    Efficiency ratio(1)   59.72       61.89       66.89       77.88       58.34  
    Noninterest income to total revenue   25.35       27.22       22.46       25.16       29.76  
    Selected Loan Metrics                  
    Loans and leases originated $ 1,757,856     $ 1,171,141     $ 805,129     $ 981,703     $ 1,073,255  
    Outstanding balance of sold loans serviced   4,452,750       4,292,857       4,329,097       4,238,328       4,028,575  
    Asset Quality Ratios                  
    Allowance for credit losses to loans and leases held for investment(3)   1.78 %     1.57 %     1.63 %     1.53 %     1.56 %
    Net charge-offs(3) $ 1,710     $ 8,253     $ 3,163     $ 4,428     $ 9,122  
    Net charge-offs to average loans and leases held for investment(2) (3)   0.08 %     0.38 %     0.15 %     0.22 %     0.48 %
                       
    Nonperforming loans and leases at historical cost(3)                  
    Unguaranteed $ 49,398     $ 37,340     $ 43,117     $ 39,285     $ 33,255  
    Guaranteed   166,177       122,752       105,351       95,678       65,837  
    Total   215,575       160,092       148,468       134,963       99,092  
    Unguaranteed nonperforming historical cost loans and leases, to loans and leases held for investment(3)   0.52 %     0.42 %     0.51 %     0.48 %     0.43 %
                       
    Nonperforming loans at fair value(4)                  
    Unguaranteed $ 8,672     $ 9,590     $ 7,942     $ 7,230     $ 6,518  
    Guaranteed   49,822       51,570       47,620       41,244       39,378  
    Total   58,494       61,160       55,562       48,474       45,896  
    Unguaranteed nonperforming fair value loans to fair value loans held for investment(4)   2.53 %     2.64 %     2.09 %     1.86 %     1.59 %
                       
    Capital Ratios                  
    Common equity tier 1 capital (to risk-weighted assets)   11.19 %     11.85 %     11.89 %     11.73 %     11.63 %
    Tier 1 leverage capital (to average assets)   8.60       8.71       8.69       8.58       8.56  

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

    Live Oak Bancshares, Inc.
    Quarterly Average Balances and Net Interest Margin
    (Dollars in thousands)

      Three Months Ended
    September 30, 2024
      Three Months Ended
    June 30, 2024
      Average Balance   Interest   Average Yield/Rate   Average Balance   Interest   Average Yield/Rate
    Interest-earning assets:                      
    Interest-earning balances in other banks $ 519,340     $ 7,016       5.37 %   $ 555,570     $ 7,389       5.35 %
    Investment securities   1,287,410       9,750       3.01       1,263,675       9,219       2.93  
    Loans held for sale   409,902       9,859       9.57       387,824       9,329       9.67  
    Loans and leases held for investment(1)   9,354,522       182,311       7.75       8,997,164       172,511       7.71  
    Total interest-earning assets   11,571,174       208,936       7.18       11,204,233       198,448       7.12  
    Less: Allowance for credit losses on loans and leases   (137,285 )             (136,668 )        
    Noninterest-earning assets   567,098               562,488          
    Total assets $ 12,000,987             $ 11,630,053          
    Interest-bearing liabilities:                      
    Interest-bearing checking $ 350,239     $ 4,892       5.56 %   $ 304,505     $ 4,267       5.64 %
    Savings   5,043,930       51,516       4.06       4,804,037       48,617       4.07  
    Money market accounts   134,481       190       0.56       128,625       186       0.58  
    Certificates of deposit   5,028,830       53,576       4.24       5,032,856       52,288       4.18  
    Total deposits   10,557,480       110,174       4.15       10,270,023       105,358       4.13  
    Borrowings   116,925       1,762       6.00       119,321       1,770       5.97  
    Total interest-bearing liabilities   10,674,405       111,936       4.17       10,389,344       107,128       4.15  
    Noninterest-bearing deposits   237,387               223,026          
    Noninterest-bearing liabilities   90,079               70,667          
    Shareholders’ equity   999,116               947,016          
    Total liabilities and shareholders’ equity $ 12,000,987             $ 11,630,053          
    Net interest income and interest rate spread     $ 97,000       3.01 %       $ 91,320       2.97 %
    Net interest margin           3.33               3.28  
    Ratio of average interest-earning assets to average interest-bearing liabilities           108.40 %             107.84 %

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

    Live Oak Bancshares, Inc.
    GAAP to Non-GAAP Reconciliation
    (Dollars in thousands)

      As of and for the three months ended
      3Q 2024   2Q 2024   1Q 2024   4Q 2023   3Q 2023
    Total shareholders’ equity $ 1,007,756     $ 961,049     $ 927,718     $ 902,666     $ 850,368  
    Less:                  
    Goodwill   1,797       1,797       1,797       1,797       1,797  
    Other intangible assets   1,606       1,644       1,682       1,721       1,759  
    Tangible shareholders’ equity (a) $ 1,004,353     $ 957,608     $ 924,239     $ 899,148     $ 846,812  
    Shares outstanding (c)   45,151,691       45,003,856       44,938,673       44,617,673       44,480,215  
    Total assets $ 12,607,346     $ 11,868,570     $ 11,505,569     $ 11,271,423     $ 10,950,460  
    Less:                  
    Goodwill   1,797       1,797       1,797       1,797       1,797  
    Other intangible assets   1,606       1,644       1,682       1,721       1,759  
    Tangible assets (b) $ 12,603,943     $ 11,865,129     $ 11,502,090     $ 11,267,905     $ 10,946,904  
    Tangible shareholders’ equity to tangible assets (a/b)   7.97 %     8.07 %     8.04 %     7.98 %     7.74 %
    Tangible book value per share (a/c) $ 22.24     $ 21.28     $ 20.57     $ 20.15     $ 19.04  
    Efficiency ratio:                  
    Noninterest expense (d) $ 77,589     $ 77,656     $ 77,737     $ 93,204     $ 74,262  
    Net interest income   97,000       91,320       90,111       89,576       89,410  
    Noninterest income   32,932       34,159       26,097       30,107       37,891  
    Total revenue (e) $ 129,932     $ 125,479     $ 116,208     $ 119,683     $ 127,301  
    Efficiency ratio (d/e)   59.72 %     61.89 %     66.89 %     77.88 %     58.34 %
    Pre-provision net revenue (e-d) $ 52,343     $ 47,823     $ 38,471     $ 26,479     $ 53,039  
                                           

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

    The MIL Network

  • MIL-OSI: TransAlta Declares Dividends

    Source: GlobeNewswire (MIL-OSI)

    CALGARY, Alberta, Oct. 23, 2024 (GLOBE NEWSWIRE) — The Board of Directors of TransAlta Corporation (TSX: TA) (NYSE: TAC) declared a quarterly dividend of $0.06 per common share payable on January 1, 2025, to shareholders of record at the close of business on December 1, 2024.

    The Board of Directors also declared the following quarterly dividend on its Cumulative Redeemable Rate Reset First Preferred Shares for the period starting from and including September 30, 2024, up to but excluding December 31, 2024:

    Preferred Shares TSX Stock Symbol Dividend Rate Dividend Per Share Record Date Payment Date
    Series A TA.PR.D 2.877% $0.17981 December 1, 2024 December 31, 2024
    Series B* TA.PR.E 6.235% $0.39182 December 1, 2024 December 31, 2024
    Series C TA.PR.F 5.854% $0.36588 December 1, 2024 December 31, 2024
    Series D* TA.PR.G 7.305% $0.45906 December 1, 2024 December 31, 2024
    Series E TA.PR.H 6.894% $0.43088 December 1, 2024 December 31, 2024
    Series G TA.PR.J 6.773% $0.42331 December 1, 2024 December 31, 2024

    * Please note the quarterly floating rate on the Series B and Series D Preferred Shares will be reset every quarter.

    All currency is expressed in Canadian dollars except where noted. When the dividend payment date falls on a weekend or holiday the payment is made the following business day.

    About TransAlta Corporation:

    TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 113 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where our employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and the Future-Fit Business Benchmark, which also defines sustainable goals for businesses. Our reporting on climate change management has been guided by the International Financial Reporting Standards (IFRS) S2 Climate-related Disclosures Standard and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 66 per cent reduction in GHG emissions or 21.3 million tonnes CO2e since 2015 and received an upgraded MSCI ESG rating of AA.

    For more information about TransAlta, visit our web site at transalta.com.

    For more information:

    Investor Inquiries: Media Inquiries:
    Phone: 1-800-387-3598 in Canada and US Phone: 1-855-255-9184
    Email: investor_relations@transalta.com Email: ta_media_relations@transalta.com

    The MIL Network

  • MIL-OSI: Innventure, Inc. Announces Financing Agreements to Further Strengthen Balance Sheet

    Source: GlobeNewswire (MIL-OSI)

    Enters $50 Million Secured Line of Credit with Western Technology Investment

    Issues Approximately $11 Million of Series B Preferred Stock

    ORLANDO, Fla., Oct. 23, 2024 (GLOBE NEWSWIRE) — Innventure, Inc. (Nasdaq: INV) (“Innventure”), a technology commercialization platform, today announced two financing arrangements to bolster its capital position and provide additional operating flexibility.

    The Company entered into a $50 million secured line of credit (the “Line of Credit”) with Western Technology Investment (“WTI”). The Company expects to draw on the Line of Credit in multiple installments through March 31, 2025, subject to the satisfaction of certain conditions and achievement of certain commercial milestones by certain dates.

    Innventure also entered into investment agreements at the time of closing of the business combination the (“Business Combination”) with certain qualified investors for the issuance and sale of approximately $11 million of Series B Preferred Stock in a private placement of Series B Preferred Stock. Proceeds from this offering augmented the $11.3 million of trust assets that were not redeemed in connection with the Business Combination.

    “These financing agreements are a testament to Innventure’s differentiated business model and mark a significant milestone as a newly public company,” said Bill Haskell, CEO of Innventure. “The Line of Credit and private placement, together with our conditional $75 million Standby Equity Purchase Agreement with Yorkville, strengthen Innventure’s financial position and provide even greater opportunity to continue identifying, funding and commercializing transformative technologies.”

    About Innventure
    Innventure founds, funds, and operates companies with a focus on transformative, sustainable technology solutions acquired or licensed from multinational corporations. Innventure takes what it believes to be breakthrough technologies from early evaluation to scaled commercialization utilizing an approach designed to help mitigate risk as it builds disruptive companies it believes have the potential to achieve a target enterprise value of at least $1 billion. Innventure defines ‘‘disruptive’’ as innovations that have the ability to significantly change the way businesses, industries, markets and/or consumers operate.

    Cautionary Statement Regarding Forward-Looking Statements

    This press release contains forward-looking statements, including statements about the Company’s business model, the financial condition and prospects of the Company. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements generally relate to future events or the Company’s future financial or operating performance and may refer to projections and forecasts. Forward-looking statements are often identified by future or conditional words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “will,” “potential,” “predict,” “should,” “would” and other similar words and expressions (or the negative versions of such words or expressions), but the absence of these words does not mean that a statement is not forward-looking.

    The forward-looking statements are based on the current expectations of the Company’s management and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of this press release. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the parties) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section entitled “Risk Factors” in the Form S-4, which was filed in connection with the Business Combination and was declared effective by the Securities and Exchange Commission, and those discussed and identified in other public filings made with the Securities and Exchange Commission by the Company and the following: (a) expectations regarding the Company’s and the Innventure Companies’ (as defined below) strategies and future financial performance, including their future business plans, expansion and acquisition plans or objectives, prospective performance and opportunities and competitors, revenues, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures, and the Company’s ability to invest in growth initiatives; (b) the implementation, market acceptance and success of the Company’s and the Innventure Companies’ business models and growth strategies; (c) the Company’s future capital requirements and sources and uses of cash; (d) the Company’s ability to meet the various conditions, including the available cash and performance targets, and access any of the installments draws under the Line of Credit; (e) the Company’s ability to meet the various conditions and satisfy the various limitations under the Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd., including exchange caps, issuances and subscriptions based on trading volumes, to access the funds available under the SEPA; (f) that the Company will have sufficient capital following the completion of the Business Combination to operate as anticipated; (g) the Company’s ability to obtain funding for its operations and future growth; (h) developments and projections relating to the Company’s and the Innventure Companies’ competitors and industry; (i) the Innventure Companies’ ability to meet, and to continue to meet, applicable regulatory requirements for the use of their products and the numerous regulatory requirements generally applicable to their products and facilities; (j) the outcome of any legal proceedings that may be instituted against the Company in connection with the completion of the Business Combination; (k) the Company’s ability to find future opportunities to license or acquire breakthrough technology solutions from multinational corporations (“MNCs”) and to satisfy the requirements imposed by or to avoid disagreements with its current and future MNC partners; (l) the risk that the Company may be deemed an investment company under the Investment Company Act, which would impose burdensome compliance requirements and restrictions on its activities; (m) the Company’s ability to sufficiently protect the intellectual property rights of itself and its subsidiaries, and to avoid or resolve in a timely and cost-effective manner any disputes that may arise relating to its use of the intellectual property of third parties; (n) the risk of a cyber-attack or a failure of the Company’s information technology and data security infrastructure; (o) the ability to recognize the anticipated benefits of the Business Combination; (p) unexpected costs related to the Business Combination; (q) geopolitical risk and changes in applicable laws or regulations; (r) potential adverse effects of other economic, business, and/or competitive factors; and (s) operational risks related to the Company and its subsidiaries.

    Except to the extent required by applicable law or regulation, the Company undertakes no obligation to update statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

    Media Contact: Laurie Steinberg, Solebury Strategic Communications
    press@innventure.com

    Investor Relations Contact: Sloan Bohlen, Solebury Strategic Communications
    investorrelations@innventure.com

    The MIL Network

  • MIL-OSI: First Bank Announces Third Quarter 2024 Net Income of $8.2 Million

    Source: GlobeNewswire (MIL-OSI)

    Results reflect strong loan and deposit growth, solid asset quality, and balance sheet optimization initiatives

    HAMILTON, N.J., Oct. 23, 2024 (GLOBE NEWSWIRE) — First Bank (Nasdaq Global Market: FRBA) (the Bank) today announced results for the third quarter of 2024. Net income for the third quarter of 2024 was $8.2 million, or $0.32 per diluted share. Return on average assets, return on average equity and return on average tangible equity[i] for the third quarter of 2024 were 0.88%, 8.15% and 9.42%, respectively. The Bank recorded a net loss of $1.3 million, or a loss of $0.05 per diluted share, and losses on average assets, equity, and tangible equityi of 0.14%, 1.43%, and 1.66%, respectively, for the third quarter of 2023. Financial results for the third quarter of 2023 were negatively impacted by the Malvern Bancorp acquisition, completed in July 2023, primarily due to the merger-related expenses and the initial credit loss expense on acquired loans.

    Third Quarter 2024 Performance Highlights:

    • Total loans of $3.09 billion at September 30, 2024 grew $89.5 million, or 11.9%, annualized, from the linked quarter ended June 30, 2024. Loan growth occurred late in the quarter, which is reflected in average loan balance increase of only $12.2 million during the quarter ended September 30, 2024. The growth was primarily driven by $56.9 million expansion within the Commercial and Industrial and Owner-occupied commercial real estate loan categories.
    • Total deposits of $3.05 billion at September 30, 2024 grew $82.4 million, or 11.1%, annualized, from the linked quarter. Growth occurred across all deposit categories, as non-interest bearing demand, interest bearing demand, money market and savings, and time deposits increased $19.3 million, $23.3 million, $36.3 million, and $3.6 million, respectively, from the second quarter of 2024.
    • Tangible book value per share[ii] grew to $13.84 at September 30, 2024, increasing 11.2%, annualized, from $13.46 at June 30, 2024.
    • The Bank continued to prioritize balance sheet efficiency, selling approximately $11.7 million of investment securities during the quarter ended September 30, 2024 which resulted in a $555,000 net loss on the sale of investments during the quarter. The Bank also completed a restructuring of its bank-owned life insurance (BOLI) portfolio during the quarter which resulted in approximately $24 million in terminated policies and the acquisition of approximately $20 million in new policies. As a result of the restructure, the Bank recorded a $1.1 million enhancement to the cash surrender value and recognized additional income tax expense totaling $1.2 million.
    • Strong asset quality continued, with nonperforming assets decreasing by 9 basis points to 0.47% of total assets at September 30, 2024 from 0.56% at June 30, 2024.

    Patrick L. Ryan, President and CEO of First Bank, reflected on the Bank’s performance, stating, “First Bank’s outstanding third quarter growth is an outcome of a well-executed long-term strategy. We have worked to build teams, products, and operating structures that promote quality growth over the long term, and the results are evident. Our teams added high-quality loans and deposits across all categories. We also continued to optimize the Bank’s efficiency as our efficiency ratio[iii] remained below 60% for the 21st consecutive quarter. We continued to enact strategies to enhance future profitability and complement our organic growth efforts including ongoing balance sheet restructuring through the sale of certain lower-yielding investment securities, and we opportunistically restructured our BOLI policies during the quarter, an initiative that will be accretive to future earnings. The current quarter highlighted our efforts to build our core community banking customer base while we expand our specialty banking teams and continued investment in technology to improve the customer experience.”   

    Mr. Ryan added, “We are pleased with our ability to generate solid returns for our shareholders, including this quarter’s 11% annualized growth in tangible book value per share. We continue to explore a variety of opportunities to drive future earnings. Our recent receipt of regulatory approval to initiate stock repurchases also adds to our toolkit of options to support continued and growing returns for our shareholders.”

    Income Statement

    In the third quarter of 2024, the Bank’s net interest income increased to $30.1 million, growing $1.5 million, or 5.2%, compared to the same period in 2023. The increase was primarily due to net interest margin expansion in the third quarter of 2024 compared to the third quarter of 2023. Net interest income decreased $446,000, or 1.5%, from the linked second quarter of 2024. The modest decrease was primarily due to net interest margin compression and the timing of our loan growth, which occurred late in the third quarter, limiting interest income received during the quarter. During the third quarter, a $606,000 increase in interest income compared to the second quarter of 2024 was primarily related to higher earning asset balances, which was offset by a $1.1 million increase in interest expense, resulting from increased deposit costs and a higher level of average borrowings.

    The Bank’s tax equivalent net interest margin of 3.49% for the third quarter of 2024 represented an increase of 13 basis points from the quarter ended September 30, 2023 and a decrease of 13 basis points from the linked quarter ended June 30, 2024. The Bank’s tax equivalent net interest margin includes the impact of amortization and accretion of premiums and discounts from fair value measurements of assets acquired and liabilities assumed in acquisitions. Amortization of premiums and accretion of discounts from fair value measurements of assets acquired and liabilities assumed in acquisitions totaled $3.4 million during the third quarter of 2024, compared to $2.7 million for the quarter ended September 30, 2023 and $3.6 million for the quarter ended June 30, 2024. The Bank’s net interest margin declined compared to the linked second quarter due to lower acquisition accounting accretion income, increased levels of average borrowings, lower average loan yields, and higher interest bearing deposit costs.

    The Bank recorded a credit loss expense totaling $1.6 million during the third quarter of 2024, compared to $63,000 recorded during the second quarter of 2024 and $6.7 million recorded for the third quarter of 2023. The Bank’s credit loss expense for the third quarter of 2024 was commensurate with robust organic loan growth during the quarter and continued to reflect strong and stable asset quality. Credit loss expense for the third quarter of 2023 included a $5.5 million credit loss recorded to establish the allowance for credit losses on the acquired Malvern loan portfolio.

    In the third quarter of 2024, the Bank recorded non-interest income of $2.5 million, compared to $193,000 during the same period in 2023 and $689,000 in the second quarter of 2024. The increase in non-interest income was primarily related to approximately $1.1 million in one-time enhancement to the cash surrender value of BOLI that resulted from the aforementioned BOLI restructuring transaction during the quarter, as well as higher yields earned on the new BOLI policies purchased during the quarter. Additionally, the Bank recorded $135,000 in net gains on the sale of loans during third quarter 2024, compared to net losses on the sale of loans totaling $900,000 and $704,000 in the linked and prior year quarters, respectively. This was partially offset by $555,000 in net losses on the sale of investment securities during third quarter 2024, while no investment securities sales were executed in the linked quarter, and $527,000 in net losses were recognized during the third quarter of 2023.

    Non-interest expense for the third quarter of 2024 was $18.6 million, a decrease of $4.8 million, or 20.6%, compared to $23.4 million for the prior year quarter. Lower non-interest expense was largely due to $7.0 million in merger-related expenses recorded during the third quarter of 2023. Excluding merger-related expenses, non-interest expense grew $2.2 million, or 13.3%, including an increase of $849,000 in salaries and employee benefits due to merit increases and a larger employee base. Other real estate owned (OREO) expense totaled $662,000 during third quarter 2024, with no similar expense recorded in third quarter 2023. The increase reflects a $363,000 impairment of an OREO asset along with other legal and real estate tax expenses recorded during the quarter. Additionally, other professional fees increased $312,000 primarily related to increases in personnel placement costs, consulting fees, and tax services.

    On a linked quarter basis, non-interest expense increased $691,000, or 3.8%, from $18.0 million for the second quarter of 2024. The largest impact on expenses compared to the linked quarter is the aforementioned $363,000 OREO impairment expense during third quarter 2024. Salaries and employee benefits expense increased by $207,000 primarily due to a larger employee base. These were partially offset by modest decreases in marketing and advertising costs, as well as travel and entertainment expenses.

    Income tax expense for the three months ended September 30, 2024 was $4.2 million with an effective tax rate of 33.9%, compared to an income tax benefit of $78,000 for the third quarter of 2023 and an income tax expense of $2.1 million with an effective tax rate of 16.2% for the second quarter of 2024. The effective tax rate for the third quarter of 2024 included approximately $1.2 million of tax expense recorded related to the BOLI restructuring. Excluding this impact, the effective tax rate would have been approximately 24% for the third quarter of 2024. The effective tax rate for the second quarter of 2024 was lower compared to the first quarter due to the recently enacted New Jersey Corporate Transit Fee, which resulted in a change in tax rate and a revaluation of the Bank’s deferred tax assets. A tax benefit of $1.1 million was booked as a discrete item in the second quarter for this change in tax rate.  With the expected negative ongoing impact of the New Jersey Corporate Transit Fee, we anticipate our future effective tax rate will range between 24% and 25%.

    Balance Sheet

    Total assets increased $148.3 million, or 4.1%, from December 31, 2023 to September 30, 2024. Total loans increased $66.0 million, or 2.2%, from December 31, 2023 to September 30, 2024. Growth totaling $116.3 million across the owner-occupied commercial real estate and commercial and industrial loan portfolios was partially offset by a decline of commercial investor real estate loans totaling $47.8 million, including multi-family and construction and development, during the first nine months of 2024. The Bank continues to prioritize relationship-based commercial and industrial lending while actively managing our exposure in investor real estate lending.

    Total assets grew $141.9 million, or 15.6% annualized, during the quarter ended September 30, 2024. Growth included an increase of $71.5 million in cash and cash equivalents related to the opportunistic addition of FHLB advances when interest rates declined during the quarter. Total loans increased by $89.5 million, or 11.9%, annualized, during the quarter ended September 30, 2024. Growth across the owner-occupied commercial real estate and commercial and industrial loan portfolios totaled $56.9 million, while commercial investor real estate loans, including multi-family and construction and development, grew $27.5 million, and consumer and residential real estate loans grew $5.2 million.

    Total deposits increased by $82.4 million, or 11.1% annualized, during the quarter ended September 30, 2024. Growth occurred across all categories, with non-interest bearing demand, interest bearing demand, money market and savings, and time deposits increasing $19.3 million, $23.3 million, $36.3 million, and $3.6 million, respectively, from the second quarter of 2024. Our team continued to focus on attracting new deposit relationships while maintaining existing core balances.

    Nearly all of the Bank’s deposit growth for the first nine months of 2024 occurred during the quarter ended September 30, 2024. We also experienced a slight shift in the mix of customer balances over the nine-month period. The Bank grew non-interest bearing demand deposits by $17.3 million in a challenging interest rate environment, while total interest-bearing deposits experienced a shift toward higher-costing deposits. During the first nine months of 2024, increases in money market and savings deposits and time deposits totaled $64.2 million and $32.3 million, respectively, partially offset by a decline in interest bearing demand deposits totaling $31.3 million.

    During the nine months ended September 30, 2024, stockholders’ equity increased by $31.2 million, primarily due to net income, partially offset by dividends.

    As of September 30, 2024, the Bank continued to exceed all regulatory capital requirements to be considered well-capitalized, with a Tier 1 Leverage ratio of 9.53%, a Tier 1 Risk-Based capital ratio of 9.65%, a Common Equity Tier 1 Capital ratio of 9.65%, and a Total Risk-Based capital ratio of 11.55%. The tangible stockholders’ equity to tangible assets ratio[IV] increased to 9.41% as of September 30, 2024 compared to 8.89% at December 31, 2023.

    Asset Quality

    First Bank’s asset quality metrics for the third quarter of 2024 remained favorable. Total nonperforming loans declined from $25.0 million at December 31, 2023 to $12.0 million at September 30, 2024, while total nonperforming assets declined from $25.0 million to $17.7 million during the same period. 

    The Bank recorded net charge-offs of $386,000 during the third quarter of 2024, compared to net charge-offs of $175,000 during the second quarter of 2024 and net charge-offs of $1.1 million in the third quarter of 2023. The allowance for credit losses on loans as a percentage of total loans measured 1.21% at September 30, 2024, compared to 1.21% at June 30, 2024 and 1.40% at December 31, 2023.  The decline from December 31, 2023 to September 30, 2024 reflected the $5.5 million charge-off and elimination of the Bank’s reserves on a purchase credit deteriorated loan transferred to OREO during the first quarter of 2024.

    Liquidity and Borrowings

    The Bank increased its liquidity position in the third quarter of 2024. Total cash and cash equivalents increased by $71.5 million to $312.3 million at September 30, 2024. Borrowings increased by $49.9 million compared to June 30, 2024, as the Bank increased its FHLB borrowings.

    Management believes the Bank’s current liquidity position, coupled with our various contingent funding sources, provides us with a strong liquidity base and a diverse source of funding options.    

    Cash Dividend Declared

    On October 15, 2024, the Bank’s Board of Directors declared a quarterly cash dividend of $0.06 per share to common stockholders of record at the close of business on November 8, 2024, payable on November 22, 2024.

    Share Repurchase Program

    The Board of Directors has authorized and the Bank has received regulatory approvals for a new share repurchase program. The program provides for the repurchase of up to 1.0 million shares of First Bank common stock for an aggregate repurchase amount of up to $16.0 million. The timing, price and volume of repurchases will be based on market conditions, relevant securities laws and other factors. The stock repurchases may be made from time to time on the open market or in privately negotiated transactions. The stock repurchase program does not require First Bank to repurchase any specific number of shares, and First Bank may terminate the repurchase program at any time. The share repurchase program will expire on September 30, 2025.

    Conference Call and Earnings Release Supplement

    Additional details on the quarterly results and the Bank are included in the attached earnings release supplement. http://ml.globenewswire.com/Resource/Download/8c344bfa-6975-4f79-872b-2307433b1520

    First Bank will host its earnings call on Thursday, October 24, 2024 at 9:00 AM Eastern Time. The direct dial toll free number for the live call is 1-800-715-9871 and the access code is 1578641. For those unable to participate in the call, a replay will be available by dialing 1-800-770-2030 (access code 8550862) from one hour after the end of the conference call until January 22, 2025. Replay information will also be available on First Bank’s website at www.firstbanknj.com under the “About Us” tab. Click on “Investor Relations” to access the replay of the conference call.

    About First Bank

    First Bank is a New Jersey state-chartered bank with 26 full-service branches in Cinnaminson, Delanco, Denville, Ewing, Fairfield, Flemington (2), Hamilton, Lawrence, Monroe, Morristown, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Coventry, Devon, Doylestown, Glenn Mills, Lionville, Malvern, Paoli, Trevose, Warminster and West Chester, Pennsylvania; and Palm Beach, Florida. With $3.76 billion in assets as of September 30, 2024, First Bank offers a full range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia corridor. First Bank’s common stock is listed on the Nasdaq Global Market under the symbol “FRBA.”

    Forward Looking Statements

    This press release contains certain forward-looking statements, either express or implied, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding First Bank’s future financial performance, business and growth strategy, projected plans and objectives, and related transactions, integration of acquired businesses, ability to recognize anticipated operational efficiencies, and other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about First Bank, any of which may change over time and some of which may be beyond First Bank’s control. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “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. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: changes in market interest rates on funding costs, yield on interest earning assets, credit quality and strength of underlying collateral and the effect of such changes on the market value of First Bank’s investment securities portfolio; whether First Bank can: successfully implement its growth strategy, including identifying acquisition targets and consummating suitable acquisitions, integrate acquired entities and realize anticipated efficiencies, sustain its internal growth rate, and provide competitive products and services that appeal to its customers and target markets; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which First Bank operates and in which its loans are concentrated, including the effects of declines in housing market values; the effects of the recent turmoil in the banking industry (including the failures of two financial institutions in early 2023); the impact of public health emergencies, such as COVID-19, on First Bank, its operations and its customers and employees; an increase in unemployment levels and slowdowns in economic growth; First Bank’s level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; the extensive federal and state regulation, supervision and examination governing almost every aspect of First Bank’s operations, including changes in regulations affecting financial institutions and expenses associated with complying with such regulations; uncertainties in tax estimates and valuations, including due to changes in state and federal tax law; First Bank’s ability to comply with applicable capital and liquidity requirements, including First Bank’s ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; and possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Forward-Looking Statements” and “Risk Factors” in First Bank’s Annual Report on Form 10-K and any updates to those risk factors set forth in First Bank’s proxy statement, subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if First Bank’s underlying assumptions prove to be incorrect, actual results may differ materially from what First Bank 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 First Bank does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that First Bank or persons acting on First Bank’s behalf may issue.

    _____________

    i Return on average tangible equity is a non-U.S. GAAP financial measure and is calculated by dividing net income by average tangible equity (average equity minus average goodwill and other intangible assets).  For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

    ii Tangible book value per share is a non-U.S. GAAP financial measure and is calculated by dividing common shares outstanding by tangible equity (equity minus goodwill and other intangible assets).  For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

    iii The efficiency ratio is a non-U.S. GAAP financial measure and is calculated by dividing non-interest expense less merger-related expenses by adjusted total revenue (net interest income plus non-interest income).  For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

    iv Tangible stockholders’ equity to tangible assets ratio is a non-U.S. GAAP financial measure and is calculated by dividing tangible equity (equity minus goodwill and other intangible assets) by tangible assets (total assets minus goodwill and other intangible assets).  For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

    FIRST BANK
    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
    (in thousands, except for share data, unaudited)
     
      September 30,
    2024
      December 31,
    2023
    Assets          
    Cash and due from banks $ 35,456     $ 25,652  
    Restricted cash   9,200       13,770  
    Interest bearing deposits with banks   267,643       188,529  
    Cash and cash equivalents   312,299       227,951  
    Interest bearing time deposits with banks   743       996  
    Investment securities available for sale, at fair value   74,549       94,142  
    Investment securities held to maturity, net of allowance for credit losses of $206 at September 30, 2024 and $200 at December 31, 2023 (fair value of $39,049 and $38,486 at September 30, 2024 and December 31, 2023, respectively)   43,659       44,059  
    Equity securities, at fair value   1,860       1,888  
    Restricted investment in bank stocks   13,845       10,469  
    Other investments   11,141       9,841  
    Loans, net of deferred fees and costs   3,087,488       3,021,501  
    Less: Allowance for credit losses   (37,434 )     (42,397 )
    Net loans   3,050,054       2,979,104  
    Premises and equipment, net   20,331       21,627  
    Other real estate owned, net   5,637        
    Accrued interest receivable   13,502       14,763  
    Bank-owned life insurance   84,727       86,435  
    Goodwill   44,166       44,166  
    Other intangible assets, net   9,318       10,812  
    Deferred income taxes, net   31,448       30,875  
    Other assets   40,374       32,199  
    Total assets $ 3,757,653     $ 3,609,327  
               
    Liabilities and Stockholders’ Equity          
    Liabilities:          
    Non-interest bearing deposits $ 519,079     $ 501,763  
    Interest bearing deposits   2,530,991       2,465,806  
    Total deposits   3,050,070       2,967,569  
    Borrowings   236,999       179,140  
    Subordinated debentures   29,926       55,261  
    Accrued interest payable   5,078       2,813  
    Other liabilities   33,510       33,644  
    Total liabilities   3,355,583       3,238,427  
    Stockholders’ Equity:          
    Preferred stock, par value $2 per share; 10,000,000 shares authorized; no shares issued and outstanding          
    Common stock, par value $5 per share; 40,000,000 shares authorized; 27,367,984 shares issued and 25,186,920 shares outstanding at September 30, 2024 and 27,149,186 shares issued and 24,968,122 shares outstanding at December 31, 2023   135,415       134,552  
    Additional paid-in capital   124,014       122,881  
    Retained earnings   167,792       140,563  
    Accumulated other comprehensive loss   (3,773 )     (5,718 )
    Treasury stock, 2,181,064 shares at September 30, 2024 and December 31, 2023   (21,378 )     (21,378 )
    Total stockholders’ equity   402,070       370,900  
    Total liabilities and stockholders’ equity $ 3,757,653     $ 3,609,327  
                   
    FIRST BANK
    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
    (in thousands, except for share data, unaudited)
     
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
      2024   2023   2024   2023
    Interest and Dividend Income                      
    Investment securities—taxable $ 1,201     $ 1,151     $ 3,661     $ 3,128  
    Investment securities—tax-exempt   35       86       109       158  
    Interest bearing deposits with banks, Federal funds sold and other   3,972       2,593       10,479       6,029  
    Loans, including fees   50,957       46,088       151,039       111,536  
    Total interest and dividend income   56,165       49,918       165,288       120,851  
                           
    Interest Expense                      
    Deposits   23,081       18,470       66,253       40,574  
    Borrowings   2,550       1,914       6,859       4,939  
    Subordinated debentures   440       940       1,224       1,821  
    Total interest expense   26,071       21,324       74,336       47,334  
    Net interest income   30,094       28,594       90,952       73,517  
    Credit loss expense   1,579       6,650       944       8,237  
    Net interest income after credit loss expense   28,515       21,944       90,008       65,280  
                           
    Non-Interest Income                      
    Service fees on deposit accounts   362       280       1,056       741  
    Loan fees   218       152       437       259  
    Income from bank-owned life insurance   1,819       544       3,213       1,291  
    Losses on sale of investment securities, net   (555 )     (527 )     (555 )     (734 )
    Gains (losses) on sale of loans, net   135       (704 )     (536 )     (393 )
    Gains on recovery of acquired loans   35       24       209       95  
    Other non-interest income   465       424       1,308       1,026  
    Total non-interest income   2,479       193       5,132       2,285  
                           
    Non-Interest Expense                      
    Salaries and employee benefits   10,175       9,326       30,181       25,320  
    Occupancy and equipment   2,080       1,915       6,188       5,107  
    Legal fees   245       270       801       671  
    Other professional fees   943       631       2,628       1,880  
    Regulatory fees   728       595       1,970       1,345  
    Directors’ fees   272       224       784       631  
    Data processing   800       907       2,355       2,206  
    Marketing and advertising   310       220       983       693  
    Travel and entertainment   233       140       762       519  
    Insurance   245       272       740       624  
    Other real estate owned expense, net   662             879       38  
    Merger-related expenses         7,028             7,710  
    Other expense   1,951       1,958       6,136       4,020  
    Total non-interest expense   18,644       23,486       54,407       50,764  
    Income Before Income Taxes   12,350       (1,349 )     40,733       16,801  
    Income tax expense   4,188       (78 )     8,986       4,284  
    Net Income (loss) $ 8,162     $ (1,271 )   $ 31,747     $ 12,517  
                           
    Basic earnings (loss) per common share $ 0.32     $ (0.05 )   $ 1.26     $ 0.60  
    Diluted earnings (loss) per common share $ 0.32     $ (0.05 )   $ 1.26     $ 0.59  
                           
    Basic weighted average common shares outstanding   25,172,927       23,902,478       25,114,685       20,928,847  
    Diluted weighted average common shares outstanding   25,342,462       23,902,478       25,265,250       21,057,655  
                                   
    FIRST BANK
    AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
    (dollars in thousands, unaudited)
     
      Three Months Ended September 30,
      2024   2023
      Average         Average   Average         Average
      Balance   Interest   Rate(5)   Balance   Interest   Rate(5)
    Interest earning assets                                
    Investment securities (1) (2) $ 137,216     $ 1,244     3.61 %   $ 169,244     $ 1,255       2.94 %
    Loans (3)   3,010,116       50,957     6.73 %     3,003,703       46,088       6.09 %
    Interest bearing deposits with banks,                                
    Federal funds sold and other   265,474       3,593     5.38 %     182,128       2,395       5.22 %
    Restricted investment in bank stocks   12,768       257     8.01 %     10,284       196       7.56 %
    Other investments   12,776       122     3.80 %     9,162       2       0.09 %
    Total interest earning assets (2)   3,438,350       56,173     6.50 %     3,374,521       49,936       5.87 %
    Allowance for credit losses   (36,612 )               (41,216 )            
    Non-interest earning assets   271,105                 232,045              
    Total assets $ 3,672,843               $ 3,565,350              
                                     
    Interest bearing liabilities                                
    Interest bearing demand deposits $ 587,045     $ 3,974     2.69 %   $ 674,417     $ 4,038       2.38 %
    Money market deposits   1,064,045       10,573     3.95 %     952,042       8,386       3.49 %
    Savings deposits   149,057       563     1.50 %     174,412       490       1.11 %
    Time deposits   690,723       7,902     4.55 %     655,288       5,556       3.36 %
    Total interest bearing deposits   2,490,870       23,012     3.68 %     2,456,159       18,470       2.98 %
    Borrowings   206,588       2,550     4.91 %     163,746       1,914       4.64 %
    Subordinated debentures   29,908       440     5.88 %     51,101       940       7.36 %
    Total interest bearing liabilities   2,727,366       26,002     3.79 %     2,671,006       21,324       3.17 %
    Non-interest bearing deposits   506,084                 507,866              
    Other liabilities   40,858                 33,106              
    Stockholders’ equity   398,535                 353,372              
    Total liabilities and stockholders’ equity $ 3,672,843               $ 3,565,350              
    Net interest income/interest rate spread (2)         30,171     2.71 %           28,612       2.70 %
    Net interest margin (2) (4)             3.49 %                 3.36 %
    Tax equivalent adjustment (2)         (8 )               (18 )      
    Net interest income       $ 30,163               $ 28,594        
                                         

    (1) Average balance of investment securities available for sale is based on amortized cost. 
    (2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%. 
    (3) Average balances of loans include loans on nonaccrual status. 
    (4) Net interest income divided by average total interest earning assets. 
    (5) Annualized.

    FIRST BANK
    AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
    (dollars in thousands, unaudited)
     
      Nine Months Ended September 30,
      2024   2023
      Average         Average   Average         Average
      Balance   Interest   Rate(5)   Balance   Interest   Rate(5)
    Interest earning assets                              
    Investment securities (1) (2) $ 143,528     $ 3,793     3.53 %   $ 155,128     $ 3,319     2.86 %
    Loans (3)   2,995,895       151,039     6.73 %     2,590,409       111,536     5.76 %
    Interest bearing deposits with banks,                              
    Federal funds sold and other   231,171       9,404     5.43 %     143,922       5,403     5.02 %
    Restricted investment in bank stocks   11,461       699     8.15 %     9,327       454     6.51 %
    Other investments   12,262       376     4.10 %     8,902       172     2.58 %
    Total interest earning assets (2)   3,394,317       165,311     6.51 %     2,907,688       120,884     5.56 %
    Allowance for credit losses   (37,000 )               (33,664 )          
    Non-interest earning assets   265,368                 174,246            
    Total assets $ 3,622,685               $ 3,048,270            
                                   
    Interest bearing liabilities                              
    Interest bearing demand deposits $ 599,025     $ 11,453     2.55 %   $ 445,318     $ 6,492     1.95 %
    Money market deposits   1,046,911       30,921     3.95 %     840,688       20,177     3.21 %
    Savings deposits   156,416       1,756     1.50 %     155,370       1,202     1.03 %
    Time deposits   680,194       22,054     4.33 %     586,827       12,703     2.89 %
    Total interest bearing deposits   2,482,546       66,184     3.56 %     2,028,203       40,574     2.67 %
    Borrowings   181,844       6,859     5.04 %     149,042       4,939     4.43 %
    Subordinated debentures   34,071       1,224     4.79 %     36,949       1,821     6.57 %
    Total interest bearing liabilities   2,698,461       74,267     3.68 %     2,214,194       47,334     2.86 %
    Non-interest bearing deposits   494,971                 490,211            
    Other liabilities   41,971                 29,939            
    Stockholders’ equity   387,282                 313,926            
    Total liabilities and stockholders’ equity $ 3,622,685               $ 3,048,270            
    Net interest income/interest rate spread (2)         91,044     2.83 %           73,550     2.70 %
    Net interest margin (2) (4)             3.58 %               3.38 %
    Tax equivalent adjustment (2)         (23 )               (33 )    
    Net interest income       $ 91,021               $ 73,517      
                                       

    (1) Average balance of investment securities available for sale is based on amortized cost.
    (2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21%.
    (3) Average balances of loans include loans on nonaccrual status.
    (4) Net interest income divided by average total interest earning assets.
    (5) Annualized.

    FIRST BANK
    QUARTERLY FINANCIAL HIGHLIGHTS
    (in thousands, except for share and employee data, unaudited)
     
      As of or For the Quarter Ended
      9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    EARNINGS                            
    Net interest income $ 30,094     $ 30,540     $ 30,318     $ 30,999     $ 28,594  
    Credit loss (benefit) expense   1,579       63       (698 )     (294 )     6,650  
    Non-interest income   2,479       689       1,964       (3,000 )     193  
    Non-interest expense   18,644       17,953       17,810       17,936       23,486  
    Income tax expense   4,188       2,140       2,658       1,977       (78 )
    Net income   8,162       11,073       12,512       8,380       (1,271 )
                                 
    PERFORMANCE RATIOS                            
    Return on average assets (1)   0.88 %     1.23 %     1.41 %     0.93 %     (0.14 %)
    Adjusted return on average assets (1) (2)   0.93 %     1.31 %     1.39 %     1.38 %     1.07 %
    Return on average equity (1)   8.15 %     11.52 %     13.36 %     9.06 %     (1.43 %)
    Adjusted return on average equity (1) (2)   8.56 %     12.26 %     13.17 %     13.38 %     10.75 %
    Return on average tangible equity (1) (2)   9.42 %     13.40 %     15.64 %     10.67 %     (1.66 %)
    Adjusted return on average tangible equity (1) (2)   9.89 %     14.26 %     15.41 %     15.75 %     12.50 %
    Net interest margin (1) (3)   3.49 %     3.62 %     3.64 %     3.68 %     3.36 %
    Yield on loans (1)   6.73 %     6.81 %     6.66 %     6.49 %     6.09 %
    Total cost of deposits (1)   3.05 %     3.01 %     2.83 %     2.63 %     2.47 %
    Efficiency ratio (2)   58.49 %     55.88 %     55.56 %     53.79 %     54.83 %
                                 
    SHARE DATA                            
    Common shares outstanding   25,186,920       25,144,983       25,096,449       24,968,122       24,926,919  
    Basic earnings per share $ 0.32     $ 0.44     $ 0.50     $ 0.34     $ (0.05 )
    Diluted earnings per share   0.32       0.44       0.50       0.33       (0.05 )
    Adjusted diluted earnings per share (2)   0.34       0.47       0.49       0.49       0.40  
    Book value per share   15.96       15.61       15.23       14.85       14.48  
    Tangible book value per share (2)   13.84       13.46       13.06       12.65       12.26  
                                 
    MARKET DATA                            
    Market value per share $ 15.20     $ 12.74     $ 13.74     $ 14.70     $ 10.78  
    Market value / Tangible book value   109.83 %     94.65 %     105.20 %     116.18 %     87.96 %
    Market capitalization $ 382,841     $ 320,347     $ 344,825     $ 367,031     $ 268,712  
                                 
    CAPITAL & LIQUIDITY                            
    Stockholders’ equity / assets   10.70 %     10.86 %     10.64 %     10.28 %     10.15 %
    Tangible stockholders’ equity / tangible assets (2)   9.41 %     9.50 %     9.27 %     8.89 %     8.72 %
    Loans / deposits   101.23 %     101.02 %     100.75 %     101.82 %     101.80 %
                                 
    ASSET QUALITY                            
    Net charge-offs $ 386     $ 175     $ 5,293     $ 209     $ 1,122  
    Net charge-offs (recoveries), excluding PCD loan charge-off (4)   386       175       (201 )     209       1,122  
    Nonperforming loans   12,014       14,227       17,054       24,989       24,158  
    Nonperforming assets   17,651       20,226       23,053       24,989       24,158  
    Net charge offs / average loans (1)   0.05 %     0.02 %     0.72 %     0.03 %     0.15 %
    Net charge offs (recoveries), excluding PCD loan charge-off / average loans (1) (4)   0.05 %     0.02 %     (0.03 %)     0.03 %     0.15 %
    Nonperforming loans / total loans   0.39 %     0.47 %     0.57 %     0.83 %     0.80 %
    Nonperforming assets / total assets   0.47 %     0.56 %     0.64 %     0.69 %     0.68 %
    Allowance for credit losses on loans / total loans   1.21 %     1.21 %     1.22 %     1.40 %     1.42 %
    Allowance for credit losses on loans / nonperforming loans   311.59 %     254.81 %     213.42 %     169.66 %     177.50 %
                                 
    OTHER DATA                            
    Total assets $ 3,757,653     $ 3,615,731     $ 3,591,398     $ 3,609,327     $ 3,558,426  
    Total loans   3,087,488       2,998,029       2,992,423       3,021,501       3,020,778  
    Total deposits   3,050,070       2,967,634       2,970,262       2,967,569       2,967,455  
    Total stockholders’ equity   402,070       392,489       382,254       370,900       361,037  
    Number of full-time equivalent employees   313       294       288       286       286  
                                           

    (1) Annualized.
    (2) Non-U.S. GAAP financial measure that we believe provides management and investors with information that is useful in understanding our financial performance and condition.  See accompanying table, “Non-U.S. GAAP Financial Measures,” for calculation and reconciliation.
    (3) Tax equivalent using a federal income tax rate of 21%.
    (4) Excludes $5.5 million in a PCD loan charge-off in first quarter of 2024, which was reserved for through purchase accounting marks at the time of the Malvern acquisition.

    FIRST BANK
    QUARTERLY FINANCIAL HIGHLIGHTS
    (dollars in thousands, unaudited)
     
      As of the Quarter Ended
      9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    LOAN COMPOSITION                            
    Commercial and industrial $ 546,541     $ 530,996     $ 508,911     $ 506,849     $ 478,120  
    Commercial real estate:                            
    Owner-occupied   688,988       647,625       625,643       612,352       607,888  
    Investor   1,170,508       1,143,954       1,172,311       1,221,702       1,269,134  
    Construction and development   193,460       190,108       184,816       186,829       168,192  
    Multi-family   267,861       270,238       279,668       271,058       275,825  
    Total commercial real estate   2,320,817       2,251,925       2,262,438       2,291,941       2,321,039  
    Residential real estate:                            
    Residential mortgage and first lien home equity loans   143,953       144,978       154,704       156,024       158,487  
    Home equity–second lien loans and revolving lines of credit   49,891       46,882       45,869       44,698       46,239  
    Total residential real estate   193,844       191,860       200,573       200,722       204,726  
    Consumer and other   29,518       26,321       23,702       25,343       20,208  
    Total loans prior to deferred loan fees and costs   3,090,720       3,001,102       2,995,624       3,024,855       3,024,093  
    Net deferred loan fees and costs   (3,232 )     (3,073 )     (3,201 )     (3,354 )     (3,315 )
    Total loans $ 3,087,488     $ 2,998,029     $ 2,992,423     $ 3,021,501     $ 3,020,778  
                                 
    LOAN MIX                            
    Commercial and industrial   17.7 %     17.7 %     17.0 %     16.8 %     15.8 %
    Commercial real estate:                            
    Owner-occupied   22.3 %     21.6 %     20.9 %     20.3 %     20.1 %
    Investor   37.9 %     38.2 %     39.2 %     40.4 %     42.0 %
    Construction and development   6.3 %     6.3 %     6.2 %     6.2 %     5.6 %
    Multi-family   8.7 %     9.0 %     9.3 %     9.0 %     9.1 %
    Total commercial real estate   75.2 %     75.1 %     75.6 %     75.9 %     76.8 %
    Residential real estate:                            
    Residential mortgage and first lien home equity loans   4.7 %     4.8 %     5.2 %     5.1 %     5.3 %
    Home equity–second lien loans and revolving lines of credit   1.6 %     1.6 %     1.5 %     1.5 %     1.5 %
    Total residential real estate   6.3 %     6.4 %     6.7 %     6.6 %     6.8 %
    Consumer and other   0.9 %     0.9 %     0.8 %     0.8 %     0.7 %
    Net deferred loan fees and costs   (0.1 %)     (0.1 %)     (0.1 %)     (0.1 %)     (0.1 %)
    Total loans   100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
                                           
    FIRST BANK
    QUARTERLY FINANCIAL HIGHLIGHTS
    (dollars in thousands, unaudited)
     
      As of the Quarter Ended
      9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    DEPOSIT COMPOSITION                            
    Non-interest bearing demand deposits $ 519,079     $ 499,765     $ 470,749     $ 501,763     $ 493,703  
    Interest bearing demand deposits   597,802       574,515       580,864       629,110       623,338  
    Money market and savings deposits   1,235,637       1,199,382       1,219,634       1,171,440       1,228,832  
    Time deposits   697,552       693,972       699,015       665,256       621,582  
    Total Deposits $ 3,050,070     $ 2,967,634     $ 2,970,262     $ 2,967,569     $ 2,967,455  
                                 
    DEPOSIT MIX                            
    Non-interest bearing demand deposits   17.0 %     16.8 %     15.8 %     16.9 %     16.6 %
    Interest bearing demand deposits   19.6 %     19.4 %     19.6 %     21.2 %     21.0 %
    Money market and savings deposits   40.5 %     40.4 %     41.1 %     39.5 %     41.4 %
    Time deposits   22.9 %     23.4 %     23.5 %     22.4 %     21.0 %
    Total Deposits   100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
                                           
    FIRST BANK
    NON-U.S. GAAP FINANCIAL MEASURES
    (in thousands, except for share data, unaudited)
     
      As of or For the Quarter Ended
      9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
    Return on Average Tangible Equity                            
    Net income (numerator) $ 8,162     $ 11,073     $ 12,512     $ 8,380     $ (1,271 )
                                 
    Average stockholders’ equity $ 398,535     $ 386,644     $ 376,542     $ 366,950     $ 353,372  
    Less: Average Goodwill and other intangible assets, net   53,823       54,347       54,790       55,324       49,491  
    Average Tangible stockholders’ equity (denominator) $ 344,712     $ 332,297     $ 321,752     $ 311,626     $ 303,881  
                                 
    Return on Average Tangible equity (1)   9.42 %     13.40 %     15.64 %     10.67 %     -1.66 %
                                 
    Tangible Book Value Per Share                            
    Stockholders’ equity $ 402,070     $ 392,489     $ 382,254     $ 370,900     $ 361,037  
    Less: Goodwill and other intangible assets, net   53,484       54,026       54,483       54,978       55,554  
    Tangible stockholders’ equity (numerator) $ 348,586     $ 338,463     $ 327,771     $ 315,922     $ 305,483  
                                 
    Common shares outstanding (denominator)   25,186,920       25,144,983       25,096,449       24,968,122       24,926,919  
                                 
    Tangible book value per share $ 13.84     $ 13.46     $ 13.06     $ 12.65     $ 12.26  
                                 
    Tangible Equity / Tangible Assets                            
    Stockholders’ equity $ 402,070     $ 392,489     $ 382,254     $ 370,900     $ 361,037  
    Less: Goodwill and other intangible assets, net   53,484       54,026       54,483       54,978       55,554  
    Tangible stockholders’ equity (numerator) $ 348,586     $ 338,463     $ 327,771     $ 315,922     $ 305,483  
                                 
    Total assets $ 3,757,653     $ 3,615,731     $ 3,591,398     $ 3,609,327     $ 3,558,426  
    Less: Goodwill and other intangible assets, net   53,484       54,026       54,483       54,978       55,554  
    Tangible total assets (denominator) $ 3,704,169     $ 3,561,705     $ 3,536,915     $ 3,554,349     $ 3,502,872  
                                 
    Tangible stockholders’ equity / tangible assets   9.41 %     9.50 %     9.27 %     8.89 %     8.72 %
                                 
    Efficiency Ratio                            
    Non-interest expense $ 18,644     $ 17,953     $ 17,810     $ 17,936     $ 23,486  
    Less: Merger-related expenses                     338       7,028  
    Adjusted non-interest expense (numerator) $ 18,644     $ 17,953     $ 17,810     $ 17,598     $ 16,458  
                                 
    Net interest income $ 30,094     $ 30,540     $ 30,318     $ 30,999     $ 28,594  
    Non-interest income   2,479       689       1,964       (3,000 )     193  
    Total revenue   32,573       31,229       32,282       27,999       28,787  
    Add: Losses on sale of investment securities, net   555                   916       527  
    (Subtract) Add: (Gains) losses on sale of loans, net   (135 )     900       (229 )     3,799       704  
    Less: Bank Owned Life Insurance Enhancement   (1,116 )                        
    Adjusted total revenue (denominator) $ 31,877     $ 32,129     $ 32,053     $ 32,714     $ 30,018  
                                 
    Efficiency ratio   58.49 %     55.88 %     55.56 %     53.79 %     54.83 %
                                           

    (1) Annualized.

    FIRST BANK
    NON-U.S. GAAP FINANCIAL MEASURES
    (dollars in thousands, except for share data, unaudited)
     
      For the Quarter Ended
      9/30/2024   6/30/2024   3/31/2024   12/31/2023   9/30/2023
                                 
    Adjusted diluted earnings per share,                            
    Adjusted return on average assets, and                            
    Adjusted return on average equity                            
                                 
    Net income $ 8,162     $ 11,073     $ 12,512     $ 8,380     $ (1,271 )
    Add: Merger-related expenses(1)                     267       5,552  
    Add: Credit loss expense on acquired loan portfolio(1)                           4,323  
    Add (subtract): Losses (gains) on sale of loans, net(1)   (107 )     711       (181 )     3,001       556  
    Add: Losses on sale of investment securities, net(1)   438                   724       416  
    Add: Net Impact of Bank Owned Life Insurance Restructuring(2)   79                          
    Adjusted net income $ 8,572     $ 11,784     $ 12,331     $ 12,372     $ 9,576  
                                 
    Diluted weighted average common shares outstanding   25,342,462       25,258,785       25,199,381       25,089,495       24,029,910  
    Average assets $ 3,672,843     $ 3,618,912     $ 3,575,748     $ 3,561,261     $ 3,565,350  
    Average equity $ 398,535     $ 386,644     $ 376,542     $ 366,950     $ 353,372  
    Average Tangible Equity $ 344,712     $ 332,297     $ 321,752     $ 311,626     $ 303,881  
                                 
    Adjusted diluted earnings per share $ 0.34     $ 0.47     $ 0.49     $ 0.49     $ 0.40  
    Adjusted return on average assets(3)   0.93 %     1.31 %     1.39 %     1.38 %     1.07 %
    Adjusted return on average equity(3)   8.56 %     12.26 %     13.17 %     13.38 %     10.75 %
    Adjusted return on average tangible equity(3)   9.89 %     14.26 %     15.41 %     15.75 %     12.50 %
                                           

    (1) Items are tax-effected using a federal income tax rate of 21%.
    (2) Includes the net impact of the new Bank Owned Life Insurance enhancement and the increased tax expense on the terminated policies.
    (3) Annualized.

    The MIL Network

  • MIL-OSI: CVB Financial Corp. Reports Earnings for the Third Quarter 2024

    Source: GlobeNewswire (MIL-OSI)

    Third Quarter 2024

    • Net Earnings of $51 million, or $0.37 per share
    • Return on Average Assets of 1.23%
    • Return on Average Tangible Common Equity of 14.93%
    • Net Interest Margin of 3.05%

    Ontario, CA, Oct. 23, 2024 (GLOBE NEWSWIRE) — CVB Financial Corp. (NASDAQ:CVBF) and its subsidiary, Citizens Business Bank (the “Company”), announced earnings for the quarter ended September 30, 2024.

    CVB Financial Corp. reported net income of $51.2 million for the quarter ended September 30, 2024, compared with $50.0 million for the second quarter of 2024 and $57.9 million for the third quarter of 2023. Diluted earnings per share were $0.37 for the third quarter, compared to $0.36 for the prior quarter and $0.42 for the same period last year. Net income of $51.2 million for the third quarter of 2024 produced an annualized return on average equity (“ROAE”) of 9.40%, an annualized return on average tangible common equity (“ROATCE”) of 14.93%, and an annualized return on average assets (“ROAA”) of 1.23%.

    David Brager, President and Chief Executive Officer of Citizens Business Bank, commented, “We are pleased with our third quarter results. The Bank continues to execute on our strategy of banking the best small to medium sized businesses in the markets we serve. The results in the third quarter represent our 190th consecutive quarter of profitability. I am very proud of the commitment of our associates to our mission and the loyalty of our customers to our shared vision of success.“

    Highlights for the Third Quarter of 2024

    • Net interest margin of 3.05%
    • Efficiency Ratio of 46.5%
    • TCE Ratio = 9.7% & CET1 Ratio > 15%
    • Net income grew by 2.4%, compared to the second quarter of 2024
    • Deposits and customer repurchase agreements increased $408 million compared to the end of the second quarter of 2024
    • Noninterest-bearing deposits were 59% of total deposits
    • Early redemption of $1.3 billion of Bank Term Funding Program borrowings
    • Sold $312 million in AFS securities for a loss of $11.6 million
    • Executed the sale and leaseback of two buildings generating gains of $9.1 million
    • Loans declined by $109 million, or 1.3% from the end of the second quarter of 2024
    • Net recoveries were $156,000 for the third quarter of 2024

    INCOME STATEMENT HIGHLIGHTS

      Three Months Ended   Nine Months Ended  
      September 30,
    2024

        June 30,
    2024

        September 30,
    2023

        September 30,
    2024

        September 30,
    2023

       
      (Dollars in thousands, except per share amounts)
    Net interest income $ 113,619     $ 110,849     $ 123,371     $ 336,929     $ 368,634    
    Recapure of (provision for) credit losses               (2,000 )           (4,000 )  
    Noninterest income   12,834       14,424       14,309       41,371       40,167    
    Noninterest expense   (58,835 )     (56,497 )     (55,058 )     (175,103 )     (163,956 )  
    Income taxes   (16,394 )     (18,741 )     (22,735 )     (53,339 )     (67,918 )  
    Net earnings $ 51,224     $ 50,035     $ 57,887     $ 149,858     $ 172,927    
    Earnings per common share:                  
    Basic $ 0.37     $ 0.36     $ 0.42     $ 1.07     $ 1.24    
    Diluted $ 0.37     $ 0.36     $ 0.42     $ 1.07     $ 1.24    
                       
    NIM   3.05 %     3.05 %     3.31 %     3.06 %     3.32 %  
    ROAA   1.23 %     1.24 %     1.40 %     1.23 %     1.41 %  
    ROAE   9.40 %     9.57 %     11.33 %     9.43 %     11.50 %  
    ROATCE   14.93 %     15.51 %     18.82 %     15.19 %     19.24 %  
    Efficiency ratio   46.53 %     45.10 %     39.99 %     46.29 %     40.11 %  

    Net Interest Income
    Net interest income was $113.6 million for the third quarter of 2024. This represented a $2.8 million, or 2.50%, increase from the second quarter of 2024, and a $9.8 million, or 7.90%, decrease from the third quarter of 2023. The quarter-over-quarter increase in net interest income was primarily due to a $7.0 million increase in interest income resulting from a $513 million average increase in our interest-earning balances due from the Federal Reserve, partially offset by a $3.8 million increase in interest on deposits. The decline in net interest income compared to the third quarter of 2023 was primarily due to a 26 basis point decline in net interest margin.

    Net Interest Margin
    Our tax equivalent net interest margin was 3.05% for both the second and third quarters of 2024, compared to 3.31% for the third quarter of 2023. Our cost of funds compared to the second quarter of 2024 increased nine basis points, which was offset by a six basis point increase in our interest-earning asset yield. The six basis point increase in our interest-earning asset yield was due to a five basis point increase in loan yields and funds on deposit at the Federal Reserve increasing as a percentage of earnings assets to 8.2%, from 4.8% in the prior quarter. Average funds held at the Federal Reserve of $1.22 billion, grew by $513 million from the second quarter of 2024, earning 5.4% on average for the third quarter. Our cost of funds increased in the third quarter to 1.47%, as our cost of deposits and customer repurchase agreements increased by 14 basis points to 1.01%. The cost of interest-bearing non-maturity deposits increased from the prior quarter by 22 basis points. On average, borrowings decreased by $121 million compared to the second quarter, while continuing to have an average cost of 4.77%. The 26 basis point decrease in net interest margin compared to the third quarter of 2023, was primarily the result of a 55 basis point increase in cost of funds. This increase in cost of funds from the prior year quarter was the result of a 46 basis point increase in the cost of deposits and an increase in the level of borrowings, which grew on average by $411 million. A 25 basis point increase in earning asset yields over the prior year quarter partially offset the increase in funding costs. The higher earning asset yields, included higher loan yields, which grew from 5.07% for the third quarter of 2023 to 5.31% for the third quarter of 2024. The higher earning asset yield was also the result of the increase in average funds held at the Federal Reserve, which grew from 3.1% of earning assets in the third quarter of 2023 to 8.2% in the third quarter of 2024.

    Earning Assets and Deposits
    On average, total earning assets grew by $262 million, or 1.79%, quarter-over-quarter. This growth includes the $513 million increase in average funds on deposit at the Federal Reserve. Investment securities and loans declined on average by $126.9 million and $126.3 million, respectively, when compared to the second quarter of 2024. The decline in investment securities includes the impact of selling approximately $300 million of AFS securities during the third quarter. Compared to the third quarter of 2023, the mix of assets changed modestly, with the average balance of investment securities decreasing by $462.6 million, declining from 37% to 34% of total earning assets. Conversely, the average amount of funds held at the Federal Reserve increased by $748.8 million, growing from 3.1% of total earning assets in the third quarter of 2023 to 8.2% for the third quarter of 2024. Noninterest-bearing deposits declined on average by $28.4 million, or 0.40%, from the second quarter of 2024 and interest-bearing deposits and customer repurchase agreements increased on average by $279.2 million. Compared to the third quarter of 2023, total deposits and customer repurchase agreements declined on average by $503.7 million, or 3.90%, including a decline of $688 million, or 8.8%, in noninterest-bearing deposits. Non-maturity interest-bearing deposits and customer repurchase agreements decreased by $247.5 million on average, while time deposits grew on average by $431.9 million. On average, noninterest-bearing deposits were 59.10% of total deposits during the most recent quarter, compared to 60.20% for the second quarter of 2024 and 62.09% for the third quarter of 2023.

        Three Months Ended  
    SELECTED FINANCIAL HIGHLIGHTS September 30, 2024   June 30, 2024   September 30, 2023  
        (Dollars in thousands)  
    Yield on average investment securities (TE)   2.67 %     2.71 %     2.64 %  
    Yield on average loans   5.31 %     5.26 %     5.07 %  
    Yield on average earning assets (TE)   4.43 %     4.37 %     4.18 %  
    Cost of deposits   0.98 %     0.88 %     0.52 %  
    Cost of funds   1.47 %     1.38 %     0.92 %  
    Net interest margin (TE)   3.05 %     3.05 %     3.31 %  
                               
    Average Earning Asset Mix Avg   % of Total   Avg   % of Total   Avg   % of Total
      Total investment securities $ 5,080,033   34.01 %   $ 5,206,959   35.49 %   $ 5,542,590   37.20 %  
      Interest-earning deposits with other institutions   1,232,551   8.25 %     716,916   4.89 %     473,391   3.18 %  
      Loans   8,605,270   57.61 %     8,731,587   59.51 %     8,862,462   59.48 %  
      Total interest-earning assets   14,935,866         14,673,474         14,900,003      

    Provision for Credit Losses
    There was no provision for credit losses in the third and second quarter of 2024, compared to $2.0 million in provision in the third quarter of 2023. Net recoveries for the third quarter of 2024 were $156,000, compared to net charge-offs $31,000 in the prior quarter. Allowance for credit losses represented 0.97% of gross loans at September 30, 2024, compared to 0.95% at June 30, 2024.

    Noninterest Income
    Noninterest income was $12.8 million for the third quarter of 2024, compared with $14.4 million for the second quarter of 2024 and $14.3 million for the third quarter of 2023. During the third quarter of 2024, the Bank executed sale-leaseback transactions with the sale of two buildings, which operate as Banking Centers, and were simultaneously leased back, resulting in a pre-tax net gain of $9.1 million. The gains on selling the buildings were offset by realizing a pre-tax net loss of $11.6 million on the sale of $312 million of AFS securities. Third quarter income from Bank Owned Life Insurance (“BOLI”) increased by $557,000 from the second quarter of 2024 and increased by $2 million compared to the third quarter of 2023. We experienced $320,000 in death benefits that exceeded the asset value on certain policies in the third quarter of 2024, compared to no death benefits in the second quarter of 2024 and no death benefits in the third quarter of 2023. The year-over-year increase of $2 million in BOLI income was primarily due to the restructuring and enhancements in BOLI policies during the fourth quarter of 2023. Trust and investment service fees grew by 4.0% or $137,000 compared to the prior quarter and by 9.8% or $319,000 compared to the third quarter of 2023.  

    Noninterest Expense
    Noninterest expense for the third quarter of 2024 was $58.8 million, compared to $56.5 million for the second quarter of 2024 and $55.0 million for the third quarter of 2023. The $2.3 million quarter-over-quarter increase included a $1.2 million increase in staff related expense, as annual salary increases took effect in July. The $690,000 quarter-over-quarter increase in regulatory assessments was due to the $700,000 accrual adjustment in the second quarter of 2024 related the FDIC special assessment. There was a $750,000 recapture of provision for unfunded loan commitments in the third quarter of 2024, compared to a $500,000 recapture of provision in the second quarter of 2024 and $900,000 recaptured in the third quarter of 2023. Occupancy and equipment expense grew by $432,000 or 7%, compared to the prior quarter, including the impact of the two buildings that were sold and leased back during the third quarter.

    The $3.8 million increase in noninterest expense year-over-year included increased staff related expenses of $1.9 million, or 5.48%. Professional services increased $738,000, including a $627,000 increase in legal expense year-over-year. Occupancy and equipment expense increased by $586,000, or 10.43% and software expense increased $258,000, or 7% year-over-year. As a percentage of average assets, noninterest expense was 1.42% for the third quarter of 2024, compared to 1.40% for the second quarter of 2024 and 1.33% for the third quarter of 2023. The efficiency ratio for the third quarter of 2024 was 46.53%, compared to 45.10% for the second quarter of 2024 and 39.99% for the third quarter of 2023.  

    Income Taxes
    Our effective tax rate for the nine months ended September 30, 2024 was 26.25%, compared with 28.20% for the same period of 2023. Our estimated annual effective tax rate can vary depending upon the level of tax-advantaged income from municipal securities and BOLI, as well as available tax credits.

    BALANCE SHEET HIGHLIGHTS

    Assets
    The Company reported total assets of $15.4 billion at September 30, 2024. This represented a decrease of $748.3 million, or 4.63%, from total assets of $16.15 billion at June 30, 2024. The decrease in assets included a $416.9 million decrease in interest-earning balances due from the Federal Reserve, a $304.8 million decrease in investment securities, and a $109.4 million decrease in net loans.

    Total assets decreased by $617.8 million, or 3.86%, from total assets of $16.02 billion at December 31, 2023. The decrease in assets included a $549.9 million decrease in investment securities, and a $328.4 million decrease in net loans, partially offset by a $142.9 million increase in interest-earning balances due from the Federal Reserve.

    Total assets at September 30, 2024 decreased by $499.8 million, or 3.14%, from total assets of $15.90 billion at September 30, 2023. The decrease in assets was primarily due to a $491.8 million decrease in investment securities and a $299.0 million decrease in net loans, partially offset by an increase of $188.6 million in interest-earning balances due from the Federal Reserve and a $57.1 million increase in the cash surrender value of BOLI.

    Sale-Leaseback Transaction
    During the third quarter of 2024, the Bank executed sale-leaseback transactions and sold two buildings, that are utilized as Banking Centers, for an aggregate sale price of $17 million. The Bank simultaneously entered into lease agreements with the respective purchasers for initial terms of 15 and 18 years. These sale-leaseback transactions resulted in a pre-tax net gain of $9.1 million for the third quarter of 2024. The Bank also recorded Right of Use (“ROU”) assets and corresponding operating lease liabilities each totaling $11.2 million.

    Investment Securities and BOLI
    Total investment securities were $4.87 billion at September 30, 2024, a decrease of $549.9 million, or 10.14% from December 31, 2023, and a decrease of $491.8 million, or 9.17%, from $5.36 billion at September 30, 2023.  

    At September 30, 2024, investment securities available-for-sale (“AFS”) totaled $2.47 billion, inclusive of a pre-tax net unrealized loss of $367.7 million. AFS securities decreased by $280.2 million from the prior quarter end, by $490.5 million, or 16.59%, from December 31, 2023 and decreased by $407.6 million, or 14.19%, from $2.87 billion at September 30, 2023. Pre-tax unrealized loss decreased by $120.2 million from the end of the prior quarter, and declined by $82.1 million from December 31, 2023 and by $260.7 million from September 30, 2023.

    Concurrent with the sale-leaseback transactions during the third quarter of 2024, the Bank sold AFS securities with a book value of $312 million, resulting in a net pre-tax loss of $11.6 million.

    At September 30, 2024, investment securities held-to-maturity (“HTM”) totaled $2.41 billion, a decrease of $24.6 million from the prior quarter end, a $59.4 million, or 2.41% decline from December 31, 2023, and a decrease of $84.2 million, or 3.38%, from September 30, 2023.

    Combined, the AFS and HTM investments in mortgage backed securities (“MBS”) and collateralized mortgage obligations (“CMO”) totaled $3.82 billion or approximately 78% of the total investment securities at September 30, 2024. Virtually all of our MBS and CMO are issued or guaranteed by government or government sponsored enterprises, which have the implied guarantee of the U.S. Government. In addition, at September 30, 2024, we had $552.6 million of Government Agency securities that represent approximately 11.3% of the total investment securities.

    Our combined AFS and HTM municipal securities totaled $485.7 million as of September 30, 2024, or 10% of our total investment portfolio. These securities are located in 35 states. Our largest concentrations of holdings by state, as a percentage of total municipal bonds, are located in Texas at 16.09%, Minnesota at 11.07%, and California at 9.71%.

    At September 30, 2024, the Company had $316.6 million of Bank Owned Life insurance (“BOLI”), compared to $308.7 million at December 31, 2023 and $259.5 million at September 30, 2023. The $57.1 million increase in value of BOLI, when compared to September 30, 2023, was primarily due to a restructuring of the Company’s life insurance policies at the end of 2023, including a $4.5 million write-down in value on surrender policies that was offset by a $10.9 million enhancement to cash surrender values, as well as additional policy purchases totaling $41 million. This restructuring has increased returns on our BOLI policies resulting in additional non-taxable noninterest income in 2024.

    Loans
    Total loans and leases, at amortized cost, of $8.57 billion at September 30, 2024 decreased by $109.3 million, or 1.26%, from June 30, 2024. The quarter-over quarter decrease in loans included decreases of $46.3 million in commercial real estate loans, $37.5 million in construction loans, $19.7 million in commercial and industrial loans, and $8.1 million in dairy & livestock and agribusiness loans.

    Total loans and leases, at amortized cost, decreased by $332.3 million, or 3.73%, from December 31, 2023. The decrease in total loans included decreases of $165.9 million in commercial real estate loans, $70.5 million in dairy & livestock and agribusiness loans, $52.0 million in construction loans, and $33.4 million in commercial and industrial loans.

    Total loans and leases, at amortized cost, decreased by $305.1 million, or 3.44%, from September 30, 2023. The $305.1 million decrease included decreases of $224.4 million in commercial real estate loans, $48.3 million in construction loans, $13.1 million in SBA loans, $9.0 million in dairy & livestock and agribusiness loans, and $8.0 million in municipal lease financings.

    Asset Quality
    During the third quarter of 2024, we experienced credit charge-offs of $26,000 and total recoveries of $182,000, resulting in net recoveries of $156,000. The allowance for credit losses (“ACL”) totaled $82.9 million at September 30, 2024, compared to $82.8 million at June 30, 2024 and $89.0 million at September 30, 2023. At September 30, 2024, ACL as a percentage of total loans and leases outstanding was 0.97%. This compares to 0.95% at June 30, 2024 and 0.98% at December 31, 2023 and 1.00% at September 30, 2023.

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

    Nonperforming Assets and Delinquency Trends September 30,
    2024
      June 30,
    2024
      September 30,
    2023
       
               
    Nonperforming loans   (Dollars in thousands)    
    Commercial real estate   $ 18,794     $ 21,908     $ 3,655      
    SBA     151       337       1,050      
    Commercial and industrial     2,825       2,712       4,672      
    Dairy & livestock and agribusiness     143             243      
    SFR mortgage                 339      
    Consumer and other loans                 4      
    Total   $ 21,913     $ 24,957     $ 9,963   [1]  
    % of Total loans     0.26 %     0.29 %     0.11 %    
    OREO                
    Commercial real estate   $     $     $      
    Commercial and industrial     647       647            
    SFR mortgage                      
    Total   $ 647     $ 647     $      
                     
    Total nonperforming assets   $ 22,560     $ 25,604     $ 9,963      
    % of Nonperforming assets to total assets     0.15 %     0.16 %     0.06 %    
                     
    Past due 30-89 days (accruing)                
    Commercial real estate   $ 30,701     $ 43     $ 136      
    SBA                      
    Commercial and industrial     64       103            
    Dairy & livestock and agribusiness                      
    SFR mortgage                      
    Consumer and other loans                      
    Total   $ 30,765     $ 146     $ 136      
    % of Total loans     0.36 %     0.00 %     0.00 %    
                     
    Classified Loans   $ 124,606     $ 124,728     $ 92,246      
         
    [1] Includes $2.6 million of nonaccrual loans past due 30-89 days.    

    The $3.0 million decrease in nonperforming loans from June 30, 2024 was primarily due to the payoff of one nonperforming commercial real estate loans totaling $2.3 million and $1.4 million in paydowns of nonperforming commercial real estate loans associated with two relationships. Past due loans grew to more than $30 million on September 30, 2024. Classified loans are loans that are graded “substandard” or worse. Classified loans decreased $122,000 quarter-over-quarter, primarily due to a $668,000 net decrease in classified commercial real estate loans, which included the payoff of 4 loans totaling $11.5 million that were partially offset by the addition of six classified commercial real estate loans in the third quarter of 2024. Classified dairy & livestock and agribusiness loans declined by $3.5 million due to paydowns and classified commercial and industrial loans increased $3.5 million primarily due to the addition of one classified commercial and industrial loan.

    Deposits & Customer Repurchase Agreements
    Deposits of $12.07 billion and customer repurchase agreements of $394.5 million totaled $12.47 billion at September 30, 2024. This represented a net increase of $407.9 million compared to June 30, 2024. Total deposits at September 30, 2024 included $400 million in brokered time deposits. Total deposits and customer repurchase agreements increased $761.7 million, or 6.51%, when compared to $11.71 billion at December 31, 2023 partially due to the growth in brokered deposits, and decreased $161.3 million, or 1.28% when compared to $12.63 billion at September 30, 2023.

    Noninterest-bearing deposits were $7.14 billion at September 30, 2024, an increase of $46.7 million, or 0.66%, when compared to $7.09 billion at June 30, 2024. Noninterest-bearing deposits decreased by $69.4 million, or 0.96% when compared to $7.21 billion at December 31, 2023, and decreased by $449.8 million, or 5.93% when compared to $7.59 billion at September 30, 2023. At September 30, 2024, noninterest-bearing deposits were 59.12% of total deposits, compared to 60.13% at June 30, 2024, 63.03% at December 31, 2023, and 61.39% at September 30, 2023.

    Borrowings
    As of September 30, 2024, total borrowings consisted of $500 million of FHLB advances. The FHLB advances include maturities of $300 million, at an average cost of approximately 4.73%, maturing in May of 2026, and $200 million, at a cost of 4.27% maturing in May of 2027. During the third quarter of 2024, we repaid the $1.3 billion of borrowings from the Federal Reserve’s Bank Term Funding Program, with a cost of 4.76%, that were scheduled to mature in January of 2025.

    Capital
    The Company’s total equity was $2.20 billion at September 30, 2024. This represented an overall increase of $119.9 million from total equity of $2.08 billion at December 31, 2023. Increases to equity included $149.9 million in net earnings and a $48.7 million increase in other comprehensive income, that were partially offset by $83.9 million in cash dividends. We engaged in no stock repurchases during the first nine months of 2024. Our tangible book value per share at September 30, 2024 was $10.17.

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

            CVB Financial Corp. Consolidated  
    Capital Ratios   Minimum Required Plus Capital Conservation Buffer   September 30, 2024   December 31, 2023   September 30, 2023  
                       
    Tier 1 leverage capital ratio   4.0 %   10.6 %   10.3 %   10.0 %  
    Common equity Tier 1 capital ratio   7.0 %   15.8 %   14.6 %   14.4 %  
    Tier 1 risk-based capital ratio   8.5 %   15.8 %   14.6 %   14.4 %  
    Total risk-based capital ratio   10.5 %   16.6 %   15.5 %   15.3 %  
                       
    Tangible common equity ratio       9.7 %   8.5 %   7.7 %  
                       

    CitizensTrust

    As of September 30, 2024, CitizensTrust had approximately $4.7 billion in assets under management and administration, including $3.3 billion in assets under management. Revenues were $3.6 million for the third quarter of 2024, compared to $3.2 million for the same period of 2023. CitizensTrust provides trust, investment and brokerage related services, as well as financial, estate and business succession planning.

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

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

    Conference Call
    Management will hold a conference call at 7:30 a.m. PDT/10:30 a.m. EDT on Thursday, October 24, 2024 to discuss the Company’s third quarter 2024 financial results. The conference call can be accessed live by registering at: https://register.vevent.com/register/BI6b56a1a5e9bf45efa402c04252b87308

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

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

    General risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which we conduct business; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market and monetary fluctuations; the effect of acquisitions we have made or may make, including, without limitation, the failure to obtain the necessary regulatory approvals, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target, key personnel and customers into our operations; the timely development of competitive products and services and the acceptance of these products and services by new and existing customers; the impact of changes in financial services policies, laws, and regulations, including those concerning banking, taxes, securities, and insurance, and the application thereof by regulatory agencies; the effectiveness of our risk management framework and quantitative models; changes in the level of our nonperforming assets and charge-offs; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the U.S. Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters; possible credit related impairments or declines in the fair value of loans and securities held by us; possible impairment charges to goodwill on our balance sheet; changes in customer spending, borrowing, and savings habits; the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; periodic fluctuations in commercial or residential real estate prices or values; our ability to attract or retain deposits (including low cost deposits) or to access government or private lending facilities and other sources of liquidity; the possibility that we may reduce or discontinue the payment of dividends on our common stock; changes in the financial performance and/or condition of our borrowers; changes in the competitive environment among financial and bank holding companies and other financial service providers; technological changes in banking and financial services; systemic or non-systemic bank failures or crises; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism, and/or military conflicts, which could impact business and economic conditions in the United States and abroad; catastrophic events or natural disasters, including earthquakes, drought, climate change or extreme weather events that may affect our assets, communications or computer services, customers, employees or third party vendors; public health crises and pandemics, and their effects on our asset credit quality, business operations, and employees, as well as the impact on general economic and financial market conditions; cybersecurity threats and fraud and the costs of defending against them, including the costs of compliance with legislation or regulations to combat fraud and cybersecurity threats; our ability to recruit and retain key executives, board members and other employees, and our ability to comply with federal and state employment laws and regulations; ongoing or unanticipated regulatory or legal proceedings or outcomes; and our ability to manage the risks involved in the foregoing. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s 2023 Annual Report on Form 10-K filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).

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

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

    CVB FINANCIAL CORP. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited)
    (Dollars in thousands)
                 
                 
        September 30,
    2024
      December 31,
    2023
      September 30,
    2023
     
    Cash and due from banks   $ 200,651     $ 171,396     $ 176,488  
    Interest-earning balances due from Federal Reserve     252,809       109,889       64,207  
    Total cash and cash equivalents     453,460       281,285       240,695  
    Interest-earning balances due from depository institutions     24,338       8,216       4,108  
    Investment securities available-for-sale     2,465,585       2,956,125       2,873,163  
    Investment securities held-to-maturity     2,405,254       2,464,610       2,489,441  
    Total investment securities     4,870,839       5,420,735       5,362,604  
    Investment in stock of Federal Home Loan Bank (FHLB)     18,012       18,012       18,012  
    Loans and lease finance receivables     8,572,565       8,904,910       8,877,632  
    Allowance for credit losses     (82,942 )     (86,842 )     (88,995 )
    Net loans and lease finance receivables     8,489,623       8,818,068       8,788,637  
    Premises and equipment, net     36,275       44,709       44,561  
    Bank owned life insurance (BOLI)     316,553       308,706       259,468  
    Intangibles     11,130       15,291       16,736  
    Goodwill     765,822       765,822       765,822  
    Other assets     417,164       340,149       402,372  
    Total assets   $ 15,403,216     $ 16,020,993     $ 15,903,015  
    Liabilities and Stockholders’ Equity            
    Liabilities:            
    Deposits:            
    Noninterest-bearing   $ 7,136,824     $ 7,206,175     $ 7,586,649  
    Investment checking     504,028       552,408       560,223  
    Savings and money market     3,745,707       3,278,664       3,906,187  
    Time deposits     685,930       396,395       305,727  
    Total deposits     12,072,489       11,433,642       12,358,786  
    Customer repurchase agreements     394,515       271,642       269,552  
    Other borrowings     500,000       2,070,000       1,120,000  
    Other liabilities     238,381       167,737       203,276  
    Total liabilities     13,205,385       13,943,021       13,951,614  
    Stockholders’ Equity            
    Stockholders’ equity     2,472,660       2,401,541       2,378,539  
    Accumulated other comprehensive loss, net of tax     (274,829 )     (323,569 )     (427,138 )
    Total stockholders’ equity     2,197,831       2,077,972       1,951,401  
    Total liabilities and stockholders’ equity   $ 15,403,216     $ 16,020,993     $ 15,903,015  
                 
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED AVERAGE BALANCE SHEETS
    (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
    Assets                    
    Cash and due from banks   $ 162,383     $ 162,724     $ 176,133     $ 162,385     $ 176,559  
    Interest-earning balances due from Federal Reserve     1,216,671       704,023       467,873       786,282       285,573  
    Total cash and cash equivalents     1,379,054       866,747       644,006       948,667       462,132  
    Interest-earning balances due from depository institutions     15,880       12,893       5,518       13,161       7,630  
    Investment securities available-for-sale     2,661,990       2,764,096       3,040,965       2,774,981       3,139,369  
    Investment securities held-to-maturity     2,418,043       2,442,863       2,501,625       2,439,427       2,524,799  
    Total investment securities     5,080,033       5,206,959       5,542,590       5,214,408       5,664,168  
    Investment in stock of FHLB     18,012       18,012       21,560       18,012       27,460  
    Loans and lease finance receivables     8,605,270       8,731,587       8,862,462       8,720,058       8,905,697  
    Allowance for credit losses     (82,810 )     (82,815 )     (86,986 )     (83,788 )     (86,222 )
    Net loans and lease finance receivables     8,522,460       8,648,772       8,775,476       8,636,270       8,819,475  
    Premises and equipment, net     38,906       43,624       45,315       42,291       45,731  
    Bank owned life insurance (BOLI)     315,435       312,645       258,485       312,574       257,358  
    Intangibles     11,819       13,258       17,526       13,216       19,256  
    Goodwill     765,822       765,822       765,822       765,822       765,822  
    Other assets     365,740       390,834       357,280       368,951       343,782  
    Total assets   $ 16,513,161     $ 16,279,566     $ 16,433,578     $ 16,333,372     $ 16,412,814  
    Liabilities and Stockholders’ Equity                    
    Liabilities:                    
    Deposits:                    
    Noninterest-bearing   $ 7,124,952     $ 7,153,315     $ 7,813,120     $ 7,153,557     $ 7,908,749  
    Interest-bearing     4,931,220       4,728,864       4,769,897       4,705,566       4,624,848  
    Total deposits     12,056,172       11,882,179       12,583,017       11,859,123       12,533,597  
    Customer repurchase agreements     363,959       287,128       340,809       320,280       461,478  
    Other borrowings     1,729,405       1,850,330       1,318,098       1,856,771       1,273,521  
    Other liabilities     196,832       157,463       164,624       174,328       133,046  
    Total liabilities     14,346,368       14,177,100       14,406,548       14,210,502       14,401,642  
    Stockholders’ Equity                    
    Stockholders’ equity     2,479,766       2,456,945       2,383,922       2,456,348       2,357,028  
    Accumulated other comprehensive loss, net of tax     (312,973 )     (354,479 )     (356,892 )     (333,478 )     (345,856 )
    Total stockholders’ equity     2,166,793       2,102,466       2,027,030       2,122,870       2,011,172  
    Total liabilities and stockholders’ equity   $ 16,513,161     $ 16,279,566     $ 16,433,578     $ 16,333,372     $ 16,412,814  
                         
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
    (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:                    
    Loans and leases, including fees   $ 114,929     $ 114,200     $ 113,190     $ 345,478     $ 332,574
    Investment securities:                    
    Investment securities available-for-sale     20,178       21,225       22,441       62,849       61,393
    Investment securities held-to-maturity     13,284       13,445       13,576       40,131       41,272
    Total investment income     33,462       34,670       36,017       102,980       102,665
    Dividends from FHLB stock     375       377       598       1,171       1,430
    Interest-earning deposits with other institutions     16,986       9,825       6,422       32,884       11,583
    Total interest income     165,752       159,072       156,227       482,513       448,252
    Interest expense:                    
    Deposits     29,821       25,979       16,517       77,166       32,647
    Borrowings and customer repurchase agreements     22,312       22,244       16,339       68,418       46,971
    Total interest expense     52,133       48,223       32,856       145,584       79,618
    Net interest income before provision for (recapture of) credit losses     113,619       110,849       123,371       336,929       368,634
    Provision for (recapture of) credit losses                 2,000             4,000
    Net interest income after provision for (recapture of) credit losses     113,619       110,849       121,371       336,929       364,634
    Noninterest income:                    
    Service charges on deposit accounts     5,120       5,117       5,062       15,273       15,244
    Trust and investment services     3,565       3,428       3,246       10,217       9,475
    Loss on sale of AFS investment securities     (11,582 )                 (11,582 )    
    Gain on sale leaseback transactions     9,106                   9,106      
    Other     6,625       5,879       6,001       18,357       15,448
    Total noninterest income     12,834       14,424       14,309       41,371       40,167
    Noninterest expense:                    
    Salaries and employee benefits     36,647       35,426       34,744       108,474       103,539
    Occupancy and equipment     6,204       5,772       5,618       17,541       16,585
    Professional services     2,855       2,726       2,117       7,836       6,375
    Computer software expense     3,906       3,949       3,648       11,380       10,372
    Marketing and promotion     1,964       1,956       1,628       5,550       4,664
    Amortization of intangible assets     1,286       1,437       1,567       4,161       5,006
    (Recapture of) provision for unfunded loan commitments     (750 )     (500 )     (900 )     (1,250 )    
    Other     6,723       5,731       6,636       21,411       17,415
    Total noninterest expense     58,835       56,497       55,058       175,103       163,956
    Earnings before income taxes     67,618       68,776       80,622       203,197       240,845
    Income taxes     16,394       18,741       22,735       53,339       67,918
    Net earnings   $ 51,224     $ 50,035     $ 57,887     $ 149,858     $ 172,927
                         
    Basic earnings per common share   $ 0.37     $ 0.36     $ 0.42     $ 1.07     $ 1.24
    Diluted earnings per common share   $ 0.37     $ 0.36     $ 0.42     $ 1.07     $ 1.24
    Cash dividends declared per common share   $ 0.20     $ 0.20     $ 0.20     $ 0.60     $ 0.60
                         
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    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
    Interest income – tax equivalent (TE)   $ 166,285     $ 159,607     $ 156,771     $ 484,120     $ 449,888  
    Interest expense     52,133       48,223       32,856       145,584       79,618  
    Net interest income – (TE)   $ 114,152     $ 111,384     $ 123,915     $ 338,536     $ 370,270  
                         
    Return on average assets, annualized     1.23 %     1.24 %     1.40 %     1.23 %     1.41 %
    Return on average equity, annualized     9.40 %     9.57 %     11.33 %     9.43 %     11.50 %
    Efficiency ratio [1]     46.53 %     45.10 %     39.99 %     46.29 %     40.11 %
    Noninterest expense to average assets, annualized     1.42 %     1.40 %     1.33 %     1.43 %     1.34 %
    Yield on average loans     5.31 %     5.26 %     5.07 %     5.29 %     4.99 %
    Yield on average earning assets (TE)     4.43 %     4.37 %     4.18 %     4.38 %     4.04 %
    Cost of deposits     0.98 %     0.88 %     0.52 %     0.87 %     0.35 %
    Cost of deposits and customer repurchase agreements     1.01 %     0.87 %     0.51 %     0.87 %     0.34 %
    Cost of funds     1.47 %     1.38 %     0.92 %     1.39 %     0.75 %
    Net interest margin (TE)     3.05 %     3.05 %     3.31 %     3.06 %     3.32 %
    [1] Noninterest expense divided by net interest income before provision for credit losses plus noninterest income.        
                         
    Tangible Common Equity Ratio (TCE) [2]                    
      CVB Financial Corp. Consolidated     9.71 %     8.68 %     7.73 %        
      Citizens Business Bank     9.59 %     8.57 %     7.63 %        
    [2] (Capital – [GW+Intangibles])/(Total Assets – [GW+Intangibles])        
                         
    Weighted average shares outstanding                    
    Basic     138,649,763       138,583,510       138,345,000       138,415,424       138,360,531  
    Diluted     138,839,499       138,669,058       138,480,633       138,548,651       138,481,462  
    Dividends declared   $ 27,977     $ 28,018     $ 27,901     $ 83,881     $ 83,695  
    Dividend payout ratio [3]     54.62 %     56.00 %     48.20 %     55.97 %     48.40 %
    [3] Dividends declared on common stock divided by net earnings.        
                         
    Number of shares outstanding – (end of period)     139,678,314       139,677,162       139,337,699          
    Book value per share   $ 15.73     $ 15.12     $ 14.00          
    Tangible book value per share   $ 10.17     $ 9.55     $ 8.39          
                         
        September 30,
    2024
      December 31,
    2023
      September 30,
    2023
           
                   
    Nonperforming assets:                    
    Nonaccrual loans   $ 21,913     $ 21,302     $ 9,963          
    Other real estate owned (OREO), net     647                      
    Total nonperforming assets   $ 22,560     $ 21,302     $ 9,963          
    Modified loans/performing troubled debt restructured loans (TDR) [4]   $ 15,769     $ 9,460     $ 7,304          
                         
    [4] Effective January 1, 2023, performing and nonperforming TDRs are reflected as Loan Modifications to borrowers experiencing financial difficulty.        
                         
    Percentage of nonperforming assets to total loans outstanding and OREO     0.26 %     0.24 %     0.11 %        
    Percentage of nonperforming assets to total assets     0.15 %     0.13 %     0.06 %        
    Allowance for credit losses to nonperforming assets     367.65 %     407.67 %     893.26 %        
                         
        Three Months Ended    Nine Months Ended
        September 30,
    2024
      June 30,
    2024
      September 30,
    2023
      September 30,
    2024
      September 30,
    2023
    Allowance for credit losses:                    
     Beginning balance   $ 82,786     $ 82,817     $ 86,967     $ 86,842     $ 85,117  
    Total charge-offs     (26 )     (51 )     (26 )     (4,344 )     (224 )
    Total recoveries on loans previously charged-off     182       20       54       444       102  
    Net recoveries (charge-offs)     156       (31 )     28       (3,900 )     (122 )
    Provision for (recapture of) credit losses                 2,000             4,000  
    Allowance for credit losses at end of period   $ 82,942     $ 82,786     $ 88,995     $ 82,942     $ 88,995  
                         
    Net recoveries (charge-offs) to average loans     0.002 %     -0.000 %     0.000 %     -0.045 %     -0.001 %
                         
    CVB FINANCIAL CORP. AND SUBSIDIARIES  
    SELECTED FINANCIAL HIGHLIGHTS  
    (Unaudited)  
    (Dollars in millions)  
                                             
    Allowance for Credit Losses by Loan Type                                    
                                             
        September 30, 2024   December 31, 2023   September 30, 2023    
        Allowance
    For Credit
    Losses
      Allowance
    as a % of
    Total Loans
    by Respective
    Loan Type
      Allowance
    For Credit
    Losses
      Allowance
    as a % of
    Total Loans
    by Respective
    Loan Type
      Allowance
    For Credit
    Losses
      Allowance
    as a % of
    Total Loans
    by Respective
    Loan Type
       
                                             
    Commercial real estate   $ 69.7     1.05 %     $ 69.5     1.02 %     $ 70.9     1.04 %      
    Construction     0.5     3.07 %       1.3     1.91 %       1.0     1.59 %      
    SBA     2.5     0.92 %       2.7     0.99 %       3.0     1.08 %      
    Commercial and industrial     5.3     0.56 %       9.1     0.94 %       9.3     0.99 %      
    Dairy & livestock and agribusiness     3.8     1.12 %       3.1     0.75 %       3.6     1.01 %      
    Municipal lease finance receivables     0.2     0.28 %       0.2     0.29 %       0.3     0.33 %      
    SFR mortgage     0.4     0.16 %       0.5     0.20 %       0.5     0.20 %      
    Consumer and other loans     0.5     0.99 %       0.4     0.85 %       0.4     0.82 %      
                                             
    Total   $ 82.9     0.97 %     $ 86.8     0.98 %     $ 89.0     1.00 %      
                                             
    CVB FINANCIAL CORP. AND SUBSIDIARIES  
    SELECTED FINANCIAL HIGHLIGHTS  
    (Unaudited)  
    (Dollars in thousands, except per share amounts)  
                               
    Quarterly Common Stock Price  
                               
          2024       2023       2022    
    Quarter End   High   Low   High   Low   High   Low  
    March 31,   $ 20.45   $ 15.95     $ 25.98     $ 16.34     $ 24.37     $ 21.36    
    June 30,   $ 17.91   $ 15.71     $ 16.89     $ 10.66     $ 25.59     $ 22.37    
    September 30,   $ 20.29   $ 16.08     $ 19.66     $ 12.89     $ 28.14     $ 22.63    
    December 31,   $   $     $ 21.77     $ 14.62     $ 29.25     $ 25.26    
                               
    Quarterly Consolidated Statements of Earnings  
                               
            Q3   Q2   Q1   Q4   Q3  
              2024       2024       2024       2023       2023    
    Interest income                          
    Loans and leases, including fees       $ 114,929     $ 114,200     $ 116,349     $ 115,721     $ 113,190    
    Investment securities and other         50,823       44,872       41,340       42,357       43,037    
    Total interest income         165,752       159,072       157,689       158,078       156,227    
    Interest expense                          
    Deposits         29,821       25,979       21,366       18,888       16,517    
    Borrowings and customer repurchase agreements     22,312       22,244       23,862       19,834       16,339    
    Total interest expense         52,133       48,223       45,228       38,722       32,856    
    Net interest income before (recapture of)                      
    provision for credit losses         113,619       110,849       112,461       119,356       123,371    
    (Recapture of) provision for credit losses                       (2,000 )     2,000    
    Net interest income after (recapture of)                      
    provision for credit losses         113,619       110,849       112,461       121,356       121,371    
                               
    Noninterest income         12,834       14,424       14,113       19,163       14,309    
    Noninterest expense         58,835       56,497       59,771       65,930       55,058    
    Earnings before income taxes         67,618       68,776       66,803       74,589       80,622    
    Income taxes         16,394       18,741       18,204       26,081       22,735    
    Net earnings       $ 51,224     $ 50,035     $ 48,599     $ 48,508     $ 57,887    
                               
    Effective tax rate         24.25 %     27.25 %     27.25 %     34.97 %     28.20 %  
                               
    Basic earnings per common share       $ 0.37     $ 0.36     $ 0.35     $ 0.35     $ 0.42    
    Diluted earnings per common share     $ 0.37     $ 0.36     $ 0.35     $ 0.35     $ 0.42    
                               
    Cash dividends declared per common share   $ 0.20     $ 0.20     $ 0.20     $ 0.20     $ 0.20    
                               
    Cash dividends declared       $ 27,977     $ 28,018     $ 27,886     $ 27,945     $ 27,901    
                               
    CVB FINANCIAL CORP. AND SUBSIDIARIES
    SELECTED FINANCIAL HIGHLIGHTS
    (Unaudited)
    (Dollars in thousands)
                         
    Loan Portfolio by Type
        September 30, June 30,   March 31,   December 31,   September 30,
          2024       2024       2024       2023       2023  
                         
    Commercial and industrial   $ 6,618,637     $ 6,664,925     $ 6,720,538     $ 6,784,505     $ 6,843,059  
    Construction     14,755       52,227       58,806       66,734       63,022  
    SBA     272,001       267,938       268,320       270,619       283,124  
    SBA – PPP     1,255       1,757       2,249       2,736       3,233  
    Commercial and industrial     936,489       956,184       963,120       969,895       938,064  
    Dairy & livestock and agribusiness     342,445       350,562       351,624       412,891       351,463  
    Municipal lease finance receivables     67,585       70,889       72,032       73,590       75,621  
    SFR mortgage     267,181       267,593       276,475       269,868       268,171  
    Consumer and other loans     52,217       49,771       57,549       54,072       51,875  
    Gross loans, at amortized cost     8,572,565       8,681,846       8,770,713       8,904,910       8,877,632  
    Allowance for credit losses     (82,942 )     (82,786 )     (82,817 )     (86,842 )     (88,995 )
    Net loans   $ 8,489,623     $ 8,599,060     $ 8,687,896     $ 8,818,068     $ 8,788,637  
                         
                         
                         
    Deposit Composition by Type and Customer Repurchase Agreements
                         
        September 30, June 30,   March 31,   December 31,   September 30,
          2024       2024       2024       2023       2023  
                         
    Noninterest-bearing   $ 7,136,824     $ 7,090,095     $ 7,112,789     $ 7,206,175     $ 7,586,649  
    Investment checking     504,028       515,930       545,066       552,408       560,223  
    Savings and money market     3,745,707       3,409,320       3,561,512       3,278,664       3,906,187  
    Time deposits     685,930       774,980       675,554       396,395       305,727  
    Total deposits     12,072,489       11,790,325       11,894,921       11,433,642       12,358,786  
                         
    Customer repurchase agreements     394,515       268,826       275,720       271,642       269,552  
    Total deposits and customer repurchase agreements   $ 12,467,004     $ 12,059,151     $ 12,170,641     $ 11,705,284     $ 12,628,338  
                         
    CVB FINANCIAL CORP. AND SUBSIDIARIES  
    SELECTED FINANCIAL HIGHLIGHTS  
    (Unaudited)  
    (Dollars in thousands)  
                           
    Nonperforming Assets and Delinquency Trends  
        September 30, June 30,   March 31,   December 31,   September 30,
     
          2024       2024       2024       2023       2023    
    Nonperforming loans:                      
    Commercial real estate   $ 18,794     $ 21,908     $ 10,661     $ 15,440     $ 3,655    
    Construction                                
    SBA     151       337       54       969       1,050    
    Commercial and industrial     2,825       2,712       2,727       4,509       4,672    
    Dairy & livestock and agribusiness     143             60       60       243    
    SFR mortgage                 308       324       339    
    Consumer and other loans                             4    
    Total   $ 21,913     $ 24,957     $ 13,810     $ 21,302     $ 9,963   [1]
    % of Total loans     0.26 %     0.29 %     0.16 %     0.24 %     0.11 %  
                           
    Past due 30-89 days (accruing):                      
    Commercial real estate   $ 30,701     $ 43     $ 19,781     $ 300     $ 136    
    Construction                                
    SBA                 408       108          
    Commercial and industrial     64       103       6       12          
    Dairy & livestock and agribusiness                                
    SFR mortgage                       201          
    Consumer and other loans                       18          
    Total   $ 30,765     $ 146     $ 20,195     $ 639     $ 136    
    % of Total loans     0.36 %     0.00 %     0.23 %     0.01 %     0.00 %  
                           
    OREO:                      
    Commercial real estate   $     $     $     $     $    
    SBA                                
    Commercial and industrial     647       647       647                
    SFR mortgage                                
    Total   $ 647     $ 647     $ 647     $     $    
    Total nonperforming, past due, and OREO   $ 53,325     $ 25,750     $ 34,652     $ 21,941     $ 10,099    
    % of Total loans     0.62 %     0.30 %     0.40 %     0.25 %     0.11 %  
                           
      [1] Includes $2.6 million of nonaccrual loans past due 30-89 days.                
                           
       
    CVB FINANCIAL CORP. AND SUBSIDIARIES  
    SELECTED FINANCIAL HIGHLIGHTS  
    (Unaudited)  
                       
    Regulatory Capital Ratios  
                       
                       
                       
            CVB Financial Corp. Consolidated  
    Capital Ratios   Minimum Required Plus
    Capital Conservation Buffer
      September 30,
    2024
      December 31,
    2023
      September 30,
    2023
     
                       
    Tier 1 leverage capital ratio   4.0 %   10.6 %   10.3 %   10.0 %  
    Common equity Tier 1 capital ratio   7.0 %   15.8 %   14.6 %   14.4 %  
    Tier 1 risk-based capital ratio   8.5 %   15.8 %   14.6 %   14.4 %  
    Total risk-based capital ratio   10.5 %   16.6 %   15.5 %   15.3 %  
                       
    Tangible common equity ratio       9.7 %   8.5 %   7.7 %  
                       
    Tangible Book Value Reconciliations (Non-GAAP)
     
    The tangible book value per share is a Non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of tangible book value to the Company stockholders’ equity computed in accordance with GAAP, as well as a calculation of tangible book value per share as of September 30, 2024, December 31, 2023 and September 30, 2023.   
     
                   
          September 30,
    2024
      December 31,
    2023
      September 30,
    2023
     
          (Dollars in thousands, except per share amounts)  
                 
    Stockholders’ equity   $ 2,197,831     $ 2,077,972     $ 1,951,401  
    Less: Goodwill     (765,822 )     (765,822 )     (765,822 )
    Less: Intangible assets     (11,130 )     (15,291 )     (16,736 )
    Tangible book value   $ 1,420,879     $ 1,296,859     $ 1,168,843  
    Common shares issued and outstanding     139,678,314       139,344,981       139,337,699  
    Tangible book value per share   $ 10.17     $ 9.31     $ 8.39  
                 
    Return on Average Tangible Common Equity Reconciliations (Non-GAAP)
                             
    The return on average tangible common equity is a non-GAAP disclosure. The Company uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance. The following is a reconciliation of net income, adjusted for tax-effected amortization of intangibles, to net income computed in accordance with GAAP; a reconciliation of average tangible common equity to the Company’s average stockholders’ equity computed in accordance with GAAP; as well as a calculation of return on average tangible common equity.
     
          Three Months Ended     Nine Months Ended
          September 30, June 30,   September 30, September 30, September 30,
            2024       2024       2023       2024       2023    
          (Dollars in thousands)  
                             
      Net Income   $ 51,224     $ 50,035     $ 57,887     $ 149,858     $ 172,927    
      Add: Amortization of intangible assets     1,286       1,437       1,567       4,161       5,006    
      Less: Tax effect of amortization of intangible assets [1]     (380 )     (425 )     (463 )     (1,230 )     (1,480 )  
      Tangible net income   $ 52,130     $ 51,047     $ 58,991     $ 152,789     $ 176,453    
                             
      Average stockholders’ equity   $ 2,166,793     $ 2,102,466     $ 2,027,030     $ 2,122,870     $ 2,011,172    
      Less: Average goodwill     (765,822 )     (765,822 )     (765,822 )     (765,822 )     (765,822 )  
      Less: Average intangible assets     (11,819 )     (13,258 )     (17,526 )     (13,216 )     (19,256 )  
      Average tangible common equity   $ 1,389,152     $ 1,323,386     $ 1,243,682     $ 1,343,832     $ 1,226,094    
                             
      Return on average equity, annualized [2]     9.40 %     9.57 %     11.33 %     9.43 %     11.50 %  
      Return on average tangible common equity, annualized [2]     14.93 %     15.51 %     18.82 %     15.19 %     19.24 %  
                             
                             
      [1] Tax effected at respective statutory rates.                      
      [2] Annualized where applicable.                      
                             

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

    The MIL Network

  • MIL-OSI USA: Hold DOJ Accountable for Failure to Prosecute Noncitizen Voter Registration

    US Senate News:

    Source: United States Senator for Wisconsin Ron Johnson

    It should be obvious to everyone — even Democrats — that we should prevent illegal immigrants from voting. Unfortunately, most Democrats in Congress do not agree. I was happy to cosponsor the SAVE Act in the Senate. This legislation aimed to secure our elections by requiring proof of citizenship to vote. It passed in the House, but not the Senate.

    On October 2, I joined Republican colleagues in a letter to U.S. Attorney General Merrick Garland exposing the Department of Justice’s (DOJ) failure to prevent noncitizens from registering to vote in America’s federal elections and its refusal to prosecute those who have done so. 

    We need more information about the incidence of noncitizens registering to vote, and steps that the DOJ is taking to deal with the issue and secure U.S. elections.

    In recent weeks, I have written two op-eds highlighting my concerns with election integrity. I urge you to read both.

    The Daily Caller: FBI Ignoring Real Threats To Election Integrity

    The Federalist: Democrat-Controlled States Refuse To Clean Voter Rolls And Fix Election Problems

    Under the Biden-Harris administration, more than 500,000 unaccompanied migrant children have crossed the southwest border without a parent or guardian to provide care.

    Last month, I joined a letter to President Biden and Vice President Harris calling out abuses in their Unaccompanied Migrant Children Program, namely the Department of Health and Human Services (HHS)’s cover-up of the crisis. HHS has failed to comply with two out of three Department of Homeland Security subpoenas and other information requests issued amid its investigation into more than 100 suspicious sponsors.

    The Biden-Harris administration limited background checks for sponsors of unaccompanied children, cut back on familial DNA testing at the border, and decreased information sharing with law enforcement.

    Cartel trafficking activity surged an estimated 2,500% from the Trump administration to the middle of the Biden-Harris term in 2022.  

    I joined another letter demanding Biden and Harris collect DNA samples from every immigrant the Department of Homeland Security (DHS) encounters, per the DNA Fingerprint Act of 2005. DHS missed three separate opportunities to gather DNA from the illegal immigrant who murdered Rachel Morin, a Maryland mother of five.

    MILTON: The Milton Area Chamber of Commerce hosted a town hall at the Milton House Museum. Before the event, I took a fascinating tour of Wisconsin’s only certified Underground Railroad site which is designated a National Historic Landmark.

    REESEVILLE:  Caine Warehousing hosted a town hall at their Dodge County campus. It was an honor to meet the three generations of Caines who run this successful family business. 

    WATERTOWN:  American Disposal and Lueck Recycling, another family run business, hosted a town hall at their facility. People are very concerned about open borders, the economy, and parental rights. 

    WATERTOWN: I always look forward to my visits to Maranatha Baptist University. I held a meeting with campus leadership and then answered questions from students, staff, and community members.  

    WHITEWATER: I enjoyed meeting with students at the University of Wisconsin Whitewater. When asked by a campus reporter about my main message for young people, I responded “jealously guard your freedom.” 

    MIL OSI USA News

  • MIL-OSI USA: Governor Shapiro, DCED Secretary Siger to Announce Major Economic Development Investment

    Source: US State of Pennsylvania

    October 24, 2024Lancaster County, PA

    ADVISORY – Governor Shapiro, DCED Secretary Siger to Announce Major Economic Development Investment

    Governor Josh Shapiro and Department of Community & Economic Development Secretary Rick Siger will announce a major economic development investment – the largest Commonwealth-supported investment in Lancaster County history.

    WHO:
    Governor Josh Shapiro
    DCED Secretary Rick Siger
    Major Business Leaders

    WHEN:
    Thursday, October 24, 2024 at 1:00 PM
    Press conference will begin at approximately 1:20 PM

    WHERE:
    Please RSVP to receive the address and arrival instructions.

    LIVE STREAM:
    pacast.com/live/gov
    governor.pa.gov/live/

    RSVP:
    Press who are interested in attending must RSVP with the names and phone numbers for each member of their team to ra-gvgovpress@pa.gov.

    MIL OSI USA News

  • MIL-OSI: ChampionX Reports Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    • Revenue of $906.5 million
    • Net income attributable to ChampionX of $72.0 million
    • Adjusted net income of $85.9 million
    • Adjusted EBITDA of $197.5 million
    • Income before income taxes margin of 11.2%
    • Adjusted EBITDA margin of 21.8%
    • Cash from operating activities of $141.3 million and free cash flow of $108.1 million

    THE WOODLANDS, Texas, Oct. 23, 2024 (GLOBE NEWSWIRE) — ChampionX Corporation (NASDAQ: CHX) (“ChampionX” or the “Company”) today announced third quarter of 2024 results. Revenue was $906.5 million, net income attributable to ChampionX was $72.0 million, and adjusted EBITDA was $197.5 million. Income before income taxes margin was 11.2% and adjusted EBITDA margin was 21.8%. Cash from operating activities was $141.3 million and free cash flow was $108.1 million.

    CEO Commentary

    “The third quarter demonstrated the resiliency of our ChampionX portfolio as we delivered strong adjusted EBITDA and adjusted EBITDA margin, and generated robust free cash flow. These results were the direct result of our employees around the world remaining laser-focused on serving our customers well, and I am grateful to them for their dedication to our corporate purpose of improving lives,” ChampionX’s President and Chief Executive Officer Sivasankaran “Soma” Somasundaram said.

    “During the third quarter of 2024, we generated revenue of $907 million, which decreased 4% year-over-year, as growth in North America, Middle East & Africa, Europe, and Asia Pacific was offset by Latin America, which was impacted by lower sales in Mexico. Revenue from all areas other than Mexico increased 6% year-over-year. Our revenue increased 1% sequentially, with both North America and international revenues increasing slightly versus the second quarter. North America revenues were up 2% sequentially, driven primarily by higher sales volumes in our artificial lift business. International revenues were up 1% sequentially, driven, in part, by the contribution of RMSpumptools, which was acquired during the quarter. We generated net income attributable to ChampionX of $72 million, income before income taxes margin of 11.2%, and we delivered adjusted EBITDA of $198 million, representing a 21.8% adjusted EBITDA margin, our highest level as ChampionX, which speaks to the productivity and profitability focus of our team.

    “Cash flow from operating activities was $141 million during the third quarter, which represented 196% of net income attributable to ChampionX, and we generated strong free cash flow of $108 million, which represented 55% of our adjusted EBITDA for the period. We remain confident in achieving at least 50% adjusted EBITDA to free cash flow conversion for 2024. Our balance sheet and financial position remain strong, ending the third quarter with approximately $1.1 billion of liquidity, including $389 million of cash and $671 million of available capacity on our revolving credit facility.”

    Agreement to be Acquired by SLB

    On April 2, 2024, SLB (NYSE: SLB) and ChampionX jointly announced a definitive Agreement and Plan of Merger (the “Merger Agreement”) for SLB to purchase ChampionX in an all-stock transaction. The transaction was unanimously approved by the ChampionX board of directors and the transaction received the approval of the ChampionX stockholders at a special meeting held on June 18, 2024. The transaction is subject to regulatory approvals and other customary closing conditions. It is currently anticipated that the closing of the transaction will occur in the first quarter of 2025.

    ChampionX may continue to pay its regular quarterly cash dividends with customary record and payment dates, subject to certain limitations under the Merger Agreement. Given the pending acquisition of ChampionX by SLB, ChampionX has discontinued providing quarterly guidance and will not host a conference call or webcast to discuss its third quarter 2024 results.

    Production Chemical Technologies

    Production Chemical Technologies revenue in the third quarter of 2024 was $559.5 million, a decrease of $10.0 million, or 2%, sequentially, due primarily to lower international sales volumes.

    Segment operating profit was $87.3 million and adjusted segment EBITDA was $120.6 million. Segment operating profit margin was 15.6%, an increase of 60 basis points, sequentially, and adjusted segment EBITDA margin was 21.6%, an increase of 94 basis points, sequentially. The sequential increase in segment operating profit margin and adjusted segment EBITDA margin was driven by strong cost management, productivity improvements, and favorable product mix.

    Production & Automation Technologies

    Production & Automation Technologies revenue in the third quarter of 2024 was $275.7 million, an increase of $31.2 million, or 13%, sequentially, due primarily to higher artificial lift systems demand in North America, and the acquisition of RMSpumptools, which was completed during the quarter. Revenue from digital products was $57.9 million in the third quarter of 2024, an increase of 7% sequentially, driven by increased customer activity in North America.

    Segment operating profit was $34.1 million and adjusted segment EBITDA was $69.6 million. Segment operating profit margin was 12.4%, an increase of 330 basis points, sequentially, and adjusted segment EBITDA margin was 25.2%, an increase of 118 basis points, sequentially. The increase in segment operating profit margin and adjusted segment EBITDA margin was driven by higher sales volumes, productivity improvements, and favorable product mix.

    Drilling Technologies

    Drilling Technologies revenue in the third quarter of 2024 was $51.8 million, a decrease of $1.1 million, or 2%, sequentially, driven by lower sales volumes in the bearings product line associated with customers managing inventory levels.

    Segment operating profit was $11.5 million and adjusted segment EBITDA was $12.9 million. Segment operating profit margin was 22.2%, compared to 22.4% in the prior quarter, and adjusted segment EBITDA margin was 24.8%, a decrease of 2 basis points, sequentially, due primarily to lower volumes.

    Reservoir Chemical Technologies

    Reservoir Chemical Technologies revenue in the third quarter 2024 was $20.5 million, a decrease of $6.6 million, or 24%, sequentially, driven by lower sales volumes in the U.S. and internationally.

    Segment operating profit was $1.7 million and adjusted segment EBITDA was $3.3 million. Segment operating profit margin was 8.2%, a decrease of 793 basis points, sequentially, and adjusted segment EBITDA margin was 16.0%, a decrease of 592 basis points, sequentially. The decrease in segment operating profit margin and adjusted segment EBITDA margin was driven by lower volumes.

    Other Business Highlights

    • ChampionX won the Gulf Energy Information Excellence Award for best coating / corrosion advancement technology for its AnX coiled rod product line. The company was a finalist in four additional categories: SMARTEN™ XE ESP control system in the best controls, instrumentation, automation technology category; Pump Checker™ gas lift analysis module in the best digital transformation – upstream category; Chemical Technologies Decarbonization Program in the best HSE contribution category; and the ChampionX Diversity, Equality, and Inclusion programs in the DE&I in energy category.

    Other Business Highlights: Production Chemical Technologies and Reservoir Chemical Technologies

    • In the Asia Pacific region, ChampionX secured a significant new contract to provide both engineering services and the initial chemical supply for a new Floating Production Storage and Offloading (FPSO) unit, set to be deployed at a large gas condensate field in Australasia. Operations are scheduled to begin in the first half of 2025 and contribute significantly to regional Liquified Natural Gas (LNG) production capacity. This strategic win further strengthens our presence in the region and reinforces our commitment to delivering innovative, high-quality solutions to our upstream customers.
    • ChampionX was awarded a large first-fill contract to supply multiple production chemicals for corrosion inhibitors, scale inhibitors, and biocides for a major onshore oil and gas incremental project in Saudi Arabia.
    • ChampionX has secured a first-fill contract to supply production chemicals for a significant gas development program in Qatar.
    • ChampionX secured a multi-million-dollar order for a novel application of UltraFab in Carbon Capture, Utilization, and Storage (CCUS) for delivery in 2025.
    • ChampionX recently completed the pre-commission cleaning, chemical treatment, and readiness work for the 303-mile natural gas Mountain Valley Pipeline connecting Marcellus and Utica shale production to markets in the Mid- and South-Atlantic regions.
    • In the Canadian oil sands, ChampionX completed a steam additive first-fill program for a major technology development trial, leading to additional market interest.
    • ChampionX was awarded a three-year contract extension from a major producer in the San Juan Basin in California, recognizing our service, people, and commitment to helping the producer achieve their strategic goals as reasons for the extension.
    • As part of an initiative to expand our technology into adjacent markets, ChampionX Reservoir Chemical Technologies was awarded business with a premier supplier of local sand used for hydraulic fracturing in the Permian Basin. Our solution affords the supplier a significant savings on sand drying costs and is designed to increase operational throughput.

    Other Business Highlights: Production & Automation Technologies

    • In the third quarter, ChampionX completed the acquisition of RMSpumptools, a provider of advanced mechanical and electrical solutions for complex ESP systems. The acquisition expands ChampionX’s international footprint while providing greater opportunities for RMSpumptools in North America. Soon after the acquisition close, our Permian ESP team collaborated with RMSpumptools to deliver a sand control solution to a major oil company operating in the Permian basin.
    • ChampionX Artificial Lift expanded its Latin America footprint into Ecuador with a contract award for two 400HP multiplex surface pump systems for jet lift applications. This accomplishment is the result of a strengthening partnership with a Latin America independent operator that is expanding its operations from Colombia to Ecuador. Unlike typical systems, the surface pump and oil vessel required for jet lifted wells will be built on one skid with all the necessary piping, which reduces assembly time at the wellsite.
    • Building on the combined strengths of our XSPOC artificial lift software and the acquisition of Artificial Lift Performance Limited Pump Checker software, ChampionX introduced ALLY™ production optimization digital solutions, debuting a modern interface with user-friendly dashboards and intuitive workflows, paired with powerful performance—ingesting, processing, and displaying more data than ever before. It is a one-stop-shop for production teams to manage and optimize their producing assets, regardless of lift type or equipment provider. Building on the launch of this new digital solution, in the third quarter ChampionX secured seven new clients for our production optimization software solution.
    • ChampionX launched the PCS Ferguson new generation SMARTEN™ Unify control system, which is engineered to deliver sophisticated digital automation and optimization capabilities at a cost of ownership that fits within the narrow economic profile of plunger lifted wells. SMARTEN Unify provides enhanced visibility to what is happening “live” at any second in a plunger lift system, eliminating the need for operating based on calculated guesses.

    Other Business Highlights: Drilling Technologies

    • Drilling Technologies’ diamond bearings products continue to see positive test results in additional downhole drilling and completion tools applications.
    • Drilling Technologies’ diamond inserts business had significant new products launches with four major customers.

    About Non-GAAP Measures

    In addition to financial results determined in accordance with generally accepted accounting principles in the United States (“GAAP”), this news release presents non-GAAP financial measures. Management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income attributable to ChampionX and adjusted diluted earnings per share attributable to ChampionX, provide useful information to investors regarding the Company’s financial condition and results of operations because they reflect the core operating results of our businesses and help facilitate comparisons of operating performance across periods. In addition, free cash flow, free cash flow to adjusted EBITDA ratio, and free cash flow to revenue ratio are used by management to measure our ability to generate positive cash flow for debt reduction and to support our strategic objectives. Although management believes the aforementioned non-GAAP financial measures are good tools for internal use and the investment community in evaluating ChampionX’s overall financial performance, the foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is included in the accompanying financial tables.

    About ChampionX

    ChampionX is a global leader in chemistry solutions, artificial lift systems, and highly engineered equipment and technologies that help companies drill for and produce oil and gas safely, efficiently, and sustainably around the world. ChampionX’s expertise, innovative products, and digital technologies provide enhanced oil and gas production, transportation, and real-time emissions monitoring throughout the lifecycle of a well. To learn more about ChampionX, visit our website at www.ChampionX.com

    Forward-Looking Statements

    This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements relating to the proposed transaction between SLB and ChampionX, including statements regarding the benefits of the transaction and the anticipated timing of the transaction, and information regarding the businesses of SLB and ChampionX, including expectations regarding outlook and all underlying assumptions, SLB’s and ChampionX’s objectives, plans and strategies, information relating to operating trends in markets where SLB and ChampionX operate, statements that contain projections of results of operations or of financial condition and all other statements other than statements of historical fact that address activities, events or developments that SLB or ChampionX intends, expects, projects, believes or anticipates will or may occur in the future. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. All statements in this communication, other than statements of historical fact, are forward-looking statements that may be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,” “anticipates,” “should,” “estimates,” “intends,” “plans,” “seeks,” “targets,” “may,” “can,” “believe,” “predict,” “potential,” “projected,” “projections,” “precursor,” “forecast,” “ambition,” “goal,” “scheduled,” “think,” “could,” “would,” “will,” “see,” “likely,” and other similar expressions or variations, but not all forward-looking statements include such words. These forward-looking statements involve known and unknown risks and uncertainties, and which may cause SLB’s or ChampionX’s actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to those factors and risks described in Part I, “Item 1. Business”, “Item 1A. Risk Factors”, and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in SLB’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on January 24, 2024 and Part 1, Item 1A, “Risk Factors” in ChampionX’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 6, 2024, and each of their respective, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These include, but are not limited to, and in each case as a possible result of the proposed transaction on each of SLB and ChampionX: the ultimate outcome of the proposed transaction between SLB and ChampionX, including the effect of the announcement of the proposed transaction; the ability to operate the SLB and ChampionX respective businesses, including business disruptions; difficulties in retaining and hiring key personnel and employees; the ability to maintain favorable business relationships with customers, suppliers and other business partners; the terms and timing of the proposed transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction; the anticipated or actual tax treatment of the proposed transaction; the ability to satisfy closing conditions to the completion of the proposed transaction (including the adoption of the merger agreement in respect of the proposed transaction by ChampionX stockholders); other risks related to the completion of the proposed transaction and actions related thereto; the ability of SLB and ChampionX to integrate the business successfully and to achieve anticipated synergies and value creation from the proposed transaction; changes in demand for SLB’s or ChampionX’s products and services; global market, political and economic conditions, including in the countries in which SLB and ChampionX operate; the ability to secure government regulatory approvals on the terms expected, at all or in a timely manner; the extent of growth of the oilfield services market generally, including for chemical solutions in production and midstream operations; the global macro-economic environment, including headwinds caused by inflation, rising interest rates, unfavorable currency exchange rates, and potential recessionary or depressionary conditions; the impact of shifts in prices or margins of the products that SLB or ChampionX sells or services that SLB or ChampionX provides, including due to a shift towards lower margin products or services; cyber-attacks, information security and data privacy; the impact of public health crises, such as pandemics (including COVID-19) and epidemics and any related company or government policies and actions to protect the health and safety of individuals or government policies or actions to maintain the functioning of national or global economies and markets; trends in crude oil and natural gas prices, including trends in chemical solutions across the oil and natural gas industries, that may affect the drilling and production activity, profitability and financial stability of SLB’s and ChampionX’s customers and therefore the demand for, and profitability of, their products and services; litigation and regulatory proceedings, including any proceedings that may be instituted against SLB or ChampionX related to the proposed transaction; failure to effectively and timely address energy transitions that could adversely affect the businesses of SLB or ChampionX, results of operations, and cash flows of SLB or ChampionX; and disruptions of SLB’s or ChampionX’s information technology systems.

    These risks, as well as other risks related to the proposed transaction, are included in the Form S-4 and proxy statement/prospectus that was filed with the SEC in connection with the proposed transaction. While the list of factors presented here is, and the list of factors presented in the registration statement on Form S-4 are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to SLB’s and ChampionX’s respective periodic reports and other filings with the SEC, including the risk factors identified in SLB’s and ChampionX’s Annual Reports on Form 10-K, respectively, and SLB’s and ChampionX’s subsequent Quarterly Reports on Form 10-Q. The forward-looking statements included in this communication are made only as of the date hereof. Neither SLB nor ChampionX undertakes any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

    Investor Contact: Byron Pope
    byron.pope@championx.com 
    281-602-0094

    Media Contact: John Breed
    john.breed@championx.com 
    281-403-5751

    CHAMPIONX CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (UNAUDITED)

      Three Months Ended   Nine Months Ended
      September 30,   June 30,   September 30,   September 30,
    (in thousands, except per share amounts)   2024       2024       2023       2024       2023  
    Revenue $ 906,533     $ 893,272     $ 939,783     $ 2,721,946     $ 2,814,730  
    Cost of goods and services   608,764       613,426       647,923       1,845,127       1,957,309  
    Gross profit   297,769       279,846       291,860       876,819       857,421  
    Costs and expenses:                  
    Selling, general and administrative expense   180,501       182,995       162,317       535,910       485,617  
    (Gain) loss on sale-leaseback transaction and disposal group   57                   (29,826 )     12,965  
    Interest expense, net   14,137       15,421       13,744       43,493       40,754  
    Foreign currency transaction (gains) losses, net   3,505       (2,767 )     7,992       793       21,683  
    Other expense (income), net   (2,176 )     938       (1,994 )     1,689       (13,494 )
    Income before income taxes   101,745       83,259       109,801       324,760       309,896  
    Provision for income taxes   28,078       27,868       29,009       82,542       69,334  
    Net income   73,667       55,391       80,792       242,218       240,562  
    Net income attributable to noncontrolling interest   1,659       2,822       3,081       4,718       3,522  
    Net income attributable to ChampionX $ 72,008     $ 52,569     $ 77,711     $ 237,500     $ 237,040  
                       
    Earnings per share attributable to ChampionX:                  
    Basic $ 0.38     $ 0.28     $ 0.40     $ 1.25     $ 1.20  
    Diluted $ 0.37     $ 0.27     $ 0.39     $ 1.23     $ 1.18  
                       
    Weighted-average shares outstanding:                  
    Basic   190,496       190,426       195,881       190,575       197,058  
    Diluted   193,362       193,257       199,592       193,655       201,025  
                                           

    CHAMPIONX CORPORATION
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (UNAUDITED)

    (in thousands) September 30, 2024   December 31, 2023
    ASSETS      
    Current Assets:      
    Cash and cash equivalents $ 389,109     $ 288,557  
    Receivables, net   434,107       534,534  
    Inventories, net   546,817       521,549  
    Prepaid expenses and other current assets   68,218       80,777  
    Total current assets   1,438,251       1,425,417  
           
    Property, plant and equipment, net   760,775       773,552  
    Goodwill   729,783       669,064  
    Intangible assets, net   270,361       243,553  
    Other non-current assets   178,490       130,116  
    Total assets $ 3,377,660     $ 3,241,702  
           
    LIABILITIES AND EQUITY      
    Current Liabilities:      
    Current portion of long-term debt $ 6,203     $ 6,203  
    Accounts payable   455,485       451,680  
    Other current liabilities   278,498       324,866  
    Total current liabilities   740,186       782,749  
           
    Long-term debt   592,161       594,283  
    Other long-term liabilities   246,296       203,639  
    Stockholders’ equity:      
    ChampionX stockholders’ equity   1,814,310       1,676,622  
    Noncontrolling interest   (15,293 )     (15,591 )
    Total liabilities and equity $ 3,377,660     $ 3,241,702  
                   

    CHAMPIONX CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (UNAUDITED)

      Nine Months Ended September 30,
    (in thousands)   2024       2023  
    Cash flows from operating activities:      
    Net income $ 242,218     $ 240,562  
    Depreciation and amortization   183,291       177,226  
    (Gain) loss on sale-leaseback transaction and disposal group   (29,826 )     12,965  
    Loss on Argentina Blue Chip Swap transaction   7,086        
    Deferred income taxes   (16,810 )     (15,380 )
    Loss (gain) on disposal of fixed assets   868       (1,480 )
    Receivables   115,269       85,181  
    Inventories   (40,118 )     (50,011 )
    Accounts payable   (30,577 )     (7,018 )
    Other assets   6,665       17,470  
    Leased assets   (24,193 )     (38,597 )
    Other operating items, net   (31,442 )     (49,600 )
    Net cash flows provided by operating activities   382,431       371,318  
           
    Cash flows from investing activities:      
    Capital expenditures   (101,403 )     (110,965 )
    Proceeds from sale of fixed assets   9,323       12,328  
    Proceeds from sale-leaseback transaction   44,292        
    Purchase of investments   (31,526 )      
    Sale of investments   24,358        
    Acquisitions, net of cash acquired   (123,269 )      
    Net cash used for investing activities   (178,225 )     (98,637 )
           
    Cash flows from financing activities:      
    Proceeds from long-term debt         15,500  
    Repayment of long-term debt   (4,652 )     (43,625 )
    Repurchases of common stock   (49,399 )     (159,730 )
    Dividends paid   (52,430 )     (48,309 )
    Other   3,854       (384 )
    Net cash used for financing activities   (102,627 )     (236,548 )
           
    Effect of exchange rate changes on cash and cash equivalents   (1,027 )     (1,314 )
           
    Net increase in cash and cash equivalents   100,552       34,819  
    Cash and cash equivalents at beginning of period   288,557       250,187  
    Cash and cash equivalents at end of period $ 389,109     $ 285,006  
                   

    CHAMPIONX CORPORATION
    BUSINESS SEGMENT DATA
    (UNAUDITED)

      Three Months Ended
      September 30,   June 30,   September 30,
    (in thousands)   2024       2024       2023  
    Segment revenue:          
    Production Chemical Technologies $ 559,539     $ 569,577     $ 604,254  
    Production & Automation Technologies   275,700       244,487       256,148  
    Drilling Technologies   51,792       52,888       54,869  
    Reservoir Chemical Technologies   20,531       27,123       25,093  
    Corporate and other   (1,029 )     (803 )     (581 )
    Total revenue $ 906,533     $ 893,272     $ 939,783  
               
    Income before income taxes:        
    Segment operating profit (loss):          
    Production Chemical Technologies $ 87,260     $ 85,388     $ 94,560  
    Production & Automation Technologies   34,136       22,207       28,299  
    Drilling Technologies   11,501       11,863       12,255  
    Reservoir Chemical Technologies   1,675       4,363       2,461  
    Total segment operating profit   134,572       123,821       137,575  
    Corporate and other   18,690       25,141       14,030  
    Interest expense, net   14,137       15,421       13,744  
    Income before income taxes $ 101,745     $ 83,259     $ 109,801  
               
    Operating profit margin / income before income taxes margin:          
    Production Chemical Technologies   15.6 %     15.0 %     15.6 %
    Production & Automation Technologies   12.4 %     9.1 %     11.0 %
    Drilling Technologies   22.2 %     22.4 %     22.3 %
    Reservoir Chemical Technologies   8.2 %     16.1 %     9.8 %
    ChampionX Consolidated   11.2 %     9.3 %     11.7 %
               
    Adjusted EBITDA          
    Production Chemical Technologies $ 120,622     $ 117,421     $ 133,101  
    Production & Automation Technologies   69,604       58,848       59,288  
    Drilling Technologies   12,867       13,149       13,786  
    Reservoir Chemical Technologies   3,292       5,954       4,198  
    Corporate and other   (8,873 )     (12,139 )     (12,837 )
    Adjusted EBITDA $ 197,512     $ 183,233     $ 197,536  
               
    Adjusted EBITDA margin          
    Production Chemical Technologies   21.6 %     20.6 %     22.0 %
    Production & Automation Technologies   25.2 %     24.1 %     23.1 %
    Drilling Technologies   24.8 %     24.9 %     25.1 %
    Reservoir Chemical Technologies   16.0 %     22.0 %     16.7 %
    ChampionX Consolidated   21.8 %     20.5 %     21.0 %
                           

    CHAMPIONX CORPORATION
    RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
    (UNAUDITED)

      Three Months Ended
      September 30,   June 30,   September 30,
    (in thousands)   2024       2024       2023  
    Net income attributable to ChampionX $ 72,008     $ 52,569     $ 77,711  
    Pre-tax adjustments:          
    (Gain) loss on sale leaseback transaction and disposal group(1)   57              
    Russia sanctions compliance and impacts(2)   109       32       95  
    Restructuring and other related charges   5,317       7,927       1,228  
    Merger transaction costs(3)   8,312       15,059        
    Acquisition costs and related adjustments(4)   753       574        
    Intellectual property defense   69       531       220  
    Merger-related indemnification responsibility               722  
    Tulsa, Oklahoma storm damage               1,895  
    Foreign currency transaction (gains) losses, net   3,505       (2,767 )     7,992  
    Loss on Argentina Blue Chip Swap transaction         2,994        
    Tax impact of adjustments   (4,259 )     (5,722 )     (2,702 )
    Adjusted net income attributable to ChampionX   85,871       71,197       87,161  
    Tax impact of adjustments   4,259       5,722       2,702  
    Net income attributable to noncontrolling interest   1,659       2,822       3,081  
    Depreciation and amortization   63,508       60,203       61,839  
    Provision for income taxes   28,078       27,868       29,009  
    Interest expense, net   14,137       15,421       13,744  
    Adjusted EBITDA $ 197,512     $ 183,233     $ 197,536  

    _______________________

    (1) Amount represents the gain on the sale and leaseback of certain buildings and land.
    (2) Includes charges incurred related to legal and professional fees to comply with, as well as additional foreign currency exchange losses associated with, the sanctions imposed in Russia.
    (3) Includes costs incurred in relation to the Merger Agreement with Schlumberger Limited, including third party legal and professional fees.
    (4) Includes costs incurred for the acquisition of businesses.
       
      Three Months Ended
      September 30,   June 30,   September 30,
    (in thousands)   2024       2024       2023  
    Diluted earnings per share attributable to ChampionX $ 0.37     $ 0.27     $ 0.39  
    Per share adjustments:          
    (Gain) loss on sale leaseback transaction and disposal group                
    Russia sanctions compliance and impacts                
    Restructuring and other related charges   0.03       0.04       0.01  
    Merger transaction costs   0.04       0.08        
    Acquisition costs and related adjustments                
    Intellectual property defense                
    Merger-related indemnification responsibility               0.01  
    Tulsa, Oklahoma storm damage               0.01  
    Foreign currency transaction (gains) losses, net   0.02       (0.01 )     0.04  
    Loss on Argentina Blue Chip Swap transaction         0.02        
    Tax impact of adjustments   (0.02 )     (0.03 )     (0.02 )
    Adjusted diluted earnings per share attributable to ChampionX $ 0.44     $ 0.37     $ 0.44  
                           

    CHAMPIONX CORPORATION
    RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES BY SEGMENT
    (UNAUDITED)

      Three Months Ended
      September 30,   June 30,   September 30,
    (in thousands)   2024       2024       2023  
    Production Chemical Technologies          
    Segment operating profit $ 87,260     $ 85,388     $ 94,560  
    Non-GAAP adjustments   7,073       5,851       9,079  
    Depreciation and amortization   26,289       26,182       29,462  
    Segment adjusted EBITDA $ 120,622     $ 117,421     $ 133,101  
               
    Production & Automation Technologies          
    Segment operating profit $ 34,136     $ 22,207     $ 28,299  
    Non-GAAP adjustments   1,656       6,000       2,089  
    Depreciation and amortization   33,812       30,641       28,900  
    Segment adjusted EBITDA $ 69,604     $ 58,848     $ 59,288  
               
    Drilling Technologies          
    Segment operating profit $ 11,501     $ 11,863     $ 12,255  
    Non-GAAP adjustments   54             (8 )
    Depreciation and amortization   1,312       1,286       1,539  
    Segment adjusted EBITDA $ 12,867     $ 13,149     $ 13,786  
               
    Reservoir Chemical Technologies          
    Segment operating profit $ 1,675     $ 4,363     $ 2,461  
    Non-GAAP adjustments   3       11       72  
    Depreciation and amortization   1,614       1,580       1,665  
    Segment adjusted EBITDA $ 3,292     $ 5,954     $ 4,198  
               
    Corporate and other          
    Segment operating profit $ (32,827 )   $ (40,562 )   $ (27,774 )
    Non-GAAP adjustments   9,336       12,488       920  
    Depreciation and amortization   481       514       273  
    Interest expense, net   14,137       15,421       13,744  
    Segment adjusted EBITDA $ (8,873 )   $ (12,139 )   $ (12,837 )
                           

    Free Cash Flow

      Three Months Ended
      September 30,   June 30,   September 30,
    (in thousands)   2024       2024       2023  
    Free Cash Flow          
    Cash flows from operating activities $ 141,298     $ 67,625     $ 163,030  
    Less: Capital expenditures, net of proceeds from sale of fixed assets   (33,248 )     (29,310 )     (48,469 )
    Free cash flow $ 108,050     $ 38,315     $ 114,561  
               
    Cash From Operating Activities to Revenue Ratio          
    Cash flows from operating activities $ 141,298     $ 67,625     $ 163,030  
    Revenue $ 906,533     $ 893,272     $ 939,783  
               
    Cash from operating activities to revenue ratio   16 %     8 %     17 %
               
    Free Cash Flow to Revenue Ratio          
    Free cash flow $ 108,050     $ 38,315     $ 114,561  
    Revenue $ 906,533     $ 893,272     $ 939,783  
               
    Free cash flow to revenue ratio   12 %     4 %     12 %
               
    Free Cash Flow to Adjusted EBITDA Ratio          
    Free cash flow $ 108,050     $ 38,315     $ 114,561  
    Adjusted EBITDA $ 197,512     $ 183,233     $ 197,536  
               
    Free cash flow to adjusted EBITDA ratio   55 %     21 %     58 %

    The MIL Network

  • MIL-OSI USA: Tillis Urges Congress to Quickly Pass a Disaster Recovery Package

    US Senate News:

    Source: United States Senator for North Carolina Thom Tillis
    WASHINGTON, D.C. – Today, The Hill published an op-ed by Senator Thom Tillis on the importance for elected officials in Congress to step up and be proactive with long-term disaster recovery assistance. 
    Read the full op-ed HERE.
    Tillis on North Carolina’s recovery from Helene:
    “The recovery process will be long and difficult and will require years and billions of dollars of assistance. That is why it is so important for elected officials in Congress to step up and be proactive — not reactive — with long-term disaster recovery assistance. This is why I have led a bipartisan group of senators in disaster-hit states calling on Congress to end its seven-week recess and come back to Washington to pass a disaster funding package that initiates the long-term recovery process for victims and communities ravaged by Helene and Milton.” 
    Tillis on the need to replenish the SBA Disaster Loan Fund and FEMA Disaster Relief Fund:
    “The most pressing need is to replenish the Small Business Administration’s disaster loan fund, which has already run out of money. Few Helene victims have flood insurance, so the SBA’s various disaster recovery programs are key to long-term recovery. By utilizing these programs, victims can access low-interest loans to replace lost property or repair or rebuild their homes or small businesses. The loans can also be used to provide a financial cushion for small businesses that face an economic loss in the months ahead due to the storm. Now that funding for the SBA disaster loan program has run out, it risks delays in processing storm victims’ loans and their ability to get their lives back together. We cannot let this continue to go on. 
    “FEMA is also in danger of running out of money in its Disaster Relief Fund. The hurricane season isn’t over until November and the National Hurricane Center is already monitoring tropical disturbances that could turn into more full-blown storms. It may only get worse.” 
    Tillis on the broken disaster response and recovery process:
    “The fact is, the federal disaster response and recovery process is broken and many Americans understandably have concerns. First, there are questions about prioritization. It was telling that in a 24-hour period in the wake of Helene, the Biden-Harris administration bragged about sending $100 million in transportation funding to rebuild roads in Western North Carolina as it also pledged $157 million in assistance to Lebanon. That is reflective of an administration that can’t read a room and doesn’t have its priorities in order. Wrong message, wrong time. Additionally, there has been a big political dust-up over FEMA money being used for illegal immigrants. This confusion could have been avoided if FEMA had been laser-focused on its mission to respond to natural disasters. FEMA should never have become a funding conduit for responding to the Biden-Harris administration’s border security crisis.
    “Secondly, and most important, is the question about competency. The federal government is already too slow and bureaucratic, but the disaster recovery process takes it to another level. The long-term funding for recovery is, shockingly, neither permanent nor predictable and requires constant reauthorization from Congress. I have worked across the aisle to introduce legislation that would help fix this problem by establishing a permanent and predictable funding process for long-term recovery and getting assistance to families and business owners sooner. 
    “There also needs to be a drastic improvement in how FEMA assists victims who suffer property damage. I recently introduced a bipartisan bill to end the ‘one-size-fits-all’ approach to disaster relief and cut the red tape that prevents many individuals and communities from accessing the relief they desperately need when they need it.” 

    MIL OSI USA News

  • MIL-OSI New Zealand: Parliament Hansard Report – Restoring Citizenship Removed by Citizenship (Western Samoa) Act 1982 Bill — Second Reading – 001431

    Source: New Zealand Parliament – Hansard

    lass=”BeginningOfDay”>WEDNESDAY, 23 OCTOBER 2024

    (continued on Thursday, 24 October 2024)

    RESTORING CITIZENSHIP REMOVED BY CITIZENSHIP (WESTERN SAMOA) ACT 1982 BILL

    Second Reading

    SPEAKER: Members, in accordance with a determination of the Business Committee, I call on members’ order of the day No. 1.

    MIL OSI New Zealand News

  • MIL-OSI USA: Four Disaster Recovery Centers Close This Week, But Help Is Still Available

    Source: US Federal Emergency Management Agency

    Headline: Four Disaster Recovery Centers Close This Week, But Help Is Still Available

    Four Disaster Recovery Centers Close This Week, But Help Is Still Available

    SPRINGFIELD – Four FEMA/State Disaster Recovery Centers will close this week, but help will still be available. FEMA teams will work closely with county emergency managers to ensure Illinoisans who live in one of the seven designated counties will still be able to apply for assistance, update their application information, and speak to a FEMA specialist.The best way to get help from FEMA is by calling the helpline at 800-621-3362 or by contacting the county emergency management office for guidance. Applications will also continue to be accepted online at DisasterAssistance.gov or on the FEMA mobile app.The following location closes Thursday, October 24 at 7:30 p.m.:Kaskaskia College Extension Center17869 Exchange Ave.Nashville, IL 62263Hours: Tues. – Thurs. 10:30 a.m. – 7:30 p.m.The following locations close Friday, October 25 at 7 p.m.:Cuba Community Center616 E Polk St.Cuba, IL 61427Hours: Tues. – Fri. 8 a.m. – 7 p.m.Henry County Office of Emergency Management4424 Walter Payton Memorial Highway (Hwy 34)Kewanee, IL 61443Hours: Tues. – Fri. 8 a.m. – 7 p.m.Will County Center for Community Concerns2455 Glenwood Ave.Joliet, IL 60435Hours: Tues. – Fri. 8 a.m. – 7 p.m.Other Disaster Recovery Centers Remain OpenSeveral Disaster Recovery Centers will remain open throughout the state. No appointments are necessary; walk-ins are welcome. Survivors can visit any recovery center to speak with specialists from FEMA, the State of Illinois and the U.S. Small Business Administration. Starting Saturday, October 26, the hours of operation for the remaining recovery centers will be:Southwestern Illinois Justice & Workforce Development Campus2300 W. Main St.Suite M117 (City of Belleville Office Bldg.)Belleville, IL 62226Hours: Mon. – Fri. 8 a.m. – 6 p.m., Sat. 9 a.m. – 5 p.m., Closed SundaysCahokia Heights Fitness and Community Center509 Camp Jackson RoadCahokia Heights, IL 62207Hours: Mon. – Fri. 8 a.m. – 6 p.m., Sat. 9 a.m. – 5 p.m., Closed SundaysForest City Church1280 S. Alpine RoadRockford, IL 61108Hours: Mon. – Fri. 8 a.m. – 6 p.m., Sat. 9 a.m. – 2 p.m., Closed SundaysChicago Lawn Branch Library6120 S. Kedzie Ave.Chicago, IL 60629Hours: Mon. and Wed. 10 a.m. – 6 p.m., Tues. and Thurs. 12 p.m. – 6 p.m., Fri. and Sat. 9 a.m. – 5 p.m., Closed SundaysVillage of Homewood Auditorium2010 Chestnut RoadHomewood, IL 60430Hours: Mon. – Fri. 8 a.m. – 6 p.m., Sat. 9 a.m. – 5 p.m., Closed SundaysBeverly Center3031 South 25th Ave.Broadview, IL 60155Hours: Mon. – Fri. 8 a.m. – 6 p.m., Sat. 9 a.m. – 5 p.m., Closed SundaysFor the latest information on recovery center locations and hours, visit FEMA.gov/DRC.For even more information about the disaster recovery operation in Illinois, visit www.fema.gov/disaster/4819.  
    kimberly.keblish
    Wed, 10/23/2024 – 21:00

    MIL OSI USA News

  • MIL-OSI USA: Application for FEMA Assistance Required for a Home Inspection

    Source: US Federal Emergency Management Agency

    Headline: Application for FEMA Assistance Required for a Home Inspection

    Application for FEMA Assistance Required for a Home Inspection

    FEMA personnel are conducting home inspections in areas affected by Tropical Storm Helene to help determine whether the residences are safe, sanitary and livable. FEMA will not conduct a home inspection at any home where occupants have not applied for assistance.However, due to the volume of registrations, FEMA is working with the Tennessee Emergency Management Agency and officials in the impacted counties to call or text those who have applied to schedule an appointment.If you applied for FEMA assistance and received a letter from FEMA stating you were found Ineligible due to “No Contact,” call the FEMA Helpline at 800-621-3362 to update/confirm your contact information and schedule your inspection. If a FEMA inspector shows up unannounced, he/she will have photo identification to show you. For security reasons, federal identification may not be photographed. A FEMA inspector will never ask for, or accept, money. Their service is free. A typical home inspection takes about 45 minutes to complete. After the inspection, applicants should allow seven to 10 days for processing. If you have questions about the status of your application, you can call the FEMA Helpline.Inspectors do not make decisions on eligibility for assistance. Information gathered during the inspection is among the criteria FEMA uses to determine if applicants are eligible for federal assistance. The inspectors consider:The structural soundness of the home, both inside and outside.Whether the electrical, gas, heat, plumbing and sewer/septic systems are all in working order.Whether the home is safe to live in and can be entered and exited safely.The deadline to apply for federal assistance is Monday, Dec. 2.To apply, go online to DisasterAssistance.gov, use the FEMA App or call the FEMA Helpline at 800-621-3362. Lines are open from 7 a.m. to midnight Eastern Time. Operators speak most languages; if you use a relay service, captioned telephone or other service, you can give FEMA your number for that service. You may also visit a Disaster Recovery Center. For locations and hours, visit fema.gov/drc.To watch an accessible video on how to apply, visit FEMA Accessible: Registering for Individual Assistance (youtube.com).You may also apply for a low-interest disaster loan from the U.S. Small Business Administration. SBA disaster loans are the largest source of federal recovery funds for homeowners, renters and businesses of all sizes. To learn more or to apply, visit sba.gov/disaster or call SBA’s Customer Service Center at 800-659-2955. Email DisasterCustomerService@sba.gov for more information or to have a loan application mailed to you.To learn more about FEMA home inspections and how to identify an inspector, visit FEMA Home Inspections.
    kwei.nwaogu
    Wed, 10/23/2024 – 21:00

    MIL OSI USA News